HomeMy WebLinkAboutMINUTES - 03151994 - 1.55 Rev.
Contra
TO: BOARD OF SUPERVISORS
Costa
FROM: Harvey E. Bragdon Co�..�nty
Director of Community Development '� � ���`
DATE: March 15, 1994
SUBJECT: Bond Sale Resolution - Crescent Park Apartments, Richmond
SPECIFIC REQUEST(S) OR -RECOMMENDATIONS (S) & .BACKGROUND .AND JUSTIFICATION
RECOMMENDATIONS
ADOPT resolution authorizing the sale of Multi-Family Mortgage Revenue
Bonds for the acquisition of the Crescent Park Apartments, Richmond,
and actions related thereto.
FISCAL IMPACT
None. County is compensated for costs incurred in issuance process
and for costs of monitoring compliance with Regulatory Agreement.
BACKGROUND/REASONS FOR RECOMMENDATIONS
On February 5, 1991 the Board of Supervisors approved an Inducement
Resolution conditionally stating its intent to issue multi-family
mortgage revenue bonds for the acquisition/renovation of the Crescent
Park Apartments in Richmond by Ecumenical Association for Housing.
The Crescent Park Apartments are an existing, privately owned,
federally subsidized affordable housing project in South Richmond.
The current owner desires to prepay the existing mortgage, thereby
terminating the federal affordability controls, and sell the 378 unit
project. In order to preserve the affordability of the project, EAH-
Contra Costa, Inc. , a subsidiary of the Ecumenical Association for
Housing, a California Non-Profit Public Benefit Corporation,
negotiated an acquisition price as a "priority purchaser" (as defined
in the "Low Income Housing Preservation and Resident Homeownership Act
of 199011) .
CONTINUED ON ATTACHMENT: XX SIGNATURE: 00"
RECOMMENDATION OF COUNTY ADMINISTRATOR MMENDATION OF BOARD COMMIT E
APPROVE OTHER
SIGNATURE(S) :
ACTION OF BOARD ON y h APPROVED AS RECOMMENDED ,( OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
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.
Source: Jim Kennedy
646-4208
cc: Community Development ATTESTED
County Administrator PHIL BATCHELOR, CLERK OF
County Counsel THE BOARD OF SUPERVISORS
via Community Development AND COUNTY ADMINISTRATOR
EAH-Contra Costa
Kirkpatrick Pettis
Orrick Herrington & Sutcliffe
Arter Hadden Haynes & Miller
BY , DEPUTY
JK:1h
sra12/crespark.bos
The Regulatory Agreement of the County will require that 186 units
(49% of the total) be reserved for very low income tenants for at
least thirty years. The owner, EAH-Contra Costa, Inc. , intends to
provide approximately 70% of the units for very low income tenants.
No existing qualified tenant will be displaced as a result of this
acquisition.
The bonds to be issued will finance the acquisition and
rehabilitation of the Crescent Park Apartments. The bonds will be
secured by a pledge of rents, reserve accounts and by a policy of
mortgage insurance issued by FHA under the 241(f) mortgage
insurance program. The bonds are expected to be rated AAA. The
bonds are to be issued in three series (a taxable Series A-T; a
Series A FHA insured/GNMA collateralized bonds; and a Series B FHA
insured) in an amount not to exceed $22 million.
The underwriters for this transaction is Kirkpatrick, Pettis, Smith
& Polian, Inc. as Senior Manager, and Charles A. Bell Securities
Corp. as Co-Manager. The underwriter was determined pursuant to
adopted Board policy for the selection of underwriters and the
County's MBE-WBE goals and policies. Charles A. Bell Securities
Corp. is a MBE firm.
The bond sale resolution authorizes a number of actions, a summary
of which is provided as Attachment A.
ATTACHMENT A
The attached resolution authorizes a number of actions, a summary
of which follows:
1. Authorizes the issuance of revenue bonds in an amount not to
exceed $22 million;
2 . Approves the form of Trust Indentures .between the County and
the Trustee, Bank of America NT&SA;
3 . Approves the form of Bond Purchase Agreements between the
County, EAH-Contra Costa, Inc. and Kirkpatrick, Pettis, Smith,
Polian, Inc. and Charles A. Bell Securities Corp. as
Underwriter;
4 . Approves form of Financing Agreements between County, Trustee,
Developer and TRI Capital Corporation, the FHA Lender;
5. Approves form of Regulatory Agreement between County, Trustee
and EAH-Contra Costa, Inc. ;
6. Approves form, of Preliminary Official Statements;
7 . Designates Kirkpatrick, Pettis, Smith, Polian, Inc. and
Charles A. Bell Securities Corp. as Underwriters;
8. Designates Orrick, Herrington, & Sutcliffe as Bond Counsel;
9. Designates Litten Financial Consulting as financial advisor;
10. Authorizes the Chair, vice-Chair, County Administrator,
Director of Community Development, Deputy Director-
Redevelopment to take such other actions necessary to complete J
the sale of bonds and assistance related thereto.
JK:1h
sra12/crespark.bos
tL/
COUNTY OF CONTRA COSTA
RESOLUTION NO. 94/154
A RESOLUTION AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF
MULTIFAMILY HOUSING REVENUE BONDS FOR THE PURPOSE OF FINANCING
THE ACQUISITION AND REHABILITATION OF A MULTIFAMILY RENTAL
HOUSING DEVELOPMENT KNOWN AS CRESCENT PARK APARTMENTS,
DETERMINING AND PRESCRIBING CERTAIN MATTERS RELATING THERETO, AND
APPROVING AND AUTHORIZING RELATED ACTIONS AND THE EXECUTION AND
DELIVERY OF RELATED DOCUMENTS.
WHEREAS, Chapter 8 of Part 5 of Division 31 of the
Health and Safety Code of the State of California (the "Act")
authorizes counties to incur indebtedness for the purpose of
financing the acquisition of multifamily rental housing by
nonprofit organizations exempt from federal income taxation under
Section 501 (c) (3) of the Internal Revenue Code of 1986 (the
"Code") , and the Act provides a complete, additional and
alternative method for such financing;
WHEREAS, the County of Contra Costa (the "County")
desires to engage in a program (the "Program") of financing the
acquisition by EAH-Contra Costa, Inc. , a California nonprofit
corporation (the "Owner") , of multifamily rental housing known as
Crescent Park Apartments (the "Project") , and in order to do so
intends to sell and issue not to exceed $22,.000, 000 of
multifamily housing revenue bonds;
WHEREAS, the Board of Supervisors of the County (the
"Board") has now determined to provide financing for the Project
for the purpose of providing housing for very low income persons
or families;
WHEREAS, the Issuer expects the Owner to pay certain
expenditures (the "Reimbursement Expenditures") in connection
with the Project prior to the issuance of indebtedness for the
purpose of financing costs associated with the Project on a
long-term basis;
WHEREAS, the Issuer reasonably expects that certain of
the proceeds of multifamily housing revenue bonds will be used to
reimburse the Owner for the Reimbursement Expenditures; and
WHEREAS, there has been prepared and presented to this
Board for consideration at this meeting the documentation
required for the issuance of bonds for such financing;
WHEREAS, it appears that each of the documents which
are now before this meeting is in appropriate form and is an
SF2-27263.2 RESOLUTION NO. 941154
appropriate instrument to be executed and delivered for the
purposes intended;
WHEREAS, the interest on the bonds may qualify for
exclusion from gross income under Section 103 of the Code, only
if the bonds are approved in accordance with Section 147 (f) of
the Code; and
WHEREAS, the Project is located wholly within the
County of Contra Costa, California; and
WHEREAS, this Board is the elected legislative body of
the County and is the applicable elected representative required
to approve the issuance of the bonds within the meaning of
Section 147 (f) of the Code; and
WHEREAS, this Board has received from Jim Kennedy,
Deputy Director-Redevelopment of the County of Contra Costa, a
report to the effect that, pursuant to Section 147 (f) of the
Code, following notice duly given, such officer held a public
hearing regarding the issuance of such bonds, and now desires
this Board to approve the issuance of such bonds.
WHEREAS, Kirkpatrick, Pettis, Smith, Polian Inc. and
Charles A. Bell Securities Corp. (the "Underwriters") , expressed
their intention to purchase the bonds authorized hereby, and this
Board finds that the public interest and necessity require that
the County at this time make arrangements for the sale of such
bonds;
NOW, THEREFORE, BE IT RESOLVED by the Board of
Supervisors of the County of Contra Costa, as follows:
1. Pursuant to the Act and the Indentures
(hereinafter defined) , revenue bonds of the County, to be
designated as "County of Contra Costa Multifamily Housing Revenue
Bonds (GNMA Collateralized - Crescent Park Apartments Project)
1994 Series A, " County of Contra Costa Multifamily Housing
Revenue Bonds (GNMA Collateralized - Crescent Park Apartments
Project) Taxable 1994 Series A-T, " and County of Contra Costa
Multifamily Housing Revenue Bonds (FHA Insured Mortgage Loan
Crescent Park Apartments Project) 1994 Series B (the "Series A
Bonds, " the "Series A-T Bonds" and the "Series B Bonds, "
respectively, and collectively, the "Bonds") , in an aggregate
principal amount not to exceed $22, 000, 000, and with a final
maturity date not later than April 1, 2035, are hereby authorized
to be issued. The Bonds shall be in the forms set forth in and
otherwise in accordance with the Indentures, and shall be
executed by the manual or facsimile signature of the Chair of
this Board, and the manual or facsimile seal of the County shall
be impressed or reproduced thereon and attested by the manual or
facsimile signature of the County Administrator and Clerk of this
Board.
SF2-27263.2 2
2 . The proposed forms of Trust Indentures (the
"Indentures") , each between the County and the Trustee, as
defined below, in substantially the forms presented to this
meeting, are hereby approved. Any Authorized Issuer
Representative (as defined in the Indentures) is hereby
authorized and directed, for and in the name and on behalf of
this Board and the County, to execute by manual signature, and
such officer is hereby authorized and directed, for and in the
name and on behalf of this Board and the County, to deliver, the
Indentures in substantially said forms, with such additions
thereto or changes therein as such officer may approve or
recommend upon consultation with County Counsel and Bond Counsel
to the County (provided that such additions or changes shall not
authorize an aggregate principal amount of Bonds in excess of the
amount stated above, or having a maturity later than the date
stated above, or result in a stated interest rate on the Bonds in
excess of 8 .5% per annum) , the approval of such additions or
changes to be evidenced conclusively by the execution and
delivery of the Indentures. The date, maturity dates, interest
rate or rates, interest payment dates, denominations, form,
registration privileges, manner of execution, place of payment,
terms of redemption and other terms of the Bonds shall be as
provided in the appropriate Indenture as finally executed. The
execution of the Indentures shall constitute appointment by the
Authorized Issuer Representative of the Trustee named therein
(the "Trustee") to act as such Trustee, and such appointment is
hereby approved.
3 . The proposed forms of bond purchase agreements
relating to the Bonds (the "Purchase Contracts") , each among the
County, the Owner and the Underwriters, in substantially the
forms presented to this meeting, are hereby approved. Any
Authorized Issuer Representative is hereby authorized and
directed, for and in the name and on behalf of this Board and the
County, to accept the offer of the Underwriters to purchase the
Bonds contained in the Purchase Contracts (when such offers are
made and if such offer is consistent with Section 2 hereof) and
to- execute and deliver said Purchase Contracts; provided,
however, that the Underwriters' fee with respect to such purchase
of Bonds shall not exceed 2 % of the aggregate principal
amount of the Bonds.
4 . The proposed forms of Financing Agreements (the
"Financing Agreements") each among the County, the Trustee and
the Owner, in substantially the forms presented to this meeting,
are hereby approved. Any Authorized Issuer Representative is
hereby authorized and directed, for and in the name and on behalf
of this Board and the County, to execute by manual signature, and
such officers are hereby authorized and directed, for and in the
name and on behalf of this Board and the County, to deliver the
Financing Agreements, with such additions or changes in said
document as such officers may recommend or approve upon
consultation with County Counsel and Bond Counsel to the County,
SF2-27263.2 3
the approval of such additions or changes to be evidenced conclu-
sively by the execution and delivery of the Financing Agreements.
5 . The proposed form of Regulatory
ory Agreement and
Declaration of Restrictive Covenants (the "Regulatory Agreement")
among the County, the Trustee and the Owner, in substantially the
form presented to this meeting, is hereby approved. Any
Authorized Issuer Representative is hereby authorized and
directed, for and in the name and on behalf of this Board and the
County, to execute by manual signature, and such officers are
hereby authorized and directed, for and in the name and on behalf
of this Board and the County, to deliver, the Regulatory
Agreement with such additions or changes in said document as such
officers may recommend or approve upon consultation with County
Counsel and Bond Counsel to the County, the approval of such
additions or changes to be evidenced conclusively by the
execution and delivery of the Regulatory Agreement.
6 . The proposed forms of preliminary official
statements relating to the Bonds (the "Preliminary Official
Statements") , in substantially the form presented to this
meeting, to be used in connection with the offer and sale of the
Bonds, is hereby approved, and the Board hereby ratifies and
approves distribution of the Preliminary Official Statements to
prospective purchasers of the Bonds. Any Authorized Issuer
Representative is hereby authorized and directed, for and in the
name and on behalf of this Board and the County, to execute and
deliver, at the time of sale of the Bonds, said forms of
Preliminary Official Statements as the final official Statements,
(the "Official Statements") , with such additions thereto or
changes therein as such officer may recommend or approve upon
consultation with County Counsel and Bond Counsel to the County,
the approval of such additions or changes to be conclusively
evidenced by the execution and delivery of the Official
Statements. Such changes may include, without limitation, such
changes as to the principal amount, maturity schedule, interest
rates and redemption features of the Bonds as effectuate the
purposes of this resolution, subject to the limitations
prescribed in Section 2 hereof. Any Authorized Issuer
Representative is hereby authorized to certify that the
Preliminary official Statements and the final Official Statements
are, as of their respective dates, "deemed final" by the County
as defined in Rule 15c2-12 of the Securities and Exchange
Commission.
7. It is -the purpose and intent of this Board that
this Resolution constitute approval of the Bonds by the
applicable elected representative of the issuer of the Bonds and
the applicable elected representative of the governmental unit
having jurisdiction over the area in which the Project is
located, in accordance with Section 147 (f) of the Code.
M-27263.2 4
8 . It is the purpose and intent of this Board that
this Resolution constitute compliance with the requirements of
Section 1.150-2 of the Treasury Regulations.
9 . The Issuer hereby declares its official intent to
use proceeds of indebtedness to reimburse the Owner for
Reimbursement Expenditures.
10 . 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 Underwriters in accordance with written instructions
executed on behalf of this Board and the County by any Authorized
Issuer Representative, which instructions said officer is hereby
authorized and directed, for and in the name and on behalf of the
Board and the County, to execute and deliver to the Trustee.
Such instructions shall provide for the delivery of the Bonds to
the Underwriters in accordance with the Purchase Contracts, upon
payment of the purchase price thereof.
11. Orrick, Herrington & Sutcliffe is hereby appointed
Bond Counsel in regards to the issuance of the Bonds, Litten
Financial Consulting is hereby appointed Financial Advisor to the
County in regards to the issuance of the Bonds, and Kirkpatrick,
Pettis, Smith, Polian Inc. and Charles A. Bell Securities Corp.
are hereby appointed Underwriters in regards to the issuance of
the Bonds.
12 . All consents, approvals, notices, orders, requests
and other actions permitted or required by any of the documents
authorized by this resolution, including without limitation any
of the foregoing which may be necessary or desirable in
connection with any default under or amendment of such documents,
any transfer or other disposition of the Project, any
substitution of credit enhancement for the Bonds or any
redemption of the Bonds, may be given or taken by any Authorized
Issuer Representative without further authorization by this
Board, and any Authorized Issuer Representative is hereby
authorized and directed to give any such consent, approval,
notice, order or request and to take any such action which such
officer may deem necessary or desirable to further the purposes
of this resolution and- the Program.
13 . All actions heretofore taken by the officers and
agents of the County with respect to the establishment of the
Program and the sale and issuance of the Bonds are hereby
approved, confirmed and ratified, and the proper officers of the
County 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 and deliver any and all
certificates, agreements and other documents, including but not
limited to an escrow or similar agreement or instrument and those
SF2-27263.2 5
documents described in the Indentures, the Purchase Contracts and
the other documents herein approved, which they, or any of them,
may deem necessary or advisable in order to consummate the lawful
issuance and delivery of the Bonds and to effectuate the purposes
thereof and of the documents herein approved in accordance with
this resolution and resolutions heretofore adopted by this Board
and otherwise in order to carry out the Program.
14 . This Resolution shall take effect immediately upon
its passage and adoption.
ADOPTED this 15th day of March 1994, by the following
vote:
AYES: Supervisors Smith, Bishop, McPeak, Torlakson and Powers
NOES: None
ABSTAINING: None
ABSENT: None
Ch it of the Board of Supervisors
ATTEST:
Phil Batchelor,
County Administrator and
Clerk of the Board of Supervisors
By:
D6jpulty
SF2-27263,2 6
Bond Purchase Agreement
COUNTY OF CONTRA COSTA
MULTIFAN13LY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
BOND PURCHASE AGREEMENT
March _, 1994
County of Contra Costa
Community Development Department
County Administration Building
651 Pine Street
4th Floor, North Wing
Martinez, California 94553-0095
EAH - Contra Costa, Inc.
2169 East Francisco Boulevard
Suite B
San Rafael, California 94901
Dear Ladies and Gentlemen:
Kirkpatrick, Pettis, Smith, Polian Inc. and Charles A. Bell Securities Corp. (collectively,
the "Purchasers"), offer to enter into this Bond Purchase Agreement with the County of Contra
Costa, a political subdivision and body corporate and politic of the State of California (the
"Issuer") and EAH - Contra Costa, Inc., a California nonprofit corporation (the "Borrower").
02/24/94 m12-1853
0
1. Background.
(a) The Issuer proposes to issue $ aggregate principal amount of its
Multifamily Housing Revenue Bonds (GNMA Collateralized --Crescent Park Apartments) 1994
Series A (the "1994 Series A Bonds") and $ aggregate principal amount of its
Multifamily Housing Revenue Bonds (GNMA Collateralized -- Crescent Park Apartments)
Taxable 1994 Series A-T (the "Taxable 1994 Series A-T Bonds") (collectively, the "Bonds"),
and to loan the proceeds of the Bonds to the Borrower in order to provide money to finance the
Borrower's acquisition and rehabilitation of a 378 unit multifamily rental housing project located
in the City of Richmond, County of Contra Costa, California, for low-income persons (the
"Project") and to pay certain costs related to the issuance of the Bonds.
(b) The Bonds will mature on the dates and in the amounts and bear interest at the
rates set forth on Schedule I attached hereto, subject to prior redemption or acceleration as
described in the Official Statement (as hereinafter defined). The Bonds will be issued pursuant
to a bond resolution (the "Resolution") passed on March _, 1994 by the Issuer, and will be
secured under a Trust Indenture (the "Indenture"), dated as of March 1, 1994, between the
Issuer and Bank of America National Trust and Savings Association, as trustee (the "Trustee")
for the holders of the Bonds. All terms used herein and not otherwise defined shall have the
meanings set forth in the Indenture.
(c) The Bonds are being issued pursuant to and in accordance with the provisions of
Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the
"Act"), the proceeds of the Bonds will be expended so that the interest on the 1994 Series A
Bonds will not be includable in gross income for the purposes of federal income taxation, and
the Bonds may be purchased by the original purchasers without registration of any security under
the Securities Act of 1933, as amended (the "Securities Act"), or qualification of any indenture
under the Trust Indenture Act of 1939 (the "Trust Indenture Act").
(d) In order that the Project will be operated as a charitable project property within
the meaning of Section 145 of the Internal Revenue Code of 1986, as amended (the "Code"),
the Borrower will enter into a Regulatory Agreement and Declaration of Restrictive Covenants
(the "Regulatory Agreement"), dated as of March 1, 1994, with the Issuer for the benefit of the
Issuer.
(e) In order to induce the Issuer to enter into this Bond Purchase Agreement, and to
induce the Issuer to issue and deliver the Bonds, the Borrower has joined in this Bond Purchase
Agreement.
2. Purchase, Sale and Delivery of Bonds.
(a) Subject to the terms and conditions and in reliance upon the representations,
warranties and agreements. set forth herein, the Purchasers hereby agree to purchase from the
Issuer for reoffering to the public all of the Bonds as contemplated herein. The purchase price
for the Bonds shall be as follows, plus accrued interest to the Closing Date (defined herein):
02124194 2 - m12-1853
1994 Series A Bonds
Principal Amount Purchase Price
Taxable 1994 Series A-T Bonds
Principal Amount Purchase Price
(b) The Issuer has delivered or shall cause to be delivered to the Purchasers copies
of the Preliminary Official Statement (the "Preliminary Official Statement") and copies of the
final Official Statement, substantially in the form of the Preliminary Official Statement, with
such changes as may be approved by the Purchasers (collectively, the "Official Statement") in
quantities and at times sufficient to enable the Purchasers to comply with the rules of the
Municipal Securities Rulemaking Board and Rule 15c2-12 of the Securities and Exchange
Commission. The Issuer hereby approves the use and distribution by the Purchasers to persons
who may by interested in the purchase of the Bonds of the Preliminary Official Statement and
the Official Statement, and hereby authorizes the Purchasers to use and distribute the Preliminary
Official Statement and the Official Statement, and copies of the Indenture and all other
documents, executed in connection with the placement and sale of the Bonds.
(c) At 10:00 a.m. on April _, 1994, or at such earlier or later time or date as shall
be agreed_by the Issuer, the Borrower and the Purchasers (such time and date being herein
referred to as the "Closing Date"), the Issuer will deliver to the Purchasers in the offices of The
Depository. Trust Company ("DTC"), 55 Water Street, New York, New York, a single Bond
for each maturity, in a form which is eligible for the book entry system maintained by DTC,
registered in the name of Cede & Co., duly executed by the Issuer and authenticated by the
Trustee (or Authenticating Agent if an entity separate from the Trustee is acting as an
authenticating agent) as provided for in the Indenture, and will deliver to the Purchasers in the
offices of Orrick, Herrington &Sutcliffe, San Francisco, California ('Bond Counsel") the other
documents herein mentioned; and the Purchasers will accept such delivery and shall arrange for
the purchase price of the Bonds as set forth in paragraph (a) of this section to be paid by the
original purchasers by wire transfer in immediately available funds to an account specified by
the Trustee, for the account of the Issuer (such delivery and payment being herein referred to
as the "Closing").
02124/94 - 3 - m12-1853
(d) Except as may be inconsistent with the provisions of this Bond Purchase
Agreement, the Purchasers covenant and agree to purchase all (but not less than all) of the
Bonds at the price set forth in the Official Statement and to send to each such original purchaser
a copy of the Official Statement concurrently with or prior to sending to such purchaser a final
written confirmation of the sale. Further, the Purchasers agree not to use the Official Statement
for the purpose of marketing the Bonds subsequent to receiving written notice from the Issuer
or the Borrower which (i) states that the Official Statement contains an untrue statement of a
material fact or omits to state a material fact, and (ii) specifically identifies the material fact or
omission, provided that upon the amendment of the Official Statement to the satisfaction of the
party delivering the notice pursuant hereto, the Purchasers may, subject to the continuing
obligations contained herein, resume use of the amended Official Statement in marketing the
Bonds.
3. Issuer's Representations and Warranties. The Issuer makes the following
representations and warranties:
(a) The Issuer is authorized by the provisions of the Act, among other things, (i) to
issue revenue bonds, such as the Bonds, and to make the proceeds of such Bonds available to
persons such as the Borrower for the purposes described in the Indenture and the Financing
Agreement (the "Agreement") by and among the Issuer, the Borrower, the Trustee and TRI
Capital Corporation, a California corporation (the "Lender"), payable from and secured by a
pledge of the revenues and assets pledged thereto under the Indenture (the "Revenues"), and (ii)
to secure such Bonds in the manner contemplated by the Indenture.
(b) The Issuer has full legal right, power and authority (i) to pass the Resolution, (ii)
to enter into this Bond Purchase Agreement, the Indenture, the Agreement and the Regulatory
Agreement, (iii) to issue, sell and deliver the Bonds to the original purchasers as provided
herein, and (iv) to carry out and consummate all other transactions contemplated by each of the
aforesaid documents, and the Issuer has complied with all provisions of applicable law, including
the Act, in all matters relating to such transactions.
(c) The Issuer has duly authorized (i) the issuance and sale of the Bonds upon the
terms set forth herein and in the Indenture, (ii) the execution, delivery and due performance of
this Bond Purchase Agreement, the Bonds, the Indenture, the Agreement and the Regulatory
Agreement, and (iii) the taking of any and all such actions as may be required on the part of the
Issuer to carry out, give effect to and consummate the transactions contemplated by such
instruments, including the use of the Official Statement. All consents or approvals, if any,
necessary to be obtained by the Issuer in connection with the foregoing have been received, and
the consents or approvals so received, if any, are still in full force and effect.
(d) The Resolution has been duly passed by the Issuer, is in full force and effect and
constitutes the legal, valid and binding act of the Issuer. This Bond Purchase Agreement and
the Regulatory Agreement constitute, and the Indenture and the Agreement, when executed and
delivered, will constitute legal, valid and binding obligations of the Issuer in accordance with
their respective terms, except that enforceability may be limited by laws relating to bankruptcy,
0224/94 - 4 - m12-1853
reorganization or other similar laws affecting the rights of creditors, by the exercise of judicial
discretion in accordance with general principles of equity, and by matters of public policy.
(e) When duly authenticated by the Trustee and delivered to and paid for by the
Purchasers at the Closing in accordance with the provisions of this Bond Purchase Agreement,
the Bonds will have been duly authorized, executed, issued and delivered and will constitute
legal, valid and binding limited obligations of the Issuer in conformity with the laws of the State
of California, including the Act, will be entitled to the benefit and security of the Agreement and
the Indenture, and will be enforceable in accordance with their terms, except that enforceability
may be limited by laws relating to bankruptcy, reorganization or other similar laws affecting the
rights of creditors and by principles of equity.
(f) Neither the passage of the Resolution, the execution and delivery by the Issuer
of this Bond Purchase Agreement, the Bonds, the Indenture, the Agreement or the Regulatory
Agreement, nor the consummation by the Issuer of the transactions contemplated therein or the
compliance by the Issuer with the provisions thereof, will conflict with, or constitute on the part
of the Issuer a violation of, or a breach of or default under, any statute, indenture, mortgage,
commitment, note or other agreement or instrument to which the Issuer is a party or by which
it is bound, or under any provision of the California Constitution or under any existing law,
rule, regulation, ordinance, charter, judgment, order or decree to which the Issuer is subject.
(g) Other than the Indenture and the Agreement, the Issuer has not entered into any
contract or arrangement of any kind which might give rise to any lien or encumbrance on the
Trust Estate.
(h) To the best of the Issuer's knowledge, there is no action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, public board or body, pending or
threatened against the Issuer, which in any way questions the powers of the Issuer referred to
in paragraph (a)above, or the validity of any proceedings taken by the Issuer in connection with
the issuance of the Bonds, or wherein an unfavorable decision, ruling or finding would
materially adversely affect the transactions contemplated by, or the validity or enforceability of,
the Resolution, the Regulatory Agreement, the Indenture, the Agreement, the Bonds or this Bond
Purchase Agreement.
(i) ' The information contained in the Preliminary Official Statement and the Official
Statement under the caption "THE ISSUER" was or will be, as of their respective dates, and as
of the Closing Date will be, true, correct and complete in all material respects, and such
information in the Preliminary Official Statement and the Official Statement does not and will
not contain any untrue or misleading statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances under which they are
made, not misleading. The Preliminary Official Statement as of its date was "final" within the
meaning of paragraph (b)(1) of Securities and Exchange Commission Rule 15c2-12, and the
Official Statement will be final within the meaning of paragraphs (b)(3)and (b)(4)of such Rule.
02124194 - 5 - m12-1853
Any certificate relating to the Bonds signed by any official of the Issuer and
delivered to Bond Counsel or the Purchasers at or before the Closing Date shall be deemed a
representation and warranty by the Issuer to Bond Counsel or the Purchasers, as the case may
be, as to the truth of the statements therein contained.
(k) The Issuer has not been notified of any listing or proposed listing by the Internal
Revenue Service to the effect that the Issuer is a bond issuer whose arbitrage certifications may
not be relied on.
(1) The Issuer is not now in default nor has it been in default since December 31, 1975,
as to principal or interest with respect to any obligations issued or guaranteed by the Issuer.
4. Borrower's Representations and Warranties. The Borrower makes the following
representations and warranties:
(a) The Borrower is a nonprofit corporation, duly organized, validly existing and in
good standing under the laws of the State of California, with full power to own the Borrower's
properties and conduct the Borrower's business. The Borrower has full legal right, power and
authority to execute and deliver this Bond Purchase Agreement, the Mortgage and the Mortgage
Note (as defined in the Indenture), the Agreement and the Regulatory Agreement, to provide for
the operation and management of the Project, and to take any and all such action as may be
required on the Borrower's part to carry out, give effect to.and consummate the transactions
contemplated by this Bond Purchase Agreement, the Agreement and the Regulatory Agreement.
(b) The Borrower has duly authorized, executed and delivered this Bond Purchase
Agreement, and on the Closing Date will have duly authorized, executed and delivered the
Mortgage, the Mortgage Note, the Agreement and the Regulatory Agreement, and has taken or
will take all such action as may be required on the part of the Borrower to carry out, give effect
to and consummate the transactions contemplated by each of such documents. This Bond
Purchase Agreement and the Regulatory Agreement constitute, and the Mortgage, the Mortgage
Note, the Agreement and the Bonds, when executed and delivered, will constitute, legal, valid
and binding obligations of the Borrower enforceable in accordance with their respective terms,
except that enforceability may be limited by laws relating to bankruptcy, reorganization or other
similar laws affecting the rights of creditors.
(c) Neither the execution and delivery of this Bond Purchase Agreement, the
Mortgage, the Mortgage Note or the Agreement, nor the consummation of the transactions
contemplated therein or the compliance with the provisions thereof, will conflict with, or
constitute on the part of the Borrower a violation of, or a breach of or default under the
Borrower's organizational documents, or any statute, indenture, mortgage, commitment, note
or other agreement or instrument to which the Borrower is a party or by which the Borrower
is bound, or any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Borrower or any of the Borrower's activities or properties. All consents,
approvals,authorizations and orders of governmental or regulatory authorities which are required
for the Borrower's execution and delivery of, consummation of the transactions contemplated
02/24/94 - 6 - m12-1853
by and compliance with the provisions of this Bond Purchase Agreement, the Mortgage, the
Mortgage Note, the Regulatory Agreement and the Agreement have been obtained.
(d) To the best of the Borrower's knowledge, there is no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public board or body,
pending or threatened, against or affecting the Borrower or the actions taken or contemplated
to be taken by the Borrower, nor, to the best of the Borrower's knowledge, is there any basis
therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect
the business, financial condition or operations of the Borrower, or the transactions contemplated
by, or the validity or enforceability of, this Bond Purchase Agreement, the Mortgage, the
Mortgage Note, the Agreement or the Regulatory Agreement, or which would in any way
jeopardize the tax-exempt status of the interest on the Bonds. .
(e) No event has occurred and no condition exists which, upon issuance of the Bonds,
would constitute (or with the giving of notice or lapse of time, or both, would constitute) an
Event of Default under the Indenture.
(f) The Borrower is not in violation of any provision of, or in default under, its
organizational documents, or any statute, indenture, mortgage, commitment, note or other
agreement or instrument to which the Borrower is a party or by which it is bound, or any order,
rule, regulation or decision of any court or governmental agency or body having jurisdiction
over the Borrower or any of the Borrower's activities or properties.
(g) The information contained in the Preliminary Official Statement and the Official
Statement relating to the Borrower and the Project was or will be, as of their respective dates,
and as of the Closing Date will be, true, correct and complete in all material respects, and the
Preliminary Official Statement and the Official Statement as to such matters do not and will not
contain any untrue or misleading statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they are
made, not misleading.
(h) The Borrower will furnish such information and cooperate with the Purchasers
as the Purchasers may reasonably request in order for the Purchasers (i) to qualify, or perfect
an exemption from qualification, the Bonds for offer and sale under the Blue Sky or other
securities laws and regulations of such states and other jurisdictions of the United States as the
Purchasers may designate, and (ii) to determine the eligibility of the Bonds for investment under
the laws of such states and other jurisdictions, and the Borrower will use its best effort to
continue such qualification in effect so long as required for distribution of the Bonds.
(i) Any certificate signed by any officer of the Borrower and delivered to the Issuer,
Bond Counsel or the Purchasers shall be deemed a representation and warranty by the Borrower
to the Issuer, Bond Counsel and the Purchasers as to the truth of the statements therein
contained.
112124/94 - T - m12-1853
S. Covenants of the Issuer. The Issuer covenants that it will observe all covenants of
the Issuer in the Indenture and the Agreement and will not issue or sell any bonds or obligations
other than the Bonds referred to in the Indenture, the principal of, premium, if any, and interest
on which are payable in whole or in part from the Trust Estate or are to be secured by any lien
on, or pledge of, the Trust Estate.
6. Covenants of the Borrower. The Borrower covenants as follows:
(a) The Borrower will cause the proceeds of the Bonds to be applied as provided in
and subject to all of the terms and provisions of the Agreement and will observe all covenants
of the Borrower in such instrument.
(b) The Borrower will take such action as may be reasonably requested to facilitate
the timely consummation of the transactions contemplated by this Bond Purchase Agreement.
(c) The Borrower will notify the Issuer and the Purchasers of any material adverse
change in the plan of financing for the Project occurring before the Closing Date.
(d) The Borrower will not take any action or permit any action to be taken on the
Borrower's behalf, or cause or permit any circumstance within the Borrower's control to arise
or continue, if such action would adversely affect the excludability from gross income for federal
income tax purposes of the interest on the 1994 Series A Bonds.
(e) The Borrower will secure the consents and approvals of the Lender, the Federal
Housing Administration ("FHA") and the Government National Mortgage Association
("GNMA") on or prior to the Closing Date which are necessary to consummate the transactions
contemplated by this Bond Purchase Agreement and the Official Statement.
7. Conditions to the Obligations of the Purchasers. The obligation of the Purchasers to
accept delivery of and to cause payment for the Bonds on the Closing Date shall be subject, at
the option of the Purchasers, to the accuracy in all material respects of the representations and
warranties on the part of the Issuer and the Borrower contained herein as of the date hereof and
as of the Closing Date, to the accuracy in all material respects of the statements of the Issuer
and the Borrower made in any certificates or other documents furnished pursuant to the
provisions hereof, to the performance by the Issuer and the Borrower of their respective
obligations to be performed hereunder at or prior to the Closing Date and to the following
additional conditions:
(a) At the Closing Date, the Indenture, the Regulatory Agreement, the Agreement,
the Mortgage and the Mortgage Note shall have been duly authorized, executed and delivered
by the respective parties thereto, and the Official Statement shall have been delivered to the
Purchasers, and none of the foregoing agreements shall have been amended, modified or
supplemented so as to materially affect the content thereof, except as may have been agreed to
in writing by the Purchasers, and there shall have been taken in connection therewith, with the
issuance of the Bonds, and with the transactions contemplated thereby and by this Bond Purchase
02124194 - 8 .. m12-1853
Agreement, all such actions as Arter Hadden Haynes .& Miller, counsel to the Purchasers
("Purchasers' Counsel"), shall deem to be necessary and appropriate;
(b) At the Closing Date, the Official Statement shall not have been amended, modified
or supplemented, except as may have been agreed to in writing by the Purchasers;
(c) At or prior to the Closing Date, no event shall have occurred or information
become known which, in the reasonable judgment of the Purchasers, makes untrue in any
material respect any statement or information contained in the Official Statement or has the
effect that the Official Statement contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
(d) At or prior to the Closing Date, the Purchasers and the Issuer shall have received
an original or copies of the following documents, in each case satisfactory in form and substance
to the Purchasers and in each case conforming in all material respects with any description
thereof contained in the Official Statement:
W The Indenture, the Agreement, the Bonds, the Mortgage, the Mortgage
Note and the Regulatory Agreement, each duly executed and delivered by the respective
parties thereto, with such amendments, modifications or supplements as may have been
agreed to in writing by the Purchasers;
(ii) The opinion of Michaud &Hoshiyama, San Franciso,'Califomia, counsel
to the Borrower, dated the Closing Date, in substantially the form attached as Exhibit A
hereto;
The opinion of Bond Counsel, dated the Closing Date, in form, scope and
substance acceptable to the Purchasers' and their counsel and a supplemental opinion of
Bond Counsel, dated the Closing Date, in substantially the form attached as Exhibit B
hereto;
(iv) The opinion of Arter Hadden Haynes&Miller,Purchasers' Counsel,dated
the Closing Date, in substantially the form attached as Exhibit C hereto;
W A certificate, dated the Closing Date, signed by a duly authorized official
of the Issuer, in form satisfactory to the Purchasers and the Purchasers' Counsel to the
effect that the representations and warranties of the Issuer set forth in Section 3 hereof
are true, correct and complete on the date thereof,
(vi) A certificate or certificates dated the Closing Date, signed by properly
authorized officers of the Borrower, in form satisfactory to the Purchasers and the
Purchasers' Counsel to the effect that the representations and warranties of the Borrower
set forth in Section 4 hereof are true, correct and complete on the date thereof;
02/24/94 m12-1853
(vii) A certificate, dated the Closing Date, signed by a duly authorized officer
of the Lender, in substantially the form attached as Exhibit D hereto;
(viii) Evidence that Standard &Poor's Ratings Group has assigned a rating of
"AAA" to,the Bonds;
(ix) FHA shall initially endorse the Mortgage Loan with respect to the Project
providing for a principal amount equal to $15,672,100 bearing interest at not less than
a rate of % per annum;
(x) The Investment Agreement; and
(xi) Such additional legal opinions, certificates, proceedings, instruments and
other documents as the Purchasers or Purchasers' Counsel may reasonably request to
evidence compliance by the Trustee or the Borrower with legal requirements of closing,
and to certify the truth and accuracy, as of the Closing Date, of the representations of
the Issuer and the Borrower contained herein and the due performance or satisfaction by
the Issuer and the Borrower at or prior to such time of all agreements then to be
performed and all conditions then to be satisfied by each of them.
(e) Between the date hereof and the Closing Date, legislation shall not have been
enacted by the Congress or be actively considered for enactment by Congress, or recommended
to the Congress for passage by the President of the United States, or introduced to either house
of the Congress, nor a decision rendered by any court of competent jurisdiction, or the Tax
Court of the United States, nor any order, ruling, regulation or official statement made by the
United States Treasury Department or the Internal Revenue Service, with the purpose or effect
of imposing federal income taxation upon revenues or other income of the character derived by
the Issuer under the Agreement or upon the interest to be paid on the Bonds or on bonds of the
general character of the Bonds, or of subjecting any such interest to the federal alternative
minimum tax applicable to individuals and corporations.
(f) Between the date hereof and the Closing Date, legislation-shall not have been
enacted by the Congress or be actively considered for enactment by Congress, or recommended
to the Congress for enactment by the President of the United States, or introduced or favorably
reported for passage to either house of the Congress, and neither a decision, order or decree of
a court of competent jurisdiction, nor an order, ruling, regulation or.official statement of or on
behalf of the Securities and Exchange Commission shall have been rendered or made, with the
purpose or effect that the issuance, offering or sale of the Bonds or any related security or
obligations of the general character of the Bonds or any related security as contemplated hereby,
or the execution and delivery of the Indenture, is or would be in violation of any provision of,
or is or would be subject to registration or qualification requirements under, the Securities Act
or the Trust Indenture Act.
0224194 _ 10 - m12-1853
(g) None of the following shall have occurred: (i) additional material restriction not
in force as of the date hereof shall have been imposed upon trading in securities generally by
any governmental authority or by any national securities exchange or such trading shall have
been suspended; (ii) the New York Stock Exchange or other national securities exchange, or the
National Association of Securities Dealers, Inc. or other national securities association, or the
Municipal Securities Rulemaking Board or other similar national self-regulatory rule-making
board, or any governmental authority, shall impose, as to the Bonds or similar obligations, any
material restrictions not now in force, or increase materially those now in force, with respect.
to the extension of credit by, or change in the net capital requirements of, underwriters; (iii) a
general banking moratorium shall have been declared by Federal, New York or California
authorities; or (iv) a war involving the United States of America, whether or not declared, or
any other national or international calamity or crisis, or a financial crisis, shall have occurred,
the effect of which, in the judgment of the Purchasers, would make it impracticable to market
the Bonds or would materially and adversely affect the ability of the Purchasers to enforce
contracts for the sale of the Bonds.
(h) All matters relating to this Bond Purchase Agreement, the Official Statement, the
Bonds, the Resolution, the Regulatory Agreement, the Indenture, the Agreement and the
consummation of the transactions contemplated by this Bond Purchase Agreement and the
Official Statement, shall be reasonably satisfactory to and subject to the approval of the
Purchasers.
If the conditions to the Purchasers' obligations contained in this Bond Purchase
Agreement are not satisfied or if the Purchasers' obligations shall be terminated for any reason
permitted herein, this Bond Purchase Agreement shall, at the option of the Purchasers, terminate
and neither the Purchasers, the Issuer, nor the Borrower shall have any further obligations
hereunder, except as provided in Section 10 with respect to the payment of certain expenses.
8. No Pecuniary Liability of Issuer. No provision, covenant, or agreement contained
in this Bond Purchase Agreement, and no obligation herein imposed upon the Issuer, or the
breach thereof, shall constitute an indebtedness of the Issuer or the State of California or any
political subdivision thereof within the meaning of any California constitutional provision or
statutory limitation or shall constitute or give rise to a pecuniary liability of the Issuer or the
State of California or any political subdivision thereof or a charge against its general credit or
taxing powers. In making the agreements, provisions and covenants set forth in this Bond
Purchase Agreement, the Issuer has not obligated itself, except to the extent that the Issuer is
authorized to act pursuant to California law and except with respect to the Trust Estate. The
Issuer and any of its officials, officers, employees, members or agents shall have no monetary
liability arising out of the obligations of the Issuer hereunder or in connection with any covenant,
representation or warranty made by the Issuer herein, and neither the Issuer nor its officials shall
be obligated to pay any amounts in connection with the transactions contemplated hereby other
than from the Trust Estate or other moneys received from the Borrower.
02n4/94 - 11 - m12-1853
9. Survival of Representations,Warranties, Covenants, Agreements and Indemnities.
All representations, warranties, covenants, agreements and indemnities contained in this Bond
Purchase Agreement, or contained in the certificates of members, officials or officers of the
Issuer or the Borrower submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation by or on behalf of the Purchasers or any person
controlling the Purchasers, and shall survive delivery of the Bonds to the Purchasers and
payment therefor by the original purchasers.
10. Expenses. The Borrower shall be responsible for payments of all costs and
expenses incident to the performance of the Issuer's, the Purchasers', and the Borrower's
obligations in connection with the authorization, issuance and sale of the Bonds, the Mortgage,
the Mortgage Loan and the Project. The costs set forth on Schedule 11 hereto shall be paid by
the Trustee from funds on deposit in the Costs of Issuance Fund; provided, however, that the
Purchasers shall not be responsible for paying the fees of Bond Counsel, Issuer's Counsel,
Borrower's Counsel and Trustee's Counsel in excess of the amounts listed on Schedule 11 and
any additional amounts, if any, shall be the responsibility of the Borrower.
11. Indemnification.
(a) General. The Borrower covenants and agrees to indemnify the Issuer and the
Purchasers and their respective directors, officers, attorneys, trustees, and employees and each
person, if any, who controls any of such persons within the meaning of Section 15 of the
Securities Act (collectively, the "Indemnified Parties") for, and to hold each Indemnified Party ,
harmless against, all liabilities, claims, costs, losses and expenses (including without limitation,
to the extent permitted by law, reasonable attorneys' fees and expenses), imposed upon or
asserted against the Indemnified Parties pursuant to any action, claim or proceeding based upon
any untrue statement or alleged untrue statement of a material fact contained in the Preliminary
Official Statement or the Official Statement.
The Borrower shall reimburse any legal or other expenses incurred reasonably by any
Indemnified Party in connection with investigating and defending any liability, claim, cost, loss,
expense, action or proceeding described above; provided, nothing herein shall require the
Borrower to pay for any losses, claims, damages, liabilities or expenses resulting from the
negligence or the willful misconduct of an Indemnified Party or for expenses that were incurred
without prior notice to the Borrower. At the request and the expense of the Borrower, each
Indemnified Party shall cooperate in making any investigation and defense of any action, claim
or proceeding and shall assert appropriately the rights, privileges and defenses which are
available to the Indemnified Party in connection therewith.
(b) Procedure. The Indemnified Party shall, in the event of any claim, suit, action
or proceeding against it, any of its directors, attorneys, officers, representatives or employees
or any persons controlling it as referenced above, in respect of which indemnity may be sought
on account of any indemnity agreement by the Borrower contained herein, promptly give written
notice thereof to the Borrower. When such notice is given, the Borrower shall be entitled to
participate at its own expense in the defense of, or if it so elects, to assume the defense of, such
02/24/94 - 12 - m12-1853
0
claim, suit, action or proceeding, in which event such defense shall be conducted by counsel
chosen by the Borrower, but if the Borrower shall elect not to assume such defense, it shall
reimburse such Indemnified Party or Parties for the reasonable fees and expenses of any counsel
retained by them. Each and every Indemnified Party shall have the right to compromise, settle
or conclude any claim, action or proceeding against it with the written consent of the Borrower,
which consent shall not be unreasonably withheld. The foregoing notwithstanding, in the event
that the Borrower shall assume such defense and any Indemnified Party or Parties shall be
advised by independent legal counsel that counsel selected by the Borrower is not fully and
adequately protecting such party or parties and representing the interests of such party.or parties,
any such Indemnified Party or Parties shall have the right to conduct its own defense against any
such claim, suit, action or proceeding in addition to or in lieu of any defense conducted by the
Borrower, and the Borrower shall indemnify and hold harmless such Indemnified Party or
Parties against and from any and all suits, claims, damages, liabilities or expenses whatsoever
(including reasonable fees and expenses of counsel selected by such Indemnified Party or Parties)
incurred by and arising out of or in connection with any such claim, suit, action or proceeding.
12. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit
of the Purchasers and their successors and assigns, the Issuer and its officials and officers, and
the Borrower and the Borrower's successors and assigns, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of this Bond
Purchase Agreement.
13. Notices. Any notice or other communication to be given to any party to this Bond
Purchase Agreement may be given by delivering the same in writing at the respective addresses
set forth below:
Issuer: County of Contra Costa
Community Development Department
County Administration Building
651 Pine Street
4th Floor, North Wing
Martinez, California 94553-0095
Attention: Deputy Director-Redevelopment
Borrower: EAH - Contra Costa, Inc.
2169 East Francisco Boulevard, Suite B
San Rafael, California 94901
Attention:
Purchasers: Kirkpatrick, Pettis, Smith, Polian Inc.
1700 Lincoln Street, 30th Floor
Denver, Colorado 80203
Attn: James A. Danford
M/24/% - 13 -
m12-1853
14. Seve_ rabili1y. If any provisions of this Bond Purchase Agreement shall be held or
deemed to be or shall, .in fact, be inoperative, invalid or unenforceable as applied in any
particular case in any jurisdiction or jurisdictions or in all jurisdictions because it conflicts with
any provisions of any constitution, statute, rule or public policy, or any other reason, such
circumstance shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rending any other provision or provisions
of this Bond Purchase Agreement invalid, inoperative or unenforceable to any extent whatever.
15. Subordination to HUD Regulations. In the event of conflict between the
provisions of this Bond Purchase Agreement and the National Housing Act, as amended, the
regulations and administrative requirements promulgated thereto and the FHA documents, such
acts, regulations, administrative requirements and FHA documents shall control. No amendment
to this Bond Purchase Agreement shall conflict with any such acts, regulations, or administrative
requirements or FHA documents.
16. Limited Liability. Enforcement of the covenants under Section 6 of this Bond
Purchase Agreement will not result inany claim by the Issuer against the Project, the proceeds
of the Mortgage, any reserve or deposit required by FHA, or the rents or income from the
Project; except for available Residual Receipts (as defined in the Loan Agreement).
17. Applicable Law. This Bond Purchase Agreement shall be governed by and
construed in accordance with the laws of the State of California.
18. Counterparts. This Bond Purchase Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
COUNTY OF CONTRA COSTA
By:
Title: Chairman
EAH - CONTRA COSTA, INC.
By:
02/24/94 - 14 - m12-1853
IQRKPATRICK,PETTIS, SMITH,POLIAN INC.
CHARLES A. BELL SECURITIES CORP.
By: KIRKPATRICK, PETTIS, SMITH,
POLIAN INC.
By:
Vice President
02/24/94 - is - m12-1853
SCHEDULE I
MATURITY SCHEDULE
1994 Series A Bonds
Maturijy Date Principal Amount Interest Rate
Taxable 1994 Series A-T Bonds
Maturity Date Principal Amount Interest Rate
Price: _% (Plus accrued interest if any)
0224/94 m12-1853
SCHEDULE II
COSTS OF ISSUANCE
(1) BOND COSTS OF ISSUANCE
Bond Counsel - Orrick, Herrington & Sutcliffe
Purchasers' Counsel - Arter Hadden Haynes & Miller
Borrower's Counsel
Printing
Rating - Standard & Poor's Ratings Group
Out-of-Pocket Expenses
Sales Concessions
Management Fee
Cash Flow Verification
Issuer's Counsel
Issuer's Fee
Trustee Acceptance & Legal
Contingency
Total
(2) MORTGAGE LOAN COSTS AND FEES
Lender Warehouse Costs
GNMA Application Fee
GNMA Set up Fee
Lender Legal
Title and Recording
Lender Fee
Total Mortgage Loan
02124/94 m12-1853
EXHIBIT A
[FORM OF OPINION OF COUNSEL TO THE LENDER]
April 1994
County of Contra Costa
Martinez, California
Bank of America National Trust
and Savings Association
Los Angeles, California
Kirkpatrick, Pettis, Smith, Polian Inc.
Denver, Colorado
Charles A. Bell Securities Corp.
San Francisco, California
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
Dear Ladies and Gentlemen:
We have acted as counsel to TRI Capital Corporation, a corporation organized under the
laws of the State of California (the "Lender"), in connection with the issuance of the above-
referenced bonds (the "Bonds").
02/24/94 A-1 m12-1853
i •
In our capacity as such counsel, in rendering the opinions set forth below, we have
examined among other things, originals or copies, certified or otherwise identified to our
satisfaction, of the following documents: (i) the Official Statement, dated March _, 1994 (the
"Official Statement") of the County of Contra Costa (the "Issuer"), with respect to the Bonds;
(ii) the Financing Agreement, dated as of March 1, 1994 the ("Financing Agreement"), among
the Issuer, the Lender, EAH - Contra Costa, Inc., as Borrower and Bank of America National
Trust and Savings Association, as Trustee; and (iii) such other documents, certificates and
instruments as we have deemed necessary for the purposes of reaching the opinion expressed
herein. We have also relied as to matters of fact upon certificates of officers of the Lender and
examined certain other certificates and documents.
In such examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity to the original document of all
documents submitted to us as photostatic or certified copies. We have assumed due
authorization, execution and delivery of all documents referenced herein by the parties thereto
other than the Lender and that each of such parties has full power, authority and legal right to
execute and deliver each such instrument.
Capitalized terms used but not defined herein have the meanings assigned to them in the
Financing Agreement.
1. The Lender (i) is a corporation duly and lawfully organized under the laws of the
State of California and duly authorized to, transact business in the State of California; (ii) is
organized and operated for the purposes, among others, of making mortgage loans to provide
financing for the acquisition and construction of residential developments and issuing mortgage-
backed securities guaranteed by GNMA in order to obtain funds to make the mortgage loans;
(iii) has the requisite power and authority to execute and deliver the Financing Agreement, to
issue and deliver the GNMA Securities and to perform its obligations under the Financing
Agreement and the GNMA Securities; and (vi) has duly authorized the execution and delivery
of the Financing Agreement and the issuance and delivery of the GNMA Securities.
2. The execution and delivery of the Financing Agreement, the issuance and delivery
of the GNMA Securities and the consummation of the transactions contemplated in the Financing
Agreement and the GNMA Securities do not conflict with or constitute a breach of or a default
under the Lender's organizational documents.
3. GNMA has approved the Lender to issue mortgage-backed securities guaranteed
by GNMA as to timely payment of principal and interest pursuant to Section 306(g) of Title III
of the National Housing Act of 1934 and the regulations promulgated pursuant thereto as in
effect on the date hereof.
4. The Mortgage Note, upon due execution and delivery by the Borrower and upon
endorsement for insurance by the Commissioner, will be in a form which complies with (i)
HUD's requirements as expressly set forth in Title 24, Part 251 of the Code of Federal
Regulations (the "HUD Regulations") and GNMA's requirements as expressly set forth in Title
02/24/94 A-2 m12-1853
24, Part 390 of the Code of Federal Regulations (the "GNMA Regulations") and GNMA
Handbook 5500.1 REV-6 (Government National Mortgage Association Mortgage-Backed
Securities Guide) (the "GNMA Handbook").
5. The Lender has duly authorized,executed and delivered the Financing Agreement,
and, assuming the due and valid authorization, execution and delivery by the other parties
thereto, the Financing Agreement constitutes a legal, valid,and binding obligation of the Lender,
subject to (i) the exercise of judicial discretion in accordance with general principals of equity,
and (ii) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable.
6. The Lender has duly authorized the issuance and delivery of the GNMA
Securities, and, upon the issuance and delivery by the Lender, such instruments will constitute
legal, valid and binding obligations of the Lender, subject to (i) the compliance by the Lender
on the date of issuance of the GNMA Securities with all issuer eligibility requirements of
GNMA, (ii) the exercise of judicial discretion in accordance with general principles of equity,
and (iii) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable. The
foregoing statement, however, is expressly limited by the fact that the GNMA Securities do not
constitute liability of, nor evidence any recourse against, the Lender, as recourse may be had
to GNMA in the event of any failure of timely payment as provided for in the GNMA Guaranty
set forth on the face of the GNMA Securities. We have made no independent investigation of
the Lender's compliance with the issuer eligibility requirements of GNMA.
7. Upon the valid issuance of the GNMA Securities and the execution by GNMA of
the Guaranty set forth on the face thereof as required under Section 390.13(a) of the GNMA
Regulations and as particularly set forth in Appendices 42 and 43 of the GNMA Handbook, the
GNMA Securities will be guaranteed by GNMA as to timely payment of principal and interest
pursuant to Section 306(g) of Title III of the Act and the regulations promulgated pursuant
thereto as in effect on the date of issuance of the GNMA Commitments.
8. Nothing has come to our attention which would lead us to believe that the
information appearing under the caption "THE GNMA MORTGAGE-BACKED SECURITIES
PROGRAM," and "THE MORTGAGE NOTE AND MORTGAGE" in the Official Statement
contains any untrue statement of a material fact or fails to state any fact necessary in order to
make the statements made therein, in light of the circumstances under which they were made,
not misleading. The information appearing under those captions are fair and accurate summaries
of the matters discussed therein. Except as expressly stated herein, we express no opinion
regarding the accuracy or completeness of any of the other information contained in any other
section of the Official Statement.
02/24/94 A-3 m12.1853
This opinion is intended solely for the reliance of the Issuer, and the Trustee, and the
initial purchaser of the Bonds, as addressee above and may not be delivered to or relied upon
by any other person without our express prior written consent.
Very truly yours,
02124/94 A-4 m12-1853
EXHIBIT B
[FORM OF OPINION OF COUNSEL TO THE BORROWER]
April 1994
County of Contra Costa
Martinez, California
Bank of America National Trust
and Savings Association
Los Angeles, California
Kirkpatrick, Pettis, Smith, Polian Inc.
Denver, Colorado
Charles A. Bell Securities Corp.
San Francisco, California
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
Dear Ladies and Gentlemen:
We have acted as counsel to EAH-Contra Costa, Inc., a nonprofit corporation organized
under the laws of the State of California (the 'Borrower"), in connection with the issuance of
the above-referenced bonds (the "Bonds").
In our capacity as such counsel, in rendering the opinions set forth below, we have
examined among other things, originals or copies, certified or otherwise identified to our
satisfaction, of the following documents: (i) the Official Statement, dated March _, 1994 (the
"Official Statement") of the County of Contra Costa (the "Issuer"), with respect to the Bonds;
02/24/94 B-1 m12-1853
(ii) the Financing Agreement, dated as of March 1, 1994 (the "Financing Agreement") among
the Issuer, the Borrower, TRI Capital Corporation, as Lender, and Bank of America National
Trust and Saving Association, as Trustee (iii) the Regulatory Agreement and Declaration of
Restrictive Covenants dated as of March 1, 1994 (the "Regulatory Agreement"), between the
Issuer and the Borrower; (iv) Bond Purchase Agreement, dated March _, 1994, among the
Issuer, the Borrower, and Kirkpatrick, Pettis, Smith, Polian Inc. and Charles A. Bell Securities
Corp., as Purchasers (the "Bond Purchase Agreement"); and (v) such other documents,
certificates and instruments as we have deemed necessary for the purposes of reaching the
opinion expressed herein. We have also relied as to matters of fact upon certificates of officers
of the Borrower and examined certain other certificates and documents.
In such examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity to the original document of all
documents submitted to us as photostatic or certified copies. We have assumed due
authorization, execution and delivery of all documents referenced herein by the parties thereto
other than the Borrower and that each of such parties has full power, authority and legal right
to execute and deliver each such instrument.
Capitalized terms used but not defined herein have the meanings assigned to them in the
Indenture or the Bond Purchase Agreement.
Based upon and subject to the foregoing, we are of the opinion that, as of the date
hereof.
(i) The Borrower is a nonprofit corporation validly existing and in good
standing under the laws of the State of California, with full power and authority to
execute and deliver the Mortgage Loan Documents (as defined below), the Financing
Agreement and the Regulatory Agreement and to perform its obligations under each
respective agreement.
(ii) The Mortgage, the Mortgage Note, the Regulatory Agreement and the
Financing Agreement (collectively, the "Mortgage Loan Documents") and the Bond
Purchase Agreement have each been duly authorized, executed and delivered by the
Borrower and constitute legal, valid and binding obligations of the Borrower, enforceable
in accordance with their respective terms, except as the enforcement thereof may be
limited by (a)applicable bankruptcy, insolvency, moratorium, reorganization and similar
laws(including fraudulent conveyance laws)affecting the enforcement of creditors' rights
and remedies generally in effect from time to time, and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding at equity or at
law).
(iii) The execution and delivery of the Mortgage Loan Documents, the Bond
Purchase Agreement and the performance by the Borrower of the terms of the respective
agreements do not conflict with or violate any other document, instrument, decree,
indenture or agreement by which the Borrower is bound.
02/24/94 B-2 m12-1853
•
(iv) No approval, authorization or other action by, or filing with, the State of
California, or any agency thereof, is required in connection with the execution and
delivery by the Borrower of the Bond Purchase Agreement.
(v) There is no action, suit, proceeding, inquiry or investigation at law or in
equity or before any court, public body pending or, to the best of our knowledge, after
due inquiry, threatened, to challenge the right, power or authority of the Borrower to
own and operate the Project (as defined in the Official Statement) or to perform its
obligations under the Bond Purchase Agreement or the Mortgage Loan Documents.
(vi) The information set forth in the Official Statement under the subcaptions
"The Project," "Sources of Revenue" and "The Borrower" under the caption "THE
PROJECT AND THE PRIVATE PARTICIPANTS" is true and correct and does not
contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
(vii) We have no reason to believe that the Official Statement (except.as to any
financial or statistical data included therein, as to which we do not express any opinion),
as of the date hereof, contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Very truly yours,
MICHAUD & HOSHIYAMA
02/24/94 B-3 m12-1853
EXHIBIT C
[FORM OF BOND COUNSEL SUPPLEMENTAL OPINION]
April _, 1994
Kirkpatrick, Pettis, Smith, Polian Inc.
Denver, Colorado
Charles A. Bell Securities Corp.
San Francisco, California
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
Dear Ladies and Gentlemen:
We have acted as Bond Counsel in connection with the authorization and issuance of the
above-captioned bonds (the "Bonds") by the County of Contra Costa (the "Issuer").
We have examined originals, or copies certified or otherwise identified to our satisfaction,
of (a) the Trust Indenture (the "Indenture") relative to the Bonds dated as of March 1, 1994,
between the Issuer and Bank of America National Trust and Savings Association(the "Trustee");
(b) the Mortgage Loan and the Note from the EAH - Contra Costa, Inc. (the 'Borrower"); (c)
the Bond Purchase Agreement dated March_, 1994 (the'Bond Purchase Agreement"),between
the above-named purchasers, the Issuer and the Borrower; (d) the Financing Agreement dated
as of March 1, 1994, among the Issuer, the Borrower, the Trustee and TRI Capital Corporation
(the "Lender"); (e) the Regulatory Agreement and Declaration of Restrictive Covenants dated
as of March 1, 1994, between the Issuer and the Borrower; (f) the Official Statement (the
"Official Statement") of the Issuer relating to the Bonds; and (g) the opinions and certificates
required to be delivered to the above-named purchasers pursuant to Section 7 of the Bond
Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the
same meanings as set forth in the Indenture.
02/24/94 C-1 m12-1853
On the basis of the foregoing, and our review of such other information, records and
documents as in our judgment is necessary or advisable, we are of opinion as follows:
1. Under existing laws, the Bonds may be offered and sold without registration under the
Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the
Trust Indenture Act of 1939, as amended.
2. The statements made in the Official Statement under the headings "THE BONDS,"
"TAX EXEMPTION," "CERTAIN OTHER TAX CONSEQUENCES," and "CERTAIN
LEGAL MATTERS" and in APPENDIX B -- "SUMMARY OF THE INDENTURE,"
APPENDIX C -- "SUMMARY OF THE FINANCING AGREEMENT" and APPENDIX D --
"SUMMARY OF THE REGULATORY AGREEMENT AND DECLARATION OF
RESRICTIVE COVENANTS" are, to the extent that such statements are summaries of
documents referred to therein, accurate summaries of the information purported to be shown.
Except as indicated in the preceding paragraph, we have not undertaken to check the
accuracy or completeness of, or verified the information contained in, the Official Statement.
Nevertheless, we have had discussions with representatives of the Issuer and such other persons
as we deemed appropriate and our participation in such discussions did not disclose to us any
information which gives us reason to believe that the Official Statement (except as to any
financial or statistical data included in the Official Statement as to which we do not express any
opinion), as of the date hereof, contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein made, in light of the
circumstances under which they were made, not misleading.
In rendering this opinion, we have relied upon the opinions and certificates delivered
pursuant to the Bond Purchase Agreement.
Reference is made to our opinion of even date herewith delivered in connection with the
Bonds and addressed to the Issuer. You may rely on such opinion as if it were addressed to
you.
We bring to your attention the fact that our conclusions are an expression of professional
judgment and are not a guarantee of a result.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE
02/24/94 C-2 m12-1853
• 0
EXHIBIT D
[FORM OF OPINION OF PURCHASERS' COUNSEL]
April _, 1994
Kirkpatrick, Pettis, Smith, Polian Inc.
Denver, Colorado
Charles A. Bell Securities Corp.
San Francisco, California
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
Dear Ladies and Gentlemen:
We have acted as your counsel in connection with the issuance of the above-captioned Bonds.
In connection with such representation, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of the following documents: (i) the Trust Indenture
dated as of March 1, 1994 (the "Indenture") by and between the County of Contra Costa (the
"Issuer") and Bank of America National Trust and Savings Association, Los Angeles, California,
as trustee (the "Trustee"); (ii) the Financing Agreement, dated as of March lf 1994 by and
among the Issuer, the Trustee, TRI Capital Corporation (the "Lender"), and EAH - Contra
Costa, Inc., a California nonprofit corporation (the "Borrower"); (iii) the Bond Purchase
Agreement, relating to the sale of the Bonds, by and among the Issuer, the Borrower and you;
(iv) the Official Statements with respect to the Bonds (the "Official Statements"); (v) the
Regulatory Agreement and Declaration of Restrictive Covenants dated as of March 1, 1994
between the Issuer and the Borrower; and (vi) such other documents, certificates, opinions,
instruments and records as we have deemed necessary for the purpose of this opinion.
02t24194 D-1 m12-1853
Based on the foregoing, we are of the opinion that the Bonds are not subject to the
registration requirements of the Securities Act of 1933, as amended, and the Indenture is not
subject to the qualification requirements of the Trust Indenture Act of 1939, as amended.
We have not undertaken to determine independently or assume any responsibility for the
accuracy, completeness or fairness of, or to verify the information contained in, the Official
Statements relating to the Bonds. Nevertheless, we have had discussions with you,
representatives of the Issuer, the Borrower and the Trustee and their respective counsels and
Bond Counsel with respect to the preparation of the Official Statements. Our participation in
such discussions and our review of the Official Statements as your counsel did not disclose to
us any information that gives us reason to believe that the Official Statements' (except as to the
statistical and financial data and any project information included in the Official Statements, as
to which we do not express any opinion), as of the date hereof, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading.
In rendering this opinion we have relied on the opinions and certificates delivered pursuant
to the aforementioned Bond Purchase Agreement with respect to the matters covered therein.
No opinion is expressed herein with respect to the status of the offer and sale of the Bonds under
the Blue Sky laws of any jurisdiction.
This letter, and the legal opinions herein, are intended for the information solely of the
addressee hereof and solely for the purposes of the transactions described in the Official
Statements and are not to be relied upon by any other person or entity, or for any other purpose,
or quoted as a whole or in part, or otherwise referred to, in any document, or to be filed with
any governmental or other administrative agency or other person or entity for any purpose
without our prior written consent. We do not undertake to advise you of matters that may come
to our attention subsequent to the date hereof that may affect the conclusions expressed herein.
We bring to your attention the fact that our conclusions are an expression of professional
judgment and are not a guarantee of a result.
Sincerely,
ARTER HADDEN HAYNES & MILLER
0=4/94 D-2 m12-1853
EXHIBIT E
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
CERTIFICATE OF TRI CAPITAL CORPORATION
IN THE CAPACITY SET FORTH BELOW
This Certificate is made and delivered by the undersigned officer of TRI Capital Corporation,
a California corporation (the "Lender") in connection with the issuance by the County of Contra
Costa (the "Issuer") of $ in aggregate principal amount of Multifamily Housing
Revenue Bonds (GNMA Collateralized -- Crescent Apartments Project) 1994 Series A and
$ in aggregate principal amount of Multifamily Housing Revenue Bonds (GNMA
Collateralized -- Crescent Apartments Project) Taxable 1994 Series A-T (collectively, the
"Bonds") and in accordance with Section 7(d)(vi) of the Bond Purchase Agreement dated March
_, 1994 (the "Bond Purchase Agreement") among the Issuer, EAH - Contra Costa, Inc. (the
'Borrower"), and Kirkpatrick, Pettis, Smith, Polian Inc. and Charles A. Bell Securities Corp.
Capitalized terms used herein and not defined shall have the meanings ascribed thereto in the
Official Statement relating to the Bonds.
1. The making of the Mortgage Loan, the delivery of the GNMA Securities, and the
consummation of the transactions contemplated hereby and thereby, do not conflict with or
constitute a breach of or a default under the Lender's organizational documents or under the
terms and conditions of any agreement or commitment to which the Lender is a party or by
which the Lender is bound.
2. The Lender is, and shall take no action which would jeopardize its ability to remain
until the acquisition of all the GNMA Securities by the Trustee, (i) approved by FHA to
originate and service mortgage loans insured by FHA under Section 241(f) of the National
Housing Act and applicable regulations thereunder, and (ii) approved by GNMA to issue
02/24/94 E-1 m12-1853.
mortgage-backed securities guaranteed by GNMA pursuant to Section 306(g) of the National
Housing Act and applicable regulations thereunder.
3. The information relating to the Lender contained in the section of the Official
Statement of the Issuer with respect to the Bonds (the "Official Statement") titled "THE
PROJECT AND THE BORROWER -- The Mortgage Lender/Servicer" does not contain an
untrue statement of a material fact or fails to state a material fact necessary in order to make the
statements made not misleading as of the date hereof.
4. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, or
before or by any court, public board or body, pending or, to the best knowledge of the Lender,
threatened against or affecting the Lender wherein an unfavorable decision, ruling or finding
might result in any material adverse change in the business, operations, properties, assets,
liabilities or conditions (financial or other) of the Lender.
IN WITNESS WHEREOF, the undersigned officer of TRI Capital Corporation executed this
Certificate as of this day of April, 1994.
TRI CAPITAL CORPORATION
By:
Title:
02124/94 E-2 m12-1853
Financing Agreement
[OH AFT OF 11 MARCH 19941
'a
FINANCING AGREEMENT
Dated as of 1, 1994
by and among
COUNTY OF CONTRA COSTA,
EAH-CONTRA COSTA, INC.,
a California nonprofit corporation
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
Relating to
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(FHA INSURED MORTGAGE LOAN - CRESCENT PARK APARTMENTS PROJECT)
1994 SERIES C
SF2-28089.1 40511-90-MS 1-03/11/94
TABLE OF CONTENTS
PAGE
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
The Loan Payments and Additional Payments
Section 2.1. Amount and Terms of the FHA Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2. Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3. Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.4. Adequate Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
Maintenance, Insurance, Damage,
Destruction and Eminent Domain
Section 3.1. Maintenance, Taxes and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2. Removal of Portions of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.3. Damage, Destruction and Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4. Right of Access to the Project and Records . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
Warranties, Representations and Special Covenants
Section 4.1. Representations and Warranties of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.2. Representations, Covenants and Warranties of the Borrower . . . . . . . . . . . . . . 4
Section 4.3. Borrower's Approval of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4. Tax-Exempt Status of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
Indemnification; Limitation of Liability
Section 5.1. Indemnification of the Issuer and the Trustee . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.2. Limitation on Personal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.3. Limitation on Liability of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.4. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
Assignment
Section 6.1. Assignment by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.2. Mortgage and Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SF228089.1 i 40511-90-MS1-03/11/94
PAGE
ARTICLE VII
Additional Agreements
Section 7.1. Nature of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.2. No Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.3. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.4. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.5. No Default Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.6 Maintenance of Existence; Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.7. Statement of Compliance; Notice of Certain Events . . . . . . . . . . . . . . . . . . . 13
Section 7.8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.9. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII
Miscellaneous
Section 8.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.2. Continuing Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.3. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.4. Concerning Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.6. Modifications in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.7. Further Assurances and Corrective Instruments . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.8. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.11. Amounts Remaining in Bond Fund or Other Funds . . . . . . . . . . . . . . . . . . . 15
Section 8.12. Effective Date and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.13. HUD and FHA Requirements to Control . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SF2-28089.1 11 40511-90-MS1-03/11/94
FINANCING AGREEMENT
THIS FINANCING AGREEMENT(as supplemented and amended, this "Agreement") is entered into
as of 1, 1994, by and among the COUNTY OF CONTRA COSTA, a legal subdivision and body
corporate and politic existing under the laws of the State of California (together with its successors and assigns,
the "Issuer"), EAH-CONTRA COSTA, INC., a California nonprofit corporation (together with its successors
and assigns, the "Borrower"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as trustee (together with its successors and assigns, the "Trustee") under a Trust Indenture of
even date herewith between the Issuer and the Trustee (as supplemented and amended, the "Indenture").
Recitals
(1) This Agreement is being executed in connection with the issuance of the Issuer's Multifamily
Housing Revenue Bonds (FHA Insured Mortgage Loan - Crescent Park Apartments Project), 1994 Series C (the
'Bonds"). The proceeds of the Bonds will be loaned to the Borrower and used to finance the acquisition and
rehabilitation of a 378-unit multifamily rental housing project located in the City of Richmond, County of
Contra Costa, California, known as Crescent Park (the "Project").
NOW, THEREFORE, in consideration of the Recitals and the mutual covenants and representations
hereinafter contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. All words and phrases used herein shall have the meanings defined in
Article I of the Trust Indenture dated as of the date hereof between the Issuer and the Trustee.
The terms "herein," "hereunder," "hereby," "hereto", "hereof" and any similar terms refer to this
Financing Agreement; the term "heretofore" means before the date of execution of this Financing Agreement;
and the term "hereafter" means after the date of execution of this Financing Agreement.
Section 1.2. Interpretation. Words importing persons include firms, associations and corporations.
Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and
neuter genders. Words importing the singular number shall include the plural number and vice versa unless the
context shall otherwise dictate. References to Articles, Sections and other subdivisions of this Financing
Agreement are the Articles, Sections and other subdivisions of this Financing Agreement as originally executed.
The headings of this Financing Agreement are for convenience and shall not define or limit the provisions
hereof.
ARTICLE H
The Loan Payments and Additional Payments
Section 2.1. Amount and Terms of the FHA Note. The Issuer agrees, subject to the terms and
conditions in this Financing Agreement, to make the Mortgage Loan to the Borrower in an amount equal to the
aggregate principal amount of the Bonds for the purpose of acquisition and rehabilitation of the Project. The
proceeds of the Bonds shall be deposited with the Trustee and used as provided in the Indenture.
SF2-28089.1 40511-90-MSI-03/11/94
The Borrower agrees to repay the Mortgage Loan, in accordance with the terms of the FHA Note, to
enter into such agreements as are necessary to modify the Mortgage Loan to reflect the assumption by the
Borrower of the obligation evidenced thereby, and to make loan payments under the FHA Note as provided
therein.
Section 2.2. Additional Payments. In addition to payments required of the Borrower under the
Indenture and the FHA Documents, the Borrower also agrees to pay, to the extent funds are not available for
such purposes from Available Fee Revenues under the Indenture, (1) within thirty(30) days after receipt of
request for payment thereof, all reasonable extraordinary out-of-pocket expenses of the Issuer (not including
salaries and wages of employees of the Issuer) related to the Project and the financing thereof which are not
otherwise required to be paid by the Borrower under the terms of this 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 interpretation and enforcement of any documents relating to the Project or the Bonds; (2) on
the Closing Date the sum of$ to the Issuer; and (3) on each Interest Payment Date thereafter,
commencing , 1995 and ending on , 20 , an amount equal to one-sixteenth of one percent
(1/16 of I%) of$ (the initial aggregate principal amount of Bonds issued), in each case without
demand or notice, and in each case in payment of the semiannual fee of the Issuer. The Borrower also agrees
to pay the reasonable fees, charges and expenses of the Trustee as trustee, paying agent, and the fees of any
other paying agent for the Bonds under the Indenture including, without limitation, those items described in
Section 7.06 of the Indenture, to the extent funds are not available for such purpose from Available Fee
Revenues.
The Borrower also agrees to pay, or cause the Trustee to pay from amounts received from the
Borrower or otherwise, any fees and other costs required to be incurred by the Issuer and/or the Trustee to
comply with the provisions of the Indenture and the Tax Certificate relating to rebate calculations, including but
not limited to any expenses related to computations to determine if moneys are required to be rebated to the
United States, to the extent not paid from the Rebate Fund established under the Indenture. In addition, in the
event that amounts held in the Rebate Fund under the Indenture are insufficient to make any transfer or payment
to the United States, the Borrower shall promptly pay the amount of the insufficiency to the Trustee.
The obligations of the Borrower to make the payments required by this Section and to perform and
observe the other agreements on its part contained herein shall be absolute and unconditional, irrespective of any
defense or any rights of set-off, recoupment or counterclaim it might otherwise have against the Issuer or the
Trustee, and during the term of this Agreement, the Borrower shall pay absolutely net the payments required
hereunder, free of any deductions and without abatement, diminution or set-off. Until such time as the principal
of, premium, if any, and interest on the Bonds shall have been fully paid, or provision for the payment thereof
shall have been made as required by the Indenture, the Borrower (i) will not suspend or discontinue any
payments provided for in this Section; (ii) will perform and observe all of its other covenants contained in this
Agreement and (iii)will not terminate this Agreement for any cause, including, without limitation, the
occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to
the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of
America or of the State of California or any political subdivision or either of these, or any failure of the Issuer
or the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement or the Indenture, except to the extent permitted by
this Agreement. The Issuer shall as its sole remedy upon the Borrower's failure to comply with this Section 2.2
require the Trustee to cause a foreclosure of the Mortgage and under no circumstances shall the Issuer have the
right to obtain a judgment against the Borrower for the Borrower's failure to comply with this Section 2.2.
Section 2.3. Investment of Funds. Any moneys held as a part of any funds established under the
Indenture shall be invested or reinvested by the Trustee in accordance with the Indenture. The Trustee may
make any and all such investments through its own investment department. All earnings on such investments
shall, however, in no event reduce the obligation of the Borrower pursuant to the FHA Note.
SF2-28089.1 2 40511-90-MSI-03/11/94
Section 2.4. Adequate Payments. The Borrower reconfirms that, to the best of its knowledge, the
amounts required to be paid by the Borrower pursuant to the FHA Note, plus other amounts available pursuant
to the Indenture, will be sufficient at all times to pay the principal of and interest on the Bonds, to make all
other payments required by the Indenture and to maintain all other funds established under the Indenture at their
required levels.
ARTICLE III
Maintenance, Insurance, Damage,
Destruction and Eminent Domain
Section 3.1. Maintenance, Taxes and Insurance. So long as any of the Bonds are outstanding
within the meaning of the Indenture, the Borrower shall, as required under the FHA Documents, keep and
maintain the Project, and the Borrower hereby reconfirms its agreement in the Mortgage, subject to the
nonrecourse provisions thereof, to pay all costs of maintenance and repair with respect to the Project, all taxes
and assessments and related governmental charges, insurance premiums (including public liability insurance and
insurance against damage to or destruction of the Project) concerning or in any way related to the Project, or
any part thereof, and any expenses or renewals hereof, and any other governmental charges and impositions
whatsoever, including taxes, foreseen or unforeseen, and all utility and other charges and assessments
concerning or in any way related to the Project.
Section 3.2. Removal of Portions of the Project. The Borrower shall have the right from time to
time to substitute personal property or fixtures for any portions of the Project, provided such actions are
permitted under the FHA Documents. Removal of any portion of the Project pursuant to this Section shall be
made only with the prior written concurrence of FHA.
Section 3.3. -Damage, Destruction and Eminent Domain. If, prior to full payment of all Bonds
outstanding(or provision for payment thereof having been made in accordance with the provisions of the
Indenture), the Project or any portion thereof is destroyed or damaged as a whole or in part by fire or other
casualty, or title to, or the temporary use of, the Project or any portion thereof shall have been taken by the
exercise of the power of eminent domain, and the Issuer, the Borrower or Trustee receives Net Proceeds from
insurance or any condemnation award in connection therewith, such proceeds shall be applied as provided in the
FHA Documents and the Indenture.
Section 3.4. Right of Access to the Proiect and Records. The Borrower agrees that during the
term of this Agreement the Issuer, the Trustee and the duly authorized agents of either of them shall have the
right at all reasonable times and upon reasonable notice during normal business hours to enter upon the site of
the Project to examine and inspect the Project and to have access to the books and records of the Borrower with
respect to the Project.
ARTICLE IV
Warranties, Representations and Special Covenants
Section 4.1. Representations and Warranties of Issuer. The Issuer represents and warrants that:
(a) The Issuer is a legal subdivision and body corporate and politic, duly organized and existing
under laws of the State. Under the provisions of the Act, the Issuer has the power to enter into this Agreement,
the Indenture and the Issuer Regulatory Agreement and the transactions contemplated hereunder and thereunder
and to carry out its obligations hereunder and thereunder. By proper action, the Issuer has duly authorized the
execution and delivery of this Agreement, the Indenture and the Issuer Regulatory Agreement.
