HomeMy WebLinkAboutMINUTES - 07102012 - C.101RECOMMENDATION(S):
ADOPT Resolution 2012/306 authorizing the issuance of Multifamily Housing Revenue Bonds in an amount not to
exceed $12,777,000 to finance the acquisition and construction of Lafayette Senior Housing in Lafayette, and actions
related thereto.
FISCAL IMPACT:
None. At bond closing, the County is reimbursed for costs incurred during the issuance process. Annual expenses for
monitoring of Regulatory Agreement provisions are provided for in the bond issue. The bonds will be solely secured
by a pledge of revenues (rents, reserves, etc.) pledged under the bond documents. No County funds are pledged to
secure the bonds.
BACKGROUND:
Lafayette Senior Housing located at 3428 Mount Diablo Boulevard in Lafayette, is a 46-unit senior housing
development including 45 units affordable to seniors with incomes between 20-50% of the area median income. The
project has numerous amenities including a fitness center, community room, library/computer room, services office
and courtyards. It is located within Lafayette's
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 07/10/2012 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II
Supervisor
Mary N. Piepho, District III
Supervisor
Karen Mitchoff, District IV
Supervisor
Federal D. Glover, District V
Supervisor
Contact: Kristen Lackey,
925-674-7888
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the
Board of Supervisors on the date shown.
ATTESTED: July 10, 2012
David Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
C.101
To:Board of Supervisors
From:Catherine Kutsuris, Conservation and Development Director
Date:July 10, 2012
Contra
Costa
County
Subject:Bond Sale Resolution - Lafayette Senior Housing, Lafayette
BACKGROUND: (CONT'D)
revitalization area, and 1/8 of a mile from the new Lafayette Public Library and Resource Center. The City of
Lafayette supports the project.
The ownership entity will be Lafayette Senior, L.P., a California limited partnership with Lafayette Senior LLC
serving as managing general partner. Lafayette Senior LLC is wholly owned by Eden Housing Investments, Inc., a
local non-profit housing developer that successfully manages several affordable housing projects in Contra Costa
County.
On February 28, 2012, the Board of Supervisors adopted an Inducement Resolution (a nonbinding conditional
statement of intent to issue multi-family bonds) for the project as required by tax law. The Inducement Resolution
authorized the submittal of an application by the County for Private Activity Bond Authority. Subsequent to the
Inducement Resolution, the County, as required by Section 147(f) of Internal Revenue Code, held a noticed public
hearing to permit interested parties to comment on the project. This hearing was held on February 29, 2012. No
comments were received. The Board adopted Resolution No. 2012/93 on March 13, 2012 to authorize proceeding
with an issuance of bonds pursuant to Section 147(f) of the Internal Revenue Code.
On May 16, 2012 the California Debt Limit Allocation Committee awarded the County authority to issue bonds in
the amount of $12,777,000. In addition to Multifamily Mortgage Revenue Bonds, the project will utilize several
other forms of financing detailed in Attachment A. The proceeds of the bonds will finance the loan for Lafayette
Senior Housing. The bonds will be directly placed with Banc of America Public Capital Corp, who in turn will
issue a loan at tax exempt rates to Lafayette Senior, L.P. The bond counsel for this transaction is Quint &
Thimmig LLP.
The recommended action is to adopt Bond Sale Resolution No. 2012/306 which would authorize the issuance of
$12,777,000 in tax-exempt bonds to finance the acquisition and construction of Lafayette Senior Housing in
Lafayette. The proposed bond sale resolution authorizes a number of actions, a summary of which is listed in
Attachment B.
CONSEQUENCE OF NEGATIVE ACTION:
Negative action would prevent the sale of Multifamily Housing Revenue bonds in order to provide a loan to
Lafayette Senior, L.P. to finance the acquisition and construction of Lafayette Senior Housing, a 46-unit
affordable senior housing development, located at 3428 Mount Diablo Boulevard in Lafayette. The loss of bond
financing could jeopardize the project's feasibility.
CHILDREN'S IMPACT STATEMENT:
Not applicable.
ATTACHMENTS
Resolution No. 2012/306
Lafayette Sr Bond Sale Bd Order Att A
Lafayette Sr Bond Sale Bd Order Att B
Lafayette Sr Bond Sale Bd Order Att C
Lafayette Sr Bond Sale Bd Order Att D
Lafayette Sr Bond Sale Bd Order Att E
Attachment A
Lafayette Senior Housing
Multifamily Housing Revenue Bond
Plan of Finance
Tax Exempt Bonds* 12,777,000$
California Housing & Community Development/MHP 4,572,660$
County CDBG/HOME 3,005,000$
City RDA Loan 3,500,000$
4% Low Income Housing Tax Credits 8,065,075$
Federal Home Loan Bank Affordable Housing Program 450,000$
General Partner Equity 888,303$
Deferred Developer Fee 469,697$
Total 33,727,735$
*A portion of the tax-exempt bonds will be defeased at construction close by funding from the
Tax Credit Equity Investor, MHP, & General Partner equity .
July 10, 2012 Contra Costa County Board of Supervisors 782
G:\CDBG-REDEV\MF MRB\Lafayette Senior\Bond Sale Resolution\Lafayette Bd Ord Att B Summary of Resolution.doc
Attachment B
Summary of Actions – Bond Sale Resolution of July 10, 2012
1. Authorizes the issuance of County of Contra Costa Multifamily Housing Revenue
Bonds (Lafayette Senior Housing), Series 2012A in an amount not to exceed
$12,777,000 to finance the acquisition and construction of Lafayette Senior
Housing in Lafayette;
2. Approves the form of the Indenture of Trust between the County of Contra Costa
and U.S. Bank National Association, as trustee,
3. Approves the form of the Loan Agreement between the County of Contra Costa,
U.S. Bank National Association, as trustee, and Lafayette Senior, L.P., as
developer;
4. Approves the form of the Regulatory Agreement and Declaration of Restrictive
Covenants between the County of Contra Costa and Lafayette Senior, L.P., as
developer;
5. Directs U.S. Bank National Association, as trustee, to authenticate and deliver
the Bonds to Banc of America Public Capital Corp, as purchaser of the Bonds.
6. Appoints Quint & Thimmig LLP as bond counsel for the transaction.
July 10, 2012 Contra Costa County Board of Supervisors 783
Quint & Thimmig LLP
03007.25:J11737
TRUST INDENTURE
by and between the
COUNTY OF CONTRA COSTA, CALIFORNIA
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
Dated as of August 1, 2012
Relating to:
$__________
County of Contra Costa
Multifamily Housing Revenue Bonds
(Lafayette Senior Housing),
Series 2012A
July 10, 2012 Contra Costa County Board of Supervisors 784
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.01Definitions ................................................................................................................................................. 4
Section 1.02Construction............................................................................................................................................ 16
ARTICLE II
REPRESENTATIONS AND COVENANTS OF THE ISSUER
Section 2.01Representations by the Issuer ............................................................................................................... 17
Section 2.02Covenants of the Issuer.......................................................................................................................... 17
ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.01Authorization of Bonds.......................................................................................................................... 19
Section 3.02Conditions Precedent to Authentication and Delivery of Bonds..................................................... 19
Section 3.03Registered Bonds.................................................................................................................................... 20
Section 3.04Loss, Theft, Destruction or Mutilation of Bonds ................................................................................20
Section 3.05Terms of Bonds – General...................................................................................................................... 21
Section 3.06Interest on the Bonds.............................................................................................................................. 21
Section 3.07Payment of Interest on the Bonds......................................................................................................... 23
Section 3.08Execution and Authentication of Bonds.............................................................................................. 23
Section 3.09Negotiability, Transfer and Registry of Bonds ...................................................................................24
Section 3.10Ownership of Bonds............................................................................................................................... 26
Section 3.11Payments on Bonds Due on Non-Business Days............................................................................... 26
Section 3.12Registration of Bonds in the Book-Entry Only System...................................................................... 26
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01Mandatory Redemption......................................................................................................................... 29
Section 4.02Redemption Price of Bonds Redeemed Pursuant to Mandatory Redemption............................... 30
Section 4.03Optional Redemption............................................................................................................................. 30
Section 4.04Purchase in Lieu of Redemption........................................................................................................... 30
Section 4.05Notice of Redemption............................................................................................................................ 30
Section 4.06Selection of Bonds To Be Redeemed .................................................................................................... 31
Section 4.07Partial Redemption of Registered Bonds............................................................................................. 31
ARTICLE V
ESTABLISHMENT OF CERTAIN FUNDS AND ACCOUNTS, APPLICATION THEREOF AND SECURITY
THEREFOR
Section 5.01Establishment of Funds and Accounts; Application of Proceeds of the Bonds; and Other
Amounts............................................................................................................................................... 33
Section 5.02Project Fund............................................................................................................................................. 34
Section 5.03Use of Moneys Following Stabilization............................................................................................... 35
Section 5.04Condemnation Awards and Insurance Proceeds............................................................................... 35
Section 5.05Replacement Reserve Fund and Operating Reserve Fund ............................................................... 36
Section 5.06Tax and Insurance Fund........................................................................................................................ 36
Section 5.07Revenue Fund ......................................................................................................................................... 37
Section 5.08Rebate Fund............................................................................................................................................. 38
Section 5.09Moneys Held in Trust; Investment of Moneys................................................................................... 39
Section 5.10Investment Earnings............................................................................................................................... 39
Section 5.11Covenants Respecting Arbitrage and Rebate......................................................................................40
July 10, 2012 Contra Costa County Board of Supervisors 785
Section 5.12Records..................................................................................................................................................... 40
Section 5.13Reports From the Trustee...................................................................................................................... 40
ARTICLE VI
DEFAULT PROVISIONS; REMEDIES
Section 6.01Events of Default..................................................................................................................................... 41
Section 6.02Remedies.................................................................................................................................................. 41
Section 6.03Additional Remedies and Enforcement of Remedies........................................................................ 42
Section 6.04Application of Revenues and Other Moneys After Default.............................................................. 42
Section 6.05Remedies Not Exclusive ........................................................................................................................ 43
Section 6.06Remedies Vested in Trustee and Servicer ........................................................................................... 43
Section 6.07Individual Bond Owners Action Restricted........................................................................................44
Section 6.08Termination of Proceedings.................................................................................................................. 44
Section 6.09Waiver and Non-Waiver of Event of Default ..................................................................................... 44
Section 6.10Servicer Controls Proceedings.............................................................................................................. 44
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01Trustee; Appointment and Acceptance of Duties .............................................................................. 46
Section 7.02Responsibilities of Trustee..................................................................................................................... 46
Section 7.03Evidence on Which Trustee May Act................................................................................................... 47
Section 7.04Compensation; No Trustee Liens......................................................................................................... 48
Section 7.05Certain Permitted Acts........................................................................................................................... 48
Section 7.06Resignation of Trustee............................................................................................................................ 48
Section 7.07Removal of Trustee................................................................................................................................. 48
Section 7.08Appointment of Successor Trustee; Temporary Trustee................................................................... 48
Section 7.09Transfer of Rights and Property to Successor Trustee....................................................................... 48
Section 7.10Merger or Consolidation of Trustee..................................................................................................... 49
Section 7.11Servicer..................................................................................................................................................... 49
ARTICLE VIII
AMENDMENTS AND SUPPLEMENTAL INDENTURES; AMENDMENTS OF ISSUER DOCUMENTS
Section 8.01Supplemental Indentures Not Requiring Consent of Owners of Bonds......................................... 50
Section 8.02Supplemental Indentures Requiring Consent of Owners of Bonds................................................. 50
Section 8.03Reliance on Opinion of Counsel........................................................................................................... 51
Section 8.04Consents Required.................................................................................................................................. 51
Section 8.05Amendments of Loan Documents Not Requiring Consent of Owners of Bonds.......................... 51
Section 8.06Amendments of Loan Documents Requiring Consent of Owners of Bonds.................................. 52
ARTICLE IX
DISCHARGE
Section 9.01Discharge of Indenture .......................................................................................................................... 53
Section 9.02Discharge by Delivery ............................................................................................................................ 53
Section 9.03Discharge by Deposit............................................................................................................................. 53
ARTICLE X
MISCELLANEOUS
Section 10.01Evidence of Signatures of Bond Owners and Ownership of Bonds .............................................. 55
Section 10.02Bonds Not an Obligation of the State or Any Political Subdivision; Limited Liability of Issuer55
Section 10.03Preservation and Inspection of Documents...................................................................................... 57
Section 10.04Parties Interested Herein..................................................................................................................... 57
Section 10.05No Recourse on the Bonds .................................................................................................................. 57
Section 10.06Severability of Invalid Provisions....................................................................................................... 57
Section 10.07Successors.............................................................................................................................................. 57
July 10, 2012 Contra Costa County Board of Supervisors 786
Section 10.08Notices, Demands and Requests ........................................................................................................ 57
Section 10.09Applicable Law..................................................................................................................................... 58
Section 10.10Table of Contents and Section Headings Not Controlling.............................................................. 58
Section 10.11Exclusion of Bonds ............................................................................................................................... 58
Section 10.12Effective Date........................................................................................................................................ 58
Section 10.13.Execution in Several Counterparts.................................................................................................... 58
EXHIBIT A FORM OF BOND
EXHIBIT B FORM OF INVESTOR LETTER
EXHIBIT C FORM OF REDEMPTION SCHEDULE
EXHIBIT D FORM OF REQUISITION
July 10, 2012 Contra Costa County Board of Supervisors 787
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TRUST INDENTURE
This TRUST INDENTURE, dated as of August 1, 2012 (this “Indenture”), is by and
between the COUNTY OF CONTRA COSTA, CALIFORNIA, a political subdivision and body
corporate and politic of the State of California (the “Issuer”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under and by virtue of
the laws of the United States of America and being duly qualified to accept and administer the
trusts created hereby, as trustee (the “Trustee”),
RECITALS:
WHEREAS, the Issuer is authorized under the provisions of Chapter 7 of Part 5 of
Division 31 of the California Health and Safety Code, as amended (the “Act”), to finance
multifamily rental housing by issuing its revenue bonds to provide funds for the cost of the
acquisition, construction and permanent financing thereof; and
WHEREAS, Lafayette Senior, L.P., a California limited partnership (the “Borrower”),
has applied to the Issuer for financial assistance for the purpose of providing part of the funds
with which to pay the cost of the acquisition, construction and equipping of a 46-unit
multifamily rental housing project in Lafayette, California, currently known as Lafayette Senior
Apartments (the “Project”); and
WHEREAS, the provision of the Loan (as hereinafter defined),is authorized by the Act
and will accomplish a valid public purpose of the Issuer, and the Issuer has determined that it is
in the public interest to issue its Multifamily Housing Revenue Bonds (Lafayette Senior
Housing), Series 2012A in the aggregate principal amount of $__________ (the “Bonds”) for the
purpose of providing funding necessary for the acquisition, construction and equipping of the
Project; and
WHEREAS, pursuant to a Loan Agreement dated as of even date herewith (the “Loan
Agreement”) among the Issuer, the Trustee and the Borrower, the Issuer has agreed to issue the
Bonds and lend the proceeds thereof to the Borrower (the “Loan”) and the Borrower has agreed
to (i) apply the proceeds of the Loan to pay a portion of the costs of the acquisition, construction
and equipping of the Project, (ii) make payments sufficient to pay the principal of and interest
on the Bonds when due (whether at maturity, by redemption, acceleration or otherwise), and
(iii) observe the other covenants and agreements and make the other payments set forth therein;
and
WHEREAS, the Borrower has delivered to the Trustee, on behalf of the Issuer, its
promissory note dated the date of issuance of the Bonds in an original principal amount equal
to the aggregate original principal amount of the Bonds (as amended, modified or
supplemented from time to time, the “Note”) evidencing its obligation to repay the Loan, and
the Issuer has made the Loan to the Borrower, subject to the terms and conditions of the Loan
Agreement and this Indenture; and
July 10, 2012 Contra Costa County Board of Supervisors 788
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WHEREAS, to secure its obligations under the Loan Agreement and the Note, the
Borrower has executed (i) a Construction Deed of Trust with Assignment of Rents, Security
Agreement and Fixture Filing (as amended, modified or supplemented from time to time, the
“Mortgage”), (ii) an Assignment of Deed of Trust and Related Documents (as amended,
modified or supplemented from time to time, the “Assignment of Mortgage”), (iii) an
Assignment of Contracts, Plans and Specifications (as amended, modified or supplemented
from time to time, the “Assignment of Project Documents”) and (iv) an Assignment of Tax
Credits and Capital Contributions (as amended, modified or supplemented from time to time,
the “Security Agreement”), each dated as of even date with this Indenture, for the benefit of the
Issuer, as secured party.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual promises,
representations and agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
GRANTING CLAUSES
The Issuer, in consideration of the premises, the acceptance by the Trustee of the trusts
hereby created, the purchase and acceptance of the Bonds by the Owners thereof, and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to secure the payment of the principal of and interest on the Bonds
according to their tenor and effect, and to secure the performance and observance by the Issuer
of all the covenants, agreements and conditions herein and in the Bonds contained, does hereby
transfer, pledge and assign, without recourse, to the Trustee and its successors and assigns in
trust forever, and does hereby grant a security interest unto the Trustee and its successors in
trust and its assigns, in and to all and singular the property described in paragraphs (a), (b) and
(c) below (said property being herein referred to as the “Trust Estate”), to wit:
(a) all right, title and interest of the Issuer in and to the Note, the Mortgage,
the Assignment of Mortgage, the Assignment of Project Documents, the Security
Agreement and the other Loan Documents (as that term is defined below), and all
moneys from time to time paid by the Borrower pursuant to the terms of the Loan
Documents and all right, title and interest of the Issuer (including, but not limited to, the
right to enforce any of the terms thereof) under and pursuant to and subject to the
provisions of the Loan Agreement (but excluding the Reserved Rights as defined in the
Loan Agreement); and
(b) all other moneys and securities from time to time held by the Trustee
under the terms of this Indenture, excluding amounts required to be rebated to the
United States Treasury under Section 148(f) of the Code, whether or not held in the
Rebate Fund; and
(c) any and all property (real, personal or mixed) of every kind and nature
from time to time hereafter, by delivery or by writing of any kind, pledged, assigned or
July 10, 2012 Contra Costa County Board of Supervisors 789
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transferred as and for additional security hereunder to the Trustee, which the Trustee is
hereby authorized to receive at any and all times and to hold and apply the same subject
to the terms of this Indenture.
TO HAVE AND TO HOLD, all and singular, the Trust Estate with all rights and
privileges hereby transferred, pledged, assigned and/or granted or agreed or intended so to be,
to the Trustee and its successors and assigns in trust forever;
IN TRUST NEVERTHELESS, upon the terms and conditions herein set forth for the
equal and proportionate benefit, security and protection of all present and future Owners of the
Bonds Outstanding, without preference, priority or distinction as to participation in the lien,
benefit and protection of this Indenture of one Bond over or from the others, except as herein
otherwise expressly provided;
PROVIDED, NEVERTHELESS, and these presents are upon the express condition, that
if the Issuer or its successors or assigns shall well and truly pay or cause to be paid the principal
of the Bonds with interest, according to the provisions set forth in the Bonds, or shall provide
for the payment or redemption of the Bonds by depositing or causing to be deposited with the
Trustee the entire amount of funds or securities requisite for payment or redemption thereof
when and as authorized by the provisions of Article IX (it being understood that any payment
with respect to the principal of or interest on Bonds made by the Borrower shall not be deemed
payment or provision for the payment of the principal of or interest on Bonds, except Bonds
purchased and canceled by the Trustee, all such uncanceled Bonds to remain Outstanding and
the principal of and interest thereon payable to the Owners thereof), and shall also pay or cause
to be paid all other sums payable hereunder by the Issuer, then these presents and the estate
and rights hereby granted shall cease, terminate and become void, and thereupon the Trustee,
on payment of its lawful charges and disbursements then unpaid, on demand of the Issuer and
upon the payment by the Borrower of the cost and expenses thereof, shall duly execute,
acknowledge and deliver to the Issuer such instruments of satisfaction or release as may be
necessary or proper to discharge this Indenture of record, and if necessary shall grant, reassign
and deliver to the Issuer all and singular the property, rights, privileges and interests by it
hereby granted, conveyed and assigned, and all substitutes therefor, or any part thereof, not
previously disposed of or released as herein provided; otherwise this Indenture shall be and
remain in full force;
THIS INDENTURE FURTHER WITNESSETH, and it is hereby expressly declared,
covenanted and agreed by and between the parties hereto, that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered and that all the Trust Estate is to be
held and applied under, upon and subject to the terms, conditions, stipulations, covenants,
agreements, trusts, uses and purposes as hereinafter expressed, and the Issuer does hereby
agree and covenant with the Trustee, for the benefit of the respective Owners from time to time
of the Bonds as follows:
July 10, 2012 Contra Costa County Board of Supervisors 790
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.01 Definitions. The following capitalized terms, as used in this Indenture,
shall have the meanings specified below unless the context otherwise shall require. All other
capitalized terms which are defined in the Loan Agreement and not defined herein shall have
the respective meanings ascribed to them in the Loan Agreement.
“Accounts” means the accounts established pursuant to Section 5.01 hereof.
“Act” has the meaning set forth for that term in the Recitals above.
“Additional Interest” means an amount equal to the excess of (i) the amount of interest
an Owner (other than an Owner who is a “substantial user” of the Project or a “related person”
to a “substantial user,” as defined in Section 147(a) of the Code) would have received during the
period of time commencing on the date that the interest on the Bonds becomes subject to federal
income taxation, to the earlier of the date of the payment of the Bonds or the date of a
Determination of Taxability (excluding from such period any time in which the tax on such
interest is uncollectible) at a per annum rate equal to the Taxable Rate, over (ii) the aggregate
amount of interest received by an Owner for said period.
“Affiliates” or “Affiliate” means, if with respect to an entity, (i) any manager, member,
officer or director thereof and any Person who or which is, directly or indirectly, the beneficial
owner of more than 10% of any class of shares or other equity security of such entity, or (ii) any
Person which, directly or indirectly, controls or is controlled by or is under common control
with such entity. Control (including the correlative meanings of “controlled by” and “under
common control with”) means effective power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person. With respect to a partnership or
venture, “Affiliate” shall include, without limitation, any (i) general partner, (ii) general partner
of a general partner, or (iii) partnership with a common general partner, and if any general
partner is a corporation, any Person which is an “Affiliate” (as defined above) of such
corporation. With respect to a limited liability company, “Affiliate” shall include, without
limitation, any member of such entity.
“Alternative Rate” means the lower of (i) 4% in excess of the rate of interest payable on
the Bonds or (ii) 12% per annum; provided that such rate shall in no event exceed the maximum
rate allowed by law.
“Assignment of Mortgage” has the meaning set forth for that term in the Recitals above
“Assignment of Project Documents” has the meaning set forth for that term in the
Recitals above.
“Authorized Denomination” means $250,000, and any amount in excess of $250,000,
but not in excess of the aggregate principal amount of Bonds then Outstanding.
July 10, 2012 Contra Costa County Board of Supervisors 791
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“Authorized Representative” means, (i) with respect to the Issuer, any person or
persons designated to act on behalf of the Issuer by a certificate filed with the Borrower, the
Trustee and the Servicer containing the specimen signatures of such person or persons and
signed on behalf of the Issuer by its Chair, Vice Chair, County Administrator, Director of
Conservation and Development or Affordable Housing Program Manager; (ii) with respect to
the Borrower, any person or persons designated to act on behalf of the Borrower by a certificate
filed with the Issuer, the Trustee and the Servicer containing the specimen signatures of such
person or persons and signed by the __________ of the General Partner of the Borrower or by
another Authorized Representative of the Borrower; and (iii) with respect to the Servicer, any
person or persons designated to act on behalf of the Servicer by a certificate filed with the
Borrower, the Issuer and the Trustee, containing the specimen signatures of such person or
persons and signed on behalf of the Servicer by its President, Vice President or Secretary. Each
such certificate may designate an alternate or alternates, each of whom shall be entitled to
perform all duties and exercise all powers of an Authorized Representative.
“Bank” means Banc of America Public Capital Corp, a Kansas corporation, its successors
and assigns.
“BBA LIBOR Daily Floating Rate” means a variable rate of interest per annum equal to
the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as selected by the Servicer
from time to time) as determined for each Business Day at approximately 11:00 a.m. London
time two (2) London Banking Days prior to the date in question, for U.S. Dollar deposits (for
delivery on the first day of such interest period) with a one month term, as adjusted from time
to time in the Servicer’s sole discretion for reserve requirements, deposit insurance assessment
rates and other regulatory costs. If such rate is not available in such time for any reason, then
the rate will be determined by such alternate method as reasonably selected by the Servicer. A
“London Banking Day” is a day on which banks in London are open for business and dealing
in offshore dollars. Interest at such rate shall be computed for the actual number of days which
have elapsed, on the basis of a 360-day year.
“Bond” or “Bonds” has the meaning set forth for that term in the Recitals above.
“Bond Counsel” means Quint & Thimmig LLP, or any other attorney or firm of
attorneys of nationally recognized standing in the field of municipal finance law whose
opinions are generally accepted by purchasers of tax-exempt obligations and who is acceptable
to the Issuer and the Servicer.
“Bond Payment Date” means each date on which principal or redemption price or
interest shall be payable on any of the Bonds according to their respective terms.
“Borrower” has the meaning set forth for that term in the Recitals above.
“Borrower’s Tax Certificate” means the Tax Agreement, and the related Certificate
Regarding Use of Proceeds, each executed by the Borrower (and, in the case of the Tax
Agreement, executed by the Issuer) on the Closing Date in which the Borrower confirms various
facts relating to the Project which bear on the exclusion of interest on the Bonds from gross
July 10, 2012 Contra Costa County Board of Supervisors 792
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income for purposes of federal income taxation, and in which the Borrower agrees to certain tax
compliance procedures.
“Business Day” means a day of the year which is not a Saturday or Sunday or any other
day on which banks located in the city of New York, New York and banks located in the city in
which the Principal Office of the Trustee is located are required or authorized by law to remain
closed and on which The New York Stock Exchange is not closed.
“Calculation Period” means the period commencing upon the first day of each month
and ending on (and including) the last day of such month.
“Capitalized Interest Account” means the account of that name established in the
Project Fund pursuant to Section 5.01 of this Indenture.
“Closing Date” means August __, 2012, being the date of issuance of the Bonds.
“Code” means the Internal Revenue Code of 1986, as amended, together with all
corresponding and applicable final or temporary regulations and revenue rulings issued or
promulgated thereunder.
“Completion” has the meaning set forth for that term in the Construction Disbursement
Agreement.
“Completion Deadline” has the meaning set forth for that term in the Construction
Disbursement Agreement, as it may be amended from time to time.
“Condemnation Award” means the total condemnation proceeds actually paid by the
condemnor as a result of the condemnation of all or any part of the property subject to the
Mortgage less the actual costs incurred, including attorneys’ fees, in obtaining such award.
“Construction Disbursement Agreement” means the Construction Disbursement
Agreement dated as of even date with this Indenture, between the Borrower and Bank, as the
same may be supplemented, amended or modified.
“Control,” “Controlled” and “Controlling” means, with respect to any Person, either (i)
ownership directly or indirectly of more than 50% of all beneficial equity interest in such
Person, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, through the ownership of voting securities, by
contract or otherwise.
“Conversion Date” means the earlier of (a) the Interest Date immediately following the
Stabilization Date, or (b) August 1, 2014.
“Costs of Issuance” means “issuance costs” with respect to the Bonds within the
meaning of Section 147(g) of the Code.
July 10, 2012 Contra Costa County Board of Supervisors 793
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“Costs of Issuance Account” means the account of that name established within the
Project Fund pursuant to Section 5.01 of this Indenture.
“Counsel” means an attorney or firm of attorneys acceptable to the Trustee and the
Servicer, and may, but need not, be Bond Counsel, or counsel to the Issuer, the Servicer or the
Borrower.
“Determination of Taxability” means (i) a determination by the Commissioner of the
Internal Revenue Service, (ii) a private ruling or Technical Advice Memorandum issued by the
National Office of the Internal Revenue Service, (iii) a determination by any court of competent
jurisdiction, or (iv) receipt by the Trustee, at the request of the Servicer, of an opinion of Bond
Counsel, in each case to the effect that the interest on the Bonds is includable in gross income
for federal income tax purposes of the Owners thereof or any former Owner thereof, other than
an Owner who is a “substantial user” (within the meaning of Section 147(a) of the Code) of the
Project or a “related person” (as defined in Section 147(a) of the Code); provided that no such
Determination of Taxability under clause (i), (ii) or (iii) shall be deemed to have occurred if (a)
the Borrower and the Servicer have been afforded the opportunity to contest such
determination, and (b) if the Borrower or the Servicer has elected to contest such determination
in good faith and is proceeding with all applicable dispatch to prosecute such contest until the
earliest of (A) a final determination from which no appeal may be taken with respect to such
determination, or (B) abandonment of such appeal by the Borrower or the Servicer.
“Environmental Indemnity” means the Borrower Indemnity Agreement dated as of
even date herewith, from the Borrower for the benefit of the Trustee, as the same may be
modified, supplemented or amended from time to time.
“Equity Account” means the account of that name established within the Project Fund
pursuant to Section 5.01 of this Indenture.
“Event of Default” means any of those events defined as Events of Default by Section
6.01 of this Indenture.
“Fixed Rate” means __________ percent (____%) per annum.
“Fixed Rate Period” means the period commencing on the Conversion Date and ending
on (and including) the day before the Reset Date.
“Funds” means the funds established pursuant to Section 5.01 hereof.
“Government Obligations” means direct obligations of, or obligations guaranteed by,
the United States of America.
“Indenture” has the meaning set forth for that term in the Recitals above.
“Initial Notification of Taxability” means the receipt by Trustee or any Owner of a
communication from the Internal Revenue Service or any court of competent jurisdiction to the
July 10, 2012 Contra Costa County Board of Supervisors 794
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effect that the exclusion of interest on the Bonds from the gross income of the Owners, for
federal income tax purposes, will not continue in effect.
“Insurance and Condemnation Proceeds Account” means the account of that name
established within the Project Fund pursuant to Section 5.01 of this Indenture.
“Insurance Proceeds” means the total proceeds of insurance actually paid or payable by
an insurance company in respect of the required insurance on the Project, less the actual costs
incurred, including attorneys’ fees, in the collection of such proceeds.
“Interest Payment Date” means the first day of each month commencing with the
month following the month in which the Closing Date occurs.
“Investment Securities” means any one or more of the following investments, if and to
the extent the same are then legal investments under the applicable laws of the State for moneys
proposed to be invested therein:
(a) Bonds or other obligations of the State or bonds or other obligations, the
principal of and interest on which are guaranteed by the full faith and credit of the State;
(b) Bonds or other obligations of the United States or of subsidiary
corporations of the United States Government which are fully guaranteed by such
government;
(c) Obligations of agencies of the United States Government issued by the
Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank,
and the Central Bank for Cooperatives;
(d) Bonds or other obligations issued by any public housing agency or
municipality in the United States, which bonds or obligations are fully secured as to the
payment of both principal and interest by a pledge of annual contributions under an
annual contributions contract or contracts with the United States government, or project
notes issued by any public housing agency, urban renewal agency, or municipality in
the United States and fully secured as to payment of both principal and interest by a
requisition, loan, or payment agreement with the United States government;
(e) Certificates of deposit of national or state banks which have deposits
insured by the Federal Deposit Insurance Corporation and certificates of deposit of
federal savings and loan associations and state building and loan associations which
have deposits insured by the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation, including the certificates of deposit of any bank, savings and
loan association, or building and loan association acting as depositary, custodian, or
trustee for any such bond proceeds. The portion of such certificates of deposit in excess
of the amount insured by the Federal Deposit Insurance Corporation or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation, if any, shall
be secured by deposit, with the Federal Reserve Bank of San Francisco, California, or
with any national or state bank or federal savings and loan association or state building
July 10, 2012 Contra Costa County Board of Supervisors 795
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and loan or savings and loan association, of one or more the following securities in an
aggregate principal amount equal at least to the amount of such excess: direct and
general obligations of the State or of any county or municipal corporation in the State,
obligations of the United States or subsidiary corporations included in paragraph (ii)
hereof, obligations of the agencies of the United States Government included in
paragraph (iii) hereof, or bonds, obligations, or project notes of public housing agencies,
urban renewal agencies, or municipalities included in paragraph (iv) hereof;
(f) Interest-bearing time deposits, repurchase agreements, reverse
repurchase agreements, rate guarantee agreements, or other similar banking
arrangements with a bank or trust company having capital and surplus aggregating at
least $50 million or with any government bond dealer reporting to, trading with, and
recognized as a primary dealer by the Federal Reserve Bank of New York having capital
aggregating at least $50 million or with any corporation which is subject to registration
with the Board of Governors of the Federal Reserve System pursuant to the
requirements of the Bank Holding Company Act of 1956 and whose unsecured or
uncollateralized long-term debt obligations of which are rated in the one of the two
highest letter rating categories of S&P or Moody’s or whose unsecured and
uncollateralized short-term debt obligations are rated in one of the two highest letter
rating categories of S&P or Moody’s at the time of purchase, provided that each such
interest-bearing deposit, repurchase agreement, reverse repurchase agreement,
guarantee agreement, or other similar banking arrangement shall permit the moneys so
placed to be available for use at the time provided with respect to the investment or
reinvestment of such moneys;
(g) Any and all other obligations of investment grade and having a
nationally recognized market, including, but not limited to, rate guarantee agreements,
guaranteed investment contracts, or other similar arrangements offered by any firm,
agency, business, governmental unit, bank, insurance company or other entity;
provided, that each such obligation shall permit moneys so placed to be available for use
at the time provided with respect to the investment or reinvestment of such moneys;
(h) Shares of a money market mutual fund or other collective investment
fund registered under the Investment Company Act of 1940, whose shares are registered
under the Securities Act of 1933, having assets of at least $100,000,000 and rated in the
one of the two highest letter rating categories of S&P or Moody’s; and
(i) Any other investment approved in writing by the Servicer.
“Investor Limited Partner” means Union Bank, N.A., a national banking association.
“Issuer” has the meaning set forth for that term in the Recitals above.
“Issuer Documents” means, collectively, this Indenture, the Loan Agreement, the
Regulatory Agreement and the Tax Agreement.
July 10, 2012 Contra Costa County Board of Supervisors 796
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“Legal Requirements” means any legal requirements, including any local, state or
federal statute, law, ordinance, code, rule or regulation, now or hereafter in effect (including
environmental laws) or order, judgment, decree, injunction, permit, license, authorization,
certificate, franchise, approval, notice, demand, direction or determination, of any
Governmental Authority and all legal requirements imposed upon the Land, or upon the
owner(s) of the Land from time to time, pursuant to any applicable covenants, conditions,
easements, servitudes and restrictions and any applicable ground lease.
“Loan” has the meaning set forth for that term in the Recitals above.
“Loan Account” means the account of that name established within the Project Fund
pursuant to Section 5.01 of this Indenture.
“Loan Agreement” means the Loan Agreement dated as of even date herewith, among
the Issuer, the Trustee and the Borrower, as the same may be supplemented, amended or
modified.
“Loan Documents” means, collectively, the Loan Agreement, the Note, the Regulatory
Agreement, the Construction Disbursement Agreement, the Mortgage, the Assignment of
Mortgage, the Assignment of Project Documents, the Security Agreement, the Borrower
Environmental Indemnity, the Tax Agreement and, upon delivery thereof, the Servicing
Agreement, together with all other documents or instruments executed by the Borrower which
evidence or secure the Borrower’s indebtedness under any such documents and all other
documents and instruments delivered simultaneously herewith or required under the Loan
Documents to be delivered during the term of the Loan.
“Majority Owner” means the Person who owns at least fifty-one percent (51%) in
aggregate principal amount of Outstanding Bonds, or, if no single person owns at least fifty-one
percent (51%) in aggregate principal amount of Outstanding Bonds, the person who is
designated in writing delivered to the Issuer and the Trustee to exercise the powers of
“Servicer” and “Majority Owner” hereunder by persons who collectively own at least fifty-one
percent (51%) in aggregate principal amount of Outstanding Bonds.
“Maturity Date” means August 1, 2042.
“Maximum Rate” means twelve percent (12.0%) per annum.
“Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation, its
successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer
to any other nationally recognized securities rating agency designated by the Issuer, with the
consent of the Borrower and the Servicer.
“Mortgage” has the meaning set forth for that term in the Recitals above.
“Note” has the meaning set forth for that term in the Recitals above.
July 10, 2012 Contra Costa County Board of Supervisors 797
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“Notice Address” means, with respect to the Issuer, County of Contra Costa
Department of Conservation and Development, 30 Muir Road, Martinez, California 94553,
Attention: Affordable Housing Program Manager; with respect to the Borrower, Lafayette
Senior, L.P., c/o Eden Investments, Inc., 22645 Grand Street, Hayward, California 94541-5031,
Attention: Executive Director, with a copy to Gubb & Barshay, LLP, 50 California Street, Suite
3155, San Francisco, California 94111, Attention: Natalie Gubb, Esq., and a copy to Union Bank,
N.A., 200 Pringle Avenue, Suite 355, Walnut Creek, California 94596 Attention: CDF Division
Head, and a copy to Paul Hastings LLP, 515 Flower Street, 25th Floor, Los Angeles, California
90071, Attention: Kenneth Krug; with respect to the Trustee, U.S. Bank National Association,
One California Street, Suite 1000, San Francisco, California 94111, Attention: Corporate Trust
Services; with respect to the initial Servicer and Majority Owner: Banc of America Public Capital
Corp, 555 California Street, 6th Floor, San Francisco, California 94104, Attention: Jeff White, with
a copy to Banc of America Public Capital Corp, 2001 Clayton Road, 2nd Floor, Concord,
California 94520, Attention: Loan Administration Manager, and with respect to any future
Servicer or Majority Owner, such address as may be shown in the records of the Trustee.
[“Operating Reserve Fund” means the fund of that name established pursuant to
Section 5.01 of this Indenture.]
“Outstanding” means, when used with respect to Bonds, as of any date, all Bonds
theretofore authenticated and delivered under this Indenture except:
(a) any Bond canceled or delivered to the Trustee for cancellation on or
before such date;
(b) specified as not Outstanding in paragraph (b) of Section 4.05 hereof;
(c) any Bond in lieu of or in exchange for which another Bond shall have
been authenticated and delivered pursuant to Article II of this Indenture;
(d) any Bond deemed to have been paid as provided in Article IX of this
Indenture;
(e) any Bond owned or held by or for the account of the Issuer or the
Borrower, as provided in Section 10.11 of this Indenture, for the purpose of consent or
other action or any calculation of outstanding Bonds provided for in this Indenture, and
(f) any undelivered Bond (except for purposes of receiving the purchase
price thereof upon surrender in accordance with this Indenture).
“Owner” or “Owners” means the registered owner, or owners, of the Bonds.
“Security Agreement” has the meaning set forth for that term in the Recitals above.
“Person” means any natural individual, corporation, partnership, trust, unincorporated
association, business or other legal entity, and any government or governmental agency or
political subdivision thereof.
July 10, 2012 Contra Costa County Board of Supervisors 798
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“Prepayment Equalization Payment” means the greater of (i) 1% of the outstanding
principal balance of the Bonds; or (ii) the product obtained by multiplying (A) the amount of
principal of the Bonds being redeemed or purchased by (B) the difference between (1) the Fixed
Rate and (2) the yield rate (the “Yield Rate”) on the U.S. Treasury Security due nearest to, but
not later than, the Reset Date (the “Specified U.S. Treasury Security”) (or the average yield rate
for all U.S. Treasury Securities due nearest to, but not later than the expiration of the Reset Date
if more than one U.S. Treasury Security qualifies as the Specified U.S. Treasury Security), as
such yield rate is reported in The Wall Street Journal (or, if the publication of such yield rate is
not available in The Wall Street Journal, as such yield rate is reported in the Financial Times, or, if
the publication of such yield rate is not available in The Wall Street Journal or the Financial Times,
as such yield rate is reported in the New York Times) on the twenty-fifth (25th) Business Day
preceding (x) the date of the prepayment of such Bonds or (y) the date the Trustee accelerates
such Bonds, by (C) the Present Value Factor (as defined below). For purposes of the preceding
sentence, the “Present Value Factor” is equal to:
1 – (1 + r)-Ķ
r
where “r” is equal to the Yield Rate and “n” is equal to the number of 365-day years (or
366-day years, if applicable), and any fraction thereof, remaining between the date of
redemption and the Reset Date. In the event that the Yield Rate is not available in The Wall
Street Journal, the Financial Times or the New York Times, the Trustee may retain a certified public
accountant or other valuation expert to provide the Yield Rate and pay for such valuation from
the Trust Estate as Trustee Expenses. The Trustee may conclusively rely on such valuation
without liability provided that the Trustee used reasonable care in the selection of such
valuation expert.
“Prime Rate” means, on any day, the rate of interest per annum then most recently
established by Bank of America, N.A. as its “prime rate.” Any such rate is a general reference
rate of interest, may not be related to any other rate, and may not be the lowest or best rate
actually charged by Bank of America, N.A. to any customer or a favored rate and may not
correspond with future increases or decreases in interest rates charged by other lenders or
market rates in general, and that Bank of America, N.A. may make various business or other
loans at rates of interest having no relationship to such rate. Each time the Prime Rate changes,
the per annum rate of interest on the Bonds shall change immediately and contemporaneously
with such change in the Prime Rate. If Bank of America, N.A. ceases to exist or to establish or
publish a prime rate from which the Prime Rate is then determined, the applicable variable rate
from which the Prime Rate is determined thereafter shall be instead the prime rate reported in
The Wall Street Journal (or the average prime rate if a high and a low prime rate are therein
reported), and the Prime Rate shall change without notice with each change in such prime rate
as of the date such change is reported.
“Principal Office” means, with respect to any party, the office designated as such in, or
as designated by the respective party in writing pursuant to, this Indenture.
“Project” has the meaning set forth for that term in the Recitals above.
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“Project Fund” means the fund of that name established pursuant to Section 5.01 of this
Indenture.
“Property” has the meaning ascribed to such term in the Mortgage.
“Qualified Costs of the Project” means the actual costs incurred to acquire, construct
and equip the Project which (i) are incurred not more than sixty (60) days prior February 28,
2012, being the date on which the Board of Supervisors of the Issuer adopted Resolution No.
2012/61 expressing its “official intent” (within the meaning of Treasury Regulations Section
1.150-2) with respect to the Project (other than preliminary expenditures with respect to the
Project in an amount not exceeding twenty percent (20%) of the aggregate principal amount of
the Bonds), (ii) are (A) chargeable to the Project’s capital account 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 Section 1.103 8(a)(1), and if
charged or chargeable to the Project’s capital account are or would have been deducted only
through an allowance for depreciation or (B) made for the acquisition of land, to the extent
allowed in Section 147(c) of the Code and (iii) are made exclusively with respect to a “qualified
residential rental project” within the meaning of Section 142(d) of the Code; provided, however,
that (i) Costs of Issuance shall not be deemed to be Qualified Costs of the Project; (ii) fees,
charges or profits payable to the Borrower or a “related person” (within the meaning of Section
147 of the Code) shall not be deemed to be Qualified Costs of the Project; (iii) interest during the
construction of the Project shall be allocated between Qualified Costs of the Project and other
costs and expenses of the Project; (iv) interest following the construction of the Project shall not
constitute Qualified Costs of the Project; (v) letter of credit fees and municipal bond insurance
premiums which represent a transfer of credit risk shall be allocated between Qualified Costs of
the Project and other costs and expenses to be paid from the proceeds of the Bonds; and (vi)
letter of credit fees and municipal bond insurance premiums which do not represent a transfer
of credit risk (including, without limitation, letter of credit fees payable to a “related person” to
the Borrower) shall not constitute Qualified Costs of the Project. As used herein, the term
“preliminary expenditures” includes architectural, engineering, surveying, soil testing and
similar costs that were incurred prior to commencement of acquisition, construction or
rehabilitation of the Project, but does not include land acquisition, site preparation or similar
costs incident to the commencement of the construction of the Project.
“Rebate Analyst” means any Person, chosen by the Borrower and at the expense of the
Borrower, qualified and experienced in the calculation of rebate payments under Section 148 of
the Code and compliance with the arbitrage rebate regulations promulgated under the Code,
which is engaged for the purpose of determining the amount of required deposits to the Rebate
Fund, if any, pursuant to Section 5.18(c) of the Loan Agreement and Section 2(r) of the
Regulatory Agreement.
“Rebate Fund” means the fund of that name established pursuant to Section 5.01 of this
Indenture.
“Record Date” means, with respect to each Bond Payment Date, the close of business on
the day preceding such Bond Payment Date, whether or not such day is a Business Day.
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“Regulatory Agreement” means the Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of August 1, 2012, by and between the Issuer and the Borrower,
as the same may be amended, modified or supplemented from time to time.
“Replacement Reserve Fund” means the fund of that name established pursuant to
Section 5.01 of this Indenture.
“Required Equity Funds” means the amounts required to be deposited in the Equity
Account of the Project Fund pursuant to Section 1.2 of the Construction Disbursement
Agreement and Section 5.9 of the Loan Agreement.
“Requisition” means a requisition in the form of Exhibit D attached hereto, together
with all invoices, bills of sale, schedules and other submissions required for the making of an
advance from the Loan Account, the Equity Account of the Project Fund.
“Reset Date” means the seventeenth (17th) anniversary of the Conversion Date.
“Reset Period” means the period commencing on the Reset Date and ending on (and
including) the Maturity Date.
“Reset Rate” means a variable rate of interest per annum, equal to the sum of (i) the
BBA LIBOR Daily Floating Rate, plus (ii) two percent (2.0%); but not in any event more than the
Maximum Rate nor less than the Fixed Rate in effect on the Reset Date.
“Resolution” means the resolution of the Issuer adopted on July __, 2012, authorizing,
among other things, the execution and delivery by the Issuer of the Issuer Documents and the
Bonds and the performance of its obligations thereunder.
“Revenue Fund” means the fund of that name established pursuant to Section 5.01 of
this Indenture.
“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., its
successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to
any other nationally recognized securities rating agency designated by the Issuer, with the
consent of the Borrower and the Servicer.
“Security Agreement” has the meaning set forth for that term in the Recitals above.
“Servicer” means the servicer of the Loan appointed pursuant to Section 7.11 hereof.
Prior to the Conversion Date and during any other times as no servicer has been appointed
pursuant to Section 7.11 hereof, all references herein and in the Loan Documents to the Servicer
shall be deemed to refer to the Majority Owner.
July 10, 2012 Contra Costa County Board of Supervisors 801
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“Servicing Agreement” means any servicing agreement entered into among the
Majority Owner, the Trustee and the Servicer, as the same may be amended, modified or
supplemented from time to time.
“Stabilization” has the meaning set forth for that term in the Construction
Disbursement Agreement, as it may be amended from time to time.
“Stabilization Date” means the date specified by the Servicer, in a notice to the Trustee
and the Borrower, as the date upon which Stabilization occurred.
“Stabilization Deadline” has the meaning set forth for that term in the Construction
Disbursement Agreement, as it may be amended from time to time.
“State” means the State of California.
“Supplemental Indenture” means any indenture hereafter duly authorized and entered
into between the Issuer and the Trustee in accordance with Article VIII hereof, amending,
modifying or supplementing this Indenture.
“Tax and Insurance Fund” means the fund of that name established pursuant to Section
5.01 of this Indenture.
“Tax Agreement” means the Certificate as to Arbitrage dated the Closing Date of the
Issuer and the Borrower, as the same may be supplemented, amended or modified.
“Taxable Rate” means a rate of interest equal to the lesser of twelve percent (12.0%) per
annum or a rate per annum that is two percent (2%) in excess of the Prime Rate, with changes in
the Taxable Rate effective concurrently with each announced change in the Prime Rate.
“Trust Estate” means the trust estate pledged by the Issuer and described in the
Granting Clauses of this Indenture.
“Trustee” has the meaning set forth for that term in the Recitals above, and includes any
successor trustee appointed pursuant to Section 7.08.
“Trustee Fee” means ______________ per ___________, payable ______________.
“Trustee Expenses” means the fees and expenses of the Trustee set forth in Section 7.04
of this Indenture.
“Variable Rate” means a variable rate per annum equal to the sum of (a) BBA LIBOR
Daily Floating Rate, plus (b) one and eighty-five one hundredths percent (1.85%).
“Variable Rate Period” means the period commencing on the Closing Date and ending
on (and including) the day before the Conversion Date.
July 10, 2012 Contra Costa County Board of Supervisors 802
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Section 1.02 Construction. In this Indenture, unless the context otherwise requires:
(a) Articles and Sections referred to by number shall mean the corresponding
Articles and Sections of this Indenture.
(b) The terms “hereby”, “hereof”, “hereto”, “herein”, “hereunder” and any
similar terms refer to this Indenture, and the term “hereafter” shall mean after, and the
term “heretofore” shall mean before, the date of execution and delivery of this
Indenture.
(c) Words of the masculine gender shall mean and include correlative words
of the female and neuter genders, and words importing the singular number shall mean
and include the plural number and vice versa.
(d) Words importing the redemption of a Bond or the calling of a Bond for
redemption do not include or connote the payment of such Bond at its stated maturity or
the purchase of such Bond.
(e) References in this Indenture to particular sections of the Code, the Act or
any other legislation shall be deemed to refer also to any successor sections thereto or
other redesignation for codification purposes.
(f) The terms “receipt”, “received”, “recovery”, “recovered” and any similar
terms, when used in this Indenture with respect to moneys or payments due the Issuer,
shall be deemed to refer to the passage of physical possession and control of such
moneys and payments to the Issuer, the Owners of the Bonds or the Trustee on its
behalf.
July 10, 2012 Contra Costa County Board of Supervisors 803
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ARTICLE II
REPRESENTATIONS AND COVENANTS OF THE ISSUER
Section 2.01 Representations by the Issuer. The Issuer represents and warrants to the
Trustee and the Owners of the Bonds that:
(a) The Issuer is a public body, corporate and politic, and a political
subdivision of the State, duly organized, validly existing and in good standing under the
laws of the State.
(b) The Issuer has power and lawful authority to adopt the Resolution, to
execute and deliver the Issuer Documents, to issue the Bonds and receive the proceeds
of the Bonds, to apply the proceeds of the Bonds to make the Loan, to assign the
revenues derived and to be derived by the Issuer from the Loan to the Trustee, and to
perform and observe the provisions of the Issuer Documents and the Bonds to be
performed and observed by the Issuer.
(c) The Issuer has duly authorized the execution and delivery by it of each of
the Issuer Documents, the issuance, execution, sale and delivery of the Bonds, and the
performance of the obligations of the Issuer thereunder.
(d) The Issuer is not in violation of any Legal Requirements which would
affect its existence or its ability to issue, execute, sell or deliver the Bonds, to enter into
any of the Issuer Documents or to perform any of its obligations thereunder.
The Issuer makes no representation or warranty, express or implied, that the proceeds of
the Bonds will be sufficient to finance the acquisition, construction and equipping of the Project
or that the Project will be adequate or sufficient for the Borrower’s intended purposes.
Section 2.02 Covenants of the Issuer. The Issuer hereby agrees with the Owners from
time to time of the Bonds that, so long as the Bonds remain unpaid:
(a) The Issuer will pay or cause to be paid the principal of and the interest on
the Bonds as the same become due, but subject in any event to the provisions of Section
10.02 hereof.
(b) The Issuer will do, execute, acknowledge, when appropriate, and deliver
from time to time at the written request of the Owners of the Bonds or the Trustee (and
at the expense of the Borrower) such further acts, instruments, financing statements and
other documents as are necessary or desirable to better assure, transfer, pledge or assign
to the Trustee, and grant a security interest unto the Trustee in and to the Trust Estate
and otherwise to carry out the intent and purpose of the Issuer Documents and the
Bonds.
(c) The Issuer will not use or knowingly permit the use of any proceeds of
the Bonds or other funds of the Issuer, directly or indirectly, in any manner, and will not
July 10, 2012 Contra Costa County Board of Supervisors 804
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take or knowingly permit to be taken any other action or actions, which would result in
any of the Bonds being treated as an obligation not described in Section 142(a)(7) of the
Code by reason of such Bond not meeting the requirements of Section 142(d) of the
Code.
(d) The Issuer, at the expense of the Borrower, will at all times do and
perform all acts and things permitted by law and this Indenture which are requested in
writing by the Owners of the Bonds or the Servicer and are necessary or desirable in
order to assure, and will not knowingly take any action which will adversely affect, the
excludability of interest on the Bonds from gross income for federal income tax
purposes.
