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MINUTES - 10131998 - C59
Rev. TO. BOARD OF SUPERVISORS FROM: Dennis M. Barry, AICP Community Development Director DATE: October 13, 1998 SUBJECT: Bond Sale Resolution - Coggins Square Apartments: Pleasant Hill BART Station Area SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ADOPT Resolution authorizing the sale of up to $10,000,000 multi-family mortgage revenue bonds to finance the development of the Coggins Square Apartments, Pleasant Hili BART Station Area. FISCAL IMPf None. The bonds are solely secured by revenues pledged by the owner and the project. The County's administrative costs during the issuance process and during the term of the Regulatory Agreement are reimbursed. BAQKGROUNDIRE8SQNS FOR RECOMMENDATIONS On January 28, 1998 the Board of Supervisors adopted an Inducement Resolution conditionally providing for the issuance of multifamily mortgage revenue bonds to finance the development of the Goggins Square Apartments at the Pleasant Hill BART Station Area (Area 45). This 86-unit project is located at the corner of Las Juntas Way and Coggins Drive (Attachment A). CONTINUED ON ATTACHMENT: CLX YES SIGNATURE: ,X RECOMMENDATION OF COMME D TION OF A NCY COMMITTEE APPROVE OTHER t SIGNATURE(S). &k&-kL-41 ACTION OF XSE44M ON October -13 , 1998- APPROVED AS RECOMMENDED X OTHER TOARb IT I8 BY THE BOARD ORDERED that the above recommendation is APPROVED and VOTE OF SUPERVISORS Resolution No. 98/50-2 is ADOPTED. I HEREBY CERTIFY THAT THIS IS A x UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT. ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Jim Kennedy 335-12551 prig. Community Development ATTESTED October 13, 1998 cc: County Administrator PHIL BATCHELOR, CLERK OF County Counsel THE BOARD OF SUPERVISORS Redevelopment Agency AN=CUN ADMIuLTRATOR Via Community Development BRIDGE Housing Corp. BY , DEPUTY Wells Fargo Bank Goldfarb & Lipman Litten Financial Quint &Thimmig X/de-d/data/wp6/98 I 0/bos 10 13 ..................... .................. ................— .......... .............— ....................... .................. ..................... d. The County received the necessary authority to issue private activity bonds from the California Debt Limit Allocation Committee on July 22, 1998. The necessary commitments to proceed with the financing are in place. The bonds to be issued will finance the development of the Coggins Square Apartments, and will provide the permanent financing for the project. The bonds will be secured by a pledge of rents, reserve accounts, and guarantees of the project owner. Because the bonds will not carry a credit enhancement, they will be subject to the County's guidelines for the issuance of unrated bonds. These guidelines require that the financing be structured so that only sophisticated investors who have done extensive due diligence and are capable of assessing the risks inherent in the investment are able to purchase the bonds. The financing structure will require bond denominations that are not less than one million dollars ($1,000,000). Purchasers will be required to execute a "Sophisticated Investor' letter indicating that they have undertaken due diligence and accept any risks associated with the bonds and the project being financed. The bonds are being purchased by Wells Fargo Bank, the lender for the project. In 1996 the Redevelopment Agency entered into a Disposition and Development Agreement with BRIDGE Housing Corporation, the Martin Group, and Holliday Development for the construction of a 140 unit residential complex on Area 4 in the Pleasant Hill BART Station Area. Area 4 is owned by the Redevelopment Agency. The project is to consist of 86 units of affordable rental housing - the BRIDGE portion - and 54 units of market rate townhouses. The preferred method for financing the BRIDGE portion of the development is to use a variety of public and private financing sources anchored by use of the federal Low Income Housing Tax Credits (9%). This source proved to be unavailable. Securement of the 9% Tax Credits has proven to be problematic, as demand far exceeds supply. The alternative Plan of Finance that has been developed utilizes the issuance of tax exempt multi-family mortgage revenue bonds by the County. Such bonds automatically include an allocation of Tax Credits, albeit at a reduced level of 4% (rather than 9%). Other sources include County HOME and CDBG funds, federal Home Loan Bank funds, developer equity, development Agency land write-down, a private bank loan, and an annual revenue pledge of Redevelopment Agency housing set-aside of $100,000/year for 24 years. All of the additional sources of funds have been committed. The recommended resolution authorizes the sale of bonds, which is the final piece in the Plan of Finance. The actions authorized are set forth in Attachment B. JK/de-d/data/wp6/9810/bos1013 ...................... .............. ................................... .......... .......................... .................. ..................... ........................... ATTACHMT A .,.:.AVAIL,t L.E DEVELOPMENT SI'D'ES Seurrt',NCHO A4OM$ArdlifCCU and Akye,Alohaddcs,+a. dalc Mr. COGGINS DR. © ( CHINS C SQUARE SITE all ;, w F E as i'—t.�� � �FF •� -tfi�,+y} r��� fix, s � • i !:f! 4� ,y, }};; "`i`� dry �.7 eR�+• . e •, F t 1 it F ?.:•�•?�,,,'t; � � fi�,�F;.r'F�'r��:�.'�%.�,...[ j i vrr ' LAS JUNTAS WAY Cj Cj Cj t 1 +I �::kJ' FF: •s FF' �'°?'3F� t 's 11 11 S A � t tr s (y .' ..._ +t I� +, {vt�F w�4F.'�. .kF ! •'�''�S+S�i„*55��'¢��. i+ +1 tq fi. F' }FF f j:%a'; ,,•P' �y' y §.�+F}. . TREAT BLVD. 14 tr•{i Q Denotes 11 1+ �.3'jrJ'F fifiyv n " t'F yY . I r + R Numbers Avolloble /1 for } Development • tl f a s`�FY�:� 7 / 1 Planning Analysis & Development T-3 ATTACHMENT B SUMMARY OF BOND SALE RESOLUTION COGGINS SQUARE MULTI-FAMILY MORTGAGE REVENUE BONDS 1. Authorize the issuance of bonds in an amount not to exceed $10,000,000; 2. Approves form of Indenture of Trust between the County and a trustee bank to be designated as Holder and Agent for the bonds; 3. Approves form of Loan Agreement between the County, Wells Fargo Bank National Association, Coggins Square Associates, a California Limited Partnership (the "Developer" whose members are BRIDGE Housing Corporation and the California Equity Fund, the tax credit investor), and the Trustee, and U.S. Bank National Association; 4. Approves Regulatory Agreement and Declaration of Restrictive Covenants between the County, the Trustee, and the Developer; 5. Approves Subordination Agreement relating to the subordination by the County and the Redevelopment Agency of its secondary financing to the multifamily bond loan and the Regulatory Agreement related thereto; 6. Approves Quint and Thimmig as bond counsel; 7. Approves Litten Financial as financial advisor; 8. Such other actions as are necessary to complete the financing. Wde-drdata/wp6/9810/boo 1013 .......... ..::... ... ......... .. ::5.:::::::::::.W::::::::::::..' ::::i:. RESOLUTION NO. 9$1502 A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA.COSTA AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF COUNTY OF CONTRA COSTA MULTIFAMILY HOUSING REVENUE BONDS(COGGINS SQUARE APARTMENTS) 1998 SERIES D,ISSUE I AND II,AUTHORIZING THE'EXECUTION AND DELIVERY OF AN INDENTURE OF TRUST, A LOAN AGREEMENT AND A REGULATORY AGREEMENT,AND AUTHORIZING THE EXECUTION AND DELIVERY OF AND APPROVING OTHER RELATED DOCUMENTS AND APPROVING OTHER RELATED ACTIONS IN CONNECTION THEREWITH WHEREAS, the County of Contra Costa (the "County„) is authorized pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act") to issue revenue bonds to provide funds to finance multifamily rental housing facilities; and WHEREAS, Coggins Square Associates, a California Limited Partnership (the "Developer") has requested that the County issue and sell revenue bonds (the "Bonds") to assist in the financing of the acquisition,construction and equipping of an 86 unit multifamily rental housing facility located in the County and to be known as Coggins Square Apartments (the "Project"); and WHEREAS, the Deputy Director-Redevelopment of the Community Development Department of the County(the"Deputy Director-Redevelopment")has held'a public hearing on the proposed issuance of the Bonds, as required under the provisions of the Internal Revenue Code applicable to tax-exempt bonds,following published notice of such hearing;and WHEREAS, there have been prepared various documents with respect to the issuance of the Bonds,copies of which are on file with the Deputy Director-Redevelopment,and this Board of Supervisors now desires to approve the issuance of the Bonds and the execution and delivery of such documents by the County;and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in connection with the issuance of the Bonds as contemplated by this Resolution and the documents referred to herein exist,have happened and have been performed in due time, form and manner as required by the laws of the State of California,including the Act. NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of Contra Costa, as follows. 1. The County hereby finds and declares that the above recitals are true and correct. 2. Pursuant to the Act and the Indenture(hereinafter defined),revenue bonds of the County designated as"County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I" and "County of Contra Costa Multifamily .Rental Housing Revenue Bonds(Coggins Square Apartments) 1998 Series D,Issue II" (collectively,the "Bonds"),in an aggregate principal amount not to exceed$10,000,000, are hereby authorized to be issued. The Bonds shall be executed by the manual or facsimile signature of the Chair of the Board of Supervisors (the "Chair"), the facsimile of the seal of the County shall be reproduced thereon and attested by the manual or facsimile signature of the County Administrator and Clerk of the Board of Supervisors (the "County Administrator"), in the farm set forth in and otherwise in accordance with the Indenture. 3. The indenture of trust relating to the Bonds(the"Indenture")by and between the County and a trustee to be designated by the Deputy Director-Redevelopment of the County, which such officer is hereby authorized to so designate (the"Trustee"),in the form on file with the Clerk of the Board, is hereby approved. Any one of the Chair, the Vice-Chair of the Board of Supervisors, the County Administrator, the Director of Community Development and the Deputy Director-Redevelopment of the Community Development Department of the County (collectively, the "Designated Officers") is hereby authorized and directed, for and in the name and on behalf of the County, to execute and deliver the Indenture, and the County Administrator is hereby authorized and directed, for and in the name and on behalf of the County, to attest the Indenture in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Indenture upon consultation with the Deputy Director-Redevelopment of the Community Development Department of the County and Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 9 hereof, provided that no additions or changes shall authorize an aggregate principal amount of Bands in excess of the amount set forth in Section 2 above, or an interest rate on any maturity of the Bonds in excess of 6.501/6), the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Indenture by the County. The date, maturity dates, interest rate or rates, privileges, manner of execution, place of payment, terms of redemption and other terms of the Bonds shall be as provided in the Indenture as finally executed. 4. The loan agreement relating to the Bonds (the "Loan Agreement") among the County, Wells Fargo Bank, National Association, as Bondowner Representative, and the Developer,in the form on file with the Clerk of the Board,is hereby approved. Any one of the Designated Officers is hereby authorized and directed to execute and deliver the Loan Agreement in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Loan Agreement upon consultation with the Deputy Director-Redevelopment of the Community Development Department of the County and Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 9 hereof), the approval of such changes to be conclusively evidenced by the execution and delivery of the Loan Agreement by the County. 5. The regulatory agreement and declaration of restrictive covenants relating to the Bonds (the "Regulatory Agreement") among the County, the Trustee and the Developer, in the form on file with the Clerk of the Board, is hereby approved. Any one of the Designated Officers is hereby authorized and directed, for and in the name and on behalf of the County,to execute and deliver the Regulatory Agreement in said form,together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Regulatory Agreement upon consultation with the Deputy Director-Redevelopment of the Community Development Department of the County and Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 9 hereof),the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Regulatory Agreement by the County. 6. The subordination agreement relating to the subordination.by the County and the Contra Costa County Redevelopment Agency (the "Agency") of certain'loans, and related deeds of trust and regulatory agreements with respect to the Project to the loan and related liens under the Loan Agreement and the Regulatory Agreement (the "Subordination Agreement")by the County and the Agency for the benefit of the Trustee and the Bondowners, in the form on file with the Clerk of the Board,is hereby approved. Any one of the Designated 2 Officers is hereby authorized and directed, .for and in the name and on behalf of the County, to execute and deliver the Subordination Agreement in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Subordination Agreement upon consultation with the Deputy Director-Redevelopment of the Community Development Department of the County and Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 9 hereof),the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Subordination Agreement by the County. 7. The Bonds, when executed, shall be delivered to the Trustee for authentication. The Trustee is hereby requested and directed to authenticate the Bonds by executing the Trustee's certificate of authentication and registration appearing thereon, and to deliver the Bonds, when duly executed and authenticated, to the purchaser thereofin accordance with written instructions executed on behalf of the County by any one of the Designated Officers of the County, which instructions said officer is hereby authorized and directed, for and in the name and behalf of the County, to execute and deliver to the Trustee. Such instructions shall provide for the delivery of the Bonds to the purchaser thereof, upon payment of the purchase price therefor. 8. The law firm of Quint&Thimmig LLP is hereby designated'as Bond Counsel to the County for the Bonds. The fees and expenses of such firm for matters related to the Bonds shall be payable solely from the proceeds of the Bonds or contributions by the Developer. 9. All actions heretofore taken by the officers and agents of the County with respect to the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the proper officers of the County, including the Designated Officers, are hereby authorized and directed, for and in the name and on behalf of the County, to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this Resolution,including but not limited to those certificates, agreements and other documents described in the indenture, the Loan Agreement,the Regulatory Agreement and any other documents herein approved and any certificates, agreements or documents as may be necessary to evidence credit support or additional security for the Bonds. 3 14. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED this jjLh day of October, 1998 by the following vete: AYES: Supervisors Uilkema, Gerber, DeSaulnier, Canciamilla and Rogers NOES: None ABSTAINING: None ABSENT: None Chair X ATTEST: Phil Batchelor County Administrator and Clerk of the Board of Supervisors By: 21 Deputy Clerk 03007.02:J4038 9/30/98 Quint Be Thimmig LLP 9/27/98 10/8/98 INDENTURE OF TRUST between the COUNTY OF CONTRA COSTA, as County and BNY WESTERN TRUST COMPANY. as Trustee Dated as of: October 1, 1998 Relating to $5,793,000 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue I and $3,852,053 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue II 03007.04:J4036 - � TABLE OF CONTENTS GRANTINGCLAUSES.......................................................................................................... ......2 GRANTING CLAUSE FIRST................................................................................. ...... .............. 2 GRANTING CLAUSE SECOND....................................................................................................2 GRANTING CLAUSE THIRD..................................... .................................................... ........... ARTICLE l DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS 1.1 Def6nitions....................................'.....'........ ..........'..............................................3 12 Rules of Interpretation....................................................................................................I4 ARTICLE THE BONDS 2.1 Authorized Face Amount;Determination of Outstanding Principal Amount and FormofBonds...................................................................... .........................................15 2.2 Issuance of Bonds............................................................................................................15 2.3 Execution.......................................................................................................................l7 2.4 Authentication................................................................................................................l7 2.5 [wndjdoom Precedent to the Delivery ofBonds.................................................................17 2.6 [Resezved]................................................................................................................ .....l8 27 Mutilated,Lost or Destroyed Bonds.................................................................................1A 2.8 [Reyezved]................................................................................................... ..................18 2.9 '--~------.—.—.--.---------------.--1& 2.I0 [Remerved]......................................................................................................................18 2.11 Registration, Transfer and Exchange of Registered Bonds.................................................10 212 Nonpresentment of Bonds..................... .........................................................................19 213 Interest Rights Preserved----.--.-------------------'----..2O 2.14 Destruction o6Bonds................................................................... ........................ --....2O 2.15 Restrictions on Transfer................................................................................................... ARTICLE REDEMPTION OF BONDS BEFORE MATURITY ' 3.1 Redemption........................................ ............................ .............................................21 3.2 Notice of Redemption ozPurchase...................................................................................25 3.3 Cancellation...................................................................................................................25 3.4 Method of Redemption urPurchase.................................................................................25 ARTICLE GENERAI. COVENANTS 4.1 Payment ofPrbncipa4 Premium and Interest....................................................................26 4.2 PorfbrmmnCe of Covenants..................................................... .................. ..... ........ .......26 4.3 Instruments of Further Amsucauce ............ .......... — ........ .............. — ....... — ....... —Z7 4.4 .............................. — .... ................................................................... ........Z7 4.5 Books and Records........................................ ...................................................... .........27 4.6 Bondholders' Access to Bond Register ---._—r—.—_._—.--.---_------..Z7 47 —.------~----.—..28 4.8 .---.----_-----.28 4.9` No --.-----------------..—.--_-----.-28 4.10. Limitation of Expenditure of Proceeds..............................................................................28 i 4.11. Limitation omIssuance Costs........................... .............. .................................................28 4.12. FederalGuarantee .............................. ...................................................... '28 4.13. Prohibited Facilities............................................................... .............. .........................28 4.14. Use Covenant --- ................................................................. ...................................28 4.15 Immunities and Limitations of Responsibility o6County...................................................29 ARTICLE 5 FUNDS AND ACCOUNTS 5.1 Trust Funds Pledged and Assigned Lnthe Trustee.............................. —'.......................29 5.2Project .............................. ...................................................................................30 5.3 Revenue Fund....... ..................................................................... .................................31 5.4 Bond Fund........................................................................................ ............................32 5.5 Purchase or Redemption of Bonds at Request ofBorrower.............................................. .32 56 Deposit of Funds With Paying Agent.................................................................... .........32 57 Rebate Fund..................................................................................................................33 5.8 ------..------------------..34 5.9 Application of the Real Estate Tax and Insurance Fund................................................. ..36 5.10 The Repair and Replacement Fund.................................................................................96 E11 Costs c6Issuance Fund....................................................................................................37 5.I2 Interest Earned ooFunds ....................................................................... ......................37 5.13 Final Balances...................................................................... .........................................37 ARTICLE INVESTMENTS 61 Investments by Trustee...................................................................................................37 6.2 Computation ofBalances LnFunds and Accounts............ .................................................38 ARTICLE DISCHARGE OFLIEN 7.1 Payment of Bds;Sa6s6sdoo,Defeaaarueaod[imcharReuyBoodsandQbD8adno toBondholders........................................................................................^......................38 7.2 Cancellation ofSurrendered Bonds..................................................................................39 7.3 Payment of Bonds --------.---.----.—.---.---.---.--4O 7.4 Application of Deposited Money—..................................................................................40 7.5 Survival ofCertain Provisions.........................................................................................4O ARTICLE DEFAULT PROVISIONS AND REMEDIES 8.1 Events ofDefault............................................................................................................4O 8.2 Acceleration............................................................................ ......................................40 8.3 Remedies,........................................................................................... ..........................4U 8.4 Direction of Proceedings by Bondowner Representative...................................................41 8.5 Waiver Extension m[ Bx�ooiom Law s..~---------.—.—.----.--------.4] 86 Priority of Payment and Application of Moneys, .......... ...... ................ ............ — ....41 8.7 Remedies Vested bzTrustee......... ...................... ........................... ............ — ............43 8.0 Rights and Remedies of Holders.............................. ..................................... ................43 8.0 Termination of D ............... ..........-- ....................................................... ....44 8.10 Waiver oyuoEvent ofDefault............................................... .........................................44 8.I1 Limitations........................................ ............................................................................44 ' � ARTICLE THE TRUSTEE 9.1 Acceptance of the Trustee................................................................................... ............44 92 Trustee's Fees, Expaoaes.............................................'.........................'...47 9.3 Notice tnHolders c6Default.........................................................................................—47 9.4 Intervention bvTrustee..................................................................................................47 0.5 Successor Trustee.............................................................. .............................................47 9.6 Re --- .................................................................................... 9'7 Removal of Trustee.........................................................................................................48 9.8 ..48 9.9 Acceptance by Successor Trustees .----------.-----.—'48 9.10 Right of Trustee To ------------------40 9.11 Trustee Protected in Be -----'—'—.---_-------..40 9.12 Successor Trustee as Custodian of Funds and Paying Agent........ ................................. .48 9.13 Co-trustee......................... .............................................................................................49 9.14 ---^------.-50 9\15 ........................................................51 9.16 Successor Paying Agent or Bond Registrar.......................................................................5I 9.17 Confirmation of the Trustee.............................................................................................51 ARTICLE 10 SUPPLEMENTAL INDENTURES 10.1 Supplemental Indentures Not Requiring Consent of Bondholders.....................................52 102 Supplemental Indentures Requiring Consent ofBondholders...........................................52 I0.3 Opinion cdBond Counsel............ ...................................................................................5S ARTICLE 11 AMENDMENTS TO LOAN DOCUMENTS 11.1 Amendments Not Requiring Bondholder Consent—..'....................................................5B 11.2 Aoueodzoeotm De irbnBondholder Consent..................................................................54 I1.3 Opinion of Bond Couoeel................................................................................................55 11.4 Rights oiTrustee............................................... ............................................................5S ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 Consent n{Holders.........................................................................................................5g 12.2 Rights Under Indenture..................................................................................................5S 12.3 Severability............................................................................................................ .......S5 12.4 Notices............................................................................................ .............. ...............55 12.5 ----.---------^.--.------_------.S6 12.6 Counterparts---..----------.--.--.--.—.—..----.--------'56 12J' Limited Obligations............................................... ........................................................56 12.8 Complete Agreement... ...............--- .......... ........................----............. ...........58 12.9 Governing Law............. — ........ — ............................ .......... —........._—........... ....58 EXHIBIT A-1 FORM OF REQUISITION CERTIFICATE-PROJECTlUNDJ PROCEEDS EXHIBIT A-2 FORM OF REQUISITION CERTIFICATE'PBX]T2CT FlJN8] '_-__—'''' EXHIBIT FORM OF REQUISITION CERTIFICATE -MORTGAGE RECOVERY FUND EXHIBIT C-1 FORM[FISSUE IBOND 8XBlB[[C-2 FORM OFISSUE DBOND EXHIBIT FORM OF PURCHASER'S LETTER ......... ......... ......_.. ......... ......... ......... ......... ...__.._. ......__. ._...... .._..._.. ............. ......... ..__._...._........... ......................_. .......... . .......... ....._... .......... INDENTURE OF TRUST THIS INDENTURE OF TRUST (the "Indenture") dated as of October 1, 1998, is by and between the COUNTY OF CONTRA COSTA, a political subdivision and public body corporate and politic of the State of California (the "County"), and BNYWESTERN TRUST COMPANY, a banking corporation duly organized and existing under the laws of the State of California and authorized to accept and execute trusts of the character herein set out, as trustee (the "Trustee"). WITNESSETH : WHEREAS, the County is authorized pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act"), to issue bonds to provide funds to be loaned by the County to finance the acquisition and construction of multifamily rental housing to provide housing within the territorial jurisdiction of the County;and WHEREAS, Coggins Square Associates, a California Limited Partnership (the "Borrower"), has requested that the County issue bonds and lend the proceeds thereof to the Borrower to enable the Borrower to acquire and construct a multifamily housing project to be known as "Coggins Square Apartments" (the "Project") and to be located in the unincorporated area of the Pleasant Hill BART Station in the County of Contra Costa; and WHEREAS, the County deems it desirable and in keeping with its purposes to issue its County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I (the "Issue I Bonds") and its County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue II (the "Issue II Bonds" and, collectively with the Issue I Bonds, the "Bonds"), for the purpose of making a loan (the "Loan") to the Borrower to finance, in part, the acquisition and construction of the Project; and WHEREAS,under the terms of a Loan Agreement of even date herewith, the County has agreed to make the Loan, and the Borrower has agreed to the repayment of the sums borrowed pursuant thereto'and has executed the Note, the Mortgage and the other Loan Documents with respect to the Project to secure, among other things, the payments due under the Loan Agreement;and WHEREAS, terms not otherwise defined in these recitals or the granting clauses hereof shall have the meanings as hereinafter defined;and WHEREAS, all things necessary to make the Bonds, when authenticated by the Trustee and issued as provided in this Indenture, valid, binding and legal limited obligations of the County according to their tenor and effect and to constitute this Indenture'a valid contract for. the security of the Bonds, have been done and performed; and the creation, execution and delivery of this Indenture, and the creation,execution and issuance of the Bonds, subject to the terms hereof,have in all respects been duly authorized. 1 ......... ......... ......... ......... ......... .......................... ...... ......... ......... ......... ......... .._...... ........_. ......... ._......_. ......... ....._.................._._...._... ........ ......... ....... _ _ NOW THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS INDENTURE WITNESSETH: GRANTING CLAUSES The County, in consideration of the premises and the acceptance by the Trustee of the trusts hereby created and of the purchase and acceptance of the Bonds by the Holders thereof, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds according to their,tenor and effect and the performance and observance by the County of all the covenants expressed or implied herein and in the Bonds, does hereby grant, mortgage, grant a security interest in, assign, transfer in trust, and pledge to the Trustee, and to its successors in trust,and to them and their assigns forever,the following: GRANTING CLAUSE FIRST All rights, title, interest and privileges of the County in, to and under (i) the Loan Agreement and the Note, including,but not limited to,all sums which the County is entitled to receive from the Borrower pursuant to the Loan Agreement and in particular the Project Revenues, except for the Reserved Rights, (ii) the Funds,except for amounts held in the County Account and the Rebate Fund, and (iii) all other sums (except for amounts in the County Account, and except for rebatable arbitrage whether or not deposited in the Rebate Fund)which are required to be deposited in the Funds in accordance with Article 5 hereof; GRANTING CLAUSE SECOND All the County's rights, title, interest and privileges in all property mortgaged, pledged and assigned under the Mortgage and the Loan Documents to secure the Bonds (except for the Reserved Rights), and any and all other property of every name and nature which may from time to time hereafter by delivery or by writing of any kind be subjected to the lien hereof by the County or by anyone on its behalf or with its written consent, and the Trustee is hereby authorized to receive any and all such property at any and all times and to hold and apply the same as additional security hereunder subject to the terms hereof; and GRANTING CLAUSE THIRD The earnings derived from the investment of any of the foregoing sums (except amounts on deposit in the Rebate Fund) as provided herein TO HAVE AND TO HOLD all the same (herein called the "Trust Estate") with all privileges and appurtenances hereby granted and assigned, or agreed or intended so to be, to the Trustee and its successors in trust and to them and their assigns; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth, first for the equal and proportionate benefit, security and protection of all Holders from time to time of the Bonds issued under and secured by this Indenture, without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the others except as otherwise provided herein, second for the benefit of the Trustee to secure the payment of Ordinary Fees and Expenses, and third for the benefit of the Trustee to secure the payment of Extraordinary Fees and Expenses, all as herein provided, and for the uses and purposes and upon the terms, agreements and conditions set forth herein; PROVIDED, HOWEVER, that if the County, its successors or assigns, shall well and truly pay, or cause to be paid, or provide fully for payment as herein provided of the principal of the Bonds and the interest due or to become due thereon (together with premium, if any), at 2 the time and in the manner set forth in the Bonds according to the true intent and meaning thereof, and shall make the payments into the Bond Fund as required under Article 5 or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee sums sufficient for payment of the entire amount due or to become due thereon as herein provided, and shall well and truly keep,perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay to the Trustee all sures of money due or to become due to it in accordance ,with the terms and provisions hereof and of the Loan Documents,then this Indenture and the rights hereby granted shall cease, terminate and be void except as otherwise provided herein. THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered and all payments, revenues, income and funds hereby pledged and assigned, are subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed. ARTICLE 1 DEFINITIONS,EXHIBITS AND GENERAL PROVISIONS 1.1 Definitions. In this Indenture the following terms shallhave the following meanings unless'the context hereof clearly requires otherwise,and any other terms defined in the Loan Documents shall have the same meanings when used herein as assigned to them in the Loan Documents unless the context or use thereof indicates another or different meaning or intent: "Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California as amended. "Account" means an account established with the Trustee pursuant to this Indenture. "Act of Bankruptcy" means any of the following events: (A) The Borrower or the County shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of the Borrower or the County of all or a substantial part of the property of the Borrower or the County, (ii) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect), or (iii) file a petition with respect to itself seeking to take advantage of any other law relating to bankruptcy,insolvency, reorganization,winding- up or composition or adjustment of debts; (B) A proceeding or case shall be commenced without the application or consent of the Borrower or the County, as the case may be, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding-up or the composition or adjustment of debts of the Borrower or the County, (ii) the appointment of a trustee,receiver,custodian,liquidator or the like of the Borrower'or the County or of all or any substantial part of the assets of the Borrower or the County, or (iii) similar relief in respect of the Borrower or the County under any law relating to bankruptcy, insolvency,reorganization, winding-up or composition or adjustment of debts and such proceeding or case shall not be dismissed within 60 days of such filing;or (C) For purposes of this Indenture and the Loan Agreement, an Act of Bankruptcy shall be deemed dismissed only if(i) the petition is dismissed by order of a court of competent jurisdiction and no further rights exist from such order, and (ii) the 3 ........ ........................................................................................................................................................... .........._............_. ...._........ ............_......... .....__.... ...._........ _......_................... _...._..... ......_....._...._..... Borrower or the County, as the case may be, notifies the Trustee that such a dismissal has occurred. „Additional Charges" means the payments required by Section 3.4 of the Loan Agreement. "Arbitrage Consultant" means any accountant, law firm or consultant, unrelated to the Borrower,experienced in the calculation of arbitrage rebate selected by the Trustee. "Architect" means David Baker Associates, or another architect for the Project approved by the Bondowner Representative. "Architectural Contract" means that certain contract executed between Architect and the Borrower and dated as of . as that contract may be amended from time to time with the consent of Bondowner Representative. "Bank" means Wells Fargo Bank, National Association, or its successors and assigns. "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978, as amended,or any similar or succeeding federal bankruptcy law. "Basic Payments" means the payments so defined in Section 3.3(a) of the Loan Agreement. "Bond Counsel" means Quint & Thimmig LLP, or any firm of nationally recognized bond counsel experienced in tax exempt private activity bond financing selected by the County. "Bond Documents" means this Indenture, the Loan Agreement, the Regulatory Agreement and the Tax Certificate. "Bond Fund" means the fund by that name established pursuant to Section 5.1 of this Indenture. "Bond Proceeds Account" means the account by that name established pursuant to Section 5.1 of this Indenture. "Bond Register" means the register maintained by the Bond Registrar pursuant to Section 2.11. "Bond Registrar" means the Trustee and any successor thereto appointed,qualified and then acting as such under the provisions of this Indenture. "Bond Year" means the period of twelve consecutive months commencing on October 2 and ending on October 1 in any year in which Bonds are or will be Outstanding,provided that the first Bond Year shall commence on the Closing Date and end on October 1, 1999. "Bondholder" or"Holder" means the person in whose name a Bond is registered in the Bond Register. "Bondowner Representative" means (i) the Bank or any affiliate of Wells Fargo & Co., so long as the Bank or such affiliate owns any of the Bonds; (ii) if neither the Bank nor any affiliates of Wells Fargo & Co. owns any of the Bonds, then (a) if and so long as one Bondholder holds a majority in principal amount of all Outstanding Bonds, such Bondholder or a person appointed to be the Bondowner's Representative by such Bondholder; and (b) if and 4 so long as no one Bondholder owns a majority in principal amount of all Outstanding Bonds, the Bondholder who holds the greatest principal amount of all Outstanding'Bonds. "Bonds" 'means, collectively, the $5,793,000 aggregate initial principal amount of the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments), 1998 Series D, Issue I, and the $3,652,053 aggregate initial principal amount of the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments), 1998 Series D,Issue II,issued pursuant to this Indenture. "Borrower" means Coggins Square Associates, a California Limited Partnership, authorized to do business in the State, its successors and assigns, and any surviving, resulting or transferee entity which may assume its obligations under the Loan Documents. "Business Day" means any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions in the city where the principal corporate trust office of the Trustee and the Bond Registrar are located are authorized by law or executive order to close or any day on which the New York Stock Exchange is closed. Unless specifically referenced in this Indenture as a Business Day, all references to "days" shall be to calendar days. "Closing Date" means the date of issuance and delivery of the Bonds. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, and, with respect to a specific section thereof, such reference shall be deemed to include (a) the regulations promulgated by the United States Department of the Treasury under such section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code, and (d) the regulations promulgated under the provisions described in(b)and (c). "Completion Date" means September 30, 2000, or such other date as the Bondowner Representative approves. "Condemnation"or the phrase "eminent domain"as used herein shall include the taking or requisition by Governmental Authority or by a person, firm or corporation acting under governmental authority and a conveyance made under threat of such taking or requisition, and "Condemnation Award" shall mean payment for property condemned or conveyed under threat of Condemnation. "Construction Contract" means that certain construction contract executed between.the Contractor and Borrower and dated as of ' as that contract may be amended from time to time with the consent of Bondowner Representative. "Contractor"means Segue Construction Inc. "Contribution Account" means the account by the name established';pursuant to Section 5.1 of this Indenture. "Conversion Date" means October 1, 2000, but only on the condition that the outstanding principal amount of the Bonds shall have been reduced to the Post-Conversion Amount and the conditions contained in Section 3.1(d) hereof have been satisfied or waived by the Bondowner Representative; if such events have not occurred as of October 1, 2000, the Conversion Date shall not occur. "Costs of Issuance" means, with respect to any Bonds, all expenses incurred in connection with the authorization, sale, issuance and delivery of the Bonds,including,without 5 limitation, counsel fees (including Bond Counsel, Trustee's Counsel and County's counsel, as well as any other specialized counsel fees incurred in connection with the issuance of the Bonds), County's costs, financial advisory fees and accountant fees related to issuance of the Bonds, initial Trustee, Registrar and Paying Agent fees, title insurance fees, survey fees and recording and filing fees, including any applicable documentary stamp taxes, intangible tax and the mortgage registration tax. "Costs of Issuance Fund" means the fund by that name established pursuant to Section 5.1 of this Indenture. "County," means the County of Contra Costa, and its successors and assigns. "County Account" means the Account by that name created pursuant to Section 5.1(2) hereof. "Current Expenses" means all operating expenses of the Borrower which are not otherwise specifically described in Section 5.9(2) hereof, including administrative expenses and property management fees with respect to the Project incurred in its ordinary operations. "Debt Service Coverage Ratio" shall mean the ratio of (A) the Net Operating Income of the Project for the last calendar month preceding the month in which the Conversion Date occurs to (B) the amount of the monthly payment of principal and interest an the portion of the Loan evidenced by the Issue I Note which will be due and payable each month after the Conversion Date, as projected by Bondowner Representative. "Debt Service on the Bonds" means the interest amounts, principal amounts and premium, if any, payable by the Borrower pursuant to Section 3.3 of the Loan Agreement sufficient to pay all principal of, premium,if any,and interest as and when due on the Bonds. "Default Rate" means the interest rate equal to five percent (5%) in excess of the Prime Rate; provided, however, the interest rate shall not exceed the maximum rate permitted by applicable law. "Determination of Taxability„ means a final judgment or order of a court of original jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effect that the interest on any of the Bonds (other than interest on any Bond for a period during which such Bond is held by a "substantial user" of any facility financed with the proceeds of the Bonds or a "related person," as such terms are used in Section 147(a) of the Code, and except as a result of any minimum tax,preference tax or other similar tax) is not excludable for federal income purposes from the gross income of the recipients thereof subject to federal income taxes. With respect to the foregoing, a judgment or order or a court or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired. "Discharge Date" means the date on which all Outstanding Bonds are discharged under Article 7 hereof. "Environmental Law" shall have the meaning ascribed to that term in Section 9.1(14) hereof. "Event of Default" means any of the events set forth in Section 8.1 hereof. 6 "Extraordinary Fees and Expenses" means all fees and expenses charged or incurred by the Trustee under this Indenture,other than Ordinary Fees and Expenses. "Extraordinary Revenues" means Proceeds, excluding use and business interruption insurance proceeds and rental loss insurance proceeds. "Facility" means the buildings and improvements located on the Project Premises as they may now or from time to time exist. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Obligation-State Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local'Agency Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. "Final Payment Date" means the Maturity Date, the Discharge Date or the Purchase Date on which all Outstanding Bonds either mature, are to be redeemed, are discharged under Article 7,or are purchased under Section 5.5,whichever date is earliest. "Funds" means, collectively, the Bond Fund, the Project Fund, the Rebate Fund, the Revenue Fund,the Mortgage Recovery Fund,the Servicing Fund and the Costs of Issuance Fund. "General Partner" means BRIDGE Housing Corp., a California non profit public benefit corporation, and any successor thereto. "Governmental Authority" means (i) any government, municipality or political subdivision thereof, (ii) any governmental or quasi-governmental agency, authority, board, bureau, commission, department,instrumentality or public body, (iii) any court, administrative tribunal or public utility,or(iv)any central bank or comparable authority. "Guarantor"means BRIDGE Housing Corporation, a California nonprofit public benefit corporation. "Hazardous Materials" has the meaning set forth for that term in Section 9.1 of the Loan Agreement. "Indenture" means this Indenture of Trust by and between the County and the Trustee, as the same may from time to time be amended or supplemented as herein provided. "Independent Accountant" means a certified public accountant or firm of certified public accountants registered and qualified to practice as such under the laws of the State, and not employed by the County or the Borrower, except to perform independent audits of the 7 books and records of either or both of them or other similar periodic reviews and to perform other independent services. "Independent Counsel" means any attorney acceptable to the Trustee and the County, duly admitted to practice law before the highest court of any state or of the District of Columbia, who may be counsel to the County but who may not be an officer or an employee of the County. "Investor Limited Partner" means a partner added to the Borrower as a limited partner, who agrees to make the capital contributions referenced in Section 8.2(p) of the Loan Agreement. "Issue I Bonds" means the Bonds due October 1,2028,in the aggregate principal amount of $5,793,000. "Issue II Bonds" means the Bonds due October 1, 2007, in the aggregate principal amount of $3,65.2,053. "Issue I Note"means the Note in the principal amount of the Issue I Bonds. "Issue II Note"means the Note in the principal amount of the Issue II Bonds. "Loan" means the loan of proceeds of the Bonds by the County to the Borrower described in Section 3.1 of the Loan Agreement. "'Loan Agreement"means the Loan Agreement of even date herewith by and among the County, the Bondowner Representative and the Borrower,as the same may from time to time be amended or supplemented as provided therein and in this Indenture. "Loan Documents"' means the Loan Agreement, the Regulatory Agreement, the Note in the original aggregate face amount of $10,000,000, the Mortgage, the Security Agreement, assignments by Borrower to Trustee of the Construction Contract, Architectural Contract and Plans and Specifications and consents by the contracting parties to such assignments. "Maturity Date" means October 1, 2028, for the Issue I Bonds and October 1, 2007, for the Issue II Bonds. "Mortgage" means the Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith, from the Borrower as trustor to American Securities Company as trustee and the Trustee as beneficiary with respect to the Project, as the same may from time to time be replaced, amended or supplemented as provided therein and in this Indenture. "Mortgaged Property" means the properties, real, personal or mixed, described in the Granting Clauses of the Mortgage,as they may at any time exist. "Mortgagee" means, collectively, the Trustee and any co-trustee or successor trustee appointed, qualified and acting as such under this Indenture, as beneficiaries under the Mortgage. "Mortgage Recovery Fund" means the fund by that name established pursuant to Section 5.1 of this Indenture. "Net Proceeds"shall have the meaning set forth in the Mortgage. 8 "Net Operating Income" shall mean the actual gross rental revenues received by Borrower from the Project for the last calendar month preceding the month in which the Conversion Date occurs, minus the sum of (i) all operating expenses actually incurred by Borrower in connection with the Project during the same period,other than amounts paid from replacement, capital improvements and operating reserves required pursuant to the Bond Documents, plus (ii) all amounts funded into such replacement, capital improvement and operating reserves during the same period. "Note" means, collectively, the Issue I Note and the Issue II Note,each by the Borrower to the order of the County. "Ordinary Fees and Expenses" means the fees and expenses charged or incurred by the Trustee in the fulfillment of its obligations hereunder which are reimbursable to the Trustee from the Trust Estate in an aggregate annual amount equal to 0.027% of the then outstanding principal amount of the Bonds. "Other Related Documents" means the documents listed as such in Exhibit B to the Loan Agreement. "Outstanding Bonds" or "Bonds Outstanding" means, as of the date of determination, all Bonds theretofore issued and delivered under this Indenture except: (A) Bonds theretofore canceled by the Trustee or Paying Agent or delivered to the Trustee or Paying Agent for cancellation; (B) Bonds for which payment or redemption moneys or securities (as provided in Article 7) shall have been theretofore deposited with the Trustee or Paying Agent in trust for the Holders of such Bonds; provided, however, that if such Bonds are to be redeemed, notice of such redemption shall have been duly given pursuant to this Indenture or irrevocable action shall have been taken to call such Bonds for redemption at a stated redemption date; and (C) Bonds in exchange for or in lieu of which other Bonds shall have been issued and delivered pursuant to Section 2.7 or other provisions of this Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Bonds have given any request,demand,authorization,direction, notice,consent or waiver hereunder,Bonds owned by the County or the Borrower shall be disregarded and deemed not to be Outstanding Bonds (unless the Borrower owns all the Bonds otherwise outstanding, in which case they shall be deemed 'outstanding), except that in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. "Partnership Agreement" means that certain Limited Partnership Agreement of the Borrower made as of February 11, 1998, by the General Partner and Coggins Square, Inc., a California nonprofit public benefit corporation, as initial limited partner,as it may be amended from time to time, in accordance with the Security Agreement. "Paying Agent" means the Bond Registrar, the Trustee or any other entity designated pursuant to this Indenture as the agent of the County and Trustee, and their successors and assigns,to receive and disburse the principal of and premium,if any,and interest on the Bonds. 9 "Payment bate" means, prior to the Conversion Date, the first day of each month commencing November 1, 1998, and, after the Conversion Date, April 1 and October 1 of each year,commencing on April 1,2001. "Permitted Encumbrances" means the Permitted Encumbrances,as such term is defined in the Loan Agreement. "Permitted Investments"means. (a) To the extent permitted by applicable law, any of the following investments, provided that none of such investments (other than any investment under clause (10)) shall have a term in excess of one year; (1) certificates or interest-bearing notes or obligations of the United States,or those for which the full faith and credit of the United States are pledged for the payment of principal and interest; (2) investments in any of the following obligations,provided such obligations are backed by the full faith and credit of the United States. (a) direct obligations or fully guaranteed certificates of beneficial interest of the Export-Import Bank of the United States, (b) debentures of the Federal Housing Administration, (c) guaranteed mortgage- backed bonds of the Government National Mortgage Association, (d) certificates of beneficial interest of the Farmers Home Administration, (e) obligations of the Federal Financing Bank, (f) project notes and local authority bonds of the United States Department of Housing and Urban Development, or (g) obligations of the Private Export Funding Corp.; (3) investments in (a) senior obligations of the Federal Home Loan Bank System, (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (c) mortgage-backed securities and senior debt obligations (excluding stripped mortgage securities that are valued greater than par on the portion of the unpaid principal) of the Federal National Mortgage Association, or (d) senior debt obligations of the Student Loan Marketing Association; (4) repurchase agreements with primary dealers and/or banks rated "A" or better by Standard &z Poor's Ratings Service or Moody's Investor Service collateralized with the obligations described in (i) or (ii) above held by a third-party custodian, at levels set forth in Section(b)below; (5) money market mutual funds registered with the Securities Exchange Commission conforming to Rule 2a-7 of the Investment Company Act of 1940, that invest primarily in direct obligations issued by the U.S. Treasury and repurchase agreements backed by those obligations, including funds for which the Trustee or an affiliate of the Trustee acts as an advisor, and rated in the highest category by Standard &Poor's Ratings Service or Moody's Investor Service; (6) certificates of deposit of any bank (including the Trustee and its affiliates), trust company or savings and loan association whose short-term obligations are rated "A-1" or better by Standard & Poor's Ratings Service or Moody's Investor Service provided that such certificates of deposit are fully secured by the obligations describedin(i) or(ii) above, at the levels set forth in Section(b)below, the Trustee has a perfected'first security interest in the obligations securing the certificates and the Trustee holds (or shall have the option to appoint a bank, trust company or savings and loan association as its agent to hold)the obligations securing the certificates; 10 (7) certificates of deposit of any bank (including the Trustee and its affiliates), trust company or savings and loan association which certificates are fully insured by the Federal Deposit Insurance Corporation; (8) commercial paper rated "A-1+" or better by Standard & Poor's Ratings Service or Moody's Investor Service; (9) obligations of, or obligations fully guaranteed by, any state of the United States of America or any political subdivision thereof which obligations are rated by Standard & Poor's Datings Service or Moody's Investor Service in the highest rating categories(without regard to any refinement or gradation of rating category by numerical modifier or otherwise and without regard to credit enhancement)assigned by such rating agency to obligations of that nature; (10) an investment agreement between.the Trustee and and (11) any other investment which is approved in writing by the Bondowner Representative. (b) Collateral Percentage Levels of United States Government Securities for Repurchase Agreements and Bank Certificates of Deposit: REMAIINING MATURITY Frequency 1 year 5 years 10 years 15 years 30 years of Valuation or less or less or less or less or less Daily 102 105 106 107 113 Meekly 103 110 11l 113118 Monthly 106 116 119 123 130 Quarterly 106 118 128 130 135 Further Requirements: (i) on each valuation date, the market value of the collateral shall be in an amount equal to the indicated collateral percentage of the obligation (including unpaid accrued interest) that is being secured; (ii) in the event the collateral level is below its required collateral percentage on a valuation date, such percentage shall be restored within the following restoration periods: one Business Day for daily valuations, two Business'Days for weekly valuations and one month for monthly and quarterly valuations (the use of different restoration periods affects the requisite collateral percentage); (iii) the Trustee is hereby required to terminate the repurchase agreement upon a failure to maintain the requisite collateral percentage after the restoration period and, if not paid by the counterparty in federal funds against transfer of the repurchase agreement,to liquidate the collateral;and (iv) collateral for all repurchase agreements must be held by third parties. 11 _... ......... ......... ......... .................111.1 ........ ._............ ......... ......... ......... ......... ......... ......... ......._. ......... ........_ ......... ......... ................... . ................................................................. "Plans and Specifications" means the plans and specifications for the Improvements approved in writing by Bondowner Representative, together with such amendments thereto as are made from time to time in accordance with Section 5.11 of the Loan Agreement. "Post-Conversion Amount" means the lowest of (i) ninety percent (90%) of the appraised fair market value of the Project, as most recently determined by the Bondowner Representative on the basis of an appraisal conducted by an MAI appraiser approved by, and using appraisal methods approved by, the Bondowner Representative, giving effect to the occupancy and rent restrictions imposed on the Project by the Regulatory Agreement but not giving effect to the availability to the Project of low income housing tax credits or favorable financing, or (ii) an amount which will result in a Debt Service Coverage Ratio of 1.15:1.00 or (iii) $ . The Bondowner Representative shall inform the Trustee of the Post-Conversion Amount in a timely manner. "Prime Rate" means a base rate of interest which Wells Fargo Bank, National Association establishes from time to time and which serves as the basis upon which the effective rates of interest are calculated for those loans making reference thereto. Any change in an effective rate due to a change in the Prime Rate shall become effective on the day each such change is announced within Wells Fargo Bank, National Association. In the event that Wells Fargo Bank,National Association no longer establishes such a rate, the Prime Rate shall be the prime commercial lending rate announced from time to time by a money center bank designated by the Bondowner Representative by notice to the Trustee. "Proceeds" means the proceeds of any insurance recovery or condemnation award (or payment in lieu of condemnation) less all amounts reimbursed to the Trustee and the County for expenses incurred in connection therewith. "Project" means the Project Premises,the Facility and any and all Project Equipment. "Project Debt Service" means all scheduled debt service on debt incurred by the Borrower with respect to the Project, including all interest, fees and charges and scheduled principal payments. "Project Engineer" means an engineer for the Project and any successor thereto retained by the Bondowner Representative. "Project Equipment" means, with respect to the Project, the property described as "Personal Property"in the Mortgage. "Project Fund" means the Fund by that name established pursuant to Section 5.1 of this Indenture. "Project Insurance Premiums" means the aggregate amount of the annual (or other periodic installments)premiums payable for the policies of insurance required to be maintained pursuant to Section 5.5 of the Loan Agreement. "Project Premises" means, with respect to the Project, the property and interests in real property described in the Mortgage as the"Real Property." "Project Revenues" means all gross revenues and receipts derived by the Borrower from the operation of the Project, including tenant rentals and all other moneys as may be paid to or on behalf of the Borrower or to which the Borrower may be entitled with respect to the Project, including earnings on the foregoing but excluding securities deposits and Extraordinary Revenues. 12 _1.111 ......... ....._... ......._.......11.11 _..... ........._... .._...... ......... ......... ......... ......... ........1 .._111._. _. _... _....... ......... ......... ......... ....__... .................................................................................... "Purchase Date" means the date on which any Outstanding Bonds are purchased pursuant to Section 5.5. "Purchaser's Letter" means a letter in the form of the letter found in Exhibit D hereto and executed by the Bondowner Representative and any subsequent transferees of the Bonds pursuant to Section 2.15 hereof. "Qualified Project Period" shall have the meaning set forth in the Regulatory Agreement. "Rebate Fund" means the fund by that name established pursuant to Section 5.1 of this Indenture into which the Trustee is to deposit rebatable arbitrage paid by the Borrower pursuant to Section 6.27 of the Loan Agreement. "Record Hate" means with respect to any Payment Date, (a) the fifteenth day of the month (whether or not a Business Day) next preceding such Payment Date or (b) if there is a default in payment of interest due on such Payment Date, a special Record Date for the payment of such defaulted interest established by notice mailed by the Trustee on behalf of the County; notice of such special Record Date shall be mailed not less than 15 days preceding such special Record Date, to the Holder at the close of business on the fifth Business Day preceding the date of mailing. "Record Date Holders" means the person in whose name a Bond is registered in the Bond Register on the Record Date, irrespective of any transfer or exchange of such Bond subsequent to such Record Date and prior to a Payment Date. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, of even date herewith, among the Borrower, the County and the Trustee, together with any amendments and supplements thereto permitted thereby. "Regulatory Costs"are,collectively,future,supplemental,emergency or other changes in reserve percentages under Federal Reserve Board Regulation D, assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority and related in any manner to a Variable Rate. "Representative" means any officer of the County or the Borrower, or any other person at any time designated to act on behalf of the County or the Borrower, as the case may be, as evidenced by a written certificate furnished to such other party and the Trustee containing the specimen signature of such person and signed for the County by its Chair or Vice Chair of the Board of Supervisors, the County Administrator, the Director of Community* Development, or the Deputy Director - Redevelopment of the Community Development Department of the County, or for the Borrower by a of the General Partner. "Requirements" shall have the meaning set forth in Section 5.17(x) of the Loan Agreement. "Reserved Rights" means those certain rights of the County under the Loan Agreement to indemnification and to payment or reimbursement of fees and expenses of the County, including the County's annual fee as well as its fees and expenses and the fees and expenses of counsel, assumption fees and indemnity payments, its right to give and receive notices and to enforce notice and reporting requirements and restrictions on transfer of ownership, its right to inspect and audit the books, records and premises of the Borrower and of the Project, its right to collect attorney's fees and related expenses, its right to specifically enforce the Borrower's covenant to comply with applicable federal tax law and State law (including the Act and the 13 11 ......... ......... ......_.. ......... ..... .... _ .. ....................._... ......... ......... ......... ......... ......... ......... .. . _.._.. ......... ......... ......... ......... ......_. ................................................................................... rules and regulations of the County), its right to receive notices under the Loan Agreement and its rights to give or withhold consent to amendments,changes, modifications and alterations to the Loan Agreement. "Responsible Agent" means any person duly authorized and designated by the Trustee, the Bond Registrar and the Paying Agent to act on its behalf in carrying out the applicable duties and powers of such entity as set forth in this Indenture; any action required by the Trustee, the Bond Registrar and the Paying Agent under this Indenture may be taken by a Responsible Agent. "Servicing Fund" means the Fund created by Section 5.9. "State" means the State of California. "Tax Certificate" means the Certificate as to Arbitrage dated the Closing Date. "Tax Credits" means low income housing tax credits allocated to the Project pursuant to Section 42 of the Code. "Term Loan Phase" means the period of time during which the Note remains unpaid following the Conversion Date. "Title Company" means First American Title Insurance Company, its successors and assigns. "Title Policy" means the title insurance policy required pursuant to Section 4.1(d) of the Loan Agreement. "Treasury" means the United States Department of the Treasury, and any successor to its functions. "Treasury Regulations" means all proposed, temporary or final federal income tax regulations issued or amended with respect to the Code by the Treasury or Internal Revenue Service. "Trustee" means BNY Western Trust Company and any co-trustee or successor trustee appointed,qualified and then acting as such under the provisions of this Indenture. "Trust Estate" means the Trust Estate as defined and set forth in the Granting Clauses hereof. "Unpaid Bonds"means all Outstanding Bonds and any other Bonds which have neither matured nor been redeemed or canceled under this Indenture. 1.2 tRWes of Intw ation. (1) This Indenture shall be governed by and construed in accordance with the laws and judicial decisions of the State of California, except as they may be preempted by Federal rules,regulations and laws applicable to the County. (2) The words"herein" and "hereof" and "hereunder" and words of similar import, without reference to any particular section or subdivision, refer to this Indenture as a whole rather than to any particular section or subdivision of this Indenture. 14 (3) References in this Indenture to any particular article,section or subdivision hereof are to the designated article,section or subdivision of this Indenture as originally executed. l(4) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and all computations provided for herein shall be made in accordance with generally accepted accounting principles consistently applied and applied on the same basis as in prior years. (5) The Table of Contents and titles of articles and sections herein are for convenience of reference only and are not a part of this Indenture and shall not deny or limit the provisions hereof. (6) Unless the context hereof clearly requires otherwise,the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa. (7) Articles, sections, subsections and clauses mentioned by number only are those so numbered which are contained in this Indenture. (8) Any opinion of counsel called for herein shall be a written opinion of such counsel. (9) Any reference to particular sections or subsections of the Code and applicable Treasury Regulations shall include any successor provisions of law or regulations, to the extent the same shall apply to the Bonds. (10) The parties hereto acknowledge that each such party, the Borrower, the Bank and their respective counsel have participated in the drafting and revision of this Indenture. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Indenture or any amendment or supplement or exhibit hereto or thereto. ARTICLE 2 THE BONDS 2.1 Authorized Face amount; Determinationof Outstandin�; Principal Amount and Form.Forof Bonds. The Bonds shall be issued in fully registered form without coupons. The Bonds, together with the certificate of authentication, the form of assignment and the registration information thereon,shall be in substantially the forms found in Exhibit C with such appropriate variations,omissions and insertions as are permitted or required by this Indenture, and in accordance with the further provisions of this Article 2. The initial aggregate principal amount of Issue I Bonds shall be$5,793,000 and the initial aggregate principal amount of Issue II Bonds shall be $3,652,053, and the principal on such Bonds shall be payable and mature as provided herein. 2.2 Issuance of Bonds. The Bonds shall be issued in two series designated the Issue I Bonds and the Issue 11 Bonds and shall. (1) be dated as of the date of original delivery of the Bonds (the "Dated Date"); ', (2) be issued and delivered as one fully registered Bond for each series without coupons, in the minimum denominations equal to the entire amount of such series;. provided, however, that upon satisfaction of the conditions set forth in Section 15 _. ......._. ......._. .11.11 .. _...........___...... ......... ......... ......... ......... ..._111.1 ....... .. ....... ......... ......... ......... ......... ......... .................................................................................................................. .................................. 2.15(b) hereof, the Bonds may be delivered in the minimum denomination of $100,000 and any integral multiples of $1 in excess of $140,000 thereof of a single maturity (provided that, if necessary in connection with a partial redemption of Bonds,one Bond of each issue may be outstanding in a principal amount less than$100,000); (3) be numbered from 1 upwards in chronological order of delivery for each series of Bonds with such number being preceded by such designation as the Trustee shall determine; (4) mature on the dates and bear interest per annum at the interest rates set forth below: Issue Maturity Date Principal Amount Interest Rate I October 1, 2028 $5,793,000 6.25% lI October 1, 2007 $3,652,053 5.50 (5) [reserved] (6) bear interest at the interest rates set forth above, calculated on the basis of a 360-day year of twelve (12) thirty (30) day months payable on each Payment Date, such interest to accrue from the Dated Date thereof, or, in the case of transfer or exchange, from the most recent Payment Date to which interest has been paid or provided for under this Indenture;if a payment of defaulted interest is to be made, the Trustee shall establish the time of such payment and shall establish the associated special Record Date therefor as provided in the definition of "RecordDate"; (7) be payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the principal corporate trust office of the Trustee or Paying Agent, except that interest on the Bonds will be payable by check mailed by the Trustee on the Payment Date to the Record Date Holders at the last addresses thereof as shown in the Bond Register on the applicable Record Date, and principal of and any premium on any Bonds shall be payable at the principal corporate trust office of the Trustee; and (8), be subject to redemption upon the terms and conditions and at the redemption prices specified in Article 3 hereof. Notwithstanding the foregoing, if the date for payment of the principal of, premium, if any, or interest on the Bonds shall be a day which is not a Business Day, there the date for such payment shall be the next succeeding day which is a Business Day, and payment on such later date shall have the same force and effect as if made on the nominal date of payment; and Notwithstanding the foregoing, any Holder of at least $1,000,000 principal amount of any Bonds (or a lesser amount of such Bands if such Bonds constitute all the Bonds at the time outstanding), upon payment by the Holder of the cost of such wire transfer as an Ordinary Fee or Expense, may file with the Trustee an instrument satisfactory to the Trustee requesting the amounts payable by the Trustee to such Holder be paid by transferring by wire transfer in immediately available funds, on the day such payment is due, the amount to be distributed to such Holder to a designated account maintained by such Holder at any bank in the United States. The Trustee shall pay all amounts payable by the Trustee hereunder to such Holder by transfer directly to said designated bank in accordance with the provisions of any such instrument, provided that if such amount represents a payment of the principal of any Bond, such Bond shall have been presented to the Trustee. All payments so made shall be valid and 16 effective to satisfy and discharge the liability upon such Bonds. Notwithstanding the foregoing, all payments of principal of and interest on the Bonds payable on the Maturity bate, the Purchase bate, any date of mandatory special redemption or the Discharge Date shall only be payable upon presentation of the Bonds at the principal corporate trust office of the Trustee. 2.3 Execution. Bonds shall be signed by, or executed with the facsimile or manual signature of, the Chair or the Vice Chair of the Board of Supervisors of the County and attested by the facsimile or manual signature of the Clerk of the Board of Supervisors of the County. In case any officer of the County whose signature or whose facsimile signature shall appear on any Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until such delivery, and also any Bond may be signed by such persons as at the actual time of the execution of such Bond shall be the proper officers to sign such Bond although at the date of such Bond such persons may not have been such officers. 2.4 Authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Indenture unless a certificate of authentication on such Bond,substantially in the form set forth in Exhibit C hereto, shall have been duly executed manually by a Responsible Agent of the Bond Registrar. Certificates of authentication on different Bands need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the County on each Bond by execution of the certificate of authentication on the Bond;and the certificate of authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Indenture. 