HomeMy WebLinkAboutMINUTES - 07082008 - C.109 ` Contra
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TO: BOARD OF SUPERVISORS/REDEVELOPMENT AGENCY
Costa
FROM: Dennis M. Barry, AICP, Interim Director
Department of Conservation and Development . °%, '' County
,::,_
r�coU.
John Cullen, Executive Director
Contra Costa County Redevelopment Agency
DATE: July 8, 2008
SUBJECT: Bond Sale Resolution - BART Transit Village, Contra Costa Centre Area
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
As the Board of Supervisors ADOPT resolution authorizing the remarketing of Multi-
Family Housing Revenue Bonds in an amount not to exceed $125 million, and the sale
of Multi-Family Housing Revenue Bonds in an amount not to exceed $10 million for the
development of the BART Transit Village Apartments, Contra Costa Centre, and
actions related thereto; and
As the Governing Board of the Redevelopment Agency APPROVE and AUTHORIZE
the Redevelopment Director to execute the Amended and Restated Regulatory
Agreement and Declaration of Restrictive Covenants for the BART Transit Village
Project.
FISCAL IMPACT:
No General Fund obligation is involved. The bonds are secured by a revenue pledge, a
credit guarantee and reserve accounts. The bonds are credit enhanced with a Bank of
America direct pay irrevocable letter of credit. The County is compensated for its costs
of issuance, and annually for monitoring expenses. No County funds are pledged to
secure the bonds. The underlying public/private partnership for this development will
create a real estate asset for the County General Fund that will generate an estimate
$600-700 million flow of General Fund revenue over the next 99 years.
CONTINUED ON ATTACHMENT: Z YES NO SIGNATUREA/
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMME ATI N OF B ARD COMM TEE
APPROVE OTHER
SIGNATURE (S):
ACTION OF BOARD ON ��,� 2 APPROV D AS RECOM NDED_,r_ O R
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND
CORRECT COPY OF AN ACTION TAKEN AND
UNANIMOUS (ABSENT ENTERED ON THE MINUTES OF THE BOARD
AYES: NOES: OF SUPERVISORS ON THE DATE SHOWN.
ABSENT: ABSTAIN: ;�''
ATTESTED cf ,,U 1�1__ �)
Contact: Jim Kennedy (925-335-7225) JOHN CU EN, CLERK OF THE
cc: Department of Conservation and Development(DCD) B ARD OF SUPERVISORS AND
County Administrator OUN Y ADMINISTRATOR
County Counsel
Redevelopment Agency BY , DEPUTY
via Redevelopment
*AvalonBay Communities
* Millennium Partners
*Orrick, Herrington & Sutcliffe
*Goldfarb& Lipman
(i:(;DI3(i-RI_I:)I:V/MI MK1.3..•'13AIt 1 TV PKO.1F..0 BOND SALF RESOLUTION 7.8.08 I.)KAF"1'2
y
BACKGROUND/REASONS FOR RECOMMENDATIONS
On March 14, 2006 the Board of Supervisors approved the sale of $125 million of Multi-Family
Housing Revenue Bonds to finance the BART Transit Village project(which has now been named
by the developer as Avalon Walnut Creek at Contra Costa Centre). The sale of these 2006 Bonds
was completed on March 23, 2006. The proceeds from the 2006 Bonds were placed in an escrow
account to be used.once the BART Patron Replacement Parking Garage was completed thereby
allowing construction of the Transit Village to proceed. The BART Parking Garage is substantially
complete, and construction of the Transit Village is scheduled to proceed in July, 2008. To proceed
the 2006 Bonds must be remarketed in their permanent form. The County has also received the
necessary authority from the California Debt Limit Allocation Committee to issue an additional $10
million in private activity bonds for the project. Previously, the County issued $116 million in tax-
exempt bonds and $9 million in taxable bonds for the project. The additional allocation will allow the
project to be fully financed.
The BART Transit Village Apartments is a 422-unit project located on the BART property adjacent
to the Pleasant Hill BART Station. The project is a new construction mixed income affordable
housing project with a mixed use element. The required period of affordability is fifty-five years
pursuant to the bond program Regulatory Agreement, and the Redevelopment Agency's business
agreements. The County/Agency Regulatory Agreement will result in 85 affordable units for very
low income households (50% of area median income) for fifty-five years.
The BART Transit Village project began February 21, 2006 when the construction of a BART patron
replacement parking garage was initiated. The new garage replaces all of the surface level parking
lost to the residential mixed-use project plus an additional 75 spaces. The residential mixed-use
project will include 522 residential units(including 100 for-sale condominiums), 35,590 square feet
of local serving retail (including restaurants, business services, and convenience retail),.a 270,000
square foot office building, and a 19,400 square foot business conference center. All of these
activities would occur a few steps from the BART fare gates at the heart of Contra Costa. Only the
residential apartment project would be financed with the proceeds of the Multi-Family Bonds.
The property is to be owned by PHVP I, a Delaware limited partnership, which is comprised of
Avalon Bay Communities and Millennium Partners("the Developer"). Both firms have a significant
history of delivering high quality and successful mixed-use projects within the context of
public/private partnerships.
The entire project will be built on land owned by BART, leased to the Pleasant Hill BART Leasing
Authority (a joint powers authority conmprised of BART, the County, and the County
Redevelopment Agency; the "JPA"). The JPA will be sub-leasing the property to the Developer.
The Redevelopment Agency is financing public improvements including the BART Replacement
Parking Garage, Backbone Infrastructure (roads, drainage, utilities), and Placemaking
Improvements(parks, plazas, street furniture, decorative pavers, decorative lighting, etc.)as well as
provide financial assistance to achieve the affordable housing. The County will be receiving the
bulk of the Ground Lease revenues over the next 99 years as a result of the Agency's investment.
All aspects of this business partnership were approved by the JPA, the County, and/or the
Redevelopment Agency in 2005, with approved Amendments in 2008.
The proposed financing and the credentials of the Developer have been thoroughly evaluated by
staff. The plan of finance covers the approximate $155.4 million development costs of the BART
Transit Village Apartments with $126 million of tax-exempt bond proceeds, $9 million of taxable
bond proceeds, approximately $4.5 million, of low income housing tax-credit equity, and
approximately $15.9 million in developer equity. The bonds will be secured by a Bank of America
direct pay irrevocable letter of credit. The bonds will be sold on a public basis, and rated AA/A-1+
(Standard and Poor's and Moody's respectively). The proposed issuance of bonds complies with
the County's adopted polices for the issuance of bonds.
The proposed financing is consistent with County and Redevelopment Agency goals to increase the
supply of affordable housing. The development will also create a real estate asset that will
generate"significant return to the County General Fund.
The resolution before you provides the necessary authority to sell such bonds. The bond sale
resolution authorizes a number of actions, a summary of which is provided as Attachment A. No
pledge of County revenues is involved in securing the bonds.
G:('1)I3Ci-itEDI:V/IvIFMRI3/I3AIt'I'TV PRO.IEC'f BOND SALE RIS(:)LUTION 7.8.08 DRAFT 2
Attachment A .
Summary of Actions in the Bond Sale Resolution
1) Authorizes the remarketing of the 2006A and 2006A-T BART Transit Village Multi-Family
Housing Revenue Bonds in an amount not to exceed $125 million, and the sale of 2008 Multi-
Family Housing Revenue Bonds in an amount not to exceed $10 million;
2) Approves the form of Amended and Restated Trust Indenture between the County and The
Bank of New York Mellon Trust Company, N.A. (the Trustee);
3) Approves the form of the Amended and Restated Financing Agreement between the County,
the Trustee, and PHVP I (the Developer);
4) Approves the forms of the Amended and Restated Regulatory Agreement and Declaration of
Restrictive Covenants between the County, the County Redevelopment Agency, the Trustee,
and the Developer;
5) Approves the form of the Bond Purchase Agreement between the County, the Developer,
and Citigroup Global Markets Inc., the Underwriter;
6) Approves the form of the Composite Offering Statement.
G:CDBCi-IZEDEV/MI:MIZ1.3/13AIZ'I"I'V PRO.II--C"T BOND SALF RESOLUTION 7.8.08 DRAFT2
RESOLUTION NO. 2008/496
OF THE BOARD OF SUPERVISORS OF THE
COUNTY OF CONTRA COSTA
RESOLUTION AUTHORIZING THE REMARKETING OF MULTIFAMILY
HOUSING REVENUE BONDS IN "THE AGGREGATE PRINCIPAL AMOUNT
OF $125,000,000 AND THE ISSUANCE AND DELIVERY OF MULTIFAMILY
HOUSING REVENUE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT
NOT TO EXCEED $10,000,000 TO FINANCE A PORTION OF THE
ACQUISITION AND CONSTRUCTION OF A MULTIFAMILY RENTAL
IIOUSING PROJECT GENERALLY KNOWN AS AVALON WALNUT CREEK
AT CONTRA COSTA CENTRE; DETERMINING AND PRESCRIBING
CERTAIN MATTERS AND APPROVING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF VARIOUS DOCUMENTS RELATED
THERETO; RATIFYING ANY ACTION HERETOFORE TAKEN AND
APPROVING RELATED MATTERS IN CONNECTION WITH SAID BONDS.
WHEREAS,the County of Contra Costa(the "County") is authorized pursuant to
Section 52075 and following of the California Health and Safety Code(the"Act")to issue revenue
bonds for the purpose of financing, among other things, the acquisition and construction of
multifamily rental housing projects,.-
WHEREAS,
rojects;WHEREAS, the proceeds of such bonds may be loaned to a nongovernmental
owner of multifamily housing, who shall be responsible for the payment of such bonds, to allow
such nongovernmental owner to reduce the cost of constructing, owning and operating such
housinu and to assist in providing housing for low income persons;
WHEREAS,the County desires to assist in the financing of the acquisition and
construction of an approximately 422-unit multifamily rental housing development fornierly known
as Pleasant Hill BART Transit Village Apartments and now generally known as Avalon Walnut
Creek at Contra Costa Centre (the"Project'),which will be owned and operated by PHVP I LP, a
Delaware limited partnership, and entities related thereto (collectively;the`Borrower').
OHS West260450764.2
WHEREAS,the County has previously issued its Multifamily Housing Revenue
Bonds (Pleasant Hill BART Transit Village Apartments Project) Series 2006A and Taxable Series
2006A-T(the"2006 Bonds") and desires to authorize the remarketing of the 2006 Bonds as
"Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project)
Series 2006A and 2006A-T"and the sale and issuance not to exceed $10,000,000 of additional
multifamily housing revenue bonds in one or more series(as more fully described herein,the '.2008
Bonds"and collectively with the 2006 Bonds, the'`Bonds''), and to loan the proceeds of the Bonds
to the Borrower,thereby reducing the cost of the Project and assisting in providing housing for low
income persons;
WHEREAS,the Board desires to approve the financing,the remarketing of the
2006 Bonds and the issuance of the 2008 Bonds; and
WHEREAS,there have been prepared and presented at this meeting the following
documents required for the remarketing of the 2006 Bonds and the issuance of the 2008 Bonds, and
such documents are now in substantial fon- and appropriate instruments to be executed and
delivered for the purposes intended:
(1) Amended and Restated Trust Indenture (the "Indenture") to be entered into
between the County and The Bank of New York Mellon Trust Company,N.A., as successor
trustee (the "Trustee"'), providing for the remarketing of the 2006 Bonds and the issuance of
the 2008 Bonds;
(2) Amended and Restated Financing Agreement (the "Financing Agreement")
to be entered into among the County,the Trustee and the Borrower;
OHS West:260450764.2 2
(3) Amended and .Restated. Regulatory Agreements and Declarations of
Restrictive Covenants (the "Regulatory Agreements"), to be entered into among the County,
the Contra Costa County Redevelopment Agency,the Trustee, and the Borrower;
(4) Bond Purchase Agreement (the "Purchase Agreement') to be entered into
among the County, the Borrower and Citigroup Global Markets Inc. (the "Underwriter");
and
(5) Composite Offering Statement for the Bonds.
NOW,THEREFORE, BE IT RESOLVED by the Board of Supervisors of the
County of Contra Costa, as follows:
Section 1. This Board hereby specifically finds and declares that the statements,
findings and determinations of the County set forth above are true and correct.
Section 2. Pursuant to the Act and the Indenture described herein.the County is
hereby authorized to cause the 2006 Bonds to be remarketed as "County of Contra Costa
Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Series
2006A and Taxable-Series 2006A-T"and to issue the 2008 Bonds. The 2008 Bonds shall be
designated as"County of Contra Costa Multifamily Housing Revenue Bonds (Avalon Walnut
Creel: at Contra Costa Centre Project)", and shall be issued in one or more series (with an
appropriate series designation) in an aggregate principal amount not to exceed $10,000,000. The
2008 Bonds shall be in the form set forth in and otherwise in accordance with the Indenture. The
2008 Bonds shall be executed by the manual or facsimile signature of the Chair or Vice Chair of
this Board of Supervisors, the County Administrator of the County,the Interim Director of the
Department of Conservation and Development of the County or the.Deputy Director-
OHS West:26045 3
Redevelopment of the County(each an"Authorized Officer"). The 2006 Bonds shall be
remarketed and the 2008 Bonds shall be issued and secured in accordance with the terms of the
Indenture presented.at this meeting, as applicable, and the payment of the principal of.redemption
premium, if any, and interest on,the Bonds shall be made solely from the amounts and assets
pledged thereto under the Indenture. The Bonds shall not be deemed to constitute a debt or liability
of the County.
Section 3. The form of Indenture, on file with the Clerk of the Board of
Supervisors (the"Clerk"), is hereby approved and each Authorized Officer is hereby authorized and
directed to execute and deliver the Indenture in substantially said form, with such changes therein
as such officer may require or approve, such approval to be conclusively evidenced by the
execution and delivery thereof. The date,maturity date or dates (which shall not extend beyond
March 15, 2046), interest rate or rates(which shall not exceed 12%per annum), interest payment
dates. denominations, forni,registration privileges, manner of execution,.place of payment,terms of
redemption and other terms of the Bonds shall be as provided in the Indenture as finally executed.
Section 4. The form of Financing Agreement, on file with the Clerk, is hereby
approved and each Authorized Officer is hereby authorized and directed to execute and deliver the
Financing Agreement in substantially said form, with such changes therein as such officer may
require or approve, such approval to be conclusively evidenced by the execution and delivery
thereof.
Section 5. The form of Regulatory Agreement, on file with the Clerk, is hereby
approved and each Authorized Officer is hereby authorized and directed to execute and deliver one
or more Regulatory Agreements in substantially said form, with such changes therein as such
OHS Wesr:260450764.2 4
officer may require or approve, such approval to be conclusively evidenced by the execution and
delivery thereof.
Section 6. The form of the Purchase Agreement, on file with the Clerk, is
hereby approved and each Authorized Officer is hereby authorized and directed to execute and
deliver one or more Purchase Agreements in substantially said form,with such changes therein as
such officer may require or approve, such approval to be conclusively evidenced by the execution
and delivery thereof, provided. however. that the Underwriter's discount shall not exceed I% of the
principal amount of the 2008 Bonds.
Section 7. The form of Composite Offering Statement,on file with the Clerk. is
hereby approved with such changes, additions and corrections as an Authorized Officer may
hereafter approve, and'the Underwriter is hereby authorized to distribute copies of one or more
Composite Offering Statements in preliminary or final form to persons who may be interested in
purchasing the Bonds. An Authorized Officer is hereby authorized and directed to sign one or more
Composite Offering Statements in final form and the Underwriter is hereby authorized and directed
to deliver copies of an Composite Offering Statement in final form to the purchasers of the Bonds.
Section 8. The 2008 Bonds, when executed, shall be delivered to the Trustee
for authentication. The Trustee is hereby requested and directed to authenticate the 2008 Bonds by
executino,the"Trustee's certificate of authentication appearing thereon, and to deliver the 2008
Bonds, when duly executed and authenticated, in accordance with written instructions executed and
delivered on behalf of the County by an Authorized Representative. which instructions are hereby
authorized and directed to be executed and delivered to the Trustee. Such instructions shall provide
for the delivery of the 2008 Bonds to the Underwriter upon payment of the purchase price thereof.
OHS west2604io764.2 5
Section 9. The Board hereby appoints Orrick. Herrington& Sutcliffe LLP as
bond counsel and Litten Financial Consulting as financial advisor.
Section 10. All actions heretofore taken by the officers and agents of the.County
with respect to the financing of the Project.the remarketing of the 2006 Bonds and the sale and
issuance of the 2008 Bonds are hereby approved. ratified and confirmed, and any Authorized
Officer is hereby authorized and directed, for and in.the name and on behalf of the County,to do
any and all things and take any and all actions and execute and deliver any and all certificates,
agreements and other documents, including but not limited to those described in the Indenture, the
Purchase Aureement and the other documents herein approved, as well as a tax certificate and an
intercreditor and/or subordination agreement which such officer, or any of them, may deem
necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds and to
effectuate the purposes thereof and of the documents herein approved in accordance with this
resolution and resolutions heretofore adopted by the County and otherwise in order to carry out the
financing of the Project.
Section 11. All further consents. approvals, notices, orders, requests and other
actions permitted or required by any of the documents authorized by this resolution, whether before
or after the remarketing of the 2006 Bonds and the issuance of the 2008 Bonds, including without
limitation any of the foregoing which may be necessary or desirable in connection with any default
under or amendment of such documents, any transfer or other disposition of the Project, any
addition or substitution of security for the Bonds or any redemption of the Bonds, may be given or
taken by an Authorized Officer without further authorization by this Board of Supervisors, and such
Authorized Officer is hereby authorized and directed to give any such consent, approval,notice,
01is wLsc:260450764.2 6
order or request and to take any such action which such officer may deem necessary or desirable to
further the purposes of this resolution and the financing of the Project.
Section 12. This Resolution shall take effect upon its adoption.
PASSED AND ADOPTED THIS 8th day of July,2008.
AYES: GIOIA, UILKEMA, PIEPHO, BONILLA&GLOVER
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Chair of the Board of Supervisors
ATTEST:
John Cullen, County Administrator
and Clerk of the Board of Supervisors
B .
Deputy Clerk
cc: Department of Conservation and
Development—Redevelopment and Housing
OHS West:260450764.2 7
CLERK'S CERTIFICATE
1, ,.,J „� G��_ , Deputy Clerk of the Board of Supervisors of
the County of Contra Costa,hereby certify that the foregoing is a full,true and correct copy of a
resolution duly adopted at a regular meeting of the Board of Supervisors of said County duly and
regularly held at the regular meeting place thereof on July 8, 2008, of which meeting all of the
members of said Board of Supervisors had due notice and at which a majority thereof were present;
and that at said meeting said resolution was adopted by the following vote_
AYES: GIOIA, UILKEMA, PIEPHO, BONILLA&GLOVER
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
An agenda of said meeting was posted at least 72 hours before said meeting at 651
Pine Street, Martinez, California; a location freely accessible to members of the public, and a brief
general description of said resolution appeared on said agenda.
I further certify that I have carefully compared the same with the original minutes of
said meeting on file and of record in my office- that the foregoing resolution is a full, true and
correct copy of the original resolution adopted at said meeting and entered in said minutes; and that
said resolution has not been amended,modified or rescinded since the date of its adoption, and the
same is now in full force and effect.
WITNESS my hand and the seal of the County of Contra Costa this . day of
July, 2008.
John Cullen, County Administrator and
Clerk of the Board of Supervisors
[SEAL,]
J
By:
Deputy Clerk
of-►s Wesr.2604507>a.2
OHS DRAFT
7/2/08
AMENDED AND RESTATED TRUST INDENTURE
between
COUNTY OF CONTRA COSTA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as "Trustee
relating to
$116,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2006A
and
$9,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Taxable Series 2006A-T
and
$1.0,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
Dated as of July 1, 2008
Amending and restating Trust Indenture
dated as of March 1, 2006 and amended as of
December 1, 2007 and as of May 1; 2008
OHS West:2 6044 7815.3
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section1.01. Definitions........................................................................................................4
Section 1.02. Rules of Construction .................................
ARTICLE 11
THE BONDS
Section 2.01. Authorized Amount of Bonds........................................................................ 26
Section 2.02. Issuance of Bonds.......................................................................................... 26
Section 2.03. Payment of Principal and Interest..................................................................26
Section 2.04. Limited Obligations....................................................................................... 27
Section 2.05. Weekly Variable Rate Mode and Daily Variable Rate Mode........................ 27
Section2.06. Reset Rate Mode............................................................................................ 28
Section 2.07. Fixed Rate Mode...................................................................:. .. 29
.....................
Section 2.08. Mode Adjustments.......................:................................................................. 29
Section 2.09. Credit Facility Requirement........................................................:
Section 2.l 0. Certain General Provisions Concerning Modes and Interest Rates............... 34
Section2.11. Temporary Bonds........................................................................................... 36
Section2.12. Execution....................................................................................................... 36
Section2.13. Authentication................................................................................................ 36
Section 2.14. Mutilated, Lost, Stolen or Destroyed Bonds.................................................. 36
Section 2.15. Securities Depository Provisions................................................................... 37
Section 2.16. Bond Registrar, Exchange and Transfer of Bonds; .Persons Treated as
theBondholders............................................................................................. 38
Section2.17. Cancellation................................................:.................................................. 39
Section 2.18. No Additional Bonds ..................................................................................... 39
ARTICLE III
REDEMPTION OF BONDS
Section3.01. Redemption...........................:........................................................................ 39
Section3.02. Optional Redemption..................................................................................... 39
Section 3.03. Mandatory Redemption ....................
Section 3.04. Notice of Redemption to Registered Owners ................................................42
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Section 3.05. Redemption Payments ...................................................................................44
Section 3.06. Selection of Bonds To Be Redeemed Upon Partial Redemption ..................45
Section 3.07. Purchase of Bonds in Whole in Lieu of Redemption ....................................45
ARTICLE IV
PURCHASE AND REMARKETING OF BONDS
Section 4.01. Purchase of Bonds on Any Business Day......................................................46
Section 4.02. Mandatory Tender and Purchase .............................:.....................................48
Section 4.03. Remarketing of Bonds................................................................................... 51
Section4.04. Pledged Bonds ................................................................................................ 53
Section 4.05. No Sales After Wrongful Dishonor; No Purchase After Acceleration.......... 54
ARTICLE V
FUNDS AND ACCOUNTS
Section 5.01. Creation of Funds and Accounts.................................................................... 54
Section 5.02. Initial Transfers Deposits............................................................................... 55
Section5.03. Loan Fund...................................................................................................... 55
Section 5.04. Revenue Fund—Interest Account................................................:................. 57
Section 5.05. Revenue Fund—Redemption Account.......................................................... 58
Section 5.06. Revenue Fund—Credit Facility Account........................................................ 60
Section 5.07. Revenue Fund—Fees Account .................................:.................................... 61
Section 5.08. Costs of Issuance Fund ..........................:....................................................... 61
Section5.09. Rebate Fund.................................................................................................... 62 .
Section 5.10. Bond Purchase Fund...................................................................................... 62
Section 5.11. Principal Reserve Fund.................................................................................. 63
Section 5.12. Moneys To Be Held in Trust ......................................................................... 64
Section5.13. Records .......................................................................................................... 64
Section 5.14. Reports by the Trustee................................................................................... 64
Section 5.15. Moneys Held for Particular Bonds ................................................................ 65
Section 5.16. Nonpresentment of Bonds.............................................................................. 65
Section 5.17. Disposition of Remaining Moneys ................................................................. 65
01-1S West260447815.3 -li-
TABLE OF CONTENTS
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Page
ARTICLE VI
INVESTMENTS
Section 6.01. Investment Limitations ..............................................:................................... 66
Section 6.02. Trustee's Authority and Responsibilities..............................................
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER
Section 7.01. Issuer's Representations and Warranties....................................................... 67
Section 7.02. Issuer's Covenants......................................................................................... 67
Section 7.03. Limitations on Liability ................................................................................. 67
Section 7.04. Further Assurances, Security Agreement...................................................... 68
Section 7.05. Enforcement.........................:.......................................................................... 68
Section 7.06. Tax Covenants69
...............................................................................................
ARTICLE VIII
CREDIT FACILITY; ALTERNATE CREDIT FACILITY; LETTER OF CREDIT
Section 8.01. Acceptance of the Credit Facility .................................................................. 69
Section 8.02. Draws and Requests for Advances Under Credit Facility............................. 70
Section 8.03. Return of Payments Under the Credit Facility............................................... 70
Section 8.04. Alternate Credit Facility .............................
Section 8.05. Extension of Credit Facility........................................................................... 71
Section 8.06. Limitations on Rights of Credit Provider....................................................... 71
Section 8.07. References to Credit Provider When No Credit Facility Is In Effect............ 72
Section 8.08. Certain Notices to the Credit Provider..................:........................................ 72
Section 8.09. Credit Provider To Control Insolvency Proceedings..................................... 72
Section 8.10. Terms and Conditions of the Initial Letter of Credit..................................... 72
Section 8.11. Wrongful Dishonor........................................................................................ 74
ARTICLE IX
DISCHARGE OF LIEN
Section 9.01. Discharge of Lien and Security Interest......................................................... 74
Section 9.02. Payment of Outstanding Amounts................................................................. 74
Section 9.03. Defeasance..........................................:.......................................................... 75
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Page
ARTICLE X
DEFAULT PROVISIONS AND REMEDIES
Section 10.01. Events of Default; Preliminary Notice........................................................... 77
Section 10.02. Acceleration, Redemption and Mandatory Tender........................................ 78
Section 10.03. Other Remedies..........................................:..............:.................................... 79
Section 10.04. Preservation of Security and Remedies if Payment Under Credit
Facility Is Not Made or Is Insufficient; Rights of Bondholders .................... 80
Section 10.05. Remedies Not Exclusive; Delay or Omission................................................ 80
Section10.06. Waiver............................................................................................................ 80
Section 10.07. Rights of the Credit Provider and the Bondholders To Direct
Proceedings; Rights and Limitations Applicable to Bondholders. Issuer
andTrustee..................................................................................................... 81
Section 10.08. Discontinuance of Proceedings...................................................................... 82
Section 10.09. Possession of Bonds....................................................................................... 82
Section 10.10. Application of Moneys .................................................................................. 82
ARTICLE XI
THE TRUSTEE AND TENDER AGENT
Section 11.01. Appointment.of Trustee; Duties.................
Section11.02. Qualification .................................................................................................. 87
Section 11.03. Fees; Expenses............................................................................................... 87
Section 11.04. Merger; Consolidation................................................................................... 87
Section 11.05. Resignation or Removal of Trustee ........................................
Section 11.06. Appointment of Successor Trustee................................................................ 88
Section 11.07. Transfer of Rights and Mortgaged Property to Successor Trustee................ 88
Section 11.08. Power To Appoint Co-Trustees and Separate Trustees................................. 89
Section 11.09. Filing of Financing Statements...................................................................... 89
Section11.10. Tender Agent ................................................................................................. 90
Section 11.11. Resignation or Removal of Tender Agent..................................................... 90
ARTICLE XII
SUPPLEMENTAL INDENTURES; AMENDMENTS
Section 12.01. Supplemental Indentures Not Requiring Bondholder Consent...................... 91
Section 12.02. Supplemental Indentures Requiring Bondholder Consent.............................. 92
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Section 12.03. No Bondholder Consent Required for Amendment to Loan Documents...... 93
Section 12.04. Amendments to the Credit Facility................................................................ 94
Section 12.05. Notice to and Consent of Bondholders.......................................................... 94
Section. 12.06. Required Approvals....................................................................................... 94
Section. 12.07. Opinions of Counsel ......................................................................................95
Section 12.08. Notation of Modification on Bonds; Preparation of New Bonds .................. 95
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Consents, etc.. of Bondholders ...................................................................... 95
Section 13.02. Limitation of Rights....................................................................................... 95
Section 13.03. Severability...................................................................................
Section13.04. Notices........................................................................................................... 96
Section 13.05. Action Required To Be Taken on a Non-Business Day................................ 97
Section 13.06. Binding Effect................................................................................................ 97
Section 13.07. Governing LaA................................................................................................ 97
Section 13.08. No Personal Liability; No Recourse.............................................................. 97
Section 13.09. Counterparts................................................................................................... 97
Section 13.10. Amendment of Original Indenture................................................................. 98
01-IS West260447815.3 _V_
AMENDED AND RESTATED TRUST INDENTURE
THIS AMENDED AND RESTATED TRUST INDENTURE, dated as of July 1, 2008
(this "Indenture".), is by the COUNTY OF CONTRA COSTA, a political subdivision of the
State of California (together with its successors and assigns, "Issuer"), and THE BANK OF
NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized
under the laws of the United States of America (together with its permitted successors and
assigns, "Trustee"), and amends and restates that certain Trust Indenture, dated as of March 1,
2006 and amended as of December 1 2007 and May 1, 2008 (the "Original Indenture"), between
the Issuer and the U.S. Bank National Association, as trustee.
The meaning of capitalized terms can be determined by reference to Article I of this
Indenture.
RECITALS :
A. The Issuer is authorized by the Act to issue revenue bonds for the purpose of
financing the development of multifamily rental housing for persons of low and moderate
income.
B. The Borrower requested that the Issuer provide financing for the Mortgaged
Property to be owned by the Borrower by issuing the Bonds and by using the Net Bond
Proceeds, on and after the Escrow Break Date, to fund the Loan to the Borrower and the
Borrower has agreed to secure the Loan by placing the Security Instrument on the Mortgaged
Property on the Escrow Break Date.
C. The Issuer determined that the issuance and sale of the 2006 Bonds and the
application of the Net Bond Proceeds to fund'a portion of the Loan will facilitate the financing of
the Mortgaged Property and will accomplish a valid public purpose of the Issuer.
D. The Issuer issued the 2006 Bonds on March 26, 2006 and, on March 26, 2006, the
Issuer, U.S. Bank National Association, as trustee, and the Borrower entered into the Original
Financing Agreement.
E. The Bank of New York Mellon Trust Company, N.A. has succeeded U.S. Bank
National Association as trustee under the Original Indenture.
F. The Issuer has determined that the issuance and sale of the 2008 Bonds and the
application of the Net Bond Proceeds thereof to fund the balance of the Loan will facilitate the
financing of the Mortgaged Property and will accomplish a valid public purpose of the Issuer.
G. The Issuer has, pursuant to the Act and the Bond Resolutions, authorized (i) the .
issuance of the Bonds in the Principal Amount for the purpose of providing financing for the
Mortga(led Property, (ii) the execution and delivery of this Indenture to establish the terms of the
Bonds and the security for the Bonds and (iii) the execution and delivery of the Financing
Agreement to establish certain terms and conditions of the Loan.
OHS Niest:260447815.3
H. The Escrow Break Requirements have been satisfied and the Letter of Credit has
been delivered to the Trustee.
1. By executing this Indenture, the Issuer is directing the deposit of the Net Bond
Proceeds with the Trustee, to be used by the Trustee to fund the Loan to the Borrower. The
proceeds of the Loan will be applied together with other funds, to the financing of the Mortgaged
Property.
J. The Issuer, the Trustee and the Borrower are concurrently entering into the
Financing Agreement.
K. The Loan will be (i) made by the Issuer pursuant to the Financing Agreement, (ii)
evidenced by the Note, (iii) secured by the Security Instrument and (iv) otherwise documented.
evidenced and secured by the other Loan Documents.
L. The Bonds will also be initially secured by an irrevocable direct pay letter of
credit issued by Bank of America, N.A.
M. The Issuer has determined that all things necessary to make the 2006 Bonds and
the 2008 Bonds, when executed by the Issuer and authenticated by the Trustee and issued in
accordance with this Indenture, the valid, binding and legal special and limited obligations of the
Issuer and to constitute this Indenture a valid assignment and pledge of the Trust Estate as
security for the payment of the principal of and interest and any premium on, the Bonds, have
been done, and the creation, execution and delivery of this Indenture and the creation, execution
and delivery of the Bonds, subject to the terms of this Indenture, have been duly authorized by
the Issuer.
N. The Trustee has trust powers and the power and authority to enter into this
Indenture, to accept trusts generally and to accept and execute the trust created by this Indenture;
the Trustee has accepted the trust so created, and to evidence such acceptance, has joined in the
execution of this Indenture.
GRANTING CLAUSES
To secure the payment of the principal o1' and interest and any premium on, and the
purchase price of the Bonds according to their tenor and effect, to secure, on a parity basis, all
obligations owed to the Credit Provider under the Credit Facility Documents and the Loan
Documents, and to secure the performance and observance by the Issuer of the covenants
expressed or implied in this Indenture and in the Bonds, the Issuer absolutely and irrevocably
pledges and assigns the property described in the following paragraphs (1) through (5) to the
Trustee for the benefit of the Bondholders and to the Credit Provider, as their interests may
appear, subject to the Assignment and the provisions of this Indenture permitting the application
of such property for the purposes set forth in this Indenture:
I. All right, title and interest of the Issuer in and to the Loan, including the
Note, the Security Instrument and the other Loan Documents and in and to the Financing
Agreement, reserving, however, the Reserved Rights;
01 is West:26044751i.3 2
2. All rights to receive payments on the Note and under the other Loan
Documents, including all proceeds of insurance or condemnation awards;
3. All right, title and interest of the Issuer in and to the Revenues, the Net
Bond Proceeds and the accrued interest, if any, derived from the sale of the Bonds, and
all Funds and Accounts under this Indenture (including, without limitation, moneys,
documents, securities, Investments,. Investment Income, instruments and general
intangibles on deposit or otherwise held by the Trustee) but excluding all moneys in the
Fees Account, the Rebate Fund and the Costs of Issuance Fund (including within such
exclusion Investment Income retained in the Costs of Issuance Fund and the Rebate
Fund);
4. All funds, moneys and securities and any and all other rights and interests
in property, whether tangible or intangible, from time to time conveyed, mortga0ed,
pledged, assigned or transferred by delivery or by writing of any kind to the Trustee as
additional security under this Indenture for the benefit of the Bondholders and the Credit
Provider; and
5. All of the proceeds of the foregoing, including, without limitation,
Investments and Investment Income (except as excluded above);
TO HAVE AND TO HOLD unto the Trustee and the Credit Provider, as their interests
may appear;
IN TRUST, NEVERTHELESS, upon the terms set forth in this Indenture for the equal
and proportionate benefit, security and protection of (i) 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 other Bonds. and (ii) the Credit Provider to secure the payment of all amounts owed to the
Credit Provider under the Credit Facility Documents;
PROVIDED, FURTHER, HOWEVER, that if the Issuer or its successors or assigns pay
or cause to be paid to the Registered Owners of the Bonds the principal of and interest and any
premium to become due on the Bonds at the times and in the manner provided in this Indenture,
and if no amount is owing by the Borrower to the Issuer or the Trustee under the Financing
Aureement or to the Credit Provider under the Credit Facility Documents, and if the Issuer
keeps, performs and observes, or causes to be kept, performed and observed, all of its covenants,
warranties and agreements contained in this Indenture, this Indenture and the estate and rights
granted by this Indenture shall terminate and be discharged in accordance with its terms, upon
which termination the Trustee shall execute and deliver to the Issuer such instruments in writing
as shall be necessary to satisfy the lien of this Indenture, and, in accordance with Article IX, shall
reconvey to the Issuer any property at the time subject to the lien of this Indenture which may
then be in the Trustee's possession, except amounts held by the Trustee for the payment of
principal of and interest and any premium on the Bonds, or moneys held in the Rebate Fund for
payment to the United States Government or moneys held in the Fees Account for the payment
of accrued and unpaid Third Party Fees and Fees and Expenses; otherwise this Indenture shall be
and remain in. full force and effect, upon the trusts and subject to the covenants and conditions
set forth in this Indenture; and
OHS West260447$15.3 3
FINALLY, all Bonds issued and secured under this Indenture are to be issued.
authenticated and delivered, and all property, rights and interests, including, but not limited to,
the amounts payable under the Financing Agreement and any other amounts assigned and
pledged by this Indenture are to be dealt with and disposed of under, upon and subject to, the
terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes expressed in this
Indenture; and the Issuer has agreed and covenanted, and agrees and covenants with the Trustee
and with the Registered Owners of the Bonds as set forth in this Indenture.
ARTICLE 1.
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. All capitalized terms used in this Indenture have the
meanings given to those terms in this Section 1:01 or elsewhere in this Indenture unless the
context clearly indicates a different meaning.
"Account" means an account established within a Fund.
"Act" means Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code,
as amended.
"Act of'Banln•uplc3,'" means any proceeding instituted under the Bankruptcy Code or other
applicable insolvency law by or against the Issuer.
"Adju.stnient Date" means any date on which the interest rate on the Bonds of a Series is
adjusted to a different Mode or to a different Reset Rate. An Adjustment Date may only occur
on an Interest Payment Date or, if such date is not a Business Day, the following Business Day.
Any Reset Date and the Fixed Rate Adjustment Date are Adjustment Dates.
"Affiliate" as applied to any person, means any other person directly or indirectly
controlling, controlled by, or under common control with. that person. For the purposes of this
definition, "control" (including with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities, partnership interests or by contract
or otherwise.
"Alternate Credit Facility" means a letter of credit (.whether or not so named), surety
bond, insurance policy, standby bond purchase agreement, credit enhancement instrument,
collateral purchase agreement, mortgage backed security or similar agreement, instrument or
facility provided in accordance with the Financing Agreement and satisfying the requirements of
Section 8.04. The Letter of Credit (including any extension or renewal of the Letter of Credit) is
not an "Alternate Credit Facility." For purposes of this definition, "letter of credit'' means an
irrevocable letter of credit (i) having the characteristics of a "credit" or "letter of credit" set forth
in Section 5-103 of the UCC except that a letter of credit (A) may not be revocable and (B) may
be issued only by (1) a national bank, (2) any banking institution organized under the laws of any
state, territory or the District of Columbia, the business of which is substantially confined to
banking and is supervised by the state or territorial banking commission or similar officials or
01 IS West:260447915.3 4
(3) a branch or agency of a foreign bank, provided that the nature and. extent of federal and/or
state regulation and the supervision of the particular branch or agency is substantially equivalent
to that applicable to federal or state chartered domestic banks doing business in the same
jurisdiction; and (ii) which meets the requirements of a Credit Facility under this Indenture.
"Alternate Credit Provider" means the provider of an Alternate Credit Facility.
"Assigned Rights" has the meaning given to that term in the Assignment.
"Assignment" means the Intercreditor Agreement, dated as of July 1, 2008, among the
Issuer, the Trustee and the Credit Provider (and its successors and assigns), and acknowledged
and agreed to by the Borrower. as it may be amended, supplemented or restated from time to
time. and any similar agreement executed and delivered in connection with the delivery of an
Alternate Credit Facility.
"as their interests n7nv, appear" or "a's its interest naay appear" means, with reference to
any of the Assigned Rights; the respective interests, exclusive of the Reserved Rights of the
Issuer.. of the Credit Provider and of the Trustee to such documents and rights as set forth in the
Assignment.
"Authorized Attesting Of means any Authorized Representative or other officer of
the Issuer who, in accordance with the laws of the State. the bylaws or other governing
documents of the Issuer, or practice or custom. regularly attests or certifies official acts and
records of the Issuer, and includes any assistant or deputy officer to the principal officer or
officers exercising such responsibilities.
t4u horized Borrower Representative" means any person who. at any time and from time
to time., is designated as the Borrower's authorized representative by written certificate furnished
to the (i) Issuer, (ii) the Trustee and (iii) the Credit Provider or the Alternate Credit Provider. as
applicable. Such certificate must contain the specimen signature of the person authorized to act
on behalf of the Borrower and be signed on behalf of the Borrower by or on behalf of any
authorized general partner of the Borrower if the Borrower is a general or limited partnership, by
any authorized managing member of the Borrower if the Borrower is a limited liability company,
or by any authorized officer of the Borrower if the Borrower is a corporation, which certificate
may designate an alternate or alternates. The Trustee may conclusively presume that a person
designated in a written certificate filed with it as an Authorized Borrower Representative is an
Authorized Borrower Representative until such time as the Borrower files with the Trustee (with
a copy, to the Issuer and the Credit Provider or the Alternate Credit Provider, as applicable), a
written certificate revoking such authority.
"Authori.:ed Credit Provider Representative" means any person from time to time
designated to act on behalf of the Credit Provider by written certificate furnished to the Issuer
and the Trustee. Such certificate must contain the specimen signature of the person authorized to
act on behalf of the Credit Provider by resolution or other appropriate action of the Board of
Directors of the Credit Provider or by its bylaws. Such resolution or other appropriate action
may designate an alternate or alternates who shall have the same authority, duties and powers as
the Authorized Credit Provider Representative. The Trustee may conclusively presume that a
OHS West:26044781 i.3 5
person designated in a written certificate filed with the Trustee as an Authorized Credit Provider
Representative is an Authorized Credit Provider Representative until such time as such provider
files with it and with the Issuer a written certificate identifying a different person or persons to
act in such capacity.
"Authorized Denomination" means, (i) during any Daily Variable Rate Period or Weekly
Variable Rate Period, $100,000 or any integral multiple of $5,000 in excess of $100,000 and
(ii) during any Reset Period or the Fixed Rate Period. $5,000 or any integral multiple of$5,000.
"Authorized Representative" means the Chair or Vice Chair of the Board of Supervisors,
the County Administrator, the Interim Director of the Conservation and Development
Department, or the Deputy Director-Redevelopment, 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, sign a specified document or otherwise take action with respect to the Bonds.
"Available Moneys" means, as of any date of determination. any of(i) the proceeds of the
Bonds; (ii) remarketing proceeds received from the Remarketing Agent or any purchaser of
Bonds (other than remarketing or purchase proceeds provided by the Borrower, the Issuer, any
Affiliate of either the Borrower or the Issuer or any guarantor of the Loan); (iii) moneys received
by the Trustee pursuant to a draw on the Credit Facility; (iv) the proceeds of refunding bonds;
(v) any other amounts for which, in each case, the Trustee has received an Opinion of Counsel
acceptable to each Rating Agency 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 or the Borrower become a debtor in proceedings commenced under the
Bankruptcy Code; (vi) the price paid by the Credit Provider for the purchase of Bonds in lieu of
redemption pursuant to Section 3.7; and (vii) Investment Income derived from the investment of
moneys described in clause (i), (ii), (iii), (iv), (v) or(vi).
'`Bankruptcl Code"means Title 11 of the United States Code entitled .'Bankruptcy," as in
effect now and in the future, or any successor statute.
"Beneficial a4yn>>" means, for any Bond which is held by a nominee, the beneficial
owner of such Bond.
"Bond" or "Bonds"means, collectively, the 2006 Bonds and the 2008 Bonds.
"2006 Bonds" means, collectively, the 2006A Bonds and the 2006A-T Bonds.
"2006A Bonds" means the Issuer's Multifamily Housing Revenue Bonds (Avalon
Walnut Creek at Contra Costa Centre Project) Series 2006A.
"2006A-T Bonds" means the Issuer's Multifamily Housing Revenue Bonds (Avalon
Walnut Creek at Contra Costa Centre Project)Taxable Series 2006A-T.
"2008 Bonds" means the Issuer's Multifamily Housing Revenue Bonds (Avalon Walnut
Creek at Contra Costa Centre Project) Series 2008A.
OI IS Wes1:260447815.3 6
"Bond Counsel" means (i) on the Closing Date, the law firm delivering the approving
opinion with respect to the 2006 Bonds, (ii) on the Escrow Break Date, the law firm delivering
the approving opinion with respect to the 2008 Bonds or (iii) after the Escrow Break Date, any
law firm selected by the Issuer and acceptable to the Credit Provider, of nationally recognized
standing in matterspertaining 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 Assignment, the Bonds, the Bond Purchase Agreements,
the Credit Facility, the Disclosure Agreement, if any, the Financing Agreement, this Indenture,
the Regulatory Agreement (and any other agreement relating to rental restrictions on the
Mortgaged Property), the Remarketing Agreement, the Tax Certificate, any Tender Agent
Agreement and all other documents, instruments and agreements executed and delivered in
connection with the issuance, sale, delivery and/or remarketing of the Bonds, as each such
agreement or instrument may be amended, supplemented or restated from time to time.
"Bond Purchase Agreements" means, collectively, the Bond Purchase Agreement, dated
March 16, 2006, among the 2006 Underwriter, the Issuer and the Borrower, and the Bond
Purchase Agreement, dated July 2008, among the 2008 Underwriter, the Issuer and the
Borrower.
"Bond Purchase Fund" means,the Bond Purchase Fund created by Section 5.01.
"Bond Register" means the Bond Register maintained by the Trustee pursuant to
Section 2.16.
"Bond Resolutions" means, collectively, the resolution adopted by the Board of
Supervisors of the Issuer on March 14, 2006 and the resolution adopted by the Board of
Supervisors of the Issuer on July 8, 2008, authorizing and approving the issuance and sale of the
Bonds and the execution and delivery of this Indenture, the Assignment, the Bond Purchase
Agreements, the Financing Agreement, the Loan Documents, the Regulatory Agreement, the Tax
Certificates and certain other documents, making certain appointments and determining certain
details with respect to the Bonds.
"Bondholder," "holder," "Holder," "Owner," "'owner," "Registered Owner" or
"registered owner" means, with respect to any Bond, the owner of the Bond as shown on the
Bond Register.
"Bondholder Tender Notice" means a written notice meeting the requirements of
Section 4.01(a).
"Book-Entry Bonds" means that part of the Bonds for which a Securities Depository or its
nominee is the Bondholder.
"Book-Entry System" means an electronic system in which the clearance and settlement
of securities transactions is made through electronic book-entry changes.
BOI'T"OlNel"""" means PHVP I, LP, a Delaware limited partnership, or any of its permitted
successors or assigns as owner of the Project.
OHS West:260447815.3 7
"Borroiver Documents" means the Bond Documents to which the Borrower is a party. the
Credit Facility Documents to which the Borrower is a party and the Loan Documents and all
other documents to which the Borrower is a party and which are being executed and delivered by
the Borrower in connection with the transactions provided for in the Transaction Documents and
the Loan Documents.
"Business Day" means any day other than (i) a Saturday or a Sunday, (ii) any day on
which banking institutions located in the City of New York, New York are required or
authorized by law or executive order to close, (iii) any day on which banking institutions located.
in the city or cities in which the Designated Office of the Trustee or the Remarketing Agent is
located are required or authorized by law or executive order to close, (iv) prior to the Fixed Rate
Adjustment Date, a day on which the New York Stock Exchange is closed, or (v) so long as a
Credit Facility is in effect, any day on which the office of the Credit Provider responsible for
making payments under the Letter of Credit or the office of the Alternate Credit Facility Provider
responsible for making payments under any Alternate Credit Facility is closed.
"Capitalized Moneys Accounl" means the Capitalized Moneys Account of the Loan Fund.
"Cerlrfrcate of Borrower" means the Certificate of Borrower, dated the Closing Date, as
it may be amended, supplemented or restated from time to time.
"Closing Dale' means March 23, 2006, the date on which the 2006 Bonds were issued
and delivered to or upon the order of the 2006 Underwriter.
"Code" means the Internal Revenue Code of 1986; each reference to the Code is deemed
to include (i) any successor internal revenue law and (ii) the applicable regulations whether final,
temporary or proposed under the Code or such successor law. Any reference to a particular
provision of the Code is deemed to include any successor provision of any successor internal
revenue law. and applicable regulations whether final, temporary or proposed under such
provision or successor provision.
"Conditional Redeniplion" means a redemption where the Trustee has stated in the notice
of redemption that the redemption is conditioned upon deposit of funds as further described in
Section 3.04.
"Costs of'Issuance" means:
(a) the fees, costs.and expenses of(i)the Issuer (in the amount of$33,1-5),
(ii) the Issuer's financial advisor (in the amount of $45,000). (iii) Issuer's counsel,
(iv) the 2008 Underwriter (including discounts to the 2008 Underwriter or other
purchasers of the Bonds, other than original issue discount, incurred in the issuance and
sale of the Bonds) and the 2008 Underwriter's counsel, (v) the Remarketing Agent,
(vi) Bond Counsel, (vii) the Trustee and the Trustee's counsel, (viii) the Borrower's
counsel and the Borrower's financial advisor, if any, (ix) the Rating Agency and (x) the
Credit Provider and the Credit Provider's counsel;
(b) costs of printing the offering documents relating to the remarketing or sale
of the Bonds; and
OHS W'est:26044781 5.3 8
(c) all other fees, costs and expenses directly associated with the
authorization, issuance, sale and delivery of the 2008 Bonds, or the remarketing of the
2006 Bonds on the Escrow Break Date, including printing costs, costs of reproducing
documents, filing and recording fees.
'.Costs of Issuance Deposit" means the deposit to be made by or on behalf of the
Borrower with the Trustee on the Escrow Break Date to pay Costs of Issuance, plus any
additional amount deposited by the Borrower with the Trustee to pay Costs of Issuance or costs
of remarketing the Bonds.
"Costs oflssuance Fund"means the Costs of Issuance Fund created by Section 5.01.
"Costs of the Project" means the costs chargeable to the Mortgaged Property in
accordance with generally accepted accounting principles, including, but not limited to, the costs
of acquisition, construction, rehabilitation, reconstruction, restoration, repair, alteration,
improvement and extension (in any of such events, "construction") of any building, structure,
facility or other improvement; stored materials for work in progress; the cost of machinery and
equipment; the cost of the "Land" (as that term is defined in the Security Instrument),
rights-in-lands, easements, privileges, agreements, franchises, utility extensions, disposal
facilities, access roads• and site development necessary or useful and convenient for the
Mortgaged Property; financing costs, including, but not limited to, the Costs of Issuance,
engineering and inspection costs; fees paid to the developer of the Mortgaged Property;
organization, administrative, insurance, legal, operating, letter of credit and other expenses of the
Borrower actually incurred prior to and during construction; and all such other expenses as may
be necessary or incidental to the financing, acquisition, construction or completion of the
Mortgaged Property or any part of it, including, but not limited to, the amount of interest expense
incurred with respect to the Loan prior to the date the Mortgaged Property is placed in"service or
available to be placed in service; insurance premiums payable by the Borrower and taxes and
other goverrunental charges levied on the Mortgaged Property.
"Credit Facility" means the Letter of Credit and at such time as an Alternate Credit
Facility is in effect, the Alternate Credit Facility.
"Credit Facility Account" means the Credit Facility Account of the Revenue Fund.
"Credit Facility Documents" means, individually and collectively, the Reimbursement
Agreement and the Letter of Credit and all other documents evidencing, securing or otherwise
relating to the Reimbursement Agreement and the Letter of Credit, including, without limitation,
the other Reimbursement Documents, and all amendments, supplements and restatements of
such documents.
"Credit Provider" means, initially, Bank of America, N.A., the provider of the Letter of
Credit, or so long as any Alternate Credit Facility is in effect, the Alternate Credit Provider then
obligated under the Alternate Credit Facility.
"Credit Provider Bonds" means any Bonds purchased and held in accordance with
Section 3.07.
OHS West:26>0447815.3 9
"Credit Provider Rate" means the interest rate to be paid on Credit Provider Bonds and
Pledged Bonds established as provided in the Reimbursement Agreement.
"Daily Variable Rate" means the variable rate of interest per annum for the Bonds of a
Series determined from time to time during the Daily Variable Rate Period in accordance with
Section 2.05.
"Daily Variable Rate Period" means the period commencing on the Closing Date or an
Adjustment Date on which the interest rate on the Bonds of a Series is adjusted from the Weekly
Variable Rate or a Reset Rate to the Daily Variable Rate and ending on the day preceding the
following Adjustment Date or the Maturity Date.
"Designated 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 13.04 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
Section 13.04.
"Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of
March 1, 2006, between the Borrower and the Trustee.
"Disposition and Development Agreement" means the Disposition and Development
Agreement, dated as of September 7, 2005, between The Pleasant Hill BART Station Leasing
Authority and Pleasant Hill Transit Village Associates, LLC, as amended.
"Dram,"means a payment under the Letter of Credit or any Alternate Credit Facility.
"DTCC" means The Depository Trust Company and any successor to it or any nominee of
it.
"DTC.'Parlicipant"has the meaning given to that term in Section 2.15(b).
"Electronic Means" means a facsimile transmission or any other electronic means of
communication approved in writing by the Credit Provider.
"Escrow Break Date" means July_, 2008.
"Escrow Break Requirements" has the meaning ascribed to such term in Section 2.19(b)
of the Original Indenture.
"Event of Default" means, as used in any Transaction Document, any event described in
that document as an Event of Default. Any "Event of Default" as described in any Transaction
Document is not an "Event of Default" in any other Transaction Document unless that other
Transaction Document specifically so provides.
"Extension Date" means, with respect to the Letter of Credit or any Alternate Credit
Facility, the date that is five Business Days prior to the date of expiration of the Letter of Credit
or the Alternate Credit Facility, as applicable.
OFIS West.260447815.3 10
"Extraordinary Items" means, with respect to the Trustee, reasonable compensation for
extraordinary services and/or reimbursement for reasonable extraordinary costs and expenses
including reasonable fees and expenses of its counsel.
"Facility Fee" means the fees owed to the Credit Provider by the Borrower pursuant to
the Reimbursement Agreement.
"Fees Account"means the Fees Account of the Revenue Fund.
`'Fees and Expenses' means the fees, advances; out-of-pocket expenses, costs and other
charges payable by the Borrower from time to time pursuant to Section 2.05(cj of the Financing
Agreement.
"Financing Agreement" means the Amended and Restated Financing Agreement, dated
as of the date of this Indenture, among the Issuer, the Trustee and the Borrower, as amended,
supplemented or restated from time to time.
"Fixed
Rate" means the rate of interest'borne by the Bonds of a Series as determined in
accordance with Section 2.07.
"Fixed Rate Adju.stmenl Dale" means the date on which the interest rate on the Bonds of
a Series adjusts from the Daily Variable Rate, Weekly Variable Rate or a Reset Rate to the Fixed
Rate pursuant to Section 2.08.
"Fixed Rate Period' means the period be<ginnina on the Fixed Rate Adjustment Date and
endin;on the Maturity Date.
"Fund"means any fund created by Section 5.01.
"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.
"Ground.Sub-lease" means the ground sub-leases to be entered into by the Borrower, as
sub-lessee, and Pleasant Hill BART Station Joint Powers Leasing Authority, a joint powers
agency, established and existing pursuant to the joint powers agency law of the State of
California, as sub-lessor, with respect to the real property underlying the Mortgaged Property, as
amended.
"Highest Rating Category" has the meaning, with'respect to an Investment, given in this
definition. If the Bonds are rated by a Rating Agency, the term "Highest Rating Category"
means, with respect to an Investment, that the Investment is rated by each Rating Agency in the
highest rating given by that Rating Agency for that general category of security. If at any time
the Bonds are not rated ;(and, consequently, there is no Rating Agency), then the term "Highest
Rating Category' means, with respect to anInvestment, that the Investment is rated by S&P or
Moody's in the highest rating given by that rating agency for that general category of security.
By way of example.. the Highest Rating Category for tax-exempt municipal debt established by
S&P is '`A-1+" for debt with a term of one year or less and "AAA" for a term greater than one
01 IS West260447815.3 I I
year, with corresponding ratings by Moody's of "MIG-1" (for fixed rate) or "VMIG-l" (for
variable rate) for one year or less and "Aaa" for greater than one year. If at any time (i)the
Bonds are not rated, (ii) both S&P and Moody's rate an Investment and (iii) one of those ratings
is below the Highest Rating Category, then such Investment will, nevertheless, be deemed to be
rated in the Highest Rating Category if the lower rating is no more than one rating category
below the highest rating category of that rating agency. For example, an Investment rated
":AAA" by S&P and "Aa3" by Moody's is rated in the Highest Rating Category. If, however, the
lower rating is more than one full rating category below the Highest Rating Category of that
rating agency, then the Investment will be deemed to be rated below the Highest Rating
Category. For example, an Investment rated "AAA" by S&P and "'Al" by Moody's is not rated
in the Highest Rating Category.
"Indenture" means this Amended and Restated Trust Indenture, as amended,
supplemented or restated from time to time.
"Interest Account" means the Interest Account of the Revenue Fund.
"Interest Payment Date" means (i) during any Daily Variable Rate Period or Weekly
Variable Rate Period, the fifteenth day of each calendar month commencing August 15, 2008;
(ii) during any Reset Period and during the Fixed Rate Period, each April 15 and October 15
following the Adjustment Date, provided that the first Interest Payment Date during any such
period may only occur on a date which is at least 30 days after the Adjustment Date; (iii) each
Adjustment Date; (iv) for Bonds subject to redemption in whole or in part on any date, the date
of such redemption; (v) the Maturity Date and (vi) for all Bonds any date determined pursuant to
Section 10.10(c).
"Interest Requirement".means (i) during any Daily Variable Rate Period or Weekly
Variable Rate Period, [34] days interest on the Bonds at the Maximum Rate on the basis of a
365- or 366-day year, as applicable, for the actual number of days elapsed, and (ii) 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, on the basis of a year of 360 days of twelve 30-day months; or,
in the case of either (i) or (ii), such other number of days as may be required by the Rating
Agency.
"Investment" means any Permitted Investment and any other investment held under this
Indenture that does not constitute a Permitted Investment.
"Investment Agreement" means a Permitted Investment described in paragraph (g) of the
definition of the term "Permitted Investments."
"Investment Income" means the earnings, profits and accreted value derived from the
investment of moneys pursuant to Article VI.
"Issuer" means the County of Contra Costa, a political subdivision of the State of
California, and its successors and assigns.
OHS West:260447815.3 12
"Issuer Documents" means the Assignment, the Bonds, the Financing Agreement, this
Indenture, the Loan Documents to which the Issuer is a party, the Regulatory Agreement and the
Tax Certificate.
"Issuer's Fee" means the Issuer's annual fee payable by the Borrower under the
Regulatory Agreement.
"Letter of Credit" means the irrevocable direct pay letter of credit issued and delivered by
the Credit Provider on the Escrow Break Date, for the benefit of the Trustee, to provide credit
enhancement and liquidity support for the Bonds, any amendment, modification, or restatement
of such letter of credit, any replacement letter of credit,.any confirming letter or credit and any
renewal(s) or extension(s) of any such letter of credit. If an Alternate Credit Facility is then in
effect, each reference to the Letter of Credit shall mean such Alternate Credit Facility.
"Letter of Credit Expiration Date" means the expiration date specified in the Letter of
Credit, subject to extension in accordance with the Reimbursement Agreement.
"Letter of Representations" means when all the Bonds are Book-Entry Bonds, the Letter
of Representations executed by the Issuer and the Trustee and delivered to the Securities
Depository, as amended, supplemented or restated from time to time, or any agreement entered
into in substitution therefor.
"LIBOR" means, with respect to any Week, the per annum rate for deposits in U.S.
dollars for one month which appears on the Bloomberg British Bankers' Association Back up
rate to Taxable Rate Official BBA LIBOR Fixings Page (the "Official BBA LIBOR Fixings
Page" as defined below) as of 11:00 a.m., London, England time, on the second Business Day
preceding the beginning of such Week (in each case, a "LIBOR Determination Date"), rounded,
if necessary, upward to the nearest one hundredth of one percent (0.01%). If such rate does not
appear on the Official BBA LIBOR Fixings Page, LIBOR will be determined on such date as
described in the paragraph below. "Official BBA LIBOR Fixings Page" means the display
designated as page 1 of the "Official BBA LIBOR Fixings" on the Bloomberg Financial Markets
Commodities News Service (or such other page as may replace the Official BBA LIBOR Fixings
Page on that service, or a comparable service, for the purpose of displaying London interbank
offered rates of major banks).
If on such LIBOR Determination Date fewer than two offered rates appear on the Official
BBA LIBOR Fixings Page, the Trustee will request the principal London office of each of two
major banks (other than the Trustee or a Trustee owned or Trustee affiliated bank) that are
engaged in transactions in the London interbank market, as selected by the Trustee with the
approval of the Credit Provider, to provide the Trustee with its offered quotation for U.S. dollar
deposits for one month to prime banks in the London interbank market as of 11:00 a.m., London,
England time, on such date. If at least two such major banks provide the Trustee with such
offered quotations, LIBOR on such date will be the arithmetic mean rounded, if necessary,
upward to the nearest one hundredth of one percent (0.01%) of such quotations. If on such date
fewer than two of the major banks provide the Trustee with such an offered quotation, LIBOR on
such date will be the arithmetic mean rounded, if necessary, upward to the nearest one hundredth
of one percent (0.01%) of the offered rates that two leading banks in the City of New York(other
0145 West 260447815.3 13
than the Trustee or a Trustee owned or Trustee affiliated bank), as selected by the Credit
Provider, are quoting as of 11:00 a.m., New York City time, on such date to leading European
banks for U.S. dollar deposits for one month; provided, however, that if two such New York
banks are not quoting as described above, LIBOR will be the LIBOR applicable to the
immediately preceding Week.
"Loan" means the loan made by the Issuer to the Borrower on the Escrow Break Date
pursuant to the Financing Agreement for the purpose of providing funds to the Borrower to
finance the acquisition and construction of the Mortgaged Property.
"Loan Documents" means, collectively, the Note, the Security Instrument and all other
documents, agreements and instruments evidencing,.securing or otherwise relating to the Loan,
as each such document, agreement or instrument may be amended, supplemented or restated
from time to time. Neither the Financing Agreement nor the Regulatory Agreement is a Loan
Document and neither document is secured by the Security Instrument.
"Loan Fund'' means the Loan Fund created by Section 5.01.
"Mandatory Tender Date" means any date on which Bonds are required to be tendered
pursuant to Section 4.02, including any Adjustment Date, proposed Adjustment Date,
Substitution Date or Extension Date on or prior to which the Trustee has not been furnished with
an extension of the Letter of Credit or Alternate Credit Facility then in effect or date specified by
the Trustee as provided in Section.4.02(b).
"Maturity Date" means, with respect to each Series of Bonds, March 15, 2046, or in the
event the Bonds of a Series are adjusted to the Fixed Rate Mode and a Sinking Fund Schedule is
established, the maturity date of all serial Bonds of such Series, if any.
"Maximum Rate" means 12% pet annum; provided, however, that the Maximum Rate
may be increased if the Trustee receives (i) the written consent of the Credit Provider and the
Borrower to a specified higher Maximum Rate not to exceed the lesser of the maximum rate
permitted by law to be paid on the Bonds and the maximum rate chargeable on the Loan, (ii) 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 and (iii) a new or amended
Credit Facility in an amount equal to the sum of(A) the then outstanding principal amount of the
Bonds and (B) the new Interest Requirement calculated using the new Maximum Rate.
"Mode" means any of the Daily Variable Rate, Weekly Variable Rate, the Reset Rate and
the Fixed Rate.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation, and its
successors and assigns, or if it is dissolved or no longer assigns credit ratings, then any other
nationally recognized statistical rating agency, designated by the Credit Provider, as assigns
credit ratings.
"Mortgaged Property" has the meaning given to that term in the Security Instrument.
OHS West260447815.3 14
"Net Bond Proceeds" means the total proceeds derived from the issuance, sale and
delivery of the Bonds, representing the total purchase price of the Bonds. including any premium
paid as part of the purchase price of the Bonds, but excluding the accrued interest, if any, on the
Bonds paid by the initial purchaser(s) of the Bonds.
"Net Proceeds" means the proceeds from insurance or from actual or threatened
condemnation or eminent domain action with respect.to the Mortgaged Property, less any costs
reasonably expended by the Borrower to receive such proceeds.
"Note" means the Multifamily Note (together with all addenda thereto) executed by the
Borrower on or prior to the Escrow Break Date in favor of the Issuer, as it may be amended,
supplemented or restated from time to time or any mortgage note executed in substitution
therefor in accordance with the Bond Documents, as such substitute note may be amended,
supplemented or restated from time to time.
"Opinion of Counsel" means a written opinion of legal counsel, acceptable to the
recipient(s) of such opinion. If the opinion is with respect to an interpretation of federal tax laws
or regulations or bankruptcy matters, such legal counsel also. must be an attorney or firm of
attorneys experienced in such matters.
"Original Financing Agreement" means the Financing Agreement, dated as of March 1.
2006, among the Issuer, U.S. Bank National Association, as trustee, and the Borrower.
"Original Indenture" means the Trust Indenture, dated as of March 1, 2006 and amended
as of December 1, 2007 and as of May 1, 2008, between the Issuer and U.S. Bank National
Association, as trustee.
"Outstandin " 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 under this Indenture except:
(a) Bonds cancelled or delivered for cancellation at or prior to such date;
(b) Bonds deemed to be paid in accordance with Article IX; and
(c) Bonds in lieu of which others have.been authenticated under Article II.
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 or
for the account of the Borrower and Pledged Bonds will be disregarded and deemed not to be
Outstanding under this Indenture for the purpose of any such detennination unless all Bonds are
Pledged Bonds, Bonds owned or held by or for the account of the Borrower or a combination of
Pledged Bonds and Bonds owned by or held for the;account of the Borrower. In determining
whether the Trustee will be protected in relying upon any such request, demand. authorization,
direction, notice, consent or waiver, only Bonds which are registered in the name of or known by
the Trustee to be held. for the account of the Borrower, including Pledged Bonds, will be
disregarded.
0115 West:260447815.3 15
"Peimitted 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 are
rated in the Highest Rating Category-,
(c) Obligations, in each case rated in the Highest Rating Category, of(i) any
state or territory of the United States of America, (ii) any agency, instrumentality.
authority or political subdivision of a state or territory or (iii) any public benefit or
municipal corporation the principal of and interest on which are guaranteed by such state
or political subdivision;
(d) Any written repurchase agreement entered into with a Qualified Financial
Institution whose unsecured short-term obligations are rated in the Highest Rating
Category;
(e) Commercial paper rated in the Highest Rating Category;
(f) Interest-bearing negotiable certificates of deposit, interest-bearing time
deposits, interest-bearing savings accounts and bankers' acceptances, issued by a
Qualified Financial Institution if either (i) the Qualified Financial Institution's unsecured
short-term obligations are rated in the Highest Rating Category or (ii) such deposits,
accounts or acceptances are fully insured by the Federal Deposit Insurance Corporation;
(g) an agreement held by the Trustee for the investment of moneys at a
guaranteed rate with (i) the Credit Provider or (ii) a Qualified Financial Institution whose
unsecured long-term obligations are rated in the Highest Rating Category or the Second
Highest Rating Category, or whose obligations are unconditionally guaranteed or insured
by a Qualified Financial Institution whose unsecured long-term obligations are rated in
the Highest Rating Category or Second Highest Rating Category, provided that such
agreement is in a form acceptable to the Credit Provider; and provided further that such
agreement includes the following restrictions:
(i) the invested funds will 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 applicable or
(B) any Rating Agency indicates that it will lower or actually lowers, suspends or
withdraws the rating on the Bonds on account of the rating of the Qualified
Financial Institution providing, guaranteeing or insuring, as applicable, the
agreement;
(ii) the agreement, and if applicable the guarantee or insurance, is an
unconditional and general obligation of the provider and, if applicable, the
OHS West:2604478153 16
guarantor or insurer of the agreement, and ranks pari passu with all other
unsecured unsubordinated obligations of the provider, and if applicable, the
guarantor or insurer of the agreement;
(iii) the Trustee receives an Opinion of Counsel, which may be subject
to customary qualifications, that such agreement is legal, valid, binding and
enforceable upon the provider in accordance with its terms and, if applicable, an
Opinion of Counsel that any guaranty or insurance policy provided by a guarantor
or insurer is legal, valid, binding and enforceable upon the guarantor or insurer in
accordance with its terms; and
(iv) the agreement provides that if during its term the rating of the
Qualified Financial Institution providing, guaranteeing or insuring, as applicable,
the agreement, is withdrawn, suspended by any Rating Agency or falls below the
Second Highest Rating Category, the provider must, within 10 days, either:
(A) collateralize the agreement (if the agreement is not already collateralized)
with Permitted Investments described in paragraph (a) or (b) by depositing
collateral with the Trustee or a third party custodian, such collateralization to be
effected in a manner and in an amount sufficient to maintain the then current
rating of the Bonds, or, if the agreement is already collateralized, increase the
collateral with Permitted Investments described in paragraph (a) or (b) by
depositing collateral with the Trustee or a third party custodian, so as to maintain
the then current rating of the Bonds, (B) at the request of the Trustee or the Credit
Provider, repay the principal of and accrued but unpaid interest on the investment,
in either case with no penalty or premium unless required by law or (C)transfer
the agreement, guarantee or insurance, as applicable, to a replacement provider,
guarantor or insurer, as applicable, then meeting the requirements of a Qualified
Financial Institution and whose unsecured long-term obligations are then rated in
the Highest Rating Category or the Second Highest Rating Category. The
agreement may provide that the down-graded provider may elect which of the
remedies to the down-grade (other than the remedy set out in (B)) to perform.
(h) Subject to the ratings requirements set forth in this definition, shares in
any money market mutual fund (including those of the Trustee or any of its affiliates)
registered under the Investment Company Act of 1940, as amended, that have been rated
"AAAm-G" or "AAAm" by S&P or "Aaa" by Moody's so long as the portfolio of such
money market mutual fund is limited to Government Obligations and agreements to
repurchase Government Obligations. If approved in writing by the Credit Provider, a
money market mutual fund portfolio may also contain obligations and agreements to
repurchase obligations described in paragraphs (b) or (c). If the Bonds are rated by a
Rating Agency, the money market mutual fund must be rated "AAAm-G" or "AAAm"
by S&P, if S&P is 'a Rating Agency, or ``Aaa" by Moody's, if Moody's is a Rating
Agency. If at any time the Bonds are not rated (and, consequently, there is no Rating
Agency), then the money market mutual fund must be rated ``AAAm-G" or "AAAm" by
S&P or "Aaa" by Moody's. If at any time (i)the Bonds are not rated, (ii) both S&P and
Moody's rate a money market mutual fund and (iii) one of those ratings is below the level
required by this paragraph, then such money market mutual fund will, nevertheless, be
OI-IS West:260447815.3 17
deemed to be rated in the Highest Rating Category if the lower rating is.no more than one
rating category below the highest rating category of that rating agency; and
(i) Any other .investment authorized by the laws of the State, if such
investment is approved in writing by the Credit Provider and each Rating Agency.
Permitted Investments shall not include any of the following:
(i) Except for any investment described in the next sentence, any
investment with a final maturity or any agreement with a term greater than one
year from the date of the investment. This exception (i) shall not apply to any
obligation that provides for the optional or mandatory tender, at par, by the holder
of such obligation at least once within one year of the date of purchase,
Government Obligations irrevocably deposited with the Trustee for payment of
Bonds pursuant to Section 9.03, and Permitted Investments listed in
paragraphs (g) and (i);
(ii) Except for any obligation described in paragraph (a) or (b), any
obligation with a purchase price greater or less than the par value of such
obligation;
(iii) Any asset-backed security, including mortgage-backed securities,
real estate mortgage investment conduits, collateralized mortgage obligations,
credit card receivable asset-backed securities and auto loan asset-backed
securities;
(iv) Any interest-only or principal-only stripped security;
(v) Any obligation bearing interest at an inverse floating rate;
(vi) Any investment which may be prepaid or called at a price less than
its purchase price prior to stated maturity;
(vii) 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;
(viii) Any investment described in paragraph (d) or (g) with, or
guaranteed or insured by, a Qualified Financial Institution described in clause (iv)
of the definition of Qualified Financial Institution 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
(ix) any investment to which S&P has added an"r" or"t" highlighter.
"Pei
•son" means a natural person, estate, trust, corporation, partnership, limited liability
company, association, public body or any other organization or entity (whether governmental or
private).
OHS West260447815.3 18
"Pledge Agreement" means that certain Pledge and Security Agreement executed by the
Borrower in favor of the Credit Provider with respect to the Pledged Bonds.
"Pledged 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 the proceeds of a Draw
under the Letter of Credit or Draw under an.Alternate Credit Facility, as applicable, to, but
excluding, the date on which the amount of the Draw made by the Credit Provider on account of
such Pledged Bond is reinstated under the Letter of Credit.
"Potential Default" means, as used in any Transaction Document, any event that has
occurred which. with the giving of notice or the passage of time or both, would constitute an
Event of Default as described in that document. Any "Potential Default" as described in any
Transaction Document is not a "Potential Default" in any other Transaction Document unless
that other Transaction Document specifically so provides.
"Preference Claim" has the meaning given that term in Section 8.08.
"Principal Amount" means, with respect to the 2006A Bonds, $116,000,000, with respect
to the 2006A-T Bonds, $9,000,000, and, with respect to the Series 2008 Bonds, $10,000,000.
"Principal Reserve Amount" means 20% of the aggregate principal amount of the Bonds.
"Principal Reserve Fund"means the Principal Reserve Fund created by Section 5.01.
"Principal Reserve Schedule" means the [Schedule of Deposits to Principal Reserve
Fund] attached to the Reimbursement Agreement, as such schedule may be amended,
supplemented or restated from time to time.
"Project Account" means the Project Account of the Loan Fund.
"Qualified Financial Institution" means any.of. (i) bank or trust company organized
under the laws of any state of the United States of America, (ii) national banking association,
(iii) savings bank, a savings and loan association, or an 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 a 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, (v) government bond dealer reporting to, trading with, and recognized as a primary
dealer by the Federal Reserve Bank of New York, (vi) securities dealer approved in writing by
the Credit Provider the liquidation of which is subject to the Securities Investors Protection
Corporation or other similar corporation and (vii) any other entity which is acceptable to the
Credit Provider. With respect to an entity which provides an agreement held by the Trustee for
the investment of moneys at a guaranteed rate as set out in paragraph (g) of the definition of the
term "Permitted Investments" or an entity which guarantees or insures, as applicable, the
.agreement, a "Qualified Financial Institution" may also be a corporation or limited liability
company organized under the laws of any state of the United States of America.
OHS West260447815.3 19
"Rate Determination Date" means (i) with respect to the Weekly Variable Rate,
Wednesday of each week, or if such Wednesday is not a Business Day, the following day or if
such day is not a Business Day, then the first Business Day before such Wednesday; provided,
however, that upon any adjustment to the Weekly Variable Rate Mode from a Reset Rate, the
first Rate Determination Date shall be the Business Day prior to the Adjustment Date, (ii) with
respect to the Daily Variable Rate, each Business Day, and (iii) with respect to any Reset Rate
and the Fixed Rate, the date selected by the Remarketing Agent which date must be a Business
Day not less than five Business Days prior to the Adjustment Date. The initial Rate
Determination Date shall be the Closing.Date.
"Rating Agency" means any nationally recognized statistical rating agency then
maintaining a rating on the Bonds.
"Rebate Analyst" means a Person that is (i) 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, (ii) chosen by the Borrower and (iii) engaged for the
purpose of determining the amount of required deposits, if any to the Rebate Fund.
"Rebate.Analyst's Fee" means the annual continuing fee of the Rebate Analyst, if any, for
its rebate calculation services.
"Rebate Fund" means the Rebate Fund created by Section 5.01.
"Record Date" means, with respect to any Interest Payment Date, (i) if the Bonds bear
interest at the Daily Variable Rate or Weekly Variable Rate, the Business Day before the Interest
Payment Date and (ii) if the Bonds bear interest at a Reset Rate or the Fixed Rate, the first day of
the month in which the Interest Payment Date occurs.
"'Redemption Account" means the Redemption Account of the Revenue Fund.
"Redemption Date" means.any date upon which Bonds are to be redeemed pursuant to
this Indenture.
"Regulatory Agreement" means, collectively, the Amended and Restated Regulatory
Agreement and Declaration of Restrictive Covenants (Lots 2 and 3) and the Amended and
Restated Regulatory Agreement and Declaration of Restrictive Covenants (Lot 5) relating to the
Mortgaged Property, each dated as of July 1, 2008, among the Issuer, the Contra Costa County
Redevelopment Agency, the Trustee and the Borrower, as it may be amended, supplemented or
restated from time to time, or any agreement entered into in substitution therefor.
."Reimbursement Agreement" means the Reimbursement and Disbursement Agreement,
entered into in connection with the occurrence of the Escrow Break Date, between the Borrower
and the Credit Provider, in its individual capacity and as representative of the co-lenders, as such
agreement may be amended, modified, or restated from time to time, and, if an Alternate Credit
Facility is in effect, any reimbursement agreement associated with such Alternate Credit Facility.
"Reimbursement Documents" has the meaning given to that term in the Reimbursement
Agreement.
OHS West:260-147815.3 20
"Remarketing Agent" means Citigroup Global Markets Inc. or any successor as
Remarketing Agent designated in accordance with Section 4.03.
"Remarketing Agent's Fee" means the continuing fees of the Remarketing Agent for its
remarketing services as provided in the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement, entered into by the
Borrower and the Remarketing Agent, as amended, supplemented or restated from time to time,
or any agreement entered into in substitution therefor.
"Remarketing Notice Parties" means the Borrower, the Issuer, the Trustee. the Tender
Agent:, the Remarketing Agent and the Credit Provider.
"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, its right to receive notices and to enforce notice and reporting requirements, its right to
inspect and audit the books, records and premises of the Borrower and of the Mortgaged
Property, 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 and regulations of the Issuer, if any)" and its right to give or withhold consent
to amendments, changes, modifications and alterations to the Financing Agreement relating to
the Reserved Rights.
"Reset Date" means any date upon which the Bonds of a Series begin to bear interest at a
Reset Rate for the Reset Period then beginning.
"Reset Periodd" means each period of 10 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
Provider, during which the Bonds of a Series bear interest at a Reset Rate.
"Reset Rate" means the rate or rates of interest borne by the Bonds of a Series as
determined in accordance with Section 2.06.
"Revenue Fund' means the Revenue Fund created by Section 5.01.
"Revenues" means all (i) payments made under the- Credit Facility, (ii) Investment
Income (excludin(y Investment Income earned from moneys on deposit in the Principal Reserve
Fund, the Rebate Fund, the Fees Account and the Costs of Issuance Fund, but including
Investment Income earned on Net Bond Proceeds deposited into the Costs of Issuance Fund and
Investment Income on such Investment Income) and (iii)payments made under the Note.
"Second Highest Rating Category" means, with respect to an Investment, that the
Investment is rated by each Rating Agency in the second highest rating category given by that
Rating Agency for that general category of security. If at any time the Bonds are not rated (and,
consequently, there is no Rating Agency), then the term "Second Highest Rating Category"
means, with respect to an Investment, that the Investment is rated by S&P or Moody's in the
second highest rating category given by that rating agency for that general category of security.
By way of example, the Second Highest Rating Category for tax-exempt municipal debt
OHS West:260447815.3 21
established by S&P is "AA" for a term greater than one year, with corresponding ratings by
Moody's of"Aa." If at any time (i)the Bonds are not rated, (ii) both S&P and Moody's rate an
Investment and (iii) one of those ratings is below the Second Highest Rating Category, then such
Investment will not be deemed to be rated in the Second Highest Rating Category. For example,
an Investment rated "AA" by S&P and "A" by Moody's is not rated in the Second Highest
Rating Category.
"Securities Depository" means, initially. DTC and its successors and assigns, and any
replacement securities depository appointed under this Indenture.
"Security"means the Trust Estate and the Credit Facility.
"Security Instrument" means, together, the Construction First Deed of Trust, Assignment
of Rents and Leases. Security Agreement and Fixture Filing, together with all riders and exhibits,
securing the Note and the obligations of the Borrower to the Issuer under the Bond Documents,
as executed by the Borrower with respect,to the Mortgaged Property, and the Construction
Second Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing,
together with all riders and exhibits, securing the obligations of the Borrower to the Credit ,
Provider under the Credit-Provider Documents. as executed by the Borrower with respect to the
Mortgaged Propertv, as each may be amended, supplemented or restated from time to time, or
any security instrument executed in substitution therefor, as such substitute security instrument
may be amended, supplemented or restated from time to time.
"Series"means the 2006A Bonds. the 2006A-T Bonds or the 2008 Bonds.
"SIFM.A Index Rate" means the Securities Industry and Financial Markets Association
Municipal Swap Index, announced by Municipal Market Data, a Thomson Financial Services
Company, or its successors.
"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 such future date, but excluding any amount payable by the Issuer by reason
of the maturity of a Bond or by optional redemption at the election of the Issuer.
"Sinking Fund Payment Date"means any of the dates on which any of the Bonds matures
or is subject to redemption through the application of Sinking Fund Payments as set out in a
Sinking Fund Schedule.
"Sinking Fund Schedule" means a schedule of principal amounts of Bonds to mature or
be subject to redemption through the application of Sinking Fund Payments on the specified
dates and/or a schedule of principal amounts of Bonds maturing as serial Bonds.
"W" means Standard & Poor's Ratings Services. a Division of The McGraw-Hill
Companies Inc., and its successors and assigns, or if it is dissolved or no longer assions credit
ratings, then any other nationally recognized statistical rating agency, designated by the Credit
Provider, as assigns.credit ratings.
".State"means the State of California.
0135 West:260447815.3 22
"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 (i) an Interest Payment Date
during a Daily Variable Rate Period or Weekly Variable Rate Period or an Adjustment Date
which immediately follows a Reset Period and (ii) a date on which the Credit Facility for which
substitution is being made is available to be accessed or drawn upon. An extension of any
Extension Date by reason of the extension of a Credit Facility is not a Substitution Date.
"Tax Certificate" means, collectively, the Tax Certificate and Agreement, dated. the
Closing Date, and the Tax Certificate and Agreement, dated the Escrow Break Date, executed
and delivered by the Issuer and the Borrower; as amended, supplemented or restated from time to
time.
"Tax Event"has the meaning given to that term in Section 10.0 1(c).
"Tax-Exempt Bonds"means, collectively, the 2OO6A Bonds and the 2008 Bonds.
"Tender Agent" means the Tender Agent named in Article XI or its successor as Tender
Agent under this Indenture named in accordance with such Article.
"Tender. Agent Agreement" means any Tender Agent Agreement entered into by the
Issuer, the Trustee and the Tender Agent in the event that the Trustee does not serve as Tender
Agent under this Indenture, as such agreement may be amended, supplemented or restated from
time to time.
"Tender Agent's Annual Fee" means the continuing fee of the Tender Agent payable by
the Borrower as provided in the Financing Agreement.
"Tender Date" means any Mandatory Tender Date or any other date on which
Bondholders are permitted under this Indenture to tender their Bonds for purchase.
"Tendered Bond" means any Bond which has been tendered for purchase pursuant to
Section 4.01 or 4.02.
"Third Party Fees" means the Issuer's Fee, the Rebate Analyst's Fee, the Remarketing
Agent's Fee, the Tender Agent's Fee and the Trustee's Annual Fee. Neither the Fees and
Expenses nor the Facility Fee is a Third Party Fee.
"Transaction Documents" means the Bond Documents, the Loan Documents and the
Credit Facility Documents.
"Trust Estate" means the property, interests, rights, money, securities and other amounts
pledged and assigned pursuant to this Indenture and the property, rights, money, securities and
other amounts pledged and assigned by the Issuer to the Trustee and the Credit Provider pursuant
to the Assignment.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., a national
banking association, duly organized and existing under the laws of the United States of America,
or its successors or assigns, or any other corporation or association resulting from or surviving
OHS West:2604478153 .23
any consolidation or merger to which it or its successors may be.a party and any successor
trustee at any time serving as successor trustee under-this Indenture.
"Trustee's Annual Fee" means the annual continuing trust administration fee of the
Trustee equal to $ per annum payable by the Borrower as provided in the Financing
Agreement.
"UCC" means the Uniform Commercial Code of the State as in effect now or in the
future, whether or not such Uniform Commercial Code is applicable to the parties or the
transactions.
"2006 Underwriter' means Newman& Associates, A Division of GMAC Commercial
Holding Capital Markets Corp.
"2008 Underm,riter" means Citigroup Global Markets Inc.
"Week" means any seven-day period during a Daily Variable Rate Period or Weekly
Variable Rate Period beginning on Thursday and ending on and including the following
Wednesday; except that:
(a) the first Week will begin on the Escrow Break Date and end on and
include the second following Wednesday;
(b) the first Week of a Daily Variable Rate Period or Weekly Variable Rate
Period immediately following an Adjustment Date will begin on such Adjustment Date
and end on and include the following Wednesday;
(c) any Week ending immediately before an Adjustment Date will begin on a
Thursday and end on the day before such Adjustment Date;
(d) the final Week will begin on a Thursday and end on the earlier of an
Adjustment Date or the Maturity Date; and
(e) the first and last Weeks of a Daily Variable Rate Period or Weekly
Variable Rate Period may consist of more (but not more than 13) or less than seven days.
"YVeekly Variable Rate" means the variable rate of interest per annum for the Bonds of a
Series determined from time to time during the Weekly Variable Rate Period in accordance with
Section 2.05.
"Weekly Variable Rate Period' means the period commencing on an Adjustment Date on
which the interest rate on the Bonds of a Series is adjusted from the Reset Rate to the Weekly
Variable Rate and ending on the day preceding the following Adjustment Date or the Maturity
Date.
"WY
•ongftl Dishonor" means an uncured failure by the Credit Provider to pay a Draw to
the Trustee upon proper presentation of documents which conform to the terms and conditions of
the Credit Facility then in effect.
OHS West:260447815.3 24
Section 1.02. Rules of Construction. The rules of construction set forth in. this
Section 1.02 apply to this Indenture.
(a) The singular form of any word includes the plural, and vice versa, unless
the context otherwise requires. The use of a pronoun of any gender includes correlative
words of the other genders.
(b) All references to "Articles," "Sections' and other subdivisions are to the
corresponding Articles. Sections or other subdivisions of this Indenture; and the words
"in this Indenture," "of this Indenture," "under this Indenture" and other words of similar
import refer to this Indenture as a whole and not to any particular Article, Section or
subdivision.
(c) Any captions, headings or titles of the several Articles.. Sections and other
subdivisions, and the table of contents are solely for convenience of reference and do not
limit or otherwise affect the meaning, construction or effect of this Indenture or describe
the scope or intent of any provision.
(d) All accounting terms not otherwise defined 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 under this Indenture by
any party must be in writing and signed by a duly authorized representative of such party
with a duly authorized signature.
(f) All references in this Indenture to "counsel fees," "attorneys fees' or the
like mean and include fees and disbursements allocable to in-house or outside counsel,
whether or not suit is instituted, and including fees and disbursements preparatory to and
during trial and appeal and in any bankruptcy or arbitration proceedings.
(g) Whenever the word "includes" or "including" is used, such word means
"includes or including by way of example and not limitation."
ARTICLE II
THE BONDS
Section 2.01. Authorized Amount of Bonds. No Bonds may be issued under this
Indenture except as provided in this Article. The total principal amount of Bonds that may be
issued and outstanding under this Indenture is expressly limited to the Principal Amount.
Section 2.02. Issuance of Bonds. The Bonds are authorized to be issued pursuant to and
in accordance with this Indenture, substantially in the form set forth in Exhibit A with such
appropriate variations, legends, omissions and insertions as permitted by this Indenture. The
Bonds shall (i) be issued in three Series designated "County of Contra Costa Multifamily
Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Series 2006A",
OFFS West260447815.3 25
`'Cou�aty of Contra Costa Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra
Costa Centre Project) Taxable Series 2006A-T" and "County of Contra Costa Multifamily
Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Series 2008A'
respectively (the words "Variable Rate Demand" may be added as needed), (ii) be issued in the
applicable Principal Amount. (iii) be.dated the date of original issuance thereof,.. (iv) bear interest
from the Escrow Break Date at the rate or rates determined as provided in Sections 2.05, 2.06
and 2.07 and independently for each Series, payable on each Interest Payment Date; provided
that any Credit Provider Bonds or Pledged Bonds shall bear interest at the Credit Provider Rate;
and (v) mature on the Maturity Date, subject to prior redemption as provided in Article III. The
Bonds of each Series shall, from the Escrow Break Date until adjusted to another Mode, bear
interest at a .Weekly Variable Rate. The Bonds shall be issued as registered bonds without
coupons in Authorized Denominations. The 2006 Bonds shall be issued on the Closing Date and
the 2008 Bonds shall be issued at the Escrow Break Date. The Bonds shall be numbered
consecutively within each Series from R-1 upwards.
Section 2.03. Payment of Principal and Interest. The principal of and the interest and
any premium on the Bonds are payable in lawful money of the United States of America to the
Registered Owners at the close of business on the applicable Record Date. Payment of interest
on the Bonds shall be made on each Interest Payment Date by check drawn upon the Trustee and
mailed by first class mail, postage prepaid, to the addresses of the Registered Owners as they
appear on the Bond Register or to such other address as may be furnished in writing by any
Registered Owner to the Trustee prior to the applicable Record Date. Payment of the principal.
of any Bond and premium, if any, together with interest (other than interest payable on a
regularly scheduled Interest Payment Date) shall be made by check only upon presentation and
surrender of the Bond on or after its maturity date or date fixed for purchase.. redemption or other
payment at the office of the Trustee designated for that purpose. Notwithstanding the foregoing,
payment of principal of and interest and any premium on any Bond shall be made by wire
transfer to any account within the United States of America designated by a Registered Owner
owning $1,000,000 or more in aggregate principal amount of Bonds if a written request for wire
transfer in form and substance satisfactory to the Trustee is delivered to the Trustee by any such
Registered Owner not less than five Business Days prior to the applicable payment date. A
request for wire transfer that specifies that it is.effective with respect to all succeeding payments
of principal, interest and any premium will be so effective unless and until rescinded in writing
by the. Registered Owner at least five-Business Days.prior to a Record Date. If interest on the
Bonds is in default, the Trustee, prior to the payment of interest. shall establish a special record
date ("Special Record Date") for such payment. A Special Record Date may not be more than
15 nor less than 10 days prior to the date of the proposed payment. Payment of defaulted interest
shall then be made by check or wire transfer, as permitted above, mailed or remitted to the
Registered Owners in whose names the Bonds are registered on the Special Record Date.
Section 2.04. Limited Obligations. The Bonds are special, limited obligations of the
Issuer. payable solely from the Security. The Bonds are not a debt of the State or of any other
political subdivision of the State, and neither the State nor any other political subdivision of the
State will be liable for the payment of the Bonds. The faith and credit of the Issuer, the State or
any political subdivision of the State are not pledged to the payment of the principal of or interest
on the. Bonds. Neither the members of the Board of.Supervisors of the Issuer, nor any person
01ls West:26044781 5.3 26
executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability
or accountability by reason thereof.
Section 2.05. Weekly Variable Rate Mode and Daily Variable Rate Mode.
(a) Weekly Variable Rate Mode.
(i) Weekly T ariable Rate. Except while a Series of Bonds bears
interest during a Daily Variable Rate Period, Reset Period or a Fixed Rate Period,
the Bonds shall bear interest at the Weekly Variable Rate, determined from time
to time pursuant to Section 2.05(a)(ii). During the Weekly Variable Rate Period,
interest shall accrue on the basis of a 365- or 366-day year. as applicable, for the
actual number of days elapsed.
(ii) Determination of Weekly irariable Rate. During each Weekly
Variable Rate Period, the Remarketing Agent shall determine the Weekly
Variable Rate for each Series for each Week not later than 4:00 p.m. Eastern Time
on each Rate Determination Date. The Weekly Variable Rate shall be the
minimum rate of interest necessary, in the professional judgment of the
Remarketing Agent, taking into consideration prevailing market conditions, to
enable the Remarketing Agent to remarket all of the Bonds of a Series on the
applicable Rate Determination Date at par plus accrued interest on such Bonds for
that Week. Each Weekly Variable Rate so determined shall be effective for the
Week for which such rate was determined. The Remarketing Agent shall provide
notice of the Weekly Variable Rate for each Series before 5:00 p.m. Eastern Time
on the Rate Determination Date by telephone to any Beneficial Owner upon
request and to the Credit Provider (so long as the Letter of Credit is in effect) or
any Alternate Credit Provider (at such time as an Alternate Credit Facility is in
effect), and the Trustee, and. not later than the next Business Day to the other
Remarketing.Notice Parties by Electronic Means. Each Weekly Variable Rate for
each Series so determined by the Remarketing Agent will be conclusive and
binding upon the Remarketing Notice Parties and the Registered Owners.
(b) Daily Variable Rate Mode.
(i) Daily Variable Rate. Except while a Series of Bonds bears .interest
during a Weekly Rate -Period, a Reset Period or a Fixed Rate Period, the Bonds
shall bear interest at the applicable Daily Variable Rate for each Series,
determined from time to time pursuant to Section 2.05(b)(ii). During the Daily
Variable Rate Period, interest shall accrue on the basis of a 365-or 366-day year,
as applicable, for the actual number of days elapsed.
(ii) Determination of Daily Variable Rate. During each Daily Variable
Rate Period, the Remarketing Agent shall determine the Daily Variable Rate for
each Series not later than 9:45 a.m. Eastern Time on each Rate Determination
Date. The Daily Variable Rate shall be the minimum rate of interest necessary, in
the professional judgment of the Remarketing Agent. taking into consideration
OHS West2604478153 27
prevailing market conditions, to enable the Remarketing Agent to remarket all of
the Bonds of a Series on the applicable Rate Determination Date at par plus
accrued interest on the Bonds for that date. Each Daily Variable Rate for each
Series so determined shall be effective for the day for which such rate was
determined. The Daily Variable Rate for each Series for any date which is not a
Business Day shall be the latest Daily Variable Rate for such Series detennined
by the Remarketing Agent.
The Remarketing Agent shall provide notice of the Daily Variable
Rate determined on each Rate Determination Date before 10:00 a.m. Eastern
Time by telephone to any Beneficial Owner upon request and to the Credit
Provider (so long as the Letter of Credit is in effect) or any Alternate Credit
Provider (at such time as an Alternate Credit Facility is in effect), and the Trustee
by fax or electronic transmission. Each Daily Variable Rate so determined by the
Remarketing Agent will be conclusive and binding upon the Remarketing Notice
Parties and the Registered Owners.
Section 2.06. Reset Rate Mode.
(a) Reset Rate. During any Reset Period, a Series of Bonds shall bear interest
at the Reset Rate determined pursuant to Section 2.06(b) for such Reset Period. During
each Reset Period, interest shall accrue on the basis of a year of 360 days of twelve
30-day months.
(b) Determination of Reset Rate. The Remarketing Agent shall determine the
Reset Rate for each Series not later than 4:00 p.m. Eastern Time on the applicable Rate
Detennination Date. Each Reset Rate shall be the minimum rate of interest necessary, in
theprofessional 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. The
Remarketing Agent will provide notice of each Reset Rate before 5:00 p.m. Eastern Time
on the Rate Determination Date by telephone to any Beneficial Owner upon request and
to the Trustee and the Credit Provider (so long as the Letter of Credit is in effect) or any
Alternate Credit Provider (at such time as an Alternate Credit Facility is in effect), and
not later than the next Business Day to the other Remarketing Notice Parties by
Electronic Means. Each Reset Rate so determined by the Remarketing Agent will be
conclusive and binding upon the Remarketing Notice Parties and the Registered Owners.
Section 2.07. Fixed Rate Mode.
(a) Fixed Rate. During the Fixed Rate Period, a Series of Bonds shall bear
interest at the Fixed Rate determined pursuant to Section 2.07(b). During the Fixed Rate
Period, interest shall accrue on the basis of a year of 360 days of twelve 30-day months.
(b) Determination of Fixed Rate. The Remarketing Agent shall determine
the Fixed Rate for each Serires not later than 4:00 p.m. Eastern Time on the applicable
Rate Determination Date. The Fixed Rate shall be the minimum rate of interest
014S West:26044781 i3 28
necessary. in the 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. The
Remarketing Agent shall provide notice of each Fixed Rate before 5:00 p.m. Eastern
Time on the Rate Determination Date by telephone to the Trustee and the Credit Provider
(so long as the Letter of Credit is in effect) or any Alternate Credit Provider (at such time
as an Alternate Credit Facility is in effect), and not later than the next Business Day to the
other Remarketing Notice Parties by Electronic Means. Each Fixed Rate so determined
by the Remarketing Agent will be conclusive and binding upon the Remarketing Notice
Parties and the Registered Owners.
Section 2.08. Mode Adjustments.
(a) Adjustment to Reset Rate From Dailj., Variable Rate, Week13, Variable
Rate or From Prior Reset Rate. At the option of the Borrower, the interest rate on all
Outstanding Bonds of a Series may be adjusted on any Interest Payment Date from the
Weekly Variable Rate or Daily Variable Rate to a Reset Rate for a Reset Period of
10 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 Provider. Any Reset Period
must end immediately before an Interest Payment Date. In addition, the interest rate on
all Outstanding Bonds of a Series may be adjusted from a prior Reset Rate to a new Reset
Rate on the Adjustment Date immediately following the Reset Period then in effect.
