.. • I NEW ISSUE: Book Entry Only NOT RATED Series C-1 Bonds: In the opinion of Orrick, He"ington & Sutcltffe LLP, Bond Counsel, based upon an andlysts of existing laws, regulations, rulings and court decisions, and assuming, altWng other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series C-1 Bonds Is excluded from gross income for federal im::ome tax purposes under Section 103 of the Internal Revenue Code of /986 (the "I 986 Code''), except that no opinion is expressed as to the status of interest on any Bond during any period that such Bond is held lry a "substantial user" of facilities financed or nfinan.ced by the Series C-1 Bonds or by a "related person" within the meaning of Seciion U7(b) of the 1986 Code. Bond Counsel observes that interest on the Series C-1 Bonds is a specific preference item for purposes of calculating the federal tndlvtdual and corporate alternatiYe minimum /aXeS. Brmd Counsel is also of the opinion that intere.tl on the Series C-1 Bonds is exempt from State ofCalifomia personal income taxes. Bond Counsel expresses tJO opinion regarding 01!Y other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-1 Bands. See ''TAX MATJ'ERS" herein. · Series C-2 Bonds and Series C-3 Bonds: In the opinion of 01'1'ick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series C-2 Bonds and Series C-3 Bonds is excluded from gross income for federal income tax purposes under Title XIII of the Tax Reform Act of 1986, as amended, and Section 103 of the lntemai.Revenue Code of 1954, as (the "/954 Code''), except that no opinion Is expressed as to the status of interest on any Series C-2 Bond or Series C-3 Bond during any period that such Series C-2 Bond or Series C-3 Boncl is held by a "substantial user" of facilities financed or refmanced by the Series C-2 Bond or Series C-3 Bond or by a "related person" within the meaning of Section 103(b)(l3) of the 1954 Code. In the further opinion of Bond Counsel, interest on the Series C-2 Bonds and the Series C-3 Bonds is not a specific preference Item for purposes of the federal individual or corporate alternative minimum ttD:es, although Bond Counsel observes that such interest is Included ill adjusted CUffl!nl eaminC$ when calculating corporate alternative minimum taxable income. Bond Counsel ts also of the opinion that interest on the Series C-2 Bonds and the Series C-2 Btmds is exempt from State of California personal incoTTW taxes. Bond Counsel e7>presses no opinion regarding wry other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-2 Bonds a11d Series C-3 Bonds. See "TAX MATTERS" herein Dated: Date of Delivery CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY MULTIFAMILY HOUSING REVENUE REFUNDING BONDS (lAC PROJECT), SERIES 2008 C-1 (AMT), C-2 and C-3 Initial Mandatory Tender Date: May 15, 2018 The California Statewide Commurtities Development Authority MuJtifamily Housing Revenue Refunding Bonds (lAC Project), $24,800,000 Series 2008 C- 1 (AMD, $109,222,000 Series 2008 C-2 and $68,526,000 Series 2008 C-3 (the "Bonds") are being issued by the California Statewide Communities Development Authority (together with its successors and assigns, the "Issuer) under aild pursuant to a Trust Indenture dated as of April 1. 2008 (as the same may be amended, modified or supplemented from time to time, the "Indenture), by and between the Issuer and U.S. Bank National Association. as trustee (together with any successor trustee under the Indenture and their respective successors and assigns, the "Trustee}. The proceeds of the Bonds wiJI be used. together with the proceeds of certain other bonds issued Wlder the Indenture, to fund a Loan (the "Loan') to be made by the Issuer to IfViliCApartrnent a Delaware limited partnership (together with its successors and assigns, the "Borrower .. }, for the purpose 'Of refunding certain out:standing bonds previously issued by the Issuer, as more fully described herein. The Loan will be made pmsuant to a Loan Agreement dated as of Apn11, 2008 (as the same may be amended, mOdified or supplemented from time to time, the "Loan Agreement) between lhe Issuer and the Borrower. · 1be Bonds shall initially bear interest at a variable rate per annum equal to the lesser of four and two tenths (4.2%) above the SIFMA Index Rate or twelve percent (12%) per annum, computed on the basis of a 365/366-day year for the actual number of days elapsed, payable in arrears on the ftrst Business Day of each month commencing on May 1, 2008. Interest on the Bmds shall accrue from the Closing Dae. The Bonds and the interest thereon do not constitute an indebtedness or un obligation, general or moral, or a pledge of the faith or loan of credit of tbe Issuer, tbc Stare of California or any political subdivision thereof, whhin tbe purview of any constitutional limitation or provision. The Issuer is obligated to pay the principal of, premium, if any, and interest on the Bonds and other costs incidental thereto onty t'rom the sources specified in the Indenture. Neither the faith and credit nor tbe taring powers of the Issuer or the State of Califorrtia or any political subdivision thcreofh pledged to I he payment of the principal of, premium, if any, . and interest on the Bonds or other costs incidental except as otherwise provided in tbe Indenture. No owner of any Bond shaD have the right to compel the taxing power of the Issuer, the State of California or any political subdivision thereof to pay the principal or, premium, if any, or interest on ihe Bonds. The Bonds will be subject to mandatory tender for purchase at a purchase price equal to the: principal amount thereof plus interest accrued thereon through the date of purchase on the Initial Mandatory Tender Date set forth above. The Bonds will be subject to mandatory Wld optional redemptions, prior to their stated matmity date at lhe prices, on the terms and upon the occurrence of the events described herein. See ''THE BONDs-Redemption Provisions'' herein. In addition, under the Indenture, the maturity of the Bonds may be accelerated "'on the occurrence of certain events. See "APPENDIX B- THE INDENTURE" attached bert to. TilE BONDS ARE SUBJECf TO A SIGNIFICANT DEGREE OF RISK. SEE, "BONDHOLDERS' RISKS", llliR>:IN. TilE BONDS ARE SUITABLE INVESTMENT CONSIDERATION ONLY ··oR mOSE PURCHASERS WIIO ARE SOPIUSTICATED AND EXPERIENCED IN TilE FlELD OF MULTIFAMILY HOUSING BONDS. NO RATING FOR THE BONDS HAS BEEN APPLIED FOR. SEE "SECURITY FOR THE BONDS" . AND "BONDHOLDERS' RISKS" HEREIN. This cover page contains certain information for general reference only. It is not a summary of the security or terms of this issue. Potential investors are advised to read this entire Private Placement Memorandum to obtain information essential to tbe making or an informed investment decision witb respect to the Bonds. Price of all Bonds I 000/o The Bonds are offered when, as and if issued and received by the Underwriter, subject to the opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. certain legal matters will be passed upon for the Borruwer by its CouiJseL Buchalter Ne1ner, Los Angeles, Califomia. It is anticipated that the Bonds will be available for delivery on or about Apri/3, 2008 . .JPMorganO Dated: Apri/1, 2008 .,., ' . : ._-, :·.
Transcript
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I
NEW ISSUE: Book Entry Only NOT RATED
Series C-1 Bonds: In the opinion of Orrick, He"ington & Sutcltffe LLP, Bond Counsel, based upon an andlysts of existing laws, regulations, rulings and court decisions, and assuming, altWng other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series C-1 Bonds Is excluded from gross income for federal im::ome tax purposes under Section 103 of the Internal Revenue Code of /986 (the "I 986 Code''), except that no opinion is expressed as to the status of interest on any Bond during any period that such Bond is held lry a "substantial user" of facilities financed or nfinan.ced by the Series C-1 Bonds or by a "related person" within the meaning of Seciion U7(b) of the 1986 Code. Bond Counsel observes that interest on the Series C-1 Bonds is a specific preference item for purposes of calculating the federal tndlvtdual and corporate alternatiYe minimum /aXeS. Brmd Counsel is also of the opinion that intere.tl on the Series C-1 Bonds is exempt from State ofCalifomia personal income taxes. Bond Counsel expresses tJO opinion regarding 01!Y other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-1 Bands. See ''TAX MATJ'ERS" herein. ·
Series C-2 Bonds and Series C-3 Bonds: In the opinion of 01'1'ick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series C-2 Bonds and Series C-3 Bonds is excluded from gross income for federal income tax purposes under Title XIII of the Tax Reform Act of 1986, as amended, and Section 103 of the lntemai.Revenue Code of 1954, as a~nded (the "/954 Code''), except that no opinion Is expressed as to the status of interest on any Series C-2 Bond or Series C-3 Bond during any period that such Series C-2 Bond or Series C-3 Boncl is held by a "substantial user" of facilities financed or refmanced by the Series C-2 Bond or Series C-3 Bond or by a "related person" within the meaning of Section 103(b)(l3) of the 1954 Code. In the further opinion of Bond Counsel, interest on the Series C-2 Bonds and the Series C-3 Bonds is not a specific preference Item for purposes of the federal individual or corporate alternative minimum ttD:es, although Bond Counsel observes that such interest is Included ill adjusted CUffl!nl eaminC$ when calculating corporate alternative minimum taxable income. Bond Counsel ts also of the opinion that interest on the Series C-2 Bonds and the Series C-2 Btmds is exempt from State of California personal incoTTW taxes. Bond Counsel e7>presses no opinion regarding wry other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-2 Bonds a11d Series C-3 Bonds. See "TAX MATTERS" herein
Dated: Date of Delivery
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY MULTIFAMILY HOUSING REVENUE REFUNDING BONDS
(lAC PROJECT), SERIES 2008 C-1 (AMT), C-2 and C-3
Initial Mandatory Tender Date: May 15, 2018
The California Statewide Commurtities Development Authority MuJtifamily Housing Revenue Refunding Bonds (lAC Project), $24,800,000 Series 2008 C-1 (AMD, $109,222,000 Series 2008 C-2 and $68,526,000 Series 2008 C-3 (the "Bonds") are being issued by the California Statewide Communities Development Authority (together with its successors and assigns, the "Issuer) under aild pursuant to a Trust Indenture dated as of April 1. 2008 (as the same may be amended, modified or supplemented from time to time, the "Indenture), by and between the Issuer and U.S. Bank National Association. as trustee (together with any successor trustee under the Indenture and their respective successors and assigns, the "Trustee}. The proceeds of the Bonds wiJI be used. together with the proceeds of certain other bonds issued Wlder the Indenture, to fund a Loan (the "Loan') to be made by the Issuer to IfViliCApartrnent Co~ics,-~.P., a Delaware limited partnership (together with its successors and assigns, the "Borrower .. }, for the purpose 'Of refunding certain out:standing bonds previously issued by the Issuer, as more fully described herein. The Loan will be made pmsuant to a Loan Agreement dated as of Apn11, 2008 (as the same may be amended, mOdified or supplemented from time to time, the "Loan Agreement) between lhe Issuer and the Borrower. ·
1be Bonds shall initially bear interest at a variable rate per annum equal to the lesser of four and two tenths pe~nl (4.2%) above the SIFMA Index Rate or twelve percent (12%) per annum, computed on the basis of a 365/366-day year for the actual number of days elapsed, payable in arrears on the ftrst Business Day of each month commencing on May 1, 2008. Interest on the Bmds shall accrue from the Closing Dae.
The Bonds and the interest thereon do not constitute an indebtedness or un obligation, general or moral, or a pledge of the faith or loan of credit of tbe Issuer, tbc Stare of California or any political subdivision thereof, whhin tbe purview of any constitutional limitation or provision. The Issuer is obligated to pay the principal of, premium, if any, and interest on the Bonds and other costs incidental thereto onty t'rom the sources specified in the Indenture. Neither the faith and credit nor tbe taring powers of the Issuer or the State of Califorrtia or any political subdivision thcreofh pledged to I he payment of the principal of, premium, if any,
. and interest on the Bonds or other costs incidental the~to, except as otherwise provided in tbe Indenture. No owner of any Bond shaD have the right to compel the taxing power of the Issuer, the State of California or any political subdivision thereof to pay the principal or, premium, if any, or interest on ihe Bonds.
The Bonds will be subject to mandatory tender for purchase at a purchase price equal to the: principal amount thereof plus interest accrued thereon through the date of purchase on the Initial Mandatory Tender Date set forth above. The Bonds will be subject to mandatory Wld optional redemptions, prior to their stated matmity date at lhe prices, on the terms and upon the occurrence of the events described herein. See ''THE BONDs-Redemption Provisions'' herein. In addition, under the Indenture, the maturity of the Bonds may be accelerated "'on the occurrence of certain events. See "APPENDIX B-THE INDENTURE" attached bert to.
TilE BONDS ARE SUBJECf TO A SIGNIFICANT DEGREE OF RISK. SEE, "BONDHOLDERS' RISKS", llliR>:IN. TilE BONDS ARE SUITABLE ~'OR INVESTMENT CONSIDERATION ONLY ··oR mOSE PURCHASERS WIIO ARE SOPIUSTICATED AND EXPERIENCED IN TilE FlELD OF MULTIFAMILY HOUSING BONDS. NO RATING FOR THE BONDS HAS BEEN APPLIED FOR. SEE "SECURITY FOR THE BONDS"
. AND "BONDHOLDERS' RISKS" HEREIN.
This cover page contains certain information for general reference only. It is not a summary of the security or terms of this issue. Potential investors are advised to read this entire Private Placement Memorandum to obtain information essential to tbe making or an informed investment decision witb respect to the Bonds.
Price of all Bonds I 000/o
The Bonds are offered when, as and if issued and received by the Underwriter, subject to the opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. certain legal matters will be passed upon for the Borruwer by its CouiJseL Buchalter Ne1ner, Los Angeles, Califomia. It is anticipated that the Bonds will be available for delivery on or about Apri/3, 2008 .
No dealer, broker, salesperson or other person has been authorized by J.P. Morgan Securities Inc. (the "Placement Agent"), the Borrower or the Issuer to give any information or to make any representations, other than those contained herein, in connection with the offering of the Bonds described herein, and, if given or made, such other information or representation must not be relied upon as having been authorized by the Issuer, the Borrower or the Placement Agent. This Private Placement Memorandum does not constitute an offer to sell nor the solicitation of any offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Private Placement Memorandum is not to be construed to be a contract with the purchasers of the Bonds. Statements contained in this Private Placement Memorandum which involve estimates, forecasts or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as representations offact.
The Issuer has supplied information in this Private Placement Memorandum under the captions "THE ISSUER" and "NO LITIGATION- As to the Tssuer"··herein, but is not responsible for any other information contained in this Private Placement Memorandum. All other information set forth herein has been obtained from sources other than the Issuer which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Issuer or the Placement Agent. The Issuer has made no <independent verification of any of the information contained herein. The information and expression of opinions contained herein are subject to change without notice, and neither the delivery of this Private Placement Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer, the Borrower or any other party described herein since the date hereof.
This Private Placement Memorandum is submitted in connection with the placement of the Bonds referred to herein ~nd may not be reproduced or used, in whole or in part, for any other purpose.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACTOF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
THIS PRJV ATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUER OR THE PLACEMENTAGENT AND ANY ONE OR MORE HOLDERS OF THE BONDS.
. '). .
TABLE OF CONTENTS
: INTRODUCTION ......................................................................................................................................... 1 . THE BONDS ................................................................................................................................................. 2
Authorization and Terms of Bonds ............. , ............................................................................................ 2 ·Tender of Bonds for Purchase .................................................................................................................. 2 Rcdem ption Provisions ............................................................................................................................. 2 The Depository Trust Company ...................................................................... : ........................................ 4
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ............................................................. 6 General ..................................................................................................................................................... 6
BONDHOLDERS' RISKS ............................................................................................................................ 7 General ..................................................................................................................................................... 7
.. Security ............... , .................................................................................................................................... 8 Performance of the Project. ........................................................................................................ : ............. 8 Real Estate Risks ............................................................................................................................. : ........ 8 Other Risks ............................................................................................................................................... 9
THE ISSUER .............................................................................................................................................. 1 0 ESTIMATED SOURCES AND USES OF FUNDS ................................................................................... 11 THE BORROWER AND THE MANAGER .............................................................................................. 11
The Borrower ......................................................................................................................................... 12 The Manager ............................................................................................................... : .......................... 12
TAX MATTERS .......................................................................................................................................... 12 LEGAL MA TIERS .................................................................................................................................... 14 NO LITIGATION ....................................................................................................................................... 15
As to Borrower ....................................................................................................................................... 15 As to the Issuer ....................................................................................................................................... 15
ENFORCEABILITY OF REMEDIES ........................................................................................................ 15 RATING ...................................................................................................................................................... l6 MISCELI .ANEOUS .................................................................................................................................... 17 APPENDIX A FORM OF OPINION OF BOND COUNSEL ................................................................ A-1 APPENDIX B FORM OF THE INDENTURE .... : ................................................................................... B- I APPENDIX C FORM OF THE LOAN AGREEMENT.. ........................................................................ C· I APPENDJX D SCHEDULE OF REGULATORY AGREEMENTS AND FORM OF
AMENDMENTS ................................................................................................................................. D- I
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY MULTIFAMILY HOUSING REVENUE REFUNDING BONDS
(lAC PROJECT), SERIES 2008 C-1 (AMT), C-2 AND C-3
INTRODUCTION
The California Statewide Communities Development Authority Multifamily Housing Revenue Refunding Bonds (lAC Project), $24,800,000 Series C-1 (AMT) (the "Series C-1 Bonds"), $109,222,000 Series C-2 (the "Series C-2 Bonds"), and $68,526,000 Series C-3 (the "Series C-3 Bonds") and together with the Series C-1 Bonds and the Series C-2 Bonds, the "Bonds") are being issued by the California Statewide Communities Development Authority (together with its successors and assigns, the "Issuer") under and pursuant to a Trust Indenture, dated as of April 1, 2008, in the form attached hereto as Appendix B (as the same may be amended, modified or supplemented from time to time, the "Indenture"), between the Issuer and U.S. Bank National Association, as trustee (together with any successor trustee under the Indenture and their respective successors and assigns, the "Trustee"). The
. proceeds of the Bonds, together with the proceeds of one additional series of bonds being issued under the Indenture (the "Additional Bonds") contemporimeously herewith, will be used to fund a loan (the "Loan") to be made by the Issuer to Irvine Apartment Communities, L.P., a Delaware limited partnership (together with its successors and assigns, the "Borrower"), for the purpose of refunding those certain Apartment Development Revenue Refunding Bonds (Irvine Apartment Communities, L.P.) $24,800,000 Series 1998A-l, $109,390,000 Series !998A-2, $100,000,000 Series 1998A-3, and $100,000,000 Series 1998A-4 (the "1998 Bonds"), all previously issued by the Issuer. The proceeds of the 1998 Bonds were used for the construction/rehabilitation of twenty-five (25) residential rental projects of the Borrower as set forth in the Indenture (the "Projects"). Regulatory and Land Usc Restriction Agreements executed, delivered and recorded with respect to each of the Projects, a list of which agreements, together with the proposed omnibus amendment thereto, are attached hereto as Appendix D (as amended, modified or supplemented from time to time, the "Regulatory Agreements"), impose certain regulatory restrictions on the Borrower's use and operation of the Project. See "THE BORROWER AND THE MANAGER" herein. The Loan will be made pursuant to a Loan Agreement dated as of April I, 2008, in the form attached hereto as Appendix C (as the same may be amended, modified or supplemented from time to time, the "Loan Agreement") between the Issuer and the Borrower. Pursuant to the Indenture, the Issuer will assign certain rights under the Loan Agreement (including the amounts payable thereunder) together with other property comprising the Trust Estate, to the Trustee. Capitalized terms used in this Private Placement
. Memorandum but not defined herein shall have the meanings ascribed thereto in the Indenture.
THE BONDS ARE SUBJECT TO A SIGNIFICANT DEGREE OF RISK. SEE "BONDHOLDERS' RISKS" BELOW. THE: BONDS ARE SUITABLE FbR INVESTMENT CONSIDERATION ONLY FOR THOSE PURCHASERS WHO ARE SOPHISTICATED AND EXPERIENCED IN THE FIELD OF MULTIFAMILY HOUSING BONDS. NO RATING FOR THE BONDS HAS BEEN APPLIED FOR. SEE "SECURITY FOR THE BONDS" ANI> "BONDHOLDERS' RISKS" HEREIN.
THE BONDS SHALL NOT CONSTITUTE AN OBLIGATION, EITHER GENERAL OR SPECIAL, OF THE STATE OF CALIFORNIA· (THE "STATE") OR ANY AGENCY, POLITICAL SUBDIVISION OR. LOCAL GOVERNMENT THEREOF; AND NEITHgR THE STATE NOR ANY AGENCY, POLITICAL SUBDIVISION OR LOCAL GOVERNMENT THEREOJ<' SHALL BE LIABLE THEREON. NEITffi:R THE FAITH AND CREDIT NOR TAXING POWER OF THE ISSUER OR THE STATE OF ANY AGENCY, POLITICAL SUBDIVISION OR LOCAL GOVERNMENT THEREOF SHALL BE PLEDGED TO Tlill PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY), OR INTEREST ON THE BONDS.
·THE BONDS ARE PAYABLE, AS TO PRINCIPAL, INTEREST AND PREMIUM (IF ANY),
• •• ·····~---·--·-------------·----··-··
SOLELY OUT OF THE TRUST ESTATE WHICH IS TilE SOLE ASSET OF THE ISSUER PLEDGED THEREFOR PURSUANT TO THE INDENTURE.
There follows in this Private Placement Memorandum brief descriptions of the Bonds, the sources of payment for the Bonds, the Issuer, and the Borrower. The forms of the Indenture, the Loan Agreement and the Omnibus Agreement to Regulatory Agreements are attached hereto as ~1mendix B, Appendix C and ~endix D respectively. Copies of tl1e Regulatory Agreements are available from the Placement Agent upon request.
THE BONDS
Authorization and Tcnns of Bonds
The Bonds will be dated the Closing Date. The Bonds shall mature (subject to prior mandatory tender for purchase, redemption or acceleration) on the dates set forth on the inside front cover of this Private Placement Memorandum.
The Bonds will be issued in fully registered form, without coupons, in denominations of $100,000 and any multiple of $1 in excess of $100,000, but not in excess of the aggregate principal amount of Bonds then Outstanding. The principal of and premium, if any, on each Bond will be payable upon the surrender of such Bond, when due, at the Principal Corporate Trust Office of the Trustee.
The Indenture contains provisions for the Bonds to bear interest in a variety of interest rate modes. This Private Placement Memorandum only describes the. Bonds while they bear interest at the SIFMA Index Rate. If the Bonds are converted to another Interest Rate, a supplement to this Private Placement Memorandum or a new Private Placement Memorandum will be prepared.
The Bonds shall initially bear interest at a variable rate per annum equal to the lesser of four and two tenths percent (4.2%) above the SIFMA Index Rate or twelve percent (12%) per annum, computed for the actual number of days elapsed on the basis of a 365/366 day year, payable in arrears on the first day of each month commencing on May I, 2008. Interest on the B.onds shall accrue from the.Ciosing Date. Payments due on the Bonds which are due on a day other than a Business Day shall be payable on the next succeeding Business Day.
The principal of and interest and premium, if any, on the Bonds shall be payable in lawful money · of the United States of America by the Trustee to the registered owner thereof, which shall initially be the Cede & Co., as nominee for DTC (as hereafter defined).
Tender of Bonds for Purchase
The Bonds shall be subject to mandatory tender for purchase on May 15, 2018 in whole at a purchase price equal to I 00% of the principal amount thereof plus interest accrued to the purchase date.
Redemption Provisions
Optional Redemption. The Bonds shall be subject to redemption, in whole or in part at the direction of the Borrower, on any date on or after May I, 2009 at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date
Special Mandatory Redemption. The Bonds shall be subject to mandatory redemption prior to maturity as follows:
(a) The Bonds shall be subject to special mandatory redemption prior to maturity at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the redemption dale, on a date selected by the Trustee, in whole or in part, in the event of an acceleration of the Loan by the Trustee in accordance with the provisions of the Loan Agreement. The special ·mandatory redemption set forth in this subparagraph (a) shall be in whole unless a favorable Opinion of Bond Counsel is delivered to the Trustee to the effect that less· than all of the Bonds may be redeemed without adversely affecting the exclusion from gross income for federal income lax purposes of interest on the remaining Bonds, in which case only the principal amount of Bonds indicated in such Opinion shall be redeemed.
(b) The Bonds which are subject to a Determination of Taxability shall be subject to special mandatory redemption j,rior to-maturity at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the redemption date, on a date selected by the Borrower not later than one hundred eighty ( 180) days after the occurrence of a Determination of Taxability affecting such Bonds (the "Affected Bonds"). The special mandatory redemption set forth in this subparagraph (b) shall apply ·to all Affected Bonds, but only to the Affected Bonds, unless an Opinion of Bond Counsel is delivered to the Trustee to the affect that the Bonds other than the Affected Bonds must be redeemed to avoid
· adversely affecting the exclusion from gross. income for federal income tax purposes of interest on any Bonds, or that less than all of such Affected Bonds may be redeemed without adversely affecting the exclusion from gross income for federal income lax purposes of interest on the remaining Bonds, in which case the principal amount of Bonds indicated in such Opinion, allocated to the Projects set forth in 'such Opinion, shall be redeemed.
Extraordinary Optional Redemption. The Bonds allocated to a Project shall be subject to extraordinary partial optional redemption at the direction of the Borrower, in whole or in part as set forth below, on any date at a· redemption price equal to I 00% of the principal amount thereof, plus accrued
·interest, if one or more of the following events shall have occurred within the preceding year with respect to such Project:
(a) If such Project shall have beel1 damaged or destroyed to such. extent that, in the opinion of the Borrower, (i) normal operations at such Project are prevented or are likely to be prevented for a period of six consecutive months, or (ii) the restoration of such Project is not economically feasible.
(b) Iftitle to, or the temporary use of, all or substantially all of such Project shall have been taken under the exercise of the power of eminent domain by any governmental authority, or person, firm .or corporation acting under governmental authority which, in the opinion of the Borrower, is likely to result in normal operations at such Project being prevented for a period of four consecutive months. ·
(c) If changes, which the Borrower cannot reason~bly control or overcome, in the economic availability of materials, supplies, labor, equipment and other properties and things necessary for the efficient operation of such Project shall have occurred, or technological or other changes shall have occurred which, in the opinion of the Borrower, render uneconomic the continued operation of such Project.
(d) · If any court or administrative body shall enter a judgment, order or decree requiring cessation of all or any substantial part of operations at such Project, to such an extent that, in the opinion
··of the Borrower, is likely to result in normal operations at such Project being prevented for a period of four consecutive months.
Purchase in Lieu of Redemption. At any time during which the Bonds are subject to redemption in whole pursuant to the provisions of the Indenture, all (but not .less than all) of the Bonds of a series to
3
. ;_
....
be redeemed shall be purchased for the account of the Borrower which shall give the Trustee at least one Business Day's notice prior to such redemption date, at a purchase price equal to the redemption price
·which would have been applicable to such Bonds on the redemption date. Any purchase in lieu of redemption of a series of Bonds is not intended as an extinguishment of the debt represented by such series of Bonds.
Notice of Redemption. Notice of redemption shall be given by the Borrower to the Trustee at least twenty (20) days prior to the proposed redemption date. The Trustee shall cause notice of any
· redemption of Bonds hereunder to be mailed by first class mail, postage prepaid, to the Owners of all .Bonds at least ten (I 0) days prior to the redemption date for Bonds, provided, however, that so long as DTC or its nominee is the sole Owner of the Bonds under DTC's "Book-Entry Only System," redemption notices will be sent to Cede & Co. Any failure on the part of DTC or a Direct Participant (as hereinafter defined) to give such notice to the Beneficial Owner (as hereinafter defined) or any defect therein shall not affect the sufficiency or validity of any proceedings for the redemption of the Bonds. Notwithstanding the foregoing, in the case of an optional redemption or extraordinary optional redemption of the Bonds, (i) the Borrower .. shall deliver notice to the Trustee of its intention to prepay the Loan and cause such Bonds to be called at least seventy-five (75) days prior to the proposed redemption date of the Bonds, and (ii) the Trustee shall deliver notice to the Owners of the Bonds of the Borrower's intention to prepay the Loan and cause the Bonds to be called at least sixty-five (65) days prior to the proposed redemption date of the Bonds.
The Depository Trust Company
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC'S partnership nominee), or such other name as may be requested by an authorized representative of DTC. One fully registered Bond certificate will be. issued for each. maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section l 7 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, tmst companies, clearing corporations and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporati()n, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's highest rating: AAA, The DTC Rules applicable to its Participants are on file with the Securities and Exchange· · Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (the "Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds; except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to ·the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC. If Jess than aJJ of the Bonds are being redeemed, OTC's practice is to determine by Jot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) wiJJ consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of securities as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
So long as any Bond is registered in the name of DTC's nominee, aJJ payments of principal of, premium, if any, and interest on such Bond wiJJ be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Issuer or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners wiJJ be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee or
the Issuer, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer
. or the Trustee, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to.the Issuer or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, the Bonds are required to be printed and delivered as described in the Agreement.
The use of the system of book-entry transfers through DTC (or a successor securities depository) may be discontinued as described in the Agreement. In that event, Bond certificates will be printed and delivered as described in the Agreement.
The information above concerning DTC and DTC's book-entry system has been obtained from sources that the Borrower believes to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the Borrower, the Issuer, the Trustee or the Placement
. Agent. The Borrower, the Issuer, the Trustee and the· Placement Agent make no assurances that DTC. Direct Participants, Indirect Participants or other nominees of the Beneficial Owners will act in
. accordance with the procedures described above or in a timely manner.
NONE OF THE ISSUER, THE TRUSTEE OR THE PLACEMENT AGENT SHALL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A BONDHOLDER WITH RESPECT TO EITHER: (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (2) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (3) THE DELIVERY OR THE TIMELINESS. OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE AGREEMENT TO BE GIVEN TO THE OWNER OF THE BONDS; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
THE BONDS AND THE iNTEREST THEREON DO NOT CONSTITUTE AN INDEBTEDNESS OR AN OBLIGATION, GENERAL OR MORAL, OR A PLEDGE OF THE FAITH OR LOAN OF CREDIT OF TilE ISSUER, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE PURVIEW OF ANY CONSTITUTIONAL LIMITATION OR PROVISION. THE ISSUER IS OBLIGATED TO PAY
· THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS AND OTHER COSTS INCIDENTAL THERETO ONLY FROM THE SOURCES SPECIFIED IN Tllli INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWERS OF THE ISSUER OR THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS OR OTHER COSTS INCIDENTAL THERETO, EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE. NO OWNER OF ANY BOND SHALL HA YE
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THE RIGHT TO COMPEL THE TAXING POWER OF THE ISSUER, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS.
The Bonds are payable solely from the Trust Estate consisting of:
(a) All right, title and _interest of the Issuer in and to· all moneys from time to time paid by the Borrower pursuant to the terms of the Loan Documents and all right, title and interest of the Issuer (including, but not limited to, the right to enforce any of the tenns thereat) under and pursuant to and subject to the provisions of the Loan Agreement (but excluding the Issuer's Reserved Rights as defined in the Loan Agreement and the Indenture); and
(b) All other moneys and securities from time to time held by the Trustee under the terms of . the Indenture, exchiding amounts required to meet the arbitrage rebate requirements set forth in Section ·148 of the Internal Revenue Code of 1986, as amended (the "Code"). ·
BONDHOLDERS' RISKS
Purchase of the Bonds involves certain investment risks; In order to identify risk factors and make an informed investment decision, potential. investors should be thoroughly familiar with this entire Private Placement Memorandum (including the Appendices hereto) in order to make a judgment as to whether the Bonds are an appropriate investment. Certain of the risks associated with the purchase of the Bonds are described below. The following list of possible risk factors, while not setting fqrth all possible risk factors, contains some of the risk factors which should be considered prior to purchasing the Bonds. THIS DISCUSSION OF RISK FACTORS IS NOT, AND IS NOT INTENDED TO BE, COMPREHENSIVE OR EXHAUSTIVE.
General
The Bonds and the obligations of the Issuer under the Indenture are limited obligations of the Issuer to be paid and satisfied solely from the revenues and assets pledged therefor under the Indenture, including receipts to be derived by the Issuer under the Loan Agreement.
The Bonds are payable solely from the sources described above and do not constitute a general obligation of the Issuer, the State of any political subdivision thereof. No property is pledged to.pay the principal of or interest on the Bonds.
The Bonds are pari passu with, and payable from the same sources of payment as, the Additional Bonds. Although certain rights of holders of the Bonds and the Additional Bonds are exercisable on a series by series basis, according to events at the underlying Project to which a series relates, the Bonds and the Additional Bonds are cross-defaulted and cross-collateralized.
In addition to the Bonds and the Additional Bonds, the Borrower is also the obligor in respect of approximately $69,238,000 in aggregate principal amount of other tax-exempt bonds issued by the Issuer
· in respect of another multifamily housing project. These bonds are not issued under the Indenture, but the Borrower's obligations with respect thereto are pari passu with and payable from the same sources of payment as the Bonds.
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Security
The Borrower's obligation to repay the Loan is an unsecured obligation. The Trustee does not have a mortgage on any of the Projects or a security interest in any of the revenues of the Projects. The obligations of the Borrower under the Loan Agreement will be non-recourse indebtedness of the Borrower; although a default by the Borrower may have adverse consequences under other borrowing arrangements of affiliates of the Borrower, the obligations· of the Borrower under the Loan Agreement will not be recourse obligations of, or guaranteed by, the General Partner or any constituent entities of the Borrower. .
Performance oftbe Project
No assurance can be given as to the future performance of the Projects. If there is a default by the Borrower under the Loan Agreement, including the failure by the Borrower to pay on the date due any amounts required to be paid by the Borrower under the Loan Agreement, the Loan and the Bonds may be accelerated. No premium will be paid on the Bonds in the event of the acceleration of the Bonds. Further, there can be no assurance that sufficient funds will be available to pay either the principal of or interest accrued on the Bonds and the Additional Bonds.
Real Estate Risks
General Risks. General risks attending any investment in real estate include, but are not limite,j to, possible adverse use of adjoining land, fire or other casualty, condemnation, increased taxes, changes in demand for such facilities, increases in utility rates, adverse general and local economic conditions, energy shortages, a decline in property values in the geographic area of the Projects, increases in operating costs due to inflation, non-compliance of tenants with the terms of their leases, unfavorable governmental regulation (such as enactment of rent controls), force majeure and uninsurable risks, construction strikes and a decrease in the relative popularity of real estate investments as contrasted with other investments. These risks and many others cannot be controlled by the Borrower and may have a substantial bearing on the profitability and financial feasibility of the Projects, and which may adversely affect the ability to pay when due interest on and principal of the Bonds as well as the realizable value of the real estate and other collateral securing payment of the Bonds. In addition, the twenty-five (25) Projects consist of apartment communities located in twenty-one (21) residential communities. Each of these residential communities is located in .either Irvine, Tustin or Newport Beach in Orange County.
Competing Facilities. There are other comparable apartment properties currently built that will compete with the Project for tenants. In addition, competing owners, including affiliates of the Borrower, may develop, construct, acquire and/or operate other facilities that could compete with the Projects for tenants and the Issuer may issue bonds for fin.ancing such projects. There is no assurance that the tenants will not choose other competing projects over the Projects. No assurance can be given that competing owners, including affiliates of the Borrower, will limit apartment development activity to specific volumes or locations, which could affect the Projects. Any competing facilities could adversely affect rental rates, absorption and ultimately occupancy of the Projects and the revenues generated by the
·Projects and, consequently, may result in an Event of Default or a mandatory redemption of the Bonds ··prior to maturity without premium. In either such event, there can be no assurance that sufficient funds will be available to pay the interest accrued on or the principal of the Bonds.
Management of the Projects. The successful operation of the Projects will depend, to a large extent, upon the management services provided by.the manager of the Projects and upon the ability of the Borrower to lease the units and keep the Projects substantially occupied on an ongoing basis. There is no
assurance that the manager will oper~te the Projects on a profitable basis. See "THE BORROWER AND THE MANAGER" herein.
Requirements ofRegulatorv A<!reements. The economic feasibility of the Projects will depend, in large part, upon the Project being substantially occupied. The Borrower will be required, as a condition to preserving exclusion from federal income taxation of the interest on the Series C-1 Bonds, to maintain a portion of the units in the Projects allocated to the Series C-1 Bonds for occupancy by low or moderate income tenants in accordance with the provisions of the applicable Regulatory Agreements. The period during which a portion of the units in the Projects financed with the Series C-2 Bonds and the Series C-3 Bonds must be maintained for occupancy by persons of low or moderate income in order to preserve the exclusion from federal income taxation of the Series C-2 Bonds and the Series Cc3 Bonds, has expired. Accordingly, a present or future failure to set aside units in such Projects for low and moderate income will not affect the exclusion from gross income of interest on the Series C-2 Bonds or the Series C-3
·Bonds, The Regulatory Agreements also impose requirementS on all of the Projects, unrelated to federal tax considerations, under which a portion of the units in the Projects must be maintained for occupancy by low income and very low income tenants. There can be no assurance that the Borrower will be able to rent units to comply with these requirements or that units so rented will generate income comparable to . unrestricted units. These circumstances may adversely affect the net operating income of the Projects and the ability of the Borrower to make timely payments on the Note. See "APPENDIX D- SCHEDULE OF REGULATORY AGREEMENTS AND FORM OF AMENDMENTS" attached hereto.
Effect oUncreases in Operating Expenses. It is impossible to predict future increases in operating expenses. Substantial increases in operating expenses will affect future net operating income of the Projects and the ability of the Borrower to meet its obligation to pay principal and interest on the Loan.
Environmental Mailers. There are potential risksrelating to environmental liability associated with the Projects. If hazardous substances are found to be located on the Projects, the owners of the Projects in addition to those already identified for remediation, including the Borrower, may be held liable for costs and other liabilities relating to such hazardous substances. Such action could impact the Borrower's ability to pay principal and interest on the Loan. ·
The above-listed risks, while not comprehensive or exhaustive, may adversely affect the occupancy and ·revenues generated by the Projects and could result in an Event of Default or a mandatory redemption (without premium) of the Bonds prior io maturity. See "THE BONDS- Redemption Provisions" herein. In either such event, there can be no assurance that sufficient funds will be available to pay the interest accrued on or the principal of the Bonds.
Other Risks
Early Redemption Purchasers of Bonds, especially those who purchase Bonds at a price in excess of their principal amount or who hold such a Bond trading at a pric~ in excess of par, should consider that the Bonds are subject to optional and mandatory redemption at a redemption price equal to their principal amount plus accrued interest (without any premium) upon the occurrence of certain events. See "THE BONDS:- Redemption Provisions" herein. Under such circumstances, a purchaser of the Bonds may not
· have the opportunity to hold such Bonds for a time period consistent with such purchaser's original investment intentions.
Uninsured Losses. There are certain types of losses which are not insured or insurable, such as "force majeure." Should such a catastrophic casualty occur, the Borrower would suffer a loss for which insurance benefits would not be available. Further,. there is no assurance that insurance proceeds where available will be sufficient to repay the Bonds.