2.5 Conditions Erecedent to the Delivery of Bonds. Upon the execution and delivery of this Indenture, the County shall execute and deliver to the Bond Registrar, and the Bond Registrar shall authenticate, the Bonds and shall deliver the Bonds to the Bondowner Representative after the Trustee has received the following: (1) original executed counterparts of the Loan Agreement and this Indenture, (2) copies of original executed counterparts of the Mortgage, the Regulatory Agreement and UCC financing statements with evidence of recording (which may be telephonic notice of recordation from the Title Company); (3) copies of original executed counterparts of all Loan Documents not specifically referred to in paragraphs (1) and (2) above, (4) a copy, duly certified by the Clerk of the Board of Supervisors of the County, of the resolution adopted and approved by the governing body of the County, authorizing, among other things, the execution and delivery of this Indenture, the Loan Agreement and the Regulatory Agreement and the issuance of the Bonds, (5) a request and authorization (which may be part of'a certificate of the County) to the Trustee on behalf of the County, signed by an County Representative, to deliver the Bands to the purchaser identified upon payment to the Trustee for the account of the County of a specified sura plus accrued interest, (6) the opinion of counsel to the Borrower in the form required by counsel to the Bondowner Representative, addressed to the County, the Trustee and the Bondowner Representative; 17 (7) the opinion of counsel to the County; (8) the opinion of Bond Counsel, addressed to the County (with a reliance letter to the Trustee), to the effect that the Bonds have been duly and validly issued and that interest on the Bonds is excludable from gross income for federal income tax purposes and exempt from State personal income taxes; (9) a commitment from the Title Company to issue the Title Policy; (10) a copy of the instruction letter delivered to and accepted by the Title Company in connection with the closing of the Project by the Borrower and consented to by the Bondowner Representative; (11) original of a Purchaser's Letter executed by, the Bondowner Representative and addressed to the Trustee and the County in the form found at Exhibit D; (12) confirmation by the Bondowner Representative of its receipt of payment of a loan fee in the amount of 2.0%of the original principal amount of the Bonds;and (13) any other documents or opinions which the Trustee, the County or Bond Counsel may reasonably require. 2.6 [Reserved]. 2.7 Mutilated, Lost or Destroyed Bands. In case any Bond issued hereunder shall become mutilated or be destroyed or lost, the County shall, if not then prohibited by law, cause to be executed, and the Bond Registrar shall authenticate and deliver, a, new Bond of like amount,Maturity Date and tenor,but bearing a number not contemporaneously outstanding,in exchange and substitution for and upon cancellation of any such mutilated Bond, or in lieu of and in substitution for any such Bond destroyed or lost, upon the Holder's paying the reasonable expenses and charges of the Bond Registrar and the County and, in the case of a Band destroyed or lost, the .Holder's filing with the Bond Registrar of evidence satisfactory to the Bond Registrar and the Trustee that such Bond was destroyed or lost, and of the Holder's ownership thereof, and furnishing the County, the Trustee and the Band Registrar with indemnity satisfactory to the Trustee. If the mutilated, destroyed or lost Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bondprior to payment. 2.8 [Reserved]. 2.9 Q3ynership of Bonds. The County, the Trustee, the Bond Registrar and Paying Agent may deem and treat the Holder of any Bond,whether or not such Bond shall be overdue, as the absolute owner of such Bond for the purpose of receiving payment thereof(subject to the provisions of Section 2.2(4) and (5) as to payment of interest) and for all other purposes whatsoever, and the County (or any agent thereof), the Trustee, the Bond' Registrar and the Paying Agent shall not be affected by any notice to the contrary. 2.10 [Reserved]. 2.11 Registration-Transfer and Exchange-of f registered Bow. (1) The Trustee shall, at the expense of the Borrower, prepare, execute and authenticate fully registered Bonds, shall cause to be kept at the principal corporate trust office 18 ......... ......... ......... .......... .............. ......... ......... ......... ......... ......... ............. ._.. _. _... ......... ......... ......... ......... ..........._.... ................................................................................ of the Bond Registrar a Bond Register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Trustee shall provide for the registration of Bonds and the registration of transfers of Bonds. The Bond Register shall contain a record of every Bond, including bond number and face amount at any time authenticated hereunder, together with the name and address of the Holder thereof, the date of authentication, the date of transfer or payment, and such other matters as are appropriate for the Bond Registerin the estimation of the Bond Registrar and the Trustee. (2) The transfer of each Bond is subject to registration by the Holder thereof only upon compliance with the conditions for registration of transfer imposed on the Holder under this subsection (2) and subsection (5) and (6) below. TRANSFER OF THE BONDS IS SUBJECT TO THE RESTRICTIONS SET FORTH IN SECTION 2.15. Upon surrender of any Bond at the principal corporate trust office of the Bond Registrar, the County shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, in the name of the designated transferee or transferees(but not registered in blank or to"bearer" or a similar designation),one or more new Bonds of any authorized denomination or denominations of a like face amount, having the same stated maturity and interest rate, as requested by the transferor. (3) At the option and sole expense of the Holder, Bonds may be exchanged for other Bonds of any authorized denomination or denominations of a like aggregate face amount and stated maturity, upon surrender of the Bonds to be exchanged at the principal corporate trust office of the Bond Registrar, and upon payment, if the County shall so require, of the taxes, if any, hereinafter referred to. Whenever any Bonds are so surrendered for exchange, the County shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, the Bonds which the Holder making the exchange is entitled to receive. (4) All Bonds delivered in exchange for or upon transfer of Bonds shall be valid limited obligations of the County, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Bonds surrendered for such exchange or transfer. (5) Registration of the transfer of a Bond may be made on the Bond Register by the Holder in person or by the Holder's attorney duly authorized in writing. Every Bond presented or surrendered for registration of transfer or exchange shall (if so required by the County or the Bond Registrar) be (i) in compliance with the provisions of Section 2.15 of this Indenture, (ii) duly endorsed or be accompanied by a written instrument or instruments of transfer, and (iii)in the forth printed on the Bond or in another form satisfactory to the Bond Registrar, duly executed and with guaranty of signature of the Holder thereof or its attorney duly authorized in writing,and shall include written instructions as to the details of the transfer of the Bond. (6) No service charge shall be made to the Holder for any registration, transfer or exchange,but the Bond Registrar and County may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, other than exchanges expressly provided in this Indenture to be made without expense or without charge to Bondholders, and any legal or unusual costs of transfers and lost Bonds. (7) Upon the purchase of any Bonds, the Bond Registrar shall not be required (a) to transfer or exchange any Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption or purchase of Bonds under this Indenture and ending, at the close of business on the day of such notice or (b) to transfer or exchange any Bond so selected for redemption or purchase in whole or in part. 2.12 Nonl2resentment of Bonds. In the event any Bond shall not be presented for payment when the principal of such Bond becomes due, if funds sufficient to pay such Bonds 19 shall have been paid to the Trustee (or the Paying Agent(if any)) for the benefit of the registered owner thereof, and shall have remained unclaimed for two (2) years after such principal has become due, such funds shall be paid to the County and all liability of the County and the Trustee to the registered owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged. The owner of such Bond shall thereafter be entitled to look only to the County for payment of such Bond, and the County shall not be liable for the payment of any interest thereon from and after the date payment was due. 2.13 Interest Rights Preserved. Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid, and to accrue,which were carried by such other Bond. 2.14 Destruction of Bonds. Whenever any Outstanding Bond shall be delivered to the Bond Registrar or the Trustee for cancellation pursuant to this Indenture, upon payment of the principal amount and interest represented thereby or for replacement pursuant to Section 2.7 or transfer pursuant to Section 2.11, such Bond shall be canceled and destroyed by the Bond Registrar or the Trustee, as the case may be, and counterparts of a certificate of cancellation evidencing such cancellation shall be furnished by the Bond Registrar,or the Trustee,as the case may be, to the County,the Bond Registrar and, if appropriate, the Trustee. 2.15 Restrictions on Transfer. (1) The Trustee shall not register any transfer or exchange of any Bonds unless such Bondholder's prospective transferee delivers to the Trustee and the County a Purchaser's Letter substantially in the form set forth in Exhibit D to this Indenture. No transfer of the Issue H Bonds may occur until all amounts in the County Account have been disbursed to the County by the Trustee, and, unless otherwise consented to by the County in writing, the Bonds may only be transferred in whole. In the event of the resignation of the Trustee pursuant to Section 9.6 of this Indenture upon notification of the Bondholder's prospective transferee, no such transfer shall occur pursuant to this Section 2.15(x) unless and until a successor Trustee is appointed as provided in Section 9.8 of this Indenture. The Trustee shall be entitled to rely, without any further inquiry, on any Purchaser's Letter delivered to it and shall be fully protected in registering any transfer or exchange of any Bonds in reliance on any such Purchaser's Letter which appears on its face to be correct and of which the Trustee has no actual knowledge otherwise. Any Bondholder desiring to effect such transfer shall agree to indemnify the County and Trustee from and against any and all loss, costs, damages, expenses, suits, judgments, actions and liabilities of whatever nature (including, without limitation, attorneys' fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from or arising out of or related to such transfer. Notwithstanding anything to the contrary set forth herein or in any Loan Document,Borrower shall have no liability for any cost or expense arising from a transfer of one or more Bonds. (2) Notwithstanding Section 2.15(a), the County, in its sole discretion, may approve the transfer of Bonds without the delivery of a Purchaser's Letter (which approval may be conditioned upon, among ether things, (i) the preparation of an official statement for such Bonds in a form satisfactory to the County, (ii) delivery to the County of an opinion of Bond Counsel to the effect that the exclusion from gross income for federal income tax purposes will not be adversely'affected thereby, (iii) delivery of credit enhancement sufficient to obtain a rating of the Bonds of at least "A" or its equivalent from Standard & Poors Ratings Services or Moody's Investors Service,and (iv)satisfaction of any continuing disclosure requirements of the Borrower under the securities laws. All costs associated with a transfer of Bonds pursuant to this Section 2.15(b)shall be borne by the Bondowner Representative. 20 ARTICLE 3 REDEMPTION OF BONDS BEFORE MATURITY 3.1 Redemption. Subject to the provisions of Sections 3.2 and 3.4, the Bonds are subject to purchase or redemption as follows: (1) Extraordinary Redemption or Purchase. (A) The Bonds are subject to mandatory redemption or purchase by the Borrower in whole or in part, on any Business Day, in the event of damage to or destruction or condemnation of the Project or any part thereof as provided in Section 5.8 hereof, the Loan Agreement and the Mortgage, at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. (B) [Reserved] (C) The Bonds are subject to mandatory redemption on October 1, 2001, from Bond Proceeds remaining on deposit in the Bond Proceeds Account of the Project Fund at a redemption price equal to the principal amount thereof plus accrued interest, unless the Trustee shall have received an opinion of Bond Counsel to the effect that a redemption on a later date will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. (D) The Issue I Bonds are subject to mandatory redemption in whole on October 1, 2000, at a price equal to the principal amount thereof plus accrued interest, unless the following conditions shall be satisfied: (i) Borrower shall have caused to be redeemed Issue I and Issue II Bonds in an amount sufficient to reduce the outstanding principal balance of the Issue I and Issue II Bonds to the Post Conversion Amount; (ii) Each unit in the Project shall have been leased at least once, and, for the immediately preceding three-month period, an average of at least 90% of the units within the Project shall have been occupied by qualified tenants who are paying rent under written leases approved by Bondowner Representative; (iii) The Facility shall have been completed substantially in accordance with the Plans and Specifications approved by Bondowner Representative, and Borrower shall have received a certificate of an architect acceptable to Bondowner Representative certifying';such completion; (iv) A final certificate of occupancy for the Facility and the Project shall have been issued by each Governmental Authority having jurisdiction over the Facility and the Project; (v) The Facility and the Project shall be free and clear of all mechanics' liens and materialmen's' liens (and the period for filing all such liens shall have expired), either by reason that no such liens have been filed or by reason that Borrower has posted all required statutory bonds sufficient to prevent attachment; (vi) No Default shall have occurred, and no event which, with the giving of notice or the passage of time, or both, would constitute an event of default shall have 21 ......... ......... ......... ............_._. ............. .._...... ......... ..._.... ......... ......... ......... ................_. _ _. _.. _.. ... ......... ......... ......... ......... ............_. .................................................................................. occurred and be continuing, under the Loan Agreement or any; of the other Loan Documents or the Bond Documents; (vii) [intentionally omitted] (viii) Borrower shall have submitted an application for Form 8609 to the California Tax Credit Allocation Committee, in form and substance satisfactory to Bondowner Representative; (ix) All equity contributions of Investor Limited Partner shall have been received by Borrower, unconditionally invested in the Project, and disbursed for payment of the Project Costs approved by Bondowner Representative (with the exception of any portion of the equity contribution to be used exclusively for the payment of any developer fee), and Bondowner Representative shall have received written evidence of such investment satisfactory to Bondowner Representative; (x) Borrower shall have provided evidence satisfactory to Bondowner Representative that Borrower has not experienced a significant deterioration in its financial capacity; and (xi) Borrower shall have provided evidence to Bondowner Representative of its continued compliance with all conditions necessary for allocation to the Project of not less than $410,757 in annual Tax Credits for ten years, subject to the credit percentage fixed for the Project. (D) The issue I Bonds shall be subject to mandatory redemption in part on October 1, 2000, in an amount sufficient to reduce the outstanding principal balance of the Issue I Bonds to the Post Conversion Amount at a price equal to such principal amount, plus accrued interest to the redemption date. (F) The Bonds shall be subject to mandatory redemption in whole at a price equal to the principal amount thereof plus accrued interest upon the occurrence of any of the following: (i) failure to pay any interest on any outstanding Bond on the due date thereof; (ii) failure to pay the principal of any Outstanding Band, on the stated maturity 'thereof, on the date fixed for redemption or purchase thereof or by acceleration,or failure to pay any redemption premium on the Bonds when due; (iii) failure to pay any other moneys required to be paid to the Trustee under the provisions of this Indenture and such default shall have continued for a period of fifteen (15) days after written notice thereof, specifying such default, shall have been given by the Trustee to the County and the Borrower,or to the County,the Borrower and the Trustee by the Holders of not less than 25% in aggregate principal amount:of the Bonds then Outstanding; (iv) if the Trustee has actual knowledge,or has been notified in writing, that a Default(as defined in the Loan Agreement or the Mortgage)has occurred; (v) the entry by a court having jurisdiction over the Borrower of(A) a decree or order for relief in respect of the Borrower in an involuntary case or proceeding under any applicable federal or State bankruptcy, insolvency, reorganization or other similar law or(B)a decree or order adjudging the Borrower bankrupt or insolvent,or approving 22 as ,properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Borrower under any applicable federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Borrower or of any substantial part of its property,or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order not stayed or dismissed and in effect for a period of more than 90 consecutive days; or (vi) the commencement by the Borrower of a voluntary case or proceeding under any applicable federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Borrower in an involuntary case or proceeding under any applicable federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or State law or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Borrower or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors,or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Borrower in furtherance of any such action. (2) Optional Redemption. (A) The Issue I Bonds are subject to: redemption at the option of the Borrower, in whole or in part on any date on and after 1, __ , at a redemption price equal to the principal amount thereof,plus accrued interest to the redemption date,plus a redemption premium as follows: Rede=tion Period Redemption Price 1, to 1, 103% 1, to 1, 102 1, to 1, 101 1, and thereafter 100 The Issue II Bonds are subject to redemption at the option of the Borrower, in whole or in part on any date on and after1, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, plus a redemption premium as follows: Redemption EcriQd Rede tion Price 1, to 1. 103% 1, to 1, 102 1, to 1, 101 1, and thereafter 100 (3) Mandatory Sinking Fund Redemption. (A) The Issue I Bonds shall be subject to mandatory sinking fund redemption, on each April 1 and October 1, commencing April 1, 2001, at a redemption price equal to the principal amount thereof,without premium,plus accrued interest to the redemption date in the years and in the principal amounts set forth below: 23 Principal Principal Date Amount Date Amount April 1, 2001 $ April 1, 2015 $ October 1, 2001 October 1, 2015 April 1, 2002 April 1, 2016 October 1, 2002 October 1,2016 April 1, 2003 April 1, 2017 October 1, 2003 October 1,2017 April 1, 2004 April 1, 2018 October 1,2004 October 1, 2018 April 1, 2005 April 1, 2019 October 1, 2005 October 1,2019 April 1, 2006 April 1, 2020 October 1, 2006 October 1,2020 April 1, 2007 April 1, 2021 October 1, 2007 October 1, 2021 April 1, 2008 April 1, 2022 October 1, 2008 October 1,2022 April 1, 2009 April 1, 2023 October 1, 2009 October 1, 2023 April 1, 2010 April 1, 2024 October 1, 2010 October 1, 2024 April 1, 2011 April 1, 2025 October 1, 2011 October 1,2025 April 1, 2012 April 1, 2026 October 1,2012 October 1,2026 April 1, 2013 April 1, 2027 October 1, 2013 October 1, 2027 April 1, 2014 April 1, 2028 October 1, 2014 October 1,2028(maturity) (B) The Issue II Bonds shall be subject to mandatory sinking fund redemption, on each April 1 and October 1, commencing April 1, 2001, at a redemption: price equal to the principal amount thereof,without premium,plus accrued interest to the redemption date in the years and in the principal amounts set forth below: Principal Principal Date Amount Date Amount April 1, 2001 $ October 1,2004 $ October 1, 2001 April 1, 2005 April 1, 2002 October 1,2005 October 1,2002 April 1, 2006 April 1, 2003 October 1,2006 October 1,2003 April 1, 2007 April 1, 2004 October 1,2007(maturity) (C) On or before the sixtieth day next preceding any date specified in the mandatory redemption schedule set forth above, the Borrower, at its option, may deliver to the Trustee written notice,which shall(i)specify a principal amount of such Bonds delivered to the Trustee therewith, and/or (ii) specify a principal amount of such Bonds previously redeemed (otherwise than pursuant to the above mandatory sinking fund redemption schedule) or purchased and canceled by the Trustee and not theretofore applied asa credit against any redemption of Bonds pursuant to the above mandatory sinking fund redemption schedule, and (iii) instruct the Trustee to apply the principal amount of such Bonds so deliveredorpreviously redeemed or purchased and canceled for credit against the principal installments to be prepaid 24 pursuant to the mandatory sinking fund redemption schedule; provided, however, that no credit shallbe applied which results in the debt service during any future Bend Year being more than $25,000 greater than the debt service in any prior Band Year. Each such Bond so delivered or previously redeemed or purchased and canceled shall be credited'by the Trustee in chronological order at 1001I6 of the principal amount thereof against the next succeeding and future principal installments to be prepaid pursuant to the mandatary sinking fund redemption schedule. (4) Purchase of Bonds in Lieu of Redemption or Acceleration. At any time that Bonds are subject to redemption or acceleration hereunder, the Borrower my direct the Trustee to purchase such Bands in lieu of their redemption or acceleration, at a purchase price equal to the applicable redemption or acceleration price, from moneys provided to the Trustee by the Borrower and deposited by the Trustee in the Bond. Fund. Such Bonds sea purchased by the Borrower shall be cancelled. 3.2 Notice of&d=m ori or ur b=. (1) To effect the redemption or purchase of the Bonds under Section 3.1, the Trustee shall promptly give notice within the time, in the manner and with the effect provided by this Section 3.2. Notice of redemption or purchase shall be mailed by first class remail not less than 10 days prior to the redemption or purchase date by the Trustee to the Paying Agent and the Holders of Bonds to be redeemed or purchased. No defect in or failure to give notice shall affect the validity of the proceedings for redemption or purchase of any Bond not affected by such defect. Such notice, which shall be prepared by the Trustee shall state the subsection under Section 3.1,pursuant to which the Bonds are being called for redemption or purchase, and unless all Outstanding Bonds are to be redeemed,each such notice shall refer to the Bonds to be redeemed by their numbers and maturities and the date on which and the place where they shall be presented for redemption or purchase. The Trustee shall rescind such notice to each Bondholder at least three Business Days before the date on which such redemption or purchase is scheduled to occur (except for redemptions under Section 3.1(3)), if funds sufficient to redeem or purchase such Bonds, including accrued interest thereon to the redemption or purchase date and any premium, shall not have been deposited to the Bond Fund. Except as specifically provided in this indenture, Bands called for redemption or purchase shall cease to bear interest from and after the specified redemption or purchase date, and the Holder of such Bonds shall have no further rights with respect to the Bonds or under this Indenture except to receive the redemption or purchase price of such Bonds. (2) Not less than 15 days prior to each redemption date, the Bond Registrar shall furnish the names and addresses of the Holders of the Bonds as of the Record Date immediately preceding such redemption date to the Trustee. 3.3 Cancellation. Subject to the provisions of Section 2.12, all Bonds which have been redeemed shall be canceled by the Trustee as provided in Section 2.14 and shall not be reissued. 3.4 Met'iSLd.Q emi2tion car Purchase. (1) The Trustee shall redeem or purchase Bonds under subsection (1) (other than clause (c) thereof) or (2) of Section 3.1 only if it has received written notice and instructions from the Bondowner Representative to so redeem or purchase at least 15 days before the redemption date, and the Trustee has been provided with immediately available funds sufficient for such purpose when added to other funds on deposit in the Bond Fund, at least three Business bays prior to the redemption or purchase date. The Trustee shall purchase Bonds under subsection(4) of Section 3.1 in accordance with the Borrower's instructions. 25 (2) The Trustee shall redeem or purchase Bonds under Section 3.1(3) and shall select Bonds for such redemption or purchase in accordance with the provisions of Section 3.4(3). (3) To effect the partial redemption or purchase of Bonds under Section 3.1, the Trustee, prior to giving notice of redemption or purchase, shall assignto each Bond then outstanding a distinctive number for each $1,000 of the principal amount of such Bond. The Trustee shall then select such Bonds for redemption or purchase as instructed by the Bondowner representative. If the Bondowner Representative fails to instruct the Trustee with regard to the selection of Bonds for redemption or purchase,the Trustee shall select first, Issue I Bonds for redemption or purchase by lot,using such method of selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as many numbers as, at $1,000 for each number, shall equal the principal amount of such Bonds to be redeemed or purchased until no Issue I Bonds are Outstanding. The Trustee shall then follow the same procedures for selecting Issue II Bonds for redemption. The Bonds to be redeemed or purchased shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of each such Bond of a denomination of more than $1,000 shall be redeemed or purchased as shall equal $1,000 for each number assigned to it and so selected. If a Bond may be redeemed or purchased only in part, it shall be surrendered to the Trustee(with, if the Trustee so,requires, a written instrument of transfer in form satisfactory to the Trustee duly executed by the Molder thereof or its attorney duly authorized in writing)and the County shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such Bland, without service charge, a new Bond or Bonds of the same series, of any authorized denomination or denominations, as requested by such Holder, having the same stated maturity and interest rate in aggregate principal amount equal to and in exchange for the unredeemed or unpurchased portion of the principal of the Bond so surrendered. (4) As soon as Bonds are called for redemption or purchase pursuant to this Article 3, sums in the Band Fund consisting of funds sufficient to effect such redemption or purchase shall be irrevocably set aside for such purpose and applied for no other purpose under this Indenture,provided that upon an Event of Default such sums shall be applied as provided in Section 8.6. ARTICLE 4 GENERAL COVENANTS 4.1 Pa=nt of Principal, Erenuum aad interest. Subject to Section 12,7, the County will duly and punctually pay the principal of, premium, if any, and interest on the Bonds in accordance with the terms of the Bonds and this Indenture. Nothing in the Bonds or in this Indenture shall be considered as assigning or pledging funds or assets of the County other than those covered by the Granting Clauses set forth herein. 4.2 Perf�mame of Co ants. (1) The County covenants that it will faithfully perform at all tunes any and all of its covenants, undertakings, stipulations and provisions contained in this Indenture, in any and every Bond executed, authenticated and delivered, hereunder and in all proceedings of its governing body pertaining thereto;that it is duly authorized under the Constitution and laws of the State, including particularly and without limitation the Act, to issue the Bonds authorized hereby, to execute this Indenture, to loan the proceeds of the Bonds to the Borrower and to assign and pledge the payments from. the Loan Agreement in the manner and to the extent herein set forth, that all action on its part for the issuance of the Bonds and the execution and delivery of this Indenture has been duly and effectively taken; and that the Bonds in the hands 26 of the Holders thereof are valid and enforceable obligations of the County according to the terms thereof. (2) The Trustee covenants that it will faithfully perform at all tunes any and all of its covenants, undertakings, stipulations and provisions contained in this Indenture, and in every Bond executed, authenticated and delivered hereunder; that it is duly organized, validly existing,in good standing and possesses all licenses and authorizations necessary to enter into this Indenture and the Mortgage;that it has full power and authority to enter into this Indenture and the Mortgage and the transactions contemplated thereby; that the Indenture and the Mortgage have been duly executed and delivered by it; that this Indenture and the Mortgage constitute legal,valid,binding and enforceable obligations of the Trustee (subject to bankruptcy, insolvency or creditor rights laws generally and principles of equity generally) without offset, defense or counterclaim, that the execution, delivery and performance of this Indenture and the Mortgage by the Trustee will not cause or constitute, including due notice or lapse of time or both, a default under or conflict with organizational documents or other agreements or otherwise materially or adversely affect performance of duties; that the execution of this Indenture and the Mortgage by the Trustee will not violate any law,regulation,order or decree of any governmental authority; that all consents, approvals, authorizations; orders or filings of or with any court or governmental agency or body, if any, required for the execution, delivery and performance of this Indenture and the Mortgage by the Trustee have been obtained or made; and that there is no pending action, suit, proceeding, arbitration or governmental investigation against it, an adverse outcome of which would materially adversely affect its performance under this Indenture and the Mortgage. 4.3 Instruments of Further Assurance. The County covenants that it has not made, done, executed or suffered, and will not make, do, execute or suffer, any act or thing whereby its interest in the Loan Agreement or any part thereof is now or at any time hereafter will be impaired, changed or encumbered in any manner whatsoever, except as may be expressly permitted herein or in the Loan Agreement or as required by law; and that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such instruments supplemental hereto and such further acts,instruments and transfers as the Trustee may reasonably require for the better assuring,transferring,pledging,assigning and confirming unto the Trustee all and singular the sums assigned and pledged hereby to the payment of the principal of,premium,if any, and interest on the Bonds. 4.4 [Reserved]. 4.5 Books and ecords. The Trustee covenants that so long as any Outstanding Bonds issued hereunder and secured by this Indenture shall be unpaid, the Trustee will keep proper books,records and accounts,in which full,true and correct entries will be made of all its financial dealings or transactions in relation to the Project and the payments derived from the Loan Agreement, this Indenture and the Mortgage. At reasonable times and under reasonable regulations established by the'Trustee,such books shall be open to the inspection of the Holders or the County, and such accountants or other agencies as the Holders or the County may from time to time designate in writing to the'Trustee. 4.6 Bandholde_r ' Access Bond Register. At reasonable times and under reasonable regulations established by the Bond Registrar, the Bond Register or a copy thereof may be inspected and copied by the County, the Trustee or the Holders (or a designated representative thereof)of 101/0 or more in principal amount of the then Outstanding Bonds,such authority of any such designated representative to be evidenced to the reasonable satisfaction of the Bond Registrar. Except as otherwise may be provided by law,the Bond Register shall not be deemed a public record and shall not be made available for inspection by the public, unless and until notice to the contrary is given to the Bond Registrar by the County. 27 4.7 Rights Undar Loan Agreement. The Loan Agreement sets forth covenants and obligations of the County and the Borrower, and reference is hereby made to the same for a detailed statement of said covenants and obligations. The County agrees to cooperate in the enforcement of all covenants and obligations of the Borrower under the Loan Agreement and agrees that the Trustee and the Bondowner Representative may enforce all rights of the County (other than its .Reserved Rights) and all obligations of the Borrower under and pursuant to the Loan Agreement in their respective names and on behalf of the Holders,:whether or not the County has undertaken to enforce such rights and obligations. 4.8 Rights Under Mortgage. (1) The County acknowledges that it is not a party to the Mortgage and that such instrument further secures payment of the Bonds, interest thereon and amounts due under certain other Lean Documents, and reference is hereby made to the same for a detailed statement of the obligations of the parties thereto. (2) Subject to the terms of this Indenture, the Mortgage and the Regulatory Agreement, until the occurrence of an Event of Default hereunder, the Borrower shall be permitted to possess, use and enjoy the Mortgaged property and to receive and use the issues and profits of the Mortgaged Property. 4.9. No Arbitrage. The County shall not take,nor permit nor suffer to be taken by the Trustee or otherwise, any action with respect to the gross proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of the issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and Regulations promulgated thereunder. 4.10. Limitation of Expenditure of Procce s. The County shall assure that not less than 97 percent of the face amount of the Bonds,plus premium(if any) paid on the purchase of the Bonds by the original purchaser thereof from the County,less original discount, are used for Qualified Project Costs and not more than 25 percent of such amount is used for land or an interest in land. 4.11. LiMitaijon on Issuance Costs. The County shall assure that no proceeds of the Bonds are used to pay for, or provide for the payment of, Costs of Issuance. For this purpose, if the fees of such original purchaser are retained as a discount on the purchase of the Bonds, such retention shall be deemed to be an expenditure of proceeds of the Bonds for said fees. 4.12. FWgral Guarantee Prohibition. The County 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 260(b)of the Code. 4.13. Prohibited lifies. No portion of the proceeds of the Bands 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 minimus amount of the functions to be performed at such office is not related to the day-to--day operations of the Project. 4.14. Use Covenant. The County shall not use or knowingly permit the use of any proceeds of Bonds or any other funds of the County, directly or indirectly, in any manner, and 28 shall not take or permit to be taken any other action or actions,which would result in any of the Bonds being treated as an obligation not described in Section 142(4) of the Code by reason of such Bond not meeting the requirements of Section 142(d) of the Code. 4.15 Immunities imitationsn ibility of County. The County shall be entitled to the advice of counsel (who, except as otherwise provided, may be counsel for any Bondholder), and the County shall be wholly protected as to action takenor omitted in good faith in reliance on such advice. The County may rely conclusively on any communication or other document furnished to it hereunder and reasonably believed by it to be genuine. The County 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 betaken 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 County 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 County shall not be required to take any remedial action(other than the giving of notice) unless indemnity in a farm acceptable to the County is furnished for any expense or liability to be incurred in connection with such remedial action, other than liability for failure to meet the standards set forth in this Section. The County 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 County 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. The Borrower has indemnified the County against certain acts and events as set forth in the Loan Agreement and the Regulatory Agreement. Such indemnities shall survive payment of the Bonds and discharge of the Indenture. ARTICLE 5 FUNDS AND ACCOUNTS 5.1 Trust E nod d and Act5i=d to the Trustee. The following Funds and Accounts are hereby created and established hereunder: (1) the Bond Fund,and within such Fund the Interest Account,the Principal Account and the Redemption Account, (2) the Project Fund, and within such Fund the Bond Proceeds Account, the County Account and the Contribution Account; (3) the Rebate Fund; (4) the Revenue Fund; (5) the Mortgage Recovery Fund; (6) the Real Estate Tax and Insurance Fund; 29 (7) the Repair and Replacement Fund; and (8) the Costs of Issuance Fund. All payments,revenues and income receivable by the County under the Loan Agreement and pledged and assigned by this Indenture to the Trustee, together with the balance of the Trust Estate, are to be paid directly to the Trustee and, subject to the provisions of Section 8.6, deposited by the Trustee in the Funds and Accounts created under this Article 5 and held in trust for the purposes set forth herein, and, except as otherwise providedherein, shall not be subject to any lien, levy, garnishment or attachment by any creditor of the County or the Borrower nor shall they be subject to any assignment or hypothecation by the Borrower. Moneys on deposit in the Funds and Accounts created under this Article 5>shall be held by the Trustee in trust, as segregated trust funds or accounts, and (except for the County Account and the Rebate Fund) pending application in accordance with the provisions of this Article 5 shall be subject to a lien and charge in favor of the Bondholders until applied as hereinafter provided. The Trustee shall not deposit into such Funds and Accounts any moneys other than as provided in this Indenture or the Loan Agreement. The Trustee shall at all times maintain accurate records of deposits into such funds and the sources and timing of such deposits. 5.2 Project Fund. (1) On the Closing Date, the Trustee shall deposit $ from Bond Proceeds into the Bond Proceeds Account and $3,000,000 from Bond Proceeds into the County Account. On the Closing'Date, upon receipt, the Trustee shall deposit $ provided by or on behalf of the Borrower into the Contribution Account. Additional amounts constituting equity investment in the Project by the Borrower may be delivered to the Trustee from time to time for deposit in the Contribution Account. (2) Upon satisfaction of the requirements of this Section 5.2 and receipt from the Borrower of a written requisition in the form of Exhibit A-1, in the case of amounts requisitioned from the Bond Proceeds Account, and in the form of Exhibit A-2, in the case of amounts requisitioned from the Contribution Account,which have not previously been paid or reimbursed and consented to in writing by the Bondowner Representative, the Trustee shall immediately disburse all amounts requested in such requisition from funds deposited in the Project Fund to the Borrower or the persons designated by the Borrower. (3) Neither the Trustee nor the County shall be responsible for the application by the Borrower of moneys disbursed to the Borrower (if any money is disbursed thereto) in accordance with this Section 5.2. (4) Unless directed to do so by the Bondowner Representative or except as otherwise provided in Section 5.2(5) below (with respect to amounts in the County Account), the Trustee shall not honor any requisition for disbursement from the Project Fund if the Trustee is aware that a Default under the Loan Agreement, any of the other Loan Documents to which the Borrower is a party (with respect to which Default the Bonds shall be subject to redemption)or an Event of Default under this Indenture shall have occurred and be continuing. All requisitions, other statements, orders, certifications and approvals received by the Trustee, as required by this Article as conditions to payment from the Project Fund, may be conclusively relied upon by the Trustee and shall be retained by the Trustee, subject at all reasonable times to examination by the Borrower (so long as the Loan Agreement shall remain in force and effect),the County, the Bondowner Representative and the agents and representatives thereof. 30 (5) Notwithstanding any other provision of this Indenture,amounts deposited to the County Account pursuant to Section 5.2(l) shall be held for the sole and exclusive benefit of the County, and shall be disbursed solely as provided in this Section 5.2(5). On the first Business Day of each month,any earnings on amounts in the County Account shall be transferred by the Trustee to the Bond 'Proceeds Account of the Project Fund. On the following dates, the following amounts shall be disbursed by the Trustee to the County from amounts held in the County Account, said amounts so disbursed to be applied solely to the repayment of the loan from the County to the Borrower described in clause (b) of the definition "Co-Construction Loan" in the Loan Agreement(the "County Loan"): [insert dates and amounts of scheduled repayments of County Loan] Notwithstanding the foregoing, (a) all amounts in the County Account shall;be disbursed by the Trustee to the County upon written notice from the County to the Trustee to the effect that the County Loan is in default or has matured, and (b) upon receipt of a written notice from the County to the effect that the County Loan has been repaid in full or otherwise discharged, the Trustee shall transfer all amounts then on deposit in the County Account to the Band Proceeds Account of the Project Fund. None of the Borrower, any Guarantor, the Bank, the Bondowner Representative, any Bondholder,the Contractor,the General Partner,the Investor Limited Partner,the Paying Agent or the Trustee shall have any interest in or claim upon amounts in the County Account. 5.3 R"venu Fend. (1) Deposits to the Revenue Fund. All payments under the provisions of the Loan Agreement and the Notes are assigned by the County to the Trustee pursuant to this Indenture for monthly deposit to the Revenue Fund. (2) Uses of Revenue Fund. Provided no Event of Default has occurred and is continuing, funds on deposit in the Revenue Fund shall be distributed at least monthly by the Trustee as follows: FIRST: to the Bond Fund in an amount equal to one-sixth of the principal of(but only after the Conversion Date) and interest to become due on the next Payment Date, providedthat in the month preceding each Payment Date, all such amounts shall be transferred to the Bond Fund pursuant to Section 5.4 hereof on the Business Day preceding the next Payment Date so that the aggregate amount is equal to, but not in excess of, the next required payment of principal of and interest on the Bonds; and provided,further, that when the amount in the Bond Fund is equal to the next required payment of principal of and interest on the Bonds no further transfers shall be required until the Business Day preceding the following Payment Date; SECOND: to the Real Estate Tax and Insurance Fund, 1/12 of 1001°lam of the amount budgeted by the Borrower for annual premiums for insurance required to be maintained pursuant to the Loan Agreement and for annual real estate taxes (or payments in lieu of taxes)or other charges for governmental services for the current year (except for utility charges) which shall be disbursed by the Trustee from time to time upon instructions from the Bondowner Representative to pay such premiums and taxes when due or reimburse the Borrower upon receipt of satisfactory evidence of payment thereof; provided, however,that distribution by the Trustee to the Real Estate Tax and Insurance Fund'in respect of the first date or dates on which premiums for insurance and taxes or other payments described above are payable shall be made in amounts equal to the respective quotients obtained by dividing (i) the amount of such premiums and (ii) 31 the amount of such taxes or other charges by the respective number of months,including the month of computation, to and including the month prior to the month in which such premiums or taxes are payable; THIRD: to the Repair and Replacement Fund, the sum of 1/12 of $ times the number of units in the Project to be deposited commencing on the first anniversary of the Conversion Date;and FOURTH: to the Bond Fund. 5.4 Bind Fund. The Trustee shall deposit to the Bond Fund amounts transferred from the Revenue Fund and the Mortgage Recovery Fund and any amounts deposited with the Trustee by the Borrower for the purchase of Bonds. (1) Interest Account. On or before the Business Day prior to each Payment Date the Trustee shall deposit to the Interest Account from moneys on deposit in the Bond Fund an amount equal to the interest due on all Bonds Outstanding on such Payment Date. Moneys in the Interest Account shall be used to pay interest on the Bonds as it comes due. In the event that such moneys shall not be sufficient for such purpose, the Trustee shall apply such moneys first to the Issue I Bonds and second to the Issue II Bonds. (2) Principal Account. On or before the Business Day prior to each Payment Date after the Conversion Date, the Trustee shall deposit to the Principal Account from moneys on deposit in the Bond Fund an amount equal to the principal due on all Bonds Outstanding on such Payment Date, including mandatory sinking fund requirements due with respect to the Issue I Bonds. (3) Redemption Account. The Trustee shall deposit to the Redemption Account any amounts to be transferred from(i) the Mortgage Recovery Fund pursuant to Section 5.8 hereof, (ii) the Servicing Fund and (iii) any amounts deposited with the Trustee by the Borrower to effect an optional redemption of Bonds pursuant to Article 3 hereof. Moneys on deposit in the Redemption Account shall be used for redemption of Bonds Outstanding pursuant to the provisions of Article 3 hereof. 5.5 P f BorrQwer. Upon deposit by the Borrower in the Bond Fund of sums in excess of amounts required to pay principal and interest due on the Bonds on the next Payment Date and other payments then and theretofore required to be so deposited, including any redemption premium as required by Section 3.1(2) which, together with any other available funds in the Bond Fund requested to be so used by the Borrower, are sufficient to redeem, provide for the discharge of, or purchase, on the open market,Bonds as provided herein and in the Loan Agreement, the Trustee shall use such funds, at the written direction of the Borrower, to purchase first, Issue II Bonds until no Issue II Bonds are Outstanding, and second, Issue I Bonds until no Issue I Bonds are outstanding, in the amount of the sums so deposited or available. All Bonds so purchased by the Trustee shall be canceled as soon as received. 5.6 Deposit of Funds With PayingAgent. (1) If the Trustee is not the Paying Agent, the Trustee shall transfer and remit sums from the Band Fund to the Paying Agent on or before the Business Day prier to each Payment Date, from the balance then on hand in the Bond Fund, sufficient to pay all principal, interest and redemption premiums then due on the Bonds. The Paying Agent shall hold in trust for the Holders of such Bonds all sums so transferred to it until paid to such Holders or otherwise disposed of as herein provided. 32 (2) Subject to the provisions of Section 2.12, interest on each Band (including accrued interest to the,date of deposit and interest,to the extent permitted,by law, on overdue installments of interest at the rate borne by such Bond) (a) shall cease to accrue on its Maturity Date, provided that funds sufficient for the payment thereof with accrued interest and any redemption premium have been deposited with the Paying Agent on or before the Maturity Bate, and in the caste of redemption, that the requirements of Article 3 have been complied with, or (b) shall cease on any date after its Maturity Date on which such deposit has been made, and the Holder shall have no further rights with respect to the Bonds or under this Indenture except to receive the payment so deposited. (3) The Trustee will cause any Paying Agent which is not the Trustee to execute and deliver to it an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 5.6,that such Paying Agent will: (A) hold all sums held by it for the payment of principal of(and premium, if any) or interest on Bonds in trust for the benefit of the Holders of such Bonds until such sums shall be paid to such Holders or otherwise disposed of as herein provided, and (B) at any time during the continuance of any default in the making of any such payment of principal (and premium, if any)or interest,upon the written request of the Trustee, pay to the Trustee all sums so held in trust by such Paying Agent. The Trustee, acting as Paying Agent, shall also be bound by the terms of the foregoing requirements. 5.7 Rebate Bund. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to make rebate payments to the federal government to the extent required by Section 148(f) of the Code, and as calculated by the Arbitrage Consultant, for payment to the United States Government, and neither the County, the Borrower, the Bondholders nor the Trustee 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. The Trustee shall designate, from time to time, to the County and the Borrower an Arbitrage Consultant for purposes of this Section 5.7. Within 55 days of the end of each fifth Bond Year, the Trustee shall cause the Arbitrage Consultant to calculate the amount of rebatable arbitrage,in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described,if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), for this purpose treatingthe last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b)of the Rebate Regulations(the"Rebatable Arbitrage"). Within 55 days of the end of each fifth Bond Year and within 55 days after the date on which no Bonds are Outstanding, the Trustee shall demand payment from the Borrower of any Rebatable Arbitrage, as computed by the Arbitrage Consultant, and upon receipt thereof from the Borrower, shall deposit such amount to the Rebate Fund, so that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with the preceding paragraph. The Trustee shall pay to the United States Treasury,out of amounts in Rebate Fund: 33 Not later than 60 days after the end of (A) the fifth Bond Year, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year; and (ii) Not later than 60 days after the payment of all Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code. Each payment required to be made under this Section shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, which shall be prepared by the Arbitrage Consultant. Notwithstanding any provision of this Indenture to the contrary, the obligation to remit payment of the Rebate Requirement to the United States and to comply with all other requirements of this Section 5.7 shall survive the defeasance or payment in full of the Bonds. 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. The Trustee shall obtain and keep such records of the computations made pursuant to this Section 5.7 as are required under Section 148(f) of the Code. The Trustee shall keep and make available to the Borrower,the Issuer and the Arbitrage Consultant 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 any of them in order to make the aforesaid computations as are required under Section 148(f)of the Code. Notwithstanding the foregoing, the computations and payments of rebate amounts referred to in this Section 5.7 need not be made to the extent that neither<the County nor the Borrower will thereby fail to comply with any requirements of Section 148(f) of the Code based on an opinion of Bond Counsel, a copy of which shall be provided to the Trustee. 5.8 M-Qrtgagc&caym:X�- (1) The Trustee shall establish and maintain a special trust fund separate from any other fund established and maintained hereunder designated as the Mortgage Recovery Fund. (2) In the event there is damage,destruction or condemnation of the Project, the Net Proceeds shall be deposited in the Mortgage Recovery Fund and shall be disbursed in the following order of priority to (a) pay or reimburse the Borrower for the costs of repairing or replacing the Project subject to the requirements provided in paragraph(6)below; (b)the extent required or permitted by the Loan Agreement, or if the Borrower fails to comply with the requirements of paragraph (6) below, redeem or purchase Bonds, in whole or in part,or to pay the principal of and interest on the Bonds upon the acceleration of the maturity thereof; (c) make payments of principal and interest on the Bonds; and (d) pay Additional Charges. The Trustee's use of Net Proceeds is further subject to the provisions of paragraph(4)below. (3) In the event of a foreclosure of the Mortgage, the Net Proceeds realized from the foreclosure sale shall be deposited in the Mortgage Recovery Fund and shall be disbursed by the Trustee to(a) redeem or purchase Bonds,in whole;(b) make payments of principal and interest on the Bonds or other amounts due under the Loan Documents;or (c) pay Additional Charges. 34 ............. The Trustee's use of Net Proceeds pursuant to clause (c) is subject to the provisions of paragraph (4)below. (4) Moneys in the Mortgage Recovery Fund shall be transferred by the Trustee to the Bond Fund to pay principal of and interest on the Bunds when due to the extent funds are not otherwise available to make payment on the Bonds when due. (5) In the event moneys are deposited in the Mortgage Recovery Fund pursuant to the Mortgage,such moneys shall be disbursed in the manner set forth in paragraph(3)above. (6) (a) Amounts in the Mortgage Recovery Fund shall be disbursed to pay or reimburse the Borrower for the costs of repairing or replacing the Project only if the following conditions are satisfied: (b) The Trustee and Bondowner Representative shall have been furnished within 120 days after the date of such casualty or condemnation, (i) a written opinion of a ProjectEngineer based upon plans, specifications and cast estimates provided to the Project Engineer by the Borrower that the Project can be restored within a period of 360 days after the date of such casualty or condemnation to its condition► immediately prier to such casualty, or in the case of a Condemnation, to a condition suitable for the continued operation of the remaining portion of the Project, (ii) a contract between the Borrower and a general contractor,whereby the general contractor agrees to restore the Project for a fixed price (the "Construction Contract"), and (iii) a written confirmation from the Bondowner Representative that the conditions contained in Section 5.6 of the Mortgage have been satisfied; (c) The Borrower shall have provided a statement itemizing the full cost of the repair or restoration (the "Construction Statement") unless an itemized list of the full cost of repair and restoration is set forth in the Construction Contract; (d) The Net Proceeds to be deposited in the Mortgage Recovery Fund to pay for such repair or restoration shall be sufficient to complete such repair or restoration, or the Borrower shall deposit in the Mortgage Recovery Fund the net difference prior to commencing repair or restoration; (e) Disbursements from the Mortgage Recovery Fund to pay the cost of such repair or restoration shall be made not more frequently than twice a month for restoration work completed and in place pursuant to the construction lending procedures and conditions contained in Section 13.4 of the Loan Agreement;and (f) The Borrower shall submit a requisition for such disbursement to the Trustee in the form of Exhibit B attached hereto, and the Bondowner Representative shall have signed such requisition to indicate its consent to the disbursement requested. (g) The Trustee shall not honor any requisition if a Default under the Loan Agreement, any Related Document to which the Borrower is a party or an Event of Default under this Indenture shall have occurred and be continuing.; All requisitions in the form attached to this Indenture as Exhibit B and all other statements, orders, certifications and approvals received by the Trustee, as required' by this Article as conditions of payment from. the Mortgage Recovery Fund, may be conclusively relied upon by the Trustee,and shall be retained by the Trustee,subject at all reasonable times to examination by the Borrower (so long as the Loan Agreement shall remain in farce and effect),the County and the agents and representatives thereof. 35 (h) In the event that the Burrower does not complete the repair or replacement of the Project in accordance with the terms and schedule set forth above, the Trustee shall, after 30 days' written notice from the Trustee to the Burrower of such failure and continuance of such failure at the end of such period, either disburse moneys in the Mortgage Recovery Fund,including retainage, for the payment of costs of repairing or replacing the Project or disbursemoneys in the Mortgage Recovery Fund in the priority set forth in this Section 5.8(2), at the request of and by requisitions,consented to by the Bondowner Representative. (i) Upon the completion of the repair or replacement of the Project (as evidenced by a certificate of a Project Engineer), the accumulated retainage shall be disbursed to the Borrower and the balance in the Mortgage Recovery Fund shall be deposited by the Trustee into the Repair and Replacement Fund or, if directed by the Burrower,to the redemption or purchase of Bonds pursuant to Section 3.1(1)(A). 5.9 A12121icatiQn of the Beal EstatClax angi Insurancg Fund. The Trustee shall transfer from the .revenue Fund amounts rewired by Section'5.3 hereof for deposit to the Real Estate Tax and Insurance Fund and shall maintain separate accounting of payments applicable to each of real estate taxes and assessments and insurance premiums. Interest accrued on this Fund shall become a part of this Fund and may be utilized for the purposes of this Account. The Trustee shall pay all of the real estate taxes and assessments with respect to the Project solely from funds earmarked for real estate taxes and assessments and accounted for as part of the Real Estate Tax and Insurance Fund not more than 15 days in advance of and in all events not later than when delinquent. The Trustee shall pay all of the insurance premiums due with respect to the Project solely from funds earmarked for insurance premiums and accounted for as part of the Real Estate Tax and Insurance Fund not more than 15 days in advance of and in all events not later than when past due. In the event insurance for the Project is provided through a blanket policy of insurance covering properties other than the Project, the Trustee shall pay such portion of the premiums therefor as may be properly allocated to the Project. When making each such payment, the Trustee shall request from the Borrower evidence of payment of the full amount of the premium then due. Except as provided in the preceding sentence, the Trustee shall not be responsible for payment of real estate taxes and assessments and insurance premiums in the event there are insufficient funds in the Real Estate Tax and Insurance Fund to pay the real estate taxes and assessments and insurance premiums when. due. In such event, the Borrower shall, on demand of the Trustee, deposit with the"Trustee any amount necessary to make up the deficiency. Amounts in the Real Estate'Tax and Insurance Fund in excess of the requirements therefor shall be credited against future required transfers from the Revenue Fund. 5.10 The K=irandplacgment Fund. The Trustee shall transfer from the Revenue Fund amounts required. by Section 5.3 and from the Mortgage Recovery Fund any amounts required by Section 5.8 for deposit to the Repair and Replacement Fund and shall maintain separate accounting thereof. The Trustee shall disburse amounts from such funds accounted for as the Repair and Replacement Fund to pay or reimburse the Borrower for the payment of capital expenditures and replacements to the Project, exclusive of ordinary or routine maintenance upon receipt by the Trustee of evidence satisfactory to the Trustee that the Borrower has incurred capital expenditures, repairs or replacements, such evidence to include invoices therefor indicating payment to be made and such other evidence as the Trustee deems necessary. For expenditures in excess of$10,000, the Trustee shall require written certification of the Borrower of lien-free completion of such work. Consent of the Bondowner Representative shall be required for all disbursements required hereunder. Interest accrued on the Repair and Replacement Fund shall become a part of this Fund and may be utilized for the purposes of this Fund. In no event shall the Trustee be obligated to consider requests for more than one disbursement from the Repair and Replacement.Fund each calendar month. Moneys in the Repair and Replacement Fund shall be transferred by the Trustee to the Bond Fund to pay principal of and interest on the Bonds when due to the extent funds are not otherwise available to make payment on Bonds when due. 5.12 Costs of IssuanceLund. On the Closing Date, upon receipt, the Trustee shall deposit to the credit of the Costs of Issuance Fund the sum.of$ representing an equity contribution by the Borrower. The Trustee shall disburse amounts in such: Fund upon written request of the County to pay Costs of Issuance. On the earlier of the ninetieth (90) day following the Closing Date or the date of receipt by the Trustee of the written consent of the County, any amounts remaining in the Costs of Issuance Fund shall be transferred to the Contribution Account of the Project Fund. 5.12 In et st sated ort Funds. (1) The interest earned from the investment of money held by the Trustee in each of the Funds and Accounts created under this Article 5(other than the Rebate Fund) shall inure to the benefit of the Borrower and, except as provided in paragraph (2) below and Section 5.2(5) above, shall be retained in such separate Fund and Account and applied as a credit against the payment next due into such separate Fund or Account. (2) During the continuance of a Default or an event which, with notice or lapse of time or bath, would become a Default under the Loan Agreement or any other .Related Document, interest earned from: the investment of money in the Funds and Accounts created under this Article 5 shall be held in each such Fund Account and shall not be credited against the payments next due to or from such separate Funds or Accounts (except as otherwise provided in Section 5.2(5)). 5.15 Final Balances. Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if any, and interest on the Bonds, and upon satisfaction of all claims against the County hereunder and under the Loan Documents,including any rebate obligation, all fees, charges and expenses of the Trustee, the Bond Registrar, the County and any Paying Agent which are properly due and payable hereunder, or upon the making of adequate provisions for the payment of such amounts as permitted hereby, all moneys remaining in all Fundis shall be remitted to the Borrower, except: (i) moneys necessary to pay principal of, premium,if any,and interest on the Bands,which moneys shall be held by the Trustee and paid to the Bondholders or the County pursuant to Section 2.12; (ii) moneys, if any, set aside pursuant to Section 5.7 hereof; and(iii) moneys on deposit in the County Account, which shall be disbursed solely as provided in Section 5.2(5). ARTICLE 6 INVESTMENTS 6.1 Inveatments by.Trustee. (1) Moneys held hereunder by the Trustee in the Funds and Accounts, if permitted by law, shall, as nearly as may be practicable, be invested by the Trustee: (a) witless a Default has occurred and is continuing under the Loan Agreement or any of the other Loan Documents, I pon direction of the Borrower given or confirmed in writing (which direction shall specify the amount thereof to be so invested),in Permitted Investments maturing on or before the Business Day prior to the day such amounts are required and in the amounts required, to enable the Trustee to snake payments due hereunder on the Bonds or otherwise,but in no event longer than 180 days or(b) if'a Default has occurred and is continuing under the Loan Agreement or any of the other Loan Documents, or if the Trustee has received no direction, the Trustee shall hold 3? _ _ _ . money in the Funds and Accounts in Permitted Investments of the type described in clause (a)(5) of the definition of Permitted Investments. Notwithstanding the foregoing, amounts in the County Account shall be invested solely in Permitted Investments of the type described in clause(a)(1), (5) or (10) of the definition of Permitted Investments. (2) The Trustee shall sell and reduce to cash a sufficient portion of investments under the provisions of this Section whenever the cash balance in the Fund or Account for which the investment was made is insufficient for its current requirements. Securities so purchased as an investment of money shall be held by the Trustee, shall be registered in the name of the Trustee or its nominee if registration is required, and shall be deemed at all times a part of the applicable Fund or Account, and the interest accruing thereon and any profit realized from such investments shall be credited to the Fund from which the investment was made,subject to any transfer to another Fund or Account as herein provided. Any loss resulting from such investment shall be charged to the Fund or Account from which the investment was made, and in the event such loss reduces the amount held in such Fund or Account below the amount required to be deposited in such Fund or Account, the Trustee shall request the Borrower to transfer to the Trustee for deposit into such Fund or Account the amount required to restore amounts in such Fund or Account to the required amount. The Trustee shall not be liable for any loss incurred from the purchase or sale of any investment(except for any such loss resulting from the negligence or willful misconduct of the Trustee or its employees). (3) Unless otherwise directed by the Bondowner Representative or the Borrower,the Trustee may purchase from or sell to itself, or through any affiliated company, as principal or agent,securities herein authorized so long as such purchase or sale is at fair market value. (4) The Borrower acknowledges that, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Borrower the right to receive brokerage confirmations of security transactions as they occur,the Borrower specifically waives receipt of such confirmations to the extent permitted by law. 6.2o utation of Balances. C mrr in Funds and Accounts. Except as otherwise provided in the next sentence, all investments of amounts deposited in any Fund or Account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and.valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code shall be valued at their present value (within the meaning of Section 148 of the Code). ARTICLE 7 DISCHARGE OF LIEN 7.112ischarge !2f Bonds and Obligation to Bondholders. Whenever the conditions specified in either subsection (a) or (b) below and the conditions specified in subsections (c), (d) and (e) below, to the extent applicable, shall exist,: (1) all Bonds have become due and payable and all principal or premium, if any, and interest on the Bonds shall have been paid in full, or all Bonds have been cancelled by the Trustee or delivered to the Trustee for cancellation without payment,except for: 38 (A) Bonds for which funds have theretofore been deposited in trust or segregated and held in trust by the Paying Agent or Trustee and thereafter repaid to the Borrower or discharged from such trust, as provided in Section 5.6;and (B) Brands alleged to have been destroyed, last or stolen which have been replaced or paid as provided in Section 2.7, and (1) which, prior to the satisfaction and discharge of this indenture as hereinafter provided, have not been presented to the Paying Agent or Trustee with a claim of ownership and enforceability by the Halder hereof,or(2)whose enforceability by the Holder thereof has been determined adversely to the Holder by a court of competent jurisdiction or other competent tribunal;or (2) the County or the Borrower has deposited or caused to be deposited, as trust funds, with the Trustee cash and/or Permitted investments of the type;described in clause (a)(1) of the definition of that term which do not permit the redemption thereof at the option of the issuer thereof, the principal of,premium, if any, and interest on which when due (or upon the redemptionthereof at the option of the holder), will, without reinvestment, provide cash which together with the cash, if any, deposited with the Trustee at the same time, shall be sufficient to pay and discharge the entire indebtedness on Bonds not theretofore cancelled by the Trustee or delivered to the Trustee for cancellation by the payment of interest on and principal (and premium, if any) 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 in the name,and at the expense,of the Borrower in the same manner as is provided by Section 3.2; (3) the County or Borrower has paid, caused to be paid or made arrangements satisfactory to the Trustee for the payment of all other sums due and payable hereunder and under the Loan Documents,including any rebatable arbitrage of the Borrower; (4) the Borrower has delivered to the Trustee and the County a report of an Independent Accountant stating that the payments to be made on any securities, together with the cash, if any, deposited pursuant to subsection (b) above will be sufficient to pay when due the principal of,premium,if any,and interest on the Bonds to be defeased;and (5) if discharge is to be effected under subsection (b),an opinion of Bond Counsel is delivered to the Trustee and the County stating in effect that such discharge will not impair the exclusion of interest on the Bonds from gross income for federal income tax purposes; then, except as otherwise provided in Section 7.5, the rights of the Bondholders shall be limited to the cash or cash and securities deposited as provided in subsection (a) or (b) above, and the rights and interest hereby granted or granted by the Loan Documents to or for the benefit of the Trustee or the Bondholders shall cease, terminate and become null and void, and the County and the Trustee shall, at the expense of the Borrower, execute and deliver such instruments of satisfaction and transfer as may be necessary, and the estate, right, title and interest of the Trustee in and to all of the Project and in and to all rights under this Indenture and the Loan Documents (except the moneys or securities or bath deposited as required above, rebatable arbitrage and except as may otherwise be provided in Sections 5.2(5) and 7.5) shall thereupon be discharged and satisfied; except that in any event the obligations of the Borrower under Sections 3.3(b),6.22 and 9.1 through 9.5 of the Loan Agreement shall survive. 7.2 Cancellation of Surrendered Bond. The County or the Borrower may at any time surrender to the Trustee for cancellation by the Trustee any Bonds previously authenticated and delivered hereunder which the_County or Borrower acquired in any manner 39 whatsoever,and such Bonds,upon such surrender and cancellation,shall be deemed to be paid and retired. 7.3 Pam �t of Bones. Any Bonds shall be deemed paid if the conditions set forth in Section 7.1 hereof have been satisfied with respect thereto, even though other Bands may remain outstanding. 7.4 A rlig;atiQn of Qel2oaited Money. All money, securities and income thereon deposited with the Trustee pursuant to Section 7.1 for the purpose of paying'the principal, premium,if any,and interest on Bonds shall be applied by the Trustee solely for such purpose. 7.5 Suryival of Certain Provisions. Notwithstanding satisfaction of the conditions set forth in Section 7.1(b) hereof, the provisions contained in Sections 4.7, 4.8, 5.2(5) and 5.7 shall survive the discharge of this Indenture pursuant to Section 7.1(b). ARTICLE 8 DEFAULT PROVISIONS AND REMEDIES 8.1 Eyents of Default. Subject to the provisions of Sections 8.10 and 8.12, if default shall be made in the performance or observance of any of the covenants, agreements or conditions on the part of the County contained in this Indenture or in the Bonds and such default shall have continued for a period of 30 days after written notice thereof given, such default is hereby defined as and declared to be and to constitute an Event of Default(whatever the reason for such an Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order'of any court or any order,rule or regulation of any administrative or governmental body). The Trustee shall provide Bondholders, the Borrower and the County notice of any Event of Default as provided in Section 9.3 hereof. 8.2 Acceleration. The Trustee shall, upon written direction of the Bondowner Representative following the occurrence of an Event of Default, and by notice in writing delivered to the County and the Borrower, declare the principal of all of the Unpaid Bonds and the interest accrued thereon immediately due and payable. The Trustee shall give notice of acceleration to Bondholders in the same manner as notice of redemption is given under Section 3.2 (except as to the timing thereof)stating the accelerated date upon which the Bonds are due and payable, provided that the Trustee shall not be required to delay the effective_ date of acceleration until',such notice is given. 8.3 Hsi- (1) Upon the occurrence of an Event of Default or an event which, with notice or lapse of time or both,would become an Event of Default, the Trustee shall take such actions as the Bondowner Representative shall direct (subject to receipt of indemnity acceptable to it pursuant to Section 9.1 hereof) to enforce any and all rights available to the County (except Reserved Rights) or Bondholders under this Indenture, the Loan Agreement, the Regulatory Agreement and the Mortgage, the Guaranty or otherwise, and, in this regard, is specifically authorized to transfer funds from any Fund or Account created pursuant to Article 5 (except rebatable arbitrage whether or not deposited in the Rebate Fund or Account and moneys held in the County Account, or in trust for the payment of Bonds or interest thereon which have matured or otherwise become payable prior to such Event of Default to the Bond Fund for its use in paying principal`and interest on the Bonds. 40 (2) No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or the Bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy(i)given to the Trustee or to the folders or(ii)now or hereafter existing at law or in equity or by statute. (3) No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default, or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. (4) No waiver of any Event of Default hereunder, whether by the Trustee or the Holders, shall extend to or shall affect any subsequent Event of Default or impair any rights or remedies consequent thereon. 8.4 Direction of Proceedi b Bondoc�r g�.y n,e.r Representative,. Anything in this Indenture to the contrary notwithstanding, the Bondowner Representative shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee and subject to receipt by the Trustee of indemnity acceptable to it pursuant to Section 9.1 hereof, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions (except for the Reserved Rights) of this Indenture, the Loan Agreement, the regulatory Agreement and the Mortgage or for the appointment of a receiver or any other proceedings hereunder; provided:that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture, the Loan Agreement,the Regulatory Agreement and the Mortgage. 8.5 'Waiver Qf Stay or Extension Laws. Upon the occurrence of an Event of Default, to the extent that such rights may then lawfully be waived, neither the County nor anyone claiming through it or under it shall or will set up, claim, or seek to take advantage of any appraisement,valuation, stay,extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement of this Indenture, but the County, for itself and all who may claim through or under it,hereby waives to the extent that it lawfully may do so the benefit of all such laws and all right of appraisement and redemption to which it may be entitled under the laws of the State. 