SF2-28089.1 3 40511-90-MS1-03/11/94
(b) The Issuer is issuing the Bonds, at the request of the Borrower, in order to provide for the
financing of the acquisition and rehabilitation of the Project.
(c) To its knowledge and in reliance upon the advice of counsel, neither the execution nor the
delivery of the Bonds, this Agreement, the Bond Purchase Agreement, the Issuer Regulatory Agreement or the
Indenture conflicts with or results in a breach of any of the terms, conditions or provisions of any constitutional
provisions or statute of the State, or of any agreement, instrument,judgment, order or decree to which the
Issuer is now a party or by which it is bound, or constitutes a default under any of the foregoing.
(d) The Issuer hereby confirms its findings relating to the issuance of the Bonds contained in the Bond
Resolution.
Section 4.2. Representations, Covenants and Warranties of the Borrower. As a condition to the
Issuer's entering into this Financing Agreement, the Borrower represents, warrants and covenants that:
(a) The Borrower (i) is a nonprofit corporation duly organized and existing, in good standing,
under the laws of the State of California, (ii) has the power to own its property and to carry on its business as
now being conducted and as contemplated by this Agreement, the Issuer Regulatory Agreement and the FHA
Documents, (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the transaction of its business makes such
qualification necessary, including, but not limited to, the State, (iv) is an organization described in Section
501(c)(3) of the Code and is exempt from federal income tax under Section 501(a) of the Code, and (v) the
Borrower's acquisition and operation of the Project pursuant to (and subject to requirements set forth in) the
Indenture, this Financing Agreement and the Issuer Regulatory Agreement, will not give rise to an "unrelated
trade or business" of the Borrower within the meaning of Section 513(a) of the Internal Revenue Code of 1986.
(b) The Borrower has full power and authority to execute and deliver this Financing Agreement,
the Issuer Regulatory Agreement, the FHA Documents, the Tax Certificate and all other documents and
instruments required in connection with the refinancing of the Mortgage Loan and the issuance of the Bonds
(collectively, the "Borrower Documents"), and to carry out the transactions provided for herein and therein.
The Borrower Documents have by proper action been duly authorized, executed and delivered by the Borrower
and all actions necessary have been taken to constitute the Borrower Documents, when executed and delivered
by the respective parties thereto, valid and binding obligations of the Borrower.
(c) The execution, delivery and performance by the Borrower of the Borrower Documents and the
consummation of the transactions contemplated hereby and thereby (i) do not and will not violate or, as
applicable, have not violated any provision of law, rule or regulation applicable to the Borrower or of any writ
or decree of any court or governmental instrumentality or of the partnership agreement of the Borrower, or of
any mortgage, indenture, contract, agreement or other undertaking to which the Borrower is a party or that
purports to be binding upon the Borrower or upon any of its assets, and (ii) will not violate or, as applicable,
have not violated any provision of any indenture, agreement or other instrument, or result in the creation of
imposition of any lien, charge or encumbrance of any nature other than the liens created hereby and thereby.
(d) The use and operation of the Project will be in accordance with the Act, and the Project does
not and will not conflict with any zoning, planning, building, water and air pollution and other similar
regulations of all governmental authorities having jurisdiction of the Project, and all necessary permits, licenses,
consents and permissions have been obtained as of the date of execution of this Financing Agreement and the
Project conforms to all applicable environmental regulations.
(e) There is no litigation or proceeding pending or, to the knowledge of the Borrower, threatened
against the Borrower or the Project before any court or administrative agency which, in the opinion of the
Borrower or its counsel, if determined adversely to the Borrower, will materially adversely affect the Borrower
or the Project, or the authority of the Borrower to enter into this Agreement, the Issuer Regulatory Agreement
or any of the FHA Documents executed and delivered by the Borrower.
SF2-28089.1 4 40511-90-MS1-03/11/94
(f) There is (i) no provision of the Borrower's articles of incorporation, dated 199_,
bylaws, dated , 199_, or other organizational documents or resolutions of the Borrower and no
provision of any existing mortgage, indenture, contract or agreement binding on the Borrower or affecting any
of the Borrower's property, and (ii) to the best of the Borrower's knowledge, no provision of law or order of
court binding upon the Borrower or affecting any of the Borrower's property, in either case which would
conflict with or in any way prevent the execution, delivery, or performance of the terms of this Agreement, the
Bond Purchase Agreement, the Issuer Regulatory Agreement or any of the FHA Documents executed and
delivered by the Borrower, or which would be in default or violated as a result of such execution, delivery or
performance. The Borrower is not in material default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party,
other than its defaults under the Mortgage Loan and related documents which will be cured by the transactions
contemplated hereby.
(g) No assessments of any nature with respect to the Project are delinquent, including but not
limited to assessments relating to streets, roads, entrances, water lines, sanitary and storm sewers, gas lines and
all other utilities including acreage fees and trunk sewers.
(h) The Borrower shall do or cause to be done all things necessary to preserve, maintain and keep
in full force and effect its legal existence and comply with all laws applicable to it.
(i) The Borrower agrees promptly to give notice in writing to the Trustee and the Issuer of the
occurrence or existence of any material litigation, labor dispute or governmental proceeding or investigation
affecting the Borrower that could reasonably be expected to interfere substantially with its normal operations or
materially and adversely affect its financial condition.
0) The Borrower lawfully owns and is possessed of the real property and interests therein
described in the Mortgage and has good and marketable title and fee simple estate therein subject only to such
encumbrances as are described in the Trustee's policy of title insurance and approved by FHA, and it will
defend the title thereto and every part thereof against the claims and demands of all persons whomsoever.
(k) No counterclaim, offset, defense or right of rescission exists that can be asserted and
maintained by the Borrower against the Issuer.
(1) The statements made in any official statement relating to the Bonds (the "Official Statement")
that are descriptive of the Borrower, the Project and its prior Operating History, have been prepared or
reviewed by the Borrower and did not, as of the date of the Official Statement, do not as of the date hereof, and
will not on the date of delivery of the Bonds contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make such statements, in the light of the circumstances under which they
were made, not misleading.
(m) The Borrower will prepare or cause to be prepared at its expense all audits of the Borrower or
of the Project required by HUD in accordance with HUD regulations.
(n) The Borrower agrees to pay all of the fees and expenses of counsel, any certified public
accountant and any other necessary consultants employed by the Borrower, the Trustee or the Issuer in
connection with any of the rebate calculation requirements imposed by the Indenture. The Borrower shall
provide or cause to be provided all information and moneys (including moneys necessary to make deposits to
the Rebate Fund required by the Indenture) to the Trustee to enable the Trustee to perform the duties imposed
on the Trustee by the Indenture with respect to any excess nonpurpose obligation earnings under Section 148 of
the Internal Revenue Code of 1986 and investment of amounts held under the Indenture.
SF2-28089.1 5 40511-90-MS 1-03/11/94
(o) The Borrower covenants and agrees that from the date hereof until payment in full of all of the
obligations hereunder, unless the Issuer and Trustee shall otherwise consent in writing, the Borrower will pay
all Ordinary and Extraordinary Trustee/Mortgage Servicer Fees and Expenses to the extent not available under
the Indenture, and will not:
(i) Incur, create, assume or suffer to exist any mortgage, pledge, security interest, lien,
charge or other encumbrance of any nature on any of the Borrower's assets, now or hereafter owned
other than (1) any liens, taxes or other governmental charges which are not yet due and payable, (2)
any pledge relating to syndication of the Project, (3) any lien, including, but without limiting the
generality of the foregoing, mechanics' liens, or other liens resulting from a good-faith dispute on the
part of the Borrower, which dispute the Borrower agrees to resolve diligently, or which liens are
insured over by a title insurance company acceptable to FHA, (4) other liens or encumbrances
approved by FHA, and (5) such other pledges as may be approved in writing by the Trustee;
(ii) Create, incur, assume or suffer to exist any indebtedness for borrowed money or any
other obligation whatsoever, regardless of how evidenced or secured, except indebtedness of the
Borrower to the Issuer or the Trustee or provided for in the FHA Note, the Mortgage, the Indenture
and the documents referred to therein or in the normal course of business.
(p) The Borrower may not sell, transfer or exchange or permit the sale, transfer, conveyance or
encumbrance of the Project or any part thereof(except for unit leases) unless the Borrower shall notify in
writing and obtain the agreement of any buyer or successor or other person acquiring the Project or any interest
therein that such acquisition is subject to the requirements of this Financing Agreement and the Issuer
Regulatory Agreement. This provision shall not act to waive any other restriction on such sale, transfer or
exchange contained in the Issuer Regulatory Agreement.
(q) The Borrower shall not discriminate on the basis of race, creed, color, sex, age or national
origin in the lease, use or occupancy of the Project or in connection with the employment or application for
employment of persons for the operation and management of the Project.
(r) The Borrower shall not:
(i) grant commercial leases of portions of the Project in excess of 10% of the net
available square footage of the Project;
(ii) demolish any part of the Project or substantially subtract from any real or personal
property of the Project, except as required by or necessary to comply with any federal, state or local
law; or
(iii) permit the use of the unit for any purpose other than rental housing during the term of
this Agreement.
(s) The Borrower warrants that it has not and will not execute any other agreement with
provisions contradictory to, or in opposition to, the provisions hereof, and that in any event the requirements of
this Agreement are paramount and controlling as to the rights and obligations herein set forth and supersede any
other requirements in conflict herewith; provided, however, that in the case of any conflict with the FHA
documents relating to the Mortgage Loan, the FHA documents shall control.
(t) The Borrower shall operate or cause the Project to be operated as a housing project pursuant to
Section 221(d)(b) of the National Housing Act of 1934.
(u) All work performed in connection with the Project was, to the best of the Borrower's
knowledge, performed in strict compliance with all applicable federal, state, county and municipal laws,
ordinances, rules and regulations now in force or that may be enacted hereafter.
SF2-28089.1 6 40511-90-MS I-03/11/94
• •
(v) The Indenture has been submitted to the Borrower for its examination, and the Borrower
acknowledges, by execution of this Agreement, that it has reviewed the Indenture, and it hereby approves the
Indenture. The Borrower agrees to perform fully and faithfully all the duties and obligations which the Issuer
has covenanted and agreed in the Indenture to cause the Borrower to perform and any duties and obligations
which the Borrower or the Issuer is required by the Indenture to perform. The foregoing shall not apply to any
duty or undertaking of the Issuer which by its nature cannot be delegated or assigned.
(w) If the Borrower becomes aware of any situation, event or condition which would result in the
interest on the Bonds being included in gross income for federal income tax purposes, the Borrower shall
promptly give written notice thereof to the Issuer and the Trustee.
(x) The Project is of the type authorized and permitted by the Act and has at all times been
operated in compliance with the provisions of the Act and the provisions of the Code applicable thereto. The
Borrower will use due diligence to cause the Project to be operated in accordance with the Act and all other
laws, rulings, regulations and ordinances of the State and the departments, agencies and political subdivisions
thereof. The Borrower has obtained or will cause to be obtained all requisite approvals of the State and of other
federal, state, regional and local governmental bodies for the operation of the Project.
(y) The Borrower acknowledges, represents and warrants that it understands the nature and
structure of the transactions relating to the financing of the Project; that it is familiar with the provisions of all
of the documents and instruments relating to such financing to which it or the Issuer is a party or of which it is
a beneficiary; that it understands the risks inherent in such transactions, including without limitation the risk of
loss of the Project; and that it has not relied on the Issuer for any guidance or expertise in analyzing the
financial or other consequences of such financing transactions or otherwise relied on the Issuer in any manner
except to issue the Bonds.
Section 4.3. Borrower's Approval of Indenture. The Indenture has been submitted to the Borrower
for examination, and the Borrower acknowledges, by execution of this Financing Agreement, that it has
approved the Indenture.
Section 4.4. Tax-Exempt Status of Bonds. (a) It is the intention of the parties hereto that interest
on the Bonds shall be and remain exempt from federal income taxation, and to that end the covenants and
agreements of the Issuer and the Borrower in this Section and in Section 4.2 are for the benefit of the Trustee
on behalf of and for each and every holder of the Bonds. The Borrower covenants and agrees that it will take
or cause to be taken all such actions as are within its power to be taken so that interest on the Bonds shall be
and remain excluded from gross income for federal income tax purposes, and more specifically agrees as
hereinafter provided.
(b) The Borrower covenants and agrees that it will not use or permit the use of any of the
funds provided by the Issuer hereunder or any other funds of the Borrower, directly or indirectly, 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, to the knowledge of the Borrower, 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 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 4.4 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 notify the Issuer, and the Trustee
shall comply with the written instructions of the Issuer.
SF2-28089.1 7 40511-90-MSI-03/11/94
• 0 -
(d) The Borrower specifically covenants to comply with the covenants and procedures set
forth in the Tax Certificate and to deposit in the Rebate Fund such amounts as may be necessary to
increase the amount on deposit in the Rebate Fund to the Rebate Requirement.
(e) Notwithstanding any provisions of this Section 4.4, if the Issuer shall provide to the
Trustee an opinion of Bond Counsel that any specified action required under this Section 4.4 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 Trustee, the Issuer and the
Borrower may conclusively rely on such opinion in complying with the requirements of this Section 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, creed,
color, sex or national origin in the lease, use or occupancy of the Project or in connection with the
employment or application for employment of persons for the construction, operation and management
of the Project.
(g) The Borrower further warrants and covenants that it has not executed and will not
execute any other agreement, or any amendment or supplement to any other agreement, with provisions
contradictory to, or in opposition to, the provisions hereof, of the Indenture and of the Issuer
Regulatory Agreement, and that in any event, the requirements of this Agreement and the Issuer
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.
ARTICLE V
Indemnification; Limitation of Liability
Section 5.1. Indemnification of the Issuer and the Trustee. The Borrower releases the Issuer and
the Trustee and their respective officials, officers, employees and agents from, and shall protect, indemnify, and
save harmless the Issuer and the Trustee and their respective officials, officers, employees and agents against
and from any and all liabilities, suits, actions, claims, demands, losses, expenses and costs of every kind and
nature incurred by, or asserted or imposed against, the Issuer, the Trustee and their respective officials,
officers, agents or employees, or any of them, (a) by reason of any default or event of default by the Borrower
or its successors or assigns under this Agreement, the Issuer Regulatory Agreement or any of the FHA
Documents; or (b) by reason of any accident, injury (including death) or damage to any person or property,
however caused (other than, in the case of the Trustee, the negligence or willful misconduct of the Trustee or its
officers, agents or employees), resulting from, connected with or growing out of any act of commission or
omission of the Borrower, or any officers, employees, agents, assignees, contractors or subcontractors of the
Borrower or any use, non-use, possession, occupation, condition, operation, service, design, construction,
acquisition, maintenance or management of, or on, or in connection with, the Project or any part thereof; or (c)
resulting from any and all claims, actions, settlements, or liability for acts or failure to act by any person,
including, without limitation, the Borrower, the Issuer, the Trustee or their respective officials, officers, agents
and employees in connection with the Project as set forth in this Section (other than, in the case of the Trustee,
the negligence or willful misconduct of the party claiming indemnification, or its officers, agents or employees);
or (d) insofar as such liabilities, suits, actions, claims, demands, losses, expenses and costs arise out of or are
based upon any untrue statement or allegedly untrue statement of a material fact contained in any offering
documents distributed in connection with the issuance of the Bonds or the omission or alleged omission to state
therein a material fact necessary or allegedly necessary in order to make the statements and information therein
not misleading (other than a statement or omission resulting from the fraud or bad faith of the party claiming
indemnification, or its respective officials, officers, agents or employees, or any information describing the
issuer or the Trustee, as the case may be); or (e) as to the Issuer and its officers, agents and employees, for any
other reason in connection with the issuance of the Bonds, the financing or refinancing of the Project; in any
case regardless of whether such liabilities, suits, actions, claims, demands, damages, losses, expenses and costs
SF2-28089.1 8 40511-90-MS1-03111194
be against or be suffered or sustained by the Issuer or the Trustee or any of their respective officials, officers,
agents or employees, or be against or be suffered or sustained by legal entities, officials, officers, agents, or
other persons to whom the Issuer or the Trustee or any of their respective officials, officers, agents or
employees may become liable therefor. The Issuer and the Trustee shall not be liable for any damage or injury
occurring to the persons or property of the Borrower or any of its officers, agents, including operating
personnel, contractors and employees, or any other person or entity who or which may be upon the Project,
except for, as to the Trustee, such damage or injury caused by such entity's willful misconduct or negligence.
The Borrower shall undertake to defend, at its sole cost and expense, any and all suits, actions and
proceedings brought against the Issuer or the Trustee or any of their respective officials, officers, agents or
employees in connection with any of the matters indemnified against in this Section. The persons so
indemnified may also retain separate counsel in connection with such actions, suits or proceedings, but the
Borrower shall have no responsibility for the fees and expenses of such counsel. The Issuer and the Trustee
shall give the Borrower timely notice of and shall forward to the Borrower every demand, notice, summons or
other process received with respect to any claim or legal proceedings within the purview hereof, but the failure
of the Issuer or the Trustee to give such notice shall not affect its right to indemnification hereunder.
All acts, including any failure to act, relating to the Project and the Bonds by the Issuer or the Trustee
or any agent, representative or designee of the Issuer or the Trustee are performed solely for the benefit of the
Issuer, the Trustee, and the Bondholders to assure repayment of the Mortgage Loan, maintenance of the tax
status of the interest on the Bonds and increase and maintenance of residential rental housing in the jurisdiction
of the Issuer, and are not for the benefit of the Borrower or the benefit of any other person, unless, as to the
Trustee, the failure to give notice shall have deprived the Borrower of a reasonable opportunity to contest any
such matter.
The obligations of the Borrower under this Section shall survive the termination of this Agreement and
the payment and performance of all of the other obligations of the Borrower hereunder and under the FHA
Documents and the Issuer Regulatory Agreement.
Section 5.2. Limitation on Personal Liability of Borrower. Notwithstanding anything contained in
this Financing Agreement to the contrary, the liabilities of the Borrower shall be limited to assets securing the
Mortgage Loan and the partners of the Borrower shall not have any personal liability for the payment of
principal or interest on the Bonds or any other obligation hereunder, including any and all claims for
reimbursement or indemnity hereunder. The foregoing specifically relates to the obligation of payment of
principal and interest on the Bonds and any other obligation hereunder, and nothing contained in this Financing
Agreement shall affect the parties' obligations and limitations of liability as set forth in the FHA Note and the
Mortgage.
Section 5.3. Limitation on Liability of Issuer. The Issuer shall not be obligated to pay the
principal of, or premium, if any, or interest on the Bonds, except from Pledged Revenues, but excluding any
amounts on.deposit in the Rebate Fund. The Borrower hereby acknowledges that the Issuer's sole source of
moneys to repay the Bonds and to pay expenses related thereto will be provided by the payments made by the
Borrower pursuant to this Agreement, together with other Pledged Revenues, including any investment income
on certain funds and accounts (except the Rebate Fund) held by the Trustee under the Indenture, and hereby
confirms that amounts available to pay all principal of, and premium, if any, and interest on the Bonds as the
same shall become due (whether by maturity, redemption, acceleration or otherwise), have been calculated to be
at all times sufficient for such purpose.
No recourse under or upon any obligation, covenant, warranty or agreement contained in this
Agreement or in any Bond, or under any judgment obtained against the Issuer, or the enforcement of any
assessment, or any legal or equitable proceedings by virtue of any constitution or statute or otherwise, or under
any circumstances under or independent of this Agreement, shall be had against any supervisor, officer or
employee of the Issuer, as such, past, present or future, either directly or through the Issuer or otherwise, for
the payment for or to the Issuer or any receiver thereof, or for or to the holder of any Bond, or otherwise, of
SF2-28089.1 9 40511-90-MSI-03/11/94
• •
any sum that may be due and unpaid by the Issuer upon any such Bond. Any and all personal liability of every
nature whether at common law or in equity or by statute or by constitution or otherwise of any such
commissioner, officer or employee, as such, to respond, by reason of any act or omission on his or her part or
otherwise, for the payment or to the holder of any Bond or otherwise of any sum that may remain due and
unpaid upon the Bonds secured by the Indenture or any of them is, by the acceptance thereof, expressly waived
and released as a condition of and in consideration for the execution of this Agreement and the issuance of the
Bonds. Neither the issuance of the Bonds nor the delivery of this Agreement shall, directly or indirectly or
contingently, obligate the Issuer to levy any form of taxation therefor or to make any appropriation for their
payment. Nothing in the Bonds or in the Indenture or this Agreement or the proceedings of the Issuer
authorizing the Bonds or in the Act or in any other related document shall be construed to authorize the Issuer
to create a debt of the Issuer within the meaning of any constitutional or statutory provision of the State of
California.
Section 5.4. Expenses. The Borrower covenants and agrees to pay the Issuer and the Trustee all
costs and charges, including reasonable fees and disbursements of attorneys, accountants, consultants and other
experts, incurred in good faith in connection with the enforcement of this Agreement, the Issuer Regulatory
Agreement, the Bonds or the Indenture.
ARTICLE VI
Assignment
Section 6.1. Assignment by Borrower. This Financing Agreement may not be assigned as a whole
or in part by the Borrower, except in accordance with a transfer of the ownership of the Project pursuant to
HUD regulations and procedures, and upon the prior written consent of the Issuer, which consent shall not be
unreasonably withheld.
Section 6.2. Mortgage and Pledge. The Borrower shall mortgage the Project and the Issuer shall
pledge the Pledged Revenues and assign its rights under and interest in this Financing Agreement and, among
other things, loan payments under the FHA Note and money receivable hereunder, to the Trustee pursuant to
the Indenture as security for payment of the principal of and interest and any premium on the Bonds and shall
not make any further such assignment or pledge except as may be necessary or required to enforce or secure
payment of principal of and interest and any premium on the Bonds.
ARTICLE VII
Additional Agreements
Section 7.1. Nature of Obligation. The obligations of the Borrower under this Financing
Agreement shall remain in full force and effect until the earlier of(i) the entire principal of, premium, if any,
and interest on all Bonds shall have been paid or provisions for provided for, or (ii) the FHA Note shall have
been paid in full, or (iii) such date as the Trustee receives full payment pursuant to the terms of the Contract of
Mortgage Insurance, or (iv) such date as the Trustee receives full payment of the net proceeds from any
casualty insurance or of the net proceeds from any condemnations awards and such proceeds are not used to
repair, restore, reconstruct or replace the Project or to reimburse the Borrower for same pursuant to the
Mortgage, and such obligations shall not be affected, modified or impaired upon the happening from time to
time of any event, including without limitation any of the following, whether or not with notice to, or the
consent of, the Borrower:
(a) the compromise, settlement, release or termination of any or all of the obligations, covenants
or agreements of the Issuer under the Indenture;
SF2-28089.1 10 40511-90-MSI-03111/94
(b) the failure to give notice to the Borrower of the occurrence of an event of default under the
terms and provisions of this Financing Agreement, the Indenture or the FHA Documents;
(c) the waiver of the payment, performance or observance by the Issuer or the Borrower of any of
the obligations, covenants or agreements of either of them contained in the Indenture, the FHA Documents or
this Financing Agreement;
(d) the extension of the time for payment of any principal of, premium, if any, or interest on any
Bond, or under this Financing Agreement, or of the time for performance of any other obligations, covenants or
agreements under or arising out of the Indenture, the FHA Documents or this Financing Agreement or the
extension or the renewal of either thereof;
(e) the modification or amendment (whether material or otherwise) of any obligation, covenant or
agreement set forth in the Indenture or the FHA Documents;
(f) the taking or the omission of any of the actions referred to in the Indenture, the Issuer
Regulatory Agreement, the FHA Documents and any actions under this Financing Agreement;
(g) subject to Section 5.1 hereof, any failure, omission, delay or lack on the part of Issuer or the
Trustee to enforce, assert or exercise any right, power or remedy conferred on the Issuer or the Trustee in this
Financing Agreement or any document relating to the Bonds or the Indenture, or any other act or acts on the
part of the Issuer, the Trustee or any of the Borrowers from time to time of the Bonds;
(h) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting the Borrower or the Issuer or any of the assets of either of them, or any allegation
or contest of the validity of this Financing Agreement in any such proceeding;
(i) to the extent permitted by law, the release or discharge of the Borrower from the performance
or observance of any obligation, covenant or agreement contained in this Financing Agreement by operation of
law; or
0) the default or failure of the Borrower fully to perform any of its obligations set forth in this
Financing Agreement.
Without limiting any of the other terms or provisions hereof, it is understood and agreed that, in order to hold
the Borrower liable hereunder, there shall be no obligation on the part of the Trustee or any owner of any Bond
to resort in any manner or form for payment to the Issuer or to any other person, firm or corporation, their
properties or estates.
Section 7.2. No Defense. No setoff, counterclaim, reduction or diminution of any obligation, or
any defense of any kind or nature which the Borrower has or may come to have against the Issuer or the
Trustee shall be available hereunder to the Borrower against the Trustee other than with respect to violations of
the Trustee's fiduciary obligations to the owners of the Bonds.
Section 7.3. Waiver of Notice. The Borrower hereby expressly waives notice from the Trustee or
the owners from time to time of any of the Bonds of their acceptance and reliance on this Financing Agreement.
The Borrower agrees to pay all costs, expenses and fees, including all reasonable attorney's fees which may be
incurred by the Trustee in enforcing or attempting to enforce this Financing Agreement following any default on
the part of the Borrower hereunder, whether the same shall be enforced by suit or otherwise. The Trustee shall
be entitled to the benefits of Sections 7.03(a) and 7.03(h) of the Indenture in the exercise of its rights and duties
hereunder.
SF2-28089.1 1 1 40511-90-MS1-03/11/94
• •
Section 7.4. Enforcement. This Financing Agreement is entered into by the Borrower for the
benefit of the Trustee, the Issuer and any successor trustee or trustees under the Indenture, all of whom shall be
entitled to enforce performance and observance of this Financing Agreement to the same extent as if they were
parties signatory hereto. Failure by the Borrower to comply with any provision contained herein shall not
permit the Borrower to invalidate this Agreement.
Section 7.5. No Default Certificate. The Issuer and the Trustee agree, upon the request of the
Borrower or its successors in interest, promptly to execute and deliver to the Borrower or its successors in
interest or to any potential or actual purchaser, mortgager or encumbrancer of the project, a written certificate
stating, if the same be true, that the Issuer and Trustee have no knowledge of any violation or default by the
Borrower of any of its covenants hereunder or under the Financing Agreement, or if there are such violations or
defaults, the nature of the same.
Section 7.6 Maintenance of Existence; Ass4mnents.
(a) The Borrower agrees that during the term of this Agreement it will remain in good
standing and qualified to do business in the State of California and will maintain its existence as a limited
partnership, will not dissolve or otherwise dispose of all or substantially all of its assets and will not combine or
consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge
into it; provided, however, that the Borrower may so combine, consolidate with, or merge into another entity
existing under the laws of one of the states of the United States, or permit one or more other entities to
consolidate with or merge into it, or sell or otherwise transfer to another entity all or substantially all of its
assets as an entirety and thereafter dissolve, provided that the surviving, resulting or transferee entity, as the
case may be, (i) assumes and agrees in writing to pay and perform all of the obligations of the Borrower
hereunder, (ii) qualifies to do business in the State of California if such qualification is legally required, and
(iii) the Issuer shall have received (1) an opinion of Bond Counsel to the effect that such change in ownership
will not cause%interest on the Bonds to be included in gross income for federal income tax purposes, and (2) an
Borrower Compliance Certificate.
(b) The rights and obligations of the Borrower under this Agreement may be assigned by
the Borrower to any person in whole in connection with any conveyance of all of the Project permitted by
Section 7 of the Issuer Regulatory Agreement; provided that (i) the assignee shall assume in writing the
obligations of the Borrower hereunder to the extent of the interest assigned, and a copy of such instrument of
assumption shall be delivered to the Issuer and the Trustee within ten (10) days after the execution thereof; and
(ii) the Borrower shall remain liable for its obligations hereunder to the extent of any interest not so assigned.
(c) The rights and obligations of the Borrower under this Agreement may also be
assigned by the Borrower to any person in whole or in part, subject, however, to each of the following
conditions:
(i) No assignment other than pursuant to subsection(a) or (b) of this Section
shall relieve the Borrower from primary liability for any of its obligations hereunder, and in the event
of any assignment not pursuant to subsection (a) or (b) of this Section the Borrower shall continue to
remain primarily liable for the payments specified in Section 2.2 hereof and for performance and
observance of the other agreements on its part herein provided to be performed and observed by it.
(ii) Any assignment from the Borrower shall retain for the Borrower such rights
and interests as will permit it to perform its remaining obligations under this Agreement, if any, and
any assignee from the Borrower shall assume the obligations of the Borrower hereunder to the extent of
the interest assigned.
(iii) The Borrower shall, within thirty days after delivery thereof, furnish or cause
to be furnished to the Issuer and the Trustee a true and complete copy of each such assignment together
with (1) an instrument of assumption, and (2) an opinion of Bond Counsel to the effect that such
SF2-28089.1 12 40511-90-MSI-03/11/94
assignment will not cause interest on the Bonds to be included in gross income for federal income tax
purposes.
(d) The Borrower shall notify the Trustee, the Issuer in writing of any new or additional
general partners or guarantors of the Borrower or, in the event the Project is sold, of any new Borrower prior
to such event, which notice shall specify the nature of the change, the effective date and the identity of the
relevant parties.
Section 7.7. Statement of ComRliance; Notice of Certain Events.
(a) The Borrower will deliver to the Issuer and the Trustee, on 1 of each
year, a written statement signed by an Authorized Borrower Representative stating, as to the signer thereof, that
(1) a review of the activities of the Borrower during such year and of performance under this Agreement and
the Issuer Regulatory Agreement has been made under their supervision, and (2) to the best of the knowledge of
such Representative, based on such review, the Borrower has fulfilled all its obligations hereunder and under the
Issuer Regulatory Agreement throughout such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such Representative and the nature and status thereof.
(b) The Borrower hereby covenants to notify the Issuer and the Trustee in writing of the
occurrence of any Event of Default hereunder or any event which, with the passage of time or service of notice,
or both, would constitute an Event of Default hereunder, specifying the nature and period of existence of such
event and the actions being taken or proposed to be taken with respect thereto. Such notice shall be given
promptly, and in no event less than ten (10) Business Days after the Borrower receives notice or knowledge of
the occurrence of any such event. The Borrower further agrees that it will give prompt written notice to the
Trustee if insurance proceeds or condemnation awards are received with respect to the Project and are not used
to repair or replace the Project, which notice shall state the amount of such proceeds or award.
Section 7.8. Insurance. The Borrower agrees to insure the Project or cause the Project to be
insured during the term of this Agreement for such amounts and for such occurrences as are required under the
Mortgage. The Borrower further agrees to provide the Issuer and the Trustee with evidence of such insurance
and to certify compliance with the insurance requirements by not later than 1 of each year.
Section 7.9. Financial Statements. On or before 1 of each year, the Borrower shall
provide to the Issuer and the Trustee financial statements of the Borrower (in the form provided to HUD). The
Trustee shall provide without charge to any Bondholder a copy of such financial statements upon the written
request of such Bondholder.
ARTICLE VIII
Miscellaneous
Section 8.1. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given by hand delivery or certified mail and shall be deemed given when hand delivered, or three
days after mailing if mailed by certified mail, postage prepaid, return receipt requested, addressed to the Issuer,
the Borrower, the Trustee, the Lender, or any other person to whom any such notice, certificate or other
communication is to be given, at the appropriate address set forth in Section 10.04 of the Indenture. The
Issuer, the Borrower, the Lender and the Trustee, by notice given hereunder, may designate any further or
different addresses to which subsequent notices, certificates or other communications shall be sent.
Section 8.2. Continuing Obligation. The obligations of the Borrower hereunder shall arise when
the Bonds shall have been issued, sold and delivered by the Issuer and the proceeds thereof paid to the Trustee,
and shall continue until this Agreement is terminated pursuant to Section 8.12.
SF2-28089.1 13 40511-90-MS1-03/11/94
Upon the sale, exchange, assignment or other transfer of the Project, the Borrower shall be released
from all liability hereunder, provided, however, that any and all successors in interest to the Project shall
assume, in writing, all of the obligations of the Borrower hereunder.
Section 8.3. Remedies. No remedy herein conferred upon or reserved to 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 Financing Agreement or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default,
omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Trustee to exercise any remedy reserved to it in this Financing
Agreement, it shall not be necessary to give any notice, other than such notice as may be herein expressly
required. In the event any provision contained in this Financing Agreement should be breached by the
Borrower and thereafter duly waived by the Trustee, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. No waiver, amendment, release or
modification of this Financing Agreement shall be established by conduct, custom or course of dealing, but shall
be solely by an instrument in writing duly executed by the Trustee. If at any time the Borrower shall request
the consent of the Trustee to any such proposed amendment, change or modification of this Financing
Agreement, and if the consent of Bondholders is required pursuant to the Indenture, the Trustee shall, upon
being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or
modification to be circulated in the same manner as provided in the Indenture 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 Bondholders. Nothing contained herein shall permit or be construed as permitting any
amendment, change or modification of this Financing Agreement which would (a) reduce or eliminate any
amount payable by the Borrower hereunder, (b) change the time for payment of the amounts payable by the
Borrower hereunder or (c) change the unconditional nature of this Financing Agreement.
Section 8.4. Concerning Successors and Assignns. All covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto or to the Indenture shall survive the
financing herein contemplated and the execution and delivery of the Borrower Documents and shall continue in
full force and effect so long as the obligations hereunder and under the FHA Note are outstanding and unpaid.
Whenever in this Financing Agreement any of the parties hereto is referred to, such reference shall be deemed
to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf
of the Borrower which are contained in this Financing Agreement shall bind its successors and assigns and inure
to the benefit of the successors and assigns of the Issuer.
Section 8.5. Governing Law. This Financing Agreement and the exhibits attached hereto shall be
construed in accordance with and governed by the laws of the State and where applicable the laws of the United
States of America.
Section 8.6. Modifications in Writing. Modification or the waiver of any provision of this
Financing Agreement, the FHA Note or the Mortgage, or consent to any departure by the Borrower therefrom,
shall in no event be effective unless the same shall be in writing approved by the parties thereto and by FHA, if
FHA so requires, and then such waiver or consent shall be effective only in the specific instance and for the
purpose for which given and so long as the interests of any Bondholders are not adversely affected and Trustee
assents thereto. No notice to or demand on the Borrower in any case shall entitle it to any other or further
notice or demand in the same circumstances.
Section 8.7. Further Assurances and Corrective Instruments. The Issuer, the Trustee and the
Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the performance of this Financing Agreement.
SF2-28089.1 14 40511-90-MSI-03/11/94
Section 8.8. Captions. The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Financing Agreement.
Section 8.9. Severability. In the event any provision of this Financing Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision thereof.
Section 8.10. Counterparts. This Financing Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument.
Section 8.11. Amounts Remaining in Bond Fund or Other Funds. It is agreed by the parties hereto
that any amounts remaining in the Bond Fund or other Funds established under the Indenture, upon expiration
or sooner termination of the term hereof, as provided below, after payment in full of the Bonds (or provision
for payment thereof having been made in accordance with the provisions of the Indenture) and the fees and
expenses of the Trustee and any paying agents in accordance with the Indenture, shall be paid only in
accordance with the Indenture.
Section 8.12. Effective Date and Term. This Financing Agreement, and all of the covenants of the
Borrower contained herein, shall become effective upon its execution and delivery by the parties hereto, shall
remain in full force from such date and, subject to the express provisions hereof, shall terminate on the earliest
to occur of(i) such date as the Trustee receives full payment pursuant to the terms of the Contract of Mortgage
Insurance, or (ii) receives full payment of the net proceeds from any casualty insurance or of the net proceeds
from any condemnation awards and such proceeds are not used to repair, restore, reconstruct or replace the
Project or to reimburse the Borrower therefor pursuant to the Mortgage, or (iii)payment in full of the FHA
Note, or (iv) payment of principal, premium, if any, and interest on all Outstanding Bonds.
Section 8.13. HUD and FHA Requirements to Control.
(a) Notwithstanding anything in the Indenture or this Financing Agreement to the contrary, the
provisions hereof are subject and subordinate to the National Housing Act, all applicable HUD insurance
regulations and related administrative requirements and the FHA Documents, and all applicable FHA regulations
and related administrative requirements; and in the event of any conflict between the provisions of said
Indenture or this Financing Agreement and the provisions of the National Housing Act, any applicable HUD
regulations, related HUD administrative requirements, or the FHA Documents, or the FHA regulations and
related administrative requirements, the said National Housing Act, regulations, related administrative
requirements or FHA Documents shall be controlling in all respects.
(b) This Financing Agreement shall not be construed to restrict or affect adversely the duties and
obligations of the Mortgage Servicer under the Contract of Mortgage Insurance with respect to the Mortgage
Loan.
(c) Neither the Issuer, the Trustee, nor any of the Bondholders has or shall be entitled to assert
any claim against the Project, the Mortgage proceeds, any reserve or deposit required by HUD in connection
with the Mortgage Loan, or the rents or income of the property other than "surplus cash" as defined in the
Issuer Regulatory Agreement, or as otherwise permitted by HUD; provided, however, that the foregoing shall
not restrict any rights of the Issuer, the Trustee, the Mortgage Servicer or any of the Bondholders against any
guarantor of the obligations of the Borrower, if any, with respect to this Financing Agreement.
SF2-28089.1 15 40511-90-MS1-03/11/94
• i
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first above written.
COUNTY OF CONTRA COSTA
By:
Deputy Director-Redevelopment
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Trustee
By:
Title:
EAH-CONTRA COSTA, INC., a California
nonprofit corporation
By:
Managing General Partner
SF2-28089.1 16 40511-90-MSI-03/11/94
Preliminary Purchase
Agreement
PRELIMI*Y OFFICIAL STATEMENT DAT& MARCH _, 1994
o NEW ISSUE-Book-Entry Only Standard&Poor'a:"
(See"RATING"herein)
= m In the opinion of Orrick,Herrington&Sutcli e,Bond Counsel,the 1994 Series A Bonds are qualified 501(c)(3)bonds and,under existing law and assuming
- compliance by:he Issuer and the Borrower with applicable requirements of the Internal Revenue Code of 1986,as amended,includingarbitrage and arbitrage rebate
requirements,that must be satisfied subsequent to the issuance of the 1994 Series A Bonds,interest on the 1994 Series A Bonds is excluded from gross income of registered
ami $ owner for federal income tax Purposes under existing federal tax law,and is not an item of tax prejercnce or'
r purposes o the alternativeminimum fax applicable to
E individuals. However, while interest on the 1994 Series A Bonds also is not an item of tax preferences purposes offthe alternative minimum tax applicable to
corporations,interest on the 1994 Serio A Bonds received by c:t-t
tions is taken into account to the computation of adjusted current earnings for purposes of the
a alternative minimum tax applicable to corporations,interest on thSen u A Bonds received by terrain corporations may be subject to an environmental tax,interest
N on the 1994 Series A Bonds received by terrain S cotporatioru bject to tx,andinterest on the 1994 Series A Bonds received byforeign corporations with United
States branches may be subifect to a foreign branchprofits fax Ion the Taxable 1994 Series A-T Bonds is not excludable from gross income for federal income
a tax purpose. In addition,in the opinion of Bond Counsel,interest on the 1994 Series A Bonds and the Taxable 19�Series A-T Bonds u exempt from personal income
c taxation imposed by the Stare oJCaiifornia See rhe captions'TAX EXEMPTION'and'CERTAIN OTHER TAX CONSEQUENCES'herein
O
°
C $
COUNTY OFCONTRA COSTA
a MULTIFAMILY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
S C
and
$
E COUNTY of CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
Zi (GNMA Collateralized - Crescent Park Apartments Project)
2
2 Taxable 1994 Series A-T
L
� = Dated: March 1, 1994 Due:as shown below
5 ; The Bonds are issuable only as fully registered bonds without coupons in the denomination of$1,000 principal amount or any integral multiple thereof.Interest
e on the Bondi will be ayable on April 20 and October 20 of each year,commencing October 20, 1994. Purchasers of the Bonds will not receive certificates representing
E o their interests in the Bonds purchased. Bonds will be registered in the name of Code&Co.,as registered owner and nominee of The Depository Trust Company,New
E York,New York. Principal of and interest on the Bond;is ayable by Bank of America National Trust and Savings Association,Los Angeles,California,as trustee(the
_ ..°-° "Trustee"),to Cede&Co. See"BOOK ENTRY ONLY SYSTEM"herein.
Ew The Bonds are beeng issued pursuant to a Trust Indenture,dated as of March 1, 1994(the"Indenture"),by and between the County of Contra Costa(the
c "Issuer")and the Trustee to make a mortgage loan(the"Mortgage Loan")to EAH-Contra Costa,Inc.,a California nonprofit corporation(the"Borrower")in order to
`o c finance the acquisition and rehabilitation of a 378 unit multifamily rental housing project located in the City of Richmond,County of Contra Costa,California,for low-
= m income persons and to pay certain costs associated with the issuance of the Bonds.
o c
° It is anticipated that the Bonds will be secured primarily by fully-modified pass-through mortgage backed securities(the"GNMA Securities")guaranteed as
aM to timely payment of principal and interest by the Government National Mortgage Association("GNMA') issued by TRI Capital Corporation(the"Lender"),and held
E rby the Trustee. The GNMA Securities are backed by the Mortgage Loan and issued by the Lender pursuant to a financing agreement(the"Financing Agreement")among
o the Issuer,the Borrower,the Trustee and the Lender. Prior to acquisition of the GNMA Securities the Bonds will be secured by certain of the Bond proceeds invested
c m by the Trustee pursuant to certain investment agreements described herein. See"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS"herein.
m The Bonds are subject to redemption prior to maturity as described herein. Persons who purchase Bonds at a price in excess of their principal amount risk
o ere the loss of any premium paid in the event the Bonds are redeemed prior to maturity. See"THE BONDS"and"CERTAIN BONDHOLDERS'RISKS"herein.
:a
(a w
MATURITY SCHEDULE*
Maturity Date Principal Amount Interest Rate
40
d m
S m
d O
_ Pike: %
10 r (Plus accrued interest rr—om March 1, 1994)
c _
° THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE ISSUER,PAYABLE SOLELY FROM THE REVENUES AND
c w THE TRUST ESTATE,WHICH ARE SPECIFICALLY ASSIGNED AND PLEDGED TO SUCH PURPOSES. NEITHER THE UNITED STATES OF AMERICA,
'P c HUD,FHA,ANY OTHER AGENCY OF THE UNITED STATES OF AMERICA,GNMA,THE STATE OF CALIFORNIA, NOR ANY POLITICAL SUBDIVISION
E THEREOF(EXCEPT THE ISSUER,TO THE LIMITED EXTENT SET FORTH HEREIN)WILL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM(IF c ANY)OR INTEREST ON THE BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE,OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OF HE ISSUER,AND NONE OF THE BONDS OR ANY OF THE ISSUER'S AGREEMENTS OR OBLIGATIONS WILL BE
CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF;THE FAITH AND CREDIT OF OR A LOAN OF THE CREDIT OF ANY OF THE
w FOREGOING WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE BONDS AND THE PREMIUM,IF
ANY,AND INTEREST THEREON WELL NEVER CONSTITUTE A DEBT,INDEBTEDNESS OR PLEDGE OR A LOAN OF THE FAITH OR CREDIT OR THE
° TAXING POWER OF THE ISSUER,THE STATE OF CALIFORNIA, OR ANY POLITICAL CORPORATION,SUBDMSION OR AGENCY THEREOF WITHIN
m THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION. ;THE BONDS ARE NOT AND NEVER WILL BECOME GENERAL OBLIGATIONS
OF THE ISSUER AND WILL NOT BE PAYABLE FROM THE GENERAL REVENUES OF THE ISSUER,AND NEITHER THE ISSUER NOR THE STATE OF
m ° CALIFORNIA OR ANY POLITICAL CORPORATION,SUBDIVISION,OR AGENCY THEREOF WILL BE LIABLE THEREON,NOR IN ANY EVENT WILL THE
E c BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE ISSUER SPECIFICALLY PLEDGED THEREFOR. NO HOLDER
r «. OF ANY BONDS HAS THE RIGHT TO COMPEL ANY EXERCISE OF THE TAXING POWER OF THE ISSUER TO PAY THE BONDS OR THE INTEREST OR
10 THE REDEMPTION•PREMIUM,IF ANY,THEREON,AND THE BONDS WILL NOT BE CONSTRUED.TO CREATE ANY MORAL OBLIGATION ON THE PART
to 2 OF THE ISSUER WITH RESPECT TO THE PAYMENT OF THE BONDS.
W o
v m This cover page contains only a brief description of the Issuer,the Bonds and the security therefor. It is not intended to be a summary of material information
Cwith respect to the Bonds. Investors should read this entire Official Statement to obtain information necessary to make an informed investment decision.
° The Bonds are offered when,as and if issued and received by the Underwriters,subject to the a��roving opinion of Orrick, Herrington&SutcliffJ�e,San
em Francisco,Calijomia,Bond Counsel. Certain legal matters will be passed upon ley Aster Hadden Haynes&Miller,Counsel to the Underwriters. Certain legal matters
E p will be passed uponfor the Borrower by its counsel,Michaud&Hoshiyama,San Francisco,Caliromia andfor the Lender by Paul Renno,Esq.,its Corporate Counsel.
—y kis expected that
ter
will be available for delivery to The Depository Trust Company in New York,New Yost,on or about March_,1994.
a` w
Kirkpatrick, Pettis, Smith, Polian Inc. Charles A. Bell Securities Corp.
The date of this Official Statement is March_, 1994
retmtnary;subject to change.
I
{
F r +i !
Y
No broker, dealer, salesman or other person has been authorized by the Issuer, the Borrower,
the Lender or the Underwriters to give any information or to make any representations with respect to
the Bonds other than those contained in this Official Statement and, if given or made, such information
or representations must not be relied upon as having been authorized by the Issuer, the Borrower, the
Lender or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation
of an offer to buy, nor will there be any sale of the Bonds by any person in any jurisdiction in which it
is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has
been obtained from the Borrower, the Lender and the Issuer and other sources believed by the
Underwriters to be reliable. This information is not guaranteed as to accuracy and is not to be construed
as a representation of such by the Underwriters,the Borrower,the Lender or the Issuer. The information
and expressions of opinion herein are subject to change without notice, and neither the delivery of this
Official Statement nor any sale made hereunder will,under any circumstances, create any implication that
there has been no change in the information or opinions set forth herein since the date hereof.
No registration statement relating to the Bonds has been filed with the Securities and Exchange
Commission(the "Commission")or with any state securities agency. The Bonds have not been approved
or disapproved by the Commission or any state securities agency, nor has the Commission or any state
securities agency passed upon the accuracy or adequacy of this Official Statement. Any representation
to the contrary is a criminal offense.
IN CONNECTION WITH THIS OFFERING,THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH TEND TO STABILIZE OR MAINTAIN THE MARKET PRICE
FOR THE BONDS ABOVE THE LEVELS WHICH ;WOULD OTHERWISE PREVAIL. SUCH
ACTIVITIES, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
Page
I
INTRODUCTORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . I
THEISSUER . . . . . . . . . . . . . . . . . . . . . . . . . i . . . . . . . . . . . . . . . . . . . . . . . . . . 4
THEBONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
BOOK ENTRY ONLY SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS . . . . . . . . . . . . . . . . . . . 13
THE GNMA MORTGAGE-BACKED SECURITIES PROGRAM . . . . . . . . . . . . . . . . . . . . 14
THE MORTGAGE NOTE AND MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
THE PROJECT AND THE PRIVATE PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . 18
CERTAIN BONDHOLDERS' RISKS . . . . . . . . . . ! . . . . . . . , . 20
TAX EXEMPTION . . . . . . . . . . . . . . . . . . . . f . . . , . . . . . . . . . . . . . . . . . . . . . . 23
CERTAIN OTHER TAX CONSEQUENCES . . . . . I. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
UNDERWRITING I . , . . . . 25
RATING . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . � . . . . . 26
CERTAIN LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 26
ABSENCE OF LITIGATION . . . . . . . . . . . . . . { . . . . . . . . . . . . . . . . . . . . . . . . . . 27
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . I. . . . . . . . , . . . . . . . . . . . . . . . . . . 27
APPENDIX A CERTAIN DEFINITIONS A-1
APPENDIX B SUMMARY OF THE INDENTURE B-1
APPENDIX C SUMMARY OF THE FINANCING AGREEMENT C-1
APPENDIX D SUMMARY OF THE REGULATORY;AGREEMENT AND DECLARATION .
OF RESTRICTIVE COVENANTS I D-I
it
02124194 m12-1854
!i
I
. 1 1W . •
OFFICIAL STATEMENT
COUNTY OF CONTRA COSTA
MULTIFAMH.Y HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
1994 Series A
and
COUNTY OF CONTRA COSTA
MULTIFAMELY HOUSING REVENUE BONDS
(GNMA Collateralized -- Crescent Park Apartments Project)
Taxable 1994 Series A-T
INTRODUCTORY STATEMENT
This Official Statement sets forth certain information concerning the County of Contra
Costa(the "Issuer"), a political subdivision and body corporate and politic organized and existing
under the Constitution and laws of the State of California and the issuance and sale of
$ * aggregate principal amount of its Multifamily Housing Revenue Bonds, (GNMA
Collateralized -- Crescent Park Apartments Project) 1994 Series A (the "1994 Series A Bonds")
and$ *Multifamily Housing Revenue Bonds(GNMA Collateralized--Crescent Park
Apartments Project) Taxable 1994 Series A-T (the "Taxable 1994 Series A-T") (collectively, the
"Bonds"). The Bonds will be issued pursuant to a bond resolution adopted by the Issuer on
March _, 1994, and secured by a Trust Indenture dated as of March 1, 1994 (the "Indenture")
between the Issuer and Bank of America National Trust and Savings Association, Los Angeles,
California, as Trustee (the "Trustee") for the purpose of providing the funds to make a mortgage
loan to EAH-Contra Costa, Inc., a California nonprofit corporation (the "Borrower"), in order
to finance the acquisition and rehabilitation of a 378 unit multifamily rental housing project
located in the City of Richmond, County of Contra Costa, California, for low-income persons
(the "Project") and to pay certain costs associated with the issuance of the Bonds.
The following is a summary of certain information contained in this Official Statement,
to which reference should be made for a complete statement thereof. The Bonds are offered to
potential investors only by means of the entire Official Statement, including the cover page, this
introductory statement and the Appendices hereto. No person is authorized to detach this
introductory statement from the Official Statement or otherwise use it without the entire
*Preliminary; subject to change.
02/24/94 m12-1854
0 0
Official Statement. Capitalized terms used but not defined herein will have the meanings
ascribed to them in the Indenture, the Financing Agreement or the Regulatory Agreement and
Declaration of Restrictive Covenants or as set forth under "CERTAIN DEFINITIONS" attached
hereto as APPENDIX A.
Issuer
The issuer of the $ aggregate principal amount of Multifamily Housing
Revenue Bonds (GNMA Collateralized Crescent Park Apartments Project) 1994 Series A and
$ *principal amount of Multifamily Housing Revenue Bonds(GNMA Collateralized-
-Crescent Park Apartments Project)Taxable 1994 Series A-T is the County of Contra Costa (the
"Issuer"). See "THE ISSUER" herein.
Security for the Bonds
The principal of, premium, if any, and interest on the Bonds are payable from the
payments on the GNMA Securities and from any other security pledged under the Indenture.
Prior to the acquisition of the GNMA Securities by the Trustee, Bonds will be secured by certain
of the Bond proceeds held in the Bond Fund and invested by the Trustee pursuant to an
investment agreement with (the "Investment Agreement"). See
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "CERTAIN BOND-
HOLDERS' RISKS" herein.
GNMA Security
The Bonds are to be secured primarily by fully modified mortgage-backed securities in
the aggregate principal amount of$ (the'"GNMA Securities"), to be issued by TRI
Capital Corporation, a California corporation (the !"Lender"), guaranteed as to principal and
interest by the Government National Mortgage Association ("GNMA") and backed by the
Mortgage Loan from the Lender to the Borrower as evidenced by the Mortgage Note. See
"THE GNMA MORTGAGED-BACKED SECURITIES PROGRAM" herein.
The Bonds
The Bonds are available in book-entry only form. See "BOOK-ENTRY ONLY
SYSTEM" herein. So long as Cede & Co., as nominee of The Depository Trust Company,
New York, New York ("DTC"), is the registered owner of the Bonds, references herein to the
Bondholders or registered owners of the Bonds means Cede&Co. and not the beneficial owners
of the Bonds.
The Bonds are issued in fully registered form without coupons in the denomination of
$1,000 principal amount or any integral multiple thereof. See "THE BONDS" herein.
02/24/94 - 2 - :1 m12-1854
0
The Bonds are subject to optional redemption prior to maturity as a whole at any time
on or after 19 2004, upon payment of the,redemption prices set forth under "THE
BONDS -- Redemption - Optional Redemption" herein. The Bonds are also subject to special
mandatory redemption and scheduled mandatory redemption as described under "THE BONDS-
-. Redemption -- Special Mandatory Redemption" and "-- Scheduled Mandatory Redemption"
herein.
Any person who purchases a Bond above par should consider the risk that such premium
may be lost in the event that the Bond is redeemed prior to maturity. See "CERTAIN
BONDHOLDERS' RISKS" herein.
Tax Exemption
In the opinion of Bond Counsel, under existing law and assuming continuous compliance
with certain provisions of the Indenture, the Financing Agreement and the Regulatory Agreement
and Declaration of Restrictive Covenants designed t'p meet the requirements of the Code, the
1994 Series A Bonds are qualified 501(c)(3)bonds and the interest on the 1994 Series A Bonds,
including any original issue discount, (a) is excludable from gross income for federal income tax
purposes and (b) will not be an item of tax preference for purposes of the federal alternative
minimum income tax imposed on individuals and corporations. Such interest may be included
in the calculation of a corporation's alternative minimum tax and a holder may be subject to
other federal tax consequences as described in the section "TAX EXEMPTION" and "CERTAIN
OTHER TAX CONSEQUENCES" herein.
Certain Legal and Other Matters
The Issuer has appointed Bank of America National Trust and Savings Association, Los
Angeles, California, to serve as the Trustee under the Indenture. Certain legal matters relating
to the authorization and validity of the Bonds will',be passed upon by Orrick, Herrington &
Sutcliffe, San Francisco, California, as Bond Counsel. Certain legal matters will be passed upon
for the Borrower by its counsel, Michaud & Hoshiyama, San Francisco, California and for the
Lender by Paul Reno, Esq., its Corporate Counsel.:, Certain legal matters will be passed upon
by Arter Hadden Haynes & Miller, Washington, D.C., counsel to the Underwriters.
Issuer; Issuance and Delivery of Bonds
The Bonds are being issued under authority contained in Chapter 8 of Part 5 of Division
31 of the Health and Safety Code of the State of California (the "Act").
The Bonds are offered when, as and if issued and received by the Underwriters, subject
to the approving opinion of Bond Counsel. It is expected that the Bonds will be available for
delivery in book-entry only form to DTC in New York, New York, on or about March
1994.
02/24/94 - 3 - m12-1854
.. 0
V
Miscellaneous
The information contained herein is current as of the date of this Official Statement set
forth on the cover page hereof. The information contained herein is subject to change after such
date. The Issuer has not provided information regarding GNMA or the Borrower, and does not
certify as to the accuracy or sufficiency of the information regarding GNMA or the Borrower,
and is not responsible for such information provided herein.
Additional Information
Brief descriptions of the Issuer, the Bonds, the security for the Bonds, the Borrower, the
Project, the Indenture, the Financing Agreement, the Regulatory Agreement and Declaration of
Restrictive Covenants and the Mortgage Note and Mortgage are included in this Official
Statement and the Appendices hereto. All references herein to the Indenture, the Financing
Agreement, the Regulatory Agreement and Declaration of Restrictive Covenants the Mortgage
Note and Mortgage and other documents and agreements are qualified in their entirety by
reference to such documents and agreements, copies of which are available for inspection at the
offices of the Trustee and the Issuer.
THE ISSUER
The Issuer is a political subdivision and body corporate and politic organized and existing
under the Constitution and the laws of the State of California. The Issuer is empowered to
engage in certain activities related to the provision of housing for persons of low or moderate
income in the County of Contra Costa, California, including the power to finance housing and
housing rehabilitation through the issuance of obligations such as the Bonds.
Board of Supervisors
The Board of Supervisors (the "Board") is the principal legislative and governing body
of the Issuer. The five-member Board of Supervisors and the Chairman are elected for four-year
terms. The Board of the Issuer, the years in which their respective terms expire and their
positions are as follows:
Board Term Expires Position
Tom Powers January, 1995 Chairman
Gayle Bishop January, 1997 Vice-Chair
Tom Torlakson January, 1997 Supervisor
Sunne Wright McPeak January, 1995 Supervisor
Jeff Smith January, 1997 Supervisor
02/24/94 - 4
mit-1854
The Issuer will have no responsibility with respect to the management and operation of
the Project, the servicing of the Mortgage Loan or the collection, transfer or payment of any
moneys derived therefrom.
Staff Members
The Issuer's staff consists of four people. The staff members of the Issuer function under
the management of the Deputy Director - Redevelopment who is appointed by the County
Administrator. At present, the Deputy Director - Redevelopment and senior staff members are:
Position Name
Director - Community Development Harvey E. Bragdon
Deputy Director - Redevelopment James Kennedy
The main offices of the Issuer are located at 651 Pine Street, North Wing, 4th Floor,
Martinez, California 94553-0095. The Issuer's telephone number is (510)646-4076.
THE BONDS
The Bonds are available in book-entry only form. See "BOOK-ENTRY ONLY
SYSTEM" below. So long as Cede & Co.; as nominee of DTC, is the registered owner of the
Bonds, references herein to the Bondholders or holders or registered owners or owners of the
Bonds mean Cede & Co. and not the beneficial owners of the Bonds.
General
The Bonds are issuable in the denominations of$1,000 principal amount or any integral
multiple thereof. The Bonds will be dated March 1, 1994, and will mature on the dates and in
the amounts and bear interest from their date at the rate set forth on the cover page hereof.
Interest will be payable semiannually on April 20 and October 20 of each year, commencing
October 20, 1994 (each a "Payment Date") in accordance with the provisions of the Indenture,
whether at maturity, upon acceleration or otherwise as provided therein. Interest will be
calculated and be due on a basis of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest on the Bonds will be Payable by the Trustee to Cede
& Co.
Limited Obligations
The Bonds and the interest thereon are limited obligations of the Issuer, payable solely
from the Revenues and the Trust Estate, which are specifically assigned and pledged to such
purposes. Neither the United States of America, HUD, FHA, any other agency of the United
States of America, GNMA, the State of California, nor any political subdivision thereof(except
the Issuer, to the limited extent set forth in the first and last sentences of this section) will in any
02/24/94 - 5 - m12-1854
v
event be liable for the payment of the principal of, premium (if any) or interest on the Bonds
or for the performance of any pledge, obligation or agreement of any kind whatsoever of the
Issuer, and none of the Bonds or any of the Issuer's agreements or obligations will be construed
to constitute an indebtedness of or a pledge of the faith and credit of or a loan of the credit of
any of the foregoing within the meaning of any constitutional or statutory provision whatsoever.
The Bonds and the premium, if any, and interest thereon will never constitute a debt,
indebtedness or pledge or a loan of the faith or credit or the taxing power of the Issuer, the State
of California, or any political corporation, subdivision or agency thereof within the meaning of
any constitutional or statutory provision. The Bonds are not and never will become general
obligations of the Issuer and will not be payable from the general revenues of the Issuer, and
neither the Issuer nor the State of California or any political corporation, subdivision, or agency
thereof will be liable thereon, nor in any event will the Bonds be payable out of any funds or
properties other than those of the Issuer specifically pledged therefor. No holder of any Bonds
has the right to compel any exercise of the taxing power of the Issuer to pay the Bonds or the
interest or the redemption premium, if any, thereon, and the Bonds will not be construed to
create any moral obligation on the part of the Issuer with respect to the payment of the Bonds.
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 the Indenture contained, against the Issuer, any past, present or future member of
its governing body, its officers, 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 Issuer or any successor public entity, under any rule of
law or penalty or otherwise, and all such liability of the Issuer, any member of its governing
body and its officers, attorneys, accountants, financial advisors, agents and staff is, and by the
acceptance of the Bonds, expressly waived and released as a condition of, and in consideration
for, the execution of the Indenture and the issuance of any of the Bonds.
It is recognized that notwithstanding any other provision of the Indenture, neither the
Borrower, the Trustee nor any Bondholder will look to the Issuer for damages suffered by the
Borrower, the Trustee or such Bondholder as a result of the failure of the Issuer to perform any
covenant, undertaking or obligation under the Indenture, the Financing Agreement, the Bonds,
the Regulatory Agreement and Declaration of Restrictive Covenants, any of the FHA Loan
Documents or any of the other documents referred to the Indenture, or as a result of the
incorrectness of any representation made by the Issuer in any of such documents, nor for any
other reason. Although the Indenture recognizes that such documents will not give rise to any
pecuniary liability of the Issuer, nothing contained in the Indenture will be construed to preclude
in any way any action or proceeding (other than that element of any action or proceeding
involving a claim for monetary damages against the Issuer) in any court or before any
governmental body,agency or instrumentality or otherwise against the Issuer or any of its offices
or employees to.enforce the provisions of any of such documents which the Issuer is obligated
to perform and the performance of which the Issuer has not assigned to the Trustee or any other
person.
02/24194 - 6 - m12-1854
Redemption
Optional Redemption. The Bonds are subject to redemption on any date on or after
9 2004, in whole or in part, from payments on the GNMA Security representing
voluntary prepayments on the Mortgage Loan, or otherwise at the option of the Issuer from the
proceeds of refunding bonds or other funds of the Issuer, at the redemption prices set forth in
the table below, expressed as percentages of the principal amount of the Bonds to be redeemed,
plus accrued interest to the redemption date, as follows:
Redemption Dates Redemption Prices
, 2004 through 92005 104%
, 2005 through 2006 103
, 2006 through 2007 102
, 2007 through 2009 101
2009 and thereafter 100
In the event of an optional redemption of Bonds on a date on which the redemption price
includes a redemption premium, the Bonds will not be redeemed unless the Trustee will have
either (i)(A) had in its possession, for a period of at least 91 days prior to the redemption date,
an amount equal to the prepayment premium on the Bonds, and (B) received a certificate of an
Authorized Borrower Representative to the effect that the Borrower has neither commenced a
voluntary case under Title 11 of the United States Code as from time to time in effect nor
authorized by appropriate proceedings of its board of directors the commencement of such a
voluntary case, and (ii) received an opinion of Bond Counsel or bankruptcy counsel acceptable
to the Trustee to the effect that the.sums to be utilized to pay the prepayment premium are not
subject to the provisions of Sections 362(a), 547 and 550 of the Federal Bankruptcy Code.
Special Mandatory Redemption. The Bonds are subject to redemption, in whole or in
part, at any time on the earliest practical date, at a redemption price equal to the principal
amount thereof plus accrued interest to the redemption date:
. (a) to the extent that any payment on the GNMA Security exceeds a level payment
of principal and interest thereon as a result of payments representing (i) casualty insurance
proceeds or condemnation awards applied to the prepayment of the Mortgage Loan following
a partial or total destruction or condemnation of the Project, (ii) mortgage insurance proceeds
or other amounts received with respect to the Mortgage Loan following the acceleration thereof
upon the occurrence of an event of default thereunder, (iii) a prepayment of the Mortgage Loan
required by the applicable rules, regulations, policies and procedures of HUD or GNMA, or(iv)
a prepayment if HUD determines that prepayment will avoid a Mortgage Insurance claim and
is therefore in the best interest of the Federal Government; or
(b) to the extent that the Trustee receives payments on the GNMA Security
representing prepayments on the Mortgage Loan made by the Borrower without notice or
prepayment penalty while under the supervision of a trustee in bankruptcy.
02/24/94 7 - m12-1854
If less than all of the Outstanding Bonds will be called for redemption pursuant to this
section, an amount of Bonds of each maturity will be redeemed so that the resulting decrease
in the debt service on the Bonds for the six-month period ending on each Interest Payment Date
is proportional, as nearly as practicable, to the decrease in the payments on the GNMA Security
in each such six-month period, provided that no 1994 Series A Bonds will be redeemed pursuant
to this section while any Taxable 1994 Series A-T Bonds remain Outstanding.
The Trustee agrees to notify the Rating Agency promptly after it receives any partial
payment of the GNMA Security in excess of regularly scheduled payments thereon.
Scheduled Mandatory Redemption. The 1994 Series A Bonds and the Taxable 1994
Series A-T Bonds are subject to scheduled mandatory redemption on the respective Interest
Payment Dates set forth in the schedules below, at a redemption price equal to the principal
amount thereof plus accrued interest to the redemption date, in the following principal amounts,
subject to pro-rata reduction of such scheduled mandatory redemption payments to the extent that
such 1994 Series Bonds and Taxable 1994 Series A-T Bonds are redeemed prior to maturity
otherwise than pursuant to such scheduled mandatory redemption;
1994 Series A Bonds Due ,
Principal Principal
Redemption Dates Amount Redemption Dates Amounts
Taxable 1994 Series A-T Bonds Due ,
Principal Principal
Redemption Dates Amount Redemption Dates Amounts
02124194 - g - m12.1854
If less than all of the 1994 Series A Bonds or Taxable 1994 Series A-T Bonds are to be
redeemed other thanin accordance with the scheduled mandatory redemption provisions of this
section, the Bonds so to be redeemed will be selected by maturity and the scheduled mandatory
redemption requirements for each maturity described above will be adjusted so that the resulting
decrease in debt service on the Bonds (including scheduled mandatory redemption payments)
during each six-month period commencing on each Interest Payment Date.is proportional, as
nearly as practicable, to the decrease in the payments on the GNMA Security during each six-
month period, and by lot within a maturity.
Selection of Bonds for Redemption. The Bonds may be redeemed only in Authorized
Denominations. If less than all of the Bonds are redeemed, in the case of redemption pursuant
to scheduled.mandatory redemption, Bonds will be redeemed in accordance with the respective
schedules set forth in such section. In the event the Bonds are redeemed in part and not in
whole other than in accordance with scheduled mandatory redemption, the Bonds to be redeemed
will be selected by maturity and the scheduled mandatory redemption requirements for each
maturity described above will be adjusted so that the resulting decrease in debt service on the
Bonds (including scheduled mandatory redemption payments) during each six-month period
commencing on each Interest Payment Date is proportional, as nearly as practicable, to the
decrease in the payments on the GNMA Security during each such six-month period. All Bonds
to be redeemed within the same maturity will be selected by lot.
Except as otherwise described above, any Bonds to be called for redemption will be
selected by the Trustee in such manner as the Trustee in its absolute discretion will determine,
such selection to be made prior to the date on which notice of such redemption must be given.
Bonds will be redeemed as soon as practicable after an event causing a redemption will have
occurred.
If it is determined that less than all of the principal amount represented by any Bond is
to be called for redemption, then, following notice of intention to redeem such principal amount,
the holder thereof will surrender such Bond to the Trustee on or before the applicable
redemption date for (a) payment on the redemption date to such Bondholder of the redemption
price of the amount called for redemption and (b) delivery to such Bondholder of a new Bond
or Bonds in an aggregate principal amount equal to the unredeemed balance of such Bond, which
will be an Authorized Denomination. A new Bond representing the unredeemed balance of such
Bond will be issued to the registered owner thereof, without charge therefor. If the registered
owner of any Bond or integral multiple of the Authorized Denomination selected for redemption
will fail to present such Bond to the Trustee for payment and exchange as aforesaid, such Bond
Will, nevertheless, become due and payable on the date fixed for redemption to the extent of the
amount called for redemption (and to that extent only).
Notice of Redemption. Except as provided below, notice of redemption will be given by
registered mail or other secure means, postage prepaid, to the registered holder of each Bond
to be redeemed, at the address of such registered holder shown on the Bond Register. All such
redemption notices will be given not less than 30 days nor more than 60 days prior to the date
fixed for redemption, except that (a) any notice of redemption following receipt of casualty
02/24194 - 9 - m12-1854
insurance proceeds or condemnation awards will be given no less than 15 days prior to the date
fixed for redemption, and (b) any notice of redemption pursuant to subparagraph (b) under
"Special Mandatory Redemption" will be given not less than 13 days nor more than 60 days
prior to the date fixed for redemption. No redemption notices will be given prior to receipt by
the Trustee of sufficient funds (together with investment earnings thereon from the date of
deposit to the date fixed for redemption) to redeem all Bonds subject to such notice, unless the
Trustee will have determined that it will have available, as a result of receipt of proceeds of
refunding obligations, an amountsufficient to redeem such Bonds. Each notice will specify the
CUSIP numbers and the series and certificate numbers of the Bonds to be redeemed and the
principal amount of each Bond being redeemed (if the Bonds are to be redeemed in part), the
date of issue of the Bonds as originally issued, the complete official name of the Bonds including
the series designation, the redemption date, the redemption price and the place or places where
-amounts due upon such redemption will be payable, the name, address and telephone number
of the Trustee together with a contact person of the Trustee, the interest rate, the maturity date
on the Bonds to be redeemed together with the date of the redemption notice; provided,
however, that any errors in the CUSIP numbers set forth in such notice will not affect the
validity of any redemption. Such notice will further state that payment of the applicable
redemption price plus accrued interest to the date fixed for redemption will be made upon
presentation and surrender of the Bonds. A second notice of redemption will be given within
60 days after the redemption date in the manner described above to the registered holder of
redeemed Bonds which have not been presented for payment within 30 days after the redemption
date.
Neither failure to give notice by mailing to the registered owner of any Bond designated
for redemption nor any defect in such notice will affect the validity of the proceedings for the
redemption of any Bond with respect to which no such failure or defect has occurred nor will
failure to give or defect in the second notice described above constitute a defect in the notice of
redemption of any Bond.
Notice of such redemption will also be sent by registered mail, or other secure means,
postage prepaid, to certain municipal registered Securities Depositories (described below) which
are known to the Trustee to be holding Bonds, and to at least two of the national Information
Services (described below) that disseminate securities redemption notices, at least 35 days but
not more than 65 days prior to the redemption date (except in the case of redemption following
receipt of casualty insurance proceeds or condemnation awards); provided, however, that neither
the failure to receive such notice or any defect in any notice so mailed will affect the sufficiency
of the proceedings for the redemption of any Bonds.
Securities Depositories include The Depository Trust Company, 711 Steward Avenue,
Garden City, New York 11530; Midwest Securities,Trust Company, Capital Structures-Call
Notification, 440 South LaSalle Street, Chicago, Illinois 60605; Philadelphia Depository Trust
Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103,
Attention: Bond Department; or, in accordance with the then current guidelines of the Securities
and Exchange Commission, such other addresses and/or such other securities depositories or any
such other depositories as the Issuer may designate in writing to the Trustee.
02/24/94 _ 10 - m12-1854
Information services include Financial Information, Inc., "Daily Called Bond Service,"
30 Montgomery Street, 10th Floor, Hersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services, "Called Bond Services," 55 Broad Street, 28th Floor, New York, New
York 10004; Moody's Investors Service, "Municipal and Government," 99 Church Street, 8th
Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard and
Poor's Corporation, "Called Bond Record," 25 Broadway, New York, New York 10004; or,
in accordance with the then current guidelines of the Securities and Exchange Commission, such
other addresses and/or such other services providing information with respect to called bonds,
or any other such services as the Issuer may designate in writing to the Trustee.
Notwithstanding the foregoing or any other provision of the Indenture, in the event of a
redemption by reason of the Trustee receiving payments on the GNMA Security representing
payments on the Mortgage Loan made by the Borrower without notice or prepayment penalty
while under the supervision of a trustee in bankruptcy, notice of redemption of Bonds will not
be required if the circumstances do not permit the Trustee to give such notice in accordance with
the preceding paragraphs of this section.
Notice of redemption having been given in the manner provided above (or not required
as provided in the immediately preceding paragraph)-, and money sufficient for the redemption
being held by the Trustee for that purpose, the Bonds so called for redemption will become due
and payable on the redemption date, and interest thereon will cease to accrue; and the holders
of the Bonds so called for redemption will thereafter no longer have any security or benefit
under the Indenture except to receive payment of the redemption price for such Bonds. Moneys
deposited with and held by the Trustee due to non-presentment of Bonds on any redemption date
will be retained by the Trustee for a period of at least one year after the final maturity date of
the Bonds, or the maximum amount of time allowed under the laws of the State.
BOOK ENTRY ONLY SYSTEM
The Bonds will be available in book-entry form only in the principal amount of $1,000
and any integral multiple thereof. Purchasers of the Bonds will not receive certificates
representing their interests in the Bonds purchased.
The Bonds will be held by The Depository Trust Company, New York, New York
("DTC"), as securities depository. The ownership of one fully registered Bond for each
maturity is registered in the name of Cede & Co., as nominee for DTC. DTC is a limited-
purpose trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its
participants (the "Participants") and to facilitate the clearance and settlement of securities
transactions among Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust companies, clearing
02/24/94 m12-1854
corporations, and certain other organizations, some of whom (and/or their representatives) own
DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a Participant, either
directly or indirectly (the "Indirect Participants").
Ownership interests in the Bonds may be purchased by or through Participants. Such
Participants and the persons for whom they acquire interests in the Bonds as nominees will not
receive certificated Bonds, but each Participant is to receive a credit balance in the records of
DTC in the amount of such Participant's interest in the Bonds, which is to be confirmed in
accordance with DTC's standard procedures. Each such person for whom a Participant acquires
an interest in the Bonds, as nominee, may desire to make arrangements with such Participant
to receive a credit balance in the records of such Participant, and may desire to make
arrangements with such Participant to have all notices of redemption or other communications
to DTC, which may affect such persons, be forwarded in writing by such participant and to have
notification made of all interest payments. Neither the Issuer nor the Trustee will have any
responsibility or obligation to such Participants or the persons for whom they act as nominees
with respect to the Bonds in respect of the accuracy of any records maintained by DTC or any
Participant; the payment by DTC or any Participant or any amount in respect of the principal
or redemption price of or interest on the Bonds; any notice that is permitted or required to be
given to Bondholders under the Indenture; the selection by DTC of any Participant of any person
to receive payment in the event of a partial redemption of the Bonds; or any consent given or
other action taken by DTC as Bondholder. In this Official Statement, the term "Beneficial
Owner" includes the person for whom the Participant acquires an interest in the Bonds.
SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS
NOMINEE OF DTC, REFERENCE HEREIN TO THE BONDHOLDERS OR REGISTERED
OWNERS OF THE BONDS MEANS CEDE & CO., NOT THE BENEFICIAL OWNERS OF
THE BONDS.
In the event of any inconsistency between the provisions of the Indenture and the
provisions of the Letter of Representations relating to the same matter or matters, the provisions
of the Letter of Representations, to the extent of such inconsistency, will control.
DTC is to receive payments from the Trustee to be remitted to the Participants for
subsequent disbursement to the Beneficial Owners. The ownership interest of each Beneficial
Owner in the Bonds is to be recorded on the records of the Participants, whose ownership
interests are to be recorded on a computerized book-entry system operated by DTC.
When reference is made to any action that is required or permitted to be taken by the
Beneficial Owner, such reference only relates to those permitted to act (by statute, regulation
or otherwise) on behalf of such Beneficial Owners for such purposes. When notices are given,
they are to be sent by the Trustee to DTC only. DTC is responsible for notifying Participants,
and Participants and Indirect Participants are responsible for notifying the Beneficial Owners.
Neither the Trustee nor the Issuer is responsible for sending notices to Beneficial Owners.
02/24/44 - 12 - m12-1854
t
Beneficial Owners are to receive a written confirmation of their purchase detailing the
terms of the Bonds acquired. Notwithstanding anything to the contrary in the Indenture,
transfers of ownership interests in the Bonds are to be accomplished by book entries made by
DTC and by the Participants who act on behalf of the Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interest in the Bonds, except as
specifically provided in the Indenture. Interest and principal are to be paid by the Trustee to
DTC in clearing house funds, then paid by DTC to the Participants and thereafter paid by the
Participants to the Beneficial Owners when due.
For every transfer and exchange of the Bonds, the Beneficial Owner may be charged a
sum sufficient to cover any tax, fee or other government charge that may be imposed in relation
thereto.
DTC may determine to discontinue providing its services with respect to the Bonds at any
time by giving notice to the Issuer and the Trustee and discharging its responsibilities with
respect thereto under applicable law. Under such circumstances (if there is not a successor
securities depository) certificated Bonds are required to be delivered as described in the
Indenture.
The Issuer or the Trustee may determine that continuation of the system of book-entry
transfers through DTC (or a successor securities depository) is not in the best interest of the
Beneficial Owners, or the Issuer may decide to discontinue the use of the system of book-entry.
In such event, certificated Bonds are required to be delivered as described in the Indenture.
In the event that the book-entry only system is discontinued, Bonds may be exchanged for
an equal aggregate principal amount of certificated Bonds in authorized denominations. The
transfer of any certificated Bond may be registered on the books maintained by the Trustee for
such purpose only upon the surrender thereof to the Trustee with a duly executed assignment in
form satisfactory to the Trustee. For every exchange or transfer of registration of certificated
Bonds, the Issuer and the Trustee may make a charge sufficient to reimburse them for any tax
or other governmental charge required to be paid with respect to such exchange or registration
of transfer, but no other charge may be made to the Beneficial Owner for any exchange or
registration of transfer of the Bonds.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
The Bonds will be secured under the Indenture by (a) all right, title and interest of the
Issuer in and to all Revenues, derived or to be derived by the Issuer or the Trustee for the
account of the Issuer under the terms of the Indenture and the Financing Agreement (other than
the Reserved Rights of the Issuer), together with all Revenues received by the Trustee for the
account of the Issuer arising out of or on account of the Trust Estate; (b) all right, title and
interest of the Issuer in and to the GNMA Security, including all payments with respect thereto
and any interest, profits or other income derived from the investment thereof; (c) all right, title
and interest of the Issuer in and to, and remedies under, the Financing Agreement and the
02/24/94 - 13 - m12-1854
Regulatory Agreement and Declaration of Restrictive Covenants; (d) all funds, moneys and
securities and any and all other rights and interests in property whether tangible or intangible
from time to time by delivery or by writing of any kind, conveyed, mortgaged, pledged,
assigned or transferred as and for additional security under the Indenture for the Bonds by the
Issuer or by anyone on its behalf or with its written consent to the Trustee, which is authorized
to receive any and all such property at any and all times and to hold and apply the same subject
to the terms of the Indenture.
The Bonds and the interest thereon are limited obligations of the Issuer, payable solely
from the Revenues and the Trust Estate, which are specifically assigned and pledged to such
purposes. Neither the United States of American, HUD, FHA, any other agency of the United
States of America, GNMA, the State of California, nor any political subdivision thereof(except
the issuer, to the limited extent set forth under the caption "THE BONDS -- Limited
Obligations") will in any event be liable for the payment of the principal of, premium (if any)
or interest on the Bonds or for the performance of any pledge, obligation or agreement of any
kind whatsoever of the Issuer, and none of the Bonds or any of the Issuer's agreements or
obligations will be construed to constitute an indebtedness of or a pledge of the faith and credit
of or a loan of the credit of any of the foregoing within the meaning of any constitutional or
statutory provision whatsoever. The Bonds and the premium, if any, and interest thereon will
never constitute a debt, indebtedness or pledge or a loan of the faith or credit or the taxing
power of the Issuer, the State of California, or any political corporation, subdivision or agency
thereof within the meaning of any constitutional or statutory provision. The Bonds are not and
never will become general obligations of the Issuer and will not be payable from the general
revenues of the Issuer, and neither the Issuer nor the State of California or any political
corporation, subdivision, or agency thereof will be liable thereon, nor in any event will the
bonds be payable out of any funds or properties other than those of the Issuer specifically
pledged therefor. No Holder of any Bonds has the right to compel any exercise of the taxing
power of the Issuer to pay the bonds or the interest or the redemption premium, if any, thereon,
and the Bonds will not be construed to create any moral obligation on the part of the Issuer with
respect to the payment of the Bonds.