July 10, 2012 Contra Costa County Board of Supervisors 805
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ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.01 Authorization of Bonds.
(a) There is hereby authorized, established and created an issue of Bonds of the
Issuer to be known and designated as the “County of Contra Costa Multifamily Housing
Revenue Bonds (Lafayette Senior Housing), Series 2012A” in the original aggregate principal
amount of $__________. No additional bonds shall be authorized or issued under this
Indenture. The Bonds shall be issued for the purpose of making the Loan by depositing such
amounts in the various accounts of the Project Fund established hereunder.
(b) The Bonds are hereby authorized to be issued as drawdown Bonds. The Owners
of the Bonds shall fund the purchase price of the Bonds in installments. The initial installment
for the purchase of the Bonds shall be in the amount of $_________ to be advanced by the
Owners of such Bonds and received by the Trustee on the Closing Date, which purchase price
shall be deposited in the Project Fund for application as provided in Section 5.02 hereof.
Provided that the conditions to advance contained in the Construction Disbursement
Agreement are either satisfied or waived by the Servicer, the balance of the purchase price of
the Bonds shall be advanced in subsequent installments by the Owners (if more than one
Owner for a series of Bonds, pro rata based on the respective maximum face principal amounts
of such Bonds). Upon receipt of a Funding Notice described below, the Trustee shall provide
the Owners with written directions to fund a portion of the purchase price of the Bonds not less
than three (3) Business Days prior to the date when such funds are required from the Owners,
which such notice shall describe the amount of the purchase price to be funded and the
purposes to which the proceeds of the Bonds so purchased will be applied. Upon the payment
of any portion of the purchase price of the Bonds by the Owners in accordance with the terms of
this Section 3.01(b), such payment shall be deposited by the Trustee in the Project Fund as
designated in the corresponding funding notice received by the Trustee from the Servicer (each,
a “Funding Notice”) and thereafter immediately applied in accordance with the corresponding
Requisition pursuant to Section 5.02 hereof.
The Trustee shall maintain in its books a log which shall reflect from time to time the
payment of the purchase price of the Bonds by the Owners in accordance with the provisions of
this Section 3.01(b). If presented to the Trustee by any Owner, amounts funded by the Owners
in accordance with the provisions of this Section 3.01(b) shall be noted on Schedule A attached
to the applicable Bond so presented to the Trustee.
Notwithstanding any provision in Section 3.06 hereof to the contrary, the Bonds shall
bear interest as provided in Section 3.06 hereof upon the deposit with Trustee by the Owners of
the amount of purchase price of the Bonds so paid in accordance with the provisions of this
Section 3.01(b).
Section 3.02 Conditions Precedent to Authentication and Delivery of Bonds. Prior to
the initial authentication and delivery of the Bonds, the Trustee shall have received each of the
following:
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(a) the original executed Note, and executed original counterparts of this
Indenture, the other Issuer Documents and the other Loan Documents;
(b) confirmation from the Servicer or its counsel that the conditions to initial
purchase of Bonds contained in the Construction Disbursement Agreement have been
satisfied or waived by Servicer;
(c) a certified copy of the Resolution;
(d) evidence of the payment of the initial installment of the purchase price of
the Bonds and deposit of the Borrower funds required pursuant to Section 5.01(c) of this
Indenture;
(e) an opinion of Bond Counsel substantially to the effect that the Bonds
constitute legal, valid and binding obligations of the Issuer and that under existing
statutes, regulations, rulings and court decisions, the interest on the Bonds is not
includable in gross income of the Owners (other than an Owner who is a “substantial
user” of the Project or a “related person” to a “substantial user,” as defined in Section
147(a) of the Code) for federal income tax purposes; and
(f) an original investor letter executed by the initial purchaser(s) of the
Bonds, in substantially the applicable form set forth in Exhibit B hereto.
Section 3.03 Registered Bonds. The Bonds shall be in fully registered form and shall
be payable in accordance with the provisions hereof and of the Bonds to the Owner thereof as
shown on the Bond registration records maintained by the Trustee pursuant to Section 3.09(a).
Section 3.04 Loss, Theft, Destruction or Mutilation of Bonds. In the event a Bond is
mutilated, lost, stolen or destroyed, the Issuer may execute and the Trustee may authenticate
and deliver a new Bond bearing a notation indicating the principal amount outstanding, in
exchange for the mutilated Bond, or in substitution for a Bond so destroyed, lost or stolen. In
every case of exchange or substitution, the applicant shall furnish to the Issuer and the Trustee
(i) such security or indemnity as may be required by the Trustee to save the Issuer and the
Trustee harmless from all risks, however remote related to such Bond, and (ii) evidence to the
Trustee’s satisfaction of the mutilation, destruction, loss or theft of a Bond and of the ownership
thereof. Upon the issuance of a Bond upon such exchange or substitution, the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses, including counsel fees, of the Issuer and
the Trustee related thereto. In case a matured Bond shall become mutilated or be destroyed,
lost or stolen, the Trustee may, instead of authenticating a Bond in exchange or substitution
therefor, pay or authorize the payment of the same (without surrender thereof except in the case
of a mutilated Bond) if the applicant for such payment shall furnish to the Issuer and the
Trustee such security or indemnity as the Trustee may require to save them harmless and
evidence satisfactory to the Trustee of the mutilation, destruction, loss or theft of the Bond and
of the ownership thereof.
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Section 3.05 Terms of Bonds – General.
(a) Registration; Denomination. The Bonds shall be issuable initially in Authorized
Denominations as specified in writing by the initial Owner to the Issuer and the Trustee on or
prior to the Closing Date. Thereafter, the Bonds shall be issuable in any Authorized
Denomination required to effect transfers, exchanges or redemptions permitted or required by
this Indenture. The Bonds shall be substantially in the form of Exhibit A hereto, with such
amendments and changes as the officer executing the same shall deem appropriate.
(b) Date and Maturity. All Bonds shall be dated the Closing Date. The Bonds shall
bear interest from the Closing Date until paid in full, payable for the periods, in the amounts, at
the rates, and as provided in Section 3.06 hereof. The Bonds shall mature on the Maturity Date,
unless sooner redeemed or accelerated.
(c) Payment. The principal of and interest on the Bonds shall be payable in lawful
money of the United States of America by check or draft of the Trustee. Payments of interest
and of principal upon redemption pursuant to Section 4.01(f) hereof shall be mailed by first-
class mail to the Owners of the Bonds at their addresses appearing on the records of the Trustee;
provided, however, that the payment to the Servicer shall, upon written request of the Servicer,
be transmitted by the Trustee by wire transfer or other means requested in writing by the
Servicer. Payment of the principal (other than upon redemption pursuant to Section 4.01(f)
hereof) of a Bond shall only be made upon surrender of the Bond at the Principal Office of the
Trustee. Notwithstanding anything in this Indenture to the contrary, all payments of principal
and interest with respect to Bonds owned by the Majority Owner shall, at the written request of
the Majority Owner to the Trustee, be made by wire transfer to the Majority Owner without the
requirement of surrender of such Bonds under any circumstances.
Section 3.06 Interest on the Bonds.
(a) General. The Bonds for which installment purchase payments have been
received by the Trustee shall bear interest at the applicable rate provided below. On each
Interest Payment Date, interest accrued on the Bonds for the previous Calculation Period shall
be payable by the Trustee to the Bondowners. While the Bonds bear interest at a Variable Rate
or at the Reset Rate, or at an Alternative Rate based on a Variable Rate or the Reset Rate, interest
on the Bonds shall be computed on the basis of a 360-day year, for the number of days actually
elapsed. While the Bonds bear interest at the Fixed Rate, or at an Alternative Rate based on the
Fixed Rate, interest on the Bonds shall be computed on the basis of a 360-day year of twelve
equal months of 30 days each. While the Bonds bear interest at the Taxable Rate, interest on the
Bonds shall be computed on the basis of a year of 365 or 366 days, as applicable, and actual days
elapsed.
(b) Variable Rate. During the Variable Rate Period, the Bonds shall bear interest at
the Variable Rate. During the Variable Rate Period, the Servicer shall determine a Variable Rate
for each day. The Servicer shall give telephonic (with following written confirmation) or
facsimile notice on, or promptly following, each Interest Payment Date to the Trustee and the
Borrower of the interest payable on such Interest Payment Date. Absent manifest error, the
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determination of the Variable Rate by the Servicer shall be conclusive and binding upon the
Owners, the Issuer, the Borrower and the Trustee.
(c) Fixed Rate. During the Fixed Rate Period, the Bonds shall bear interest at the
Fixed Rate. Not less than thirty (30) days prior to the Conversion Date, the Trustee shall
provide notice by first-class mail, postage prepaid, to all Owners (with a copy to the Issuer and
the Borrower) at their addresses shown on the Bond register notifying them that the interest
rate on the Bonds will be converted to the Fixed Rate effective on the Conversion Date. Failure
to mail any such notice or any defect in the mailing thereof in respect of any Bond shall not
affect the validity of the conversion of the interest rate with respect to any Bond.
(d) Reset Rate. During the Reset Period, the Bonds shall bear interest at the Reset
Rate. Not less than thirty (30) days prior to the Reset Date, the Trustee shall provide notice by
first-class mail, postage prepaid, to all Owners (with a copy to the Issuer and the Borrower) at
their addresses shown on the Bond register notifying them that the interest rate on the Bonds
will be converted to the Reset Rate effective on the Reset Date if the Trustee receives an Opinion
of Bond Counsel to the effect that conversion of the interest rate on the Bonds to the Reset Rate
on the Reset Date will not, in and of itself, cause interest on the Bonds to be includable in gross
income for federal income tax purposes. Failure to mail any such notice or any defect in the
mailing thereof in respect of any Bond shall not affect the validity of the conversion of the
interest rate with respect to any Bond. It is a condition to conversion of the interest rate on the
Bonds to the Reset Rate on the Reset Date that the Trustee and the Servicer shall have received
an Opinion of Bond Counsel to the effect that conversion of the interest rate on the Bonds to the
Reset Rate on the Reset Date will not, in and of itself, cause interest on the Bonds to be
includable in gross income for federal income tax purposes. During the Reset Period, the
Servicer shall determine a Reset Rate for the Bonds for each day. The Servicer shall give
telephonic or facsimile notice (with following written confirmation) on, or promptly following,
each Interest Payment Date to the Trustee and the Borrower of the interest payable on such
Interest Payment Date. Absent manifest error, the determination of the Reset Rate by the
Servicer shall be conclusive and binding upon the Owners, the Issuer, the Borrower and the
Trustee.
(e) Alternative Rate. Following the occurrence of an Event of Default under the
Loan Agreement or an Event of Default under this Indenture, the Bonds shall bear interest at
the Alternative Rate.
(f) Taxable Rate. If an Initial Notification of Taxability shall occur, the Bonds shall
bear interest from the date of such Initial Notification of Taxability at the Taxable Rate. If such
Initial Notification of Taxability is reversed by the Internal Revenue Service or a court of
competent jurisdiction and a Determination of Taxability has not occurred, then the Bonds shall
bear interest from the date of such reversal at the rate otherwise applicable to the Bonds as if no
Initial Notification of Taxability had been delivered, and the Bank shall refund to the Borrower
on or prior to the next succeeding Bond Payment Date, the excess interest previously paid. This
provision shall survive the discharge of this Indenture.
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(g) Additional Interest. The Owners of the Bonds shall also be entitled to Additional
Interest, which amount, if any, shall be deposited in the Revenue Fund pursuant to the
provisions of Section 3.2(b) of the Loan Agreement.
(h) Maximum Rate. In no event shall interest accrue on the Bonds at a rate greater
than the Maximum Rate.
(i) Usury. Notwithstanding any provision of this Indenture to the contrary, in no
event shall the interest contracted for, charged or received in connection with the Bonds
(including any other costs or considerations that constitute interest under the laws of the State
which are contracted for, charged or received pursuant to this Indenture) exceed the maximum
rate of nonusurious interest allowed under the laws of the State as presently in effect and to the
extent of any increase allowable by such laws. To the extent permitted by law, interest
contracted for, charged or received on the Bonds shall be allocated over the entire term of the
Bonds, to the end that interest paid on the Bonds does not exceed the maximum amount
permitted to be paid thereon by law. Excess interest, if any, provided for in this Indenture, or
otherwise, shall be canceled automatically as of the date of such acceleration or, if theretofore
paid, shall be credited as principal paid on the Bonds.
Section 3.07 Payment of Interest on the Bonds. Interest on the Bonds shall be payable
in the following manner: commencing the first day of the first month after the month in which
the Closing Date occurs and continuing on each Interest Payment Date thereafter, interest on
the Outstanding principal balance of the Bonds (which amount shall reflect so much of the
purchase price as shall have been paid pursuant to Section 3.01(b) hereof) at the applicable
interest rate for the Bonds shall be due and payable in arrears; and all accrued and unpaid
interest shall be due and payable in full on the Maturity Date, if not paid earlier. To the extent
more than one Bond is issued and Outstanding at any one time under the terms of this
Indenture, payments of principal, interest and premium (if any) on the Bonds shall be made in
a pro rata manner based on the Outstanding principal amount of the Bonds.
Section 3.08 Execution and Authentication of Bonds.
(a) The Bonds shall be executed on behalf of the Issuer by the manual or facsimile
signature of an Authorized Representative of the Issuer, and its corporate seal (or a facsimile
thereof) shall be thereunto affixed, imprinted, engraved or otherwise reproduced, and attested
by the manual or facsimile signature of an Authorized Representative of the Issuer.
(b) In case any officer of the Issuer whose signature or facsimile signature shall
appear on any of the Bonds shall cease to be such officer before the Bonds so signed and sealed
shall have been actually delivered, such Bonds may, nevertheless, be delivered as herein
provided, and may be issued as if the persons who signed or sealed such Bonds had not ceased
to hold such offices or be so employed. Any Bond may be signed and sealed on behalf of the
Issuer by such persons as, at the actual time of the execution of such Bond, shall be duly
authorized or hold the proper office in or employment by the Issuer, although at the date of the
Bonds such persons may not have been so authorized nor have held such office or employment.
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(c) No Bond shall be valid or obligatory for any purpose or shall be entitled to any
right or benefit under this Indenture unless there shall be endorsed on such Bond a certificate of
authentication in the form set forth in such Bond duly executed by the Trustee, by the manual
signature of an authorized signatory thereof, and such certificate of the Trustee upon any Bond
executed on behalf of the Issuer shall be conclusive evidence that the Bond so authenticated has
been duly issued under this Indenture and that the Owner thereof is entitled to the benefits of
this Indenture.
Section 3.09 Negotiability, Transfer and Registry of Bonds.
(a) All the Bonds issued under this Indenture shall be negotiable, subject to the
provisions for registration and transfer contained in this Indenture and in the Bonds. So long as
this Indenture remains in force, the Trustee, as registrar, shall maintain and keep books for the
recordation of the taxpayer identification number of each of the Owners of the Bonds and the
registration, transfer and exchange of Bonds. Each Bond shall be transferable only upon the
books of registration. The Trustee is hereby appointed registrar, to act as agent of the Issuer for
the registration and transfer of Bonds and the maintenance of the books of registration. The
Issuer may appoint a successor registrar upon notice by mail to the Trustee and the Owners of
the Bonds.
(b) Upon a partial redemption of the Bonds, the Issuer shall execute and the Trustee
shall authenticate and deliver new Bond certificates representing the unredeemed portion of the
Bonds to be so tendered or redeemed in part, in exchange for the certificates representing the
Bonds to be so tendered or redeemed in part. Surrender of Bonds for execution, authentication
and delivery of new certificates shall not be a precondition to the redemption of Bonds pursuant
to Section 4.01(f) hereof. If a Bond shall be transferred in part, such Bond shall be delivered to
the registrar, and the Trustee shall, on behalf of the Issuer, deliver two Bonds in replacement
therefor, having the same maturity and interest provisions and in the same aggregate principal
amount as the Bond so delivered.
(c) Upon surrender of the Bonds at the Principal Office of the Trustee with a written
instrument of transfer satisfactory to the Trustee, duly executed by the Owner or his attorney
duly authorized in writing, such Bonds may, at the option of the Owner thereof, be exchanged
for an equal aggregate principal amount of Bonds in Authorized Denominations.
(d) The Borrower shall bear all costs in connection with any transfer or exchange of
Bonds, including the reasonable fees and expenses of the Issuer, Bond Counsel and the Trustee
and of any required indemnity for the Issuer and the Trustee; provided that the costs of any tax
or other governmental charge imposed upon such transfer or exchange shall be borne by the
Owner of the Bond.
(e) Bonds shall be transferred upon presentation and surrender thereof at the
Principal Office of the Trustee by the Owner thereof or his attorney duly authorized in writing
with due endorsement for transfer or accompanied by a written instrument of transfer in form
satisfactory to the Trustee. All Bonds surrendered in any exchanges or transfers shall forthwith
be canceled. For every such exchange or transfer of Bonds, there shall be made a charge
sufficient to pay any tax or other governmental charge required to be paid with respect to such
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exchange or transfer, which sum or sums shall be paid by the Owner requesting such exchange
or transfer as a condition precedent to the exercise of the privilege of making such exchange or
transfer. The Trustee shall not be obligated to (i) authenticate, exchange or transfer any Bond
during a period beginning at the opening of business on any Record Date and ending at the
close of business on the next succeeding Interest Payment Date, (ii) authenticate, exchange or
transfer any Bond during a period beginning at the opening of business 15 days next preceding
any selection of Bonds to be redeemed and ending at the close of business on the date of the first
giving of notice of such redemption, or (iii) transfer or exchange any Bonds called or being
called for redemption in whole or in part.
(f) The Bonds may be transferred in whole or in part by any Owner only as follows:
(1) to the Borrower, any subsidiary of the initial Owner, any Affiliate of the
Owner, any entity arising out of any merger or consolidation of the Owner, or a trustee
in bankruptcy of the Owner;
(2) to any “accredited investor” (as defined in Regulation D promulgated
under the Securities Act of 1933, as amended) or any “qualified institutional buyer” (as
defined in Rule 144A promulgated under the Securities Act of 1933, as amended);
(3) to any bank, savings institution or insurance company (whether acting in
a trustee or custodial capacity for any “accredited investor” as defined in clause (2),
above, “qualified institutional buyer” or on its own behalf); or
(4) to any trust or custodial arrangement each of the beneficial owners of
which is required to be an “accredited investor” or “qualified institutional buyer;” (as
defined in clause (2), above).
Any transfer of Bonds described in clauses (2), (3) or (4) of this Section 3.09(f) shall be
conditioned upon delivery by the proposed transferee to the Trustee of an investor letter in
substantially the form set forth in Exhibit B hereto.
(g) In addition to any transfer permitted by Section 3.09(f), the Bonds may be
transferred, in whole or in part:
(1) to one or more Owners upon receipt by the Issuer, each Owner making
such transfer, and the Trustee of (i) any disclosure document which is prepared in
connection with such transfer of any Bond, (ii) evidence that each such Bond is rated
“A” or better by one of S&P or Moody’s, and (iii) an opinion of Counsel to the effect that
(A) the exemption of the Bonds or any securities evidenced thereby from the registration
requirements of the Securities Act of 1933, as amended, and the exemption of this
Indenture from qualification under the Trust Indenture Act of 1939, as amended, will
not be impaired as a result of such transfer, and (B) such transfer will not adversely
affect the exclusion of interest on the Bonds from gross income of the Owners thereof
(other than an Owner who is a “substantial user” of the Project or a “related person” to a
“substantial user,” as defined in Section 147(a) of the Code) for federal income tax
purposes; or
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(2) to any trust, custodial or similar arrangement the ownership interests in
which are to be distributed through the issuance of (A) securities that are registered
under the Securities Act of 1933, as amended, and/or are exempt from the registration
requirements of the Securities Act of 1933, as amended, and are rated “A” by S&P or
Moody’s (or an equivalent rating by another nationally recognized rating agency) or
better, without respect to modifier, or securities the pass-through payments on which
are guaranteed by an insurer or guarantor, the unsecured long-term obligations of
which are rated “A” by S&P or Moody’s (or an equivalent rating by another nationally
recognized rating agency) or better, without respect to modifier, or (B) non-investment-
grade securities representing a residual interest in such trust, custodial or similar
arrangement that may only be transferred in transactions that are exempt from the
registration requirements of the Securities Act of 1933, as amended.
Section 3.10 Ownership of Bonds. The Issuer, the Trustee and any other Person may
treat the registered owner of any Bond as the absolute owner thereof, whether such Bond shall
be overdue or not, for the purpose of receiving payment of, or on account of, the principal or
redemption price of and interest on such Bond and for all other purposes whatsoever, and
payment of the principal or redemption price, if any, of and interest on any such Bond shall be
made only to, or upon the order of, such registered owner. All such payments to such
registered owner shall be valid and effectual to satisfy and discharge the liability of the Issuer
upon such Bond to the extent of the sum or sums so paid, and neither the Issuer nor any Trustee
shall be affected by any notice to the contrary.
Section 3.11 Payments on Bonds Due on Non-Business Days. In any case where any
Bond Payment Date shall be a day other than a Business Day, then payment of the Bonds need
not be made on such date but may be made on the next succeeding Business Day with the same
force and effect as if made on the Bond Payment Date, and no interest shall accrue for the
period after such date.
Section 3.12 Registration of Bonds in the Book-Entry Only System.
(a) Notwithstanding any provision herein to the contrary, the provisions of this
Section 3.12 and the Representation Letter (as defined below) shall apply with respect to any
Bond registered to Cede & Co. or any other nominee of The Depository Trust Company
(“DTC”) while the Book-Entry Only System (meaning the system of registration described in
paragraph (b) of this Section 3.12) is in effect. The Book-Entry Only System shall become
effective thirty (30) days after the Owners of all the Bonds provide notice in writing to the
Trustee, the Borrower, and the Issuer to the effect that the Owners desire that the Bonds be in
book entry form, subject to the provisions below concerning termination of the Book-Entry Only
System. Until all of the Owners of the Bonds provide such notice, the Book-Entry Only System
shall not be in effect.
(b) Upon the effectiveness of the Book-Entry Only System, the Issuer shall execute
and deliver, and the Trustee shall transfer and exchange Bond certificates for a separate single
authenticated fully registered Bond for each stated maturity in substantially the form provided
for in Exhibit A hereto. Any legend required to be on the Bonds by DTC may be added by the
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Trustee. On the date of delivery thereof, the Bonds shall be registered in the registry books of
the Trustee in the name of Cede & Co., as nominee of DTC as agent for the Issuer in maintaining
the Book-Entry Only System. With respect to Bonds registered in the registry books kept by
the Trustee in the name of Cede & Co., as nominee of DTC, the Issuer, the Borrower, and the
Trustee shall have no responsibility or obligation to any Participant (which means securities
brokers and dealers, banks, trust companies, clearing corporations and various other entities,
some of whom or their representatives own DTC) or to any Beneficial Owner (which means,
when used with reference to the Book-Entry Only System, the Person who is considered the
Beneficial Owner of the Bonds pursuant to the arrangements for book entry determination of
ownership applicable to DTC) with respect to the following: (i) the accuracy of the records of
DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the
delivery to or from any Participant, any Beneficial Owner or any other Person, other than DTC,
of any notice with respect to the Bonds, including any notice of redemption or tender (whether
mandatory or optional), or (iii) the payment to any Participant, any Beneficial Owner or any
other Person, other than DTC, of any amount with respect to the principal or premium, if any,
or interest on the Bonds. The Trustee shall pay all principal of and premium, if any, and
interest on the Bonds only to or upon the order of DTC, and all such payments shall be valid
and effective fully to satisfy and discharge the Issuer’s obligations with respect to the principal
of any premium, if any, and interest on Bonds to the extent of the sum or sums so paid. No
Person other than DTC or its agent shall be entitled to receive an authenticated Bond evidencing
the obligation of the Issuer to make payments of principal and premium, if any, and interest
pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect
that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede
& Co.” in this Indenture shall refer to such new nominee of DTC.
(c) Upon receipt by the Trustee of written notice from DTC to the effect that DTC is
unable or unwilling to discharge its responsibilities, the Issuer shall issue and the Trustee shall
transfer and exchange Bonds as requested by DTC in appropriate amounts and in authorized
denominations, and whenever DTC requests the Issuer and the Trustee to do so, the Trustee
and the Issuer will, at the expense of the Borrower, cooperate with DTC in taking appropriate
action after reasonable notice (i) to arrange for a substitute bond depository willing and able
upon reasonable and customary terms to maintain custody of the Bonds or (ii) to make available
for transfer and exchange Bonds registered in whatever name or names and in whatever
authorized denominations as DTC shall designate.
(d) In the event the Beneficial Owners subsequently determine that the Beneficial
Owners should be able to obtain Bond certificates, the Beneficial Owners may so notify DTC
and the Trustee, whereupon DTC will notify the Participants of the availability through DTC of
Bond certificates. In such event, the Issuer shall issue and the Trustee shall, at the expense of
the Beneficial Owners, transfer and exchange Bond certificates as requested by DTC in
appropriate amounts and in authorized denominations. Whenever DTC requests the Trustee to
do so, the Trustee will, at the expense of the Beneficial Owners, cooperate with DTC in taking
appropriate action after reasonable notice to make available for transfer and exchange Bonds
registered in whatever name or names and in whatever authorized denominations as DTC shall
designate.
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(e) Notwithstanding any other provision of this Indenture to the contrary, so long as
any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to the principal of, premium, if any, and interest on such Bond and all notices with
respect to such Bond shall be made and given, respectively, to DTC as provided in the Letter of
Representation to be delivered by the Borrower and the Trustee to DTC.
(f) Notwithstanding any provision herein to the contrary, so long as the Bonds
outstanding are held in the Book-Entry Only System, if less than all of such Bonds of a maturity
are to be redeemed upon any redemption of Bonds hereunder, the particular Bonds or portions
of Bonds to be redeemed shall be selected by DTC in such manner as DTC may determine.
(g) So long as the Book-Entry Only System is in effect, a Beneficial Owner who elects
to have its Bonds purchased pursuant to any provision of this Indenture requiring that Bonds
be purchased at an election of an Owner, shall effect delivery by causing a Participant to
transfer the Beneficial Owner’s interest in the Bonds pursuant to the Book-Entry Only System.
The requirement for physical delivery of Bonds in connection with a demand for purchase or a
mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are
transferred in accordance with the Book-Entry Only System.
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01 Mandatory Redemption. The Bonds shall be subject to mandatory
redemption, and shall be redeemed prior to maturity, as follows:
(a) in whole or in part on the first Interest Payment Date for which notice can
be given in accordance with this Indenture after the Conversion Date to the extent of
excess funds on deposit on such date in the Loan Account of the Project Fund,
determined as provided in Section 5.03 of this Indenture; or
(b) in whole or in part on the first Interest Payment Date for which adequate
notice can be given in accordance with this Indenture after and to the extent that
Insurance Proceeds or a Condemnation Award in connection with the Project are
deposited in the Insurance and Condemnation Account of the Project Fund and are not
to be used to repair or restore the Project (which unused Condemnation Award or
Insurance Proceeds shall be applied to the redemption of Bonds, unless all of the
Owners shall have approved a proposed alternative application of such funds and the
Trustee and the Servicer shall have received an opinion of Bond Counsel to the effect
that such proposed alternative application of such funds will not adversely affect the
exclusion from gross income of Owners (other than an Owner who is a “substantial
user” of the Project or a “related person” to a “substantial user,” as defined in Section
147(a) of the Code)); or
(c) in whole on the first Interest Payment Date for which notice can be given
to the Owners in accordance with this Indenture following receipt by the Trustee of
notice from the Servicer demanding such redemption, following a Determination of
Taxability; or
(d) on the date upon which Stabilization is achieved (or the Interest Payment
Date immediately preceding such date), in an amount sufficient to reduce the aggregate
principal amount of Outstanding Bonds to $3,207,000; or
(e) on the date upon which Stabilization is achieved (or the Interest Payment
Date immediately preceding such date), in the amount (if any), in excess of the amount
required pursuant to Section 4.01(d), that is necessary in order to achieve compliance
with the debt service coverage condition to achievement of Stabilization; or
(f) in whole on any specified Interest Payment Date on or after the Reset
Date (i.e., the seventeenth anniversary of the Conversion Date), if the Owners of all of
the Bonds elect redemption by giving not less than 180 days’ prior written notice thereof
to the Trustee and the Borrower, which notice shall specify the Interest Payment Date on
which the Bonds are to be redeemed; or
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(g) in part on the first day of each calendar month as set forth in Exhibit C to
this Indenture (as it may be amended from time to time in accordance with Section
4.07(b)), in the amount set forth opposite such date in Exhibit C; or
(h) in whole, following receipt by the Trustee of notice from the Servicer
stating that an Event of Default has occurred under the Loan Agreement or the
Construction Disbursement Agreement and demanding redemption of the Bonds, on
any date selected by the Servicer, specified in a notice in writing delivered to the
Borrower (with a copy to the Trustee and the Issuer) at least ten (10) days prior to such
date.
Section 4.02 Redemption Price of Bonds Redeemed Pursuant to Mandatory
Redemption. Any Bonds being redeemed before maturity in accordance with Section 4.01 of
this Indenture shall be redeemed at a redemption price equal to the principal amount of the
Bonds being redeemed, together with accrued interest to the date of redemption, plus (a) the
Prepayment Equalization Payment, if redemption is under Section 4.01(a), (b), (c), (e) or (h) and
occurs prior to the Reset Date, and (b) Additional Interest, if redemption is under Section
4.01(c).
Section 4.03 Optional Redemption. The Bonds shall be subject to redemption from the
proceeds of an optional prepayment of the Loan by the Borrower (a) in whole or in part, on any
Interest Payment Date during the Variable Rate Period, at a redemption price equal to the
principal amount thereof, together with accrued interest to the date of redemption, plus the
Prepayment Equalization Payment, and (b) in whole, but not in part, on any Interest Payment
Date during the Reset Period, at a redemption price equal to the principal amount thereof,
together with accrued interest to the date of redemption. No optional redemption is permitted
during the Fixed Rate Period.
Section 4.04 Purchase in Lieu of Redemption. At the election of the Borrower upon a
redemption in whole of the Bonds, by written notice to the Trustee and the Servicer given not
less than five (5) Business Days in advance of such redemption date, the Bonds will be deemed
tendered for purchase in lieu of the redemption on such date. The purchase price of Bonds so
purchased in lieu of redemption shall be the principal amount thereof together with all accrued
and unpaid interest to the date of redemption and shall be payable on the date of redemption
thereof. Bonds so purchased in lieu of redemption shall remain Outstanding and shall be
registered to or upon the direction of the Borrower.
Section 4.05 Notice of Redemption.
(a) Notice of redemption shall be given by the Trustee to the Owners, the Issuer and
Borrower by facsimile transmission or other similar electronic means of communication,
promptly confirmed in writing, not less than ten (10) Business Days prior to the date fixed for
redemption; provided, however, that no notice of redemption shall be required to be given to
the Owners for a redemption pursuant to Section 4.01(e) of this Indenture during such time as
there is a single Owner of all the Bonds, and no notice of redemption shall be required to be
given to the Owners in any event for a redemption pursuant to Section 4.01(f) of this Indenture.
Receipt of such notice of redemption shall not be a condition precedent to such redemption, and
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failure to so notify any of such registered Owners of the redemption shall not affect the validity
of the proceedings for the redemption of the Bonds.
(b) Notice of redemption having been given as provided in subsection (a) of this
Section 4.05 and all conditions precedent, if any, specified in such notice having been satisfied,
the Bonds or portions thereof so to be redeemed shall become due and payable on the date fixed
for redemption at the redemption price specified therein plus any accrued interest to the
redemption date, and upon presentation and surrender thereof at the place specified in such
notice, such Bonds or portions thereof shall be paid at the redemption price, plus any accrued
interest to the redemption date. On and after the redemption date (unless funds for the payment
of the redemption price and accrued interest shall not have been provided to the Trustee), (i)
such Bonds shall cease to bear interest, and (ii) such Bonds shall no longer be considered as
Outstanding under this Indenture.
Section 4.06 Selection of Bonds To Be Redeemed.
(a) Except as otherwise expressly set forth herein, if less than all the Bonds are to be
redeemed, the particular Bonds or portions of Bonds to be redeemed shall be selected by the
Trustee, in such manner as the Trustee in its sole discretion may deem fair and appropriate so
that Bonds are redeemed, as nearly as practicable, from each Owner, if there is more than one
Owner, on a pro rata basis according to the principal amount of Bonds represented by each
Bond Outstanding.
(b) In making such selection, the Trustee may treat each Bond to be redeemed as
representing that number of Bonds of the lowest Authorized Denomination as is obtained by
dividing the principal amount of such Bond by such Authorized Denomination.
Section 4.07 Partial Redemption of Registered Bonds.
(a) In case part but not all of a Bond shall be selected for redemption, upon
presentation and surrender at the Principal Office of the Trustee of such Bond by the Owner
thereof or his attorney duly authorized in writing (with due endorsement for transfer or
accompanied by a written instrument of transfer in form satisfactory to the Trustee), the Issuer
shall execute and the Trustee shall authenticate and deliver to or upon the order of such Owner,
without charge therefor, for the unredeemed portion of the principal amount of the Bond so
surrendered, a Bond or Bonds, at the option of such Owner, of any Authorized Denomination of
like tenor, or if less than the minimum Authorized Denomination, an amount necessary to equal
the unredeemed portion of the principal amount of the Bond; provided, however, that such
surrender of Bonds shall not be required for payment of the redemption price pursuant to
Sections 4.01(e) or 4.01(f) hereof. For all purposes of this Indenture (including exchange and
transfer), the Bond so issued in less than a minimum Authorized Denomination shall be
deemed to have been issued in an Authorized Denomination. Bonds so presented and
surrendered shall be canceled in accordance with this Indenture.
(b) In the event of a partial redemption of Bonds other than pursuant to Section
4.01(e) of this Indenture or any failure of all of the Bonds authorized hereunder to be purchased
through the “drawdown” mechanism pursuant to Section 3.01(b) through the Conversion Date,
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the mandatory sinking fund schedule set forth on the schedule attached as Exhibit C to this
Indenture (as it may have been previously adjusted in accordance with this Section 4.07(b)) shall
be adjusted to provide for approximately equal monthly payments of principal and interest at
the applicable rate hereunder (taking into account minimum denominations of the Bonds) on
the Bonds remaining Outstanding after taking into account such partial redemption; and the
Servicer shall provide the Trustee, the Issuer and the Borrower with a new schedule reflecting
such adjustment.
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ARTICLE V
ESTABLISHMENT OF CERTAIN FUNDS AND ACCOUNTS, APPLICATION THEREOF
AND SECURITY THEREFOR
Section 5.01 Establishment of Funds and Accounts; Application of Proceeds of the
Bonds; and Other Amounts.
(a) The following Funds and Accounts are hereby created and established as special
trust funds:
(i) the Project Fund, consisting of:
(A) the Loan Account;
(B) the Costs of Issuance Account;
(C) the Insurance and Condemnation Proceeds Account;
(D) the Equity Account; and
(E) the Capitalized Interest Account.
(ii) the Replacement Reserve Fund;
(iii) [the Operating Reserve Fund;]
(iv) the Tax and Insurance Fund;
(v) the Revenue Fund; and
(vi) the Rebate Fund.
(b) All the Funds and Accounts created by subsection (a) of this Section 5.01 shall be
held by the Trustee in trust for application only in accordance with the provisions of this
Indenture.
(c) The initial installment for the sale of the Bonds ($__________), together with the
initial equity contribution of the Borrower ($__________) shall be applied as follows:
(i) $__________, representing a portion of the initial installment of the
proceeds of the sale of the Bonds, shall be deposited in the Loan Account of the Project
Fund;
(ii) $__________, representing [a portion of the initial installment of the
proceeds of the sale of the Bonds] [the initial equity contribution of the Borrower] shall
be deposited in the Capitalized Interest Account;
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(iii) $__________, representing a portion of the initial equity contribution of
the Borrower and $__________, representing a portion of the initial installment of the
proceeds of the sale of the Bonds, for a total of $__________ shall be deposited in the
Costs of Issuance Account of the Project Fund; and
(iv) $__________, representing the balance of the initial equity contribution of
the Borrower shall be deposited in the Equity Account of the Project Fund.
Section 5.02 Project Fund.
(a) Deposit of Moneys. The amounts specified in Section 5.01(c) shall be deposited
in the Loan Account, the Capitalized Interest Account, the Costs of Issuance Account and the
Equity Account of the Project Fund. The Loan Account of the Project Fund shall be funded
from time to time as and when installments of the purchase price of the Bonds are paid by the
Owners pursuant to Section 3.01(b) hereof. Additional capitalized interest deposited by the
Borrower in connection with any extension of the Completion Deadline or the Stabilization
Deadline shall be deposited in the Capitalized Interest Account of the Project Fund. Any
amounts received by the Trustee from the Borrower in response to demands by the Trustee or
the Servicer for deposits of Borrower’s funds shall be deposited in the Equity Account of the
Project Fund. All Condemnation Awards and Insurance Proceeds shall be deposited in the
Insurance and Condemnation Proceeds Account of the Project Fund. Any other funds directed
by the Issuer, the Servicer or the Borrower to be deposited in the Project Fund which are not
required to be otherwise deposited or disbursed shall be so deposited by the Trustee upon
receipt of funds and such direction.
(b) Use of Moneys.
(i) Loan Account and Equity Account. The Trustee shall make payments from the
Loan Account for the purpose of paying the Qualified Costs of the Project. The Trustee shall
make payments from the Equity Account to pay (A) all costs of acquisition, construction and
equipping of the Project other than Qualified Costs of the Project, and (B) to the extent amounts
on deposit in the Loan Account are insufficient for such purposes, Qualified Costs of the Project.
Disbursements from the Loan Account and the Equity Account shall be made by the Trustee
upon receipt of a Requisition, executed by an Authorized Representative of the Borrower and
approved by an Authorized Representative of the Servicer.
(ii) Capitalized Interest. On the last Business Day immediately preceding each
Interest Payment Date up to and including the Stabilization Date, the Trustee shall transfer
funds from the Capitalized Interest Account to the Revenue Fund to pay accrued interest on the
Bonds through the date immediately preceding such Interest Payment Date, without any
requirement or condition of submission of any Requisition. After the Stabilization Date,
amounts held in the Capitalized Interest Account shall be applied to pay Project Costs,
transferred to the Revenue Fund for application to the payment of amounts due in respect to the
Bonds, or, as further provided in Section 5.03 hereof, released to the Borrower, in each case
upon the written direction of the Servicer to the Trustee (a copy of which shall be provided to
the Borrower).
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(iii) Costs of Issuance Account. Amounts in the Costs of Issuance Account shall be
disbursed by the Trustee on the Closing Date and thereafter only to pay costs of issuance of the
Bonds pursuant to a closing statement signed by the Issuer identifying the amount to be paid
and the payee. Amounts remaining in the Costs of Issuance Account (including investment
proceeds) after the payment of all costs of issuance, and in any event not later than thirty (30)
days following the Closing Date, shall be transferred to the Equity Account of the Project Fund.
(iv) Insurance and Condemnation Proceeds Account. The Trustee shall make all
disbursements from the Insurance and Condemnation Proceeds Account only upon the receipt
by the Trustee of the written request of the Borrower accompanied by the written approval of
the Servicer and in accordance with the provisions of Section 5.04 hereof.
(v) Acceleration. Upon the occurrence and continuation of an Event of Default
hereunder and an acceleration of the Bonds pursuant thereto, all moneys and investments in the
Project Fund shall be transferred to the Revenue Fund and applied to the payment of the Bonds.
(c) Requisitions. The Trustee may rely fully on the representations of the Borrower
contained in any Requisition, upon the written approval of the Servicer set forth on any
Requisition, and upon the approval by the Issuer of any Requisition for amounts in the Costs of
Issuance Account, delivered pursuant to the Loan Agreement, this Indenture and the
Construction Disbursement Agreement, and shall not be required to make any investigation, or
inspection of the Project, in connection therewith.
Section 5.03 Use of Moneys Following Stabilization. Moneys (including investment
proceeds but net of amounts that the Trustee is directed by a written instruction from the
Servicer to retain to pay Qualified Costs of the Project (i) incurred but not then due and payable
or (ii) allocated to construction contingency, marketing or operating expenses after the
Stabilization Date) held in the Loan Account shall be transferred immediately after the
Stabilization Date to the Revenue Fund for application to the redemption of Bonds pursuant to
Section 4.01(a) of this Indenture. Moneys held in the Equity Account shall be released to or
upon the order of the Borrower, when the Servicer has notified the Trustee in writing that all of
the following conditions have been satisfied or waived by the Servicer: (i) the Borrower has
obtained, and applied to costs of the Project in accordance with the requirements of the
Construction Disbursement Agreement, all funds required to be paid by the Borrower pursuant
to the Construction Disbursement Agreement; and (ii) Stabilization has occurred.
Section 5.04 Condemnation Awards and Insurance Proceeds.
(a) Moneys representing a Condemnation Award or Insurance Proceeds shall be
deposited into the Insurance and Condemnation Proceeds Account of the Project Fund, and
notice of such deposit thereof shall be given by the Trustee to the Servicer.
(b) To the extent there has been a determination pursuant to the Loan Documents to
restore the Project, such Condemnation Award or Insurance Proceeds as have been approved
for disbursement by the Servicer shall be disbursed by the Trustee to or for the account of the
Borrower, in accordance with terms, conditions and procedures specified by the Servicer, for
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application by the Borrower for such purposes in accordance with the provisions of the Loan
Documents.
(c) In the event there is a determination pursuant to the Loan Documents not to
restore the Project, such Condemnation Award or Insurance Proceeds shall be either (i)
transferred to the Revenue Fund and applied to the redemption of Bonds in accordance with
Section 4.01(c) hereof, or (ii) released to the Borrower if the Borrower obtains an opinion of
Bond Counsel that such release will not affect the excludability of the interest on the Bonds
from gross income of Owners (other than an Owner who is a “substantial user” of the Project or
a “related person” to a “substantial user,” as defined in Section 147(a) of the Code) for federal
income tax purposes, all in accordance with written direction of the Servicer to the Trustee and
subject to the provisions of the Loan Documents.
Section 5.05 Replacement Reserve Fund and Operating Reserve Fund.
(a) There shall be deposited in the Replacement Reserve Fund all moneys received
for such purpose by the Trustee from the Borrower pursuant to Section 5.22(c) of the Loan
Agreement or transferred pursuant to Section 5.07 of this Indenture. Moneys in the
Replacement Reserve Fund shall be disbursed by the Trustee only upon receipt of a written
request therefor executed by the Authorized Representative of the Borrower and approved by
the Servicer to be applied to repairs of or replacements in part of the Project, except that upon
the occurrence and continuation of an Event of Default hereunder and an acceleration of the
Bonds pursuant hereto, all moneys and investments in the Replacement Reserve Fund (other
than moneys held to pay costs required to be paid but not yet payable) shall be transferred to
the Revenue Fund and applied to the payment of the Bonds. Upon the payment in full of the
Bonds and the fees and expenses of the Issuer, the Majority Owner, the Servicer and the Trustee
and upon payment of amounts payable to the United States pursuant to Section 5.08 hereof, any
amounts remaining in the Replacement Reserve Fund shall be paid to the Borrower as soon as
practicable upon its written request therefor.
(b) There shall be deposited in the Operating Reserve Fund all moneys received for
such purpose by the Trustee from the Borrower pursuant to Section 5.22(i) of the Loan
Agreement or transferred pursuant to Section 5.07 of this Indenture. Moneys in the Operating
Reserve Fund shall be disbursed by the Trustee only upon receipt of a written request therefor
executed by the Authorized Representative of the Borrower and approved by the Servicer to be
applied to costs of operation of the Project, except that upon the occurrence and continuation of
an Event of Default hereunder and an acceleration of the Bonds pursuant hereto, all moneys
and investments in the Operating Reserve Fund (other than moneys held to pay costs required
to be paid but not yet payable) shall be transferred to the Revenue Fund and applied to the
payment of the Bonds. Upon the payment in full of the Bonds and the fees and expenses of the
Issuer, the Majority Owner, the Servicer and the Trustee and upon payment of amounts payable
to the United States pursuant to Section 5.08 hereof, any amounts remaining in the Operating
Reserve Fund shall be paid to the Borrower as soon as practicable upon its written request
therefor.
Section 5.06 Tax and Insurance Fund. There shall be deposited in the Tax and
Insurance Fund all moneys received for such purpose by the Trustee from the Borrower
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pursuant to Section 5.22(h) of the Loan Agreement or transferred pursuant to Section 5.07 of this
Indenture. Moneys in the Tax and Insurance Fund shall be applied to payment of real estate
taxes and insurance premiums, as the same become due in accordance with bills for such taxes
and insurance premiums. If the Trustee becomes aware at any time that amounts in the Tax
and Insurance Fund are or will be insufficient to pay such taxes and insurance premiums as
they become due, the Trustee shall promptly give notice of such insufficiency to Borrower and
the Servicer. Upon the occurrence and continuation of an Event of Default hereunder and an
acceleration of the Bonds pursuant hereto, all moneys and investment in the Tax and Insurance
Fund (other than moneys held to pay costs required to be paid but not yet payable) shall be
transferred to the Revenue Fund and applied to the payment of the Bonds. Upon the payment
in full of the Bonds and the fees and expenses of the Issuer, the Majority Owner, the Servicer
and the Trustee, and upon payment of amounts payable to the United States pursuant to
Section 5.08 hereof, any amounts remaining in the Tax and Insurance Fund shall be paid to the
Borrower as soon as practicable upon its written request therefor.
Section 5.07 Revenue Fund.
(a) There shall be deposited in the Revenue Fund all amounts transferred from the
Project Fund or received from the Borrower pursuant to Section 3.2 of the Loan Agreement with
respect to the Loan Documents, including payments of interest and principal and voluntary and
involuntary prepayments of the Loan and investment earnings on investments held in the
Funds and Accounts created by this Indenture (except as otherwise provided in Section 5.08 and
Section 5.10).
(b) Amounts in the Revenue Fund shall be applied to the following items in the
following order of priority:
(i) on each Interest Payment Date, to the payment of interest on the Bonds;
(ii) on each Bond Payment Date, to the payment of the principal of or
redemption price (or purchase price in the event of an election of Borrower under
Section 4.04) of, interest on, and any Prepayment Equalization Payment or Additional
Interest due with respect to, the Bonds;
(iii) on the first day of each month, to the payment of any required deposit in
the Tax and Insurance Fund;
(iv) on the first day of each month, to the payment of any required deposit in
the Replacement Reserve Fund;
(v) on the first day of each month, to the payment of any required deposit in
the Operating Reserve Fund;
(vi) on the first day of each month, to the payment of the fees of the Issuer,
the Trustee, the Majority Owner and the Servicer, if any, due and owing under the Loan
Documents and this Indenture;
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(vii) on the first day of each month, to the payment of any other amounts then
due and owing under the Loan Documents; and
(viii) on the first day of each month, to the Borrower or such other party as
may be legally entitled thereto.
(c) Upon the payment in full of the Bonds and the fees and expenses of the Issuer
and the Trustee and the payment of amounts payable to the United States pursuant to Section
5.08 hereof, any amounts remaining in the Revenue Fund (except amounts held for future
payment to the United States pursuant to Section 5.08 hereof) shall be paid to the Borrower.
Section 5.08 Rebate Fund.
(a) The Rebate Fund shall be held and applied as provided in this Section 5.08. All
money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for
payment, to the extent required under the Code and as calculated by the Rebate Analyst, for
payment to the United States Government. None of the Issuer, the Borrower or the Owners
shall have any rights in or claim to such moneys. All amounts deposited into or on deposit in
the Rebate Fund shall be governed by this Section and by the Tax Agreement.
(b) The Trustee shall make information regarding the Bonds and the investments
hereunder available to the Borrower and the Rebate Analyst promptly upon written request,
shall make deposits to and disbursements from the Rebate Fund in accordance with the
directions received from the Authorized Representative of the Borrower, shall invest moneys in
the Rebate Fund pursuant to said directions and shall deposit income from such investments
pursuant to said directions, and shall make payments to the United States of America in
accordance with written directions received from the Borrower.
(c) Notwithstanding any provision of this Indenture to the contrary, the Trustee
shall not be liable or responsible for any calculation or determination which may be required in
connection with or for the purpose of complying with Section 148 of the Code or any applicable
Treasury regulation (the “Arbitrage Rules”), including, without limitation, the calculation of
amounts required to be paid to the United States under the provisions of the Arbitrage Rules
and the fair market value of any investment made hereunder, it being understood and agreed
that the sole obligation of the Trustee with respect to investments of funds hereunder shall be to
invest the moneys received by the Trustee pursuant to the written instructions of the
Authorized Representative of the Borrower given in accordance with Section 5.09 hereof. The
Trustee shall have no responsibility for determining whether or not the investments made
pursuant to the direction of the Borrower or any of the instructions received by the Trustee
under this Section comply with the requirements of the Arbitrage Rules and shall have no
responsibility for monitoring the obligations of the Borrower or the Issuer for compliance with
the provisions of the Indenture with respect to the Arbitrage Rules.
(d) Notwithstanding any provision of this Indenture to the contrary, the obligation
to remit payment of the rebate amount to the United States and to comply with all other
requirements of this Section 5.08 shall survive the defeasance or payment in full of the Bonds.
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(e) Any funds remaining in the Rebate Fund after redemption and payment of all of
the Bonds and payment and satisfaction of any Rebate Requirement, or provision made therefor
satisfactory to the Trustee, shall be withdrawn and remitted to the Borrower.
(f) The Trustee shall obtain and keep such records of the computations made
pursuant to this Section 5.08 as are required under Section 148(f) of the Code. The Trustee shall
keep and make available to the Borrower and the Rebate Analyst such records concerning the
investments of the gross proceeds of the Bonds and the investments of earnings from those
investments as may be requested by the Borrower or the Rebate Analyst in order to enable the
Rebate Analyst to make the aforesaid computations as are required under Section 148(f) of the
Code.
(g) Notwithstanding the foregoing, the computations and payments of rebate
amounts referred to in this Section 5.08 need not be made if there shall have been delivered to
the Trustee, the Issuer and the Servicer an opinion of Bond Counsel to the effect that such
withdrawal and payment are not necessary in order to establish or maintain the exclusion from
gross income of Owners (other than an Owner who is a “substantial user” of the Project or a
“related person” to a “substantial user,” as defined in Section 147(a) of the Code) of interest on
the Bonds. In the event Bond Counsel so opines, the moneys on deposit in the Rebate Fund
shall be applied to such purpose as the Borrower shall direct in writing provided that the
Borrower shall deliver to the Issuer, the Trustee and the Servicer an opinion of Bond Counsel to
the effect that such application will not adversely affect the exclusion from gross income of
Owners (other than an Owner who is a “substantial user” of the Project or a “related person” to
a “substantial user,” as defined in Section 147(a) of the Code) of interest on the Bonds for
purposes of federal income taxation.
Section 5.09 Moneys Held in Trust; Investment of Moneys.
(a) All moneys from time to time received by the Trustee and held in the Funds and
Accounts created hereby (other than the Rebate Fund) shall be held in trust as security for the
benefit of the Owners of the Bonds. All such moneys, including the moneys held in the Rebate
Fund, shall be invested as provided in this Indenture.
(b) Any such investments shall be held by or under the control of the Trustee. A
sufficient amount of such investments shall be liquidated whenever the cash balance in any
Fund or Account is insufficient to pay an approved Requisition when presented. Any moneys
held as a part of the Funds shall be invested or reinvested, to the extent permitted by law, in
Investment Securities at the request of and as directed in writing by an Authorized
Representative of the Borrower.
Section 5.10 Investment Earnings. Earnings on investments held in the Capitalized
Interest Account, the Loan Account, the Equity Account and the Insurance and Condemnation
Proceeds Account shall be retained in the Capitalized Interest Account, the Loan Account, the
Equity Account and the Insurance and Condemnation Proceeds Account, respectively, for
application pursuant to Sections 5.02, 5.03 and 5.04 hereof. Earnings on all investments held in
the Revenue Fund shall be retained in the Revenue Fund for application pursuant to Section
5.07 hereof. Earnings on investments held in the Replacement Reserve Fund, the Operating
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Reserve Account, the Tax and Insurance Fund and the Rebate Fund shall be retained therein
and applied in the manner prescribed by Sections 5.05, 5.06 and 5.08 hereof, respectively.
Section 5.11 Covenants Respecting Arbitrage and Rebate. The Trustee shall keep and
make available to the Borrower such records concerning the investment of the gross proceeds of
the Bonds and the investments of earnings from those investments as may be requested by the
Borrower in order to enable the Borrower to fulfill the requirements of Section 148(f) of the
Code.