Each such adjustment is subject to satisfaction of the following conditions precedent:
(i) not less than 45 days before the proposed Reset Date, the Borrower
delivers to the Trustee (A) written notice to the other Remarketing Notice Parties
of the proposed adjustment and designating the proposed Reset Date and the
duration of the Reset Period to commence on such Reset Date and (B)the written
preliminary consent of the Credit Provider to such adjustment which consent may
be subject to the satisfaction of conditions specified by the Credit Provider prior
to such adjustment;
r
(ii) not less than 30 days before the proposed Reset Date, the Trustee
gives written notice to the Bondholders by first class mail, postage prepaid.
stating: (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 of such.Series are subject to mandatory tender and purchase on
the proposed Reset Date, whether or not such conditions are satisfied, and no
holder of any Bond shall have the right to elect to retain such Bond;
(iii). on or prior to the proposed Reset Date, the Borrower delivers
(A)to the Trustee, written notice from the Credit Provider consenting to the
adjustment to the Reset Rate, together with confirmation that the Credit Facility
will be sufficient in amount and terns to satisfy the requirements of Section 2.09
and (B) to the other Remarketing 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
OHS West260447815.3 29
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 Tax-Exempt Bonds; and
(iv) on or prior to the proposed Reset Date, the Remarketing Agent has
given notice pursuant to Section 4.03(dj to the effect that all Outstanding Bonds
of such Series have been remarketed for the Reset Period at the Reset Rate
determined pursuant to Section 2.06(b).
(b) Adjustment to Weekly Variable Rate From Daily Variable Rate, and to
Daily Variable Rate From Weekly Variable Rate. At the option of the Borrower, the
interest rate on all Outstanding Bonds of a Series may be adjusted on any Interest
Payment Date from the Weekly Variable Rate to the Daily Variable Rate or from the
Daily Variable Rate to the Weekly Variable Rate with the prior written consent of the
Credit. Provider. Each such adjustment is subject to satisfaction of the following
conditions precedent:
(i) not less than 45 days before the proposed Adjustment Date, the
Borrower delivers to the Trustee (A) written notice to the other Remarketing
Notice Parties electing the proposed adjustment and (B) the written preliminary
consent of the Credit Provider to such adjustment which consent may be subject
to the satisfaction of conditions specified by the Credit Provider, prior to such
adjustment;
(ii) not less than 30 days before the proposed Adjustment Date, the
Trustee gives written notice to the Bondholders by first class mail, postage
prepaid, stating: (A) the proposed Adjustment Date; (B) that from and after the
proposed Adjustment Date, if the conditions specified in this Indenture to such
adjustment are satisfied, the Bonds will bear interest at the Daily Variable Rate or
the Weekly Variable Rate as the case may be (which rate need not be stated); and
(C) that all Bonds of such Series are subject to mandatory tender and purchase on
the proposed Adjustment Date, and that no holder of any Bond will have the right
to elect to retain such Bond;
(iii) on or prior to the proposed Adjustment Date, the Borrower delivers
(A) to the Trustee, written notice from the Credit Provider consenting to the
adjustment to the Daily Variable Rate or the Weekly Variable Rate, together with
confirmation that the Credit Facility will be sufficient in. amount and term to
satisfy the requirements of Section 2.09 and.(B) to the other Remarketing Notice
Parties, an opinion of Bond Counsel to the effect that the adjustment of the
interest rate on the Bonds to the Daily Variable Rate or the Weekly Variable Rate
is authorized and permitted by this Indenture and the laws of the State, and will
not adversely affect the exclusion from gross income for federal income tax
purposes of the interest payable on the Tax-Exempt Bonds; and
(iv) on or prior to the proposed Adjustment Date, the Remarketing
Agent has given notice pursuant to Section 4.03(d) to the effect that all
011S West:260447815.3 30
Outstanding Bonds of such Series have been remarketed for the first Week of the
Weekly Variable Rate Period at the applicable Weekly Variable Rate determined
pursuant to Section 2.05(a)(ii), or for the first Daily Variable Rate Period at the
applicable Daily Variable Rate determined pursuant to Section 2.05(b)(ii).
(c) Adjustment,From Reset Rate to Weekly Variable Rate or Dail), Variable
Rate. At the option of the Borrower, the interest rate on all Outstanding Bonds of a
Series may be adjusted from a Reset Rate to the Daily Variable Rate or the Weekly
Variable Rate on the day following the last day of a Reset Period with the prior written
consent of the Credit Provider. Each such adjustment is subject to the satisfaction of the
following conditions precedent:
(i) not less than 45 days before the proposed Adjustment Date, the
Borrower delivers to the Trustee (A) written notice to the other Remarketing
Notice Parties electing the proposed adjustment and (B) the written preliminary
consent of the Credit Provider to such adjustment which consent may be subject
to the satisfaction of conditions specified by the Credit Provider, prior to such
adjustment;
(ii) not less than 30 days before the proposed Adjustment Date, the
Trusteegives written notice to the Bondholders by first class mail, postage
prepaid,.stating: (A) the proposed Adjustment Date; (B) that from and after the
proposed Adjustment Date, if the conditions specified in this Indenture to such
adjustment are satisfied, the Bonds of such Series will bear interest at the Daily
Variable Rate or the Weekly Variable Rate as the case may be (which rate need
not be stated); and (C) that all Bonds of such Series are subject to mandatory
tender and purchase on the proposed Adjustment Date, and that no holder of any
Bond will have the right to elect to retain such Bond;
(iii) on or prior to the proposed Adjustment Date, the Borrower delivers
(A)to the Trustee, written notice from the Credit Provider 'consenting to the
adjustment to the Daily Variable Rate or the Weekly Variable Rate, together with
confirmation that the Credit Facility will be sufficient in amount and term to
satisfy the requirements of Section 2.09.and (B)to the other Remarketing Notice
Parties, an opinion of Bond Counsel to the effect that the adjustment of the
interest rate on the Bonds to the Daily Variable Rate or the Weekly Variable Rate
is authorized and permitted by this Indenture and the laws of the State, and will
not adversely affect the exclusion from gross income for federal income tax
purposes of the interest payable on the Tax-Exempt Bonds; and
(iv) on or prior to the proposed Adjustment Date, the Remarketing
Agent has given notice pursuant to Section 4.03(d) to the effect that all
Outstanding Bonds have been remarketed for the first Week of the Weekly
Variable.Rate Period at the applicable Weekly Variable Rate determined pursuant
to Section 2.05(a)(ii) or for the first Daily Variable Rate Period at the applicable
Daily Variable Rate determined pursuant to Section 2.05(b)(ii).
OHS West:260447815.3 31
(d) Adjustment to Fired Rate. At the option of the Borrower, and with the
prior written consent of the Credit Provider and, unless.a Credit Facility providing credit
supportfor the Bonds of such Series will be in effect. with the prior written consent of the
Issuer (which consent may be conditioned upon the receipt of a rating of at least "A",
higher Authorized Denominations or the delivery of investor letters). the interest rate on
all Outstanding Bonds of a Series may be adjusted to the Fixed Rate (i) from the Weekly
Variable Rate or. Daily Variable Rate on any Interest Payment Date designated by the
Borrower or (ii) rom a Reset Rate (A) on the day following the last day of any Reset
Period or (B) on any Interest Payment Date during a Reset Period on which the Bonds are
subject to redemption pursuant to Section 3.02(a) at par without any premium. Such
adjustment is subject to the satisfaction of the following conditions precedent:
(i) not less than 45 days before the proposed Fixed Rate Adjustment
Date. the Borrower delivers to the Trustee (A) written notice to the other
Remarketing Notice Parties designating the proposed Fixed Rate Adjustment Date
and (B) the written preliminary consent of the Credit Provider to such adjustment
which consent may be subject to the satisfaction of conditions prior to such
adjustment;
(ii) not less than 30 days before the proposed Fixed Rate Adjustment
Date. the Trustee gives written notice to the Bondholders by first class mail,
postage prepaid, stating the following: (A) the proposed Fixed Rate Adjustment
Date; (B)that from and after the proposed Fixed Rate Adjustment Date. if the
conditions specified in this Indenture to such adjustment are satisfied, the Bonds
will bear interest at the Fixed Rate (which rate need not be stated), and (C) that all
Bonds of such Series are subject to. mandatory tender and purchase on the
proposed Fixed Rate Adjustment Date, whether or not such conditions are .
satisfied and no holder of any Bond(s) will have the right to elect to retain its
Bonds;
(iii) on. or prior to the proposed Fixed Rate Adjustment Date. the
Borrower delivers (A) to the Trustee, either (1) written notice from the Credit
Provider consenting to the adjustment to the Fixed Rate. together with
confirmation that the Credit Facility will be sufficient in amount and term to
satisfy the requirements ol'Section 2.09 or (2) 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 remains in effect for the mandatory tender of the
Bonds on the proposed Fixed Rate Adjustment Date (which waiver will
acknowledge that the Rating Agency has been notified not less than 10 days prior
to the Fixed Rate Adjustment Date that the Credit Facility will be terminated on
the Fixed Rate Adjustment Date); and (B) to the other Remarketing Notice
Parties, an opinion of.Bond. Counsel to the effect that the adjustment 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 Tax-Exempt Bonds;
01IS West:260447815.3 32
(iv) on or prior .to the proposed Fixed Rate Adjustment Date, the
Remarketing Agent has given notice pursuant to Section 4.03(d) to the effect that
all Outstanding Bonds have been remarketed for the Fixed Rate Period at the
Fixed Rate determined pursuant to Section 2.07(b); and
(v) on or prior to the proposed Fixed Rate Adjustment Date (A) the
Issuer, at the written direction of the Borrower and with the prior written consent
of the Credit Provider, establishes a Sinking Fund Schedule, (B) the Issuer, the
Trustee and the Credit Provider receive an opinion of Bond Counsel to the effect
that establishing a Sinking Fund Schedule will not adversely affect the exclusion
from gross income for federal income tax purposes of the interest payable on the
Tax-Exempt Bonds and (C) the Note is amended, with the prior written consent of
the Credit Provider, to provide for principal amortization of the Loan consistent
with the Sinking Fund Schedule.
The Trustee shall provide a copy of the Sinking Fund Schedule, Opinion of Bond Counsel and
Note amendment to the Credit Provider on or before the proposed Adjustment Date.
Section 2.09. Credit Facility Requirement. So long as a Series of Bonds bears interest
at the Weekly Variable Rate, Daily Variable Rate or at a Reset Rate, one or more Credit
Facilities providing credit support for the Bonds of such Series and liquidity support for the
Bonds of such Series must be in effect. If the Bonds of a Series bear interest at the Fixed Rate,
one or more Credit Facilities providing credit support for the Bonds must be in effect unless the
Issuer has expressly waived such requirement in writing. When delivered, each Credit Facility
shall satisfy the following requirements:
(a) the Credit Facility shall be in an amount equal to the aggregate principal
amountof the Bonds of such Series Outstanding from time to time plus the Interest
Requirement;
(b) the Credit Facility shall 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;
(c) if the Credit Facility is provided to secure a Series of Bonds during a Reset
Period, the Credit Facility shall provide an expiration date no earlier than the earliest of
(i) the day following the Adjustment Date immediately succeeding the Reset Period;
(ii) 10 days after the Trustee receives notice from the Credit Provider of an Event of
Default under the Reimbursement Agreement and a direction to redeem all Outstanding
Bonds of such Series; (iii)the date on which all Bonds of such Series are paid in full and
this Indenture is discharged in accordance with its terms; and (iv) the date on which the
Bonds of such Series become secured by an Alternate Credit Facility in accordance with
the terms of the Indenture and the Credit Facility;
(d) unless waived by the Issuer in its sole discretion, the Credit Facility shall
result in such Series of Bonds receiving a short-term rating in the highest rating category
OHS West260447815.3 JJ
of each Rating Agency or a long-term rating in one of the three highest rating categories
of each Rating Agency, or both, as applicable for the Mode then in effect;
(e) if the Credit Facility is an Alternate Credit Facility, the Alternate Credit
Facility satisfies the requirements of Section 8.04; and
(f) the Trustee has received on or prior to the effective date of the Credit
Facility (i) an Opinion of Counsel to the Credit Provider issuing the Credit Facility, in
form and substance satisfactory to the Issuer and the Trustee, relating to the due
authorization and issuance of the Credit Facility and its enforceability and (ii) with
respect to an Alternate Credit Facility, an opinion of Bond Counsel to the effect that the
Alternate Credit Facility will not adversely affect the exclusion from gross income, for
federal income tax purposes, of the interest payable on the Tax-Exempt Bonds.
Section 2.10. Certain General Provisions Concerning Modes and Interest Rates.
(a) Failure To Satisfy Conditions Precedent to Mode Change. If the
conditions precedent to a change in Mode set forth in Sections 2.08 and 2.09 have not
been satisfied,then the following will apply:
(i) The new Mode shall not take effect;
(ii) The applicable Bonds shall be subject to mandatory tender on the
proposed Adjustment Date and the holders of the Bonds will not have the right to
elect to retain their Bonds;
(iii) If the Mode in effect immediately prior to the proposed
Adjustment Date is the Weekly Variable Rate or Daily Variable Rate, the interest
rate on the applicable Bonds shall continue at the Weekly Variable Rate or Daily
Variable Rate, as the case may be, from and after the proposed Adjustment Date,
without any further action by any party;
(iv) If the Mode in effect immediately prior to the proposed
Adjustment Date is a Reset Rate, the interest rate on the applicable Bonds shall be
adjusted on the proposed Adjustment Date to the Weekly Variable Rate or Daily
Variable Rate if, with respect to a change in Mode of a Series of Tax-Exempt
Bonds, the Trustee and the Credit Provider receive an opinion of Bond Counsel to
the effect that the change to a Weekly Variable Rate or Daily Variable Rate will
not adversely affect the exclusion from gross income for federal income tax
purposes of the interest payable on such Tax-Exempt Bonds. if such an opinion is
not delivered,the interest rate on such Tax-Exempt Bonds shall be adjusted on the
proposed Adjustment Date to a new Reset Rate for the shortest Reset Period
ending on an Interest Payment Date which would enable the Remarketing Agent
to remark-et such Tax-Exempt Bonds on the proposed Adjustment Date at par with
such Tax-Exempt Bonds bearing interest (on a weighted average basis) at the
lowest possible rate, but in no event greater than the Reset Rate in effect for the
Reset Period immediately prior to the proposed Adjustment Date or such higher
rate to which the Credit Provider may consent from time to time without any
OHS West:260447815.; 34
further action by any party other than the selection of the Reset Period and the
remarketing of such Tax-Exempt Bonds so long as the Trustee and the Credit
Provider receive an opinion of Bond Counsel to the effect that the change to such
Reset Period.will not adversely affect the exclusion of the interest on such Tax-
Exempt Bonds from gross income for federal income tax purposes. If such
opinion is not delivered. such Tax-Exempt Bonds shall remain at the Reset Rate
in effect for the immediately prior Reset Period. with a Reset Period equal to the
Reset Period previously in effect without any further action by any party other
than the remarketing of such Tax-Exempt Bonds; and
(v) The Remarketing Agent will remarket the applicable Bonds on the
Adjustment Date at the applicable interest rate.
(b) Failure by Remarketing Agent To Determine Weekly Variable Rate or
Daily Variable Rate. If the Remarketing Agent fails or refuses to determine the Weekly
Variable Rate or Daily Variable Rate applicable to a Series of Bonds for any Week, the
interest rate to be borne by a Series of Bonds during such Week shall be (i) with respect
to a Series of Tax-Exempt Bonds, the latest SIFMA Index Rate published on or before
the Rate Determination Date or (ii) with respect the 2006A-T Bonds, the current,LIBOR,
or. in the event the SIFMA Index Rate or LIBOR is no longer published. the last Weekly
Variable Rate or Daily Variable Rate for such Series of Bonds determined by the
Remarketing Agent.
(c) . Maximum Interest Rate. Notwithstanding any other provision of this
Indenture, the interest rate on the Bonds may not exceed the Maximum Rate.
(d) Alternate Credit Facility. Notwithstanding anything to the contrary in
this Indenture, the consent of the Credit Provider to a change in Mode shall not be
required if(i) an Alternate Credit Facility satisfying the requirements of Section 2.09 will
be in effect on the Adjustment Date and (ii) 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 Provider must
also be delivered to the Alternate Credit Provider.
Section 2.11. Temporary Bonds. If definitive Bonds are not ready for delivery on the
Escrow Break Date, the. Issuer shall execute, and at the request of the Issuer, the Trustee shall
authenticate and deliver, one or more temporary typewritten, printed or lithographed Bonds, in
any Authorized Denomination, in fully registered form, and in substantially the form provided
for definitive Bonds with appropriate omissions, insertions and variations. The Issuer shall cause
definitive Bonds to be prepared and to be executed and delivered to the Trustee. Upon
presentation to it of any temporary Bond. the Trustee shall cancel the same and authenticate and
deliver in exchange therefor, without charge to the owner of such Bond, 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 will in all respects be entitled to the same benefit and
security of this Indenture as the definitive Bonds.
Of IS West260447815.3 35
Section 2.12. Execution. The Bonds shall be signed by the manual or facsimile
signature of an Authorized Representative and attested by the manual or facsimile signature of an
Authorized Attesting Officer. The foregoing officers are hereby authorized and directed to sign
the Bonds in accordance with this section. Any facsimile signatures shall have the same force
and effect as if the person had manually signed and attested the Bonds. In case any officer
whose signature or a facsimile of whose signature appears on any Bonds ceases 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..
Section 2.13. Authentication. Only such Bonds as have endorsed on them a certificate
of authentication substantially in the form set forth in Exhibit A to this Indenture duly executed
by the Trustee 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 has been
manually executed by the Trustee. Such executed certificate upon any Bond shall be conclusive
evidence that such Bond has been authenticated and delivered under this Indenture. The
Trustee'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, but it shall not be necessary that the
same person sign the certificates of authentication on all of the Bonds.
Section 2.14. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is mutilated,
lost, stolen or destroyed, the Issuer shall execute and the Trustee shall authenticate and deliver a
new Bond of the same maturity, interest rate, principal ainount, Series and tenor in lieu of and in
substitution for the mutilated, lost, stolen or destroyed Bond, provided, however, that in the case
of any mutilated Bond, the mutilated Bond must first be surrendered to the Trustee, and in. the
case of any lost. stolen or destroyed Bond, there must be first furnished to the Trustee evidence
satisfactory to it of the ownership of the Bond, and of the loss, theft or destruction, together with
indemnity satisfactory to the Trustee and the Issuer and compliance with such other reasonable
requirements as the Trustee and the Issuer may prescribe. If any such Bond will mature within
the ensuing 60 days, or if such Bond has been called for redemption or a redemption date
pertaining to such Bond has passed. instead of replacing the Bond, the Trustee may, upon receipt
of such indemnity, pay the Bond on such maturity date or redemption date. The Trustee shall
cancel any mutilated Bond surrendered to it. .In connection with any such substitution or
payment. the Issuer and the Trustee may charge the holder of such Bond their reasonable fees
and expenses. including attorneys' fees and expenses.
If, after the delivery of such replacement Bond, the original Bond in lieu of which such
replacement Bond was issued is presented for payment or registration, the Trustee shall seek to
recover such replacement Bond from the person to whom it was delivered or any person taking
therefrom and shall be entitled to recover from the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Trustee, the Borrower or the Issuer in
connection therewith.
Section 2.15. Securities Depository Provisions. .
(a) Registration in the Book-Entry System. Initially. all Bonds shall be
Book-Entry Bonds. All Bonds shall be registered initially in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC'"). The Issuer and the Trustee
01 IS West:26044781 5.3 36
acknowledge that they have executed and delivered a Letter of Representations with
DTC. All payments of principal of, redemption premium, if any, and interest on the
Book-Entry Bonds and all notices with respect thereto, including notices of full or partial
redemption, shall be made and given at the times and in the manner set out in the Letter
of Representations. This Indenture shall govern in the event of any inconsistency
between this Indenture and the Letter of Representations. The Letter of Representations
may be amended without Bondholder consent.
(b) Exculpation. With respect to Book-Entry Bonds, neither the Issuer, the
Trustee, the Credit Provider, any Alternate Credit Provider nor the Borrower will have
any responsibility or obligation to any broker-dealer, bank or other financial institution
for which DTC holds Bonds from time to time as securities depository ('DTC
Participant") or to any person on behalf of whom such a DTC Participant directly or
indirectly holds an interest in the Bonds ('Indirect Participant"). Without limiting the
immediately preceding sentence, the Issuer, the Trustee, the Credit Provider, any
Alternate Credit Provider and the Borrower will have no responsibility or obligation with
respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant
with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC
Participant or any Indirect Participant or any other person, other than DTC. as
Bondholder, of any notice with respect to the Bonds,including any notice of redemption,
(iii) the payment to any DTC Participant or Indirect Participant or any other Person, other
than DTC, as Bondholder, of any amount with respect to principal of, premium, if any, or
interest on, the Bonds, (iv) any consent given by DTC or (v) selection of Bonds for
redemption. The Issuer, the Borrower, the Credit Provider, any Alternate Credit Provider
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 and neither the Issuer, the Borrower nor the Trustee shall have any
responsibility or obligation to any Beneficial Owner of any Book-Entry Bond. While in
the DTC system, no person other than DTC will receive a Bond certificate with respect to
any Bond.
(c) Successor Securities Depository; Transfers Outside Book-Entry System.
DTC may discontinue providing its services with respect to the Bonds at any time by
giving written notice to the Issuer, the Trustee, the Remarketing Agent, the Tender
Agent, the Credit Provider, any Alternate Credit Provider and the Borrower and by
discharging its responsibilities with respect to the Bonds under applicable law. The
Issuer or the Borrower, with the consent of the other, may terminate the services of DTC.
If the Borrower is in default under any Bond Document or any Loan Document, the
Issuer will not be required to obtain the consent of the Borrower to terminate the services
of DTC. Without the consent of the Issuer, the Borrower may terminate the services of
DTC if the Tender Agent is not a DTC Participant. Upon the discontinuance or
termination of the services of DTC, unless a substitute securities depository is appointed
to undertake the functions of DTC under this Indenture, the Issuer, at the expense of the
Borrower, shall provide Bond certificates to the Trustee for delivery to the Beneficial
Owners of the Bonds, and the Bonds may be registered in whatever name or names the
Registered Owners transferring or exchanging Bonds designate to the Trustee in writing.
The Trustee may appoint a successor depository operating a securities depository system.
OHS West:260447815.3 37
qualified to act as such under Section 17A of the Securities Exchange Act of 1934, as
amended, as may be acceptable to the Issuer.
Section 2.16. Bond Registrar; Exchange and Transfer of Bonds; Persons Treated as
the Bondholders.
(a) Bond Registrar; Bond Register. The Trustee shall act as the initial Bond
Registrar and in such capacity shall keep the Bond Register for the registration of the
Bonds and for the registration of transfer of the Bonds.
(b) Transfers and Exchanges. Any Bondholder or its attorney duly
authorized in writing may transfer title to or exchange a Bond upon surrender of the Bond
at the Designated Office of the Trustee together with a written instrument of transfer (in
substantially the form of assignment, including signature guarantee, attached to the Bond)
satisfactory to the Trustee executed by the Bondholder or its attorney duly authorized in
writing. .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 Bondholder or its
transferee or transferees a new Bond or Bonds of the same aggregate principal amount,
rate of interest, maturity, series and tenor as the Bond surrendered and of any Authorized
Denomination.
(c) Exceptions to Transfers and Exchanges. Except as provided in
Section 4.01, the Trustee will not be required to register any transfer or exchange of any
Bond (or portion of any Bond) during the 1 -day period immediately before the selection
of Bonds for redemption, and from and after notice calling such Bonds (or portion of
such Bonds) for redemption or partial.redemption has been given and prior to such
redemption.
(d) Charges. Registrations of transfers or exchanges of Bonds shall be
without charge to the Bondholders.. but any taxes or other governmental charges required
to be paid with respect to a transfer or exchange shall be paid by the Bondholder
requesting the 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.
(e) Recognized Owners. The person in whose name any Bond is registered
on the Bond Register will be deemed the absolute owner of such Bond for all purposes,
and payinerit of any principal, interest and premium will be made only to or upon the
order of such person or its attorney duly authorized in writing, but such registration may
be changed as provided above. 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.
(f) Bonds Protected. All Bonds issued.upon any registration of transfer or
exchange of Bonds will 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.
0115 Wesu260447815.3 38
(g) Issuer's Reliance. 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 2.17. Cancellation. All Bonds which have been surrendered pursuant to.
Section 2.03 or Article III for payment upon maturity or redemption prior to maturity or Bonds
which are deemed canceled or are canceled pursuant to Section 4.04(b) will be canceled by the
Trustee and will not be reissued. Unless otherwise directed by the Issuer, the Trustee shall,treat
such Bonds in accordance with its document retention policies or as may be directed by the law
of the State.
Section 2.18. No Additional Bonds. No bonds other than the Bonds may be issued
hereunder.
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption. The Bonds are subject to redemption prior to maturity only
as set forth in this Article 111. All redemptions must be in Authorized Denominations.
Section 3.02. Optional Redemption.
(a) General Provisions. The Bonds are subject to optional redemption in
whole or in part upon optional prepayment of the Loan by the Borrower. Redemptions
pursuant to this Section 3.02 will be made at the following times and at the following
prices:
(i) On any Interest Payment Date within a Weekly Variable Rate
Period or Daily Variable Rate Period and on any Adjustment Date at a redemption
price equal to 100% of the principal amount redeemed, without premium, plus
accrued interest to the Redemption Date.
(ii) On any date within a Reset Period 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
0.5% each year until such redemption price equals 100% of the principal amount
of the Bonds, plus accrued interest, if any, to the Redemption Date:
Term of Reset Period . No-Call Period Redemption Price
Greater than or equal to 16 years 8 years 101%, declining 0.5%
per year to 100%
Less than 16 years and greater 4 years 101%, declining 0.5%
than or equal to 8 years per year to 100%
OHS West:260447815.3 39
Less than 8 years and greater 2 years 101%, declining 0.5%
than or equal to 4 years per year to 100%
The Borrower and the Remarketing Agent, not less than 15 days before any Reset
Date, may give notice to the Issuer. the Credit Provider and the Trustee setting
.forth a redemption. schedule different from that set forth above, accompanied by
(A)the written consent of the Credit Provider of the Credit Facility to be in effect
for the ensuing Reset Period and (B) an opinion of Bond Counsel to the effect that
such change will not adversely affect the exclusion from. gross income for federal
income tax purposes of the interest payable on the Tax-Exempt Bonds. Such
different redemption schedule will apply to any redemption pursuant to this
Section 3.02(a)(ii) for the new Reset Period, without further action by any party.
(iii) On any date within the Fixed Rate Period, 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
each year as provided below until such redemption price equals 100% of the
principal amount of the Bonds, plus accrued interest, if any, to the Redemption
Date:
Term of Fixed Period No-Call Period Redemption Price
Greater than or equal to 16 years 8 years 102%, declining 1.0%
per year to 100%
Less than 16 years and greater 4 years 101%, declining 0.5%
than or equal to 8 years per year to 100%
Less than 8 years and greater 2 years 101%, declining 0.5%
than or equal to 4 years per year to 100%
The Borrower and the Remarketing Agent may, not less than 15 days before the
Fixed Rate Adjustment Date, give notice to the Issuer, the Credit Provider 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 Provider of the
Credit Facility, 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 from gross income for federal income tax purposes of interest
payable on the Tax-Exempt Bonds. Such different redemption schedule shall
apply to any redemption pursuant to this Section 3.02(a)(iii) for the Fixed Rate
Period, without further action by any party.
(iv) On any Mandatory Tender Date, as designated by the Borrower in
writino, on or before such Mandatory Tender Date, at a price equal to the principal
amount of Bonds redeemed, plus interest accrued thereon to the date fixed for
redemption.
01S West260447815.3 40
(b) Premium From Available Moneys Other Than the Credit Facility. The
principal of and accrued interest on any Bond being redeemed under Section 3.02(a) shall
be paid from a Draw on the Letter of Credit or if an Alternate Credit Facility is in effect,
be paid from a Draw under the Alternate Credit Facility. Notwithstanding any other
provision of this Indenture; optional redemption of the Bonds shall not be permitted
unless, on or before the Redemption Date, the Trustee has on deposit Available Moneys
(which shall be from a source other than the Credit Facility and from a party other than
the Credit Provider) in an amount sufficient to pay the premium, if any, on the
Redemption Date.
Section 3.03. Mandatory Redemption. The Bonds are subject to mandatory
redemption as provided in this Section 3.03 on the earliest practicable Redemption Date for
which timely notice of redemption can be given pursuant to Section 3.04 following the
occurrence of the event requiring such redemption. The principal of and accrued interest on any
Bond being redeemed under this Section shall be paid from a Draw on the Letter of Credit, if a
Letter of Credit is in effect, or if an Alternate Credit Facility is in effect, be paid from a Draw
under the Alternate Credit Facility. Bonds will be redeemed at a redemption price equal to 100%
of the principal amount of such Bonds, without premium, plus accrued interest to the
Redemption Date. Bonds subject to mandatory redemption in part shall be redeemed in
Authorized Denominations or shall be redeemed in such amounts so that the Bonds Outstanding
following the redemption are in Authorized Denominations. If the Trustee receives an amount
for the mandatory redemption of Bonds which is not equal to a whole integral multiple of the
Authorized Denomination. the Trustee shall redeem Bonds in an amount equal to the next lowest
whole integral multiple of the Authorized Denomination to the amount received by the Trustee
and hold any excess amount in the Redemption Account.
(a) Casualty, or Condemnation. The Bonds shall be redeemed in whole or in
part in the event and to the extent that proceeds of insurance from any.casualty to, or
proceeds of any award from any condemnation of, or any award as part of a settlement in
lieu of condemnation of, the Mortgaged Property (.'Proceeds") are applied in accordance
with the Security Instrument to the prepayment of the Loan.
(b) After an Event of Default Under the Reimbursement Agreement. The
Bonds shall be redeemed in whole or in part in an amount specified by and at the
direction of the Credit Provider requiring that the Bonds be redeemed pursuant to this
subsection following any Event of Default under the Reimbursement Agreement. The
Redemption Date shall be the earliest practicable date, but in no. event shall such
redemption occur later than two Business Days prior to the date, if any, that the Credit
Facility terminates on account of the Credit Provider's giving of direction to the Trustee
pursuant to this subsection to redeem all of the Bonds.
(c) Principal Reserve Fund. The Bonds shall be redeemed in whole or in
part as follows:
(i) on each Adjustment Date in an amount equal to the amount which
has been transferred from the Principal Reserve Fund on such Adjustment Date to
the Redemption Account pursuant to Section 5.11(b)(v); and
01-1S West:260447815.3 41
(ii) on any Interest Payment Date in an amount equal to the amount
which has been transferred from the Principal Reserve Fund on such Interest
Payment Date to the Redemption Account pursuant to Section 5.1.1(b)(vi).
Bonds shall be redeemed in the following order of priority: first, 2006A-T Bonds,
second, Tax-Exempt Bonds in a Daily Mode or a Weekly Mode, third, all other Tax-
Exempt Bonds.
(dj Sinking Fund Redemption. The Bonds shall be redeemed during the
Fixed Rate Period if the Issuer has established a Sinking Fund Schedule, at the times and
in the amounts set forth in the Sinking Fund Schedule (subject to the provisions of
Section 5.05(c) permitting amounts to be credited toward part or all of any one or more
Sinking Fund Payments).
(e) Excess Loan Funds. The Bonds shall be redeemed in whole or in part in
the event and to the extent that amounts on deposit in the Loan Fund are transferred to the
Redemption Account pursuant to Section 5.03(c)(i); provided, proceeds of the 2006A
Bonds on deposit in the Loan Fund may be applied only to the redemption of 2006A
Bonds and proceeds of the 2008 Bonds on deposit in the Loan Fund may be applied only
to the redemption of 2008 Bonds.
Section 3.04. Notice of Redemption to Registered Owners.
(a) Notice Requirement. For any redemption of Bonds pursuant to
Section 3.02 or 3.03 (a), (c) or (e), the Trustee shall give notice of redemption by first
class snail, postage prepaid, not less than 10 days prior to the specified Redemption Date,
to the Registered Owner of each Bond to be redeemed at the address of such Registered
Owner as shown on the Bond Register; provided. that no notice of redemption shall be
required for redemption of Bonds pursuant to Section 3.02(a)(iv). With respect to
Book-Entry Bonds. if the Trustee sends notice of redemption to the Securities Depository
pursuant to the Letter of Representations, the Trustee shall not be required to give the
notice set forth in the immediately preceding sentence. In the case of any redemption of
Bonds pursuant Section 3.03(b), no notice of redemption will be given.
In the case of an optional redemption under Section 3.02, the notice of .
redemption shall state that it is conditioned upon receipt by the Trustee of sufficient
moneys to redeem the Bonds including Available Moneys to pay any redemption
premium in full ("Conditional Redemption"), and such notice and optional redemption
shall be of no effect if either (A) by no later than the scheduled redemption date.
sufficient moneys to redeem the Bonds and sufficient .Available Moneys to pay any
redemption premium have not been deposited with the Trustee, or if such moneys are
deposited, are not available or (B) the Credit Provider instructs the Trustee to rescind
such notice on or prior to the scheduled redemption date. The Trustee shall provide
copies of all notices given under this Sectionand of all revocations of notices to the
Credit Provider (so long as the Letter of Credit is in effect) or any Alternate Credit
Provider (at such time as an Alternate Credit Facility is in effect), at the same time it
gives notices to Bondholders.
01-IS West260447815.3 42
(b) Content of Notice. Each notice of redemption must state: (i) the date of
the redemption notice;- (ii)the complete official name of the Bonds, including the
Series designation; (iii) for each Bond to be redeemed, the interest rate or that the interest
rate is variable, maturity date and in the case of a partial redemption of Bonds, the
principal amount of each Bond to be redeemed; (iv) the CUSIP numbers of all Bonds
being redeemed; (v) the place or places where the Bonds to be redeemed must be
surrendered for payment and where amounts due upon such redemption will be payable
upon surrender of the Bonds to be redeemed; (vi)the Redemption Date and redemption
price of each Bond to be redeemed; (vii) the name, address, telephone number and
contact person at the office of the Trustee with respect to such redemption; (viii)that
interest on all Bonds to be redeemed will not accrue from and after the Redemption Date;
(ix) if a redemption is a Conditional Redemption, that redemption is conditional upon
receipt by the Trustee of sufficient moneys to redeem the Bonds including Available
Moneys to pay any redemption premium and (x) that the Credit Provider may direct the
Trustee to cancel such redemption upon the occurrence of any Event of Default under any
Credit Facility Document.
(c) Additional Notice. At the same time notice of redemption is sent to the
Registered Owners the Trustee shall send notice of redemption by first class mail,
overnight delivery service or such other means as is acceptable to the recipient, postage
or service prepaid (or as specified below) (i) to the Rating Agency, (ii) if the Bonds are
not subject to the Book-Entry System, 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 (iii) at least two of the national Information Services (described below) that
disseminate securities redemption notices. For this purpose:
(i) Securities Depositories include: The Depository Trust Company,
711 Stewart Avenue, Garden City, New York 11530, Fax: (516) 227-4039 or
4190; 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, and
(ii) Information Services include: Financial Information, Inc. "Daily
Called Bond Service,"'30 Montgomery Street, l Ot" 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 & Poor's
Ratings Group "Called Bond Record," 55 Water Street, New York, New Yorke
10041; 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.
OHS West:260447815.3 43
(d) . Validity of Proceedings for the Redemption of Bonds. If notice is given
as stated in subsection (a), failure of any Bondholder.to receive such notice, or any defect
in the notice, shall not affect the redemption or the validity of the proceedings for the
redemption of the Bonds.
(e) Rescission of Conditional Redemption; Cancellation of Optional
Redemption. The Trustee shall rescind any Conditional Redemption if the requirements
of Section 3.02(b) have not been met on or before the Redemption Date or the Trustee
has received a direction to cancel the Conditional Redemption fiom the Credit Provider.
The Trustee shall give notice of rescission by the same means as is provided in this
Section for the giving of notice of redemption or by Electronic Means confirmed in
writing. The optional redemption shall be canceled once the Trustee has given notice of
rescission. Any Bonds subject to Conditional Redemption where redemption has been
rescinded shall remain Outstanding, and neither the rescission nor the failure of funds
being made available in part or in whole on or before the Redemption Date shall
constitute an Event of Default. Notwithstanding notice having been given in the manner
provided above, any optional redemption of Bonds shall be canceled with the consent of
or at the direction of the Credit Provider if the Credit Provider has notified the Trustee in
writing, that an Event of Default under any Credit Facility Document has occurred.
Section 3.05. Redemption Payments. If notice of redemption has been given and the
conditions for such redemption, if applicable, have been met, the Bonds called for redemption
shall become due andpayable on the Redemption Date. interest on those Bonds will cease to
accrue from and after the Redemption Date and the called Bonds will no longer be Outstanding.
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. All moneys held by or on behalf of the Trustee for
the redemption of particular Bonds will be held in trust for the account of the holders of the
Bonds to be redeemed. If less than the entire principal amount of a Bond is called for
redemption, the Issuer shall execute, and the Trustee shall authenticate and deliver, upon the
surrender of such Bond to the Trustee. without charge by the Issuer or the Trustee to the
Bondholder. in exchange for the unredeemed principal amount of such Bond, a new Bond or
Bonds of the same interest rate. maturity and term, in any Authorized Denomination, in
aggregate_principal amount equal to the unredeemed balance of the principal amount of the Bond
so surrendered.
Section 3.06. Selection of Bonds To Be Redeemed Upon Partial Redemption. If less
than all the Outstanding Bonds of a Series are called for redemption, the Trustee shall select by
lot, in such manner as it determines in its discretion. the Bonds, or portions of the Bonds in
Authorized Denominations, to be redeemed. In the selection process (i) any Pledged Bonds
Outstanding will be called for redemption before any other Bonds are selected for redemption,
and (ii) if applicable, the Bonds with the highest interest rate will be called for redemption before
any other Bonds are selected for redemption. For the purposes of this Section, Bonds which
have previously been selected for redemption will not be deemed Outstanding. Notwithstanding
the foregoing, the Securities Depository for Book-Entry Bonds shall select the Bonds for
redemption within particular maturities according to its stated procedures.
01►S West260447815.3 44
Section 3.07. Purchase of Bonds in Whole in Lieu of Redemption. If the Bonds.are
called for redemption in whole, the Bonds called for redemption may be purchased in lieu of
redemption in accordance with this Section.
(a) Purchase in Lieu of Redemption. Purchase in lieu of redemption shall be
available for all of the Bonds called for redemption. The Credit Provider, or the
Borrower with the written consent of the Credit Provider, may direct the Trustee to
purchase all of the Bonds. Any such direction to the Trustee must:
(i) be in writing;
(ii) state either that all of the Bonds called for redemption are to be
purchased or, if less than all of the Bonds called for redemption are to be
purchased, identify those Bonds to be purchased by maturity date and outstanding
principal amount in Authorized Denominations; and
(iii) be received by the Trustee no later than noon one Business Day
prior to the Redemption Date.
If so directed, the Trustee shall purchase such Bonds on the date which otherwise would
be the Redemption Date. Any of the Bonds called for redemption that are not purchased
in lieu of redemption shall be redeemed as otherwise required by this Indenture on the
Redemption Date.
(b) Withdrawal of Direction To Purchase. On or prior to the scheduled
redemption date, any direction given to the Trustee pursuant to this Section or any
consent given by the Credit Provider to such a direction may be withdrawn by written
notice to the Trustee. Subject generally to this Indenture, should a direction to purchase
or the consent of the Credit Provider be withdrawn, the scheduled redemption of such
Bonds shall not occur.
(c) Purchaser. If the purchase is directed by the Credit Provider, the
purchase shall be made for the account of the Credit Provider or its designee. If the
purchase is directed by the Borrower with the consent of the Credit Provider, the
purchase shall be made for the account of the Borrower or its designee.
(d) Purchase Price. The purchase price of the Bonds shall be equal to the
outstanding principal of, accrued and unpaid interest on and the redemption premium, if
any, which would have been payable on such Bonds on the Redemption Date for such
redemption. To pay the purchase price of such Bonds, the Trustee shall use such funds, if
any, in:
(i) the Credit Facility Account to pay the principal and interest
components of the purchase price; and
(ii) the Redemption Account to pay the redemption premium
component of the purchase price;
OHS West:2604478153 45
r
that the Trustee would have used to pay the outstanding principal of, accrued and unpaid
interest on and the redemption premium, if any, that would have been payable on the
redemption of such Bonds on the Redemption Date. Otherwise, the Trustee shall pay the
purchase price only from Available Moneys. The Trustee shall not purchase the Bonds
pursuant to this Section if by no later than the Redemption Date, sufficient moneys have
not been deposited with the Trustee, or such moneys are deposited, but are not available.
(e) No Notice to Bondholders. No notice of the purchase in lieu of
redemption shall be required to be given to the Bondholders (other than the notice of
redemption otherwise required under this Indenture).
(f) Limitations on Transfer of Bonds. Notwithstanding Section 2.16, Bonds
purchased pursuant to this Section 3.07 may not be transferred to another registered
owner without the written approval of the Issuer and only in compliance with all
applicable securities laws; provided, however, that such approval shall not be required if,
at the time of such transfer, such Bonds have a current investment grade rating from the
Rating Agency. Any such approved transfer must be of all of the Bonds purchased to a
single registered owner.
ARTICLE IV
PURCHASE AND REMARKETING OF BONDS
Section 4.01. Purchase of Bonds on Any Business Day.
(a) Optional Tender. During any Weekly Variable Rate Period or Daily
Variable Rate Period, the Trustee shall purchase any Bond on behalf of and as agent for
the Borrower, but solely from the sources provided in Section 4.01(o). on the demand of
the Beneficial Owner of such Bond. The purchase price of any Bond tendered for
purchase shall be 100% of the principal amount of such Bond plus accrued interest, if
any, to the date of purchase. The Beneficial Owner may demand purchase of its Bond by
delivery of a Bondholder Tender Notice complying with the requirements of this
subsection to the Tender Agent at its Designated Office on any Business Day. Any
Bondholder Tender Notice received by the Tender Agent after 3:30 p.m. Eastern Time on
a Business Day will be treated as received at 9:00 a.m. Eastern Time on the following
Business Day. The date of purchase shall be the date selected by the Beneficial Owner in
the Bondholder Tender Notice; provided, however, that such date is (i) a Business Day
which is at least seven days after the date of the delivery of the Bondholder Tender
Notice to the Tender Agent with respect to a Bond at a Weekly Variable Rate or (ii) is a
Business Day with respect to a Bond at a Daily Variable Rate. During a Daily Variable
Rate Period, a Bondholder Tender Notice must be received by the Tender Agent no later
than 9:00 a.m. Eastern time if the date of purchase is the day the Bondholder Tender
Notice is received. A Bondholder Tender Notice complies with the requirements of this
subsection if it:
(i) is accompanied by a guaranty of signature.acceptable to the Tender
Agent; and
\ ORIS West:260447815.3 46
(ii) contains.the CUSIP number of the Bond, the principal amount to
be purchased (or portion of a Bond, provided that the retained portion is an
Authorized Denomination), the name, address and tax identification number or
social security number of the Beneficial Owner of the Bond. demanding such
payment and the purchase date.
(b) Irrevocability of Tender. Subject to Section 4.01(h), by delivering a
Bondholder Tender Notice the Beneficial Owner irrevocably agrees to deliver the
Tendered 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
Designated Office of the Tender Agent or any other address designated by the Tender
Agent at or prior to 10:00 a.m. Eastern 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 of a Bond or Bonds) for purchase on a Business Day in accordance
with Section 4.01(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 4.01(a) only if the Bonds so delivered to the Tender Agent
conform in all respects to the description of such Bonds 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 4.01(a) and whether Bonds
delivered conform in all respects to the description of the Bonds in the Bondholder
Tender Notice. Such determination shall be binding on the other Remarketing 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 Remarketing
Notice Parties by telephone, promptly confirmed in writing, of such receipt, specifying
the contents of such Bondholder Tender Notice.
(e) Untendered Bonds. If after delivery of a Bondholder Tender Notice to the
Tender Agent the holder making such election fails to deliver any of the Bonds described
in the Bondholder.Tender Notice as required by Section 4.01(b), each untendered Bond
or portion of such untendered Bond ("Untendered Bond") described in such Bondholder
Tender Notice shall be deemed to have been tendered to the Tender Agent for purchase,
to the extent that there is on deposit in the Bond Purchase Fund on the applicable
purchase date an amount sufficient to pay the purchase price of such Untendered Bond,
and such Untendered Bond from and after such purchase date will cease to bear interest
and no longer be considered to be Outstanding. The Trustee shall promptly give notice
by registered or certified first-class mail, postage prepaid, to each Beneficial Owner of
any Bond which has been deemed to have been purchased pursuant to this Section,
stating that interest on such Untendered Bond ceased to accrue from and after the date of
purchase and that moneys representing the purchase price of such Untendered Bond are
available against delivery of such Untendered Bond at the Designated Office of the
Tender Agent. The Issuer shall sign and the Tender Agent shall authenticate and deliver
for redelivery a new Bond or Bonds in replacement of the Untendered Bond not so
OI-IS Wcst260447815.; 47
delivered. The replacement of any Bond will not be deemed to create new indebtedness,
but will be deemed to evidence the indebtedness previously evidenced by the Untendered
Bond.
(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 of such Bond 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 any Tendered Bond to the Registered Owner at or before 4:00 p.m. Eastern
Time on the date for purchase specified in the Bondholder Tender Notice, first from
remarketing proceeds on deposit in the Bond Purchase Fund, second, from proceeds of a
payment under the Credit Facility, and third, from the Borrower.
(h) Book-Entr},-Only. Notwithstanding the above, during any period that the
Bonds are Book-Entry Bonds, (i) any Bondholder Tender Notice also must (A) provide
evidence satisfactory to the Tender Agent that the party delivering the notice is the
Beneficial Owner of the Bond(s) 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 Bond(s) on
the records of DTC to the account of, or as directed by,. the Trustee; (iii) Tendered
Bond(s) will be purchased without physical delivery as if such Bond(s) had been so
delivered and (iv)the purchase price of such Bond(s) will be paid to DTC.
Section 4.02. Mandatory Tender and Purchase.
(a) Mandatory Tender Dates (Other Than Upon Default); Notice. The
holders of the Bonds shall be required to tender their Bonds to the Tender Agent for
purchase on each Mandatory Tender Date by the Trustee acting on behalf of and as agent
for the Borrower, but solely from the sources provided in Section 4.02(d), at a purchase
price equal to 100% of the principal amount of the Bonds plus accrued interest to the
applicable Mandatory Tender Date. The Owner of any Bond may not elect to retain its
Bond. Mandatory Tender Dates include each proposed Adjustment Date (even if a
proposed change in Mode fails to occur), each Substitution Date and each Extension Date
(unless an extension of the Letter of Credit or the Alternate Credit Facility then in effect
`has been received by the Trustee on or before such date). The Trustee shall give notice of
Mandatory Tender Dates as follows:
(i) Not less than 30 days before any proposed Adjustment Date, the
Trustee shall give notice by first class mail, postage prepaid, to the Bondholders
stating the information required to be set forth in notices pursuant to the
applicable provisions of Sections 2.08(a)(ii), 2.08(b)(ii) or 2.08(c)(ii). .
OHS West:260447815.3 48
(ii) Not less than 10 days before any Substitution Date, the Trustee
shall give notice by first class mail, postage prepaid, to the Bondholders stating
(A) an Alternate Credit Facility will be substituted for the Credit Facility then in
effect, (B) the Substitution Date, (C) that the Bonds are required to be tendered on
the Substitution Date and (D) that Bondholders will not have the right to elect to
retain their Bonds.
(iii) Not less than 10 days before any Extension Date, if the Trustee has
not received a binding commitment to extend the Letter of Credit or applicable
Alternate Credit Facility then in effect, the Trustee shall give notice by first class
mail, postage prepaid, to the Bondholders stating (A) the Extension Date and that
no commitment to extend the Letter of Credit or Alternate Credit Facility then in
effect has been received by the Trustee, (B) that such Bonds are required to be
tendered on the Extension Date (unless an extension of the Letter of Credit or
Alternate Credit Facility then in effect is received prior to the Extension Date,
notice of which shall be given promptly to Bondholders), and (C) that the
Bondholders will not have the right to elect to retain such Bonds if an extension
of the Letter of Credit or Alternate Credit Facility then in effect.is not received.
(b) Mandatory Tender Upon Default, Notice. The Bonds shall be subject to
mandatory tender upon receipt by the Trustee of written notice from the Credit Provider
stating that an Event of Default under this Indenture, the Financing Agreement or any
Credit Facility Document has occurred and directing that the Bonds be subject to
mandatory tender. Such mandatory tender shall be made on the earliest practicable date
but no later than 10 days, after notice of tender has been given to Bondholders and shall
be payable solely from the sources provided in Section 4.02(d)(ii) at a purchase price
equal to 100% of the principal amount of the Bonds plus accrued interest to the
Mandatory Tender Date. The Owner of any Bond may not elect to retain its Bond.
Immediately upon receipt by the Trustee of such written notice from the Credit Provider,
the Trustee shall give notice by first class mail, postage prepaid, to the owners of the
Bonds stating that (i) such event has occurred, (ii) the Bonds are required to be tendered
on the Mandatory Tender Date specified in such notice and (iii) the Bondholders will not
have the right to elect to retain their Bonds.
(c) Untendered Bond. Any Bond which is not tendered on a Mandatory
Tender Date ("Untendered Bond") will 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.will be considered to be Outstanding. In
the event of a failure by owners to deliver Bonds on the Mandatory Tender Date, such
Owners will not be entitled to any payment (including any interest to accrue from and
after the Mandatory Tender Date) other than the purchase price for such Untendered
Bond, and any Untendered Bond will no longer be entitled to the benefits of this
Indenture, except for the purpose of payment of the purchase price for such Untendered
Bond. The Issuer shall sign, and the Tender Agent shall authenticate and deliver to the
Remarketing Agent for redelivery to the purchaser, a new Bond in replacement of the
Untendered Bond. The replacement of any such Untendered Bond shall not be deemed to
OHS West:260447815.3 49
create new indebtedness; but shall be deemed to evidence the indebtedness previously
evidenced by the Untendered Bond.
(d) Payment and Sources of Purchase Price. The Tender Agent shall make
payment for Bonds purchased pursuant to this Section at or before 4:00 p.m. Eastern
Time on the Mandatory Tender Date. The Tender Agent shall pay the purchase price:
(i) for Bonds purchased pursuant to 4.02(a), first, from remarketing
proceeds on deposit in the Bond Purchase Fund, second, from proceeds of a
payment under a Credit Facility, and third, from the Borrower; and
(ii) for Bonds purchased .pursuant to Section 4.02(b), first from
proceeds of a payment under the Credit Facility, and second, 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 of such Bonds at the Designated Office of the Tender Agent. The
Tender. Agent shall promptly give notice by registered or "certified first class" mail,
postage prepaid, to each Registered Owner of Bonds whose Bonds are deemed to have
been purchased stating 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 of such Bonds at the Designated Office of the Tender Agent. During any
period that the Bonds are Book-Entry Bonds, (i) any notice delivered pursuant to this
Section 4.02(e) shall be given only to the entity designated in the Letter of
Representations, as required by Section 3.04(a) and (ii) it shall not be necessary for
Bond(s) to be physically delivered on the date specified for purchase of such Bond(s), but
such purchase shall be made.as if such Bond(s) had been so delivered, and the purchase
price of such Bond(s) shall be paid to DTC.
OHS West:260447815.3 50
Section 4.03. Remarketing of Bonds.
(a) Resignation and Removal ofRemarketing-Agent.
(i) Resignation of Remarketing Agent; Termination of Existence. The
Remarketing Agent may resign by giving no less than 30 days' prior written
notice to the other Remarketing Notice Parties, but in 'no event shall such
resignation take effect prior to the date a successor Remarketing Agent is
appointed and is serving under this Indenture and the Remarketing Agreement.
Upon receipt of such notice or upon termination of the Remarketing Agent's
corporate existence, or removal of the Remarketing Agent pursuant to
Section 4.03(a)(ii), the Borrower, with the prior written consent of the Credit
Provider and the Issuer. shall appoint a successor Remarketing Agent, which must
be a trust company or bank or investment bank in good standing, within or
without the State. 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 Provider may, with the prior written consent
of the Issuer, appoint a successor Remarketing Agent by written notice to the
other Remarketing Notice Parties.
(ii) Removal of Remarketing Agent. The Borrower may remove the
Remarketing Agent, with the prior written consent of the Credit Provider, at any
time by a written notice to the other Remarketing Notice Parties, but unless
specifically approved by the Credit Provider, such removal will not become
effective until a successor Remarketing Agent satisfactory to the.Credit Provider
and the Issuer is appointed. If (A) an Event of Default has occurred and is
continuing under the Reimbursement Agreement or (B)the Remarketing Agent
has failed to fulfill any of its duties and obligations under this Indenture or the
Remarketing Agreement, the Credit Provider may remove the Remarketing A-ent
by written notice to the other Remarketing Notice Parties and appoint a successor
Remarketing Agent.
(b) Best Efforts To Remarket Tendered Bonds. In accordance with
Sections 2.05, 2.06 and 2.07, the Remarketing Agent shall offer for sale and use its best
efforts to rernarket, on or prior to each applicable Tender Date:
(i) all Bonds identified in a Bondholder Tender Notice delivered to
the Tender Agent;
(ii) all Bonds required to be tendered upon delivery of notice under
Sections 4.02(a)(i), 4.02(a)(ii) and 4.02(a)(iii);
(iii) all Bonds required to be tendered pursuant to Section 4.02(a)(iii)
but only if the Letter of Credit has been extended or an Alternate Credit Facility
has been delivered to the Trustee; and
OHS West260447815.3 51
(iv) all Bonds required to be tendered upon delivery of notice pursuant
to Section 4.02(b) but only if the Credit Provider directs that such Bonds be
remarketed.
The Remarketing Agent shall offer such Bonds for sale at par plus accrued interest, if
any.
(c) Preliminary Notice of Remarketing. During any Weekly Variable Rate,
the Remarketing Agent will give notice by telephone (immediately confirmed by
Electronic Means) not later than 4:00 p.m. Eastern Time (unless a mandatory tender
pursuant to Section 4.02(b) is scheduled, in which case the Remarketing Agent will give
such notice not later than 11:00 a.m. Eastern Time) on the Business Day preceding each
Tender Date, as follows:
(i) to the other Remarketing Notice Parties specifying the total
principal amount of Tendered Bonds, if any, (A) that have been remarketed for
settlement on such Tender Date, (B) that remain unremarketed at such time and
(C) that in its best good faith estimate will remain unremarketed as of 10:00 a.m.
Eastern Time on the Tender Date; and
(ii) to the Trustee, specifying the name, address and taxpayer
identification number or social security number of each purchaser as well as the
` denominations of the Bonds to be issued to such purchaser.
(d) Final Notice of Remarketing. Not later than 10:00 a.m. Eastern Time on
the Tender Date, the Remarketing Agent shall give notice by Electronic Means to the
other Remarketing Notice Parties (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 4.03(c) if not already provided);
(ii) the amount of remarketing proceeds on deposit with the Tender
Agent;
(iii) the amount of Bonds to be purchased that have not been
remarketed at the time of such notice; and
(iv) the amount required to be paid under the Credit Facility;
except that the information specified in paragraphs (iii) and (iv) is not relevant to a
remarketing described in Section 4.03(b)(iv) and the Remarketing Agent need not give
such information in that circumstance. Upon receipt of such notice, the Trustee shall
draw on the Credit Facility pursuant to Section 8.02 in the amount necessary to pay the
purchase price of the Bonds for which remarketing proceeds are not available.
01 IS West:26044781 5.3 52
(e) Payment of Purchase Price. Upon delivery (except as otherwise provided
in, but subject to the tendering Beneficial Owners' compliance with, Section 4.01(h)) of
Tendered Bonds to or upon the order of the Remarketing Agent, the Remarketing Agent
shall deliver to the Tender Agent at its Designated Office no later than 3:00 p.m., Eastern
time, 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 4.03(d), plus accrued interest, if any, on such Bonds.
(f) Prohibited Remarketing. Except as otherwise provided in this Indenture,
the Remarketing Agent shall not remarket any Bonds directly to the Issuer, the Borrower,
any Affiliate of the Borrower, any Affiliate of the Issuer or any guarantor of the Loan.
(g) Remarketing Agent's Own Account. 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.
(h) Periodic Notice to Credit Provider. The Remarketing Agent shall provide
the Credit Provider with a notice, in form satisfactory to the Credit Provider, by the next
Business Day after the first Rate Determination Date in each calendar month, setting
forth the name and telephone number of the person providing the notice, the name of the
Remarketing Agent and the principal amount of Bonds tendered for remarketing 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. The Credit Provider
may.waive its right to receive such notice(s) from time to time in writing.
(i) Notices of Rate Determination Date and Nonpayment of Fees. On or
before a Rate Determination Date other than during a Daily Variable Rate Period or
Weekly Variable Rate Period, the Remarketing Agent shall notify the other Remarketing
Notice Parties of the date selected as the Rate Determination Date.
0) Duties of Trustee Concerning Remarketed Bonds. Unless the Bonds are
then Book-Entry Bonds, the Trustee shall deliver, or cause to be delivered, at the
Designated Office of the Tender Agent, Bonds remarketed by the Remarketing Agent,
before 1:00 p.m. Eastern Time on the applicable purchase date or Mandatory Tender
Date; provided; however, that prior to delivery of the Bonds (including Bonds previously
purchased pursuant to Section 4.04 and then being remarketed) 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 Pledged Bonds not then being remarketed)
plus the Interest Requirement.
Section 4.04. Pledged Bonds.
(a) No Credit Facility Support. The Credit Facility shall not constitute
security or provide liquidity for Pledged Bonds.
(b) Ownership and Pledge of Pledged Bonds. Pledged Bonds shall be owned
by the Borrower and pledged to the Credit Provider under the Pledge Agreement. As set
OHS West:260447815.3 5_3
forth in the Pledge Agreement, the Tender Agent shall either (i) ensure that Pledged
Bonds are delivered to the Credit Provider, 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 Pledged Bonds is reflected directing the
intermediaries to credit the security entitlement to the Pledged Bonds to the appropriate
account for the benefit of the Credit Provider and deliver to the Credit Provider a written
confirmation of such credit, whether or not the Borrower notifies the Remarketing Agent
to do so. The Trustee shall cancel Pledged Bonds upon the written direction of the Credit
Provider.
(c) Remarketing of Pledged Bonds. At such time as a Pledged Bond is
remarketed by the Remarketing Agent, the Trustee or the.Tender Agent, as appropriate,
shall (i) remit the proceeds from the remarketing to the Credit Provider, (ii) confirm with
the Credit Provider or the Alternate Credit Provider, as applicable, that the Letter of
Credit has been reinstated by the amount drawn to purchase the Pledged Bonds and
(iii) give written notice to the Remarketing Agent, the Borrower and the Credit Provider
that such Bond is no longer a Pledged Bond. No Pledged Bond which has been
remarketed shall be delivered by the Trustee to the purchaser of such Bond until the
Trustee has received written confirmation from the Credit Provider that the Credit
Facility has been reinstated in the principal amount of such remarketed Pledged Bond.
During the occurrence and continuation of an Event of Default under this Indenture or
any Credit Facility Document, no Pledged Bond shall be remarketed without the prior
written consent of the Credit Provider. No Pledged Bond shall be remarketed unless the
Trustee takes such action, if any, required by the Credit Facility to reinstate the Credit
Facility for a like amount.
Section 4.05. No Sales After Wrongful Dishonor; No Purchase After Acceleration.
Notwithstanding anything in this Indenture to the contrary, no Bonds shall be remarketed if the
Trustee has given notice to the Remarketing Agent that a Wrongful Dishonor has occurred and is
continuing. No Bonds, other than Pledged Bonds, shall be purchased if the Trustee has given
notice to the Remarketing Agent that there has occurred and is continuing an acceleration of the
Bonds pursuant to Section 10.02.
ARTICLE V
FUNDS AND ACCOUNTS
Section 5.01. Creation of Funds and Accounts. The following Funds and Accounts
are created with the Trustee:
(a) the Loan Fund and within the Loan Fund, the Project Account and
Capitalized Moneys Account, and within each of the Project.Account and the Capitalized
Moneys Accounts, a 2006A Bonds subaccount, a 2006A-T Bonds subaccount and a 2008
Bonds subaccount;
(b) the Revenue Fund and within the Revenue Fund, the Interest Account, the
Credit Facility Account,the Redemption Account, and the Fees Account;
OHS west:26044781�3 54
(c) the Costs of Issuance Fund;
(d) the Rebate Fund;
(e) so long as any Bonds are Outstanding and have not been adjusted to the
Fixed Rate, the Bond Purchase Fund; and
(f) the Principal Reserve Fund.
The Trustee shall hold and administer the Funds and Accounts in accordance with this Indenture.
Section 5.02. Initial Transfers and Deposits. On the Escrow Break Date, the Trustee
shall make the following transfers and deposits:
(a) transfer $ representing Net Bond Proceeds of the
2006A Bonds, from the Loan.Fund to the 2006A Bonds subaccount of the Capitalized
Moneys Account;
(b) transfer $ representing Net Bond Proceeds of the
2006A Bonds, from the Loan Fund tothe. 2006A Bonds subaccount of the Project
Account;
(c) transfer $ representing Net Bond Proceeds of the
2006A-T Bonds, from the Loan Fund to the 2006A-T Bonds subaccount of the
Capitalized Moneys Account;
(d) transfer $ representing Net Bond Proceeds of the
2006A-T Bonds, from the Loan Fund to the 2006A-T Bonds subaccount of the Project
Account;
(e) deposit $ representing Net Bond Proceeds of the 2008
Bonds, in the 2008 Bonds subaccount of the Capitalized Moneys Account;
(f) deposit $ , representing Net Bond Proceeds of the 2008
Bonds, in the 2008 Bonds subaccount of the Project Account;.
(g) deposit $ ;received from the Borrower, representing the
Costs of Issuance Deposit, into the Costs of Issuance Fund;
Section 5.03. Loan Fund.
(a) Disbursements From the Capitalized Moneys Account. Until the
depletion of the Capitalized Moneys Account, the Trustee shall automatically transfer
amounts on deposit in. the Capitalized Moneys Account without the receipt of
Requisitions as follows:
(i) Interest on the Note. Not later than three Business Days prior to
each Interest Payment Date, the Trustee shall transfer to the Interest Account an
OHS West:260447815.3 55
amount equal to the interest which shall be payable on such Interest Payment Date
by the Borrower under the Note;
(ii) Facility Fee to the Credit Provider. Not later than three Business
Days prior to each Interest Payment Date, the Trustee shall transfer to the Interest
Account an amount equal to the amount of the Facility Fee payable to the Credit
Provider under the Reimbursement Agreement (or similar agreement if an
Alternate Credit Facility is then in effect); and
(iii) Certain Other Fees. Not later than three Business Days prior to
the date on which any Third Party Fee is due, the Trustee shall transfer to the Fees
Account, the amount of such Third Party Fee.
Transfers from the Capitalized Moneys Account shall, so long as the Letter of
Credit is outstanding, be made no later than three Business Days prior to the respective
dates on which such payments are due. The Trustee shall immediately notify the Credit
Provider if sufficient funds are not available to make the transfers as and when required
by this paragraph.
Transfers from the Capitalized Moneys Account shall be made from the
subaccounts specified by the Borrower or, if no specification is made, on a pro rata basis.
(b) Disbursements From.the Project Account. On and after the Escrow
Break Date, the Trustee shall disburse amounts on deposit in the Project Account as
provided in this subsection for the sole purpose of paying Costs of the Project.
(i) Requisitions. The Trustee shall make disbursements from the
Project Account only upon the receipt of Requisitions, each in the form of the
attached Exhibit B, signed by an Authorized Borrower Representative and
countersigned by an Authorized Credit Provider Representative. The Trustee
shall have no duty to determine whether any requested disbursement from the
Project Account complies with the Credit Facility Documents. The
countersignature of the Authorized Credit Provider Representative on a
Requisition shall be deemed a certification and, insofar as the Trustee and the
Issuer are concerned, constitute conclusive evidence, that all of the terms,
conditions and requirements of the Credit Facility Documents applicable to the
disbursement have been fully satisfied or waived. The Trustee shall, immediately
upon each receipt of a completed Requisition signed by the Authorized Borrower
Representative and countersigned by an Authorized Credit Provider
Representative, initiate procedures with the provider of the Investment Agreement
applicable to the Loan Fund, if any, to make withdrawals under that Investment
Agreement as necessary to fund the Requisition.
(ii) Timing. If a Requisition signed by the Authorized Borrower
Representative and countersigned by an Authorized Credit Provider
Representative is received by the Trustee by noon, prevailing California time; on
any given Business Day, the Trustee shall pay the requested disbursement within
OI-IS West:260447815.3 56
two Business Days (for this purpose, including in the definition of `Business
Day' only clauses (i) and (iii) of such definition), or, if an Investment Agreement
is in effect with respect to such funds, within two Business Days after funds are
received by the Trustee from the provider of the relevant Investment Agreement.
If a Requisition. signed by the Authorized Borrower Representative and
countersigned by an Authorized Credit Provider Representative is received by the
Trustee after noon, prevailing California time, on any given Business Day, the
Trustee shall pay the requested disbursement within three of the above counted
Business Days. Upon final disbursement of all amounts on deposit in the Loan
Fund, the Trustee shall close the Loan Fund.
(c) Transfers To Effect Certain Mandatory Redemptions of Bonds.
(i) Excess Loan Funds. The Trustee shall transfer to the Redemption
Account such amounts remaining on deposit in the Loan Fund, excluding from
such transfer, however. any amount required to pay Costs of the Project which are
then not yet due and payable or which are then being contested in good faith, as
determined by the Credit Provider (so long as.the Letter of Credit is in effect) or
any Alternate Credit Provider (at such time as an Alternate Credit Facility is in
effect). The Trustee shall apply any amounts.so transferred to the redemption of
Bonds pursuant to Section 3.03(e).
Certain Other Mandatory Redemptions. Immediately prior to any
mandatory redemption of the Bonds in whole pursuant to Section 3.03(a) or
3.03(b), any amounts then remaining in the Loan Fund shall, at the written
direction of the Credit Provider, be transferred to the Redemption Account to be
applied to the redemption of Bonds pursuant to the applicable provision.
Section 5.04. Revenue Fund—Interest Account:
(a) Deposits Into the Interest Account. The Trustee shall deposit each of the
following amounts into the Interest Account:
(i) moneys provided by or on behalf of the Borrower relating to an
interest payment under the Note or an interest reimbursement under the
Reimbursement Agreement;
(ii) moneys provided by or on behalf of the Borrower for the payment
of the Facility Fee to the Credit Provider;
(iii) moneys transferred from the Capitalized Moneys Account pursuant
to Section 5.03(a) whether to pay accrued interest on the Bonds, the Facility Fee
to the Credit Provider or otherwise;
(iv) all Investment Income on the Funds and Accounts (except that
Investment Income earned on amounts on deposit in the Loan Fund, Rebate Fund,
Costs of Issuance Fund, and the Principal Reserve Fund shall be credited to and
retained in those respective Funds or Accounts); and
OHS West:2604478153 57
(v). any other moneys made available for deposit into the Interest
Account from any other source, including, but not limited to, any excess amounts
in the Bond Purchase Fund pursuant to Section 5.10.
(b) Disbursements From the Interest Account. The Trustee shall disburse or
transfer, as applicable, moneys on deposit in the Interest Account at the following times
and apply such moneys in the following manner and in the following order of priority:
(i) On each (A) Interest Payment Date, (B) Redemption Date and
(C) date of acceleration of the Bonds, the Trustee shall disburse to the Credit
Provider the amount of any Draw, as applicable, under the Credit Facility relating
to the payment of interest on the Bonds;
(ii) In the event of a Wrongful Dishonor until such Wrongful Dishonor
is cured, the Trustee shall disburse to the Bondholders on each Interest Payment
Date, an amount equal to the interest due on the Bonds on such date;
(iii) On each Interest Payment Date, to the Credit Provider the amount
of its Facility Fee,
(iv) If the Credit Provider gives written notice to the Trustee at any
time to the effect that there is any unreimbursed draw under the Credit Facility or
any other amount required to be paid by the Borrower to the Credit Provider
under the Loan Documents, the Bond Documents or the Credit Facility
Documents remains unpaid, then the Trustee shall transfer any Investment Income
earned on the Interest Account from and after the preceding Interest Payment
Date to the Credit Provider but not in an amount which exceeds the amount stated
as unpaid by the Credit.Provider in its notice to the Trustee; and
(v) Unless there is (A) a deficiency in the Principal Reserve Fund, the
Fees Account or the Rebate Fund or (B) other than as described in paragraph (iii)
above, an Event of Default under any Credit Facility Document or any Bond
Document or a default under any Loan Document has occurred and is continuing,
on each Interest Payment Date the Trustee shall disburse the Investment Income
earned on or transferred to the Interest Account from and after the preceding
Interest Payment Date to the Borrower. If a deficiency exists in the Principal
Reserve Fund, the Fees Account or the Rebate Fund, such Investment Income
shall be transferred to the Principal Reserve Fund, the Fees Account and/or the
Rebate Fund, in that order of priority. prior to any payment to the Borrower.
58
OHS wcsr:2�;oaa7st;.3
Section 5.05. Revenue Fund—Redemption Account.
.(a) Deposits Into the Redemption Account. The Trustee shall deposit each of
the following amounts into the Redemption Account:
(i) Available Moneys provided by or on behalf of the Borrower to
fund the premium payable on Bonds in connection with a redemption of such
Bonds. which amounts shall be held in a segregated subaccount in the
Redemption Account;
(ii) moneys transferred from the Loan Fund pursuant to
Section 5.03(c);
(iii) moneys provided by or on behalf of the Borrower relating to a
principal payment, including any prepayment under the Note;
(iv) moneys transferred from the Principal Reserve Fund pursuant to
Section 5.11; and
(v) any other amount received by the Trustee and required by the
terms of this Indenture or the Financing Agreement to be deposited into the
Redemption Account.
(b) . Disbursements From the Redemption Account. On each Redemption
Date, date of acceleration of the Bonds, the Maturity Date and/or the date on which the
Bonds are purchased in lieu of redemption in accordance with Section 3.07 hereof. the
Trustee shall disburse from the Redemption Account (x) to the Credit Provider, the
amount of any Draw under the Credit Facility relating to the payment of principal on the
Bonds or (y) in the event of a Wrongful Dishonor, to the Bondholders, an amount equal
to the principal due on the Bonds on such date. In addition., on any date on which
premium payable on Bonds in connection with a redemption of such Bonds is due, the
Trustee shall disburse to the Bondholders, from the segregated subaccount in the
Redemption Account. Available Moneys in an amount sufficient to pay such premium.
(c) Disbursements From the Redemption Account for .Sinking Fund
Payments.
(i) Application of Moneys. Provided that no notice of optional
redemption has been sent to Bondholders on or prior to the thirtieth day preceding
a Sinking Fund Payment Date, at the written instruction of the Issuer (acting
through an Authorized Representative), at the direction of the Borrower and with
the prior written consent of the Credit Provider. the Trustee shall apply any
moneys accumulated in the Redemption Account on or prior to the thirtieth day
preceding such Sinking Fund Payment Date 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 plus accrued and .unpaid interest to the date of purchase. such
OHS Wcsti260447815.3 59
purchase to be made in such manner as the Trustee (after consultation with the
Issuer, the Borrower and the Credit Provider) determines.
(ii) Credit Toward Sinking Fund P.ayment. Upon the purchase of any
Bond pursuant to Section 5.05(c)(i), all such Bonds will be cancelled by the
Trustee and an amount equal to the principal amount of the Bonds so purchased
will be credited toward the Sinking Fund Payment next due with respect to the
Bonds of'such maturity. 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 Borrower.
(iii) Redemption. As soon as practicable after the thirtieth day
preceding the due date of any such Sinking Fund Payment, and otherwise as
provided in Section 3.04, the Trustee shall give notice of redemption of Bonds in
such amount as is necessary to complete the retirement of a principal amount of
Bonds equal to the unsatisfied balance of such Sinking Fund Payment. The
Trustee shall call such Bonds for redemption whether or not it then has moneys in
the Redemption Account sufficient to pay the applicable redemption price of the
Bonds to be redeemed on the Redemption Date. The Trustee shall pay the
amount required for the redemption of the Bonds called for redemption from the
Funds specified in Article V of this Indenture, in the order of priority indicated,
and such amount will be applied by the Trustee to such redemption.
Section 5.06. Revenue Fund—Credit Facility Account.
(a) Deposits Into the Credit Facility Account. The Trustee shall deposit into
the Credit Facility Account all Draws under the Credit Facility, except that amounts
drawn to purchase Pledged Bonds shall be deposited into the Bond Purchase Fund
pursuant to Section 5.10(a)(ii). No other moneys shall be deposited into the Credit
Facility Account and the Credit Facility Account shall be maintained as a segregated
account and moneys in it shall not be commingled with any other moneys held under the
Indenture. The Credit Facility Account shall be closed at such time as the Credit
Provider has no continuing liability under the Credit Facility.
(b) Transfers From the Credit Facility Account. The Trustee shall cause
amounts deposited into the Credit Facility Account to be applied on the date payment is
due to the payments for which the Draw was made pursuant to the Credit Facility. In no
event shall amounts in the Credit Facility Account be applied to any premium that may
be payable upon the redemption of any Bonds, the payment of principal of and interest,
the purchase price and any premium on any Pledged Bonds or on any Bonds known by
the Trustee to be held by the Borrower or any Affiliate of the Borrower. Any amounts
remaining in the Credit Facility Account after making the payment for which the Draw
01 IS West260447815.3 60
was made pursuant to the Credit Facility shall be immediately refunded to the Credit
Provider.
Section 5.07. Revenue Fund—Fees Account.
(a) Deposits Into the Fees Account. The Trustee shall deposit into the Fees
Account all:
(i) Capitalized Moneys Account. Moneys transferred from the
Capitalized Moneys Account pursuant to Section 5.03(a);
(ii) Third Party Fees. Payments made by or on behalf of the Borrower
under the Financing Agreement attributable to the Third Party Fees; and
(iii) Fees and Expenses. Payments made by or on behalf of the
Borrower under the Financing Agreement attributable to the Fees and Expenses.-
(b) Disbursements From the Fees Account. On any date on which any
amounts are required to pay any Third Party Fees or any Fees and Expenses, such
amounts shall be withdrawn by the Trustee from the Fees Account for payment to the
appropriate party. In the event the amount in the Fees Account is insufficient to pay such
Third Party Fees or any Fees and Expenses, the Trustee shall make written demand on the
Borrower for the amount of such insufficiency and, pursuant to the terms of the
Financing Agreement, the Borrower shall be liable to promptly pay the amount of such
insufficiency to the Trustee after the date of the Trustee's written demand. The Trustee
will provide notice of the insufficiency to the Credit Provider.
(c) No Other Claims to Trust Estate. Neither the Tender Agent, the
Remarketing Agent nor the Rebate Analyst shall have any right to any moneys in any
Fund or Account or otherwise in the Trust Estate other than those moneys deposited
pursuant to subsection (a) into the Fees Account specifically for such Person. Except as
otherwise stated in Sections 5.17 and 9.02, the Issuer shall not have any right to any
moneys in any Fund or Account or otherwise in the Trust Estate other than those moneys
deposited pursuant to subsection (a) into the Fees Account specifically for the Issuer.
Except as otherwise stated in Sections 5.17, 9.02 and 10.10, the Trustee shall not have
any right to any moneys in any Fund or Account or otherwise in the Trust Estate other
than those moneys deposited pursuant to subsection (a) into the Fees Account specifically
for the Trustee.
Section 5.08. Costs of Issuance Fund.
(a) Deposits Into the Costs of Issuance Fund. On or before the Escrow
Break Date the Borrower shall deliver the Costs of Issuance Deposit to the Trustee. On
the Escrow Break Date the Trustee shall deposit or transfer, as applicable, the portion of
the Costs of Issuance Deposit then remitted to the Trustee into the Costs of Issuance Fund
to pay the costs incurred in connection with the remarketing of the 2006 Bonds and the
issuance and sale of the 2008 Bonds on the Escrow Break Date.
OHS west:260447815.3 61
(b) Disbursements Front the Costs of Issuance Fund. The Trustee shall
disburse,moneys on deposit in the Costs of Issuance Fund, pursuant to requisitions in the
form of Exhibit C attached to this Indenture, signed by an Authorized Borrower
Representative, to pay Costs of Issuance. The Trustee may conclusively rely on such
requisitions forpurposes of making such disbursements. Moneys on deposit in the Costs
of Issuance Deposit Account of the Costs of Issuance Fund shall not be part of the Trust
Estate and will be used solely to pay Costs of Issuance.
(c) Disposition of Remaining Amounts. Any moneys remaining in the Costs
of Issuance Deposit Account of the Costs of Issuance Fund two months after the Escrow
Break Date and not needed to pay still unpaid Costs of Issuance will be returned to the
Borrower. Upon final disbursement, the Trustee shall close the Costs of Issuance Fund.
Section 5.09. Rebate. Fund. ' The Trustee shall hold and apply the Rebate Fund as
provided in the Tax Certificate. Within 30 days after the end of every fifth Bond Year (as
defined in the Tax Certificate) for the 2006A Bonds or the 2008 Bonds, and within 55 days after
the date on which no 2006A Bonds or no .2008 Bonds are Outstanding, the Borrower or the
Trustee shall cause the Rebate Analyst to deliver to the Trustee and the Issuer a certificate 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.
The Trustee agrees to comply with all instructions given to it by the Borrower in
accordance with this covenant. The Trustee shall conclusively be deemed to have complied with
the provisions of this Section 5.09 if it follows the instructions of the Borrower and shall not be
required to take any actions hereunder in the absence of instructions from the Borrower.
Section 5.10. Bond Purchase Fund.
(a) Deposits htto Bond Purchase Fund. The Trustee shall deposit each of
the following into the Bond Purchase Fund:
(i) remarketing proceeds received upon the remarketing of Tendered
Bonds to any person; and
(ii) Draws under the Credit Facility to enable the Trustee to pay the
purchase price of Tendered Bonds to the extent that moneys obtained pursuant to
paragraph (i) 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. Eastern Time on each Tender Date.
Subject to Section 8.03 permitting reimbursement of amounts owed to the Credit
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 years will be applied in the same manner as provided under
Section 5.16 with respect to unclaimed payments of principal and interest.
(b) . Disbursements.From the Bond Purchase Fund. The Trustee shall
transfer to the Tender Agent on or before 3:00 p.m. Eastern Time on each Tender Date
OHS West:260447815.3 62
amounts on deposit in the Bond Purchase Fund to pay the purchase price of Tendered
Bonds. The Tender Agent shall apply such amounts to pay the purchase price of Bonds
purchased under this Indenture to the former owners of such Bonds upon presentation of
the Bonds to the Tender Agent pursuant to Section 4.01 or 4.02.
Section 5.11.' Principal Reserve Fund.
(a) Deposits Into the Principal Reserve Fund. The Trustee shall deposit each
of the following amounts into the Principal Reserve Fund:
(i) All of the monthly payments of principal made by the Borrower in
accordance with the Reimbursement Agreement, as such schedule of principal
payments may be amended in accordance with the Reimbursement Agreement,
upon delivery to the Issuer, the Trustee and the Credit Provider of an Opinion of
Bond Counsel to the effect that such amendment will not, in and of itself,
adversely affect the exclusion of the interest payable on the Tax-Exempt Bonds
from gross income for federal income tax purposes; and
(ii) Investment Income earned on amounts on deposit in the Principal
Reserve Fund.
(b) Disbursements From the Principal Reserve Fund. The Trustee shall pay
or transfer amounts on deposit in the Principal Reserve Fund as follows:
(i) at the written direction of the Credit Provider, to the Credit
Provider to reimburse the Credit Provider for any unreimbursed Draw under the
Credit Facility and to pay any other amounts required to be paid by the Borrower
under the Loan Documents. the Bond Documents or the Credit Facility
Documents (including any amounts required to be paid to the Credit Provider);
(ii) at the written direction of the Credit Provider. with the written
consent of the Borrower (so long as an Event of Default has not occurred and is
not continuing under any of the Credit Facility Documents), to the Credit Provider
or the Borrower, as the Credit Provider elects, to make improvements or repairs to
the Mortgaged Property;
(iii) at the written direction of the Credit Provider, if a default has
occurred under the Credit Facility Documents. any Loan Document or any Bond
Document, to the Credit Provider for any use approved in writing by the Credit
Provider;
(iv) at the written direction of the Credit Provider, if a new mortgage
and mortgage note have been substituted for the Security Instrument and the Note
in accordance with the Loan Documents, or if the Borrower otherwise consents,
for any purpose approved in writing by the Credit Provider;
(v) on each Adjustment Date, to the Redemption Account;
OHS West:26044781 .3 6J
(vi) during a Weekly Variable Rate Period or Daily Variable Rate
Period, so long as any 2006A-T Bonds remain Outstanding, on the tenth Business
Day prior to each Interest Payment Date, all or any part of the amounts on deposit
in the Principal Reserve Fund in Authorized Denominations (rounded down to the
nearest integral multiple of $100,000) shall be transferred to the Redemption
Account for the redemption of 2006A-T Bonds; and .thereafter, on the tenth
Business Day prior to each Interest Payment Date, all amounts on deposit in the
Principal Reserve Fund (rounded downward to the nearest multiple of$100,000)
in excess of the Principal Reserve Amount, to the Redemption Account for the
redemption of Tax-Exempt Bonds; and
(vii) pay to the Borrower, Investment Income on moneys in the
Principal Reserve Fund on the Interest Payment Date ,following receipt by the
Trustee of such interest or profits; provided that there is. no deficiency in the
Interest Account. the Redemption Account, the Principal Reserve Fund, the Fees
Account or the Rebate Fund, and that no default exists under the Credit Facility
Documents, any Loan Document or any Bond Document. If a deficiency exists in
the Interest Account, the Redemption Account, the Principal Reserve Fund, the
Fees Account or the Rebate Fund. the Trustee shall transfer such Investment
Income to the Interest Account, the Redemption Account, the Principal Reserve
Fund, the.Fees Account and/or the Rebate Fund, in that order of priority, prior to
any payment to the Borrower.
Section 5.12. Moneys To Be Held in Trust. Except for (i) moneys deposited with or
paid to the Trustee for the redemption of Bonds notice of the redemption of which has been duly
given and (ii) moneys on deposit in the Costs of Issuance Fund, the Rebate Fund and the Fees
Account, all moneys required to be deposited with or paid to the Trustee for the account of any
Fund or Account will be held by the Trustee in trust and, while held by the Trustee, shall
constitute part of the Trust Estate and be subject to the security interest created by this Indenture.
Section 5.13. Records. The Trustee shall keep and maintain accurate records with
respect to the Funds and Accounts. .The Trustee shall file at least an annual accounting of the
Funds and Accounts and the payment history on the Bonds and the Loan with the Issuer and the
Borrower and, upon request, with the:Credit Provider.
Section 5.14. .Reports by the Trustee., The Trustee shall, on or before the twentieth day
of each month, file with the Borrower and, upon request, the Credit Provider a statement setting
forth in respect of the preceding calendar month:
(a) the amount withdrawn or transferred and the amount deposited within or
on account of each Fund and Account under this Indenture, including the amount of
Investment Income on each Fund and Account transferred to the Interest Account;
(b) the amount on deposit at the end of such month to the credit of each Fund
and Account;
OHS West:260417815.3 64
(c) a brief description of all obligations held as an investment of moneys in
each Fund and Account;
(d) the amount applied to the. purchase or redemption of: Bonds and a
description of the Bonds or portions of Bonds so purchased or redeemed; and
(e) any other information which the Borrower, the Credit Provider or the
Issuer may reasonably request.
No monthly statement for a Fund or Account need be rendered if no activity occurred in
that Fund or Account during such month. Upon the written request of any Bondholder owning
25% or more 'in aggregate principal amount of Bonds then Outstanding, the Trustee. at the
Borrower'.s expense., shall provide a copy of such statement to the Bondholder. All records and
files pertaining to the Trust Estate will be open at all reasonable times during regular business
hours of the Trustee to the inspection and audit of the Issuer. the Borrower and the Credit
Provider and their agents and representatives upon reasonable prior notice.
Section 5.15. Moneys Held for Particular Bonds. The amounts held by the Trustee for
payment of the interest. premium, if any, principal or redemption price due on any date with
respect to particular Bonds, pending such payment, will be set aside and held in trust by the
Trustee for the Bondholders entitled to such payment. For the purposes of this Indenture such
interest, premium, principal or redemption price, after the due date of payment, will no longer be
considered to be unpaid.
Section 5.16. Nonpresentment of Bonds. In the event any Bond is not presented for
payment when the principal of such Bond becomes due. either at maturity or at the date fixed for
redemption of such Bond or otherwise, if amounts sufficient to pay such Bond have been
deposited with the Trustee for the benefit of the owner of the Bond and have remained unclaimed
for two years after such principal has become due and payable, such amounts, to the extent
amounts are owed to the Credit Provider as set forth in a written statement of the Credit Provider
addressed to the Trustee, will be paid to the Credit Provider, with any excess to be paid to the
Borrower. Upon such payment, all liability of the Issuer and the Trustee to the holder of any
Bond for the payment of such Bond will cease and be completely discharged. The obligation of
the Trustee under this Section to pay any such amounts to the Credit Provider or the Borrower
will be subject to any provisions of law applicable to the Trustee or to such amounts providing
other requirements for disposition of unclaimed property.
Section 5.17. Disposition of Remaining Moneys. Provided that the rebate requirements
referenced in the Tax Certificate are first satisfied, any amounts remaining in the Revenue Fund
or the Principal Reserve Fund after payment in full of the principal of and interest and any
premium on the Bonds will be applied to pay (i) first, to the Credit Provider any unpaid amounts
certified by the Credit Provider to be due and owing to the Credit Provider, (ii) second, to the
person or persons entitled to be paid. all other unpaid 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.
OHS Wcst260447815.3 65
ARTICLE VI
INVESTMENTS
Section 6.01. Investment Limitations. Moneys held as part of any Fund or-Account
shall be invested and reinvested in Permitted Investments. Permitted Investments shall have
maturities corresponding to, or shall be available for withdrawal without penalty no later than,
the dates upon which such moneys shall be needed for the purpose for which such moneys are
held. Moneys on deposit in the (i) Interest Account shall be invested only in investments
described in paragraphs (a), (b) and (c) of the definition of Permitted Investments,
(ii) Redemption Account shall be invested only in investments described in paragraph (a) of the
definition of Permitted Investments, with a term not exceeding the earlier of 30 days from the
date of investment of such moneys or the date or dates that such moneys are anticipated to be
required for redemption, (iii) Credit Facility Account and Bond Purchase Fund shall be held
uninvested and (iv) Costs of Issuance Fund, until disbursed or returned to the Borrower pursuant
to Section 5.08, shall be invested only in investments described in paragraph (h) of the definition
of Permitted Investments. Permitted Investments shall be held by or under the control of the
Trustee. All Investment Income from moneys held in all Funds and Accounts other than the
Loan Fund, the Rebate Fund, the Costs of Issuance Fund (other than as provided below) and the
Principal Reserve Fund, upon receipt, shall be deposited into the Interest Account. Investment
Income from moneys held in the Loan Fund, the Rebate Fund, the Costs of Issuance Fund and
the Principal Reserve Fund shall remain in the respective Fund where earned.
Section 6.02. Trustee's Authority and Responsibilities. The Trustee is authorized to
sell and reduce 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 investments, and may transact purchases and sales through its investment
department or through its Affiliates. 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 in this Indenture. If no direction is provided to the Trustee, the
Trustee shall invest such moneys in investments described in paragraph (h) of the definition of
Permitted Investments. In computing the amount in any Fund or Account, 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 to maturity) plus accrued interest.
The Trustee shall take such actions as shall be necessary to assure that Permitted Investments
purchased by it under this Indenture are held pursuant to the terms of this Indenture and are
subject to the trusts and security interests created in this Indenture. The Issuer (and the Borrower
by its execution of the Financing Agreement) acknowledges that to the extent regulations of the
Comptroller of the Currency or other applicable regulatory entity grant the Issuer or the
Borrower the right to receive brokerage confirmations of security transactions as they occur, the
Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted
by law.
of-is West:260447815.3 66
ARTICLE VII
REPRESENTATIONS,WARRANTIES AND COVENANTS OF THE ISSUER
Section 7.01. Issuer's Representations and Warranties. The Issuer represents and
warrants that:
(a) The Issuer is duly authorized under the Constitution and laws of the State,
including the Act. to (i) issue the Bonds. (ii) execute and deliver this Indenture. the
Financing Agreement, the Assignment and the Regulatory Agreement and to endorse the
Note, (iii) assign its interest in the Financing Agreement (except the Reserved Rights)
and (iv)pledge and assign the Trust Estate as set forth in this Indenture for the benefit of
(A)the Bondholders, to secure the payment of the principal of and interest and any
premium on the Bonds in accordance with the terms and provisions of this Indenture and
the Bonds and (B) the Credit Provider to secure the payment of all amounts owing to the
Credit Provider under the Credit Facility Documents.
(b) All actions on the part of the Issuer for the issuance, sale and delivery of
the Bonds and for the execution and delivery of this Indenture, the Financing Agreement,
the Assignment and the Regulatory Agreement and the endorsement of the Note have
been or will be taken duly and effectively.
(c) The Bonds will be valid and enforceable special obligations of the Issuer
according to their terms, subject to bankruptcy and equitable principles.
Section 7.02. Issuer's Covenants. In addition to all other covenants and agreements of
the Issuer contained in this Indenture or the Financing Agreement, the Issuer further covenants
and agrees with the Bondholders and the Trustee as follows:
(a) Except as provided in Article XII, the Issuer shall not alter, modify or
cancel, or agree to alter. modify or cancel. any agreement which relates to or affects the
Security.
(b) Except as otherwise provided in this Indenture, the Financing Agreement,
the Assignment or the Credit Facility Documents, the Issuer shall not sell, convey,
mortgage, encumber or otherwise dispose of any portion of the Security or create or
authorize to be created any debt, lien or charge thereon.
(c) At the expense of the Borrower. the Issuer shall cooperate with the
Borrower in the Borrower's performing the Borrower's obligation to cause this Indenture,
or anv related instruments or documents.relating to the assigmnent made by the Issuer
under this Indenture to secure the Bonds, to be recorded and filed in the manner and in
the places which may be required by law in order to preserve and protect fully the
security of the holders of the Bonds and the rights of the Trustee hereunder.
Section 7.03. Limitations on Liability. Notwithstanding any other provision of this
Indenture to the contrary:
01 IS West:260447815.; 67
(a) The obligations of the Issuer with respect to the Bonds are not general
obligations of the Issuer but are special, limited obligations of the Issuer payable by the
Issuer solely from the Security;
(b) Nothing contained in the Bonds or in this Indenture shall be considered as
assigning or pledging any funds or assets of the Issuer other than the Trust Estate;
(c) The Bonds are not and will not be a debt of the State, the Issuer or of any
other political subdivision of the State, and none of the State, the Issuer or any other
political subdivision of the State is or will be liable for the payment of the Bonds;
(d) Neither the faith and credit of the Issuer, the State nor of any other
political subdivision of the State are pledged to the payment of the principal of and
interest and any premium on the Bonds;
(e) No failure of the Issuer to comply with any term, condition, covenant or
agreement in this Indenture or in any document executed by the Issuer in connection with
the Mortgaged Property, or the issuance, sale and delivery of the Bonds shall subject the
Issuer to liability for any claim for damages, costs or other charges except to the extent
that the same can be paid or recovered from the Trust Estate;
(f) The Issuer shall not be required to advance any moneys derived from any
source other than the Trust Estate for any of the purposes of this Indenture, any of the
other Bond Documents or any of the Loan Documents, whether for the payment of the
principal or redemption price of, or interest on, the Bonds, the payment of Third Party
Fees, Fees and Expenses or administrative expenses or otherwise; and
(g) Neither the members of the Board of Supervisors of the Issuer nor any
person executing the Bonds will be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof.
Section 7.04. Further Assurances; Security Agreement. The Issuer, to the extent
permitted by law, shall execute, acknowledge and deliver such supplemental indentures and
other instruments and documents, and perform such further acts, as the Trustee or the Credit
Provider may reasonably require to perfect. and maintain perfected, the security interest in the
Trust Estate or to better assure, transfer, convey, pledge, assign and confirm to the Trustee or the
Credit Provider all of its respective interest in the property described in this Indenture and the
revenues, receipts and other amounts pledged by the Indenture. The Issuer shall cooperate to the
extent necessary with the Borrower, the Trustee and the Credit Provider in their defenses of the
Trust Estate and the Security against the claims and demands of all Persons. In addition to the
assigr>ment by the Issuer of its rights in the Trust Estate to the Trustee, the Issuer hereby
acknowledges that in order to more fully protect, perfect and preserve the rights of the Trustee
and the Credit Provider in the Trust Estate, the Issuer grants to the Trustee and the Credit
Provider, a security interest in the Trust Estate and the proceeds thereof.
Section 7.05. Enforcement. The Issuer agrees that the Trustee and, so long as a Credit
Facility provided by the Credit Provider continues in effect, the Credit Provider, in its name or in
the name of the Issuer, may enforce against the Borrower or any other Person any rights of the
OI-IS West260447815.3 68
Issuer under the Bond Documents (other than the Reserved Rights) whether or not the Issuer is in
default under this Indenture or under the Financing Agreement, but neither the Trustee nor the
Credit Provider will be deemed to have assumed any of the obligations of the Issuer under the
Bond Documents. The Issuer shall fully cooperate with the Trustee or the Credit Provider in the
enforcement by the Trustee or the Credit Provider of any such rights. At the request of the
Trustee or the Credit Provider, the Issuer, upon being indemnified to its reasonable satisfaction
against all liability, costs and expenses which may be incurred in connection with such
enforcement, shall in its name commence legal action or take such other actions as the Trustee or
the Credit Provider reasonably requests to enforce the rights of the Issuer, the Trustee or the
Credit Provider under or arising from the Bonds or the Bond Documents.
Section 7.06. Tax Covenants. The Issuer agrees:
(a) it shall neither make nor direct the Trustee to make any investment or
other use of the proceeds of the Bonds that would cause the Tax-Exempt Bonds to be
"arbitrage bonds" as that term is defined in Section 148(a) of the Code and that it shall
comply with the requirements of the Code throughout the term of the Series A Bonds;
(b) it (i) shall take, or use its best efforts to require to be taken, all actions that
may be required of the Issuer for the interest on the Tax-Exempt Bonds to be and remain
not included in gross income for federal income tax purposes and (ii) shall not take or
authorize to be taken any actions within its control that would adversely affect that status
under the provisions of the Code; and
(c) it shall enforce or cause to be enforced all obligations of the Borrower
under the Regulatory Agreement in accordance with its terms and seek to cause the
Borrower to correct any violation of the Regulatory Agreement within a reasonable
period after any such violation is first discovered.
In furtherance of the covenants in this Section, the Issuer and the Borrower shall execute, deliver
and comply with the provisions of the Tax Certificate, which is by this reference incorporated
into this Indenture and made a part of this Indenture, and by its acceptance of this Indenture the
Trustee acknowledges receipt of the Tax Certificate and acknowledges its incorporation into this
Indenture by this reference. The Trustee agrees that in those instances where it exercises
discretion over.the investment of funds, it shall not knowingly make any investment inconsistent
with subsection (a).
ARTICLE VIII
CREDIT FACILITY; ALTERNATE CREDIT FACILITY; LETTER OF CREDIT
Section 8.01. Acceptance .of the Credit Facility. The Trustee shall hold the Credit
Facility and shall enforce in its name all rights of the Trustee and all obligations of the Credit
Provider under the Credit Facility for the benefit of the Bondholders. The Trustee shall not
assign or transfer the Credit Facility except (i)to a successor Trustee under this Indenture. (ii) to
the Credit Provider upon expiration or other termination of the Credit Facility in accordance with
01-IS West:260417815.3 69
its terms, including expiration on its stated expiration date or (iii) upon payment under the Credit
Facility of the full amount payable under the Credit Facility.
Section 8.02. Draws Under Credit Facility. The Trustee shall draw on the Letter of
Credit, or, if an Alternate Credit Facility is in effect, draw on the Alternate Credit Facility, in
each case for the payment of principal of and interest due on any Bond and the purchase price of
any Bond to the extent required by Section 4.01(g) and 4.02(d) and in accordance with the terms
of the Credit Facility then in effect, and cause the proceeds of each Draw to be applied so that
full and timely payments are made on each date on which payment of principal, interest or
purchase price is due on any Bond. The Trustee shall not request, and shall not apply the
proceeds of, anv Draw to pay (i)principal of, interest on, or the purchase price of any Pledged
Bond or any Bond known by the Trustee to be held by the Borrower or any Affiliate of the
Borrower, (ii) premium that may be payable upon the redemption of any of the Bonds or (iii)
interest that.may accrue on any. of the Bonds on or after the maturity of such Bonds. Prior to
making a Draw to pay principal. of.or interest on the Bonds on an Interest Payment Date, the
Trustee shall determine the amount necessary to make such payment of principal or interest.