THE GNMA MORTGAGE-BACKED SECURITIES PROGRAM
The summary and explanation of the GNMA Mortgage-Backed Securities Program and
the other documents referred to herein do not purport to be complete, and reference is made to
the GNMA I Mortgage-Backed Securities Guide(GNMA Handbook 5500.1 REV-6, as amended)
and to said documents for full and complete statements of their provisions.
The Government National Mortgage Association ("GNMA") is a non-stock corporate
instrumentality of the United States within the Department of Housing and Urban Development
("HUD") with its principal office in Washington, D.C.
42/24/94 - 14 - m12-1854
- • 0
The GNMA Securities will be "fully modified pass-through" mortgage-backed securities
issued and serviced by the Lender. The total face amount of the GNMA Securities will be in
the same amount as the Mortgage Note. The Lender will be required to pass through to the
Trustee, as the holder of the GNMA Securities, by the 15th day of each month the monthly
scheduled installments of principal and interest (interest only on the Construction Loan
Certificates) on the Mortgage Note (less the GNMA guarantee fee and the Lender's servicing
fee), whether or not the Lender receives such payment from the Borrower, plus any unscheduled
prepayments of principal of the Mortgage Note received by the Lender. GNMA guarantees the
timely payment of the principal of and interest on the GNMA Securities.
GNMA Guaranty
GNMA is authorized by Section 306(8) of Title III of the National Housing Act, as
amended (the "National Housing Act"), to guarantee the timely payment of the principal of, and
interest on, securities which are based on and backed by mortgage pools consisting of a single
mortgage insured by the Federal Housing Administration ("FHA") pursuant to Section 241(0
of the National Housing Act. Section 306(g) of the National Housing Act further provides that
"[T]he full faith and credit of the United States is pledged to the payment of all amounts which
may be required to be paid under any guaranty under this subsection." An opinion, dated
December 12, 1969, of the then Assistant Attorney General of the United States, states that such
guaranties under Section 306(8) of mortgage-backed securities of the type being delivered to the
Trustee on behalf of the Issuer are authorized to be made by GNMA and "would constitute
general obligations of the United States backed by its full faith and credit."
Pursuant to such authority,GNMA, upon delivery of a GNMA Security to the Lender in
accordance with the related GNMA Guaranty Agreement, will have guaranteed the timely
payment of the principal of and interest on such GNMA Security.
GNMA Borrowing Authority
In order to meet its obligations under such guaranty, GNMA, in its corporate capacity
under Section 306(d) of Title III of the National Housing Act, may issue its general obligations
to the United States Treasury Department (the "Treasury") in an amount outstanding at any one
time sufficient to enable GNMA, with no limitations as to amount, to perform its obligations
under its guaranty of the timely payment of the principal of and interest on the GNMA Security.
The Treasury is authorized to purchase any obligations so issued by GNMA and has indicated
in a letter dated February 13, 1970, from the then Secretary of the Treasury to the then
Secretary of HUD that the Treasury will make loans to GNMA, if needed, to implement the
aforementioned guaranty.
GNMA warrants to the holder of the GNMA Securities in the related GNMA Guaranty
Agreement (as hereinafter defined), that, in the event it is called upon at any time to make good
its guaranty of the payment of principal of and interest on the GNMA Securities, it will, if
necessary, in accordance with Section 306(d), apply to the Treasury for a loan or loans in
amounts sufficient to make payments of principal and interest on the GNMA Securities.
02/24/94 - 15 - m12-1854
Servicing of Mortgage Loans
The Lender is responsible for servicing and otherwise administering the Mortgage in
accordance with generally accepted practices of the mortgage banking industry and the GNMA
Servicer's Guide.
The monthly remuneration of the Lender, for its servicing and administrative functions,
and the guaranty fee charged by GNMA, are based on the unpaid principal amount of the
GNMA Securities outstanding. The total of the servicing and guaranty fees with respect to the
GNMA Securities is 0.25% per annum, payable monthly, calculated on the principal balance of
the GNMA Securities outstanding on the last day of the month preceding such date of
calculation. 4f the 0.25% total fee, part is paid to GNMA as a guaranty fee, and the remainder
is retained by the Lender as a servicing fee. The GNMA Securities carry interest rates that are
0.25% per annum less than the interest rate on the Mortgage Note because the servicing and
guaranty fee is deducted from payments on the Mortgage Note.
It is expected that interest and principal payments on the Mortgage Note will be the source
of moneys for payments on the GNMA Securities. If such payments are less than what is due,
the Lender may advance its own funds to ensure timely payment of scheduled installments of
principal and interest due on the GNMA Securities. GNMA guarantees such timely payment
in the event of the failure of the Lender to pass through such scheduled principal and interest
payments when due.
The Lender is required to advise GNMA in advance of any impending default on
scheduled payments on the GNMA Securities so that GNMA as guarantor will be able to
continue such payments as scheduled on the 15th day of each month. If, however, such
payments are not received as scheduled, the Trustee, on behalf of the Issuer, has recourse
directly to GNMA.
The guaranty agreements to be entered into by GNMA and the Lender in connection with
the issuance of the GNMA Securities (collectively, the "GNMA Guaranty Agreement") will
provide that, in the event of a default by the Lender, including (i) a request to GNMA to make
a payment of principal or interest on the GNMA Securities when the Borrower is not in default
under the Mortgage Note, (ii) insolvency of the Lender, or (iii) default by the Lender under any
other guaranty agreement with GNMA, GNMA will have the right, by letter to the Lender, to
effect and complete the extinguishment of the Lender's interest in the Mortgage Note, and the
Mortgage Note will thereupon become the absolute property of GNMA, subject only to the
unsatisfied rights of the holder of the GNMA Securities. In such event, the GNMA Guaranty
Agreement will provide that on and after the time GNMA directs such a letter of extinguishment
to the Lender, GNMA will be the successor in all respects to the Lender in its capacity under
the GNMA Guaranty Agreement and the transaction and arrangements set forth or arranged for
therein, and will be subject to all responsibilities, duties, and liabilities (except the Lender's
indemnification of GNMA), theretofore placed on the Lender by the terms and provisions of the
GNMA Guaranty Agreement, provided that at any time, GNMA may enter into an agreement
with any other eligible issuer of GNMA securities under which the latter undertakes and agrees
02124194 - 16 - m12.1854
to assume any part or all such responsibilities, duties or liabilities theretofore placed on the
Lender, and provided that, no such agreement will detract from or diminish the responsibilities,
duties or liabilities of GNMA.in its capacity as guarantor of the GNMA Securities, or otherwise
adversely affect the rights of the holders thereof.
Payment of Principal and Interest on the GNMA Securities
Payment of interest on the GNMA Security is required to be made in monthly installments
on or before the 15th day of each month commencing the month next following the date of issue
of the GNMA Security, subject to prepayment due to prepayment or acceleration of the
Mortgage Note. Each'installment on the GNMA Security is applied first to interest and then in
reduction of the principal balance then outstanding on the GNMA Security. The amount of
principal due on the GNMA Security is the scheduled principal amortization currently due on
the Mortgage Note.
The monthly installments are subject to adjustment by reason of any prepayments or other
early or unscheduled recoveries of principal on the Mortgage Note. The Lender is required to
pay to the Trustee, as holder of the GNMA Securities, monthly installments of not less than the
interest due on the GNMA Securities at the rate specified in the GNMA Securities, together with
any scheduled installments of principal, whether or not collected from. the Borrower, and any
prepayments or early recoveries of principal.
Liability of Lender
The GNMA Securities will not constitute a liability of nor evidence any recourse against
the Lender. The GNMA Securities are based on and backed by the Mortgage on the real
property securing the Mortgage Note. Recourse may be had by the Trustee only to GNMA in
the event of any failure of timely payment as provided for in the GNMA Guaranty Agreement
appended to the GNMA Securities.
THE MORTGAGE NOTE AND MORTGAGE
This summary and explanation of the Mortgage Note and Mortgage does not purport to
be comprehensive and is qualified in its entirety by reference to the Mortgage Note and
Mortgage for full and complete statements of their provisions.
The Mortgage from the Borrower to the Lender secures the Mortgage Note. The
Mortgage Loan proceeds will be disbursed by the Lender and the Lender will be reimbursed for
such advances upon the purchase of the GNMA Security by the Trustee. Upon the purchase of
GNMA Security, the Lender will make payments thereon which may differ from the Mortgage
Note payments. Upon the purchase of the GNMA Security from the Lender by the Trustee, on
behalf of the Issuer, monthly scheduled installments of principal and interest on the Mortgage
Note(less the GNMA guaranty fee and the Lender's servicing fee) will be passed through to the
Trustee as scheduled payments of principal and interest on the GNMA Security.
02/24/94 - 17 - m12-1854
The Mortgage Loan, as evidenced by the Mortgage Note and Mortgage which are
modified by certain modification agreements, (i) is insured by FHA pursuant to and in
accordance with the provisions of Section 241(f) of the National Housing Act and applicable
regulations thereunder, as evidenced by the endorsement by FHA of the Mortgage Note
evidencing the Mortgage Loan; (ii)is in the principal amount of$ (iii)bears interest
at the rate of % per annum; (iv) has a final maturity of 1, _; payable in equal
monthly installments of principal and interest, commencing on _ 1, _; (vi) is secured
on a nonrecourse basis; and (vii) is not subject to prepayment prior to 1, 2004,
without the consent of the holder of the Mortgage Note except that (A) the Mortgage Note is
subject to mandatory prepayment in whole or in part at any time without premium or penalty,
from the proceeds of any casualty insurance or condemnation awards received following a partial
or total destruction or condemnation of the Project, in the event and to the extent that such
casualty proceeds or condemnation awards, are not applied to the repair or restoration of the
Project in accordance with the FHA Loan Documents, (B) the Mortgage Note is subject to
prepayment in whole or in part at the option of the Borrower, on _ 1, 2004, or at any
time thereafter, upon at least 30 days' advance written notice to the Lender, and upon payment
of the principal amount of the Mortgage Note then outstanding together with the applicable
prepayment premium attributable to the balance of the Mortgage Note plus interest to the end
of the month in which the prepayment is made, and (C) the Mortgage Note is subject to
mandatory prepayment in whole or in part without the consent of the mortgagee and without
prepayment penalty if HUD determines that prepayment will avoid an FHA insurance claim and
therefore is in the best interest of the Federal government, notwithstanding any prepayment
prohibition imposed and/or penalty required by the Mortgage Note with respect to prepayments
made prior to 1, 2004. In the event of a partial prepayment described in
subparagraphs (A) and (B) above, the Mortgage Note may be reamortized to reflect its reduced
principal amount.
If the Borrower makes any such prepayment on the Mortgage Note, the amount prepaid
will be paid to the Lender and passed through to the Trustee, as a prepayment on the GNMA
Security, and applied to the redemption of Bonds, as described under "THE BONDS --
Redemption."
THE PROJECT AND THE PRIVATE PARTICIPANTS
The following information concerning the Project and the private participants has been
provided by representatives of the Borrower and the other private participants and has not been
independently confirmed or verified by either the Underwriters, Bond Counsel or the Issuer.
No representation is made herein as to the accuracy or adequacy of such information or as to
the absence of material adverse changes in such information subsequent to the date hereof.
02/24/94 - 18 - m12-1854
The Project
The Project known as Crescent Park Apartments is located at in
the City of Richmond, County of Contra Costa, California, consisting of 378 apartment units
as follows:
Projected
Number Type Approximate Rent
of Units of Unit Size Per Unit
Each Apartment unit is equipped with The Project has on site
parking for vehicles.
Sources of Revenue
[TO COME]
Borrower
The Borrower is a California nonprofit corporation., The principal office of the Borrower
is located at 2169 East Franciso Boulevard, Suite B, San Rafael, California 94901. The
Borrower is a single purpose corporation created for the sole purpose of acquiring, rehabilitating
and ensuring the permanent affordability of the apartment units. The Directors of the Borrower
are —. The Directors will have
general responsibility and sole authority for supervising the operations of the Borrower, and will
be responsible for the development, rehabilitation and management of the Project subject to
regulation, supervision and inspection by HUD.
Architect
The design and inspecting architect for the Project is Kodama Associates(the "Architect")
located at 1701 Montgomery Street, San Francisco, California 94111. The Architect is a
diversified architectural and planning firm which has been in existence since 1978. The
principal of the firm is Steve Kodama, who has been practicing architecture for over thirty years
02/24/94 - 19 - ti�12-1854
and has special expertise in community and user-oriented projects such as community housing
developments, special needs housing, and residential complexes for seniors. The senior
associates are James Stetson and Robert Anderson, while Matt Anderson is an associate. The
Architect has extensive experience in a wide range of areas. These include a multitude of
housing types, resort and recreational developments, commercial facilities, offices, restaurants,
educational projects, and interiors.
As required by HUD, the architect will certify that, to the best of its knowledge, belief
and professional judgment, rehabilitation of the Project in accordance with the plans and
specifications is permissible under all applicable state and local codes, ordinances and
regulations, and will comply with HUD's minimum property standards and other applicable
HUD design requirements.
The duty of the architect is to review and inspect the construction of the Project in order
to provide sufficient assurance to the Trustee of completion of the Project.
The Mortgage Lender/Servicer
TRI Capital Corporation, a California corporation, is the Lender. The Lender is a HUD-
approved lender under Sections 223(f) and 221(d)(4) of the National Housing Act, and a
GNMA-approved issuer of GNMA Securities. The Lender was formed in 1987 and is located
in San Francisco, California. As of December 31, 1993 the Lender had made approximately
166 mortgage loans with a total commitment amount of approximately $867 million.
To be approved by GNMA to.issue modified pass-through securities with respect to a
long-term mortgage on multi-family projects, the Lender is required to have a net worth (based
on audited financial statements) equal to at least $500,000 plus 0.2 percent of any securities
outstanding in excess of$35 million.
The principal corporate office of the Lender is located in San Francisco, California.
The Trustee
Bank of America National Trust and Savings Association, will serve as Trustee under the
Indenture. The Trustee is a national banking association organized under the laws of the United
States of America, having all of the powers of a bank, including fiduciary powers and is a
member of the Federal Deposit Insurance Corporation and the Federal Reserve System.
CERTAIN BONDHOLDERS' RISKS
The purchase of the Bonds will involve a number of risks. The following is a summary,
which does not purport to be comprehensive or definitive, of some of such risk factors.
02/24/94 - 20 - m12-1854
Early Redemption and Loss of Premium
Purchasers of Bonds, including those who purchase Bonds at a price in excess of their
principal amount or who hold such a Bond trading at a price in excess of par, should consider
the fact that the Bonds are subject to redemption at a redemption price equal to their principal
amount plus accrued interest in the event such Bonds are redeemed prior to maturity. This could
occur, for example, in the event the GNMA Security is not delivered by the date required under
the Indenture (as,such date may be extended pursuant to the Indenture) or is delivered in a
principal amount less than $ . in the event that the Mortgage Note is prepaid as a result
of a casualty or condemnation award payments affecting the Project or there is a default under
the Mortgage. See "THE BONDS -- Redemption -- Special Mandatory Redemption."
The Underwriters expects that in the event of a special mandatory redemption under the
circumstances described in clause (a) or (b) under the caption "THE BONDS -- Special
Mandatory Redemption" approximately $ will be available to pay the related redemption
premium. No assurance, however, can be given that funds will be available under the Indenture
to pay any portion of the related premium in the event that the Project Loan Certificate is not
delivered on or prior to 1, _ or has a principal balance less than $ on
the date of purchase by the Trustee.
Limited Security
The Bonds are limited obligations of the Issuer payable solely from certain funds pledged
to and held by the Trustee pursuant to the Indenture. See "THE Bonds -- Limited Obligations"
herein.
Taxability of 1994 Series A Bonds
THE 1994 SERIES A BONDS ARE NOT SUBJECT TO REDEMPTION, AND THE
RATE OF INTEREST ON THE 1994 SERIES A BONDS IS NOT SUBJECT TO
ADJUSTMENT, BY REASON OF THE INTEREST ON THE 1994 SERIES A BONDS BEING
INCLUDED IN GROSS INCOME FOR PURPOSES OF FEDERAL INCOME TAXATION.
Such event could occur if the Borrower (or any subsequent owners of the Project) does not
comply with the provisions of the Regulatory Agreement and Declaration of Restrictive
Covenants and the Financing Agreement which are designed, if complied with, to satisfy the
continuing compliance requirements of the Code in order for the interest on the 1994 Series A
Bonds to be excludable from gross income for purposes of federal income tax.
Enforcement of the Regulatory Agreement and Declaration of Restrictive Covenants
As a condition of FHA's insuring the Mortgage Note, the Regulatory Agreement and
Declaration of Restrictive Covenants is made expressly subordinate to the obligations under the
Mortgage, and enforcement of the Regulatory Agreement and Declaration of Restrictive
Covenants is expressly limited so that enforcement will not serve as the basis for a declaration
of default under the Mortgage or an acceleration of the Mortgage Note or result in any claim
02/24/94 - 21 - m12-1954
under the Mortgage Note, or claim against the Project, the Mortgage Note proceeds, any reserve
or deposit made with the Lender or another person or entity required by HUD in connection
with the Mortgage Note transaction, or against the rents or other income from the Project for
payment under the Regulatory Agreement and Declaration of Restrictive Covenants.
Consequently, the rights of the Issuer or the Trustee to enforce a claim for money damages
would be severely restricted and, among other things, it would not be possible to accelerate the
debt evidenced by the Mortgage Note or to seek FHA Insurance benefits. There is no provision
in the 1994 Series A Bonds or the Indenture for an acceleration of the indebtedness evidenced
by the 1994 Series A Bonds or payment of additional interest in the event interest on the 1994
Series A Bonds were declared taxable, and the Issuer will not be liable under the 1994 Series
A Bonds or the Indenture for any such payment on the 1994 Series A Bonds whatsoever. See
APPENDIX D -- "Summary of the Regulatory Agreement and Declaration of Restrictive
Covenants."
Issuance of GNMA Securities
It is anticipated that the Trustee will acquire the GNMA Security on or before 1,
as such acquisition date may be extended pursuant to the terms of the Indenture. The
purchase of each GNMA Security is subject to the following conditions, among others: (i) the
submission by the Lender to GNMA of certain documents required by GNMA in form and
substance satisfactory to GNMA, (ii) the Lender's continued compliance, on the date of issuance
of the GNMA Security, with all of GNMA's eligibility requirements, specifically including, but
not limited to, certain net worth requirements and (iii) the Lender's continued ability to issue
and deliver each GNMA Security, as such ability may be affected by the Lender's bankruptcy,
insolvency or reorganization. In the event that the GNMA Security is not issued as a result of
a failure of any of the conditions listed above, the Bonds will be subject to early redemption in
whole or in part as discussed under "THE BONDS -- Special Mandatory Redemption" herein.
Investment Agreement
Amounts held in the Bond Fund will be invested by the Trustee in the Investment
Agreement with at the rate of % per annum; provided that amounts held in the
Sinking Fund Account will be invested at a rate of % per annum. The Investment
Agreement represents the unsecured general obligation of to provide repayment
to the Trustee of moneys invested in the Investment Agreement pursuant to the Indenture at the
rate of return set forth therein. For information with respect to, purchasers of the Bonds should
write to . The Issuer and the Underwriters make no representation
as to the ability of the provider of the Investment Agreement to make payments thereunder in
amounts necessary to make scheduled payments of debt service on the Bonds.
The rating shown on the cover page of this Official Statement is dependent in part on the
fact that certain funds will be invested in the Investment Agreement. A downgrading of the
long-term credit rating of may have an adverse effect on the rating for the Bonds.
02/24/94 - 22 - m12-1854
Secondary Markets and Prices
The Underwriters will not be obligated to repurchase any of the Bonds, and no
representation is made concerning the existence of any secondary market for the Bonds. No
assurance can be given that any secondary market will develop following the completion of the
offering of the Bonds, and no assurance can be given that the Bonds can be resold at their initial
offering prices for any period of time.
Competing Facilities
The Issuer and persons who may be affiliated with the Issuer and the Borrower and
persons who may be affiliated with each may finance, develop, construct, and operate other
facilities that could compete with the Project for tenants. Any competing facilities, if so
constructed, could adversely affect occupancy and revenues of the Project.
TAX EXEMPTION
Exclusion from Gross Income
In the opinion of Orrick, Herrington &Sutcliffe, Bond Counsel, the 1994 Series A Bonds
are qualified 501(c)(3) bonds and, assuming compliance by the Issuer and the Borrower with
applicable requirements of the Code, including arbitrage and arbitrage rebate requirements under
Section 148 of the Code, that must be satisfied subsequent to the date of issuance,of the 1994
Series A Bonds, interest on the 1994 Series A Bonds is excluded from gross income for federal
income tax purposes under existing federal law and is not an item of tax preference for purposes
of the alternative minimum tax applicable to individuals. Interest on the Taxable 1994 Series
A-T bonds is not excludable from gross income for federal income tax purposes. In addition,
in the opinion of Bond Counsel, interest on the 1994 Series A Bonds and Taxable 1994 Series
A-T Bonds is exempt from personal income taxation imposed by the State of California.
The Issuer and the Borrower have covenanted in the Indenture and Financing Agreement
to comply with applicable arbitrage and arbitrage rebate requirements of the Code as necessary
to preserve the exclusion of interest on the 1994 Series A Bonds from gross income of the
Owners of the 1994 Series A Bonds for federal income tax purposes. However, a failure to
comply with arbitrage rebate requirements, to the extent applicable, could result in interest on
the 1994 Series A Bonds becoming taxable retroactive to the date of issuance of the 1994 Series
A Bonds.
Corporate Alternative Minimum Tax
While interest on the 1994 Series A Bonds also is not an item of tax preference for
purposes of the alternative minimum tax applicable to corporations under Section 55 of the
Code, tax-exempt interest, including interest on the 1994 Series A Bonds, received by
corporations is taken into account in the computation of adjusted current earnings for purposes
02124/94 - 23 - m12-1854
-
of the alternative minimum tax applicable to corporations (as defined for federal income tax
purposes). Under the Code, alternative minimum taxable income of a corporation will be
increased by 75% of the excess of the corporation's adjusted current earnings (including any tax-
exempt interest) over the corporation's alternative minimum taxable income determined without
regard to such increase. A corporation's alternative minimum taxable income, so computed, that
is in excess of an exemption of$40,000, which exemption will be reduced (but not below zero)
by 25% of the amount by which the corporation's alternative minimum taxable income exceeds
$150,000, is then subject to a 20% minimum tax.
Corporate Environmental Tax
Section 59A of the Code imposes for taxable years beginning before January 1, 1996,
an environmental tax of 0.12% ($1.20 per $1,000) on the amount of a corporation's alternative
minimum taxable income (increased for certain book income and adjusted current earnings,
including any tax-exempt interest, as described in the preceding paragraph) that exceeds
$2,000,000 for the taxable year. The environmental tax is imposed whether or not the taxpayer
is subject to the alternative minimum tax, but is deductible from gross income for federal income
tax purposes.
Tax on Certain Passive Investment Income of S Corporations
Under Section 1375 of the Code, certain excess net passive investment income, including
interest on the 1994 Series A Bonds, received by an S Corporation (a corporation treated as a
partnership for most federal tax purposes) that has Subchapter C earnings and profits at the close
of its taxable year may be subject to federal income taxation at the highest rate applicable to
corporations, if more than 25% of the gross receipts of such S corporation is passive investment
income.
Foreign Branch Profits Tax
Interest on the 1994 Series A Bonds may be subject to the foreign branch profits tax
imposed by Section 884 of the Code when the 1994 Series A Bonds are owned by, and
effectively connected with a trade or business of, a United States branch of a foreign
corporation.
CERTAIN OTHER TAX CONSEQUENCES
1994 Series A Bonds Not "Qualified Tax-Exempt Obligations" for Financial Institutions
Section 265 of the Code provides that 100% of any interest expense incurred by banks
and other financial institutions for interest allocable to tax-exempt obligations acquired after
August 7, 1986, will be disallowed as a tax deduction. However, if the tax-exempt obligations
are obligations other than private activity bonds, are issued by a governmental unit that, together
with all entities subordinate to it, does not reasonably anticipate issuing more than $10,000,000
02/24/94 - 24 - m12-1854
of tax-exempt obligations (other than private activity bonds and other obligations not required
to be included in such calculation) in the current calendar year, and are designated by the
governmental unit as "qualified tax-exempt obligations," only 20% of any interest expenses
deduction allocable to those obligations will be disallowed. For this purpose, qualified 501(c)(3)
bonds such as the 1994 Series A Bonds are not treated as private activity bonds.
The Issuer does not reasonably anticipate issuing less than $10,000,000 of tax-exempt
obligations (other than private activity bonds and other obligations not required to be included
in such calculation) during the current calendar year and has not designated the 1994 Series A
Bonds as "qualified tax-exempt obligations" for purposes of the 80% financial institution interest
expense deduction. Therefore, no interest expense of a financial institution allocable to the 1994
Series A Bonds is deductible for federal income tax purposes.
Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies
Under Section 832 of the Code, interest on the 1994 Series A Bonds received by property
and casualty insurance companies will reduce tax deductions for loss reserves otherwise available
to such companies by an amount equal to 15% of tax-exempt interest received during the taxable
year.
Effect on Certain Social Security and Retirement Benefits
Section 86 of the Code requires Owners of the 1994 Series A Bonds who are also
recipients of certain Social Security and certain Railroad Retirement benefits to take receipts or
accruals of interest on the 1994 Series A Bonds into account in determining gross income.
Other Possible Tax Consequences
Although Bond Counsel expects to render opinions that interest on the 1994 Series A
Bonds and the Taxable 1994 Series A-T Bonds is exempt from California personal income taxes
and that interest on the 1994 Series A Bonds is excluded from gross income for federal income
tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds
may otherwise affect a bondholder's federal or state tax liability. The nature and extent of these
other tax consequences will depend upon the particular tax status of the Bondholders or
Bondholders' other items of income or deduction. Bond Counsel expresses no opinion regarding
any such consequences.
UNDERWRITING
v Kirkpatrick, Pettis, Smith, Polian Inc. and Charles A. Bell Securities Corp. (collectively,
the "Underwriters") have agreed to purchase the Bonds from the Issuer at a price of
$ plus accrued interest for which they will receive a fee of $ . The Bond
Purchase Agreement provides that the Underwriters will purchase all of the Bonds if they are
issued, the obligation to make such purchase being subject to certain terms and conditions set
02/24/94 - 25 - m12-1854
0
forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel, and
certain other information. The Underwriters intend to offer the Bonds to the public initially at
the offering price shown on the cover page hereof, which price may subsequently change without
requirement of prior notice. The Underwriters reserve the right to join with other dealers and
underwriters in offering the Bonds to the public. The Underwriters may offer and sell the Bonds
to certain dealers at prices lower than the public offering prices.
The Borower has agreed to indemnify the Issuer and the Underwriters against certain
liabilities.
RATING
Standard & Poor's Ratings Group ("S&P")has assigned a rating of " to the Bonds. The
rating reflects only the view of S&P at the time the rating was issued and an explanation of the
significance of such rating may be obtained from S&P. There is no assurance that any such
rating will c'ontinue for any given period of time or that it will not be revised downward or
withdrawn entirely by such rating agency if, in its judgment, circumstances so warrant. Any
such downward revision or withdrawal of such rating can be expected to have an adverse effect
on the market price of the Bonds.
The rating shown on the cover page of this Official Statement is dependent in part on the
fact that certain funds will be invested in the Investment Agreement. A downgrading of the
long-term credit rating of_ may have an adverse effect on the rating for the Bonds.
CERTAIN LEGAL MATTERS
Certain legal matters relating to the authorization and validity of the Bonds will be subject
to the approving opinion of Orrick, Herrington & Sutcliffe, San Francisco, California, as Bond
Counsel. Certain legal matters will be passed upon for the Borrower by I its counsel, Michaud
&Hoshiyama, San Francisco, California; and for the Lender by Paul Renno, Esq., its Corporate
Counsel. Certain legal matters will be passed upon by Arter Hadden Haynes & Miller,
Washington, D.C., counsel to the Underwriters.
,Bond Counsel's opinion will be limited to matters relating to authorization and validity
of the Bonds. Bond Counsel has not been engaged to investigate the Project, the financial
resources of the providers of the Investment Agreements or the Borrower or any other source
of payment of the Bonds, and its opinion will make no statement as to such matters or as the
accuracy or completeness of this Official Statement or any other information that may have been
relied on by anyone in making the decision to purchase the Bonds.
Payment of the fees of Orrick, Herrington & Sutcliffe and Arter Hadden Haynes &
Miller is contingent upon the closing of the Bonds.
02/24/94 - 26 - m12-1854
r
r
ABSENCE OF LITIGATION
On the date of delivery of the Bonds, the Issuer will deliver a certificate to the effect that
there are no legal proceedings pending or, to the Issuer's knowledge, threatened to restrain or
enjoin the issuance, sale or delivery of the Bonds or the payment, collection or application of
the proceeds thereof or of the revenues and other'moneys and securities pledged or to be pledged
under the Indenture or in any way contesting or affecting any authority for or the validity of the
Bonds or the Indenture.
MISCELLANEOUS
Any statements herein involving matters of opinion, whether or not expressly so stated,
are intended as such and not as representations of fact. This Official Statement is not to be
construed as a contract or agreement between the Issuer and the purchasers or owners of any
of the Bonds.
COUNTY OF CONTRA COSTA
By:
Chairman
02124194 - 27 - m12-1854
APPENDIX A
CERTAIN DEFINITIONS
In addition to the words and terms defined elsewhere in this Official Statement, the
following words and terms as used herein will have the following meanings unless the context
or use clearly indicates another or different meaning or intent.
"Act" means Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the
State of California.
"Authorized Denomination" means $1,000 or any integral multiple thereof.
"Authorized Issuer Representative" means the Chair of the Board of Supervisors,
Director of Community Development, County Administrator, Director of the Growth
Management and Economic Development Agency or Deputy Director Redevelopment of the
Issuer, or any other person designated to act in such capacity by a Certificate of the Issuer
containing the specimen signature of such person, which certificate may designate an alternate
or alternates.
"Authorized Borrower Representative" means any general partner of the Borrower, or
any other person designated to act in such capacity by a certificate of such general partner
containing the specimen signature of such person, which certificate may designate an alternate
or alternates.
"Bond Counsel" means any attorney at law or firm of attorneys selected by the Issuer,
of nationally recognized standing in matters pertaining to the validity of, and exclusion from
gross income for federal income tax purposes of interest on, bonds issued by states and political
subdivisions, and duly admitted to practice law before the highest court of any state of the
United States of America.
"Bond Obligation" means as of any date of calculation, the aggregate principal amount
of all outstanding Bonds or, with respect to any series, all outstanding Bonds of such series.
"Bondholder" or "holder" or "registered owner," when used with respect to any Bond,
means the person or persons in whose name such Bond is registered.
"Bond Purchase Agreement" means the Bond Purchase Agreement among the Issuer, the
Borrower and the Underwriters relating to the Bonds.
"Bond Register" and "Bond Registrar" have the respective meanings specified in the
Indenture.
02124/94 A-1 m12-1954
"Bond Year" means, with respect to a series of Bonds, the period beginning on the date
of issuance of such series and ending on March 31, 1995, and each twelve-month period
thereafter. The last Bond Year will end on the date,of final payment of such series of Bonds.
"Business Day" or "business day" means a day on which (a)banks located in New York,
New York, or in the city in which the Trust Office of the Trustee is located, are not required
or authorized by law or executive order to close for business, and (b) The New York Stock
Exchange is not closed.
"Certificate of the Issuer, "Request of the Issuer,, "Requisition of the Issuer" and
"Statement of the Issuer" mean, respectively, a written certificate, request, requisition or
statement signed in the name of the Issuer by an Authorized Issuer Representative. Any such
instrument and supporting opinions or representations, it any, may, but need not, be combined
in a single instrument with any other instrument, opinion or representation, and the two or more
so combined will be read and construed as a single instrument.
"Closing Date" means the date of delivery of the Bonds in exchange for the purchase
price thereof.
"Code" means the Internal Revenue Code of 1986. Each reference to a section of the
Code will be deemed to include the United States Treasury Regulations in effect or proposed
from time to time with respect thereto and applicable to the Project or the Bonds or the use of
the proceeds thereof.
"Compliance Certificate" means a certificate of an Authorized Borrower Representative
to the effect that, as of the date of such certificate, the Borrower is in compliance with all
requirements of the Regulatory Agreement and Declaration of Restrictive Covenants, the
Financing Agreement, the other Financing Documents and the FHA Loan Documents (with such
exceptions as will be acceptable to the Issuer).
"Costs of Issuance" means all fees, costs and expenses payable or reimbursable directly
or indirectly by the Issuer or the Borrower and related to the authorization, issuance and sale
of the Bonds.
"Defaulted Interest" means any interest on any Bond which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date.
"Event of Default" or "event of default" means any of the events so specified or defined
in the Indenture.
THA" means the Federal Housing Administration, an organizational unit within HUD,
its successors and assigns.
02/24/94 A-2 m12-1854
"FHA Loan Documents" means, collectively,the Mortgage Note, the Mortgage, the FHA
Regulatory Agreement, and all other documents required in connection with the endorsement of
the Mortgage Loan by FHA for Mortgage Insurance.
"FHA Regulations" means the regulations promulgated by FHA regarding insurance
under Sections 221(d)(4) and 244 of the National Housing Act.
"FHA Regulatory Agreement" means the Regulatory Agreement for Insured Multi-family
Projects dated March _, 1994, by and between the Borrower and HUD, together with any and
all supplements thereto.
"Financing Agreement" means the Financing Agreement, dated as of March 1, 1994,
among the Issuer, the Trustee, the Lender and the Borrower, together with any and all
supplements thereto.
"Financing Documents" will mean the Indenture, the Financing Agreement, the
Regulatory Agreement and Declaration of Restrictive Covenants, the Tax Certificate, the GNMA
Guaranty Agreement and the GNMA Security.
"GNMA" means Government National Mortgage Association, its successors and assigns.
"GNMA Guaranty Agreement" means the GNMA Guaranty Agreement between GNMA
and the Lender, together with all Supplements thereto.
"GNMA Security" means the fully-modified, mortgage-backed security in the principal
amount of$ to be issued by the Lender and registered in the name of the Trustee and
dated April_, 1994, which security is backed by the Mortgage Note and the Mortgage and is
guaranteed as to timely payment of principal and interest by GNMA, pursuant to Section 306(g)
of Title m of the National Housing Act and the regulations promulgated thereunder, and bearing
interest at the rate of_% per annum.
"HUD" means the United States Department of Housing and Urban Development, any
authorized representative thereof or any successor thereto.
"Indenture" means the Trust Indenture, dated as of March 1, 1994, between the Issuer
and the Trustee, together with all supplements thereto.
"Interest Payment Date" means each April 20 and October 20, commencing
20, 199_.
"Investment Agreement" means an Investment Agreement for the Bond Fund between the
Trustee and providing for investment of moneys in the Bond Fund at the rate
of_% per annum from the Closing Date until
02124194 A-3 m12-1854
"Mortgage" means the deed of trust from the Borrower securing the Mortgage Note, as
amended.
"Mortgage Insurance" means the insurance against certain losses under the Mortgage
Loan provided by the FHA, as evidenced by the endorsed Mortgage Note.
"Mortgage Loan" means the loan made by the Lender to the Borrower in connection with
the issuance of the Bonds and in a principal amount equal to the aggregate principal amount of
the Bonds, in order to provide financing for the Project.
"Mortgage Note" means the deed of trust note from the Borrower in favor of the Lender
evidencing the Mortgage Loan.
"National Housing Act" means the National Housing Act of 1934, as amended.
"Outstanding," when used with respect to the Bonds means all Bonds theretofore
authenticated and delivered under the Indenture, except:
(a) Bonds theretofore cancelled by the Trustee or theretofore delivered to the
Trustee for cancellation;
(b) Bonds for the payment or redemption of which moneys or obligations will
have been theretofore deposited with the Trustee in accordance with the Indenture; and
(c) Bonds in exchange for or in lieu of which other Bonds have been
authenticated and delivered under the Indenture.
Qualified Investments" means any of the following if and to the extent permitted by law:
(i) direct obligations of the United States of America backed by the full faith and credit of the
United States; (ii) obligations of United States government agencies the principal of and interest
on which are guaranteed by the full faith and credit of the United States of America; (iii) time
deposits, certificates of deposit or other obligations issued by any state or national bank which
has combined capital, surplus and undivided profits of not less than $50,000,000 (including the
Trustee), or any savings and loan institution having combined capital, surplus and retained
earnings of not less than $100,000,000, which time deposits, other accounts, certificates of
deposit or other obligations are fully insured by the Federal Deposit Insurance Corporation and
which are rated by the Rating Agency at least P-1 for investments of less than 365 days and Aa-2
or higher for investments over one year; (iv) the Investment Agreement or any other investment
agreement, having the same terms as said Investment Agreement with respect to interest rate and
maturity date, with an institution rated at least P-1 if the investment is for less than 365 days and
Aa-2 or higher if the investment is for one year or longer) by the Rating Agency; and (v) money
market funds (including money market funds sponsored by the Trustee or its affiliates) investing
solely in investments described in clauses (i)and (ii)above and rated Aaa by the Rating Agency.
02/24/94 A-4 m12-1854
"Rating Agency" means Standard & Poor's Ratings Group, and its successors and
assigns.
"Rebate Amount" means the amount, if any, which is to be paid to the United States of
America pursuant to Section 148(f) of the Code and the Tax Certificate and the Indenture.
"Rebate Analyst" means Orrick, Herrington & Sutcliffe or any other qualified person
acceptable to the Issuer and retained by the Borrower to calculate the Rebate Amount or, in the
event that the Borrower fails to so retain a Rebate Analyst one month prior to any date on which
calculations are required to be made under the Tax Certificate, any qualified person retained by
the Trustee to calculate the Rebate Amount.
"Regular Record Date" means, with respect to an Interest Payment Date, the close of
business on April 5 or October 5, as the case may be, next preceding such Interest Payment
Date, whether or not a business day.
"Regulatory Agreement and Declaration of Restrictive Covenants" means the Regulatory
Agreement and Declaration of Restrictive Covenants, dated as of March 1, 1994, between the
Borrower and the Issuer, together with any and all supplements thereto.
"Reserved Rights of the Issuer" means (a) all rights which the Issuer or its officers,
officials, agents or employees may have under the Indenture and the Financing Agreement to
indemnification by the Borrower and by any other persons and to payments for expenses
incurred by the Issuer itself, or its officers, officials, agents or employees; (b) the right of the
Issuer to receive notices, reports or other information, make determinations and grant approvals
under the Indenture and under the other Financing Documents; (c) all rights of the Issuer to
enforce the representations, warranties, covenants and agreements of the Borrower pertaining
in any manner or way, directly or indirectly to the requirements of the Housing Law or any
requirements imposed by the Issuer with respect to the Project, or necessary to assure that
interest on the 1994 Series A Bonds is excluded from gross income for federal income tax
purposes, as are set forth in any of the Financing Documents or in any other certificate or
agreement executed by the Borrower; (d) all rights of the Issuer in connection with any
amendment to or modification of the Financing Documents; and (e) all enforcement remedies
with respect to the foregoing.
"Responsible Officer" means the President or any vice president, assistant vice president
or trust officer of the Trustee.
"Revenues" means the revenues, receipts, interest, income, investment earnings and other
moneys received or to be received by the Issuer or the Trustee from the Project, including
moneys received or to be received from the GNMA Security or the Borrower under the
Financing Documents and all investment earnings derived or to be derived on any moneys or
investments held by the Trustee under the Indenture, but excluding (a) amounts paid as fees,
reimbursement for expenses or for indemnification of the Issuer and the Trustee, (b) amounts
02/24194 A-5 m12-1854
paid to or collected by the Issuer in connection with any Reserved Rights of the Issuer and (c)
any Rebate Amount.
"State" means the State of California.
"Tax Certificate" means the Tax Certificate and Agreement dated the Closing Date
between the Issuer and the Borrower, together with any and all supplements thereto.
"Taxes" means all taxes, water rents, sewer rents, assessments and other governmental
or municipal or public or private dues, fees, charges and levies and any liens (including federal
tax liens) which are or may be levied, imposed or assessed upon the Project or any part thereof,
or upon any leases pertaining thereto, or upon the rents, issues, income or profits thereof,
whether any or all of the aforementioned be levied directly or indirectly or as excise taxes or
as income taxes.
"Trustee" means Bank of America National Trust and Savings Association, a national
banking association, its successors and assigns.
"Trust Estate" means the property rights, money, securities and other amounts pledged
and assigned to the Trustee pursuant to the granting clauses of the Indenture.
"Trust Office" means the appropriate trust office of the Trustee located at the address set
forth in the Indenture, or such other offices as may be specified in writing to the Issuer by the
Trustee.
"Underwriters" means Kirkpatrick, Pettis Smith, Polian Inc. and Charles A. Bell
Securities Corp.
02/24/94 A=6 m12-1854
APPENDIX B
SUMMARY OF THE INDENTURE
The following is a summary, which does not purport to be comprehensive or definitive,
of certain provisions of the indenture, and which is qualified in its entirety by reference to the
Indenture.
Security for the Bonds
Under the Indenture, as security for payment of the principal of, premium, if any, and
interest on the Bonds and for funds advanced by the Trustee pursuant thereto, the Issuer pledges
and assigns to, and grants a security interest to the Trustee in, the following described property:
(a) all right, title and interest of the Issuer in and to all Revenues, derived or to be derived by
the Issuer or the Trustee for the account of the Issuer under the terms of the Indenture and the
Financing Agreement (other than the Reserved Rights of the Issuer), together with all Revenues
received by the Trustee for the account of the Issuer arising out of or on account of the Trust
Estate; (b) all right, title and interest of the Issuer in and to the GNMA Security, including all
payments with respect thereto and any interest, profits or other'income derived from the
investment thereof; (c) all right, title and interest of the Issuer in and to, and remedies under,
the Financing Agreement and the Regulatory Agreement and Declaration of Restrictive
Covenants; (d) all funds, moneys and securities and any and all other rights and interests in
property whether tangible or intangible from time to time by delivery or by writing of any kind,
conveyed, mortgaged, pledged, assigned or transferred as and for additional security under the
Indenture for the Bonds by the Issuer or by anyone on its behalf or with its written consent to
the Trustee, which is authorized to receive any and all such property at any and all times and
to hold and apply the same subject to the terms of the Indenture.
Establishment of Funds for the Bonds
The following funds, will be established and maintained by the Trustee under the
Indenture for the benefit of the Bonds:
(i) Acquisition Fund;
00 Bond Fund (and therein a Sinking Fund Account);
(iii) Expense Fund;
(iv) Cost of Issuance Fund; and
(v) Rebate Fund.
02/24/94 B-1 m12-1854
• i i
Application of Bond Proceeds and Other Amounts
Upon issuance of the Bonds, the proceeds of the Bonds and other amounts received in
connection with such issuance will be deposited as follows: (a)the interest accrued on the Bonds
between the dated date of such Bonds and the date of delivery thereof ($_____) will be
deposited in the Bond Fund; (b)$ of the 1494 Series A Bond proceeds will be deposited
in the Acquisition Fund; (c) $ of the 1994 Series A Bond proceeds will be deposited in
the Costs of Issuance Fund; (d) $ of the 1994 Series A Bond proceeds will be
transferred to the Borrower; and (e) $ of the 1994 Series A-T Bonds proceeds will be
deposited into the Costs of Issuance Fund.
Acquisition Fund
Amounts will be deposited in the Acquisition Fund as provided above and will be applied
as provided below; provided that no amounts will be transferred or disbursed from the
Acquisition Fund until the Trustee will have received evidence of the recordation of any
amendments to the Regulatory Agreement and Declaration of Restrictive Covenants, which may
be telephonic notice from the title company responsible for such recordation.
On the date of issuance of the Bonds, the Trustee will acquire the GNMA Security in
accordance with clause (i) below, and will (A) confirm that the aggregate principal amount of
the GNMA Security is$ plus accrued interest, if any, or such lesser amount in the event
that the GNMA Security is delivered subsequent to any pass through of principal on the
Mortgage Note and that the GNMA Security bears interest at the rate of % per annum; and
(B) notify the Rating Agency in writing of the acquisition; and (C) after receipt of the GNMA
Security, apply the moneys on deposit in the Acquisition Fund as follows:
(i) the Trustee will acquire the GNMA Security from the Lender for the
account of the Issuer and will remit to the Lender, but only to the extent of available
funds, an amount not to exceed the principal amount of the GNMA Security, plus
accrued and unpaid interest thereon, if any; and
(ii) the Trustee will transfer to the Bond Fund any remaining balance in the
Acquisition Fund.
Bond Fund
(a) The Trustee will deposit into the Bond Fund (i) the amounts required above; (ii)
all income, revenue, proceeds and other amounts received from or in connection with the
GNMA Security; (iii.) all earnings and gains from the investment of moneys held in the Bond
Fund accruing after the acquisition of the GNMA Security by the Trustee; and (iv) any other
amount received by the Trustee which are subject to the lien and pledge of the Indenture.
42/24194 13-2 m12-1854
The GNMA Security will, upon its acquisition, be held for the account of the Bond Fund
and registered in the name of the Trustee so that the Trustee maintains a first perfected security
interest in such GNMA Security at all times.
(b) At the earliest practicable time, the Trustee will give immediate telephonic notice
(to be followed by written notice on the 16th day of any month) to GNMA of the failure of the
Lender to make any payment on the GNMA Security on the 15th day of such month (or the next
succeeding Business Day if the 15th day is not a Business Day) and demand payment under the
terms of GNMA's guaranty thereof.
(c) The Trustee will apply amounts in the Bond Fund (other than amounts in the
Sinking Fund Account) on each Interest Payment Date (or any other date on which Bonds are
to be redeemed), in the following order of priority:
(i) First to pay interest on the Bonds and .then to pay the principal of all
Bonds maturing on such date and the redemption prices of all Bonds required to be
redeemed on such date;
(ii) Amounts on deposit in the Bond Fund will be transferred to the Expense
Fund in an amount sufficient to pay the expenses set forth under the Expense Fund
below;
(iii) Amounts on deposit in the Bond Fund will be transferred to the Expense
Fund in an amount or amounts sufficient to pay other expenses as required under the
Expense Fund below, provided that amounts in the Bond Fund will never be reduced
below $5,000; and
(iv) Notwithstanding the provisions of clause (i) above, amounts held in the
.Sinking Fund Account will be exclusively used to pay the principal of the Bonds
maturing on , 2004 or in a manner which results in a discharge of the
Indenture.
(d) The Trustee will also apply moneys in the Bond Fund which are (i) transferred
from the Acquisition Fund pursuant to the Indenture derived from payments on the GNMA
Security that exceed level payments of principal of and interest on the Mortgage Loan, to the
redemption of Bonds in accordance with the redemption provisions herein.
(e) All scheduled principal payments received by the Trustee on the GNMA Security
on or prior to , 2004, will be deposited by the Trustee into the Sinking Fund Account
until the amount therein equals $ and will be used to pay the principal of the Series A
Bonds maturing on , 2004. Any investment earnings on money held in the Sinking
Fund Account will be deposited in the Bond Fund.
02/24/94 B-3 m12-1854
Expense Fund
The Trustee will apply moneys on deposit in the Expense Fund solely for the following
purposes, on each Interest Payment Date, in the following order of priority:
(i) to transfer money to the Bond Fund on any Interest Payment Date to the
extent necessary to pay debt service on the Bonds on such date but only if there are
insufficient moneys held to the credit of the Bond Fund on that date;
(ii) to transfer to the Rebate Fund the Rebate Amount (if any);
(iii) to pay one-half of the annual administrative fees and expenses of the
Trustee in a semiannual amount equal to $
(iv) to pay the fees and expenses of the Rebate Analyst in an amount not to
exceed $ in any five year period in which calculations are required to be made
by the Rebate Analyst pursuant to the Tax Certificate; and
(V) to pay one-half the annual fee of the Issuer in a semiannual amount equal
to one-sixteenth of one percent of the initial aggregate principal amount of the Bonds
issued.
In the event moneys in the Expense Fund are not sufficient to pay the fees and expenses
of the Trustee, the Rebate Analyst or the Issuer, the Trustee will seek payment of any such
deficiency from the Borrower.
Rebate Fund
The purpose of the Rebate Fund is to facilitate compliance with section 148(f) of the
code. Any Rebate Amount deposited in such Fund will be for the sole benefit of the United
States of America and will not be subject to the lien of the Indenture or to the claim of any other
person, including, without limitation, the Bondholders and the Issuer. The requirements of this
section are subject to, and will be interpreted in.accordance with, section 148(f) of the Code and
the Treasury regulations applicable thereto (the "Regulations"), and will apply except to the
extent(i)the Trustee is furnished with an opinion of Bond Counsel or other satisfactory evidence
that the Regulations contain an applicable exception; or (ii) the Trustee in its judgment
determines that such requirements will diminish the security of the Bondholders; provided that
in the case of clause (ii), the Trustee will obtain an opinion of Bond Counsel to the effect that
failing to take such action would not adversely affect the exclusion of interest on the Tax-Exempt
Bonds from federal income taxation.
Promptly upon the close of each Bond Year and also upon the retirement of the Bonds,
the Trustee will provide the Borrower with a statement of earnings on funds and accounts held
under the Indenture during any period not covered by a prior statement, and a final statement
or a supplement thereto covering the period ending Each statement will include
02/24/94 B-4 m12-1854
the purchase and sale prices of each investment, if any, (including any commission paid thereon
which will be separately stated if such information is available), the dates of each investment
transaction, information as to whether such transactions were made at a discount or premium,
and such other information known or reasonably available to the Trustee as the Borrower or
Rebate Analyst will reasonably require. If so requested by the Owner at any time, the Trustee
will create within the Bond Fund separate accounts for purposes of accounting for earnings on
amounts attributable to the 1994 Series A Bonds and the Taxable 1994 Series A-T Bonds,
respectively.
The Trustee will promptly transfer to the Rebate Fund each amount required to be
deposited therein pursuant to the Tax Certificate, first from earnings in the Acquisition Fund,
and second, to the extent amounts in the Acquisition Fund are insufficient, from revenues which
have been deposited into the Bond Fund and earnings thereon. To the extent that the amount
to be deposited into the Rebate Fund exceeds the amount which can be transferred from such
Funds, the Trustee will promptly notify the Borrower and an amount equal to such deficiency
will be paid promptly by the Borrower to the Trustee for deposit into the Rebate Fund.
The Borrower and the Trustee, on behalf of the Issuer, will keep such records as will
enable them to fulfill their respective responsibilities under this section and section 148(f) of the
code, and the Borrower (or the Trustee upon the written request of the Issuer) will engage a
Rebate Analyst as may be necessary in connection with such responsibilities. The fees and
expenses of the Rebate Analyst will be paid by the Trustee as described under the Expense
Fund. For purposes of the computation of the Rebate Amount required under the Tax
Certificate, the Trustee will make available to the Borrower and the Issuer during normal
business hours all information in the Trustee's control which is necessary to such computations.
Costs of Issuance Fund
The Trustee will pay Costs of Issuance upon the written direction of the Issuer, which
Costs of Issuance will not exceed the amounts set forth in the Bond Purchase Agreement. Any
funds remaining in the Costs of Issuance Fund six months after the Closing Date, and not
specifically committed to the payment of Costs of Issuance, will be deposited in the Bond Fund.
Investments
The Trustee will invest all moneys in the Bond Fund in the Investment Agreement
described in clause (iv) of the definition of Qualified Investments. Subject to the provisions of
the foregoing sentence and the Tax Certificate, any moneys held as part of any fund created by
the Indenture, including the Expense Fund, will be invested or reinvested from time to time by
the Trustee upon receipt by the Trustee of the written directions of the Borrower in Qualified
Investments having a maturity not exceeding the shorter of(i) the date on which such Funds may
be needed under the Indenture, or (ii) six months, in its sole discretion unless directed by the
Borrower to invest such moneys in Qualified Investments specified by the Borrower, in which
event it will follow such direction. In no event will a maturity be longer than the longest
maturity of the Bonds. The investments so made will be held by the Trustee and will be deemed
02/24/94 B-S m12-1$54
at all times to be a part of the fund in which such moneys were held; provided that for purpose
of investment moneys held in any of the funds established under the Indenture may be
commingled. The Trustee will sell and reduce to cash a sufficient amount of such investments
whenever the cash balance in any fund will be insufficient to cover a proper disbursement
therefrom. For the purpose of determining the amount in any fund, Qualified Investments(other
than an Investment Agreement) credited to such fund or account will be valued at their cost
(exclusive or accrued interest after the first payment of interest following acquisition) or market
value, whichever is less. The Trustee will invest at the highest yields prudently available
consistent with the Indenture. If any moneys held under the Indenture other than the Expense
Fund are not invested in the -Investment Agreement, such moneys will be invested only in
accordance with the written instructions of the Borrower, upon the advice,of Bond Counsel.
No Disposition of GNMA Security
The Trustee will not, without the written consent of the holders of 100% of the Bond
Obligation, sell or otherwise dispose of the GNMA Security after its acquisition for an amount
less than an amount sufficient, together with other amounts then held under the Indenture and
available for the payment of principal of and interest on the Bonds, to provide for the payment
of the Bonds in accordance with the Indenture.
Events of Default; Acceleration; Remedies
Each of the following events will be an Event of Default under the Indenture:
(a) default in the due and punctual payment of any interest on any Bond; or
(b) default in the due and punctual payment of the principal of or premium, if any,
on any Bond whether at the stated maturity thereof, or on proceedings for redemption thereof,
or on the maturity thereof by declaration; or
(c) default in the performance or observance of any other of the covenants,
agreements or conditions on the part of the Issuer,in the Indenture or in the Bonds (subject to
an opportunity to cure); or
(d) approval by a court of competent jurisdiction of any petition for reorganization
of the Issuer or rearrangement or readjustment of the obligations of the Issuer under the
provisions of any bankruptcy law.
The Borrower's failure to pay obligations owing to the Lender will not constitute an
Event of Default under the Indenture. The occurrence of an Event of Default under this section
with respect to one series does not of itself constitute an Event of Default with respect to any
other series of the Bonds.
02/24/44 B-6 m12-1854
The Trustee will give written notice to tle.Rating Agency of the occurrence of any Event
of Default described in paragraph (a) or (b) above within 15 days after a Responsible Officer
of the Trustee has notice or knowledge thereof.
If an Event of Default described in subparagraph (a) or (b) above has occurred and is
continuing with respect to Bonds, the Trustee may, and upon the written request of the holders
of at least 25% of the Bond Obligation of such series the Trustee will, by notice in writing
delivered to the Issuer and the Borrower, declare the principal of all Bonds then outstanding and
the interest accrued thereon immediately due and payable without premium, and such principal
and interest will thereupon become and be immediately due and payable.
If an Event of Default described in subparagraph (c) or (d) has occurred and is
continuing, the Trustee will, upon the written request of the holders of 100% of the Bond
Obligation, by notice in writing delivered to the Issuer and the Borrower, declare the principal
of all Bonds then outstanding and the interest accrued thereon immediately due and payable
without premium, and such principal and interest will thereupon become and be immediately due
and payable.
The foregoing provisions of the two immediately preceeding paragraphs, however, are
subject to the condition that if at any time after the principal of the Bonds of such series will
have been so declared due and payable, and before any judgment or decree for the payment of
the money due will have been obtained or entered as hereinafter provided, there will be paid or
deposited with the Trustee a sum sufficient to pay all principal of the Bonds of such series
matured (or due upon mandatory redemption) prior to such declaration and all matured
installments of interest (if any) upon all the Bonds of such series, with interest at the rate borne
by the Bonds on such overdue.principal and premium, if any, and (to the extent legally
enforceable) on such overdue installments of interest (other than in the payment of principal of
and interest on the Bonds due and payable solely by reason of such declaration), and the
reasonable expenses of the Trustee will have been made good or cured or adequate provisions
will have bee made therefor, then and in every case, the holders of at least a majority of the
Bond Obligation of such series, by written notice to the Trustee and the Issuer, may direct the
Trustee on behalf of the holders of all the Bonds of such series to rescind and annul such
declaration and its consequences, but no such rescission and annulment will extend to or will
affect any subsequent default, nor will it impair or exhaust any right or power consequent
thereon. Nothing in the Indenture will be construed to obligate the Issuer to make a payment
or deposit referred to herein from any revenues other than the revenues derived from the Trust
Estate.
Upon the occurrence of an Event of Default, the Trustee will have the power to proceed
with any right or remedy granted by the Constitution and laws of the State, as it may deem best,
including any suit, action or special proceeding in equity or at law for the specific performance
of any covenant or agreement contained herein or under the GNMA Security or for the
enforcement of any proper legal or equitable remedy as the Trustee will deem most effectual to
protect the rights aforesaid, insofar as such may be authorized by law.
02124/94 B-7 m12-1854
. No remedy by the terms of the Indenture conferred upon or reserved to the Trustee or
to the Bondholders is intended to be exclusive of any other remedy, but each and every such
remedy will be cumulative and will be in addition to any other remedy given to the Trustee or
to the Bondholders hereunder,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 or event of default
will impair any such right or power or will be construed to be a waiver of any such default or
event of default or acquiescence therein, and every such right and power may be exercised from
time to time and as often as may be deemed expedient. No waiver of any default or event of
default hereunder, whether by the Trustee or by the Bondholders, will extend to or will affect
any subsequent default or event of default or will impair any rights or remedies consequent
thereto.
Rights of Bondholders
If any Event of Default will have occurred and if requested in writing so to do by the
holders of not less than a majority of the Bond Obligation of the series with which there is a
default, and if indemnified as provided in the Indenture, the Trustee will be obligated to exercise
such one or more of the rights and powers conferred by the Indenture and to proceed to protect
its rights and the rights of the Bondholders under applicable law, the GNMA Security, the
GNMA Guaranty Agreement, the Financing Agreement and the Indenture, as the Trustee, being
advised by counsel, will deem most expedient in the interest of the Bondholders. Anything in
the Indenture to the contrary notwithstanding, but subject to the provisions of the Indenture, the
holders of a majority of such Bond Obligation will have the right at any time, by an instrument
in writing executed and delivered to the Trustee, to direct the time, method and place of
conducting all proceedings to be taken in connection with the enforcement of the terms and
conditions of the Indenture, or for the appointment of a receiver or any other proceedings
hereunder, in accordance with the provisions of law, the Indenture and the GNMA Security.
Supplemental Indentures Not Requiring Consent of Bondholders
The Issuer and the Trustee may, without the consent of or notice to any of the
Bondholders, enter into an indenture or indentures supplemental to the Indenture as will not be
inconsistent with the terms and provisions hereof or materially adverse to the interests of the
holders of the Bonds, including without limitation for any one or more of the following
purposes:
(a) to cure any ambiguity or to cure or correct any defect or inconsistent provisions
contained in the Indenture or to make such provisions in regard to matters or questions arising
under the Indenture as may be necessary or desirable and not contrary to or inconsistent with
the Indenture or adverse to the Bondholders;
(b) to change or modify any provision of the Indenture so as to harmonize to the
maximum extent practicable to the provisions hereof with existing rules, regulations and
procedures of FHA;
02/24/94 B-g m12-1854
(c) to add to the covenants and agreements of the Issuer in the Indenture other
covenants and agreements, or to surrender any right or power reserved or conferred upon the
Issuer if such surrender will not, in the judgment of the Trustee, materially adversely affect the
interests of the Bondholders, the Trustee being authorized to rely on an opinion of counsel
(including counsel to the Issuer) with respect thereto;
(d) to confirm, as further assurance, any pledge of or lien on the Financing
Agreement or the Revenues or of any other moneys, securities or funds subject to the lien of the
Indenture;
(e) to modify any of the provisions hereof relating to the use of a book-entry system
for registration of the Bonds;
(f) to preserve the exclusion of interest on the 1994 Series A Bonds from gross
income for federal income tax purposes, as set forth in an opinion of Bond Counsel;
(g) to subject to the lien and pledge of the Indenture additional revenues, properties
or collateral;
(h) to grant to or confer upon the Trustee for the benefit of the Bondholders any
additional rights, remedies, powers or authority that may lawfully be granted to or conferred
upon the Bondholders or the Trustee or any of them; or
(i) to modify, amend or supplement the Indenture or any indenture supplemental
thereto in such manner as to permit the qualification thereof under the Trust Indenture Act of
1939 or any similar federal statute hereafter in effect or under any state securities laws.
Supplemental Indentures Requiring Consent of Bondholders
With the consent of the holders of not less than two-thirds of the Bond Obligation of each
series affected thereby, the Issuer and the Trustee may, from time to time, enter into
supplemental indentures for the purpose of modifying, altering, amending, adding to or
rescinding any of the terms or provisions contained in the Indenture or in any supplemental
indenture; provided, however, that nothing contained in this section will permit, or be construed
as permitting (a) an extension of the stated maturity of or a reduction in the principal amount
of or reduction in the interest rate on, or an extension of time of payment of interest on, or
reduction of any premium payable on the redemption of, any Bonds, without the consent of the
registered owner of such Bonds; or (b) the creation of any lien on all or any portion of the Trust
Estate prior to or on a parity with the lien of the Indenture, without the consent of the holders
of all of the Bonds, or (c) a reduction in the amount of Bond Obligation, the.holders of which
are required to approve any such supplemental indenture, without the consent of the holders of
all the Bonds at the time Outstanding which would be affected by the action to be taken; or (d)
a privilege or priority of any Bond over any other Bonds without the consent of the holders of
all Bonds adversely affected thereby; or (e) any action which may result in the loss of the
exclusion of interest on the 1994 Series A Bonds from federal income taxation; or (f) an
02124194 B-9 m12-1854
amendment of the section of the Indenture relating to disposition of the GNMA Security or the
second paragraph of the section of the Indenture relating to acceleration upon and Event of
Default under subparagraph (c) or (d) of such section), without in each case the consent of the
holders of all the Bonds then Outstanding.
If at any time the Issuer will request the Trustee to enter into any such supplemental
indenture for any of the purposes of this section, the Trustee will, upon being satisfactorily
indemnified with respect to, expenses, cause notice of the proposed execution of such
supplemental indenture to be mailed, postage prepaid, to all Bondholders. Such notice will
briefly set forth the nature of the proposed supplemental indenture and will state that copies
thereof are on file at the Trust Office of the Trustee for inspection by all Bondholders. If,
within 60 days following the mailing of such notice, the holders of the required portion of Bonds
at the time of the execution of any such supplemental indenture will have consented to and
approved the execution thereof as herein provided, no holder of any Bond will have any right
to object to any of the terms and provisions contained therein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee
or the Issuer from executing the same or from taking any action pursuant to the provisions
thereof. Upon the execution of any such supplemental indenture as is in this section permitted
and provided, the Indenture will be and be deemed to be modified and amended in accordance
therewith.
Bonds owned or held by or for the account of the Issuer or the Borrower or any Person
controlling, controlled by or under common control with either of them will not be deemed
Outstanding for the purpose of consent or any calculation of Outstanding Bonds provided for in
the Indenture. At the time of any such calculation, the Issuer will furnish the Trustee a
certificate of an Authorized Representative of the Issuer, upon which the Trustee may rely,
describing all Bonds held by the Issuer to be so excluded.
Discharge of Indenture
If the Issuer (i) will pay or cause to be paid to the holders of the Bonds the principal,
interest and premium, if any, to become due thereon at the times and in the manner stipulated
therein and in the Indenture, and will pay or cause to be paid all fees and expenses of the
Trustee, and (ii) will keep, perform and observe all and singular the covenants and promises in
the Bonds and in the Indenture expressed as to be kept, performed and observed by it or on its
part, then these presents and the estate and rights granted will, cease, determine and be void,
and thereupon the Trustee will cancel and discharge the lien of the Indenture and execute and
deliver to the Issuer such instruments in writing as will be requisite to satisfy the lien of the
Indenture, will convey to the Borrower the estate, and will assign and deliver to the Borrower
any interest in property at the time subject to the lien of the Indenture which may then be in its
possession, except amounts held by the Trustee for the payment of principal of and interest and
premium, if any, on the Bonds.
02/24/94 B-10 m12-2854
All Outstanding Bonds will, prior to the maturity or redemption date thereof, be deemed
to have been paid within the meaning and with the effect expressed in item (i) of the first
paragraph of this section if the following conditions will have been fulfilled: (a) there will be
on deposit with the Trustee either moneys (which are not subject to Sections 544, 547 or 554
of the United States Bankruptcy Code or any other banking laws of the United States) or direct
noncallable obligations of the United States of America(which are purchaser with moneys which
are not subject to Sections 544, 547 or 550 of the United States Bankruptcy Code or any other
banking laws of the United States) in an amount sufficient to pay when due the principal or
redemption price, if applicable, and interest due and to become due on the Bonds on and prior
to the redemption date or maturity date thereof, as the case may be; (b) if any of the Bonds are
to be redeemed on any date prior to their maturity, the Issuer will have given to the Trustee, in
form satisfactory to it, irrevocable instructions to mail, as provided in the Indenture, notice of
redemption of such Bonds on such date; (c) the Issuer will have given the Trustee irrevocable
instructions to mail, as soon as practicable, in the manner prescribed by the Indenture, a notice
to the holders of such Bonds that the deposit required by this paragraph has been made with the
Trustee and that the Bonds are deemed to have been paid in accordance with this section and
stating the redemption date upon which moneys are to be available for the payment of the
principal or redemption price, if applicable, on said Bonds; and (d) the Trustee will have
received the opinion required by the paragraph immediately below.
No deposit under this section will be made or accepted and no use made of any such
deposit unless the Trustee will have received an opinion of Bond Counsel to the effect that such
deposit and use would not adversely affect the exclusion of interest on the 1994 Series A Bonds
from gross income for federal income tax purposes.
The Trustee
The Trustee pursuant to the Indenture accepts the trusts and obligations imposed upon
it by the Indenture and agrees to perform such trusts and obligations, but only upon and subject
to the following express terms and conditions and no implied covenants or obligations will be
read into the Indenture against the Trustee:
(a) The Trustee may execute any of the trusts or powers of the Indenture and perform
any of its duties by or through attorneys, agents, receivers or employees, and will be entitled
to advice of counsel concerning all matters of the trusts thereof and the duties under the
Indenture, and may in all cases pay such reasonable compensation to all such attorneys, agents,
receivers and employees as may be reasonably employed in connection with the trusts thereof.
The Trustee may act upon the opinion or advice of any attorney, who may be the attorney or
attorneys for the Issuer, and the Trustee will not be responsible for any loss or damage resulting
from any action or inaction taken in good faith in reliance upon such opinion or advice.
02124194 B-11 m12-1854
(b) The Trustee will not be responsible for any recital in the Indenture, or in the
Bonds (except in respect to the authentication certificate of the Trustee endorsed on the Bonds),
or for the validity of the execution by the Issuer of the Indenture or of any supplements to the
Indenture or instruments of further assurance, or for the sufficiency of the security for the
Bonds issued under the Indenture or intended to be secured thereby.
(c) The Trustee may become the owner or pledgee of the Bonds secured by the
Indenture and otherwise deal with the Issuer and the Borrower with the same rights which it
would have if not Trustee.
(d) To the extent permitted under the Indenture, the Trustee may rely and will be
protected in acting upon any notice, request, consent, certificate, order, affidavit, letter,
telegram or other paper or document reasonably believed to be genuine and correct and to have
been signed or sent by the proper person or persons, and the Trustee will not be bound to make
any investigation into the facts or matters stated in any such document so delivered and signed
unless requested in writing so to do by the holders of a majority of the Bond Obligation.
(e) The permissive rights of the Trustee to do things enumerated in the Indenture will
not be construed as a duty unless so specified herein.
(f) At any and all reasonable times, the Trustee and its duly authorized agents,
attorneys, experts, engineers, accountants and representatives will have the right, but will not
be required, to inspect the Project fully, including all books, papers and records of the Issuer
pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto
as may be desired.
(g) Notwithstanding anything elsewhere in the Indenture contained, the Trustee will
have the right, but will not be required, to demand in respect of the authentication of any Bonds,
the withdrawal of any moneys, the release, of any interest in property, or any action whatsoever
within the purview of the Indenture, any showings, certificates, opinions, appraisals or other
information, or official action or evidence thereof, in addition to those required in the Indenture.
(h) Before taking any action under the Indenture the Trustee may require that a
satisfactory indemnity bond be furnished for the reimbursement of all expenses to which it may
be put and to protect it against all liability, except liability which is adjudicated to have resulted
from its negligence or willful misconduct by reason of any action so taken.
(i) All moneys received by the Trustee or any paying agent will, until used or applied
or invested as provided in the Indenture, be held in trust for the purposes for which they were
received but need not be segregated from other funds except to the extent required by law or by
the Indenture. Neither the Trustee nor any paying agent will be under any liability for interest
on any moneys received under the Indenture except such as may be agreed upon in writing with
the Issuer or the Borrower.
02/24/94 B-12 m12-1854
(j) The Trustee undertakes to perform such duties as are specifically set forth in the
Indenture. In case an event of default has occurred which has not been cured, the Trustee will
exercise the rights, duties and powers vested in it by the Indenture in good faith and with that
degree of diligence, care and skill which a reasonable person would exercise under similar
circumstances in like situations.
(k) The Trustee will not be responsible for insuring the Project or for collecting any
insurance moneys.
0) Whether or not expressly provided for herein, every provision of the Indenture
relating to the conduct of or affecting the liability of the Trustee will be subject to the provisions
of this section. The immunities and exceptions from liability of the Trustee will extend to its
officers, employees and agents.
Amendment of Certain Documents
The Issuer and the Trustee may make or consent to any amendment, change or
modification of the Financing Agreement, the GNMA Security and the Regulatory Agreement
and Declaration of Restrictive Covenants, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective or inconsistent provision contained therein, or in
regard to matters or questions arising under said documents, as the Issuer and the Trustee may
deem necessary or desirable and not inconsistent with said documents or the Indenture and which
will not adversely affect the interests of the holders of the 1994 Series A Bonds.
Except for the amendments, changes or modifications as provided in the paragraph
immediately above, the Trustee will not consent to or approve any other amendment, change or
modification of any of the Financing Documents (other than the Indenture) without notice to and
the written approval or consent of the Issuer, the Lender, the Borrower and the owners of not
less than two-thirds of the Bond Obligation given and procured as provided in the Indenture.
If, at any time, either the Borrower or the Issuer will request the consent to or approval of the
Trustee to any such proposed amendment, change or modification of any of the Financing
Documents (other than the Indenture), the Trustee will, upon being satisfactorily indemnified by
the Borrower with respect to expenses, cause notice of such proposed amendment, change or
modification to be given in the same manner as provided in the Indenture with respect to
supplemental indentures. Such notice will briefly set forth the nature of such proposed
amendment, change or modification and will state that copies of the instrument embodying the
same are on file at the principal corporate trust office of the Trustee for inspection by all
Bondholders. If, within 60 days or such longer period as will be prescribed by the Trustee
following the giving of such notice, the holders of not less than two-thirds of the Bond
Obligation at the time of the execution of such proposed amendment will have consented to and
approved the execution thereof as provided in the Indenture, subject to the provisions of the
second paragraph under the "-- Supplemental Indentures Requiring Consent of Bondholders,"
no holder of any Bond will have any right to object to any of the terms and provisions contained
in the Indenture, or the operation of the Indenture, or in any manner to question the propriety
of the execution of the Indenture, or to enjoin or restrain the Trustee from agreeing to the
02/24/94 B-13 m12-1854
execution of the Indenture. Upon the execution of any such amendment as in this section is
permitted and provided, the Financing Documents will be and be deemed to be modified and
amended in accordance therewith.
02/24/94 B-14 m12-1854
APPENDIX C
SLINEWARY OF FINANCING AGREEMENT
The following is a summary, which does not purport to be complete, comprehensive or
definitive, of certain provisions of the Financing Agreement, which is qualified in its entirety
by reference to the Financing Agreement.
General Terms of the Financing
(a) In order to provide a portion of the funds necessary to acquire the Project, the
Issuer will issue, sell and deliver the Bonds in accordance with the Bond Purchase Agreement
and upon the terms and subject to the conditions contained in the Financing Agreement and the
Indenture, and will cause the Underwriters to deliver the proceeds thereof to the Trustee.
(b) The Lender will deliver the GNMA Security to the Trustee on the Closing Date.
(6) The Borrower unconditionally promises (i) to repay the principal of the Mortgage
Loan with interest thereon as provided in the Mortgage Note, and (ii) to comply with the
provisions of the Financing Agreement, the FHA LoanDocuments and the Regulatory
Agreement and Declaration of Restrictive Covenants as pro I vided therein, provided that such
promise is subject to the provisions of the Financing Agreement.
(d) The Lender agrees to make all payments on the GNMA Security when due and
to meet all its obligations under the GNMA Mortgage-Backed Securities Guide and the GNMA
Guaranty Agreement.
Sufficiency of Funds
The Issuer does not make any warranty, either express or implied, that the moneys
deposited in the Acquisition Fund under the Indenture and available for payment of the costs of
acquiring the GNMA Security will be sufficient to pay all the costs thereof. The Borrower
agrees that if the Borrower should pay any costs relating to the acquisition of the GNMA
Security other than from the Bond proceeds, the Borrower will not be entitled to any
reimbursement therefor from the Lender, the Issuer, the Trustee or the Bondholders; provided,
however that the Borrower will incur such costs as a result of the negligent or willful misconduct
of either the Lender or the Trustee or as a result of the willful misconduct of the Issuer, the
Borrower may be entitled to reimbursement therefor.
Acquisition of the GNMA Security
The Trustee agrees to acquire the GNMA Security on behalf of the Issuer; provided,
however, that the Trustee's obligation in such respect will be limited to the moneys available for
such purpose in the Acquisition Fund, and provided further that the Trustee will not have any
02/24/94 m12-1854
C-1
obligation to acquire the GNMA Security unless there will have been delivered to the Trustee,
along with the GNMA Security, the following:
(a) a copy of the executed FHA Loan Documents;
(b) evidence that the Regulatory Agreement and Declaration of Restrictive Covenants
has been duly filed of record in the Recorder's Office of the County of Contra Costa, California;
and
(c) a certificate of the Borrower dated the date of acquisition of the GNMA Security
stating that (i) all representations and warranties of the Borrower set forth in the Financing
Agreement and the Regulatory Agreement and Declaration of Restrictive Covenants remain true
and correct in all material respects as of the date of such certificate and (ii) the Borrower is in
full material compliance with all covenants and undertakings of the Borrower set forth in the
Financing Agreement, the Regulatory Agreement and Declaration of Restrictive Covenants and
the FHA Loan Documents, as of the date of such certificate.
Upon delivery of the foregoing to the Trustee, the Lender will be entitled to receive, as
payment for the GNMA Security, but solely from and to the extent of moneys available for such
purpose, moneys contained in the Acquisition Fund. Remaining balances in the Acquisition
Fund after acquisition of the GNMA Security will be transferred to the Bond Fund as provided
in the Indenture.
Operation of the Project
The Borrower will operate or cause the Project to be operated as a housing project
pursuant to Section 241(f) of the National Housing Act and in accordance with the requirements
of the Regulatory Agreement and Declaration of Restrictive Covenants, the Code, the Act and
the requirements set forth in the Plan of Action between the Borrower and HUD pursuant to
Title II of the Housing and Community Development Act of 1987.
Absolute and Unconditional Obligation; Limited Recourse
The obligations of the Borrower under the Financing Agreement will be absolute and
unconditional and will remain in full force and effect until (i) the entire principal of and
premium, if any, and interest on the Bonds will have been paid or provided for, or (ii) the
Mortgage Note will have been paid in full, and such obligations will not be affected, modified
or impaired upon the happening from time to time of any event, including without limitation any
of the following, whether or not with notice to, or the consent of, the Borrower:
(a) the compromise, settlement, release or termination of any or all of the obligations,
covenants or agreements of the Issuer under the Indenture;
02/24/94 m12-1854
C-2
(b) the failure to give notice to the Borrower of the occurrence of an event of default
under the terms and provisions of the Financing Agreement, the FHA Regulatory, Agreement,
the Indenture, the Mortgage Note, the Mortgage or the Regulatory Agreement and Declaration
of Restrictive Covenants;
(c) the waiver of the payment, performance or observance by the Issuer or the
'Borrower of any of the obligations,-covenants or agreements of them contained in the Indenture,
the Mortgage Note, the Mortgage, the Regulatory Agreement and Declaration of Restrictive
Covenants, the FHA Regulatory Agreement or the Financing Agreement.
(d) the extension of the time for payment of any principal of, premium, if any, or
interest on any Bond or under the Financing Agreement, or of the time for performance of any
other obligations, covenants or agreements under or arising out of the Indenture, the Mortgage
Note,the Mortgage, the FHA Regulatory Agreement, the Regulatory Agreement and Declaration
of Restrictive Covenants or the Financing Agreement;
(e) the modification or amendment(whether material or otherwise) of any obligation,
covenant or agreement set forth in the Indenture, the Mortgage Note, the Mortgage, the FHA
Regulatory Agreement or the Regulatory Agreement and Declaration of Restrictive Covenants;
(f) the taking or the omission of any of the actions referred to in the Indenture, the
Mortgage Note, the Mortgage, the FHA Regulatory Agreement or the Regulatory Agreement
and Declaration of Restrictive Covenants or any actions under the Financing Agreement;
(g) any failure, omission, delay or lack on the part of Issuer or the Trustee to enforce,
assert or exercise any right, power or remedy conferred on the Issuer or the Trustee in the
Financing Agreement or any document relating to the Bonds or the Indenture, or any act or acts
on the part of the Issuer, the Trustee or any of the holders from time to time of the Bonds;
(h) the voluntary or involuntary liquidation, dissolution, 'Sale or other disposition of
all or substantially all the assets, marwilling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition
with creditors or readjustment of, or other similar proceedings affecting, the'Borrower or the
Issuer or any of the assets of either of them, or any allegation or contest of the validity of the
Financing Agreement in any such proceeding;
(i) to the extent permitted by law, the release or discharge of the Borrower from the
performance or observance of any obligation, covenant or agreement contained in the Financing
Agreement by operation of law (other than the release or discharge from payment on the
Mortgage Note); or
the default or failure of the Borrower fully to perform any of its obligations set
forth in the Financing Agreement.
02/24/94 m12-1854
C-3
The specific enumeration of the above-mentioned acts, failures or omissions will not be
deemed to exclude any other acts, failures or omissions, though not specifically mentioned
above, it being the purpose and intent of this paragraph that the obligations of the Borrower will
be absolute and unconditioned to the extent herein specified and will not be discharged, impaired
or varied except by the happening of any of the events specified in the first paragraph of this
section. Without limiting any of the other terms or provisions of the Financing Agreement, it
is understood and agreed that, in order to hold the Borrower liable under the Financing
Agreement, there will be no obligation on the part of the Trustee or any Bondholder to resort
in any manner or form for payment to the Issuer or to any other person, firm or occupation;
their properties or estates.