8.6 Priori of 1' =t and Application of Mgneys. All Bonds issued hereunder and secured hereby shall be equally and ratably secured by and payable from the Bond Fund, without priority of one Bond over any other, except as otherwise expressly provided herein. Upon the occurrence of an Event of Default, all moneys collected pursuant to action taken under the Loan Agreement,the Regulatory Agreement or the Mortgage(other than sums payable directly to the County constituting Reserved Rights), after payment of the costs and expenses (including court costs and reasonable attorneys' fees) of the proceedings resulting in the collection of such moneys (including any such costs and expenses incurred by the County)and of the expenses, liabilities and advances (provided that the Trustee shall not be required to make any advances, as set forth in Section 9.1(13)hereof) incurred or made by the Trustee, and rebatable arbitrage required to be deposited into the Rebate Fund, and after any other prior application of such moneys has been made as is required by law, or required or permitted by the Loan Documents, shall be deposited in such Fund or Account as the Trustee deems appropriate; and all moneys in the Bond Fund and, at the discretion of the Trustee except when otherwise required hereunder, any other Fund or Account (excluding, however, rebatabie arbitrage, whether or not deposited in the rebate Fund, and any moneys held in the County Account which shall be disposed of only as set forth in Section 5.2(5), or moneys held in trust for the payment of Bonds or interest thereon which have matured or otherwise become payable prior to such Event of Default) shall be applied as follows: 41 (1) Unless the principal of all the Bonds shall have become or shall have been declared due and payable,all such moneys shall be applied: FIRST: To the payment to the persons entitled thereto of all installments of interest then due on the Issue I Bonds and then the Issue lI Bonds, in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto,without any discrimination or privilege; SECOND: To the payment to the persons entitled thereto of, first, the unpaid principal of and, second,redemption premium, if any,on any of the Issue I Bonds,then the Issue II Bonds which shall have became due in the order of their due dates according to the amount of principal and premium,if any,due on such date, to the persons entitled thereto; THIRD: To the payment of interest and premium, if any, on and the principal of the Issue I Bonds, then the Issue II Bonds, and to the purchase or redemption of Issue I Bonds,then the Issue II Bonds,as thereafter may from time to time become due, all in accordance with the provisions of Article 5 of this Indenture;and FOURTH: To reimburse and/or pay to the County in full for costs, expenses or fees (including without limitation, all amounts payable as Additional Charges pursuant to the Loan Agreement) not described in the first unnumbered paragraph of this Section 8.6;and FIFTH: To reimburse and/or pay to the Trustee in full for costs,expenses or fees (including,without limitation,all amounts payable as Additional Charges pursuant to the Loan Agreement) not described in the;first unnumbered paragraph of this Section 8.6. (2) If the principal of all Bonds,or an Issue of Bonds, shall have become due or shall have been declared due and payable, all such moneys shall be applied first to the payment of the principal and interest then due and unpaid on the Issue I Bonds and then the Issue II Bonds, without preference or priority of principal;over interest or of interest over principal, or of any installment of interest over any ether installment of interest, or of any Bond over any other.Bond of the same Series,ratably,according to the amounts due respectively for principal and interest, to the persons entitled thereto, without any discrimination or privilege,second to payment of any redemption premium; third: to reimburse the County for any costs, expenses or fees (including, without limitation,all amounts payable as.Additional Charges pursuant to the Loan Agreement) not described in the first unnumbered paragraph of this Section 8.6; and fourth, to reimburse and/or pay to the Trustee in full for costs, expenses or fees (including, without limitation, all amounts payable as Additional Charges pursuant to the Loan Agreement)not described in the first unnumbered paragraph of this Section 8.6. (3) If the principal of all the Bonds shall have been declared due and payable,and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (2) of this Section in the event that the principal of all the Bands shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph(1) of this Section. 42 Whenever moneys are to be applied by the Trustee pursuant to the provisions of this Section,such moneys shall be applied by it at such times,and from time to time, as the Trustee shall determine,having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall (i) fix the date (which shall be a Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest can the amounts of principal to be paid on such date shall cease to accrue and (ii) on or before such date set aside the moneys necessary to effect such application. The Trustee, at the expense of the Borrower, shall give to the Bondholders mailed notice of the deposit with it of any such moneys and of the fixing of any such date. Neither the Trustee nor any Paying Agent shall be required to make payment of principal or redemption premium to the Holder of any Band until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Bonds and interest thereon have been paid under the provisions of this Section 8.6, all expenses and charges of the Trustee and the County have been paid and rebatable arbitrage has been paid or provided for, any balance remaining shall be paid to the person entitled to receive the same pursuant to Section 5.12. 8.7 &medies:Vested in Trustm. All rights of action(including the right to file proof of claims) under this In or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto,and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any Holders of the Bands,and any recovery or judgment shall be for the equal benefit of the Holders of the Outstanding Bonds to the extent and in the manner provided herein. The County and Trustee hereby agree,without in any way limiting the effect and scope thereof, that the pledge and assignment'hereunder to the Trustee of all rights included within the Trust Estate shall constitute an agency appointment coupled with an interest on the part of the Trustee which,for all purposes of this Indenture, shall be irrevocable and shall survive and continue in full force and effect notwithstanding the bankruptcy or insolvency of the County or its default hereunder or on the Bands. 8.8 Rights and Remedies a#Holders. No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or any belated Document or for the execution of any trust hereof or any remedy hereunder or thereunder or for the appointment of a receiver, unless (i) a default thereunder shall have become an Event of Default and the Bondowner Representative shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereunder granted or to institute such action, suit or proceeding in its own name;(ii) the Bondowner Representative shall have offered to indemnify the Trustee as provided in Section 9.1; and (iii)the Trustee shall thereafter fail or refuse to exercise within a reasonable period of time the remedies hereunder granted., or to institute such action,suit or preceeding in its own name. Such notification,request and offer of indemnity are hereby declared in every such case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture or any Related Document, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Holders shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture or any Related Document,by its,his,her or their action or to enforce any right hereunder or thereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Holders of all Bonds then Outstanding; provided, however, that nothing herein shall be construed to preclude any Bondholder from enforcing,or impair the right of any Bondholder to enforce, the 43 payment by the Trustee of principal of, and interest and premium, if any, on any Bond of such Bondholder at or after its date of maturity, if and to the extent that such payment is required to be made to such Bondholder by the Trustee from available funds in accordance with the terms hereof. 8.9 Termination of Proceediyp. In case the Trustee shall have proceeded to enforce any right under this Indenture or any Related Document by the appointment of a receiver, by entry and possession or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the County and Trustee shall be restored to their former positions and rights hereunder with respect to the property herein conveyed, and all rights,remedies and powers of the Trustee shallcontinue as if no such proceedings had been taken. 8.10 Waiver of an Event of Default. The Trustee shall waive any Event of Default hereunder and its consequences and rescind any declaration of acceleration of maturity or principal,upon written request of the Bondowner Representative. No such waiver or rescission shall extend: to any subsequent or other Events of Default, or impair any right consequent thereon. 8.11 Limitations. If a Default (as defined in the Loan Agreement) occurs under the Loan Agreement, the Bondholders may direct the Trustee to accelerate the Loan and cause a mandatory redemption of the Bonds pursuant to Section 3.1(F)(iv) of this Indenture. Upon such redemption of the Bonds,all of the Bonds shall cease to bear interest,and the Bondholders shall have no further rights except to obtain the distribution of the proceeds of the funds and assets pledged to the Bonds,which shall constitute payment in full of the Bunds whether or not such amounts so distributed shall be sufficient to pay the principal amount of the Bonds then Outstanding and interest accrued thereon to the redemption date. The Trustee shall liquidate and distribute such funds and assets in accordance with Section 8.6 of this Indenture. By their acceptance of the Bonds without credit enhancement the Bondholders hereby consent to the mandatory redemption described above, and, upon completion of such redemption, the Bondholders shall no longer look to the County to receive payment of any principal of or interest on the Bonds or any other sums which may be due with respect to the Bonds,but shall look solely to the funds and assets pledged to the Bonds hereunder. ARTICLE 9 THE TRUSTEE 9.1 Acceptance f the Trustee. The Trustee, prior to the occurrence of an Event of Default, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture; and no 'implied covenants or obligations should be read into this Indenture against the Trustee. In case an Event of Default has occurred, the Trustee agrees to perform such trusts as an ordinarily prudent man, but in any event, only upon>and subject to the following express terms and conditions: (1) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees,including, but not limited to, the duties set forth in Section 5.8 hereof, and shall not be answerable for any misconduct or negligence on the part of any agent or attorney appointed with due care, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay such reasonable compensation to any attorney,agent,receiver or employee retained or employed by it in connection herewith and shall be entitled to reimbursement from the Borrower for such payment. The Trustee 44 may act upon the written opinion or written advice of any attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care or, if;selected or retained by the County, acceptable to the Trustee in the exercise of such care, provided that the only legal advice or opinion that the Trustee may rely upon for purposes of securing advice or an opinion relating to the tax exempt status of the Bonds is given by Bond Counsel. The Trustee shall not be responsible for any loss or damage resulting from any action or in good faith in reliance upon such opinion or advice. (2) The Trustee shall not be responsible for any recital herein,or in the Bonds or for the investment of moneys as herein provided (except as provided in Section 6.1 or 6.2), or for collecting any property insurance proceeds, or for the validity of the execution by the County of this indenture, or of any supplemental indentures or instruments of further assurance, or for the sufficiency of any security for the Bonds, or for the value of title of the property herein conveyed, if any, or otherwise as to the maintenance of the security hereof; except that, in the event the Trustee enters into possession of a part or all of the property conveyed pursuant to any provisions of this Indenture or the Mortgage, it shall use due diligence in preserving such property. The Trustee may,but shall be under no duty to,require of the Borrower full information and advice as to the performance of the covenants, conditions and agreements in the Loan Agreement, the Regulatory Agreement and the Mortgage as to the condition of any Mortgaged. Property and the performance of all other obligations thereunder and shall use reasonable efforts, but without any obligation, to advise the County and the Borrower of any impending Event of Default known to the Trustee. (3) The Trustee shall not be accountable for the use or application of any of the Bonds or the proceeds thereof(except as herein expressly provided)or for the use or application of any money paid over by the Trustee in accordance with the provisions of this indenture or for the use and application of money received by any raying Agent. The Trustee may become the owner-of Bonds secured hereby with the same rights it would have if not Trustee. (4) The Trustee shall be protected in acting in accordance with the standard of care otherwise required hereunder upon any written notice,order,requisition,request, consent, certificate, opinion (including an opinion of independent Counsel or Bond Counsel), affidavit, letter, telegram, facsimile or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and the Trustee shall be under no duty to make'an investigation or inquiry into any statement contained therein. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Folder of any Bond, shall be conclusive and binding upon all future Holders of the same Bond and upon Bonds issued in exchange therefor,upon transfer thereof,or in place thereof. (5) As to the existence or non-existence of any fact or as to the sufficiency or authenticity of any instrument,paper or proceeding, the Trustee shall be entitled to rely upon a certificate of the County signed by a Representative of the County as sufficient evidence of the facts stated therein. The Trustee may accept a certificate of an County Representative to the effect that a motion,resolution or ordinance in the forret therein set forth has been adopted by the governing body of the County as conclusive'evidence that such motion or resolution has been duly adopted, and is in full force and effect, and may accept such motion, resolution or ordinance as sufficient evidence of the facts stated therein and the necessity or expediency of any particular dealing, transaction or action authorized or approved thereby, but may at its discretion secure such further 45 _...... ......... ......... ......... ............... ... ..... ... _........ ......... ......... ......... ......... ......... ......... ......... ........ . _... _............................................._....................................................... . . ........................................................................... evidencedeemed necessary or advisable, but shall in no case be bound to secure the same. (6) The Trustee shall not be answerable, and shall incur no liability, except for its negligence or willful misconduct. (7) The Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged., or for salaries or nonfulfillment of contracts during any period in which it may be in possession of or managing the real and tangible personal property as in this Indenture'provided. (8) Upon the occurrence and continuance of an Event of Default at any and all reasonable times, the Trustee, and its duly authorized agents,(attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all of the property comprising the Mortgaged Property, including all books,papers and records of the County pertaining to the Mortgaged Property and the Bonds,and to take such memoranda from:and with regard thereto as may be desired. (9) The Trustee shall not be required to give any bond or surety with respect to the execution of said trusts and powers or otherwise with respect to the premises. (10) Notwithstanding anything contained elsewhere in this Indenture, the Trustee shall have the right, but shall not be required, to demand,with respect to the authentication of any Bonds, the withdrawal of any cash, the release of any property or any action whatsoever within the purview of this Indenture, any showings,certificates, opinions(including opinions of Independent Counsel), appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Trustee, deemed desirable for the purpose of establishing the right of the County to the authentication of any Bonds, the withdrawal of any cash, the release of any property, or the taking of any either action by the Trustee. (11) The County shall not be liable for the payment of such sums or for providing for the indemnification of the Trustee. (12) Notwithstanding any provision of this Indenture to the contrary, before taking any action hereunder, the Trustee may require that it be furnished indemnity satisfactory to it for the reimbursement of all expenses to which it may be put and to protect it against all liability(except liability which, is adjudicated to have resulted from the negligence or willful misconduct of the Trustee) by reason of any action so taken by the Trustee. (13) No provision of this Indenture or any related document shall require the Trustee to expend or risk its own funds, make advances or otherwise'incur any financial liability in the performance of any of its duties, or the exercise of its rights and powers hereunder. (14) Notwithstanding anything to the contrary contained in this Indenture,in the event the Trustee is entitled or required to commence an action or otherwise exercise remedies to acquire control or possession of any or all of the Project under, but not limited to,the provisions of the Mortgage,the Trustee shall not be required to commence any such action or exercise any such remedy if the Trustee has determined in good faith that it may incur liability under an Environmental Law (as defined below) as the result of the presence at, or release on or from the Project of any Hazardous Materials unless 46 _._..... ......... ......... ......... ......... ......... .. ......._.. ......... ......... ......... ......... ......... ......... ......... ............_._._... ....... ....._... ......... ......... ......... ......... .................................. .................................................................................. the Trustee has received security or indemnity, from a person, in an amount and in a form all satisfactory to the Trustee in its sole discretion, protecting the Trustee from all such liability. The term "Environmental Laws" shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes,ordinances and codes relating to the protection of the environment or governing the use,storage,treatment, generation, transportation, processing, handling,production or disposal of Hazardous Materials and the rules, regulations, policies, guidelines, interpretations, decisions,orders and directives of federal, state and local governmental agencies and authorities with respect thereto. (15) The Trustee is under no obligation to monitor the receipt of rents by the Borrower. (16) The Trustee shall not be required to take notice or be deemed to have notice of any events of default in the Bond Documents, except failure of any of the payments to be made to the Trustee required to be made under the Indenture unless the Trustee shall be specifically notified in writing of such event of default by the Bondowner representative. 9.2 Trustee5 fees.Charges and , per. (1) The Trustee and any Paying Agent shall be entitled to payment and/or reimbursement for Ordinary Pees and Expenses, all advances, counsel fees and other expenses reasonably made or incurred by the Trustee in and about the execution of the trusts created by this Indenture and in and about the exercise and performance of the powers and duties of the Trustee hereunder and for the reasonable and necessary costs and expenses incurred in defending any liability in the premises of any character whatsoever (unless such liability is adjudicated to have resulted from the negligence or willful misconduct of the Trustee). In this regard the County has made provisions in Section 3.4 of the Loan Agreement for the payment of said fees,advances, counsel fees,costs and expenses, and reference is hereby made to the Loan Agreement for the provisions so made; and the County shall not otherwise be liable for the payment of such sums. (2) The compensation of the Trustee shall not be limited by any provision of law which limits the compensation of a trustee of an express trust. 9.3 Notice to Holders gf Default. The Trustee shall give to the Bondholders and the County written notice of all Events of Default known to the Trustee, within five (5) days after the Trustee has actual knowledge or receives written notice of such Event of Default. 9.4 Interventibh ",<r ; e . In any judicial proceeding to which the County is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Bondholders, the Trustee may intervene on behalf of Holders and shall do so if requested in writing by the Bondowner representative subject to Section 9.1(12) and (13). The rights and obligations of the Trustee under this Section are subject to the approval of a court of competent jurisdiction in the premises. 9.5 Suocessor Trustee. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become successor trustee and paying agent under this Indenture and vested with all of the title to the Trust Estate, and all the trusts, powers,discretions,immunities,privileges and all other matters as was its predecessor,without 47 the execution or'filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto,anything herein to the contrary notwithstanding. 9.6 Resignation by Trustee. The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving 30 days` written notice to the County, the Bondowner Representative and the Borrower and by first-class mail to each Bondholder as shown on the Bond Register, and such resignation shall take effect upon the appointment of a successor trustee as provided in Section 9.8. Such notice to the County, the Bondowner Representative or the Borrower may be served personally or sent by registered or certified mail, or overnight courier. 9.7 Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee,Borrower and County,and signed by the County upon consultation with the Bondowner Representative. 9.8 Appointment of�uccca or Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved or shallbe in course of dissolution or liquidation, or otherwise become incapable of acting hereunder,or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the County upon consultation with the Bondowner Representative. The Trustee may petition the court for appointment of a Trustee if no replacement is otherwise appointed. Every such Trustee appointed pursuant to the provisions of this Section 9.8'must be a trust company, a bank or banking corporation having trust powers and having a reported capital and surplus not less than $50,000,000. 9.9 Acceptance by Successor Trustees. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor, to the Borrower and also to the County, an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance shall become fully vested with all the estates,properties, rights, powers, trusts, duties and obligations of its predecessors as Trustee and Paying Agent; but such predecessor shall, nevertheless, on the written request of the County, or of its successor Trustee, execute and deliver an instrument transferring to such successor Trustee all the estates, properties, rights, powers and trusts of such predecessor hereunder, and every predecessor Trustee shall deliver all securities and moneys held by it as Trustee hereunder to its successor. Should any instrument in writing from the County be required by any successor Trustee for more fully and certainly vesting in such successor the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the County. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder,together with all other instruments provided for in this Article,shall be forthwith filed or recorded or both by the successor Trustee in each recording office where this Indenture or the Mortgage shall have been filed or recorded or both. 9.10 Mght of Irustee T!u Pay Taxes gnd {cher Charggs. In case any tax, assessment or governmental or other charge upon any part of the Project is not paid, to the extent, if any, that the same is legally payable, the Trustee may, but shall be under no duty to,pay such tax, assessment or governmental or other charge, without prejudice, however, to any rights of the Trustee or Bondholders hereunder arising as a consequence of such failure;and any amount at any time so paid under this Section,Section 6.3 of the Loan Agreement or under the Mortgage, with interest thereon at the Default Rate, shall be repaid to the Trustee upon demand as an Additional Charge under the Loan Agreement, and shall became so' much additional indebtedness secured by the Indenture, and the same shall be given a preference in payment over any of the Bonds,except with respect to the payment of any principal, interest or premium 48 on the Bonds which is then due but not paid, but the Trustee shall be under no obligation to make such payment of taxes, assessments or governmental charges unless it shall have been requested to do so by the Bondowner Representative and shall have been provided with adequate indemnity for the purpose of such payment and them such obligation shall extend only to the Trust Estate. Any such payment shall be made upon five days' prior written notice to the Borrower unless the delay occasioned by any such written notice could result in the forfeiture or termination of any right. 9.11 Truatee Frotggiedi . The resolutions, orders, requisitions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant,protection and authority to the Trustee. 9.12 5ucccssQr Trustee as Custodian of Funds and Paying A In the event of a change in the office of the Trustee the predecessor Trustee which has resigned or been removed shall cease to be custodian of the Bunds described in Article 5 and shall cease to act as a Laying Agent for principal and interest on the Bonds, and the successor Trustee shall be and become such custodian and a Paying Agent. 9.13 Cru&tee. (1) At any time or times upon the consent of the Bondowner Representative, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Estate may at the time be located., the Trustee shall have the power to appoint, and, upon the request of the Trustee, the County shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint one or more persons either to act as co-trustee or co-trustees, jointly with the Trustee, of all or any part of the Trust Estate, or to act as separate trustee or separate trustees of all or any part of the Trust Estate, and to vest in such person or persons, in such capacity,such right to the Trust Estate or any part thereof, and such rights, powers, duties, trusts or obligations as the Trustee may consider necessary or desirable, subject to the remaining provisions of this Section 9.13. Every such co-trustee or separate trustee appointed pursuant to the provisions of this Section 9.13 must be a trust company or bank having trust powers and having a reported capital and surplus not less than $50,000,000, if there be such an institution willing, qualified and able to accept the trust upon reasonable or customary terms. (2) The County shall execute, acknowledge and deliver all such instruments as may be required by any such co-trustee or separate trustee for more fully confirming such title,rights, powers, trusts, duties and obligations to such co-trustee or separate trustee. (3) Every co-trustee or separate trustee shall, to the extent permitted by law but to such extent only,be appointed subject to the following terms,namely: (A) All rights, powers, trusts, duties and obligations' conferred by this Indenture upon the Trustee with respect to the custody, control or management of moneys, papers, securities and other personal property shall be exercised solely by the Trustee. (B) All rights, powers, trusts, duties and obligations conferred or imposed upon the trustees shall be conferred or imposed upon and exercised or performed by the Trustee, or by the Trustee and such co-trustee or co-trustees or separate trustee or separate trustees jointly, as shall be provided in the instrument appointing such co- trustee or co-trustees or separate trustee or separate trustees; provided,'however, the Trustee shall remain responsible for exercising all rights and powers, maintaining all 49 trusts and performing all duties and obligations conferred or imposed upon the trustees, except to the extent that, under the law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such act or acts shall be performed by such co-trustee or co-trustees or separate trustee or separate trustees. (C) Any request in writing by the Trustee to any co-trustee or separate trustee to tape or to refrain from taking any action hereunder shall be sufficient warrant for the taking, or the refraining, from taking, of such action by such co-trustee or separate trustee. (D) Any co-trustee or separate trustee may delegate to the Trustee the exercise of any right,power,trust,duty or obligation,discretionary or otherwise. (E) The Trustee at any time, by an instrument in writing, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 9.13. Upon the request of the Trustee, the County shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 9.13. (F) No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. (G) Any demand, request, direction, appointment, removal, notice, consent, waiver or other action in writing delivered to the Trustee shall be deemed to have been delivered to each co-trustee or separate trustee. (H) Any moneys, papers, securities or other items of personal property received by any such co-trustee or separate trustee hereunder shall''forthwith, so far as may be permitted by law,be turned over to the Trustee. (4) Upon the acceptance in writing of such appointment by any such co-trustee or separate trustee, such co-trustee or separate trustee shall be vested with such interest in and to the Trust Estate or any part thereof,and with such rights,powers, duties or obligations, as shall be specified in the instrument of appointment jointly with the Trustee (except insofar as local law makes it necessary for any such co-trustee or separate trustee to act alone) subject to all the terms of this indenture. Every such acceptance shall be filed with the Trustee. Any co-trustee or separate trustee may, at any time by an instrument in writing, constitute the Trustee, its attorney-in-fact and agent, with full power and authority to do all acts l and things and to exercise all discretion on its or his or her behalf and in its or his or her name.' (5) in case any co-trustee or separate trustee shall die, become incapable of acting, resign or be removed, the title to the.Trust Estate and all rights, powers, trusts, duties and obligations of said co-trustee or separate trustee shall, so far as.permitted by law, vest in and be exercised by the Trustee unless and until a successor co-trustee or separate trustee shall be appointed in the manner herein provided. 9.14 Obligations as to Rp.12orting. The Trustee shall provide to the County, upon request monthly reports of the balances in the Funds held under Article 5. 50 __ 9.15 Appointment t. The County at the direction of the Borrower hereby appoints the Trustee as Bond Registrar and Paying Agent under this Indenture. 9.16 5uccessor Paying Agent ol Bond ' a . The provisions of Sections 9.5 through 99 with respect to removal,resignation and appointment of a successor trustee shall be equally applicable to the removal, resignation and appointment of a successor to the raying Agent and the Bond Registrar. If permissible under applicable law,the Trustee shall be eligible for appointment as successor to the Paying Agent if the Trustee is not thein already serving in such capacity. 9.17 Confir atim of the Irru . (1) At any time while Bonds remain outstanding under this Indenture, and in any of the following circumstances, to the extent permitted by law,to wit: (A) The Trustee is in doubt as to whether or not this Indenture or any Related Document or instrument requires Bondholders' or the Bondowner Representative's consent or the consent of the Borrower or the County in connection with any proposed action; (B) The Trustee has substantial doubt as to whether its consent to a proposed action,although authorized,should in the particular circumstances be given; (C) The Trustee's consent is sought or deemed necessary in connection with a proposedaction which is not specifically dealt with or contemplated by this Indenture or any Related Document, or it is unclear whether this Indenture or any Related Document is intended to deal with the proposed action; (D) There is a disagreement as to whether a proposed action may be taken or is required to be taken; (E) There appears to be a conflict, ambiguity or inconsistency between or among the provisions of this Indenture and any Related Document other than as provided for in Sections 10.1 and 11.1; (F) There is doubt as to whether or not a proposed action falls within one of the provisions of Sections 101.1 and 11.1 authorizing such action without Bondholders' consent; (G) Bondholders' consent is required by this Indenture or any Related Document but consent cannot be obtained because it is not possible to comply with requirements of this Indenture or any Related Document as to the notice to be given to Bondholders with respect to the proposed matter requiring consent; or in any other eventuality in which it shall be necessary to determine a question arising under, or to construe, this Indenture or any Related Document, the Trustee may, and upon request of the County, the Borrower or the Holders of 25% or more in principal amount of outstanding Bonds shall,proceed in accordance with an opinion of Independent Counsel. If Bondholders'consent cannot be obtained because of the circumstances described in subparagraph (1)(G) above, a court of competent jurisdiction may amend or supplement the Loan Agreement'or this Indenture or any Related Document upon a proper showing of the necessity therefor. 51 (2) In construing and interpreting this Indenture and any other Related Document, the objective shall always be to ascertain and effectuate the intention of the parties. (3) The Trustee or successor Trustee shall not be answerable for actions taken in compliance with any final order of the court. The Trustee or successor Trustee shall not be entitled to require an indemnity bond pursuant to Section 9.1(11), prior to taking any action directed by final order of the court. ARTICLE 10 SUPPLEMENTAL INDENTURES 10.1 . The County and the Trustee may, from time to time, and at any time with the prior written consent of the Bondowner Representative, but without the consent of,or notice to, any of the other Holders, and when so required by this Indenture shall,enter into an indenture or indentures supplemental to this Indenture as shall not be inconsistent with the terms and provisions hereof (which supplemental indenture or indentures shall thereafter form a part hereof), to (1) cure any ambiguity or formal defect or omission in this Indenture or in any supplemental indenture, (2) grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Holders or Trustee, (3) more precisely identify the Trust Estate, or any other property which may become a part of the Trust Estate, (4) subject to the lien and pledge of this Indenture additional,'revenues, properties or collateral, (5) evidence the appointment of a separate trustee or a co-trustee or the succession of a new Trustee or Paying Agent or both, (6)modify,eliminate and/or add to the provisions of this Indenture to such extent as shall be necessary to prevent any interest on the Bonds from becoming includable in gross income for federal income tax purposes or to effect the qualification of this Indenture ander the Trust Indenture Act of 1939, as then amended, or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by said Trust Indenture Act of 1939, excluding however the provisions referred to in Section 316(a)(2) of said Trust Indenture Act of 1939, (7) make any ether change which is required by any provision of this Indenture or which is deemed by the Trustee or the County necessary to reconcile this Indenture with the Loan Documents, or any amendments thereto, or (8) make any other change which in the judgment of the Trustee,based upon an opinion of Bond Counsel, is necessary or desirable and will not materially adversely affect the interests of the Bondholders. 10.2 Exclusive of supplemental indentures covered by Section 10.1 and subject to the terms and provisions contained in this Section, and not otherwise, the Trustee, upon receipt of an instrument evidencing the consent to the below-mentioned supplemental indenture;by the Bondowner Representative and the Holders of not less than 51% of the aggregate principal amount of the Bonds then outstanding, shall join with the County in the execution of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular,,any of the terms or provisions contained in this Indenture or in any supplemental indenture; provided, however, that nothing herein contained shall permit or be construed as permitting(1)an extension of the maturity of the principal of or the interest on any Bond,(2) a reduction in the principal amount of any Bond or the rate of interest thereon, (3) a privilege or priority of any Bond or Bonds over any other Bond or Bonds except as may be otherwise expressly provided herein, (4) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental indenture, (5) the modification of any of the provisions of this Section, in each case without the 52 consent of the Holders of 100% of the principal amount of all Bonds affected thereby ("100% Bondholders'Consent"), or(6) modify any of the rights or obligations of the Trustee. If at any time the County shall request the Trustee to enter into any such supplemental indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed', execution of such supplemental indenture to be mailed by first class mail, postage prepaid, to the Bondholders at the addresses shown on the Bond Register. 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 Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice to any particular Bondholder if notice was generally mailed to Bondholders, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the Bondowner Representative and the Holdersof not less than 51% of the aggregate principal amount of the Bonds then 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 Bondholder shall have any right to object to any of the terms and provisions contained herein or the operation thereof,or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or County from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section permitted and provided,this Indenture shall be and is deemed to be modified and amended in accordance herewith. Anything herein to the contrary notwithstanding, a supplemental indenture under this Article 10 which adversely affects the rights and/or obligations of the Borrower under this Indenture, the Loan Agreement, the Notes, the Regulatory Agreement or the Mortgage or any other document executed in connection with the Bonds shall not become'effective unless and until the Borrower shall have consented (either in writing or by inaction as provided below) 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 such supplemental indenture, together with a copy of the proposed supplemental indenture, to be mailed by certified or registered mail to the Borrower at least 15 days prior to the proposed date of execution and delivery of any such supplemental indenture. The Borrower shall be deemed to have consented to the execution and delivery of any such supplemental indenture if the Trustee does not receive a letter signed by a Representative of the Borrower of protest or objection thereto on or before 5:30 p.m.,New York time,on the fifteenth day after the mailing of said notice and a copy of the proposed supplemental indenture to the Borrower unless such fifteenth day falls on a day which is not a Business Day, in which event the letter of objection must be received not later than the next succeeding Business Day. 10.3 Q12 ion of Bond Counsel. Any amendment governed by this Article 10 shall be accompanied by an opinion of Bond Counsel that such amendment sloes not impair the exclusion of interest on the Bonds from gross income for federal income tax purposes. ARTICLE 11 AMENDMENTS TO LOAN DOCUMENTS 11.1 Amendments Not Requiring Bondholder Consent. The County or the Trustee or both may, with the prior written consent of the Bondowner Representative, but without the consent of or notice to the Bondholders, consent, to any amendment,change or modification of any of the Loan Documents: 53 (1) which may be required or permitted with the consent of the Bondowner Representative, but without Bondholder consent, by the provisions of the Loan Documents or this Indenture; (2) for the purpose of curing any ambiguity or formal defect or omission; ( ) in connection with additional land, equipment or improvements which may be acquired and which constitute a part of the Mortgaged Property, to (A) more precisely identify the same, (B) substitute or add additional land or additional equipment or(C) sell or remove such land or equipment,all as provided in the Mortgage; provided, however, that any such amendment, change or modification of any of the Loan Documents as provided in this Section 11.1(3) shall not be effective until notice of such action is given to the Holders of the Bonds; (4) to reconcile any Loan Documents with any amendment or supplement to this Indenture;or (5) to effect any other change in a Related Document which, in the judgment of the Trustee,will not materially adversely affect the interests of the Bondholders. 11.2 Amendments ReQuiring Bondholder Consent. Except for (1) amendments, changes or modifications as provided in Section 11.1 and (2) amendments, changes or modifications permitted by any Loan Document,neither the County nor Trustee shall consent to any other amendment, change or modification of any Related Document without the giving of notice and the written approval or consent of the Bondowner Representative and the Holders of not less than 51% of the aggregate principal amount of the Bonds then outstanding given and procured as provided in this Section; provided that in no event shall such amendment, change or modification relieve the Borrower of the obligation under any Loan Documents to make when and as due any payments required for the payment of principal, interest and any premium due or to become due on the Bonds unless the consent of the Holders of all Bonds affected thereby is first secured. If at any time the County and the Borrower shall request the consent of the Trustee to any such proposed amendment, change or modification of any Loan Documents to which the County is a party or the Borrower shall request consent of the Trustee to any such proposed amendment, change or modification of any other Related Document to which the County is not a party, the Trustee shall, upon being satisfactorily indemnified with respect to expenses,cause notice of such proposed amendment,change or modification to be given in the same manner as provided in Section 10.2 with respect to supplemental indentures. 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 Holders. The Trustee shall not,however,be subject to any liability to any Holder by reason of its failure to mail such notice to any particular Bondholder if notice was generally mailed to Bondholders, and any such failure shall not affect the validity of such amendment, change or modification when consented as provided in this Section. If the Bondowner Representative and the Holders of not less than 51% of the aggregate principal amount of the Bonds then outstanding at the time of the execution of any such amendment shall consent to the execution thereof as herein provided,no Holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or County from executing the same or from taping any action pursuant to the provisions thereof. Upon the execution of any such amendment, the applicable.Loan Document thereby amended shall be deemed to be modified and amended in accordance therewith. Nothing in this Section shall permit or be construed as permitting any reduction in the payments required to be made by Sections 3.3 and 3.4 of the Loan Agreement or a reduction or change in the stated maturity of the Bonds. 54 _......_. ......... ............... . .. ......... .........._. . ......... ......... ......... ......... ......... _....._ _._. ........_ ......... ......... ......... ...... .. . . . .................................................................................. 11.3 Qpimion gf Bond Counsgl. Any amendment governed by this Article 11 shall be accompanied by an opinion of Bond Counsel that such amendment does not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. 11.4 Rights of Trustee. The Trustee shall not be required, to consent to any amendment referred to in this Article unless it has first received an opinion of Independent Counsel that such amendment is permitted by this Indenture. ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 Consent of Holders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by the Holders may be in any number of concurrent writings of similar tenor and must be signed or executed by such Holders in person or by agent appointed in writing. Proof of the execution of any such consent, request,direction, approval,objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Indenture,and shall be conclusive in favor of the Trustee with regard to any action taken by it under such request or other instrument,namely: (1) The fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof,or by an affidavit of any witness to such execution;and {2} The fact of the ownership by any person of Bonds and the amounts and numbers of such Bonds, and the date of the holding of the same, may be proved only by reference to the Bond Register. 12.2 Rights Under Indent,Yr . Nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give any person or entity other than the parties hereto,and the Bondholders,any legal or equitable right,remedy,or claim under or with respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the Holders of the Bonds hereby secured as herein provided. 12.3 Severability. If any provision of this Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule of public policy, or for any other reason, such circumstances shall. not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provisions herein contained invalid,inoperative or unenforceable to any extent whatever. 12.4 Notices. All notices, certificates or other communications hereunder shall be given to all parties identified below,shall be in writing(except as otherwise expressly provided herein) and shall be sufficiently given and shall be deemed given when delivered by hand delivery, telegram or facsimile or served by depositing the same with the United States Postal Service, or any official successor thereto, designated as Registered or Certified Mail, Return Receipt Requested,bearing adequate postage, or delivery by reputable private courier such as 55 Federal Express, Airborne, DHL or similar overnight delivery service, and addressed as hereinafter provided. Notices, except to the Trustee, shall be deemed given when mailed as provided herein. Notices to the Trustee shall be deemed given only when received by the Trustee. All parties identified below may, by written notice given by each to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required, as contemplated by this indenture. Any notice, certificate, report,financial statement or other communication properly provided by legal counsel on behalf of any party hereunder shall be deemed properly provided by the party represented by such counsel. Until otherwise provided by the respective parties, all notices, certificates and communications to each of there shall be addressed as follows: To the County: County of Contra Costa 651 Pine Street,North Wing,4th Floor Martinez, CA 94553-1295 Attention: Deputy Director-Redevelopment To the Borrower: Coggins Square Associates' c/o BRIDE Housing Corp. One Hawthorne Street,Suite 400 San Francisco, CA 94105 To the Trustee, Bond BNY Western Trust Company Registrar and Paying Agent: 550 Kearny Street, Suite 600 San Francisco, CA 94105 to the initial Bondowner Wells Fargo Bank, N.A. Representative: 707 Wilshire Boulevard, 18th Floor Los Angeles, CA 90017 Attention: Jill Koenig,Community Lending Department Confirmation: (213) 614-2501 Telecopy No.: (213) 614-4010 with a copy to: Wells Fargo Bank,N.A. 707 Wilshire Boulevard, 18th Floor Los Angeles,CA 90017 Attention: Renee Cooks,Community Lending Department Confirmation: (213) 614-7688 Telecopy No.: (213) 61.4-4010 12.5 ReQuirrd A jaroyals. Consents and approvals required by this Indenture to be obtained from the Borrower, the County or the Trustee shall be in writing and shall not be unreasonably withheld or delayed. 12.6 Counterparts. This Indenture may be simultaneously executed in several counterparts,each of which shall be an original and all of which shall constitute but one and the same instrument. 12.7 L imitcd Obligations. THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE COUNTY, PAYABLE SOLELY FROM THE REVENUES AND THE TRUST ESTATE, WHICH ARE HEREBY SPECIFICALLY ASSIGNED AND PLEDGED TO SUCH PURPOSES IN THE MANNER AND TO THE EXTENT PROVIDED HEREIN. NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT 56 _ _._. _......__ ......... ......... ......... ......... ......... ........... .... ....... ......_.... . ._..._._. ......... ......... ........... .....__.. ......... ......... ......... ......................................... THE COUNTY, TO THE LIMITED EXTENT SET FORTH HEREIN) SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OF THE COUNTY, AND NONE OF THE BONDS NOR ANY OF THE COUNTY'S AGREEMENTS OR OBLIGATIONS SHALL BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE CREDIT OF ANY OF THE FOREGOING WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE BONDS, TOGETHER WITH THE INTEREST AND PREMIUM (IF ANY) THEREON AND THE PURCHASE PRICE THEREOF, SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR ANY PUBLIC AGENCY OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE COUNTY, BUT SHALL BE PAYABLE SOLELY FROM THE FUNDS PROVIDED THEREFOR PURSUANT TO THIS INDENTURE. ITHE BONDS ARE ONLY A LIMITED OBLIGATION OF THE COUNTY AS PROVIDED BY THE ACT, AND THE COUNTY SHALL UNDER NO CIRCUMSTANCES BE OBLIGATED TO PAY THE BONDS EXCEPT FROM REVENUES AND OTHER FUNDS PLEDGED THEREFOR UNDER THIS INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE, INCLUDING THE COUNTY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, PURCHASE PRICE OF OR INTEREST ON THE BONDS, NOR IS THE STATE OR ANY POLITICAL' SUBDIVISION .OF THE STATE, INCLUDING THE COUNTY, IN ANY MANNER OBLIGATED TO MAKE ANY APPROPRIATION FOR SUCH PAYMENT. NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY OF THE BONDS OR FOR ANY CLAIM BASED THEREON OR UPON ANY OBLIGATION, COVENANT OR AGREEMENT IN THIS INDENTURE CONTAINED, AGAINST THE COUNTY, ANY PAST, PRESENT OR FUTURE MEMBER OF THE COUNTY'S BOARD OF SUPERVISORS, ITS OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, FINANCIAL ADVISORS, AGENTS OR STAFF, OR THE OFFICERS, ATTORNEYS, ACCOUNTANTS, FINANCIAL ADVISORS, AGENTS OR STAFF OF ANY SUCCESSOR PUBLIC ENTITY, AS SUCH, EITHER DIRECTLY OR THROUGH THE COUNTY OR ANY SUCCESSOR PUBLIC ENTITY, UNDER ANY RULE OF LAW OR PENALTY OR OTHERWISE, AND ANY SUCH LIABILITY OF THE COUNTY, ANY MEMBER OF THE COUNTY'S BOARD OF SUPERVISORS, ITS OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, FINANCIAL ADVISORS, AGENTS AND STAFF IS HEREBY, AND BY THE ACCEPTANCE OF THE BONDS, EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF, AND IN CONSIDERATION FOR, THE EXECUTION OF THIS INDENTURE AND THE ISSUANCE OF ANY OF THE BONDS. IT IS RECOGNIZED THAT NOTWITHSTANDING ANY OTHER PROVISION OF THIS INDENTURE, NONE OF THE BORROWER, THE TRUSTEE OR ANY BONDHOLDER SHALL LOOK TO THE COUNTY OR THE MEMBERS OF THE COUNTY'S BOARD OF SUPERVISORS, ITS OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, FINANCIAL -ADVISORS, AGENTS OR STAFF FOR DAMAGES SUFFERED BY THE BORROWER, THE TRUSTEE OR SUCH BONDHOLDER AS A RESULT OF THE FAILURE OF THE COUNTY TO PERFORM ANY COVENANT, UNDERTAKING OR OBLIGATION UNDER THIS INDENTURE, THE LOAN AGREEMENT, THE BONDS, THE REGULATORY AGREEMENT, ANY OF THE LOAN 'DOCUMENTS OR ANY OF THE OTHER DOCUMENTS REFERRED TO HEREIN, OR AS A RESULT OF THE INCORRECTNESS OF ANY REPRESENTATION 57 ......... ......... ......... .........._..__... ............. ........._.... . .......... ......... ......... ......... ......... ......... ............... _....._.. .. .... ... _........ ......... ......... ......... . . .................................................. MADE BY THE COUNTY IN ANY OF SUCH DOCUMENTS, NOR FOR ANY OTHER REASON EXCEPT FOR REPRESENTATIONS MADE BY THE COUNTY IN THE CLOSING CERTIFICATE OF THE COUNTY AND THE OPINION OF COUNSEL TO THE COUNTY. ALTHOUGH THIS INDENTURE RECOGNIZES THAT SUCH DOCUMENTS SHALL NOT GIVE RISE TO ANY PECUNIARY LIABILITY OF THE COUNTY,NOTHING CONTAINED IN THIS INDENTURE 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 COUNTY) IN ANY COURT OR BEFORE ANY GOVERNMENTAL BODY, AGENCY OR INSTRUMENTALITY OR OTHERWISE AGAINST THE COUNTY OR ANY OF ITS OFFICERS OR EMPLOYEES TO ENFORCE THE PROVISIONS OF ANY OF SUCH DOCUMENTS WHICH THE COUNTY IS OBLIGATED TO PERFORM AND THE PERFORMANCE OF WHICH THE COUNTY HAS NOT ASSIGNED TO THE TRUSTEE OR ANY OTHER PERSON. 12.8 CQmplete Agreement. The County and the Trustee understand that oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt,including promises to extend or renew such debt, are not enforceable. To protect the County and the Trustee from misunderstanding or disappointment,any agreements the County and the Trustee reach covering such matters are contained in this Indenture,which is the complete and exclusive statement of the agreement between the County and the Trustee, except as the County and the Trustee may later agree in writing to modify this Indenture (subject to the provisions of Article 10). 12.9 Governing Law. This Indenture shall be governed by and interpreted in accordance with internal laws of the State without regard to conflicts of laws principles. 58 _ _ _.. . ..... . _._ ......... ......... ......... ._......... ......._. ............._.......... ...._...... ......... ......... ......... .._...... ......... ............ ......... ......... ......... ......... IN WITNESS WHEREOF, the County has caused this Indenture to be signed in its name and on its behalf by its duly authorized officer, and to evidence its acceptance of the trusts hereby created the Trustee has caused this Indenture to be signed in its name and on its behalf by its duly authorizedofficer, all as of the date first above written. COUNTY OF CONTRA COSTA By: Deputy Director-Redevelopment BNY WESTERN TRUST COMPANY, as Trustee By: Authorized'Officer 03007.04:j4036 59 _....... ......... ......... ......... ......._. ......._.. _.. ._._. _....._.. .._.._... _........ ......... .......... ..._.._.. ......... ......_.. ......... ......... ......... .......... EXHIBIT A-1 (FORM OF REQUISITION CERTIFICATE) Project Fund (Bond Proceeds Account) Requisition No. Date: REQUISITION CERTIFICATE TO: BNY WESTERN TRUST COMPANY, AS TRUSTEE UNDER i THE INDENTURE OF TRUST DATED AS OF OCTOBER 1, 1998, BETWEEN THE COUNTY OF CONTRA COSTA AND THE TRUSTEE. Coggins Square Associates, a California Limited Partnership (the "Borrower"), hereby requests that the following amounts be paid from the Bond Proceeds Account of the Project Fund to the following payees for the following purposes: Amount: Payee: Address: Less 10% Retainage $ The Borrower hereby certifies that: (1) obligations in the stated amounts have been incurred and performed at the Project and are presently due and payable and that each item thereof is a proper charge against the Project Fund and has not been the subject of a previous withdrawal from.the Project Fund; (2) to the best of the undersigned's knowledge there has not been filed with or served upon the County or the Borrower notice of any lien,right or attachment upon,or claim affecting the right of any such persons, firms or corporations to receive payment of, the respective amounts stated in this requisition which has not been released or will not be released simultaneously with the payment of such obligation; (3)(A) obligations as stated on this requisition have been properly incurred, (B) such work was actually performed or such materials or supplies were actually furnished or installed in or about the Project, (C) if contested, bond has been made by the Borrower and (D) either such materials or supplies are not subject to any lien or security interestor any such lien or security interest will be released or discharged upon payment of this requisition; (4) the amounts to be disbursed were made or incurred or financed and were necessary for the Project and were made or incurred in accordance with the construction contracts, plans and specifications heretofore in effect; A-1-1 . . . ......................................................................................................................................................................................................................... .........._...._............ ...._.... ...._..... ....._._..__........._......_.............._................_...... ........_.... ..._._._......._... (5) the amounts to be disbursed represent a part of the funds due and payable for Project Costs; such funds were not paid in advance of the time, if any, fixed for payment and such funds are due in accordance with usual and customary practice under existing conditions; (6) the moneys requisitioned are not greater than those necessary to meet obligations due and payable or to reimburse the Borrower for its funds actually advanced for Project Costs and do not represent a reimbursement to the Borrower for working capital; (7) the amount remaining in the Project Fund, together with expected investment income on the Project Fund, will, after payment of the amount requested by this Requisition Certificate, be sufficient to pay the costs of completing the Project substantially in accordance with the construction contracts, plans and specifications and building permits therefor, if any, currently in effect; (8) all of the funds being requisitioned are being used in compliance with all tax covenants set forth in the Indenture,the Loan Agreement and the RegulatoryAgreement; (9) the Borrower is not in default under the Loan Agreement, the Regulatory Agreement or any of the Loan Documents and nothing has occurred to the knowledge of the Borrower that would prevent the performance of its obligations under the Loan Agreement, the Regulatory Agreement or any of the other Loan Documents; (10) no amounts being requisitioned by this requisition will be used to pay, or reimburse,any Costs of Issuance incurred in connection with the issuance of the Bonds;and NOTE: The final Requisition Certificate shall contain the following additional certification and shall have attached to it an itemization of all costs requisitioned from the Bond Proceeds Account: Not less than 95% of the sum of: (A) the amounts requisitioned by this requisition;plus (B) all amounts previously requisitioned and disbursed from the Bond Proceeds Account of the Project Fund; have been or will be applied by the Borrower to pay Qualified Project Costs. A-1-2 .... ................................................................................................................................................................................................... ......... ......... ......... ......... ...._.... ....___.... ......... .......... ......... . ............_...........__...... (11) all rights, title and interest to any and all personal property acquired with the proceeds of this requisition is vested in the Borrower. COGGINS SQUARE ASSOCIATES, a California Limited Partnership By: Authorized Borrower Representative Requested this day of [PROJECT ENGINEER] Approved this _ day of "Bondowner Representative" WELLS FARGO BANK, NATIONAL ASSOCIATION By: By: A-1-3 ............. EXHIBIT A-2 (FORM OF REQUISITION CERTIFICATE) Project Fund (Contribution Account) Requisition No. Date: REQUISLTIO-N CERTIFICATE TO: BNY WESTERN TRUST COMPANY, AS TRUSTEE UNDER THE INDENTURE OF TRUST DATED AS OF OCTOBER 1, 1998, BETWEEN THE COUNTY OF CONTRA COSTA AND THE TRUSTEE. Coggins Square Associates, a California Limited Partnership (the "Borrower"), hereby requests that the following amounts be paid from the Contribution Account of the Project Fund to the following payees for the following purposes: Amount: Payee: Address: Less 10% Retainage $ The Borrower hereby certifies that: (1) obligations in the stated amounts have been incurred and performed at the Project and are presently due and payable and that each item thereof is a proper charge against the Project Fund and has not been the subject of a previous withdrawal from the Project Fund; (2) to the best of the undersigned's knowledge there has not been filed with or served upon the County or the Borrower notice of any lien,right or attachment upon,or claim affecting the right of any such persons, firms or corporations to receive payment of, the respective amounts stated in this requisition which has not been released or will not be released simultaneously with the payment of such obligation; (3)(A) obligations as stated on this requisition have been properly incurred, (B) such work was actually performed or such materials or supplies were actually furnished or installed in or about the Project, (C) if contested, bond has been made by the Borrower and (D) either such materials or supplies are not subject to any lien or security interest or any such lien or security interest will be released or discharged upon payment of this requisition; (4) the amounts to be disbursed were made or incurred or financed and were necessary for the Project and were made or incurred in accordance with the construction contracts, plans and specifications heretofore in effect; A-2-1 (s) the amounts to be disbursed represent a part of the funds due and payable for Project Costs; such funds were not paid in advance of the time, if any, fixed for payment and such funds are due in accordance with usual and customary practice under existing conditions; (6) the moneys requisitioned are not greater than those necessary to meet obligations due and payable or to reimburse the Borrower for its funds actually advanced for Project Costs and do not represent a reimbursement to the Borrower for working capital; (7) the amount remaining in the Project Fund, together with expected investment income on the Project Fund, will,after payment of the amount requested by this requisition, be sufficient to pay the costs of completing the Project substantially in accordance with the construction contracts,plans and specifications and building permits therefor,if any, currently in effect; (8) the Borrower is not in default ,under the Loan Agreement, the Regulatory Agreement or any of the Loan Documents and nothing has occurred to the knowledge of the Borrower that would prevent the performance of its obligations under the Loan Agreement, the Regulatory Agreement or any of the other Loan Documents; (9) all rights, title and interest to any and all personal property acquired with the proceeds of this requisition is vested in the Borrower. COGGINS SQUARE ASSOCIATES, a California Limited Partnership By: Authorized Borrower Representative Requested this day of [PROJECT ENGINEER] Approved this day of "Bondowner Representative„ WELLS FARGO BANK, NATIONAL ASSOCIATION By: By: A-2-2 _..._.. ......... ......... ......... ......... ......... ......... ........._....._. ..........._...._...... ......._. ._....... ......... ......... ..._...... ......... ......... ......... ......... ......... .._..... EXHIBIT B (FORM OF REQUISITION CERTIFICATE) Mortgage Recovery Fund Date: TO: BNY WESTERN TRUST COMPANY, AS TRUSTEE UNDER THE INDENTURE OF TRUST DATED AS OF OCTOBER 1, 1998, BETWEEN';THE COUNTY OF CONTRA COSTA AND THE TRUSTEE. Coggins Square Associates, a California Limited Partnership (the "Borrower"), hereby requests that Bond proceeds in the amount of $ plus all investment earnings (if any) thereon be paid from the Mortgage Recovery Fund to for the purpose of effecting the redemption and discharge of County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments), 1998 Series D, Issue (the "Note"), in the full, remaining outstanding amount of $ Payee and Wire Instructions [WIRE INSTRUCTIONSFOR l By: Authorized Borrower Representative Approved this day of "Bondowner Representative„ WELLS FARGO BANK,'NATIONAL ASSOCIATION By: Title: Acquisition No. Date: &1 EXHIBIT C-I FORM OF ISSUE I BUND No. 1 $5,793,000 UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF CONTRA COSTA MULTIFAMILY HOUSING REVENUE BUNDS (COGGINS SQUARE APARTMENTS) 1998 SERIES D, ISSUE I THIS BOND IS A RESTRICTED SECURITY AND APRIL BE TRANSFERRED ONLY AS PROVIDED HEREIN AND IN THE HEREIN DESCRIBED INDENTURE. Interest Rate Maturity Date Dated Date C.5d.'r?M 6.25°lam October 1, 2028 October 16, 1998 REGISTERED HOLDER: Wells Fargo Bank, National Association FACE AMOUNT: Five Million Nine Hundred Thousand Dollars The County of Contra Costa (the "County"), a political subdivision and public body corporate and politic of the State of California and empowered to issue revenue bonds pursuant to the provisions of Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act"), for value received, promises to pay to the Holder specified above, or registered assigns, but only from the Trust Estate under the Indenture (defined below), and upon presentation and surrender hereof at the principal corporate trust office of BNY Western Trust Company, as trustee (the "Trustee") in San Francisco, California, the principal amount of this Band (determined in accordance with the Indenture), on the Maturity Date specified above, or, if this Bond is redeemable as stated below, on a prior date on which it shall have been duly called for redemption, and to pay interest on said principal amount to the Record Date Holder, until the principal amount is paid or discharged, at the interest rate per annum specified above. Interest hereon shall be calculated on the basis of a 360-day year of twelve 30-day months. Prior to the Conversion Date, interest only shall be payable on the first day of each month, commencing November 1, 1998, and, following the Conversion Date,principal and interest shall be payable semiannually on April 1 and October 1 of each year, commencing _ 1, _ (each a "Payment Date"). This Bund shall bear interest from the Dated Date specified above or (in the case of transfer or exchange) from the most recent .Payment Date to which interest has been paid or provided for. Interest shall be payable by check mailed to the Holder at such Holder's address as it appears on the Bond Register on the Record Date, except as otherwise provided in the Indenture. Notwithstanding the foregoing, any Holder of at least $1,000,000 principal amount of any Bonds (or a lesser amount of such Bonds if such Bonds constitute all the Bonds at the time outstanding), upon payment by the Halder of the cost of such wire transfer,may file with the Trustee an instrument satisfactory to the Trustee requesting the amounts payable by the Trustee to such Holder be paid by transferring by wire transfer in immediately available funds, on the day such payment C-1-1 ___ _. .... ... __....... _....__.. ................................ _.. ......... ...._.._. ......... ......... ......... ......_.........................................................................._..........._... is due, the amount to be distributed to such Holder to a designated account maintained by such Holder at any other bank in the United States. Notwithstanding the foregoing, all payments of principal of and interest on the Bonds payable on the Maturity Date, the Purchase Date or the Discharge Date shall only be payable upon presentation of the Bonds, at the principal corporate trust office of the Trustee. The principal of and interest and premium, if any, on this Bond are payable in lawful money of the United States of America. This Bond is one of a duly authorized issue of bonds of the County, issued in the total authorized face amount of $5,793,000, known as the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments ) 1998 Series D, Issue I (the "Issue I Bonds"), issuedin accordance with an Indenture of Trust dated as of October 1, 1998 (the "Indenture), by and between the County and the Trustee, setting forth the terms upon which such Bonds are issued. An additional series of bonds known as the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue 11 (the "Issue lI Bonds" and, collectively, with the Issue I Bonds, the "Bands") is also authorized to be issued pursuant to the Indenture. The Bonds are issued by the County for the purpose of making a loan of the proceeds thereof (the "Loan") to Coggins Square Associates, a California Limited Partnership (the "Borrower"), under the provisions of a Loan Agreement dated as of October 1, 1998 (the "Loan Agreement"), by and among the County,'Wells Fargo Bank, National Association (the "Bondowner Representative") and the Borrower, to finance the construction of Coggins Square Apartments to consist of 86 units of residential rental housing located in the County of Contra Costa,constituting "residential rental housing facilities" within the meaning of the Act (the "Project"). The Loan is evidenced by a promissory note from the Borrower to the County and endorsed without recourse by the County to the Trustee. The Borrower has agreed under the Loan Agreement to repay the Loan, together with interest thereon,in amounts and at times sufficient to pay the principal of,premium., if any, and interest on the Fonds as the same shall become due and payable. Pursuant to the Indenture, the County has assigned and pledged to the Trustee, for the equal and ratable benefit of the Holders of the Bonds, all revenues and receipts derived by the Borrower from the operation of the Project. Pursuant to a Construction;Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing filed with respect to the Project (the "Mortgage") dated as of October 1, 1998 and executed by the Borrower for the benefit of the Trustee, the Borrower has granted to the Trustee, for the equal and ratable benefit of the Holders of the Bonds, a first priority mortgage lien on and a security interest in the Project and the rents and leases thereof. The Mortgage may be released or modified in any respect upon compliance with certain conditions in the Mortgage and the Indenture. THIS BOND AND THE INTEREST HEREON IS A LIMITED OBLIGATION OF THE COUN'T'Y, PAYABLE SOLELY FROM THE TRUST ESTATE. NEITHER THE STATE OF CALIFORNIA (THE "STATE"), MOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE COUNTY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) NOR ANY POLITICAL SUBDIVISION OF THE STATE SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINTCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR.FOR THE PERFORMANCE OF ANY PLEDGE,OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OF THE COUNTY, AND NONE OF THE BONDS OR ANY OF THE COUNTY'S AGREEMENTS OR OBLIGATIONS SHALL BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR. A LOAN OF THE CREDIT OF ANY OF THE FOREGOING WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THIS BOND, TOGETHER WITH THE INTEREST AND PREMIUM (IF ANY) THEREON AND THE PURCHASE PRICE THEREOF, SHALL NOT BE DEEMED TO G1-2 .... .__...... ......... ......... ......... ......... ......... ......... ......... ......... ....._... . ... ...... ......... .......... ......... ......... .__....... ......... .......... ......... ........... ...................... CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR OF ANY POLITICAL SUBDIVISION OF THE STATE OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE COUNTY, BUT SHALL BE PAYABLE SOLELY FROM THE FUNDS PROVIDED THEREFOR PURSUANT TO THE INDENTURE. THIS BOND IS ONLY A LIMITED OBLIGATION OF THE COUNTY AS PROVIDED BY THE ACT, AND THE COUNTY SHALL UNDER NO CIRCUMSTANCES BE OBLIGATED TO PAY THE BONDS EXCEPT FROM THE TRUST ESTATE. The Bonds are subject to mandatory redemption or purchase by the Borrower in whole or in part, on any Business Day, in the event of damage to or destruction or condemnation of the Project or any part thereof as provided in the Indenture, the Loan Agreement and the Mortgage, at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. The Issue I Bonds are subject to mandatory redemption in whole on October 1, 2001, at a price equal to the principal amount thereof, plus accrued interest, if certain conditions related to the completion of the Project are not satisfied as set forth in the Indenture. The Issue I Bonds are subject to mandatory redemption in part on October 1, 2000,in an amount sufficient to reduce the outstanding principal balance of the bonds to the Post Conversion Amount at a price equal to the principal amount thereof, plus accrued interest to the redemption date. The Issue I Bonds are subject to mandatory redemption on October 1, 2000, from Bond Proceeds remaining on deposit in the Bond Proceeds Account of the Project Fund at a redemption price equal to the principal amount thereof,plus accrued interest to the redemption date, unless the Trustee shall have received an opinion of Bond Counsel to the effect that a redemption on a later date will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. The Issue I Bonds are subject to redemption at the option of the Borrower,in whole or in part on any date, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date,plus a redemption premium as follows: Remotion Period Red=tion Price 1, to 1, 103% 1, to 1, 102 1, to 1, 101 1, and thereafter 100 The Issue I Bonds are subject to mandatory sinking fund redemption, on each April 1 and October 1, commencing April 1, 2001, at a redemption price equal to the principal amount thereof, without premium,plus accrued interest to the redemption date in the years and in the principal amounts set forth in the Indenture. The Bonds are subject to mandatory redemption in whole at a, price equal to the principal amount thereof plus accrued interest to the redemption date upon (i) the failure to pay principal, interest or premium,if any, on the Bonds, when due, (ii) failure to pay any other amounts due under the Indenture, (iii) the occurrence of a Default under the Loan Agreement, (iv) the occurrence of certain proceedings relating to the bankruptcy or the insolvency of Borrower. C-1-3 11 ...... _ ......... ......... ......... ......... ......... ......... ......... ._....._. ...... ........_. . _ ......... ......... ......._. ......... ......... ......... ..__.._.. .......... ._....... ......... ......... ......... ......... If at any time, Bonds are subject to redemption or acceleration, by the Bondowner Representative, in lieu of such redemption or acceleration, the Borrower may direct the Trustee to purchase such Bonds which would otherwise be subject to redemption or acceleration from moneys provided to the Trustee by the Borrower and deposited by the Trustee in a separate account under the Indenture. The purchase price of such Bonds shall be equal to the applicable redemption or acceleration price. The Borrower may, at its option to be exercised on or before the sixtieth day next preceding any date specified in the mandatory redemption schedule referenced above, deliver to the Trustee written notice, which shall (a) specify a principal amount of such Bonds delivered to the Trustee therewith, and/or (b) specify a principal amount of such Bonds previously redeemed(otherwise than pursuant to the above mandatory redemption schedule)or purchased and cancelled by the Trustee and not theretofore applied as a credit against any redemption of Bonds pursuant to the above mandatory redemption schedule, and (c) instruct the Trustee to apply the principal amount of such Bonds so delivered or previously redeemed or purchased and cancelled for credit against the principal installments to be prepaid pursuant to the mandatory sinking fund redemption schedule upon compliance by the Borrower with certain provisions of the Loan Agreement. Each such Band so delivered or previously redeemed or purchased and cancelled shall be credited by the Trustee in chronological'order at 100%of the principal amount thereof against the next succeeding and future principal installments to be prepaid pursuant to the mandatory sinking fund redemption schedule. Notice of redemption or purchase shall be mailed to each Holder of a Bond to be purchased or redeemed not less than 30 days prior to the redemption or purchase date. No defect in or failure to give notice of redemption or purchase shall affect the validity of the proceedings for redemption or purchase of any Bond not affected by such defect. All Bonds so called for redemption or purchase, provided funds for their redemption or purchase have been duly deposited,will,except as otherwise provided in the Indenture,cease to bear interest on the specified redemption or purchase date and except for the purpose of payment shall not be entitled to the lien of the Indenture or the benefits of the Loan Agreement. The Holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any actionwith 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. Modifications or alterations of the Indenture, of any indenture supplemental thereto or of the Loan Documents, may be made only to the extent and in the circumstances permitted by the Indenture and may be made in certain cases without the consent of the holders of the Bonds. Except upon the satisfaction of certain conditions contained in the Indenture, the Bonds are issued as fully registered coupons in the denomination of$100,000 or any integral multiple thereof of $1 in excess of $100,000 of a single maturity, except that one Bond may be in a smaller denomination. The transfer of this Bond is subject to certain restrictions as provided in the Indenture and described below and to registration by the Holder in person or by the Holder's attorney upon surrender of this Bond at the principal corporate trust office of the Bond Registrar, duly endorsed or accompanied by a written instrument or instruments of transfer in the form printed on this Bond or in another form satisfactory to the Bond Registrar and executed and with guaranty of signature by the Holder or his, her or its attorney duly authorized in writing, containing written instructions as to the details of the registration of the transfer of the Bond. Thereupon the County shall execute (if necessary)and the Bond Registrar shall authenticate and deliver in the name of the transferee or transferees (but not registered in blank or to "bearer" or C-1-4 ......... ......... ......... ......... ......... ......... ......... ..........