Notwithstanding any other provision of this Indenture to the contrary, so long as a Credit Facility
is in effect (i) interest payable to the Bondholders on each Interest Payment Date, and principal
payable to the Bondholders on any date on which principal is payable to the Bondholders;
whether by reason of redemption, upon maturity, acceleration, or otherwise, shall be paid from
the proceeds of the Credit Facility deposited into the Credit Facility Account, prior to the use of
any other moneys, and all amounts held by the Trustee under this Indenture derived from
payments made by the Borrower under the Note shall, on the date on which the Trustee receives
payment under the Credit Facility, as the case may be, be paid to the Credit Provider on such
date in reimbursement of the amounts so paid and (ii) premium payable upon any optional
redemption of Bonds shall be paid with Available Moneys, provided that in no event shall
amounts be paid under the Credit Facility to pay the premium on any Bond or principal, interest,
premium or any other amount in respect of any Pledged Bond or any Bond known by the Trustee
to be held by the Borrower or any Affiliate of the Borrower.
Section 8.03. Return of Payments Under the Credit Facility. In the event the Trustee
receives a Draw from the Credit Provider on account of any Tendered Bond and thereafter the
Trustee receives remarketing proceeds upon the remarketing of such Tendered Bond, then the
Trustee shall promptly reimburse the Credit Provider with such funds to the extent of the amount
so paid by the Credit Provider as a reimbursement on behalf of the Borrower.
Section 8.04. Alternate Credit Facility. Subject to the terms of the Credit Facility
Documents, the Trustee shall accept any Alternate Credit Facility delivered to the "Trustee in
substitution for the Credit Facility then in effect if:
(a) the Alternate Credit Facility meets the requirements of Section 2.09;
(b) the Substitution Date for the Alternate Credit Facility is an Interest
Payment Date during a Weekly Variable Rate Period, or a Daily Variable Rate Period, or
an Adjustment Date which immediately follows a Reset Period;
OHS West260447815.3 70
(c) the Alternate Credit Facility is effective on and from the Substitution Date
for such Alternate Credit Facility; and
(d) the Trustee receives on or prior to the effective date of the Alternate Credit
Facility (i) an Opinion of Counsel to the Credit 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 cross income, for federal income tax
purposes, of the interest payable on the Tax-Exempt Bonds.
The Trustee shall give notice to the Bondholders by first class mail, postage prepaid, of the
substitution by such Alternate Credit Facility for the Credit Facility then in effect as provided in
Section 4.02. On the Substitution Date, the Trustee shall, if necessary, draw on or request an
Advance on the Credit Facility being replaced and shall not surrender such Credit Facility until
all requests thereon have been honored.
Any provider of an Alternate Credit Facility shall have the rights and obligations of the
Credit Provider in the event an Alternate Credit Facility is delivered to the Trustee that meets the
requirements of Sections 2.09 and 8.04.
Section 8.05. Extension of Credit Facility. In the event the term of the Letter of Credit
or the term of any Alternate Credit Facility is extended, the Trustee must receive, not later than
the Extension Date, (i) either a commitment to extend the Letter of Credit or Alternate Credit
Facility or other written evidence of the extension of the Letter of Credit or Alternate Credit
Facility and (ii) an Opinion of Counsel for the. Credit Provider (of the Letter of Credit or
Alternate Credit Facility), in substantially the form of the Opinion of Counsel delivered to the
Trustee upon the issuance of the Letter of Credit or Alternate Credit Facility. The Trustee shall
provide a copy of any commitment to extend and the actual extension of the Letter of Credit or
Alternate Credit Facility upon receipt thereof to the Rating Agency and Remarketing Agent and,
upon request, to any Bondholder. Upon the failure of the Borrower to furnish the Trustee with
the actual extension of the Letter of Credit or Alternate Credit Facility or a binding commitment
to extend the Letter of Credit or Alternate Credit Facility or an Alternate Credit Facility pursuant
to Section 8.04 and the accompanying Opinion of Counsel on or prior to each Extension Date,
the Bonds shall be subject to mandatory tender pursuant to Section 4.02.
Section 8.06. Limitations on Rights of Credit Provider. Notwithstanding anything
contained in this Indenture to the contrary, all provisions in this Indenture regarding consents,
approvals, directions, waivers, appointments, requests or other actions by the Credit 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 Provider were not
mentioned in such provisions (i) if a Wrongful Dishonor has occurred and is continuing or
(ii) after the Credit Facility ceases to be valid and binding on.the Credit Provider for any reason
excluding those circumstances where all drawings have been made under the Credit Facility and
unreimbursed obligations with respect to such drawings are owed by the Borrower under the
Reimbursement Agreement; provided, however, that the.Credit Provider's right to notices and
(subject to the limitations below) the payment of amounts due to the Credit Provider shall
OHS West260447815.3 71
continue in full force and effect. In addition, if a Wrongful Dishonor has occurred and is
continuing or after the Credit Facility ceases to be valid and binding on the Credit Provider for
any reason excluding those circumstances where all drawings have been made under the Credit
Facility and unreimbursed obligations with respect to such drawings are owed by the Borrower
under the Reimbursement Ao reement. the security interest and related rights of the Credit
Provider in the Trust Estate shall be junior and subordinate to the rights of the Bondholders. The
foregoing shall not affect any other rights of the Credit Provider.
Section 8.07. References to Credit Provider When No Credit Facility Is In Effect.
All provisions of this Indenture relating to the rights of the Credit Provider shall be of no force
and effect if there is no Credit Facility in effect and there are no Pledged Bonds and all amounts
owing to the Credit Provider under the Credit Facility Documents have been paid. In such event,
all references to the Credit Provider shall have no force or effect.
Section 8.08. Certain Notices to the Credit Provider. The Trustee and Issuer shall
promptly notify the Credit Provider of any of the following as to which it has actual knowledge:
(i) the occurrence of any Event of Default under this Indenture or under any of the other
Transaction Documents, or any event which, with the passage of time or service of notice, or
both, would constitute such an Event of Default, 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, (ii) an
Act of Bankruptcy or a bankruptcy filing by or against the Borrower and (iii) the making of any,
claim in connection with seeking the avoidance as a preferential transfer("Preference Claim') of
any payment of principal of, or interest on. the Loan.
Section 8.09. Credit Provider To Control Insolvency Proceedings. Each Bondholder,
by its purchase of Bonds, the Trustee and the Issuer agree that the Credit Provider may at any
time during the continuation of an insolvency proceeding of the Issuer or the Borrower
("Insolvency Proceeding") direct all matters. relating to the Bonds in any such Insolvency
Proceeding, including. without limitation. (i) all matters relating to any Preference Claim, (ii) the
direction of any appeal of any order relating to any Preference Claim and (iii) the posting of any
surety, supersedes or performance bond pending any such appeal. In addition, and without
limitation of the foregoing, the Credit 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 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 8.10. Terms and Conditions of the Initial Letter of Credit.
(a) De/iver17. Following the delivery on the Escrow Break Date of the Letter
Of Credit by the Credit Provider to, and in favor of, the Trustee, for the benefit of the
Bondholders. the Letter of Credit shall secure the Bonds in accordance with its terms so
long as the Mode in effect for the Bonds is the Weekly Variable Rate or Daily Variable
Rate.
01 IS WesC260447815.3 72
(b) Draws. So long as the Letter of Credit is in effect the Trustee shall make
timely Draws in accordance with the Letter of Credit such that (i) timely payment of
principal and interest is made on the Bonds (other than Excluded Bonds) as required by
this Indenture and (ii) timely.payment of the purchase price of Tendered Bonds (other
than Excluded Bonds) that have not been remarketed is made under Article IV. The
Trustee shall make such Draws in such fashion as to be able to obtain on the.applicable
payment date, such funds to the extent necessary to permit the Trustee or the Tender
Agent, as the case may be, to 'make such payment when due in accordance with this
Indenture. If any such Draws are made.on a Mandatory Tender Date in connection with
the delivery of an Alternate Credit Facility, such Draws shall be made upon the Letter of
Credit and not on the Alternate Credit Facility.
(c) Notice. The Trustee shall advise the Borrower by telecopy or telex on the
date of each Draw on the Letter of Credit of the amount and date of such Draw and of the
reason for such Draw.
(d) Extension. For any extension of the term of the Letter of Credit, the
Trustee shall, at the direction of an Authorized Credit Provider Representative, but only if
required to evidence an extension of the term of the Letter of Credit, surrender the Letter
of Credit to the Credit Provider in exchange for a new letter of credit or the Letter of
Credit with notations on it, as the Credit Provider may so elect, conforming in all material
respects to the Letter of Credit, but with the extended expiration date. Any such
extension shall be for a period of at least three months or, if less, until the fifteenth day
following the maturity date of the Bonds.
(e) Pledged Bonds and Bonds Held bj� Borrower. No draws shall be made
by the Trustee under the Letter of Credit for payment of any Pledged Bond or Bond
known by the Trustee to be held by the Borrower or any Affiliate of the Borrower.
(f) Draw Requirement. The Trustee shall not terminate or surrender the
Letter of Credit until the Trustee shall have made such Draw(s), if any, as shall be
required under this Indenture to provide for payment in full of the principal of and
interest on the Bonds, and shall have received the proceeds of such Draw(s) from the
Credit Provider.
(g) Beneficiary of Letter of Credit. The Trustee shall have the obligation to
hold and maintain the Letter of Credit for the benefit of the Owners of the Bonds until the
Letter of Credit terminates or expires in accordance with its terms.
(h) Surrender of Letter of Credit. When the Letter of Credit terminates or
expires in accordance with its terms, the Trustee shall immediately surrender it to the
Credit Provider. The Trustee agrees that, except in the case of a redemption of Bonds in
part or any other reduction in the principal amount of Bonds Outstanding, it will not
under any circumstances request that the Credit Provider reduce the amount of the Letter
of Credit. If at any time all Bonds .shall cease to be Outstanding, the Trustee shall
surrender the Letter of Credit to the Credit Provider in accordance with its terms.
OHS West:260447815.3 7J
Section 8.11. Wrongful Dishonor. Upon a Wrongful Dishonor, the Trustee shall give
immediate telephonic notice of such. dishonor to the Remarketing Agent. the Issuer, the
Borrower, and the Credit Provider.
ARTICLE IX
DISCHARGE OF LIEN
Section 9.01. Discharge of Lien and Security Interest.
(a) Discharge. Upon satisfaction of the conditions set out in subsection (b),
the Trustee shall (i) cancel and discharge this Indenture and the pledge and assignment of
the Security, (ii) 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 Provider as may be
required to cancel and discharge this Indenture and the pledge and assignment of the
Trust Estate, (iii) reconvey, assign and deliver to the Issuer so much of the Trust Estate as
may be in its possession or subject to its control (except for (A) moneys and Government
Obligations held for the purpose of paying Bonds and (B) moneys and Investments held
in the Rebate Fund for payment to the United States Government) who shall, in turn,
convey, assign and deliver the remaining Trust Estate to the Borrower and (iv) return the
Credit Facility to the Credit Provider.
(b) Conditions To Discharge. The conditions precedent to the cancellation
and discharge of this Indenture and the other acts described in subsection (a) are
(i) payment in full of the Bonds, (ii)payment of the Trustee's Annual Fee and the
Trustee's ordinary costs and expenses under this Indenture, (iii) receipt by the Trustee of
a written statement from the Credit Provider stating that all obligations owed to the Credit
Provider under the Credit Facility Documents have been fully paid, (iv)payment of all
Extraordinary Items, (v) receipt by the Trustee of a written statement from the Issuer
stating that all amounts owed to the Issuer in respect of Reserved Rights have been fully
paid and (vi) receipt by the Trustee of an Opinion of Counsel, at the expense of the
Borrower, stating that all conditions precedent to the satisfaction and discharge of this
Indenture have been satisfied.
(c) Survival of Rights and Powers. The Reserved Rights of the Issuer and the
rights and powers granted to the Trustee with respect to the payment, transfer and
exchange of Bonds shall survive the cancellation and discharge of this Indenture.
Section 9.02. Payment of Outstanding Amounts. If the Bonds are paid in full, but any
one or more of the other conditions precedent set out in Section 9.01(b) are not satisfied because
an amount has not been paid, the Trustee, prior to cancellation and discharge of this Indenture,
shall pay to the persons listed below, in the strict order set out below, the amounts required to
satisfy those conditions precedent:
(a) Trustee's Annual Fee and Ordinary Costs and Expenses. If any portion
of the Trustee's Annual Fee or ordinary costs and expenses of the Trustee remain unpaid,
OI-IS West:260447815.3 74
the Trustee shall pay to itself so much of the Trust Estate as will fully pay such unpaid
amounts. No Extraordinary Items may be included under this subsection (a).
(b) Credit Provider. If the Trustee receives a written statement from the
Credit Provider stating that moneys are owed .to the Credit Provider under the Credit
Facility Documents or the Loan Documents, the Trustee shall pay to the Credit Provider
so much of the remaining Trust Estate as will fully pay all amounts due and owing to the
Credit Provider, as determined by the Credit Provider. The reimbursement from the
Trust Estate of amounts provided by the Credit Provider for application to the payment of
remarketing expenses will be made with interest at a rate equal to the 30-day LIBOR rate
plus two (2) percentage points or from the date or dates of such advances through the date
of such reimbursement. The Trustee is authorized to rely on the written statement of the
Credit Provider as to the amount of such advances and interest accrued on such advances.
(c) Trustee. If any Extraordinary Items have not been paid to the Trustee, the
Trustee shall pay to itself so much of the remaining Trust Estate as will fully pay all
amounts owing to the Trustee for Extraordinary Items.
(d) Issuer. If the Trustee receives a written statement from the Issuer stating
that moneys are owed to the Issuer in respect of the Reserved Rights, the Trustee shall
pay to the Issuer so much of the remaining Trust Estate as will fully pay all amounts
owing to the Issuer in respect of the Reserved Rights.
Section 9.03. Defeasance.
(a) Provision for Payment of Bonds. Any Bond will be deemed paid within
the meaning of Section 9.01 if each of the conditions set out in this Section is satisfied.
The conditions are:
(i) The Issuer or the Borrower deposits with the Trustee (A) Available
Moneys or (B) Government Obligations which are not subject to early redemption
and which are purchased with Available Moneys, of such maturities and interest
payment dates. and bearing such interest as will be sufficient, without further
investment or reinvestment of either the principal amount of such Government
Obligations or the interest earnings on Government Obligations (the earnings to
be held in trust also), together with any Available Moneys, for the payment on
their respective maturity dates, or redemption dates prior to maturity, of the
principal of such Bonds (calculated at the Maximum Rate in the case of Bonds in
the Daily Variable Rate Mode or the Weekly Variable Rate Mode) and
redemption premium, if any, and interest to accrue on such Bonds to such
maturity or redemption dates;
(ii) The Trustee receives, at the expense of the Borrower, and may rely
upon: (A) a verification report of an independent certified public accountant or
other firm nationally recognized in the certification of cash flow analyses; and
(B) an Opinion of Bond. Counsel to the effect that such deposit with the Trustee
and consequent defeasance of the Bonds does not adversely affect the
OHS West:260447815.3 75
excludability from gross income for federal income tax purposes of the interest
payable on the Tax-Exempt Bonds;
(iii) All Third Party Fees and Fees and Expenses due or to become due
have been paid or sufficient additional moneys to make the required payments
have been irrevocably deposited with the Trustee;
(iv) For any such Bonds to be redeemed on any date prior to their
maturity, the Trustee has 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; and
(v) If the Bonds are in a Reset Rate Mode, the Bonds will be redeemed
on or before the last day of the current Reset Period, and if the Bonds are in a
Daily Variable Rate Mode or a Weekly Rate Mode, the Bonds will be redeemed
on the earliest possible redemption date.
The Trustee shall redeem the'Bonds specified by such irrevocable instructions on the date
specified by such irrevocable instructions.
(b) Defeased Bonds No Longer Outstanding. At such times as a Bond is
deemed to be paid under this Indenture, it will no longer be secured by or entitled to the
benefits of this Indenture, except for the purposes of payment in accordance with this
Indenture.
(c) Release of Certain Income. All income from all Government Obligations
in the hands of the Trustee pursuant to this Section which is identified by an independent
certified public accountant or other firm nationally recognized in the certification of cash
flow analyses as not required for the payment of the Bonds and interest on such income
with respect to which such moneys have been so deposited will be deposited with the
Trustee as and when realized and collected for use and application 'as are other moneys
deposited with the Trustee.
(d) Particular Bonds. Notwithstanding any other provision of this Indenture
to the contrary, all moneys or Government Obligations set aside and held in trust
pursuant to the provisions of this Article IX for the payment of Bonds (including accrued
interest on such Bonds) shall be applied to and used solely for the payment of the
particular Bonds (including interest on such Bonds) with respect to which such moneys
or Government Obligations have been so set aside in trust.
OHS West260447815.3 76
ARTICLE X
DEFAULT PROVISIONS AND REMEDIES
Section 10.01. Events of Default; Preliminary Notice.
(a) Events of Default. Each of the following constitutes an Event of Default
under this Indenture:
(i) default in the payment when due and payable of any interest due
on any Bond (other than a Pledged Bond) or. unless the Credit Provider specifies
otherwise by written notice to the Trustee, on any Bond purchased in lieu of
redemption by the Credit Provider pursuant to Section 3.07;
(ii) default in the payment when due and payable of(A) the principal
of or any redemption premium on any Bond (other than a Pledged Bond) or,
unless the Credit Provider specifies otherwise by written notice to the Trustee,
Bond purchased in lieu of redemption by the Credit Provider pursuant to
Section 3.07 at maturity or upon any redemption or (B) the purchase price of any
Tendered Bond (other than a Pledged Bond);
(iii) written notice to the Trustee from the Credit Provider of a default
by the Issuer in the observance or performance of any covenant, agreement,
warranty or representation on the part of the Issuer included in this Indenture or in
the Bonds (other than an Event of Default set forth in subsection (i) or (ii) above)
and the continuance of such default for a period of 30 days (or such longer period
as is consented to in writing by the Credit Provider) after the Trustee receives
such notice;
(iv) written notice to the Trustee from the. Credit Provider of an Event
of Default under the Reimbursement Agreement;
(v) written notice to the Trustee from the Credit Provider of an Act of
Bankruptcy; or
(vi) a Wrongful Dishonor.
(b) Preliminary Notice. The Trustee shall immediately notify the Issuer, the
Borrower and the Credit Provider after the Trustee obtains knowledge or receives notice
of the occurrence of an Event of Default under this Indenture or an event which would
become such an Event of Default with the passage of time, the giving of notice or both,
identifying the paragraph in Section 10.01(a) under which the Event of Default has
occurred or may occur.
(c) Non-Default and Prohibition of Mandatory Redemption Upon Tax
Event: The occurrence of any event ("Tax Event") which results in the interest payable
on the Tax-Exempt Bonds being includable, for federal income tax purposes, in the gross
income of the Bondholders, including any violation of any provision of the Regulatory
OHS West:260447815.3 77
Agreement or any of the other Bond Documents, shall not (i) directly or indirectly
constitute an Event of Default under this Indenture or permit any party (other than the
Credit Provider) to accelerate, or require acceleration of, the Loan or the Bonds, unless
the Credit Provider provides written notice to the Trustee that such Tax Event constitutes
a default under the Reimbursement Agreement, (ii) give rise to a mandatory redemption
of the Bonds, or (iii) give rise to the payment to the Bondholders of any amount, denoted
as "supplemental interest," "additional interest," "penalty interest," "liquidated damages,"
`-damages" or otherwise, in addition to the amounts payable to the owners of the Bonds
prior to the occurrence of the Tax Event. Nothing contained in this subsection will be
deemed to amend.or supplement the terms of the Loan Documents. Promptly upon
determining that a Tax Event has occurred, the Issuer or the Trustee, by notice in writing
to the Credit Provider, all Registered Owners of the Bonds and the Remarketing Agent,
shall state that a Tax Event has occurred and whether the Tax Event is cured, curable
within a reasonable period or incurable. Notwithstanding the availability of the remedy
of specific performance to cure a Tax Event that is curable within a reasonable period,
neither the Issuer nor the Trustee shall have, upon the occurrence of a Tax Event, any
right or obligation to cause or direct acceleration of the Bonds or the Loan, to enforce the
Note or to foreclose the Security Instrument, to accept a deed to the Mortgaged Property
in lieu of foreclosure, or to effect any other comparable conversion of the Mortgaged
Property.
Section 10.02. Acceleration, Redemption and Mandatory Tender. The Bonds shall
be subject to acceleration, redemption and mandatory tender as set out in this Section.
(a) Acceleration. Upon:
(i) the occurrence and during the continuance of a Wrongful
Dishonor, the Trustee may, and, upon the written request of Bondholders owning
not less than 51% in aggregate principal amount of Bonds then Outstanding, must,
by written notice to the Issuer, the Borrower and the Credit Provider, declare the
principal of all Bonds and the interest accrued, and to accrue, on the Bonds to the
date of payment immediately due and payable; or
(ii) the occurrence of any other Event of Default under this Indenture,
the Trustee may, upon receiving the prior written consent of the Credit Provider,
and must, upon the written direction of the Credit Provider requiring that the
Bonds be accelerated pursuant to this subsection, by written notice to the Issuer,
the Borrower and the Credit Provider, declare the principal of all Bonds and the
interest accrued, and to accrue, on the Bonds to the date of declaration
immediately due and payable.
(b) Redemption and Mandatory Tender. Upon the occurrence of an Event of
Default under Section 10.01(a)(iv) of this Indenture:
(i) if the Credit Provider so directs pursuant to Section 3.03(b), the
Bonds shall be redeemed in whole or in part in the amount specified by and at the
direction of the Credit Provider.
OI-IS West260447815.3 78
(ii) if the Credit Provider so directs pursuant to Section 4.02(b), the
Bonds.shall be subject to mandatory tender.
Notwithstanding anything to the contrary in this Indenture, if the Credit Provider directs
that the Bonds be redeemed in part pursuant to Section 3.03(b), the Credit Provider may
further direct on one or more other occasions under this subsection that the Bonds be
redeemed in whole or in part or that the Bonds be subject to mandatory tender.
(c) Notice.
(i) Acceleration. Upon any decision to accelerate payment of the
Bonds, the Trustee shall notify the Bondholders of the declaration of acceleration,
that, in the event of acceleration pursuant to Section 10.02(a)(ii) interest on the
Bonds will cease to accrue upon such declaration, and payment of the Bonds will
be made upon presentment of the Bonds at the Designated Office of the Trustee.
Such notice shall be sent by registered mail or.overnight delivery service, postage
prepaid, or, at the Trustee's option, may be given by Electronic Means to each
Registered Owner of Bonds at such Registered Owner's last address appearing in
the Bond Register. Any defect in or failure to give notice of such declaration will
not affect the validity of such declaration.
(ii) Redemption. Upon the direction of the Credit Provider to redeem
the Bonds in whole or in part pursuant Section 3.03(b) and as provided in
Section 3.04(a), immediate notice of redemption will be given.
(iii) Mandatory Tender. Upon any direction of the Credit Provider that
the Bonds be subject to mandatory tender, the Trustee shall give notice to the
Bondholders as provided in Section 4.02(b).
(d) Payment Under Credit Facility. Immediately upon acceleration of the
Bonds, the Trustee shall draw on the Letter of Credit, or Draw on the Alternate Credit
Facility then in effect, as applicable, in accordance with its terms.
Section 10.03. Other Remedies. Upon the occurrence and continuance of an Event of
Default under this Indenture, the Trustee may, with or without taking action under Section 1.0.02,
but only with the prior written consent of the Credit Provider, and must at the direction of the
Credit Provider if the Event of Default occurs under Section 10.01(a)(iii), (iv) or (v), pursue any
of the following remedies:
(a) an action in mandamus or other suit, action or proceeding at law or in
equity (i) to enforce the payment of the principal of and interest and any premium on the
Bonds, (ii) for the specific performance of any covenant or agreement contained in this
Indenture, the Financing Agreement or the Regulatory Agreement or (iii)to require the
Issuer to carry out any other covenant or agreement with Bondholders and to perform its
duties under the Act;
(b) the liquidation of the Trust Estate; or
OHS West:260447815.3 79
(c) an action or suit in equity to enjoin any acts or things which may be
unlawful or in violation of the rights of the Bondholders and to execute any other papers
and documents and do and perform any and all such acts and things as may be necessary
or advisable in the opinion of the Trustee in order to have the respective claims of the
Bondholders against the Issuer allowed in any bankruptcy or other proceeding.
Subject to the provisions of Section 10.07 and the requirement, if any, that the Credit Provider
consent in writing to the exercise by the Trustee of any remedy, upon the occurrence and
continuance of an Event of Default under this Indenture, the Trustee shall exercise such of the
rights and powers conferred by this Section as the Trustee, being advised by counsel, deems
most effective to enforce and protect the interests of the Bondholders and, unless a Wrongful
Dishonor has occurred and is continuing, the Credit Provider.
Section 10.04. Preservation of Security and Remedies if Payment Under Credit
Facility Is Not Made or Is Insufficient; Rights of Bondholders. Upon the occurrence and
during the continuance of a Wrongful Dishonor, the Trustee may proceed, and upon the written
request of the holders of not less than 25% of the aggregate principal amount of the Bonds
Outstanding and the receipt of indemnity reasonably satisfactory to the Trustee shall proceed, to
protect and enforce its rights and the rights of the Bondholders under this Indenture by such
suits, actions or special proceedings in equity or at law, whether for the specific performance of
any covenant or agreement, or in aid of the execution of any power granted in this Indenture or
by the Act, or for the enforcement of any legal or equitable right or remedy, as the Trustee, being
advised by counsel, deems most effective to protect and enforce such rights or to perform any of
its duties under this Indenture.
Section 10.05. Remedies Not Exclusive; Delay or Omission. No right or remedy
conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of
any other right or remedy, but each and every such right and remedy will be cumulative and in
addition to any other right or remedy given to the Trustee or to the Bondholders under this
Indenture or under the Financing Agreement, the Regulatory Agreement or the Credit Facility or
now or later existing at law or in equity. No delay or omission to exercise any right or remedy
provided in this Indenture will impair any such right or remedy or be construed to be a waiver of
any Event of Default or acquiescence in it. Every such right and remedy may be exercised from
time to time as often as may be deemed expedient.
Section 10.06. Waiver. Subject to the conditions precedent set out below, (i) the
Trustee may waive, (ii) the Trustee shall waive if directed to do so by the Credit Provider in
writing, and (iii) Bondholders owning not less than 51% in aggregate principal amount of Bonds
then Outstanding may waive, by written notice to the Trustee, any Event of Default under this
Indenture and its consequences and rescind any declaration of acceleration of maturity of
principal. The conditions precedent to any waiver are:
(a) unless waiver is directed by the Credit Provider, the Credit Provider must
consent to such waiver in writing;
(b) 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
OHS West:260447815.3 80
the Bonds has been paid or provided for by the Borrower in Available Moneys or by the
Credit Provider and all fees and expenses of the Trustee have been paid or provided for
by the Borrower or the Credit Provider; and
(c) after the waiver, the Credit Facility remains in effect in an amount equal to
the aggregate principal amount of the Bonds Outstanding (other than Pledged Bonds)
Z1-
plus the Interest Requirement; provided, however, that such waiver will be permitted
without the Credit Facility remaining in effect if (i) the Issuer consents to the waiver.
(ii) the Rating Agency then rating the Bonds is notified and the Trustee gives written
notice to the Bondholders that the ratings on the Bonds may be reduced or withdrawn
upon the occurrence of such waiver, and (iii) 100% of the Bondholders consent to the
waiver.
Upon any such'waiver, the default or Event of Default shall be deemed cured and shall cease to
exist for all purposes and the Issuer, the Borrower, the Trustee and the Bondholders will be
restored to their former positions and rights under this Indenture. No waiver of any default or
Event of Default shall extend to or affect any subsequent default or Event of Default or shall
impair any right or remedy consequent thereto.
Section 10.07. Rights of the Credit Provider and the Bondholders To Direct
Proceedings; Rights and Limitations Applicable to Bondholders, Issuer and Trustee.
(a) Rights To Direct Proceedings. Notwithstanding anything contained in
this Indenture to the contrary, the Credit Provider itself or Bondholders owning not less
than 51% in.aggregate principal amount of Bonds then Outstanding, but only with the
prior written consent of the Credit 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 under
this Indenture, provided, however, that such direction will not be otherwise than in
accordance with the provisions of law and of this Indenture, and provided that the Trustee
will be indemnified to its reasonable satisfaction (except for actions required under
Section 10.02(c) and (d)).
(b) Limitations on Bondholders' Rights. No.Bondholder has or shall have
the right to enforce the provisions of this Indenture or the Financing Agreement, or to
institute any proceeding in equity or at law for the enforcement of this Indenture or the
Financing Agreement, or to take any action with respect to an Event of Default under this
Indenture or an Event of Default under the Financing Agreement, or to institute, appear in
or defend any suit or other proceeding with.respect to this Indenture or the Financing
Agreement upon an Event of Default unless (i) such Event of Default is a Wrongful
Dishonor, (ii) such Bondholder has given the Trustee, the Issuer, the Credit Provider and
the Borrower written notice of the Event of Default, (iii) the holders of not less than 51%
in aggregate principal amount of Bonds then Outstanding have requested the Trustee in
writing to institute such proceeding, (iv) the Trustee has been afforded a reasonable
opportunity to exercise its powers or to institute such proceeding, (v) the Trustee has
been offered reasonable indemnity, where required, and (vi)the Trustee has thereafter
01-IS West:260447815.3 81
failed or refused to exercise such powers or to institute such proceeding within a
reasonable period of time. No Bondholder has or shall have any right in any manner
whatever to affect, disturb or prejudice the pledge of revenues or of any other moneys,
Funds, Accounts or securities under this Indenture. Except as provided in this subsection,
no Bondholder has or shall have the right. directly or indirectly, individually or as a
group, to seek to enforce, collect amounts available under, or otherwise realize on, the
Credit Facility.
Section 10.08. Discontinuance of Proceedings. If the Trustee or any Bondholder has
instituted anyproceeding or remedy under this Indenture, and such proceedings have been
discontinued or abandoned for any reason, or have been determined adversely, then and in every
such case the Issuer, the Credit Provider and the Trustee will be restored to their former positions
and rights under this Indenture. and all rights, remedies, powers, duties and obligations of the
Issuer, the Trustee and the Credit Provider shall continue as if no such proceedings had been
taken, subject to the.limits of any adverse determination.
Section 10.09. Possession of Bonds. All rights under this Indenture or upon any of the
Bonds enforceable by the Trustee may be enforced by the Trustee without the possession of any
of the Bonds, or the production of the Bonds at trial or other proceedings. Any suit, action or
proceeding instituted by the Trustee may be brought in its name for itself or as representative of
the Bondholders without the necessity of joining Bondholders as parties, and any recovery
resulting from such proceedings shall, subject to Section 10.10, be for the ratable benefit of the
Bondholders.
Section 10.10. Application of Moneys. Amounts derived from payments under the
Credit Facility shall be deposited into the Credit Facility Account and applied solely to pay the
principal of and interest on the Bonds. Amounts on deposit in the Bond Purchase Fund shall be
applied solely to pay the purchase price of the Bonds. All other moneys received by the Trustee
pursuant to any action taken under this Article X shall be deposited into the Interest Account and
the Redemption Account, as applicable, after payment of the ordinary costs and expenses of the
Trustee. The balance of such moneys, less such amounts as the Trustee determines may be
needed for possible use in paying future fees and expenses and for the preservation and
management of the Mortgaged Property (as identified by the Credit Provider), shall be applied as
set out in the following subsections.
(a) Principal on Bonds Not Declared Due and Payable. Unless the principal
on all Bonds has become or been declared due and payable, all such moneys will be
applied:
FIRST, to the payment of all interest then due on the Bonds (including for
this purpose, the interest component in respect of the Credit Facility), in the order
of the maturity of such interest and, if the amount available shall not be sufficient
to pay in full said amount, then to the payment ratably, of the amounts due,
without any discrimination or privilege;
SECOND; to the payment of the unpaid principal (including for this
purpose, the principal component in respect of the Credit Facility) of any of the
OHS M'est:260447815.3 82
Bonds which have become due (other than Bonds matured or called for
redemption for the payment of which moneys are held pursuant to this Indenture),
in the order of due dates, with interest upon the principal amount of the Bonds
from the respective dates upon which they become 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 the principal of such Bonds due on any particular
date, together with such interest, then to the payment ratably, according to the
amount of principal due on such date, to the persons entitled to such payment
without any discrimination or privilege;
THIRD, to the payment of any other amounts owed to the Credit Provider
under the Credit Facility Documents and the Loan Documents, and then to any
amounts due to the Trustee for Extraordinary Items, for this purpose including the
costs and expenses of any proceedings resulting in the collection of such moneys
and of advances incurred or made by the Trustee.
(b) Principal of Bonds Declared Due and Payable. If the principal of all the
Bonds has become or been declared due and payable, all such moneys shall be applied
first, to the payment of the principal and interest then due and unpaid upon the Bonds
(including for this purpose, the principal and interest component in respect of the Credit
Facility), 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 to payment, until all such principal and
interest has been paid; second, to pay the Credit Provider any other amounts owed to it
under the Credit Facility Documents and the Loan Documents; and third, to any other
amounts due and payable under this Indenture.
(c) General. Whenever moneys are to be applied pursuant to this Section,
such moneys shall be applied at such times, and from time to time, as the Trustee
determines, 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 applies such moneys, it shall fix the
date (which will be an Interest Payment Date unless it deems an earlier date more
suitable) upon which such application is to be made, and upon such date interest on the
amounts of principal to be paid on such date shall cease to accrue, unless interest has
already ceased to accrue in accordance with Section 1O.O2(b). 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, and shall not be required to make payment to the owner of
any Bond until such Bond is presented to the Trustee for appropriate endorsement or for
cancellation if fully paid.
OHS West:26044781>.3 8J
ARTICLE XI
THE TRUSTEE AND TENDER AGENT
Section 11.01. Appointment of Trustee; Duties. The Trustee is appointed and agrees
to act in such capacity and to perform the duties of the Trustee under this Indenture, the
Financing Agreement, the Assignment and the Regulatory Agreement upon the express terms
and conditions of this Indenture.
(a) Attorneys,Agents or Receivers. The Trustee may execute any of its trusts
or powers under this Indenture and perform any of its duties by or through attorneys,
agents or receivers. The Trustee shall be entitled to advice of counsel concerning all
matters of trust under this Indenture and its duties under this Indenture. The Trustee may
in all cases pay such reasonable compensation to such attorneys, agents and receivers and
shall be entitled to reimbursement from the Borrower for all such compensation paid.
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
which is not contrary to the express terms of this Indenture, any of the other Bond
Documents or the Loan Documents.
(b) Limitation of Responsibility. The Trustee shall not be responsible for any
recital in this Indenture (other than the final recital) or in the Bonds (other than in the
certificates.of authentication on the Bonds), or for insuring the Mortgaged Property, or
for the sufficiency of any insurance, or for collecting any insurance moneys, or for the
validity of this Indenture or of any supplements to this Indenture or instruments of further
assurance, or for the sufficiency of the security for the Bonds issued under this Indenture
or intended to be secured by this Indenture, or for the value or condition of or title to the
Mortgaged Property or the Security. The Trustee may require (but shall be under no duty
to require) of the Borrower full information and advice as to the perfonnance of the
covenants, conditions and agreements aforesaid as to the condition of the Mortgaged
Property. 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 except for losses
caused by the negligence or willful misconduct of the Trustee. The Trustee is not
accountable for the use (i) of any Bonds delivered in accordance with instructions of the
Issuer, (ii) by the Borrower of the proceeds of the Loan, or (iii) for the use or application
of any moneys paid out by the Trustee in accordance with this Indenture.
(c) Reliance. The Trustee shall be protected in acting upon any Opinion of
Counsel, notice, request, consent, direction, requisition, certificate, order, affidavit, letter,
or other paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons and which is not contrary to the express
terms of this Indenture, the other Bond Documents or the Loan Documents. 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 Bond Register will be conclusive and binding
OHS West:260447815.3 84
upon all future owners or holders of the same Bonds and upon Bonds issued in exchange
therefor or in place of such Bonds.
(d) Right Not Du& Until Undertaken. The permissive right of the Trustee to
do things enumerated in this Indenture or in the other Bond Documents to which the
Trustee is a party shall not be construed as duties until specifically undertaken by the
Trustee. Prior to an Event of Default under this Indenture, the Trustee shall only be
responsible for the performance of the duties expressly set forth in this Indenture and in
the other Bond Documents to which it is a party and shall not be answerable for other
than its negligence or willful misconduct in the performance of those express duties.
(e) No Personal Liability. 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 Mortgaged Property.
(f) No Bond or Surety Required. The Trustee shall not be required to give
any bond or surety in respect of the execution of its trusts and powers or otherwise in
respect of the premises.
(g) Security, or Indemnity Bond. Before taking any action requested by
Bondholders under Article X (except for acceleration of the Bonds with respect to any
draw on the Credit Facility), the Trustee may require reasonably satisfactory security or
an indemnity bond reasonably satisfactory to it from such 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 willful
misconduct by reason of any such action so taken.
(h) Not Bound To Inquire. The Trustee is not required to take notice or
deemed to have notice of any default or Event of Default under this Indenture, except
Events of Default under Section 10.01(a)(i), (ii) or (vi), unless the Trustee has actual
knowledge thereof or has received notice in writing of such default or Event of Default
from the Issuer, the Borrower, the Credit Provider or the holders of at least 25% in
aggregate principal amount of the Outstanding Bonds, and in the absence of any such
notice, the Trustee may conclusively assume that no such default or Event of Default
exists. The Trustee may nevertheless require the Issuer and the Borrower to furnish
information regarding performance of their respective obligations under the Financing
Agreement, the Regulatory Agreement and this Indenture, but is not obligated to do so.
(i) Standard of Care. The Trustee, during the existence and continuation of
any Event of Default under this Indenture, shall exercise such of the rights vested in it by
this Indenture, the Financing Agreement and the Regulatory 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 such person's own affairs. The foregoing
will not limit the Trustee's obligations under Article VIII or Section 10.02(a).
(j) Notice to Rating Agency. At any time that the Bonds are rated by a
Rating Agency, the Trustee shall give notice by mail to that Rating Agency at its address.
OHS West:260447815.3 85
(as specified in Section 13.04) promptly upon the occurrence of any of. (i) the
appointment of any successor trustee or separate trustee or co-trustee, (ii) any amendment
of or supplement to this Indenture, the Financing Agreement, the Credit Facility or any
Loan Document, (iii) the termination of the Credit Facility, the extension or expiration of
the Credit Facility or the substitution of any Alternate Credit Facility for the Credit
Facility, (iv) an Event of Default under this Indenture, (v) a redemption, acceleration or
defeasance of the Bonds in whole or in part.(other than any mandatory sinking fund
redemption or redemption caused by the deposit and accumulation of moneys in the
Principal Reserve Fund), (vi) any mandatory tender of the Bonds, (vii) execution by the
Trustee of an agreement for the investment of moneys at a guaranteed rate as an
Investment, (viii) any change in the provider of an agreement in the Trust Estate for the
investment of moneys at a guaranteed rate; (ix) any resignation, removal or replacement
of the Remarketing Agent, (x) any change in Mode, and (xi) any other event of which
notice reasonably is requested by the Rating Agency. Notwithstanding the foregoing, it
is expressly understood and agreed that failure to provide any such notice to any Rating
Agency or any defect in any such notice will not affect the validity of any action with
respect to which notice is to be given or the effectiveness of any such action.
(k) Notice of the Non payment of any Third Party Fee or Fees and
Expenses. The Trustee shall give prompt written notice to the Credit Provider of the
non-payment of any Third Party Fees or Fees and Expenses.
(1) Authority To Execute. The Trustee is authorized and directed by the
Issuer to execute or accept and acknowledge and to perform its obligations under, as
applicable, in its capacity as Trustee, the Financing Agreement, the Assignment, the
Regulatory Agreement and any financing.statements.
(m) No Disclosure Responsibility. The Trustee shall have no responsibility
with respect to any information, statement, or recital in any official statement, offering
memorandum or any other disclosure material prepared or distributed with respect to the
Bonds, except for any information provided by the Trustee.
(n) No Financial Obligation. No provision of this Indenture or any other
Bond Document or any Loan Document shall require the Trustee to risk or advance its
own funds or otherwise incur any financial liability in the performance of its duties or the
exercise of its rights under this Indenture.
(o) No Liability for Directions. The Trustee will not be liable for any action
taken or not taken by it in accordance with the direction of the Credit Provider or
Bondholders pursuant to this Indenture except for the Trustee's own negligent action, its
own negligent failure to act, or its own willful misconduct.
(p) Books, Records and Accounts. The Trustee, on behalf of the Issuer, shall
keep and maintain, or cause to be kept and maintained, proper books, records and
accounts in which complete and accurate entries shall be made of all of its transactions
relating to the Bonds, this Indenture, the Financing Agreement, the Regulatory
Agreement, the Loan, the Credit Facility, the Funds and Accounts, Permitted.Investments
OHS West260447815.3 86
and Investment Income, all of which, at all reasonable times, and upon reasonable prior
notice, will be subject to the inspection and audit by the Issuer. the Credit Provider, the
Borrower and Bondholders owning not less than 25% in aggregate principal amount of
Bonds then Outstanding or any of their accountants or agents duly authorized in writing,
each of whom will have the right, at its expense.. to make copies of any such books of
record and accounts.
(q) List of Bondholders. The Trustee shall keep the Bond Register available
for inspection by any Bondholder or its attorney duly authorized in writing during normal
business hours upon reasonable prior notice.
Section 11.02. Qualification. The Trustee and any successor.Trustee shall at all times
be a bank or trust company organized under the laws of the United States of America or any
state, authorized under such laws to exercise corporate trust powers, having a combined capital
stock, surplus and undivided profits of at least $50,000.000 (or an affiliate of a corporation or
banking association meeting that requirement which guarantees the obligations and liabilities of
the Trustee) and subject to supervision or examination by federal or state banking authority.
Section 11.03. Fees; Expenses. Each of the Trustee and the Tender Agent is entitled to
payment and reimbursement from the Borrower, or from the Trust Estate to the extent otherwise
permitted in this Indenture, for reasonable fees for its ordinary services rendered under this
Indenture and the other Bond Documents and its ordinary costs and expenses reasonably
incurred in connection with its services under this Indenture and the other Bond Documents. In
the event that it should become necessary that the Trustee perform extraordinary services, it shall
be entitled to- Extraordinary Items; provided however. that if such Extraordinary Items are
incurred as a result of the negligence or willful misconduct of the Trustee or the Tender Agent,
as applicable, it will not be entitled to compensation or reimbursement for such services or
expenses. The Borrower's failure to pay amounts owed to the Trustee or the Tender Agent shall
not excuse the performance of its obligations. The Trustee recognizes that all fees, charges and
other compensation to which it may be entitled under this Indenture are required to be paid by
the Borrower under the Financing Agreement, and, accordingly, the Trustee and the Tender
Agent agree that the Issuer shall not be liable for any such fees, charges and other compensation.
Section 11..04. Merger; Consolidation. Any corporation oz- 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, merger or consolidation,
provided such corporation or association otherwise qualifies under Section 11.02. shall be and
become the successor Trustee under this Indenture with all the estates, properties, rights. powers
and duties of the predecessor Trustee without the execution or filing of any instrument or any
further act, deed or conveyance (other than the provision of notice to the Issuer and the Credit
Provider).
Section 11.05. Resignation or Removal of Trustee. The Trustee may resign only upon
giving 60 days' prior written notice to the Issuer, the Credit Provider, the Borrower and to each
Registered Owner of Bonds then Outstanding as shown on the Bond Register. The Trustee may
be removed at any time upon 30 days" prior written notice to the Trustee, (i) by the Issuer, with
Of IS West:260447815.3 87
the prior written consent of the Credit Provider, (ii) by the owners of not less than 51% in
aggregate principal amount of Bonds then Outstanding, which written instrument shall designate
a successor Trustee approved by the Credit Provider, or (iii) by the Credit Provider. Such
resignation or removal shall not be effective until a successor Trustee satisfying the requirements
Of Section 11.02 is appointed and has accepted its appointment.
Section 11.06. Appointment of Successor Trustee. Upon the resignation or removal of
the Trustee, a successor Trustee, satisfying the requirements of Section 11.02, shall be appointed
by the Issuer with the prior written consent of the Borrower (if the Borrower is not then in
default under any Bond Document or any Loan Document and if no event which, with notice or
the passage of time or both, would constitute such a default has occurred and is continuing) and
with the prior written consent of the Credit Provider (unless appointed by the Bondholders as
provided in Section 11.05), provided, however, that if such consent or other correspondence with
respect thereto is not received by the Issuer within 15 Business Days after receipt by the Credit
Provider of written notice of the proposed successor Trustee, such con-sent shall be deemed to
have been given. If, in the case of resignation or removal of the Trustee, no successor is
appointed within 30 days after the notice of resignation or within 30 days after removal, as the
case may be, then, in the case of a resignation, the resigning Trustee shall appoint a successor
with the prior written consent of the Issuer and the Credit Provider or apply to a court of
competent jurisdiction for the appointment of a successor Trustee and, in the case of a removal,
the Credit Provider shall have the right to appoint a successor Trustee or to apply to a court of
competent jurisdiction for the appointment of a successor Trustee. The successor Trustee must
accept in writing its duties and responsibilities under this Indenture, the Financing Agreement,
the Assignment, and the Regulatory Agreement. The successor Trustee shall give notice of such
succession by first-class mail, postage prepaid, to each Bondholder, the Issuer, the Credit
Provider and the Borrower.
Section 11.07. Transfer of Rights and Mortgaged Property .to Successor Trustee.
The successor Trustee, without any further act, deed or conveyance, shall become fully vested
with all moneys, estates, properties, rights, powers, duties and obligations of the predecessor
Trustee, but the former Trustee shall nevertheless, on the written request of the Issuer, the Credit
Provider or the successor Trustee, execute, acknowledge and deliver such instruments of
conveyance and further assurance and do such other things as may be reasonably required for
more fully and certainly vesting and confirming in the successor Trustee all the right, title and
interest of the predecessor Trustee in and to any properties held by it under this Indenture, and
shall pay over, assign and deliver to the successor Trustee any money or other property subject to
the trusts and conditions set forth in this Indenture. The former Trustee shall execute and deliver
a certificate of transfer or such other certificate or document as may be required by the Credit
Facility for its transfer to a successor Trustee and do such other things as may be reasonably
required to transfer all of its right, title and interest in and to the Credit Facility to the successor
Trustee. Should any deed, conveyance or instrument in writing from the Issuer be required by
the successor Trustee for more fully and certainly vesting in and confirming to the successor
Trustee any such moneys, estates, properties, rights, powers and duties, any and all such deeds,
conveyances and instruments in writing, shall, on request, and as may be authorized by law, be
executed, acknowledged and delivered by the Issuer.
ORIS West:260447815.3 88
tl
Section 11.08. Power To Appoint Co-Trustees and Separate Trustees.
(a) Appointment of Co-Trustees: At any time or times, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the Mortgaged
Property is located, the Issuer (at the request of the Borrower, unless the Borrower is then
in default under any Bond Document or any Loan Document or if an event has occurred
and is continuing which, with notice or the passage of time or both, would constitute such
a default) shall have the power, subject to the approval of the Credit Provider, to appoint
one or more persons approved by the Trustee either to act as co-trustee jointly with the
Trustee or as separate trustee of all or any part of the Mortgaged Property, and to vest in
such person, in such capacity, such title to the Mortgaged Property or any part of it,
and/or such rights, powers, duties, trusts or obligations as the Issuer and the Trustee may
consider necessary or desirable. If the Issuer is in default under this Indenture, the
Trustee alone will have the power to make such appointment with the prior written
consent of the Credit Provider. 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.
(b) Effect of Death, Incapacity, Resignation or Removal of Co-Trustee or
Separate Trustee. In case any co-trustee or separate trustee dies, becomes incapable of
acting, resigns or is removed, the pledge and assignment of the Security and all rights,
powers, trusts, duties and obligations of the co-trustee or separate trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee unless and until a
successor co-trustee or separate trustee is appointed in the same manner as provided in
subsection (a).
(c) Approval of the Issuer. No co-trustee or separate trustee may assume its
duties under this Indenture without the prior written approval of the Issuer, unless the
Issuer is in default under this Indenture or has failed to respond timely as otherwise
provided in this Article XI.
Section 11.09. Filing of Financing Statements. The Trustee shall, at the expense of the
Borrower, file or recordor cause to be filed or recorded all financing statements which are
identified to the Trustee by the Borrower and required to be tiled or recorded in order to fully
protect and preserve the security interests relating to and the priority of(a) the Trust Estate and
the Security, and (b) at the direction of the Credit Provider, the Loan and (c) the rights and
powers of the Issuer, the Trustee and the Credit Provider in connection with such security
interests, including, but not limited to, all continuation statements for the purpose of continuing
without lapse the effectiveness of(i) those financing statements which have been filed at or prior
to the Closing Date in connection with the security for the Bonds pursuant to the authority of the
UCC, and (ii) any previously filed continuation statements which have been filed as required by
this Indenture; provided, however, that if the Credit Provider 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 shall obtain from the Borrower
or the Credit Provider, all such financing statements as may be required for such purposes. Upon
the filing of any such financing statement the Trustee shall immediately notify the Issuer, the
OHS West:260447815.3 89
Borrower and the Credit.Provider that the same has been done. If direction is given by the Credit
Provider, the Trustee shall file all financing statements in accordance with such directions.
Section 11.10. Tender Agent. The initial Tender Agent is U.S. Bank National
Association. The Tender Agent shall designate to the Trustee, the Issuer, the Remarketing Agent
and the Credit Provider its Designated Office and signify its acceptance of the duties and
obligations imposed upon it under this Indenture by a written instrument of acceptance delivered
to the Trustee under which such Tender Agent will agree particularly to:
(a) act as agent for the Trustee for the purpose of authenticating, accepting
delivery of and delivering Bonds in accordance with Section 2.142.1212.. 13, 2.14, 2.16,
4.01 or 4.02 or other provisions of this Indenture relating to authentication and delivery
of Bonds;
(b) 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) 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. 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 delivered
such moneys until the Bonds purchased with such moneys have been registered,
authenticated and delivered to or to the order of such person; and
(e) hold all Bonds delivered to it for purchase in trust for the owner of such
Bonds until such owner has received the purchase price for such Bonds.
The 'Tender Agent shall be entitled to the same protections. immunities and limitations from
liability afforded the Trustee under this Indenture. The Issuer shall cooperate with the Trustee,
the Borrower and the Credit Provider to cause the necessary arrangements to be made and to be
continued by which amounts from the sources specified in this Indenture and in the Financing
Agreement shall be made available•for the purchase of Bonds presented at the Designated Office
of the; Tender Agent, and by which 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 4.01 or 4.02.
Section 11.11. Resignation or Removal of Tender Agent. The Tender Agent may
resign by giving no less than 30 days' prior written notice to the Borrower, the Trustee, the
Credit Provider and the Issuer. The Tender Agent may be removed by the Issuer with the written
approval of the Credit Provider, by an instrument signed by the Issuer stating the reason for such
removal filed with the Tender Agent, the Trustee, the Credit Provider, and the Issuer may
appoint a successor Tender Agent with the prior written consent of the Borrower (if the
Borrower is not then in default under any Bond Document or any Loan Document and if no
event which, with notice or the passage of time or both. would constitute such a default has
occurred and is continuing) and the Credit Provider. The Trustee or the Credit Provider is
authorized, with the prior written approval of the Issuer and the Credit Provider or the Trustee, as
01IS\Nlestz60447815.3 90
applicable, to remove the Tender Agent and appoint a successor. No removal of the Tender
Agent shall be effective until a successor Tender Agent has been appointed and has accepted
such appointment. Failing such appointment by the Issuer prior to the effective date of the
Tender Agent's resignation, the Credit Provider shall have the right to appoint a successor
Tender Agent acceptable to the Issuer. Any successor Tender Agent shall be a trust company or
bank having trust powers and in good standing, within or without the State, having trust powers. .
The provisions of this Section shall apply if the resignation of the Tender Agent is due to the fact
that the Tender Agent no longer exists. In no event shall the resignation or removal of the
:Tender Agent take effect prior to the date a successor Tender Agent has been appointed and is
serving under this Indenture and the Tender Agent Agreement. The Trustee, when acting as
Tender Agent, may transfer the Tender Agent duties to,any related affiliate without further act or
approval (other than the provision of notice to the Issuer, the Credit Provider, the Borrower and
the Remarketing Agent).
ARTICLE XII
SUPPLEMENTAL INDENTURES; AMENDMENTS
Section 12.01. Supplemental Indentures Not Requiring Bondholder Consent. The
Issuer and the Trustee, without the consent of or notice to any Bondholder, 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
in this Indenture or in any supplemental indenture which may be defective or inconsistent
with any other provision contained in this Indenture or in any supplemental indenture;
(b) to amend, modify or supplement this Indenture in any respect if such
amendment, modification or supplement is not materially adverse to 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 in such manner as to
permit qualification 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 or co-trustee, or a separate
Tender Agent or Bond Registrar;
(f) to make any change requested by the Credit Provider which is not
materially adverse to the interests of the Bondholders, including, but not limited to,
provision of a Credit Facility other than or in substitution for the initial Credit Facility,
ORIS West:260447815.3 91
provided that the provision of such other Credit Facility does not adversely affect the
rating then in effect-for the.Bonds;
(g) to make any changes in this Indenture or in the terms of the Bonds
-necessary or desirable in order to maintain the then existing rating awarded to the Bonds
by the Rating Agency or otherwise to comply with requirements of any Rating Agency
then rating the Bonds;
(h) to comply with the Code and the regulations and rulings issued with
respect to the Code, to the extent determined as necessary in the Opinion of Bond
Counsel;
(i) to modify, alter, amend or supplement this Indenture in any other respect,
including amendments which would otherwise be described in Section 12.02; (A) if such
amendments will take effect on a Mandatory Tender Date following the purchase of
Tendered Bonds or (B) if notice of the proposed supplemental indenture is given to
Bondholders (in the same manner as notices of redemption are given) at least 30 days
before the effective date of such amendment, modification, alteration or supplement and,
on or before such effective date, the Bondholders have the right to demand purchase of
their Bonds pursuant to Section 4.01; or
(j) to change any of.the time periods for provision of notice relating to the
remarketing of Bonds or the determination of the interest rate on the Bonds.
If the Trustee has received written confirmation from the Rating Agency to the effect that such
supplemental indenture will not result in the suspension, withdrawal or reduction of the then
current rating on the Bonds and all conditions precedent in this Section 12.01 and in
Sections 12.05 and 12.06 have been satisfied. the Trustee shall join the Issuer in the execution of
any such supplemental indenture. The Trustee promptly shall furnish a copy of any such
supplemental indenture to the Credit Provider, the Remarketing Agent, the Tender Agent and the
Borrower.
Section 12.02. Supplemental Indentures Requiring Bondholder Consent. The Issuer
and the Trustee may, with the consent of Bondholders owning not less than 51% in aggregate
principal amount of Bonds then Outstanding, from time to time, execute indentures supplemental
to this Indenture for the purpose of modifying or amending any of the provisions of this
Indenture provided, however, that nothing in this Section 12.02 permits, or shall 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 owner of such Bond;
(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;
OHS West:26044781 5.3 92
(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 under this Indenture or otherwise approve matters requiring Bondholder approval
under this Indenture, including consent to any supplemental indenture, without the
consent of the owners of all the Bonds then Outstanding;
(f) a transfer, assignment or release of the Credit Facility (or modification of
the provisions of this Indenture governing such transfer, assignment or release); other
than as permitted by this Indenture or the Credit Facility, without the consent of the
owners of all of the Bonds then Outstanding;
(g) a reduction in the aggregate principal amount of the Bonds required for
consent to such supplemental indenture, without the consent of the holders of all of the
Bonds then Outstanding;
(h) the creation of any lien other than a lien ratably securing all of the Bonds
at any time Outstanding under this Indenture, without the consent of the holders of all of
the Bonds then Outstanding; or
(i) the amendment of this Section 12.02, without the consent of the holders of
all of the Bonds then Outstanding.
The Trustee shall promptly furnish a copy of any such supplemental indenture to the Credit
Provider, the Remarketing Agent, the Tender Agent and the Borrower. Notice of any
amendment pursuant to this Section shall be given to the Bondholders promptly following the
execution thereof.
Section 12.03. No Bondholder Consent Required for Amendment to Loan
Documents. Unless a Wrongful Dishonor has occurred and is continuing, the Credit Provider
alone may give the consent to any amendment to the Loan Documents required to be given by
Bondholders and no consent of the Bondholders is required; provided, however, that any
amendment or substitution of the Note shall occur only following written confirmation of the
Rating Agency that such amendment or substitution will not result in a reduction or withdrawal
of the rating on the Bonds.
Section 12.04. Amendments to the Credit Facility. The Credit Facility may.only be
amended, supplemented or otherwise changed subject to the consent of Credit Provider and in
accordance with the following:
(a) Replacement Credit Facility. At the request of the Credit Provider, the
Trustee shall exchange the Credit Facility with the Credit Provider then in effect for a
new Credit Facility (a `Replacement Credit Facility") issued by the Credit Provider,
provided that there is delivered to the Trustee (i) a written confirmation from the Rating
Agency to the effect that such exchange shall not adversely affect the rating then in effect
for the Bonds and (ii) a written opinion of Bond Counsel to the effect that such exchange
will not adversely affect the excludability of interest on the Tax-Exempt Bonds from
93
oris Wcst:26044781 i.3
gross income for federal income tax purposes. No such. exchange shall require the
approval of the Issuer, the Trustee or any of the Bondholders or constitute or require a
modification or supplement to this Indenture.
(b) Amendment of the Credit Facility. The Trustee may consent, without the
consent .of the owners of the Bonds, to any amendment of the Credit Facility not
addressed in subsection(a) which does not prejudice in any material respect the interests
of the Bondholders.
(c) Other Amendments of the Credit Facility. Except as provided in
subsections (a) and (b), the Credit Facility may be amended only with the consent of the
Trustee and the owners of a majority 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 under the Credit Facility or change the time for payment of such amounts;
provided, however, 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 12.05. Notice to and Consent of Bondholders. If consent of the Bondholders
is required for any supplement, amendment or modification to this Indenture or for any other
similar purpose, the Trustee shall give notice of the proposed supplement, amendment or
modification by first class mail, postage prepaid, to the Bondholders. Such notice will be
conclusively presumed to have been duly given and received when given in such manner,
whether or not any holder actually receives the notice. Such notice shall briefly set forth the
nature of the proposed supplement, amendment or modification, and shall state that copies of any
such supplement, amendment or modification are on file at the Designated Office of the Trustee
for inspection by the Bondholders. The consent of the holder of any Bond will be binding on
any transferee and successor transferees of such Bond.
Section 12.06. Required Approvals. Subject to the provisions of Section 8.06, no
amendment, supplement or modification may be made to any Transaction Document without the
prior written consent of the Credit Provider (so long as the Letter of Credit is in effect) or any
Alternate Credit Provider (at such time as an Alternate Credit Facility is in effect). Anything in
this Indenture to the contrary notwithstanding, a supplement or amendment or other document
described under this Article XII which materially and adversely affects any rights or obligations
of the Borrower will not become effective unless and until the Borrower has consented in writing
to the execution of such supplemental indenture, amendment or other document. The Trustee
shall not be required to enter into any supplement or amendment which adversely affects the
Trustee's rights and duties under this Indenture.
Section 12.07. Opinions of Counsel. Subject to the provisions of Section 11.01, the
Trustee may obtain and will be fully protected in relying upon an Opinion of Counsel as
conclusive evidence that any supplement or amendment to this Indenture is authorized and
permitted by this Indenture and, if applicable, is not materially adverse to the interests of the
Bondholders. No supplement or amendment with respect to this Indenture will be effective until
the Issuer and the Trustee have received an opinion of Bond Counsel to the effect that such
OHS West260447815.3 94
supplement or amendment will not adversely affect the exclusion from gross income, for federal
income tax purposes, of the interest payable on the Tax-Exempt Bonds.
Section 12.08. 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
so provides, 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
Bondholders, upon surrender for cancellation of such Bonds in equal aggregate principal
amounts.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Consents, etc., of Bondholders. Any consent, request, direction, or
other instrument required to be signed by the Bondholders may be in any number of concurrent
writings of similar tenor and may be signed by any Bondholder in person or by an authorized
agent appointed in writing. The i:act and date of the execution by any person of any such request,
consent, direction, approval, objection or other instrument may be proved by the certificate of
any officer in any jurisdiction who by law has power to take acknowledgments within such
jurisdiction that the person signing such writing acknowledged before such officer its execution,
or by an affidavit of any witness to such execution. Such proof of execution or of the writing
appointing any agent will be sufficient for any of the purposes of this Indenture and will be
conclusive in favor of the Trustee with regard to any action taken by it under such consent,
request, direction or other instrument. In the.Geyent that the Trustee receives conflicting
directions from two groups of Bondholders, each with combined holdings of not less than 25% in
aggregate principal amount of all Bonds then Outstanding, the directions given by the group of
Bondholders which hold the largest percentage of Bonds Outstanding will be controlling and the
Trustee shall follow such directions as elsewhere required in this Indenture.
Section 13.02. Limitation of Rights. .With the exception of rights expressly conferred
in this Indenture, 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 Issuer, the Trustee,
the Bondholders, the Credit Provider and the Borrower any legal or equitable right, remedy or
claim under or in respect of this Indenture., This Indenture and all of the covenants, conditions
and provisions in this Indenture are intended to be for the sole and exclusive benefit of the
parties to this Indenture, the Bondholders, the Credit Provider and the Borrower as provided in
this Indenture. The Credit Provider is a third-party beneficiary of this Indenture with the right to
enforce its provisions.
Section 13.03. Severability. If any provision of this Indenture is held to be in conflict
with any applicable constitution or statute or rule of law, or is otherwise held to be unenforceable
for any reason, such circumstance 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
OIiS West260447815.3 95
provision or provisions contained in this Indenture invalid, inoperative or unenforceable to any
extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of.
this Indenture will not affect the remaining portions of this Indenture.
Section 13.04. Notices. Unless otherwise specified in this Indenture, it shall be
sufficient service or giving of any notice. request, certificate, demand or other communication if
the same is sent by (and all notices required to be given by mail will be given by) first-class
registered or certified mail, postage prepaid, return receipt requested, or by private courier
service which provides evidence of delivery, or sent by Electronic Means which produces
evidence of transmission, confirmed by first-class mail, postage prepaid, and in each case will 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 will be addressed as follows:
To the Issuer: County of Contra Costa
Conservation and Development Department
2530 Arnold Drive, Suite 190
Martinez, CA 94553
To the Trustee:
To the Remarketing Agent: Citigroup Global Markets Inc.
444 South Flower Street
27th Floor
Los An-eles, CA 90071
To the Borrower: PHVP I, LP
735 Market Street, Third Floor
San Francisco, CA 94103
Attention: Mark Farrar
with a copy to: Joanne Lockridge
Senior Vice President— Finance
1000 Bridgeport Avenue, Suite 258
Shelton, CT 06484
To the Tender Agent: U.S. Bank National Association
Corporate Trust Services
One California Street, Suite 2100
San Francisco, CA 94111
01 IS VJest:260447815.3 96
To the Credit Provider:
To the Rating Agency: Standard & Poor's Rating Services
38`" Floor
55 Water Street
New York, NY 10041
Attention: Public Finance Surveillance Group
Telephone: (212) 438-2054
Facsimile: (212) 438-2157
pubfin—structured@standardandpoors.com
By notice given under this Indenture, any entity whose address is listed in this Section 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 will be required
to be sent to more than two addresses. All approvals required under this Indenture will be given
in writing.
Section 13.05. Action Required To Be Taken on a Non-Business Day. If the date for
making any payment or any date on which action is required to be taken is not a Business Day;
then any action required to be taken or any payment required to be made may be taken or made
on the following Business Day with the same force and effect as if made or taken on the date
otherwise provided for in this Indenture and, in the case of any payment date, no interest will
accrue for the period from and after such date.
Section 13.06. Binding Effect. From and after the Closing Date, this Indenture shall be
binding upon the Issuer and the Trustee and their respective successors and assigns, subject,
however, to the limitations contained in this Indenture.
Section 13.07. 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.
Section 13.08. No Personal Liability; No Recourse. No member, officer, agent,
employee or attorney of the Issuer, including any person executing this Indenture or the Bonds,
will be liable personally on the Bonds or for any reason relating to the issuance of the Bonds. No
recourse will be had for the payment of the principal of or the interest on the Bonds, or for any
claim based on such Bonds, or otherwise in respect of such Bonds, or based on or in respect of
this Indenture or any indenture supplemental to this Indenture, 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 of this Indenture and as part of the consideration for the issue
of the Bonds, expressly waived and released.
OHS West:260447815.3 97
Section 13.09. Counterparts. This Indenture may be simultaneously executed in
several counterparts. each of which.will be an original and all of which will constitute but one
and the same instrument.
Section 13.10. Amendment of Original Indenture. This Indenture amends the
Original Indenture as of the Escrow Break Date and shall take effect on the Escrow Break Date
upon the purchase of the 2006 Bonds on the Escrow Break Date. This Indenture is entered into
pursuant to Section 12.01(i)(A) of the Original Indenture.
[Remainder of Page Intentionally Left Blank]
OHS West:260447815.3 . 98
The Issuer has caused this Indenture tobe executed 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 set forth above.
COUNTY OF CONTRA COSTA, as Issuer
By
Deputy Director- Redevelopment
THE BANK OF NEW YORK MELLON
TRUST COMPANY,N.A., as Trustee
By
Authorized Officer
OFIS West:260447815.3 99
Acknowledged, Consented and Agreed To:
PHVP 1. LP.
a Delaware limited partnership
By: PHVP I GP, LLC,
a Delaware limited liability company,
its general partner
By:
Name:
Title: Authorized Signatory
CITIGROUP GLOBAL MARKETS INC.,
as Remarketing Agent
By:
Authorized Representative
OHS West:260447815.3 100
EXHIBIT A
FORM OF BOND
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(AVALON WALNUT CREEK AT CONTRA COSTA CENTRE PROJECT)
[TAXABLE] SERIES [2006A] [2006A-T] [2008A]
No. R- $
Dated . Maturity Date CUSIP
Date
[March 23, 2006] March 15, 2046
[July 2008]
REGISTERED OWNER: Cede & Co.
PRINCIPAL AMOUNT:
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to The Bank of New York Mellon Trust Company,
N.A., as trustee (the "Trustee") for registration, transfer, exchange or payment, and any Bond
issued is registered in the name of Cede & Co. or in the name of such other entity as is requested
by an authorized representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE OF THIS BOND FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUI. inasmuch as the Registered Owner of this Bond, Cede & Co.,
has an interest in this Bond.
Capitalized terms used in this Bond but not defined in this Bond shall have the meanings
given to those terms in the Indenture (as hereinafter defined).
FOR VALUE RECEIVED, the County of Contra Costa (the "Issuer'), a political
subdivision of the State of California (the "State'), promises to pay to the Registered Owner
identified above or registered assigns (subject to prior redemption as hereinafter provided), on
the Maturity Date set forth above, the Principal Amount set forth above, and to pay interest on
the Principal Amount on each Interest Payment Date. The term "Interest Payment Date." means
any date on which interest is payable, including any Adjustment Date, any Redemption Date, the
Maturity Date and the date of acceleration of the Bonds.
Payment of interest on this Bond on each Interest Payment Date will. be made to the
Registered Owner of this Bond (as determined at the close of business on the Record Date (being
OFIS West:260444781 5.3 A-1
the Business Day preceding the applicable Interest Payment Date) by check drawn upon the
Trustee and mailed by first class mail, postage prepaid, on the Interest Payment Date to the
address of the Registered Owner as it appears on the Bond Register or to such other address as
may be furnished in writing by the Registered Owner to the Trustee prior to the applicable
Record Date. Payment of the principal of this Bond and premium, if any, together with interest
payable on any Bond Payment Date (other than interest payable on a regularly scheduled Interest
Payment Date) will be made by check to the Registered Owner of this Bond only upon
presentation and surrender of this Bond on or after its maturity date or date fixed for purchase,
redemption or other payment at the office of the Trustee designated by the Trustee for that
purpose. Notwithstanding the foregoing, payment of principal of, premium, if any, and interest
on, this Bond will be made by wire transfer to any account within the United States of America
designated by the Registered Owner if the Registered Owner owns $1,000,000 or more in
aggregate principal amount of the Bonds and otherwise complies with the procedures set forth in
the Indenture. Notwithstanding the foregoing, payments of the principal of, premium, if any, and
interest on any Bonds that are subject to the Book-Entry System will be made as provided in the
Indenture.
If interest on this Bond is in default, the Trustee, prior to the payment of interest, will
establish a special record date (the "Special Record Date") for such payment. A Special Record
Date will be not more than 15 nor less than 10 days prior to the date of the proposed payment.
Payment of defaulted interest will then.be made by check or wire transfer as permitted by the
Indenture, mailed or remitted to the Registered Owner in whose name this Bond is registered on
the Special Record Date at the address or account of such Registered Owner as shown on the
Bond Register.
The principal of, premium, if any, and interest on this Bond are payable in lawful money
of the United States of America.
Interest on this Bond is payable, unless otherwise specified in accordance with the
Indenture, at the Weekly Variable Rate, calculated on the basis of a 365- or 366-day year, as
applicable, for the actual number of days elapsed.
THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF
THE ISSUER, . PAYABLE SOLELY FROM THE TRUST ESTATE, WHICH IS
SPECIFICALLY ASSIGNED AND PLEDGED TO SUCH PURPOSES IN THE MANNER
AND TO THE EXTENT PROVIDED IN THE INDENTURE. NEITHER THE STATE OF
CALIFORNIA, NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER,
TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) WILL IN ANY EVENT BE
LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR
INTEREST ON THE BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE,
OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OF THE ISSUER, AND
NONE OF THE BONDS OR ANY OF THE ISSUER'S AGREEMENTS OR OBLIGATIONS
WILL. BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF
THE FAITH AND CREDIT OF OR A LOAN OF THE CREDIT OF THE ISSUER, THE
STATE OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE
LIMITED EXTENT SET FORTH IN THE INDENTURE) WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER.
OHS West:2 6044 7815.3 A-2
This Bond is one of the duly authorized issue of bonds of the,Issuer designated as
"County of Contra Costa,Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra
Costa Centre Project) [Taxable] Series [2006A] [2006A-T] [2008A] limited in aggregate
principal amount to $ (the "Series [2006A] [2006A-T] [2008A] Bonds"). The
[Taxable] Series [2006A] [2006A-T] [2008A] Bonds, together with "County of Contra Costa
Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project)
Series [2006A] [2008A]" in the aggregate principal amount of $ and
"County of Contra Costa Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra
Costa Centre Project) [Taxable] Series [2006A-T] [2008A]" in the aggregate principal amount of
$ (collectively, the "Bonds"), have been issued under an Amended and
Restated Trust Agreement, dated as of July 1, 2008, between the Issuer and the Trustee (as
originally executed and delivered and as amended and supplemented from time to time, the
"Indenture').
The Bonds are equally and ratably secured as to principal, premium, if any, interest and
purchase price by the Indenture. Reference is made to the Indenture (a copy of which is on file
at the Designated Office of the Trustee) for a description of the Trust Estate, the nature and
extent of the Security for the Bonds, the terms and conditions upon which the Bonds are secured,
and the rights of the owners of the Bonds. In the event of any conflict between the terms of this
Bond and the terms of the Indenture, the terms of the Indenture shall control.
THE BONDS ARE SUBJECT TO OPTIONAL AND SPECIAL MANDATORY
REDEMPTION, TENDER AND PURCHASE PRIOR TO THEIR RESPECTIVE
STATED MATURITIES, ON THE DATES, IN THE AMOUNTS, AT THE
REDEMPTION OR PURCHASE PRICES AND UPON NOTICE AS PROVIDED IN THE
INDENTURE.
The registered owner of this Bond will have no right to enforce the provisions of the
Indenture or the Financing Agreement or to institute any proceeding in equity or at law for the
enforcement of the Indenture or the Financing Agreement or to take any action with respect to an
Event of Default under the Indenture or the Financing Agreement or to institute, appear in or
defend any suit or other proceedings with respect to the Indenture or the Financing Agreement,
except as provided in the Indenture.
If an Event of Default occurs, the principal of all Bonds may be declared due and payable
upon the conditions, in the manner and with the effect provided in the Indenture.
The Trustee is the Bond Registrar for the Bonds and will keep the Bond Register for the
registration of the Bonds and for the registration of transfer of Bonds.
Subject to the express limitations contained in the Indenture, any Bondholder or its
attorney duly authorized in writing may transfer title to a Bond on the Bond Register upon
surrender of the Bond at the office of the Trustee designated by the Trustee for that purpose,
together with a written instrument of transfer (in substantially the form of assignment, including
signature guarantee, attached to the Bond) satisfactory to the Trustee executed by the Bondholder
or its attorney duly authorized in writing, and upon surrender for registration of transfer of any
Bond, the Issuer will execute and the Trustee will authenticate and deliver in the name of the
oF1S West:260447815.3 A-3
transferee or transferees a new Bond or Bonds of the same aggregate principal amount, rate of
interest, maturity and tenor as the Bond surrendered and of any Authorized Denomination.
Subject to the express limitations contained in the Indenture, Bonds may be exchanged
upon surrender of such Bonds at the office of the Trustee designated by the Trustee for that
purpose together with a written instrument of transfer (in substantially the form of assignment,
including signature guarantee, attached to the Bond) satisfactory to the Trustee, 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 of interest, maturity, and tenor as the Bonds
being exchanged and of any Authorized Denomination. The Issuer will execute and the Trustee
will authenticate and deliver Bonds which the Bondholder making the exchange is entitled to
receive, bearing numbers not contemporaneously then outstanding.
Registrations of transfers or exchanges of Bonds will be without charge to the
Bondholders, but any taxes or other governmental charges required to be paid with respect to a
transfer or exchange must be paid by any Bondholder requesting the 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 will be paid by the Borrower.
The Trustee is not required to register any transfer or exchange of any Bond (or portion
of any Bond) called for redemption.
The person in whose name this Bond is registered on the Bond Register will be deemed.
and regarded as the absolute owner of this Bond for all purposes, and payment of or on account
of either principal or interest will be made only to or upon the order of such person or its attorney
duly authorized in writing, but such registration may be changed as provided in the Indenture.
In any case in which 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 or any date on
which action is required to be taken is a day other,than a Business Day, then any action required
to be taken or any payment required to be made on such date need not be taken or made on such
date, but may be taken or made on the next succeeding Business Day with the same force and
effect as if made or taken on the date otherwise provided for in the Indenture and, in the case of
any payment date, no interest shall accrue for the period on and after such date.
Neither the members of.the governing body of the Issuer nor any officer, agent,
representative or employee of the Issuer nor any person executing this Bond shall be subject to
any personal liability or accountability by reason of the issuance of this Bond, 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 expressly waived as a condition of and in consideration for the
execution of the Indenture and the issuance of the Bonds.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication on this Bond-has been manually
endorsed by the Trustee.
It is certified and recited by the Issuer that all conditions, acts and things required by the
Indenture or by the laws of the State, including the Act, to exist, to have happened or to have
OHS West:2660447815.3 A-4
been performed precedent to or in the issuance of this Bond do exist, have happened and 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 is within every debt and other limit prescribed by
said Constitution or statutes.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its name
and on its behalf by the manual signature of an Authorized Representative and attested by the
manual signature of its Authorized Attesting Officer, all as of the date first above written.
COUNTY OF CONTRA COSTA
By
Authorized Representative
Attest:
Authorized Attesting Officer
REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within mentioned Indenture.
Dated:
THE BANK OF NEW YORK MELLON
TRUST COMPANY,N.A.. as Trustee
By
Authorized Signatory
011S West:?60447815.3 A-5
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
the within-mentioned Registered Bond and do(es) hereby irrevocably constitute and appoint
attorney, to transfer the same on the books of the Bond Registrar with full power of substitution
in the premises.
Dated:
Note: The signature(s) to this Assignment
must correspond with the name(s) as written on
the face of the within Registered Bond in every
particular, without alteration or enlargement or
any change whatsoever.
OHS West:260447815.3 A-E)
EXHIBIT B
FORM OF PROJECT ACCOUNT REQUISITION
[FORM OF REQUISITION]
REQUISITION FOR FUNDS
To: THE BANK OF NEW YORK MELLON TRUST COMPANY.N.A., as Trustee
From: PHVP I. LP
Re: PLEASANT HILL BART TRANSIT VILLAGE APARTMENTS PROJECT
Requisition from 2006A Bonds subaccount
2006A-T Bonds subaccount
2008 Bonds subaccount
Requisition No.
The undersigned (the `Borrower") hereby requests payment, from the Project Account of
the Loan Fund for the Project identified above, the total amount shown below to the order of the
payee named below, as payment or reimbursement for costs incurred or expenditures made in
connection with said Project. The payee(s), the purpose and the amount of the disbursement
requested are as follows:
Payee Purpose Amount
Total $
The undersigned hereby certifies as follows:
1. At least 97% of the sum of the payment requisitioned by or for the account of the
Borrower from the Project Account shall constitute costs, that: (i) were paid or,incurred by or on
account of the.Borrower or any Related Person on or after the 60th day prior to 20_
the date on which the Issuer adopted its "official intent" resolution as required by Treasury
Regulation LI 50-2(c)-(e); (ii) are chargeable to the capital account for the residential units of the.
OHS West:260447815.3 B-I
Project or would be so chargeable either with a proper election by the Borrower or but for a
proper election by the Borrower to deduct such costs, within the meaning of Treasury
Regulation 1.103-8(a)(1); (iii) if any portion of the Project is being constructed by a Related
Person of the Borrower (whether as a general contractor or a subcontractor), include only. the
actual out-of-pocket costs incurred by such Related Person in constructing the Project (or any
portion thereof) and not. for example, intercompany profits resulting from members of an
affiliated group (within the meaning of Section 1504 of the Code) participating in the
construction of the Project or payments received by such Related Person due to early completion
of the Project (or any portion thereof);. (iv) do not constitute Costs of Issuance or leasing
commissions, costs of advertising for the Project or other costs related to the rental of units in the
Project or management fees for the management and operation of the Project after the Funding
Date; and (v) are used to finance residential rental property described in Section 1.103-8(b) of
the Treasury Regulations.
2. The obligation mentioned herein has been properly incurred and is a proper
charge against the Project Account of the Loan Fund, and was necessary in connection with the
acquisition, construction and equipping of the Project. None of the items for which payment is
requested has been reimbursed previously from the Project Account of the Loan Fund, and none
of the payments herein requested will result in a breach of the representations and agreements in
Section 5.O3(b) of.the Financing Agreement or in the Tax Certificate relating to the Project.
Dated:
PHVP I. LP.
a Delaware limited partnership
By: PHVP I GP, LLC,
a Delaware limited liability company,
its general partner
By:
Name:
Title: Authorized Signatory
OHS West:1-60447815.3 B-2
Approved:
BANK OF AMERICA, N.A.
By: _
Authorized Signatory
OHS Wcst:260447815.3 B—J
EXHIBIT C
FORM OF COST OF ISSUANCE FUND REQUISITION
WRITTEN REQUISITION FOR COSTS OF ISSUANCE FUND
The Bank of New York Mellon Trust Company, N.A.
Re: County of Contra Costa Multifamily Housing Revenue Bonds (Avalon Walnut
Creek at Contra Costa Centre Project) Series 2006A, County of Contra Costa
.Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa
Centre Project) Taxable Series 2006A-T and County of Contra Costa Multifamily
Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
Trustee:
You are requested to disburse funds from the Costs of Issuance Fund pursuant to
Section 5.08(b) of the Indenture in the amount(s), to the person(s) and for the purpose(s) set forth
in this requisition (the "Requisition"). The terms used in this requisition shall have the meaning
given to those terms in the Amended and Restated Trust Indenture (the "Indenture'), dated as of
July 1, 2006, by and between the County of Contra Costa and The Bank of New York Mellon
Trust Company,N.A., as Trustee, securing the above-referenced Bonds.
1. REQUISITION NO.: 1
2. PAYMENT DUE TO: See Schedule
;. AMOUNT TO BE DISBURSED: $
4. The undersigned certifies that:
(a) the expenditures for which moneys are requisitioned by this Requisition
represent proper charges against the Costs of Issuance Fund, have not been included in
any previous requisition, have been properly recorded on the Borrower's books and are
set forth in the Schedule attached to this Requisition, with paid invoices attached for any
sums for which reimbursement is requested, and
(b) the moneys requisitioned are not greater than those necessary to meet
obligations due and payable or to reimburse the Borrower for its funds actually advanced
for Costs of Issuance.
of-Is West:2 6044 7815.3 C-1
5. Attached to this Requisition is a Schedule, together with copies of invoices or
bills of sale covering all items for which payment is being requested.
Date of Requisition: , 200&
PHVP I, LP,
a Delaware limited partnership
By: PHVP I GP, LLC,
a Delaware limited liability company,
its general partner
By:
Name:
Title: Authorized Signatory
OHS West:260447815.3 C-2
SCHEDULE TO REQUISITION CERTIFICATE
OFIS West:260447815.3
4J
OHS DRAFT
7/2/08
AMENDED AND RESTATED FINANCING AGREEMENT
among
COUNTY OF CONTRA COSTA,
as Issuer
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
and
PHVP I, LP, a Delaware Limited Partnership,
as Borrower
relating to
$116,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2006A
and
$9,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Taxable Series 2006A-T
and
$10,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
Dated as of July 1, 2008
Amending and restating Financing Agreement dated as of March 1, 2006
OHS West:260447805.3
TABLE OF CONTENTS
Page
ARTICLE I
INCORPORATION OF RECITALS, DEFINITIONS AND RULES OF
CONSTRUCTION
Section 1.01. Incorporation of Recitals............................................................................ 1
Section 1.02. Definitions.................................................................................................. 1
Section 1.03. .Rules of Construction ................................................................................ 1
ARTICLE II
THE LOAN
Section 2.01. Amount and Source of Loan...................................................................... 1
Section 2.02. Note and Security Instrument.............................:...................................... 1
Section 2.03. Costs of Issuance Deposit.......................................................................... 2
.Section 2.04. Credit Facility.......................................................:.................................... 2
Section 2.05. Payment of Fees, Costs and Expenses....................................................... 2
Section 2.06. Liability for Fees, Costs and Expenses...................................................... 3
Section 2.07. Borrower's Obligations Upon Tender of Bonds........................................ 3
Section 2.08. Redemption Premium ................................................................................ 3
Section 2.09. Obligation of the Borrower To Pay Deficiencies ...................................... 3
Section 2.10. Borrower's Approval of Transaction Documents...................................... 3
Section 2.11. Payment of Bonds...................................................................................... 3
ARTICLE III
NATURE OF BORROWER'S-OBLIGATIONS; SECURITY FOR OBLIGATIONS
Section 3.01. Obligations of the Borrower Unconditional ..............................................4
Section 3.02. Personal Liability of Borrower...................................................................4
Section 3.03. Obligations Unsecured................................................................................ 4
Section 3.04. Certain Obligations Personal to the Borrower........................................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Issuer............................................ 5
Section 4.02. Representations and Agreements of the Trustee........................................ 6
Section 4.03. Representations and Agreements of the Borrower.................................... 7
ARTICLE V
COVENANTS OF THE BORROWER
'Section 5.01. Compliance With Laws............................................................................ 10
01 IS Wcst:2G0447805.3 -1-
TABLE OF CONTENTS
(continued)
Page .
Section 5.02. Maintenance of Legal Existence.............................................................. 10
Section 5.03. Access to Mortgaged Property and Records............................................ 11
Section 5.04. Reports and Ini:orination.......................................................................... 11
Section 5.05. Tax Covenants ......................................................................................... I 1
Section 5.06. Notice of Certain Events.......................................................................... 12
Section 5.07. Obligation of the Borrower To Acquire and Construct the Property....... 12
Section 5.08. Disclosure Agreement.............................................................................. 13
Section 5.09. Insurance; Taxes and Charges; Maintenance and Repair........................ 13
Section 5.10. Damage, Destruction And Condemnation; Use Of Proceeds.................. 14
Section 5.11. Control of Borrower and Credit Bank ..................................................... 15
ARTICLE VI
INDEMNIFICATION
Section 6.01. Borrower's Obligations...................................
Section 6.02. Defense of Claims.................................................................................... 17
Section 6.03. Borrower's Continuing Obligations......................................................... 18
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default..................................................................................... 18
Section 7.02. Remedies Upon an Event of Default :....................................:................. 18
Section 7.03. No Levy or Other Execution Against Mortgaged Property..................... 19
Section 7.04. Waiver and Annulment............................................................................ 19
Section 7.05. No Remedy Exclusive.............................................................................. 19
Section7.06. No Waiver................................................................................................ 19
Section7.07. No Notices ................................................................................................ 19
Section7.08. Expenses .................................................................................................. 19
ARTICLE VIII
MISCELLANEOUS
Section8.01. Notices ................................................:.................................................... 20
Section8.02. Amendment.............................................................................................. 20
Section 8.03. Entire Agreement.....................................................................................20
Section 8.04. Binding Effect.......................................................................................... 20
Section 8.05. Further Assurances and Corrective Instruments...................................... 20
Section 8.06. Severability..............................................................................................21
Section 8.07. Execution in Counterparts........................................................................21
Section 8.08. Governing Law.........................................................................................21
Section 8.09. Waiver of July Trial.................................................................................21
Section 8.10. Limited Liability of the Issuer................................................................. 21
OHS West:260447805.3 —11—
TABLE OF CONTENTS
(continued)
Page
Section 8.11. Term of This Agreement........ 22
Section 8.12. References to the Credit Provider............................................................ 22
01 IS West:260.447805.3
AMENDED AND RESTATED FINANCING AGREEMENT
THIS AMENDED AND RESTATED FINANCING AGREEMENT (this
"Agreement") dated as of July 1, 2008, is among the COUNTY OF CONTRA COSTA,
apolitical subdivision of the State of California (the "Issuer"), PHVP I, LP, a Delaware
limited partnership, and its permitted successors and assigns (the "Borrower"), and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking
association (the "Trustee"), not in its individual or corporate capacity, but solely as
Trustee under the Indenture, and amends and restates that certain Financing Agreement,
dated as of March 1, 2006, among the Issuer, the Borrower and U.S. Bank National
Association, as trustee.
ARTICLE I
INCORPORATION OF RECITALS,
DEFINITIONS AND
RULES OF CONSTRUCTION
Section 1.01. Incorporation of Recitals. The Recitals to the Indenture are
incorporated into and made a part of this Agreement.
Section 1.02. Definitions. All capitalized terms used in this Agreement have the
meanings given to those terms in that certain Amended and Restated Trust Indenture,
dated as of July 1, 2008, between the Issuer and the Trustee, or elsewhere in this
Agreement unless the context or use clearly indicates a different meaning.
Section 1.03. Rules of Construction. The rules of construction set forth in
Section 1.02 of the Indenture shall apply to this Agreement in their entirety, except that in
applying such rules, the term "Agreement"" shall be substituted for the term "Indenture'.
ARTICLE II
THE LOAN
Section 2.01. Amount and Source of Loan. The Issuer has issued the Bonds in
the aggregate principal amount of$135,000,000. The Issuer agrees, to make the Loan in
the amount of $135,000,000 to the Borrower with the Net Bond Proceeds. Upon
satisfaction of the Escrow Break Requirements and the issuance of the 2008 Bonds on the
Escrow Break Date, the Issuer will deliver the Net Bond Proceeds to the Trustee. The
Loan shall be deemed made in full on the Escrow Break Date. The Borrower accepts the
Loan from the Issuer upon the terms and conditions set forth in this Agreement and the
Loan Documents, subject to the Indenture, the Regulatory Agreement and the
Assignment. Disbursements will be made from the Loan Fund as provided in the
Indenture. The Borrower agrees to apply the proceeds of the Loan to pay costs of the
construction and development of the Mortgaged Property.
ORIS West:260447805.3
Section 2.02. Note and Security Instrument. The Loan shall be evidenced by,
payable in accordance with, and bear interest at the rates and on the terms provided in,
the Note and secured by the Security Instrument.
Section 2.03. Costs of Issuance Deposit. Prior to the Escrow Break Date, the
Borrower shall pay to the Trustee $ , representing the Costs of Issuance
Deposit, for deposit into the Costs of Issuance Fund. The Issuer shall have no obligation
to issue the 2008 Bonds and to fund the Loan unless and until the Borrower delivers the
Costs of Issuance Deposit.
Section 2.04. Credit Facility. The Borrower agrees to cause the Credit Facility
to be in effect in the amounts and during the periods as required by the Indenture. From
time to time, the Borrower may arrange for the delivery to the Trustee of one or more
Alternate Credit Facilities meeting the requirements of the Indenture in substitution for
the Credit Facility then in effect.
Section 2.05. Payment of Fees, Costs and Expenses. The Borrower shall pay
when due, without duplication, the fees, expenses and other sums specified in this
Section.
(a) Costs of Issuance. The Borrower shall direct the Trustee to pay
the Costs of Issuance from the Costs of Issuance Fund on.the Escrow Break Date.
(b) Third Party Fees. The Borrower shall pay the Third Party Fees to
the Trustee in sufficient time to allow the Trustee to pay such Third Party Fees
when due. The Third Party Fees are as follows:
(i) Issuer. The Issuer's Fee.
(ii) Trustee. The Trustee's Annual Fee.
(iii) Tender Agent. The Tender Agent's Annual Fee is the
annual continuing fee of the Tender Agent, if any.
(iv) Remarketing Agent. The continuing fee of the Remarketing
Agent for its remarketing services.
(v) Rebate Analyst. The Rebate Analyst's Fee.
(c) Fees and Expenses.
(i) Rating Agency. The annual rating maintenance fee of each
Rating Agency.
(ii) Extraordinary Items. The Extraordinary Items.
(iii) Certain Advances, Expenses and other Items. All
advances, out-of-pocket expenses, costs and other charges of each of the
OHS West:260447805.3 -2-
Issuer, the Rebate Analyst, the Remarketing Agent, the Tender Agent and
the Trustee incurred from time to time, but only to the extent that any such
amounts are payable by the Borrower pursuant to an agreement between
the Borrower and such Person regarding its services in connection with the
Bonds or the Loan.
(iv) Bond Cosis. All costs of registering, printing, reprinting,
preparing and delivering any replacement bonds required under the
Indenture and in connection with the registration, printing, reprinting or
transfer of Bonds.
(v) Adjustment or Conversion of Interest Rate; Tender,
Purchase, Remarketing or Reoffering of' Bonds. All fees, costs and
expenses of any change in Mode or of any tender, purchase, remarketing
or reoffering of any Bonds, including, but not limited to, such fees, costs
and expenses incurred in connection with the remarketing of the 2006
Bonds on the Escrow Break Date. The fees, costs and expenses of any
tender, purchase, remarketing or reoffering of Bonds must be paid by the
Borrower in advance in accordance with the Remarketing Agreement or
other agreement relating to the remarketing or reoffering of the Bonds.
The Borrower agrees to timely honor any demand for payment by the Trustee pursuant to
Section 5.07(b) of the Indenture on account of any insufficiency in the Fees Account.
Section 2.06. Liability for Fees, Costs and Expenses. Neither the Issuer nor
the Trustee shall have any obligation to pay any of the fees, costs or expenses referred to
in Section 2.05 hereof.
Section 2.07. Borrower's Obligations Upon Tender of Bonds. If any
Tendered Bond is not remarketed on any Tender Date and a sufficient amount is not
available in the Bond Purchase Fund for the purpose of paying the purchase price of such
Bond. the Borrower will cause to be paid to the Trustee pursuant to the Credit Facility or
otherwise pay by the applicable times provided in the Indenture, an amount equal to the
principal amount of all Bonds tendered and not remarketed, together with interest accrued
to the Tender Date.
Section 2.08. Redemption Premium. The Borrower shall pay all redemption
premium, if any, payable with respect to each redemption of any of the Bonds. The
Borrower shall make each such payment, or cause such payment to be made, in Available
Moneys.
Section 2.09. Obligation of the Borrower To Pay Deficiencies. The Borrower
shall pay any deficiency resulting from any loss due to a default under any investment in
any Fund or Account or a change in value of any investment.
Section 2.10. Principal Reserve Fund. The Borrower shall make payments for
deposit by the Trustee into the Principal Reserve Fund on the dates and in the amounts
OHS West:260447805.3 —3—
required by the Reimbursement Agreement. Amounts on deposit in the Principal Reserve
Fund shall be applied as provided in the Indenture.
Amounts in the Principal Reserve Fund shall not be credited against the principal
amount of the Note or be deemed to be interest payments on the Loan until the date such
amounts are withdrawn from the Principal Reserve Fund and used to reimburse the Credit
Provider for amounts paid under the Credit Facility to redeem or otherwise pay principal
of or interest on the Bonds.
Section 2.11. Borrower's Approval of Transaction Documents. The
Borrower acknowledges that it participated in the drafting and negotiation of the
Transaction. Documents and approves and agrees to each of the provisions of the
Transaction Documents. The Borrower agrees that it is bound by, shall adhere to, and
shall have the rights set forth by, the Indenture.
Section 2.12. Payment of Bonds. The Borrower shall timely remit to the
Trustee all amounts required to pay principal of and premium, if any, and interest on the
Bonds when due, and all other amounts due hereunder or.under the Indenture including,
without limitation, amounts required to pay the Purchase Price of the Bonds, when due.
ARTICLE III
NATURE OF BORROWER'S OBLIGATIONS;
SECURITY FOR OBLIGATIONS
Section 3.01. Obligations of the Borrower Unconditional. Subject to the
recourse limiting provisions of Section 3.02, to the fullest extent permitted by law, the
obligations of the Borrower to make all payments and perform its other obligations under
this Agreement shall be absolute, unconditional and irrevocable, and shall be paid and
performed strictly in accordance with the applicable Transaction Documents under all
circumstances, including, without limitation, the following circumstances: (i) any
invalidity or unenforceability of the Credit Facility or any of the other Transaction
Documents; (ii) any amendment or waiver of, or any consent to departure from, the terms
of the Credit Facility or any of the other Transaction Documents, any extension of time or
other modification of the terms and conditions for any act to be performed in connection
with the Credit Facility or any of the other Transaction Documents; (iii)the existence of
any claim, set-off, defense or other right which the Borrower may have at any time
against the Issuer. the Trustee, the Tender Agent, the Credit Provider, the Remarketing
Agent or any other Person, whether in connection with any of the Transaction
Documents, the Mortgaged Property. or any unrelated transaction; (iv) the surrender or
impairment of any security for the performance or observance of any of the agreements
or terms of any of the Transaction Documents; (v) defect in title to the Mortgaged
Property, any act or circumstance that may constitute failure of consideration, destruction
of, damage to or condemnation of the Mortgaged Property, commercial frustration of
purpose; or any change in the tax or other laws of the United States of America or of the
State or any political subdivision of either; (vi) the breach by the Issuer; the Trustee, the
Tender Agent, the Remarketing Agent, the Credit Provider or any other Person of any of
OHS West:260447805.3 —4—
its obligations under any Transaction Document; or (vii) any_ other circumstance,
happening or omission whatsoever, whether or not similar to any of the foregoing.
Section 3.02. Personal. Liability.of Borrower. Except as provided in the last
sentence of this Section, the obligations of the Borrower under this Agreement and the
obligations of the Borrower under the Regulatory Agreement to pay money, including the
obligations of the Borrower with respect to the Reserved Rights, shall be (a) general
obligations of the Borrower with recourse to the Borrower personally, and
(b) subordinate and junior in priority, right of payment and all other respects to any and
all obligations of the Borrower under the Loan Documents and to the Credit Provider
under or in respect of the Credit Facility Documents. Nothing in this Section shall
impose personal liability upon Borrower for payments due on the Bonds or any
obligations of the Borrower under any of the Loan Documents.
Section 3.03. Obligations Unsecured. All obligations of the Borrower under
this Agreement and under the Regulatory Agreement, including the obligations of the
Borrower with respect to the Reserved Rights. shall not be secured by the Security
Instrument and shall not constitute a lien on the Mortgaged Property in any manner.