Notwithstanding the foregoing or any other provision or obligation to the contrary
contained in the Financing Agreement, (i) the liability of the Borrower under the Financing
Agreement and any other document relating to the Bonds to any person or entity, including, but
not limited to, the Trustee or the Issuer and their successors and assigns, is limited to the
Borrower's interest in the Project and the amounts held in the funds and accounts created under
the Indenture or other documents relating to the Bonds or any rights of the Borrower under any
guarantees relating to the Project, and such persons and entities will look exclusively thereto,
or to such other security as may from time to time be given for the payment of obligations
arising out of the Financing Agreement or any other agreement securing the obligations of the
Borrower under the Financing Agreement; and (ii) from and after the date of the Financing
Agreement, no deficiency or other personal judgment, nor any order or decree of specific
performance (other than pertaining to the Financing Agreement, any agreement pertaining to the
Project or any other agreement securing the Borrower's obligations under the Financing
Agreement), will be rendered against the Borrower, the assets of the Borrower (other than the
Borrower's interest in the Project, the Financing Agreement, amounts held in the funds and
accounts created under the documents relating to the Bonds, any rights of the Borrower under
the documents relating to the Bonds or any rights of the Borrower under any guarantees relating
to the Project), its partners, officers, directors or members or their heirs, personal
representatives, successors, transferees or assigns, as the case may be, in any action or
proceeding arising out of the Financing Agreement and the Indenture or any agreement securing
the obligations of the Borrower under the Financing Agreement, or any judgment order or
decree rendered pursuant to any such action or proceeding.
Nothing contained in the Financing Agreement will in any way be construed to limit any
indemnification provided by the Borrower to the Issuer, the Trustee or any other person pursuant
to any other agreement to which the Borrower is a party.
Assignment
No assignment or transfer of title to the Project will be made except as permitted by the
Regulatory Agreement and Declaration of Restrictive Covenants and unless (1) the Lender and
HUD consent to such assignment or transfer, as long as the Mortgage Loan is held by the
Lender and insured by FHA, and (2) the transferee or assignee, as the case may be, assumes all
of the dudes of the Borrower under the Financing Agreement, the Regulatory Agreement and
02/24/94
m12-1854
C-4
Declaration of Restrictive Covenants and the FHA Loan Documents, subject to the provisions
of such documents. Upon the assumption of the duties of the Borrower by an assignee as
provided in the Financing Agreement, the Borrower will be released from all executory
obligations so assumed. Nothing contained in this section will be construed to supersede any
provisions regarding assignment and transfer of the Project contained in the FHA Loan
Documents.
Tax Covenants
The Issuer, the Trustee, the Lender and the Borrower have entered into the Financing
Agreement with the intention that the interest on the 1994 Series A Bonds be and remain
excluded from gross income under the Code. Accordingly, for the benefit of the Issuer, the
Trustee and each Bondholder, the Borrower covenants that it will not(a)take any action, (b) fail
to take any action, or (c) make any use of the Project or the proceeds of the 1994 Series A
Bonds, which would cause the interest on any of the 1994 Series A Bonds to be or become
includable in the gross income of the Bondholders for federal income tax purposes. Without
limiting the generality of the foregoing, the Borrower confirms each of its representations set
forth in, and covenants and agrees that it will comply with each of the provisions of the
Regulatory Agreement and Declaration of Restrictive Covenants and the Tax Certificate.
The Borrower recognizes that certain of the facts, estimates and circumstances required
to be set forth in the Tax Certificate and the other instruments of the Issuer, including Form
8038, will be based upon the representations of the Borrower. The Borrower covenants to
provide, or cause to be provided, such facts, estimates and circumstances as are necessary to
enable the Issuer to execute and deliver the Tax Certificate and such other instruments. The
Borrower further covenants that (a) such facts, estimates and circumstances will be based on the
Borrower's reasonable expectations on the Closing Date and will be, to the best of the
knowledge of the representative of the Borrower furnishing such facts, estimates and
circumstances, true, correct and complete as of that date, and (b) the Borrower will make
reasonable inquiries to insure such truth, correctness and completeness.
The Borrower and the Lender recognize that (a) the Trustee will hold and invest the
proceeds of the 1994 Series A Bonds within its control in accordance with the expectations of
the Issuer and the Borrower set forth in the Tax Certificate; (b) if the Issuer is of the opinion,
upon receipt of written advice of Bond Counsel, that it is necessary to further restrict or limit
the yield on the investment of any proceeds of the 1994 Series A Bonds in order to avoid the
1994 Series A Bonds being considered "arbitrage bonds" within the meaning of Section 148 of
the Code, the Issuer will deliver to the Trustee a written certificate to such effect (along with
appropriate written instructions and a copy of the written advice of Bond Counsel), in which
event the Trustee will promptly deliver a copy of all such material to the Borrower and will take
such action as is necessary to restrict or limit the yield on such investment in accordance with
such certificate and instructions. The parties to the Financing Agreement recognize that the
Issuer will incur no liability in connection with any certificate or instructions delivered by the
Issuer to the Trustee as contemplated in the Financing Agreement.
02124/94 m12-1854
C-S
The obligations of the Borrower under this section will survive the termination of the
Financing Agreement and the payment and performance of the other obligations of the Borrower
hereunder and under the FHA Loan Documents and the Regulatory Agreement and Declaration
of Restrictive Covenants.
Events of Default; Remedies
Upon receipt by a Responsible Officer of the Trustee of notice of a violation by the
Borrower of, or default by the Borrower under any of the provisions of the Financing
Agreement, the FHA Loan Documents or the Regulatory Agreement and Declaration of
Restrictive Covenants, the Trustee will give written notice thereof to the Borrower by certified
mail, postage prepaid, return-receipt requested. If either (a) a violation or default by the
Borrower of any of the provisions of the Financing Agreement is not corrected to the reasonable
satisfaction of the Trustee within 30 days after the date such notice is mailed or, if the violation
or default (other than a payment default) cannot be corrected within such period, within such
longer period as may be necessary, in the reasonable opinion of the Trustee, to correct such
violation, provided that the Borrower has commenced and is diligently pursuing appropriate
action to correct such violation and there will be no material adverse effect on the rights of the
Issuer, the Trustee, the Lender or the Bondholders under the Financing Agreement, the
Regulatory Agreement and Declaration of Restrictive Covenants, any of the FHA Loan
Documents or the Indenture as a result of such extension, or (b) a violation of or default under
any of the provisions of the Regulatory Agreement and Declaration of Restrictive Covenants is
not corrected or cured within any cure period provided therein, without further notice the
Trustee may declare a default under the Financing Agreement effective on the date of such
declaration of default, and upon such default the Issuer, the Lender or the Trustee may apply
to any state or federal court having jurisdiction (i) for specific performance of the Financing
Agreement or for an injunction against any violation of the Financing Agreement, since the
injury to the Issuer, the Lender and the Trustee arising from a default under any of the terms
of the Financing Agreement, since the injury to the Issuer, the Lender and the Trustee arising
from a default to ascertain, or (ii) for other relief in law or equity which may be appropriate.
A default under the Financing Agreement will not constitute an Event of Default under the
Indenture. In addition, subject to the provisions of the Indenture, the Lender will be entitled to
exercise such remedies as may be available under the FHA Loan Documents and the Regulatory
Agreement and Declaration of Restrictive Covenants. Except as provided in the Financing
Agreement, nothing included herein will permit the Issuer to recover actual monetary damages
from the Borrower upon the occurrence of an Event of Default under the Financing Agreement.
Option to Prepay Loan
The Borrower will have and is granted the option to prepay the Mortgage Loan in full
or in part prior to the payment and discharge of all the outstanding Bonds, but only in
accordance with the provisions of the Financing Agreement, the Mortgage Note and the
Indenture.
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C-6
The Lender will within 24 hours notify the Trustee by telephone of the receipt of any
notice of prepayment by the Borrower and of the receipt of any prepayment or prepayment
penalties paid by the Borrower pursuant to the terms of the Mortgage .Note and will promptly
confirm any such notice or receipt in writing. The written notice will state the date such
prepayment will be passed through to the GNMA Security holder, which date will be not later
than the 15th day of the month following the month in which such prepayment occurs and will
state the effect such prepayment(if a partial prepayment)would have on the remaining scheduled
tpayments on the GNMA Security. The Lender will transfer to the Trustee, immediately upon
receipt, the portion of any prepayment penalties paid by the Borrower pursuant to the Mortgage
Note which are attributable to the GNMA Security, which prepayment penalties will comply
with the requirements of the Indenture. If such prepayment is not made by the time required
therefor by the terms of the Mortgage Note, any prepayment premiums previously received by
the Lender will be returned to the Borrower by the person holding such prepayment.
FHA Loan Documents and Regulation Control
To the extent that there is any inconsistency or ambiguity between or among the
Financing Agreement, including without limitation, the tax covenants of the Borrower in the
Financing Agreement, and any of the FHA Loan Documents, the National Housing Act and the
regulations under such Acts, the FHA Loan Documents, the National Housing Act and the
regulations under such Acts, will be deemed to be controlling and any such ambiguity or
inconsistency will be resolved in favor of, and pursuant to the terms of, the FHA Loan
Documents, the National Housing Act and the regulations under such Acts, as applicable.
02124194 m22-1854
C-7
APPENDIX D
SUMMARY OF THE REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
The following is a summary, which does not purport to be comprehensive or definitive,
of certain provisions of the Regulatory Agreement and Declaration of Restrictive Covenants,
which is qualified in its entirety by reference to the Regulatory Agreement and Declaration of
Restrictive Covenants.
Project Restrictions
The Borrower acknowledges and agrees that the Project is to be owned, managed and
operated as a "qualified project" (within the meaning of the Code) and, to that end, the Borrower
represents, warrants and covenants that:
(a) The Project has been and will be operated for the purpose of providing
multifamily residential rental housing and the Borrower will own, manage and operate (or cause
the management and operation of) the Project as a project to provide multifamily rental housing
comprised of a building or structure or several interrelated buildings or structures, each
consisting of more than one dwelling unit and facilities functionally related and subordinate
thereto, and no other facilities. As used in the Regulatory Agreement and Declaration of
Restrictive Covenents, facilities functionally related and subordinate to the Project will include
facilities for use by the tenants, including, for example, swimming pools, other recreational
facilities, parking areas, and other facilities which are reasonably required for the Project, for
example, heating and cooling equipment, trash disposal equipment or units for resident managers
or maintenance personnel.
(b) All of the dwelling units in the Project were and are similarly constructed, and
each dwelling unit in the Project does and will contain facilities for living, sleeping, eating,
cooking and sanitation for a single person or a family which are complete, separate and distinct
from other dwelling units in the Project and does and will include a sleeping area, bathing and
sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) The Borrower does not and will not knowingly permit any of the dwelling units
in the Project to be used on a transient basis and will not rent any of the units for a period of
less than 30 consecutive days, and none of the dwelling units in the Project will at any time be
leased or rented for use as a hotel, motel, dormitory, fraternity house, sorority house, rooming
house, hospital, nursing home, sanitarium, rest home or trailer court or park or place of
business.
(d) No part of the Project'has been or will at any time be owned or used by a
cooperative housing corporation.
02/24/94 D-1 m12-1854
. (e) The site of the Project consists of a parcel or parcels that are contiguous (parcels
are contiguous if their boundaries meet at one or more points) except for the interposition of a
road, street or stream, and the Project comprises a single geographically and functionally
integrated project for multifamily rental housing, as evidenced by the common ownership,
management, accounting and operation of the Project.
(f) The Borrower will not sell any of the dwelling units within the Project.
(g) All of the units in the Project will be leased, rented, or available for lease or
rental on a continuous basis to members of the general public (other than units for a resident
manager or maintenance personnel.
(h) The Borrower will not restrict Qualifying Tenants (as defined below) or tenants
of the Reserved Units (as defined below) from the enjoyment of unrestricted access to all
common facilities and common areas of the Project.
(i) The Borrower will give priority consideration, in accepting tenants, to holders of
federal certificates for rent subsidies pursuant to the existing program under Section 8 of the
United States Housing Act of 1937, or its successor ("Section 8 Certificate Holders").
0) The Borrower will not knowingly and voluntarily take or omit to take, as is
applicable, any action if such action or omission would in any way cause the use and operation
of the Project in a manner contrary to the requirements of the Regulatory Agreement and
Declaration of Restrictive Covenants.
(k) The Borrower will not discriminate on the basis of race, creed, color, sex, age
or national origin or source of income if from a federal, state or local governmental body or
such other sources of income as approved by the Issuer e.g., AFDC or SSI payments) or, except
to the extent appropriate in the interests of the health and safety of the tenants, physical
disability, in the lease, use, or occupancy of the Project or in connection with the employment
or application for employment of persons for the operation and management of the Project.
(1) The Borrower will not knowingly and voluntarily 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 Agreement.
(m) The Borrower will operate the Project in the manner described in its Application
for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code submitted
by the Borrower to the Internal Revenue Service on July 6, 1993.
02/24/94 D-2 m12-1854
Occupancy Restrictions
The Borrower represents, warrants and covenants that:
(a)(1) At least forty-nine percent (49%) of the total number of units in the Project
("Reserved Units") will be occupied continuously or held available for occupancy (or treated as
occupied as provided herein)by (i) individuals or families whose adjusted gross income does not
exceed 50% of the median adjusted gross income for the area, as adjusted gross income may
from time to time be determined pursuant to Section 8 of the United States Housing Act of 1937,
as amended; and (ii) whose income does not exceed the qualifying limits for very low income
families as established and amended from time to time pursuant to Section 8 of the Housing Act,
or who otherwise qualify as very low income households as deemed by Section 50105 of the
Health and Safety Code of the State of California ("Very Low Income Tenants"). Median
adjusted gross income for the area with respect to Very Low Income Tenants is to be adjusted
for family size.
(2) The determination of whether an individual or family is within the prescribed
income limitations will be made only at the time the tenancy commences. Any unit occupied by
an individual or family who is a Very Low Income Tenant during their tenancy in such unit even
though such individual or family subsequently ceases to be of very low, low or moderate
income. Any completed unit vacated by a Very Low Income Tenant will be treated as being
occupied by such prior Very Low Income Tenant until reoccupied by another occupant, other
than for a temporary period not to exceed 31 days.
(3) The Borrower will use its Best Efforts to rent the next available Reserved Unit
to a Section 8 Certificate Holder. For purposes of this provision, "Best Efforts" will mean that
the Borrower has(a)notified the County of Contra Costa of the availability of the Reserved Unit
for Section 8 Certificate Holders, and(ii)held the Reserved Unit available exclusively to Section
8 Certificate Holders for a period of at least fifteen (15) days.
(b) The Reserved Units will consist of one bedroom units, two
bedroom units, (_) three bedroom units, and (�) four bedroom units and will be
made available at nor more than affordable rents. The term "affordable rents" is defined for (i)
for all Reserved Units occupied by Section 8 Certificate Holders, as 100% of the existing
Section 8 Fair Market Rents, as published annually by the United States Department of Housing
and Urban Development, less the utility allowance then in effect, and (ii) for all Reserved Units
occupied by Very Low Income Tenants who are not Section 8 Certificate Holders, as the amount
derived by multiplying 30 percent times 50 percent of the median adjusted gross income for the
area, adjusted for family size by computing income on the basis of two persons in the case of
a one-bedroom unit, three persons in the case of a two-bedroom unit, four persons in the case
of a three-bedroom unit and five persons in the case of a four-bedroom unit. In the event that
the existing Section 8 Housing Assistance Program ceases to exist, affordable rents with respect
to Very Low Income Tenants will be adjusted in corresponding proportion to rents associated
with a successor program; or, in the event that no successor program is enacted, commencing
with the first anniversary of the last determination of affordable rents under the Section 8
02124/94 D-3 m12-1854
Housing Assistance Program, or its successor, affordable rents with respect to Very Low Income
Tenants will be increased by the lesser of (i) eight percent per annum, or (ii) the annual
percentage increase in the Contra Costa County median income for all personal income tax
returns as published by the State Franchise Tax Board, but in no event will the increase be less
than five percent.
Nothing in this paragraph (b) will be construed as a waiver of the Borrower's right to
request HUD to preempt, pursuant to 24 CFR part 403, any local controls on the Project's rents
should such controls jeopardize the financial viability of the Project.
(c) As a condition to occupancy, each person who is intended to be Very Low Income
Tenant will be required to sign and deliver to Borrower an Income Computation and
Certification (the "Income Certification"), in which the prospective Very Low Income Tenant
certifies that he or his family qualifies as being of very low, low or moderate income. In
addition, such person will be required to provide whatever other information, documents or
certifications are deemed necessary by the Issuer or the Trustee to substantiate the Income
Certification.
(d) The form of lease to be utilized by the Borrower in renting any units in the project
to any person who is intended to be a Very Low Income Tenant will provide for termination of
the lease and consent by such person to immediate eviction for failure to qualify as a Very Low
Income Tenant as a result of any material misrepresentation made by such person with respect
to the Income Certification. The Borrower has reviewed the addendum to the form of lease for
the Project prepared by the County of Contra Costa and its management policies will not conflict
with the provisions in such addendum. The Borrower agrees to include the provisions of such
addendum only in its leases with holders of Section 8 certificates.
(e) All tenant lists, applications, and waiting lists relating to the Project, to the extent
that such information is maintained will at all times be kept separate and identifiable from any
other business of the Borrower which is unrelated to the Project, as required by the Issuer or
the Trustee from time to time, in a reasonable condition for proper audit and subject to
examination during business hours upon reasonable notice by representatives of the Issuer or the
Trustee.
(f) The Borrower will utilize a maximum occupancy standard not less than that
required by Section 8 of the United States Housing Act of 1937 on the dated date of the
Regulatory Agreement and Declaration of Restrictive Covenants, that is three individuals for a
one bedroom unit(or such greater number as may be allowed by the Department of Housing and
Urban Development), four individuals for a two bedroom unit (or such greater number as may
be allowed by the Department of Housing and Urban Development, _ individuals for a three
bedroom unit (or such greater number as may be allowed by the Department of Housing and
Urban Development), and_individuals for a four bedroom unit (or such greater number as may
be allowed by the Department of Housing and Urban Development).
02/24/94 D-4 m12-1854
i
(g) The Borrower will submit to the Issuer any information or completed forms
requested by the Issuer to comply with State and/or IRS reporting requirements. Such
information will be submitted to the Issuer within 15 days of receipt of a written request from
the Issuer.
(h) The Borrower will not apply or permit the application of, management policies
or lease provisions with respect to the Project which have the effect of precluding occupancy of
Reserved Units by holders of Section 8 certificates.
The Issuer acknowledges that it is the Borrower's responsibility to screen and select
tenants for desirability and creditworthiness, and that such selection is within the Borrower's
discretion. If written management policies exist, or exist in the future, with respect to the
Project, the Issuer may review such written policies and may require changes in such policies,
if necessary, to reasonably comply with the provisions of the Regulatory Agreement and
Declaration of Restrictive Covenants and the requirements of the Section 8 Program as set forth
in the first paragraph of this subparagraph (h).
(i) The Borrower will submit to the Issuer (i) at the time of initial occupancy of any
Very Low Income Tenant, (ii) upon the reoccupancy of any unit held available for Very Low
Income Tenants, and (iii) as often as necessary to comply with the requirements of the Issuer,
Income Certifications, which are subject to independent investigation and verification by the
Issuer. Income Certifications will be maintained on file at the Project with respect to each Very
Low Income Tenant who resides in a Project unit or resided therein during the immediately
preceding calendar year.
In addition, the Borrower agrees to obtain and maintain on file the following with respect
to each.prospective Very.Low Income Tenant: qualification forms as required by Section 8 for
Section 8 Certificate Holders or employment verifications or verifications of other sources of
income for noncertificate holders or such other forms of certification that may be required by
the Issuer from time to time. Provided that such documentation has been obtained, the Borrower
may rely upon the Income Certifications of the prospective tenants unless the Borrower has
actual knowledge that they are inaccurate.
0) The Borrower will maintain complete and accurate records pertaining to the
Reserved.Units, and will permit any duly authorized representative of the Issuer or the Trustee
to inspect the books and records of the Borrower pertaining to the incomes of Very Low Income
Tenants- residing in the Project, the rent levels for the Reserved Units and other records
necessary to determine compliance with this Agreement.
(k) On the fifteenth day of each month or such later date as may be specified in
writing by the Issuer, the Borrower will submit to the Issuer and the Trustee a certificate
executed by the Borrower stating the percentage of units of the Project which were occupied by
Very Low Income Tenants at all times during the preceding month and identifying Very Low
Income Tenants who commenced or terminated occupancy of the Project during such month. In
addition, the Borrower will prepare and submit to the Issuer within 30 days after April 1 in each
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mit-1854
w
year a "Certificate of Continuing Program Compliance" executed by the Borrower, stating (i)
the percentage of the dwelling units in the Project which were occupied by Very Low Income
Tenants (or held vacant and available for occupancy as provided in paragraph 0) above) during
such period, and (ii) that to the knowledge of the Borrower, no default has occurred under this
Agreement.
Tax-Exempt Status of 1994 Series A Bonds
The Borrower and the Issuer, as applicable, each hereby represents, warrants and agrees
as follows:
(a) The Borrower and the Issuer will not knowingly take or permit, or omit to take
or cause to be taken, as is appropriate, any action that would adversely affect the Tax-Exempt
nature of the interest on the 1994 Series A Bonds and, if either of them should take or permit,
or omit to take or cause to be taken, any such action, it will take all lawful actions necessary
to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof.
(b) The Borrower represents, covenants and agrees that it will maintain its status as
an organization described in Section 501(c)(3) of the Code and exempt from federal income tax
under Section 501(a) of the Code (a "501(c)(3) Organization").
(c) The Borrower will not use or permit the use of more than 5 % of the Project by
persons other than a 501(c)(3) Organization or by a 501(c)(3) Organization (including the
Borrower) in an "unrelated trade or business" within the meaning of Section 513(a) of the Code,
if the payments received in respect of such uses total more than 5% of the principal or interest
on the 1994 Series A Bonds. For purposes of this covenant, "use" that would not be counted for
purposes of the "private business use test" described in Section 141(b)(1) of the Code will be
disregarded, including "use" not counted if 501(c)(3)Organizations were treated as governmental
units with respect to their activities which do not constitute unrelated trade or businesses,
determined by applying Section 513(a). This covenant will not be deemed to restrict the rental
of units in the Project to tenants for the occupancy of such units as their residences.
(d) The Borrower represents that it has not, and covenants and agrees that it will not,
become a test period beneficiary of any tax-exempt non-hospital bonds issued on or before the
Closing Date, the aggregate face amount of which allocable to it when added to the aggregate
face amount of the 1994 Series A Bonds exceeds $150,000,000, all as described in Section
145(b)of the Code. The Borrower represents that no 501(c)(3)Organization with which it shares
common management and control ("Affiliated Organization") is, and covenants and agrees that
it will not permit any Affiliated Organization to become, a test period beneficiary of any
Tax-Exempt non hospital bonds issued on or before the Closing Date, the aggregate face amount
of which allocable to it, when added to the aggregate face amount of the 1994 Series A Bonds,
exceeds $150,000,000, all as described in Section 145(b) of the Code.
02/24/94 D-6 m12-2854
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w
(e) The Borrower will not permit the use of the Project by any 501(c)(3)Organization
who is a test period beneficiary of any tax-exempt non-hospital bonds issued on or before the
Closing Date, the aggregate face amount of which allocable to it, when added to the aggregate
face amount of the 1994 Series A Bonds allocable to such 501(c)(3) Organization, exceeds
$150,000,000, all as described in Section 145(b) of the Code.
(f) The Borrower will comply with Section 145(d) of the Code, including in
particular, Section 145(d)(2)(B).
(g) The Borrower represents and covenants that at least 40% of the total number of
units in the Project will be occupied by individuals or families whose income does not exceed
60% of the median income for the area.
Additional Requirements of the Act
In addition to the requirements set forth above, so long as any Bonds are outstanding the
Borrower agrees to comply with each of the requirements of Section 52102 of the Act set forth
in this section, as follows:
(a) Not less than 20% of the total number of units in the Project will be for
occupancy on a priority basis by lower income households, as defined by Section 50079.5 of the
California Health and Safety Code (as in effect on the Closing Date, persons whose income does
not exceed the qualifying limits for lower income families as established and amended from time
to time pursuant to Section 8 of the Housing Act).
(b) Not less than one-half of the units required to be available for occupancy pursuant
to paragraph (a) of this section will be occupied by, or made available only to, Very Low
Income Tenants.
(c) The rental payments for the Very Low Income Units paid by the tenants thereof
(excluding any supplemental rental assistance from the State, the federal government or any
other public agency to those tenants or on behalf of those units) will not exceed 30% of an
amount equal to 50% of the medianadjusted gross income for the area. If the Borrower elects
to establish a base rent for units reserved as required by subparagraphs (a) and (b) of this
section, the base rents will be adjusted for household size, and in making such adjustments it
will be assumed that one person will occupy a studio unit, two persons will occupy a
one-bedroom unit, three persons will occupy a two-bedroom unit, four persons will occupy a
three-bedroom unit, and five persons will occupy a four-bedroom unit.
(d) If at the time of acquisition of the Project any of the units are occupied by
ineligible households, that fact alone will neither constitute a cause for the tenant's eviction nor
render the Project ineligible. Upon vacation of any unit initially occupied by an ineligible
household, that unit will be rented to an eligible household until the required residency by
eligible households is attained
02124194 D-7 m12.1854
(e) The units reserved for occupancy as required by subparagraph (a) of this section
will remain available on a priority basis for occupancy for the term of the Bonds (and any
refunding bonds) or 30 years, whichever is greater.
(f) - The covenants and conditions of the Regulatory Agreement and Declaration of
Restrictive Covenants will be binding upon successors in interest of the Borrower.
(g) The Regulatory Agreement and Declaration of Restrictive Covenants will be
recorded in the office of the county recorder of the County of Contra Costa and will be recorded
in the grantor-grantee index to the names of both the property owner and the Borrower as
grantor and to the name of the Issuer as grantee.
Terms of Restrictions
Occupancy and Rental-Restrictions: The term of the restrictions set forth in the
Regulatory Agreement and Declaration of Restrictive Covenants will commence on the date of
execution hereof and will end on the latest of the following: (i) the date which is 15 years after
the date on which 50% of the dwelling units in the Project were first occupied, or (ii) the date
which is a "qualified number of days" after the date on which any of the dwelling units in the
Project were occupied; or (iii) the date on which any assistance provided with respect to the
Project under Section 8 of the United States Housing Act of 1937 terminates including the initial
term and any extension thereof; or (iv) For purposes of clause (ii), the term
"qualified number of days" means, with respect to the Bonds, fifty percent (50%) of the total
number of days from the date of issuance of the Bonds to and including the final stated maturity
date of the Bonds or the scheduled maturity date of any bonds issued to refund the Bonds.
Termination of Restrictions: Notwithstanding the provisions of (a) of this section, the
Regulatory Agreement and Declaration of Restrictive Covenants and all other restrictions under
the Regulatory Agreement and Declaration of Restrictive Covenantswill terminate upon the
happening of any event set forth in the Regulatory Agreement and Declaration of Restrictive
Covenants. In addition, the Regulatory Agreement and Declaration of Restrictive Covenants and
the restrictions thereunder will also cease to apply in the event of an involuntary noncompliance
caused by unforeseen events such as fire, seizure, requisition, a change in federal law or an
action of a federal agency after the date of issuer which prevents the Issuer from enforcing the
requirements of the Regulatory Agreement and Declaration of Restrictive Covenants, or
condemnation, provided that (i) the Bonds are retired at the first available call date; or (ii) any
insurance proceeds or condemnation award or other amounts received as a result of such loss
or destruction are used to provide a project which meets the requirements of Section 142(d) of
the Code and Treasury
02/24/94 D-8 m12-1854
n
Subordination of Agreement
The Regulatory Agreement and Declaration of Restrictive Covenants and the restrictions
thereunder are subordinate to the FHA Insured Mortgage. In the event of foreclosure or transfer
of title by deed-in-lieu of foreclosure, the Regulatory Agreement and Declaration of Restrictive
Covenants and the restrictions thereunder will automatically terminate, subject to the provisions
of the Regulatory Agreement and Declaration of Restrictive Covenants. ,
02/24/94 D-4 mI2-1$54
Trust Indenture
I
j [OH*RAFT OF 11 MARCH 19941
TRUST INDENTURE
Dated as of 1, 1994
By and Between
COUNTY OF CONTRA COSTA
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Trustee
Relating to
COUNTY OF CONTRA COSTA
$ MULTIFAMILY HOUSING REVENUE BONDS
(FHA INSURED MORTGAGE LOAN - CRESCENT PARK APARTMENTS PROJECT)
1994 SERIES C
SF2-28088.1 40511-90-MS1-03/11/94
• TABLE OF CONTENTS •
Page
ARTICLE I
Definitions and Interpretation
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.03. Content of Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
The Bonds
Section 2.01. Authorized Amount and Terms of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.02. Limited Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.03. Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.04. Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.05. Mutilated, Lost, Stolen or Destroyed Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.06. Registration, Transfer and Exchange of Bonds; Persons Treated as Owners . . . . . . . . . . . 11
Section 2.07. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.08. Delivery of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
Redemption of Bonds Prior to Maturity
Section 3.01. Redemption of Bonds Prior to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.02. Redemption of Bonds upon Prepayment of FHA Note . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.03. Damage, Destruction or Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.04. Selection of Bonds for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.05. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.06. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.07. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
Funds; Investments
Section 4.01. Establishment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.02. Application of Bond Proceeds and Other Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.03. Disbursements from Acquisition Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.04. Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.05. Debt Service Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.06. Costs of Issuance Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.07. Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.08. Custody of Funds; Moneys Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.09. Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.10. Nonpresentment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.11. Final Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.12. Cancellation of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SF2-28088.1 i 40511-90-MS1-03/11/94
Page
ARTICLE V
General Covenants and Representations
Section 5.01. Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.02. FHA Note; Instruments of Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.03. Inspection of Project Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.04. Recordation and Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.05. No Modification of Security; Additional Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.06. Existence and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.07. Servicing the Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.08. Required Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.09. No Disposition of Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.10. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI
Default Provisions and Remedies
of Trustee and Bondholders
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.03. Mortgage Insurance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.04. Opportunity to Cure Default Under Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.05. Rights of the Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.06. Rights of Bondholders to Direct Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.07. Waiver by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.08. Application of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.09. Remedies Vested in Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.10. Rights and Remedies of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.11. Waivers of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.12. Notice of Defaults; Opportunity of the Issuer and the Borrower to Cure Defaults . . . . . . . 29
Section 6.13. Powers of Trustee upon Default under the FHA Note . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
The Trustee
Section 7.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.04. Not Responsible for Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.05. Trustee May Hold Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.06. Compensation of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.07. Maintenance of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.09. Resignation by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.10. Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.11. Appointment of Successor Trustee by the Bondholders; Temporary Trustee . . . . . . . . . . . 33
Section 7.12. Concerning Any Successor Trustee . . I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.13. Successor Trustee as Trustee, Paying Agent and Bond Registrar . . . . . . . . . . . . . . . . . . 34
Section 7.14. Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
I
SF2-28088.1 11 40511-90-MS 1-03/11/94
i •
Page
Section 7.15. Additional Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.16. Representation by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.17. Appointment, Resignation or Removal of Paying Agent; Successors . . . . . . . . . . . . . . . 35
Section 7.18. FHA-Approved Mortgagees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.19. Additional Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
Supplemental Indentures
Section 8.01. Supplemental Indentures Not Requiring Consent of Bondholders . . . . . . . . . . . . . . . . . . 37
Section 8.02. Supplemental Indentures Requiring Consent of Bondholders . . . . . . . . . . . . . . . . . . . . 37
Section 8.03. Amendment of Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX
Satisfaction and Discharge of Indenture
Section 9.01. Discharge of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.02. Payment and Discharge of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.03. No Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.04. Survival of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X
Miscellaneous
Section 10.01. Consents and Other Instruments of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.02. Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.03. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.05. Notices to Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.06. Trustee as Paying Agent and Bond Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.07. Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.08. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.09. Laws Governing Indenture and Situs and Administration of Trust . . . . . . . . . . . . . . . . 42
Section 10.10. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.11. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XI
Provisions Relating to FHA
Section 11.01. Approvals of FHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.02. FHA Documents Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBIT A - Form of Bond
EXHIBIT B -Estimated Debt Service Schedule
SF2-28088.1 iii 40511-90-MS1-03111194
INDENTURE
THIS TRUST INDENTURE, dated as of , 1994, is between the County of Contra
Costa (the "Issuer"), a legal 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 successors and assigns and any surviving, resulting or transferee entity, the "Issuer"), and Bank of America
National Trust and Savings Association, as Trustee (the "Trustee"), a national banking association duly
organized and existing under the laws of the United States of America, and authorized to accept and execute
trusts of the character herein set out, as Trustee (together with any successors and assigns and any surviving,
resulting or transferee entity, the "Trustee").
Recitals
WHEREAS, the Issuer is authorized pursuant to Chapter 8 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 Issuer to a nonprofit organization exempt from federal income taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986 (the "Code"), for use by the organization to finance the acquisition and
rehabilitation of multifamily rental housing to provide housing within the territorial jurisdiction of the Issuer in
accordance with the organization's tax-exempt purposes under the Code, subject to the requirements of the Act,
including the requirement that the bonds satisfy the requirements of Section 145 of the Code;
WHEREAS, EAH-Contra Costa, Inc. (the "Borrower"), has requested that the Issuer
issue bonds and lend the proceeds thereof to the Borrower in order to enable the Borrower to acquire and
rehabilitate a multifamily rental housing development known as Crescent Park Apartments located within the
jurisdiction of the Issuer in Richmond, California(the "Project");
WHEREAS, the Borrower has represented to the Issuer that the Borrower is a
nonprofit organization exempt from federal income taxation under Section 501(c)(3) of the Code, and has
represented and covenanted to comply with all requirements necessary to satisfy Section 145 of the Code;
WHEREAS, pursuant to and in accordance with the Act, the Issuer desires to provide
funds to finance the acquisition and rehabilitation of the Project by issuing its Multifamily Housing Revenue
Bonds (FHA Insured Mortgage Loan - Crescent Park Apartments Project) Series 1994 B (the "Bonds"), in the
principal amount of$ , pursuant to this Indenture; and
WHEREAS, the proceeds of the Bonds will be loaned to the Borrower. Upon
acquisition of the Project, the Borrower will assume the outstanding mortgage loan (the "Mortgage Loan") on
the Project to be evidenced by the Borrower's deed of trust note, as modified(the "FHA Note" or the "Note")
and secured by a deed of trust on the Project, as modified (the "Mortgage"). The FHA Note has been finally
endorsed for insurance by the Federal Housing Administration("FHA")pursuant to Section 221(d)(3) of the
National Housing Act of 1934, as amended;
WHEREAS, the Issuer has expressly determined and hereby confirms that the
issuance of the Bonds will accomplish a valid public purpose of the Issuer by enabling the Issuer to require the
Borrower to comply with the provisions of the Financing Agreement of even date herewith (the "Financing
Agreement"), among the Issuer, the Borrower and the Trustee, and the Regulatory Agreement and Declaration
of Restrictive Covenants of even date hereof(the "Issuer Regulatory Agreement"), among the Issuer, the
Borrower and the Trustee; and
WHEREAS, the execution and delivery of this Indenture and the issuance and sale of
the Bonds have been in all respects duly and validly authorized by a resolution duly adopted by the Issuer, and
all things necessary to make the Bonds, when authenticated by the Trustee and issued as provided in this
Indenture, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute
this Indenture a valid assignment and pledge of the Trust Estate for payment of the principal of, premium, if
SF2-28088.1 40511-90-MSI-03/11/94
• 0 *
any, and interest on 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;
NOW, THEREFORE, the Issuer, 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 and owners
thereof, and for other good and valuable consideration, the receipt of which is hereby acknowledged, 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 Issuer of all the covenants expressed or implied herein and in
the Bonds, does hereby bargain, sell, convey, pledge, assign and grant a security interest unto the Trustee in
and to the following, subject only to the provisions of this Indenture permitting the application thereof for or to
the purposes and on the terms and conditions set forth herein (said property being herein referred to as the
"Trust Estate"), to wit:
GRANTING CLAUSES
1.
All right, title and interest of the Issuer in and to all Prepared Revenues (as herein defined),
derived or to be derived by the Issuer or the Trustee for the account of the Issuer under the terms of this
Indenture and the Financing Agreement (other than the Reserved Rights of the Issuer), together with all other
Revenues received by the Trustee for the account of the Issuer arising out of or on account of the Trust Estate;
R.
All right, title and interest of the Issuer in and to the Mortgage Loan and the security therefor,
including the FHA Note, the Mortgage, all Mortgage Insurance or casualty insurance benefits or condemnation
awards payable with respect thereto, and any interest, profits and other income derived from the investment
thereof.
III.
All right, title and interest of the Issuer in and to, and remedies under, the Financing
Agreement and the Regulatory Agreement.
IV.
All funds, moneys and securities and any and all other rights and interests in property whether
tangible or intangible from time to time hereafter by delivery or by writing of any kind, conveyed, mortgaged,
pledged, assigned or transferred as and for additional security hereunder for the Bonds by the Issuer or by
anyone on its behalf or with its written consent to the Trustee, which is hereby authorized to receive any and all
such property at any and all times and to hold and apply the same subject to the terms hereof.
TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby
conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trust and to
them and their assigns forever (it being understood by the parties hereto that the requirements of FHA do not
permit a gross revenue pledge and that the Trustee may hold certain other funds in connection with the Project
pursuant to documents entered into with FHA, which funds shall not be subject to the lien of this Indenture);
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and
proportionate benefit, security and protection of all holders and owners 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 of the Bonds except as set forth in this Indenture;
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• •
PROVIDED,HOWEVER, that if the Issuer shall pay or cause to be paid to the holders and
owners of the Bonds the principal, interest and premium, if any, to become due thereon at the times and in the
manner provided in Article IX and if the Issuer shall keep, perform and observe, or cause to be kept, performed
and observed all of its covenants, warranties and agreements contained herein, this Indenture and the estate and
rights hereby granted shall, at the option of the Issuer, cease and be void, and thereupon the Trustee shall
cancel and discharge the lien of this Indenture and reconvey to the Issuer any property at the time subject to the
lien of this Indenture which may then be in its possession, except funds held by the Trustee for the payment of
interest on, premium, if any, and principal of the Bonds; otherwise this Indenture shall be and remain in full
force and effect, and upon the trusts and subject to the covenants and conditions hereinafter set forth.
ARTICLE I
Definitions and Interpretation
Section 1.01. Definitions. The terms defined in this Section 1.01 or in the Recitals hereto
(except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section
1.01 or in the Recitals hereto.
"Act" means Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the State of
California.
"Act of Bankruptcy" means the filing of a petition in bankruptcy (or other commencement of a
bankruptcy or similar proceeding) by or against the Borrower or any guarantor of the Borrower, or the Issuer,
under any applicable bankruptcy, insolvency or similar law as now or hereafter in effect.
"Authorized Borrower Representative" means the President of the Borrower, or any other
person designated to act in such capacity by a resolution of the Board of Directors of the Borrower.
"Authorized Issuer Representative" means the Chair or the Vice-Chair of the Board of
Supervisors, the Director of Community Development of the County, the County Administrator, the Director of
the Growth Management and Economic Development Agency, Deputy Director-Redevelopment of the Issuer or
any other person designated to act in such capacity by a Certificate of the Issuer containing the specimen
signature of any of such persons, which certificate may designate an alternate or alternates.
"Available Amounts" means moneys which are continuously on deposit with the Trustee in trust for
the benefit of Bondholders in a separate and segregated account in which only Available Amounts are held and are
(a) moneys deposited by or on behalf of the Borrower which have been held by the Trustee in the Available
Amounts Account for at least 367 days prior to the date of notice of redemption relating to the use of such moneys
to make payments on the Bonds, provided that no Act of Bankruptcy shall have occurred during the period after
such moneys were deposited in the Available Amounts Account; provided, however, that such 367-day period may
be reduced hereunder (and under the prepayment provisions of the FHA Note) upon receipt by the Trustee of an
opinion(which may assume that no owner of Bonds is an "insider" within the meaning of the Bankruptcy Code) of
Bond Counsel or nationally recognized counsel experienced in bankruptcy matters to the effect that the use of such
moneys to pay the principal of, premium, or interest on the Bonds would not be recoverable from Bondholders
pursuant to Section 362(a) or 550 of the Bankruptcy Code as avoidable preferential payments under Sections 544 and
547 of the Bankruptcy Code in the event of the occurrence of an Act of Bankruptcy; and (b)proceeds of the
investment of funds qualifying as Available Amounts under the foregoing clause. In determining whether an Act of
Bankruptcy of the Borrower or guarantor of the Borrower has occurred, the Trustee may rely on a certificate or
certificates of such party to that effect.
"Available Fee Revenues" means amounts to be utilized for the payment of Ordinary
Trustee/Mortgage Servicer Fees and Expenses from revenues which are excluded from Pledged Revenues but are
SF2-28088.1 3 40511-90-MSI-03/11/94
derived from payments to the Trustee on the FHA Note in an amount equal to % per annum of the outstanding
principal balance of the FHA Note, calculated and payable monthly, commencing with the first Note payment made
by the Borrower on the FHA Note following delivery of the Bonds.
"Bond" means the $ aggregate principal amount County of Contra Costa Multifamily
Housing Revenue Bonds (FHA Insured Mortgage Loan - Crescent Park Apartments Project) 1994 Series C.
"Bond Counsel" means any attorney at law or firm of attorneys selected by the Issuer, of nationally
recognized standing in matters pertaining to the validity of, and exclusion from gross income for federal income tax
purposes of interest on, bonds issued by states and political subdivisions, and duly admitted to practice law before
the highest court of any state of the United States of America.
"Bond Form" means the form of Bonds attached to this Indenture as an Exhibit.
"Bondholder," or "holder" or "owner" of the Bonds means the person or persons in whose name
any Bond is registered from time to time.
"Bond Obligation" means, as of any date of calculation, the principal amount of all Outstanding
Bonds.
"Bond Purchaser" means, collectively, Kirkpatrick, Pettis, Smith, Polian Inc. and Charles A. Bell
Securities Corp.
"Bond Purchase Agreement" means the agreement of that name dated , 1994, among the
Bond Purchaser, the Borrower and the Issuer.
"Borrower" means EAH-Contra Costa, Inc., a nonprofit corporation organized and existing under
the laws of the State of California.
"Business Day" or "business day" means a day, other than Saturday or Sunday, on which(a) banks
located in New York, New York, or in the city in which the Trust Office of the Trustee is located, are not required
or authorized by law or executive order to close for business, and (b) The New York Stock Exchange is not closed.
"Certificate of the Issuer," "Statement of the Issuer," "Request of the Issuer" and "Requisition of
the Issuer" mean, respectively, a written certificate, statement, request or requisition signed in the name of the
Issuer by an Authorized Issuer Representative or such other person as may be designated and authorized to sign for
the Issuer. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined
in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall
be read and construed as a single instrument.
"Closing" or "Closing Date" means , 1994.
"Code" means the Internal Revenue Code of 1986. Each reference to a section of the Code shall
be deemed to include the United States Treasury Regulations in effect or proposed from time to time with respect
thereto and applicable to the Project or the Bonds or the use of the proceeds thereof.
"Contract of Mortgage Insurance" means the contract by and between FHA and the Trustee
pursuant to the National Housing Act, as evidenced by the endorsed FHA Note and providing for insurance against
certain losses under the Mortgage Loan.
"Debt Service" means the scheduled amount of interest and amortization of principal payable on
the Bonds during the period of computation, excluding amounts scheduled during such period which relate to
principal that has been retired before the beginning of such period.
SF2-28088.1 4 40511-90-MS1-03/11/94
"Debt Service Reserve Requirement" means, on any date of calculation by the Trustee, the sum
of(i) an amount equal to one payment of principal and interest on the FHA Note, (ii) an amount equal to
one-twelfth(1/12) of the difference between (a) the product of the principal amount of Bonds Outstanding
multiplied by the highest rate of interest payable on any Bond Outstanding and (b) the product of 99% of the
unpaid principal balance on the FHA Note multiplied by the rate of interest on the Bond Fund Investment
Agreement, and (iii) 8/6 of the maximum semiannual principal and interest payment on the Bonds. In making
such determination, the Trustee shall refer to the debt service schedule attached as Exhibit B hereto, as such
schedule may be revised in the event of a redemption of Bonds in part otherwise than pursuant to Section 3.01 (c)
hereof. Debt Service Reserve Requirement on the Closing Date is $
"Defeasance Obligations" means (i) direct, non-callable obligations of the United States of
America (including obligations issued or held in book-entry form on the books of the Department of the Treasury
of the United States of America), or obligations the timely payment of the principal of and interest on which is
unconditionally guaranteed by the United States of America, which obligations will not adversely affect the rating
on the Bonds as determined by written confirmation of the Rating Agency, and (ii) certificates which evidence
ownership of the right to the payments of the principal of and interest on obligations described in clause (i) or in
specified portions thereof, including without limitation, portions consisting solely of the principal thereof or solely
of the interest thereon.
"Event of Default" means any of those events specified in and defined by the applicable
provisions of Article VI hereof to constitute an Event of Default.
"Extraordinary Fees and Expenses" means those fees and expenses in excess of the Ordinary
Trustee/Mortgage Servicer Fees and Expenses in connection with an Event of Default under Article VI hereof,
but in no event shall such amount exceed the sum of$ from moneys held under the Indenture.
"FHA" means the Federal Housing Administration, an organizational unit within HUD, and may
refer to any authorized representative or the successor thereof.
"FHA Documents" means the FHA Note, the Mortgage, the FHA Regulatory Agreement and
any other documents which are required by HUD in connection with the Mortgage Loan.
"FHA Note" or "Note" means the nonrecourse promissory note of the Borrower evidencing the
Mortgage Loan, as modified by the Modification of Deed of Trust Note and Deed of Trust.
"FHA Regulations" means the regulations promulgated by FHA regarding insurance under
Section 221(d)(3) of the National Housing Act.
"FHA Regulatory Agreement" means the Regulatory Agreement dated as of 1,
1994 between the Borrower and HUD relating to the Project.
"Financing Agreement" means the agreement of that name dated as of the date hereof among
the Issuer, the Borrower and the Trustee.
"HUD" means the United States Department of Housing and Urban Development, and its
successors and assigns.
"Indenture" means this Trust Indenture and all indentures supplemental hereto.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30
Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information
Services', "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's
Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007,
Attention: Municipal News Reports; and Standard &Poor's Corporation "Called Bond Record," 25 Broadway,
SF2-28088.1 5 40511-90-MSI-03/11194
New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange
Commission, to such other addresses and/or such other services providing information with respect to called
Bonds, or any other such services as the Issuer may designate in writing to the Trustee.
"Interest Payment Date" means each April_and October_, commencing on October
1994.
"Investment Agreement(s)" means the agreement or agreements providing for the investment of
moneys held hereunder between the Trustee and or any substituted agreement which shall be in
substantially the same form as the initial agreement(s) and which shall have no adverse impact on the Rating
Agency's rating of the Bonds'as determined by written confirmation of the Rating Agency.
"Issuer" means the County of Contra Costa, a legal subdivision and body corporate and politic
of the State.
"Modification of Deed of Trust Note and Deed of Trust" means the agreement of that name
dated as of the date hereof relating to the modification of certain terms and provisions of the FHA Note and the
Mortgage.
"Mortgage" means the deed of trust encumbering the Project and securing payment of the
Mortgage Loan, as modified by the Modification of Deed of Trust Note and Deed of Trust.
"Mortgage Insurance" means the insurance provided for by the Contract of Mortgage
Insurance.
"Mortgage Loan" means the permanent loan assumed by the Borrower, as evidenced by the
FHA Note, as modified, and secured by the Mortgage and all related documents required by HUD to obtain and
maintain the Mortgage Insurance.
"Mortgage Servicer" means or its successor as servicer under
the Mortgage Servicing Agreement.
"Mortgage Servicing Agreement" means the agreement of that name dated the date hereof by
and between the Trustee and the Mortgage Servicer, as from time to time amended.
"National Housing Act" means the National Housing Act of 1934, as amended.
"Net Proceeds," when used with respect to any insurance proceeds or condemnation award,
means the amount remaining after deducting from the gross proceeds thereof all expenses (including attorneys'
fees) incurred in the collection of such proceeds or award.
"Opinion of Counsel" means an opinion in writing signed by an attorney or firm of attorneys
who may be counsel to the Issuer, the Borrower or the Trustee but shall not be a full-time employee of the
Issuer, the Borrower or the Trustee.
"Ordinary Trustee/Mortgage Servicer Fees and Expenses" means the combined ordinary fees
and expenses of the Trustee and Mortgage Servicer pursuant to Section 7.06 hereof.
"Outstanding," when used with respect to the Bonds means all Bonds theretofore authenticated
and delivered under this Indenture, except:
(a) Bonds theretofore cancelled by the Trustee or theretofore delivered to the
Trustee for cancellation;
SF2-28088.1 - 6 40511-90-MS1-03/11/94
(b) Bonds for the payment or redemption of which moneys or obligations shall
have been theretofore deposited with the Trustee in accordance with Article IX; and
(c) Bonds in exchange for or in lieu of which other Bonds have been
authenticated and delivered under this Indenture.
"Paying Agent" means the Trustee acting as paying agent and not in its capacity as Trustee.
"Pledged Revenues" means (a) the payments on the FHA Note (which payments exclude
Available Fee Revenues), (b) subject to the provisions of this Indenture with respect to the Trustee holding
moneys for the benefit of the Holders of particular Bonds in trust after notice of redemption has been given and
upon defeasance pursuant to Article IX hereof, all other moneys received by the Issuer, or the Trustee for the
account of the Issuer, with respect to the Financing Agreement, except the Reserved Rights of the Issuer, (c)
any moneys on deposit in all of the funds (except the Rebate Fund) and accounts held under this Indenture, (d)
the income and profit from the investment of any moneys while held in the funds and accounts held under this
Indenture (excluding earnings on the Rebate Fund), and (e) all moneys (and/or debentures, as the case may be)
paid pursuant to the Contract of Mortgage Insurance and other benefits thereunder.
"Project" means the multifamily rental housing project known as Crescent Park Apartments,
located on and including the land described in Exhibit A to the Issuer Regulatory Agreement.
"Qualified Investments" means:
(a) Government Obligations;
(b) Federal Housing Administration's debentures;
(c) Federal Home Loan Mortgage Corporations's (FHLMC) participation
certificates (excluding stripped mortgage securities which are purchased at prices exceeding
their principal amounts) which guarantee timely payment of principal and interest and senior
debt obligations;
(d) Farm Credit Banks' (Federal Land Banks, Federal Intermediate Credit Banks
and Banks for Cooperatives) consolidated systemwide bonds and notes;
(e) Federal Home Loan Banks consolidated debt obligations;
(f) Federal National Mortgage Association's (FNMA) mortgage-backed securities
(excluding stripped mortgage securities which are purchased at prices exceeding their principal
amounts) and senior debt obligations;
(g) Student Loan Marketing Association's (Sallie Mae) senior debt obligations
(excluding securities that do not have a fixed par value and/or whose terms do not promise a
fixed dollar amount at maturity or call date) and letter of credit backed issues;
(h) Resolution Funding Corp.'s (REFCORP) debt obligations;
(i) Federal funds, certificates of deposit, time deposits and bankers' acceptances
(having original maturities of not more than 365 days) of any bank, the unsecured short term
obligations of which are rated "A-1+" by Standard &Poor's;
(j) Deposits which are fully insured by the Federal Deposit Insurance Corp.
(FDIC);
SF2-28088.1 7 40511-90-MSI-03/11/94
(k) Debt obligations rated "AAA" by Standard & Poor's (excluding securities
that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at
maturity or call date);
(1) Commercial paper (Having original maturities of not more than 270 days)
rated "A-1+" by Standard &Poor's;
(m) Money market funds rated "AAAm" or "AAAm-G") by Standard's &Poor's;
(n) Repurchase agreements with any institution the unsecured, uninsured and
unguaranteed debt obligations of which are rated "AAA" by Standard &Poor's or commercial
paper of which is rated "A-1+" by Standard &Poor's;
(o) Any stripped securities assessed or rated "AAA" by Standard &Poor's; and
(p) The Investment Agreements.
"Rating Agency" means Standard &Poor's Corporation and its successors and assigns.
"Rebate Amount" means the amount described in the Tax Certificate.
"Rebate Analyst" means Orrick, Herrington& Sutcliffe or any other qualified person
acceptable to the Issuer and retained by the Borrower to calculate the Rebate Amount or, in the event that the
Borrower fails to so retain a Rebate Analyst one month prior to any date on which calculations are required to
be made under the Tax Certificate, any qualified person retained by the Trustee to calculate the Rebate Amount.
"Registrar" means the Trustee acting as registrar.
"Regulations" means the Income Tax Regulations promulgated or proposed by the Department
of the Treasury pursuant to the Code from time to time or pursuant to any predecessor statute to the Code.
"Reserved Rights of the Issuer" means (a) all rights which the Issuer or its officers, officials,
agents or employees may have under this Indenture and the Financing Agreement to indemnification by the
Borrower and by any other persons and to payments for expenses incurred by the Issuer itself, or its officers,
officials, agents or employees; (b) the right of the Issuer to receive notices, reports or other information, make
determinations and grant approvals hereunder and under the other Financing Documents; (c) the right of the
Issuer to receive its fee pursuant to Section 2.2 of the Financing Agreement; (d) all rights of the Issuer to
enforce the representations, warranties, covenants and agreements of the Borrower pertaining in any manner or
way, directly or indirectly to the requirements of the Act or any requirements imposed by the Issuer with
respect to the Project, or necessary to assure that interest on the Bonds is excluded from gross income for
federal income tax purposes,.as are set forth in any of the Financing Documents or in any other certificate or
agreement executed by the Borrower; (e) all rights of the Issuer in connection with any amendment to or
modification of the Financing Documents; and (f) all enforcement remedies with respect to the foregoing.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden
City, New York 11530, Fax (516) 227-4039 or 4190; Midwest Securities Trust Company, Capital
Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312) 663-2343; Pacific
Securities Depository Trust Company, Pacific and Company, P.O. Box 7041, San Francisco, California 94120,
Fax (415) 393-4128; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street,
Philadelphia, Pennsylvania 19103, Attention: Bond Department, Fax (215) 496-5058; or, in accordance with the
then current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other
securities depositories or any such other securities depositories as the Issuer may designate in writing to the
Trustee.
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• 0
"Sinking Account Payment" means the amount required by this Indenture to be paid by the
Issuer on any single date at or prior to maturity for the retirement of Bonds.
"State" means the State of California.
"Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive
Covenants, dated as of 1, 1994, among the Borrower, the Issuer and the Trustee, together with any
and all Supplements thereto.
"Supplements" means all extensions, renewals, modifications, amendments, supplements and
substitutions.
"Tax Certificate" means the Tax Certificate and Agreement dated , 1994 between
the Issuer and the Borrower together with any and all supplements thereto.
"Trustee" means the person named as the "Trustee" in the first paragraph of this Indenture
until a successor shall have become Trustee pursuant to this Indenture, and thereafter such successor.
Section 1.02. Interpretation. The words "hereof," "herein," "hereunder," "hereto," and other
words of similar import refer to this Indenture in its entirety.
The terms "agree" and "agreements" contained herein are intended to include and
mean "covenant" and "covenants."
References to Articles, Sections, and other subdivisions of this Indenture are to the
designated Articles, Sections and other subdivisions of this Indenture.
The headings of this Indenture are for convenience only and shall not define or limit
the provisions hereof.
All references made (a) in any gender shall be deemed to have been made in all
genders, and (b) in the singular or plural number shall be deemed to have been made, respectively, in the plural
or singular number as well.
Any reference to particular sections or subsections of the Code and applicable Income
Tax Regulations shall include any successor provisions of law or regulations, to the extent the same shall apply
to the Bonds.
The parties acknowledge that each party, the Borrower and its respective counsel have
participated in the drafting and revision of this Indenture, the Financing Agreement and the Issuer Regulatory
Agreement. Accordingly, the parties agree that any rule of construction which would disfavor the drafting party
shall not apply in the interpretation of this Indenture, the Financing Agreement or the Issuer Regulatory
Agreement or any Supplement or exhibit hereto or thereto.
Section 1.03. Content of Certificates and Opinions. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this Indenture or the Financing Agreement
shall include(a) a statement that the person or persons making or giving such certificate or opinion have read
such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions contained in such certificate or
opinion are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such
examination or investigation as is necessary to enable them to express an informed opinion as to whether or not
such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the
signers, such condition or covenant has been complied with.
SF2-28088.1 9 40511-90-MS1-03/11/94
Any such certificate or opinion made or given by an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with respect to the matters upon which his
or her certificate or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous. Any such certificate or opinion made or given by counsel
may be based, insofar as it relates to factual matters (with respect to which information is in the possession of
the Issuer), upon the certificate or opinion of or representations by an officer of the Issuer, unless such counsel
knows that the certificate or opinion or representations with respect to the matters upon which his or her opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care should have known that the same
were erroneous.
ARTICLE II
The Bonds
Section 2.01. Authorized Amount and Terms of Bonds. Bonds may not be issued under this
Indenture except in accordance with this Article. The Bonds shall be in the form of the Bond Form. The total
principal amount of Bonds that may be issued hereunder is expressly limited to $ . The Bonds shall
be issued only as fully registered bonds, without coupons, and shall be in the denomination of[$5,000] or any
integral multiple thereof requested by the registered owner thereof; provided, however, that each Bond shall
have only one principal maturity date. The Bonds shall be numbered from 1 upward. All of the Bonds are
equally and ratably secured under this Indenture.
Each Bond shall be dated as of the date of this Indenture and shall bear interest (computed on
the basis of a 360-day year consisting of twelve 30-day months)until paid from the Interest Payment Date next
preceding the date of registration thereof unless it is registered as of a day during the period from the sixteenth
day of the month next preceding any Interest Payment Date to such Interest Payment Date, inclusive, in which
event it shall bear interest from such Interest Payment Date, or unless it is registered before December 15,
1994, in which event it shall bear interest from , 1994; provided however, that if, at the time of
registration of any Bonds, interest is in default on Outstanding Bonds, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment on the
Outstanding Bonds.
Bonds shall bear interest payable semiannually on each Interest Payment Date, shall mature on
the dates and in the amounts, and shall bear interest at the rate or rates, as set forth below:
Maturity Principal Amount Interest Rate
Principal of and premium on the Bonds shall be paid only upon presentation and surrender
thereof for cancellation at the principal corporate trust of the Trustee in Los Angeles, California. Payment of
principal, premium and interest shall be made in such coin or currency of the United States as at the time of
payment is legal tender for payment of private and public debts. Payment of the interest on any Bond shall be
made to the person whose name appears on the Bond registration books of the Trustee as the registered owner
thereof as of the close of business on the fifteenth day of the calendar month next preceding an Interest Payment
Date, whether or not such day is a Business Day (the "Record Date"), such interest to be paid by check or draft
mailed to such registered owner at its address as it appears on such registration books; provided, that at the
written request addressed to the Trustee of a Holder of$1,000,000 or more in aggregate principal amount of
Bonds, such payments of interest and (upon presentation and surrender of Bonds)principal or redemption price
shall be made by wire transfer of funds (on the same day as described above for payment by check) to an
account at a financial institution in the United States designated to the Trustee by such Bondholder no later than
SF2-28088.1 10 40511-90-MSI-03111/94
•
five (5) days prior to the corresponding Record Date. The Trustee shall cause notice of the proposed payment
of defaulted interest and the record date of such payment (a "Special Record Date") to be mailed, first class, to
each Bondholder at the addresses shown on the Bond registration books of the Trustee, not less than 10 days
before such Special Record Date.
The Bonds shall be subject to redemption prior to maturity as provided in Article III hereof.
Section 2.02. Limited Obligations. The Bonds and the interest thereon are limited obligations
of the Issuer, payable solely from the revenues, receipts and security pledged therefor in the Granting Clauses
hereof. Neither the faith and credit nor the taxing power of the Issuer or the State is pledged to the payment of
the principal of or premium or interest on the Bonds. The Bonds are not a debt of the United States of,
America, HUD or any other governmental agency and are not guaranteed by the full faith and credit of the
United States. Neither the United States of America nor HUD, nor any other agency of the United States of
America, nor the State, nor any political subdivision or agency thereof(except the Issuer, to the limited extent
set forth in this Section) 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 Issuer, and none of the Bonds or any of the Issuer'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.
Section 2.03. Execution. The Bonds shall be executed on behalf of the Issuer by the manual
or facsimile signature of the Chair of its Board of Supervisors, attested by the manual or facsimile signature of
the County Administrator and Clerk of its Board of Supervisors under the official seal, or a facsimile thereof, of
the Issuer. Any facsimile signatures shall have the same force and effect as if said officers had manually signed
the Bonds. Any reproduction of the official seal of the Issuer on the Bonds shall have the same force and effect
as if the official seal of the Issuer had been impressed on the Bonds.
In case any officer whose signature or facsimile of whose signature shall appear on any Bonds
shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes as if such officer had remained in office until delivery.
Section 2.04. Authentication. Only such Bonds as shall have endorsed thereon a certificate of
authentication and registration substantially in the form set forth in the Bond Form duly executed by the Trustee
shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or obligatory for any
purpose unless and until such certificate of authentication and registration shall have been duly executed by the
Trustee; and such executed certificate upon any such Bond shall be conclusive evidence that such Bond has been
authenticated and delivered under this Indenture. The Trustee's certificate of authentication and registration on
any Bond shall be deemed to have been executed by it if signed by an authorized signatory of the Trustee, but it
shall not be necessary that the same person sign the certificate of authentication and registration on all the
Bonds.
Section 2.05. Mutilated, Lost, Stolen or Destroyed Bonds. In the event any Bond is
mutilated, lost, stolen or destroyed, the Issuer may execute and the Trustee may authenticate and deliver a new
Bond in lieu of such mutilated, lost, stolen or destroyed Bond, of like date, number, series, maturity and
denomination-as that mutilated, lost, stolen or destroyed. Any mutilated Bond shall first be surrendered to the
Issuer; and in the case of any lost, stolen or destroyed Bond, there shall first be furnished to the Trustee
evidence of such loss, theft or destruction satisfactory to it together with indemnity satisfactory to it. In the
event any such Bond shall have matured, instead of issuing a duplicate Bond the Trustee may pay the same
without surrender thereof. The Trustee may charge the holder or owner of such Bond with its reasonable fees
and expenses.
Section 2.06. Registration, Transfer and Exchange of Bonds; Persons Treated as Owners.
The Trustee as Bond Registrar shall cause a bond register to be kept for the registration of transfers of Bonds.
Any Bond may be transferred only upon an assignment duly executed by the registered owner or his duly
SF2-28088.1 I I 40511-90-MS 1-03111/94
authorized representative in such form as shall be satisfactory to the Bond Registrar, and upon surrender of such
Bond to the Trustee for cancellation. Whenever any Bond or Bonds shall be surrendered for transfer, the Issuer
shall execute and the Trustee shall authenticate and deliver to the transferee a new fully registered Bond or
Bonds, of like series and maturity, of authorized denomination or denominations and for the amount of such
Bond or Bonds so surrendered.
Any Bond may be exchanged at the office of the Trustee for a new Bond or Bonds of the same
series and maturity and of any authorized denomination or denominations for the aggregate amount of such
Bond then remaining Outstanding.
In all cases in which Bonds shall be transferred or exchanged hereunder, the Trustee may
make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with
respect to such transfer or exchange. The Trustee shall not be required to transfer any Bond after the selection
of such Bond for redemption has been made, or during the period of fifteen days next preceding the selection of
Bonds for redemption.
The person in whose name any Bond shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on account of the principal of and premium and
interest on any such Bond shall be made only to or upon the order of the registered owner thereof, or his legal
representative, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary. All such
payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the
sum or sums to be paid.
Section 2.07. Temporary Bonds. Until definitive Bonds are ready for delivery, there may be
executed, and upon the request of the Issuer the Trustee shall authenticate and deliver, in lieu of definitive Bonds,
one or more temporary typewritten, printed, engraved or lithographed Bonds, in any appropriate denomination, in
fully registered form, and in substantially the tenor set forth in the Bond Form, with such appropriate omissions,
insertions and variations as may be required.
If temporary Bonds shall be issued, the Issuer shall cause the definitive Bonds to be prepared and
to be executed and delivered to the Trustee, and the Trustee, upon presentation to it at its principal corporate trust
office of any temporary Bond, shall cancel the same and authenticate and deliver in exchange therefor, without
charge to the owner thereof, a definitive Bond or Bonds of an equal aggregate principal amount, of the same series
and maturity and bearing interest at the same rate as the temporary Bond surrendered. Until so exchanged, the
temporary Bonds shall in all respects be entitled to the same benefit and security of this Indenture as the definitive
Bonds to be issued and authenticated hereunder. Interest on temporary Bonds, when due and payable, if the
definitive Bonds shall not be ready for exchange, shall be paid on presentation of such temporary Bonds for notation
of such payment thereon by the Trustee.
Section 2.08. Delivery of the Bonds. Upon the execution and delivery of this Indenture, the
Issuer shall execute and deliver to the Trustee and the Trustee shall authenticate the Bonds and deliver them to or
upon the order of the Issuer upon receipt by the Trustee of the following:
(a) An executed counterpart of this Indenture, and an executed counterpart or copy, as
executed, of the Financing Agreement, the Regulatory Agreement, the Tax Certificate and the Deed of Trust Note
and Deed of Trust;
(b) an approving opinion of Bond Counsel with respect to the validity of the Bonds;
(c) a resolution, certified by the County Administrator and Clerk of the Board of Supervisors
of the Issuer, or Deputy Clerk (or another authorized official) authorizing the execution and delivery of this
Indenture and other necessary documents and the issuance, sale and delivery of the Bonds;
(d) the Bond Purchase Agreement, duly executed by each party thereto;
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(e) the original of the Mortgage and FHA Note endorsed for insurance by HUD, and copies
of the amendments to the Mortgage and FHA Note duly executed by the Borrower, the Trustee and HUD;
(f) conformed copies of all other FHA Documents assigned to or in the name of the Trustee
as mortgagee;
(g) certified true and exact copy of the policy of title insurance in the face amount of the FHA
Note together with original endorsements and copies of any easements, to include coverage against all liens that may
arise from labor performed or materials supplied prior to the date of such policy, insuring the Trustee in its capacity
hereunder as the holder thereof that the Mortgage constitutes a valid first lien upon the Project;
(h) a letter of instructions from the Issuer directing the Trustee to authenticate and deliver the
Bonds against receipt of the purchase price therefor;
(i) evidence of payment to the Trustee of its acceptance fee; and
(j) such other opinions and documents as Bond Counsel or the Trustee, or both, may
reasonably request.
ARTICLE III
Redemption of Bonds Prior to Maturity
Section 3.01. Redemption of Bonds Prior to Maturity. The Bonds are subject to redemption prior
to maturity as set forth in this Section, Section 3.02 and Section 3.03 hereof.
(a) Mandatory Redemption. The Bonds are subject to mandatory redemption prior to maturity
at a redemption price equal to 100% of the principal amount thereof, without premium, on the earliest practicable
date for which notice of redemption can be given in accordance with Section 3.05 hereof, plus accrued interest to
the date fixed for redemption (i) on any date, in whole or in part, if Mortgage Insurance proceeds are payable to the
Trustee (in which event funds held by the Trustee shall be applied in the order set forth in Section 6.08), or (ii) on
any date, in whole or in part, as provided in Section 3.03, if Net Proceeds as a result of damage to the Project or
condemnation are applied to the prepayment of the.FHA Note, or (iii)in whole or in part in the event the Borrower
becomes subject to bankruptcy proceedings and the trustee in bankruptcy causes or directs the prepayment of the
FHA Note(along with a proportionate reduction of and redemption from the Debt Service Reserve Fund as
described in Section 3.04 hereof).
(b) Optional Redemption. The Bonds maturing on or after 1, 200_are also
subject to redemption prior to maturity on the earliest practicable date on or after September 1, 2003, in whole or in
part, from the proceeds of any refunding obligations of the Issuer or other funds provided by the Issuer and to the
extent of any prepayment of the FHA Note by the Borrower as described in Section 3.02 hereof, together with an
appropriate reduction of and redemption from the Debt Service Reserve Fund as described in Section 3.05 hereof,
during the periods and at the redemption prices (expressed as percentages of the principal amount) set forth in the
table below, together with interest accrued thereon to the date fixed for redemption, as follows:
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• •
Redemption Dates Redemption Prices
The Trustee shall not give notice of redemption pursuant to this subsection unless the Trustee
has received and has on deposit(i) Available Amounts sufficient to redeem the Bonds represented by the
principal prepayment of the FHA Note(principal, premium and accrued interest) or (ii) proceeds of refunding
obligations of the Issuer or other funds provided by the Issuer, plus the amount required to redeem Bonds
pursuant to Section 3.04 hereof. All moneys deposited with the Trustee pursuant to this paragraph shall be
invested in Qualified Investments until used for redemption.
(c) Sinking Account Redemption. The Bonds are subject to sinking account redemption
on the respective Interest Payment Dates set forth in the schedule below, at a redemption price equal to the
principal amount thereof plus accrued interest to the redemption date, in the following principal amounts,
subject to pro-rata reduction of such scheduled mandatory redemption payments to the extent that such Bonds
are redeemed prior to maturity otherwise than pursuant to such sinking account redemption:
Bonds Due ,
Principal Principal
Redemption Dates Amount Redemption Dates Amount
* Maturity
Section 3.02. Redemption of Bonds upon Prepayment of FHA Note. In the event the
Borrower exercises its option to prepay the FHA Note or any part thereof according to its terms, the Trustee
shall deposit the proceeds of such prepayment in the Bond Fund and shall use such proceeds to redeem Bonds at
the applicable redemption price specified in Section 3.01(b)hereof without any action on the part of the Issuer.
Prior to notice of redemption being given as provided in Section 3.05 hereof, there shall be deposited in the
Bond Fund an amount which, in addition to other moneys, if any, available and held by the Trustee for such
purpose, will be sufficient to redeem at the redemption price thereof, plus interest accrued to the redemption
date, all the Bonds to be redeemed, including Bonds to be redeemed through a reduction of the Debt Service
Reserve Fund as provided in Section 3.04 hereof to the extent of a reduction in monthly payments on the FHA
Note. The 367-day period for notice of prepayment and deposit of available funds as set forth in the FHA Note
shall be subject to reduction as provided in the definition of "Available Amounts" set forth in Section 1.01
hereof. The Borrower may, on or before the forty-fifth day next preceding any such redemption payment date,
SF2-28088.1 14 40511-90-MS 1-03/11/94
deliver Bonds to the Trustee for payment and cancellation on such redemption date in an aggregate principal
amount not to exceed the principal amount of Bonds to be redeemed on such date pursuant to this subsection.
In such event, the amount of Bonds to be redeemed shall be reduced by the principal amount of Bonds delivered
to the Trustee by the Borrower.
Section 3.03. Damage, Destruction or Condemnation. If, as a result of fire or other casualty,
the Project, or any part thereof, is damaged or destroyed, or the Project, or any part thereof, shall be
condemned or acquired for public use, the Borrower shall, within thirty (30) days after receiving actual notice
of such damage, destruction or condemnation, and after written notice has been given to the Trustee, select one
of the two alternatives set forth below:
(a) Alternative A -Restoration. If the Project can be repaired or restored to substantially
the same condition as it existed prior to the event causing such damage or destruction, or the effect of the
condemnation can be relieved so that the status of the Project will be restored to substantially the same status as
it existed prior to the event causing such condemnation, without, in either case,jeopardizing repayment of the
principal of and interest on the Bonds, all in accordance with the opinion of an expert or experts selected as
referred to below, then, upon receipt by the Trustee of the written consent of HUD, the Borrower may so repair
and restore the Project and the Borrower may and/or the Trustee shall apply the net proceeds of any insurance
relating to such damage, destruction or condemnation or any condemnation award to the payment or the
reimbursement of the costs of such repair or restoration. The Trustee may rely on the advice of architects,
engineers, accountants, financial consultants, attorneys and other experts reasonably selected by it in the
foregoing matters.
(b) Alternative B - Prepayment of Note; Redemption of Bonds. If Alternative A is not
selected, the Trustee shall apply the Net Proceeds of any insurance or condemnation award to the reduction of
indebtedness under the FHA Note. In such event, the Trustee shall deposit such Net Proceeds in the Bond Fund
for application to the redemption of Bonds in accordance with Section 3.01 hereof(along with a proportionate
reduction of and redemption from the Debt Service Reserve Fund as described in Section 3.04 hereof).
Section 3.04. Selection of Bonds for Redemption. If less than all the Bonds then Outstanding
shall be called for redemption upon application of Net Proceeds to a prepayment of the FHA Note, upon a
partial prepayment of the FHA Note by the Borrower, or because of the receipt of Mortgage Insurance
proceeds, the Trustee shall redeem an amount of Bonds of each maturity so that the resulting decrease in debt
service on the Bonds during each six-month period ending on an Interest Payment Date is proportional, as
nearly as practicable, to the decrease in payments on the FHA Note in each such six-month period.
If less than all Bonds of the same maturity are to be redeemed under the provisions of this
Indenture other than pursuant to Section 3.01(c), the Bonds to be redeemed shall be selected by the Trustee by
lot in such manner as the Trustee shall determine; provided, however, that the Bonds shall be redeemed only in
integral multiples of$5,000 and, in selecting Bonds for redemption, the Trustee shall treat each Bond as
representing that number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000.
Upon surrender of any Bond redeemed in part only, the Issuer shall execute and the Trustee shall authenticate
and deliver to the registered owner thereof, without expense to such owner, a new Bond or Bonds of the same
series and maturity, bearing interest at the same rate, and of authorized denominations equal in aggregate
principal amount to the unredeemed portion of the Bond surrendered.
In the event a portion of the Bonds are to be redeemed because of a reduction in the
outstanding principal amount of the FHA Note which reduces the monthly payment thereon, then an additional
portion of the Bonds shall be redeemed from amounts on deposit in the Debt Service Reserve Fund in an
amount which bears the same proportion as nearly as practicable to the amount held in the Debt Service Reserve
Fund as the amount of the reduction in the principal amount of the FHA Note and the Mortgage bears to the
principal amount of the FHA Note and the Mortgage immediately prior to such reduction.
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Section 3.05. Notice of Redemption. Notice of the intended redemption of each Bond shall be
given by the Trustee by first class mail, postage prepaid, to the registered owner of each Bond to be redeemed
at the address of such owner shown on the Trustee's bond register. In the case of a redemption pursuant to (i)
Section 3.01(a), notice of redemption shall be given only if sufficient funds for redemption are in the Trustee's
possession on the date of notice; (ii) Section 3.01(b), notice of redemption shall be given only in accordance
with the provisions of that Section; and (iii) Section 3.01(c), notice of redemption shall not be given unless
sufficient funds for redemption either (a) are in the Trustee's possession on the date of notice, or (b) as
calculated by the Trustee and in the absence of a default on the Mortgage Loan, will be in the Trustee's
possession through a combination of those amounts for redemption in the Trustee's possession on the date of
notice plus all amounts for redemption that are due the Trustee through the date of redemption. Notice by
publication shall not be required. All such redemption notices shall be given not less than thirty (30) days nor
more than forty-five (45) days prior to the date fixed for redemption. Each notice shall specify the complete
official name of the Bond issue, including the series number(s), CUSIP number(s), the amounts being called of
each certificate (in the case of partial redemption); the issue date, maturity date, interest rate(s), the numbers of
the Bonds being called, the notice date, the redemption date, the redemption price and the place or places where
amounts due upon such redemption shall be payable, including the redemption agent's name, address and
telephone number. Such notice shall further state that interest on Bonds to be redeemed will cease to accrue
after the designated redemption date, and that payment of the redemption price plus accrued interest to the date
fixed for redemption will be made upon presentation and surrender of the Bonds, which in the case of a Bond
redeemed in part will be replaced with a new Bond in a principal amount equal to the then outstanding principal
amount thereof after said partial redemption.
Notice of such redemption also shall be sent to certain municipal registered Securities
Depositories which are known to the Trustee to be holding Bonds and, if required under then current guidelines
of the Securities and Exchange Commission, notice of such redemption also shall be sent to at least two of the
national Information Services that disseminate securities redemption notices. When possible, such notice shall
be given to the Securities Depositories at least two (2) days prior to the mailing of other notices required by this
paragraph and the immediately preceding paragraph, but in any event at least 30 days, but not more than 45
days, prior to the redemption date. Neither failure to give all or any portion of such further notice nor any
defect in any notice so mailed shall in any manner defeat the effectiveness of a call for redemption if notice
thereof is given to the Bondholders as prescribed in the preceding paragraph.
Failure to give notice by mailing to the registered owner of any Bond designated for
redemption shall not affect the validity of the proceedings for the redemption of any Bond with respect to which
no such failure has occurred. Any notice mailed as described above shall be presumed conclusively to have
been duly given, whether or not the registered owner receives the notice.
Section 3.06. Effect of Notice of Redemption. Notice of redemption having been given in the
manner provided in this Article III, and money sufficient for the redemption being held by the Trustee for that
purpose, thereupon the Bonds or portions thereof so called for redemption shall become due and payable on the
redemption date, and interest thereon (or on such portion) shall cease to accrue on such date (whether or not
such Bonds are then presented and surrendered for payment); and such Bonds or portions thereof shall thereafter
no longer be entitled to any security or benefit under this Indenture except the right to receive payment of the
redemption price thereof from moneys held by the Trustee and, to the extent provided in Section 3.04 hereof, to
receive Bonds for any unredeemed portions of such Bonds. On the date fixed for redemption, the amount of
such Bonds so called for redemption shall be deemed paid and no longer Outstanding.
Section 3.07. Cancellation. All Bonds which shall have been redeemed shall be canceled and
destroyed by the Trustee and shall not be reissued. A counterpart of the certificate of destruction evidencing
such destruction shall be furnished by the Trustee to the Issuer.
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ARTICLE IV
Funds: Investments
Section 4.01. Establishment of Funds. The following funds shall be established and
maintained by the Trustee under this Indenture for the benefit of the Bonds:
(a) the Acquisition Fund;
(b) the Bond Fund, which shall contain the Available Amounts Account and the Sinking
Account therein;
(c) the Debt Service Reserve Fund;
(d) the Costs of Issuance Fund; and -
(e) the Rebate Fund, and within that Fund, the Investment Earnings Account and the
Excess Investment Earnings Account.
Section 4.02. Application of Bond Proceeds and Other Deposits.
(A) After making the initial deposits described below, the Trustee shall deposit to the Bond
Fund all payments on the FHA Note and all interest, profits or other income derived from the investment of
amounts in any fund, except the Rebate Fund established hereunder and except as otherwise provided in
Section 4.05 hereof. Upon the issuance and delivery of the Bonds, all proceeds of the sale of the Bonds shall
be deposited by the Trustee as follows:
(a) To the Acquisition Fund, $ from Bond proceeds.
(b) To the Debt Service Reserve Fund, $ from Bond proceeds.
(c) To the Bond Fund, $ from accrued interest on the Bonds.
(d) To the Costs of Issuance Fund, $ from Bond proceeds.
(e) To the Borrower, $ from Bond proceeds.
The Rebate Fund shall receive no initial deposit.
Section 4.03. Disbursements from Acquisition Fund. On the Closing Date, the Trustee shall
transfer the amount deposited in the Acquisition Fund to[current owner of mortgage loan], against transfer,
assignment and delivery to the Trustee of the FHA Note, the Mortgage, the related FHA Documents and all
other documents evidencing or'securing the Mortgage Loan executed by the Borrower, together with evidence of
HUD's written consent to the terms thereof. Upon acquisition of the FHA Note, the Mortgage and the related
FHA Documents, the Acquisition Fund shall be terminated. The transfer and assignment of any right, title and
interest of the Issuer in and to the Mortgage Loan and the security therefor pursuant to the Granting Clauses
hereof shall attach, be perfected and be valid and binding from and after the time of the delivery of the Bonds
by the Trustee to the Bond Purchaser.
Section 4.04. Bond Fund. The Trustee shall deposit in the Bond Fund the amount required to
be deposited therein pursuant to Section 4.02 hereof, all Mortgage Insurance benefits (when and if received), all
Pledged Revenues received with respect to the FHA Note payments, and all interest earnings on all of the Funds
and Accounts held hereunder, except the Rebate Fund and except as otherwise provided in Section 4.05.