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Loss of Tax Exemption. The Borrower ljas covenanted and agreed to comply with the provisions of the Code relating to the exclusion from gross income of the interest payable on the Bonds for federal income tax purposes, and the 'financing documents contain provisions and procedures designed to assure compliance with such covenants. These covenants include, among other things, the requirement that the Borrower set aside a portion of the units in the Projects financed with the Series C-1 Bonds for occupancy by low and moderate income tenants; this requirement no longer applies to Projects financed with the Series C-2 and C-3 Bonds, but past failures to satisfy this requirement, if any such failures exist, could adversely affect the exclusion from gross income of interest on the Series C-2 Bonds and the Series C-3 Bonds for federal income tax purposes. Interest on the Bonds may become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Bonds by reason of the Borrower's failure to comply with any such covenants. If the interest on the Bonds becomes includable as gross revenue for federal income tax purposes, there is no provision in the Bonds or the Indenture for any "gross up" in the amount of interest to be paid on the Bonds. The holders of the Bonds may surrender their Bonds for redemption, without premium, upon the occurrence of a Determination of Taxability; however, there is no assurance that sufficient funds would be available to pay the redemption price.
Potential for Additional Debt Financing and Increased Leverage. The Borrower may elect to use leverage to increase the rate of return on its investments. The Borrower may increase total leverage to provide funding for projects to be developed by the Borrower, or acquisitions, or for general corporate purposes, including partnership distributions and/or loans for aftiliates of the Borrower. Such use of leverage presents an element of risk in the event that the cash flow from the properties is insufficient to meet the Borrower's debt service and other obligations. Subject to the limitations contained in the
·Indenture and other existing debt obligations of the Borrower, to the extent that Borrower may obtain additional debt financing in the future, it may do so through mortgages on some or all of the Projects or by incurring unsecured debt or other obligations of the Borrower. Any future mortgages may be on recourse, non-recourse or cross-collateralized bases. To the extent indebtedness is cross collateralized, lenders may seek to foreclose upon Projects that are not the primary collateral for their loans, which may, in turn, result in acceleration of other indebtedness secured by the Projects. Holders of indebtedness that is secured by any of the Projects will have a claim against such Projects which is senior to the holders of the Bonds. Foreclosure on Projects would result in a loss of income and asset value to the Borrower.
No Continuing Financial Disclosure by Borrower. The Borrower does not have any continuing obligation under the Indenture, the Loan Agreement, or any other agreement or instrument relating to the Trust Estate to disclose financial information or other proprietary non-public information. . .
THE ISSUER
The Issuer is a joint exercise of powers authority organized pursuant to an Amended and Restated Joint Exercise of Powers Agreement among a number of California counties, cities and special districts, entered into pursuant to Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code. The Issuer is authorized to issue bonds pursuant to Chapter 5 of Division 7 of Title I of the California Government Code, together with the provisions of Article I 0 of Chapter 3 of Part I of Division 2 of the California Government Code.
The Issuer has sold and delivered obligations other than the Bonds, which other obligations are and will be secured by instruments separate and apart from the Indenture and the Bonds. The holders of such obligations'ofthe Issuer haveno claim on the security for the Bonds, and the owners of the Bonds will have no claim on the security for such other obligations issued by the Issuer.
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The Issuer has not reviewed any appraisal for the Projects or any feasibility study or other financial analysis of the Projects and has not undertaken to review or approve expenditures for the Projects, to supervise the construction of the Projects, or to obtain any financial statements of the Borrower.
The Issuer has not reviewed this Private Placement Memorandum and is not responsible for any information contained herein, except for the information in this section and under the heading "NO LITIGATION- As to the Issuer".
ESTIMATED SOURCES AND USES OF FUNDS
The following information has been provided by representatives of the Borrower and other · private participants and has not been independently confirmed or verified by the.Jssuer. 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 informa:tion subsequent to the date hereof.
SOURCES OF FUNDS
Proceeds of Bonds Proceeds of Additional Bonds Funds on Hand Borrower Contribution
Total Sources
USES OF FUNDS
Repayment of 1998 Bonds . Cost of Issuance
Total Uses
THE BORROWER AND THE MANAGER
$202,548,000 $131,642,000 $ 3,800 $ 12,491,400
$346,685,200
$345,997,600 $ 687,600
$346,685,200
The following information has been provided by representatives of the Borrower and other private participants and has not been independently confirmed or verified by 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.
The Borrower's obligation to repay the Loan is an unsecured obligation of the Borrower only. Neither the General Partner nor any constituent entities of the borrower shall be personally liable for payments on the Loan, the payments on which are to be applied to pay the principal of, premium, if any, and interest on, or, if applicable, the purchase price of, the Bonds. Accordingly, the financial statements of the Borrower and the General Partner are not included in the Private Placement Memorandum. No representation is made that the Borrower will have substantial funds available for the Project.
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The Borrower
The Borrower is Irvine Apartment Communities, L.P., a Delaware limited partnership engaged in the ownership, development and operation of apartment communities in California. The Borrower's management and operating decisions are under the unilateral control of the General Partner, which is the sole general partner of the Borrower. The General Partner is lAC, Inc., a Delaware corporation (qualified to do business in California), a subsidiary of The Irvine Company LLC. As of the date of issuance of the Bonds, the General Partner will hold a I% general partnership interest in the Borrower and The Irvine Company LLC, a Delaware lirnited liability company, will hold the remaining 99% limited partnership interest, in the Borrower.
The Manager
The Manager of the Projects is The Irvine Company Apartment Communities, Inc., a Delaware corporation (qualified to do business in California). The Manager is wholly owned by The Irvine Company LLC. The Manager is responsible for the operation of apartment communities in California.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series C-1 Bonds is excluded from gross income for federal income tax purposes under Section I 03 of the Internal Revenue Code of 1986, as amended (the "1986 Code"), except that no opinion is .expressed as to the status of interest on any Series C-1 Bond during any period that such Series C-1 Bond is held by a "substantial user" of facilities financed or refmanced by the Series C-1 Bonds or by a "related person" within the meaning of Section 147(b) of the 1986 Code. Bond Counsel observes that interest on the Series C-1 "Bonds is a specific preference item for purposes of calculating the federal individual and corporate alternative minimum taxes. Bond Counsel is also of the opinion that interest on the Series C-1 Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-1 Bonds.
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of . existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series C-2 Bonds and Series C-3 Bonds is excluded from gross income for federal income tax purposes under Title Xlll of the Tax Reform Act of 1986, as amended, and Section 103 of the Internal Revenue Code of 1954, as amended (the "1954 Code"), except that no opinion is expressed as to the status of interest on any Series C-2 Bond or Series C-3 Bond during any period that such Series C-2 Bond or Series C-3 Bond is held by a "substantial user" of facilities financed or refinanced by the Series C-2 Bond or Series C-3 Bond or by a "related person" within the meaning of Section I03(b)(l3) of the 1954 Code. In the further opinion of Bond Counsel, interest on the Series C-2 Bonds and the Series C-3 Bonds is not a specific preference item for purposes ·of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel is also of the opinion that interest on the Series C-2 Bonds and the Series C-2 Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-2 Bonds and Series C-3 Bonds. ·
A complete copy of the proposed opinion of Bond Counsel with respect to the Bonds is set forth as Appendix C hereto.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity ofthe Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers).· The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straightline interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income lax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Tax Reform Act of 1986, as amended, the 1986 Code and the 1954 Code impose various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Issuer and the Borrower have made certain representations and have covenanted to comply with certain restrictions designed to assure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect the federal or state tax liability of the holder of a Bond. The nature and extent of these other tax consequences will depend upon the particular tax status of the holder of the Bond or its other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Issuer or the Borrower, or about the effect of future changes in the 1986 Code, the 1954 Code or Title XIII of the Tax Reform Act of 1986, as amended, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Issuer and the Borrower have covenanted, however, to comply with applicable requirements ofthe 1986 Code, the 1954 Code and Title XIII of the Tax Reform Act of 1986, as amended.
Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Issuer, the Borrower or holders of the Bonds regarding the Tax7Exempt Status of interest on the Bonds in the event of an audit or examination by the IRS. Under. current procedures, parties other than the Issuer, the Borrower and their appointed counsel, including holders of the Bonds, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Issuer or the Borrower legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the Issuer, the Borrower or holders of the Bonds to incur significant expense.
Future legislation, if enacted into law, clarification of the 1986 Code, the 1954 Code or Title XJII of the Tax Reform Act of 1986, as amended, or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent holders of the Bonds from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the 1986 Code, the 1954 Code or Title XIII of the Tax Reform Act of 1986, as amended, or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisers regarding any pending or proposed federal tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
On November 5, 2007, the United States Supreme Court heard an appeal in the case of Kentucky v. Davis, in which a Kentucky state court had ruled that the United States Constitution prohibited the state
. from providing a tax exemption for interest on bonds issued by Kentucky and its political subdivisions but taxing interest on obligations issued by other states and their political subdivisions. California law is similar to Kentucky in taxing interest on out-of-state bonds. A ruling by the Supreme Court against the Kentucky law would not change the exemption from California personal income taxes of the interest on the Bonds, but the value of the Bonds may be adversely affec1ed by changes in the demand for Californiaorigin bonds. There can be no assurance as to 1he outcome of the Davis case, the potential impact on market price or marketability of the Bonds which may result from a decision, or the likelihood of any future action by Congress on this subject.
LEGAL MATTERS
The authorization, issuance, sale and delivery of the Bonds by the Issuer are subject to the approval of certain legal matters by Orrick, Herrington & Sutcliffe LLP, Bond Counsel.
, Certain legal matters will be passed upon for the Issuer by Orrick, Herrington & Sutcliffe LLP and for the Borrower by its Counsel, Buchalter Nemer, A Professional Corporation,
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The proposed text of the legal opinion of Bond Counsel is set forth as "APPENDIX A- FORM OF BOND COUNSEL OPINION" attached hereto. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of the Private Placement Memorandum or otherwise shall create no implication that Bond Counsel has reviewed or expresses any. opinion concerning any of the mat1ers referenced in the opinion subsequent to its date.
Bond Counsel expresses and will express no opinion as to the accuracy, completeness or fairness of any statements in this Private Placement Memorandum, or in any other reports, financial information offering or disclosure documents or other information pertaining to the Issuer, the Borrower or the Bonds that may be prepared or made available by the Issuer, the Borrower, the Initial Purchaser or others to the holders of the Bonds or other parties.
NO LITIGATION
As to Borrower
There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body for which service of process has been effected on the Borrower or, to the knowledge of the Borrower, threatened against or affecting the Borrower, or to its knowledge, any basis therefor,. wherein an unfavorable decision, ruling or finding would adversely affect the transactions described in this Private Placement Memorandum, the exclusion of interest on the Bonds from the gross income for federal income tax purposes of the Owners of the Bonds or the validity or enforceability of the Loan Agreement, the Note or any other agreement or instrument to which the Borrower is a party and which is used or contemplated for use in the transactions contemplated by this Private Placement Memorandum.
As to the Issuer
There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body for which service of process has been effected on the Issuer or, to the knowledge of the Issuer, threatened against or affecting the Issuer, or to its knowledge, any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transactions described in the Private Placement Memorandum, the exclusion of interest on the Bonds from the gross income of the owners of the Bonds for federal income tax purposes or the validity or enforceability of the Bonds, the Indenture, the Loan Agreement, or any other agreement or instrument to which the Issuer is a party and
. which is used or contemplated for use in the transactions contemplated by this Private Placement Memorandum.
ENFORCEABILITY OF REMEDIES
The remedies available to the Trustee and the Owners of the Bonds upon an Event of Default . under the Loan Agreemen1, the Regulatory Agreements or the Indenture are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions,. including specifically the Federal Bankruptcy Code (Title ll of the United States Code), the remedies provided for under the Federal Bankruptcy Code, the Loan Agreement, the Regulatory Agreement or the Indenture may not be readily available or may be limited.
In addition, the Loan Agreement and the Regulatory Agreements provide that the obligations of the Borrower (other than certain obligations to the Issuer and the Trustee individually and not on behalf of the Owners of the Bonds) will be limited obligations payable solely from the income and assets of the
Borrower, and no partner of the Borrower shall have any personal liability for the satisfaction of any obligation of the Borrower under such agreements or of any claim against the Borrower arising out of such agreements or the Indenture. Accordingly, upon the occurrence of an Event of Default or the mandatory redemption of the Bonds under certain circumstance repayment of the Bonds is totally dependent upon the value of the Trust Estate. There can be no assurance that the value of the Trust Estate will be sufficient to pay the interest accrued on or the principal of the Bonds. See, "BONDHOLDERS' RISKS" herein.
The various legal opinions to be delivere!l in connection with the delivery of the Bonds, the Indenture, the Loan Agreement and the Regulatory Agreement will be qualified to the extent that the enforceability of certain legal rights related to the Bonds, the Indenture, the Loan Agreement and the Regulatory Agreements are subject to limitations imposed by such things as the exercise of judicial discretion in accordance with general principles of equity (whether applied by a court of law or a court of equity), including judicial limitations on rights to specific performance and bankruptcy, insolvency and reorganization.
RATING
The Bonds are not rated and there is no likelihood that the Bonds would be submitted for rating.
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MISCELLANEOUS
The Issuer is a conduit Issuer and is not responsible for the statements made herein except for the information under the captions "THE ISSUER" and "NO LITIGATION - AS TO ISSUER" herein and the Issuer will not participate in or be responsible for the offering, sale or distribution of the Bonds.
IRVINE APARTMENT COMMUNITIES, L.P., a Delaware limited partnership
By:
S-1 PHJVATE PLACEMENT AGREEMEJ-;T
APPENDIX A
FORM OF OPINION OF BOND COUNSEL
April 3, 2008
California Srnt.,;de Cornmw:Uties Development Authority Sacramento, California
Re: California Statewide Communities Development Authority Multifamily Housing Revenue Refunding Bonds (IAC Project) Series 2008 C-1, Series 2008 C-2, Series 2008 C-3 and Series 2008 C-4 (Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by the California Statewide Communities Development Authority (the "Issuer'') of Multifamily Housing Revenue Refunding Bonds (lAC Project) Series 2008 C-1 (AMI) in the aggregate principal amount of $24,800,000 (the "Series C-1 Bonds''), Series 2008 C-2 in the aggregate principal amount of $109,222,000 (the "Series C-2 Bonds''), Series 2008 G-3 in the aggregate principal amowu of $68,526,000 (the "Series C-3 Bonds'}, and Series 2008 C-4 in the aggregate principal amount of $131,642,000 (the "Series C-4 Bonds" and, together with the Series C-1 Bonds, the Series C-2 Bonds and the Series C-3 Bonds, the ''Bonds'}. The Bonds ru:e issued pursuant to Chapter 5 of Division 7 of Tide 1 of the California Government Code, together with the provisions of Article 10 of Chapter 3 of Pru:t 1 of Division 2 of the California Government Code, as amended (collectively, the "Act''), ·and a Trust Indenture, dated as of March 1, 2008 (the "Indenture''), between the pursuant to an Indenture of Trust dated as of April 1, 2008 (the "Indenture'') between the Issuer and U.S. Bank National Association, as trustee (the "Trustee') for the stated purpose of making a loan of the proceeds thereof to Irvine Apartnient Communities, L.P., a Delaware limited partnership (the "Company''), pursuant to a Loan Agreement, dated as of April 1, 2008 (the ''Loan Agreement'), between the Tssuer and the Company. Capitalized terms not otherwise defined herein shall have the meaninga set forth in the Indenture.
In such connectio~ we have reviewed the Indenture, the Loan Agreement, the Regulatory Agreements, the Tax Certificate, certificates of the Authority, the Borrower, the Trustee and others, opinions of counsel to the
· .. Borrower, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. We have assumed, without undertaking to verify, the genuineness of such documents, certificates and opinions presented to us (whether as originals or as copies) and of the signatures thereon, the accuracy of the factual matters represented, warranted_ or certified in such documents and certificates, the correctness of the 1egal conclusions contained in such opinions, and the due and legal e:;~~:ecucion of such documents and certificates by, and validity thereof against, any parties ~ther than the Authority.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not direcdy addtessed by such authorities. Such opinions may be affected by actions taken or omitted or events occutting after the date hereof. We have not wldertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not intendeQ to, and may not, be relied upon in connection with any such actions, events or matters. Our 'engagement With respect to the Bonds has concluded with their issuance, and we .disclaim any obligation to update this letter .. Furthermore, we have assumed compliance with all covenants and agreements col}t~ned in
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the Indenture, the Loan Agreement, the Regulatory Agreements and the Tax Certificate, including (without limitation) covenants and agreements compliance with Which is necessary_ to assure that future_ actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax pwposes. We c.U attention to the fact that the rights and obligations under the Bonds, the Indenture, the Loan Agreement, the Regulatory Agreements and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and Other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on lega1 remedies against joint powers agencies in the State of California (the "Staten). We express no opinion with respect to any indemnification, contribution, penalty, choice of l~w. choice of forum, choice of venue, waiver or severability provisions contained in th.e foregoing documents, nor do we express any opinion with respect to the state or quality of tide to or interest in any of the real or personal propetty described in or subject to the lien of the Indenture or th.e Loan Agreement or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such property. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Private Placement Memorandum regarding the Bonds or any offering material relating to the Bonds and express no opinion with re_spect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The Authority is a joint exercise of powers agency, duly organized and validly existing un?er the laws of the State of California, and has lawful auth~rity to issue the Bonds.
2. The Bonds constitute the valid and binding limited obligations of the Authority, payable solely from the Revenues and other funds and moneys pledged and assigned therefor under the Indenture.
3. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Authority. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Trust Estate, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture.
4. The Bonds do not constitute a debt or liability of the Authority, the State or any political subdivision thereof, or a pledge of the faith and credit of the State of California or any such political subdivision, other than the Authority to the extent provided in the Indenture.
5. Interest on the Series C-1 Bonds is excluded from gross income for federal income lax purposes und~ Section 103 of the Internal Revenue Code of 1986 (the "1986 Code"), except that no opinion is expressed as to the exclusion from gross income of interest on any Series C-1 Bond for any period during which such Series C-1 Bond is held by a person who, within the meaning of Section 147(a) of the 1986 Code, is a "substantial uSer" of the. facilities with respect to which the proceeds of the Series C-1 Bonds were used or is a "related person." HoWever, we observe that interest on the Series ·C-1 Bonds is a specific preference item for purposes of the fedefa:l.ind.ividual and corporate alternative minimum taxes. Int~est on ' the Series C-1 Bonds is exempt from State personal income taxes. We express no opinion regarding other tax consequences related to the ownership or disposition ofJ or the accrual or receipt of interest on) the Series C-1 Bonds.
6. Interest on the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds is excluded from gross income for federal Income tax pwposes under Tide XIII of the Tax Reform Act of 1986, as amended (the "1986 Act") and Section 103 of the Internal Revenue Code of 1954, as amended (the ''1954 Code1
'), except that no opinion is expressed as to the exclusion from gross income of interest on any
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Series C-2 Bond, Series C-3 Bond or Series C-4 Bond for any period during which such Series C-2 Bond, Series C~3 Bond or Series C-4 Bond is held by a "substantial user" of any facilities financed or refinanced with Series C-2 Bond, Series C-3 Bond or Series C-4 Bond proceeds or by a "related person" within the meaning of Section 103(b)(13) of the 1954 Code. Interest on the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that interest on the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds is included in adjusted current earnings in calculating corporate alternative minimum tax. Interest on the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds is exempt from State of California personal income taxes. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds.
Extension of Letter of Credit in Anticipation of Expiration ......................... 30
Delivery of Letter of Credit; Replacement of Letter of Credit.. .................... 30
Notice to Owners .......................................................................................... 30
Other Credit Enhancement ... : ........................................................................ 31
Purchase in Lieu of Redemption ................................................................... 31
Restrictions on Transfer ................................................................................ 31
ARTICLE III PURCHASE AND REMARKETING OF TilE BONDS .......................................... 32
Section 3.1.
Section 3 .2.
Section 3.3.
Section 3.4.
Section 3.5.
Optional Tenders for Purchase ...................................................................... 32
Mandatory Tenders for Purchase .................................................................. 33
Remarketing and Purchase ............................................................................ 34
Inadequate Funds for Tenders ....................................................................... 36
Bond Purchase Fund ............................................. .-....................................... 36
ARTICLE IV GENERAL PROVISIONS ......................................................................................... 37
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
OHS West:260368139.12
Authorization for Indenture; Indenture to Constitute Contract.. ................... 37
Payment of Principal, Premium, if any, and Interest .................................... 37
Performance of Covenants; Issuer Warranties .............................................. 38
Instruments of Further Assurance ................................................................. 3 8
Limitation on Issuer's Actions ...................................................................... 3 8
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... (
•' ,,
f, . :'.
· Section 4.6.
Section 4.7.
Section 4.8.
Section 4.9.
Section 4.1 0.
Section 4.11.
Section 4.12.
Section 4.13.
Section 4.14.
Section 4.15.
Section 4.16.
TABLE OF CONTENTS Page
Registration of Bonds; Trustee Appointed Bond Registrar; Persons Treated as Owners ......................................................................................... 38
Qualifications of Remarketing Agents; Resignation or Removal of Remarketing Agents ............................................... : ...................................... 56
Appointment ofScparate or Co-Trustee ....................................................... 57·
ARTICLE IX SUPPLEMENTAL INDENTURES ........................................................................... 58
Section 9 .I. Supplemental Indentures Not Requiring Consent of Bond Owners .............. 58
Section 9.2. Supplemental Indentures Requiring Consent of Bond Owners ..................... 59
Section 9.3. Limitation Upon Amendments and Supplements ......................................... 59
Section 9.4. Consent of Trustee, Borrower, Controlling Person and Remarketing Agent .. , .......................................................................................................... 59
ARTICLE X AMENDMENT OF CERTAIN LOAN DOCUMENTS ............................................ 60
Section I 0.1. Amendments of Loan Agreement and Tax Certificate Not Requiring Consent of Bond Owners .............................................................................. 60
Section I 0.2. Amendments of Loan Agreement and Tax Certificate Requiring Consent of Bond Owners .............................................................................. 60
Section 10.3. Limitation Upon Amendment of Loan Agreement ....................................... 61
ARTICLE XI MISCELLANEOUS .................................................................................................. 61
Section II. I.
Section 11.2.
OHS West260l68JJ9.12
Consents of Bond Owners; Controlling Person ............................................ 61
. Limitation of Rights ........... : ............... : .......................................................... 61
References to Letter of Credit Issuer ............................................................ 63
No Reliance on Financials of the Borrower .................................................. 63
EXHIBIT il -FORM OF BOND ............................................................................................................ A-1
EXIDBIT.B- FORM OF INVESTOR'S LETTER ................................................................................. B-1
-V-OHS West260368I39.12
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INDENTURE OF TRUST
This INDENTURE OJ<' TRUST (dated as of April!, 2008, as amended, modified or supplemented from time to time, this "Indenture"), is made and entered into by and between the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (a joint exercise of powers agency of the State of California, together with its successors and assigns, the "Issuer''), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, duly authorized to exercise trust powers hereunder, as trustee (together with any successor trustee hereunder and their respective successors and assigns, the "Trustee"),
WITNESSETH:
WHEREAS, the Issuer is duly organized and existing pursuant to the provisions relating to the joint exercise of powers found in Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code (the "JP A Law"); and
WHEREAS, the Issuer is authorized pursuant to Article 10 of Chapter 3 of Part I of Division 2 (Section 53570 and following) of the California Government Code (the "Refunding Law") to issue bonds for the purpose of refunding outstanding bonds previously issued by the Issuer and, upon satisfaction of the conditions set forth therein, its program participants; and
WHEREAS, the Issuer previously has duly issued the following bonds:
(1) Apartment Development Revenue Refunding Bonds, Series 1998A-l (Irvine Apartment Communities, L.P.) (the "1998A-l Bonds"), in the aggregate principal amount of$24,800,000;
(2) Apartment Development Revenue Refunding Bonds, Series 1998A-2 (Irvine Apartment Communities, L.P.) (the "1998A-2 Bonds"), in the aggregate principal amount of$109,390,000;
(3) Apartment Development Revenue Refunding Bonds, Series 1998A-3 (Irvine Apartment Communities, L.P.) (the "1998A-3 Bonds"), in the aggregate principal amount of$1 00,000,000; and
(4) Apartment Development Revenue Refunding Bonds, Series 1998A-4 (Irvine Apartment Communities, L.P.) (the "1998A-4 Bonds," and, together with the 1998A-l Bonds, the 1998A-2 Bonds and the 1998A-3 Bonds, the "1998 Bonds"), in the aggregate principal amount of$100,000,000; and
WHEREAS, the 1998 Bonds were issued pursuant to an Indenture of Trust, dated as of May I 5, 1998 (the "1998 Indenture"), by and between the Issuer and U.S. Bank National Association, as successor by merger to U.S. Bank Trust National Association, as trustee (the "1998 Trustee"); and
WHEREAS, the Issuer has determined to issue the following bonds:
( 1) Multifamily Housing Revenue Refunding Bonds (lAC Project), Series 2008 C-1 (AMT) (the "Series C-1 (AMT) Bonds"), in the aggregate principal amount of $24,800,000;
(2) Multifamily Housing Revenue Refunding Bonds (lAC Project), Series 2008 C-2 (the "Series C-2 Bonds"), in the aggregate principal amount of$109,222,000;
(3) Multifamily Housing Revenue Refunding Bonds (lAC Project), Series 2008 C-3 (the "Series C-3 Bonds"), in the aggregate principal amount of $68,526,000;
OHS West:260368139.12
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(4) Multifamily Housing Revenue Refmxling Bonds (lAC Project), Series 2008 C-4 (the "Series C-4 Bonds"), in the aggregate principal amount of $131 ,642,000; the Series C-1 (AMT) Bonds, the Series C-2 Bonds, the Series C-3 Borids, and the Series C-4 Bonds are referred to herein collectively as the · "Bonds";
WHEREAS, the Issuer has determined to loan the proceeds of the Bonds to Irvine Apartment Communities, L.P., a Delaware limited partnership (together with its successors and assigns, the "Borrower") pursuant to a Loan Agreement dated as of April 1, 2008 (as amended, modified or supplemented from time to time, the "Loan Agreement''), by and between the Issuer and the Borrower, to refund the 1998 Bonds (as further described herein); and
WHEREAS, the Loan Agreement requires the Borrower to make or cause to be made, payments sufficient to pay principal and purchase price of, and redemption premium, if any, and interest on, the Bonds as the same become due and payable and to pay certain administrative expenses in connection with the Bonds; and
WI-mREAS, the Borrower has delivered to the Issuer, and the Issuer has assigned to the Trustee hereunder, a promissory note dated the date of issuance of the Bonds in a principal amount equal to the aggregate principal amount of the Bonds (as the same may be amended, supplemented or modified from time to time, the "Note") evidencing the Borrower's obligation to repay the Loan and the Issuer has made the Loan to the Borrower, subject to the terms and conditions of the Loan Agreement and this Indenture; and
WHEREAS, the Issuer has, by a resolution duly adopted in accordance with the Act (as hereinafter defined), duly authorized the execution and delivery of this Indenture and the issuance of the Bonds, upon and subject to the terms and conditions hereinafter set forth; and
WHEREAS, all acts and things have been done and performed which are necessary to make the Bonds, when executed and issued by the Issuer, authenticated by the Trustee and delivered, the valid and binding legal obligations of the Issuer in accordance with their terms and to make this Indenture a valid and binding agreement for the security of the Bonds authenticated and delivered under this Indenture;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: that, to provide for the payment of principal or redemption price, the purchase price and interest in respect of all Bonds issued and outstanding under this Indenture, the rights of the Bond Owners and the performance of the covenants contained in the Bonds and herein, and the payment of all other amounts due under this Indenture, the Issuer does hereby sell, assign, transfer, set over and pledge unto the Trustee, its successors in trust and its assigns forever, the Note and all right, title and interest of the Issuer in and to, and remedies under the Loan Agreement (except for the Reserved Rights, which rights may be enforced jointly or severally by the Issuer and the Trustee) as the same relate to the Bonds issued under this Indenture, and all right, title and interest of the Issuer in and to the Revenues and the Revenue Fund (as such terms are hereinafter defined) but excluding amounts held pursuant to Section 4.8 hereof or in the Rebate Fund;
TO HAVE AND TO HOLD all and singular said right, title and interest of the Issuer assigned, transferred, pledged, released, confirmed and set over by the Issuer as aforesaid or intended so to be, unto the said Trustee, its successors and assigns, forever.
IN TRUST, NEVERTHELESS, under and subject to the terms and conditions hereinafter set forth, for the equal benefit, protection and security of the Owners of any and all of the Bonds, all of which, regardless of the time or times of their issuance or maturity, shall be of equal rank, without preference, priority or distinction of any of the Bonds over any other thereof, except as otherwise
OHS West:260368139.12 2
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provided in or pursuant to this Indenture and/or any Letter of Credit, and for securing the observance and performance of all the conditions, covenants, promises, stipulations, agreements and terms and provisions of this Indenture and the uses and purposes herein expressed and declared. It is hereby expressly declared ·that any Letter of Credit Issuer shall be deemed to be a third-party beneficiary of this Indenture, so long as the Letter of Credit Issuer is not in default of its obligations under the Letter of Credit.
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, the principal and purchase price of the Bonds and the interest and premium, if any, due or to become due thereon at the times and in the manner mentioned in the Bonds in accordance with their terms, and shall cause the payments to be made into the Revenue Fund, as required under Article V hereof, or shall provide, as permitted by Article VI hereof, for the payment thereof, and for the payment of certain excess investment earnings to the United States of America, as required under Article V hereof, and shall well and truly keep, perform and observe all of the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due in accordance with the terms and provisions hereof, then this Indenture and the rights hereby granted shall cease and terminate; otherwise this Indenture is to be and remain in full force and effect.
TI-IIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said property, rights and interests, including, without limitation, the amounts hereby assigned, are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and that the Issuer has agreed and covenanted, and hereby does agree and covenant, with the Trustee and with the Owners, from time to time, of the Bonds, or any part thereof, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section Ll. Definitions. In addition to the terms defined elsewhere herein, each of the following terms shall have the meaning assigned to it in this Section I. I whenever it is used in this Indenture, unless the context in which it is used clearly requires otherwise (certain terms used herein and not otherwise defined arc defined in the Loan Agreement):
"Act" shall mean the JPA Law and the Refunding Law, as each term is defined in the Recitals to this Indenture, and as applicable to a Series of Bonds.
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Borrower under any applicable bankruptcy, insolvency, reorganization or similar law affecting creditors' rights generally, now or hereafter in effect.
"Alternate Letter of Credit" shall mean, with respect to any Series, any guaranty, standby . purchase agreement or letter of credit substituted for a Letter of Credit (or for any Alternate Letter of
Credit), which satisfies the conditions set forth in Section 2.13 of this Indenture, a written commitment for which is issued by a Qualified Issuer at least forty-five ( 45) days prior to the Interest Payment Date immediately preceding the Termination Date, specifYing that the Alternate Letter of Credit will be effective on or prior to the Termination Date (unless the Interest Payment Date and the Termination Date are the same date, in which case such commitment shall be issued by a Qualified Issuer at least forty-five {45) days prior to such date). Any extension of a Letter of Credit or any substitute Letter of Credit contemplated by Section 2.15 hereof shall not constitute an Alternate Letter of Credit; all other
OHS Wcst:260368l39.12 3
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amendments to or modifications of an existing Letter of Credit shall constitute an Alternate Letter of Credit.
"Authorized Denominations" shall mean the following: (i) for all Bonds bearing interest at a SIFMA Index Rate, $100,000 and any 1J1Uitiple of$i in excess thereof, and (ii) for all Bonds bearing interest at a FleJtible Rate, a Daily Rate, a Weekly Rate, or a Term Rate, $100,000 and any multiple of $5,000 in excess thereof.
"Bankruptcy Cod~" shall mean Title I I of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor federal statute.
"Beneficial Owner" or "beneficial owner'' is defined in Section 2.11 hereof.
"Bond Counsel" shall mean Orrick, Herrington & Sutcliffe LLP or another firm of attorneys of . nationally recognized expertise with respect to the tax-exempt obligations of political subdivisions, .
acceptable to the Issuer, each Controlling Person ~d the Borrower.
"Bond Owner," ~'nondowner." "Owner," "owner," "Bondholder," "bondholder," ~'holder" or "owner of the Bonds," when used with respect to a Bond, shall mean the person or entity in whose name such Bond shall be registered.
"Bond Purchase Fund" shall mean the fund so designated and established pursuant to Section 3.5 hereof.
"Bonds" shall mean the Series C-1 (AMT) Bonds, the Series C-2 Bonds, the Series C-3 Bonds, and the Series C-4 Bonds, collectively.
"Bond Year" shall have the meaning given to that term in the Tax Certificate.
"Borrower" has the meaning given such term in the Recitals to this Indenture.
"Borrower Bonds" shall mean those Bonds described in Section 3.3(b)(v) hereof.
"Borrower Purchase Account" shall mean the account so designated and established pursuant to Section 3.5 hereof.
"Borrower Revenue Account" shall mean the account so designated and established pursuant to Section 5.3 hereof.
"Business Day" or "business day" shall mean any day other than a Saturday, Sunday or other day on which the New York Stock Exchange is closed, the Depository Trust Company (DTC) is closed or banks arc authorized or obligated by law or executive order to close in New York, New York or the State of California, or in any city in which is located the Principal Office of the Trustee, the Remarketing Agent or any Controlling Person, and, if so specified in the Letter of Credit in any definition of"business day"
· referred to therein, the office of the Letter of Credit Issuer at which demands for a draw on or payment under the Letter of Credit will be made.
"Closing Date" shall mean the date on which the Bonds are issued and delivered to the Underwriters.
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"Code" shall rnean the Internal Revenue Code of 1986, and with respect to a specific Section thereof such reference shall be deemed to include (a) the applicable regulations promulgated or proposed under such Section or any previous corresponding Section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code and (d) the applicable regulations promulgated or proposed under the provisions described in (b) and (c).
"Completion Pate" shall mean the date of completion of construction of the Project, as certified pursuant to the applicable Regulatory Agreement.
"Controlling Person" shall mean (i) with respect to the Series C-1 (AMT) Bonds, the Series C-2 Bonds, and the S~ries C-3 Bonds, JPMorgim, so long as it is the Owner of 100% of such Bonds, and (ii) with respect to the Series C-4 Bonds, Goldman, so long as it is the Owner of I 00% of such Bonds. There
·will be no Controlling Person with respect to any Series except as set forth above.
"Conversion Pate" shall mean the Business Day on which a particular type of Interest Rate becomes effective for a Series of Bonds that is not immediately preceded by a day on which such Bonds accrued interest at the same type of Interest Rate; and when used with respect to a Term Rate Period, the Interest Payment Date on which a Series of Bonds begins to bear interest at a new Term Rate.
"Costs of Issuance Fund" shall mean the account so designated and established pursuant to Section 5.2 hereof.
"Daily Rate" shall mean the interest rate to be determined for a Series of Bonds on each Business Day pursuant to Section 2.2(b)(v) hereof.
"Daily Rate Conversion Date" shall mean each day on which a Series of Bonds accrues interest at a Daily Rate that is immediately preceded by a day on which the Bonds did not accrue interest at a Daily Rate.
"Daily Rate Period" shall mean each period during which a Series of Bonds· accrues interest at a. particular Daily Rate.
"Dated Date" shall mean April 3, 2008.
"Determination ofTaxabilitv" shall mean, with respect to any Bonds allocated to a Project (a) there shall have been delivered to the Trustee and the Controlling Person an opinion of Bond Counsel to the eftbct that any payment of interest on such Bonds or any amount in respect of interest on any of such Bonds made on or after a date specified in said opinion is includable for federal income tax purposes in the gross income of any holder of the Bonds under the Code (other than a holder who is a "substantial user'' of the Project or a "related person" as provided for in Section 147(a) of the Code), or (b) a final determination by the Internal Revenue Service or a final judgment is rendered by a court of competent jurisdiction in a·proceeding, which determination or judgment is not being contested in an appropriate proceeding brought directly by the Borrower or by a holder of a Bond (in each case in reliance on an
. opinion of Bond Counsel that such contest has a reasonable likelihood.of success), to the effect that the · interest payable on the Bonds is includable for federal income tax purposes in the gross income of any
holder of the Bonds under Section I 03 of the Code (other than a holder who is a "substantial user" of the .Project or a "related person" within the meaning of Section 147(a) of the Code). A Determination of Taxability under (a) or (b) above will result only from the inclusion of the interest paid or to be paid on any Bond (exceptio a holder who is a "substantial user" ofthe Project or a "related person") in the gross income of the holder for federal income tax purposes and not from any other federal tax consequences· arising with respect to the Bonds.
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"DTC" shall mean The Depository Trust Company.
"Eligible Funds" shall mean (a) remarketing proceeds received from the Remarketing Agent or any purchaser.( other than funds provided by the Borrower, any general partner or guarantor of the Borrower or the Issuer), (b) proceeds received pursuant to a Letter of Credit, (c) proceeds of the Bonds received contemporaneously with the issuance and sale of the Bonds, (d) the proceeds of refunding bonds, (e) proceeds from the investment or reinvestment of moneys described in clauses (a), (b), (c) and (d) above, or (I) moneys delivered to the Trustee and accompanied by a written opinion of nationally recognized counsel experienced in bankruptcy matters acceptable to the Rating Agency to the effect that if the Borrower, any general partner or guarantor of the Borrower, or the Issuer were to become a debtor in a proceeding under the Bankruptcy Code: (i) payment of such moneys to Owners of the Bonds would not constitute an avoidable preference under Section 547 of the Bankruptcy Code and (ii) the automatic stay provisions of Section 362(a) of the Bankruptcy Code would not prevent application of such moneys to the payment of the Bonds. ·
"Event of Default" when used with respect to this Indenture, shall mean any event specified i!l Section 7.1 hereof.
"Favorable Opinion of Bond Counsel" shall mean, with respect to any Bonds, an opinion of Bond Counsel addressed to and in form and substance acceptable to the Issuer, the Controlling Person and the Trustee to the effect that an action proposed to be taken is authorized or permitted by this Indenture and will not adversely affect the exclusion of interest on such Bonds from gross income of the owners thereof for federal income tax purposes.
"Fitch" shall mean Fitch, Inc. a corporation organized and existing under the laws of the State of Delaware, doing business as Fitch Ratings, its successors and their assigns, or, if such entity shall be .dissolved or liquidated or shall no longer perform the functions of a nationally-recognized statistical rating organization, "Fitch" will be deemed to refer to any other nationally recognized statistical rating organization (other than S&P or Moody's) designated by the Borrower, with respect to any affected Series, with the consent of the Remarketing Agent, the Letter of Credit Issuer, if any, and the Controlling Person.
"Flexible Rate" shall mean, when used with respect to any particular Bond of a Series, the interest rate determined for each Flexible Rate Period applicable thereto pursuant to Section 2.2(b)(v) hereof.
"Flexible Rate Conversion Date" shall mean, each day on which. Bonds of a Series accrue interest at Flexible Rates that is immediately preceded by a day on which the such Bonds did not accrue interest at Flexible Rates.
"Flexible Rate Period" shall mean each period during which a Bond of a Series accrues interest at a particular Flexible Rate.
"Goldman" shall mean Goldman, Sachs & Co., the initial purchaser and Owner of 100% of the Series C-4 Bonds, or any affiliate thereof.