Section 3.04. Certain Obligations Personal to the Borrower. No subsequent
owner of the Mortgaged Property (including the Credit Provider as a result of a
foreclosure, a deed in lieu of foreclosure or comparable conversion of the Loan) shall be
liable for any breach or default of any obligation of any prior owner under the Regulatory
Agreement or this Agreement, including any payment or indemnification obligation. The
owner of the Mortgaged Property at the time any default or breach occurs shall remain
liable for any and all damages occasioned by such default or breach even after such
Person ceases to be the owner. Upon seeking to collect such damages, neither the Issuer
nor the Trustee shall have recourse against or the right to levy against or otherwise collect
on any judgment from the Mortgaged Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Issuer.
The Issuer represents and warrants that:
(a) The Issuer is a political subdivision of the State of California.
(b) The Issuer has complied with the Act and the constitution and laws
of the State that are prerequisites to the closing of the transactions provided for in
the Bond Documents.
(c) The issuance of the Bonds to provide funding for the Loan is
intended to serve the public interest and will further the purposes of the Act
including the provision of decent, safe and sanitary rental housing units for
persons and families of low or moderate income; to accomplish the foregoing, the
OHS West260447805.3 -5-
Issuer intends to issue the Bonds on the terms set forth in the Indenture and to use
the proceeds derived from the sale of the Bonds as specified in the Indenture and
this Agreement.
(d) The Bonds have been duly executed and delivered by the Issuer,
and upon authentication by the Trustee, will constitute legal, valid and binding
special limited obligations of the Issuer, enforceable against the Issuer in
accordance with their terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors generally and
generalprinciples of equity.
(e) The Issuer has the full legal right, power and authority to execute
and deliver the Issuer Documents, and to carry out its obligations under each of
those documents. The issuance of the Bonds and the execution, delivery and
performance of the Issuer Documents have been duly authorized by the Issuer.
Each of the Issuer Documents has been duly executed and delivered by the Issuer,
and, upon execution and delivery by the other party or parties to the Issuer.
Documents, 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 principles of equity.
(f) To the best knowledge of the Issuer, neither the execution and
delivery of, nor the fulfillment of or compliance with the terms or conditions of,
the Issuer Documents violates the constitution or laws of the State or any
judgment, order, writ, injunction or decree to which the Issuer is subject, or
conflicts. in any material respect with, or results in a material breach of, or
material default under, any agreement or instrument to which the Issuer is now a
party or by which it is bound.
(g) Except as otherwise provided in the Indenture and the Assignment,
the Issuer has not created any debt, lien or charge upon the Trust Estate, and has
not made any pledge or assignment of or created any encumbrance on the Trust
Estate.
(h) The Issuer has complied with all material provisions of the Act
applicable to the Bonds and the transactions provided for in the Issuer
Documents.
e
(i) To the best knowledge of the Issuer, no litigation or administrative
action of any nature is pending against the Issuer (i) seeking to restrain or enjoin
the issuance of the Bonds or the execution and delivery of the Issuer Documents,
(ii) questioning the proceedings or authority relating to the Bonds or any other
Issuer Document or (iii) questioning 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 is threatened.
GI-IS West:260447805.3 -6-
(j) The Bonds are being issued under the Indenture, and are secured
by the Trust Estate. Under the Indenture the Issuer's interest in this Agreement
(other than the Reserved Rights) and the revenues and receipts to be derived by
the Issuer pursuant to this Agreement, are pledged and assigned to the Trustee as
security for payment of the principal of and interest and any premium on the
Bonds.
Section 4.02. Representations and Agreements of the Trustee.
The Trustee represents and warrants that:
(a) The Trustee is a national banking association in good standing
under the laws of the State. The Trustee is duly authorized to exercise trust
powers and to execute the trust created by the Indenture and is qualified to act as
Trustee under the Indenture.
(b) The Trustee has all corporate power and authority necessary (i) to
execute and deliver this Agreement, the Regulatory Agreement and the Indenture,
(ii) to perform its obligations under this Agreement, the Regulatory Agreement
and the Indenture and (iii) to consummate the transactions contemplated by this
Agreement, the Regulatory Agreement and the Indenture.
(c) The Trustee has taken all actions necessary to authorize the
execution and delivery of, the performance by the Trustee of its obligations under,
and the consummation of the transactions contemplated by, this Agreement, the
Regulatory Agreement and the Indenture.
(d) The execution and delivery of this Agreement and compliance with
its terms, conditions and provisions will not conflict with or result in a breach of
any of the terms, conditions or provisions of the articles of incorporation or
bylaws of the Trustee or.any agreement or instrument to which it is a party or by
which it is bound, or any law or regulation or any administrative decree or order
to which it is subject, or constitute a default there-under, in each case in any
manner that would materially adversely impact its ability to perform its duties
hereunder or under the Indenture.
(e) The Trustee is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default will materially adversely impair its ability to
perform its obligations under this Agreement.
(f) The Trustee is not a party to or bound by any agreement or
instrument or subject to any charter or any other corporate restriction of any
judgment, order, writ; injunction, decree, law or regulation which now or in the
future may materially and adversely affect the ability of the Trustee to perform its
obligations under this Agreement or which requires the consent of any third
person to the execution of this Agreement or the consummation of the
transactions contemplated hereby.
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(g) No litigation has been served on the Trustee or, to the best
knowledge of the Trustee, threatened against the Trustee with respect to this
Agreement or the consummation of the transactions contemplated hereby.
Section 4.03. Representations and Agreements of the Borrower.
The Borrower represents and warrants that:
(a) The Borrower is a Delaware limited partnership qualified to do
business in the State, is in good standing in the State. has the power and authority
to own its properties and assets and to carry on its business as now conducted and
as contemplated to be conducted, and has the power to enter into and has duly
authorized. by proper action, the execution and delivery of this Agreement and all
other documents contemplated hereby to be executed by it, including, without
limitation, the Regulatory Agreement and the Reimbursement Agreement.
(b) Neither the execution and delivery of this Agreement or any other
document in connection with the financing of the Mortgaged Property, the
consummation of the transactions contemplated hereby and thereby, nor the
fulfillment of or compliance with the terms and conditions hereof and thereof;
conflicts with or results in a breach of any of the terms, conditions or provisions
of the Borrower's organizational agreement or of any agreement or instrument to
which it is now a party or by which it is bound, or constitutes a default (with due
notice or the passage of time or both) under any of the foregoing, or results in the
creation or imposition of any prohibited lien. charge or encumbrance whatsoever
upon any of the property or assets of it under the terms of any instrument or
agreement to which it is now a party or by which it is bound.
(c) The Mortgaged Property is located wholly within the County of
Contra Costa, California.
(d) The Disposition and Development Agreement and the Ground
Sub-lease constitute valid and binding obligations of the Borrower and the
Borrower has and shall have a leasehold interest in the Mortgaged Property
sufficient to carry out the purposes of this Agreement, and such interest shall be in
and remain in the Borrower, except as permitted by the Regulatory Agreement.
(e) There is no action, suit, proceeding, inquiry or investigation by or
before any court, governmental agency, public board or body pending or, to its
knowledge, threatened against it (nor is there any basis therefor), which (i) affects
or seeks to prohibit, restrain or enjoin the issuance, sale or delivery of the Bonds
or the execution or delivery of this Agreement, the Regulatory Agreement or any
related documents, (ii) affects or questions the validity or enforceability of the
Bonds, the Indenture, this Agreement, the Regulatory Agreement, or any related
documents, (iii) questions the tax status of the Tax.-Exempt Bonds or (iv)
questions its power or authority to perform its obligations under this Agreement,
OHS\4'est260447805.3 —8—
the Regulatory Agreement, or any related documents. or its powers to own,
acquire, construct. equip or operate the Project.
(f) There is no action. suit or proceeding at law or in equity or by or
before any governmental instrumentality or other agency now pending, or, to its
knowledge, threatened against or affecting it or any of its properties or rights,
which, if adversely determined, would materially impair its right to carry on
business substantially as now conducted or as now contemplated to be conducted;
or would materially adversely affect its financial condition. It is not in material
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement or instrument to
which it is a party.
(g) It is not in default under any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, the Disposition and Development Agreement, the Ground Sub-lease or
any other document, instrument or commitment to which it is a party or to which
it or any of its property is subject, in any manner material to the transactions
contemplated by this Agreement.
(h) The operation of the Mortgaged Property in the manner presently
contemplated and as described herein will not, to its knowledge, conflict with any
material zoning, water or air pollution or other ordinance, order, law or regulation
applicable thereto.
(i) It has filed or caused to be filed all federal, state and local tax
returns that are required to be filed, and has paid or caused to be paid all taxes as
shown on said returns or on any assessment received by it, to the extent that such
taxes-have become due.
(j) To the knowledge of the Borrower, no officer or other official of
the Issuer has any ownership interest whatsoever in the Mortgaged Property or in
the transactions contemplated by this Agreement (other than publicly traded
shares in indirect owners).
(k) The Mortgaged Property consists of a residential rental Mortgaged
Property comprising similarly constructed units containing separate and complete
facilities for living, sleeping, eating, cooking and sanitation or substantially
related and subordinate facilities.
(1) The Borrower currently intends to hold the Mortgaged Property for
its own account, and has no current plans, other than syndication or tax credits
available to the Mortgaged Property, to sell and has not entered into any
agreement to sell the Mortgaged Property.
(m) The Borrower acknowledges, represents and warrants that it
understands the nature and structure of the transactions relating to the financing of
the Mortgaged Property; that it is familiar with the provisions of all of the
OHS West:260447805.3 —9—
documents and instruments relating to such financing to which it 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 Mortgaged Property; and that
it has not relied on the Issuer for any guidance or expertise in analyzing the
financial or other consequences of the transactions contemplated by this
Agreement and the Indenture or otherwise relied on the Issuer in any manner.
(n) The Borrower has not received any notice that it is not in
compliance with all provisions of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"); the
Resource Conservation and Recovery Act; the Superfund Amendments and
Reauthorization Act of 1986; the Toxic Substances Control Act and all
environmental laws of the State (the "Environmental Laws"), or with any rules,
regulations and administrative orders of any governmental agency, or with any
judgments, decrees or orders of any court of competent jurisdiction with respect
thereto; and .the Borrower has not received any assessment, notice (primary or
secondary) of liability or financial responsibility, and no notice of any action,
claim or proceeding to determine such liability or responsibility, or the amount
thereof, or to impose civil penalties with respect to a site listed on any federal or
state listing of sites containing or believed to contain "hazardous materials" (as
defined in the Environmental Law), nor, if applicable, 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:
(o) The information contained in the official statement with respect to
the Bonds, insofar as such information relates to the Borrower and the Mortgaged
Property, is accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact pertaining to the
Borrower and the Mortgaged Property required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01. Compliance With Laws. The Borrower will comply with all
laws, ordinances, regulations and requirements of any duly constituted public authorities
which may be applicable to the Mortgaged Property and all recorded lawful covenants
and agreements relating to or affecting the Mortgaged Property, including all laws,
ordinances, regulations, requirements. and covenants pertaining to health and safety,
construction of improvements on the Mortgaged Property, fair housing, zoning and land
use, and Leases (as such term is defined in the Security Instrument). The Borrower will
comply with all terms of the Disposition and Development Agreement and the Ground
Sub-lease. The Borrower also will comply with all applicable laws that pertain to the
maintenance and disposition of tenant security deposits. The Borrower will at all times
OHS West:260447805.3 —10—
maintain records sufficient to demonstrate compliance with the provisions of this Section.
The Borrower will take appropriate measures to prevent, and will not engage in or
knowingly permit, any illegal activities at the Mortgaged Property that could endanger
tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture of the
Mortgaged Property, or otherwise materially impair the lien created by the Security
Instrument. The Borrower represents and warrants that no portion of the Mortgaged
Property has been or will be purchased with the proceeds of any illegal activity. Nothing
contained in this Section is intended to modify or limit any provisions of the Regulatory
Agreement or any Loan Document.
Section.5.02. Maintenance of Legal Existence. The Borrower will maintain its
existence, continue to be duly qualified to do business in the State and will not terminate
or dissolve (transfers of Borrower's partnership interests pennitted under the Security
Instrument, even if resulting in a technical dissolution, shall not violate this Section 5.02).
With the prior written consent of the Issuer, the Borrower may consolidate with or merge
into another entity or permit one or more other entities to consolidate with or merge into
it, but subject to the satisfaction of the following conditions: (i)the entity resulting from
or surviving such merger or consolidation (if other than the Borrower) ("Surviving
Entity") is duly organized and existing in good standing and qualified to do business in
the State, (ii) if the Borrower does not survive the consolidation or merger, the Surviving
Entity expressly assumes in writing all of the Borrower's obligations under this
Agreement and the other Borrower Documents and (iii)the Borrower delivers an opinion
of Bond Counsel to the effect that such consolidation or merger will not cause interest on
the. Tax-Exempt Bonds to be included in gross income for federal income tax purposes.
Section 5.03. Access to Mortgaged Property and Records. Subject to
reasonable written notice and subject to the rights of tenants residing at the Project under
their respective leases, the Issuer and the Trustee and the respective duly authorized
agents of each have the right, during normal business hours, to enter the Mortgaged
Property and any location containing records relating to any of the Borrower, the
Mortgaged Property, the Loan and the Transaction Documents, to inspect, audit and
make copies of the Borrower's records or accounts pertaining to the Borrower, the
Mortgaged Property, the Loan, the Transaction Documents, and the Borrower's
compliance with the Transaction Documents, and to require the Borrower, at the
Borrower's sole expense, to furnish such documents to the Issuer and the Trustee, as the
Issuer or the Trustee from time to time deems necessary in order to determine that the
Borrower is in compliance with the Transaction Documents and to make copies of any
records that the Issuer or the Trustee, or their respective duly authorized agents, may
reasonably require. The Borrower will make available to the Issuer and the Trustee such
other information concerning the Borrower, the Mortgaged Property, the Loan and the
Transaction Documents as any of them may reasonably request.
Section 5.04. Reports and Information. The Borrower will file such
certificates and other reports with the Issuer and the "Trustee as are required by the
Transaction Documents. The Borrower will 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 Mortgaged Property and the Bonds.
OHS West:260447805.3 -11-
Section 5.05. 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 and notwithstanding anything to the contrary in this
Agreement, the Borrower will not take; or.permit to be taken on its behalf, any action
which would cause interest on the Tax-Exempt Bonds to be included in gross income for
federal income tax purposes and will take such reasonable action as may be necessary to
continue such exclusion from gross income, including, without limitation, the following:
(a) the preparation and filing of all statements required to be filed by it
in order to maintain the exclusion (including, but not limited to, the filing of all
reports and certifications required by the Regulatory Agreement);
(b) the timely payment to the United States of America of any rebate
amount required to be paid by the Issuer or the Borrower pursuant to Section
148(f) of the Code and the U.S. Treasury regulations under Section 148; and
(c) the use of the proceeds of the Tax-Exempt Bonds as provided in
the Tax Certificate.
In furtherance of the covenants in this Section, the Issuer and the Borrower shall
execute, deliver and comply with the provisions of the Tax Certificate, which is by this
reference incorporated into this Financing Agreement and made a part hereof.
The Borrower irrevocably authorizes and directs the Issuer, 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 Treasury
Regulation Section 1.148-1 (b), it (or any related person contemplated by such
regulations) will not.purchase Tax-Exempt Bonds in an amount related to the amount of
the Loan, other than Pledged Bonds.
Section 5.06. Notice of Certain Events. The Borrower shall advise the Issuer,
the Credit Provider and the Trustee 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 Agreement or in
any of the other Borrower Documents, or of any Event of Default or Potential Default
under this Agreement known to it or of which it has received notice, specifying the nature
and period of existence of such event and the actions being taken or proposed to be taken
with respect to such default. Such notice shall be given promptly, and in no event less
than 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 Credit Provider if insurance proceeds or
condemnation awards are received with respect to the Mortgaged Property.
Section 5.07. Obligation of the Borrower To Acquire and Construct the
Property. The Borrower shall comply with the terms of the Disposition and
Development Agreement and shall proceed with reasonable dispatch to complete the
OFIS West:260447805.3 -12-
acquisition, construction and equipping of the Mortgaged Property. If amounts on
deposit in the Loan Fund are not sufficient to pay the costs of completion, the Borrower
shall pay such costs or cause the same to be paid from other sources. By reason of any
such payment of costs relating to the Mortgaged Property from sources other than the
Loan Fund, the Borrower shall not be entitled to any reimbursement from the Issuer, the
Trustee, the Credit Provider or the holders of the Bonds in respect of such payment or to
any diminution or abatement in the repayment of the Loan. Neither the Issuer nor the
Credit Provider shall be liable to the Borrower, the holders of the Bonds or any other
person if for any reason the Mortgaged Property is not completed or if the.proceeds of the
Loan are insufficient to pay all costs of the Mortgaged Property..
THE ISSUER DOES NOT MAKE ANY WARRANTY, EITHER EXPRESS OR
IMPLIED, THAT MONEYS, IF ANY, WHICH WILL BE PAID INTO THE LOAN
FUND OR OTHERWISE MADE AVAILABLE TO THE BORROWER WILL BE
SUFFICIENT TO COMPLETE THE MORTGAGED PROPERTY, AND THE ISSUER
SHALL NOT BE LIABLE TO THE BORROWER, THE BONDHOLDERS OR ANY
OTHER PERSON IF FOR ANY REASON THE MORTGAGED PROPERTY IS NOT
COMPLETED.
Section 5.08. Insurance; Taxes and Charges; Maintenance and Repair. The
Borrower agrees to insure the Mortgaged Property or cause the Mortgaged Property to be
insured during the term of this Agreement for such amounts and for such occurrences as
is required under the Security Instrument, naming the Trustee as a co-insured. The
Borrower further agrees to provide to the Issuer, the Trustee and the Credit Provider not
later than December I of each year evidence of the insurance then in effect; and to notify
the Issuer, the Trustee and the Credit Provider, by certified mail, immediately upon
cancellation or material alteration of. such insurance. The Trustee shall have no
obligation to investigate, monitor or review, and snakes no representation as to, the
existence or sufficiency of the insurance on the Mortgaged Property.
The Borrower will pay or cause to be paid, during the term of this Agreement,
before the same respectively become delinquent, (a) all taxes and governmental charges
of any kind whatsoever that may at any time. be lawfully assessed or levied against or
with respect to the Mortgaged Property or any part thereof,, including, without limiting
the generality of the foregoing, all ad valorem taxes levied against the Mortgaged
Property and any other taxes levied upon the Mortgaged Property which, if not paid, will
become a charge on the receipts from the Mortgaged Property prior to or on a parity with
the charge thereon and the pledge or assignment thereof to be created and made in the
Indenture, or a lien against the Mortgaged Property or any interest therein or the revenues
derived therefrom or hereunder; (b) all utility and other charges incurred by the Borrower
in the operation, maintenance, use, occupancy and upkeep of the Mortgaged Property;
(c) all assessments and charges lawfully made by any governmental body for public
improvements that may be secured . by a lien on the Mortgaged Property.
Notwithstanding the foregoing, the Borrower may contest any such taxes, assessments
and other charges outlined in (a), (b) or (c) above, and, in the event of any such contest,
may permit the taxes, assessments or other charges so contested to remain unpaid during
OHS West:260447805.3 -13-
the period of such contest and any appeal therefrom in accordance with the Security
Instrument.
The Borrower further agrees to maintain the Mortgaged Property, or cause the
Mortgaged Property to be maintained, during the term of this Agreement (i) in a
reasonably safe condition and (ii) in good repair and in good operating condition,
ordinary wear and tear excepted, making from time to time all commercially reasonable
repairs, modifications, alterations and improvements thereto and renewals and
replacements thereof. The Borrower will not permit any mechanic's or other lien to be
established or remain against the Mortgaged Property for labor or materials furnished in
connection with any remodeling, modifications, improvements, repairs, renewals or
replacements so made by the Borrower except as permitted in the Security Instrument.
Section 5.09. Damage, Destruction And Condemnation; Use of Proceeds.
(a) If prior to full payment of the Bonds (or provision for payment
thereof in accordance with the provisions of the Indenture) the Mortgaged
Property or any portion thereof is destroyed (in whole or in part) or is damaged by
fire or other casualty, or title to, or the temporary use of, the Mortgaged Property
or any portion thereof shall be taken under the exercise of the power of eminent
domain by any governmental body or by any person, firm or corporation acting
under governmental authority, the Borrower shall nevertheless be obligated to
continue to pay the amounts specified in Article 11 hereof.
(b) The Net Proceeds, if any, of any insurance or condemnation
awards resulting from the damage, destruction or condemnation of the Mortgaged
Property or any portion thereof shall be applied in one or more of the following
ways at the election of the Borrower, approved by the Credit Provider (which
approved shall not be unreasonably withheld or delayed) and with written notice
to the Issuer and the Trustee and subject to any conditions set forth in the Security
Instrument and the Agreement:
(i) The prompt repair, restoration, relocation, modification or
improvement of the Mortgaged Property to enable the Mortgaged Property
to accomplish as nearly as practicable the same function as the Mortgaged
Property was designed to accomplish prior to such damage or destruction
or exercise of such power of eminent domain.
(ii) Prepayment of all or a portion of the Note, subject to and in
accordance with the terms thereof, and redemption of Bonds; provided
that no part of the Net Proceeds may be applied for such purpose unless
(1) the entire amount of the Note is so prepaid and all of the outstanding
Bonds are to be redeemed in accordance with the Indenture, or (2) in the
event that only a portion of the Note is so prepaid, the Borrower shall
furnish to the Issuer, the Trustee and the Credit Provider a certificate of
the Authorized Borrower Representative acceptable to the Issuer, the
Trustee and the Credit Provider stating (i) that the portion of the Project
OHS West260447805.3 -14-
that was damaged or destroyed by such casualty or was taken by such
condemnation proceedings is not essential to the Borrower's use or
possession of the Mortgaged Property or (ii)that the Mortgaged Property
has been repaired,replaced; restored, relocated, modified or improved to
enable the Mortgaged Property to accomplish as nearly as practicable the
same function. as the Mortgaged Property was designed to accomplish
prior to such damage or destruction or the taking by such condemnation
proceedings.
(c) If the Mortgaged Property is to be repaired, restored, relocated,
modified or improved pursuant to this Section 5.10, and if the Net Proceeds are
insufficient to pay in full the cost of such repair, restoration, relocation,
modification or improvement, the Borrower will nonetheless complete the work
or cause the work to be completed and will pay or cause to be paid any cost in
excess of the amount of the Net Proceeds in accordance with such procedures, if
any, as may be established by the Credit Provider.
[To be conformed to provisions in the Ground Lease]
Section 5.10. Control of Borrower and Credit Provider. . The Borrower
represents that the Borrower does not control, either directly or indirectly, through one or
more intermediaries, the Credit Provider. "Control" for this purpose has the meaning
given to such term in Section 2(a)(a) of the Investment Company Act of 1940. The
Borrower will give notice to the Trustee and the Remarketing Agent of any transaction
that would result in the Borrower controlling or being controlled by the Credit Provider at
least forty-five (45) days prior to the date of consummation of such transaction. The
Trustee will give such notice to the Bondholders within ten (10) days of receipt thereof.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Borrower's Obligations. The Borrower releases the Issuer, the
Trustee, the Tender Agent and their respective officers, directors, agents, officials,
employees (and, as to the Issuer, members of its governing body) and any person who
controls the Issuer, the Trustee or the Tender Agent within the meaning of the Securities
Act of 1933, from, and covenants and agrees to indemnify, hold harmless and defend the
Issuer, the Trustee, the Tender Agent and their respective officers, directors, employees,
agents, members of its governing body, officials and any person who controls such party
within the meaning of the Securities Act of 1933 and employees and each of them (each
an "Indemnified Party') from and against, any and all losses, claims, damages, liabilities
and expenses (including attorneys' fees and expenses), taxes, causes of action, suits and
judgments of any nature,joint or several, by or on behalf of any person arising out of:
(a) the approval of financing for the Mortgaged Property or the
making of the Loan;
01 IS West:2604478053 -15-
(b) the issuance and sale, resale or remarketing of any Bonds or any
certifications or representations made by any person other than the party seeking
indemnification in connection therewith, including, but not limited to. any
(i) statement or information made by the Borrower with respect to the Borrower
or the Mortgaged Property in any offering document or materials regarding the
Bonds, the Mortgaged Property or the Borrower or in the Tax Certificate of the
Borrower or in any other certificate executed by the Borrower which, at the time
made, is misleading, untrue or incorrect in any material respect, (ii) untrue
statement or alleged untrue statement of a material fact relating to the Borrower or
the Mortgaged Property contained in any offering material relating to the sale of
the Bonds, as from time to time amended or supplemented, or arising out of or
based upon the omission or alleged omission to state in such offering material a
material fact relating to the Borrower or the Mortgaged Property required to be
stated in such offering material or necessary in order to make the statements in
such offering material not misleading, (iii) failure to properly register or otherwise
qualify the sale of the Bonds or failure to comply with any licensing or other law
or regulation which would affect the manner in which or to whom the Bonds
could be sold.;
(c) the interpretation, performance, enforcement, breach, default or
amendment of the Bond .D.ocuments. the Loan Documents or any other documents
relating to the Mortgaged.Property or the Bonds or in connection with any federal
or state tax audit. or any questions or other matters arising under such documents;
(d) the Borrower's failure to comply with any requirement of this
Agreement, the Regulatory Agreement, the Ground Sub-lease or the Disposition
and Development Agreement;
(e) the condition of the Mortgaged Property (environmental or
otherwise), including any violation of any law, ordinance, court order or
regulation affecting the Mortgaged Property or any part of it, provided such
condition or violation results from events arising during the period in which the
Borrower occupies or possesses the Mortgaged Property pursuant to the Ground
Sub-lease;
(f) during the period in which the Borrower occupies or possesses the
Mortgaged Property, pursuant to the Ground Sub-lease. any damage or injury,
actual or claimed, of whatsoever kind, cause or character, to property (including
loss of use of property) or persons, occurring or allegedly occurring in, on or
about the Mortgaged Property or arising out of any action or inaction of the
Borrower or any of its agents, servants, employees or licensees, whether or not
related to the Mortgaged Property, or resulting from the acquisition, construction,
design, rehabilitation, repair, operation, use or management of all or any part of
the Mortgaged Property;
(g) the Trustee's acceptance or administration of the trusts created by,
and the exercise of its powers or duties under, the Indenture or under this
OHS West:260447805.3 —16—
Agreement, the Regulatory Agreement. the Credit Facility or any other
agreements in connection with such agreements to which it is a party; and
(h) solely with respect to the Trustee.and with respect to the County in
its capacity as the issuer of the Bonds, to the extent not mentioned in any of the
preceding subsections, any cause whatsoever in connection with transactions
provided for in this Agreement and the other Transaction Documents or otherwise
in connection with the Mortgaged Property, the Bonds or the execution or
amendment of any document relating to the Bonds or the Mortgaged Property.
This indemnification shall extend to and include. without limitation. all reasonable costs,
counsel fees, expenses and liabilities incurred in connection with any such claim, or
proceeding brought with respect to such claim, except (i) in the case of the foregoing
indemnification of the Trustee or any of the Indemnified Parties, to the extent such
damages are caused by the negligence or willful misconduct of such Person. and (ii) in
the case ofthe foregoing indemnification of the Issuer or any of the Indemnified Parties.
to the extent such damages are caused by the willful misconduct of such Person.
The provisions of this Section 6.01 are not intended to and shall not negate,
nullify, change, modify or limit the limitations of Borrower's liability set forth in the
Loan Documents.
Section 6.02. Defense of Claims. In the event that any action or proceeding is
brought against any Indemnified Party with respect to which indemnity may be sought
under Section 6.01 hereof, the Borrower, upon written notice from the Indemnified Party,
will assume the investigation and defense of the action or proceeding, including the
engagement 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 to the action or proceeding, with full power to litigate, compromise or
settle the sante in its sole discretion, provided, however, that the Indemnified Party shall
have the right to review and approve or disapprove any such compromise or settlement.
Each Indemnified Party shall have the right to engage separate counsel in any action or
proceeding and participate in the investigation and defense of such action or proceeding,
and the Borrower shall pay the reasonable fees and expenses of such separate counsel if
(i) the Indemnified Party detennines that a conflict exists between the interests of the
Indemnified Party and the.interests of the Borrower or (ii) such separate counsel is
engaged with the approval of the Borrower, which approval shall not be unreasonably
withheld, conditioned or delayed.
Section 6.03. Borrower's Continuing. Obligations. Notwithstanding any
transfer of the Mortgaged Property to another owner in accordance with the Regulatory
Agreement, the Borrower shall remain obligated to indemnify each Indemnified Party
pursuant to this Article VI for all matters arising prior to such transfer, and, as a condition
to the release of the transferor on and after the transfer date, the transferee must assume
the obligations of the Borrower under this Agreement and the other Borrower Documents
on and after the transfer date. Each Indemnified Party's rights under this Article VI shall
0115 Wint260447805.3 -17-
survive the termination of this Agreement, the payment of the Loan and the payment or
defeasance of the Bonds.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default under this Agreement:
(a) The Borrower fails to pay when due any amount payable by the
Borrower under this Agreement.
(b) The Borrower fails to observe or perform any covenant or
obligation in this Agreement on its part to be observed or performed.for a period
of 30 days after receipt of written notice from the Trustee.specifying such failure
and requesting that it be remedied, provided, however, that if the failure cannot be
corrected within such period, it shall not constitute an Event of Default if the
failure is correctable without material adverse effect on the validity or
enforceability of the Bonds or on the exclusion from gross income, for federal
income tax purposes, of the interest on the Tax-Exempt Bonds, and if corrective
action is instituted by the Borrower within such period and diligently pursued
until the failure is corrected, and provided further that any such failure is cured
within 90 days of receipt of notice of such failure; provided further, failure by the
Borrower to comply with the requirements of Section 8 of the Regulatory
Agreement shall not in and of itself, constitute an Event of Default under this
Agreement.
(c) The Credit Provider provides written notice to the Trustee of an
Event of Default under this Agreement by reason of the occurrence of an Event of
Default under the Reimbursement 'Agreement. No Event of Default under the
Reimbursement Agreement shall constitute a default under this Agreement unless
specifically declared to be so by the Credit Provider. The Credit Provider shall
make such declaration by written notice to the Trustee.
Section 7.02. Remedies Upon an Event of Default. Subject to the Assignment,
whenever any Event of Default occurs and is continuing under this Agreement. the Issuer
may take one or any combination of the.following remedial steps:
(a) by written notice to the Borrower, declare all amounts then due and
payable on the Note to be immediately due and payable;
(b) exercise any of the rights and remedies provided in the Loan
Documents; and
(c) take whatever action at law or in equity may appear necessary or
desirable to collect the amounts then due and afterward to become due, or to
01 is west:260447805.3 -18-
enforce performance and observance of any obligation, agreement or covenant of
the Borrower under this Agreement..
Section 7.03. No Levy or Other Execution Against Mortgaged Property.
Neither the Issuer nor the Trustee shall have any right to levy, execute or enforce any
judgment in respect of the Borrower's obligations under this. Agreement, including the
Reserved Rights, against the Mortgaged Property or any other property of the Borrower
which secures the obligations of the Borrower under the Loan or to the Credit Provider
under any of the Credit Facility Documents.
Section 7.04. Waiver and Annulment. Unless the Credit Provider otherwise
consents in writing, neither. the Issuer nor the Trustee may waive or annul any Event of
Default under this Agreement unless (i) all amounts which would then be payable under
this Agreement by the Borrower if such Event of Default had not occurred and was not
continuing are paid by or on behalf of the Borrower, and (ii) the Borrower also performs
all other obligations in respect of which it is then in default under this Agreement and
pays the reasonable charges and expenses of the Issuer and the Trustee, including
reasonable attorneys" fees and expenses paid or incurred in connection with such default.
No waiver or annulment shall extend to or affect any subsequent Event of Default or
impair any right or remedy consequent on such Event of Default.
Section 7.05. No Remedy Exclusive. All rights and remedies provided in this
Agreement are cumulative, nonexclusive and in addition to any and all rights and
remedies that the Issuer and the Trustee may have or may be given by reason of any law,
statute, ordinance or otherwise.
Section 7.06. No Waiver. No delay or omission to exercise any right or power
accruing upon any Event of Default under this Agreement shall impair any such right or
power or shall be construed to be a waiver of such Event of Default, but any such right or
power may be exercised from time to time and as often as may be deemed expedient.
Section 7.07. No Notices. In order to entitle the Issuer to exercise any remedy
reserved to it in this Article, it shall not benecessary to give any notice, other than such
notice as may be expressly required in this Article or by any Bond Document.
Section 7.08. Expenses. In the event the Borrower should default under this
Agreement and the Issuer employs attorneys or incurs other expenses for the collection of
payments under, or the enforcement of performance or observance of any obligation or
agreement on the part of the Borrower contained in, this Agreement, the Borrower agrees
that it will pay, on demand, to the Issuer the reasonable fees of such attorneys and such
other expenses so incurred by the Issuer.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices. All notices, certificates or other communications
provided in this Agreement shall :be given in writing. and shall be sufficiently given and
01 IS West260447805.3 -19-
shall be deemed given if given in the manner provided in Section 13.04 of the Indenture.
Copies of each notice, certificate or other communication given under this Agreement by
any party shall be given to the other parties. By notice given under this Agreement, any
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 under this Agreement to the Issuer, the
Borrower or the Trustee shall also be given to the Credit Provider or, if applicable, an
Alternate Credit Provider.
Section 8.02. Amendment. No amendment.to this Agreement shall be binding
upon the parties to this Agreement until such amendment is reduced to writing and
executed by such parties: provided, however, that no amendment, supplement or other
modification to this Agreement or any other Bond Document shall be effective without
the prior written consent of the Credit Provider or, if an Alternate Credit Facility is in
effect, the Alternate Credit Provider, subject. in each case to the provisions of
Section 8.12.
Section 8.03. Entire Agreement. This Agreement is one agreement in a set of
agreements, documents and instruments representing an integrated transaction. The
agreements, documents and instruments are the Transaction Documents. The Transaction
Documents contain all agreements between the parties to the integrated transaction, and
there are no other representations, warranties, promises, agreements or understandings,
oral, written or implied, among them, unless reference is made in a Transaction
Document. Nothing in this Agreement shall relieve the Borrower of its obligations under
the Loan Documents and the Credit.Facility Documents.
Section 8.04. Binding Effect. This Agreement is a continuing obligation and
shall (i) be binding upon each of the parties to this Agreement and their successors and
assigns and (ii) inure to the benefit of and be enforceable by such parties and their
respective successors, transferees and assigns; provided, however, that the Borrower may
not assign all or any part of this Agreement without the prior written consent. of the
Issuer, which consent may be conditioned upon compliance with the requirements of the
Regulatory Agreement but shall not otherwise be unreasonably withheld.
Section 8.05: Further Assurances and Corrective Instruments. The parties
agree that they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such amendments to this Agreement and to the
other Transaction Documents contemplated by this Agreement as reasonably may be
required to carry out the intention of. or to facilitate the performance of this Agreement,
or to perfect or give further assurances of any of the rights granted or provided for in this
Agreement.
Section 8.06. Severability. Should one or more of the provisions of this
Agreement be held to be invalid, illegal or unenforceable in any jurisdiction, such
provision shall be severable from the remainder as to such jurisdiction and the validity,
legality and enforceability of the remaining provisions will not in any way be affected or
impaired in any jurisdiction.
OIIS West260447805.3 —20—
Section 8.07. Execution in 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 8.08. Governing Law. This Agreement shall be construed, and the
obligations, rights and remedies of the parties under this Agreement 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 8.09. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
LAW, THE BORROWER, THE ISSUER AND THE TRUSTEE (A) COVENANT AND
AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING UNDER THIS AGREEMENT TRIABLE BY A JURY AND (B) WAIVE
ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT
NOW EXISTS OR SHALL LATER 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, THE
ISSUER AND THE TRUSTEE 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 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.
Section 8.10. Limited Liability of the Issuer. All obligations of the Issuer
under this Agreement, the Regulatory Agreement and the Indenture shall be limited
obligations of the Issuer, payable solely and only from the Trust Estate. 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 for the payment of the
Bonds, nor to enforce the payment of the Bonds 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 Agreement on behalf of the Issuer, shall be liable
personally under this Agreement. No recourse shall be had. for the payment of the
principal of or the interest on the Bonds, for any claim based on or in respect of the
Bonds or based on or in respect of this Agreement, 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.of this Agreement and as part of the
consideration for the issuance of the Bonds, expressly waived and released.
Section 8.11. Term of This Agreement. This Agreement shall be in full force
and effect from its date to and including such date as all of the Bonds are fully paid or
retired (or provision for such payment shall have been made as provided in the
OHS West:260447805.3 —21—
Indenture); provided, however, that Sections 2.05 and 5.05 and Articles III and VI hereof
shall survive the termination of this Agreement.
Section 8.12. References to the Credit .Provider. All provisions in this
Agreement regarding consents, approvals, directions, waivers, appointments, requests or
other actions by the Credit 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 Provider were not mentioned (i) if a Wrongful Dishonor has
occurred and is continuing, or (ii) from and after the date on which the Credit Facility is
declared to be null and void by final judgment of a court of competent jurisdiction;
provided, however, that the payment of any amounts due to the Credit Provider pursuant
to this Agreement shall continue in full force and effect. The foregoing shall not affect
any other rights of the Credit Provider. All provisions in this Agreement relating to the
rights of the Credit Provider shall be of no force and effect if the Credit Facility has
terminated or expired in accordance with its terms and there are no Pledged Bonds or
Bonds in which the Credit Provider has a security interest and all amounts owing to the
Credit Provider under the Reimbursement Agreement have been paid.
Section 8.13. Amendment of Original Financing Agreement. This Agreement
amends the Original Financing Agreement as of the Escrow Break Date upon the
purchase of the 2006 Bonds on the Escrow Break Date.
[Remainder of Page Intentionally Left Blank]
01 IS West:260447805.3 —22—
The parties to this Agreement have caused this Agreement to be executed by their
duly authorized representatives as of the date set forth above.
COUNTY OF CONTRA COSTA
By
Deputy Director—Redevelopment
PHVP 1, LP,
a Delaware limited partnership
By: PHVP I GP, LLC,
a Delaware limited liability
company, its general partner
Bv:
Name:
Title: Authorized Signatory
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.,
as Trustee
By
Authorized Officer
OHS West:260447805.3 -23-
` OHS DRAFT
7/2/08
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County Redevelopment Agency
Department of Conservation and Development
2530 Arnold Drive.# 190
Martinez. CA 94553
Attention: Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383
AMENDED AND RESTATED RE,GLILATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(LOTS 2 AND 3)
By and Among
COUNTY OF CONTRA COSTA,
CONTRA COSTA COUNTY REDEVELOPMENT AGENCY,
THE BANK OF NEW YORK MELLON TRUST COMPANY.N.A.,
as'Trustee
and
PHVP I, LP.
a Delaware limited partnership
Dated as of July 1, 2008
Amending and restating Amended and Restated Regulatory Agreement
and Declaration of Restrictive Covenants(Lots A and B)dated as of March 1, 2006
P
OHS West260448093.3
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND INTERPRETATION................................................................2
SECTION 2 REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE
OWNER.............................................:.........................................................................4
SECTION 3 QUALIFIED RESIDENTIAL RENTAL PROJECT ...................................................4
SECTION 4 VERY LOW INCOME TENANTS; REPORTING REQUIREMENTS....................5
SECTION 5 TAX-EXEMPT STATUS OF SERIES A BONDS................................:....................7
SECTION 6 ADDITIONAL REQUIREMENTS OF THE ACT.....................................................7
SECTION 7 ADDITIONAL REQUIREMENTS OF THE ISSUER; CDLAC
REQUIREMENTS ......................................................................................................8
SECTION 8 REQUIREMENTS OF THE AGENCY......................................................................9
SECTION 9 MODIFICATION OF COVENANTS..................:....................................................12
SECTION 10 INDEMNIFICATION; OTHER PAYMENTS .........................................................13
SECTION 11 CONSIDERATION...................................................................................................13
SECTION 12 RELIANCE ...............................................................................................................14
SECTION 13 SALE OR TRANSFER OF THE PROJECT.............................................................14
SECTION14 TERM........................................................................................................................15
SECTION 15 COVENANTS TO RUN WITH THE LAND...........................................................16
SECTION 16 BURDEN AND BENEFIT........................................................................................16
SECTION 17 UNIFORMITY; COMMON PLAN ..........................................................................16
SECTION 18 DEFAULT; ENFORCEMENT.................................................................................16
SECTION 19 THE TRUSTEE.........................................................................................................18
SECTION 20 RECORDING AND FILING ....................................................................................19
SECTION 21 PAYMENT OF FEES................................................................................................19
SECTION 22 GOVERNING LAW .................................................................................................19
SECTION 23 AMENDMENTS; WAIVERS...................................................................................19
SECTION 24 NOTICES ..................................................................................................................20
SECTION 25 SEVERABILITY..,-'-'-....*.................................................................................-
SECTION 26 MULTIPLE COUNTERPARTS...............................................................................21
SECTION 27 THIRD-PARTY BENEFICIARY .............................................................................21
OHS Wcst:260448093.3
i
AMENDED AND RESTATED REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Lots 2 and 3)
THIS AMENDED AND RESTATED REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS (Lots 2 and 3) (as supplemented and amended from
time to time,this"Regulatory Agreement") is made and entered into as of July 1, 2008, by and among the
COUNTY OF CONTRA COSTA, a political.subdivision of the State of California (together with any
successor to its rights, duties and obligations, the "Issuer"), the CONTRA COSTA COUNTY
REDEVELOPMENT AGENCY, a public body corporate and politic, organized and existing under and
by virtue of the laws of the State of California (the "Agency"), THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., in its capacity as trustee under the Indenture(as hereinafter defined)(together
with any successor in such capacity, the "Trustee"), and PHVP I, LP, a Delaware limited partnership
(together with any successor to its rights., duties and obligations hereunder and as owner of the Project
identified herein, the "Owner"), and amends and restates that certain Regulatory Agreement and
Declaration of Restrictive Covenants (Lots A and B), dated as of March 1, 2006, among the Issuer, the
Agency, U.S. Bank National Association, as trustee,and the Owner.
WITNESSETH:
WHEREAS, pursuant to Chapter 7 of Part 5 of Division 31 of the California Health and
Safety Code (the "Act"), the Issuer has issued its Multifamily Housing Revenue Bonds (Avalon Walnut
Creek at Contra Costa Centre Project) Series 2006A (the "2006A Bonds") and its Multifamily Housing
Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Taxable Series 2006A-T (the
"2006A-T Bonds") and proposes to issue its Multifamily Housing Revenue Bonds (Avalon Walnut Creek
at Contra Costa Centre Project) Series 2008A (the"2008 Bonds"and, together with the 2006A Bonds and
the 2006A-T Bonds,the"Bonds') under an Amended and Restated Trust Indenture, of even date herewith
(the"Indenture"), between the Issuer and the Trustee;
WHEREAS, the proceeds of the Bonds will be used to fund a loan to the Owner pursuant
to an Amended and Restated Financing Agreement, dated of even date herewith, among the Issuer, the
Trustee and the Owner (the "Financing Agreement"), to provide financing for the acquisition,
construction and development of a multifamily rental housing project known as Avalon Walnut Creek at
Contra Costa Centre, a portion of which is located on the real property site described in Exhibit A hereto
as further described herein (For purposes of this Regulatory Agreement, such real property site and the
improvements thereon (and not the real property site known as "Lot 5" and the improvements thereon),
are referred to as the"Project");
WHEREAS, in order to assure the Issuer and the owners of the Bonds that interest on the
2006A Bonds and the 2008 Bonds (collectively, the "Tax-Exempt Bonds') will be excluded from gross
income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (tile
"Code"), and to satisfy the public purposes for which the Bonds are authorized to be issued under the Act
and to the purposes of the Issuer, certain limits on the occupancy of units in the Project need to be
established and certain other requirements need to be met;
WHEREAS, the Agency made a loan to the Owner in the amount of Two Million Five
Hundred Thousand Dollars ($2,500,000) (the "Agency Loan") pursuant to an Agency Assistance
Agreement, dated of even date herewith, between the Agency and the Owner(as supplemented, amended
or replaced from time to time, the "Agency Assistance Agreement"), to provide financing for the
construction of the Project;
OHS West:260448093.3 1
WHEREAS, the Agency Assistance Agreement (defined below) provides for additional
disbursements of Agency funds to the Owner provided that certain terms and conditions are satisfied;
WHEREAS, the Agency is making the Agency Loan and providing other assistance
under the Agency Assistance Agreement on the condition that the Project be maintained and operated in
accordance with Health and Safety Sections 33334.2 et sec.. The Agency intends to utilize the Very Low
Income Units to obtain replacement housing credits pursuant to California Health and Safety Code
Section 33413(a) and affordable housing production credits pursuant to California Health and Safety
Code Sections 33413(b)(2)(A)(ii).
NOW, THEREFORE, in consideration of the issuance of the Bonds by the Issuer, the
Agency Loan made by the Agency and other assistance provided the Agency under the Agency
Assistance Agreement, and the mutual covenants and undertakings set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer,
Agency, Trustee and the Owner hereby agree as follows:
SECTION 1 Definitions and Interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals hereto, in
this Section or in Section 1.01 of the Indenture.
"Administrator" means the Issuer or any administrator or program monitor appointed by
the Issuer to administer this Regulatory Agreement, and any successor so appointed.
"Affordable Rents" means the lesser of(a)thirty percent (30%) of an amount equal to
fifty percent (50%) of the median Gross Income for the Area or (b)thirty (30%) of an amount equal to
Median Income(as defined in Section 8 hereof)for the County of Contra Costa adjusted for family size.
"Agency"means the Contra Costa County Redevelopment Agency.
"Agency Assistance Agreement" means the Agency Assistance Agreement, dated
December 19, 2005 as amended on February 25, 2008, between the Agency and the Owner.
"Agency Conditions" has the meaning given to that term in Section 8.
"Agency Loan" means the loan from the Agency to the Owner in the amount of Two
Million Five Hundred Thousand Dollars($2,500,000). The Agency Loan is made pursuant to the Agency
Assistance Agreement.
"Area"means the Oakland-Fremont, CA HUD Metro FMR Area.
"California Redevelopment Law" means California Health and Safety Code Sections
33000 et seq.
"CDLAC"means the California Debt Limit Allocation Committee or its successors.
"Certificate of Continuing Program Compliance" means the Certificate to be filed by the
Owner with the Administrator, on behalf of the Issuer, and the Trustee pursuant to Section 4(f) hereof,
which shall be substantially in the form attached as Exhibit C hereto or in such other comparable form as
may be provided by the Issuer to the Owner or as otherwise approved by the Issuer.
OHS West:260448093.3 2
"Closing Date" means the date the 2006A Bonds were issued and delivered to the initial
purchasers thereof.
"Escrow Break Date" means the date the 2008 Bonds are issued and delivered to the
initial purchasers thereof.
"Gross Income" means the gross income of a person (together with the gross income off
all persons who intend to reside with such person in one residential unit) as calculated in the manner
prescribed in Regulations Section 1.167(k)-3(b)(3) in effect as of the Closing Date (or such other
definition as may be required by law).
"Housing Act" means the United States Housing Act of 1937, as amended, or its
successor.
"HUD" shall mean the United States Department of Housing and Urban Development.
"Income Certification" means a Verification of Income and an Occupancy Certificate in
the form attached as Exhibit B hereto or in such other comparable form as may be provided by the Issuer
and the Agency to the Owner or as otherwise approved by the Issuer and the Agency.
"Project" means the 389-unit multifamily rental housing development, located on the
leasehold interest in the real property site described in Exhibit A hereto, consisting of those facilities,
including real property, structures, buildings, fixtures or equipment situated thereon, as it may at any time
exist, the construction of which facilities is to be financed, in whole or in part, from the proceeds of the
sale of the Bonds or the proceeds of any payment by the Owner pursuant to the Financing Agreement, and
the Agency Loan and other payments made pursuant to the Agency Assistance Agreement.
"Qualified Project Period"means the period beginning on the later of the Closing Date or
the first day on which at least 10% of the units in the Project are first occupied and ending on the later of
the following:
(A) the date that is fifteen (15) years after the date on which at least fifty percent
(50%)of the units in the Project are first occupied:
(B) the first date on which no Tax-Exempt private activity bonds with respect to the
Project are Outstanding;
(C) the date on which any assistance provided with respect to the Project under
Section 8 of the Housing Act terminates: or
(D) Fifty-Five (55) years from first day on which at least 10% of the units in the
Project are first occupied.
"Regulations" means the Income Tax Regulations of.the Department of the Treasury
applicable under the Code from time to time.
"Regulatory Agreement" means this Amended and Restated Regulatory Agreement and
Declaration of Restrictive Covenants, as it may be supplemented or amended from time to time.
OHS West:260448093.3 3
"Tax-Exempt" means with respect to interest on any obligations of a state or local
government, including the Tax-Exempt Bonds, that such interest is excluded from gross income for
federal income tax purposes; provided, however, that such interest may be includable as an item of tax
preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities,
including any alternative minimum tax or environmental tax, under the Code.
"Verification of Income" means a Verification of Income in the form attached as Exhibit
B hereto or in such other comparable form as may be provided by the Issuer and Agency to the Owner.
"Very Low Income Tenant" means, (1) for purposes of Section.8 hereof, a household
with an income that does not exceed the qualifying limits for very low income households adjusted for
actual household size, as established and amended from time to time pursuant to Section 8 of the United
States Housing Act of 1937. and as published by the State of California Department of Housing and
Community Development, and (2)for all other purposes hereunder, a tenant whose Gross Income does
not exceed the limits for very low income households, except that the percentage of median gross income
that qualifies as very low income shall be fifty percent (50%) of median gross in the Area adjusted for
household size, as established and amended by HUD from time to time pursuant to Section 8 of the
United States Housing Act or 1937, and as published by the State of California Department of Housing
and Community .Development. If all the occupants of a unit are students (as defined under Section 151
(c)( 4) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code, such
occupants shall not qualify as Very Low Income Tenants. The determination of a tenant's status.as a
Very Low Income Tenant shall be made by the Owner upon initial occupancy of a unit in the Proiect by
such Tenant, on the basis of an Income Certification executed by the Tenant. In the event the federal
income standards are discontinued, the Issuer and the Agency shall provide the Owner with other income
detenninations which are reasonably similar with respect to methods of calculation to those previously
established by HUD and published by the,State.
"Very Low Income Units" means the units in the Project required to be rented, or held
available for occupancy by, Very Low Income Tenants pursuant to Sections 4(a), 6(a) and 8(a) of this
Regulatory Agreement.
Unless the context clearly requires.otherwise, as used in this Regulatory Agreement,
words of any 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 terns and provisions hereof shall be construed to effectuate the
purposes set forth herein and to sustain the validity 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.
The parties to this Regulatory Agreement acknowledge that each party and their
respective counsel have participated in the drafting and revision of this Regulatory Agreement.
Accordingly, the parties agree that any rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not apply in the interpretation of this Regulatory Agreement or
any supplement or exhibit hereto.
OHS West:260448093.3 4
SECTION 2 Representations. Covenants and Warranties of the Owner.
(a) The Owner hereby incorporates herein, as if set forth in full herein, each of the
representations covenants and warranties of the Owner contained in the Tax Certificate.
(b) The Owner hereby represents and warrants that the Project is located entirely
within Contra Costa County, California.
(c) The Owner acknowledges, represents and warrants that it understands the nature
and structure of the transactions contemplated by this Regulatory Agreement; that it is familiar with the
provisions of all of the documents and instruments relating to the Bonds to which it is a party or of which
it is a beneficiary; that it understands the financial and legal risks inherent in such transactions; and that it
has not relied on the Issuer or Agency for any guidance or expertise in analyzing the financial or other
consequences of such financing transactions or otherwise relied on the Agency or the Issuer in any
manner except, in the case of the Issuer, to issue the Bonds in order to provide funds to assist the Owner
in constructing the Project and, in the case of the Agency, to provide the Agency Loan and other
payments contemplated by the Agency Assistance Agreement in order to provide funds to assist the
Owner in constructing and developing the Project.
SECTION 3 Qualified Residential Rental Project. The Owner hereby acknowledges
and agrees that the Project is to be owned, managed and operated as a "residential rental project" (within
the meaning of Section 142(d) of the Code) for a term equal to the Qualified Project Period. To that end,
and for the term of this Regulatory Agreement, the Owner hereby represents, covenants, warrants and
agrees as follows:
(a) The Project will be constructed and operated for the purpose of providing
multifamily residential rental property. The Owner will own. manage and operate the Project as a project
to provide multifamily residential rental property comprised of a building or structure or several
interrelated buildings or structures, together with any functionally related and subordinate facilities, and
no other facilities, in accordance with Section 142( d) of the Code, Section LI of the Regulations
and the provisions of the.Act, and in accordance with such requirements as may be imposed thereby on
the Project from time to time.
(b) All of the dwelling units in the Project will be similarly constructed units, and
each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping,
eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and
sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a
transient basis or rented for a period of less than thirty (30) consecutive days (apart from a month to
month lease in months with less than 30 days), or will ever be used as a hotel, motel, dormitory, fraternity
house, sororityhouse, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or
park; provided that the use of certain units for tenant guests on an intermittent basis shall not be
considered transient use for purposes of this Regulatory Agreement.
(d) No part of the Project will at any time during the Qualified Project Period be
owned by a cooperative housing corporation, nor shall the Owner take any steps in connection with a
conversion to such ownership or use, and the Owner will not take any steps in connection with a
conversion of the Project to condominium ownership during the Qualified Project Period.
OHS west260448093.3 5
(e) All of the dwelling units in the Project(except for not more than two (2) units set
aside for resident manager or other administrative use) will be available for rental during the Qualified
Project Period on a continuous basis to members of the general public, and the Owner will not give
preference to any particular class or group in renting the dwelling units in the Project, except to the extent
provided in Section 8(i) and except to the extent that dwelling units are required to be leased or rented to
Very Low Income Tenants.
(f) The Project consists of a leasehold interest in a parcel or parcels that are
contiguous except for the interposition of a road, street or stream, and all of the facilities of the Project
comprise a single geographically and functionally integrated project for residential rental property, as
evidenced by the ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Owner; provided,
however, that this provision shall not be construed to prohibit occupancy of not more than two (2)
dwelling units by two(2)resident managers or maintenance personnel any of whom may be the Owner..
(h) The Owner shall deliver to the Agency, the Administrator and the Trustee, (i)
within 30 days after the date on which 10% of the dwelling units in the Project are occupied, a written
notice specifying such date, and (ii) within 30 days after the date on which 50% of the dwelling units in
the Project are occupied, a written notice specifying such date.
SECTION 4 Very Low Income Tenants: Reporting Requirements. Pursuant to the
requirements of the Code,the Owner hereby represents, warrants and covenants as follows:
(a) During the Qualified Project Period, not less.than twenty percent (20%) of the
total number of completed units in the Project shall at all times be rented to and occupied by Very Low
Income Tenants. For the purposes of this paragraph (a), a vacant unit that was most recently occupied by
a Very Low Income Tenant is treated as rented and occupied by a Very Low Income Tenant until
reoccupied, other than for a temporary period of not more than thirty one (3 1) days, at which time the
character of such unit shall be redetermined.
(b) No tenant qualifying as a Very Low Income Tenant upon initial occupancy shall
be denied continued occupancy of a .unit in the Project because, after admission, such tenant's Gross
Income increases to exceed the qualifying limit for Very Low Income Tenants. However, should a Very
Low Income.Tenant's Gross Income, as of the.most recent determination thereof, exceed one hundred
forty percent (140%) of the applicable income limit for a Very Low Income Tenant of the same
household size, the next available unit of comparable or smaller size must be rented to(or held vacant and
available for immediate occupancy by) a Very Low Income Tenant. Until such next available unit is
rented, the former Very Low Income.Tenant who has ceased to qualify as such shall be deemed to
continue to be a Very Low Income Tenant for purposes of the twenty percent (20%) requirement of
Section 4(a)and 8(b) hereof.
(c) For the Qualified Project Period, the Owner will obtain, complete and maintain
on file Income Certifications for each Very Low Income Tenant, including (i) an Income Certification
dated immediately prior to the initial occupancy of such Very Low Income Tenant in the Project, and
(ii)thereafter, an annual Income Certification with respect to each Very Low Income Tenant. The Owner
will provide such additional information as may be required in the future by the Code,the State, the Issuer
or the Agency, 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. Regulations 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 Tax-Exempt obligations. A copy of the most recent Income Certifications for
OI-IS West:260448093.3 6
Very Low Income Tenants commencing or continuing occupation of a Very Low Income Unit shall be
attached to each report to be filed with the Issuer pursuant to paragraph(e)of this Section 4.
(d) The Owner shall verify that the income information provided by an applicant in a
Verification of Income is.accurate by taking one or more of the following steps as a part of the
verification process: (1) obtain a pay stub for the most recent pay period, (2) obtain an income tax return
for the most recent tax year, (3)obtain a credit report or conduct a similar type credit search, (4) obtain an
income verification from the applicant's current employer, (5) obtain an income verification from the
Social Security Administration and/or the California Department of Social Services if the applicant
receives assistance from either of such agencies.. or (6) if the applicant is unemployed and does not have
an income tax return, obtain another forn of independent verification reasonably acceptable to the Issuer
and the Agency.
(e) The Owner will maintain complete and accurate records pertaining to the Very
Low Income Units, and, upon reasonable notice and during normal business hours, will permit any duly
authorized representative of the Issuer, the Trustee, the Department of the Treasury or the Internal
Revenue Service to inspect the books and records of the Owner pertaining to the Project, including those
records pertaining to the occupancy of the Very Low Income Units.
(f) The Owner will prepare and submit to the Administrator, on behalf of the Issuer,
at the end of each calendar quarter, until the end of the Qualified Project Period, a Certificate of
Continuing Program Compliance executed by the Owner. Each year during the Qualified Project Period,
the Owner will submit to the Issuer, the Administrator(if other than the Issuer)and the Trustee, a draft of.
the completed Internal Revenue Code Form 8703 or such other annual certification as required by the
Code with respect to the Project, not less'than two weeks prior to the date such form shall be submitted to
the Secretary of the Treasury. The Owner shall provide the Issuer and the Trustee with evidence of the
filing of such annual Certification with the Secretary of the Treasury.
(g) For the Qualified Project Period, all tenant leases or rental agreements shall be
subordinate to this Regulatory Agreement and the Security Instrument. All leases pertaining to Very Low
Income Units shall contain clauses, among others, wherein each tenant who occupies a Very Low Income
Unit: (i) certifies the accuracy of the statements made in the Verification of Income; (ii) agrees that the
household income and other eligibility requirements shall be deemed substantial and material obligations
of the tenancy of such tenant, that such tenant will comply promptly with all requests for information with
respect thereto from the Owner, the Trustee, the Agency, the Issuer or the Administrator on behalf of the
Issuer; and that the failure to provide accurate information in the Verification of Income or refusal to
comply with a request for information with respect thereto shall be deemed a violation of a substantial
obligation of the tenancy of such tenant; (iii) acknowledges that the Owner has relied on the Verification
Of Income and supporting information supplied by the Very Low Income Tenant in determining
qualification for occupancy of the Very Low Income Unit, and that any material misstatement in such
certification (whether or not intentional) will be cause for immediate termination of such lease or rental
agreement; and (iv) agrees that the tenant's income is subject to annual certification in accordance with
Section 4(c) and that if upon any such certification such tenant's Gross Income exceeds the applicable
income limit under Section 4(b), such tenant may cease to qualify as a Very Low Income Tenant and such
tenant's rent may be subject to increase.
For purposes of this Section 4, no unit occupied by a residential manager shall be treated
as a rental unit during the time of such occupation.
SECTION 5 Tax-Exempt Status of Tax-Exempt Bonds. The Owner and the Issuer, as
applicable, each hereby represents, warrants and agrees as follows:
OHS West:260448093.3 7
(a) The Owner and the Issuer 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 Tax-Exempt nature of the
interest on the Tax-Exempt Bonds and, if either of them 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) The Owner and the Issuer 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 and the Trustee(with a•
copy to the Owner), in order to insure that the requirements and restrictions of this Regulatory Agreement
will be binding upon all owners of the Project, including, but not limited to, the execution and recordation
of this Regulatory Agreement in the real property records of the County of Contra Costa, California.
SECTION 6 Additional Requirements of the Act. In addition to the requirements set
forth above, the Owner hereby agrees that it shall comply with each of the requirements of Section 52080
of the Act, including(but not limited to)the following-
(a) Not less than twenty percent (20%) of the total number of units in the Project
shall be occupied by Very Low Income Tenants. The units made available to meet this requirement shall
be of comparable quality and offer a range of sizes and numbers of bedrooms comparable to the units that
are available to other tenants in the Project.
(b) The rental payments for the Very Low Income Units paid by the tenants thereof
(excluding any supplemental rental assistance from the State, the federal government or any other public
agency to those tenants or on behalf of those units) shall not exceed thirty percent (30%) of an amount
equal to fifty percent(50%)of the median adjusted gross income for the Area.
(c) The Owner shall accept as tenants, on the same basis as all other prospective
tenants, low-income persons who are recipients of federal certificates or vouchers for rent subsidies
pursuant to the existing program under Section 8 of the Housing Act. The Owner shall not permit any
selection criteria to be applied to Section 8 certificate or voucher holders that is more burdensome than
the criteria applied to all other prospective tenants.
(d) The units reserved for occupancy as required by subsection (a) of this Section 6
shall remain available on a priority basis for occupancy by Very Low Income Tenants at all times during
the Qualified Project Period.
(e) During the three (3) years prior to the expiration of the Qualified Project Period,
the Owner shall continue to make available to eligible households Very Low Income Units that have been
vacated to the same extent that nonreserved units are made available to noneligible households.
(f) Following the expiration or termination of the Qualified Project Period, except in
the event of foreclosure and redemption of the Bonds, deed in lieu of foreclosure, eminent domain, or
action of a federal agency preventing enforcement, units reserved for occupancy as required by subsection
(a) of this Section shall remain available to any eligible tenant occupying a reserved unit at the date of
such expiration or termination, at the rent determined by subsection (b)of this Section, until the earliest of
(1) the household's income exceeds one hundred forty percent (140%) of the maximum eligible income
specified above, (2)the household voluntarily moves or is evicted for good cause (as defined in the Act),
(3)thirty (30) years after the date of the commencement of the Qualified Project Period; or(4)the Owner
pays the relocation assistance and benefits to households as provided in Section 7264(b) of the California
Government Code.
OHS West:260448093.3 8
(g) Except as set forth in Section 14 hereof, the covenants and conditions of this
Regulatory Agreement shall be binding upon successors in interest of the Owner. .
(h) This Regulatory Agreement shall be recorded in the office of the county recorder
of the County of Contra Costa, and shall be recorded in the grantor-grantee index to the names of the
Owner as grantor and to the name of the:issuer and the Agency as grantee.
SECTION 7 Additional Requirements of the Issuer: CDLAC Requirements. In
addition to the requirements set forth above and to the extent not prohibited thereby. the Owner hereby
agrees to comply with each of the requirements of the Issuer set forth in this Section 7, as follows:
(a) The Owner will pay to the Issuer all of the amounts required to be paid by the
Owner under Section 21 of this Regulatory Agreement and will indemnify the issuer and the Trustee as
provided in Section 10 of this Regulatory Agreement.
(b) Rental payments paid by Very Low Income Tenants for the Very Low Income
Units shall not exceed Affordable Rents.
(c) All tenant lists, applications and waiting lists relating to the Project shall at all
times be kept separate and identifiable from any other business of the Owner and shall be maintained as
required by the Issuer, in a reasonable condition for proper audit and subject to examination during
business hours by representatives of the Issuer upon reasonable advance notice to the Owner.
(d) The Owner shall submit to the Administrator, on behalf of the Issuer, within
fifteen (15) days after receipt of a written request, any information or completed forms requested by the
Issuer or the Administrator in order to comply with reporting requirements of the Internal Revenue
Service or the State.
(e) The Owner shall not discriminate on the basis of race, creed, color, religion, sex,
sexual orientation, marital status, national origin, source of income (e.g. SSI), ancestry or handicap in the
lease, use or occupancy of the Project or in connection with the employment or application for
employment of persons for the operation or management of the Project, and will not discriminate on the
basis of household size so long as the tenants meet the household size standards of Section 8 of the
Housing Act. Further, the Owner shall not permit occupancy in any unit in the Project by more persons
than is permissible under the Section 8 household size standards.
(f) The Owner shall comply with any reasonable request made by the Administrator
(if other than the Issuer)or the Issuer to deliver to any such Administrator, in addition to or instead of the
Issuer, any reports, notices or other documents required to be delivered pursuant hereto, and, upon
reasonable notice and during normal business hours, to make the Project and the books and records with
respect thereto available for inspection by the Issuer or the Administrator as an agent of the Issuer.
(g) For purposes of Section 7(b), the base rents shall be adjusted for household size,
to the extent permitted by law, and in making such adjustments it shall be assumed that one person will
occupy a studio unit, two persons will occupy a one-bedroom unit, three persons will occupy a two-
bedroom unit, four persons will occupy a three-bedroom unit, and five persons will occupy a four-
bedroom unit.
(h) The Owner shall comply with the conditions set forth in Exhibit A to CDLAC
Resolution No. 05-142, adopted on December—')], 2005, and in Exhibit.A to CDLAC Resolution No. 08-
52, adopted on March 26, 2008 (collectively the "CDLAC Conditions"), as they may be modified or
01 IS West:260448093.3 9
amended from time to time, which conditions are incorporated herein by reference and made a part
hereof. The Owner will prepare and submit to CDLAC, not later than each anniversary of the Closing
Date, until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance, in
substantially the form attached hereto, executed by an authorized representative of the Owner. The Issuer
and the Administrator shall have no oblivation to monitor the Owner's compliance with the CDLAC.
Conditions. y
(i) Except as otherwise provided in Section 14 of this Regulatory Agreement, this
Regulatory Agreement shall terminate at the end of the Qualified Project Period.
Any of the foregoing requirements of the Issuer(except(h), which also must be expressly
waived by CDLAC and (e) and (i), which also must be expressly waived by CDLAC and the Agency),
may be expressly waived by the Issuer, in its sole discretion, in writing, but (i) no waiver by the Issuer of
any requirement of this Section 7 shall, or shall be deemed to, extend to or affect any other provision of
this Regulatory Agreement except to the extent the Issuer has received an opinion of Bond Counsel that
any such provision is not required by the Act or the Code, and may be waived without adversely affecting
the exclusion from gross income of interest on the Tax-Exempt Bonds for federal income-tax purposes;
and (ii) any requirement of this Section 7 shall be void and of no force and effect if the Issuer and the
Owner receive a written opinion of Bond Counsel to the effect that compliance with any such requirement
would cause interest on the Tax-Exempt Bonds to cease to be Tax-Exempt or to the effect that
compliance with such requirement would be in conflict.with the Act or any other state or federal law.
SECTION 8 Requirements of the A(.,encv. In addition to the requirements set forth
elsewhere in this Regulatory Agreement and to the extent not prohibited thereby and as a condition to the
obligation of the Agency to make payments to the Owner pursuant to the Agency Assistance Agreement,
the Owner hereby agrees to comply with each.of the requirements of the Agency set forth in this Section
8 (collectively, the"Agency Conditions"), as follows:
(a) For the purposes of this Section the following definitions shall apply:
I. "Assumed Household Size" means for a studio one person, for a one bedroom
two people. for a two bedroom three people, for a three bedroom four people and for a four bedroom five
people; provided however, that if any federal statutes or regulations require use of an alternate household
size, assumptions in calculating rents, such federally-mandated household size assumptions shall be used
instead of the forgoing assumptions.
2. "Median Income" shall mean the median gross yearly income adjusted for
Assumed Household Size, as specified herein, for the County of Contra Costa as published from time to
time by HUD and the State of California. In the event that such income determinations are no longer
published or are not updated for a period of at least eighteen (18) months, the Agency shall provide the
Owner with other income determinations which are reasonably similar with respect to methods of
calculation to those previously published by HUD and the State of California.
(b) Not less than twenty percent (20%) of the units in the Project shall be occupied
by, or held vacant and available for occupancy by, Very Low Income Tenants and such units shall be of
comparable size and quality as other units in the Project and shall be disbursed throughout the Project.
(c) The rental payments paid by the occupants of the Very Low Income Units
described in Section 8(a) shall not exceed Affordable Rents.
OHS Wcst:260448093.3 10
(d) The Owner shall rent the units subject to Section 8(b) in accordance with Section
4(b).
(e) The Owner will obtain, complete and maintain on file Income Certifications for
each Very Low Income Tenant in accordance with Section 4(c) hereof. A copy of the most recent Income
Certifications for Very Low Income Tenants commencing or continuing occupation of a Very Low
Income Unit shall be attached to each report to be filed with the Issuer pursuant to paragraph (h) of this
Section 8. The Owner will provide copies of such Income Certifications to the Agency upon request by
the Agency.
(f) The Owner shall make a good faith effort, in the manner set forth in Section 4(d)
hereof, to verify that the income information provided by an applicant in a Verification of Income is
accurate.
(g) The Owner will maintain complete and accurate records pertaining to the Very
Low Income Units, and, upon reasonable notice and during business hours, will permit any duly
authorized representative of the Agency to inspect the books and records of the Owner pertaining to the
Project, including those records pertaining to the occupancy of the Very Low Income Units and the
Income Certifications required pursuant to Section 8(e). The Owner will retain copies of all materials
obtained or produced with respect to occupancy of the Very Low Income Units for a period of at least
five(5)years.
(h) Owner shall submit to Agency not later than the forty-fifth (45"') day after the
close of each fiscal year, or such other date as may be requested by Agency, a statistical report, including
household size and income data for the Very Low Income Units. Owner shall include a provision in
tenant leases pursuant to which the tenants shall consent to Owner's release of such information to the
Agency.
(i) To the extent permitted by law, the Owner shall give preferences in the
occupancy of the units in the Project to households that the Agency identifies in writing to the Owner that
have been displaced as a result of Agency activities.
0) Initial rents for the Very Low Income Units shall be approved by the Agency
prior to occupancy. All rent increases shall also be subject to the prior written approval of the Agency.
(k) The Owner shall comply with Sections 3(h), 4(g)and 6(c).
(1) All tenant lists, applications and waiting lists relating to the Project shall at all
tithes be kept separate and identifiable from any other business of the Owner and shall be maintained as
required by the Agency, in a reasonable condition for proper audit and subject to examination during
business hours by representatives of the Agency upon reasonable advance notice to the Owner.
(m) The Owner shall submit to the Agency, within fifteen (15) days after receipt of a
written request, any information or completed forms reasonably requested by the Agency in order to
comply with California Redevelopment Law.
(n) The Project shall be constructed and operated for the purpose of providing
multifamily residential rental property. No part of the Project will operate as transient housing.
SECTION 9 Modification of Covenants. The Owner, the Trustee, the Issuer and the
Agency hereby agree as follows:
OHS West:260448093.3 I 1
(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 Agency, the Trustee and the Owner,.
retroactively impose requirernents upon the ownership or operation of the Project more restrictive than
those imposed by this Regulatory Agreement, and if such requirernents are applicable to the Project, this
Regulatory Agreement shall be deemed to be automatically amended to impose such additional or more
restrictive requirements. If such a change will have an adverse effect on the financial performance of the
Project, the County and the Agency will in good faith consider, but shall have no obligation to approve,
amendments to documents proposed by the Owner to compensate for such adverse effect (so long as such
amendments do not materially adversely affect the interests of the holders of the Bonds or result in
inconsistencies with the California Redevelopment Law).
(b) To the extent that the Act, the Regulations or the Code, or any amendments
thereto; shall, in the written opinion Of Bond Counsel filed with the issuer, the Ag*ency the Trustee and the
Owner, impose requirements upon the ownership or operation of the Project less restrictive than imposed
by this Regio ulatory Agreement, this Regulatory Agreement may be amended or modified to provide such
less restrictive requirements but only by written amendment signed by tine Issuer, at its sole discretion, the
Agency, the Trustee and the Owner, and only upon receipt by the Issuer of the written opinion of Bond
Counsel to the effect that such amendment will not affect the Tax-Exempt status of interest on the Tax-
Exempt Bonds or violate the requirements of the Act, and otherwise in accordance with Section 23
hereof. The Agency shall not be required to execute any amendment providedfor in this Section 9 (and
the Trustee shall not execute such amendment pursuant to Section 9(c)) unless such amendment also
meets the requirements of California Redevelopment Law.
(c) The Owner, the Issuer, the Agency 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 9, and each of the Owner, the Issuer and the Agency 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
Owner,the Issuer or the Agency, as applicable, any such document or instrument(in such form as may be
approved in writing by Bond Counsel) if any of the Owner, the Issuer or the Agency defaults in the
performance of its obligations under this subsection (c); provided, however,that unless directed in writing
by the Issuer,the Agency or the Owner,the Trustee shall take no action under this subsection without first
notifying the Owner, the Issuer or the Agency;or all of thein, and without first providing the Owner, the
Issuer or the Agency. or all of them, an opportunity to comply with the requirements of this Section 9.
Nothing in this subsection (c) shall be construed to allow the Trustee to execute an amendment to this
Regulatory Agreement on behalf of the Issuer, the Agency or the Owner; however, if the Issuer executes
an amendment to this Regulatory Agreement,the Trustee shall also execute such amendment unless in the
reasonable opinion of a Trustee or its counsel, such execution shall adversely affect the interests of such
Trustee or the Bondholders for whom such Trustee.acts.
SECTION 10 Indemnification; Other Payments. The Owner hereby covenants and
aurees that it shall indemnity and hold harmless the Issuer and the Trustee and their respective officers,
members, directors, officials, employees and agents as set forth in the Financing'Agreernent. In addition
thereto, the Owner will pay upon demand all of the fees and expenses paid or incurred by the Trustee
and/or the issuer in enforcing the provisions hereof.
The provisions of this Section 10 shall survive the term of the Bonds and this Regulatory
Agreement: provided, however, the provisions of this Section shall, in the case of the Trustee, survive the
term of this Regulatory Agreement or the resignation or removal of the Trustee, but only as to claims
arisino from events occurring during the term of this Regulatory Agreement or the Trustee's tenure as
Trustee under the applicable Indenture, and shall, in the case of the issuer, survive the term of this
OHS West260448093.3 12
Aoreernent, but only as to claims arising from events occurring during the tern of this Regulatory
Agreement.
SECTION 11 . Consideration. The Issuer has agreed to issue the Bonds to provide funds
to lend to the Owner to finance the Project, all for,the purpose, among others, of inducing the Owner to
acquire, construct, develop and operate the Project. In consideration of the issuance of the Bonds by the
Issuer. the Owner has entered into this Reg*ulatory Agreement and has agreed to restrict the uses to which
this Project can be put on the terms and conditions set forth herein. The Agency has agreed to make the
Agency Loan and other payments under the Azr
gency Assistance Agreement to provide funds to lend to the
Owner to finance the Project, all for the purpose, among others, of inducing the Owner to construct and
operate the Project. In consideration of the Agency Loan and other benefits under the Agency Assistance
Agreement, the Owner has entered into this Regulatory Agreement and has agreed to restrict the uses to
which this Project can be put on the terms and conditions set forth herein.
SECTION 12 Reliance. The Issuer and the Owner hereby recognize and agree that the
representations and covenants set forth herein may be relied upon by all persons interested in the legality
and validity of the Bonds, in the exemption from California personal income taxation of interest on the
Bonds and in the Tax-Exempt status of the interest on the Tax-Exempt Bonds. In performing their duties
and obligations hereunder, the Issuer, the Administrator and the Trustee may rely upon staternents and
certificates of the Very Low income Tenants, and upon audits of the books and records of the Owner
pertaining to the Project. In addition, the issuer and the Trustee may consult with counsel, and the
opinion of such counsel shall be frill 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 Owner 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 Owner and may rely solely on any written notice or certificate delivered to
the Trustee by the Owner or the Issuer with respect to the occurrence or absence of a default.
SECTION 13 Sale or Transfer of the Project. For the Qualified Project Period, the
Owner shall not, except as provided in the Security instrument and as set forth below, sell. transfer or
otherwise dispose of the Project, in whole or in part. without the prior written consent of the issuer and
the Agency, which consent shall not be unreasonably withheld or delayed following: (A) the receipt by
the Issuer and the Agency of evidence acceptable to the Issuer and the Agency that (i) the Owner shall
not be in default hereunder or under the Financing Agreement, if in effect (which may be evidenced by a
Certificate of Continuing Prouram Compliance). or the purchaser or assignee undertakes to cure any
defaults of the Owner to the reasonable satisfaction of the Issuer-. (2) the continued operation of the
Project shall comply with the provisions of this Regulatory Agreement; (3)either (a) the purchaser or
assignee or its property manager has at least three(3)years' demonstrated experience in the ownership,
operation and management of similar large mixed-income rental housing projects, and at least one (1)
year's experience in the ownership; operation and management of.rental housing projects containing
below-market-rate units, without any record of material violations of discrimination restrictions or other
state or federal laws or regulations or local governmental requirements applicable to such projects, or(b)
the purchaser or assignee agrees to-retain a property management firm with the experience and record
described in subclause (a) above; (4) the person or entity which is to construct and operate the Project
does not have pending against it, and does not have a history of significant and material building code
violations or complaints concerning the maintenance, upkeep, operation, and regulatory agreement
compliance of any of its projects as identified by any local, state or federal regulatory agencies; and
(5)that the Owner shall not be in default under the Agency Assistance Agreement or the purchaser or
assignee undertakes to cure any defaults of the Owner to the reasonable satisfaction of the Agency; (B)
the execution by the purchaser or assignee of any document reasonably requested by the Issuer or the
Trustee with respect to the assumption of the Owner's obligations under this Regulatory Agreement. the
01-1S West:260448093.3 13
Financing Agreement (if then in effect) and the Agency Assistance Agreement, including without
limitation an instrument of assumption hereof and thereof, and delivery to the Issuer of an opinion of such
purchaser or assignee's counsel to the effect that each such document and this Regulatory Agreement are
valid, binding and enforceable obligations of such purchaser or assignee, subject to bankruptcy and other
standard limitations affecting creditor's rights; (C) receipt by the Issuer of an opinion of Bond Counsel
addressed to the Issuer to the effect that any such sale, transfer or other disposition will not adversely
affect.the Tax-Exempt status of interest on the Tax-Exempt Bonds; and (D) receipt by the Issuer, the
Trustee and the Agency of all fees and/or expenses then currently due and payable to the Issuer, the
Trustee and the Agency, respectively. The foregoing sentence notwithstanding, the Project may be
transferred to (y) a wholly-owned subsidiary or related entity of the Owner (with an opinion of Bond
Counsel) or(z) the Trustee or the Credit Provider pursuant to a foreclosure, deed in lieu of foreclosure or
comparable conversion under the Security Instrument, in each case, without the consent of the Issuer or
the Agency. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the
Project in violation of this Section 13 shall be null, void and without effect, shall cause a reversion of title
to the Owner, subject to all matters affecting title at the time of such reversion, and shall be ineffective to
relieve the Owner of its obligations under this Rei,ulatory Agreement. The written consent of the Issuer
and the Agency to any transfer of the Project shall constitute conclusive evidence that the transfer is not in
violation of this Section 13. Nothino in this Section shall affect any provision of any other document or
instrument between the Owner and any other party that requires the Owner to satisfy certain conditions or
obtain the prior written consent of such other party in order to sell, transfer or otherwise dispose of the
Project (including the Ground Sub-lease, to which all sales and transfers will be subject). Upon any sale
or other transfer that complies with this Regulatory Agreement, the Owner shall be fully released from its
obligations hereunder to the extent such obligations have been fully assumed in writing by the transferee
of the Project.
For the Qualified Project Period., the Owner shall not: (1)encumber any of the Project or
grant commercial leases of any part thereof, or permit the conveyance, transfer or encumbrance of any
part of the Project, except pursuant or subordinate to the provisions of this Regulatory Agreement and the
Security Instrument (and upon receipt by the Owner of an opinion of Bond Counsel that such action will
not adversely affect the Tax-Exempt status of interest on the Tax-Exempt Bonds; provided that such
opinion will not be required with respect to any encumbrance, lease or transfer relating to a commercial
operation or ancillary facility that will be available for tenant use and is customary to the operation of
multifamily housing developments similar to the Project), or except upon a sale, transfer or other
disposition of the Project in accordance with the terns of this Regulatory Agreement; (2) demolish any
part of the Project or substantially subtract from any real or personal property of the Project, except to the
extent that what is demolished or removed is replaced with comparable property; or(3) pen-nit the use of
the dwelling accommodations of the Project for any purpose except rental residences.
SECTION 14 Term. 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 for
the period provided herein and shall terminate as to any provision not otherwise provided with a specific
tennination date and shall terminate in its entirety at the end of the Qualified Project Period, it being
expressly agreed and understood that the provisions hereof are intended to survive the retirement of the
Bonds and discharge of the Indenture and the Financing Agreement for the time periods set forth herein.
The terms of this Regulatory Agreement to the . contrary notwithstanding, the
requirements of this Regulatory Agreement(except those benefiting the Agency) shall terminate and be of
no further force and effect in the event of foreclosure or transfer of title by deed in lieu of foreclosure of
the Security Instrument, involuntary noncompliance 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
Closing Date that prevents the Issuer and the Trustee from enforcing such provisions, or condemnation or
01 IS W esC260448093.3 14
a similar event, but only if,within a reasonable period, either the Bonds areretired or amounts received as
a consequence of such event are used to provide a project that meets the requirements hereof; 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 Owner or any related
person (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in
the Project for federal income tax purposes. The Owner hereby agrees that, following any foreclosure,
transfer of title by deed in lieu of foreclosure or similar event, neither the Owner nor any such related
person as described above will obtain an ownership interest in the Project for federal tax purposes.
Notwithstanding any other provision of this Regulatory Agreement, except for the provisions benefiting
the Agency, this Regulatory Agreement may be terminated upon agreement by the Issuer,the Trustee and
the Owner upon receipt by the Issuer and the Trustee of an opinion of Bond Counsel to the effect that
such termination will not adversely affect the exclusion from gross income of interest on the Tax-Exempt
Bonds for federal income tax purposes. Upon the tennination 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.
Nothing in this Section 14 shall be construed to.terminate prior to the expiration of the Qualified Project
Period, the provisions of Section 8 (and the provisions referenced therein) or the provisions in
Sections-3(h), H, 15-18 or 21-27.
SECTION 15 Covenants to Run with the Land. Notwithstanding Section 1461 of the
California Civil Code, the Owner hereby subjects the Project to•the covenants, reservations and
restrictions set forth in this Regulatory Agreement. The Issuer, the Agency and the Owner 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 Owner's successors in title to
the Project; provided, however, that on the termination of this Regulatory Agreement said covenants,
reservations and restrictions shall expire. Upon such termination, the Issuer, the Agency and the Trustee
agree to provide any necessary release or reconveyance document for the removal of this Regulatory
Agreement as an encumbrance against the Project. Each and every contract, deed or other instrument
hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to
have been executed, delivered and accepted subject to such covenants, reservations .and restrictions,
regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or
other instruments. No breach or default under this Regulatory Agreement shall defeat, render invalid or
otherwise impair the lien of the Security Instrument or similar encumbrance upon the Project given in
good faith and for value.
SECTION 16 Burden and Benefit. The Issuer, the Agency and the Owner hereby
declare their understanding and intent that the burdens of the covenants set forth herein touch and concern
the land in that the Owner's legal interest in the Project is rendered less valuable thereby. The Issuer, the
Agency and the Owner hereby further declare their understanding and intent that the benefits of such .
covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project
by Very Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions,
and by furthering the public purposes for which the Bonds were issued.
SECTION 17 Uniformity; Common Plan. The covenants. reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carr, out a common plan for the
use of the site on which the Project is located.
SECTION 18 Default: Enforcement. If the Owner defaults in the performance or
observance of any covenant, agreement or obligation of the Owner set forth in this Regulatory Agreement
OHS West:260448093.3 15
(other than the Agency Conditions), and if such default remains uncured for a period of sixty (60) days
after notice thereof shall have been given by the Issuer or Trustee to the Owner, or for a period of sixty
(60) days from the date the Owner should, with reasonable diligence, have discovered such default, then
the Issuer or the Trustee (as directed by the Issuer, subject to the provisions of the Indenture)acting on its
own behalf or on behalf of the Issuer, shall declare an "Event of Default" to have occurred hereunder;
provided, however,that if the default is of such a nature that it cannot be corrected within sixty(60) days,
such default shall not constitute an Event of Default hereunder so long as (i) the Owner institutes
corrective action within said sixty (60) days and diligently pursues such action.until the default is
corrected, and (ii) during the Qualified Period, in the opinion of Bond Counsel, the failure to cure said
default within sixty (60) days will not adversely affect the Tax-Exempt status of interest on the Tax-
Exempt Bonds. The Issuer and the Trustee shall have the right to enforce the obligations of the Owner
under this Regulatory Agreement within shorter periods of time than are otherwise provided herein if
necessary to insure compliance with the Act or the Code.
Following the declaration of an Event of Default hereunder, the Issuer or the Trustee, at
the direction of the Issuer, subject to the provisions of the Indenture, may take any one or more of the
following steps, in addition to all other remedies provided by law or equity:
(i) by mandamus or other suit, action or proceeding at law or in equity,
including injunctive relief, require the Owner to perform its obligations and covenants hereunder or
enjoin any acts or things that 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 Owner pertaining to the Project.-
(iii)
roject;(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 Owner hereunder; and
(iv) for any Event of Default other than an Event of Default under Section 8,
declare a default under the Financing Agreement and proceed with any remedies provided therein.
The Owner hereby agrees that specific enforcement of the Owner's agreements contained
herein is the only means by which the Issuer may fully obtain the benefits of such Agreement made by the
Owner herein, and the Owner therefore agrees to the imposition of the remedy of specific performance
against it in the case of anv Event of Default by the Owner hereunder.
The Trustee shall have the right, in accordance with this Section 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 action the Trustee shall give the issuer written
notice of its intended action. After the Indenture has been discharged, 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.
Promptly upon determining that a violation of this Regulatory Agreement has occurred,
the Issuer or the Trustee shall, by written notice, inform the Owner 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. The Trustee shall not be deemed to have knowledge of any
default hereunder unless such Trustee shall have been specifically notified in writing of such default by
the Issuer, the Administrator, the other Trustee or the Bondholders of at least twenty five percent (25%)
of the aggregate principal amount of Bonds outstanding under either Indenture.
Oi-IS west:260448093.3 16
All reasonable fees, costs and expenses of the Trustee and the Issuer incurred in taking
any action pursuant to this Section shall be the sole responsibility of the Owner, provided, however,-that
in the event that any action arising hereunder with the Owner and the Trustee as adversaries, the
prevailing party, if any, shall be entitled to recover legal fees and costs from the other party.
The Agency shall have the right (but not the obligation) to enforce the terms and
conditions of this Regulatory Agreement, including the Agency Conditions, and to pursue an action for
specific performance or other available.remedy at law or in equity in accordance with this Section 18 or
declare a default under the promissory note evidencing the Agency Loan, accelerate the indebtedness
evidenced by such note and proceed with foreclosure under the deed or trust securing the Agency Loan or
to pursue any remedy available under such note or deed or trust or the Agency Assistance Agreement,
provided that any such action by Agency or remedy shall not materially adversely affect the interests and
rights of the Bondholders, including, but not limited to, causing interest on the Tax-Exempt Bonds to tail
to be Tax-Exempt, or the Credit Provider.
The Owner hereby grants to both the Issuer and the Agency,. independently, the option,
upon the expiration of sixty (60) days after the giving of the notice to the Owner referred to in the first
paragraph of this Section 18, of the Owner's default under this Agreement, to lease up to twenty percent
(20%) of the units in the Project for the purposes of leasing such units to Very Low Income Tenants
pursuant to the terms set forth in this Agreement. The option granted in the preceding sentence shall be
effective only if the Owner has not instituted corrective action within such sixty (60) day period. Such
option shall be exercisable first with respect to units which are vacant at the time of exercise of this option
and shall be exercised only if the Owner has not instituted corrective action within such sixty (60) days
period and shall be exercised only to the extent that leasing of additional units is necessary in order to
bring the Project into compliance with this Agreement. The option and any leases to the issuer or the
Agencv under these provisions shall tenninate with respect to each default upon the achievement, by the
Owner or the Issuer or the Agency of compliance with the requirements with this Agreement and any
leases entered into pursuant to the Issuer's or the Agency's option shall be deemed to be leases from the
Owner. The Issuer or the Agency, as applicable, shall make diligent efforts to rent Very Low Income
Units to Very Low income Tenants for monthly rental amount equivalent to those collected from other .
Very Low Income Tenants pursuant to this Agreement, but shall not be required to obtain such rental
amounts. The Issuer or the Agencv. as applicable, shall seek to rent such units for the highest possible
rents that may be charged, consistent with the rent and occupancy restrictions of this Agreement. Tenant
selection shall be performed utilizing the Owner's reasonable management and selection policies. The
Issuer's or the Agency's leases to Very Low Income Tenants pursuant to this paragraph shall not exceed
six (6) months in term and shall expressly permit the Owner to increase the rents as otherwise permitted
by this Agreement. Any rental paid under any such lease shall be paid to,the Owner after the issuer or the
Agencv has been reimbursed for any expenses incurred in connection with such lease. All rents received
by the Issuer or the Agency from such leases shall be placed into an escrow reasonably approved by the
Owner. All funds in such escrow shall be continuously pledged by the Issuer or the Agency for the
benefit of the Owner. The issuer or the Agency agrees to allow the Owner access to the Issuer's or the
Agency's books and records relating to the collection and disbursement of rents received pursuant to such
lease. The Trustee shall have the right, in accordance with this Section and the provisions of the
Indenture, without the consent or approval of the Issuer or the Agency,.to exercise any or all of the rights
or remedies of the Issuer hereunder; provided that prior to taking any such action the Trustee shall give
the Issuer and the Agency written notice of its intended action. All reasonable fees. costs and expenses of
the Trustee incurred in taking any action pursuant to this Section shall be the sole responsibility of the
Owner. In the event that both the issuer and the Agency desire to exercise the option described in this
paragraph,the Issuer and Agency shall negotiate and determine which entity shall exercise the option.
0HS W%est:260448093.3 17
The obligations of any Owner under the Regulatory Agreement shall be personal to the
person who was the owner at the time that an event, including, without limitation, any default or breach of
the Regulatory Agreement, occurred or was alleged to have occurred. and such person shall remain liable
for anv and all such oblintions, including damages occasioned by a default or breach, even after such
person ceases to be the owner of the Project. No subsequent owner of the Project shall be liable or
obligated for the obligation of any prior owner(including the initial Owner), including, but not limited to,
any obligation for payment, indemnification or damages, for default or breach of the Reg*ulatory
Agreement or otherwise. The Owner of the Project at the time the obligation was incurred, including any
obligation arising out of a default or breach of the Regulatory Agreement, shall remain liable for any and
all payments and damages occasioned by the Owner even after such person ceases to be the Owner of the
Project,and no person seeking such payments or damages shall have recourse against the Project.
SECTION 19 The Trustee. 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.
The Trustee shall have no duty to act with respect to enforcement of the Owner's performance hereunder
as described in Section 18unless it shall have knowledge of any such default as provided in Section 18.
The Trustee may 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.
In connection with any such performance, the Trustee is acting solely as Trustee under the Indenture and
not in its individual capacity. and, except as expressly provided herein, all provisions of the Indenture
relating to the rights, privileges, powers and protections of the Trustee shall apply with equal force and
effect to all actions taken (or omitted to .be taken) by the Trustee in connection with this Regulatory
Agreement. 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.
Tile Issuer and the Agency shall be (or shall cause the Administrator to be) responsible
for the monitorin;of the Owner's compliance with the terms of this Regulatory Agreement. The Trustee
shall not be responsible for such monitorino
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 20 Recording and Filing. (a) The Owner shall cause this. Regulatory
Agreement and all amendments and supplements hereto and thereto, to be recorded and filed in the real
property records of the County of Contra Costa, and in such other places as the Issuer or the Trustee may
reasonably request. The Owner shall pay all fees and charges incurred in connection with any such
recording.
(b) The Owner and the Issuer will file of record such other documents and take such
other steps as are reasonably necessary, in the opinion of Bond Counsel and the Agency. in order to insure
that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the
Project.
(c) The Owner hereby covenants to include or reference the requirements and
restrictions contained in this Regulatory.Agreement in any documents transferring any interest in the
Project to.another person to the end that such transferee has notice of, and is bound by, such restrictions,
and, except in the case of a foreclosure or comparable involuntary conversion of the Security Instrument,
OHS West260448093.3 18
whereby either the Trustee or the Credit Provider becomes the owner of the Project, to obtain the
agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement.
SECTION 21 Pavment of Fees. Notwithstanding any prepayment of the Loan and
notwithstanding a discharge of the Indenture, the Owner shall pay to the Issuer, in advance, on or before
July 1 of each year during the Qualified Project Period, an amount equal to $ ; provided, no
amount shall be payable with respect to any period commencing upon the Credit Provider's taking
possession of the Project by reason of foreclosure,transfer of title by deed in lieu of foreclosure or similar
event and ending on the earlier of (1)the date possession of the Project is conveyed by the Credit
Provider to another Owner or (2)the date two years after the date the Credit Provider took possession of
the Project. The Owner shall, in addition, pay to the Agency an amount equal to the Agency's reasonable
costs of administering this all,
Agreement.
SECTION 22 Governing Law. This Regulatory Agreement shall be governed by the
laws of the State of California.
SECTION 23 Amendments: Waivers. (a) Except as provided in Section 9(a) hereof
this Regulatory Ao reement may 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 of Contra Costa,
and only upon receipt by the Issuer of an opinion from Bond Counsel that such amendment will not
adversely affect the Tax-Exempt status of interest on the Tax-Exempt Bonds and is not contrary to the,
provisions of the Act.
(b) Anything to the contrary contained herein notwithstanding, the Issuer, the
Trustee, the Owner and the Agency hereby agree to amend this Regulatory Agreement to the extent
required, in the opinion of Bond Counsel, in order that interest on the Tax-Exempt Bonds remain Tax-
Exempt. The parties requesting such amendment shall notify the other parties to this Regulatory
Agreement of the proposed amendment, with a copy of such proposed amendment to Bond Counsel and a
request that Bond Counsel render to the Issuer an opinion as to the effect of such proposed amendment
upon the Tax-Exempt status of interest on the Tax-Exempt Bonds. This provision shall not be subject to
any provision of any other agreement requiring any party hereto to obtain the consent of any other person
in order to amend this Regulatory Agreement.
(c) Any waiver of, or consent to, any condition under this Regulatory Agreement
must be expressly made in writing.
SECTION 24 Notices. Any notice required to be cliven hereunder shall be made in
writing and served personally with delivery receipt, or dispatched by the certified United States mail,
return receipt requested, postage prepaid, or by facsimile transmission with a copy mailed by first class
United States mail to the address listed below, or reputable overnight service with a receipt showing the
date of delivery and, in each case at the respective addresses specified below:
If intended for Agency:
Contra Costa County Redevelopment Agency
2530 Arnold Drive#190
Martinez, CA 94553
Attn: Redevelopment Director
OHS West:260448093.3 19
If intended for County:
County of Contra Costa
Conservation and Development Department
2530 Arnold Drive#190
Martinez, CA 94553
Attn: Deputy Director- Redevelopment
If intended for Owner:
PHVP i., LP
735 Market Street, Third Floor
San Francisco, CA 94103
Attn: Mark Farrar
with a copy to: Joanne Lockrid(ye
Senior Vice President— Finance
1000 Bridgeport Avenue, Suite 258
Shelton, CT 06484
if intended for the
Trustee:
Notices shall be deemed received as follows: if given by facsimile transmission, upon
receipt so long as the sending fax electronically confirms receipt and a hard copy follows by United States
mail as required above (provided that in the event the facsimile is sent after 5:00 pnr, the notice shall be
deemed received on the following business day); if given by hand delivery or delivery service with a
delivery receipt, on the date shown on the delivery receipt as the date of delivery, the date delivery was
refused, or the date the item was returned as undeliverable.
Any notice, demand or other communication may be given on behalf of a party by the
attorney for such party.
Such written notices, demands and communications may be sent in the same manner to
such other addresses as the affected party may from time designate by notice as provided in this Section.
.A copy of each notice sent to the Owner shall also be sent to the manager of the Project at
the address of the manager provided by the Owner to the Adrnimstrator; but such copies shall not
constitute notice to the Owner, nor shall any failure to send such copies constitute a breach of this
Regulatory Agreement or a failure of or defect in notice to the Owner.
SECTION 25 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 riot in any way be affected or impaired thereby.
SECTION 26 Multiple Counterparts. This Regulatory Agreement may be
simultaneously executed in multiple counterparts, all of which shall constitute one and the sarne
instrument, and each of which shall be deemed to be an-original.