Moneys to be applied to the prepayment of Bonds shall be deposited in the Available Amounts Account of the
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Bond Fund. The Trustee shall withdraw moneys from the Bond Fund on each Interest Payment Date, for and
in the following order of priority:
(i) Pay interest and principal due on the Bonds on such date;
(ii) redeem Bonds pursuant to Section 3.01(c)hereof; and
(iii) transfer to the Investment Earnings Account of the Rebate Fund the amount if
any, required pursuant to Section 4.07 hereof and the Tax Certificate.
Moneys held in the Bond Fund shall be deposited or invested pursuant to Section 4.09 hereof.
All amounts in the Bond Fund shall be used and withdrawn by the Trustee solely for the
purpose of paying the principal of, premium, if any, and interest on the Bonds when due and payable, whether
by scheduled maturity or by earlier redemption of the Bonds. All amounts in the Sinking Account within the
Bond Fund shall be used and withdrawn by the Trustee solely to redeem or pay at maturity the Bonds in
accordance with the provisions of Article III hereof.
Section 4.05. Debt Service Reserve Fund. The Trustee shall hold and maintain, for the
security of the Bonds, for so long as the Bonds or any interest thereon is Outstanding and unpaid, the Debt
Service Reserve Fund which shall be held separate and apart from all other funds and accounts established
under this Indenture and from all other moneys of the Trustee.
If, on any Interest Payment Date, the amount in the Bond Fund after making all required
deposits therein shall be insufficient to pay the interest and principal then due on the Bonds and the Notice of
Default and/or Notice of Intention and Election to Assign the Mortgage have been filed, the Trustee shall,
subject to the limitations set forth below, transfer to the Bond Fund from the Debt Service Reserve Fund the
amount of the deficit; provided, however, that any such transfer by the Trustee shall not relieve the Borrower of
any of its obligations under the FHA Note or under the Mortgage.
The Trustee shall value the Debt Service Reserve Fund on each Interest Payment Date at the
lower of cost or market value, except that an Investment Agreement shall be valued at its face amount, and to
the extent the value therein is less than the Debt Service Reserve Requirement, the Trustee shall retain interest
earnings within this Fund until the Debt Service Reserve Requirement has been met.
Unless the Debt Service Reserve Fund is valued at less than the Debt Service Reserve
Requirement, interest earnings on the Debt Service Reserve Fund shall be transferred to the Bond Fund on each
Interest Payment Date.
Whenever the amount held in the Debt Service Reserve Fund, together with any other
available moneys then held under this Indenture, is sufficient to provide for the redemption in whole or payment
upon final maturity of all Outstanding Bonds, and to pay interest to accrue to the date of redemption or payment
and any applicable redemption premium, such amount shall be transferred by the Trustee to the Bond Fund and
applied to such redemption or payment at final maturity of all Outstanding Bonds.
In the event of a default under the Mortgage Loan and assignment of the FHA Note and
Mortgage to FHA in connection with a claim under the Mortgage Insurance, and upon final receipt of all
Mortgage Insurance benefits, the Trustee shall transfer the entire balance remaining in the Debt Service Reserve
Fund to the Bond Fund for application to the redemption of Bonds pursuant to Section 3.01(a)hereof.
Notwithstanding the foregoing, however, no moneys in the Debt Service Reserve Fund shall be
used for the payment of principal of and interest on the Bonds until the Trustee has filed its election of intention
to assign the FHA Note to FHA except pursuant to Section 3.04 hereof or when all Outstanding Bonds are to be
redeemed in whole or paid upon final maturity as aforesaid.
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Whenever the Bonds are to be redeemed in part in connection with a reduction in the
outstanding principal amount of the FHA Note, the Trustee shall transfer to the Bond Fund from the Debt
Service Reserve Fund the amount calculated pursuant to the last paragraph of Section 3.04 hereof.
Section 4.06. Costs of Issuance Fund. The Trustee shall deposit in the Costs of Issuance
Fund the amounts required to be deposited therein pursuant to Section 4.02 hereof, which shall be applied only
as provided in this Section.
Amounts in the Cost of Issuance Fund shall be used to pay costs incurred in connection with
the issuance of the Bonds.
Before each payment is made from the Costs of Issuance Fund by the Trustee, there shall be
filed with the Trustee, a Written Requisition, accompanied by copies of appropriate invoices or other evidence
of amounts due, and stating with respect to each payment to be made: (i) the requisition number; (ii) the name
and address of the person to whom payment is due (which may be the Issuer if the payment is to reimburse the
Issuer for amounts previously paid) (a "Payee"); (iii)the purpose for which the payment is to be made; (iv) the
amount to be paid; (v) that each obligation mentioned therein has been properly incurred and is a proper charge
against the Costs of Issuance Fund; and (vi) that none of the items for which payment is requested has been
previously paid or reimbursed from the Costs of Issuance Fund.
Any amounts remaining ning in the Costs of Issuance Fund on the date one (1)year after the
Closing Date shall be transferred by the Trustee to the Bond Fund.
No Payee shall be entitled to any lien or claim on the Pledged Revenues or on any other Fund
established under this Indenture for amounts payable as costs incurred in connection with the issuance of the
Bonds. Such costs shall be payable exclusively from the Costs of Issuance Fund and, by accepting payment
therefrom, each Payee agrees that no claim may be made for any reason against the Pledged Revenues or any
other Fund established under this Indenture.
Section 4.07. Rebate Fund. The purpose of the Rebate Fund is to facilitate compliance with
section 148(f) of the Code. Any Rebate Amount deposited in such Fund shall be for the sole benefit of the
United States of America and shall not be subject to the lien of the Indenture or to the claim of any other
person, including, without limitation, the Bondholders and the Issuer. The requirements of this Section 406 are
subject to, and shall be interpreted in accordance with, section 148(f) of the Code and the Treasury regulations
applicable thereto (the 'Regulations"), and shall apply except to the extent(i) the Trustee is furnished with an
opinion of Bond Counsel or other satisfactory evidence that the Regulations contain an applicable exception; or
(ii) the Trustee in its judgment determines that such requirements will diminish the security of the Bondholders;
provided that in the case of clause (ii), the Trustee shall obtain an opinion of Bond Counsel to the effect that
failing to take such action would not adversely affect the exclusion of interest on the Tax-Exempt Bonds from
federal income taxation.
Promptly upon the close of each Bond Year and also upon the retirement of the Bonds, the
Trustee shall provide the Borrower with a statement of earnings on funds and accounts held under this Indenture
during any period not covered by a prior statement, and a final statement or a supplement thereto covering the
period ending . Each statement shall include the purchase and sale prices of each investment, if any,
(including any commission paid thereon which shall be separately stated if such information is available), the
dates of each investment transaction, information as to whether such transactions were made at a discount or
premium, and such other information known or reasonably available to the Trustee as the Borrower or Rebate
Analyst shall reasonably require. If so requested by the Owner at any time, the Trustee shall create within the
Bond Fund separate accounts for purposes of accounting for earnings on amounts attributable to the Series A
Bonds and the Series A-T Bonds, respectively.
The Trustee shall promptly transfer to the Rebate Fund each amount required to be deposited
therein pursuant to the Tax Certificate, first from earnings in the Acquisition Fund, and second, to the extent
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amounts in the Acquisition Fund are insufficient, from revenues which have been deposited into the Bond Fund
and earnings thereon. To the extent that the amount to be deposited into the Rebate Fund exceeds the amount
which can be transferred from such Funds, the Trustee shall promptly notify the Borrower and an amount equal
to such deficiency shall be paid promptly by the Borrower to the Trustee for deposit into the Rebate Fund.
The Borrower and the Trustee, on behalf of the Issuer, shall keep such records as will enable
them to fulfill their respective responsibilities under this Section 406 and section 148(f) of the Code, and the
Borrower (or the Trustee upon the written request of the Issuer) shall engage a Rebate Analyst as may be
necessary in connection with such responsibilities. The fees and expenses of the Rebate Analyst shall be paid
by the Trustee pursuant to Section 405(iv)hereof. For purposes of the computation of the Rebate Amount
required under the Tax Certificate, the Trustee shall make available to the Borrower and the Issuer during
normal business hours all information in the Trustee's control which is necessary to such computations.
Section 4.08. Custody of Funds; Moneys Held in Trust. The funds created under this
Indenture for the benefit of the Bonds shall be held in trust by the Trustee. The Issuer hereby authorizes and
directs the Trustee to withdraw moneys from said Funds for the purposes specified herein, which authorization
and direction the Trustee hereby accepts. All moneys required to be deposited with the Trustee under any
provision of this Article IV shall be held by the Trustee in trust, and except for moneys deposited with the
Trustee for the redemption of Bonds, notice of redemption of which has been duly given, such moneys shall
while held by the Trustee constitute part of the security for the Bondholders and be subject to the lien hereof.
Section 4.09. Investment of Funds. The Trustee is hereby authorized and directed to enter
into the original Investment Agreements. The Trustee shall maintain said Investment Agreements unless
directed by the Borrower with the prior written consent of the Issuer to obtain substitute Investment Agreements
and such procurement is consistent with the terms of the existing Investment Agreements. Except for moneys
invested pursuant to the Investment Agreements, any moneys held as part of any fund or account created by this
Article shall be invested or reinvested, from time to time, by the Trustee at the direction of the Borrower with
the prior consent of the Issuer in Qualified Investments. If the Borrower fails to give such Instructions or the
Issuer fails to consent thereto, the Trustee shall invest all moneys other than those invested in the Investment
Agreements in investments described in clause (v)under the definition of the term "Qualified Investments"
herein. Any such investments shall mature not later than the earlier of(i) the date six months after the date of
investment, or (ii) the next succeeding Interest Payment Date or redemption payment date on the Bonds. The
investments so made shall be held by the Trustee and shall be deemed at all times to be a part of the fund in
which such moneys were held; provided, that for purpose of investment moneys held in any of the funds
established hereunder may be commingled. The Trustee may act as principal or agent in the making or
disposing of any investment. The Trustee is directed to sell and reduce to cash a sufficient amount of such
investments whenever the cash balance in any fund shall be insufficient to cover a proper disbursement from
any fund. All interest, profits or other income derived from the investment of any Fund or Account created by
this Article, except earnings arising from the Rebate Fund and except as otherwise provided in Section 4.05,
shall be deposited when and as received in the Bond Fund. The Trustee shall not be liable for any losses
resulting from any such investments made in accordance with this Section.
For the purpose of determining the amount on deposit to the credit of any Fund, obligations
purchased as an investment of moneys therein shall be valued on the most recent Interest Payment Date at the
lower of cost or market value of any investments therein, inclusive of accrued interest, except that an
Investment Agreement shall be valued at its face amount.
Section 4.10. Nonpresentment of Bonds. If any Bond is not presented for payment when the
final payment of principal thereof becomes due (whether at maturity, by acceleration or call for redemption or
otherwise), all liability of the Issuer to the Holder thereof for the payment of such Bond and interest due thereon
shall forthwith cease, terminate and be completely discharged if funds sufficient to pay such Bond and interest
due thereon shall be held by the Trustee for the benefit of the Holder thereof, and thereupon it shall be the duty
of the Trustee to hold such funds, without liability for interest thereon, for the benefit of the Holder of such
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Bond, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part
under this Indenture or on, or with respect to, such Bond.
Notwithstanding any provision of this Indenture, any money deposited with the Trustee or any
other paying agent in trust for the payment of the principal of or interest or premium on any Bonds and
remaining unclaimed for two (2)years after such payment shall have become due and payable (whether at
maturity or upon call for redemption) shall then be repaid to the Issuer upon its written request, and the Holders
of such Bonds shall thereafter be entitled to look only to the Issuer for repayment thereof, and all liability of the
Trustee or any other paying agent with respect to such money shall thereupon cease. In the event of the
repayment of such money to the Issuer as aforesaid, the Holders of the Bonds in respect of which such money
was deposited shall thereafter be deemed to be unsecured creditors of the Issuer for amounts equivalent to the
respective amounts deposited for the payment of such Bonds and so repaid to the Issuer (without interest
thereon).
Section 4.11. Final Balances. Upon final payment of all principal of, premium, if any, and
interest on the Bonds, and upon satisfaction of all claims against the Issuer and the Trustee hereunder, including
the payment of all fees, charges and expenses of the Trustee, the Issuer and the Mortgage Servicer that are
properly due and payable hereunder, or upon the making of adequate provision for the payment of such
amounts, as permitted hereby, all money remaining in all Funds (other than the Rebate Fund) shall be paid to
the Borrower. Unless such payment of the Bonds is made from Mortgage Insurance benefits as a result of a
Mortgage Loan default by the Borrower, if the FHA Note is still held by the Trustee following such payment of
the Bonds, the Trustee shall mark the FHA Note "PAID" and return it to the Borrower, and shall record a full
reconveyance of the Mortgage and any other instruments securing the FHA Note.
Section 4.12. Cancellation of Obligations. Upon the redemption or payment of all the
Outstanding Bonds in accordance with the terms of this Indenture, the Issuer and the Trustee shall take whatever
steps may be necessary, if the FHA Note is not in default, to cancel the FHA Note and release the lien of the
Mortgage.
ARTICLE V
General Covenants and Representations
Section 5.01. Payment of Principal and Interest. The Issuer shall promptly pay, but only out
of the Pledged Revenues and other assets herein specified, the principal of, premium, if any, and interest on,
every Bond issued under this Indenture, and shall punctually pay or cause to be paid all Sinking Account
Payments, at the place, on the dates and in the manner provided herein and in the Bonds. The Bonds are
limited obligations of the Issuer payable solely from certain of the revenues and receipts pledged by this
Indenture, and the income and interest thereon. The Bonds are not a debt of the United States of America, the
Issuer or any other political subdivision or agency of the State.
Section 5.02. FHA Note: Instruments of Further Assurance. The Trustee shall defend its title
to the FHA Note and the Mortgage for the benefit of the holders and owners of the Bonds against the claims
and demands of all persons whomsoever and the Issuer and the Trustee shall do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto, and
such further acts, instruments and transfers as the Trustee may reasonably require for the better assuring,
transferring, conveying, pledging, assigning and confirming unto the Trustee all and singular its interest in the
property herein described and the revenues, receipts and other amounts pledged hereby to the payment of the
principal of, premium, if any, and interest on the Bonds. Any and all interest in property hereafter acquired
which is of any kind or nature herein provided to be and become subject to the lien hereof shall and without any
further conveyance, assignment or act on the part of the Issuer or the Trustee become and be subject to the lien
of this Indenture as fully and completely as though specifically described herein, but nothing contained in this
sentence shall be deemed to modify or change the obligations of the Issuer under this Section.
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Section 5.03. Inspection of Project Books. The Issuer shall open all its books and documents
relating to the Project at all times to inspection by such accountants or other agents as the Trustee may from
time to time reasonably designate.
Section 5.04. Recordation and Filing. The Issuer at its expense will cause a financing
statement with respect to the Trust Estate described in this Indenture and/or a notice of pledge of the FHA Note
and the Mortgage to be at all times filed in such manner and in such places as may be required by law in order
to fully preserve and protect the rights of the Trustee hereunder and to perfect the security interest created by
this Indenture in the Trust Estate described herein. To the extent possible under the Uniform Commercial Code
or other applicable law, as in effect in the jurisdiction(s)in which the Trust Estate is located, the Issuer will
maintain the priority of the security interest herein created in the Trust Estate as a first lien thereon, and will
warrant, protect, preserve and defend its interest in the Trust Estate and the security interest of the Trustee
therein and all rights of the Trustee under this Indenture against all actions, proceedings, claims and demands of
all persons.
Section 5.05. No Modification of Security: Additional Indebtedness. The Issuer shall not,
without the written consent of the Trustee, alter, modify or cancel, or agree to consent to alter, modify or
cancel any agreement which relates to or affects the security for the Bonds. The Issuer shall not incur any
additional indebtedness prior to or on a parity with the Bonds, except to the extent authorized herein.
Section 5.06. Existence and Authority. The Issuer is validly existing as a legal subdivision
and body corporate and politic of the State under and pursuant to the laws of the State, and the Issuer has all
necessary power and authority to execute and deliver this Indenture, to execute, deliver and issue the Bonds and
to perform its duties and discharge its obligations hereunder and thereunder. So long as any of the Bonds shall
be Outstanding the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and
effect its existence and to maintain its status as a legal subdivision and body corporate and politic. The
revenues and assets pledged for the payment of the Bonds are and will be free and clear of any pledge, lien or
encumbrance prior to, or equal with, the pledge created by this Indenture, and all action on the part of the
Issuer to that end has been duly and validly taken. The Issuer shall at all times, to the extent permitted by law,
defend and protect the pledge created hereunder against any and all claims whatsoever.
Section 5.07. Servicing the MortgLge Loan. The Trustee covenants and agrees that the
Mortgage Loan will be serviced in accordance with acceptable practices of prudent lending institutions, all
applicable provisions of the National Housing Act, and all applicable rules and regulations thereunder. The
Trustee shall engage an FHA-approved mortgage banking company or financial institution to service the
Mortgage Loan. Initially, the Mortgage Servicer has been engaged for such servicing by the Issuer. In the
event the Trustee subsequently engages another company or institution to service the Mortgage Loan, the
Trustee shall enter into a servicing agreement with such company or institution,which agreement shall be
substantially similar to the initial mortgage servicing agreement with the Mortgage Servicer. The Trustee
further covenants and agrees that it shall at all times do and perform all acts permitted by law and necessary in
order to assure that the Mortgage Insurance remains in full force and effect for as long as the Bonds are
Outstanding pursuant to the provisions of this Indenture. Such acts include assuring the timely payment of
casualty insurance premiums, that the annual inspection required by FHA is accomplished and that FHA is
given notice of any default under the FHA Note or other FHA Documents, including notice that the source of
financing is tax-exempt obligations. The Trustee is not authorized to give its consent to the Borrower to prepay
in whole or in part the FHA Note prior to the date stated therein, and thereafter the Trustee shall only give such
permission if the amount of money to be received by it as a result of the proposed prepayment will be sufficient
to enable the Trustee to (i) redeem Bonds in a principal amount equal to the balance of the FHA Note proposed
to be prepaid at the then applicable price specified in the FHA Note, (ii) pay interest on the Bonds to be
redeemed for the period between the time the FHA Note is credited with the principal reduction and the date of
redemption, if any, and (iii)pay the premium and expenses associated with the redemption of Bonds. The
Issuer consents to and approves the selections and other actions to be taken by the Trustee pursuant to this
Section.
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Section 5.08. Required Insurance. The Borrower has covenanted in the Financing Agreement
to maintain all insurance policies required by FHA to be maintained pursuant to the Mortgage Loan. All such
policies shall include standard loss payable provisions naming the Trustee, the Issuer and the Secretary of HUD
as loss payees as their interest appear, and all proceeds of such insurance shall be applied in accordance with
the provisions of Section 3.03 hereof.
Section 5.09. No Disposition of Mortgage Loan. Without the consent of the holders of 100%
of the Bond Obligation, neither the Issuer nor the Trustee shall sell or otherwise dispose of the Mortgage Loan
after its acquisition(i) in connection with any arrangement that would result in a redemption of Bonds not
expressly permitted under Article III hereof, or-(ii) for an amount less than an amount sufficient, together with
other amounts then held under the Indenture and available for the payment of principal of and interest on the
Bonds in accordance with Article IX hereof, and then only upon the prior delivery to the Trustee of an opinion
of Bond Counsel that such action would not affect adversely the exclusion of interest on the Bonds from federal
income taxation.
Section 5.10. Tax Covenants.
(a) The Issuer covenants to the holders of the Bonds that, notwithstanding any other
provisions hereof or of any other instrument, to the extent it exercises any control, it will neither make nor
cause to be made any investment or other use of the Acquisition Fund, the Bond Fund or the Debt Service
Reserve Fund or other proceeds of the Bonds which would cause the Bonds to be arbitrage bonds under Section
148 of the Code and the regulations thereunder or otherwise cause the interest on the Bonds to be included in
gross income for federal income tax purposes; and the Trustee agrees it will invest funds held under the
Indenture in accordance with the terms of this Indenture and the Tax Certificate. This covenant shall extend
throughout the term of the Bonds, to all funds created hereunder and all moneys on deposit to the credit of any
such fund.
(b) The Issuer and, subject to the provisions of Section 6.01, the Trustee covenant for the
benefit of the Bondholders to enforce all obligations of the Borrower under the Issuer Regulatory Agreement
and to seek to correct any violation of the Issuer Regulatory Agreement within a reasonable period after any
such violation is first discovered; provided, however that any provision contained in this Indenture or the Issuer
Regulatory Agreement which requires the Borrower to take any action necessary to preserve the tax status of the
Bonds (or prohibits the Borrower from taking any action that might jeopardize the tax status of the Bonds) is
qualified to except actions prohibited(or required) by HUD pursuant to the National Housing Act, FHA
Regulations, the FHA Loan Documents or, if applicable, Section 8 of the United States Housing Act of 1937, as
amended, and.the regulations thereunder.
(c) The Issuer (to the extent it exercises control) and the Trustee each covenants to the
registered holders of the Bonds at any time outstanding that it shall not use or invest or permit the use or
investment of any proceeds of the Bonds or any other Revenues, directly or indirectly, in any manner, which
would cause any of the Bonds to be an obligation that is "federally guaranteed" within the meaning of Section
149(b) of the Code. To that end, so long as any of the Bonds are outstanding, the Issuer (to the extent it
exercises control) and the Trustee, with respect to such proceeds and other Revenues, shall comply with all
requirements of said Section 149(b) and any regulations proposed or promulgated thereunder, as the same exist
on this date or may from time to time hereafter be amended, supplemented or revised.
(d) The Issuer covenants that it shall not use or cause the use of any proceeds of Bonds or
any other funds of the Issuer, directly or indirectly, in any manner, and shall not take or cause to be taken any
other action or actions, or fail to take any action or actions, which would result in interest on any of the Bonds
becoming includable in gross income of any holder thereof. The Issuer further covenants that it shall at all
times do and perform all acts and things permitted by law and necessary or desirable in order to assure that
interest paid by the Issuer on the Bonds shall be excluded from the gross income of the recipients thereof for
federal income tax purposes.
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(e) In furtherance of the covenants in this Section, the Issuer and the Borrower shall
execute, deliver and perform the Tax Certificate, which is by this reference incorporated herein and made a part
hereof as if set forth herein in full, and by its acceptance of this Indenture the Trustee acknowledges receipt of
the Tax Certificate and acknowledges its incorporation herein by reference.
ARTICLE VI
Default Provisions and Remedies
of Trustee and Bondholders
Section 6.01. Events of Default. Each of the following shall be an "Event of Default":
(a) Default in the due and punctual payment of any installment of interest on any Bond;
or
(b) default in the due and punctual payment of the principal of or premium, if any, on
any Bond whether at the stated maturity thereof, or on proceedings for redemption thereof, or on the maturity
thereof by declaration; or
(c) default in the performance or observance of any other of the covenants, agreements or
conditions on the part of the Issuer in this Indenture or in the Bonds, respectively.
The Trustee and the Issuer agree that, notwithstanding the provisions hereof, no default under
the terms of this Indenture shall be construed as resulting in a default under the FHA Note, the Mortgage or
related FHA Documents unless such event also constitutes a default thereunder, and a default under the
Mortgage Loan shall not constitute a default with respect to the Bonds.
Section 6.02. Remedies. If any Event of Default as described in Section 6.01(a) or 6.01 (b)
occurs, the Trustee may, and upon request of the Holders of a majority of the Bond Obligation shall, by notice
in writing to the Issuer, declare the principal of all Bonds then Outstanding to be immediately due and payable.
No acceleration shall be declared pursuant to this Section 6.02 by reason of an Event of Default described in
Section 6.01(c). Upon such declaration such principal, together with interest accrued thereon, shall become due
and payable immediately at the place of payment provided therein, anything in this Indenture or in the Bonds to
the contrary notwithstanding.
Upon the occurrence of an Event of Default, the Trustee shall have the power to proceed with
any right or remedy granted by the constitution and laws of the State, as it may deem best, including any suit,
action or special proceeding in equity or at law for the specific performance of any covenant or agreement
contained herein or for the enforcement of any proper legal or equitable remedy as the Trustee shall deem most
effectual to protect the rights aforesaid, insofar as such may be authorized by law, and to the right to
appointment, as a matter of right and without regard to the sufficiency of the security afforded by the Trust
Estate, of a receiver for all or any part of the Trust Estate and the earnings, rents and income thereof. The
rights herein specified are to be cumulative to all other available rights, remedies or powers and shall not
exclude any such rights, remedies or powers.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee or to 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 given to the Trustee or to the Bondholders hereunder 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 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
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acquiescence therein; and every such right and power may be exercised from time to time and as often as may
be deemed expedient.
No waiver of any Event of Default hereunder, whether by the Trustee or by the Bondholders,
shall extend to or shall affect any subsequent default or Event of Default or shall impair any consequent rights
or remedies.
Section 6.03. Mortme Insurance Benefits. In the event the Borrower fails to make any
payment due under the FHA Note or to perform any other covenant required under the FHA Documents, the
Trustee shall take all steps necessary to obtain Mortgage Insurance benefits. The Trustee shall:
(a) Submit to HUD Central in Washington, D.C., immediately upon becoming entitled to
claim Mortgage Insurance benefits (30 days after the date on which an FHA Note payment is due but not made
in full): (i) a Notice of Default, (ii) a Notice of Intention and Election to Assign the Mortgage, (iii) a schedule
showing payments received and anticipated Bond Debt Service requirements, and (iv) a request for all forms
and instructions necessary to assign the Note to FHA. Copies of all such submissions shall be sent by certified
or registered mail to the HUD Area Office, the Rating Agency and the Bond Purchaser at the same time as
submitted to HUD Central. The Trustee shall also submit legal documents to the HUD Office of General
Counsel within five days following receipt of forms and instructions from FHA and shall submit fiscal/legal
documents required by the HUD Office of Multifamily Insurance and Accounting as soon as possible, but in no
event later than 30 days after recordation of the Mortgage assignment.
(b) The Trustee may request an extension of no more than three (3) months from the time
prescribed by HUD for filing its Election to Assign the Mortgage, but only if the Trustee informs HUD that it
is making such request in consideration of the FHA partial claim payment option and only after receiving
written confirmation from the Rating Agency that the extension and partial payment option provided by HUD
would not adversely affect the rating on the Bonds. Copies of the Trustee's request as well as the Rating
Agency's written confirmation shall be sent to the Bond Purchaser. If at any time during the extension period
the Trustee determines that a workout is not feasible, the Trustee immediately shall advise and request HUD to
make a similar determination and shall submit (or resubmit if previously submitted) the Notice of Intention and
Election to Assign the Mortgage. The Trustee shall continue to pursue a full assignment of the FHA Note
during any period in which a partial payment option is under consideration.
(c) Immediately request a cash payment from FHA pursuant to its Notice of Intention and
Election to Assign the Mortgage if a Notice of default has been filed and the Trustee projects, on the first
business day of any month next preceding an Interest Payment Date, that moneys in the Bond Fund (including
interest earnings under the Investment Agreements) will be insufficient to pay Debt Service on the Bonds. The
Trustee shall also advise the Rating Agency in writing of the projected shortfall.
As soon as practicable after filing the Notice of Intention and Election to Assign the Mortgage
or upon requesting a three-month extension from HUD, whichever is earlier, the Trustee shall (i) file its
application for Mortgage Insurance benefits requesting payment in cash, and (ii) record the assignment of the
Mortgage to FHA.
The Trustee shall not foreclose on the Mortgage without written instructions from HUD
Central in Washington, D.C. Upon receipt of Mortgage Insurance benefits, such moneys shall be deposited in
the Bond Fund and used to redeem Bonds pursuant to Section 3.01(a) hereof.
Notwithstanding the foregoing provisions of this Section, the Trustee shall not consent to any
adjustments or revisions of the Contract of Mortgage Insurance, or take, or fail to take, any action involving a
default under the Mortgage Loan which would cause there to be insufficient moneys available for the scheduled
payment of Debt Service on the Bonds or the payment of Ordinary Trustee/Mortgage Servicer Fees and
Expenses, or request any extension of the time for filing its election to assign the FHA Note beyond any
extension period granted by HUD, as described above, without first notifying the Rating Agency and the Bond
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• •
Purchaser and receiving confirmation from the Rating Agency that such a request would not adversely affect the
rating on the Bonds. If a request for a further extension made pursuant to this paragraph is not granted by
HUD, the Trustee immediately shall submit its Notice of Election to Assign the Mortgage to HUD Central in
Washington, D.C.
Section 6.04. Opportunity to Cure Default Under Note. Prior to the date the FHA Note and
the Mortgage are assigned to FHA pursuant to Section 6.03 hereof, the Trustee may allow the Borrower to cure
any default under the FHA Note and the Mortgage. However, the Trustee must continue to pursue Mortgage
Insurance benefits until the Borrower complies fully with the following conditions:
(1) The Borrower must pay to the Trustee (a) any overdue payments of principal and
interest on the FHA Note, plus (b) an amount equal to the amount of interest which would have been earned on
FHA Note payments had the payments been made when due, plus (c) any escrow payments in arrears or other
amounts necessary to bring the FHA Note current, plus (d) any late fees due the Trustee in its capacity as the
holder of the Note.
(2) The Borrower must cure any non-monetary defaults under the Mortgage and the
Financing Agreement to the satisfaction of the Trustee.
(3) If any moneys have been withdrawn from the Investment Agreement for the Debt
Service Reserve Fund to be used in connection with the default, the Borrower must:
(a) redeposit under the same Investment Agreement, with at least the same rate
of interest and with the consent of the issuer of the Investment Agreement, an amount at least equal to
the amount withdrawn plus an amount equal to the amount of earnings which would have been earned
under the Investment Agreement if no withdrawal had been made, or
(b) provide the Trustee with an amount at least equal to the amount withdrawn,
which amount is invested under a new Investment Agreement with a bank whose long-term debt rating
by the Rating Agency is at least as high as the rating on the Bonds, has the same notice and cure
provisions as the original Investment Agreement, has a term not less than the term of the original
Investment Agreement, and provides for payment of at least the same amount of earnings as would
have been earned under the original Investment Agreement, or
(c) provide the Trustee with cash and/or a letter of credit, surety bond, insurance
policy or other security device (the "Reserve Facility") (from a bank or insurance company whose
long-term debt obligations are rated at least equal to the rating on the Bonds) in a form acceptable to
the Trustee and the Rating Agency which (i) provides a source for the payment of the principal and
interest on the Bonds, and (ii) is in an amount at least equal to the amount withdrawn under the
Investment Agreement plus an amount equal to the interest which would have been earned on the
amount withdrawn under the original Investment Agreement, and
(d) provide to the Trustee an unqualified opinion(s) of counsel, satisfactory to the
Trustee (and approved by the Trustee's counsel or other national recognized bankruptcy counsel) with
respect to the deposit specified in(a), (b) or (c) above and which opinion(i) if the deposit is in the
form of a Reserve Facility, states that the Reserve Facility is a valid and binding obligation of the bank
or insurance company issuing the Reserve Facility and is enforceable against the bank or insurance
company, or (ii) if the deposit is in any other form, states that such amounts are Available Amounts,
and
(e) the Rating Agency shall have been notified if any Project reserve is used for
the purpose of debt service payment on the FHA Note or to cure any default under the FHA
Documents.
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(4) The Borrower must deposit with the Trustee an amount equal to any loss of
investment income resulting from the failure to make any FHA Note payments when due and provide to the
Trustee an opinion of counsel of the type described in paragraph (3)(d) above with respect thereto.
(5) The Trustee must receive written confirmation from FHA that the withdrawal of any notice
of assignment of the FHA Note and Mortgage which had been given under Section 6.03 hereof will not affect
adversely the Mortgage Insurance on the FHA Note or be construed as a waiver or reduction thereof.
(6) There shall be delivered to the Trustee independently prepared cash flows demonstrating that
after the action(s) taken under (3) above, the timely payment of the principal of and interest on the Bonds and the
Ordinary Trustee/Mortgage Servicer Fees and Expenses, as set forth in the original cash flows, will not be affected
adversely.
(7) The Trustee shall not acknowledge a cure of the default unless the Trustee has received a
written confirmation from the Rating Agency that such cure will not adversely affect the rating on the Bonds.
(8) The Borrower shall pay all fees and expenses of the Issuer, the Mortgage Servicer and the
Trustee, extraordinary or otherwise (and including, without limitation, any legal fees incurred in connection with such
default) and provide to them the opinion of counsel of the type described in Section 6.04(3)(d)hereof with respect
thereto.
The allowance by the Trustee of any cure upon a default under the Note will not affect any subsequent
default proceedings with respect to the Mortgage Insurance or any claims thereunder.
Section 6.05. Rights of the Bondholders. If an Event of Default shall have occurred and be continuing, and
if requested so to do by the Holders of not less than twenty-five percent (25%) of the Bond Obligation, and if
indemnified as provided herein, the Trustee shall be obliged to exercise such one or more of the rights and powers
conferred by this Article as the Trustee, being advised by counsel, shall deem most expedient in the interest of the
Bondholders.
Section 6.06. Rights of Bondholders to Direct Proceedings. Any provision in this Indenture to the
contrary notwithstanding, the Holders of a majority of the Bond Obligation shall have the right at any time, by an
instrument or concurrent instruments in writing executed and delivered to the Trustee, to direct the time, method and
place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this
Indenture, or any other proceedings hereunder, in accordance with the provisions of law and of this Indenture;
provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and this
Indenture; and provided further, that the Holders of the Bonds shall look solely to the Trustee for the benefits of the
Mortgage Insurance and FHA may make payment of any claim on the Mortgage Insurance to the Trustee without any
liability or accountability to the Holders of the Bonds to see to the application of the benefits of the Mortgage
Insurance.
Section 6.07. Waiver by Issuer. Upon the occurrence of an Event of Default, to the extent
that such right may then lawfully be waived, neither the Issuer, nor anyone claiming through or under it, shall
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 the Indenture; and the Issuer, 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.
Section 6.08. Application of Moneys. All moneys received by the Trustee pursuant to any
right given or action taken under the provisions of this Article shall, after payment of the cost and expenses of
the proceedings resulting in the collection of such moneys and of the Ordinary Trustee's Fees and Expenses and
Extraordinary Fees and Expenses incurred or made by the Trustee, be deposited in the Bond Fund. All moneys
in the Bond Fund shall be applied, together with the other moneys held by the Trustee hereunder, as follows:
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(a) Unless the principal of all the Bonds shall have become due and payable, all such
moneys in the Bond Fund shall be applied:
FIRST- to the payment to the persons entitled thereto of all installments of interest then due
on the 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 the unpaid principal of and
premium, if any, on any of the Bonds which shall have become due (other than Bonds called for
redemption for the payment of which money shall be held pursuant to the provisions of this Indenture),
with interest on such Bonds from the date upon which they become due and, if the amount available
shall not be sufficient to pay in full principal of, premium, if any, and interest on the Bonds on any
particular date, then to the payment ratably, according to the amount of the principal, interest, and
premium, if any, due on such date, to the persons entitled thereto without any discrimination or
privilege; and
THIRD - to the payment of Ordinary Trustee's Fees and Expenses.
(b) If the principal of all the Bonds shall have become due and payable, all such moneys
in the Bond Fund shall be applied to the payment of the principal, premium, if any, and interest then due and
unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal, or
of any installment of interest over any other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due respectively for principal, premium, if any, and interest, to the persons
entitled thereto without any discrimination or privilege.
To the extent that the Trustee is entitled to compensation or reimbursement, or both, in excess
of the Extraordinary Fees and Expenses in connection with any action taken under this Article, such amount
shall constitute an obligation of the Borrower, but shall not constitute additional indebtedness hereunder and the
Trustee shall not be entitled to any lien or claim thereafter on any amounts held or collected by it hereunder.
Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys
shall be applied at such times, and from time to time as the Trustee shall determine, having due regard to the
amount of such moneys available for such application in the future. Whenever the Trustee shall apply such
funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made, and upon such date interest on the amounts of principal to
be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the
deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make
payment to the Holder of any Bond until such Bond.shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
Section 6.09. Remedies Vested in Trustee. All rights of action, including the right to file
proof of claims, under this Indenture or under any of the Bonds may be enforced by the Trustee 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 Bonds, and any recovery or judgment shall be
for the equal benefit of the Holders of the Outstanding Bonds.
Section 6.10. Rights and Remedies of Bondholders. 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 for
the execution of any trust hereunder or for the appointment of a receiver or any other remedy hereunder, unless
an Event of Default has occurred and the Trustee has been notified as provided herein and the Holders of at
least twenty-five percent (25%) of the Bond Obligation shall have made written request to the Trustee and shall
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have offered the Trustee reasonable opportunity either to proceed to exercise the powers hereinbefore granted or
to institute such action, suit or proceeding in its own name; nor unless also they have offered to the Trustee
indemnity as provided herein; nor unless the Trustee shall thereafter fail or refuse to exercise the powers
hereinbefore granted, or to institute such, action, suit or proceeding within 60 days after receiving such notice
and indemnity by the Holders; and such notification, request and offer of indemnity are hereby declared in
every 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 for any other
remedy hereunder, it being understood and intended that no one or more Holders of the Bonds shall have any
right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by any action or to
enforce any right hereunder 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. Nothing contained in this Indenture shall, however, affect or impair the right of
any Bondholder to enforce the payment of the principal of, premium, if any, and interest on any Bond at and
after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, and interest
on each of the Bonds issued hereunder to the respective Holders thereof at the time, place, from the source and
in the manner in said Bonds expressed.
Section 6.11. Waivers of Events of Default. The Trustee shall waive any Event of Default
hereunder and its consequences and rescind any declaration of maturity of principal of and interest on the Bonds
upon the written request of the Holders of a majority of the Bond Obligation;provided, however, that there
shall not be waived (a) any Event of Default in the payment of the principal of any Outstanding Bonds at the
date of maturity specified therein, or for mandatory redemption, or (b) any Event of Default in the payment
when due of the interest or premium on any such Bonds unless prior to such waiver or rescission, all arrears of
interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such
Event of Default shall have occurred on overdue installments of interest, and all arrears of payments of
principal or premium, if any, when due (whether at the stated maturity thereof or for mandatory redemption, as
the case may be), and all expenses of the Trustee, in connection with such Event of Default shall have been paid
or provided for, and in case of any such waiver or rescission, or in case any proceeding taken by the Trustee on
account of any such Event of Default shall have been discontinued or abandoned or determined adversely, then
and in every such case the Issuer, Trustee and Bondholders shall be restored to their former positions and rights
hereunder, respectively, but no such waiver or rescission shall extend to any subsequent or other Event of
Default, or impair any right consequent thereto.
Section 6.12. Notice of Defaults; Opportunity of the Issuer and the Borrower to Cure
Defaults. Anything herein to the contrary notwithstanding,no Event of Default under 6.01(c)hereof(other than
an Event of Default occasioned by the nonpayment of money) shall constitute an Event of Default until actual
notice of such Event of Default by registered or certified mail shall be given by the Trustee or by the Holders
of not less than twenty-five percent (25%) of the Bond Obligation to the Borrower and the Issuer, and the
Borrower and Issuer shall have had 30 days after receipt of such notice to correct said default or cause said
default to be corrected, and shall not have corrected said default or caused said default to be corrected within
the applicable period; provided, however, if said default be such that it cannot be corrected within the applicable
period, it shall not constitute an Event of Default if corrective action is instituted by the Borrower or the Issuer,
as the case may be, within the applicable period and diligently pursued until the default is corrected.
With regard to any alleged Event of Default concerning which notice has been given to the
Borrower under the provisions of this Section, the Issuer hereby grants the Borrower full authority for the
account of the Issuer to perform any covenant or obligation alleged in said notice to constitute a default, in the
name and stead of the Issuer with full power to do any and all things and acts to the same extent that the Issuer
could do and perform any such things and acts and with power of substitution.
Section 6.13. Powers of Trustee upon Default under the FHA Note. If the amounts required
to be paid by the Borrower as required by the FHA Note or the Mortgage shall not be paid at the times required
thereunder, or in case an Event of Default in the payment of principal of, premium, if any, or interest on any
Bonds shall occur and be continuing, the Trustee, in its own name and as trustee of an express trust, shall be
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• •
entitled and empowered to institute any action or proceedings at law or in equity for the collection of all sums
due and unpaid under the FHA Note, the Mortgage or the Bonds, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or final decree against any obligor
thereon, and collect in the manner provided by law out of the property of any obligor thereon wherever situated
the moneys adjudged or decreed to be payable.
ARTICLE VII
The Trustee
Section 7.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(1) The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may rely conclusively, as
to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this Indenture, but in the case
of any such certificates or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(1) This subsection (c) shall not be construed to limit the effect of subsection(a)
of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith
by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with directions received pursuant to Section 6.05 hereof or
the direction of the holders of a majority of the Bond Obligation relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
(d) No provisions of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
(e) Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
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Section 7.02. Notice of Default. Within 90 days after the occurrence of any default
hereunder of which the Trustee is deemed to have notice hereunder by virtue of Section 7.03(i)hereof, the
Trustee shall transmit by mail, to the registered owners of all Bonds then Outstanding, notice of such default
hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if any, or interest on any Bond
when due, the Trustee shall be protected in withholding such notice if and so long as the Trustee in good faith
determines that the withholding of such notice is in the interests of the holders of the Bonds. For the purpose of
this Section, the term "default" means any event which is, or after notice or lapse of time or both would
become, an event of default.
Section 7.03. Certain Rights of Trustee. Except as otherwise provided in Section 10.01:
(a) The Trustee may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or
other paper or document believed by it to be genuine and to have been signed or presented by the proper party
or parties;
(b) any Request or order of the Issuer mentioned herein shall be sufficiently evidenced by
an order signed by an Authorized Issuer Representative and any resolution of the Issuer may be sufficiently
evidenced by a Certificate of the Issuer;
(c) any notice, request, direction, election, order or demand of the Borrower mentioned
herein shall be sufficiently evidenced by an instrument purporting to be signed in the name of the Borrower by
any general partner of the Borrower (unless other evidence in respect thereof be herein specifically prescribed),
and any resolution or certification of the Borrower may be evidenced to the Trustee by a copy thereof certified
by a general partner of the Borrower;
(d) whenever in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon a
Certificate of the Issuer;
(e) the Trustee may consult with counsel, architects and engineers and other experts, and
the written advice of such counsel, architects or engineers and other experts shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and
in reliance thereon;
M the Trustee shall be under no obligation to exercise any of the rights or powers vested
in it by this Indenture at the request or direction of any of the holders of the Bonds pursuant to this Indenture,
unless such holders shall have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or direction;
(g) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent
order or other paper or document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer relating to
the Project, personally or by agent or attorney;
(h) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
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(i) the Trustee shall not be required to take notice or be deemed to have notice of any
default or Event of Default hereunder or under the Financing Agreement except nonpayment of any of the
payments to the Trustee required to be made by Article IV hereof unless the Trustee shall be specifically
notified in writing of such default by the Issuer, the Mortgage Servicer or the holders of at least twenty-five
percent (25%) of the Bond Obligation or if the Trustee has actual notice of such default or Event of Default at
its principal corporate trust office set forth in Section 10.04; and
0) all notices or other instruments required by this Indenture to be delivered to the
Trustee must, in order to be effective, be delivered at the principal corporate trust office of the Trustee at the
address set forth in Section 10.04 hereof.
Section 7.04. Not Responsible for Recitals. The recitals contained herein and in the Bonds,
except the certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Bonds.
Section 7.05. Trustee May Hold Bonds. The Trustee in its individual or any other capacity
may become the owner or the pledgee of Bonds and may otherwise deal with the Issuer with the same rights it
would have if it were not Trustee.
Section 7.06. Compensation of the Trustee. The Trustee shall be entitled to Ordinary
Trustee's Fees and Expenses for all services rendered and expenses incurred by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee (to
include those activities relating to mortgage servicing, the payment to the Issuer of its quarterly administrative
fee payable pursuant to Section 2.2 of the Financing Agreement, the payment to the Rating Agency of its annual
monitoring fee and annual payment of rebate calculation fees). If any property, other than cash, shall at any
time be held by the Trustee subject to this Indenture, or any supplemental indenture, as security for the Bonds,
the Trustee, if and to the extent authorized by a receivership, bankruptcy or other court of competent
jurisdiction or by the instrument subjecting such property to the provisions of this Indenture as such security for
the Bonds, shall be entitled to make advances for the purpose of preserving such property or of discharging tax
liens or other liens or encumbrances thereon. The Trustee shall also be indemnified by the Borrower as
provided in Article V of the Financing Agreement. The obligations under this Section to compensate the
Trustee and the Mortgage Servicer for services and to pay or reimburse the Trustee for expenses,
disbursements, liabilities and advances, shall not constitute additional indebtedness hereunder but shall be
obligations of the Borrower. The Issuer shall have no liability for Trustee's fees, costs or expenses.
Notwithstanding any other provision hereof, the Trustee shall not be entitled to any lien or
claim on the Pledged Revenues for Ordinary Trustee/Mortgage Servicer Fees and Expenses, but shall look to
the Borrower for payment of such fees or expenses, or both, to the extent Available Fee Revenues are
insufficient for the payment thereof.
Section 7.07. Maintenance of Office. There shall at all times be a Trustee hereunder which
shall be a corporation or association organized and doing business under the laws of the United States of
America or any state thereof authorized under such laws to exercise corporate trust powers, having its principal
office and place of business in any state, having a combined capital and surplus of at least Fifty Million Dollars
($50,000,000), and subject to supervision or examination by federal or state authority which will at all times be
an FHA-approved lender. If such corporation or association publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the
purposes of this Section the combined capital and surplus of such corporation or association shall be deemed to
be its combined capital and surplus as set forth in its most recent report of condition, so published. In case at
any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section 7.09 hereof.
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Section 7.08. Successor Trustee. Any corporation or association into which the Trustee may
be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust
business and assets as a whole or substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a party shall be and become successor
Trustee hereunder vested with all the title to the whole property or Trust Estate and all the trusts, powers,
discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of
any instruments or any further act, deed or conveyance on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
Section 7.09. Resignation by the Trustee. The Trustee and any successor Trustee may at any
time resign from the trusts hereby created by giving written notice to the Issuer and to the Borrower, and notice
by registered or certified mail to each registered owner of the Bonds then Outstanding; provided, however, that
no such resignation shall take effect until a successor Trustee is appointed. Such notice to the Issuer and to the
Borrower may be served personally or sent by registered mail. If no successor Trustee shall have been
appointed and have accepted appointment within thirty (30) days following delivery or publication of all required
notices of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
Section 7.10. Removal of the Trustee. Except during an Event of Default, the Trustee may
be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee, the
Issuer and the Borrower, and signed by the Holders of a majority of the Bond Obligation or by the Issuer.
Section 7.11. Appointment of Successor Trustee by the Bondholders; Temporary Trustee. In
case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be 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
Holders of a majority of the Bond Obligation or by the Issuer, by an instrument or concurrent instruments in
writing signed liy such owners, or by their duly authorized attorneys or by the Issuer, as the case may be.
Every such Trustee appointed pursuant to the provisions of this Section shall be a trust company or bank
organized under the laws of the United States of America or any state thereof and which is in good standing,
within or outside the State, having a reported capital and surplus of not less than $50,000,000 and at least
$50,000,000 in trust assets under management if there be such an institution willing, qualified and able to accept
the trust upon reasonable or customary terms and qualified to act as an FHA-approved mortgagee. The Rating
Agency shall be notified of the appointment of a successor Trustee.
Section 7.12. Concerning Any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer an instrument in
writing accepting such appointment hereunder, accepting all duties and responsibilities of its predecessor
hereunder and under the Mortgage Servicing Agreement, and accepting assignment of the FHA Note to it as
mortgagee, 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 predecessor, but such
predecessor shall, nevertheless, on the written request of the Issuer, or of its successor, and upon payment of all
amounts due such predecessor, 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 Issuer be required by a successor Trustee for more fully and certainly vesting in such
successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any
and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer.
The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all other instruments provided for in this Article, shall be filed or recorded,
or both, by the successor Trustee in each recording office where the Indenture shall have been filed or
recorded, or both.
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The successor Trustee shall give immediate written notice to the Rating Agency that it has
been appointed as successor Trustee pursuant to the Indenture.
Section 7.13. Successor Trustee as Trustee, Paving Agent and Bond Registrar. In the event
of a change in the office of Trustee, the predecessor Trustee which shall have resigned or shall have been
removed shall cease to be trustee and paying agent on the Bonds and the bond registrar, and the successor
Trustee shall become such Trustee, Paying Agent and Bond Registrar.
Section 7.14. Co-Trustee or Separate Trustee. At any time, but subject to compliance with all
applicable regulations, 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 Issuer and the Trustee shall have power to appoint an
additional institution or individual as a co-trustee or separate trustee, and upon the request of the Trustee or of
the Holders of at least ten percent (10%) of the Bond Obligation the Issuer shall for such purpose join with the
Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to
appoint such institution or individual to act as co-trustee jointly with the Trustee or as a separate trustee of all or
any part of the trust estate, and to vest in such person or institution,in such capacity, such title to the trust
estate, or any part thereof, and such rights, powers, duties, trusts or obligations as the Issuer and the Trustee
may consider necessary or desirable, subject to the remaining provisions of this Section.
If the Issuer shall not have made such appointment within thirty (30) days after the receipt by
it of a request so to do, or in case an Event of Default shall have occurred and be continuing, the Trustee alone
shall have the power to make such appointment.
The Trustee, the Issuer and the Borrower shall execute, acknowledge and deliver all such
instruments as may be required by any such co-trustee or separate trustee for more fully confirming such title,
rights, powers, trusts, duties and obligations to such co-trustee or separate trustee.
Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent
only, be appointed subject to the following terms, namely:
(a) The Bonds shall be authenticated and delivered, and all rights, powers, trusts, duties
and obligations by this Indenture conferred upon the Trustee in respect of the custody, control or management
of money, 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
Trustee shall be conferred or imposed upon or exercised or performed by the Trustee, or by the Trustee and
such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, 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 separate trustee;
(c) any request in writing by the Trustee to any co-trustee or separate trustee to take or
refrain from taking any action hereunder shall be sufficient warrant for the taking or the refraining from taking
of such action by such co-trustee or separate trustee;
(d) any co-trustee or separate trustee to the extent permitted by law may delegate to the
Trustee the exercise of any right, power, trust, duty or obligation, discretionary or otherwise;
(e) the Trustee at any time by an instrument in writing and with the concurrence of the
Issuer as evidenced by certified legislation may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section and in case an Event of Default shall have occurred and be continuing, the
Trustee shall have power to accept the resignation of or remove any such co-trustee or separate trustee without
the concurrence of the Issuer, and upon the request of the Trustee, the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such
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resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section;
(f) no trustee hereunder shall be personally liable by reason of any act or omission of any
other trustee hereunder;
(g) any demand, request, direction, appointment, removal, notice, consent, waiver or
other action in writing executed by the Bondholders and delivered to the Trustee shall be deemed to have been
delivered to each such co-trustee or separate trustee; and
(h) any money, 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.
Upon the acceptance in writing of such appointment, any such co-trustee or separate trustee
shall be vested with such title to the Trust Estate or any part thereof, and with such rights, powers, duties,
trusts or obligations as shall be specified in the instrument of appointment jointly with the Trustee (except
insofar as local law makes it necessary for any such co-trustee or separate trustee to act alone) subject to all the
terms of this Indenture. Every such acceptance shall be filed with the Trustee and the Issuer.
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.
Section 7.15. Additional Security. It is hereby expressly provided that the Trustee shall have
a set-off against any moneys in its custody from any funds created by this instrument, except the Rebate Fund,
to pay interest on or principal of any Bonds secured hereby if, for any reason, the Pledged Revenues and other
income pledged hereunder are insufficient at any time to pay Debt Service on the Bonds.
Section 7.16. Representation by Trustee. The Trustee hereby represents and warrants that as
of the date of execution of this Indenture:
(a) It is duly organized and validly existing in good standing under the laws of the
jurisdiction of its organization and has the power and authority to enter into and perform its obligations under
this Indenture;
(b) it is an FHA-approved mortgagee at the time of execution of this Indenture and will
maintain that status at all times that it serves as Trustee; and
(c) this Indenture has been duly authorized, executed and delivered by it.
Section 7.17. Appointment, Resignation or Removal of Paving Agent; Successors. The
Trustee is hereby designated and, by executing this Indenture, agrees to act as Paying Agent for and in respect
to the Bond.
The Issuer from time to time may appoint one or more additional Paying Agents and, in the
event of the resignation or removal of any Paying Agent, successor Paying Agents by an instrument signed by
an officer of the Issuer and delivered to such Paying Agent and the Trustee. Any such additional Paying Agent
or successor Paying Agent shall be a national banking association, trust company or bank which is authorized by
law to perform all the duties imposed upon a Paying Agent by this Indenture and has a combined capital and
surplus of at least $25,000,000. Any such additional Paying Agent or successor Paying Agent shall signify its
acceptance of the duties and obligations imposed upon it by this Indenture by executing and delivering to the
Issuer and the Trustee a written acceptance thereof.
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The Paying Agents shall enjoy the same protective provisions in the performance of their
duties hereunder as are specified in Section 7.01 hereof with respect to the Trustee, insofar as such provisions
may be applicable.
Any bank or trust company with or into which any Paying Agent other than the Trustee may
be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall be
deemed the successor of such Paying Agent for the purposes of this Indenture.
The principal office of each Paying Agent is hereby designated as the respective office or
agency of the Issuer for the payment of the principal of, premium, if any, and interest on the Bonds. Any
additional Paying Agent shall hold all moneys received by it for the payment of the principal of, premium, if
any, and interest on the Bonds in trust for the Holders of such Bonds. Any additional Paying Agent, and its
directors, officers, employees or agents, may in good faith buy, sell, own, hold and deal in any of the Bonds,
and may join in any action which any Bondholder may be entitled to take with like effect as if such association,
bank or trust company were not such Paying Agent.
A Paying Agent may at any time resign and be discharged of the duties and obligations created
by this Indenture by giving at least thirty (30) days' written notice to the Issuer and the Trustee. A Paying
Agent may be removed at any time on at least thirty(30) days' prior written notice by an instrument signed by
the Issuer and delivered to such Paying Agent and the Trustee.
In the event of the resignation or removal of a Paying Agent such Paying Agent shall pay
over, assign and deliver any money held by it as Paying Agent to its successor or if there be no successor, to
the Trustee.
Section 7.18. FHA-Approved Mortgagees. The Trustee and the Mortgage Servicer under this
Indenture shall be FHA-approved Mortgagees at all times.
Section 7.19. Additional Duties. Notwithstanding any provisions hereof to the contrary, the
Trustee shall have the following duties:
(1) The Trustee shall provide the Rating Agency such information as it shall reasonably
require from time to time in order to maintain a rating on the Bonds;
(2) the Trustee shall assume and perform (or cause to be performed) the duties of
Mortgage Servicer under the Mortgage Servicing Agreement in the event that the Mortgage Servicer is
removed, resigns or is unable to perform its duties thereunder, but the Trustee shall act only on an interim basis
for a reasonable period of time until it is able to engage another FHA-approved mortgage banking company or
financial institution to service the Mortgage Loan;
(3) to the extent permitted by FHA Regulations and the terms of the FHA Note, the
Trustee shall consent to any prepayment of the FHA Note only if and to the extent such prepayment will not
result in insufficient moneys being available to pay the applicable principal, premium, if any, and interest on the
Bonds; and
(4) the Trustee shall notify the Rating Agency of the occurrence of any default under this
Indenture and any monetary or other material default under the Mortgage Loan which necessitates a claim by
the Trustee for the Mortgage Insurance benefits and of any prepayment of the FHA Note.
SF2-28088.1 36 40511-90-MS 1-03/11/94
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ARTICLE VIII
Supplemental Indentures
Section 8.01. Supplemental Indentures Not Requiring Consent of Bondholders. With the prior
consent of HUD, if then required by applicable law or regulations of HUD, the Issuer and the Trustee may,
without the consent of or notice to any of the Bondholders, enter into an indenture or indentures supplemental to
this Indenture as shall not be inconsistent with the terms and provisions hereof or materially adverse to the
interests of the holders of the Bonds for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Indenture;
(b) to change or modify any provision of this Indenture so as to harmonize to the
maximum extent practicable the provisions hereof with existing rules, regulations and procedures of HUD and
FHA;
(c) to subject to the lien and pledge of this Indenture additional revenues, properties or
collateral;
(d) to grant to or confer upon the Trustee for the benefit of the Bondholders any
additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the
Bondholders or the Trustee or either of them;
(e) to provide for the issuance of refunding bonds not requiring the consent of
Bondholders;
(f) to modify, amend or supplement this Indenture or any indenture supplemental hereto
in such manner as to permit the qualification hereof and thereof under the Trust Indenture Act of 1939 or any
similar federal statute hereafter in effect or under any state Blue Sky law;
(g) to modify, amend or supplement this Indenture or any indenture supplemental hereto
in such manner as in the opinion of Bond Counsel shall be necessary to maintain the federal tax exempt status of
interest on the Bonds; or
(h) to modify, amend or supplement this Indenture in any other manner which, in the
reasonable judgment of the Trustee, does not materially adversely affect the interests of Bondholders, and in
making such determination, the Trustee may conclusively rely on an Opinion of Counsel and not be liable
therefor.
Prior to the execution and delivery of any such Supplemental Indenture, there shall be delivered to the Trustee
an opinion of Bond Counsel that the execution and delivery of such Supplemental Indenture is permitted under
the terms of the Indenture and will not adversely affect the exclusion of interest on the Bonds from federal
income taxation.
Section 8.02. Supplemental Indentures Requiring Consent of Bondholders. The Holders of
not less than two-thirds of the Bond Obligation shall have the right, with the prior consent of HUD, if then
required by applicable law or regulations of HUD, from time to time, anything contained in this Indenture to the
contrary, to consent to and approve the execution by the Issuer and the Trustee of such indenture or indentures
supplemental hereto as shall be deemed necessary and desirable by the Issuer 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 in this Section contained shall
permit, or be construed as permitting (a) an extension of the stated maturity or reduction in the principal amount
or reduction in the rate, or extension of time of payment of interest on, or reduction of any premium payable on
the redemption of, any Bonds, without the consent of the Holders of all Bonds then Outstanding, or (b) the
SF2-28088.1 37 40511-90-MS1-03/11/94
• •
creation of any lien prior to, on a parity with, or subordinate to, the lien of this Indenture, or (c) a reduction in
the aforesaid aggregate principal amount of Bonds the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of all the Bonds at the time Outstanding which
would be affected by the action to be taken, or (d) any reduction in the principal amount of or interest rate or
term remaining on the FHA Note, or (e) the modification of the rights, duties or immunities of the Trustee,
without the written consent of the Trustee, or (f) a privilege or priority of any Bond or Bonds, or (g) any action
which might result in interest on the Bonds being included in gross income for federal income tax purposes;
provided further, however, that prior to the execution and delivery of any such Supplemental Indenture, there
shall be delivered to the Trustee an opinion of Bond Counsel that the execution and delivery of such
Supplemental Indenture is permitted under the terms of the Indenture and will not adversely affect the exclusion
of interest on the Bonds from federal income taxation.
If at any time the Issuer 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, postage prepaid,
to all Bondholders. Such notice shall briefly set forth the nature of the proposed supplemental indenture and
shall state that copies thereof are on file at the corporate trust office of the Trustee for inspection by all
Bondholders. If, within sixty days or such longer period as shall be prescribed by the Issuer following the final
mailing of such notice, the holders of not less than two-thirds of the Bond Obligation at the time of the mailing
of such notice shall have consented to and approved 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 the Issuer from executing the same or from taking any action pursuant to the provisions thereof. Failure to
give notice by mailing to the registered owner of any Bond or any defect in such notice shall not affect the
validity of the proceedings for the execution of such supplemental indenture. Upon the execution of any such
supplemental indenture as in this Section permitted and provided, this Indenture shall be and be deemed to be
modified and amended in accordance therewith. The Trustee may rely upon an opinion of counsel as conclusive
evidence that execution and delivery of a supplemental indenture has been effected in compliance with the
provisions of this Article.
Section 8.03. Amendment of Certain Documents. The Issuer and the Trustee may make or
consent to any amendment, change or modification of the FHA Note, the Mortgage, the Financing Agreement
and the Supplemental Regulatory Agreement for the purpose of curing any ambiguity, or of curing, correcting
or supplementing any defective or inconsistent provision contained therein, or in regard to matters or questions
arising under said documents, as the Issuer and the Trustee may deem necessary or desirable and not
inconsistent with said documents or this Indenture and which shall not adversely affect the interests of the
holders of the,Bonds; provided, however, that no such amendment, change or modification shall result in a
reduction or delay in the payments under the FHA Note.
ARTICLE IX
Satisfaction and Discharge of Indenture
Section 9.01. Discharge of Lien. If the Issuer or the Borrower shall pay or cause to be paid
to the Holders of the Bonds the principal, interest and premium, if any, to become due thereon at the times and
in the manner stipulated therein and herein, and shall have paid or provided for the payment of all fees and
expenses of the Trustee and the Mortgage Servicer, and if the Issuer shall keep, perform and observe all and
singular the covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed and
observed by it or on its part, then these presents and the estate and rights hereby granted shall cease, terminate
and be void, and thereupon the Trustee shall cancel and discharge the lien of this Indenture and execute and
deliver to the Issuer such instruments in writing as shall be requisite to satisfy the lien hereof, shall reconvey to
the Issuer the estate hereby conveyed, and shall assign and deliver to the Issuer any interest in property at the
time subject to the lien of this Indenture which may then be in its possession(other than the FHA Note, which
SF2-28088.1 38 40511-90-MSI-03/11/94
shall be delivered to the Borrower), except amounts held by the Trustee for the payment of principal of and
interest and premium, if any, on the Bonds, and except amounts to be paid to the Borrower pursuant to Section
4.11 hereof.
Section 9.02. Payment and Discharge of Bonds. All Outstanding Bonds of shall, prior to the
maturity or redemption date thereof, be deemed to have been paid within the meaning and with the effect
expressed in the first paragraph of this Section if the following conditions shall have been fulfilled: (a) in case
any of the Bonds are to be redeemed on any date prior to their maturity, the Issuer shall have given to the
Trustee, in form satisfactory to it, irrevocable instructions to give, as provided in Article III hereof, notice of
redemption of such Bonds on said date; (b) there shall be on deposit with the Trustee either moneys (which are
not subject to Section 547 of the Bankruptcy Code) or noncallable Defeasance Obligations(which are purchased
with moneys which are not subject to Section 547 of the Bankruptcy Code and which are not subject to
redemption prior to maturity), in each case with an Opinion of Counsel to such effect acceptable to the Rating
Agency, in an amount sufficient to pay when due the principal or redemption price, if applicable, and interest
due and to become due on the Bonds on and prior to the redemption date or maturity date thereof, as the case
may be; (c) there shall be delivered to the Trustee the report of an independent certified public accountant or
firm of such accountants, acceptable to the Trustee, to the effect that the principal amount of the moneys or
Defeasance Obligations and the interest or other income thereon will be sufficient to pay, without further
investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which
earnings are to be held likewise in trust and so committed, except as provided herein), as the same become due
at maturity or upon redemption, the principal or redemption price, if applicable, and interest due or to become
due on the Bonds to their maturity or designated redemption dates; and (d) the Trustee shall have received an
Opinion of Bond Counsel to the effect that all conditions precedent to the satisfaction and discharge of this
Indenture have been satisfied and that such payment and discharge will not adversely affect the exclusion of
interest on the Bonds from federal income taxation; provided however, that the lien of this Indenture shall not
be discharged unless and until all Bonds and all interest due thereon are deemed to have been paid within the
meaning of this Article IX. Except as provided in the following paragraph, neither direct or guaranteed
obligations of the United States of America nor moneys deposited with the Trustee pursuant to this Section nor
principal or interest payments on any such securities shall be withdrawn or used for any purpose other than, and
shall be held in trust for, the payment of the principal of, premium, if any, and interest on the Bonds for which
such deposit was made.
At the written request of the Borrower and with the consent of the Issuer, which consent shall
not be unreasonably withheld, and upon compliance with the conditions hereinafter stated, the Trustee shall have
the power to sell, transfer or otherwise dispose of or request the redemption of Defeasance Obligations acquired
hereunder and to substitute other Defeasance Obligations of such maturities and interest payment dates and
bearing interest as will, without further investment or reinvestment of either the principal amount thereof or the
interest earnings thereon, be sufficient to pay the principal of and interest and premium, if any, on the Bonds
when due. The foregoing transaction may be effected only if(i) an Independent Certified Public Accountant
shall certify that after such transaction the principal amount of and interest income from the Defeasance
Obligations to be substituted will be sufficient to pay, as the same becomes due at maturity or upon redemption,
the principal or redemption price, if applicable, and interest due or to become due on the Bonds and (ii) the
Trustee shall receive an unqualified opinion of nationally recognized bond counsel to the effect that such
disposition and substitution or purchase would not cause any of the Bonds to become an "arbitrage bond" within
the meaning of Section 103 and 148 of the Code.
Any moneys held by the Trustee for the payment of principal or redemption price, if
applicable, and interest on the Bonds may be invested by the Trustee only in noncallable Defeasance Obligations
having maturity dates, or redemption dates not later than the date or dates at which moneys will be required for
the purposes described in this Section. To the extent that any income or interest earned by, or increment to, the
investments held under this Section is determined from time to time by the Trustee to be in excess of the
amount required to be held by the Trustee for the purposes of this Section, that income, interest or increment
shall be transferred at the time of that determination in the manner provided in Section 4.10 hereof.
SF2-28088.1 39 40511-90-MSI-03/11/94
The Issuer, to the extent it shall have any control over any deposit hereunder, and the Trustee,
to the extent it shall have any discretion with respect to the use of any such deposit, hereby severally covenant
that no deposit will be made or accepted hereunder and no use made of any such deposit or direction as to such
use given which would cause the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148
of the Code and any regulations in effect thereunder, as the same exist on the date hereof or may from time to
time hereafter be amended, supplemented or revised.
Section 9.03. No Amendment. Anything in Article VIII to the contrary notwithstanding, if
moneys or Defeasance Obligations have been deposited or set aside with the Trustee pursuant to this Article for
the payment of the principal or redemption price of the Bonds and the interest thereon and the principal or
redemption price of such Bonds and the interest thereon shall not have in fact been actually paid in full, no
amendment to the provisions of this Article shall be made without the consent of the owner of each of the Bonds
affected thereby.
Section 9.04. Survival of Certain Provisions. Notwithstanding the foregoing, those provisions
relating to the purchase of Bonds, the maturity of Bonds, interest payments and dates thereof, and the Trustee's
remedies with respect thereof, and provisions relating to exchange, transfer and registration of Bonds,
replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds,
nonpresentment of Bonds, the holding of moneys in trust, and repayments to the Borrower from the Funds held
under this Indenture and the duties of the Trustee in connection with all of the foregoing and the fees, expenses
and indemnities of the Trustee, shall remain in effect and shall be binding upon the Trustee, the Issuer, the
Borrower and the Bondholders notwithstanding the release, discharge and satisfaction of this Indenture. The
provisions of this Article shall survive the release, discharge and satisfaction of this Indenture.
ARTICLE X
Miscellaneous
Section 10.01. Consents and Other Instruments of Bondholders. Any consent, request,
direction, approval, waiver, objection, appointment or other instrument required by this Indenture to be signed
and executed by the Bondholders may be signed and executed in any number of concurrent writings of similar
tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of
the execution of any such instrument, if made in the following manner, shall be sufficient for any of the
purposes of this Indenture and shall be conclusive in favor of the Trustee with regard to any action taken under
such instrument, namely:
(a) The fact and date of the execution by any person of any such instrument may be
proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer
of any jurisdiction authorized by the laws thereof to take acknowledgments of deeds, certifying that the person
signing such instrument acknowledged to him the execution thereof. Where such execution is by an officer of a
corporation or association or a member of a partnership on behalf of such corporation, association or
partnership, such affidavit or certificate shall also constitute sufficient proof of his authority.
(b) The ownership of Bonds shall be proved by the bond register.
(c) Any request, consent or vote of the holder of any Bond shall bind every future holder
of the same Bond and the holder of every Bond issued in exchange therefor or in lieu thereof in respect of
anything done or permitted to be done by the Trustee or the Issuer pursuant to such request, consent or vote.
(d) In determining whether the holders of the requisite percentage of the Bond Obligation
have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are
owned by the Issuer or the Borrower or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer or the Borrower shall be disregarded and deemed not to
SF2-28088.1 40 40511-90-MS1-03/11/94
! i
be Outstanding for the purpose of determining whether the Trustee shall be protected in relying on any such
demand, request, direction, consent or waiver. Only Bonds which the Trustee knows to be so owned shall be
disregarded. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the
purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the.Trustee.
Section 10.02. Limitation of Rights. With the exception of rights herein expressly conferred,
nothing expressed or to be implied from this Indenture or the Bonds is intended or shall be construed to give to
any person other than the parties hereto, the Borrower and the holders of the Bonds any legal or equitable right,
remedy or claim under or in respect to this Indenture or any covenants, conditions and provisions hereof.
Section 10.03. 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 other provision or provisions
hereof or any constitution, statute, rule of law or public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or sections in this Indenture
contained shall not affect the remaining portions of this Indenture or any part thereof.
Section 10.04. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when mailed by first-class mail, postage prepaid, or dispatched by
facsimile transmission, addressed, unless notice of a different address is given as provided in this Section, as
follows:
(a) As to the Issuer: County of Contra'Costa
Community Development Department
Administration Building
651 Pine Street
4th Floor, North Wing
Martinez, California 94553
Attention: Deputy Director - Redevelopment
(b) As to the Borrower: EAH-Contra Costa, Inc.
2169 E. Francisco Boulevard, Suite B
San Rafael, California 94901
(c) As to the Trustee: Bank of America National Trust and Savings Association
333 South Beaudray Avenue, 25th Floor
Los Angeles, California 90071
Attention:
(d) As to the Mortgage
Servicer:
Attention:
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• •
(e) As to the Rating
Agency: Standard &Poor's Corporation
26 Broadway, 20th Floor
New York, New York 10004
Attention: Housing Surveillance Group
Section 10.05. Notices to Rating Agency. The Trustee shall give the Rating Agency notice,
in addition to other required notices specified herein, of any prepayment of the FHA Note.
Section 10.06. Trustee as Paying Agent and Bond Registrar. The Trustee is hereby
designated and agrees to act as Paying Agent, separate and apart from its duties as Trustee hereunder, and as
Bond Registrar for and in respect to the Bonds.
Section 10.07. Payments Due on Saturdays, Sundays and Holidays. In any case where the
date of maturity of interest on or principal of the Bonds, or the date fixed for redemption of any Bonds, shall be
a Saturday, Sunday, legal holiday or a day on which banking institutions are authorized by law to close, then
payment of interest or principal need not be made on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
Section 10.08. Counterparts. This Indenture may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so executed and delivered shall
constitute an original, but all of which, when taken together, shall constitute but one and the same instrument,
and shall become effective when copies hereof shall be delivered to each of the parties hereto, which copies,
when taken together, bear the signature of each of the parties hereto.
Section 10.09. Laws Governing Indenture and Situs and Administration of Trust. The effect
and meanings of this Indenture and the rights of all parties hereunder shall be governed by and construed
according to the laws of the State, but it is the intention of the Issuer that the situs of the trust created by this
Indenture be in the state in which is located the principal corporate trust office of the Trustee from time to time
acting under this Indenture. The word "Trustee" as used in the preceding sentence shall not be deemed to
include any additional individual or institution appointed as a separate or co-trustee pursuant to the Indenture.
Section 10.10. No Recourse. No recourse under or upon any obligation, covenant, warranty
or agreement contained in this Indenture or in any Bond, or under any judgment obtained against the Issuer, or
the enforcement of any assessment, or any legal or equitable proceedings by virtue of any constitution or statute
or otherwise, or under any circumstances under or independent of this Indenture, shall be had against any
commissioner, officer or employee of the Issuer, as such, past, present or future, either directly or through the
Issuer or otherwise, for the payment for or to the Issuer or any receiver thereof, or for or to the holder of any
Bond, or otherwise, of any sum that may be due and unpaid by the Issuer upon any such Bond. Any and all
personal liability of every nature whether at common law or in equity or by statute or by constitution or
otherwise of any such commissioner, officer or employee, as such, to respond, by reason of any act or omission
on his or her part or otherwise, for the payment or to the holder of any Bond or otherwise of any sum that may
remain due and unpaid upon the Bonds hereby secured or any of them is, by the acceptance thereof, expressly
waived and released as a condition of and in consideration for the execution of this Indenture and the issuance
of the Bonds.
Section 10.11. Successors and Assigns. All the covenants and representations contained in
this Indenture, by or on behalf of the Issuer, shall bind and inure to the benefit of its successors and assigns,
whether so expressed or not.
SF2-28088.1 42 40511-90-MSI-03/11/94
ARTICLE XI
Provisions Relating to FHA
Section 11.01. Approvals of FHA. Whenever any provision of this Indenture requires the
approval of FHA, any such provision shall be understood to require the prior written approval of FHA.
Section 11.02. FHA Documents Controllins. No provisions of this Indenture or related
documents, including the Financing Agreement and the Supplemental Regulatory Agreement (collectively, the
"Financing Documents") are intended to alter or conflict with Title 24 of the Code of Federal Regulations or the
Contract of Mortgage Insurance or the FHA closing documents executed in connection with the Mortgage Loan
(collectively, the "FHA Documents"), and to the extent that they do so, in the opinion of the Secretary of
Housing and Urban Development or his successors, the Financing Documents shall be amended or shall be
deemed to be amended so as not to alter or conflict with the FHA Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed
and delivered by their respective officers thereunto duly authorized as of the date first above written.
COUNTY OF CONTRA COSTA
By:
Deputy Director-Redevelopment
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Trustee
By:
Title:
SF2-28088.1 43 40511-90-MS1-03/11/94
EXHIBIT A
Form of Bond
[Form of Face of Bond]
No. R- $
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BOND
(FHA INSURED MORTGAGE LOAN - CRESCENT PARK APARTMENTS PROJECT)
THE PRINCIPAL OR REDEMPTION PRICE OF, AND INTEREST ON, THIS BOND ARE
PAYABLE SOLELY FROM THE FUNDS PLEDGED PURSUANT TO THE INDENTURE. THIS BOND
DOES NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE UNITED
STATES OF AMERICA, THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OR ANY
SUBDIVISION THEREUNDER, THE ISSUER, THE STATE OF CALIFORNIA OR ANY OTHER
POLITICAL SUBDIVISION THEREOF. THE OWNER OF THIS BOND HAS NO RIGHT TO HAVE
TAXES LEVIED BY THE ISSUER, THE STATE OF CALIFORNIA OR ANY OTHER POLITICAL
SUBDIVISION THEREOF FOR THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE OF,
AND INTEREST ON, THIS BOND.
DATED DATE MATURITY DATE INTEREST RATE CUSIP NO.
1994
REGISTERED Borrower:
PRINCIPAL SUM: DOLLARS
The COUNTY OF CONTRA COSTA (the "Issuer"), a legal subdivision and body corporate
and politic, duly organized and existing under the laws of the State of California, for value received, hereby
promises to pay, but solely from the sources hereinafter described, to the Registered Owner set forth above or
registered assigns, on the Maturity Date set forth above (unless previously called for redemption) the Principal
Sum set forth above, together with interest thereon at the rate set forth above (computed on the basis of a
360-day year consisting of twelve 30-day months) from the interest payment date next preceding the date of
registration of this Bond(unless this Bond is registered as of a day during the period from the sixteenth day of
the month next preceding any interest payment date to such interest payment date, in which event it shall bear
interest from such interest payment date, or unless this Bond is registered before December 15, 1994, in which
event it shall bear interest from the Dated Date set forth above) until the principal amount hereof shall have
been fully paid, at the rate set forth above per annum, payable on 1 and September 1 of each year,
commencing on 1, 1994 (each an "Interest Payment Date"). Payment of principal of and premium, if
any, on this Bond are payable in lawful money of the United States of America upon surrender at the principal
corporate trust office of Bank of America National Trust and Savings Association, San Francisco or Los
Angeles, California(the "Trustee"). Payment of interest shall be made to the person in whose name this Bond
is registered at the close of business on the fifteenth day (whether or not a business day) of the month next
preceding an Interest Payment Date ('Record Date") by check or draft mailed by first class mail on the Interest
Payment Date (or on the next succeeding business day if such date is not a business day) to such person at his
address as such address shall appear on the registration books for the Bonds; provided, that at the written
request of a Holder of$1,000,000 or more in aggregate principal amount of Bonds, such payments of interest
SF2-28088.1 A-1 40511-90-MS 1-03/11/94
shall be made by wire transfer of funds (on the same day as described above for payment by check) to a bank
account in the United States designated by such Bondholder prior to the Record Date.
This Bond is one of a duly authorized issue of bonds of the Issuer known as County of Contra
Costa Multifamily Housing Revenue Bonds (FHA Insured Mortgage Loan - Crescent Park Apartments Project)
1994 Series C issued in the aggregate principal amount of$ (the 'Bonds") pursuant to Chapter 8 of
Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended, and under and
pursuant to a Resolution adopted by the Board of Supervisors of the Issuer. The Bonds are issued under and
are equally and ratably secured as to principal, premium, if any, and interest by a Trust Indenture dated as of
1994, between the Issuer and the Trustee (as supplemented and amended, the "Indenture"). Reference
is hereby made to the Indenture, which is on file at the aforesaid office of the Trustee, for a description of the
trust estate under the Indenture, the nature and extent of the security, the terms and conditions upon which the
Bonds are issued and secured, the rights of the holders thereof to all of which the holder of this Bond, by
acceptance hereof, accepts and agrees. The terms and provisions contained in the Indenture are hereby
incorporated herein by reference, and the owner of this Bond, by purchase hereof, assents to all of such terms
and provisions. All capitalized, undefined terms used herein will have the meanings ascribed to them in the
Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET
FORTH ON THE REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS IF SET FORTH HEREIN.
No officer, agent or employee of the Issuer, and no officer, official, agent or employee of the
State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or
accountability by reason of the issuance of the Bonds. The Bonds are not a pledge of the faith and credit of the
County of Contra Costa, nor the State of California, nor any of its political subdivisions and neither are they
liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those of the Issuer
pledged for the payment thereof. The Bonds do not constitute an indebtedness within the meaning of any
constitutional or statutory debt limitation.
It is hereby certified, recited 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 the time, form and manner as required by law;
that payment in full for the Bonds has been received; and that the Bonds do not exceed or violate any
constitutional or statutory limitation.
G
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until such Bond shall have been authenticated by the Trustee's execution of the
certificate hereon.
SF2-28088.1 A-2 40511-90-MSI-03/11/94
•
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its name by the
facsimile signature of the Chairman of its Board of Supervisors under a facsimile of its official seal and attested
by the facsimile signature of the County Administrator and Clerk of its Board of Supervisors, all as of the Dated
Date set forth above.
COUNTY OF CONTRA COSTA
By:
Chair of the Board of Supervisors
[SEAL]
Attest:
County Administrator and
Clerk of the Board of Supervisors
By:
[Form of]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds issued under the provisions of and described in the within-mentioned
Indenture.