__... ...__..........._.. .. ......... ......... ......... ._....._. .._........... ......_.. ......... ......... ......... ......... ......... a similar designation), one or more new Bonds of any authorizeddenomination or denominations, of a like principal amount having the same stated maturity and interest rate. The Bonds may be transferred, as a whole or in part, to one or more Bondholders only upon receipt by the Trustee from such Bondholder's prospective transferee of a purchaser's letter substantially in the form set forth in Exhibit D to the Indenture and upon the Bondholder's agreement to indemnify the County and the Trustee as provided in the Indenture. This Bond shall be governed by and construed in accordance with the laws of the State of California. The terms of this Bond are subject in all respects to the terms of the Indenture. If there is a conflict between the provisions of this Bond and the Indenture, the Indenture shall control. This Bond shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Indenture until it shall have been authenticated'by the execution by the Bond Registrar on the certificate of authentication endorsed hereon. All capitalized terms used in this Bond and not defined herein shall have the meaning ascribed thereto in the Indenture. IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Indenture and the issuance of this Bond do exist,have happened and have been performed in due time,form and manner as required by law. C-I-5 ......... ......... ............. . .. __ . .......... .._......... ......._. ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... __. 111.1. ........ ........_._.. ._.__..._..._...... IN WITNESS WHEREOF, the County has caused this Bond to be executed with the facsimile or manual signature of the Chair of its Board of Supervisors and attested by facsimile or manual signature of the Clerk of its Board of Supervisors, and has caused this Bond to be dated as of the Dated Date shown above. COUNTY OF CONTRA COSTA By: Chair of the Board of Supervisors (SEAL) Attest: By: Clerk of the Board of Supervisors CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within-mentioned Indenture. Date of Authentication: BNY WESTERN TRUST COMPANY, as Bond Registrar By: Authorized Officer C-1-b (FORM OF ASSIGNMENT) For value received the undersigned hereby sells, assigns and transfers unto (Name,Address and Tax Identification or Social Security Number) the within.-mentioned registered Bond and hereby irrevocably constitute(s)and appoint(s) attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises. Dated: Signatures Guaranteed: Note: Signature(s)must be guaranteed by an eligible Note: The signatures(s) on this Assignment must guarantor. correspond with the name(s) as written on the face of the within Fond in every particular without alteration or enlargement or any change whatsoever. C-1-7 EXHIBIT C-2 FORM OF ISSUE II BOND No. 1 $3,652,053 UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF CONTRA COSTA MULTIFAMILY HOUSING REVENUE BONDS (COGGINS SQUARE APARTMENTS) 1998 SERIES D, ISSUE II THIS BOND IS A RESTRICTED SECURITY AND APRIL BE TRANSFERRED ONLY AS PROVIDED HEREIN AND IN THE HEREIN DESCRIBED INDENTURE. nter?.stRate Maturity Date Dated Date CCISIP 5.50% October 1, 2007 October 16, 1998 REGISTERED HOLDER: Wells Fargo Bank, National Association FACE AMOUNT: Four Million One Hundred Thousand Dollars The County of Contra Costa (the "County„), a political subdivision and public body corporate and politic of the State of California and empowered to issue revenue bonds pursuant to the provisions of Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act"), for value received, promises to 'pay to the Holder specified above, or registered assigns, but only from the Trust Estate under the Indenture (defined below), and upon presentation and surrender hereof at the principal corporate trust office of BNY Western Trust Company, as trustee (the "Trustee") in San Francisco, California, the principal amount of this Bond (determined in accordance with the Indenture), on the Maturity Date specified above, or, if this Bond is redeemable as stated below, on a prior date on which it shall have been duly called for redemption, and to pay interest on said principal amount to the Record Date Holder until the principal amount is paid or discharged, at the interest rate per annum specified above. Interest hereon shall be calculated on the basis of a 360-day year of twelve 30-day months. Prior to the Conversion Date, interest only shall be payable on the first day of each month, commencing November 1, 1998, and, following the Conversion Date,principal and interest shall be payable semiannually on April 1 and October 1 of each year, commencing _ 1, _ (each a "Payment Date"). This Bond shall bear interest from. the Dated Date specified above or (in the case of transfer or exchange) from the most recent Payment Date to which interest has been paid or provided for. Interest shall be payable by check :mailed to the Holder at such Holder's address as it appears on the Bond Register on the record Date, except as otherwise provided in the Indenture. Notwithstanding the foregoing, any Halder of at least $1,000,000 principal amount of any Bonds (or a lesser amount of such Bonds if such Bonds constitute all the Bonds at the time outstanding), upon payment by the Holder of the cost of such wire transfer,may file with the Trustee an instrument satisfactory to the Trustee requesting the amounts payable by the Trustee to such Holder be paid by transferring by wire transfer in immediately available funds, on the day such payment C-2-1 ............................... . ......... ._........._. ............ ......... ..............._..................... ............_...__......__...__....... _...._... ...._......._......... is due,the amount to be distributed to such Holder to a designated account maintained by such Holder at any other bank in the United States. Notwithstanding the foregoing, all payments of principal of and interest on the Bonds payable on the Maturity Date, the Purchase Date or the Discharge Date shall only be payable upon presentation of the Bonds, at the principal corporate trust office of the Trustee. The principal of and interest and premium, if any, on this Bond are payable in lawful money of the United States of America. This Bond is one of a duly authorized issue of bonds of the County, issued in the total authorized face amount of $3,652,053, known as the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue 11 (the "Issue 11 Bonds"), issued in accordance with an Indenture of Trust dated as of October 1, 1998 (the "Indenture), by and between the County and the Trustee, setting forth the terms upon which such Bonds are issued. An additional series of bonds known as the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I (the "Issue I Bonds" and, collectively, with the Issue I Bonds, the 'Bonds") is also authorized to be issued pursuant to the Indenture. The Bonds are issued by the County for the purpose of making a loan of the proceeds thereof (the "Loan") to Coggins Square Associates, a California Limited Partnership (the "Borrower"), under the provisions of a Loan Agreement dated as of October 1, 1998 (the "Loan Agreement"), by and among the County,', Wells Fargo Bank, National Association (the "Bondowner Representative") and the Borrower, to finance the construction of Coggins Square Apartments to consist of 86 units of residential rental housing located in the County of Contra Costa,constituting "residential rental housing facilities" within the meaning of the Act (the "Project"). The Loan is evidenced by a promissory note from the Borrower to the County and endorsed without recourse by the County to the Trustee. The Borrower has agreed under the Agreement to repay the Loan, together with interest thereon, in amounts and at tunes sufficient to pay the principal of, premium, if any; and interest on the Bonds as the same shall become due and payable. Pursuant to the Indenture, the County has assigned and pledged to the Trustee, for the equal and ratable benefit of the Holders of the Bonds, all revenues and receipts derived by the Borrower from the operation of the Project. Pursuant to a Construction',Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing filed with respect to the Project (the "Mortgage") dated as of October 1, 1998 and executed by the Borrower for the benefit of the Trustee, the Borrower has granted to the Trustee, for the equal and ratable benefit of the Holders of the Bonds,a first priority mortgage lien on and a security interest in the Project and the rents and leases thereof. The Mortgage'may be released or modified in any respect upon compliance with certain conditions in the Mortgage and the Indenture. THIS BOND AND THE INTEREST HEREON IS A LIMITED OBLIGATION OF THE COUNTY, PAYABLE SOLELY FROM THE TRUST ESTATE. NEITHER THE STATE OF CALIFORNIA (THE "STATE"), NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE COUNTY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) NOR ANY POLITICAL SUBDIVISION OF THE STATE SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OF THE COUNTY, AND NONE OF THE BONDS OR ANY OF THE COUNTY'S AGREEMENTS OR OBLIGATIONS SHALL BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS'OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE CREDIT OF ANY OF THE FOREGOING WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THIS BOND, TOGETHER WITH THE INTEREST AND PREMIUM (IF ANY) THEREON AND THE PURCHASE PRICE THEREOF, SHALL NOT BE DEEMED TO C-2-2 CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR OF ANY POLITICAL SUBDIVISION OF THE STATE OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE COUNTY, BUT SHALL BE PAYABLE SOLELY FROM THE FUNDS PROVIDED THEREFOR PURSUANT TO THE INDENTURE. THIS BOND IS ONLY A LIMITED OBLIGATION OF THE COUNTY AS PROVIDED BY THE ACT, AND THE COUNTY SHALL UNDER NO'CIRCUMSTANCES BE OBLIGATED TO .PAY THE BONDS EXCEPT FROM THE TRUST ESTATE. The Bonds are subject to :mandatory redemption or purchase by the Borrower in whole or in part, on any Business Day, in the event of damage to or destruction or condemnation of the Project or any part thereof as provided in the Indenture, the Loan ;Agreement and the Mortgage, at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. The Issue I Bonds are subject to mandatory redemption in whole on October 1, 2001, at a price equal to the principal amount thereof, plus accrued interest,if certain conditions related to the completion of the Project are not satisfied as set forth in the Indenture. The Issue I Bonds are subject to mandatory redemption in part on October 1,2000, in an amount sufficient to reduce the outstanding principal balance of the bonds to the Post Conversion Amount at a price equal to the principal amount thereof, plus accrued interest to the redemption date. The Issue I Bonds are subject to mandatory redemption on October 1, 2000, from Bond Proceeds remaining on deposit in the Bond Proceeds Account of the Project Fund at a redemption price equal to the principal amount thereof,plus accrued interest to the redemption date, unless the Trustee shall have received an opinion of Bond Counsel<to the effect that a redemption on a later date will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. The Issue I Bonds are subject to redemption at the option of the Borrower, in whole or in part on any date, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date,plus a redemption premium as follows: RRgdemption Period Redemption Pry 1, to 1, 103% 1, to 1, 1.02 1, to 1, 101 1, and thereafter 100 The Issue I Bonds are subject to mandatory sinking fund redemption, on each April 1 and October 1, commencing April 1,2001, at a redemption price equal to the principal amount thereof,without premium, plus accrued interest to the redemption date in the years and in the principal amounts set forth in the Indenture. The Bonds are subject to mandatory redemption in whole at a price equal to the principal amount' thereof plus accrued interest to the redemption date upon (i) the failure to pay principal, interest on premium, if any, on the Bonds,when due, (ii) failure to pay any other amounts due under the Indenture, (iii) the occurrence of a Default under the Loan Agreement, (iv) the occurrence of certain proceedings relating to the bankruptcy or the insolvency of Borrower. C-2-3 .. ................................................................................................................................................................................................. .. ...._...... ...._.... . ......... .................._... .._..... .............. .......... .......... ..........._....__......_...._........ If at any time, Bonds are subject to redemption or acceleration by the Bondowner Representative, in lieu of such redemption or acceleration, the Borrower may direct the Trustee to purchase such Bonds which would otherwise be subject to redemption or acceleration from moneys provided to the Trustee by the Borrower and deposited by the Trustee in a separate account under the Indenture. The purchase price of such Bonds shall be equal to the applicable redemption or acceleration price. Notice of redemption or purchase shall be mailed to each Holder of a Bond to be purchased or redeemed not less than 30 days prior to the redemption or purchase date. No defect in or failure to give notice of redemption or purchase shall affect the validity of the proceedings for redemption or purchase of any Bond not affected by such defect. All Bonds so called for redemption or purchase, provided funds for their redemption or purchase have been duly deposited,will, except as otherwise provided in the Indenture, cease to bear interest on the specified redemption or purchase date and except for the purpose of payment shall not be entitled to the lien of the indenture or the benefits of the Loan Agreement. The Holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto,except as provided in the Indenture. Modifications or alterations of the Indenture, of any indenture supplemental thereto or of the Loan Documents, may be made only to the extent and in the circumstances permitted by the Indenture and may be made in certain cases without the consent of the holders of the Bonds. Except upon the satisfaction of certain conditions contained in the Indenture, the Bonds are issued as fully registered coupons in the denomination of$100,000 or any integral multiple thereof of $1 in excess of $100,000 of a single maturity, except that one Bond may be in a smaller denomination. The transfer of this Bond is subject to certain restrictions as provided in the Indenture and described: below and to registration by the Holder in person or by the Holder's attorney hereof upon surrender of this Bond at the principal corporate trust office of the Bond Registrar, duly endorsed or accompanied by a written instrument or instruments of transfer in the form printed on this Bond or in another form satisfactory to the Bond Registrar and executed and with guaranty of signature by the Holder or his, her or its attorney duly authorized in writing, containing written instructions as to the details of the registration of the transfer of the Bond. Thereupon the County shall execute(if necessary) and the Bond Registrar shall authenticate and deliver in the name of the transferee or transferees(but not registered in blank or to "bearer" or a similar designation), one or more new Bonds of any authorized' denomination or denominations,of a like principal amount having the same stated maturity and interest rate. The Bonds may be transferred, as a whole or in part, to one or more Bondholders only upon receipt by the Trustee from such Bondholder's prospective transferee of a purchaser's letter substantially in the form set forth in Exhibit D to the indenture and upon the Bondholder's agreement to indemnify the County and the Trustee as provided in the Indenture. This Bond shall be governed by and construed in accordance with the laws of the State of California. The terms of this Bond are subject in all respects to the terms of the indenture. If there is a conflict between the provisions of this Bond and the Indenture,the Indenture shall control. C-2-4 1.111.... . ......... ......... ......... ......... ......... ......... ......... ......... ......... ..............._........ ._....... .......... .......... _........ _..._.._. ........_ ......... ....................................................... This Bond shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Indenture until it shall have been authenticated by the execution by the Bond Registrar on the certificate of authentication endorsed hereon. All capitalized terms used in this Bond and not defined herein shall have the meaning ascribed thereto in the Indenture. IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Indenture and the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law. C-2-5 . . . . ........................................................................................................................................................................................................ ........ ......_._...._._.._.... .. ......_.. ._.........._._...... ...._..........._...... ..........._. .............._...._.._.............._......_... IN WITNESS WHEREOF, the County has caused this Bond to be executed with the facsimile or manual signature of the Chair of its Board of Supervisors and attested by facsimile or manual signature of the Clerk of the Board of Supervisors, and has caused this Bond to be dated as of the Dated Date shown above. COUNTY OF CONTRA COSTA By: Chair of the Board of Supervisors (SEAL) Attest: By: Clerk of the Board of Supervisors CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within-mentioned Indenture. Date of Authentication: BNY WESTERN TRUST COMPANY, as Bond Registrar By: Authorized Officer C-2-6 (FORM OF ASSIGNMENT) For value received the undersigned hereby sells, assigns and transfers unto (Name,Address and Tax Identification or Social Security Number) the within-mentioned registered Pond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises. Dated: Signatures Guaranteed: Note: Signature(s)must be guaranteed by an eligible Note: The signatures(s) on this Assignment must guarantor. correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. C-2-7 .............................................................................................................................................................................................. .......................................................................................................... EXHIBIT D FORM OF PURCHASER'S LETTER [To be prepared on letterhead of Purchaser] [Date] County of Contra Costa 651 Pine Street,North Wing,4th Floor Martinez, California 94553-1295 BNY Western Trust Company 550 Kearny Street, Suite 600 San Francisco, California 94108 Re: County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I and County of Contra Costa Multifamily Housing Revenue Bonds(Coggins Square Apartments} 1998 Series D,Issue H Ladies and Gentlemen: The undersigned (the "Purchaser") hereby acknowledges receipt as transferee, from the previous owner thereof, of the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I and County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue 11 (the "Bonds"), in the aggregate principal amount of $ . The Bonds have been checked, inspected and approved by the Purchaser. The undersigned acknowledges that the Bonds were issued for the purpose of making a loan to assist in financing a certain multifamily rental housing development located in the County of Contra Costa (the "Project"), as more particularly described in that certain Loan Agreement, dated as October 1, 1998, as amended and supplemented (the "Loan Agreement"), by and among the County of Contra Costa (the "County"), Coggins Square Associates, a California Limited Partnership (the "Borrower") and Wells Fargo Bank, National Association (the "Bondowner Representative"). The undersigned further acknowledges that the Bonds are secured by a certain Indenture of Trust dated as of October 1, 1998, as amended and supplemented (the "Indenture"), between the County and BNY Western Trust Company, as Trustee (the "Trustee"), which creates a security interest in loan repayments made pursuant to the Loan Agreement for the benefit of the holders and owners of the Bonds, and by a first deed of trust and absolute assignment of leases and rents with respect to the Project (the "Mortgage"),which creates a security interest in the Project,subject to permitted encumbrances, as provided therein. Terms not otherwise defined herein shall have the j meanings assigned thereto in the Indenture. In connection with the sale of the Bonds to the Purchaser, the Purchaser hereby makes the following representations upon which you may rely: D-1 .......................................................... _ ......_.............................................................................................................................................................._..._.... ........... .......... ......._. ......... ......... ......._..._...._...... ........... .__....... ......... ......... ......__. ......._. 1. The Purchaser hereby certifies that it is (a) a bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the "Act) or a bank holding company or a wholly- owned subsidiary of a bank holding company, or a savings and loan association or other institution as defined in Section 3(a)(5)(a) of that act whether acting in its individual or fiduciary capacity; or (b) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or (c) an insurance company as defined in Section 2(13) of that act; or (d) an investment company registered under the Investment Company Act of 1940 or a business development company as (defined in Section 2(a)(48) of that act; or (e) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or (f) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivision for the benefit of its employees, if investment decisions are made by a plan fiduciary which is a bank, savings and loan association, insurance company, or registered investment advisor and the plan establishes fiduciary principles the same as or similar to those contained in Sections 404-407 of Title I of the Employee Retirement Income Security Act of 1974;or (g) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if investment decisions are made by ';a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors or (h) an "accredited investor" as defined in Rule 501 of Regulation D of the Act, as amended. 2. The Bonds are being acquired by the Purchaser for its own account and for investment and not with a view to, or for resale in connection with, any public distribution of the Bonds or any beneficial interest therein, and the Purchaser does not intend at this time to dispose of all or any part of the Bonds or any beneficial interest therein other than to a person or entity described in Section 1. The Purchaser 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 due to unmarketability of the Bonds. 3. The Purchaser understands that the Bonds have not been registered under the Act. The Purchaser acknowledges that the County requires that, if the Bonds are disposed' of by the Purchaser, other than to a person or entity described in Section 1, current information,including all current financial statements with respect to the Project, which meets the disclosure requirements of any applicable state and federal securities lacus them in effect, concerning the Bonds and the Project must be furnished to any prospective purchaser, other than to a person or entity described in Section 1, and that any disclosure document must be delivered to the County before the Bonds are offered for sale to any prospective purchaser, and further acknowledges that any current exemption from registration of the Bonds does not affect or diminish;such requirements. 4. The Purchaser acknowledges that it is familiar with the conditions, financial and otherwise, of the Borrower and understands that the Borrower has no significant assets other than the Project. To the extent deemed appropriate in making its investment decision, the Purchaser has discussed the Borrower's financial condition and the Borrower's current and proposed business activities with the Borrower. The Purchaser further acknowledges that it has such knowledge and experience in business matters that it is fully capable of evaluating the merits and risks of this investment and it is able to bear the economic risk of the investment. The Bonds are a security of the kind the Purchaser wishes to purchase and hold for investment, and the nature and D-2 _........ ......... ......... ......... ......... ......... ......... ......... ..............__.. .. _...._... ......... ......... ._....... ......... ......... ......... ......... ......... ......... ......... ......... amount of the Bonds are consistent with the Purchaser's investment program. The Purchaser has been furnished such information and such documents as the Purchaser deems necessary to make a decision to purchase the Bonds, including copies or forms of the Indenture, the Loan Agreement, the Mortgage and the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of October 1, 1398, by and among the County, the Borrower and the Trustee, and certain other documents relating to the Bonds and the Project,all of which documents the Purchaser has reviewed. Specifically, but without limitation, the Purchaser has reviewed information about the Project, the concept for the Project, and the property manager for the Project., if any, as well as information about the investment risks relating to the Bonds, and the Purchaser understands that the Bonds involve a high degree of risk. SPECIFICALLY, AND WITHOUT IN ANY MANNER LIMITING THE FOREGOING, THE PURCHASER UNDERSTANDS AND ACKNOWLEDGES THAT, AMONG OTHER RISKS, THE BONDS ARE PAYABLE SOLELY FROM REVENUES DERIVED FROM THE PROJECT, AND THE ISSUE H BONDS ARE SUBORDINATE IN PAYMENT TO THE ISSUE I BONDS. The Purchaser has made such inquiry with respect to all of the foregoing as it believed to be desirable for its purposes. 5. The Purchaser has received from the County no formal or informal offering or disclosure document relating to the Bonds and has concluded that the receipt of one prior to the purchase of the Bonds is not required. It is acknowledged that no written information has been provided by the County,and that any written information furnished by any other party to the transaction does not purport to fully disclose all information pertinent to the Bonds. b. Except as disclosed to the County, the Purchaser is not now and has never been controlled by, or under common control with, the Borrower. Except as disclosed to the County, the Borrower has never been and is not noir controlled by the Purchaser. THE PURCHASER HAS ENTERED INTO NO ARRANGEMENTS WITH THE BORROWER OR WITH ANY AFFILIATE OF THE BORROWER IN CONNECTION WITH THE BUNDS, OTHER THAN AS DISCLOSED TO THE COUNTY IN WRITING. The Purchaser hereby agrees to deliver to the County a copy of any agreement between the Purchaser and the Borrower or any affiliate of the Borrower relating to the Bonds. 7. The Purchaser has authority to purchase the Bonds and to execute this letter and any other instruments and documents required to be executed by the Purchaser in connection with the purchase of the Bonds. 8. In entering into this transaction the Purchaser has not relied upon any representations or opinions made by the County relating to the legal consequences or other aspects of the transactions, nor has it looked to, nor expected, the County to undertake or require any credit investigation or due diligence reviews relating to the Borrower, its financial condition or business operations, the Project (including the financing, acquisition, construction operation or management thereof), or any other matter pertaining to the merits or risks of the transaction, or the adequacy of any collateral pledged to the Trustee to secure repayment of the Bonds. The Purchaser understands and acknowledges that, following the Conversion Date, the obligations of the Borrower under the Loan Agreement are not recourse obligations against the general assets of the Borrower,but are secured only by the Project to the extent provided in the Mortgage. 9. The Purchaser understands that the Bonds are not secured by any pledge of any moneys received or to be received from taxation by the State of California or any D-3 political subdivision or taxing district thereof,including,without limitation, the County; that the Bonds will never represent or constitute a general obligation or a pledge of the faith and credit of the County, the State of California or any political subdivision thereof; that no right will exist to have taxes levied by the County, the State of California or any political subdivision thereof for the payment of principal, premium, if any, and interest on the Bonds; and that the liability of the County with respect to the Bonds is subject to further limitations as set forth in the Bonds and the Indenture. 10. The Purchaser has been informed that the Bonds have not been and will not be registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any jurisdiction, (ii) will not be listed on any stock or other securities exchange,and(iii)will carry no rating from any rating service. 11. The Purchaser has obtained, from representatives of the Borrower and others,all information regarding the Bonds which it has deemed relevant. The Purchaser has asked of the Borrower and all other relevant parties all the questions to which the Purchaser desired answers, and has had those questions satisfactorily answered. Neither the Borrower nor the County nor any other relevant party has refused to disclose any information that Purchaser deems necessary or appropriate to its decision to purchase the Bonds. 12. Although the Purchaser does not intend at this time to dispose of all or any part of the Bonds or any beneficial interest therein, the Purchaser acknowledges that it has the right to sell and transfer the Bonds,subject to the following requirements: (a) The Purchaser will not sell or otherwise transfer any of the Bonds or any beneficial interest therein unless such transfer will not result in the transferee owning less than all of the Bonds and all beneficial interests therein, except with the prior written approval of the County; (b) Prior to any transfer of the Bonds, the Purchaser shall deliver to the County and the Trustee a certificate identifying any and all documents that have been executed by the Purchaser and the Borrower or any affiliate of the Borrower with respect to the Bonds;and (c) The Purchaser will not sell or otherwise transfer any of the Bonds or any beneficial interest therein without requiring the transferee to deliver to the County and to the Trustee an investor's letter to the same effect as this Purchaser's Letter, including this paragraph 12, with no revisions except as may be approved in writing by the County. [PURCHASER] By: Name: Title: U-4 ................................. ...._.._. . _...... _ _ __ .. ......... .............. ......... _... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... _ _..... ........ _ ......... . ........ ....... ......_.. .... ._... .......... Quint&fihimm g LLP 9/27/98 10/8/98 AFTER RECORDATION RETURN TO: QUINT&THAN MIG LLP 100 Pine Street,Suite 2525 San Francisco,CA 94111 Attention: Paul J. Thimmig, Esq. REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS by and among the COUNTY OF CONTRA COSTA and BNY WESTERN TRUST COMPANY, as Trustee and COGGINS SQUARE ASSOCIATES, a California Limited Partnership Dated as of October 1,1998 Relating to: $5,793,000 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue I and $3,652,053 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue II 03007.04:J4037 ^ ' TABLE OF CONTENTS Section 1. Definitions and Interpretation....................................................... —...................2 Section 2. Acquisition,Construction,Equipping and Completion ofthe Project.......................5 Section 3. Residential Rental Property.................. ...............................................................6 Section 4. Lower Income Tenants............ .............................................................................7 Section 5. Tau —.—.---------.--.-----..9 Section 6. Additional -----.--------.-----..1O Section 7. Additional Requirements of the County-----------.—.----.---l1 Section 8. Modification o{Special Tax Covenants-----------------.----.I3 Section 9. Indemnification-------------------.—.--.--.`..---.—.-14 Section 10. Consideration---------------..-----.,..----..----_..15 Section11. Reliance.............................................................................................................15 Section 12. Location ofthe Project--.---------.-----.--------.----.15 Section 13. Sale orTransfer ofthe Project..............................................................................15 Section14. Term..................................................................................................................16 Section 15. Covenants toRun With the Land.................................................. .....................I6 Section 16. Burden and Benefit............................................................................................. Section17. Common Plan..................................................................................l7 Section18. Enforcement...................................... ~.............................................................17 Section19. The Trustee........................................................................................................18 Section 20. Recording and Filing..........................................................................................l8 Section 21. Payment of Fees--------------------..-----------...19 Section 22. Governing Law-----------.-----.-------.-----.--._19 Section 23. Amendments—'------------------.-----..---.--.—..lQ Section24. Notice................................................................................................................1g Section 25. Severability c---.------.—.--.-----.--.—.--.—.—.—.,---.20 Section 26. Multiple Counterparts.........................................................................................2O EXHIBIT A PROJECT SITE EXHIBIT STATISTICAL REPORT T0C0DIVIY EXHIBIT C CERTIFICATE QFTENANT ELIGIBILITY EXHIBIT CERTIFICATE UFCONTINUING PROGRAM COMPLIANCE EXHIBIT COMPLETION CERTIFICATE EXHIBIT CERTIFICATE REGARDING COMMENCEMENT OFQUALIFIED PROJECT PERIOD EXHIBIT STATEMENT CFUNDERSTANDING � REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANT'S (this "Agreement" or this "Regulatory Agreement") is made and entered into as of October 1, 1998,by and among COUNTY OF CONTRA COSTA, a political subdivision and body corporate and politic of the State of California duly organized and existing under and by virtue of the Constitution and laws of the State of California (together with any successor to its rights, duties and obligations, the "County"), BNY WESTERN TRUST COMPANY, a banking corporation organized and existing under the laws of the State of California, in its capacity as trustee under the Indenture, as hereinafter defined (the "Trustee") and COGGINS SQUARE ASSOCIATES, a California Limited Partnership (the "Borrower"). WITNESSETH: WHEREAS, the Legislature of the State of California enacted Chapter 7 of Part 5 of Division 31 (commencing with Section 52075) of the Health and Safety Code (the "Act") to authorize cities and counties to issue bonds to finance the construction or development of multifamily rental housing, WHEREAS, the Board of Supervisors of the County has adopted a resolution (the "Resolution") providing for the issuance of revenue bonds in connection with the 86-unit multifamily rental housing project of the Borrower to be constructed in the County at the site more particularly described in Exhibit A hereto (the "Project"); WHEREAS,in furtherance of the public purposes of the Act and the Resolution and as a part of the County's plan of financing housing,the County is issuing$5,900,000 aggregate initial principal amount of its County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I and $4,100,000 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue II (collectively, the ""Bonds"),the proceeds of which will be used to finance a portion of the costs of the Project; WHEREAS, in order for interest on the Bonds to be excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986 (the "Code") and the regulations and rulings with respect to the Code, and in order to comply with the Act and the requirements of the County, the use and operation of the Project must be restricted in certain respects, and WHEREAS,the County,the Trustee and the Borrower have determined to enter into this Agreement in order to set forth certain terms and conditions relating to the acquisition, construction, equipping and operation of the Project and in order to ensure that the Project will be constructed, used and operated in accordance with the Code, the Act and the additional requirements of the County. NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and'other good and valuable consideration the receipt and sufficiency of which hereby are acknowledged,the County,the Trustee and the Borrower hereby agree as follows: 1 Section 1. Definitions and Interpretation. The following terms shall have the respective meanings assigned to them in this Section 1 unless the context in which they are used clearly requires otherwise: "Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended and supplemented and in effect on the Closing Date. "Adjusted Income" means the adjusted income of a person (together with the adjusted income of all persons who intend to reside with such person in one residential unit) as calculated in the manner prescribed in Regulation Section 1.167(k)-3(b)(3) in effect as of the Closing Date. "Affiliated Party" means a general or limited partnership in which the Borrower is a partner, a person whose relationship with the Borrower would result in a disallowance of losses under section 267 or 707(b) of the Code or 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). "Agreement" or "Regulatory Agreement" means this Regulatory Agreement and Declaration of Restrictive Covenants,as it may be amended from time to time. "Area" means the Oakland Primary Metropolitan Statistical Area. "Bond Counsel" means (i) Quint & Thimmig LLP, or (ii) an attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the validity of, and the tax-exempt nature of interest on,bonds issued by states and their political subdivisions, who is selected by the County and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Bondholder" or "holder" or "owner" means,when used with respect to the Bonds, the owner of a Bond then outstanding under the Indenture as shown on the registration books maintained by the Trustee pursuant to the Indenture. "Bonds" means, collectively, the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I and the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue II, issued and outstanding under the Indenture. "Borrower" means Coggins Square Associates, a California limited partnership, and its successors and assigns, as owner of the Project. "Certificate of Continuing Program Compliance" means the Certificate to be filed annually by the Borrower with the County and the Trustee which shall be substantially in the form attached hereto as Exhibit D. "Closing Date" means the date of the issuance and delivery of the Bands,being October 16, 1998. „Code" means the Internal Revenue Code of 1986, as amended. "Company Cost Certificate" means the Borrower's Certificate Regarding Use of Proceeds, dated as of the Closing Date, with respect to certain Project Costs, delivered to the County by the Borrower. 2 "Completion Certificate" means the certificate of completion of the Project required to be delivered to the County and the Trustee by the Borrower pursuant to Section 2(g) of this Agreement,which shall be substantially in the form attached hereto as Exhibit E. "Completion Date" means the date of the completion of the acquisition, construction and equipping of the Project, as that date shall be certified as provided in Section 2(g) of this Agreement. "Costs of Issuance" means costs of issuing the Bonds, including, but not limited to, all printing and document preparation expenses in connection with the Indenture, the Bonds, the Loan Agreement, the Note, this Agreement and other documents related to the Loan, and the preliminary official statement and official statement pertaining to the Bonds,rating agency fees; market study fees, legal fees and expenses of Bond Counsel, counsel to the County, and other counsel with respect to the financing of the Project; the initial fees and expenses of the Trustee and any paying agent; the reimbursement to the County of any out-of-pocket issuance expenses or any other fee of the County charged to the Borrower in connection with the issuance of the Bonds; and other fees and expenses incurred in connection with the issuance of the Bonds or the implementation of the financing for the Project to the extent that such fees and expenses are „costs of issuance" within the meaning of Section 147 of the Code,including',any other fees paid directly or indirectly by the Borrower to the purchasers of the Bonds, the County or the Trustee or the expenses of any such party which are reimbursed directly or indirectly by the Borrower. ""County" means the County of Contra Costa. "Housing Act" means the United States Housing Act of 1937, as amended, or its successor. "HUD" means the United States Department of Housing and Urban Development, its successors and assigns. "Income Certification" means a Certification of Tenant Eligibility in the form attached as Exhibit C hereto or in such other form as may be provided by the County to the Borrower. "Indenture" means the Indenture of Trust, dated as of the date hereof, between the County and the Trustee, relating to the issuance of the Bonds, and any indenture supplemental thereto. "Inducement Date" means January 27, 1998. "Loan" means the loan made by the County to the Borrower under the Loan Agreement to provide financing for the Project. "Loan Agreement" means the Loan Agreement of even date herewith',entered into by the County, Wells Fargo Bank, National Association, as Bondowner Representative, and the Borrower. "Lower Income Tenant" means any tenant whose Adjusted Income does not exceed limits determined in a manner consistent with determinations of lower income families under Section 8 of the Housing Act, except that the percentage of median gross income that qualifies as lower income shall be sixty percent (60%) of median gross income for the Area with adjustments for family size. If all the occupants of a unit are students (as defined under Section 151(c) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code, such occupants shall not qualify as Lower Income Tenants. The determination of a 3 tenant's status as a Lower Income Tenant shall be made by the Borrower upon initial occupancy of a unit in the Project by such Tenant and annually thereafter, on the 'basis of an Income Certification executed by the tenant. "Lower Income Units" means the units in the Project required to be rented to, or held available for occupancy by, Lower Income Tenants pursuant to Section 4(a)hereof. "Project" means the Project Facilities and the Project Site. "Project Costs" means, to the extent authorized by the Code, the Regulations and the Act, any and all costs incurred by the County or the Borrower with respect to the acquisition, construction, and equipping, as the case may be, of the Project,whether paid or incurred prior to or after the date of this Agreement, including, without limitation, costs for site preparation, the planning of housing and improvements, the acquisition of real property and buildings thereon,the removal or demolition of existing structures,the construction of housing and related facilities and improvements, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project contractors' and developers' overhead and supervisors' fees and costs directly allocable to the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any municipality, county or other entity for expenditures made, with the approval of the County,for the Project),interest accrued during construction and prior to the Completion Date; provided, however, that Project Costs do not include Costs of Issuance. "Project Facilities" means the buildings, structures and other improvements to be constructed on the Project Site, and all fixtures and other property owned by the Borrower and located on, or used in connection with, such buildings, structures and other improvements constituting the Project. "Project Site" means the parcel or parcels of real property described in Exhibit A,which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. "Qualified Project Costs" means the Project Costs incurred after the date which is sixty (60) days prior to the Inducement Date, and which are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either'with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts,within the meaning of Treasury Regulations Section 1.103- 8(a)(1);provided,however, that only such portion of the interest accrued during construction of the Project shall constitute a Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs bear to all Project Costs; and provided further that interest accruing on or after the Completion Date shall not be a Qualified Project Cost; and provided finally that if any portion of the Project is being constructed by the Borrower or an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Project Costs" shall include only (a)the actual out-of-pocket costs incurred by the Borrower or such Affiliated Party in constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services actually rendered by the Borrower or such Affiliated Party (but excluding any profit component), and (c) any overhead expenses incurred by the Borrower or such Affiliated Party which are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an affiliated ',group (within the meaning of Section 1504 of the Code) participating in the construction of the Project or payments received by such Affiliated Party due to early completion of the Project (or any portion thereof). Qualified Project Costs do not include Costs of Issuance. 4 _ _. .. _ "Qualified Project Period" means the period beginning on the first day on which at least ten percent(10°lam) of the dwelling units in the Project are first occupied and ending on the latest of: (a) the date which is 15 years after the date on which at least fifty percent (50%) of the dwelling units in the Project are first occupied, (b) the first date on which no tax-exempt private activity bond (as'that phrase is used in Section 142(d)(2) of the Code) 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 Act terminates, or (d) the date on which the Bonds are no longer outstanding. "Regulations" means the Income Tax Regulations promulgated or proposed by the Department of the Treasury pursuant to the Code from time to time. "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 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. "Trustee" means BNY Western Trust Company,or any successor Trustee serving as such under the Indenture. Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number,and vice versa,when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning,' construction and interpretation of all defined terms shall be determined by reference' to this Section 1 notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only, and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent,if any question of intent shall arise. Section 2. Acquisition Construction. EQuippinZ and Completion of the Project. The Borrower hereby represents as of the date hereof,covenants and agrees as follows: (a) The Borrower has incurred, or will incur within six months after the Closing Date, a substantial binding obligation to commence the acquisition and construction of the Project, pursuant to which the Borrower is or will be obligated to expend at least five percent (5%)of the principal amount of the Bonds. (b) The Borrower's reasonable expectations respecting the costs of the acquisition,construction and equipping of the Project to be financed with the proceeds of the Bonds are accurately set forth in the Borrower Cost Certificate. (c) The Borrower will proceed with due diligence to complete the acquisition, construction and equipping of the Project. 5 (d) The Borrower reasonably expects to complete the acquisition, construction and equipping of the Project and to expend the full amount of the proceeds of the Loan for Project Costs prior to October 1, 2000. (e) The statements made in the various certificates delivered by the Borrower to the County or the Trustee hereunder or pursuant to the Loan Agreement or the Loan are true and correct. (€) The full amount of each disbursement of proceeds of,the Bonds and any interest thereon for the Project will be applied to pay or to reimburse the Borrower for the payment of Project Costs and (i) the aggregate disbursements of Bond proceeds and investment earnings thereon under the Indenture (other than amounts disbursed to pay Costs of Issuance) will have been applied to pay or to reimburse the Borrower for the payment of Qualified Project Costs in an amount equal to ninety-five percent (95%) or more of the aggregate disbursements and (ii) less than twenty-five percent (25%) of the amount of Bond proceeds disbursed pursuant to the Indenture has or will have been disbursed to pay or to reimburse the Borrower for the cost of acquiring land. (g) On the Completion Date of the Project, the Borrower will submit to the County and the Trustee a duly executed and completed Completion Certificate in substantially the form attached hereto as Exhibit E. (h) The Borrower (and any person related to it within the meaning of Section 144(a)(3) of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture, the Loan Agreement,this Agreement,the Act or the Code. (i) The Borrower will not enter into any agreements which would result in the payment of principal or interest on the Bonds being "federally guaranteed" within the meaning of Section 149(b) of the Code. (j) The Borrower hereby reaffirms the certifications made by it with respect to investment of moneys and arbitrage in the Loan Agreement, and such certifications are hereby incorporated herein as covenants of the Borrower by this reference. Section 3. Residential Rental Property. 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 Agreement, the Borrower hereby represents, covenants,warrants and agrees as follows: (a) The Project will be acquired and constructed for the purpose of providing multifamily residential rental property, and the Borrower will own the Project Site and the Project Facilities, and manage and operate the Project as a project to provide multifamily residential rental property comprised of a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time. (b) All of the dwelling units in the Project will be similarly constructed units, and each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a ;single person or a 6 __......_......._. ......... ......... ......... ......... ......... ........... . ......... ....._..... ......... ......... ......... ......... ......... _........ ......... ......... ......... ......... family, including a sleeping area,bathing; and sanitation facilities and cooking facilities equipped with a cooking range,refrigerator and sink. (c) None of the dwelling units in the Project will at any time be utilized on a transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium,rest home or trailer court or park. (d) No part of the Project will at any time 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 (except that the Borrower may obtain final map approval and the Final Subdivision Public Report from the California Department of Real Estate). (e) All of the dwelling units will be available for rental on a continuous basis to members of the general public and the Borrower will not give preference to any particular class or group in renting the dwelling units in the Project,except to the extent that dwelling units are required to be leased or rented to Lower Income Tenants. (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 Project Facilities comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership,management, accounting and operation of the Project. (g) No dwelling unit in the Project shall be occupied by the Borrower; provided, however, that if the Project contains five or more dwelling units, this subsection shall not be construed to prohibit occupancy of not more than 1 dwelling unit by one or more resident managers or maintenance personnel any of whom may be the Borrower. (h) Within 30 days after the date on which 10 percent of the dwelling units in the Project are occupied, the Borrower shall deliver a written notice to the County and the Trustee specifying such date. Within 30 days after the date on which 50 percent of the dwelling units in the Project are occupied, the Borrower shall execute and deliver to the County and the Trustee a copy of a certificate in the form of Exhibit F hereto identifying said date and the beginning and ending dates of the Qualified Project Period. The Borrower shall record a copy of such certificate in the Office of the County Recorder of the County of Contra Costa, California. Section 4. Lower Income Tenants. Pursuant to the requirements of the Code and the Act, the Borrower hereby represents,warrants and covenants as follows: (a) Commencing on the date on which ten percent (10%) of the units in the Project are first occupied, Lower Income Tenants shall occupy at least'forty percent (40%) of all completed and occupied units in the Project before any additional units are occupied by persons who are not Lower Income Tenants; and for the Qualified Project Period no less than forty percent (40%) of the total number of completed units of the Project shall at all times be rented to and occupied by Lower Income Tenants. For the purposes of this paragraph (a), (i) a newly-constructed unit will be considered as occupied by Lower Income Tenants if it is completed and held vacant and available for occupancy by a Lower Income Tenant, and (ii) a vacant unit which was most recently occupied by a Lower Income Tenant is treated as rented and occupied by a Lower Income Tenant until reoccupied, other than for a temporary period of not more than 31 7 _........ ......... ......... ......... ......... ......... ......... ......... ......... ...._.... _..._.._. .. _ ..... ......._..............._.._... ......... .._...... _......_. .._........ ......... ......... .......... ._........ ........ ......... days, at which time the character of such unit shall be redetermined.The Lower Income Units shall be intermingled with all other dwelling units in the Project and shall be of a quality, and offer a range of sizes and number of bedrooms, comparable to those units which are available to other tenants. Tenants in the Lower Income Units will have equal access to and enjoyment of all common facilities of the Project. (b) No tenant qualifying as a Lower 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 Lower IncomeTenants. However, should a Lower 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 Lower Income Tenant of the same family size, the next available unit of comparable or smaller size must be rented to (or held vacant and available for immediate occupancy by) a Lower Income Tenant. Until such next available unit is rented'to a Lower Income Tenant, the former Lower Income Tenant who has ceased to qualify as such shall be deemed to continue to be a Lower Income Tenant for purposes of the forty percent (40%) requirement of Section 4(a) hereof until the rental of an available unit of comparable or smaller size to a tenant who is not a Lower Income Tenant. (c) The Borrower will obtain, complete, and maintain on file Income Certifications from each Lower Income Tenant, including (i) an Income Certification dated immediately prior to the initial occupancy of such Lower Income Tenant in the Project, and (ii) thereafter, an annual Income Certification from each Lower Income Tenant, dated the anniversary of the date of initial occupancy in the Project of such Lower Income Tenant.The Borrower will provide such additional information as may be required in the future by the State of California,by the County and by Section 142(d) of 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 obligations issued under Section 142(d) of the Code. A copy of the most recent Income Certifications for Lower Income Tenants commencing or continuing occupation of a Lower Income Unit shall be attached to each report to be filed with the County and the Trustee pursuant to paragraph (e) of this Section 4. The Borrower)shall make a good faith effort to verify that the income information provided by an applicant in an Income Certification 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) conduct a TRW or other similar 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. (d) The Borrower will maintain complete and accurate records pertaining to the Lower Income Units, and will permit any duly authorized representative of the County, 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 Lower Income Units. (e) The Borrower will prepare and submit to the County and the Trustee,no later than the fifteenth day of each month following the receipt by the Trustee of the Completion Certificate to and including the month in which such report indicates that forty percent (40%) of the units are occupied by Lower Income Tenants, and thereafter 8 no later than the 15th day of the first month of each calendar quarteruntil the end of the Qualified(Project Period, a Certificate of Continuing Program Compliance executed by the Borrower stating (i) the percentage of the dwelling units of the Project which were occupied or deemed occupied, pursuant to subsection (a) hereof, by Lower Income Tenants during such period, (ii) that either (A) no unremedied default has occurred under this Regulatory Agreement or (B) a default has occurred, in which event the certificate shall describe the nature of the default in detail and set forth the measures being taken by the Borrower to remedy such default and (iii) that, to the knowledge of the Borrower, no Determination of Taxability has occurred, or if a Determination of Taxability has occurred,setting forth all material facts relating thereto. (f) On or before each March 15th during the Qualified 'Project Period the Borrower will submit to the County a draft of the completed Internal Revenue Code Form 8703 or such other annual certification required by the Code to be submitted to the Secretary of the Treasury as to whether the Project continues to meet the requirements of Section 142(d) of the Code. On or before each April 15th during the Qualified Project Period the Borrower will submit such completed form to the Secretary of the Treasury. (g) Each lease or rental agreement pertaining to a Lower Income Unit shall contain a provision to the effect that the Borrower has relied on the income certification and supporting information supplied by the Lower Income Tenant in determining qualification for occupancy of the Lower 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. Each such lease or rental agreement shall also provide 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 one hundred forty percent (140%) of the applicable income limit for a Lower Income Tenant of the same family size, such tenant may cease to qualify as a Lower Income Tenant,and such tenant's rent is subject to increase. (h) The requirements of this Agreement shall be administered and compliance therewith monitored by the County, as program administrator;'provided that the County shall have no liability whatsoever for a failure by the Borrower to comply with the terms of this Agreement. Section 5. Tax Exempt Status of the Bonds. The Borrower and the County each hereby represent,warrant and agree that: (a) they 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, or the validity of the Bonds, or qualifications of the Project under the Act and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof; (b) they will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the County and the Trustee, (i) to comply fully with all applicable rules,rulings,policies,procedures,Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal .Revenue Service pertaining to obligations the interest on which is Tax-exempt under Section 142(d) of the Code,and (ii) to comply with the Act; and (c) they will file of record such documents and take such other steps as are necessary,in the written opinion of Bond Counsel filed with the County and the Trustee, 9 ......... ......... ......... ......... ......... ......... ......... ......... ......... ............ . .__.. _ _ ........ ......... ......... ......... ......... ......._. ......... ......... ......... ......... ......... ......... ......... in order to insure that the requirements and restrictions of this Agreement will be binding upon all owners of the Project, including, but not limited to, the execution and recordation of this Agreement in the real property records of the County of Contra Costa. The Borrower hereby covenants to include or reference the requirements and restrictions contained in this Agreement in any documents transferring any interest in the Project to another person to the end that such transferee has notice of, and is bound by, such'>restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Agreement. Section 6. Additional Requirements of the Act. In addition to the requirements set forth above, so long as any Bonds are outstanding the Borrower hereby agrees to comply with each of the requirements of the Act set forth in this Section 6,as follows: (a) As provided in Section 52080(a)(1)(B) of the Act, forty percent or more of the residential units in the Project shall be occupied by individuals whose income is sixty percent or less of area median income. (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 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 of area median income. (c) The selection criteria applied to certificate holders under Section 8 of the Housing Act 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 County. The County shall grantthat 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 of the County set forth in Section 7 hereof 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. (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(a), until the earliest of any of the following occur: (1) The household's income exceeds 140 percent 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 10 ........................I........................................................................................................................................................... ............................................................. 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. (4) The sponsor pays the relocation assistance and benefits to tenants as provided in subdivision(b) of Section 7264 of the Government Code. (g) During the three years prior to expiration of the Qualified Project Period, the sponsor 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 County to monitor the Borrower's compliance with the provisions of paragraph (f), or that the County shall have any liability whatsoever in the event of the failure by the Borrower to comply with any of the provisions of this Agreement. Section 7. Additional Requirements of the County. In addition to the requirements set forth above and to the extent not prohibited thereby,the Borrower hereby agrees to comply with each of the requirements of the County set forth in this Section 7, 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 County,in a reasonable condition for proper audit and subject to examination during business hours by representatives of the County. (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 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 one-bedroom unit in the Project by more than two persons, in any two-bedroom unit in the Project by more than three persons or in any three-bedroom unit in the Project by more than four persons. (d) The Borrower shall provide to the County a Statement of Understanding, in the form of Exhibit G hereto (as such form may be modified with the written consent of the County, in its sole and absolute discretion), within eight months after the date hereof,in which the Borrower agrees to utilize the County's Private Industry Council as its first source for filling its immediate and future employment opportunities at the Project, subject to the provisions set forth in Exhibit G. (e) The rent limits set forth in Sections 6(b) and 6(e) shall apply to all Lower Income Units. ..............I.............................................I.........11......................11..............................I........................................... (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 Housing 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 County, (i) not later than the fifteenth (15th) day after the close of each calendar quarter, a statistical report to the County in the form set forth as Exhibit B hereto, or such other form as may be prescribed by the County, setting forth the information called for therein, and (ii) within fifteen (15) days after receipt of a written request,any other information or completed forms requested by the County in order to comply with reporting requirements of the Internal Revenue Service or the State of California, including without limitation information necessary for the County to file the annual report required by Section 8855.5 of the California Government Code. (h) The Borrower shall pay to the County, to the extent not paid pursuant to the Loan Agreement or the Indenture,all of the amounts required by Section 3.3(b)of the Loan Agreement, and shall indemnify the County as provided in Section 9 hereof and Section 6.21 of the Loan Agreement. (i) The County may, at its option and at its expense, at any time appoint an administrator to administer this Agreement and to monitor performance by the Borrower of the terms, provisions and requirements hereof. Following any such appointment, the Borrower shall comply with any request by the County to deliver to such administrator, in addition to or instead of the County, 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 County. (j) The Borrower shall submit its written management policies with respect to the Project, if any, to the County 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 Housing 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; and, provided further, however, that a Lower Income Tenant's ability to pay shall be demonstrated if such Lower Income Tenant has for such one year period paid the same percentage or more of their income for rent as specified in Section 6(b)hereof. (1) 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 Lower Income Units containing (a) the anticipated date of the expiration of the Qualified Project Period, (b) any anticipated rent increase upon the expiration of the Qualified Project Period, (c) a statement that a copy of such notice will be sent to the 12 ............I..................I......................................................................................................................................................... . ......... .......... County, and (d) a statement that a public hearing may be held by the County 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 Deputy Director-Redevelopment of the County. (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) Each of the requirements of Sections 3, 4 and 6 hereof is hereby incorporated as a specific requirement of the County, whether or not required by California or federal law. (o) The requirements of Section 6 and this Section 7 shall be in effect for the Qualified Project Period. Any of the foregoing requirements of the County may be expressly waived by the County in writing, but (i) any such waiver shall be in the County's sole discretion, and it shall not be unreasonable for the County to refuse to grant any such waiver;(ii)no waiver by the County of any requirement of this Section 7 shall, or shall be deemed to, extend to or affect any other provision of this Regulatory Agreement;and(iii)any requirement of this Section 7 shall be void and of no force and effect if the County 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 8. Modification of Special Tax Covenants. The Borrower, the Trustee and the County 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 County and with the Trustee, who shall deliver a copy thereof to the Borrower, impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Agreement, and if such requirements are applicable to the Project, this 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 County, the Trustee and the Borrower, impose requirements upon the ownership or operation of the Project less restrictive than imposed by this Agreement, this Agreement may be amended or modified to provide such less restrictive requirements but only by written amendment signed by the County, at its sole and absolute discretion,the Trustee and the Borrower and approved by the written opinion of Bond Counsel that such amendment will not affect the Tax-exempt status of interest on the Bonds, or violate the requirements of the Act. (c) The Borrower, the County and, if applicable, the Trustee, shall execute, deliver and, if applicable, file of record any and all documents and instruments, necessary to effectuate the intent of this Section 8, and each of the Borrower and the County 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 County, as is applicable, any such document or instrument (in such form as may be approved in 13 writing by Bond Counsel) if either the Borrower or the County defaults in the performance of its obligations under this subsection (c); provided,however, that unless directed in writing by the County or the Borrower;the Trustee shall take no action under this subsection(c)without first notifying the Borrower or the County,or both of them, as is applicable, and without first providing the Borrower or the County, 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 Agreement on behalf of the County. Section 9. Indemnification. The Borrower hereby covenants and agrees that it shall hold harmless, defend and indemnify the County, the Trustee and their respective officers, boardmembers, directors, officials, agents, attorneys and employees (individually and collectively, "Issuer Indemnitee") from and against all claims, liabilities, obligations, damages, penalties, litigation, costs, charges and expenses (including without limitation reasonable attorneys, accounting, consulting, engineering, and other fees and expenses), imposed on, incurred by or asserted against the Issuer Indemnitee and arising from,resulting from,or in any way connected with or related to (i) any cause whatsoever in connection with the approval of tax-exempt financing for the Project or the making or administration of the Loan; (ii) any act or omission of the Borrower or any of its agents, servants, employees or licensees, in connection with the Loan or the Project; (iii) the design, construction, installation, operation, use, occupancy, maintenance, or ownership of the Project (including compliance with laws, ordinances and rules and regulations of public authorities relating thereto ); (iv) the Trustee's acceptance or administration of the trusts under and/or the County's execution of the Indenture,the Loan Agreement or this Regulatory Agreement,or the exercise or performance by Issuer Indemnitee of any powers or duties under the Indenture, the Loan',Agreement or this Regulatory Agreement; or (v) the issuance of the Bonds or any certifications or representations of the Borrower made in connection therewith and the carrying out of any of the transactions contemplated by the Bonds, the Loan Agreement and this Regulatory Agreement; provided, however, that this provision shall not require the Borrower to indemnify the Issuer Indemnitee from any claims,costs, fees, expenses or liabilities arising solely from the willful misconduct of the Issuer Indemnitee. The indemnity provided in this Section shall include within its scope, without limitation: any and all active or passive negligence on the part of Issuer Indemnitee (other than willful misconduct) or any claims of combined negligence on the part of Issuer Indemnitee and Borrower, to the extent Issuer Indemnitee is not prohibited by law from contracting for indemnification against such active,passive or combined negligent conduct;any claims for wrongful death; any vicarious liability imposed upon the Issuer Indemnitee; and any liability imposed by law on the Issuer Indemnitee on a strict liability theory',or pursuant to any local, state or federal environmental statute, regulation or law. It is the express intention of the parties that Borrower shall indemnify Issuer Indemnitee against any and all such liability hereunder. The exception to the Borrower's obligation to indemnify is expressly limited to the Borrower's obligation to indemnify the Issuer Indemnitee and does not relieve the Borrower of its obligation to defend the Issuer Indemnitee against such claims whether such claims are made in conjunction with other claims or by themselves. In the event that any action or proceeding is brought against the County or the Trustee or any of their respective officers, directors,officials, employees,attorneys or agents, with respect to which indemnity may be sought hereunder,the Borrower,upon written notice from the Issuer Indemnitee, shall assume the investigation and defense thereof, including the employment of counsel selected by the indemnified party and the payment of all expenses related thereto. The indemnified party shall have the right to employ separate defense counsel at the sole cost and expense of Borrower, upon Issuer Indemnitee's reasonable determination that such separate counsel is necessary to provide Issuer Indemnitee with an adequate defense;to any such action or proceeding. 14 The Borrower also shall pay and discharge and shall indemnify and hold harmless the County and the Trustee from (i) any lien or charge upon payments by the Borrower to the County and the Trustee hereunder and (ii) any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed, the County or the Trustee shall give prompt notice to the Borrower and the Borrower shall have the sole right and duty to assume, and will assume, the defense thereof,with full power to litigate, compromise or settle the same in its sole discretion. In addition thereto, the Borrower will pay upon demand all of the fees and expenses paid or incurred by the Trustee and/or the County in enforcing the provisions hereof. Section 10. Consideration. The County has issued the Bonds to provide funds to make the Loan to finance the Project, all for the purpose, among others, of inducing the Borrower to acquire the Project Site and construct, equip and operate the Project. In consideration of the issuance of the Bonds by the County, the Borrower has entered into this Agreement and has agreed to restrict the uses to which this Project can be put on the terms and conditions set forth herein. Section 11. Reliance. The County, the Trustee 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 California personal income taxation on the Bonds and the Tax-exempt status of the interest on the Bonds. In performing their duties and obligations hereunder, the County and the Trustee may rely upon statements and certificates of the Lower Income Tenants, and upon audits of the books and records of the Borrower pertaining to the Project. In addition, the County 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 County 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 Agreement, neither the Trustee nor the County shall 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 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. Location of the Project. The Borrower hereby represents and warrants that the Project will be located entirely within the County. Section 13. Sale or Transfer of the Project. For the Qualified Project Period, the Borrower shall not sell, transfer or otherwise dispose of the Project, in whole or in part, without the prior written consent of the County, which consent shall be given promptly provided that (1) the Borrower shall not be in default hereunder or under any of the Bond Documents (as defined in the Indenture), (2) the continued operation of the Project shall comply with the provisions of this Agreement,(3) the purchaser or assignee shall be willing and capable of complying with the terms and conditions of this Agreement, (4) the purchaser or assignee)shall execute any document requested by the County or the Trustee with respect to the assumption of the Borrower's obligations under this Agreement, including without limitation an instrument of assumption hereof, and shall deliver to the County an opinion of its counsel to the effect that each such document and this Agreement are valid,binding and enforceable obligations of such purchaser or assignee, (5)either(a)the purchaser or assignee has at least three years'experience in the ownership, operation and management of large mixed-income rental housing projects, without any record of material violations of discrimination restrictions or other state or federal laws or regulations applicable to such projects, or (b) the purchaser or assignee agrees to retain 15 ..................I............................................................................................................................................................................ a property management firm with the experience and record described in subclause (a) above, or (c) the County shall not have any reason to believe that the purchaser or assignee is incapable, financially or otherwise,of complying with,or may be unwilling to comply with, the terms of all agreements binding on such purchaser or assignee relating to the Project, (6) the County shall have received an opinion of Bond Counsel to the effect that any such sale,transfer or other disposition will not cause interest on the Bonds to be includable in gross income of the holders thereof for federal income tax purposes, and (7) such other conditions are met as the County and the Trustee may reasonably impose. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 13 shall be null, void and without effect, shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under this 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 Agreement, the Borrower shall be fully 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 13. Section 14. Term. This Regulatory Agreement and all and several of the terms hereof shall become effective upon its execution•and delivery. Unless in the written opinion of Bond Counsel filed with the County, the Trustee and the Borrower, termination of this Agreement at some earlier time will not adversely affect the exemption from California personal income taxation and the Tax-exempt status of interest on the Bonds, this Agreement 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 expiration of the Indenture,the Loan Agreement and the Loan. The terms of this Agreement to the contrary notwithstanding,the requirements of Section 142(d) of the Code and Regulations thereunder set forth in Sections 2, 3, 4 and 5 hereof shall terminate and be of no further force and effect in the event of involuntary noncompliance with the provisions of this Agreement 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 County and the Trustee from enforcing the provisions hereof, or condemnation or a similar event,but only if,within a reasonable period,either the Bonds are retired or amounts received as a consequence of such event are used to provide a project which meets the requirements of said Sections 2, 3, 4 and 5; provided, however, that the preceding provisions of this sentence shall cease to apply and all of such 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 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 Agreement in accordance with its terms. Section 15. Covenants to Run With the Land. The Borrower hereby subjects the Project (including the Project Site) to the covenants, reservations and restrictions set forth in this 16 ...........1.11,11,111,....................................... .............................I............................................................... Agreement. The County, the Trustee 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 title to the Project; provided, however, that on the termination of this 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 16. Burden and Benefit. The County, the Trustee and the Borrower hereby declare their understanding and intent that the burden 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 County, the Trustee and the Borrower hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Lower Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Bonds were issued. Section 17. Uniformity; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use,development and improvement of the Project Site. Section 18. 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 60 days after notice thereof shall have been given by the County or the Trustee to the Borrower,then the County or the Trustee,acting on its own behalf or on behalf of the County, shall declare an "Event of Default" to have occurred hereunder,provided, however, that if the default stated in the notice is of such a nature that it cannot be corrected within 60 days, such default shall not constitute an Event of Default hereunder so long as (i) the Borrower institutes corrective action within said 60 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 60 days will not adversely affect the Tax- exempt status of interest on the Bonds. Following the declaration of an Event of Default hereunder the Trustee or the County may, at its respective option, take any one or more of the following steps: (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 County 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;or (iv) require the Borrower to pay to the County an amount equal to the rent or other amounts received by the Borrower for any units in the Project which were in violation of this Agreement during the period such violation continued;or 17 __. . (v) declare an Event of Default under and as defined in the Loan Agreement to have occurred, and take such other actions as are specified in the Loan Agreement and/or the Indenture. During the Qualified Project Period, the Borrower hereby grantsto the County the option, upon the expiration of 30 days after the giving of the notice to the Borrower referred to in the first paragraph of this Section 18 of the Borrower's default under this Agreement,to lease up to forty percent(40%) of the units in the Project for a rental of$1.00 per unit per year for the purpose of subleasing such units to Lower Income Tenants, but only to the extent necessary to comply with the provisions of Sections 3, 4, 6 and 7. The option granted in the preceding sentence shall be effective only if the Borrower has not instituted corrective action within such 30-day period. The option and any leases to the County under this provision shall terminate with respect to each default upon the achievement, by the Borrower or the County, of compliance with the requirements of Sections 3, 4, 6 and 7, and any subleases entered into pursuant to the County's option shall be deemed to be leases from the Borrower. The County shall make diligent effort to rent Lower Income Units to Lower Income Tenants for monthly rental amounts equivalent to those collected from tenants of similar units in the Project, or such lesser maximum amounts as may be permitted by Section 6 hereof,but shall not be required to obtain such rental amounts. Any rental paid under any such sublease shall be paid to the Borrower after the County has been reimbursed for any expenses incurred'in connection with such sublease. The Trustee shall have the right, in accordance with this Section and the provisions of the Indenture, without the consent or approval of the County, to exercise any or all of the rights or remedies of the County hereunder; provided that prior to taking any such action the Trustee shall give the County written notice of its intended action. All reasonable fees, costs and expenses of the Trustee incurred in taking any action pursuant to this Section shall be the sole responsibility of the Borrower. The Borrower hereby agrees that specific enforcement of the Borrower's agreements contained herein is the only means by which the County may 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 default by the Borrower hereunder. Section 19. The Trustee. The Trustee shall act as specifically provided herein and in the Indenture and may exercise such additional powers as are reasonably incidental hereto and thereto. The Trustee shall have no duty to act with respect to enforcement of the Borrower's performance hereunder as described in Section 18 unless a Responsible Agent (as defined in the Indenture) of the Trustee shall have actual knowledge of any such default. The Trustee shall act as the agent of and on behalf of the County, and any act required to be performed by the County as herein provided shall be deemed taken if such act is performed by the Trustee. In connection with any such performance, however, the Trustee is acting solely as Trustee under the Indenture, and not in its individual capacity, and all provisions of the Indenture relating to the rights, privileges, powers and protections of the Trustee, including without limitation those set forth in Article 9 thereof, 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. Section 20. Recording and Piling. The Borrower shall cause this Agreement and all amendments and supplements hereto and thereto to be recorded and filed in the real property 18 ........................................... _.. ...... ......... ......... ......... ......... ......._. ........ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... records of the County of Contra Costa and in such ether places as the County or the Trustee may reasonably request.The Borrower shall pay all fees and charges incurred in connection with any such recording. Section 21. Payment of Fees. Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture, the Borrower shall continue to pay to the Trustee reasonable compensation for any services rendered by it hereunder and reimbursement for all expenses reasonably incurred by it in connection therewith and shall continue to pay the County's annual administrative fee for the period as provided in Section 3.3(b) of the Loan Agreement. Section 22. Governing;Law. This Agreement shall be governed by the laws of the State of California. The Trustee's rights, duties and obligations hereunder are governed in their entirety by the terms and provisions of the Indenture. Section 25. Amendments. (a) This Agreement may be amendedonly by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Contra Costa, California, and only upon receipt by the County 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 County, the Trustee and the Borrower hereby agree to amend this Agreement to the extent required,in the opinion of Bond Counsel, in order that interest on the Bonds remain Tax-exempt. The parties requesting such amendment'shall notify the other parties to this 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 County an opinion as to the effect of such proposed amendment upon the Tax-exempt status of interest on the Bonds. Section 24. Notieg. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: County: County of Contra Costa Community Development Department 651 Pine Street Fourth Floor,North Wing Martinez, California 94553 Attention:Deputy Director-Redevelopment Trustee: BNY Western Trust Company 550 Kearny Street, Suite 600 San Francisco, California 94108 Borrower: Coggins Square Associates,a California,Limited Partnership c/o BRIDGE Housing One Hawthorne Street,Suite 400 San Francisco, California 94105 Notice shall be deemed given three business days after the date of mailing. 19 Section 25. Severability. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable,the validity,legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. Section 26. Multiple ounterparts. 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. 20 IN WITNESS WHEREOF, the County, the Trustee and the Borrower have executed this Regulatory Agreement by duly authorized representatives, all as of the date first above written. COUNTY OF CONTRACOSTA By: Deputy Director—Redevelopment BNY WESTERN TRUST',COMPANY, as Trustee By: Authorized Signatory COGGINS SQUARE ASSOCIATES, a California Limited Partnership By: BRIDGE Housing Corporation,a California nonprofit'public benefit corporation Its: General Partner By: Its: 03007.04:)4037 21 ....................................................................................I........................................................................................ EXHIBIT PROJECT SITE REAL PROPERTY in the County of Contra Costa, State of California, described as follows: Parcels , as shown on the filed in Book of Parcel Maps, Page Contra Costa County Records. A.P. Nos.: 148-191-008, -010 and -015; 148-192-004, -005, -006, -008, -009, and -010 A-1 ............................. ........................................................................................ ............................ EXHIBIT STATISTICAL REPORT TO COUNTY Reporting Period: . 19 Date: As of the date hereof: 1. Total units: units occupied by Lower Income Tenants: vacant units most recently occupied by Lower Income Tenants: other vacant units: 2. Total units occupied by households with children: _; Lower Income Units so occupied: -. 3. Total units occupied by elderly households with a member of age 62 or over: ; Lower Income Units so occupied: 4. The percentage of units currently occupied by white,black, Hispanic and Asian persons and American Indians are as follows: white % black % Hispanic % Asian % American Indian % 5. The number of Lower Income Tenants who terminated their rental agreements during the previous twelve(12)month period is 6. The number of units rented to new Lower Income Tenants during the last twelve (12) month period is 7. The family names of each household currently occupying a Lower Income Unit are listed on the schedule attached hereto. 8. The number of two-bedroom Lower Income Units is 9. The number of one-bedroom Lower Income Units is 10. The number of former Lower Income Tenants whose Adjusted Income has exceeded 140% of the applicable income limit for a Lower Income Tenant of the same family size and have therefore ceased to qualify as Lower Income Tenants is COGGINS SQUARE ASSOCIATES, a California Limited Partnership By Authorized Signatory B-1 ............. EXHIBIT C CERTIFICATION OF TENANT ELIGIBILITY RE: Coggins Square Apartments [insert address of Project] Apartment Number: Floor Number: Square footage: Number of Bedrooms: Initial monthly rent: $ I/We, the undersigned,being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the above apartment development for which application is made, all of whom are listed below: 1. 2. 3. 4. 5. Name of Members Relationship Social of the to Head of Security Place of Housed Household Number Employment HEAD SPOUSE 6. The anticipated income of all the above persons during the 12-month period beginning on the later of the date on which the above persons first occupy the apartment or sign a lease with respect to the apartment,including income described in(a)below,but excluding all income described in(b)below, is $ (a) Included in the total anticipated income listed above are: (1) The full amount, before any payroll deductions, of wages and salaries, overtime pay,commissions,fees,tips and bonuses, and other compensation for personal services; (2) The net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations.Any withdrawal of cash or assets from the operation of a business or profession will be included in income,except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family; (3) Interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as authorized in paragraph (a)(2) of this section. Any withdrawal of cash or assets from any investment will be included in income, except to the extent the withdrawal is C-1 reimbursement of cash or assets invested by the family. Where the family has net family assets in excess of$5,400, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rate,as determined by HUD; (4)The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts,including a lump-sum amount or prospective monthly amounts for the delayed start of a periodic amount (except as provided in paragraph (b)(13) of this section); (5) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (except as provided in paragraph (b)(3) of this section); (6) Welfare assistance. If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual costs of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of: (i) The amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities; plus, (ii) The maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities. If the family's welfare assistance is ratably reduced from the standard of need by applying a percentage, the amount calculatedunder this paragraph (a)(6)(ii) shall be the amount resulting form one application of the percentage; (7) Periodic and determinable allowances, such as alimony;and child support payments,and regular contributions or gifts received from organizations or from persons not residing in the dwelling;and (8) All regular pay, special pay and allowances of a member of the Armed Forces (except as provided in paragraph (b)(7) of this section). (b) Anticipated income does not include the following: (1) 'Income from employment of children(including foster children)under the age of 18 years: (2) Payments received for the care of foster children or foster adults (usually person with disabilities,unrelated to the tenant family,who are unable to live alone); (3) Lump-sum additions to family assets, such as inheritances, insurance payments '(including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses (except as provided in paragraph (a)(5) of this section); (4) Amounts received by the family that are specifically for,or in reimbursement of,the cost of medical expenses for any family member; (5) Income of a live-in aide, as defined in the Code of Federal Regulations Section 5.403; (6) The full amount of student financial assistance paid directly to the student or to the educational institution; C-2 (7) The special pay to a family member serving in the Armed Forces who is exposed to hostile fire; (8) (i)Amounts received under training programs funded by HUD; (ii)Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS); (iii) Amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program; (iv) Amounts received under a resident service stipend. A resident service stipend is a modest amount (not to exceed $200 per month) received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development. Such services may include,but are not limited to fire patrol, hall monitoring, lawn maintenance, and resident initiatives coordination. No resident may receive more than one stipend during the same period of time; (v) Incremental earnings and benefits resulting to any family member from participation in qualifying State or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives, and are excluded only for the period during which the family member participates in the employment training program; (9) Temporary,nonrecurring or sporadic income(including gifts); (10) Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era; (11) Earnings in excess of $480 for each full-time student 18years old or older (excluding the head of household and spouse); (12) Adoption assistance payments in excess of$480 per adopted child; (13) Deferred periodic amounts from supplemental security',income and social security benefits that are received in a lump sum amount or in prospective monthly amounts; (14) Amounts received by the family in the form of refunds or rebates under State or local law for property taxes paid on the dwelling unit; (15) Amounts paid by a State agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home; (16) Amounts specifically excluded by any other Federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 Code of Federal Regulations Section 5.609(c) apply; (17)' Value of allotment provided to an eligible household under the Food Stamp Act of 1977; C-3 (18) Payments to volunteers under the Domestic Volunteer Services Act of 1973; (19) Payments or allowances made under the Department of Health and Human Services'Low-Income Home Energy Assistance Program; (20) Payments received under programs funded in whole or in part under the job Training Partnership Act; (21) Indian Settlements/Trusts, including: (i) payments received under the Alaska Natives Claims Settlement Act, (ii) payments received under the Maine Indian Claim Settlement Act of 1980, (Pub.L 96-420 94 Stat. 1785) (iii) income derived from the disposition of funds of the Grand River Band of Ottawa Indians, (iv) the first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Grant of Claims or from funds held in trust for an Indian tribe by the Secretary of the Interior, and (v) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; (22) Amounts of scholarships funded under Title IV of the Higher Education Act of 1965, including awards under the Federal Work Study Program or under the Bureau of Indian Affairs Student Assistance; (23) Payments received form programs funded under Title V of the Older Americans Act of 1965; (24) Payments received after January 1, 1989, from the Agent Orange Settlement Fund or any other fund established under the In Re Agent Orange product liability litigation,'M.D.L. No. 381 (E.D.N.Y.); (25) The value of any child care provided or arranged (or any amount received as payment for such care or reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act of 1990;or (26) Refunds received on or after January 1, 1991 (earned income tax credit refunds), need retroactive calculation of income. See HUD Notice PIH 91-10. 7. If any of the persons described in column 1 above (or any person whose income or contributions were included in item 6)has any savings,stocks,bonds,equity in real property or other form of capital investment (excluding interest in Indian trust lands, but including the value of any assets disposed of for less than fair market vale (including a disposition in trust, but not in a foreclosure or bankruptcy sale) during the previous two year in excess of the consideration received therefor),provide: (a) the total value of all such assets owned by all such persons: $ , and (b) the amount of income expected to be derived from such assets in the 12- month period commencing this date: $ 8. (a) Will all of the persons listed in column 1 above be or have they been full- time students during five calendar months of this calendar year at an educational institution (other than a correspondence school)with regular faculty and students? Yes _ No -----— C-4 (b) (Complete only if the answer to Question $(a) is "Yes"). Is any such person (other than nonresident aliens) married and eligible to file a joint federal income tax return? Yes__ ------ No Weacknowledge that all of the above information is relevant to the status under federal income tax law of the interest on bonds issued to finance construction of the apartment building for which application is being made. We consent to the disclosure of such information to the issuer of such bonds, the holders of such bonds, any trustee acting on their behalf and any authorized agent of the Treasury Department or Internal Revenue Service. Date: Head of Household Spouse SUBSCRIBED AND SWORN to before me this day of (NOTARY SEAL) Notary Public in and for the State of My Commission Expires: NOTE TO PROJECT OWNER: A vacant unit previously occupied by individuals or a family of very low income, may be treated as occupied by individuals or a family of very low income until reoccupied, other than for a period of 31 consecutive days or less, at which time the character of the unit shall be redetermined. C-5 ................................................................................................................... .......................................................................................... FOR COMPLETION BY PROJECT OWNER ONLY: I. Calculation►of eligible income: (A) Enter amount entered for entire household in 6 above: (B) If the amount entered in 7(a) above is greater than$5,000, enter: (i) the product of the amount entered in 7(a) above multiplied by the current passbook savings rate as determined by HUD: $ (ii) the amount entered in 7(b) above: $ (iii) line (i) minus line (ii) (if less than $0, enter $0): $ (C) TOTAL ELIGIBLE INCOME (Line I(A)plus line I(B)(iii)): $ 11. Qualification as individuals or a family of lower income: (A) Is the amount entered in line 1(c) less than 60% of Median Income for the Area with adjustments for smaller and larger families.* Yes No (B) (i) If line II(A) is "No", then the household does not qualify as individuals or a family of low income;skip to item III. (ii) If line II(A) above is "Yes" and 8(a) above is "No", then the household qualifies as individuals or a family of low income:skip to item III. (iii) If line II(A) above is "Yes" and 8(b) above is "Yes", then the household qualifies as individuals or a family of low income;skip to item III. (iv) If neither(ii) nor(iii) is applicable, then the household does not qualify as individuals or a family of low income. M (Check one) The household does not qualify as individuals or a family of low income. The household qualifies as individuals or a family of low income. C-6 _._.. . ....._.. ......... ......... ......... ......... ......... ......... ......... ......... _........ .. .. _ ..... . .................._..... ...._........ ......... ....._... ......_.... ......... . ......... ......... ......... ......... ......... IV. Number of apartment unit assigned: (enter here and on page one) Owner * "Median Income for the Area" means the area median gross income as ';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 United States Housing Act of 1937, 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. C-7 _. .. ... ...... ......... ......... ......... ......... ......... ......... ......... ......... ... . ......... ................._..._...... .......... ....._._._............_. ......... . ......... ......... ......... ......... ......... EXHIBIT D CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE The undersigned, being the authorized representative of Coggins Square Associates, a California Limited Partnership (the "Borrower") has read and is thoroughly familiar with the provisions of the various Loan Documents associated with the Borrower's participation in the County of Contra Costa (the "County") Multifamily Housing Program, such documents including 1. the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of October 1, 1998, among the Borrower, the County and — as trustee (the "Trustee"); and 2. the Loan Agreement, dated as of October 1, 1998, among the Borrower, Wells Fargo Bank,National Association, as Bondowner Representative,and the County. As of the date of this certificate, the following percentages of completed residential units in the Project (i) are occupied by Lower Income Tenants (as such term is defined in the Regulatory Agreement) or(ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Lower Income Tenant vacated such unit, as indicated: Occupied by Lower Income Tenants: percent Unit Nos. Held vacant for occupancy continuously since last occupied by Lower Income Tenant: percent Unit Nos. Vacant Units: percent Unit Nos. The undersigned hereby certifies that the Borrower is not in default under any of the terms and provisions of the above documents. COGGINS SQUARE ASSOCIATES, a California Limited Partnership By: Its: D-1 _. . .1111...._ ......... ......... ......... ......... ......... ......... ......... ......... .............11.1.1 . . ... ....... ......_............_....... . ......... ......... ..._......_........__.... ......... ......... ..._....... ......... ......... ......... EXHIBIT E COMPLETION CERTIFICATE This Certificate is given in connection with the completion of the multifamily rental housing development known as Coggins Square Apartments (the "Project"') financed with the assistance of the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I and the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue II (collectively, the "Bonds"). Capitalized terms used herein shall have the meanings assigned to there in the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of October 1, 1998 (the "Regulatory Agreement"), among the County of Contra Costa, , as trustee, and Coggins Square Associates, a California Limited Partnership. The undersigned hereby certifies that: 1. All portions of the Project were substantially completed and available either for occupancy or use by tenants in the Project as of 2. The aggregate amount disbursed on the Loan to date is$ 3. All amounts disbursed on the Loan have been applied to pay or reimburse the undersigned for the payment of Project Costs 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 Project Costs;. and 4. At least 95% of the amounts disbursed on the portion of the Loan financed with the proceeds of the Bonds, including the amounts applied pursuant to the Indenture to pay for the costs of issuing the Bonds, whether derived from proceeds of sale of the Bonds or from investment earnings thereon, have been applied to pay or reimburse the Borrower for the payment of Qualified Project Costs; not more than 2% of the proceeds of the Bonds have been used to pay for costs of issuing the Bonds; and less than 25% of the net proceeds of the Bonds have been applied to pay or reimburse the Borrower for the cost of acquiring land or any interest in land. COGGINS SQUARE ASSOCIATES, a California Limited Partnership By: Authorized Representative E-1 . ................................................................................................................................................................................................................. ....... ........ ._............ ......... ....._.... ..._..... ..._....... ....__................_......._.._.... ......._... ................_.........._...-__... The undersigned hereby certifies that to date $ has been disbursed on the Loan. BNY WESTERN TRUST COMPANY, as Trustee By: Title: E-2 .....................I..................................................................................................I........1.11.11.1111111111'', ....................................................................................................................................................................................... .......................................... EXHIBIT F CERTIFICATE REGARDING COMMENCEMENT OF QUALIFIED PROJECT PERIOD WITNESSETH that on this day of , 19_, the undersigned, having borrowed proceeds of the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I and the County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue IL for the purpose of acquiring, developing and constructing a multifamily rental project does hereby certify that (1) the "Project" as defined in the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of October 1, 1998, by and among the County of Contra Costa, , as trustee, and Coggins Square Associates, a California Limited Partnership, was completed on (2) ten percent (10%) of the dwelling units in the Project were first occupied on and (3) fifty percent (50%) of the dwelling units were first occupied on COGGINS SQUARE ASSOCIATES, a California Limited Partnership By: Its: F-1 ................................I............................................................................................................................................................................. ... ................................................................................................................... ..... ........ . .... EXHIBIT G STATEMENT OF UNDERSTANDING COMMITMENT TO LOCAL EMPLOYMENT Coggins Square Associates, a California Limited Partnership (the "Borrower") has secured financing for its Coggins Square Apartments project through the issuance of multifamily mortgage revenue bonds by the County of Contra Costa.The Borrower expects to have BRIDGE Property Management Corporation (the "Operator"), manage the project. Section 7(d) of a Regulatory Agreement and Declaration of Restrictive Covenants dated as of October 1, 1998 among the County, the Borrower, and BNY Western Trust Company, as Trustee requires the Borrower to utilize the County's Private Industry Council as its source for filling its immediate and future entry- and mid-level positions for operations, maintenance and management personnel whether such positions be full-time, part-time, or seasonal, subject to the provisions set forth below. In recognition of the County of Contra Costa's commitment to expand employment opportunities for local residents: 1. Subject to the last paragraph below, Borrower and Operator agree to first source all its immediate and future employment opportunities toi local residents by listing a minimum of thirty (30) days in advance of the date of hiring for the initial operation of the project, and a minimum of seven (7) days in advance after the project has commenced operations, to the County Private Industry Council east county office, and placing advertisements in local newspapers such as the Contra Costa Times, and the Antioch Ledger/Pittsburg Post Dispatch. 2. Borrower and Operator agree to provide the County Private Industry Council with a general description and minimum requirements of the position(s), in writing,and request them to refer qualified applicants for the position(s). 3 Borrower and Operator will support and assist the County Private Industry Council in developing valid training programs,if necessary. 4. Subject to the last paragraph below, Borrower and Operator agree to refrain from any general announcement or advertisement of employment opportunities for a period of thirty (30) days after notification to the County Private Industry Council and advertisements in local newspapers as noted in 1 above with respect to the hiring of personnel for the initial operation of the project, and not less than seven (7) days after notification and advertising after the project has commenced operations. It is hereby acknowledged that the foregoing shall not apply to: (a) specialized or supervisory management positions, as identified by the Borrower or the Operator in writing to the County from time to time, such as accounting and advertising, and similar top level executive positions; or (b) the employment of persons in unforeseen and unanticipated exigent circumstances where immediate employment of a person or persons is essential to the well being of the residents of the Project. In the case of the foregoing clause (b), the Borrower or the Operator shall provide written notice to the County and the County Private Industry Council of the vacancy to the filled, with a detailed description of the exigent circumstances giving rise to the need for immediate employment, together with a statement to the effect that such circumstances and the need for such employment were not reasonably anticipated or foreseeable by the Borrower or the Operator, and, upon delivery of such written notice, such G-1 person may be employed without regard to the ten (10) day waiting periods referenced in clauses 1. and 4. above. Coggins Square Associates, a California Limited Partnership By: BRIDGE Housing Corporation, a California nonprofit public benefit corporation Its: General Partner By: Date: Its: BRIDGE Property Management Corporation By: Date: Its: County of Contra Costa By: Date: Deputy Director-Redevelopment Private Industry Council By: Date: Executive Director County Private Industry Council G-2 Quint&Thimmig LLP 9/27/98 10/8/98 LOAN AGREEMENT among the COUNTY OF CONTRA COSTA, as County WELLS FARGO BANK,NATIONAL ASSOCIATION, as Bondow►ner Representative and COGGINS SQUARE ASSOCIATES, a California Limited Partnership, as Borrower Dated as of October 1,1998 Relating to: $5,793,000 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue I and $3,652,053 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue II The interests of the County in this Loan Agreement, excluding the County's Reserved Rights, have been assigned to BNY Western Trust Company, as Trustee pursuant to an Indenture of Trust dated as of October 1, 1998 between the County of Contra Costa and the Trustee. 03007.04J4035 TABLE{FCONTENTS AJR7ICL2I DEFINITIONS AND RULES OF INTERPRETATION Section 1.1. DeOoudTezcua � ' 2 Section 1.2. Rules ofInterpretation..........................................................................................4 Section 1.3. Exhibits Incorporated............................,.....,......................—.............................5 ARTICLE ISSUANCE OF BONDS; PAYMENT OF ISSUANCE COSTS Section 2.1. Issuance of Bonds..................................................................................................6 Section 2.2. NoWarranty byCounty.......................................................................................6 Section 2.3. Payment ofCosts ofIssuance byBorrower.............................................................6 Section 2.4. Creation of Foody �...............,.................��.�....'�.................—.—........7 ARTICLE THE LOAN, LOAN REPAYMENT AND ADDITIONAL CHARGES Section B' �1 The Luau '—''''''''''''''''''''''''''''''''' 8 Section 3.2. Loan Disbursements.............................................................................................8 Section 3.3. Loan Repayment and Payment of Other Amounts.................................................0 Section3.4. Additional '.'''''''''''''''''.''''''''.'''''''''''''''''''.''''''''''''''''''.''''''''...............9 Section 3.5. Borrower's Obligations L7nonud8tinoal.........''..............................'..........,.........1O Section 3.6. Borrower's Remedies............................. ...............................................,............IU Section 3.7 Assignment otCounty's Rights...........................................................................lI ARTICLE DISBURSEMENTS CONDITIONS PRECEDENT Section 4.1 Conditions Precedent toFirst Disbursement ofBond Proceeds..............................12 Section 4.2. Conditions Precedent To Any Disbursement........................................................ Section 4.3. Account,Pledge and Assignment, and Disbursement Authorization....................16 Section 4.4. Loan Disbursements...........................................................................................I6 Section 4.5. Co-Construction Loan Disbursement....................................................................16 ARTICLE 5 CONSTRUCTION COVENANTS Section 5.1. Commencement and Completion........................................................................I7 Section5.2. Force Majeure.....................................................................................................17 Section 5.3 Construction Contract..........................................................................................l7 Section 5.4 Architect's Contract................................................ ............................................17 Section 5.5 Plans and Specifications..,..............^.'—.................................—...—...............'..l7 Section 5.6 Financial Requirements Analysis........................................................................18 Section 5.7 Balancing�u�6---'--'--'---~--^'--`----'-----'^--..-----18 Section 5.8 Contractor/Construction Information....................................................................l8 Section 5.10 Liens and Stop Notices........................................................................................19 Section 5.11 Construction Responsibilities ----._.--.---l9 Section 5.12 Assessments and Community Facilities Districts..................................................19 Section5.13 Delay............................................................................................ ....................20 Section5.14, Inspections.........................................................................................................2O Section5.15. Surveys..............................................................................................................2D Section5.16. Bonds' .—''''.'''—''^''''''''—'`''.''''`.'''''—'—'—''''''—''''`''''''''.—'^''—''.—.,..........20 Section 5.17. Project, Title, Operation and Maintenance........................................ ...................2I ............I....................................1.11,11, ................................................................... ........................................ ................................................... ......................................... Section5,18. Advances...........................................................................................................22 Section 5.19. Alterations to the Project and Removal of Equipment...........................................22 Section 5.20. Construction Schedule.........................................................................................22 Section 5.21. Preservation of Rights.........................................................................................22 Section 5.22 Maintenance and Repair.....................................................................................23 Section 5.23. Permits, Licenses and Approvals.........................................................................23 Section 5,24. Performance of Acts............................................................................................23 Section 5.25. Management Agreement....................................................................................23 Section5.26, Tax Receipts.......................................................................................................23 ARTICLE 6 BORROWER'S COVENANTS Section6.1. Loan Fee............................................................................................................24 Section6.2. Expenses............................................................................................................24 Section 6.3. Taxes and Impositions ........................................................... ............................24 Section 6.4. Compliance with Laws........................................................................................25 Section 6.5. Maintenance and Security for Property................................................................25 Section 6.6. Notice of Certain Matters.....................................................................................25 Section6.7. Liens on Property...............................................................................................26 Section 6.8. Prohibition of Transfer........................................................................................26 Section 6.9. Management of Property........I..........................I................................................27 Section 6.9A Income to be Applied to Debt Service..................................................................27 Section 6.10. Proceeds of the Capital Contributions..................................................................27 Section 6.11. Regulatory Agreement Compliance....................................................................27 Section 6.11A Co-Construction Loan..........................................................................................27 Section 6.12. Americans With Disabilities Act Compliance.......................................................27 Section 6.13, ERISA Compliance.............................................................................................27 Section6.14. Leasing.................................................................. ...........................................28 Section 6.15. Further Assurances.............................................................................................28 Section 6.16. Books and Records..............................................................................................28 Section 6.17. Reservation Letter;Tax Credits..................................................... .....................28 Section 6.18. Covenant for the Benefit of the Bondholders........................................................28 Section 6.19. Inspection and Access.........................................................................................29 Section 6.20. Annual Statement;Continuing Disclosure...........................................................29 Section6.21. Indemnity..........................................................................................................29 Section 6.22. Keeping Guarantor and Investor Limited Partner Informed..................................31 Section 6.23. Status of Borrower.................................... ..........................................................31 Section 6.24. Filing of Financing Statements............................................................................31 Section6.25. [Reserved]..........................................................................................................31 Section 6.26. Negative Covenants...........................................................................................32 Section 6.27. Tax Status of Bonds.............................................................................................32 Section 6.28. Tax-Exempt Status of Bonds.................................................................................32 Section 6.29. Loss of Tax Exclusion..........................................................................................33 Section 6.30. Regulatory Costs................................................................................................33 Section 6.31. [intentionally omitted]......... ..............................................................................34 Section 6.32. [intentionally omitted]........................................................................................M Section 6.33. Amendment of Regulatory Agreement...............................................................34 Section 6.34. Date of Acquisition.............................................................................................34 Section6.35. Useful Life.........................................................................................................34 Section 6.36. Federal Guarantee Prohibition............................................................................34 Section 6.37. Prohibited Facilities....................................................................... ....................34 Section 6,38. Election of Applicable Income Limit....................................................................34 ARTICLE 7 INSURANCE Section7.1. Title Insurance....................................................................................................35 Section 7.2. Property Insurance.............................................................................................35 Section 7.3. Flood Hazard Insurance......................................................................................35 Section 7.4. Liability Insurance.......................................................................'.......................35 Section7.5. General........................................................................................,......................35 ARTICLE S REPRESENTATIONS AND WARRANTIES OF COUNTY AND BORROWER Section 8.1. Representations and Warranties of the County.....................................................36 Section 8.2. Representations and Warranties of the Borrower..................................................36 Section 8.3. General Tax Representations, Warranties and Covenants of Borrower...................40 Section8.4. Tax Exemption...................................................................................................41 Section 8.5. Representations of Borrower as Single Purpose Entity..........................................41 ARTICLE 9 HAZARDOUS MATERIALS Section 9.1. Special Representations and Warranties....................................... .......................44 Section 9.3. Inspection By Bondowner Representative............................................................45 Section 9.4. Hazardous Materials Indemnity.................................................... .....................45 Section 9.5. Legal Effect of Section................................................................... .....................45 ARTICLE 10 SET ASIDE LETTERS Section10.1, Set Aside Letters.................................................................................................46 ARTICLE 11 REPORTING COVENANTS Section 11.1. Financial Information..........................................................................................47 Section 11.2. Books and Records....................................................................... ......................47 Section 11.3. Leasing Reports............................................................................!.....................47 Section 11.4. Operating Statements For Property and Facility...................................................47 ARTICLE 12 LEASES Section 121. Use of the Project;Leases....................................................................................49 ARTICLE 13 DAMAGE, DESTRUCTION AND CONDEMNATION Section 13.1. Damage and Destruction....................................................................................50 Section13.2. Condemnation....................................................................................................50 Section 13.3. Parties To Give Notice.........................................................................................50 Section 13.4. Conditions to Disbursement of Proceeds..............................................................50 ARTICLE 14 PREPAYMENT Section14.1. Prepayment.......................................................................................................51 iii ARTICLE 15 TERMINATION Section 15.1. Termination of Loan Agreement; Required Prepayment......................................52 ARTICLE 16 CONDITIONS RELATING TO REPAIR AND REPLACEMENT FUND ARTICLE 17 DEFAULT AND REMEDIES Section17.1. Default...............................................................................................................54 Section17.2. Remedies...........................................................................................................56 Section 17.3. Disposition of Funds...........................................................................................58 Section 17.4. Nonexclusive Remedies......................................................................................58 Section 17.5. Attorneys' Fees and Expenses.............................................................................58 Section17.6. Effect of Waiver..................................................................................................58 Section 17.7. County and Trustee May File Proofs of Claim......................................................58 Section 17.8. Restoration of Positions.......................................................................................58 Section 17.9. Suits To Protect the Project...................................................................................59 Section 17.10. Performance by Third Parties..............................................................................59 Section 17.11. Exercise of the County's Remedies by Bondholders..............................................59 Section 17.12. Limited Recourse Obligation...............................................................................59 ARTICLE 18 MISCELLANEOUS PROVISIONS Section18.1. Indemnity.................................................................................... .....................61 Section 18.2. Form of Documents............................................................................................61 Section 18.3. No Third Parties Benefited............................................................ .....................61 Section18.4. Notices...............................................................................................................61 Section18.5. Attorney-in-Fact.................................................................................................61 Section18.6. Actions...............................................................................................................61 Section 18.7. Right. of Contest..................................................................................................62 Section 18.8. Relationship of Parties........................................................................................62 Section 18.9. Delay Outside Bondowner Representative's Control............................................62 Section 18.10. Attorneys'Fees and Expenses;Enforcement........................................................62 Section 18.11. Immediately Available Funds...................................................... ......................62 Section 18.12, Bondowner Representative's Consent..................................................................62 Section18.13. Signs; Publicity..................................................................................................62 Section 18.14. Bondowner Representative's Agents...................................................................63 Section18.15. Tax Service.........................................................................................................63 Section 18.16. WAIVER OF RIGHT TO TRIAL BY JURY...........................................................63 Section18.17. Severability........................................................................................................63 Section18.18. Time..................................................................................................................63 Section18.19. Headings...........................................................................................................63 Section18.20. Governing Law..................................................................................................63 Section 18.21. Integration;Interpretation...................................................................................64 Section 18.22. Joint and Several Liability...................................................................................64 Section18.23. Counterparts......................................................................................................64 Section 18.24, Amounts Remaining in Funds............................................................................64 Section 18.25. Binding Effect.....................................................................................................64 Section 18.26. Amendments,Changes and Modification............................................................64 Section 18.27. Required Approvals......................................................................!....................64 Section 18.28. Limitation on County's Liability..........................................................................64 iv Section 18.29. NoWaiver;Consents............ .......................................................................... ,65 Section 18.30. and Effect of Boodownzez 65 Section 18.31. No Commitment to Increase Loan............ ............................................. — ........65 Section 18.32. and Other Risks ..—..'-85 Section 18.33. Relationships With Other Bondowner Representative Customers..........................o5 Section 18.34. Disclosure tnTitle Company.......................................... ........................ .........on Section 18.35. Restriction on Personal Property................................... ................... —.......... ....6u Section18.36. ................... ................................... .............................................oo Section 18.37. Loan Commission ..............................................................................................oo Section 18.38. Compliance with Usury Lamve ................................................. .........................6u Section 18.39. General 9artner—_................. ..........................................................................oo EXHIBIT A DESCRIPTION OF THE PROPERTY EXHIBIT DOCUMENTS EXHIBIT C FINANCIAL REQUIREMENT ANALYSIS EXHIBIT DISBURSEMENT PLAN EXHIBIT REPAIR AND REPLACEMENT AGREEMENT EXHIBIT ISSUE PROMISSORY NOTE;ISSUE D PROMISSORY NOTE v LOAN AGREEMENT THIS LOAN AGREEMENT (this "Loan Agreement") is made and entered into as of October 1, 1998 by and among the COUNTY OF CONTRA COSTA (the "County"), WELLS FARGO BANK, NATIONAL ASSOCIATION (the "Bondowner Representative") and COGGINS SQUARE ASSOCIATES, a California Limited Partnership (the "Borrower"). WITNESSETH: WHEREAS, the County is a political subdivision and public body corporate and politic duly organized and validly existing under the Constitution and laws of the State of California (the "State"); and WHEREAS, pursuant to Chapter 7 of Fart 5 of Division 31 of the Health and Safety Code of the State (the "Act"), the County is authorized and empowered to issue revenue bonds and apply the proceeds to make loans for the acquisition, construction,'>rehabilitation and development of qualifying housing developments(defined in the Act to include buildings used to provide residential housing for four or more families);and WHEREAS, the Borrower has requested the County to issue its County of Contra Costa Multifamily Housing Revenue Bonds(Coggins Square Apartments) 1998 Series I7,Issue I,in the initial principal amount of $5,793,000 and its County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue II, in the initial principal amount of$3,652,053 (collectively, the "Bonds") for the purpose of making a loan (the "Loan") to finance, in part, the acquisition and construction of Coggins Square Apartments, an 86-unit apartment project to be located in the unincorporated area of the County (the "Project"); and WHEREAS, the County deems it desirable and in keeping with its purpose to issue its Bonds and loan the proceeds thereof to the Borrower for the purposes described above under the terms and conditions contained in this Loan Agreement; and WHEREAS, to evidence the Loan, the Borrower is executing in favor of the County, those certain two promissory notes (the "Notes") in the aggregate principal sum of$ in the forms attached hereto as Exhibit F,which Notes provide for the repayment of the Loan in amounts sufficient to pay, when due, the principal of, premium, if any, and interest on the Bonds, and the Borrower has executed or caused to be executed the Mortgage and the Security Agreement(as such terms are hereinafter defined) with respect to the Project to secure, among other things,the payments due under the Loan Agreement;and WHEREAS, the execution and delivery of this Loan Agreement and the issuance of the Bonds have been duly and validly authorized by the County. NOW, THEREFORE, the County, the Borrower and the Bondowner;Representative (as hereinafter defined), each in consideration of the representations, covenants and agreements of the other as set forth herein,mutually represent,covenant and agree as follows; ARTICLE 1 DEFINITIONS AND RULES OF INTERPRETATION Section 1.1. Defined Terms. Capitalized terms used in this Loan Agreement and not otherwise defined shall have the meanings set forth for those terms in Section 1.1 of the Indenture. "ADA" means the Americans with Disabilities Act, 42 U.S.C. §§12101, et seq. as hereinafter amended or modified. "'Agency"means the Contra Costa County Redevelopment Agency. "Application for Payment" shall have the meaning ascribed to such term in the Disbursement Plan attached hereto as Exhibit"D." "Architect"s Contract" means that certain Agreement dated as of between Borrower and Architect. "Bond Proceeds" means the proceeds of the sale of the Bonds, including amounts to be held from time to time in the various funds and accounts established under the Indenture and any insurance and condemnation proceeds held by County or Trustee in connection with the Property and/or the Bonds, but excluding the funds held in the Cost of Issuance Fund, the County Account and Rebate Fund pursuant to the Indenture. "Border Zone Property" means any property designated as "border zone property" under the provisions of California Health and Safety Code, Sections 25220 et seq., or any regulation,adopted in accordance therewith. "Borrower's Funds" means all funds of Borrower deposited with the Trustee pursuant to the terms and conditions of this Loan Agreement. "Capital Contributions" shall have the meaning ascribed to such term in Section 8.2(p) of this Loan Agreement. "Capital Note" means any note executed by the Investor Limited Partner obligating it to make the Capital Contributions to the Borrower. "Co-Construction Loan" means, collectively, the following: (a) a loan from the County to the Borrower in the principal amount of $2,450,000, to be used for land acquisition, predevelopment costs and construction costs, (b) a loan from the County to the Borrower in the principal amount of $3,000,000, to be used for construction costs, and (c) a loan from World Savings to the Borrower in the principal amount of$233,000, to be used for construction costs. "Co-Construction Loan Documents" means collectively the following loan documents (a) with respect to the loan described in clause (a) of the definition of Co-Construction Loan herein, the Loan Agreement between the Borrower and the County, dated the Note by the Borrower dated 1998, the Deed of Trust and Security Agreement by the Borrower for the benefit of the County, dated 1998, and the Regulatory Agreement and Declaration of Restrictive Covenants, dated 1998, between the County and the Borrower; (b) with respect to the loan described in clause (b) of the 'definition of Co- Construction Loam herein, the Loan Agreement between the County and the Borrower dated the Note by the Borrower dated , and the Regulatory Agreement described in the preceding clause (a); and (c) with respect to the loan described in clause (c) of the 2 definition Co-Construction Loan herein, the Note by the Borrower dated and the Deed of Trust by the Borrower for the benefit of World Savings dated "County Subordination Agreements" means the Subordination Agreement (Deeds of Trust to Deed. of Trust), dated as of October 1, 1998, by the Borrower, the County and the Contra Costa County Redevelopment Agency,in favor of the Trustee. "Default" shall have the meaning ascribed to such terms in Section 17.1 of this Loan Agreement. "Disbursement Plan" means the Disbursement Plan attached hereto as Exhibit D. "Effective Date" means the date the Mortgage is recorded in the Office of the County Recorder of the County. "Financial Requirements Analysis" means the financial requirements analysis attached hereto as Exhibit C,as the same may be amended from time to time. "Gross Operating Income" shall have the meaning ascribed to such term in Section 11.4(a) of this Loan Agreement. "Hazardous Materials" shall have the meaning ascribed to such term in Section 9.1(a) of this Loan Agreement "Hazardous Materials Claims" shall have the meaning ascribed to such term in Section 9.1(c) of this Loan Agreement. "Hazardous Materials Laws" shall have the meaning ascribed to such term in Section 9.1(b) of this Loan Agreement. "Impositions" shall have the meaning ascribed to such term in Section 6.3 of this Loan Agreement. "Indemnified Parties" shall have the meaning ascribed to such terra in Section 6.21 of this Loan.Agreement. "Insolvency Proceeding" means any bankruptcy or other voluntary or involuntary proceeding,in or out of court,for the adjustment of debtor-creditor relationships. "Liabilities" shall have the meaning ascribed to such term in Section 6.21 of this Loan Agreement. "Management Agreement" means any agreement between Borrower and Property Manager with respect to the management of the Project,in a form reasonably acceptable to the Bondowner Representative. "Operating Statement" shall have the meaning ascribed to such term. in Section 11.4 of this Loan Agreement. "Other Related Documents" means those documents, as hereafter amended, supplemented, replaced or modified from time to time, properly executedand in recordable form, if necessary,listed in Exhibit B attached hereto as Other Related Documents. 3 "Partnership Documents" means the Partnership Agreement, the Capital Note (when executed by the maker thereof and delivered to the Borrower), and all other documents and exhibits referenced therein. "Permitted. Encumbrances" means the Regulatory Agreement and other title exceptions shown on Schedule B,Part I of the Bondowner representative's title policy. "Permitted Operating Expenses" shall have the meaning ascribed to such term in Section 11.4(b) of this Loan Agreement. "Prepayment Premium" shall have the meaning ascribed to such term in Section 14.1 of this Loan Agreement. "Project Agreements" means the Architect's Contract,Construction Contract,Plans and Specifications, and all other contracts and subcontracts entered into in connection with the design,development and construction of the Project. "Project Costs" means any and all costs incurred by the Borrower with respect to the acquisition and construction of the Project, whether paid or incurred prior to or after the sixtieth day preceding January 27, 1998, including, without limitation, costs for site preparation,the planning of housing and related facilities and improvements, the acquisition of property, the removal or demolition of existing structures, the construction of housing and related facilities and improvements, and all other work in connection therewith,and all costs of financing, including, without limitation, the cost of consultant, accounting',and legal services, other expenses necessary or incident to determining the feasibility of the Project, administrative and other expenses necessary or incident to the Project and the financing;thereof (including reimbursement to any municipality,county or entity for expenditures made for the Project). "Property" means all of Borrower's and County's right, title and interest,whether now existing or hereafter acquired, in and to the real property described in Exhibit A of the Mortgage, together with all easements and other rights now or hereafter made appurtenant thereto, all improvements and fixtures now or hereafter located thereon, and all additions and accretions thereto. "Property Manager"means BRIDGE Property Management Corporation. "Requirements" shall have the meaning ascribed to such term in Section 5.17(a) of this Loan Agreement. "Reservation Letter" shall have the meaning ascribed to such term in Section 8.2(o) of this Loan Agreement. "Secured Obligations"shall have the meaning ascribed to such term in the Mortgage. "Security Agreement" means that certain Security Agreement dated as of October 1, 1998 among the Borrower, the General Partner and the Investor Limited Partner in favor of Trustee. "Single Purpose Entity" shall have the meaning ascribed to such term in Section 8.5(4)of this Loan Agreement "ICAC" means the California Tax Credit Allocation Committee. Section 1.2. Rules of Interpretation. 4 (a) This Loan Agreement shall be governed by and construed in accordance with the laws and judicial decisions of the State of California (the "State"), except as they may be preempted by federal rules,regulations and laws applicable to the County. The County and the Borrower expressly acknowledge and agree that any judicial action to enforce any rights of the County under this Loan Agreement shall be brought and maintained at the option of the County in the Superior Court of the State of California or in the United States District Court for the Central District of California or in any United States Bankruptcy Court in any case involving or having jurisdiction over the Borrower or over the Project. (b) The words "herein," "hereof" and "hereunder" and words of similar import, without reference to any particular section or subdivision, refer to this Loan Agreement as a whole rather than to any particular section or subdivision of this Loan Agreement. (c) References in this Loan Agreement to any particular 'article, section or subdivision hereof are to the designated article, section or subdivision of this Loan Agreement as originally executed. (d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with tax basis accounting principles, and all computations provided for herein shall be made in accordance with tax basis accounting principles consistently applied and applied on the same basis as in prior years. (e) The Table of Contents and titles of Articles and Sections herein are for convenience of reference only and are not a part of this Loan Agreement, and shall not define or limit the provisions hereof. (f) Unless the context hereof clearly requires otherwise,the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa. (g) Articles, Sections, subsections and clauses mentioned by number only are those so numbered which are contained in this Loan Agreement. (h) Any opinion of counsel required hereunder shall be a written opinion of such counsel (i) References to the Bonds as "tax exempt" or to the "tax exempt status of the Bonds" are to the exclusion of interest on the Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code. Section 1.3. Exhibits Incorporated. Exhibits A, B,C, D,E and F all attached hereto,are by this reference incorporated into this Loan Agreement. 5 Quint&ThZhimmig LLP 9/27/98 10/8/98 LOAN AGREEMENT among the COUNTY OF CONTRA COSTA, as County WELLS FARGO BANK,NATIONAL ASSOCIATION, as Bondowner Representative and COGGINS SQUARE ASSOCIATES, a California Limited Partnership, as Borrower Dated as of October 1,1998 Relating to: $5,793,000 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue I and $3,652,053 County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D,Issue II The interests of the County in this Loan Agreement, excluding the County's Reserved Rights, have been assigned to BNY Western Trust Company, as Trustee pursuant to an Indenture of Trust dated as of October 1, 1998 between the County of Contra Costa and the Trustee. 03007.04J4035 TABLE OF CONTENTS ARTICLE 1 DEFINITIONS AND RULES OF INTERPRETATION Section1.1. Defined Terms........................................................................... ......................2 Section 1.2. Rules of Interpretation................................................................ ......................4 Section 1.3. Exhibits Incorporated.................................................................. ......................5 ARTICLE 2 ISSUANCE OF BONDS; PAYMENT OF ISSUANCE COSTS Section2.1. Issuance of Bonds....................................................................... .......................6 Section 2.2. No Warranty by County............................................................. ......................6 Section 2.3. Payment of Costs of Issuance by Borrower.............................................................6 Section2.4. Creation of Funds.................................................................................................7 ARTICLE 3 THE LOAN, LOAN REPAYMENT AND ADDITIONAL CHARGES Section3.1. The Loan.................................................................................... ......................8 Section 3.2. Loan Disbursements.................................................................... . ......................8 Section 3.3. Loan Repayment and Payment of Other Amounts.................................................8 Section3.4. Additional Charges..............................................................................................9 Section 3.5. Borrower's Obligations Unconditional........................................... .....................10 Section 3.6. Borrower's Remedies..........................................................................................10 Section 3.7. Assignment of County's Rights..................................................... .....................11 ARTICLE 4 DISBURSEMENTS CONDITIONS PRECEDENT Section 4.1 Conditions Precedent to First Disbursement of Bond Proceeds..............................12 Section 4.2. Conditions Precedent To Any Disbursement........................................................14 Section 4.3. Account,Pledge and Assignment, and Disbursement Authorization....................16 'section 4.4. Loan Disbursements.................................................................... ...................16 Section 4.5. Co-Construction Loan Disbursement....................................................................16 ARTICLE 5 CONSTRUCTION COVENANTS Section 5.1. Commencement and Completion........................................................................17 Section5.2. Force Majeure.............................................................................. ...................17 Section 5.3 Construction Contract..........................................................................................17 Section 5.4 Architect's Contract.............................................................................................17 Section 5.5 Plans and Specifications......................................................................................17 Section 5.6 Financial Requirements Analysis........................................................................18 Section5.7 Balancing..................................................................................... . ...................18 Section 5,8 Contractor/Construction Information............................................. ......................18 Section 5.10 Liens and Stop Notices........................................................................................19 Section 5.11 Construction Responsibilities...............................................................................19 Section 5.12 Assessments and Community Facilities Districts............................. ....................19 Section5.13 Delay........................................................................................... ..................20 Section5.14 Inspections................................................................................... ..................20 Section5.15. Surveys........................................................................................ ..................20 Section5.16. Bonds.... .................................................................................. ..................20 Section 5.17. Project, Title, Operation and Maintenance............................................................21 i Section5.18. Advances.................................................................................. .....................22 Section 5.19. Alterations to the Project and Removal of Equipment...........................................22 Section 5.20. Construction Schedule............................................................... ......................22 Section 5.21. Preservation of Rights.........................................................................................22 Section 5.22 Maintenance and Repair.....................................................................................23 Section 5.23. Permits, Licenses and Approvals.........................................................................23 Section 5.24. Performance of Acts.................................................................... .....................23 Section 5.25. Management Agreement............................................................ ....................23 Section5.26. Tax Receipts............................................................................... ....................23 ARTICLE 6 BORROWER'S COVENANTS Section6.L Loan Pee............................................................................................................24 Section6.2. Expenses............................................................................................................24 Section 6.3. Taxes and Impositions.........................................................................................24 Section 6.4. Compliance with Laws................................................................ .......................25 Section 6.5. Maintenance and Security for Property................................................................25 Section 6.6. Notice of Certain Matters.....................................................................................25 Section6.7. Liens on Property...............................................................................................26 Section 6.8. Prohibition of Transfer........................................................................................26 Section6.9. Management of Property............................................................. ....................27 Section 6.9A Income to be Applied to Debt Service........................................ ......................27 Section 6.10. Proceeds of the Capital Contributions..................................................................27 Section 6.11. Regulatory Agreement Compliance....................................................................27 Section 6.11A Co-Construction Loan..........................................................................................27 Section 6.12. Americans With Disabilities Act Compliance.......................................................27 Section6.13. ERISA Compliance.............................................................................................27 Section6.14. Leasing..............................................................................................................28 Section 6.15. Further Assurances.............................................................................................28 Section 6.16. Books and Records..............................................................................................28 Section 6.17. Reservation Letter;Tax Credits..................................................... .....................28 Section 6.18. Covenant for the Benefit of the Bondholders........................................................28 Section 6.19. Inspection and Access...................................................................:.....................29 Section 6.20. Annual Statement;Continuing Disclosure...........................................................29 Section6.21. Indemnity..........................................................................................................29 Section 6.22. Keeping Guarantor and Investor Limited Partner Informed..................................31 Section 6.23. Status of Borrower........................................................................ ......................31 Section 6.24. Piling of Financing Statements............................................................................31 Section6.25. [Reserved]..........................................................................................................31 Section 6.26. Negative Covenants.................................................................... ...................32 Section 6.27. Tax Status of Bonds...................................................................... ...................32 Section 6.28. Tax-Exempt Status of Bonds.................................................................................32 Section 6.29. Loss of Tax Exclusion..........................................................................................33 Section6.30. Regulatory Costs................................................................................................33 Section 6.31. [intentionally omitted]........................................................................................34 Section 6.32. [intentionally omitted)..........................................................................I.........I...34 Section 6.33. Amendment of Regulatory Agreement...............................................................34 Section 6.34, Date of Acquisition......................... ...................................................................34 Section6.35. Useful Life.........................................................................................................34 Section 6.36. Federal Guarantee Prohibition...................................................... . ...................34 Section 6.37. Prohibited Facilities...................................................................... ...................34 Section 6.38. Election of Applicable Income Limit.............................................. ...................34 ii ARTICLE 7 INSURANCE Section7.1. Title Insurance.....................................................................................................35 Section 7.2. Property Insurance.............................................................................................35 Section 7.3. Flood.Hazard Insurance............................................................... ......................35 Section7.4. Liability Insurance..............................................................................................35 Section7.5. General...................................................................................... .....................35 ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF COUNTY AND BORROWER Section 8.1. Representations and Warranties of the County.....................................................36 Section 8.2. Representations and Warranties of the Borrower..................................................36 Section 8.3. General Tax Representations, Warranties and Covenants of Borrower...................40 Section8.4. Tax Exemption...................................................................................................41 Section 8.5. Representations of Borrower as Single Purpose Entity..........................................41 ARTICLE 9 HAZARDOUS MATERIALS Section 9.1. Special Representations and Warranties............................................................. 44 Section 9.3. Inspection By Bondowner Representative............................................................45 Section 9.4. Hazardous Materials Indemnity..........................................................................45 Section 9.5. Legal Effect of Section.................................................................. . ....................45 ARTICLE 10 SET ASIDE LETTERS Section10.1. Set Aside Letters.................................................................................................46 ARTICLE 11 REPORTING COVENANTS Section 11.1. Financial Information.................................................................... .....................47 Section 11.2. Books and Records............ .......... ........--........................................... .............47 Section11.3. Leasing Reports..................................................................................................47 Section 11.4. Operating Statements For Property and Facility...................................................47 ARTICLE 12 LEASES Section 12..1. Use of the Project;Leases....................................................................................49 ARTICLE 13 DAMAGE, DESTRUCTION AND CONDEMNATION Section13.1. Damage and Destruction.............................................................. . ...................50 Section13.2. Condemnation............................................................................. ...................50 Section 13.3. Parties To Give Notice.................................................................. ..................50 Section 13.4. Conditions to Disbursement of Proceeds......................................... ....................50 ARTICLE 14 PREPAYMENT Section14.1. Prepayment.......................................................................................................51 iii ARTICLE 15 TERMINATION Section 15.1. Termination of Loan Agreement;Required Prepayment......................................52 ARTICLE 16 CONDITIONS RELATING TO REPAIR AND REPLACEMENT FUND ARTICLE 17 DEFAULT AND REMEDIES Section17.1. Default........................................................................................ ......................54 Section17.2. Remedies.................................................................................... ......................56 Section 17.3. Disposition of Funds...........................................................................................58 Section 17.4. Nonexclusive Remedies.............................................................. ....................58 Section 17.5. Attorneys'Fees and Expenses..................................................... ....................58 Section17.6. Effect of Waiver..................................................................................................58 Section 17.7. County and Trustee May File Proofs of Claim.................................................... 58 Section17.8. Restoration of Positions.......................................................................................58 Section 17.9, Suits To Protect the Project......................................................... ............I.........59 Section 17.14. Performance by Third Parties..................................................... .....................59 Section 17.11. Exercise of the County's Remedies by Bondholders..............................................59 Section 17.12. Limited Recourse Obligation....................................................... .......................59 ARTICLE 18 MISCELLANEOUS PROVISIONS Section18.1. Indemnity................................................................>.................. ...................61 Section18.2. Form of Documents............................................................................................61 Section 18.3. No Third Parties Benefited........................................................... ....................61 Section18.4. Notices........................................................................................ ...................61 Section18.5. Attorney-in-Fact.......................................................................... ...................61 Section18.6. Actions........................................................................................ . ....................61 Section18.7. Right of Contest.......................................................................... ....................62 Section 18.8. Relationship of Parties................................................................. ...................62 Section 18.9, Delay Outside Bondowner Representative's Control............................................62 Section 18,14. Attorneys'Fees and Expenses;Enforcement........................................................62 Section 18.11. Immediately Available Funds.............................................................................62 Section 18.12. Bondowner Representative's Consent............................................._....................62 Section18.13. Signs; Publicity........................................................................... ...................62 Section 18.14. Bondowner Representative's Agents............................................ ..............,....63 Section18.15. Tax Service.................................................................................. . ....................63 Section 18.16. WAIVER OF RIGHT TO TRIAL BY JURY...........................................................63 Section18.17. Severability................................................................................. ...................63 Section18.18. Time........................................................................................... ...................63 Section18.19. Headings.................................................................................... ...................63 Section 18.24. Governing Law........................................................................... ...................63 Section 18.21. Integration;Interpretation............................................................ ..........64 Section 18.22. Joint and Several Liability........................................................... .. . ...............64 Section18.23. Counterparts................................................................................ ...................64 Section 18.24. Amounts Remaining in Funds............................................................................64 Section18.25, Binding Effect....................................................................................................64 Section 18.26. Amendments,Changes and Modification............................................................64 Section 18.27. Required Approvals..................................................................... ...................64 Section 18.28. Limitation on County's Liability.................................................. ....................64 iv Section 18.29. No Waiver;Consents................................................................. .....................65 Section 18.30. Purpose and Effect of Bondowner Representative Approval..................................65 Section 18.31. No Commitment to Increase Loan........................................................................65 Section 18.32. Indemnity Regarding Construction and Other Risks............................................65 Section 18.33. Relationships With Other Bondowner Representative Customers. .......................65 Section 18.34. Disclosure to Title Company.................................................. .... . ...... ...........66 Section 18.35. Restriction on Personal Property...........................................................................66 Section 18.36. Interpretation............................................................................. .....................66 Section18.37. Loan Commission........................................................................ ......................66 Section 18.38. Compliance with Usury Laws.............................................................................66 Section 18.39. General Partner..................................................................................................66 EXHIBIT A DESCRIPTION OF THE PROPERTY EXHIBIT B DOCUMENTS EXHIBIT C FINANCIAL REQUIREMENT ANALYSIS EXHIBIT D DISBURSEMENT PLAN EXHIBIT E REPAIR AND REPLACEMENT AGREEMENT EXHIBIT F ISSUE I PROMISSORY NOTE;ISSUE II PROMISSORY NOTE v LOAN AGREEMENT THIS LOAN AGREEMENT (this "Loan Agreement") is made and entered into as of October 1, 1998 by and among the COUNTY OF CONTRA COSTA (the "County"), WELLS FARGO BANK, NATIONAL ASSOCIATION (the "Bondowner Representative") and COGGINS SQUARE ASSOCIATES, a California Limited Partnership (the "Borrower"). WITNESSETH: WHEREAS, the County is a political subdivision and public body corporate and politic duly organized and validly existing under the Constitution and laws of the State of California (the "State"); and WHEREAS, pursuant to Chapter 7 of fart 5 of Division 31 of the Health and Safety Code of the State (the "Act"), the County is authorized and empowered to issue revenue bands and apply the proceeds to make loans for the acquisition, construction, rehabilitation and development of qualifying housing developments (defined in the Act to include buildings used to provide residential housing for four or more families);and WHEREAS, the Borrower has requested the County to issue its County of Contra Costa Multifamily Housing Revenue Bonds(Coggins Square Apartments) 1998 Series D,Issue I,in the initial principal amount of $5,793,000 and its County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue II, in the initial principal amount of$3,652,053 (collectively, the "Bonds") for the purpose of making a loan (the "Loan") to finance, in part, the acquisition and construction of Coggins Square Apartments, an 86-unit apartment project to be located in the unincorporated area of the County(the "Project"); and WHEREAS, the County deems it desirable and in keeping with its purpose to issue its Bonds and loan the proceeds thereof to the Borrower for the purposes described above under the terms and conditions contained in this Loan Agreement;and WHEREAS, to evidence the Loan, the Borrower is executing in favor of the County, those certain two promissory notes (the "Notes") in the aggregate principal sum of$_ -in the forms attached hereto as Exhibit F,which Notes provide for the repayment of the Loan in amounts sufficient to pay, when due, the principal of, premium, if any, and interest on the Bonds, and the Borrower has executed or caused to be executed the Mortgage and the Security Agreement (as such terms are hereinafter defined) with respect to the Project to secure, among other things,the payments due under the Loan Agreement;and WHEREAS, the execution and delivery of this Loan Agreement and the issuance of the Bonds have been duly and validly authorized by the County. NOW, THEREFORE, the County, the Borrower and the Bondowner'Representative (as hereinafter defined),each in consideration of the representations,covenants and agreements of the other as set forth herein,mutually represent,covenant and agree as follows: ARTICLE 1 DEFINITIONS AND RULES OF INTERPRETATION Section 1.1. ID-efined harms. Capitalized terms used in this Loan Agreement and not otherwise defined shall have the meanings set forth for those terms in Section 1.1 of the Indenture. „ADA" means the Americans with Disabilities Act, 42 U.S.C. §12101, et seq. as hereinafter amended or modified. "Agency"means the Contra Costa County Redevelopment Agency. "Application for Payment" shall have the meaning ascribed to such term in the Disbursement Plan attached hereto as Exhibit "D." "Architect's Contract" means that certain Agreement dated as of between Borrower and Architect. "Bond Proceeds" means the proceeds of the sale of the Bonds,including amounts to be held from time to time in the various funds and accounts established under the Indenture and any insurance and condemnation proceeds held by County or Trustee in connection with the Property and/or the Bonds, but excluding the funds held in the Cost of Issuance Fund, the County Account and Rebate Fund pursuant to the Indenture. "Border Zone Property" means any property designated as "border zone property" under the provisions of California Health and Safety Code, Sections 25220 et seq., or any regulation,adopted in accordance therewith. "Borrower's Funds" means all funds of Borrower deposited with the Trustee pursuant to the terms and conditions of this Loan Agreement. "Capital Contributions" shall have the meaning ascribed to such term in Section 8.2(p) of this Loan Agreement. "Capital Note" means any note executed by the Investor Limited Partner obligating it to make the Capital Contributions to the Borrower. "Co-Construction Loan" means, collectively, the fallowing: (a) a loan from the County to the Borrower in the principal amount of $2,450,000, to be used for land acquisition, predevelopment costs and construction costs, (b) a loan from the County to the Borrower in the principal amount of $3,000,000, to be used for construction costs, and (c) a loan from World Savings to the Borrower in the principal amount of$233,000, to be used for construction costs. "Co-Construction Loan Documents" means collectively the following lean documents (a) with respect to the loan described in clause (a) of the definition of Co-Construction Loan herein, the Loan Agreement between the Borrower and the County, dated the Note by the Borrower dated _ 1998, the Deed of Trust and Security Agreement by the Borrower for the benefit of the County, dated , 1998, and the regulatory Agreement and Declaration of restrictive Covenants, dated 1998, between the County and the Borrower; (b) with respect to the loan described in clause (b) of the definition of Co- Construction Loan} herein, the Loan Agreement between the County and: the Borrower dated the Note by the Borrower dated and the Regulatory Agreement described in the preceding clause (a); and (c) with respect to the loan described in clause (c) of the 2 definition Co-Construction Loan herein, the Note by the Borrower dated , and the Deed of Trust by the Borrower for the benefit of World Savings dated "County Subordination Agreements" means the Subordination Agreement (Deeds of Trust to Deed of Trust), dated as of October 1, 1998, by the Borrower, the County and the Contra Costa County Redevelopment Agency,in favor of the Trustee. "Default" shall have the meaning ascribed to such terms in Section 17.1 of this Loan Agreement. "Disbursement Plan" means the Disbursement Plan attached hereto as Exhibit D. "Effective Date" means the date the Mortgage is recorded in the Office of the County Recorder of the County. "Financial Requirements Analysis" means the financial requirements analysis attached hereto as Exhibit C,as the same may be amended from time to time. "Gross Operating Income" shall have the meaning ascribed to such term in Section 11.4(a) of this Loan Agreement. "Hazardous Materials" shall have the meaning ascribed to such term in Section 9.1(a)of this Loan Agreement "Hazardous Materials Claims" shall have the meaning ascribed to such term in Section 9.1(c) of this Loan Agreement. "Hazardous Materials Laws" shall have the meaning ascribed to such term in Section 9.1(b)of this Loan Agreement. "Impositions" shall have the meaning ascribed to such term in Section 6.3 of this Loan Agreement. "Indemnified Parties" shall have the meaning ascribed to such term in Section 6.21 of this Loan Agreement. "Insolvency Proceeding" means any bankruptcy or other voluntary or involuntary proceeding,in or out of court,for the adjustment of debtor-creditor relationships. "Liabilities" shall have the meaning ascribed to such term in Section 6.21 of this Loan Agreement. "Management Agreement" means any agreement between Borrower and Property Manager with respect to the management of the Project, in a form reasonably acceptable to the Bondowner Representative. "Operating Statement" shall have the meaning ascribed to such term in Section 11.4 of this Loan Agreement. "Other Related Documents" means those documents, as hereafter amended, supplemented, replaced or modified from time to time, properly executedand in recordable form,if necessary,listed in Exhibit B attached hereto as Other Related Documents. 3 "Partnership Documents" means the Partnership Agreement, the Capital Note (when executed by the maker thereof and delivered to the Borrower), and all other documents and exhibits referenced therein. "Permitted Encumbrances" means the Regulatory Agreement and other title exceptions shown on Schedule B,Part I of the Bondowner Representative's title policy. "Permitted Operating Expenses"shall have the meaning ascribed to such term in Section 11.4(b)of this Loan Agreement. "Prepayment Premium" shall have the meaning ascribed to such term in Section 14.1 of this Loan Agreement. "Project Agreements" means the Architect's Contract, Construction Contract,Plans and Specifications, and all other contracts and subcontracts entered into in connection with the design,development and construction of the Project. "Project Costs" means any and all costs incurred by the Borrower with respect to the acquisition and construction of the Project, whether paid or incurred prior to or after the sixtieth day preceding January 27, 1998, including, without limitation, costs for site preparation,the planning of housing and related facilities and improvements,the acquisition of property, the removal or demolition of existing structures, the construction of housing and related facilities and improvements,and all other work in connection therewith,and all costs of financing, including, without limitation, the cost of consultant, accounting;and legal services, other expenses necessary or incident to determining the feasibility of the Project,administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any municipality,county or entity for expenditures made for the Project). "Property" means all of Borrower's and County's right, title and interest,whether now existing or hereafter acquired, in and to the real property described in Exhibit A of the Mortgage, together with all easements and other rights now or hereafter ,made appurtenant thereto, all improvements and fixtures now or hereafter located thereon, and all additions and accretions thereto. "Property Manager" means BRIDGE Property Management Corporation. "Requirements" shall have the meaning ascribed to such term in Section 5.17(a) of this Loan Agreement. "Reservation Letter" shall have the meaning ascribed to such term in Section 8.2(o) of this Loan Agreement. "Secured Obligations" shall have the meaning ascribed to such term in the Mortgage. "Security Agreement" means that certain Security Agreement dated as of October 1, 1998 among the Borrower, the General Partner and the Investor Limited Partner in favor of Trustee. "Single Purpose Entity" shall have the meaning ascribed to such term in Section 8.5(4) of this Loan Agreement "TCAC" means the California Tax Credit Allocation Committee. Section 1.2. Rules of 1nteMreLatiQn. 4 (a) This Loan Agreement shall be governed by and construed in accordance with the laws and judicial decisions of the State of California (the "State"), except as they may be preempted by federal rules,regulations and laws applicable to the County. The County and the Borrower expressly acknowledge and agree that any judicial action to enforce any rights of the County under this Loan Agreement shall be brought and maintained at the option of the County in the Superior Court of the State of California or in the United States District Court for the Central District of California or in any United States Bankruptcy Court in any case involving or having jurisdiction over the Borrower or over the Project. (b) The words "herein," "hereof" and "hereunder" and words of similar import, without reference to any particular section or subdivision, refer to this Loan Agreement as a whole rather than to any particular section or subdivision of this Loan Agreement. (c) References in this Loan Agreement to any particular 'article, section or subdivision hereof are to the designated article, section or subdivision of this Loan Agreement as originally executed. (d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with tax basis accounting principles; and all computations provided for herein shall be made in accordance with tax basis accounting principles consistently applied and applied on the same basis as in prior years. (e) The Table of Contents and titles of Articles and Sections herein are for convenience of reference only and are not a part of this Loan Agreement, and shall not define or limit the provisions hereof. (f) Unless the context hereof clearly requires otherwise,the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa. (g) Articles, Sections, subsections and clauses mentioned by number only are those so numbered which are contained in this Loan Agreement. (h) Any opinion of counsel required hereunder shall be a written opinion of such counsel (i) References to the Bonds as "tax exempt" or to the "tax exempt status of the Bonds" are to the exclusion of interest on the Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code. Section 1.3. Exhibits Incorporated. Exhibits A, B, C,D, E and F all attached hereto, are by this reference incorporated into this Loan Agreement. 5 ARTICLE 2 ISSUANCE OF BONDS; PAYMENT OF ISSUANCE COSTS Section 2.1. nuance of Bonds. Upon execution of this Loan Agreement,the ether Loan Documents,the Indenture and the occurrence of all conditions precedent to issuance,or as soon thereafter as practicable, the County will execute the Bonds and deliver the Bunds to the initial purchaser thereof or to its order upon payment of the purchase price and filing with the Trustee of the opinion of Bond Counsel as to the legality of the Bonds and the furnishing of all other documents required to be furnished before such delivery. The proceeds of the Bonds will be deposited with the Trustee and disbursed in accordance with Article 5 of the Indenture. Section 2.2. No Warranty b; County. The Borrower agrees' that, because the components of the Project have been and are to be designated and selected by it, THE COUNTY HAS NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, AND THE COUNTY MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR THE LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE BORROWER. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT, THE COUNTY SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECTTHERETO. THE PROVISIONS OF THIS SECTION 2.2 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES OR REPRESENTATIONS BY THE COUNTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT. IN ADDITION, THE BORROWER ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IT UNDERSTANDS THE NATURE AND STRUCTURE OF THE PROJECT; THAT IT IS FAMILIAR WITH THE PROVISIONS OF ALL OF THE DOCUMENTS ANIS INSTRUMENTS RELATING TO THE FINANCING OF THE PROJECT TO WHICH IT OR THE COUNTY IS 'A PARTY OR OF WHICH IT IS A BENEFICIARY;THAT IT UNDERSTANDS THE RISKS INHERENT IN SUCH TRANSACTIONS, INCLUDING WITHOUT LIMITATION THE RISK OF LOSS OF THE PROJECT; AND THAT IT HAS NOT RELIED ON THE COUNTY FOR ANY GUIDANCE OR EXPERTISE IN ANALYZING THE FINANCIAL OR OTHER CONSEQUENCES OF SUCH FINANCING TRANSACTIONS OR OTHERWISE RELIED ON THE COUNTY IN ANY MANNER EXCEPT TO ISSUE THE BONDS IN ORDER TO PROVIDE FUNDS FOR THE LOAN. Section 2.3. Pay _nf of Costs of Issuance by Borrower. The Borrower agrees that it will provide any and all funds required for the prompt and full payment of all Costs of Issuance not otherwise paid from Band proceeds,including,but not limited to,the following items: (a) all reasonable legal (including Band Counsel and counsel' to the Borrower, County, Bondowner Representative and Trustee), abstractors', title insurance, financial, engineering, environmental, construction services, survey appraisal and accounting fees and expenses, administrative fees,printing and engraving costs and other expenses incurred and to be incurred by the Borrower,County,Bondowner Representative and Trustee on or before or in connection with issuance of the Bonds; 6 (b) premiums on all insurance required to be secured and:maintained during the term of this Loan Agreement; (c) all mortgage registry fees and recording fees and other taxes, charges, assessments,license or registration fees of every nature whatsoever incurred and to be incurred in connection with this financing (other than a tax on the income of County, Bondowner Representative or Trustee); (d) all reasonable initial fees and expenses of the Trustee, the Paying Agent and the County; (e) the fee payable to Bondowner Representative pursuant to Section 6.1(a); and (f) any other Costs of Issuance. Section 2.4. Creation of Funds. The Bond Proceeds shall be held by the Trustee and applied in accordance with the Indenture. 7 ARTICLE 3 THE LOAN, LOAN REPAYMENT AND ADDITIONAL CHARGES Section 3.1. The Loan. The County agrees, upon the terms and conditions herein specified, to lend to the Borrower the proceeds received by the County from the sale of the Bonds, excluding any accrued interest, by causing such proceeds to be deposited with the Trustee for disposition as provided herein and in the Indenture. The obligation of the County to make the Loan shall be deemed.fully discharged upon the deposit of the Band proceeds with the Trustee. The obligation of the Borrower to repay the Loan shall be evidenced by the Notes, in the farms attached as Exhibit F hereto. Contemporaneously with the issuance of the Bonds, the County will endorse the Notes without recourse to the order of the Trustee, as the assignee of the County. The Borrower will repay the Loan in accordance with the provisions of the Notes and this Loan Agreement. Section 3.2. Loan Disbr meat . (a) The County has authorized and directed the Trustee to disburse monies from the Costs of Issuance Fund to pay the Costs of Issuance and to reimburse the Borrower for costs paid or incurred by the Borrower before or after the execution and delivery of this Loan Agreement to the extent permitted by law and the issuance and delivery of the Bands in accordance with the requirements of Section 5.10 of the Indenture. (b) The balance of the Bond Proceeds (other than as provided in the Indenture with respect to amounts in the County Account)shall be disbursed by the Trustee only in accordance with a written requisition of the Borrower approved in writing by the Bondowner Representative, which approval shall be granted by the Bondowner Representative upon satisfaction or waiver by the Bondowner Representative of the conditions set forth in Article 4 of this Loan Agreement. Section 3.3. Loan&pav_, anent and Pa=nt of Other Amounts. (a) Subject to the Borrower's right of prepayment granted in Section 14.1, the Borrower hereby acknowledges its indebtedness to the County and covenants to repay the Loan, and to pay interest on the amount of the Loan outstanding from time to time, in the amounts and at the times necessary to enable the Trustee, on behalf of the County, to pay all amounts payable with respect to the Bonds when due, whether as principal of, premium, or interest on, or otherwise, and whether at maturity or by redemption (including mandatory sinking fund redemption) or acceleration or otherwise ("Basic Payments") and to pay fees and expenses in connection therewith,as follows: (i) During the period commencing with the Closing Date and through and including September 30, 2000, Borrower shall pay, on or before the first day of each month,an amount equal to the interest accrued on the Loan during the previous month; (ii) During the period commencing on October 1, 2000, and ending on the date of final payment of all principal and other sums owing in connection with the Loan, Borrower shall pay, on or before the 25th day of the first month following the Conversion Date and on or before the 25th day of each month thereafter, the following: (A) an amount equal to 1/6th of the amount of principal of and interest on the Bonds due on the next Payment Date, 8 (B) 1/12th of the amount budgeted by the Burrower for annual premiums for insurance required to be maintained pursuant to this Loan Agreement and for real estate taxes or other charges for governmental service for the current year (except for utility charges) which shall be disbursed by the Trustee from time to time,and (C) 1/12th of the annual amount required to be deposited in the Repair and Replacement Account of the Servicing Fund,such amount being$250 times the number of units in the Project (subject to any adjustment as provided in Article 16). (b) The Borrower also agrees to pay, (i)without written demand',therefor,an annual administration fee in the amount of $ , payable to the County on the first day of October of each year,commencing October 1, 1999, for the term of the Qualified Project Period; provided that in the event that the Bonds are redeemed in full prior to the end of the Qualified Project Period, the annual administration fee for the remainder of the Qualified Project Period shall be paid by the Borrower at the time of the redemption of the Bonds and shall be a lump sum amount equal to the present value (based on a discount rate equal to the Effective Rate) of the annual administration fee for the number of years remaining in the term of the Qualified Project Period, all as determined by the County and communicated to the Borrower in writing; and (ii) within ten (10) days after receipt of request for payment thereof, all expenses of the County related to the Project and the financing thereof which are not otherwise required to be paid by the Borrower under the terms of this Loan Agreement and are not paid from the Cost of Issuance Fund under the Indenture, including, without limitation, legal;fees and expenses incurred in connection with the amendment, interpretation and enforcement of any documents relating to the Project or the Bonds and the performance of the County's obligations and exercise of its rights thereunder. (c) The Borrower agrees: (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it (including the reasonable compensation,expenses and disbursements of its agents and counsel) under the Indenture and any other agreements relating to the Blonds to which the Trustee is a party; (ii) except as otherwise expressly provided in the Indenture, this Loan Agreement or such other agreements related to the Bonds or the Project, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances (including reasonable counsel fees) incurred or made by the Trustee (provided that the Trustee shall not be required to make advances) in accordance with any provision of the Indenture or other agreements to which the Trustee is'a party (including, but not limited to, the reasonable compensation and the expenses and disbursements of its agents and counsel and the cost of printing Bonds), except any such expense, disbursement or advance (provided that the Trustee shall not be required to make advances) as may be attributable to its negligence or willful misconduct, (iii) to pay to the Arbitrage Consultant reasonable compensation for all services rendered by it, and (iv) to pay to the Trustee for deposit to the Rebate Fund any rebatable arbitrage determined by the Trustee or the Arbitrage Consultant to be required to be paid to the federal government (d) The Loan shall be due and payable in full on October 1, 2000, unless the conditions contained in Section 3.1(d) of the Indenture have been satisfied on or before the Conversion Date. Section 3.4. Ad i 'anal Charges. The Borrower agrees to pay, when due, all costs and expenses incurred in connection with the issuance and administration of the Bonds (in the aggregate, the "Additional Charges"), including without limitation, the expenses listed in Section 2.3, the Ordinary Fees and Expenses, and each and all of the following: 9 (a) upon the occurrence of an Event of Default under the Indenture or a Default under this Loan Agreement,to or upon the order of the Trustee,when due,all reasonable fees of the Trustee for services rendered under the Indenture and any other amounts due under Section 6.21 hereof which are not included in Ordinary Pees and Expenses, and all reasonable fees and charges of any registrars, legal counsel, accountants, engineers, public agencies and others incurred in the performance,on request of the County,of services required under the Indenture or this Loan Agreement for which such persons are entitled to payment or reimbursement, provided that the Borrower may, upon notice to the County and without creating a Default hereunder, contest in good faith the necessity or reasonableness of any such services, fees or expenses other than Ordinary Fees and Expenses,but the County's final decision shall control; (b) (i) all indemnity payments required to be made under Sections 6.21, 6.29, 9.4, 17.5 and 18.32 (such indemnity payments being due to the County or Indemnified Party upon written demand therefor and accruing interest at the Default Rate 60 days after notice of demand therefor); (ii) all reasonable expenses (including reasonable legal>fees and expenses) incurred by the County in exercising its rights under this Loan Agreement fallowing a Default; and (iii) all other expenses incurred by the County in relation to the Project which are not otherwise required to be paid by the Borrower under the terms of this Loan Agreement or any separate fee agreement,including costs incurred as a result of a request by the Borrower;and (c) interest, at the Default Rate, on all payments not made by the Borrower under Section 3.3 and under this Section 3.4 when due, to the parties entitled thereto. Section 3.5. Borrower's Obligations Unconditional. The obligations of the Borrower to perform and observe the other agreements on its part contained herein shall be absolute and unconditional and payment of the Loan and Additional Charges and all other payments required of the Borrower hereunder or under the Notes shall be paid without notice or demand and without set off, counterclaim, or defense for any reason and without abatement or deduction or defense. The Borrower will not suspend or discontinue any such payments,will perform and observe all of its other agreements in this Loan Agreement and,except as expressly permitted in Section 15.1, will not terminate this Loan Agreement for any cause, including,but not limited, to any acts or circumstances that may constitute failureof consideration, destruction or damage to the Project or the Borrower's business, the taking of the Project or the Borrower's business by Condemnation or otherwise,the lawful prohibition of the Borrower's use of the Project or the Borrower's business,the interference with such use by any private person or corporation,the invalidity or unenforceability or lack of due authorization or other infirmity of this Loan Agreement,the lack of right,power or authority of the County to enter into this Loan Agreement, eviction by paramount title, commercial frustration of purpose, bankruptcy or insolvency of the County or the Trustee,change in the tax or other laws or administrative rulings or actions of the United States of America or of the State or any political subdivision thereof,or failure of the County 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 for any other cause whether similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding, it being the intention of the parties hereto that the payment of the Loan and other amounts payable by the Borrower hereunder or under the Notes shall be paid in full when due without any delay or diminution whatever. Section 3.6. BQ rowel s Remedies. Nothing contained in this Article shall be construed to release the County and/or Bondowner Representative from the performance of any of its agreements herein,and if the County should fail to perform any such agreements,the Borrower may(subject to the limitations of Section 18.28 hereof) institute such action against the County and/or Bondowner Representative as the Borrower may deem necessary to compel such performance so long as such action shall not violate the Borrower's agreements in Section 3.4 or diminish or delay the amounts required to be paid by the Borrower pursuant',to Sections 3.3,3.4 10 and 3.5. The Borrower,however,acknowledges and agrees that any pecuniary obligation of the County created by or arising out of this Loan Agreement shall be payable solely from the proceeds derived from this Loan Agreement, the sale of the Bonds, any insurance and condemnation awards, or amounts received upon the sale or other disposition of the Project upon a default by the Borrower or otherwise. Section 3.7. Assignrn�.r�t of County's Rights. As security for the payment of the Bonds, the County will pledge the amounts payable hereunder and assign,without recourse or liability, to the Trustee,the County's rights under this Loan Agreement and the Notes,including the right to receive payments hereunder(except for the Reserved Rights),and hereby directs the Borrower to make said payments directly to the Trustee, or otherwise upon the order of the Trustee. The Borrower assents to such assignment and will make payments under this Loan Agreement directly to the Trustee, or otherwise upon the order of the Trustee without defense or set off by reason of any dispute between the Borrower,the County,the Bondholders or the'Trustee. 11 ARTICLE 4 DISBURSEMENTS CONDITIONS PRECEDENT Section 4.1 Conditi= Precedgnt to First Disbursgment. d Proceeds. Bondowner Representative's obligation to consent to the first disbursement of Bond Proceeds held by Trustee in the Bond Proceeds Account of the Project Fund shall be subject to satisfaction (or waiver by Bondowner Representative, in its sole discretion) of each of the following conditions precedent: (a) Delivery of Documents. The documents listed on ExhibitB shall have been delivered to Bondowner Representative in form and substance satisfactory to Bondowner Representative, duly executed (and, if required by Bondowner Representative, acknowledged) by all of the appropriate parties. (b) Recorded Documents. The following documents shall have been duly recorded, in the order indicated below, in the Official Records of Contra Costa County, California. (i) the Regulatory Agreement; (ii) the Mortgage, (iii) liens securing the obligations of the Borrower under the Co-Construction Loan; and (iv) the County Subordination Agreement. (c) .Financing Statements. The Financing Statements described in Exhibit B, Paragraph (a), items (v), (vi) and (vii) shall have been filed with the California Secretary of State, and Bondowner Representative shall have received and approved the results of a UCC search conducted and certified by the California Secretary of State. (d) Title Insurance. Borrower shall (at its own expense)have obtained a commitment from the Title Company in form and content satisfactory to Bondowner Representative for delivery to the Trustee of a mortgagee's policy or policies of title insurance issued with respect to the Project Premises by the Title Company in form ALTA LP-10 (in 1970 form or other form acceptable to Bondowner Representative), with a commitment to rewrite the policy into a full ALTA Loan Policy (in 1970 form or other form acceptable to Bondowner Representative), together with such endorsements as Bondowner Representative may require,including without limitation, CLIA Form 103.7, 110.9, 112.1 111.5 and 116.1 Endorsements, and a commitment to attach an unqualified and unlimited CLTA Form 100 Endorsement upon completion of construction of improvements without encroachment, and CLTA Form. 102.5 and 102.7 Endorsements upon completion of construction of foundations without encroachment,dated as of the date of recording of the Mortgage (the "Title Policy"), in form and substance reasonably satisfactory to the,Bondholder Representative and the County, naming the Trustee as insured, without creditor's,rights exceptions,in an amount not less than the original principal amount of the Bonds,insuring: (i) that the fee title to the Land is in the Borrower; (ii) that the Mortgage is a valid first lien upon the Ladd, subject only to Permitted Encumbrances;and 12 (iii) that the following standard exceptions be waived and insured: (1) facts which would be disclosed by a comprehensive survey of the Premises, (2) mechanic's, contractors' or materialmen's liens and lien claims, (3) rights of parties in possession other than residential tenants under leases with a term of one year or less and (4) all other exceptions noted in Schedule B,Section I of the Title Policy. (e) Opinion Letter. The County shall have received an original Bond Counsel approving opinion and tax opinion for the Bonds, in form and content satisfactory to Bondowner Representative, addressed to the County. (f) Delivery of Contracts; Approval of.Reports. Bondowner Representative shall have received and approved in form and substance satisfactory to Bondowner Representative: (i) a soils report for the Property; (ii) an environmental questionnaire and environmental site assessment with respect to the presence, if any, of Hazardous Materials on the Property; (iii) two sets of the Plans and Specifications, certified as complete by the Architect, together with evidence of all necessary or appropriate approvals of all applicable Governmental Authorities; (iv) evidence of satisfaction of any and all conditions precedent to issuance (other than payment of a fee) of all building permits and similar permits, licenses, approvals, development agreements and other authorizationsof Governmental Authorities required in connection with the construction,development and rehabilitation of the Property and Facility including, but not limited to, all authorizations, including building permits, annexation agreements, development agreements, subdivision approvals, sewer and water permits, vault permits, encroachment permits, driveway access and curb cut authorizations, and zoning and land use entitlements, and all other approvals, consents, permits and licenses issued or to be issued by any Governmental Authority which are (a) required for the construction, development and rehabilitation of the Project in accordance with the Plans and Specifications and in accordance with all applicable laws, ordinances and regulations and (b) capable of being issued through the date of the requested Disbursement, and all of the same shall remain in full force and effect; (v) copies of any initial study, negative declaration, mitigated negative declaration,environmental impact report,notice of determination or notice of exemption prepared, adopted, certified or filed by or with any Governmental Authority in connection with the Property and Facility;and (vi) copies of all documents, agreements, instruments, policies and other materials relating to the Project requested by Bondowner Representative, including without limitation, appraisals; all design, architect's, engineering, brokerage and construction contracts; and surveys, in each case set forth in such detail as Bondowner Representative may require. (g) .Reservation Letter. Bondowner Representative shall have received a photocopy of the Reservation Letter. (h) Utilities. Bondowner Representative shall have received evidence satisfactory to Bondowner Representative that all utility services, including, without limitation, gas, water, sewage,electrical and telephone,necessary for the development and occupancy of the Property 13 and Facility are available at or within the boundaries of the Property, or Borrower has taken all steps necessary to assure that all such services will be available upon completion of the Facility. (i) Fees. Borrower shall have paid to Bondowner Representative, in good funds, all Fees owing pursuant to Section 6.1(a). (j) Commitment for Title Policy. Borrower shall have obtained from a title insurer approved by Bondowner Representative a commitment in form and content satisfactory to Bondowner Representative to issue the Title Policy and confirmation of recordation of the Regulatory Agreement,the Mortgage and all related UCC financing statements. (k) Delivery of Borrower's Funds. Borrower shall cause to deliver to Trustee the sum of Dollars ($ ), which represents a contribution from the Borrower. Upon receipt by the Trustee, said funds will be utilized as Borrower's Funds pursuant to the terms and conditions of the Loan Documents, and shall be deposited into the Contribution Account with Trustee, and shall be disbursed by Trustee for the Property and Improvements pursuant to the terms and conditions set forth in this Loan Agreement and the Indenture. (1) Disbursements of Borrower's Funds. Borrower shall have delivered to Bondowner Representative evidence in form and content satisfactory to Bondowner Representative that the Co-Construction Loan has been fully authorized and is ready for disbursement to the Borrower, subject to the Co Construction Loan Documents. Disbursement of the Co-Construction Loan shall be made as described in Section 4.5. Section 4.2. Conditions Precedent To Any Disbursement. No Disbursement shall be made by Trustee without the prior written consent of Bondowner Representative. Bondowner Representative's obligation to consent to any Disbursement (including the first Disbursement and the final Disbursement) shall be subject to the satisfaction (or waiver by Bondowner Representative,in its sole discretion)of the following conditions precedent; (a) Application for Payment. Bondowner Representative shall have received and approved an Application for Payment (as defined in the Disbursement Plan) stating the amount of the Disbursement then requested and meeting the requirements of the Disbursement Plan attached hereto as Exhibit D, and all other documents, instruments, agreements, certificates,liens waivers and other items required thereunder. (b) Disbursement Plan Conditions. All of the conditions precedent to the requested Disbursement set forth in the Disbursement Plan attached hereto as Exhibit D shall have been satisfied. (c) Bondowner .Representative Inspections. Bondowner Representative shall have determined,based upon such inspections and examinations of the progress of construction as Bondowner Representative shall elect in its sole judgment to conduct from time to time, that construction of the Facility is proceeding in accordance with the Plans and Specifications, as modified by change orders with respect to which Borrower has complied with Section 5.5. Borrower shall have paid all of the costs and expenses of Bondowner Representative incurred in any such inspection and examination. (d) Government Inspections. If Bondowner Representative shall so ,require, any portion of the Facility completed through the date of the requested Disbursement which requires inspection or certification by municipal or other Governmental Authorities shall have been inspected and certified as complete and all other necessary approvals shall have been duly issued and Bondowner Representative shall have received true and correct copies of all such 14 inspections, certificates and approvals or Bondowner Representative shall have received other evidence, in form and content reasonably satisfactory to Bondowner Representative, that the Project has been constructed in such a manner as to be in compliance with any such inspections, certificates and approvals. (e) Title Endorsements. Bondowner Representative shall have received such endorsements and binders to the Title Policy as Bondowner Representative may require (including without limitation endorsements confirming the continuing priority of the Mortgage with respect to such Disbursement, and endorsements confirming that no encroachments exist on the Property or adjoining property). Without limitation upon the generality of the foregoing, Bondowner Representative shall not be required to consent to any Disbursement after the foundations of any of the buildings that form part of the :Facility have been installed, or at any time for any item other than foundation and pre-foundation items,unless and until the Trustee has been furnished, at the sole cost of Borrower, such endorsements to the Title Policy as Bondowner Representative may require, guaranteeing in effect that the foundations of such buildings have been located and constructed within the boundary lines of the Property and that the foundations do not encroach onto any easements in violation of the terms of any recorded documents related to such easements. Bondowner Representative shall be furnished, at no cost to it, such surveys and certificates as may be required by the title insurance company in connection with the issuance of such endorsement. (f) Mechanics' Liens; Stop Notices. No mechanics' lien shall have been recorded against the Property and no stop notice shall have been served upon Bondowner Representative or the Trustee unless there has been issued a surety bond, or such other collateral as is satisfactory to Bondowner Representative, adequate to release the Project from the lien thereof in accordance with this section),and Bondowner Representative shall have no reasonable cause to believe that the requested Disbursement will be junior in priority of lien to any mechanics' or material suppliers'lien or to any intervening or other lien upon the Property;if a claim of lien is recorded which affects the Property or Facility or a bonded stop notice is served upon Trustee and/or Bondowner Representative, Borrower shall, within twenty (20) calendar days of such recording or service or within five (5) calendar days of Bondowner Representative's demand, whichever occurs first: (i) pay and discharge the claim of lien or bonded stop notice; (ii) effect the release thereof by recording or delivering to Bondowner Representative a surety bond in sufficient form and amount; or (iii) provide Bondowner Representative with other assurances which Bondowner Representative deems, in its sole discretion, to be satisfactory for the payment of such claire of lien or bonded stop notice and for the full and continuous protection of the lien of the Mortgage from the effect of such lien or bonded stop notice.' (g) Compliance With Bond and Loan Documents. Borrower shall have complied with all of the terms and conditions imposed by the Indenture and this Loan Agreement in connection with such Disbursement and Bondowner Representative shad have received a certificate to that effect signed by the Borrower. (h) No Default; Compliance with Bond Documents. There shall exist no Default, as defined in this Loan Agreement, or Event of Default(taking into account any applicable notice and cure period with respect thereto) as defined in any of the other Bond Documents and Loan Documents or in the other Related Documents,or event requiring mandatory redemption of the Bonds or event which, with the giving of notice or the passage of time, or both, could be an. Default or event 'requiring mandatory redemption of the Bonds, and Borrower shall have performed all of its obligations under this Loan Agreement and complied with all of the terms and conditions imposed by the Indenture and the Loan Agreement in connection with such Disbursement and, if Bondowner Representative shall so require, Bondowner Representative shall have received a certificate to that effect signed by Borrower. 15 (i) Representations and Warranties. All representations and warranties contained in this Loan Agreement shall be true and correct as of the date of the Disbursement, and Bondowner Representative shall have received a certificate restating each of such representations and warranties as true and correct as of the date of the Disbursement. (j) Full .force and Effect. Each of the Bond Documents and Loan Documents shall remain in full force and effect,binding upon all parties thereto. (k) Expenditure of Borrower Funds. 'Borrower hereby agrees that Bondowner Representative shall not be obligated to consent to any disbursements or take any action under any Loan Documents unless and until all of the obligations of Borrower have been fully performed and discharged and the Project is free and clear of all liens for labor or materials provided to date, and that all work performed to date in construction of the Project has been accomplished in a good workmanlike manner and in accordance with the Plans and Specifications. Section 4.3. Account. Pledgeand i m t, and DisburseMgnt AuthurizatiQn. The Borrower's Funds shall be deposited into the Contribution Account of the Project Fund and disbursed by the Trustee to or for the benefit or account of Borrower under the terms of the Indenture, after consent to such disbursement by Bondowner Representative, upon the written request of any person who has been authorized by Borrower to request such disbursements until such time as written notice of Borrower's revocation of such authority is received by the Trustee. As additional security for Borrower's performance under the Loan Documents,Borrower hereby irrevocably pledges and assigns to Trustee, and grants to Trustee a security interest in the Contribution Account and all moneys at any time deposited in the Contribution Account, as collateral security for the obligations of Borrower under this Loan Agreement and the Notes, and agrees that Trustee shall have all of the rights of a secured party under the California Uniform.Commercial Code in connection therewith. Section 4.4. Loan Disbursements. Subject to the conditions set forth in Section 5.7 and with the consent of Bondowner Representative,provided that Bondowner Representative shall have no obligation to consent to any disbursement of Bond Proceeds until and unless the Co- Construction Loan has been fully authorized for disbursement, the Band Proceeds and Borrower's Funds shall be disbursed in accordance with the terms and conditions of Exhibit D. All costs incurred in connection with the requisition and disbursement of funds from the Project Fund, including, but not limited to, updates to the Title Policy, shall be paid by the Borrower. All disbursements shall be held by Borrower in trust and applied by Borrower solely for the purposes for which the funds have been disbursed. Bondowner Representative has no obligation to monitor or determine Borrower's use or application of the disbursements. Section 4.5. Co-Construction Loan Disbursement. Borrower 'shall provide the Bondowner Representative with a copy of any draw request (and supporting materials) submitted to the County or World Savings,as applicable,in connection with any disbursement of the Co-Construction Loan. Bondowner Representative agrees to provide to the County copies of its periodic inspection reports during the course of construction of the Facility, with the understanding that no representation is made by the Bondowner Representative as to the accuracy of any such reports. It is expected that proceeds of the Co-Construction Loan will be disbursed as set forth in the budget for the Facility described in Exhibit D hereto,and Borrower and County acknowledge that disbursements,from the Project Fund may only be made consistent therewith. 16 ARTICLE 5 CONSTRUCTION COVENANTS Section 5.1. Corrnence=nt and Co=letion. Borrower shall commence construction of the Facility without delay after recordation of the Mortgage and shall complete construction of the Facility on or before the Completion Date. Section 5.2. Force Majeure. The time within which construction of the Facility must be completed shall be extended for a period of time equal to the period of any delay directly affecting construction which is caused by fire, earthquake or other acts of God, strike, lockout, acts of public enemy, riot,insurrection,or governmental regulation of the sale or transportation of materials, supplies or labor; provided, however, that Borrower shall furnish Bondowner Representative with written notice satisfactory to Bondowner Representative evidencing any such delay within ten (10) days from the occurrence of any such delay. In no event shall the time for completion of the Facility be extended more than sixty (60) days beyond the Completion Bate. Section 5.3 Construction Contract. Borrower and Contractor have entered into the Construction Contract pursuant to the terms and conditions of which Contractor is to construct the Facility. Borrower shall require Contractor to perform in accordance with the terms of the Construction Contract,subject to Section 5.5(a)below, and shall not amend,modify or alter the responsibilities of Contractor under the Construction Contract without Bondowner Representative's prior written consent. Borrower shall execute, upon Bondowner Representative's request,an assignment of Borrower's rights under the Construction Contract to the Trustee as security for Borrower's obligations under this Loan Agreement and the other Loan Documents and shall cause the Contractor to consent to any such assignment. Section 5.4 Architect's Contr . Borrower and .Architect have entered into the Architect's Contract, pursuant to which Architect is to design the Facility. Borrower shall require Architect to perform in accordance with the terms of the Architect's Contract and subject to Section'5.5(a)'below, shall not amend, modify or alter the responsibilities of Architect under the Architect's Contract without Bondowner Representative's prier written consent. Upon Bondowner Representative's request, Borrower shall execute an 'assignment of the Architect's Contract and the Plans and Specifications to the Trustee as additional security for Borrower's performance under this Loan Agreement and the other Loan Documents and shall cause the Architect to consent to any such assignment. Section 5.5 Plans and Specifications. (a) Changes: Bondowner Representative Consent. Except as otherwise provided in this Loan Agreement,'Borrower shall not make any changes in the Plans and Specifications without Bondowner Representative's prior written consent if such change: (i) constitutes a material change in the building material or equipment specifications,or in the architectural or structural design, value or quality of any of the Facility; (ii) would result in an increase of construction costs in excess of Fifty Thousand No/100ths Dollars ($54,000) for any single change or in excess of One Hundred Fifty Thousand and No/100ths Dollars ($150,000) for all such changes; (iii) would affect the structural integrity, quality of building materials, or overall efficiency of operating systems of the Facility. Without limiting the above,Bondowner Representative agrees that Borrower may make minor changes in the Plans and Specifications without Bondowner Representative's prior written consent, provided that such changes do not violate any of the conditions specified herein. Borrower shall at all times maintain, for inspection by Bondowner Representative,a full set of working drawings of the Facility. 17 ...................... . ................ (b) Changes;Submission Requirements, Borrower shall submit any proposed change in the Plans and Specifications to Bondowner Representative at least ten (10) days prior to the commencement of construction relating to such proposed change whether or not such change is subject to Bondowner Representative's consent. Requests for any change which requires consent shall be accompanied by working drawings and a written description of the proposed change, submitted on a change order form acceptable to Bondowner Representative,signed by Borrower and, if required by Bondowner Representative, also by the Architect and the Contractor. At its option,Bondowner Representative may require Borrower to provide:(i)evidence satisfactory to Bondowner Representative of the cost and time necessary to complete the proposed change;(ii) a deposit in the amount of any increased costs into the Contribution Account in accordance with Section 5.7 below; and (iii) a complete set of "as built" Plans and Specifications for the completed Facility. (c) Consent Process. Borrower acknowledges that Bondowner Representative's review of changes and required consent may result in delays in construction and hereby consents to any such delays; provided, however, that Bondowner Representative will use its best efforts to review such changes in a timely manner. (d) Final Plans and Specifications. Upon completion of the Facility, Borrower shall deliver to Bondowner Representative within twenty (20) days a set of final Plans and Specifications. Section 5.6 Financial &quirements Awlysis. Borrower shall apply proceeds of the Bonds in accordance with the Financial Requirements Analysis attached hereto as Exhibit C, and shall construct the Project in accordance with the Plans and Specifications and within the time limits imposed by this Loan Agreement. Promptly and in any event within ten (10) days after Borrower's discovery that the Financial Requirements Analysis does not accurately project the Project Costs which have been and will be incurred in connection with construction of the Project in accordance with the Plans and Specifications, Borrower shall notify Bondowner Representative of the discrepancy and shall submit to Bondowner Representative a revised budget of Project Costs. Section 5.7 Balancing. Borrower agrees to keep the Financial Requirements Analysis "in balance" at all times. The Financial Requirements Analysis is not "in balance" if any undisbursed Bond proceeds together with all sums, if any, to be provided by Borrower as shown in Exhibit C are not at all times equal to or greater than the amount which Bondowner Representative from time to time determines necessary to: (i) complete each line item category as contained on Exhibit C; (ii) pay,through completion, all costs of development,construction, operation and leasing of the Project in accordance with the Bond Documents and the Loan Documents;(iii)pay all sums which may become payable under the Loan Documents and Other Related Documents; and (iv) enable Borrower to perform and satisfy all of the covenants of Borrower contained in the Loan Documents. If Bondowner Representative determines at any time that the Financial Requirements Analysis is not "in balance", Borrower shall provide the amount of such deficiency to the Trustee for deposit into the Contribution Account of the Project Fund. Section 5.8 Contrac,tort Cons truction Inform&tion. Within ten (10) days of Bondowner Representative's written request, Borrower shall deliver to Bondowner Representative from time to time in a form acceptable to Bondowner Representative: (a) a list detailing the name, address and phone number of each contractor, subcontractor and material supplier to be employed or used for construction of the Facility together with the dollar amount, including changes,if any,of each contract and subcontract, and the portion thereof,if any,paid through the date of such list; (b) copies of each contract and subcontract identified in such list, including any changes thereto; (c) a cost breakdown of the projected total cost of constructing 18 the Facility, and that portion, if any, of each cast item which has been 'incurred; and (d) a construction progress schedule detailing the progress of constructionand the projected sequencing and completion time for uncompleted work,all as of the date of such schedule. Borrower agrees that Bondowner Representative may disapprove any contractor, subcontractor or material supplier which, in Bondowner Representative's good faith determination, is deemed financially or otherwise unqualified; provided, however, that the absence of any such disapproval shall not constitute a warranty or representation of qualification by Bondowner Representative. Bondowner Representative may contact any such contractor,subcontractor or material supplier to discuss the course of construction. Section 5.9 Prohibited Contracts. Without Bondowner Representative's prior written consent,Borrower shall not contract for any:materials,furnishings,equipment, fixtures or other parts or components of the Facility (other than for coin operated vending machines), if any third party shall retain any ownership interest (other than lien rights created by operation of law) in such items after their delivery to the Property and Facility. Borrower shall have five (5) days to effect the removal of any such retained interest. Section 5.10 dens and StoI2Totices. If a claim of lien is recorded which affects the Property or Facility or a bonded stop notice is served upon Trustee or Bondowner Representative,Borrower shall,within twenty(20)calendar days of such recording or service or within five (5) calendar days of Bondowner representative's demand, whichever occurs first: (a) pay and discharge the claim of lien or bonded stop notice; (b) effect the release thereof by recording or delivering to Bondowner Representative a surety bond in sufficient form and amount; or (c) provide Bondowner Representative with other assurances'which Bondowner Representative deems, in its sale discretion, to be satisfactory for the payment of such claim of lien or bonded stop notice and for the full and continuous protection of Bondowner Representative from the effect of such lien or bonded stop notice. Section 5.11 Construction Responsibilities. Borrower shall construct the Facility in a workmanlike manner according to the Plans and Specifications and the recommendations of any soils or engineering report approved by Bondowner Representative. Borrower shall comply with all applicable laws,ordinances,rules,regulations,building restrictions,recorded covenants and restrictions, and requirements of all regulatory authorities having jurisdiction over the Property or Facility. Borrower shall be solely responsible for all aspects of Borrower's business and conduct in connection with the Property and Facility,including,without limitation, for the quality and suitability of the Plans and Specifications and their compliance with all governmental requirements, the supervision of the work of construction,;the qualifications, financial condition and performance of all architects,engineers, contractors, material suppliers, consultants and property managers, and the accuracy of all applications for payment and the proper application of all disbursements. Bondowner Representative is not obligated to supervise,inspect or inform Borrower or any third party of any aspect of the construction of the Facility or any other matter referred to above. Section 5.12 Assessments and Community Facilities Districts. Without Bondowner Representative's prior written consent, Borrower shall not cause to become effective or otherwise consent to the formation of any assessment district or community facilities district which includes all or any part of the Property and Facility pursuant to: (a) the Mello-Roos Community Facilities Act of 1982; (b) the Municipal Improvement Act of 1913; or (c) any other comparable or similar statute or regulation. Nor shall Borrower cause or otherwise consent to the levying of special taxes or assessments against the Property and Facility by any such assessment district or community facilities district. 19 Section 5.13 Qelay. Borrower shall promptly notify Bondowner Representative in writing of any event causing more than a thirty (30) consecutive day delay or interruption of construction, or the timely completion of construction. The notice shall specify the particular work delayed,and the cause and period of each delay. Section 5.14 Insptctions. (a) Bondowner Representative shall have the right to enter upon the Property at all reasonable times to inspect the Facility and the construction work and to verify information disclosed or required pursuant to this Loan Agreement. (b) If Bondowner Representative in its reasonable judgment determines that any work or materials fail to conform to the approved Plans and Specifications or sound building practices, or that they otherwise depart from any of the requirements of this Loan Agreement, Bondowner Representative may require the work to be stopped and withhold its consent to further Disbursements until the matter is corrected. If this occurs,the Borrower must correct the work to Bondowner Representative's satisfaction promptly. No such action by Bondowner Representative will affect the Borrower's obligation to complete the Facility;in accordance with the Plans and Specifications and on or before the Completion Date. (c) Bondowner Representative has no duty to visit the construction site,to supervise or observe construction or to examine any books or records. Any site visit, observation or examination by Bondowner Representative is solely for the purpose of protecting Bondowner Representative's rights and interests, and may not be relied upon by Borrower or by any third party as a representation or warranty of compliance with this Loan Agreement or any other agreement.No site visit, observation or examination by Bondowner Representative will impose any liability on Bondowner Representative or result in a waiver of any default of the Borrower or be a representation that the Borrower is or will be in compliance with the Plans and Specifications,that the construction is free from defective materials or workmanship,or that the construction complies with all applicable Requirements. Neither the Borrower nor any other party is entitled to rely on any site visit, observation or examination by Bondowner Representative. Bondowner Representative owes no duty of care to protect the Borrower or any other party against, or to inform the Borrower or any other party of, any negligent or defective design or construction of the Facility or any other adverse condition affecting the Project Premises. Section 5.15. ur:y-eya Upon Bondowner Representative's written'request, Borrower shall promptly deliver to Bondowner Representative: (a)a perimeter survey of the Property,(b) upon completion of the foundations of the Facility, a survey showing the location of the Facility on the Property and confirming that the Facility are located entirely within the Property and do not encroach upon any easement, or breach or violate any governmental requirement, and (c) upon completion of the Facility, an as-built survey acceptable to a title insurer for purposes of issuing an ALTA policy of title insurance. All such surveys shall be performed and certified by a licensed engineer or surveyor acceptable to the title insurer. Section 5.16. Bond. Within five (5) calendar days of Bondowner Representative's written request,Borrower shall deliver to Bondowner Representative dual obligee performance and labor and material payment bonds in form, substance and amount acceptable to Bondowner Representative. If requested:by Bondowner Representative, Borrower shall record said bond., the Plans and Specifications and the Construction Contract, if any,in the Office of the County Recorder of the County. 20 Section 5.17. P ject Title Q12eration and Maintenance. (a) The County shall not be under any obligation to operate, maintain or repair the Project Premises. The Borrower agrees that until this Loan Agreement is terminated pursuant to Section 15.1 hereof, it will, at its own expense, (a) keep the Project Premises in safe repair and in such operating condition as is needed for its operations, (b) make all necessary repairs and replacements to the Project Premises (whether ordinary or extraordinary, structural or nonstructural); (c) subject to the restrictions imposed by the Regulatory Agreement,operate the Project in a sound and economic manner in accordance with usual business practice;(d) operate the Project in compliance with all applicable laws, codes, environmental laws, zoning laws, the ADA (to the extent applicable) and laws regulating construction, occupancy or maintenance of property of a character included in the Project; and (e) comply with all applicable laws, regulations, orders, binding codes and restrictions and requirements of, and all permits and approvals from, and agreements with and commitments to, all governmental, judicial or legal authorities having jurisdiction over the Project Premises or the Borrower's business,conducted thereon or therefrom, and with all restrictive covenants and other title encumbrances encumbering the Project Premises,including without limitation those contained in the Regulatory Agreement(all collectively,the"Requirements"). (b) The Borrower shall pay all expenses of the operation and maintenance of the Project including,but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Project and payable»during the term of this Loan Agreement, all in conformance with and subject to any good faith contest provisions provided in the Mortgage. (c) In the event the-Borrower shall fail to maintain, or cause to be maintained, the full insurance coverage required by this Loan Agreement or shall fail to keep the Project in good repair and good operating condition and make all necessary repairs and replacements to the Project, the Trustee may, pursuant to instructions from Bondowner Representative and after providing Borrower with reasonable notice and the opportunity to remedy the problem(s) identified by Trustee, but shall be under no obligation to, contract for the required policies of insurance and pay the premiums on the same or make any required repairs, renewals and replacements (provided that Trustee shall have no obligation to take such actions, unless directed to do so by Bondowner Representative and furnished by Bondowner Representative with sufficient funds therefor);and the Borrower agrees to reimburse the County or the Trustee to the extent of the amounts so advanced, and in addition shall pay interest on any such amount at the Default Rate from the date such amount was advanced until the date such amount was repaid or reimbursed by the Borrower. (d) The Borrower shall obtain or cause to be obtained all necessary permits and approvals for the operation and maintenance of the Project and shall comply with all applicable lawful requirements of any governmental body regarding the use or condition of the Project, whether existing or later enacted or whether involving any change in governmental policy or requiring structural or ether changes to part or all of the Project and irrespective of the cost of making the same. (e) Notwithstanding the provisions of this Section 5.17, the Borrower may in good faith contest the validity or the applicability of any law, ordinance, rule or regulation provided that during the period of such contest and any appeal therefrom, (i) such failure to comply with such requirement or requirements will not adversely affect the lien of the Mortgage or materially endanger such liens or the Project or any part thereof,(ii)will not subject the Project or any part thereof to loss or forfeiture and (iii) the Borrower will post with the Trustee, for the benefit of 21 the Bondholders, cash, a bond or other reasonably acceptable security in an amount equal to 125%of the disputed amount. (f) The Borrower agrees not to permit or suffer others to commit a nuisance in or about the Project Premises or themselves commit a nuisance in connection with their use or occupancy of the Project Premises. Section 5.18. Advances. The Borrower acknowledges and agrees that under this Loan Agreement and certain of the other Loan Documents, the Bondholders may,but shall be under no obligation to, take certain action and make certain advances relating to the Project from certain funds held under the Indenture or otherwise, or to certain other matters as expressly provided therein, and the Borrower shall be obligated to repay all such advances on demand with interest from the date such payment was originally advanced until repaid or reimbursed by the Borrower at the Default Rate. Section 5,19. Alterations to th�rr�jet and Removal of Equipment. (a) Without the consent of Bondowner Representative, the Borrower shall not remodel or make any additions, modifications, alterations, Facility or changes (collectively referred to as "alterations") in or to the Project or remove any equipment therefrom other than in the ordinary course of business in the operation of the Project. Notwithstanding the provisions of the Mortgage,no such alteration or removal will be made if to do so would impair the character of the Project as a "project"within the meaning of the Act,or impair the exclusion of interest on the Bonds from gross income for federal income tax purposes. (b) The Borrower shall be entitled to use funds held by the Trustee in the Repair and Replacement Account of the Servicing Fund under the Indenture to pay for capital improvements, replacements and maintenance, including, but not limitedto, appliances, air conditioners, furnaces, hot water heaters, roofs, carpeting, floor vinyl, decks, pool equipment replacement,concrete replacement,tie walls,gutters, downspouts,window replacement,blinds and similar items, and for the costs of alterations or replacements, provided that the written consent of the Bondowner Representative is obtained for each such disbursement, which consent shall not be unreasonably withheld or delayed. Section 5.20. Constructim Schedule. If,based on any construction progress schedule or other materials submitted by the Borrower, Bondowner Representative in its reasonable judgment determines that the Facility will not be completed by the Completion Date, Bondowner Representative may request the Borrower in writing to reschedule the work of construction to permit timely completion. In addition, if Bondowner Representative in its reasonable judgment determines that any building constituting the Facility will not be"placed in service" (within the meaning of Section 42 of the Code) by the Completion Date, Bondowner Representative may request the Borrower in writing to reschedule the work of construction. Within fifteen (15) days after receiving such a request from Bondowner Representative, the Borrower must deliver to Bondowner Representative a revised construction progress schedule showing completion of the Facility by the Completion Date. As a condition to any agreement to extend the Completion Date, Bondowner Representative may require the Borrower to confirm by evidence satisfactory to Bondowner Representative that such extension',will not have any adverse effect upon the availability of the Tax Credits for the Project. Section 5.21.. Pre -r�,vati gf Righ. The Borrower must obtain, preserve and maintain in good standing,'as applicable, all rights, privileges and franchises necessary or,desirable for the operation of the Project Premises and the conduct of the Borrower's business thereon or therefrom. 