Section 5.12 Records. The Trustee shall keep and maintain adequate records
pertaining to the Funds and Accounts established hereunder, including all deposits to and
disbursements from said funds and accounts. The Trustee shall retain in its possession all
certifications and other documents presented to it, all such records and all records of principal
and interest paid on the Bonds, subject to the inspection of the Borrower, the Issuer, the Trustee
and the Owners of the Bonds and their representatives at all reasonable times and upon
reasonable prior notice.
Section 5.13 Reports From the Trustee. The Trustee shall, on or before the tenth (10th)
day of each month and annually, file with the Servicer, the Borrower and the Issuer a statement
setting forth in respect to the preceding calendar month or year:
(a) the amount withdrawn or transferred by it and the amount deposited
within or on account of each Fund and Account held by it under the provisions of this
Indenture, including the amount of investment income on each Fund and Account;
(b) the amount on deposit with it at the end of such month to the credit of
each Fund and Account;
(c) a brief description of all obligations held by it as an investment of moneys
in each such 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 Servicer or the Issuer may
reasonably request and to which the Trustee has access in the ordinary course of its
operations.
The Issuer acknowledges that, to the extent that regulations of the Comptroller of the
Currency or any other applicable regulatory agency grant the Issuer the right to receive
brokerage confirmations of securities transactions as they occur, the Issuer specifically waives
the right to receive such confirmations. Upon the written request of any Owner or Owners of
twenty-five percent (25%) or more in aggregate principal amount of Bonds then Outstanding,
the Trustee, at the cost of the Borrower, shall provide a copy of such statement to the Owners of
the Bonds. All records and files pertaining to the Trust Estate shall be open at all reasonable
times to the inspection of the Servicer and its agents and representatives, and to the Issuer, in
each case upon reasonable prior written notice.
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ARTICLE VI
DEFAULT PROVISIONS; REMEDIES
Section 6.01 Events of Default. Each of the following events is hereby declared an
“Event of Default” under this Indenture:
(a) the failure to pay any installment of principal or the redemption price of
any Bond when and as the same shall become due and payable, whether at maturity or
by call for redemption or otherwise; or
(b) during the Variable Rate Period and during the Reset Period, the failure
to pay any installment of interest on any Bond payable hereunder within five (5)
calendar days after the Borrower’s receipt of notice of the amount due and payable; or
(c) during the Fixed Rate Period, the failure to pay any installment of interest
on any Bond when and as the same shall become due and payable; or
(d) the failure by Issuer to perform or observe any other covenant, agreement
or condition on its part contained in this Indenture or in the Bonds, and such failure
shall continue for a period of sixty (60) days after written notice thereof to the Issuer and
the Borrower by the Trustee or by the Owners of not less than twenty-five percent (25%)
in principal amount of the Bonds Outstanding; or
(e) default in the timely payment of any installment of the fees payable to the
Issuer pursuant to Section 4A(d) of the Regulatory Agreement, and the continuance
thereof for a period of thirty (30) days after written notice to the Trustee, the Borrower
and the Servicer has been given by the Issuer, which default shall not be subject to
waiver by the Servicer or the Trustee; or
(f) The Trustee shall have received written notice from the Issuer that a
default under the Regulatory Agreement has occurred and is continuing past any
applicable notice and cure periods.
Section 6.02 Remedies.
(a) Except as otherwise provided in this Article, the Trustee shall take only such
actions in respect of an Event of Default as it shall be directed in writing to take by the Servicer.
Such actions may include the following:
(i) Declaration of all Outstanding Bonds to be immediately due and payable,
whereupon such Bonds shall become and be immediately due and payable, anything in
the Bonds or in this Indenture to the contrary notwithstanding. In such event, there
shall be due and payable on the Bonds an amount equal to the total principal amount of
all such Bonds, plus all interest accrued thereon and which will accrue thereon to the
date of payment and all unpaid interest on the Bonds on the date of payment.
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(ii) Implementation of actions for the recovery of the amounts due on the
Note, the Loan Agreement and the other Loan Documents.
(iii) Foreclosure or realization upon the collateral held by the Trustee for the
obligations of the Borrower under the Loan Documents.
(iv) Implementation of such other rights and remedies as may be available
under the Loan Documents or applicable law.
(b) At any time after the principal of the Bonds shall have been so declared to be due
and payable and before the entry of final judgment or decree in any suit, action or proceeding
instituted on account of such default, or before the completion of the enforcement of any other
remedy under this Indenture, the Trustee, if so directed by the Servicer (or in the case of an
Event of Default arising under Section 6.01(e) or (f), the Issuer), shall annul such declaration and
its consequences with respect to any Bonds not then due by their terms. In such event, the
Issuer, the Borrower, the Trustee and all of the Owners shall be restored to the same position as
before the occurrence of the Event of Default. No such annulment shall extend to or affect any
subsequent Event of Default or impair any right consequent thereon.
Section 6.03 Additional Remedies and Enforcement of Remedies. Upon the
occurrence and continuation of any Event of Default, the Trustee, if and to the extent directed
by the Servicer, may proceed forthwith to protect and enforce its rights and the rights of the
Owners under the Act, the Bonds and this Indenture by such suits, actions or proceedings as the
Servicer, in its sole discretion, shall deem expedient.
Section 6.04 Application of Revenues and Other Moneys After Default.
(a) If an Event of Default shall occur and shall not have been remedied, the Trustee
shall transfer to the Revenue Fund (i) forthwith, all moneys and securities then held in any
other Fund or Account under this Indenture other than amounts held in the Rebate Fund, and
(ii) as promptly as practicable after receipt thereof, all revenues and other payments or receipts
pledged under this Indenture and all proceeds realized as a result of remedial action under the
Loan Documents or the General Partner Documents.
(b) During the continuation of an Event of Default, the Trustee shall apply such
moneys, securities, revenues, payments and receipts and the income therefrom as follows and
in the following order:
(i) To the payment of Trustee Expenses;
(ii) To the payment of the amounts required to reimburse the Owners of the
Bonds and the Issuer for any reasonable legal or other out of pocket costs incurred by
them in connection with such remedial action and the reasonable fees and expenses of
the Issuer in carrying out this Indenture or the Loan Documents;
(iii) To the payment of the interest and principal installments or redemption
price then due and payable on the Bonds, as follows:
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(A) Unless the principal of all of the Bonds shall have become or have
been declared due and payable;
First: To the payment to the Persons entitled thereto of all
installments of interest then due and payable in the order of the maturity
of such installments, and, if the amount available shall not be sufficient to
pay in full any installment or installments maturing on the same date,
then to the payment thereof ratably, according to the amounts due
thereon to the Persons entitled thereto, without any discrimination or
preference; and
Second: To the payment to the Persons entitled thereto of the
unpaid principal installments or redemption price of any Bonds which
shall have become due and payable, whether at maturity or by call for
redemption, in the order of their due dates, and if the amounts available
shall not be sufficient to pay in full all the Bonds due and payable on any
date, then to the payment thereof ratably, according to the amounts of
principal installments or redemption price due on such date, to the
Persons entitled thereto, without any discrimination or preference.
(B) If the principal of all of the Bonds shall have become or have been
declared due and payable, to the payment of the principal and interest then due
and unpaid upon the Bonds without preference or priority of principal over
interest or of interest over principal, or of any installment of interest over any
other installment of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and interest, to the
Persons entitled thereto without any discrimination or preference (except as to
any difference as to the respective rates of interest specified in the Bonds); and
(iv) Notwithstanding anything contained herein to the contrary, the Servicer
may by written notice to the Trustee direct the application of funds other than in the
manner set forth above (except that the priority of payment of Trustee’s fees and
expenses shall not be altered), including, without limitation, the application of funds
between the principal of or interest on the Bonds. Any such determination by the
Servicer of shall be deemed conclusive, and the Issuer and the Trustee shall have no
liability for the tax or other consequences of said determination.
Section 6.05 Remedies Not Exclusive. No remedy by the terms of this Indenture
conferred upon or reserved to the Trustee or the Owners of the Bonds is intended to be
exclusive of any other remedy, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Indenture or existing at law or in equity
or by statute (including the Act) on or after the date of adoption of this Indenture.
Section 6.06 Remedies Vested in Trustee and Servicer. All rights of action (including
the right to file proof of claims) under this Indenture or under any of the Bonds may be
enforced by the Trustee and the Servicer without the possession of any of the Bonds or the
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production thereof in any trial or other proceedings relating thereto. Subject to the rights of the
Servicer to direct proceedings hereunder, any such suit or proceeding instituted by the Trustee
shall be brought in its name under the authority herein granted without the necessity of joining
as plaintiffs or defendants any Owners of the Bonds. Any recovery of judgment shall be for the
equal benefit of the Owners of the Outstanding Bonds.
Section 6.07 Individual Bond Owners Action Restricted.
(a) No Owner of any Bond other than the Servicer (if it is the Owner of any Bond) or
the Majority Owner shall have any right to institute any suit, action or proceeding in equity or
at law for the enforcement of this Indenture or for the execution of any trust under this
Indenture or for any remedy under this Indenture.
(b) Nothing contained in this Indenture shall affect or impair, or be construed to
affect or impair, the right of the Owner of any Bond (i) to receive payment of the principal of or
interest on such Bond on or after the due date thereof, or (ii) to institute suit for the enforcement
of any such payment on or after such due date; provided, however, no Owner of any Bond may
institute or prosecute any such suit or enter judgment therein, if, and to the extent that, the
institution or prosecution of such suit or the entry of judgment therein, under applicable law,
would result in the surrender, impairment, waiver or loss of the lien of this Indenture on the
moneys, funds and properties pledged under this Indenture for the equal and ratable benefit of
all Owners of the Bonds appertaining thereto.
Section 6.08 Termination of Proceedings. In case any proceeding taken by the Servicer
or by the Trustee at the direction of the Servicer on account of any Event of Default shall have
been discontinued or abandoned for any reason or shall have been determined adversely to the
Owners of the Bonds, the Issuer, the Trustee, the Borrower and the Owners of the Bonds shall
be restored to their former positions and rights under this Indenture, and all rights, remedies
and powers of the such parties shall continue as if no such proceeding had been taken.
Section 6.09 Waiver and Non-Waiver of Event of Default.
(a) No delay or omission of the Trustee, the Servicer or the Owners of the Bonds to
exercise any right or power accruing upon any Event of Default shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or an acquiescence
therein. Every power and remedy given by this Article VII to any party may be exercised from
time to time and as often as may be deemed expedient.
(b) In case of any waiver by the Trustee, acting upon the direction of the Servicer, of
an Event of Default under this Indenture, the Issuer, the Trustee and the Owners of the Bonds
shall be restored to their former positions and rights under this Indenture, respectively, but no
such waiver shall extend to any subsequent or other Event of Default or impair any right
consequent thereon.
Section 6.10 Servicer Controls Proceedings. If an Event of Default shall have occurred
and be continuing, notwithstanding anything in this Indenture to the contrary, the Servicer
shall have the right, at any time, by an instrument in writing executed and delivered to the
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Trustee, to direct the method and place of conducting any proceedings to be taken in connection
with the enforcement of the terms and conditions of this Indenture or any other proceedings
under this Indenture and subject to Section 7.02 of this Indenture; provided, however, that such
direction is in accordance with law and the provisions of this Indenture; provided that nothing
in this Section 6.10 shall impair the right of the Trustee in its discretion to take any other action
under this Indenture which it may deem proper and which is not inconsistent with such
direction by the Servicer, nor shall it impair the Issuer’s right to direct the Trustee to the extent
permitted by Section 6.02.
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ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01 Trustee; Appointment and Acceptance of Duties.
(a) The Issuer hereby appoints U.S. Bank National Association as trustee hereunder.
The Trustee shall signify its acceptance of the duties and obligations imposed upon it by this
Indenture by executing this Indenture.
(b) Unless otherwise provided, the corporate trust offices of the Trustee are
designated as the respective offices or agencies of the Trustee for the authentication and
delivery of Bonds.
Section 7.02 Responsibilities of Trustee.
(a) The recitals of fact herein and in the Bonds contained (other than the certificate of
authentication) shall be taken as the statements of the Issuer and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of any Bonds issued hereunder or as to the security
afforded by this Indenture, and the Trustee shall incur no liability in respect thereof. The
Trustee shall be under no responsibility or duty with respect to the application of any moneys
properly paid to it except as provided herein or as otherwise expressly agreed by the Trustee.
Except for a declaration of acceleration under Section 6.02 hereof or the payment of principal
and interest on the Bonds, the Trustee shall be under no obligation or duty to perform any act
that would involve it in expense or liability or to institute or defend any suit in respect of this
Indenture or to advance any of its own moneys, unless indemnified to its reasonable
satisfaction. Subject to the provisions of subsection (b) of this Section 7.02, the Trustee shall not
be liable in connection with the performance of its duties under this Indenture except for its
own negligence or willful misconduct.
(b) The Trustee, prior to the occurrence of an Event of Default and after the curing of
all Events of Default that may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of Default has occurred
(and has not been cured within any applicable grace period) and subject to the rights of the
Servicer with respect to control of remedies following an Event of Default hereunder, the
Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person’s own affairs. Any provisions of this Indenture
relating to action taken or to be taken by the Trustee or to evidence upon which the Trustee may
rely shall be subject to the provisions of this Section 7.02.
(c) The Trustee shall cooperate fully with the Servicer in the enforcement and
protection of the rights of the Owners of the Bonds to the fullest extent possible under this
Indenture, the Loan Documents and applicable law. Toward this end, the Trustee shall take
such action as directed by the Servicer, including foreclosure of the Property under the
Mortgage, suit for specific performance of the Loan Documents or for damages for
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nonperformance thereof and assignment of the Loan Documents to the Owners of the Bonds for
purposes of enforcing the rights of the Owners of the Bonds; provided, that without the prior
written consent of the Issuer, the Servicer shall give the Trustee no direction as to the
enforcement of the Reserved Rights, which shall, except with the prior written consent of the
Issuer, be enforceable only by the Issuer.
(d) The Trustee shall not take any discretionary action under the Loan Documents
(although approval or disapproval of disbursement of Loan proceeds and investment earnings
thereon under the Loan Agreement shall be made in accordance with the terms of Article V
hereof) without the written approval of the Servicer and shall, subject to the proviso of
paragraph (c) of this section, take such discretionary action permitted or required under the
Loan Documents, as may be directed in writing by the Servicer.
(e) The Trustee shall notify the Servicer of any notification received by the Trustee
under or pursuant to the Loan Documents promptly after receipt of said notice.
(f) If any Event of Default occurs and is continuing hereunder and if the Trustee has
received written notice thereof or is deemed to have notice pursuant to this Indenture, the
Trustee shall give to all Owners, the Issuer and the Borrower written notice of such default or
Event of Default within thirty (30) days after receipt of such information. For the purpose of
this Section 7.02 only, the term “default” means any event which is, or after notice or lapse of
time or both would become, an Event of Default under Section 6.01 hereof.
(g) Promptly upon receipt of notice of the occurrence of a Determination of
Taxability, the Trustee shall give immediate telephonic notice, promptly confirmed in writing,
to the Borrower, the Issuer, the Owners and former Owners (provided that the Trustee shall not
be obligated to maintain records of such former Owners or to retain records relating to such
former Owners for more than six years).
(h) The Trustee shall not be required to take notice or be deemed to have notice of
any Event of Default hereunder or under the Loan Agreement except for a default or Event of
Default referred to in Section 6.01(a) or (b) hereof, unless the Trustee shall have received written
notice of such Event of Default by the Issuer, the Borrower, the Servicer or by the Owners of not
less than 25% in aggregate principal amount of the Bonds then Outstanding.
Section 7.03 Evidence on Which Trustee May Act.
(a) The Trustee, upon receipt of any notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other paper or document furnished to it pursuant to any
provision of this Indenture, shall examine such instrument to determine whether it conforms to
the requirements of this Indenture and shall be protected in acting upon any such instrument
believed by it to be genuine and to have been signed or presented by the proper party or
parties. The Trustee may consult with counsel selected by it in respect of any action taken or
suffered by the Trustee under this Indenture.
(b) Except as otherwise expressly provided in this Indenture, any request, order,
notice or other direction required or permitted to be furnished pursuant to any provision of this
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Indenture by the Issuer to any Trustee shall be sufficiently executed if executed in the name of
the Issuer by an Authorized Representative of the Issuer.
Section 7.04 Compensation; No Trustee Liens. The Borrower shall pay to the Trustee,
as provided in the Loan Agreement, from time to time reasonable compensation for all services
rendered under this Indenture and also all reasonable expenses, charges, counsel fees and other
disbursements, including those of its attorneys, agents, and employees, incurred in and about
the performance of their powers and duties under this Indenture, provided that the Trustee
shall not have a lien therefor on any moneys or Investment Securities at any time held or
received by it under this Indenture.
Section 7.05 Certain Permitted Acts. The Trustee may become the owner of any Bonds
with the same rights it would have if it were not the Trustee. To the extent permitted by law,
the Trustee may act as depository for, and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights
of Owners of the Bonds or to effect or aid in any reorganization growing out of the enforcement
of the Bonds or this Indenture, whether or not any such committee shall represent the Owners
of a majority in principal amount of the Bonds then Outstanding.
Section 7.06 Resignation of Trustee. The Trustee may resign at any time and be
discharged of the duties and obligations created by this Indenture by giving not less than sixty
(60) days’ written notice to the Issuer, the Borrower and the Owners of the Bonds, provided that
no resignation shall become effective until the acceptance of appointment by a successor Trustee
as provided in Section 7.08 of this Indenture. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 60 days after the giving of such
notice of resignation, the retiring Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
Section 7.07 Removal of Trustee. The Trustee may be removed at any time by an
instrument or concurrent instruments in writing, signed by the Issuer or by the Servicer (subject
to the prior written consent of the Issuer, which consent shall not be unreasonably withheld or
delayed, if such removal is not for cause) and filed with the Trustee and the Borrower; provided
that no removal shall become effective until the acceptance of appointment by a successor
Trustee as provided in Section 7.08 of this Indenture
Section 7.08 Appointment of Successor Trustee; Temporary Trustee. In case at any
time the Trustee shall resign or shall be removed or shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or if a receiver, liquidator or conservator of the Trustee, or of
its property, shall be appointed, or if any public officer shall take charge or control of the
Trustee, or of its property or affairs, the Servicer shall appoint a successor Trustee, subject to the
prior written consent of the Issuer (which consent shall not be unreasonably withheld or
delayed).
Section 7.09 Transfer of Rights and Property to Successor Trustee. Any successor
Trustee appointed under this Indenture shall execute, acknowledge and deliver to its
predecessor, and also to the Issuer, the Servicer and to any Owner which shall request the same,
an instrument accepting such appointment and thereupon such successor Trustee, without any
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further act, deed or conveyance, shall become fully vested with all moneys, estates, properties,
rights, powers, duties and obligations of such predecessor Trustee, with like effect as if
originally named; but the Trustee ceasing to act nevertheless, shall execute, acknowledge and
deliver such instruments of conveyance and further assurance and do such other things as
reasonably may be required for more fully and certainly vesting and confirming in such
successor all the right, title and interest of the predecessor Trustee in and to any property 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 or pursuant to this
Indenture. Should any deed, conveyance or instrument in writing from the Issuer be required
by such successor Trustee for more fully and certainly vesting in and confirming any such
estates, rights, powers and duties, any and all such deeds, conveyances and instruments in
writing, on request and so far as may be authorized by law, shall be executed, acknowledged
and delivered by the Issuer.
Section 7.10 Merger or Consolidation of Trustee. Any company into which the
Trustee may be merged or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it may be party or any
company to which the Trustee may sell or transfer all or substantially all of its corporate trust
business, provided such company shall be a bank or trust company organized under the laws of
any state of the United States or a national banking association, and shall be authorized by law
to perform all the duties imposed upon it by this Indenture, shall be the successor to the Trustee
without the execution or filing of any paper or the performance of any further act.
Section 7.11 Servicer. The Majority Owner may (but shall not be obligated to) appoint
(with prompt notice thereof to the Issuer and the Borrower) a mortgage servicer to service the
Loan for all or a portion of the term of the Loan. The Servicer shall signify its acceptance of the
duties and obligations imposed upon it by this Indenture by executing the Servicing
Agreement. Any Servicer appointed hereunder may be removed at any time, with or without
cause, by the Majority Owner, by written notice to the Issuer, the Trustee, the Borrower and the
Servicer. At any time when a Servicer has not been appointed or when a Servicer has been
removed without appointment of a successor Servicer, pursuant to this Section 7.11, all
references in this Indenture and in the Loan Documents to the Servicer shall be deemed to refer
to the Majority Owner. The Servicer may, with the prior written consent of the Majority Owner,
appoint an agent as subservicer to perform the duties of the Servicer under the Servicing
Agreement.
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ARTICLE VIII
AMENDMENTS AND SUPPLEMENTAL INDENTURES; AMENDMENTS OF ISSUER
DOCUMENTS
Section 8.01 Supplemental Indentures Not Requiring Consent of Owners of Bonds.
The Issuer and the Trustee may, without the consent of, or notice to, the Owners of any Bonds
(but only with the prior written consent of the Servicer, if any one person or entity owns at least
fifty-one percent (51%) in aggregate principal amount of the Outstanding Bonds, and in any
event with notice to the Servicer and the Borrower), enter into one or more Supplemental
Indentures for any one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in this Indenture;
(b) to grant to or confer any additional benefits, rights, remedies, powers or
authorities that may lawfully be granted to or conferred upon the Owners of the Bonds
or the Trustee, or to make any change which, in the judgment of the Trustee and the
Servicer, is not to the prejudice of the Owners of the Bonds;
(c) to subject to the pledge and lien of this Indenture additional revenues,
properties and collateral;
(d) to evidence the appointment of a separate Trustee or co Trustee or the
succession of a new Trustee; or
(e) to modify, amend or supplement the provisions of this Indenture or any
Supplemental Indenture relating to the holding or investing by the Trustee of moneys
hereunder or thereunder in such manner as the Issuer may deem necessary or desirable
to maintain the exclusion from gross income of Owners (other than an Owner who is a
“substantial user” of the Project or a “related person” to a “substantial user,” as defined
in Section 147(a) of the Code) for purposes of federal income taxation of interest on the
Bonds.
Section 8.02 Supplemental Indentures Requiring Consent of Owners of Bonds.
(a) Exclusive of Supplemental Indentures covered by Section 8.01 of this Indenture
and subject to the terms and provisions contained in this Section 8.02, and not otherwise,
neither the Issuer nor the Trustee shall enter into any amendment, change or modification of
this Indenture without the prior written consent of the Owners of not less than two thirds in
aggregate principal amount of the Bonds then Outstanding; provided, however, that nothing in
this Section 8.02 contained shall permit, or be construed as permitting, without the consent of
the Owners of all of the Bonds, (i) an extension of the maturity date of the principal of or the
interest on any Bond, (ii) a reduction in the principal amount of any Bond or the rate of interest
thereon, (iii) change in a privilege or priority of any Bond or Bonds over any other Bond or
Bonds, (iv) a reduction in the percentages of the Owners of the Outstanding Bonds required for
consent to such Supplemental Indenture, (v) the creation of any lien other than a lien ratably
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securing all of the Bonds at any time Outstanding, or (vi) any reduction of the trusts, powers,
rights, obligations, duties, remedies, immunities and privileges of the Trustee.
(b) If at any time the Issuer and the Trustee shall desire to execute and deliver a
Supplemental Indenture for any of the purposes of this Section 8.02, the Trustee shall, upon
being provided with reasonably satisfactory arrangements for payment of its fees and expenses,
cause notice of the proposed execution of such Supplemental Indenture to be mailed by
registered or certified mail to each Owner of the Bonds. Such notice shall briefly set forth the
nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at
the Principal Office of the Trustee for inspection by all Owners of the Bonds. If within 60 days
or such longer period as shall be prescribed by the Issuer following the giving of such notice,
the Owners of not less than two thirds in aggregate principal amount of the Bonds Outstanding
at the time of the execution of any such Supplemental Indenture shall have consented to and
approved the execution thereof as herein provided, no Owner of any Bond shall have any right
to object to any of the terms and provisions contained therein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or restrain the Issuer
from adopting the same or from taking any action pursuant to the provisions thereof. Subject to
Section 8.04 hereof, upon the execution of any such Supplemental Indenture as in this Section
8.02 permitted and provided, this Indenture shall be and be deemed to be modified and
amended in accordance therewith.
Section 8.03 Reliance on Opinion of Counsel. The Trustee and the Issuer shall be
entitled to rely upon an opinion of Counsel stating that a Supplemental Indenture is authorized
or permitted by this Indenture, and prior to the execution and delivery of any Supplemental
Indenture, the Trustee, the Issuer, the Servicer shall be furnished with an opinion of Bond
Counsel to the effect that the provisions of such Supplemental Indenture will not, in themselves,
cause the interest on the Bonds to be includable in gross income of Owners (other than an
Owner who is a “substantial user” of the Project or a “related person” to a “substantial user,” as
defined in Section 147(a) of the Code) for purposes of federal income taxation.
Section 8.04 Consents Required. Anything herein to the contrary notwithstanding, a
Supplemental Indenture described in Section 8.02 hereof which adversely affects any rights of
the Borrower, the Servicer or the Trustee shall not become effective unless and until the affected
party shall have consented in writing to the execution and delivery of such Supplemental
Indenture. In this regard, the Trustee shall cause notice of the proposed execution and delivery
of any Supplemental Indenture together with a copy of the proposed Supplemental Indenture
to be mailed as provided in Section 4.05 with respect to the redemption of Bonds to the
Borrower and the Servicer at least ten (10) days before the date of its proposed execution and
delivery.
Section 8.05 Amendments of Loan Documents Not Requiring Consent of Owners of
Bonds. The Issuer, the Trustee and the Borrower may, without the consent of or notice to any of
the Owners of Bonds (but only with the consent of the Servicer) enter into any amendment,
change or modification of any of the Loan Documents as may be required (a) by the provisions
of the Loan Agreement or this Indenture, (b) for the purpose of curing any ambiguity or formal
defect or omission therein, (c) so as to add additional rights and remedies for the benefit of
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Owners of the Bonds, or (d) in connection with any other change therein which, in the judgment
of the Trustee and the Servicer, is not to the prejudice of the Trustee or the Owners of the Bonds.
Section 8.06 Amendments of Loan Documents Requiring Consent of Owners of
Bonds. Except for the amendments, changes or modifications as provided in Section 8.05
hereof, none of the Issuer, the Trustee or the Borrower shall enter into any other amendment,
change or modification of the Loan Documents without the mailing of notice and the written
approval or consent of the Owners of not less than 66 2/3% in aggregate principal amount of
the Outstanding Bonds; provided, however, that nothing in this Section or Section 8.05 hereof
shall permit or be construed as permitting without the consent of the Owners of all of the
Bonds (a) an extension of the time of the payment of any amounts payable under the Loan
Documents, or (b) a reduction in the amount of any payment or in the total amount due under
the Loan Documents. If at any time the Issuer, the Trustee or the Borrower shall desire the
consent to any such proposed amendment, change or modification, the Trustee shall, upon
being satisfactorily indemnified with respect to fees and expenses, cause notice of such
proposed amendment, change or modification to be mailed in the same manner as provided
herein with respect to redemption of Bonds. Such notice shall briefly set forth the nature of
such proposed amendment, change or modification and shall state that copies of the instrument
embodying the same are on file at the Principal Office of the Trustee for inspection by all
Owners of Bonds. If, within sixty (60) days, or such longer period as shall be prescribed by the
Trustee as the case may be, following the mailing of such notice, the Owners of 66 2/3% in
aggregate principal amount of the Bonds Outstanding at the time of the execution of any such
amendment, change or modification shall have consented to and approved the execution
thereof as hereto provided, no Owner of any Bond shall have any right to object to any of the
terms and provisions contained therein, or the operation thereof, or in any manner to question
the propriety of the execution thereof, or to enjoin or restrain the Borrower or the Issuer or the
Trustee as the case may be, from executing the same or from taking any action pursuant to the
provisions thereof. The Issuer, or the Trustee as the case may be, shall have the right to extend
from time to time the period within which such consent and approval may be obtained from
Owners of the Bonds. Upon the execution of any such amendment, change or modification as
in this Section permitted and provided, the Issuer Documents shall be and be deemed to be
modified, changed and amended in accordance therewith.
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ARTICLE IX
DISCHARGE
Section 9.01 Discharge of Indenture. If the Issuer shall pay, or there shall otherwise be
paid, to the Owners of all Bonds the principal or redemption price, if applicable, and interest
due thereon, at the times and in the manner stipulated therein and in this Indenture and if all
Trustee Expenses and all amounts payable to the Issuer for its own account (including expenses
and indemnification) shall be paid in full, then the pledge of revenues, other moneys and
securities under this Indenture, and all covenants, agreements and other obligations of the
Issuer to the Owners of Bonds, shall thereupon cease, terminate and become void and be
discharged and satisfied. In such event, the Trustee shall cause an accounting for such period
or periods as shall be requested by the Issuer to be prepared and filed with the Issuer and, upon
the request of the Issuer, shall execute and deliver to the Issuer and the Borrower all such
instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee
shall pay over or deliver as provided in Article V hereof all moneys or securities held by it
pursuant to this Indenture (except as otherwise specified in Section 5.08) after the payment of
principal or redemption price, if applicable, of or interest on Bonds. Notwithstanding the
foregoing, upon such discharge the provisions of this Indenture relating to the Rebate Fund and
Section 5.18(c) of the Loan Agreement shall continue in effect.
Section 9.02 Discharge by Delivery. The obligation to pay the principal of and interest
on all or any portion of the Bonds (the “Bond Obligations”) may be discharged by the delivery
of the Bonds to the Trustee accompanied by written direction from the Owner(s) thereof to
cancel such Bonds without payment (except as provided hereafter in this Section 9.02), and
upon such delivery, such Bond Obligations shall be canceled and deemed paid. In the event
only a portion of the Bond Obligations shall be canceled and deemed paid pursuant to the terms
of this Section 9.02, those Bond Obligations which are not so canceled and deemed paid shall
remain Outstanding for all purposes of this Indenture; provided that if all Outstanding Bonds
shall be delivered to the Trustee in accordance with the terms of this Section 9.02 and all of the
requirements for the discharge of this Indenture (other than the payment of Bond Obligations)
shall be paid and satisfied in full, then the Trustee shall discharge and release the lien of this
Indenture, assign to the Owner(s) of the Bonds all right, title and interest of the Trustee in and
to the Note, the Loan Agreement and the other Loan Documents, deliver to the Owner(s) of the
Bonds all moneys and securities held by the Trustee pursuant to this Indenture (except as
otherwise specified in Section 5.08) up to an amount necessary to pay in full all of the principal
of and interest on the Bonds through such cancellation and any other amounts due under the
Loan Documents, and execute and deliver such releases or other instruments requisite to release
the lien hereof.
Section 9.03 Discharge by Deposit. The obligation to pay the principal of and interest
on all or a portion of the Bonds may be discharged if the Issuer or the Borrower has deposited
or caused to be deposited, as trust funds, with the Trustee cash and/or Government Obligations
which do not permit the redemption thereof at the option of the issuer thereof, the principal of
and interest on which when due (or upon the redemption thereof at the option of the Owner),
will, without reinvestment, provide cash which together with the cash, if any, on deposit with
the Trustee at the same time, shall be sufficient, to pay and discharge the entire indebtedness on
July 10, 2012 Contra Costa County Board of Supervisors 840
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Bonds not theretofore canceled by the Trustee or delivered to the Trustee for cancellation by the
payment of interest on and principal of the Bonds which have become due and payable or
which shall become due at their stated maturity or redemption date, as the case may be (the
“Defeasance Collateral”), and which are to be discharged under the provisions hereof, and has
made arrangements satisfactory to the Trustee for the giving of notice of redemption, if any, by
the Trustee, at the expense of the Borrower. If the period over which payments will be made
from the Defeasance Collateral is greater than ninety (90) days, the Borrower must also deliver
to the Trustee a verification report prepared by a certified public accountant, with respect to the
sufficiency of the Defeasance Collateral to make such payments. In addition, to discharge the
obligation to pay the principal and interest on the Bonds pursuant to this Section 9.03, the Issuer
or the Borrower must (i) obtain an opinion of Bond Counsel addressed to the Issuer and the
Trustee to the effect that all actions have been taken to cause the defeasance of this Indenture
and such actions will not adversely affect the excludability of interest on the Bonds for federal
income tax purposes under existing law, and (ii) provide written notice to the Servicer of such
discharge at least thirty (30) days in advance.
July 10, 2012 Contra Costa County Board of Supervisors 841
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ARTICLE X
MISCELLANEOUS
Section 10.01 Evidence of Signatures of Bond Owners and Ownership of Bonds.
(a) Any request, consent, revocation of consent or other instrument that this
Indenture may require or permit to be signed and executed by the Owners may be in one or
more instruments of similar tenor, and shall be signed or executed by such Owners in person or
by their attorneys appointed in writing. The fact and date of the execution by any Owner of the
Bonds or his attorney of such instruments may be proved by a guaranty of the signature
thereon by a bank, trust company or national banking association or by the certificate of any
notary public or other officer authorized to take acknowledgments of deeds, that the person
signing such request or other instrument acknowledged to him the execution thereof, or by an
affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
Where such execution is by an officer of a corporation or association or a member of a
partnership, on behalf of such corporation, association or partnership, such signature guaranty,
certificate or affidavit also shall constitute sufficient proof of his authority.
(b) The ownership of Bonds and the amount, numbers and other identification, and
date of holding the same, shall be proved by the registry books maintained by the Trustee.
(c) Any request or consent by the Owner of any Bond shall bind all future owners of
such Bond in respect of anything done or suffered to be done by the Issuer or any Trustee in
accordance therewith.
Section 10.02 Bonds Not an Obligation of the State or Any Political Subdivision;
Limited Liability of Issuer.
(a) The Bonds are not general obligations of the Issuer, but are limited obligations
payable solely from the Trust Estate. The Bonds do not constitute an indebtedness or obligation
of the State or any county (other than the Issuer, to the limited extent set forth in this Indenture),
municipality or political subdivision thereof, and will not constitute or result in the creation of
an indebtedness of the State or any county (other than the Issuer, to the limited extent set forth
in this Indenture), municipality or political subdivision thereof. No Owner of the Bonds will
ever have the right to compel any exercise of the taxing power of the Issuer, or the State or any
county, municipality or political subdivision thereof, nor to enforce the payment thereof against
any property of the Issuer (other than against the Trust Estate), or the State or any county,
municipality or political subdivision thereof.
(b) No recourse may be had for the enforcement of any obligation, promise or
agreement of the Issuer contained herein, in any other Issuer Document, in the Loan Documents
or in the Bonds or for any claim based hereon or thereon or otherwise in respect hereof or
thereof against any Boardmember, officer, agent, attorney or employee, as such, in his
individual capacity, past, present or future, of the Issuer or of any successor entity, either
directly or through the Issuer or any successor entity whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or penalty otherwise.
July 10, 2012 Contra Costa County Board of Supervisors 842
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No personal liability whatsoever will attach to, or be incurred by, any Boardmember, officer,
agent, attorney or employee as such, past, present or future, of the Issuer or of any successor
entity, either directly or through the Issuer or any successor entity, under or by reason of any of
the obligations, promises or agreements entered into in the Bonds or between the Issuer and the
Trustee, whether contained herein or to be implied herefrom as being supplemental hereto; and
all personal liability of that character against every such Boardmember, officer, agent, attorney
and employee is, by the execution of this Indenture and as a condition of, and as part of the
consideration for, the execution of this Indenture, expressly waived and released.
(c) 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.
(d) 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 Project, 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.
(e) 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 Issuer
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 any fees or administrative
expenses or otherwise.
(f) Anything in this Indenture to the contrary notwithstanding, it is expressly
understood by the parties to this Indenture that (a) the Issuer and the Trustee may rely
exclusively on the truth and accuracy of any certificate, opinion, notice or other instrument
furnished to the Issuer or the Trustee or any Owner as to the existence of any fact or state of
affairs, (b) the Issuer shall not be under any obligation under this Indenture to perform any
record keeping or to provide any legal services, it being understood that such services shall be
performed or caused to be performed by the Trustee or by the Owners, and (c) none of the
provisions of this Indenture shall require the Issuer to expend or risk its own funds or otherwise
to incur financial liability in the performance of any of its duties or in the exercise of any of its
rights or powers under this Indenture, unless it shall first have been adequately indemnified to
its satisfaction against any costs, expenses and liability which it may incur as a result of taking
such action.
(g) The Issuer shall be entitled to the advice of counsel (who, except as otherwise
provided, may be counsel for any Owner), and the Issuer shall be wholly protected as to action
taken or omitted in reliance on such advice. The Issuer may rely conclusively on any
communication or other document furnished to it hereunder and reasonably believed by it to be
genuine. The Issuer shall in no event be liable for the application or misapplication of funds or
for other acts or defaults by any person, except its own officers and employees. When any
payment or consent or other action by it is called for hereby, it may defer such action pending
receipt of such evidence (if any) as it may require in support thereof. The Issuer shall not be
required to take any remedial action (other than the giving of notice) unless indemnity in a form
acceptable to the Issuer is furnished for any expense or liability to be incurred in connection
July 10, 2012 Contra Costa County Board of Supervisors 843
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with such remedial action, other than liability for failure to meet the standards set forth in this
Section. The Issuer shall be entitled to reimbursement from the Borrower for its expenses
reasonably incurred or advances reasonably made, with interest at the rate of interest on the
Bonds, in the exercise of its rights or the performance of its obligations hereunder, to the extent
that it acts without previously obtaining indemnity. No permissive right or power to act which
the Issuer may have shall be construed as a requirement to act; and no delay in the exercise of a
right or power shall affect its subsequent exercise of the right or power.
Section 10.03 Preservation and Inspection of Documents. All documents received by
any Trustee under the provisions of this Indenture shall be retained in its possession and shall
be subject at all reasonable times and upon reasonable prior notice to the inspection of the
Issuer, the Servicer and any Owner of the Bonds and their agents and their representatives, any
of whom may make copies thereof.
Section 10.04 Parties Interested Herein. Nothing in this Indenture expressed or implied
is intended or shall be construed to confer upon, or to give to, any Person, other than the Issuer,
the Trustee, the Servicer, the Borrower and the Owners of the Bonds, any right, remedy or claim
under or by reason of this Indenture or any covenant, condition or stipulation of this Indenture;
and all the covenants, stipulations, promises and agreements in this Indenture shall be for the
sole and exclusive benefit of the Issuer, the Trustee, the Servicer, the Borrower and the Owners
of the Bonds.
Section 10.05 No Recourse on the Bonds. No recourse shall be had for the payment of
the principal or redemption price or purchase price of or interest on the Bonds or for any claim
based thereon or on this Indenture or any other Issuer Document or the Loan Documents
against any Boardmember, officer, employee or agent of the Issuer or any person executing the
Bonds.
Section 10.06 Severability of Invalid Provisions. If any one or more of the covenants or
agreements provided in this Indenture on the part of the Issuer or any Trustee to be performed
should be contrary to law, then such covenant or covenants or agreement or agreements shall
be deemed severable from the remaining covenants and agreements, and in no way shall affect
the validity of the other provisions of this Indenture.
Section 10.07 Successors. Whenever in this Indenture the Issuer is named or referred
to, it shall be deemed to include any entity that may succeed to the principal functions and
powers of the Issuer under the Act, and all the covenants and agreements contained in this
Indenture by or on behalf of the Issuer shall bind and inure to the benefit of said successor
whether so expressed or not.
Section 10.08 Notices, Demands and Requests. Except as otherwise provided in Section
4.05, all notices, demands and requests to be given or made under this Indenture to or by the
Issuer or the Trustee shall be in writing and shall be sufficiently given and shall be deemed
given (a) three days after mailing by certified mail, first-class, postage prepaid; (b) the Business
Day after sending by expedited overnight delivery service; (c) the date of receipt if delivered by
personal delivery; (d) if sent by facsimile transmission, the date of transmission, if receipt of
such transmission is telephonically confirmed on such day and addressed to the Notice Address
July 10, 2012 Contra Costa County Board of Supervisors 844
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of the respective addressee. Either the Issuer or the Trustee may change the Notice Address
listed for it at any time upon written notice of such change sent by United States mail, postage
prepaid, to the other party, which charge shall be effective upon receipt.
Section 10.09 Applicable Law. This Indenture shall be governed exclusively by the
laws of the State applicable to contracts made and performed in the State.
Section 10.10 Table of Contents and Section Headings Not Controlling. The Table of
Contents and the headings of the several Articles and Sections of this Indenture have been
prepared for convenience of reference only and shall not control, affect the meaning of, or be
taken as an interpretation of any provision of this Indenture.
Section 10.11 Exclusion of Bonds. Bonds owned or held by or for the account of the
Issuer or the Borrower shall not be deemed Outstanding for the purpose of consent or other
action or any calculation of Outstanding Bonds provided for in this Indenture, and the Issuer
and the Borrower shall not be entitled with respect to such Bonds to give any consent or take
any other action provided for herein, unless all of the Outstanding Bonds are then owned by
such Person.
Section 10.12 Effective Date. This Indenture shall take effect immediately upon the
execution and delivery by all of the parties hereto.
Section 10.13. Execution in Several Counterparts. This Indenture may be executed in
any number of counterparts and each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one and the same
instrument.
July 10, 2012 Contra Costa County Board of Supervisors 845
S-1
IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed in its name
by its duly authorized official; and to evidence its acceptance of the trusts hereby created, the
Trustee has caused this Indenture to be executed in its corporate name, all as of the date first
above written.
COUNTY OF CONTRA COSTA,
CALIFORNIA
By:
Signature
Printed Name
Title
U.S. BANK NATIONAL ASSOCIATION
By:
Signature
Printed Name
Title
03007.25:J11737
July 10, 2012 Contra Costa County Board of Supervisors 846
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EXHIBIT A
FORM OF BOND
SUBJECT TO THE EXCEPTIONS SET FORTH IN SECTION 3.09 OF THE INDENTURE
(HEREINAFTER DEFINED), THE PURCHASER OF THIS BOND MUST BE AN
“ACCREDITED INVESTOR” WITHIN THE MEANING OF REGULATION D UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR A “QUALIFIED INSTITUTIONAL BUYER”
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OF 1933 AND WILL
BE REQUIRED TO EXECUTE AND DELIVER AN INVESTMENT LETTER AGREEMENT
THAT WILL, AMONG OTHER THINGS RESTRICT TRANSFER OF THIS BOND.
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(LAFAYETTE SENIOR HOUSING),
SERIES 2012A
No. _____________
Dated Date: August __, 2012
Registered Owner: __________
Maturity Date: August 1, 2042
Interest Rate: As stated below
The County of Contra Costa, California (hereinafter called the “Issuer”), a political
subdivision and body corporate and politic of the State of California, for value received hereby
promises to pay (but only from the sources and as hereinafter provided) to the Registered
Owner specified above, or registered assigns, the principal amount of _______________________
Dollars ($_______), or so much of such maximum authorized principal amount as may have
been purchased by the Owner of this Bond from time to time in accordance with the terms of
this Bonds and Section 3.01(b) of the Indenture (described below) on the Maturity Date
specified above, upon presentation and surrender of this Bond at the principal office of U.S.
Bank National Association or its successor as trustee (the “Trustee”), under the Indenture, and
to pay (but only from the sources and as hereinafter provided) interest on said principal amount
at the interest rate set forth above, from and including the dated date hereof until the principal
amount shall have been paid in accordance with the terms of this Bond and the Indenture, as
and when set forth below, but only from the sources and as hereinafter provided, by wire
transfer if there be one Owner of all of the Bonds or otherwise by check or draft mailed to the
record Owners of Bonds as the same appear upon the books of registry to be maintained by the
Trustee, as registrar.
This Bond is one of an authorized series of Bonds of the Issuer designated County of
Contra Costa Multifamily Housing Revenue Bonds (Lafayette Senior Housing), Series 2012A
and issued in the aggregate principal amount of $__________ (collectively, the “Bonds”). The
Bonds are issued for the purpose of funding a loan to Lafayette Senior, L.P., a California limited
July 10, 2012 Contra Costa County Board of Supervisors 847
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partnership (the “Borrower”), in order to finance a portion of the costs of the acquisition,
construction and equipping of a 46-unit multifamily residential housing project in Lafayette,
California (the “Project”).
THIS BOND IS BEING ISSUED AS A DRAW-DOWN BOND, IN THAT THE HOLDERS
OF THE BONDS WILL PURCHASE THE PRINCIPAL AMOUNT OF THE BONDS IN
INSTALLMENTS, AT PAR, IN ACCORDANCE WITH THE TERMS OF AND AS REQUIRED
BY SECTION 3.01(b) OF THE INDENTURE. ACCORDINGLY, THE PRINCIPAL AMOUNT
OF THE BONDS WHICH HAVE BEEN PURCHASED BY THE HOLDERS AND ARE
OUTSTANDING AT ANY GIVEN TIME MAY BE LESS THAN THE MAXIMUM PRINCIPAL
AMOUNT OF THE BONDS AS SET FORTH ON THE FACE OF THIS BOND. UPON EACH
PURCHASE OF A PORTION OF THE PRINCIPAL AMOUNT OF THE BONDS IN
ACCORDANCE WITH THE TERMS OF SECTION 3.01(b) OF THE INDENTURE, THE
TRUSTEE WILL NOTE ON A LOG MAINTAINED BY THE TRUSTEE FOR SUCH PURPOSE
THE PRINCIPAL AMOUNT OF THE BONDS SO PURCHASED, THE DATE OF SUCH
PURPOSE AND THE IDENTITY OF SUCH PURCHASER. THE RECORDS MAINTAINED BY
THE TRUSTEE IN SUCH REGARD WILL BE CONCLUSIVE EVIDENCE OF THE PRINCIPAL
AMOUNT OF THE BONDS WHICH HAVE BEEN PURCHASED AND ARE OUTSTANDING.
IF PRESENTED TO THE TRUSTEE BY THE HOLDER OF THIS BOND, THE PRINCIPAL
AMOUNT OF THE BONDS PURCHASED BY THE OWNER OF THIS BOND WILL BE NOTED
BY THE TRUSTEE ON SCHEDULE 1 ATTACHED TO THIS BOND.
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THIS BOND IS REQUIRED
TO BE MADE DIRECTLY TO THE REGISTERED OWNER HEREOF WITHOUT NOTATION
HEREON. IT CANNOT BE DETERMINED FROM THE FACE OF THIS BOND WHETHER
ALL OR ANY PART OF THE PRINCIPAL OF OR INTEREST ON THIS BOND HAS BEEN
PAID.
This Bond is issued under and pursuant to the Trust Indenture dated as of August 1,
2012 between the Issuer and the Trustee (as amended and supplemented from time to time, the
“Indenture”), and the Act (as that term is defined in the Indenture). Reference is made to the
Indenture and the Act for a full statement of their respective terms. Capitalized terms used
herein and not otherwise defined herein have the respective meanings ascribed to such terms in
the Indenture, which is hereby incorporated herein by this reference. The Bonds issued under
the Indenture are expressly limited to $__________ in aggregate principal amount at any time
Outstanding and are all of like tenor, except as to numbers and denominations. Pursuant to a
Loan Agreement (the “Loan Agreement”) and a Promissory Note (the “Note”) dated as of
August 1, 2012, the Borrower has agreed to make payments to the Trustee in amounts equal to
amounts of principal of and interest on the Bonds.
This Bond and the interest thereon shall not be deemed to constitute or to create in any
manner an indebtedness or obligation of the State or any county (except the Issuer to the limited
extent set forth in the Indenture), municipality or political subdivision thereof, and will not
constitute or result in the creation of an indebtedness of the State or any county (except the
Issuer to the limited extent set forth in the Indenture), municipality or political subdivision
thereof, but in any event shall be a limited obligation of the Issuer payable solely from the Trust
Estate (as that term is defined in the Indenture) shall not be payable from any assets or funds of
July 10, 2012 Contra Costa County Board of Supervisors 848
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the Issuer other than the Trust Estate pledged therefore under the Indenture, and neither the
faith and credit nor the taxing power of the State or any county, municipality or political
subdivision thereof is pledged to the payment of the principal of or the interest on this Bond.
THE OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY LIMITED TO
AND ARE PAYABLE SOLELY FROM (I) THE TRUST ESTATE AND ANY OTHER
COLLATERAL SECURITY FROM TIME TO TIME HELD BY THE TRUSTEE, AND (II) ANY
ADDITIONAL SECURITY PROVIDED IN THE INDENTURE.
Interest Rates. This Bond shall bear interest at the applicable rate provided below. On
each Interest Payment Date, interest accrued through the day immediately preceding such
Interest Payment Date shall be payable. While this Bond bears interest at the Fixed Rate (or an
Alternative Rate based upon the Fixed Rate), interest on this Bond shall be computed on the
basis of a 360-day year of twelve equal months of 30 days each. While this Bond bears interest
at the Variable Rate or at the Reset Rate (or an Alternative Rate based upon the Variable Rate or
the Reset Rate), interest on this Bond shall be computed on the basis of a 360-day year and
actual days elapsed. While this Bond bears interest at the Taxable Rate, interest on this Bond
shall be computed on the basis of a year of 365 or 366 days, as applicable, and actual days
elapsed.
Variable Rate. Commencing on the Dated Date and ending on (and including) the
earliest of the day before the Conversion Date (hereinafter defined), the day before the Maturity
Date or the date of redemption prior to maturity, this Bond shall bear interest at the Variable
Rate (as defined in the Indenture). per annum equal to a variable rate established as hereinafter
provided (the “Variable Rate”).
Fixed Rate. From and after the Conversion Date (as defined in the Indenture) and until
the Reset Date (as defined in the Indenture), this Bond shall bear interest at a fixed rate per
annum of [______________percent (____%)].
Reset Rate. From and after the Reset Date and until the Maturity Date, this Bond Bonds
shall bear interest at the Reset Rate (as defined in the Indenture).
Alternative Rate; Taxable Rate. Following the occurrence of an Event of Default under
the Loan Agreement or an Event of Default under the Indenture, the Bonds shall bear interest at
the Alternative Rate, as that term is defined in the Indenture. If a Determination of Taxability
occurs, this Bond shall bear interest from the date of the Determination of Taxability at the
Taxable Rate, and the Owner shall also be paid Additional Interest, as provided in the
Indenture.
Usury. Notwithstanding any provision of this Bond to the contrary, in no event shall the
interest contracted for, charged or received in connection with this Bond (including any other
costs or considerations that constitute interest under the laws of the State which are contracted
for, charged or received pursuant to this Bond) exceed the maximum rate of nonusurious
interest allowed under the laws of the State as presently in effect and to the extent of any
increase allowable by such laws. To the extent permitted by law, interest contracted for,
charged or received on this Bond shall be allocated over the entire term of this Bond, to the end
July 10, 2012 Contra Costa County Board of Supervisors 849
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that interest paid on this Bond does not exceed the maximum amount permitted to be paid
thereon by law. Excess interest, if any, provided for in this Bond, or otherwise, shall be
canceled automatically as of the date of such acceleration or, if theretofore paid, shall be
credited as principal paid on this Bond.
Registration and Transfer. THIS BOND IS SUBJECT TO THE TRANSFER
RESTRICTIONS SET FORTH IN SECTION 3.09 OF THE INDENTURE. This Bond is
transferable by the registered owner hereof in person or by his attorney duly authorized in
writing at the office of the Trustee as registrar, but only in the manner, subject to the limitations
and upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds, of any
authorized denomination or denominations, of the same maturity and for the same aggregate
principal amount will be issued to the transferee in exchange herefor. The Bonds are issuable as
fully registered Bonds in Authorized Denominations as provided in the Indenture. The Issuer,
the Trustee, and any other person may treat the person in whose name this Bond is registered
on the books of registry as the Owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Bond be overdue, and no person shall
be affected by notice to the contrary.
Redemption of Bonds. This Bond is subject to optional and mandatory redemption (and
purchase in lieu of redemption by the Borrower) prior to maturity as a whole or in part at such
time or times, under such circumstances, at such redemption prices and in such manner as is set
forth in the Indenture.
Enforcement. Only the Servicer shall have the right to direct the Trustee to enforce the
provisions of this Bond or the Indenture or to institute any action to enforce the covenants
herein or therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceedings with respect
thereto, except as provided in the Indenture. If an Event of Default occurs and is continuing,
the principal of all Bonds then outstanding may be declared due and payable by the Servicer
upon the conditions and in the manner and with the effect provided in the Indenture. As
provided in the Indenture, and to the extent permitted by law, interest and a penalty rate of
interest shall be payable on unpaid amounts due hereon.