Date of Authentication:
Bank of America National Trust and Savings Association, as
Trustee
By:
Authorized Signatory
[Form of Back of Bonds]
The Bonds are limited obligations of the Issuer payable solely from certain of the revenues, receipts
and funds pledged therefor under the Indenture, including revenues and receipts derived from the repayment of
the nonrecourse mortgage loan described below. The Bonds will be secured by a nonrecourse mortgage loan
(the "Mortgage Loan") made to EAH-Contra Costa, Inc., a California nonprofit corporation(the "Borrower"),
and used to acquire and rehabilitate a 378-unit multifamily rental housing project located in the City of
Richmond, Contra Costa County, California identified as FHA Project No. (the "Project"). The
Borrower's obligation to repay the Mortgage Loan is evidenced by a nonrecourse deed of trust note (the "FHA
Note") and secured by a deed of trust on the Project (the "Mortgage"). The Secretary of Housing and Urban
Development("HUD"), acting through the Federal Housing Administration("FHA"), has insured the FHA Note
pursuant to Section 221(d)(3)of the National Housing Act of 1934, as amended. Payment of principal,
premium, if any, or interest on the Bonds is not insured by FHA.
SF2-28088.1 A-3 40511-90-MSI-03/11/94
The Bonds are subject to mandatory redemption at a redemption price equal to the principal amount
thereof plus interest accrued to the date fixed for redemption (i) on any date, in whole or in part, if FHA
mortgage insurance proceeds are payable to the Trustee, or (ii) on any date, in whole or in part, as provided in
the Indenture, if insurance proceeds as a result of damage to the Project or condemnation awards are applied to
the prepayment of the FHA Note, or (iii)in whole or in part in the event the Borrower becomes subject to
bankruptcy proceedings and the trustee in bankruptcy causes or directs the prepayment of the FHA Note(along
with a proportionate reduction of and redemption from the Debt Service Reserve Fund as provided in the
Indenture). If any of such events shall occur, the Trustee will call Bonds for redemption as aforesaid on the
earliest practicable date for which notice of redemption can be given in accordance with the provisions of the
Indenture.
The Bonds are also subject to sinking account redemption prior to maturity on each Interest Payment
Date at a price of 100% of the principal amount thereof from any moneys remaining in the Bond Fund in excess
of the minimum balance required under the Indenture in accordance with the provisions of the Indenture.
The Bonds maturing on or after 1, 20 are also subject to redemption prior to maturity on
the earliest practicable date on or after 1, 20_, in whole or in part, from the proceeds of any
refunding obligations of the Issuer or other funds provided by the Issuer and to the extent of any prepayment of
the FHA Note by the Borrower, together with an appropriate reduction of and redemption from the Debt
Service Reserve Fund as described in the Indenture, during the periods and at the redemption prices (expressed
as percentages of the principal amount of the Bonds) set forth in the table below, together with interest accrued
to the date fixed for redemption, as follows:
Redemption Dates Redemption Prices
Bonds redeemed pursuant to the Sinking Account provisions shall be called in accordance with
the provisions of the Indenture.
If less than all the Bonds then outstanding shall be called for redemption upon application of
casualty insurance proceeds or condemnation awards to a prepayment of the FHA Note or upon a partial
prepayment of the FHA Note by the Borrower, an amount of Bonds of each maturity shall be redeemed so that
the resulting decrease in the debt service on the Bonds during each six-month period ending on an Interest
Payment Date is proportional, as nearly as practicable, to the decrease in the payments on the FHA Note in
such six-month period. In the event of such redemption in connection with a reduction in the outstanding
principal amount of the FHA Note which reduces the monthly payment thereon, then an additional portion of
the Bonds shall be redeemed from amounts in the Debt Service Reserve Fund in an amount which bears the
same proportion as nearly as practicable to the amount held in the Debt Service Reserve Fund as the amount of
the reduction in the principal amount of the FHA Note and the Mortgage bears to the principal amount of the
FHA Note and the Mortgage immediately prior to such reduction.
If less than all the Bonds of the same maturity are to be redeemed under the provisions of the
previous paragraph, the Bonds to be redeemed shall be selected by the Trustee in accordance with the provisions
of the Indenture.
Except as provided in the Indenture, notice of redemption shall be given by first class mail to
the registered owner at the address of such owner shown on the Trustee's bond register. All such redemption
notices shall be given not less than thirty (30) days nor more than forty-five(45) days prior to the date fixed for
redemption. Failure to give notice by mailing to the registered owner of any Bond designated for redemption or
any defect in such notice shall not affect the validity of the proceedings for the redemption of any Bond with
SFZ-28088.1 A-4 40511-90-MS 1-03/11/94
respect to which no such failure or defect has occurred if notice of such redemption shall have been mailed in
accordance with applicable provisions of the Indenture.
The owner of this Bond shall have no right to enforce the provisions of the Indenture or to
obtain the benefits of the FHA Insurance or to institute action to enforce the covenants therein, or to take any
action with respect to any event of default thereunder, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The Issuer and the Trustee may deem and treat the registered holder hereof as the absolute
owner hereof for the purpose of receiving payment of or on account of principal hereof and premium, if any,
hereon and interest due hereon and for all other purposes, and neither the Issuer nor the Trustee shall be
affected by any notice to the contrary.
Modifications or alterations of the Indenture or of any indenture supplemental thereto may be
made only to the extent and in the circumstances permitted by the Indenture and with the prior consent of HUD.
Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds
may be exchanged for a like aggregate principal amount of Bonds of the same maturity of other authorized
denominations.
This Bond is transferable by the registered owner hereof in person or by attorney duly
authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of
this Bond. Upon such transfer a new registered Bond or Bonds of the same, maturity and interest rate and of
authorized denomination or denominations for the same aggregate principal amount will be issued to the
transferee in exchange therefor.
The principal hereof may be declared or may become due on the conditions and in the manner
and at the time set forth in the Indenture upon the occurrence of an event of default as provided in the
Indenture.
SF2-28088.1 A-5 40511-90-MS1-03/11/94
(FORM OF ASSIGNMENT)
For value received the undersigned hereby sells, assigns and transfers unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within-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:
Signature:
Note: The signature(s) on this Assignment must
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.
Signature Guaranteed:
Note: Signature(s) must be
guaranteed by an eligible
guarantor institution.
SF2-28088.1 A-6 40511-90-MS 1-03/11/94
EXHIBIT B
Estimated Debt Service Schedule
SF2-28088.1 B-1 40511-90-MSI-03/11/94
Regulatory Agreement
& Declaration of
Restrictive Covenents
i
• [OH&S OFT OF 11 MARCH 19941
WHEN RECORDED RETURN TO:
Orrick, Herrington &Sutcliffe
Attn: Michelle W. Sexton
400 Sansome Street
San Francisco, CA 94111
REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS
between
COUNTY OF CONTRA COSTA
and
EAH-CONTRA COSTA, INC.,
a California nonprofit corporation
Dated as of 1, 1994
SF2-27266.2 40511-90-MS1-03111194
TABLE OF CONTENTS
Page
1. Subordination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Representations, Covenants and Warranties of the Borrower . . . . . . . . . . . . . . . . . . . . . 2
3. Term of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Occupancy and Rental Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Termination of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Project Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Occupancy Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Tax-Exempt Status of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. Agent of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Administration by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Successors Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Agreement to Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
14. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SF2-27266.2 40511-90-MS1-03/11/44
REGULATORY AGREEMENT
AND
DECLARATIONS OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATIONS OF RESTRICTIVE
COVENANTS (including Exhibits A, B and C attached hereto), dated as of 1, 1994, is by
and between EAH-Contra Costa, Inc., a California nonprofit corporation, and its successors and
assigns as owner of the project identified below (the "Borrower"), and the County of Contra Costa, a
legal subdivision and body corporate and politic of the State of California, duly organized and
existing under the laws of the State of California (the "Issuer").
WITNESSETH :
WHEREAS, the Issuer proposes to issue its Multifamily Housing Revenue Bonds
(GNMA Collateralized - Crescent Park Apartments Project) Series 1994 B, in the aggregate principal
amount of$ (the "Series B Bonds"), and its Multifamily Housing Revenue Bonds (GNMA
Collateralized - Crescent Park Apartments Project) Taxable Series 1994 B-T, in the aggregate
principal amount of$ (the "Series A-T Bonds" and, collectively with the Series A Bonds,
the "Bonds"), pursuant to and in compliance with Chapter 8 of Part 5 of Division 31 of the Health
and Safety Code of the State of California (the "Act"), and will lend the proceeds of the Bonds to the
Corporation pursuant to the Financing Agreement of even date herewith (as supplemented and
amended from time to time, the "Financing Agreement"), between the Issuer and the Borrower, in
order to enable the Borrower to finance the acquisition and rehabilitation of a 378-unit multifamily
rental housing project known as Crescent Park Apartments, and located on the leasehold site
described in Exhibit A hereto (the "Project"); and
WHEREAS, in order to assure the Issuer and the owners of the Series B Bonds that
interest on certain of the Bonds will be excluded from gross income for federal income tax purposes
under Section 103 of the Internal Revenue Code of 1986 (the "Code"), and to satisfy the public
purposes for which the Bonds are authorized to be issued under the Act, and to satisfy the purposes of
the Issuer in determining to issue the Bonds, certain limits on the occupancy of units in the Project
need to be established and certain other requirements need to be met;
WHEREAS, interest on the Series A Bonds is exempt from federal income tax only if
the Project continuously complies with requirements of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the Code and the regulations and rulings promulgated with respect
thereto and with respect to the Internal Revenue Code of 1986 prescribe that the financing, use and
operation of the Project be restricted in certain respects and in order to ensure that the Project will be
financed, used and operated in accordance with said Code, regulations, and rulings the Issuer and the
Borrower have determined to enter into this Regulatory Agreement and Declaration of Restrictive
Covenant (the "Agreement"); and
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth herein, and other good and valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the Issuer and the Borrower hereby agree as follows:
SF2-27266.2 40511-90-MS1-03/11/91
Section 1. Subordination of Agreement. This Agreement and the restrictions
hereunder are subordinate to the FHA Insured Mortgage. In the event of foreclosure or transfer of
title by deed-in-lieu of foreclosure, this Agreement and the restrictions hereunder will automatically
terminate, subject to the provisions of Section 3(c).
Section 2. Representations, Covenants and Warranties of the Borrower. (a) The
Borrower hereby incorporates herein, as if set forth in full herein, each of the representations,
covenants and warranties of the Borrower contained in the Tax Certificate and the Financing
Agreement relating to the acquisition and operation of the Project.
(b) The Borrower hereby represents and warrants that the Project is located
entirely within the City of Richmond, County of Contra Costa, California.
(c) The Borrower acknowledges, represents and warrants that it understands the
nature and structure of the transactions contemplated by this Agreement; that it is familiar with the
provisions of all of the documents and instruments relating to the Bonds to which it is a party or of
which it is a beneficiary; that it understands the financial and legal risks inherent in such transactions;
and that it has not relied on the Issuer for any guidance or expertise in analyzing the financial or other
consequences of such financing transactions or otherwise relied on the Issuer in any manner except to
issue the Bonds in order to provide funds to assist the Borrower in acquiring the Project.
(d) The Borrower has no knowledge of any action taken by it or by any agency
that would indicate that the Borrower's tax-exempt status under Section 501(c)(3) of the Code has
been revoked or is being considered for revocation; the Borrower believes that it has not undertaken
any action that would cause such status to be revoked; and the Borrower intends to continue to
operate in such a manner as to continue to qualify as a Section 501(c)(3) tax-exempt organization.
Section 3. Term of Restrictions.
(a) Occupancy and Rental Restrictions: The term of the restrictions set forth in
Section 5 of this Agreement shall commence on the date of execution hereof and shall end on the
latest of the following: (i) the date which is 15 years after the date on which 50% of the dwelling
units in the Project were first occupied; or (ii) the date which is a "qualified number of days" after
the date on which any of the dwelling units in the Project were occupied; or (iii) the date on which
any assistance provided with respect to the Project under Section 8 of the United States Housing Act
of 1937 terminates including the initial term and any extension thereof, (iv) , 2034; or
(v) the term of any bonds issued to refund the Bonds. For purposes of clause (ii), the term "qualified
number of days" means, with respect to the Bonds, fifty percent (50%) of the total number of days
from the date of issuance of the Bonds to and including the final stated maturity date of the Bonds or
the scheduled maturity date of any bonds issued to refund the Bonds.
(b) Termination of Restrictions: Notwithstanding the provisions of (a) of this
Section 3, this Agreement and all other restrictions hereunder shall terminate upon the happening of
any event set forth in Section 1. In addition, this Agreement and the restrictions hereunder shall also
cease to apply in the event of an involuntary noncompliance caused by unforeseen events such as fire,
seizure, requisition, a change in federal law or an action of a federal agency after the date of issue
which prevents the Issuer from enforcing the requirements of this Agreement, or condemnation,
provided that (i) the Bonds are retired at the first available call date; or (ii) any insurance proceeds or
condemnation award or other amounts received as a result of such loss or destruction are used to
provide a project which meets the requirements of Section 142(d) of the Code and Treasury
SF2-27266.2 2 40511-90-MS1-03/11/94
Regulations Section 1.103-8(b), as amended, or any successor law or regulation. However, the
foregoing provisions of this paragraph shall cease to apply in the event of foreclosure, transfer of title
by deed-in-lieu of foreclosure or similar event if, at any time subsequent to such event and during the
period set forth in paragraph (a) of this Section 3, the obligor on the purpose investment (as defined
in Sections 1.148-1(b) and 1.148-8(e)(10) of the Treasury Regulations) or a related person (as defined
in Section 1.103-10(e) of the Treasury Regulations) obtains an ownership interest in the Project for
federal tax purposes.
(c) Termination of Agreement: This Agreement and all restrictions hereunder
shall terminate upon the earlier of(i) termination of the Occupancy and Rental Restrictions as
provided in paragraph (a) of this Section, or (ii) a termination pursuant to the provisions of paragraph
(b) of this Section.
Section 4. Project Restrictions. The Borrower acknowledges and agrees that the
Project is to be owned, managed and operated as a "qualified project" (within the meaning of the
Code) and, to that end, the Borrower represents, warrants and covenants that:
(a) The Project has been and will be operated for the purpose of providing
multifamily residential rental housing and the Borrower shall own, manage and operate (or cause the
management and operation of) the Project as a project to provide multifamily rental housing
comprised of a building or structure or several interrelated buildings or structures, each consisting of
more than one dwelling unit and facilities functionally related and subordinate thereto, and no other
facilities. As used herein, facilities functionally related and subordinate to the Project shall include
facilities for use by the tenants, including, for example, swimming pools, other recreational facilities,
parking areas, and other facilities which are reasonably required for the Project, for example, heating
and cooling equipment, trash disposal equipment or units for resident managers or maintenance
personnel.
(b) All of the dwelling units in the Project were and are similarly constructed, and
each dwelling unit in the Project does and will contain facilities for living, sleeping, eating, cooking
and sanitation for a single person or a family which are complete, separate and distinct from other
dwelling units in the Project and does and will include a sleeping area, bathing and sanitation facilities
and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) The Borrower does not and will not knowingly permit any of the dwelling
units in the Project to be used on a transient basis and will not rent any of the units for a period of
less than thirty (30) consecutive days, and none of the dwelling units in the Project will at any time be
leased or rented for use as a hotel, motel, dormitory, fraternity house, sorority house, rooming house,
hospital, nursing home, sanitarium, rest home or trailer court or park or place of business.
(d) No part of the Project has been or will at any time be owned or used by a
cooperative housing corporation.
(e) The site of the Project consists of a parcel or parcels that are contiguous
(parcels are contiguous if their boundaries meet at one or more points) except for the interposition of
a road, street or stream, and the Project comprises a single geographically and functionally integrated
project for multifamily rental housing, as evidenced by the common ownership, management,
accounting and operation of the Project.
(f) The Borrower will not sell any of the dwelling units within the Project.
SF2-27266.2 3 40511-90-MSI-03/11/94
(g) All of the units in the Project will be leased, rented, or available for lease or
rental on a continuous basis to members of the general public (other than units for a resident manager
or maintenance personnel).
(h) The Borrower shall not restrict Qualifying Tenants (as defined below) or
tenants of the Reserved Units (as defined below) from the enjoyment of unrestricted access to all
common facilities and common areas of the Project.
(i) The Borrower will give priority consideration, in accepting tenants, to holders
of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the
United States Housing Act of 1937, or its successor ("Section 8 Certificate Holders").
(j) The Borrower will not knowingly and voluntarily take or omit to take, as is
applicable, any action if such action or omission would in any way cause the use and operation of the
Project in a manner contrary to the requirements of this Agreement.
(k) The Borrower shall not discriminate on the basis of race, creed, color, sex,
age, sexual orientation, marital status or national origin or source of income if from a federal, state or
local governmental body or such other sources of income as approved by the Issuer (e.g., AFDC or
SSI payments) or, except to the extent appropriate in the interests of the health and safety of the
tenants, physical disability, in the lease, use, or occupancy of the Project or in connection with the
employment or application for employment of persons for the operation and management of the
Project.
(1) The Borrower will not knowingly and voluntarily 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 this Agreement.
(m) The Borrower will operate the Project in the manner described in its
Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code
submitted by the Borrower to the Internal Revenue Service on July 6, 1993.
(n) As of the date of this Agreement, at least forty-nine percent (49%) of the total
number of units in the Project are occupied by Very Low Income Tenants (as defined below).
(o) The rental payments for the Very Low Income Units paid by the tenants
thereof(excluding any supplemental rental assistance from the State, the federal government or any
other public agency to those tenants or on behalf of those units) shall not exceed 30% of an amount
equal to 50% of the median adjusted gross income for the Area. If the Borrower elects to establish a
base rent for all or part of the units for lower income households and Very Low Income households,
the base rents shall be adjusted for household size, and in making such adjustments it shall be
assumed that one person will occupy a studio unit, two persons will occupy a one-bedroom unit, three
persons will occupy a two-bedroom unit, four persons will occupy a three-bedroom unit, and five
persons will occupy a four-bedroom unit.
Section 5. Occupancy Restrictions. The Borrower represents, warrants and covenants
that:
SF2-27266.2 4 40511-90-MSI-03/11/94
! •
(a)(1) At least forty-nine percent (49%) of the total number of units in the Project
("Reserved Units") shall be occupied continuously or held available for occupancy (or treated as
occupied as provided herein) by (i) individuals or families whose adjusted gross income does not
exceed 50 percent of the median adjusted gross income for the area, as adjusted gross income may
from time to time be determined pursuant to Section 8 of the United States Housing Act of 1937, as
amended; and (ii) whose income does not exceed the qualifying limits for very low income families as
established and amended from time to time pursuant to Section 8 of the Housing Act, or who
otherwise qualify as very low income households as defined by Section 50105 of the Health and
Safety Code of the State of California ("Very Low Income Tenants"). Median adjusted gross income
for the area with respect to Very Low Income Tenants is to be adjusted for family size.
(2) The determination of whether an individual or family is within the prescribed
income limitations shall be made only at the time the tenancy commences. Any unit occupied by an
individual or family who is a Very Low Income Tenant during their tenancy in such unit even though
such individual or family subsequently ceases to be of very low, low or moderate income. Any
completed unit vacated by a Very Low Income Tenant shall be treated as being occupied by such
prior Very Low Income Tenant until reoccupied by another occupant., other than for a temporary
period not to exceed 31 days.
(3) The Borrower will use its Best Efforts to rent the next available Reserved Unit
to a Section 8 Certificate Holder. For purposes of this provision, "Best Efforts" shall mean that the
Borrower has (a) notified the Housing Authority of the County of Contra Costa of the availability of
the Reserved Unit for Section 8 Certificate Holders, and (ii) held the Reserved Unit available
exclusively to Section 8 Certificate Holders for a period of at least fifteen(15) days.
(b) The Reserved Units shall consist of seventy-seven (77) one bedroom units,
one hundred and three (103) two bedroom units, one hundred and twenty-four (124) three bedroom
units, and thirty-seven (37) four bedroom units and shall be made available at no more than affordable
rents. The term "affordable rents" is defined for (i) for all Reserved Units occupied by Section 8
Certificate Holders, as 100% of the existing Section 8 Fair Market Rents, as published annually by
the United States Department of Housing and Urban Development, less the utility allowance then in
effect, and (ii) for all Reserved Units occupied by Very Low Income Tenants who are not Section 8
Certificate Holders, as the amount derived by multiplying 30 percent times 50 percent of the median
adjusted gross income for the area, adjusted for family size by computing income on the basis of two
persons in the case of a one-bedroom unit, three persons in the case of a two-bedroom unit, four
persons in the case of a three-bedroom unit and five persons in the case of a four-bedroom unit.
Nothing in this paragraph (b) shall be construed as a waiver of the Borrower's right to
request HUD to preempt, pursuant to 24 CFR part 403, any local controls on the Project's rents
should such controls jeopardize the financial viability of the Project.
(c) As a condition to occupancy, each person who is intended to be Very Low
Income Tenant shall be required to sign and deliver to Borrower an Income Computation and
Certification in the form attached hereto as Exhibit B (the "Income Certification"), in which the
prospective Very Low Income Tenant certifies that he or his family qualifies as being of very low,
low or moderate income. In addition, such person shall be required to provide whatever other
information, documents or certifications are deemed necessary by the Issuer or the Trustee to
substantiate the Income Certification.
SF2-27266.2 5 40511-90-MSI-03/11/94
• •
(d) The form of lease to be utilized by the Borrower in renting any units in the
project to any person who is intended to be a Very Low Income Tenant shall provide for termination
of the lease and consent by such person to immediate eviction for failure to qualify as a Very Low
Income Tenant as a result of any material misrepresentation made by such person with respect to the
Income Certification. The Borrower has reviewed the addendum to the form of lease for the Project
prepared by the Housing Authority of the City of Richmond and its management policies will not
conflict with the provisions in such addendum. The Borrower agrees to include the provisions of
such addendum only in its leases with holders of Section 8 certificates.
(e) All tenant lists, applications, and waiting lists relating to the Project, to the
extent that such information is maintained shall at all times be kept separate and identifiable from any
other business of the Borrower which is unrelated to the Project, as required by the Issuer or the
Trustee from time to time, in a reasonable condition for proper audit and subject to examination
during business hours upon reasonable notice by representatives of the Issuer or the Trustee.
(f) The Borrower shall utilize a maximum occupancy standard not less than that
required by Section 8 of the United States Housing Act of 1937 on the date hereof, that is three
individuals for a one bedroom unit (or such greater number as may be allowed by the Department of
Housing and Urban Development), four individuals for a two bedroom unit (or such greater number
as may be allowed by the Department of Housing and Urban Development, [seven] individuals for a
three bedroom unit (or such greater number as may be allowed by the Department of Housing and
Urban Development), and [nine] individuals for a four bedroom unit (or such greater number as may
be allowed by the Department of Housing and Urban Development).
(g) The Borrower shall submit to the Issuer any information or completed forms
requested by the Issuer to comply with the reporting requirements of the State of California, including
without limitation information necessary to file the annual report required by Section 8855.5 of the
California Government Code, and the Internal Revenue Service, including without limitation the
information necessary to file IRS Form 8703. Such information shall be submitted to the Issuer
within 15 days of receipt of a written request from the Issuer.
(h) The Borrower shall not apply or permit the application of, management
policies or lease provisions with respect to the Project which have the effect of precluding occupancy
of Reserved Units by holders of Section 8 certificates.
The Issuer acknowledges that it is the Borrower's responsibility to screen and select
tenants for desirability and creditworthiness, and that such selection is within the Borrower's
discretion. If written management policies exist, or exist in the future, with respect to the Project,
the Issuer may review such written policies and may require changes in such policies, if necessary, to
reasonably comply with the provisions of this Agreement and the requirements of the Section 8
Program as set forth in the first paragraph of this clause (h).
(i) The Borrower will submit to the Issuer (i) at the time of initial occupancy of
any Very Low Income Tenant, (ii) upon the reoccupancy of any unit held available for Very Low
Income Tenants, and (iii) as often as necessary to comply with the requirements of the Issuer, Income
Certifications in the form attached hereto as Exhibit B, which are subject to independent investigation
and verification by the Issuer. Income Certifications will be maintained on file at the Project with
respect to each Very Low Income Tenant who resides in a Project unit or resided therein during the
immediately preceding calendar year.
SF2-27266.2 6 40511-90-MSI-03/11/94
In addition, the Borrower agrees to obtain and maintain on file the following with
respect to each prospective Very Low Income Tenant: qualification forms as required by Section 8
for Section 8 Certificate Holders or employment verifications or verifications of other sources of
income for noncertificate holders or such other forms of certification that may be required by the
Issuer from time to time. Provided that such documentation has been obtained, the Borrower may
rely upon the Income Certifications of the prospective tenants unless the Borrower has actual
knowledge that they are inaccurate.
(j) The Borrower will maintain complete and accurate records pertaining to the
Reserved Units, and will permit any duly authorized representative of the Issuer or the Trustee to
inspect the books and records of the Borrower pertaining to the incomes of Very Low Income Tenants
residing in the Project, the rent levels for the Reserved Units and other records necessary to
determine compliance with this Agreement.
(k) On the fifteenth day of each month or such later date as may be specified in
writing by the Issuer, the Borrower will submit to the Issuer and the Trustee a certificate executed by
the Borrower stating the percentage of units of the Project which were occupied by Very Low Income
Tenants at all times during the preceding month and identifying Very Low Income Tenants who
commenced or terminated occupancy of the Project during such month. In addition, the Borrower
will prepare and submit to the Issuer within thirty (30) days after April 1 in each year a "Certificate
of Continuing Program Compliance" substantially in the form attached hereto as Exhibit "C" executed
by the Borrower, stating (i) the percentage of the dwelling units in the Project which were occupied
by Very Low Income Tenants (or held vacant and available for occupancy as provided in paragraph
0) above) during such period, and (ii) that to the knowledge of the Borrower, no default has occurred
under this Agreement.
Section 6. Tax-Exempt Status of Bonds. The Borrower and the Issuer, as applicable,
each hereby represents, warrants and agrees as follows:
(a) The Borrower and the Issuer will not knowingly take or permit, or omit to
take or cause to be taken, as is appropriate, any action that would adversely affect the Tax-Exempt
nature of the interest on the Tax-Exempt Bonds and, if either of them should take or permit, or omit
to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or
correct such actions or omissions promptly upon obtaining knowledge thereof.
(b) The Borrower represents, covenants and agrees that it will maintain its status
as an organization described in Section 501(c)(3) of the Code and exempt from federal income tax
under Section 501(a) of the Code (a "501(c)(3) Organization").
(c) The Borrower will not use or permit the use of more than 5% of the Project
by persons other than a 501(c)(3) Organization or by a 501(c)(3) Organization (including the
Borrower) in an "unrelated trade or business" within the meaning of Section 513(a) of the Code, if
the payments received in respect of such uses total more than 5% of the principal or interest on the
Tax-Exempt Bonds. For purposes of this covenant, "use" that would not be counted for purposes of
the "private business use test" described in Section 141(b)(1) of the Code shall be disregarded,
including "use" not counted if 501(c)(3) Organizations were treated as governmental units with respect
to their activities which do not constitute unrelated trade or businesses, determined by applying
Section 513(a). This covenant shall not be deemed to restrict the rental of units in the Project to
tenants for the occupancy of such units as their residences.
SF2-27266.2 7 40511-90-MSI-03/11/94
• .
(d) The Borrower represents that it has not, and covenants and agrees that it will
not, become a test period beneficiary of any Tax-Exempt non-hospital bonds issued on or before the
Closing Date, the aggregate face amount of which allocable to it when added to the aggregate face
amount of the Tax-Exempt Bonds exceeds $150,000,000, all as described in Section 145(b) of the
Code. The Borrower represents that no 501(c)(3) Organization with which it shares common
management and control ("Affiliated Organization") is, and covenants and agrees that it will not
permit any Affiliated Organization to become, a test period beneficiary of any Tax-Exempt non-
hospital bonds issued on or before the Closing Date, the aggregate face amount of which allocable to
it, when added to the aggregate face amount of the Tax-Exempt Bonds, exceeds $150,000,000, all as
described in Section 145(b) of the Code.
(e) The Borrower will not permit the use of the Project by any 501(c)(3)
Organization who is a test period beneficiary of any Tax-Exempt non-hospital bonds issued on or
before the Closing Date, the aggregate face amount of which allocable to it, when added to the
aggregate face amount of the Tax-Exempt Bonds allocable to such 501(c)(3) Organization, exceeds
$150,000,000, all as described in Section 145(b) of the Code.
(f) The Borrower will comply with Section 145(d) of the Code, including in
particular, Section 145(d)(2)(B).
(g) The Borrower represents and covenants that at least 40% of the total number
of units in the Project shall be occupied by individuals or families whose income does not exceed
60% of the median income for the area.
Section 7. Transfer Restrictions. The Borrower covenants and agrees that the
Borrower will cause or require as a condition precedent to any conveyance, transfer, assignment or
any other disposition of the Project prior to the termination of the Rental Restrictions and Occupancy
Restrictions provided herein (the "Transfer") that the transferee of the Project pursuant to the Transfer
assume in writing, in a form acceptable to the Issuer, the Trustee and HUD, all duties and obligations
of the Borrower under this Agreement, including this Section, in the event of a subsequent Transfer
by the transferee prior to expiration of the Rental Restrictions and Occupancy Restrictions provided
herein (the "Assumption Agreement"). The Borrower shall deliver the Assumption Agreement to the
Issuer prior to the Transfer. This limited transfer restriction does not affect the rights of HUD to
approve the proposed transfer as required under the FHA Regulatory Agreement.
Section 8. Enforcement.
(a) The Borrower shall permit any duly authorized representative of the Issuer,
including Bank of America National Trust and Savings Association, as trustee under the Indenture
(the "Trustee"), to inspect any books and records of the Borrower regarding the Project and with
respect to the incomes of Very Low Income Tenants which pertain to compliance with the provisions
of this Agreement and Section 145(d) of the Code.
(b) In addition to the information provided for in Section 5(e), the Borrower shall
submit any other information, documents or certifications requested by the Issuer or the Trustee
which any of them deem reasonably necessary to substantiate the Borrower's continuing compliance
with the provisions of this Agreement, the Act and Section 145(d) of the Code.
(c) The Issuer and the Borrower each covenants that it will not knowingly take or
permit any action (other than an action required by Section 241(f) of the National Housing Act of
SF2-27266.2 8 40511-90-MS1-03/11/94
1934, as amended, or the regulations thereunder, or by any documents executed in connection with
the FHA Insured Mortgage Loan) that would adversely affect the exemption from federal income
taxation of in on the Bonds. Moreover, each covenants to take, subject to the prior approval of
HUD, any lawful action (including amendment of this Agreement as may be necessary , in the
opinion of nationally recognized bond counsel) to comply fully with the requirements of the Act and
with all applicable rules, rulings, policies, procedures, regulations or other official statements
promulgated or proposed by the Department of the Treasury or the Internal Revenue Service from
time to time pertaining to obligations the interest on which is tax-exempt under Section 145(d) of the
Code and affecting the Project.
(d) The Borrower covenants and agrees to inform the Issuer, the Trustee and TRI
Capital Corporation, the mortgage servicer for the FHA Insured Mortgage Loan (the "Servicer"), or
any successor mortgage servicer, by written notice of any violation of the Borrower's obligations
hereunder within five (5) days of first discovering any such violation, and the Issuer covenants and
agrees to inform the Borrower by written notice of any violation of the Borrower's obligations
hereunder within five (5) days of first discovering a violation and to provide the Borrower a period of
time in which to correct such violation. If any such violation is not corrected to the satisfaction of the
Issuer and the Trustee within the period of time specified by the Issuer and the Trustee, which shall
be at least thirty (30) days after the date any notice to the Borrower is mailed, or within such further
time as the Issuer and the Trustee determine is necessary to correct the violation without loss of tax
exemption of interest on the Bonds, but not to exceed any limitations set by applicable regulations,
without further notice the Issuer shall declare a default under this Agreement effective on the date of
such declaration of default, and upon such default the Borrower hereby agrees to pay the Issuer (but
only to the extent of any available "surplus cash," as defined in the FHA Regulatory Agreement) any
rents 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, and the Issuer shall apply to any court,
state or federal, for specific performance of this Agreement or an injunction against any violation of
this Agreement or any other remedies at law or in equity or any such other actions as shall be
necessary or desirable so as to correct noncompliance with this Agreement.
(e) The Borrower and the Issuer each acknowledges that the primary purposes for
requiring compliance by the Borrower with the restrictions provided in this Agreement are to comply
with the requirements of the Act and to preserve the federal income tax exemption of interest on the
Tax-Exempt Bonds to the Bondholders, and that the Trustee on behalf of the Bondholders who are
declared to be third party beneficiaries of this Agreement shall be entitled, for any breach of the
provisions hereof, to all remedies both at law and in equity in the event of any default hereunder.
(f) Notwithstanding the foregoing, enforcement of this Agreement shall not serve
as a basis for a declaration of default under the FHA Insured Mortgage or acceleration of the FHA
Insured Mortgage Loan or result in any claim under such Mortgage Loan, or claim against the
Project, the FHA Insured Mortgage Loan proceeds, any reserve or deposit made with the mortgagee
or another person or entity required by HUD in connection with the FHA Insured Mortgage Loan
transaction, or against the rents or other income from the Project (other than available surplus cash)
for payment hereunder.
Section 9. Agent of the Issuer. The Issuer shall have the right to appoint an agent to
carry out any of its duties and obligations hereunder, and shall inform the Borrower of any such
agency appointment by written notice.
SF2-27266.2 9 40511-90-MS1-03/11/94
• •
Section 10. Administration by Issuer. The Borrower agrees to pay an administration
fee to the Issuer pursuant to the Financing Agreement, semiannually in arrears, in the amount of 1/8
of 1% per annum of the original aggregate principal amount of the Bonds, on every April 20 and
October 20 thereafter, commencing October 20, 1994 until the payment of the principal of, and
premium, if any, and interest on all Bonds, and the discharge of the Indenture in accordance with its
terms, or the termination of this Agreement (if later).
Section 11. Indemnification. The Borrower releases the Issuer from, and covenants
and agrees that the Issuer shall not be liable for, and covenants and agrees, to the extent permitted by
law, to indemnify and hold harmless the Issuer and its officers, employees and agents from and
against, (1) any and all losses, claims, damages, liabilities and expenses (or actions in respect thereof)
arising out of or based upon or in any way relating to the acquisition, construction, equipping or
operation of the Project, (2) any and all losses, claims, damages, liabilities and expenses (or actions in
respect thereof) that arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact relating either to the Borrower or the Project as set forth in the Official Statement
or the Preliminary Official Statement for the Bonds, or arise out of or are based upon the omission or
alleged omission therefrom of any statement or information relating to the Borrower or the Project
necessary to make the statement or information relating to the Borrower or the Project necessary to
make the statements therein not misleading in any material respect in the light of the circumstances
under which they were made, and (3) amounts paid in settlement of any litigation commenced or
threatened arising from a claim based upon any such untrue statement or alleged untrue statement or
omission or alleged omission if such settlement is effected with the written consent of the Borrower;
and will reimburse any legal or other expenses reasonably incurred by the Issuer in connection with
investigating or defending any such loss, claim, damage, liability or action. The Borrower will not
make any indemnity in respect of wrongful acts of the Issuer. The Issuer has the right to select
independent counsel to be paid by the Borrower only to the extent necessary to enforce the obligations
of the Borrower hereunder, and the Issuer has the right to approve any settlement. The provisions of
this Section shall survive the retirement of the Bonds.
The Borrower also shall pay and discharge (i) any lien or charge upon payments by
the Borrower to the Issuer 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, and in the event any moneys are paid by the Issuer on behalf of the Borrower,
the Borrower shall promptly reimburse the Issuer for such amounts. If any such claim is asserted, or
any such lien or charge upon payments, or any such taxes, assessments, impositions or other charges,
are sought to be imposed, the Issuer 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 Issuer in enforcing the provisions hereof.
Notwithstanding anything in this Section 12 to the contrary, the Borrower shall not
have any personal liability for the payment of principal or interest on the Bonds or any other
obligation hereunder, including any and all claims for reimbursement or indemnity hereunder.
Section 12. Successors Bound. This Agreement and the covenants and conditions
contained herein shall run with the land and shall bind, and the benefits shall inure to, respectively,
the Borrower and its successors and assigns and all subsequent owners of the Project or any interest
SF2-27266.2 10 40511-90-MS1-03/11/94
• •
therein, and the Issuer and its successors and assigns, for the period specified in Section 3(a) hereof,
unless terminated sooner pursuant to Section 3(c) hereof.
Section 13. Agreement to Record. The Borrower hereby represents, warrants and
covenants that it will cause this Agreement to be recorded in the grantor-grantee index to the names
of both the property owner and the Borrower as grantor and to the name of the Issuer as grantee in
the real property records of Contra Costa County, California, and in such other places as the Issuer
or the Trustee may reasonably request. The Borrower shall pay all fees and charges incurred in
connection with any such recording.
Section 14. Interpretation. Any terms not defined in this Agreement shall have the
same meaning as terms defined in the Indenture or in Section 145 of the Code and Treasury
Regulations thereunder.
Section 15. Amendment. This Agreement may be amended with the prior written
approval of HUD to reflect changes in the Act or in Section 145 of the Code, the Treasury
Regulations and any revenue rulings promulgated thereunder. No amendment to this Agreement may
be made without the prior written approval of the Trustee and HUD.
Section 16. Severability. The invalidity of any clause, part or provision of this
Agreement shall not affect the validity of the remaining portions thereof.
Section 17. Notices. All notices to be given pursuant to this Agreement shall be in
writing and shall be deemed given when mailed by certified or registered mail, return receipt
requested, to the parties hereto at the addresses set forth below, or to such other place as a party may
from time to time designate in writing.
To the Issuer: County of Contra Costa Community Development Department
Administration Building
651 Pine Street
4th Floor, North Wing
Martinez, California 94553-0096
Attention: Deputy Director - Development
To the Borrower: EAH-Contra Costa, Inc.
2169 E. Francisco Boulevard, Suite B
San Rafael, California 94901
Attention:
To the Trustee: Bank of America National Trust and Savings Association
333 South Beaudry Avenue, 25th Floor
Los Angeles, California 90071
Attention:
To the Servicer: TRI Capital Corporation
100 Pine Street, Suite 2300
San Francisco, California 94111
Attention:
SF2-27266.2 11 40511-90-MSI-03/11/44
• 0
To HUD: United States Department of Housing
and Urban Development
450 Golden Gate Avenue
San Francisco, California 94102
Attention: Loan Management
A duplicate copy of each notice, certificate or other communication given hereunder
by the Issuer or the Borrower shall also be given to the Trustee and the Servicer. The Issuer, the
Borrower, the Trustee, the Servicer and HUD/FHA may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates or other communications shall
be sent.
Section 18 Governing Law. This Agreement shall be governed by the laws of the
State of California and, where applicable, the laws of the United States of America.
SF2-27266.2 12 40511-90-MS1-03/11/94
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first above
written.
COUNTY OF CONTRA COSTA
By:
Deputy Director-Redevelopment
EAH-CONTRA COSTA, INC., a California nonprofit
corporation
By:
SF2-27266.2 13 40511-90-MS1-03/11/94
• •
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On before me, ,
personally appeared personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s) or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
My Commission Expires:
SF2-27266.2 40511-90-MS1-03/11/94
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On before me, ,
personally appeared personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s) or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
My Commission Expires:
SF2-27266.2 40511-90-MS1-03/11/94
EXHIBIT A
LEGAL DESCRIPTION
SF2-27266.2 A-1 40511-90-MS1-03/11/94
• 0
EXHIBIT B
INCOME COMPUTATION AND CERTIFICATION
[FORM OF INCOME CERTIFICATION]
VERIFICATION OF INCOME
RE: [name and address of Project]
Apartment Number:
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
Household Household Ase Number Emmployment
HEAD
SPOUSE
6. The anticipated income of all the above persons during the 12-month period beginning
this date, including income described in (a) below, but excluding all income described in (b) below, is
(a) The amount set forth above includes all of the following income (unless such income
is described in (b) below):
(i) all wages.and salaries, over-time pay, commissions, fees, tips and bonuses
before payroll deductions;
(ii) net income from the operation of a business or profession or from the rental
of real or personal property (without deducting expenditures for business expansion or amortization of
capital indebtedness or any allowance for depreciation of capital assets);
(iii) interest and dividends(include all income from assets as set forth in item
7(b);
(iv) the full amount of periodic payments received from social security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits and other similar types of
periodic receipts;
SF2-27266.2 B-1 40511-90-MS1-03/11/94
• 0
(v) payments in lieu of earnings, such as unemployment and disability
compensation, workmen's compensation and severance pay;
(vi) the maximum amount of public assistance available to the above persons;
(vii) periodic and determinable allowances, such as alimony and child support
payments and regular contributions and gifts received from persons not residing in the dwelling;
(viii) all regular pay, special pay and allowances of a member of the Armed Forces
(whether or not living in the dwelling)who is the head of the household or spouse; and
(ix) any earned income tax credit to the extent it exceeds income tax liability.
(b) The following income is excluded from the amount set forth above:
(i) casual, sporadic or irregular gifts;
(ii) amounts which are specifically for or in reimbursement of medical expenses;
(iii) 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;
(iv) amounts of educational scholarships paid directly to a student or an
educational institution, and amounts paid by the government to a veteran for use in meeting the costs of
tuition, fees, books and equipment, but in either case only to the extent used for such purposes;
(v) hazardous duty to a member of the household in the armed forces who is
away from home and exposed to hostile fire;
(vi) relocation payments under Title H of the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970;
(vii) income from employment of children (including foster children) under the age
of 18 years;
(viii) foster child care payments;
(ix) the value of coupon allotments under the Food Stamp Act of 1977;
(x) payments to volunteers under the Domestic Volunteer Service Act of 1973;
(xi) payments received under the Alaska Native Claims Settlement Act;
(xii) income derived from certain submarginal land of the United States that is
held in trust for certain Indian tribes;
(xiii) payments on allowances made under the Department of Health and Human
Services' Low-Income Home Energy Assistance Program;
(xiv) payments received from the Job Partnership Training Act;
(xv) income derived from the disposition of funds of the Grand River Band of
Ottawa Indians; and
SF2-77266.2 B-2 40511-90-MS1-03/11/94
• •
(xvi) the first$2000 of per capita shares received from judgment funds awarded by
the Indian Claims Commission or the Court of Claims or from funds held in trust for an Indian tribe by
the Secretary of Interior.
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 interests in Indian trust lands), 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
(b) (Complete only if the answer to Question 8(a) is "Yes"). Is any such person (other
than nonresident aliens) married and eligible to file a joint federal income tax return?
Yes No
We acknowledge that all of the above information is relevant to the status under federal
income tax law of the interest on bonds issued to (mance 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 Borrower: A vacant unit previously occupied by individuals or a family of low
or moderate income, may be treated as occupied by individuals or a family or low or moderate 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.
SF2-27266.2 B-3 40511-90-MS1-03/11/94
•
FOR COMPLETION BY PROJECT Borrower 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)): $
H. Qualification as individuals or a family of low or moderate or very low income:
(A) Is the amount entered in line 1(c) less than 80% of Median Gross Income for the Area*9.
Yes No
(B) (i) If line H(A) is "No", then the household does not qualify as individuals or a family of
low or moderate income; skip to item III.
(ii) If line H(A) above is "Yes" and 8(a) above is "No", then the household qualifies as
individuals or a family of low or moderate income; skip to item II(G).
(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 or moderate income; skip to item H(G).
(iv) If neither (ii) nor (iii) is applicable, then the household does not qualify as individuals
or a family of low or moderate income.
(C) Is the amount entered in line I(C) less than 50% of Median Gross Income for the Area*?
Yes No
(D) (i) If line H(C) is "No", then the household does not qualify as very low income; skip to
item III.
(ii) If line II(C) above is "Yes" and 8(a) above is "No", then the household qualifies as
very low income; skip to item III.
(iii) If line H(C) above is "Yes" and 8(b) above is "Yes", then the household qualifies as
very low income; skip to item III.
(iv) If neither (ii) nor (iii) is applicable, then the household does not qualify as very low
income.
* "Median Gross Income for the Area" means the median income for the area where the Project is located as determined by the
Secretary of Housing and Urban Development under Section 8(f)(3)of the United States Housing Act of 1937,as amended,or if programs
under Section 8(f)are terminated,median income determined under the method used by the Secretary prior to the termination.
SF2-27266.2 B-4 40511-90-MS1-03/11/94
III. (Check one)
The household does not qualify as individuals or a family of low or moderate income.
The household qualifies as individuals or a family of low or moderate income.
The household does not qualify as very low income.
The household qualifies as very low income.
IV. Number of apartment unit assigned:
(enter here and on page one)
Borrower
SF2-27266.2 B-5 40511-90-MS1-03/11/44
OCCUPANCY CERTIFICATE
(To be filed with the Issuer and the Trustee along with a
Verification of Income upon the rental of a unit to any Low
or Moderate Income Tenant.)
Project:
The tenant identified in the attached Verification of Income has entered into a lease with respect to a
unit in the above-described Project.
Such tenant is/is not(circle one) a Low or Moderate Income Tenant.
Such tenant is/is not(circle one) a Very Low Income Tenant.
The rental of a unit to such tenant will not result in a violation of any of the requirements of the
Financing Agreement or the Issuer Regulatory Agreement to which the Borrower is a party.
Witness Borrower
Date:
SF2-27266.2 B-6 40511-90-MS1-03111/94
i r
EXHIBIT C
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
WITNESSETH that on this day of the undersigned,
having borrowed certain funds consisting of the proceeds of the County of Contra Costa Multifamily Housing
Revenue Bonds (GNMA Collateralized - Crescent Park Apartments Project) 1994 Series A and 1994 Series A-T
for the purpose of refinancing a multifamily rental housing development, does hereby certify that (1) the
"Project" as that term is defined in the Supplemental Regulatory Agreement (the "Regulatory Agreement")
executed by the undersigned and filed in the official public records of Contra Costa County, California is in
continuing compliance with the Regulatory Agreement (including the requirement that all units be and remain
rental units)and that no default has occurred thereunder; (2) during the past year no less than
percent (_%) of the dwelling units in the Project have been occupied by Very Low Income Tenants or Section
8 Certificate Holders (as such term is defined in the Regulatory Agreement).
EAH-CONTRA COSTA, INC.
By:
SF2-27266.2 C-1 40511-90-MS1-03/11/94
Financing Agreement
[OH&S DRAFT OF 11 MARCH 19941
FINANCING AGREEMENT
Dated as of 1, 1994
by and among
COUNTY OF CONTRA COSTA,
EAH-CONTRA COSTA, INC.,
a California nonprofit corporation
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
and
TRI CAPITAL CORPORATION
Relating to
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA COLLATERALIZED - CRESCENT PARK APARTMENTS PROJECT)
1994 SERIES B
MULTIFAMILY HOUSING REVENUE BONDS
(GNMA COLLATERALIZED - CRESCENT PARK APARTMENTS PROJECT)
TAXABLE 1994 SERIES B-T
SF2-27262.2 40511-90-MS1-03/11/94
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE H
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
SECTION 2.1. Representations and Findings of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. Representations, Warranties and Undertakings by the
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3. Representations, Warranties and Undertakings of the Lender . . . . . . . . . . . . . . 4
SECTION 2.4. Warranty of Truth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
THE FINANCING TRANSACTION
SECTION 3.1. General Terms of the Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.2. Sufficiency of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.3. Lender Loan to Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.4. Investment of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.5. Acquisition of the GNMA Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
PAYMENTS; SPECIAL COVENANTS OF THE BORROWER
SECTION 4.1. Adequate Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.2. Operation of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.3. Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.4. Payments by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 5.1. Absolute and Unconditional Obligation; Limited Recourse . . . . . . . . . . . . . . . 8
SECTION 5.2. No Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.3. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.4. Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.5. Reports and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.7. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.8. Indemnification of Issuer and Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.9. Mortgage Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.10. Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SF2-27262.2 i 40511-90-MS1-03/11/94
Page
ARTICLE VI
SPECIAL TERMS AND PROVISIONS
SECTION 6.1. No Pecuniary Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6.2. Further Assurances and Corrective Instruments . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.3. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
SECTION 7.1.' Events of Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.2. No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.3. No Additional Waiver Implied by One Waiver . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.4. Payment of Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII
TERMINATION AND PREPAYMENT
SECTION 8.1. Option to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.2. Option to Prepay Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.3. Notice of Prepayment; Timing of Prepayment . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.2. Assignment by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.4. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.7. Amendments, Changes and Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.8. Execution of Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . 16
SECTION 9.9. Law Governing Construction of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.10. Amounts Remaining in Bond Fund or Other Funds . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.11. FHA Loan Documents and Regulations Control . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit A - Form of Income Certification
Exhibit B - Form of Certificate of Continuing Program Compliance
Exhibit C - Form of Statistical Report to Issuer
SF2-27262.2 11 40511-90-MS1-03/11/94
FINANCING AGREEMENT
THIS FINANCING AGREEMENT(as supplemented and amended, this "Agreement") is entered into
as of 1, 1994, by and among the COUNTY OF CONTRA COSTA, a legal subdivision and body
corporate and politic existing under the laws of the State of California (together with its successors and assigns,
the "Issuer"), EAH-CONTRA COSTA, INC., a California nonprofit corporation (together with its successors
and assigns, the 'Borrower"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as trustee (together with its successors and assigns, the "Trustee") under a Trust Indenture of even date herewith
between the Issuer and the Trustee (as supplemented and amended, the "Indenture"), and TRI CAPITAL
CORPORATION, a California corporation (together with its successors and assigns, the "Lender").
RECITALS
WHEREAS, the Borrower has requested the assistance of the Issuer in financing the acquisition and
rehabilitation of a very low income rental housing development, as described in Exhibit A hereto; and
WHEREAS, upon the request of the Borrower, the Issuer has determined to issue under the Indenture
its Multifamily Housing Revenue Bonds (GNMA Collateralized - Crescent Park Apartments Project) 1994 Series
B, in the aggregate principal amount of$ (the "Series B Bonds"), and its Multifamily Housing
Revenue Bonds (GNMA Collateralized - Crescent Park Apartments Project) Taxable 1994 Series B-T, in the
aggregate principal amount of$ (the "Series B-T Bonds," and collectively with the Series B Bonds,
the 'Bonds").
WHEREAS, the Trustee shall use the proceeds of the Series B Bonds to purchase from the Lender a
fully-modified mortgage-backed security (the "GNMA Security") which will be guaranteed as to timely payment
of principal and interest by the Government National Mortgage Association ("GNMA"), and will use the
proceeds of the Series B-T Bonds to pay certain costs in connection with the issuance of the Bonds. The
GNMA Security will represent an undivided interest in the Mortgage.
The Issuer, the Borrower, the Trustee and the Lender each represents as to itself that it has power and
authority to enter into this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the respective representations, covenants and agreements
hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions. Terms used in this Agreement and defined in the Indenture or in the
Regulatory Agreement and Declaration of Restrictive Covenants, dated as of 1, 1994, as amended,
among the Issuer, the Borrower and the Trustee (the "Issuer Regulatory Agreement") shall have the meanings
given to them by the Indenture or the Issuer Regulatory Agreement, respectively, unless the context clearly
indicates otherwise.
SECTION 1.2. Rules of Construction. The words "hereof", "herein" "hereunder," "hereto" and
other words of similar import refer to this Agreement in its entirety.
SF2-27262.2 40511-90-MSI-03/11/94
•
The terms "agree" and "agreements" contained herein are intended to include and mean "covenant" and
"covenants."
References to Articles, Sections, and other subdivisions of this Agreement are to the designated
Articles, Sections, and other subdivisions of this Agreement as originally executed.
The headings of this Agreement are for convenience only and shall not define or limit the provisions
hereof.
The parties acknowledge that each party and its respective counsel have participated in the drafting and
revision of this Agreement, the Indenture and the Issuer Regulatory Agreement. Accordingly, the parties agree
that any rule of construction which would disfavor the drafting party shall not apply in the interpretation of this
Agreement, the Indenture or the Issuer Regulatory Agreement or any Supplement or exhibit hereto or thereto.
ARTICLE H
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
SECTION 2.1. Representations and Findings of the Issuer. The Issuer makes the following
representations and warranties:
(a) The Issuer is a legal subdivision and body corporate and politic, duly organized and existing
under laws of the State. Under the provisions of the Act, the Issuer has the power to enter into this Agreement,
the Indenture and the Issuer Regulatory Agreement and the transactions contemplated hereunder and thereunder
and to carry out its obligations hereunder and thereunder. By proper action, the Issuer has duly authorized the
execution and delivery of this Agreement, the Indenture and the Issuer Regulatory Agreement.
(b) The Issuer is issuing the Bonds, at the request of the Borrower, in order to provide for the
financing of the acquisition and rehabilitation of the Project.
(c) To its knowledge and in reliance upon the advice of counsel, neither the execution nor the
delivery of the Bonds, this Agreement, the Bond Purchase Agreement, the Issuer Regulatory Agreement or the
Indenture conflicts with or results in a breach of any of the terms, conditions or provisions of any constitutional
provisions or statute of the State, or of any agreement, instrument,judgment, order or decree to which the
Issuer is now a party or by which it is bound, or constitutes a default under any of the foregoing.
(d) The Issuer hereby confirms its findings relating to the issuance of the Bonds contained in the Bond
Resolution.
SECTION 2.2. Representations, Warranties and Undertakings by the Borrower. The Borrower
makes the following representations and warranties:
(a) Good Standing. The Borrower (i) is a nonprofit corporation duly organized and existing, in
good standing, under the laws of the State of California, (ii)has the power to own its property and to carry on
its business as now being conducted and as contemplated by this Agreement, the Issuer Regulatory Agreement
and the FHA Loan Documents, (iii) is duly qualified to do business and is in good standing in each jurisdiction
in which the character of the properties owned by it therein or in which the transaction of its business makes
such qualification necessary, including, but not limited to, the State, (iv) is an organization described in Section
501(c)(3) of the Code and is exempt from federal income tax under Section 501(a) of the Code, and (v) the
Borrower's acquisition and operation of the Project pursuant to (and subject to requirements set forth in) the
Indenture, this Financing Agreement and the Regulatory Agreement, will not give rise to an "unrelated trade or
business" of the Borrower within the meaning of Section 513(a) of the Internal Revenue Code of 1986.
SF2-27262.2 2 40511-90-MSI-03/11/94
(b) Authori . The Borrower has full power and authority to execute and deliver this Agreement,
each of the FHA Loan Documents executed and delivered by it and the Issuer Regulatory Agreement, to make
the borrowing under the FHA Loan Documents, and to incur the obligations provided for herein and therein, all
of which have been duly authorized by all proper and necessary corporate action. All consents or approvals of
any public authority which, to the best of the Borrower's knowledge, are required as a condition to the validity
of this Agreement, the Issuer Regulatory Agreement or any of the FHA Loan Documents executed and
delivered by the Borrower have been obtained.
(c) Binding Agreements. This Agreement, the Issuer Regulatory Agreement and each of the FHA
Loan Documents executed and delivered by the Borrower have been properly executed by the duly authorized
officer of the Borrower, constitute valid and legally binding obligations of the Borrower, and are fully
enforceable against the Borrower in accordance with their respective terms, subject to bankruptcy, insolvency or
other laws affecting creditors' rights generally, and with respect to certain remedies which require, or may
require, enforcement by a court of equity, such principles of equity as the court having jurisdiction may impose.
(d) Litigation. There is no litigation or proceeding pending or, to the knowledge of the Borrower,
threatened against the Borrower or the Project before any court or administrative agency which, in the opinion
of the Borrower or its counsel, if determined adversely to the Borrower, will materially adversely affect the
Borrower or the Project, or the authority of the Borrower to enter into this Agreement, the Issuer Regulatory
Agreement or any of the FHA Loan Documents executed and delivered by the Borrower.
(e) Conflicts, Defaults. There is (i) no provision of the Borrower's articles of incorporation,
dated 199_, bylaws, dated , 199_, or other organizational documents or resolutions of the
Borrower and no provision of any existing mortgage, indenture, contract or agreement binding on the Borrower
or affecting any of the Borrower's property, and (ii) to the best of the Borrower's knowledge, no provision of
law or order of court binding upon the Borrower or affecting any of the Borrower's property, in either case
which would conflict with or in any way prevent the execution, delivery, or performance of the terms of this
Agreement, the Bond Purchase Agreement, the Issuer Regulatory Agreement or any of the FHA Loan
Documents executed and delivered by the Borrower, or which would be in default or violated as a result of such
execution, delivery or performance. The Borrower is not in material default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument
to which it is a party, other than its defaults under the Mortgage Loan and related documents which will be
cured by the transactions contemplated hereby.
(f) Title to Property. The Borrower has good and marketable title to the land constituting the site
of the Project free and clear of any liens or encumbrances (other than encumbrances on the Project approved by
FHA).
(g) Indenture. The Indenture has been submitted to the Borrower for its examination, and the
Borrower acknowledges, by execution of this Agreement, that it has reviewed the Indenture, and it hereby
approves the Indenture. The Borrower agrees to perform fully and faithfully all the duties and obligations
which the Issuer has covenanted and agreed in the Indenture to cause the Borrower to perform and any duties
and obligations which the Borrower or the Issuer is required by the Indenture to perform. The foregoing shall
not apply to any duty or undertaking of the Issuer which by its nature cannot be delegated or assigned.
(h) Events Affecting Tax Exemption. If the Borrower becomes aware of any situation, event or
condition which would result in the interest on the Tax-Exempt Bonds being included in gross income for
federal income tax purposes, the Borrower shall promptly give written notice thereof to the Issuer and the
Trustee.
(i) Compliance with Laws. The Project is of the type authorized and permitted by the Act and
has at all times been operated in compliance with the provisions of the Act and the provisions of the Code
applicable thereto. The Borrower will use due diligence to cause the Project to be operated in accordance with
SF2-27262.2 3 40511-90-MSI-03/11/94
• 0
the Act and all other laws, rulings, regulations and ordinances of the State and the departments, agencies and
political subdivisions thereof. The Borrower has obtained or will cause to be obtained all requisite approvals of
the State and of other federal, state, regional and local governmental bodies for the operation of the Project.
0) No Reliance on Issuer. The Borrower acknowledges, represents and warrants that it
understands the nature and structure of the transactions relating to the financing of the Project; that it is familiar
with the provisions of all of the documents and instruments relating to such financing to which it or the Issuer is
a party or of which it is a beneficiary; that it understands the risks inherent in such transactions, including
without limitation the risk of loss of the Project; and that it has not relied on the Issuer for any guidance or
expertise in analyzing the financial or other consequences of such financing transactions or otherwise relied on
the Issuer in any manner except to issue the Bonds.
SECTION 2.3. Representations, Warranties and Undertakings of the Lender. In addition to the
other representations and covenants of the Lender contained herein, the Lender hereby represents and warrants
as follows:
(a) Corporate Authority. The Lender (i) is a duly and lawfully organized California corporation
and is duly authorized to transact business in the State, (ii) is organized and operated for the purposes, among
others, of making mortgage loans to provide financing for the acquisition and rehabilitation of multifamily rental
residential developments and of issuing mortgage-backed securities guaranteed by GNMA to obtain funds to
make such mortgage loans, (iii)has full lawful power and authority under its organizational documents and
applicable laws to execute and deliver this Agreement, to issue, execute and deliver the GNMA Security and to
perform its obligations hereunder and thereunder, and (iv) by proper action has duly authorized the execution
and delivery of this Agreement and the issuance, execution and delivery of the GNMA Security.
(b) Binding_Agreements. This Agreement and the GNMA Security constitute the legal valid and
binding obligations of the Lender enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency or other laws affecting creditors' rights generally, and with respect to certain remedies which
require, or may require, enforcement by a court of equity, such principles of equity as the court having
jurisdiction may impose.
(c) No Conflicting Agreements. The execution and delivery of this Agreement and the issuance,
execution and delivery of the GNMA Security, and the consummation of the transactions contemplated hereby
and thereby, do not conflict with or constitute a breach of or a default under the Lender's organization
documents or under the terms and conditions of any agreement or commitment to which the Lender is a party or
by which the Lender is bound.
(d) Litigation. There is no action, suit, proceeding, inquiry or investigation by or before any
court, governmental agency, public board or body pending or, to the knowledge of the Lender, threatened
against the Lender, which questions or affects the power or authority of the Lender to carry out the transactions
contemplated by, or to be performed under, this Agreement or the GNMA Security.
(e) Lender as FHA-Approved Servicer. The Lender is (i) approved by FHA to originate and
service mortgage loans insured by FHA under Section 241(f) of the National Housing Act and applicable
regulations thereunder, (ii) meets all the issuer eligibility requirements of(including net worth requirements) and
is approved by GNMA to issue mortgage-backed securities guaranteed by GNMA pursuant to Section 306(8) of
the National Housing Act and applicable regulations thereunder.
(f) Eligibility of Mortgage for GNMA Guarantee. The Project, including the Mortgage, meets the
eligibility requirements set forth in the GNMA Mortgage-Backed Securities Guide as of the Closing Date.
(g) Approval of Indenture. The Indenture has been submitted to the Lender for examination, and
the Lender acknowledges, by execution of this Agreement, that it has reviewed and understands the Indenture
SF2-27262.2 4 40511-90-MSI-03/11/94
• •
with respect to the payment to the Lender for the GNMA Security and it hereby approves the Indenture as it
relates to the GNMA Security and in so far as it affects the Lender.
(h) Events Affecting Tax Exemption. The Lender shall not knowingly take any action that would
adversely affect the exclusion of interest on the Tax-Exempt Bonds from gross income for purposes of federal
income taxation.
(i) Fees of Lender. The fees charged by the Lender in connection with making the Mortgage
Loan are reasonable and customary for financings of the kind represented by the Mortgage Loan and do not
exceed the fees that would have been charged by the Lender for making the Mortgage Loan if the funds for the
financing had been provided other than from the Bonds or from any other obligation, the interest on which is
exempt from federal income taxes.
0) Delivery of Documents and Certificates. The Lender shall deliver such documents and
certificates to the Trustee as shall be required hereunder and under the Indenture in connection with the
disbursement of the moneys in the Acquisition Fund and the delivery of the GNMA Security.
(k) Lender's Certificate. The Lender covenants that the certifications in the Lender Certificate, a
form of which is attached as Exhibit E to the Bond Purchase Agreement, are true and correct, and agrees that
they shall be incorporated herein by reference.
SECTION 2.4. Warranty of Truth. The Borrower covenants that no information, certificate,
statement in writing or report required by this Agreement or the Issuer Regulatory Agreement or otherwise
furnished by the Borrower to the Issuer or the Trustee will contain any untrue statement of a material fact or
omit a material fact necessary to make such information, certificate, statement or report not misleading.
The Lender covenants that no information, certificate, statement in writing or report required by this
Agreement or otherwise furnished by the Lender to the Issuer or the Trustee will contain any untrue statement
of a material fact or omit a material fact necessary to make such information, certificate, statement or report not
misleading.
ARTICLE III
THE FINANCING TRANSACTION
SECTION 3.1. General Terms of the Financing. (a) In order to provide a portion of the funds
necessary to acquire the Project, the Issuer will issue, sell and deliver the Bonds in accordance with the Bond
Purchase Agreement and upon the terms and subject to the conditions contained in this Agreement and the
Indenture, and will cause the Underwriters to deliver the proceeds thereof to the Trustee.
(b) The Lender will deliver the GNMA Security to the Trustee on the Closing Date.
(c) The Borrower unconditionally promises (i) to repay the principal of the Mortgage Loan with
interest thereon as provided in the Mortgage Note, and (ii) to comply with the provisions of this Agreement, the
FHA Loan Documents and the Issuer Regulatory Agreement as provided therein, provided that such promise is
subject to the provisions of Section 9.11 hereof.
(d) The Lender agrees to make all payments on the GNMA Security when due and to meet all its
obligations under the GNMA Mortgage-Backed Securities Guide and the GNMA Guaranty Agreement.
SECTION 3.2. Sufficiency of Funds. The Issuer does not make any warranty, either express or
implied, that the moneys deposited in the Acquisition Fund under the Indenture and available for payment of the
SF2-27262.2 5 40511-90-MS 1-03/11/94
costs of acquiring the GNMA Security will be sufficient to pay all the costs thereof. The Borrower agrees that
if the Borrower should pay any costs relating to the acquisition of the GNMA Security other than from the Bond
proceeds, the Borrower shall not be entitled to any reimbursement therefor from the Lender, the Issuer, the
Trustee or the Bondholders; provided, however that the Borrower shall incur such costs as a result of the
negligent or willful misconduct of either the Lender or the Trustee or as a result of the willful misconduct of the
Issuer, the Borrower may be entitled to reimbursement therefor.
SECTION 3.3. Lender Loan to Borrower. The Lender and the Borrower represent, and the
Issuer and the Trustee acknowledge, that the Mortgage Loan (a) is insured by FHA pursuant to and in
accordance with the provisions of Section 241(f) of the National Housing Act and applicable regulations
thereunder, as evidenced by the endorsement by FHA of the note evidencing the Mortgage Loan; (b) is in the
principal amount of$ ; (c) bears interest at the rate of % per annum; (d) has a final maturity
of , 2034; (e) is payable in equal monthly installments of principal and interest, commencing on
, 1994; (f) is secured on a nonrecourse basis pursuant to the FHA Loan Documents; and (g) is not
subject to prepayment prior to maturity; except that(i) the Mortgage Loan is subject to mandatory prepayment
as a whole or in part at any time upon 15 days' prior written notice to the Lender without premium or penalty,
from the proceeds of any casualty insurance or condemnation awards received following a partial or total
destruction or condemnation of the Project, in the event and to the extent that such casualty proceeds or
condemnation awards are not applied to the repair or restoration of the Project in accordance with the FHA
Loan Documents; (ii) the Mortgage Note shall be subject to prepayment in whole but not in part, at the option
of the Borrower, on , 2004, or on any date thereafter, upon at least 30 days' advance written notice to
the Lender, and upon payment of the principal amount of the Mortgage Note then outstanding together with all
costs necessary to redeem the Bonds, including the applicable prepayment premium attributable to the balance of
the Mortgage Loan plus accrued interest to the date of redemption of the Bonds less investment earnings on
such sums paid from the date of payment to the date fixed for prepayment of the Mortgage Note and redemption
of the Bonds; (iii) the Mortgage Note shall also be subject to prepayment in whole or in part without premium
upon at least 30 days' advance written notice to the Lender to the extent, if any, required by applicable rules,
regulations, policies and procedures of HUD and GNMA; and (iv) notwithstanding any prepayment prohibition
imposed and/or penalty required by the Mortgage Note with respect to prepayments made prior to ,
2004, the indebtedness may be prepaid in part or in full without the consent of the mortgagee and without
prepayment penalty, upon at least 30 days' advance written notice to the Lender, if HUD determines that
prepayment will avoid a mortgage insurance claim and is therefore in the best interest of the Federal
Government.
SECTION 3.4. Investment of Moneys. Any moneys held as part of any fund created under the
Indenture shall be invested or reinvested, from time to time, by the Trustee in Qualified Investments as provided
in Section 410 of the Indenture. The Lender and the Borrower have reviewed those provisions of the Indenture
relating to investment of funds held under the Indenture and the use of such investment earnings, and have
reviewed the Trustee's proposed initial investment of funds deposited to the various funds under the Indenture in
the Investment Agreement for such funds, and hereby approve the same.
SECTION 3.5. Acquisition of the GNMA Security. The Trustee hereby agrees to acquire the
GNMA Security on behalf of the Issuer; provided, however, that the Trustee's obligation in such respect shall
be limited to the moneys available for such purpose in the Acquisition Fund, and provided further that the
Trustee shall not have any obligation to acquire the GNMA Security unless there shall have been delivered to
the Trustee, along with the GNMA Security, the following:
(a) a copy of the executed FHA Loan Documents;
(b) evidence that the Issuer Regulatory Agreement has been duly filed of record in the Recorder's
Office of the County of Contra Costa, California; and
SF2-27262.2 6 40511-90-MSI-03/11/94
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(c) a certificate of the Borrower dated the date of acquisition of the GNMA security stating that
(i) all representations and warranties of the Borrower set forth in this Financing Agreement and the Issuer
Regulatory Agreement remain true and correct in all material respects as of the date of such certificate and
(ii) the Borrower is in full material compliance with all covenants and undertakings of the Borrower set forth in
this Financing Agreement, the Issuer Regulatory Agreement and the FHA Loan Documents, as of the date of
such certificate.
ARTICLE IV
PAYMENTS; SPECIAL COVENANTS OF THE BORROWER
SECTION 4.1. Adequate Payments. The Borrower covenants to pay the Rebate Amount, if any,
payable to the United States Government as provided in the Tax Certificate and the Indenture.
The Borrower further reconfirms its agreement in the Mortgage, subject to the nonrecourse provisions
thereof, to pay all costs of maintenance and repair, all Taxes and assessments, insurance premiums (including
public liability insurance and insurance against damage to or destruction of the Project) concerning or in any
way related to the Project, or any part thereof, and any expenses or renewals thereof, and any other
governmental charges and impositions whatsoever, foreseen or unforeseen, and all utility and other charges and
assessments concerning or in any way related to the Project.
In the event the Borrower is in default under any provision of this Agreement, the FHA Loan
Documents or the Issuer Regulatory Agreement, the Borrower shall be liable to and upon demand shall pay to
the Issuer, the Trustee and the Lender all reasonable fees and disbursements of such persons and their agents
(including attorneys' fees and expenses) which are reasonably incurred in connection with the default or
incidental thereto except to the extent such fees and disbursements are paid from moneys available therefor
under the Indenture; provided, however, that the Borrower shall not be liable to the Trustee or the Lender for
any fees and disbursements arising out of a default caused by the negligence or willful misconduct of the
Trustee or the Lender, respectively, and shall not be liable to the Issuer for any fees and disbursements arising
out of a default caused by the willful misconduct of the Issuer. The provisions of this Section are in addition to
and not in limitation of the provisions of Sections 5.7, 5.8 and 6.1 of this Agreement.
SECTION 4.2. Operation of the Project. The Borrower shall operate or cause the Project to be
operated as a housing project pursuant to Section 241(f) of the National Housing Act and in accordance with the
requirements of the Issuer Regulatory Agreement, the Code, the Act and the requirements set forth in the Plan
of Action between the Borrower and HUD pursuant to Title II of the Housing and Community Development Act
of 1987.
SECTION 4.3. Compliance with Applicable Laws. All work performed in connection with the
Project shall be performed in strict compliance with all applicable federal, state, county and municipal laws,
ordinances, rules and regulations now in force or that may be enacted hereafter.
SECTION 4.4. Payments by Borrower. The Borrower agrees that it shall pay all expenses
incurred by it, including the expenses of its counsel and those incurred in closing the Mortgage Loan, and the
fees and expenses of the Trustee required pursuant to Section 405 of the Indenture. The Borrower shall also
pay the costs of filing any financing statements pursuant to Section 504 of the Indenture, and all costs and other
amounts mentioned in Sections 5.7, 5.8, 6.1 and 7.4 hereof.
SF2-27262.2 7 40511-90-MS1-03/11/94
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 5.1. Absolute and Unconditional Obligation; Limited Recourse. The obligations of the
Borrower under this Agreement shall be absolute and unconditional and shall remain in full force and effect
until (i) the entire principal of and premium, if any, and interest on the Bonds shall have been paid or provided
for, or (ii) the Mortgage Note shall have been paid in full, and such obligations shall not be affected, modified
or impaired upon the happening from time to time of any event, including without limitation any of the
following, whether or not with notice to, or the consent of, the Borrower:
(a) the compromise, settlement, release or termination of any or all of the obligations, covenants
or agreements of the Issuer under the Indenture;
(b) the failure to give notice to the Borrower of the occurrence of an event of default under the
terms and provisions of this Agreement, the FHA Regulatory Agreement, the Indenture, the Mortgage Note,
Mortgage or the Issuer Regulatory Agreement;
(c) the waiver of the payment, performance or observance by the Issuer or the Borrower of any of
the obligations, covenants or agreements of them contained in the Indenture, the Mortgage Note, the Mortgage,
the Issuer Regulatory Agreement, the FHA Regulatory Agreement or this Agreement;
(d) the extension of the time for payment of any principal of, premium, if any, or interest on any
Bond or under this Agreement, or of the time for performance of any other obligations, covenants or
agreements under or arising out of the Indenture, the Mortgage Note, the Mortgage, the FHA Regulatory
Agreement, the Issuer Regulatory Agreement or this Agreement;
(e) the modification or amendment (whether material or otherwise) of any obligation, covenant or
agreement set forth in the Indenture, the Mortgage Note, the Mortgage, the FHA Regulatory Agreement or the
Issuer Regulatory Agreement;
(f) the taking or the omission of any of the actions referred to in the Indenture, the Mortgage
Note, the Mortgage, the FHA Regulatory Agreement or the Issuer Regulatory Agreement or any actions under
this Agreement;
(g) any failure, omission, delay or lack on the part of Issuer or the Trustee to enforce, assert or
exercise any right, power or remedy conferred on the Issuer or the Trustee in this Agreement or any document
relating to the Bonds or the Indenture, or any act or acts on the part of the Issuer, the Trustee or any of the
holders from time to time of the Bonds;
(h) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting, the Borrower or the Issuer or any of the assets of either of them, or any
allegation or contest of the validity of this Agreement in any such proceeding;
(i) to the extent permitted by law, the release or discharge of the Borrower from the performance
or observance of any obligation, covenant or agreement contained in this Agreement by operation of law (other
than the release or discharge from payment on the Mortgage Note); or
0) the default or failure of the Borrower fully to perform any of its obligations set forth in this
Agreement.
SF2-27262.2 8 40511-90-MS1-03/11/94
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The specific enumeration of the above-mentioned acts, failures or omissions shall not be deemed to
exclude any other acts, failures or omissions, though not specifically mentioned above, it being the purpose and
intent of this paragraph that the obligations of the Borrower shall be absolute and unconditional to the extent
herein specified and shall not be discharged, impaired or varied except by the happening of any of the events
specified in the first paragraph of this Section 5.1. Without limiting any of the other terms or provisions
hereof, it is understood and agreed that, in order to hold the Borrower liable hereunder, there shall be no
obligation on the part of the Trustee or any Bondholder to resort in any manner or form for payment to the
Issuer or to any other person, firm or occupation, their properties or estates.
Notwithstanding the foregoing or any other provision or obligation to the contrary contained in this
Agreement, (i) the liability of the Borrower under this Agreement and any other document relating to the Bonds
to any person or entity, including, but not limited to, the Trustee or the Issuer and their successors and assigns,
is limited to the Borrower's interest in the Project and the amounts held in the funds and accounts created under
the Indenture or other documents relating to the Bonds or any rights of the Borrower under any guarantees
relating to the Project, and such persons and entities shall look exclusively thereto, or to such other security as
may from time to time be given for the payment of obligations arising out of this Agreement or any other
agreement securing the obligations of the Borrower under this Agreement; and (ii) from and after the date of
this Agreement, no deficiency or other personal judgment, nor any order or decree of specific performance
(other than pertaining to this Agreement, any agreement pertaining to the Project or any other agreement
securing the Borrower's obligations under this Agreement), shall be rendered against the Borrower, the assets of
the Borrower (other than the Borrower's interest in the Project, this Agreement, amounts held in the funds and
accounts created under the documents relating to the Bonds, any rights of the Borrower under the documents
relating to the Bonds or any rights of the Borrower under any guarantees relating to the Project), its partners,
officers, directors or members or their heirs, personal representatives, successors, transferees or assigns, as the
case may be, in any action or proceeding arising out of this Agreement and the Indenture or any agreement
securing the obligations of the Borrower under this Agreement, or any judgment order or decree rendered
pursuant to any such action or proceeding.
Nothing contained herein shall in any way be construed to limit any indemnification provided by the
Borrower to the Issuer, the Trustee or any other person pursuant to any other agreement to which the Borrower
is a party.
SECTION 5.2. No Defense. No setoff, counterclaim, reduction or diminution of any obligation,
or any defense of any kind or nature which the Borrower has or may come to have against the Issuer or the
Trustee shall be available hereunder to the Borrower against the Trustee other than the payment of sums owing.
SECTION 5.3. Waiver of Notice. The Borrower hereby expressly waives notice from the Trustee
or the owners from time to time of any of the Bonds of their acceptance and reliance on this Agreement. The
Borrower agrees to pay all reasonable costs, expenses and fees, including all reasonable attorneys' fees which
may be incurred by the Trustee in enforcing or attempting to enforce this Agreement following any default on
the part of the Borrower hereunder, whether the same shall be enforced by suit or otherwise; provided, however
that the Borrower shall not be liable for any costs, expenses or fees incurred by the Trustee as a result of the
Trustee's willful misconduct or breach of this Agreement or the Indenture. The Trustee shall be entitled to the
benefits of Article VII of the Indenture in the exercise of its rights and duties hereunder.
SECTION 5.4. Inspections. The Borrower agrees that all equipment, buildings,plans, offices,
apparatus, devices, books, contracts, records, documents, and other papers relating to the Project shall at all
times be maintained in reasonable condition for proper audit, and shall,upon prior written notice and during
regular business hours, be subject to examination and inspection at any reasonable time by the Issuer, the
Trustee, the Lender or their authorized agents.
SECTION 5.5. Reports and Information. At the request of the Issuer or the Trustee, their agents,
employees or attorneys, the Borrower shall furnish to the Issuer and the Trustee, concurrently with delivery to
SF2-27262.2 9 40511-90-MS1-03/11/94
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the Lender or HUD, copies of any reports and information furnished to the Lender or HUD pursuant to the
FHA Loan Documents. Additionally, the Borrower shall furnish to the Issuer and the Trustee, if so requested,
(i) such information as may be reasonably requested in writing from time to time relative to compliance by the
Borrower with the provisions of this Agreement and the Issuer Regulatory Agreement; and (ii) such other
information as may be necessary to enable the Issuer to complete and file all forms and reports required by the
laws of the State and the Code in connection with the Project and the Bonds. So long as any Bonds are
Outstanding, the Borrower shall deliver to the Trustee (i) quarterly unaudited financial statements with respect to
the Project, within 45 days after the close of each calendar quarter; and (ii) audited financial statements with
respect to the Project as soon as the same are available, but in any event within sixty days after the close of
each calendar year.
The Borrower hereby further agrees that it shall obtain and file with the Issuer and the Trustee (i) at
the time of initial occupancy of any tenant in the Project, (ii)upon the vacancy and reoccupancy of any unit in
the Project, and (iii) as often as necessary to comply with the requirements of the Code, the Act and the Issuer
Regulatory Agreement, an Income Certification, consisting of a Verification of Income and an Occupancy
Certificate, each in the form set forth in Exhibit A to this Agreement or in such other form as may be provided
to the Borrower by the Issuer, and each of which shall be subject to independent investigation and verification
by the Issuer and the Trustee upon request. During the Qualified Project Period, on or before the fifteenth
(15th) day of each January, April, July and October, the Borrower shall file with the Issuer and the Trustee (1)
a Certificate of Continuing Program Compliance, in the form set forth in Exhibit B to this Agreement or in such
other form as may be provided to the Borrower by the Issuer, and (2) a statistical report to the Issuer in the
form set forth in Exhibit C to this Agreement or in such other form as may be provided to the Borrower by the
Issuer, in each case setting forth the required information for the preceding calendar quarter. The books and
records of the Borrower pertaining to the incomes of tenants residing in the Project shall be open to inspection
by any authorized representative of the Issuer and the Trustee.
SECTION 5.6. Assi ng ment. No assignment or transfer of title to the Project shall be made
except as permitted by the Issuer Regulatory Agreement and unless (1) the Lender and HUD consent to such
assignment or transfer, as long as the Mortgage Loan is held by the Lender and insured by FHA, and (2) the
transferee or assignee, as the case may be, assumes all of the duties of the Borrower under this Agreement, the
Issuer Regulatory Agreement and the FHA Loan Documents, subject to the provisions of such documents.
Upon the assumption of the duties of the Borrower by an assignee as provided herein, the Borrower shall be
released from all executory obligations so assumed. Nothing contained in this Section shall be construed to
supersede any provisions regarding assignment and transfer of the Project contained in the FHA Loan
Documents.