OiiS West:260448093.3 20
SECTION 27 Third-Party Beneficiary. CDLAC is intended to be and shall be a third-
party beneficiary of this Regulatory Agreement. CDLAC shall have the right (but not the obligation) to
enforce the CDLAC Conditions and to pursue an action for specific performance or other available
remedy at law or in equity in accordance with Section 18 hereof, provided that any such action by
CDLAC or remedy shall not materially adversely affect the interests and rights of the Bondholders.
OHS West:260448093.3 21
IN WITNESS WHEREOF. the Issuer, the Agency, the Trustee and the Owner have
executed this Regulatory Agreement by duly authorized representatives. all as of the date first above
written.
COUNTY OF CONTRA COSTA,a political subdivision
of the State of California
By:
James Kennedv,
Deputy Director—Redevelopment
CONTRA COSTA COUNTY REDEVELOPMENT
AGENCY,a public body corporate and politic
By:
James Kennedy
Redevelopment Director
THE BANK OF NEW YORK MELLON TRUST
COMPANY,N.A.,as Trustee
Bv:
Authorized Officer
PHVP I,LP,
a Delaware limited partnership
By: PHVP I GP, LLC,
a Delaware limited liability company, its general
partner
By:
Name:
Title: Authorized Signatory
OFIS west:260448093.3 �2
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
OHS West260448093.3 A-I
EXHIBIT B
[FORM OF INCOME CERTIFICATION]
New Certification /Rec'ertiffc•ation Unit Number
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is design to assist you in computing Annual Income in accordance with the method
set forth in the Department of i iousing and 1Jrban Project(`I ILJD")Regulations(24CPR 813). You should make certain that this form is at all times up to
date with the HUD Regulations. All capitalized terms used herein shall have the meaning set forth in the Regulator Agreement.
Re:(NAME and ADDRESS of Apartment Building)
AVALON WALNUT CREEK AT
CONTRA COSTA CENTRE
UWe the undersigned state that Vwe have read and answered fully,frankh•'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 'I o Head of Social Security Place of
Household Household Age Number Employment
Income Computation
6.. The total anticipated income,calculated in accordance with this paragraph 6.of all persons(except children under 18 year of age)listed above for the
12-month period
Beginning the earlier of the date that 1/we plan to move into a unit or sign a lease for a unit is S '
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 personal property(without deducting expenditures from
business expansion or amortization of capital indebtedness or any allowances for depreciation of capital assets except f'or straight line
depreciation as provided in Internal Revenue Service regulations):
(c) interests and dividends(including income from assets included below and other net income from real or personal property):
(d) the 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,workers'compensation and severance pay:
(t) the maximum amount that the public assistance agency could in fact allow for shelter and utilities:
'If this form is beim;completed in accordance with recertification of a Lower income Tenant's or Very Lowincome Tenant's occupancy of a Lower Income unit or a Ven:I ow
Income Unit,Respectiveh,this form most be completed upon the current income of the occupants.
Of IS West:260448093.3 B-1
(g) periodic and determinable allowances,such as alimony and child support payments and regular contributions and sifts received from persons not
resitting 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(or other persons whose dependents are residing in the units):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
workers'compensation),capital gains and settlement for personal or property losses:
Id) 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 cost of tuition,fees.books and equipment. An•.amounts of such scholarships or payments to veterans not used for the
above purposes are to be included in income:
(e) hazardous.duty pay to a household member in the Armed Forces who is away from home and exposed to hostile fire:
(1) amounts received under training programs funded by HUD.
(a) foster child care payments:
(h) amounts received by a disabled person that are disregarded for a limited time for purposes of Supplemental Social Security Income eligibility and
benefits because they are set aside for use under a Plan to Attain Sclf-Sufficiency;
(i) income of a living attendant:
(j) amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-ol=pocket expenses
incurred and which are made solely to allow participation in a specific program:
(k) a resident stipend.(a modest amount(not to exceed$200 per month) received by a resident for performing a service f'or the Owner.on apart-
time basis,that enhances the quality of life in the development:
(1) compensations from state or local employment training programs and training of a family member as resident management staff:
(m) reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted
during the Nazi era:.
W amounts specifically excluded by any other federal statute from consideration as income purposes of determining eligibility or benefits under a
category of assistance programs that includes assistance under the united States Housing Act of 1937
(o) earnings in excess of$480 for each full-term student 18 years old or older(excluding the head of household and Spouse):
(p) adoption assistance in excess of S480 per adopted child.and
(q) deferred periodic payments of supplemental security income and social security benefits that are received in a lump sum payment:
(r) amounts received by the family in the form of refunds or rebates under state or local law for property taxes paid on the dwelling unit:
(s) amounts paid by a State agency to a family with a developmentally disabled family member living at home to offset the cost of services and
equipment needed to keep the developmentally disabled family member at home:and
(t) amounts specifically excluded by an other federal statute from consideration as income for purposes of determining eligibility or benefits under a
category of assistance programs that includes assistance under the United States Housing Act of 1937.
7. Do the persons whose income or contributions are included in item 6 above:
(a) have savings.stocks.bonds,equity in real property or other from of capital investment(excluding the values of necessary items of personal
property such as furniture and automobiles and interests in Indian trust land) Yes No:or .
(b) have they disposed of an_v assets(other than at a foreclosure or bankruptcy sale)during the last two years at least than fair market value?
_ Yes No
(c) If the answer to(a)or(b)is yes.does the combined total value of all such assets owned or disposed of by all such persons total more than
55.0001.1
Yes No
(.d) if the answer to(c)above is ves.state:
111 the combined total value of all such assets:$
(2) 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
(3) 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 normal]\ has a
regularly enrolled body ot'students educational organization or of a state or political subdivision thereof.
(b) if the answer to 8(a)is yes.is at least 2 of the proposed occupants of the unit a husband and wife entitle 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 an family relationship to the(honer or owns directly or indirectly an interest in the Owner. For purposes of this paragraph.
indirect ownership by an individual shall mean ownership by a family member.ownership by a corporation,partnership.estate or trust in proportion to
the ownership or beneficial interest in such corporation.partnership,estate or Trustee held by the individual or a family member.and ownership;direct
or indirect,by a partner of the individual.
10. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit;
and I/we declare that all information set forth herein is true.correct and complete and based upon information 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.
OHS West:260448093.3 B-2
1 I. I/We will assist the Owner in obtaining any information or documents required to verify the statements made herein,including either and income
verification from my/our present employers)or copies of federal tax returns for the immediately preceding calendar year.
12. 1/We acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute material
breach of my/our agreement with the Owner to lease the unit and will be entitle the Owner to prevent or terminate my/our occupancy 4:6;unjt.hy
institution or an action for ejection or other appropriate proceedings.
Me declare under penalty of perjury that the foregoing is true and correct.
Executed this day of 20 in the City of California
Applicant Applicant
Applicant Applicant
Applicant Applicant
Rev.8/95 [Signature of all persons(except children under the age of 18 years)listed in number 2 above required)
OHS West:260448093.3 B-3
FOR COMPLETION BY PROJECT OWNER ONLY:
1. Calculation of eligible income: . .
a. Enter amount entered for entire household in 6 above: $ .
b. (1) If the amount in 7(c)above is yes, enter the total amount
entered in 7(d)(2), subtract from that figure the amount
entered in 7(d)(3)and enter the remaining balance.
(2) .Multiply the amount entered in 7(d)(1)times the current
passbook savings rate as detennined by HUD to detennine
what the total savings annual earnings on the amount in 7(d)(1)
would be investigated in passbook savings( ),
subtract froth that figure the amount entered in 7(d)(3)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 l.b(3): $
2. The amount entered in 1.c:
Qualifies the applicant(s)as a Moderate-Income Tenant(s).
Qualifies the applicant(s)as a Low Income Tenant(s).
Qualifies the applicant(s)as a Very Low Income Tenant(s).
3.Nutnber of apartment unit assigned:_Bedroom size: Rent:$ HUD:$
4. This apartment unit(was/was not) last occupied for a period of 31 or more
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 a Very Low Income Tcnant(s).
5. Method using to verify applicant(s) income:
E:mpl.oytnent income verification.
Copies of tax returns.
Other( )
Manager Date
01 IS West:260448093.3 B-4
EXHIBIT C
[FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE]
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
Witnesseth that on this _ day of 20_, the undersigned, having borrowed
certain funds from the COUNTY OF CONTRA COSTA (the "Issuer") for the purpose of financing a multifamily
rental housing development(the"Project'), does hereby certify that:
I. During the preceding three'months (i) such Project was continually in compliance with
the Regulatory Agreement executed in connection with such loan from the Issuer, (ii)_%' of the units in the
Project were occupied by Very Low income Tenants(minimum of 20%).
Set forth below are the names of Very Low Income Tenants who commenced or terminated
occupancy during the preceding month.
Commenced Occupancy Terminated Occupancv
1. 1.
2
The units occupied by Very Low Income Tenants are of similar size and quality to other units and
are dispersed throughout the Project. Attached is a separate sheet listing the number of each unit and indicating*
Which units are occupied by Very Low Income Tenants, the size, the number of bedrooms of such units and the
number of Very Low Income Tenants who commenced occupancy of units during the preceding month.
2. Seleel apfn-opr•iate cerlifrcation: [No unremedied default has occurred under this
Regulatory Agreement, the Loan Agreement. the Note, or the Security Instrument.] [A default has occurred under
the The nature of the default and the measures being taken to remedy such default are as follows:
]
3. The representations set forth herein are true and correct to the best of the undersigned's
knowledge and belief.
Date:
Owner
[Complete one certificate for Lots 2 and 3 Project and a separate certificate for Lot 5 Project]
01-IS West:260448093.3 C-1
BOND PROGRAM REPORT
Property:
Location:
Today's Date: Submitted by:
Total # Units: Total Units Occupied:
Total New Rentals(Occupied)
Total Habitable/Livable Units: Current Montli/Quarter:
(Rehabilitation Proiects Only)
Total Very Low Income New Very Low Income Rentals
Units Occupied: Current Month/Quarter:
% Of Very Low Income Units Occupied to Total Units:
#Of Units Held vacant and available for Rent to Very Low Income Tenants:
PLEASE LIST ALL BOND PROGRAM UNITS BELOW IN NUMERIC OR ALPHABETIC
ORDER:
(Indicate"V" if vacant)
Gross Annual
Tenant Household
Unit Tenant's Last No.of No. of Monthly Income (all Date of
No. Name(s) Occ. Bedrm Rent* sources) Certification
*If tenant(s) are on an Assisted Rental Program such as Section 8,only list tenant portion of rent
OHS West:260448093.3 C-2
Gross Annual
Tenant Household
Unit Tenant's Last No:of No. of Monthly Income (all Date of
No. Name(s) Occ. Bedrm Rent* sources) Certification
01IS West260448093.3 C-3
Gross Annual
Tenant Household
Unit Tenant's Last No.of No. of Monthly Income(all Date of
No. Name(s) Occ. Bedrm Rent* sources) Certification
0I-1S West260448093.3 C-4
OHS DRAFT
7/2/08
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County Redevelopment Agency
Department of Conservation and Development
2530 Arnold Drive,# 190
Martinez, CA 94553
Attention: Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383
AMENDED AND RESTATED REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(LOT 5)
By and Among
COUNTY OF CONTRA COSTA,
CONTRA COSTA COUNTY REDEVELOPMENT AGENCY,
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
and
PHVP 1. LP,
a Delaware limited partnership
Dated as of July 1, 2008
Amending and restating Amended and Restated Regulatory Agreement
and Declaration of Restrictive Covenants(Lot E)dated as of March 1, 2006
01 is West:260448093.3
TABLE OF CONTENTS
Page
SECTION l DEFINITIONS AND INTERPRETATION................................................................2
SECTION 2 REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE
OWNER.......................................................................................................................4
SECTION 3 QUALIFIED RESIDENTIAL RENTAL PROJECT ...................................................4
SECTION 4 VERY LOW INCOME TENANTS; REPORTING REQUIREMENTS....................5
SECTION 5 TAX-EXEMPT STATUS OF SERIES.A BONDS.....................................................7
SECTION 6 ADDITIONAL REQUIREMENTS OF THE ACT..................... ..............................7
SECTION 7 ADDITIONAL REQUIREMENTS OF THE ISSUER; CDLAC
REQUIREMENTS ......................................................................................................8
SECTION 8 REQUIREMENTS OF THE AGENCY......................................................................9
SECTION 9 MODIFICATION OF COVENANTS.......................................................................12
SECTION 10 INDEMNIFICATION: OTHER PAYMENTS .........................................................13
SECTION 11 CONSIDERATION...................................................................................................13
SECTION 12 RELIANCE ................................................................................................................14
SECTION 13 SALE OR TRANSFER OF THE PROJECT.............................................................14
SECTION14 TERM........................................................................................................................15
SECTION 15 COVENANTS TO RUN WITH THE LAND...........................................................16
SECTION 16 BURDEN AND BENEFIT........................................................................................16
SECTION 17 UNIFORMITY; COMMON PLAN ..........................................................................16
SECTION 18 DEFAULT; ENFORCEMENT .................................................................................16
SECTION 19 THE TRUSTEE..........................................................................................................18
SECTION 20 RECORDING AND FILING....................................................................................19
SECTION 21 PAYMENT OF FEES................................................................................................19
SECTION 22 GOVERNING LAW .................................................................................................19
SECTION 23 AMENDMENTS; WAIVERS...................................................................................19
SECTION 24 NOTICES ................................................................: ................20
.................................
SECTION 25 SEVERABILITY.......................................................................................................21
SECTION 26 MULTIPLE COUNTERPARTS...............................................................................21
SECTION 27 THIRD-PARTY BENEFICIARY.............................................................................21
OSIS WesC260448093.3 _j_
AMENDED AND RESTATED REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Lot 5)
THIS AMENDED AND RESTATED. REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS (Lot 5) (as supplemented and amended from time
to time, this "Regulatory Agreement") is made and entered into as of July 1. 2008, by and among the
COUNTY OF CONTRA COSTA, a political subdivision of the State of California (together with any
successor to its rights, duties and obligations, the "Issuer'), the .CONTRA COSTA COUNTY
REDEVELOPMENT AGENCY, a public body corporate and politic, organized and existing under and
by virtue of the laws of the State of California (the "Agency'), THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., in its capacity as trustee under the Indenture(as hereinafter defined) (together
with any successor in such capacity, the "Trustee'), and PHVP I, LP, a Delaware limited partnership
(together with any successor to its rights, ditties and obliaations hereunder and as owner of the Project
identified herein, the "Owner"), and amends and restates that certain Regulatory Agreement and
Declaration of Restrictive Covenants (Lot E), dated as of March 1, 2006, among the Issuer, the Agency,
U.S. Bank National Association, as trustee, and the Owner.
WITNESSETH:
.WHEREAS, pursuant to Chapter 7 of Part 5 of Division 31 of the California Health and
Safety Code (the "Act"), the Issuer has issued its Multifamily Housing Revenue Bonds (Avalon Walnut
Creek at Contra Costa Centre Project) Series 2006A (the "2006A Bonds") and its Multifamily Housing
Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Taxable Series 2006A-T (the
"2006A-T Bonds") and proposes to issue its Multifamily Housing Revenue Bonds (Avalon Walnut Creek
at Contra Costa Centre Project) Series 2008A (the"2008 Bonds" and, together with the 2006A Bonds and
the 2006A-T Bonds,the`Bonds") under an Amended and Restated Trust Indenture, of even date herewith
(the"Indenture"), between the Issuer and the Trustee:
WHEREAS,the proceeds of the Bonds will be used to fund a loan to the Owner pursuant
to an Amended and Restated Financing Agreement, dated of even date herewith, among the Issuer, the
Trustee and the Owner (the "Financing Agreement"). to provide financing for the acquisition, .
construction and development of a multifamily rental housing project known as Avalon Walnut Creek at
Contra Costa Centre, a portion of which is located on the real property site described in Exhibit A hereto
as further described herein (For.purposes of this Regulatory Agreement, such real property site and the
improvements thereon (and not the real property site known as "Lots 2 and 3" and the improvements
thereon), are referred to as the"Project'');
WHEREAS, in order to assure the Issuer and the owners of the Bonds that interest on the
2006A Bonds and the 2008 Bonds (collectively, the "Tax-Exempt Bonds") will be excluded from gross
income for federal income-tax purposes under Section 103 of the Internal Revenue Code of 1986 (the
"Code'). and to satisfy the public purposes for which the Bonds are authorized to be issued under the Act
and to the purposes of the Issuer, certain limits on the occupancy of units in the Project need to be
established and certain other.requirements need to be met;
WHEREAS, the Agency made a loan to the Owner in the amount of Two Million Five
Hundred Thousand Dollars ($2,500,000) (the "Agency Loan") pursuant to an Agency Assistance
Agreement, dated of even date herewith, between the.Agency and the Owner(as supplemented, amended
or replaced from time to time, the 'Agency Assistance Agreement"), to provide financing for the
construction of the Project;
OHS West?60448093.3 1
WHEREAS, the Agency Assistance Agreement (defined below) provides for additional
disbursements of Agency funds to the Owner provided that certain terms and conditions are satisfied;
WHEREAS, the Agency is making the Agency Loan and providing, other assistance
under the Agency Assistance Agreement on the condition that the Project be maintained and operated in
accordance with Health and Safety Sections 33334.2 et seg The Agency intends to utilize the Very Low
Income Units to obtain replacement housing credits pursuant to California Health and Safety Code
Section 33413(a) and affordable housing production credits pursuant to California Health and Safety
Code Sections 33413(b)(2)(A)(ii).
NOW, THEREFORE, in consideration of the issuance of the Bonds by the Issuer, the
Agency Loan made by the Agency and other assistance provided the Agency under the Agency
Assistance A-reement, and the mutual covenants and undertakings set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer,
Agency,Trustee and the Owner hereby agree as follows:
SECTION 1 Definitions and interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals hereto, in
this Section or in Section 1.01 of the Indenture.
`Administrator'' means the Issuer or any administrator or program monitor appointed by
the Issuer to administer this Regulatory Agreement, and any successor so appointed.
"Affordable Rents" means the lesser of(a)thirty percent (30%) of an amount equal to
fifty percent (-50%) of the median Gross Income for the Area or (b)thirty (30%) of an amount equal to
Median Income(as defined in Section 8 hereof) for the County of Contra Costa adjusted for family size.
"Agency"means the Contra Costa County Redevelopment Agency.
"Agency Assistance Agreement" means the Agency Assistance Aorreement, dated
December 19, 2005 as amended on February 25, 2008,between the Agency and the Owner.
"Agency Conditions."has the meaning given to that tenn in Section 8.
"Agency Loan" means the loan from the Agency to the Owner in the amount of Two
Million Five Hundred Thousand Dollars($2,500,000). The Agency Loan is made pursuant to the Agency
Assistance.Agreement.
"Area" means the Oakland-Fremont, CA HUD Metro FMR Area.
"California Redevelopment Law" means California Health and Safety Code Sections
33000 et seq.
"CDLAC" means the California Debt Limit Allocation Committee or its successors.
"Certificate of Continuing Program Compliance" means the Certificate to be filed by the
Owner with the Administrator, on behalf of the Issuer, and the Trustee pursuant to Section 4(f) hereof;
which shall be substantially in the form attached as Exhibit C hereto or in such other comparable form as
may be provided by the Issuer to the Owner or as otherwise approved by the Issuer.
01-IS West:260448093:3 2
"Closing Date" means the date the 2006A Bonds were issued and delivered to the initial
purchasers thereof.
"Escrow Break Date" means the date the 2008 Bonds are issued and delivered to the
initial purchasers thereof.
"Gross Income" means the gross income of a person (together with the gross income of
all persons who intend to reside with such person in one residential unit) as calculated in the manner
prescribed in Regulations Section 1.167(k)-3(b)(3) in effect as of the Closing Date (or such other
definition as may be required by law).
"Housing Act" means the United States Housing Act of 1937, as amended, or its
successor.
"HUD" shall mean the United States Department of Housing and Urban Development.
"Income Certification" means a Verification of Income and an Occupancy Certificate in
the form attached as Exhibit B hereto or in such other comparable form as may be provided by the Issuer
and.the Agency to the Owner or as otherwise approved by the Issuer and the Agency.
"Project" means the 33-unit multifamily rental housing development, located on the
leasehold interest in the real property site described in Exhibit A hereto, consisting of those facilities,
including real property, structures, buildings, fixtures or equipment situated thereon, as it may at any time
exist, the construction of which facilities is to be financed, in whole or in part, from the proceeds of the
sale of the Bonds or the proceeds of any payment by the Owner pursuant to the Financing Agreement, and
the Agency Loan and other payments made pursuant to the Agency Assistance Agreement.
"Qualified Project Period"means the period beginning on the later of the Closing Date or
the first day on which at least 10% of the units in the Project are first occupied and ending on the later of
the following:
(A) the date that is fifteen (15) years after the date on which at least fifty percent
(50%)of the units in the Project are first occupied;
(B) the first date.on which no Tax-Exempt private activity bonds with respect to the
Project are Outstanding;
(C) the date on which any assistance provided with respect to the Project under
Section 8 of the Housing Act terminates; or
(D) Fifty-Five (55) years from first day on which at least 10% of the units in the
Project are first occupied.
"'Regulations" means the Income .Tax Regulations of the Department of the Treasury
applicable under the Code from time to time.
"Regulatory Agreement" means this Amended and Restated Regulatory Agreement and
Declaration of Restrictive Covenants, as it may be supplemented or amended from time to time.
OHS West:260448093.3 3
"Tax-Exempt" means with respect to interest on any obligations of a state or local
government, including the Tax-Exempt Bonds, that such interest is excluded from gross income for
federal income tax purposes; provided, however, that such interest may be includable as an item of tax
preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities,
including any alternative minimum tax or'environmental tax, under the Code.
"Verification of Income" means a Verification of Income in the form attached as Exhibit
B hereto or in such other comparable form as may be provided by the Issuer and Agency to the Owner.
"Very Low Income Tenant" means, (1)for purposes of Section 8 hereof, a household
with an income that does not exceed the qualifying limits for very low income households adjusted for
actual household size, as established and amended from time to time pursuant to Section 8 of the United
States Housing Act of 1937, and as published by the State of California Department of Housing and
Community Development, and (2)for all other purposes hereunder, a tenant whose Gross Income does
not exceed the limits for very low income households, except that the percentage of median gross income
that qualifies as very low income shall be fifty percent (50%) of median gross in the Area adjusted for
household size, as established and amended by HUD frorn time to time pursuant to Section 8 of the
United States Housing Act or 1937, and as published by the State of California Department of Housing
and Community Development. If all the occupants of a unit are students (as defined under Section 151
(c)(4)of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code, such
occupants shall.not qualify as Very Low Income Tenants. The determination of a tenant's status as a
Very Low Income Tenant shall be made by the Owner upon initial occupancy of a unit in the Project by
such Tenant, on the basis of an Income Certification executed by the Tenant. In the event the federal
income standards are discontinued, the Issuer and the Agency shall provide the Owner with other income
determinations which are reasonably similar with respect to methods of calculation to those previously
established by HUD and published by the State.
"Very Low Income Units" means the units in the Project required to be rented, or held
available for occupancy by, Very Low Income Tenants pursuant to Sections 4(a), 6(a) and 8(a) of this
Regulatory Agreement.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement,
words of any 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 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.
The parties to this Regulatory Agreement acknowledge that each party and their
respective counsel .have participated in the drafting and revision of this Regulatory Agreement.
Accordingly, the parties agree that any rule of construction to the effect that .ambiguities are to be
resolved against the drafting party shall not apply in the interpretation of this Regulatory Agreement or
any supplement or exhibit hereto.
OHS West:260448093.3 4
SECTION 2 Representations. Covenants and Warranties of the Owner.
(a) The Owner hereby incorporates herein, as if set forth in full herein, each of the
representations covenants and warranties of the Owner contained in the Tax Certificate.
(b) Tile Owner hereby represents and warrants that the Project is located entirely .
within Contra Costa County, California.
(c) The Owner acknowledges, represents and warrants that it understands the nature
and structure of the transactions contemplated by this Regulatory Agreement: that it is familiar with the
provisions of all of the documents and instruments relating to the Bonds to which it is a party or of which
it is a beneficiary; that it understands the financial and legal risks inherent in such transactions: and that it
has not relied on the issuer or Agency for any guidance or expertise in analyzing the financial or other
consequences of such financing transactions or otherwise relied on the Agency or the Issuer in any
manner except, in the case of the Issuer, to issue the Bonds in order to provide funds to assist the Owner
in constructing the Project and, in the case of the Agency,'to provide the Ag*ency Loan and other
payments contemplated by the Agency Assistance Agreement in order to provide funds to assist the
Oxvner in constructing and developing the Project.
SECTION 3 Qualified Residential Rental Project. Tile Owner hereby acknowledges
and agrees that the Project is to be owned, managed and operated as a "residential rental project" (within
the meaning of Section 142(d) of the Code) for a term equal to the Qualified Project Period. To that end,
and for the term of this Regulatory Agreement, the Owner hereby represents, covenants, warrants and
agrees as follows:
(a) The Project will be constructed and operated for the purpose of providing
multifamily residential rental property. The Owner will own, manage and operate the Project as a project
to provide multifamily residential rental property comprised of a .building. or structure or several
interrelated buildings or structures, together with any functionally related and subordinate facilities, and
no other facilities, in accordance with Section 142( d) of the Code, Section LI 03-8(b) of the Regulations
and the provisions of the Act, and in accordance with such requirements as may be imposed thereby on
the Project from time to.time.
(b) All of the dwelling units in the Project will be similarly constructed units, and
each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping,
eating, cooking and sanitation for a single person or a family. including a sleeping area, bathing and
sanitation facilities and cooking facilities equipped with a cooking range. refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a
transient basis or rented for a period of less than thirty (30) consecutive days (apart from a month to
month lease in months with less than 30 days), or will ever be used as a hotel, motel, dormitory, fraternity
house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or
park: provided that the use of certain units for tenant guests on an intennittent basis shall not be
considered transient use for purposes of this Regulatory Agreement.
(d) No part of the Project will at any time during the Qualified Project Period be
owned by a cooperative housing corporation, nor shall the Owner take any steps in connection with a
conversion to such ownership or use, and the Owner will not take any steps in connection with a
conversion of the Project to condominium ownership during the Qualified Project Period.
OHS west:200448003.3 5
(e) All.of the dwelling units in the Project(except for not more than two (2)units set
aside for resident manager or other administrative use) will be available for rental during the Qualified
Project Period on a continuous basis to members of the general public, and the Owner will not give
preference to any particular class or group in renting the dwelling units in the Project, except to the extent
provided in Section 8(i) and except to the extent that dwelling units are required to be leased or rented to
Very Low Income Tenants.
(f) The Project consists of a leasehold interest in a parcel or parcels that are
contiguous except for the interposition of a road, street or stream, and all of the facilities of the Project
comprise a single geographically and functionally integrated project for residential rental property, as
evidenced by the ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Owner; provided,
however, that this provision shall not be construed to prohibit occupancy of not more than two (2)
dwelling units by two(2)resident managers or maintenance personnel any of whom may be the Owner.
(11) The Owner shall deliver to the Agency, the Administrator and the.Trustee, (i)
within 30 days after the date on which 10% of the dwelling units in the Project are occupied, a written
notice specifying such date, and (ii) within 30 days after the date on which 50% of the dwelling units in
the Project are occupied, a written notice specifyin; such date.
SECTION 4 Very Low Income Tenants: Reporting Requirements. Pursuant to the
requirements of the Code,the Owner hereby represents, warrants and covenants as follows:
(a) During the Qualified Project Period, not less than twenty percent (20%) of the
total number of completed units in the Project shall at all times be rented to and occupied by Very Low
Income Tenants. For the purposes of this paragraph (a), a vacant unit that was most recently occupied by
a Very Low Income Tenant is treated as rented and occupied by a Very Low Income Tenant until
reoccupied, other than for a temporary period of not more than thirty one (3 1) days, at which time the
character of such unit shall be redetermined.
(b) No tenant qualifyino as a Very Low Income Tenant upon initial occupancy shall
be denied continued occupancy of a unit in the Project because, after admission, such tenant's Gross
Income increases to exceed the qualifying limit for Very Low Income Tenants. However, should a Very
Low Income Tenant's Gross Income,as of the most recent determination thereof exceed one hundred
forty percent (140%) of the applicable income .limit for a Very Low Income Tenant of the same
household size,the next available unit of comparable or smaller size must be rented to(or held vacant and
available for immediate occupancy by) a Very Low Income Tenant. Until such next available unit is
rented, the former Very Low Income Tenant who has ceased to qualify as such shall be deemed to
continue to be a Very Low Income Tenant for purposes of the twenty percent (20%) requirement of
Section 4(a) and 8(b) hereof.
(c) For the Qualified.Project Period, the Owner will obtain, complete and maintain
on file Income Certifications for each Very Low income Tenant, including (i) an Income Certification
dated immediately prior to the initial occupancy of such Very Low Income Tenant in the Project, and
(ii)thereafter, an annual Income Certification with respect to each Very Low Income Tenant. The Owner
will provide such additional information as may be required in the future by the Code, the State, the Issuer
or the Agency, 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, Regulations 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 Tax-Exempt obligations. A copy of the most recent Income Certifications for
Oi IS west:260448093.3 6
Very Low income Tenants commencing or continuin;
(a) The Owner and the Issuer 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 Tax-Exempt nature of the
interest on the Tax-Exempt Bonds and, if either of them 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) The Owner and the Issuer 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 and the Trustee(with a
copy to the Owner), in order to insure that the requirements and restrictions of this Regulatory Agreement
will be binding upon all owners of the Project, including. but not limited to. the execution and recordation
of this Regulatory Agreement in the real property records of the County of Contra Costa, California.
SECTION 6 Additional Requirements of the Act. In addition to the requirements set
forth above, the Owner hereby agrees that it shall comply with each of the requirements of Section 52080
of the Act, including(but not limited to)the following:
(a) Not less than twenty percent (20%) of the total number of units in the Project
shall be occupied by Very Low Income Tenants. The units made available to meet this requirement shall
be of comparable quality and offer a range of sizes and numbers of bedrooms comparable to the units that
are available to other tenants in the Project.
(b) The rental payments for the Very Low Income Units paid by the tenants thereof
(excluding any supplemental rental assistance from the State, the federal government or any other public
agency to those tenants or on behalf of those units) shall not exceed thirty percent (30%) of an amount
equal to fifty percent(50%)of the median adjusted gross income for the Area.
(c) The Owner shall accept as tenants, on the same basis as all other prospective
tenants, low-income persons who are recipients of federal certificates or vouchers for rent subsidies
pursuant to the existing program under Section 8 of the Housing Act. The Owner shall not permit any
selection criteria to be applied to Section 8 certificate or voucher holders that is more burdensome than
the criteria applied to all other prospective tenants.
(d) The units reserved for occupancy as required by subsection (a) of this Section 6
shall remain available on a priority basis for occupancy by Very Low Income Tenants at all times during
the Qualified Project Period.
(e) During the three (3) years prior to the expiration of the Qualified Project Period,
the Owner shall continue to make available to eligible households Very Low Income Units that have been
vacated to the same extent that nonreserved units are made available to noneligible households.
(f) Following the expiration or termination of the Qualified Project Period, except in
the event of foreclosure and redemption of the Bonds, deed in lieu of foreclosure, eminent domain, or
action of a federal agency preventing enforcement, units reserved for occupancy as required by subsection
(a) of this Section shall remain available to any eligible tenant occupying a reserved unit at the date of
such expiration or termination, at the rent determined by subsection (b)of this Section, until the earliest of
(1) the household's income exceeds one hundred forty percent (140%) of the maximum eligible income
specified above, (2) the household voluntarily moves or is evicted for good cause (as defined in the Act),
(3)thirty (30) years after the date of the commencement of the Qualified Project Period, or(4)the Owner
pays the relocation assistance and benefits to households as provided in Section 7264(b) of the California
Government Code.
Oi-IS west260448093.3 8
(g) Except as set forth in Section 14 hereof, the covenants and conditions of this
Regulatory Agreement shall be binding upon successors in interest of the Owner.
(h) This Regulatory Agreement shall be recorded in the office of the county recorder
of the County of Contra Costa; and shall be recorded in the <*rantor-grantee index to the names of the
Owner as grantor and to the name of the Issuer and the Agency as grantee.
SECTION 7 Additional Requirements of the Issuer: CDLAC Requirements. In
addition to the requirements set forth above and to the extent not prohibited thereby, the Owner hereby
agrees to comply with each of the requirements of the Issuer set forth in this Section 7, as follows:
(a) The Owner will pay to the Issuer all of the amounts required to be paid by the
Owner under Section 21 of this Regulatory Agreement and will indemnify the Issuer and the Trustee as
provided in Section 10 of this Regulatory Agreement.
(b) Rental payments.paid by Very Low income Tenants for the Very Low Income
Units shall not exceed Affordable Rents.
(c) All tenant lists; applications and waiting lists relating to the Project shall at all
times be kept separate and identifiable from any other business of the Owner and shall be maintained as
required by the issuer, in a reasonable condition for proper audit and subject to examination during
business hours by representatives of the Issuer upon reasonable advance notice to the Owner.
(d) The Owner shall submit to the Administrator, on behalf of the Issuer, within
fifteen (i5) days after receipt of a written request, any information or completed forms requested by the
issuer or the Administrator in order to comply with reporting requirements of the Internal Revenue
Service or the State.
(e) The Owner shall not discriminate on the basis of race, creed, color, religion, sex,
sexual orientation, marital status, national origin, source of income (e.g. SSI), ancestry or handicap in the
lease, use or occupancy of the Project or in connection with the employment or application for
employment of persons for the operation or management of the Project, and will not discriminate on the
basis of household size so lon- as the tenants meet the household size standards of Section 8 of the
Housing Act. Further, the Owner shall not permit occupancy in any unit in the Project by more persons
than is permissible under the Section 8 household size standards.
(f) The Owner shall comply with any reasonable request made by the Administrator
(if other than the Issuer) or the issuer to deliver to any such Administrator, in addition to or instead of the
Issuer. any reports, notices or other documents required to be delivered pursuant hereto, and, upon
reasonable notice and during normal business hours, to make the Project and the books and records with
respect thereto available for inspection by the Issuer or the Administrator as an agent of the Issuer.
(g) For purposes of Section 7(b), the base rents shall be adjusted for household size,
to the extent pennitted by law, and in making such adjustments it shall be assumed that one person will
occupy a studio unit, two persons will occupy a one-bedroom unit, three persons will occupy a two-
bedroom unit, four persons will occupy a three-bedroom unit, and five persons will occupy a four-
bedroom unit.
(h) The Owner shall comply with the conditions set forth in Exhibit A to CDLAC
Resolution No. 05-142, adopted on December 21, 2005, and in Exhibit A to CDLAC Resolution No. 08-
52, adopted on March 26, 2008 (collectively the "CDLAC Conditions''), as they may be modified or
OI-IS West:260448093.3 9
amended from time to time, which conditions are incorporated herein by reference and made a part
hereof. The Owner will prepare and submit to CDLAC, not later than each anniversary of the Closing
Date, until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance, in
.substantially the form attached hereto, executed by an authorized representative of the Owner. Tile issuer
and the Administrator shall have no obligation to monitor the Owner's compliance with the CDLAC
Conditions.
(i) Except as otherwise provided in Section 14 of this Regulatory Agreement, this
Regulatory Agreement shall terminate at the end of the Qualified Project Period.
Any of the foregoing requirements of the Issuer(except(h), which also must be expressly
waived by CDLAC and (e) and (i), which also must be expressly waived by CDLAC and the Agency),
may be expressly waived by the Issuer, in its sole discretion, in writing, but(i) no waiver by the issuer of
any requirement of this Section 7 shall, or shall be deemed to, extend to or affect any other provision of
this Regulatory.Agreement except to the extent the Issuer has received an opinion of Bond Counsel that
any such provision is not required by the Act or the Code, and may be waived without adversely affecting
the exclusion from gross income of interest on the Tax-Exempt Bonds for federal income tax purposes:
and (ii) any requirement of this Section 7 shall be void and of no force and effect if the Issuer and the
Owner receive a written opinion of Bond Counsel to the effect that compliance with any such requirement
would cause interest on the Tax-Exempt Bonds to cease to .be Tax-Exempt or to the effect that
compliance with such requirement would be in conflict with the Act or any.other state or federal law.
SECTION 8 Requirements of the Agencv. In addition to the requirements set forth
elsewhere in this Regulatory Agreement and to the extent not prohibited thereby and as a condition to the
obligation of the.Agency to make payments to the Owner pursuant to the Agency Assistance Agreement,
the Owner hereby agrees to comply with each of the requirements of the Agency set forth in this Section
8.(collectively,the"Agency Conditions"), as follows:
(a) For the purposes of this Section the following definitions shall apply:
1. "Assumed Household Size" means for a studio one person, for a one bedroom
two people, for a two bedroom three people, for a three bedroom four people and for a four bedroom five
people; provided however, that if any federal statutes or regulations require use of an alternate household
size, assumptions in calculating rents, such federally-mandated household size assumptions shall be used
instead of the forgoing assumptions.
2. "Median Income" shall mean the median gross yearly income adjusted for
Assumed Household Size, as specified herein, for the County of Contra Costa as published from time to
time by HUD and the State of California. In the.event that such income determinations are no longer
published or are not updated for a period of at least eighteen (18) months, the Agency shall provide the
Owner with other income determinations which are reasonably similar with respect to methods of
calculation to those previously published by HUD and the State of California.
(b) Not less than twenty percent (20%) of the units in the Project shall be occupied
bv, or held vacant and available for occupancy by, Very Low Income Tenants and such units shall be of
comparable size and quality as other units in the Project and shall be disbursed throughout the Project.
(c) The rental payments paid by the occupants of the Very Low Income Units
described in Section 8(a)shall not exceed Affordable Rents.
OHS West:?G0448093.3 10
(d) The Owner shall rent the units subject to Section 8(b) in accordance with Section
4(b)
(e) The Owner will obtain, complete and maintain on file Income Certifications for
each Very Low Income Tenant in accordance with Section 4(c) hereof. A copy of the most recent Income
Certifications for Very Low income Tenants commencirit; or continuing occupation of a Very Low
Income Unit shall be attached to each report to be filed with the Issuer pursuant to paragraph (h) of this
Section 8. The Owner will provide copies of such Income Certifications to the Agency upon request by
the Agency.
(f) The Owner shall make a good faith effort, in the manner set forth in Section 4(d)
hereof, to verify that the income information provided by an applicant in a Verification of income is
accurate.
(g) The Owner will maintain complete and accurate records pertaining* to the Very
Low Income Units, and, upon reasonable notice and during business hours, will permit any duly
authorized representative of the Agency to inspect the books and records of the Owner pertaining to the
Project, including those records pertaining to the occupancy of the Very Low Income Units and the
Income Certifications required pursuant to Section 8(e). The Owner will retain copies of all materials
obtained or produced with respect to occupancy of the Very Low income Units for a period of at least
five(5)years. .
(h) Owner shall submit to Agency not later than the forty-fifth (45"i) day after the
close of each fiscal year, or such other date as may be requested by Agency, a statistical report, including
household size and income data for the Very Low income Units. Owner shall include a provision in
tenant leases pursuant to which the tenants shall consent to Owner's release of such information to the
Agency.
(i) To the extent perniitted by law, the Owner shall give preferences in the
occupancy of the units in the Project to households that the Agency identifies in writing to the Owner that
have been displaced as a result of Agency activities.
(j) initial rents for the Very Low. Income Units shall be approved by the Agency
prior to occupancy. All rent increases shall also be subject to the prior written approval of the Agency.
(k) The Owner shall comply with Sections 3(h), 4(g)and 6(c).
(1) All tenant lists, applications and waiting lists relating to the Project shall at all
times be kept separate and identifiable frorn any other business of the Owner and shall be maintained as
required by the Agency,-in a reasonable condition for proper audit and subject to examination during
business hours by representatives of the Agency upon reasonable advance notice to the Owner.
(in) The Owner shall submit to the Agency, within fifteen (15) days after receipt of a
written request, any information or completed forms reasonably, requested by; the Agency in order to
comply with California Redevelopment Law.
(n) The Project shall be constructed and operated for the purpose of providing
multifarnily residential rental property. No part of the Project will operate as transient housing.
SECTION 9 Modification of Covenants. The Owner, the Trustee, the Issuer and the
Agenc} hereby agree as follows:
OHS Wcst260448093.3 11
(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 Agency. the Trustee and the Owner,
retroactively impose requirements upon the ownership or operation of the Project more restrictive than
those irn posed by this Regulatory Agreement, and if such requirements are applicable to the Project, this
Regulatory Agreement shall be deemed to be automatically amended to impose such additional or more
restrictive requirements. If such a change will have an adverse effect on the financial performance of the
Project, the County and the Agency will in good faith consider, but shall have no obligation to approve,
amendments to documents proposed by the Owner to compensate for such adverse effect(so long as such
amendments do not materially adversely affect the interests of the holders of the Bonds or result in
inconsistencies with the California Redevelopment Law).
(b) To the extent that the Act, the Regulations or the Code, or any amendments
thereto, shall, in the written opinion of Bond Counsel filed with the Issuer.the Agency the Trustee and the
Owner, impose requirements upon the ownership or operation of the Project less restrictive than imposed
by this Regulatory Agreement, this Regulatory Agreement may be amended or modified to provide such
less restrictive requirements but only by written amendment signed by the Issuer, at its sole discretion,the
Agency, the Trustee and the Owner. and only upon receipt by the Issuer of the written opinion of Bond
Counsel to the effect that such amendment will not affect the Tax-Exempt status of interest on the Tax-
Exempt Bonds or violate the requirements of the Act, and otherwise in accordance with Section 23
hereof. The Agency shall not be required to execute any amendment provided for in this Section 9 (and
the Trustee shall not execute such amendment pursuant to Section 9(c)) unless such amendment also
meets the requirements of California Redevelopment Law. .
(c) The Owner, the Issuer, the Agency 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 9, and each of the Owner, the Issuer and the Agency 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
Owner,the Issuer or the Agency, as applicable, any such document or instrument(in such form as may be
approved in writing by Bond Counsel) if any of the Owner, the Issuer or the Agency defaults in the
performance of its obligations under this.subsection (c); provided, however,that unless directed in writing
by the Issuer,the Agency or the Owner,the Trustee shall take no action under this subsection without first
notifying the Owner, the Issuer or the Agency, or all of them, and without first providing the Owner. the
Issuer or the Agency, or all of them. an opportunity to comply with the requirements of this Section 9.
Nothing in this subsection (c) shall be construed to allow the Trustee to execute an amendment to this
Regulatory Agreement on behalf of the Issuer, the Agency or the Owner; however, if the issuer executes
an amendment to this Regulatory Agreement, the Trustee shall also execute such amendment unless in the
reasonable opinion of a Trustee or its counsel, such execution shall adversely affect the.interests of such
Tnistee or the Bondholders for whom such Trustee acts.
SECTION 10 Indemnification, Other Pavments. The Owner hereby covenants and
agrees that it shall indemnify and hold harmless the Issuer and the Trustee and their respective officers,
members, directors, officials, employees and agents as set forth in the Financing Agreement. in addition
thereto, the Owner will pay upon demand all of the fees and expenses paid or incurred by the Trustee
and/or the Issuer in enforcing the provisions hereof.
The provisions of this Section 10 shall survive the term of the Bonds and this Regulatory
Agreement; provided, however, the provisions of this Section shall, in the case of the Trustee, survive the
teen of this Regulatory Agreement or the resignation or removal of the Trustee, but only as to claims
arising from events occurring during the term of this Regulatory Agreement or the Trustee's tenure as
Trustee under the applicable Indenture, and shall, in the case of the Issuer, survive the term of this
OHS West:26044 12
Agreement, but only as to claims arising from events occurring during the term of this Regulatory
A-reement.
SECTION 11 Consideration. The issuer has agreed to issue the Bonds to provide funds
to lend to the Owner to finance the Project, all for the purpose. among others, of inducing the Owner to
acquire, construct, develop and operate the Project. In consideration of the issuance of the Bonds by.the
Issuer, the Owner has entered into this Regulatory Agreement and has agreed to restrict the uses to which
this Project can be put on the terms and conditions set forth herein. The Agency has agreed to make the
Agency Loan and other payments under the Agency Assistance Agreement to provide funds to lend to the
Owner to finance the Project, all for the purpose, among others, of inducing the Owner to construct and
operate the Project. in consideration of the Agency.Loan and other benefits under the Agency Assistance
Agreement, the Owner has entered into this Regulatory Agreement and has agreed to restrict the uses to
which this Project can be put on the terns and conditions set forth herein.
SECTION 12 Reliance. Tire issuer and the Owner hereby recoanize and agree that the
representations and covenants set forth herein may be relied upon by all persons interested in the legality
and validity of the .Bonds, in the exemption from California personal income taxation of interest on the
Bonds and in the Tax-Exempt status of the interest on the Tax-Exempt Bonds. In performing their duties
and obligations hereunder, the Issuer, the Administrator and the Trustee may rely upon statements and
certificates of the Very Low Income .Tenants, and upon audits of the books and records of the Owner
pertaining to the Project. In addition, the Issuer and the Trustee may consult with counsel, and the
opinion of such counsel shall be full and complete authorization and protection in respect of any action
taken or suffered by the issuer or the-Trustee hereunder in good faith and in conformity with such
opinion. In determinino. whether any default or lack of compliance by the Owner 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 Owner and may rely.solely on any written notice or certificate. delivered to
the Trustee by the Owner or the Issuer with respect to the occurrence or absence of a default.
SECTION 13 Sale or Transfer of the Project. For the Qualified Project Period, the
Owner shall not, except as provided in the Security Instrument and as set forth below, sell. transfer or
otherwise dispose of the Project, in whole or in part, without the prior written consent of the Issuer and
the Agency, which consent shall not be unreasonably withheld or delayed following.: (A) the receipt by
tiie Issuer and the Agency'of evidence acceptable to the Issuer and the Agency that (1) the Owner shall
not be.in default hereunder or under the Financing Agreement, if in effect (which may be evidenced by a
Certificate of Continuing Program Compliance), or the purchaser or assignee undertakes to cure any
defaults of the Owner to the reasonable satisfaction of the Issuer; (2) the continued operation of the
Project shall comply with the provisions of this Regulatory Agreement; (3)either (a) the purchaser or
assignee or its property manager has at least three (3)years' demonstrated experience in the ownership,
operation and management of similar• large mixed-income rental housing projects, and at least one (1)
year's experience in the ownership, operation and management of rental housing projects containing
below-market-rate units, without any record of material violations of discrimination restrictions or other
state or federal laws or regulations or local governmental requirements applicable to such projects, or(b)
the purchaser or assignee agrees to retain a property management firm with the experience and record
described in subclause (a) above; (4) the person or entity which'is to construct and operate the Project
does not have pending against it, and does not have a history, of significant and material building code
violations or complaints Conceriing the maintenance, upkeep, operation, and regulatory agreement
compliance of any of its projects as identified by any local, state or federal regulatory agencies; and
(5)that the Owner shall not be in default under the Agency Assistance Agreement or the purchaser or
assignee undertakes to cure any defaults of the Owner to the reasonable satisfaction of the Agency: (B)
the execution by the purchaser or assignee of any document reasonably requested by the Issuer or the
Trustee with respect to the assumption of the Owner's obligations.under this Regulatory Agreement, the
OHS West260448093.3 13
Financin<(T Agreement (if then in effect) and tile. Agency Assistance Agreement, including without
limitation an instrument of assumption hereof and thereof and delivery to the Issuer of an opinion of such
purchaser or assignee's counsel to the effect that each such document and this Reygulatory Agreement are
valid, binding and enforceable obligations of such purchaser or assignee, subject to bankruptcy and other
standard limitations affecting creditor's rights; (C) receipt by the issuer of an opinion of Bond Counsel
addressed to the Issuer to the effect that any such sale, transfer or other disposition will not adversely
affect the Tax-Exempt status of interest on the Tax-Exempt Bonds; and (D) receipt by the Issuer, the
Trustee and the Agency of all fees and/or expenses then currently due and payable to the Issuer, the
Trustee and the Agency, respectively. The foregoing sentence notwithstanding, the Project may be
transferred to (y) a wholly-owned subsidiary or related entity of the Owner (with an opinion of Bond
Counsel) or(z)the Trustee or the Credit Provider pursuant to a foreclosure, deed in lieu of foreclosure or
comparable conversion under the Security instrument, in each case, without the consent of the Issuer or
the Agency. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the
Project in violation of this Section 13 shall be null, void and without effect, shall cause a reversion of title
to the Owner, subject to all matters affecting title at the time of such reversion. and shall be ineffective to
relieve the Owner of its obligations under this Regulatory Agreement. Tile written consent of the Issuer
and the Agency to any transfer of the Project shall constitute conclusive evidence that the transfer is not in
violation of this Section 13. Nothing in this Section shall affect any provision of any other document or
instrument between the Owner and any other party that requires the Owner to satisfy certain conditions or
obtain the prior written consent of such other party in order to sell, transfer or otherwise dispose of the.
Project (including the Ground Sub-lease, to which all sales and transfers will be subject). Upon any sale
or other transfer that complies with this Regulatory Agreement, the Owner shall be fully released from its
obligations hereunder to the extent such obligations have been fully assumed in writing by the transferee
Of the.Project.
For the Qualified Project Period, the Owner shall not: (1) encumber any of the Project or
grant commercial leases of any part thereof, or permit the conveyance, transfer or encumbrance of any
part of the Project, except pursuant or subordinate to the provisions of this Regulatory Agreement and the
Security Instrument (and upon receipt by the Owner of an opinion of Bond Counsel that such action will
not adversely affect the Tax-Exempt status of interest on the Tax-Exempt Bonds; provided that such
opinion will not be required with respect to any encumbrance, lease or transfer relating to a commercial
operation or ancillary facility that will be available for tenant use and is customary to the operation of
multifamily housing developments similar to the Project), or except upon a sale, transfer or. other
disposition of the Project in accordance with the terms of this Regulatory Agreement; (2) demolish any
part of the Project or substantially subtract from any real or personal property of the Project, except to the
extent that what is demolished or removed is replaced with comparable property: or(3) permit the use of
the dwelling accommodations of the Project for any purpose.except rental residences.
SECTION 14 Term. 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 for
the period provided herein and shall terminate as to any provision not otherwise provided with a specific
termination date and shall terminate in its entirety at the end of the Qualified Project Period, it being
expressly agreed and understood that the provisions hereof are intended to survive the retirement of the
Bonds and discharge of the Indenture and the Financing Agreement for the time periods set forth herein.
The terms of this Regulatory Agreement to the contrary notwithstanding, the
requirements of this Regulatory Agreement(except those benefiting the Agency) shall terminate and be of
no further force and effect in the event of foreclosure or transfer of title by deed in lieu of foreclosure of
the Security Instrument, involuntary noncompliance 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
Closinc, Date that prevents the Issuer and the Trustee from enforcing such provisions, or condemnation or
of-IS wcst26W80933 14
a similar event, but only if, within a reasonable period, either the Bonds are retired or amounts received as
a consequence of such event are used to provide a project that meets the requirements hereof, 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 Owner or any related
person (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in
the Project for federal income tax purposes. The Owner hereby agrees that, following any foreclosure,
transfer of title by deed in lieu of foreclosure or similar event, neither the Owner nor any such related
person as described above will obtain an ownership interest in the Project for federal tax purposes.
Notwithstanding any other provision of this Regulatory Agreement, except for the provisions benefiting
the Agency, this Regulatory Agreement may be terminated upon agreement by the Issuer, the Trustee and
the Owner upon receipt by the Issuer and the Trustee of an opinion of Bond Counsel to the effect that
such tennination will not adversely affect the exclusion from gross income of interest on the Tax-Exempt
Bonds for federal income tax purposes. Upon the termination of the terns of this Regulatory Agreement,
the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of
the terns hereof., provided, however, that the execution and delivery of such instruments shall not be
necessary or a prerequisite to the tennination of this Regulatory Agreement in accordance with its terns.
Nothing in this Section 14 shall be construed to terminate prior to the expiration of the Qualified Project
Period, the provisions of Section 8 (and the provisions referenced therein) or the provisions in
Sections 3(h), 11, 15-18 or 21727.
SECTION 15 Covenants to Run with the Land. Notwithstanding Section 1461 of the
California Civil Code. the Owner hereby subjects the Project to the covenants, reservations and
restrictions set forth in this Regulatory Agreement. The Issuer, the Agency and the Owner 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 Owner's successors in title to
the Project: provided, however. that on the termination of this Regulatory Agreement said covenants,
reservations and restrictions shall expire. Upon such tennination, the Issuer, the Agency and the Trustee
agree to provide any necessary release'or reconveyance document for the removal of this Regulatory
Agreement as an encumbrance against the Project. Each and every contract, deed or other instrument
hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to
have been executed, delivered and accepted subject to such covenants, reservations and restrictions,
regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or
other instruments. No breach or default under this Regulatory Agreement shall defeat, render invalid or
otherwise impair the lien of the Security Instrument or similar encumbrance upon the Project given in
*ood faith and for value.
SECTION 16 Burden and Benefit. The Issuer. the Agency and the Owner hereby
declare their understanding and intent that the burdens of the covenants set forth herein touch and concern .
the land in that the Owner's legal interest in the Project is rendered less valuable thereby. The Issuer. the
Agency and the Owner hereby further declare their understanding; and intent that the benefits of such
covenants touch land concern the land by enhancing and increasing the enjoyment and use of the Project
by Very Low income Tenants, the intended beneficiaries of such covenants, reservations and restrictions,
and by furthering the public purposes for.which the Bonds were issued.
-SECTION 17 Uniformitv: Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the
use of the site on which the Project is located.
SECTION 18 Default; Enforcement. If the Owner defaults in the performance or
observance of any covenant, agreement or obligation of the Owner set forth in this Regulatory Agreement
OFIS West260448093.3 i S
(other than the Agency Conditions), and if such default remains uncured for a period.of.sixty (60) days
after notice thereof shall have been given by the Issuer or Trustee to the Owner, or for a period of sixty
(60) days from the date the Owner should, with reasonable diligence, have discovered such default, then
the Issuer or the Trustee (as directed by the issuer. subject to the provisions of the Indenture) acting on its
own behalf or on behalf of the Issuer, shall declare an "Event of Default" to have occurred hereunder;
provided, however,that if the default is of such a nature that it cannot be corrected within sixty (60) days,
such default shall not constitute an Event of•Default hereunder so long as (i) the Owner institutes
corrective action within said sixty (60) days and diliaently pursues such action until the default is
corrected. and (ii) during the Qualified Period. in the opinion of Bond Counsel, the failure to.cure said
default within sixty (60) days will not adversely affect the Tax-Exempt status of interest on the Tax-
Exempt Bonds. The Issuer and the Trustee shall have the right to enforce the obligations of the Owner
under this Regulatory Agreement within shorter periods of time than are otherwise provided herein if
necessary to insure compliance with the Act or the Code.
Following the declaration of an Event of Default hereunder. the Issuer or the Trustee, at
the direction of the Issuer, subject to the provisions of the Indenture, may take any one or more of the
fol lowing.steps, in addition to all other remedies provided by law or equity:
(i) by:mandamus or other suit, action or proceeding at law or in equity,
including injunctive relief, require the Owner to perform its obligations and covenants hereunder or
enjoin any acts or things that 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 Owner pertaining to the Project;
(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 Owner hereunder; and
(iv) for any Event of Default other than an Event of Default under Section 8,
declare a default under the Financing Agreement and proceed with any remedies provided therein.
The Owner hereby agrees that specific enforcement of the Owner's agreements contained
herein is,the only means by which the Issuer may fully obtain the benefits of such Aygreement made by the
Owner herein, and the Owner therefore ay.;rees to the imposition of the remedy of specific performance
against it in the case of any Event of Default by the Owner hereunder.
The Trustee shall have the right, in accordance with this Section 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 action the Trustee shall give the Issuer written
notice of its intended action. After the indenture has been discharged, 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.
Promptly upon determining that a violation of this Regulatory Agreement has occurred,
the Issuer or the Trustee shall, by written notice. inform the Owner that such violation has occurred, the
nature of the violation and that tale violation has been cured or has not been cured, but is curable within a
reasonable period of time, or is incurable. The Trustee shall not be deemed to have knowledge of any
default hereunder unless such Trustee.shall have been specifically notified in writing of such default by
the Issuer, the Administrator, the other Trustee or the Bondholders of at least twenty five percent (25%)
of the aggregate principal.amount of Bonds outstanding under either Indenture.
011S West:260448093.3 16
All reasonable fees, costs and expenses of the Trustee and the Issuer incurred in taking
any action pursuant to this Section shall be the sole responsibility of the Owner; provided, however, that
in the event that any action .arising hereunder with the Owner and the Trustee as adversaries, the
prevailing party, if any, shall be entitled to recover legal fees and costs from the other party:
The Agency shall have the right (but not the obligation) to enforce the terns and
conditions of this Regulatory Agreement, including the Agency Conditions, and to pursue an action for
specific performance or other available remedy at law or in equity in accordance with this Section 18 or
declare a default under the promissory note evidencing the Agency Loan, accelerate the indebtedness
evidenced by such note and proceed with foreclosure under the deed or trust securing the Agency Loan or
to pursue any remedy available under such note or deed or trust or the Agency Assistance Agreement.
provided that any such action by Agency or remedy shall not materially adversely affect the interests and
rights of the Bondholders, including, but not limited to, causing interest on the Tax-Exempt Bonds to fail
to be Tax-Exempt, or the Credit Provider.
The Owner hereby grants to both the Issuer and the Agency, independently; the option,
upon the expiration of sixty (60) days after the giving of the notice to the Owner referred to in the first
paragraph of this Section 18. of the Owner's default under this Agreement, to lease up to twenty percent
(20%) of the units in the Project for the purposes of leasing such units to Very Low Income Tenants
pursuant to the terms set forth in this Agreement. The option granted in the preceding. sentence shall be
effective only if the Owner has not instituted corrective action within such sixty (60) day period. Such
option shall be exercisable first with respect to units which are vacant at the time of exercise of this option
and shall be exercised only if the Owner has not instituted corrective action within such sixty (60) days
period and shall be exercised only to the extent that leasing of additional units is necessary in order to
bring the Project into compliance with this Agreement. The option and any leases to the Issuer or the
Agency under these provisions shall terminate with respect to each default upon the achievement. by the
Owner or the Issuer or the Agency of compliance with the requirements with this Agreement and any
leases entered into pursuant to the lssueCs or the Agency's option shall be deemed to be leases from the
Owner. The Issuer or the Agency, as applicable, shall make dili0ent efforts to rent Very Low Income
Units to Very Low Income Tenants for monthly rental amount equivalent to those collected from other
Very Low Income Tenants pursuant to this Agreement, but shall not be required to obtain such rental
amounts. The Issuer or the Agency, as applicable, shall seek to rent such units for the highest possible
rents that may be charged, consistent with the rent and occupancy restrictions of this Agreement. Tenant
selection shall be performed utilizing the Owner's reasonable management and selection policies. The
Issuer's or the Agency's leases to Very Low Income Tenants pursuant to this paras*raph shall not exceed
six (6) months in term and shall expressly pert-nit the Owner to increase the rents as otherwise permitted
by this A�oreernent. Any rental paid under any such lease shall be paid to the Owner after the Issuer or the
Agency has been reimbursed for any expenses incurred in connection with such lease. All rents received
by the issuer or the Agency from such leases shall be placed into an escrow reasonably approved by the
Owner. All funds in such escrow shall be continuously pledged by the Issuer or the Agency for the
benefit of the Owner. Tile issuer or the Agency agrees to allow the Owner.access to the issuer's or the
Agency's books and records relating to the collection and disbursement of rents received pursuant to such
lease. The Trustee shall have the right.. in accordance with this Section and the provisions of the
Indenture, without the consent or approval of the Issuer or the Agency, to.exercise any or all of the rights
or remedies of the Issuer hereunder; provided that prior to taking any such action the Trustee shall give
the issuer and the Agency written notice of its intended action. All reasonable fees, costs and expenses of
the Trustee incurred in taking any action pursuant to this Section shall be the sole responsibility of the
Owner. In the event that both the Issuer and the Agency desire to exercise the option described in this
paragraph.the issuer and Agency shall negotiate and determine which entity shall exercise the option.
OHS West260448093.3 17
The obligations of any Owner under the Regulatory Agreement shall be personal to the
person who was the owner at the time that an event, including, without limitation,any default or breach of
the Regulatory Agreement, occurred or was alleged to have occurred, and such person shall remain liable
for anv and all such obligations, including damages occasioned by a default or breach, even after such
person ceases to be the owner of the Project. No subsequent owner of the Project shall be liable or
obligated for the obligation of any prior owner(including the initial Owner), including, but not limited to,
any obligation for payment, indemnification or damages, for default or breach of the Regulatory
Agreement or otherwise. The Owner of the Project at the time the obligation was incurred, including any
obligation arising out of a default or breach of the Regulatory Agreement, shall remain liable for any and
all payments and dainages occasioned by the Owner even after such person ceases to be the Owner of the
Project, and no person seeking such payments or damages shall have recourse against the Project.
SECTION 19 The Trustee. 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.
The Trustee shall have no duty to act with respect to enforcement of the Owner's performance hereunder
as described in.Section 18 unless it shall have knowledge of any such default as provided in Section 18.
The Trustee may 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 perfor►ned by the-Trustee.
in connection with any such performance. the Trustee is acting solely as Trustee under the Indenture and
not in its individual capacity, and, except as expressly provided Herein, all provisions of the indenture
relating to the rights, privileges, powers and protections of the Trustee shall apply with equal force and
effect to all actions taken (or omitted to he taken) by the Trustee in connection with this Regulatory
Agreement. Neither the Trustee nor anv 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 Issuer and the Agency shall be (or shall cause the.Administrator to be) responsible
for the monitoring of the Owner's compliance with the terms of this Regulatory Agreement. The Trustee
shall not be responsible for such monitoring.
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 20 Recording and Filing. (a) The Owner shall cause this Regulatory
AcTreement and all amendments and supplements hereto and thereto, to be recorded and filed in the real
property records of the County of Contra Costa. and in such other places as the Issuer or the Trustee may
reasonably request. The Owner shall pay all fees and charges incurred in connection with any such
recording.
(b) The Owner and the Issuer will file of record such other documents and take such
other steps as are reasonably necessary, in the opinion of Bond Counsel and the Agency, in order to insure
that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the
Project.
(c) The Owner hereby covenants to include or reference the requirements and
restrictions contained in this Regulatory Agreement in any documents transferring any interest in the
Project to another person to the end that such transferee has notice of, and is bound by, such restrictions,
and, except in the case of a foreclosure or comparable involuntary conversion of the Security Instrument.
OHS West:260448093.3 18
whereby either the Trustee or the Credit Provider becomes the owner of the Project, to obtain the
agreement fi•om any transferee to abide by all requirements and restrictions of this Regulatory Agreement.
SECTION 21 Pavment of Fees. . Notwithstanding any prepayment of the Loan and
notwithstanding a discharge of the indenture, the Owner shall pay to the Issuer, in advance, on or before
July 1 of each year during the Qualified Project Period, an amount equal to $ ; provided, no
amount shall be payable with respect to any. period commencing upon the Credit Provider's taking
possession of the Project by reason of foreclosure,transfer of title by deed in lieu of foreclosure or similar
event and ending on the earlier of (1)the date possession of the Project is.conveyed by the Credit
Provider to another Owner or (2)the date two years after the date the Credit Provider took possession of
the Project. The Owner shall, in addition, pay to the Agency an amount equal to the Agency's reasonable
costs of administering this Regulatory Agreement.
SECTION 22 Governing Law. This Regulatory Agreement shall be governed by the
laws of the State of California.
SECTION 23 Amendments: Waivers. (a) Except as provided in Section 9(a) hereof,
this Regulatory Agreement may 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 of Contra Costa,
and only upon receipt by the Issuer of an opinion from Bond Counsel that such amendment will not
adversely affect the Tax-Exempt status of interest on the Tax-Exempt.Bond s and is not contrary to the
provisions of the Act.
(b) Anything to the contrary contained herein notwithstanding, the Issuer, the
Trustee, the Owner and the Agency hereby agree to amend this Regulatory Agreement to the extent
required, in the opinion of Bond .Counsel, in order that interest on the Tax-Exempt Bonds rernain Tax-
Exempt. The parties requesting such amendment shall notify the other parties to this Reygulatory
Agreement of the proposed amendment, with a copy of such proposed amendment to Bond Counsel and a
request that Bond Counsel render to the Issuer an opinion as to the effect of such proposed amendment .
upon the Tax-Exempt status of interest on the Tax-Exempt Bonds. This provision shall not be subject to
any provision of any other agreement requiring any party hereto to obtain the consent of any other person
in order to amend this Regulatory Agreement.
(c) Any waiver of,',or consent to, any condition under this Regulatory Agreement
must-be expressly made in writing.
SECTION 24 Notices. Any notice required to be given hereunder shall be made in
writim, and served personally with delivery receipt, or dispatched by the certified United States mail,
return receipt requested, postage prepaid, or by facsimile transmission with a copy mailed by first class
United States rnail to the address listed below, or reputable overnight service with a receipt showing the
date of delivery and: in each case at the respective addresses specified below:
if intended for Agency:
Contra Costa County Redevelopment Agency
2530 Arnold Drive#190
Martinez, CA 94553
Attn: Redevelopment Director
01 IS West:260448093.3 '19
If intended for County:
County of Contra Costa
Conservation and Development Department
11-530 Arnold Drive#190
Martinez, CA 94553
Attn: Deputy Director-Redevelopment
If intended for Owner:
PHVP I. LP
735 Market Street, Third Floor
San Francisco. CA 94103
Attn: Mark Farrar
with a copy to: Joanne Lockridge
Senior Vice President—Finance
1000 Bridgeport Avenue, Suite 258
Shelton, CT 06484
If intended for the
Trustee:
Notices shall be deemed received as follows: if given by facsimile transmission, upon
receipt so lone as the sending fax electronically confirms receipt and a hard copy follows by United States
mail as required above (provided that in the event the facsimile is sent after 5:00 pm, the notice shall be
deemed received on the following business day); if given by hand delivery or delivery service with a
delivery receipt, on the date shown on the delivery receipt as the date of delivery;the date delivery was
refused, or the date the item was returned as undeliverable.
Any notice, demand or other communication may begiven on behalf of a party by the
attorney for such party. y
Such written notices, demands and communications may be sent in the same manner to
such other addresses as the affected party may thorn time designate by notice as provided in this Section.
A copy of each notice sent to the Owner shall also be sent to the manager of the Project at
the address of the tnana(Yer provided by the Owner to the Administrator; but such copies shall not
constitute notice to the Owner, nor shall any failure to send such copies constitute a breach of this
Regulatory Agreement or a failure of or defect in notice to the Owner.
SECTION 25 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 26 Multiple Counterparts. This Reg*ulatory Agreement may be
simultaneously 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.
0115 West:20448093.3 20
SECTION 27 Third-Party Beneficiarv. CDLAC is intended to be and shall be a third-
party beneficiary of this Regulatory Agreement. CDLAC shall have the right (but not the obligation) to
enforce the CDLAC Conditions and to pursue an action for specific performance or other available
remedy at law or in equity in accordance with Section 18 hereof; provided that any such action by
CDLAC or remedy shall not materially adversely affect the interests and rights of the Bondholders.
OHS wesC260448093.3 21
IN WITNESS WHEREOF. the Issuer, the Agency, the Trustee and the Owner have
executed this Regulatory Agreement by duly authorized representatives, all as of the date first above
written.
COUNTY OF CONTRA COSTA,a political subdivision
of the State of California
By:
James Kennedy,
Deputy Director— Redevelopment
CONTRA COSTA COUNTY REDEVELOPMENT
AGENCY,a public body corporate and politic
By:
James Kennedy
Redevelopment Director
THE BANK OF NEW.YORK MELLON TRUST
COMPANY,N.A.,as Trustee
By:
Authorized Officer
PHVP I,LP,
a Delaware limited partnership
By: PHVP I GP, LLC,
a Delaware limited liability company, its general
partner
By:
Name:
Title: Authorized Signatory
OHS W'est:260448093.3 �7
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
OHS West:260448093.3 A-1
EXHIBIT B
[FORM OF INCOME CERTIFICATION]
New Certification /Recertification Unit Number
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is design to assist you in computing Annual Income in accordance with the method
set forth in the Department of Housing and Urban Project("HUD")Regulations(24C1'R 813). You should make certain that this form is at all times up to
date with the I IUD Regulations. All capitalized terms used herein shall have the meaning set forth in the Regulatory Agreement.
Re:(NAIVE and ADDRESS of Apartment Building)
AVALON WALNUT CREEKAT
CONTRA COSTA CENTRE
I/We the undersigned state that I/we have read and answered fully,frankly and personally each of the following questions for all
persons who are to occupy the unit being applied for in the above apartment prgject. 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
Ilousehold Ilousehold Age Number Employment
Income Computation
6. The total anticipated income,calculated in accordance with this paragraph 6,of all persons(except children under 18 years of age)listed above for the
12-month period
Beginning the earlier of the date that I/we plan to move into a unit or sign a lease for a unit is$
Included in the total anticipated income listed above arc:
(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 personal property(without deducting expenditures from
business expansion or amortization of capital indebtedness or any allowances for depreciation of capital assets except for straight line
depreciation as provided in Internal Revenue Service regulations);
(c) interests and dividends(including income from assets included below and other net income from real or personal property):
(d) the 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,workers'compensation and severance pay:
(f) the maximum amount that the public assistance agency could in fact allow for shelter and utilities;
If this form is being completed in accordance with recertification of a Lower Income Tenant's or Ver%Low income Tenant's occupancy of a Lower Income unit or a Vere Low
Income Unit.Respectively,this form must be completed upon the current income of the occupants.
OHS W'est:260448093.3 B-I
(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;
(It) all regular pay,special pay and allowances of a member of the Aimed Forces(whether or not livina.in the dwelling)who is the head of the
household or spouse(or other persons whose dependents are residing in the units):and
(i) anv 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
workers'compensation),capital gains and settlement firr 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 cost 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) hazardous.duty pay to a household member in the Armed Forces who is away from home and exposed to hostile fire:
(f) amounts received under training programs funded by HUD:
(g) tinter child care payments:
(h) amounts received b}a disabled person that are disregarded for a limited time for purposes of Supplemental Social Security Income eligibility and
benefits because they are set aside for use under a Plan to Attain Sell=
Sufficiency;
(i) income of a living attendant:
0) amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses
incurred and which are made solely to allow participation in a specific program:
(k) a resident stipend(a modest amount(not to exceed$200 per month) received by a resident for performing a service for the Owner.on a part-
time basis.that enhances the quality of life in the development:
(1) compensations from state or local employment training programs and training of a family member as resident management staff:
(m) reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted
during the Nazi era: y
(n) amounts specifically excluded by any other federal statute from consideration as income purposes of determining eligibility or benefits under a
category of assistance programs that includes assistance under the United States Housing Act of 1937
(o) earnings in excess of$480 for each full-tern student 18 years old or older(excluding the head of'household and spouse):
(p) adoption assistance in excess of$480 pei•adopted child:and
(q) deferred periodic payments ol'supplemental security income and social security benefits that are received in a lump sum payment:
(r) amounts received by the family in the form of refunds or rebates under state or local law,for property taxes paid on the dwelling unit:
(s) amounts paid by a State agency to a family with a developmental) disabled family member living at home to offset the cost of services and
equipment needed to keep the developmentally disabled family member at home:and
(t) amounts specifically excluded by an other federal statute from consideration as income for purposes of determining eligibility or benefits under a
category of assistance programs that includes assistance under the united States Housing Act of 1937.
7. Do the persons whose income or contributions are included in item 6 above:
(u) have savings,stocks,bonds,equity in real property or other from 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
(v) have they disposed of any assets(other than at a foreclosure or bankruptcy sale)during the last two years at least than fair market value?
Yes No
(w) If the answer to(a)or(b)is yes.does the combined total value of all such assets owned or disposed of by all such persons total more than
$5.000?
Yes No
(x) .if the answer to(c)above is yes.state:
(1) the combined total value of all such assets:$
(2) 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
(3) 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 till-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 educational organization or of a state or political subdivision thereof.
(b) if the answer to 8(a)is yes.is at least 2 of the proposed occupants of the unit a husband and wife entitle to file a joint federal income tax return?
Yes No
9. Neither myself nor anj 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 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 IAc declare that all information set forth herein is true,correct and complete and based upon information i/we deem reliable and that the statement
of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary.
OHS West:260448093.3 B=2
11. Me will assist the Owner in obtaining any information or documents required to verify the statements made herein,including either and income
verification from my/our present employer(s)or copies of federal tax returns for the immediately preceding calendar year. v
12. 1/We acknowledge that 1/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute material
breach of my/our agreement with the Owner to lease the unit and will be entitle the Owner to prevent or terminate my/our occupancy of the unit by
institution of an action for ejection or other appropriate proceedings.
I/We declare under penalty of perjury that the foregoing is true and correct.
Executed this day of 20 in the City of California
Applicant Applicant
Applicant Applicant
Applicant Applicant
Rev.8/95 ISignature of all persons(except children under the age of 18 years) listed in number 2 above required
OHS West:260448093.3 B-3
FOR COMPLETION BY PROJECT OWNER ONLY:
Section 1. 1. Calculation of eligible income: Section 2.
Section 3. a. Enter amount entered for entire household in 6 above: Section 4. $
Section 5. b. (1) If the amount in 7(c)above is yes, enter the total Section 6.
amount
entered in 7(d)(2), subtract from that figure the amount
entered in 7(d)(3)and enter the remaining balance.
Section 7. (2) Multiply the amount entered in 7(d)(1)times the Section 8.
current
passbook savings rate as determined by HUD to determine
what the total savings annual earnings on the amount in
7(d)(1)
would be investigated in passbook savings( ),
subtract from that figure the amount entered in 7(d)(3)and
enter
the remaining balance($ );
Section 9. (3) Enter at right the greater of the amount calculated Section 10. $
under(1)or(2) _
above:
Section 11. c. TOTAL ELIGIBLE INCOME(line la. plus l.b(3): Section 12. $
Section 13. 2. The amount entered in l.c: Section 14.
Section 15. Qualifies the applicant(s)as a Moderate-Income Section 16.
Tenant(s).
Section 17. Qualifies the applicant(s)as a Low Income Section 18.
Tenant(s).
Section 19. Qualifies the applicant(s)as a Very Low Income Section 20.
Tenant(s).
Section 21. 3.Number of apartment unit assigned:_Bedroom size: Rent:$ HUD:$
Section 22. 4. This apartment unit(was/was not) last occupied for a period of Section 23.
31 or more 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 a Very Low Income
Tenant(s).
Section 24. 5. Method using to verify applicant(s) income:
OHS west:260448093.3 B-4
Section 25. Employment income verification.
Section 26. Copies of tax returns.
Section 27. Other( )
Section 28. Section 30.
Section 29. Manager Section 31. Date
OHS West:260448093.3 B-5
EXHIBIT C
[FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE]
CERTIFICATE OF.CONTINUING PROGRAM COMPLIANCE
Witnesseth that on this _ day of 20 the undersigned, having borrowed
certain funds from the COUNTY OF CONTRA COSTA (the "Issuer') for the purpose of financing a multifamily
rental housing development(the"Project"), does hereby certify that:
1. During the preceding three months (i) such Project was continually in compliance with
the Regulatory Agreement executed in connection with such loan from the Issuer, (ii)_% of the units in the
Project were occupied by Very Low Income Tenants(minimum of 20%).
Set forth below are the names of Very Low Income Tenants who commenced or terminated
occupancy during the preceding month.
Commenced Occupancy Terminated OccupancX
1. 1.
2. 2.
3. 3.
The units occupied by Very Low Income Tenants are of similar size and quality to other units and
are dispersed throughout the Project. Attached is a separate sheet listing the number of each unit and indicating
which units are occupied by Very Low income Tenants, the size. the number of bedrooms of such units and the
number of Very Low Income Tenants who commenced occupancy of units during,the preceding month.
2. Select apinropriale certification: [No unremedied default has occurred under this
Regulatory Agreement. the Loan Agreement, the Note, or the Security instrument.] [A default has occurred under
the The nature of the default and the measures being taken to remedy such default are as follows:
3. Tile representations set forth herein are true and correct to the best of the undersigned's
knowledge and belief.
Date:
Owner
[Complete one certificate for Lot 5 Project and a separate certificate for Lots 2 and 3 Project]
OHS West:260448093.3 C-1
BOND PROGRAM REPORT
Property:
Location:
Today's Date: Submitted by:
Total #Units: Total Units Occupied:
!Total New Rentals(Occupied)
Total Habitable/Livable Units: Current Month/Quarter:
(Rehabilitation Projects Only)
Total Very Low Income New Very Low Income Rentals
Units Occupied: Current Month/Quarter:
% Of Very Low Income Units Occupied to Total Units:
#Of Units Held vacant and available for Rent to Very Low Income Tenants:
PLEASE LIST ALL BOND PROGRAM UNITS BELOW IN NUMERIC OR ALPHABETIC
ORDER:
(Indicate"V" if vacant)
Gross Annual
Tenant Household
Unit Tenant's Last No. of No. of Monthly Income(all Date of
No. Name(s) Occ. Bedrm Rent* sources) Certification
*If tenant(s) are on an Assisted Rental Program such as Section 8,only list tenant portion of rent
01 IS West:260448352.2 C-2
Gross Annual
Tenant Household
Unit Tenant's Last No.of No.of Monthly Income(all Date of.
No. Name(s) Oce. Bedrm Rent* sources) Certification
OHS West:260448352.2 C-3
Gross Annual
Tenant Household
Unit Tenant's Last No. of No.of Monthly Income(all Date of
No. Name(s) Occ. Bedrm Rent* sources) Certification
OI-IS West:260448352.2 C-4
BOND PURCHASE AGREEMENT
$10,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
July 2008
PHVP 1, LP, a Delaware limited partnership County of Contra Costa
c/o AvalonBay Communities, Inc. c/o Contra Costa County Community Development
1000 Bridgeport Avenue, Suite 258 Department
Shelton, CT 06484 2530 Arnold Drive. Suite 190
Attn: Joanne Lock-ridge Martinez, CA 94553
Ladies and Gentlemen:
Citigroup Global Markets Inc. (the "Underwriter') hereby offers to enter into this Bond Purchase
Agreement (tile "Bond Purchase Agreement") with the County of Contra Costa (the "Issuer") and PHVP
I, LP, a Delaware limited partnership (the "Borrower'). Tile offer is hereby made subject to acceptance
by the Issuer and the Borrower (by the execution and delivery of this Bond Purchase Agreement to the
Underwriter) on or before 10:00 a.m.,New York Time. on the date hereof and upon such acceptance, this
Bond Purchase Agreement shall be in full force and effect in accordance with its terms and shall be
binding upon the Issuer, the Borrower and the Underwriter. Capitalized terms used herein and not
otherwise defined have the meaning set forth in the Indenture hereinafter defined.
The Borrower is entering into this Bond Purchase Agreement in order to induce the Issuer and the
Underwriter to enter into this Bond Purchase Agreement and to induce the Issuer to sell, and induce the
Underwriter to purchase the above-captioned County of Contra Costa Multifamily Housing Revenue
Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Series 2008A (the "Bonds") on the terms
set forth herein. The Borrower, by acceptance of the offer made herein, requests the issuer to,issue and
the Underwriter to purchase the Bonds.
The Bonds are issued 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 and supplemented from time to time (the "Act"), a
resolution duly adopted by the Issuer (the "Resolution") and an Amended and Restated Trust Indenture,
dated as of July 1, 2008 (the "Indenture"), by and between the issuer and The Bank of New York Mellon
Trust Company, N.A., as trustee (the "Trustee"). The Act, the Resolution and the Indenture are
collectively referred to herein as the "Authorizations." The Bonds shall be issued in accordance with the
provisions of the Authorizations and secured as provided therein.
The Issuer will lend the proceeds of the sale of the .Bonds (the "Loan") to the Borrower alone
with the proceeds of the Issuer's Multifamily Housing* Revenue Bonds (Avalon Walnut Creek at Contra
Costa Centre Project) Series 2006A (the "2006A Bonds') and the .Issuers Multifamily Housing Revenue
Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Taxable Series 2006A-T (tile "2006A-T
Bonds") pursuant to an Amended and Restated Financing Agreement, dated as of July 1, 2008 (the
"Financing Agreement") by and among the issuer, the Trustee and the Borrower. The proceeds of the
Loan will be used by the Borrower to finance the construction and development of a multifamily rental
housing project known as Avalon Walnut Creek at Contra Costa Centre (the "Project") located in the
County of Contra Costa, California. The Loan will be evidenced by a non-recourse [Multifamily Note]
dated as of July _, 2008 (together with all riders and addenda thereto, the "Note") executed by the
Borrower in favor of the issuer and secured by a first lien [First Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing] dated as of July_, 2008 (the "Security Instrument")executed by
the Borrower and delivered.to the Issuer with respect to the Project.
The Borrower has caused to be provided to the Trustee an irrevocable direct-pay letter of credit
(the .'Letter of Credit") issued by Bank of America, N.A. (the "Bank.). To evidence the repayment
obligations of the Borrower to the Bank as a result of payments made by Bank under the Letter of Credit.
the Borrower and Bank will enter into a Reimbursement and Disbursement Agreement, dated as of the
date of the indenture (the "Reimbursement Agreement"). The obligations of the Borrower to Bank under
the Reimbursement Agreement will be secured by a second lien Construction Second Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of July 1, 2008 (the
"Reimbursement Mortgage") executed by the Borrower and delivered to the Bank with respect to the
Project.
The Issuer, the Trustee and Bank have also entered into an Intercreditor Agreement, dated as of
the date of the Indenture (the "Intercreditor Agreement"), pursuant to which, the Issuer will assign and
deliver all of its right, title.and interest in4and to the Loan, including the Note, the Security Instrument and
the other Loan Documents,to the Trustee and Bank, as their interests may appear.
The Indenture, the Financing Agreement, the Regulatory Agreement, the Intercreditor
Agreement, the Security Instrument, the Note, the Reimbursement Agreement, the Reimbursement
Mortgage and this Bond Purchase Agreement are herein referred to as the "Program Documents."
References in this Bond Purchase Agreement to the authorization, execution and delivery of and
perfonnance under the Program Documents by a person or an entity shall be deemed to refer only to those
Program Documents to which such person or entity is a party.
SECTION 1. Purchase and Purchase Price. Under the terms and conditions and in reliance
upon the representations, warranties and agreements set forth herein, the Issuer agrees to execute and
deliver the Bonds, and the Underwriter agrees to purchase all (but not less than all) of said Bonds at an
aggregate purchase price of 100% of the principal amount of the Bonds. The Bonds will bear interest as
provided in the Indenture. In consideration for its purchase of the Bonds, the Underwriter will be paid a
fee by the Borrower in an amount equal to 0.2834% of the principal amount of the Bonds, which amount
will be due and payable on the date of issuance of the Bonds(the"Delivery Date").
SECTION 2. Official Statement. The Borrower hereby ratifies, approves and authorizes the
use by the Underwriter, prior to the date hereof, in connection with the offer and sale of the Bonds, of the
Composite Offering Statement dated July _, 2008 (which Composite Offering Statement, including the
cover page and all appendices, exhibits, reports and statements included therein or attached thereto, as it
may be amended from time to time,. being herein called the "Official Statement"), the Program
Documents and all information contained herein and therein of all other documents, certificates or
statements furnished by the Borrower to the Underwriter in connection with the transactions contemplated
by this Bond Purchase A>reement. The Underwriter agrees that it will not confine the sale of any Bonds
unless the settlement of such sale is accompanied by or preceded bythe delivery of a copy of the final
Official Statement.
In the event that the Bonds, or the remarketing of the Bonds, should become subject to the
continuing disclosure requirements of Rule 15c2-12 under the Securities Exchange Act of 1934 (the
"Rule"), the Borrower will furnish to the Underwriter all information reasonably required .by the
Underwriter to comply with the Rule.
SECTION 3. Closing; Bonds. At 12:00 p.m., New York Time, July 24, 2008, or at such other
time or on such earlier or later date as the Underwriter, the Borrower and the Issuer mutually agree upon,
the Issuer will deliver or cause to be delivered to the Underwriter the Bonds in definitive form, duly
executed, and authenticated together with the other documents hereinabove mentioned, and the
Underwriter will accept such delivery and pay the Purchase Price of the Bonds set forth in Section 1
hereof in federal funds payable to the order of the Trustee for deposit pursuant to the terms of the
Indenture. Delivery and payment shall be simultaneously, as aforesaid, made at such place as the
Underwriter shall designate or in such other city as the Underwriter,the Borrower and the Issuer mutually
agree upon. This payment and delivery shall be called the "Closing." The Bonds shall be in fully
registered form, registered in such names as the Underwriter shall submit to the Trustee prior to the
Closing and shall be in denominations of$100,000 or any integral multiple of$5,000 in excess thereof
with respect to the Bonds, except as otherwise provided in the Indenture. The Bonds shall be made
available to the Underwriter for checking at least one (1) Business Day prior to the Closing.
Notwithstanding the foregoing and any other references in this Bond Purchase Agreement to delivery of
Bonds, or similar statements, the Bonds are registered in the name of a nominee of the Depository Trust
Company ("DTC") and DTC procedures will be followed and take precedence over any conflicting
procedures or provisions.
SECTION 4. Representations,Warranties and Agreements of the Issuer. The Issuer hereby
represents to, warrants to, and covenants and agrees with.the Underwriter that:
(a) The Issuer is, and will be on the Delivery Date, a political subdivision of the State of
California, with full legal right, power and authority under the Act to issue, sell and deliver the Bonds
pursuant to the Authorizations and this Bond Purchase Agreement, to enter into the Program Documents,
to adopt the Resolution and to carry out and perform its obligations under the Program Documents and
the Resolution.
(b) The Resolution, adopted by the Issuer granting final approval of the execution and
delivery of the Bonds and the Program Documents and the issuance and sale of the Bonds, has been duly
adopted by the Issuer, has not been amended, modified or repealed and is in full force and effect on the
date hereof.
(c) The Issuer is not in breach of or default under any applicable law or administrative
regulation of the State of California or of the United States, or any applicable judgment or decree or any
loan agreement, indenture,note,resolution, agreement or other instrument to which the Issuer is a party or
is otherwise subject, which would impair in any material respect the performance of its obligations under
the Program Documents.
(d) The execution and delivery by the Issuer of the Bonds and the Program Documents,
compliance by it with the provisions of each thereof and, to the best of its knowledge, without
investigation, the consummation by it of the transactions on its part contemplated thereby will not conflict
with or constitute a breach of or default under any law, administrative regulation,judgment, decree, loan
agreement, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise
subject, which conflict, breach or default has or may have a material adverse effect on the Issuer's ability
to perforin its obligations under such documents.
3
(e) All approvals, consents and orders of any governmental authority, board, agency or
commission having jurisdiction which would constitute a condition precedent to the performance by the
Issuer of its obligations under the Bonds and the Program Documents have been obtained.
(f) There is no threatened action, suit, proceeding, inquiry or investigation against the
issuer, at law or in equity, by or before any court, public board or body, nor to the Issuer's knowledge, is
there any basis therefor, affecting the existence of the issuer or the titles of its officials to their respective
offices, or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the pledge .
of revenues or assets of the Issuer pledged or to be pledged to pay the principal of and interest on the
Bonds, or in any way materially adversely affecting or questioning (i).the territorial jurisdiction of the
issuer.. (ii)the use of the Official Statement or the use of the proceeds of the Bonds to make the Loan, (iii)
the validity or enforceability of the Bonds, any proceedings of the Issuer taken with respect to the Bonds
or any of the Program Documents, (iv) the exclusion of the interest on the Bonds from gross income for
purposes of federal income taxation or the accuracy or completeness of the Official Statement with regard
to the issuer., (v) the execution and delivery by the Issuer of the Program Documents or the Bonds or(vi)
the power of the Issuer to carry out the transactions on its part contemplated by the Bonds, the Official
Statement or any of the Program Documents.
(g) The Bonds, when delivered in accordance with the Indenture and paid for by the
Underwriter on the Delivery Date, will be valid and binding limited obligations of the Issuer payable
solely from the revenues and other property pledged and assigned for such payment as provided in the
Indenture.
(h) Any certificate signed by any authorized official of the Issuer and delivered to the
Underwriter shall be deemed to be a representation and warranty by the Issuer to the Underwriter as to the
statements made therein.
(i) Neither the Issuer nor anyone acting with its authorization on its behalf(other than the
Underwriter) has, directly or indirectly, offered for sale or solicited any offer to acquire the Bonds or any
security the offering of which would be deemed for purposes of the Securities Act of 1933, as amended,
to be part of the offering of the Bonds contemplated hereby.
(j) All meetings of the governing body of the Issuer at which action was taken in
connection with the Pro-ramyDocunients and the Bonds were duly and legally called and held, open to the
public at all times, and notice of the time and place of each such meeting was given as required by law.
(k) The Issuer shall not knowingly take or omit to take, as is appropriate.. any action the
taking or omission of which would adversely affect the exclusion of interest on the Bonds from gross
income for purposes of federal income taxation.
(1) The Issuer shall, at the expense of the Borrower, furnish or cause to be furnished to the
Underwriter, in such quantities as shall be requested by the Underwriter, copies of the Official Statement
and all amendments and supplements thereto.. in each case as soon as available.
(m) The Issuer shall furnish such information, execute such instruments and take such other
action consistent with law as may be required, and shall otherwise cooperate with the Underwriter in
taking all action necessary, to qualify the Bonds for offer and sale and to determine the eligibility for
investment in the .Bonds under the laws of such. jurisdictions as the Underwriter designate and the
continuation of such qualification in effect so long as required for distribution of the Bonds; provided,
however, that the foregoing will not require the Issuer to consent to service of process in any foreign.
jurisdiction or to register as a broker-dealer or qualify as a foreign corporation in any foreign jurisdiction.
4
The execution and delivery of this Bond Purchase Agreement by the Issuer shall constitute a
representation to the Underwriter that the representations and warranties contained in this Section 4 are
true as of the date hereof.
SECTION 5. Representations, Warranties and Covenants of the Borrower. The Borrower
represents warrants and covenants to the Underwriter and the Issuer that:
(a) The Borrower is, and will be at the date of Closing, a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware and is duly qualified to
transact business in the State. The Borrower has full power and authority to own its property (including,
without limitation, the Project), to carry on its business as presently being conducted and as contemplated
to be conducted by the Program Documents and to execute, deliver and perform its obligations under the
Program Documents.
(b) The information in the Official Statementunder the headings "ESTIMATED SOURCES
AND USES OF FUNDS," "THE PROJECT AND THE PRIVATE PARTICIPANTS" and "ABSENCE
OF LITIGATION — Borrower". was, on the date thereof, and is, on the date hereof, true and correct in all
material respects and did not. on the date thereof, and does not, on the date hereof; contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not misleading.
(c) The execution. delivery and performance of the Program Documents and the taking of
any.and all other actions and the execution, delivery and performance of all such documents as may be
required of it pursuant to the provisions of the Program Documents including, without limitation, the
authorization of the use by the Underwriter of the Official Statement in connection with the offering, sale
and distribution of the Bonds, have been duly authorized by all necessary action on its part.
(d) This Bond Purchase Agreement has been duly executed and delivered by the Borrower
and when executed and delivered by the other parties hereto will constitute a legal, valid and binding
obligation of the Borrower, enforceable 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 of the Program Documents by the Borrower and the other parties
thereto, the Program Documents will constitute legal, valid and binding obligations of the Borrower;
enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency,
reoro*a.nization, moratorium or other similar laws affecting creditors" rights generally.
(e) If at an_v time the Borrower becomes aware that any event shall have occurred of which
the Borrower believes it has unique knowledge not available to the Underwriter and which might cause
the Official Statement to contain.any untrue statement of material fact or omit to state any fact necessary
to make the statements therein not misleading in any material respect. the Borrower shall notify the
Underwriter. In addition, the Borrower shall promptly advise the Underwriter of the institution of any
action, suit, proceeding, inquiry or investigation of which it has any knowledge seeking to prohibit,
restrain or otherwise affect the use of the Official Statement in connection with the offering, sale or
distribution of the Bonds. The Borrower promptly shall furnish the Underwriter any information
concerning the Borrower and the Project which the Underwriter might reasonably request in connection
with any amendment of or supplement to the Official Statement.
(f) The execution, delivery and performance of the Program Documents and the
consummation of the transactions contemplated thereby will not conflict with, or constitute a breach of or
default.under,the Borrower's certificate of limited partnership or partnership agreement, or any indenture,
mortgage, deed of trust, lease, note, commitment, agreement or other instrument or obligation to which
5
the Borrower is a party or by which the Borrower or any of its respective properties is bound, or under
any law, rule, regulation.' judgment. order or decree to which the Borrower or any of its respective
properties are bound which breach might have a material adverse effect on the ability of the Borrower to
perfonn under the Program Documents. Tine Borrower is not now and never has been in default under any
order or decree of any court or any order, regulation or demand of any federal, state, municipal or
governmental agency or anv document, instrument or commitment to which the Borrower is subject or in
the payment of the principal of, or premium or interest on, or otherwise in default with respect to, any
bonds, notes or other obligations which it has issued, assumed or guaranteed, directly or indirectly, as to
payment of principal, premium or interest.
(g) To the Borrower's knowledge, there is no action, suit, proceeding, inquiry or
investi_,ation by or before any court., governmental agency, public board-or body pending and served, or
to tine knowledge of the Borrower, threatened against the Borrower (nor,.to the best of its knowledge, is
there any basis therefor), which (i) affects or seeks to prohibit, restrain or enjoin the issuance, sale or
delivery of the Bonds or the delivery of the Letter of Credit or the use of the Official Statement or the
execution and delivery of the Program Documents or (ii) affects or questions the validity or the
enforceability of the Bonds. (iii) questions the completeness or accuracy of the Official Statement or (iv)
questions the power or authority of tine Borrower to carry out the transactions contemplated by the
Program Documents or the power of the Borrower to construct, equip, own or operate the Project.
(h) To the Borrower's knowledge, it has made all filings with and received all approvals,
consents and orders of any governmental authority, legislative body, board, agency or commission having;
jurisdiction, or will obtain such approvals and consents on a timely basis which are necessary to permit
the Borrower to perfonn its obligations under the Program Documents, to carry out the transactions
contemplated by the Program Documents and to develop and equip tine PrCject.
(i) Any certificate signed for the .Borrower by an authorized representative thereof and
delivered to the Underwriter or the Issuer in connection with the transactions contemplated by the
Program Documents shall be deemed to be a representation and warranty by the Borrower to the
Underwriter or issuer as to the statements therein by the Borrower.
(j) The Borrower shall furnish or cause to be furnished to the Underwriter, in such quantities
as shall be reasonably requested by the Underwriter, copies of the Official Statement and of the Program
Documents and all amendments and supplements thereto, in each case as soon as available.
SECTION 6. Conditions to the Obligations of the Underwriter. The obligation of the
Underwriter to accept delivery of and pay for the Bonds on the Closing shall be subject, at the option of
the Underwriter, to the accuracy in all material respects of the representations, warranties and agreements
on the part of the Borrower and the representations of the issuer contained herein as of the date hereof and
as of the Closing. to the accuracy in all material respects of tine statements of the officers and other
officials ofthe Trustee,the Bank. the Borrower and tine issuer made in any certificates or other documents
furnished pursuant to the provisions hereof or of the Program Documents, and to the performance by the
Borrower and the Issuer of their respective obligations,to be performed hereunder and under the Program
Documents at or prior to the Closing and to the following additional conditions:
(a). At the Closing, the Bonds, the Program Documents and the Official Statement shall have
been duly authorized, executed and delivered by the respective parties thereto,. in substantially the forms
heretofore submitted to the Underwriter with any such changes as shall have been agreed to in writing by
the Underwriter, and said agreements shall not have been amended, modified or supplemented, except as
may have been agreed to in writing by the Underwriter, and there shall have been taken in connection
therewith, with the issuance of the Bonds and with the transactions contemplated thereby and by this
6
Bond Purchase Agreement,all such actions as Bond Counsel or Eichner & Norris PLLC, counsel to the
Underwriter("Underwriter's Counsel"), shall deem to be necessary and appropriate.
(b) The representations and warranties of the Borrower and the representations of the Issuer
contained in this Bond Purchase Agreement shall be accurate and complete in all material respects on the
date hereof and on the Closing, as if made again on the Closing, and the Official Statement (as the same
may be supplemented or amended with the written approval of the Underwriter) shall be accurate and
complete in all'material respects and shall not contain any untrue statement of fact or omit to state any
fact required to be stated therein or .necessary to make the statements therein, in the light of the
circumstances under which such statements were made,not misleading.