Discharge. The Indenture prescribes the manner in which it may be discharged and
after which the Bonds shall be deemed to be paid and no longer be secured by or entitled to the
benefits of the Indenture, except for the purposes of registration and exchange of Bonds and of
such payment.
Modifications. Modifications or alterations of the Indenture, or of any supplements
thereto, may be made only to the extent and in the circumstances permitted by the Indenture.
This Bond shall not be valid or obligatory for any purpose until it shall have been signed
on behalf of the Issuer, and authenticated by a duly authorized officer of the Trustee.
In the event of any inconsistency between the provisions of this Bond and the provisions
of the Indenture, the provisions of the Indenture shall control.
July 10, 2012 Contra Costa County Board of Supervisors 850
A-5
It is hereby certified and recited that all conditions, acts and things required by the
statutes of the State or by the Act or the Indenture to exist, to have happened or to have been
performed precedent to or in the issuance of this Bond exist, have happened and have been
performed and that the Bonds, together with all other indebtedness of the Issuer, is within
every debt and other limit prescribed by said statutes.
July 10, 2012 Contra Costa County Board of Supervisors 851
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IN WITNESS WHEREOF, the County of Contra Costa, California has caused this Bond
to be executed in its name by the manual or facsimile signature of its Chair of its Board of
Supervisors, as of the Dated Date above.
COUNTY OF CONTRA COSTA, CALIFORNIA
By:
Signature
Printed Name
Chair of the Board of Supervisors
Title
FORM OF CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture and issued
under the provisions of the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION
By:
Signature
Printed Name
Title
Date of Authentication:
July 10, 2012 Contra Costa County Board of Supervisors 852
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
__________ the within and hereby authorizes the transfer of this Bond on the registration books
of the Trustee.
Dated:
Authorized Signature
Name of Transferee
Signature Guaranteed by
Name of Bank
By:
Title:
July 10, 2012 Contra Costa County Board of Supervisors 853
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SCHEDULE A
$__________
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(LAFAYETTE SENIOR HOUSING),
SERIES 2012A
Draw-Down Purchases
The installment reflected by the draw-down of this Bond may be registered only by the
registered owner in person or by its duly authorized officer or attorney upon presentation
hereof to the Trustee, as Bond registrar, who shall make note thereof in the books kept for such
purpose and in the registration blank below.
Date of
Draw-Down
Name of
Registered Owner
Principal
Amount
Signature of
Bond Registrar
_________ _______________________ _________ _________________________
_________ _______________________ _________ _________________________
_________ _______________________ _________ _________________________
_________ _______________________ _________ _________________________
_________ _______________________ _________ _________________________
July 10, 2012 Contra Costa County Board of Supervisors 854
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EXHIBIT B
FORM OF INVESTOR LETTER
___________, 20___
County of Contra Costa
651 Pine Street
Martinez, California 94553
U.S. Bank National Association, as Trustee
One California Street, Suite 1000
San Francisco, California 94111
Re: County of Contra Costa Multifamily Housing Revenue Bonds (Lafayette Senior
Housing), Series 2012A
Ladies and Gentlemen:
The undersigned (the “Investor”) [as [custodian] [trustee] pursuant to a [custody
agreement] [trust agreement] between [an affiliate of] the transferor of the Bonds, as [depositor]
[trustor/grantor] and the Investor, as [custodian] [trustee] (the “Custody Agreement”)] hereby
acknowledges receipt of $___________ in aggregate principal amount of the above-referenced
bonds (the “Bonds”).
The undersigned acknowledges that the Bonds were issued for the purpose of making a
mortgage loan to assist in the financing of the [construction] [rehabilitation] and equipping of a
certain ___-unit multifamily residential rental housing project located in __________, _________
(the “Project”), as more particularly described in that certain Loan Agreement dated as of
________ 1, 20__ (the “Loan Agreement’), among County of Contra Costa (the “Issuer”), U.S.
Bank National Association, as trustee (the “Trustee”), and Lafayette Senior L.P., a
_______________________ (the “Borrower”). The undersigned further acknowledges that the
Bonds are secured by a Trust Indenture dated as of ___________ 1, 20__ (the “Indenture”),
between the Issuer and the Trustee, which creates a security interest in the trust estate described
therein (the “Trust Estate”) for the benefit of the Owners of the Bonds.
In connection with the purchase of the Bonds by the Investor, the Investor hereby makes
the following representations upon which you may rely:
1. The Investor has authority to purchase the Bonds [as [custodian] [trustee] under
the Custody Agreement] and to execute this letter and any other instruments and documents
required to be executed by the Investor in connection with the purchase of the Bonds.
2. [The Investor is the custodian/trustee under a custody agreement/trust
agreement, which provides each beneficial owner of interests in the Bonds must be] [The
July 10, 2012 Contra Costa County Board of Supervisors 855
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Investor is] (i) an “accredited investor” (as defined in Regulation D promulgated under the
Securities Act of 1933, as amended) or a “qualified institutional buyer” (as defined in Rule 144A
promulgated under the Securities Act of 1933, as amended), or (ii) a trust or custodial
arrangement each of the beneficial owners of which is required to be an accredited investor or
qualified institutional buyer.
3. The Bonds are being acquired [as custodian/trustee under the custody
agreement/trust agreement described above] [by the Investor for investment] and not with a
view to, or for resale in connection with, any distribution of the Bonds, and the Investor intends
to hold the Bonds for its own account and for an indefinite period of time. The Investor
understands that it may need to bear the risks of this investment for an indefinite time, since
any sale prior to maturity may not be possible.
4. The Investor understands that the Bonds are not registered under the Securities
Act of 1933 and that such registration is not legally required as of the date hereof; and further
understands that the Bonds (a) are not being registered or otherwise qualified for sale under the
“Blue Sky” laws and regulations of any state, (b) will not be listed in any stock or other
securities exchange, (c) will not carry a rating from any rating service and (d) will be delivered
in a form which is not be readily marketable.
5. The Investor understands that (a) the Bonds are not secured by any pledge of any
moneys received or to be received from taxation by the County of Contra Costa, or the State of
California or any political subdivision thereof, (b) the Bonds do not and will not represent or
constitute a general obligation or a pledge of the faith and credit of the Issuer, or the State of
California or any political subdivision thereof; and (c) the liability of the Issuer with respect to
the Bonds is limited to the Trust Estate as set forth in the Indenture.
6. [The transferor of the Bonds (the “Transferor”) has represented to the Investor
that it] [The Investor] has either been supplied with or been given access to information,
including financial statements and other financial information, [which it considers necessary to
make an informed decision to act as custodian/trustee in connection with the purchase of the
Bonds] [to which a reasonable investor would attach significance in making investment
decisions, and the Investor has had the opportunity to ask questions and receive answers from
knowledgeable individuals concerning the Borrower, the Project and the Bonds]. [The
Transferor has represented to the Investor that it] [The Investor] has not relied upon the Issuer
for any information in connection with its purchase of the Bonds.
7. The Investor acknowledges that neither the Issuer nor the Borrower has prepared
an offering document with respect to the Bonds.
8. [The Transferor has represented to the investor that it][The Investor] has made its
own inquiry and analysis with respect to the Bonds and the security therefor, and other material
factors affecting the security and payment of the Bonds. [The Transferor has represented to the
Investor that it] [The Investor] is aware that the business of the Borrower involves certain
economic variables and risks that could adversely affect the security for the Bonds.
July 10, 2012 Contra Costa County Board of Supervisors 856
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9. Subject to the exceptions set forth in Section 3.09 of the Indenture, the Investor
acknowledges that it has the right to sell and transfer the Bonds, in accordance with the terms of
the Indenture, subject to the delivery to the Trustee of an investor’s letter from the transferee in
substantially the form attached to the Indenture as Exhibit B, with no revisions except as may be
approved in writing by the Issuer, and compliance with the other applicable provisions of said
Section 3.09.
July 10, 2012 Contra Costa County Board of Supervisors 857
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Capitalized terms used herein and not otherwise defined have the meanings given to
such terms in the Indenture.
Very truly yours,
[INVESTOR]
By:
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 858
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EXHIBIT C
$__________
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(LAFAYETTE SENIOR HOUSING),
SERIES 2012A
REDEMPTION SCHEDULE
DATE OF REDEMPTION PRINCIPAL AMOUNT
TO BE REDEEMED
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
July 10, 2012 Contra Costa County Board of Supervisors 859
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EXHIBIT D
FORM OF REQUISITION
BORROWER: ___________________________
PROJECT: ___________________________
REQUISITION NO.: __________
In the Amount of $____________
TO: U.S. Bank National Association, as Trustee (the “Trustee”)
One California Street, Suite 1000
San Francisco, California 94111
Banc of America Public Capital Corp (the “Majority Owner”)
_________________________
Mail Code ________________
_________________________
The Borrower hereby requests payments in the following amounts, from the following sources
and to be made to the following parties, all as set forth on the Borrower’s Request for Payment
attached to this Requisition:
Amount Source Payable to:
[identify name of Account & Fund
in Indenture [proceeds of
subordinate loans] or Capital
Contributions]
[Borrower’s account #] [third
party payment/wire instructions
must be attached]
Requisition - Contents and Attachments
Borrower’s Request for Payment
Contractor’s Application and Certification for Payment (AIA Form G-702) including change
orders if applicable
Paid Invoices Supporting Application-(AIA Form G-702), as appropriate
Paid Invoices Supporting Borrower’s Request for Payment, as appropriate
Lien Waivers
Architect’s Certificate (If required by Bondowner Representative)
Borrower’s Representations and Warranties
July 10, 2012 Contra Costa County Board of Supervisors 860
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The Borrower hereby requisitions the funds described above, and makes the representations
and warranties attached hereto to the Issuer and the Trustee.
“Borrower”:
Lafayette Senior, L.P.
a California limited partnership
By: Eden Investments, Inc.,
a California nonprofit public benefit
corporation,
its general partner
By:
Printed Name:
Title:
Date:
The foregoing Requisition is approved by Majority Owner.
“Majority Owner”:
By:
Printed Name:
Title:
Date:
July 10, 2012 Contra Costa County Board of Supervisors 861
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Borrower’s Request for Payment
[Bank of America Form]
[attach spreadsheets]
July 10, 2012 Contra Costa County Board of Supervisors 862
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Contractor’s Application and Certification for Payment
(AIA Form G-702) including change orders if applicable
Paid Invoices Supporting Application
(AIA Form G-702), as appropriate
Paid Invoices Supporting Borrower’s Request for Payment, as appropriate
Lien Waivers
Architect’s Certificate
(If required by Bondowner Representative)
Application for Payment No.________
TO: U.S. BANK NATIONAL ASSOCIATION, as Trustee (“Trustee”)
BANC OF AMERICA PUBLIC CAPITAL CORP (“Majority Owner”)
FROM: ___________________ (“Architect”)
RE: construction of Lafayette Senior Apartments located at 3428 Mount Diablo Boulevard
in Lafayette, California (the “Project”) by Lafayette Senior, L.P. (“Borrower”).
We are the architect for the Project, and to induce Majority Owner and Servicer to
approve advance loans of proceeds by the Trustee to assist in funding construction of the
Project, and knowing that Majority Owner and Servicer will rely on this certificate in doing so,
we hereby certify as follows:
1. We inspected the Project on _____________, 20__ and found the status of
the Project on that date and the progress made on the Project since our last certificate to
you dated _____________, 20__ to be as follows:
2. We delivered the Plans and Specifications for the Project, copies of which
have been delivered to you (the “Plans and Specifications”). We have made no changes
to the Plans and Specifications except as you have approved in writing. There are no
pending change orders or construction change directives except as follows:
3. All work to date has been done in accordance with the Plans and
Specifications and in a good and workmanlike manner. All materials and fixtures
usually furnished and installed or stored on site at the current stage of [construction]
July 10, 2012 Contra Costa County Board of Supervisors 863
D-5
[rehabilitation] have been furnished, installed or stored on site. All of the work to date is
hereby approved except as follows:
4. We have examined the requisition being submitted herewith to you by
Borrower, which requisition includes and Application for Payment from _____________
(“Contractor”) respecting construction of the Project. The payment so applied for by
Contractor does not exceed (when added to the payments heretofore applied for by and
paid to Contractor) [90%] of the value of labor and materials incorporated into the
Project.
5. We have been advised that as of this date there remains unexpended
funds of $___________ which are available to fund construction costs, from which funds
to pay the aforementioned Application for Payment will be deducted. In our opinion,
such unexpended funds, after deduction of funds sufficient to cover both the current
Application for Payment and the applicable retainage heretofore withheld and to
become due on account of previous Applications, will be sufficient to pay for all
construction costs reasonably required to complete the Project, provided that the
amount advanced under the current application is, in fact, applied against obligations
incurred for labor and materials heretofore furnished on account of construction of the
Project.
6. All permits, licenses, approvals and the like required to complete
[construction] [rehabilitation] of the Project have been validly issued by the appropriate
authorities and are in full force and effect, and there is no violation of any of the
provisions thereof or of any legal requirements applicable to the Project of which we
have notice or knowledge as of the date hereof except as follows:
7. Access to and egress from the Project and all improvements to be
constructed thereon are in accordance with all applicable legal requirements. Water,
drainage and sanitary sewerage facilities and telephone, gas and electric services of
public utilities are or are due to be installed in the locations indicated on the Plans and
Specifications and are adequate to serve the Project. All necessary approvals for
installation of or connection to said facilities or services have been obtained.
8. To the best of our knowledge, there are no petitions, actions or
proceedings pending or threatened to revoke, rescind, alter or declare invalid any laws,
ordinances, regulations, permits, licenses or approvals for or relating to the Project.
9. No amendments, modifications or changes have been made to our
contract dated ___________, 20__ with the Borrowers except such as have had your prior
written approval.
10. Borrower is not in default of any of Borrower’s obligations to us as of the
date hereof except as follows:
This certificate is rendered based on our examination of the Project, the Plans and
Specifications, the data comprising the Application for Payment and all other matters which we
July 10, 2012 Contra Costa County Board of Supervisors 864
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deem relevant. We are to incur no liability under this certificate except for failure to exercise
due professional skill and diligence.
July 10, 2012 Contra Costa County Board of Supervisors 865
D-7
Executed as a sealed instrument this ________ day of _______________, 20__.
[ARCHITECT NAME]
By:
Name:
Title:
Borrower’s Representations and Warranties
1. No changes have been made in the Plans and Specifications which require and
have not received the prior approval of (i) the Bank under the terms of the Construction
Disbursement Agreement dated as of August 1, 2012 (the “Agreement”), (ii) any Governmental
Authority having jurisdiction over the Project or (iii) any other parties from whom such
approval is required.
2. construction of the Improvements has been performed in accordance with the
Plans and Specifications.
3. As of the date hereof, the Borrower has executed change orders
(increasing/decreasing) the cost of the Improvements by $_______ in the aggregate, has notified
the Consulting Engineer of such changes and, to the extent necessary, has received any and all
necessary approvals from the Majority Owner.
4. Funding of this Requisition shall be in accordance with the terms and provisions
of the (i) Agreement, (ii) the Loan Agreement dated as of August 1, 2012 with respect to the
Bonds (the “Loan Agreement”) and (iii) the Trust Indenture dated as of August 1, 2012 with
respect to the Bonds (the “Indenture”).
5. All monies requisitioned by the Borrower for construction and disbursed by the
Trustee under previously approved requisitions have been paid to the Contractor and, to
Borrower’s best knowledge, all subcontractors, vendors and suppliers; all other funds
requisitioned by the Borrower and disbursed by the Trustee under previously approved
requisitions have been expended for the purpose for which they were requisitioned.
6. All of the information submitted to the Majority Owner and the Trustee in
connection with this Requisition is true and accurate as of the date of submission.
7. The representations and warranties set forth in the Loan Documents are true and
correct as of the date hereof with the same effect as if made on this date.
July 10, 2012 Contra Costa County Board of Supervisors 866
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8. The Borrower represents and warrants that (i) there has occurred no Event of
default or event which, with the passage of time or the giving or notice or both, would
constitute an Event of Default on the part of the Borrower under the terms of the Loan
Documents, (ii) except as previously disclosed by the Borrower to the Majority Owner, the
Borrower has not received notice from or been informed by any Governmental Authority or the
Consulting Engineer of any alleged deficiencies in the work performed to date or any deviation
of such work from Plans and Specifications or notice of any assertion of a claim that the
Improvements are not been constructed in accordance with all applicable Requirements, (iii)
with the exception of any Permitted Liens, there are no liens against any portion of the Project
or any other asset of the Borrower, and (iv) the Loan Documents are in full force and effect.
9. The Borrower represents and warrants that this Requisition is in the form of
requisition required by the Bank.
10. The Borrower represents and warrants that, following payment of the amounts
requested under this Requisition, not less than 95% of amounts paid from proceeds of the Bonds
have been applied to the payment of Qualified Costs of the Project.
11. Attached hereto are copies of lien waivers from all such subcontractors and
materialmen requisitioning payment under this Requisition, the originals of which have been
delivered to the Title Insurance Company.
12. All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto under the Loan Agreement.
Executed this ____ day of ____, _____.
LAFAYETTE SENIOR L.P.
a California limited partnership
By: Eden Investments, Inc.
a California nonprofit public benefit
corporation,
its general partner
By:
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 867
Quint & Thimmig LLP
03007.25:J11741
LOAN AGREEMENT
by and between the
COUNTY OF CONTRA COSTA, CALIFORNIA,
U.S. BANK NATIONAL ASSOCIATION, as Trustee
and
LAFAYETTE SENIOR, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
Dated as of August 1, 2012
Relating to:
$__________
County of Contra Costa
Multifamily Housing Revenue Bonds
(Lafayette Senior Housing),
Series 2012A
The interest of the County of Contra Costa, California (the “Issuer”) in this Loan
Agreement has been assigned (except for certain “Reserved Rights” as defined in this Loan
Agreement) pursuant to the Trust Indenture dated as of the date hereof from the Issuer to U.S.
Bank National Association, as trustee (the “Trustee”), and is subject to the security interest of
the Trustee thereunder.
July 10, 2012 Contra Costa County Board of Supervisors 868
July 10, 2012 Contra Costa County Board of Supervisors 869
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1Definitions.......................................................................................................................................3
Section 1.2Construction ...................................................................................................................................9
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1Representations by the Issuer.....................................................................................................11
Section 2.2Representations by the Borrower...............................................................................................12
Section 2.3Covenants by the Borrower........................................................................................................18
ARTICLE III
LOAN AND PROVISIONS FOR REPAYMENT
Section 3.1Issuance of Bonds and Delivery of Note and other Loan Documents..................................20
Section 3.2Loan Repayments and Other Amounts ....................................................................................20
Section 3.3Payments Pledged and Assigned...............................................................................................22
Section 3.4Obligations of Borrower Hereunder Unconditional...............................................................22
ARTICLE IV
ADVANCES
Section 4.1Requisition....................................................................................................................................24
ARTICLE V
SPECIAL COVENANTS OF THE BORROWER
Section 5.1Commencement and Completion of Project ............................................................................25
Section 5.2Records and Accounts.................................................................................................................25
Section 5.3Financial Statements and Information......................................................................................25
Section 5.4Insurance.......................................................................................................................................27
Section 5.5Liens and Other Charges.............................................................................................................27
Section 5.6Inspection of Project and Books, Appraisals............................................................................27
Section 5.7Compliance with Laws, Contracts, Licenses, and Permits.....................................................28
Section 5.8Use of Proceeds ............................................................................................................................28
Section 5.9Borrower to Pay Excess Project Costs........................................................................................28
Section 5.10Laborers, Subcontractors and Materialmen .............................................................................29
Section 5.11Further Assurance of Title ..........................................................................................................29
Section 5.12Publicity.........................................................................................................................................29
Section 5.13Further Assurances......................................................................................................................29
Section 5.14Notices...........................................................................................................................................30
Section 5.15Solvency; Adequate Capital........................................................................................................30
Section 5.16Management Contract.................................................................................................................30
Section 5.17Negative Covenants of the Borrower........................................................................................31
Section 5.18Arbitrage and Tax Matters..........................................................................................................33
Section 5.19Indemnification............................................................................................................................35
Section 5.20Agreements Between Borrower and its Affiliates ...................................................................36
Section 5.21Sale of Bonds and Securitization................................................................................................36
Section 5.22Funds .............................................................................................................................................38
Section 5.23Covenants Regarding Tax Credits.............................................................................................41
Section 5.24Leasing...........................................................................................................................................43
July 10, 2012 Contra Costa County Board of Supervisors 870
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Section 5.25Compliance with Anti-Terrorism Regulations.........................................................................44
ARTICLE VI
OPTION AND OBLIGATIONS OF BORROWER TO PREPAY
Section 6.1Optional Prepayment ..................................................................................................................46
Section 6.2Mandatory Prepayment..............................................................................................................46
Section 6.3Amounts Required for Prepayment..........................................................................................46
Section 6.4Cancellation at Expiration of Term............................................................................................47
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1Events of Default..........................................................................................................................48
Section 7.2Remedies on Default....................................................................................................................51
Section 7.3No Remedy Exclusive..................................................................................................................51
Section 7.4Agreement to Pay Fees and Expenses of Counsel...................................................................51
Section 7.5No Additional Waiver Implied by One Waiver; Consents to Waivers ................................52
Section 7.6Remedies Subject to Applicable Law ........................................................................................52
Section 7.7Cure by Special Limited Partner................................................................................................52
Section 7.8Issuer Exercise of Remedies........................................................................................................52
ARTICLE VIII
MISCELLANEOUS
Section 8.1General Provisions.......................................................................................................................53
Section 8.2Authorized Borrower Representative.......................................................................................53
Section 8.3Binding Effect ...............................................................................................................................54
Section 8.4Execution in Counterparts..........................................................................................................54
Section 8.5Amendments, Changes and Modifications..............................................................................54
Section 8.6Severability....................................................................................................................................54
Section 8.7Notices...........................................................................................................................................54
Section 8.8Applicable Law.............................................................................................................................54
Section 8.9Debtor Creditor Relationship.....................................................................................................55
Section 8.10Usury; Total Interest....................................................................................................................55
Section 8.11Term of this Loan Agreement.....................................................................................................55
Section 8.12Non-Recourse...............................................................................................................................55
Section 8.13PATRIOT Act Notice...................................................................................................................56
Section 8.14.Limited Liability of the Issuer....................................................................................................56
Section 8.15.No Limitations on Actions of Issuer in Exercise of its Governmental Powers....................57
Section 8.16. Execution of Counterparts..........................................................................................................57
EXHIBIT A LEGAL DESCRIPTION OF REAL ESTATE
EXHIBIT B FORM PROMISSORY NOTE
EXHIBIT C PROJECT APPROVALS TO BE OBTAINED
EXHIBIT D FORM OF APPROVED RESIDENTIAL LEASE
EXHIBIT E SCHEDULE OF INSURANCE REQUIREMENTS
EXHIBIT F FORM OF LEASING REPORT CERTIFICATE
EXHIBIT G FORM OF STABILIZATION CERTIFICATE
July 10, 2012 Contra Costa County Board of Supervisors 871
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 1, 2012 (together with all supplements,
modifications and amendments thereto, this “Loan Agreement”), is by and among the County
of Contra Costa, California, a political subdivision and body corporate and politic of the State of
California (together with its successors and assigns, the “Issuer”), U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee under the herein defined Indenture
(together with any successor trustee hereunder and their respective successors and assigns, the
“Trustee”), and LAFAYETTE SENIOR, L.P., a California limited partnership (together with its
successors and assigns, the “Borrower”).
RECITALS:
WHEREAS, the Issuer is authorized under the laws of the State of California (the
“State”) to finance multifamily rental housing by issuing its revenue bonds; and
WHEREAS, the Issuer has determined to issue its County of Contra Costa Multifamily
Housing Revenue Bonds (Lafayette Senior Housing), Series 2012A in the aggregate principal
amount of $__________ (the “Bonds”) pursuant to the Trust Indenture dated as of August 1,
2012 (the “Indenture”), executed by the Issuer and U.S. Bank National Association, as trustee
(the “Trustee”), for the purpose of providing funding necessary for the acquisition, construction
and equipping by the Borrower of a 46-unit multifamily rental housing project in Lafayette,
California known as Lafayette Senior Apartments (the “Project”); and
WHEREAS, pursuant to this Loan Agreement, the Issuer has agreed to issue the Bonds
and to use proceeds of the Bonds to fund a loan to the Borrower (the “Loan”), and the Borrower
has agreed to (i) apply the proceeds of the Loan to pay a portion of the costs of acquisition,
construction and equipping of the Project, (ii) make payments sufficient to pay the principal of,
premium, if any, and interest on the Bonds when due (whether at maturity, by redemption,
acceleration or otherwise), and (iii) observe the other covenants and agreements and make the
other payments set forth herein; and
WHEREAS, the Borrower has delivered to the Trustee, on behalf of the Issuer, its
promissory note dated the date of issuance of the Bonds in an original principal amount equal
to the aggregate original principal amount of the Bonds in substantially the form set forth on
Exhibit B hereto (as the same may be amended, modified or supplemented from time to time,
the “Note”) evidencing its obligation to repay the Loan; and
WHEREAS, to secure its obligations under this Loan Agreement and the Note, the
Borrower has executed (i) a Construction Deed of Trust with Assignment of Rents, Security
Agreement and Fixture Filing (as amended, modified or supplemented from time to time, the
“Mortgage”), (ii) an Assignment of Contracts, Plans and Specifications (as the same may be
amended, modified or supplemented from time to time, the “Assignment of Project
Documents”) and (iii) a Security Agreement (Assignment of Partnership Interest and Capital
Obligations (as amended, modified or supplemented from time to time, the “Partnership
Assignment”) each dated as of even date with this Loan Agreement, for the benefit of the Issuer
as secured party.
July 10, 2012 Contra Costa County Board of Supervisors 872
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AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
July 10, 2012 Contra Costa County Board of Supervisors 873
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following capitalized terms shall have the meanings
specified in this Article unless the context requires otherwise. All other capitalized terms used
herein which are defined in the Indenture and not defined herein shall have the respective
meanings ascribed thereto in the Indenture unless otherwise expressly provided or unless the
context otherwise requires. The singular shall include the plural and the masculine shall
include the feminine and neuter shall include the masculine or feminine.
“Accountant” means _______________, or such other independent certified public
accountant or firm of independent certified public accountants, selected by the Borrower and
approved by the Servicer, such approval not to be unreasonably withheld or delayed.
“Appraisal” means an appraisal of the market value of the Project performed by a
qualified independent appraiser approved by the Servicer.
“Approved Budget” means the Proposed Budget approved by the Servicer.
“Architect” means Van Meter Williams Pollack Architects.
“Architect’s Contract” means the _______________, dated __________, 2012, between the
Borrower and the Architect, providing for the design of the Improvements and the supervision
of the construction and equipping thereof, including ongoing monthly inspection of the
Improvements, certification of Requisitions and certification of Completion, among other
things.
“Bank” means Banc of America Public Capital Corp, and its successors and assigns.
“Capital Expenditures” means capital expenditures determined in accordance with
generally accepted accounting principles relating to the repair, renovation or replacement of the
Project.
“Change Order” means a change made to the Plans and Specifications, as evidenced by
a written change order request in accordance with the terms of the Construction Contract.
“Construction Contract” means the contract, dated ___________, 20___ between the
Borrower and the Contractor, providing for the construction and equipping of the
Improvements and certification of Requisitions, among other things.
“Consulting Engineer” has the meaning set forth for that term in the Construction
Disbursement Agreement.
“Contractor” means L&D Construction Company.
July 10, 2012 Contra Costa County Board of Supervisors 874
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“Control,” “Controlled” and “Controlling” means, with respect to any Person, either (i)
ownership directly or indirectly of more than 50% of all beneficial equity interest in such
Person, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, through the ownership of voting securities, by
contract or otherwise.
“Default” or “Event of Default” means, when referring to (i) the Indenture, an event or
condition specified or defined as such by Article VI of the Indenture and (ii) this Loan
Agreement, an event or condition specified or defined as such by Section 7.1 hereof.
“Development Budget” means the budget for total estimated Project Costs and sources
of payment attached to the Construction Disbursement Agreement, as the same may be
amended, modified or supplemented from time to time in accordance with the terms hereof and
the Construction Disbursement Agreement.
“Direct Costs” means the costs of the Land, the Improvements, the Personal Property,
and all labor, materials, fixtures, machinery and equipment required to [construct] [rehabilitate]
and equip the Improvements in accordance with the Plans and Specifications.
“Financing Statements” means Uniform Commercial Code Form 1 Financing
Statement(s) from the Borrower and the General Partner in favor of the Trustee.
“General Partner” means Eden Investments, Inc., a California nonprofit public benefit
corporation, together with any permitted successors and assigns as general partner of Borrower.
“General Partner Documents” means the Partnership Assignment and the
Environmental Indemnity.
“Generally Accepted Accounting Principles” means the principles that are (i)
consistent with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time, and (ii) consistently applied with past
financial statements of the Borrower adopting the same principles; provided that a certified
public accountant would, insofar as the use of such accounting principles is pertinent, be in a
position to deliver an unqualified opinion (other than a qualification regarding changes in
Generally Accepted Accounting Principles) as to financial statements in which such principles
have been properly applied.
“Governmental Authority” means the United States, the State in which the Land is
located and any political subdivision, agency, department, commission, board, bureau,
authority or instrumentality of either of them, including any local authorities, or any other
entity exercising executive, legislative, judicial, regulatory or administrative junctions of
government, which has jurisdiction over the Land or the [construction] [rehabilitation],
equipping and operation of the Project thereon.
“Hazardous Substances” has the meaning set forth for that term in the Environmental
Indemnity.
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“Improvements” means the 46-unit multifamily rental housing project with related site
improvements and amenities to be located on the Land and constructed, equipped and
furnished in accordance with the Plans and Specifications.
“Indebtedness” means all obligations, contingent and otherwise, that in accordance
with Generally Accepted Accounting Principles should be classified upon the Obligor’s balance
sheet as liabilities, or to which reference should be made by footnotes thereto, including in any
event and whether or not so classified: (a) all debt and similar monetary obligations, whether
direct or indirect; (b) all liabilities secured by any deed to secure debt, mortgage, deed of trust,
pledge, security interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall have been assumed;
(c) all liabilities under capitalized leases; and (d) all guaranties, endorsements and other
contingent obligations whether direct or indirect in respect of indebtedness of others, including
the obligations to reimburse the issuer of any letter of credit for amounts drawn on such letter
of credit.
“Indirect Costs” means all title insurance premiums, survey charges, engineering fees,
architectural fees, real estate taxes, appraisal costs, premiums for insurance, marketing,
advertising and leasing costs, brokerage commissions, legal fees, accounting fees, overhead and
administrative costs, and all other expenses as shown on the Development Budget which are
expenditures relating to the Project and are not Direct Costs.
“Initial Notification of Taxability” means the receipt by the Trustee or the Owner of a
communication from the Internal Revenue Service or any court of competent jurisdiction to the
effect that interest on the Bonds is not excluded, or will not in the future be excluded, from the
gross income of the owners of the Bonds for federal income tax purposes.
“Investor Limited Partner” means Union Bank, N.A. a national banking association,
together with its permitted successors and assigns as limited partner in Borrower.
“Issuer’s Fee” means an issuance fee in the amount of Thirty-Two Thousand One
Hundred Seventy-Nine Dollars ($32,179.00) payable by the Borrower on the Closing Date, along
with the first two year’s of Issuer Annual Fees (as defined in the Regulatory Agreement also
payable by the Borrower on the Closing Date).
“Land” means the real property described in Exhibit A attached hereto.
“Lien” means any interest in the Project or any part thereof or any right therein,
including without limitation any rents, issues, profits, proceeds and revenues therefrom,
securing an obligation owed to, or a claim by, any Person, whether such interest is based on the
common law, statute or contract, and including but not limited to the lien and security interest
arising from a deed to secure debt, mortgage, deed of trust, encumbrance, pledge, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes. The term “Lien”
shall also include any and all reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting
the Project or any part thereof or any interest therein.
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“Loan Fee” means an amount equal to seventy-five one hundredths percent (0.75%) of
the maximum principal amount of the Bonds, or Ninety-Three Thousand Forty-Five Dollars
($93,045.00)
“Management Agreement” means the Property Management Agreement dated as of
_________, 20___, between the Borrower and the Manager, and any substitute agreement
relating to the management of the Project.
“Manager” means Eden Housing Management Inc., or any successor manager of the
Project approved by the Servicer and the Issuer (which approval of the Issuer shall not be
unreasonably withheld and shall be deemed granted if not rejected within ten (10) days of
receipt of written request therefor).
“Net Operating Income” means, for any period, (A) the lesser of (i) actual Project
Revenues for such period or (ii) Project Revenues as projected in the Appraisal dated
_______________ for such period, adjusted to reflect a five percent (5.0%) vacancy rate less (B)
the greater of (i) Operating Expenses for such period or (ii) the allocable portion of Projected
Operating Expenses.
“Obligor(s)” means the Borrower and the General Partner.
“Operating Expenses” means, for any period, the aggregate amount of expenses
incurred by the Borrower in connection with the Project pursuant to arm’s length transactions
for ordinary and necessary expenses sufficient to provide the amenities and services associated
with a multi-family residential facility as follows: labor costs; general maintenance; legal and
accounting fees relating solely to the operation of the Project (and not partnership
administration, other than audit and other expenses incurred by the Borrower relating solely to
the operation of the Project); general and administrative costs of the Borrower directly
attributable to the Project (and not partnership administration) and advertising and marketing
costs; supplies for the Project; non-capital repairs and replacements; leasing and brokerage
commissions; management fees payable pursuant to the management agreement up to an
amount equal to 3.0% of Project Revenues; costs of licenses, permits and similar fees relating to
property operations; premiums for insurance required pursuant to the Loan Agreement;
charges for electricity and other utilities; real estate taxes, water and sewer rents and
assessments; payments made into the Replacement Reserve Fund [, the Operating Reserve
Fund] and the Tax and Insurance Fund; and all other expenses incurred in connection with the
ordinary course of property operations and maintenance. The foregoing expenses and fees paid
to Affiliates of the Borrower, with the Servicer’s consent, shall be included as Operating
Expenses in an amount equal to the actual fees and expenses paid or payable to such Affiliate,
but in no event greater than amount that customarily would be paid to an unaffiliated third
party on an arm’s-length basis for such services. Without limiting the generality of those items
which shall be excluded from the definition of Operating Expenses, the following shall be
specifically excluded from such calculation: depreciation, amortization and other non-cash
items; all partnership administrative expenses (including, without limitation, legal, accounting,
and other professional expenses); prepaid expenses which are not customarily prepaid in the
ordinary course of business; any termination or similar fee in connection with financing for the
Project; expenditures funded by disbursements from the Replacement Reserve Fund and the
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Tax and Insurance Fund; scheduled debt service and scheduled principal payments on
Indebtedness related to the Project; penalties, late fees and similar charges arising from or on
account of the Borrower’s failure to pay any monetary obligations; any costs, expenses or fees,
including interest, payable by the Borrower on advances made by the Servicer, the Issuer or the
Trustee after an Event of Default, and franchise and income taxes of the Borrower.
“Organizational Documents” means for any corporation, partnership, trust, limited
liability company, limited liability partnership, unincorporated association, business or other
legal entity, the documents pursuant to which such entity has been established or organized, as
such documents may be amended from time to time in accordance with the terms of this Loan
Agreement.
“Partnership Agreement” means the First Amended and Restated Limited Partnership
Agreement of the Borrower dated as of _______________, 2012, among the General Partner,
__________, __________ as Withdrawing Limited Partner, the Special Limited Partner and the
Investor Limited Partner, as the same may be amended, modified or supplemented from time to
time, subject to the terms hereof.
“Partnership Documents” means, collectively, the Partnership Agreement and any
other documents that govern the formation, organization, management and funding of
Borrower’s partnership.
“Permitted Encumbrances” has the meaning set forth for that term in the Mortgage.
“Personal Property” means all materials, furnishings, fixtures, furniture, machinery,
equipment and all items of tangible or intangible personal property now or hereafter owned or
acquired by the Borrower in which the Issuer has been or will be granted an interest to secure
the obligations of the Borrower under the Loan Documents.
“Plans and Specifications” means the plans and specifications for the Project prepared
by the Architect and more particularly described in the Construction Disbursement Agreement,
as the same may be amended, modified or supplemented in accordance with the terms hereof
and the Construction Disbursement Agreement.
“Project Approvals” means all approvals, consents, waivers, orders, agreements,
authorization, permits and licenses required under applicable Legal Requirements or under the
terms of any restriction, covenant or easement affecting the Project, or otherwise necessary or
desirable for the ownership, acquisition, [construction] [[construction] [rehabilitation]] and
equipping, use and operation of the Project and the Improvements, whether obtained from a
Governmental Authority or any other Person.
“Project Costs” means the sum of all Direct Costs and Indirect Costs that will be
incurred by the Borrower in connection with the acquisition of the Land and the Improvements,
the construction and equipping of the Improvements, the marketing and leasing of leasable
space in the Improvements, and the operation and carrying of the Project through Stabilization.
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“Project Revenues” means, for any period, the revenues actually collected during such
period (a) generated from all tenants and others occupying or having a right to occupy or use
the Project or any portion thereof (other than revenue from Section 8 vouchers to the extent
such revenue causes the rent on any unit to exceed the lower of (A) maximum allowable tax
credit rent designated for that unit or (B) the average rent being achieved for similar non-
Section 8 subsidized units within the Project for such period), adjusted to reflect rental
concessions over the term of any applicable lease, and (b) from the use and occupancy of any
amenities and services of the Project, including vending machine income, net cable TV
revenues, laundry service and parking income, but exclusive of (i) capital contributions, (ii) net
proceeds from the sale or refinancing of the Project, (iii) net proceeds of insurance (other than
proceeds of loss of rent insurance to the extent paid for apartment units occupied at the time of
the loss), and net condemnation awards, (iv) security deposits and prepaid rents to the extent
not permitted to be released to the Borrower pursuant to the terms of leases, and (v) interest
earnings.
“Projected Operating Expenses” means $______ per annum (increased on an annual
basis beginning _______________ 1, 20___, by ___%), [plus actual costs of utilities, insurance and
Impositions (provided Impositions constituting real property taxes are based on the full
assessed value of the Project following completion of [construction] [rehabilitation] and
equipping of the Improvements as contemplated by this Loan Agreement and provided further
that if the actual amount of real property taxes reflects a full or partial abatement or exemption,
such abatement or exemption shall have been approved by Servicer), plus all required deposits
into the Replacement Reserve Fund [and Operating Reserve Fund].
“Property” has the meaning set forth for that term in the Mortgage.
“Proposed Budget” means the proposed capital and operating budget for the Project,
submitted to the Servicer for approval.
“Related Person” means a “related person” as defined in Section 147(a) of the Code.
“Required Equity Funds” means contributions by Investor Limited Partner to the
capital of the Borrower, for application to Project Costs in accordance with the Approved
Budget, to be contributed and so applied in installments at times and in amounts approved by
the Servicer, in the aggregate amount of Eight Million Sixty-Five Thousand Seventy-Five
Dollars ($8,065,075.00).
“Reserved Rights” means, the rights of the Issuer hereunder pursuant to Sections 2.3(a),
2.3(b), 2.3(c), 2.3(d), 2.3(e), 2.3(f), 2.3(l), 3.2(b), 3.2(c), 3.2(d), 3.2(f), 5.3, 5.6, 5.13, 5.14, 5.19, 5.21(b),
6.3(a)(ii), 7.4 and 7.8 hereof, and the Issuer’s right to enforce the provisions of the Regulatory
Agreement, which are retained and not assigned to the Trustee pursuant to the Indenture.
“Single Purpose Entity” means an entity that (i) is formed solely for the purpose of
owning and operating a single asset; (ii) does not engage in any business unrelated to such
asset; (iii) keeps its own books and records and its own accounts, separate and apart from the
books, records and accounts of any other Person; and (iv) holds itself out as being a legal entity,
separate and apart from any other Person.
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“Special Limited Partner” means Union Bank, N.A., a national banking association,
together with its permitted successors and assigns.
“Subordinate Loans” means, collectively (i) a loan from the City of Lafayette, California,
to the Borrower in the amount of $3,500,000; and (ii) a loan from the County of Contra Costa
(and not in any way considered to be a part of the Loan) in the amount of $3,000,000.
“Survey” means an instrument survey of the Land and the Improvements prepared in
accordance with the Servicer’s survey requirements, such survey to be reasonably satisfactory
to the Servicer in form and substance.
“Tax Credits” means the federal and state low income housing credits available with
respect to the Project.
“Title Insurance Company” means North American Title Company.
“Title Policy” means an ALTA standard form title insurance policy issued by the Title
Insurance Company for the benefit of the Trustee and, its successors and assigns, as their
interests may appear (with such reinsurance or co-insurance as the Servicer may require, any
such reinsurance to be with direct access endorsements) insuring the priority of the Mortgage
and that the Borrower holds marketable fee simple title to the Project, subject only to Permitted
Encumbrances and such exceptions as the Servicer may approve, and containing such
endorsements and affirmative insurance as the Servicer in its discretion may require.
“Unit Reserve Amount” means during the first twelve months following completion of
construction and equipping of the Project, an amount equal to $____ times the number of
apartment units at the Project, which amount shall be increased (i) as of the first day of the first
full month of each succeeding twelve month period by the amount by which the cost of living
(as reflected in the Consumer Price Index for the metropolitan area in which the Project is
located, or any successor or substitute index) as of the last calendar month of the immediately
preceding twelve month period exceeded such cost of living as of the last calendar month of the
prior twelve month period and (ii) not more frequently than once every five years upon the
written direction of the Servicer by an amount reasonably determined by the Servicer, based on
a physical needs assessment in respect of the Project, as necessary to meet the upcoming capital
needs of the Project.
Section 1.2 Construction. In this Loan Agreement, unless the context otherwise
requires:
(a) Articles and Sections referred to by number shall mean the corresponding
Articles and Sections of this Loan Agreement.
(b) The terms “hereby”, “hereof”, “hereto”, “herein”, “hereunder” and any
similar terms refer to this Loan Agreement, and the term “hereafter” shall mean after,
and the term “heretofore” shall mean before, the date of execution and delivery of this
Loan Agreement.
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(c) Words of the masculine gender shall mean and include correlative words
of the female and neuter genders, and words importing the singular number shall mean
and include the plural number and vice versa.
(d) References in this Loan Agreement to particular sections of the Code, the
Act or any other legislation shall be deemed to refer also to any successor sections
thereto or other redesignation for codification purposes.
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ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 Representations by the Issuer. The Issuer makes the following
representations as of the date of the execution and delivery of this Loan Agreement as the basis
for the undertakings on its part herein contained:
(a) The Issuer is a public body, corporate and politic, of the State, and is duly
organized, validly existing and in good standing under the laws of the State.
(b) The Issuer has the power and lawful authority to adopt the Resolution, to
execute and deliver the Issuer Documents, to issue the Bonds and receive the proceeds
of the Bonds, to apply the proceeds of the Bonds to make the Loan, to assign the
revenues derived and to be derived by the Issuer from the Loan to the Trustee and to
enter into the transactions on its part contemplated by the Issuer Documents and the
Bonds and otherwise on its part to be performed and observed thereunder.
(c) The Issuer has duly authorized the execution and delivery of each of the
Issuer Documents, the issuance sale and delivery of the Bonds and the performance of
the obligations of the Issuer thereunder.
(d) The Issuer Documents and the Bonds have been duly executed and
delivered by the Issuer and constitute the legal, valid and binding obligations of the
Issuer, enforceable against the Issuer in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting generally the enforcement of creditors’ rights, and
except to the extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding therefor may
be brought.
(e) Neither of the Issuer nor any Boardmember, officer or employee of the
Issuer has any interest, financial, employment or other, in the Borrower, the Project or
the transactions contemplated by the Loan Documents.
(f) There is no action, suit, proceeding, inquiry or investigation pending with
respect to which the Issuer has been served with process or, to the knowledge of the
Issuer, threatened against the Issuer by or before any court, governmental agency or
public board or body, which (i) affects or questions the existence or the territorial
jurisdiction of the Issuer or the title to office of any officer of the Issuer; (ii) affects or
seeks to prohibit, restrain or enjoin the execution and delivery of any of the Issuer
Documents, or the issuance, execution or delivery of the Bonds; (iii) affects or questions
the validity or enforceability of any of the Issuer Documents or the Bonds; (iv) questions
the exclusion from gross income for federal income taxation of interest on the Bonds; or
(v) questions the power or authority of the Issuer to perform its obligations under any of
the Issuer Documents or the Bonds or to carry out the transactions on its part
contemplated by any of the Issuer Documents or the Bonds.
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(g) The Issuer has used no broker in connection with the execution hereof
and the transactions contemplated hereby.
The Issuer makes no representation or warranty, express or implied, that the proceeds of
the Bonds will be sufficient to finance the acquisition, construction and equipping of the Project
or that the Project will be adequate or sufficient for the Borrower’s intended purposes.
Section 2.2 Representations by the Borrower. The Borrower makes the following
representations and warranties, and covenants and agrees as follows, as of and from the date of
the execution and delivery of this Loan Agreement as the basis for the undertakings on its part
herein contained:
(a) The Borrower is, and at all times will be, a limited partnership duly
organized, validly existing and in good standing under the laws of the State. The
General Partner is, and at all times will be, a California nonprofit public benefit
corporation, duly organized, validly existing and in good standing under the laws of the
State. Each of the Borrower and the General Partner has, and will at all times have, all
requisite power to own its property and conduct its business as now conducted and as
presently contemplated, to execute and deliver the Loan Documents and the General
Partner Documents and to perform its duties and obligations hereunder and thereunder.
(b) The execution, delivery and performance of this Loan Agreement and the
other Loan Documents and the transactions contemplated hereby and thereby (i) are
within the authority of the Borrower, (ii) have been duly authorized by all necessary
proceedings on the part of the Borrower, (iii) do not conflict with or result in any breach
or contravention of any provision of law, statute, rule or regulation to which the
Borrower is subject or any judgment, order, writ, injunction, license or permit applicable
to the Borrower, (iv) do not conflict with any provision of the Organizational Documents
of the Borrower, and (v) do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained and the filing of
certain of the Loan Documents in the appropriate public records.
(c) The execution and delivery of this Loan Agreement and the other Loan
Documents will result in valid and legally binding obligations of the Borrower
enforceable against it in accordance with the respective terms and provisions hereof and
thereof, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights, and except to the extent that availability of the remedy
of specific performance or injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
(d) The Borrower and the General Partner are, and will at all times be, Single
Purpose Entities.
(e) The address of the Borrower’s chief executive office and principal place of
business is Lafayette Senior, L.P., c/o Eden Investments, Inc., 22645 Grand Street,
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Hayward, California 94541-5031, Attention: Executive Director. The organizational
identification number for the Borrower is _______________. The federal employer
identification number for the Borrower is _______________.
(f) On the Closing Date, the Borrower will acquire and hold fee simple title
to the Land and the Improvements, in each case subject only to the Permitted
Encumbrances. The Borrower possesses, and will at all times possess, all franchises,
patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect
of the foregoing, adequate for the conduct of its business substantially as now conducted
or as it is intended to be conducted with respect to the Project, without known conflict
with any rights of others.
(g) The Borrower is not subject to any charter, partnership or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is expected in
the future to have a materially adverse effect on the business assets or financial
condition of the Borrower. The Borrower is not, and will not be, a party to any contract
or agreement that has or is expected, in the judgment of the Borrower’s partners, to have
any materially adverse effect on the business or financial condition of the Borrower.
(h) The Borrower is not and will not at any time be, in violation of any
provision of its Organizational Documents or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or adversely affect the
financial condition, properties or business of the Borrower.
(i) The Borrower and each Obligor (i) has made or filed, and will make or
file in a timely fashion, all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid, and will pay
when due, all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those being
contested in good faith and by appropriate proceedings, (iii) if a partnership, limited
liability partnership or limited liability company, has, and will maintain, partnership tax
classification under the Code, and (iv) has set aside, and will at all times set aside, on its
books provisions reasonably adequate for the payment of all taxes for periods
subsequent to the period to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the partners, officers, members or trustees of the Borrower know of no
basis for any such claim. The Borrower has filed, and will continue to file, all of such tax
returns, reports, and declarations either (x) separately from any Affiliate or (y) if part of
a consolidated filing, as a separate member of any such consolidated group.
(j) The Project is located wholly within the State and within the jurisdiction
of the Issuer.
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(k) None of the Issuer, the Trustee or any director, Boardmember, officer or
employee of the Issuer or the Trustee has any interest, financial, employment or other, in
the Borrower, the Project or the transactions contemplated hereby.
(l) There is no Event of Default on the part of the Borrower or any Obligor
under this Loan Agreement or any other Loan Document, any General Partner
Document or any Organizational Document, and no event has occurred and is
continuing which after notice or passage of time or both would give rise to a default
under any thereof. The Borrower has received no notices of and has no knowledge of
any violations of any Legal Requirements or Project Approvals.
(m) The certifications, representations, warranties, statements, information
and descriptions contained in the Loan Documents and in the Borrower’s Tax
Certificate, as of the date of the first authentication and delivery of the Bonds, are and
will be true, correct and complete, do not and will not contain any untrue statement or
misleading statement of a material fact, and do not and will not omit to state a material
fact required to be stated therein or necessary to make the certifications, representations,
warranties, statements, information and descriptions contained therein, in light of the
circumstances under which they were made, not misleading. The estimates and the
assumptions contained in the Loan Documents and in the Borrower’s Tax Certificate, as
of the date of the first authentication and delivery of the Bonds, are reasonable and
based on the best information available to the Borrower. Each of the certifications,
representations, warranties, statements, information and descriptions contained in the
Borrower’s Tax Certificate is hereby incorporated into this Loan Agreement by
reference, as if fully set forth herein.
(n) The Borrower has furnished to the Issuer in the Borrower’s Tax Certificate
or otherwise all information necessary for the Issuer to file an IRS Form 8038 with
respect to the Bonds, and all of such information is and will be on the date of filing, true,
complete and correct.
(o) The Borrower is not contemplating either the filing of a petition by it or
by the General Partner under any state or federal bankruptcy or insolvency law or the
liquidation of all or a major portion of its property, and the Borrower has no knowledge
of any Person contemplating the filing of any such petition against it or any Obligor.
(p) The Borrower is not an “employee benefit plan,” as defined in Section
3(3) of ERISA, subject to Title I of ERISA, and none of the assets of the Borrower
constitutes or will constitute “plan assets” of one or more such plans within the meaning
of 29 C.F.R. section 2510.3-101.
(q) No part of the proceeds of the Loan will be used for the purpose of
purchasing or acquiring any “margin stock” within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System or for any other purpose that would
be inconsistent with such Regulation U or any other Regulation of such Board of
Governors, or for any purpose prohibited by Legal Requirements or any Loan
Document.
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(r) The Borrower is not (i) an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended; (ii) a “holding company” or a “subsidiary company”
of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary
company” within the meaning of the Public Utility Holding Company Act of 1935, as
amended; or (iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
(s) The Borrower has not entered into the Loan or any Loan Document with
the actual intent to hinder, delay, or defraud any creditor, and the Borrower has received
reasonably equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the transactions contemplated by the Loan Documents, the fair saleable
value of the Borrower’s assets exceeds and will, immediately following the execution
and delivery of the Loan Documents, exceed the Borrower’s total liabilities, including
subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of
the Borrower’s assets is and will, immediately following the execution and delivery of
the Loan Documents, be greater than the Borrower’s probable liabilities, including
maximum amount of its contingent liabilities or its debts as such debts become absolute
and matured. The Borrower’s assets do not and, immediately following the execution
and delivery of the Loan Documents, will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted. The Borrower does
not intend to, and does not believe it will, incur debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such debts as
they mature (taking into account the timing and amounts to be payable on or in respect
of obligations of the Borrower).
(t) All information regarding the Borrower, the Project and any Obligor
delivered to the Issuer, the Trustee and the Bank is true and correct in all material
respects and all such financial information fairly presents the financial condition and
results of operations of the Borrower and the other Obligors for the periods to which
such financial information relates, and discloses all liabilities and contingent liabilities of
the Borrower or the other Obligors.