SECTION 5.7. Fees and Expenses. The Borrower agrees to pay, whether out of the proceeds of
the Mortgage Loan or other funds, all reasonable fees and expenses of the Issuer, the Trustee and the Rebate
Analyst (including the reasonable fees and expenses of their counsel) in connection with the issuance of the
Bonds and the performance of their duties in connection with the transactions contemplated hereby, including,
without limitation, all costs of recording and filing, to the extent such fees and expenses are not otherwise paid
from the Costs of Issuance Fund or the Expense Fund in accordance with Section 405 of the Indenture. All
such amounts shall be paid directly to the parties entitled thereto for their own account as and when such
amounts become due and payable. The Borrower will also pay any reasonable expenses in connection with any
redemption of the Bonds. Specifically, and without limiting the foregoing, the Borrower agrees to pay (i) to the
Issuer or to any payee designated by the Issuer, within thirty(30) days after receipt of request for payment
thereof, all reasonable expenses of the Issuer related to the Project and the financing thereof which are not paid
from the funds held under the Indenture, including, without limitation, legal fees and expenses incurred in
connection with the interpretation, performance, enforcement or amendment of any documents relating to the
Project or the Bonds or in connection with questions or other matters arising under such documents; and (ii) to
the Issuer, on the Closing Date, the sum of$ ; and on , 1994, the sum of$ , and
on each Interest Payment Date thereafter, commencing , 1995 and ending on , 2034, an
amount equal to one-sixteenth of one percent (1/16 of 1%) of$ (the initial aggregate principal
SF2-27262.2 10 40511-90-MSI-03/11/94
amount of Bonds issued), in each case without demand or notice, and in each case in payment of the semiannual
fee of the Issuer for monitoring compliance by the Project with the Issuer Regulatory Agreement (the "Issuer's
Fee"); provided, however, that to the extent the amount on deposit in the Expense Fund pursuant to Section
405(v) of the Indenture is insufficient to pay the Issuer's Fee when due, the Borrower shall, not later than 5
days after notification from the Trustee of such deficiency, pay such amount directly to the Issuer,-that the
amount payable to or for the benefit of the Issuer under clause (ii) of this Section 5.7 shall not exceed any
limitation under Section 148 of the Code.
SECTION 5.8. Indemnification of Issuer and Trustee. The Borrower releases the Issuer and the
Trustee and their respective officials, officers, employees and agents from, and shall protect, indemnify, and
save harmless the Issuer and the Trustee and their respective officials, officers, employees and agents against
and from any and all liabilities, suits, actions, claims, demands, losses, expenses and costs of every kind and
nature incurred by, or asserted or imposed against, the Issuer, the Trustee and their respective officials,
officers, agents or employees, or any of them, (a) by reason of any default or event of default by the Borrower
or its successors or assigns under this Agreement, the Issuer Regulatory Agreement or any of the FHA Loan
Documents; or (b) by reason of any accident, injury (including death) or damage to any person or property,
however caused (other than, in the case of the Trustee, the negligence or willful misconduct of the Trustee or its
officers, agents or employees), resulting from, connected with or growing out of any act of commission or
omission of the Borrower, or any officers, employees, agents, assignees, contractors or subcontractors of the
Borrower or any use, non-use, possession, occupation, condition, operation, service, design, construction,
acquisition, maintenance or management of, or on, or in connection with, the Project or any part thereof; or (c)
resulting from any and all claims, actions, settlements, or liability for acts or failure to act by any person,
including, without limitation, the Borrower, the Issuer, the Trustee or their respective officials, officers, agents
and employees in connection with the Project as set forth in this Section (other than, in the case of the Trustee,
the negligence or willful misconduct of the party claiming indemnification,or its officers, agents or employees);
or (d) insofar as such liabilities, suits, actions, claims, demands, losses, expenses and costs arise out of or are
based upon any untrue statement or allegedly untrue statement of a material fact contained in any offering
documents distributed in connection with the issuance of the Bonds or the omission or alleged omission to state
therein a material fact necessary or allegedly necessary in order to make the statements and information therein
not misleading (other than a statement or omission resulting from the fraud or bad faith of the party claiming
indemnification, or its respective officials, officers, agents or employees, or any information describing the
issuer or the Trustee, as the case may be); or (e) as to the Issuer and its officers, agents and employees, for any
other reason in connection with the issuance of the Bonds, the financing or refinancing of the Project; in any
case regardless of whether such liabilities, suits, actions, claims, demands, damages, losses, expenses and costs
be against or be suffered or sustained by the Issuer or the Trustee or any of their respective officials, officers,
agents or employees, or be against or be suffered or sustained by legal entities, officials, officers, agents, or
other persons to whom the Issuer or the Trustee or any of their respective officials, officers, agents or
employees may become liable therefor. The Issuer and the Trustee shall not be liable for any damage or injury
occurring to the persons or property of the Borrower or any of its officers, agents, including operating
personnel, contractors and employees, or any other person or entity who or which may be upon the Project,
except for, as to the Trustee, such damage or injury caused by such entity's willful misconduct or negligence.
The Lender shall indemnify and hold harmless the Issuer and its officials, officers, employees,
attorneys and agents, including the Trustee, from and against any and all claims arising from any act or
omission of the Lender or any of its respective agents, contractors, servants, employees or licensees in
connection with the Mortgage Loan prior to the delivery of the GNMA Security to the Trustee and all costs,
counsel fees, expenses or liabilities incurred in connection with any such claim or proceeding brought thereon.
The Borrower or the Lender, as the case may be, shall undertake to defend, at its sole cost and
expense, any and all suits, actions and proceedings brought against the Issuer or the Trustee or any of their
respective officials, officers, agents or employees in connection with any of the matters indemnified against in
this Section. The persons so indemnified may also retain separate counsel in connection with such actions, suits
or proceedings, but the Borrower or the Lender, as the case may be, shall have no responsibility for the fees
sF2-z7262.2 1 1 40511-90-MSI-03/11194
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and expenses of such counsel. The Issuer and the Trustee shall give the Borrower or the Lender, as the case
may be, timely notice of and shall forward to the Borrower or the Lender, as the case may be, every demand,
notice, summons or other process received with respect to any claim or legal proceedings within the purview
hereof, but the failure of the Issuer or the Trustee to give such notice shall not affect its right to indemnification
hereunder.
All acts, including any failure to act, relating to the Project and the Bonds by the Issuer or the Trustee
or any agent, representative or designee of the Issuer or the Trustee are performed solely for the benefit of the
Issuer, the Trustee, and the Bondholders to assure repayment of the Mortgage Loan, maintenance of the tax
status of the interest on the Tax-Exempt Bonds and increase and maintenance of residential rental housing in the
jurisdiction of the Issuer, and are not for the benefit of the Borrower or the benefit of any other person, unless,
as to the Trustee, the failure to give notice shall have deprived the Borrower or the Lender, as the case may be,
of a reasonable opportunity to contest any such matter.
The obligations of the Borrower and the Lender under this Section shall survive the termination of this
Agreement and the payment and performance of all of the other obligations of the Borrower and the Lender
hereunder and under the FHA Loan Documents and the Issuer Regulatory Agreement.
SECTION 5.9. Mortgage Loan Documents. In connection with the making of the Mortgage
Loan, the Lender and the Borrower shall execute and deliver such documents as may be customarily utilized for
mortgage loans to be insured under the provisions of Section 241(f) of the National Housing Act and applicable
regulations thereunder, with such omissions, insertions and variations as may be permitted by such regulations
and as may be consistent with the terms and provisions of this Agreement.
SECTION 5.10. Insurance Proceeds. The Lender covenants that in the event of a default on the
Mortgage Loan resulting in a claim by the Lender for insurance proceeds pursuant to Section 241(f) of the
National Housing Act, the Lender shall request that such claim be paid only in cash and not debentures.
ARTICLE VI
SPECIAL TERMS AND PROVISIONS
SECTION 6.1. No Pecuniary Liability. The parties intend that by reason of making this
Agreement, by reason of the issuance of the Bonds, by reason of the performance of any act required of the
Issuer by this Agreement, the Issuer Regulatory Agreement or the Indenture, or by reason of the performance of
any act requested of the Issuer by the Borrower, or for any other reason, no indebtedness or obligation or
pledge of the faith and credit of the Issuer or a debt or pledge of the faith and credit of the State shall occur.
Nevertheless, if the Issuer shall incur any such pecuniary liability, then in such event the Borrower shall
indemnify and hold the Issuer harmless by reason thereof. The Borrower agrees to pay the Issuer (or, if the
Issuer so elects, to pay directly to the person entitled to payment) for the expenses, if any, incurred by the
Issuer in the administration of this Agreement, of the Mortgage Loan, of the Bonds and of the Issuer Regulatory
Agreement, or for any reason in connection with the issuance of the Bonds, as more specifically set forth in
Section 5.7.
It is recognized that notwithstanding any other provision of this Agreement, neither the Borrower, the
Trustee nor the Lender shall look to the Issuer for damages suffered by the Borrower, the Trustee, the Lender
or any Bondholder as a result of the Issuer's performance, failure to perform or insufficient performance of any
covenant, undertaking or obligation under this Agreement, the Indenture, the Bonds, the Issuer Regulatory
Agreement, any of the FHA Loan Documents or any of the other documents referred to herein, nor as a result
of the incorrectness of any representation made by the Issuer in any of such documents. Although this
Agreement recognizes that such documents shall not give rise to any pecuniary liability of the Issuer, nothing
contained in this Agreement shall be construed to preclude in any way any action or proceeding (other than that
SF2-27262.2 12 40511-90-MS]-03/11/94
element of any action or proceeding involving a claim for monetary damages against the Issuer) in any court or
before any governmental body, agency or instrumentality or otherwise against the Issuer or any of its officers or
employees to enforce the provisions of any of such documents which the Issuer is obligated to perform and
which the Issuer has not assigned to the Trustee or any other person. The obligation of the Borrower under this
Section shall survive the termination of this Agreement and the payment and performance of all of the other
obligations of the Borrower hereunder and under the FHA Loan Documents and the Issuer Regulatory
Agreement.
SECTION 6.2. Further Assurances and Corrective Instruments. The Issuer, the Trustee, the
Lender and the Borrower agree that they will, from time to time, execute and deliver or cause to be executed
and delivered such supplements hereto and such further instruments as may reasonably be required for carrying
out the intention of the parties to, or facilitating the performance of, this Agreement.
SECTION 6.3. Tax Covenants. The Issuer, the Trustee, the Lender and the Borrower have
entered into this Agreement with the intention that the interest on the Tax-Exempt Bonds be and remain
excluded from gross income under the Code. Accordingly, for the benefit of the Issuer, the Trustee and each
Bondholder, the Borrower covenants that it will not(a) take any action, (b) fail to take any action, or (c) make
any use of the Project or the proceeds of the Bonds, which would cause the interest on any of the Tax-Exempt
Bonds to be or become includable in the gross income of the Bondholders for federal income tax purposes.
Without limiting the generality of the foregoing, the Borrower confirms each of its representations set forth in,
and covenants and agrees that it will comply with each of the provisions of, the Issuer Regulatory Agreement
and the Tax Certificate.
The Borrower recognizes that certain of the facts, estimates and circumstances required to be set forth
in the Tax Certificate and other instruments of the Issuer, including Form 8038, will be based upon the
representations of the Borrower. The Borrower covenants to provide, or cause to be provided, such facts,
estimates and circumstances as are necessary to enable the Issuer to execute and deliver the Tax Certificate and
such other instruments. The Borrower further covenants that(a) such facts, estimates and circumstances will be
based on the Borrower's reasonable expectations on the Closing Date and will be, to the best of the knowledge
of the representative of the Borrower furnishing such facts, estimates and circumstances, true, correct and
complete as of that date, and (b) the Borrower will make reasonable inquiries to insure such truth, correctness
and completeness.
The Borrower and the Lender recognize that(a) the Trustee will hold and invest the proceeds of the
Bonds within its control in accordance with the expectations of the Issuer and the Borrower set forth in the Tax
Certificate; (b) if the Issuer is of the opinion, upon receipt of written advice of Bond Counsel, that it is
necessary to further restrict or limit the yield on the investment of any proceeds of the Bonds in order to avoid
the Tax-Exempt Bonds being considered "arbitrage bonds" within the meaning of Section 148 of the Code, the
Issuer shall deliver to the Trustee a written certificate to such effect (along with appropriate written instructions
and a copy of the written advice of Bond Counsel), in which event the Trustee will promptly deliver a copy of
all such material to the Borrower and will take such action as is necessary to restrict or limit the yield on such
investment in accordance with such certificate and instructions. The parties to this Agreement recognize that the
Issuer shall incur no liability in connection with any certificate or instructions delivered by the Issuer to the
Trustee as contemplated in this Agreement.
The obligations of the Borrower under this Section shall survive the termination of this Agreement and
the payment and performance of the other obligations of the Borrower hereunder and under the FHA Loan
Documents and the Issuer Regulatory Agreement.
SF2-27262.2 13 40511-90-MSI-03/11/94
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
SECTION 7.1. Events of Default; Remedies. Upon receipt by a Responsible Officer of the
Trustee of notice of a violation by the Borrower of, or default by the Borrower under any of the provisions of
this Agreement, the FHA Loan Documents or the Issuer Regulatory Agreement, the Trustee shall give written
notice thereof to the Borrower by certified mail, postage prepaid, return-receipt requested. If either (a) a
violation or default by the Borrower of any of the provisions of this Agreement is not corrected to the
reasonable satisfaction of the Trustee within 45 days after the date such notice is mailed or, if the violation or
default(other than a payment default) cannot be corrected within such period, within such longer period as may
be necessary, in the reasonable opinion of the Trustee, to correct such violation,provided that the Borrower has
commenced and is diligently pursuing appropriate action to correct such violation and there will be no material
adverse effect on the rights of the Issuer, the Trustee, the Lender or the Bondholders under this Agreement, the
Issuer Regulatory Agreement, any of the FHA Loan Documents or the Indenture as a result of such extension,
or (b) a violation of or default under any of the provisions of the Issuer Regulatory Agreement is not corrected
or cured within any cure period provided therein, without further notice the Trustee may declare a default under
this Agreement effective on the date of such declaration of default, and upon such default the Issuer, the Lender
or the Trustee may apply to any state or federal court having jurisdiction(i) for specific performance of this
Agreement or for an injunction against any violation of this Agreement, since the injury to the Issuer, the
Lender and the Trustee arising from a default under any of the terms of this Agreement would be irreparable,
and the amount of damage would be difficult to ascertain, or (ii) for other relief in law or equity which may be
appropriate. A default hereunder shall not constitute an Event of Default under the Indenture. In addition,
subject to the provisions of the Indenture, the Lender shall be entitled to exercise such remedies as may be
available under the FHA Loan Documents and the Issuer Regulatory Agreement. Except as provided in Section
4.1 hereof, nothing included herein shall permit the Issuer to recover actual monetary damages from the
Borrower upon the occurrence of an Event of Default hereunder.
SECTION 7.2. No Remedy Exclusive. No remedy conferred upon or reserved to the Issuer, the
Lender or the Trustee by this Agreement is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under
this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise
any right or power accruing upon any default shall impair any such right to power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Issuer, the Lender 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 expressly
required herein.
SECTION 7.3. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Agreement should be breached by any party and thereafter waived by the other parties, such
waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach
hereunder.
SECTION 7.4. _Payment of Costs. In the event the Borrower is in default under any provision of
this Agreement, the FHA Loan Documents or the Issuer Regulatory Agreement, the Borrower shall be liable to,
and upon demand shall pay to the Issuer, the Trustee and the Lender all reasonable fees and disbursements of
such persons and their agents (including attorneys' fees and expenses) which are reasonably connected therewith
or incidental thereto except to the extent such fees and disbursements are paid from moneys available therefor
under the Indenture.
SF2-27262.2 14 40511-90-MS1-03/11/94
ARTICLE VIII
TERMINATION AND PREPAYMENT
SECTION 8.1. QRttion to Terminate. The Borrower shall have the option to terminate this
Agreement at any time when (i) the Indenture shall have been discharged pursuant to Article IX thereof, and
(ii) sufficient moneys are on deposit with the Trustee or the Issuer, or either of them, to meet all additional
payments due or to become due through the date on which the last of the Bonds are then scheduled to be retired
or redeemed, or, with respect to additional payments to become due, provisions satisfactory to the Trustee and
the Issuer are made for paying such amounts as they come due.
SECTION 8.2. Option to Proaay Loan. The Borrower shall have and is hereby granted the option
to prepay the Mortgage Loan in full or in part prior to the payment and discharge of all the outstanding Bonds,
but only in accordance with the provisions of Section 3.4 hereof, the Mortgage Note and the Indenture.
SECTION 8.3. Notice of Prepayment; Timing of Prepayment. The Lender shall within 24 hours
notify the Trustee by telephone of the receipt of any notice of prepayment by the Borrower and of the receipt of
any prepayment or prepayment penalties paid by the Borrower pursuant to the terms of the Mortgage Note and
shall promptly confirm any such notice or receipt in writing. The written notice shall state the date such
prepayment will be passed through to the GNMA Security holder, which date shall be not later than the 15th
day of the month following the month in which such prepayment occurs and shall state the effect such
prepayment (if a partial prepayment) would have on the remaining scheduled payments on the GNMA Security.
The Lender shall transfer to the Trustee, immediately upon receipt, the portion of any prepayment penalties paid
by the Borrower pursuant to the Mortgage Note which are attributable to the GNMA Security, which
prepayment penalties shall comply with the requirements of Section 304 of the Indenture. If such prepayment is
not made by the time required therefor by the terms of the Mortgage Note, any prepayment premiums
previously received by the Lender shall be returned to the Borrower by the person holding such prepayment.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Term of Agreement. This Agreement shall remain in full force and effect from
the date hereof to and including the earliest to occur of the maturity date of the GNMA Security, the final
maturity of the Bonds, or such time as all of the Bonds shall have been fully paid (or provision made for such
payment pursuant to the Indenture), subject to the provisions of this Agreement which are expressed herein to
survive the termination hereof.
SECTION 9.2. Assignment by the Issuer. The Issuer has, simultaneously with the delivery of
this Agreement, by execution and delivery of the Indenture, assigned to the Trustee, as security for the Issuer's
obligations under the Bonds and the Indenture (among other things), all of the Issuer's right, title and interest in
and to and remedies under this Agreement (excepting only the Reserved Rights of the Issuer, including without
limitation, its right to indemnification by the Borrower and to payments to the Issuer (or for its account) for
expenses incurred by the Issuer itself, or its officials, officers, agents or employees on its behalf).
SECTION 9.3. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given by hand delivery or certified mail and shall be deemed given when hand delivered, or three
days after mailing if mailed by certified mail, postage prepaid, return receipt requested, addressed to the Issuer,
the Borrower, the Trustee, the Lender, or any other person to whom any such notice, certificate or other
communication is to be given, at the appropriate address set forth in Section 1004 of the Indenture. The Issuer,
the Borrower, the Lender and the Trustee, by notice given hereunder, may designate any further or different
addresses to which subsequent notices, certificates or other communications shall be sent.
SF2-27262.2 15 40511-90-MSI-03/11/94
SECTION 9.4. BindingEffect.ffect. This Agreement shall inure to the benefit of and shall be binding
upon the Issuer, the Borrower, the Trustee, the Lender and their respective successors and assigns, subject to
the limitation that any obligation of the Issuer created by or arising out of this Agreement shall not be an
indebtedness or a charge against the general credit or taxing powers of the Issuer or the State or any political
subdivision thereof, or give rise to any pecuniary liability of the Issuer, but shall be payable solely out of the
Revenues pledged under the Indenture.
SECTION 9.5. Successors and Assigns. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower which are contained in this Agreement
shall bind its successors and assigns and inure to the benefit of the successors and assigns of the Issuer.
SECTION 9.6. Severability. In the event any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable
any other provision thereof.
SECTION 9.7. Amendments, Changes and Modifications. This Agreement may be amended,
changed, modified, altered or terminated only by a written instrument executed by each of the parties hereto,
and only as permitted by Article VIII of the Indenture.
SECTION 9.8. Execution of Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
SECTION 9.9. Law Governing Construction of Agreement. This Agreement is prepared and
entered into with the intention that the laws of the State and, where applicable, the United States of America,
shall govern its construction.
SECTION 9.10. Amounts Remaining in Bond Fund or Other Funds. It is agreed by the parties
hereto that upon the expiration or sooner termination of this Agreement, and after payment in full of(a) the
principal of and redemption premium, if any, and interest on the Bonds (or after provision has been made for
the payment thereof as provided in the Indenture), (b) the Rebate Amount and (c) the fees and expenses of the
Trustee, the Rebate Analyst and the Issuer, any moneys remaining in the Bond Fund and in any other fund
established under the Indenture shall be paid only in accordance with the Indenture.
SECTION 9.11. FHA Loan Documents and Regulations Control. To the extent that there is any
inconsistency or ambiguity between or among this Agreement, including without limitation, the covenants of the
Borrower in Section 6.3 of this Agreement, and any of the FHA Loan Documents, the National Housing Act
and the regulations under such Acts, the FHA Loan Documents, the National Housing Act and the regulations
under such Acts, will be deemed to be controlling, and any such ambiguity or inconsistency will be resolved in
favor of, and pursuant to the terms of, the FHA Loan Documents, the National Housing Act and the regulations
under such Acts, as applicable.
SF2-27262.2 16 40511-90-MS 1-03/11/94
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their respective duly
authorized representatives, all as of the date first above written.
COUNTY OF CONTRA COSTA,
By:
Deputy Director-Redevelopment
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Trustee
By:
Title:
EAH-CONTRA COSTA, INC., a California nonprofit
corporation
By:
Title:
TRI CAPITAL CORPORATION
By:
Title:
SF2-27262.2 17 40511-90-MSI-03/11/94
Exhibit A
[FORM OF INCOME CERTIFICATION]
VERIFICATION OF INCOME
RE: [name and address of Project]
Apartment Number:
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
Household Household Age Number Employment
HEAD
SPOUSE
6. The anticipated income of all the above persons during the 12-month period beginning this
date, including income described in (a) below, but excluding all income described in(b) below, is $
(a) The amount set forth above includes all of the following income (unless such income is
described in (b) below):
(i) all wages and salaries, over-time pay, commissions, fees, tips and bonuses before
payroll deductions;
(ii) net income from the operation of a business or profession or from the rental of
real or personal property (without deducting expenditures for business expansion or amortization of capital
indebtedness or any allowance for depreciation of capital assets);
(iii) interest and dividends(include all income from assets as set forth in item 7(b);
(iv) the full amount of periodic payments received from social security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits and other similar types of
periodic receipts;
(v) payments in lieu of earnings, such as unemployment and disability compensation,
workmen's compensation and severance pay;
(vi) the maximum amount of public assistance available to the above persons;
SF2-27262.2 A-1 40511-90-MS 1-03/11/94
0
(vii) periodic and determinable allowances, such as alimony and child support
payments and regular contributions and gifts received from persons not residing in the dwelling;
(viii) all regular pay, special pay and allowances of a member of the Armed Forces
(whether or not living in the dwelling)who is the head of the household or spouse; and
(ix) any earned income tax credit to the extent it exceeds income tax liability.
(b) The following income is excluded from the amount set forth above:
(i) casual, sporadic or irregular gifts;
(ii) amounts which are specifically for or in reimbursement of medical expenses;
(iii) 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;
(iv) amounts of educational scholarships paid directly to a student or an educational
institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees,
books and equipment, but in either case only to the extent used for such purposes;
(v) hazardous duty to a member of the household in the armed forces who is away
from home and exposed to hostile fire;
(vi) relocation payments under Title H of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970;
(vii) income from employment of children (including foster children) under the age of
18 years;
(viii) foster child care payments;
(ix) the value of coupon allotments under the Food Stamp Act of 1977;
(x) payments to volunteers under the Domestic Volunteer.Service Act of 1973;
(xi) payments received under the Alaska Native Claims Settlement Act;
(xii) income derived from certain submarginal land of the United States that is held in
trust for certain Indian tribes;
(xiii) payments on allowances made under the Department of Health and Human
Services' Low-Income Home Energy Assistance Program;
(xiv) payments received from the Job Partnership Training Act;
(xv) income derived from the disposition of funds of the Grand River Band of Ottawa
Indians; and
(xvi) the first$2000 of per capita shares received from judgment funds awarded by the
Indian Claims Commission or the Court of Claims or from funds held in trust for an Indian tribe by the
Secretary of Interior.
SF2-27262.2 A-2 40511-90-MS1-03/11/94
• •
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 interests in Indian trust lands), 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
(b) (Complete only if the answer to Question 8(a) is "Yes"). Is any such person (other than
nonresident aliens) married and eligible to file a joint federal income tax return?
Yes No
We acknowledge 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 Borrower: A vacant unit previously occupied by individuals or a family of low or
moderate income, may be treated as occupied by individuals or a family or low or moderate 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.
FOR COMPLETION BY PROJECT Borrower ONLY:
I. Calculation of eligible income:
(A) Enter amount entered for entire household in 6 above: $
SF2-27262.2 A-3 40511-90-MSI-03/11/94
(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)): $
H. Qualification as individuals or a family of low or moderate or very low income:
(A) Is the amount entered in line 1(c) less than 80% of Median Gross Income for the Area*9.
Yes No
(B) (i) If line II(A) is "No", then the household does not qualify as individuals or a family of low
or moderate 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 or moderate income; skip to item H(G).
(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 or moderate income; skip to item H(G).
(iv) If neither (ii) nor (iii) is applicable, then the household does not qualify as individuals or a
family of low or moderate income.
(C) Is the amount entered in line I(C) less than 50% of Median Gross Income for the Area*9.
Yes No
(D) (i) If line II(C) is "No", then the household does not qualify as very low income; skip to
item III.
(ii) If line II(C) above is "Yes" and 8(a) above is "No", then the household qualifies as very
low income; skip to item III.
(iii) If line H(C) above is "Yes" and 8(b) above is "Yes", then the household qualifies as very
low income; skip to item III.
(iv) If neither (ii) nor (iii)is applicable, then the household does not qualify as very low
income.
in. (Check one)
The household does not qualify as individuals or a family of low or moderate income.
The household qualifies as individuals or a family of low or moderate income.
* "Median Gross Income for the Area"means the median income for the area where the Project is located as determined by the
Secretary of Housing and Urban Development under Section 8(f)(3)of the United States Housing Act of 1937,as amended,or if programs under
Section 8(f)are terminated,median income determined under the method used by the Secretary prior to the termination.
SF2-27262.2 A-4 40511-90-MS1-03/11/94
The household does not qualify as very low income.
The household qualifies as very low income.
IV. Number of apartment unit assigned:
(enter here and on page one)
Borrower
SF2-27262.2 A-5 40511-90-MSI-03111/94
OCCUPANCY CERTIFICATE
(To be filed with the Issuer and the Trustee along with a
Verification of Income upon the rental of a unit to any Low or
Moderate Income Tenant.)
Project:
The tenant identified in the attached Verification of Income has entered into a lease with respect to a unit in
the above-described Project.
Such tenant is/is not (circle one) a Low or Moderate Income Tenant.
Such tenant is/is not(circle one) a Very Low Income Tenant.
The rental of a unit to such tenant will not result in a violation of any of the requirements of the Financing
Agreement or the Issuer Regulatory Agreement to which the Borrower is a party.
Witness Borrower
Date:
SF2-27262.2 A-6 40511-90-MSI-03/11194
Exhibit B
[FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE]
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
Witnesseth that on this_ day of , the undersigned, having borrowed certain
funds from the (the "Issuer") for the purpose of constructing a multifamily rental housing
development (the "Project"), does hereby certify that during the preceding quarter (i) such Project was continually in
compliance with the Issuer Regulatory Agreement executed in connection with such loan from the Issuer, and
(ii)_% of the units in the Project were occupied by Very Low Income Tenants (minimum 49%), at Affordable
Rents; and does hereby further certify that the representations set forth herein are true and correct to the best of the
undersigned's knowledge and belief.
Set forth below are the names of Very Low Income Tenants who commenced or terminated
occupancy during the preceding quarter.
Commenced Occupancy Terminated Occupancy
1. 1.
2. 2.
3. 3.
The units occupied by Very Low Income Tenants are of similar size and quality to other units and
are dispersed throughout the Project.
Attached is a separate sheet listing the number of each unit and indicating which units are occupied
by Very Low Income Tenants, the size, the number of bedrooms of such units and the number of Very Low Income
Tenants who commenced occupancy of units during the preceding quarter.
Witness Borrower
Date:
SF2-27262.2 B-1 40511-90-MS1-03/11/94
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Exhibit C
[Form of]
STATISTICAL REPORT TO ISSUER
Reporting Period: , _. Date:
As of the date hereof-
1.
ereof:1. Total units: ; units occupied by Very Low Income Tenants: ; vacant
units most recently occupied by Very Low Income Tenants: ; other vacant units:
2. Total units occupied by households with children: ; Very Low Income Units so
occupied: ;
3. Total units occupied by elderly households with a member of age 62 or over: ;
Very Low 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 Very Low Income Tenants who terminated their rental agreements during
the previous twelve (12) month period is_
6. The number of units rented to new Very Low Income Tenants during the last twelve (12)
month period is_
7. The family names of each household currently occupying a Very Low Income Unit are
listed on the schedule attached hereto.
8. The number of Very Low Income Units of various sizes is:
studio:
one-bedroom:
two-bedroom:
three-bedroom:
[Name of Borrower]
By
Borrower Representative
SF2-27262.2 C-1 40511-90-MSI-03/11/94
Trust Indenture
• [OHARAFT OF 11 MARCH 19941
TRUST INDENTURE
Dated as of 1, 1994
By and Between
COUNTY OF CONTRA COSTA
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Trustee
Relating to
COUNTY OF CONTRA COSTA
$ MULTIFAMILY HOUSING REVENUE BONDS
(GNMA COLLATERALIZED - CRESCENT PARK APARTMENTS PROJECT)
1994 SERIES B
and
$ MULTIFAMILY HOUSING REVENUE BONDS
(GNMA COLLATERALIZED - CRESCENT PARK APARTMENTS PROJECT)
TAXABLE 1994 SERIES B-T
SF2-27261.2 40511-90-MS1-03/11/94
TABLE OF CONTENTS
(This Table of Contents is not part of the Trust
Indenture and is only for convenience of reference.)
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 102. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 103. Content of Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IT
THE BONDS
Section 201. Terms of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 202. Authentication, Sale and Delivery of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 203. Limited Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 204. Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 205. Authentication of Bonds Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 206. Mutilated, Lost, Stolen or Destroyed Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 207. Transfer and Exchange of Bonds; Persons Treated as Holders . . . . . . . . . . . . . . . . . . . . 13
Section 208. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 209. Cancellation and Destruction of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 210. Form of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 211. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
REDEMPTION OF BONDS
Section 301. Redemption of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 302. Special Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 303. Scheduled Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 304. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 305. Selection of Bonds for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 306. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
FUNDS; INVESTMENTS
Section 401. Establishment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 402. Application of Bond Proceeds and Other Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 403. Acquisition Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 404. Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 405. Expense Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 406. Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 407. Costs of Issuance Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 408. Custody of Funds; Moneys Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 409. Nonpresentment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 410. Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 411. Payments of Funds Upon Discharge of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE V
GENERAL COVENANTS AND REPRESENTATIONS
Section 501. Payment of Bonds; Priority of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 502. Instruments of Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 503. No Disposition of GNMA Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 504. Recordation and Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 505. Modification of Security; Additional Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 506. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 507. Power to Issue Bonds and Make Pledge and Assignment . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 508. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 509. Issuer's Obligation Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 510. Role of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 511. Trustee to Retain Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
DEFAULT AND REMEDIES
Section 601. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 602. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 603. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 604. Rights of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 605. Waiver by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 606. Application of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 607. Remedies Vested in Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 608. Remedies of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 609. Termination of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 610. Waivers of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 611. Notice of Defaults: Opportunity to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII
THE TRUSTEE
Section 701. Acceptance of the Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 702. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 703. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 704. Intervention by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 705. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 706. Resignation by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 707. Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 708. Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 709. Concerning Any Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 710. Trustee Protected in Relying Upon Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 711. Trustee as Paying Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII
SUPPLEMENTAL INDENTURES AND AMENDMENTS
OF OTHER FINANCING DOCUMENTS
Section 801. Supplemental Indentures Not Requiring Consent of Bondholders . . . . . . . . . . . . . . . . . . . 34
Section 802. Supplemental Indentures Requiring Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . 34
Section 803. Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 804. Amendment of Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 805. Amendment by Unanimous Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 806. Opinions; Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SF2-27261.2 ii 40511-90-MS1-03/11/94
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Section 807. Effect of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 901. Discharge of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE X
MISCELLANEOUS
Section 1001. Consents and Other Instruments of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 1002. Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 1003. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 1004. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 1005. Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 1006. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 1007. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 1008. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 1009. Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EXHIBIT A - FORM OF SERIES B OR B-T BOND
SF2-27261.2 111 40511-90-MS1-03/11/94
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TRUST INDENTURE
THIS TRUST INDENTURE is entered into as of 1, 1994, by and between the
COUNTY OF CONTRA COSTA, a legal subdivision and body corporate and politic organized and existing
under the Constitution and laws of the State of California (together with any successors and assigns and any
surviving, resulting or transferee entity, the "Issuer"), and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, a national banking association duly organized and existing under the laws of the
United States of America, and authorized to accept and execute trusts of the character herein set out, as Trustee
(together with any successors and assigns and any surviving, resulting or transferee entity, the "Trustee").
RECITALS
The Issuer is authorized pursuant to Chapter 8 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 Issuer to
a nonprofit organization exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue
Code of 1986 (the "Code"), for use by the organization to finance the acquisition and rehabilitation of
multifamily rental housing to provide housing within the territorial jurisdiction of the Issuer in accordance with
the organization's tax-exempt purposes under the Code, subject to the requirements of the Act, including the
requirement that the bonds satisfy the requirements of Section 145 of the Code;
WHEREAS, EAH-Contra Costa, Inc. (the "Borrower"), has requested that the Issuer issue
bonds and lend the proceeds thereof to the Borrower in order to enable the Borrower to acquire and rehabilitate
a multifamily rental housing development known as Crescent Park Apartments located within the jurisdiction of
the Issuer in Richmond, California(the "Project");
WHEREAS, the Borrower has represented to the Issuer that the Borrower is a nonprofit
organization exempt from federal income taxation under Section 501(c)(3) of the Code, and has represented and
covenanted to comply with all requirements necessary to satisfy Section 145 of the Code;
WHEREAS, pursuant to and in accordance with the Act, the Issuer desires to provide funds to
finance the acquisition and rehabilitation of the Project by issuing its Multifamily Housing Revenue Bonds
(GNMA Collateralized - Crescent Park Apartments Project) Series 1994 B (the "Series B Bonds"), and County
of Contra Costa Multifamily Housing Revenue Bonds (GNMA Collateralized - Crescent Park Apartments
Project) Taxable 1994 Series B-T (the "Series B-T Bonds"), in the respective principal amounts of$
and $ (collectively, the 'Bonds"), pursuant to this Indenture; and
WHEREAS, the Issuer has expressly determined and hereby confirms that the issuance of the
Bonds will accomplish a valid public purpose of the Issuer by enabling the Issuer to require the Borrower to
comply with the provisions of the Financing Agreement of even date herewith (the "Financing Agreement"),
among the Issuer, the Borrower, the Trustee and TRI Capital Corporation(the "Lender"), and the Regulatory
Agreement and Declaration of Restrictive Covenants of even date hereof(the "Issuer Regulatory Agreement"),
among the Issuer, the Borrower and the Trustee; and
WHEREAS, the execution and delivery of this Indenture and the issuance and sale of the
Bonds have been in all respects duly and validly authorized by a resolution duly adopted by the Issuer, and all
things necessary to make the Bonds, when authenticated by the Trustee and issued as provided in this Indenture,
the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this
Indenture a valid assignment and pledge of the Trust Estate for payment of the principal of, premium, if any,
and interest on 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;
SF2-27261.2 40511-9D-MSI-03/11/94
GRANTING CLAUSES AND AGREEMENTS
NOW, THEREFORE, the Issuer, 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, and
for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and 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 Issuer of all the covenants expressed or implied
herein and in the Bonds, does hereby bargain, sell, convey, pledge, assign and grant a security interest unto the
Trustee in and to the following, subject only to the provisions of this Indenture permitting the application
thereof to the purposes and on the terms and conditions set forth herein (such property being herein referred to
as the "Trust Estate"), to wit:
1.
All right, title and interest of the Issuer in and to all Revenues (as herein defined), derived or
to be derived by the Issuer or the Trustee for the account of the Issuer under the terms of this Indenture and the
Financing Agreement (other than the Reserved Rights of the Issuer), together with all other Revenues received
by the Trustee for the account of the Issuer arising out of or on account of the Trust Estate;
H.
All right, title and interest of the Issuer in and to the GNMA Security, including all payments
with respect thereto and any interest, profits or other income derived from the investment thereof,
in.
All right, title and interest of the Issuer in and to, and remedies under, the Financing
Agreement and the Issuer Regulatory Agreement; and
IV.
All funds, moneys and securities and any and all other rights and interests in property whether
tangible or intangible from time to time hereafter by delivery or by writing of any kind, conveyed, mortgaged,
pledged, assigned or transferred as and for additional security hereunder for the Bonds by the Issuer or by
anyone on its behalf or with its written consent to the Trustee, which is hereby authorized to receive any and all
such property at any and all times and to hold and apply the same subject to the terms hereof;
PROVIDED, HOWEVER, that there shall be excluded from the granting clauses of this
Indenture all the Reserved Rights of the Issuer, including all amounts paid or collected by the Issuer in
connection therewith, and all amounts on deposit in the Rebate Fund, which shall be held for the sole benefit of
the United States of America; and provided further that moneys and other assets on deposit in any account
established with respect to a Series of Bonds shall be held solely for the holders of Bonds of such Series;
TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby
conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trust and to
them and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth, for the equal and
proportionate benefit, security and protection 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 Bonds over
any of the other Bonds, except as set forth in this Indenture;
PROVIDED, HOWEVER, that if the Issuer shall pay or cause to be paid to the holders of the
Bonds the principal, interest and premium, if any, to become due thereon at the times and in the manner
SF2-27261.2 2 40511-90-MSI-03/11/94
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provided in Article IX and if the Issuer shall keep, perform and observe, or cause to be kept, performed and
observed all its covenants, warranties and agreements contained herein, and if the Rebate Amount shall be paid
in full, this Indenture and the estate and rights hereby granted shall cease and be void, and thereupon the
Trustee shall cancel and discharge the lien of this Indenture and execute and deliver to the Issuer such
instruments in writing as shall be requisite to satisfy the lien hereof, and reconvey to the Issuer any property at
the time subject to the lien of this Indenture which may then be in its possession, except as provided in Section
411 hereof and funds held by the Trustee for the payment of interest on, premium, if any, and principal of the
Bonds and for payment of the Rebate Amount; otherwise this Indenture shall be and remain in full force and
effect, and upon the trusts and subject to the covenants and conditions hereinafter set forth.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 101. Definitions. The terms defined in this Section 101 or in the Recitals hereto
(except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section
101 or in the Recitals hereto.
"Acquisition Fund" means the Acquisition Fund established pursuant to Section 401 hereof.
"Act" means Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the State of
California.
"Authorized Denomination" means $1,000 or any integral multiple thereof.
"Authorized Borrower Representative" means the President of the Borrower, or any other
person designated to act in such capacity by a resolution of the Board of Directors of the Borrower.
"Authorized Issuer Representative" means the Chair or Vice-Chair of the Board of
Supervisors, Director of Community Development, County Administrator, Director of the Growth Management
and Economic Development Agency or Deputy Director-Redevelopment of the Issuer, or any other person
designated to act in such capacity by a Certificate of the Issuer containing the specimen signature of such
person, which certificate may designate an alternate or alternates.
"Bond" means any of the Series B Bonds or Series B-T Bonds issued under and secured by
this Indenture.
"Bond Counsel" means any attorney at law or firm of attorneys selected by the Issuer, of
nationally recognized standing in matters pertaining to the validity of, and exclusion from gross income for
federal income tax purposes of interest on, bonds issued by states and political subdivisions, and duly admitted
to practice law before the highest court of any state of the United States of America.
"Bond Fund" means the Bond Fund established in Section 401 hereof.
"Bondholder" or "holder" or "registered owner," when used with respect to any Bond, means
the person or persons in whose name such Bond is registered.
"Bond Obligation" means as of any date of calculation, the aggregate principal amount of all
outstanding Bonds or, with respect to any Series, all outstanding Bonds of such Series.
"Bond Purchase Agreement" means the Bond Purchase Agreement among the Issuer, the
Borrower and the Underwriters relating to the Bonds.
SF2-27261.2 3 40511-90-MSI-03/11/94
"Bond Register" and 'Bond Registrar" have the respective meanings specified in Section 207.
"Bond Resolution" means the Resolution adopted by the Governing Body of the Issuer on
March _, 1994, authorizing the issuance of the Bonds and the execution of this Indenture, the Financing
Agreement and other documents in connection therewith.
"Bond Year" means the period beginning on the date of issuance of the Bonds and ending on
1995, and each twelve-month period thereafter. The last Bond Year will end on the date of final
payment of the Bonds.
"Borrower" means EAH-Contra Costa, Inc., a nonprofit corporation organized and existing
under the laws of the State of California.
"Business Day" or "business day" means a day, other than a Saturday or Sunday, on which (a)
banks located in New York, New York, or in the city in which the Trust Office of the Trustee is located, are
not required or authorized by law or executive order to close for business, and (b) The New York Stock
Exchange is not closed.
"Certificate of the Issuer," "Request of the Issuer," 'Requisition of the Issuer" and "Statement
of the Issuer" mean, respectively, a written certificate, request, requisition or statement signed in the name of
the Issuer by an Authorized Issuer Representative. Any such instrument and supporting opinions or
representations, if any, may, but need not, be combined in a single instrument with any other instrument,
opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
"Closing Date" means the date of delivery of the Bonds in exchange for the purchase price
thereof.
"Code" means the Internal Revenue Code of 1986. Each reference to a section of the Code
shall be deemed to include the United States Treasury Regulations in effect or proposed from time to time with
respect thereto and applicable to the Project or the Bonds or the use of the proceeds thereof.
"Compliance Certificate" means a certificate of an Authorized Borrower Representative to the
effect that, as of the date of such certificate, the Borrower is in compliance with all requirements of the Issuer
Regulatory Agreement, the Financing Agreement, the other Financing Documents and the FHA Loan
Documents (with such exceptions as shall be acceptable to the Issuer).
"Costs of Issuance" means all fees, costs and expenses payable or reimbursable directly or
indirectly by the Issuer or the Borrower and related to the authorization, issuance and sale of the Bonds.
"Costs of Issuance Fund" means the Costs of Issuance Fund established in Section 401 hereof.
"Defaulted Interest" means any interest on any Bond which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date.
"Event of Default" or "event of default" means any of the events so specified or defined in
Section 601 hereof.
"Expense Fund" means the Expense Fund established in Section 401 hereof.
"FHA" means the Federal Housing Administration, an organizational unit within HUD, its
successors and assigns.
"FHA Loan Documents" means, collectively, the Mortgage Note, the Mortgage, the FHA
Regulatory Agreement, and all other documents required in connection with the endorsement of the Mortgage
Loan by FHA for Mortgage Insurance.
SF2-27261.2 4 40511-90-MSI-03/11/914
• •
"FHA Regulations" means the regulations promulgated by FHA regarding insurance under
Section 241(f) of the National Housing Act.
"FHA Regulatory Agreement" means the Regulatory Agreement for Insured Multi-family
Projects dated March _, 1994, by and between the Borrower and HUD, together with any and all Supplements
thereto.
"Financing Agreement" means the Financing Agreement of even date herewith among the
Issuer, the Trustee, the Lender and the Borrower, together with any and all Supplements thereto.
"Financing Documents" shall mean this Indenture, the Financing Agreement, the Issuer
Regulatory Agreement, the Tax Certificate, the GNMA Guaranty Agreement and the GNMA Security.
"GNMA" means Government National Mortgage Association, its successors and assigns.
"GNMA Guaranty Agreement" means the GNMA Guaranty Agreement between GNMA and
the Lender, together with all Supplements thereto.
"GNMA Security" means the fully-modified, mortgage-backed security in the principal amount
of$ to be issued by the Lender and registered in the name of the Trustee and dated April 1, 1994,
which security is backed by the Mortgage Note and the Mortgage and is guaranteed as to timely payment of
principal and interest by GNMA, pursuant to Section 306(g) of Title III of the National Housing Act and the
regulations promulgated thereunder, and bearing interest at the rate of % per annum.
"Governing Body" of the Issuer means the Board of Supervisors of the Issuer or any body
succeeding to the functions thereof.
"HUD" means the United States Department of Housing and Urban Development, any
authorized representative thereof or any successor thereto.
"Indenture" means this Trust Indenture, together with all Supplements hereto.
"Interest Payment Date" means each April 20 and October 20, commencing October 20, 1994.
"Investment Agreement" means an Investment Agreement for the Bond Fund between the
Trustee and providing for investment of moneys in the Bond Fund (other than amounts in the
Sinking Fund Account) at the rate of % per annum from the Closing Date until and providing
for investment of moneys in the Sinking Fund Account at the rate of % per annum from the Closing Date
to
"Issuer" means the County of Contra Costa, and its successors and assigns.
"Issuer Regulatory Agreement" means the Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of 1, 1994, among the Borrower, the Issuer and the Trustee, together
with any and all Supplements thereto.
"Lender" means TRI Capital Corporation, a California corporation, its successors and assigns.
"Mortgage" means the deed of trust from the Borrower securing the Mortgage Note, as
amended.
"Mortgage Insurance" means the insurance against certain losses under the Mortgage Loan
provided by the FHA, as evidenced by the endorsed Mortgage Note.
SF2-27261.2 5 40511-90-MS1-03/11/94
"Mortgage Loan" means the loan made by the Lender to the Borrower in connection with the
issuance of the Bonds and in a principal amount equal to the aggregate principal amount of the Bonds, in order
to provide financing for the Project.
"Mortgage Note" means the deed of trust note from the Borrower in favor of the Lender
evidencing the Mortgage Loan.
"National Housing Act" means the National Housing Act of 1934, as amended.
"Outstanding", when used with respect to the Bonds means all Bonds theretofore authenticated
and delivered under this Indenture, except:
(a) Bonds theretofore cancelled by the Trustee or theretofore delivered to the Trustee for
cancellation;
(b) Bonds for the payment or redemption of which moneys or obligations shall have been
theretofore deposited with the Trustee in accordance with Article IX; and
(c) Bonds in exchange for or in lieu of which other Bonds have been authenticated and
delivered under this Indenture.
"Project" means the multifamily rental housing project known as Crescent Park Apartments,
located on and including the land described in Exhibit A to the Issuer Regulatory Agreement.
"Qualified Investments" means:
(a) Government Obligations;
(b) Federal Housing Administration's debentures;
(c) Federal Home Loan Mortgage Corporations's (FHLMC)participation certificates
(excluding stripped mortgage securities which are purchased at prices exceeding their principal
amounts) which guarantee timely payment of principal and interest and senior debt obligations;
(d) Farm Credit Banks' (Federal Land Banks, Federal Intermediate Credit Banks and
Banks for Cooperatives) consolidated systemwide bonds and notes;
(e) Federal Home Loan Banks consolidated debt obligations;
(f) Federal National Mortgage Association's (FNMA) mortgage-backed securities
(excluding stripped mortgage securities which are purchased at prices exceeding their principal
amounts) and senior debt obligations;
(g) Student Loan Marketing Association's (Sallie Mae) senior debt obligations(excluding
securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount
at maturity or call date) and letter of credit backed issues;
(h) Resolution Funding Corp.'s (REFCORP) debt obligations;
(i) Federal funds, certificates of deposit, time deposits and bankers' acceptances (having
original maturities of not more than 365 days) of any bank, the unsecured short term obligations of
which are rated "A-1+" by Standard & Poor's;
(j) Deposits which are fully insured by the Federal Deposit Insurance Corp. (FDIC);
SF2-27261.2 6 40511-90-MSI-03/11/94
(k) Debt obligations rated "AAA" by Standard &Poor's (excluding securities that do not
have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call
date);
(1) Commercial paper (Having original maturities of not more than 270 days) rated "A-
1+" by Standard &Poor's;
(m) Money market funds rated "AAAm" or "AAAm-G") by Standard's &Poor's;
(n) Repurchase agreements with any institution the unsecured, uninsured and
unguaranteed debt obligations of which are rated "AAA" by Standard &Poor's or commercial paper of
which is rated "A-1+" by Standard &Poor's;
(o) Any stripped securities assessed or rated "AAA" by Standard & Poor's; and
(p) The Investment Agreements.
"Rating Agency" means Standard & Poor's Corporation, and its successors and assigns.
"Rebate Amount" means the amount, if any, which is to be paid to the United States of
America pursuant to Section 148(f) of the Code and the Tax Certificate and Section 406 hereof.
"Rebate Analyst" means Orrick, Herrington& Sutcliffe or any other qualified person
acceptable to the Issuer and retained by the Borrower to calculate the Rebate Amount or, in the event that the
Borrower fails to so retain a Rebate Analyst one month prior to any date on which calculations are required to
be made under the Tax Certificate, any qualified person retained by the Trustee to calculate the Rebate Amount.
"Regular Record Date" means, with respect to an Interest Payment Date, the close of business
on April 5 or October 5, as the case may be, next preceding such Interest Payment Date, whether or not a
business day.
"Reserved Rights of the Issuer" means (a) all rights which the Issuer or its officers, officials,
agents or employees may have under this Indenture and the Financing Agreement to indemnification by the
Borrower and by any other persons and to payments for expenses incurred by the Issuer itself, or its officers,
officials, agents or employees; (b) the right of the Issuer to receive notices, reports or other information, make
determinations and grant approvals hereunder and under the other Financing Documents; (c) the right of the
Issuer to receive its fee pursuant to Section 5.7 of the Financing Agreement; (d) all rights of the Issuer to
enforce the representations, warranties, covenants and agreements of the Borrower pertaining in any manner or
way, directly or indirectly to the requirements of the Act or any requirements imposed by the Issuer with
respect to the Project, or necessary to assure that interest on the Bonds is excluded from gross income for
federal income tax purposes, as are set forth in any of the Financing Documents or in any other certificate or
agreement executed by the Borrower; (e) all rights of the Issuer in connection with any amendment to or
modification of the Financing Documents; and (f) all enforcement remedies with respect to the foregoing.
"Responsible Officer" means the President or any Vice President, Assistant Vice President or
Trust Officer of the Trustee.
"Revenues" means the revenues, receipts, interest, income, investment earnings and other
moneys received or to be received by the Issuer or the Trustee from the Project, including moneys received or
to be received from the GNMA Security or the Borrower under the Financing Documents and all investment
earnings derived or to be derived on any moneys or investments held by the Trustee hereunder, but excluding
(a) amounts paid as fees, reimbursement for expenses or for indemnification of the Issuer and the Trustee, (b)
amounts paid to or collected by the Issuer in connection with any Reserved Rights of the Issuer and (c) any
Rebate Amount.
SF2-27261.2 7 40511-90-MSI-03/11/94
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"Series" means any series of Bonds issued pursuant to this Indenture.
"Series B Bonds" means the $ aggregate principal amount County of Contra Costa
Multifamily Housing Revenue Bonds (GNMA Collateralized - Crescent Park Apartments Project) 1994 Series
B.
"Series B-T Bonds" means the $ aggregate principal amount County of Contra Costa
Multifamily Housing Revenue Bonds (GNMA Collateralized - Crescent Park Apartments Project) Taxable 1994
Series B-T.
"Special Record Date" has the meaning specified in Section 201 hereof.
"State" means the State of California.
"Supplements" means all extensions, renewals, modifications, amendments, supplements and
substitutions.
"Tax Certificate" means the Tax Certificate and Agreement dated the Closing Date between
the Issuer and the Borrower, together with any and all Supplements thereto.
"Taxes" means all taxes, water rents, sewer rents, assessments and other governmental or
municipal or public or private dues, fees, charges and levies and any liens (including federal tax liens) which
are or may be levied, imposed or assessed upon the Project or any part thereof, or upon any leases pertaining
thereto, or upon the rents, issues, income or profits thereof, whether any or all of the aforementioned be levied
directly or indirectly or as excise taxes or as income taxes.
"Tax-Exempt Bonds" means the Series B Bonds.
"Term Bonds" means the Series B Bonds maturing on , 2034.
"Trustee" means Bank of America National Trust and Savings Association, a national banking
association, its successors and assigns.
"Trust Estate" means the property rights, money, securities and other amounts pledged and
assigned to the Trustee pursuant to the Granting Clauses hereof.
"Trust Office" means the appropriate trust office of the Trustee located at the address set forth
in Section 1004 hereof, or such other offices as may be specified in writing to the Issuer by the Trustee.
"Underwriters" means Kirkpatrick, Pettis, Smith, Polian Inc. and Charles A. Bell Securities
Corp.
Section 102. Interpretation. The words "hereof," "herein," "hereunder," "hereto," and other
words of similar import refer to this Indenture in its entirety.
The terms "agree" and "agreements" contained herein are intended to include and mean
"covenant" and "covenants."
References to Articles, Sections, and other subdivisions of this Indenture are to the designated
Articles, Sections and other subdivisions of this Indenture.
The headings of this Indenture are for convenience only and shall not define or limit the
provisions hereof.
SF2-27261.2 8 40511-90-MSI-03/11/94
All references made (a) in any gender shall be deemed to have been made in all genders, and
(b) in the singular or plural number shall be deemed to have been made, respectively, in the plural or singular
number as well.
Any reference to particular sections or subsections of the Code and applicable Income Tax
Regulations shall include any successor provisions of law or regulations, to the extent the same shall apply to
the Bonds.
The parties acknowledge that each party, the Borrower, the Lender and their respective
counsel have participated in the drafting and revision of this Indenture, the Financing Agreement and the Issuer
Regulatory Agreement. Accordingly, the parties agree that any rule of construction which would disfavor the
drafting party shall not apply in the interpretation of this Indenture, the Financing Agreement or the Issuer
Regulatory Agreement or any Supplement or exhibit hereto or thereto.
Section 103. Content of Certificates and Opinions. Every certificate or opinion with respect
to compliance with a condition or covenant provided for in this Indenture or the Financing Agreement shall
include (a) a statement that the person or persons making or giving such certificate or opinion have read such
covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions contained in such certificate or
opinion are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such
examination or investigation as is necessary to enable them to express an informed opinion as to whether or not
such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the
signers, such condition or covenant has been complied with.
Any such certificate or opinion made or given by an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such
officer knows that the certificate or opinion or representations with respect to the matters upon which his or her
certificate or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should have
known that the same were erroneous. Any such certificate or opinion made or given by counsel may be based,
insofar as it relates to factual matters (with respect to which information is in the possession of the Issuer), upon
the certificate or opinion of or representations by an officer of the Issuer, unless such counsel knows that the
certificate or opinion or representations with respect to the matters upon which his or her opinion may be based
as aforesaid are erroneous, or in the exercise of reasonable care should have known that the same were
erroneous.
ARTICLE II
THE BONDS
Section 201. Terms of the Bonds. Bonds may not be issued under this Indenture except in
accordance with this Article. The total principal amount of Bonds that may be issued hereunder is expressly
limited to $ , consisting of Bonds in the aggregate principal amount of$ designated
"County of Contra Costa Multifamily Housing Refunding Revenue Bonds (GNMA Collateralized - Crescent
Park Apartments Project) 1994 Series B"; and Bonds in the aggregate principal amount of$ designated
"County of Contra Costa Multifamily Housing Revenue Bonds (GNMA Collateralized - Crescent Park
Apartments Project) Taxable 1994 Series B-T." The Bonds shall be issued as fully registered bonds, without
coupons, in Authorized Denominations, and the Bonds of each Series shall bear the prefix "A" or "A-T," as
appropriate, and shall be numbered separately from 1 upward in the order of their issuance.
SF2-27261.2 9 40511-90-MS 1-03/11/94
The Series B Bonds shall mature on the dates and in the principal amounts, and shall bear
interest at the rates per annum, set forth in the following table:
Maturity Principal Interest
Date Amount Rate
, 2004 $
, 2034
The Series B-T Bonds shall mature on , 19 , and shall bear interest at the rate of
per annum.
The Bonds shall be dated as of 1, 1994. Except as otherwise provided in this Section,
each Bond shall bear interest (computed on the basis of a 360-day year of twelve 30-day months and payable on
each Interest Payment Date) from the later of its date or the most recent Interest Payment Date to which interest
has been paid or duly provided for; except that when there is no existing default in the payment of interest on
the Bonds, each Bond authenticated after the Regular Record Date for any Interest Payment Date but prior to
such Interest Payment Date shall bear interest from such Interest Payment Date.
The person in whose name any Bond is registered at the Regular Record Date with respect to
an Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date (unless
such Bond has been called for redemption on a redemption date which is prior to such Interest Payment Date)
notwithstanding the cancellation of such Bond upon any registration of transfer or exchange thereof subsequent
to such Regular Record Date and prior to such Interest Payment Date; provided, however, that if and to the
extent the Issuer shall default in the payment of the interest due on any Interest Payment Date, such defaulted
interest shall be paid as provided in the next paragraph.
Any interest on any Bond which is payable, but is not punctually paid or duly provided for, on
any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the
Bondholder on the relevant Regular Record Date by virtue of having been such Bondholder. The Trustee shall
elect to make payment of any Defaulted Interest to the persons in whose names the Bonds (or their respective
predecessor Bonds) are registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The Trustee shall determine the amount of
Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment, and shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be not more than fifteen nor less
than ten days prior to the date of the proposed payment, and shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each
Bondholder at its address as it appears in the Bond Register not less than ten days prior to such Special Record
Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names
the Bonds (or their respective predecessor Bonds) are registered on such Special Record Date.
Payment of principal of, premium (if any) and interest on the Bonds shall be made in such
coin or currency of the United States as at the time of payment is legal tender for payment of private and public
debts. Principal of and premium (if any) on the Bonds shall be paid only upon presentation and surrender
thereof for cancellation at the Trust Office of the Trustee. Payment of the interest on and principal of each
Bond shall be made by check or draft mailed to the person entitled thereto at its address as it appears on the
Bond Register. Upon the request of a registered holder of at least $1,000,000 principal amount of Outstanding
Bonds of any Series, all payments of interest on the Bonds of such Series owned by such registered holder, shall
be paid by wire transfer of immediately available funds to an account designated by such registered holder.
SF2-27261.2 10 40511-90-MS1-03/11/94
CUSIP number identification with appropriate dollar amounts for each CUSIP number must accompany all
payments of principal, interest or premium, whether by check or by wire transfer.
The Bonds shall be subject to redemption as provided in Article III hereof.
Section 202. Authentication, Sale and Delivery of the Bonds.
Upon execution and delivery of this Indenture, the Trustee shall authenticate the Bonds and
deliver them to the Underwriters, but only upon receipt of the payment to the Trustee for the account of the
Issuer of the principal amount of the Bonds plus accrued interest, if any, thereon to the date of delivery and
upon receipt of the following:
(1) An executed copy of this Indenture;
(2) A request and authorization from an Authorized Issuer Representative to the Trustee
requesting and authorizing the Trustee (i) to authenticate the Bonds; (ii) to deliver the Bonds as authenticated,
upon receipt of the purchase price therefor; and (iii) to deposit the proceeds from the sale of the Bonds,
including any premium thereon, and the moneys to be paid by the Borrower as provided in Article IV of this
Indenture;
(3) A duly certified copy of the Bond Resolution;
(4) An executed copy of a document indicating FHA's commitment to insure the
Mortgage under Section 241(f) of the National Housing Act;
(5) A GNMA Security in the principal amount of$
(6) An executed copy of the Issuer Regulatory Agreement in form satisfactory for
recording;
(7) An executed copy of the Financing Agreement;
(8) An executed copy of the Investment Agreement; and
(9) A copy of final cash flow statements prepared by Arter Hadden Haynes &Miller.
Section 203. Limited Obligations. The Bonds and the interest thereon are limited obligations
of the Issuer, 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 United States of
America, HUD, FHA, any other agency of the United States of America, GNMA, the State, nor any political
subdivision thereof(except the Issuer, to the limited extent set forth in the first and last sentences of this
Section) 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 Issuer, and
none of the Bonds or any of the Issuer'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 and the premium, if any, and interest thereon shall not constitute a debt,
indebtedness or pledge or a loan of the faith or credit or the taxing power of the Issuer, the State, or any
political corporation, subdivision or agency thereof within the meaning of any constitutional or statutory
provision. The Bonds are not general obligations of the Issuer and shall not be payable from the general
revenues of the Issuer, and neither the Issuer nor the State or any political corporation, subdivision, or agency
thereof shall be liable thereon, nor in any event shall the Bonds be payable out of any funds or properties other
than those of the Issuer specifically pledged therefor. No holder of any Bonds has the right to compel any
SF2-27261.2 1 1 40511-90-MSI-03/11/94
exercise of the taxing power of the Issuer to pay the Bonds or the interest or the redemption premium, if any,
thereon, and the Bonds shall not be construed to create any moral obligation on the part of the Issuer with
respect to the payment of the Bonds.
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 Issuer, any past, present or future member of its Governing Body, its officers,
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 Issuer or any
successor public entity, under any rule of law or penalty or otherwise, and all such liability of the Issuer, any
member of its Governing Body and its officers, 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, neither the
Borrower, the Trustee nor any Bondholder shall look to the Issuer for damages suffered by the Borrower, the
Trustee or such Bondholder as a result of the failure of the Issuer to perform any covenant, undertaking or
obligation under this Indenture, the Financing Agreement, the Bonds, the Issuer Regulatory Agreement, any of
the FHA Loan Documents or any of the other documents referred to herein, or as a result of the incorrectness
of any representation made by the Issuer in any of such documents, nor for any other reason. Although this
Indenture recognizes that such documents shall not give rise to any pecuniary liability of the Issuer, 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 Issuer) in any court or
before any governmental body, agency or instrumentality or otherwise against the Issuer or any of its officers or
employees to enforce the provisions of any of such documents which the Issuer is obligated to perform and the
performance of which the Issuer has not assigned to the Trustee or any other person.
Section 204. Execution. The Bonds shall be executed in the name of the Issuer and on its
behalf by the manual or facsimile signature of the Chair of the Board of Supervisors of the Issuer, and the
official seal of the Issuer or a facsimile thereof shall be impressed or otherwise reproduced thereon and attested
by the manual or facsimile signature of the County Administrator and Clerk of the Board of Supervisors of the
Issuer.
In case any officer whose signature or facsimile of whose signature shall appear on any Bonds
shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes as if he or she had remained in office until delivery.
Section 205. Authentication of Bonds Required. Only such Bonds as shall have endorsed
thereon a certificate of authentication substantially in the form set forth in Exhibit A hereto manually executed
by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or
obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by
the Trustee; and such executed certificate upon any such Bond shall be conclusive evidence that such Bond has
been authenticated and delivered under this Indenture. The Trustee's certificate of authentication on any Bond
shall be deemed to have been executed by it if signed by an authorized representative of the Trustee, but it shall
not be necessary that the same person sign the certificate of authentication on all the Bonds. The Trustee shall
not use a facsimile signature to authenticate the Bonds.
Section 206. Mutilated, Lost, Stolen or Destroyed Bonds. In the event any Bond is mutilated,
lost, stolen or destroyed, the Issuer may execute and, if so executed, the Trustee shall authenticate and deliver a
new Bond in lieu of such mutilated, lost, stolen or destroyed Bond, of like Series, maturity and denomination as
that mutilated, lost, stolen or destroyed. Any mutilated Bond shall first be surrendered to the Trustee; and in
the case of any lost, stolen or destroyed Bond, there shall first be furnished to the Trustee evidence of such
loss, theft or destruction satisfactory to it together with indemnity satisfactory to it. In the event any such Bond
shall have matured, instead of issuing a duplicate Bond the Trustee shall pay the same without surrender
thereof. The Trustee may charge the registered owner of such Bond with its reasonable fees and expenses.
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Section 207. Transfer and Exchange of Bonds; Persons Treated as Holders. The Trustee is
hereby appointed Bond Registrar and shall cause a register (herein sometimes referred to as 'Bond Register") to
be kept for the registration of Bonds and the registration of transfers of Bonds.
The registration of any Bond may be transferred only upon an assignment duly executed by the
registered holder or its duly authorized representative in such form as shall be satisfactory to the Trustee, and
upon surrender of such Bond to the Trustee for cancellation. Whenever any Bond or Bonds shall be
surrendered for registration of transfer, the Issuer shall execute and the Trustee shall authenticate and deliver to
the transferee a new Bond or Bonds of like Series and maturity of Authorized Denomination or Denominations
and for the amount of such Bond or Bonds so surrendered. Any Bond may be exchanged at the office of the
Trustee, for a new Bond or Bonds, of the same Series and maturity, of any Authorized Denomination or
Denominations and for the aggregate amount of such Bond then remaining Outstanding.
Notwithstanding the foregoing, no Bonds may be transferred or exchanged in violation of any
applicable federal or state securities laws.
In all cases in which the registration of Bonds shall be transferred or Bonds shall be exchanged
hereunder, the Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental
charge required to be paid with respect to such transfer or exchange. The Trustee shall not be required to
transfer any Bond after the mailing of notice calling such Bond for redemption has been made, or during the
period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds.
The person in whose name any Bond shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes and payment of or on account of the principal of and premium and
interest on any such Bond shall be made only to or upon the order of the registered holder thereof, or its legal
representative, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary. All such
payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the
sum or sums to be paid.
Section 208. Temporary Bonds. Until definitive Bonds are ready for delivery, there may be
executed, and upon the written request of the Issuer the Trustee shall authenticate and deliver, in lieu of
definitive Bonds, one or more temporary typewritten, printed, engraved, or lithographed Bonds, in any
appropriate denomination, in fully registered form, and in substantially the tenor set forth in Exhibit A hereto,
and with such appropriate omissions, insertions, and variations as may be required.
If temporary Bonds shall be issued, the Issuer, at the expense of the Borrower, shall cause the
definitive Bonds to be prepared and to be executed and delivered to the Trustee, and the Trustee, upon
presentation to it at its Trust Office of any temporary Bond, shall cancel the same and authenticate and deliver
in exchange therefor, without charge to the holder thereof, a definitive Bond or Bonds of an equal aggregate
principal amount, of the same Series and maturity and bearing interest at the same rate as the temporary Bond
surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefit and
security of this Indenture as the definitive Bonds to be issued and authenticated hereunder. Interest on
temporary Bonds, when due and payable, if the definitive Bonds shall not be ready for exchange, shall be paid
by check or draft mailed to the registered owners thereof.
Section 209. Cancellation and Destruction of Bonds. All Bonds which have been surrendered
for payment or redemption, for registration of transfer or for exchange pursuant to the provisions hereof shall
be cancelled and destroyed by the Trustee and shall not be reissued, and a counterpart of the certificate of
destruction evidencing such destruction shall be furnished by the Trustee to the Issuer and the Borrower. Any
Bonds so cancelled may be retained by the Trustee for such period of time as the Trustee may determine and
shall be destroyed by the Trustee at the end of such period. Any Bond so cancelled shall thereafter no longer
be considered Outstanding for any purpose of this Indenture.
Section 210. Form of the Bonds. The Bonds shall be issued substantially in the form set forth
in Exhibit A attached hereto and made a part hereof; in each case with such variations, omissions and insertions
SF2-27261.2 13 40511-90-MS1-03/11/94
as are permitted or required by this Indenture. If appropriate, any portion of the text of any Bond as shown on
said Exhibit A may be printed on the back of such Bond, and in such case there shall be inserted in place of
such text a legend referring thereto to the following effect: "Reference is hereby made to the further provisions
of this Bond set forth on the back hereof, and such further provisions are hereby incorporated by this reference
as if set forth here in full."
Section 211. Book-Entry System. (a) Notwithstanding any of the foregoing provisions of this
Article II or other provisions of this Indenture, the Bonds initially shall be issued in the form of a single
authenticated fully registered bond for each stated maturity of each Series of the Bonds, representing the
aggregate principal amount of the Bonds of such maturity and Series; and the Bonds shall be governed by the
provisions of this Section 211. For purposes of this Section, the term "DTC" means The Depository Trust
Company and its successors and assigns; the term "Participants" means those broker-dealers, banks and other
financial institutions from time to time for which DTC holds the Bonds as securities depository; and the term
"Representation Letter" means the Letter of Representations from the Issuer and the Trustee to DTC with
respect to the Bonds, and any similar letter or other agreement with any successor depository for the Bonds.
(b) Except as provided in this paragraph (b) and in paragraph (d) of this Section, all of
the Outstanding Bonds shall be registered in the registration books kept by the Bond Registrar in the name of
Cede & Co., as nominee of DTC. With respect to the Bonds registered in the name of Cede & Co., as
nominee of DTC, the Issuer, the Trustee, the Bond Registrar, any paying agent and the Borrower shall have no
responsibility or obligation to any Participant or to any person on behalf of which a Participant holds an interest
in the Bonds. Without limiting the immediately preceding sentence, the Issuer, the Trustee, the Bond Registrar,
any paying agent and the Borrower shall have no responsibility or obligation with respect to (i) the accuracy of
the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the
delivery to any Participant or any other person, other than a Bondholder, as shown in the registration books
kept by the Bond Registrar, of any notice with respect to the Bonds, including any notice of redemption, or
(iii)the payment to any Participant or any other person, other than a Bondholder, as shown in the registration
books kept by the Bond Registrar, of any amount with respect to principal of, premium if any, or interest on the
Bonds. The Issuer, the Trustee, the Bond Registrar, any paying agent and the Borrower may treat and consider
the person in whose name each Bond is registered in the registration books kept by the Bond Registrar as the
holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with
respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such
Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever.
The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of
the respective Bondholders, as shown in the registration books kept by the Bond Registrar as provided in
Section 207, or their respective attorneys duly authorized in writing, and all such payments shall be valid and
effective to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of, premium,
if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Bondholder,
as shown in the registration books kept by the Bond Registrar, shall receive a certificated Bond evidencing the
obligation of the Issuer to make payments of principal, premium, if any, and interest pursuant to the Indenture.
Upon delivery by DTC to the Issuer or the Trustee of written notice to the effect that DTC has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Regular
Record Dates, the words "Cede & Co." in this Indenture shall refer to such new nominee of DTC.
(c) The delivery by the Issuer of the Representation Letter shall not in any way limit the
provisions of paragraph (b) of this Section or in any other way impose upon the Issuer any obligation
whatsoever with respect to persons having interests in the Bonds other than the Bondholders, as shown on the
registration books kept by the Bond Registrar. The Trustee shall take all action necessary for all representations
of the Issuer in the Representation Letter with respect to the Trustee to be complied with at all times.
(d) DTC may determine to discontinue providing its services with respect to the Bonds at
any time by giving reasonable written notice to the Issuer and the Trustee and discharging its responsibilities
with respect thereto under applicable law. With the consent of the Issuer, the Borrower, in its sole discretion
and without the consent of any other person, may terminate the services of DTC with respect to the Bonds.
Upon the discontinuance or termination of the services of DTC with respect to the Bonds, unless a substitute
SF2-27261.2 14 40511-90-M S 1-03/11/94
securities depository is appointed to undertake the functions of DTC hereunder, the Issuer is obligated to deliver
Bond certificates at the expense of the beneficial owners of the Bonds, as described in the Indenture, and the
Bonds shall no longer be restricted to being registered in the name of Cede & Co. as nominee of DTC, but may
be registered in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in
accordance with the provisions of the Indenture.
(e) Notwithstanding any other provision of the Indenture to the contrary, so long as any
Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal or,
premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given,
respectively, in the manner provided in the Representation Letter. Bondholders shall have no lien or security
interest in any rebate or refund paid by DTC to the Trustee which arises from the payment by the Trustee of
principal of or interest on the Bonds in immediately available funds to DTC.
(f) The Trustee is hereby authorized and requested to execute and deliver the
Representation Letter and, in connection with any successor nominee for DTC or any successor depository,
enter into comparable arrangements, and shall have the same rights with respect to its actions thereunder as it
has with respect to its actions under this Indenture.
ARTICLE III
REDEMPTION OF BONDS
Section 301. Redemption of the Bonds. The Bonds are subject to redemption prior to
maturity, as provided in the form of the Bonds and as provided in this Article III.
Section 302. Special Mandatory Redemption. The Bonds are subject to redemption, in whole
or in part, at any time on the earliest practical date, at a redemption price equal to the principal amount thereof
plus accrued interest to the redemption date:
(a) to the extent that any payment on the GNMA Security exceeds a level payment of
principal and interest thereon as a result of payments representing (i) casualty insurance proceeds or
condemnation awards applied to the prepayment of the Mortgage Loan following a partial or total destruction or
condemnation of the Project, (ii) mortgage insurance proceeds or other amounts received with respect to the
Mortgage Loan following the acceleration thereof upon the occurrence of an event of default thereunder, (iii)a
prepayment of the Mortgage Loan required by the applicable rules, regulations, policies and procedures of HUD
or GNMA, or (iv) a prepayment if HUD determines that prepayment will avoid a Mortgage Insurance claim and
is therefore in the best interest of the Federal Government; or
(b) to the extent that the Trustee receives payments on the GNMA Security representing
prepayments on the Mortgage Loan made by the Borrower without notice or prepayment penalty while under the
supervision of a trustee in bankruptcy.
If less than all of the Outstanding Bonds shall be called for redemption pursuant to this
Section, an amount of Bonds of each maturity shall be redeemed so that the resulting decrease in the debt
service on the Bonds for the six-month period ending on each Interest Payment Date is proportional, as nearly
as practicable, to the decrease in the payments on the GNMA Security in each such six-month period; provided
that no Series B Bonds shall be redeemed pursuant to this Section while any Series B-T Bonds remain
Outstanding.
The Trustee agrees to notify the Rating Agency promptly after it receives any partial payment
of the GNMA Security in excess of regularly scheduled payments thereon.
Section 303. Scheduled Mandatory Redemption. The Term Bonds and the Series B-T Bonds
are subject to scheduled mandatory redemption on the respective Interest Payment Dates set forth in the
SF2-27261.2 15 40511-90-MS 1-03/11/94
schedules below, at a redemption price equal to the principal amount thereof plus accrued interest to the
redemption date, in the following principal amounts, subject to pro-rata reduction of such scheduled mandatory
redemption payments to the extent that such Term Bonds and Series B-T Bonds are redeemed prior to maturity
otherwise than pursuant to such scheduled mandatory redemption:
Series B Bonds Due , 2034
Principal Principal
Redemption Dates Amount Redemption Dates Amount
* Maturity
Series B-T Bonds Due , 19_
Principal Principal
Redemption Dates Amount Redemption Dates Amount
* Maturity
If less than all of the Term Bonds or Series B-T Bonds are to be redeemed other than in
accordance with the scheduled mandatory redemption provisions of this Section 303, the Bonds so to be
redeemed shall be selected by maturity and the scheduled mandatory redemption requirements for each maturity
described above shall be adjusted so that the resulting decrease in debt service on the Bonds (including
scheduled mandatory redemption payments) during each six-month period commencing on each Interest Payment
Date is proportional, as nearly as practicable, to the decrease in the payments on the GNMA Security during
each such six-month period, and by lot within a maturity.
Section 304. Optional Redemption. The Bonds are also subject to redemption on any date on
or after April 20, 2004, in whole or in part, from payments on the GNMA Security representing voluntary
prepayments on the Mortgage Loan, or otherwise at the option of the Issuer from the proceeds of refunding
bonds or other funds of the Issuer, at the redemption prices set forth in the table below, expressed as
SF2-27261.2 16 40511-90-MSI-03/11/94
percentages of the principal amount of the Bonds to be redeemed, plus accrued interest to the redemption date,
as follows:
Redemption Dates Redemption Prices
April 20, 2004 through April 19, 2005 105%
April 20, 2005 through April 19, 2006 104
April 20, 2006 through April 19, 2007 103
April 20, 2007 through April 19, 2009 102
April 20, 2009 through April 19, 2010 101
April 20, 2010 and thereafter 100
In the event of an optional redemption of Bonds on a date on which the redemption price
includes a redemption premium, the Bonds shall not be redeemed unless the Trustee shall have either (i) (A) had
in its possession, for period of at least 91 days prior to the redemption date, an amount equal to the prepayment
premium on the Bonds, and (B) received a certificate of an Authorized Borrower Representative to the effect
that the Borrower has neither commenced a voluntary case under Title 11 of the United States Code as from
time to time in effect nor authorized by appropriate proceedings of its board of directors the commencement of
such a voluntary case, or (ii) received an opinion of Bond Counsel or bankruptcy counsel acceptable to the
Trustee to the effect that the sums to be utilized to pay the prepayment premium are not subject to the
provisions of Sections 362(a), 547 and 550 of the Federal Bankruptcy Code.
Section 305. Selection of Bonds for Redemption. The Bonds may be redeemed only in
Authorized Denominations. If less than all of the Bonds are redeemed, in the case of redemption pursuant to
Section 303, Bonds shall be redeemed in accordance with the respective schedules set forth in such Section. In
the event the Bonds of any Series are redeemed in part and not in whole other than in accordance with Section
303, the Bonds of such Series to be redeemed shall be selected by maturity and the scheduled mandatory
redemption requirements for each maturity described in Section 303 above shall be adjusted so that the resulting
decrease in debt service on the Bonds (including scheduled mandatory redemption payments) during each
six-month period commencing on each Interest Payment Date is proportional, as nearly as practicable, to the
decrease in the payments on the GNMA Security during each such six-month period. All Bonds to be redeemed
within the same maturity shall be selected by lot.
Except as otherwise described above, any Bonds to be called for redemption shall be selected
by the Trustee in such manner as the Trustee in its absolute discretion shall determine, such selection to be
made prior to the date on which notice of such redemption must be given. Bonds shall be redeemed as soon as
practicable after an event causing a redemption shall have occurred.
If it is determined that less than all of the principal amount represented by any Bond is to be
called for redemption, then, following notice of intention to redeem such principal amount, the holder thereof
shall surrender such Bond to the Trustee on or before the applicable redemption date for (a) payment on the
redemption date to such Bondholder of the redemption price of the amount called for redemption and
(b) delivery to such Bondholder of a new Bond or Bonds of such Series in an aggregate principal amount equal
to the unredeemed balance of such Bond, which shall be an Authorized Denomination. A new Bond of such
Series representing the unredeemed balance of such Bond shall be issued to the registered owner thereof,
without charge therefor. If the registered owner of any Bond or integral multiple of the Authorized
Denomination selected for redemption shall fail to present such Bond to the Trustee for payment and exchange
as aforesaid, such Bond shall, nevertheless, become due and payable on the date fixed for redemption to the
extent of the amount called for redemption (and to that extent only).
Section 306. Notice of Redemption. Except as provided below, notice of redemption shall be
given by registered mail or other secure means, postage prepaid, to the registered holder of each Bond to be
SF2-27261.2 17 40511-90-MSI-03/11/94
redeemed, at the address of such registered holder shown on the Bond Register. All such redemption notices
shall be given not less than 30 days nor more than 60 days prior to the date fixed for redemption, except that
any notice of redemption following receipt of casualty insurance proceeds or condemnation awards shall be
given no less than 15 days prior to the date fixed for redemption. No redemption notices shall be given prior to
receipt by the Trustee of sufficient funds (together with investment earnings thereon from the date of deposit to
the date fixed for redemption) to redeem all Bonds subject to such notice, unless the Trustee shall have
determined that it will have available, as a result of receipt of proceeds of refunding obligations, an amount
sufficient to redeem such Bonds. Each notice shall specify the CUSIP numbers and the Series and certificate
numbers of the Bonds to be redeemed and the principal amount of each Bond being redeemed (if the Bonds of
any Series are to be redeemed in part), the date of issue of the Bonds as originally issued, the complete official
name of the Bonds including the series designation, the redemption date, the redemption price and the place or
places where amounts due upon such redemption will be payable, the name, address and telephone number of
the Trustee together with a contact person of the Trustee, the interest rate, the maturity date on the Bonds to be
redeemed together with the date of the redemption notice; provided, however, that any errors in the CUSIP
numbers set forth in such notice shall not affect the validity of any redemption. Such notice shall further state
that payment of the applicable redemption price plus accrued interest to the date fixed for redemption will be
made upon presentation and surrender of the Bonds. A second notice of redemption shall be given within 60
days after the redemption date in the manner described above to the registered holder of redeemed Bonds which
have not been presented for payment within 30 days after the redemption date.
