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R96-096RESOLUTION NO. R-96-~ A RESOLUTION OF THE CITY COMMISSION OF CITY OF BOYNTON BEACH, FLORIDA AUTHORIZING THE ISSUANCE OF ITS NOT TO EXCEED $13,000,000 MULTI-FAMILY HOUSING MORTGAGE REVENUE BONDS, SERIES 1996 (CLIPPER COVE APARTMENTS) FOR THE PRINCIPAL PURPOSE OF REFINANCING A PORTION OF THE COST OF ACQUIRING, CONSTRUCTING AND EQUIPPING A MULTI-FAMILY HOUSING FACILITY TO BE OWNED AND OPERATED BY C/HP COVE, INC.; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION OF AN INDENTURE OF TRUST AND ASSIGNMENT OF MORTGAGE, A LOAN AGREEMENT, A DECLARATION OF RESTRICTIVE COVENANTS, A BOND PURCHASE AGREEMENT AND A DEFINITIVE AGREEMENT AND APPROVING THE FORM OF A MORTGAGE AND SECURITY AGREEMENT AND A PRELIMINARY OFFICIAL STATEMENT; AUTHORIZING THE AWARD OF THE SALE OF THE BONDS BY A NEGOTIATED SALE; APPROVING A TRUSTEE FOR THE BONDS; AUTHORIZING THE PREPARATION, EXECUTION AND DELIVERY OF A FINAL OFFICIAL STATEMENT; AUTHORIZING CERTAIN OFFICIALS AND EMPLOYEES OF ~HE CITY TO TAKE ALL ACTIONS REQUIRED IN CONNECTION WITH THE ISSUANCE OF THE BONDS; AND MAKING CERTAIN OTHER COVENANTS AND AGREEMENTS IN CONNECTION WITH THE ISSUANCE OF THE BONDS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, City of Boynton Beach, Florida (the "Issuer") is a political subdivision of the State of Florida and is empowered by the provisions of Article VIII, Section 2 and Article VII, Section 10(c) of the Florida Constitution, and Chapter 166, Florida Statutes (the "Act"), to issue obligations for the purpose of financing multi-family housing facilities; and WHEREAS, the City Commission (the "Governing Body") of the Issuer has been requested by C/HP Cove, Inc. to issue not to exceed $13,000,000 aggregate principal amount of multi-family housing mortgage revenue bonds for the principal purpose of refinancing the cost of a multi-family housing facility within the City of Boynton Beach, Florida; and WHEREAS, on December 19, 1995 and again on June 4, 1996 the Issuer conducted public hearings as required by Section t47(f) of the Internal Revenue Code of 1986, as amended, with respect to the i~suance of the aforementioned bonds; and WHEREAS, the Issuer has determined to issue its Multi-family Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) in the principal amount of not exceeding $13,000,000 (the "Bonds") as further provided herein; and WHEREAS, the Issuer and C/HP Cove, Inc., a Florida corporation not-for-profit (the "Borrower") have received a form of Bond Purchase Agreement (the "Bond Purchase Agreement") whereby Wheat, First Securities, Inc., Stifel Nicolaus & Company, Incorporated and Raymond James & Associates, Inc. (the "Underwriters") would agree to purchase the Bonds; and WHEREAS, it is necessary and desirable to approve the form of and authorize the execution of an Indenture of Trust and Assignment of Mortgage, a Loan Agreement, a Declaration of Restrictive Covenants, a Definitive Agreement and the Bond Purchase Agreement and to approve the forms of a Preliminary Official Statement and a Mortgage and Security Agreement in connection with the issuance of the Bonds, and to provide a method to specify the interest rate(s), maturity date(s), redemption provisions and other details for the Bonds; and WHEREAS, the issuance of the Bonds and the sale thereof to the Underwriters will, in the judgment of the Issuer, serve the intended public purpose and in all respects conform to the provisions and requirements of the Act; NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. Unless the context otherwise requires, terms used herein in capitalized form and not otherwise defined herein shall have the meanings specified therefor in the Indenture of Trust and Assignment of Mortgage attached hereto as Exhibit "A" (the "Indenture"). Words importing singular number shall include the plural number in each case and vice versa, and words importing persons shall include firms and corporations. Section 2. Authority for this Resolution. This resolution, herein called the "Resolution," is adopted pursuant to the Act. Section 3. Findings. and declared as follows: It is hereby ascertained, determined A, The Project is appropriate to the needs and circumstances of, and will make a significant contribution to the economic growth of the Issuer, will provide and preserve gainful employment, and will serve a public purpose, consistent with Article VII, Section 10(c) of the Florida Constitution, by advancing the economic prosperity and the general welfare of the Issuer, the State, and the people thereof, and in particular, the issuance of the Bonds is in the common interest of the people of the City of Boynton Beach, Florida. The Borrower is financially responsible and fully capable of and willing to fulfill any -2- 8100M obligations which it may incur in connection with the financing of the Project as contemplated by this Resolution. The Issuer will be able to cope satisfactorily with the impact of the Project and will be able to provide, or cause to be provided when needed, the public facilities, including utilities and public services, that will be necessary for the operation, repair and maintenance of the Project and on account of any increases in population or other circumstances resUlting therefrom. B. The Issuer hereby finds that the Agreement makes adequate provision for the operation, repair and maintenance of the Project at the expense of the Borrower and for the payment of the principal and interest on the Bonds. Section 4. Authorization of Bonds. Subject and pursuant to the provisions hereof and of the Indenture, for the purpose of financing the Project, the issuance of revenue bonds of the Issuer under the authority of the Act in the principal amount of not to exceed $13,000,000 is hereby approved. The Mayor or Vice-Mayor of the Issuer (the "Mayor") is hereby authorized to award the sale of the Bonds in an aggregate principal amount sufficient, together with other available funds, to finance the Project and the costs associated with issuance of the Bonds, as requested by the Borrower, provided that the aggregate principal amount of the Bonds shall not exceed $13,000,000, the final maturity shall not be more than forty (40) years after issuance, the net interest cost on the Bonds shall not exceed eight percent (8%) per annum and the purchase price shall not be less than ninety-eight percent (98%) of the principal amount of the Bonds (reduced by any original issue discount and increased by any premium reflected in the initial offering price to the public), plus accrued interest to the date of issuance of the Bonds, all as approved by the Borrower and set forth in the Bond Purchase Agreement. The issuance of the Bonds is hereby approved for purposes of Section 147(f) of the Code. Subject to the foregoing, the Bonds shall be dated, shall bear interest at such rates, mature on such dates, be subject to redemption on such dates and in such amounts and at such price and have such other details, terms and conditions all as set forth in the Indenture. Section 5. Authorization of Execution and Delivery of the Indenture. As security for the payment of the principal of and interest on the Bonds, the Indenture, in substantially the form thereof attached hereto as Exhibit A, completed to reflect the terms of the Bonds, and with such changes, alterations and corrections as may be approved by the Mayor, such approval to be presumed by the execution thereof by the Mayor, is hereby approved by the Issuer, and the Issuer hereby authorizes and directs the Mayor to execute the Indenture and the City Clerk or any deputy City Clerk (the "Clerk") to attest thereto under the official seal of the Issuer, and to deliver the Indenture to the Trustee all of -3- 8100M the provisions of which, when executed and delivered by the Issuer as authorized herein, shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein. Section 6. Authorization of Execution and Delivery of the Aqreement. The Agreement, in substantially the form thereof attached hereto as Exhibit B, completed to reflect the terms of the Bonds and with such other changes, alterations and corrections thereto as may be approved by the Mayor, such approval to be presumed by the execUtion thereof by the Mayor, is hereby approved by the Issuer, and the Issuer authorizes and directs the Mayor to execute the Agreement and the Clerk to attest thereto under the official seal of the Issuer, and to deliver the Agreement to the Borrower, all of the provisions of which, when executed and delivered by the Issuer as authorized herein shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein. Section 7. Approval of Mortgage. The Mortgage, in substantially the form thereof attached hereto as Exhibit C, completed to reflect the terms of the Bonds and with such other changes, alterations and corrections thereto as may be approved by the Mayor, such approval to be presumed by the execution of the Agreement by the Mayor, is hereby approved by the Issuer. Section 8. Sale of Bonds: Execution and Delivery of the Bond Purchase Agreement. The Bonds are hereby awarded to the Underwriters upon the terms and conditions as shall be set forth in the Bond Purchase Agreement° The Bond Purchase Agreement, in substantially the form thereof attached hereto as Exhibit D, completed to reflect the terms of the Bonds and with such other changes, alterations and corrections thereto as may be approved by the Mayor, such approval to be presumed by the execution thereof by the Mayor, is hereby approved by the Issuer, and, upon execution thereof by the Borrower, the Issuer authorizes and directs the Mayor to execute the Bond Purchase Agreement and the Clerk to attest thereto under the official seal of the Issuer, and to deliver the Bond Purchase Agreement to the Underwriters, all of the provisions of which, when e~ecuted and delivered by the Issuer as authorized herein shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein. The Issuer hereby determines that a negotiated sale of the Bonds is in the ~est interest of the Issuer, the Borrower and the citizens and i of the limited market for bon execution of the Bond Purchase file with the Issuer the discl~ Florida Statutes, and competiti~ waived. ]habitants of the Issuer by reason ds such as the Bonds. Prior to Agreement the Underwriters shall sure required by Section 218.385, e bidding for the Bonds is hereby Section 9. Appointment of Trustee. The Bank of New York, acting by and through its agent, The Bank of New York Trust Company of Florida, N.A. is hereby appointed Trustee to act under the Indenture° -4- 8100M Section 10. Official Statement. The Issuer hereby approves the form and content of the Preliminary Official Statement relating to the Bonds attached hereto as Exhibit E, with such changes, alterations and corrections thereto as may be approved by the City Manager, and authorizes the use thereof in connection with the sale of the Bonds. The City Manager is hereby authorized to "deem final" the Preliminary Official Statement for purposes of Securities and Exchange Commission Rule 15c2-12. The Issuer authorizes and directs the preparation of a final Official Statement, which shall be in the form of the Preliminary Official Statement, together with such changes, insertions, omissions and filling in of blanks therein as may be approved by the Mayor, and upon such preparation, the Mayor is authorized and directed to execute the final Official Statement, such execution to be conclusive evidence of such approval. Section 11. Authorization of Execution and Delivery of th~ Restrictive Covenants. The Restrictive Covenants, in substantially the form thereof attached hereto as Exhibit F, with such changes, alterations and corrections thereto as may be approved by the Mayor, such approval to be presumed by the execution thereof by the Mayor, is hereby approved by the Issuer, and the Issuer authorizes and directs the Mayor to execute the Restrictive Covenants and the Clerk to attest thereto under the official seal of the Issuer, and to deliver the Restrictive Covenants to the Borrower, all of the provisions of which, when executed and delivered by the Issuer as authorized herein shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein. Section 12. Authorization of Execution and Delivery of the Definitive Aqreement. The Definitive Agreement, in substantially the form thereof attached hereto as Exhibit G, with such changes, alterations and corrections thereto as may be approved by the Mayor, such approval to be presumed by the execution thereof by the Mayor, is hereby approved by the Issuer, and the Issuer authorizes and directs the Mayor to execute the Definitive Agreement and the Clerk to attest thereto under the official seal of the Issuer, and to deliver the Definitive Agreement to the Borrower, all of the provisions of which, when executed and delivered by the Issuer as authorized herein shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein. Section 13. Authorization of Execution and Delivery of th~ Letter of Representations. The Letter of Representations, in substantially the form attached hereto as Exhibit H, completed with the details of the Bonds, is hereby approved, and the Mayor is hereby authorized and directed to execute the Letter of Representations, and to deliver the same to the Trustee, all of the provisions of which, when executed and delivered by the parties thereto, shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated verbatim herein. -5- 8100M Section 14. No Personal Liability. No covenant, stipulation, obligation or agreement herein contained or contained in the Agreement, the Indenture, the Restrictive Covenants, the Bond Purchase Agreement, the Definitive Agreement, the Bonds, or any instrument contemplated thereby shall be deemed to be a covenant, stipulation, obligation or agreement of any officer, member, agent or employee of the Issuer in his or her individual cspacity, and no member of the Governing Body of the Issuer executing the Bonds or other documents herein mentioned shall be liable personally thereon or be subject to any personal accountability by reason of the issuance or execution thereof. Section 15. No Third Party Beneficiaries. Except as herein or in the documents herein mentioned otherwise expressly provided, nothing in this Resolution or in such documents, express or implied, is intended or shall be construed to confer upon any person other than the Issuer, the Borrower, the owners of the Bonds, the Underwriters, and the Trustee any right, remedy or claim, legal or equitable, under and by reason of this Resolution or any provision hereof or of such documents; this Resolution and such documents being intended to be and being for the sole and exclusive benefit of such parties. Section 16. Prerequisites Performed. Ail acts, conditions and things relating to the passage of this Resolution and required by the Constitution or laws of the State of Florida to happen, exist and be performed precedent to and in the passage hereof have happened, exist and have been performed as so required. Section 17. General Authority. The Clerk and the members of the Governing Body of the Issuer are hereby authorized to do all acts and things required of them by this Resolution, the Agreement, the Restrictive Covenants, the Bond Purchase Agreement, or the Indenture, or desirable or consistent with the requirements hereof or thereof, for the full punctual and complete performance of all terms, covenants and agreements contained in the Bonds, the Agreement, the Bond Purchase Agreement, the Restrictive Covenants, the Indenture, and this Resolution. Section 18. General Authorizations. The Mayor, and any other member of the Governing Body of the Issuer, the Clerk, the City Attorney, and any other appropriate employee of the Issuer, are hereby each authorized to execute, publish, file and record such other documents, instruments, notices, and records and to take such other actions as shall be necessary or desirable to accomplish the purposes of this Resolution and to comply with and perform the obligations of the Issuer under the Indenture, the Agreement, the Restrictive Covenants and the Bong Purchase Agreement. Section 19. Resolution Constitutes a Contract. The Issuer covenants and agrees that this Resolution shall constitute a contract between the Issuer and the Owners from time to time of -6- 8100M the Bonds and that all covenants and agreements set forth herein and in the Agreement and the Indenture to be performed by the Issuer shall be for the equal and ratable benefit and security of all Owners of the Bonds. Section 20. Severability. If any one or more of the covenants, agreements, or provisions contained herein or in the Bonds shall be held contrary to any express provisions of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements, or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements, or provisions hereof and thereof and shall in no way affect the validity of any of the other provisions of this Resolution or of the Bonds. Section 21. Repealer. Ail resolutions or parts thereof of the Issuer in conflict with the provisions herein contained are, to the extent of any such conflict, hereby superseded and repealed. Section 22. Effective Date. This effect immediately upon its adoption. Resolution shall take PASSED AND ADOPTED THIS J DAY OF JULY, 1996. (SEAL) ATTEST: 'City Clerk CITY OF BOYNTON BEACH, FLORIDA Vice-M~ / j~,/ 3 A ROV .D S TO,,J OR ANO SO ./CIENC : Commissioner Co~ssioner / / -7- 8100M 810.0M/8 EXHIBIT "A" INDENTURE OF TRUST SIXTH DRAFT .6/20/96 INDENTURE OF TRUST AND ASSIGNMENT OF MORTGAGE between CITY OF BOYNTON BEACH, FLORIDA and THE BANK OF NEW YORK, as Trustee, acting by and thorough The Bank of New York Trust Company- of Florida, N.A., its agent Dated as of July 1, 1996 THIS INSTRUMENT PREPARED BY/RETURN TO: Mark E. Raymond Moyle, Flanigan, KatZ, FitzGerald & Sheehan, P.A. P.O. Box 3888 West Palm Beach, FL 33402 796 TABLE OF CONTENTS ARTICLE I - REFINITI,ONS AND RULES OF CONSTRUCTION Section 101. Section 102. Definitions Rules of Construction ARTICLE II - AUTHORIZATION, EXECUTION, AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS Section 201. Section 202. Section 203. Sect'ion 204. Section 205. Section 206. 'Section 207. Section 208. Section 209. Section 210. 'Section 21.1. Section 212. Section 213. .'Section 214. Section 215. Authorization of 1996 Bonds Details of 1996 Bonds; Provisions on Interest and Payment Execution of Bonds Authentication of Bonds Form of the 1996 Bonds Delivery of the 1996 Bonds Registration of Bonds; Persons Treated as Owners Exchange of Bonds Charges for Exchange and Registration Temporary Bonds Mutilated, Lost or Destroyed Bonds Cancellation and Distribution of Bonds Issuance of Additional Bonds Application of 1996 Bond Proceeds and Additional Bond Proceeds Adjustment to Interest Rate ARTICLE III - REDEMPTION AND TENDER OF BONDS Section 3,01. iSection 3.02. Section 303. Section 304. Redemption Dates and Prices Manner of Redemption Notice of Redemption Mandatory Tender of Tax-Exempt Bonds ARTICLE IV - GENERAL COVENANTS AND PROVISIONS Section 401. Section 402. Section 403. Section 404. Section 405,. Section 406. SeCtion 407. .Section 408. Payment .of Bonds Performance of Issuer's Covenants Instruments of Further Assurance Inspection of Project Books Rights under Loan Agreement, Note and Restrictive Covenants Prohibited Activities Reports of Trustee Secondary Market Disclosure Page 7964M/67 TABLE OF CONTENTS (CO'NTINUED) ARTICLE V - REVENUES AND FUNDS Section 501. Section 502. Section 503. Section 504. Section 505. Section 506. Section 507. Section '508. Section 509. Section 510. Section 511. Section 512. 'Section 513. Establishment of Funds Revenue Fund Expense Fund Rebate Fund Bond Fund Cost of Issuance Fund Debt Service Reserve Fund Maintenance Reserve Fund Operating Reserve Fund Surplus Fund Annual Budget 'Monies to Be Held in Trust Repayment to Borrower ARTICLE VI - CUSTODY AND APPLICATION OF BOND PROCEEDS Section 601. SeCtion 602. Section 603. ~Creation of Project Fund Payments into Project Fund Payments from Project Fund ARTICLE VII - INVESTMENTS Section 701. Section 702. Invest,ment of Funds Investments through Trustee's Bond Department ARTICLE VIII - DISCHARGE OF INDENTURE Section 801. Discharge of Indenture ARTICLE IX - DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 901. Section 902. Section 903. Section 904. Section 905. Section 906. Section 907. Section 908. Events ~of Default Acceleration Other Remedies; Rights of Bondholders Right of Bondholders to Direct Proceedings Application of Monies Remedies Vested in Trustee Limitations on Suits Waivers of Events of Default Page 7964M/68 TABLE OF CONTENTS (CONTINUED) Section 909. 'Section 910. Unconditional Right to Receive Principal, Premium and Interest Notice of Defaults; Opportunity to Cure Defaults ARTI~CLE X -'THE'TRUSTEE Section 100I. ~'Section 100~2. Section 1003. Section 1004. Section 1005. Section 1006. Section 1007. Section 1008. Section 1009. Section 1010. Section 1011. Acceptance of Trusts Fees, Charges and Expenses of Trustee Intervention by Trustee Merger or Consolidation of Trustee Resignation by Trustee Removal of Trustee Appointment of Successor Trustee by Bondholders; Temporary Trustee Concerning any Successor Trustee Trustee Pr.otected in Relying Upon Resolutions, etc. Successor Trustee as Bond Registrar, Custodian of Bond Fund and Paying Agent Notice to Rating Agency ARTICLE XI - SUPPLEMENTAL INDENTURES Section 1101. Section 1102. Section 1103.. Section 110.4. Supplemental Indentures Not Requiring Consent of Bondholders Supplemental Indentures Requiring Consent of Bondholders Opinion of Counsel and Consent of ~Borrower Required Trustee~'s Obligation Regarding Supplemental Indentures and Amendments, e~c., to Loan Agreement, Note, Mortgage and Restrictive Covenants ARTICLE XII - AMENDMENT OF LOAN AGREEMENT, NOTE, MORTGAGE AND RESTRICTIVE COVENANTS Sec'tion 1201. Section 1202. Amendments, etc., to Loan Agreement, Note, Mortgage and Restrictive Covenants Not Requiring Consent of Bondholders Amendments, etc., to Loan Agreement, Note, Mortgage and Restrictive Covenants Requiring Consent of Bondholders Page 7964M/69 TABLE OF CONTENTS (CONTINUED) Section 1203. Section 1204. .Section 1205. Limitation on Amendments Amendment by Unanimous Consent Opinion of Counsel Required and Consent of Borrower Required ARTICLE XIII - MISCELLANEOUS Sec%io.n 1301. Section 1302. Section 1303. Section 1304. Section 1305. Section 1306. Section 13:07. Section 1308. Section 1309. Consents, etc., of Bondholders Limitation of Rights Limitation of Liability of Officers, Directors, etc., of Issuer Notices Successors and Assigns Severability Applicable Law Counterparts Election under Section 142(d)(1) of the Code Exhibit A - Form of 1996 Bond Exhibit B - Requisition Form EXhibit C - Certificate of Coverage Page THIS INDENTURE OF TRUST AND ASSIGNMENT OF MORTGAGE, made as of ~he first day of July, 1996, by and between the CITY OF BOYNTON BEACH, FLORIDA, a political subdivision and municipality of the State of Florida (the "Issuer"), and THE BANK OF NEW YORK, as Trustee acting by and through THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.Ao, its agent, a national banking association duly organized and existing under the laws of the United States with it,s principal corporate trust office in Jacksonville, Florida, toget'her with any successor as trustee (the "Trustee"); WI TNE S SETH: WHEREAS, the Issuer is a political municipality of the State of Florida; and subdivision and WI~EREAS, pursuant to Article VIII, Section 2 and Article VII, Section 10{c), of the Florida Constitution, the Charter of the Issuer, Chapter 166, Florida Statutes and, with respect to the Taxable Bonds (hereinafter defined) Part VII of Chapter 159, Florida Statutes (collectively, the "Act") the Issuer is authorized to exercise all the powers set forth in the Act, which ~nctUde, among other things, the power to issue bonds for residential rental property for family units for use by an organization which is described in Section 501(c)(3) of the Internal Revenue :Code of 1986, as amended (the "Code"), and which -is exemp~ from federal income taxation pursuant to Section 501(a) of the Code; and WHEREAS, in .order to further the purposes of the Act, the Issuer proposes to issue its Multi-Family Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments), in an amount of ~$ (the "1996 Bonds") and use the proceeds thereof to make a loan to C/HP Cove, Inc., a Florida corporation not-for-profit and an organization described in Section 501(c)(3) of the Code and exempt from federal income tax under Section 501(a) of the Code (the "Borrower"), under the terms of a Loan ~Agreement, dated as of the date hereof (the "Loan Agreement"), between the Issuer and the Borrower, to be used by the Borrower for the principal purpose of refinancing a multi-family residential rental project in the City of Boynton Beach, Florida (the "Project"), constituting a "qualified residential rental ~project" within the meaning of Section 142(d) of the Code; and WHEREAS, %he Issuer intends to assign to the Trustee, as security for the Bonds, substantially all of its rights under the Loan Agreement and the Borrower's promissory note in the principal amount of $ (the "Note") delivered to the Issuer pursuant to the Loan Agreement and the Mortgage and Security Agreement made by Borrower granting a lien on the Project ~(the ',Mortgage"); and WHEREAS, %he 1996 Bonds, the Trustee's certificate of authentication to be endorsed on each of them and the form of assignment to be printed on each of them are to be in substantially the form attached as Exhibit A, with appropriate vari@tions, omissions and insertions as are permitted or required by %his Indenture; and WHEREAS, all things necessary to make the 1996 Bonds, when authenticated by the Trustee and issued as provided in this Indenture, valid, binding and legal limited obligations of the Issuer and to constitute this Indenture a valid and binding agreement securing the payment of the principal of, premium, if any, and interest on the Bonds (as hereinafter defined) issued and to be issued hereunder, have been done and performed and the execution and delivery of %his Indenture and the execution and issuance of the 1996 Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THIS INDENTURE FURTHER WITNESSETH: That the Issuer, as security for payment of the principal of, premium, if any, and interest on the Bonds and for the funds which may be advanced by the Trustee pursuant hereto, does hereby pledge and assign without recourse to the Trustee all of the Issuer's right, title and interest in and to the following described property: A. The Mortgage; B. The Loan Agreement (except for the right of the Issuer to indemnification pursuant to Section 5.3 of the Loan Agreement and payment of its fees and its costs and expenses pursuant to Sections 4.1(b) and 6.4 of the Loan Agreement), and the Note delivered pursuant thereto and the security therefor, and all revenues and receipts derived by the Issuer therefrom; C. The funds, including monies and investments therein, held by the Trustee pursuant to the terms of this Indenture; D. The right to enforce the Restrictive Covenants (as hereinafter defined), provided the Issuer also reserves certain rights t~o enforce the same as provided herein; and E. Ail other property of every name and nature from time to time hereafter by delivery or by writing mortgaged, pledged, delivered or hypothecated as and for additional security hereunder by the Issuer or by anyone else in favor of the Trustee, including the Mortgage, and the Trustee is hereby authorized to receive all such property at any time and to hold and apply the same subject to the terms hereof; TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended -2- 7964M to be conveyed and assigned, to the Trustee and its successors in such trust and their assigns forever; IN TRUST, ~however, for the equal and proportionate benefit and security of the owners from time to time of the Bonds issued under and secured by this Indenture without privilege, priority, or distinction as to the lien or otherwise of any of the Bonds over any of the others except as otherwise provided herein, upon the terms and conditions hereinafter stated; The .Issuer hereby covenants and agrees with the Trustee and with the respective owners, from time to time, of the Bonds as follows: ARTICLE I DEFINITIONS AND RULE~ OF CONSTRUCTION Section 10t. Definitions. Except as otherwise defined in the Loan Agreement, all w~ords and terms defined in the Loan Agreement and the Restrictiwe Covenants shall have the same meanings in this Indenture. In addition, the following words and terms as used in this Indenture shall have the following meanings unless a different meaning clearly appears from the context: "Act" shall mean Article VIII, Section 2 and Article VII, Section 10(c)., of the Florida Constitution, the Charter of the Issuer, Cha~ter 1.66, Florida S'tatutes and, with respect to the Taxable Bonds, Part VII of Chapter 159, Florida Statutes. "Additional Bonds" -shall ~mean any bonds issued pursuant to Section 213. "Annual Budget" shall mean the annual budget provided for in Section 511. "Asset Management Fee" shall mean the fee of 1.25% of Gross Revenue per month paid .or due to (i) the Corporation pursuant to that certain , dated between the Borrower -and the Corporation or (ii) the Corporation or any other entity pursuant to an agreement provided to the Trustee together with an opinion of Bond Counsel to the effect that payment of such Asset Management Fee pursuant to such agreement will not adversely affect any exclusion from gross income for federal income tax purposes of int.erest on the Tax-Exempt Bonds. "Asset Manager" shall mean the Corporation or such other entity entitled to receive the Asset Management Fee. "Authorized Representative of the Borrower" shall mean or such other person as may be designated by the Borrower from time to time to act on behalf of the Borrower. -3- 7964M ".Beneficial Owner" shall mean any person which (a) has the power, directly-or indirectly, to vote or consent with respect to, or to -dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other interme~liaries), or (b) is 'treated as the owner of any Bonds for feders1 income ~tax purposes. ~"Bond Counsel" shall mean an attorney or firm of attorneys nationally ~ecognized on the subject of municipal bonds. "Bond Coverage Requirement" shall mean, for any Fiscal Year, a Bond Coverage Ratio of or greater. "Bond Coverage Ratio" shall mean for any Fiscal Year the ratio of (a) Gross Revenues deposited into the Revenue Fund less (i) Expenses paid during such Fiscal Year from the General Expense .Account .and from the Tax/Insurance Account, (ii) the Maintenance Reserve Fund Deposit Requirement for the Fiscal Year, which for .purposes of this .definition shall be limited to $8,000 per month, (iii) any deposit made to the Operating Reserve Fund during the Fiscal Year, (iv) amounts paid for Trustees Fees and Expenses, Rating .Agency Fees, Rebate Analyst Fees, Asset Management Fees and Social ServiceManagement Fees to (b) Maximum Annual Debt Service. "BondFund" shall mean the Bond Fund created by Section 501. "Bondholder," "Holder" or "Owner" shall mean the registered owner of an~ Bond. 'Bonds" shall mean the 1996 Bonds and any Additional Bonds. "Bond ~ear~ shall mean the 12-month period (or portion thereof ,ss to the first Bond Year) ending on and including January 1 of each year~. "Borrower" shall mean C/HP Cove, Inc., a Florida corporation 'not-for-profit and an organization described in Section 501(c)(3) of the ~Code and exempt from tax under Section 501(a) of the Code, and fits successors or assigns, or such persons or entities as may be designated to act on behalf of the Borrower. "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which the Principal Office of the Trustee is lawfully closed. 'Certificate of Coverage" shall mean that certificate in the form attached to this Indenture as Exhibit C. 