(u) There are no actions, suits, proceedings or investigations of any kind
pending or threatened against the Borrower or the General Partner before any court,
tribunal or administrative agency or board or any mediator or arbitrator that, if
adversely determined, might, either in any case or in the aggregate, adversely affect the
business, assets or financial condition of the Borrower or the General Partner, or result in
any liability not adequately covered by insurance, or for which adequate reserves are
not maintained on the balance sheet of the Borrower or the General Partner, or which
question the validity of this Loan Agreement or any of the other Loan Documents or any
of the General Partner Documents, any action taken or to be taken pursuant hereto or
thereto, or any lien or security interest created or intended to be created pursuant hereto
or thereto, or which will adversely affect the ability of the Borrower or the General
Partner to construct, equip, use and occupy the Project or to pay and perform its
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obligations hereunder in the manner contemplated by this Loan Agreement, any of the
other Loan Documents or any of the General Partner Documents.
(v) All utility services necessary and sufficient for the construction,
equipping and operation of the Project shall be, upon Completion of the Project, and
thereafter will at all times be, available through dedicated public rights of way or
through perpetual private easements with respect to the Borrower’s interest in which the
Mortgage creates a valid and enforceable first priority mortgage lien. The Borrower has
obtained, or promptly will obtain, all utility installations and connections required for
the operation and servicing of the Project for its intended purposes.
(w) The rights of way for all roads necessary for the full utilization of the
Project for its intended purposes have either been acquired by the appropriate
Governmental Authority or have been dedicated to public use and accepted by such
Governmental Authority. All such roads shall have been completed, and the right to use
all such roads, or suitable substitute rights of way approved by the initial Servicer, shall
be maintained at all times for the Project. All curb cuts, driveways and traffic signals
shown on the Plans and Specifications are existing or have been fully approved by the
appropriate Governmental Authority and after the completion thereof, shall be
maintained at all times for the Project.
(x) The acquisition, construction, equipping, use and occupancy of the
Project will at times comply with all Legal Requirements. The Borrower will give all
notices to, and take all other actions with respect to, such Governmental Authorities as
may be required under applicable Legal Requirements to construct and equip the
Improvements and to use, occupy and operate the Project.
(y) Except as set forth on Exhibit C hereto, the Borrower has obtained all
Project Approvals required for the acquisition, construction and equipping of the Project
in accordance with the Plans and Specifications. All Project Approvals obtained by the
Borrower have been validly issued and are in full force and effect. The Borrower has no
reason to believe that any of the Project Approvals required for acquisition, construction
and equipping of the Project in accordance with the Plans and Specifications and not
heretofore obtained by the Borrower will not be obtained by the Borrower in the
ordinary course in order to permit completion of construction and equipping of the
Project in accordance with the Plans and Specifications on or before the Completion
Deadline. The Borrower will timely obtain all Project Approvals not heretofore obtained
by the Borrower (including those listed and described on Exhibit C hereto, those
required for use and occupancy of the Project for its intended purpose upon Completion
and any other Project Approvals which may hereafter become required, necessary or
desirable) and will furnish the Servicer with evidence that the Borrower has obtained
such Project Approvals promptly upon their receipt. The Borrower will duly perform
and comply with all of the terms and conditions of all Project Approvals obtained at any
time. No Project Approvals will terminate, or become void or voidable or terminable,
upon any sale, transfer or other disposition of the Project, including any transfer
pursuant to foreclosure, deed in lieu of foreclosure or exercise of power of sale under the
Mortgage.
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(z) The Borrower has furnished the Bank with true and complete sets of the
Plans and Specifications. The Plans and Specifications so furnished to the initial Servicer
comply with all Legal Requirements, all Project Approvals, and all restrictions,
covenants and easements affecting the Project, and have been approved by such
Governmental Authority as is required for construction and equipping of the
Improvements.
(aa) The Development Budget accurately reflects all Project Costs.
(bb) The Survey delivered to the Bank does not fail to reflect any material
matter of survey affecting the Project or the title thereto.
(cc) No part of the Land is located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazard or to the extent
any part of the Land is an area identified as an area having special flood hazard,
adequate flood insurance has been obtained by the Borrower.
(dd) The Borrower is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the violation of which might
materially adversely affect the condition (financial or otherwise) or business of the
Borrower. There has not been and shall never be committed by the Borrower or any
other Person in occupancy of or involved with the operation or use of the Project any act
or omission affording any Governmental Authority the right of forfeiture as against the
Project or any part thereof any moneys paid in performance of the Borrower’s
obligations under any Loan Document.
(ee) The Construction Contract and the Architect’s Contract are each in full
force and effect and each of the parties thereto are in full compliance with their
respective obligations thereunder. The work to be performed by the Contractor under
the Construction Contract is the work called for by the Plans and Specifications, and all
work required to complete the Improvements in accordance with the Plans and
Specifications is provided for under the Construction Contract.
(ff) Each Requisition submitted by the Borrower shall contain an affirmation
that the foregoing representations and warranties remain true and correct as of the date
hereof.
(gg) The Related Persons are not (and to Borrower’s knowledge after diligent
inquiry, no other Person holding any legal or beneficial interest whatsoever in the
Related Persons, directly or indirectly, is included in, owned by, Controlled by, acting
for or on behalf of, providing assistance, support, sponsorship, or services of any kind
to, or otherwise associated with any of the Persons referred to or described in any list of
persons, entities, and governments issued by the Office of Foreign Assets Control of the
United States Department of the Treasury (“OFAC”) pursuant to Executive Order 13224
– Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism, as amended (“Executive Order 13224”), or any similar
July 10, 2012 Contra Costa County Board of Supervisors 888
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list issued by OFAC or any other department or agency of the United States of America
(collectively, the “OFAC Lists”).
Section 2.3 Covenants by the Borrower. The Borrower hereby covenants and agrees
that, on and after the Closing Date, it will:
(a) Give written notice promptly, and in any event at least thirty (30) days
prior to the closing thereof, of any intended refinancing of the Project to the Issuer, the
Trustee and the Servicer;
(b) Comply with all Legal Requirements and promptly furnish the Issuer, the
Trustee and the Servicer with reports of any official searches made by any
Governmental Authority and any claims of violations thereof;
(c) Upon reasonable notice and at reasonable times, permit the Servicer, the
Majority Owner, the Issuer and the Trustee (or their representatives) to enter upon the
Land and inspect the Project;
(d) Indemnify the Issuer, the Trustee, the Owners and the Servicer against
claims of brokers arising by reason of the execution hereof or the consummation of the
transactions contemplated hereby;
(e) Deliver to the Servicer and the Issuer copies of all leases (other than
leases to residential tenants in the ordinary course of business in the form set forth in
Exhibit D hereto) with respect to the Project or any portion thereof, whether executed
before or after the date of this Loan Agreement;
(f) Not enter into, cancel or amend any agreement for the furnishing of
management or similar services to the Project, without the prior written consent of the
Servicer and the Issuer, such consent not to be unreasonably withheld or delayed;
(g) Comply with all restrictions, covenants and easements affecting the Land
or the Project;
(h) Take, or require to be taken, such acts as may be required under
applicable law or regulation in order that the interest on the Bonds continues to be
excludable from gross income for purposes of federal income taxation, and refrain from
taking any action which would adversely affect the exclusion from gross income of
interest on the Bonds from federal income taxation;
(i) Perform and satisfy all the duties and obligations of the Borrower set
forth and specified in the Indenture as duties and obligations of the Borrower, including
those duties and obligations which the Indenture requires this Loan Agreement or the
other Loan Documents to impose upon the Borrower;
(j) Confirm and assure that the Project, equipment, buildings, plans, offices,
apparatus, devices, books, contracts, records, documents and other papers relating
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thereto shall at all times be maintained in reasonable condition for proper audit and
shall be subject to examination and inspection at reasonable times and upon reasonable
notice by the Issuer, the Trustee or the Servicer or the duly authorized agent of any of
them and shall keep copies of all written contracts or other instruments which affect the
Project, all or any of which shall be subject to inspection and examination by the Issuer,
the Trustee, the Servicer or the duly authorized agent of any of them;
(k) Commencing on the fifth anniversary of the Closing Date, and on such
anniversary in each fifth year thereafter, cause to be delivered to the Trustee and the
Servicer, if so requested by the Trustee or the Servicer, at Borrower’s cost, an opinion of
counsel, who may be counsel for the Borrower, addressed to the Trustee and the
Servicer and stating that based upon the law in effect on the date of such opinion no
filing, registration or recording and no refiling, re-registration or rerecording of the
Mortgage and any Financing Statement, amendments thereto, continuation statements
or instruments of a similar character relating to the pledges and assignments made by
the Borrower to the Issuer or the Trustee to or for the benefit of the Owners of Bonds is
required by law in order to fully preserve and protect the rights of the Issuer, the Trustee
and the Owners of Bonds, as the case may be, or if such filing, registration, recording,
refiling, re-registration or rerecording is necessary, setting forth the requirements in
respect thereof; and cause such filing, registration, recording, refiling, re-registration or
rerecording to take place at Borrower’s expense and promptly after any filing, recording,
refiling or rerecording of the Mortgage and any such Financing Statement or
amendment thereto or continuation statement or instrument, deliver to the Trustee and
the Servicer evidence, satisfactory to the Trustee and the Servicer, that such filing,
registration, recording, refiling, re-registration, or rerecording has been duly
accomplished and setting forth the particulars thereof; and
(l) Promptly notify the Issuer, the Trustee and the Servicer in writing of any
(i) default by the Borrower in the performance or observance of any covenant,
agreement, representation, warranty or obligation of the Borrower set forth in this Loan
Agreement or any other Loan Documents or (ii) any event or condition which with the
lapse of time or the giving of notice, or both would constitute an Event of Default under
this Loan Agreement or any other Loan Documents; and commence, pursue and
complete [construction] [rehabilitation] and equipping of the Improvements as provided
herein and in the Construction Disbursement Agreement.
The Borrower acknowledges that, to the extent that regulations of the Comptroller of the
Currency or any other applicable regulatory agency require granting the Borrower the right to
receive brokerage confirmations of securities transactions incident to this Agreement or the
Indenture as they occur, the Borrower specifically waives the right to receive such
confirmations.
July 10, 2012 Contra Costa County Board of Supervisors 890
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ARTICLE III
LOAN AND PROVISIONS FOR REPAYMENT
Section 3.1 Issuance of Bonds and Delivery of Note and other Loan Documents.
(a) In order to finance a portion of the costs of the acquisition, construction and
equipping of the Project, the Issuer has, consistent with the Act, issued and caused the Trustee
to authenticate and deliver the Bonds pursuant to the Indenture to the initial Owner. The
Bonds bear interest and are payable as provided therein and in the Indenture. The Bonds shall
mature and all Outstanding principal of, Prepayment Equalization Payments, interest and
Additional Interest (if any) on the Bonds shall be due and payable in full on the Maturity Date,
all as provided more fully in the Bonds and the Indenture.
(b) The Issuer agrees to lend the proceeds received from the sale of the Bonds to the
Borrower, by causing such amounts to be deposited directly into the Project Fund, subject to the
terms and conditions of the Indenture and this Loan Agreement, including the terms and
conditions thereof and hereof governing the disbursement of proceeds of the Loan.
(c) Pursuant to the Indenture, the Trustee shall make disbursements from the Project
Fund created pursuant to the Indenture to pay or to reimburse the Borrower for costs of the
acquisition, construction and equipping of the Project, subject to the conditions of the Indenture
and this Loan Agreement. Upon receipt of a properly signed Requisition approved by the
Servicer (which approval of the Servicer is expressly subject to the satisfaction of the conditions
precedent set forth in the Construction Disbursement Agreement), or in the case of a
Requisition for amounts in the Costs of Issuance Account of the Loan Account, upon receipt of a
Requisition executed by the Issuer, the Trustee is authorized to act upon such Requisition
without further inquiry, and, except for negligence after notice of facts to the contrary or willful
misconduct of the Trustee, the Borrower shall hold the Trustee harmless against any and all
losses, claims or liabilities incurred in connection with the Trustee’s making disbursements
from the Project Fund in accordance with such Requisition. Neither the Trustee nor the Issuer
shall be responsible for the application by the Borrower of moneys properly disbursed from the
Project Fund.
(d) Concurrent with the sale and delivery of the Bonds, and to evidence further the
obligation to repay the Loan in accordance with the provisions of this Loan Agreement, the
Borrower has executed and delivered the Note and the other Loan Documents.
Section 3.2 Loan Repayments and Other Amounts.
(a) [On the Closing Date, the Borrower shall pay to the Trustee, for deposit into the
Revenue Fund, the amount equal to $_______. Thereafter,] the Borrower shall pay to the
Trustee, for deposit into the Revenue Fund, on the first day of each month commencing with
the month [ that is _______ after the month ] of the Conversion Date, an amount equal to the
sum of (i) the interest due on the Bonds on said date (after taking into account funds available
for such purpose, if any, in the Capitalized Interest Account of the Project Fund), plus (ii) the
principal due on the Bonds on said date, plus (iii) amounts required to be deposited into the
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Replacement Reserve Fund (pursuant to Section 5.22(c) hereof), the Operating Reserve Fund
(pursuant to Section 5.22(i) hereof) and the Tax and Insurance Fund pursuant to Section 5.22(h)
hereof) as of such date. Amounts so paid to the Trustee by the Borrower shall be in
immediately available funds or shall be such that on the Bond Payment Date they are available
funds.
(b) The Borrower understands that the interest rate applicable under the Note and
with respect to the Bonds is based upon the assumption that interest income paid on the Bonds
will be excludable from the gross income of the Owners under Section 103 of the Code and
applicable state law. In the event that an Initial Notification of Taxability shall occur, then the
interest rate on the Note and the Bonds, and on all obligations under this Agreement (other than
those to which the Alternative Rate applies) shall, effective on the date of such Initial
Notification of Taxability, be increased to a rate equal to the Taxable Rate. The Borrower shall,
in addition, pay to the Trustee, for deposit into the Revenue Fund, promptly upon demand
from the Trustee or the Servicer, an amount equal to the Additional Interest payable on the
Bonds. The Borrower shall also indemnify, defend and hold the Issuer and the Owners
harmless from any penalties, interest expense or other costs, including reasonable attorneys’
fees (including all reasonably allocated time and charges of Issuer’s, Owners’ and Trustee’s “in-
house” and “outside” counsel and Bond Counsel) and accountants’ costs, resulting from any
dispute with the Internal Revenue Service concerning the proper tax treatment of the Bonds and
any interest payable to any Owner with respect to the Bonds. The obligations of the Borrower
under this Section 3.2(b) shall survive termination of this Agreement and the Note and
repayment of the Loan. If, following any increase in interest rates pursuant to this Section
3.2(b), a final determination is made, to the satisfaction of the Owners, that interest paid on the
Bonds is excludable from the Owners’ gross income under Section 103 of the Code and
applicable state law, the Owners shall promptly refund to the Borrower any Additional Interest
and other additional amounts paid by the Borrower pursuant to this Section 3.2(b).
(c) The Borrower agrees to pay the Trustee Fee and Trustee Expenses to the Trustee
and agrees to pay the Issuer’s Fee to the Issuer. The Borrower also agrees to pay the Issuer’s
Annual Fee (as defined in the Regulatory Agreement), and all fees, charges and expenses of the
Trustee and the Issuer, respectively (including, without limitation, the reasonable, actually
incurred fees and expenses of counsel to the Issuer, Bond Counsel and counsel to the Trustee),
under any of the Issuer Documents or the Loan Documents as and when the same become due.
The Borrower also agrees to pay the printing and engraving costs of the Bonds, including any
certificates required to be prepared for use in connection with any exchanges of Bonds for the
cost of which Owners are not liable. The Borrower also agrees to pay the Loan Fee to Bank on
or before the Closing Date, to pay the fees of the Majority Owner and the Servicer, and to pay
all reasonable costs and expenses incurred by the Majority Owner, the Servicer and the Issuer in
connection with the administration of the Bonds, the Loan or the collateral therefor, and any
amendments, modifications or “workouts” thereof, including without limitation reasonable
attorneys’ fees and costs (including allocated costs of in-house attorneys), fees and costs of
engineers, accountants, appraisers and other consultants, title insurance premiums and
recording costs upon receipt of written demand therefor.
(d) The Borrower agrees to pay all Costs of Issuance (in addition to those Costs of
Issuance otherwise required to be paid by this Section 3.2).
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(e) The Borrower agrees to pay any Prepayment Equalization Payments at the times
and in the amounts the same become payable pursuant to the Indenture.
(f) The Borrower agrees to pay, as and when the same become due, to the Issuer, the
Servicer or the Trustee any extraordinary expenses, including, without limitation, any costs of
litigation, which may be incurred by the Issuer, the Servicer or the Trustee in connection with
this Loan Agreement or the Indenture, including the reasonable, actually incurred costs and
fees of any attorneys or other experts retained by the Issuer, the Servicer or the Trustee in
connection therewith.
(g) The Borrower agrees to repay the Loan at the times and in the amounts necessary
to enable the Trustee, on behalf of the Issuer, to pay all amounts payable with respect to the
Bonds, when due, whether at maturity or upon redemption, acceleration, tender, purchase or
otherwise.
Section 3.3 Payments Pledged and Assigned. It is understood and agreed that the
Loan Documents and certain other documents and property and all payments required to be
made by the Borrower pursuant hereto (except payments to be made to the Issuer in respect of
its Reserved Rights and payments to be made to the Servicer and the Trustee pursuant to
Section 3.2(b) hereof) have been assigned to the Trustee simultaneously herewith pursuant to
the Indenture as and for security for the Bonds. The Borrower hereby consents to such
assignment and recognizes the Trustee as the assignee of the Issuer, to the extent of the
assignment, for purposes of said documents and property.
Section 3.4 Obligations of Borrower Hereunder Unconditional. The obligations of
the Borrower to make any payments required by the terms of this Loan Agreement and the
other Loan Documents, including, without limitation, the payments required in Section 3.2
hereof, and to perform and observe the other agreements on its part contained herein and in the
other Loan Documents shall be absolute and unconditional and shall not be subject to any
defense (other than payment) or any right of set off, counterclaim, abatement or otherwise and,
until such time as the principal of and interest on the Bonds shall have been fully paid or
provision for the payment thereof shall have been made in accordance with the Indenture. The
Borrower (i) will not suspend or discontinue, or permit the suspension or discontinuance of,
any payments provided for herein or in the other Loan Documents, (ii) will perform and
observe all of its other agreements contained herein and the other Loan Documents and (iii) will
not suspend the performance of its obligations hereunder and under the other Loan Documents
for any cause including, without limiting the generality of the foregoing, failure to complete
construction and equipping of the Project, any acts or circumstances that may constitute failure
of consideration, failure of or a defect of title to the Project or any part thereof, eviction or
constructive eviction, destruction of or damage to the Project, commercial frustration of
purpose, any change in the tax or other laws or administrative rulings of or administrative
actions by the United States of America or the State or any political subdivision of either, or any
failure of the Issuer to perform and observe any agreement, whether express or implied, or any
duty, liability or obligation arising out of or connected with this Loan Agreement or the other
Loan Documents. The Borrower may, at its own cost and expense and in its own name or in the
name of the Issuer (provided the Issuer is a necessary party and consents thereto), prosecute or
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defend any action or proceeding or take any other action involving third persons which the
Borrower deems reasonably necessary in order to secure or protect its rights hereunder, and in
such event the Issuer, subject to the provisions of the Indenture, hereby agrees to cooperate
fully with the Borrower and to take all action (at the Borrower’s cost and expense) necessary to
effect the substitution of the Borrower for the Issuer in any such action or proceeding if the
Borrower shall so request.
July 10, 2012 Contra Costa County Board of Supervisors 894
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ARTICLE IV
ADVANCES
Section 4.1 Requisition. At such time as the Borrower shall desire to obtain an
advance from the Loan Account, the Insurance and Condemnation Proceeds Account or the
Equity Account of the Project Fund, the Borrower shall complete, execute and deliver a
Requisition to the Servicer. Each Requisition shall be signed on behalf of the Borrower and shall
be in the form attached as Exhibit G to the Construction Disbursement Agreement. The Trustee
may rely conclusively on the statements and certifications contained in any Requisition. The
Borrower shall not submit any Requisition directly to the Trustee. Each advance from the Loan
Account, the Insurance and Condemnation Proceeds Account the Equity Account of the Project
Fund by the Trustee shall be subject to prior approval of the Requisition by the Servicer, except
that the Trustee shall accept requisitions of the Issuer for amounts in the Costs of Issuance
Account of the Loan Account without any requirement for any approval of the Servicer. Upon
approval, the Servicer shall forward each Requisition to the Trustee for payment.
July 10, 2012 Contra Costa County Board of Supervisors 895
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ARTICLE V
SPECIAL COVENANTS OF THE BORROWER
Section 5.1 Commencement and Completion of Project. The Borrower will
commence construction and equipping of the Improvements within _____ (__) days after the
Closing Date, will diligently pursue construction and equipping of the Improvements, will
attain Completion prior to the Completion Deadline, and will pay all sums and perform all such
acts as may be necessary or appropriate to complete such construction and equipping, all as
more fully set forth in the Construction Disbursement Agreement.
Section 5.2 Records and Accounts. The Borrower will (a) keep true and accurate
records and books of account in which full, true and correct entries will be made in accordance
with Generally Accepted Accounting Principles, which records and books will not be
maintained on a consolidated basis with those of any other Person, including any Affiliate of
the Borrower and (b) maintain adequate accounts and reserves for all taxes (including income
taxes), depreciation and amortization of its properties, contingencies, and other reserves, all of
which accounts shall not be commingled with accounts of any other Person, including any or
Affiliate of the Borrower.
Section 5.3 Financial Statements and Information. The Borrower will deliver, or
cause to be delivered, to the Issuer, the Trustee and the Servicer:
(a) as soon as available, but in any event not later than ninety (90) days after the end
of each fiscal year of the Borrower, beginning for the year ended ______________, 20___, the
audited balance sheet of the Borrower at the end of such year, and the related audited statement
of income, statement of retained earnings, changes in capital, and statement of cash flows for
such year, and a statement of all contingent liabilities of the Borrower which are not reflected in
such financial statements or referred to in the notes thereto, each setting forth in comparative
form the figures for the previous fiscal year and all such statements to be in reasonable detail,
prepared in accordance with Generally Accepted Accounting Principles, and accompanied by
an auditor’s report prepared without qualification by the Accountant;
(b) as soon as available, but in any event not later than ninety (90) days after the end
of each fiscal year of the General Partner, beginning for the year ended ______________, 20___,
the audited balance sheet of the General Partner at the end of such year, and the related audited
statement of income, statement of retained earnings, changes in capital, and statement of cash
flows for such year, and a statement of all contingent liabilities of the General Partner which are
not reflected in such financial statements or referred to in the notes thereto, each setting forth in
comparative form the figures for the previous fiscal year and all such statements to be in
reasonable detail, prepared in accordance with Generally Accepted Accounting Principles, and
accompanied by an auditor’s report prepared without qualification by the Accountant;
(c) as soon as available, but in any event not later than fifteen (15) days after the end
of each [calendar month]/[calendar quarter], copies of the balance sheet of the Borrower as at
the end of such [month]/[quarter], and the related statement of income, statement of retained
earnings, changes in capital, and statement of cash flows for the portion of the Borrower’s fiscal
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year then elapsed, all in reasonable detail and prepared in accordance with Generally Accepted
Accounting Principles, together with a certification by the chief financial officer of the General
Partner that the information contained in such financial statements fairly present the financial
position of the Borrower on the date thereof (subject to year-end adjustments);
(d) as soon as available, but in any event not later than fifteen (15) days after the end
of each [calendar month]/[calendar quarter], copies of the balance sheet of the General Partner
as at the end of such [month]/[quarter], and the related statement of income, statement of
retained earnings, changes in capital, and statement of cash flows for the portion of the General
Partner’s fiscal year then elapsed, all in reasonable detail and prepared in accordance with
Generally Accepted Accounting Principles, together with a certification by the General Partner
that such financial statements are true and correct [the chief financial officer of the General
Partner that the information contained in such financial statements fairly present the financial
position of the General Partner on the date thereof (subject to year-end adjustments)];
(e) within fifteen (15) days after the end of each calendar month, commencing with
the month in which the construction of the Project is substantially complete and continuing
until the month in which Stabilization occurs, (i) a current rent roll and schedule of aging lease
receivables as of the end of such month, in form and level of detail reasonably acceptable to the
Servicer, detailing, with respect to each Lease, the tenant’s name, the Lease date, the premises
demised, the term, the rent, the security deposit and any rent paid more than one month in
advance, (ii) a leasing report setting forth the Borrower’s efforts to market and lease the then
unleased space in the Improvements and the results of such efforts, accompanied by a certificate
of the Borrower in the form attached hereto as Exhibit F, and (iii) an operating report for the
Project for such month, in form and level of detail reasonably acceptable to the Servicer,
together with a certification by the chief financial officer that the information in all of the items
required pursuant to this Section 5.3(e) is true and correct;
(f) within fifteen (15) days after the end of each calendar quarter, commencing with
the quarter in which Stabilization occurs, (i) a current rent roll and schedule of aging lease
receivables as of the end of such quarter, in form and level of detail reasonably acceptable to the
Servicer, detailing, with respect to each Lease, the tenant’s name, the Lease date, the premises
demised, the term, the rent, the security deposit and any rent paid more than one month in
advance, (ii) a leasing report setting forth the Borrower’s efforts to market and lease the then
unleased space in the Improvements and the results of such efforts, accompanied by a certificate
of the Borrower in the form attached hereto as Exhibit F, and (iii) an operating report for the
Project for such quarter, in form and level of detail reasonably acceptable to the Servicer,
together with a certification by the chief financial officer that the information in all of the items
required pursuant to this Section 5.3(f) is true and correct;
(g) quarterly, on the first day of each calendar quarter beginning with the quarter in
which the Project achieves Completion and ending in the quarter in which the Project achieves
Stabilization, a certificate in the form set forth in Exhibit G hereto;
(h) contemporaneously with the filing or mailing thereof, copies of all material of a
financial nature filed with the Securities and Exchange Commission or sent to the stockholders,
partners, members or beneficiaries of the Borrower and any Affiliate thereof, if any;
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(i) on or before December 1 of each year, a copy of the Proposed Budget, and on or
before January 30 of each year, a copy of the Approved Budget; and
(j) from time to time such other financial data and information related to the
Borrower, the General Partner and the Project as the Issuer, the Trustee or the Servicer may
reasonably request.
Section 5.4 Insurance.
(a) The Borrower will obtain and maintain insurance with respect to the Project and
the operations of the Borrower as required from time to time by the Servicer. The initial
insurance requirements are set forth on Exhibit E hereto. All renewal policies, with premiums
paid, shall be delivered to the Servicer at least thirty (30) days before expiration of the existing
policies. If any such insurance shall expire or be canceled, or become void or voidable by
reason of the breach of any condition of coverage, or if the Servicer determines that any
coverage is unsatisfactory by reason of the failure or impairment of the capital of any insurance
carrier, or if any insurance is unsatisfactory to the Servicer, in its sole judgment, the Borrower
shall promptly place new insurance satisfactory to the Servicer.
(b) The Borrower will provide the Trustee and the Servicer with certificates
evidencing such insurance upon the request of the Servicer.
(c) If the Borrower fails to provide, maintain, keep in force or deliver to the Servicer
the policies of insurance and certificates required by this Loan Agreement, the Servicer may
(but shall have no obligation to) procure such insurance, and the Borrower will pay all
premiums thereon promptly on demand by the Servicer, and until such payment is made by the
Borrower, the amount of all such premiums shall bear interest at the Alternative Rate.
Section 5.5 Liens and Other Charges. The Borrower will duly pay and discharge,
cause to be paid and discharged, or provide a bond satisfactory to the Servicer to pay or
discharge, before the same shall become overdue all claims for labor, materials, or supplies that
if unpaid might by law become a lien or charge upon any of its property.
Section 5.6 Inspection of Project and Books, Appraisals.
(a) The Borrower shall permit the Issuer, the Trustee and the Servicer upon
reasonable notice at reasonable times, at the Borrower’s cost and expense, to visit and inspect
the Project and all materials to be used in the construction and equipping thereof and will
cooperate with the Issuer, the Trustee and the Servicer during such inspections (including
making available working drawings of the Plans and Specifications); provided that this
provision shall not be deemed to impose on the Issuer, the Trustee, and the Servicer any
obligation to undertake such inspections.
(b) The Borrower shall permit the Issuer, the Trustee and the Servicer, upon
reasonable notice at reasonable times, at the Borrower’s cost and expense, to examine the books
of account of the Borrower and the Project (and to make copies thereof and extracts therefrom)
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and to discuss the affairs, finances and accounts of the Borrower and the Project with, and to be
advised as to the same by, its officers, partners, or trustees, all at such reasonable times and
intervals as the Issuer, the Trustee and the Servicer may reasonably request; provided that so
long as no Default or Event of Default shall have occurred and be continuing, the Borrower
shall only be obligated to pay the expenses associated with one (1) such investigation during
any twelve (12) month period.
(c) The Issuer, the Trustee and the Servicer shall have the right to obtain from time
to time, at the Borrower’s cost and expense, updated Appraisals of the Project; provided that so
long as no Default or Event of Default shall have occurred and be continuing, the Borrower
shall only be obligated to pay for the costs and expenses associated with one (1) such Appraisal
during any twelve (12) month period.
(d) The costs and expenses incurred by the Issuer, the Trustee and the Servicer in
obtaining such Appraisals or performing such inspections shall be paid by the Borrower
promptly upon billing or request by the Issuer, the Trustee and the Servicer for reimbursement.
Section 5.7 Compliance with Laws, Contracts, Licenses, and Permits. The Borrower
will comply with (a) all Legal Requirements, (b) the provisions of its Organizational
Documents, (c) all applicable decrees, orders and judgments, and (d) all licenses and permits
required by applicable laws and regulations for the conduct of its business or the ownership,
use or operation of its properties, including all Project Approvals.
Section 5.8 Use of Proceeds. In accordance with the Development Budget, the
Borrower will use the proceeds of the Bonds solely for the purpose of paying for Qualified
Costs of the Project.
Section 5.9 Borrower to Pay Excess Project Costs. The Borrower will pay when due
all costs of acquisition, construction, and equipping of the Project in excess of the proceeds of
the Bonds, regardless of the amount. If at any time, the Servicer shall in its sole discretion
determine that the remaining undisbursed portion of the Project Fund, together with the
undisbursed balance of Required Equity Funds, and any other sums previously deposited or to
be deposited by the Borrower in connection with the Project, is or will be insufficient to
complete the construction and equipping of the Improvements in accordance with the Plans
and Specifications, to operate and carry the Project after Completion until Stabilization, to pay
all other Project Costs, to pay all interest accrued or to accrue on the Bonds from and after the
date hereof or until Stabilization, and to pay all other sums due or to become due under the
Loan Documents (or any budget category or line item), regardless of how such condition may
be caused, the Borrower will, within ten (10) days after written notice of such determination
from the Servicer, deposit with the Trustee such sums of money in cash as the Servicer may
require, in an amount sufficient to remedy the condition described in such notice, and sufficient
to pay any liens for labor and materials alleged to be due and payable at the time in connection
with the Improvements, and, at the Servicer’s direction, no further disbursements from the
Project Fund shall be made by the Trustee until the provisions of this Section have been fully
complied with. The Servicer may direct the Trustee to enforce the Completion Agreement in
accordance with its terms, and upon such direction, the Trustee shall proceed to enforce the
Completion Agreement. All such deposited sums shall constitute additional security under the
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Loan Documents and, prior to the occurrence of a Default, shall be disbursed by the Trustee in
the same manner as disbursements under the Indenture before any further disbursements from
the Project Fund shall be made by the Trustee. Notwithstanding the above, in the event
amounts deposited hereunder are actually in excess of the amount necessary to achieve
Completion, such excess amounts shall be returned to the Borrower in accordance with Section
5.03 of the Indenture.
Section 5.10 Laborers, Subcontractors and Materialmen. The Borrower will furnish to
the Issuer, the Trustee or the Servicer, upon reasonable request, and from time to time,
affidavits listing all laborers, subcontractors, materialmen, and any other Persons who might or
could claim statutory or common law liens and are furnishing or have furnished labor or
material to the Project or any part thereof, together with affidavits, or other evidence
satisfactory to the Issuer, the Trustee or the Servicer, showing that such parties have been paid
all amounts then due for labor and materials furnished to the Project. The Borrower will also
furnish to the Issuer, the Trustee, and the Servicer, at any time and from time to time upon
reasonable request by the Issuer, the Trustee, Servicer or the Servicer, lien waivers bearing a
then current date and prepared on a form satisfactory to the Issuer, the Trustee or the Servicer
from the Contractor and such subcontractors or materialman as the Issuer, the Trustee or the
Servicer may designate.
Section 5.11 Further Assurance of Title. If at any time the Servicer has reason to
believe that any disbursement from the Project Fund is not secured or will or may not be
secured by the Mortgage as a first priority mortgage lien and security interest on the Property,
then the Borrower shall, within ten (10) days after written notice from the Servicer, do all things
and matters necessary, to assure to the satisfaction of the Servicer that any disbursement from
the Project Fund previously made hereunder or to be made hereunder is secured or will be
secured by the Mortgage as a first priority mortgage lien and security interest on the Property,
and the Servicer, at its option, may decline to approve any further Requisitions until the
Servicer has received such assurance. Nothing in this Section shall limit the right of the
Servicer, at the Borrower’s expense, to order searches of title from time to time and to require
bringdowns or endorsements extending the effective date of the Title Policy in connection with
the making of advances as herein set forth.
Section 5.12 Publicity. The Borrower will permit the Servicer to obtain publicity in
connection with the acquisition, construction and equipping of the Improvements through press
releases and participation in such events as ground breaking and opening ceremonies and
placement of signs on the Land.
Section 5.13 Further Assurances.
(a) Regarding Construction. The Borrower will furnish or cause to be furnished to
the Issuer, the Trustee and the Servicer all instruments, documents, boundary surveys, footing
or foundation surveys, certificates, plans and specifications, title and other insurance, reports
and agreements and each and every other document and instrument required to be furnished
by the terms of this Loan Agreement or the other Loan Documents, all at the Borrower’s
expense.
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(b) Regarding Preservation of Collateral. The Borrower will execute and deliver to
the Issuer, the Trustee and the Servicer such further documents, instruments, assignments and
other writings, and will do such other acts necessary or desirable, to preserve and protect the
collateral at any time securing or intended to secure the obligations of the Borrower under the
Loan Documents, as the Issuer, the Trustee and the Servicer may require.
(c) Regarding this Loan Agreement. The Borrower will cooperate with, and will do
such further acts and execute such further instruments and documents as the Issuer, the Trustee
and the Servicer shall reasonably request to carry out to their satisfaction the transactions
contemplated by this Loan Agreement and the other Loan Documents.
(d) Bank of Account. The Borrower will utilize Bank as its principal bank of account;
including all construction disbursement, operating accounts, and reserve accounts.
Section 5.14 Notices. The Borrower will promptly notify the Issuer, the Trustee and
the Servicer in writing of (i) the occurrence of any Default or Event of Default or event which,
with the giving of notice or the passage of time, or both, would constitute a Default or Event of
Default; (ii) the Borrower’s receipt of notice from any Governmental Authority of any alleged
violation of environmental laws or regulations or other Legal Requirements; (iii) any labor
problems with respect to the Borrower or the Project; (iv) the occurrence of any other event
which would have a material adverse effect on the Project or the business or financial condition
of the Borrower; or (v) the receipt by the Borrower of any notice of default or notice of
termination with respect to any contract or agreement relating to the ownership, construction,
equipping, operation, or use of the Project.
Section 5.15 Solvency; Adequate Capital. The Borrower will:
(a) Remain solvent and pay all of its indebtedness from its assets as the same
become due; and
(b) Maintain adequate capital for the normal obligations reasonably foreseeable for a
business of its size and character and in light of its contemplated business operations.
Section 5.16 Management Contract.
(a) At all times following Completion, the Project shall be managed pursuant to a
management contract with the Manager, which contract shall be terminable with or without
cause by the Borrower or its successors as owners of the Project and shall otherwise be in form
and substance satisfactory to the Servicer. The Borrower acknowledges that the Issuer, the
Trustee and the Servicer will rely on the Manager’s experience in operating properties such as
the Project as a means of maintaining the value of the collateral. In connection with the
approval of the Manager, or any replacement management company:
(i) the Manager or holder of the stock or partnership interest therein, shall be
a Person whose character, financial strength, stability and experience is acceptable to the
Servicer and who shall have experience managing properties of a type and size
reasonably similar to the Project;
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(ii) the Manager shall deliver all organizational documentation and other
materials evidencing its experience acceptable to the Servicer; and
(iii) [the terms of any management contract shall provide for management
fees in excess of 3.0% of the Project Revenues to be subordinate to payments owed by
the Borrower under the Loan Documents and otherwise must be acceptable to the
Servicer in all respects.]
(b) The Borrower shall, from time to time, obtain from the Manager such certificates
of estoppel with respect to compliance by the Borrower with the terms of the management
contract as may be requested by the Servicer, the Trustee and the Servicer.
(c) The Project will be managed by the Manager pursuant to the Management
Agreement. The Borrower acknowledges and agrees that Trustee, as mortgagee under the
Mortgage, is and shall be a third-party beneficiary of the Management Agreement and any
replacement management agreement. Any amendment to the Management Agreement or
delivery of a replacement management agreement must be approved in writing by the Servicer.
Section 5.17 Negative Covenants of the Borrower. The Borrower covenants and
agrees that, so long as the Loan is outstanding:
(a) Restrictions on Easements and Covenants. Except for Permitted
Encumbrances and matters permitted by Section 5.17(d), the Borrower will not create or
suffer to be created or to exist any easement, right of way, restriction, covenant,
condition, license or other right in favor of any Person which affects or might affect title
to the Project or the use and occupancy of the Project or any part thereof without
obtaining the prior written consent of the Servicer, which shall not be unreasonably
withheld or delayed so long as the proposed action is necessary for the operation of the
Project for the purposes contemplated hereby and the proposed action does not
materially impair the validity or priority of the lien of the Mortgage.
(b) No Amendments, Terminations or Waivers. Neither the Borrower nor
the General Partner shall amend, supplement terminate or otherwise modify or waive
any provision of its Organizational Documents, [the documents evidencing the
Subordinate Loans] or any documents relating to the contribution of equity by the
partners of the Borrower [in a manner that would have a material adverse effect on the
Issuer or the Owners] without obtaining the prior written consent of the Servicer.
(c) Restrictions on Indebtedness. Without obtaining the prior written
consent of the Servicer, the Borrower will not create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other than:
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(i) Indebtedness arising under the Loan Documents;
(ii) Indebtedness arising in connection with the Subordinate Loans;
(iii) current liabilities of the Borrower relating to the Project, incurred
in the ordinary course of business but not incurred through (A) the borrowing of
money, or (B) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal purchases
of goods and services; and
(iv) Indebtedness relating to the Project, in respect of taxes,
assessments, governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be required to
be made.
(d) Restrictions on Liens The Borrower shall not subject the Project, or
permit the Project to be subjected, to any Lien or encumbrance except as permitted
pursuant to Article 6 of the Mortgage.
(e) [intentionally omitted]
(f) Transfers. The Borrower shall not transfer the Project or any interest in
the Project, in the Borrower or in any partner of the Borrower, or permit any such
transfer, except (i) as permitted pursuant to Article 6 of the Mortgage, or (ii) as
permitted pursuant to the Construction Disbursement Agreement.
(g) Merger, Consolidation, Conversion and Disposition of Assets
(i) The Borrower will not become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock acquisition.
(ii) The Borrower will not convert into any other type of entity.
(iii) The Borrower will not seek the dissolution or winding up, in
whole or in part, of the Borrower or voluntarily file, or consent to the filing of, a
petition for bankruptcy, reorganization, assignment for the benefit of creditors or
similar proceedings.
(h) Sale and Leaseback. The Borrower will not enter into any arrangement,
directly or indirectly, whereby the Borrower shall sell or transfer any property owned by
it in order then or thereafter to lease such property or lease other property that the
Borrower intends to use for substantially the same purpose as the property being sold or
transferred.
(i) Preservation of Tax Exemption. The Borrower will not take any action
that would adversely affect the exclusion of interest on the Bonds from gross income of
the Owners thereof for purposes of federal income taxation, nor omit or fail to take any
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action required to maintain the exclusion of interest on the Bonds from gross income of
the Owners thereof for purposes of federal income taxation.
Section 5.18 Arbitrage and Tax Matters. It is the intention of the Issuer and the
Borrower that interest on the Bonds shall be and remain excludable from gross income for
federal income taxation purposes, and to that end the covenants and agreements of the
Borrower in this Section 5.18 are for the benefit of the owners of the Bonds and the Issuer.
(a) The Borrower hereby represents, warrants and agrees that all certifications and
representations of fact made by the Borrower in the Borrower’s Tax Certificate are true, accurate
and complete in all material respects of the date on which executed and delivered.
(b) The Borrower covenants not to cause or direct any moneys on deposit in any
fund or account to be used in a manner which would cause the Bonds to be classified as
“arbitrage bonds” within the meaning of Section 148 of the Code, and the Borrower certifies and
covenants to and for the benefit of the Issuer and the Owners of the that so long as there are any
Bonds Outstanding, moneys on deposit in any fund or account in connection with the Bonds,
whether such moneys were derived from the proceeds of the sale of the Bonds or from any
other sources, will not be used in a manner which will cause the Bonds to be classified as
“arbitrage bonds” within the meaning of Section 148 of the Code. In furtherance of the
foregoing, the Borrower covenants to comply with the terms and conditions of Borrower’s Tax
Certificate and to pay when due any amount required to be paid to the United States in
accordance with Borrower’s Tax Certificate and this Loan Agreement.
(c) At any time when any amount required to be paid under Section 148(f) of the
Code (the “Rebate Regulations”) is due, the Borrower shall pay to the United States on behalf
of the Issuer the full amount then required to be paid under the Rebate Regulations. Within
sixty (60) days after the Bonds have been paid in full, the Borrower shall pay to the United State
on behalf of the Issuer the full amount then required to be paid under the Rebate Regulations.
Each such payment shall be made to such location specified by the Internal Revenue Service,
accompanied by a Form 8038-T (or other appropriate information reporting form) prepared by
the Borrower. No later than fifteen (15) days prior to each date on which a payment could
become due under the Rebate Regulations (“Rebate Payment Date”), the Borrower shall deliver
to the Issuer and the Trustee a certificate of a Rebate Analyst either summarizing the
determination that no amount is required to be paid or specifying the amount then required to
be paid, if the certificate specifies an amount to be paid, (A) such certificate shall be
accompanied by a completed Form 8038-T, which is to be signed by an Authorized
Representative of the Issuer, and shall include a certification by the Borrower that the Form
8038-T is accurate and complete, and (B) no later than ten (10) days after the Rebate Payment
Date, the Borrower shall furnish to the Issuer and the Trustee a certificate state that such
amount has been timely paid. This Section 5.18(c) shall be construed so as to cause compliance
with the Rebate Regulations. The Borrower covenants that all action taken under this Section
5.18(c) shall be taken in a manner that complies with the Rebate Regulations and that it shall
neither take any action nor omit to take any action that would cause the Bonds to be “arbitrage
bonds” by reason of the failure to comply with the Rebate Regulations. To the extent that any
payment of rebatable arbitrage or penalty in lieu of rebate is not timely made to the United
States, the Borrower shall pay to the United States on behalf of the Issuer any correction
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amount, interest, penalty or other amount necessary to prevent the Bonds from becoming
“arbitrage bonds” within the meaning of Section 148 of the Code. The Borrower covenants that,
to the extent necessary, it shall obtain the advice and assistance of a Rebate Analyst to aid it in
complying with the Rebate Regulations.
(d) The Borrower covenants and agrees that it will not (i) use or permit the use of any of
the funds provided by the Issuer hereunder or any other funds of the Borrower, directly or
indirectly, in such manner as would, or (ii) enter into, or allow any “related person” (as defined
in Section 147(a)(2) of the Code) to enter into, any arrangement, formal or informal, for the
purchase of the Bonds that would, or (iii) take or omit to take any other action that would, in
each case cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the
Code.
(e) In the event that at any time the Borrower is of the opinion or becomes otherwise
aware that for purposes of this Section 5.18 it is necessary to restrict or to limit the yield on the
investment of any moneys held under the Indenture or otherwise by the Trustee, the Borrower
shall determine the limitations and so instruct the Trustee in writing and cause the Trustee to
comply with those limitations under the Indenture.
(f) The Borrower will take such action or actions as may be reasonably necessary in the
opinion of counsel to the Issuer, or of which it otherwise becomes aware, to fully comply with
Section 148 of the Code as applicable to the Bonds.
(g) The Borrower further warrants and covenants that it has not executed and will not
execute any other agreement, or any amendment or supplement to any other agreement, with
provisions contradictory to, or in opposition to, the provisions, of this Loan Agreement and of
the Regulatory Agreement, and that in any event, the requirements of this Loan Agreement and
each Regulatory Agreement are paramount and controlling as to the rights and obligations
herein set forth and supersede any other requirements in conflict herewith and therewith.
(h) The Borrower will use due diligence to complete the construction of all of the units
comprising the Project and reasonably expects to fully expend the entire $__________ principal
amount of the Loan by August 1, 2014.
(i) The Borrower hereby represents and warrants that, within the meaning of Section
147(a)(14) of the Code, the average maturity of the Bonds does not exceed 120 percent of the
average reasonably expected economic life of the facilities being financed with the proceeds of
the Bonds.
(j) The Borrower shall take no action, nor permit nor suffer any action to be taken if the
result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning
of Section 149(b) of the Code.
(k) The Borrower represents and warrants that no portion of the proceeds of the Loan
shall be used to provide any airplane, skybox or other private luxury box, health club facility,
facility primarily used for gambling, or store the principal business of which is the sale of
alcoholic beverages for consumption off premises, and no portion of the proceeds of the Loan
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shall be used for an office unless (i) the office is located on the premises of facilities constituting
a portion of the Project and (ii) not more than a de minimis amount of the functions to be
performed at such office is not related to the day-to-day operations of the Project.
Section 5.19 Indemnification.
(a) The Borrower hereby releases the Issuer, the Trustee and the Servicer (including
any Person at any time serving as a Boardmember, employee, officer, trustee, official or agent of
any thereof) from and agrees that the Issuer, the Trustee and the Servicer (including any Person
at any time serving as a member, employee, officer, trustee, official or agent of any thereof) shall
not be liable for, and to the maximum extent permitted by law, agrees to indemnify and hold
the Issuer, the Trustee and the Servicer (including any Person at any time serving as a
Boardmember, employee, officer, trustee, official or agent of any thereof) harmless from: (i) any
liability for any loss or damage to property or any injury to, or death of, any Person that may be
occasioned by any cause whatsoever pertaining to the Project, (ii) any liabilities, losses or
damages, or claims therefor, and expenses (including reasonable attorneys’ fees actually
incurred), arising out of or in connection with any Loan Document or any of the transactions
contemplated hereby or thereby or failure on the part of the Borrower to comply with any law,
regulation or ordinance affecting the Project, and (iii) any liabilities, losses or damages, or
claims therefor, arising out of or in connection with the issuance, sale and public or other
offering or remarketing of the Bonds, including, in each such case, reasonable attorneys’ fees
actually incurred, except for any such liabilities, losses or damages, or claims therefor resulting
from information provided by the Issuer, the Trustee or the Servicer, as the case may be, in
connection with the issuance, sale and public or other offering or remarketing of the Bonds
which proves to have been materially incorrect or misleading when provided or any act of gross
negligence or willful misconduct by such Person. If any such claim is asserted, any Person
indemnified herein will give prompt notice to the Borrower and will cooperate with the
Borrower in the investigation and defense of any such claim, and the Borrower will assume the
defense thereof by engaging counsel approved by the indemnified party (which approval shall
not be unreasonably withheld). In the event the indemnified party reasonably determines that
there exists a conflict of interest between counsel’s representation of the Borrower and its own
representation in any such action or proceedings, the indemnified party shall have the right to
employ separate counsel in any such action or proceedings and to participate in the
investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses
actually incurred by such separate counsel. During the pendency of litigation with respect to
any claim which would have a material adverse effect on the financial condition of the
Borrower or the Project. Borrower shall at its cost post such bond or other security as the Issuer,
the Trustee or the Servicer or any individual indemnified hereunder may reasonably require
with respect to any such claim. This indemnification covenant shall survive repayment of the
Loan and the Bonds and the termination of this Loan Agreement and the Indenture.
(b) The Borrower agrees to indemnify and hold harmless the Issuer, the Trustee and
the Servicer from and against any and all claims, actions and suits, and from and against any
and all liabilities, losses, damages and expenses of every nature and character arising out of this
Loan Agreement or any of the other Loan Documents or the transactions contemplated hereby
and thereby including, without limitation, (i) any brokerage, leasing, finder’s or similar fees, (ii)
any disbursement of the proceeds of any of the Bonds, (iii) any condition of the Project whether
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related to the quality of construction or otherwise, (iv) any actual or proposed use by the
Borrower of the proceeds of the Bonds, (v) any actual or alleged violation of any Legal
Requirements or Project Approvals, or (vi) any Obligor’s entering into or performing this Loan
Agreement or any of the other Loan Documents, in each case including reasonable fees and
disbursements of counsel incurred in connection with any such investigation, litigation or other
proceeding except for any act of gross negligence or willful misconduct by the Person. In
litigation, or the preparation therefor, the Issuer, the Trustee or the Servicer shall be entitled to
select its own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable actually incurred fees and expenses of such counsel. The obligations
of the Borrower under this Section shall survive the termination of this Loan Agreement and the
Indenture and the repayment of the Loan and the Bonds. If, and to the extent that the
obligations of the Borrower under this Section are unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
Section 5.20 Agreements Between Borrower and its Affiliates. [Except for the
_________________ executed by the Borrower and ___________ and dated __________, 20___,]
the Borrower shall not enter into any agreement, written or otherwise, directly or indirectly
relating to the Project with an Affiliate of the Borrower without the prior written consent of the
Servicer.
Section 5.21 Sale of Bonds and Securitization.
(a) At the request of the Servicer, the Borrower shall take such actions and execute
and deliver such documents and data as may be reasonably necessary or appropriate in
connection with the sale of the Bonds or participation therein or any securitization (such sale
and/or securitization, the “Securitization”) of single or multi-class securities (the “Securities”)
secured by or evidencing ownership interests in the Bonds. Without limiting the generality of
the foregoing, the Borrower shall:
(i) provide financial and other information with respect to the Project, the
Borrower and its Affiliates, the manager and any tenants of the Project and provide
business plans and budgets relating to the Project;
(ii) perform or permit or cause to be performed or permitted such site
inspection, appraisals, market studies, environmental reviews and reports (Phase I and,
if appropriate, Phase II), engineering reports and other due diligence investigations of
the Project, as may be reasonably requested by the Servicer or the Rating Agencies or as
may be necessary or appropriate in connection with the Securitization (the items
provided to the Servicer pursuant to this paragraph (a) being called the “Provided
Information”), together, if customary, with appropriate verification of and/or consents
to the Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to the Servicer and the Rating Agencies;
(iii) cause counsel to render opinions as to non-consolidation, fraudulent
conveyance, true sale and true contribution and any other opinion customary in
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securitization transactions with respect to the Project, the Borrower and its Affiliates,
which counsel and opinions shall be satisfactory to the Servicer and the Rating Agencies;
(iv) make such representations and warranties as of the closing date of the
Securitization with respect to the Project, the Borrower and the Loan Documents as are
customarily provided in securitization transactions and as may be reasonably requested
by the Servicer or the Rating Agencies and consistent with the facts covered by such
representations and warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents;
(v) provide current certificates of existence with respect to the Borrower from
appropriate Governmental Authorities; and
(vi) execute such amendments to the Loan Documents and the Organizational
Documents of the Borrower as may be requested by the Servicer or the Rating Agencies
or otherwise to effect the Securitization.
(b) All reasonable third party costs and expenses incurred by the Borrower solely in
connection with the Borrower’s complying with requests made under this Section 5.21 shall
promptly be paid or caused to be paid by the Servicer. The Borrower shall not be liable for third
party costs or expenses incurred by the Servicer in connection with the Securitization.
(c) The Borrower understands that certain of the Provided Information may be
included in disclosure documents in connection with the Securitization, including a prospectus
or private placement memorandum (each, a “Disclosure Document”) and may also be included
in filings with the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the “Securities Act”), or the Securities and Exchange Act of 1934, as amended (the
“Exchange Act”), or provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the Securitization. In the event
that the Disclosure Document is required to be revised prior to the sale of all Securities, the
Borrower shall cooperate with the Servicer in updating the Provided Information for inclusion
or summary in the Disclosure Document by providing all current information pertaining to the
Borrower and the Project necessary to keep the Disclosure Document accurate and complete in
all material respects with respect to such matters.