22 Section 5.22 Mainten nce anal R &12air. The Borrower must (i) maintain n the Project Premises,including the parking and landscaping portions thereof,in good condition and repair, (ii) promptly .make all necessary structural and non-structural repairs to the Facility (or cause tenants under any leases to perforin such obligation), and. {iii} not erect any new buildings, structures or building additions on the Project Premises, without the prior written consent of Bondowner Representative. The Borrower must pay when due all claims for labor performed and materials furnished therefor in connection with any improvement or construction activities. Section 5.23. Permits, icenses and Approvals. The Borrower must obtain, comply with and keep in effect all building permits and similar permits, licenses, approvals, development agreements and other authorizations required from governmental bodies in connection with the development and construction of the Project Premises and Facility. The Borrower must deliver copies of all such permits, licenses and approvals to Bondowner Representative promptly following written request by the Bondowner Representative therefor, and in any event within twenty(20)days after receipt thereof. Section 5.24. Performance of Acts. Borrower must perform, upon Bondowner Representative's request, all acts necessary to perfect any lien or security interest provided for in the Loan Documents. Section 5.25. Management Agleent. Bondowner Representative must review and approve any agreement providing for the management or operation of the Project Premises, including any material modifications or amendments thereto,before the Borrower can enter into such agreement, provided, however, the approval of Bondowner Representative shall not be required for the renewal of any such agreement. Section 5.26. Tax Receipts. Throughout the term of the Loan, at the Borrower's sole expense,Trustee must be furnished with a tax services contract issued by a tax reporting agency satisfactory to it. 23 ARTICLE 6 BORROWER'S COVENANTS Section 6.1. Loan Fee. Borrower shall pay or cause to be paid to Bondowner Representative from time to time in cash or by such other means as may be satisfactory to Bondowner Representative in its sole discretion a loan fee in the amount of two percent(2.00%) of the principal amount of the Loan,payable on or before execution of this Loan Agreement. Section 6.2. Expenses. Borrower shall immediately pay Bondowner Representative upon demand all costs and expenses incurred by Bondowner Representative in connection with: (a) the preparation of this Loan Agreement, all ether Loan Documents, Cather Related Documents and Bond Documents; (b) the administration of this Loan Agreement, the other Loan Documents and Other Related Documents and Bond Documents for the term of the Loan; and (c) the enforcement or satisfaction by Bondowner Representative of any of Borrower's obligations under this Loan Agreement, the other Loan Documents or the Other Related Documents or Bond Documents. For all purposes of this Loan Agreement, Bondowner Representative's costs and expenses shall include, without limitation, all appraisal fees, cost engineering and inspection fees, legal fees and expenses, accounting fees, environmental consultant fees, auditor fees, and the cost to Bondowner Representative of any title insurance premiums, title surveys, reconveyance and notary fees. Borrower recognizes and agrees that formal written appraisals of the Property and Facility by a licensed independent appraiser may be required by Bondowner Representative's internal procedures and/or federal regulatory reporting requirements on an annual and/or specialized basis and that Bondowner Representative may, at its option, require inspection of the Property and Facility by an independent supervising architect and/or cost engineering specialist:' (i) prior to each Disbursement; (ii) at least once each month during the course of construction even though no Disbursement is to be made for that month; (iii) upon completion of the Facility; and (iv) at least semiannually thereafter. If any of the services described above are provided by an employee of Bondowner Representative, Bondowner Representative's costs and expenses for such services shall be calculated in accordance with Bondowner Representative's standard charge for such services. Section 6.3. Taxes and Impositions. Borrower shall pay or cause to be paid, prior to delinquency, all of the following (collectively, the "Impositions"): (a) all general and specific real property taxes and assessments imposed on the Property; (b) all other taxes and assessments and charges of every kind that are assessed upon the Property(or upon the owner and/or operator of the Property) and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property),including without limitation nongovernmental levies and assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, taxes and assessments imposed on Bondowner Representative (other than Bondowner Representative's income,or franchise taxes) which are .measured by or based upon (in whole or in part) the amount;of the obligations secured by the Property. If permitted by law, Borrower may pay or cause to be paid any Imposition in installments (together with any accrued interest). Borrower shall not be required to pay or cause to be paid any Imposition so long as (d) its validity is beim actively contested in good faith and by appropriate proceedings, (e) Borrower has demonstrated to Bondowner Representative's reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair Bondowner Representative's interests under the Loan Documents and (f) if Bondowner Representative shall so request, Borrower has furnished. Bondowner Representative with a bond or other security satisfactory to Bondowner Representative in an amount not less than 100% of the applicable claim. Upon demand by Bondowner Representative from time to time, Borrower shall (g) deliver to Bondowner 24 Representative, within SO days following the due date of Imposition, evidence of payment or other satisfaction of such Imposition reasonably satisfactory to Bondowner Representative and (h) furnish to Bondowner Representative a tax reporting service for the Property of a type and duration, and with a company, reasonably satisfactory to Bondowner Representative. Notwithstanding the foregoing, Borrower shall comply with any provisions of the Indenture which require impounding of Impositions and if such provisions are inconsistent with the requirements of this Loan Agreement,the provisions of the Indenture shall control. Section 6.4. Compliance with Laws. Borrower shall comply with all laws and requirements of Governmental Authorities and all rights of third parties,relating to the Property or Borrower's business or other properties, and deliver to Bondowner Representative from time to time, within 10 days of Bondowner Representative's request therefor, evidence satisfactory to Bondowner Representative that Borrower has complied with any such law,requirement or right. Section 6.5. Maintenance and Security for Prouty. Borrower shall maintain the Property in good condition and repair (such condition and repair to be consistent with that of competing properties), take all measures reasonably required by Bondowner Representative to protect the physical security of the Property, and not permit any waste or damage with respect to the Property. Section 6.6. Notice of Certain Matters. Borrower shall give notice to Bondowner Representative,within 7 days of Borrower's knowledge thereof,of each of the following: (a) any litigation or claim of any kind affecting or relating to Borrower and involving an amount in excess of $ and: any litigation or claim of any kindthat might subject Borrower to liability in excess of$ whether covered by insurance or not; (b) any aspect of the Project that is not in conformity with the Plans and Specifications in a material respect; (c) the creation or imposition of any mechanic's lien,materialmen's lien or other lien against the Property unless Borrower shall post statutory bonds or other security satisfactory to Bondowner Representative sufficient to cause the removal of such lien; (d) the occurrence of any default that remains uncured beyond any applicable notice and cure period by Borrower or any other party under any Project Agreement,or the receipt by Borrower of any notice of default under any Project Agreement; (e) the occurrence of any dispute between Borrower and any Governmental Authority relating to the Property, the adverse determination of which might materially affect the Property; (f) the occurrence of any threat or commencement of proceedings in condemnation or eminent domain relating to Borrower's ownership of the Property; (g) the use of any trade name hereafter used by Borrower in connection with the Project,other than the use of the trade name"Goggins Square Apartments"; (h) any change in Borrower's principal place of business; (i) the occurrence of any Default or event which, with the giving of notice or the passage of time or both,would constitute Default; and 25 (j) the occurrence of any other event or condition causing a material adverse change in the financial condition of Borrower. Section 6.7. Liens on Prone. Borrower shall not cause or suffer to become effective any lien, restriction or other title limitation affecting any part of the Property other than mechanics'liens permitted pursuant to Section 4.2(f),the Regulatory Agreement,the Mortgage, the lien of the deed of trust securing the Co-Construction Loan and any other liens or encumbrances previously approved by Bondowner Representative in writing and the inchoate lien securing the payment of taxes and assessments not delinquent. Borrower acknowledges that, with any project of the magnitude of the Project, modifications of the Plans and Specifications and.Loan Documents may be necessary from time to time and that the existence of junior lienholders,who would be required to consent to such modifications in order to protect the priority of the lien of the Mortgage,could impair the expeditious completion of the Project, to the detriment of all parties. Section 6.8. Prohibition of Transfer. (a) Borrower represents,agrees and acknowledges that: (i) Development of real property is a highly complex activity which requires substantial knowledge of law and business conditions and practices, and an ability to control, coordinate and schedule the many factors affecting such development. Experience, financial stability,managerial ability and a good reputation in the business community enhance a developer's ability to obtain market rents and/or sales prices and to induce cooperation in scheduling and are taken into account by Bondowner Representative in approving loan applications. (ii) Borrower has represented to Bondowner Representative, not only in the representations and warranties contained in the Loan Documents,but also in its initial credit application and in all of the negotiations connected with the Loam, certain facts concerning Borrower's financial stability,managerial and operational ability,reputation, skill, and credit worthiness. Bondowner Representative has relied upon these representations and warranties as a substantial and material consideration in its decision to enter into this Loan Agreement. (iii) The conditions and terms provided in this Loan Agreement were induced by these representations and warranties and would not have been made available by Bondowner Representative in the absence of these representations and warranties. (iv) Borrower's financial stability and managerial and operational ability and that of those persons or entities having a direct or beneficial interest in Borrower are a substantial and material consideration to any third parties who have entered or will enter into agreements with Borrower. (v) Bondowner Representative has relied upon the skills and services offered by such third parties and the provision of such skills and services is jeopardized if Borrower breaches its covenants contained below regarding transfers. (vi) A transfer of possession of or title to the subject Property, or a change in the person or entity operating,developing,constructing or managing the subject Property would substantially increase the risk of Default under the Loam Documents and significantly and materially impair and reduce Bondowner Representative's security for the obligations under this Loan Agreement. 26 (b) In consideration of Bondowner Representative's induced reliance on such representations,warranties and agreements,Borrower shall not make any transfer prohibited by Section 5.12 of the Mortgage. (c) Without the prior written consent of Bondowner Representative, Borrower shall not assign Borrower's interest under any of the Bond Documents or Loan Documents,or in any monies due or to become due thereunder, and any assignment without such consent shall be void. (d) Nothing in this Section 6.8 or elsewhere in this Loan Agreement shall in any way prohibit, or require Bondowner Representative's prior consent to, the exercise of an option of the General Partner or an affiliate thereof to purchase the interests of the Investor Limited Partner in the Borrower. Section 6.9. Management of Property. In accordance with the Management Agreement, the Property Manager shall provide management,leasing and operation services for the Project. Borrower shall not substitute the Property Manager or amend the Management Agreement, without the prior written consent of Bondowner Representative. Section 6.9A Ln-come to be Applied to 12ebt Service. Borrower shall apply all revenue derived from operation of the Property and Improvements to the payment of expenses of operation of the Property (including any development fee) and the payment of amounts currently payable under this Loan Agreement and the other Loan Documents prior to distributing any portion of the same to any partner of Borrower. Section 6.10. Proceeli of the C=ital Contributions. None of the proceeds of the Capital Contributions shall be used for any purpose other than for payment to the Trustee and for deposits required under 5.2(1) of the Indenture until all sums owing under the Loan Documents and Other .Related Documents have been paid in full, unless Bondowner Representative consents in writing to such other use. Further, Borrower covenants and agrees that Borrower will comply and cause General Partners to comply with all obligations and requirements under the Partnership Documents necessary to cause the Investor Limited Partner to timely fund all Capital Contributions. Section 6.11. Reg la +oa Agreement{oo=li� ance_. Borrower shall provide to Bondowner Representative an annual certification of compliance with all applicable provisions of the Regulatory Agreement and Section 42 of the Code. Section 6.11A Co- o.atrurtion Lan. Borrower shall deliver to Bondowner Representative copies, certified by Borrower to be true and correct, of the documents that evidence and secure the Co-Construction Loan, the form and content of which shall be subject to Bondowner Representative's reasonable approval. Borrower shall at all times fully and timely comply and cause the Property and Improvements to comply with all applicable terms and conditions of the Co-Construction Loan Documents and shall provide Bondowner Representative with such verification of that compliance from time to time as reasonably requested by Bondowner Representative. Section 6.12. Americans With Disabilities Act Qo=liance. Borrower shall comply with all of the requirements of the ADA, as amended from time to time,which are applicable to the Project. Borrower shall be responsible for all ADA compliance costs. Section 6.13. ERISA Cornl2liange. Borrower shall at all times comply with the provisions with respect to any retirement or other employee benefit plan to which it is a party as employer, and as soon as possible after Borrower knows, or has reason to know, that any 27 Reportable Event (as defined in ERISA) with respect to any such plan. of Borrower has occurred, it shall furnish to Bondowner Representative a written statement setting forth details as to such Reportable Event and the action, if any, which Borrower proposes to take with respect thereto, together with a copy of the notice of such Reportable Event furnished to the Pension Benefit Guaranty Corporation. Section 6.14. Ln,g. Borrower shall comply at all times with all requirements of the Regulatory Agreement;and all leases of all or any part of the Project shall be on a farm of lease approved by Bondowner Representative prior to Borrower's execution of any such lease. All standard lease forms and any material deviation from any form, shall be approved by Bondowner Representative prior to execution of any lease using such form. Section 6.15. Furffigr Assurances. Upon Bondowner Representative's request and at Borrower's sole cost and expense, Borrower shall execute, acknowledge and deliver any other instruments and perform any other acts necessary, desirable or proper, as determined by Bondowner Representative, to carry out the purposes of this Loan Agreement and the other Loan Documents and Bond Documents or to perfect and preserve any liens created by the Loan Documents. In addition, upon any modification of any Loan Document or Bond Document, Borrower shall, at Borrower's sole cost and expense, deliver to Bondowner Representative, in form and content reasonably satisfactory to Bondowner Representative, a written confirmation of any subordination agreement described on Exhibit B attached hereto. Section 6.16. Books and Records. Borrower shall maintain complete books of account and other records for the Project and for disbursement and use of the proceeds of the Bonds and Borrower's Funds, and the same shall be available for inspection and copying by Bondowner Representative upon reasonable prior notice. Section 6.17. Reservatir-n Letter; Tax Credits.ice. Borrower shall take all action necessary to maintain the Reservation Letter in full force and effect and to obtain the Tax Credits reserved in the Reservation Letter. Borrower shall not amend, modify or terminate, or allow to lapse or expire, the Reservation Letter. Borrower shall satisfy all conditions precedent to the issuance of the Tax Credits as soon as reasonably possible and in any event prior to the date upon which the Reservation Letter (or the reservation of Tax Credits described therein) would expire or lapse. Borrower shall comply,and cause the Project to comply,with all requirements imposed by the Cade or by Governmental Authorities in order to preserve the Tax Credits in the full amount provided in the Reservation Letter. Without limitation upon the foregoing, Borrower shall timely file all certifications and reports required in connection with the Tax Credits, and shall deliver copies of such certifications and reports to the Bondowner Representative concurrently with the filing of the same. Section 6.18. Conant for the B=fit of the BQndh1p dgrs. The Borrower recognizes the authority of the County to assign its interest in and pledge moneys receivable under this Loan Agreement(other than the County's Reserved Rights) to the Trustee as security for the payment of the principal of and interest and redemption premiums, if any, on the Bonds, and the payment of all tither amounts as set forth in Sections 3.3 and 3.4 of this Loan Agreement. The Borrower hereby (i) agrees to be bound by the County's grant of such assignment and pledge), (ii) grants to the Trustee a security interest in any right and interest the Borrower may have in sums held in the Funds described in Article 5 of the Indenture, to secure the obligations of the Borrower under this Loan Agreement and the other Loan Documents and (iii) agrees that the Trustee shall have all of the rights of a secured party under the California Uniform Commercial Code in connection with such security interest. Each of the terms and provisions of this Loan Agreement is a covenant for the use and benefit of the Bondholders and the Bondowner Representative,solong as the Bonds shall remain Outstanding;but upon payment in full of the Bonds in accordance with Article 7 of the Indenture and of all fees and charges requested under 28 Sections 3.3 and 3.4 of this Loan Agreement, all references in this Loan Agreement to the Bondowner Representative, the Bonds and the Bondholders shall be ineffective, and the Bondholders and the Bondowner Representative shall thereafter have no rights hereunder, save and except those that shall have theretofore vested or that arise from provisions hereunder which survive termination of this Loan Agreement. Section 6.19. Inapg Ction and Access. (a) The Borrower agrees that the County, the Trustee and their duly authorized agents, shall have the right to examine and inspect during normal business hours, and for that purpose to enter upon, the Project Premises, and shall also have such right of access thereto at reasonabletimes and under reasonable conditions and subject to the rights of tenants in possession as may be reasonably necessary to cause the Project to be properly maintained in accordance with Article 5 and in accordance with the applicable provisions of the other Loan Documents. In each instance,the County,the Trustee and their duly authorized agents will give Borrower reasonable notice before entering the Project premises and make reasonable efforts to avoid interfering,with the Borrower's use of the Project Premises when exercising any of the rights granted in this Section. (b) Subject to the restrictions of all applicable laws,the Borrower hereby covenants to execute,acknowledge and deliver all such further documents,and do all such other acts and things as may be necessary in order to grant to the County and the Trustee the rights of access and entry described herein and agrees that such rights of access and entry shall not be terminated, curtailed or otherwise limited by any assignment, lease or other transfer of the Project Premises by the Borrower to any other person and subject to the rights of tenants in possession at reasonable times and under reasonable conditions. Section 6.20. Annual tat =nt•ContinuingLisclosur . (a) The Borrower covenants that as long as any amount owed by the Borrower under this Loan Agreement remains unpaid, at the Borrower's sole cost and expense, to furnish the Trustee and the County with annual audited operating statements and balance sheets, which shall be prepared by an independent accounting firm with respect to the Borrower, the Investor Limited. Partner and BRIDGE blousing Corporation, and with annual unaudited financial statements for the General Partners certified by their respective chief financial officers. The Trustee shall have no responsibility to review such statements. (b) The Borrower covenants and agrees to take all actions required in order to comply with Rule 15c2-12 adopted under the Securities Exchange Act of 2934,as the same may be amended from time to time, if such compliance is required at any time while amounts outstanding under this Loan Agreement remain unpaid to effect such compliance. Section 6.21. Indemni1y. (a) The Borrower will pay, defend,protect, indemnify and save the County and the members of the governing body of the County, and its officers, employees and agents and the Trustee and its officers, agents and employees and any person who controls the Trustee or the County within the meaning of the Securities Act of 1933, the Bondowner Representative and each Bondholder (the "Indemnified Parties") from and against all liabilities, losses, damages, costs, expenses (including attorneys' fees), causes of action (whether in contract, tort, or otherwise), suits, claims, demands and judgments of every kind, character and nature whatsoever(collectively referred to herein as the"Liabilities")directly or indirectly arising from or relating to the Bonds„the lean of the proceeds of the Bonds,the administration and servicing of the Loan,the construction,operation,use,occupancy,maintenance,ownership and leasing of 29 the Project,the Mortgage,the Indenture,this Loan.Agreement or any other document related to the issuance and sale of the Bonds, the Trustee's acceptance and administration of the trusts under the Indenture,including,but not limited to,the following: (i) any injury to or death of any person or damage to property in or upon the Project or growing out of or connected with the use,non-use,condition or occupancy of the Project or any part thereof; (ii) violation by the Borrower of any agreement or condition of this Loan Agreement or the Mortgage; (iii) violation by the Borrower of any contract, agreement, or restriction relating to the Project; (iv) violation of any law, ordinance,or regulation affecting the Project,or any part thereof or the ownership,occupancy,or use thereof; (v) the issuance and sale of the Bonds or any of them; and (vi) any statement,information,or certificate furnished by,the Borrower to the County which is misleading,untrue,or incorrect in any respect. (b) The Borrower also agrees to indemnify and hold harmless each of the Indemnified Parties from and against the Liabilities directly or indirectly arising from or relating to any fraud or misrepresentations or omissions of Borrower occurring during any proceedings of the County relating to the issuance of the Bonds or pertaining to the financial condition of the Borrower which, if known to the Bondholders purchasing the Bonds, might be considered a factor in their decision to purchase the Bonds. (c) Nothing in Sections 6.21(a) and 6.21(b) shall be deemed to provide indemnification to an Indemnified Party with respect to Liabilities arising from the negligence(in the case of Trustee only)or grass negligence or willful misconduct of such Indemnified Party. (d) Promptly after receipt by an Indemnified Party of notice of the commencement of any action or proceeding with respect to which indemnification is being sought hereunder,such Indemnified Party will notify the Borrower of the commencement of such proceeding. Such notification shall be a necessary condition precedent to indemnification hereunder,but failure to so notify the Borrower will not relieve Borrower from any liability to an ilnden-inified Party which the Borrower may have otherwise. The Borrower shall assume the defense of such action or proceeding,including the employment of counsel selected by the Indemnified Party and will pay the fees and disbursements of such counsel. However,notwithstanding;the foregoing,(i)if the Indemnified Party,with advice from counsel determines that(A)having common counsel to represent both the Borrower and the Indemnified Party would present a conflict of interest or (B) defenses are available to such Indemnified Party which are not available to the Borrower or (ii) if the Borrower fails to assume the defense of the action or proceeding in a timely manner, then such indemnified Person may employ separate counsel to represent or defend it in any such action or proceeding and the Borrower will pay the reasonable fees and disbursements of such counsel. In any action or proceeding the defense of which the Borrower assumes, the Indemnified Party will have the right to participate in such litigation and to retain it's own counsel at such Indemnified Party's own expense. No Indemnified Party shall settle any complaint, claim, action, suit or other proceeding for which indemnification is being sought hereunder,without the prior consent of the Borrower. 30 (e) The Indemnified Parties, other than the County, shall be considered to be third party beneficiaries of this indemnification agreement. (f) Borrower's duty and obligations to defend, indemnify and hold harmless the Indemnified Parties shall survive the term of the Bonds, cancellation of the Notes, the release, reconveyance or partial reconveyance of the Mortgage,this Loan Agreement and the resignation or removal of the Trustee. (g) The obligations of the Borrower under this Section are independent of any other contractual obligation of the Borrower to provide indemnity to the parties named herein or otherwise. 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, and any indemnified party shall be entitled simultaneously to seek indemnity under this Section and any other provision of any document under which it is entitled to indemnity (including,specifically,the Regulatory Agreement). (h) Nothing contained in this Section 6.21 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 to a degree other than as provided in Section 17.12. Section 6.22. KeepingQuargntgrd Investor Limited Partner Informed. The Borrower must keep the Guarantor and Investor Limited Partner informed of the borrower's financial condition and business operations, the condition and all uses of the Project Premises,including all changes in condition or use, and any and all other circumstances that might materially adversely affect the Borrower's ability to pay or perform its obligations under this Loan Agreement. Section 6.23. Status of Borrower. (a) Throughout the term of this Loan Agreement, the Borrower will maintain its existence as a limited partnership under the laws of the State of California in good standing and qualified to transact business in the State and will not wind up or otherwise dispose of all or substantially all of its assets. (b) Notwithstanding the provisions of the .Mortgage, the Borrower shall not effect a merger, consolidation or transfer if the result thereof would cause the interest on the Bonds (in the hands of any person who is not a "substantial user" of the Project or a "related person") to become includable in gross income for federal income tax purposes. (c) Upon any change in the status of the Borrower, by way of substitution, sale or otherwise of the Borrower, the County shall be promptly informed and, if requested, the Borrower as newly constituted shall deliver to the County and the Bondholders an instrument in form satisfactory to each of them affirming the liability of the Borrower hereunder Section 6.24. Ming of Financing Staternent-s. The Borrower agrees that it will, at its sole expense,file or cause to be filed,on or before October 1 of each fifth calendar year,commencing October 1, 2003, any financing statements or continuation statements required or requested by the Bondowner's representative to perfect and preserve the security interest of the County and the Trustee in this Loan Agreement and the payments to be made hereunder, as granted in the Indenture. The Borrower agrees to provide a copy of each such filing to the Trustee. Section 6.25. [Reserved]. 31 Section 6.26. Negative Covenants. Without Bondowner Representative's prior written consent,the Borrower may not. (a) engage in any business activities substantially different from the Borrower's present business; (b) liquidate or dissolve the Borrower's business; (c) lease (other than to tenants at the Facilities) or dispose of all or a substantial part of the Borrower's business or the Borrower's assets; (d) enter into any consolidation, merger, pool, joint venture, syndicate or other combination. Section 6.27. Tax Status of Bonds. The Borrower hereby covenants, represents and agrees as follows: (a) that the Borrower will not take or permit any action to be taken that would adversely,affect either the exclusion from gross income for federal income tax purposes of the interest on the Bonds and, if it should take or permit any such action, the Borrower will take all lawful actions to rescind such action promptly upon having knowledge thereof; and (b) that the Borrower will take such action or actions, including amending the Loan and this Loan Agreements as determined reasonably necessary in the opinion of Bond Counsel to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the United States Department of the Treasury or the Internal Revenue Service under the Code. The Borrower further covenants and agrees that it will direct all investments in compliance with the Code. The Borrower covenants and agrees to cause to be calculated by the Arbitrage Consultant and pay to the Trustee any amounts owing to the United States as rebatable arbitrage in accordance with the procedures set forth in the Tax Certificate and Section 5.7 of the Indenture. Section 6.28. Tax•ExeTnpt Status of Bonds. (a) It is the intention of the County and the Borrower that interest on the Bonds shall be and remain excluded from the gross income of the owners thereof for purposes of federal' income taxation, and to that end the covenants and agreements of the Borrower in this Section and in Sections 6.27, 6.34, 6.35, 6.36, 6.37, 8.2(q)(i) and (v), 8.3 and 8.4 are for the benefit of the Trustee on behalf of and for each and every Holder of the Bonds. (b) The Borrower covenants and agrees that it will not use or permit the use of any of the funds provided by the County hereunder or any other funds of the Borrower, directly or indirectly, or direct the Trustee to invest any funds held by it hereunder or under the Indenture, in such manner as would, or 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 take or omit to take any other action that would cause any Bond to be an"'arbitrage bond"within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 260(b) of the Code and applicable regulations,promulgated from time to time thereunder. (c) In the event that at any time the Borrower is of the opinion or becomes otherwise aware that for purposes of,this Section 6.28 it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under the Indenture, 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. 32 The Borrower will take such action or actions as may be reasonably necessary in the opinion of Bond Counsel, or of which it otherwise becomes aware, to fully comply with Section 148 of the Code. (d) The Borrower will tape such action or actions as necessary to ensure compliance with Sections 4.9 through 4.14, and Section 5.7 of the Indenture, and with Sections 6.27, 6.34 through 6.37, 8.2(q)(i) and (v), 8.3 and 8.4 hereof.. (e) 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 hereof, of the Indenture,the Deed of Trust and the Regulatory Agreement,and that in any event, the requirements of this Agreement and the Regulatory Agreement are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements in conflict herewith and therewith. (f) The Borrower shall not, pursuant to an arrangement, formal or informal, purchase Bonds in an amount related to the amount of the Loan. Section 6.29. T os5 of Tax u Exl� �sion_. The Borrower understands that the interest rates provided under the Notes and this Loan Agreement have been establishedon the assumption that interest paid on the Bonds will be excludable from the Bondholders' gross income under Section 1013 of the Code and applicable State law. In the event that (i) the Borrower receives notice from Bondowner Representative that Bondowner Representative has discovered any facts or circumstances that would cause interest paid on the Bonds not to be tax-exempt;or (ii) any Bondholder receives notice from the Internal Revenue Service or other Governmental Authority that interest payable on the Bonds is not tax-exempt, or that the Internal Revenue Service is challenging the tax-exempt status of the Bonds, then the interest rate shall be increased,both prospectively and retroactively, to the after-tax equivalent rate(to be calculated by dividing the interest rate by one minus the combined applicable state (if any) and federal marginal tax rates for such Bondholder), and the Borrower shall pay to the Bondholders promptly upon demand an amount sufficient to adjust previous payments of interest to the increased rate. The Borrower shall also indemnify, defend and hold County and Bondowner Representative harmless from any penalties, interest expense or other costs, including reasonable attorneys' fees (including all charges of County's and Bondowner Representative's internal and tax counsel) and accountants' costs, resulting from any dispute with the Internal Revenue Service concerning the exclusion from gross income for federal income tax purposes of interest on the Bonds and the interest payable to any Bondholder on the Bonds, and upon receipt by Bondowner Representative of the amounts set forth in the foregoing indemnity, Bondowner Representative shall assign to Borrower any claims it may have against third parties for negligent acts or omissions in connection with the failure of interest on the Bonds to be excludable from gross income for federal income tax purposes. The County shall have the right to enter into closing agreements with the Internal Revenue Service in the County's sole discretion, and any liability,arising under such closing agreements shall be paid by Borrower. The obligations of the Borrower under this paragraph shall survive termination of this Loan Agreement and repayment of the Loan. Section 6.30. Regulatory Costs. Upon Bondowner Representative's demand, Borrower shall pay to Bondowner Representative, in addition to all other amounts which may be, or become, due and payable under this Loan Agreement and the other Loan Documents, any and all Regulatory Costs., Bondowner Representative shall give Borrower notice of any Regulatory Costs as soon as practicable after their occurrence, but Borrower shall be liable for any Regulatory Costs regardless of whether or when notice is so given. 33 Section 6.31. [intentionally omitted] Section 6.32. [intentionally omitted] Section 6.33. A endMgnt of&gulatory Agrte+�nt. Borrower shall not suffer or permit to become effective any restrictions(including,without limitation,any"automatic" amendment of the Regulatory Agreement pursuant to its terms)which imposes requirements with respect to the occupancy, leasing or operation of the Facility which are materially more burdensome than those contained in the Regulatory Agreement as of the date of this Loan Agreement, without first obtaining the consent of Bondowner Representative to the imposition of such restriction except for the Co-Construction Loan Documents. Section 6.34. Datf AcQUisitil2n. The Borrower hereby represents and warrants that the acquisition and construction of all portions of the Project financed with proceeds from the sale of the Bonds commenced after the Inducement Date (as defined in the Regulatory Agreement). Section 6.35. Useful Life. 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 refinanced with the proceeds of the Bonds. Section 6.36. Federal Guarantee Prohibition. 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 260(b)of the Code. Section 6.37. Prohibited Facilities. The Borrower represents and warrants that no portion of the proceeds of the Bonds will be used to provide any airplane, skybox or other private luxury box, health club facility, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises,and no portion of the proceeds of the Bonds will be used for an office unless the office was located on the premises of the facilities constituting the Project and unless not more than a de minimus amount of the functions to be performed at such office is not related to the day-to-day operations of the Project. Section 6.38. Election ofAr2lalcable Income Limit. The County hereby elects to have the Project meet the requirements of section 142(d)(1)(B) of the Code in that forty percent (401/6) or more of the residential units in the Project shall be occupied by persons or families whose Adjusted Income (as defined in the Regulatory Agreement) is sixty percent (609/6) or less of median income for the Area (as defined in the Regulatory Agreement),adjusted for household size. 34 ARTICLE 7 INSURANCE Borrower shall, while any obligation of Borrower or any of the Guarantor under any Loan Document remains outstanding, maintain at Borrower's sole expense, with licensed. insurers approved by Bondowner Representative, the following policies of insurance in form and substance satisfactory to Bondowner Representative and the County: Section 7.1. Title Insurance. The Title Policy required pursuant to Section 4.1(d). During the term of the Loan, Borrower shall deliver to Bondowner Representative, within five (5) days of Bondowner Representative's written request, such endorsements to the Title Policy as Bondowner Representative may require. Section 7.7. Propertynsrance. A Builders Risk Completed Value Hazard Insurance policy, including, without limitation, such endorsements as Bondowner Representative may require, insuring Bondowner Representative against damage to the Property and Facility in an amount accepted to Bondowner Representative. County, Trusteeand Bondowner Representative shall be named on the policy under a Bondowner Representative's Loss Payable Endorsement(form#438BFU or equivalent). Section 7.3. Flaod Hazgrd Insurance. A policy of flood insurance, as required by applicable governmental regulations,or as deemed necessary by Bondowner Representative. Section 7.4. Liability Insu air nce. A policy of comprehensive general liability insurance with limits as required by Bondowner Representative,insuring against liability for injury and/or death to any person and/or damage to any property occurring on the Property and/or in the Facility from any cause whatsoever naming the County as an additional insured party. Section 7.5. Qeneral. Burrower shall provide to Bondowner Representative the originals of all required insurance policies, or other evidence of insurance acceptable to Bondowner Representative. All insurance policies shall provide that the insurance shall not be cancelable or materially changed without ten (10) days prior written notice to Bondowner Representative. County, Trustee and Bondowner Representative shall be named under a Mortgagee's Loss Payable Endorsement (form#438BFU or equivalent) on all insurance policies which Borrower actually maintains with respect to the Property and Facility. Borrower shall provide to Bondowner Representative evidence of any other hazard insurance Bondowner Representative may deem necessary at any time during the term of the Loan. 35 ARTICLE S REPRESENTATIONS AND WARRANTIES OF COUNTY AND BORROWER Section 8.1. R=res -nj tio+n+ s and Warranties of the Countv The County makes the following representations and warranties. (a) The County is organized and existing as a political subdivision and public body corporate and politic under by virtue of the laws of the State of California (the "State"), and is authorized to issue the Bonds to finance a portion of the cost of the Project pursuant to the Act. (b) The County has lawful power and authority under the Act to enter into this Loan Agreement and the Indenture and to carry out its obligations hereunder and under the Indenture. By proper action of its governing body, the County has been duly authorized to execute and deliver this Lean Agreement,acting by and through its duly authorized officers. The Indenture and this Loan Agreement have been duly executed by the County and, assuming due execution by all other parties thereto,each constitutes a valid,legal,binding and enforceable obligation of the County(subject to bankruptcy, insolvency or creditors' rights laws,principles of equity and the limitations of remedies against governmental agencies within the State) without offset, defense or counterclaim. The execution, delivery and performance of the Indenture and this Loan Agreement by the County will not violate any material provision of any law, regulation, order or decree of any State governmental authority and all consents, approvals, authorizations, orders or filings of or with any State court or governmental agency or body, if any, required for the execution, delivery and performance of such documents by the County have been obtained or made. (c) The County has not received notice of any pending or threatened action, suit or proceeding,arbitration or governmental investigation against the County,an adverse outcome of which would materially affect the County's performance under the Indenture and this Loan Agreement. (d) The execution, delivery and performance of the Indenture and this Loan Agreement by the County will not cause or constitute a material default under or materially conflict with its organizational documents or other agreements to which it is a party or otherwise materially adversely affect performance of the duties of the County under such organizational documents or other agreements. Section $.2. Represmtations and Warranties of the Borrower. The Borrower makes the following representations and warranties: (a) Authority/Enforceability. Borrower is in compliance with all laws and regulations applicable to its organization,existence and transaction of business and has all necessary rights and powers to own and develop the Project as contemplated by the Loan Documents. (b) Binding Obligations. Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents, and such obligations shall be valid and binding obligations of Borrower. (c) Formation and Organizational Documents. Borrower has delivered to Bondowner Representative all formation and organizational documents of Borrower, of the partners, joint venturers or members of Borrower, if any, and of the Guarantor, if any, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Bondowner Representative. Borrower shall immediately 36 provide Bondowner Representative with copies of any amendments or modifications of the formation or organizational documents. (d) No Violation. Borrower's execution, delivery, and performance under the Loan Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document, (b) violate any governmental requirement applicable to the Project or any other statute, law, regulation or ordinance or any order or ruling of any court or Governmental Authority; (c) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement,contract,lease,or other document by which the Borrower is or the Project are bound or regulated; or (d) violate any statute, law, regulation or ordinance, or any order of any court or Governmental Authority. (e) Compliance With Laws. Borrower has, and at all times shall have obtained, all permits, licenses, exemptions, and approvals necessary to construct, occupy, operate and lease the Project, and shall maintain compliance with all governmental requirements applicable to the Project and all other applicable statutes, laws, regulations and ordinances necessary for the transaction of its business. (f) Litigation. Except as disclosed to Bondowner Representative and County in writing, there are no claims, actions, investigations, suits, or proceedings pending, or to Borrower's knowledge threatened,against Borrower or materially adversely affecting the Project or materially adversely affecting the ability of the Borrower to perform under this Loan Agreement,the other Loan Documents or the Indenture or in any way challenging the validity of the Bonds. (g) Financial Condition. All financial statements and information heretofore delivered to Bondowner Representative by Borrower,including,without limitation,information relating to the financial condition of Borrower, the Property, the Facility, the partners, joint venturers or members of Borrower, and/or the Guarantor, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein)in accordance with generally accepted accounting principles consistently applied. Borrower acknowledges and agrees that Bondowner Representative may request and obtain additional information from third parties regarding any of the above,including,without limitation,credit reports. (h) No Material Adverse Change. There has been no material adverse change in the financial condition of Borrower and/or the Guarantor since the dates of the latest financial statements furnished to Bondowner Representative and, except as otherwise disclosed to Bondowner Representative in writing, Borrower has not entered into any material transaction which is not disclosed in such financial statements. (i) Bond Proceeds and Adequacy. The undisbursed Bond Proceeds, together with Borrower's Funds, if any, to be provided by Borrower as shown in Exhibit C, are sufficient to construct the.Facility in accordance with the terms and conditions of this Loan Agreement and the other Loan Documents. (j) Accuracy. All reports, documents, instruments, information and forms of evidence delivered to Bondowner Representative by Borrower concerning the Loan or security for the Loam or required by the Loan Documents are accurate, correct and complete and give Bondowner'Representative true, accurate and complete knowledge of their subject matter and do not contain any material misrepresentation or omission. (k) Tax',Liability. Borrower has filed all required federal, state,county and municipal tax returns and has paid all taxes and assessments owed and payable, and Borrower has no 37 knowledge of any basis for any additional payment with respect to any such taxes and assessments. (l) utilities. All utility services, including, without limitation, gas, water, sewage, electrical and telephone, necessary for the development and occupancy of the Property and Facility are available at or within the boundaries of the Property, or Borrower has taken all steps necessary to assure that all such services will be available upon completion of the Facility. (m) Compliance. Borrower is familiar with and in compliance with all governmental requirements for the development of the Property and construction of the Facility and will conform to and comply with all governmental requirements and the Plans and Specifications. (n) Americans With Disabilities Act Compliance. To the extent required by applicable law, the Facility has been designed and shall be constructed and completed, and thereafter maintained, in strict accordance and full compliance with all of the requirements of the ADA, as amended from time to time applicable to the Facility. (o) Tax Credits. Borrower has received a Tax Exempt .Reservation Letter ("Reservation Letter") from ICAC dated September 24, 1998, for, and Borrower is entitled to, an allocation of Tax Credits for the Facility. The Tax Credits to be granted pursuant to the Reservation Letter are for Federal Tax Credits in the amount of Four Hundred Ten Thousand Seven Hundred Fifty-Seven Dollars ($410,757), annually for each of ten (10) years. Borrower shall completely and in a timely manner perform all actions and meet all requirements to maintain and perfect the reservation, including timely furnishing to TCAC all of the items required to be furnished to it in order to prevent the expiration of the reservation. Failure to do so is a Defaultpursuantto Section 17 herein. (p) Capital Contributions. Borrower hereby represents and warrants to Bondowner Representative that, pursuant to the Partnership Documents, Investor Limited Partner will be required to make the following capital contributions: (i) the First Capital Contribution upon the later of: (a) 100% completion of construction and receipt of the permanent certificate(s) of occupancy or (b) 95%occupancy receipt of accountant's certification; and (ii) thereafter, seven annual installments on the anniversary of the date of the First Capital Contribution. (q) Bend Related Representations. (i) In addition to the Bonds, no other obligations have been or are expected to be issued under Section 103 of the Code for sale at substantially the sate time as the Bonds are'sold pursuant to a common plan of marketing and at substantially the same rate of interest as the Bonds and which are payable in whole or part by the Borrower or otherwise have with the Bonds any common or pooled security for the payment of debt service thereon,or which are otherwise treated as the same"issue of obligations" as the Bonds as described in Revenue Ruling No. 81-216. (ii) The Borrower is not in the trade or business of selling properties such as the Project and has acquired the Project for investment purposes only or otherwise for use by the Borrower in its trade or business, and therefore the Borrower has no present intention to voluntarily sell,surrender or otherwise transfer,in whole or part,its interest in the Project in the foreseeable future. (iii) The Borrower has reviewed and approved the provisions of the Indenture. 38 (iv) To the best of the Borrower's knowledge, no member of the governing body of the County or any other officer of the County has any significant or conflicting interest, financial, employment or otherwise, in the Borrower, the Project or the transactions contemplated hereby. (v) The covenants, representations and warranties of the Borrower in the Regulatory Agreement are true and correct as of the date hereof and are incorporated herein by reference and made a part of this Loan Agreement. (vi) The Borrower has not entered into the transaction evidenced hereby with the actual intent to hinder, delay or defraud any creditor and the Borrower has received reasonably equivalent value in exchange for its obligations hereunder and under the Mortgage and the Regulatory Agreement. (vii) Except for the Co-Construction Loan, the Borrower has no known material contingent liabilities other than as contemplated in the Partnership Agreement. (viii) The Borrower has no material financial obligation under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Borrower is a party or by which the Borrower or the Project are otherwise bound, other than(a)obligations under this Loan Agreement and the other Loan Documents to which the Borrower is a party; (b) the Co-Construction Loan; (c) obligations with respect to two loans made by the Contra Costa County Redevelopment Agency with respect to the Project in the principal amounts of $350,000 and $2,800,000, respectively, and (d) obligations which may be incurred by Borrower from time to time in the ordinary course of business. (ix) The Borrower has not borrowed or received other debt financing that has not been heretofore repaid in full, except for (a) the Co-Construction Loan and (b) equipment financing relating to laundry facilities on the Project Premises. (x) The Borrower is not (a) an "investment company„ or a company "controlled by an investment company"within the meaning of the Investment Company Act of 1940, as amended; (b) 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(c) subject to any other federal or state law or regulation which purports to restrict its ability to borrow money other than Article 15 of the California State Constitution. (xi) Except as disclosed in the Title Policy, there are no pending or, to the knowledge of the Borrower, proposed special or other assessments for public improvements affecting the Project,nor,to the knowledge of the Borrower,are there any contemplated improvements to the mortgaged property that may result in such special or other assessments. (xii) No statement of fact made by the Borrower herein or in the Loan Documents to which the Borrower is a party contains any untrue statement of a material fact or omits to state any material fact necessary to make statements made by the Borrower herein or therein not misleading. There is no fact presently known to the Borrower which has not been disclosed which adversely affects or, to the best of Borrower's knowledge, would adversely affect the business, operations or conditions (financial or otherwise)of the Borrower. 39 (xiii) All reports, documents, instruments, information and forms of evidence delivered to Bodowner Representative by Borrower concerning the Loan or required by the Loan'Documents are (or, in the case of materials prepared by persons other than Borrower or its partners or Investor Limited Partner, are to the best of Borrower's knowledge) accurate, correct and sufficiently complete to give Bondowner Representative true and accurate knowledge of their subject matter. (xiv) The Borrower owns directly, and not through any affiliated entity, all of the personal property and fixtures necessary for the operation of the Project Premises for the uses presently being conducted thereon. (xv) The Borrower is not a "foreign person" within the meaning of Section 1445(f)(3)of the Internal Revenue Code of 1486, as amended from time to time. (xvi) Before Guarantor became obligated in connection with the Loan, or the Investor Limited Partner becomes obligated in connection with the Security Agreement, the Borrower made full disclosure to Guarantor and will make full disclosure to the Investor Limited Partner regarding the Borrower's financial condition and business operations, the present and former condition, uses and ownership of the Project Premises and all other circumstances bearing upon the Borrower's ability to pay and perform its obligations under the Loan Documents. Section 8.3. Gmeral Tax Representations. Warranties and Covenantsf Borrgwgr. The Borrower further represents,warrants and covenants as follows: (a) The Borrower will use and operate the Project in a manner consistent with the Regulatory Agreement and will use and operate the Project in accordance with the terms of the Regulatory Agreement until the date on which the Qualified Project Period terminates. If in the future there is a cessation of that operation,the Burrower will use its best efforts to resume that operation or accomplish an alternate use by the Borrower or others which will be consistent with the Act and the tax-exempt status of the Bonds. (b) The Borrower covenants and agrees that it will not use or permit the use of any of the funds provided by the County hereunder or any other funds of the Borrower, directly or indirectly, in such manner as would, or 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 take or omit to take any other action that would, to the knowledge of this Borrower, cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the Code and applicable regulations promulgated from time to time thereunder. (c) In the event that at any time the Borrower is of the opinion or is otherwise aware that for purposes of this Section 8.3 or Section 5.7 of the Indenture it is necessary to restrict or to limit the yield on the investment of any moneys held by,or on behalf of,the County under the Indenture, the Borrower shall obtain an opinion of Bond Counsel, which shall determine the limitations and so instruct and direct in writing the County to take such actions as the Borrower believes are necessary in order to comply with these limitations under the Indenture. (d) The Borrower covenants to comply with the covenants and procedures set forth in Section 5.7 of the Indenture and to deposit in the Rebate Fund such amounts as may be necessary to maintain the amount on deposit in the Rebate Fund at the Rebate Requirement. (e) Notwithstanding any provisions of this Section 8.3, if the Borrower shall provide to the County an opinion of Band Counsel that any specified action required under this Section 40 8.3 or under Section 5.7 of the Indenture is no longer required or that some further or different action is required to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds,the County and the Borrower may conclusively rely on such opinion in complying with the requirements of this Section 8.3 and Section 5.7 of the Indenture and be protected in so doing, and the covenants hereunder shall be deemed to be modified to that extent. (f) The Borrower further agrees that it shall not discriminate on the basis of race, religion,creed,calor,ethnic group identification,sex,source of income(e.g.,AFDC,SSI),mental or physical disability,age,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 construction,operation and management of the Project. (g) Not less than 95°lam of the proceeds of the Bonds will be expended for Qualified Project Costs,as that term is defined in the Regulatory Agreement. Section 8.4. Tax Exemption, Regglatory Agreement. The Borrower hereby covenants, represents and agrees as follows: (a) not to take or omit to take any action with respect to this Loan Agreement or the Project (solely with respect to the Borrower) that would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds(so long as the Bonds are not owned by a person or entity which is a "substantial user" of the Project Premises), (b) to take such action or actions, including amendment of the Regulatory Agreement, as may be necessary in the opinion of Bond Counsel, to preserve or perfect the exclusion of interest on the Bonds from gross income for federal income tax purposes; (c) to file of record such documents and take such other steps as are necessary in order to insure that the requirements and restrictions of the Regulatory Agreement will be binding upon all owners of the Project, including, but not limited to, the execution and recordation of the Regulatory Agreement in the real property records of Contra Costa County, California; (d) to include the requirements and restrictions contained in the Regulatory Agreement in any deed or other document transferring any interest in the Project to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any transferee so to abide;and (e) to provide to the County notice of any action (other than actions in its ordinary course of business) which impacts the County's rights hereunder or under the Regulatory Agreement. Section 8.5, &MeseaLafiongi of Borrower as 5ingLe Pur2ose Entity. (a) Borrower covenants and agrees that it shall not: (i) (1) except for the Co-Construction Loan, incur, create or assume any indebtedness for borrowed money except indebtedness represented by an invoice, statement of account, check, work request, purchase Girder or other similar document representing expenses relating to activities of the Borrower undertaken in accordance with its formation documents or (2) transfer or lease the Project or any interest therein, except as permitted under Section 6.8 hereof; 41 ................... ....................... (ii) engage,directly or indirectly,in any business other than that arising out of or entering into this Loan Agreement and the other Loan Documents to which Borrower is a party and the ownership, management, leasing, construction, development, operation and maintenance of the Project; (iii) commingle its assets with the assets of any other entity; (iv) partition the Project except as expressly permitted under the Mortgage;or (v) voluntarily file or consent to the filing of a petition for bankruptcy, reorganization, assignment for the benefit of creditors or similar proceeding under any federal or state bankruptcy,insolvency,reorganization or other similar law,without the unanimous consent of its partners. Borrower represents and warrants that as the date hereof it does not have any indebtedness or obligations which would cause it to be in violation of the foregoing covenants. Further, Borrower covenants that it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence,will not engage in,seek or consent to any dissolution, winding up, liquidation, consolidation, merger or asset sale; will not materially modify its agreement of limited partnership; will pay all expenses of the Project from assets of Borrower; will maintain separate books and records and bank accounts; will at all times hold itself out to the public as a separate and distinct legal entity (including in its leasing activities, in entering into any contract and in preparing its financial statements); will file its own tax returns;and will cause its management to meet regularly to carry on its business. (b) Borrower shall do all things necessary to preserve and keep in full force and effect its existence, rights and privileges under the laws of the State and its right to own property or transact business in the State. Borrower further represents and warrants that it is, and, so long as any portion of the Loan shall remain unpaid, shall do all things necessary to continue to be, an entity which is formed or organized solely for the purpose of holding, directly, an ownership interest in the Project,does not engage in any business unrelated to such properties and the financing thereof, does not have any assets other than those related to its interest in the properties or the financing thereof or any indebtedness other than as permitted by the Mortgage or the other Loan Documents, has its own separate books and records and its own accounts, in each case which are separate and apart from the books and records and accounts of any other entity and will maintain the same as official records, holds itself out as being an entity, separate and apart from any other entity and will conduct its business in its own name. (c) The Borrower will not fail to correct any known misunderstanding regarding the separate identity of the Borrower. (d) The Borrower will not assume or guarantee or become obligated for the debts of any other entity or hold out its credit as being available to satisfy the obligations of any other entity;will allocate fairly and reasonably any overhead for shared office space; will not pledge its assets for the benefit of any other person or entity; will not make loans to any person or entity; will not enter into or be a party to any transaction with its partners or affiliates except (a)pursuant to its Partnership Agreement as it exists as of the date of this Loan Agreement or (b)in the ordinary course of business and on terms which are no less favorable to it than would be obtained in a comparable arm's-length transaction with an unrelated third party. 42 Any firm, corporation or partnership which can make the representations and warranties and satisfy the covenants set forth in this Section 8.5 shall constitute a "Single Purpose Entity." 43 ARTICLE 9 HAZARDOUS MATERIALS Section 9.1. Special 12e12resentations and Warranties. Without in any way Limiting the other representations and warranties set forth in this Loan Agreement, and after reasonable investigation and inquiry, Borrower hereby represents and warrants to the best of Borrower's knowledge as of the date of this Loan Agreement as follows: (a) Hazardous Materials. Except as previously disclosed to Bondowner Representative in that certain Phase I Environmental Assessment, darted , the Property and Facility are not and have not been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any oil,flammable explosives,asbestos,urea formaldehyde insulation.,radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are "hazardous substances," "hazardous wastes," "hazardous materials" or "toxic substances" under the Hazardous Materials Laws, as described below, and/or other applicable environmental laws, ordinances and regulations (collectively, the "Hazardous Materials"). "Hazardous Materials" shall not include materials used in the ordinary course of construction and/or operation of the Property and Facility which are used and stored in accordance with all applicable environmental laws, ordinances and regulations. (b) Hazardous Materials Laws. The Property and Facility are in compliance with all laws, ordinances and regulations relating to Hazardous Materials ("Hazardous Materials Laws"), including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq., the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, "CERCLA"), 42 U.S.C. Section 9601 et seq., the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act' of 1986, 42 U.S.C. Section 110031 et seq., the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws,laws of other jurisdictions or orders and regulations. (c) Hazardous Materials Claims. There are no claims or actions ("Hazardous Materials Claims") pending or threatened against Borrower, the Property;or Facility by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws. (d) Boner Zone Property. The Property has not been designated as Border Zone Property under the provisions of California Health and Safety Code, Sections 25220 et seq. and there has been no occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be designated as Border Zone Property. Section 9.2. Hazardous Materials Covenants. Borrower agrees as follows: (a) No '.Hazardous Activities. Borrower shall not cause or perp-dt the Property or Facility to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge,disposal, transportation or presence of any Hazardous Materials. 44 (b) Compliance. Borrower shall comply and cause the Property and Facility to comply with all Hazardous Materials Laws. (c) Notices. Borrower shall immediately notify Bondowner Representative in writing of: (i) the discovery of any Hazardous Materials on, under or about the Property and Facility; (ii) any knowledge by Borrower that the Property and Facility do not comply with any Hazardous Materials Laws; (iii) any Hazardous Materials Claims; and (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be designated as Border Zone Property. (d) Remedial Action. In response to the presence of any Hazardous Materials on, under or about the Property or Facility, Borrower shall immediately take, at Borrower's sole expense, all remedial action required by any Hazardous Materials Laws or any judgment, consent decree,settlement or compromise in respect to any Hazardous Materials Claims. Section 9.3. nsp cte ion By Bondowner presentative. Upon reasonable prior notice to Borrower, Bondowner Representative, its employees and agents, may from time to time (whether before or after the commencement of a nonjudicial or judicial foreclosure proceeding) enter and inspect the Property and Facility for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of an hazardous substance into,onto,beneath or from the Property and Facility. Section 9.4. Hazardous Materials Indemnity. Borrower hereby agrees to defend, indemnify and hold harmless County, Trustee and Bondowner Representative,their governing bodies, directors, officers, employees, agents, successors and assigns from and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including, without limitation, attorneys' fees and expenses) which County, Trustee and Bondowner Representative may incur as a direct or indirect consequence of the use, generation, manufacture, storage, disposal, threatened disposal, transportation or presence of Hazardous Materials in, on, under or about the Property or Facility. Borrower shall immediately pay to County, Trustee and Bondowner Representative upon demand any amounts owing under this indemnity, together with interest from the date the indebtedness arises until paid at the rate of interest applicable to the principal balance of the Notes. BORROWER'S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS BONDOWNER REPRESENTATIVE SHALL SURVIVE THE CANCELLATION OF THE NOTES AND THE RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE MORTGAGE. Section 9.5. Legal Effect of SectiQn. Borrower and Bondowner Representative agree that: (a) this Article is intended as Bondowner Representative's written request for information (and Borrower's response)concerning the environmental condition of the real property security as required by California Code of Civil Procedure§726.5; and (b)each provision in this Article (together with any indemnity applicable to a breach of any such provision) with respect to the environmental condition of the real property security is intended by Bondowner Representative and Borrower to be an "environmental provision" for purposes of California Code of Civil Procedure § 736, and as such it is expressly understood that Borrower's duty to indemnify Bondowner Representative hereunder shall survive: (i) any judicial or non-judicial foreclosure under the Mortgage,or transfer of the Property in lieu thereof; (ii)the release and reconveyance or cancellation of the Mortgage; and (iii) the satisfaction of all of Borrower's obligations under the Loan Documents. 45 ARTICLE 10 SET ASIDE LETTERS Section 10.1. Set Aside Utters. 8ondowner Representative shall have no obligation to issue any letter or letters („Set Aside Letter") to any governmental agency or bonding company whereby 8ondowner Representative agrees to allocate Loan proceeds for the construction of off-site,common area,or other Facility required by any governmental agency or for which bonds may be required in connection with the development of the Property. If 8ondowner Representative agrees, in its sole discretion, to issue a Set Aside Letter, 8ondowner Representative may condition the issuance of such Set Aside Letter upon payment of such fee and delivery of such indemnification as 8ondowner Representative shall require. 46 ARTICLE 11 REPORTING COVENANTS Section 11.1. Financial Information. Borrower shall deliver to Bondowner Representative, as soon as available, but in no event later than one hundred twenty (1.20)days after Borrower's fiscal year end, a current financial statement(including,without limitation, an income and expense statement and balance sheet) signed by authorized representative of Borrower together with any other financial information including, without limitation, annual financial statements, cash flow projections and quarterly operating statements requested by Bondowner Representative for the following persons and entities:Borrower,the General Partner and the Guarantor. Within thirty (30) days of Bondowner Representative's request, Borrower shall also deliver to Bondowner Representative such quarterly and other financial information regarding any persons or entities in any way obligated on the Loan as Bondowner Representative may specify. if audited financial information is prepared,Borrower shall deliver to Bondowner Representative copies of that information within fifteen ( 5) days of its final preparation. Except as otherwise agreed to by Bondowner Representative, all such financial information shall be prepared in accordance with generally accepted accounting principles consistently applied. Section 11.2. Books and Records. Borrower shall maintain complete books of account and other records for the Project and for disbursement and use of the proceeds of the Loan and Borrower's Funds, and the same shall be available for inspection and copying by the County or the Bondowner Representative upon reasonable prior notice. Section 11.3. Leasing Reports. Within ten (10) days after the end of each calendar, month until 95% of the units in the Project have been rented, and within ten(10) days after the end of each calendar quarter thereafter, Borrower shall deliver to Bondowner Representative a rent roll for the Project as of the end of the previous month in form and substance acceptable to Bondowner Representative. Within ten (10) days of Bondowner Representative's request, Borrower shall deliver such other information with respect to the Project or the leasing thereof as Bondowner Representative shall reasonably request. Section 11.4. Op... rgiting-Statements Fgr Property and Facility. After completion of construction of the Facility and until such time as the Notes are paid in full, Burrower shall deliver to Bondowner Representative on the fifteenth (15th) day after the end of each calendar quarter an "Operating Statement" which shows in detail the amounts and sources of Gross Operating Income received by or on behalf of Borrower and the amounts and purposes of Permitted Operating Expenses paid by or on behalf of Borrower with respect to the Property and Facility for the previous month. (a) "Gross Operating Income" for this purpose shall mean the sum of any and all amounts, payments, fees, rentals, additional rentals, expense reimbursements (including, without limitation, all reimbursements by tenants, lessees, licensees and;rather users of the Property and Facility) discounts or credits to Borrower, income, interest and other monies directly or indirectly received by or on behalf of or credited to Borrower from any person with respect to Borrower's ownership, use, development, operations, leasing, franchising, marketing or licensing of the Property and Facility. Gross Operating income shall be computed on a cash basis and shall include for each monthly statement all amounts actually received in such month whether or not such amounts are attributable to a charge arising in such month. (b) "Permitted Operating Expenses" shall mean the following expenses to the extent that such expenses are reasonable in amount and customary for properties of this type: (i) taxes and assessments imposed upon the Property and Facility to the extent that such taxes and 47 assessments are required to be paid by Borrower and are actually ,paid or reserved for by Borrower, (ii) band assessments; (iii) insurance premiums for casualty insurance (including, without limitation, earthquake) and liability insurance carried in connection with the Property and Facility, provided, however, if any, insurance is maintained as partof a blanket policy covering the Property and Facility and other properties,the insurance premium included in this subparagraph shall be the premium fairly allocable to the Property and Facility; (iv) operating expenses incurred by Borrower for the management,operation, cleaning, leasing, maintenance and repair of the Property and Facility. Permitted Operating Expenses shall not include any interest or principal payments on the Loan or any allowance for depreciation. 