(c) Between the date hereof and the Closing. the market price or marketability, at the initial
offering prices set forth in the Official Statement, of the Bonds shall not have been materially adversely
affected, in the reasonable judgment of the Underwriter by reason of any of the following:
(i) legislation enacted or introduced in the Congress or recommended for passage by
the President of the United States, or a decision rendered by a court established under Article iiI
of the Constitution of the United States, or an order, ruling,.regulation (final, temporary or
proposed)or official statement issued or made:
(A) by or on behalf of the Treasury Department or the Internal.Revenue
Service of the United States, by the President or other a(7ency of the federal government
or members of the Congress with the purpose or effect, directly or indirectly; of imposing .
federal income taxation upon the revenues to be derived by the Issuer to pay the principal
of and interest on the Bonds, or such interest as would be received by the owners of the
Bonds, or
(B) by or on behalf of the Securities and Exchange Commission. or any other
governmental agency having jurisdiction of the subject matter, to the effect that
obligations of the general character of the Bonds, including any or all underlying
arrangements, are not exempt from registration under the Securities Act of 1931 as
amended or that the Indenture is not exempt from qualification under the Trust .Indenture
Act of 1939, as amended;
(ii) the declaration of war or engagement in major military hostilities by the United
States or the occurrence of any other national emergency or calamity relating to the effective
operation of the government of or the financial community in,the United States;
(iii) the declaration of a general banking moratorium by federal, New York or
California authorities. or the general suspension of trading on any national securities exchanoe;
(iv) the imposition by the New York Stock Exchange or other national securities
exchange, or any governmental authority, of any material restrictions not now in force with
respect to the Bonds or obligations of the general character of the Bonds or securities generally,
or the material increase of any such restrictions now in force, including those relating to the
extension of credit by, or the charge to the net capital requirements of, underwriters;
(v) an order, decree or injunction of any court of competent jurisdiction, or order,
filing, regulation or official statement by the Securities and Exchange Commission. or any other
governmental agency having jurisdiction of the subject matter, issued or made to the effect that
the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance,
7
offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby
or by the Official Statement, is or would be in violation of the federal securities laws as amended
and then in effect;
(vi) the withdrawal or downgrading of any rating of the Bonds by a national rating
agency or any rating of the Bank by a nationally recognized rating service; v
(vii) the occurrence of any adverse change of a material nature in the business,
financial condition, results of operation or properties of; the Bank,the Borrower, or of any change
or development in, or affecting particularly; the economy or the Borrower generally; or
(viii) any event occurring, or information becoming known which, in the reasonable
judgment of the.Underwriter, makes untrue in any material respect any statement or information
contained in the Official Statement, or has the effect that the Official Statement contains any
untrue statement of material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) At or prior to the.Closing, the Underwriter shall have received the following documents,
in each case satisfactory in form and substance to the Underwriter:
(i) the Program Documents, duly executed and delivered by the respective parties
thereto, with such amendments, modifications or supplements as may have been agreed to in
writing by the Underwriter, and the Official Statement, duly executed by the Borrower and the
Issuer;
(ii) a final opinion, dated the date of the Closing, of Bond Counsel, in the form
attached as Appendix F to the Official Statement and addressed to the Issuer, and a separate letter
addressed to the Underwriter (or a comparable statement in the supplemental opinion) to the
effect that the final opinion may be relied upon by the Underwriter to the same extent as if it had
been addressed to it, together with supplemental opinion dated the date of the Closing and .. .
addressed to the Underwriter substantially in the form of Exhibit A hereto;
(iii) the opinion of counsel to the Bank dated the Delivery Date and addressed to the
Underwriter in a form acceptable to the Underwriter;
(iv) a certificate of the Bank dated the Delivery Date, signed by an authorized
representative thereof,to the effect that:
a) to the actual knowledge of such authorized representative, there is no action, suit,
litigation, proceeding, inquiry or investigation at law or in equity or by or before
any judicial or administrative court, agency, body or other entity, pending or, to
the best knowledge of the Bank, threatened against the Bank or any of its
properties, wherein an unfavorable decision, ruling or finding (A) would
adversely affect the validity or enforceability of the Letter of Credit or(B) would
otherwise adversely affect the legal ability of the Bank to comply with its
obligations under the Letter of Credit; and
b) the information contained in the Official Statement under the heading "THE
BANK" and in APPENDIX E — SUMMARY OF CERTAIN PROVISIONS OF
THE REIMBURSEMENT AGREEMENT" does not contain any untrue
8
statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were make,
not misleading,
(v) the opinion of counsel to the Borrower, dated the date of Closing and addressed
to the Issuer, the Bank, Bond Counsel and the Underwriter, substantially in the form of Exhibit B
hereto;
(vi) the opinion of Underwriter's Counsel, dated the date of Closing, addressed to the
Underwriter, substantially in form of acceptable to the Underwriter;
(vii) a certificate of the Borrower, dated the date of Closing, signed by the Borrower,
confirming the representations set forth in Section 5 hereof as if given on the Closing;
(viii) a certificate of the Trustee dated the date of Closing, signed by a duly authorized
officer of the Trustee,to the effect that:
(A) such officer is a duly authorized officer of the Trustee;
(B) the Trustee is a national banking association duly organized and in good
standing and qualified to do business in the State, is authorized to carry out corporate
trust powers and has all necessary power and authority to enter into and perform its duties
under the Indenture and upon the execution and delivery thereof by the Trustee, the same
shall constitute legally valid and binding obligations of the Trustee, enforceable in
accordance with their respective terms;
(C) the trusts, duties and obligations of the Trustee under the Indenture have
been duly accepted by the Trustee;
(D) the Trustee is duly authorized to enter into the Indenture, the Financing
Agreement and the Regulatory Agreement and to authenticate and deliver the Bonds to
the Underwriter under instruction by the issuer pursuant to the terms of the indenture,
and the Indenture constitutes legally binding obligations of the Trustee in accordance
with their respective terms;
(E) to the best knowledge of such officer, the acceptance by the Trustee of
the duties and obli-ations under the Indenture, the Financing* Agreement and the
Regulatory Agreement and the execution and delivery of the Indenture and compliance
with provisions thereof, will not conflict with, or constitute a breach of or default under.
the Trustee's duties under said documents or any law, administrative regulation, court
decree. resolution, charter, bylaws or other agreement to which the Trustee is subject or
by which it is bound;
(F) the representations and agreements of the Trustee in the indenture are
true; complete and correct in all material respects as of the Closing:
(G) to the best of such officer's knowledge, no litigation is pending or
threatened (either in state or federal courts) against the Trustee (A) to restrain or enjoin
the execution or delivery of any of the Bonds or the collection of Revenues (as defined in
the Financing Agreement) pledged under the Indenture, or (B) in any way contesting or
9
affecting any authority for the authentication or delivery of the Bonds or the validity or
enforceability of the Bonds or the Indenture; and
(H) the Bonds have been validly authenticated, registered and delivered by
the Trustee;
(ix) a certificate of the Issuer, dated the date of Closing, signed by an authorized
representative as is acceptable to the Underwriter,to the effect that:
(A) the representations and agreements of the Issuer contained in this Bond
Purchase Agreement, the Financing Agreement and the Indenture are true and correct in
all material respects as of the Closing;
(B) the Issuer has complied with all agreements and conditions to be
complied with by the Issuer at or prior to the Closing under this Bond Purchase
Agreement,the Financing Agreement and the Indenture;
(C) to the best of the Issuer's knowledge, no action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, regulatory agency, public
board or body has been served upon the Issuer and is pending or is otherwise known to be
threatened in any way affecting the existence of the Issuer, or the titles of the Issuer's
officials to their respective offices, or seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds or the application of the proceeds thereof in accordance with the
Indenture, or the collection or application of the Revenues(as defined in the Indenture)to
pay the principal of and interest on the Bonds, or in any way contesting or affecting the
validity or enforceability of the Program Documents or any action of the Issuer
contemplated by any of said documents, or in any way contesting the completeness or
accuracy of the Official Statement or the powers of the Issuer or its authority with respect
to the Program Documents or any action on the part of the Issuer contemplated by any of
said documents,nor to the Issuer's knowledge is there any basis therefor.
(D) the information contained in the Official Statement under the captions
"THE ISSUER" and "ABSENCE OF LITIGATION — Issuer." as of its date was, and as
of the date hereof, is true and.correct.in all material respects and such information does
not contain any untrue or misleading statement of material fact or omit to state any
material fact necessary to make the statements therein, in the light of the circumstances
under which they were made. not misleading;
(x) the tax compliance certificate of the Issuer dated the date of the Closing;
(xi) evidence satisfactory to the Underwriter to the effect that the Bonds have
received a rating of"AA+/A-1+" from Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc.; and
(xii) such additional legal opinions. certificates, proceedings, instruments and other
documents as.the Underwriter, Bond Counsel or Underwriter's Counsel may reasonably request
to evidence compliance by the Borrower, the Bank, the Trustee and the .Issuer with legal
requirements, the truth and accuracy, as of the Closing; of the representations of the Borrower,
the Issuer,the Bank and the Trustee, and the due performance or satisfaction by the Borrower,the
Issuer, the Bank and the Trustee at or prior to such time of all agreements then to be performed
and all conditions then to be satisfied by the Borrower,the Issuer,the Bank and the Trustee.
10
SECTION 7. Amendment of Official Statement. After the Closing, (1)the Borrower will not
adopt any amendment of or supplement to the Official Statement to which, after having been furnished
with a copy, the Underwriter shall object in writing (and shall provide indemnification satisfactory to the
Issuer with respect to the failure to so amend or supplement the Official Statement) and (2) if any event
relating to or affecting the Issuer,the Bank or the Borrower shall occur as a result of which it is necessary,
in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make such
document not misleading in the light of the circumstances existing at the time it is delivered to the
Underwriter. the Borrower.shall cause to be forthwith prepared and furnished to the Underwriter (at the
expense of the.Borrower for ninety (90) days from the Closing and otherwise at the expense of the
Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement
(in form and substance satisfactory to the Underwriter) that will amend or supplement such document so
that it will not contain an untrue statement of material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances existing at the time it is delivered to
the Underwriter, not misleading.
SECTION 8. Indemnification of Issuer,Underwriter and Related Parties.
(a) The Borrower agrees to pay, defend, protect, indemnify, save and hold harmless the
Issuer, the Underwriter and each affiliate, member, officer, director, official, employee and agent of the
Issuer and the Underwriter and each person, if any, who controls any of the foregoing within the meanin�o
of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of
1934, as amended (collectively referred to herein as the "Indemnified Parties"), against any and all
liabilities, losses, damages, costs, expenses (including reasonable attorneys' fees), causes of action
(whether in contract, tort or otherwise),suits, claims, demands and judgments of any kind, character and
nature (collectively referred to herein as the "Liabilities"), except for any Liability arising from the gross
negligence or willftil misconduct of the Indemnified Parties, caused by or directly or indirectly arising
from or in any way relating to (i) the Bonds, the Project, the Loan, the Financing Agreement, the
indenture, this .Bond Purchase Agreement or any document related to the Bonds, the Project, the Loan
(the "Transaction Documents") or any transaction or agreement, written or oral, pertaining to the
foregoing or(ii)any untrue or misleading statement or alleged untrue or alleged misleading statement of a
material fact made by the Borrower or its agents under the headings "ESTIMATED SOURCES AND
USES OF FUNDS," "THE PROJECT AND THE PRIVATE PARTICIPANTS" and "ABSENCE OF
LITIGATION — Borrower" contained in the Official Statement, or caused by any omission or alleged
omission from the Official Statement of anv material fact under the headings "ESTIMATED SOURCES
AND USES OF FUNDS." "THE PROJECT AND THE PRIVATE PARTICIPANTS" and "ABSENCE
OF LITIGATION — Borrower" necessary to be stated therein in order to make the statements made
therein, in light of the circumstances under which they were made, not misleading.
(b) Any Indemnified Party shall notify the Borrower of the existence of any Liability to
which this indemnification obligation would apply and shall give to the Borrower an opportunity to
defend the same at the Borrower's expense and with counsel satisfactory to the Indemnified Party,
provided that the indemnified Party shall at all times also have the right to fully participate in the defense.
If there may be legal defenses available to the.Indemnified Party which are different from or in addition to
those available to the Borrower or if the Borrower shall, after this notice and within a period of time
necessary to preserve any and all defenses to any claim asserted, fail to assume the defense or to employ
counsel for that purpose satisfactory to the Indemnified Party, the Indemnified Party shall have the right,
but not the obligation, to undertake the defense of, and, with the approval of the Borrower, which
approval shall not be unreasonably withheld or delayed, to compromise or settle the claim or other matter
on behalf of: for the account of, and at the risk of, the Borrower. It shall be reasonable for the Borrower
11
to disapprove any proposed compromise or settlement if it would adversely affect the Borrower's
prosecution of a related case or its assertion of a defense in a related case. .
(c) In order to provide for just and equitable contribution in circumstances in which the
indemnity provided for in paragraph (a) of this Section 8 is for any reason held to be unavailable. the
Borrower and the Indemnified Partv shall contribute proportionately to the aggregate Liabilities to which
the Borrower and the Indemnified Party may be subject, so that the Indemnified Party is responsible for
that portion represented by the percentage that the fees paid by the Borrower to the Indemnified Party in
connection with the issuance and administration of the Bonds bear to the aggregate offering price of the
Bonds, with the,Borrower responsible for the balance: provided, however, that in no case shall the
indemnified Party be responsible for any amount in excess of the fees paid by the Borrower to the
Indemnified Party in connection with the issuance and administration of the Bonds.
(d) The Indemnified Parties,.other than the Issuer and the Underwriter, shall be considered to
be third party beneficiaries of this Bond Purchase Agreement for purposes of this Section 8. The
provisions of this Section 8 will be in addition to all liability which the Borrower may otherwise have and
shall survive any termination of this Bond Purchase Agreement, the offering and sale of the Bonds and
the payment or provisions for payment of the Bonds.
(e) The indemnification hereunder shall be in addition to, and shall not limit, any indemnity
granted by the Borrower pursuant to the Financing Agreement or any other document.
SECTION 9. Expenses. Whether or not the sale of the Bonds to the Underwriter is
consummated, the Underwriter shall be under no obligation to pay any costs or expenses incident to the
performance of the obligations of the Issuer or'Borrower hereunder. All costs and expenses to effect the
authorization, preparation (including word processing and printing costs), issuance, sale and delivery, as
the case may be,- of the Official Statement (together with any amendments or supplements thereof). the
Bonds, the Program Documents, anv rating agency fees. Trustee's fees and expenses, Trustee's counsel
fees and disbursements, financial consultant fees'and disbursements, the fees and disbursements of Bond
Counsel, the fees and expenses of Underwriter's Counsel, all Blue Sky fees and expenses, the fees and
expenses of the Issuer's Counsel, the fee of the issuer's financial advisor, if any, and the amount to be
paid to the Underwriter pursuant to Section I of this Bond Purchase Agreement, shall be paid out of the
sources provided therefor in the indenture, or if the Bonds are not delivered to the Underwriter, such. costs
and expenses shall be paid by the Borrower. Unless otherwise agreed, all expenses listed above and
incurred as of the Delivery Date shall be due and payable on the Delivery Date. All out-of-pocket
expenses of the Underwriter did the cost of obtaining federal fluids for the purchase price of the Bonds
hereunder shall be paid by.the Underwriter.
SECTION 10. Survival of Certain Representations and Obligations. The respective
agreements, covenants, representations, warranties and other statements of the Borrower and the issuer
and each of their respective officials or officers set forth in or made pursuant to this Bond Purchase
Agreement shall remain in full force and effect..re0ardless of any investigation, or statements as to the
results thereof, made by or on behalf of the Underwriter and will survive delivery of and payment for the
Bonds.
SECTION 11. Notices. Any notice or other communication hereunder shall be in writing. and,
if sent to the Underwriter, will be mailed, delivered or telecopied and confirmed to the Underwriter care
of Citigroup Global Markets Inc., 390 Greenwich Street, 2nd Floor. New York, NY 10013, Attn:
Manger, Short-Term Finance Group, with a copy to Citigroup Global Markets Inc., 444 S. Flower Street,
27th Floor, Los Angeles, CA 90071, Attn: Mr. Richard Gerwitz, and if sent to the Issuer or Borrower
shall be mailed, delivered or telecopied and confirmed at its address respectively set forth above.
12
SECTION 12. Governing Law. This Bond Purchase Agreement shall be governed by and
construed in accordance with the laws of the State, without giving effect to the principles of conflict of
laws in the State.
SECTION 13. Counterparts. This Bond Purchase Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
SECTION 14. Successors. This Bond Purchase Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, and no other person shall acquire or have
any right or obligation under or by virtue of this Bond Purchase Agreement.
SECTION 15. Termination of Agreement. If the conditions to the obligations of the
Underwriter contained in this Bond Purchase Agreement are not satisfied, or if the obligations of the
Underwriter to purchase and accept delivery of the Bonds are terminated for any reason permitted by this
Bond Purchase Agreement, then, upon written notice from the Underwriter to the Borrower and the Issuer
delivered prior to Closing, this Bond Purchase Agreement will terminate and none of the Underwriter, the
Borrower or the Issuer will be under further obligation hereunder, except that the obligations to pay
expenses. as provided in Section 9 hereof, and the Borrower's indemnification obligations under Section
8 hereof, will continue in full force and effect. The Underwriter may in its discretion waive any one or
more of the conditions imposed by this Bond Purchase Agreement for its protection and proceed with the
Closing.
13
IN WITNESS WHEREOF, the parties hereto have executed this Bond Purchase Agreement as of
the date first above written.
Very truly yours,
CITIGROUP GLOBAL MARKETS INC.
By:
Its: Managing Director
[Signatures continued on next page]
[Counterpart signature page to the Pleasant Hill Bond Purchase Agreement]
PHVP I,LP,
a Delaware limited partnership
By: PHVP I GP,LLC, a Delaware limited
liability company, its general partner
By:
Name:
Title: Authorized Signatory
[Signatures continued on next page]
[Counterpart signature page to the Pleasant Hill Bond Purchase Agreement]
COUNTY OF CONTRA'COSTA,as Issuer
By:
Name: James Kennedy
Title: Deputy Director=Redevelopment
EXHIBIT A
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
Julv 24, 2008
Citigroup Global Markets Inc.
New York,New.York
$10,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
[After appropriate introductory language, the opinion shall state substantially as follows]
I. The Bond Purchase Agreement has been duly executed and delivered by, and constitutes
the valid and binding agreement, of the Issuer.
2. The Bonds are not subject to the registration requirements of the Securities Act of 1933,
as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as
amended. No opinions are expressed with respect to the Credit Enhancement.
3. The opinions delivered in this paragraph 3 are rendered solely to Citigroup Global
Markets Inc., as the Underwriter of the Bonds. The statements contained in the Official Statement under
the captions THE BONDS" (except under the subcaptions `Book-Entry Only," "Remarketing Agent"
and "Disclosure Concerning Sales by Remarketing Agent"), "SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS," "TAX MATTERS" and in Appendices A, B, C, D and F, insofar as
such statements expressly summarize certain provisions of the Bonds. the Indenture, the Financing
Agreement, the Regulatory Agreement and the Bond Opinion, concerning certain federal tax matters
relatin;to the Bonds, are accurate in all material respects.
Yours truly,
EXHIBIT B
FORM OF OPINION OF BORROWER'S COUNSEL
July_, 2008
County of Contra Costa Citigroup Global Markets Inc.
Martinez, California New York, New York
The Bank of New York Mellon Trust Company, Bank of America,N.A.
N.A. New York, New York
Los Angeles, California
Re: $10,000,000 County of Contra Costa Multifamily Housing Revenue Bonds (Avalon Walnut
Creek at Contra Costa Centre Project) Series 2008A
[After appropriate introductory language, the opinion shall state substantially as follows]
(1) The Borrower is qualified to do business and in good standing wherever such
qualification and/or standing are required, including the State of California.
(2) The Borrower has full legal right, power and authority (a) to own its properties
and conduct its business as described in the Official Statement and (b) to enter into and to carry out and
consummate the transactions contemplated by the documents signed by the Borrower (collectively, the
'`Borrower Documents")..
(3) By all necessary action, the Borrower has duly authorized and adopted the
Borrower Documents, and approved the execution and delivery of, and the performance by the Borrower
of the obligations in connection with the issuance of the Bonds on its part contained in the Bonds and the
Borrower Documents and the consummation by it of all other transactions contemplated by the Indenture
and the Borrower Documents in connection with the issuance of the Bonds.
(4) The Borrower Documents have been duly executed and delivered by the
Borrower and, assuming the due authorization, execution and delivery of such agreements by the
respective other parties thereto where necessary, if any, constitute legal, valid and binding obligations of
the Borrower' enforceable in accordance with their respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general
applicability affecting the enforcement of creditors' rights and to general principles of equity, regardless
of whether such enforceability is considered in equity or in law.
(5) To the best of our knowledge after due and diligent inquiry, as of the Delivery
Date, the Borrower is not in any material respect in violation of, breach of or default under any applicable
constitutional provision or law of any state or of the United States, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Borrower or any of its activities,
properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement (including,
without limitation,the Borrower Documents)or other agreement or instrument to which the Borrower is a
party or by which the Borrower or any of its property or assets is bound, and no event has occurred and is
continuing which with the passage of time or the giving of notice, or both, would constitute such a default
or event of default under any such instruments; and the execution and delivery of the Bonds and the
Borrower Documents, and compliance with the provisions on the Borrower's part contained therein, do
not and will not conflict with, or constitute on the part of the Borrower a violation of, breach of or default
under, any applicable constitutional provision or law of any state or of the United States, or any order,
rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or
any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note
agreement or other aureement or instrument to which the Borrower is a party or by which the Borrower or
any of its property or assets is bound, nor will any such execution, delivery or compliance result in the
creation or imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the property or assets of the Borrower or under the terms of any such law,
regulation or instrument, except as provided by the Bonds or the Borrower Documents;
(6) To the best of our knowledge after due and diligent inquiry, as of the Delivery
Date, all consents, approvals, authorizations, and orders of or filings or registrations with any
governmental authority, board, agency or commission of any state or of the United States having
jurisdiction required in connection with, or the absence of which would materially adversely affect, the
execution and delivery by the'Borrower of the Borrower Documents or the performance by the Borrower
of its obligations thereunder have been obtained or made and are in full force and effect.
(7) To the best of our knowledge after due and diligent inquiry. as of the Delivery
Date, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
judicial or administrative court or c*overnmental agency or body, state, federal or other, pending or, to the
best of our knowledge, threatened against the Borrower, affecting the existence of the Borrower or the
titles of its officers to their respective offices, or contesting or affecting as to the Borrower the validity or
enforceability of the Act,'the Bonds, any Borrower Document or the execution and delivery or adoption
by the Borrower of any Borrower Document, or in any way contesting or challenging the completeness or
accuracy of the Official Statement or the powers of the Borrower or its authority with respect to the
Borrower Documents or the consummation of the transactions contemplated thereby; nor, to the best of
our knowledge, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein
an unfavorable decision, ruling or finding would materially adversely affect the financial condition or
operations of the Borrower or the validity of the authorization. execution, delivery or performance by the
Borrower of any Borrower Document.
(8). The Official Statement does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements under the captions
"ESTIMATED SOURCES AND USES OF FUNDS," "THE PROJECT AND THE PRIVATE
PARTICIPANTS" and "ABSENCE OF LITIGATION—Borrower'(except for any financial or statistical
data or forecasts, numbers, charts, estimates, projections, assumptions or expressions of opinion, included
therein, as to which we express no opinion or view), in the light of the circumstances under which they
were made, not misleading. y
COMPOSITE OFFERING STATEMENT
NEW ISSUE(2008 BONDS) Rating: S&P"AA/A-1+
REMARKETING–NOT A NEW ISSUE(2006 BONDS) Sec"RATINGS"herein
On March 23, 2006, Orrick. Herrington cf Sutcliffe LLP, Bond Counsel,delivered its opinion that interest on the 2006A Bonds Bras excluded from gross income fur federal
income tax purposes under Section 103 ofthe Internal Revenue Code of 1986(the "Code"),except that no opinion was expressed as to the status of interest on any 20064 Bund,fn•anti
period that such 2006A Bond is held by a "substantial user"of the facilities,fnanced or refinanced hr the 2006A Bonds or by a "related person"within the meaning of.Section 147(a)of
the Code. Bond Counsel observed, however, that interest on ry
the 2006A Bonds as a specific preference item for purposes of the federal individual and corporate alternative minimum
taxes,and that interest on the 2006.4-T Bonds was not excluded from gross intone for federal income tax proposes. Bond Counsel it-as also ofihe opinion that interest on the 2006 Bonds
it-cis exempt from State of Califbi-nia personal income taxes. Bond Counsel expresserd no opinion regarding anv other tax consequences related to the ownership or disposition of,or the
accrual of-receipt of interest on,tine 2006 Bunds.
In the opinion of Bond Counsel, under existing lairs,regulations,rulings and judicial recisions,the remarketing of the 2006A Bonds on dee Delivery Date will not,in and of
itself,'adversely affect tlue exclusion from gross income for federal income tax purposes of interest pavable on the 2006A Bonds.
In tine opinion of Bond Counsel,based upon an analvsis of existing lanes,regulations,rulings and court decisions,and assuming,among other matters,the accrtracc of certain
representations and compliance with certain covenants, interest on the 2008 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal
Revenue Code of 1986(the "Code").except that no opinion is expressed as to dee status of interest on urn•2008 Bond during am period such 2008 Bond is held bm:a ".snhstantial user"of
the facilities financed or refinanced by rile Bonds or is a "related person"within the meaning of Section 147(a)of the Code. Bond Counsel observes that interest an the 2008 Bonds is a
specific preference itenh forphuposes ofihe federal individual and corporuie alternative nninunun taxes. 1n the further opinion of Bond Counsel,interest on the 2008 Bonds is exempt ftonl
State of California personal income taxes. Bond Counsel expresses no opinion regarding other tax consequences relating to the ownership or disposition of of-the accrual or receipt of
interest our,the 2008 Bonds. See ""1'AX A1..4TTF,RS"for additional inforn:ation..
S 116,000,000 S9,000,000
Count'of Contra Costa County of Contra Costa
Multifamily Housing Revenue Bonds Multifamily Housing Revenue Bonds
(.Avalon Walnut('reek at Contra Costa Centre Project) (Avalon Walnut Creek at Contra Costa Centre Project)
Series 2006A Taxable Series 2006.A-T
C:USIP: 212249 CC 8 CUSIP:212249 CD6
$1(1,000,000
County of Contra Costa
Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
CUS1P:
Interest Accrues From Jule 24,2008 Price:100% Due: March 15,2(96
'Ile County of Contra Costa("issuer")is issuing the above-captioned Series 2008A Bonds(the"2008 Bonds'and together with the 2006 Bonds.as defined below.the"Bonds')
pursuant to an Amended and Restated Trust indenture,dated as ofJuh 1.2008(the"Indenture'),b) and between the Issuer and'file Bank of New York Mellon Trust Company,N.A.(the
"Trustee"). In addition.the above-captioned Series 2006A Bonds.issued as"Count ofContra Costa Multifamily Housing Revenue Bonds(Pleasant I lull BART Transit Village Apartment
Project)Series 2006A' (the"2006A Bonds")and Taxable Series 2006A-T Bonds,issued as"Count of Contra Costa Multifamily l lousing Revenue Bonds(Pleasant Hill BART Transit
Village Apartments Project)Taxable Series 2006A-T'"(the"2006A-T Bonds"and together with the 2006A Bonds.the"2006 Bonds'),originally issued on March 23,2006 pursuant to the
tennis of a Trust Indenture.dated as of March 1.2006(the"Original Indenture').between the Issuer and U.S. Bank National Association,as trustee,are being remarketed pursuant to the
terms of the Indenture. The net proceeds of the Bonds will he used to fund a loan(the"Loan")to be made by the Issuer to PHVP 1.LP,a Delaware limited partnership(the"Borrower"),to
finance the construction and development of a multifamily rental housing project known as Avalon Walnut Creek at Contra Costa Centre(the"Project")located in the County of Contra
Costa. California. The Loan will he made pursuant to an Amended and Restated Financing Agreement,dated as of.luly 1.2008 (the"Financing Agreement'),anion-the Issuer,the
Borrower and the Trustee.
The Bonds will initially bear interest at the rate determined b) the Citigroup Global Markets Inc.on or prior to Juh 24.2008(the"Delivery Date')from and including the
Delivery Date to and including Jule 30.2008.and thereafter will bear interest at a variable rate determined weekh (the"Weekly Variable Rate")by Citigroup Global Markets inc..the
initial Remarketing Agent.The Bonds will continue to bear interest at the Weekly Variable Rate until adjusted to an interest rate Mode The Weekh Variable Rate will be determined
independently for each Series of Bonds.The Bonds are issuable as full,registered bonds.without coupons,in the minimum denomination of'$100.(100 or any integral multiple of$5.00(1 in
excess thereof during a Weekly Variable Rate Period. The Bonds will be issued in book-entry onh torn. registered in the name of Cede&Co.,as nominee of The Depository Trust
Company.New fork.New fork(`DTC"). Purchasers will not receive certificates representing their interest in the Bonds.
The principal of each Bond will he payable upon the presentation and surrender of such Bond.when due.at the principal corporate trust office of the'trustee. During any
Weckh Variable Rate Period.interest nn each Bond will he payable on the fifteenth day of each month.commencing on August I5.2008. For so long as the Bonds are registered in the
name of Cede&Co..the Trustee will make all payments of principal of and interest on the Bonds to DTC which,in turn,is obligated to remit such principal and interest to DTC Participants
(as defined herein)for subsequent disbursement to the Beneficial Owners(as defined herein)ofthe Bonds.
The interest rate on the Bonds max be adjusted to a Daily Variable Rate,Reset Rate or Fixed Rate as set forth in the Indenture and further described herein. THIS COMPOSITE
OFFERING STATEMENT IS NOT INTENbED TO PROVIDE CERTAIN INFORMATION WiTH RESPEC'1 TO THF.. BONDS (INCLUDING THE TERMS OF SUCH BONDS)
AFTER ADJUSTMENT TO AN INTEREST RATE MODE OTHER THAN TTiE WEEKLY VARIABLE RATE. IF THE BONDS ARE ADJUSTED TO A DAII.i'VARIABLE RATE,
RESET RATE OR FIXED RATE. A SUPPLEMENT TO THIS COMPOSITE.OFFERING STATEMENT OR A NEW OFFICIAL.STATEMENT OR REMARKETING CIRCULAR
WILL BE PREPARED. See''I'l IE BONDS–Mandator'fender for Purchase of Bonds'herein.
Payments of principal of and interest on the Bonds are enhanced by an irrevocable direct-pay letter of credit(the"Letter of Credit')issued to the Trustee for the benefit of the
registered Bondholders b)'
BANK OF AMERICA,N.A.
Unless extended.the Letter ol'Credit will expire by its terms on,luny .2011.unless it terminates earlier in accordance with its terms. The Letter of Credit nmay be
replaces)by an Alternate Credit Facility as permitted by the Indenture. See"SG(TRITY AND SOURCES OF PAYMENT FOR T'HE 130NDS–The Letter of Credit"and"—
Alternate Credit Facility."
TI ii• BONUS AND Ti IF. INTFARES'r THEREON ARE LIMITED OBLIGATIONS OF TI II:; ISSUER,PAYABLE SOi.ELY FROM THE SECURITY,WHICH IS
SPECIF ICA I-L)'ASSIGNED AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED IN THE INDENTURE. NEITHERTHE STATE OF
CALIFORNIA (THE"STA'T'E"). NOR ANi' POLITICAL SUBDIVISION THEREOF(EXCEPT THE ISSUER. TO THE LiMITED EXTENT SEF FORTH IN THE INDENTURE)
WILL iN ANY FVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF.PREMIUM(IFANY)OR INTERL-'S'l ON'1 HE BONDS OR FORTI IE PERFORMANCE OF
ANY PLEDGF,OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OF THE ISSUER.AND NONE OF TT IF BONDS OR ANY OF TT IF ISSUER'S AGRF.F:MENTS
OR OBLIGATIONS WILL BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF'I HE CREDIT OF
THE ISSUER,TIME STATE OR ANi'POLITICAL SUBDIVISION THEREOF(EXCEPT'TIIE ISSUER,-1.0 THE LIMITED EXTENT SET FORTiI IN THE INDENTURE)WITHIN
THE MEANING OF ANY CONST'fl'iT1ONAL OR STATUTORY PROVISION WHATSOEVER.
During any Weekly Variable Rate Period, Bondholders and Direct Participants(as defined herein)have the option to demand the purchase of their Bonds upon not less than
seven(7)days notice given to the Trustee.at a price equal to one-hundred percent(100%)of the principal amount thereof plus accrued and unpaid interest thereon to the date of purchase.
The Bonds will he subject to redemption and mandatory tender prior to their stated maturity dale at the prices.on the terns and upon the occurrence of the events described
herein. See"ITIF BONDS– Mandatory Tender for Purchase of Bonds"and `--Redemption Provisions"herein. In addition. under the Indenture. the nmaturit of the Bonds may he
accelerated upon the occurrence of cenain events. See APPENDIX B:"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE–Default and Remedies."
This cover page contains certain information for general reference only. It is not a summary of the security or terms of this issue. Potential investors are advised to
read this entire Composite Offering Statement to obtain information essential to the making of an informed investment decision with respect to the Bonds.
The.Series 2006 Bonds are being offered where,as and ifreceived upon mandaton�tender and the Series 20/18 Bonds are being offered when,as and if issued and received by
Citigroup Global Alarkets Inc.,subject to the approval as to their validim by Orrick. Herrington d Sutcliffe LLP,San Francisco,California.Bond Counsel.cud vermin other conditions.
Certain legal matters will be passed upon for Bank ofAtnerica,N.A.by Updike, Kell v&Spellacv, P.C., llar(ford. Connecticut,for Citigroup Global Markets inc. by Fichner X Norris
PLLC, Washingion,DC and for the Borrower by Goodwin Procter LLP,San Francisco.California. It is anticipated that the Bonds will be as•ailable jou clelivery through DTC in New fork.
Herr Fork.on or about Juh•24,2008.
Citi
Dated: July_.2008
Citigroup Global Markets Inc. (the "Underwriter' or "Remarketing Agent") has provided the
following sentence.for inclusion in this Composite Offering Statement. The Underwriter has reviewed
the information in this Composite .Offering Statement . in accordance with, and as part of, its
responsibilities to.investors under the federal securities laws as applied to the facts and circumstances of
this transaction, but the Underwriter does not guarantee the accuracy or completeness of such
information.
No dealer, broker, salesperson or other person has been authorized by the Underwriter, the
Borrower or the issuer to give any information or to make any representations, other than those contained
herein, in connection with the offering of the Bonds described herein, and, if given or made, such other
information or representation must not be relied upon as having been authorized by the Issuer, the
Borrower or the Underwriter. This Composite Offering Statement does not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any
jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Composite Offering Statement is not to be construed to be a contract with the purchasers of
the Bonds. Statements contained in this Composite Offering Statement which involve estimates,forecasts
or matters of opinion,whether or not expressly described herein, are intended solely as such and are not to
be construed as representations of fact.
The Issuer has supplied information in this Composite Offering Statement under the caption
"THE ISSUER" and ."ABSENCE OF LITIGATION — issuer," but is not responsible for any .other
information contained in this Composite Offering Statement. All other information set forth herein has
been obtained from sources other than the Issuer that are believed to be reliable but it is not guaranteed as
to accuracy or completeness, and is not to be construed as a representation by the Issuer or the
Underwriter. The Issuer has made no independent verification of any of the information contained herein.
The information and expression of opinions contained herein are subject to change without notice, and
neither the delivery of this Composite Offering Statement nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the affairs.of the Issuer, the
Borrower or any other party described herein since the date hereof.
Bank of America, N.A. (the "Bank") has not provided or approved any information in this
Composite Offering Statement, except with respect to the description under the caption "THE BANK"
and APPENDIX H — FORM OF LETTER OF CREDIT and does not take any responsibility for any other
information contained in this Composite Offering Statement. Bank of America, N.A. makes no
representation as to the contents of this Composite Offering Statement, the suitability of the Bonds for
any investor, the feasibility or performance of the Project or compliance with any securities, tax or other
laws or regulations.
This Composite Offering Statement is submitted in connection with the sale of the Bonds referred
to herein and may not be reproduced or used, in whole or in part, for any other purpose. The Issuer and
the Borrower have no plans to make or cause to be made any secondary market disclosure regarding the
issuer or the Borrower, as applicable, subsequent to the distribution of this Composite Offering Statement
unless otherwise required to do so by law.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
AS AMENDED, NOR HAS THE INDENTURE BEEN QUALIFiED UNDER :THE TRUST
INDENTURE ACT OF 1939. AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN
SUCH ACTS. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE.
TABLE OF CONTENTS
Page
INTRODUCTION........................................................................:................................................................l
THEBONDS..................................................................................................................................................
•BOOK-ENTRY ONLY SYSTEM..............................................................................................................16
SECURITY AND SOURCES OF PAYMENT FOR THE.BONDS ...........................................................18 ,
BONDHOLDERS' RISKS .........................................................................................................................20
THEISSUER..............................................................................................................................................24
THEBANK..................................................................................................:..............................................24
ESTIMATED SOURCES AND USES OF FUNDS...................................................................................26
THE PROJECT AND THE PRIVATE PARTICIPANTS..........................................................................26
RATINGS...........:........................................................................................................................................28
TAXMATTERS......................................................................................................................:..................28
ENFORCEABILITY OF REMEDIES........................................:...............................................................31
CONTINUING DISCLOSURE..................................................................................................................31
ABSENCEOF LITIGATION.....................................................................................................................32
UNDERWRITING AND REMARKETING..............................................................................................32
LEGALMATTERS....................................................................................................................................33
MISCELLANEOUS....................................................................................................................................33
APPENDIX A' SELECTED DEFINITIONS A-1
APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE B-I
APPENDIX.0 SUMMARY OF CERTAIN PROVISIONS OF THE
FINANCING AGREEMENT C-1
APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE
REGULATORY AGREEMENT D-1
APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE
REIMBURSEMENT AGREEMENT E-1
APPENDIX F PROPOSED FORM OF BOND COUNSEL OPINIONS F-1
APPENDIX G PRIOR BOND COUNSEL OPINION G-1
APPENDIX H FORM OF LETTER OF CREDIT H-1
COMPOSITE OFFERING STATEMENT
relating to
5116,000,000 $9,000,000
County of Contra Costa County of Contra Costa
Multifamily Housing Revenue Bonds Multifamily Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project) (Avalon Walnut Creek at Contra Costa Centre Project)
Series 2006A 'taxable Series 2006A-T
$10,000,000
County of Contra Costa
Multifamih•Housing Revenue Bonds
(Avalon Walnut Creek at Contra Costa Centre Project)
Series 2008A
INTRODUCTION
This Composite Offering Statement; including the cover page hereof, sets forth information
concerning (i) the issuance and sale by the County of Contra Costa (the "Issuer") of $10,000,000
Multifamily Housing Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Series
2008A (the "2008 Bonds"); and (ii)the remarketing of$116,000,000 of the Issuer's Multifamily Housing
Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Series 2006A, issued as "County
of Contra Costa Multifamily Housing Revenue Bonds (Pleasant Hill BART Transit Village Apartment
Project) Series 2006A" (the "2006A Bonds") and $9,000,000 of the Issuer's Multifamily Housing
Revenue Bonds (Avalon Walnut Creek at Contra Costa Centre Project) Taxable Series 2006A-T, issued
as "County of Contra Costa Multifamily Housing Revenue Bonds (Pleasant Hill BART Transit Village
Apartments Project) Taxable Series 2006A-T" (the "2006A-T Bonds" and together with the 2006A
Bonds and the 2008 Bonds, the "Bonds"). The Issuer is a political subdivision of the State of California
(the`'State''). See"THE ISSUER"herein.
The 2006A Bonds and 2006A-T Bonds were issued and the 2008 Bonds will be issued pursuant
to the provisions of 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 issuance and as it may from time to time be amended and
supplemented (tile "Act"). The Bonds will be will be offered pursuant to the terms of an Amended and
Restated Trust Indenture, dated as of July 1. 2008 (the "Indenture"), by and between the Issuer and The
Bank of New York Mellon Trust Company,N.A., as trustee(the"Trustee"), which amends and restates in
its entirety a Trust Indenture, dated as of March 1. 2006 (the "Original Indenture"), between the Issuer
and U.S. Bank National Association, as trustee (the "Original Trustee''), pursuant to which the 2006
Bonds were issued. The net proceeds of the Bonds will be used to fund a loan (the"Loan.")to be made by
the Issuer to PHVP I, LP, a Delaware limited partnership (the "Borrower"). The Loan will be evidenced
by a non-recourse [Multifamily Note] dated July _, 2008 (together with all riders and addenda thereto,
the "Note") executed by the Borrower in favor of the Issuer and secured by a Construction First Deed of
Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated as of July_, 2008
(the"Bond Mortgage"), executed by the Borrower and delivered to the Issuer with respect to the Project.
The proceeds of the. Loan will be used by the Borrower to finance the construction and
development of a multifamily rental housing project known as Avalon Walnut Creek at Contra Costa
Centre(the"Project') located in the County of Contra Costa, California. The Loan will be made pursuant
to an Amended and Restated Financing Agreement, dated as of July 1, 2008 (the "Financing
Agreement'), among the Issuer, the Borrower and the Trustee. Of the total units in the Project, 20% will
be occupied by and held open for occupancy by persons or families of very low income as required in part
by Section 142(d) of the Internal Revenue Code of 1986, as amended, pursuant to the Regulatory
Agreement (as defined herein). See "THE PROJECT AND THE PRIVATE PARTICIPANTS –
Restrictive Covenants' and "APPENDIX D- SUMMARY OF CERTAIN PROVISIONS OF THE
REGULATORY AGREEMENT"herein.
To provide credit enhancement for the Bonds, Bank of America,N.A. (the `Bank')will issue and
deliver to the Trustee an irrevocable direct-pay letter of credit (the "Letter of Credit") pursuant to a
Reimbursement and 'Disbursement Agreement, dated as of July 1, 2008 (the "Reimbursement
Agreement"), between the Bank and the Borrower. Under the Letter of Credit,the Trustee will be entitled
to draw up to an amount sufficient to pay one hundred percent (100%) of the principal amount of the
Bonds Outstanding on the date of the draw (whether at maturity, upon earlier redemption or purchase by
the Bank in lieu thereof, mandatory purchase or purchase on demand), plus 34 days' interest on the Bonds
calculated at an assumed rate of twelve percent (12%) per annum based on a 365-day year. as applicable,
so long as the Bonds bear interest at the Weekly Variable Rate. The Borrower agrees in the
Reimbursement Agreement to reimburse the Bank for drawings made under the Letter of Credit and to
make certain other payments to the Bank. The Letter of Credit will expire by its terms on July—, 2011,
unless it terminates earlier in accordance with its terms, or unless extended pursuant to the terms of the
Reimbursement Agreement, which provides for two twelve-month extension options. The Letter of
Credit may be replaced by an Alternate Credit Facility as permitted by the Indenture. See "SECURITY
AND SOURCES OF PAYMENT FOR THE BONDS – The Letter of Credit" and "—Alternate Credit
Facility.". The Borrower will execute a Construction Second Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing, dated as of July 1, 2008 (the "Reimbursement Mortgage"
and together with the "Bond Mortgage," the "Security Instrument") for the benefit of the Bank to secure
the Borrower's obligations under the Reimbursement Agreement.
Pursuant to an Intercreditor Agreement, dated as of July 1. 2008 (the "Assignment"), among the
Issuer, the Contra Costa County Redevelopment Agency (the "Agency"), the Contra Costa
Redevelopment Agency, the Trustee and the Bank, neither the Trustee nor the Bondholders will have the
right to exercise remedies under the Bond Mortgage while the Letter of Credit secures the Bonds and the
Bank continues to honor its obligations thereunder.
The Indenture provides that during the Weekly Variable Rate Period the Bondholder of any Bond
may require the Trustee to purchase such Bond at certain times and under certain circumstances for a
Purchase Price equal to the principal amount of the Bond plus accrued interest to the date of purchase.
See `"THE BONDS–Purchase of Bonds on Demand of Bondholder."
Pursuant to a Remarketing Agreement, dated the date of the closing (the `'Remarketing
Agreement"), between Citigroup Global Markets Inc. and the Borrower, Citigroup Global Markets Inc. is
serving as the initial remarketing agent (the "Remarketing Agent"). The Remarketing Agent has agreed
to use its best efforts to remarket Bonds that the Bondholders thereof have tendered for purchase or are
required to tender for purchase to the Tender Agent pursuant to the Indenture.
THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE
ISSUER, PAYABLE SOLELY FROM THE SECURITY, WHICH IS SPECIFICALLY ASSIGNED
AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED IN
THE INDENTURE. NEITHER THE STATE OF CALIFORNIA (THE "STATE"), NOR ANY
POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE LIMITED EXTENT SET
FORTH IN THE INDENTURE) WILL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM (1F ANY) OR INTEREST ON THE BONDS OR FOR THE
PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND
2
WHATSOEVER OF THE ISSUER, AND NONE OF THE BONDS OR ANY OF THE ISSUER'S
AGREEMENTS OR OBLIGATIONS WILL BE CONSTRUED TO CONSTITUTE AN
iNDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE
CREDIT OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT
THE ISSUER. TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER.
There follow in this Composite Offering Statement brief descriptions of the Bonds, the sources of
payment for the Bonds, the Issuer, the Bank, the Borrower,the Project,the Underwriter and Remarketing
Agent, together with summaries of the indenture, the Financing Agreement, the Regulatory Agreement,
the Reimbursement Agreement, the Letter of Credit and the Remarketing Agreement. The summaries of
documents contained herein do not purport to be complete and are qualified in their entirety by reference
to such documents. Copies of forms of the Indenture. the Financing Agreement, the Regulatory
Agreement, the .Reimbursement Agreement, the Letter of Credit and the Remarketing Ao reement are
available for inspection at the Principal Corporate Trust Office of the Trustee. Certain terns used in this
Composite Offering Statement and not otherwise defined have the meanin=.s ascribed thereto in
"APPENDIX A_SELECTED DEFINITIONS"or, if not defined therein. as set.forth in the Indenture.
THE BONDS
Authorization and Terms of Bonds
Interest on the Bonds will accrue from July 24, 2008 (the `'Delivery Date") and the Bonds shall
mature (subject to prior redemption or acceleration) on March 15, 2046. The Bonds will be issued in
fully registered form in the minimum denomination of$100,000 or any integral multiple of$5,000 above
such amount. The principal of and the interest and any premium on the Bonds are payable in lawful
money of the United States of America to the Registered Owners at the close of business on the
applicable Record Date. Payment of interest on the Bonds shall be made on each Interest Payment Date
by check drawn upon the Trustee and mailed by first class mail, postage prepaid, to the addresses of the
Registered Owners as they appear on the Bond Register or to such other address as may be furnished in
writing by any Registered Owner to the Trustee prior to the applicable Record Date. Payment of the
principal of any Bond and premium, if any, together with interest (other than interest payable on a
regularly scheduled Interest Payment Date) shall be made by check only upon presentation and surrender
of the Bond on or after its maturity date or date fixed for purchase, redemption or other payment at the
office of the Trustee designated for that purpose. Notwithstanding the foregoing, payment of principal of
and interest and any premium on any Bond shall be made by wire transfer to any account within the
United States of America designated by a Registered Owner owning $1,000.000 or more in aggregate
principal amount of Bonds if a written request for wire transfer in form and substance satisfactory to the
"Trustee is delivered to the Trustee by any such Registered Owner not less than five Business Days prior to
the applicable payment date. A request for wire transfer that specifies that it is effective with respect to
all succeeding payments of principal, interest and any premium will be so effective unless and until
rescinded in writing by the Registered Owner at least five Business Days prior to a Record Date.
The Bonds when issued, will be registered in the name of Cede & Co., as registered owner and
nominee of The Depository Trust Company, New York, New York ("DTC," together with any successor
securities depository. the "Securities Depository"). DTC will act as Securities.Depository for the Bonds
so purchased. Individual purchases will be made only in book-entry form. Purchasers will not receive
physical certificates representing their beneficial ownership interests in the Bonds. So long as the Bonds
are rey(yistered in the name of Cede & Co., payment of principal of, premium, if any, and interest on the
Bonds will be payable to DTC or its nominee. DTC in turn will remit such payments to DTC Participants
for subsequent disbursement to the Beneficial Owners. See`BOOK-ENTRY ONLY SYSTEM."
3
During each Weekly Variable Rate Period, the Remarketing Agent shall determine the Weekly
Variable Rate for each Series for each Week not later than 4:00 p.m. Eastern Time on each Rate
Determination Date. The Weekly Variable Rate shall be the minimum rate of interest necessary, in the
professional judgment of the Remarketing Agent, taking into consideration prevailing market conditions,
to enable the Remarketing Agent to remarket all of the Bonds of a Series on the applicable Rate
Determination Date at par plus accrued interest on such Bonds for that Week. Each Weekly Variable
Rate so determined shall be effective for the Week for which such rate was determined. The Remarketing
Agent shall provide notice of the Weekly Variable Rate for each Series before 5:00 p.m. Eastern Time on
the Rate Determination Date by telephone to any Beneficial Owner upon request and to the Credit
Provider (so long as the Letter of Credit is in effect) or any Alternate Credit Provider(at such time as an
Alternate Credit Facility is in effect), and the Trustee, and not later than the next Business Day to the
other Remarketing Notice Parties by Electronic Means. Each Weekly Variable Rate for each Series so
determined by the Remarketing Agent will be conclusive and binding upon the .Remarketing Notice
Parties and the Registered Owners.
If the Remarketing Agent fails or refuses to determine the Weekly Variable Rate or Daily
Variable Rate applicable to a Series of Bonds for any Week, the interest rate to be borne by a Series of
Bonds during such Week shall be (i) with respect to a Series of Tax-Exempt Bonds, the latest SIFMA
Index Rate published on or before the Rate Determination Date or (ii) with respect.the 2006A-T Bonds,
the current 1 month LIBOR, or, in the event the SIFMA Index Rate or.LIBOR is no longer published, the
last Weekly Variable Rate or Daily Variable Rate for such Series of Bonds determined by the
Remarketing Agent.
Notwithstanding any other provision of the Indenture, the interest rate on the Bonds may not
exceed the Maximum Rate.
Adjustment of Interest Rate on the Bonds
Adjustment to Reset Rate From Daily Variable Rate, Weekt), Variable Rate or From Prior
Reset Rate. At the option of the Borrower, the interest rate on all Outstanding Bonds of a Series may be
adjusted on any Interest Payment Date from the Weekly Variable Rate or Daily Variable Rate to a Reset
Rate for a Reset Period of 10 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 Provider. Any Reset Period must
end immediately before an Interest Payment Date. Each such adjustment is subject to satisfaction of the
following conditions precedent:
(i) not less than 45 days before the proposed Reset Date, the Borrower delivers to the
Trustee (A) written notice to the other Remarketing Notice Parties of the proposed adjustment and
designating the. proposed .Reset Date and the duration of the Reset Period to commence on such Reset
Date and (B) the written preliminary consent of the Credit Provider to such adjustment which consent
may be subject to the satisfaction of conditions specified by the Credit Provider prior to such adjustment;
(ii) not less than 30 days before the proposed Reset Date, the Trustee gives written notice to
the Bondholders by first class mail, postage prepaid, stating: (A) the proposed Reset Date; (B) that from
and after the proposed Reset Date, if the,conditions specified in the 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 of such Series are subject to mandatory tender and purchase on the proposed Reset Date, whether
or not such conditions are satisfied, and no holder of any Bond shall have the right to elect to retain such
Bond;
4
on or prior to the proposed Reset Date. the Borrower delivers (A) to the Trustee, written
notice from the Credit Provider consentiiio 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 the Indenture
and (B) to the other Remarketing 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 the 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 Tax-Exempt Bonds; and
(iv) on or prior to the proposed Reset Date, the Remarketing? Agent has given notice pursuant
to the Indenture to the effect that all Outstanding Bonds of such Series have been remarketed for the Reset
Period at the Reset Rate determined pursuant to the indenture.
Adjustment to Weekly Variable Rate From Daily Variable Rate, and to Daily Variable Rate
From Weekly Variable Rate. At the option of the Borrower,the interest rate on all Outstandina.Bonds of
a Series may, be adjusted on any Interest Payment Date from the Weekly Variable Rate to the Daily
Variable Rate or from the Daily Variable Rate to the Weekly Variable Rate with the prior written consent
of the Credit Provider. Each such adjustment is subject.to satisfaction of the following conditions
precedent:
(i) not less than 45 days before the proposed Adjustment Date, the Borrower delivers to the
Trustee (A) written notice to the other Remarketing Notice Parties electing the proposed.adjustment and
(B) the written .preliminary consent of the Credit Provider to such adjustment which consent may be
subject to the satisfaction of conditions specified by the Credit Provider, prior to such adjustment;
(ii) not less than.30 days before the proposed Adjustment Date, the Trustee gives written
notice to the Bondholders by first class mail, postage prepaid, stating: (A)the proposed Adjustment Date;
(B)that from and after the proposed Adjustment Date, if the conditions specified in the Indenture to such
adjustment are satisfied, the Bonds will. bear interest at the Daily Variable Rate or the Weekly Variable
Rate as the case may be (Which rate need not be stated): and (C) that all Bonds of such Series are subject
to mandatory tender and purchase on the proposed Adjustment Date, and that no holder of any Bond will
have the right to elect to retain such Bond;
(iii) on or prior to the proposed Adjustment Date, the Borrower delivers (A) to the Trustee,
written notice from the Credit Provider consenting to the adjustment to the Daily Variable Rate or the
Weekly Variable Rate,together with confirmation that the Credit Facility will be sufficient in amount and
term to satisfy .the requirements of the indenture and (B) to the other Remarketing Notice Parties, an
opinion of Bond Counsel to the effect that the adjustment of the interest rate on the Bonds to the Daily
Variable Rate or the Weekly Variable Rate is authorized and permitted by the Indenture and the laws of
the State, and will not adversely affect the exclusion from gross income for federal income tax purposes
of the interest payable on the Tax-Exempt Bonds; and
(iv) on or prior to the proposed Adjustment Date, the Remarketing Agent has given notice
pursuant to the Indenture to the effect that all Outstanding Bonds of such Series have been remarketed for
the first Week of the Weekly Variable Rate Period at the applicable Weekly Variable Rate determined
pursuant to the Indenture, or for the first Daily Variable Rate Period at the applicable Daily Variable Rate
determined pursuant to the Indenture.
Adjustment to Fixed Rate. At the option of the Borrower, and with the prior written consent of
the Credit Provider and, unless a Credit Facility providing credit support for the Bonds of such Series will
be in effect, with the prior written consent of the Issuer (which consent may be conditioned upon the
receipt of a rating of at least "A", higher Authorized Denominations or the delivery of investor letters).
5
the interest rate on all Outstanding Bonds of a Series may be adjusted to the Fixed Rate from the Weekly
Variable Rate or Daily. Variable Rate on any Interest Payment Date designated by the Borrower. Such
adjustment is subject to the satisfaction of the following conditions precedent:
(i) not less than 45 days before the proposed Fixed Rate Adjustment Date, the Borrower
delivers to the Trustee (A) written notice to the other Remarketin; Notice Parties designating the
proposed Fixed Rate Adjustment Date and (B) the written preliminary consent of the Credit Provider to
such adjustment which consent may be subject to the satisfaction of conditions prior to such adjustment;
(ii) not less than 30 days before the proposed Fixed Rate Adjustment Date.the Trustee gives
written notice to the Bondholders by first class mail, postage prepaid, stating the following: (A) the
proposed Fixed Rate Adjustment Date: (B) that from and after the proposed Fixed Rate Adjustment Date,
if the conditions specified in the Indenture to such adjustment are satisfied, the Bonds will bear interest at
the Fixed Rate (which rate need not be stated): and (C) that all Bonds of such Series are subject to
mandatory tender and purchase on the proposed Fixed Rate Adjustment Date, whether or not such
conditions are satisfied and no holder of any Bond(s) will have the right to.elect to retain its Bonds; .
(iii) on or prior to the proposed Fixed Rate Adjustment Date, the Borrower delivers (A)to the
Trustee, either(1) written notice from the Credit Provider consenting to the adjustment to the Fixed Rate.
together with confirmation that the Credit Facility will be sufficient in amount and term to satisfy the
requirements of the Indenture or (2) 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 remains in effect'for the
mandatory tender of the Bonds on the proposed Fixed Rate Adjustment Date (which waiver will
acknowledge that the Rating Agency has been notified not less than 10 days prior to the Fixed Rate
Adjustment Date that the Credit Facility will be terminated on the Fixed Rate Adjustment Date); and (B)
to the other Remarketing Notice Parties; an opinion of Bond Counsel to the effect that the adjustment of
the interest rate on the Bonds to the Fixed Rate is authorized and permitted by the 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 Tax-Exempt Bonds;
(iv) on or prior to the proposed Fixed Rate Adjustment Date; the Remarketing Agent has
given notice pursuant to the Indenture to the effect that all Outstanding Bonds have been remarketed for
the Fixed Rate Period at the Fixed Rate determined pursuant to the Indenture; and
(v) on or prior to the proposed Fixed Rate Adjustment Date (A) the issuer, at the written
direction of the Borrower and with the prior written consent of the Credit Provider, establishes a Sinkino
Fund Schedule, (B)the Issuer, the Trustee and the Credit Provider receive an opinion of Bond Counsel to
the effect that establishing a Sinking Fund Schedule will not adversely affect the exclusion from gross
income for federal income tax purposes of the interest payable on the Tax-Exempt Bonds and (C) the
Note is amended, with the prior written consent of the Credit Provider, to provide for principal
amortization of the Loan consistent with the Sinking Fund Schedule. The Trustee shall provide a copy of
the Sinking Fund Schedule, Opinion of Bond Counsel and Note amendment to the Credit Provider on or .
before the proposed Adjustment Date.
Failure To Satisfy Condition ' Precedent to Mode Change. If the conditions precedent to a
change in Mode described above have not been satisfied, then the following will apply: (i)the new Mode
shall not take effect; (ii)the applicable Bonds shall be subject to mandatory tender on the proposed
Adjustment Date and the holders of the Bonds will not have the right to elect to retain their Bonds; (iii)
the interest rate on the applicable Bonds shall continue at the Weekly Variable Rate or Daily Variable
Rate, as the case may be, from and after the proposed Adjustment Date, without any further action by any
6
party; (v) the Remarketing Agent will remarket the applicable Bonds on the Adjustment Date at the
applicable interest rate.
THIS COMPOSITE OFFERING STATEMENT IS NOT INTENDED TO PROVIDE CERTAIN
INFORMATION WITH RESPECT TO THE BONDS (INCLUDING THE TERMS OF SUCH BONDS)
AFTER ADJUSTMENT TO A MODE OTHER THAN THE WEEKLY VARIABLE RATE MODE. IF
THE BONDS ARE CONVERTED TO A MODE OTHER THAN THE WEEKLY VARIABLE RATE
MODE, A SUPPLEMENT TO THIS COMPOSITE OFFERING STATEMENT OR A NEW OFFICIAL
STATEMENT O. R. REMARKETING CIRCULAR WILL BE PREPARED. See "THE BONDS —
Mandatory Tender for Purchase of Bonds."
Purchase of Bonds on Demand of Bondholder
Generally. During any Weekly Variable Rate Period or Daily Variable Rate Period, the Trustee
shall purchase any.Bond on behalf of and as agent for the Borrower, but solely from the sources provided
in the Indenture, on the demand of the Beneficial Owner of such Bond. The purchase price of any .Bond
tendered for purchase shall be 100% of the principal amount of such Bond plus accrued interest, if any, to
the date of purchase. The Beneficial Owner may demand purchase of its Bond by delivery of a
Bondholder Tender Notice complying with the requirements of this subsection to the Tender Agent at its
Designated Office on any Business Day. Any Bondholder Tender Notice received by the Tender Agent
after 3:30 p.m. Eastern Time on a Business Day will be treated as received at 9:00 a.m. Eastern Time on
the following Business Day. The date of purchase shall be the date selected by the Beneficial Owner in
the Bondholder Tender Notice; provided. however, that such date is (i) a Business Day which is at least
seven days after the date of the delivery of the Bondholder "fender Notice to the Tender Agent with
respect to a Bond at a Weekly Variable Rate or (ii) is a Business Day with respect to a Bond at a Daily
Variable Rate. During a Daily Variable Rate Period, a Bondholder Tender Notice must be received by
the Tender Agent no later than 9:00 a.m. Eastern time if the date of purchase is the day the Bondholder
Tender Notice is received. A Bondholder Tender Notice complies with the requirements of this
subsection if it:
(i) is accompanied by a guaranty of signature acceptable to the Tender Agent; and
(ii) contains the CUSIP number of the Bond, the principal amount to be purchased (or
portion of a Bond, provided that the retained portion is an Authorized Denomination), the name, address
and tax identification number or social security number of the Beneficial Owner of the Bond demanding
such payment and the purchase date.
Irrevocability of Tender. Subject to certain provisions of the Indenture, by delivering a
Bondholder Tender Notice the Beneficial Owner irrevocably agrees to deliver the Tendered 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 Designated Office of the Tender Agent or any other address
designated by the Tender Agent at or prior to 10:00 a.m. Eastern 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 of a Bond or Bonds) for purchase on a .Business Day in accordance with the Indenture shall also
be binding on any transferee of the Beneficial Owner making such election.
Compliance With Tender Requirements. Bonds shall be required to be purchased pursuant to
the Indenture only if the Bonds so delivered to the Tender Agent conform in all respects to the description
of such Bonds in the Bondholder Tender Notice. The Tender Agent shall determine in its sole discretion
whether a Bondholder Tender Notice complies with the requirements of the Indenture and whether Bonds
7
delivered conform in all respects to the description of the Bonds in the Bondholder Tender Notice. Such
determination shall be binding on the other Remarketing Notice Parties and the Beneficial Owner of the
Bonds. y
Notice of Bondholder Tender Notice. Immediately upon receipt of a copy of a Bondholder
Tender Notice, the Tender Agent shall notify the other Remarketing Notice Parties by telephone,
promptly confirmed in writing, of such receipt, specifying the contents of such Bondholder Tender
Notice.
Untendered Bonds. .If after delivery of a Bondholder Tender Notice to the Tender Agent the
holder making such election fails to deliver any of the Bonds described in the Bondholder Tender Notice
as required by the Indenture, each untendered Bond or portion of such untendered Bond ("Untendered
Bond") described in such Bondholder Tender Notice shall be deemed to have been tendered to the Tender
Agent for purchase, to the extent that there is on deposit in the Bond Purchase Fund on the applicable
purchase date an amount sufficient to pay the purchase price of such Untendered Bond, and such
Untendered .Bond from and after such purchase date will cease to bear interest and no longer be
considered to be Outstanding. The Trustee shall promptly give notice by registered or certified first class
mail, postage prepaid, to each Beneficial Owner of any Bond which has been deemed to have been
purchased pursuant to the provisions of the Indenture, stating that interest on such Untendered Bond
ceased to accrue from and after the dateof purchase and that moneys representing the purchase price of
such Untendered Bond are available against delivery of such Untendered Bond at the Designated Office
of the Tender Agent. The Issuer shall sign and the Tender Agent shall authenticate and deliver for
redelivery a new Bond or Bonds inreplacement of the Untendered Bond not so delivered. The
replacement of any Bond will not be deemed to create new indebtedness, but will be deemed to evidence
the indebtedness previously evidenced by the Untendered .Bond.
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 of such Bond 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.
Payment and Sources of Purchase Price. The Tender Agent shall make payment for any
Tendered Bond to the Registered Owner at or before 4:00 p.m. Eastern Time on the date for purchase
specified in the Bondholder Tender Notice, first from remarketing proceeds on deposit in the Bond
Purchase Fund, second, from proceeds of a payment under the Credit .Facility, and third, from the
Borrower.
Book Entry Only. Notwithstanding the above, during any period that the Bonds are Book Entry
Bonds, (i) any.Bondholder Tender Notice also must (A) provide evidence satisfactory to the Tender
A(Yent: that the party delivering the notice is the Beneficial Owner of the Bond(s) 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 Bond(s) on the records of DTC to the
account of, or as directed by, the Trustee; (iii) Tendered Bond(s) will be purchased without physical
delivery as if such Bond(s)had been so delivered and (iv) the purchase price of such Bond(s) will be paid
to DTC.
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Mandatory Tender for Purchase of Bonds
Mandatory Tender Dates (Other Than Upon Default); Notice. The holders of the Bonds shall
be required to tender their Bonds to the Tender Agent for purchase on each Mandatory Tender Date by
the Trustee acting on behalf of and as agent for the Borrower,.but solely from the sources provided in the
Indenture, at a purchase price equal to 100% of the principal amount of the Bonds plus accrued interest to
the applicable Mandatory Tender Date. The Owner of any Bond may not elect to retain its Bond.
Mandatory Tender Dates include each proposed Adjustment Date (even if a proposed change in Mode
fails to occur), each Substitution Date and each Extension Date (unless an extension of the Letter of
Credit or the Alternate Credit.Facility then in effect has been received by the Trustee on or before such
date). The Trustee shall give notice of Mandatory Tender on the Escrow Break Date in accordance with
the Indenture. The Trustee shall give notice of Mandatory Tender Dates as follows:
(i) Not less than 30 days before any proposed Adjustment Date, the Trustee shall
give notice by first class mail, postage prepaid, to the Bondholders stating the information
required to be set forth in notices pursuant to the applicable provisions of the Indenture.
(ii) Not less than 10 days before any Substitution Date, the Trustee shall give notice
by first class mail, postage prepaid, to the Bondholders stating (A) an Alternate Credit Facility
will be substituted for the Credit Facility then in effect, (B) the Substitution Date, (C) that the
Bonds are required to be tendered on the Substitution Date and (D) that Bondholders will not
have the right to elect to retain their Bonds.
(iii) Not less than 10 days before any Extension Date, if the Trustee has not received a
binding commitment to extend the Letter of Credit or applicable Alternate Credit Facility then in
effect,the Trustee shall give notice by first class mail, postage prepaid,to the Bondholders stating
(A)the Extension Date and that no commitment to extend the Letter of Credit or Alternate Credit
Facility then in effect has been received by the Trustee, (B) that such'Bonds are required to be
tendered on the Extension Date (unless an extension of the Letter of Credit or Alternate Credit
Facility then in effect is received prior to the Extension Date, notice of which shall be given
promptly to Bondholders), and (C) that the Bondholders will not have the right to elect to retain
such Bonds if an extension of the Letter of Credit or Alternate Credit Facility then in effect is not
received.
Mandatory Tender Upon Default;Notice. The Bonds shall be subject to mandatory tender upon
receipt by the Trustee of written notice from the Credit Provider stating that an Event of Default under the
Indenture, the Financing Agreement or any Credit Facility Document has occurred and directing that the
Bonds be subject to mandatory tender. Such mandatory tender shall be made on the earliest practicable
date but no later than 10 days, after notice of tender has been given to Bondholders and shall be payable
solely from the 'sources provided in the Indenture at a purchase price equal to 100% of the principal
amount of the Bonds plus accrued interest to the Mandatory Tender Date. The Owner of any Bond may
not elect to retain its Bond. Immediately upon receipt by the Trustee of such written notice from the
Credit Provider, the Trustee shall give notice by first class mail, postage prepaid, to the owners of the
Bonds stating that (i) such event has occurred, (ii) the Bonds are required to be tendered on the
Mandatory Tender Date specified in such notice and (iii)the Bondholders will not have the right to elect
to retain their Bonds.
Untendered Bond. Any Bond which is not tendered on a Mandatory Tender Date ("Untendered
Bond") will 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 will be
considered to be Outstanding. In the event of a failure by owners to deliver Bonds on the Mandatory
9
Tender Date, such Owners will not be entitled to any payment (including any interest to accrue from and
after the Mandatory Tender Date) other than the purchase price for such Untendered Bond, and any
Untendered Bond will no longer be entitled to the benefits of the Indenture, except for the purpose of
payment of the purchase price for such Untendered Bond. The Issuer shall sign, and the Tender Agent
shall authenticate and deliver to the Remarketing Agent for redelivery to the purchaser, a new Bond in
replacement of the Untendered Bond. The replacement of any such Untendered Bond shall not be
deemed to create new indebtedness, but shall be deemed to evidence the indebtedness previously
evidenced by the Untendered Bond.
Pnvment and Sources of Purchase Price. Tile Tender Agent shall make payment for Bonds
purchased pursuant to this Section at or before 4:00 p.m. Eastern Time on the Mandatory Tender Date.
The Tender Agent shall pay the purchase price:
(i) for Bonds purchased pursuant to the provisions of the Indenture described above
under "Mandatory Tender Dates (Other than Upon Default); Notice," first, from remarketing
proceeds on deposit in the Bond Purchase Fund, second, from proceeds of a payment under a
Credit Facility, and third. from the Borrower; and
(ii) for Bonds purchased pursuant to the provisions of the Indenture described above
cinder "Mandatory Tender Upon Default; Notice," first from proceeds of a payment under the
Credit Facility, and second, from the Borrower.
Purchase Price Monevs 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 of such Bonds at the.
Designated Office of the Tender Agent. Tile Tender Agent shall promptly give notice by registered or
"certified first class"mail, postage prepaid, to each Registered Owner of Bonds whose Bonds are deemed
to have been purchased stating 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 of such Bonds at
the Designated Office of the Tender Agent. During any period that the Bonds are Book Entry Bonds, (i)
any notice delivered pursuant to the provisions of the Indenture described in this paragraph shall.be given
only to the entity designated in the Letter of Representations. as required by the Indenture and (ii) it shall
not be necessary for Bonds) to be physically delivered oil the date .specified for purchase of such
Bond(s), but such purchase shall be made as if such Bond(s) had been so delivered, and the purchase price
of such Bond(s) shall be paid to DTC.
No Sales After Wrongful Dishonor; No Purchase After Acceleration
Notwithstanding anything in the Indenture to the contrary, no Bonds shall be remarketed if the
Trustee has given notice to the Remarketing Agent that a Wrongful Dishonor has occurred and is
continuing. No Bonds, other than Pledged Bonds, shall be purchased if the Trustee has given notice to
the Remarketing Agent that there has occurred and is continuing an acceleration of the Bonds pursuant to
the Indenture.
Remarketing Agent
Citigroup Global Markets Inc. (the "Remarketing Agent") will serve as remarketing agent with
respect to the Bonds under a Remarketing Agreement, dated as of July 1, 2008 (the "Remarketing
Agreement`'), by and between the Remarketing Agent and the Borrower. The Remarketing* Agent will
detennine the interest rates on the Bonds in accordance with the Indenture and is required to use its best
efforts to reinarket the Bonds in accordance with the terms of the Remarketing Agreement.
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Disclosure Concerning Sales by Remarketing Agent
The following ntfortnation concerning salt's by the Remarketing Agent has been provided by the
Remarketing Agent for inclusion herein.
The Remarketing Agent is Paid by the Borro►ver. The 'Remarketing Agent's responsibilities
include determining the interest rate from time to time and remarketing Bonds that are optionally or
mandatorily tendered by the owners thereof (subject, in each case, to' the terns of the Remarketing
Agreement), all as further described in this Composite Offerin(R) Statement. The Remarketing Agent is
appointed by the Borrower and is paid by the Borrower for its services. As a result, the interests of the
Remarketing Agent may differ from those of existing holders and potential purchasers of Bonds.
The Remarketing Agent Routineh? Purchases Bondv or Its Own Account. The Remarketing
Agent. acts as remarketing agent for a variety of variable rate demand obligations and. in its sole
discretion, routinely purchases such obligations for its own account. The Remarketing Agent is
permitted, but not obligated, to purchase tendered Bonds for its own account and, in its sole discretion,
routinely acquires such tendered Bonds in order to achieve a successful remarketing of the Bonds (i.e.,
because there otherwise are not enough buyers to purchase the Bonds).or.for other reasons. However, the
Remarketing Agent is not,obligated to purchase Bonds, and may cease doing so at any time without
notice. The Remarketing Agent may also make a market in the Bonds by routinely purchasing and selling
Bonds other than in connection with an optional or mandatory tender and remarketing. Such purchases
and sales may be at or below par. However. the Remarketing Agent is not required to make a market in
the Bonds. The Remarketing Agent may also sell any Bonds it has purchased to one or more affiliated
investment vehicles for collective ownership or enter into derivative arrangements with affiliates or others
in order to reduce its exposure to the Bonds. The purchase of Bonds 'by the Remarketing Agent may
create the appearance that there is greater third party demand for the Bonds in the market than is actually
the case. The practices described above also may result in fewer Bonds being tendered in a remarketing.
Bonds Mcry be Of at Different Prices on Any Date Including an Interest Payment Date.
Pursuant to the Remarketing Agreement, the Remarketing Agent is required to determine the applicable
rate of interest that. in its judgment, is the lowest rate that would permit the sale of the Bonds bearing .
interest at the applicable interest rate at par plus accrued interest, if any, on and as of the applicable
Interest Payment Date. The interest rate will reflect, among other factors, the level of market demand for
the Bonds (including whether the Remarketing Agent is willing.to purchase Bonds for its own account).
There may or may not be Bonds tendered and remarketed on a Interest Payment Date, the Remarketing
Agent may or may not be able to remarket any Bonds tendered for purchase on such date at par and the
Remarketing Agent may sell Bonds at varying prices to different investors on such date or any other date.
The Remarketing Agent is not obligated to advise purchasers in a remarketing if it does not have third
party buyers for all of the Bonds at the remarketin, price. In the event the Remarketing Agent owns any
Bonds for its own account, it may, in its sole discretion in a secondary market transaction outside the
tender process, offer such Bonds on any date, including the interest Payment Date, at a discount to par to
some investors.
The Ability, to Sell the Bonds other than through Tender Process May Be Limited. The
Remarketing Agent may buy and sell Bonds other than through the tender process. However, it is not
obligated to do so and may cease doing so at any time without notice and may require holders that wish to
tender their Bonds to do so through the .Tender Agent with appropriate notice. Thus, investors who
purchase the .Bonds, whether in a remarketing or otherwise, should not assume that they will be able to
sell their Bonds other than by tendering the Bonds in accordance with the tender process.
ll .
Under Certain Circumstances. the Remarketing Agent Alav Be Removed Without a Successor
Being Named. Under certain circumstances the Remarketing; Arent may be removed without a successor
having been named. subject to the terns of the Indenture.
Redemption Provisions
The Bonds shall be subject to redemption prior to maturity as set forth below. All redemptions
must be in Authorized Denominations.
Optional Redemption. The Bonds are subject to optional redemption in whole or in part upon
optional prepayment of the Loan by the Borrower (i) on any Interest Payment Date within a Weekly
Variable Rate Period or Dailv Variable Rate Period and on any Adjustment Date at a redemption price
equal to 100% of the principal amount redeemed, without premium, plus accrued interest to the
Redemption Date or(ii) on any Mandatory Tender Date, as designated by the Borrower in writing on or
before such Mandatory Tender Date, at a price equal to the principal amount of Bonds redeemed, plus
interest accrued thereon to the date fixed for redemption. The principal of and accrued interest on any
Bond being optionally redeemed shall be paid from a Draw on the Letter of Credit or if an Alternate
Credit Facility is.in effect. be paid from a Draw under the Alternate Credit Facility.
Mandatory Redemption. The Bonds are subject to mandatory redemption as provided in the
provisions of the .indenture described in this paragraph on the earliest practicable Redemption Date for
which timely notice of redemption can be given pursuant to the Indenture following the occurrence of tile..
event requiring such redemption. The principal of and accrued interest on any Bond being redeemed
under the provisions of the Indenture described in this paragraph shall be paid from a Draw on the Letter
of Credit, if a Letter of Credit is in effect. or if an Alternate Credit Facility is in effect, be paid fi•om a
Draw under the Alternate Credit Facility. Bonds will be redeemed at a redemption price equal to 100% of
the principal amount of such Bonds, without premium, plus accrued interest to the Redemption Date.
Bonds subject to mandatory redemption in part shall be redeemed in Authorized Denominations or shall
be redeemed in such amounts so that the Bonds Outstanding following the redemption are in Authorized
Denominations. If the Trustee receives an amount for the mandatory redemption of Bonds which is not
equal to a whole integral multiple of the Authorized Denomination, the Trustee shall redeem Bonds in an
amount equal to the nest lowest whole integral multiple of the Authorized Denomination to the amount
received by the Trustee and hold any excess amount in the Redemption Account.
(a) Casually or Condemnation. The Bonds shall be redeemed in whole or in part in
the event and to the extent that proceeds of insurance from any casualty to, or proceeds of any
award from any condemnation of or any award as part of a settlement in lieu of condemnation of,
the Mortgaged Property ("Proceeds") are applied in accordance with the Security Instrument to
the prepayment of the Loan.
(b) After an Event of Default Under the Reimbursement Agreement. The Bonds shall
be redeemed in whole or in part in an amount specified by and at the direction of the Credit
Provider requiring that the Bonds be redeemed pursuant to the provisions of the indenture
described in this subsection following any Event of Default under the Reimbursement
Agreement. The Redemption Date shall be the earliest practicable date, but in no event shall such
redemption occur later than two Business Days prior to the date, if any, that the Credit Facility
terminates on account of the Credit Provider's giving of direction to the Trustee pursuant to the
provisions of the Indenture described in this subsection to redeem all of the Bonds.
(c) Principal Reserve Fund. The Bonds shall be redeemed in whole or in part as
follows:
12
(i) on each Adjustment Date in an amount equal to the amount which has
been transferred from the Principal Reserve Fund on such Adjustment Date to the
Redemption Account pursuant to the Indenture; and
(ii) oil any Interest Payment Date in an amount equal to the amount which
has been transferred from the Principal Reserve Fund on such Interest Payment Date to
the Redemption Account pursuant to the Indenture.
Bonds are required to be redeemed in the following order of priority: first, 2006A-T Bonds,
second, Tax-Exempt Bonds in a Daily Mode or a Weekly Mode, third, all other Tax-Exempt
Bonds.
(d) Excess Loan Funds. The Bonds shall be redeemed in whole or in part in the
event and to the extent that amounts on deposit in the Loan Fund are transferred to the
Redemption Account pursuant to the indenture; provided, proceeds of the 2006A Bonds on
deposit in the Loan Fund may be applied only to the redemption of 2006A Bonds and proceeds of
the 2008 Bonds on deposit in the Loan Fund may be applied only to the redemption of 2008
Bonds.
Notice of Redemption. For any redemption of Bonds other than as described below, the Trustee
shall give notice of redemption by first class mail, postage prepaid, not less than 10 days prior to the
specified Redemption Date, to the Registered Owner of each Bond to be redeemed at the address of such
Registered Owner as shown on the Bond Reo ister; provided, that no notice of redemption shall be
required for an optional redemption of Bonds on a Mandatory Tender Date as described above. With
respect to Book Entry Bonds, if the Trustee sends notice of redemption to the Securities Depository
pursuant to the Letter of Representations, the Trustee shall not be required to give the notice set forth in
the immediately preceding sentence. In the case of any mandatory redemption of Bonds after an event of
default under the Reimbursement Agreement, as described above, no notice of redemption will be given.
In the case of an optional redemption, the notice of redemption shall state that it is conditioned
upon receipt by the Trustee of sufficient moneys to redeem the Bonds including Available Moneys to pay
any redemption premium in full ("Conditional Redemption"). and such notice and optional redemption
shall be of no effect if either (A) by no later than the scheduled redemption date, sufficient moneys to
redeern the Bonds and sufficient Available Moneys to pay any redemption premium have not been
deposited with the Trustee, or if such moneys are deposited; are not available or (B) the Credit Provider
instructs the Trustee to rescind such notice on or prior to the scheduled redemption date. The Trustee
shall provide copies of all notices given under the Indenture and of all revocations of notices to the Credit
Provider(so long as the Letter of Credit is in effect) or any Alternate Credit Provider(at such time as an
Alternate Credit Facility is in effect), at the same time it gives notices to Bondholders.
At the same time notice of redemption is sent to the Registered Owners the Trustee shall send
notice of redemption by first class mail,•overnig.;ht delivery service or such other means as is acceptable to
the recipient, postage or service prepaid (or as specified below) (i)to the Rating Agency. (ii) if the Bonds
are not subject to the Book Entry System, 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 (iii) at least two of the
national information Services that disseminate securities redemption notices.
If notice is given as stated in the indenture, failure of any Bondholder to receive such notice, or
any defect in the notice, shall not affect the redemption or the validity of the proceedings for the
redemption of the Bonds.
13
The Trustee shall rescind any Conditional Redemption if the requirements of the Indenture have
not been met on or before the Redemption Date or the Trustee has received a direction to cancel the
Conditional Redemption from the Credit Provider. The Trustee shall give notice of rescission by the
same means as is provided in the Indenture for the giving of notice of redemption or by Electronic Means
confirmed in writing. The optional redemption shall be canceled once the Trustee has given notice of
rescission. Any Bonds subject to Conditional Redemption where redemption has been rescinded shall
remain Outstanding, and neither the rescission nor the failure of fiends being made available in part or in
whole on or before the Redemption Date shall constitute an Event of Default. Notwithstanding notice
having been given in the manner provided above, any optional redemption of Bonds shall be canceled
with the consent of or at the direction of the Credit Provider if the Credit Provider has notified the Trustee
in writing that an Event of Default under any Credit Facility Document has occurred.
THE "TRUSTEE, AS LONG AS THE BOOK-ENTRY ONLY SYSTEM IS USED FOR THE
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES ONLY TO DTC.
ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT
TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT
WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO
THE REDEMPTION OF BONDS CALLED .FOR REDEMPTION OR OF ANY OTHER ACTION
PREMISED ON SUCH NOTICE.
Redemption Payments. If notice of redemption has been given and the conditions for such
redemption, if applicable, have been met, the Bonds called for redemption shall become due and payable
on the Redemption Date, interest on those Bonds will cease to accrue from and after the Redemption Date
and the called Bonds will no longer be Outstanding. The holders of the Bonds so called for redemption
shall thereafter no longer have any security or benefit under the Indenture except to receive payment of
the redemption price for such Bonds upon surrender of such Bonds to the Trustee. All moneys held by or
on behalf of the Trustee for the redemption of particular Bonds will be held in trust for the account of the
holders of the Bonds to be redeemed. If less than the entire principal amount of a Bond is called for
redemption, the Issuer shall execute, and the Trustee shall authenticate and deliver, upon the surrender of
such Bond to the Trustee, without charge by the Issuer or the Trustee to the Bondholder, in exchange for
the unredeemed principal amount of such Bond, a new Bond or Bonds of the same interest rate, maturity
and term, in any Authorized Denomination, in aggregate principal amount equal to the unredeemed
balance of the principal amount of the Bond so surrendered.
Selection of Bonds To Be Redeemed Upon Partial Redemption. If less than all the Outstanding
Bonds of a Series are called. for redemption, the Trustee shall select by lot, in such manner as it
determines in its discretion,.the Bonds, or portions of the Bonds in Authorized Denominations, to be .
redeemed. In the selection process (i) any Pledged Bonds Outstanding will be called for redemption
before any other Bonds are selected for redemption, and (ii) if applicable, the Bonds with the highest
interest rate will be called for redemption before any other Bonds are selected for redemption. For the
purposes of the provisions of the Indenture described in this paragraph, Bonds which have previously
been selected for redemption will not be deemed Outstanding. Notwithstanding, the foregoing, the
Securities Depository for Book Entry Bonds shall select the Bonds for redemption within particular
maturities according to its stated procedures.
Purchase in Lieu of Redemption
If the Bonds are called for redemption in whole, the Bonds called for redemption may be
purchased in lieu of redemption in accordance with the provisions of the Indenture described in this
section.
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(a) Purchase in Lieu of Redemption. Purchase in lieu of redemption shall be available for all
of the Bonds called for redemption. -The Credit Provider, or the Borrower with the written consent of the
Credit Provider, may direct the Trustee to purchase all of the Bonds. Any such direction to the Trustee
must:
(i) be in writing;
(ii) state either that all of the Bonds called for redemption are to be purchased or, if
less than all of the Bonds called for redemption are to be purchased, identify those Bonds to be
purchased by maturity date and outstanding principal amount in Authorized Denominations; and
(iii) be received by the Trustee no later than noon one Business Day prior to the
Redemption Date.
If so directed, the Trustee shall purchase such Bonds on the date which otherwise would be the
Redemption Date. Any of the Bonds called for redemption that are not purchased in lieu of redemption
shall be redeemed as otherwise required by the Indenture on the Redemption Date.
(b) Withdrmval of'Direction To Purchase. On or prior to the scheduled redemption date, any
direction given to the Trustee or any consent given by the Credit Provider to such a direction may be
withdrawn by written notice to the Trustee. Subject generally to the Indenture, should a direction to
purchase or the consent of the Credit Provider be withdrawn, the scheduled redemption of such Bonds
shall not occur.
(c) Purchaser. if the purchase is directed by the Credit Provider,the purchase shall be made
for the account of the Credit Provider or its designee. If the purchase is directed by the Borrower with the
consent of the Credit Provider,the purchase shall be made for the account of the Borrower or its designee.
(d) Purchase Price. The purchase price of the Bonds shall be equal to the outstanding
principal of accrued and unpaid interest on and the redemption premium, if any, which would have been
payable on such Bonds on the Redemption Date for such redemption. To pay the purchase price of such
Bonds, the Trustee shall use such funds, if any, in: .
(i) the Credit Facility Account to pay the principal and interest components of the
purchase price.- and
(ii) the Redemption Account to pay the redemption premium component of the
purchase price.-
that
rice;that the Trustee would have used to pay the outstanding principal of, accrued and unpaid interest
on and the redemption premium, if any, that would have been payable on the redemption of such Bonds
on the Redemption Date. Otherwise, the Trustee shall pay the purchase price only from Available
Moneys. The Trustee shall not purchase the Bonds pursuant to this Section if by no later than the
Redemption Date, sufficient moneys have not been deposited with the Trustee, or such moneys are
deposited,but are not available.
(e) No Notice to Bondholders. No notice of the purchase in lieu of redemption shall be
required to be given to the Bondholders (other than the notice of redemption otherwise required under the
Indenture).
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(f) Limitations on Transfer of Bonds. Notwithstanding certain provisions of the Indenture
regarding the exchange and transfer of Bonds, Bonds purchased in lieu of redemption pursuant to the
provisions of the Indenture described in this section may not be transferred to another registered owner
without the written approval of the Issuer and only in compliance with all applicable securities laws;
provided, however, that such approval shall not be required if, at the time of such transfer, such Bonds
have a current investment grade rating from the Rating Agency. Any such approved transfer must be of
all of the Bonds purchased to a single registered owner.
BOOK-ENTRY ONLY SYSTEM
The Bonds will be available in book entry form only in Authorized Denominations. Purchasers
of the Bonds will not receive certificates representing their interests in the Bonds purchased.-
The Depository Trust Company ("DTC"), New York,New York, will act as securities depository
for the Bonds. The Bonds will be issued as fully registered bonds registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully registered certificate will be issued for each series and maturity of the Bonds, each in the
aggregate principal amount of such series and maturity, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking Law, a"banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a
'`clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity,
corporate and municipal debt issues, and money market instruments from over 100 countries that DTC
participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement
among Direct Participants of sales and other securities transactions in deposited securities through
electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This
eliminates the need for physical movement of securities certificates. Direct Participants include both U.S.
and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the
National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets
Clearing Corporation, (NSCC, .FICC and EMCC, also subsidiaries of DTCC), as well as by the New York
Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities
Dealers. inc. Access to the DTC system is also available to others such as both U.S. and non U.S.
securities brokers and dealers, banks, trust companies, and clearing corporations that clear throw=h or
maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants''). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about DTC can
be found at www.dtcc.com and www.dtc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond (`Beneficial Owner') is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the .Direct or Indirect Participant
through which the Beneficial Owner entered-into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
16
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Bonds. such
as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alterative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Redemption notices, if any, will be sent to DTC. If less than all of the Bonds within an issue.are
being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede&
Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice
is to credit Direct Participants' accounts upon'DTC's receipt of funds and corresponding detail
infonnation from the Issuer or the Trustee, on the payment date in accordance with their respective
holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the responsibility of such Participant
and not of DTC nor its nominee, the Trustee, the Borrower, the Remarketing Agent or the Issuer, subject
to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal
and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of
DTC) is the responsibility of the Issuer or the Trustee, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners will be the responsibility of Direct and Indirect Participants.
The requirement for physical delivery of Bonds in connection with a mandatory purchase will be
deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's
records and followed by a book entry credit of tendered Bonds to the account of the Tender Agent or the
Remarketing Agent, as appropriate.
17
A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant,to the Tender Agent or the Remarketing Agent, as applicable, and shall effect delivery of such
Bonds by causing the .Direct Participant to transfer the Participant's interest in the Bonds. on DTC's
records,to the tender agent or the remarketing agent, as applicable. The requirement for physical delivery
of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when
the ownership ri0 hts in the Bonds are transferred by Direct Participants on DTC's records and followed
by a book-entry credit of tendered Bonds to the DTC account of the tender agent or the remarketing
aggent, as applicable.
DTC may discontinue providing its service as securities depository with respect to the Bonds at
any time by giving reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event
that a successor depository is not obtained. Bond certificates are required to be printed and delivered.
The Issuer may decide to discontinue use of the system of book entry transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that Issuer believes to be reliable,but Issuer takes no responsibility for the accuracy thereof.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Generally
,The Bonds and the interest thereon are limited obligations of the Issuer,payable solely from
the Security (consisting of the Letter of Credit and the Trust Estate), which is specifically assigned
and pledged to such purposes in the manner and to the extent provided in the Indenture. Neither
the State of California (the "State"), nor any political subdivision thereof(except the Issuer, to the
limited extent set forth in the Indenture) will in any event be liable for the payment of the principal
of, premium (if any) or interest on the Bonds or for the performance of any pledge, obligation or
agreement of any kind whatsoever of the Issuer, and none of the Bonds or any of the Issuer's
agreements or obligations will be construed to constitute an indebtedness of or a pledge of the faith
and credit of or a loan of the credit of the Issuer, the State or any political subdivision thereof
(except the Issuer, to the limited extent set forth in the Indenture) within the meaning of any
constitutional or statutory provision whatsoever.
To secure the payment of the principal of and interest and any premium on, and the purchase
price of, the Bonds according to their tenor and effect, and to secure, on a parity basis, all obligations
owed to the Credit Provider under the Credit Facility Documents and the Loan Documents, and to secure
the performance and observance by the Issuer of the covenants expressed or implied in the Indenture and
in the Bonds,the Issuer has absolutely and irrevocably pledged and assigned the property described in the
following paragraphs(1) through (5)(the"Trust Estate")to the Trustee for the benefit of the Bondholders
and to the Credit Provider, as their interests may appear, subject to the Assignment and the provisions of
the Indenture permitting the application of such property for the purposes set forth in the Indenture:
L. All right, title and interest of the Issuer in and to the Loan, including the Note,
the Security Instrument and the other Loan Documents and in and to the Financing Agreement,
reserving, however,the Reserved Rights;
2. All rights to receive payments on the Note and under the other Loan Documents,
including all proceeds of insurance or condemnation awards;
18
I All right, title and interest of the Issuer in and to the Revenues, the Net Bond
Proceeds and the accrued interest, if any, derived from the sale of the Bonds, and all Funds and
Accounts under the Indenture (including, without limitation, moneys, documents, securities,
Investments, investment Income, instruments and general intangibles on deposit or otherwise
held by the Trustee) but excluding all moneys in the Fees Account,the Rebate Fund and the Costs
of Issuance Fund (including within such exclusion Investment Income retained in the Costs of
Issuance Fund and the Rebate Fund);
4. All funds, moneys and securities and any and all other rights and interests in
property, whether tangible or intangible. from time to time conveyed, mortgaged, pledged,
assioFned or transferred by delivery or by writing of any kind to the Trustee as additional security
under the Indenture for the benefit of the Bondholders and the Credit Provider; and
5. All of the proceeds of the'foregoing. including, without limitation, Investments
and Investment Income (except as excluded as described above).
The Letter of Credit
The Letter of Credit in the amount of$ initially expires on July _, 2011 by its
terms (the "Expiration Date") and will be subject to two twelve-month extension options pursuant to the
terms of the Reimbursement Agreement, but is subject to earlier termination in certain events. The Letter
of Credit will be delivered to the Trustee by the Bank and shall be effective upon the Delivery Date.
Under the Letter of Credit, the Trustee will be entitled to draw up to an amount sufficient to pay (a) the
principal or Purchase Price of the Bonds and (b) up to 34 days' interest on the Bonds computed at an
assumed rate of twelve percent (12%) per annum.on the principal thereof based on a 365-day year, as
applicable, so long as the Bonds bear interest at the Weekly Variable Rate.
Under the Letter of Credit, the Bank will make payments in an amount that will be sufficient to
pay the interest on the Bonds when and as due and the Purchase Price equal to the unpaid principal of and
interest accrued on Bonds tendered for purchase. The obligation of the Bank to make timely payments
sufficient to pay the principal of and interest on the Bonds under the Letter of Credit during its tern is
irrevocable. Under the terns of the Reimbursement Agreement, the Borrower must reimburse the Bank
for all sums paid under the Letter of Credit. The form of the Letter of Credit is attached hereto as
"APPENDIX H—FORM OF LETTER OF CREDT.''
Alternate Credit Facility
At all times there shall be provided and continuously available to the Trustee, as beneficiary, a
Credit Facility (whether in the form of a letter of credit, insurance policy, surety bond or any other credit
instrument) meeting the requirements of the indenture. The Borrower shall have the right at any time,
whether or not in connection with the adjustment of the interest on the Bonds to another Mode or the
pending expiration of any then outstanding Credit Facility, to provide to the Trustee an Alternate Letter of .
Credit that meets the requirements of the Indenture, and the Trustee has been directed pursuant to the
Indenture to accept any such Alternate Letter of Credit.
When delivered, the Indenture requires that each Credit Facility satisfy the following
requirements: .
(a) the Credit Facility shall be in an amount equal to the aggregate principal amount of the
Bonds of such Series Outstanding from time to time plus the Interest Requirement;
19
(b) the Credit Facility shall 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;
(c) if the Credit Facility is provided to secure a Series of Bonds during a Reset Period, the
Credit Facility shall provide an expiration date no earlier than the earliest of (i) the day following the
Adjustment Date immediately succeeding the Reset Period; (ii) 10 days after the Trustee receives notice
from the Credit .Provider of an Event of Default under the Reimbursement Agreement and a direction to
redeem all Outstanding Bonds of such Series; (iii) the date on which all Bonds of such Series are paid in
full and the Indenture is discharged in accordance with its terms; and (iv) the date on which the Bonds of
such Series become secured by an Alternate Credit Facility in accordance with the terms of the Indenture
and the Credit Facility:
(d) unless waived by the Issuer in its sole discretion, the Credit Facility shall result in such
Series of Bonds receiving a short term rating in the highest rating category of each Rating Agency or a
Iona term rating in one of the three highest rating categories of each Rating Agency, or both, as applicable
for the Mode then in effect;
(e) if the Credit Facility is an Alternate Credit Facility, the Alternate Credit Facility satisfies
certain other requirements of the Indenture, including the requirement that the Substitution Date for an
Alternate Credit Facility be an Interest Payment Date during a Weekly Variable Rate Period, or a Daily
Variable Rate Period, or an Adjustment Date which immediately follows a Reset Period; and
(f) the Trustee has received on or prior to the effective date of the Credit Facility (i) an
Opinion of Counsel to the Credit Provider issuing the Credit Facility, in form and substance satisfactory
to the Issuer and the Trustee, relating to the due authorization and issuance of the Credit Facility and its
enforceability and (ii) with respect to an Alternate Credit Facility, an opinion of Bond Counsel to the
effect that the Alternate Credit Facility will not adversely affect the exclusion from gross income, for
federal income tax purposes, of the interest payable on the Tax-Exempt Bonds.
BONDHOLDERS' RISKS
Purchase of the Bonds involves certain investment risks. In order to identify risk factors and
make an informed investment decision, potential investors should be thoroughly familiar with this entire
Composite Offering Statement (including the Appendices hereto) in order to make a judgment as to
whether the.Bonds are an appropriate investment. Certain of the risks associated with the purchase of the
Bonds are described below. The following list of possible factors, while not setting forth all the factors
which must be considered, contains some of the factors which should be considered prior to purchasing
the Bonds. . THIS DISCUSSION OF RISK FACTORS IS NOT, AND IS NOT INTENDED TO BE,
COMPREHENSIVE OR EXHAUSTIVE.