(d) In connection with a preliminary and a final private placement memorandum or
prospectus, as applicable, the Borrower agrees if requested by the Servicer, to certify in writing
that the Borrower has carefully examined those portions of such memorandum or prospectus,
as applicable, pertaining to the Borrower and the Project and such sections (and any other
sections reasonably requested and pertaining to Borrower and the Project) do not contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statement made, in the light of the circumstances under which they were made, not misleading.
(e) The Borrower’s liability under this Section 5.21 shall be limited to liabilities
arising out of or based upon any such material untrue statement or omission made with
knowledge thereof and made therein in reliance upon and in conformity with information
furnished to the Servicer by or on behalf of the Borrower in connection with the preparation of
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those portions of the Disclosure Document pertaining to the Borrower or the Project or in
connection with the underwriting of the debt, including financial statements of the Borrower,
operating statements, rent rolls, environmental site assessment reports and property condition
reports with respect to the Project.
(f) The Issuer shall have no obligation or liability whatsoever under this Section 5.21
or under any document provided pursuant to this Section 5.21.
Section 5.22 Funds. The Borrower acknowledges the creation of the Replacement
Reserve Fund, the Operating Reserve Funds and the Tax and Insurance Fund pursuant to the
Indenture. The Replacement Reserve Fund, the Operating Reserve Fund and the Tax and
Insurance Fund shall be funded, and moneys therein shall be disbursed, in accordance with the
provisions of the Indenture and this Section 5.22.
(a) On or before _______________ 1 of each year, the Borrower shall submit
to the Servicer for approval the Proposed Budget to be effective for the next following
year. The Servicer shall have the right to approve or disapprove any Proposed Budget
or any line-item contained in such Proposed Budget. If any Proposed Budget is not
approved by the Servicer within thirty (30) days following submission by the Borrower,
such Proposed Budget shall be deemed disapproved. If any line-item or Proposed
Budget is disapproved, the Borrower shall thereafter consult for an additional thirty (30)
days with the Servicer in an effort to achieve mutually acceptable Approved Budget. To
the extent that the Proposed Budget is disapproved, the Approved Budget for the
previous year shall remain in effect, increased by 5% over the previous year (except for
costs of utilities, real estate taxes and assessments and insurance and other third-party
costs or cost associated with remediation of emergency conditions which shall be
permitted variances to the Proposed Budget) until the parties resolve their differences.
In addition to, and not in limitation of the foregoing, each Approved Budget may be
revised from time to time with prior written consent of the Servicer to reflect changes to
items set forth in the then-current Approved Budget.
(b) Each Proposed Budget:
(i) shall be prepared on the basis of sound accounting practices
consistently applied;
(ii) shall reflect the projected gross revenues and operating expenses
regarding the Project;
(iii) shall reflect all projected Capital Expenditures which are
reasonably expected to be made in connection with the Project during the year
covered by such Proposed Budget; and
(iv) shall contain such other information as reasonably may be
requested by the Servicer.
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(c) On each Interest Payment Date beginning with the first month after the
Project achieves Completion, the Borrower shall remit to the Trustee for deposit by the
Trustee in the Replacement Reserve Fund an amount equal to 1/12 of the Unit Reserve
Amount.
(d) Except as otherwise provided in this Section, before the Servicer shall
authorize the disbursement of any amounts from the Replacement Reserve Fund, the
Borrower shall submit the following items to the Servicer for its review and approval:
(i) a requisition from the Borrower stating that no Event of Default
exists and requesting the Servicer to approve a disbursement;
(ii) the identity of all general contractors, architects, engineers and
other professionals, if any, engaged in connection with the proposed capital
expenditures along with copies of the contracts entered into between the
Borrower and such entities;
(iii) copies of the plans and specifications for the work to be done, if
required or produced in connection with the work contemplated;
(iv) if requested by the Servicer, evidence of compliance with all
applicable Legal Requirements;
(v) if requested by the Servicer in connection with construction work
in excess of $10,000, evidence of builders’ risk insurance along with workers’
compensation and public liability insurance in such amounts and in such form as
the Servicer may reasonably require;
(vi) if requested by the Servicer in connection with [construction]
[rehabilitation] work in excess of $10,000, evidence that the Consulting Engineer
shall have inspected and approved of the work performed to date;
(vii) copies of bills or invoices documenting the proposed expenditure
(with paid receipts or other evidence of payment for such Capital Expenditures
to be provided to the Servicer before the next requested requisition and in any
event within ten (10) days of disbursement to the Borrower of the requested
payment); and
(viii) evidence that the general contractor has delivered and filed
effective mechanics lien waivers prior to the commencement of work or, if such
waivers were not delivered and filed, a release of liens in connection with all
work performed, which releases may be conditioned upon payment to the
general contractor provided that the general contractor delivers unconditional
releases within thirty (30) days of receipt of such payment.
(e) Provided the conditions set forth in Section 5.22(d) have been satisfied (or
waived in writing by the Servicer), the Servicer shall authorize the disbursement from
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the Replacement Reserve Fund of the amount requested by the Borrower in its
requisition, or such lesser amount approved by the Consulting Engineer, to the
Borrower. It shall be a condition to all withdrawals from the Replacement Reserve Fund
that (i) all work shall be performed in a good and workmanlike manner and in
compliance with all applicable Legal Requirements, (ii) the Servicer shall have reviewed
and approved each of the foregoing requirements, (iii) the work to be performed is
consistent with the Approved Budget or the recommendations of the Consulting
Engineer, and (iv) sufficient amounts are on deposit in the Replacement Reserve Fund to
pay the amount requisitioned.
(f) For any single Capital Expenditure (not part of, or related to, a sequence
or a series of Capital Expenditures or a particular capital improvement plan or project)
costing less than Five Thousand Dollars ($5,000.00) and whether or not described in the
Approved Budget, the Borrower, upon completion of the work, shall deliver to the
Servicer evidence reasonably satisfactory to the Servicer of such completion and shall
deliver to the Servicer invoices for such work, and, for all of such subsequent
disbursements from the Replacement Reserve Fund, the Borrower shall deliver evidence
of payment in full for all invoices pertaining to the previous disbursement from the
Replacement Reserve Fund, whereupon the Servicer shall authorize reimbursement of
the cost of the Capital Expenditure from the Replacement Reserve Fund to the Borrower
or, at the Servicer’s option, to the contractors to whom such funds are owed.
(g) For any Capital Expenditure (not part of or related to a sequence or series
of Capital Expenditures) costing Five Thousand Dollars ($5,000.00) or more which is to
be paid from the Replacement Reserve Fund, before entering into any contracts in
connection with such Capital Expenditure (whether or not the Capital Expenditure was
described in the Approved Budget), the Borrower shall submit to the Servicer for its
prior review and approval (which shall not be unreasonably withheld or delayed) copies
of the proposed contracts to be entered into with respect to such Capital Expenditure
and copies of the proposed plans and specifications for the Capital Expenditure. Once
the Capital Expenditure is approved in advance by the Servicer, the provisions of
Section 5.22(d) shall apply. Upon completion of such work, the Borrower shall deliver
to the Servicer evidence reasonably satisfactory to the Servicer of such completion and
shall deliver to the Servicer invoices for such work and, for all of such subsequent
disbursements from the Replacement Reserve Fund, the Borrower shall deliver evidence
of payment in full for all invoices pertaining to the previous disbursement from the
Replacement Reserve Fund, whereupon the Servicer shall authorize reimbursement of
the cost of the Capital Expenditure from the Replacement Reserve Fund to the Borrower,
or, at the Servicer’s option, the contractors to whom such costs are owed.
(h) Borrower shall provide to the Trustee and the Servicer, promptly
following the Borrower’s receipt thereof, copies of all bills received by the Borrower for
real property taxes for the Property and for the premiums on the insurance policies
required to be maintained pursuant to the loan documents. On each Interest Payment
Date, beginning with the first month after the Conversion Date, the Borrower shall remit
to the Trustee for deposit by the Trustee into the Tax and Insurance Fund funds in an
amount equal to one-twelfth (1/12) of the amount required to be payable during the
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current year for real estate taxes and insurance premiums with respect to the Project, as
indicated by the current bills. If, one month prior to the due date of any aforementioned
obligations, the amounts then on deposit shall be insufficient for the payment of such
obligation in full, the Borrower shall to the Trustee for deposit by the Trustee in the Tax
and Insurance Fund the amount of the deficiency within ten (10) days after demand
from the Trustee or the Servicer. Amounts held in the Tax and Insurance Fund shall be
applied by the Trustee to the payment of real estate taxes and insurance premiums on or
before the respective dates on which the same or any of them would become delinquent.
(i) [On the Closing Date, the Borrower shall remit to the Trustee for deposit
by the Trustee in the Operating Reserve Fund __________________ Dollars
($__________) of the Borrower’s own funds.] [On each __________, the Borrower shall
remit to the Trustee for deposit by the Trustee in the Operating Reserve Fund, [to the
extent available from Net Operating Revenues,] [from its own funds,] up to
_____________ Dollars ($__________) [until the balance in the Operating Reserve Fund is
__________________ Dollars ($__________).] Moneys in the Operating Reserve Fund
shall be disbursed only upon the authorization of the Servicer. To the extent that Project
Revenues are insufficient to pay Operating Expenses and/or the amount necessary to
pay principal and interest on the Bonds as required pursuant to Section 3.2, the
Borrower may make written request to the Servicer for disbursement of amounts in the
Operating Reserve Fund for payment of such Operating Expenses an debt service on the
Bonds. Following receipt of any such request, the Servicer may authorize the
disbursement of such sums from the Operating Reserve Fund as it shall have approved
from time to time. [If moneys are disbursed from the Operating Reserve Fund, the
Borrower shall, from time to time, deposit into the Operating Reserve Fund any Net
Operating Revenues that it realizes until the amount so deposited is equal to the
aggregate amounts so disbursed.]
Section 5.23 Covenants Regarding Tax Credits. The Borrower hereby agrees to
comply with all of the following covenants (each, a “Tax Credit Covenant”):
(a) To observe and perform all obligations imposed on the Borrower in
connection with the Tax Credits, including the obligation to have the Project “placed in
service” (within the meaning given in Section 42 of the Code) in a timely manner; and to
operate the residential units of the Project, and to use the Borrower’s best efforts to cause
all appropriate parties to operate the same, in accordance with all requirements, statutes,
and regulations governing the Tax Credits;
(b) To preserve at all times the allocation and availability of the Tax Credits;
(c) Not to release, forego, alter, amend, or modify its rights to the Tax Credits
without the Servicer’s prior written consent, which the Servicer may give or withhold in
the Servicer’s reasonable discretion;
(d) Not to execute any residential lease of all or any portion of the Project
which does not comply fully with all requirements, statutes, and regulations governing
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the Tax Credits, without the Servicer’s prior written consent, which the Servicer may
give or withhold in the Servicer’s sole and absolute discretion;
(e) To cause to be kept all records, and cause to be made all elections and
certifications, pertaining to the number and size of apartment units, occupancy thereof
by tenants, income level of tenants, set-asides for low-income tenants, and any other
matters now or hereafter required to qualify for and maintain the Tax Credits in
connection with the low-income occupancy of the Project;
(f) To comply with the appropriate minimum low-income set-aside
requirements under the Code or applicable federal regulations (the “Federal Laws”) and
all laws and regulations of the State (the “State Laws”) applicable to the creation,
maintenance and continued availability of the Tax Credits;
(g) To certify compliance with the set-aside requirements and report the
dollar amount of qualified basis and maximum applicable percentage, date of placement
in service and any other information required for the Tax Credits at such time periods as
required by Federal Laws or State Laws for such Tax Credits;
(h) To set aside the appropriate number of units for households with incomes
meeting the required standards of the median income of the county in which the Project
is located to qualify for the Tax Credits (as determined pursuant to Section 42 of the
Code and/or State Laws), adjusted for family size, and to operate and maintain all such
units as “low-income units” qualifying for the Tax Credits under Section 42(i)(3) of the
Code and/or State Laws;
(i) To exercise good faith in all activities relating to the operation and
maintenance of the Project in accordance with the requirement of Federal Laws and
State Laws; and
(j) To promptly deliver to the Servicer true and correct copies of all notices
or other documents or communications received or given by the Borrower with regard
to or relating in any way to the Borrower’s partnership interests and/or the Tax Credits.
Immediately upon receipt thereof, the Borrower shall deliver to the Servicer a copy of (i)
the fully-executed allocation and final reservation of Tax Credits for the Project; (ii) the
basis audit (as required by Section 42 of the Code) for the Project (including a certificate
of the Borrower’s accountant or attorneys if requested by the Servicer); (iii) the first
annual income certification for all tenants of the Project showing that the tenants are
qualified for purposes of the Borrower’s obtaining Tax Credits, and (iv) the fully-
completed Form 8609 (required by the Code) issued for the Project. The Borrower shall
deliver promptly to the Servicer such other certificates, income certificates, reports and
information as the Servicer may request.
The Borrower understands and acknowledges that the Bank is purchasing the Bonds
based, in part, upon the value of the Tax Credits, and the Tax Credits, directly or indirectly,
constitute part of Trustee’s security on behalf of the Owners of the Bonds, for the obligations of
the Borrower in connection with the Loan. The Borrower agrees to indemnify, defend, and hold
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the Servicer and the Owners harmless for, from, and against any and all actions, suits, claims,
demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation
costs and reasonable attorneys’ fees, arising from or in any way connected with the Borrower’s
failure to comply with one or more Tax Credit Covenants, excepting those arising out of, or
resulting, solely from the gross negligence or willful misconduct of the Servicer.
Section 5.24 Leasing. The Servicer (and all other parties whose approval is required)
must approve the Borrower’s standard form of residential lease or rental agreement prior to its
use by the Borrower. The Borrower may not materially modify the approved standard form of
residential lease without the Servicer’s prior written consent in each instance (which consent
shall not be unreasonably withheld), together with the approval of all other parties whose
consent is required. Each lease, other than leases on the Borrower’s standard form of residential
lease, of any part of the Project is subject to the Servicer’s written approval as to form and
substance prior to execution and delivery. Despite the foregoing, the Borrower may enter into
residential leases (and amendments) in the ordinary course of business with bona fide third
party tenants without the Servicer’s prior written consent if the Borrower uses the approved
standard form of residential lease and:
(i) Within fifteen (15) days after the Servicer’s written request therefor, the
Servicer receives a copy of the executed lease (accompanied by all financial information
and certificates obtained by the Borrower pertaining to the tenant);
(ii) The Borrower, acting in good faith and exercising due diligence, has
determined that the tenant qualifies as a low-income family for purposes of meeting the
requirements for obtaining Tax Credits;
(iii) The lease meets the standards required by Section 42 of the Code;
(iv) The lease meets the requirements of the Servicer, the Issuer, and the
Investor Limited Partner;
(v) The lease reflects an arm’s-length transaction and, so long as the
Construction Disbursement Agreement is in effect, conforms to the projections of the Pro
Forma Schedule attached thereto;
(vi) The lease does not affect more than one (1) residential unit within the
Improvements and is for a minimum term of six (6) months and a maximum term of
twelve (12) months, unless otherwise agreed in writing by the Servicer; and
(vii) So long as the Construction Disbursement Agreement is in effect, the
lease, together with all leases previously executed, does not cause the Loan to become
“out of balance” as that term is defined in Section 1.2(a) of the Construction
Disbursement Agreement The Borrower acknowledges that the Loan may become “out
of balance” if the landlord’s aggregate economic obligations under the leases exceed, or
the Net Operating Income from the Project fails to meet, the Borrower’s projections for
such obligations, thereby increasing the cost or decreasing the value of the Project.
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(b) The Servicer in the exercise of its sole discretion may consider any executed lease
it receives to be unsatisfactory if the lease fails to meet any of the requirements of this
Agreement. If this happens, or if the Borrower at any time fails to submit any executed lease
(and accompanying information) at the time required by this Section, or if any Event of Default
has occurred and is continuing, the Servicer may make written demand on the Borrower to
submit all future leases for the Servicer’s approval prior to execution. The Borrower must
comply with any such demand by the Servicer.
(c) The Servicer’s approval of any lease is for the sole purpose of protecting the
Servicer’s security and preserving the Servicer’s rights under the Loan Documents. No
approval by the Servicer will result in a waiver of any default of the Borrower. In no event will
the Servicer’s approval of any lease be a representation of any kind with regard to the lease, its
enforceability or the financial capacity of any tenant or guarantor.
(d) The Borrower must perform all obligations required to be performed by it as
landlord under any lease affecting any part of the Land or any space within the Improvements.
Section 5.25 Compliance with Anti-Terrorism Regulations.
(a) None of the Related Persons will be included in, owned by, Controlled by, act for
or on behalf of, provide assistance, support, sponsorship, or services of any kind to, or
otherwise associate with any of the Persons referred to or described in any list of persons,
entities, and governments issued by OFAC pursuant to Executive Order 13224 or any other
OFAC List.
(b) Borrower will comply at all times with the requirements of Executive Order
13224; the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701-06; the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Pub. L. 107-56 (the “PATRIOT Act”); the Iraqi Sanctions Act,
Pub. L. 101-513, 104 Stat. 2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c;
the Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C. Section 219, 18 U.S.C.
Section 2332d, and 18 U.S.C. Section 2339b); the International Security and Development
Cooperation Act, 22 U.S.C. Section 2349 aa 9; the Terrorism Sanctions Regulations, 31 C.F.R.
Part 595; the Terrorism List Governments Sanctions Regulations, 31 C.F.R. Part 596; the Foreign
Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597; the Bank Secrecy Act, Pub. L.
91-508, 84 Stat. 1114, 1118; the Trading with the Enemy Act, 50 U.S.C. App. Section 1 et seq.; the
laws relating to prevention and detection of money laundering in 18 U.S.C. Sections 1956 and
1957 and any similar laws or regulations currently in force or hereafter enacted (collectively, the
“Anti-Terrorism Regulations”).
(c) If Borrower becomes aware or receives any notice that any of the Related Persons
are named on any of the OFAC Lists (such occurrence, an “OFAC Violation”), Borrower will
immediately (i) give notice to the Issuer, the Trustee and the Servicer of such OFAC Violation,
and (ii) comply with all laws applicable to such OFAC Violation (regardless of whether the
party included on any of the OFAC Lists is located within the jurisdiction of the United States of
America), including, without limitation, the Anti-Terrorism Regulations, and Borrower hereby
authorizes and consents to Issuer’s, Trustee’s and Servicer’s taking any and all steps Issuer,
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Trustee and Servicer deem necessary, in the sole discretion of each of Issuer, Trustee and
Servicer, to comply with all laws applicable to any such OFAC Violation, including, without
limitation, the requirements of the Anti-Terrorism Regulations (including the “freezing” and/or
“blocking” of assets).
(d) Upon Issuer, Trustee’s or Servicer’s request from time to time during the term of
the Loan, Borrower agrees deliver a certification confirming that the representations and
warranties set forth in this Agreement remain true and correct as of the date of such certificate
and confirming Borrower’s compliance with this Section. Borrower also agrees to cooperate
with each of Issuer, Trustee and Servicer, and to cause each Related Person to cooperate with
Issuer, Trustee and Servicer, in providing such additional information and documentation on
Borrower’s and such Related Person’s legal or beneficial ownership, policies, procedures and
sources of funds as Issuer, Trustee and Servicer deem necessary or prudent to enable each of
them to comply with the Anti-Terrorism Regulations as now in existence or hereafter amended.
From time to time upon the written request of Issuer, Trustee or Servicer, Borrower shall deliver
to the requesting party a schedule of the name, legal domicile, address and jurisdiction of
organization, if applicable, for each Related Party and each holder of a legal interest in any
Borrower.
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ARTICLE VI
OPTION AND OBLIGATIONS OF BORROWER TO PREPAY
Section 6.1 Optional Prepayment.
(a) The Note and amounts due under Section 3.2(a) hereof are subject to prepayment
in order to effect the redemption of the Bonds under Section 4.03 of the Indenture at the option
of the Borrower in whole but not in part at the times (and not before the times) and at the
redemption prices plus accrued interest to the redemption date of the Bonds, Additional
Interest and the Prepayment Equalization Payment, if applicable, as set forth in Section 4.03 of
the Indenture together with interest as set forth in Section 4.03 of the Indenture. The Note is not
otherwise subject to optional prepayment by the Borrower.
(b) To effect prepayment of the Note and redemption of the Bonds as contemplated
in subparagraph (a) above, the Borrower shall deliver to the Trustee and the Servicer, not less
than ninety (90) days prior to the date on which Bonds are subject to redemption under said
Section, a written certificate of the Borrower stating that the Borrower is prepaying the Note
pursuant to this Section 6.1. The certificate from the Borrower shall certify the following: (i) the
principal amount of the Note to be prepaid, (ii) that the amount to be prepaid on the Note shall
be credited to redemption of the Bonds pursuant to Section 4.03 of the Indenture, (iii) the date
for redemption of the Bonds, (iv) any conditions to such prepayment.
(c) The options granted to the Borrower in this Section 6.1 shall be exercisable only
(i) in the event and to the extent the Bonds are subject to redemption in accordance with the
Indenture and (ii) if no Event of Default under any of the Loan Documents shall have occurred
and be then continuing or if all costs associated with any existing Event of Default (including,
without limitation, late fees, penalties, costs of enforcement, protective advances and interest on
such amounts) which are then due and owing under the Loan Documents are paid in full in
connection with such prepayment.
Section 6.2 Mandatory Prepayment. The Loan and amounts due under Section 3.2(a)
hereof shall be prepaid in whole or in part in order to effect the mandatory redemption of the
Bonds at the times and in the amounts specified in Section 4.01 of the Indenture.
Section 6.3 Amounts Required for Prepayment.
(a) The amount payable by the Borrower hereunder upon either (i) the exercise of
the option granted to the Borrower in Section 6.1 hereof, or (ii) the mandatory prepayment of
the Note by the Borrower in Section 6.2 hereof shall be, to the extent applicable and except as
otherwise provided, the sum of the following:
(i) the amount of money necessary to pay the redemption price of the Bonds
to be redeemed specified in Section 4.03 of the Indenture, in the case of optional
redemption and Section 4.02 of the Indenture in the case of mandatory redemption,
together with all interest specified therein payable up to and including said redemption
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date, Prepayment Equalization Payment (if applicable), and all expenses of the
redemption; plus
(ii) in the event of a redemption in whole, an amount of money equal to the
Trustee Fee, Trustee’s Expenses and Issuer’s expenses under the Indenture accrued and
to accrue until the final payment and redemption of the Bonds, together with any due
and unpaid Issuer Annual Fee or other amounts owing to the Issuer under and as such
term is defined in the Regulatory Agreement; plus
(iii) in the event of any prepayment during the existence and continuance of
an Event of Default, the amounts described in Section 6.1(c)(ii) hereof.
(b) Any prepayment made pursuant to Section 6.1 or 6.2 hereof shall be deposited
into the Revenue Fund. No prepayment or investment of the proceeds thereof shall be made
which shall cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the
Code.
Section 6.4 Cancellation at Expiration of Term. At the acceleration, termination or
expiration of the term of this Loan Agreement and following full payment of the Bonds or
provision for payment thereof in accordance with Article XI of the Indenture and of all other
fees and charges of all parties having been made in accordance with the provisions of this Loan
Agreement and the Indenture, the Issuer shall deliver to the Borrower any documents and take
or cause the Trustee to take such actions as may be necessary to effectuate the cancellation and
evidence the termination of this Loan Agreement and the Loan Documents (other than the
Regulatory Agreement, which shall not terminate except in accordance with the terms thereof).
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The following shall be “Events of Default” under this
Loan Agreement, and the term “Event of Default” shall mean, whenever it is used in this Loan
Agreement, any one or more of the following events:
(a) Failure by the Borrower to pay any amounts required to be paid on the
Note or under Section 3.2 (a) or (b) hereof when due;
(b) Any failure by the Borrower to pay as and when due and payable any
other sums to be paid by the Borrower under this Loan Agreement and the continuation
of such failure for a period of five (5) days after the same are due; or
(c) Any failure of any representation or warranty made in this Loan
Agreement, the Construction Disbursement Agreement or any Requisition to be true
and correct; or
(d) Any failure by the Borrower to observe and perform any covenant or
agreement on its part to be observed or performed hereunder or thereunder, other than
as referred to in subsections (a) or (b) of this Section 7.1, for a period of thirty (30) days
after written notice specifying such breach or failure and requesting that it be remedied,
given to the Borrower by the Issuer, the Trustee or the Servicer; provided, however, that
in the event such breach or failure be such that it can be corrected but cannot be
corrected within said 30 day period, the same shall not constitute an Event of Default
hereunder if corrective action is instituted by the Borrower or on behalf of the Borrower
within said 30 day period and is diligently pursued to completion thereafter (unless, in
the opinion of Bond Counsel delivered to the Servicer, failure to correct such breach or
failure within the cure period herein provided (or such shorter time as shall be
established as a limitation on the period of time during which correction may be
pursued) will adversely affect the exclusion from gross income of interest on the Bonds
for federal income taxation purposes or violate State law, in which case the extension of
cure period herein provided will not be available); or
(e) Any Event of Default (as defined or otherwise set forth in the Indenture
or any of the Loan Documents or the General Partner Documents) shall have occurred
and shall remain uncured beyond any applicable cure period provided in the applicable
document; or
(f) Any dissolution, termination, partial or complete liquidation, merger or
consolidation of any Obligor or the General Partner of Borrower, or any sale, transfer or
other disposition of the Project or of all or substantially all of the assets of Borrower; or
(g) Any failure by the Borrower to obtain any Project Approvals as required
in order to proceed with the construction of the Project so as to complete the same by the
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Completion Deadline, or the revocation or other invalidation of any Project Approvals
previously obtained; or
(h) Any change in the legal or beneficial ownership of the Borrower or the
General Partner other than as expressly permitted by the terms hereof or by reason of
the death of the owner of such interests; or
(i) The General Partner ceases for any reason to act in that capacity unless
replaced by a transferee permitted pursuant to Section 5.17(e); or
(j) [intentionally omitted]
(k) Any failure by the Borrower to pay at maturity, or within any applicable
period of grace, any Indebtedness, or any failure to observe or perform any material
term, covenant or agreement contained in any agreement by which it is bound,
evidencing or securing any Indebtedness, 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
(l) Any Obligor shall file a voluntary petition in bankruptcy under Title 11 of
the United States Code, or an order for relief shall be issued against any such Obligor in
any involuntary petition in bankruptcy under Title 11 of the United States Code, or any
such Obligor shall file any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, dissolution or
similar relief for itself under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief of debtors, or such Obligor
shall seek or consent to or acquiesce in the appointment of any custodian, trustee,
receiver, conservator or liquidator of such Obligor, or of all or any substantial part of its
respective property, or such Obligor shall make an assignment for the benefit of
creditors, or such Obligor shall give notice to any governmental authority or body of
insolvency or pending insolvency or suspension of operation; or
(m) An involuntary petition in bankruptcy under Title 11 of the United States
Code shall be filed against the Borrower or any Obligor and such petition shall not be
dismissed within ninety (90) days of the filing thereof; or
(n) A court of competent jurisdiction shall enter any order, judgment or
decree approving a petition filed against any Obligor seeking any reorganization,
arrangement, composition, readjustment, liquidation or similar relief under any present
or future federal, state or other law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or appointing any custodian, trustee, receiver, conservator or
liquidator of all or any substantial part of its property; or
(o) Any of the events described in Section 7.1(k), (l) or (m) occurs with
respect to the Investor Limited Partner prior to funding by the Investor Limited Partner
of all of the capital contributions required in order to avoid the occurrence of an Event of
Default pursuant to Section 7.1(v); or
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(p) Any uninsured final judgment in excess of $25,000 shall be rendered
against the Borrower and shall remain in force, undischarged, unsatisfied and unstayed,
for more than thirty (30) days, whether or not consecutive; or
(q) Any of the Loan Documents or the General Partner Documents shall be
canceled, terminated, revoked or rescinded otherwise than in accordance with the terms
thereof or with the express prior written consent of the Servicer, or any action at law,
suit in equity or other legal proceeding to cancel, revoke or rescind any of the Loan
Documents or the General Partner Documents shall be commenced by or on behalf of
any Obligor which is a party thereto, or any of their respective stockholders, partners or
beneficiaries, 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 Loan Documents or the
General Partner Documents is illegal, invalid or unenforceable in accordance with the
terms thereof; or
(r) Any refusal by the Title Insurance Company to insure that any advance is
secured by the Mortgage as a valid lien and security interest on the Project and the
continuation of such refusal for a period of twenty (20) days after notice thereof by
Servicer to the Borrower; or
(s) Completion shall not have been attained by the Completion Deadline; or
(t) Any cessation at any time in construction or equipping of the
Improvements for more than twenty (20) consecutive days except for strikes, acts of
God, fire or other casualty, or other causes entirely beyond the Borrower’s control, or
any cessation at any time in construction or equipping of the Improvements for more
than sixty (60) consecutive days, regardless of the cause thereof; provided, however, that
such cessation may continue for a period of longer than sixty (60) consecutive days with
the consent of the Servicer if the Borrower shall have requested and received the consent
of the Servicer to an extension of the Completion Deadline, in which case it shall not be
an Event of Default hereunder unless and until the period of cessation extends beyond
the number of days for which the extension was granted; or
(u) Any of the Indenture, this Agreement, the Regulatory Agreement or the
Tax Certificate shall be amended in a material manner (including without limitation any
“automatic” amendments of the Regulatory Agreement) without the prior written
consent of the Servicer; or
(v) Failure of the Investor Limited Partner to fund its capital contributions to
the Borrower in at least the amounts and on or before the deadline dates as set forth in
the Construction Disbursement Agreement.
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Section 7.2 Remedies on Default.
(a) Whenever any Event of Default referred to in Section 7.1 hereof shall have
occurred and be continuing, any obligation of the Servicer to approve Requisitions shall be
terminated, and the Trustee (but only if directed to do so by Servicer and, subject to the
provisions of the Indenture) shall:
(i) by notice in writing to the Borrower (with a copy to the Issuer) declare
the unpaid indebtedness under the Loan Documents to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable; and
(ii) take whatever action at law or in equity or under any of the Loan
Documents or the General Partner Documents, as may appear necessary or desirable to
collect the payments and other amounts then due and thereafter to become due
hereunder or thereunder or under the Note, or to exercise any right or remedy or to
enforce performance and observance of any obligation, agreement or covenant of the
Borrower under this Loan Agreement, the Note or any other Loan Document (including
without limitation foreclosure of the Mortgage) or any General Partner Document; and
(iii) cause the Project to be completed, [constructed] [rehabilitated] and
equipped in accordance with the Plans and Specifications, with such changes therein as
the Servicer may, from time to time, and in its sole discretion, deem appropriate.
(b) Any amounts collected pursuant to action taken under this Section (other than
amounts collected by the Issuer pursuant to the Reserved Rights) shall, after the payment of the
costs and expenses of the proceedings resulting in the collection of such moneys and of the
expenses, liabilities and advances incurred or made by the Issuer, the Trustee or the Servicer
and their respective Counsel, be paid into the Revenue Fund (unless otherwise provided in this
Loan Agreement) and applied in accordance with the provisions of the Indenture. No action
taken pursuant to this Section 7.2 shall relieve the Borrower from the Borrower’s obligations
pursuant to Section 3.2 hereof.
Section 7.3 No Remedy Exclusive. No remedy conferred herein or in any other Loan
Document upon or reserved to the Trustee or the Servicer is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Loan Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Trustee or the Servicer to exercise any
remedy reserved to it herein or in any other Loan Document, it shall not be necessary to give
any notice, other than such notice as may be herein expressly required.
Section 7.4 Agreement to Pay Fees and Expenses of Counsel. If an Event of Default
shall occur under this Loan Agreement or under any of the other Loan Documents, and the
Issuer, the Trustee, the Servicer should employ counsel or incur other expenses for the
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collection of the indebtedness or the enforcement of performance or observance of any
obligation or agreement on the part of the Borrower herein or therein contained, the Borrower
agrees that it will on demand therefor pay to any such party, or, if so directed by any such
party, to its counsel, the reasonable actually incurred fees of such Counsel and all other out-of-
pocket expenses incurred by or on behalf of the Issuer, the Trustee, the Servicer.
Section 7.5 No Additional Waiver Implied by One Waiver; Consents to Waivers. In
the event any agreement contained in this Loan Agreement should be breached by either party
and thereafter waived by the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder. No waiver shall be
effective unless in writing and signed by the party making the waiver.
Section 7.6 Remedies Subject to Applicable Law. All rights, remedies, and powers
provided by this Article may be exercised only to the extent that the exercise thereof does not
violate any applicable provisions of law, and all the provisions of this Article are intended to be
subject to all applicable mandatory provisions of law which may be controlling in the Land and
to be limited to the extent necessary so that they will not render this Loan Agreement invalid,
unenforceable, or not entitled to be recorded, registered, or filed under the provisions of any
applicable law.
Section 7.7 Cure by Special Limited Partner. The Issuer, the Trustee and the Servicer
hereby agree that cure of any Event of Default made or tendered by the Investor Limited
Partner or by the Special Limited Partner shall be deemed to be a cure by the Borrower and
shall be accepted or rejected on the same basis as if made or tendered by the Borrower.
Section 7.8 Issuer Exercise of Remedies. Notwithstanding anything to the contrary
contained herein, the Issuer may enforce its Reserved Rights under the Loan Documents and
exercise the permitted remedies with respect thereto against the Borrower; provided that the
Issuer shall not commence or direct the Trustee to commence any action to declare the
outstanding balance of the Bonds or the Loan to be due and neither the Issuer nor the Trustee
shall take any action in respect of Reserved Rights (i) to foreclose to take similar action under
the Mortgage or otherwise in respect of any liens upon or security interests in the Project or
other property pledged to secure the Borrower’s obligations under the Loan Documents, (ii) to
appoint a receiver, (iii) to enforce any similar remedy against the Project or other property
pledged to secure the Borrower’s obligations under the Loan Documents; or (iv) to enforce any
other remedy which would cause any liens or security interests granted under the Loan
Documents to be discharged or materially impaired thereby.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 General Provisions. The following provisions shall be applicable at all
times throughout the term of this Loan Agreement:
(a) The Issuer, the Trustee and the Servicer shall, at all times, be free to
establish independently to their respective satisfaction and in their respective absolute
discretion the existence or nonexistence of any fact or facts the existence of which is a
condition of this Loan Agreement or any other Loan Document.
(b) The Bonds and the obligations and undertakings of the Issuer hereunder
do not constitute a general obligation of the Issuer or the State or any political
subdivision thereof, and recourse on the Bonds and on the instruments and documents
executed and delivered by or on behalf of the Issuer in connection with the transactions
contemplated hereby may be had only against certain moneys due and to become due
under the Loan Documents (and not against any moneys due or to become due to the
Issuer pursuant to the Reserved Rights). No recourse shall be had for the payment of
the principal of or interest on the Bonds, or for any claim based thereon or on this Loan
Agreement or any other Loan Document, any Issuer Document or any instrument or
document executed and delivered by or on behalf of the Issuer in connection with the
transactions contemplated hereby, against the Issuer or any Boardmember, officer,
employee or other elected or appointed official, past, present or future, of the Issuer or
any successor body, as such, either directly or through the Issuer or any such successor
body, under any constitutional provision, statute or rule of law, or by the enforcement of
any assessment or penalty or by any legal or equitable proceeding or otherwise and all
such liability of the Issuer or any such Boardmember, officer, director, employee, any
other elected or appointed official or trustee as such is hereby expressly waived and
released as a condition of and consideration for the adoption of the rResolution and
issuance of the Bonds and the delivery of other documents in connection herewith. No
Boardmember, officer, employee or other elected or appointed official past, present or
future, of the Issuer or any successor body shall be personally liable on the Issuer
Documents, the Bonds or any other documents in connection herewith, nor shall the
issuance of the Bonds be considered as misfeasance or malfeasance in office. The Bonds
and the undertakings of the Issuer under the Issuer Documents do not constitute a
pledge of the general credit or taxing power of the Issuer, the State, or any political
subdivision thereof, do not evidence and shall never constitute a debt of the State or any
political subdivision thereof (other than the Issuer, to the limited extent set forth in the
Indenture), and shall never constitute nor give rise to a pecuniary liability of the State or
any political subdivision thereof, other than the Issuer, to the limited extent set forth in
the Indenture.
Section 8.2 Authorized Borrower Representative. Pursuant to written direction
provided on the Closing Date, the Borrower has appointed one or more Authorized
Representative for the purpose of taking all actions and making all certificates required to be
taken and made by the Authorized Representative under the provisions of the Loan
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Documents. Whenever under the provisions of any Loan Document the approval of the
Borrower is required or any party is required to take some action at the request of the Borrower,
such approval or such request shall be made by the Authorized Borrower Representative,
unless otherwise specified in this Loan Agreement, and the Issuer, the Trustee and the Servicer
shall be authorized to act on any such approval or request and the Borrower shall have no
complaint against any such party as a result of any such action taken in conformity with such
approval or request by the Authorized Borrower Representative.
Section 8.3 Binding Effect. This Loan Agreement shall inure to the benefit of and
shall be binding upon the Issuer, the Trustee and the Borrower and their respective successors
and permitted assigns. The Borrower acknowledges and agrees that the Issuer has assigned or
is assigning its rights under this Loan Agreement to the Trustee, and that, pursuant to the
Indenture, Trustee will follow directions from the Servicer in implementing certain of the rights
and remedies under this Loan Agreement. The Owners of the Bonds and the Servicer shall be
express third party beneficiaries of this Loan Agreement, and shall have the right to enforce
directly against Borrower or other persons the rights and implement the rights and remedies
provided to each of them hereunder, but not including the Reserved Rights; provided, however,
that the rights of the Owners to bring actions and implement rights and remedies hereunder
shall be subject to the same restrictions as are imposed with respect to actions, rights and
remedies of the Owners under the Indenture.
Section 8.4 Execution in Counterparts. This Loan Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument; provided, however, that for purposes of perfecting a lien or security
interest in this Loan Agreement by the Trustee, whether under Article 9 of the Uniform
Commercial Code of the State or otherwise, only the counterpart delivered to, and receipted by,
the Trustee shall be deemed the original.
Section 8.5 Amendments, Changes and Modifications. Subsequent to the issuance of
the Bonds and prior to payment or provision for the payment of the Bonds in full (including
interest thereon) in accordance with the provisions of the Indenture and except as otherwise
provided herein, the Loan Documents may not be amended, changed, modified, altered or
terminated by the Issuer, the Trustee or the Borrower except in compliance with Article IX of
the Indenture.
Section 8.6 Severability. In the event any provision of this Loan Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof and such invalid or
unenforceable provision shall be deemed no longer to be contained in this Loan Agreement.
Section 8.7 Notices. All notices, demands, requests, consents, approvals, certificates
or other communications hereunder shall be effective if given in the manner required in Section
10.08 of the Indenture.
Section 8.8 Applicable Law. This Loan Agreement shall be governed exclusively by
and construed in accordance with the laws of the State applicable to contracts made and
performed in the State.
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Section 8.9 Debtor Creditor Relationship. It is expressly understood and agreed that
the relationship between the Issuer and the Borrower established by the transaction
contemplated by this Loan Agreement and by all of the other Loan Documents is exclusively
that of creditor or lender, on the part of the Issuer, and debtor or borrower, on the part of the
Borrower and is in no way to be construed as a partnership or joint venture of any kind. It is
further understood that all payments by the Borrower under the Loan Documents shall be
exclusively on account of the said debtor/creditor relationship.
Section 8.10 Usury; Total Interest. This Loan Agreement is subject to the express
condition, and it is agreed, that at no time shall payments hereunder, under the Note or under
the other Loan Documents that are or are construed to be payments of interest on the unpaid
principal amount of the Loan reflect interest that is borne at a rate in excess of the maximum
permitted by law. The Borrower shall not be obligated or required to pay, nor shall the Issuer
be permitted to charge or collect, interest borne at a rate in excess of such maximum rate. If by
the terms of this Loan Agreement or the other Loan Documents the Borrower is required to
make such payments reflecting interest borne at a rate in excess of such maximum rate, such
payments shall be deemed to be reduced immediately and automatically to reflect such
maximum rate. It is further agreed that the total of amounts paid hereunder as interest on the
Loan which is to pay interest on the Bonds, cumulative from the date of the Note, shall not
exceed the sum of 5% per month, simple and non-compounded for each month from such date
to the date of calculation (calculated on the basis of a 360-day year of twelve thirty-day months).
Any such excess payment previously made in either case shall be immediately and
automatically applied to the unpaid balance of the principal sum of the Loan and not to the
payment of interest thereon. This Loan Agreement is also subject to the condition that amounts
paid hereunder representing late payment or penalty charges or the like shall only be payable to
the extent permitted by law.
Section 8.11 Term of this Loan Agreement. This Loan Agreement shall be in full force
and effect from its date to and including such date as all of the Bonds issued under the
Indenture shall have been fully paid or retired in accordance with their terms and the terms of
the Indenture (or provision for such payment shall have been made as provided in the
Indenture), except, however, that the covenants and provisions relating to the Reserved Rights
of the Issuer and the covenants relating to the preservation of exclusion from gross income of
interest on the Bonds for purposes of federal income taxation shall survive the termination
hereof.
Section 8.12 Non-Recourse. Anything contained in any provision of this Loan
Agreement, the Mortgage, the Regulatory Agreement, the Borrower’s Tax Certificate or the
Note notwithstanding, in the event of any proceeding to foreclose the Mortgage or otherwise to
enforce the provisions of the Note, this Loan Agreement, the Mortgage or the Regulatory
Agreement after Stabilization, neither the Issuer, nor the Trustee or other holder of the Note
(collectively, the “Noteholder”), nor any Owner of Bonds, nor any beneficiary of the Mortgage
shall be entitled to take any action to procure any personal money judgment or any deficiency
decree against the Borrower or any partner of the Borrower or its or their heirs, personal
representatives, successors and assigns, it being understood and agreed that recourse hereon
and under the Mortgage, the Regulatory Agreement and the Note shall, following Stabilization,
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be limited to the assets of the Borrower that are the security from time to time provided with
respect to the Note and this Loan Agreement; provided, however, nothing herein contained
shall limit or be construed to limit or impair the enforcement against the Project or any other
additional security as may from time to time be given to the beneficiary hereof as security for
the performance of this Loan Agreement, the Mortgage, the Regulatory Agreement, the
Borrower’s Tax Certificate, the Note, or any other instrument now or hereafter securing the
Note or this Loan Agreement, or the rights and remedies of the Trustee or the beneficiary, its
successors and assigns, under this Loan Agreement, the Mortgage, the Regulatory Agreement,
the Tax Agreement or the Note or any other instruments. Notwithstanding the foregoing, the
provisions of this Section shall be null and void and have no force and effect to the extent of any
loss suffered by the Issuer, the Trustee, any Bondholder or any beneficiary of or the trustee
under the Mortgage as a result of the Borrower’s: (a) committing any act of fraud; (b)
misapplication of any condemnation award or casualty insurance proceeds; (c) failure to apply
the revenues of the Project in the manner and for the purposes provided in the Bond
Documents, whether before or after an Event of Default; or (d) violation of any environmental
laws. Nothing herein shall be deemed to prohibit the naming of the Borrower in an action to
realize upon the remedies provided herein either at law or in equity, subject to the foregoing
limitation against a personal money judgment or deficiency decree against the Borrower, the
partners of the Borrower or their heirs, personal representatives, successors and assigns, or to
prohibit the naming of any person in any action to realize upon the remedies provided in the
General Partner Documents or any other guaranty given in favor of the Issuer, the Trustee or
the Servicer.
Section 8.13 PATRIOT Act Notice. Issuer hereby notifies Borrower and Guarantor
that, pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and
record information that identifies Borrower and Guarantor, which information includes the
names and addresses of Borrower and Guarantor and other information that will allow Issuer to
identify Borrower and Guarantor in accordance with the PATRIOT Act.
Section 8.14. Limited Liability of the Issuer. All obligations of the Issuer under any of
the Issuer Documents or the Loan Documents 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
thereof or of the Issuer 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 thereof or of the Issuer except
as provided in the Indenture.
It is recognized that notwithstanding any other provision of this Loan Agreement, and
except for the Trust Estate pledged under the Indenture, none of the Borrower, the Trustee, the
Owners or the Servicer shall look to the Issuer for damages suffered by the Borrower, the
Trustee, the Owners, the Servicer or any owner of Bonds as a result of the Issuer’s performance,
failure to perform or insufficient performance of any covenant, undertaking or obligation under
this Loan Agreement or any of the other Issuer Documents or the Loan Documents, or as a
result of the incorrectness of any representation made by the Issuer in any of such documents,
nor for any other reason, unless such damages result solely from the gross negligence, willful
misconduct, fraud or intentional misrepresentation of the Issuer. Although this Loan
Agreement recognizes that such documents shall not give rise to any pecuniary liability of the
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Issuer, nothing contained in this Loan Agreement shall be construed to preclude in any way any
action or proceeding (other than that element of any action or proceeding involving a claim for
monetary damages against the Issuer) in any court or before any governmental body, agency or
instrumentality or otherwise against the Issuer or any of its officers or employees to enforce the
provisions of any of such documents which the Issuer is obligated to perform and which the
Issuer has not assigned to the Trustee or any other person.
The Issuer shall be entitled to the advice of counsel (who, except as otherwise provided
herein, may be counsel for any Owner), and the Issuer shall be wholly protected as to action
taken or omitted in good faith in reliance on such advice. The Issuer shall not be liable for any
action (a) taken by it in good faith and reasonably believed by it to be within its discretion or
powers hereunder, or (b) in good faith omitted to be taken by it because such action was
reasonably believed to be beyond its discretion or powers hereunder, or (c) taken by it pursuant
to any direction or instruction by which it is governed hereunder, or (d) omitted to be taken by
it by reason of the lack of any direction or instruction required hereby for such action; nor shall
it be responsible for the consequences of any error of judgment reasonably made by it. The
Issuer shall in no event be liable for the application or misapplication of funds or for other acts
or defaults by any person or entity, except for the gross negligence or willful misconduct of its
own agents, officers and employees. When any payment or consent or other action by it is
called for hereby, it may defer such action pending receipt of such evidence (if any) as it may
require in support thereof. The Issuer shall not be required to take any remedial action (other
than the giving of notice) unless indemnity in a form acceptable to the Issuer is furnished for
any cost or liability to be incurred in connection with such remedial action, other than liability
for failure to meet the standards set forth in this Section. The Issuer shall be entitled to
reimbursement for its costs reasonably incurred or advances reasonably made, with interest at
the rate of 10% per annum, in the exercise of its rights or the performance of its obligations
hereunder, to the extent that it acts without previously obtaining indemnity. No permissive
right or power to act which it may have shall be construed as a requirement to act; and no delay
in the exercise of a right or power shall affect its subsequent exercise of the right or power.
Section 8.15. No Limitations on Actions of Issuer in Exercise of its Governmental
Powers. Nothing in this Loan Agreement or the Indenture is intended, nor shall it be construed,
to in any way limit the actions of the Issuer in the exercise of its governmental powers, as
contrasted with any contractual rights or powers. Subject to the provisions of the Intercreditor
Agreement, it is the express intention of the parties hereto that the Issuer shall retain the full
right and ability to exercise its governmental powers with respect to the Borrower, the Project,
the Servicer, the Owners and the transactions contemplated by this Loan Agreement, the
Indenture, the Regulatory Agreement and the other Loan Documents to the same extent as if it
were not a party to this Financing Agreement, the Indenture, the Regulatory Agreement or the
transactions contemplated thereby, and in no event shall the Issuer have any liability in contract
arising under this Loan Agreement, the Indenture or the Regulatory Agreement by virtue of
any exercise of its governmental powers.
Section 8.16. Execution of Counterparts. This Loan 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.
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IN WITNESS WHEREOF, the Issuer, the Trustee and the Borrower have caused this
Loan Agreement to be executed in their respective names, all as of the date first above written.
(SEAL)
COUNTY OF CONTRA COSTA,
CALIFORNIA
By:
Signature
Printed Name
Title
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
Signature
Printed Name
Title
LAFAYETTE SENIOR, L.P., a California
limited partnership
By: Eden Investments, Inc., a California
nonprofit public benefit corporation,
its general partner
By:
Signature
Printed Name
Title
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July 10, 2012 Contra Costa County Board of Supervisors 930
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EXHIBIT A
LEGAL DESCRIPTION OF REAL ESTATE
[TO BE ATTACHED]
July 10, 2012 Contra Costa County Board of Supervisors 931
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EXHIBIT B
FORM OF PROMISSORY NOTE
$__________.00 August __, 2012
FOR VALUE RECEIVED, LAFAYETTE SENIOR, L.P., a California limited partnership
(together with its permitted successors and assigns, “Borrower”), having an address of c/o
Eden Investments, Inc., 22645 Grand Street, Hayward, California 94541-5031, Attention:
Executive Director, promises to pay to the order of the County of Contra Costa, California or its
successors or assigns (the “Holder”), at the office of U.S. Bank National Association, One
California Street, Suite 1000, San Francisco, CA 94111, Attention: Corporate Trust Services, or at
such other place as may be designated in writing by the Holder, in legal tender of the United
States, the principal sum of Twelve Million Four Hundred Six Thousand Dollars
($__________.00) as provided herein, together with interest thereon at the rates, at the times and
in the amounts provided below.
All capitalized terms used but not defined herein shall have the meanings ascribed to
them in the Trust Indenture (as the same may be modified, amended or supplemented from
time to time, the “Indenture”) dated as of August 1, 2012 between the County of Contra Costa,
California (the “Issuer”), and U.S. Bank National Association, as trustee (the “Trustee”) or the
Loan Agreement dated as of even date herewith among the Issuer, the Trustee and Borrower (as
the same may be modified, amended or supplemented from time to time, the “Loan
Agreement”).
This Note shall bear interest at the rate from time to time borne by the Bonds, and
Additional Interest shall be payable on this Note as provided in Section 3.2 of the Loan
Agreement.
On the Closing Date, the Borrower shall pay to the Trustee, for deposit into the Revenue
Fund, the amount equal to $_______. Thereafter, Borrower shall pay to the Trustee for deposit
into the Revenue Fund, on the first day of each month for the period commencing ___________,
20_____ (i) an amount equal to the sum of the principal and interest next coming due on the
Bonds (after taking into account funds available for such purpose, if any, in the Capitalized
Interest Account of the Project Fund) to pay the principal of and interest on the Bonds due and
payable on each Bond Payment Date and amounts required to be deposited into the
Replacement Reserve Fund (pursuant to Section 5.22(c) of the Loan Agreement), the Tax and
Insurance Fund (pursuant to Section 5.22(h) of the Loan Agreement) and the Operating Reserve
Fund (pursuant to Section 5.22(i) of the Loan Agreement) as of such date. Amounts so paid to
the Trustee by the Borrower shall be in immediately available funds or shall be such that on the
Bond Payment Date they are available funds.
All payments under this Note shall be applied as provided in the Indenture.
The obligations of Borrower under this Note are secured by a Construction Deed of
Trust with Assignment of Rents, Security Agreement and Fixture Filing dated as of even date
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herewith (as the same may be modified, amended or supplemented from time to time, the
“Mortgage”) made by Borrower to the Holder covering property, with improvements thereon,
as more fully described therein (the “Property”) and certain other security as more fully set
forth in the Loan Agreement.
At no time shall interest be payable on this Note or under the Mortgage or the Loan
Agreement at a rate in excess of the maximum permitted by law. Borrower shall not be
obligated or required to pay, nor shall the Holder per permitted to charge or collect, interest at a
rate in excess of such maximum rate. If by the terms of this Note or of the Mortgage or Loan
Agreement, Borrower is required to pay interest at a rate in excess of such maximum rate, the
rate of interest hereunder or thereunder shall be deemed to be reduced immediately and
automatically to such maximum rate, and any such excess payment previously made shall be
immediately and automatically applied to the unpaid balance of the principal sum hereof and
not to the payment of interest.
Amounts payable hereunder representing late payments, penalty payments or the like
shall be payable to the extent allowed by law.
This Note is subject to all of the terms, conditions, and provisions of the Loan
Agreement, including Section 8.12 thereof and the provisions of the Loan Agreement respecting
prepayment and the acceleration of maturity and is further subject to all of the terms, conditions
and provisions of the Indenture. The outstanding principal hereof is subject to acceleration at
the same time or times and under the same terms and conditions, and with the same notice, if
any, as provided under the Indenture for the acceleration of payment of the Bonds.