Neither failure to give notice by mailing to the registered owner of any Bond designated for
redemption nor any defect in such notice shall affect the validity of the proceedings for the redemption of any
Bond with respect to which no such failure or defect has occurred nor shall failure to give or defect in the
second notice described above constitute a defect in the notice of redemption of any Bond.
Notice of such redemption shall also be sent by registered mail, or other secure means,
postage prepaid, to certain municipal registered Securities Depositories (described below) which are known to
the Trustee to be holding Bonds, and to at least two of the national Information Services (described below) that
disseminate securities redemption notices, at least 35 days but not more than 65 days prior to the redemption
date (except in the case of redemption following receipt of casualty insurance proceeds or condemnation
awards); provided, however, that neither the failure to receive such notice or any defect in any notice so mailed
shall affect the sufficiency of the proceedings for the redemption of any Bonds.
Securities Depositories include The Depository Trust Company, 711 Stewart Avenue, Garden
City, New York 11530; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South
LaSalle Street, Chicago, Illinois 60605; Philadelphia Depository Trust Company, Reorganization Division, 1900
Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department; or, in accordance with the then
current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities
depositories or any such other depositories as the Issuer may designate in writing to the Trustee.
Information services include Financial Information, Inc., "Daily Called Bond Service," 30
Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services,
"Called Bond Services," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service,
"Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007 Attention: Municipal
News Reports; and Standard and Poor's Corporation, "Called Bond Record," 25 Broadway, New York, New
York 10004; or, in accordance with the then current guidelines of the Securities and Exchange Commission,
such other addresses and/or such other services providing information with respect to called bonds, or any other
such services as the Issuer may designate in writing to the Trustee.
Notwithstanding the foregoing or any other provision of this Indenture, in the event of a
redemption by reason of the Trustee receiving payments on the GNMA Security representing payments on the
Mortgage Loan made by the Borrower without notice or prepayment penalty while under the supervision of a
trustee in bankruptcy, notice of redemption of Bonds shall not be required if the circumstances do not permit the
Trustee to give such notice in accordance with the preceding paragraphs of this Section.
SF2-27261.2 18 40511-90-MSI-03/11/94
Notice of redemption having been given in the manner provided above (or not required as
provided in the immediately preceding paragraph), and money sufficient for the redemption being held by the
Trustee for that purpose, the Bonds so called for redemption shall become due and payable on the redemption
date, and interest thereon shall cease to accrue; and the holders of the Bonds so called for redemption shall
thereafter no longer have any security or benefit under this Indenture except to receive payment of the
redemption price for such Bonds. Moneys deposited with and held by the Trustee due to non-presentment of
Bonds on any redemption date shall be retained by the Trustee for a period of at least one year after the final
maturity date of the Bonds, or the maximum amount of time allowed under the laws of the State.
ARTICLE IV
FUNDS; INVESTMENTS
Section 401. Establishment of Funds. The following funds and accounts shall be established
and maintained by the Trustee under this Indenture for the benefit of the Bonds:
(a) Acquisition Fund;
(b) Bond Fund, including therein a Sinking Fund Account;
(c) Expense Fund;
(d) Costs of Issuance Fund; and
(e) Rebate Fund.
The funds and accounts created under this Indenture shall be held in trust in the custody of the
Trustee with the corporate trust department of the Trustee. The Issuer authorizes and directs the Trustee to
withdraw moneys from said funds and accounts for the purposes specified herein, which authorization and
direction the Trustee hereby accepts. All moneys required to be deposited with or paid to the Trustee under any
provision of this Indenture shall be held by the Trustee in trust and shall, while held by the Trustee, constitute a
part of the Trust Estate and be subject to the lien hereof.
Section 402. Application of Bond Proceeds and Other Amounts. Upon issuance of the Bonds
of each Series, the proceeds of such Series and other amounts received in connection with such issuance shall be
deposited as follows:
(a) the interest accrued on such Series of Bonds between the date of such Bonds
and the date of delivery thereof($ )shall be deposited in the Bond
Fund;
(b) $ of the Series B Bond proceeds shall be deposited in the Acquisition
Fund;
(c) $ of the Series B Bond proceeds shall be deposited in the Costs of
Issuance Fund;
(d) $ of the Series B Bond proceeds shall be transferred to the Borrower;
(e) $ of the Series B-T Bond proceeds shall be deposited into the Costs of
Issuance Fund.
Section 403. Acquisition Fund. Amounts shall be deposited in the Acquisition Fund as
provided in subsection (a) of this Section and shall be applied as provided in subsections (b) through (d) of this
SF2-27261.2 19 40511-90-MSI-03/11/94
• •
Section; provided that no amounts shall be transferred or disbursed from the Acquisition Fund until the Trustee
shall have received evidence of the recordation of the Issuer Regulatory Agreement, which may be telephonic
notice from the title company responsible for such recordation.
(a) The Trustee shall deposit into the Acquisition Fund in the amount of the amounts
required to be deposited pursuant to Section 402 hereof.
(b) On the date of issuance of the Bonds, the Trustee shall acquire the GNMA Security
from the Lender for the account of the Issuer and shall remit to the Lender, but only to the extent of available
funds, an amount not to exceed the principal amount of the GNMA Security, plus accrued and unpaid interest
thereon, if any.
Section 404. Bond Fund. (a) The Trustee shall deposit into the Bond Fund(i) the amounts
required by Section 402; (ii)all income, revenue, proceeds and other amounts received from or in connection
with the GNMA Security; and(iii)any other amounts received by the Trustee which are subject to the lien and
pledge of this Indenture.
The GNMA Security shall be held for the account of the Bond Fund and registered in the
name of the Trustee so that the Trustee maintains a first perfected security interest in such GNMA Security at
all times.
(b) At the earliest practicable time, the Trustee shall give immediate telephonic notice(to
be followed by written notice on the 16th day of any month) to GNMA of the failure of the Lender to make any
payment on the GNMA Security on the 15th day of such month(or the next succeeding Business Day if the
15th day is not a Business Day) and demand payment under the terms of GNMA's guaranty thereof.
(c) The Trustee shall apply amounts in the Bond Fund(other than amounts in the Sinking
Fund Account)on each Interest Payment Date (or any other date on which Bonds are to be redeemed), in the
following order of priority:
(i) first to pay interest on the Bonds and then to pay the principal of all Bonds
maturing on such date and the redemption prices of all Bonds required to be redeemed on such date;
(ii) Amounts on deposit in the Bond Fund shall be transferred to the Expense
Fund in an amount sufficient to pay the expenses set forth in Section 405(ii)and(iii);
(iii) Amounts on deposit in the Bond Fund shall be transferred to the Expense
Fund an amount or amounts sufficient to pay other expenses as required in Section 405 hereof,
provided that amounts in the Bond Fund shall never be reduced below$5,000; and
(iv) Notwithstanding the provisions of clause (i)above, amounts held in the
Sinking Fund Account shall be exclusively used to pay the principal of the Bonds maturing on
, 2004 or in a manner which results in a discharge of the Indenture pursuant to Article IX.
(d) The Trustee shall also apply moneys in the Bond Fund which are derived from
payments on the GNMA Security that exceed level payments of principal of and interest on the Mortgage Loan,
to the redemption of Bonds in accordance with the redemption provisions provided herein.
(e) All scheduled principal payments received by the Trustee on the GNMA Security on
or prior to ,2004, shall be deposited by the Trustee into the Sinking Fund Account until the
amount therein equals $ and shall be used to pay the principal of the Series B Bonds maturing on
' 2004. Any investment earnings on money held in the Sinking Fund Account shall be deposited in
the Bond Fund.
(f) If any GNMA Security is in book-entry only form, then the following shall apply:
Sn27261.2 20 40511-e0-Msi-03/11/94
• •
(i) the GNMA Security must be registered in the name of the Trustee at the
depository for such book-entry designation at the time of purchase of the GNMA Security by the Trustee and
the Trustee shall have a first-lien position perfected security interest in the GNMA Security;
(ii) the Trustee shall be or shall become a participant in the Participants Trust
Co. ("PTC") or shall have entered into a custody agreement with respect to the GNMA Certificate with a
participant of PTC;
(iii) the Trustee or the participant acting on behalf of the Trustee (in either case,
the 'Receiving participant") shall establish a limited purpose account with PTC for this Indenture to be called
the "Limited Purpose Account";
(iv) the Receiving Participant shall deliver an irrevocable instruction to PTC to
the effect that all fees arising in connection with the Limited Purpose Account are to be charged to another
account maintained by PTC for the Receiving Participant;
(v) PTC shall deliver a certificate to the Receiving Participant acknowledging
that Receiving Participant will not charge the specified Limited Purpose Account at all times that the instruction
in paragraph (iv) above remains in effect (with exceptions only for mistake or to secure and repay any advance
of principal and interest made by PTC);
(vi) there must be written evidence from PTC or the Receiving Participant that
PTC has made an appropriate entry in its records of the transfer of such book-entry security to the Receiving
Participant's account; and
(vii) the GNMA Security has been transferred and received into the Limited
Purpose Account free of any payment obligation other than the Trustee's obligation to pay the Lender for the
GNMA Security.
The Trustee may rely on representations made by the Lender regarding compliance with the foregoing
requirements. The provisions of paragraphs (iii), (iv), (v) and (vii) shall not apply if the Trustee receives
written evidence from PTC and the Receiving Participant that PTC will not offset its fees against the Receiving
Participant's custodial account.
Section 405. Expense Fund. The Trustee shall deposit into the Expense Fund the amounts
required by Section 404. The Trustee shall apply moneys on deposit in the Expense Fund solely for the
following purposes, on each Interest Payment Date, in the following order of priority:
(i) to transfer money to the Bond Fund on any Interest Payment Date to the
extent necessary to pay debt service on the Bonds on such date but only if there are insufficient moneys
held to the credit of the Bond Fund on that date;
(ii) to transfer to the Rebate Fund the Rebate Amount (if any);
(iii) to pay one-half of the annual administrative fees and expenses of the Trustee
in a semiannual amount equal to $ ;
(iv) to pay the fees and expenses of the Rebate Analyst in an amount not to
exceed $ in any five year period in which calculations are required to be made by the Rebate
Analyst pursuant to the Tax Certificate; and
[(v) to pay one-half the annual fee of the Issuer in a semiannual amount equal to
one-sixteenth of one percent of the initial aggregate principal amount of the Bonds issued.]
SF2-27261.2 21 40511-90-MSI-03/11/94
• •
In the event moneys in the Expense Fund are not sufficient to pay the fees and expenses of the
Trustee, the Rebate Analyst or the Issuer, the Trustee shall seek payment of any such deficiency from the
Borrower.
Section 406. Rebate Fund.
The purpose of the Rebate Fund is to facilitate compliance with section 148(f) of the Code.
Any Rebate Amount deposited in such Fund shall be for the sole benefit of the United States of America and
shall not be subject to the lien of the Indenture or to the claim of any other person, including, without
limitation, the Bondholders and the Issuer. The requirements of this Section 406 are subject to, and shall be
interpreted in accordance with, section 148(f) of the Code and the Treasury regulations applicable thereto (the
"Regulations"), and shall apply except to the extent (i) the Trustee is furnished with an opinion of Bond Counsel
or other satisfactory evidence that the Regulations contain an applicable exception; or (ii) the Trustee in its
judgment determines that such requirements will diminish the security of the Bondholders; provided that in the
case of clause (ii), the Trustee shall obtain an opinion of Bond Counsel to the effect that failing to take such
action would not adversely affect the exclusion of interest on the Tax-Exempt Bonds from federal income
taxation.
Promptly upon the close of each Bond Year and also upon the retirement of the Bonds, the
Trustee shall provide the Borrower with a statement of earnings on funds and accounts held under this Indenture
during any period not covered by a prior statement, and a final statement or a supplement thereto covering the
period ending , 2034. Each statement shall include the purchase and sale prices of each investment, if
any, (including any commission paid thereon which shall be separately stated if such information is available),
the dates of each investment transaction, information as to whether such transactions were made at a discount or
premium, and such other information known or reasonably available to the Trustee as the Borrower or Rebate
Analyst shall reasonably require. If so requested by the Owner at any time, the Trustee shall create within the
Bond Fund separate accounts for purposes of accounting for earnings on amounts attributable to the Series B
Bonds and the Series B-T Bonds, respectively.
The Trustee shall promptly transfer to the Rebate Fund each amount required to be deposited
therein pursuant to the Tax Certificate, first from earnings in the Acquisition Fund, and second, to the extent
amounts in the Acquisition Fund are insufficient, from revenues which have been deposited into the Bond Fund
and earnings thereon. To the extent that the amount to be deposited into the Rebate Fund exceeds the amount
which can be transferred from such Funds, the Trustee shall promptly notify the Borrower and an amount equal
to such deficiency shall be paid promptly by the Borrower to the Trustee for deposit into the Rebate Fund.
The Borrower and the Trustee, on behalf of the Issuer, shall keep such records as will enable
them to fulfill their respective responsibilities under this Section 406 and section 148(f) of the Code, and the
Borrower (or the Trustee upon the written request of the Issuer) shall engage a Rebate Analyst as may be
necessary in connection with such responsibilities. The fees and expenses of the Rebate Analyst shall be paid
by the Trustee pursuant to Section 405(iv)hereof. For purposes of the computation of the Rebate Amount
required under the Tax Certificate, the Trustee shall make available to the Borrower and the Issuer during
normal business hours all information in the Trustee's control which is necessary to such computations.
Section 407. Costs of Issuance Fund. The Trustee shall deposit in the Costs of Issuance Fund
the amounts set forth in Section 402 hereof and shall pay Costs of Issuance upon the written direction of the
Issuer, which Costs of Issuance shall not exceed the amounts set forth in Schedule H to the Bond Purchase
Agreement. Any funds remaining in the Costs of Issuance Fund six months after the Closing Date, and not
specifically committed to the payment of Costs of Issuance, shall be deposited in the Bond Fund.
Section 408. Custody of Funds; Moneys Held in Trust. The funds created under this
Indenture for the benefit of the Bondholders shall be held in trust by the Trustee. The Issuer hereby authorizes
and directs the Trustee to withdraw moneys from the funds hereunder for the purposes specified herein, which
authorization and direction the Trustee hereby accepts. All moneys required to be deposited with or paid to the
Trustee under any provisions of this Article shall be held by the Trustee in trust, and except for moneys
SF2-27261.2 22 40511-90-MS1-03/11/94
• •
deposited with or paid to the Trustee for the redemption of the Bonds, notice of redemption of which has been
duly given, or for the payment of principal and interest on Bonds which have become due at the stated maturity
thereof, shall while held by the Trustee constitute part of the security for the registered owners of Outstanding
Bonds, and be subject to the lien hereof.
Section 409. Nonpresentment of Bonds. In the event any Bonds shall not be presented for
payment when the principal thereof becomes due, either at maturity or at the date fixed for redemption thereof
or otherwise, if moneys sufficient to pay such Bonds shall have been made available to the Trustee (whose duty
it shall be to hold such moneys, without liability to the Issuer, any Bondholder or any other person for interest
thereon) for the benefit of the registered holders thereof and shall have remained unclaimed for a period up to
six months prior to the date when such moneys would escheat under applicable law after such principal or
interest has become due and payable, such funds shall be paid to the Issuer; and all liability of the Trustee to the
registered holders thereof for the payment of such Bonds shall forthwith cease, determine and be completely
discharged; provided, however, that the Trustee, before being required to dispose of such funds as stated above,
shall cause to be published once in a financial newspaper or journal of general circulation in New York, New
York or San Francisco, California, notice that such moneys remain unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such
moneys then remaining will be paid to the Issuer. The cost of such publication shall be paid from the
unclaimed funds so held by the Trustee. The obligation of the Trustee under this Section to pay any such funds
to the Issuer shall be subject to any other provisions of law applicable to the Trustee or to such funds providing
other requirements for disposition of unclaimed property.
Section 410. Investment of Funds. The Trustee shall invest all moneys in the Bond Fund in
the Investment Agreement described in clause (iv) of the definition of Qualified Investments. Subject to the
provisions of the foregoing sentence and the Tax Certificate, any moneys held as part of any fund created by
this Article, including the Expense Fund, shall be invested or reinvested from time to time by the Trustee upon
receipt by the Trustee of the written directions of the Borrower in Qualified Investments having a maturity not
exceeding the shorter of(i) the date on which such Funds may be needed under the Indenture, or (ii) six
months, in its sole discretion unless directed by the Borrower to invest such moneys in Qualified Investments
specified by the Borrower, in which event it shall follow such direction. In no event shall a maturity be longer
than the longest maturity of the Bonds. The investments so made shall be held by the Trustee and shall be
deemed at all times to be a part of the fund in which such moneys were held; provided that for purpose of
investment moneys held in any of the funds established hereunder may be commingled. The Trustee shall sell
and reduce to cash a sufficient amount of such investments whenever the cash balance in any fund shall be
insufficient to cover a proper disbursement therefrom. For the purpose of determining the amount in any fund,
Qualified Investments (other than an Investment Agreement) credited to such fund or account shall be valued at
their cost (exclusive of accrued interest after the first payment of interest following acquisition)or market value,
whichever is less. The Trustee shall invest at the highest yields prudently available consistent with this
Indenture. If any moneys held under this Indenture other than the Expense Fund are not invested in the
Investment Agreement, such moneys shall be invested only in accordance with the written instructions of the
Borrower.
Section 411. Payments of Funds Upon Discharge of Lien. Upon discharge of the lien of this
Indenture in accordance with Article IX hereof, any moneys remaining in any funds created by this Indenture
shall be paid by the Trustee to: (a) the Lender if, upon inquiry by the Trustee (and the Trustee shall so inquire),
the Lender advises the Trustee in writing that an event of default has occurred and is continuing under any of
the FHA Loan Documents (and if the Lender shall fail to respond to such inquiry by the Trustee within 30 days
after such inquiry the Lender shall be deemed to have stated that no such event of default has occurred and is
continuing, provided that the Trustee shall notify the Lender in such inquiry of the provisions of this
parenthetical clause); or (b) otherwise, to the Borrower.
SF2-27261.2 23 40511-90-MSI-03/11/94
ARTICLE V
GENERAL COVENANTS AND REPRESENTATIONS
Section 501. Payment of Bonds; Priority of Lien. The Issuer shall promptly pay, but only out
of the Revenues and the Trust Estate and not from any other fund or source of the Issuer, the principal of,
premium, if any, and interest on, every Bond issued under this Indenture at the place, on the dates and in the
manner provided herein and in the Bonds, according to the true intent and meaning thereof. Nothing in this
Indenture or the Bonds shall be considered as assigning or pledging any other funds or assets of the Issuer other
than the Trust Estate.
Section 502. Instruments of Further Assurance. The Trustee shall defend its title to the
GNMA Security for the benefit of the holders of the Bonds against the claims and demands of all persons
whomsoever and shall do, execute, acknowledge and deliver, such indentures supplemental hereto, and such
further acts, instruments and transfers as the Trustee may reasonably require for the better assuring,
transferring, conveying, pledging, assigning and confirming unto the Trustee all its interest in the property
herein described and the revenues, receipts and other amounts pledged hereby to the payment of the principal
of, premium, if any, and interest on the Bonds. Any and all interest in property hereafter acquired which is of
any kind or nature herein provided to be and become subject to the lien hereof shall and without any further
conveyance, assignment or act on the part of the Issuer or the Trustee, become and be subject to the lien of this
Indenture as fully and completely as though specifically described herein, but nothing contained in this sentence
shall be deemed to modify or change the obligations of the Issuer under this Section.
Section 503. No Disposition of GNMA Security. The Trustee shall not, without the written
consent of the holders of 100% of the Bond Obligation, sell or otherwise dispose of the GNMA Security after
its acquisition for an amount less than an amount sufficient, together with other amounts then held under this
Indenture and available for the payment of principal of and interest on the Bonds, to provide for the payment of
the Bonds in accordance with Article IX.
Section 504. Recordation and Filine. The Trustee will cause financing statements with
respect to the Trust Estate described in this Indenture and the pledge of the GNMA Security to be at all times
filed in such manner and in such places as required by law in order to fully preserve and protect the rights of
the Trustee hereunder and to perfect the security interest created by this Indenture in the Trust Estate described
herein. To the extent possible under applicable law, as in effect in the jurisdiction in which the Trust Estate is
located, the Trustee will maintain the priority of the security interest herein created in the Trust Estate as a first
lien thereon, and warrant, protect, preserve and defend its interest in the Trust Estate and the security interest of
the Trustee therein and all rights of the Trustee under this Indenture against all actions, proceedings, claims and
demands of all persons, all paid solely from the Trust Estate.
Section 505. Modification of Security; Additional Indebtedness. The Issuer shall not, without
the written consent of the Trustee, alter, modify or cancel, or agree to consent to alter, modify or cancel any
agreement which relates to or affects the security for the Bonds. Such consent of the Trustee may be given only
as provided in Article VIII hereof. No additional indebtedness prior to or on a parity with the Bonds may be
issued under this Indenture or otherwise.
Section 506. Reports. The Trustee shall furnish annually to any Bondholder who requests in
writing copies thereof, and furnishes an address to which such reports and statements are to be sent, at the sole
cost and expense of such Bondholder, copies of(a) any reports furnished to the Trustee with regard to the
Project and (b) annual statements of the Trustee with regard to fund balances under this Indenture. The Trustee
shall also furnish to the Rating Agency such information as may be reasonably requested by the Rating Agency
in order to maintain the rating on the Bonds.
Section 507. Power to Issue Bonds and Make Pledge and Assignment. The Issuer is duly
authorized pursuant to the laws of the State, including the Act, to issue the Bonds and to enter into this
Indenture and to assign the Revenues and other assets purported to be assigned under this Indenture in the
SF2-27261.2 24 40511-90-MSI-03/1 1/94
manner and to the extent provided in this Indenture. The Bonds and the provisions of this Indenture are and
will be the legal, valid and binding limited obligations of the Issuer in accordance with their terms. So long as
any of the Bonds shall be Outstanding, the Issuer shall do or cause to be done all things necessary to preserve
and keep in full force and effect its existence and to maintain its status as such.
Section 508. Tax Covenants.
(a) The Issuer covenants to the holders of the Tax-Exempt Bonds that, notwithstanding
any other provisions hereof or of any other instrument, to the extent it exercises any control, it will neither
make nor cause to be made any investment or other use of the Acquisition Fund, the Bond Fund or the Expense
Fund or other proceeds of the Bonds which would cause the Tax-Exempt Bonds to be arbitrage bonds under
Section 148 of the Code and the regulations thereunder or otherwise cause the interest on the Tax-Exempt Bonds
to be included in gross income for federal income tax purposes; and the Trustee agrees it will invest funds held
under the Indenture in accordance with the terms of this Indenture and the Tax Certificate. This covenant shall
extend throughout the term of the Tax-Exempt Bonds, to all funds created hereunder and all moneys on deposit
to the credit of any such fund.
(b) The Issuer and, subject to the provisions of Section 701, the Trustee covenant for the
benefit of the Bondholders to enforce all obligations of the Borrower under the Issuer Regulatory Agreement
and to seek to correct any violation of the Issuer Regulatory Agreement within a reasonable period after any
such violation is first discovered; provided, however that any provision contained in this Indenture or the Issuer
Regulatory Agreement which requires the Borrower to take any action necessary to preserve the tax status of the
Tax-Exempt Bonds (or prohibits the Borrower from taking any action that might jeopardize the tax status of the
Tax-Exempt Bonds) is qualified to except actions prohibited (or required) by HUD pursuant to the National
Housing Act, FHA Regulations, the FHA Loan Documents or, if applicable, Section 8 of the United States
Housing Act of 1937, as amended, and the regulations thereunder.
(c) The Issuer (to the extent it exercises control) and the Trustee each covenants to the
registered holders of the Tax-Exempt Bonds at any time outstanding that it shall not use or invest or permit the
use or investment of any proceeds of the Bonds or any other Revenues, directly or indirectly, in any manner,
which would cause any of the Tax-Exempt Bonds to be an obligation that is "federally guaranteed" within the
meaning of Section 149(b) of the Code. To that end, so long as any of the Tax-Exempt Bonds are outstanding,
the Issuer (to the extent it exercises control) and the Trustee, with respect to such proceeds and other Revenues,
shall comply with all requirements of said Section 149(b) and any regulations proposed or promulgated
thereunder, as the same exist on this date or may from time to time hereafter be amended, supplemented or
revised.
(d) The Issuer covenants that it shall not use or cause the use of any proceeds of Bonds or
any other funds of the Issuer, directly or indirectly, in any manner, and shall not take or cause to be taken any
other action or actions, or fail to take any action or actions, which would result in interest on any of the Tax-
Exempt Bonds becoming includable in gross income of any holder thereof. The Issuer further covenants that it
shall at all times do and perform all acts and things permitted by law and necessary or desirable in order to
assure that interest paid by the Issuer on the Tax-Exempt Bonds shall be excluded from the gross income of the
recipients thereof for federal income tax purposes.
(e) In furtherance of the covenants in this Section, the Issuer and the Borrower shall
execute, deliver and perform the Tax Certificate, which is by this reference incorporated herein and made a part
hereof as if set forth herein in full, and by its acceptance of this Indenture the Trustee acknowledges receipt of
the Tax Certificate and acknowledges its incorporation herein by reference.
Section 509. Issuer's Obligation Limited. The obligations of the Issuer hereunder shall be
limited as provided in Section 203 hereof. To implement such provisions, it is recognized that, notwithstanding
any other provision of this Indenture, the holders of the Bonds shall not look to the Issuer for damages suffered
by the holders of the Bonds as a result of the Issuer's failure to perform any covenant, undertaking or obligation
under this Indenture, the Bonds, the Issuer Regulatory Agreement or any other document, nor as a result of the
M-27261.2 25 40511-90-MS1-03/11/94
incorrectness of any representation made by the Issuer in this Indenture, the Financing Agreement or any other
document to which the Issuer is a party, nor for any other reason. Although this Indenture recognizes that the
documents shall not give rise to any pecuniary liability of the Issuer, nothing in the provisions of this Indenture
shall be deemed to preclude in any way any action or proceeding (other than that element of any action or
proceeding involving a claim for monetary damages against the Issuer) in any court or before any governmental
body, agency or instrumentality or otherwise against the Issuer or any of its officers, agents or employees to
enforce the provisions of any document, which the Issuer is obligated to perform and the performance of which
the Issuer has not assigned to the Trustee or any other person.
Although the Issuer shall have the right to seek remedies in the event of a default by the
Borrower, by this Indenture the Issuer assigns to the Trustee the right, the burden and the duty of taking action,
in order to implement the purposes and intent of the Act, without the Issuer's incurring any pecuniary obligation
or liability. In any case where action by the Trustee requires simultaneous or subsequent action by the Issuer,
the Issuer shall cooperate with the Trustee and take any and all action necessary to effectuate the purposes and
intent of this Indenture upon receipt of indemnification satisfactory to the Trustee. Notwithstanding the
foregoing, the Issuer hereby reserves the Reserved Rights of the Issuer, including, without limitation, (a) its
rights to indemnification, to the payment of Taxes and payment of its fees and expenses, and to receive notices
and give consents to the extent provided herein and in the other documents referred to herein, and (b) the right
to take all action necessary to assure and enforce compliance with the restrictions, covenants and provisions
contained in the Issuer Regulatory Agreement, without in any way limiting the rights of the Trustee thereunder
or hereunder, either on its own behalf or as the assignee of the Issuer.
Section 510. Role of Issuer. The Issuer shall not be required to take any action not expressly
provided for herein. In addition, the Issuer shall have no obligation to review, control or oversee the activities
of the Trustee or any other person in connection with this Indenture or the Bonds. Furthermore, the Issuer shall
not be obligated to take any action which might in its reasonable judgment involve it in any expense or liability
unless it shall have been furnished with assurance of payment or reimbursement for any expense and with
reasonable indemnity for liability of the Issuer, its officers, officials and employees.
Section 511. Trustee to Retain Information. So long as any of the Bonds shall be outstanding,
the Trustee shall retain all certificates, financial statements and other written information furnished to it by or on
behalf of the Borrower or any other person under the Financing Agreement and any other agreement or
instrument pertaining to the Bonds and shall make such documentation available to any Bondholder for review
after reasonable notice during regular business hours at the Trust Office of the Trustee. The Trustee shall
permit such reviewers to take copies of all or any part of such documentation, subject to their payment of such
reasonable copying and handling charges as the Trustee may impose.
ARTICLE VI
DEFAULT AND REMEDIES
Section 601. Events of Default. Each of the following shall be an "Event of Default" or
"event of default" hereunder:
(a) default in the due and punctual payment of any interest on any Bond; or
(b) default in the due and punctual payment of the principal of or premium, if any, on
any Bond whether at the stated maturity thereof, or on proceedings for redemption thereof, or on the maturity
thereof by declaration; or
(c) default in the performance or observance of any other of the covenants, agreements or
conditions on the part of the Issuer in this Indenture or in the Bonds (subject to Section 611 hereof); or
SF2-27261.2 26 40511-90-MSI-03/11%94
• •
(d) approval by a court of competent jurisdiction of any petition for reorganization of the
Issuer or rearrangement or readjustment of the obligations of the Issuer under the provisions of any bankruptcy
law.
The Borrower's failure to pay obligations owing to the Lender shall not constitute an Event of
Default hereunder.
The Trustee shall give written notice to the Rating Agency of the occurrence of any Event of
Default described in subsections (a) or (b) above within 15 days after a Responsible Officer of the Trustee has
notice or knowledge thereof.
Section 602. Acceleration. If an Event of Default described in Section 601(a) or (b) has
occurred and is continuing with respect to a Bond, the Trustee may, and upon the written request of the holders
of at least 25% of the Bond Obligation the Trustee shall, by notice in writing delivered to the Issuer and the
Borrower, declare the principal of all Bonds then outstanding and the interest accrued thereon immediately due
and payable without premium, and such principal and interest shall thereupon become and be immediately due
and payable.
If an Event of Default described in Section 601(c) or (d)has occurred and is continuing, the
Trustee shall, upon the written request of the holders of 100% of the Bond Obligation, by notice in writing
delivered to the Issuer and the Borrower, declare the principal of all Bonds then outstanding and the interest
accrued thereon immediately due and payable without premium, and such principal and interest shall thereupon
become and be immediately due and payable.
The foregoing provisions of this Section 602, however, are subject to the condition that if at
any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment
or decree for the payment of the money due shall have been obtained or entered as hereinafter provided, there
shall be paid or deposited with the Trustee a sum sufficient to pay all principal of the Bonds matured (or due
upon mandatory redemption) prior to such declaration and all matured installments of interest (if any) upon all
the Bonds, with interest at the rate borne by the Bonds on such overdue principal and premium, if any, and (to
the extent legally enforceable) on such overdue installments of interest (other than in the payment of principal of
and interest on the Bonds due and payable solely by reason of such declaration), and the reasonable expenses of
the Trustee shall have been made good or cured or adequate provisions shall have been made therefor, then and
in every case, the holders of at least a majority of the Bond Obligation, by written notice to the Trustee and the
Issuer, may direct the Trustee on behalf of the holders of all the Bonds to rescind and annul such declaration
and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent
default, nor shall it impair or exhaust any right or power consequent thereon. Nothing herein shall be construed
to obligate the Issuer to make a payment or deposit referred to herein from any revenues other than the revenues
derived from the Trust Estate.
Section 603. Remedies. Upon the occurrence of an Event of Default, the Trustee shall have
the power to proceed with any right or remedy granted by the Constitution and laws of the State, as it may
deem best, including any suit, action or special proceeding in equity or at law for the specific performance of
any covenant or agreement contained herein or under the GNMA Security or for the enforcement of any proper
legal or equitable remedy as the Trustee shall deem most effectual to protect the rights aforesaid, insofar as such
may be authorized by law.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee or to 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 given to the Trustee or to the Bondholders hereunder 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 or event of default shall impair any such right or power or shall be construed to be a
waiver of any such default or event of default or acquiescence therein, and every such right and power may be
exercised from time to time and as often as may be deemed expedient. No waiver of any default or event of
SF2-27261.2 27 40511-90-MS 1-03/11/94
default hereunder, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent
default or event of default or shall impair any rights or remedies consequent thereto.
Section 604. Rights of Bondholders. If any Event of Default shall have occurred and if
requested in writing so to do by the holders of not less than a majority of the Bond Obligation, and if
indemnified as provided herein, the Trustee shall be obligated to exercise such one or more of the rights and
powers conferred by this Article and to proceed to protect its rights and the rights of the Bondholders under
applicable law, the GNMA Security, the GNMA Guaranty Agreement, the Financing Agreement and this
Indenture, as the Trustee, being advised by counsel, shall deem most expedient in the interest of the
Bondholders. Anything in this Indenture to the contrary notwithstanding,but subject to the provisions of
Sections 608 and 701(h) hereof, the holders of a majority of such Bond Obligation shall have the right at any
time, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of
conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this
Indenture, or for the appointment of a receiver or any other proceedings hereunder, in accordance with the
provisions of law, this Indenture and the GNMA Security.
Section 605. Waiver by Issuer. Upon the occurrence of an Event of Default hereunder, to the
extent that such right may then lawfully be waived, neither the Issuer nor anyone claiming through or under it
shall set up, claim or seek to take advantage of any appraisal, valuation, stay, extension or redemption laws now
or hereinafter in force, in order to prevent or hinder the enforcement of this Indenture; and the Issuer, 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.
Section 606. Application of Mones. Any moneys received by the Trustee pursuant to this
Article, together with available funds in the Acquisition Fund, the Bond Fund and the Expense Fund, shall,
after payment of the costs and expenses of the proceedings with respect to a default pursuant to Section 501(a)
or Section 601(b) of this Indenture, but prior to payment of costs and expenses of the proceedings with respect
to a default under Section 601(c) or Section 601(d) of this Indenture and liabilities and advances incurred or
made by the Trustee, be deposited in the Bond Fund and applied in the following order, at the date or dates
fixed by the Trustee and, in the case of the distribution of such money on account of principal, or premium, if
any, or interest, upon presentation of Bonds, and notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
(a) 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 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; and
SECOND: to the payment to the persons entitled thereto of the unpaid principal of any of the
Bonds which shall have become due, in the order of their due dates, with interest on such Bonds from
the respective dates upon which they become due and, if the amount available shall not be sufficient to
pay in full principal of and interest on the Bonds due on any particular date, then to the payment
ratably, according to the amount of the principal and interest due on such date, to the persons entitled
thereto.
(b) If the principal of all the Bonds shall have become due or shall have been declared
due and payable, (i) all such moneys shall be applied to the payment of all amounts then due on the Bonds for
principal, premium, if any, and interest in respect of which or for the benefit of which money has been
collected (other than Bonds which have matured or otherwise become payable prior to such event of default and
money for the payment of which is held in the Bond Fund), ratably without preference or priority of any kind,
SF2-27261.2 28 40511-90-MSI-03/11/94
according to the amounts due and payable on such Bonds, for principal, premium, if any, and interest
respectively; and (ii) the remainder of any such moneys shall be paid to the Borrower.
(c) If the principal of all the Bonds shall have been declared due and payable, and if such
declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject
to the provisions of subsection(a) hereof in the event that the principal of all the Bonds shall later become due
or be declared due and payable, such moneys shall be applied in accordance with the provisions of paragraph (a)
of this Section.
Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys
shall be applied at such times and from time to time as the Trustee shall determine, having due regard to the
amount of such moneys available for such application in the future. Whenever the Trustee shall apply such
funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made, and upon such date interest on the amounts of principal to
be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the
deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make
payment to the holder of any Bond until such Bond shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
Section 607. Remedies Vested in Trustee. All rights of action, including the right to file
proof of claims, under this Indenture or under any of the Bonds may be enforced by the Trustee 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 Bonds, and any recovery or judgment shall be
for the equal benefit of the holders of the outstanding Bonds.
Section 608. Remedies of Bondholders. 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 for the
execution of any trust hereunder or for the appointment of a receiver or any other remedy hereunder, unless
(a) a default shall have occurred of which the Trustee shall have been notified as provided herein; (b) such
default shall have become an event of default; (c) the holders of at least a majority of the Bond Obligation shall
have made written request to the Trustee and shall have offered reasonable opportunity to the Trustee either to
proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own
name; (d) such holders shall have offered to the Trustee indemnity as provided herein; and (e) the Trustee shall
within 60 days thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action,
suit or proceeding. Such notification, request and offer of indemnity are hereby declared in every 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 other remedy hereunder; and it is
understood and intended that no one or more holders of the Bonds shall have any right in any manner
whatsoever to affect, disturb or prejudice the lien of this Indenture or the rights of any other holders of Bonds
or to obtain priorityor preference over any other holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all holders of Bonds then Outstanding.
Nothing contained in this Indenture shall, however, affect or impair the right of any Bondholder to enforce the
payment of the principal of, the premium, if any, and interest on any Bond at the maturity thereof or the
obligation of the Issuer to pay the principal of, premium, if any, and interest on the Bonds issued hereunder to
the respective holders thereof, at the time, in the place, from the sources and in the manner expressed in said
Bonds.
Section 609. Termination of Proceedings. In case the Trustee shall have proceeded to enforce
any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such
case the Issuer and the Trustee shall be restored to their former positions and rights hereunder with respect to
the Trust Estate herein conveyed, and all rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.
SF2-27261.2 29 40511-90-MS1-03/11/94
• •
Section 610. Waivers of Events of Default. The Trustee shall waive any event of default
hereunder and its consequences and rescind any declaration of maturity of principal of and interest on the Bonds
upon the written request of the holders of a majority of the Bond Obligation; provided, however, that there shall
not be waived (a) any event of default in the payment of the principal of any Bonds at the date of maturity
specified therein, or upon proceedings for mandatory redemption, or (b) any default in the payment when due of
the interest or premium on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with
interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such default shall
have occurred on overdue installments of interest or all arrears of payments of principal or premium, if any,
when due (whether at the stated maturity thereof or upon proceedings for mandatory redemption), as the case
may be, and all expenses of the Trustee in connection with such default, shall have been paid or provided for,
and in case of any such waiver or rescission, or in case any proceeding taken by the Trustee on account of any
such default shall have discontinued or abandoned or determined adversely, then and in every such case the
Issuer, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder
respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any
right consequent thereto.
Section 611. Notice of Defaults: Opportunity to Cure. Anything herein to the contrary
notwithstanding,no default under Section 601(c)hereof shall constitute an Event of Default until actual notice of
such default by first class mail shall be given by the Trustee or by the holders of not less than a majority of the
Bond Obligation to the Issuer and the Borrower, and the Issuer and the Borrower shall have had 30 days after
receipt of such notice to correct said default or cause said default to be corrected, and shall not have corrected
said default or caused said default to be corrected within the applicable period; provided, however, if said
default be such that it cannot be corrected within the applicable period, it shall not constitute an Event of
Default if the Issuer or the Borrower has commenced and is diligently pursuing appropriate action to cure such
default, and there will be no material adverse effect on the rights of the Trustee or the Bondholders under this
Indenture, the Financing Agreement, the Issuer Regulatory Agreement or the GNMA Security as a result of
such extension.
ARTICLE VII
THE TRUSTEE
Section 701. Acceptance of the Trusts. The Trustee hereby accepts the trust imposed upon it
by this Indenture and agrees to perform said trusts upon the following terms and conditions:
(a) 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, and shall be entitled to advice of counsel
concerning all matters of the trusts hereof and the duties hereunder, and may in all cases pay such reasonable
compensation to all such attorneys, agents, receivers and employees as may be reasonably employed in
connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorney, who may be
the attorney or attorneys for the Issuer, and the Trustee shall not be responsible for any loss or damage resulting
from any action or inaction taken in good faith in reliance upon such opinion or advice.
(b) The Trustee shall not be responsible for any recital herein, or in the Bonds (except in
respect to the authentication certificate of the Trustee endorsed on the Bonds), or for the validity of the
execution by the Issuer of this Indenture or of any supplements hereto or instruments of further assurance, or
for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby.
(c) The Trustee may become the owner or pledgee of the Bonds secured hereby and
otherwise deal with the Issuer and the Borrower with the same rights which it would have if not Trustee.
(d) To the extent permitted hereunder, the Trustee may rely and shall be protected in
acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or
document reasonably believed to be genuine and correct and to have been signed or sent by the proper person or
SF2-27261.2 30 40511-90-MSI-03/11/94
•
persons, and the Trustee shall not be bound to make any investigation into the facts or matters stated in any
such document so delivered and signed unless requested in writing so to do by the holders of a majority of the
Bond Obligation.
(f) The permissive rights of the Trustee to do things enumerated in this Indenture shall
not be construed as a duty unless so specified herein.
(g) At any and all reasonable times, the Trustee and its duly authorized agents, attorneys,
experts, engineers, accountants and representatives shall have the right, but shall not be required, to inspect the
Project fully, including all books, papers and records of the Issuer pertaining to the Project and the Bonds, and
to take such memoranda from and in regard thereto as may be desired.
(h) Notwithstanding anything elsewhere in this Indenture contained, the Trustee shall have
the right, but shall not be required, to demand in respect of the authentication of any Bonds, the withdrawal of
any moneys, the release of any interest in property, or any action whatsoever within the purview of this
Indenture, any showings, certificates, opinions, appraisals or other information, or official action or evidence
thereof, in addition to those required herein.
(i) Before taking any action hereunder the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses to which it may be put and to protect it
against all liability, except liability which is adjudicated to have resulted from its negligence or willful
misconduct by reason of any action so taken.
0) All moneys received by the Trustee or any paying agent shall, until used or applied or
invested as herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law or by this Indenture. Neither the Trustee nor
any paying agent shall be under any liability for interest on any moneys received hereunder except such as may
be agreed upon in writing with the Issuer or the Borrower.
(k) The Trustee undertakes to perform such duties as are specifically set forth in this
Indenture. In case an event of default has occurred which has not been cured, the Trustee shall exercise the
rights, duties and powers vested in it by this Indenture in good faith and with that degree of diligence, care and
skill which a reasonable person would exercise under similar circumstances in like situations.
(1) The Trustee shall not be responsible for insuring the Project or for collecting any
insurance moneys.
(m) Whether or not expressly provided for herein, every provision of this Indenture
relating to the conduct of or affecting the liability of the Trustee shall be subject to the provisions of this
Section 701. The immunities and exceptions from liability of the Trustee shall extend to its officers, employees
and agents.
Section 702. Notice of Default. Within 30 days after the occurrence of any default hereunder
of which the Trustee has or is deemed to have notice hereunder, the Trustee shall transmit by registered or
certified or first class mail, to the holders of all Bonds then Outstanding, notice of such default unless such
default shall have been cured or waived; provided, however, that, except in the case of a default in the payment
of the principal of(or premium, if any) or interest on any Bond when due, the Trustee shall be protected in
withholding such notice if and so long as the Trustee in good faith determines that the withholding of such
notice is in the interests of the holders of the Bonds. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an event of default.
Section 703. Compensation and Reimbursement. The following payments shall be made to
the Trustee from amounts in the Expense Fund, from amounts paid by the Borrower pursuant to the Financing
Agreement, or, after payment in full of the Bonds, from amounts in the Bond Fund:
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(1) The Trustee shall be paid from time to time its annual administrative fee as reasonable
compensation for all services rendered by it hereunder, as provided in Section 405(iii)hereof, and shall not be
limited by any provision of law in regard to the compensation of a trustee of an express trust; and
(2) Except as otherwise expressly provided herein, the Trustee shall be reimbursed upon
its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in
accordance with the enforcement of any provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel) and any extraordinary expense except any such
expense, disbursement or advance as may be attributable to its negligence or bad faith.
The Trustee shall also be entitled to indemnification in accordance with the Financing
Agreement against any loss, liability or expense incurred without negligence or willful misconduct on its part,
arising out of or in connection with the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in connection with the exercise or performance of any
of its powers or duties hereunder until replaced by a successor Trustee; provided that payment therefor is
payable only from funds received from the Borrower pursuant to Article V of the Financing Agreement.
The Issuer shall be under no obligation to make the foregoing payments except from amounts
in the Expense Fund or, after payment in full of the Bonds, from amounts in the Bond Fund.
The Trustee agrees to continue to serve as trustee hereunder, whether amounts in the Expense
Fund are sufficient therefor, until a successor is appointed, and if amounts in the Expense Fund are insufficient
to pay and reimburse the Trustee as provided in this Section, the Trustee shall look only to the Borrower under
the Financing Agreement.
Upon the occurrence of an Event of Default hereunder, the Trustee shall have a first lien with
the right of payment prior to the payment of any Bond upon the amounts held hereunder for its fees and the
foregoing charges and expenses incurred by it.
Section 704. Intervention by the Trustee. In any judicial proceeding to which the Issuer is a
party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of the
holders of Bonds, the Trustee may intervene on behalf of such Bondholders and shall do so if requested in
writing by the owners of at least 25% of the Bond Obligation. The rights and obligations of the Trustee under
this Section are subject to the approval of a court of competent jurisdiction.
Section 705. Successor Trustee. Any corporation or association into which the Trustee may
be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust
business and assets as a whole or substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a party shall, ipso facto, be and become
successor Trustee hereunder and vested with all the title to the whole property or Trust Estate and all the trusts,
powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or
filing of any instruments or any further act, deed or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 706. Resignation by the Trustee. The Trustee and any successor Trustee may at any
time resign from the trusts hereby created by giving written notice by registered or certified mail to the Issuer,
the Lender, the Borrower and each holder of the Bonds then Outstanding; provided that no such resignation
shall take effect until either (i) a successor Trustee shall have been appointed and shall have accepted such
appointment as provided in Section 709 or (ii) a temporary trustee shall be appointed as provided in Section
708. If no successor Trustee shall have been appointed and have accepted appointment within 30 days following
the giving of all required notices of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Section 707. Removal of the Trustee. The Trustee may be removed at any time, by an
instrument or concurrent instruments in writing delivered to the Trustee, the Issuer, the Lender and the
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Borrower and signed by the holders of a majority of the Bond Obligation. So long as no Event of Default has
occurred and is continuing hereunder, the Trustee may be removed at any time by an instrument in writing
signed by an Authorized Issuer Representative and delivered to the Trustee, the Lender and the Borrower.
Section 708. Appointment of Successor Trustee. In case the Trustee hereunder shall resign or
be removed, or be dissolved, or shall be 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 Issuer (with the concurrence of the
Borrower) or, if an Event of Default has occurred and is continuing hereunder, by the holders of a majority of
the Bond Obligation by an instrument or concurrent instruments in writing signed by such holders, or by their
duly authorized attorneys.
Every such Trustee appointed pursuant to the provisions of this Section shall be a trust
company or bank organized under the laws of the United States of America or any state thereof and which is in
good standing, within or outside the State, having a reported capital and surplus of not less than $75,000,000
and at least $50,000,000 in trust assets under management if there be such an-institution willing, qualified and
able to accept the trust upon reasonable or customary terms.
Section 709. Concerning Any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer and the Borrower an
instrument in writing accepting such appointment hereunder to it as mortgagee, 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 predecessor; but such predecessor Trustee shall, nevertheless, on the
written request of the Issuer, or of the successor Trustee, and upon payment of all amounts due such
predecessor, 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 Issuer be required by a successor Trustee for more fully and certainly vesting in such successor the estate,
rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. The
resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor
hereunder, together with all other instruments provided for in this Article, shall be filed or recorded by the
successor Trustee in each recording office where the Indenture shall have been filed and/or recorded.
Section 710. Trustee Protected in Relying Upon Instruments. The resolutions, opinions,
certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive
evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the
Trustee for the release of property hereunder.
Section 711. Trustee as Paving Agent and Registrar. The Trustee is hereby designated and
agrees to act as paying agent, separate and apart from its duties as Trustee hereunder, and as Bond Registrar for
and in respect to the Bonds.
In the event of a change in the office of Trustee, the predecessor Trustee which has resigned
or has been removed shall cease to be Trustee, Paying Agent on the Bonds and Bond Registrar, and the
successor Trustee shall become such Trustee, Paying Agent and Bond Registrar.
SF2-27261.2 33 40511-90-MSI-03/11/94
ARTICLE VIII
SUPPLEMENTAL INDENTURES AND AMENDMENTS
OF OTHER FINANCING DOCUMENTS
Section 801. Supplemental Indentures Not Requiring Consent of Bondholders. The Issuer and
the Trustee may, without the consent of or notice to any of the Bondholders, enter into an indenture or
indentures supplemental to this Indenture as shall not be inconsistent with the terms and provisions hereof or
materially adverse to the interests of the holders of the Bonds, including without limitation for any one or more
of the following purposes:
(a) to cure any ambiguity or to cure or correct any defect or inconsistent provisions
contained in this Indenture or to make such provisions in regard to matters or questions arising under this
Indenture as may be necessary or desirable and not contrary to or inconsistent with this Indenture or adverse to
the Bondholders;
(b) to change or modify any provision of this Indenture so as to harmonize to the
maximum extent practicable the provisions hereof with existing rules, regulations and procedures of FHA;
(c) to add to the covenants and agreements of the Issuer in this Indenture other covenants
and agreements, to surrender any right or power reserved or conferred upon the Issuer or amend or supplement
any other provision hereof if the foregoing shall not, in the judgment of the Trustee, materially adversely affect
the interests of the Bondholders, the Trustee being authorized to rely on an opinion of counsel (including
counsel to the Issuer) with respect thereto;
(d) to confirm, as further assurance, any pledge of or lien on the Financing Agreement or
the Revenues or of any other moneys, securities or funds subject to the lien of this Indenture;
(e) to modify any of the provisions hereof relating to the use of a book-entry system for
registration of the Bonds;
(f) to preserve the exclusion of interest on the Tax-Exempt Bonds from gross income for
federal income tax purposes, as set forth in an opinion of Bond Counsel;
(g) to subject to the lien and pledge of this Indenture additional revenues, properties or
collateral;
(h) to grant to or confer upon the Trustee for the benefit of the Bondholders any
additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the
Bondholders or the Trustee or any of them; or
(i) to modify, amend or supplement this Indenture or any indenture supplemental hereto
in such manner as to permit the qualification hereof and thereof under the Trust Indenture Act of 1939 or any
similar federal statute hereafter in effect or under any state securities laws.
Section 802. Supplemental Indentures Requiring Consent of Bondholders. With the consent of
the holders of not less than two-thirds of the Bond Obligation, the Issuer and the Trustee may, from time to
time, enter into supplemental indentures for the purpose of modifying, altering, amending, adding to or
rescinding any of the terms or provisions contained in this Indenture or in any supplemental indenture;
provided, however, that nothing contained in this Section shall permit, or be construed as permitting(a) an
extension of the stated maturity of or a reduction in the principal amount of or reduction in the interest rate on,
or an extension of time of payment of interest on, or reduction of any premium payable on the redemption of,
any Bonds, without the consent of the registered owner of such Bonds; or (b) the creation of any lien on all or
any portion of the Trust Estate prior to or on a parity with the lien of this Indenture, without the consent of the
holders of all of the Bonds; or (c) a reduction in the amount of Bond Obligation, the holders of which are
SF2-27261.2 34 40511-90-MS1-03/11/94
required to approve any such supplemental indenture, without the consent of the holders of all the Bonds at the
time Outstanding which would be affected by the action to be taken; or (d) a privilege or priority of any Bond
over any other Bonds without the consent of the holders of all Bonds adversely affected thereby; or (e) any
action which may result in the loss of the exclusion of interest on the Tax-Exempt Bonds from federal income
taxation; or (f) an amendment of Section 503 hereof(relating to disposition of the GNMA Security) or the
second paragraph of Section 602 hereof(relating to acceleration upon an Event of Default under Section 601(c)
or (d) hereof), without in each case the consent of the holders of all the Bonds then Outstanding.
If at any time the Issuer shall request the Trustee to enter into any such supplemental indenture
for any of the purposes 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, postage prepaid,
to all Bondholders. Such notice shall briefly set forth the nature of the proposed supplemental indenture and
shall state that copies thereof are on file at the Trust Office of the Trustee for inspection by all Bondholders. If,
within 60 days following the mailing of such notice, the holders of the required portion of Bonds at the time of
the execution of any such supplemental indenture shall have consented to and approved 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 the Issuer from executing the same or from taking any action pursuant to
the provisions thereof. Upon the execution of any such supplemental indenture as is in this Section permitted
and provided, this Indenture shall be and be deemed to be modified and amended in accordance therewith.
Section 803. Required Consents. Notwithstanding anything herein to the contrary, the Trustee
shall not be required to enter into or consent to any supplemental indenture or any amendment of any other
Financing Document which, in the sole judgment of the Trustee, might adversely affect the rights, obligations,
powers, privileges, indemnities, immunities or other security provided the Trustee herein or therein, except to
the extent necessary, as set forth in an opinion of Bond Counsel, to preserve the exclusion of interest on the
Bonds from gross income for federal income tax purposes.
In addition, except to the extent necessary, as set forth in an opinion of Bond Counsel, to
preserve the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes,
a supplemental indenture under this Article which affects any rights of the Borrower shall not become effective
unless and until the Borrower shall have consented 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 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 supplemental indenture.
Section 804. Amendment of Certain Documents. (a) The Issuer and the Trustee may make or
consent to any amendment, change or modification of the Financing Agreement, the GNMA Security and the
Issuer Regulatory Agreement, for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision contained therein, or in regard to matters or questions
arising under said documents, as the Issuer and the Trustee may deem necessary or desirable and not
inconsistent with said documents or this Indenture and which shall not adversely affect the interests of the
holders of the Bonds.
(b) Except for the amendments, changes or modifications as provided in subsection(a)
above, the Trustee shall not consent to or approve any other amendment, change or modification of any of the
Financing Documents (other than the Indenture)without notice to and the written approval or consent of the
Issuer, the Lender, the Borrower and the owners of not less than two-thirds of the Bond Obligation given and
procured as in Section 802 provided. If, at any time, either the Borrower or the Issuer shall request the consent
to or approval of the Trustee to any such proposed amendment, change or modification of any of the Financing
Documents (other than the Indenture), the Trustee shall, upon being satisfactorily indemnified by the Borrower
with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the
same manner as provided by Section 802 hereof 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 corporate trust office of the Trustee for
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• •
inspection by all Bondholders. If, within 60 days or such longer period as shall be prescribed by the Trustee
following the giving of such notice, the holders of not less than two-thirds of the Bond Obligation at the time of
the execution of such proposed amendment shall have consented to and approved the execution thereof as herein
provided, subject to the provisions of the second paragraph of Section 802 hereof, 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, 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 from agreeing to the execution hereof. Upon the
execution of any such amendment as in this Section is permitted and provided, the Financing Documents shall
be and be deemed to be modified and amended in accordance therewith.
(c) Anything herein to the contrary notwithstanding, the Issuer and the Trustee shall not
consent to any amendment, change or modification of the GNMA Security which would reduce the Lender's
obligations to make payments thereunder or GNMA's guarantee of such payments (other than as a result of a
prepayment of the GNMA Security permitted pursuant to the terms thereof) without the consent of the holders
of 100% of the Bond Obligation.
Section 805. Amendment by Unanimous Consent. Notwithstanding any other provision of
this Indenture, the Issuer and the Trustee may consent to any Supplement to any Financing Document upon
receipt of the consent of the Lender, the Borrower and the holders of all Bonds then Outstanding.
Section 806. Opinions; Certificate. The Trustee shall not enter into or consent to any
supplemental indenture or any amendment of any provision of any other Financing Document unless there shall
have been delivered to the Issuer and the Trustee an opinion of Bond Counsel stating that such supplemental
indenture or such amendment is authorized or permitted by the Act and will not adversely affect the exclusion of
interest on the Tax-Exempt Bonds from the gross income of the recipients thereof for federal income tax
purposes. In addition, the Trustee (i) may obtain, and shall be protected in relying on, an opinion of counsel to
the effect that such supplemental indenture or such amendment is authorized or permitted by this Indenture and
complies with the terms hereof; and (ii) may require, as a condition to entering into or consenting to any such
supplemental indenture or such amendment, a Compliance Certificate from the Borrower.
Section 807. Effect of Amendments. Upon the execution and delivery of any supplemental
indenture or any amendment to any other document pursuant to the provisions of this Article, this Indenture or
such other document shall be, and be deemed to be, modified and amended in accordance therewith, and the
respective rights, duties and obligations under the Financing Documents of the Issuer, the Trustee, the
Borrower, the Lender and the Bondholders shall thereafter be determined, exercised and enforced hereunder and
under the Financing Documents subject in all respects to such modifications and amendments.
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 901. Discharge of Lien. If the Issuer (i) shall pay or cause to be paid to the holders of
the Bonds the principal, interest and premium, if any, to become due thereon at the times and in the manner
stipulated therein and herein, and shall pay or cause to be paid all fees and expenses of the Trustee, and
(ii) shall keep, perform and observe all and singular the covenants and promises in the Bonds and in this
Indenture expressed as to be kept, performed and observed by it or on its part, then these presents and the estate
and rights hereby granted shall, cease, determine and be void, and thereupon the Trustee shall cancel and
discharge the lien of this Indenture and execute and deliver to the Issuer such instruments in writing as shall be
requisite to satisfy the lien hereof, shall convey to the Borrower the estate hereby conveyed, and shall assign
and deliver to the Borrower any interest in property at the time subject to the lien of this Indenture which may
then be in its possession, except amounts held by the Trustee for the payment of principal of and interest and
premium, if any, on the Bonds.
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All Outstanding Bonds shall,prior to the maturity or redemption date thereof, be deemed to
have been paid within the meaning and with the effect expressed in item (i) of the first paragraph of this Section
if the following conditions shall have been fulfilled: (a) there shall be on deposit with the Trustee either moneys
(which are not subject to Sections 544, 547 or 550 of the United States Bankruptcy Code or any other banking
laws of the United States) or direct noncallable obligations of the United States of America (which are
purchased with moneys which are not subject to Sections 544, 547 or 550 of the United States Bankruptcy Code
or any other banking laws of the United States) in an amount sufficient to pay when due the principal or
redemption price, if applicable, and interest due and to become due on the Bonds on and prior to the redemption
date or maturity date thereof, as the case may be; (b) if any of the Bonds are to be redeemed on any date prior
to their maturity, the Issuer shall have given to the Trustee, in form satisfactory to it, irrevocable instructions to
mail, as provided in Article III hereof, notice of redemption of such Bonds on such date; (c) the Issuer shall
have given the Trustee irrevocable instructions to mail, as soon as practicable, in the manner prescribed by
Article III hereof, a notice to the holders of such Bonds that the deposit required by this paragraph has been
made with the Trustee and that the Bonds are deemed to have been paid in accordance with this Article and
stating the redemption date upon which moneys are to be available for the payment of the principal or
redemption price, if applicable, on said Bonds; and (d) the Trustee shall have received the opinion required by
the last paragraph of this Section.
No deposit under this Article shall be made or accepted hereunder and no use made of any
such deposit unless the Trustee shall have received an opinion of Bond Counsel to the effect that such deposit
and use would not adversely affect the exclusion of interest on the Tax-Exempt Bonds from gross income for
federal income tax purposes.
ARTICLE X
MISCELLANEOUS
Section 1001. Consents and Other Instruments of Bondholders. Any consent, request,
direction, approval, waiver, objection, appointment or other instrument required by this Indenture to be signed
and executed by the Bondholders may be signed and executed in any number of concurrent writings of similar
tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of
the execution of any such instrument, if made in the following manner, shall be sufficient for any of the
purposes of this Indenture and shall be conclusive in favor of the Trustee with regard to any action taken under
such instrument, namely:
(a) The fact and date of the execution by any person of any such instrument may be
proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer
of any jurisdiction, authorized by the laws thereof to take acknowledgements of deeds, certifying that the person
signing such instrument acknowledged to him the execution thereof. Where such execution is by an officer of a
corporation or association or a member of a partnership on behalf of such corporation, association or
partnership, such affidavit or certificate shall also constitute sufficient proof of his authority.
(b) The ownership of Bonds shall be proved by the Bond Register.
(c) Any request, consent or vote of the holder of any Bond shall bind every future holder
of the same Bond and the holder of every Bond issued in exchange therefor or in lieu thereof, in respect of
anything done or permitted to be done by the Trustee or the Issuer pursuant to such request, consent or vote.
(d) In determining whether the holders of the requisite amount of the Bond Obligation
have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are
owned by the Issuer or the Borrower or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer or the Borrower shall be disregarded and deemed not to
be Outstanding for the purpose of determining whether the Trustee shall be protected in relying on any such
demand, request, direction, consent or waiver. Only Bonds which the Trustee has evidence in the Bond
SF2-27261.2 37 40511-90-MS 1-03/11/94
Register to be so owned shall be disregarded. Bonds so owned which have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the
Trustee the pledgee's right to vote such Bonds. In case of a dispute as to such right, any decision by the
Trustee taken upon the advice of counsel shall be full protection to the Trustee.
Section 1002. Limitation of Rights. Whenever under the provisions of this Indenture the
approval of the Issuer, the Trustee or the Borrower is required for any action, and whenever the Issuer, the
Trustee or the Borrower is required to deliver any notice or other writing, such approval or such notice or other
writing shall be given, respectively, on behalf of the Issuer by an Authorized Issuer Representative or on behalf
of the Trustee by a Responsible Officer or on behalf of the Borrower by an Authorized Borrower
Representative, and the Issuer, the Trustee and the Borrower shall be authorized to act on any such approval or
notice or other writing and neither party hereto nor the Borrower shall have any complaint against the others as
a result of any such action taken.
Section 1003. 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 other provision or provisions
hereof or any constitution, statute, rule of law or 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
circumstances, or of rendering any other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or sections in this Indenture
contained shall not affect the remaining portions of this Indenture or any part thereof.
Section 1004. Notices. All notices, certificates, requests or other communications hereunder
shall be sufficiently given and shall be deemed given when mailed by certified or registered mail, postage
prepaid, or dispatched by telefax (with confirming copies via overnight courier) or telegram, addressed, unless
notice of a different address is given as provided in this Section, as follows:
If to the Issuer: County of Contra Costa
Community Development Department
County Administration Building
651 Pine Street
4th Floor, North Wing
Martinez, California 94553-0095
Attention: Deputy Director-Redevelopment
If to the Borrower: EAH-Contra Costa, Inc.
2169 E. Francisco Boulevard, Suite B
San Rafael, California 94901
Attention:
If to the Trustee: Bank of America National Trust and Savings Association
333 South Beaudry Avenue, 25th Floor
Los Angeles, California 90071
Attention:
If to the Lender: TRI Capital Corporation
100 Pine Street, 23rd Floor
San Francisco, California 94111
Attention:
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If to the Rating Agency: Standard & Poor's Corporation
25 Broadway, 21st Floor
New York, New York 10004
Attention:
Any of the foregoing may, by notice given hereunder to each of the others, designate any
further or different addresses to which subsequent notices, certificates, requests or other communications shall
be sent hereunder.
Any registered owner (or beneficial owner in the event that all or part of the Bonds are
registered in the name of any depository institution)of at least $1,000,000 principal amount of Outstanding
Bonds of any Series may request that the Trustee send an additional copy of any notice of default, redemption
or any other correspondence by first class mail to a second address simultaneously and in addition to the regular
mailing of such notices to registered holders recorded on the books of the Trustee.
Section 1005. Payments Due on Saturdays, Sundaes Holidays. In any case where the
date of maturity of interest on or principal of the Bonds, or the date fixed for redemption of any Bonds, shall be
a Saturday, Sunday, legal holiday or a day on which banking institutions are authorized by law to close, then
payment of interest or principal need not be made on such date but may be made on the next succeeding
business day with the same force and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
Section 1006. Counterparts. This Indenture may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the same instrument.
Section 1007. Governing Law. The effect and meanings of this Indenture and the rights of all
parties hereunder shall be governed by and construed according to the laws of the State of California.
Section 1008. Successors and Assigns. All the covenants and representations contained in this
Indenture, by or on behalf of the Issuer, shall bind and inure to the benefit of its successors and assigns whether
so expressed or not.
Section 1009. Limitation of Rights. With the except of rights herein expressly conferred,
nothing expressed or to be implied by this Indenture or the Bonds is intended or shall be construed to give to
any person other than the parties hereto and the owners of the Bonds any legal or equitable right, remedy or
claim under or in respect to this Indenture or any covenants, conditions and provisions hereof.
SF2-27261.2 39 40511-90-MSI-03/11/94
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed
by their duly authorized representatives, as of the date and year first above written.
COUNTY OF CONTRA COSTA
By:
Deputy Director-Redevelopment
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Trustee
By:
Title:
SF2-27261.2 40 40511-90-MS1-03/11/94
EXHIBIT A
FORM OF SERIES B OR B-T BOND
THE PRINCIPAL OR REDEMPTION PRICE OF, AND INTEREST ON, THIS BOND ARE
PAYABLE SOLELY FROM THE FUNDS PLEDGED PURSUANT TO THE INDENTURE. THIS BOND
DOES NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE UNITED
STATES OF AMERICA, THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OR ANY
SUBDIVISION THEREUNDER, THE ISSUER, THE STATE OF CALIFORNIA OR ANY OTHER
POLITICAL SUBDIVISION THEREOF. THE OWNER OF THIS BOND HAS NO RIGHT TO HAVE
TAXES LEVIED BY THE ISSUER, THE STATE OF CALIFORNIA OR ANY OTHER POLITICAL
SUBDIVISION THEREOF FOR THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE OF,
AND INTEREST ON, THIS BOND.
COUNTY OF CONTRA COSTA
MULTIFAMILY HOUSING REVENUE BOND
(GNMA COLLATERALIZED - CRESCENT PARK APARTMENTS PROJECT)
[TAXABLE] 1994 SERIES B/B-T
Interest Rate Maturity Date Dated Date CUSIP
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The County of Contra Costa, a legal subdivision and body corporate and politic organized and
existing under the laws of the State of California(the "Issuer"), for value received, hereby promises to pay (but
only out of the revenues and other assets hereinafter referred to) to the Registered Owner specified above or
registered assigns, on the Maturity Date specified above (subject to any right of prior redemption hereinafter
mentioned), the Principal Amount specified above and to pay interest thereon from the Dated Date specified
above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, on
and October 20 in each year commencing October 20, 1994 (each an "Interest Payment Date"), at the
Interest Rate per annum specified above, until the principal hereof is duly paid, or provided for, in full.
Notwithstanding the foregoing, if the date of authentication hereof is after a Regular Record Date for the
payment of such interest (which shall be the fifth day of the month in which such interest payment is due) and
before the following Interest Payment Date, and if the Issuer shall not default in the payment of interest due on
such Interest Payment Date, this Bond shall bear interest from such Interest Payment Date. The interest so
payable on any Interest Payment Date will, subject to certain exceptions provided in the Indenture referred to,
below, be paid to the person in whose name this Bond (or one or more predecessor Bonds) is registered at the
close of business on the Regular Record Date preceding such Interest Payment Date. Payment of principal of,
premium (if any) and interest on this Bond shall be made in such coin or currency of the United States as at
time of payment is legal tender for payment of private and public debts. The principal amount hereof and
premium (if any) on this Bond shall be payable upon presentation and surrender hereof for cancellation at the
office of ,in , or its successor in trust(the "Trustee").
Payment of interest on and principal of this Bond shall be made by check or draft mailed to the person entitled
thereto as such address shall appear on the registration books for the Bonds (hereinafter defined). Upon the
request of a Registered Owner of at least $1,000,000 principal amount of Outstanding Bonds, all payments of
interest on the Bonds owned by such registered holder, and upon presentation and surrender thereof, the
principal and premium of all such Bonds shall be paid by wire transfer of immediately available funds to an
account designated by such Registered Owner.
SF2-27261.2 A-1 40511-90-MSI-03/11/94
This Bond is one of a duly authorized issue of bonds of the Issuer known as County of Contra
Costa Multifamily Housing Revenue Bonds (GNMA Collateralized - Crescent Park Apartments Project)
[Taxable] 1994 Series B/B-T issued in the aggregate principal amount of$ / (the
"Series B/B-T Bonds")pursuant to Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the
State of California, as amended, and under and pursuant to a Resolution adopted by the Board of Supervisors of
the Issuer. The Series B/B-T Bonds are issued under and are equally and ratably secured as to principal,
premium, if any, and interest by a Trust Indenture dated as of 1, 1994, between the Issuer and the
Trustee (as supplemented and amended, the "Indenture"). In connection with the issuance of the Series B/B-T
Bonds, the Issuer is issuing on a parity with the Series B/B-T Bonds other series of bonds in the aggregate
principal amount of$ / ,all as more fully set forth in the Indenture (collectively with
the Series B/B-T Bonds, the "Bonds", and each a "Series"). Reference is hereby made to the Indenture, which
is on file at the aforesaid office of the Trustee, for a description of the trust estate under the Indenture, the
nature and extent of the security, the terms and conditions upon which the Bonds are issued and secured and the
rights of the holders thereof, to all of which the holder of this Bond, by acceptance hereof, accepts and agrees.
The terms and provisions contained in the Indenture are hereby incorporated herein by reference, and the owner
of this Bond, by purchase hereof, assents to all of such terms and provisions. All capitalized, undefined terms
used herein will have the meanings ascribed to them in the Indenture.
The Bonds are limited obligations of the Issuer payable solely from the Revenues and the Trust
Estate as provided in the Indenture. Pursuant to and in accordance with a Financing Agreement dated as of
April 1, 1994 (the "Financing Agreement") among the Issuer, EAH-Contra Costa, Inc., a California nonprofit
corporation (the 'Borrower"), the Trustee and TRI Capital Corporation (the "Lender"), the Lender has made a
secured loan in the amount of$ (the "Mortgage Loan") to provide for the acquisition and
rehabilitation of a multifamily rental housing development located in the County of Contra Costa, California,
known as Crescent Park Apartments (the "Project"). The Mortgage Loan is insured by the Federal Housing
Administration(the "FHA"), an organizational unit within the United States Department of Housing and Urban
Development ("HUD")pursuant to Section 241(f) of the National Housing Act of 1934, as amended (the
"National Housing Act"). The Mortgage Loan will be evidenced by the Borrower's deed of trust note(the
"Mortgage Note") in favor of the Lender and secured by a deed of trust (the "Mortgage") on the Project. In
order to provide security for the Bonds, the Trustee is to use the proceeds of the Bonds to purchase from the
Lender a fully-modified mortgage-backed security (the "GNMA Security") which will be guaranteed as to timely
payment of principal and interest by the Government National Mortgage Association ("GNMA"). Payment of
principal of and interest on the Bonds is not guaranteed by GNMA. Payments required to be made by GNMA
pursuant to the GNMA Security and the earnings from such investment agreement, however, have been
calculated to be sufficient to make payments of principal or redemption price of and interest on the Bonds.
THE BONDS AND THE PREMIUM(IF ANY) AND INTEREST THEREON ARE NOT A
GENERAL OBLIGATION OF THE ISSUER OR A PLEDGE OF THE FAITH AND CREDIT OF THE
ISSUER OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF CALIFORNIA;
AND EXCEPT TO THE EXTENT PAID FROM BOND PROCEEDS, THE PRINCIPAL OF AND
INTEREST ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES AND TRUST ESTATE
(AS DEFINED IN THE INDENTURE). THE ISSUER MAKES NO REPRESENTATION OR WARRANTY
OF ANY KIND WITH RESPECT TO THE PROJECT, THE BORROWER, THE BONDS OR ANY
SECURITY THEREFOR.
The Bonds are subject to mandatory redemption, as soon as practicable, on any date, as a
whole or in part, at a redemption price equal to the principal amount thereof, plus accrued interest to the
redemption date (all without any redemption premiums) upon the occurrence of any of the following events
(a) to the extent that any payment on the GNMA Security exceeds a level payment of principal and interest
thereon as a result of payments representing (i) casualty insurance proceeds or condemnation awards applied to
the prepayment of the Mortgage Loan following a partial or total destruction or condemnation of the Project, (ii)
mortgage insurance proceeds or other amounts received with respect to the Mortgage Loan upon the occurrence
of an event of default thereunder, (iii)a,prepayment of the Mortgage Loan required by the applicable rules,
regulations, policies and procedures of HUD or GNMA, or (iv) a prepayment if HUD determines that
prepayment will avoid a mortgage insurance claim and is therefore in the best interest of the Federal
SF2-27261.2 A-2 40511-90-MSI-03/11194
Government; or (b) to the extent that the Trustee receives payments on the GNMA Security representing
prepayments on the Mortgage Loan made by the Borrower without notice or prepayment penalty while under the
supervision of a trustee in bankruptcy. If less than all of the Outstanding Bonds shall be called for redemption
pursuant to this paragraph, an amount of Bonds of each maturity shall be redeemed so that the resulting
decrease in the debt service on the Bonds for the six-month period ending on each Interest Payment Date is
proportional, as nearly as practicable, to the decrease in the payments on the GNMA Security in each such
six-month period.
[Delete for Series B-T] The Bonds are also subject to optional redemption prior to maturity on
any date on or after April 20, 2004, in whole, from payments on the GNMA Security representing optional
prepayment of the Mortgage Loan, or otherwise at the option of the Issuer from the proceeds of refunding
bonds or any other source of funds, at the redemption prices set forth in the table below, expressed as
percentages of the principal amount of the Series B Bonds to be redeemed, plus accrued interest to the
redemption date, as follows:
Redemption Dates Redemption Prices
April 20, 2004 through April 19, 2005 105%
April 20, 2005 through April 19, 2006 104
April 20, 2006 through April 19, 2007 103
April 20, 2007 through April 19, 2009 102
April 20, 2009 through April 19, 2010 101
April 20, 2010 and thereafter 100
Notice of redemption is required to be given by first class mail, postage prepaid, to the
registered holder of each Bond to be redeemed (and, in the case of any holder of$1,000,000 or more in
aggregate principal amount of Bonds of any Series to be redeemed, by registered mail or other secure means),
at the address of such registered owner as shown on the Bond Register, not less than 30 nor more than 60 days
prior to the redemption date; except that(i) any notice of redemption following receipt of casualty insurance
payments or condemnation awards shall be no less than 15 days prior to the date filed for redemption; and
(ii) in the event of a redemption by reason of the Trustee receiving payments on the GNMA Security
representing payments on the Mortgage Loan made by the Borrower without notice or prepayment penalty while
under the supervision of a trustee in bankruptcy, notice of redemption of Bonds shall not be required if the
circumstances do not permit the Trustee to give notice as described in the Indenture. Neither failure to give
notice by mailing to the registered owner of any Bond designated for redemption nor any defect in such notice
shall affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure
or defect has occurred.
THE BONDS ARE NOT SUBJECT TO REDEMPTION OR ACCELERATION IN THE
EVENT IT IS DETERMINED THAT THE INTEREST ON THE BONDS IS INCLUDABLE IN THE GROSS
INCOME OF THE REGISTERED OWNERS THEREOF FOR PURPOSES OF FEDERAL INCOME
TAXATION. [Delete for Series B-T.]
THE INDENTURE CONTAINS NO PROVISION REQUIRING PUBLICATION OF
NOTICE OF REDEMPTION OF ANY OR ALL OF THE BONDS UNDER ANY CIRCUMSTANCES. IN
ACCORDANCE WITH THE INDENTURE, NOTICE OF REDEMPTION OF ANY BONDS IS REQUIRED
TO BE GIVEN ONLY AT THE ADDRESS OF THE REGISTERED OWNERS THEREOF AS SHOWN ON
THE BOND REGISTER. IN THE EVENT THAT ANY BOND IS CALLED FOR REDEMPTION, THE
BOND SO CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE
REDEMPTION DATE AND INTEREST THEREON SHALL CEASE TO ACCRUE FROM AND AFTER
THE REDEMPTION DATE.
SF2.27261.2 A-3 - 40511-90-MSI-03/11/94
The Registered Owner of this Bond shall have no right to enforce the provisions of the
Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event
of default thereunder, or to institute, appear in or defend any suit or other proceeding with respect thereto,
except as provided in the Indenture.
Modifications or alterations of the Indenture or of any indenture supplemental thereto may be
made only to the extent and in the circumstances permitted by the Indenture.
This Bond shall be registered on the books of the Issuer to be kept for that purpose by the
Trustee, which shall act as bond registrar for the Bonds. This Bond may be exchanged, and its transfer may be
effected, only by the Registered Owner hereof in person or by attorney duly authorized in writing at the
aforesaid office of the Trustee, but only in the manner, subject to the limitations and upon payment of the
charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon exchange or
registration of such transfer a new registered Bond or Bonds of the same maturity and interest rate and of
authorized denomination or denominations for the same aggregate principal amount will be issued in exchange
therefor.
The Issuer and the Trustee may deem and treat the person in whose name this Bond shall be
registered on the Bond Register (as defined in the Indenture), as the absolute owner hereof for the purpose of
receiving payment of or on account of principal hereof and interest due hereon and for all other purposes and
neither the Issuer nor the Trustee shall be affected by any notice to the contrary.
The Bonds are issuable only as registered Bonds without coupons in denominations of$1,000
principal amount and any integral multiple thereof.
The principal hereof may be declared or may become due on the conditions and in the manner
and at the time set forth in the Indenture upon the occurrence of an event of default as provided in the
Indenture.
No recourse shall be had for the payment of the principal of, premium, if any, or interest on
this Bond or for any claim based thereon or upon any obligation, covenant or agreement in the Indenture
contained, against the Issuer, any past, present or future member of its governing body, its officers, 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 Issuer or any successor public
entity, under any rule of law or penalty or otherwise, and all such liability of the Issuer, any member of its
governing body and its officers, attorneys, accountants, financial advisors, agents and staff is, by the acceptance
of this Bond, expressly waived and released as a condition of, and in consideration for, the execution of the
Indenture and the issuance of the Bonds.
It is hereby certified, recited 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 the time, form and manner as required by law.
This Bond shall not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose until the Trustee shall have executed the Certificate of Authentication appearing hereon.
SF2-27261.2 A-4 40511-90-MS1-03/11/94
• •
IN WITNESS WHEREOF, the Issuer has caused this Bond to be duly executed in its name
and on its behalf by the manual or facsimile signature of the Chair of the Board of Supervisors of the Issuer,
and has caused its corporate seal or a facsimile thereof to be impressed or otherwise reproduced hereon and
attested by the manual or facsimile signature of the County Administrator and the Clerk of the Board of
Supervisors of the Issuer, all as of 1, 1994.
(SEAL) COUNTY OF CONTRA COSTA
ATTEST:
By:
County Administrator and Chair of the Board of Supervisors
Clerk of the Board of Supervisors
[Form of Certificate of Authentication]
CERTIFICATE,OF AUTHENTICATION
This Bond is one of the Bonds described in the within-mentioned Indenture.
as Trustee
By:
Authorized Officer
Date of Authentication:
SF2-27261.2 A-5 40511-90-MSI-03/11/94
[Form of Assignment for Transfer]
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, hereby sells, assigns and transfers unto
(Tax Identification or Social Security No. )the
within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Bond on the books kept for registration
thereof, with full power of substitution in the premises.
Date:
Signature guaranteed:
NOTICE: Signatures must be guaranteed by NOTICE: The signatures to this assignment must
a member firm of the New York Stock correspond with the name as it appears upon
Exchange or a commercial bank the face of the within Bond in every
particular, without alteration or enlargement
or any change whatever
SF2-27261.2 A-6 40511-90-MSI-03/11194