'Code~ shall mean %he Internal Revenue Code of 1986, as amended, as it applies to the Bonds, including applicable ~egul~tions and revenue rulings thereunder. Reference herein to an~ specific provision of the Code shall be deemed to include any ~successoz provision of such provision of the Code. -4- 7964M ~"Corporation" shall mean Cornerstone Housing Corporation, or ~ts successors and assigns, provided such successors or assigns ~are organizations described in Section 501(c)(3) of the Code. "Cost of the Project" shall mean ~rti¢le VI. the items described in "Cost of Issuance" shall mean fees and expenses (including legal ~ees) of the Issuer, the Trustee, any paying agent for the ~Bonds, the underwriters and the Borrower, title insurance ~premiums, appraisal and structural reviews and all other costs and expenses related to the issuance of the Bonds. "Cost of Issuance Fund" shall mean the Cost of Issuance Fund created by Section 501. · 'Debt Service Reserve Fund" shall mean the Debt Reserve Fund created by Section 501. Service "Debt Service Reserve Fund Requirement" shall mean, with respect to a Series of. Bonds to be secured by an account in the Debt .Service Reserve Fund, the lesser of (A) the maximum annual debt service scheduled to become due on such Bonds for the then current or any subsequent Bond Year, (B) ten percent (10%) of the stated principal amount of such Bonds (if a Series of Bonds has ~mo're than a de minimis amount of original issue discount or premium (as defined in Treas. Reg. §1.148-1(b)) then the issue price (as defined in said Regulation) of such Series (net of pre-issuance accrued interest) shall be used to measure the ten percent (10%) limitation in lieu of the stated principal amount of such Series) or (C) 125% of the average annual principal and interest payable on such Series of Bonds calculated on a Bond Year basis on ~the date of issuance only. The Debt Service Reserve Fund Requirement for a Series may be identified by the Series ~designation for such Series, and the Debt Service Reserve Fund Requirement for the 1996 Bonds is referred to as the "1996 Bonds Debt Service Reserve Fund Requirement." "Definitive Agreement" shall mean that Definitive Agreement dated July , 1996 between the Borrower and the City of Boynton Beach, Florida, which sets forth the agreement of the parties thereto with respect to the purchase, financing and operation of the Project. "Determination of Taxability" shall mean the entry of a final decree or judgment of any Federal court or the taking of final action by the Internal Revenue Service, which decree, judgment or action determines that interest paid or payable on any Tax-Exempt Bond is or was includable in the gross income of an Owner of such Tax-Exempt Bond for Federal income tax purposes under Section 103 of %he Code. No such decree, judgment or action shall be considered "final," however, until the earlier of (a) the -5- 7964M expiration ~of a period of 45 days after the giving of notice to the Borrower-o~f such decree, judgment or action, during which time the ~Bo'rrower shall have failed to initiate action to contest such decr~ee, judgment or action either directly or in the name of any owner~f Tax~Exempt Bonds, or (b) conclusion unfavorable to the Borrower and the Bondholders of any such action initiated by the 3Borrower within such 45-day period including conclusion of any appellate review, if sought'; provided, however, that prior to in%flaring such action the Borrower shall deliver to the Trustee a written opinion of Bond Counsel to the effect that the Borrower has a meritorious basis for such action and after initiating the same t~he BOrrower pursues such action in good faith and with due diligence. "Event of .Default" shall mean any of the events enumerated in Section 901. "Expense Fund" shall mean the Expense Fund created by Section 501. "Expense :Requirement, shall mean an amount equal to the sum of (a) one-twelfth ~of the annual operating expenses of the Project, as set forth in the Annual Budget for the Project including Management Fees and Expenses, but excluding (1) any depreciation or amortization, (2) amounts for property taxes and insurance premiums., {3) Trustee Fees and Expenses, Rating Agency Fees, Rebate Analyst Fee, the Asset Management Fee and the Social -Service .Fee and (4) payments to be made pursuant to the Note and the Loan .:Agreement, and {b) the aggregate amount of all unfilled requisitions ~pon the'General Expense Account. "'Expenses" shall mean, for any period, all expenses related to the operation and maintenance of the Project and properly allocated 'to such period whether by reason of actual cash expenditure or ,accrual of the Obligation; such expenses include, but are not limited to, .the folloWing: the Management Fees and Expenses, Asset Management Fees, Social Service Fees and all other fees 'and expenses for management and other services provided at or in connection with the Project; wages, salaries and employee benefits .and other labor costs; maintenance, janitorial and cleaning .expenses; repairs and replacements; lease payments and expenses; utilities; water and sewer charges and trash, garbage _and solid waste disposal fees, charges and expenses; contracted services; legal, accounting and consulting fees and expenses of the Project and %he Borrower; taxes, payments in lieu of taxes, assessments and excises; leasing and brokerage commissions; costs of licenses, permits and similar fees relating to the Project or its operations; advertising and marketing costs; costs of goods and supplies; interest and principal on debt incurred to maintain, improve or expand the Project and debt incurred to refinance any of such obligations; financing expenses and ongoing fees and expenses related to the Bonds and other obligations incurred in -6- 7964M respect ~o the Project (except to the extent paid from the .proceeds of the Bonds or other obligations); and all other expenses incurred in the course of property operations, maintenance and preservation. ,Extrmordinary T~ustee Fees and Expenses" shall mean the extraordinary fees and expenses of the Trustee (including legal fees) beyond its ordinary annual fees. "Financing I~nstruments" shall have.the meaning given to such term in %he Loan Agreement. "Fiscal Year" means %he one year period selected by the ~Borrower as its fiscal yeiar, w:hich shall be a year beginning on January 1, unless the Borrower shall select a different year as its fiscal year and shall have provided written notice thereof to the Trustee. "GAAP" shmll mean generally accepted accounting principles. "General Expense Account" ~shall mean the General Account in the Expense Fund created by Section 501. Expense "Government Obligations" shall mean either noncallable direct full faith and credit obligations of the United States of America or noncaltable obligations the payment of principal of and interest on which is unconditionally guaranteed by the full faith and credit of the United States of America. "Gross Revenues" means, for any period, the aggregate revenues, dete~rmined on a cash basis, generated from owning, operating, leasing and/or occupying the Project including, but not limited to, the tota'l amount paid by all tenants and others occupying or using or having a right to occupy or use the Project or any portion thereof, including, but not limited to all rents (including reimbursements by tenants of operating expenses and including Security Deposits forfeited by tenants or otherwise included in the Borrower's income), license fees and other charges or sums received by or credited to the Borrower under any lease, license or other agreement (including, without limitation, proceeds of rental or business interruption insurance prorated over the applicable period in the manner rent wss to be paid), vending machine income and laundry service income, all interest earned on the funds and accounts held under this Indenture and deposited into the Revenue Fund; provided, however, that Gross Revenue does not include (i) the proceeds of any Bonds or other borrowing or moneys otherwise advanced to the Borrower by third parties, (ii) the proceeds of ~any Sale or refinancing of the Project, ('iii) any capital contributions, (iv) the insurance proceeds (other than business interruption insurance to the extent described above) and (v) Security Deposits (until converted into rental income-ms described above). -7- 7964M "Indenture, shall mean this Indenture of Trust and Assignment of Mortgage, including any amendments or supplements hereto as i'herein permitted. "'Interest Account" shall mean the-account of that name in the Bond Fund created by Section 501. "Interest Payment Date" shall mean, with respect to the 1996 Bonds,. January 1 and July 1 of each year, commencing on January 1, 19'97. "Investment Obligations" shall mean: {a) bonds, notes and other evidences of indebtedness of the ~State or any political subdivision thereof and securities unconditionally guaranteed as to payment of principal and interest ;by :the State, as long as the same have a rating on the date of ~nvestment therein from the Rating Agency equal to or higher than the rating on the Bonds; (.b) bonds, treasury notes and other obligations of the United States Of America and securities unconditionally guaranteed as to payment of principal and interest by the United States of America; (c) as long as the same have a rating on the date of investment 'therein from the Rating Agency equal to or higher than the rating o-n the Bonds, bonds, debentures, notes or other evidence of indebtedness issued by any of the following agencies or any other like governmental or government-sponsored agencies which are hereafter created: Bank for Cooperatives; Federal Intermediate Credit Banks; Consolidated Farm Credit System-Wide Bonds; Federal Financing Bank; Federal Home Loan Bank System; Export-Import Bank of the United States; Farmers Home Administration; .Small Business Administration; Inter-American Development Bank; Federal Land Banks; and Government National Mortgage Association; (d) repurchase agreements for such' obligations specified in paragraphs (b) and (c) above subject to the limitations set forth below; (e) savings accounts, time deposits, certificates of deposit or other interest-bearing accounts in any bank within or without the State, including the Trustee, having a combined capital surplus a~d undivided profits of not less than $50,00'0,000; provided, that such investment is either (i) fully insured by the Federal Deposit Insurance Corporation or similar federal agency or (ii) collateralized or otherwise secured to the full extent required by law and at levels required by the Rating Agency; and provided, further, that no such deposits made under this ~paragraph (e) shall be made for any period in excess of one year; ,8- 7964M (f) commercial paper, with a maturity of 180 days or ~ess, of issuing corporations organized under the laws of the United states or of any state thereof, including paper issued by Danks and bank holding companies, rated by the Rating Agency not lower than A-l; and (g) a agreement with a requirements: guarant,eed investment contract or investment provider or guarantor meeting the following (i) the provider or guarantor must be rated at least "A" or equivalent by the Rating Agency; provided, that the guarantee ~must be unconditional and must be confirmed in ~writing prior to a'ny assignment by the provider to another subsidiary of ~he guarantor; (ii} the moneys invested under the such contract or agreement must be payable to the Trustee without condition (other than notice) and without a breakage fee or other penalty for regularly scheduled withdrawals therefrom, upon not more than two Business Days' notice for application when and as required or permitted under this Indenture; (iii) such .contract or agreement must state that it is unconditional and must expressly disclaim any right of set-off; (iv) such contract or agreement must provide for immediate 'termination in the event of insolvency of the provider and for termination upon demand of the Trustee (which demand shall only be made by the Trustee at the direction of the Issuer) after any payment or other covenant default by the provider; and (v) the terms and provisions of such contract or agreement and any request for bidding thereon shall'be in form satisfactory to Bond Counsel. A repurchase agreement pursuant to paragraph (d) above shall be made with any bank, savings institution or trust company as ~rincipal, including the Trustee or an affiliate of the Trustee, within or wit'hout the State having a combined capital, surplus and undivided profits of not less than $50,000,000 or with any broker-dealer with retail customers insured by the Securities Investors Protection Corporation; provided, that the financial institution or broker-dealer is obligated to repurchase within one year. Such repurchase agreement shall be considered a purchase of · such securities even if title and/or possession of such securities is not transferred to the Trustee or the Issuer so long as (1) the repurchase obligation of the financial institution or broker-dealer is collateralized by the securities themselves and the interest to be paid is secured by collateral of comparable credit rating to the securities which are the subject of the -9- 7964M repurchase agreement, (2) the securities have on each day the ~epurchase agreement is in eff~C~ a fair market value equal to at least i00% of the amount of the repurchase Obligation of the · inanc~al institution or broker-dealer (which shall include principal and interest accrued thereunder), (3) the securities are free and clear of any lien, charge or encumbrance of any person other than of the Issuer or the Trustee, (4) the securities are held ~by a third party and segregated from securities owned generally by the financial institution or broker-dealer, (5) a perfected security interest under the Uniform Commercial Code of the applicable state ~or book-entry procedures prescribed by federal law in such securities is created for the benefit of the ~ho~ders of the Bonds, and (6) if the repurchase agreement is with the bank serving as Trustee or any affi parity holding such securities holds them of the holders of the Bonds rather than serving as Trustee or any other party. With respect to all of the forel ~bligation must be limited to those i~ predetermined ~fixed dollar amount of pr~ that cannot vary or change. If the obliga not have an "r" highlighter affixed to should be tied to a single interest rate i spread, if any, and move proportionately wi "Issuer" shall mean City of Boynton successors and assigns. "Letter of Representations" shall Representations, dated July 1, 1996, Trustee ~to the Securities Depository and a any successor agreements between the Iss~ any successor Securities Depository, system to be maintained by the Securities to the Bonds. Notwithstanding any provi: [iated party, the third ~s agent for the benefit as agent for the bank ~oing investments, the ~struments that have a ncipal due at maturity ~ion is rated, it should its rating. Interest ~dex plus a single fixed th that index. ~each, Florida, and its mean the Letter of )m the Issuer and the ~y amendments thereto or .er and the Trustee and ating to a book-entry Depository with respect ion of this Indenture, including Article XI regardin~ amendments, the Trustee may enter into any such amendment or successor agreei%ent without the consent .of Bondholders. "Loan" shall mean the loan from the I~suer to the Borrower to be made in the manner provided in the Loan Agreement and as evidenced by the Note and secured by the Mortgage. "Loan Agreement,' shall mean the Loan Agreement, dated as of the date .hereof, between the Issuer and the Borrower, including any amendments thereto as herein permitted. "Maintenance Reserve Fund" shall mean the Maintenance Reserve Fund created by Section 501. -10- 7964M "Maintenance Reserve Fund Deposit Requirement" shall mean $8,000.00, per ~a~onth, plus any amount directed in writing by the Borrowe~ to be,deposited therein from time to time. "Management 'Fees .and .Expenses" shall mean the amount set forth each year as management fees and expenses in the Annual Budget payable to the manager of the ~Project. "Material Damage" shall mean damage to or destruction of the Project by fire or other casualty, condemnation thereof or loss thereof because of failure of {itte, equal in amount to at least $1,000,000. "Maximum Annual Debt Service" shall mean, at any time of ,calculation, with respect to all Tax-Exempt Bonds then Outstanding, the greatest amount of regularly scheduled principal and interest becoming due on such Bonds in the then current or any future Fiscal ~ear. "Maximum 'Corporate Tax ~ate" means the highest marginal tax rate (expressed as a decimal) applicable to the taxable income of corporations (as currently set forth in Section 11 of the Code) without zegard to any increase in tax designated to normalize the rate for alt ~ncome at the highest marginal tax rate or to phase out the benefit of graduated tax rates and impose a flat-tax at a specified rate (for example, the tax imposed by the last two sentences of Section ll(b)(1) of the Code as in effect on the date hereof), which rate on the date 'hereof is .35. "Mortgage" means %he Mortgage and Security Agreement, dated the date hereof, from the Borrower to the Issuer. "1996 ~Bonds" shall mean the Bonds authorized by Section 201 hereof. "1996 Bonds Reserve Account" shall mean the account of that name in the Debt-Service Reserve Fund created by Section 501. "Note" shall .mean. the promissory note of the Borrower in the principal amount of $. in substantially the form attached as an eXhibit to the Loan Agreement, and any amendments, supplements or substitutions thereto and therefor as herein permitted. "Operatin~ Reserve Fund" shall mean the Operating Reserve Fund created by Section 501. "Operating Reserve Fund Requirement" shall mean an amount equal to one-twelfth of the maximum amount of principal and interest sCheduled to become 'due on the Bonds in the then current or any succeeding Bond Year'. -11- 7964M "Opinion Qf Counsel" shall mean a written opinion of an 'attorne~ or firm .of attorneys, who may be counsel for the Issuer -or the ~Bo~rower but shall not be a full time employee of any of the Issuer, the Borrower or the Trustee.. "Paying Agent" shall mean the Trustee as paying agent for the ~Bonds or aay sucCessor appointed pursuant to Section 1008. "Payment of the iBonds" shall mean payment in full of principal .of, premium, if any, and interest on the Bonds or provision for such payment sufficient to discharge this Indenture as provided herein. "Principal Account" shall mean the account of that name in the Bond Fund created by Section 501. "Principal Office" shall mean, with respect to the Trustee, ~office designated in or pursuant to Section 1304 hereof. Project" Shall mean Clipper Cove Apartments, a 384 unit muIti-family residential housing project located on the Land described in Exhibit A to the Mortgage. "Project Fund" shall mean the Project Fund created by Section 601. "Rating.Agency" shall mean Standard & Poor's Ratings Services, a division~of The McGraw-Hill Companies, Inc. "Rating Agency Fees" shall mean an annual surveillance fee -~ayable to the Rating Agency of $2,500.00. 'Rebate Amount" shall mean the rebate amount for the Tax-Exempt Bonds, determined in accordance with Section 148 of the Code and Treasury Regulation 1.148-3. "Rebate Analyst" shall mean a firm of rebate analysts, nationally .recognized in the performance of the computation of rebate relating to tax-exempt obligations, such firm to be chosen iby %he Borrower. "Rebate Analyst Fee" shall mean the fee charged by a Rebate Analyst, such fee to be for calculation of rebate due, if any, in an amount not to exceed $5,000.00 on January 1, 2001 and $5,000.00 every 5 years thereafter so long as rebate calculations need to be made. "Rebate Fund" shall mean the Rebate Fund created by Section 501. · 'Requisition" shall mean a request for a disbursement from the Project Fund which shall be in the form of Exhibit B hereto. -12- 7964M "Restrictive Covenants" shall mean those certain restrictive .covenants and agreements placed on the Project in the form attached as Exhibit C to the Loa~ Agreement, as the same may be amended in accordance with the ProVisions hereof. "Revenue Fund" shall mean the Revenue Fund created by Section 501. "Sale" means %he direct or indirect sale, assignment, transfer, conveyance or other disposition of the Project or any pa~t thereof or interest therein or any interest in the Borrower. "Securities Depository" shall mean initially The Depository Trust Company and any successor depository for the 1996 Bonds as provided in Section 202. "Security Deposits" means all moneys received from or on behalf of tenants and retained in escrow by the Borrower as tenant security deposits. "Series" or "Series of Bonds" shall mean the 1996 Bonds and any designated Series of Bonds iss~[ed pursuant to Section 213. "Social Services Fee- shall ~ean the fee of 1.25% of Gross Revenue per ~month paid or due t(t (i) Housing Partnership, Inc. pursuant to that .certain Management and Coordination of Social Services Delivery Contract, dated December 19, 1995, as amended, between the Borrower and HOusing Partnership, Inc. or (ii) Housing Par~tnership, Inc. or any other ~ntity pursuant to an agreement provided ~o the Trustee together with an opinion of Bond Counsel to the effect that payment of such Social Services Fee pursuant to such agreement will not adversely affect any exclusion from gross income for federal income tax purposes of interest on the tax-exempt bonds. "Social Service Provider" shal~ mean Housing Partnership, Inc. or such other entity as shall be entitled to receive the Social Services Fee. "State" shall mean the State of Florida. "Surplus Fund'" shall mean the Surplus Fund created by Section 501. "Tax-Exempt Bonds" shall mean the 1996 Bonds and any Additional Bonds the interest on which is excludable from gross income for federal income purposes. "Tax/Insurance Account" shall mean the Tax/Insurance Account in the Expense Fund created by Section 501. -13m 7964M "Tax/Insurance Requirement" shall mean one-twelfth of the amount shown in %he Annual Budget as necessary for the payment of ~roperty taxes, ~ayments in lieu of taxes and insurance premiums in eac~h Fiscal Year. "Trustee" shall mean The Bank of New York acting by and ~hrough The Bank of New York Trust Company of Florida, N.A., it agen~t~ or its successors serving as such hereunder. "Trustee Fees .and Expenses" shall mean the fees and expenses -of %he Trustee incurred pursuant to this Indenture not to exceed $ annually prior to an Event of Default, excluding any counsel fees, but such $' amount may be increased with the consent of the Borrower, after the end of the term during which such initial fees are effective, annually for inflation at a percentage not to exceed the percentage increase in net rental income for the immediately preceding year. "Underwriters" St~el Nicotaus Associates, Inc. shall mean Wheat, First Company Incorporated and Securities, Inc., Raymond James & Section 102. Rules of Construction. Unless the context ~clearly indicates to the contrary, the following rules shall apply .the construction of this Indenture: (a) Words importing the singular number shall include the plural number and vice versa. (b) Words importing the redemption or calling for redemption of Bonds shall not be deemed to refer to or connote the payment of Bonds at their stated maturity. (c) Ail accounting terms not defined herein shall be defined in accordance with GAAP. (d) Ail references herein to particular articles or sections are references to articles or sections of this Indenture unless otherwise noted. (e) ~The headings herein are solely for convenience of ~eference and shall not constitute a part of this Indenture nor shall they affect its meaning, construction or effect. (f) This Indenture shall be construed for the benefit of the Borrower and the Issuer to the extent not inconsistent with the rights of t~he Trustee and the Bondholders. -14- 7964M ARTICLE II AUTHORI'ZATI@N, EXECUTION, AUTHENTICATION, REGISTRATION ~ND DELIVERY OF BONDS Section 201. Authorization of 1996. Bonds. There are hereby authorized to be issued the Issuer's Multi-Family Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) in the amount of. Million Hundred Thousand Dollars ($ ). .Section 282. Details of 1996 Bonds; Provisions on Interest and Payment. The 1996 .Bonds shall be dated July 1, 1996, shall be issuable as fully registered Bonds without cou'pons in the denomination of $'5,0~00 or any integral multiple of $5,000 in .excess thereof. The 1996 Bonds shall be numbered R-1 upward, shall bear inter~st :payable on each Interest Payment Date at the rates, subject to adjustment as provided in Section 215 hereof, and shall mature on the dates and in the amounts as provided below: Date Amount Rate $ % Each I996 Bond shall bear interest from the Interest Payment Date next preceding the date on which it is authenticated, unless .such 1996 Bond is (a) authenticated before the first Interest Payment DaCe following the initial delivery of 1996 Bonds, in which case it shall bear interest from its date, or (b) authenticated upon an Interest Payment Date, in which case it shall bear interest f~om such Interest Payment Date; provided, however, that if at the time of authentication of any 1996 Bond interest is in default, such 1996 Bond shall bear interest from :the date to which interest has been paid. Interest on the 1996 Bonds shall be calculated on a 360-day year of twelve 30-day months. Principal of and premium, if any, on the 1996 Bonds shall be payable at the designated office of the Trustee (initially, New York, New York). Principal and premium, if any, shall be payable upon presentation and surrender of the 1996 Bonds as the same become due. Interest on the 1996 Bonds shall be paid to the persons in whose name the 1996 Bonds are registered at the close of business of the fifteenth day (whether or not a Business Day) of the month next preceding an Interest Payment Date by check mailed by the Paying Agent on the Interest Payment Date to such -15- 7964M persons at t~heir addresses as they appear on the registration books. Tf .any 1996 Bond is not paid upon presentment when due (.whether ~at maturity, by acceleration or call for redemption or o~her~ise), such 19'96 Bond shall continue to bear interest until pa~d at the rate specified thereon. Principal, premium, if any, and ~in%er.e-st ion the 1996 Bonds shall be payable in lawful money of ~%he United States of America. The Depository Trust Company ("DTC"), New York, New York, will a'c~ ~as Securities Depository for the 1996 Bonds. The Issuer and t'he Trustee have entered into a Letter of Representations with DTC. ~Upon the issuance of the 1996 Bonds, one fully-registered t996 .Bond 'for each maturity will be registered in the name of Cede '~ Co., as nominee for DTC. So long as Cede & Co. is the ~egistered ~owner of the 1996 Bonds, as nominee of DTC, references herein to the ~owners ~of the 1996 Bonds or registered owners of the %996 ~onds shall mean Cede ~ Co. and shall not mean the Beneficial Owners of the 1996 Bonds. DTC may determine to discontinue providing its service with respect t~o the 1996 Bonds at any time by giving written notice to t~he Issuer and the Trustee and discharging its responsibilities with respect thereto under applicable law. If there is no successor Securities Depository appointed by the Issuer, the Issuer-shall deliver 1996 Bonds to the Beneficial Owners thereof {pursuant to ~Section 207. The Issuer, at the direction of the Borrower, shall discontinue participation in the system of ~book-entry transfers through DTC (or a successor Securities Depository) at any time by giving written notice to DTC not less ~han thirty (30) days prior to termination of such participation (or a successor Securities Depository). In such event, the Issuer will deliver 1.996 Bonds to the beneficial owners thereof pursuant to Section 207.. Section 203. Execution of Bonds. The Bonds shall be signed by the manual or facsimile signature of the Mayor or Vice Mayor of the .Issuer, and the Issuer's seal shall be affixed thereto or a facsimile thereof printed thereon and attested by the manual or .facsimile signature of the Issuer. In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be such officer before the delivery of the Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes as if he had remained in ~ffice until such delivery. Any Bond may bear the manual or facsimile signature -of such persons who at the actual time of the execution thereof shall be the proper officers to sign such Bond although at .the date of such Bond such persons may not have been such officers. Section 204. Authentication of Bonds. The Bonds shall bear a certificate of authentication, substantially in the forms attached to ~he forms of Bonds attached hereto, duly and manually executed by ~he Trustee. The Trustee shall authenticate each Bond with 'the -16- 7964M .signature of an authorized signatory of the Trustee but it shall not be necessary for the same signatory to authenticate all of the Bonds of any series. Only such authenticated Bonds shall be entitled to any right or benefit under this Indenture and such certificate on any Bond issued hereunder shall be conclusive evidence that the Bond has been duly issued and is secured by the -provisions hereof. Section 205. Form of the 1996 Bonds The 1996 Bonds shall be in substantially the form attached hereto as Exhibit A, with such appropriate variations, omissions and insertions as are permitted or required ~by this Indenture. .Section 206. Delivery of the 1996 Bonds. The Trustee shall .authenticate and ~eliver the 1996 Bonds when there have been filed with or received by it the following: (a) A certified copy of the resolution of the Issuer authorizing (1) the execution and delivery of the Loan Agreement, (2) the execution and delivery of this Indenture, and (3) the issuance, sale, execution and delivery of the 1996 Bonds. (b) Original execut~ed counterparts of the Loan Agreement and the Indenture. (c) The original executed Note, assigned by the Issuer to the Trustee, and san original executed counterpart of the Mortgage. (d) The mortgagee title insurance policy, or a duly endorsed commitment therefor, required by the Mortgage. (e) A written opinion of Bond ~Counsel that the issuance of the 1996 .Bonds ~as ~been duly authorized, that the 1996 Bonds are valid and binding limited obligations of the Issuer, that interest on -the 1996 Bonds is excluded from gross income of the Owners ~thereof ~for Federal income tax purposes and that interest on the 19'96 Bonds ~s ~exempt from the intangible personal property tax imposed by the State. (f) ~A written opinion of counsel to the Borrower that the Note, the Loan Agreement, the Mortgage and the Restrictive Covenants have been validly authorized, executed and delivered by the Borrower and are enforceable against the Borrower in accordance with their respective terms, that the Borrower is a 501(c)(3) organization within the meaning of the Code and that based upon a certification as to factual information provided by the Borrower no portion of the Project is being used in an "unrelated trade or business" of the Borrower within the meaning of Section 513 of the Code. (g) A certificate of the Borrower, substantially similar to ~Exhibit C, establishing the net operating income projections for -17- 7964M the ~rojec% for 1996 based upon the ~J~anua~y 1 ~hrough April 1 statistics. annualization of actual (h) A ~certificate from the Underwriters that the I996 Bond Coverage Ratio is met using the interest rates established by the sale o'f the 1996 Bonds, the guaranteed investment contracts for investment of the 1996 Bonds R~Serve Account and the Operating Reserve Fund, the scheduled debt service payments on the 1996 Bonds and the Borrower's certificate provided pursuant to paragraph (g) above. (i) A certificate of the ~orrower that the insurance required by the Mortgage is in effect together with proof of such insurance coverage and payment of insurance premiums due and payable as of the-date of-the issuance of the 1996 Bonds. (j) A certificate of the, Borrower that the proper amounts have 'been funded Ko %he Tax/Insurance Account to provide for the necessary insurance premiums due as of the date of the issuance of the 1996 Bonds'. (k) A certificate of the 'Borrower as to the amount of I i .