"Government Obligations" shall mean direct obligations of, or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by, the United States of America, which, at the time of investment, are legal investments under the laws of the State for the moneys proposed to be invested therein.
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"IndentUre" shall mean this Indenture of Trust, including all amendments hereof and supplements hereto.
"Indexing Agent" shall mean the indexing agent appointed by the Issuer, a,t the direction and expense of the Borrower, to determine the SIFMA Index Rate in accordance with. the provisions of this Indenture. The initial Indexing Agent with respect to each Series shall be the applicable Controlling Person.
"Initial MandatOI:y Tender Date" shall mean May 15, 2018 ..
"Interest Payment Date" shall mean (a) when used with respect to any particular Bond accruing interest at a Flexible R~te, the day after the last day of each Flexible Rate Period applicable thereto; (b) when used with respect to Bonds accruing interest at Daily Rate, a Weekly Rate, or a SIFMA Index Rate, the first Business Day of each calendar month following a month in which interest at such rate has accrued; (c) when used with respect to Bonds accruing interest at a Term Rate, the fifteenth day of the March or September following the month in which a Term Rate Conversion Date occurs and the fifteenth day of each March and September thereafter to which interest at such rate has accrued, except that the last Interest Payment Date for any Term Rate Period shall be the first Business Day that falls on or after the fifteenth day of the March or September in which the Term Rate Period ends; and (d) each Conversion Date.
"Interest Period" shall mean the period from and including any Interest Payment Date to and including the day immediately preceding the next Interest Payment Date.
"Interest Rate" shall mean a Flexible Rate, a Daily Rate, a Weekly Rate, a SIFMA Index Rate or a Term Rate, as the case may be.
"Issuer" shall have the meaning given such term in the first paragraph of this Indenture.
"JP Morgan" shall mean JPMorgan Chase Bank, N.A., the initial purchaser and Owner of I 00% of the Series C-1 (AMT) Bonds, the Series C-2 Bonds and the Series C-3 Bonds, or any affiliate thereof and any securitization vehicle in which JPMorgan or any affiliate thereof holds, directly or indirectly, a residual or subordinate interest or provides credit enhancement or liquidity support.
"Letter of Credit'' shall mean, with. respect to any Series, at any time, any guaranty, standby purchase agreement or letter of credit or other similar agreement or instrument then in effect, providing credit and/or liquidity support for the payment of principal, purchase price, and interest on the Bonds, including any Alternate Letter of Credit, meeting the requirements of Section 2.I3 of this Indenture.
"Letter of Credit Issuer" shall mean the Qualified Issuer of any Letter of Credit.
"Letter of Credit Purchase Account" shall mean the account so designated and established pursuant to Section 3.5 hereof.
"Letter of Credit Revenue Account'' shall mean the account so designated and established pursuant to Section 5.3 hereof
"Letter of Credit Tender Date" shall mean the last Interest Payment Date at least two (2) Business Days prior to the Termination Date of the Letter of Credit. ·
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"Loan" shall mean the loan made by the Issuer to the Borrower from the proceeds of the Bonds pursuant t() the Loan Agreement. ··
"Loan Agreemenf' has the meaning given such term in the Recitals to this Indenture.
"Mandatory Redemption Event'' shall mean the occurrence of the event described in Section 2.6( d) hereof. .
"Maximum Rate" shall mean twelve percent (12%) per annum; provided, however, that the Maximum Rate may be increased if the Trustee receives (i) the written consent of the Borrower to a specified higher Maximum Rate not to exceed the lesser of the maximum rate permitted by law to be paid on the Bonds and the maximum rate chargeable on the Loan and (ii) an opinion of Bond Counsel to the effect that such higher Maximum Rate is permitted by law and will not adversely affect either the validity of the Bonds or the exclusion of the interest payable on the Bonds from gross income for federal income tax purposes, and, (iii) if applicable, a new or amended Letter of Credit in an amount equal to the sum of (A) the then outstanding principal amount of the Bonds and (B) the new interest requirement calculated using the new Maximum Rate.
"Moody's" shall mean Moody's Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a statistical rating organization, any other nationally recognized statistical rating organization designated by the Borrower, with respect to any affected Series, with the consent of the Remarketing Agent, the Letter of Credit Issuer, if any, and the Controlling Person.
"Note" means the Promissory Note, in substantially the form attached to the Loan Agreement as Exhibit A, dated the date of issuance of the Bonds in favor of the Issuer and assigned to the Trustee, in which the Borrower has agreed to make payments in amounts equal to amounts of principal of and premium, if any, and interest on the Bonds, as the same may be modified, amended or supplemented from time to time.
"Outstanding" or ~'Bonds outstanding" or "Bonds then outstanding," at the time in question, shall mean all Bonds which have been executed and delivered by the Issuer and authenticated by the Trustee
·under this Indenture, except:
(i) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;
(ii) Bonds paid and retired or deemed to be paid and retired by defeasance pursuant to Article VI;
(iii) Bonds in lieu of or in exchange for which other Bonds shall have been executed and delivered by the Issuer and authenticated by the Trustee pursuant to Section 4.6(b), 4.14 or 4.15 hereof;
(iv) Undelivered Bonds; and
(v) Bonds in a Series (including Pledged Bonds) which are owned or held by or for the account of the Borrower, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Borrower (unless the Borrower owns all of the Bonds in a Series, in which event such Bonds in such Series shall be deemed to be Outstanding for purposes of any
such determination); provided however, Bonds in a Series (including Pledged Bonds) which are owned or held by or for the account of the Borrower shall not be deemed outstanding for the purposes of receiving pro rata allocations after an Event of Default has occurred and is continuing.
"Permitted Investments" shall mean, to the extent permitted by State law (the Trustee shall be entitled to rely upon any investment direction from the Borrower as a certification to it that such investment is permitted by State law):
(A) Direct obligations of the United States of America (including obligations issued or held in book-entry fonn on the books of the Department of the Treasury, CATS and TIGRS and similar instruments which have been stripped by the Treasury itself) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America;
(B) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any · of the following federal agencies and provided such obligations are backed by the full faith and credit of ·
the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):
I. U.S. Export-Import Bank (Eximbank)- Direct obligations or fully guaranteed certificates of beneficial ownership;
2. Fanners Home Administration (FmHA)- Certificates of beneficial ownership;
3. Federal Financing Bank;
4. Federal Housing Administration Debentures (FHA);
5. General Services Administration- Participation certificates;
6. Government National Mortgage Association (GNMA or "Ginnie Mae")- GNMA -guaranteed mortgage-backed bonds and GNMA- guaranteed pass-through obligations
7. U.S. Maritime Administration- Guaranteed Title XI financing; and
8. U.S. Department of Housing and Urban Development (HUD);
(C) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself):·
I. Federal Home Loan Bank System- Senior debt obligations;
2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac")- Participation Certificates and Senior debt obligations;
3. Federal National Mortgage Association(FNMA or "Fannie Mae")- Mortgage-backed securities and senior debt obligations;
4. Resolution Funding Corp. (REFCORP) obligations; and
5. Fa.'m Credit System- Consolidated systemwide bonds and notes;
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(D) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m, and if rated by Moody's rated Aaa, Aal or Aa2 including funds for which the Trustee and its affiliates provide investment advisory or other management services;
(E) Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual . savings banks and the collateral must be held by a third paf!Y and the bondholders must have a perfected first security interest in the collateral;
(F) Certificates of deposit, savings accounts, deposit accounts or money market deposits that are fully insured by FDIC, including those of the Trustee and its affiliates;
(G) Investment agreements, including guaranteed investment contracts, forward purchase agreements and put agreements;
(H) Commercial paper rated, at the time of purchase, "Prime - I" by Moody's and "A-I" or better by S&P;
(I) Bonds or notes issued by any state or municipality, which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies;
(J) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of"Prime- I" by Moody's and "A-1" by S&P;
(K) Repurchase Agreements ("repos''), which provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date, and which follow the following criteria:
I. Repos must be between the municipal entity and a dealer bank or securities fum,
a. Primary dealers on the Federal Reserve reporting dealer list which are rated "A/Aa" or better by S&P and Moody's, or
b. Banks rated "A/Aa" or above by S&P and Moody's,
2. The written repo contract must include the following:
a. Securities that are acceptable for transfer are:
(I) Direct U.S. governments, or
(2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC),
b. The term of the repo may be up to 30 days,
c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying
OHS West:260368139.12 10
the collateral) before/simultaneous with payment (perfection by possession of certificated securities).
d. Valuation of Collateral:
(I) The securities must be valued weekly, marked-to-market at current market price plus accrued interest,
(2) The value of collateral must be equal to I 04% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest; if the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred; if, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal lOS%,
3. Legal opinion must be delivered to the municipal entity to the effect that the repo meets guidelines under state law for legal investment of public funds.
(L) any other investment approved in writing by the holders of more than 50% in aggregate principal amount of Bonds then Outstanding.
"Premium" or "premium." when used with respect to a Bond, shall mean any amount in addition to the principal or redemption price of, and interest on, such Bond that is required to be paid in the event of the exercise of an option or obligation to pay the principal or redemption price of such Bond prior to maturity as permitted or required by this Indenture, and, when used with respect to the Loan, shall mean any amount in addition to the principal of, and interest on, the Loan that is required to be paid in the event of the exercise of an option or obligation to pay the principal of the Loan 'prior to maturity as permitted by the Loan Agreement.
"Prepaymenf' or "prepayment," when used with respect to the Loan, shall mean the payment of all or a portion of the principal of the Loan prior to maturity, except for a payment made in advance of the scheduled due date thereof that is not to be applied against the outstanding principal balance of the Loan until such due date.
"Principal Office," with respect to the Remarketing Agent, shall mean the office thereof designated by the Remarketing Agent in writing to the Issuer, the Trustee, the Letter of Credit Issuer, the ·Controlling Person and the Borrower; with respect to the Trustee shall mean the office thereof at which at ·any particular time its corporate trust business shall be principally administered or any other such office as shall be designated by the Trustee in writing to the Issuer, the Remarketing Agent, the Letter of Credit
'Issuer, the Controlling Person and the Borrower; and with respect to the Controlling Person, shall mean the office thereof designated by the Controlling Person in writing to the Issuer, the Trustee and the Borrower.
"Projects" shall mean the following twenty-five (25) residential rental projects of the Borrower -refinanced through the issuance of the Bonds, as set forth more fully in the Tax Certificate:
Notwithstanding anything to the contrary, in the event that any of the Bonds or· Series of Bonds relating to a specific Project have been redeemed, purchased or otherwise paid in full, such Project shall no longer be included in the definition of Project hereunder.
"Qualified Issuer" shall mean a bank, financial institution or other entity that has the power and authority.to issue a Letter of Credit.
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"Qualified Project Costs" means any expenditure: (a) to provide facilities and improvements that constitute part of a qualified residential rental project within the meaning of Section 142(d) of the Code and (b) that is properly chargeable to the capital account for such facilities and improvements under general federal income tax principles or that would be so chargeable with a proper election or but for a proper election by the Borrower to deduct such expenditure.
"Rate Period" shall mean the period during which a particular Interest Rate is to remain in effect .pursuant to the terms of this Indenture.
"Rating Agencies" shall mean any nationally recognized rating agency which then maintains a rating on the Bonds.
"Rebatable Arbitrage" shall have the meaning set forth in Section 5.10 hereof.
"Rebate Analyst" shall mean (a) any nationally recognized firm of certified public accountants, or (b) any reputable firm which offers to the tax-exempt bond industry rebate calculation services and holds itself out as having expertise in that area, acceptable to the Issuer.
"Rebate Regulations" shall mean the Treasury Regulations issued under Section 148(1) of the Code.
"Rebate Fund" shall mean the fund so designated and established pursuant to Section 5 .I 0 hereof.
"Record Date" shall mean (a) with respect to each Interest Payment Date when Bonds bear interest at a Daily Rate, a Weekly Rate or a Flexible Rate, the Business Day next preceding such Interest Payment Date, and (b) with respect to each Interest Payment Date when Bonds bear interest at a Term Rate or a SIFMA Index Rate, the first day of the calendar month containing such Interest Payment Date.
"Registration Books" shall mean the registration records, maintained by the Trustee, as registrar for the Bonds.
"Regulatory Agreements" shall mean, collectively, the Regulatory Agreements executed, delivered and recorded with respect to each of the Projects.
"Reimbursement Agreemenf' shall mean any agreement between a Qualified Issuer of a Letter of Credit and the Borrower, if it shall state that it is to be considered a reimbursement agreement for the purpose of this Indenture, as any such agreement may be amended, modified, supplemented or restated from time to time in accordance with its terms.
"Remarketing Aceounf' shall mean the account so designated and established pursuant to Section 3.5 hereof.
"Remarketing Agenf' shall mean, with respect to any Series, any remarketing agent appointed by . the Borrower in accordance with a Remarketing Agrc9mcnt to perform the duties of"Remarketing Agent" hereunder.
"Remarketing Agreemenf' shall mean the Remarketing Agreement, by and between the Borrower and the Remarketing Agent, and any similar agreement between the Borrower and a successor Remarketing Agent, as any such agreement may be amended, modified, supplemented or restated from time to time.
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"Revenue Fund" shall mean the fund so designated and established by Section 5.3 hereof.
"Revenues" shall mean (i) all amounts payable in respect of, or proceeds from, the Loan and drawings under any Letter of Credit, (ii) investment income in respect of any money held by the Trustee, and (iii) any other amounts paid by the Borrower to the Trustee pursuant to the Loan Agreement (except for amounts payable under Sections 2.7 (to the Issuer), 7.1, 7.5, 8.5 and 9.3 of the Loan Agreement).
"Series" shall mean any series of Bonds issued pursuant to this Indenture.
"Series C-1 (AMTl Bonds" shall·mean the Issuer's Multifamily Housing Revenue Refunding . Bonds (lAC Project), Series 2008 C-1 (AMT), issued under this Indenture in the aggregate principal amount of $24,800,000.
"Series C-2 Bonds" shall mean the Issuer's Multifamily Housing Revenue Refunding Bonds .(lAC Project), Series 2008 C-2, issued under this Indenture in the aggregate principal amount of $1 09,222,000.
"Series C-3 Bonds" shall mean the Issuer's Multifamily Housing Revenue Refunding Bonds (lAC Project), Series 2008 C-3, issued under this Indenture in the aggregate principal amount of $68,526,000.
"Series C-4 Bonds" shall mean the Issuer's Multifamily Housing Revenue Refunding Bonds (lAC Project), Series 2008 C-4; issued under this Indenture in the aggregate principal amount of
. $131,642,000.
"SIFMA Index Rate" shall mean the SIFMA Rate plus a spread equal to (i) with respect to the· Series C-1 (AMT) Bonds, the Series C-2 Bonds and the Series C-3 Bonds, 4.20%, and (ii) with respect to the Series C-4 Bonds, 4.30%; provided that in no event shall the SIFMA Index Rate exceed the Maximum Rate.
"SIFMA Index Rate Conversion Date" shall mean each day on which a Series of Bonds accrues interest at a SIFMA Index Rate that is immediately preceded by a day on which the Bonds did! not accrue interest at a SIFMA Index Rate.
"SIFMA Index Rate Period" shall mean the period in which a Series of Bonds accrues interest at the SIFMA Index Rate.
"SIFMA Rate" shall mean a rate determined on the basis of the seven-day high grade market index of tax-exempt variable rate demand obligations, as produced by Municipal Market Data. and published or made available by the Securities Industry and Financial Markets Association or SIFMA (formerly The Bond Markets Association) or any person acting in cooperation with or under the sponsorship of SIFMA and acceptable to the Trustee and Borrower and effective from such date; ·provided that in no event shall the SIFMA Index Rate exceed the Maximum Rate. In the event that, the seven-day high grade market index of tax-exempt variable rate demand obligations, as produced by .Municipal Market Data and published or made available by the Securities Industry and Financial Markets Association or SIFMA should cease or temporarily interrupt publication, the term "SIFMA Rate" shall mean a rate selected from comparable interest rate index, mutually agreed upon by the Issuer, the Borrower and the Controlling Person, if any, which is readily available and verifiable to the Borrower but is beyond the Issuer's and/or any applicable Controlling Party:s control.
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"S&P" shall mean Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., its successors and their assigns, or, if such entity shall be dissolved or liquidated or.shall no longer perform the functions of a statistical rating organization, any other nationally recognized statistical rating organization designated by the Borrower, with respect to any affected Series, with the consent of the Remarketing Agent, the Letter of Credit Issuer, if any, and the Controlling Person .
"State" shall mean the State of California.
"Tax Certificate" shall mean the Tax Certificate of the Issuer dated the Closing Date.
"Term Rate" shall mean the interest rate per annum on a Series of Bonds established in accordance with Section 2.2(b)(vix) hereof.
"Term Rate Conversion Date" shall mean the Interest Payment Date on which a Series of Bonds begin to bear interest at a new Term Rate in accordance with the terms hereof.
"Term Rate Period" shall mean the period from a Term Rate Conversion Date to a subsequent Term Rate Conversion Date, to a Conversion Date or to the final maturity of the Bonds, but, in any event, a period of not less than one year in duration that ends on an Interest Payment Date on which interest is paid on Bonds bearing interest at a Term Rate; provided that if a Letter of Credit is then in effect, no Term Rate Period shall extend beyond the remaining term of such Letter of Credit less fourteen ( 14) days.
"Termination Date" shall mean the termination or expiration date of any Letter of Credit, as such date may be extended from time to time pursuant to the terms thereof.
"Treasury Regulations" shall mean the temporary and permanent Income Tax Regulations promulgated or proposed by the Department of the Treasury pursuant to the Code, as applicable to the
. Bonds.
"Trustee" shall mean U.S. Bank National Association, a national banking association organized and existing under the laws of the United States, or any successor trustee serving as such under this Indenture, in all cas~s with the consent of the Borrower.
"Trust Estate" shall mean the property conveyed to the Trustee pursuant to the Granting Clauses of this Indentore.
"Undelivered Bonds" shall mean any Bond subject to mandatory or optional tender that is not tendered on any mandatory tender date or optional tender date, but for which there has been irrevocably deposited with the Trustee an amount sufficient to pay the purchase price thereof plus interest accrued thereon through the purchase date.
"Weekly Rate" shall mean the interest rate per annum on a Series of Bonds established in accordance with Section 2.2(b)(vi) hereof.
"Weekly Rate Conversion Date" shall mean the Business Day on which a Series of Bonds begin to bear interest afa Weekly Rate in accordance with the terms hereof.
"Weekly Rate Period" shall mean the period in which a Series of Bonds accrues interest at a particular Weekly Rate.
"1998 Bonds" shall mean the 1998A-l Bonds, the 1998A-2 Bonds, the 1998A-J Bonds, and the 1 998A-4 Bonds, issued pursuant to the 1998 Indenture, by and between the Issuer and the 1998 Trustee.
"1998A-l Bonds" shall mean the Issuer's Apartment Development Revenue Refunding Bonds, Series 1998A-l (Irvine Apartment Communities, L.P.).
''1998A-2 Bonds" shall mean the Issuer's Apartment Development Revenue Refunding Bonds, Series I998A-2 (Irvine Apartment Communities, L.P.).
"I 998A-3 Bonds" shall mean the Issuer's Apartmeut Development Revenue Refunding Bonds, Series 1998A-3 (Irvine Apartment Communities, L.P .).
"1998A-4 Bonds" shall mean the Issuer's Apartment Development Revenue Refunding Bonds, Series 1998A-4 (Irvine Apartment Communities, L.P.).
"1998lndenture" shall mean the Indenture of Trust, dated as of May 15, 1998, by and between the Issuer and the 1998 Trustee.
"1998 Trustee" shall mean U.S. Bank National Association, as successor by merger to U.S. Bank Trust National Association.
Section 1.2. Article and Section Headings. Headings, titles or captions in this Indenture, and the Table of Contents appended hereto, are solely for convenience of reference and shall not affect the
· meaning or construction of the provisions hereof.
Section 1.3. Interpretation. The singular form of any word used herein shall include the plural, and vice versa, if applicable. The use of a word of any gender shall include all genders, if applicable. This Indenture and all of the terms and provisions hereof shall be construed so as to effectuate the purposes contemplated hereby and to sustain the validity hereof. All references to any person or entity defined in Section 1.1 shall be deemed to include any person or entity succeeding to the rights, duties and obligations of such person or entity.
The parties hereto acknowledge that each of them and the Borrower and their respective counsel have participated in the drafting and revision of this Indenture. Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not apply in the interpretation of this Indenture or any amendment or supplement or exhibit hereto or thereto
ARTICLE II
AUTHOIUZATION AND ISSUANCE OF THE BONDS
Section 2.1. Authorization of Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article. The Bonds are hereby authorized to be issued in four (4) Series, designated "California Statewide Communities Development Authority Multifamily Housing Revenue Bonds (lAC Project)" with the following Series designations: · ·
Series 2008 C-1 (AMT);
Series 2008 C-2;
Series 2008 C-3; and
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~eries 2008 C-4;
The Bonds shall be issued for the purpose of providing funds to enable the Issuer to make the Loan to the Borrower, as provided in the Loan Agreement. More particularly, the Series C-1 {AMT) Bonds, the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds shall be issued pursuant to the Refunding Law to refund the 1998A-1 Bonds, the 1998A-2 Bonds, the 1998A-3 Bonds and 1998A-4 Bonds, collectively.
Section 2.2. Terms of Bonds; Determination oflnterest Rates.
(a) Bond Terms.
(i) Series C-1 (AMn Bonds. The Series C-1 (AMT) Bonds (i) shall be issued in the aggregate principal amount of $24,800,000, (ii) shall initially bear interest at a SIFMA Index Rate as set forth in Section 2.2(b), and thereafter at such Interest Rate(s) as determined in accordance with Section 2.2( c) until paid, at the rates therein provided, and (iii) shall mature on May I 5, 2025.
(ii) Series C-2 Bonds. The Series C-2 Bonds (i) shall be issued in the aggregate principal amount of $109,222,000, (ii) shall initially bear interest at a SIFMA Index Rate as set forth in Section 2.2(b), and thereafter at such Interest Rate(s) as determined in accordance with Section 2.2( c) until paid, at the rates therein provided, and (iii) shall mature on May 15, 2025.
(iii) Series C-3 Bonds. The Series C-3 Bonds (i) shall be issued in the aggregate principal amount of $68,526,000, (ii) shall initially bear interest at a SIFMA Index Rate as set forth in Section 2.2(b), and thereafter at such Interest Rate(s) as determined in accordance with Section 2.2(c) until paid, at the rates therein provided, and (iii) shall mature on May 15,2025.
(iv) Series _eX Bonds. The Series C-4 Bonds (i) shall be issued in the aggregate principal amount of$ I 31,642,000, (ii) shall initially bear interest at a SIFMA Index Rate as set forth in Section 2.2(b), and thereafter at such Interest Rate(s) as detennined in accordance with Section 2.2(c) until paid, at the rates therein provided, and (iii) shall'niatureon May 15,2025.
(v) . General. The Bonds shall be dated as provided in Section 2.2(h). Interest on the Bonds shall be computed, while the Bonds bear interest at a Daily Rate, a Flexible Rate, a Weekly Rate, or a SIFMA Index Rate on the basis of a 365- or 366-day year, for the actual number of days elapsed and, while the Bonds bear interest at a Term Rate, on 1he basis of a 360-day year, composed of twelve 30-day months, and shall be payable on each Interest Payment Date, commencing on the first Business Day in May, 2008, as provided herein. In all events when any payment due hereunder or under the Bonds falls due on a day which is not a business day, such payment shall instead be due on the next succeeding day which is a business day.
(b) Determination of interest Rates. Interest Rates shall be determined for each Series of Bonds as follows:
(i) Initial SIFMA Index Rate Period. The initial Rate Period for each Series will be a SIFMA Index Rate Period as set forth in Section 2.2(bXviXA) herein. During any SIFMA Index Rate Period, the Interest Rate shall be determined by the Indexing Agent in accordance with paragraph (vi) of this Section 2.2(b).
(ii)" Determination by Remarketing Agent (A) During any Rate Period other than a SIFMA Index Rate Period, the Interest Rate shall be determined by the Remarketing Agent as the rate of interest which, in the best judgment of the Remarketing Agent, would cause the Bonds of a Series
to have a market value as of the date of determination equal to the principal amount thereof, taking into account prevailing market conditions; provided that if a Letter of Credit is then in effect for the Bonds, the Interest Rate borne by the Bonds shall not exceed the maximum interest rate specified in the Letter of Credit.
(B) In the event the Remarketing Agent fails for any reason to determine or notify the Trustee of the Interest Rate for any Rate Period other than a SIFMA Index Rate Period:
(I) The Interest Rate then in effect while a Series of Bonds accrues interest at a Daily Rate will remain a Daily Rate, and until a new Daily Rate is determined, and furnished to the Trustee in writing, by the Remarketing Agent, such Bonds shall accrue interest at a rate equal to the SIFMA Rate furnished to the Trustee in writing by the Remarketing Agent; (2) The Interest Rate then in effect while a Series of Bonds accrues interest at a Weekly Rate will remain a Weekly Rate, and until a new Weekly Rate is determined, and furnished to the Trustee in writing, by the Remarketing Agent, such Bonds shall accrue interest at a rate equal to the SIFMA Rate furnished to the Trustee in writing by the Remarketing Agent; (3) The Interest Rate for any Bond that accrues interest at a Flexible Rate and for which a Flexible Rate and Flexible Rate Period is not determined shall be a rate equal to the SIFMA Rate and furnished to the Trustee in writing by the Remarketing Agent, and the Flexible Rate Period for such Bond shall begin on each Business Day and extend through the day preceding the next Business Day until a new Flexible Rate and Flexible Rate Period is determined for such Bond and furnished to the Trustee in writing, by the Remarketing Agent; and -(4) The Interest Rate then in effect while a Series of Bonds accrues interest at a Term Rate shall be converted automatically to Flexible Rates determined in accordance with clause (3) above with Flexible Rate Periods beginning on each Business Day and extending through the day preceding the next Business Day until the Trustee is notified in writing of a new Flexible Rate and Flexible Rate Period determined for such Bonds by the Remarketing Agent; provided, that, the Trustee shall have received a Favorable Opinion of Bond Counsel prior to the commencement of any such Flexible Rate Period, and, in the event that the Trustee does not receive a Favorable Opinion of Bond Counsel prior to the commencement of any such Flexible Rate Period, the Term Rate then in effect shall continue for another Term Rate Period of the same duration or, if shorter, until the maturity date of such Bonds.
(C) All determinations of Interest Rates pursuant to this Section shall be conclusive and binding upon the Issuer, the Borrower, the Trustee, and the Owners of the Bonds to which such rates are applicable. The Interest Rate in effect for the Bonds during any Rate Period shall be available to Bond Owners between 1:00 p.m. and 5:00p.m., New York City time, from the Remarketing Agent or the Trustee (subject to prior receipt of notice thereoffrom the Remarketing Agent) at their Principal Offices.
(iii) Flexible Rates.
(A) The Flexible Rate Period for each Bond shall be of such duration, not exceeding 270 days, as may be offered by the Remarketing Agent and specified by the purchaser; provided that if a Letter of Credit is then in effect and such Letter of Credit provides less than 284 days' interest coverage, such Flexible Rate Period shall not be longer than a period equal to the maximum number of days' interest coverage provided by such Letter of Credit minus eight days. Any Bond may accrue interest at a Flexible Rate for a Flexible Rate Period different from any other Bond. Each Flexible Rate Period shall commence on a Business Day and end on a day immediately preceding a Business Day. The Remarketing Agent shall offer and accept purchase commitments for the Bonds for such Flexible Rate Periods and at such Flexible Rates as it deems advisable in order to minimize the net interest cost on such Bonds, taking into account prevailing market conditions; provided, however, that the foregoing shall not prohibit the Remarketing Agent from accepting purchase commitments for longer Flexible Rate
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Periods (and at higher Flexible Rates) than are otherwise available at the time of any remarketing if the Remarketing Agent determines that, taking into account prevailing market conditions, a lower net interest cost on such Bonds can be achieved over the longer Flexible Rate Period.
(B) Each Flexible Rate and Flexible Rate Period shall be determined not later than 1:00 p.m., New York City time, on the first Business Day of the Flexible Rate Period to which it relates, with notice thereof provided to the Trustee by the Remarketing Agent by written, telephonic (promptly confirmed in writing or electronically) or electronic means by I :00 p.m., New York City time, on that same day.
(iv) Daily Rates. A Daily Rate shall be determined for each Daily Rate Period as follows:
(A) Daily Rate Periods shall commence on a Daily Rate Conversion Date, which shall be a Business Day, and on each Business Day thereafter until the Daily Rate Period is converted to another type of Interest Rate and shall extend to, but not include, the next succeeding Business Day.
(B) The Daily Rate for each Daily Rate Period shall be effective from and including the commencement date of such Daily Rate Period and shall remain in effect to, but not including, the next succeeding Business Day. Each such Daily Rate shall be determined not later than 10:30 a.m., New York City time, on the first Business Day of the Daily Rate Period to which it relates, with notice thereof provided to the Trustee by the Remarketing Agent by written, telephonic (promptly confirmed in writing or electronically) or electronic means by 1 :OO.p.m., New York City time, on that same day; provided that no notice need be given if the Daily Rate then in effect is to be the Daily Rate for the next Daily Rate Period.
(v) Weekly Rates. A Weekly Rate shall be determined for each Weekly Rate Period as follows:
(A) Weekly Rate Periods shall commence on a Wednesday (or, if a Wednesday is not a Business Day, the next succeeding Business Day) and, in each case, end on the day prior to the commencement of the next succeeding Weekly Rate Period, and each Weekly Rate Period shall be followed by another Weekly Rate Period until the Weekly Rate is converted to another type of Interest Rate; provided that ( 1) in the case of a conversion to a Weekly Rate Period from another type of lnterest'Rate, the Weekly Rate Period shall commence on the Weekly Rate Conversion Date and shall end on the day prior to the commencement of the next succeeding Weekly Rate Period; and (2) in the case of a conversion from a Weekly Rate to another type oflnterest Rate, the last Weekly Rate Period prior to conversion shall end on the last day inunediately preceding the Conversion Date to the new type of Interest Rate.
(B) The Weekly Rate for each Weekly Rate Period shall be effective Trom and including the commencement date of such Weekly Rate Period and shall remain in effect through and including the last day thereof. Each such Weekly Rate shall be detennined not later than 10:00 a.m., New York City time, on the first day of the Weekly Rate Period to which it relates, with · notice thereof provided to the Trustee by the Remarketing Agent by written, telephonic (promptly confirmed in writing or electronically) or electronic means by 12:00 Noon; New York City time, on such ~dey. . .
(vi) SIFMA Index Rate. The SIFMA Index Rate shall be determined from time to time during each SIFMA Index Rate Period as follows:
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(A) The initial SJFMA Index Rate Period with respect to each Series shall commence on the Closing Date and shall end on the earlier of(i) a Conversion Date with respect to such Series or (ii) the Initial Mandatory Tender Date. SIFMA Index Rate Periods shall generally commence on a SIFMA Index Rate Conversion Date, which shall be a Thursday (or, if a Thursday is not a Business Day, the next succeeding Business Day) and end on the last day immediately preceding the Conversion Date to the new type of Interest Rate.
(B) During any SIFMA Index Rate Period, the Indexing Agent shall · determine the SJFMA Index Rate not later than 5:30p.m., New York, New York time, on Wednesday of
each week, or the next preceding Business Day if such Wednesday is not a Business Day, with notice thereof(including an invoice for payment) provided to the Trustee by written, telephonic {promptly confirmed in writing or electronically) or electronic means by 6:00p.m., New York City time, on such Wednesday; which rate shall become effective on the succeeding Thursday.
(vii) Term Rates. A Term Rate shall be determined for each Term Rate Period as follows:
{A) Term Rate Periods shall (I) commence on a Term Rate Conversion Date and (2) end on a subsequent Term Rate Conversion Date or Conversion Date or on the final maturity date of the Bonds but, in any event, a period of not less than one year in duration that ends on an Interest Payment Date on which interest is paid· on Bonds bearing interest at a Term Rate; provided that if a Letter ofCrcdit is then in effect, no Term Rate Period shall extend beyond the remaining term of such Letter of Credit less 14 days.
(B) The Term Rate for each Term Rate Period shall be effective from and including the commencement date of such Term Rate Period and remain in effect to but not including the last day thereof. Each such Term Rate shall be determined not later than 12:00 noon, New York City time, on the Business Day immediately preceding the commencement date of the Term Rate Period to which it relates, with notice thereof provided to the Trustee by the Remarketing Agent by written, telephonic (promptly confirmed in writing or electronically) or electronic means by the close of business on such Business Day.
(c) Conversions Between Interest Rates. The Borrower miiy elect to convert the Interest Rate on a Series of Bonds from one type oflntercst Rate to another type of Interest Rate (including from one Term Rate Period to a Term Rate Period of a different duration) as follows:
(i) Conversion Dates.
{A) If the conversion is from a Flexible Rate, the Conversion Date shall be a Business Day on which interest is payable on all Bonds accruing interest at Flexible Rates.
(B) If the conversion is from a Daily Rate or a Weekly Rate, the Conversion Date shall be a Business Day.
(C) If the conversion is from a Term Rate, the Conversion Date shall be a date on which the Bonds are subject to optional redemption pursuant to Section 2.6(a)(iii) hereof.
(D) If the conversion is from a SIFMA Index Rate, the Conversion Date shall be (i) a date on which the Bonds are subject to optional redemption pursuant to Section 2.6(a)(ii) hereof, or (ii) the Initial Mandatory Tender Date.
(ii) Notices by Borrower. The Borrower shall give notice of any proposed conversion to the,Trustee, the Letter of Credit Issuer and the Remarketing Agent not less than twenty-five (25) days before the proposed conversion from a Flexible Rate, a Daily Rate, a Weekly Rate or a SIFMA Index Rate and not less than forty-five (45) days before the proposed conversion from a Term Rate.
(iii) Notices by Trustee. The Trustee shall give notice by first class mail of "the proposed conversion to the Owners of Bonds subject io the proposed conversion accruing interest at a Flexible Rate, a Daily Rate, a Weekly Rate ora SIFMA Index Rate not less than fifteen (15) days before the proposed Conversion Date and to the Owners of Bonds subject to the proposed conversion accruing interest at a Term Rate not less than thirty (:iO) days before the proposed Conversion Date. Such notice shall state:
(A) the proposed Conversion Date;
(B) that the Bonds subject to the proposed conversion will be subject to mandatory tender for purchase on the Conversion Date (except in the case of conversions from a D·aily Rate to a Weekly Rate or from a Weekly Rate to a Daily Rate);
(C) the conditions, if any, to the conversion pursuant to subsection (iv) below;
(D) any changes in the redemption dates or redemption prices following the Conversion Date, if any, applicable to the Bonds subject to the proposed conversion .which have been approved by a supplemental indenture adopted in accordance with the terms of this Indenture; and
(E) if the Bonds subject to the proposed conversion are in certificated form, information with respect to required delivery of Bond certificates and payment of the purchase price.
(iv) Conditions to Conversion. No conversion oflnterest Rates will become effective unless:
(A) if the conversion is from a Flexible Rate, the Trustee has received, prior to the date on which notice of conversion is required to be given to Bond Owners, written confirmation from the Remarketing Agent that it has not established and will not establish any Flexible ·Rate Periods extending beyond the day before the Conversion Date; ·
(B) if the conversion is from a Flexible Rate, a Daily Rate, a Weekly Rate or a SIFMA Index Rate to a Term Rate, or from a Term Rate to a Flexible Rate, a Daily· Rate, a Weekly Rate, a SIFMA Index Rate or a new Term Rate or Term Rate Period, the Trustee has been provided, no later than one day before the Conversion Date, with a Favorable Opinion of Bond Counsel with respect to the conversion;
(C) if a Letter of Credit will be held by the Trustee after the Conversion Date, such Letter of Credit (1) will cover (x) the principal of and interest (computed on the basis of a 365-day year, in the case of conversion to a Flexible Rate, a Daily Rate, Weekly Rate or a SIFMA Index Rate, and on the basis of a 360-day year consisting of twelve 30-day months, in the case of conversion to a Term Rate) that will accrue on the Outstanding Bonds for the maximum permitted Interest Period for the proposed Rate Period plus fourteen (14) days and (y) the purchase price of Bonds tendered for purchase, at such times as required under this Indenture; and (2) in the case of conversion to a Term Rate, (i) extends for a period :o"hich shall not end on a date that is earlier than five days after the first date on
which the Bonds can be called for optional redemption, and (ii) covers the premium, if any, that would be included in the purchase price upon mandatory purchase of the Bonds pursuant to Section 3 .2( c) hereof if .such l;etter of Credit were not extended beyond the Termination Date set forth therein.
(d) Redemption Provisions. The Bonds are subject to redemption prior to maturity as set forth in Section 2.6 hereof.
(e) Tender Rights/Obligations. With respect to each Series, while bearing interest at a Daily Rate or a Weekly Rate, Bonds may be tendered by the Bond Owners for purchase as set forth in Section 3.1 hereof. In addition, the Bonds are subject to mandatory tender for purchase on the Initial Mandatory Tender Date, on the day after the last day of each Flexible Rate Period, on the last day of a Term Rate Period, on the day on which a Letter of Credit is replaced pursuant to Section 2.13 hereof, on each Letter of Credit Tender Date and on each Conversion Date.
(f) Form: Numbering. The Bonds are issuable in the form of registered Bonds without coupons in Authorized Denominations. The Bonds shall be numbered consecutively within each Series from I upwards, bearing numbers not then contemporaneously outstanding according to the Registration Books.
(g) Payment Terms. Principal and redemption price of, and premium, if any, on the Bonds (and interest on Bonds accruing at a Flexible Rate) shall be payable by the Trustee to the Bond ·owners upon presentation and surrender of the Bonds as the same become due at the Principal Office of the Trustee. Interest on the Bonds shall be paid by the Trustee by check drawn upon the Trustee and mailed by first class mail on the respective Interest Payment Dates to the Bond Owners at their addresses shown on the Registration Books as of the close of business on the Record Date with respect to such Interest Payment Date; provided that payment of interest may be made by the Trustee by wire transfer to an account with a financial institution in the United States of an Owner of $1 ,000,000 or more in aggregate principal amount of Bonds upon such Owner providing the Trustee with written wire transfer instructions before the applicable Record Date. Such interest shall be paid notwithstanding the cancellation of any Bonds upon any exchange or registration of transfer thereof subsequent to the Record Date and prior to such Interest Payment Date, except that, if and to the extent there shall be a default in the payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the Bond Owners in whose names such Bonds (or any Bond or Bonds issued upon registration of transfer or exchange thereof) are registered at the close of business on the Business Day next preceding the date of payment of such defaulted interest. Payment of principal or purchase price of, premium, if any, and interest on, the Bonds shall be made in such lawful money of the United States of America as, at the respective times of payment, shall be legal tender for the payment of public and private debts. If a Letter of Credit is in effect and the Letter of Credit so provides, the Trustee shall draw under the Letter of Credit in accordance with its terms to the extent necessary to pay the principal and redemption price of, premium, if any, purchase price and interest on, the Bonds, as and when due. In the event a proper drawing under the Letter of Credit is dishonored, the Trustee shall notiry the Borrower immediately.