If there is an Event of Default under the Loan Documents, then in any such event and
subject to the requirements set forth in the Loan Agreement, the Holder may, upon the direction
of the Servicer, declare the entire unpaid principal balance of this Note and accrued interest, if
any, due and payable at once. All of the covenants, conditions and agreements contained in the
Loan Documents are hereby made part of this Note.
No delay or omission on the part of the Holder in exercising any remedy, right or option
under this Note or the Loan Documents shall operate as a waiver of such remedy, right or
option. In any event a waiver on any one occasion shall not be construed as a waiver or bar to
any such remedy, right or option on a future occasion. The rights, remedies and options of the
Holder under this Note and the Loan Documents are and shall be cumulative and are in
addition to all of the rights, remedies and options of the Holder at law or in equity or under any
other agreement.
Borrower shall pay all costs of collection on demand by the Holder, including without
limitation, reasonable attorneys’ fees and disbursements actually incurred, which costs may be
added to the indebtedness hereunder, together with interest thereon at the Alternative Rate to
the extent allowed by law.
This Note may not be changed orally. Presentment for payment, notice of dishonor,
protest and notice of protest are hereby waived. The acceptance by the Holder of any amount
after the same is due shall not constitute a waiver of the right to require prompt payment, when
July 10, 2012 Contra Costa County Board of Supervisors 933
B-3
due, of all other amounts due hereunder. The acceptance by the Holder of any sum in an
amount less than the amount then due shall be deemed an acceptance on account only and
upon condition that such acceptance shall not constitute a waiver of the obligation of Borrower
to pay the entire sum then due, and Borrower’s failure to pay such amount then due shall be
and continue to be a default notwithstanding such acceptance of such amount on account, as
aforesaid. Consent by the Holder to any action of Borrower which is subject to consent or
approval of the Holder hereunder shall not be deemed a waiver of the right to require such
consent or approval to future or successive actions.
July 10, 2012 Contra Costa County Board of Supervisors 934
B-4
Borrower agrees that this Note shall be construed in accordance with and governed by
the laws of the State of California.
LAFAYETTE SENIOR, L.P., a California
limited partnership
By: Eden Investments, Inc., a California
nonprofit public benefit corporation,
its general partner
By:
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 935
C-1
EXHIBIT C
PROJECT APPROVALS TO BE OBTAINED
[TO BE INSERTED]
July 10, 2012 Contra Costa County Board of Supervisors 936
D-1
EXHIBIT D
FORM OF APPROVED RESIDENTIAL LEASE
[TO BE ATTACHED]
July 10, 2012 Contra Costa County Board of Supervisors 937
E-1
EXHIBIT E
SCHEDULE OF INSURANCE REQUIREMENTS
1. General Requirements
In order to close, the following insurance specifications must be met and approved in
writing by the Bank’s insurance consultant. Copies of policies together with an original
ACORD 28 (Evidence of Property Insurance) and an ACORD 25 (Certificate of Insurance) or an
approved equivalent listing all coverage will be accepted for pre-closing contingent on complete
“true and certified” copies of the policies with all endorsements attached being received within
90 days after closing. Each certificate must correctly identify the property by address and the
insured by borrowing entity name.
Policy premiums cannot be financed or paid in installments to an insurance carrier, but
must be paid in full as evidenced by a paid receipt presented prior to or at pre-closing. All
policies and renewals thereof are to be written for not less than one year. An escrow account, as
described further in the loan application, will be established to pay the premium at renewal.
All of the liability policies must be written and provide for claims to be paid on an
“Occurrence” basis.
Each policy must have a cancellation provision that provides that the carrier will notify
Mortgagee, its successors and/or assigns, in writing at least 30 days in advance of any policy
reduction or cancellation for any reason except for non-payment of premium (for which not less
than 10 days written notice shall be provided).
The insurer under each policy shall be a domestic primary insurance company duly
qualified as such under the laws of the states in which the Property is located and duly
authorized, admitted and licensed in such states to transact the applicable insurance business
and to write the insurance provided and must have and maintain a rating of AA or higher by
Standard & Poor’s or A.M. Best rating of A-IX or higher for any Mortgage Loan $20,000,000 or
above. For any Mortgage Loan below $20,000,000, the insurance carrier must have and
maintain a rating of “A” or higher by Standard & Poor’s and/or an A.M. Best rating of A-VI or
higher.
The insurance policies may be part of a blanket policy provided the insured
acknowledges that failure to pay any portion of the premium which is not allocable to the
mortgaged property or any other action not relating to the mortgaged property which would
otherwise permit the issuer to cancel the coverage, would require the mortgaged property to be
insured by a separate, single-property policy. The blanket policy must properly identify and
fully protect the mortgaged property as if a separate policy were issued for 100% of
Replacement Cost (insurable value) at the time of loss, allocate a portion of the premium to the
mortgaged property, and otherwise meet all applicable insurance requirements of the Bank.
July 10, 2012 Contra Costa County Board of Supervisors 938
E-2
During the life of the loan, should any condition change or occur which affects the levels
of risk anticipated, Borrower will be required to obtain appropriate coverage to mitigate the
associated risk.
If any required type of coverage is not available for the mortgaged property, Mortgagee shall have
no obligation to close the loan.
2. Mortgagee Clause
All policies must include EXACTLY the following standard, non-contributory,
mortgagee clause:
U.S. Bank National Association, as trustee
One California Street, Suite 1000
San Francisco, California 94111
Attention: Corporate Trust Services
Mortgagee must be named as a first Mortgagee with respect to buildings, Loss Payee with
respect to loss of rents/business interruption, and Additional Insured with respect to general
liability.
3. Waiver of Subrogation
Not Required.
4. Required Insurance Coverage
Borrower is required to maintain the following policies of insurance during the term of
the Loan:
• All Risk or Special Causes of Loss Form Property Insurance. Property
insurance must be maintained insuring against loss or damage by fire, lightning, wind
and such other perils as are included in a standard “all-risk” or “special causes of loss”
form, and against loss or damage by all other risks and hazards covered by a standard
property insurance policy including, without limitation, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in an amount
equal to the then full replacement cost of the Improvements, Equipment and personal
property, without deduction for physical depreciation, no co-insurance is permitted, and
maximum acceptable deductible is $25,000. If the property is “non-conforming” with
respect to zoning requirements, Borrower will be required to maintain “demolition”
insurance (in an amount equal to 10% of the building value) and “increased cost of
construction” insurance (in an amount equal to 25% of the building value). The burden
to prove conforming use is the borrowers.
• Terrorism Insurance. For Loans in excess of $10 million and if the insurance
required under the subparagraph immediately above excludes terrorism, terrorism
insurance must be maintained, unless at the time of determination: (i) it is not available
at commercially reasonable rates; (ii) no affiliates of Borrower have purchased terrorism
July 10, 2012 Contra Costa County Board of Supervisors 939
E-3
insurance with respect to another property, (iii) terrorism insurance is not commonly
maintained by owners of other similar properties and (iv) it is not required for
securitized loans similar to the Loan and secured by property similar to the Property in
the commercial mortgage-backed securities market.
• Flood Insurance. If any portion of the Improvements are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards (i.e. Zone A and V) and in which flood insurance is made available under
the National Flood Insurance Program, then flood insurance must be maintained at least
equal to the lesser of (A) the full replacement cost, together with business interruption
coverage or (B) the maximum limit of coverage available for the Property under the
National Flood Insurance Act of 1968, The Flood Disaster Protection Act of 1973 and the
National Flood Insurance Reform Act of 1994, as each may be amended, or $250,000 per
residential building and $500,000 per commercial building.
• Earthquake Insurance. If a seismic study is required by this Program
Summary and such study reveals a 50 year/10% PML of not more than 20% of the
replacement cost (as determined by the Bank), earthquake insurance will not be
required. If the PML study reveals that a 50 year/10% PML of greater than 20% of the
replacement cost, then earthquake insurance must be maintained in an amount equal to
the replacement cost with a maximum deductible of 10% replacement cost.
• Boiler and Machinery Insurance. If the Property contains HVAC equipment,
or there are boilers or other pressure-fired vessels that are required to be regulated by
the state in which the property is located, then Broad Form Boiler and Machinery
Insurance (without exclusion for explosion and including “system breakdown coverage)
must be maintained on the Property and Improvements in an amount at least equal to or
greater than the repair and full replacement cost of such equipment and insurance
against loss of occupancy or use arising from any breakdown of such equipment in such
amounts as are generally required by institutional lenders for properties comparable to
the Property.
• Business Interruption/Loss of Rental Income Insurance. Business Interruption
and/or loss of rental income insurance must be maintained in an amount sufficient to
provide proceeds that will cover the “actual loss” sustained during the restoration. No
co-insurance is permitted. The “actual loss” coverage amount may be capped based on
projected gross revenues (less non-recurring expenses) for a twelve (12) month period.
The policy can provide an “Extended Period of Indemnity” endorsement for at least an
additional 90 days for loans of $20 million or more. The perils covered by this insurance
shall be the same as those required to be covered on the real property including flood,
terrorism and earthquake, as necessary.
• Builders Risk Insurance. Borrower is required to maintain, at all times
during which structural construction repairs or alterations are being made with respect
to the improvements (A) owner’s contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance provided for in
July 10, 2012 Contra Costa County Board of Supervisors 940
E-4
Paragraph 1 hereof written in a so-called builder’s risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to said Paragraph 1
hereof, (3) including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions.
• Commercial General Liability Insurance. Borrower must maintain
Commercial General Liability Insurance on an “occurrence” form including broad form
property damage, contractual damages and personal injuries (including death resulting
therefrom) and a liquor liability endorsement if Borrower sells liquor on the Property. In
addition, excess and/or umbrella liability insurance must be maintained against all
claims typically covered by an umbrella liability policy including all legal liability
imposed upon Borrower and all court costs and attorneys’ fees connected with the
ownership, operation, and maintenance of the Property and Equipment, including
products/completed operations, if applicable. The per occurrence limits including
umbrella liability insurance, if applicable, must be maintained in the minimum amounts
as outlined below:
$1,000,000 total coverage for 1 to 3 story buildings
$5,000,000 total coverage for 4 to 10 story buildings
$10,000,000 total coverage for 11 to 20 story buildings
$25,000,000 total coverage for buildings with greater than 20 stories
If Borrower has a multi-location policy or loan, the aggregates referred to above
must be maintained on a per location basis.
• Wind Insurance. If the All Risk or Special Cause of Loss coverage excludes
wind, the Borrower must present evidence of separate wind coverage. Maximum
acceptable deductible for this peril is 5% of total insured value.
• Sinkhole and Mine Subsidence Insurance. Sinkhole and mine subsidence
insurance must be maintained if, in the opinion of a professional engineer, whose
resume shows evidence of his/her experience in this professional area, that there is a
foreseeable risk of loss due to this hazard. If necessary, as determined by the engineer,
Borrower shall maintain coverage in the full principal amount of the Loan.
• Statutory Workers Compensation Insurance. If Borrower has employees on
site, statutory workers compensation insurance as required by law and including
employer’s liability must be maintained in an amount that is at least customary for
employers insuring similar risks.
• Hired and Non-Owned Auto Insurance. If Borrower has employees on site,
Hired and Non-Owned Auto Insurance must be maintained in an amount equal to $1
Million combined single limit.
July 10, 2012 Contra Costa County Board of Supervisors 941
E-5
• Employee Dishonesty. If Borrower has employees on site, in an amount not
less than three (3) months of gross revenue from the property and with a deductible not
greater than Twenty-Five Thousand and no/100 Dollars ($25,000). This coverage is
required only on Cooperative Corporations.
• Other Insurance Coverage. Such other insurance with respect to the
Property or on any replacements or substitutions or additions or increased coverage
limits as may from time to time be required by the holder of the Loan against other
insurable hazards or casualties which at the time are commonly insured against in the
case of property similarly situated, including, without limitation, sinkhole, mold, mine
subsidence, earthquake and environmental insurance, due regard being given the height
and typed of buildings, their construction, location, use and occupancy.
July 10, 2012 Contra Costa County Board of Supervisors 942
F-1
EXHIBIT F
FORM OF MONTHLY LEASE UP REPORT
MOVE IN DATABASE
Building # Apt. #
# of
BR’s
# of
BA’s
Set-
Aside
Security
Deposit
Lease
Rent
Certified
or Move
in Date
Lease
Expiration
Total Value
of
Concessions
Description
of
Concession
Concession
Given at
Move In
(Y/N)
MOVE OUT DATABASE
# of # of Set-
Total
Security
Security
Deposit to Lease Move
Certified
or Move
Lease
(enter an “x”)
Building # Apt. # BR’s BA’s Aside Deposit Tenant Rent Out Date in Date Skip Evicted Expired Other
July 10, 2012 Contra Costa County Board of Supervisors 943
G-1
EXHIBIT G
FORM OF STABILIZATION CERTIFICATE
____________, ___
U.S. Bank National Association, as trustee
One California Street, Suite 1000
San Francisco, California 94111
Attention: Corporate Trust Services
Re: Lafayette Senior Apartments (the “Project”)
Ladies and Gentlemen:
The undersigned, being the owner of the Project, hereby certifies to [Trustee Name], as
trustee (the “Trustee”) and ________________ (as servicer, acting on behalf of the Servicer of the
bonds issued in connection with the Project, the “Servicer”) that:
The undersigned hereby represents and warrants that:
1. The Improvements are ___% occupied by tenants meeting the
requirements of the Loan Documents in each of three (3) prior consecutive months.
2. The ratio of Net Operating Income in each of the prior three (3) months to
maximum principal and interest payable in any month under the Loan Documents on
the amount of Bonds Outstanding at the time of calculation is ____ to 1.0.
3. Stabilization [has/has not] occurred.
4. Attached hereto is a worksheet showing the calculation of Stabilization.
Capitalized terms used herein and not defined shall have the meanings ascribed thereto
in the Loan Agreement dated as of August 1, 2012 by and among the [Issuer Name], the
Trustee, and the undersigned.
LAFAYETTE SENIOR, L.P., a California
limited partnership
By: Eden Investments, Inc., a California
nonprofit public benefit corporation,
its general partner
By:
July 10, 2012 Contra Costa County Board of Supervisors 944
G-2
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 945
G-3
Stabilization Spreadsheet
July 10, 2012 Contra Costa County Board of Supervisors 946
Quint & Thimmig LLP
03007.25:J11721
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
QUINT & THIMMIG LLP
575 Market Street, Suite 3600
San Francisco, CA 94105
Attention: Paul J. Thimmig, Esq.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
by and between the
COUNTY OF CONTRA COSTA, CALIFORNIA,
and
LAFAYETTE SENIOR, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
dated as of August 1, 2012
relating to:
$__________
County of Contra Costa
Multifamily Housing Revenue Bonds
(Lafayette Senior Housing), Series 2012A
July 10, 2012 Contra Costa County Board of Supervisors 947
-i-
TABLE OF CONTENTS
Section 1. Definitions and Interpretation......................................................................................................1
Section 2. Representations, Covenants and Warranties of the Borrower.................................................5
Section 3. Qualified Residential Rental Project............................................................................................8
Section 4. Low Income Tenants; Reporting Requirements.......................................................................10
Section 4A. Additional Requirements of the Issuer.....................................................................................12
Section 5. Tax-Exempt Status of the Bonds ................................................................................................15
Section 6. Additional Requirements of the Act..........................................................................................15
Section 7. CDLAC Requirements.................................................................................................................17
Section 8. Modification of Covenants..........................................................................................................18
Section 9. Indemnification............................................................................................................................18
Section 10. Consideration ...............................................................................................................................20
Section 11. Reliance..........................................................................................................................................20
Section 12. Sale or Transfer of the Project.....................................................................................................21
Section 13. Term...............................................................................................................................................23
Section 14. Covenants to Run With the Land...............................................................................................23
Section 15. Burden and Benefit......................................................................................................................23
Section 16. Uniformity; Common Plan .........................................................................................................24
Section 17. Default; Enforcement...................................................................................................................24
Section 18. References to Trustee...................................................................................................................25
Section 19. Recording and Filing ...................................................................................................................25
Section 20. Payment of Administration Fees................................................................................................26
Section 21. Governing Law.............................................................................................................................26
Section 22. Amendments; Waivers................................................................................................................26
Section 23. Notices...........................................................................................................................................26
Section 24. Severability....................................................................................................................................27
Section 25. Multiple Counterparts.................................................................................................................28
Section 26. Third Party Beneficiaries; Enforcement ....................................................................................28
Section 27. The Trustee....................................................................................................................................28
Section 28. No Interference or Impairment of Loan....................................................................................28
Section 29. Limitation on Borrower Liability...............................................................................................29
Section 30. Limited Liability...........................................................................................................................30
Section 31. Conflict With Other Affordability Agreements.......................................................................30
EXHIBIT A DESCRIPTION OF PROPERTY
EXHIBIT B FORM OF CERTIFICATE OF COMPLIANCE (CDLAC RESOLUTION)
EXHIBIT C COMPLETION CERTIFICATE
EXHIBIT D CERTIFICATE AS TO COMMENCEMENT OF QUALIFIED PROJECT PERIOD
EXHIBIT E VERIFICATION OF INCOME
EXHIBIT F CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
July 10, 2012 Contra Costa County Board of Supervisors 948
-1-
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS
(as supplemented and amended from time to time, this “Agreement” or this “Regulatory
Agreement”) is made and entered into as of August 1, 2012, by and between the COUNTY OF
CONTRA COSTA, CALIFORNIA, a political subdivision and body corporate and politic of the
State of California (together with any successor to its rights, duties and obligations, the
“Issuer”), and LAFAYETTE SENIOR, L.P., a California limited partnership (together with any
successor to its rights, duties and obligations hereunder, the “Borrower”).
RECITALS:
WHEREAS, the Issuer proposes to issue up to $__________ principal amount of its
County of Contra Costa Multifamily Housing Revenue Bonds (Lafayette Senior Housing),
Series 2012A (the “Bonds”), pursuant to Chapter 7 of Part 5 of Division 31 (commencing with
Section 52075) of the Health and Safety Code of the State of California (the “Act”), with the
proceeds of the Bonds to be utilized to fund a loan to the Borrower pursuant to the terms of the
Loan Agreement, dated as of August 1, 2012 (as supplemented and amended from time to time,
the “Loan Agreement”), among U.S. Bank National Association, as trustee, the Issuer and the
Borrower, in order to enable the Borrower to finance the acquisition and construction of a
multifamily rental housing development known as Lafayette Senior Housing, consisting of 46
units of senior rental housing located on the site described in Exhibit A hereto (as further
described herein, the “Project”); and
WHEREAS, in order to assure the Issuer and the owners of the Bonds that interest on the
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 satisfy the purposes of the Issuer in
determining to issue the Bonds, certain limits on the occupancy of units in the Project need to be
established and certain other requirements need to be met.
AGREEMENT:
NOW, THEREFORE, in consideration of the issuance of the Bonds by the Issuer and the
mutual covenants and undertakings set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the Issuer and the
Borrower 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 1, in Section 1.01 of the Trust Indenture, dated as of August 1,
2012, between the Issuer and U.S. Bank National Association, as trustee, or in Section 1.1 of the
Loan Agreement (as defined in the Recitals to this Agreement).
July 10, 2012 Contra Costa County Board of Supervisors 949
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“Adjusted Income” means the adjusted income of a person (together with the
adjusted income of all persons of the age of 18 years or older who intend to reside with
such person in one residential unit) as calculated in the manner prescribed pursuant to
Section 8 of the Housing Law, or, if said Section 8 is terminated, as prescribed pursuant
to said Section 8 immediately prior to its termination or as otherwise required under
Section 142 of the Code and the Act.
“Administrator” means the Issuer or any administrator or program monitor
appointed by the Issuer to administer this Regulatory Agreement, and any successor
administrator appointed by the Issuer.
“Affiliated Party” means (a) a person whose relationship with the Borrower
would result in a disallowance of losses under Section 267 or 707(b) of the Code, (b) a
person who together with the Borrower are members of the same controlled group of
corporations (as defined in Section 1563(a) of the Code, except that “more than 50
percent” shall be substituted for “at least 80 percent” each place it appears therein), (c) a
partnership and each of its partners (and their spouses and minor children) whose
relationship with the Borrower would result in a disallowance of losses under Section
267 or 707(b) of the Code, and (d) an S corporation and each of its shareholders (and
their spouses and minor children) whose relationship with the Borrower would result in
a disallowance of losses under Section 267 or 707(b) of the Code.
“Affordable Rents” means thirty percent (30%) of an amount equal to sixty
percent (60%) of the median gross income for the Area, adjusted for household size (as
described in the definition of “Lower Income Tenant” in this Section 1), less a utility
allowance calculated as set forth in U.S. Treasury Regulation Section 1.42-10.
“Area” means the metropolitan statistical area in which the Project is located.
“Area Median Gross Income” means the median gross income for the Area, as
determined by the Secretary of the Treasury in a manner consistent with determination
of lower-income families and area median gross income under Section 8 of the Act and
Section 3009a of the Housing and Economic Recovery Act of 2008, including
adjustments for family size or, if programs under Section 8 are terminated, area median
gross income determined under the method in effect immediately before such
termination.
“CDLAC” means the California Debt Limit Allocation Committee, or successor
thereto.
“CDLAC Resolution” means Resolution No. 12-44 adopted by CDLAC on May
16, 2012, with respect to the Project.
July 10, 2012 Contra Costa County Board of Supervisors 950
-3-
“Certificate of Continuing Program Compliance” means the Certificate to be filed
by the Borrower with the Administrator, on behalf of the Issuer, and the Trustee
pursuant to Section 4(e) hereof, which shall be substantially in the form attached as
Exhibit F to this Regulatory Agreement, or in such other form as may be provided by the
Issuer or the Administrator to the Borrower, or as otherwise approved by the Issuer.
“City” means the City of Lafayette, California.
“Closing Date” has the meaning given to such term in the Indenture.
“Completion Certificate” means the certificate of completion of the Project
required to be delivered to the Issuer by the Borrower pursuant to Section 2(i) of this
Regulatory Agreement, which shall be substantially in the form attached to this
Regulatory Agreement as Exhibit C.
“Completion Date” means the date of completion of the acquisition and
construction of the Project, as that date shall be certified as provided in Section 2(i) of
this Regulatory Agreement.
“County” means the County of Contra Costa, California.
“FOCUS Program” means (a) the FOCUS Compliance Verification Program
(user’s guide located at www.housingcompliance.org/contracosta) utilized by the Issuer
to verify the Borrower’s compliance with various requirements of this Regulatory
Agreement; or (b) any similar program used by the Issuer, in substitution for the
program described in the preceding clause (a), to verify the Borrower’s compliance with
various requirements of this Regulatory Agreement.
“Housing Law” means the United States Act of 1937, as amended, or its
successor.
“HUD” means the United States Department of Housing and Urban
Development, or any successor thereto.
“Inducement Date” means February 28, 2012, being the date of adoption by the
Board of Supervisors of the Issuer of Resolution No. 2012/61 expressing the Issuer’s
intent to issue the Bonds to finance costs of the Project.
“Issuer Annual Fee” means, for the period from the Closing Date to but not
including August 1, 2014, $25,744.00; and, thereafter, an amount equal to the greater of
(a) one-tenth of one percent of the then outstanding principal amount of the Bonds on
the first day of the month in which the anniversary of the Closing Date occurs, or (b)
$4,000.00.
July 10, 2012 Contra Costa County Board of Supervisors 951
-4-
“Issuer Issuance Fee” means $32,179.00.
“Low Income Tenant” means individuals or families whose Adjusted Income
does not exceed sixty percent (60%) of Area Median Gross Income; provided, however,
that if all the occupants of a Low Income Unit are students (as defined in Section
152(f)(2) of the Code) who fail to be described in Section 42(i)(3)(D) of the Code, the
occupants of that Low Income Unit shall in no event be deemed to be “Low Income
Tenants.” The Adjusted Income of individuals and Area Median Gross Income shall be
determined by the Secretary of the Treasury in a manner consistent with determinations
of lower income families and Area Median Gross Income under Section 8 of the Housing
Law (or, if such program is terminated, under such program in effect immediately
before such termination). Determinations under the preceding sentence shall include
adjustments for family size as prescribed under Section 8 of the Housing Law.
“Low Income Units” means the units in the Project required to be rented, or held
available for occupancy by, Low Income Tenants pursuant to Sections 4(a) and 6(a)
hereof.
“Manager” means the property manager of the Project.
“Project” means the 46 units of senior rental housing to constitute the
development known as Lafayette Senior Apartments, located on the real property site
described in Exhibit A hereto, and consisting of those facilities, including the Borrower’s
fee interest in the real property described in Exhibit A hereto, structures, buildings,
fixtures or equipment, as may at any time exist on such real property, the acquisition
and construction of which 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 Borrower pursuant to the Loan
Agreement, and any real property, structures, buildings, fixtures or equipment acquired
in substitution for, as a renewal or replacement of, or a modification or improvement to,
all or any part of such facilities.
“Qualified Project Costs” has the meaning given to the term “Qualified Costs of
the Project” in the Indenture.
“Qualified Project Period” means the period beginning on the first day on which
at least ten percent (10%) of the units in the Project are first occupied, and ending on the
later of (a) the date which is 15 years after the date on which at least fifty percent (50%)
of the aggregate of the residential units in the Project are first occupied following the
Completion Date, (b) the first day on which no Tax-Exempt private activity bond issued
with respect to the Project is outstanding, (c) the date on which any assistance provided
with respect to the Project under Section 8 of the Housing Law terminates, or (d) the
date on which Bonds are paid in full; provided that, unless otherwise amended or
modified in accordance with the terms hereof, the Qualified Project Period for purposes
of this Regulatory Agreement shall be 55 years from the Closing Date, as required by the
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CDLAC Resolution. For purposes of clause (b), the term “private activity bond” has the
meaning contemplated in Section 142(d)(2)(A)(ii) of the Code.
“Regulations” means the Income Tax Regulations of the Department of the
Treasury applicable under the Code from time to time.
“Regulatory Agreement” means this Regulatory Agreement and Declaration of
Restrictive Covenants, as it may be supplemented and amended from time to time.
“State” means the State of California.
“Tax-Exempt” means with respect to interest on any obligations of a state or local
government, including the Bonds, that such interest is excluded from gross income for
federal income tax purposes; provided, however, that: (a) such interest may be included
in gross income of any owner of any Bond that is a “substantial user” of the Project or a
“related person” within the meaning of Section 147(a) of the Code; and (b) 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 E to this Regulatory Agreement or in such other form as may be provided by the
Issuer to the Borrower.
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. The 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.
Section 2. Representations, Covenants and Warranties of the Borrower. The Borrower
hereby represents, as of the date hereof, and covenants, warrants and agrees as follows:
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(a) The statements made in the various certificates delivered by the Borrower to
the Issuer, the Servicer or the Trustee on the Closing Date are true and correct.
(b) The Borrower (and any person related to it within the meaning of Section
147(a)(2) of the Code) will not take or omit to take, as is applicable, any action if such
action or omission would in any way cause the proceeds of the Loan to be applied in a
manner contrary to the requirements of the Loan Agreement or this Regulatory
Agreement.
(c) The Borrower will not knowingly take or permit, or omit to take or cause to be
taken, as is appropriate, any action that would adversely affect the exclusion from gross
income for federal income tax purposes or the exemption from California personal
income taxation of the interest on the Bonds and, if it should take or permit, or omit to
take or cause to be taken, any such action, it will take all lawful actions necessary to
rescind or correct such actions or omissions promptly upon obtaining knowledge
thereof.
(d) The Borrower will take such action or actions as may be necessary, in the
written opinion of Bond Counsel filed with the Issuer and the Borrower, to comply fully
with the Act, the Code and all applicable rules, rulings, policies, procedures, Regulations
or other official statements promulgated, proposed or made by the Department of the
Treasury or the Internal Revenue Service to the extent necessary to maintain the
exclusion from gross income for federal income tax purposes of interest on the Bonds.
(e) The acquisition and commencement of construction by the Borrower of the
Project occurred after the date which was 60 days prior to the Inducement Date. The
Borrower has incurred a substantial binding obligation to expend proceeds of the Loan
pursuant to which the Borrower is obligated to expend at least five percent (5%) of the
maximum principal amount of the Loan.
(f) The Borrower will proceed with due diligence to complete the acquisition and
construction of the Project and the full expenditure of the proceeds of the Loan. The
Borrower reasonably expects to expend the full $__________ principal amount of the
Loan for Project Costs by August 1, 2014.
(g) The Borrower’s reasonable expectations respecting the total expenditure of
the proceeds of the Loan have been accurately set forth in a certificate of the Borrower
delivered to the Issuer on the Closing Date. At all times, the aggregate disbursements of
the proceeds of the Loan will have been applied to pay or to reimburse the Borrower for
the payment of Qualified Project Costs in an amount equal to ninety-seven percent
(97%) or more of such disbursements, and less than twenty-five percent (25%) of such
disbursements shall have been used to pay for the acquisition of land or an interest
therein.
(h) The Borrower will not take or omit to take, as is applicable, any action if such
action or omission would in any way cause the proceeds from the Loan to be applied in
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a manner contrary to the requirements of the Loan Agreement, this Regulatory
Agreement, the Act or the Code.
(i) On the Completion Date of the Project, the Borrower will submit to the Issuer,
a duly executed and completed Completion Certificate.
(j) The Borrower acknowledges that the Issuer may appoint an Administrator
other than the Issuer to administer this Regulatory Agreement and to monitor
performance by the Borrower of the terms, provisions and requirements hereof. In such
event, the Borrower shall comply with any reasonable request by the Issuer or the
Administrator 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 to make the Project and the books and records with respect thereto available for
inspection by the Administrator as an agent of the Issuer.
(k) Within thirty (30) days after the date on which fifty percent (50%) of the
dwelling units in the Project are occupied, the Borrower will submit to the Issuer and the
Servicer, and will cause to be recorded in the County Recorder’s office, a duly executed
and completed Certificate as to Commencement of Qualified Project Period in the form
of Exhibit D hereto.
(l) Money on deposit in any fund or account in connection with the Bonds,
whether or not such money was derived from other sources, shall not be used by or
under the direction of the Borrower, in a manner which would cause the Bonds to be
“arbitrage bonds” within the meaning of Section 148 of the Code, and the Borrower
specifically agrees that the investment of money in any such fund shall be restricted as
may be necessary to prevent the Bonds from being “arbitrage bonds” under the Code.
(m) All of the proceeds of the Bonds and earnings from the investment of such
proceeds will be used to pay costs of the Project; and no more than two percent (2%) of
the proceeds of the Bonds will be used to pay Costs of Issuance.
(n) No portion of the proceeds of the Bonds shall be used to provide any
airplane, skybox or other private luxury box, health club facility, facility primarily used
for gambling, or store the principal business of which is the sale of alcoholic beverages
for consumption off premises. No portion of the proceeds of the Bonds shall be used for
an office unless the office is located on the premises of the facilities constituting the
Project and unless not more than a de minimis amount of the functions to be performed
at such office is not related to the day-to-day operations of the Project.
(o) The Borrower hereby incorporates herein, as if set forth in full herein, each of
the representations, covenants and warranties of the Borrower contained in the Tax
Agreement.
(p) The Borrower shall comply with all applicable requirements of Section
65863.10 of the California Government Code, including the requirements for providing
July 10, 2012 Contra Costa County Board of Supervisors 955
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notices in Sections (b), (c), (d) and (e) thereof, and with all applicable requirements of
Section 65863.11 of the California Government Code.
(q) The Borrower 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 for any guidance or expertise in analyzing the financial or other consequences of
such financing transactions or otherwise relied on the Issuer in any manner except to
issue the Bonds in order to provide funds to assist the Borrower in acquiring and
rehabilitating the Project.
(r) Notwithstanding the provisions of Section 5.18(c) of the Loan Agreement, and
in addition thereto, the Borrower agrees to obtain a written report from an independent
firm with experience in calculating excess investment earnings for purposes of Section
148(f) of the Code, not less than once on or about each five year anniversary of the
Closing Date and within thirty (30) days of the date the Bonds have been paid in full,
determining that either (i) no excess investment earnings subject to rebate to the federal
government under Section 148(f) of the Code have arisen with respect to the Bonds in
the prior five-year period (or, with respect to the final such report following the
repayment of the Bonds, have arisen since the last five-year report); or (ii) excess
investment earnings have so arisen during the prior five-year period (or, with respect to
the final such report following the repayment of the Bonds, have arisen since the last
five-year report), and specifying the amount thereof that needs to be rebated to the
federal government and the date by which such amount needs to be so rebated. The
Borrower shall provide a copy of each report prepared in accordance with the preceding
sentence to the Issuer, each time within one week of its receipt of the same from the
independent firm that prepared the respective report.
Section 3. Qualified Residential Rental Project. The Borrower hereby acknowledges and
agrees that the Project is to be owned, managed and operated as a “qualified 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 Borrower hereby
represents, covenants, warrants and agrees as follows:
(a) The Project will be acquired, constructed and operated for the purpose of
providing multifamily residential rental property for seniors. The Borrower will own,
manage and operate the Project as a project to provide multifamily residential rental
property for seniors 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 1.103-8(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 are and will be similarly constructed
units, and each dwelling unit in the Project contains complete separate and distinct
July 10, 2012 Contra Costa County Board of Supervisors 956
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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 and the Borrower will not rent any of the units for a period of less than
thirty (30) consecutive days, and none of the dwelling units in the Project will at any
time be leased or rented for use as a hotel, motel, dormitory, fraternity house, sorority
house, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or
park.
(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 Borrower take any steps in
connection with a conversion to such ownership or use, and the Borrower will not take
any steps in connection with a conversion of the Project to condominium ownership
during the Qualified Project Period (except that the Borrower 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 City of Lafayette).
(e) All of the dwelling units in the Project will be available for rental during the
Qualified Project Period on a continuous basis to members of the general public, on a
first-come first-served basis, and the Borrower will not give preference to any particular
class or group in renting the dwelling units in the Project, except (i) not more than one
unit may be set aside for resident manager or other administrative use, (ii) to the extent
that dwelling units are required to be leased or rented to Low Income Tenants
hereunder, and (iii) to the extent units in the Project are required to be leased to seniors
or otherwise pursuant to the documents evidencing and otherwise related to the
Subordinate Loans.
(f) The Project site consists of a parcel or parcels that are contiguous except for
the interposition of a road, street or stream, and all of the facilities 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) The Borrower shall not discriminate on the basis of race, creed, color, sex,
source of income (e.g. AFDC, SSI), physical disability, age (except as may be required
under any of the documents described in Section 3(e)(iii)), national origin or marital
status in the rental, lease, use or occupancy of the Project or in connection with the
employment or application for employment of persons for the operation and
management of the Project.
(h) No dwelling unit in the Project shall be occupied by the Borrower.
Notwithstanding the foregoing, if the Project contains five or more dwelling units, this
subsection shall not be construed to prohibit occupancy of dwelling units by one or
more resident managers or maintenance personnel any of whom may be the Borrower;
provided that the number of such managers or maintenance personnel is not
July 10, 2012 Contra Costa County Board of Supervisors 957
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unreasonable given industry standards in the area for the number of dwelling units in
the Project.
(i) The Borrower will not sell dwelling units within the Project.
(j) In accordance with Section 147(b) of the Code, the average maturity of the
Bonds does not exceed 120% of the average reasonably expected economic life of the
facilities being financed by the Bonds.
(k) Should involuntary noncompliance with the provisions of Section 1.103-8(b)
of the Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by
deed in lieu of foreclosure, change in a federal law or an action of a federal agency after
the Closing Date which prevents the Issuer from enforcing the requirements of the
applicable Regulations, or condemnation or similar event, the Borrower covenants that,
within a “reasonable period” determined in accordance with the applicable Regulations,
it will either prepay the Loan or, if permitted under the provisions of the Loan
Agreement, apply any proceeds received as a result of any of the preceding events to
reconstruct the Project to meet the requirements of Section 142(d) of the Code and the
applicable Regulations.
The Issuer hereby elects to have the Project meet the requirements of Section 142(d)(1)(B)
of the Code.
Section 4. Low Income Tenants; Reporting Requirements. Pursuant to the requirements
of the Code, the Borrower hereby represents, warrants and covenants as follows:
(a) During the Qualified Project Period, not less than forty percent (40%) of the
units in the Project will be occupied by, or held vacant and available for occupancy by,
Low Income Tenants. For the purposes of this paragraph (a), a vacant unit which was
most recently occupied by a Low Income Tenant is treated as rented and occupied by a
Low Income Tenant until reoccupied, other than for a temporary period of not more
than 31 days, at which time the character of such unit shall be redetermined.
(b) No tenant qualifying as a Low Income Tenant shall be denied continued
occupancy of a unit in the Project because, after admission, such tenant’s Adjusted
Income increases to exceed the qualifying limit for Low Income Tenants. However,
should a Low Income Tenant’s Adjusted Income, as of the most recent determination
thereof, exceed one hundred forty percent (140%) of the applicable income limit for a
Low Income Tenant of the same family size, the next available unit of comparable or
smaller size in the same building (within the meaning of Section 42 of the Code) must be
rented to (or held vacant and available for immediate occupancy by) a Low Income
Tenant. Until such next available unit is rented to a Low Income Tenant, the former Low
Income Tenant who has ceased to qualify as such shall be deemed to continue to be a
Low Income Tenant for purposes of the Low Income Unit requirements of Section 4(a)
hereof (but shall not be so deemed to continue to be a Low Income Tenant upon the
rental of an available unit of comparable or smaller size to a tenant who is not a Low
Income Tenant).
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(c) For the Qualified Project Period, the Borrower will obtain, complete, and
maintain on file Verification of Income certifications for each Low Income Tenant,
including (i) a Verification of Income dated immediately prior to the initial occupancy of
such Low Income Tenant in the Project, and (ii) thereafter, an annual Verification of
Income with respect to each Low Income Tenant within thirty days before or after the
anniversary of such tenant’s initial occupancy of a unit in the Project. In lieu of
obtaining an annual Verification of Income, the Borrower may, with respect to any
particular twelve-month period ending August 1 of each year, deliver to the
Administrator no later than fifteen (15) days after such date, a certification that as of
August 1, no unit in the Project was occupied within the preceding twelve (12) months
by a new resident whose income exceeded the limit applicable to Low Income Tenants
upon admission to the Project. The Administrator may at any time and in its sole and
absolute discretion notify the Borrower in writing that it will no longer accept
certifications of the Borrower made pursuant to the preceding sentence and that the
Borrower will thereafter be required to obtain annual Verifications of Income for
tenants.
The Borrower also will provide such additional information as may be required
in the future by the State of California, by the Issuer, by CDLAC and by the Code, 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. Upon
request of the Administrator or the Issuer, copies of Verification of Income for Low
Income Tenants commencing or continuing occupation of a Low Income Unit shall be
submitted to the Administrator or the Issuer, as requested.
The Borrower 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.
(d) The Borrower will maintain complete and accurate records pertaining to the
Low Income Units and will permit any duly authorized representative of the Issuer, the
Administrator, the Trustee, the Department of the Treasury or the Internal Revenue
Service to inspect the books and records of the Borrower pertaining to the Project,
including those records pertaining to the occupancy of the Low Income Units.
(e) The Borrower will prepare and submit quarterly, on or before each April 15
(for the quarterly period ending March 30), July 15 (for the quarterly period ending June
July 10, 2012 Contra Costa County Board of Supervisors 959
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30), October 15 (for the quarterly period ending September 30) and January 15 (for the
quarterly period ending December 31) during the Qualified Project Period rent rolls and
other information required by the Focus Program, along with, to the Administrator and
the Trustee, a Certificate of Continuing Program Compliance executed by the Borrower
stating (i) the percentage of the aggregate of the dwelling units of the Project which were
occupied or deemed occupied, pursuant to subsection (a) hereof, by Low Income
Tenants during the preceding year; and (ii) that either (A) no unremedied default has
occurred under this Regulatory Agreement, or (B) a default has occurred, in which event
the certificate shall describe the nature of the default in detail and set forth the measures
being taken by the Borrower to remedy such default.
During the Qualified Project Period, the Borrower shall submit a completed
Internal Revenue Code Form 8703 or such other annual certification as required by the
Code with respect to the Project, to the Secretary of the Treasury on or before March 31
of each year (or such other date as may be required by the Code).
(f) For the Qualified Project Period, all tenant leases or rental agreements shall be
subordinate to this Regulatory Agreement. All leases pertaining to Low Income Units
shall contain clauses, among others, wherein each tenant who occupies a Low Income
Unit: (i) certifies the accuracy of the statements made in the Verification of Income; (ii)
agrees that the family 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
Borrower, the Trustee 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 Borrower has relied
on the Verification of Income and supporting information supplied by the Low Income
Tenant in determining qualification for occupancy of the 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) hereof
and that if upon any such certification such tenant’s Adjusted Income exceeds the
applicable Low Income Tenant income limit under Section 4(b), such tenant may cease to
qualify as a Low Income Tenant, and such tenant’s rent is subject to increase.
Section 4A. Additional Requirements of the Issuer. In addition to the requirements set
forth elsewhere in this Regulatory Agreement and to the extent not prohibited by the
requirements set forth in Sections 4, 5 and 6 hereof, the Borrower hereby agrees to comply with
each of the requirements of the Issuer set forth in this Section 4A, as follows:
(a) All tenant lists, applications and waiting lists relating to the Project shall at all
times be kept separate and identifiable from any other business of the Borrower and
shall be maintained as required by the Issuer, in a reasonable condition for proper audit
and subject to examination upon reasonable notice (which need not be in excess of three
Business Days, as defined in the Loan Agreement) and during business hours by
representatives of the Issuer.
July 10, 2012 Contra Costa County Board of Supervisors 960
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(b) The Borrower shall not discriminate on the basis of race, creed, color, religion,
sex, sexual orientation, marital status, national origin, source of income (e.g. AFDC and
SSI), ancestry or handicap in the lease, use or occupancy of the Project (except as
required to comply with Section 3(e)(iii) or (iv)), or in connection with the employment
or application for employment of persons for the construction, operation, or
management of the Project.
(c) The Borrower shall not permit occupancy in any unit in the Project by more
than (i) two persons per bedroom in the unit, plus (ii) one person; and the Borrower
shall at all times offer for rent the largest unit then available for the applicable household
size (being one bedroom units for 2-3 person households, and two bedroom units for 4-5
person households).
(d) The Borrower shall pay directly to the Issuer (i) on the Closing Date the Issuer
Issuance Fee and the Issuer Annual Fee for the period from the Closing Date to but not
including August 1, 2014, and (ii) on each August 1, on and after August 1, 2014, the
Issuer Annual Fee; without in either case any requirement for notice or billing of the
amount due. In addition, the Borrower shall pay to the Issuer promptly following
receipt of an invoice that reasonably identifies the relevant expenses and the amounts
thereof, any out of pocket expenses incurred by the Issuer in connection with the Bonds,
the Indenture, this Regulatory Agreement or the Loan Agreement, including but not
limited to any costs related to the Focus Program.
(e) The rent limits set forth in Sections 6(b) and 6(f) shall apply to all Low Income
Units. In addition, the rental payments paid by Low Income Tenants for the Low
Income Units shall not exceed Affordable Rents.
(f) The Borrower will accept as tenants, on the same basis as all other prospective
tenants, persons who are recipients of federal certificates for rent subsidies pursuant to
the existing program under Section 8 of the Act, or its successor. The Borrower shall not
apply selection criteria to Section 8 certificate or voucher holders that is more
burdensome than criteria applied to all other prospective tenants, nor shall the Borrower
apply or permit the application of management policies or lease provisions with respect
to the Project which have the effect of precluding occupancy of units by such
prospective tenants.
(g) The Borrower shall submit to the Issuer: (i) rent rolls and other information
required by the Focus Program on a quarterly basis as specified in Section 4(e), and (ii)
within fifteen (15) days after receipt of a written request, any other information or
completed forms requested by the Issuer in order to comply with reporting
requirements of the Internal Revenue Service or the State.
(h) The Borrower shall pay to the Issuer, to the extent not paid pursuant to the
Loan Agreement or the Indenture, all of the amounts required by Section 3.2 of (and
otherwise under) the Loan Agreement and shall indemnify the Issuer as provided in
Section 9 hereof and Section 5.19 of the Loan Agreement.
July 10, 2012 Contra Costa County Board of Supervisors 961
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(i) The Issuer may, at its option and at its expense, at any time appoint an
Administrator to administer this Agreement or any provision hereof and to monitor
performance by the Borrower of all or of any of the terms, provisions and requirements
hereof. Following any such appointment, the Borrower shall comply with any request by
the Issuer to deliver to such Administrator, in addition to or instead of the Issuer, any
reports, notices or other documents required to be delivered pursuant hereto, and to
make the Project and the books and records with respect thereto available for inspection
by such administrator as an agent of the Issuer.
(j) The Borrower shall submit its written management policies with respect to the
Project, if any, to the Issuer for its review, and shall amend such policies in any way
necessary to insure that such policies comply with the provisions of this Agreement and
the requirements of the existing program under Section 8 of the Act, or its successors.
The Borrower shall not promulgate management policies which conflict with the
provisions of the addendum to the form of lease for the Project prepared by the Housing
Authority of Contra Costa County, and shall attach such addendum to leases for tenants
which are holders of Section 8 certificates.
(k) The Borrower shall screen and select tenants for desirability and
creditworthiness at its discretion; provided, however, that the Borrower shall consider a
prospective tenant’s rent history for at least the one year period prior to application as
evidence of the tenant’s ability to pay the applicable rent.
(l) At least six months prior to the expiration of the Qualified Project Period the
Borrower shall provide by first-class mail, postage prepaid, a notice to all tenants in the
Low Income Units containing (i) the anticipated date of the expiration of the Qualified
Project Period, (ii) any anticipated rent increase upon the expiration of the Qualified
Project Period, (iii) a statement that a copy of such notice will be sent to the Issuer, and
(iv) a statement that a public hearing may be held by the Issuer on the issue and that the
tenant will receive notice of the hearing at least fifteen (15) days in advance of any such
hearing. The Borrower shall also file a copy of the above-described notice with the
Affordable Housing Program Manager of the Issuer.
(m) Notwithstanding Section 1461 of the Civil Code, the provisions of this
Section shall run with land and may be enforced either in law or in equity by any
resident, local agency, entity, or by any other person adversely affected by the
Borrower’s failure to comply with the provisions of this Section.
(n) The Borrower shall not participate in any refunding of the Bonds by means of
the issuance of bonds or other obligations by any governmental body other than the
Issuer.
(o) Each of the requirements of Sections 3, 4, 6 and 7 hereof is hereby
incorporated as a specific requirement of the Issuer, whether or not required by
California or federal law.
July 10, 2012 Contra Costa County Board of Supervisors 962
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(p) The requirements of Section 6 and this Section 4A shall be in effect for the
Qualified Project Period.
Any of the foregoing requirements of the Issuer contained in this Section 4A may be
expressly waived by the Issuer in writing, but (i) no waiver by the Issuer of any requirement of
this Section 4A shall, or shall be deemed to, extend to or affect any other provision of this
Regulatory Agreement except to the extent the Issuer has received an opinion of Bond Counsel
that any such provision is not required by the Act and may be waived without adversely
affecting the exclusion from gross income of interest on the Bonds for federal income tax
purposes; and (ii) any requirement of this Section 4A shall be void and of no force and effect if
the Issuer and the Borrower receive a written opinion of Bond Counsel to the effect that
compliance with any such requirement would cause interest on the Bonds to cease to be 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 5. Tax-Exempt Status of the Bonds. The Borrower and the Issuer, as applicable,
each hereby represents, warrants and agrees as follows:
(a) The Borrower 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 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 Borrower 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
Borrower, the Issuer and the Trustee, 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.
Section 6. Additional Requirements of the Act. In addition to the requirements set forth
elsewhere in this Regulatory Agreement, so long as the Bonds are outstanding the Borrower
hereby agrees to comply with each of the requirements of the Act applicable to the Project.
Without limiting the foregoing, the Borrower agrees as follows:
(a) As provided in Section 52080(a)(1)(B) of the Act, forty percent (40%) or more
of the aggregate of the completed residential units in the Project shall be occupied by, or
held vacant and available for occupancy by, lower income tenants within the meaning of
Section 52080(a)(1) of the Act (it being acknowledged that units required to be set aside
for Low Income Tenants pursuant to Section 4(a) may be counted for purposes of
satisfying the requirements of this Section 6(a) if the related Low Income Tenants
otherwise satisfy the requirements of this Section 6(a)).
(b) The rental payments paid by the occupants of the units described in
paragraph (a) of this Section (excluding any supplemental rental assistance from the
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state, the federal government, or any other public agency to those occupants or on behalf
of those units) shall not exceed thirty percent of sixty percent (60%) of area median
income.
(c) The Borrower shall accept as tenants, on the same basis as all other
prospective tenants, Low Income Tenants who are recipients of federal certificates or
vouchers for rent subsidies pursuant to the existing program under Section 8 of the
Housing Law. The selection criteria applied to certificate holders under Section 8 of the
Housing Law shall not be more burdensome than the criteria applied to all other
prospective tenants.
(d) The Borrower shall ensure that units occupied as required by paragraph (a) of
this Section are of comparable quality and offer a range of sizes and number of
bedrooms comparable to those units which are available to other tenants.
(e) As provided in Section 52080(e) of the Act, the Project may be syndicated after
prior written approval of the Issuer. The Issuer shall grant that approval only after it
determines that the terms and conditions of the syndication (1) shall not reduce or limit
any of the requirements of the Act or regulations adopted or documents executed
pursuant to the Act, (2) shall not cause any of the requirements in this Agreement to be
subordinated to the syndication agreement, or (3) shall not result in the provision of
fewer assisted units, or the reduction of any benefits or services, than were in existence
prior to the syndication agreement. The Issuer hereby acknowledges that this Section
6(e) does not apply to the syndication of federal tax credits for the Project as
contemplated by the Borrower’s partnership agreement.
(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 required to
be reserved for occupancy pursuant to Section 6(a) shall remain available to any eligible
household occupying a reserved unit at the date of such expiration or termination, at a
rent not greater than the amount required by Section 6(b), until the earliest of any of the
following occur:
(1) The household’s income exceeds one hundred-forty percent (140%) of
the maximum eligible income specified in Section 6(a).
(2) The household voluntarily moves or is evicted for “good cause.”
“Good cause” for the purposes of this section means the nonpayment of rent or
allegation of facts necessary to prove major, or repeated minor, violations of
material provisions of the occupancy agreement which detrimentally affect the
health, safety, occupancy or quiet enjoyment of other persons or the structure,
the fiscal integrity of the Project, or the purposes or special programs of the
Project.
(3) Thirty years after the date of commencement of the Qualified Project
Period.
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(4) The Borrower pays the relocation assistance and benefits to tenants as
provided in subdivision (b) of Section 7264 of the Government Code.
(g) 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,
during the three years prior to expiration of the Qualified Project Period, the Borrower
shall continue to make available to eligible households reserved units that have been
vacated to the same extent that nonreserved units are made available to noneligible
households.
(h) This Section shall not be construed to require the Issuer to monitor the
Borrower’s compliance with the provisions of paragraph (f), or that the Issuer shall have
any liability whatsoever in the event of the failure by the Borrower to comply with any
of the provisions of this Agreement.
(i) The covenants and conditions of this Regulatory Agreement shall be binding
upon successors in interest of the Borrower.
(j) This Regulatory Agreement shall be recorded in the office of the county
recorder of the County, and shall be recorded in the grantor-grantee index to the names
of the Borrower as grantor and to the name of the Issuer as grantee.
Section 7. CDLAC Requirements. The acquisition, construction and operation of the
Project and the financing thereof are and shall be in compliance with the conditions set forth in
Exhibit A to the CDLAC Resolution (the “CDLAC Conditions”), as it may be amended, which
conditions are incorporated herein by reference and are made a part hereof; provided, however,
the Issuer shall have no obligation under this Regulatory Agreement to monitor and enforce the
Borrower’s compliance with the CDLAC Conditions. The Borrower shall prepare and submit to
CDLAC, at the times required by CDLAC, a Certificate of Compliance in substantially the form
attached hereto as Exhibit B hereto (or in such other form as CDLAC may require), executed by
an authorized representative of the Borrower.
The Borrower acknowledges that the CDLAC Conditions include the following:
(a) 45 of the units in the Project be restricted for a term of 55 years, including 31
units rented or held vacant for rental for persons or families whose income is at 50% or
below of the Area Median Gross Income and 14 units rented or held vacant for rental for
persons or families whose income is at 60% or below of the Area Median Gross Income.
(b) A minimum of $9,922,660 of public funds will be expended for the Project.