Limited Liability
THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE
'ISSUER, PAYABLE SOLELY FROM THE SECURITY, WHICH IS SPECIFICALLY ASSIGNED
AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED IN
THE INDENTURE. NEITHER THE. STATE OF CALIFORNIA (THE "STATE"), NOR ANY
POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE LIMITED EXTENT SET
FORTH IN THE INDENTURE) WILL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR FOR THE
PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND
20
WHATSOEVER OF THE ISSUER., AND NONE OF THE BONDS OR ANY OF THE ISSUER'S
AGREEMENTS OR OBLIGATIONS WILL BE. CONSTRUED TO CONSTITUTE AN
INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE
CREDIT OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT
THE ISSUER, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) WITHiN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER.
Performance of the Borrower
If there is a default by the Borrower under the Financing Agreement, including the failure by the
Borrower to pay on the date due any amounts required to be paid by the Borrower under the Financin;
Agreement or the Reimbursement Agreement, the Bank may request that the Trustee declare the unpaid
balance of the Loan to be immediately due and payable. In such event.the Trustee is required pursuant to
the Indenture to declare the principal amount of the Bonds to be immediately due and payable. No
premium will be paid on the Bonds in-the event of the declaration of acceleration of maturity of the
Bonds.
Market Factors Regarding Bonds
The relative buying and selling interest of market participants in securities such as such as the
Bonds will vary over time, and such variations may be affected by, among other things, news relating to
the Borrower or the Bank, the attractiveness of alternative investments, the perceived risk of owning the
security, the tax treatment accorded the instruments, the accounting treatment accorded such securities,
reactions to regulatory actions or press reports. financial reporting cycles and market sentiment generally.
Shifts of demand in response to any one or simultaneous particular events cannot be predicted and may be
short-lived or exist for longer periods.
No Acceleration or Early Redemption Upon Loss of Tax Exemption on the Bonds
The Bonds are not subject to acceleration or redemption (unless the Bank shall cause, in its sole
discretion, such acceleration or redemption), and the rate of interest on the Bonds is not subject to
retroactive adjust►nent, by reason of the interest on the Bonds being included in gross income for purposes
of federal income taxation. Such event could occur if the Borrower or any subsequent owner of the
Project) does not comply with the provisions of the Financing Agreement and the Regulatory Agreement
that are designed, if complied with, to satisfy .the continuing compliance requirements the Internal
Revenue Code of 1986, as amended (the 1986 Code"), in order for the interest on the Bonds to be
excludable from Gross income for purposes of federal income tax. Under such circumstances, interest on
the Bonds might become subject to federal income taxation retroactive to the date of issuance or some
other subsequent date.
Bond Ratings Based on Letter of Credit
,The rating on the Bonds is based on the Letter of Credit and the creditworthiness of the Bank.
Tile main credit risk is that the Bank will fail to perform under the Letter of Credit. There can be no
assurance that the Bank will maintain its financial condition or honor future payment obligations on the
Bonds until expiration of the Letter of Credit.
21
Early Redemption
A variety of factors described herein may result in an early redemption of the Bonds. The
possibility of an early redemption could affect the ability of the Bonds to be valued or sold at a premium.
Early redemption would.also cause a loss of any premium otherwise owing to the holder of any Bond.
Bankruptcy of Borrower
In the event of a bankruptcy filing by or against the Borrower, all or a portion of any payments
made to Bondholders within 91 days of the filing of such bankruptcy could be recovered from
Bondholders by the order of a bankruptcy judge finding that such payments to Bondholders were
"preferential" payments within the meaning of Section 547 of the United States Bankruptcy Code. In the
event Bondholders were ordered to return payments previously received, Bondholders' recourse, through
the Trustee. would be to the obligations of the Bank to the Trustee as and to the extent provided in the
Letter of Credit.
The United States Bankruptcy Code automatically stays enforcement of any liens, such as the
Security Instrument, against the property of a bankrupt estate, even if such liens arose prior to the filing of
the bankruptcy petition. In the event of the bankruptcy of the Borrower, the Trustee's ability to enforce
the provisions of the Security Instrument would be substantially impaired, absent relief by the bankruptcy
court from the automatic stay. In the event of such a stay, Bondholders recourse, through the Trustee,
would be to the obligations of the Bank to the Trustee as and to the extent provided in the Letter of Credit.
Normal Risks Attending any Investment in Real Estate; Environmental Risks
There are many diverse risks attending any in in real estate not within the Borrower's
control. including general economic conditions, over-supply of similar facilities in the area, population
decrease, uninsured losses, operating deficits, mortgage foreclosure and adverse changes in zoning laves.
In addition, there are potential risks relating to environmental liability associated with the ownership of
real property. If hazardous substances are found to be located on a property, the owner of such property
may be held liable for costs and other liabilities relating to such hazardous substances. In the event of a
foreclosure of the Project or active participation in the management of the Project by the Trustee on
behalf of the Bondholders,the Trustee (and, indirectly, the Bondholders) may be held liable for costs and
other liabilities related to hazardous substances, if any, on the site of the Project on a strict liability basis
and such costs might exceed the value of such property.
Performance of the Project
No assurance can be given as to the future perfornance of the Project. The economic feasibility
of the Project depends in large part upon its being substantially occupied at rentals adequate to cover all
operating expenses and debt service. Although surveys of the area where the Project is located suggest
that a substantial number of persons currently need housing facilities such as the Project, occupancy of
the Project may be affected by competition frorn existing housing facilities or from housing facilities
which may be constructed in the area served by the Project, including new housing facilities which the
Borrower, or its affiliates, may, construct. There may be difficulties in keeping the Project substantially
occupied. Furthermore, no assurance can be given that the low income tenants are able to afford the
rental rates of the Project, albeit at below market rental rates, nor can assurance be given that there are
sufficient low income tenants to fully rent the Very Low income Units. Tile rent and affordability
restrictions may adversely affect the revenues on the Project.
22•
Estimated Project Expenses; Management
The success of the Project depends upon economic conditions, successful management of the
Project and other factors. Furthermore, should management of the Project prove to be inefficient,
increases in operating expenses might exceed increases in rents which can be supported by market
conditions. The economic feasibility of the Project also depends to a large extent on operating expenses.
No assurances can be given that moneys available to the Borrower from operation of the Project will be
sufficient to make the required paymentsunder the Financing Agreement.
No Personal Liability of the Borrower.
The Borrower has not been nor.will it be (subject to certain exceptions to non-recourse liability
set forth in the Financing Agreement and the Security Instrument) personally liable for payments on the
Loan, nor will the Borrower be (subject to certain exceptions to non-recourse liability set forth in the
Security Instrument and subject to certain exceptions to non-recourse liability set forth in the Financing**.
Agreement with respect to the Issuer and the payment of the rebate amount) personally liable under the
other documents executed in connection with the Bonds and the making of such Loan. All payments on
the Loan are expected to be derived from revenues generated by the Project.
Competing Facilities
The Issuer, the Borrower and its affiliates and others may develop, construct, acquire and/or
operate other facilities that could compete with the Project for tenants. Any competing facilities, if so
constructed or acquired, could adversely affect occupancy and revenues of the Project.
Secondary Markets and Prices
The Underwriter will not be obli;ated to repurchase any of the Bonds, and no representation is
made concerning the existence of any secondary market. There can be no assurance that any secondary
market will develop following the completion of the offering of the Bonds. Further, there can be no
assurance that the initial offering prices for the Bonds will continue for any period of time.
Energy Shortages and Allocations
There may be shortages or increases in the cost of fuel, natural gas, electric power or allocations
thereof by suppliers or governmental regulatory bodies in the area of the Project. In the event such
shortages, price increases or allocations occur, the Project may be adversely affected. No assurance can
be given as to whether such shortages. price increases or allocations will occur or the degree to which
such events will influence the performance of the Project.
THE ISSUER
General
The Bonds have been or are being issued by the County of Contra Costa, California, pursuant to
Chapter 7 of Part 5 of Division 31, cornmencing with Section 52075, of the Health and Safety Code of
California (the "Act"), which permits counties to issue revenue bonds for the purpose of financing the
acquisition, construction, and equipping of multifamily rental housing (such as the Project). The County
of Contra Costa is located on the east side of San Francisco Bay.
Limited Liability
THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE
ISSUER, PAYABLE SOLELY FROM THE SECURITY, WHICH IS SPECIFICALLY ASSIGNED
AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED IN
THE INDENTURE. NEITHER THE STATE OF CALIFORNIA (THE "STATE"), NOR ANY
POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE LIMITED EXTENT SET
FORTH IN THE INDENTURE) WILL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR FOR THE
PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KiND
WHATSOEVER OF THE ISSUER, AND NONE OF THE BONDS OR ANY OF THE ISSUER'S
AGREEMENTS OR OBLIGATIONS WILL BE CONSTRUED TO CONSTITUTE AN
INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE
CREDIT OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT
THE ISSUER, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER.
THE BANK
Bank of America, N.A. (the 'Bank") is a national banking association organized under the laws
of the United States, with its principal executive offices located in Charlotte,North Carolina. The Bank is
a wholly-owned indirect subsidiary of Bank of America Corporation (the "Corporation") and is engaged
in a general consumer banking, commercial banking and trust business, offering a wide range of
commercial, corporate, international, financial market, retail and fiduciary banking services. As of March
31, 2008, the Bank had consolidated assets of$1,355 billion, consolidated deposits of$793 billion and
stockholder's equity of$1 1 1 billion based on regulatory accounting principles.
The Corporation is a bank holding company and a financial holding company, with its principal
executive offices located in Charlotte, North Carolina. Additional information regarding the Corporation
is set forth in its Annual Report on Form 10-K. for the fiscal year ended December 31, 2007, together with
any subsequent documents it filed with the Securities and Exchange Commission (the "SEC")pursuant to
the Securities Exchange Act of 1934, as amended(the"Exchange Act'').
Additional information regarding the foregoing is available from the filings made by the
Corporation with the SEC, which filings can be inspected and copied at the public reference facilities
maintained by the SEC at 100 F Street.. N.E., Wash ington,.D.C. 20549, United States. at prescribed rates.
In addition, the SEC maintains a website at http://www.sec.gov, which contains reports. proxy statements
and other information regarding registrants that file such information electronically with the SEC.
The information concerning the Corporation and the Bank contained herein is furnished solely to
provide limited introductory information and does not purport to be compreliensive. Such information is
224
qualified in its entirety by the detailed information appearing in the documents and financial statements
referenced herein.
The Letter of Credit has been issued by the Bank. Moody's investors Service, Inc. ("Moody's")
currently rates the Bank's longi tern debt as "Aaa" and short-term debt as `'P-i." The outlook is stable.
Standard & Poor's rates the Bank's long-term debt as "AA+" and its short-term debt as "A-1+." The
outlook is stable. Fitch Ratinygs, inc. ("Fitch") rates long-term debt of the Bank as "AA" and short-term
debt as "F l+." The long term rating is.currently on Rating Watch Negative. Further information with
respect to such ratings may be obtained from Moody's, Standard & Poor's and Fitch, respectively. No
assurances can be given that the current ratings of the Bank's instruments will be maintained.
The Bank will provide copies of the most recent Bank of America Corporation Annual Report on
Form 10-K, any subsequent reports on Form 10-Q, and any, required reports on Form 8-K (in each case as
filed with the SEC pursuant to the Exchange Act), and the publicly available portions of the most recent
quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each
person to whom this document is delivered, on the written request of such person. Written requests
Should be directed to:
Bank of America Corporate Communications
100 North Tryon Street, 18th Floor
Charlotte, North Carolina 28255
Attention: Corporate Communications
PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS WiLL BE MADE FROM
DRAWINGS UNDER THE LETTER OF CREDIT. PAYMENTS OF THE PURCHASE PRiCE OF
THE BONDS WILL BE MADE FROM DRAWINGS UNDER THE. LETTER OF CREDIT IF
REMARKETING PROCEEDS ARE NOT AVAILABLE. ALTHOUGH THE LETTER OF CREDIT IS
A BINDING OBLIGATION OF THE BANK, THE BONDS ARE NOT DEPOSITS OR
OBLIGATIONS OF THE CORPORATION OR ANY OF ITS AFFILIATED BANKS AND ARE NOT
GUARANTEED BY ANY OF THESE ENTITIES. THE BONDS ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE. CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY AND ARE SUBJECT TO'CERTAIN INVESTMENT RiSKS, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
The delivery hereof shall not create any implication that there has been no change in the affairs of
the Corporation or the Bank since the date hereof.. or that the information contained or referred to in this
section is correct as of any time subsequent to its date.
25
ESTIMATED SOURCES AND USES OF FUNDS
The sources and uses of fiends for the construction and development of the Project are estimated
by the Borrower to be approximately as follows:
Sources of Funds
Tax Exempt Bond Proceeds $126,060,000
Taxable Bond Proceeds(Series 2006A-T) 9,000,000
LIHTC Equity 4,458,115
Developer Equity 15.958.659
Total $.]_,55,416.774
Uses of Funds
Land Purchase/Lease $3,499,580
On-Site & Off-Site Costs 1 1,240,219
Hard Construction Costs 97,089,100
Architect& Enaineering Fees 5,376,401
Contractor Overhead and Profit 2.587.501
Developer Fee 1,606.000
Cost of Issuance 13,412.214
Capitalized Interest 3,415,460
Other Soft Costs 17.190.300
Total $15-5,11.6,77. 4
Low Income Housing Tax Credits
Simultaneously with the offering of the Bonds, the Borrower will sell to
a (the "Tax Credit Partner") a % limited partnership interest in the Borrower.
Pursuant to the sale, the tax credit equity, which is expected to total approximately $4,458.115 will be
paid in stages during and after construction of the Project. The funding levels and the timing of the
fimding are subject to numerous adjustments and conditions which could result in the amounts funded
and/or the timing; or even occurrence of the funding varying siL7nificantly from the Borrower's current
projections and neither the issuer nor.the Underwriter or Remarketing Agent makes any representation as
to the availability of such funds.
THE PROJECT AND THE PRIVATE PARTICIPANTS
The,1611mving,igforwalion concerning the Pr(ject and the private participants has been provided
by rel)resentatives Of the Borrower and Other private participants and has not been independent1v
conf1rtned Or ver7f1ed bill the Underwriter Or the Issuer. NO representation is made herein as to the
accuracy or adequacy Of such 1111brindtion Or as to the absence of.nialeria1 adverse changes in such
information subsequent to the date hereof.'
The Borrower
The Project is owned by PHVP 1. LP (the ."Borrower'), a Delaware limited partnership qualified
to do business in California. The Borrower was formed for the purpose of owning, operating. leasing,
managing and maintaining the Project. The Borrower is comprised of a 1% general partner and a 99%
limited partner. The Borrower's general partner is PHVP i GP, LLC, a Delaware limited liability
company (the "General Partner'). The sole member of the. General Partner is Pleasant Hili Transit
Villa<ue Associates, LLC (".PHTVA"). PHTVA is also the limited partner of the Borrower, and is
26
indirectly controlled by AvalonBay Communities, Inc. ("AvalonBay"). AvalonBay is a Maryland
corporation whose common stock is listed on both the New York Stock Exchange (AVB) and the Pacific
Exchange (AVB). AvalonBay has elected to be taxed as a real estate investment trust under the internal
Revenue Code of 1986,as amended. AvalonBay focuses on the ownership, development and operation of
luxury apartment communities in high barrier-to-entry markets of the United States. As of March 31,
2008, AvalonBay owned or held an interest in 183 apartment communities containing 52,167 apartment
units in 10 states and the District of Columbia. The Borrower has no real estate assets other than the
Project.
The obli(yations and liabilities of the Borrower under the Loan are of a non-recourse nature and
are limited to the Project and moneys derived from the operation of the Project. Neither the Borrower nor
its partners, officers, shareholders or directors have any personal liability for payments on the Note to be
applied to pay the principal of and interest on the Bonds. Furthermore, no representation is made that the
Borrower has substantial funds available for the Project. Accordingly, neither the Borrower's financial
statements nor those of its partners are included in this Composite Offering Statement.
The Project
The Project, known as Avalon Walnut Creek at Contra Costa Centre, is a residential component
of a larger mixed-use development (the."Development") located adjacent to the Pleasant Hill Bay Area
Rapid Transit rail system ("BART") station in Contra Costa County, California. The Development is
expected to consist of market-rate and affordable•residential units, a multistory parking garage that will
contain approximately 3,367 parking spaces, approximately 35,000 square feet of retail space,
approximately 270,000 square feet of commercial office space. 100 for sale units and approximately
19,400 square feet of conference facilities. As a component of the Development, the Project is expected
to be built as luxury family apartments in a courtyard style, and is anticipated to include an approximately
648-space parking garage. All units will.be included in three. four-story apartment buildings, the bottom
level of which will house street level retail space. Bond proceeds will be used to finance only the Project
and no other component of the overall Development.
The Project will include an anticipated unit mix as follows:
No.of Bedrooms/Baths No, of Units Approximate Square Footage of
Each Unit
Studio 31 532
IBR/IBA 187 806
2BR/2BA 175 1.195
3BR/3BA 29 1,333
Individual unit amenities will include balconies. nine-foot ceilings, washer and dryers, walk in
closets, wall-to-wall carpeting; vinyl flooring in bathrooms and.kitchen areas, and vertical blinds.
Kitchens will be equipped with electric ranges/ovens, microwaves, refrigerators. dishwashers, garbage
disposals, granite countertops and maple cabinetry. Each unit will have an independently controlled
HVAC heating and cooling unit.
The land underneath the Project is owned by the San Francisco Bay Area Rapid Transit, which
leases it to Pleasant Hill BART Station Joint Powers Leasing Authority, a joint powers agency established
and existing pursuant to the joint powers agency law of the State of California (the "Authority"). The
Authority will sublease the land to the Borrower pursuant to the Ground Sub-lease, which has a term of
approximately 98 years.
27
Restrictive Covenants
The Regulatory Agreement imposes certain requirements on the Borrower with respect to the tax-
exempt status of the Tax-Exempt Bonds under the Code, which include, among other requirements, a set
aside of not less than 20% of the units in the Project (the "Very Low Income Units") for rental to,very
low income households (no greater than 50% of area median income, adjusted for family size). The
Regulatory Agreement also imposes certain affordable housing requirements on the Project in connection
with a loan to be made to the Borrower from the Contra Costa County Redevelopment Agency (the
"Agency"), in accordance with the California Community Redevelopment Law.
Under the Regulatory Agreement, very low income households are persons or families having
incomes at or below the limits for very low income households, adjusted for actual household size, as
established and amended by the United States Department of Housing and Urban Development from time
to time pursuant to Section 8 of the United States Housing Act or 1937, and as published by the State of
California Department of Housing and Community Development. Further, annual rents charged on the
Very Low Income Units may not exceed an amount in excess of 30% of 50% of median adjusted gross
income for the area, adjusted for family size. See "APPENDIX D --SUMMARY OF CERTAIN
PROVISIONS OF THE REGULATORY AGREEMENT"herein.
Property Manager
The Project will be managed by AvalonBay Communities, Inc. ("Project Manager"). The Project
Manager manages over 42,300 units of affordable, conventional, and multifamily housing in the United
States.
RATINGS
It is a condition to closing the Bonds that Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.. ("S&P") has assigned the Bonds the ratings shown on the cover page
hereof. Such ratings reflect only the view of such organization, and an explanation of the significance of
such ratings may be obtained only from S&P. There is no assurance that such ratings will continue for
any given period of time or that it will not be revised downward or withdrawn entirely by the rating
agency if, in the judgment of such rating agency, circumstances so warrant. Any such downward revision
or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
TAX MATTERS'
2006A Bonds
On March 23, 2006, Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Issuer, delivered
its opinion that interest on the 2006A Bonds was excluded from gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code"), except that no opinion
was expressed as to the status of interest on any 2006A Bond for any period that such 2006A Bond is held
by a "substantial user" of the facilities financed or refinanced by the 2006A Bonds or by a "related
person" within the meaning of Section 147(a) of the Code. Bond Counsel observed, however,that interest
on the 2006A Bonds was a specific preference item for purposes of the federal individual and corporate
alternative minimum taxes, and that interest on the 2006A-T Bonds was not excluded from gross income
for federal income tax purposes. Bond Counsel was also of the opinion that interest on the 2006 Bonds
was exempt from State of California personal income taxes. Bond Counsel expressed no opinion
28
regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt
of interest on.the 2006 Bonds.
In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions,
the remarketing of the 2006A Bonds on the Closing Date will not, in and of itself, adversely affect the
exclusion from gross income for federal income tax purposes of interest payable on the 2006A Bonds.
Bond Counsel is not rendering any opinion on the current tax status of the 2006A Bonds. A complete
copy of the proposed form of opinion proposed to be delivered by Bond counsel on the delivery date is set
forth in Appendix F.
As described in the Official Statements relating to the original issuance of the 2006A Bonds, the
Code imposes various restrictions, conditions and requirements relating to the exclusion from gross
income for federal income tax purposes of interest on obligations such as the 2006A Bonds. The Issuer
and the Borrower have made certain representations and covenanted to comply with certain restrictions,
conditions and requirements designed to ensure that interest on the 2006A Bonds will not be included in
federal gross income. inaccuracy of these.representations or failure to comply with these covenants may
result in interest on the 2006A Bonds beiiia included in gross income for federal income tax purposes,
possibly from the date of original issuance of the 2006A Bonds. The opinion of Bond Counsel assumed
the accuracy of these representations and compliance with these covenants. Bond Counsel has not
undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events
occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of
issuance of the 2006A Bonds may adversely affect the value of. or the tax status of interest on, the 2006A
Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon.in
connection with any such actions, events or matters.
Although Bond Counsel was of the opinion that interest on the 2006A Bonds is excluded from
gross income for federal income tax purposes and is exempt from State of California personal income
taxes, the ownership or disposition of, or the accrual or receipt of interest on, the 2006A Bonds may
otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these
other tax consequences depends upon the particular tax status of the beneficial owner or.the beneficial
owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such
other tax consequences.
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may
cause interest on the 2006A Bonds to be subject, directly or indirectly, to federal income taxation or to be
subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing
the full current benefit of the tax status of such interest. The introduction or enactment of any such future
legislative proposals, clarification of the Code or court decisions may also affect the market price for, or
marketability of the 2006A Bonds. Prospective purchasers of the 2006A Bonds should consult their own
tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as
to which Bond Counsel expresses no opinion.
The opinion of Bond Counsel was based on current legal authority, covers certain matters not
directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment
of the 2006A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service
("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or
assurance about the future activities of the .Issuer or the Borrower, or about the effect of future changes in
the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The
Issuer and the Borrower have covenanted, However, to comply with the requirements of the Code.
''9
The IRS has an ongoing program of auditing tax-exempt obligations to detennine whether, in the
view of the IRS, interest on such tax-exempt obligations is includable in the gross income of the owners
thereof for federal income tax purposes. Bond Counsel is not obligated to defend the owners regarding
the tax-exempt status of the 2006A Bonds in the event of an audit examination by the IRS. Under current
procedures. parties other than the Issuer, the Borrower and their appointed counsel, including the
beneficial owners, would have little, if any, right to participate in the audit examination process.
Moreover, because achieving judicial review in connection with an audit examination of tax-exempt
bonds is difficult, obtaining an independent review of IRS positions with which the Issuer or the
Borrower legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited
to selection of the 2006A Bonds for audit. or the course or result of such audit, or an audit of bonds
presenting similar tax issues may affect the market price for, or the marketability of. the 2006A Bonds,
-and may cause the issuer,the Borrower or the beneficial owners to incur significant expense.
2008 Bonds
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Issuer. based upon an
analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters,the
accuracy of certain representations and compliance with certain covenants, interest on the 2008 Bonds is
excluded from gross income for federal income tax purposes under Section 103 of the internal Revenue
Code of 1986 (the "Code'). except that no opinion is expressed as to the status of interest.on any 2008
Bond for any period that such Bond is held by a "substantial user" of the facilities financed or refinanced
by the 2008 Bonds or by a "related person" within the meanin; of Section 147(a) of the Code. Bond
Counsel observes, however, that interest on the 2008 Bonds is a specific preference item for purposes of
the federal individual and corporate alternative minimum taxes. Bond Counsel is also of the opinion that
interest on the 2008 Bonds is exempt from.State of.California personal income taxes. A complete copy of
the proposed form of opinion of Bond Counsel is set forth in Appendix F hereto.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from
gross income for federal income tax purposes of interest on obligations such as the 2008 Bonds. The
Issuer and the Borrower have made certain representations and covenanted to comply with certain
restrictions, conditions and requirements designed to ensure that interest on the 2008 Bonds will not be
included in federal gross income. Inaccuracy of these representations or failure to comply with these
covenants may result in interest on the 2008 Bonds being included in gross income for federal income tax
purposes, possibly from the date of original issuance of the 2008 Bonds. The opinion of Bond Counsel
assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has
not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events
occurring (or not occurring), or any other matters coming to Bond Counsel's attention atter the date of
issuance of the 2008 Bonds may adversely affect the value of or the tax status of interest on, the 2008.
Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in
connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the 2008 Bonds is excluded from gross
income for federal income tax purposes,and is exempt from State of California personal income taxes, the
ownership or disposition of, or the accrual or receipt of interest on, the 2008 Bonds may otherwise affect
a Beneficial Owner's federal, state or. local .tax liability. The nature and extent of these other tax
consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner's
other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax
consequences.
30
Future legislation, if enacted into law, or clarification of the Code may cause interest on the 2008
Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent Beneficial
Owners from realizing the full current-benefit of the tax status of such interest. The introduction or
enactment of any such future legislation or clarification of the Code may also affect the market price for,
or marketability of. the 2008 Bonds. Prospective purchasers of the 2008 Bonds should consult their own
tax advisers regarding any pending or proposed federal tax legislation, as to which Bond Counsel
expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not
directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment
of the 2008 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service
("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or
assurance about.the future activities of the Issuer or the Borrower. or about the effect of future changes in
the Code,the applicable regulations,the interpretation thereof or the enforcement thereof by the IRS. The
Issuer and the Borrower have covenanted, however,to comply with the requirements of the Code.
The IRS has an ongoing program of auditing tax-exempt obligations to determine whether. in the
view of the IRS, interest on such tax-exempt obligations is includable in the gross income of the owners
thereof for federal income tax purposes. Bond Counsel is not obligated to defend the owners regarding
the tax-exempt status of the 2008 Bonds in the event of an audit examination by the IRS. Under current
procedures, parties other than the Issuer, the Borrower and their.appointed counsel, including the
beneficial owners, would have little, if any, right to participate in the audit examination process.
Moreover, because achieving judicial review in connection with an audit examination of tax-exempt
bonds is difficult, obtaining an independent review of IRS positions with which the Issuer or the
Borrower legitimately disagrees, may not be practicable. Any action of the iRS. including but not limited
to selection of the 2008 Bonds for audit, or the course or result of such audit, or an audit of bonds
presenting similar tax issues may affect the market price for, or the marketability of, the 2008 Bonds, and
may cause the Issuer,the Borrower or the beneficial owners to incur significant expense.
ENFORCEABILITY OF REMEDIES
The remedies available to the Trustee and the Bondholders upon an event of default under the
Letter of Credit or the Indenture are in many respects dependent upon regulatory and _judicial actions
which are often subject to discretion and delay. Under existing law and_judicial decisions, the remedies
provided for under such documents may not be readily available or may be limited. The various legal
opinions to be delivered concurrently with the delivery of the Bonds and such documents will be qualified
as to enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization.
insolvency or other similar laws affecting the rights of creditors generally and as to the availability of
equitable remedies. Additionally, the enforcement of provisions of the Regulatory Agreement and
Financing Agreement and the covenants contained therein are subject to the provisions of the Interereditor
Agreement.
CONTINUING DISCLOSURE
During the time the Bonds bear interest during a Weekly Variable Rate Period pursuant to the
Indenture, the Borrower, as obligor with respect to the Bonds, is exempt from the continuinu disclosure
requirements of Securities Exchange Commission Rule 15c2-12(b)(5). Accordingly, no continuing
disclosure with respect to the Bonds, the Borrower, the Bank or the Issuer will be provided to the
Bondholders so long as the Bonds bear interest during a Weekly Variable Rate Period. Pursuant to the
Financing Agreement, the Borrower will covenant and agree that on and after adjustment to a Reset Rate
or the Fixed Rate, it will comply, to the extent applicable to the Bonds, with and carry out all of the
31
provisions of a continuing disclosure undertaking between the Borrower and the Trustee to be executed
and delivered as a condition to the adjustment of the interest rate with respect to the Bonds to a Reset Rate
or the Fixed Rate for compliance with the continuing disclosure obligations under Securities Exchange
Commission Rule 15c2-12(b)(5).
ABSENCE OF LITIGATION
Issuer
There is no action, suit or proceeding known to be pending or, to the best of the Issuer's
knowledge.threatened, seeking.to restrain or enjoin.the execution or delivery of the Bonds. the Indenture,
the Financing Agreement, the Regulatory Agreement, the Letter of Credit or in any way contesting or
affecting the validity of the foregoing*.
Borrower
There is no controversy or litigation of any nature now pending against the Borrower and no
controversy or litigation of any nature now pending or,to the best knowledge of the Borrower, threatened
seeking= to restrain or enjoin the issuance, sale or delivery of the Bonds. or in any way contesting or
affecting the validity of the Bonds. .There is no controversy.or litigation of any nature now pending or.to
the best knowledue of the Borrower, threatened against the Borrower which, if successful. would in the
view of the Borrower materially and adversely affect the operations or financial condition of the
Borrower.
UNDERWRITING AND REMARKETING
The 2008 Bonds are being purchased for offering by Citigroup Global Markets Inc. (tile
"Underwriter') pursuant to a Bond Purchase Agreement among the Underwriter. the Borrower and the
Issuer. The Underwriter has agreed to purchase the 2008 Bonds at a purchase price equal to the principal
amount of the 2008 Bonds. The Bond Purchase Agreement provides that the Underwriter will purchase
all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms
and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel
and certain other conditions. For its services as such, the Underwriter is to be paid a fee equal to
$28.340.00. from which it will pay certain expenses.
In addition, the 2006 Bonds are being remarketed by Citigroup Global Markets Inc. the
("Remarketing Agent') pursuant to a Remarketing Agreement between the Borrower and the
Remarketing A�(Tent at a price of par with no accrued interest. As consideration for using its best efforts to
remarket the 2006 Bonds on the Delivery Date, the Remarketing Agent will .be paid a fee equal to
$354,250.00, which is in addition to fees totaling $43.750.00 previously received by Citigroup Global
Markets Inc. for its underwriting of the original issuance of the 2006 Bonds and the remarketing of the
2006 Bonds on December 4.2007.
In addition to its compensation for services as Underwriter with respect to the issuance of the
2008 Bonds and for services as Remarketing Agent with respect to the remarketing of the 2006 Bonds on
the Delivery Date, Citigroup Global Markets inc. will. be paid an annual fee in accordance with the terns
of the Remarketing Agreement for its'on-going remarketing services with respect to the Bonds. The
Remarketing Agent may reoffer and sell the Bonds to certain dealer banks and banks acting as agents at
prices lower than the price stated on the cover of the Composite Offering Statement.
32
LEGAL MATTERS
Legal matters incident to the authorization and issuance of the Bonds are subject to the approving
opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. Bond Counsel
undertakes no responsibility for the accuracy, completeness or fairness of this Composite Offering
Statement. Certain legal matters will be passed upon for the Bank by Updike, Kelly & Spellacy, P.C.,
Hartford, Connecticut, for the Underwriter and Remarketing Agent by Eichner & Norris PLLC,
Washington, D.C., and for the Borrower by Goodwin Procter, LLP, San Francisco, California.
MISCELLANEOUS
Any statement in this Composite Offering Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. This Composite Offering
Statement is not to be construed as a contract or agreement between the Issuer, the Borrower and the
purchasers or Bondholders of any of the Bonds.
[Issuer's Signature Page to the Composite Offering Statement]
COUNTY OF CONTRA COSTA, as Issuer
By
Deputy Director- Redevelopment
[Borrower's Signature Page to the Composite Offering Statement]
PHVP I,LP,
a Delaware limited partnership
By: PHVP I GP,LLC, a Delaware limited
liability company, its general partner
By:
Name:
Title: Authorized Signatory
APPENDIX A
SELECTED DEFINITIONS
Certain c'al7llalLed ivordS and ie7'1775 used but not elsewhere defined in this Conlposite Offel-ing
Statement shall have the following meanings:
.`Account"means an account established within a Fund.
"Act" means Chapter 7 of Part'5 of Division 31 of the California Health and Safety Code, as
amended.
"Act of Bankruptcy" means any proceeding instituted under the Bankruptcy Code or other
applicable insolvency law by or against the Issuer.
"Adjustn7ent Date" means any date on which the interest rate on the Bonds of a Series is adjusted
to a different Mode or to a.different Reset Rate. An Adjustment Date may only occur on an Interest
Payment Date or, if such date is not a Business Day, the following Business Day. Any Reset Date and the
Fixed Rate Adjustment Date are Adjustment Dates.
".9ffiliate," as applied to any person, means any other person directly or indirectly controlling,
controlled bv. or under common control with, that person. For the purposes of this definition. "control"
(including with correlative meanings, the terms "controlling', "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or indirectly, of the power to
direct or cause. the direction of the management and policies of that person, whether through the
ownership of voting securities, partnership interests or by contract or otherwise.
"Alternate C1-edit Facility" means a letter of credit (whether or not so named), surety bond,
insurance policy, standby bond purchase agreement, credit enhancement instrument, collateral purchase
agreement. mortgage backed security or similar agreement, instrument or facility provided in accordance
with the Financing Agreement and satisfying the requirements of the Indenture. The Letter of Credit
(including* any extension or renewal of the Letter of Credit) is not an "Alternate Credit Facility." For
purposes of this definition, "letter of credit" means an irrevocable letter of credit (i) having .the
characteristics of a "credit' or"letter of credit" set forth in Section 5 103 of the UCC except that a letter
of credit (A) may not be revocable and (B) may be issued only by (1) a national bank, (2) any banking
institution organized under the laws of any state, territory or the District of Columbia, the business of
which is substantially confined to banking and is supervised by the state or territorial banking commission
or similar officials or (3) a branch or agency of a foreign bank, provided that the nature and extent of
federal and/or state regulation and the supervision of the particular branch or agency is substantially
equivalent to that applicable to federal or state chartered domestic banks doing business in the same
jurisdiction; and (ii) which meets the requirements of a Credit Facility under the Indenture.
"Ahei-nate Credit Provider"means the provider of an Alternate Credit Facility.
"Assigned Rights"has the meaning given to that term in the Assignment.
"Assignment"means the Intercreditor Agreement, dated as of July 1, 2008, among tiie Issuer, the
Agency, the Trustee and the Credit Provider (and its successors and assigns), and acknowledged and
agreed to by the Borrower, as it may be amended, supplemented or restated from time to time, and any
similar agreement executed and delivered in connection with the deliveryof an Alternate Credit Facility.
"Authol•Led Denomination" means. .(i) during any Daily Variable Rate Period or Weekly
Variable Rate Period, $100,000 or any integral multiple of$5,000 in excess of$100,000 and (ii) during
any Reset Period or the Fixed Rate Period, $5,000 or any integral multiple of$5,000.
"Authorised Representative" means the Chair or Vice Chair of the Board of Supervisors, the
County Administrator, the Interim Director of the Conservation and Development Department, or the
Deputy Director-Redevelopment, 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. sign a specified
document or otherwise take action with respect to the Bonds.
"Available Moneys" means, as of any date of determination, any of(a)the proceeds of.the Bonds.
(b)remarketing proceeds-received from the Remarketing Agent or any purchaser of Bonds (other than
remarketing or 'purchase proceeds provided by the Borrower, the Issuer, any Affiliate of either the
Borrower or the Issuer or any guarantor of the Loan), (c)the proceeds of refunding bonds, (d) any other
amounts for which, in each case, the Trustee has received an Opinion of Counsel acceptable to each
Rating Agency 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 or the Borrower become a debtor
in proceedings commenced under the Bankruptcy Code; and (e)Investment Income derived from the
investment of moneys described in clause(a), (b), (c)or(d).
"Bankrupic'V Code- means Title I I of the United States Code entitled "Bankruptcy," as in effect
now and in the future,.or any successor statute.
"Beneficial Owner" means, for any Bond which is held by a nominee, the beneficial owner of
such Bond.
"Bond"or"Bonds"means, collectively,the 2006 Bonds and the 2008 Bonds.
"2006 Bonds" means, collectively,the 2006A Bonds and the 2006A-T Bonds.
"2006A Bonds" means the Issuer's Multifamily Housing Revenue Bonds (Avalon Walnut Creek
at Contra Costa Centre Project) Series 2006A.
"2006A-T Bonds" means the Issuer's Multifamily Housing Revenue Bonds (Avalon Walnut
Creek at Contra Costa Centre Project)Taxable Series 2006A-T.
"2008 Bonds" means the Issuer's Multifamily Housing Revenue Bonds (Avalon Walnut Creek at
Contra Costa Centre Project) Series 2008A.
"Bond Counsel" means (i) on the Closing Date, the law firm delivering the approving opinion
with respect to.the 2006 Bonds. (ii) on the Escrow Break Date. the law firm delivering the approving
opinion with respect to the 2008 Bonds or(iii) after the Escrow Break Date, any law firm selected by the
Issuer and acceptable to the Credit 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 Assignment,the Bonds,the Bond Purchase Agreements.the Credit
Facility. the Disclosure Agreement, if any, the Financing Agreement, the Indenture. the Regulatory
Agreement (and any other agreementrelating to rental .restrictions on the Mortgaged Property), the
Remarketing Agreement, the Tax Certificate, any Tender Agent Agreement and all other documents.
instruments and agreements executed and delivered in connection with the issuance, sale, delivery and/or
remarketing of the Bonds. as each such agreement or instrument may be amended, supplemented or
restated from time to time. .
A-2
"Bond Purchase Agreements" means, collectively, the Bond Purchase Agreement, dated March
16, 2006, among the 2006 Underwriter, the issuer and the Borrower, and the Bond Purchase Agreement,
dated July2008, among the 2008 Underwriter,the Issuer and the Borrower.
"Bond Purchase Fund"means the Bond Purchase Fund created by the Indenture.
"Bond Register"means the.Bond Register maintained by the Trustee pursuant to the Indenture.
"Bond Resolutions" means, collectively, the resolution adopted by the Board of Supervisors of
the Issuer on March 14, 2006 and the resolution adopted by the Board of Supervisors of the Issuer on July
8, 2008, authorizing and approving the issuance and sale of the Bonds and the execution and delivery of
the indenture, the Assignment, the Bond Purchase Agreements,.the Financing Agreement, the Loan
Documents, the Regulatory Agreement. the Tax Certificates and certain other documents, making certain
appointments and determining certain details with respect to the Bonds.
"Bondholder," "holder," "Owner," .'owner," "Registered 0147ner' or "registered oirner" means,
with respect to any Bond,the owner of the Bond as shown on the Bond Register.
"Bondholder Tencler Notice" means a written notice meetino the requirements of the Indenture.
"Book-EnIr), Bonds" means that part of the Bonds for which a Securities Depository or its
nominee is the Bondholder.
"Book-Entre System" means an electronic system in which the clearance and settlement of
securities transactions is made through electronic book-entry changes.
"Borrower" means PHVP I, LP, a Delaware limited partnership, or any of its permitted
successors or assigns as owner of the Project.
"Borrower DOclmlents" means the Bond Documents .to which the Borrower is a party and the
Loan Documents and all other documents to which the Borrower is a party and which are being executed
and delivered by the Borrower in connection with the transactions provided for in the Transaction
Documents, and the Loan Documents.
"Business Day" means any 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 are required or authorized by law or
executive order to close, (c)any day on which banking institutions located in the city or cities in which
the Designated .Office of the "Trustee or the Remarketing Agent is located are required or authorized by
law or executive order to close, or(d)a day on which the New York Stock Exchange is closed.
"CaritaliTed Moneys Account"means the Capitalized Moneys Account of the Loan Fund.
"Certificate of Borrower"means the Certificate of Borrower, dated the Closing Date, as it may be
amended, supplemented or restated from time to time
"Closing Date" means March 23, 2006, the date on which the 2006 Bonds were issued and
delivered to or upon the order of the 2006 Underwriter.
"Code" means the internal Revenue Code of 1986; each reference to the Code is deemed to
include (i) any successor internal revenue law and (ii)the applicable regulations whether final, temporary
or proposed under the Code or such successor law. Any reference to a particular provision of the Code is
deemed to include any successor provision of any successor internal revenue law and applicable
regulations whether final,temporary or proposed under such provision or successor provision.
A-3
"Conditional Redenilvion" means a redemption where the Trustee has stated in the notice of
redemption that the redemption is conditioned upon deposit of funds.
"Costs of Issuance'."means:
(a) the fees, costs and expenses of(i) the issuer (in the amount of$33,125), (ii) the
Issuer's financial advisor (in the amount of $45,000), (iii) Issuer's counsel, (iv) the 2008
Underwriter(including discounts to the 2008 Underwriter or other purchasers of the Bonds, other
than ori-inal issue discount, incurred in the issuance and sale of the Bonds) and the 2008
Underwriter's counsel, (v) the Remarketing A0ent, (vi) Bond Counsel, (vii) the Trustee and the
Trustee's counsel, (viii) the Borrower's counsel and the Borrower's financial advisor, if any, (ix)
the Rating Agency and (x)the Credit Provider and the Credit Provider's counsel;
(b) costs of printing the offering= documents relating to the remarketing or sale of the
Bonds; and
(c) all other fees, costs and expenses directly associated with the authorization,
issuance, sale and delivery of the 2008 Bonds—or the remarketing of the 2006 Bonds on the
Escrow Break Date, including printing costs, costs of reproducing documents, filing and
recording fees.
"Costs of Issuance Deposit" means the deposit in the amount set forth in the Indenture to be made
by the Borrower with the Trustee on the Escrow Break Date to pay Costs of Issuance, plus any additional
amount deposited by the Borrower with.the Trustee to pay Costs of issuance or costs of remarketing the
Bonds.
"Costs of Issuance Fund' means the Costs of Issuance Fund created and established by the
Indenture.
"Costs of the Project" means the costs chargeable to the Mortgaged Property in accordance with
generally accepted accounting principles, including. but not limited to, tite costs of acquisition.
construction, rehabilitation, reconstruction, restoration, repair, alteration, improvement and extension (in
any of such events, "construction") of any building. structure, facility or other improvement, stored
materials for work in progress; the cost of machinery and equipment; the cost of the "Land" (as that term
is defined in the Security Instrument), rights in lands, easements, privileges, agreements, franchises.
utility extensions, disposal facilities, access roads and site development necessary or useful and
convenient for the Mort aged Property; financing costs, including, but not limited to, the Costs of
Issuance. engineering and inspection costs; fees paid to the developer of the Mortgaged Property;
organization, administrative, insurance, legal, operating, letter of credit and other expenses of the
Borrower actually incurred prior to and during construction; and all such other expenses as may be
necessary or incidental to the financing. acquisition, construction or completion of the Mortgaged
Property or any part of it, including, but not limited to, the amount of interest expense incurred with
respect to the Loan prior to the date the.Mortgaged Property is placed in service or available to be placed
in service; insurance premiums payable by the Borrower and taxes and other governmental charges levied
on the Mortgaged Property.
"Credit Facility" means the Letter of Credit and at such time as an Alternate Credit Facility is in
effect.the Alternate Credit Facility.
"Credit Facility Account"means the Credit Facility Account of the Revenue Fund.
"Creclit Facility Documents" means, individually and collectively, the Reimbursement
Agreement and the Letter of Credit and all other documents evidencing, securing or otherwise relating to
A-4
the Reimbursement Agreement and the Letter of Credit, including, without limitation, the [other
Reimbursement Documents], and all amendments, supplements and restatements of such documents.
"Credit Provider"means, initially, Bank of America,N.A.,the provider of the Letter of Credit, or
so long as any Alternate Credit Facility is in effect, the Alternate Credit Provider then obligated under the
Alternate Credit Facility.
"Credit Provider Bonds"means any Bonds purchased and held in accordance with the Indenture.
"Credit Provider Rate" means the interest rate to be paid on Credit Provider Bonds and Pledged
Bonds established as provided in the.Reimbursement Agreement.
"Daily Variable Rate" means the variable rate of interest per annum for the Bonds of a Series
determined from time to time during the Daily Variable Rate Period in accordance with the indenture.
"Daily Variable Rate Period" means the period commencing on the Closing Date or an
Adjustment Date on which the interest rate on the Bonds of a Series is adjusted from the Weekly Variable
Rate or a Reset Rate to the Daily Variable Rate and ending on the day preceding the following
Adjustment Date or the.Maturity Date.
"Deliver,Date"means July 24, 2008.
"Designated 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 the Indenture 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 the Indenture.
["Disposition and Development Agreement" means the Disposition and Development
Agreement, dated as of September 7, 2005, between The Pleasant Hill BART•Station Leasing Authority
and Pleasant Hill Transit Village Associates, LLC, as amended.]
"Dram" means a payment under the Letter of Credit or any Alternate Credit Facility.
"DTC" means Tile Depository Trust Company and any successor to it or any nominee of it.
"DTC Participant" has the meaning given to that term in the Indenture.
"Electronic Means" means a facsimile transmission.
"Escrow Break Date"means July_, 2008.
"Escrow Break Requirements"has the meaning ascribed to such term in the Original Indenture.
"Event of Default" means, as used in any Transaction Document, any event described in that
document as an Event of Default. Any "Event of Default" as described in any Transaction Document is
not an "Event of Default" in any other Transaction Document unless that other Transaction Document
specifically so provides.
"Extension Date" means, with respect to the Letter of Credit or any Alternate Credit Facility, the
date that is five Business Days prior to the date of expiration of the Letter of Credit or the Alternate Credit
Facility, as applicable.
A-5
"Extraordinarl, Items" means.,. with respect to the Trustee, reasonable compensation for
extraordinary services and/or reimbursement for reasonable extraordinary costs and expenses including.
reasonable fees and expenses of its counsel.
"Fees Account"means the-Fees Account of the Revenue Fund.
"Financing Agreement" means, the Amended and Restated Financing- Agreement dated as of the
date of the Indenture among the Issuer, the Trustee and the Borrower, as amended, supplemented or
restated from time to time.
"Fixed Rate" means the rate of interest borne by the Bonds of a Series as determined in
accordance with the Indenture.
"Fixed Rate Adjzzstment Date" means the date on which the interest rate on the Bonds of a Series
adjusts from the Daily Variable Rate; Weekly Variable Rate or a Reset Rate to the Fixed Rate pursuant to
the Indenture.
"Fixed Rate 1'eriod"means the period beginning on the Fixed Rate Adjustment Date and ending
on the Maturity Date.
"Fzzzzd" means any fund created and established by the 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 tl►e
United States of America.
"Grozozd .Sub-lease" means the ground sub-leases to be entered into by the Borrower, as sub-
lessee, and Pleasant Hill BART Station Joint Powers Leasing Authority, a joint powers agency,
established and existing pursuant to the joint powers agency law of the State of California, as sub-lessor,
with respect to the real property underlying the Mortgaged Property, as amended.
"Highest Ratizzg Category' has the meaning, with respect to an investment, given in this
definition. If the Bonds are rated by a Ratino Agency, the term "Highest Rating* Category" means, with
respect to an Investment, that the Investment is rated by each Rating Agency in the highest rating *iven
by that Rating Agency for that general category of security. If at any time the Bonds are not rated (and,
consequently, there is no Rating Agency), then the term "Highest Rating Category" means, with respect
to an investment, that the Investment is rated by SRP or Moody's in the highest rating given by that
rating agency for that general category of security. By way of example, the Highest Rating Category for
tax-exempt municipal debt established by SRP is "A-1+" for debt with a term of one year or less and
"AAA" for a teen greater than one year, with corresponding ratings by Moody's of"MIG-i" (for fixed
rate) or "VMIG-1" (for variable rate) for one year or less and "Aaa" for greater than one year. if at any
time (i)the Bonds are not rated. (ii) both S&P and Moody's rate an Investment and (iii)one of those
ratings is below the Highest Rating Category, then such investment will, nevertheless, be deemed to be
rated in the Highest Rating Category if the lower rating is no more than one rating category below the
highest rating category of that rating agency. For example; an Investment rated "AAA" by S&P and
"Aa3 by Mood_v's is rated in the Highest Ratin�o, Category. If however, the lower rating- is more than
one full rating category below the Highest Rating Category of that rating agency, then the Investment will
be deemed to be rated below the Highest Rating Category. For example, an Investment rated "AAA" by
S&P and "A I" by Moody's is not rated in the Highest Rating Category.
"Indenture" means the Amended and Restated Trust Indenture, as amended, supplemented or
restated from time to time.
A-6
"Interest Account"means the Interest Account of the Revenue Fund.
"Interest Payment Date" means (i) during any Daily Variable Rate Period or Weekly Variable
Rate Period,the fifteenth day of each calendar month commencing August 15, 2008; (ii) during any Reset
Period and during the Fixed Rate Period, each April 15 and October 15 following the Adjustment Date,
provided that the first Interest Payment Date during any such period may only occur on a date which is at
least 30 days after the Adjustment Date, (iii) each Adjustment Date; (iv) for Bonds subject to redemption
in whole or in part on any date, the date of such redemption; (v) the Maturity Date and (vi) for all Bonds
any date determined pursuant to the Indenture.
"Interest Requirement" means (i) during any Daily Variable Rate Period or Weekly Variable
Rate Period, 34 days interest on the Bonds at the Maximum Rate on the basis of a 365-day year, as
applicable, for the actual number of days elapsed, and (ii)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, on the basis of a
year of 360 days of twelve 30 day months;or, in the case of either(i) or(ii), such other number of days as
may be required by the Rating Agency.
"Investment" means any Permitted Investment and any other investment held under the Indenture
that does not constitute a Permitted Investment.
"Investment Income" means the earnings, profits and accreted value derived from the investment
of moneys pursuant to the Indenture.
"Issztei" means the County of Contra Costa, a political subdivision of the State of California, and
its.successors and assigns.
"Issuer Documents" means the Bonds, Financing Agreement, the Indenture, the Loan Documents
to which the Issuer is a party, the Regulatory Agreement and the Tax Certificate.
..'Issuers Fee" means the Issuer's annual fee payable by the Borrower under the Regulatory
Agreement.
"Letter of Credit" means the irrevocable direct pay letter of credit issued and delivered by the
Credit Provider on the Escrow Break Date, for the benefit of the Trustee, to provide credit enhancement
and liquidity support for the Bonds, any amendment, modification, or restatement of such letter of credit,
any replacement letter of credit, any confirming letter or credit and any renewal(s) or extension(s) of any
such letter of credit. If an Alternate Credit Facility is then in effect, each reference to the Letter of Credit
shall mean such Alternate Credit Facilitv.
"Letter of Credit Ea7)iration Date" means the expiration date specified in the Letter of Credit,
subject to extension in accordance with the Reimbursement Agreement.
"LIBOR" means, with respect to any Week, the per annum rate for deposits in U.S. dollars for
one month which appears on the Bloomberg British Bankers' Association Back up rate to Taxable Rate
Official'BBA LIBOR .Fixings Paore (tile "Official BBA LIBOR Fixings Page" as defined below) as of
11:00 a.m., London, England time, on the second Business Day preceding the beginning of such Week(in
each case, a "LIBOR Determination Date"), rounded, if necessary, upward to the nearest one hundredth
of one percent (0.01%). If such rate does not appear on the Official BBA LIBOR Fixings Page, LIBOR
will be determined on such date as described in the paragraph below. "Official BBA LIBOR Fixings
Page" means the display designated as page 1 of the "Official BBA LIBOR Fixings" on the Bloomberg
Financial Markets Commodities News Service (or such other page as may replace the Official BBA
LIBOR Fixings Page on that service, or a comparable service, for the purpose of displaying London
interbank offered rates of major banks).
A-7
If on such LIBOR Determination Date fewer than two offered rates appear on the Official BBA
LIBOR Fixings Page, the Trustee will request the principal London office of each of two major banks
(other than the Trustee or a Trustee owned or Trustee affiliated bank) that are engaged in transactions in
the London interbank market, as selected by the Trustee with the approval of the Credit Provider, to
provide the Trustee with its offered quotation for U.S. dollar deposits for one month to prime banks in the
London interbank market as of 11:00 a:m., London, England time, on such date. If at least two such.
major banks provide the Trustee with such offered quotations, LIBOR on such date will be the arithmetic
mean rounded, if necessary, upward to the .nearest one hundredth of one percent,(0.01%) of such
quotations. If on such date fewer than two of the major banks provide the Trustee with such an offered
quotation, LIBOR on such date will be the arithmetic mean rounded, if necessary. upward to the nearest
one hundredth of one percent(0.01%) of the offered rates that two leading banks in the City of New York
(other than the Trustee or a Trustee owned or Trustee affiliated bank), as selected by the Credit Provider.
are quoting as of 11:00 a.m.. New York City time, on such date to leading European banks for U.S. dollar
.deposits for one month; provided, however,that if two such New York banks are not quoting as described
above, LIBOR will be the LIBOR applicable to the immediately preceding Week.
"Loan"means the loan made by tile Issuer to the Borrower on the Escrow Break Date pursuant to
the Financing Agreement for the purpose of providing funds to the Borrower to permanently finance the
acquisition and construction of the Project.
"Loan Documents" means, collectively, all other documents, agreements and instruments
evidencing, securing or otherwise relating to the Loan, as each such document, agreement or instrument
may be amended, supplemented or restated from time to time. Neither the Financing Agreement nor the
Regulatory Agreement is a Loan Document.
"Loan Fund" means the Loan Fund created by the Indenture.
"Mandatory Tender Date" means any date on which Bonds are required to be tendered pursuant
to the Indenture, including any Adjustment Date. proposed Adjustment Date, Substitution Date or
Extension Date on or prior to which the Trustee has not been furnished with an extension of the Letter of
Credit or Alternate Credit Facility then in effect or date specified by the Trustee as provided in the
Indenture.
".Maturity Date"means the maturity date set forth on the inside cover hereof.
"Maximtmn Rate" means 12% per annum; provided, however, that the Maximum Rate may be
increased if the "Trustee receives (i) the written consent of the Credit Provider and the Borrower to a
specified higher Maximum Rate not to exceed the lesser of the maximum rate permitted by law to be paid
on the Bonds and the maximum rate chargeable on the Loan, (ii)an opinion of Bond Counsel to the effect
that such higher Maximum Rate is pennitted 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 and (iii) a new or amended Credit Facility in an amount equal to the sum of (A) the then
outstanding principal amount of the Bonds and (B)the new Interest Requirement calculated using the new
Maximum Rate.
"Mode" means any of the Daily Variable Rate, Weekly Variable Rate, the Reset Rate and the
Fixed Rate.
"Moody's•" means Moody's Investors Service inc., a Delaware corporation, and its successors and
assigns.
"Mortgaged Property"has the meaning given to that term in the Security Instrument.
A-8
"Nei Bond Proceeds"means the total proceeds derived from the issuance, sale and delivery of the
Bonds, representing the total purchase price of the Bonds, including any premium paid as part of the
purchase price of the Bonds, but excluding the accrued interest, if any. on the Bonds paid by the initial
purchaser(s) of the Bonds.
"Net Proceeds" means the proceeds from insurance or from actual or threatened condemnation or
eminent domain action with respect to the Mortgaged Property, less any costs reasonably expended by the
Borrower to receive such proceeds.
["Nota Interest"has the meaning given to that term.in the Note.]
-Opinion of Counsel" means a written opinion of legal counsel. acceptable to the recipient(s) of
such opinion. If the opinion is with respect to an interpretation of federal tax laws or regulations or
bankruptcy matters, such legal counsel also must be an attorney or firm of attorneys experienced in such
matters.
"Original Financing Agreement" means the Financing Agreement, dated as of March 1, 2006,
among the Issuer, U.S. Bank National Association, as trustee and the Borrower.
"OriginncilIndenture
" means the Trust Indenture, dated as of March 1, 2006 and amended as of
December 1, 2007 and as of May 1, 2008, between the issuer and U.S. Bank National Association, as
trustee:
"Outstanding"means, when used with reference to the Bonds at any date as of which the amount
of Outstandina Bonds is to be determined, all Bonds which have been authenticated and delivered under
the Indenture except:
(a) Bonds cancelled or delivered for cancellation at or prior to such date;
(b) Bonds deemed to he paid in accordance with the Indenture; and
(c) Bonds in lieu of which others have been authenticated under the Indenture.
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 the Indenture, Bonds which are owned or held by or for the account of the Borrower will
be disre-arded and deemed not to be Outstanding under the Indenture for the purpose of any such
determination, unless all Bonds are owned or held by or for the account of the Borrower. In detennining
whether the Trustee will be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Bonds which are registered in the name of or known by the Trustee to be
held for the account of the Borrower will be disregarded.
"Permitted bnvestnnents" 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 are rated in the Highest Rating Category;
A-9
(c) Obligations, in each case rated in the Highest Rating* Category, of(i) any state or
territory of the United States of America, (ii) any agency, instrumentality, authority or political
subdivision of a state or territory.or(iii)any, public benefit or municipal corporation the principal
of and interest on which are guaranteed by such state or political subdivision;
(d) Any written .repurchase a*reement entered into with a Qualified Financial
Institution whose.unsecured short-term obligations are rated in the Highest Rating Category;
(e) Commercial paper'rated in the Highest Rating Category;
(f) Interest-bearing negotiable certificates of deposit, interest-bearing time deposits,
interest-bearing savings accounts and bankers' acceptances, issued by a Qualified Financial
Institution if either (i)the Qualified Financial Institution's unsecured short-term obligations are
rated in the Highest Rating Category or (ii) such deposits, accounts or acceptances are fully
insured by the Federal Deposit Insurance Corporation;
(g) an agreement held by the Trustee for the investment of moneys at a guaranteed
rate with a Qualified Financial.Institution whose unsecured long-term obligations are rated in the
Highest Rating Category or the Second Highest Rating Category, or whose obligations are
unconditionally guaranteed or insured by a Qualified Financial Institution whose unsecured
long-term obligations are rated in the Highest Rating Category or Second Highest Rating
Category; and provided further that such agreement includes the following restrictions:
(i) the invested funds will 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 the Indenture to which the agreement is applicable or (B)any Rating*
Agency indicates that it will lower or actually lowers, suspends or withdraws the rating
on the Bonds on account of the rating of the Qualified Financial institution providing,
cyuaranteeing.or insuring, as applicable.the agreement;.
(ii) the agreement, and if applicable the guarantee or insurance; is an
unconditional and general obligation of the provider and. if applicable, the guarantor or
insurer of the agreement, and ranks pari passu with all other unsecured unsubordinated
obligations of the provider, and if applicable,the guarantor or insurer of the a0 reement;
(iii) . the Trustee receives an Opinion of Counsel, which may be subject to
customary qualifications, that such agreement is legal, valid, binding and enforceable
upon the provider in accordance with its terns and, if applicable, an Opinion of Counsel
that any.guaranty or insurance policy provided by a guarantor or insurer is legal, valid,
binding and enforceable upon the guarantor or insurer in accordance with its terms; and
(iv) the agreement provides that if during its term the rating of the Qualified
Financial .Institution providing, guaranteeing or insuring, as applicable, the agreement, is
withdrawn'. suspended by any Rating Agency or falls Below the Second Highest Rating
Category, the provider must, within 10 days, either: (A)collateralize the agreement (if
the agreement is not already collateralized) with Permitted Investments described in
paragraph (a) or (b)by depositing collateral with the Trustee or a third party custodian,
such collateralization to be effected in a manner and in an amount sufficient to maintain
the then current rating of tl�e Bonds, or, if tl�e agreement is already, collateralized.
increase the collateral with Permitted Investments described in paragraph (a) or (b)by
depositing collateral with the Trustee or a third party custodian, so as to maintain the then
current rating of the Bonds, (B) at the request of the Trustee, repay the principal of and
accrued but unpaid interest on the investment, in either case with no penalty or premium
A-10
unless required by law or (C)transfer the agreement, guarantee or insurance, as
applicable, to a replacement provider, guarantor or insurer, as applicable, then meeting
the requirements of a Qualified Financial Institution and whose unsecured long-term
obligations are then rated in the Highest Rating Category or the Second Highest Rating
Category. The agreement may provide that the down-graded provider may elect which of
the remedies to the down-grade(other than the remedy set out in(B))to perform.
(h) Subject to the ratings requirements set forth in this definition, shares in any
money market mutual fund (including those of the Trustee or any of its affiliates) registered under
the Investment Company Act of 1940, as amended, that have been rated AAAm-G or AAAm by
S&P or Aaa by Moody's so long as the portfolio of such money market mutual fund is limited to
Government Obligations and aureements to repurchase Government Obligations. If the Bonds
are rated by a Rating Agency, the money market mutual fund must be rated AAAm-G or AAAm
by S&P, if S&P is a Rating Agency, or Aaa by Moody's. if Moody's is a Rating Agency. If at
any time the Bonds are not rated (and, consequently, there is no Rating Agency); then the money
market mutual fund must be rated AAAm-G or AAAm by S&P or Aaa by Moody's. If at any
time (i)the Bonds are not rated, (ii)both S&P and Moody's rate a money market mutual fund and
(iii)one of those ratings is below the level required by this paragraph, then such money market
mutual fund will, nevertheless, be deemed to be rated in the Highest Rating Category if the lower
rating is no more than one rating category below the highest rating category of that rating agency;
and
(i) Any other investment authorized by the laws of the State, if such investment is
approved in writing by each Rating Agency.
Permitted Investments will not include any of the following:
(i) Except for any investment described in the next sentence, any investment
with a final maturity or any agreement with a term greater than one year from the date of
the investment. This exception (i) will not apply to any obligation that provides for the
optional or mandatory tender, at par, by the holder of such obligation at least once within
one year of the date of purchase, Government Obligations irrevocably deposited with the
Trustee for payment of Bonds pursuant to the Indenture, and Permitted Investments listed
in paragraphs(g)and (i));
(ii) Except for any obligation described in paragraph (a) or (b), any
obligation with a purchase price greater or less than the par value of'such obligation;
(iii) Any asset-backed security, including mortgage-backed securities. real
estate mortgage investment conduits, collateralized mortgage obligations, credit card
receivable asset-backed securities and auto loan asset-backed securities;
(iv) Any interest-only or principal-only stripped security;
(v) Any obligation bearing interest at an inverse floating rate.-
(vi)
ate;(vi) Any investment which may be prepaid or called at a price less than its
purchase price prior to stated maturity;
(vii) 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;
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(viii) Any investment described in paragraph(d) or (g) with, or guaranteed or
insured by, a Qualified Financial Institution described in clause (iv) of the definition.of
Qualified Financial Institution 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
(ix) any investment to which S&P has added an "r'or"t"higlilighter.
".`Person"means a natural person, estate,trust, corporation, partnership, limited liability company,
association, public body or any other organization or entity(whether governmental or private).
"Pledge Agreement" means that certain Pledge and Security Agreement executed by the
Borrower in favor of the Credit Provider with respect to the PledcTed Bonds.
"Pledged 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 the proceeds of a Draw under the Letter of
Credit or Draw.under an Alternate Credit Facility, as applicable, to, but excluding, the date on which the
amount of the Draw made by the Credit Provider on account of such Pledged Bond is reinstated under the
Letter of Credit.
"Potential Default" means, as used in any Transaction Document, any event that has occurred
which, with the giving of notice or the passage of time or both, would constitute an Event of Default as
described in that document. Any "Potential Default'' as described in any Transaction Document is not a
"Potential Default" in any other Transaction Document unless that other Transaction Document
specifically so provides.
"Preference Claim"has the meaning given that term in the Indenture.
"Principal Amount" means, with respect to the 2006A Bonds, $116,000,000, with respect to the
2006A-T Bonds, $9,000,000, and,with respect to the Series 2008 Bonds, $10,000,000.
"Principal Reserve Amount"means 20% of the aggregate principal amount of the Bonds.
"Principal Reserve Fund"means the Principal Reserve Fund created by the Indenture.
"Principal Reserve Schedule" means the Schedule of Deposits to .Principal Reserve Fund
attached to the Reimbursement Agreement, as such schedule may be amended, supplemented or restated
from time to time.
"Project Account"means the Project Account of the Loan Fund.
"Qualified Financial Institution" means any of (a) bank or trust company organized under the
laws of any state of the United States of America, (b)national banking association, (c) savings bank, a
savings and loan association, or an insurance company or association chartered or organized under the
laws of any state of..the United States of America, (d) federal branch or agency pursuant to the
International Banking Act of 1978 or any successor provisions of law or a 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, (e)government bond dealer reporting to, trading with
and recognized as a primary dealer by the Federal Reserve Bank of New York and (f) securities dealer the
liquidation of which is subject to the Securities Investors Protection Corporation or other similar
corporation. With respect to an entity which provides an agreement held by the Trustee for the
investment of moneys at a guaranteed rate as set out in paragraph (g) of the definition of the term
"Permitted Investments" or an entity which guarantees or insures, as applicable, the agreement, a
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"Qualified Financial Institution" may also be a corporation or limited liability company organized under
the laws of any state of the United States of America.
"Rating Agencv" means any nationally recognized statistical rating agency then maintaining a
rating on the Bonds.
"Rate Determination Date" means (i) with respect to the Weekly Variable Rate, Wednesday of
each week, or if such Wednesday is not a Business Day,the following day or if such day is not a Business
Day, then the first Business Day before such Wednesday; provided, however, that upon any adjustment to
the Weekly Variable Rate Mode from a Reset Rate, the first Rate Determination Date shall be the
Business Day prior to the Adjustment Date, (ii) with respect to the Daily Variable Rate, each Business
Day, and (iii) with respect to any Reset Rate and the Fixed Rate, the date selected by the Remarketing
Agent which date must be a Business Day not less than five Business.Days prior to the Adjustment Date.
Tile initial Rate Determination Date shall be the Closing Date.
"Rebate Analust" means a Person that is (a)qualified and experienced in the calculation of rebate
payments under Section 148 of the Code in compliance with the arbitrage rebate regulations promulgated
under the Code, (b)chosen by the Borrower, and (c)engaged for the purpose of detennining the amount
of required deposits, if any,to the Rebate Fund.
"Rebate Fund" means the Rebate Fund created under the Indenture.
"Record Data" means, with.respect to any Interest Payment Date, (i) if the Bonds bear interest at
the Daily Variable Rate or Weekly Variable Rate, the Business Day before the Interest Payment Date and
(ii) if the Bonds bear interest at a Reset Rate or the Fixed Rate, the first day of the month in which the
Interest Payment Date occurs.
"Redemption Account"means the Redemption Account of the Revenue Fund.
"Redeniption Date" means any date upon which Bonds are to be redeemed pursuant to the
Indenture.
"Regulatory Agreement" means, collectively, the Amended and Restated Regulatory Agreement
and Declaration of Restrictive Covenants (Lots 2 and 3) and the Amended and Restated Regulatory
Agreement and Declaration of Restrictive Covenants (Lot 5) relating to the Mortgaged Property, each
dated as of July 1, 2008, among the issuer. the Contra Costa County Redevelopment Agencv, the Trustee
and the Borrower, as it may be amended, supplemented or restated from time to time, or any agreement
entered into in substitution therefor.
"Reimbursement Agreement" means the Reimbursement and Disbursement Agreement, entered
.into in connection with the occurrence of the Escrow Break Date, between the Borrower and the Credit
Provider, in its individual capacity and as representative of the co-lenders, as such agreement may be .
amended, modified, or restated from.time to time, and, if an Alternate Credit Facility is in effect, any
reimbursement agreement associated with such Alternate Credit Facility.
"Reimbursement Documents" has the meaning given to that tern in the Reimbursement
Agreement.
"Remarketing Agent" means Citigroup Global Markets Inc., or any successor as Remarketing
Agent designated in accordance with the Indenture.
"Remarketing Agreement" means the Remarketing Agreement entered into in connection with the
occurrence of the Escrow Break Date, by and between. the Borrower and the Remarketing Agent, as
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amended, supplemented or restated from time to time, or any agreement entered into in substitution
thereof.
"Remarketing Notice Parties" means the Borrower, Issuer, Trustee, Tender Agent and
Remarketing Agent.
"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, its right to receive
notices and to enforce notice and reporting requirements, its right to inspect and audit the books, records
and premises of the Borrower and of the Project, its right to collect reasonable 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 and regulations of the Issuer, if any); and its right to
give or withhold consent to amendments, changes, modifications and alterations to the Financing
Agreement relating to the Reserved Rights.
"Reset Date" means any date upon which the Bonds of a Series begin to bear interest at a Reset
Rate for the Reset Period then beginning.
"Reset Period" means each period of 10 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 Provider, during
which the Bonds of a Series bear interest at a Reset Rate.
"Reset Rate" means the rate or rates of interest borne by the Bonds of a Series as determined in
accordance with the Indenture.
"Revenue Fund"means the Revenue Fund created under the Indenture.
"Revenues" means all (i) payments made under the Credit Facility, (ii) Investment Income
(excluding Investment Income earned from moneys on deposit in the Principal Reserve Fund, the Rebate
Fund, the Fees Account and the Costs of Issuance Fund, but including Investment Income earned on Net
Bond Proceeds deposited into the Costs of Issuance Fund and Investment Income on such Investment
Income)and (iii)payments made under the Note.
"Second Highest Rating Category" means, with respect to an Investment, that the Investment is
rated by each Rating Agency in the second highest rating category given by that Rating Agency for that
general category of security. If at any time the Bonds are not rated (and, consequently, there is no Rating
Agency), then the term "Second Highest Rating Category" means, with respect to an Investment, that the
Investment is rated by S&P or Moody's in the second highest rating category given by that rating agency
for that general category of security.. By way of example, the Second Highest Rating Category for tax-
exempt municipal debt established by S&P is "AA" for a term greater than one year, with corresponding
ratings by Moody's of"Aa." If at any time(i) the Bonds are not rated, (ii) both S&P and Moody's rate an
Investment and (iii) one of those ratings is below the Second Highest Rating Category, then such
Investment will not be deemed to be rated in the Second Highest Rating Category. For example, an
Investment rated "AA"by S&P and "A" by Moody's is not rated in the Second Highest Rating Category.
"Securities Depositon," means, initially, The Depository Trust Company, New York, New York,
and its successors and assigns, and any replacement securities depository appointed under the Indenture.
"Security"means the Trust Estate and the Credit Facility.
"Security Instrument"means, together,the First Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing, together with all riders and exhibits, securing the Note and the
obligations of the Borrower to the Issuer under the Bond Documents, as executed by the Borrower with
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respect to the Mortgaged Property, and the Second Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing, together with all riders and exhibits, securing the obligations of
the Borrower to the Credit Provider under the Credit Facility Documents, as executed by the Borrower
with respect to the Mortgaged Property, as each may be amended, supplemented or restated from time to
time, or any security instrument executed in substitution therefor, as such substitute security instrument
may be amended, supplemented or restated from time to time.
"Series"means the 2006A Bonds. the 2006A-T Bonds or the 2008 Bonds.
.'SIFMA Index Rate" means the Securities Industry and Financial Markets Association Municipal
Swap Index, announced by Municipal Market Data, a Thomson Financial Services Company, or its
successors.
"S&P" means Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies,
Inc., and its successors and assigns.
"Stale" means the State of California.
"Subslitution'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 (i) an Interest Payment Date during a Daily
Variable Rate Period or Weekly Variable Rate Period or an Adjustment Date which immediately follows
a Reset Period and (ii) a date on which the Credit Facility for which substitution is being made is
available to be accessed or drawn upon. An extension of any Extension Date by reason of the extension
of a Credit Facility is not a Substitution Date.
"Tax Certificate" means,'collectively, the Tax Certificate and Agreement, dated the Closing
Date, and the Tax Certificate and Agreement, dated the Escrow Break Date, executed and delivered by
the Issuer and the Borrower, as amended, supplemented or restated from time to time.
"Tax Event" has the meaning given to that term under the heading"Nondefault and Prohibition of
Mandatory Redemption Upon Tax Event"below.
"Tax-Exempt Bonds"means, collectively,the 2006A Bonds and the 2008 Bonds.
"Tender Agent'' means, initially, The Bank of New York Mellon Trust Company, N.A., or its
successor as Tender Agent under the Indenture.
"Tencter Agent Agreement" means any Tender Agent Agreement entered into by the Issuer, the
Trustee and the Tender Agent in the event that the Trustee does not serve as Tender Agent under the
Indenture, as such agreement may be amended, supplemented or restated from time to time.
"Tender Date" means any Mandatory Tender Date or any other date on which Bondholders are
permitted under the Indenture to tender their Bonds for purchase.
"Tendered Bond" means any Bond which has been tendered to the Tender Agent for purchase
pursuant to the Indenture.
"Third Party Fees"has the meaning given to that term in the Indenture.
"Transaction Documents"means the Bond Documents and the Loan Documents.
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"Trust Estate' means the property, interests, rights, money, securities and other amounts pledged
and assigned pursuant to the Indenture and the property, rights, money, securities and other amounts
pledged and assigned by the Issuer to the Trustee.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., a national banking
association, duly organized and existing under the laws of the United States of America, or its successors
or assigns, or any other corporation or association resulting from or surviving any consolidation or merger
to which it or its successors may be a party and any successor trustee at any time serving as successor
trustee under the Indenture.
"Trustee's Annual Fee" means the annual continuing trust administration fee as set forth in the
Indenture payable by the Borrower as provided in the Financing Agreement, computed and payable
semiannually in advance on each Interest Payment Date.
"2006 Underwriter" means Newman & Associates, A Division of GMAC Commercial Holding
Capital Markets Corp.
"2008 Undenw-iter"means Citigroup Global Markets Inc.
"Week" means any seven day period during a Daily Variable Rate Period or Weekly Variable
Rate Period beginning,*on Thursday and ending on and including the following Wednesday, except that:
(a) the first Week will begin on the Escrow Break Date and end on and include the .
second following Wednesday;
(b) the first Week of a Daily Variable Rate Period or Weekly Variable Rate Period
immediately following an Adjustment Date will begin on such Adjustment Date and end on and
include the following Wednesday;
(c) any Week ending immediately before an Adjustment Date will begin on a
Thursday and end on the day before such Adjustment Date;
(d) the final Week will begin on a Thursday and end on the earlier of an Adjustment
Date or the Maturity Date; and
(e) the first and last Weeks of a Daily Variable Rate Period or Weekly Variable Rate
Period may consist of more(but not more than 13)or less than seven days.
"Weekly Variable Rate" means the variable rate of interest per annum for the Bonds of a Series
determined from time to time during the Weekly Variable Rate Period in accordance with the Indenture.
"Weekly Variable Rate Period" means the period commencing on an Adjustment Date on which
the interest rate on the Bonds of a Series is adjusted from the Reset Rate to the Weekly Variable Rate and
ending on the day preceding the following Adjustment Date or the Maturity Date.
"Wrongful Dishonor" means an uncured failure by the Credit Provider to pay a Draw to the.
Trustee upon proper presentation of documents which conform to the terms and conditions of the Credit
Facility then in effect.
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APPENDIX B
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The following is a brief summary of certain provisions of the Indenture. This summary does not
purport to be complete or definitive and is qualified in its entirely by reference to the Indenture. a copy of
which is onfile with the Trustee.
Funds and Accounts
The following Funds and Accounts are created with the Trustee under the Indenture:
(a) the Loan Fund and within the Loan Fund, the Project Account and Capitalized
Moneys Account , and within each of the Project Account and the Capitalized Moneys Accounts,
a 2006A Bonds subaccount, a 2006A-T Bonds subaccount and a 2008 Bonds subaccount;
(b) the Revenue Fund and within the Revenue Fund, the Interest Account, the Credit
Facility Account,the Redemption Account and the.Fees Account;
(c) the Costs of Issuance Fund;
(d) the Rebate Fund;
(e) so long as any Bonds are Outstanding and have not been adjusted to the Fixed
Rate,the Bond Purchase Fund; and
(f) the Principal Reserve Fund.
The Trustee will hold and administer the Funds and Accounts in accordance with the Indenture.
The Loan Fund
Disbursements From the Capitalized Moneys Account
Until the depletion of the Capitalized Moneys Account, the Trustee shall automatically transfer
amounts on deposit in the Capitalized Moneys Account without the receipt of Requisitions as follows:
(i) Interest on the Note. Not later than three Business Days prior to each Interest Payment
Date, the Trustee shall transfer to the Interest Account an amount equal to the interest which shall be
payable on such Interest Payment Date by the Borrower under the Note.-
(ii)
ote;(ii) Facility Fee to the Credit Provider. Not later than three Business Days prior to each
Interest Payment Date,the Trustee shall transfer to the Interest Account an amount equal to the amount of
the Facility Fee payable to the Credit Provider under the Reimbursement Agreement (or similar
agreement if an Alternate Credit Facility is then in effect); and
(iii) Certain Other Fees. Not later than three Business Days prior to the date on which any
Third Party Fee is due,the Trustee shall transfer to the Fees Account, the amount of such Third Party Fee.
Transfers from the Capitalized Moneys Account shall, so long as the Letter of Credit is
outstanding, be made no later than three Business Days prior to the respective dates on which such
payments are due.
Transfers from the Capitalized Moneys Account shall be made from the subaccounts specified by
the Borrower or, if no specification is made, on a pro rata basis.
Disbursements From the Project Account.
On and after the Escrow Break Date, the Trustee shall disburse amounts on deposit in the Project
Account as provided in this subsection for the sole purpose of paying Costs of the Project.
(i) Requisitions. The Trustee shall make disbursements from the Project Account only upon
the receipt of Requisitions, each in the form of the attached Exhibit B, signed by an Authorized Borrower
Representative and countersigned by an Authorized Credit Provider Representative. The Trustee shall
have no duty to determine whether any requested disbursement from the Project Account complies with
the Credit Facility Documents. The countersignature of the Authorized Credit Provider Representative on
a Requisition shall be deemed a certification and, insofar as the Trustee and the Issuer are concerned,
constitute conclusive evidence, that all of the terms, conditions and requirements of the Credit Facility
Documents applicable to the disbursement have been fully satisfied or waived. The Trustee shall,
immediately upon each receipt of a. completed Requisition signed by the Authorized Borrower
Representative and countersigned by an Authorized Credit Provider Representative, initiate procedures
with the provider of the investment Agreement applicable to the Loan Fund, if any, to make withdrawals
under that Investment Agreement as necessary to fund the Requisition.
(ii) Timing. If a Requisition signed by the Authorized Borrower Representative and
countersigned by an Authorized Credit Provider Representative is received by the Trustee by noon,
prevailing California time, on any given Business Day, the Trustee shall pay the requested disbursement
within two Business Days (for this purpose, including in the definition of`'Business Day' only clauses(i)
and (iii) of such definition), or, if an Investment Agreement is in effect with respect to such funds, within
two Business Days after funds are received by the Trustee from the provider of the relevant Investment
Agreement. If a Requisition signed by the Authorized Borrower Representative and countersigned by an
Authorized Credit Provider Representative is received by the Trustee after noon, prevailing California
time, on any given Business Day, the Trustee shall pay the requested disbursement within three of the
above counted Business Days. Upon final disbursement of all amounts on deposit in the Loan Fund, the
Trustee shall close the Loan Fund.
Transfers To Effect Certain Mandatory Redemptions of Bonds
(i) Excess Loan Funds. The Trustee shall transfer to the Redemption Account such amounts
remaining on deposit in the Loan Fund, excluding from such transfer, however, any amount required to
pay Costs of the Project which are then not yet due and payable or which are then being contested in good
faith, as determined by the Credit Provider (so long as the Letter of Credit is in effect) or any Alternate
Credit Provider (at such time as an Alternate Credit Facility is in effect). The Trustee shall apply any
amounts so transferred to the redemption of Bonds pursuant to the Indenture.
(ii) Certain Other Mandatory Redemptions. Immediately prior to any mandatory redemption
of the Bonds in whole pursuant to the Indenture, any amounts then remaining in the Loan Fund shall, at
the written direction of the Credit Provider, be transferred to the Redemption Account to be applied to the
redemption of Bonds pursuant to the applicable provision.
B-2
Revenue Fund—Interest Account
Deposits Into the Interest Account. The Trustee shall deposit each of the following amounts into
the Interest Account:
(l) (i) moneys provided by or on behalf of the Borrower relating to an interest payment
under the Note or an interest reimbursement under the Reimbursement Agreement;
(2) moneys provided by or on behalf of the Borrower for the payment of the Facility Fee to
the Credit Provider;
(3) moneys transferred from the Capitalized Moneys Account pursuant to the .Indenture
whether to pay accrued interest on the Bonds,the Facility Fee to the Credit Provider or otherwise;
(4) all Investment Income on the Funds and Accounts(except that Investment Income earned
on amounts on deposit in the Loan Fund, Rebate Fund. Costs of Issuance Fund, and the Principal Reserve
Fund shall be credited to and retained in those respective Funds or Accounts); and
(5) any other moneys made available for deposit into the Interest Account from any other
source, including, but not limited to, any excess amounts in the Bond Purchase Fund pursuant to the
Indenture.
Disbursements Front the Interest Account. The Trustee shall disburse or transfer. as applicable,
moneys on deposit in the interest Account at the following times and apply such moneys in the following
manner and in the following order of priority:
(1) On each (A) Interest Payment Date, (B) Redemption Date and (C) date of acceleration of
the Bonds, the Trustee shall disburse to the Credit Provider the amount of any Draw, as applicable, under
the Credit Facility relating*to the payment of interest on the Bonds;
(2) In the event of a Wrongful Dishonor until such Wrongful Dishonor is cured, the Trustee
shall disburse to the Bondholders on each Interest Payment Date, an amount equal to the interest due oil
the Bonds on such date;
(3) On each Interest Payment Date, to the Credit Provider the amount of its Facility Fee;
(4) If the Credit Provider gives written notice to the Trustee at any time to the effect that
there is any unreimbursed draw under the Credit Facility or any other amount required to be paid by the
Borrower to the Credit Provider under the Loan Documents, the Bond Documents or the Credit Facility
Documents remains unpaid, then the Trustee shall transfer any investment income earned'on the Interest
Account from and after the preceding Interest Payment Date to the Credit Provider but not in an amount
which exceeds the amount stated as unpaid by the Credit Provider in its notice to the Trustee; and
(5) Unless there is (A) a deficiency in the Principal Reserve Fund. the Fees Account or the
Rebate Fund or(B) other than as described in paragraph (iii) above, an Event of Default under any Credit
Facility Document or any Bond Document or a default under any Loan Document has occurred and is
continuing. on each Interest Payment Date the Trustee shall disburse the Investment Income earned on or
transferred to the interest Account from and after the preceding Interest Payment Date to the Borrower. If
a deficiency exists in the Principal Reserve Fund. the Fees Account or the Rebate Fund, such Investment
Income shall be transferred to the Principal Reserve Fund. the Fees Account and/or the Rebate Fund, in
that order of priority. prior to any payment to the Borrower.
B-3
The Revenue Fund—Redemption Account
Deposits Into the Redemption Account. The Trustee shall deposit each of the following amounts
into the Redemption Account:
(i) Available Moneys provided by or on behalf of the Borrower to fund the premium
payable on Bonds in connection with a redemption of such Bonds, which amounts shall be held in
a segregated subaccount in the Redemption Account;
(ii) moneys transferred from the Loan Fund pursuant to the Indenture;
(iii) moneys provided by or on behalf of the Borrower relating to a principal payment,
including any prepayment under the Note;
(iv) moneys transferred from the Principal Reserve Fund pursuant to the Indenture;
and
(v) any other amount received by the Trustee and required by the terms of the
Indenture or the Financing Agreement to be deposited into the Redemption Account.
Disbursements From the Redemption Account. On each Redemption Date, date of
acceleration of the Bonds,the Maturity Date and/or the date on which the Bonds are purchased in
lieu of redemption in accordance with the Indenture, the Trustee shall disburse from the
Redemption Account(x)to the Credit Provider, the amount of any Draw under the Credit Facility
relating to the payment of principal on the Bonds or (y) in the event of a Wrongful Dishonor, to
the Bondholders, an amount equal.to the principal due on the Bonds on such date. in addition, on
any date on which premium payable on Bonds in connection with a redemption of such Bonds is
due, the Trustee shall disburse to the Bondholders, from the segregated subaccount in the
Redemption Account.Available Moneys in an amount sufficient to pay such premium.
Revenue Fund—Fees Account
Deposits Into the Fees Account. The Trustee shall deposit into the Fees Account all:
(i) Capitalized Moneys Account. Moneys transferred from the Capitalized Moneys Account
pursuant to the Indenture;
(ii) Third.Party Fees. Payments made by or on behalf of the Borrower under the Financing
Agreement attributable to the Third Party Fees; and
(iii) Fees and Expenses. Payments made by or on behalf of the Borrower under the Financing
Agreement attributable to the Fees and Expenses.
Disbursements From the Fees Account. On any date on which any amounts are required to pay
any Third Party Fees or any Fees and Expenses, such amounts shall be withdrawn by the Trustee from the
Fees Account for payment to the appropriate party. In the event the amount in the Fees Account is
insufficient to pay such Third Party Fees or any Fees and Expenses, the Trustee shall make written
demand on the Borrower for the amount of such insufficiency and, pursuant to the terms of the Financing
Agreement, the Borrower shall be liable to promptly pay the amount of such insufficiency to the Trustee
after the date of the Trustee's written demand. The Trustee will provide notice of the insufficiency to the
Credit Provider.
B-4
No Other Claims to Trust Estate. Neither the Tender Agent, the Remarketing Agent nor the
Rebate Analyst shall have any right to any moneys in any Fund or Account or otherwise in the Trust
Estate other than those moneys deposited pursuant to the Indenture'into the Fees Account specifically for
such Person. Except as otherwise stated in the Indenture, the Issuer shall not have any right to any
moneys in any Fund or Account or otherwise in the Trust Estate other than those moneys deposited
pursuant to the Indenture into the Fees Account specifically for the Issuer. Except as otherwise stated in
the Indenture, the Trustee shall not have any right to any moneys in any Fund or Account or otherwise in
the Trust Estate other than those moneys deposited pursuant to the .Indenture into the .Fees Account
specifically for the Trustee.
Revenue Fund—Credit Facility Account
(a) Deposits Into the Credit Facility Account. The Trustee shall deposit into the
Credit Facility Account all Draws under the Credit Facility, except that amounts drawn to
purchase Pledged Bonds shall be deposited into the Bond Purchase Fund pursuant to the
Indenture. No other moneys shall be deposited into the Credit Facility Account and the Credit
Facility Account shall be maintained as a segregated account and moneys in it shall not be
commingled with any other moneys held under the Indenture. The Credit Facility Account shall
be closed at such time as the Credit Provider has no continuing liability under the Credit Facility.
(b) Transfers From the Credit Facility Account. The Trustee shall cause amounts
deposited into the Credit Facility Account to be applied on the date payment is due to the
payments for which the Draw was made pursuant to the Credit Facility. In no event shall
amounts in the Credit Facility Account be applied to any premium that may be payable upon the
redemption of any Bonds, the payment of principal of and interest, the purchase price and any
premium on any Pledged Bonds or on any Bonds known by the Trustee to be held by the
Borrower or any Affiliate of the Borrower. Any amounts remaining in the Credit Facility
Account after making the payment for which the Draw was made pursuant to the Credit Facility
shall be immediately refunded to the Credit Provider.
Costs of Issuance Fund
Deposits Into the Costs of Issuance Fund. On or before the Escrow Break Date the Borrower
shall deliver the Costs of Issuance Deposit to the Trustee. On the Escrow Break Date the Trustee shall
deposit or transfer, as applicable, the portion of the Costs of Issuance Deposit then remitted to the Trustee
into the Costs of Issuance Fund to pay the costs incurred in connection with the remarketing of the 2006
Bonds and the issuance and sale of the 2008 Bonds on the Escrow Break Date.
Disbursements From the Costs oflssuance Fund. The Trustee shall disburse moneys on deposit
in the Costs of Issuance Fund, pursuant to requisitions in the form of Exhibit C attached to the Indenture,
signed by an Authorized Borrower Representative, to pay Costs of Issuance. The Trustee may
conclusively rely on such requisitions for purposes of making such disbursements. Moneys on deposit in
the Costs of Issuance Deposit Account of the Costs of Issuance Fund shall not be part of the Trust Estate
and will be used solely to pay Costs of Issuance.
Disposition of Remaining Amounts. Any moneys remaining in the Costs of Issuance Deposit
Account of the Costs of Issuance Fund two months after the Escrow Break Date and not needed to pay
still unpaid Costs of Issuance will be returned to the Borrower. Upon final disbursement, the Trustee
shall close the Costs of Issuance Fund.
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Rebate Fund
The Trustee shall hold and apply the Rebate Fund as provided in the Tax Certificate. Within 30
days after the end of every fifth Bond Year(as defined in the Tax Certificate) for the 2006A Bonds or the
2008 Bonds. and within 55 days after the date on which no 2006A Bonds or no 2008 Bonds are
Outstanding, the Borrower or the Trustee shall cause the Rebate Analyst to deliver to the Trustee and the
Issuer a certificate 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.
The Trustee agrees to comply with all instructions given to it by the Borrower in accordance with
this covenant. The Trustee shall conclusively be deemed to have complied with the provisions of the
Indenture if it follows the instructions of the Borrower and shall not be required to take any actions in the
absence of instructions from the Borrower.
Bond Purchase Fund
Deposits Into Bond Purchase Fund. The Trustee shall.deposit each of the following into the
Bond Purchase Fund:
(i) remarketing proceeds received upon the remarketing of Tendered Bonds to any person;
and
(ii) Draws under the Credit Facility to enable the Trustee to pay the purchase price of
Tendered Bonds to the extent that moneys.obtained pursuant to paragraph (i) 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. Eastern Time on each Tender Date.
Subject to the Indenture permitting reimbursement of amounts owed to the Credit 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 years will
be applied in the same manner as provided under the indenture with respect to unclaimed payments of
principal and interest.
Disbursements From the Bond Purchase Fund. The Trustee shall transfer to the Tender Agent .
on or before 3:00 p.rn. Eastern Time on each Tender Date amounts on deposit in the Bond Purchase Fund
to pay the purchase price of Tendered Bonds. The Tender Agent shall apply such amounts to pay the
purchase price of Bonds purchased under the Indenture to the former owners of such Bonds upon
presentation of the Bonds to the Tender Agent pursuant to the Indenture.
Principal Reserve Fund
Deposits Into the Principal Reserve Fund. The Trustee shall deposit each of the following
amounts into the Principal Reserve Fund:
(i) All of the monthly payments of principal made by the Borrower in accordance with the
Reimbursement Agreement, as such schedule of principal payments may,be amended in accordance with
the Reimbursement Agreement, upon delivery to the Issuer, the Trustee and the Credit Provider of all
Opinion of Bond Counsel to the effect that such amendment will not, in and of itself, adversely affect the
exclusion of the interest payable on the Tax-Exempt Bonds from gross income for federal income tax
purposes; and
(ii) investment Income earned on amounts on deposit in the Principal Reserve Fund.
B-6
Disbursements From the Principal Reserve Fund. The Trustee shall pay or transfer amounts on
deposit in the Principal Reserve Fund as follows:
(i) at the written direction of the Credit Provider,.to the Credit Provider to reirnburse the
Credit Provider for any unreimbursed Draw under the Credit Facility and to pay any other amounts
required to be paid by the Borrower under the Loan Documents, the Bond Documents or the Credit
Facility Documents(including any amounts required to be paid to the Credit Provider);
(ii) at the written direction of the Credit Provider, with the written consent of the Borrower
(so long as an Event of Default has not occurred and is not continuing under any of the Credit Facility
Documents), to the Credit Provider or the Borrower, as the Credit Provider elects, to make improvements
or repairs to the Mortgaged Property;
(iii) at the written direction of the Credit Provider, if a default has occurred under the Credit
Facility Documents, any Loan Document or any Bond Document, to the Credit Provider for any use
approved in writing by the Credit Provider;
(iv) at the written direction of the Credit Provider, if a new mortgage and mortgage note have
been substituted for the Security Instrument and the Note in accordance with the Loan Documents, or if
the Borrower otherwise consents, for any purpose approved in writing by the Credit Provider;
(v) on each Adjustment Date,to the Redemption Account:
(vi) during a Weekly Variable Rate Period or Daily Variable Rate Period, so long as any
2006A-T Bonds remain Outstanding, on the tenth Business Day prior to each Interest Payment Date. all
or any part of the amounts on deposit in the Principal Reserve Fund in Authorized Denominations
(rounded down to the nearest integral multiple of $100,000) shall be transferred to the Redemption
Account for the redemption of 2006A-T Bonds; and thereafter, on the tenth Business Day prior to each
Interest Payment Date, all amounts on deposit in the Principal Reserve Fund (rounded downward to the
nearest multiple of$100,000) in excess of the Principal Reserve Amount, to the Redemption Account for
the redemption of Tax-Exempt Bonds; and
(vii) pay to the Borrower, Investment Income on moneys in the Principal Reserve Fund on the
Interest Payment Date following receipt by the Trustee of such interest or profits; provided that there is no
deficiency in the Interest Account, the Redemption Account, the Principal Reserve Fund, the Fees
Account or the Rebate Fund, and that no default exists under the Credit Facility Documents, any Loan
Document or any Bond Document. If a deficiency exists in the Interest Account, the Redemption
Account, the Principal Reserve Fund, the Fees Account or the Rebate Fund, the Trustee.shall transfer
such Investment Income to the Interest Account, the Redemption Account, the Principal Reserve Fund,
the Fees Account and/or the Rebate Fund, in that order of priority, prior to any payment to the Borrower.
Moneys to be Held in Trust
Except for(i) moneys deposited with or paid to the Trustee for the redemption of Bonds notice of
the redemption of which has been duly given, and (ii) moneys on deposit in the Costs of Issuance Fund,
the Rebate Fund and the Fees Account, all moneys required to be deposited with or paid to the Trustee for
the account of any Fund or Account will be held by the Trustee in trust and, while held by the Trustee,
will constitute part of the Trust Estate and be subject to the security interest created by the Indenture.
Nonpresentment of Bonds
In the event any Bond is not presented for payment when the principal of such Bond becomes
due.. either at maturity or at the date fixed for redemption of such Bond or otherwise, if amounts sufficient
B-7
to pay such Bond have been deposited with the Trustee for the benefit of the owner of the Bond and have
remained unclaimed for two years after such principal has become due and payable, such amounts will be
paid to the Borrower. Upon such payment, all liability of the Issuer and the Trustee to the holder.of any
Bond for the payment of such Bond will cease and be completely discharged. The. cost of such
publication will be paid from the unclaimed amount held by the Trustee. The obligation of the Trustee
under this section to pay any such amounts to the Borrower will be subject to any provisions of law
applicable to the Trustee or to such amounts providing other requirements for disposition of unclaimed
property.
Investments
Moneys held as part .of any Fund or Account will be invested and reinvested in Permitted
Investments. Permitted Investments will have maturities corresponding to, or will be available for
withdrawal without penalty no later than, the dates upon which such moneys will be needed for the
purpose for which such moneys are held. Moneys on deposit in the (a) Interest Account will be invested
only in investments described in paragraphs (a), (b) and (c) of the definition of Permitted investments,
(b) Redemption Account will be invested only in investments described in paragraph (a) of the definition
of Permitted investments, with a term not exceeding the earlier of 30 days from the date of investment of
such moneys or the date or dates that such moneys are anticipated to be required for redemption, (c) Bond
Purchase Fund will be held uninvested and (d) Costs of Issuance Fund will, until disbursed or returned to
the Borrower. be invested only in investments described in paragraph (h) of the definition of Permitted
Investments. Penmitted Investments will be held by or under the control of the Trustee.. All Investment
Income from moneys held in all Funds and Accounts other than the Loan Fund, the Rebate Fund and the
Costs of Issuance Fund (other than as described below) upon receipt will be deposited into the Interest
Account. investment Income from moneys held in the Bond Fund, if any, the Rebate Fund and the Costs
of issuance Fund in the respective Fund where earned.
Limitations on Liability
Notwithstanding any other provision of the Indenture to the contrary:
(a) the obligations of the Issuer with respect to the Bonds are not general obligations
Of the issuer but are special, limited obligations of the Issuer payable by the issuer solely from the
Security;
(b) nothing contained in the Bonds or in the Indenture will be considered as
assigning or pledging any funds or assets of the issuer other than the Trust Estate;
(c) the Bonds are not and will not be a debt of the State, the Issuer or any other
political subdivision of the State, and none of the State, the Issuer or any other political
subdivision of the State will be liable for the payment of the Bonds;
(d) neither the faith and credit of the Issuer, the State nor any other political
subdivision of the State is pledged to the payment of the principal of and interest and any
premium on the Bonds;
(e) no .failure of the issuer to comply with any tern, condition, covenant or
agreement in the Indenture or in any document executed by the Issuer in connection with the
Project or the issuance of the Bonds will subject the Issuer to liability for any claim for damages,
costs or other charge except to the extent that the same can be paid or recovered from the Trust
Estate;
B-8
(f) the Issuer will not be required to advance any moneys derived from any source
other than the Trust Estate for' any of the purposes of the Indenture, any of the other Bond
Documents .or any of the Loan Documents, whether for the payment of the principal or
redemption price of, or interest on. the Bonds, the payment of Third Party Fees or administrative
expenses or otherwise; and
(g) neither the members of the Board of Supervisors of the issuer nor any person
executing the Bonds will be liable personally on the Bonds or be subject to any personal liability
or accountability by reason of the issuance thereof.