(h) Dating. The Bonds shall be dated the Dated Date, and shall bear interest from the . Interest Payment Date next preceding their date of authentication, unless (i) authenticated prior to the first Interest Payment Date, in which event the Bonds shall bear interest from the Dated Date, (ii) authenticated on an Interest Payment Date, in which event the Bonds shall bear interest from ·such Interest Payment Date, or (iii) authenticated on a date after a Record Date but before the next Interest Payment Date, in which event the Bonds shall bear interest from such next Interest Payment Date. If, as shown by the records of the Trustee, interest on the Bonds is in default, Bonds issued in exchange for Bonds surrendered for registration of transfer or exchange shall bear interest from the date to which interest has
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been paid in full on the Bonds, or, if no interest has been paid on the Bonds, from the Dated Date. The Bonds shall bear a date of authentication.
Section 2.3. Form of Bond. Subject to the provisions hereof with respect to special endorsement of Bonds in connection with a conversion, the Bonds, the certificate of authentication, the registration information form and the form of assignment shali be in substantially the form set forth in Exhibit A attached hereto, with such appropriate variations, omissions, substitutions and insertions as are permitted or required hereby, and may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon as may be required to comply with any applicable laws or rules or regulations, or as may, consistently herewith, be determined by the officers executing such Bonds, as evidenced by their execution of the Bonds. In the preparation of definitive forms of Bonds relative to the periods before and after a Conversion Date, pertinent provisions of the form of Bond may be omitted, as appropriate.
Section 2.4. Execution: Limited Obligations. The Bonds shall be executed on behalf of the Issuer with the manual or facsimile signature of the Chairman or the Vice Chairman of the Commission .of the Issuer and attested with the manual or facsimile signature of the Secretary of the Commission. All authorized facsimile signatures shall have the same force and effect as manual signatures. In case any officer of the Issuer whose signature or a facsimile thereof appears on a Bond shall cease to be such officer before the delivery of such Bond, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in the office until delivery.
The Bonds herein authorized and all payments by the Issuer hereunder are not and shall never become general obligations of the Issuer, but are limited obligations payable solely and only from the
· Revenues received under the Loan Agreement, the documents executed by the Borrower in connection therewith and the Funds and Accounts created pursuant to this Indenture, and as authorized by the Act and provided herein. No covenant or agreement contained in the Bonds, in this Indenture or in any other agreement referred to in this Indenture shall be deemed to be the covenant or agreement of any officer, member, agent or employee of the Issuer in his or her individual capacity, and neither such persons nor any official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.
THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS NOT OBLIGATED TO . PAY, AND NEITHER THEFAITHANDCREDJTNOR TAXINGPOWEROFTHE STATE OR ANY
POLITICAL SUBDIVISION UIEREOF IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRlCE, IF ANY, OF, OR INTEREST ON, THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAY ABLE SOLELY OUT OF THE
. REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE ISSUER PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE
'INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE ISSUER. THE ISSUER HAS NO TAXING POWER.
Section 2.5. Conditions Precedent to Deliverv of Bonds: Authentication. The Issuer shall execute and deliver the Bonds to the Trustee, and the Trustee shall, upon receipt by the Trustee of the purchase pric~ for the Bonds, authenticate the Bonds and deliver them to the initial purchasers hereof. Priorto and as a condition precedent to the authentication.and delivery of the Bonds there shall be filed with and delivered to the Trustee in addition to the items required by Article VI of the Loan Agreement:
(a) a certified copy of the resolution adopted by the Issuer authorizing the execution and delivery of this Indenture and the issuance of the Bonds;
(b) a written order of the Issuer, directed to the Trustee, instructing the Trustee to authenticate the Bonds and to make them available for delivery to the initial purchasers upon payment to the Trustee for the account of the Issuer of the sum specified in such written order; ·
(c) an opinion of Bond Counsel substantially to the effect that (I) the Bonds constitute valid and binding special, limited obligations of the Issuer, subject to bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting the rights of creditors and to the exercise of judicial discretion in accordance with general principles of equity, and (2) the interest on the Bonds is excludable from gross income for federal income tax purposes under existing statutes, regulations, rulings and court decisions, except for interest on any Bond for any period during which such Bond is held by a "substantial user" of the Project or a "related person," as such terms are used in Section 147(a) of the Code, and under existing law, interest on the Bonds is exempt from State personal income taxes; and
(d) original executed investor letter or letters in the form attached hereto as Exhibit B.
No Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Indenture unless and until a certificate of authentication on such Bond shall have been duly executed by the Trustee. Such executed certificate of the Trustee upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The certificate of authentication on any Bond shall be deemed to have been executed by the Trustee if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the certificates of authentication on all Bonds issued hereunder.
Section 2.6. Redemption of Bonds. The Bonds shall be subject to redemption prior to maturity as set forth below:
(a) Optional Redemption. The Bonds of each Series shall be subject to redemption, in whole or in part in Authorized Denominations, at the direction of the Borrower, from funds deposited in the Revenue Fund for such purpose pursuant to Section 2.5 of the Loan Agreement, as follows:
(i) while the Bonds accrue interest at a Daily Rate or a Weekly Rate, each Bond is subject to optional redemption on any date, and while the Bonds accrue interest at a Flexible Rate, each Bond is subject to optional redemption on any Interest Payment Date, in all cases at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Interest due on any redemption date that is also an Interest Payment Date shall be paid in accordance with the procedures set forth in Section 2.2(g) hereof;
(ii) during the initial SIFMA Index Rate Period commencing on the Closing Date with respect to each Series, each Bond of such Series is subject to optional redemption on any date on or after May I, 2009 at a redemption price equal to I 00% of the principal amount thereof plus accrued interest to the redemption date; and
(iii) while the Bonds accrue interest at a Term Rate, the Bonds shall be subject to optional redemption, at the direction of the Borrower, on any date after the applicable Conversion Date at a redemption price of 10 I% (expressed as a percentage of principal amount) for the ·first year, such redemption price declining .5% each year thereafter until such redemption price equals 100% of the principal amount of Bonds to be redeemed, plus accrued interest, if any, to the redemption date; ·
provided that such optional redemption dates and redemption prices may be changed in connection with a Conversion Date or the beginning of a new Term Rate Period by a
·supplemental indenture approved by the Borrower and filed with the Trustee, accompanied by a Favorable Opinion of Bond Counsel, and, provided, further, that any change in such redemption dates and redemption prices must (x) be accomplished by a supplemental indenture approved prior to the applicable
. Conversion Date or beginning of the Term Rate Period, and (y) be effective only after the applicable Conversion Date or beginning of the Term Rlite Period.
If a Letter of Credit is then in effect and the redemption price includes any premium, and the Letter of Credit so provides, the right of the Borrower to direct an optional redemption is subject to the condition that the Trustee has received, prior to the date on which notice of redemption is required to be given to the Owners, written confirmation from the Letter of Credit Issuer that it can draw under the Letter of Credit on the proposed redemption date in an aggregate amount sufficient to cover the principal of and premium and interest due on the redemption date.
(b) Special Mandatory Redemption.
(i) The Bonds shall he subject to special mandatory redemption prior to maturity at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the redemption date, on a date selected by the Trustee, in whole or in part, in the event of an acceleration of the Loan by the Trustee in accordance with the provisions of the Loan Agreement.
The special mandatory redemption set forth in this subparagraph (i) shall be in whole unless a Favorable Opinion of Bond Counsel is delivered to the Trustee to the effect that less than all of the Bonds may be redeemed without adversely affecting the exclusion from gross income for federal income tax purposes of interest on the remaining Bonds, in which case only the principal amount of Bonds indicated in such Opinion shall be redeemed.
(ii) The Bonds which are subject to a Determination of Taxability shall be subject to special mandatoryredemption prior to maturity at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the redemption date, ori a date selected by the Borrower not later than one hundred eighty (I 80) days after the occurrence of a Determination of Taxability affecting such Bonds (the "Affected Bonds").
The special mandatory redemption set forth in this subparagraph (ii) shall apply to all Affected Bonds, but only to the Affected Bonds, unless an Opinion of Bond Counsel is delivered to the Trustee to the effect that Bonds other than the Affected Bonds must be redeemed to avoid adversely affecting the exclusion from gross income for federal income tax purposes of interest on any Bonds, or that less than all of such Affected Bonds may be redeemed without adversely affecting the exclusion from gross income for federal income tax purposes of interest on the remaining Bonds, in which case the principal amount of Bonds indicated in such Opinion, allocated to the Projects set forth in such Opinion, shall be redeemed.
If the Trustee receives written notice from any Owner stating that (A) the Owner has been notified in writing by the Internal Revenue Service that it proposes to include the interest on any Bond in the gross income of such Owner for the reasons stated in the definition of"Deterrnination of Taxability" or any other proceeding has been instituted against such Owner which may lead to a "final determination"
·or "finaljudgmenf' as described in the aforesaid definition, and (B) such Owner will afford the Borrower the opportunity to contest the same, either directly or in the name of such Owner, until a conclusion of any appellate review, if sought, the Trustee shall promptly give notice of the receipt of any written notice described above to the Borrower, the Issuer and the Owners of Bonds then Outstanding. Prior to any "final determination" or "finaljudgmenf' thereafter occurring the Borrower and Trustee shall be entitled to not less than thirty (30) days' prior written notice thereof as well as the Trustee by such Owner, the Trustee shall make demand for prepayment of the unpaid Loan payments (or necessary portions thereof as
OHS West:260368!39.12 25
specified in the foregoing Opinion) from the Borrower and give notice of the special mandatory redemption of the appropriate amount of Bonds on the date selected by the Borrower within the required period of one hundred eighty (180) days. In taking any action or making any determination under this Section 2.6(b), the Trustee may rely on an opinion of Bond Counsel.
(c) Extraordinary Optional Redemption. The Bonds allocated to a Project shall be subject to extraordinary partial optional redemption as set forth below, at the direction of the Borrower, in whole or in part as set forth below, on aily date during any Term Rate Period and SIFMA Index Rate Period, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest, if any, to the redemption date, if one or more of the following events shall have occurred within the preceding year:
(i) If a Project shall have been damaged or destroyed to such extent that, in · the opinion of the Borrower, (A) normal operations at such Project are prevented or are likely to be
prevented for a period of six consecutive months,. or (B) the restoration of such Project is not economically feasible;.
(ii) If title to, or the temporary use of, all or substantially all of a Project .shall have been taken under the exercise of the power of eminent domain by any governmental authority, or person, firm or corporation acting under governmental authority which, in the opinion of the Borrower, is likely to result in normal operations at such Project being prevented for a period of four consecutive months;
(iii) If changes, which the Borrower cannot reasonably control or overcome, in the economic availability of materials, supplies, labor, equipment and other properties and things necessary for the efficient operation of a Project shall have occurred, or technological or other changes shall have occurred which, in the opinion of the Borrower, render uneconomic the continued operation of such Project; or
(iv) If any court or administrative body shall enter a judgment, order or decree requiring cessation of all or any substantial part of operations at a Project, to such an extent that, in the opinion of the Borrower, is likely to result in normal operations at such Project being prevented for a period of four consecutive months.
(d) Mandatory Redemption. If a Letter of Credit is in effect, and if the Letter of Credit so provides, the Bonds shall be subject to mandatory redemption prior to maturity in whole at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date, upon receipt by the Trustee of an authenticated written notice from the Letter of Credit Issuer which shall be concurrently sent to the Borrower directing the Trustee to draw under the Letter of Credit in an amount necessary to redeem the Bonds as a result of the occurrence of an uncured event of default under the Reimbursement Agreement (a "Mandatory Redemption Evenf').
Section 2. 7. Selection of Bonds for Redemption.
(a) In the event that all Bonds are subject to redemption and fewer than all such Bonds are to be redeemed, Bonds shall be selected for redemption by the Trustee by Series, as directed by the Borrower (unless otherwise required by Section 2.6(b) or (c) hereof) and within each Series by lot, first, from Bonds subject to such redemption (other than Bonds owned of record by the Borrower) and, second, from Bonds owned of record by the Borrower subject to such redemption.
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(b) In the event that Bonds of a Series, but not all Bonds, are subject to redemption and fewer than all such Bonds are to be redeemed, Bonds shall be selected for redemption by the Trustee from within such Series, as directed by the Borrower (unless otherwise required by Section 2.6(b) or (c) hereof), by lot, first from Bonds subject to such redemption (other than Bonds owned of record by the Borrower) and, second, from Bonds owned of record by the Borrower subjectto such redemption.
(c) In the ease of Bonds of varying denominations, the Trustee shall, to the extent practicable, treat each Bond as representing that number of units of Bonds which is obtained by dividing the face amount thereof by the smallest Authorized Denomination. !fit is determined that one or more, but not all, of the units of principal amountrepresented by any such Bond is to be called for redemption, then upon notice of intention to redeem such unit or units of principal, the Bondholder of such Bond shall forthwith surrender such Bond to the Trustee for (i) payment to such Bondholder of the redemption price of the unit or units of its Bond called for redemption and ( ii) delivery to such Bondholder of a new Bond or Bonds in an aggregate principal amount equal to the unredeemed balance of such Bond. New Bonds representing the unredeemed balance of the principal amount of such Bond shall be issued to the Bondholder thereof without charge therefor. If the Bondholder of any such Bond of a denomination greater than the principal amount thereof called 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 principal amount called for redemption (and to that extent only).
Section 2.8. Notice of Redemption.
(a) The Borrower shall deliver notice to the Trustee of its intention to prepay the Loan and cause the Bonds of any Series to be called for optional redemption or extraordinary optional redemption (as described in Section 2.6 hereof) at least twenty (20) days prior to the proposed redemption date of Bonds bearing interest at a Flexible Rate, a Daily Rate or a Weekly Rate, and at least forty-five (45) days prior to the proposed redemption date of Bonds bearing interest at a Term Rate. Any notice from the Borrower to the Trustee pursuant to the preceding sentence shall state that all conditions precedent contained herein to the applicable redemption have been complied with. The Trustee shall cause notice of any redemption of Bonds hereunder to be mailed by first class mail, postage prepaid, to the Owners of all Bonds to be redeemed at the registered addresses appearing in the Registration Books. Each such notice shall (i) be mailed at least ten (I 0) days prior to the redemption date for Bonds bearing interest at a Daily Rate, a Weekly Rate and a Flexible Rate and at least thirty (30) days prior to the redemption date for Bonds bearing interest' at a Term Rate, (ii) identify the Bonds to be redeemed if less than all Bonds are to be redeemed (specifying the CUSIP numbers, if any, assigned to the Bonds), (iii) specify the redemption date and the redemption price, and (iv) state that on the redemption date the Bonds called for redemption will be payable at the Principal Office of the Trustee, that from that date interest will cease to accrue and that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds; provided, however, that so long as DTC or it• nominee is the sole Owner of the Bonds under DTC's "Book-Entry Only System," redemption notices will be sent to Cede & Co. Any failure on the part ofDTC or a Direct Participant (as hereinafter defined) to give such notice to the Beneficial Owner or any defect therein shall not affect the sufficiency or validity of any
. proceedings for the redemption ofthe Bonds. No defect affecting any Bond, whether in the notice of redemption or mailing thereof(including any failure to mail such notice), shall affect the validity of the redemption proceedings for any other Bonds.
N"twithstanding the foregoing, in the case of an optional redemption or extraordinary optional redemption (as described in Section 2.6 hereof) of any Bonds in a SIFMA Index Rate Period, (i) the Borrower shall, in accordance with Section 2.2 of the Loan Agreement, deliver notice to the Trustee of its intention to prepay the Loan and cause such Bonds to be called at least seventy-five (75) days prior
to the proposed redemption date ofthe Bonds; and (ii) the Trustee shall deliver notice to Owners of the Bonds of the Borrower's intention to prepay the Loan and cause the Bonds to be called at least sixty-five (65) days prior to the proposed redemption date of the Bonds.
(b) Conditional Notice. If, at the time of mailing of notice of an optional redemption there shall not have been deposited with the Trustee moneys sufficient to redeem all the Bonds called for redemption, such notice may state that it is conditioned upon the deposit with the Trustee on or prior to the redemption date of moneys sufficient to pay the redemption price of the Bonds to be redeemed plus interest, if any, accrued thereon to the date of redemption, and such notice shall be of no effect (and the redemption shall not occur) unless such moneys are so deposited; provided that this Section 2.8(b) shall apply only during any Interest Period other than a SIFMA Index Rate Period.
(c) Additional Notice of Redernotion. In addition to the redemption notice required above, if there is more than one Owner of the Bonds, further notice (the "Additional Notice") shall be given by the Trustee as set forth below. No defect in the Additional Notice nor any failure to give all or any portion of the Additional Notice shall in any manner defeat the effectiveness of a call for redemption if notice is given as prescribed in paragraph (a) above.
(1) Each Additional Notice shall contain the information required in paragraph (a) above tor an official notice of redemption plus (i) the date of the Bonds as originally issued; (ii) the interest rate determination method for, or the rate of interest borne by, each Bond being redeemed; (iii) the maturity date of each Bond being redeemed; and (iv) any other descriptive information needed to idcntiry accurately the Bonds being redeemed.
(2) Each Additional Notice shall be sent at least thirty (30) days (fifteen (IS) days in the case of Bonds accruing interest at a Daily Rate, a Weekly Rate or Flexible Rates) before the redemption date by registered or certified mail or overnight delivery service to the following registered securities depositories: The Depository Trust Company of New York, New York, and to such other registered securities depositories as may be specified by the Borrower to the Trustee in writing and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds as shall be specified by the Borrower to the Trustee in writing.
(3) The Trustee's agreement to give any Additional Notice is made as a matter of courtesy and accommodation only and the Trustee shall incur no liability to any Person tor its failure to give such Additional Notices.
Section 2.9. Effect of Redemption. If payment of the redemption price of the Bonds has been duly provided for on the redemption date, then. interest on the Bonds called for redemption will cease to accrue on such date, and the Owners will have no rights with respect to such Bonds nor will they be entitled to the benefits of the Indenture except to receive payment of the redemption price thereof and unpaid interest accrued to the date fixed for redemption.
Section 2.10. Optional Redemption only at Direction of Borrower. Optional redemption of the ·Bonds pursuant to Sections 2.6(a) and (c) shall only be made at the direction and in the sole discretion of the Borrower, and the Issuer shall take no action with respect to Section 2.6(a) or (c) without the prior · written direction of the Borrower.
Section 2.11. Book-Entry Bonds.
(a) The Bonds may be issued pursuant to a book-entry system administered by a securities depository with no physical distribution of Bond certificates to be made except as provided in
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with DTC in taking appropriate action (i) to· make available one or more separate definitive Bonds evidencing the Bonds to any Direct Participant having Bonds credited to its DTC account, or (ii) to arrange for another securities depository to maintain custody of definitive Bonds.
(d) In connection with any notice or other communication to be provided to Bondholders pursuant to this Indenture with respect to any consent or other action to be taken by Bondholders, the Issuer or the Trustee, as the case may be, the Trustee shall establish a record date for such consent or other action and give DTC notice of such record date not less than fifteen (IS) calendar days in advance of such record date to the extent practicable.
(e) The expense of providing definitive Bonds shall be borne by the Borrower.
Section 2.12. Extension of Letter of Credit in Anticipation of Expiration. At least forty-five ( 45) days (or such shorter period as shall be acceptable to the Trustee in its sole discretion) prior to the Interest Payment Date next preceding the Termination Date of any existing Letter of Credit, the Borrower may provide for the delivery to the Trustee of an amendment to the Letter of Credit, which extends the Termination Date to a date that is not earlier than one year from its then current Termination Date or the maturity of the Bonds if shorter. If the Letter of Credit is so extended, the mandatory tender for purchase pursuant to Section 3.2(c) shall not occur; otherwise, the Trustee shall take all action necessary to call the · Bonds for mandatory tender for purchase pursuant to Section 3.2(c) on the Interest Payment Date next preceding such Termination Date; provided that if the Borrower shall have notified the Trustee in writing that it expects to meet all the conditions for the delivery of an amendment extending the existing Letter of Credit on or before the Interest Payment Date next preceding the Termination Date of the existing Letter of Credit, then the notice of mandatory tender for purchase pursuant to Section 3.2(c) shall state that it is subject to rescission, and the Trustee shall rescind such notice, if such conditions are so met (in which case such mandatory purchase shall not occur).
Section 2.13. Deliverv of Letter of Credit; Replacement of Letter of Credit. At such time·as the Bonds shall no longer bear interest at the SIFMA Rate Index, the Borrower may, with respect to any Series or any part thereof, provide for the delivery to the Trustee of (I) (A) a Letter of Credit issued by a Qualified Issuer, which shall have a Termination Date that is not earlier than the first to occur of(i) the expiration of one year from the date of its delivery, or (ii) the maturity date of the Bonds, or (B) an Alternate Letter of Credit issued by a Qualified Issuer, which shall have terms that are substantially similar in all material respects to the terms of the then existing. Letter of Credit (except as to the Termination Date, the rating of the Qualified Issuer, or any changes pursuant to this Indenture with respect to interest or premium coverage in connection with a concurrent Rate Period conversion), and which shall have a Termination Date that is not earlier than the first to occur of (i) the expiration of one year from the date of its delivery, (ii) the Termination Date of the then existing Letter of Credit, (iii) the maturity date of the Bonds, or (iv) the mandatory tender date for the Bonds under Section 3.2(c) of this Indenture; (2) an opinion of counsel to the Qualified Issuer in form satisfactory to the Trustee with respect to the validity, binding effect and enforceability of such Letter of Credit or Alternate Letter of Credit; and (3) a Favorable Opinion of Bond Counsel. If the requirements set forth in this Section are met, then the Trustee shall accept such Letter of Credit or Alternate Letter of Credit and, if applicable, promptly surrender for cancellation the then existing Letter of Credit (but only after any draw, if necessary, is honored) to the issuer thereof in accordance with the terms of such Letter of Credit. With respect to any AltemateLetter of Credit, the Borrower shall give the Trustee at least forty-five (45) days (or such shorter period as shall be acceptable to the Trustee in its sole discretion) notice of the proposed replacement of the then existing Letter of Credit, which notice shall include the expected ratings, if any, applicable to the Bonds after the proposed replacement of the Letter of Credit. Upon receipt of such notice, the Trustee · shall take all action necessary to cause the Bonds to be tendered for purchase pursuant to Section 3.2(c)
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on the date on which the Letter of Credit is to be replaced. Any Alternate Letter of Credit shall, upon its ·acceptance by the Trustee, be deemed to be a Letter of Credit for all purposes of this Indenture.
Section 2.14. Notice to Owners. The Trustee shall give notice to the Owners and the Remarketing Agent of the proposed replacement of any existing Letter of Credit, of the ratings expected to be applicable to the Bonds of such Series after the proposed replacement and of the mandatory tender date as required under Section 3.2(c) by first class mail, postage prepaid, not less than fifteen (15) days prior to the proposed replacement date.
Section 2.15. Other Credit Enhancement. After a mandatory purchase of the Bonds of a Series pursuant to Section 3.2(c) or after a conversion to a Term Rate Period, nothing in this Article II shall limit the Borrower's right, to provide other credit enhancement (such as an Alternate Letter of Credit, liquidity facility or bond insurance); provided that any such credit enhancement shall have administrative provisions reasonably satisfactory to the Trustee, and the Borrower shall have furnished to the Trustee a ·Favorable Opinion of Bond Counsel. .
Section 2.16. Purchase in Lieu of Redemption. Notwithstanding anything in this Indenture to the contrary and to the extent permitted under the Tax Certificate, at any time during which any Series is subject to redemption in whole pursuant to the provisions of this Indenture, all (but not Jess than all) of the Bonds of such Series to be redeemed shall be purchased by the Trustee (for the account of the Borrower or the Letter of Credit Issuer, if any, or their respective designee), as directed by such party on
. the date which would be the redemption date at the direction of the Letter of Credit Issuer, if any, or the Borrower, with the prior written consent of the Letter of Credit Issuer, if any, (which direction shall specify that such purchase is pursuant to this Section 2.16), which shall give the Trustee at least one Business Day's notice prior to such redemption date, at a purchase price equal to the redemption price which would have been applicable to such Bonds on the redemption date. During any period in which a Letter of Credit is in effect, Bonds may be purchased in lieu of redemption pursuant to this Section only from amounts provided by the Letter of Credit Issuer or from other Eligible Funds. In the event the Trustee is so directed to purchase Bonds in lieu of redemption, no notice to the Owners of the Bonds to be so purchased (other than the notice of redemption otherwise required hereunder) shall be required, and the Trustee shall be authorized to apply to such purpose the funds in the Revenue Fund which would have been used to pay the redemption price for such Bonds if such Bonds had been redeemed rather than purchased. Such Bonds so purchased for the account of the Borrower shall for all purposes under this Indenture constitute Bonds held by the Trustee and may be remarketed by the Remarketing Agent in accordance with the provisions of Section 3.3. In addition, the Letter of Credit Issuer shall have the right to direct the transfer of such Bonds purchased pursuant to this Section 2.16 (without reinstatement of the then existing Credit Facility or delivery to the Trustee of an Alternate Credit Facility, which will result in such Bonds being unrated) to the Letter of Credit Issuer or any subsidiary of the Letter of Credit Issuer, or to a single Bondholder which has provided the Trustee with an investment letter in the form attached to this Indenture as ExhibifB, provided that any transfer to a singleBondholder as described above shall require delivery of an opinion of Bond Counsel addressed to the Trustee and the Remarketing Agent to the effect that such transfer will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds purchased pursuant to this Section 2.16. Subject in all cases to the requirements of the Tax Certificate, such Bonds, if not remarketed or transferred as provided herein, shall be redeemed and cancelled automatically by the Trustee on the date which is not later than five years from the date of purchase, unless an opinion of Bond Counsel is delivered addressed to the Trustee and the Remarketing Ageni to the effect that not redeeming and canceling such series of Bonds purchased pursuant to this Section 2.16 will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. Any purchase of a series of Bonds hereunder is not intended as an extinguishment of the debt represented by such series of Bonds.
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Section 2.17. Restrictions on Transfer. Unless the Bonds of a Series are rated "A," without regard to a modifier (or the equivalent) or better by a Rating Agency, such Bonds shall be sold and subsequently transferred only to purchasers that execute and deliver to the Trustee an Investor Letter in substantially the 'fonn attached hereto as Exhibit B. Every Bond presented. or surrendered· for transfer or exchange shall contain, or be accompanied by, all necessary endorsements for transfer.
ARTICLE ill
PURCHASE AND REMARKETING OF TilE BONDS
Section 3. I. Optional Tenders for Purchase.
(a) Purchase Dates. The Owners of Bonds of any Series accruing interest at Daily Rates or Weekly Rates may elect to have their Bonds (or portions thereof in amounts equal to any Authorized Denomination) purchased at a purchase price equal to I 00% of the principal amount, plus accrued interest to the purchase date on the following purchase dates:
(i) Bonds accruing interest at Daily Rates may be tendered for purchase at a purchase price payable in immediately available funds on any Business Day prior to conversion from a Daily Rate to a different Interest Rate, upon written, electronic or telephonic notice of tender given to the Trustee, directly or through the Beneficial Owner's Direct Participant, not later than II :00 a.m., New York City time, on the purchase date; and
(ii) Bonds accruing interest at Weekly Rates may be tendered for purchase at a purchase price payable in immediately available funds on any Business Day prior to conversion from a Weekly Rate to a different Interest Rate, upon written or electronic notice of tender given to the Trustee, directly or through the Beneficial Owner's Direct Participant, not later than 5:00p.m., New York City time, on a Business Day not less than seven (7) days prior to the purchase date.
(b) Notice of Tender. Each notice of tender:
{i) shall, in the case of a written notice, be delivered to the Trustee at its Principal Office and be in form satisfactory to the Trustee;
(ii) shall state, whether delivered hi writing, electronically or by telephone, (A) the principal an1ount of the Bond to which the notice relates, (B) that the Owner irrevocably demands purchase of such Bond or a specified portion thereof in an amount equal to any Authorized Denomination, (C) the date on which such Bond or portion is to be purchased, and (D) payment instructions with respect to the purchase price; and
(iii) shall automatically constitute, whether delivered in writing, electronically or by telephone (A) an irrevocable offer to sell the Bond (or portion thereof) to which the notice relates on the purchase date at a purchase price equal to the principal amount of such Bond (or portion thereof) plus; with respect to Bonds accruing interest at a Daily Rate or a Weekly Rate, any interest thereon accrued and unpaid as ofthe purchase date, (B) an irrevocable authorization and instruction to the Trustee to effect transfer of such Bond (or portion thereof) upon payment of the purchase price to the Trustee on the purchase date, (C) an irrevocable authorization and instruction to the Trustee to effect the exchange of the Bond to be purchased in whole or in part for other Bonds in an equal aggregate principal amount so as to facilitate the sale of such Bond (or portion thereof to be purchased), and (D) an acknowledgment that such Owner will have no further rights with respect to such Bond (or portion thereof) upon payment of the purchase price thereof to the Trustee on the purchase date, except
OHS West:260368139.12 32
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for the right or"such Owner to receive such purchase price upon delivery of such Bond to the Trustee and that after the purchase date such Owner will hold any undelivered certificate as agent for the Trusiee. The determination of the Trustee as to whether a notice of tender has been properly delivered pursuant to the foregoing shall be conclusive and binding upon the Owner.
(c) Bonds to be Remarketed. Not later than II :00 a.m., New York City time, on the Business Day immediately following the date of receipt of any notice of tender (or immediately upon such receipt, in the case of Bonds accruing interest at Daily Rates), the Trustee shall notizy, by telephone, promptly confirmed in writing, the Borrower, the Trustee and the Remarketing Agent of the principal amount of Bonds (or portions thereof) to be purchased and the date of purchase.
Section 3.2. Mandatory Tenders for Purchase.
(a) Flexible Rate and Term Rate Bonds. Each Bond accruing interest at a Flexible Rate shall be subject to mandatory tender for purchase on the day after the last day of each Flexible Rate Period applicable to such Bond, at a purchase price equal to I 00% of the principal amount thereof, plus interest accrued during such Flexible Rate Period. Each Bond accruing interest at a Term Rate shall be subject to mandatory tender for purchase on the last day of the Term Rate Period applicable to such Bond, at a purchase price equal to I 00% of the principal amount thereof, plus interest accrued to the purchase date. The Owner of any Bond tendered for purchase as provided in this Section 3.2(a) shall provide the Trustee with written payment instructions for the purchase price of its Bond on or before tender thereof to the Trustee.
(b) Conversions between Interest Rates. Bonds to be converted from one type oflnterest Rate to a different type of Interest Rate are subject to mandatory tender for purchase on the Conversion Date at a purchase price equal to the principal amount thereof plus accrued interest, if any; provided that the purchase price for Bonds converted from a Term Rate on a date when such Bonds are also subject to optional redemption at a premium shall include an amount equal to the premium, if any, that would be payable if such Bonds were redeemed on such date.
(c) Prior to Expiration or upon Replacement of Letter of Credit. Bonds supported by a Letter of Credit are subject to mandatory tender for purchase from a drawing under any existing Letter of Credit (i) on the Letter of Credit Tender Date, unless at least forty-five (45) days (or such shorter period as shall be acceptable to the Trustee in its sole discretion) prior to such Letter of Credit Tender Date the Trustee has received written notice from the Letter of Credit Issuer that the Letter of Credit has been or will be extended and (ii) on the date the Letter of Credit is replaced pursuant to Section 2.13, in each case, at a purchase price equal to the principal amount thereof plus accrued interest to the mandatory tender date; provided that, if a Letter of Credit is delivered on a date on which the Bonds are also subject to optional redemption at a premium, the purchase price shall include an amount equal to the premium, if any, that would be payable if such Bonds were redeemed on that date.
(d) Initial Mandatorv Tender Date. The Bonds are subject to mandatory tender for purchase on the Initial Mandatory Tender Date at a purchase price equal to the principal amount thereof ·plus accrued interest, if any. The Borrower shall appoint a Remarketing Agent meeting the requirements of Section 8.12 of this Indenture not less than thirty (30) days prior to the Initial Mandatory Tender Date; provided that this requirement may be waived by the Owners of I 00% in aggregate principal amount of Bonds then Outstanding.
(e) Notice of Mandatory Tender. The Trustee shall give notice of mandatory tender for purchase to the Owners of Bonds subject to mandatory tender pursuant to this Section 3.2 by first class mail, not less than seven (7) days prior to the mandatory tender date, except that not less than thirty. (30)
OHS West260368\39.12 33
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days notice shall be given to the Owners of Bonds accruing interest at a Term Rate. If the Bonds are in certificated form, such notice shall include information with respect to required delivery of Bond certificates and payment of the purchase price.
Section 3.3. Remarketing and Purchase.
(a) Remarketing of Tendered Bonds. Unless otherwise instructed by the Borrower, the Remarketing Agent shall offer for sale, and use its best efforts to find purchasers for, all Bonds (or portions thereof) for which notice of tender has been received pursuant to Section 3.l(b) or 3.2(e). While the Bonds are in book-entry only fonn, the Remarketing Agent will make payment of the purchase price for tendered Bonds in accordance with the procedures established by DTC. If the book-entry only system is not in effect, the terms of any sale by the Remarketing Agent shall provide for the payment of the purchase price for tendered Bonds by the Remarketing Agent to the Trustee (i) in immediately available funds not later than 3:00p.m., New York City time, on the purchase date, in the case of Bonds accruing interest at Flexible Rates, (ii) in immediately available funds not later than 4:00 p.m., New York City time, on the purchase date, in the case of Bonds accruing interest at Daily Rates, the SIFMA Index Rate or Weekly Rates, and (iii) in immediately available funds not later than 12:00 noon, New York City time, on the purchase date, in the case of Bonds accruing interest at Term Rates. The Remarketing Agent shall not sell any Bond as to which a notice of conversion from one type of Interest Rate to another has been given by the Trustee unless the Remarketing Agent has advised the Person to whom the sale is made of the conversion. The Remarketing Agent shall not, while any Letter of Credit is in effect, remarket the Bonds to the Issuer, the Borrower, or any General Partner of the Borrower, any affiliate of the Borrower or any guarantor of the Borrower's obligations, without the prior consent of the Letter of Credit Issuer.
(b) Purchase of Tendered Bonds.
(i) ~- Not later than I :30 p.m., New York City time, on the Business Day immediately preceding the date fixed for purchase of tendered Bonds, the Remarketing Agent shall give notice by telephone, telecopy, electronically or by other similar communication to the Borrower and the Trustee of the principal amount of tendered Bonds which were remarketed and the amount of remarketing proceeds received which will be transferred pursuant to Section 3.3(a). Not later than 2:00 p.m., New York City time, on the date of receipt of such notice the Trustee shall give notice by telephone, telecopy, electronically or by other similar communication to any Letter of Credit Issuer and the Borrower, specifying the principal amount of tendered Bonds as to which the Remarketing Agent has notified the Trustee that it has not found a purchaser at that time. Not later than 1:30 p.m., New York City time, on the Business Day prior to the purchase date to the extent known to the Remarketing Agent, the Remarketing Agent shall give notice to the Trustee by telephone (promptly confirmed in writing or electronically) of the names, addresses and taxpayer identification numbers of the purchasers, the denominations of Bonds to be delivered to each purchaser and, if available, payment instructions for regularly scheduled interest payments, or of any changes in any such information previously communicated.
(ii) Sources of Payments: Drawings on Letter of Credit. The Remarketing Agent shall cause to be paid to the Trustee, all amoun~ representing proceeds of the remarketing of such Bonds, such payments to be made in the manner and at the time specified in Section 3.3(a) above. If, on the Business Day preceding the purchase date, such amounts will not be sufficient to pay the principal
·.amount thereof plus the accrued and unpaid interest thereon (if any) to the purchase date and the Letter of Credit covers payment of the purchase price of such Bonds, the Trustee shall by 10:30 a.m., California time, draw under the Letter of Credit, if any, then-held by the Trustee in accordance with its terms in a manner so as to furnish immediately available funds by 3:00p.m., New York City time, on the purchase date, in an amount sufficient, together with the remarketing proceeds available for such purchase, to
enable the Trustee to pay the purchase price of Bonds to be purchased on such purchase date. The purchase price of Bonds tendered in connection with the delivery of an Alternate Letter of Credit shall be paid from a draw made under the then-existing Letter of Credit. If no Letter of Credit is then held by the Trustee, or if a properly presented drawing under the Letter of Credit shall have been dishonored, the Borrower shall deliver or cause to be delivered to the Trustee immediately available funds in an amount equal to such deficiency prior to 2:30p.m., New York City time, on the date set for purchase of tendered Bonds (the obligation of the Borrower to deliver such moneys not being conditioned upon receipt by the Borrower of the foregoing notice from the Trustee). All monies received by the Trustee as remarketing proceeds or from drawings under any Letter of Credit and additional amounts, if any, received from the Borrower shall be deposited by the Trustee in the appropriate account of the Bond Purchase Fund to be used solely for the payment of the purchase price of tendered Bonds and shall not be commingled with other funds held by the Trustee.
(iii) Payments by the Trustee. Not later than 4:00p.m., New York City time, on the date set for purchase of tendered Bonds and upon receipt by the Trustee of I 00% of the aggregate purchase price of the tendered Bonds, the Trustee shall pay the purchase price of such Bonds to the Owners thereof in immediately available funds (or by wire transfer). The Trustee shall apply such moneys to purchase the tendered Bonds in the following order: (A) moneys paid to it by the Remarketing Agent as proceeds of the remarketing of such Bonds by the Remarketing Agent, (B) proceeds of a drawing under any Letter of Credit, and (C) other monies made available by the Borrower. If sufficient funds are not available for the purchase of all tendered Bonds, no purchases shall be consummated, all as further set forth in Section 3.4 hereof.
. {iv) Registration and Deliverv of Tendered or Purchased Bonds. On the date of purchase, the Trustee shall register and deliver (or hold) or cancel all Bonds purchased on any purchase date as follows: (A) Bonds purchased or remarketed by the Remarketing Agent shall be registered and made available to the Remarketing Agent by 2:15p.m., New York City time, in a:cordance with the instructions of the Remarketing Agent; and (B) Bonds purchased with proceeds of a drawing under a Letter of Credit or purchased with amounts provided by the Borrower shall be registered in the name of the Borrower and held in accordance with subparagraph (v) below. Notwithstanding anything herein to the contrary, so long as the Bonds are held under the book-entry only system in aocordance with Section 2.11 hereof, Bonds will not be delivered as set forth above; rather, transfers of beneficial ownership of the Bonds to the person indicated above will be effected on the registration books ofDTC pursuant to its rules and procedures.