~ Security Deposits and the ocgtlon of the Security Deposit funds and a certification of the Borrower that all Security Deposits are kept in a segregated bank account in accordance with all ~provisions of 'State law. (1) A request and authorization of the Issuer, signed by the Mayor ~or Vice-Mayor of the Issher, to the Trustee to authenticate and deliver the 1996 Bonds to such person or persons named therein upon payment to the Trustee flor the account of the Issuer of a specified sum plus accrued interest to the date of delivery. Section 207. RegistratiQn~ of Bonds; Persons Treated as ~Owners. The Trustee shall m~inltain registration books for the ~registrat.ion and the registra'~ion of transfer of the Bonds, and the transfer of any Bond may [be registered only upon such books ~upon surrender thereof to the ~rustee together with an assignment duly executed by the registered owner in person or by his duly authorized attorney-in-fact or legal representative. Upon any such transfer, %he Issuer sh~ll execute and the Trustee shall authenticate and deliver ini exchange for such bond a new registered bond or bonds of ~he same series, name of the transferee, of !an~ denomination registered in the or denominations authorized by this Indenture. Prior to due presentment ~or registration of transfer of a ~Bond ~he Trustee Shall treat ~hei registered owner thereof as the · only person entitled to payment thereon and the exercise of all other rights and powers o~ the owner, except that all interest ~ayments shall ~be .made Ko the reg~stered owner as of the fifteenth day of the month preceding each I~terest Payment Date. -18- 7964M Section 2:08. -Exchange of Bonds. Upon surrender thereof at %he Princ.i~al Office :~of the Trustee, together with an assignment duly executed ~by the registered owner or his duly authorized attorney-in-fact or ~eg~l representative, Bonds of any Series may, at the o~tio~n of the Owner., be exchanged for an equal aggregate principal amount ~of Bonds of .the same series and of the same maturit~ ~f ~authorized denominations as requested by the Owner thereof or his dut~ authorized attorney-in-fact or legal representative. The Issuer shall execute and the Trustee shall authe;n~icate any Bonds whose execution and authentication is necessary to provide for exchange of Bonds pursuant to this sec%ion. .Section 209. Charges for Exchanqe and Registration. Any exchange or ~egistration of 'transfer of any Bond by any owner thereof Shall !De at the expense .of the Borrower, except that the Trustee shall make a charge to :aRy Bondholder requesting such exchange, ~egi~tration or discharge in the amount of any tax or · o~her governmental charge required to be paid with respect thereto. Section 210~ Temporary 'Bonds. Prior to the preparation of Bonds i~n :definitive form, the: Issuer may issue temporary bonds in ~egiste,red form and in such denominations as the Issuer may determine, :but otherwise in substantially the forms attached hereto., with ~appropr.iate variations, omissions and insertions. The Issuer shall promptly prepare, execute and deliver to the Trustee ~efore ~he first Interest Payment Date Bonds in definitive form and thereupon, upon presentation and surrender of Bonds in temporar~ form, the Trustee shall authenticate and deliver in exchange therefor Bonds in definitive form of the same aggregate principal amount. Until exchanged for Bonds in definitive form, Bonds in ~%emporar¥ form shall ~e entitled to the lien and benefit of this ~ndenture. Section 211. Mutilated, Lost or Destroyed Bonds. ShoUld any Bond become mutilated or be lost or destroyed, the Issuer shall cause to be executed, and ~he Trustee shall authenticate and deliver, a new Bond of like date and tenor and of the same series in exchange and substitution fo~, and upon cancellation of, such mutilated Bond or in lieu of and in substitution for such lost or destroyed Bond; provided, however, that the Issuer and the Trustee shall so execute, authenticate and deliver only if the holder has paid ~he r.easonable expenses and charges of the Issuer and the Trustee in connection therewith and, in the case of a lost or destroyed Bond, ~as furnished to the Issuer, the Borrower and the Trustee indemnity satisfactory to the Trustee. If any such Bond shall ha~e matured, instead of authenticating and delivering a new Bond %he Trustee may pay ~he same without surrender thereof · Section 212. Cancellation and Distribution of Bonds. Ail Bonds Which ~have been paid {whether at maturity, by acceleration or call for zedemption or otherwise) or delivered to the Trustee -19- 7964M 'by the Borrower for cancellation shall not be reissued, and the Trustee shall, ,unless otherwise directed by the Issuer, cremate, shred or other.wise dispose of such Bonds. Upon request, the Trustee shall deliver to the Issuer and the Borrower a certificate of any such cremation, shredding .or other disposition of any Bond. Section 213. Issuance ~of Additional Bonds. (a) Subject to receipt by the Trustee of the documents listed in Section 213(c), upon the request .of the Borrower, the Issuer may issue one or more Series of Additional Bonds for the purposes set forth in Section 213(b). EaCh .such Series of Additional Bonds shall be issued pursuant to a supplement to this Indenture and shall be equally and ratably secured ~under this Indenture with all other Series of Bonds issued ~hereunder, without preference, priority or distinction of any Bonds over any other Bonds; provided, that a reserve account for a Series of Bonds shall secure only that Series of Bonds for which such reserve account wss created. Unless provided otherwise in a supplement to this Indenture, all such Additional .Bonds shall be in substantially the form of the 1996 -Bonds, ~but shall bear such date or dates, bear interest at such rate or rates, mature on such dates and in such amounts, have such redemption dates and redemption premiums, contain an appropriate Series designation, and be issued at such prices as shall be approv.ed by the Issuer and as set forth in a supplemental indenture adopted pursuant to Section ll01(e) hereof. For so long as any 1996 Bonds are rated by the Rating Agency, no Additional Bonds may be issued without written evidence from the Rating Agency that s~ch rating of the 1996 Bonds will not be reduced or ~withdrawn as a consequence of the issuance of the Additional Bonds. (b) Additional Bonds msy be issued (i) to pay the costs of adding %0, renovating, repairing, improving and equipping the Project when the ~costs are of such nature as to be chargeable to a fixed capital account by GAAP, (ii) to refund any Bonds previously issued by the Issuer, (iii) to provide working capital for the Borrower or (iv) for any combination of such purposes. (c) The Trustee shall authenticate Additional Bonds only upon receipt of the following: and deliver (i) A certificate of the Borrower dated as of the date of delivery of such Series of Additional-Bonds, signed by an Authorized Representative of the Borrower, either (1) stating that as .of the date of such certificate, to the best of the signer's knowledge after due investigation, no event or condition is happening or existing which constitutes an Event of Default or (2) if any such event or condition is happening or existing, specifying such event or condition, stating that the Borrower will act with due diligence to correct such event or condition after .the issuance of such Additional Bonds and describing, in detail reasonably acceptable to the Trustee, the actions to be taken by the Borrower toward such correction. -20- 7964M .... A certified copy of a resolution or resolutions (ii) of t.he Issuer (1) authorizing the execution and delivery of a supplement %o t~his Indenture and an amendment to the Loan Agreement, (2) authorizing the issuance, sale, execution arid delivery of such Additional Bonds, award, ~(3) specifying the interest rate or rates, maturity date or dates, amounts maturing on such date or dates, initial interest .payment date and redemption provisions for the Additional Bonds, and (4) stating, if applicable, the terms and conditions regarding the redemption or repayment price of any obligations to be refunded or refinanced, the amount of the interest accruing thereon to the date fixed for redemption or repayment and the source of payment thereof, the expenses incidental to such redemption or repayment and the source of payment thereof, and any other applications of the proceeds of Additional Bonds issued for the purpose of such refunding or refinancing. (iii) An endorsement to the mortgagee title insurance policy issued pursuant to the Mortgage, increasing the coverage thereof to an amount equal to the then outstanding principal amount of the Bonds, including the Additional Bonds. (iv) An original executed counterpart of a supplement to this Indenture authorizing the issuance and providing for the details of such Additional Bonds and an original executed counterpart of an amendment to the Loan Agreement pursuant to which the Borrower agrees to make payments thereunder in amounts sufficient to make all payments on the Additional Bonds. (v) The original, executed, amended Note, assigned by the Issuer to the Trustee and an original executed counterpart o'f a modification to the Mortgage. {vi) If any such Additional Bonds are issued for the purpose described in Section 213(b)(i), a written statement from an engineer, ~rchitect or other knowledgable professional selected by the Borrower: (1) giving an estimate of the cost of adding to, renovating, repairing, improving and equipping the Project (including all financing and related costs) and the date on which such adding to, renovating, improving and equipping of the Project are likely to be completed; and -21- 7964M (2) stating an opinion that the proceeds of such Additional Bonds, together with any monies identified and av~ilaDle for such purpose, will be sufficient to pay the cost of completing the additions, renovations, repairs, improvements and/or equipping. (vii) If Additional Bonds are issued for the purpose described in.Section 213(b)(ii), the following: (1) an opinion of Bond Counsel to the effect that provision for the payment or prepayment of all indebtedness to be refunded or refinanced has been made in accordance with the requirements of Article VIII hereof; and (2) a written report of an independent certified public accountant or other knowledgable professional selected ~by the Borrower that the proceeds (excluding accrued interest) of suc.h Additional Bonds, together with any other monies deposited with the Trustee or an escrow agent for such purpose and the investment income to be earned on the defeasance obligations held for the payment or prepayment of such indebtedness, shall be sufficient to pay, whether upon prepayment of such indebtedness or at maturity, the principal of and premium, if any, and interest on the indebtedness to be refunded or refinanced and the estimated expenses incident to such refunding or refinance. (viii) An opinion of Bond Counsel that the issuance of such Additional Bonds is permitted under the te'rms of this Indenture and 'has been duly authorized. (ix) A request and authorization of the Issuer, signed ~by its Mayor or Vice Mayor, to the Trustee to authenticate and deliver such Additional Bonds to the initial purchaser named therein upon payment to the Trustee for the account of the Issuer of .~ specified sum. (x) If any 1996 Bonds are then rated, written evidence from the Rating Agency that the issuance of the Additional Bonds will not cause the rating on such 1996 Bonds to be reduced or wit~hdrawn. Se~ction 214. ~Application of 1996 Bond Proceeds and Additional Bond ~Proceeds. Simultaneously with the delivery of the 1996 Bonds, the proceeds (including accrued interest) of the 1996 Bonds, together with $ provided by the Borrower not from Bond proceeds (the "Equity") shall be applied by the Trustee as follows: (a) to the credit of the (which includes the Equity); Cost of Issuance Fund -22- 7964M (b) to the credit of the Interest Account, $ ~consi~ting ~f the amount received as pre-issuance accrued interest the 2996 Bonds; (c) $ ; to the credit of the 1996 Bonds Reserve Account ~(d) to the credit of the Operating Reserve Fund $ '(e) to ~the credit of the Maintenance Reserve Fund $ ; (f) to the credit of the Tax/Insurance Account $ ; and (g) to the credit of the Project Fund created for the 1996 Bo.nds, $ , which is the remainder of the proceeds of 'the 1996 Bonds. The proceeds of Additional Bonds shall be applied as set forth in the supplemental indentures pursuant to which such Additional Bonds are issued. Section 215. Adjustment to Interest Rate. Upon the occurrence of a .Determination of Taxability, the interest rates otherwise borne by the 1996 Bonds shall be increased, but not decreased, to rates determined by the Borrower (in a certificate delivered to the Trustee) by multiplying the rates Otherwise borne by the 1996 Bonds (from and after the Determination of Taxability) ~by a fraction, the numerator of which is one and the denominator of which is one .minus the Maximum Corporate Tax Rate as of the date of the Determination of Taxability, provided that if such fraction is less than one, then no interest rate adjustment shall be made. ARTICLE III REDEMPTION AND TENDER OF BONDS Section 301. Redemption Dates and Prices. BOnds, other than %he 1996 Bonds, may not be called for redemption by the Issuer except as provided in the supplemental indentures pursuant to which such ~Bonds are issued. The 1996 Bonds may not be called for redemption by the Issuer except as provided below: (a) The 1996 Bonds are subject to redemption by the Issuer at the option and direction of the Borrower, in whole but not in part, at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date at any time within 365 days after the occurrence of a Determination of Taxabil~ity. -23- 7964M (b) The 1996 Bonds are required to be redeemed by the Issuer in whole -or in part at the earliest practicable date at a redemption price of 100% of the principal amount thereof to be redeemed plus accrued interest to the redemption date if, after Material Damage, the Borrower shall elect not to repair or restore the Project to substanti~ally the same condition as prior to such Material Damage; provided no such partial redemption shall be permitted unless such partial redemption will not affect the outstanding rating on the 1996 Bonds. (c) The 1996 Bonds are subject to redemption by the Issuer at the option and direction of the Borrower, on or after January 1, 2006, in whole on any date, or in part on any Interest Payment Date, at the following redemption prices (expressed as percentage of the principal amount to be redeemed) plus accrued interest to the redemption date: Date Redemption Price January 1, 2006, to and including December 31, 2007 January 1, 2007, to and including December 31, 2008 January 1, 2008, and thereafter 102% 101% 100% (d) As and for a sinking fund for the retirement of the 1996 Bonds maturing on January 1, (the "__ Term 1996 Bonds") the Issuer shall redeem Term 1996 Bonds on the dates set forth below in the principal amounts respectively set forth opposite such dates at a redemption price of 100% of the principal amount of the Term 1996 Bonds to be redeemed plus accrued interest to the redemption date: Date Amount As and for a sinking fund for the retirement of the 1996 Bonds .maturing on , (the " Term 1996 Bonds"), the Issuer shall redeem Term 1996 Bonds on the dates set forth below in the principal amounts respectively set forth opposite such dates at a redemption price of 100% of the principal amount of the Term 1996 Bonds to be redeemed plus accrued interest to the redemption date: -24- 7964M Date Amount As and for a sinking fund for the retirement of' the 1996 Bonds maturing on 1, (the" Term 1996 Bonds"), ~the Issuer shall redeem Term 1996 Bonds on the dates set forth below in the principal amounts respectively set forth opposite such dates at a redemption price of 100% of the principal amount of the Term 1996 Bonds to be redeemed plus accrued interest to the redemption date: Date Amount As and for a sinking fund for the retirement-of the Term 1996 Bonds maturing on 1, (the " Term 1996 Bonds"), the Issuer shall redeem Term 1996 Bonds on %he .dates set forth below in the principal amounts respectively set forth opposite such dates at a redemption price of 100% of the principal amount of the Term 1996 Bonds to be redeemed plus accrued interest to the redemption date: -25- 7964M Date Amount $ *Final MatUrity. (e) On or before the sixtieth day next preceding any sinking fund redemption date the Borrower on behalf of the Issuer, may (1) cause to be paid to the Trustee for deposit in the Bond Fund, as an advance payment under the Note, such amount as the Borrower may determine, accompanied by a certificate directing the Trustee to apply such amount on or before such sixtieth day thereafter to the purchase of 1996 Bonds and the Trustee shall thereupon use all reasonable efforts to expend such funds as nearly as may be praCticable in the purchase of such 1996 Bonds at a price not exceeding the principal amount thereof and the applicable premium for optional redemption of such 1996 Bonds plus accrued interest to such sinking fund redemption date or maturity date; or (2) deliver to the Trustee for cancellation 1996 Bonds in any aggregate principal amount desired and receive a credit against its sinking fund redemption obligation or maturity date obligation for such 1996 Bonds of the same maturity. Each 1996 Bond so purchased, delivered or previously redeemed shall be credited by the Trustee at 100% of the principal amount thereof against the obligation of the Issuer on such sinking fund redemption date with a corresponding credit on amounts otherwise due on the Note. Any excess over such obligation shall be credited against future sinking fund redemption obligations pro rata, as nearly as practicable, in chronological order, and the principal amount of such 1996 Bonds to be redeemed by operation of the sinking fund or to be paid upon maturity shall be accordingly reduced. AnY funds received by the Trustee pursuant to clause (1) above but not expended as provided therein for the purchase of 1996 Bonds on or before said sixtieth day shall be retained in the Bond Fund and shall thereafter be used only for the purchase of 1996 Bonds or as a credit against future sinking fund obligations or maturity date obligations on the 1996 Bonds on a pro rata amount of each maturity outstanding to the extent otherwise -26- 7964M ~payable out of payments thereafter becoming due under the Note and applied to the redemption of 1996 Bonds pursuant to this section. Section 302~ Manner of Redemption. If less than all of the Bonds of a Series are to be redeemed, the particular Bonds or portions thereof to be called for redemption shall be selected by the TrUstee fro.m ~each maturity thereof on a pro rata basis, as nearly as practicable, based~upon the outstanding principal of the serial and term Bonds of such Series. In any event, (a) the portion of any Bond to be redeemed shall be in the principal amount of '$5,000 or an integral multiple thereof, and (b) in selecting Bonds for redemption, each Bond shall be considered as representing ~tha't number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000. If a portion of a Bond shall be called for redemption, a new Bond in principal amount equal to the unredeemed portion thereof shall be issued to the BondhOlder upon the surrender thereof. The Trustee will apply any prepayments on the Note or any other money deposited with the Trustee accompanied by instructions that it is to be applied to the redemption of Bonds pursuant to ~ection 301(c) ~hereof on the earliest practicable date for which timely notice can be given after the Trustee's receipt of such ~prepayment. Section 303. Notice of Redemption. The Trustee shall send to the registered owner of each Bond to be redeemed notification .%hereof which .notice shall (1) specify the Bonds to be redeemed, the redemption date, the redemption price and the place or places where amounts due upon such redemption will be payable (which shall be the Principal Office of the Trustee) and, if less than all of the Bonds are to be redeemed, the numbers of the Bonds and the portions of Bonds to be redeemed, (2) state any condition to such redemption and {3) state that on the redemption date, and upon the satisfaction of any such condition, the Bonds to be redeemed shall cease to bear interest. Unless such notice states it is conditional as described below, the Trustee shall not send any notice of redemption for redemptions pursuant to Sections 301(a), (b) or (c) unless there shall be on deposit with the Trustee in the applicable accounts in the Bond Fund monies sufficient to pay the principal of, premium, if any, and interest .%0 the redemption :date on, the 1996 Bonds permitted to be ~redeemable and to be called for redemption pursuant to those respective Sections. Such notice may set forth any additional information relating to such redemption. Such notice may state that the redemption is subject to conditions, including but not limited to, the availability of funds to pay the applicable redemption ~price of Bonds to be redeemed. Such notice shall be given by mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption (a) by first class mail to the owner of each such Bond to be redeemed, at his address as it appears on the registration books of the Trustee, -27- 7964M (b) to all orga~nizations registered with the Securities and ~Exchange Commission as securities depositories as provided in a certificate of the Borrower .delivered to the Trustee, and (c) to at 'least one information .service of national recognition which disseminates securities redemption information with respect to tax-exempt securities. In preparing such notice, the Trustee shall take into account, to the extent applicable, the prevailing tax-exempt securities industry standards. Failure to give any notice specified in (a) or any defect therein, shall not affect the validity of any proceedings for the redemption of any Bonds with respect to which no such failure has occurred, and failure to give any notiCe specified in (b} or (c), or any defect therein, shall not affect the validity of any proceedings for the redemption of any Bonds with respect to which the notice specified ~n Ca) is correctly given and shall not give rise to any liability on %he part of the Trustee to the Issuer, the Borrower or any bondholder. Any notice mailed as provided herein shall conclusively be presumed to have been given whether or not actually received by any Bondholder. Provided funds for their redemption are on deposit at the place of payment on the redemption date, all Bonds or portions thereof so called for redemption shall .cease to bear interest on such date, shall no longer .be secured by the Indenture and shall not be deemed to be outstanding und.er the provisions of the Indenture. Section 304. Mandatory Tender of Tax-Exempt Bonds. At any time the Tax-EXempt Bonds are subject to redemption pursuant to Section 381(a), 301(b) or 301(c) hereof, the Tax-Exempt Bonds may be subject to mandatory tender, in whole but not in part, to the Trustee for purchase by t.he Borrower's designee, at a tender price equal to the principal amount thereof, plus accrued interest to the tender date, plus aay premium that would apply were such Tax-Exempt Bonds to be called for redemption on the tender date pursuant to Section 301(a), 301(b) or 301(c), as applicable. Notwithstanding any other provision of this Section 304, the Bonds shall not be subject to mandatory tender at any time after s notice of redemption of such Bonds pursuant to Section 301(a), 301(b), or 301(c) hereof shall have been sent and prior to the applicable redemption-date. In order to exercise its right to require the Tax-Exempt Bonds to be tendered, the Borrower shall provide written notice of its election to exercise such right to the Trustee, at least 20 and not more than 30 days prior to the tender date, which date shall 'be designated in such notice. On or prior to the tender date there shall be deposited with the Trustee, by the Borrower's designee, funds sufficient to pay the tender price of such principal amount of Tax-Exempt Bonds and the Trustee shall deposit such funds in a special account which the Trustee is hereby authorized to create. The Trustee shall send to the registered owner of each Bond to be subject to mandatory tender notification thereof, which shall -28- 7964M specify the Tax-Exempt Bonds to be subject to mandatory tender, .the tender date, the tender price and the place or places where amounts due upon such t.ender will be payable (which shall be the ~rincipal Office of the Trustee) and shall state that on the ~ender date~ the Bondholders of the Tax-Exempt BOnds subject to mandatory tender shall cease to be entitled to any further interest thereon. Such notice may state that the tender is subject to conditions, including but not limited to, the aYailability 'of funds to pay the applicable tender price of Bonds to-~e tendered. 'Such notice shall be given by mail not less than ~en (10) days nor ~more than thirty (30) days prior to the date fixed ~or tender by registered or certified mail to the owner of each 1996 Bond ~o be subject to mandatory tender at his address as ~ appears on ~he registration books of the Trustee. Failure to give any not~ce <of tender or any defect therein shall not affect ~he validity of any proceedings for the tender of any Tax-Exempt ~ol~ds with ~espect to which no such failure has occurred, and any notice .ma'iled as provided herein shall conclusively be presumed to ~have been given whether or not actually received by any Bondholder. On the tender date, Tax-Exempt Bonds subject to mandatory tender will be deemed to ha~e been purchased whether or not ~del~vered by the ~Bondholder thereof provided funds are on deposit with the Trustee for the purchase of such Tax-Exempt Bonds. In ~he event funds sufficient to pay the purchase price of all Tax-Exempt ~Bonds are not on deposit with the Trustee for purchase of ail Tax-Exempt Bonds on the tender date, the tender shall be rescinded, and the Trustee shall return all Tax-Exempt Bonds to the ~tendering Bondholders, and shall also send notice, by first class mail, to ~he holders of the Tax-Exempt Bonds notifying them that ~t~he tender has been ~escinded. In the event any Tax-Exempt Mo~d subject to mandatory tender is not so tendered, the Trustee will authenticate and deliver a replacement Tax-Exempt Bond of the same series and of like maturity as the Tax-Exempt Bond not tendered, ~nd 'bearing a aumber not contemporaneously outstanding, ~and the Taxi'Exempt Bond which was not tendered shall no longer be Outstanding under this Indenture, except that the Bondholder :thereof shall be entitled to receive the tender price therefor upon tender to the Trustee. On the tender date, the Trustee shall authenticate and register replacement Tax-Exempt Bonds for the Tax-Exempt Bonds tendered or deemed tendered in the name of the Borrower or its designee, shall pay the tender price of Tax-Exempt Bonds .tendered to it from amounts held by it in the special account .established for such purpose as hereinabove provided, and, except .for any amounts held by it for Tax-Exempt Bonds deemed tendered, shall pay to the Borrower or its designee any amount remaining in ~such special account. ARTICLE IV GENERAL COVENANTS AND PROVISIONS Section 401. Pa_~rmen-t of Bonds. The Issuer shall promptly pay when due the principal of (whether at maturity, by acceleration or -29- 7964M call for redemption or otherwise), premium, if any, and interest on the Bonds at ~he places, on the dates, from the accounts and in the manner provided herein and in the Bonds according to the true intent and meaning thereof; provided, however, that such obligations are not general obligations of the Issuer but are limited obligations of the Issuer payable solely from the revenues and receipts deriv, ed pursuant to the Loan Agreement, including the NOte and the security therefor, including the Mortgage. Neither the officers of the- Issuer nor any persons executing the Bonds shall be liable personally on the Bonds by reason of the issuance thereof. THE OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE NUES AND RECEIPTS DERIVED BY THE ISSUER FROM THE NOTE AND THEREFOR, WHICH REVENUES AND RECEIPTS HAVE BEEN AND ASSIGNED TO SECURE PAYMENT THEREOF. THE BONDS ARE NOT A DEBT OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE ISSUER. NO COVENA/qT, 'CONDITION OR AGREEMENT CONTAINED HEREIN SHALL BE DEEMED TO BE A COVENANT, AGREEMENT OR OBLIGATION OF ANY PRESENT OR FUTURE OFFICER, EMPLOYEE OR AGENT OF THE ISSUER IN HIS OR HER INDIVIDUAL CAPACITY, AND NEITHER THE OFFICERS OF THE ISSUER NOR ANY OFFICER THEREOF EXECUTING THE BONDS SHALL BE LIABLE PERSONALLY ON THE BONDS OR BE SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BT REASON OF THE ISSUANCE THEREOF. Section 402. Performance of Issuer's Covenants. The Issuer shall faithfully observe and perform all covenants, conditions and agreements on its part contained in this Indenture, in every Bond executed, authenticat,ed and delivered hereunder and in all of its proceedings pertaining thereto; provided, however, that the liability of the Issuer under any such covenant, condition or agreement for any breach or default by the Issuer thereof or thereunder shall be limited solely to the funds held by the Trustee pursuant to this Indenture, and the revenues and receipts derived pursuant to the Loan Agreement, Note and Mortgage. The Issuer represents that it is duly authorized under the Constitution and laws of the State, including particularly the Act, to issue the 1996 Bonds authorized hereby and to execute this Indenture, to execute and assign the Loan Agreement, Note and Mortgage and to pledge the revenues and receipts in the manner and to t'he extent herein set forth; that all action on its part for the issuance of the 1996 Bonds, the execution and delivery of this Indenture, the execution and assignment of the Loan Agreement, Note 'and Mortgage and the pledge of the revenues, receipts and payments thereunder has been duly and effectively taken (or if Additional Bonds are issued hereafter pursuant to Section 213, will be duly taken as provided therein); and that the 1996 Bonds in the hands of the owners .thereof are and will be valid and enforceable limited obligations of the Issuer according to the import thereof. -30- 7964M Section 403. Instruments of Further Assurance. The Issuer shall do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and .delivered, such indentures supplemental hereto and such further acts, instruments and transfers as the 'Trustee may rea~sonably require for the better assuring, transferring, conveying, pledging and assigning to the Trustee of all the rights assigned hereby and the revenues and receipts pledged hereby to the payment of the principal of, premium, if any, and inker.est on %he Bonds. The Issuer agrees that, so long as any Bonds are outstanding, should there be a default under the Loan Agreement or this Indenture, the Issuer will fully cooperate with the T~ustee and with the Bondholders to the end of fully protecting the rights and security of the Bondholders. Section 404. Inspection of Project Books. Ail books and documents relating to the Project and the revenues derived therefr.om in the possession of the Issuer or the Borrower shall at all reasonable times .and upon not less than two Business Days' prior written notice be open to inspection by such agents as the Trustee, the Issuer or the Rating Agency may from time to time designate, provided the costs of such inspection shall be borne by the Borrower, (i) in .all events if the Trustee is the inspecting party and (ii) in the event that an Event of Default shall have occurred and be continuing and/or in the event that the party requesting such inspection shall not have requested such an inspection within the preceding 12 months, otherwise the cost of such inspection shall be borne by the inspecting party. Section 405. Rights under Loan Agreement, Note and ~Restrictive Covenants. The Trustee, as assignee of the Issuer, shall enforce all covenants, undertakings and obligations of the Borrower under the Restrictive Covenants, as provided in Sections 7(a) and 11 of the Restrictive Covenants, provided the Issuer shall also be able t.o independently enforce the Restrictive Covenants. The Trustee shall take no action, shall knowingly permit no action to be taken by others and shall not knowingly omit to take any action or permit others to omit to take any action, and the Issuer shall not knowingly take any action, knowingly permit any action to be taken by others or knowingly omit to take any action or permit others to omit to take any action, which action or omission might release the Borrower from its liabilities or obligations under the Restrictive Covenants or the Loan Agreement or result in the surrender, termination, amendment or modification of, or impair the validity of, the Loan Agreement or the Restrictive Covenants except as specifically provided herein and therein. The Trustee in its own name or in the name of the Issuer may enforce all other rights of the Issuer and all obligations of the Borrower under and pursuant to the Loan Agreement, and may enforce all rights of the Issuer and all obligations of the Borrower under and pursuant to the Note, for and on behalf of the Bondholders, whether or not the Issuer is in default hereunder; provided, however, the Trustee shall have no dut~ or obligation to monitor the Project, other than as -31- 7964M specifically agreed to concerning the monitoring of receipt of ~ritten materials required herein. The Trustee shall be entitled to conclusively rely upon the third party agents referenced in Sec%ion 1001(~m) herein, the cost concerning which shall be borne by the Borrower. Section 406. 