Defeasance
Provision for Prryment of Bonds. Any Bond will be deemed to have been paid within the
meaning of the Indenture if each of the following conditions is satisfied:
(a) the Issuer or the Borrower deposits with the Trustee (i) Available Moneys or
(ii)Government Obligations which are not subject to early redemption and which are purchased
with Available Moneys, of such maturities and interest payment dates and bearing such interest as
will be sufficient, without further investment or reinvestment of either the principal amount of
such Government Obligations or the interest earnings on Government Obligations(the earnings to
be held in trust also), together with any Available Moneys, 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 on such Bonds to such maturity or redemption
dates;
(b) the Trustee receives, at the expense of the Borrower, and may rely upon (i)a
verification report of an independent certified public accountant or other firm nationally
recognized in the certification of cash flow analyses; and (ii)an opinion of Bond Counsel to the
effect that such deposit with the Trustee and consequent defeasance of the Bonds does not
adversely affect the excludability from gross income for federal income tax purposes of the
interest payable on the Tax-Exempt Bonds;
(c) all Third Party Fees and Fees and Expenses due or.to become due have been paid
or sufficient additional moneys to make the required payments have been irrevocably deposited
with the Trustee;
(d) for any such Bonds to be redeemed on any date prior to their maturity, the
Trustee has 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 the indenture have been Given or irrevocable power
authorizing the Trustee to give such redemption notices: and
(e) the Bonds will be redeemed on the earliest possible redemption date.
The Trustee will redeem the ;Bonds specified by such irrevocable instructions on the date
specified by such irrevocable instructions.
Defeased Bonds No Longer Outstanding. At such times as a Bond will be deemed to be paid
under the Indenture, it will no longer be secured by or entitled to the benefits of the Indenture, except for
the purposes of payment in accordance with the terms of the Indenture.
B-9
Acceptance of the Credit Facility
The Trustee shall hold the Credit Facility and shall enforce in its name all rights of the Trustee
and all obligations of the Credit Provider under the Credit Facility for the benefit of the.Bondholders.
The Trustee shall not assign-or transfer the Credit Facility except (i) to a successor Trustee under the
indenture, (ii) to the Credit Provider upon expiration or other termination of the Credit Facility in
accordance with its terms. including expiration on its stated expiration date or (iii) upon payment under
the Credit Facility of the full amount payable under the Credit Facility. .
Draws Under Credit Facility
The Trustee shall draw on the Letter of Credit, or, if an Alternate Credit Facility is in effect, draw
on the Alternate Credit Facility, in each case for the payment of principal of and interest due on any Bond
and the purchase price of any Bond to the extent required by the Indenture and in accordance with the
terms of the Credit Facility then in effect, and cause the proceeds of each Draw to be applied so that full
and timely payments are made on each date on which payment of principal, interest or purchase price is
due on any Bond. The Trustee shall not request, and shall not apply the proceeds of, any Draw to pay (i)
principal of, interest on, or the purchase price of, any Pledged Bond or anv Bond known by the Trustee to
be held by the Borrower or any Affiliate of the Borrower. (ii) premium that may be payable upon the
redemption of any of the Bonds or (iii) interest that may accrue on any of the Bonds on or after the
maturity of such Bonds. Prior to making a Draw to pay principal of or interest on the Bonds on an Interest
Payment Date, the Trustee shall detennine the amount necessary to make such payment of principal or
interest. Notwithstanding any other provision of the Indenture to the contrary, so long as a Credit Facility
is in effect(i) interest payable to the Bondholders on each Interest Payment Date,and principal payable to
the Bondholders on any date on which principal is payable to the Bondholders, whether by reason of
redemption, upon maturity, acceleration, or otherwise, shall be paid from the proceeds of the Credit
Facility deposited into the Credit Facility Account, prior to the use of any other moneys, and all amounts
held by the Trustee under the indenture derived from payments made by the Borrower under the Note
shall, on the date on which the Trustee receives payment under the Credit Facility, as the case may be, be
paid to the Credit Provider on such date in reimbursement of the amounts so paid and (ii) premium
payable upon any'optional redemption of Bonds shall be paid with Available Moneys, provided that in no
event shall amounts be paid under the Credit Facility to pay the premium on any Bond or principal,
interest. premium or any other amount in respect of any Pledged Bond or any Bond known by the Trustee
to be held by the Borrower or any Affiliate of the Borrower.
Return of Payments Under the Credit Facility
In the event the Trustee receives a Draw from the Credit Provider on account of any Tendered
Bond and thereafter the Trustee receives remarketing proceeds upon the remarketing; of such Tendered
Bond, then the Trustee shall promptly reimburse the Credit Provider with such funds to the extent of the
amount so paid by the Credit Provider as a reimbursement on behalf of the Borrower.
Alternate Credit Facility
Subject to the terms of the Credit Facility Documents. the Trustee shall accept any Alternate
Credit Facility delivered to the Trustee in substitution for the Credit Facility then in effect if:
(a) the Alternate Credit Facility meets the requirements of the Indenture:
(b) the Substitution Date for the Alternate Credit Facility is an Interest Payment Date
during a Weekly Variable Rate Period, or a Daily Variable Rate Period, or an Adjustment Date
which immediately follows a Reset Period;
B-10
(c) the Alternate Credit Facility is effective on and from the Substitution Date for
such Alternate Credit Facilitv; and
(d) the Trustee receives on or prior to the effective date of the Alternate Credit
Facility (i) an Opinion of Counsel-to the Credit 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 Tax-Exempt Bonds.
The Trustee shall give notice to the Bondholders by first class mail, postage prepaid, of the
substitution by such Alternate Credit Facility for the Credit Facility then in effect as provided in the
indenture. On the Substitution Date,the Trustee shall, if necessary, draw on or request an Advance on the
Credit Facility being replaced and shall not surrender such Credit Facility until all requests thereon have
been honored.
Any provider of an Alternate Credit Facility shall have the rights and obligations of the Credit
Provider in the event an Alternate.Credit Facility is delivered to the Trustee that meets the requirements
of tine Indenture.'
Extension of Credit Facility
In the event the term of the,Letter of Credit or the term of any Alternate Credit Facility is
extended, the Trustee must receive, not later than the Extension Date, (i) either a commitment to extend
the Letter of Credit or Alternate Credit Facility or other written evidence of the-extension of the Letter of
Credit or Alternate Credit Facility and (ii) an Opinion of Counsel for the Credit Provider(of the Letter of
Credit or Alternate Credit Facility), in substantially the form of the Opinion of Counsel delivered to the
Trustee upon the issuance of the Letter of Credit or Alternate Credit Facility. The Trustee shall provide a
copy of any commitment to extend and the actual extension of the Letter of Credit or Alternate Credit
Facility upon receipt thereof to the Rating Agency and Remarketing Agent and, upon request, to any
Bondholder. Upon the failure of the Borrower to furnish the Trustee with the actual extension of.tine
Letter of Credit or Alternate Credit Facility or a binding commitment to extend the Letter of Credit or
Alternate Credit Facility or an Alternate Credit Facility pursuant to the Indenture and the accompanying
Opinion of Counsel on or prior to each Extension Date, the Bonds shall be subject to mandatory tender
pursuant to the Indenture.
Limitations on Rights of Credit Provider
Notwithstanding anything contained in the Indenture to the contrary, .all provisions in the
Indenture regarding consents, approvals, directions, waivers, appointments, requests or other actions by
the Credit 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 Provider were not mentioned in
such provisions (i) if a Wrongful Dishonor has occurred and is continuing or(ii) after the Credit Facility
ceases to be valid and binding on tine Credit Provider for an_v reason excluding those circumstances where
all drawings have been made under the Credit Facility and unreimbursed obligations with respect to such
drawings are owed by the Borrower under the Reimbursement Agreement; provided, however, that the
Credit Provider's right to notices and (subject to the limitations below)the payment of amounts due to tine
Credit Provider shall continue in full force and effect. in addition, if a Wrongful Dishonor has occurred
and is continuing or after the Credit Facility ceases to be valid and binding on the Credit Provider for any
reason excluding those circumstances where all drawings have been made under the Credit Facility and
unreimbursed obligations with respect .to such drawings are owed by the Borrower under the .
Reimbursement Agreement, the security interest and related rights of the Credit Provider in the Trust
B-11
Estate shall be junior and subordinate to the rights of the Bondholders. The foregoing shall not affect any
other rights of the Credit Provider.
References to Credit Provider When No Credit Facility Is In Effect
All provisions of the Indenture relating to the rights of the Credit Provider shall be of no force
and effect if there is no Credit Facility in effect and there are no Pledged Bonds and all amounts owing to
the Credit Provider under the Credit Facility Documents have been paid. In such event, all references to
the Credit Provider shall have no force or effect.
Certain Notices to the Credit Provider
The Trustee and Issuer shall promptly notify the Credit Provider of any of the following as to
which it has actual knowledge: (i) the occurrence of any Event of Default under the Indenture or under
any of the other Transaction Documents, or any event which, with the passage of time or service of
notice, or both, would constitute such an Event of Default, 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, (ii) an Act of
Bankruptcy or a bankruptcy filing by or against the Borrower and (iii) the making of any claim in
connection with seeking the avoidance as a preferential transfer ("Preference Claim") of any payment of
principal of, or interest on,the Loan.
Credit Provider To Control Insolvency Proceedings
Each Bondholder, by its purchase of Bonds, the Trustee and the Issuer agree that the Credit
Provider may at any time during the continuation of an insolvency proceeding of the Issuer or the
Borrower ("Insolvency Proceeding') direct all matters relating to the Bonds in any such Insolvency
Proceeding, including, without limitation, (i) all matters relating to any Preference Claim, (ii) the
direction of any appeal of any order relating to any Preference Claim and (iii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition. and without limitation of the
foregoing, the Credit 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 tinder
the Credit Facility, including 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.
Terms and Conditions of the Initial Letter of Credit
(a) Delivery. Following the delivery on the Escrow Break Date of the Letter of
Credit by the Credit Provider to, and in favor of, the Trustee, for the benefit of the Bondholders,
the Letter of Credit shall secure the Bonds in accordance with its terms so lone as the Mode in
effect for the Bonds is the Weekly Variable Rate or Daily Variable Rate.
(b) Draws. So long as the Letter of Credit is in effect the Trustee shall make timely
Draws in accordance with the Letter of Credit such that (i) timely payment of principal and
interest is made on the Bonds (other than Excluded Bonds) as required by the Indenture and (ii)
timely payment of the purchase price of Tendered Bonds (other than Excluded Bonds) that have
not been remarketed is made under the Indenture. The Trustee shall make such Draws in such
fashion as to be able to obtain on.the applicable payment date, such funds to the extent necessary
to permit the Trustee or the Tender Agent,as the case may be,to make such payment when due in
accordance with the Indenture. If any such Draws are made on a Mandatory Tender Date in
connection with the delivery of an Alternate Credit Facility, such Draws shall be made upon the
Letter of Credit and not on the Alternate Credit Facility.
B-12
(c) Notice. The Trustee shall advise the Borrower by telecopy or telex on the date of
each Draw on the Letter of Credit of the amount and date of such Draw and of the reason for such
Draw.
(d) Extension. For any extension of the tern of the Letter of Credit. the Trustee
shall, at the direction of an Authorized Credit Provider Representative, but only if required to
evidence an extension of the term of the Letter of Credit, surrender the Letter of Credit to the
Credit Provider in exchange for a new letter of credit or the Letter of Credit with notations on it,
as the Credit Provider may so elect, conforming in all material respects to the Letter of Credit, but
with the extended expiration date. Any such extension shall be for a period of at least three
months or. if less, until the fifteenth day following the maturity date of the Bonds.
(e) Pledged Bonds and Bonds Held ht- Borrower. No draws shall be made by the
Trustee under the Letter of Credit for payment of any Pledged Bond or Bond known by the
Trustee to.be held by the Borrower or any Affiliate of the Borrower.
(f) Draiv Requirement. Tile Trustee shall not terminate or surrender the Letter of
Credit until the Trustee shall have made such Draw(s), if any, as shall be required under the
Indenture to provide for payment in full of the principal of and interest on the Bonds, and shall
have received the proceeds of such Draw(s)from the Credit Provider.
(g) Beneficiary of'Letter of'Credit. The Trustee shall have the obligation to hold and
maintain the Letter of Credit for the benefit of the Owners of the Bonds until the Letter of Credit
terminates or expires in accordance with its terms.
(h) Surrender of Letter of Credit. When the Letter of Credit terminates or expires in
accordance with its terns, the Trustee shall immediately surrender it to the Credit Provider. The
Trustee agrees that. except in the case of a redemption of Bonds in part or any other reduction in
the principal amount of Bonds Outstanding,.it will not under any circumstances request that the
Credit Provider reduce the amount of the Letter of Credit. if at any time all Bonds shall cease to
be Outstanding, the Trustee shall surrender the Letter of Credit to the Credit Provider in
accordance with its terms.
Defaults and Remedies
Events of Default. Each of the following constitutes an Event of Default under the Indenture:
(i) default in the payment when due and payable of any interest due on any Bond (other than
a Pledged Bond)or, unless the Credit Provider specifies otherwise by written notice to the Trustee, on any
Bond purchased in lieu of redemption by the Credit Provider pursuant to the indenture;
(ii) default in the payment when due and payable of(A) the principal of or any redemption
premium on any Bond (other than a Pledged Bond) or, unless the Credit Provider specifies otherwise by
written notice to the Trustee, Bond purchased in lieu of redemption by the Credit Provider pursuant to the
indenture at maturity or upon any redemption or(B)the purchase price of any Tendered Bond (other than
a Pledged Bond);
(iii) written notice to the Trustee from the Credit Provider of a default by the issuer in the
observance or performance of any covenant, agreement, warranty or representation on the part of the
issuer included in the Indenture or.in the Bonds (other than an Event of Default set forth in subsection (i)
or (ii) above) and the continuance of such default for a period of 30 days (or such longer period as is
consented to in writing by the Credit Provider)after the Trustee receives such notice;
B-13
(iv) written notice to the Trustee from the Credit Provider of an Event of Default under the
Reimbursement Agreement;
(v) written notice to the Trustee from the Credit Provider of an Act of Bankruptcy; or
(vi) a Wrongful Dishonor.
Nondefault and Prohibition of Mandatory Redemption Upon Tax Event. The occurrence of
any event (a "Tax Event") which results in the interest payable on the Tax-Exempt Bonds being
includable, for federal income tax purposes, in the gross income of the Bondholders, including any
violation of any provision of the Regulatory Agreement or any of the other Bond Documents, will not
(a) directly or indirectly constitute an Event of Default under the Indenture or permit any party to
accelerate, or require acceleration of,the Loan or the Bonds, or(b) give rise to a mandatory redemption of
the Bonds, or (c)give rise to the payment to the Bondholders of any amount, denoted as "supplemental
interest," "additional interest," "penalty interest," "liquidated damages," "damages" or otherwise, in
addition to the amounts payable to the owners of the Bonds prior to the occurrence of the Tax Event.
Promptly upon determining that a Tax Event has occurred, the Issuer or the Trustee, by notice in writing
to all Registered Owners of the Bonds and the Remarketing Agent, will state that a Tax Event has
occurred and whether the Tax Event is cured, curable within a reasonable period or incurable.
Notwithstanding the availability of the remedy of specific performance to cure a Tax Event that is curable
within a reasonable period, neither the Issuer nor the Trustee will have, upon the occurrence of a Tax
Event, any right or obligation to cause or direct acceleration of the Bonds or the Loan,to accept a deed to
the Project in lieu of foreclosure, or to effect any other comparable conversion of the Project.
Acceleration, Redemption and Mandatory Tender. The Bonds shall be subject to acceleration,
redemption and mandatory tender as set out in this Section.
(a) Acceleration. Upon:
(i) the occurrence and during the continuance of a Wrongful Dishonor, the Trustee
may, and, upon the written request of Bondholders owning not less than 51% in aggregate
principal amount of Bonds then Outstanding, must, by written notice to the Issuer, the Borrower
and the Credit Provider, declare the principal of all Bonds and the interest accrued, and to accrue,
on the Bonds to the date of payment immediately due and payable; or
(ii) the occurrence of any other Event of Default under the Indenture, the Trustee
may, upon receiving the prior written consent of the Credit Provider, and must, upon the written
direction of the Credit Provider requiring that the Bonds be accelerated pursuant to this
subsection, by written notice to the Issuer, the Borrower and the Credit Provider, declare the
principal of all Bonds and the interest accrued, and to accrue, on the Bonds to the date'of
declaration immediately due and payable.
(b) Redemption and Mandatory Tender. Upon the occurrence of an Event of Default as
defined tinder paragraph(ii) under"Events of Default"above:
(i) if the Credit Provider so directs, the Bonds shall be redeemed in whole or in part
in the amount specified by and at the direction of the Credit Provider.
(ii) if the Credit Provider so directs,the Bonds shall be subject to mandatory tender.
Notwithstanding anything to the contrary in the Indenture, if the Credit Provider directs that the Bonds be
redeemed in part, the Credit Provider may further direct on one or more other occasions under this
B-14
subsection that the Bonds be redeemed in whole or in part or that the Bonds be subject to mandatory
tender.
(c) Notice.
(i) Acceleration. Upon any decision to accelerate payment of the Bonds,the Trustee
shall notify the Bondholders of the declaration of acceleration, that, in the event of acceleration,
interest on the Bonds will cease to accrue upon such declaration. and payment of the Bonds will
be made upon presentment of the Bonds at the .Designated Office of the Trustee. Such notice
shall be sent by registered mail or overnight delivery service, postage prepaid, or, at the Trustee's
option, may be given by Electronic Means to each Registered Owner of Bonds at such Re;istered
Owner's last address appearing in the Bond Register. Any defect in or failure to give notice of
such declaration will not affect the.validity of such declaration.
(ii) Redemption. Upon the direction of the Credit Provider to redeem the Bonds in
whole or in part,.immediate notice of redemption will be given.
(iii) Mandatory Tender. Upon any direction of the Credit Provider that the Bonds be
subject to mandatory tender, the Trustee shall give notice to the Bondholders as provided in the
Indenture.
(d) Payment Under Credit Facility. Immediately upon acceleration of the Bonds, the Trustee
shall draw on the Letter of Credit, or Draw on the Alternate Credit Facility then in effect, as applicable, in
accordance with its terms.
Notice. Upon any decision to accelerate payment of the Bonds, the Trustee will notify the
Bondholders of the declaration of acceleration, that, in the event of acceleration pursuant to the Indenture,
interest on the Bonds will cease to accrue upon such declaration, and payment of the Bonds will be made
upon presentment of the Bonds at the Desianated Office of the Trustee. Such notice will be sent by
registered mail or overnight delivery service, postage prepaid, or, at the Trustee's option, may be given by
Electronic Means to each Registered Owner of Bonds at such Registered Owner's last address appearing
in the Bond Register. Any defect in or failure to give notice of such declaration will not affect the
validity of such declaration.
Other Remedies. Upon the occurrence and continuance of an Event of Default, the Trustee may,
with or without taking action to accelerate the Bonds, pursue any of the following remedies:
(a) an action in mandamus or other suit, action or proceeding at law or in equity
(i)to enforce the payment of the principal of; premium, if any, or interest on the Bonds then
Outstanding, (ii)for the specific performance of any covenant or agreement contained in the
Indenture, the Financing Agreement or the Regulatory Agreement or (iii)to require the Issuer to
carry out any other covenant or agreement with Bondholders and to perform its duties under the
Act;
(b) the liquidation of the Trust Estate; or
(c) an action or suit in equity, to enjoin any acts or things which may be unlawful or
in violation of the rights of the Bondholders and to execute any other papers and documents and
do and perform any and all such acts and things as may be necessary or advisable in the opinion
of the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed
in any bankruptcy or other proceeding.
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Remedies Not Exclusive. No right or remedy conferred upon or reserved to the Trustee(or to the
Bondholders) by the Indenture is intended to be exclusive of any other right or remedy, but each and
every such right and remedy will be cumulative and will be in addition to any other right or remedy given
to the Trustee or to the Bondholders under the Indenture or under the Financing Agreement or the
Regulatory Agreement or now or later existing at law or in equity. No delay or omission to exercise any
right or remedy provided in the Indenture will impair any such right or remedy or be construed to be a
waiver of any Event of Default or acquiescence in it. Every such right and remedy may be exercised from
time to time as often as may be deemed expedient.
Waiver. Subject to the conditions precedent set.out below, (a)the Trustee may waive and
(b) Bondholders owning not less than 51% in aggregate principal amount of Bonds then Outstanding may
waive, by written notice to the Trustee, any Event of Default under the Indenture and its consequences
and rescind an_v declaration of acceleration of maturity of principal. The conditions precedent to any
waiver are:
(a) unless waiver is directed by the Credit Provider,the Credit Provider must consent
to such waiver in writing,
(b) 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 has
been paid or provided for by the Borrower in Available Moneys or by the Credit Provider and all
fees and expenses of the Trustee have been paid or provided for by the Borrower or the Credit
Provider, and
(c) after the waiver, the Credit Facility remains in effect in an amount equal to the
aggregate principal amount of the Bonds Outstanding (other than Pledged Bonds) plus the
Interest Requirement: provided, however, that such waiver will be permitted without the Credit
Facility remaining in effect if(i) the Issuer consents to the waiver, (ii) the Rating Agency then
rating the Bonds is notified and the Trustee naives written notice to the Bondholders that the
ratings on the Bonds may be reduced or withdrawn upon the occurrence of such waiver, and (iii)
100%of the Bondholders consent to the waiver.
Upon any such waiver, the default or Event of Default will be deemed cured and will cease to
exist for all purposes and the Issuer, the Borrower, the Trustee and the Bondholders will be restored to
their former positions and rights under the indenture. No waiver of any default or Event of Default will
extend to or affect any subsequent default or Event of Default or will impair any right or remedy
consequent thereto.
Rights To Direct Proceedings. Notwithstanding anything contained in the Indenture to the
contrary, Bondholders owning not less than 51% in aggregate principal amount of Bonds then
Outstanding, will 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 the Indenture or any other proceedings
under the Indenture; provided, however, that such direction will not be otherwise than in accordance with
the provisions of law and of the Indenture, and provided that the Trustee will be indemnified to its
reasonable satisfaction (except as otherwise provided in the Indenture).
Limitations on Bondholders' Rights. No Bondholder has or will have the right to enforce the
provisions of the Indenture or the Financing Agreement, or to institute any proceeding in equity or at law
for the enforcement of the Indenture or the Financing Agreement, or to take any action with respect to an
Event of Default under the Indenture or an Event of Default under the Financing Agreement, or to
institute, appear in or defend any suit or other proceeding with respect to the Indenture or the Financing
Agreement upon an Event of Default unless (a)such Bondholder has given the Trustee, the issuer and the
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Borrower written notice of the Event of Default.. (c)the holders of not less than 51% in aggregate
principal amount of Bonds then Outstanding have requested the Trustee in writing to institute such
proceeding, (d)the Trustee has been afforded a reasonable opportunity to exercise its powers or to
institute such proceeding. (e)the Trustee has been offered reasonable indemnity; where required, and
(f)the Trustee has thereafter failed or refused to exercise such powers or to institute such proceeding
within a reasonable period of time. No Bondholder has or will have any right in any manner whatever to
affect, disturb or prejudice the pledge of revenues or of any other moneys, Funds, Accounts or securities
under the Indenture.
Application of Moneys. All moneys received by the Trustee pursuant to any action taken under
the Indenture will be-deposited into the Interest Account and the Redemption Account, as applicable, after
payment of the ordinary costs and expenses of the Trustee. The balance of such moneys, less .such
amounts as the Trustee determines may be needed for possible use in paying future fees and expenses and
for the preservation and management of the Project, will be applied as set out in the following
subsections.
Principal on Bonds Not Declared Due and Payable. Unless the principal on all Bonds has
become or been declared due and payable.all such moneys will be applied:
FIRST—to the payment of all interest then due on the Bonds, in the order of the maturity of such
interest and, if the amount available will not be sufficient to pay in full said amount, then to the payment
ratably, of the amounts due,without any discrimination or privilege;
SECOND—to the payment of the unpaid principal of any of the Bonds which have become due
(other than Bonds matured or called for redemption for the payment of which moneys are held pursuant to
the Indenture), in the order of due dates, with interest upon the principal amount of the Bonds from the
respective dates; upon which they become due at the rate or rates borne by the Bonds, to the extent
permitted by law, and, if the amount available will not be sufficient to pay in full the principal of such
Bonds due on any particular date, together with such interest, then to the payment ratably, according to
the amount of principal due on such. date, to the persons entitled to such payment without any
discrimination or privilege; and
THIRD — to the payment of any other amounts due to the Trustee for Extraordinary Items,
including the costs and expenses of any proceedings resulting in the collection of such moneys and of
advances incurred or made by the Trustee. .
Principal of Bonds Declared Due and Payable. If the principal of all the Bonds has become or
been declared due and payable, all such moneys will be applied first; 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 to payment, until all such principal and interest has been paid; and second, to any
other amounts due and payable under the Indenture.
Trustee
Standard of Care. The Trustee, during the existence and continuation of any Event of Default
under the Indenture, shall exercise such of the rights vested in it by the Indenture, the Financing
Agreement and the Regulatory 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 such person's own
affairs. The foregoing will not limit the Trustee's obligations under the Indenture.
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Resignation of Trustee. The Trustee may resign only upon giving 60 days' prior written notice
to the Issuer, the Borrower and each Registered Owner of Bonds then Outstanding as shown on the Bond
Register. Notwithstanding such notice, such resignation will take effect only upon the appointment of a
successor Trustee in accordance with the Indenture and the acceptance of such appointment by such .
successor Trustee.
Removal of Trustee. The Trustee may be removed at any time, upon 30 days' prior written
notice to the Trustee (i) by the Issuer, (ii) by the owners of not less than 51% in aggregate principal
amount of Bonds then Outstanding or (iii)by the Borrower, with the prior written consent of the Issuer,
which written instrument will designate a successor Trustee. Such removal will not be effective until a
successor Trustee satisfying the requirements of the Indenture is appointed and has accepted its
appointment.
Appointment of Successor Trustee. Upon the resignation or removal of the Trustee, a successor
Trustee, satisfying the requirements of the Indenture, will be appointed by the Issuer with the prior written
consent of the Borrower (if the Borrower is not then in default under any Bond Document or any, Loan
Document and if no event which, with notice or the passage of time or both, would constitute such a
default has occurred and is continuing) and with the prior written consent of the Credit Provider (unless
appointed by the Bondholders as provided in the Indenture), provided, however, that if such consent or
other correspondence with respect thereto is not received by the issuer within 15 Business Days after
receipt by the Credit Provider of written notice of the proposed successor Trustee, such consent will be
deemed to have. been given. If, in the case of resignation or removal of the Trustee, no successor is
appointed within 30 days after the notice of resignation or within 30 days after removal, as the case may
be, then, in the case of a resignation, the resigning Trustee will appoint a successor with the prior written
consent of the Issuer or apply to a court of competent jurisdiction for the appointment of a successor
Trustee, and, in the case of a removal, the Issuer will have the right to appoint a successor Trustee or to
apply to a court of competent jurisdiction for the appointment of a successor Trustee. The successor
Trustee must accept in writing its duties and responsibilities under the Indenture, the Financing
Agreement and the Regulatory Agreement. The successor Trustee will give notice of such succession by
first-class mail, posta0e prepaid,to each Bondholder,the issuer and the Borrower.
Supplemental Indenture; Amendments
Supplepiental Indenture Not Requiring Bondholder Consent. The Issuer and the Trustee,
without the consent of or notice to .any Bondholder, may enter into an Indenture or indenture
supplemental to the Indenture for one or more of the purposes set forth below:
(a) to cure any ambiguity or to corrector supplement any provision contained in the
Indenture or in any supplemental indenture which may be defective or inconsistent with any other
provision contained in the Indenture or in any supplemental Indenture;
(b) to amend, modify.or supplement the Indenture in any respect if. in the judgment
of the Trustee, such amendment, modification or supplement is not materially adverse to 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 the'Indenture;
(d) to modify, amend or supplement the Indenture in such manner as to permit
qualification under the Trust Indenture Act of 1.939,.,as amended, or any similar federal statute
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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 or co-trustee, or a separate Tender
Agent or Bond Registrar;
(f) to make any changes in the Indenture or in the terms of the Bonds necessary or
desirable in order to maintain the then existing rating awarded to the Bonds by the Rating Agency
or otherwise to comply with requirements of any Rating Agency then rating the Bonds;
(g) to make any changes in the Indenture or in the terms of the Bonds necessary or
desirable in order to maintain the then existing rating awarded to the Bonds by the Rating Agency
or otherwise to comply with requirements of any Rating Agency then rating the Bonds;
(h) to comply with the Code and the regulations and rulings issued with respect to
the Code, to the extent determined as necessary in the Opinion of Bond Counsel;
(i) to modify, alter, amend or supplement the Indenture in any other respect,
including amendments which would otherwise be described in the Indenture, (i) if such
amendments will take effect on a Mandatory Tender Date following the purchase of Tendered
Bonds or (ii) if notice of the proposed supplemental Indenture is given to Bondholders (in the
same manner as notices of redemption are given) at least 30 days before the effective date of such
amendment, modification, alteration or supplement and, on or before such effective date, the
Bondholders have the right to demand purchase of their Bonds pursuant to the Indenture; or
(j) to change any of the time periods for provision of notice relating to the
remarketing of Bonds or the determination of the interest rate on the Bonds; or
Supplemental Indenture Requiring Bondholder Consent. The Issuer and the Trustee may, with
the consent of Bondholders owning not less than 51% in aggregate principal amount of Bonds then
Outstanding, from time to time, execute Indenture supplemental to the Indenture for the purpose of
modifying or amending any of the provisions contained in the Indenture or in any supplemental Indenture,
provided that nothing in this paragraph will 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 owner of such Bond;
(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 the 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 under the Indenture or otherwise approve matters requiring Bondholder approval under
the Indenture, including consent. to any supplemental Indenture, without the consent of the
Owners of all the Bonds then Outstanding;
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(f) a reduction in the aggregate principal amount of the Bonds required for consent
to such supplemental Indenture, without the consent of the Owners of all of the Bonds then
Outstanding;
(g) the creation of any lien other than a lien ratably securing all of the Bonds at any
time Outstanding under the Indenture, without the consent of the Owners of all of the Bonds then
Outstanding; or
(h) the amendment of the provisions of the Indenture relating to the amendment
thereof,without the consent of the Owners of all of the Bonds then Outstanding.
No Bondholder Consent Required for Amendment to Loan Documents. No consent of the
Bondholders is required to amend the Loan Documents.
Required Approvals. Anything in the Indenture to the contrary notwithstanding, a supplement or
amendment or other document described under the Indenture which materially and adversely affects any
rights or obligations of the Borrower .will not become effective unless and until the Borrower has
consented in writing to the execution 'of such supplemental Indenture, amendment or other document.
The Trustee will not be required to enter into any supplement or amendment which adversely effects the
Trustee's rights and duties under the Indenture.
Opinions of Counsel. The Trustee may obtain and will be fully protected in relying upon an
Opinion of Counsel as conclusive evidence that any supplement or amendment to the Indenture is
authorized and permitted by the Indenture and, if applicable, is not materially adverse to the interests of
the Bondholders. No supplement or amendment with respect to the Indenture will be effective until the
Issuer and the Trustee will have received an Opinion of Bond Counsel to the effect that such supplement
or amendment will not adversely affect the exclusion from gross income, for federal income tax purposes,
of the interest payable on the Tax-Exempt Bonds.
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE FINANCING AGREEMENT
The following is a brief summary of the Financing Agreement. The summary does not purport to
be complete or definitive and is qualified in its entirety by reference to.the Financing Agreement, a copy
Of which is on file with the Trustee.
The Loan
The Issuer has issued the Bonds in the aggregate principal amount of$135,000,000. The Issuer
agrees, to make the Loan in the amount of$135,000,000 to the Borrower with the Net Bond Proceeds.
Upon satisfaction of the Escrow Break Requirements and the issuance of the 2008 Bonds on the Escrow
Break Date, the Issuer will deliver the Net Bond Proceeds to the Trustee. The Loan shall be deemed
made in full on the .Escrow Break Date. The Borrower accepts the Loan from the Issuer upon the terms
and conditions set forth in the Financing Agreement and the Loan Documents, subject to the Indenture,
the Regulatory Agreement and the Assignment. Disbursements will be made from the Loan Fund as
provided in the Indenture. The Borrower agrees to apply the proceeds of the Loan to pay costs of the
construction and development of the Mortgaged Property.
The Loan shall be evidenced by, payable in accordance with, and bear interest at the rates and on
the terms provided in,the Note and secured by the Security Instrument.
The Borrower agrees to cause the Credit Facility to be in effect in the amounts and during the
periods as required by the Indenture. From time to time, the Borrower may arrange for the delivery to the
Trustee of one or more Alternate Credit Facilities meeting the requirements of the Indenture in
substitution for the Credit Facility then in effect.
Agreement of Borrower To Acquire/Construct/Equip the Project
The Borrower shall comply with the terms of the Disposition and Development Agreement and
shall proceed with reasonable dispatch to complete the acquisition, construction and equipping of the
Project. If amounts on deposit in the Loan Fund are not sufficient to pay the costs of completion, the
Borrower shall pay such costs or cause the same to be paid from other sources. By reason of any such
payment of costs relating to the Project from sources other than the Loan Fund, the Borrower shall not be
entitled to any reimbursement from the Issuer, the Trustee, the Credit Provider, the Loan Servicer or the
holders of the Bonds in respect of such payment or to any diminution or abatement in the repayment of
the Loan. Neither the Issuer nor the Credit Provider shall be liable to the Borrower. the holders of the
Bonds or any other person if for any reason the Project is not completed or if the proceeds of the Loan are
insufficient to pay all costs of the Project.
THE ISSUER DOES NOT MAKE ANY WARRANTY, EITHER EXPRESS OR IMPLIED,
THAT MONEYS, IF ANY, .WHICH WILL BE PAID INTO THE LOAN FUND OR OTHERWISE
MADE AVAILABLE TO THE BORROWER WILL BE SUFFICIENT TO COMPLETE THE
PROJECT, AND THE ISSUER SHALL NOT BE LIABLE TO THE BORROWER, THE
BONDHOLDERS .OR ANY OTHER PERSON IF FOR ANY REASON THE PROJECT IS NOT
.COMPLETED.
Payment of Fees, Costs and Expenses
The Borrower shall pay when due, without duplication, the fees, expenses and other sums
specified in the Financing Agreement:
(a) Costs of Issuance. The Borrower shall direct the Trustee to pay the Costs of Issuance
from the Costs of Issuance Fund on the Escrow Break Date.
(b) Third Part), Fees. The Borrower shall pay the Third Party Fees to the Trustee in
sufficient time to allow the Trustee to pay such Third Party Fees when due. The Third Party Fees are as
.follows:
(i) Issuer. The Issuer's Fee.
(ii) Trustee. The Trustee's Annual Fee.
(iii) Tender Agent. The Tender Agent's Annual Fee is the annual continuing fee of
the Tender Agent, if any.
(iv) Remarketing Agent. The continuing fee of the Remarketing Agent for its
remarketing services.
(v) Rebate Analvst. The Rebate Analyst's Fee.
(c) Fees and Expenses.
(i) Rating_Age . The annual rating maintenance fee of each Rating Agency.
(ii) Extraordinary Items. The Extraordinary items.
(iii) Certain Advances, Expenses and Other Items. All advances, out-of-pocket
expenses, costs and other charges of each of the Issuer, the Rebate Analyst, the Remarketing
Agent, the Tender Agent and the Trustee incurred from time to time, but only to the extent that
any such amounts are payable by the Borrower pursuant to an agreement between the Borrower
and such Person regarding its services in connection with the Bonds or the Loan.
(iv) Bond Costs. All costs of registering, printing, reprinting, preparing and
delivering any replacement bonds required under the Indenture and in connection with the
registration, printing, reprinting or transfer of Bonds.
(v) Adjustment or Conversion of Interest Rate; Tender, Purchase, Remarketing or
Offering of Bonds. All fees, costs and expenses of any change in Mode or of any tender;
purchase, remarketing or offering of any Bonds. The fees, costs and expenses of any tender,
purchase, remarketing or offering of Bonds must be paid by the Borrower in advance in
accordance with the Remarketing Agreement or other agreement relating to the remarketing or
offering of the Bonds.
The Borrower agrees to timely honor any demand for payment by the Trustee pursuant to the
Indenture on account of any insufficiency in the Fees Account.
Certain Payments
Borrower's Obligations Upon Tender of Bonds. If any Tendered Bond is not remarketed on any
Tender Date and a sufficient amount is not available in the Bond Purchase Fund for the purpose of paying
the purchase price of such Bond, the Borrower will cause to be paid to the Trustee pursuant to the Credit
Facility or otherwise pay by the applicable times provided in the Indenture, an amount equal to the
principal amount of all Bonds tendered and not remarketed, together with interest accrued to the Tender
Date.
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Redemption Premium. The Borrower shall pay all redemption premiums, if any, payable with
respect to each redemption of any of the Bonds. The Borrower shall make each such payment, or.cause
such payment to be made, in Available Moneys.
Oblil;ation of the Borrower to Pay Deficiencies. The Borrower shall pay, any deficiency resulting
from any loss due to a default under any investment in any Fund or Account or a change in value of any
investment.
Indemnification
The Borrower releases the Issuer, the Trustee, the Tender Agent and their respective officers,
directors, agents. officials, employees (and, as to the Issuer, members of its governing body) and any
Person who controls the Issuer, the Trustee or the Tender Agent within the meaning of the Securities Act
of 1933 from, and covenants and agrees to indemnify, hold harmless and defend the Issuer, the Trustee,
the Tender Agent and their respective officers, directors, employees, agents, members of its governing
body, officials and any Person who controls such party within the meaning of the Securities Act of 1933
and employees and each of them (each an "Indemnified Party") from and against, any and all losses,
claims, damages, liabilities and expenses (including attorneys' fees and expenses),taxes, causes of action,
suits and judgments of any nature,joint or several, by or on behalf of any Person arising out of-
(a) the approval of financing for the Mortgaged Property or the making of the Loan;
(b) the issuance and sale, resale or remarketing of any Bonds or any certifications or
representations made by any Person other than the party seeking indemnification in connection therewith,
including, but not limited to, any (i) statement or information made by the Borrower with respect to the
Borrower or the Mortgaged Property in any offering document or materials regarding the Bonds, the
Mortgaged Property or the Borrower or in the Tax Certificate of the .Borrower or in any other certificate
executed by the Borrower which, at the time made, is misleading, untrue or incorrect in any material
respect, (ii) untrue statement or alleged untrue statement of a material fact relating to the Borrower or the
Mortgaged Property contained in any offering material relating to the sale of the Bonds, as from time to
time amended or supplemented, or arising out of or based upon the omission or alleged omission to state
in such offering material a material fact relating to the Borrower or the Mortgaged Property required to be
stated in such offering material or necessary in order to make the statements in such offering material not
misleading, (iii) failure to properly register or otherwise qualify the sale of the Bonds or failure to comply
with any licensing or other law or regulation which would affect the manner in which or to whom the
Bonds could be sold;
(c) the interpretation, performance, enforcement, breach, default or amendment of the Bond
Documents, the Loan Documents or any other documents relating to the Mortgaged Property or the
Bonds or in connection with any federal or state tax audit or any questions or other matters arising under
such documents;
(d) the Borrower's failure to comply with any requirement of the Financing Agreement, the
Regulatory Agreement,the Ground Sub-lease or the Disposition and Development Agreement;
(e) . the condition of the Mortgaged Property (environmental or otherwise), including any
violation of any law, ordinance, court order or regulation affecting the Mortgaged Property or any part of
it, provided such condition or violation results.from events arising during the period in which the
Borrower occupies or possesses the Mortgaged Property pursuant to the Ground Sub-lease;
(f) during the period .in which the Borrower occupies or possesses the Mortgaged Property
pursuant to the Ground Sub-lease, any damage or injury, actual or claimed, of whatsoever kind, cause or
character, to property (including loss of use of property) or Persons, occurring or allegedly occurring in,
C-3
on or about the Mortgaged Property or arising out of any action or inaction of the Borrower or any of its
a0ents, servants, employees or licensees, whether or not related to the Mortgaged Property, or resulting
from the acquisition, construction, design, rehabilitation, repair, operation, use or management of all or
any part of the Mortgaged Property;
(g) the Trustee's acceptance or administration of the trusts created by, and the exercise of its
powers or duties under, the Indenture or under the Financing Agreement, the Regulatory Agreement, the
Credit Facility or any other agreements in connection with such agreements to which it is a party; and
(h) solely with respect to the Trustee and with respect to the County in its capacity as the
issuer of the Bonds, to the extent not mentioned in any of the preceding subsections, any cause
whatsoever in connection with transactions provided for in the Financing Agreement and the other
Transaction Documents or otherwise in connection with the Mortgaged Property, the Bonds or the
execution or amendment of any document relating to the Bonds or the Mortgaged Property.
This indemnification shall extend to and include, without limitation, all reasonable costs, counsel
fees, expenses and liabilities incurred in connection with any such claim or proceeding brought with
respect to such claim, except (i) in the case of the foregoing indemnification of the Trustee or any of the
its Indemnified Parties, to the extent such damages are caused by the negligence or willful misconduct of
such Person, and (ii) in the case of the foregoing indemnification of the Issuer or any of its Indemnified
Parties,to the extent such damages are caused by the willful misconduct of such Person.
Obligations of Borrower Unconditional
To the fullest extent pennitted by law, the obligations of the Borrower to make all payments and
perform its other obligations under the Financing Agreement shall be absolute, unconditional and
irrevocable, shall be paid and performed strictly in accordance with the applicable Transaction
Documents under all circumstances. including, without limitation, the following circumstances: (i) any
invalidity or unenforceability of the Credit Facility or any of the other Transaction Documents; (ii) any
amendment or waiver of, or any consent to departure from, the terns of the Credit Facility or any of the
other Transaction Documents, any extension of time or other modification of the terns and conditions for
any act to be performed in connection with the Credit Facility or any of the other Transaction Documents;
(iii) the existence of any claim, setoff, defense or other right which the Borrower may have at any time
against.the Issuer, the Trustee, the Tender Agent, the Credit Provider, the Loan Servicer, the Offering
Agent or any other Person, whether in connection with any of the Transaction Documents, the Mortgaged
Property. or any unrelated transaction, (iv) the surrender or impairment of any security for the
performance or observance of any of the agreements or terms of any of the Transaction Documents; (v)
defect in title to the Mortgaged Property, any act or circumstance that may constitute failure of
consideration, destruction of, damage to or condemnation of the Mortgaged Property, commercial
frustration of purpose, or any change in the tax or other laws of the United States of America or of the
State or any political subdivision of either, (vi) the breach by the Issuer, the Trustee, the Tender Agent,
the Offering Agent, the Credit Provider, the Loan Servicer or any other Person of any of its obligations
under any Transaction Document; or (vii) any other circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing.
Personal Liability of Borrower
Except as provided in the last sentence of this paragraph, the obligations of the Borrower under
the Financing Agreement and the obligations of the Borrower under the Regulatory Agreement to pay
money, including the obligations of the Borrower with respect to the Reserved Rights, shall be(i) general
obligations of the Borrower with recourse to the Borrower personally, and (ii) subordinate and junior in
priority, right of payment and all other respects to any and all obligations of the Borrower under the Loan
Documents and to the Credit Provider under or in respect of the Credit Facility Documents. Nothing in
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this paragraph shall impose personal liability upon Borrower for payments due on the. Bonds or any
obligations of the Borrower under any of the Loan Documents.
Obligations Unsecured
All obligations of the Borrower under the Financing Agreement and under the Regulatory
Agreement, including the obligations of the Borrower with respect to the Reserved Rights, shall not be
secured by the Security Instrument and shall not constitute a lien on the Mortgaged Property in any
manner.
Certain Obligations Personal to the Borrower
No subsequent.owner of the Mortgaged Property (including the Credit Provider as a result of a
foreclosure, a deed in lieu of foreclosure or comparable conversion of the Loan) shall be liable for any
breach or default of any obligation of any prior owner under the Regulatory Agreement or the Financing
Agreement, including any payment or indemnification obligation. The owner of the Mortgaged Property
at the time any default or breach occurs shall remain liable for any and all damages occasioned by such
default or breach even after such Person ceases to be the owner. Upon seeking to collect such damages,
neither the Issuer nor the Trustee shall have recourse against or the right to levy against or otherwise
collect on any judgment from the Mortgaged Property.
Events of Default
The occurrence of any one or more of the following events shall constitute an Event of Default
under the Financing Agreement:
1. The Borrower fails to pay when due any amount payable by the Borrower under the
Financing Agreement.
2. The Borrower fails to observe or perform any covenant or obligation in the Financing
Agreement on its part to be observed or performed for a period of 30 days after receipt of written notice
from the Trustee specifying such failure and requesting that it be remedied; provided, however, that if the
failure cannot be corrected within such period, it shall not constitute an Event of Default if the failure is
correctable without material adverse effect on the validity or enforceability of the Bonds or on the
exclusion from gross income, for federal income tax purposes, of the interest on the Tax-Exempt Bonds,
and if corrective action is instituted by the Borrower within such period and diligently pursued until the
failure is corrected; and provided further that any such failure is cured within 90 days of receipt of notice
of such failure; provided further, failure by the Borrower to comply with the requirements of Section 8 of
the Regulatory Agreement shall not in and of itself, constitute an Event of Default under this Agreement.
3. The Credit Provider.provides written notice to the Trustee of an Event of Default under
the Financing Agreement by reason of the occurrence of an Event of Default under the Reimbursement
Agreement. No Event of Default under the Reimbursement Agreement shall constitute a default under
the Financing Agreement unless specifically declared to be so by the Credit Provider. The Credit
Provider shall make such declaration by written notice to the Trustee.
Remedies Upon an Event of Default
Subject to the Assignment, whenever any Event of Default occurs and is continuing under the
Financing Agreement,the Issuer may take'one or any combination of the following remedial steps:
(d) by written notice to the Borrower, declare all amounts then due and payable on the Note
to be immediately due and payable;
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(e) exercise any of the rights and remedies provided in the Loan Documents; and
(f) take whatever action at law or in equity may appear necessary or desirable to collect the
amounts then due and afterward to become due, or to enforce performance and observance of any
obligation, agreement or covenant of the Borrower under the Financing Agreement. .
No Levy or Other Execution Against Project
Neither the Issuer nor the Trustee shall have any right to levy, execute or enforce any judgment in
respect of the Borrower's obligations under the Financing Agreement, including the Reserved Rights,
against the Project or any other property of the Borrower which secures the obligations of the Borrower
under the Loan or to the Credit Provider under any of the Credit Facility Documents.
Amendment
No amendment to the Financing Agreement shall be binding upon the parties to the Financing
Agreement until such amendment is reduced to writing and executed by such parties; provided, however,
that no amendment, supplement or other modification to the Financing Agreement or any other Bond
Document shall be effective without the prior written consent of the Credit Provider, subject to the
provisions of the Financing Agreement.
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT
On the Escrow Break Date, the Borrower is entering into an Amended and Restated Regulator,
Agreement and Declaration of Restrictive Covenants (Lot 5), dated as of July 1, 2008 (the "Lot 5
Regulatory Agreement'), among the Issuer, the Contra Costa County-'Redevelopment Agency (the
"Agency") and the Trustee with respect to _ units in the Mortgaged Propertv and an Amended and
Restated Regulatory Agreement and Declaration Qf Restrictive Covenants (Lots 2 and 3), dated as of July
1, 2008 (the "Lot 2 and 3 Regulatory Agreement" and collectively with the Lot 5 Regulatory Agreement,
the "Regulatory Agreements'), among the Issuer, the Agency and the Trustee with respect to the other
422 units in the Mortgaged Property. Apart from apphving to separate portions of*the Mortgaged
Property, the Regulatory Agreements are identical. Therefore this Appendix only summarizes one of the
Regulatory Agreements.
Definitions
The following are definitions set forth in the Regulatory Agreement and used in the
Official Statement:
"Affordable Rents" means thirty percent (30%) of an amount equal to fifty percent(50%)
of the median eross income for the Area.
'`Agency Assistance Agreement'' means the Agency Assistance Agreement, dated of even
date herewith, between the Agency and the Owner.
"Agency Conditions" has the meaning given to that term in Section 8.
"Agency Loan" means the loan from the Agency to the Owner in the amount of Two
Million Five Hundred Thousand Dollars ($2,500,000). The Agency Loan is made pursuant to the
Agency Assistance Agreement.
"Area"means the Oakland-Fremont, CA HUD Metro FMR Area.
"California Redevelopment Law" means California Health and Safety Code Sections
33000 et se
"CDLAC"means the California Debt Limit Allocation Committee or its successors.
"Housing Act" means the United States Housing Act of 1937, as amended, or its
successor.
"Project" means the 422-unit (in the case of the Lots 2 and 3 Regulatory Agreement) or
the _-unit (in the case of the Lot 5 Regulatory Agreement) multifamily rental housing
development, located on the leasehold interest in the real property site described in Exhibit A to
the Regulatory Agreement, consisting of those facilities, including real property, structures,
buildings, fixtures or equipment situated thereon, as it may at any time exist, the construction of
which facilities is to be financed, in whole or in part, from the proceeds of the sale of the Bonds
or the proceeds of any payment by the Owner pursuant to the Financing Agreement, and the
Agency Loan made pursuant to the Agency Assistance Agreement.
"Qualified Project Period"means the period beginning on the later of the Closing Date or
the first day on which at least 10% of the units in the Project are first occupied and ending on the
later of the following:
(A) the date that is fifteen (15) years after the date on which at least fifty percent
(50%)of the units in the Project are first occupied.-
(B)
ccupied:(B) the first date on which no Tax-Exempt private activity bonds with respect to the
Project are Outstanding;
(C) the date on which any assistance provided with respect to the Project under
Section 8 of the Housing Act terminates; or
(D) Fifty-Five(55)years from the date that construction of the Project is completed.
"Very Low Income Tenant" means any tenant whose Gross Income does not exceed the
limits for very low income households, except that the percentage of median gross income that
qualifies as very low income shall be fifty percent(50%)of median gross in the Area adjusted for
household size, as established and amended by HUD from time to time pursuant to Section 8 of
the United States Housing-Act or 1937, and as published by the State of California Department of
Housing and Community Development. If all the occupants of a unit are students (as defined
under Section 151 (c)( 4) of the Code), no one of whom is entitled to file a joint return under
Section 6013 of the Code, such occupants shall not qualify as Very Low Income Tenants. The
determination of a tenant's status as a Very Low Income Tenant shall be made by the Owner
upon initial occupancy of a unit in the Project by such Tenant, on the basis of an Income
Certification executed by the Tenant. In the event the federal income standards are discontinued,
the Agency shall provide the Owner with other income determinations which are reasonably
similar with respect to methods of calculation to those previously established by HUD and
published by the State.
"Very Low Income Units" means the units in the Protect required to be rented, or held
available for occupancy by, Very Low Income Tenants pursuant to the Regulatory Agreement.
Qualified Residential Rental Project
The Owner hereby acknowledges and agrees that the Project is to be owned, managed and
operated as a "residential rental project' (within the meaning of Section 142(d) of the Code) for a term
equal to the Qualified Project Period. To that end, and for the term of the Regulatory Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
(a) The Project will be constructed and operated for the purpose of providing multifamily
residential rental property. The Owner will own, manage and operate the Project as a project to provide
multifamily residential rental property comprised of a building or structure or several interrelated
buildings or structures, together with any functionally related and subordinate facilities, and no other
facilities, in accordance with Section 142( d) of the Code, Section 1.1 03-8(b) of the Regulations and the
provisions of the Act, and in accordance with such requirements as may be imposed thereby on the
Project from time to time.
(b) All of the dwelling units in the Project will be similarly constructed units, and each
dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping,
eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and
sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a transient basis
or rented for a period of less than thirty (30) consecutive days (apart from a month to month lease in
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months with less than 30 days), or will ever be used as a hotel, motel, dormitory, fraternity house, sorority
house, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or park; provided
that the use of certain units for tenant.guests on an intermittent basis shall not be considered transient use
for purposes of the Regulatory Agreement.
(d) No part of the Project will at any time during the Qualified Project Period be owned by a
cooperative housing corporation, nor shall the Owner take any steps in connection with a conversion to
such ownership or use, and the Owner will not take any steps in connection with a conversion of the
Project to condominium ownership during the Qualified Project Period (except that the Owner may obtain
final map approval and the Final Subdivision Public Report from the California Department of Real
Estate and may file a condominium plan with the County).
(e) All of the dwelling units in the Project (except for not more than two (2) units set aside
for resident manager or other administrative use) will be available for rental during the Qualified Project
Period on a continuous basis to members of the general public, and the Owner will not give preference to
any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling
units are required to be leased or rented to Very Low Income Tenants.
(f) The Project consists of a leasehold interest in a parcel or parcels that are contiguous
except for the interposition of a road, street or stream, and all of the facilities of the Project comprise a
single geographically and functionally integrated project for residential rental property, as evidenced by
the ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Owner; provided, however, that
if the Project contains five or more dwelling units, this provision shall not be construed to prohibit
occupancy of not more than two (2) dwelling units by two (2) resident managers or maintenance
personnel any of whom may be the Owner.
The Owner shall deliver to the Administrator and the Trustee, (i)within 30 days after the
date on which 10%of the dwelling units in the Project are occupied, a written notice specifying such date,
and (ii) within 30 days after the date on which 50% of the dwelling units in the Project are occupied, a
written notice specifying such date.
Very Low Income Tenants; Reporting Requirements
Pursuant to the requirements of the Code, the Owner hereby represents, warrants and covenants
as follows:
(a) During the Qualified Project Period, not less than twenty percent (20%) of the total
number of completed units in the Project shall at all times be rented to and occupied by Very Low Income
Tenants. For the purposes of this paragraph (a), a vacant unit that was most recently occupied by a Very
Low Income Tenant is treated as rented and occupied by a Very Low Income Tenant until reoccupied,
other than for a temporary period of not more than thirty one (31) days, at which time the character of
such unit shall be redetermined.
(b) No tenant qualifying as a Very Low Income Tenant upon initial occupancy shall be
denied continued occupancy of a unit in the Project because, after admission, such tenant's Gross Income
increases to exceed the qualifying limit for Very Low Income Tenants. However, should a Very Low
Income Tenant's Gross Income, as of the most recent determination thereof: exceed one hundred forty
percent(140%) of the applicable income limit for a Very Low Income Tenant of the same household size,
the next available unit of comparable or smaller size must be rented to (or held vacant and available for
immediate occupancy by)a Very Low Income Tenant. Until such next available unit is rented, the former
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Very Low Income Tenant who has ceased to qualify as such shall be deemed to continue to be a Very
Low Income Tenant for purposes of the twenty percent(20%)requirement of the Regulatory Agreement.
(c) For the Qualified Project Period, the Owner will obtain, complete and maintain on file
Income Certifications for each Very Low Income Tenant, including (i) an Income Certification dated
immediately prior to the initial occupancy of such Very Low Income Tenant in the .Project, and
(ii)thereafter, an annual Income Certification with respect to each Very Low Income Tenant. The Owner
will provide such additional information as may be required in the future by the Code,the State,the Issuer
or the Agency, 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, Regulations 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 Tax-Exempt obligations. A copy of the most recent Income Certifications for
Very Low Income Tenants commencing or continuing occupation of a Very Low Income Unit shall be
attached to each report to be filed with the Issuer pursuant to paragraph (e)above.
(d) The Owner shall make a good faith effort to verify that the income information provided
by an applicant in a Verification of Income is accurate by taking one or more of the following steps as a
part of the verification process: (1)obtain a pay stub for the most recent pay period, (2)obtain an income
tax return for the most recent tax year, (3)obtain a credit report or conduct a similar type credit search, (4)
obtain an income verification from the applicant's current employer, (5) obtain an income verification
from the Social Security Administration and/or the California Department of Social Services if the
applicant receives assistance from either of such agencies, or (6) if the applicant is unemployed and does
not have an income tax return, obtain another form of independent verification.reasonably acceptable to
the Issuer and the Agency.
(e) The Owner will maintain complete and accurate records pertaining to the Very Low
Income Units, and, upon reasonable notice and during normal business hours, will permit any duly
authorized representative of the Issuer, the Trustee, the Department of the Treasury or the Internal
Revenue Service to inspect the books and records of the Owner pertaining to the Project, including those
records pertaining to the occupancy of the Very Low Income Units.
(f) The Owner will prepare and submit to the Administrator, on behalf of the issuer, at the
end of each calendar quarter, until the end of the Qualified Project Period, a Certificate of Continuing
Program Compliance executed by the Owner. Each year during the Qualified Project Period, the Owner
will submit to the Issuer, the Administrator (if other than the Issuer) and the Trustee, a draft of the
completed Internal Revenue Code Form 8703 or such other annual certification as required by the Code
with respect to the Project. not less than two weeks prior to the date such form shall be submitted to the
Secretary of the Treasury. The Owner shall provide the Issuer and the Trustee with evidence of the filing
of such annual Certification with the Secretary of the Treasury.
(g) For the Qualified Project Period, all tenant leases or rental agreements shall be
subordinate to the Regulatory Agreement and the Security Instrument. All leases pertaining to Very Low
Income Units shall contain clauses, among others, wherein each tenant who occupies a Very Low Income
Unit: (i) certifies the accuracy of the statements made in the Verification of Income, (ii) agrees that the
household income and other eligibility requirements shall be deemed substantial and material obligations
of the tenancy of such tenant,that such tenant will comply promptly with all requests for information with
respect thereto from the Owner, the Trustee, the Agency, the Issuer or the Administrator on behalf of the
Issuer, and that the failure to provide accurate information in the Verification of Income or refusal to
comply with a request for information with respect thereto shall be deemed a violation of a substantial
obligation of the tenancy of such tenant; (iii) acknowledges that the Owner has relied on the Verification
Of Income and supporting information supplied by the Very Low Income Tenant in determining
qualification for occupancy of the Very Low Income Unit, and that any material misstatement in such
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certification (whether or not intentional) will be cause for immediate termination of such lease or rental
agreement: and (iv) agrees that the tenant's income is subject to annual certification in accordance with
the Regulatory Agreement and that if upon any such certification such tenant's Gross Income exceeds the
applicable income limit under the Regulatory Agreement. such tenant may cease to qualify as a Very Low
Income Tenant and such tenant's rent may be subject to increase.
No unit occupied by a residential manager shall be treated as a rental unit during the time of such
occupation.
Additional Requirements of the Act
In addition to the requirements set forth above, the Owner hereby agrees that it shall comply with
each of the requirements of Section 52080 of the Act, including(but not limited to)the following:
(a) Not less than twenty percent (20%) of the total number of units in the Project shall be
occupied by Very Low Income Tenants. The units made available to meet this requirement shall be of
comparable quality and offer a range of sizes and numbers of bedrooms comparable to the units that are
available to other tenants in the Project.
(b) The rental payments for the Very Low Income Units paid by the tenants thereof
(excluding any supplemental rental assistance from the State, the federal government or any other public
agency to those tenants or on behalf of those units) shall not exceed thirty percent (30%) of an amount
equal to fifty percent(50%)of the median adjusted gross income for the Area.
(c) The Owner shall accept as tenants, on the same basis as all other prospective tenants,
low-income persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to
the existing program under Section 8 of the Housing Act. The Owner shall not permit any selection
criteria to be applied to Section 8 certificate or voucher holders that is more burdensome than the criteria
applied to all other prospective tenants.
(d) The units reserved for occupancy as required by subsection (a) above shall remain
available on a priority basis for occupancy by Very Low Income Tenants at all times during the Qualified
Project Period.
(e) During the three (3) years prior to the expiration of the Qualified Project Period. the
Owner shall continue to make available to eligible households Very Low Income Units that have been
vacated to the same extent that nonreserved units are made available to noneligible households.
(f) Following .the expiration or termination of the Qualified Project Period, except in the
event of foreclosure and redemption of the Bonds, deed in lieu of foreclosure, eminent domain, or action
of a federal agency preventing enforcement, units reserved for occupancy as required by subsection (a)
above shall remain available to any eligible tenant occupying a reserved unit at the date of such expiration
or termination, at the rent determined by subsection (b) above, until the earliest of(1) the household's
income exceeds one hundred forty percent (140%) of the maximum eligible income specified above, (2)
the household voluntarily moves or is evicted for good cause (as defined in the Act), (3) thirty (30)years
after the date of the commencement of the Qualified Project Period, or(4)the Owner pays the relocation
assistance and benefits to households as provided.in Section 7264(b)of the California Government Code.
(g) Except as set forth in the Regulatory Agreement, the covenants and conditions of the
Regulatory Agreement shall be binding upon successors in interest of the Owner.
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The Regulatory Agreement shall be recorded in the office of the county recorder of the County of
Contra Costa, and shall be recorded in the grantor-grantee index to the names of the Owner as grantor and
to the.name of the Issuer and the Agency as grantee.
Additional Requirements of the Issuer; CDLAC Requirements
In addition to the requirements set forth above and to the extent not prohibited thereby.the Owner
hereby agrees to comply with each of the requirements of the Issuer set forth in the" Regulatory
Agreement, as follows:
(a) The Owner will pay to the Issuer all of the amounts required to be paid by the Owner
under .the Regulatory Agreement and will indemnify the Issuer and the Trustee as provided in the
Regulatory Agreement.
(b) Rental payments paid by Very Low Income Tenants for the Very Low Income Units shall
not exceed Affordable Rents.
(c) All tenant lists, applications and waiting lists relating to the Project shall at all times be
kept separate and identifiable from any other business of the Owner and shall be maintained as required
by the Issuer, in a reasonable condition for proper audit and subject to examination during business hours
by representatives of the Issuer upon reasonable advance notice to the Owner.
(d) The Owner shall submit to the Administrator, on behalf of the Issuer, within fifteen (15)
days after receipt of a written request, any information or completed forms requested by the Issuer or the
Administrator in order to comply with reporting requirements of the Internal Revenue Service or the
State.
(e) The Owner shall not discriminate on the basis of race, creed, color, religion, sex, sexual
orientation, marital status, national origin, source of income (e.g. SSI), ancestry or handicap in the lease,
use or occupancy of the Project or in connection with the employment or application for employment of
persons for the operation or management of the Project, and will not discriminate on the basis of
household size so long as the tenants meet the household size standards of Section 8 of the Housing Act.
Further, the Owner shall not permit occupancy in any unit in the Project by more persons than is
permissible under the Section 8 household size standards.
(f) The Owner shall comply with any reasonable request made by the Administrator(if other
than the Issuer) or the Issuer to deliver to any such Administrator, in addition to or instead of the Issuer,
any reports, notices or other documents required to be delivered pursuant to the Regulatory Agreement,
and, upon reasonable notice and during normal business hours, to make the Project and the books and
records with respect thereto available for inspection by the Issuer or the Administrator as an agent of the
Issuer.
(g) For purposes in the Regulatory Agreement, the base rents shall be adjusted for household
size, to the extent permitted by law, and in making such adjustments it shall be assumed that one person
will occupy a studio unit, two persons will occupy a one-bedroom unit, three persons will occupy a two-
bedroom unit, four persons will occupy a three-bedroom unit, and five. persons will occupy_a four-
bedroom unit.
(h) The Owner shall comply with the conditions set forth in Exhibit A to CDLAC Resolution
No. 05-142, adopted on December 21, 2005, and in Exhibit A to.CDLAC Resolution No. 08-52, adopted
on March 26, 2008 (collectively the "CDLAC Conditions"), as they may be modified or amended from
time to time, which conditions are incorporated in the Regulatory Agreement by reference and made a
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part of the Regulatory Agreement. The Owner will prepare and submit to CDLAC, not later than each
anniversary of the Closing Date, until the end of the Qualified Project Period, a Certificate of Continuing
Program Compliance, in substantially the form attached to the Regulatory Agreement, executed by an
authorized representative of the Owner.. The Issuer and the Administrator shall have no obligation to
monitor the Owner's compliance with the CDLAC Conditions.
(i) Except as otherwise provided in the Regulatory Agreement, the Regulatory Agreement
shall terminate on the date fifty five(55)years after the Escrow Break Date.
Any of the foregoing requirements of the Issuer(except(h), which also must be expressly waived
by CDLAC and (e) and (i), which also must be expressly waived by CDLAC and the Agency), may be
expressly waived by the Issuer, in its sole discretion, in writing, but (i) no waiver by the Issuer of any
requirement of this section shall, or shall be deemed to, extend to or affect any other provision of the
Regulatory Agreement except to the extent the Issuer has received an opinion of Bond Counsel that ally
such provision is not required by the Act or the Code, and may be waived without adversely affecting the
exclusion from gross income of interest on the Tax-Exempt Bonds for federal income tax purposes, and
(ii) any requirement of this.section shall be void and of no force and effect if the Issuer and the Owner
receive a written, opinion of Bond Counsel to the effect that compliance with any such requirement would
cause interest on the Tax-Exe►npt Bonds to cease to be Tax-Exempt or to the effect that compliance with
such requirement would be in conflict with the Act or any other state or federal law.
Requirements of the Agency
in addition to the requirements set forth elsewhere in the Regulatory Agreement and to the extent
not prohibited thereby, and as a condition to the obligation of the Agency to make payments to the Owner
pursuant to the Agency Assistance Agreement.the Owner agrees to comply with each of the requirements
of the Agency set forth in this section (collectively, the"Agency Conditions"),as follows:
(a) For the purposes of this section the following definitions shall apply:
1. "Assumed Household Size" means for a studio one person, for a one bedroom
two people, for a two bedroom three people, for a three bedroom flour people and for a four bedroom five
people; provided however, that if any federal statutes or regulations require use of an alternate household
size, assumptions in calculating rents, such federally-mandated household size assumptions shall be used
instead of the forgoing assumptions.
2. "Median Income" shall mean the median gross yearly income adjusted for
Assumed Household Size, as specified in the Indenture, in the Area as published from time to time by
HUD and the State of California. In the event that such income detenninations are no longer published or
are not updated for a period of at least eighteen (18) months,the issuer(or Agency if the Qualified Period
has expired) shall provide the Owner with other income determinations which are reasonably similar with
respect to methods of calculation to those previously published by HUD and the State of California.
(b) Not less than twenty percent (20%) of the units in the Project shall be occupied by, or
held vacant and available for occupancy by, Very Low Income Tenants.
(c) The rental payments paid.by the occupants of the Very Low Income Units described in
the indenture shall not exceed Affordable Rents, adjusted for Assumed .Household Size.
(d) The Owner shall rent the units subject to "Requirements of the Agency" (b) above in
accordance with "Very Low Income Tenants: Reporting Requirements"(b)above.
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(e) The Owner will obtain, complete and maintain on file income Certifications for each
Very Low Income Tenant in accordance with the Indenture. A copy of the most recent Income
Certifications for Very Low income Tenants commencing or continuing occupation of a Very Low
Income Unit shall be attached to each report to be filed with the Issuer pursuant to paragraph (h) of this
section. The.Owner will provide copies of such Income Certifications to the Agency upon request by the
Agencv.
(f) The Owner shall make a good faith effort. in the manner set forth above,to verify that the
income information provided by an applicant in a Verification of income is accurate.
(g) The Owner will maintain complete and accurate records pertaining to the Very Low
Income Units, and, upon reasonable notice and during business hours, will permit any duly authorized
representative of the Agency to inspect the books and records of the Owner pertaining to the Project.
including those records pertaining to the occupancy of the Very Low income Units and the Income
Certifications required pursuant to paragraph (e) above. The Owner will retain copies of all materials
obtained or produced with respect to occupancy of the Very Low Income Units for a period of at least
five(5)years.
(h) Owner shall submit to Agency not later than the forty-fifth (45"i) day after the close of
each fiscal _near, or such other date as may be requested by Agency, a statistical report, including
household size and income data for the Very Low Income Units. Owner shall include a provision in
tenant leases pursuant to which the tenants shall consent to Owner's release of such information to the
Agency.
(i) To the extent permitted by law, the Owner shall give preferences in the occupancy of the
units in the Project to households that the Agency. identifies in writing to the Owner that have been
displaced as a result of Agency activities.
(j) Tile Agency shall provide Owner with a schedule of maximum pennissible rents for the
Very Low Income Units annually.
(k) The Owner shall comply with paragraph (g) above.
(1) To the extent different from the requirements set forth in "Additional Requirements of
the Issuer; CDLAC Requirements" (c) above, all tenant lists, applications and waiting lists relating to the
Project shall at all times be kept separate and identifiable from any other business of the Owner and shall
be maintained as required by the Agency, in a reasonable condition for proper audit and sub' to
examination during business hours by representatives of the Agency upon reasonable advance notice to
the Owner.
(►m) The Owner shall submit to the Agency, within fifteen (15) days after receipt of a written
request, any infonnation or completed forms reasonably requested by the Agency in order to comply with
California Redevelopment Law.
(n) The Owner shall comply with "Additional Requirements of the Act"(c)above.
(o) The Owner shall comply with "Additional Requirements of the Issuer; CDLAC
Requirements" :(e) above. In addition, all deeds, leases or contracts, if any, from Owner to any tenant
shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(i) In deeds:
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"The grantee herein covenants by and for the grantee, the grantee's heirs, executors,
administrators and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, sex, sexual orientation, age, handicap, marital status, ancestry or national origin
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein
conveyed, nor shall the grantee, or any person claiming'under or through the grantee, establish or
permit 'any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the premises herein conveyed. The foregoing covenants shall run with the land."
.(ii) In leases:
"Tile lessee herein covenants by and for the lessee, the lessee's heirs, executors,
administrators and assigns, and all persons claiming under or through the lessee, and this lease is
made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, religion, sex, sexual orientation, age, handicap, marital
status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure
or enjoyment of the premises herein leased. nor shall the lessee, or any person claiming under or
through. the lessee, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location. number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees in the premises herein leased."
(iii) In contracts:
"There shall be no discrimination against or segregation of any person or group of
persons on account of race. color,creed, religion, sex. sexual orientation. age, handicap, marital
status. ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the premises. nor shall the transferee, or any person claiming.under or through the
transferee, establish or permit any such practice or practices of discrimination or segregation with
referenceto the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees or vendees of the premises."
(p) Any of the foregoing requirements of the Agency may be expressly waived by the
Agency in writing, but (i) any such waiver shall be in the Agency's sole discretion, and it shall not be
unreasonable for the Agency to refuse to grant any such waiver, (ii) no waiver by the Agency of any
requirement of this section shall, or shall be deemed to, extend to or affect any outer provision of the
Regulatory Agreement; and, (iii)any requirement of this section shall be void and of no force and effect if
the A-encv and.the Owner receive a written opinion of Bond Counsel to the effect that compliance with
any such requirement would cause interest on the Tax-Exempt Bonds to cease to be Tax-Exempt or to the
effect that compliance with such requirement would be in conflict with the Act or anv other state or
federal law.
(q) The Owner releases the Agency (and members. of its governing body) and any person
who controls the Acrency within the meaning of the Securities Act of 1933, from, and covenants and
agrees to indemnify, hold harmless and defend the Agency, its respective officers, directors, employees,
agents, members of its governing body, officials and any person who controls such party within the
meaning of the'Securities Act of 1933 and employees and each of thein (each an "Indemnified Party")
from and against, any and all losses, claims. damages, liabilities and expenses (including attorneys' fees
and expenses),taxes, causes of action, suits and judgments of any nature,joint or several. by or on behalf
of any person arising out of
D-9
(i) the approval or the making of the Agency Loan;
(ii) the interpretation, performance, enforcement, breach, default or
amendment of the Regulatory Agreement or any questions or other matters arising herewith:
(iii) the Owner's failure to comply with any requirement of the .Regulatory
Agreement;
(iv) the condition of the Project (environmental or othervvise), including any
violation of any law, ordinance, court order or regulation affecting the Project or any part of it, provided
such condition or violation results from events arising during the period in which the Owner occupies or
possesses the property described in Exhibit A to the Regulatory Agreement pursuant to the Ground Sub-
lease to be entered. into by the Owner, as sub-lessee, and Pleasant Hill BART Station ,Joint Powers
Leasin<a Authority, a joint powers agency established pursuant to the joint powers agency law of the State
of California (the "Authority"), as sub-lessor, with respect to the property described in the Regulatory
Agreement, or
(v) during the period in which the Owner occupies or possesses the property
described in Exhibit A to the Regulatory Agreement pursuant to the Ground Sub-lease to be entered into
by the Owner, as sub-lessee, and the Authority, as sub-lessor, with respect to the property described in
Exhibit A to the Regulatory Agreement, any damage or injury, actual or claimed, of whatsoever kind,
cause or character, to property (includinci loss of use of property) or persons, occurring or allegedly
occurring in, on'or about the Project or arising out of any action or inaction of the Owner or any of its
agents, servants, employees or licensees, whether or not related to the Project, or resulting from the
acquisition, construction, design, rehabilitation, repair, operation. use or management of all or any part of
the Project.-
This
roject;This indemnification shall extend to and include,.without limitation, all reasonable costs, counsel fees,
expenses and liabilities incurred in connection with any such claim, or proceeding brought with respect to
such claim, except to the extent such damages are cause by the gross negligence or willful misconduct of
such Indemnified Party.
(r) In the event that any action or proceeding is brought against any Indemnified Party with
respect to which indemnity may be sought pursuant to paragraph (q) above. the Owner, upon written
notice from the Indemnified Party, will assume the investigation and defense of the action or proceeding,
including the engagement of counsel selected by the Owner, subject to the approval of the indemnified
Party in such party's sole discretion, and shall assume the payment of all expenses related to the action or
proceeding, with full power to litigate, compromise or settle the same in its sole discretion; provided,
however, that the Indemnified Party shall have the right to review and approve or disapprove any such
compromise or settlement. Each Indemnified Partv shall have the right to engage separate counsel in any
action or proceeding and participate in the investigation and defense of such action or proceeding, and the
Owner shall pay the reasonable fees and expenses of such separate counsel if(i)the indemnified Party
determines that.a conflict exists between the interests of the Indemnified Partv and the interests of the
Owner or (ii) such separate counsel is engaged with the approval of the Owner, which approval shall not
be unreasonably withheld, conditioned or delayed.
(s) Notwithstanding any .transfer of the Project to another owner in accordance with the
Regulatory Agreement, the Owner shall remain obligated to indemnif}' each Indemnified Party pursuant
to this section for all matters arising prior to such transfer, and, as a condition to the release of the
transferor on and after the transfer date, the transferee must assume the obligations of the Owner under
the Regulatory Agreement on and after the transfer date. Each Indemnified Party's rights under this
section shall survive the termination of the Regulatory Agreement, the payment of the Agency Loan.
D-10
The terms, provisions and requirements of this section shall expire and terminate, without the
need for any action by any of the parties to the Regulatory Agreement, upon any transfer of the Project
resulting from a foreclosure of any deed of trust securing the repayment of the Loan or a transfer in lieu of
any such foreclosure; provided the provisions of paragraphs (q), (r) and (s) shall survive the termination
of the Regulatory Agreement, but only as to claims arising from events occurring during the term of the
Regulatory Agreement.
Indemnification; Other Payments
The Owner hereby covenants and agrees that it shall indemnify and hold Harmless the Issuer and
the Trustee and their respective officers, members, directors, officials, employees and agents as set forth
in the Financing Agreement. In addition thereto, the Owner will pay upon demand all of the fees and
expenses paid or incurred by the Trustee and/or the Issuer in enforcing the provisions in the Regulatory
Agreement.
The provisions of this section shall survive the term of the Bonds and the Regulatory Agreement;
provided, however, the provisions of this section shall, in the case of the Trustee, survive the term of the
Regulatory Agreement or the resignation or removal of the Trustee, but only as to claims arising from
events occurring during the term of the Regulatory Agreement or the Trustee's tenure as Trustee under
the Indenture, and shall, in the case of the Issuer, survive the term of the Regulatory Agreement, but only
as to claims arising from events occurring during the term of the Regulatory Agreement.
Sale or Transfer of the Project
For the. Qualified Project Period, the Owner shall not, except as provided in the Security
Instrument and as set forth below, sell, transfer or otherwise dispose of the Project. in whole or in part,
without the prior written consent of the Issuer and the Agency, which consent shall not be unreasonably
withheld or delayed following: (A)the receipt by the Issuer and the Agency of evidence acceptable to the
Issuer and the Agency that(1)the Owner shall not be in default under the Regulatory Agreement or under
the Financing Agreement, if in effect (which may be evidenced by a Certificate of Continuing Program
Compliance), or the purchaser or assignee undertakes to cure any defaults of the Owner to the reasonable
satisfaction of the Issuer; (2) the continued operation of the Project shall comply with the provisions of
the Regulatory Agreement; (3)either (a) the purchaser or assignee or its property manager has at least
three (3)years' demonstrated experience in the ownership, operation and management of similar large
mixed-income rental housing projects, and at least one (1) year's experience in the ownership, operation
and management of rental housing projects containing below-market-rate units, without any record of
material violations of discrimination restrictions or other state or federal laws or regulations or local
governmental requirements applicable to such projects, or(b) the purchaser or assignee agrees to retain a
property management firm with the experience and record described in subclause (a) above; (4) the
person or entity which is to construct and operate the Project does not have pending against it, and does
not have a history of significant and material building code violations or complaints concerning the
maintenance, upkeep, operation, and regulatory agreement compliance of any of its projects as identified
by any local, state or federal regulatory agencies; and (5)that the Owner shall not be in default under the
Agency Assistance Agreement or the purchaser or assignee undertakes to cure any defaults of the Owner
to ,the reasonable satisfaction of the Agency; (B) the execution by the purchaser or assignee of any
document reasonably requested by the Issuer or the Trustee with respect to the assumption of the Owner's
obligations under the Regulatory Agreement, the Financing Agreement (if then in effect) and the Agency
Assistance Agreement, including without limitation an instrument of assumption, and delivery to the
Issuer of an opinion of such purchaser or assignee's counsel to the effect that each such document and the
Regulatory Agreement are valid, binding and enforceable obligations of such purchaser or assignee,
subject to bankruptcy and other standard limitations affecting creditor's rights; (C)receipt by the Issuer of
an opinion of Bond Counsel addressed to the Issuer to the effect that any such sale, transfer or other
D-I I
disposition will not adversely affect the Tax-Exempt status of interest on the Tax-Exempt Bonds; and (D)
receipt by the Issuer. the Trustee and the.Agency of all fees and/or expenses then currently due and
payable to the Issuer, the Trustee and the Agency, respectively. The foregoing notwithstanding, the
Project may be transferred to (y) a wholly-owned subsidiary or related entity of the Owner (with an
opinion of Bond.Counsel) or (z) the Trustee or Credit Provider pursuant to a foreclosure. deed in lieu of
foreclosure or comparable conversion under the Security Instrument, in each case, without the consent of
the Issuer or the Agency. It is hereby expressly stipulated and agreed that any sale, transfer or other
disposition of the Project in violation of this section shall be null, void and without effect, shall cause a
reversion of title to the Owner, subject to all matters affecting title at the time of such reversion, and shall
be ineffective to relieve the Owner of its oblioations under the Regulatory Agreement. The written
consent of the Issuer and the Agency to anv transfer of the Project shall constitute conclusive evidence
that the transfer is not in violation of this section. Nothing in this section shall affect any provision of any
other document or instrument between the Owner and any other party that requires the Owner to satisfy
certain conditions or obtain the prior written consent of such other party in order to sell, transfer or
otherwise dispose of the Project. Upon any sale or other transfer that complies with the Regulatory
Agreement,the Owner shall be frilly released from its obligations hereunder to the extent such obligations
have been fully assumed in writing by the transferee of the Project.
For the Qualified Project Period, the Owner shall not: (1) encumber any of the Project or grant .
commercial leases of any part thereof: or permit the conveyance, transfer or encumbrance of any part of
the Project, except pursuant or subordinate to the provisions of the Regulatory Agreement and the
Security Instrument (and upon receipt by the Owner of an opinion of Bond Counsel that such action will
not adversely affect the Tax-Exempt status of interest on the Tax-Exempt Bonds; provided that such
opinion will not be required with respect to any encumbrance, lease or transfer relating to a commercial
operation or ancillary facility that will be available for tenant use and is customary to the operation of
multifamily housing developments similar to the Project), or except upon a sale, transfer or .other
disposition of the Project in accordance with the terms of.the Regulatory Agreement; (2) demolish any
part of the Project or substantially subtract from any real or personal property of the Project. except to the
extent that what is demolished or removed-is replaced with comparable property; or(3) permit the use of
the dwelling accommodations of the Project for any purpose except rental residences.
Term
The Regulatory Agreement and.all and several of the terms thereof shall become effective upon
its execution and delivery, and shall remain in full force and effect for the period provided therein.and
shall terminate as to any provision not otherwise provided with a specific termination date and shall
terminate in its entirety at the end of the Qualified Project Period, it being expressly agreed and
understood that the provisions of the Regulatory Agreement are intended to survive the retirement of the
Bonds and discharge of the Indenture and the Financing Agreement for the time periods set forth therein.
The terms of the Regulatory Agreement to the contrary notwithstanding, the requirements of the
Regulatory Agreement shall terminate and be of no further force and effect in the event of foreclosure or
transfer of title by deed in lieu of foreclosure of the Security instrument, involuntary noncompliance with
the provisions of the Regulatory Agreement caused by fire, seizure, requisition, change in a federal lav or
an action of a 'federal agency after the Closing Date that prevents the Issuer and the Trustee from
enforcing such provisions, or condemnation or a similar event, but only if, within a reasonable period,
either the Bonds are retired or amounts received as a consequence of such event are used to provide a
project that meets the requirements thereof .provided, however. that the preceding provisions of this
sentence shall cease to apply and the`restrictions contained therein 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 Owner or any related person (within the meaning of Section
1.103-10(e) of the Regulations) obtains an ownership interest in the Project for federal income tax
D-12
purposes. Tile Owner thereby agrees that, following any foreclosure. transfer of title by deed in lieu of
foreclosure or similar event, neither the Owner nor any such related person as described above will obtain
an ownership interest in the Project for federal tax purposes. Notwithstanding any other provision of the
Regulatory Agreement, the Regulatory Agreement may be terminated upon agreement by the Issuer, the
Trustee and the Owner upon receipt by the Issuer and the Trustee of an opinion of Bond Counsel to the
effect that such termination will not adversely affect the exclusion from gross income of interest on the
Tax-Exempt Bonds for federal income tax purposes. Upon the termination of the terms of the Regulatory
Agreement, the parties thereto agree to execute, deliver and record appropriate instruments of release and
discharge of the terms of the Regulatory Agreement; provided, However, that the execution and delivery
of such instruments shall not be necessary or a prerequisite to the termination of the Regulatory
Agreement in accordance with its terms.
Covenants to Run with the Land
Notwithstanding Section 1461 of the California Civil Code, the Owner hereby subjects the
Project to the covenants, reservations and restrictions set forth in the Regulatory Agreement. The Issuer
and the Owner hereby declare their express intent that the covenants, reservations and restrictions set
forth in the Regulatory Agreement shall be deemed covenants running with the land and shall pass to and
be binding upon the Owner's successors in title to the Project; provided, however,that on the termination
of the Regulatory Agreement said covenants. reservations and restrictions shall expire. Upon such
termination, the Issuer and the Trustee agree to provide any necessary release or reconveyance document
for the removal of the Regulatory Agreement as an encumbrance against the Project. Each and every
contract. deed or other instrument hereafter executed covering or conveying the Project or any portion
thereof shall conclusively be held to have been executed, delivered and accepted subject to such
covenants, reservations and restrictions, regardless of whether such covenants, reservations and
restrictions are set forth in such contract, deed or other instruments. No breach or default under the
Regulatory Agreement shall defeat, render invalid or otherwise impair the lien of the Security Instrument
or similar encumbrance upon the Project given in good faith and for value.
Burden and Benefit
The Issuer and the Owner hereby declare their understanding and intent that the burdens of the
covenants set forth in the Regulatory Agreement touch and concern the land in that the Owner's legal
interest in the Project is rendered less valuable thereby. The Issuer and the Owner further declare their
understanding and intent that the benefits of such covenants touch and concern the land by enhancing and
increasin<a the enjoyment and use of the Project by Very Low Income Tenants, the intended beneficiaries
of such covenants, reservations and restrictions, and by furthering the public purposes for which the
Bonds were issued.
Payment of Fees
Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture,
the Owner shall continue to pay the Issuer Fee and expenses as provided in the Regulatory Agreement
and in the Financing Agreement for the Qualified Project Period.
D-13
APPENDIX E
SUMMARY OF CERTAIN PROVISIONS OF THE REIMBURSEMENT AGREEMENT
Beloir is a sinnincirl'of Certain pi-ovisions of the Reiinbursement Agreement. This sinninai-1)does
not purj.)oN to be compete and is qualified in its entirety by reference to such clocinnents. All initially
ccipitali.:ed terms used herein and not otherVt,ise ckf red shall have the ieanings set,forth in the
Reimbursement Agreement.
The Borrower and the Bank will enter into a Reimbursement and Disbursement Agreement, dated
as of.luly 1, 2008 (the"Reimbursement Agreement"), which inter alia, sets forth the ten-ns and conditions
whereby the Borrower is required to repay the Bank any amounts drawn by the Trustee under the Letter
of Credit. The Bond proceeds will be disbursed to the Borrower in accordance with the conditions for
such disbursement set forth in'the Reimbursement Agreement and exhibits thereto. All capitalized terms
used below and not otherwise defined in this Appendix E shall have the meanings set forth in the
Reimbursement Agreement.
Pursuant to the Reimbursement Agreement, the Bank has issued the Letter of Credit. The
Borrower has agreed to reimburse the Bank for any payments made by the Bank to the Trustee on behalf
of the Holders of the Bonds under the Letter of Credit. In addition, the Borrower agrees, among other
things, to maintain its existence, maintain the required insurance, pay all required taxes, provide certain
Information and notices to the Bank, conduct its business in an orderly manner without voluntary
interruption and remain qualified to do business in the State of California.
The occurrence of any of the following events, among others, constitutes an Event of Default.
under the Reimbursement Agreement:
(a) Tile Borrower shall fail to repay any Reimbursement Obligation when the same shall become due
and payable; or
(b) The Borrower shall fail to pay the Annual Fee, any interest with respect to any unpaid
Reimbursement Obligation outstanding under the Reimbursement Agreement or any other sums due
under the Reimbursement Agreement or under any of the other Reimbursement Documents, when the
same shall become due and payable; or
(c) The Borrower shall fail to comply with any of its covenants contained in (i) certain provisions of
the Reimbursement Agreement or any of the covenants contained in the Security Documents or (ii)
certain provisions of the Reimbursement Agreement for fifteen (15) days after written notice of such
failure .has been given to the Borrower,by the Administrative Agent, or Guarantor shall fail to comply
with any of its covenants contained in (i) certain provisions of the Reimbursement Agreement or any of
the covenants contained in the Security Documents or (ii) certain provisions of the Reimbursement
Agreement for fifteen (15)days after written notice of such failure has been given to the Borrower and the
Guarantor by the Administrative Agent;
(d) The Borrower shall fail to perform any term, covenant or agreement contained in the
Reimbursement Agreement or in any of the other Reimbursement Documents (other than those specified
in the Reimbursement Agreement) for fifteen (15) days after written notice of such failure has been given
to the Borrower by the Administrative Agent, unless Borrower is unable to cure such default within
fifteen (15) days in which case Borrower shall have an additional fifteen (15) days to cure the default, or
Guarantor shall fail to perform any tern, covenant or agreement contained in the Reimbursement
A-reement or in any of the other Reimbursement Documents (other than those specified in the
Reimbursement Agreement) for fifteen (15) days after written notice of such failure has been given to the
Borrower and the Guarantor by the Administrative Agent, unless the Guarantor is unable to cure such
default within fifteen (15) days in which case the Guarantor shall have an additional fifteen (15) days to
cure the default;
(e) Any representation or warranty of the Borrower in the Reimbursement Agreement, any of the
other Reimbursement Documents, the Bond Documents or in any other document or instrument delivered
pursuant to or in connection with the Reimbursement Agreement 'shall prove to have been false in any
material respect upon the date when made or deemed to have been made or repeated.-
(f)
epeated;(f) The Borrower shall fail to pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received in the amount of$1001000 or more, or fail to observe or
perform any tern, covenant or agreement contained in any agreement by which it is bound, evidencing or
securing any obligation for borrowed money or credit received in the amount of$100,000 or more for
such period of time as would permit (assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate the maturity thereof, or if the
Borrower shall be in default under any agreement evidencing Indebtedness owing to the Administrative
Agent or any of the Co-Lenders;
(g) The Borrower or the Guarantor shall make an assignment for the benefit of creditors, or admit in
writin`c its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition
or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Borrower or the
Guarantor or of any substantial.part of the assets of the.Borrower or the Guarantor or shall commence any
case or other proceeding relating to the Borrower or the Guarantor under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation (and with respect to an
involuntary petition only not dismissed within ninety (90) days of filing) or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the
foregoing, or if any such petition or application shall be filed or any such case.or other proceeding shall
be commenced against the Borrower or the Guarantor and the Borrower or the Guarantor shall indicate its
approval thereof, consent thereto or acquiescence therein;
(h) A decree or order is entered appointing a trustee, custodian, liquidator or receiver or adjudicating
the Borrower or the Guarantor bankrupt or insolvent, or approving a petition in.any such case or other
proceeding, or a decree or order for relief is entered in respect of the Borrower or.the Guarantor in an
involuntary case under federal bankruptcy laws as now or hereafter constituted (and with respect to an
involuntary petition only not dismissed within ninety(90) days of filing);
(i) There shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty (30)
days, whether or not consecutive, any final judgment against the Borrower that. with other outstanding
final judgments, undischarged, against the Borrower exceeds in the aggregate $100,000.00;
(j) If any of the Reimbursement Documents or any of the Bond Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with the terns thereof or with the express
prior written agreement, consent or approval of the Administrative Agent, or any action or suit at law or
in equity or other legal proceeding to cancel, revoke or rescind any of the Reimbursement Documents or
any of the Bond Documents shall be commenced by or on behalf of the Borrower or the Guarantor, or any
of their respective stockholders, or.any court or any other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Reimbursement Documents or any of the Bond Documents is
illegal, invalid or unenforceable in accordance with the terms thereof;
(k) The Borrower or Guarantor shall be indicted for a federal crime, a punishment for which could
include the forfeiture of any assets of the Borrower having a fair market value in excess of$100,000;
E-2
(1) There shall occur an "event of default" (as defined in Any of the Bond Documents) under any of
the Bond Documents, whether or not acceleration of the maturity of the amounts due in respect of any of
the obligations thereunder shall have occurred;
(m) An Event of Taxability shall occur;
(n) if any survey required or requested by Administrative Agent pursuant to the provisions of the
Reimbursement Agreement shows any material adverse condition not approved by Administrative Agent
and such condition is not removed within one hundred twenty (120) days after written notice thereof by
Administrative Agent to Borrower.
(o) If the Improvements are not substantially completed substantially in accordance with the
provisions of the Reimbursement Agreement on or before the first day of the twenty-fourth month
followincy the date of issuance of the Letter of Credit(the "Completion Date");
(p) if construction of the Improvements is suspended for a period of forty-five (45) consecutive days
other than by reason of the occurrence of a Force Majeure Delay. or if construction of the Improvements,
in the reasonable judgment of Administrative Agent or Construction Inspector, is not carried on with
reasonable diligence;
(q) If aletter of credit, cash collateral or guaranty in lieu thereof is not kept in full force in an amount
at least equal to that required under the Reimbursement Agreement;
(r) The failure of the issuer of the Equity Letter of Credit to honor a draw on the applicable letter of
credit; or the expiration or termination of the applicable letter of credit prior to the then Scheduled
Expiration Date and any extension thereof;
(s) If, without the approval of Administrative Agent (such approval not to be unreasonably
withheld), Borrower executes any chattel mortgage or other security agreement with respect to any
materials, equipment, furniture or fixtures used in the construction of the Improvements or the operation
of the improvements or with respect to any articles of personal properly constituting part of the Property, .
or if any such materials, equipment, furniture, fixtures or articles of personal property are not substantial])-
in accordance with the Plans or are leased or purchased pursuant to any conditional sales contract or other
security agreement or otherwise so that.the ownership thereof will not vest unconditionally in Borrower
free from encumbrances upon being made a part of the Property other than the Issuer Deed of Trust and
the Agency Deed of Trust;
(t) If the Guarantor shall disclaim all or any portion of its obligations pursuant to its Guaranty or
shall otherwise be in material default, beyond the expiration of any applicable grace and cure periods,
under its Guaranty;
(u) If any Bond proceeds on deposit in any funds or accounts established under the indenture shall
become subject to any writ. judgment, warrant or attachment, and such writ, judgment. warrant or
attachment shall not be released or bonded within ten (10) days, or any such funds shall be seized or
executed upon by any person;
(v) if there shall occur a default by Borrower which is not cured within the applicable grace period, if
any, under any loan, load agreement or other credit-related agreement to which Borrower is a party:
(w) If Borrower shall be in default beyond any applicable grace or cure period in the perfonnance of
its obligations under the Ground Lease or if the Ground Lease shall be terminated;
E-3
(x) If Borrower shall be in default beyond any applicable grace or cure period in performance of its
obligations under the Ground Sublease or if the Ground Sublease shall be terminated;
(y) There shall occur a default under any of the Development Agreements;
(z) If any bonded notice to withhold funds is served on the Administrative Agent in accordance with
the provisions of applicable California law or similar provisions and within twenty (20) days of the
receipt of such notice the claim set forth therein is not discharged or, if the amount claimed is disputed in
good faith by Borrower or Contractor, an appropriate counter bond or equivalent acceptable to Bank is
filed with Bank; then, and in any such event, so long as the same may be continuing, the Administrative
Agent may by notice in writing to the Borrower (1) declare all amounts owing with respect to the
Reimbursement Agreement and the other Reimbursement Documents to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand, protest or other notice of
any kind, all of which are thereby expressly waived by the Borrower and (2) require the Borrower to
immediately pay to the Administrative Agent a cash amount equal to the maximum aggregate amount that
the beneficiary under the Letter of Credit may then draw thereunder plus any unreimbursed draws under
the Letter of Credit with interest, if applicable, which cash amount shall be held by the Administrative
Agent as cash collateral for all Reimbursement Obligations; provided that in the event of any Event of
Default described in paragraphs (g) or (h) above, all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the Administrative Agent.
In case any one or more of the Events of Default shall have occurred and be continuing, and whether or
not the Administrative Agent shall have accelerated the maturity. of the Obligations and required the
payment of cash collateral,the Bank may proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in the Reimbursement Agreement and the other Reimbursement Documents or any
instrument pursuant to which the Obligations to the Administrative Agent are evidenced, including as
permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Administrative Agent. Furthermore, except as otherwise described in the
preceding sentence, upon the occurrence of any Event of Default and for so long as such Event of Default
shall be continuing, Administrative Agent may, at its option and in its sole and absolute discretion take
one or more of the following actions:
(a) declare the indebtedness evidenced and secured by the Deed of Trust immediately due and
payable,
(b) instruct Trustee pursuant to the Indenture to send a mandatory redemption notice for all or a
portion of' the Bonds and to take all action necessary under the Indenture to effect such mandatory
redemption;
(c) direct Trustee pursuant to the Indenture to call all of the Bonds for mandatory purchase by Bank
and to take all action necessary under the Indenture to effect such mandatory purchase;
(d) cease authorizing Trustee to make Advances to Borrower;
(e) declare the Obligations to be immediately due and payable;
(f) pursue any and all remedies provided for in the Reimbursement Documents, or otherwise
available at law.or in equity;
(g) require Borrower to purchase from Bank all Bonds purchased by Bank in accordance with the
Indenture for a purchase price equal to the price paid by Bank for such Bonds; or
E-4
(h) pursue any combination of the foregoing to the full extent not mutually exclusive. No remedy
herein conferred upon the Administrative Agent is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other remedy given under the
Reimbursement Agreement or now or hereafter existing at law or in equity or by statute or any other
provision of law.
E-5
APPENDIX F
PROPOSED FORM OF BOND COUNSEL OPINIONS
APPENDIX G
PRIOR BOND COUNSEL OPINION
APPENDIX H
FORM OF LETTER OF CREDIT