(v) Borrower Bonds. Bonds that are from time to time purchased from a drawing under the Letter of Credit for the account of the Borrower pursuant to this Section 3.3 shall be held by the Trustee and shall constitute "Borrower Bonds." To, but excluding, the date on which any such Borrower Bonds are remarketed or sold or assigned to any successor of the Borrower, the Borrower shall be the owner of such Borrower Bonds for all purposes of this Indenture and interest accruing on such Borrower Bonds from and after the date of purchase to, but excluding, the date ofremarketing, sale· or assignment, shall be payable solely to the Borrower as Registered Owner of the Borrower Bonds. Interest on Borrower Bonds shall be calculated in the same manner as interest is calculated on the Bonds. Principal and redemption price of, and interest on, Borrower Bonds shall be deemed paid as long as
· Borrower Bonds are owned by the Borrower. Subject in all cases to the requirements of the Tax Certificate, Borrower Bonds shall be deemed redeemed and cancelled by the Trustee on the date which is five years from the date of their purchase, unless an opinion of Bond Counsel is delivered to the Issuer and the Trustee to the effect that not redeeming and canceling the Borrower Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and the Borrower Bonds. Borrower Bonds are not subject to acceleration or default under this Indenture.
At the direction of the Borrower, the Remarketing Agent shall offer for sale and use its best efforts to sell Borrower Bonds at a price equal to the principal amount thereof plus accrued interest. Upon remarketing of any Borrower Bonds, the Remarketing Agent shall immediately give telegraphic or telephonic notice, promptly confirmed by a written notice, to the Trustee and the Borrower (A) directing the Trustee to deliver in New York, New York, any Borrower Bonds which the Remarketing Agent has remarketed to the new purchaser thereof or their agents against payment therefor on the date specified by the Remarketing Agent and (B) stating the principal amount of Borrower Bonds remarketed; provided, however, that, notwithstanding the foregoing, the Trustee shall not release such Borrower Bonds or transfer such Borrower Bonds on its bond registration books unless it shall have received written confirmation from the Letter of Credit Issuer that the Letter of Credit will provide for the payment of the
. principal amount of all Bonds Outstanding (including such Borrower Bonds) plus an amount equal to 34 days of interest thereon calculated at the maximum interest rate specified in the Letter of Credit, or an Alternate Letter of Credit, if any, has been delivered to the Trustee.
Notwithstanding anything to the contrary in this Subsection, if and for so long as the Bonds are to be registered in accordance with Section 2.11 hereof, the registration requirements under this Subsection (v) shall be deemed satisfied if Borrower Bonds are (I) registered in the name of DTC or its nominee in accordance with Section 2.11 hereof, or (2) credited on the books ofDTC to the account of the Trustee (or its nominee).
(vi) Delivery ofTendered Bonds: Effect of Failure to Surrender Bonds. All Bonds (other than Bonds held in a book-entry-only system) to be purchased on any date shall be required to be delivered to the Principal Office of the Trustee not later than (A) 1:00 p.m., New York City time, on the purchase date in the case of Bonds accruing interest at Flexible Rates or Daily Rates; (B) 12:00 noon, New York City time, on the purchase date in the case of Bonds accruing interest at Weekly Rates; or (C) 5:00p.m., New York City time, on the second Business Day prior to the purchase date in the case of Bonds accruing interest at Term Rates. If the Owner of any Bond (or portion thereof) in cet;tificated form that is subject to optional or mandatory purchase pursuant to this Article fails to deliver such Bond to the Trustee for purchase on the purchase date, and if the Trustee is in receipt of the purchase price therefor, such Bond (or portion thereof) shall nevertheless be deemed purchased on the day fixed for purchase
- thereof and ownership of such Bond (or portion thereof) shall be transferred to the purchaser thereof as provided in subsection (b Xiv) above. Any Owner who fails to deliver such Bond for purchase shall have no further rights thereunder and hereunder except the right to receive the purchase price thereof upon presentation and surrender of said Bond to the Trustee. The Trustee shall, as to any tendered Bonds which have not been delivered to it (i) promptly notify the Remarketing Agent of such nondelivery and (ii) cause the Trustee to place a stop transfer against an appropriate amount of Bonds registered in the name of such Owner(s) on the Registration Books. The Trustee shall cause the Trustee to place such stop(s) commencing with the lowest serial number Bond registered in the name of such Owner(s) until stop transfers have been placed against an appropriate amount of Bonds until the appropriate tendered Bonds are delivered to the Trustee. Upon such delivery, the Trustee shall cause the Trustee to make any necessary adjustments to the Registration Books.
·' Section 3.4. Inadeouate Funds for Tenders. If the funds available for purchases of Bonds
pursuant to Section 3.3 are inadequate· for the purchase of all Bonds tendered on any purchase date, the Trustee shall, after any applicable grace period: (a) return all tendered Bonds to the Owners thereof; (b) return all moneys received for the purchase of such Bonds to the Persons (other than the Borrower) providing such monies; and (c) notify the Issuer and the Remarketing Agent of the return of such Bonds and moneys and the failure to make payment for tendered Bonds.
Section 3.5. Bond Purchase Fund. (a) There is hereby created with the Trustee a segregated trust fund to be designated the "Bond Purchase Fund." The Bond Purchase Fund shall consist of three
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accounts to be designated the "Remarketing Account," the "Letter of Credit Purchase Account" and the "Borrower Purchase Account," respectively. The Trustee shall establish separate subaccounts within the Letter of Credit Purchase Account for each Letter of Credit that it holds for the payment of Bonds or a Series of Bonds.
(b) The Trustee shall deposit or cause to he deposited into the Remarketing Account, when and as receive_d, all moneys delivered to ihe Trustee as and for the purchase price of remarketed Bonds by or on behalf of the Owners of the Bonds or the Remarkcting Agent. The Trustee shall disburse moneys from the Remarketing Account to pay the purchase price of Bonds properly tendered for purchase upon surrender of such Bonds.
(c) The Trustee shall deposit or cause to be deposited into the Letter of Credit Purchase Account, when and as received, all proceeds from a drawing under the Letter of Credit pursuant to Section 3.3(b) hereof. The Trustee shall disburse moneys from the Letter of Credit Purchase Account to pay the purchase price of Bonds properly tendered for purchase upon surrender of such Bonds; provided that such proceeds shall not be applied to purchase Borrower Bonds or Bonds held in the name of the Issuer, or any general partner of the Borrower, any affiliate of the Borrower or any guarantor of the Borrower's obligations identified to the Trustee in a certificate of the Borrower.
(d) The Trustee shall deposit or cause to be deposited into the Borrower Purchase Account, when and as received, all moneys delivered to the Trustee by or for the account of the Borrower pursuant to Section 3.3(b)(ii) hereof. The Trustee shall disburse moneys from the Borrower Purchase Account to pay the purchase price of Bonds properly tendered for purchase by or on behalf of the Owners of the Bonds or the Borrower upon surrender of such Bonds or to reimburse the Letter of Credit Issuer for drawings under the Letter of Credit for such purpose.
(e) The funds held by the Trustee in the Bond Purchase Fund shall not constitute part of the Trust Estate which is subject to the lien of this Indenture. The moneys in the Bond Purchase Fund shall be used solely to pay the purchase price of Bonds as aforesaid (or to reimburse the Letter of Credit Issuer for drawings under the Letter of Credit for such purpose) and may not be used for any other purposes. It shall be the duty of the Trustee to hold the moneys in the Bond Purchase Fund, without liability for interest thereon, for the benefit of the Owners of Bonds which have been properly tendered for purchase or deemed tendered on the purchase date, and if sufficient funds to pay the purchase price for such tendered Bonds shall be held by the Trustee in the Bond Purchase Fund for the benefit of the Owners thereof, each such Owner shall thereafter be restricted exclusively to the Bond Purchase Fund for any claim of whatever nature on such Owner's part under this Indenture or on, or with respect to, such tendered Bond. The provisions of Section 4.8 hereof shall govem.any funds held in the Bond Purchase Fund for such Owners of the Bonds which remain unclaimed for a period of two years after the applicable purchase date.
ARTICLE IV
GENERAL PROVISIONS
Section 4. I. Authorization for Indenture; Indenture to Constitute Contract. This Indenture is entered into pursuant to the Act. In consideration of the purchase of the Bonds by the Bond Owners, the provisions of this Indenture shall be part of the contract of the Issuer with the Owners of the Bonds, and shall be deemed to be and shall constitute a contract among the Issuer, the Trustee, any Letter of Credit Issuer, the Remarketing Agent and the Bond Owners. The provisions hereof are covenants and agreements with such Bond Owners, which the Issuer hereby determines to be necessary and desirable for the security and payment of the Bonds. ·
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Section 4.2. Payment of Principal. Premium. if any. and Interest. The Issuer covenants that it will duly and punctually pay or cause to be paid the principal of, premium, if any, purchase price of and interest on the Bonds issued under this Indenture at the place, on the dates and in the manner provided herein and therein according to the true intent and meaning hereof and thereof, but solely from the payments, revenues and receipts specifically assigned herein for such purposes as set forth in Section 5.3 and in Section 5.5 and, with respect to the purchase price of Bonds, Section 3.5 of this Indenture.
Section 4.3. Performance of Covenants: Issuer Warranties. The Issuer covenants that it will faithfully comply with .the stipulations and provisions required to be performed by it and contained in this Indenture, or in any of its proceedings pertaining hereto. The Issuer warrants that it is duly authorized under the laws of the State, including particularly and without limitation the Act, to issue the Bonds authorized hereby and to execute this Indenture and to assign its rights under or with respect to the Loan Agreement and all amounts payable thereunder or with respect thereto, which hereby are assigned in the manner and to the extent herein set forth; that all actions on its part for the issuance of the Bonds and the execution and delivery of this Indenture have been duly and effectively taken; and that the Bonds are and will be valid and binding limited obligations of the Issuer enforceable in accordance with the terms thereof and hereof, excep~ as enforcement thereofand hereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting the rights of creditors and by the application of general principles of equity, ifsuch remedies are pursued.
Section 4.4. Instruments of Further Assurance. The Issuer covenants that it will 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 or the Borrower reasonably may require for the better and more effectual assignment to the Trustee of all payments, revenues and other amounts payable under or with respect to the Loan Agreement, and any other income and other moneys assigned hereby to the payment of the principal of, premium, if any, and interest on the Bonds. The Issuer further covenants that it will not create or suffer to be created any lien, encumbrance or charge upon its interest in the revenues and other amounts payable under or with respect to the Trust Estate, except the lien and charge granted hereby. The Issuer authorizes the Trustee to execute such documents as are necessary to amend the legal description of a Project attached to any Regulatory Agreement in the event the Borrower or its applicable affiliate executes a lot tie agreement and/or lot line adjustment with respect to a Project and release those portions of such Project site on which no Project improvements are located.
Section 4.5. Limitation on Issuer's Actions. The Issuer shalrhave no obligation to undertake any affirmative action, to execute any document, or to file or record any document or instrument unless it is requested in writing to do so by the Trustee, the Borrower or other party express authorized hereunder and its reasonable fees and expenses incurred in taking such actions are tendered to the Issuer by the requesting party.
Section 4.6. Registration of Bonds: Trustee Appointed Bond Registrar; Persons Treated as Owners.
· (a) Registration. The Trustee is hereby appointed as registrar of the Bonds and as such shall maintain the Registration Books as provided by this Indenture. The Registration Books shall note any Bond owned by the Borrower and shall reflect the information required by the registration information form contained in Exhibit A to be provided by Bond Owners in connection with the transfer of Bonds. At reasonable times and under reasonable regulations established by the Trustee, the Registration Books may be inspected and copied by the Borrower, the Issuer, the Trustee, the Remarketing Agent or the Owners (or designated representatives thereof) of at least 25% in aggregate principal amount of Bonds then Outstanding.
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(b) Transfer and Exchange. (i) The ownership of a Bond may be transferred (in the amount of any Authorized Denomination; provided, that any portion thereof retained is itself in an Authorized Denomination) only upon surrender thereof at the Principal Office of the Trustee, accompanied by an assignment, duly executed by the Owner of such Bond or its duly authorized attorneyin-fact, in such form as set forth in Exhibit A. Upon the due presentation of any Bond for transfer and on request of the Trustee, the Issuer shall execute in the name of the transferee, and the Trustee shall authenticate and deliver, a new fully registered Bond or Bonds, in any Authorized Denomination, in an aggregate principal amount equal to the unmatured and unredeemed principal amount of such transferred fully registered Bond, and bearing interest at the same rate, and maturing on the same date, as such transferred Bond. All Bonds surrendered to the Trustee for transfer pursuant to this Section 4.6 shall be cancelled by the Trustee and shall not be redelivered.
(ii) Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds of Authorized Denominations. All Bonds surrendered to the Trustee for exchange pursuant to this Section 4.6 shall be cancelled by the Trustee and shall not be redelivered. Neither the Issuer nor the Trustee shall be required to make any such transfer or exchange of any Bond during the ten ( 10) Business Days immediately preceding the selection of the Bonds for redemption or, with respect to a Bond, after such Bond or any portion thereof has been selected for redemption. Notwithstanding the foregoing provisions, the Trustee shall authenticate and make available for receipt by the purchaser or purchasers of any Bond tendered or deemed to be tendered in accordance with the provisions or"the form of Bond contained herein, against payment therefor, a new fully registered Bond or Bonds, in any Authorized Denomination, in an aggregate principal amount equal to the principal amount of the Bond so tendered or deemed to be tendered and bearing interest at the same rate, and maturing on the same date, as such tendered or deemed tendered Bond.
(iii) The Trustee shall attach to each Bond issued in transfer or exchange for a Bond (or a portion of a Bond) called for redemption or mandatory tender a copy of the notice thereof.
(c) Charges. In ,all cases of the transfer of a Bond, the Trustee shall register on the Registration Books, such Bond in accordance with the provisions of this Indenture. The Issuer or the Trustee may make a charge to the Bond Owner for every such transfer and every exchange of a Bond sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange, and may demand that such charge be paid before any new Bond is delivered.
(d) Ownership. As to any Bond, the person in whose name the ownership ofsuch.Bond shall be registered on the Registration Books shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of, premium, if any, purchase price of and interest on any such Bond shall be made only to or upon the order of the registered Owner thereof or its legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond, including the interest thereon, to the extent of the sum or sums so paid.
Section 4.7. Cancellation. All Bonds that have been paid at maturity or redeemed prior to maturity shall not be reissued but shall be cancelled by the Trustee. All Bonds that are cancelled by the
· Trustee shall be disposed of by the Trustee, and a certificate of the disposition tj>ereofshall be furnished promptly to the Issuer. '
Section 4.8. . Non-presentment of Bonds. If any check representing payment of interest, principal, premium or purchase price on any Bond is returned to the Trustee or is not presented for payment by the payee thereof, or any Bond is not presented for payment of principal or premium at the maturity or redemption date, or purchase price at the purchase date, if the proceeds of a remarketing of the Bonds by the Remarketing Agent, or funds provided by the Borrower or any Letter of Credit Issuer and/or
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Government Obligations purchased with such funds, sufficient to pay such interest, or such principal and premium or purchase price, as is applicable, shall have been made available to the Trustee for the benefit ofthe Owner of the applicable Bond, all liability of the Issuer to the Owner of such Bond for such interest or such principal and premium or purchase price shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys and/or Government Obligations, without investing or reinvesting the same and without liability for interest thereon, for the benefit of the Owner of such Bond, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on such Owner's part under this Indenture or on, or with respect to, such Bond, and thereafter such Bond shall no longer be considered to be Outstanding. The Trustee's obligation to hold such moneys and/or Government Obligations with respect to such Bond shall continue for a period equal to two years following the date on which the applicable payment shall have become due, at which time the Trustee, upon request of the Borrower and upon payment of all fees and expenses due and owing to it and receipt of indemnity satisfactory to it, shall surrender such funds so held to the Borrower .. Following such surrender, any claim under this Indenture by the Owner of such Bond of whatever nature shall be made only upon the Borrower and all liability of the Issuer, the Trustee with respect thereto shall cease.
The provisions of this Section 4.8 shall be subject to all applicable escheat and unclaimed property laws.
Section 4.9. Rights Under Loan Agreement. This Indenture, the Loan Agreement and the documents executed by the Borrower in connection therewith, duly executed counterparts or originals of which have been filed with the Trustee, set forth the covenants and the obligations of the Issuer, the Borrower and the Trustee. Reference is hereby made to such documents for detailed statements ofthe covenants and obligations set fonh therein. The Issuer and the Trustee agree that the Trustee, for and on behalf of the Bond Owners, in its name or, to the extent permitted by law, in the name of the Issuer, may enforce all rights of the Issuer and all Obligations of the Borrower under and pursuant to the Loan Agreement and such documents, subject to the Issuer's right to enforce the Reserved Rights under the Loan Agreement to carry out its public purposes in making the Loan.
Section 4.10. Legal Existence oflssuer. The Issuer covenants that it will at all times maintain its legal existence and .will duly procure any necessary renewals and extensions thereof; will use its best efforts to maintain, preserve and renew all the rights, powers, privileges and franchises owned by it; and will comply with all valid acts, rules, regulations and orders of any legislative, executive, judicial or administrative body applicable to the Issuer in connection with the Bonds.
Section 4.11. Tax-Exempt Status of Bonds. The Issuer covenants to commit or suffer no act within its control that would alter the status or character of the Bonds, or the interest to be paid on the Bonds, for purposes of State or federal taxation.
Section 4.12. Diminution of. or Encumbrance on, Trust Estate. The Issuer covenants not to sell, transfer, assign, pledge, release, encumber or otherwise diminish or dispose of, directly or indirectly, by merger or otherwise, or cause or suffer the same to occur, or create or allow to be created or to exist any lien upon, all or any part of its interests in the Trust Estate, except as expressly permitted by this Indenture.
Section 4.13. Books. Records and Accounts. The Trustee agrees to keep proper books for the registration of, and transfer of ownership of, each Bond, and proper books, records and accounts in which complete and correct entries shall be made of all transactions relating to the receipt, disbursement,
, investment, allocation and application of the proceeds received from the sale. of the Bonds, the Revenues, the documents executed by the Borrower in connection therewith, the funds and accounts created
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pursuant to this Indenture, and all other moneys held by the Trustee hereunder. The Trustee shall, during regular business hours and upon reasonable prior notice, make such books, records and accounts available for inspection and copying by the Issuer, the Borrower and the Bond Owners.
Section 4.14. Temporarv Bonds. Until definitive Bonds are ready for delivery, there may be executed, and, upon written request of the Issuer, the Trustee shall authenticate and deliver, in lieu of definitive Bonds, but subject to the same limitations and conditions, temporary printed, engraved, lithographed or typewritten registered Bonds (without coupons), in any Authorized Denomination, substantially of the tenor hereinabove set forth for definitive Bonds, and with such omissions, insertions and variations as may be appropriate. If temporary Bonds shall be issued, as soon as is practicable the Issuer shall cause the definitive Bonds to be prepared and to be executed and deposited with the Trustee, arid the Trustee, upon presentation to it at its respective Principal Office ofany temporary, Bond, shall cancel the same and authenticate and deliver in exchange therefor at the required location, without charge to the Owner thereof, a definitive Bond or Bonds of an equal aggregate principal amount and bearing interest at the same rate as the temporary Bond or Bonds so surrendered. Until so exchanged the temporary Bonds shall be entitled in all respects to the same benefit and security of this Indenture as the defmitive Bonds to be issued and authenticated hereunder.
Section 4.15. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is mutilated, lost, stolen or destroyed, the Trustee, upon request, shall authenticate a new Bond, dated as provided in Article
·II hereof, of the same denomination and bearing interest at the same rate as the Bond mutilated, lost, stolen or destroyed; provided, however, that, in the case of any mutihited Bond, such 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 the Trustee, together with indemnity covering the Trustee and the Issuer satisfactory to the Trustee and the Issuer. If any such Bond shall have matured, instead of issuing a replacement Bond the Issuer may pay the same. The Trustee and the Issuer may charge the Owner of such Bond with their reasonable fees and expenses in connection with the issuance of any such replacement Bond.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, stolen or destroyed Bonds.
Seetion 4.16. Notice to Remai'keting Agent and Rating Agencies. The Trustee shall provide the Remarketing Agent, each Controlling Person, any Letter of Credit Issuer and each Rating Agency then rating the Bonds, if the Bonds are then rated, with prior written notice as early as practicable, of (i) the appointment of any successor Trustee or Remarketing Agent, (ii) any supplement or amendment to this Indenture or the Loan Agreement, (iii) the provision of any Letter of Credit, the expiration of any Letter of Credit, the renewal of any Letter of Credit or the provision of an Alternate Letter of Credit, (iv) the payment in full of all of the Bonds, (v) the giving of a notice of mandatory tender of the Bonds, or (vi) the conversion of the Bonds to a new Rate Period. Each notice to the Rating Agencies hereunder shall be directed to the respective addresses provided by the Rating Agencies. The Trustee's agreement to give the notices to the Rating Agencies provided for in this Section is made as a matter of courtesY and accommodation only, and the Trustee shall incur no liability to any Person for its fui!ure to give .such ·notices: ·
Section 5.1. Application of Bond Proceeds. The proceeds from the sale of the Bonds and other amounts received by the Trustee shall be deposited or transferred by the Trustee as follows:
(a) the amount of$687,576.19 received from the Borrower, shall be deposited in the Costs of Issuance Fund and applied as set forth in Section 5.2 of this Indenture;
(b) the amount of$334,190,000, representing the proceeds of the Series C-1 (AMT) Bonds, the Series C-2 Bonds, the Series C-3 Bonds and the Series C-4 Bonds, shall be transferred to the 1998 Trustee, for deposit pursuant to a Defeasance Escrow Agreement, dated the Closing Date, by and between the Borrower and the Trustee and agreed to and acknowledged by the Issuer, and application to the defeasance on the Closing Date and subsequent redemption in whole of the 1998A-1 Bonds, the 1998A-2 Bonds, 1998A-3 Bonds and 1998A-4 Bonds.
Section 5.2. Costs oflssuance Fund. The Costs oflssuance Fund is hereby created. Amounts in the Costs oflssuance Fund shall be disbursed by the Trustee only to pay Costs of Issuance upon receipt of a written requisition of the Borrower which requisition shall state the amount to be paid, the payee and the purpose for such payment. Upon the date that is sixty (60) days following the Closing Date, the Trustee shall transfer all amounts remaining in the Costs of Issuance Fund to the Borrower.
Section 5.3. Creation of Revenue Fund. There is hereby created by the Issuer and ordered established with the Trustee a trust fund to be designated the "California Statewide Communities Development Authority Multifamily Housing Revenue Bonds (lAC Project), Series 2008 C-1 through C-4 Revenue Fund" (the "Revenue Fund"). The Revenue Fund shall consist of two accounts to be designated, respectively, the "Letter of Credit Revenue Account" and the "Borrower Revenue Account."
Section 5.4. Payments into Revenue Fund. There shall be deposited into the Revenue Fund when received: (i) all payments (other than purchase price payments, which shall be deposited into the Bond Purchase Fund) specified in Section 2.5 of the Loan Agreement; (ii) all moneys required to be so deposited in connection with any redemption of Bonds; and (iii) all other moneys when received by the Trustee that are required to be deposited into the Revenue Fund or which are accompanied by directions that such moneys are to be paid into the Revenue Fund, including without limitation, moneys received pursuant to the Loan Agreement and any amounts due any Letter of Credit Issuer pursuant to the Reimbursement Agreement.
All amounts received for deposit into the Revenue Fund shall be deposited by the Trustee as follows: (a) any amounts received pursuant to a dnawing under any Letter of Credit in accordauce with its terms for the payment of the principal of, redemption price, if any, and interest on the Bonds shall be
. deposited into the Letter of Credit Revenue Account and (b) all other amounts shall be deposited into the Borrower ·Revenue Account. Any amounts received for deposit in the Revenue Fund shall not be commingled with any other moneys held by the Trustee and any amounts deposited into specific Accounts of the Revenue Fund shall not be commingled with moneys held in any other Account.
Section 5.5. Use of Moneys in Revenue Fund. The Issuer hereby authorizes and directs the Trustee to withdraw sufficient fuods from the Revenue Fund to pay the principal of, premium, if any, and Interest on the Bonds as the same become due and payable, which authorization and direction the Trustee hereby accepts. Amounts in the Revenue Fund shall be withdnawn by the Trustee in the following order and priority: (a) amounts in the Letter of Credit Revenue Account, if any, shall be applied to pay the
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principal or redemption price of, premium, if any, and interest on the Bonds as the same become due and payable; provided, no such amounts shall be applied to make such payments on the Borrower Bonds or any other Bonds registered in the name of the Borrower or its affiliates or the Issuer), and (b) amounts in the Borrower Revenue Account shall be applied to pay the principal or redemption price of, premium, if any, and interest on the Bonds as the same become due and payable only to the extent amounts in (a) above are not available, and thereafter to reimburse any Letter of Credit Issuer for any amounts outstanding under the Reimbursement Agreement, upon receipt by the Trustee from the Letter of Credit Issuer of written notice as to the amounts owed to it under the Reimbursement Agreement. In the event the Letter of Credit does not provide for the payment of any premium due on the Bonds, amounts on deposit in the Borrower Revenue Account may be applied to pay such premiums only upon receipt by the Trustee of an opinion of nationally recognized bankruptcy counsel to the effect that such amounts will not be subject to recapture by a trustee in bankruptcy under Section 544 or 547 of Title II of the United States Code or recoverable under Section 550(a) of such Code.
Section 5.6. Investment of Moneys. Subject to the restrictions hereinafter set forth in this Section 5.6 and in the Tax· Certificate, moneys held in the Revenue Fund (other than moneys in the Letter of Credit Revenue Account and moneys on deposit for the redemption of Bonds) shall be invested and reinvested by the Trustee upon the written instructions of the Borrower in Permitted Investments, maturing not later than the date on which it is estimated that such moneys will be required to be paid hereunder, which instructions shall specify the particular investment to be made and shall certify that such investment constitutes a Permitted Investment and is otherwise permitted to be made hereunder and under the Loan Agreement (including Section 7.5 thereof). Moneys held in the Bond Purchase Fund shall not be invested by the Remarketing Agent or the Trustee. Moneys held in the Rebate Fund, the Letter of Credlt Revenue Accourit, the Borrower Revenue Account and moneys held for the redemption of Bonds shall be invested only in Government Obligations, which mature as needed for payment, upon the written instructions of the Borrower, which instructions shall specify the particular investment to be made and shall certifY that such investment constitutes a Government Obligation and is otheJWise permitted to be made hereunder. All investment instructions hereunder shall be provided to the Trustee no later than one Business Day prior to the making of the investment directed therein. The Trustee may make any and all such investments through its own investment department or through any of its affiliates or subsidiaries. The Trustee shall be entitled to rely on all written investment instructions provided by the Borrower hereunder and shall have no duty to monitor the compliance thereof with the restrictions set forth in this Section 5.6 and in the Tax Certificate. The Trustee shall not be responsible or liable for the performance of any such investments or for keeping the moneys held by it hereunder fully invested at all times. Absent the provision of investment instructions hereunder, the Trustee shall invest moneys held pursuant hereto in investments described in clause (A) of the definition of"Permitted Investments." Any obligations acquired by the Trustee as a result of such investment or reinvestment shall be held by or under the control of the Trustee (except for such investments held in book entry form) and shall be deemed to constitute a part of the Fund or Account from which the moneys usad fur its purchase were taken. All investment income shall be retained in the Fund or Account to which the investment is credited from which such income is derived, and with respect to the Revenue Fund shall be available for the purposes set forth in Section 5.5 hereof(and to the extent so available shall serve as a credit against the amount due frorn the Borrower under Section 2.7 of the Loan Agreement on the next succeeding ·Loan payment date). Any investment losses shall be charged to the Fund or Account from which such investment was made. Moneys held under Section 4.8 shall not be invested. The Issuer (and the Borrower by its execution of the Loan Agreement) acknowledges that to the extent regulations of the Comptroller ofthe Currency or other applicable regulatory entity grant the Issuer or the Borrower the right to receive brokerage confirmations of security transactions as they occur, the Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Issuer and the Borrower periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. To the extent the Trustee does not receive
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written instructions for investment from the Borrower, the Trustee shall invest, to the extent reasonab,ly practicable in investments described in clause (A) of the definition of"Permitted Investments."
The Trustee may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate.
The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder.
Section 5.7. Moneys Held in Trust. All moneys required to be deposited with or paid to the Trustee for the account of any Fund or Account under any provisions of this Indenture shall be held by the Trustee in trust, and except for moneys deposited with or paid to the Trustee for redemption of Bonds (notice of the redemption for which has been duly given) and moneys in the Bond Purchase Fund and the Rebate Fund, shall, while held by the Trustee, constitute part of the Trust Estate and be subject to the security interest created hereby.
Section 5.8. Repayment to Borrower from Indenture Funds. Any amounts remaining in any Fund or Account created under this Indenture, after payment or provision for payment in full of the Bonds .in accordance with Article VI hereof, any sums due any Letter of Credit Issuer, the fees, charges and expenses of the Issuer, the Trustee, the Remarketing Agent and any co-trustee appointed hereunder, and all other amounts required to be paid hereunder or under the Loan Agreement, and after and to the extent that the Borrower shall determine that the payment of such remaining amounts may be made without violation of the provisions of the Tax Certificate, shall be paid, upon the expiration of, or upon the sooner termination of, the terms of this Indenture, to the Borrower, provided that the Borrower shall have delivered a certificate to the Trustee to the effect that all conditions precedent to such payment set forth in this Section have been colllplied with.
Section 5.9. Tax Covenants. The Issuer covenants with the Owners of the Bonds that, notwithstanding any other provision of this Indenture or any other instrument, it will not make any investment or other use of the proceeds of the Bonds or any other moneys held under this Indenture that would cause the Bonds to be "arbitrage bonds" under Section 148 of the Code or "federally guaranteed" obligations under Section 149 of the Code, and it further covenants that it will comply with all applicable requirements of Sections 103 and 141-150 of the Code (except that the Issuer shall be deemed to have complied with these requirements as long as it acts on the written direction of the Borrower). The foregoing covenants shall extend throughout the term of the Bonds to all Funds and Accounts created under this Indenture and all moneys on deposit to the credit of any such Fund or Account, and to any other amounts which are proceeds of the Bonds or which have been replaced with proceeds of the Bonds
· for purposes of Sections 103 and 141-150 of the Code. It is expressly understood that because investments hereunder are to be made by the Trustee only pursuant to instructions of the Borrower, the Trustee shall have no liability with respect thereto if, as a result of an investment made pursuant to such instructions, the Bonds become "arbitrage bonds" under Section 148 of the Code or "federally guaranteed" obligations under Section 149 of the Code or the covenants of this Section are otherwise violated.
hi furthemnce of this covenant, the Issuer and the Borrower shall execute, deliver and perform their respective obligations under the Tax Certificate, which is by this reference incorporated herein and made a part hereof as if set forth herein in full.
Section 5.1 0. Rebate Fund. There is hereby created by the Issuer and ordered established with the Trustee a trust fund to be designated the "California Statewide Communities Development Authority Multifamily Housing Revenue Bonds(IAC Project) Rebate Fund" (the "Rebate Fund"). All money at
any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfY the Rebate Requirement (as defmed in the Tax Certificate) and as calculated by the Rebate Analyst, for payment to the United States Government, and neither the Issuer nor the Borrower nor the Bondholders shall have any rights in or claim to such moneys. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section and by the Tax Certificate. The Trustee shall conclusively be deemed to have complied with such provisions ifit follows the written instructions of the Borrower, including supplying all necessary information in the manner set forth in the Tax Certificate, and shall not be required to take any actions thereunder in the absence of written instructions from the Borrower.
At such times as required by the Tax Certificate, the Borrower shall or shall cause the Rebate Analyst to calculate the amount ofrebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, as described in the Tax Certificate), for this purpose treating the last day of the applicable Bond Year as a computation date within the meaning of Section 1.148-l(b) of the Rebate Regulations (the "Rebatable Arbitrage").
Within 55 days of the end of each Bond Year or as otherwise set forth in the Tax Certificate, upon the written direction of the Borrower, an amount shall be deposited to the Rebate Fund by the Trustee from amounts provided by the Borrower, if and to the extent required so that the balance in the Rebate Fund shall equal the amount ofRebatable Arbitrage so calculated in accordance with the preceding paragraph. The Trustee shall pay, as directed by the Borrower, to the United States Treasury, out of amounts in Rebate Fund:
(i) Not later than 60 days after the end of (A) the fifth Bond Year, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year; and
(ii) Not later than 60 days after the payment of all the Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any .income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(1) of the Code.
Each payment required to be made under this Section shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 803 8-T, which shall be prepared by the Rebate Analyst or the Borrower and provided to the Trustee.
Notwithstanding any provision of this Indenture to the contrary, the obligation to remit payment of Rebatable Arbitrage to the United States and to comply with all other requirements of this Section 5.10 and the requirements of the Tax Certificate shall survive the defeasance or payment in full of the Bonds.
Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Requirement, or provision made therefor satisfactory to the Trustee, shall be withdrawn and remitted to the Borrower as provided for in Section 5.8 of this Indenture.
The Trustee shall keep such records of the computations made pursuant to this Section 5.10 as are required under Section 148(1) of the Code to the extent furnished to the Trustee. The Trustee shall keep and make available to the Borrower such records concerning the investments of the gross proceeds of the Bonds and the investments of earnings from those investments made by the Trustee as may be requested by the Borrower in order to enable the Borrower to make the aforesaid computations as are required under Section J48(t) of the Code.
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Notwithstanding the foregoing, the computations and payments ofRebatable Arbitrage referred to in this Section 5.10 need not be made to the extent that neither the Issuer nor the Borrower will thereby fail to comply with any requirements of Section 148(1) of the Code based on an opinion of Bond Counsel, a copy of which shall be provided to the Trustee.
The Trustee shall not be responsible for calculating rebate amounts or for the adequacy or correctness of any rebate report or rebate calculations. The Trustee shall be deemed conclusively to have complied with the provisions of this Indenture or any other agreement relating to the Bonds regarding calculation and payment of rebate if it follows the directions of the Borrower and it shall have no independent duty to review any such calculations or enforce compliance with such rebate requirements.
ARTICLE VI
DISCHARGE OF INDENTURE
Section 6.1. Discharge. If the Issuer shall pay or cause to be paid, or there shall be otherwise paid, or provision shall be made for the payment or redemption price of, the principal, premium, if any, and interest due or to become due on the Bonds at the times and in the manner stipulated therein, and if the Issuer shall not then be in default under any of the other covenants and promises in such Bonds and this Indenture to be kept, performed and observed by it or on its part, and if the Issuer shall pay or cause to be paid to the Trustee all sums of money due or to become due according to the provisions hereof or of the Bonds and of the Loan Agreement, then, except for the rights of the Trustee under Section 8.2 hereof, these presents and the interests in the Trust Estate and rights hereby granted shall cease, terminate and be void, and the Trustee shall take such actions as may be required by the Issuer to evidence the cancellation and discharge of the lien of this Indenture. Any Bond shall be deemed to be paid within the meaning of this Article VI and for all purposes of this Indenture when (i) payment of the principal or redemption price of and the applicable redemption premium, if any, on such Bond, plus interest thereon to the due date thereof (whe!her such due date be by reason of maturity or upon redemption as provided in this Indenture, or otherwise), shall have been provided to the Trustee by irrevocably depositing with the Trustee, in trust, and the Trustee shall have irrevocably set aside exclusively for such payment, any combination of( I) funds provided by the Borrower sufficient to make such payment, and/or (2) Government Obligations (purchased with such funds) not subject to redemption or prepayment and maturing as to principal and interest in such amounts and at such times as will, in the written opinion of a firm of nationally recognized independent certified public accountants delivered to the Trustee, provide sufficient moneys, without reinvestment ·of any matured amounts, to make such payment without reinvestment; (ii) the Trustee shall have been given irrevocable written instructions to call all outstanding Bonds for redemption on a date certain, if such Bonds are to be called for redemption prior to maturity; (iii) the Trustee shall have received a Favorable Opinion of Bond Counsel; and (iv) all necessary and proper fees, compensation, el<penses and indemnities of the Issuer and the Trustee pertaining to the Bonds shall have been paid or the payment thereof provided for to the satisfaction of the Trustee.
Prior to the defeasance of Bonds bearing interest at a Daily Rate, a SIFMA Index Rate or a Weekly Rate, the Borrower shall be required to effect a conversion of the Bonds to a Flexible Rate or a Term Rate having a term equal to or greater than the date of redemption contained in the notice set forth in (ii) above. Prior to the defeasance of Bonds having a Terrn' Rate which have Term Rate Periods shorter than the redemption date contained in the notice set forth in (ii) above, the Borrower shall be .required to effect a conversion of the Bonds to a Flexible Rate or to a Terrn Rate having a term equal to or , greater than the redemption date set forth in (ii) above. Prior to the defeasance or Bonds bearing interest at a Terrn Rate, the Trustee shall establish a redemption date for the Bonds that is on or prior to the termination date of the Terrn Rate Period unless the Bonds mature at the end of the Term Rate Period.
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ARTICLEVD
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Each of the following events is hereby defined as, and declared to constitute, an "Event of Default" under this Indenture:
(i) failure to pay (a) interest on any Outstanding Bond when due, or (b) the principal or purchase price of, or premium, if any, on, any Outstanding Bond, whether at the stated maturity thereof, upon the purchase date thereof, upon any proceedings for redemption, or upon the maturity thereof or by declaration of acceleration; or
(ii) failure by the Issuer to perform or observe any of the other covenants, agreements or conditions contained in this Indenture, and the continuation thereof for the period after notice specified in Section 7.12 hereof.
Section 7 .2. Acceleration. (A) Upon the occurrence of an Event of Default described in Section 7.l(i), the Trustee shall accelerate the maturity of the Bonds then Outstanding, whereupon the principal of and all accrued interest on all of the Bonds shall become immediately due and payable, without premium, and no interest shall accrue on any Bond from and after the date of such acceleration. Upon the occurrence of any other Event of Default, the Trustee may, and if requested to do so by any Controlling Person or, if there is no Controlling Person, by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding. shall, accelerate the maturity of the Bonds, whereupon the principal of and all accrued interest on the Bonds shall become immediately due and payable, without premium, and no interest shall accrue on any Bond from and after the date of such acceleration. In the event of any acceleration of the Bonds, the Trustee shall give the Issuer, each Controlling Person and the Borrower written notice of the acceleration of the Loan.
Section 7.3. Other Remedies: Rights of Bond Owners. (a) Subject to the next succeeding paragraph, upon the occurrence of any Event of Default described in Section 7.1, the Trustee shall upon the written direction of any Controlling Person or, if there is no Controlling Person, by the Owners of not less.than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding, and subject to the terms of the Loan Agreement, pursue any available remedy by suit at law or in equity to enforce the payment of the principal or purchase price of, premium, if any, and interest on the Bonds then Outstanding. and the performance by the Issuer of its obligations hereunder, including, without limitation, the following:
(i) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Bond Owners, and require the Issuer to carry out its obligations under this Indenture;
(ii) bring suit upon the Bonds;
(iii) by action, suit or proceeding at law or in equity require the Issuer to account for any moneys received by the Issuer as if it were the trustee of an express trust for the Bond Owners; and
(iv) by action, suit or proceeding at law or in equity, specifically enforce the provisions of the Loan Agreement or enjoin any acts or things which may be unlawful or in violation of the rights of the Bond Owners under this Indenture.
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(b) Any judgment against the Issuer shall be enforceable only against the Trust Estate. There shall not be authorized any deficiency judgment against any assets of, or the general credit of, the Issuer. Subject to the prior rights of the Bond Owners, the Issuer shall be entitled to reimbursement for
· any of its expenses in connection with such proceeding from any available funds in the Trust Estate.