'Prohibited Activities. TLe Issuer shall not knowi permit the use of any amounts received by the Issuer or the witlh respect to the Bonds in any manner, and shall not knowingly .take or permit to be taken any other action or actions, which would cause any Tax-Exempt Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code or which would otherwise cause interest on any Tax-Exempt Bonds to become subject bo Federal income tax. The Issuer shall at all times do and ~perfo.rm all acts and things requested by Bond Counsel that are necessary or desirable in order to assure that interest paid by the Issuer on the Tax-Exempt Bonds shall, fOr the purposes of Federal income tax, be exempt from all income taxation under any valid provision of law. Section 407. Reports of Trustee. The Trustee shall make monthly reports to the Borrower, and upon request, to the Issuer, of all monies received and expended by it. The Trustee shall furnish ~o the Issuer upon request (a) a statement of the aggregate principal amount of the Bonds outstanding as of the date of such request and (b) such information in the possession of the Trustee as may be necessary to make any reports as may be required by the Act or any ~State or federal law, now or hereafter in effect. The Trustee shall hold all statements and other items received from %he Borrower pursuant to Section 5.6 of the Loan -Agreement (the "Borrower Statements") or the Restrictive Covenants (the "Covenant Reports") during the term of this Indenture. Whenever the Trustee has actual notice of the occurrence of any of the following (a "Change"): (i) There is an Event of Default or any event has occurred which with the lapse of time or notice or both could become an Event of ~Default; or (ii) There is a decree or judgment of a Federal court or action by the I~nternal Revenue Service which would become, once final, a Determination of Taxability; or (iii) Material Dlmmage occurs in such a manner that a redemption of Bonds pursuant to Section 301(b) is possible; then the Trustee 'shall send a notice of such Change (a "Change ~otice") to the Rating Agency. The Trustee shall provide copies of any Borrower Statements, Covenant Reports and Change Notices to anyone upon request therefor and receipt of an amount equal to the cost of reproduction and mailing thereof, provided no such costs -32- 7964M ~wilt ~be assessed on Bondholders (which costs will be reimbursed to t~he Trustee by %he Borrower). Section 408. Secondary Market Disclosure. Pursuant to Section 5.14 of the Loan Agreement, the Borrower has undertaken all responsibility for compliance with continuing disclosure requirements, and the Issuer shall have no liability to the Bondholders or any other person with respect to Securities and Exchange Commission Rule 15c2-12. The Trustee hereby covenants and agrees that it will comply with and carry out all of its responsibilities pursuant to Section 5.14 of the Loan Agreement. Notwithstanding any other provision of this Indenture, failure of the Borrower or the Trustee to comply with Section 5.14 of the ~oanAgreement shall not be considered an Event of Default. (b) accounts: ARTICLE V REVENUES AND FUNDS Section 501. Establishment of Funds. In addition to the Project Fund created by Section 601, there are hereby established with the Trustee the following trust funds and accounts: (a) Revenue Fund; Cost of Issuance Fund; Bond Fund in which there are established the following (1) (2) Interest Account Principal Account; (d) Expense Fund in which there are established a General Ex.pense Account and a Tax/Insurance Account; (e) Debt Service Reserve Fund in which there is established the following account (and in which there may be established other accounts in connection with Series of Additional Bonds): {1) 1996 Bonds Reserve Account; (f) Maintenance Reserve Fund in which there are established the following accounts: (1) Monthly Deposit Account; (2) Additional Deposit Account (g) Operating Reserve Fund; -33- 7964M (~h) Surplus Fund in which there are established the following · accounts: (1) Deposit Account; (2.) Distribution Account (i) Rebate Fund. Section 502. Revenue Fund. The Trustee shall deposit into the Revenue Fund, as received, all Gross Revenues deposited with the Trustee by or on behalf .of the Borrower under the terms of the Loan Agreement. Earnings from investment of the Revenue Fund shall be retained therein as received. As of the first Business Day of each month, but not later than the tenth day of such month, commencing in August., 1996, the Trustee shall make the following transfers from 'the .Revenue Fund in the following order, subject to credits as provided in this Article: (8) To the Rebate Fund, if any, to the extent the Rebate Analyst .determines pursuant to Section 504 hereof that a Rebate Amount must be deposited in the Rebate Fund. (b) To the General Expense Account the amount needed to cause the amount therein to equal the Expense Requirement and to the Tax/Insurance Account the amount needed to cause the amount therein to equal the Tax/Insurance Requirement. (c) To 'the Interest Account beginning in August, 1996, one-fifth of ~he difference between the amount that will become due on t~he 1996 Bonds on January 1, 1997 and the amount deposited in the Interest Account pursuant to Section 214, and, beginning in January, 1997, one-sixth of the amount of interest that will become due on the Bonds -on the next succeeding Interest Payment Date. (d) To the Principal Account beginning in January, 1997, one-sixth of the principal amount of Bonds maturing or subject to mandatory sinking fund redemption on the next succeeding July 1 or January 1, as the case may be. · (~e) Subject %0 the p~ovisi~ns of Section 507(d) hereof, if the balance in the Debt Service Reserve Fund is less than the aggregate Debt Service Reserve Fund Requirement, to the accounts in the Debt Service Reserve Fund the amount necessary to satisfy the Debt Service Reserve Fund Requirement for all Series of Bonds secured by an account in t~he Debt Service Reserve Fund PROVIDED HOWEVER, that if the revenues available to the Trustee for transfer to the Debt Servi~ce Reserve Fund in any month are no% Sufficient to satisfy the aggregate amount to be deposited therein, the Trustee shall deposit such revenues on a pro rata basis, based upon %.he relative deficiencies from the Debt Service ReServe Fund Requirements therefor, between all those accounts therein. -34- 7964M ~f) To the.Monthly Deposit Account of the Maintenance Reserve Fund the Maintenance Reserve Fund Deposit Requirement. ~(g) If the balance in the Operating Reserve Fund was less ·han the Operating Reserve Fund Requirement as of the immediately preceding January t, to the Operating Reserve Fund the amount necessary %o cause the amount therein to equal the Operating Reserve Fund Requirement. ~h) To the Trustee, the Rating Agency and the Rebate Analyst the amount of any outstanding Trustee Fees and Expenses, Rating Agency Fees and 'Rebate Analyst Fees. !(i) To 'the Asset Manager, the Asset Management Fee, and to the Social .Service Provider, the Social Service Fee, pro-rata, if necessary, and (j) After making the above deposits in each month, any monies remaining in the Revenue Fund shall be deposited in the Deposit Account of the Surplus Fund. Section 503. Expense Fund. The amounts in the Expense Fund shall be used to pay the Expenses of the Project in accordance ~.with the Annual BUdget. Amounts may be drawn by the Borrower or its authorized designee (who shall be designated in writing to the Trustee by the Borrower with evidence of facsimile signature) not more often than once each week. Any draw request which, when added to any other request in such month, shall exceed one-twelfth ~of the amount-budgeted in the Annual Budget, shall be contained in a ~requisition and be accompanied by a disbursement schedule for the amounts to be paid or reimbursed from such draw and by any reasonable backup information for the amount in excess of the budgeted amount for such month. Amounts shall be drawn from the General Expense Account unless the requisition identifies an amount ~for property taxes, payments in lieu of taxes or insurance ~premiums, in which case such amount shall be drawn from the Tax/Insurance Account. tf at any time the amount in either account in ~he Expense Fund is insufficient for payment of such amounts, the Trustee shall transfer the necessary additional amounts ~o such -account in the Expense Fund first from the other account ~n .%fie Expense Fund, then from the Surplus Fund, then from the Operating Reserve Fund, and then from the Maintenance Reserve Fund. Earnings from investment of the Expense Fund shall be deposited in the Revenue Fund as received. Section 504. Rebate Fund. {~) The Trustee shall maintain the Rebate Fund until the Trustee Shall have received a Rebate Analyst's report concerning the computation period ending upon the retirement of the last outstanding Tax-Exempt Bo'nds and until any Rebate Amount in respect ~hereof shall have been paid. -35- 7964M (b) The Borrower shall determine or cause to be determined, in ~accordance with Section 148 of the Code and applicable Treasury Regulations promulgated under Section 148(f) of the Code, the Rebate Amount attributable to the Tax-Exempt Bonds on January 1, 20gt and every five years thereafter and upon the retirement of any Series of Tax-Exempt Bonds (each a "Computation Period"). The Trustee and the Issuer may rely conclusively upon the opinions, calculations, determinations, directions and advice of the Rebate Analyst, ~copies of all of which opinions, calculations, de'terminations, directions and advice shall be given to the Trustee by the Issuer. The Trustee shall deposit from moneys on deposit in the Revenue Fund into the Rebate Fund the amount necessary to increase the balance in the Rebate Fund to the Rebate Amount. If amounts available for deposit in the Rebate Fu.nd from the Revenue Fund are not sufficient t:o pay the Rebate Amount, the Trustee will request the Borrower to deposit the ,amount of the deficiency with the Trustee from any monies returned by the Trustee to the Borrower or from any other source. If for any Computation Period the amount of money and investments held in the Rebate Fund exceeds the Rebate Amount for that Computation Period, the Trustee 'shall deposit such excess to the Revenue Fund. {c) The Trustee Shall make the following payments from the money and investments in the Rebate Fund to the United States Treasury when ~and as indicated below (or on such other payment date or dates as may be permitted by Section 148 of the Code): (i) not later than the 60th day following the end of each Computation Period, an amount equal to 90% of the Rebate Amount for the Computation Period ending immediately prior to the date of payment; and, (ii) not earlier than the date of payment of the last outstanding Tax-Exempt Bond of a Series nor later than the 60th day thereafter, the amount, if any, which, when added to amounts previously paid to the United States as Rebate Amounts, will equal 100% of the Rebate Amount with respect to the Tax-Exempt Bonds of a Series. (d) The Trustee shall retain all records that have been delivered to it of the source of and determination of the Rebate Amounts required to be deposited and credited to the Rebate Fund, of the proceeds of any investments of money in the Rebate Fund, and of the amounts paid to the United States Treasury from the Rebate Fund for six years after the retirement of the last outstanding Tax-Exempt Bond. (e) The Trustee may, in its discretion, establish such aCcounts within the Rebate Fund established under the Indenture, and subaccounts within any of such accounts, as the Trustee may deem necessary or useful for the purpose of identifying more precisely the sources of payments into and disbursements from such -36- 7964M accounts or subaccounts, but the establishment of any such additional account or subaccount shall not alter or modify any of the ~equirements of this Indenture with respect to the deposit or use of money in the Rebate Fund established hereunder or result in commingling .of funds not permitted hereunder. (f) 'The Borrower shall prepare or cause to be prepared Internal Revenue Service Form 8038-T, or such other form as appropriate, required to accompany any payment of any Rebate Amount, and t~he Issuer agrees to cooperate reasonably in executing such form. Section 505. ~Bond Fund. ~(a) Interest Account. The Trustee shall use amounts in the {rite-rest Account to make sufficient transfers to the Paying Agent pay interest on the Bonds as the same becomes due. (b) Principal Account. The Trustee shall use amounts in the Principal Account to make sufficient transfers to the Paying Agent to pay the principal of the Bonds as the same becomes due. (c) Deficiencies and Excess Monies. In the event the balances in the Interest Account and the Principal Account are insufficient for the purposes thereof on a payment date, the Trustee shall transfer first to the Interest Account and then to the Principal Account such amounts as may be necessary therefor first from the Surplus Fund, then from the Operating Reserve Fund, ~hen from the Maintenance .Reserve Fund. In the event that after making the transfers described in the ipreceding paragraph, on any date the amount in the Interest Account shall be insufficient to pay the interest coming due on · he Bonds, the amount in the Interest Account shall be applied pro rata to the payments due on the Bonds, and the remaining amount due wit'h respect to any Series secured by an account in the Debt ~Service Reserve Fund Shall be paid from such account. In the event that after making the transfers described in the ~preceding paragraph, .on any date the amount in the Principal Account shall be insufficient to pay the interest coming due on the Bonds, the amount in the Principal Account shall be applied ~pro rata to the payments due on the Bonds, and the remaining 'amount due with respect to any Series secured by an account in the ~Debt Service Reserve Fund shall be paid from such account. If on any January 1 or July 1 the balance in the Interest Account and/or Principal Account (exclusive of the transfers to be ~made to such account on such date) shall exceed the amount payable on account of interest on the Bonds on such date, the excess shall be transferred to the Revenue Fund. -37- 7964M (8) EarninqS. Earnings from investment of the amounts held in the Bond Fund shall be deposited in the Revenue Fund as received. Section 506. Cost of Issuance Fund. The Trustee shall use amounts in the Cost of Issuance Fund for payment of Costs of Issuance of the Bonds, as directed in writing by the Borrower. For purposes of the Code the Equity shall be deemed allocated to expenditures from the Cost of Issuance Fund after all other amounts therein shall have been so allocated. Earnings from any investment of the Cost of Issuance Fund shall be deposited in the Revenue Fund. All amounts in the Cost of Issuance Fund on -October 1, 1996, or sooner, if directed by the Borrower, shall be transferred to the Borrower, to. the extent of the unspent Equity and then to the Revenue Fund and the Cost of Issuance Fund shall be closed. Section 507. Debt Service Reserve Fund. (a) The Trustee shall use amounts in the respective accounts in the Debt Service Reserve Fund to make transfers to the extent necessary to pay the principal of (whether at maturity or upon acceleration or redemption) and interest on the Series of Bonds secured thereby as the same become due if amounts in the Bond Fund are insufficient therefor after taking into account transfers from the Revenue Fund, the ~Surplus Fund, the Operating Reserve Fund and the Maintenance Reserve Fund. (b) In the event the balance in the respective accounts in the Debt Service Reserve Fund on any January 1 or July 1 (after any required transfers on such date) shall exceed the Debt Service Reserve Fund Requirement therefor, the excess shall be transferred to the Revenue Fund. (c) If the balance in the respective accounts in the Debt Service Reserve Fund falls below the Debt Service Reserve Fund Requirement therefor, the Trustee shall transfer funds to such accounts to provide therein the amount of the Debt Service Reserve Fund Requirement therefor, first to the extent and in the manner provided in Section 502, from the Revenue Fund, then, on the day following the application of amounts in the Revenue Fund pursuant to Section 502, from the Surplus Fund and then from the Operating Reserve Fund, and then from the Maintenance Reserve FUnd. The Trustee shall notify the Borrower and the Rating Agency of any of such transfers. (d) Notwithstanding the immediately preceding paragraph (c), if on any January 1 or July 1 the amount in any account in the Debt Service Reserve Fund is less than the Debt Service Reserve Fund Requirement therefor solely by reason of a change in the valuation of invest.ments therein, no transfers to such account shall be required so long as all investment earnings and amounts -38- 7964M in such account remain therein until such account contains the amount of the Debt Service Reserve Fund Requirement therefor and on t:he next January 1 or July 1, as the case may be, such account contains an Requirement contain an Requirement thereto of ~aragraph. amount equal to the Debt Service Reserve Fund therefor; if such account at that time does not amount equal to the Debt Service Reserve Fund therefor, the Trustee shall begin the transfers the amounts required pursuant to the preceding (e) Earnings from the investment of the amounts on deposit in any account in the Debt Service Reserve Fund shall be retained therein to the extent the amount on deposit therein is less than the Debt Service Reserve Fund Requirement therefor, and otherwise shall be deposited in the Revenue Fund as received. Section 508. Maintenance Reserve Fund. (a) The Trustee shall use amounts in the Maintenance Reserve Fund as needed in the following order: (1) to make transfers to the Expense Fund to the extent the balance therein after transfers thereto from the Revenue Fund, the 'Surplus Fund and the Operating Reserve Fund is less than the sum of the Expense Requirement and the Tax/Insurance Requirement; (2) to make transfers to the Interest Account and then to the Principal Account to the extent necessary to pay interest on and principal of (whether at maturity or upon acceleration or redemption), the Bonds as the same may become due, in the event transfers from the Revenue Fund, the Surplus Fund and the OPerating Reserve Fund are insufficient for such purpose; and (3) to make transfers to the Debt Service Reserve Fund if required by Section 507. (b) At the direction of the Borrower (which direction shall be accompanied by a certificate to the effect that it is in compliance with this paragraph), the Trustee shall use amounts in {he Maintenance Reserve Fund not utilized pursuant to subsection (a) to pay the cost of acquiring, constructing and equipping fixtures, machinery, equipment, furniture, real property and additions to, or improvements, extensions or enlargements of, the Project, and the cost of extraordinary maintenance or repairs (repairs or maintenance not recurring annually), renewals and replacements and repairs resulting from an emergency caused by some extraordinary occurrence; provided, however, that such disbursements shall be made to pay only costs which are capital expenditures normally subject to depreciation in accordance with GAAP as evidenced in the certificate of the Borrower hereinabove -39- 7964M mentioned. ~roperty acquired with payments made pursuant to this section shall become part of the Project. {c) In addition to the use of moneys in the Maintenance Reserve Fund for any of the purposes set forth in (a) and (b) _above, amounts transferred from the Surplus Fund and deposited into the Additional Deposit Account shall be available to pay and shall b.e disbursed by t'he Trustee, at the written direction of the Bor.rower ~(which direction shall be accompanied by a certificate to 'the effect that it is in compliance with this paragraph), (i) to repay advances ;m~de by the Borrower or by third parties or to pay principal and interest on borrowings obtained by the Borrower, .provided amounts so advanced or the proceeds of such borrowing were used ~by the Borrower to provide for the operation, maintenance or improvement of the Project, (ii) to establish reserves ~or maintenance or repair expenses which the Borrower estimates will be needed within a reasonable period of time and that, when incurred, will exceed the amounts then expected to be available in ~the Monthly Deposit Account of the Maintenance Fund for such purpose and tO pay other Expenses or capital expenses of the Project. .(d) Earnings from investment of the Maintenance Reserve Fund shall be deposited in the Revenue Fund as received. Section 509. Operating Reserve Fund. (a) Fund: The Trustee shall use amounts in the Operating Reserve (1) to make transfers to the Expense Fund, to the extent the balance therein after transfers from the Revenue Fund and the Surplus Fund is less than the sum of the Expense Requirement and the Tax/Insurance Requirement; ~2) to make transfers to the Interest Account and then to the Principal Account to the extent necessary to pay interest on an'd principal of (whether at maturity or upon acceleration or redemption) the Bonds as the same become due, in the ev.ent transfers from the Revenue Fund and the Surplus Fund .are insufficient for such purpose; and ~(3) 'to make transfers to the Debt Service Reserve ~Fund if reguired by Section 507. (b) Any amount on deposit in the Operating Reserve Fund in excess of ~he Operating Reserve Fund Requirement on any January 1 or July 1 shall be transferred to the Revenue Fund. (c) .Earnings from investment of the Operating Reserve Fund shall be deposited in the Revenue Fund as received. -40- 7964M ~Sect~on 1510. Surplus Fund. (a) The DePOsit Account. The Trustee shall make deposits ~nto the Deposit Account of the Surplus Fund as provided in ~ection 502(j)of this Indenture and, if transfers or payments are required to be made from the Surplus Fund under the terms of ~Section 503, 505 or 507 of this Indenture, the Trustee shall make ~such transfers first from amounts then on deposit in the Deposit ~Account and then from any amounts in the Distribution Account. ~xcept for transfers made pursuant to Section 503, 505 or 507, d~Sbursements and transfers from the Deposit Account shall be made ~only under the :following conditions: (1) No disbursement or transfer shall be made from the ~Deposit ~ccount unless, after such disbursement or transfer, there shall remain in the Deposit Account, the sum of not less than i~[$10,000], no Extraordinary Trustee Fees and Expenses are due and owing and the Borrower has delivered to the Trustee Certificates of Coverage evidencing that: (i) the Bond Coverage Requirement has been met for ~he preceding Fiscal Year; and (ii) on the basis of the Annual Budget for the then current Fiscal Year, the Bond Coverage Requirement will be met for such Fiscal Year. {2) If the conditions set forth in (1) above have been -met, ~then 'the Trustee shall, upon written requisition of the Borrower, transfer such amounts as the Borrower shall direct to the Additional Deposit Account in the Maintenance Reserve Fund to be used for any of the purposes described in Section 508 of this Indenture. {3) On each January 1 beginning January 1, 1997 (or as soon thereafter as the audited financial statements of the Borrower for the immediately preceding Fiscal Year together with the Certificate ~of Coverage for such immediately preceding Fiscal Year and for the then current Fiscal Year are presented to the Trustee) after making any transfers from the Surplus Fund then r.equ~red under Section 503, 505 or 507 of this Indenture and any ~ransfers to the Additional Deposit Account of the Maintenance Reserve Fund upon the requisiti~on of the Borrower as provided in (2) above, and if the conditions set forth in (1) above have been met, ~hen the Trustee shall transfer the balance (in excess of $10,009) from the Deposit Account to the Disbursement Account. (b) Disbursement Account. Not later than the last Business DBy of any month in which the Trustee transfers money into the Disbursement Account, all amounts in the Disbursement Account shall, at the written direction of the Borrower, be disbursed to the Borrower. -41- 7964M (c) During the period from the date of initial delivery of the 1996 Bonds, to and including December 31, 1996, the Bond Core, rage Ratio shall be calculated by the Borrower by multiplying the sum of (a) Gross Revenues deposited into the Revenue Fund during the period from and including . , 1996 to and including December 31, 1996 less Expenses paid during such period from the General Expense Account and from the Tax/Insurance Account, the Maintenance Reserve Fund Deposit Requirement for such · period, any deposit made to the Operating Reserve Fund during such period, amounts paid 'for Trustee Fees and Expenses, Rating Agency ~Fees, Rebat.e Analyst Fees, Asset Management Fees and Social Service Management Fees during such period by , and dividing .the result ~by the Maximum Annual Debt Service. Section '511. Annual Budqet. (a) The initial Annual Budget shall be delivered to the Trustee upon issuance of the Bonds. Thereafter, prior to the beginning ~of each Fiscal Year, the Borrower shall adopt a budget for %he Proj.ect for the ensuing Fiscal Year which shall be called the Annual Budget. (b) The Annual Budget shall be prepared in such manner as to 'show in reasonable detail (t) all rentals, fees and other .charges to be derived to pay (A) the cost of operation and maintenance of the Project and (B) %he amount of principal of and premium, if any, and interest on the 'Bonds that shall become due during such Fiscal Year, and (2) the operating expenses (excluding any depreciation or amortization) estimated to be incurred in connection with the ownership or operation of the Project, with a breakout number showing amounts necessary for the payment of property taxes and insurance premiums. Copies of the Annual Budget shall be filed with the Issuer, the Trustee and the Rating Agency no later than .the first day of the Fiscal Year for which it is prepared. (c) If for any reason an Annual Budget has not been adopted within the time required by subsection (a) of this section, the last previously adopted Annual Budget shall be deemed to provide for and regulate and control expenditures during such Fiscal Year until an Annual Budget for ~uch Fiscal Year shall have been adopt.ed and filed with the Trustee, the Issuer and the Rating Agency. (d) The Borrower may amend the Annual Budget at any time during the Fiscal Year. The Borrower shall follow the same procedure regarding any such amendment as provided in subsection (b) of ~this section for the ~doption and filing of the Annual Budget. Copies of all such amendments shall be filed promptly with the Trustee, the Issuer an( Section 512. Monies to Be to be.deposited with or paid to the Rating Agency. {eld in Trust. All monies required the Trustee for the account of any 42- 7964M fund or account under any provision of this Indenture (including any ~emporary %rust fund or account established pursuant to SeCtion 501) received by the Trustee shall be held by the Trustee in %rust, and, .except for (i) monies deposited with or paid to the Trustee for the redemption of Bonds, notice of the redemption of which has been duly given and (ii) monies held in the Rebate Fund, monies received by the Trustee skall, while held by the Trustee, constitute part of the trust estate and be subject to the lien hereof. Section .513. Repayment to Borrower. Following Payment of the Bounds iR full and after payment of Trustee Fees and Expenses and EXt.raordinary Tru~stee Fees and Expenses and other amounts required to ~be pa~d hereunder and payment of the fees and expenses of the Issuer and any other amounts required to be paid to the Issuer under the Loan Agreement or otherwise, all amounts remaining in any fund or account under this Indenture shall be paid to the ~Borrower, except for monies held in the Rebate Fund for the payment o'f rebate. ARTICLE VI PROJECT FUND Section 601. Creation of Project Fund. There is hereby c~eated and order.ed established with the Trustee a trust fund to be designated as the "Project Fund." Section 602. Payments into Project Fund. Amounts shall be deposited in the Project Fund pursuant to Section 214 and used by the Trustee as provided in Section 603. Section ~603. Payments from Project Fund. The Trustee shall use all monies deposited in the Project Fund as follows: (a) to make a payment to the Borrower in the amount of $ , which the Borrower agrees will be used to pay amounts constituting operating or non,operating expenses of the Project or amounts chargeable to capital account of the Project in accordance with generally accepted accounting principles; (b) to ~ay the amount of $ to Resolution Trust Corporation or its successor or assign, as holder of that certain Promissory Note made December 18, 1995 by the Borrower in the principal amount of $8,835,'000.00, in satisfaction thereof; (c) to pay the amount of $ to The Enterprise Foundation, Inc., as holder of that certain Promissory Note made December , 1995 by the Borrower in the principal amount of $495,000.00 in satisfaction thereof; and -43- 7964M (d) to pay the amount of $186,000.00 to the Issuer as partial consideration for the assignment by the Issuer to the Borrower of the Issuer's right to acquire the Project from Resolution Trust Corporation; and (e) to pay such other amounts as are directed in writing by the Borrower to satisfy all existing indebtedness and obligation~s of the Borrower with respect to the Project; and (f) the remaining amount shall be disbursed by the 'Trustee to the Borrower, to be used by the Borrower to pay costs of repairs, replacements and other amounts chargeable to the capital account of the Project, pursuant to Requisitions signed by the Borrower. ARTICLE VII INVESTMENTS Section 701. Investment of Funds. The Trustee shall separately invest and reinvest the monies held in the funds and accounts under this .Indenture at the request of and as directed in writing by the Borrower in Investment Obligations. Any moneys held in the Bond Fund shall be separately invested and reinvested by the Trustee, as directed in writing by the Borrower, in Investment Obligations described in paragraphs (a), (b), (c), (d) or (e) of the definition of Investment Qbligations. SubjeCt to application as provided elsewhere in this Indenture, any such investments shall be held by, or under the control ~of, the Trustee and while so held shall be deemed a part of the fund, account, subaccount or sub-subaccount in which such moneys were originally held, and the interest accruing thereon and any profit realized from such investments, including realized discounts on obligations purchased, shall be credited to such funds, accounts, subaccounts or sub-subaccounts and any loss resulting from such investments shall be charged to such funds, accounts, subaccounts or sub-subaccounts. The Trustee shall sell and reduce to cash such investments whenever the cash balance in any fund, account, subaccount or sub-subaccount is insufficient for its purposes. Ail investments not ~therwise directed but held pursuant to this Section 701 shall mature or be subject to redemption at the option of the holder at the times at which the Borrower reasonably estimates the invested moneys will be needed for the purposes of the fund, account, subaccount or sub-subaccount from which the investment was made, except with respect to savings accounts, time deposits or certificates of deposit, which shall have a maturity not in excess of that specified in paragraph (e) of the definition of Investment Obligations. -44- 7964M 'The Trustee shall not have any obligation to the Bondholders or the Borrower for any loss arising from investments made pursuant to the provisions of this Section 701. 'The Trustee may trade with itself in the purchase and sale of securities for such investment and may charge its ordinary and customary fees for such trades. ~ection 702. Investments thrGuqh TruStee's Bond Department. The Trustee may make investments permitted by Section 701 through its own bond depart~ment or trust investments department. ARTICLE VIII DISCHARGE OF INDENTURE Section 801. Discharge of Indenture. If: (a) (i) (A) the Bonds have become due and payable in accordance with their terms or otherwise as provided in this Indenture or have been duly called for redemption or (B) irrevocable instructions to call the Bonds for redemption have ~een given as provided herein to the Trustee, and (ii) the Trustee ~olds for such purpose cash or Government Obligations the ~principal of and the interest on which at maturity (which shall be prior to or on the date of redemption or payment of the Bonds) will, based upon the ~calculations of a verification age,t, be sufficient .