The Borrower will promptly provide any information reasonably requested by the Issuer
in order for the Issuer to comply with any regulations of CDLAC applicable to the CDLAC
Resolution, the CDLAC Conditions, the Bonds or the Project, including but not limited to
Section 5144 of Article 11 of the CDLAC regulations.
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Section 8. Modification of Covenants. The Borrower and the Issuer hereby agree as
follows:
(a) To the extent any amendments to the Act, the Regulations or the Code shall,
in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the
Borrower, impose requirements upon the ownership or operation of the Project more
restrictive than those imposed by this Regulatory Agreement, 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.
(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 Trustee
and the Borrower, impose requirements upon the ownership or operation of the Project
less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement
may be amended or modified to provide such less restrictive requirements, but only by
written amendment signed by the Issuer, in its sole discretion, and the Borrower, 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 Bonds or violate
the requirements of the Act, and is otherwise in accordance with Section 22 hereof.
(c) The Borrower and the Issuer shall execute, deliver and, if applicable, file of
record any and all documents and instruments necessary to effectuate the intent of this
Section 8, and each of the Borrower and the Issuer hereby appoints the Trustee as its true
and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf
of the Borrower or the Issuer, as is applicable, any such document or instrument (in such
form as may be approved by Bond Counsel, as evidenced by receipt of the opinion
required by paragraph (b) above) if either the Borrower or the Issuer defaults in the
performance of its obligations under this subsection (c); provided, however, that unless
directed in writing by the Issuer or the Borrower, the Trustee shall take no action under
this subsection (c) without first notifying the Borrower or the Issuer, or both of them, as
is applicable, and without first providing the Borrower or the Issuer, or both, as is
applicable, an opportunity to comply with the requirements of this Section 8. 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.
Notwithstanding any other provision of this Regulatory Agreement, whenever an
opinion of Bond Counsel is required or requested to be delivered hereunder after the Closing
Date, the Trustee, the Issuer and the Borrower shall accept (unless otherwise directed in writing
by the Issuer) an opinion of Bond Counsel in such form and with such disclaimers as may be
required so that such opinion will not be treated as a “covered opinion” for purposes of the
Treasury Department regulations governing practice before the Internal Revenue Service
(Circular 230), 31 CFR Part 10.
Section 9. Indemnification.
(a) To the fullest extent permitted by law, the Borrower agrees to indemnify, hold
harmless and defend the Issuer, the Trustee, and each of their respective past, present and
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future officers, Boardmembers, directors, officials, employees and agents (collectively, the
“Indemnified Parties”), against any and all losses, damages, claims, actions, liabilities, costs and
expenses of any conceivable nature, kind or character (including, without limitation, reasonable
attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to
discharge judgments) to which the Indemnified Parties, or any of them, may become subject
under or any statutory law (including federal or state securities laws) or at common law or
otherwise, arising out of or based upon or in any way relating to:
(i) the Bonds, the Indenture, the Loan Agreement, the Loan, this Regulatory
Agreement or the execution or amendment hereof or thereof or in connection with
transactions contemplated hereby or thereby, including the issuance, sale or resale of the
Bonds;
(ii) any act or omission of the Borrower or any of its agents, contractors, servants,
employees, tenants) or licensees in connection with the Project, the operation of the
Project, or the condition, environmental or otherwise, occupancy, use, possession,
conduct or management of work done in or about, or from the planning, design,
acquisition, installation or construction of, the Project or any part thereof;
(iii) any lien or charge upon payments by the Borrower to the Issuer and the
Trustee hereunder or under the Loan Agreement, or any taxes (including, without
limitation, all ad valorem taxes and sales taxes), assessments, impositions and other
charges imposed on the Issuer in respect of any portion of the Project;
(iv) any violation of Section 5.7 of the Loan Agreement;
(v) the defeasance and/or redemption, in whole or in part, of the Bonds;
(vi) any untrue statement or misleading statement or alleged untrue statement or
alleged misleading statement of a material fact contained in any offering statement or
disclosure or continuing disclosure document for the Bonds or any of the documents
relating to the Bonds, or any omission or alleged omission from any offering statement
or disclosure or continuing disclosure document for the Bonds of any material fact
necessary to be stated therein in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading;
(vii) any declaration of taxability of interest on the Bonds, or allegations that
interest on the Bonds is taxable or any regulatory audit or inquiry regarding whether
interest on the Bonds is taxable; or
(viii) the Trustee’s acceptance or administration of the Indenture, or the exercise
or performance of any of its powers or duties thereunder or under any of the documents
relating to the Bonds to which it is a party;
except (A) in the case of the foregoing indemnification of the Trustee or any of its respective
officers, members, directors, officials, employees and agents, to the extent such damages are
caused by the gross negligence or willful misconduct of an Indemnified Party; or (B) in the case
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of the foregoing indemnification of the Issuer or any of its officers, Boardmembers, directors,
officials, employees and agents, to the extent, with respect to any such Indemnified Party, such
damages are caused by the willful misconduct of the respective Indemnified Party seeking
indemnification. In the event that any action or proceeding is brought against any Indemnified
Party with respect to which indemnity may be sought hereunder, the Borrower, upon written
notice from the Indemnified Party, shall assume the investigation and defense thereof,
including the employment of counsel selected by the Indemnified Party, and shall assume the
payment of all expenses related thereto, with full power to litigate, compromise or settle the
same in its sole discretion; provided that the Indemnified Party shall have the right to review
and approve or disapprove any such compromise or settlement. Each Indemnified Party shall
have the right to employ separate counsel in any such action or proceeding and participate in
the investigation and defense thereof, and the Borrower shall pay the reasonable fees and
expenses of such separate counsel; provided, however, that such Indemnified Party may only
employ separate counsel at the expense of the Borrower if in the judgment of such Indemnified
Party a conflict of interest exists by reason of common representation or if all parties commonly
represented do not agree as to the action (or inaction) of counsel.
(b) The rights of any persons to indemnity hereunder and rights to payment of fees and
reimbursement of expenses pursuant to Section 4A(a), this Section 9 and Section 20 shall survive
the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or
removal. The provisions of this Section shall survive the termination of this Regulatory
Agreement.
(c) Nothing contained in this Section 9 shall cause the obligation of the Borrower to pay
principal and interest on the Loan or amounts owing with respect to the Bonds to be a recourse
obligation of the Borrower.
(d) The obligations of the Borrower under this Section are independent of any other
contractual obligation of the Borrower to provide indemnity to the Issuer or otherwise, and the
obligation of the Borrower to provide indemnity hereunder shall not be interpreted, construed
or limited in light of any other separate indemnification obligation of the Borrower. The Issuer
shall be entitled simultaneously to seek indemnity under this Section and any other provision
under which it is entitled to indemnity.
Section 10. Consideration. The Issuer has agreed to issue the Bonds to provide funds to
lend to the Borrower to finance the acquisition and construction of the Project, all for the
purpose, among others, of inducing the Borrower to acquire, construct and operate the Project.
In consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this
Regulatory Agreement and has agreed to restrict the uses to which the Project can be put on the
terms and conditions set forth herein.
Section 11. Reliance. The Issuer and the Borrower 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 State personal income taxation of
interest on the Bonds and in the Tax-Exempt status of the interest on the Bonds. In performing
their duties and obligations hereunder, the Issuer and the Trustee may rely upon statements
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and certificates of the Low Income Tenants and upon audits of the books and records of the
Borrower pertaining to the Project. In addition, the Issuer and the Trustee may consult with
counsel, and the opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered by the Issuer or the Trustee hereunder in good faith
and in conformity with such opinion. In determining whether any default or lack of compliance
by the Borrower exists under this Regulatory Agreement, the Issuer shall not be required to
conduct any investigation into or review of the operations or records of the Borrower and may
rely solely on any written notice or certificate delivered to the Issuer or the Trustee by the
Borrower with respect to the occurrence or absence of a default unless it knows that the notice
or certificate is erroneous or misleading.
Section 12. Sale or Transfer of the Project. For the Qualified Project Period, the
Borrower shall not, except as provided below and in accordance with the Loan Agreement and
the Mortgage, sell, transfer or otherwise dispose of the Project, in whole or in part, without the
prior written consent of the Issuer, which consent shall be given as promptly as practicable
following: (A) the receipt by the Issuer of evidence acceptable to the Issuer that (1) the Borrower
shall not be in default hereunder or under the Loan Agreement (which may be evidenced by a
certificate of the Borrower) or the purchaser or assignee undertakes to cure any defaults of the
Borrower 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 years’ experience in the ownership, operation
and management of similar size, rental housing projects, and at least one year’s experience in
the ownership, operation and management of rental housing projects contained below-market-
rate units, without any record of material violations of discrimination restrictions or other state
or federal laws or regulations or local government 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, or (c) the transferring Borrower or its management
company will continue to manage the Project for at least one year following such transfer and
during such period will provide training to the transferee and its manager in the responsibilities
relating to the Low Income Units; and (4) the person or entity which is to acquire the Project
does not have pending against it, and does not have a history of, building code violations or
significant and material 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; (B) the execution by the purchaser or assignee of any document requested
by the Issuer with respect to the assumption of the Borrower’s obligations under this
Regulatory Agreement and the Loan Agreement, including without limitation an instrument of
assumption hereof, 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; (C) receipt by the Issuer of an
opinion of Bond Counsel addressed to the Issuer and the Trustee to the effect that any such sale,
transfer or other disposition will not adversely affect the Tax-Exempt status of interest on the
Bonds; (D) receipt by the Issuer and Trustee of all fees and/or expenses then currently due and
payable to the Issuer and Trustee; (E) satisfaction of such other conditions or matters as are set
forth in the Loan Agreement and the Mortgage; and (F) such other conditions are met as the
Issuer may reasonably impose. The Issuer hereby consents to a transfer of the Project by the
Borrower to its general partner or its affiliate, if the Issuer receives the documents listed in the
preceding sentence. It is hereby expressly stipulated and agreed that any sale, transfer or other
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disposition of the Project in violation of this Section 12 shall be null, void and without effect,
shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of
its obligations under this Regulatory Agreement. Nothing in this Section shall affect any
provision of any other document or instrument between the Borrower and any other party
which requires the Borrower to obtain the prior written consent of such other party in order to
sell, transfer or otherwise dispose of the Project. Upon any sale or other transfer which complies
with this Regulatory Agreement, the Borrower shall be fully and automatically released from its
obligations hereunder to the extent such obligations have been assumed by the transferee of the
Project. Any transfer of the Project to any entity, whether or not affiliated with the Borrower,
shall be subject to the provisions of this Section 12, except that no consent of the Issuer shall be
required in the case of any transfer of the Project to a wholly owned subsidiary of the Borrower
if any applicable conditions set forth in the Loan Agreement and any conditions set forth in the
Mortgage are satisfied.
Notwithstanding anything contained in this Section 12 to the contrary, neither the
consent of the Issuer nor the delivery of items (A) through (F) of the preceding paragraph shall
be required in the case of (a) the execution, delivery and recordation by Borrower of any
mortgage or deed of trust encumbering all or any part of the Project, or (b) a foreclosure or deed
in lieu of foreclosure by the Trustee whereby the Trustee or a purchaser at a foreclosure sale
becomes the owner of the Project, and nothing contained in this Section 12 shall otherwise affect
the right of the Trustee or a purchaser at a foreclosure sale to foreclose on the Project or to
accept a deed in lieu of foreclosure. The Issuer’s consent otherwise required by item (A) of the
preceding paragraph shall not be required in connection with any purchase of the Project by a
partner of the Borrower as allowed for in the Borrower’s partnership agreement, or a sale or
transfer of the Project to any wholly owned subsidiary of Eden Housing, Inc. In addition, the
provisions of this Section 12 shall not apply to (i) the replacement of the managing general
partner of the Borrower by an entity formed by or that is a subsidiary of the initial managing
general partner of the Borrower, (ii) the withdrawal of any limited partner of the Borrower from
its partnership, (iii) any transfer of limited partnership interest in the Borrower and the
admission of a substitute limited partner, (iv) any transfer of direct or indirect interests in any
limited partner of the Borrower, or (v) any transfer of interests pursuant to the provisions of the
Borrower’s partnership agreement as in effect from time to time, including but not limited to
the removal of a general partner of the Borrower and replacement thereof by an affiliate of a
limited partner of the Borrower pursuant to the Borrower’s partnership agreement; provided,
however, that the Issuer shall receive notice from the Borrower of any transfer of general
partner interests.
For the Qualified Project Period, the Borrower shall not: (1) except pursuant to the
provisions of this Regulatory Agreement, the Loan Agreement and the Mortgage (and upon
receipt by the Borrower of an opinion of Bond Counsel that such action will not adversely affect
the Tax-Exempt status of interest on the Bonds), or except upon a sale, transfer or other
disposition of the Project in accordance with the terms of this Regulatory Agreement,
subordinate or encumber any of the Project or grant commercial leases (not including any
laundry, cable, management office equipment, resident service (including but not limited to
convenience vending, or satellite television) or similar or related leases) of any part thereof, or
permit the conveyance, transfer or encumbrance of any part of the Project (except for apartment
leases); (2) demolish any part of the Project or substantially subtract from any real or personal
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property of the Project, except to the extent that what is 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 13. Term. This Regulatory Agreement 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, the Loan Agreement and the Mortgage.
The terms of this Regulatory Agreement to the contrary notwithstanding, this
Regulatory Agreement shall terminate and be of no further force and effect in the event of
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,
foreclosure, transfer of title by deed in lieu of foreclosure, 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 which 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
Borrower 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 Borrower
hereby agrees that, following any foreclosure, transfer of title by deed in lieu of foreclosure or
similar event, neither the Borrower nor any such related person as described above will obtain
an ownership interest in the Project for federal tax purposes. Upon the termination of the terms
of this Regulatory Agreement, the parties hereto agree to execute, deliver and record
appropriate instruments of release and discharge of the terms hereof; provided, however, that
the execution and delivery of such instruments shall not be necessary or a prerequisite to the
termination of this Regulatory Agreement in accordance with its terms.
Section 14. Covenants to Run With the Land. Notwithstanding Section 1461 of the
California Civil Code, the Borrower hereby subjects the Project to the covenants, reservations
and restrictions set forth in this Regulatory Agreement. The Issuer and the Borrower hereby
declare their express intent that the covenants, reservations and restrictions set forth herein
shall be deemed covenants running with the land and shall pass to and be binding upon the
Borrower’s successors in interest to the Project; provided, however, that on the termination of
this Regulatory Agreement said covenants, reservations and restrictions shall expire. Each and
every contract, deed or other instrument hereafter executed covering or conveying the Project or
any portion thereof shall conclusively be held to have been executed, delivered and accepted
subject to such covenants, reservations and restrictions, regardless of whether such covenants,
reservations and restrictions are set forth in such contract, deed or other instruments.
Section 15. Burden and Benefit. The Issuer and the Borrower hereby declare their
understanding and intent that the burdens of the covenants set forth herein touch and concern
the land in that the Borrower’s legal interest in the Project is rendered less valuable thereby. The
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Issuer and the Borrower 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 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 16. Uniformity; Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common
plan for the use of the site on which the Project is located.
Section 17. Default; Enforcement. If the Borrower defaults in the performance or
observance of any covenant, agreement or obligation of the Borrower set forth in this
Regulatory Agreement, and if such default remains uncured for a period of thirty (30) days after
notice thereof shall have been given by the Issuer or the Trustee to the Borrower (with a copy to
the Investor Limited Partner), or for a period of thirty (30) days from the date the Borrower
should, with due diligence, have discovered such default, then the Issuer or the Trustee, acting
on its own behalf or on behalf of the Issuer (to the extent directed in writing by the Issuer,
subject to the provisions of the Indenture), 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 thirty (30) days, such default shall not constitute an Event of Default hereunder so long
as (i) the Borrower institutes corrective action within said thirty (30) days and diligently
pursues such action until the default is corrected, and (ii) in the opinion of Bond Counsel, the
failure to cure said default within thirty (30) days will not adversely affect the Tax-Exempt
status of interest on the Bonds. The Issuer and the Trustee shall have the right to enforce the
obligations of the Borrower under this Regulatory Agreement within shorter periods of time
than are otherwise provided herein if necessary in the opinion of Bond Counsel to insure
compliance with the Act or the Code.
Any limited partner of the Borrower shall have the right but not the obligation to cure
any Event of Default, and the Issuer and the Trustee agree to accept any cure tendered by any
such limited partner on behalf of the Borrower within any cure period specified above.
Following the declaration of an Event of Default hereunder the Issuer, or the Trustee
may, at their respective options, 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 Borrower to perform its obligations and covenants
hereunder or enjoin any acts or things which may be unlawful or in violation of the
rights of the Issuer or the Trustee hereunder;
(ii) have access to and inspect, examine and make copies of all of the books and
records of the Borrower 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 Borrower
hereunder;
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(iv) declare a default under the Loan Agreement and (subject to any applicable
cure periods set forth in the Loan Agreement) proceed with any remedies provided
therein; or
(v) order and direct the Borrower in writing to terminate the then manager of the
Project and to select a replacement Manager reasonably satisfactory to the Issuer within
60 days of such written direction, and to notify the Issuer in writing of the identity of the
replacement Manager.
The Borrower hereby agrees that specific enforcement of the Borrower’s agreements
contained herein is the only means by which the Issuer may fully obtain the benefits of such
agreements made by the Borrower herein, and the Borrower therefore agrees to the imposition
of the remedy of specific performance against it in the case of any Event of Default by the
Borrower hereunder.
The Trustee shall have the right (but no obligation), 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.
All 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 Borrower.
No breach or default under this Regulatory Agreement shall defeat or render invalid the
Mortgage or any like encumbrance upon the Project or any portion of either thereof given in
good faith and for value.
Section 18. References to Trustee. After the date on which no Bonds remain outstanding
under the Indenture, all references to the Trustee in this Regulatory Agreement shall be deemed
references to the Issuer.
Section 19. Recording and Filing. (a) The Borrower shall cause this Regulatory
Agreement and all amendments and supplements hereto to be recorded and filed in the real
property records of the County and in such other places as the Issuer or the Trustee may
reasonably request. The Borrower shall pay all fees and charges incurred in connection with any
such recording.
(b) The Borrower and the Issuer will file of record such other documents and take such
other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer and
the Trustee, in order to insure that the requirements and restrictions of this Regulatory
Agreement will be binding upon all owners of the Project.
July 10, 2012 Contra Costa County Board of Supervisors 973
-26-
(c) The Borrower 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 (other than in any document granting a security interest to the
Trustee and, provided, however, that no such assignment shall be required in connection with
the transfer of the Project to the Trustee or to the Bondholders by foreclosure, deed in lieu of
foreclosure or comparable conversion of the Loan) to the end that such transferee has notice of,
and is bound by, such restrictions, and to obtain the agreement from any transferee to abide by
all requirements and restrictions of this Regulatory Agreement.
Section 20. Payment of Administration Fees. Notwithstanding any prepayment of the
Loan and notwithstanding a discharge of the Indenture, throughout the term of this Regulatory
Agreement, the Borrower shall continue to pay to the Issuer its fees described in Section 4.A.(d)
and in the event of default, to the Administrator, the Issuer and to the Trustee reasonable
compensation for any services rendered by either of them hereunder and reimbursement for all
expenses reasonably incurred by any of them in connection therewith.
Section 21. Governing Law. This Regulatory Agreement shall be governed by the laws
of the State of California.
Section 22. Amendments; Waivers. (a) Except as otherwise provided in Section 8 above,
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, 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 Bonds and is not
contrary to the provisions of the Act.
(b) Anything to the contrary contained herein notwithstanding, the Issuer and the
Borrower hereby agree to amend this Regulatory Agreement to the extent required, in the
opinion of Bond Counsel, in order that interest on the Bonds remain Tax-Exempt. The party
requesting such amendment shall notify the other party to this Regulatory Agreement of the
proposed amendment, with a copy of such requested amendment to Bond Counsel and a
request that such 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 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 23. Notices. Any notice required to be given hereunder shall be made in writing
and shall be given by personal delivery, overnight delivery, certified or registered mail, postage
prepaid, return receipt requested, or by telecopy, in each case at the respective addresses set
forth below or at such other addresses as may be specified in writing by the parties hereto.
July 10, 2012 Contra Costa County Board of Supervisors 974
-27-
If to the Issuer or the Administrator: County of Contra Costa
Department of Conservation and Development
30 Muir Road
Martinez, CA 94553
Attention: Affordable Housing Program
Manager
If to the Trustee: U.S. Bank National Association
One California Street, Suite 1000
San Francisco, CA 94111
Attention: __________
If to the Borrower: Lafayette Senior, L.P.
c/o Eden Investments, Inc.
22645 Grand Street
Hayward, CA 94541-5031
Attention: Executive Director
with a copy to : Gubb & Barshay, LLP
50 California Street, Suite 3155
San Francisco, CA 94111
Attention: Natalie Gubb, Esq.
with a copy to: the Investor Limited Partner
If to the Investor Limited Partner: Union Bank, N.A.
200 Pringle Avenue, Suite 355
Walnut Creek, CA 94596
Attention: CDF Division Head
with a copy to: Paul Hastings LLP
515 South Flower Street, 25th Floor
Los Angeles, CA 90071
Attention: Kenneth Krug, Esq.
The Issuer, the Administrator, the Trustee and the Borrower may, by notice given
hereunder, designate any further or different addresses to which subsequent notices, certificates
or other communications shall be sent. Notice shall be deemed given on the date evidenced by
the postal or courier receipt or other written evidence of delivery or electronic transmission.
Section 24. Severability. If any provision or 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.
July 10, 2012 Contra Costa County Board of Supervisors 975
-28-
Section 25. Multiple Counterparts. This Regulatory 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.
Section 26. Third Party Beneficiaries; Enforcement. The Trustee, the Servicer, the
Investor Limited Partner and CDLAC are intended to be and shall each be a third party
beneficiary of this Regulatory Agreement. CDLAC shall have the right (but not the obligation)
to enforce the CDLAC Conditions (as defined in Section 7) and to pursue an action for specific
performance or other available remedy at law or in equity in accordance with Section 17 hereof,
provided that any such action or remedy shall not materially adversely affect the interests and
rights of the owners of the Bonds. Pursuant to Section 52080(k) of the Act, the requirements of
Section 6 may be enforced either in law or in equity by any resident, local agency, entity, or by
any other person adversely affected by the Borrower’s failure to comply with the requirements
of that Section.
Section 27. The Trustee. The Trustee shall be entitled, but shall have no duty, to act
with respect to enforcement of the Borrower’s performance hereunder. The Trustee, either on
its own behalf or as the agent of and on behalf of the Issuer, may, in its sole discretion, act
hereunder 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, 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. The Trustee may consult with legal counsel selected by it (the reasonable fees of
which counsel shall be paid by the Borrower) and any action taken or suffered by it reasonably
and in good faith in accordance with the opinion of such counsel shall be full justification and
protection to it. The Trustee may at all times assume compliance with this Regulatory
Agreement unless otherwise notified in writing by or on behalf of the Issuer, or unless it has
actual knowledge of noncompliance.
After the date on which no Bonds remain outstanding as provided in the Indenture, the
Trustee shall have no further rights, 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 28. No Interference or Impairment of Loan. Notwithstanding anything herein to
the contrary, (i) the occurrence of an event of default under this Regulatory Agreement shall
not, under any circumstances whatsoever, be deemed or constitute a default under the Loan
Documents (as defined in the Loan Agreement), except as may be otherwise specified in the
Loan Documents, and shall not impair, defeat or render invalid the lien of the Mortgage and (ii)
neither of the Issuer nor any other person shall:
(a) initiate or take any action which may have the effect, directly or indirectly, of
impairing the ability of the Borrower to timely pay the principal of, interest on, or other
amounts due and payable under, the Loan;
July 10, 2012 Contra Costa County Board of Supervisors 976
-29-
(b) interfere with or attempt to interfere with or influence the exercise by the
Trustee of any of its rights under the Loan Agreement, including, without limitation, the
Trustee remedial rights under the Loan Documents upon the occurrence of an event of
default by the Borrower under the Loan; or
(c) upon the occurrence of an event of default under the Loan Agreement, take
any action to accelerate or otherwise enforce payment or seek other remedies with
respect to the Loan, it being understood and agreed that the Issuer may not, without the
prior written consent of the Servicer, on account of any default under this Regulatory
Agreement, seek, in any manner, to cause the Loan to become due and payable, to
enforce the Loan Agreement or to foreclose on the Mortgage or cause the Trustee to
redeem the Bonds or to declare the principal of the Bonds and the interest accrued on
the Bonds to be immediately due and payable, or cause the Trustee to foreclose or take
any other action under the Bond Documents (as defined in the Loan Agreement), the
Loan Documents or any other documents which action would or could have the effect of
achieving any one or more of the foregoing actions, events or results.
No person other than the Servicer shall have the right to declare the principal balance of
the Loan to be immediately due and payable or to initiate foreclosure or other like action.
The forgoing prohibitions and limitations shall not in any way limit the rights of the
Issuer to specifically enforce this Regulatory Agreement or to seek injunctive relief in order to
provide for the operation of the Project in accordance with the requirements of the Code and the
Act, and shall not be construed to limit the rights of the Issuer to enforce its rights against the
Borrower under the indemnification provisions of the Regulatory Agreement provided that the
prosecution of a claim for indemnification shall not cause the Borrower to file a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the Borrower under
any applicable liquidation, insolvency, bankruptcy, construction, composition, reorganization,
conservation or other similar law in effect now or in the future.
Notwithstanding the above, the provisions of this Section 28 shall not in any way limit
or alter the Issuer’s authority, power or activities as a governmental regulatory agency pursuant
to applicable laws and regulations relating to the Project or otherwise.
Section 29. Limitation on Borrower Liability. Notwithstanding any other provision or
obligation to the contrary contained in this Regulatory Agreement, and except for the
Borrower’s obligations under Section 9 of this Regulatory Agreement (which are not subject to
the provisions and limitations of this Section 29) (i) the liability of the Borrower under this
Regulatory Agreement to any person or entity, including, but not limited to, the Trustee or the
Issuer and their successors and assigns, is limited to the Borrower’s interest in the Project, the
revenues therefrom, including the amount held in the funds and accounts created under the
Indenture and the Loan Documents (as defined in the Loan Agreement), or any rights of the
Borrower under any guarantees relating to the Project, and such persons and entities shall look
exclusively thereto, or to such other security as may from time to time be given for the payment
of obligations arising out of this Regulatory Agreement or any other agreement securing the
obligations of the Borrower under this Regulatory Agreement; and (ii) from and after the date
July 10, 2012 Contra Costa County Board of Supervisors 977
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of this Regulatory Agreement, no deficiency or other personal judgment, nor any order or
decree of specific performance (other than pertaining to this Regulatory Agreement, any
agreement pertaining to the Project or any other agreement securing the Borrower’s obligations
under this Regulatory Agreement), shall be rendered against the Borrower, the assets of the
Borrower (other than the Borrower’s interest in the Project, this Regulatory Agreement,
amounts held in the funds and accounts created under the Indenture and the Loan Documents
(as defined in the Loan Agreement), any rights of the Borrower under the Indenture and the
Loan Documents (as defined in the Loan Agreement) or any other documents relating to the
Bonds or any rights of the Borrower under any guarantees relating to the Project), its partners,
members, successors, transferees or assigns and each their respective officers, directors,
employees, partners, agents, heirs and personal representatives, as the case may be, in any
action or proceeding arising out of this Regulatory Agreement and the Indenture or any
agreement securing the obligations of the Borrower under this Regulatory Agreement, or any
judgment, order or decree rendered pursuant to any such action or proceeding.
Section 30. Limited Liability. All obligations of the Issuer incurred under this
Regulatory Agreement shall be limited obligations, payable solely and only from Bond
proceeds and other amounts derived by the Issuer from the Loan or otherwise under the Loan
Agreement.
Section 31. Conflict With Other Affordability Agreements. In the event of any conflict
between the provisions of this Regulatory Agreement and any agreement referenced in Section
3(e)(iii) hereof, the provisions providing for the most affordable units, with the most
affordability, in the Project shall prevail, so long as at all times the requirements of Section 2, 3,
4, 4A, 6 and 7 of this Regulatory Agreement are in any event satisfied. Notwithstanding the
foregoing, a breach or default under any agreement referenced in Section 3(e)(iii) and (iv) hereof
shall not, in itself, constitute a breach or a default under this Regulatory Agreement.
July 10, 2012 Contra Costa County Board of Supervisors 978
-31-
IN WITNESS WHEREOF, the Issuer and the Borrower have executed this Regulatory
Agreement by duly authorized representatives, all as of the date first above written.
COUNTY OF CONTRA COSTA
By:
Its:
LAFAYETTE SENIOR, L.P., a California limited
partnership
By: Eden Investments, Inc., a California nonprofit
public benefit corporation,
its general partner
By:
Signature
Printed Name
Title
[Signature Page to Regulatory Agreement – Lafayette Senior Housing]
03007.25:J11721
July 10, 2012 Contra Costa County Board of Supervisors 979
STATE OF CALIFORNIA )
COUNTY OF ___________________ )
On ___________________, 2012 before me, ______________________________, Notary Public,
personally appeared ______________________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public [Seal]
July 10, 2012 Contra Costa County Board of Supervisors 980
STATE OF CALIFORNIA )
COUNTY OF ___________________ )
On ___________________, 2012 before me, ______________________________, Notary Public,
personally appeared ______________________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public [Seal]
July 10, 2012 Contra Costa County Board of Supervisors 981
A-1
EXHIBIT A
DESCRIPTION OF PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
LAFAYETTE, COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, AND IS DESCRIBED
AS FOLLOWS:
APN: __________
July 10, 2012 Contra Costa County Board of Supervisors 982
B-1
EXHIBIT B
FORM OF CERTIFICATE OF COMPLIANCE (CDLAC RESOLUTION)
Project Name: Lafayette Senior Apartments
Name of Bond Issuer: County of Contra Costa
CDLAC Application No.: 12-050
Pursuant to Section 13 of Resolution No. 12-44 (the “Resolution”), adopted by the California
Debt Limit Allocation Committee (the “Committee”) on May 16, 2012, I, ______________, an
Officer of the Project Sponsor, hereby certify under penalty of perjury that, as of the date of this
Certification, the above-mentioned Project is in compliance with all of the terms and conditions
set forth in the Resolution.
I further certify that I have read and understand the CDLAC Resolution, which specifies that
once Bonds are issued, the terms and conditions set forth in the Resolution Exhibit A shall be
enforceable by the Committee through an action for specific performance, negative points,
withholding future allocation or any other available remedy.
Please check or write N/A to the items list below:
The project is currently in the Construction or Rehabilitation phase.
The project has incorporated the minimum specifications into the project design for all
new construction and rehabilitation projects as evidenced by attached the applicable
third party certification (HERS Rater, Green Point Rater or US Green Building Council).
For projects under construction or rehabilitation, the information is due following
receipt of the verification but in no event shall the documentation be submitted more
than two years after the issuance of bonds.
For projects that received points for exceeding the minimum requirements please attach
the appropriate California Energy Commission compliance form for the project which
shows the necessary percentage improvement better than the appropriate standards.
The compliance form must be signed by a California Association of Building
Consultants, Certified Energy Plans Examiner or HERS Rater as applicable.
Signature of Officer Date
July 10, 2012 Contra Costa County Board of Supervisors 983
B-2
Printed Name of Officer
Title of Officer
July 10, 2012 Contra Costa County Board of Supervisors 984
C-1
EXHIBIT C
COMPLETION CERTIFICATE
The undersigned hereby certifies that the acquisition and construction of the Project was
substantially completed as of ____________.
The undersigned hereby further certifies that:
(1) the aggregate amount disbursed on the Loan to date is $___________;
(2) all amounts disbursed on the Loan have been applied to pay or reimburse the
undersigned for the payment of costs of the Project and none of the amounts disbursed on the
Loan have been applied to pay or reimburse any party for the payment of costs or expenses
other than costs of the Project;
(3) at least 97 percent of the amounts disbursed on the Loan have been applied to pay or
reimburse the Borrower for the payment of Qualified Project Costs (as that term is used in the
Regulatory Agreement), and less than 25 percent of all such disbursements have been used for
the acquisition of land or an interest therein; and
(4) the Borrower is in compliance with the provisions of Section 5.18 of the Loan
Agreement, dated as of August 1, 2012, among U.S. Bank National Association, as trustee, the
Borrower and the Issuer.
Capitalized terms used in this Completion Certificate have the meanings given such
terms in the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of
August 1, 2012, between Lafayette Senior, L.P., a California limited partnership and the County
of Contra Costa.
LAFAYETTE SENIOR L.P., a California limited
partnership
By: Eden Investments, Inc., a California nonprofit
public benefit corporation,
its general partner
By:
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 985
D-1
EXHIBIT D
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
CONTRA COSTA COUNTY
Department of Conservation and Development
30 Muir Road
Martinez, California 94553
Attention: Affordable Housing Programs Manager
CERTIFICATE AS TO COMMENCEMENT OF
QUALIFIED PROJECT PERIOD
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(LAFAYETTE SENIOR HOUSING), SERIES 2012A
The undersigned, on behalf of Lafayette Senior, L.P., a California Limited Partnership,
hereby certifies that (complete blank information):
10% of the dwelling units in the Project financed in part from the proceeds of the
captioned bonds were first occupied on ________________, 20____.
50% of the dwelling units in the Project financed in part from the proceeds of the
captioned bonds were first occupied on ________________, 20__.
LAFAYETTE SENIOR L.P., a California limited
partnership
By: Eden Investments, Inc., a California nonprofit
public benefit corporation,
its general partner
By:
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 986
E-1
EXHIBIT E
FORM OF VERIFICATION OF INCOME
TENANT INCOME CERTIFICATION
Initial Certification 1st Recertification Other:
Effective Date:
Move-in Date:
(YYYY-MM-DD)
PART I - DEVELOPMENT DATA
Property Name: Lafayette Senior Apartments County: Contra Costa BIN #:
Address: 3428 Mount Diablo Boulevard, Lafayette, CA Unit Number: # Bedrooms:
PART II. HOUSEHOLD COMPOSITION
Vacant
HH
Mbr #
Last Name
First Name
Middle
Initial
Relationship to
Head
of Household
Date of Birth
(YYYY/MM//D
D)
F/T
Student
(Y or N)
Last 4 digits of
Social Security
#
1 HEAD
2
3
4
5
6
7
PART III. GROSS ANNUAL INCOME (USE ANNUAL AMOUNTS)
HH
Mbr #
(A)
Employment or Wages
(B)
Soc. Security/Pensions
(C)
Public Assistance
(D)
Other Income
TOTALS $ $ $ $
Add totals from (A) through (D), above TOTAL
INCOME (E): $
PART IV. INCOME FROM ASSETS
Hshld
Mbr #
(F)
Type of Asset
(G)
C/I
(H)
Cash Value of Asset
(I)
Annual Income from Asset
TOTALS: $ $
Enter Column (H) Total Passbook Rate
If over $5000 $ X 2.00% = (J) Imputed Income $
Enter the greater of the total of column I, or J: imputed income TOTAL INCOME FROM $
July 10, 2012 Contra Costa County Board of Supervisors 987
E-2
ASSETS (K)
(L) Total Annual Household Income from all Sources [Add (E) + (K)] $
Effective Date of Move-in Income Certification:
Household Size at Move-in Certification:
HOUSEHOLD CERTIFICATION & SIGNATURES
The information on this form will be used to determine maximum income eligibility. I/we have provided for each person(s) set forth in Part II
acceptable verification of current anticipated annual income. I/we agree to notify the landlord immediately upon any member of the household moving
out of the unit or any new member moving in. I/we agree to notify the landlord immediately upon any member becoming a full time student.
Under penalties of perjury, I/we certify that the information presented in this Certification is true and accurate to the best of my/our knowledge and
belief. The undersigned further understands that providing false representations herein constitutes an act of fraud. False, misleading or incomplete
information may result in the termination of the lease agreement.
Signature (Date) Signature (Date)
Signature (Date) Signature (Date)
July 10, 2012 Contra Costa County Board of Supervisors 988
E-3
PART V. DETERMINATION OF INCOME ELIGIBILITY
RECERTIFICATION ONLY:
TOTAL ANNUAL HOUSEHOLD
INCOME FROM ALL SOURCES:
From item (L) on page 1
$
Unit Meets Income
Restriction at:
60% 50%
Current Income Limit x 140%:
$
Current Income Limit per Family Size:
$
40% 30%
%
Household Income exceeds 140%
at recertification:
Yes No
Household Income at Move-
in:
$ Household Size at Move-in:
PART VI. RENT
Tenant Paid Rent
$
Rent Assistance: $
Utility Allowance $ Other non-optional charges: $
GROSS RENT FOR UNIT:
(Tenant paid rent plus Utility Allowance &
other non-optional charges)
$
Unit Meets Rent Restriction at:
60% 50% 40% 30% %
Maximum Rent Limit for this unit:
$
PART VII. STUDENT STATUS
*Student Explanation:
ARE ALL OCCUPANTS FULL TIME STUDENTS? If yes, Enter student explanation* 1 AFDC / TANF Assistance
(also attach documentation) 2 Job Training Program yes no 3 Single Parent/Dependent Child
4 Married/Joint Return
Enter 1-5 5 Former Foster Care
PART VIII. PROGRAM TYPE
Mark the program(s) listed below (a. through e.) for which this household’s unit will be counted toward the property’s occupancy
requirements. Under each program marked, indicate the household’s income status as established by this certification/recertification.
a. Tax Credit
See Part V above.
b. HOME
Income Status
d 50% AMGI
d 60% AMGI
d 80% AMGI
OI**
c. Tax Exempt
Income Status
50% AMGI
60% AMGI
80% AMGI
OI**
d. AHDP
Income Status
50% AMGI
80% AMGI
OI**
e.
(Name of Program)
Income Status
__________
__________
OI**
** Upon recertification, household was determined over-income (OI) according to eligibility requirements of the program(s) marked above.
July 10, 2012 Contra Costa County Board of Supervisors 989
E-4
SIGNATURE OF OWNER/REPRESENTATIVE
Based on the representations herein and upon the proof and documentation required to be submitted, the individual(s) named in Part II
of this Tenant Income Certification is/are eligible under the provisions of Section 42 of the Internal Revenue Code, as amended, and the
Land Use Restriction Agreement (if applicable), to live in a unit in this Project.
SIGNATURE OF OWNER/REPRESENTATIVE DATE
July 10, 2012 Contra Costa County Board of Supervisors 990
E-5
INSTRUCTIONS FOR COMPLETING
TENANT INCOME CERTIFICATION
This form is to be completed by the owner or an authorized representative.
Part I - Project Data
Check the appropriate box for Initial Certification (move-in), Recertification (annual recertification), or Other. If Other, designate the
purpose of the recertification (i.e., a unit transfer, a change in household composition, or other state-required recertification).
*Move-in Date Enter the date the tenant has or will take occupancy of the unit. (YYYY-MM-DD)
*Effective Date Enter the effective date of the certification. For move-in, this should be the move-in
date. For annual recertification, this effective date should be no later than one year
from the effective date of the previous (re)certification. (YYYY-MM-DD)
Property Name Enter the name of the development.
County Enter the county (or equivalent) in which the building is located.
BIN # Enter the Building Identification Number (BIN) assigned to the building (from IRS
Form 8609).
Address Enter the address of the building.
Unit Number Enter the unit number.
# Bedrooms
*Vacant Unit
Enter the number of bedrooms in the unit.
Check if unit was vacant on December 31 of requesting year.
Part II - Household Composition
List all occupants of the unit. State each household member’s relationship to the head of household by using one of the following
coded definitions:
H - Head of Household S - Spouse
A - Adult co-tenant O - Other family member
C - Child F - Foster child(ren)/adult(s)
L - Live-in caretaker N - None of the above
Enter the date of birth, student status, and last four digits of social security number or alien registration number for each occupant.
If tenant does not have a Social Security Number (SSN) or alien registration number, please enter the numerical birth month and
last two digits of birth year (e.g. birthday January 1, 1970, enter “0170”). If tenant has no SSN number or date of birth, please enter
the last 4 digits of the BIN.
If there are more than 7 occupants, use an additional sheet of paper to list the remaining household members and attach it to the
certification.
July 10, 2012 Contra Costa County Board of Supervisors 991
E-6
Part III - Annual Income
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income, including acceptable forms of
verification.
From the third party verification forms obtained from each income source, enter the gross amount anticipated to be received for the
twelve months from the effective date of the (re)certification. Complete a separate line for each income-earning member. List each
respective household member number from Part II. Include anticipated income only if documentation exists verifying pending
employment. If any adult states zero-income, please note “zero” in the columns of Part III.
Column (A) Enter the annual amount of wages, salaries, tips, commissions, bonuses, and other income from
employment; distributed profits and/or net income from a business.
Column (B) Enter the annual amount of Social Security, Supplemental Security Income, pensions, military
retirement, etc.
Column (C) Enter the annual amount of income received from public assistance (i.e., TANF, general assistance,
disability, etc.).
Column (D) Enter the annual amount of alimony, child support, unemployment benefits, or any other income
regularly received by the household.
Row (E) Add the totals from columns (A) through (D), above. Enter this amount.
Part IV - Income from Assets
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income from assets, including acceptable forms
of verification.
From the third party verification forms obtained from each asset source, list the gross amount anticipated to be received during the
twelve months from the effective date of the certification. List the respective household member number from Part II and complete a
separate line for each member.
Column (F) List the type of asset (i.e., checking account, savings account, etc.)
Column (G) Enter C (for current, if the family currently owns or holds the asset), or I (for imputed, if the family
has disposed of the asset for less than fair market value within two years of the effective date of
(re)certification).
Column (H) Enter the cash value of the respective asset.
Column (I) Enter the anticipated annual income from the asset (i.e., savings account balance multiplied by the
annual interest rate).
TOTALS Add the total of Column (H) and Column (I), respectively.
If the total in Column (H) is greater than $5,000, you must do an imputed calculation of asset income. Enter the Total Cash Value,
multiply by 2% and enter the amount in (J), Imputed Income.
Row (K)
Row (L)
*Effective Date of
Income
Certification
Enter the greater of the total in Column (I) or (J)
Total Annual Household Income From all Sources Add (E) and (K) and enter the total
Enter the effective date of the income certification corresponding to the total annual
household income entered in Box L. If annual income certification is not required, this may
be different from the effective date listed in Part I.
Enter the number of tenants corresponding to the total annual household income entered in
July 10, 2012 Contra Costa County Board of Supervisors 992
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*Household Size
at
Certification
Box L. If annual income certification is not required, this may be different from the number
of tenants listed in Part II.
July 10, 2012 Contra Costa County Board of Supervisors 993
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HOUSEHOLD CERTIFICATION AND SIGNATURES
After all verifications of income and/or assets have been received and calculated, each household member age 18 or older must sign
and date the Tenant Income Certification. For move-in, it is recommended that the Tenant Income Certification be signed no earlier
than 5 days prior to the effective date of the certification.
Part V – Determination of Income Eligibility
Total Annual Household Income
from all Sources
Enter the number from item (L).
Current Income Limit per Family
Size
Enter the Current Move-in Income Limit for the household size.
Household income at move-in
Household size at move-in
Current Income Limit x 140%
For recertifications, only. Enter the household income from the move-in certification.
On the adjacent line, enter the number of household members from the move-in
certification.
For recertifications only. Multiply the Current Maximum Move-in Income Limit by
140% and enter the total. 140% is based on the Federal Set-Aside of 20/50 or 40/60,
as elected by the owner for the property, not deeper targeting elections of 30%,
40%, 45%, 50%, etc. Below, indicate whether the household income exceeds that
total. If the Gross Annual Income at recertification is greater than
140% of the current income limit, then the available unit rule must be followed.
*Units Meets Income Restriction at Check the appropriate box for the income restriction that the household meets
according to what is required by the set-aside(s) for the project.
Part VI - Rent
Tenant Paid Rent Enter the amount the tenant pays toward rent (not including rent assistance
payments such as Section 8).
Rent Assistance Enter the amount of rent assistance, if any.
Utility Allowance Enter the utility allowance. If the owner pays all utilities, enter zero.
Other non-optional charges Enter the amount of non-optional charges, such as mandatory garage rent, storage
lockers, charges for services provided by the development, etc.
Gross Rent for Unit Enter the total of Tenant Paid Rent plus Utility Allowance and other non-optional
charges.
Maximum Rent Limit for this unit Enter the maximum allowable gross rent for the unit.
Unit Meets Rent Restriction at Check the appropriate rent restriction that the unit meets according to what is
required by the set-aside(s) for the project.
Part VII - Student Status
If all household members are full time* students, check “yes”. If at least one household member is not a full time student, check “no”.
If “yes” is checked, the appropriate exemption must be listed in the box to the right. If none of the exemptions apply, the household is
ineligible to rent the unit.
Full time is determined by the school the student attends.
July 10, 2012 Contra Costa County Board of Supervisors 994
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Part VIII – Program Type
Mark the program(s) for which this household’s unit will be counted toward the property’s occupancy requirements. Under each
program marked, indicate the household’s income status as established by this certification/recertification. If the property does not
participate in the HOME, Tax-Exempt Bond, Affordable Housing Disposition, or other housing program, leave those sections blank.
Tax Credit See Part V above.
HOME If the property participates in the HOME program and the unit this household will occupy will count towards the
HOME program set-asides, mark the appropriate box indicting the household’s designation.
Tax Exempt If the property participates in the Tax Exempt Bond program; mark the appropriate box indicating the household’s
designation.
AHDP If the property participates in the Affordable Housing Disposition Program (AHDP), and this household’s unit will
count towards the set-aside requirements, mark the appropriate box indicting the household’s designation.
Other If the property participates in any other affordable housing program, complete the information as appropriate.
SIGNATURE OF OWNER/REPRESENTATIVE
It is the responsibility of the owner or the owner’s representative to sign and date this document immediately following execution by
the resident(s).
The responsibility of documenting and determining eligibility (including completing and signing the Tenant Income Certification form)
and ensuring such documentation is kept in the tenant file is extremely important and should be conducted by someone well trained in
tax credit compliance.
These instructions should not be considered a complete guide on tax credit compliance. The responsibility for compliance with federal program
regulations lies with the owner of the building(s) for which the credit is allowable.
PART IX. SUPPLEMENTAL INFORMATION
Tenant Demographic Profile Complete for each member of the household, including minors, for move-in. Use
codes listed on supplemental form for Race, Ethnicity, and Disability Status.
Resident/Applicant Initials All tenants who wish not to furnish supplemental information should initial this
section. Parent/guardian may complete and initial for minor child(ren).
* Please note areas with asterisks are new or have been modified. Please ensure to note the changes or formats now being requested.
July 10, 2012 Contra Costa County Board of Supervisors 995
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TENANT INCOME CERTIFICATION QUESTIONNAIRE
Name: Telephone Number:
_______________________________________________________ ( )
Initial Certification BIN #
Re-certification
Other Unit #
INCOME INFORMATION
Yes No MONTHLY GROSS INCOME
I am self employed. (List nature of self employment) (use net income from business)
$
I have a job and receive wages, salary, overtime pay, commissions, fees, tips, bonuses,
and/or other compensation: List the businesses and/or companies that pay you:
Name of Employer
1)
2)
3)
$
$
$
I receive cash contributions of gifts including rent or utility payments, on an ongoing
basis from persons not living with me.
$
I receive unemployment benefits. $
I receive Veteran’s Administration, GI Bill, or National Guard/Military
benefits/income.
$
I receive periodic social security payments. $
The household receives unearned income from family members age 17 or under
(example: Social Security, Trust Fund disbursements, etc.).
$
I receive Supplemental Security Income (SSI). $
I receive disability or death benefits other than Social Security.
$
I receive Public Assistance Income (examples: TANF, AFDC) $
I am entitled to receive child support payments.
I am currently receiving child support payments.
If yes, from how many persons do you receive support? ________
I am currently making efforts to collect child support owed to me. List efforts being
made to collect child support:
$
$
I receive alimony/spousal support payments $
I receive periodic payments from trusts, annuities, inheritance, retirement funds or
pensions, insurance policies, or lottery winnings.
If yes, list sources:
1)_____________________________________
2)_____________________________________
$
$
I receive income from real or personal property. (use net earned income)
$
July 10, 2012 Contra Costa County Board of Supervisors 996
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Student financial aid (public or private, not including student loans)
Subtract cost of tuition from Aid received
$
Asset information
YES NO INTEREST RATE CASH VALUE
I have a checking account(s).
If yes, list bank(s)
1)
2)
%
%
$
$
I have a savings account(s)
If yes, list bank(s)
1)
2)
%
%
$
$
I have a revocable trust(s)
If yes, list bank(s)
1)
%
$
I own real estate.
If yes, provide description:
$
I own stocks, bonds, or Treasury Bills
If yes, list sources/bank names
1)
2)
3)
%
%
%
$
$
$
I have Certificates of Deposit (CD) or Money Market Account(s).
If yes, list sources/bank names
1)
2)
3)
%
%
%
$
$
$
I have an IRA/Lump Sum Pension/Keogh Account/401K.
If yes, list bank(s)
1)
2)
%
%
$
$
I have a whole life insurance policy.
If yes, how many policies
$
I have cash on hand.
$
I have disposed of assets (i.e. gave away money/assets) for less
than the fair market value in the past 2 years.
If yes, list items and date disposed:
1)
2)
$
$
July 10, 2012 Contra Costa County Board of Supervisors 997
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July 10, 2012 Contra Costa County Board of Supervisors 998
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STUDENT STATUS
YES NO
Does the household consist of all persons who are full-time students (Examples: College/University, trade school,
etc.)?
Does the household consist of all persons who have been a full-time student in the previous 5 months?
Does your household anticipate becoming an all full-time student household in the next 12 months?
If you answered yes to any of the previous three questions are you:
x Receiving assistance under Title IV of the Social Security Act (AFDC/TANF/Cal Works - not SSA/SSI)
x Enrolled in a job training program receiving assistance through the Job Training Participation Act (JTPA) or
other similar program
x Married and filing (or are entitled to file) a joint tax return
x Single parent with a dependant child or children and neither you nor your child(ren) are dependent of
another individual
x Previously enrolled in the Foster Care program (age 18-24)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION PRESENTED ON THIS FORM IS TRUE AND ACCURATE TO THE BEST OF MY/OUR
KNOWLEDGE. THE UNDERSIGNED FURTHER UNDERSTANDS THAT PROVIDING FALSE REPRESENTATIONS HEREIN CONSTITUTES AN ACT OF
FRAUD. FALSE, MISLEADING OR INCOMPLETE INFORMATION WILL RESULT IN THE DENIAL OF APPLICATION OR TERMINATION OF THE LEASE
AGREEMENT.
PRINTED NAME OF APPLICANT/TENANT SIGNATURE OF APPLICANT/TENANT DATE
WITNESSED BY (SIGNATURE OF OWNER/REPRESENTATIVE) DATE
July 10, 2012 Contra Costa County Board of Supervisors 999
F-1
EXHIBIT F
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
LAFAYETTE SENIOR APARTMENTS
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 the above-listed multifamily rental housing development (the “Project”), does
hereby certify that:
A. During the preceding twelve-months (i) the 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 Low Income Tenants (minimum of 40%).
B. Set forth below is certain information regarding occupancy of the Project as of the
date hereof.
1. Total Units: __________
2. Total Units Occupied: __________
3. Total Units Held Vacant and Available for Rent
to Low Income Tenants __________
4. Total Low Income Units Occupied: __________
5. % of Low Income Units to Total Units % __________%
(equals the Total of Lines 3 and 4, divided by the
lesser of Line 1 or Line 2)
C. The units occupied by Low Income Tenants are of similar size and quality to other
units and are dispersed throughout the Project.
D. Select appropriate certification: [No unremedied default has occurred under the
Regulatory Agreement, the Note, Loan Agreement or the Mortgage.] [A default has occurred
under the ____________. The nature of the default and the measures being taken to remedy such
default are as follows: _______________.]
E. The representations set forth herein are true and correct to the best of the
undersigned’s knowledge and belief.
July 10, 2012 Contra Costa County Board of Supervisors 1000
F-2
Capitalized terms used in this Certificate and not otherwise defined herein have the
meanings given to such terms in the Regulatory Agreement and Declaration of Restrictive
Covenants, dated as of August 1, 2012, between the Issuer and Lafayette Senior, L.P., a
California limited partnership.
Date: LAFAYETTE SENIOR L.P., a California limited
partnership
By: Eden Investments, Inc., a California nonprofit
public benefit corporation,
its general partner
By:
Signature
Printed Name
Title
July 10, 2012 Contra Costa County Board of Supervisors 1001
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July 10, 2012 Contra Costa County Board of Supervisors 1002