(c) If an Event of Default shall have occurred and is continuing, and if requested to do so by any Controlling Person or, if there is no Controlling Person, by the OwnerS of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstandin·g, the Trustee shall be obligated (subject to Section 7.4 hereof) to exercise one or more of the rights and powers as so directed.
(d) No remedy conferred upon or reserved to the Trustee or the Bond Owners by the terms of this. Indenture is intended to be exclusive of any other remedy, but each and every such remedy shall he cumulative and shall he in addition to any other remedy given to the Trustee or the Bond Owners hereunder or now or hereafter existing at law or in equity. 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 he construed to be a waiver of any such default or Event of Default or an acquiescence therein; and every such right and power may be exercised from time to time as often as may he deemed expedient. No waiver of any default or Event of Default hereunder, whether by the Trustee or the Bond Owners, shall
· extend to or shall affect any subsequent default or Event of Default or shall impair any right or remedy consequent thereon.
(e) The above provisions, however, are subject to tlie condition that if, after the principal of all the Bonds then Outstanding shall have been so declared to be due and payable and prior to the entry of a judgment or decree for the payment of any moneys due pursuant to the Bonds, this Indenture or the Loan Agreement, all accrued and unpaid interest on the Bonds, at the applicable rate per annum borne by the Bonds at the time of acceleration, and all other sums payable under this Indenture, except the principal of, and interest on, the Bonds which by such declaration shall have become due and payable, shall have been paid by or on he half of the Issuer, all other Events of Default hereunder shall have been cured or waived, and the Issuer also shall have performed all other things in respect of which it may have been in default under this Indenture, and shall have paid the reasonable fees and expenses of the Trustee and of the Owners of the Bonds, including reasonable attorneys' fees paid or incurred then and in every such case, all the Controlling Persons together or, if there is no Controlling Person, the Owners of not less than a majoritY in aggregate principal amount of the Bonds then Outstanding, by written notice to the Trustee, may rescind and annul such declaration, whereupon the Trustee shall give written notice thereof to the
· Issuer and the Borrower by registered mail. Any such rescission and annulment shall he binding upon all holders of the Bonds, but no such rescission and annulment shall extendto or affect any subsequent default or impair any right or remedy consequent thereon.
Section 7 .4. Right of Bond Owners to Direct Proceedings. Anything in this Indenture tb the contrary notwithstanding, upon the occurrence and continuance of an Event of Default, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the
. method and place of conducting all proceedings to he taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver or for any other proceedings hereunder; provided, however, that direction shall not be otherwise than in accordance with the provisions of law and of this Indenture and shall not involve the Trustee in personal liability.
Section 7 .5. A!!pointment of Receiver. Upon the occurrence and continuance of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and the Bond Owners under this Indenture, the Trustee, shall be entitled, as a matter of right, to request the appointment of a receiver or receivers of the Trust Estate and of the revenues, issues,
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earnings, income, products and profits thereof, pending such proceedings, with such powers as the court . making such appointment shall confer.
Section 7.6. Waiver of Certain Laws. Upon the occurrence of an Event of Default, to the extent that such rights may then lawfully be waived, neither the Issuer, nor anyone claiming through or under it, shall claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement of this Indenture. 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.
Section 7.7. APPlication of Moneys. All moneys relating to the Bonds received by the Trustee pursuant to any right given or action taken under the provisions of this Article VII shall (after payment of the costs and expenses (including legal fees and expenses) of the proceedings resulting in the collection of such moneys and of the fees and expenses, liabilities and advances of the Issuer and the
. Trustee, it being understood that such payment shall not be made from any moneys already held for the benefit of the Bond Owners in the Bond Purchase Fund, the Letter of Credit Revenue Account or the Borrower Revenue Account or pursuant to Section 4.8) be deposited in the Accounts of the Revenue Fund as required under Section 5.4 hereof, and all moneys in such Accounts shall be applied as required under Section 5 .. 5 hereof as follows:
(i) Unless the principal of all the Bonds Outstanding 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 Outstanding Bonds 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 1he persons entitled thereto of the unpaid principal of, and premium, if any, on, the Outstanding Bonds which shall have become due (other than Bonds matured or called for redemption for the payment of which moneys are already held pursuant to the provisions of this Indenture) in the order of their due dates, and; if the amount available shall not be sufficient to pay in full the principal of each Bond due on any particular date, together with,such premium, then to the payment ratably, according to the amount of principal and premium due on such date, to the persons entitled thereto, without any discrimination or privilege.
(ii) If the principal of all the Outstanding Bonds shall have become due or shall have been declared due and payable by acceleration, all such moneys shall be applied to the payment of the principal, premium, if any, and interest then due on such Bonds, without prefererce or priority of principal and premium over interest or of interest over principal and premium, 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.
(iii) If the principal of all the Outstanding Bonds shall have been declared due and payable by acceleration, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article VII, then the moneys shall be applied in accordance with the provisions of Subsection (i) above; provided, however, that in the event that the principal of all the Bonds
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shall later become due or be declared due and payable by acceleration, the moneys shall be applied in accordance with the provisions of Subsection (ii) above.
Whenever moneys are to be applied pursuant to the provisions of this Section 7.7, such moneys shall be applied pari passu at such times, and from time to time, as the Trustee shall determine is appropriate upon due consideration of the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future.
Whenever the Trustee shall apply such funds it shall ftx the date of application, which shall be an Interest Payment Date unless it shall deem, in the reasonable exercise of its discretion, another ·date more suitable. 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.
For purposes of this Section, the term "principal" shall include the principal component of the purchase price of the Bonds, and the term "interest" shall include the interest component of the purchase price of the Bonds.
Section 7.8. Remedies Vested in Trustee. All rights of action (including the rightto file proofs of claim) under this Indenture and under the Bonds or any Bond may be enforced by the Trustee without the possession of any Bond or the production thereof in any trial or proceedings related 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 plaintiff or defendant the Owner of any Bond .
. Section 7.9. Rights and Remedies of Bond Owners. No Owner of any Bond shall have any right to institute any s_uit, action or proceeding in equity or at Jaw for the enforcel}lent of this Indenture or for the execution of any trust hereofor for the appointment of a receiver or any other remedy hereunder, unless:
(i) an Event of Default has occurred of which the Trustee has been notified as provided in Section 8.1(h) hereof, or of which by said Section 8. I(h) the Trustee is deemed to have notice;
(ii) the Controlling Person or, if there is no Controlling Person, by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding, shall have made written request to the Trustee, and shall have offered the Trustee reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in the name or names of such Owners, and shall have offered to the Trustee indemnity as provided in Section 8 .I (I) hereof; and
(iii) the Trustee shall thereafter fail or refuse to exercise the powers granted herein, or to institute such action, suit or proceeding in its own name, within sixty (60) days;
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 (other than its obligations to draw under any Letter of Credit as required to make payments of principal of, premium, if any, and interest on the Bonds when due), and to any action or cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hereunder. No one or more Owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by such Owners' action, 11"d all proceedings atlaw or in equity shall be instituted, had and maintained in the manner herein provided and (except as herein otherwise provided) for the equal and ratable benefit of the Owners of all Bonds then Outstanding. Nothing in this Indenture,
however, shall affect or impair the right of any Bond Owner to enforce the payment of the principal of, premium, if any, and interest on any Bond owned by such Bond Owner at and after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, and interest on any Bond to the Owner thereof at the time and place, from the source, and in the manner expressed in such Bond. Nothing contained herein shall be construed as permitting or affording any Bond Owner a right or cause of action against the Trustee or in respect of the Bonds where a default has been waived under Section 7.11 hereof or cured under Section 7.12 hereof.
Section 7 .I 0. 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 to the Trustee, then and in every such case the Issuer, the Trustee and the Bond Owners shall be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.
Section 7 .II. Waivers of Events of Default. The Trustee may, waive any Event of Default hereunder and its consequences, only upon the written request of each Controlling Person or, if there is no Controlling Person, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that the Trustee may not waive an Event of Default described in subparagraph (i) of Section 7.1 hereof without the consent of the registered Owners of all Bonds then Outstanding and, if any Letter of Credit is in effect, without the full reinstatement of the Letter of Credit in accordance with its terms.
Section 7.12. Notice of Default: Opportunity to Cure Defaults. Anything herein to the contrary notwithstanding, no failure to act under Section 7.1(ii) hereof shall constitute an Event of Default until actual notice of such failure by registered or certified mail shall be given to the Issuer and the Borrower by the Trustee, or to the Issuer, the Borrower and the Trustee by Owners of not less than twenty-five percent (25%) in aggregate principal amount of all Bonds Outstanding or any Controlling Person, any such notice to specifY the failure, require it to be remedied and to state that such notice is a "Notice of Default" hereunder, and the Issuer and the Borrower shall have had thirty (30) days after receipt of such notice at their option to correct such failure or to cause such failure to be corrected, and shall not have corrected such failure or caused such failure to be corrected within the applicable period; provided, however, if such default is not reasonably capable of being cured such initial thirty (30) day period and the Borrower is making diligent efforts to cure such default, then Borrower shall have an additional ninety (90) days after the Notice of Default to cure such default.
With regard to any failure to ~ct for which notice is given under the provisions of this Section 7.12, the Issuer, to the full extent permitted by law, hereby grants the Borrower full authority to perform and observe for the account of the Issuer any covenant or obligation alleged in said notice not to have been performed or observed 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, with power of substitution. ·
ARTICLEVlll
THE TRUSTEE AND REMARKETING AGENT
Section 8.1. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred, 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. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's affairs.
(b) The Trustee may execute any of the rights or p<>wers hereunder or perform any duties hereunder either directly or by or through agents, receivers or attorneys and the Trustee shall not be responsible for the acts of such agents, receivers or attorneys if selected and appointed by the Trustee with due care; provided that any such ageuts or attorneys shall be responsible for their acts to the same extent as the Trustee would have been responsible had the Trustee performed such acts itself. The Remarketing Agent shall not be deemed an agent of the Trustee for any purpose, and the Trustee shall not be responsible for the compliance of the Remarketing Agent with its obligations .under this Indenture or in
·connection with the transactions contemplated herein. The Trustee shall be entitled to the advice of counsel (which may be an employee of the Trustee or an affiliate of the Trustee) concerning all matters of trust hereof and its duties hereunder, and in all cases may pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trust hereof. The Trustee may act upon the opinion or advice of any attorneys approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or non-action exercised in good faith in reliance upon such opinion or advice.
(c) The Trustee shall not be responsible for any recital herein or in the Bonds (other than the certificate of authentication thereon), the legality, sufficiency or validity of this Indenture, the Loan Agreement, the Bonds or any document or instrument relating hereto or thereto; the recording or filing of any instrument required by this Indenture to secure the Bonds; the validity of the execution by the Issuer of this Indenture or of any supplement hereto or amendment hereof or of any instrument of further assurance; or the validity, priority, perfection or sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or otherwise as to the maintenance of the security hereof.
(d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder. The Trustee may in good faith buy, sell, own and hold any ofthe Bonds (or beneficial interests therein) and may join in any action which any Bond Owner may be entitled to take with like effect as if the Trustee were not a party to this Indenture. The Trustee may also engage in or be interested in any financial or other transaction with the Issuer, the Remarketing Agent, any Letter of Credit Issuer or the Borrower; provided, however, that if the Trustee determines that any such relationship is in conflict with its duties under this Indenture, it shall eliminate the conflict or resign as Trustee. To the extent permitted by law, the Trustee may also purchase Bonds (or beneficial interests therein) with like effect as if it were not the Trustee.
(e) The Trustee shall be protected in acting upon, and may conclusively rely upon, any notice, request or other paper or document reasonably believed by it to be genuine and correct, and reasonably believed by it to have been signed or sent by the proper person or persons. Any action taken
. by the Trustee pursuant to this Indenture or the Loan Agreement upon the request, authority or consent of ·any person, who at the time of making such request or giving such authority or consent is authorized to do so on behalf of the Owners of the Bonds, shall be conclusive and binding upon all future Owners oftbe same Bond and any Bond issued in replacement therefor.
(f) As to the existence or nonexistence of any fact, or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed by a
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duly authorized representative of the Issuer, the Remarketing Agent or the Borrower as sufficient evidence of the facts therein contained; and prior to the occurrence of a default of which the Trustee has been notified as provided in Subsection (h) of this Section 8.1, or of which by said Subsection (h) it is deemed to have notice, the Trustee shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient. The Trustee may, at its discretion, secure such further evidence (including, but not limited to, legal opinions) deemed necessary or advisable by it, but shall in no case be bound to secure the same. The Trustee may accept a certificate of the officer of the Issuer charged with the maintenance of its books and records over the seal of the Issuer to the effect that a resolution or ordinance in the form therein set forth has been adopted and is in full force and effect.
(g) The right of the Trustee to perform any discretionruy act enumerated in this Indenture shall not be construed as a duty. No provision of this Indenture shall be construed to relieve the Trustee from liability for its negligence or willful misconduct in the performance of its powers and duties under this Indenture, except that
(i) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, 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 or the Loan Agreement, as the case may be;
(iii) the Trustee shall not be liable for any error of judgment made in good faith by its officers, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iv) 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 any direction of Bond Owners given pursuant to Section 7.4; and
(v) no provision of this Indenture shall be deemed to 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 its rights or powers.
(h) 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 Loan Agreement, or. in any other document or instrument executed in connection with the execution and delivery of the Bonds, except an Event of Default under Section 7.l(i) hereof, unless the Trustee shall be specifically notified in writing of such default or Event of Default by the Issuer, the Borrower, the Owners of at least twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding or any Controlling Person. All notices or other instruments required by this Indenture to be delivered to the Trustee shall be delivered at the Principal Office of the Trustee, and, in the absence of such notice so delivered, the Trustee may . conclusively assume there is no default or Event of Default except as aforesaid.
(i) At any and all reasonable times, and upon prior notice, the Trustee and its duly authorized agents, attorneys, experts, engineers, accountants and representatives shall have the right (but not any duty) to inspect fully all books, papers and records of the Issuer pertaining to this Indenture, the Loan Agreement, the Tax Certificate and the Bonds, and to take such photocopies and memoranda therefrom and in regard thereto as may be desired.
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0) The Trustee shall not be required to give any bond or surety in respect of the execution of the trust created hereby or the powers granted hereunder.
(k) Notwithstanding 81lything contained elsewhere in this Indenture to the. contrary, the Trustee shall have the right, but not the obligation, to demand, in respect of the withdrawal of any cash, the release of any property, or the taking of any action whatsoever within the purview of this Indenture or the Loan Agreement, any showing, certificate, opinion, appraisal or other information, or corporate action or evidence thereof, in addition to that required by the terms hereof as a condition of such action by the Trustee, as deemed desirable for the purposes of establishing the right of the Issuer or the Borrower to the withdrawal of any cash, the release of any property or the taking of any other action by the Trustee.
(I) Before taking any action referred to in Article VII or Section 8.3 hereof (except with respect to acceleration, any mandatory tender or redemption of the Bonds, payment of the Bonds upon such acceleration, m81ldatory tender or redemption or their due date, actions taken at the direction of a
. Controlling Person which do not require the expenditure of the Trustee's own funds, or requests for payment under any Letter of Credit) the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses which it may incur 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.
(m)All moneys received by the Trustee shall, until used, 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 this Indenture. The Trustee shall be under no liability for interest on any moneys received by it hereunder.
(n) Notwithstanding the effective date of this Indenture or anything to the contrary in this Indenture, the Trustee shall have no liability or responsibility for any act or event relating to this . Indenture which occurs prior to the date the Trustee formally executes this Indenture and commences acting as Tru.stee hereunder;
(o) The Trustee has no obligation or liability to the Bond Owners for the payment of interest or premium, if any, on, or principal or purchase price of, the Bonds, but rather the Trustee's sole
. obligations are to administer, for the benefit of the Borrower and the Bond Owners, the various Funds and Accounts established hereunder.
{p) Notwithstanding the final payment of the principal of or interest on the Bonds, whether at maturity, upon redemption or otherwise, the duties of the Trustee under Section 5.10 of this Indenture shall survive the termination of this Indenture.
(q) Any request or direction of the Issuer, any Letter of Credit Issuer, a Controlling Person qr the Borrower mentioned herein or in the Loan Agreement shall be sufficiently evidenced by a writing signed by any authorized officer thereof.
(r) The Trustee shall have no responsibility with respect to any information, statement; or recital in any official statement, offuring memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(s) The Trustee may rely upon any representation that a party is a Beneficial Owner or a Direct Participant for purposes of this Indenture.
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(t) The Trustee is authorized and directed in its capacity as Trustee to enter into the Regulatory Agreements.
Section 8.2. Annual Fees. Charges and Expenses of Trustee . The Trustee shall be entitled to . reasonable compensation for all services, including any extraordinary services, rendered by it under this
Indenture. ·.In addition, the Trustee shall be entitled to reimbursement for its charges and expenses (including reasonable counsel fees and expenses) incurred in connection with such services and to indemnity against losses, liabilities and expenses. Such compensation, reimbursement and indemnity shall be paid by the Borrower pursuant to Section 9.3 of the Loan Agreement; provided, however, that to the extent not so paid, the Trustee may make disbursements from the Borrower Revenue Account of the Revenue Fund to pay such amounts. The Trustee's right to receive compensation, reimbursement of expenses and indemnity under this Section 8.2 and under the applicable provisions of the Loan Agreement shall be secured by a prior lien upon the Trust Estate (excluding that portion of the Trust Estate consisting of funds received from drawings under a Letter of Credit and funds already held for the benefit of particular Bond Owners pursuant to any other provisions of this Indenture, as to which such lien shall be subordinate to the lien created hereby for the benefit of the Bond Owners). The Issuer has required the Borrower, pursuant to the Loan Agreement, to indemnity and hold harmless the Trustee against any liabilities which the Trustee may incur in the exercise and performance of their powers and duties hereunder and under any other agreement referred to herein which are not due to the Trustee's negligence or willful misconduct, and for any fees and expenses of the Trustee to the extent funds are not available under this Indenture for the payment thereof. The rights of the Trustee under this Section 8.2 shall survive the payment in full of the Bonds and the discharge of this Indenture.
Section 8.3. Notice to Bond Owners of Default. If a default occurs of which the Trustee is required by Section 8.1(h) hereof to take notice or of which notice of default is given as provided in Section 8._1(h) hereof, then tlie Trustee shall promptly give written notice thereof by first class mail, postage prepaid, to each Owner of Bonds then Outstanding. The Trustee shall promptly give written
· notice to the Remarketing Agent, the Issuer, any Letter of Credit Issuer, the Rating Agency (subject to the last sentence of Section 4.16) and the Borrower by certified mail of any such notice of default sent to any Owner of Bonds as provided hereunder.
Section 8.4. Reserved.
Section 8.5. Successor Trustee by Merger or Otherwise. Any corporation or association into which the Trustee may be converted or merged, with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a .
. party, ipso facto, shall be and become the Trustee hereunder vested with all of the title to the Trust Estate and all the trusts, powers, discretions, immunities, privileges, responsibilities, obligations and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor Trustee meets the requirements of Section 8.14(a) hereof.
Section 8.6. Resignation by Trustee. The Trustee may resign from the trusts hereby created by giving written notice to the Issuer, the Borrower, any Letter of Credit Issuer, each Controlling Person, the Remarketing Agent and the Owners of the Bonds then Outstanding, and shall so resign whenever it ceases to be qualified to act as Trustee hereunder. Such notice shall be sent by certified mail, postage prepaid, to the Bond Owners. Such resignation shall.take effect only upon the appointment of a successor Trustee and transfer of any Letter of Credit to such successor. If no successor Trustee is. appointed pursuant to Section 8.8 hereof within thirty (30) days after the delivery of such notice, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee.
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Section 8. 7. Removal of Trustee. The Trustee may be removed at any time by !he Borrower, so long as no event of default has occurred and is continuing under the Loan Agreement, or !he Issuer or, if !he Issuer is in default hereunder, by an instrument or substantially concurrent instruments in writing delivered to !he Issuer, the Trustee, !he Remarketing Agent and signed by the holders of more than fifty percent (50%) in aggregate principal amount of !he Bonds outstanding and !he Controlling Person, if any. Such removal shall take effect only upon the appointment of a successor Trustee.
Section 8.8. Appointment of Successor Trustee. In case lhe Trustee shall resign, be removed, be dissolved, be in !he course of dissolution or liquidation or olherwise become incapable of acting or not be qualified to act hereunder, or in case !he Trustee shan be taken under !he control of any public officer or officers or a receiver appointed by a court, a successor shan he appointed by !he Issuer wilh !he consent of each Controlling Person and !he Borrower (which consent shall be deemed given if party from which such consent is requested fails to respond within fifteen Business Days of receipt of such written request) by written instrument delivered to !he successor Trustee. Written notice of such appointment shan be
. given to !he Remarketing Agent and !he Bond Owners by first class mail, postage prepaid.
Section 8.9. Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor, !he Remarketing Agent, lhe Borrower, any Letter of Credit Issuer and !he Issuer an instrument in writing accepting such appointment hereunder, and !hereupon such successor, wilhout any further act, deed or conveyance, shall become fully vested wilh !he title to the Trust Estate and all of !he trust powers, discretions, immunities, privileges, responsibilities, obligations and all other matters of its predecessor; but such predecesso; shall, neverlheless, on !he written request of the Issuer, or of its successor Trustee, execute and deliver an instrument transferring to such successor Trustee all !he estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall, upon payment of its charges, deliver all securities and moneys held by it as the Trustee hereunder to its successor Trustee. Should any instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such successor !he estates, 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 !he 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 Vlll, shall be filed ancllor recorded by the successor Trustee in each recording office where this Indenture shall have been filed ancllor recorded. No appointment of a successor Trustee hereunder shall become effective unless such successor meets the requirements of Section 8.14(a) hereof.
Section 8.10. Reserved.
Section 8.11. Remarketing Agent. Except in connection wilh an optional redemption or a purchase-in-lieu of redemption, the Borrower shall appoint a Remarketing Agent meeting !he requirements of Section 8.12 of !his Indenture not less than thirty (30) days prior to the Initial Mandatory Tender Date or any Conversion Date; provided that this requirement may be waived by the Owners of 100% in aggregate principal amount of Bonds then Outstanding. The Remarketing Agent shall signify acceptance of its duties as Remarketing Agent by a written instrument of acceptance. ·
Section 8. I 2. Qualifications of Remarketing Agents; Resignation or Removal of Remarketing
(a) Each Remarketing Agent shall be (i) an institution rated at least "Baa3" or "P-3" by Moody's (or Moody's shall have provided written evidence !hat such Remarketing Agent is otherwise acceptable to Moody's) if !he Bonds are !hen rated by Moody's, at least ''BBB-" or "A-3" by Standard & Poor's (or Standard & Poor's shall have provided written evidence !hat such Remarketing Agent is
otherwise acceptable to Standard & Poor's) if the Bonds are then rated by Standard & Poor's, and at least "BBB-" or "F3" by Fitch (or Fitch shall have provided written evidence that such Remarketing Agent is otherwise acceptable to Fitch) if the Bonds are then rated by Fitch, (ii) acceptable to any Letter of Credit Issuer, and (iii) authorized by law to perform all the duties imposed upon it by this Indenture. So long as
· the Bonds are held in a book-entry only system, each Remarketing Agc:nt shall be the sole participant in such system with respect to the Bonds.
(b) A Remarketing Agent (whether initial or successor) may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 30 days written notice to the Issuer, the Borrower, any Letter of Credit Issuer and the Trustee (with a copy thereof mailed by certified mail to each of the Bond Owners). A Remarketing Agent (whether initial or successor) may be removed at any time by an instrument signed by the Borrower, and tiled, at least thirty (30) days prior to such removal, with the Remarketing Agent, any Letter of Credit Issuer, the Issuer and with the Trustee. No removal or resignation hereunder shall become effective prior to the earlier to occur of (i) acceptance of appointment of a Remarketing Agent hereunder, or (ii) thirty (30) days from the date of the notices described in this Section.
Section 8.13. Appointment of Separate or Co-Trustee. It is the intent of the parties to this Indenture that there shall be no violations of any law of any jurisdiction (including particularly the laws of the State) denying or restricting the rights of banking corporations or associations to transact business as a trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture, and in particular in the case of the enforcement of this Indenture on default, or in case the Trustee deems that by reason of any present or future law of any jurisdiction it may nut exercise any of the powers, rights or remedies herein granted to the Trustee, or hold title to the properties, in trust, as herein granted, or take any other action ·which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate trustee or co-trustee. The following provisions of this Section 8.13 are adapted to these ends.
lfthe Trustee appoints an additional individual or institution as a separate trustee or co-trustee to exercise such powers, rights or remedies, to hold such title or to take such action, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, duty, obligation, title, interest and lien expressed or intended by this Indenture to be exercised by, vested in or conveyed to the Trustee with respect thereto shall be exercisable by, vested in and conveyed to such separate trustee or co-trustee, but only to the extent necessary to enable such separate trustee or co-trustee to exercise such powers, rights and remedies, to hold such title or to take such action and every covenant and obligation necessary for the exercise thereby by such separate trustee or co-trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Issuer be required by the separate trustee or co-trustee so appointed by the Trustee for more fully vesting in and confrrming to them such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. If any separate trustee or co-trustee, or a successor to either, shall die, become incapable of acting or not be qualified to act, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a successor to such separate trustee or co- trustee.
Section 8.14. Qualifications.
(a) Each successor to the Trustee and each institutional co-trustee (if any) shall at all times be a bank or trust company, which (i) is organized as a banking corporation or association and doing business under the Jaws of the United States or any state thereof, (ii) is authorized under such laws
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to exercise corporate trust powers, (iii) is subject to supervision or examination by federal or state authority, (iv) has combined capital and surplus (as set forth in its most recent published report of condition) of at least $100,000,000, and (v) shall not have become incapable of acting or have been adjudged a bankrupt or an insolvent nor have bad a receiver appointed for itself or for any of its property, nor have had a public officer take charge or control of it or its property or affairs for the purpose of rehabilitation, conservation or liquidation.
(b) Should any successor to the Trustee or any institutional co-trustee at any time cease to be eligible, pursuant to this Section 8.14, to act as successor Trustee or co-trustee (as the case may be), it shall promptly notify the Owners of all Outstanding Bonds, the Issuer, the Borrower, any Letter of Credit Issuer and the Remarketing Agent of such fact; such notice shall be sent by certified mail, postage prepaid, to the Bond Owners. Any such notice shall set forth all the relevant facts known to the Trustee or such co-trustee (as the case may be).
ARTICLE IX
SUPPLEMENTALUNDENTURES
Section 9.1. Supplemental Indentures Not Requiring Consent of Bond Owners. Subject to the terms and provisions of Sections 9.3 and 9.4 of this Indenture, the Issuer and the Trustee may with the consent of the Borrower and each Controlling Person, without the consent of, or notice to, any of the Bond Owners (except in the capacity of Controlling Person), enter into an indenture or indentures supplemental to this Indenture, not inconsistent with the terms and provisions hereof, for any one or more of the following purposes:
(i) to cure any ambiguity, formal defect or omission in this Indenture;
(ii) to grant to or confer upon the Trustee, for the benefit of the Bond Owners, any additional rights, remedies, powers or authorities that may lawfully be granted to or conferred upon the Bond Owners or the Trustee;
(iii) 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, as amended, or any similar federal statute hereafter in effect, or to permit the qualification of the Bonds for sale under the securities laws of any of the states of the United States, and if the Issuer so determines, to add to this Indenture or any indenture supplemental hereto such other terms, conditions and provisions as may be permitted by the Trust lndenture Act of 1939, as amended, or any similar federal statute;
(iv) to add to. the covenants and agreements ofthe Issuer contained in this Indenture (with the consent of the Borrower) other covenants and agreements thereafter to be observed for the protection of the Bond Owners or to surrender or limit any right, power or authority herein reserved to or conferred upon the Issuer;
(v) to modify, amend or supplement this Indenture, or any indenture supplemental hereto, in any manner, provided that such modification, amendment or supplement does not take effect until the next succeeding Conversion Date or commencement of a Term Rate Period and such modification, amendment or supplement is disclosed to the purchasers of the Bonds on such Conversion Date; and
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(vi) to make any other change that does not have a material adverse effect upon the interests of the Bond Owners (which determination shall be made by the Controlling Person, if any).
(vii) . Nothing in this Section 9.1 hereof shall be construed to prevent or limit the issuance of additional parity or pari passu bonds on behalf of the Borrower.
Section 9.2. Supplemental Indentures Requiring Consent of Bond Owners. Exclusive of supplemental indentures covered by Section 9.1 hereof, this Indenture may be amended or supplemented only as provided in this Section 9.2. Subject to the terms and provisions contained in Sections 9.3 and 9.4 of this Indenture, the Owners of more than fifty percent (50%) in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, to 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 purposes 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. If at any time the Issuer shall request the Trustee to enter into any such supplemental indenturefor any of the purposes
. of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be mailed by certified mail to the Bond Owners. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the principal corporate trust office of the Trustee for inspection · by all Bond Owners. If, within sixty (60) days, or such longer period as shall he prescribed by the Issuer, following the mailing of such notice, the Owners of the requisite percentage in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof; or in any manner to question the propriety of the execution thereof; or to enjoin or restrain the Trustee or the Issuer (subject to Section 9.4) from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section and Section 9.4 permitted and provided, this Indenture shall be and be deemed to be modified and amended in accordance therewith.
Section 9.3. Limitation Upon Amendments and Supplements. Nothing contained in Sections 9.1 and 9.2 hereof shall permit, or be construed as permitting, without the consent and approval of the Owners of all of the Bonds then Outstanding (i) an extension of the maturity of the principal of, or the time for payment of any redemption premium or interest on, any Bond or a reduction in the principal amount of any Bond, or the rate of interest or redemption premium thereon, or a reduction in the amount of, or exten~ion of the time of any payment required by, any Bond; (ii) a privilege or priority of any Bond over any other Bond (except as herein provided); (iii) a reduction in the aggregate principal amount of the Bonds required for consent to such a supplemental indenture; (iv) the deprivation of the Owner of any Bond then Outstanding of the lien created by this Indenture; or (v) the amendment of this Section 9.3. No amendment or supplement to this Indenture may be entered into without the Trustee and the Issuer first receiving (a) a Favorable Opinion of Bond Counsel; and (b) written evidence from each Rating Agency then rating the Bonds (if the Bonds are then rated) to the effect that such Rating Agency has reviewed the amendment or supplement, and that the effectiveness thereof will not, by itself, result in a reduction or withdrawal of such Rating Agency's then current rating on the Bonds.
Section 9.4. Consent of Trustee, Borrower, Controlling Person and Remarketing Agent . This Indenture may not be amended without the consent of the Trustee and each Controlling Person. The Trustee shall not be required to give its consent to any amendment which shall increase its duties, responsibilities, obligations or standards of care or decrease the protections afforded by this Indenture. Anything herein to the contrary notwithstanding, an amendment or supplemental indenture under this
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Article IX shall not become effective unless and until the BoJTOwer shall have consented in writing to the execution and delivery thereof. The Trustee shall inform the Remarketing Agent of any amendment or supplement to this Indenture affecting the respective rights and obligations of the Remarketing Agent, and such amendment or supplement shall not become effective unless and until the Remarketing Agent shall have consented in writing to the provisions thereof which affect its rights and obligations.
ARTICLE X
AMENDMENT OF CERTAIN LOAN DOCUMENTS
Section I 0.1. Amendments of Loan Agreement and Tax Certificate Not Requiring Consent of Bond Owners. Subject to the terms and provisions of Section 10.3 of this Indenture, the Issuer and the Borrower may, with the prior written consent of the Trustee and, in the case of any amendment materially affecting the payment terms of the Bonds, the Controlling Person, amend or modify the Loan Agreement or the Tax Certificate, or any provision thereof, or may consent to the amendment or modification thereof, in any manner not inconsistent with the terms and provisions of this Indenture, for any one or more of the following purposes:
(i) to cure any ambiguity or formal defect in the Loan Agreement or the Tax Certificate;
(ii) to grant to or confer upon the Issuer or the Trustee, for the benefit of the . Bond Owners, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Issuer or the Trustee; ·
(iii) to amend or modifY the Loan Agreement or the Tax Certificate, or any part thereof, in any manner specifically required or permitted by the terms thereof, including, without limitation, as may be necessary to maintain the exclusion from gross income for purposes of federal or State income taxation of the interest on the Bonds;
'· (iv) to amend or modifY the Loan Agreement in any manner,. provided that
such amendment or modification shall not take effect until.the next succeeding Conversion Date or commencement of a Term Rate Period and such modification, amendment or supplement is disclosed to the purchasers oftbe Bonds on such Conversion Date; and
(v) to make any other change that does not have a material adverse effect upon the interests of the Bond Owners (which determination shall be made by the Controlling Person, if any).
Section I 0.2. Amendments of Loan Agreement and Tax Certificate Reauiring Consent of Bond Owners. Exclusive of amendments and modifications covered by Section I 0.1 hereof, the Loan Agreement or the Tax Certificate may be amended or modified with the prior written consent of the Trustee only as provided in this Section I 0.2. Subject to the terms and provisions contained in Section 10.3 of this Indenture, the OwnerS of greater than fifty percent (50%) in aggregate principal amount of the Bonds then Outstanding and each Controlling Person shall have the right, from time to time, to consent to and approve any amendment or modification of the Loan Agreement or the Tax Certificate as shall be deemed necessary and desirable by tbe Trustee for the purpose of amending and modifYing, in any particular, any of the terms or provisions contained in the Loan Agreement or the Tax Certificate. If at any time the Trustee shall be asked to enter into or to consent to any such amendment or modification, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such modification or amendment to be mailed by certified mail to the
OHS West:260368139.12 . 60
Bond Owners. Such notice shall briefly set forth the nature of the proposed amendment or modification and shall state that copies thereof are on me at the principal corporate trust office of the Trustee for inspection by the Bond Owners. If, within sixty (60) days, or such longer period as shall be prescribed by the Issuer, fc:>llowing the mailing of such notice, the Owners of the requisite percentage in aggregate principal amount of the Bonds Outstanding at the time of the execution ofany such amendment or modification shall have consented to and approved the execution thereof as herein provided, no Owner of any Bond shall have any right to object to 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 or consenting to the same or from taking any action pursuant to the provisions thereof.
Section I 0.3. Limitation Upon Amendment of Loan Agreement. Nothing contained in Sections 10.1 and 10.2 of this Indenture shall permit, or he construed as permitting, withoutthe approval and consent of the Owners of all of the Bonds then Outstanding, (i) the extension of the time for any payment under the Loan or a reduction in the amount of any payment under the Loan, or (ii) the payment to any person other than the Trustee as provided herein of any amount due under the Loan. No amendment of the Loan Agreement may be entered into without the Trustee and the Issuer first receiving (a) a Favorable Opinion of Bond Counsel, and (b) written evidence from each Rating Agency then rating the Bonds (if the Bonds are then. rated) to the effect that the appropriate Rating Agency has reviewed the amendment, and that the effectiveness thereof will not, by itself, result in a reduction or withdrawal of such Rating Agency's then current rating on the Bonds. The Trustee shall not be required to give its consent to any amendment of the Loan Agreement or the Tax Certificate which shall increase its duties, responsibilities, obligations or standards of care or decrease the protections afforded by the Loan Agreement, the Tax Certificate or the Indenture .
ARTICLE XI
MISCELLANEOUS
Section 11.1. Consents of Bond Owners; Controlling Person. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by a Bond Owner may be in any number of concurrent writings of similar tenor, and may be signed or executed by such Bond Owner in person or by such Bond Owner's agent appointed in writing. The fact and date of the execution by any person of any such consent, request, direction, approval, objection or other instrument, or of the writing appointing any such agent, may be proved in any jurisdiction by the certificate of any officer who by law has the power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by an affidavit of any witness to such execution or in any other manner satisfactory to the Trustee, and if made in any such manner shall he sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken by it under such request or other instrument.
Except as otherwise expressly required herein, any consent, request, direction, approval, objection or other instrument required by this Indenture to be given by a Controlling Person shall be required only of, and only be given by, the Controlling Person for the affected Series.
Section 11.2. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended, or shall be construed, to give to any person other than the parties hereto, the Trustee, the Borrower, the
· Remarketing Agent, any Letter of Credit Issuer and the Owners of the Bonds any legal or equitable right, remedy or claim under or with respect to this Indenture or any covenants, conditions and provisions herein contained. This Indenture and all of the covenants, conditions and provisions hereof are. intended
to be, and are, for the sole and exclusive benefit of the parties hereto, the Borrower, tbe Trustee, any Letter of Credit Issuer, the Remarketing Agent and the Owners of the Bonds as herein provided.
Section 11.3. Severability. If any provisions of this Indenture shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render tbe same invalid, inoperative or unenforceable to any extent whatever.
Section I 1.4. Notices. Except as otherwise provided in tbis Indenture, all notices, certificates or otber communications hereunder shall be sufficiently given and shall be deemed given when personally delivered or when sent by telecopy or, if sent by certified mail, postage prepaid, upon receipt addressed as follows:
If to tbe Issuer: ·
1fto the Trustee:
If to the Borrower:
If to JPMorgan:
If to Goldman:
OHS West:260368139.12
California Statewide Communities Development Authority 11 00 K Street, Suite I 0 I . Sacramento, California 95814 Attn: Treasurer Facsimile:
U.S. Bank National Association 63 3 West Fifth Street, 24tb Floor Los Angeles, Ca 90071 Attn: Account Manager Phone: (213) 615-6002 Fax: (213) 615-6199
Irvine Apartment Communities, L.P. c/o tbe Irvine Company LLC 550 Newport Center Drive, Suite 200 Newport Beach, California 92660 Attn.: Chief Financial Officer Telephone: (949) 720-2311 Facsimile: (949) 720-2657
Irvine Apartment Communities, L.P. c/o the Irvine Company LLC 550 Newport Center Drive, Suite 200
· Newport Beach, California 92660 Attn.: General Counsel Telephone: (949) 720-5586 Facsimile: (949) 760-0896
JPMorgan Chase Bank, N .A. 270 Park Ave., 6th Floor New York, NY 10017 Attn.: Kenneth C. Rogozinski Facsimile: 212.834.6080
Goldman, Sachs & Co. Inc. 85 Broad Street
62
' ;. r ::
New York NY I 0004 Attn: Robert Jacobsen
A duplicate copy of each notice given hereunder by either party hereto shall be given to the Trustee and the Borrower. Any person or entity listed above may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent
Section 11.5. Payments or Performance Due on Other Than Business Days. Except as specifically provided herein, if the day for making any payment or the last day for taking any action, including, without limitation, exercising any remedy, under this Indenture falls on a day other than a Business Day, such payment may be made, or such action may be taken, on the next succeeding Business Day, and, if so made or taken, shall have the same effect as if made ortakeil on the date required by this Indenture. The amount of any payment due under this Indenture shall riot be affected because payment is made on a date other than the date specified in this Indenture pursuant to this Section 11.5.
Section 11.6. Execution of Countemarts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shalf constitute but one and the same instrument.