(x) to, as applicable, redeem in accordance with the ~elevant section hereof or pay at maturity all Bonds then outstanding and to pay any premium applicable to such redemption, -(y) ~o pay interest on all Bonds outstanding to their redemption 'or payment at maturity, and (z) to pay to the Trustee, the Rating ~gency and Rebate Analyst their reasonable fees and expenses and · an~ other fees and expenses for which the Borrower may be responsible under the Loan Agreement, including any Rebate Amounts and the costs and expenses of canceling and discharging this Indenture; or (b) all Bonds theretofore issued under this Indenture (other than Bonds which have been destroyed or lost and replaced or paid and Bonds for whose payment cash or Government Obligations have theretofore been deposited in trust and thereafter repaid to the Borrower) have been delivered to the Trustee for cancellation; and in either case (c) the Issuer has observed and performed all its covenants, conditions and agreements in this Indenture and the Bonds, ,45- 7964M then the Trustee shall at the expense of the Borrower cancel and ~discharge this Indenture and execute and deliver to the Issuer amd the Borrower such instruments in writing as shall be requisite ~to cancel the lien hereof, and assign and deliver to the Borrower any pr.operty at the time subject to this Indenture which may then De in its po~ssession, except funds or securities held by the Trustee fo.r the .payment of the principal of, premium, if any, and interest an t.he Bonds, Rebate Amounts and all fees and expenses described above. Sonds for %'he payment or redemption of which cash or Government Obligations the principal of and interest on which will be, based upon the calculations of a verification agent, sufficient therefor shall have been deposited with the Trustee ~whether ~pon or prior to the maturity or the redemption date of such Bonds) shall be'deemed to be paid and no longer outstanding; ~provided, however, that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been duly given or instructions satisfactory to the Trustee shall have been given to the Trustee. The obligation to pay the principal of, premium, if any, and interest on all or any pOrtion of the Bonds may be discharged by the delivery of suc'h Bonds to the Trustee accompanied by written direction from the Owner(s) thereof to cancel such Bonds without payment, and upon such delivery, such Bonds shall be cancelled and ~eemed paid. In the event only a portion of the Bonds shall be ~cancelled and deemed paid pursuant to the terms of this Article VIII, those Bonds which are not so cancelled and deemed paid shall remain Outstanding for all purposes of this Indenture, except as otherwise ~provided herein. ARTICLE IX DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 901. Events of Default. shall ~be an Event of Default: Each of the following events (a) Default in the due and punctual payment of any interest .on any Bond; (b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond (whether at maturity, by acceleration or ~call for redemption or otherwise); (c) Subject to Section 910, default in the observance or performance of any of the covenants, conditions or agreements of the Issuer under this Indenture (other than Section 408); and -46- 7964M (d) The occurrence of an Event of Default under the Loan Agreement. The occurrence of a Determination of Taxability shall not constitute an ~E~ent of Default. SectiOn 902. Acceleration. Upon the occurrence of an Event of Default under (a) and (b) of Section 901, the Trustee may and at the request of %he holders of not less than a majority of the aggregate principal amount of the Bonds then outstanding shall, and upon the-occurrence of an Event of Default under (c) or (d) of Section 901, the Trustee only at the request of the holders of not .less than 100'% of the aggregate principal amount of the Bonds then outstanding s~hall, by notice delivered to the Issuer and the Borrower, declare the principal of all Bonds and the interest ,accrued to the date of such acceleration immediately due and payable. Upon any such acceleration, the Trustee shall i~ediately declare all payments required to be made by the Borrower under the Note and the Loan Agreement to be immediately due and payable and shal:l also transfer all monies from all other funds and accounts ,hereunder to the Bond Fund. Section 903. .Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default and subject to Section 1001(k) hereof, the Trustee may proceed to protect and enforce its rights and the rights of {he Bondholders by mandamus or other suit, action or proceeding at law or in equity, including an action for specific performance of any agreement herein contained. No remedy conferred .by this Indenture upon or remedy reserved to tlhe Trustee or %o the Bondholders, is intended to be exclusive of any other remedY, but each such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bondholders hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein, and every such right and ~power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or Event of Default, whether by the Trustee pursuant to Section 908 or by the Bondholders, shall extend to or shall sffect any subsequent default or Event of Default hereunder or shall impair any rights or remedies consequent thereon. Section 904. Right of Bondholders to Direct ProceedinGs. Anything in this Indenture to the contrary notwithstanding, the owners of a majority in aggregate principal amount of Bonds then -47- 7964M ~oUtstanding Shall ~have the right, at any time, by an instrument or ~nstruments in writing executed and delivered to the Trustee, with indemnity as may be required by the Trustee pursuant to SeCtion 1001('k), to -direct the method and place of conducting all proceedings ;to :~ taken in connection with the enforcement of the te~ms and conditions of this Indenture or for the appointment of a receiver or ..any other proceedings hereunder; provided, however, that such-direction shall not be otherwise than in accordance with ~he provisions of law and of this Indenture. Unless directed by a majority of to this section, the Trustee shall have full power in the exercise of its discretion for the best intereis~s of the owners, to conduct, continue, discontinue, compromise, settle or otherwise dispose of any legal or action or proceeding. 'Section 9'05. ~Application of Monies. Ail monies received by ~th.e ~TruStee pursuant-to any right given or action taken under the provisions of ~his Article shall, after the payment of all unpaid :fees and -expenses-of the Trustee and of the cost and expenses of the proceedings .resulting in the collection of such monies and the creation of a r. eserve for anticip!ated fees, costs and expenses, be ~eposited in the Bond Fund. All monies in the Bond Fund shall be applied as follows: (a) Unless the principal of all the Bonds shall have become :or shall-have been declared due and payable; First - To .the payment t:o the persons entitled thereto of all installments 'of interest then due on the Bonds, in the order of the maturity of the installments of such interest and, if the amount available shall not be 'sufficient to pay in full any .particular installment, then ~to the payment ratably, according to the amounts due on .such installment, to the persons entitled thereto, withouk any .discrimination or preference except as to any difference in the respective rates of interest specified in the~Bonds; Second - ~o the payment to the persons entitled thereto -of ~he ~unpaid principal of and premium, if any, on any of the ~Bonds which shall have become due (other than Bonds called for redemption for the payment of which monies are held pursuant to ~he ~provisions of this Indenture) in the order of 'their due dates, with interest on such Bonds at the respective rates specified therein from the respective dates upon which they become due and, if the amount 'available shall not be sufficient to pay in full .Bonds due on any particular date, together with such ~nterest, t'hen first to the payment of such interest ratably, according to the amount of such interest due on such date, and then to the amount of such principal, -4B- 7964M ratably, according to the amount of such principal due on such date, t~o the persons entitled thereto, without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds; and Third - To the extent permitted by law, to the payment to the persons entitled thereto of the unpaid interest on overdue fnstaliments of interest ratably, according to the amounts of such interest due on such date, without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds. (b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such monies shall be applied to the payment of the principal and interest then due and .unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond'over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto, without any discrimination or privilege. ~(c) If the principal of all the Bonds shall have been declared :due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this article, then, subject to the provisions of subsection (b) of this section in the event that the principal of all the Bonds shall later become due or be declared dye and payable, the monies shall ~e applied in accordance with the provisions of subsection (a) of this section. Whenever monies are to be applied pursuant to the provisions ~of this section, such monies shall be applied at such times and from time to time as the Trustee shall determine, having due regard to the amount of such monies available for application and ~the likelihood of additional monies becoming available for such application in the future. Whenever the Trustee shall apply such monies, it shall fix the date (which may be an interest payment date) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such other notice as it may deem appropriate of the deposit with it of any such monies and of the fixing of any such date, and shall not be required to make payment to the owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Section 906. Remedies Vested in Trustee. Ail rights of action (including the right to file proof of claims) under this Indenture or under any of the Bonds to protect the rights of the -49- 7964M owners of the Bonds may be enforced by the Trustee without the ~ossession of any of the Bonds or the production thereof in any .trial or other proceeding relating thereto and any such suit or proceeding instituted by the Trustee may be brought in its name as Tru'stee without the necessity of joining as plaintiffs or defendants any owners of the Bonds, and any recovery of judgment shall be for the equal benefit of the owners of the outstanding- ~onds. Section 907. Limitations on .Suits. Except to enforce the r~ghts given under Section 902 and except as provided in Section 909, ~no owner of any Bond shall have any right to institute a suit, action or proceeding in equity or at law for the enforcement of ~thi-s Indent.ute or for the execution of any trust hereof or any other remedy hereunder, unless (a) a default has occurred of which the Trustee 'has been notified or is deemed to have notice as provided in Section I001(h), (b) such default shall have become an Event ~of Default and the owners of at least a majority in ag~gregate ~principal amount of Bonds then outstanding shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, (c) such owners have offered to the Trustee indemnity as provided in Section 1001(k), (d) the Trustee for 60 days after such notice shall fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name or in the name of such owners, (e) no direction inconsistent with such request has been given to the Trustee during such 60-day period by the owners of a majority in aggregate principal amount of Bonds then outstanding, and (f) notice of such action, suit or proceeding is given to the Trustee; it being understood and intended that no one or more owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice this Indenture by its, his or their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted and maintained in the manner herein provided and for the equal benefit of the owners of all Bonds then outstanding. The notification, request and offer of indemnity set forth in the preceding paragraph, at the option of the Trustee, shall be conditions precedent to the execution of the powers and trusts in this Indenture and to any action or cause of action by the Bondholders for the enforcement of this Indenture or for any other remedy hereunder, except to enforce the obligations of the Trustee arising under Section 902. Section 908. Waivers of Events of Default. The Trustee may in its discretion waive any Event of Default hereunder and the consequences of such Event of Default and rescind any declaration of acceleration of maturity of principal of and interest on the Bonds under Section 902, and shall do so upon the request of the -50- 7964M holders of at least a -majority in aggregate principal amount of Bonds %hen outstanding; provided, however, that no Event of Default shall be .waived unless prior to such waiver all arrears of ~rincipal ~nd interest (other than principal or interest on the Bonds which became due and payable by declaration of acceleration) and ~all expenses of the Trustee in connection with such Event of Default-shall have .been paid or provided for or unless the holders of 100% i.n aggregate principal amount of Bonds then outstanding Shall have consented thereto. In case of any waiver or rescission described above, or in case any proceedings taken by the Trustee on .account of any suc~h Event of Default shall have been disconti~ued or concluded or determined adversely to the Trustee or the Bondholders, then 'and in every such case the Issuer, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, but no such waiver or rescission Shall <extend to any subsequent or other Event of .Default, or impair any right consequent thereon. Section ~909. Unconditional Right to Receive Principal, Premium and Interest. Nothing in this Indenture shall, however, affect or impair ~he right of any Bondholder to enforce, by action at law, ~payment of the principal of, premium, if any, or interest on any ~ond at and after the maturity thereof, or on the date fixed for redemption or (subject to the provisions of Section 902) upon the same being declared due prior to maturity as herein provided, or to enforce, by action at law, the obligation of the Issuer to pay the principal of, premium, if any, and interest on each of the Bonds issued hereunder to the respective owners thereof at the time, place, from the source and in the manner >herein ~and in the Bonds expressed. Section 910. Notice of Defaults; Opportunity to Cure Defaults. Anything contained in this Indenture to the contrary notwithstanding, no default described in Section 901(c) on the part of the Issuer shall constitute an Event of Default until (a) notice of such default shall be given (1) by the Trustee to the Issuer and the Borrower or (2) by the holders of at least a majority in aggregate principal amount of Bonds then outstanding to the Trustee, the Issuer and the Borrower, and (b) the Issuer and the Borrower shall have had 90 days after such notice to correct such default or cause such default to be corrected, and Shall not have corrected such default or caused such default to be corrected within such period; provided, however, if any default desCribed in Section 901(c) shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the Issuer or the Borrower within such period and diligently pursued until such default is corrected. -51- 7964M ARTICLE X THE TRUSTEE .Section 1001. Acceptance of Trusts. By executing this Indenture, the Trustee hereby accepts the trusts and obligations imposed upon it by this Indenture and the other Financing Instruments and agrees to perform such trusts and obligations, but only upon and subject to the following express terms and conditions: (ia) The Trustee, prior to the occurrence of an Event of Default a~nd after the curing 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 as a ~prudent .man would exercise or use in the circumstances in the ~conduct of ~is own affairs. 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 man would exercise or use in the circumstances.in the conduct of his own affairs. <(b) The Trustee may execute any of the trusts or powers hereof and ~erform any of its duties by or through attorneys, agents, receivers or employees, but shall be answerable for the conduct of the same in accordance with the same standard of care specified above, and .shall be entitled to act upon the reasonable opinion or advice of its counsel concerning all matters of trust hereof and the duties 'hereunder, and may in all cases be reimbursed hereunder for reasonable compensation paid to all such attorneys, agents, r.eceivers and employees, as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon an Opinion of Counsel, and shall not be responsible for any loss or damage resulting from any action or non-action by it taken or omitted .to be taken in good faith in reliance upon such Opinion of Counsel. {c) The Trustee shall not be responsible for (i) any recital herein-or in the Bonds (except with respect to the certificate of authentication .of the Trustee endorsed on the Bonds), (ii) the .recording of this Indenture, (iii) insuring the Project or collecting any insurance monies, (iv) the validity of the execution by the Issuer of this Indenture or of any supplements hereto or instruments of further assurance, (v) the sufficiency ~of, or filing of documents related to, the security for the Bonds issued hereunder or intended to be secured hereby, or (vi) the value of or title to the Project or otherwise as to the maintenance of the security thereof, and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Issuer or on the part of the Borrower under the Loan Agreement -52- 7964M except as otherwise provided herein. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of .fu-nds made by it in accordance with Section 701, except ~for the Tzustee's gross negligence and willful misconduct. (d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder. The bank or trust company acting as Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in the Bonds and may join in any action which any Bondholder may be entitled to take with like effect as if such bank or trust company were .not the Trustee. To the extent permitted by law, such bank .or trust company may also receive tenders and purchase in good faith Bonds from itself, including any department, affiliate or subsidiary, with bike effect as if it were not the Trustee. (e) The Trustee shall be protected in reasonably acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. (f) .As to the existence or non-existence of any fact or as to the sufficiency or validity ~f any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by its Mayor or Vice Mayor and atteSt~ed by its Clerk under its seal, or such other person or persons a's may be designated for such purposes by ~esolution of the Issuer, 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 th~s section, 'or of Which by such subsection' it is deemed to have notice, may also accept a similar certificate to the effect that any ~particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The T~ustee may accept a certificate of the ~Mayor or Vice Mayor .or the Clerk of the Issuer under its seal to the effect that a .resolution in the form therein set forth has been adopted by the Issuer as conclusive evidence that such resolution has been duly adopted and is in full force and effect. (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its gross negligence or willful misconduct. The immunities and exceptions from liability of the Trustee set forth in this Indenture shall extend to its officers, ~directors, employees and agents. -53- 7964M {h) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except for defaults specified in subsections (a) or (b) of Section 901 hereof, unless t.h~e Trustee shall be specifically notified in writing of such default by the Issuer, the Borrower or by the holders of at least a majority in aggregate principal amount of Bonds. ~(i) The Trustee shall not be required to give any bond or surety with respect to the execution of its rights and obligations hereunder. (j) Anything contained in this Indenture to the contrary not.w~thstanding, the Trustee shall have the right, but not the obt~ation, to demand, as a condition of any action by the Trustee with ~espect to the authentication of any Bonds, the withdrawal of any cash, t.he release of any property, or any action whatsoever within the .purview of this Indenture, any showings, certificates, opinions, appraisals or other information or corporate action or evidence thereof in addition to that required by the terms hereof. (k) Before taking any action under this Indenture other than the acceleration of the Bonds as provided in section 902, the Trustee may require that satisfactory indemnity be furnished to it for the reimbursement of all expenses, including reasonable counsel fees, to which it may be put and to protect it against all liability by reason of any action ~so taken, except liability which is adjudicated to have resulted from its gross negligence or willful misconduct. The Trustee may decline to exercise any right provided by this Indenture, tlhe %oan Agreement, the Restrictive Covenants or the Mortgage which, in the reasonable discretion of of ~the Trustee ~based on an OpiniOn Counsel, may cause the trust estate or the Trustee to incur corporate or personal liability under any environmental law. (1) Ail monies received by the Trustee shall, until used or applied or invested as herein provided, be held in trust in the manner and .for the purposes for which they were received but need not be segregated for investment purposes from other funds except to the extent r. equired by this Indenture or law. The Trustee shall not be under any liability for interest on any monies received hereunder except such as may be agreed upon. (m) The Trustee may, at the expense of the Borrower, as provided in Section 4.1(b)(1) of the Loan Agreement, employ a firm or person experienced in monitoring compliance of multi-family residential rental projects with the requirements of the Restrictive Covenants, unaffiliated in any manner with the Borrower and acceptable to the Borrower and the Issuer, as the Trustee's agent to enforce thp obligations of the Borrower under the Restrictive Covenants and shall -not be answerable or accountable for any act or omission of such agent. -54- 7964M Section 1002. Fees, Charges and Expenses of Trustee. The ~Trustee shall be entitled to payment of and reimbursement for reasonable 'fees for its services and all out-of-pocket expenses reasonably incurTed by the Trustee hereunder and as Bond Registrar and Paying Agent for 'the Bonds, including the reasonable fees of its counsel. In ~the event the Trustee ceases to be the Paying Agent and Bond Registrar heret~nder, that portion of the Trustee's fees attributable %o such services shall be payable to such other ~entities performing such services. Section i003. Intervention bY Trustee. In any judicial ~proceeding to which the Issuer is a party and which in the opinion of the Trustee has a substantial bearing on the interests of owners of the Bonds, the Trustee may intervene on behalf of bondholders and, subject to Section 1001(k), shall do so if requested by the owners of at least a majority in aggregate principal amount of Bonds then outstanding. The rights and obligations of the Trustee under this section are subject to the approval of a court of competent jurisdiction. Section 1004. Merqer or Consolidation of Trustee. Any corporation or bank ~nto which the Trustee may be converted or merged, or with which it may be consolidated, or to whiCh it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or bank resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party shall be and become successor Trustee hereunder and veste~ with all the trusts, powers, discretion, immunities, privileges 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. Section 1005. Resiqnation by Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created by giving notice to the Issuer, the Borrower and each owner of Bonds then outstanding. Such resignation shall take effect .only upon ~the appointment of a successor Trustee by the Bondholders, the Borrower or the Issuer. If no successor Trustee be appointed within ~6.0 days of such notice of resignation, a temporary Trustee shall be appointed pursuant to Section 1007 until a successor TrUstee shall be appointed by the Bondholders or the Issuer. Section 1006. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and the Issuer and signed by the owners of a majority in aggregate principal amount of Bonds then outstanding, or so long as no Event of Default has occurred and is continuing by the Borrower, in either case upon payment of all fees.and expenses due the Trustee. -55- 7964M Section 1007. Appointment of Successor Trustee by .~Bondholde~s; Temporary Trust~ee. In case the Trustee hereunder shall resign, be removed, be dissolved, be in course of ~dissolution or liquidation, or otherwise become incapable of ~ct~ing hereunder, or in case it shall be taken under the control of any ~ublic officer or officers or of a receiver appointed by a ..court, a 'successor may be appointed by (1) the owners of a majority in aggregate principal amount o:f Bonds then outstanding, witch the consent of the Issuer. and the Borrower, such consent not %o- be un~easonablY withheld, by an instrument or concurrent i~nstruments in writing signed by such owners or (2) the Issuer, with the consent of the Borrower, such consent not to be unreasonably withheld by-an instrument signed by the Mayor or Vice .Mayor of the Issuer and attested by its Clerk under its seal. If ~no successor or temporary Trustee is appointed within 60 days of the resignation of the Trustee, the Trustee may petition a court ~of suitable jurisdiction at the expense of the Borrower to seek the immediate appointment of a successor Trustee. Every such Trustee appointed pursuant to this section shall be, if there be such an institution willing, qualified and able to accept this trust upon reasonable or customary terms, a trust company or bank combined capital, surplus and undivided profits of not havingless thana $100 ~milti0~. Notice of the appointment of the Trustee shall be provided to the holders of the Bonds and Wheat, First Securities, Inc. SeCtion 1008. Concernin~ any Successor Trustee. Every successor Trustee ~ppointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer an instrument in writing accepting such appointment hereunder, and ~thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the properties, .~ri~hts, powers, trusts, ,duties and obligations of its predecessor; but such predecessor .shall, nevertheless, on the request of the Issuer or its successor, execute and deliver an instrument transferring to such successor Trustee all the properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and monies held by it as Trustee hereunder to its successor. Should any instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such successor the .properties, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in ~riting s. hall, on request, be ~xecuted, acknowledged and delivered 'b~ the Issuer. The resignatioD of any Trustee and the instrument ~or instruments removing any Trustee and appointing a successor ihereunder, together with all other instruments provided for in %his article shall be filed and/or recorded by the successor Trustee i.n each recording office where the Indenture may have been filed ~nd/or recorded. -56- 7964M Section 1009. Trustee Pr0t~ected in Relyinq Upon Resolutions, etc, The resolutions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee for the release of property and the withdrawal of cash hereunder. Section 1010. SuCCeSsor ~Trustee as Bond Reqistrar, Custodian of Bond Fund and 'Paying Agent. In the event of a change in the office of Trustee, ~he predecessor Trustee which has resigned or been ~emoved shall cease to be Bond Registrar, custodian of the funds and amounts hereunder and Paying Agent for principal of, premium, if any, and i.nter~est on the Bonds, and the successor Trustee shall become such Bond Registrar, custodian and Paying Agent. Section 1011. Notice to Rating Agency. The Rating Agency shall be notified by the Trustee of the following: (a) any redemption of Bonds other than scheduled sinking fund redemptions; (b) whenever there is a change in the Trustee; (c) whenever there shall occur an Ewent of Default; (d) whenever there shall have occurred a defeasance of th~ Bonds or discharge of this Indenture; (e) when all t.he Bonds are paid; (f) any disbursement from the Debt Service Reserve FUnd; (g) any Material Damage to the Project or Project or any part thereof and (h) notification of any default under the Mortgage of which t~he Trustee has notice in accordance with Section 1001(h). The Rating Agency shall be furnished by the Trustee any information in the possession of the Trustee it requests in order to maintain the rating on the Bonds, and the Trustee shall cooperate with the Rating Agency, including submitting any surveillance forms required by the Rating Agency. The Trustee shall provide to the Rating Agency, .upon its receipt thereof, the annual audited financial statements of the Borrower. ARTICLE XI SUPPLEMENTAL INDENTURES Section 1101. Supplemental Indentures Not Requiring Consent of Bondholders. The Issuer and the Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to this Indenture to the extent not inconsistent With the terms and provisions hereof for any one or more of ~he following purposes: (a) t~o cure any ambiguity or formal defect or omission in %his Indenture; (b) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers or -57- 7964M authority that may lawfully be granted to or conferred upon the ~Bondholders or the Trustee or either of them; ,(c) %o subject to properties or collateral; this Indenture additional revenues, (d) to modify, amend or supplement this Indenture in such manner as required to permit the ~qualification hereof under the Trust Indenture Act of 1939, as amended, any similar Federal statute hereafter in effect, or any state securities ("Blue Sky") law, and, if they so determine, to add to this Indenture such other terms, conditions and provisions as may be required by the Trust Indenture Act of 1939, as amended, or similar Federal statute or state securities law; (e) to provide for the issuance, sale and delivery of Additional Bonds as provided in and upon compliance with Section 213 to provide for (1) the deposit and disbursement of the ~proceeds of such Additional Bonds to pay the expenses of the issuance of such Additional Bonds and the cost of all or any part · of the facilities to be financed by means of such Additional Bonds or to refund another series of Bonds, as the case may be, (2) the payment of the principal of, premium, if any, and interest on such ~Additional Bonds, and (3) such other changes necessary in connection with the issuance of such Additional Bonds as shall not adversely affect in any material respect the rights of the owners of the Bonds then .outstanding; (f) to -make any change herein which, in the opinion of Bond ~Counsel, is necessary to preserve the exclusion of interest on any Tax-Exempt Bonds from gross income for Federal income tax purposes; and (g) to make any ~other ~change herein which shall not adversely affect in any material respect the rights of the owners of the Bonds thenoutstanding. Section 1102. Supplemental Indentures Requiring Consent of Bondholders. Exclusive of supplemental indentures covered by Section 1101 and subject to 'the terms and provisions contained in this section, and not otherwise, the owners of at least a majority in aggregate principal amount of Bonds then outstanding have the right from time to time, anything contained in this Indenture to the contrary notwit'hstanding, to consent to and approve the execution by the Issuer and the Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary o~ desirable by the Issuer for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture; provided, however, that nothing in this Indenture shall permit, or be .construed as permitting, without the consent and approval of the owners of all the Bonds then -'58- 7964M outstanding, (a) an extension of the date upon which the payment of any principal of or interest on any Bond is due or (b) a reduction in the principal amount of, or premium, if any, on any Bond or the .rate of interest thereon or the amount of interest ~ayabte ~hereon or (c) a reduction in amount of any payment ~required by any sinking fund that may be applicable to any Bond, or (d) a privilege or priority of any Bond or Bonds over any Other Bond ~or Bonds, or (e) a change in the privileges~ or priorities of any Bond or Bonds over any other Bond or Bonds or (f) a reduction in the aggregate principal .amount of Bonds required for consent to ~ny supplemental indenture. If, at any time, the Issuer shall request the Trustee to enter into any supplemental indenture for any of the purposes of this section, the Trustee shall send to each Bondholder notice of the proposed execution of such supplemental indenture by registered or certified mail to the address of such BondhOlder as it appears on t~he registration books; provided, however, that failure to give such notice to any Bondholder by mailing, or any defect therein, shall not affect the validity of any proceedings pursuant hereto. Su.ch notice shall briefly set forth the nature of the proposed supplemental indentuze and shall state that copies thereof are on file at the principal office of the Trustee for inspection by all Bondholders. If, within 60 days or such longer period as shall be prescribed by the Issuer following the giving of such notice, the owners of a majority in aggregate principal amount of Bonds then outstanding shall have consented to the execution thereof as herein provided, no owners 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 t. he Issuer from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any supplemental indenture as permitted and provided for in this Section, this Indenture shall be deemed to be modified and amended in accordance therewith. Bonds owned .or held by or for the account of the Issuer or the Borrower or any person controlling, controlled by or under common control with either of them shall not be deemed outstanding for the .purpose of consent or any calculation of outstanding Bonds provided 'for in this article or in Article XII. At the time of any such caIculation, the Issuer shall furnish the Trustee a certificate of an officer of the Issuer, upon which the Trustee may rely, describing all Bonds to be so excluded. The Issuer and t~he Trustee may enter into an indenture supplemental to this Indenture pursuant to Section ll01(e) and in accordance with the prOvisions of Section 213 without compliance with this section. -59- 7964M Anything contained in this Indenture to the contrary notwithstanding, the Issuer and the Trustee may enter into any indenture supplemental to this Indenture upon receipt of the consent of the owners of all Bonds then outstanding and, if required by Section 1103, the consent of the Borrower. Section 110.3. O_pinion of Counsel and. COnsent of Borrower .Required. Anything in this Indenture to the contrary notwithstanding, the-Trustee (a) shall not execute any indenture supplemental to this Indenture unless there shall