48 ARTICLE 12 LEASES Section 12.1. U6-e of the Project• Leases. (a) The Borrower shall operate the Project in accordance with the requirements of the Regulatory Agreement. (b) The Borrower shall lease units within the Project only pursuant to a form of lease which has been approved by Bondowner Representative. 49 ARTICLE 13 DAMAGE, DESTRUCTION AND CONDEMNATION' Section 13.1. Damage and De is .ruction. If the Bonds are Outstanding when the Project is damaged or destroyed by fire or other casualty, the Borrower shall restore the Project if the conditions contained in Section 5.6 of the Mortgage are satisfied;otherwise, Borrower shall use any proceeds received in respect of such casualty to prepay the Loan in whsle or in part. Section 13.2. ondemmnation. If the Bonds are outstanding when the Project or any part thereof is taken by Condemnation, the Borrower shall restore the Project if the conditions contained in Section 5.6 of the Mortgage are satisfied; otherwise Borrower shall use any proceeds received in respect of such Condemnation to prepay the Loan in whole or in part or take such other action, as is required or permitted by the Mortgage and the other Loan Documents. Section 13.3. Parties To Giv.Notice. In the case of material damage to or destruction of all or any part of the Project, the Borrower shall give prompt notice thereof to the County, the Trustee,the Bondowner Representative in the manner prescribed by Section 18.4. In the case of a taking or proposed taking of all or any part of the Project by Condemnation, the party hereto upon which notice of such taking or proposed taking is served shall give prompt notice thereof to the County, the Trustee and the Bondowner Representative in the mariner prescribed by Section 18.4. Any such notice shall describe generally the nature and extent of such damage, destruction,taking or proposed taking. Section 13.4. Conditions to Disbuure=nt of Proceeds. If all of the conditions contained in Section 5.6 of the Mortgage are satisfied proceeds held by Trusteeand funds in the Contribution Account shall be disbursed subject to the consent of Bondowner Representative,in the same manner and subject to the same conditions (subject to adjustment to reflect the different nature of construction) as applied with respect to the initial disbursement of the Loan. 50 ARTICLE 14 PREPAYMENT Section 24.3. Pr avmentnt. (a) (1) Borrower,at its option, may prepay principal on the Issue I Note, in whole or in part, on any date that Issue I Bonds are permitted to be optionally redeemed pursuant to Section 3.1(2) of the Indenture, in authorized denominations and at the redemption prices specified in Section 3.3(2) of the Indenture, upon 15 days written notice of its intention to do so, at the times and in the mounts sufficient to enable the Trustee to redeem Issue I Bonds,pursuant to Section 3.2(2)of the Indenture. (2) Borrower, at its option, may prepay principal on the Issue II Note, in whole or in part, on any date that Issue II Bonds are permitted to be optionally redeemed pursuant to Section 3.1(3) of the Indenture, in authorized denominations and at the redemption prices specified in Section 3.1(3) of the Indenture, upon 15 days written notice of its intention to do so, at the times and in the amounts sufficient to enable the Trustee to redeem Issue II Bonds,pursuant to Section 3.2(3) of the Indenture. (b) The Issue I Note and the Issue II Note are subject to mandatory prepayment in part at the respective principal amount thereof (without prepayment penalty), plus accrued interest thereon from mandatory sinking account payments on the Issue I Bonds and the Issue II Bonds, as applicable, as set forth in Section 3.1(3) of the Indenture. (c) The Issue I and Issue II Notes are subject to mandatory prepayment in whole or in part in the event the Issue I Bonds or Issue II Bonds,respectively, are redeemed pursuant to Section 31(1)(a) or 3.1(1)(f) of the Indenture at the principal amount thereof plus accrued interest to the redemption date. (d) The Issue I Note and the Issue II Note are subject to mandatary prepayment in whale on October 1, 2000, at the principal amount of the Issue I Bonds and the Issue II Bonds, as applicable, plus accrued interest to the redemption date unless the conditions set forth in Section 3.1(1)(D) of the Indenture are satisfied. (e) The Issue I Note and the Issue II Note are subject to mandatory prepayment in part on October 1, 2000,in an amount sufficient to reduce the outstanding balance of the Issue I Bonds and the Issue II Bonds, as applicable, to the Post-Conversion Amount. (f) The Issue I and Issue 11 Notes are subject to mandatory prepayment,in whole or in part, in the event of damage to or destruction or condemnation of the Project or any part thereof as provided in Section 5.8 of this Loan Agreement and the Mortgage at the principal amount thereof plus accrued interest to the redemption date of the Bonds. 51 ARTICLE 15 TERMINATION Section 15.1. Termination of Loan Agreement;Recuired Prepa . (a) Except during the continuance of a Default,the Borrower shall have the option of terminating this Loan Agreement if (i) the Bonds have been paid in full or if provision is otherwise made for payment of the Bonds in such manner that the Indenture will be discharged under Article 7 thereof on or before the date of termination, (ii) such prepayment and termination is allowed by the Mortgage, (iii) the Borrower provides the Trustee and the County with an opinion of Bond Counsel to the effect that all such conditions have been satisfied; and provided that this Loan Agreement may not be terminated unless and until (x) all of the Borrower's obligations under the Loan Documents have been satisfied and (y) all of the Borrower's obligations with respect to the County's fees and any rebate obligation have been satisfied and the Borrower has so certified to the County and the Trustee. All obligations of the Borrower under Sections 3.3(b) and (c), 3.4, 6.21, 6.29, 9.4,17.5 and 18.32 shall survive termination of this Loan Agreement. (b) Notwithstanding the foregoing, the Borrower .may not terminate this Loan Agreement unless and until the Trustee has on deposit an amount equal to the sum of the following: (c) Funds on deposit in any of the Funds established under Article 5 of the Indenture and available for that purpose which are sufficient to discharge the Indenture in accordance with Article 7 thereof;plus (d) to the extent not paid under subsection (a) above, an amount equal to the Trustee's and County's fees and expenses under the Indenture and any other amounts due under Sections 6.21, 6.29, 9.4, 17.5 and 18.32 hereof, accrued and to accrue until the Bonds are fully paid and redeemed and all other advances, fees, costs and expenses reasonably incurred and to be incurred on or before the termination date by the Trustee under the Indenture and by the County and the Trustee under this Loan Agreement and/or the other Loan Documents. (e) On the termination date, a closing shall be held at any office mutually agreed upon among the County, the Borrower and the Trustee (which closing may be conducted by first-class mail or recognized overnight delivery service). At the closing the County and the Trustee shall, upon acknowledgment of receipt of the sum set forth in subsection (2) above, execute and deliver to the Borrower such release and other instruments as the Borrower reasonably determines is necessary to terminate this Loan Agreement. All further obligations of the Borrower hereunder (except as specifically provided in Sections 3.3(b) and (c), 3.4, 6.21, 6.29, 9.4, 17.5 and 18.32) shall thereupon terminate,provided, however, that the Borrower shall also remain obligated to pay or reimburse the County and the Trustee for the payment of all other fees, costs and expenses unaccounted for in the sum paid in accordance with subsection (b)(ii)above and reasonably incurred before or subsequent to such closing in connection with the Bonds. 52 ARTICLE 16 CONDITIONS RELATING TO REPAIR AND REPLACEMENT FUND Borrower shall deposit into the Repair and Replacement Fund, on the first anniversary of the Conversion Date,an amount equal to $250 times the number of units in the Project to be held as a replacement reserve for the Project. The Repair and Replacement Fund shall be pledged to Trustee as additional security for payment of the Loan and shall be maintained in accordance with Exhibit E. 53 ARTICLE 17 DEFAULT AND REMEDIES Section 17.1. Default. The occurrence of any one or more of the following shall constitute an event of default(hereinafter, "Default") under this Loan Agreement and the other Loan Documents: (a) Monetary. Borrower's failure to pay when due any sumspayable under the Notes or any of the other Loan Documents or Borrower's failure to deposit any Borrower's Funds as and when required under this Loan Agreement;or (b) Performance of Obligations. Borrower's failure to perform any obligation under any of the Loan Documents other than obligations in other subparagraphs'of this Section 17.1, within thirty (30) days after written notice to Borrower from Bondowner Representative requesting that Borrower cure such failure;provided,however,that if a cure period is provided for the remedy of such failure, Borrower's failure to perform will not constitute a Default until such date as the specified cure period expires; or (c) Construction: Use. (i) There is any material deviation in the work of Construction from the Plans and Specifications or governmental requirements or the appearance or use of defective workmanship or materials in constructing the Facility, and Borrower fails to remedy the same to Bondowner Representative's satisfaction within ten (10) days of Bondowner Representative's written demand to do so; or (ii) there is a cessation of construction of the Facility prior to completion for a continuous period of more than fifteen (15) days (except as caused by an event of force majeure for which a longer delay may be permitted under Article V); or (iii) the construction, sale or leasing of any of the Facility in accordance with the Loan Documents is prohibited, enjoined or delayed for a continuous period of more than thirty (30) days; or (iv) utilities or other public services necessary for the full occupancy and utilization of the Property and Facility are curtailed for a continuous period of more than thirty(30) days; or (d) Liens,Attachment: Condemnation. (i)The recording of any claim of lien against the Property or Facility or the service on Bondowner Representative of any bonded stop notice relating to the Loan and the continuance of such claim of lien or bonded stop notice for twenty (20)days without'discharge, satisfaction or provision for payment being made by Borrower in a manner satisfactory to Bondowner Representative; or (ii) the condemnation, seizure or appropriation of,or occurrence of an uninsured casualty with respect to any material portion of the Property or Facility; or (iii) the sequestration or attachment of, or any levy or execution upon any of the Property or Facility, any other collateral provided by Borrower under any of the Loan Documents, any monies in the Contribution Account, or any substantial portion of the other assets of Borrower, which sequestration, attachment, levy or execution is not released, expunged or dismissed prior to the earlier of thirty (30) days or the sale of the assets affected thereby;or (e) .Representations and Warranties. (i) The failure of any representation or warranty of Borrower in any of the Loan Documents and the continuation of such failure for more than ten (10) days after written notice to Borrower from Bondowner Representative requesting that Borrower cure such failure; or (ii) any material adverse change in the financial condition of Borrower or any ether person or entity in any manner obligated to Bondowner Representative under the Loan Documents from the financial condition represented to Bondowner Representative as of the Effective Date; or (f) Voluntary Bankruptcy; Insolvency; Dissolution. (i) The filing of a petition by Borrower for relief under the Bankruptcy Code, or under any other present or future state or 54 federal law regarding bankruptcy,reorganization or other debtor relief law,(ii) the filing of any pleading or an answer by Borrower in any involuntary proceeding under the Bankruptcy Code or other debtor relief law which admits the jurisdiction of the court or the petition's material allegations regarding Borrower's insolvency; (iii) a general assignment by Borrower for the benefit of creditors; or (iv) Borrower applying for, or the appointment of a receiver, trustee, custodian or liquidator of Borrower or any of its property;or (g) Involuntary Bankruptcy. The failure of Borrower to effect a full dismissal of any involuntary petition under the Bankruptcy Code or under any other debtor relief law that is filed against Borrower or in any way restrains or limits Borrower or Bondowner Representative regarding the Loan, the Property or the Facility, prior to the earlier of the entry of any court order granting relief sought in such involuntary petition, or thirty (30) days after the date of filing of such involuntary petition;or (h) Partners. Guarantor. The occurrence of any of the events specified in Section 17.1(f) or 17.1(8) as to any person or entity other than Borrower including,',without limitation, the General Partner, or the Guarantor, which is in any manner obligated to Bondowner Representative under the Loan Documents; or (i) Death or Incapacity of Borrower. The death or incapacity of Borrower, if an individual;or (j) Change In Management or Control. Except as otherwise provided in Section 6.8, the occurrence of any material management or organizational change in Borrower or in the partners,venturers or members of Borrower,including,without limitation,any partnership,joint venture or member dispute which Bondowner Representative determines, in its sole and absolute discretion, shall have a material adverse effect on the Lean, on the Property and Facility, or on the ability of Borrower or its partners, venturers or members to perform their obligations under the Loan Documents;or (k) Loss of Priority. The failure at any time of the Mortgage to be a valid first lien upon the Property and Facility or any portion thereof, other than as a result of any release or reconveyance of the Mortgage with respect to all or any portion of the Property and Facility pursuant to the terms and conditions of this Loan Agreement;or (1) Hazardous Materials. The discovery of any significant Hazardous Materials, which Borrower fails to remove or remediate within sixty(60) days of discovery to Bondowner Representative's satisfaction in, on or about the Property or Facility subsequent to the Effective Date. Any such Hazardous Materials shall be "significant" for this purpose if said Hazardous Materials, in Bondowner Representative's sole discretion, have a materiallyadverse impact on the value of the Property and Facility;or (m) Investor Limited Partner Bankruptcy. Until Investor Limited'Partner has made each and every Capital Contribution to Borrower contemplated under this Loan Agreement and the Partnership Agreement, the occurrence of any of the events specified in Sections 17.1(f) or 17.1(g) of this Loan Agreement with respect to Investor Limited Partner, on whose financial resources Bondowner Representative has relied, or any corporations, partnerships or limited liability companies that are partners,venturers or members of Investor Limited Partner;or (n) Other Bankruptcy. The occurrence of any of the events specified in Sections 17.1(f) or 17.1(8) of this Loan Agreement with respect to Contractor (unless Contractor is replaced by a contractor satisfactory to Bondowner Representative within thirty (30) days of such occurrence and such thirty (30) day period does not materially adversely impact the Tax Credits; or 55 (o) Adverse Financial Condition - Other Than Borrower. Any material adverse change in the financial condition of the Guarantor from the condition shown on the financial statements submitted to Bondowner Representative and relied upon by Bondowner Representative in making the Loan, the materiality and adverse effect of such change in financial condition to be reasonably determined by Bondowner Representative in accordance with its credit standards and underwriting practices in effect at the time of making such determination;or (p) Partnership Documents. The occurrence of a breach or default under the Partnership Documents, or failure to satisfy any of the terms, covenants or conditions of or under the Partnership Documents,including,without limitation,the failure,of Investor Limited Partner to make the Capital Contributions following the expiration of any cure period provided for in the Partnership Documents;or (q) Unsecured Indemnity Agreement. The occurrence of a default (and the expiration of all applicable cure periods) under that certain Hazardous Materials Indemnity Agreement (Unsecured)executed by General Partner,as Indemnitor,in favor of Bondowner Representative, and dated of even date herewith,or (r) Tax Credits. The loss of the Tax Credits for the Property and Facility or the failure to promptly reapply for the Tax Credits upon Bondowner Representative's request or expiration of the Tax Credits. (s) Co-Construction Loan Documents. The expiration or termination or occurrence of a breach or default under the Co-Construction Loan Documents or any documents in connection therewith, or failure to satisfy any of the terms or covenants or conditions of or under the Co- Construction Loan Documents and any documents in connection therewith, in either case following expiration of any applicable cure periods provided therein. (t) Transfer of Assets. The sale, assignment, pledge, hypothecation, mortgage or transfer of assets of Borrower other than as otherwise contemplated by the Partnership Agreement,permitted herein or in the ordinary course of business of said entity. Section 17.2. I&medies. (a) Whenever any Default shall have occurred and be continuing, the Trustee, as assignee of the County,may declare all the payments under the Loan payable for the remainder of the Term of this Loan Agreement (in an amount equal to that necessary to pay in full the Bonds and the interest thereon, assuming acceleration of the Bonds under the Indenture and to pay all other indebtedness due under the Loan Documents and under this Loan Agreement and the Loan Documents) to be immediately due and payable,whereupon the same shall become immediately due and payable by the Borrower. (b) Subject in all events to the provisions of Section 17.12 hereof, whenever any Default shall have occurred and be continuing,any one or more of the following remedial steps may also be taken to the extent permitted by law: (i) the Trustee, as assignee of the County, shall take whatever action at law or in equity as it is directed to take by the Bondowner Representative to collect all sums then due and thereafter to become due,or to enforce performance and observance of any obligation,',agreement,covenant, representation or warranty of the Borrower, under this Loan Agreement or any other Related Document, or the Guarantor under any of the Other Related Documents, or to foreclose the real property and/or personal property 56 security for such obligations, or to otherwise compensate the County, the Trustee and the Bondholders for any damages on account of such Default;and (ii) the County(without the prior written consent of the Trustee if the Trustee is not enforcing the County's rights in a manner to protect the County or is otherwise taking action that brings adverse consequences to the County), may take whatever action at law or in equity may appear necessary or appropriate to enforce its rights to indemnification under Section 6.21, 6.29, 9.4, 17.5 and 18.32 and to collect all sums then due and thereafter to become due to the County under Sections 3.3(b) and (c) and 3.4 of this Loan Agreement; provided that the County will not take any action which would prejudice the rights of the Trustee. (c) All of Bondowner Representative's and County's rightsand remedies are cumulative. If any Default occurs,County's obligation to lend and Bondowner Representative's obligation to consent to disbursements of Bond Proceeds under the Loan Documents automatically terminate,and Bondowner Representative in its sole discretion may withhold any one or more disbursements. Bondowner Representative may also withhold any one or more disbursements after an event occurs that, with notice or the passage of time, could become a Default. No disbursement of Loan funds by Bondowner Representative will cure any default of the Borrower,unless Bondowner Representative agrees otherwise in writing in each instance. (d) If the Borrower becomes the subject of any Insolvency Proceeding, all of the Borrower's obligations under the Loan Documents automatically become immediately due and payable upon the filing of the petition commencing such proceeding, all without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character. Upon the occurrence of any other Default, all of the Borrower's obligations under the Loan Documents may become due and payable immediately without notice of default,presentment or demand for payment,protest or notice of nonpayment or dishonor or other notices or demands of any kind or character, all at Bondowner Representative's option, exercisable in its sole discretion. If such acceleration occurs,Bondowner Representative may apply any undisbursed Loan funds and any sums in the Contribution Account to the Borrower's obligations under the Loan Documents, in any order and proportions in Bondowner Representative's sole discretion. (e) Also upon any Default that occurs during the course of construction of the Facility, Trustee or Bondowner Representative in its sole discretion may enter and take possession of the Project Premises,whether in person, by agent or by court-appointed receiver, and take any and all actions that Bondowner Representative in its sole discretion may consider necessary to complete construction of the Facility, including making 'changes in plans, specifications, work or materials and entering into, modifying or terminating any contractual arrangements, all subject to Bondowner Representative's right at any time to discontinue any work without liability. By choosing to complete the Facility, Bondowner Representative does not assume any liability to the Borrower or any other person for completing them or for the manner or quality of their construction, and the Borrower expressly waives any such liability. If Bondowner Representative exercises any of the rights or remedies provided in this clause (e), that exercise will not make Bondowner Representative, or cause Bondowner Representative to be deemed, a partner or joint venturer of the Borrower. Bondowner Representative in its sole discretion may choose to complete construction in its own name. All sums expended by Trustee or Bondowner Representative in completing construction will be considered to have been disbursed to the Borrower and will be secured by the Mortgage and any other collateral held by Trustee in connection with the Loan; any sums of principal will be considered to be an additional loan to the Borrower bearing interest at the Default Rate, and be secured by the Mortgage and any other collateral held by Trustee in connection with the Loan. For these 57 purposes Bondowner Representative, in its sole discretion, may reallocate any line item or cost category of the cast breakdown. Section 17.3. Imposition of Junds. Any amounts collected pursuant to action taken under Section 17.2 (other than sums collected for the County on account of its rights to indemnification and certain direct payments to be made under Sections 3.3(b), 3.4, 6.21, 6.29, 9.4, 17.5 and 13.32 which sums shall be paid directly to the County) shall be applied in accordance with the provisions of the Indenture. Section 17.4. Nonexclusive Remedies. No remedy herein conferred upon or reserved to the County or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and. shall be in addition to every other remedy given under this 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 County or the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required or as may be required by law. Section 17.5. AttorneYs' Pees and E=ennaes,. If a Default shall exist under this Loan Agreement and the County,the Bondowner Representative or the Trustee employ attorneys or incur other expenses for the collection of any amounts due hereunder, or for the enforcement of performance of any obligation or agreement on the part of the Borrower, the Borrower shall upon demand pay to the County,the Bondowner Representative or the Trustee,as the case may be,the reasonable fees of such attorneys and such other expenses so incurred. Section 17.6. :effect of Waiver. In the event any agreement contained in this Loan Agreement is breached by either party and thereafter such breach is waivedby 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. Section 1.7.7. County and Trustee May Pile Proofs of QaWi. In case of the pendency of any receivership,insolvency,liquidation,bankruptcy,reorganization, arrangement, adjustment, composition or ether judicial proceeding relative to the Borrower or the property of the Borrower,the Trustee or the County(with the prior consent of the Trustee),shall be entitled and empowered,by intervention in such proceeding or otherwise: (a) to file and prove a claim and to file such other papers or documents as may be necessary or advisable in order to have the claims of the County and the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the County and Trustee,their agents and counsel)allowed in such judicial proceeding;and (b) to collect and receive any moneys or other property payable or deliverable on any such claims; and to distribute the same. Section 17.8. Ides oration of Positions. If the County or the Trustee',has instituted any proceeding to enforce any right or remedy under this Loan Agreement,and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the County or the Trustee, then and in every such case the Borrower, the Trustee and the County shall, subject to any determination in the proceeding,be restored to the positions they held prior to commencement'of such proceedings,and thereafter all rights and remedies of the County and the Trustee shall continue as though no such proceeding had been instituted. 58 Section 17.9. Suits To Protct the Project. If the Borrower shall fail to do so after 30 days prior written notice from the County or the Trustee, the County or the Trustee shall have power to institute and to maintain such proceedings as either of them may deem expedient to prevent any impairment of the Project or any portion thereof, by any acts which may be unlawful or in violation of this Loan Agreement, and such suits and proceedings as the County or the Trustee may deem expedient to protect its interests in the Project or any portion thereof, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of, or compliance with, such enactment, rule or order would impair or adversely affect the Project or be prejudicial to the interests of the Trustee. Section 17.10. Performance by Third Pa t1r ies. The Trustee or the County, with the consent of the Trustee,may permit third parties to perform any and all acts'or take such action as may be necessary for and on behalf of the Borrower to cure any Default hereunder. The acceptance by the County or the Trustee of any such performance by third parties shall not in any way diminish or absolve the Borrower of primary liability hereunder. Section 17.11. Exerg;ise of the County'sRemedies Bondholders. Whenever any Default shall have happened and be subsisting the Trustee may, but except as otherwise provided in the Indenture shall not be obligated to,exercise any or all of the rights of the County under this Article 17,with notice to the County. Section 17.12. T invited Regourse C �il?gat"o�n.. (a) Prior to the Conversion Date, the Borrower is personally liable for any deficiency in the payment of any "Secured Obligations" (as defined in the Mortgage) that may remain following a judicial foreclosure (or, to the extent permitted by law, a nonjudicial foreclosure) of the Mortgage. (b) Following the Conversion Date, the County, the Trustee, and the Bondowner Representative will neither seek nor obtain judgment against the Borrower, any General Partner or any other partner of Borrower for payment of principal or interest under the Notes or for other obligations funder the Loan Documents following a judicial foreclosure (or to the extent permitted by law, a nonjudicial foreclosure) of the Mortgage, and the Trustee's sole recourse against the Borrower, any General Partner or any other partner of Borrower for any default in the payment of principal or interest is limited to the Project and any other collateral of the Loan; provided, however, that the limitation of liability set forth in this Section will not prejudice or affect the County's rights to: (i) Name the Borrower or any General Partner as a party defendant in any action,proceeding,reference or arbitration,subject to the limitations of this Section;or (ii) Assert any unpaid amounts on the Loan as a defense or offset to or against any claim or cause of action made or alleged against the County by the Borrower; any General Partner or joint venturers, or any guarantor or indemnitor in connection with the Loan;or (ii) Exercise self-help remedies such as set off or nonjudicial foreclosure against or sale of any real or personal property collateral or security;or (iv)' Collect or recover rents, insurance proceeds, amounts payable under surety bonds or letters of credit, condemnation or any other awards arising out of any public action, or any damages or awards arising out of any damage or injury to, or decrease in value of,all or part of the collateral for the Loan;or 59 (v) Collect or recover an amount from the Borrower or any General Partner equal to any rents or other sums of any type that are not applied as required by this Loan Agreement after an Default has occurred and while it is continuing;or (vi) Enforce and collect or recover all sums owing under Sections 3.3(b) and (c), 3.4, 6.21, 6.29, 17,5, 18.32 and Article 9 of this Loan Agreement by the Borrower provided, however, the exclusion of Section 6.21 shall not include losses sustained by reason of nonpayment of principal, interest or premium, if any, on the Bonds or with respect to the Loan;or (vii) Enforce any and all of the Borrower's and the GeneralPartners' obligation under this Loan Agreement relating to preserving the condition of the Project or the priority of the County's interest in the Project,including obligations',to pay all taxes and charges that may affect or become a lien on the Project, to maintain the Project and all insurance'in accordance with this Loan Agreement, and to repay all sums advanced by the County,or the Trustee for any such purposes;or (viii) Enforce any agreement of the Borrower or any other party(other than this Loan Agreement) specifically stating that it is not subject to the limitation of liability contained in this Section;or (ix) Recover any expenses, damages or costs, including attorneys' fees (including the allocated costs for services of in-house counsel), that the County or the Trustee may incur because of the Borrower's fraud, willful misrepresentation, misapplication of funds or waste or intentional damage of or to any collateral for the Loan;or (x) Enforce any and all of the Borrower's obligations to complete construction on the Project as contemplated by this Loan Agreement, including obligations to repay sums advanced by the County or the Trustee for such purpose. (c) Enforce any indemnity or other obligation of the Borrower',arising from or in connection with the issuance,enforcement or performance of any set aside letter. The limitation of liability set forth in this Section 17.12(b)will be deemed void and have no force or effect if Borrower or any General Partner attempts to materially delay any foreclosure of or on the Mortgage or any other collateral for the Loan, or if the Borrower or any General Partner claims that this Loan Agreement or any related documents are invalid or unenforceable to an extent that would preclude foreclosure. Nothing contained in this Section shall impair the validity of this Loam Agreement or any related documents or any lien or security interest created or perfected by this Loan Agreement. 60 ARTICLE 18 MISCELLANEOUS PROVISIONS Section 18.1. Inter mnity. Borrower hereby agrees to defend, indemnify and hold harmless Bondowner Representative, its directors, officers, employees, agents, successors and assigns from and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including, without limitation, attorneys' fees and expenses) whichBondowner Representative may incur as a direct or indirect consequence of: (a) the purpose to which Borrower applies the Bond Proceeds; (b) the failure of Borrower to perform any obligations as and when required by this Loan Agreement or any of the other Loan Documents; (c) any failure at any time of any of Borrower's representations or warranties to be true and correct; or (d) any act or omission by Borrower, constituent partner or member of Borrower,any contractor,subcontractor or material supplier,engineer,architect or other person or entity with respect to any of the Property or Facility. Borrower shall immediately pay to Bondowner Representative upon demand any amounts owing under this indemnity, together with interest from the date the indebtedness arises until paid at the rate of interest applicable to the principal balance of the Notes. BORROWER'S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS BONDOWNER REPRESENTATIVE SHALL SURVIVE CANCELLATION OF THE NOTES AND THE RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE MORTGAGE. Notwithstanding the foregoing,Borrower shall not be obligated to indemnify Bondowner Representative or such other persons or entities against their own gross negligence or willful misconduct. Section 18.2. Form of Dgcumgntt . The form and substance of all documents, instruments, and forms of evidence to be delivered to Bondowner Representative under the terms of this Loan Agreement and any of the Loan Documents shall be subject to Bondowner Representative's approval. Section 18.3. No Third Parties Benefited. No person other than the County, the Trustee, the Bondowner Representative and the Borrower and their permitted successors and assigns shall have any right of action under any of the Loan Documents. Section 18.4. Notices. All notices, demands, or other communications under this Loan Agreement and the other Loan Documents shall be in writing and shall be delivered to the appropriate party at the address set forth in the Indenture (subject to change from time to time by written notice to all other parties to this Loan Agreement). All communications shall be deemed served upon delivery of,or if mailed, upon the first to occur of receipt or the expiration of three (3) days after the deposit in the United States Postal Service mail, postage prepaid and addressed to the address of Borrower or Bondowner Representative at the address specified; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. Section 18.5. At,tic rney-in-FFact. Borrower hereby irrevocably appoints and authorizes Bondowner Representative, as Borrower's attorney-in-fact, which agency is coupled with an interest, to execute and/or record in Bondowner Representative's or Borrower's name any notices, instruments or documents that Bondowner Representative deems appropriate to protect Bondowner Representative's interest under any of the Loan Documents. Section 18.6. moons Borrower agrees that Bondowner Representative, in exercising the rights, duties or liabilities of Bondowner Representative or Borrower under the Loan Documents,may commence, appear in or defend any action or proceeding purporting to affect the Property, the Facility, or the Loan Documents and Borrower shall immediately reimburse 61 Bondowner Representative upon demand for all such expenses so incurred or paid by Bondowner Representative, including, without limitation, attorneys' fees and expenses and court costs. Section 18.7. Right ht f Contest.t. Borrower may contest in good faith any claim, demand, levy or assessment (other than liens and stop notices) by any person other than Bondowner Representative which would constitute a Default if: (a)Borrower pursues the contest diligently, in a manner which Bondowner Representative determines is not prejudicial to Bondowner Representative, and does not impair the rights of Bondowner Representative under any of the Loan Documents; and (b) Borrower deposits with Bondowner Representative any funds or other forms of assurance which Bondowner Representative in good faith determines from time to time appropriate to protect Bondowner Representative from the consequences of the contest being unsuccessful. Borrower's compliance with this Section shall operate to prevent such claim,demand,levy or assessment from becoming a Default. Section 18.8. Relationahipof Parties. The relationship of Borrower and Bondowner Representative under the Loan Documents is, and shall at all times remain, solely that of Borrower and Bondowner Representative, and Bondowner Representative neither undertaken nor assumes any responsibility or duty to Borrower or to any third party with respect to the Property or Facility, except as expressly provided in this Loan Agreement and the other Loan Documents. Section 18.9. Delay Qutside Bondowner R rp esent tive's _Control. Bondowner Representative shall not be liable in any way to Borrower or any third party for Bondowner Representative's failure to perform or delay in performing under the Loan Documents (and Bondowner Representative may suspend or terminate all or any portion of Bondowner Representative's obligations under the Loan Documents) if such failure to perform or delay in performing results directly or indirectly from, or is based upon, the action, inaction, or purported action, of any governmental or local authority, or because of war, rebellion, insurrection, strike, lock-out,boycott or blockade (whether presently in effect, announced or in the sole judgment of Bondowner Representative deemed probable), or from any Act of God or other cause or event beyond Bondowner Representative's control Section 18.101. Attorneys' Fees and Expenses; Enforcement. If any attorney is engaged by any party to this Loan Agreement to enforce or defend any provision of this Loan Agreement,any of the other Loan Documents or Other Related Documents,or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, Borrower shall immediately pay, upon demand, the amount of all attorneys' fees and expenses and all costs incurred by any party in connection therewith, together with interest thereon from the date of such demand until paid at the Default Rate. Section 18.11. Immediately Available Funds. Unless otherwise expressly provided for in this Lean Agreement,all amounts payable by Borrower to Bondowner Representative shall be payable only in United States currency,immediately available funds. Section 18.12. Bondowner &12resentatiye's Consent. Wherever in this Loan Agreement there is a requirementfor Bondowner Representative's consent and/or a document to be provided or an action taken "to the satisfaction of Bondowner Representative", it is understood by such phrase that Bondowner Representative shall exercise its consent, right or judgment in a reasonable manner given the specific facts and circumstances applicable at the time. Section 18.13. Signs: DuWic4. Bondowner Representative may place on the Property reasonable signs standard to construction loan transactions stating that construction financing 62 is being provided by the Bonds which have been purchased by Bondowner Representative. The Borrower hereby agrees that Bondowner Representative, at its expense, may publicize the financing of the Project Premises and,in connection therewith,may use the address, description and a photograph or other illustrative drawing of the Project Premises. Section 18.14. Bondgw,ner Representative's Agents. Bondowner Representative may designate an agent or independent contractor to exercise any of Bondowner Representative's rights under this Loan Agreement and any of the other Loan Documents. Any reference to Bondowner Representative in any of the Loan Documents shall include Bondowner Representative's agents,employees or independent contractors. Section 18,15. Tax Service. Bondowner Representative is authorized to secure, at Borrower's expense, a tax service contract with a third party vendor which shall provide tax information on the Property and Facility satisfactory to Bondowner Representative. Section 18.16. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS LOAN AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR LOAN AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND EACH PARTY HEREBY AGREES AND CONSENTS; THAT ANY PARTY TO THIS LOAN AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COUNT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY. Section 18.17. Ecyrability. If any provision or obligation under this Loan Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from the Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of the Loan Documents, provided, however, that if the rate of interest or any other amount payable under the Notes or this Loan Agreement or any other Loan Document, or the right of collectibility therefor, are declared to be or become invalid, illegal or unenforceable, Bondowner Representative's obligations to make advances under the Loan Documents shall not be enforceable by Borrower. Section 18.18. Time. Time is of the essence of each and every term of this Loan Agreement. Section 18.19. Headings. All Article, Section or other headings appearing in this Loan Agreement and any of the other Loan Documents are for convenience of reference only and shall be disregarded in construing this Loan Agreement and any of the other Loan Documents. Section 18.20. Goyerning Law. This Loan Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of California, except to the extent preempted by federal laws. Borrower and all persons and entities in any manner obligated to Bondowner Representative under the Loan Documents consent to the jurisdiction 63 of any federal or State court within the Mate having proper venue and also consent to service of process by any means authorized by State or federal law. Section 18.21. Integration; Interpretation. The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements,written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference in any of the Loan Documents to the Property or Facility shall include all or any part of the Property or Facility. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Bondowner Representative in writing. Section 18.22. Tont and -Several Liab'liAy. The liability of all persons and entities obligated in any manner under this Loan Agreement and any of the Loan Documents shall be joint and several Section 18.23. Counterparts. This Loan Agreement, any of the other Loan Documents (except for the Notes), any other Related Documents and any subsequent modifications, amendments,waivers,consents or supplements thereof,if any,may be executed in any number of counterparts,each of which when executed and delivered shall be deemed to be an original and all such counterparts together,shall constitute one and the same instrument. Section 18.24. Amounts Remaining in Funds. Except during the continuance of a Default, any amounts remaining in the Funds created under Article 5 of the Indenture upon expiration or earlier termination of this Loan Agreement,as provided herein shall be distributed as provided in Section 5.12 of the Indenture. Section 18.25. Bindin_Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the County and Borrower and their respective successors and assigns. Insofar as this Loan Agreement provides for rights of the Trustee, this Loan Agreement shall also inure to the benefit of the Trustee. Section 18.26. Amendments_ Charges and Modification. Except as otherwise provided in this Loan Agreement or in the Indenture, subsequent to the issuance of the Bonds and before the lien of the Indenture is satisfied and discharged in accordancewith its terms,this Loan Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of the holders of a majority of the aggregate principal amount of the Bonds then outstanding as provided in Article 11 of the Indenture (and the County to the extent any proposed amendment,change or modification relates to the Reserved Rights). Section 18.27. Rec€-uire�d Approvals. Consents and approvals required by this Loan Agreement to be obtained from.the Borrower,the County or the Trustee shall be in writing and shall not be unreasonably withheld or delayed. Section 18.28. Limitation on County's Liability. No covenant, agreement or obligation contained herein shall be deemed to be a covenant, agreement or obligation of any present or future member of its governing body, officer, employee or agent of the County in his or her individual capacity, and neither the members of the governing body of the County nor any officer thereof executing the Bonds shall be liable personally on the Bands or be subject to any personal liability or accountability by reason of the issuance thereof. No member of its governing body, officer, employee or agent of the County shall incur any personal liability with respect to any other action taken by him or her pursuant to this Loan Agreement or the Act, provided such member, officer, employee or agent acts in good faith. No agreements or provisions contained in this Loan Agreement nor any agreement,covenant or undertaking by the 64 County contained in any document executed by the County in connection with the Project or the issuance,sale and delivery of the Bonds,nor any breach of any pledge, obligation or agreement of the County hereunder, shall give rise to any pecuniary liability of the County or a charge against its general credit or taxing powers, or shall obligate the County financially in any way. All obligations of the County incurred hereunder shall be special, limited obligations of the County, payable solely and only from the funds and accounts pledged therefor under the Indenture. The Bonds, and the interest thereon, do not constitute a debt,liability, general or moral obligation or pledge of the faith or loan of the credit of the County. the State or any other political subdivision of the State, within the meaning of any constitutional or statutory limitation or provisions. Section 18.29. NcWaiver; Consents. No alleged waiver by Trustee, Bondowner Representative or County will be effective unless in writing,and no waiver will be construed as a continuing waiver. No waiver may be implied from any delay or failure by Trustee, Bondowner Representative or County to take action on account of any default of the Borrower or to exercise any right or remedy against the Borrower or any security. Consent by Trustee, Bondowner Representative or County to any act or omission by the Borrower may not be construed as a consent to any other or subsequent act or omission or as a waiver of the requirement for Bondowner Representative's consent to be obtained in any future or other instance. All Bondowner Representative's rights and remedies are cumulative. Section 18.30. Purpgae.and Effectof hondowner Rel2r=ntative A=�rva1. Bondowner Representative's approval of any matter in connection with the Loan is for the sole purpose of protecting the County's security and rights of Trustee and the Bondholders.' No such approval will result in a waiver of any default of the Borrower. In no event may Bondowner Representative's approval be a representation of any bind with regard to the matter being approved. Section 18.31. Ng Commitment to Increase Loan. From time to time, Bondowner Representative may approve changes to the Plans and Specifications at the Borrower's request and also require',the Borrower to make corrections to the work of construction, all on and subject to the terms and conditions of this Loan Agreement. The Borrower'acknowledges that no such action or other action by Bondowner Representative will in any'manner commit or obligate the County to increase the amount of the Loan. Section 18.32. Inde►nit Rerding_Construction anther Risks. The Borrower indemnifies,defends and holds the Indemnified Parties harmless from and against any and all Indemnified Cosh directly or indirectly arising out of or resulting from construction of any Facility on the Project Premises, including any defective workmanship or materials; or any failure to satisfy any requirements of any laws,regulations,ordinances,governmental policies or standards, reports, subdivision maps or development agreements that apply or pertain to the Project Premises;or breach of any representation or warranty made or given by the Borrower to any of the Indemnified Parties or to any prospective or actual buyer of all or any portion of the Project Premises; or any claim or cause of action of any kind by any party that any Indemnified Party is liable for any act or omission of the Borrower or any other person or entity in connection with the ownership, sale, operation or development of the Project Premises. The provisions of this Section 18.32 shall survive termination of this Loan Agreement. Section 18.33, RelatiQmhips With Other Bondmner &Presentative Customers. 'From time to time, Bondowner Representative may have business relationships with the Borrower's customers, suppliers, contractors, tenants, partners, shareholders, officers or directors, or with businesses offering products or services similar to those of the Borrower, or with persons seeking to invest in,borrow from or lend to the Borrower. The Borrower agrees that Bondowner Representative may extend credit to such parties and take any action it deems necessary to 65 collect the credit, regardless of the effect that such extension or collection of credit may have on the Borrower's financial condition or operations. The Borrower further agrees that in no event will BondownerRepresentative be obligated to disclose to the Borrower any information concerning any other Bondowner Representative customer. Section 18.34. Di5c1_osurg to, Title Co=annv. Without notice to or the consent of the Borrower,Bondowner Representative may disclose to any title insurance company insuring any interest of Bondowner Representative under the Mortgage(whether as primary insurer,coinsurer or reinsurer) any information, data or material in Bondowner .Representative's possession relating to the Borrower,the Loan,the Facility or the Project Premises. Section 18.35. Restriction on Persona Propertv. Except for the replacement of personal property made in the ordinary course of the Borrower's business with items of equal or greater value, the Borrower may not sell, convey or otherwise transfer or dispose of its interest in any personal property in which Bondowner Representative has a security interest or contract to do any of the foregoing, without the prior written consent of Bondowner Representative in each instance. Section 18.36. Interpretation. The language of this Loan Agreement must be construed as a whole according to its fair meaning,and not strictly for or against any party. Whenever the context requires,all words used in the singular will be construed to have been used in the plural, and vice versa, and each gender will include any other gender. The captions of the sections of this Loan Agreement are for convenience only and do not define or limit any terms or provisions. The word "include(s)" means "include(s), without limitation," and the word "including" means "including, but not limited to." No listing of specific',instances, items or matters in any way limits the scope or generality of any language of this Loan Agreement. Section 18.37. oan Commission. Bondowner Representative is not obligated to pay any brokerage commission or fee in connection with or arising out of the Loan. The Borrower must pay any and all brokerage commissions or fees arising out of or in connection with the Loan. Section 18.38. mlianc -w-iih Uaury Laws. Notwithstanding any other provision of this Loan Agreement, it is agreed and understood that in no event shall this Loan Agreement, with respect to the Notes or other instrument of indebtedness, be construed as requiring the Borrower or any other person to pay interest and other costs or considerations that constitute interest under any applicable law which are contracted for,charged or received pursuant to this Loan Agreement in an amount in excess of the maximum amount of interest allowed under any applicable law. In the event of any acceleration of the payment of the principal amount of the Notes or other evidence of indebtedness, that portion of any interest payment in excess of the maximum legal rate of interest, if any, provided for in this Loan Agreement or related documents shall be canceled automatically as of the date of such acceleration, or if theretofore paid, credited to the principal amount. The provisions of this Section prevail over any other provision of this Loan Agreement. Section 18.39. General Partner. The General Partner agrees that it is jointly and severally liable for performance of the Borrower's obligations under the`,Loan Documents, except as and to the extent expressly set forth in the Notes, subject to Section 17.12. 66 IN WITNESS WHEREOF, the County, the Bondowner Representative and the Borrower have caused this Loan Agreement to be executed by their duly authorized officers, all as of the date first above written. "County„ COUNTY OF CONTRA COSTA By: Deputy Director-Redevelopment "Bondowner Representative„ WELLS FARGO BANK, NATIONAL ASSOCIATION By: "Borrower" COGGINS SQUARE ASSOCIATES, a California Limited.Partnership By: BRIDGE Dousing Corporation,a California nonprofit public benefit corporation Its: General Partner By: Its: 03007.04:J4035 67 EXHIBIT A DESCRIPTION OF PROPERTY All that certain real property located in the County of Contra Costa, State of California, described as follows: Parcels , as shown on the filed in Book of Parcel Maps, Page Contra Costa County Records. A.P. Nos.: 248-191-008, -010 and -015; 148-192-004, -005, -006, -008, -009, and -010 A-1 .............. ............. F)aHBIT B DOCUMENTS Load► Documents. The documents listed below, numbered (i) through (xix), inclusive, and amendments,modifications and supplements thereto which have received the prior written consent of Bondowner Representative, together with any documents executed in the future that are approved by Bondowner Representative and that recite that they are "Loan Documents" for purposes of the Loan Agreement are collectively referred to herein as the Loan Documents. (i) The Loan Agreement. (ii) The Promissory Notes Secured by Mortgage of even date herewith in the original aggregate principal amount of the Loan made by Borrower payable to the order of County. (iii) The Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Loan Agreement and Fixture Filing of even date herewith executed by Borrower, as Trustor, to American Securities Company,as deed of trust trustee, for the benefit of Trustee. (iv) Security Agreement dated as of October 1, 1998, executed by Borrower, General Partners and Investor Limited Partner. (v) Uniform Commercial Code-National Financing Statement-Form UCC-1,dated October 1, 1998,executed by Borrower as Debtor in favor of Trustee as Secured Party (vi) Uniform Commercial Code -National Financing Statement-Form UCC-1, dated October 1, 1998, executed by Borrower and General Partners as Debtors in favor of Trustee as Secured Party. (vii) Uniform Commercial Code-National Financing Statement -Form UCC-1,dated October 1, 1998, executed by Investor Limited Partner as Debtor in favor of Trustee as Secured Party. (viii) Borrowing Certificate of even date herewith executed by (ix) Corporate Resolution Authorizing Execution of Guaranty and Endorsement and Hypothecation of Property of even date herewith certified by CORPORATION SECRETARY HERE as Secretary of NAME OF CORPORATION HERE. (x) Certificate Authorizing the Execution and Delivery of Guaranty and Endorsement and Hypothecation of Property of even date herewith executed by ------—------- (xi) Limited Liability Company Certificate Authorizing the Execution of Guaranty and Endorsement and Hypothecation of Property of even date herewith executed by PERSON OR ENTITY HERE. (xii) Corporate Resolution Authorizing Partnership Activity of even date herewith certified by CORPORATION SECRETARY HERE as Secretary of NAME OF CORPORATION HERE. B-1 I I 1 111.1-...I-............. X,................ ... ................, .. ,................ (xiii) Limited Liability Company Certificate Authorizing Partnership Activity of even date herewith executed by PERSON OR ENTITY HERE. (xiv) Assignment of Construction Contracts of even date herewith executed by Borrower and Contractor in favor of Trustee. (xv) Assignment of Architectural Agreements and Plans and Specifications of even date herewith executed by Borrower and Architect in favor of Trustee. (xvi) Assignment of Management Agreement executed by Borrower and Related Management Company in favor of Trustee. (xvii) Assignment of Capital Note dated executed by Borrower and Investor Limited Partner in favor of Trustee. (xviii) Subordination Agreement dated as of October 1, 1998 executed by the County, the Contra Costa County Redevelopment Agency and Borrower in favor of Trustee. (xix) Opinion of Borrower's Legal Counsel. QLher Rj&ted Documents(Which Are Not Loan Documents): (i) Completion Guaranty dated as of October 1, 1998, executed by the General Partner,as Guarantor in favor of Trustee. (ii) Repayment Guaranty dated as of October 1, 1998 executed by the General Partner,as Guarantor in favor of Trustee. (iii) Funding Guaranty dated as of October 1. 1998,executed by the General Partner, as Guarantor, in favor of Trustee. (iv) Hazardous Materials Indemnity Agreement (Unsecured) dated as of October 1, 1998,executed by and between BRIDGE Housing Corporation,as Indemnitor and Trustee. B-9 ............ ............... EXHIBIT FINANCIAL REQUIREMENT ANALYSIS The Financial Requirement Analysis set forth herein represents an analysis of the total costs necessary in Borrower's estimation to perform Borrower's obligations under the Loan Documents. Colurnn A, "Total Budget", sets forth Borrower's representation of the maximum costs for each Item specified in Column A. Column B, "Prepaid Items", sets forth Borrower's representation of costs that Borrower has paid or has caused to be paid from other sources of funds for each Item specified in Column B. Column C, "Borrower's Funds to be Disbursed", sets forth Borrower's representation of costs that Borrower will pay or will cause to be paid from other sources of funds for each Item specified in Column C. Column D, "Deferred Costs," sets forth the costs for each item in Column D,payment of which has been deferred. Column E, 'Bond Disbursement Budget", sets forth the portion of the Loan and Borrower's Funds which has been allocated for each Item specified in Column E and will be disbursed pursuant to the terms,covenants,conditions and provisions of Exhibit D of the Loan Agreement and the Loan Documents. Unless specified otherwise, all reference to Columns or Items in the Loan Agreement refer to Columns or Items in this Exhibit C. C-1 EXI-IIBIT D DISBURSEMENT PLAN D_1 .................................................. . . EXHIBIT E REPAIR AND REPLACEMENT AGREEMENT E-1 EXHIBIT F ISSUE I PROWSSORY NOTE $5,793,00 San Francisco,California October 1, 1998 FOR VALUE RECEIVED, COGGINS SQUARE ASSOCIATES, a California Limited Partnership (the 'Borrower"), promises to pay in lawful money of the United States of America to the order of the COUNTY OF CONTRA COSTA, its successors or assigns (the "County"), the principal sum of .Five Million Seven Hundred Ninety Three Thousand Dollars($5,793,000),with interest thereon from the date of delivery hereof at the rate per annum on the outstanding principal balance as provided in the Loan Agreement (as defined below). Terms not otherwise defined in this Note shall have the respective meanings as set forth in the Indenture(as defined below)and the Loan Agreement. The principal and interest on this Note shall be payable at the times and in the amounts determined as provided in Section 3.3 of the Loan Agreement dated as of October 1, 1998, among the County, the Borrower and Wells Fargo Bank, National Association. (the "Loan Agreement"), with the final payment of all outstanding principal and interest on this Nate to be paid on October 1, 2028. Both principal and interest under this Note shall be payable at the Principal Office of BNY Western Trust Company,in San Francisco,California(the "Trustee"). This Note is subject to optional and mandatory prepayment as provided in Section 14.1 of the Loan Agreement. This Note is made pursuant to the Loan Agreement wherein, among other things, the County has agreed to lend to the Borrower and the Borrower has agreed to take a loan in the principal amount above, being the proceeds from the sale of the County's County of Contra Costa Multifamily Housing Revenue Bonds (Coggins Square Apartments) 1998 Series D, Issue I, in the principal amount of $5,793,000 (the "Issue I Bonds"), said proceeds to be disbursed to the Borrower from time to time in accordance with the provisions of the Loan Agreement and the Indenture. The Issue I Bonds are being issued by the County pursuant to an Indenture of Trust dated as of October 1, 1998,between the County and the Trustee (the"Indenture"). Upon the occurrence of any Default as described in Section 17.1 of the Loan Agreement, all unpaid principal of and interest on this Note may be declared to be due and payable in the manner and with the effect provided, in the Loan Agreement. Failure to exercise this option shalt not constitute a waiver of the right to exercise the same in the event of any subsequent occurrence of such an Default. The indebtedness evidenced by this Note is secured by a Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of October 1, 1998,and by certain ether personal property collateral The obligations of the Borrower to make Basic Payments, Additional Charges and payment of any other amounts due under the Loan Agreement shall be absolute and unconditional, and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, setoff, recoupment or counterclaim which the Borrower may have or assert against the County, the Trustee or any other Person; provided that the Basic Payments and all obligations of the Borrower (other than the County's Reserved Rights) under the Loan Documents shall be nonrecourse as and to the extent provided in Section 17.12 of the Loan Agreement only after the Conversion Date. If this Note shall be placed in the hands of an attorney or attorneys for collection, the Borrower agrees to pay, in addition to the amount due hereon, the reasonable costs and expenses of collection, including reasonable attorneys' fees. All parties to this Note, whether principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor. F-1 The provisions of Section 17.12(b) of the Loan Agreement are incorporated herein by reference. Executed as of this 1st day of October, 1998. COGGINS SQUARE ASSOCIATES,a California Limited Partnership By: BRIDGE Housing Corporation,a California nonprofit';public benefit corporation Its: General Partner By: Its: ENDORSEMENT TO NOTE, dated October 1, 1998,in the principal amount of$5,793,000, made by Coggins Square Associates, a California Limited Partnership, payable to the order of the COUNTY OF CONTRA COSTA. PAY TO THE ORDER OF BNY Western Trust Company, as Trustee. COUNTY OF CONTRA COSTA By: Deputy Director-Redevelopment F-2 ISSUE II PROMISSORY NOTE $3,652,053 San Francisco,California October 1, 1998 FOR VALUE RECEIVED,COGGINS SQUARE ASSOCIATES, a California Limited Partnership (the "Borrower"),promises to pay in lawful money of the United States of America to the order of the COUNTY OF CONTRA COSTA, its successors or assigns (the "County") the principal sum of Three Million Six Hundred Fifty Two Thousand Fifty Three Dollars ($3,652,053),with interest thereon from the date of delivery hereof at the rate per annum on the outstanding principal balance as provided in the Loan Agreement(as defined below). Terms not otherwise defined in this Note shall have the respective meanings as set forth in the Indenture (as defined below) and the Loan Agreement. The principal and interest on this Note shall be payable at the times and in the amounts determined as provided in Section 3.3 of the Loan Agreement dated as of October 1, 1998, among the County, the Borrower and Wells Fargo Bank, National Association (the "Loan Agreement"), with the final payment of all outstanding principal and interest on this Note to be paid on 1, . Both principal and interest under this Note shall be payable at the Principal Office of BNY Western Trust Company in San Francisco, California (the "Trustee"). This Note is subject to optional and mandatory prepayment as provided in Section 14.1 of the Loan Agreement. This Note is made pursuant to the Loan Agreement wherein, among other things, the County has agreed to lend to the Borrower and the Borrower has agreed to take a loan in the principal amount above, being the proceeds from the sale of the County's County of Contra Costa Multifamily Housing Revenue Bands (Coggins Square Apartments) 1998 Series D, Issue Il, in the principal amount of $3,652,053 (the "issue II Bonds"), said proceeds to be disbursed to the Borrower from time to time in accordance with the provisions of the Loan Agreement and the Indenture. The Issue II Bonds are being issued by the County pursuant to an Indenture of Trust dated as of October 1, 1998,between the County and the Trustee(the"Indenture"). Upon the occurrence of any Default as described in Section 17.1 of the Loan Agreement, all unpaid principal of and interest on this Note may be declared to be due and payable in the manner and with the effect provided in the Loan Agreement. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent occurrence of such an Default. The indebtedness evidenced by this Note is secured by a Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of October 1, 1998, and by certain other personal property collateral. The obligations of the Borrower to make Basic Payments, Additional Charges and payment of any other amounts due under the Loan Agreement shall be absolute and unconditional, and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, setoff, recoupment or counterclaim which the Borrower may have or assert against the County, the Trustee or any other Person; provided that the Basic Payments and all obligations of the Borrower (other than the County's Reserved Rights) under the Loan Documents shall be nonrecourse as and to the extent provided in Section 17.12 of the Loan Agreement only after the Conversion Date. If this Note shall be placed in the hands of an attorney or attorneys for collection, the Borrower agrees to pay, in addition to the amount due hereon, the reasonable costs and expenses of collection, including reasonable attorneys' fees. All parties to this Note, whether principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor. F-3 Executed as of this 1st day of October, 1998. COGGINS SQUARE ASSOCIATES,a California Limited Partnership By: BRIDGE Housing Corporation,a California nonprofitpublic benefit corporation Its: General Partner By: Its: ENDORSEMENT TO NOTE,dated October 1, 1998, in the principal amount of$3,652,053,made by Coggins Square Associates, a California Limited Partnership, payable to the order of the COUNTY OF CONTRA COSTA. PAY TO THE ORDER OF as Trustee. COUNTY OF CONTRA COSTA By: Deputy Director- Redevelopment F-4 RECORDING REQUESTER BY AND WHEN RECORDED MAIL TO: WELLS FARGO BANK, NATIONAL ASSOCIATION Community Lending Department 111 Sutter Street,Suite 700 Sari Francisco, CA 94105 Attn: Margaret Schrand Loan No. SUBORDWATION AGREEMENT (Deeds of Trust to Deed of Trust) NOTICE. THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT ("Agreement") is made October 1, 1998, by COGGINS SQUARE ASSOCIATES, owner of the real property hereinafter described ('Owner'), CONTRA COSTA COUNTY REDEVELOPMENT AGENCY{"Agency`} and COUNTY OF CONTRA COSTA("County"},holder of the deeds of trust described below;in favor of[NAME OF BOND TRUSTEE],("Trustee"). RECITALS A. Reference is made to the following deeds of trust(collectively,the"Subordinate Mortgages")which have been executed or are proposed to be executed by Owner, each of which will encumber the property described on Exhibit A attached hereto(which property,together with all improvements now or hereafter located on the property,is hereinafter referred to as the"Property"): (a) [Deed of Trust#1]executed as of October_, 1995 by Owner,as trustor, naming Agency as beneficiary and as trustee,to be recorded in the official records of Contra Costa County,California (b) [Deed of Trust#2]executed as of October_, 199€3 by Owner,as trustor,naming Agency as beneficiary and as trustee,to be recorded in the official records of Contra Costa County,California (c) [Deed of Trust]executed as of October_, 1998 by Owner, as trustor,naming County as beneficiary and as trustee,to be recorded in the official records of Contra Costa County,California B. Owner has executed,or proposes to execute,a Construction Deed of Trust with Absolute Assignment of Leases and Dents, Security Agreement and Fixture Filing ("Trustee's Deed of Trust")dated as of October 1, 1998, naming Trustee as beneficiary and American Securities Company as trustee. The Trustee's Deed of Trust secures, among other things,the obligations of Owner under a promissory note("Note)made by Owner to the order of County, as issuer of certain multifamily housing revenue bonds, in the principal sum of TEN MILLION AND N01100THS DOLLARS ($10,000,000) the loan evidenced by the Note (the "Loan"), is being matte pursuant to a Loan Agreement (the "Loan Agreement)executed as of October 1,1998,among Owner,Trustee and Wells Fargo Bank, National Association. The Loan Agreement,the Note,the Trustee's Deed of Trust,and the other instruments LA2:LMY\OTHERV100\1I146M.I Page 1 of 6 SUSAGOT WFRE14(REV 7/97) Loan No. LOAN NUMBER and documents which relate to or secure the obligations under the Loan shall be referred to collectively as the"Loan Documents"). Trustee's Deed of Trust is to be recorded concurrently herewith. C. As a condition to funding of the Loan,Trustee requires that Trustee's Deed of Trust be unconditionally and at all times remain a lien or charge upon the Property,prior and superior to all the rights of Agency and County under their respective Subordinate Mortgages and that Agency and County specifically and unconditionally subordinate their respective deeds of trust to the lien or charge of Trustee's Deed of Trust. D, Agency, County and Owner all agree to the subordination of the Subordinate Mortgages in favor of Trustee. THEREFORE,for valuable consideration and to induce Trustee to make the Loan,Owner,Agency and County hereby agree for the benefit of Trustee as follows: 1. Trustee's Deed of Trust and any modifications, renewals or extensions thereof, shall unconditionally be and at all times remain a lien or charge on the Property prior and superior to the rights of Agency and County under their respective Subordinate Mortgages. 2. This Agreement shall be the whole agreement with regard to the subordination of Agency's and County's respective Subordinate Mortgages and shall supersede and cancel, but only insofar as would affect the priority of Trustee's Deed of Trust,any prior agreements as to such subordination, including, without limitation, those provisions, if any, contained in the Subordinate Mortgages which provide for the subordination of the Subordinate Mortgages to a deed or deeds of trust or to a mortgage or mortgages. 3. The parties hereto agree to cooperate with each other and perform any acts and execute, acknowledge and deliver any additional agreements,documents,or instruments that may be reasonably necessary or desirable to carry out the provisions or to effectuate the purpose of this Agreement, including, without limitation, execution, acknowledgment, delivery and recordation of any document necessary to clear title to the Property and Improvements after a foreclosure under the Trustee"s Deed of Trust,' or a transfer of the Property and Improvements by an assignment or a deed in lieu of foreclosure under the Trustee's Deed of Trust. Agency and County further declare,agree and acknowledge for the benefit of Trustee,that: 4. Trustee,in making disbursements of proceeds of the Loan,is under no obligation or duty to, nor has Trustee represented that it will,see to the application of such proceeds by the person or persons to whom Trustee disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in'such agreement or agreements shell not defeat the subordination herein made in whole or in part;and 5. Agency and County intentionally and unconditionally waive, relinquish and subordinate all of Agency's and County's rights,tit€es and interests in and to the Property to the lien or charge of Trustee's Deed of Trust upon the Property and understand that in reliance upon,and in consideration of,this waiver,relinquishment and subordination,specific loans and advances are being and will be made by Trustee and,as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination. Trustee covenants and agrees that: 6. In the event that the Trustee delivers to Owner a notice of default under the Loan Documents, the Lender shall deliver to Agency and County a copy of said notice concurrently with delivery LA2:LMYk0THEF\1=1I146M.I Page 2 of 6 SUBAGOT WFRE14(REV 7197) Loan No, LOAN NUMBER to Owner, and the County or Agency shall have the right(but not the obligation)to cure any or all defaults specified in said notice for a period of ninety(90) days after the date of such notice. 7. If,prior to any foreclosure sale of the Property under the Trustee's Deed of Trust,Agency or County takes title to or possession of the Property and cures the outstanding defaults under the Loan, if any,Trustee hereby agrees not to exercise any rights it may have to declare a default and accelerate its Loan by reason of the transfer of title or possession to Agency or County,or if acceleration has already occurred, Lender hereby agrees that it will reinstate the Loan at that time;and agrees that it will recognize Agency or County as borrower under the Loan under the same terms and conditions of said Loan, if Agency or County agrees to assume and perform Owner's obligations under said Loan. [DISCUSS APPLICABILITY IN BOND FINANCING] 8. if Agency or County takes title to the Property and cures the outstanding defaults under the Loan Documents, if any, Agency or County shall have the right to transfer the Property to another housing developer reasonably approved in writing by Trustee. to connection with any such transfer approved by Trustee,Trustee agrees that such transfer shall not constitute a default under the Loan Documents and Trustee shall not exercise any rights it may have to accelerate the Loan as a result of such transfer. [DISCUSS APPLICABILITY IN BOND FINANCING] This Agreement may be executed in two or more counterparts,each of which shall be deemed an original and all of which together shall constitute and be construed as one and the same instrument Exhibit A is attached hereto and incorporated herein by this reference., NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO. COGGINS SQUARE ASSOCIATES By: Its: CONTRA COSTA COUNTY REDEVELOPMENT AGENCY By: Its: LAZLMYICJTHERMMI1146398.1 Page 3 of 6 SUBAGDT WFRE14(REV 7187) Loan No. LOAN NUMBER COUNTY OF CONTRA COSTA By: Its: (ALL SIGNATURES MUST BE ACKNOWLEDGED) LA2:LMY=HER\1=11146398.1 Page 4 of 6 SUBAGOT WFRE14(REV 7197) EXHIBIT A Loan No. LOAN NUMBER DESCRIPTION OF PROPERTY Exhibit A to Subordination Agreement executed by COGGINS SQUARE ASSOCIATES, as "Owner", and CONTRA COSTA COUNTY REDEVELOPMENT AGENCY("Agency") and COUNTY OF CONTRA COSTA ("County"),in favor of NAME OF BOND TRUSTEE,'Trustee",dated as of October 1, 1998. All that certain real property located in the Contra Costa County, State of California,described as follows: APN LA2:LM1A0THEM1001411463M.1 Page 5 of 6 SUBAGOT WFRE14(REV 7/87) STATE OF CALIFORNIA COUNTY OF ss. On this day of , 15,,,,_, before me, a Notary Public in and for the State of California, personally appeared personally known to me(or proved on the basis of satisfactory evidence)to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that helshe/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s),or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal Signature My commission expires LAZLMYt6THEt110(hi1146398.1 Page 6 of 6 SUBAGOT WFRE14(REV 7/97)