Section II. 7. Applicable Law. This Indenture shall be governed by and construed in accordance with the laws of the State.
Section 11.8. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred with any demand, request, direction, consent or waiver under this Indenture, Bonds (including Pledged Bonds) which are owned or held by or for the account of the Borrower, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Borrower shall be disregarded and deemed not to be Outstanding for purposes of any such determination (unless the Borrower owns all of the Bonds, in which event such Bonds shall be deemed to be Outstanding for purposes of any such determination); provided, that in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver under this Indenture, only Bonds which the Trustee knows to be so owned shall be so disregarded.
Section 11.9. References to Letter of Credit Issuer. Notwithstanding anything herein to the contrary, all rights and powers granted to the Letter of Credit Issuer under this Indenture and all references thereto shall not be effective if no Letter of Credit is in effect or if it has been wrongfully dishonored.
Section I 1.10. No Reliance on Financials of the Borrower. JP Morgan nor Goldman shall rely on the financials of the Borrower and the Borrower shall not have any continuing obligation to disclose financial information or other proprietary non-public infonnation.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be executed in their respective names by their respective duly authorized officers, all as of the day and year frrst above written.
. OHS West:260368JJ9.l2
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
By: Member of the Commission
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By: Authorized Officer
S-1
No.R-__ _
EXHIBIT A
FORM OF BOND
$. ___ _
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTIIORITY MULTIFAMILY HOUSING REVENUE [REFUNDING] BONDS
(lAC PROJECT), SERIES C-_
INTEREST RATE MATURITY DATE DATED DATE CUSI~
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
[Last Day of rrerrn Rate] [Flexible Rate] [SIFMA Index Rate) Period
[Number of Days in Period '---- Interest Due at End of Period]
The CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTIIORITY (the "Issuer"}, a joint exercise of powers agency of the State of California (the "State"}, hereby promises to pay to the Registered Owner specified above, or registered assigns, the Principal Amount specified above on the Maturity Date specified above ( o"r earlier as hereinafter provided), and to pay interest on the Principal Amount hereof from the Dated Date specified above at the rates per annum and on ·the dates set forth herein; provided, however, that such principal and interest are payable solely from the sources and in the manner hereinafter described.
The Bonds are issued pursuant to and in compliance with the laws of the State, particularly California Government Code Section 6500 and following and California Government Code Section 53570 and following (collectively, the "Act"). The Bonds are limited obligations of the Issuer payable solely from revenues and funds pledged therefor under the Indenture. No holder of this Bond shall ever have the right to compel the exercise of the taxing power of the State or any political subdivision thereof to pay the principal of this Bond or the interest hereon or any other cost incident hereto, or to enforce payment hereof against any property of said State or any political subdivision thereof.
The principal of, premium, if any, and interest on, this Bond are payable in lawful money of the United States of America. The principal and premium, if any, payable upon maturity or earlier redemption of this Bond (and interest on this Bond ifit is accruing interest at a Flexible Rate) is payable when due upon the presentation and surrender hereof at the principal corporate trust office of U.S. Bank National Association, as trustee (the "Trustee"}, or any successor. Each payment of interest oil this Bond shall be payable to the holder hereof as shown on the Registration Books at the close of business on the Business Day next preceding the date on which (but, during a Tenn Rate Period, the first day of the calendar month in which) such interest becomes due and payable (herein, a "Record Date"). Interest on this Bond shall be payable to the holder hereof by check mailed by first class mail on the respective
OHS West:260368!39.12 A-1
I f ,
Interest Payment Dates (as hereinafter defined) to the address of such holder as shown on the Registration Books at the close of business on the relevant Record Date, or to such other address as is furnished to the
· Trustee (in fonn satisfactory to the Trustee) by such holder prior to such Record Date. Holders of $1,000,000 in aggregate principal amount of Bonds shall be entitled to receive interest payments by wire transfer to an account with a financial institution in the United States by providing written wire instructions to the Trustee before the Record Date.
This Bond is one of a duly authorized series of Bonds of the Issuer limited in aggregate principal ·amount to $334,190,000, issued under and pursuant to the Act, a resolution of the Issuer and the Indenture of Trust, dated as of April l, 2008 (the "Indenture"), by and between the Issuer and the Trustee, to make a loan to Irvine Apartment Communities, L.P., a Delaware limited partnership (the "Borrower"), to refinance the construction of certain multifamily housing projects in the Cities ofirvine, Newport Beach and Tustin, California (the "Projects").
The Bonds are special, limited obligations of the Issuer, payable solely from payments made by the Borrower pursuant to the Loan Agreement dated as of April I, 2008 (the "Loan Agreement'') by and
··between the Issuer and the Borrower, from payments made pursuant to a Letter of Credit (as hereinafter defined), if any, and from any other moneys held by the Trustee under the Indenture for such purpose, and ·other than as provided in the Loan Agreement and the Indenture, there shall be no other reeourse against the Issuer. The Borrower has evidenced its obligation to repay the Loan by delivering a promissory note dated the date of issuance of the Bonds, with a face amount equal to the aggregate principal amount of the Bonds, to the Issuer, which the Issuer has assigned to the Trustee. Except as otherwise specified in the Indenture, this Bond is entitled to the benefits of the Indenture equally and ratably both as to principal, premium, if any, and interest with all other Bonds issued under the Indenture, to which reference is made for a description of the rights of the holders of the Bonds, the rights and obligations of the Issuer, the rights, duties and obligations of the Trustee, and the provisions relating to amendments to and modifications of the Indenture. The holder of this Bond may not enforce the provisions of the Loan Agreement except in accordance with the provisions of the Indenture. Copies of the Indenture and the Loan Agreement are on file at the principal corporate trust office of the Trustee.
This Bond has been issued in global fonn, registered in the name of Cede & Co., nominee of The Depository Trust Company ("DTC"). Beneficial owners hereof will hold their interests herein through the facilities and subject to the procedures ofDTC. By acceptance of a confinnation of purchase, delivery or tnmsfer, the beneficial owners of this Bond shall be deemed to have agreed to this
' arrangement. Cede & Co., as registered owner of this Bond, shall be treated as the owner hereof for all purposes.
Reference is made to the Indenture and the Loan Agreement for provisions concerning, as ·applicable, the rights of the holders and the rights and obligations of the Issuer, the Borrower and the Trustee. The acceptance of the tenns and conditions of the foregoing documents [mcluding amplifications and qualifications of the provisions of this Bond), each of which is on file at the principal corporate trust office of the Trustee, is an explicit and material part of the consideration of the Issuer's issuance of this Bond, and each holder hereof by acceptance of this Bond accepts and assents to all such terrns.arid conditions as if fully set forth herein.
Capitalized tenns used in this Bond which are not defineq herein but which are defined in the Indenture shall have the respective meanings set forth in the Indenture.
OHS Wesl:260368139.12 A-2
.·.'.""t
Interest on Bonds
The Bonds shall initially accrue interest at a SIFMA Index Rate in accordance with the provisions of the Indenture and will be subject to conversion as herein provided. All computations of interest shall be computed on the basis of360-day years of twelve 30-day months; except for interest at Daily, Weekly, SIFMA Index or Flexible Rates, which shall be based on 365- ·or 366- day years for the actual number of days elapsed. Notwithstanding any provision of this Bond or the Indenture to the contrary, in no event shall the cumulative amount of interest paid or payable on this Bond (including interest calculated as provided herein, together with all other amounts that constitute interest on this Bond under the laws of the State which are contracted for, charged, reserved, taken or received pursuant to the Loan Agreement or the Indenture) through any date of payment of interest or through the date of payment of this Bond (whether at maturity, by acceleration or upon earlier redemption) exceed the maximum rate permitted by State law.
The Bonds may accrue interest at other types of Interest Rates effective for Rate Periods determined as described in the Indenture.
Interest Payment Dates
While this Bond accrues interest at a Daily Rate, a Weekly Rate or a SIFMA Index Rate, interest is payable on the first Business Day of each month. While this Bond accrues interest at a Flexible Rate, interest is payable on the day after the last day of each Flexible Rate Period. During any Term Rate Period, interest is payable semiannually on the fifteenth day of the March or September after the commencement of such Term Rate Period and the fifteenth day of each March or September thereafter; provided that the last Interest Payment Date for any Term Rate Period shall be the first Business Day that falls on or after the fifteenth day of the March or September in which the Term Rate Period ends. In all events when any payment due hereunder or under this Bond falls due on a day which is not a business day, such payment shall instead be due on the next succeeding day which is a business day.
Optional and Mandatory Tender; Conversion
This Bond is subject to optional and mandatory tender, and to conversion from one Rate Period to another Rate Period, on the dates and under the terms and conditions set forth in the Indenture, all of the provisions of which are, by this reference, incorporated into this Bond.
Redemption of Bonds
This Bond is subject to optional and mandatory redemption in whole or in part, on the dates, under the terms and conditions and at the redemption prices set forth in the Indenture, all of the provisions of which are, by this reference, incorporated into this Bond.· Notice of redemption shall be given in the manner set forth in the Indenture.
Default Acceleration
In case an Event of Default shall have occurred, the principal of all Bonds then outstanding under the Indenture may become due and payable prior to their scheduled maturity date.
GENERAL PROVISIONS
The provisions of this Section shall apply at all times from and after the date of issuance of this Bond.
OHS West:260368139.12 A-3
Bonds will be issued in Authorized Denominations. Except during such period of time as the Bonds are held under DTC's "Book-Entry Only System," the ownership of this Bond may be transferred (in an amount which is an Authorized Denomination; provided that the portion thereof retained is itself an Authorized Denomination) only upon presentation and surrender of this Bond at the Principal Office of the Trustee together with an assignment duly executed by the Registered Owner hereof or its duly authorized attorney-in-fact in such form as shall be satisfactory to the Trustee, and subject to the provisions made therefor in the Indenture; provided that the Trustee shall not be required to make any such transfer of any Bond during the ten ( 10) Business Days immediately preceding the selection of Bonds for redemption or, with respect to a Bond, after such Bond or any portion thereofhas been selected for redemption.
Provisions may be made for the payment of amounts represented by the Bonds as provided in the Indenture, in which event all liability of the Issuer to the owners of the applicable Bonds for the payment -of such Bonds shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such funds (but only for the period specified and as provided in the Indenture), without liability for interest thereon, for the benefit of the owners of such Bonds, who shall thereafter be restricted exclusively to such funds for any claims of whatever nature under the. Indenture or on, or with respect to, said Bonds.
It is hereby certified and covenanted that this Bond has been duly and validly authorized, issued and delivered; that all acts, conditions and things required to exist, happen and be performed precedent to or in the authorization, issuance and delivery of this Bond do exist, have happened and have been performed in accordance with law; that the Bonds are limited obligations of the Issuer; and that the principal of, premium, if any, and interest on the Bonds are payable from and secured by the properties, revenues and receipts that constitute a part of the Trust Estate.
The Bonds are secured by the Indenture, whereunder the Trustee undertakes to enforce the rights of the owners of the Bonds and to perform other duties to the extent and under the conditions stated in the Indenture. In case an Event of Default shall occur, the principal of and interest on the Bonds then outstanding may, and, under certain circumstances, shall, be declared to be due and payable immediately upon the conditions and in the manner provided in the Indenture; and no interest shall accrue on this Bond from and after the date of such acceleration. Under the circumstances provided in the Indenture, the Trustee may, in its discretion, and upon the written request of the Registered Owners of a majority in aggregate principal amount of the Bonds then outstanding shall, waive any Event of Default and its consequences; provided, however, that an Event of Default arising from a default in the payment of the principal of, premium, if any, or interest on the Bonds may not be waived by the Trustee without the consent of the Registered Owners of all of the Bonds. The Registered Owners of the Bonds shall have no right to institute any action, suit or proceeding at law or in equity to enforce the Indenture, except as provided in the Indenture; provided, however, that nothing in the Indenture shall affect or impair the right of the Registered Owner of any Bond to enforce the payment of the principal of, premium, if any, and
· interest on such Bond from the source and in the manner herein expressed.
The Issuer has reserved the right to amend the Indenture with the consent of the Borrower as provided therein. Under some (but not all) circumstances, amendments to the Indenture must be approved by the owners of greater than fifty percent (50%) or one hundred percent (100%) in aggregate principal amount of the outstanding Bonds.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee, or any successor. · ·
OHS West:260368ll9.12 A-4
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of its Chainnan and attested by the manual or facsimile signature of its Secretary.
ATTEST:
Secretary.
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
By ________ =-~--------------Chairman
[FORM OF] CERTIFICATE OF AUTHENTICATION
This Bond is hereby authenticated as required by the within-referenced Indenture.
Date of Authentication:----------
OHS We~I:260368JJ9.12
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By ____ ~-.-~~~------------Authorized Signatory
A-5
I·
,.
[FORM OF REGISTRATION INFORMATION]
REGJSTRA TION INFORMATION
Under the terms of the Indenture, the Trustee will register a Bond in the name of a transferee only ifthe owner of such Bond (or its duly authorized representative) provides as much of the information requested below as is applicable to such owner prior to submitting this Bond for transfer.
Social Security or Employer Identification Number: __________________________ ___
If a Trust, Name and Address ofTrustee(s) and Date of Trust: _________________________ _
OHS West:260368139.12 A-6
;?
[FORM OF ASSIGNMENT]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
::--:---:-;--:--~-:---,:-:---~--=----::--------------the within Bond, and does hereby irrevocably constitute and appoint----------------
attorney to transfer ~uch Bond on the books kept for registration and transfer of the within Bond, with full power of substitution in the premises.
Dated: ___________ _
Signature Guaranteed By:
Note: The signature to this Assignment must be guaranteed by an eligible guarantor institution.
OHS West:260368139.12
NOTE: The signature to this Assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without enlargement or alteration or any change whatsoever.
\
A-7
·•.:
.j
EXHIBITB
FORM OF INVESTOR'S LEITER
[DATE]
California Statewide Communities Development Authority II 00 K Street, Suite I 0 I
Sacramento, California 95814 Attn: Treasurer Facsimile:
U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, Ca 90071 Attn: Account Manager Phone: (213) 615-6002 Fax: (213)615-6199
Re: [Bond Caption]
Ladies and Gentlemen:
The undersigned (the "Investor") is purchasing $ in aggregate principal amount of above-referenced bonds (the "Bonds"). Unless the context or use indicates another or different meaning, each capitalized term used herein and not otherwise defined herein shall have the meaning ascribed to it in the Indenture (as hereinafter defined).
The undersigned acknowledges that the Bonds were issued for the purpose of making an unsecured loan to assist in refunding certain previously issued bonds, as more particularly described in that certain Loan Agreement dated as of April I, 2008 (the "Loan Agreement''), by and between California Statewide Communities Development Authority (the "Issuer") and Irvine Apartment Communities, L.P., a Delaware limited partnership (the "Borrower''). The undersigned further acknowledges that the Bonds are secured by a Indenture of Trust dated as of April!, 2008 (the "Indenture'') between the Issuer and the Trustee, which creates a security interest in trust estate described therein (the ''Trust Estate") for the benefit of the holders from time to time ofthe Bonds.
In connection with the transfer of the Bonds to the Investor, the Investor hereby makes the following representations upon which you may rely: ·
I. The Investor has authority to invest in the Bonds and to execute this letter and any other instruments and documents required to be executed by the Investor in connection with its investment in the Bonds.
2. [We are the custodian/trustee under a custody agreement/trust agreement, which provides that each beneficial owner of interests in the Bonds must be] [The Investor is] a "qualified institutional
OHS West:260368!39.!2 B-1
/
buyer" under Rule 144A of the Securities Act of 1933 (as amended, the "Act").
3. The Bonds are being acquired [by the Investor as custodian/trustee under the custody agreement/trust agreement described above] [by the Investor for investment], for its own account, and not with a view to any distribution thereof, provided that the disposition of the Bonds shall be at all times within the Investor's sole control. The Investor understands that it may need to bear the risks of this investment for an indefinite time.
4. The Investor understands that the Bonds (i) are not registered under the Act, and that such registration is not legally required as of the date hereof, (ii) are not being registered or otherwise qualified for sale under the "Blue Sky" laws or regulations of any state, (iii) will not be listed on any stock or other securities exchange, (iv) will not carry a rating from any securities rating service and (v) will be delivered in a form which may not be readily marketable.
5. The Investor understands that (a) the Bonds are not secured by any pledge of any moneys received or to be received from taxation by the State of California or any political subdivision thereof and that the Issuer has no taxing power; (b) the Bonds do not and will not represent or constitute a general obligation or a pledge of the faith and credit of the Issuer, the State of California or any political subdivision thereof; and (c) the liability of the Issuer with respect to the Bonds is limited to the Trust Estate as set forth in the Indenture.
6. The transferor of the Bonds (the "Transferor") has represented to the Investor that it has no continuing obligation to disclose financial information . '
7. (The Transferor has represented to the investor that it][The Investor] has made its own inquiry and analysis with respect to the Bonds, the security therefor and other material factors affecting the payment ofthe Bonds. (The Transferor has represented to the Investor that it] [The Investor] is aware that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Bonds.
8. The Investor acknowledges that it has the right to sell and transfer the Bonds, in accordance with the terms of the Indenture, subject to the delivery to the Trustee of an investor's letter from the transferee in substantially the form attached to the Indenture as Exhibit B.
The foregoing representations shall survive the delivery to us ofthe Bonds and the instruments and documents contemplated thereby.
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
and
IRVINE APAR1MENT COMMUNITIES, L.P.
Dated as of April!, 2008
Relating to
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY MULTIFAMILY HOUSING REVENUE REFUNDING BONDS (lAC PROJECT), SERIES 2008 C-1 (AMT), C-2, C-3, and C-4
This LOAN AGREEMENT (as amended, modified or supplemented from time to time, this "Loan Agreement"), dated as of April I, 2008, by and between the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORlTY (together with its successors and assigns, the "Issuer"), a joint exercise of powers agency of the State of California (the "State"), and IRVINE APARTMENT COMMUNITIES, L.P., a limited partnership (together with its permitted successors and assigns, the "Borrower"),
For and in consideration of the premises and the mutual covenants and representations herein,.and intending to be legally bound the parties hereto hereby mutually agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. ln addition to the terms defined elsewhere herein, the foliowing terms shall have the following meanings unless a different meaning clearly appears from the context. Terms not otherwise defined herein shall have the meanings ascribed to such terms in Section 1.1 of the Indenture.
"Article" .shall mean a specified article hereof, unless otherwise indicated.
"Authorized Borrower Representative" shall mean any officer or representative duly authorized by the Borrower in writing to act on its behalf.
"Authorized Issuer Representative" shall mean any member of the Commission of the Issuer or any other person designated by the Commission to act in such capacity.
"Bond Proceeds" shall mean the amount paid to the Issuer as the initial purchase price of the Bonds.
"Borrower's Formation Agreement" means that certain Fourth Amended and Restated Limited Partnership Agreement, dated April 3, 2008.
"Contract of Purchase" shall mean, collectively, (i) the Bond Placement Agreement dated April 3, 2008 among the Issuer, J.P. Morgan Securities Inc., as placement agent, and the Borrower and (ii) the Bo11d·P\uchase/Agreement dated April 3, 2008 among the Issuer, Goldman, Sachs & Co. Inc., as initial
. purchaser, and the Borrower.
"Counsel for the Borrower" shall mean Buchalter Nemer, PC or such other counsel.as selected by the Borrower.
"Event of Default" shall mean any event of default as defined in Section 8.1 hereof.
"Funds" shall mean the Revenue Fund, the Costs of Issuance Fund, the Bond Purchase Fund and the Rebate Fund.
"General Certificate of the Issuer" shall mean the certificate of the Issuer that is made a part of the Record of Proceedings.
OHS We.~t.26036B142.13 1
"General Partner" shall mean lAC, Inc., a Delaware corporation, together with its successors and assigns, in its capacity as the general partner of the Borrower.
"horein,u "hereunder," "hereby," "hereto," "hereof," and any similar terms, refer to this Loan Agreement; the term "heretofore" shall mean before the date of execution of this Loan Agreement; and the term "hereafter" shall mean after the date of execution of this Loan Agreement.
"Indemnified Parties" shall have the meaning set forth in Section 7.5.
"Indenture" shall mean the Indenture ofTrust dated as of April I, 2008, between the Issuer and U.S. Bank National Association, as initial trustee, as the same may be amended, modified or supplemented from time to time.
"Issuer's Annual Fee" shall mean the annual administrative fee of the Issuer, calculated as follows based on the original aggregate principal amount of Bonds issued: (i) 0.12% per annum with respect to Bonds issued up to $100,000,000 in aggregate principal amount; plus (ii) 0.1 0% per annum with respect to Bonds issued in excess of $100,000,000 in aggregate principal amount, up to $200,000,000 in aggregate principal amount; plus (iii) 0.08% with respect to Bonds issued in excess of $200,000,000; provided that upon written notice from the Borrower that all Bonds allocable to a particular Project have been retired and upon confirmation by the Issuer that the qualified project period has ended for such Project, the principal amount of Bonds on which such fee is calculated will be reduced by the original aggregate principal amount of the Bonds allocated to such Project, with such reduction allocated to the portion of the fee described in clause (iii) if at the time of such reduction more than $200,000,000 in aggregate principal amount of Bonds remain outstanding, from clause (ii) if more than $100,000,000 but not more than $200,000,000 in aggregate principal amount of Bonds remain outstanding, and from clause (i) if$100,000,000 or less in aggregate principal amount of Bonds remain outstanding.
"Loan Agreement" or "Agreement" shall mean this Loan Agreement, as amended, modified or supplemented from time to time.
"Loan Documents" shall mean any or all of this Loan Agreement, the Indenture, the Contract of Purchase, the Note, the Regulatory Agreements, as amended, the Tax Certificate and all documents and instruments executed in connection therewith.
"Note" shall mean the Promissory Note, dated as of April3, 2008 by the Borrower in favor ofthe Issuer.
"Obligations" shall mean the obligations of the Borrower created pursuant to the Loan Documents.
"Paragraph" shall mean a specified paragraph of a Section, unless otherwise indicated.
"Person" or "Persons" shall mean any individual, corporation, limited liability company, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Record of Proceedings" shall mean the Loan Documents, certificates, affidavits, opinions and other documentation executed by or on behalf of Borrower or Issuer in connection with the sale of the Bonds and the making of the Loan.
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"Related Person" shall mean a related person within the meaning of Section 144(a)(3) or Section 147(a) ofthe Code, as is applicable.
''Reserved Rights" shall mean the rights of the Issuer to receive payments under Sections 2.7, 5.6, 5. 7, 7.1, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 8.5, 9.3 and 9.8 and to enforce such rights pursuant to Sections 8.2, 8.3 and 8.4 hereof. The Reserved Rights have been assigned to the Trustee under the Indenture but are also held and retained by the Issuer concurrently with the Trustee, subject to the terms of this Loan Agreement.
"Resolution" shall mean the resolution of the Issuer adopted March 27, 2008, authorizing the issuance and sale of the Bonds and determining other matters in connection therewith.
"Section'' shall mean a specified section hereof, unless otherwise indicated.
"Substantial User" shall mean a substantial user of a Project or any Related Person to a Substantial User within the meaning of Section 147(a) of the Code.
Section 1.2. Section Headings. Headings, titles or captions in this Loan Agreement, and the Table of Contents appended hereto, are solely for convenience of reference and shall not affect the meaning or construction of the provisions hereof.
Section 1.3. Internretation. The singular form of any word used herein shall include the plural, and vice versa, if applicable. The use of a word of any gender shall include all genders, if applicable. This Loan Agreement and all of the terms and provisions hereof shall be construed so as tci effectuate the purposes contemplated hereby and to sustain the validity hereof. All references to any person or entity defined in Section 1.1 shall be deemed to include any person or entity succeeding to the rights, duties and obligations of such person or entity, to the extent permitted under this Loan Agreement All references herein to any document or agreement shall be deemed to include all amendments, supplements or modifications of such document or agreement, to the extent permitted under this Loan Agreement, unless the context clearly states otherwise.
The parties hereto acknowledge that each of them and their respective counsel have participated in the drafting and revision of this Loan Agreement. Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not apply in the interpretation of this Loan Agreement or exhibit hereto or thereto.
ARTICLE II
THE LOAN
Section 2.1. The Loan; Disbursement of Loan Proceeds.
(a) The Issuer hereby makes and agrees to fund to the Borrower and the Borrower hereby accepts from the Issuer the Loan, all on the terms and conditions set forth in this Loan Agreement and the other Loan Documents: The Issuer shall apply or cause to be applied the proceeds of the Loan in accordance with the provisions of this Loan Agreement and the Indenture. The Loan shall be deemed made when the Trustee receives of the Bond Proceeds and closing conditions in Article VI hereof and Section 2.5 of the Indenture are satisfied, or deemed satisfied. To evidence further the obligation to repay the Loan in accordance with the provisions of this Loan Agreement, the Borrower has executed and delivered the Note. The Issuer and Borrower agree, in the event of a partial redemption of the Bonds, to
amend and restate the Note as necessary to correctly evidence the Borrower's obligation to repay the currently outstanding balance of the Loan.
(b) On the Closing Date, the Trustee shall fund and disburse, or cause to be funded and disbursed, the Loan proceeds in accordance with Section 5.1 of the Indenture to cause the redemption and, to the extent applicable, defeasance, of all of the 1998 Bonds.
Section 2.2. Prepayment of Loan.
(a) The Borrower shall have the option to prepay all or any part ofthe Loan on the same terms and conditions set forth in the Indenture for an optional redemption of the Bonds. An optional prepayment ofthe Loan and associated redemption of the Bonds ofany Series shall require written notice given by the Borrower to the Issuer, the Controlling Person and the Trustee at least thirty (30) days prior
. to the proposed redemption date of Bonds bearing interest at a Flexible Rat~, a Daily Rate or a Weekly Rate, at least forty-five (45) days prior to the proposed redemption date of Bonds bearing interest at a Term Rate, and at least seventy-five (75) days prior to the proposed redemption date of Bonds bearing interest at a SIFMA Index Rate. The notice given by the Borrower shall specify the type of redemption, redemption price and date of redemption for the Bonds and shall state that all conditions precedent contained in the Indenture to the applicable redemption have been complied with, or will be complied with concurrently with the proposed redemption. At the option of the Borrower any such redemption may be revocable or conditional as provided in the Indenture.
(b) The Borrower shall prepay the Loan upon the occurrence ofany Mandatory Redemption Event or other redemption of the Bonds. The Issuer will cause the Bonds to be redeemed upon the occurrence of any Mandatory Redemption Event pursuant to Section 2.6(d) of the Indenture upon notice given by the Issuer or the Letter of Credit Issuer, if any, to the Trustee at least five (5) days before the date upon which the Trustee is required to give notice to the Bond Owners under the Indenture.
Section 2.3. No Defense or Set-Off. The obligation ofthe Borrower to make the payments required under the Loan and this Loan Agreement shall be absolute and unconditional without defense or set-offby reason of any default by the Issuer under this Loan Agreement, or under any other agreement between the Borrower and the Issuer, or for any other reason, it being the intention of the parties that the payments required by this Loan Agreement will be paid in full when due without any delay or diminution .whatsoever. -
Section 2.4. Omitted.
Section 2.5, Manner of Payment. The payments provided for herein shall be paid by the Borrower in immediately available funds or by wire transfer, free of deductions and without any abatement, recoupment, diminution or set-off whatsoever, on the date on which such payment is due and payable, directly to the Trustee for the account of the Issuer and shall be deposited in the Revenue Fund, except that payments made pursuant to Sections 7 .5, 8.5 and 9.3 hereof shall be made directly to the party to whom such payment is due and owing.
Section 2.6. Repayment of Loan. (a) If, for any reason resulting from a failure of Borrower to pay principal of an interest on the Bonds when due, amounts paid to the Trustee under the Loan,. together with other moneys held by the Trustee and then available, are not sufficient to make payments of principal or redemption price of, and accrued and unpaid interest, if any, on the Bonds and all other amounts due and owing under the Indenture when such payments are due and payable, the Borrower will pay the amounts required to make up any such deficiency. In addition, but without double-counting any amounts, the Borrower shall pay, in repayment of the Loan, to the Trustee for the account of the Issuer
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until the principal of, premium, if any, and interest on the Bonds shall have been made in accordance with the Indenture, in immediately available funds on each date upon which a payment is due on the Bonds, an amount equal to (i) the interest on the Bonds that will become due on such date and (ii) the principal and the redemption premium, if any, on the Bonds which will become due (whether at maturity, by prior redemption, or otherwise) on such date.
(b) The Borrower, at its option, may provide for the payment of the principal of the Bonds when due (whether upon redemption or acceleration) and premium, if any, and accrued and unpaid interest, if any, on the Bonds, by the delivery of a Letter of Credit to the Trustee. Upon delivery of such a Letter of Credit, the Borrower hereby authorizes and directs the Trustee to draw moneys under the Letter of Credit for the payment of such amounts on behalf of the Borrower in accordance with its terms.
(c) If the amounts available under any Letter of Credit delivered to the Trustee are insufficient to pay the principal of the Bonds when due (whether at maturity or upon acceleration or redemption or ·otherwise) or to pay premium, if any, or accrued and unpaid interest, if any, on the Bonds when due, the
·.Borrower shall be obligated to furnish to the Trustee a sum equal to the difference between the amount· available for such purpose and the amount due on the Bonds.
(d) lt is agreed that payments duly and properly made under the Note shall satisl)' the Borrower's obligation to make like payments under this Section 2.6 to the extent of the amount so paid.
Section 2.7. Additional Payment Obligations of Borrower. The Borrower agrees to pay to the Trustee for the account of the Issuer in immediately available funds the purchase price of bonds tendered for purchase pursuant to the Indenture on each date upon which a payment of the purchase price is due on ·ihe Bonds; provided that, as set forth in this Section 2.7, the Borrower's obligation to pay such purchase price will be reduced·to the extent payment is made therefor from proceeds of a draw under a Letter of Credit provided for such purpose or from remarketing proceeds.
Upon the failure of the Letter of Credit Issuer (if any) to pay under terms of its Letter of Credit, and after five (5) business days notice thereof, the Borrower agrees to pay to the Trustee amounts sufficient to pay the principal, redemption price and purchase price of and interest on the Bonds by 2:30p.m., New York City time, on the date such amounts are due. In all events under Section 2.6(a),(b ),(c) and this Section 2.7 in the event of such payments, the obligations of the Borrower to make such payments hereunder with respect to the purchase of Bonds pursuant to Article III of the Indenture shall be reduced by the amount of money available for such payment from the remarketing of Bonds thereunder or the payment of principal thereon by the Borrower under such Sections. All such payments shall be made to the Trustee at its Principal Office, in lawful money (immediately available) of the United States of America. The Borrower directs the Trustee to apply such amounts so as to assure timely payment to the Bond Owners thereof on the date due.
_ The Borrower agrees to pay to the Issuer (i) an initial fee of $442,737.50, which shall be paid on or before the Closing Date, (ii) the Issuer's Annual Fee, which amount shall be paid in equal monthly installments, in arrears, commencing on the Closing Date and continuing until the end of the Qualified Project Period (as defined in the Regulatory Agreements) with respect to each Series of Bonds, which shall be paid to the Trustee for immediate remittance to the Issuer; and (iii) within thirty (30) days after receipt of written request for payment thereof, all reasonable out-of-pocket expenses of the Issuer (not including salaries and wages of Issuer employees) related to any Project and the financing and refinancing thereof that are not otherwise required to be paid by the Borrower under the terms of this Loan Agreement and are not paid from the Cost of Issuance Account under the Indenture, including, without limitation, reasonable legal fees and expenses actually incurred in connection with the interpretation, performance, enforcement or amendment of any documents relating to any Project or the Bonds.
Section 2.8. Conversion Right. The Borrower may elect to convert the rate of interest borne by the Bonds from one type oflnterest Rate to another as provided in the Indenture.
Section 2.9. Nonrecourse Obligations. The Obligations of the Borrower under this Loan Agreement are general obligations of the Borrower. Notwithstanding the foregoing, the Obligations of the Borrower under this Loan Agreement are not secured by any security interest in or lien on any real property, personal property or olher assets of the Borrower and shall be nonrecourse to the Borrower's general or limited partners, members, shareholders, beneficial owners, constituents and their respective officers, directors, representatives, employees or agents (each, an "Excluded Person") or the respective real property, personal property or olher assets or interests of an Excluded Person. Without derogating the foregoing, at no time will any Excluded Person have any obligation to make a payment to any person (or a contribution or olher payment to lhe Borrower) out of non Borrower assets because the Loan or other obligations under this Loan Agreement have become due and payable, whether upon the liquidation of the Borrower or otherwise.
Se<:tion 2.1 0. Allocation of Loan Proceeds to Projects. Notwilhstanding any other provision of this Loan Agreement or the Indenture to the contrary, the proceeds of the Bonds and the Loan shall be allocated to individual Projects as set forth in Schedule I attached hereto.
ARTICLEID
FUNDS
Section 3.1. APPlication of Bond Proceeds. In order to provide funds to make lhe Loan, the Issuer, concurrently with the execution and delivery of this Loan Agreement, will issue and deliver the Bonds to the initial purchasers thereof and cause the Bond Proceeds to be delivered to the Trustee for the account of the Issuer. The Bond Proceeds shall be applied to redeem the 1998 Bonds in full.
Section 3.2. Rebate Fund. The Indenture requires the Trustee to deposit all mon.eys paid by the Borrower pursuant to Section 7.l(c) hereof in the Rebate Fund. Investment earnings on all amounts so deposited in the Rebate Fund shall also be deposited in the Rebate Fund immediately upon receipt. ·
The Indenture provides that the Trustee shall make payments from the Rebate Fund to the United States on behalf of the Issuer upon the written direction of the Borrower in accordance with Section 7.J{c) hereof, to the extent applicable. The Borrower hereby confirms its covenant in Section 7.1(c) hereof to give the Trustee all such required written directions.
Section 3.3. Investment of the Funds. Any moneys held as a part of the Funds will be invested and reinvested by the Trustee in Permitted Investments, in accordance with Section 5.6 of the Indenture. Only at the Borrower's direction may the Trustee make such Permitted Investments through the Trustee's own investment department.
The Borrower shall direct investments of amounts in the Funds so that such Permitted ·Investments shall mature in such amounts and at such times, or shall be redeemable by the Trustee at such times, as may be necessary to provide funds when, at the time of the investment, it is anticipated the same will be needed to make payments from the Funds in accordance with the provisions of Section 5.6 of the Indenture. To the extent required for payments from the Funds, the Trustee may, at any time, after consultation with the and at the direction of the Borrower, sell any of such Permitted Investments. The proceeds of any such sale, all payments at maturity and all payments upon redemption of such Permitted Investments shall be held in lhe respective Funds in which such investment income was derived.
The Borrower shall be entitled to receive from the Trustee annually and at such other times as the Borrower may reasonably request, a statement of account of any moneys held in the Funds by the Trustee.
Section 4.1. follows:
ARTICLE IV
REPRESENTATIONS OF THE ISSUER
Representations. The Issuer hereby represents, warrants and covenants as
(a) The Issuer is a joint exercise of powers agency, duly organized and existing and in . good standing under the laws of the State. Under the provisions of the Act, the Issuer has the power to enter into the transactions on its part contemplated by this Loan Agreement, the Indenture, the Regulatory Agreements and 1he Contract of Purchase (collectively, the "Issuer Documents'') and to carry out its ·obligations hereunder and thereunder. By proper action, the Issuer has au1horized the execution, delivery and due performance of the Issuer Documents.
(b) To the best knowledge of1he Issuer, neither the execution and delivery ofthe Bonds, the Issuer Documents and the Tax Certificate, nor the Issuer's compliance with the terms and conditions in the Bonds, the Issuer Documents and the Tax Certificate, conflicts in any material respect with or results in a material breach of the State constitution or statute of the State, or agreement, indenture, instrument, judgment, order or decree to which the Issuer is now a party or by which it is bound or constitutes a material default by the Issuer under any of the foregoing.
(c) Except as otherwise provided in the Indenture, the Issuer has not created and will not create any debt, lien or charge upon the Trust Estate, and has not made and will not make any pledge or assignment of or create any encumbrance thereon, other than the pledge and assignment thereof under the Indenture.
(d) The Issuer has complied and will comply with all material provisions of the Act to be complied with by the Issuer applicable to the Bonds and the transactions contemplated by this Loan Agreement and the other Issuer Documents.
(e) The Bonds are being issued under the Indenture, and are secured by the Indenture, ·pursuant to which the Issuer's interest in this Loan Agreement (other than its Reserved Rights) is pledged and assigned to the Trustee. The Issuer covenants that it has not pledged and will not pledge or assign its interest in this Loan Agreement other than to the Trustee under the Indenture.
(f) No litigation or administrative action of any nature has been served on the Issuer and is now pending (i) seeking to restrain or enjoin the execution and delivery of the Bond Documents, or in any manner questioning the proceedings or authority relating thereto or-otherwise affecting the validity of the Bonds, or (ii) as to the existence or authority of the Issuer or that of its present or former members or officers and, to the knowledge of the Issuer, none of the foregoing are threatened.
(g) The Issuer makes no representation or warranty that the Projects will be adequate or sufficient for the purposes of the Borrower. ·
The Borrower hereby represents and warrants to the Issuer that:
Section S.L Organization. Powers. etc. The Borrower is a limited partnership duly organized and validly existing under the laws of the State of Delaware, has the power and authority to own its properties and assets and to carry on its business as now being conducted (and as now contemplated by the Borrower) and has the power to perform all the undertakings to be performed by it under the Loan Documents, to borrow hereunder and to execute and deliver the Loan Documents to which it is a party.
Section 5.2. Execution of Loan Documents. The execution, delivery and performance by the Borrower of the Loan Documents and other instruments required by this Loan Agreement to which it is a party ,or by which Borrower has agreed to be bound:
(a) have been duly authorized by all necessary partnership action;
(b) do not (and the terms hereof will not) conflict with or violate any provision of applicable Jaw, rule or regulation, any order of any court or other agency of government, the conflict with or violation of which would (i) materially and adversely affect the transactions contemplated by the Loan Documents, (ii) affect the validity or enforceability of the Loan Documents, (iii) materially and adversely affect the ability of the Borrower to perform its obligations under the Loan Documents, (iv) materially and adversely impair the Borrower's right to carry on its business substantially as now conducted (and as now contemplated by the Borrower) or (v) have a material adverse effect on the Borrower's financial condition existing as of the Closing Date;
(c) do not and will not conflict with or violate any provision of the Borrower's Formation Agreement;
(d) do not and will not violate or result in any material default under any other indenture, agreement or other instrument the violation of which would (i) materially and adversely affect the transactions contemplated by the Loan Documents, (ii) affect the validity or enforceability of the Loan Documents, (iii) materially and adversely affect the ability of the Borrower to perform its obligations under the Loan Documents, (iv) materially and adversely impair the Borrower's right to carry on its business substantially as now conducted (and as now contemplated by the Borrower) or (v) have a material adverse effect on the Borrower's financial condition existing as of the Closing Date; and
(e) have been duly executed and delivered by the Borrower and are enforceable against the Borrower in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting or limiting the enforcement of a creditor's rights generally and by general equitable principles, whether enforcement is sought by
. proceedings in equity of at law.