have been filed with the Trustee (i) an Opinion of Counsel stating that such supplemental indenture is authorized or permitted by this Indenture and complies with its terms and that upon execution it will be valid and binding upon the Issuer in accordance with its terms, and (ii) a. written opinion of Bond Counsel stating in e~ffect that such supplemental indenture will not affect the tax-exempt status of interest on the Tax-Exempt Bonds, and (b)(i) unless an Event of Default has occurred and is continuing, shall not, without the consent of the Borrower, execute any indenture supplemental to this Indenture, and (ii) if an Event of Default has occurred and is continuing shall not without the consent of the Borrower execute any indenture supplemental to this Indenture which ~adversely affects any rights or obligations of the Borrower. Section 1104. Trustee's Obliqation Regarding Supplemental Indentures and Amendments, etc., to Loan Agreement, Note, Mortgaqe and Restrictive Covenants. The Trustee shall not unreasonably (a) refuse to enter into any supplemental indenture permitted by this article or (b) withhold its consent to any amendment, change or modification of the Loan Agreement, the Note, the Mortgage or the Restrictive Covenants permitted by Article XII. The Trustee shall not be deemed to have acted unreasonably hereunder if it believes in good faith that any such supplemental indenture, amendment, change or modification is or may be prejudicial to the rights of the Trustee or the Bondholders. ARTICLE XII AMENDMENT OF LOAN AGREEMENT, NOTE, MORTGAGE AND RESTRICTIVE COVENANTS Section 1201. Amendments, etc., to Loan Agreement, Note, ~Mortgage and Restrictive Covenants Not Requirinq 'Consent of Bondholders. The Issuer and the Trustee shall, without the necessity of consent by or notice to the Bondholders, consent to any amendment, change or modification of the Loan Agreement, the Note, the Mortgage or the Restrictive Covenants as may be required: (a) by the provisions of the Loan Agreement, the Note, the ~.Mortgage, the Restrictive Covenants or this Indenture; -60- 7964M Cb) for the purpose of curing any ambiguity or formal defect or omissio~n ~herein; {c) in connection with the Project to identify the same more precisely or substitute or add additional property acquired with the proceeds of ~the Bonds; {d) ~n connection with the issuance, sale and delivery of Additional Bonds as provided in and in compliance with Section 213 to provide for ~ayments of additional amounts and/or revenues sufficient to pay t~he principal of, premium, if any, and interest on such Additional Bonds and such other Changes as are necessary in connection with t~he issuance of such Additional Bonds; (e) to make any .change therein which, in the opinion of Bond Counsel, is necessary .to preserve the exclusion of interest on any Tax~.Exempt ~Bonds £ro.m gross income for Federal income tax purposes; or (f) in connection with any other change therein, which sh@ll not adversely affect in any material respect the rights of the -holders of the Bonds then outstanding. Section 1202. ~Amendments, etc., to Loan Aoreement, Note, ~Mort0a~e 'and Restrictive CoVenants Requiring Consent of Bondholders. Except for amendments, changes or modifications as provided in Section 1201, ~neither the Issuer nor the Trustee shall consent to any amendment, change or modification of the Loan Agreement, the Note, the Mortgage or the Restrictive Covenants without the prior consent of the owners of at least a majority in aggregate principal amount of Bonds then outstanding given and ~Procured as ~provided in Section 1102. If at any time the Issuer and the Borrower shall request the consent of the Trustee to any such ~proposed amendment, change or modification of the Loan Agreement, the No~e, the Mortgage or the Restrictive Covenants, ~the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification ~o be given in the same manner as provided by Section 11102 with respect to supplemental indentures. Such .notice shall briefly set forth the nature of such proposed · amendment, change or modification and shall state that copies of ~the instrument embodying the same are on file at the principal office of 'the TruStee for inspection by all Bondholders. Section 1203. Limitation on Amendments. No amendment, change or modification to the Loan Agreement, the Note, the Mortgage or the Restrictive Covenants may decrease the obligation of the Borrower to provide revenues in amounts sufficient to pay the principal of and premium, if any, and interest on the Bonds as the same become due. Notwithstanding anything to the contrary in Sections 1201 or 1202, %he Issuer shall not be required to consent to any amendment, change or modifi.cation of the Loan Agreement, -61- 7964M the Note, the Mortgage or the Restrictive Covenants that adversely affects any rights .of the Issuer. Section 1204. Amendment by Unanimous Consent. Anything contained in this Indenture to the contrary notwithstanding, the Issuer and the Tr.ustee may consent to any amendment, change or modification of the Loan Agreement, the Note, the Mortgage or the Restrictive Covenants upon receipt of the consent of the owners of all ~Bonds then outstanding. .Section 1205. Opinion of- .Counsel Required and Consent of BQrrower .Required. Anything in this Indenture to the contrary .notwithstanding, the Trustee (a) shall not execute any amendment, change or modification to the Loan Agreement, the Note, the Mortgage or the ~Restrictive .Covenants unless there shall have been filed With the Trustee (i) an Opinion of Counsel stating that such proposed amendment, change or modification of the Loan Agreement, the Note, the Mortgage or the Restrictive Covenants is authorized or permitted by this Indenture and complies with its terms and 'that upon execution it will be valid and binding upon the party or parties executing it in accordance with its terms, and (ii) a written opinion of Bond Counsel stating in effect that such amendment, change or modification will not affect the tax-exempt status of interest on the Tax-Exempt Bonds, and (b)(i) unless an Event of Default has occurred and is continuing hereunder, shall not, without the consent of the Borrower, execute any such amendment, change or modification and (ii) if an Event of Default has occurred and is continuing, shall not without the consent of the Borrower, execute any such amendment, change or modification .which adversely affects any rights or obligations of the Borrower. ARTICLE XIII MISCELLANEOUS Section 1301. ~Consents, etc., of Bondholders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by the Bondholders may ibe in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or ~of the writing appointing any such agent, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, amd shall be conclusive in favor of the Trustee with regard to any action taken under such request or other instrument. The fact and date of the execution by any person of any such writing may be approved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing -62- 7964M such writing acknowledged before him the execution thereof, or by affidavit of any witness to such execution. For all purposes of this Indenture and of the proceedings for the enfo~rcement hereof, the Bondholder giving such a writing shall be deemed to continue to be the owner of such Bond until the Trustee shall have received notice in writing to the contrary. Section 1302. 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 or company other than the parities hereto, the Borrower 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 agreements herein contained, this Indenture and all of the covenants, conditions and agreements hereof ~being intended to be and being for the sole and exclusive benefit of the parties hereto, the Borrower and the -owners of the Bonds as herein provided. Section 1303. Limitation of Liability of Officers, Directors, etc.. of Issuer. No covenant, agreement or obligation contained .herein shall be deemed to be a Covenant, agreement or obligation of any past, present or future officer, director, employee or agent of the Issuer in his individual capacity, and neither the members of the Issuer nor any officer thereof executing the Bonds shall be liable ~personally on the Bonds or be subject to any ~personat liability or accountability by reason of the issuance thereof. No officer, director, employee or agent of the Issuer shall incur any personal liability with respect to any other action taken by him pursuant to this Indenture or the Act, ~provided such officer, dir.ector, employee or agent acts in good ~aith. Sec%ion 1304. Notices. Unless otherwise provided herein, all demands, notices, approvals~ consents, requests and other communications hereunder shall be in writing and shall be deemed to have been ~given When deliver~ed in person or mailed by first class registered or certified mail, postage prepaid, addressed (a) if to the Borrower, C/HP Cove, Inc., c/o Cornerstone Housing ~Corporation, Suite 200, 1350 Beverly Road, McLean, Virginia 22101-3634, Attention: President, with copies to C/HP Cove, Inc., c/o Housing .Partnership, Inc., Suite 409, 319 Clematis street, West Palm Beach, Florida 33401, Attention: John Corbett and Baber & Kalinowski, P.C., Suite 305, 3050 Chain Bridge Road, Fairfax, Virginia 22030-2834, Attention: Brant Baber, Esq., (b) if to the Rating Agency, Standard & Poor's, 25 Broadway, 21st Floor, New York, New York 10004, (c) if to the Trustee, The Bank of New York, at 10161 'Centurion Par.kway, 2nd Floor, Jacksonville, Florida 32256, and if to the Issuer at City of Boynton Beach, 100 East Boynton Beach Blvd., Boynton Beach, FL 33435, Attn: City Manager. A duplicate copy of each demand, notice, approval, -63- 7964M .consent, request or other communication given hereunder by either the Issuer or the Trustee to the other shall be given to the Borrower. The Borrower, the Issuer and the Trustee may, by notice given ~ereunder, designate any further or different addresses to which '*subsequent demands, notices, approvals, consents, requests or other communications shall be sent or persons to whose attention the same shall be directed. Section 1.305. Successors and Assiqns This Indenture shall be binding upon, inure to the benefit of and be enforceable by the parties and t.heir respective successors and assigns. Section 1306. Indenture shall be jurisdiction, such provision .hereof. $everabilit¥. If any provision of this held invalid by any court of competent holding shall not invalidate any other Section 13.07. Applicable Law. Thi.s Indenture governed by the applicable laws of the State. shall be Section 1308. Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which together shall constitute but one and the same instrument. Section 1309. Election under Section 142(d)(1) of the Code. The Issuer her.eby elects, pursuant to Section l~2(d)(1) of the :Code, to have the requirements of Section 142(d)(1)(A) of the Code ~apply for purposes of determining whether the Project is a "qualified residential rental project." IN WITNESS WHEREOF, the Issuer and the Trustee have caused · this Indenture to be executed in their respective corporate names Dy their duly .authorized officers, all as of the date first above written. (SEAL) ATTEST: Mayor CITY OF BOYNTON BEACH, FLORIDA By: ~Clerk THE BANK OF NEW YORK, AS TRUSTEE, ACTING BY AND THROUGH THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.A., as Trustee By: -64- 7964M NUMBER EXHIBIT A (Form of 1996 Bonds) INTEREST RATE UNITED STATES OF AMERICA CITY OF BOYNTON BEACH, FLORIDA Multi-Family Housing Mortgage Revenue Bond, Series 1996 {~Clipper Cove Apartments), MATURITY DATED DATE DATE CUSIP -July 1, 1996 REGISTERED OWNER: PRINCIPAL~AMOUNT: 'The City of Boynton Beach, Florida (the "Issuer") a political subdivision and municipality of the State of Florida, for value received, 'hereby promises to pay, upon presentation and surrender hereof at the designate office (initially, New York, New York) of The Bank of New York, as Trustee, acting by and through The Bank of New York Trust Company of Florida, N.A., its agent, or its successor in t-rust (the "Trustee"), solely from the sources hereinafter described, to the registered owner hereof, or registered assigns or legal representatives, the principal sum set forth ~bove on fthe maturity date set forth above, subject to.prior redemption as described below, and to pay, solely from such sources, on January 1, 1997, and on each January 1 and July 1 thereafter, ~nterest thereon at the interest rate per year specified above~ subject to adjustment as hereinafter provided (computed on the basis of a 360-day year of twelve 30-day months). Interest shall-be payable from the interest payment date next preceding the date on which this Bond is authenticated, unless this Bond is (a) authenticated before the first interest payment date following the initial delivery of the BondS, in which case it shall ~bear interest from its date, or (b) authenticated after the fifteenth day of the month next preceding an interest payment date, but prior to such intlerest payment date, in which case it shall bear interest from such interest payment date, or (c) authenticated upon an interest payment date, in which case it shall bear interest 'from such interest payment date (unless interest on this Bond is in default at the time of authentication, in which case this Bond shall bear interest from the da~e to which interest has been paid). Interest hereon shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a Business Day) of A-t 7982M the month next preceding an interest payment date by check mailed by the Paying Agent on the interest payment date to such person at his address as it appears on the registration books kept by the Trustee. Principal, premium, if any, and interest are payable in lawful money of the united States of America. Upon the occurrence of a Determination of Taxability, the interest rate otherwise borne by this Bond shall be increased, but not :decreased, to a rate determined by multiplying the rate otherwise borne hereby by a fraction, the numerator of which is one and the denominator of which is one minus the Maximum Corporate ~Tax Rate as of the date of the Determination of Taxability, provided that if such fraction is less than one, then no inter.est rate adjust~ment shall be made. THIS BOND AND THE INTEREST HEREON ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE REVENUES AND RECEIPTS DERIVED BY THE ISSUER FROM THE NOTE AND OTHER SECURITY THEREFOR, WHICH RE%q~NUE$ AND RECEIPTS HAVE BEEN PLEDGED AND ASSIGNED TO SECURE PAYMENT HEREOF. THIS BOND IS NOT A DEBT OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE ISSUER, LIMITED AS AFORESAID THE ISSUER' SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, ON, OR INTEREST ON THIS BOND OR iOTHER COSTS INCIDENT HERETO EXCEPT FROM THE REVENUES AND RECEIPTS PLEDGED AND ASSIGNED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE ISSUER, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, ON, OR INTEREST ON THIS BOND OR OTHER COSTS INCIDENT HERETO. This Bond is one of an issue of $ City of Boynton Beach, Florida Multi-Family Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) (the "Bonds"), of like date and tenor, except as to number, interest rate, maturity date and denomination. The Bonds are being issued for the purpose of making a loan in the principal amount of $ (the · 'Loan") to C/HP Cove, Inc., a Florida corporation not-for-profit and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as. amended (the "Code") and exempt from tax under Section 501(a) of the Code (the "Borrower"), for the primary purpose of providing funds to the Borrower to refinance a multi-family residential rental project in the City of Boynton -Beach, Florida (the "Project"), pursuant to a Loan Agreement, dated as of July 1, 1996 (the "Loan Agreement"), between the Issuer and the Borrower. The Bonds are issued under and are equally and ratably secured by an Indenture of Trust and ASsignment of Mortgage, dated as of July 1, 1996 (the "Indenture"), between the Issuer and the Trustee, which provides for the security for the Bonds and any additional bonds issued pursuant to the Indenture. The Issuer has assigned as security for the Bonds certain of the Issuer's rights under the Loan Agreement and the Borrower~'s promissory note in the principal AL2 7982M amount of $. (the "Note"), issued and delivered pursuant to the Loan Agreement and evidencing the Borrower's obligation to repay the Loan. The Note is secured by a Mortgage and Security Agreement (the "Mortgage,) granting a lien on the ~roject. Reference is hereby made to the Indenture, the Loan Agreement, the Mortgage and the Note and to all amendments and The Bonds may not be called for redemption by the Issuer except as .provided in the 1. The Bonds are su! option and direction of th, a redemption price of 100 accrued interest to the days after the occurrence ndenture and as provided below: ect to redemption by the Issuer at the Borrower, in whole but not in part, at of the principal amount thereof plus edemption date at any time within 365 a Determination of Taxability. whole or in part at the e~ price of 100% of the princ accrued interest to the re~ the Borrower shall elect r substantially the same ~conc provided no such partial partial redemption will Bonds. "Material Damage" any or all of the Project thereof or loss thereof amount to at least $1,000~ The Bonds are required to be redeemed by the Issuer in ~rliest practicable date at a redemption ipal amount thereof to be redeemed plus lemption date if, after Material Damage, Lot to repair or restore the Project to tition as prior to such Material Damage; ~demption shall be permitted unless such t affect the outstanding rating on the shall mean damage to or destruction of by fire or other casualty, condemnation )ecause of failure of title, equal in 00. 3. As and for a sinking fund for the retirement of the Bonds maturing on 1, , the Issuer shall redeem Bonds on the dates set forth below in the principal amounts respectively set ~ort'h opposite such dates at a redemption price of 100% of the princf*pal amount of the Bonds to be redeemed plus accrued interest .to the redemption date: Date Amount *Final Maturity. A-3 7982M 4. The Bonds are subject to redemption by the Issuer at the option and direction of the Borrower on or after January 1, 2006, in whole on any date or in part on a~y interest payment date, at the following redemption prices (expressed as a percentage of the principal amount to be redeemed) plus accrued interest to the redemption date: Date Redemption Price January 1, 2006, to and including December 30, 2006 January 1, 2007, to and including December 30, 2007 ~January 1, 2008, and thereafter 102% 101% 100% If less than all of the Bonds are called for redemption, the Bonds to be redeemed shall be selected as provided in the Indenture. If any of the Bonds or portions thereof are called for redemption, the Trustee shall send to the registered owner of each Bond to be redeemed notification thereof by first class mail (postage prepaid) not less than 30 nor more than 60 days prior to the redemption da%e, at his address as it appears on the registration books; provided, however, that failure to give any such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of any Bonds with respect to which no such failure or defect has occurred. Provided funds for their redemption are on deposit at the' place of payment on the redemption date, all Bonds or portions thereof so called for redemption shall cease to bear interest on such date, shall no longer be secured by the Indenture and shall not be deemed to be ~outstanding under the provisions of the Indenture. Subject to certain limitations set forth in the Indenture, at · any time this Bond is subject to redemption pursuant to Paragraphs 1., 2. or 4. above, this Bond shall also be subject to mandatory tender, in whole or in part, to the Trustee for purchase by the Borrower, or the Borrower's designee, at a tender price equal to the principal amount hereof, plus accrued interest to the tender date, plus any premium that would apply were such 1996 Bonds to be called for redemption on the tender date pursuant to Paragraph 1. 2., or 4., as applicable. In the event this Bond is called for mandatory tender, the Trustee shall send to the registered owner hereof notification thereof, which shall specify the tender date, the tender price and the place or places where amounts due upon such tender will be payable (which shall be the Principal Office of the Trustee), and, if less than all the Bonds are to be subject to mandatory tender, the numbers of the Bonds and the portions of the Bonds to be tendered and shall state that on the tender date, the Bondholders A-4 7982M ~f ~he Bonds subject to mandatory tender shall cease to be ~enti~led %o any ~further interest thereon. Such notice shall be ~i~en by ma~l not less than ten (10) days nor more than thirty ~3~!0) days prior to the date fixed for tender by registered or · certified mail %o the owner of each Bond to be subject to ma. Rdatory tender at ~his address as it appears on the registration ~ Trustee. Failure to give any notice of tender or any in shall not affect the validity of any proceedings · or ~he tender of any Bonds with respect to which no such failure occurred, and ~ny notice mailed as provided herein shall be presumed to have been given whether or not actual!y Teceived by any Bondholder. On the ~ender ~ate, Bonds subject to mandatory tender will be ~deemed ~o have ~been purchased whether or not delivered by the Bondholder thereof, provided funds are on deposit with the Trustee ~or the purChase of such Bonds. In the event funds sufficient to ~pa~ %he purchase price of all Bonds are not on deposit with the · rustee for the purchase of all Bonds on the tender date, the tender shall be rescinded, and the Trustee shall return all Bonds to ~th~ tendering ~ondholders, and shall also send notice, by first ~class mail, to the holders of the Bonds notifying them that the ~en'der has been rescinded. In the event any Bond subject to ~mandatory tender is not so tendered, the Trustee will authenticate and ~eliver a replacement Bond of like series and maturity as the ~Bond not tendered, and bearing a number not contemporaneously outstanding, and %he Bond which was not tendered shall no longer be Outstanding under the Indenture, except that the Bondholder · ~hereof shall be entitl-ed to receive the tender price therefor ~pon tender to the Trustee. On the tender date, the Trustee shall aut'henticate and register replacement Bonds for the Bonds tendered ~r ~e~med tendered in the name of the Borrower or its designee and s.h~ll pay {he tender price of Bonds tendered to it from amounts ~held b~ it for such purpose under the Indenture. The transfer of this Bond may be registered by the registered ~wner hereof in person or by his duly authorized attorney or legal xepr~sentati~e Bt the principal corporate trust office of the ~Trns{ee,-but :only in the msnner and subject to the limitations and ~c~ndit-ions provided in the Indenture and upon surrender and cancellation of th~s Bond. Upon any such registration of · ransfer, ~he ~ssuer shall execute and the Trustee shall ~uthenticate and deliver in exchange for this Bond a new Bond, · egistered in %he name of the transferee, of authorized ~denominati~ns. The Trustee, the Issuer and the Borrower shall, prior to due presentment for registration of transfer, treat the registered owner as the person exclusively entitled to payment of principa-1, premium, if any, and interest and the exercise of all other rights and powers of the owner, except that all payments of ~interest shall-be made to the registered owner as of the fifteenth d~ of the month preceding each interest payment date. A-5 7982M Any exchange or registration of transfer shall be without charge except that the Trustee shall make a 'charge to any bondholder requesting such exchange or registration in the amount ~of -any tax or other governmental charge required to be paid with respect-thereto. All acts, conditions and things required to happen, exist or be performed precedent to and in the issuance of this Bond have happened, exist'and have been performed. This Bond shall not become obligatory for any purpose or be entitled to any security or benefit under the Indenture or be valid until the Trustee shall have executed the Certificate of Authentication appearing hereon. IN WITNESS WHEREOF, the City of Boynton Beach, Florida has caused this Bond to be signed by the manual or facsimile signature of its Mayor, its seal or a facsimile thereof to be printed hereon and attested by the manual or facsimile signature of its Clerk, and this Bond to be dated July 1, 1996. CITY OF BOYNTON BEACH, FLORIDA ~$EAL) By Mayor ATTEST: .Clerk (Form of Trustee's Certificate of Authentication) Date of Authentication: This Bond is one of the Bonds described in the within- mentioned Indenture. THE BANK OF NEW YORK, acting by and through The Bank of New York Trust Company of Florida, N.A., its agent, as Trustee By Authorized Signatory A-6 7982M (Form of Assignment) ~OR ~ALUE RECEIYED the undersigned hereby sells, transfe~rs unto assigns and (Please print or typewrite Name and Address, including zip code of Transferee) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints AttorneF to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the ~premises. Dated: · Signature Guaranteed Registered Owner: NOTICE: Signature(s) must be by a member firm of the New York Stock ExChange or a bank or-commercia~ trust company. NOTE: The signature above must correspond with the name of the registered owner as it appears on the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. (End of Form of Assignment) A-7 7982M EXHIBIT B No. REQUISITION Sirs: I hereby requisition from the Project Fund created by the Indenture of Trust and Assignment of Mortgage, dated as of 1, 1996 (the "Indenture"), between the City of Boynton Beach, Florida and you, as Trustee, the sum of $ to be paid to the parties identified on Schedule A hereto. I certify the amount requisitioned hereby is being used in a manner permitted by the Financing Instruments (as defined in the Indenture). C/HP COVE, INC. By: Title: B-1 7987M EXHIBIT C Certificate of Coverage Letterhead of (Underwriter)(Borrower) Certification of "A" rated debt coverage (Project name. location) Clipper Cove Apartments Bond Issue Maximum annual debt service on "A" rated debt as shown per %he attached schedule of bond payments LESS: annual interest income from Debt Service Reserve Fund and Operating Reserve Fund reinvestment as supported by GIC contract attached e Annual interest income from principal interest reinvestment as supported by GIC contract attached Net annual debt service on "A" rated debt Net operating income available for rated ~debt per the attached "Certification of Annual budget/Net Operating Income Available for Rated Debt" Calculated "A" rated debt coverage ,A" rated debt coverage required by the Indenture I. . representative of (Underwriter)(Borrower) for the Clipper Cove Apartments bond issue do hereby certify that the above debt coverage calculations are accurate. Date C-1 7987M ~ 810 0M/9 EXHIBIT "B" LOAN AGREEMENT Sixth Draft ~6/20/96 7967M/36 LOAN AGREEMENT between CITY OF BOYNTON BEACH, FLORIDA and C/HP COVE, INC. Dated as of July 1, 1996 Note: The interest of the City of Boynton Beach, Florida in this Loan Agreement has been assigned (except for the rights of and amounts payable to the City of Boynton Beach, Florida pursuant to Sections 4.1(b), 5.3 and 6.4 hereof) pursuant to an Indenture of Trust and Assignment of Mortgage dated as of the date hereof from the City of Boynton Beach, Florida to The Bank of New York, as Trustee, acting by and through The Bank of New York Trust Company of Florida, N.A., its agent. 7967M/37 TABLE OF CONTENTS1 ARTICLE I - DEFINITIONS AND RULES OF CONSTRUCTION Paqe Section 1.1. Section 1.2. Definitions ........................... Rules of Construction ................. ARTICLE II - REPRESENTATIONS Section 2.1. Sectio~n 2.2. Representations by Issuer ............. Representations by Borrower ........... ARTICLE III - REFINANCING OF PROJECT Section 3.1. Section 3.2, Section 3.3. Section 3..4. Agreement to Make Loan ................ Agreement to Issue 1996 Bonds ......... Agreement to Pay Costs of the Project Limitation of Issuer's Liability ...... ARTICLE IV - PAYMENT Section 4.1. Section 4.2. Section 4.3. Secti. on 4.4. Amounts Payable ....................... 8 Payments Assigned ..................... 9 Default in Payments ................... 9' Obligations of Borrower ............... 9 ARTICLE ¥ - SPECIAL COVENANTS Section ~5.1. Section 5.2. Section 5.3. Section ~5~4. Section <5.5. Section 5.6. Section 5.7. Section 5.8. Section 5.9. Section 5.10. Section 5.11. Section 5.12. Restrictive Covenants ................. 10 Inspection of Project and Records ..... 10 Indemnification by Borrower ........... 11 Use of Proceeds; Other Matters With... 12 Respect to Project and 1996 Bonds ..... 16 Reference to Bonds Ineffective after BondS Paid ............................ 16 Financial Records and Statements ...... 16 Certificate as to No Default .......... 16 Obligation of Borrower to Furnish Certain Information to the Issuer ............. 16 Notice of Suits ....................... 16 Permits ............................... 17 Maintenance, Modifications and Use of Project ............................... 17 'Taxes, Other Governmental Charges and Utility Charges ....................... 17 1 This Table of Contents shall not constitute part of this Loan Agreement, and is for convenience of reference only. 7967M/38 TABLE OF CONTENTS1 Section Section'5.t4. ManaGement Services ................... ContinuingDisclosure ................. Page 18 18 ARTICLE VI - .~ENTSOF ,DEFAULT AND REMEDIES Section 6.1. Section 6.2, Section 6.3. Section 6.4. Section ~6~5. Event of Default Defined ............. . 23 ~Remedies on Default ................... 24 Ho Remedy Exclusive ................... 25 Extraordinary Fees and Other Expenses 25 Mo Additional Waiver Implied by ~One Waiver ............................ 25 ARTICLE VII - ~REPA!rMENT Section 7.1. Prepayment ............................ 25 ARTICLE VIII - ,MISCELLANEOUS Section 8.1. Section 8.2. Section ~8,3. Section 8.-4. Section 8.5, Section 8..6. Section:8.7. Section 8.8,. Section ~.9. Term of Loan Agreement ................ 26 Notices, ,etc .......................... 26 Amendments to Loan Agreement .......... 26 ~Successors and Assigns ................ 26 ~Severability .......................... 26 ~pplicabte Law ........................ 27 Counterparts .......................... 27 Issuer'May Perform Borrower's Obligations ........................... 27 Limited Obligations of Borrower ....... 