Section 53. Litigation. Except as disclosed by the Borrower to the initial purchasers of the Bonds, there is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending or, to the actual knowledge of the Borrower, threatened against or affecting it or any of its properties or rights which, if adversely determined, would (i) materially and adversely affect the transactions contemplated by the Loan Documents, (ii) affect the validity or enforceability of the Loan Documents, (iii) materially and adversely affect the ability of the Borrower to perform its obligations under the Loan Documents, (iv) materially and adversely impair the
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Borrower's right to carry on its business substantially as now conducted (and as now contemplated by the Borrower) or ( v) have a material adverse effect on the Borrower's fmancial condition existing as of the Closing Date.
Section SA. No Defaults. To the knowledge of the Borrower, the Borrower is not in 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 or by which it is bound, except for such defaults which would not have a material adverse effect on the Borrower's financial condition existing as of the Closing Date.
Section S.S. [Reserved].
Section 5.6. No Untrue Statements. All documents, certificates and statements furnished to the Trustee, the Issuer or the initial purchasers of the Bonds by or on behalf of the Borrower are true, correct and complete in all material respects, do not contain any untrue statement of a material fact and do not omit to state a material fact necessary in order to make the statements contained herein and therein not misleading or incomplete. It is specifically understood by the Borrower that all such statements, representations and warranties shall be deemed to have been relied upon by the Issuer as an inducement to make the Loan.
Section 5.7. No Action. To the actual knowledge of the Borrower and based solely on the representations and information provided by other parties and which are contained in the Tax Certificate, the Borrower knows of no action that any other Person has taken or intends to take, which would cause interest on the Bonds to be includable in the gross income of the recipients thereof for federal income tax purposes.
Section 5.8. Application of Proceeds. The Borrower has applied or made arrangements 1D apply all of the proceeds received by it from the issuance of the Bonds as provided in Section 2.l(b).
Section 5.9. Knowledge. As used herein, "to the actual knowledge ofthe Borrower" or words of similar import shall mean the actual and not constructive or imputed knowledge, without independent investigation or inquiry, of the Controller of the Borrower or such other comparable officer or representative designated in writing by Borrower from time to time.
ARTICLE VI
CONDITIONS OF LOAN
The Issuer's obligations to make the Loan and issue the Bonds are subject to the following conditions precedent:
Section 6.1. Opinion of Counsel for the Borrower. The Issuer shall have received the opinion of Counsel for the Borrower, dated the Closing Date, addressed to the Issuer, and satisfactory in form and substance to the Issuer and its counsel.
Section 6.2_ Opinion of Bond Counsel. The Issuer-and Borrower shall have received the opinion of Bond Counsel to the effect that interest on the Bonds is excludable from gross income for federal income tax purposes; and that the Bonds have been duly authorized and issued by the Issuer under the provisions of the Act.
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( Section 6.3. Loan and Other Documents. The Issuer shall have received:
(a) the Loan Documents duly executed by all parties thereto; and
(b) all other documents required by Section 2.5 of the Indenture.
ARTICLE VII
COVENANTSOFTBEBORROWER
The Borrower covenants and agrees, so long as this Loan Agreement shall remain in effect or the Bonds shall be Outstanding, as follows:
Section 7 .I. Compliance with Code and Regulations.
(a)· The Borrower shall use commercially reasonable efforts to assure that interest paid on the Bonds shall be excludable from the gross income of the recipients thereof for federal tax purposes, except in the event that such recipient is a Substantial User or Related Person to a Substantial User.
In addition, any and all actions to be undertaken by the Borrower or by any other Person as to which the Issuer must, pursuant to the terms hereof, consent or approve.in advance, shall be deemed to be the actions of the Borrower or such other Person (and not the actions of the Issuer).
(b) The Borrower shall not permit at any time or times any of the Gross Proceeds of the Bonds to be used, directly or indirectly, to acquire any Investment Property (within the meaning of Section 148(b)(2) of the Code) the acquisition of which would cause the Bonds to be "arbitrage bonds" for the purposes of Section 148 of the Code.
(c) The Borrower shall calculate or cause to be calculated Rebatable Arbitrage in accordance with the provisions of Section 5 .I O'of the Indenture and Article VI of the Tax Certificate, and shall pay to the Trustee the amount of any Rebatable Arbitrage for deposit to the Rebate Fund. The Borrower shall direct the Trustee in writing to pay to the United States any Rebatable Arbitrage as required by Section 5.10 of the Indenture and the Tax Certificate.
Section 7 .2. Reserved.
Section 7.3. Mergers. etc. The Borrower shall maintain its existence as a legal entity and shall not sell, assign, transfer or otherwise dispose of substantially all of its Projects, except for any disposition as may be required by (i) a lawful condemnation or (ii) an ordinary course disposition of one or more Projects to a third party purchaser provided that the B9nds associated with each Projeci so transferred shall be redeemed in accordance with this Loan Agreement and the Indenture. Notwithstanding the preceding sentence, the Borrower may merge with or into or consolidate with another entity, and the applicable Projects and this Loan Agreement may be transferred without violating this Section (a "Permitted Transfer''); provided
(1) the Borrower provides to the Issuer notice of the proposed surviving, resulting or transferee entity on or before the effective date of such Permitted Transfer;
(2) after the Permitted Transfer, either the Borrower shall be the continuing entity, or the successor entity or the Person which acquires by sale or conveyance any or all the assets of the Borrower (if other than the Borrower) shall be an entity organized under the laws of the United States of America or
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any state, thereof and shall expressly assume the applicable obligations of the Borrower under the Note and this Loan Agreement;
(3) after giving effect to the Permitted Transfer, no Event of Default, and no event which, after notice or lapse oftime, or both, would become an Event of Default, shall have occurred and be continuing; and
( 4) prior to the Permitted Transfer, the written consent of the Letter of Credit Issuer (if any) is delivered to the Issuer and the Trustee. In the event of any Permitted Transfer (other than a conveyance by way of lease) and upon any such assumption by a successor entity, the Borrower or any successor entity shall be discharged from all applicable obligations and covenants under this Loan Agreement.
The Borrower shall, before consummating any Permitted Transfer, deliver to the Issuer and the Trustee a Favorable Opinion of Bond Counsel.
Nothing in this Section 7.3 shall be construed to prohibit the Borrower from transferring any asset of the Borrower which is not a Project.
Section 7 .4. Assignment of Loan Agreement. Subject to the provisions of Section 7 .3, the Borrower may not assign or transfer the whole or any part ofthis Loan Agreement without the prior express written consent of the Issuer and the Trustee. Any assignment ofthis Loan Agreement by the Borrower without the prior express written consent of the Issuer and the Trustee shall be null and void.
Section 75. Indemnification. To the fullest extent permitted by law, the Borrower agrees to indemnil}', hold harmless and defend the Issuer and the Trustee, and each of their respective officers, governing members, directors, officials, employees, attorneys and agents, and, with respect to the Issuer, the applicable program participant (collectively, the "Indemnified Parties"), against any and all actual losses, damages, claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under federal or state securities laws or any oiher statutory law or at common law or otherwise, arising out of or based upon or in any way relating to:
(a) the Loan Documents or the execution or amendment thereof or in connection with transactions contemplated thereby, including the issuance, sale, resale or remarketing ofthe Bonds;
(b) any act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Loan or the Projects, the operation of the Projects, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design; acquisition, installation or construction of, the Projects or any part thereof; ·
(c) any I ien or charge upon payments by the Borrower to the Issuer and the Trustee hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Issuer or the Trustee in respect of any portion of any Project;
(d) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Projects or any part thereof;
(e) the defeasance and/or redemption, in whole or in part, of the Bonds;
(f) any declaration of taxability of interest on the Bonds, or allegations or regulatory inquiry that interest on the Bonds is taxable, for federal tax purposes.
(g) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact by the Borrower contained in any offering statemeni or document for the Bonds or any of the documents relating to the Bonds to which the Borrower is a party, or any omission or alleged omission from any offering statement or document for the Bonds of any materialtfact necessary to be stated therein in order to make the statements made therein by the Borrower, in the light of the circumstances under which they were made, not misleading;
(h) the Trustee's acceptance or administration of the trust of the Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party; ·
except (i) in the case of the foregoing indemnification of the Trustee or any of their respective officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the negligence or willful misconduct of such Indemnified Party; or (ii) in the case of the foregoing indemnification of the Issuer or any of its officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement, which approval shall not be unreasonably withheld or delayed.· Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Borrower if in its reasonable judgment a material conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.
Notwithstanding any transfer of a Project to another owner in accordance with the provisions of this Loan Aireement, the Borrower shall remain obligated to indemnify each Indemnified Party pursuant to this Section if such subsequent owner fails to indemnify any party entitled to be indemnified hereunder, unless such Indemnified Party bas consented to such transfer and to the assignment of the rights and .obligations of the Borrower hereunder.
The rights of any persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses pursuant to Section 2.7 hereof shall survive the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or removal. The provisions of this Section 7.5. shall survive the termination of this Loan Agreement.
The foregoing provisions shall not provide the Bond Owners with any rights against the . Borrower, in addition to those contained in the Bonds, if any, upon a determination that interest on the Bonds has become taxable for federal income tax purposes, provided the Borrower acts in accordance with the redemption provisions of the Bonds.
OHS Wcst:260368142.l3 .12
Section 7.6. Notices of Default. The Borrower agrees to use commercially reasonable efforts to notify the Trustee in writing ofany occurrence of an Event of Default of which the Borrower has actual .knowledge of, but in any event not later than ten (I 0) Business Days after the event giving rise to the requirement of notification.
Section 7. 7. Brokerage Fee. Each of the Issuer and Borrower represent to the other that there are no brokerage fees, finder's fees or loan servicing fees payable of which they are aware and each shall hold the other harmless to the extent and such fees or claims arise through or from the actions of the other.
Section 7.8. Covenant by Borrower as to Compliance with Indenture. The Borrower shall not knowingly interfere with the exercise of the power and authority granted to the Trustee in the Indenture. The Borrower shall use commercially reasonable efforts to aid in fumishing·to the Issuer or the Trustee any documents, certificates or opinions that are· reasonable and necessary under the Indenture and to
·comply with the provisions thereof which apply to the Borrower. The Borrower shall not have any continuing obligation to disclose financial information or other proprietary non-public information.
Section 7.9. Letter of Credit. If at any time the Borrower elects to obtain a Letter of Credit, the Borrower may submit such Letter of Credit to a Rating Agency for the purposes of obtaining a rating on the Bonds. The Borrower shall fumish the Trustee with the original of any Letter of Credit obtained pursuant to this Section, and, if such Letter of Credit is submitted to a Rating Agency, evidence of any rating or ratings obtained on the Bonds in connection therewith. No Altemate Letter of Credit may replace a Letter of Credit unless all amounts owed to such Letter of Credit Issuer under the Reimbursement Agreement have been paid.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute an Event of Default hereunder:
(a) if any representation or warranty made in Article V herein or any other material representation made in any other Loan Document or in any report, certificate, or other instrument furnished in connection with this Loan Agreement shall prove to be false or misleading in any material respect when made and such defective representation or warranty (with respect to non-intentionally defective representations or warranties only) is not remedied to the reasonable satisfaction of the Issuer within thirty (30) days of Borrower's receipt of written notice thereof;
(b) default in the payment ofany installment of the principal or redemption price of, prepayment premium, if any, or accrued and unpaid interest, if any, under the Loan or the payment ofthe purchase price of tendered Bonds, in each case, on the dates when due;
(c) Borrower fails to perform any material covenant, material condition or material agreement of Borrower under the Loan Documents, other than the payment of principal, redemption price, purchase price and interest which shall be governed by (b) above, and failure continues for thirty (30) days after Borrower receives written notice from the Issuer or the Trustee (with a copy to the other) which notice shall state that it is a "Notice of Default" and a specific default has occurred under the Loan Documents and require that the default be cured within thirty (30) days; provided, however, if such default is not reasonably capable of being cured such initial thirty (30) day period and the Borrower is
OHS West:260368142.13 ·13
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making diligent.efforts to cure such default, then Borrower shaH have an additional ninety (90) days after the Notice of Default to cure such default; or
(d) the occurrence of an Act of Bankruptcy; provided that if such Act of Bankruptcy is not a voluntary act on the part of Borrower or any of its affiliates and provided that such involuntary Act of Bankruptcy is discharged within 60 days of notice of filing and Borrower otherwise remains current on all payments due under the Loan and the Loan Documents, then such involuntary occurrence shaH not be an Event of Default.
Section 8.2. Remedies. If an Event of Default has occurred and is continuing, provided that written notice of the Event of Default, when required, has been given to the Borrower by the Issuer (or the Trustee) and the Event of Default has not theretofore been cured within the applicable cure period, and provided, further, that no remedial steps shall be taken by the Issuer the effect of which wouid be to entitle the Issuer to funds necessary for the payment of principal of and accrued and unpaid interest, if any, on the Bonds which have not yet matured unless such principal and interest shall have been declared ·due and payable in accordance with the Indenture and such declaration shall not have been rescinded, the Issuer may and, at the direction of the Controlling Person (in accordance with the terms and provisions of the Indenture) shall, take any one 'or more of the following remedial steps, subject to the provisions of this Loan Ag~ment:
(a) declare the principal of and accrued and unpaid interest, if any, on the Loan due and payable; and
(b) take any action at law or in equity to collect the payments then due and thereafter to become due or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Loan Agreement.
Any amounts collected pursuant to action taken under this Section 8.2 shall be applied in .accordance with the Indenture.
Section 8.3. No Remedy Exclusjye. Subject to the provisions of this Loan Agreemen~ no remedy herein conferred or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute, No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exeroised from time to time and as often as may be deemed expedient. In order ·to entitle the Issuer to exercise any remedy reserved to it in this Article, it shall not be necessary to give notice, other than such notice as may be required in this Article.
Section 8.4. Additional Remedies. In addition to the above remedies, if the Borrower commits a breach or threatens to commit a breach of this Loan Agreement, the Issuer and the Trustee shall have the right and remedy, without posting bond or other security, to have the provisions of this Loan Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Issuer and that money damages will not provide an adequate remedy therefor.
Section 8.5. Agreement to Pay Attorneys' Fees and Exoenses. In the event the Borrower should default under any of the provisions of this Loan Agreement or the other Loan Documents and either the Issuer or the Trustee shall require and employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any
OHS West260368142 13 14
obligation or agreement on the part of the Borrower or enforcement of the Bonds under any Loan Document, the Borrower agrees that it will, on demand therefor, pay to the Issuer or the Trustee, as the case may be, the reasonable fees of such attorneys and such other reasonable out-of-pocket expenses so
\ incurred by the Issuer or the Trustee.
Section 8.6. No Additional Waiver Implied by One Waiver. In the event any agreement contained in any Loan Document should be breached by any party and thereafter such breach should be waived by any party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Notices. Any notice or other communication required under this Loan Agreement shall be sufficiently given and shall be deemed given when provided in the manner and to the addresses set forth in Section I I .4 of the Indenture.
Section 9.2. Concerning Successors and Assigns. All covenants, agreements, representations and warranties made herein, in the other Loan Documents and the representations in the certificates delivered by Borrower pursuant hereto and thereto shall survive the making of the Loan herein contemplated and shall continue in full force and effect so long as the payment Obligations are outstanding and unpaid. Whenever in this Loan Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower which are contWned in this Loan Agreement shall bind its successors and assigns and inure to the benefit of the permitted successors and assigns of the Issuer.
Section 9.3. Closing Expenses and Fees. Subject to the terms of any separate agreement between the Trustee and the Borrower, the Borrower will pay the reasonable administration expenses of the Trustee, all reasonable expenses incurred in connection with the preparation of the Loan Documents and the making of the Loan hereunder and all such expenses relating to any amendments, waivers or consents regarding the Indenture or Loan Documents.
The following covenants of the Borrower shall be in addition to and shall not be limited by the covenants of the Borrower contained in the preceding paragraph.
The Borrower agrees:
(I) subject to the terms of any separate agreement between the Trustee and the Borrower, to pay to the Trustee from time to time reasonable compensation for all services rendered by them under the Indenture and hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) subject to the terms of any separate agreement between the Trustee and the Borrower, to reimburse the Trustee upon its request for all reasonable expenses incurred or made by either of them in accordance with any provision of the IndentUre or this Loan Agreement (including the reasonable compensation and the expenses and disbursements of their agents and counsel); and
The rights of the Trustee under this Section and the obligations of the Borrower hereunder shall survive the termination of this Loan Agreement.
Section 9.4. Applicable Law. This Loan Agreement shall be construed in accordance with and governed by the laws of the State, without regard to conflict of laws principles.
Section 9.5. Modification in Writing. The waiver of any provision of this Loan Agreement, or consent to any departure by the Borrower therefrom shall, in no event, be effective unless the same shall be in writing and signed by the Issuer and approved by the Trustee (and, if required by the Indenture, any Controlling Person). Any such waiver shall be effective only in the specific instance and for the purpose for which given. No notice to or demand upon the Borrower in any case shall entitle it to any other further notice or demand in the same circums!Jmces. Any amendment of this Loan Agreement shall be effected only in the manner provided in Article X of the Indenture.
Section 9.6. Failure to Exercise Rights. Neither any failure nor any delay on the part of the . Issuer or Trustee in exercising any right, power or privilege hereunder or under any other Loan Document shall operate as a waiver hereof or thereof, nor shall a single or partial exercise thereof preclude any other . or further exercise of any other right, power or privilege.
Section 9.7. . Assignment of Loan Agreement. The Borrower acknowledges that this Loan Agreement shall be assigned by the Issuer to the Trustee as security for the Bonds pursuant to the terms of the Indenture. The Issuer retains the right, jointly or severally with the Trustee, to specifically enforce its Reserved Rights.
The Borrower consents to such assignment and hereby agrees that, as to the Trustee, its obligation to make payments under this Loan Agreement shall be absolute, and shall not be subject to any defense or any right of set-off, counterclaim or recoupment arising out of any breach by the Issuer of any duty or obligation to the Borrower, whether hereunder or otherwise, or out of indebtedness or liability at any time owing to the Borrower by the Issuer; provided that in all events there shall be no duplicate performance of any payment or other Obligations.
Section 9.8. Further Assurances and Corrective Instruments. The Issuer 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 and amendments hereto and such further instruments as may reasonably be required to correct the legal description of a Project or to carry out the intention of or facilitate the performance of this loan Agreement in the manner proyided in Article X of the Indenture.
Section 9.9. Captions. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Loan Agreement.
Section 9.10. Severabilitv. In the event any provision of this Loan Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render any other provision hereof unenforceable.
Section 9 .II. Counterparts. This Loan 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 9.12. Eff.,;,tive Date and Term. This Loan Agreement shall become effective upon its execution and delivery by the parties hereto, and all representations and warranties shall be deemed to have been made as of such date of execution and delivery and the Loan Agreement shall remain in full force and effect from the date hereof and, subject to the provisions hereof, shall expire on such date as the Bonds and all payment Obligations hereunder are paid in full.
Section 9.13. Reserved.
OHSWesr.26036814213 16
Section 9.14. Jncomoration ofTenns. The other Loan Documents shall be made subject to all the tenns and conditions contained in this Loan Agreement to the same extent and effect as if this Loan Agreement were fully set forth in and made a part of the other Loan Documents. This Loan Agreement is made subject to all the conditions, stipulations, agreements and covenants contained in the other Loan Documents to the same extent and effect as if the other Loan Documents were fully set forth herein and made a part hereof. Notwithstanding any of the foregoing, if any provisions in the other Loan Documents (other than the Indenture and the Bonds) are inconsistent with the public purpose covenants contained within this Loan Agreement, to that extent this Loan Agreement shall control.
Section 9 .I 5. References to Letter of Credit Issuer. Notwithstanding anything herein to the contrary, all rights and powers granted to any Letter of Credit Issuer under this Loan Agreement and all references thereto shall not be effective if there is no Letter of Credit, if the Letter of Credit is no longer in effect, or if the Letter of Credit has been wrongfully dishonored.
Section 9.16. Dispute Resolution.
(i) Arbitration. Except with respect to a payment default or to the extent expressly provided below, any controversy, claim or dispute relating to the Loan or the Loan Documents between the parties hereunder (a ''Dispute") shall, upon the request of either party, be determined by binding arbitration in accordance with the Federal Arbitration Act, Title 9, United States Code (or if not applicable, the applicable state law), the applicable rules for arbitration of disputes of JAMS and the "Special Rules" set forth below. In the event of any inconsistency, the Special Rules shall control. The filing of a court action is not intended to constitute a waiver of the right of Borrower or Issuer, including the suing party, thereafter to require submittal of the Dispute to arbitration. Any party to this Loan Agreement may bring an action, including a summary or expedited proceeding, to compel arbitration of
· any Dispute in any court having jurisdiction over such action.
(ii) Special Rules.
(I) The arbitration shall be conducted in Sacramento County, California.
(2) The arbitration shall be administered by JAMS, who will appoint an arbitrator; if JAMS is unable or legally precluded from administering the arbitration, then the American Arbitration Association will serve. All Disputes shall be detennined by one arbitrator; however, if the amount in controversy in a Dispute .exceeds Five Million Dollars ($5,000,000), upon the request of any party, the Dispute shall be decided by three arbitrators (for purposes of this Loan Agreement, referred to collectively as the "arbitrator").
(3) All arbitration hearings will be commenced within ninety (90) days of the demand for arbitration and completed within ninety (90) days from the date of commencement; provided, however, that upon a showing of good cause, the arbitrator shall be permitted to extend the commencement of such hearing for up to an additional sixty (60) days.·
(4) The judgment and the award, if any, of the arbitrator· shall be issued within thirty (30) days of the close of the hearing. The arbitrator shall provide a concise written statement setting forth the reasons for the judgment and for the award, if any. The arbitration award, if any, may be submitted to any court having jurisdiction to be confirmed and enforced, and such confinnation and enforcement shall not be subject to arbitration.
OHS West:260368142B 17
i t i
(5) Tho arbitrator will have the authority to decide whether any Dispute is barred by the statute of limitations and, if so, to dismiss the arbitration on that basis. For purposes of the application of the statute of limitations, the service on JAMS under applicable JAMS rules of a notice of Disputes is the equivalent of the tiling of a lawsuit.
(6) Any dispute concerning this arbitration provision, including any such dispute as to the validity or enforceability of this provision, or whether a Dispute is
. arbitrable, shall be determined by the arbitrator.
(7) The arbitrator shall have the power to award legal fees and costs pursuant to the terms of this Loan Agreement
(iii) Judicial Reference. Unless both Borrower and Issuer consent to submission of the Dispute to arbitration to be conducted as provided in subsections (a) and (b), the Dispute shall be resolved by judicial reference pursuant to California Code of Civil Procedure (the "CCP") Sections 638 et seq. This provision constitutes a reference agreement between or among the parties as provided in Section 638 of the CCP. The referee(s) shall be chosen by the parties under the auspices of JAMS in the same manner as arbitrators are selected in proceedings administered under the JAMS rules and procedures for the arbitration of financial disputes. The referee (or the presiding referee of the panel) must be an active attorney or a retired judge. The award that results from the decision of the referee(s) shall be entered as a judgment in the court that appointed the referee, in accordance with the provisions of Sections 644 and 645 of the CCP.
(iv) Conflicting Provisions for Dispute Resolution. If there is any conflict ·between the terms, conditions and provisions of this Section and those of any other provision or agreement for arbitration, judicial reference or other dispute resolution, the terms, conditions and provisions of this Section shall prevail as to any Dispute arising out of or relating to (i) this Loan Agreement, (ii) any other Loan Document, (iii) any related agreements or instruments, or (iv) the transaction contemplated herein or therein. In any other situation, if the resolution of a given Dispute is specifically governed by another provision or agreement for arbitration, judicial reference or other dispute resolution, the other provision or agreement shall prevail with respect to said Dispute.
(v) Jury Trial Waiver in Arbitration. By agreeing to this Section, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Dispute.
. (vi) Section 7.5 Controls. The provisions of Section 7.5 s)lall control in the event of any conflict between this Section 9.16 and Section 7.5.
Section9.17. WAIVER OF JURY TRIAL. WITIIOUTINTENDING IN ANYWAY TO LIMIT THE PARTIES' AGREEMENT TO ARBITRATE ANY "DISPUTE" AS SET FOR Til IN THlS LOAN AGREEMENT, TO THE EXTENT ANY "DISPUTE" IS NOT SUBMITTED TO ARBITRATION OR IS DEEMED BY THE ARBITRATOR OR BY ANY COURT WITH JURISDICTION TO BE NOT ARBITRABLE OR NOT REQUIRED TO BE ARBITRATED, BORROWER AND ISSUER WAIVE TRIAL BY JURY IN RESPECT OF ANY SUCH "DISPUTE" AND ANY ACTION ON SUCH "DISPUTE." THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND ISSUER, AND BORROWER AND ISSUER HEREBY REPRESENT TIIA T NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN DOCUMENTS. BORROWER
OHS West260368142.13 18
AND ISSUER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their duly authorized representatives as of the day first written above.
OHS West:26036814~13
CALIFORNIA STATEWIDE COMMUNITfES DEVELOPMENT AUTHORITY
IRVINE APARTMENT COMMUNITIES, L.P., a Delaware limited partnership
By: ·lAC, Inc., a Delaware corporation, its general partner
By: ........,:-:--=--:----Marc D. Ley SVPandCFO
By: __ ~~~~------Fioy E. Andrews Secretary
EXHIBIT A
FORM OF PROMISSORY NOTE
$334,190,000 April 3, 2008
FOR VALUE RECEIVED, and upon the terms and conditions set forth herein, IRVINE APARTMENT COMMUNITIES, L.P., a Delaware limited partnership ("Borrower''), promises to pay to the order of CALIFORNJA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, a joint exercise of powers agency of the State of California (together with its successors and assigns, the "Issuer"), at the Issuer's office located at 1100 K Street, Suite 101, Sacramento, California 95814, or at such other place as the Issuer may designate to Borrower in writing from time to time, the principal amount of TIIREE HUNDRED THIRTY FOUR MILLION ONE HUNDRED NINETY THOUSAND AND NO/I 00 DOLLARS ($334, 190,000), togeth!'f with interest thereon, in the amounts, at the times and otherwise in accordance with the terms set forth in that certain Loan Agreement dated as of April I, 2008 (as amended, modified, or supplemented from time to time, tl!e "Loan Agreement'') between Borrower and the Issuer, which terms are incorporated herein by this reference.
ARTICLE 1 TERMS OF NOTE
1.01 Loan Agreement This Note is the promissory note·referred to in the Loan Agreement. Ali capitalized terms used herein and not defined herein have the meanings provided in the Loan Agreement. All of the terms, conditions and provisions of tl!e Loan Agreement applicable to this Note and the debt evidenced hereby are incorporated herein by this reference.
1.02 Negotiable Instrument Borrower agrees that this Note is a negotiable instrument, even though this Note, absent this paragraph, may not otherwise qualify as a negotiable instrument under applicable law. '
1.03 Exculoation. NOTWITHSTANDING ANY PROVISION HEREOF TO THE CONTRARY, BORROWER'S PERSONAL LIABILITY FOR PAYMENT OF THIS NOTE AND PERFORMANCE OF THE OBLIGATIONS UNDER TillS NOTE IS LIMITED IN 1HE SAME MANNER AND TO THE SAME EXTENT AS EXPRESSLY PROVIDED IN THE LOAN AGREEMENT.
1.04 Borrower's Waivers. Borrower, for itself and all others who may become liable for .payment of all or any portion of this Note; hereby waives presentment for payment, demand, protest, and notice of dishonor, protest, nonpayment, demand, intent to accelerate, and acceleration. Borrower,. for itself and all others who may become liable for payment of all or any portion of this Note, hereby further waives and renounces, to the fullest extent permitted by law, all rights to the benefits of any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now or hereafter provided, both as to par(y and proper(y (real and personal), against the enforcement and collection of the obligations evidenced by this Note or any of the other Loan Documents.
1.05 Unconditional Payment. Any payment received by the Issuer hereunder that is required to be refunded or recovered from the Issuer as a voidable preference or a fraudulent transfer or is otherwise set-aside pursuant to the Bankruptcy Code or any insolvency or other debtor relief law shall not be considered as a payment made on the Loan or under this Note. Borrower's liability under this Note to make such payment shall be reinstated, notwithstanding that this Note may have been marked satisfied and returned to Borrower or otherwise canceled, and such payment shall be immediately due and payable upon demand.
ARTICLE2 DEFAULT AND REMEDIES
2.0 I Event of Default.· The occurrence of an "Event of Default" as that term is defined under the Loan Agreement shall constitute an "Event of Default" under this Note.
2.02 Cu!llulative and Independent Remedies. Following an Event of Default (which has not been waived in writing by the Issuer), the Issuer, without notice or consent from Borrower,. shall be entitled to exercise all rights and remedies as have been provided to the Issuer hereunder and shall, to the extent required by the Indenture, exercise such rights and remedied upon the direction of the Controlling Person, under the Loan Agreement and other Loan Documents, by Jaw or in equity. Such rights and remedies are cumulative and may be exercised independently, concurrently or successively in the Issuer's sole discretion and as often as occasion therefor shall arise. No partial exercise by the Issuer of any right or remedy will preclude further exercise thereof. Notice or demand given to Borrower in any instance will not entitle Borrower to notice or demand in similar or other circumstances or constitute the Issuer's waiver of its right to take any future action in any circumstance without notice or demand (except where expressly required by this Note to be gi~en). The Issuer may release security for the Loan, may release any party liable for the Loan, may grant extensions, renewals or forbearances with respect thereto, and may apply any security held by it to payment of the Loan, in each case without prejudice to its rights under this Note. The Issuer will not be deemed as a consequence of its delay or failure to act, or any forbearances granted, to have waived or be estopped from exercising any of its rights or remedies.
ARTICLE3 MISCELLANEOUS PROVISIONS
3.01 lncnrnoration from Loan Agreement. All provisions of the Loan Agreement are incorporated into this Note by this reference, as if fully reproduced herein.
3.02 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California (without regard to any conflict of laws or principles) and the applicable laws of the United States of America.
[Remainder of page is blank; signatures appear on next page.j
OHS West:260368142.13
IN WITNESS WHEREOF, the undersigned hereby signs, seals and delivers this Note, intending to be legally bound hereby.
OHS West:260368142.13
IRVINE APAR1MENT COMMUNITIES, L.P., a Delaware limited partnership
By: lAC, Inc., a Delaware corporation, its general partner
U.S. Bank National Association, as Trustee, without recourse.
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
By: ___________ _
Member
Schedule I '~-
l ,.
OHS W~::st260368142.13
CSCDA Multifamily Housing Revenue Refunding Bonds (lAC Project) Series 2008 Allocation of Bonds to Projects
Project Bond Allocated Maturity Number Series ProJ!ct Commun!!l: BondAniount Date CUSIP
c -1 San Paulo San Paulo $24,800,000 5/15125 13079PMH3
2 C-2 CedarCreek Cedar Creek $8,715,000 5115125 3 C-2 ComeiiCourt Harvard I Cornell Court 5,280,000 5115125 4 C-2 Deerfield II Deerfield II 3,400,000 5115125 5 C-2 Harvard Court Harvard I Cornell Court 5,235,000 5115125 6 C-2 Northwood Park Northwood Park 7,875,000 5115125 7 C-2 Northwood Place Northwood Place 30,595,000 5115125 8 C-2 San Marino San Marino 9,997,000 5115125 9 C-2 San Remo I San Remo Vdla 6,835,000 5115125 10 C-2 San Remo II San Remo Villa 7,205,000 5/15125 11 C-2 Stanford Court Stanford Court 14,085,000 5115125
13 C-3 Berkeley Court I Berkeley I Columbia Court $5,415,000 5115125 14 C-3 Berkeley Court II Berkeley I Columbia Court 2,510,000 5/15125 15 C-3 Columbia Court Berkeley I Columbia Court 2,640,000 5/15125
16 C-3 Cross Creek Cross Creek 6,855,000 5115125
17 C-3 Newport North Newport North 38,540,000 : 5115125
SCHEDULE OF REGULATORY AGREEMENTS AND FORM OF AMENDMENTS
I. Berkeley Court I Project - Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants among California Statewide Communities Development Authority, as Issuer and Irvine Apartment Communities, L.P., and U.S. Bank Trust National Association Dated as of May 15, 1998 Relating to Berkeley Court I Project $334,190,000. (Recorded in Orange County, No. 19980382085- 6-17-98); as amended by that Omnibus Amendment to Regulatory Agreements dated as of April!, 2008.
2. Berkeley Court D Project - Amended and Restated Regulatory Agreement and ·Declaration of Restrictive Covenants among California Statewide Communities Development Authority, as Issuer and Irvine Apartment Communities, L.P., and U.S. Bank Trust National Association Dated as of May 15, 1998 Relating to Berkeley Court II Project $334,190,000. (Recorded in Orange County, No. 199803 82086 - 6-17-98), as amended by that Omnibus Amendment to Regulatory Agreements dated as of April I, 2008.
3. Dartmouth Court Project - Amended .and Restated Regulatory Agreement and Declaration of Restrictive Covenants among California Statewide Communities Development Authority, as Issuer and Irvine Apartment Communities, L.P., and U.S. Bank Trust National Association Dated as of May 15, 1998 Relating to Dartmouth Court Project $334,190,000. (Recorded in Orange County, No. 19980382091- 6-17-98), as amended by that OmnibiJS Amendment to Regulatory Agreements dated as of April I, 2008.
4. Cross Creek Project- Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants among California Statewide Communities Development Authority, as Issuer and Irvine Apartment Communities, L.P., and U.S. Bank Trust National. Association Dated as of May 15, 1998 Relating to Cross Creek Project $334,190,000. (Recorded in Orange County, No.l9980382090-6-17-98), as amended by that Omnibus Amendment to Regulatory Agreements dated as of April I, 2008.
5. San Paulo Apartments Project - Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants among California Statewide Communities Development Authority, as Issuer and Irvine Apartment Communities, L.P., and U.S. Bank Trust National Association Dated as of May 15, 1998 Relating to San Paulo Apartments Project $334,190,000. (Recorded in Orange County, No. 19980382103- 6-17-98), as amended by that Omnibus Amendment to Regulatory Agreements dated as of April!, 2008.
Irvine Apartment Communities, L.P., a Delaware limited partnership
WHEN RECORDED RETURN TO:
Orrick, Herrington & Sutcliffe LLP The Orrick Building 405 Howard Street San Francisco, CA 94105 Attention: Justin Cooper, Esq.
OMNIBUS AMENDMENT TO REGULATORY AGREEMENTS
THIS OMNIBUS AMENDMENT TO REGULATORY AGREEMENTS dated as of April I, 2008 (this "Amendment"), amending those certain Regulatory Agreements set forth in Exhibit B attached hereto (the "Original Regulatory Agreements" and, together with this Amendment, the "Regulatory Agreements"), recorded in the Official Records of the County of Orange, California, as documents numbered as set forth in Exhibit B, made by and among the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORJTY, a joint exercise of powers authority of the State of California (the "Issuer"), U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Trustee"), as successor to U.S. Bank Trust Natiomil Association, under that certain Indenture of Trust, dated as of April I, 2008 (the "Indenture"), between the Issuer and the Trustee, and IRVINE APARTMENT COMMUNITIES, L.P., a Delaware limited partnership (together with its successors and assigns, the "Borrower"),
WITNESSETH:
WHEREAS, the Issuer previously issued its $334,190,000 Apartment Development Revenue ·Refunding Bonds, Series 1998A (Irvine Apartment Communities, L.P .) (the "Prior Bonds"), pursuant to an Indenture of Trust, dated as of May 15, 1998, between the Issuer and the Trustee, as trustee thereunder (the "Prior Indenture"), and the Issuer loaned the proceeds of the Prior Bonds to the Borrower pursuant to a Loan Agreement dated as of May 15, 1998, to finance and refmance multifamily housing rental developments located in the County of Orange, California (as further described in the Original Regulatory Agreements, the "Project"); and
WHEREAS, in connection with the issuance of the Prior Bonds, the Issuer, the Trustee and the Borrower entered into the Original Regulatory Agreements; and
WHEREAS, at the request of the Borrower, the Issuer has authorized and issued $334,190,000 Multifamily Housing Revenue Refunding Bonds (IAC Project) Series 2008 C-1 (AMT), C-2, C-3 and C-4 (collectively, the "Bonds") pursuant to the Indenture, and loaned the proceeds ofthe Bonds to the Borrower pursuant to a Loan Agreement, dated as of April I, 2008 (the "Loan Agreement"), to redeem the Prior Bonds and thereby refinance the Project;
WHEREAS, in connection with the issuance of the Bonds, the parties hereto desire to amend the Original Regulatory Agreements as set forth herein; and
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WHEREAS, Section 20 of the Original Regulatory Agreements provides that their terms may be amended by a written instrument executed by the parties thereto and certain other conditions set forth therein, each of which has been satisfied;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:
SECTION I. Definitions.
(a) All terms defined in Section 1.1 of the Indenture shall have the same meanings when used in the Regulatory Agreements, unless otherwise provided in this Amendment
(b) The following definitions used in the Original Regulatory Agreements are hereby amended as follows:
"Allocable to the Project"- With respect to a portion of the Bonds or the Loan, the amount thereof allocated to the Project as set forth in the Loan Agreement.
"Bonds"- The Issuer's $334,190,000 Multifamily Housing Revenue Refunding Bonds (lAC Project) Series 2008 C-1 (AM1), C-2, C-3 and C-4, and any federally tax-exempt private activity bonds issued to refund such bonds.
"Closing Date" means the date the Prior Bonds were issued and delivered to the initial purchasers thereof.
· "Indenture"- The Trust Indenture providing for issuance of the Bonds, dated as of April 1, 2008, by and between the Issuer and the Trustee, as amended and supplemented from time to time.
"Loan Agreement"- The Loan Agreement, dated as of April I, 2008, by and between the Issuer and the Borrower, as amended and supplemented from time to time. · ··
"Program Administrator"- except as otherwise appointed by the Issuer, the Issuer.
SECTION 2. Amendment of Section 21. The notice address for the Program Administrator set forth in Section 21 of the Original Regulatory Agreements is hereby amended to read as follows:
California Communities 2033 North Main Street, Suite 705 Walnut Creek, CA 94596 Attention: Housing Compliance Monitoring
SECTION 3. Ratification and Reaffirmation of the Regulatory Agreements. Except as hereby expressly amended or superseded by this Amendment, the Regulatory Agreements shall remain in full force and effect. The Regulatory Agreements, as hereby amended, are ratified and confirmed.
SECTION 4. Interpretation. In the event of any conflict between the provisions of the Regulatory Agreements as originally in effect and the provisions of this Amendment, the provisions of this Amendment shall control.
SECTION S. Execution in Counterparts. This Amendment may be executed in several counterparts, each of which shall be an original and all ofwhich shall constitute but one and the same instrument.
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SECTION 6. Effective Date. Tiris Amendment shall become effective when executed by each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment, all as of the day and year first above mentioned.
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CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
BY----------~~~------------Member
U.S. BANK NATIONAL ASSOCIATION, as Trustee
~------~~~~~------~ Authorized Officer
(Borrower's and Owner's signatures follow on nexl page.)