27 Exhibit Exhibit Exhibit ,A- B - C - ~Note Mortgage and Security Agreement i~Declaration of Restrictive Covenants 7 967M THIS LOAN AGREEMENT made as of the 1st day of July, 1996, between CITY OF BOYNTON BEACH, FLORIDA, a political subdivision and municipality of the State of Florida (the "Issuer"), and ~C/HP COVE, INC., a Florida corporation not-for-profit (the "Borrower"); WITNESSETH: '~WHEREAS, ~ursuant to Article VIII, Section 2 and Article VII, Section 10(.c) of the Florida Constitution, the Charter of the Issuer and Chapter 166, Florida Statutes (collectively, the "Act"), the ISsuer is authorized to issue bonds to provide residential rental property for family units; and WHEREAS, in order to further the purpose of the Act, the Issuer .proposes to issue its Multi-Family Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments), in the principal amount of $ (the "1996 Bonds"), and use the proceeds thereof to make a loan (the "Loan") for the principal purpose of providing funds to the Borrower to refinance a multi-family ~esidential rental project in the City of Boynton Beach, Florida (the "Project"); and WHEREAS, the Loan will be evidenced by promissory note executed by the Borrower (the "Note") in favor of the Issuer in the principal amount of $ which will be secured by a Mortgage and Security Agreement (the "Mortgage") granting a lien on and security interest in the Project; and WHEREAS, the Issuer and the Borrower desire to set forth the terms and conditions with respect to such financing; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto covenant and agree as follows: ARTICLE I DEFINITIONS AN~ RULES OF CONSTRUCTION 'Section 1.t. Definitions. Ail words and terms defined in the Indenture (as defined below) or the Restrictive Covenants (as defined in the Indenture) shall have the same meaning in this Loan Agreement. In addition, the following words and terms shall have the following meanings unless the context otherwise requires: "Agreement" or "Loan Agreement" shall mean this Loan Agreement, including .any amendments hereto as permitted by the Indenture. "Even% .of Default" shall mean any of the events enumerated in Section 6.1. "Financing Instruments" shall mean this Loan Agreement, the Indenture, the 1996 Bonds, the Mortgage, the Note and the Restrictive Covenants. "Hazardous Materials" ~defined in Section 2.2(i). shall mean Hazardous Materials as "Indemnitees" shall mean the Issuer, the Trustee, their current amd future officers, directors, members, employees and .agents and each ~person, if any, who "controls" the Issuer or the Trustee within the meaning of Section 15 of the Securities Act of 11933, as amended, or Section 20(a) of the Securities Exchange Act of 1934, as amended. "Indenture" shall mean the Indenture of Trust, dated as of the date hereof, between the Issuer and The Bank of New York, as Trustee, acting by and through The Bank of New York Trust Company of Flo~rida, N.A., its agent including any amendments thereof or supplements thereto. "LOan" shall mean the loan from the Issuer to the Borrower in the amount of $ "Noteholder" shall mean the Trustee, as assignee of the Issuer, as holder of the Note, or any subsequent holder. "Official Statement" shall mean the Official Statement, dated , 1996, with respect to the 1996 Bonds. Section 1.2. Rules of 'Construction° The following rules shall apply t.o the construction of this Loan Agreement unless the context otherwise requires: (a) Words importing the singular number shall include the ~plural number and vice versa. (b) Words importing the redemption or calling for redemption of Bonds shall not be deemed to refer to or cOnnote the payment of Bonds aS their stated maturity. (c) Ail references herein to particular articles or sections are references to articles or sections of this Loan Agreement unless .otherwise noted. (d) The headings herein are solely for convenience of reference and shall not constitute a part of this Loan Agreement nor-shall they affect its meaning, construction or effect. -2- 7967M ARTICLE II REPRESENTATIONS Section 2,1. Representations by Issuer. The Issuer makes the following representations as the basis for its undertakings hereunder: (a) The Issuer is a political subdivision and municipality of the State of Florida duly.created and existing pursuant to the Act, has the power to enter into the Financing Instruments to which it is a party and the transactions contemplated thereby and to carry out its obligations thereunder and to issue the 199.6 Bonds, and by proper action has duly authorized the Issuer's execution and delivery of, and its performance under, such Financing Instruments and all other agreements and instruments relating thereto. (b) The Issuer proposes to issue its 1996 Bonds to finance the Cost of the Project under the Indenture and the payments on the Note will be assigned, without recourse, and ;pledged ~by-the Issuer to the Trustee as security for payment of the principal of, premium, if any, and interest on the 1996 ~Bonds and payment of the expenses inCident to the issuance ~hereof. (c) To the ~best of its knowledge, the Issuer is in compliance in 'all respects with the Act, all other existing taws, rules, regulations, judgments, decrees and orders applicable to or binding on it and the provisions of all agreements and instruments by which it is bound, a default under or violation of which would prevent it from issuing and selling the 1996 Bonds, making the Loan, executing and delivering the Financing Instruments to which it 'is a party or consummating the 'transactions contemplated thereby, and no event has occurred and is continuing under the provisions of any such agreement or instrument or -otherwise that with the lapse of time or the giving of notice, or both, would constitute such a default or violation. (d) The execution and delivery by the Issuer of the Financing Instruments to which it is a party and its compliance with the terms and conditions thereof will not, to the best of the Issuer's knowledge, constitute a default under or violation of the Act or any law, rule, regulation, judgment, order, decree, agreement or instrument by which it is bound. (e) .No further approval, consent or withholding of objection on the part of any regulatory body, Federal, state or local, is required in connection with (1)~ the issuance and delivery of the 1996 Bonds by the Issuer, (2) the execution or delivery of or compliance by the Issuer with the terms and -3- 7967M conditions of the other Financing Instruments to which it is a part~, or (3) ithe 'assignment by the Issuer to the Trustee of its rights under this Loan Agreement, the Mortgage and the NOte. The consummation by the Issuer of the transactions set forth in the ~996 Bonds and this Loan Agreement in the manner and under the terms and conditions as provided herein will comply with all applicable state, local or Federal laws and any rules and regulations pr. omulgated thereunder by any regulatory authority or.agency. (f) No litigation, inquiry or investigation of any kind in or by any judicial or administrative court or agency is pending or to ~ts knowledge threatened, against the Issuer with respect to {1) the organization and existence of the Issuer, (2) its authority to execute or deliver the Financing Instruments to which it is a party, (3) the validity or enforceability of any such 'Financing Instruments or the transactions contemplated :thereby, (4-) the title of any officer of the Issuer who executed such Financing Instruments or (5) any authority or proceedings ~elating to the execution and delivery of such Financing Instruments on ~ehalf .of the Issuer. (g) The Issuer has found that the issuance of the 1996 Bonds will serve the purposes of the Act and that the Loan to the Borrower is in furtherance of the purposes of the Act. (h) 'The Issuer is not in default in the payment of the principal of or interest on any of its indebtedness for borrowed money and is not in material default under any instrument under or subject to which any indebtedness for borrowed money has been incurred, and no event has occurred and is continuing under the provisions of any such instrument that with the lapse ~of time or the giving of notice, or both, would constitute a material event of default thereunder. {i) The ~evenues and receipts to be derived from the Note, the Mortgage and this Loan Agreement have not been pledged previously by the Issuer to secure any of its notes or bonds other than the 1996 Bonds. The Issuer makes no representation, covenant or agreement as to the financial position or business condition of the Borrower or the Project an~d does not represent or warrant as to any statements, materials, representations or certifications furnished by the Borrower in connection with the sale of the 1996 Bonds or as to the correctness, completeness or accuracy thereof. Section 2.2. Representations by Borrower. makes the 'following representations as the undertakings hereunder: The Borrower basis for its -4- 7967M (a) The Borrower iS a corporation not-for-profit duly organized, validly existing and in good Standing under the laws of the State of Florida, has the power to enter into the Financing Instruments to which it is a party and to undertake %he transactions contemplated thereby and to perform its 'obligations thereunder and by proper action has duly authorized the execution and delivery of such Financing Instruments and the :performance of its obligations thereunder. (b) The 'Borrower has received a determination letter from the Internal Revenue Service recognizing that it is an organization described in Section 501(c)(3) of the Code and that it is not a private foundation within the meaning of Section 509(a) of the Code; such letter has not been modified, limited, revoked or superseded; and the Corporation has conducted its operations and filed all required reports or documents with the Internal Revenue Service so as to maintain the exemption. (c) The ~Borrower intends to operate the Project, or to cause it to be operated, as a multi-family residential rental project meeting all the requirements of Section 142(d) of the Code for so long as required by such Section. (d) The Borrower is not in default under or in ~iolation of, and the execution, delivery and compliance by the Borrower with the terms and conditions of the Financing Instruments to which it is a party, the performance by the Borrower of its obligations thereunder and the consummation by the Borrower of the transactions herein contemplated do not and will not conflict .with, or constitute a breach or result in a violation of (and no event has occurred and is continuing which with the lapse of time or the giving of notice, or both, would constitute or result in such a default or violation) (1) the Borrower's articles of incorporation or bylaws, (2) any agreement or other instrument to which the Borrower is a party or by which it is bound, or (3) to the knowledge of the Borrower, any constitutional or statutory provision or order, rule, regulation, decree or ordinance of any court, government or governmental authority having jurisdiction over the Borrower or its property. (e) The -Borrower is not in default in the payment of %he principal of or interest on any of its indebtedness for borrowed money and is not in default in any material respect under any instrument under and subject to which any indebtedness for borrowed money has been incurred, and no event has occurred and is continuing under the provisions of any such agreement that with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder~ (f) To the Borrower's knowledge, there is no litigation at law or in equity or any proceeding before any -5- 7967M · court or .governmental agency the Borrower or any of ~t-s -officers pending or threatened, except those in which any liability -of %he Borrower is adequately covered by insurance or in which any judgment or order would not have a material adverse ~effect upon the business or the assets of the Borrower, nor to the Borrower"s knowledge, is there any such litigation or proceeding tha~ would materially and adversely affect, in any .way, its existence or authority to do business, the operation of the Project., the ~alidity or enforceability of any Financing Instruments to which it is a party or the performance of the Borrower'.s obligations thereunder. (g) The ~Borrower has -obtained, or will obtain in a timely manner, all consents, approvals, permits, authorizations and orders of any governmental or regulatory authority that are required 'to be obtained by the Borrower as a condition precedent to the execution and delivery of the Financing Instruments to which it is a party or the performance by the Borrower of its obligations thereunder, or that are required for the operation of the Project. (h) When executed and delivered, the Financing Instruments to which the Borrower is a party will be valid and binding obligations or agreements of the Borrower enforceable in accordance with their respective terms. (i) The Borrower and its assets fully comply in all material respects with all Federal, state and local ~environmental laws, rules, regulations, ordinances and other requirements including, without limitation, those which relate to ithe production, storage, disposal or use of any and all Hazardous Materials. The Borrower covenants that the Project shall be 'kept free of Hazardous Materials and shall not be used to generate, manufacture, refine, transport, treat, store, ~handle, dispose of, transfer, produce or process Hazardous Materials, except in connection with the normal maintenance and operation of any portion of the Project. The Borrower shall comply, or cause there to be compliance, with all applicable Federal, state and local laws, ordinances, rules and regulations with respect to Hazardous Materials and shall keep, or cause to 'be kept, the Project fre~ and clear of any liens imposed ~pursuant to .such laws, ordinances, rules and regulations. In the event that the Borrower receives any notice from any governmental agency or any lessee with regard to Hazardous Materials on, from or affecting the Project, the Borrower shall immediately notify %he Trustee and the IssUer. The Borrower shall conduct and complete, or cause there to be conducted and completed, all investigations, studies, sampling and testing and alt remedial, removal and other actions necessary to clean up and remove all Hazardous Materials on, from or affecting the Project in accordance with all applicable Federal, state and local laws, .ordinances, rules, regulations and policies. For -6- 7967M ~purposes of this subsection (i), ~'Hazardous Materials" shall include, without limitation, any petroleum, petroleum products or fractions or components thereof, flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous .or toxic substances, or related materials, asbestos or any materials containing asbestos, or any other similar substance or material as defined by any Federal, State or local ordinance, rule or regulation including, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. sections 9601 et seq.), the Hazardous Materials Transportation ACt, as amended (49 U.S.C. sections 1801 et seq.), the Resource .Conservation and Recovery Act, as amended (42 U.S.C. sections 9601 et seq.), and the regulations adopted and publications promulgated pur.suant thereto. ARTICLE III REFINANCING OF PROJECT Section 3.1. Agreement to Make Loan. The Issuer agrees to make, but solely from the proceeds of the 1996 Bonds, and the Borrower agrees to accept, the Loan for the principal purpose of refinancing the Project and paying costs incidental thereto. The Borrower's obligation to repay the Loan shall be evidenced by the Note substantially in the form attached hereto as Exhibit A and secured by the Mortgage substantially in the form attached hereto as Exhibit B. The Borrower agrees to use the proceeds of the Loan to refinance the Project in accordance with the provisions of the Indenture and to make all payments required hereunder and under the Note, subject to the limitation of Section 4.4, when and as the same shall become due. Subject to such limitation, the Borrower acknowledges and agrees that it is the intent of the Borrower to make, and the Borrower agrees to ~make, or cause to be made, payments required under the Note and this Loan Agreement when and as the same shall become due. Section 3.2. Agreement to Issue 1996 Bonds. In order to provide funds for the principal purpose of refinancing the Project, the Issuer shall, simultaneously with the execution and delivery ~hereof, proceed with the issuance of the 1996 Bonds bearing interest, maturing and having the other terms and provisions set fort'h in the Indenture and, as security for the '1996 Bonds, shall pledge and assign, without recourse to the Trustee (a) all of its right, title and interest in and to the Note, the Mortgage and this Loan Agreement (except for the rights of the Issuer pursuant to Sections 4.1(b), 5.3 and 6.4) and all revenues and receipts therefrom and the security therefor, (b) the amounts on deposit from time to time in the funds established under the Indenture, and (c) the right to enforce the Restrictive Covenants as provided in Section 405 of the Indenture. All revenues and assets pledged and assigned -7- 7967M .hereby Shall .immediately be sUbject to the lien of such' pledge without any physical delivery thereof or any further act. By its ,e~ecution ~of this Loan Agreement, the Borrower conclusively acknowledges its approval of all the terms and conditions of the Indenture. Section 3.3. A~reement to Pay Costs of the Project. The ~Borrow~r shall-use proceeds of the Loan only to pay Costs of the Project. Section .3..~4. Limitation of Issuer's Liability. Anything contained in -this Loan Agreement or the other Financing Instruments to the contrary notwithstanding, no obligation that the Issuer ~:may incur in connection with the undertaking of the Project ~or %he ,pa!~ment of money shall be deemed to constitute a debt or general Obligation of the Issuer but any such obligation shall be ~payable solely from the proceeds of the 1996 Bonds, the payments ~made hereunder and under the Note and the security for ~he Note, .including the Mortgage. Neither the members of the City 'Commission of the Issuer nor any persons executing the 1996 Bonds shall be liable personally on the 1996 Bonds by reason of the issuance thereof. The 1996 Bonds shall be limited obligations of the Issuer as provided therein and in the Indenture. ARTICLE IV PAYMENT Section 4.1. Amounts ~ayable. (a) The Borrower covenants to make payments required by the Note, as and when the same become due. .(b) The Borrower also shall pay, or cause to be paid, as and when :t-he same become due, unless paid from the Expense Fund or ~he Revenue Fund, (1) to the Trustee, its reasonable fees :for services rendered and for expenses reasonably incurred '~y it as Trustee ,under the Indenture, including without limitation the reasonable fees of its counsel, all reasonable charges for exchange or registration of transfer of Bonds, any reasonable cost or expense necessary to cancel and discharge the Indentur~e and Mortgage upon ~payment in full of the Bonds and the reasonable fees and expenses of any agent engaged by the Trustee pursuant to section 1001'(m) of the Indenture; (2) to the Rating Agency, a fee :of $2,50'0 on each January 1 beginning January 1, 1997 and a .fee of $45,000 apon issuance of the 1996 Bonds; (3) to the Issuer, all reasonable and necessary costs and expenses of ~he Issuer directly related to the issuance of the 1996 Bonds; and (4) to the Trustee and Issuer, all other amounts that the Borrower agrees to pay under the terms of this Loan Agreement; ~provided, however, that the aggregate of all such amounts paid to the Issuer shall not equal or exceed an amount -8- 7967M wh'ich would cause the "yield" on th~ Loan Agreement, the Note or any other "acquired purpose Obligation" to be "materially higher" tha~ the "yield" on the applicable Tax-Exempt Bonds, as such quoted te~ms are defined in the Code. (c) Pursuant to the Mortgage, the Borrower has pledged and assigned %o the Issuer, and its successors and assigns, including the Trustee, its interests in all receipts, ~rentals and other amounts received with respect to the Project, and the Borrower agrees to pay all receipts, rentals and other amounts received with respect to the Project, when received, directly to the Trustee for deposit in the Revenue Fund. If the ~total of suCh amounts is less than the amounts to be paid by the ~orrower under 'sUbsections (a) and (b), the Borrower shall .none%.helesS, but subject to Section 8.9 hereof, be obligated to make ~futl payment of all amounts due under subsections (a) and Section 4.2. Payments Assiqned. It is understood and agreed that all payments with respect to the Loan, as well as the Issuer's other rights under this Loan Agreement and the Note (except its rights to indemnification pursuant to Section 5.3 and payment of its fee and its costs and expenses pursuant to Sections 4.1(b) and 6.4), are assigned by the Indenture to the Trustee. The Borrower consents to such assignment and agrees to pay to the Trustee all amounts payable by the Borrower that are so assigned, including all receipts with respect to the Project. Section 4.3. Default in Payments. If the Borrower should fail to make payments required by the Note or the Mortgage or if t~he Borrower should fail to make any other payment required hereunder ~when due, the Borrower, to the extent permitted by law, shall ~PaF interest with respect to the payments thereon at the maximum rate on any of the Bonds from the due date until paid. Section 4.4. Obli~ations of Borrower. The obligation of the Borrower to make payments on the Note, to make all other payments provided for herein and to perform and observe the other agreements and covenants on its part herein contained shall be absolute and unconditional, irrespective of any defense or any rights ~of setoff, recoupment or counterclaim it might otherwise hav.e against the Issuer, the Trustee or any other person. Subject to prepayment of the Note in full and termination as provided herein, the Borrower shall not suspend or discontinue any such payment hereunder or on the Note or fail to perform and observe any of its other agreements and covenants contained herein or terminate this Loan Agreement for any cause, including, without limiting the generality of the foregoing, any acts or circumstances that may deprive the Borrower of the use and enjoyment of the Project, failure of consideration or commercial frustration of purpose, any damage to or destruction -9- 7967M of the Project or any part thereof, the taking by eminent domain of titl~e to .or the right to temporary use of all or any part of the ~roject, any change in the tax or other laws of the United States of <America, the ~ate ~of Florida or any political or taxing subdivision of either thereof, or any failure by the Issuer to perform and observe any agreement or covenant, whether express ~r implied, or any duty, liability or obligation arising out of ~or connected with this Loan Agreement. The Issuer and the ~Borrower agree'that the assignment made hereby and by ~he Indenture is irrevocable and inures to the Trustee and its successors and assigns and that they will not, -while such assignment is in effect or thereafter until they have received from the Trustee notice of the termination of such assignment, take any action which is inconsistent with this assignment, or-make or suffer to be made any other assignment, designation or direction of the subject matter hereof, and that any such- other assignment, designation or direction shall be void. 'The Issuer agrees not to waive, excuse, condone or in any manner release or ~discharge the Borrower under the Note or hereunder of or from the obligations, covenants, conditions and agreements by the Borrower to be performed, including the obligation to make the payments called for under the Note and hereunder in the manner and at the place and time specified therein and herein. The assignment made hereby shall not in any way impair or 'diminish any obligation of the Issuer or the Borrower under this Loan Agreement, nor shall any of their obligations De imposed upon the Trustee. ARTICLE V SPECIAL COVENANTS ~$ection 5.1. ~Restrictive Covenants. The Restrictive Covenants attached hereto as Exhibit C are hereby incorporated herein ~by reference and the Borrower hereby covenants and agrees to perform each and every covenant and agreement set forth therein. 'Section 5.~. Inspection of Project and Records. The Issuer and the TruStee and their duly authorized agents shall have the right (but not the obligation) at all reasonable times upon not less t~han t~o Business Days prior written notice to enter upon and to examine and inspect any part of the Project, subject to the rights -of any tenants in the Project, and the Issuer and the Trustee and their duly authorized agents shall also have /he ~right at all reasonable times and upon reasonable notice to examine .the .books and records of the Borrower insofar as such books .and records relate to the refinancing and maintenance of the Project or payments hereunder or on the Note or the compliance by the Borrower with the Restrictive Covenants. -10- 7967M Section 5.3. Indemnification by Borrower. The Borrower shall at all times Protect, indemnify and save harmless the Indemnitees from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses including, without limitation (1) all amounts paid in settlement of any litigation commenced or reasonably threatened against the Indemnitees, if such settlement is effected with the written consent of the Borzower; (2) all expenses reasonably incurred in the investigation of, preparation for or defense of any litigation, proceeding or investigation of any nature whatsoever, commenced or reasonably threatened against the Borrower, the Project or the Indemnitees; (3) any judgments, -penalties, fines, damages, assessments, indemnities or contributions; and (4) the reasonable fees of attorneys, .auditors and consultants provided the same is imposed upon or incurred 'by or asserted against the Indemnitees on account of (a) any failure of the Borrower to comply with any of the terms of the Financing Instruments, or (b) any loss or damage to property or any injury to or death of any person that may be occasioned by any .cause whatsoever pertaining to the Project or the use thereof or to the Bonds or (c) any act or failure to act by the Borrower as required under the Restrictive Covenants and .any .consequences arising therefrom, including specifically and without limitation, consequences from the loss of the exclusion from gross income for Federal income tax purposes of interest on :the 1996 Bonds or (d) any failure by the Borrower or its employees or agents to comply with the terms of the Financing Instruments to which the Borrower is a party and any agreements, covenants, obligations, or prohibitions set forth therein; or i(e) any breach of any representation or warranty of the Borrower set forth in the Financing Instruments to which the Borrower is a party or any certificate or any letter of representation deliv.ered by the Borrower pursuant thereto, and any claim that ~any statement, representation or warranty of the Borrower, or the Official Statement for the 1996 Bonds (other than any information therein supplied by the Indemnitee seeking indemnification hereunder), contains or contained any untrue or m~sl'eading statement .of material fact or omits or omitted to s~ate any material facts necessary to make the statements made therein not misleading in light of the circumstances under which they were made; or (f) any action, suit, claim, proceeding or investigation of a judicial, legislative,administrative or · r~gulatory nature arising from or in connection with the .r~financing, rehabilitati6n, equipping, ownership, operation, odcupation ~r use of the Pr6ject including the presence, escape, seepage, leakage, discharge, emission, release or threatened Telease, or disposal of any Hazardous Materials; or (g) any suit, action, administrative proceeding, enforcement action, or governmental or private action of any kind whatsoever commenced against .the Borrower, the Project or the Indemnitees which might adversely affect the validity or enforceability of the Bonds, the Financing Instruments to which the Borrower is a party or -11- 7967M the performance by the Borrower or the Indemnitees of any of their respective Obligations thereunder; provided, however, that such indemnity shall be effective as to any Indemnitee only to the extent of any loss that may be sustained by such Indemnitee in excess of the net proceeds received by such Indemnitee from insurance, if any, required under the Mortgage with respect to such loss and provided further that the benefits of this section shall not inure to any person other than the Indemnitees. Nothing contained herein shall require the Borrower to indemnify any Indemnitee for any claim or liability resulting from ~egligence or willful misconduct of the Indemnitee. If any action, suit or proceeding is brought or reasonably 'threatened against the Indemnitees for any loss or damage for which t~he Borrower is required to provide indemnification under this Section, the Issuer and the Trustee shall promptly notify the ~Borrower and the Borrower shall have the right to, upon request and at its expense, resist and de!fend such action, suit or proceeding, or cause the same to be resisted and defended by counsel designated by the Borrower and approved by the Indemnitees, which approval shall not be unreasonably withheld; provided, however, that such approval shall not be required in the case of defense by counsel designated by any insurance company undertaking such defense pursuant to any applicable policy of insurance. The obligations of the Borrower under this section shall survive any termination of this Loan Agreement. Section 5..4. Use of Proceeds; Other Matters With Respec~ · to Project and 1996 Bonds. (a) The Borrower shall not (1) request, authorize, approve or permit to be approved on its behalf, any payment of the proceeds of the 1996 Bonds if, as a result of such payment, (i) less than 95% of the proceeds of the 1996 .BOnds expended at that time would be considered as having been used to provide a "qualified residential rental project" within the meaning of Sections 142(a)(7) and 142(d) of the Code, or (ii) the issuance costs of the 1996 Bonds financed by the 1996 Bonds would exceed 2% of the proceeds of the 1996 Bonds, within the meaning of Section 147(g) of the Code, or (iii) less than all property provided by net proceeds of the 1996 Bonds 'being owned other than by a Tax-Exempt Organization (hereinafter defined) or a governmental unit (as defined in Section 145 of the Code) (2) take or refrain from taking any ~ther action that would constitute or result in non-compliance with Section 142(d) of the Code, or would otherwise result in the loss of the exclusion of interest on any 1996 Bonds from gross income for Federal income tax purposes. Without limitation by reason of the foregoing or any other provision of this Agreement, the Borrower agrees to take all action required under the Code with respect to use of the proceeds of the 1996 Bonds and operation of the Project or as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements -12- 7967M proposed or promulgated by the Department of Treasury or the Internal Revenue Service pertaining to Obligations issued under 'Sections i42(d) and 145 of the Code, to prevent loss of the exclusion of interest on the 1996 BOnds from gross income for Federal income tax purposes, and to refrain from taking any ~action that would result in loss of such exclusion. Without limiting the generality of the foregoing the Borrower shall not use the proceeds of the 1996 Bonds, or permit such proceeds to -bemused, directly or indirectly, to provide any airplane, skybox or other private luxury box, any facility prlmarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises. (b) The Borrower represents and agrees, in compliance ~ith Section 142(d) of the Code, that substantially all of the Project consists of units of similar quality and type of .construction, containing facilities for living, sleeping, eating, cooking and sanitation, the Project is on a single tract of land and all of the buildings, structures and facilities constituting the Rroject comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the .ownership, management, accounting and operation of the Project. -(c) The Borrower represents that no proceeds of any financing used to acquire ownership of the Project were used to reimburse the Borrower 'for expenditures previously made or incurred by the Borrower with respect to the Project prior to October 2, 1995. (d) The Borrower represents and agrees that the weighted average maturity of the 1996 Bonds allocable to the refinancing of the Project does not exceed 120% of the remaining average reasonably expected economic life of the Project, determined pursuant ~to Section 147(b) of the Code, as set forth in the certificates or letters of representation of the Borrower delivered on the -date of the issuance of the 1996 Bonds. The Borrower agrees that it will not make any changes in the Project which would, at the time made, cause the average reasonably expected economic life of the Project, determined pursuant to Section 147(b) of the Code, to be less than the average reasonably expected economic life of the Project set forth in such certificates or letters of representation of the Borrower, unless the Borrower s-hall file with the Trustee an opinion of Bond Counsel that such Changes to the Project will not result in loss of the exclusion of interest on the 1996 Bonds from gross income for Federal income tax purposes. (e) The Borrower represents that the information contained in the certificates or letters of representation of the Borrower with respect to compliance with the requirements of Section 149(e) of the .Code, including the information in Form 8038, is true and correct in all material respects. -13- 7967M (f) The Borr~ower shall not and the Issuer shall not knQwingly (1) take or omit to take any action, or approve the .~TrUstee's making any investment or use of the proceeds of any Tax-Exempt I996 Bonds or any other monies within their respective control (including without limitation the proceeds of :any insurance or any condemnation award with respect to the :'Project) or the taking or omission of any other action, the taking or omissio~n of. which would cause any 1996 Bonds to be bonds" within the~meaning of ~Section 148 of the Code barring unforeseen circumstances, approve the use of the proceeds from the sale of any 1996 Bonds otherwise than in accordance with the Issuer's "non-arbitrage" certificate given immediately prior to the issuance of 1996 Bonds. {g) The Borrower shall, at its sole expense, determine and pay on behalf of the Issuer the Rebate Amount to the United ~States, as and when due, in accordance with the "rebate requirement" described in Section 148(f) of the Code and Treasury Regulations thereunder, including without limitation, Treasury Regulations Sections 1.148-1 through -111 and retain records of all such determinations until six years after payment of the 1996 Bonds. For purposes of this Section, "Rebate ~Amount" shall mean the excess of (1) the future value of ~all non-purpose receipts with respect to the 1996 Bonds over (2) ~the future value of all non-purpose payments with respect to the 199.6 Bonds, in each case calculated under this Section pursuant to Section 148 of the Code and the Treasury Regulations thereunder, or such other amount of arbitrage required to be rebated to the United States of America under Section 148 of the Code or the Treasury Regulations thereunder. (h) The Issuer hereby selects January 1 as the installment computation date pursuant to the Treasury Regulations, unless the Issuer by certificate delivered to the ~or.rower selects another date to be the installment computation date prior to .the d~ate that any amount with respect to the 1996 ~onds is paid or required to be paid to the United States of America pursuant t'o Section 148 of the Code or Treasury Regulations issued %hereunder. (i) Within 30 days (i) after January 1, 2001, the initial installment .computation date, and at least once every five years thereafter, and (ii) after the final payment of the 1996 Bonds, the Borrower will cause the Rebate Amount to be computed and will deliver a copy of such computation (the "Rebate Amount Certificate") to the Issuer and the Trustee. The Rebate Amount Certificate setting forth such Rebate Amount shall be prepared ~or approved by a Rebate Analyst. (j) Not later than 60 days after the initial installment .computation date, the Borrower, on behalf of the Issuer, 'shall pay to the United States of America at least 90% -14- 7967M of the Rebate Amount as ~et forth in the Rebate Amount ~Certificate prepared with respect to such installment ~computation date. At least once on or before 60 days after the installment computation date that is the fifth anniversary of the initial installment computation date and on or before 60 days after every fifth anniversary date thereafter until payment of the 1996 Bonds, %he Borrower, on behalf of the Issuer, shall pay to the Unit.ed States of America at least the amount, if any, by_whiCh 90% of the ~Rebate Amount set fOrth in the most recent Rebate Amount Certificate exceeds the aggregate of all such .payments %heretofore made to the United States of America ~pursuant to this Section. On or before 60 days after payment of the 1996 Bonds, the Borrower, on behalf of the Issuer, shall pay to the Unit~ed States of America the amount, if any, by which 100-% of the Rebate Amount set forth in the Rebate Amount Certificate with respect to the Tax-Exempt 1996 Bonds exceeds the aggregate of all payments %heretofore made pursuant to this Section. All such payments shall be made by the Borrower, on behalf of the Issuer, from any available source. The Borrower shall pre]~are ant return required by the Internal Revenue Service to accompany any rebate payment, and if required, the Issuer agrees to cooperate reasonably in the execution of such return. (k} Notwithstanding anything contained herein to the contrary, no rebate payment will be made if the Borrower receives and delivers %o %he Issuer and the Trustee an opinion of Bond Counsel that such payment is not required under the Code · o prevent the 1996 Bonds from becoming "arbitrage bonds" within ~the meaning of Section 148 of the Code. (1) The Borrower represents that the 1996 Bonds are no~t and will not be "Federally guaranteed," as such term is used i'n Section 149(b) of the Code. (m) The Borrower will not engage in any activities or take any action that .might reasonably be expected to result in the Borrower ceasing to be a Section 501(c)(3) organization within the meaning of Section 145 of the Code that is exempt from Federal income taxation under Section 501(a) of the Code and is not a "private foundation" within the meaning of Section 509(a) of the Code (a "Tax-Exempt Organization"), or .corresponding provisions of Federal income tax law from time to time in effect. The Borrower will promptly notify the Trustee and the Issuer of any loss of its status as a Tax-Exempt Organization or of any investigation, proceeding or ruling that might result in the loss of its status as a Tax-Exempt Organization. (n) The Borrower represents and agrees that all of the property provided or to be provided by the net proceeds of the 1996 Bonds will be owned by a Tax-Exempt Organization or by -15- 7967M a ~governmental unit within the meaning of Section 145(a)(1) of ,the .Code. Section 5.'5. Reference to Bonds Ineffective after Bonds Paid. -Upon payment of the Bonds all references in this Loan Agreement to the Bo.nds and the Trustee, except those in Section 8.1, Shall be ineffective, and neither the Trustee nor the owners ,of any of the ~onds shall thereafter have any rights ~ereunder .except as provided in Section 8.1. Section 5.6. Financial Records and Statements. The ~B.orrower shall maintain proper books of record and account, in ~which full and correct entries shall be made in accordance with ~gen,eralt~ accepted accounting principles, of the Project and all the Borrower's business and affairs. The Borrower shall provide .to the Trustee and the Issuer copies of its annual operating statements ~for the Project (within 120 days after the end of ~each fiscal year), its .annual rent roll for the Project (within 120 days after the end ~of 'each fiscal year), its Annual Budget (pursuant to Section 511 of the Indenture) and annual audited financial statements (within 120 days after the end of each fiscal year). ~ection 5.7. Certificate aS to No Default. The Borrower Shall deliver to the Issuer and the Trustee within 90 days after -the .close of each of its fiscal years a certificate signed by the ~orrower stating that during such fiscal year and as of the -date of .such certificate no event or condition has happened or existed~ or is happening or existing, that constitutes an Event of Default or the violation of any covenant or agreement herein or in any .of the Borrower's other obligations under the Financing Instruments, or if such an Event of Default or the violation of any covenant or agreement herein has occurred or is occurring, ~specifying the nature and period of such Event of Defau'lt ~.or such violation and what action the Borrower has taken, is taking ~or proposes to take with respect thereto. In the absence of actual notice of a misrepresentation by Borrower contained in such certificates, the Issuer and the Trustee shall ~be entitled to rely conclusively upon such certificates as accurate. Section 5.8. Obligation of Borrower to Furnish Certain Information to the Issuer. The Borrower shall furnish to the Issuer and the Trustee, upon request, such information with respect ~to ~the Bonds, -the Project or the Borrower's obligations -hereunder or under the Mortgage as may be reasonably necessary for the Issuer to complete its annual audit or to make any reports as ma~ be required by state or Federal law, now or hereafter in effect. Section 5.9. Notice of Suits. The Borrower shall notify the Trustee and .the Issuer as soon as it has knowledge of any -16- 7967M actions, .suits or proceedings ~% law, in equity or before or by any governmental authority, pending, or to its knowledge reasonably threatened, materially affecting the security for the Note, or involving the validity or enforceability of the Note, the Mortgage or this Loan Agreement. Section 5.10. Permits. The Borrower shall, at its sole c obtain all permits, consents and approvals req local, state or Federal laws, ordinances, rules, regulat or .requirements in connection with the operation or use of the ~roject, including without limitation, the furnishing of utilities thereto and environmental matters. Section 5.11. Maintenance, Modifications and Use of Proiect.. The Borrower shall, at its own expense, keep the Project in good repair and operating condition, making from time to time all necessary repairs, renewals and replacements. The Borrower may, at its own expense, make any additions, modifications or mmprovements to the Project that it may deem desirable for its efficient operation and that do not adversely affect the value of the Project, provided that all such additions, modifications ~or improvements comply with all Federal, st.a~te and loCal codes as applied to the Project, and all ~such renewals, replacements, additions, modifications and improvements shall become part of the Project. The Borrower shall -comply with all lawful requirements of any governmental body regarding the use or condition of the Proj~ect, whether existing or later enacted or foreseen or unforeseen or whether involving any change in governmental policy or requiring structural or other changes to the Project, or any part thereof, and irrespective of the cost of making the same. The Borrower will neither commit nor suffer to exist waste or a nuisance in or about the Project. Section 5.12. Taxes, Other Governmental Charqes and ~Utility Charqes. The Borrower shall pay as the same respectively become due, all taxes, fees, assessments, levies and governmental charges of any kind whatsoever that may be lawfully assessed, levied or imposed on it with respect to the -Project '(.except for any charge from which the Borrower or the Project is exempt). The Borrower shall pay, as the same respectively become due, all utility and other charges incurred in the .operation, maintenance, use and occupancy of the Project and all assessments and charges lawfully made by any governmental body for public improvements to or affecting the Project. The Borrower may, however, contest in good faith and by appropriate proceedings any such taxes, fees, assessments, levies and utility and other charges, in which event it may permit such taxes, fees, assessments, levies or charges to remain unpaid during the period of such contest and any appeal therefrom unless by such action the lien of the Mortgage on any -17- 7967M ~part .of %he Project shall be subject to loss, forfeiture or -impairment, in which event such taxes, fees, assessments, levies or charges shall be promptly satisfied or secured by posting with the Trustee or an appropriate court of record a bond or 'other i~demnity in form, amount and with surety satisfactory to ~he Trustee. The ~Borrower agrees that the Annual Budget required to be prepared by the Borrower pursuant to the Indenture shall provide for ~deposits to the Tax/Insurance Account in each year in an amount ~s~ufficient to pay, in addition to any other amounts properly payable from such account, a payment in lieu of taxes i("Pilot") to the Issuer. The Pilot shall only be payable if and to the 'extent that the Project or any portion thereof shall be deemed to De wholly or partially exempt from ad valorem ~axation. To the extent of any such exemption, the amount of the Pilot shall be an amount equal to the millage rate imposed 'by the City with respect to the then current year multiplied by ~the assessed value of the Project as established by the Palm Beach County Property Appraiser multiplied by the percentage of exemption from ad valorem taxation applicable to the Project at such time. In. the -event that amounts in the Tax/Insurance Account are insufficient to pay any Pilot due, the Borrower shall nevertheless be obligated to make such payment to the Issuer. Section 5.13. Manaaement Services. The Borrower agrees to comply with the provisions of Revenue Procedure 93-19, to the extent necessary to preserve the tax-exempt status of the 1996 Bonds, in connection with any management or other services contract ~with respect to the Project. Section 5.14o Continuing Disclosure. (a) This Section r5.14 constitutes the written undertaking for the benefit of the holders of the 1996 Bonds required by Section (b)(5)(i) of the Securities and Exchange Commission Rule 15c2-12 under the ~$ecurities Exchange Act of 1934, as amended (17 CFR Part 240, 240 15c2-12) (the "Rule"). It is the Borrower's express intention that this Section 5.14 be assigned pursuant to and in accordance with the terms of the Indenture to the Trustee for ithe benefit of the Owners and any Beneficial Owners of the 1996 Bonds and ~that the Trustee and each Owner and each Beneficial Owner of the 1996 Bonds be a beneficiary of this Section 5.14. {b} The Borrower, as an "obligated person" within the meaning of %he Rule, undertakes to provide the following information as provided in this Section 5.14: (1) Annual Financial Information; -18- 7967M (2) Financial Statements, if any; and (3) Material Event Notices. (c) (1) Subject to the terms of this Section 5.14, the Borrower shall while any 1996 Bonds are Outstanding provide the Annual Financial Information to the Trustee on or before the date 180 days after the end of each Fiscal Year of the Borrower (the "Report Date".). The Borrower shall include with each submission of Annual Financial Information to the Trustee a written representation to the effect that the Annual Financial Information is the Annual Financial Information required by this Section 5~.14 and that it complies with the applicable requirements of this Section 5.14. The Borrower may adjust the Report Date if the Borrower changes its Fiscal Year by providing written notice of t~he change of Fiscal Year and the new Report Date to the Trustee, each then .existing NRMSIR and the SID, if any; provided that the new Report Date shall be one hundred eighty days (180) days after the end of the new Fiscal Year, and provided further that the period between the final Report Date relating to the former Fiscal Year and the initial Report Date relating to the new FisCal Year shall not exceed one year in duration. It shall be sufficient if the Borrower provides to the Tr~ustee the Annual Financial Information by specific reference to documents previously provided to each NRMSIR and the SID, if any, or filed with the Securities and Exchange ~Commission and, if such a document is a final official statement within the meaning of the Rule, available from the Municipal Securities Rulemaking Board. (2) If not provided as part of the Annual Financial Information, the Borrower shall provide Financial Statements when and if available while 1996 Bonds are Outstanding to the Trustee. (3) (i) If a Material Event occurs while any 1996 Bonds are Outstanding, the Borrower shall provide in a timely manner a Material Event Notice to the Trustee and the Issuer. Each Material Event Notice shall be so captioned and shall prominently state the date, title and CUSIP numbers of the 1996 Bonds. (ii) The Trustee shall promptly advise the Borrower whenever, in the course of performing its duties as Trustee under the Indenture, the Trustee identifies an occurrence which, if material, would require the Borrower to provide a Material Event Notice pursuant to clause (3)(i); provided that the failure of the Trustee so to advise the Borrower shall not constitute a breach by the Trustee of any of its duties and responsibilities hereunder. -19- 7967M (4) (a) The Trustee shall each year while the .p~ovisions of this Section 5.14 are operative, at least thirty ~30)days prior to the Report Date provide notice to the Borrower of its obligation pursuant to this Section 5.14 to provide the Annual Financial. Information to each existing NRMSIR and SID~ (b) The Trustee shall within ten (10) Business Days after it receives Annual Financial Information and/or Financial Statements pursuant to (c)(1) and/or (2) above send a copy thereof to each then existing NRMSIR and the SI~, if any. (c) The Trustee shall, within ten (10) Business 'Days after receipt of a Material Event Notice pursuant to (.c)(3)(i) above, send a copy thereof to the Municipal Securities Rulemaking Board, each NRMSIR and the SID, if any. (5) The Trustee shall provide in a timely manner to %he ~Municipal Securities Rulemaking Board and to the SID, if any, notice of any failure while any 1996 Bonds are Outstanding by the Borrower to provide Annual Financial Information on or before the Report Date. (d) The following are the definitions of the capitalized terms used in this Section and not otherwise defined · n this Agreement. (1) "Annual Financial Information" means the financial information (which shall be based on financial statements prepared in accordance with generally accepted accounting principles ("GAAP")) or operating data with respect to the Borrower, provided at least annually, of the type included in the Official Statement utilized in connection with the sale of the 1996 Bonds, which Annual Financial Information shall include Financial Statements. (2) "Financial Statements" means the Borrower's annual financial statements, prepared in accordance with GAAP, and if audited, accompanied by the report of the auditing certified public account. {3) "Material Event" means any of the following events, if material, with respect to the 1996 Bonds. (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults; -20- 7967M ~iii) 'Unscheduled draws On debt service reserves zeflecting financial difficulties; (~v) Unscheduled draws on credit enhancements reflecting £inancial difficulties; ~v) ~Substitution of credit, or liquidity providers, or their failure to perform; (vi) ~dverse tax opinions or events affecting the tax-exempt status of the security; (vii) ~Modificakions to rights of holders of 1996 Bonds; (viii) 1996 Bond calls (other than scheduled mandatory sinking fund redemptions); (ix) Defeasances; (x) ~Release, substitution, or sale of property securing repayment of the 1996 Bonds; and (ix) Rating changes. (5:) "NRMSIR" means a nationally recognized municipal securities information repository, as recognized from ~ime to time by the Securities and Exchange Commission for the purposes referred to in the Rule; ~he NRMSIRs as of the date of this Agreement being as follows: The ~NRMSIRs approved by the Securities and Exchange Commission as of June 18, 1996 are as follows: Bloomberg Municipal Repository P.O. Box 840 ~rinceto~, ~ew.Jersey 0B542 tntern~et address: biUNIS@Bloomberg.doc (609) 279-3200 FAX (6-09) 279-5962 JJ Kenny Information Services Repository Services 65 Broadway / 16th Floor New York, New York 10006 (212) 770-4595 FAX (212) 797-7994 'The ,Bond Buyer Moody's NRMSIR Secondary,Market,,Disclosure Public Finance Information Center 395 ~udson Street / 3rd Floor 99 Church Street New York, New York 10014 New York, New York 10007 Internet address: Disclosure@muller.com (800) 339-6306 (212) 807-3814 FAX (212) 553-1460 FAX '{212) 989-9282 -21- 7967M 'Disclosure, ThC. Document ~cquisitlons/Municipal ~ecuri~ies ~5161 River Road <Bethesda, Mar.yland 20816 ~(30l) 951-14'50 FAX (301) 718-2329 Municipal Securities Disclosure.Archive 559 Main Street Hudson, Massachusetts 01749 (800) 580-3670 FAX (508) 562-1969 According to a Securities and Exchange Commission press release dated June 26, 1995, a list of names and addresses of all ~designated nationally recognized municipal securities information reposito~ries as of any point in time is available by calling the SEC,s FAX on Demand Service at (202) 942-8088 from a telecopier ~machine and requesting document number 0206. (6) SID means a state information or designated by the State as such for -to in the Rule. (e) Unless otherwise required by technical and economic feasibility, the Borr~ methods of information transmission as sf recommended by the designated recipients information. (f) The continuing obligation here to provide Annual Financial Information and and the Trustee's obligations under this terminate immediately once the 1996 Outstanding. This Section 5.14, or any provl null and void in the event that the Borr Trustee and the Issuer an opinion of Bond %hat those portions of' the Rule whichrequi or .any such provisions, are invalid, retroactively or otherwise do not apply ~provided ~that the Borrower shall have pro ~delivery a. nd the cancellation of this Sect] existing NRMSIR and the SID, if any. This amended without the consent of the 1996 Bond] ~the delivery by the Borrower to the Trustee proposed amendment and an opinion of Bond that such amendment, and giving effect there ~epository as operated the purposes referred law and subject to )wer shall employ such ~all be requested or of the Borrower's under of the Borrower 4aterial Event Notices Section 5.14 shall ~nds no longer are ~sion hereof, shall be ower delivers to the 2ounsel to the effect re this Section 5.14, have been repealed to the 1996 Bonds; zided notice of such on 5.14 to each then Section 5.14 may be ~olders, but only upon and the Issuer of the 3ounsel to the effect ~o, will not adversely ~affect the compliance of this Section 5.14 and by the Borrower with the Rule; provided that the Borrower shall have provided notice of such delivery and of the amendment to each then existing NR~SIR and ,the SID, if any. (g) Any failure by the Borrower to perform in accordance with this Section 5.14 shall not constitute an "Event of Default" under Section 9.1 of this Agreement and the rights and remedies provided by Article IX of this Agreement upon the occurrence of an -22- 7967M "Event of Default'" shall not apply to any such failure. Neither the Issuer nor the Trustee shall have any duty whatsoever to enforce this Section 5.14. The Trustee and each Owner and each Beneficial Owner individually may take remedial action to require the Borrower to provide the information and notices described in this Section; however, any action to challenge the adequacy of the information provided may be pursued only in accordance with the provisions of Section -904 of the Indenture. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1, Event of Default Defined. events shall be an Event of Default: Each of the following (a) Failure of the Borrower to make any payment of principal, premium, if any, or interest under the Note when the same becomes due and payable. (b) Except as provided in Section 5.14 and in subsection (c) below, failure by the Borrower to observe and perform any other covenant, condition or agreement on its part under this Loan Agreement or the Mortgage for a period of 30 days after notice (unless the Borrower and the Trustee shall agree in writing to an extension of such time prior to its expiration), specifying such failure and requesting that it be ~emedied, given by the Issuer o.r the Trustee to the Borrower, or in the case of any such default which cannot with due diligence be cured within such 30-day period, failure of the Borrower to proceed promptly to cure the same with due diligence. (c) The falsity when made, in any material respect, of any warranty, representation or other statement by or on behalf of the Borrower ~contained in this Loan Agreement or in any instrument furnished in connection with the issuance or sale of the Bonds. (d) An Event of Default under the Indenture. Notwithstanding subsection (b) above, if by reason of force ~maieure the Borrower is unable in whole or in part to observe and perform- any of its covenants, conditions or agreements hereunder, other than those contained in Sections 4.1, 5.1, 5.3 and 5.4 hereof, or under the Mortgage, the Borrower shall not be deemed in default during the continuance of such inability. The term "force majeure" as used herein shall include without limitation acts of God; strikes, lockouts or other industrial disturbances; acts o'f public enemies; orders of any kind of the government of the United States of America or the State of -23- 7967M F~or~da or any political subdivision ~thereof or any of their ~idepartments, agencies or officials, or any civil or military authority; ~nsurrections; riots; epidemics; landslides; · .ightning; earthquakes; fires; hurricanes; tornadoes; storms; floods; washouts; droughts; arrests; restraints of government and people; civil disturbances; explosions; breakage or accident to 'machinery, transmission pipes or canals; partial or entire failure of utilities; or any other cause or event not reasOnably within the control of the Borrower. The Borrower shall remedy ~with all reasonable dispatch the cause or causes preventing the Bor~rower from carrying out its covenants, conditions and agreements, that the settlement of strikes, lockouts and Other disturbances shall be entirely within the ~discretion of the Borrower, and the Borrower shall not be required Ko make settlement of strikes, lockouts and other industrial distu,~bances by acceding to the demands of any opposing party when such course is in the judgment of the ~Bor~ower not ~zn ~ts best interests. Section 6.2. Remedies on Default. (a) Upon acceleration of the maturity of the Bonds pursuant to Section 902 of the Indenture, all amounts payable hereunder and under the Note shall become immediately due and payable without notice or declaration of any kind. (b) Upon the occurrence and continuation of an Event of Default, the Notehotder may exercise any one or more of the following remedies: (1) If t'he same shall not have become due and payable as provided in subsection (a) of this Section, declare all amounts payable hereunder and under the Note to be i-mmediately due and payable, whereupon the same shall become immediately due and payable. (2) Through its duly authorized agents, have access to and inspect, examine and make copies of, the books~ ~records and accounts of the Borrower. (3) Exercise any remedy afforded a mortgagee and/or secured party under the laws of the State of Florida. (4) Take whatever other action at law or in .equity .may appear necessary or desirable to collect the amounts then due and thereafter to become due or to enforce observance or performance of any covenant, condition or agreement of the Borrower under this Loan Agreement or the Restrictive Covenants, including injunctive relief to require the Borrower to perform its obligations and covenants hereunder or under the Restrictive Covenants or enjoin any acts or things -24- 7967M which may be unlawful or in violation of the rights of the Issuer or the Trustee hereunder or under the Restrictive Covenants. The Issuer and the Trustee shall cooperate in any action taken by the other with respect to this Loan Agreement or the Restrictive Covenants to enforce the covenants contained herein and therein. The Borrower shall pay all reasonable costs and expenses which may be incurred by the ISsuer or the Trustee in connection with the taking of such actions. Section 6.3. No Remedy Exclusive. No remedy set forth in Section 6.2 is intended to be exclusive of any other remedy, and every remedy shall be cumulative and in addition to every other remedy 'herein or now or hereafter existing at law, in equity or by statute. No delay or failure to exercise any right or power accruing upon an Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, and any such right or power may be exercised from time to time and as often as may be deemed expedient by the Issuer or the Trustee. Except as 'otherwise expressly provided herein or by applicable law, no notice shall be required as a Condition of the exercise of any remedy reserved in this Article VI. .Section 6.4. Extraordinary Fees and Other Expenses. The Borrower shall, on demand, pay to the Issuer its reasonable expenses and to the Trustee its extraordinary fees and expenses, ~ncluding reasonable attorneys' fees (including in connection with any appeal) and other reasonable extraordinary expenses incurred by any of them in the collection of amounts payable 'hereunder and under the Note, or the enforcement of any other obligation of the Borrower hereunder. Section 6.5. No Additional Waiver Implied by One Waiver. If either party or its assignee waives a default by the other party under any covenant, condition or agreement herein, such waiver shall be limited to the particular default so waived and shall not be deemed to waive any other default hereunder. ARTICLE VII PREPAYMENT Section 7.1. Prepayment. The Borrower shall have the option to prepay, or shall be required to prepay, the Note at such t~mes and in such amounts as are specified for redemption - of the Bonds in Section 301 of the Indenture. To prepay the Note pursuant~ to this Article, the Borrower shall pay to the Trustee an amount which, together with any other funds then held by the Trustee and available for such purpose, will be ~ufficient (a) in the case of prepayment in whole, to redeem the Bonds in whole and (b) in the case of prepayment in part, to -25- 7967M redeem ~Bonds in an amount equal to the principal amount of the Note so prepaid, including in any case any premium and interest ~accruing on :the Bonds to be redeemed to the date set for their ~redemption and any other amounts payable hereunder or under the Indenture in connection with such redemption. In the case of any prepayment of the Note pursuant to this Article, the Borrower shall make arrangements satisfactory to the Trustee for .giving any required notice of redemption of the Bonds, and the Trustee shall credit the principal amount of each Bond redeemed against the obligation of the Borrower to make future principal payments on the Note. ARTICLE VIII MISCELLANEOUS Section 8.1. 'Term of Loan Agreement. This Loan Agreement shall be effective upon its execution and delivery and, except as herein provided, shall terminate when no Bonds are outstanding. The covenants of the Borrower contained in ~Sections 4ol(b), 5.1, 5.3., 5.4(g) and 5.4(j) and the rights of enforcement and indemnification of the Issuer and the Trustee in connection t.herewith contained in Sections 5.1, 5.3, 5.4(g), 5.4(j) and 6.4 shall survive termination or expiration of this 'Loan Agreement, and shall be binding upon the successors and assigns of the Borrower. Section 8.2. Notices, etc. Unless otherwise provided here~n, all demands, notices, approvals, consents, requests and Other communications hereunder shall be given in the manner .provided in the Indenture. A duplicate copy of each demand, .notice, approval, .consent, request or other communication given hereunder by ~either the Issuer or the Borrower to the other shall also be given to the Trustee. Section 8.3. Amendments to Loan Agreement. This Loan Agreement shall not be amended or supplemented subsequent to the ~issuance of the Bonds and before payment of the Bonds without ~the consent of the parties hereto and the consent of the Trustee and, if appropriate, the owners of the Bonds, given in any case ~n accordance ~with Article XII of the Indenture. Section 8.4. Successors.and Assiqns. This Loan Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. Section 8.5. Severability. If any provision of this Loan Agreement shall be held invalid by any court of competent jurisdiction, such holding shall not invalidate any other provision hereof. -26- 7967M Section 8..6. Applicable Law. This Loan Agreement shall be go,erred by t~he applicable laws of the State of Florida. Bection 8.7. .Countelrparts. This Loan Agreement may be · executed ~n several counterparts, each of which shall be an original .and all of Which together shall constitute but one and the same instrument; except that to the extent, if any, that this Loan Agreement Shall constitute personal property under the Uniform Commercial Code of Florida, no security interest in this Loan Agreement may ~be created or perfected through the transfer or possession of any counterpart of this Loan Agreement other ~han ~the 'original counterpart, which shall be the counterpart containing the receipt therefor executed by the Trustee following ~he signatures to this Loan Agreement. Section 8,8. Issuer~ May Perform Borrower's Obligations. If the Borrower shall fail to make any payment or perform any act required -of it hereunder, the Issuer, without prior notice to or demand upon the Borrower and without releasing any obligation o.r waiving any default, may (but shall be under no obligation to) make .such payment or perform such act. All amounts so paid by the Issuer and all costs, fees and expenses so incurred Shall be payable by the Borrower as an additional obligation under this Agreement, together with interest thereon at the maximum rate on any of the Bonds until paid. Section ~8.9. Limited ObliGations of Borrower. The Issuer expressly agrees that the personal liability of the Borrower and the members, officers and directors of the Borrower shall be strictly and absolutely limited to the property encumbered by ~he Mortgage, and %he leases, rents, profits and issues thereof and any other collateral securing the Borrower's obligations hereunder or under the Note. The Issuer and any assignee of any ,of the Financing Instruments shall not and may not seek any judgment -for a deficiency against the Borrower or any member, officer or director of the Borrower in any action under any of the Financing Instruments, or in any action to foreclose, to 'exercise a .power of sale, or to exercise any other rights or power under or by reason of the Mortgage or any other instrument evidencing or securing the obligations of the Borrower under any of the -Financing Instruments. If any suit is brought on the Mortgage as .part of judicial proceedings to foreclose the Mortgage, or to confirm any foreclosure or sale pursuant to a power .of sale hereunder, any judgment obtained in such suit shall constitute a lien on, and will be and can be enforced only against the property encumbered by the Mortgage, and any such other security instrument and the leases, rents, profits and issues thereof and not against any other asset of the Borrower or any member, officer or director thereof, and the terms of such judgment s.hall expressly so provide. Notwithstanding anything to the contrary contained in this Section 8.9, the obligations of the Borrower under Sections 5.3 and 4.1(b) (other -27- 7967M than 4.1(b)(2) hereof) hereof shall be recourse to the assets and general credit of the Borrower (but not the members, officers or directors thereof). IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan Agreement to be executed in their respective names by their duly authorized officers or representatives, all as of the date first above written. CITY OF BOYNTON BEACH, FLORIDA ATTEST: By: Mayor By: City Clerk C/HP COVE, INC. By: Its President -28- 7967M RECEIPT Receipt of the foregoing original counterpart of the Loan Agreement., dated as of July 1, 1996, between City of Boynton Beach, Florida and C/HP Cove, Inc., is hereby acknowledged. The Bank of New York, as Trustee By: Its -29- 7967M Exhibit A Promissory Note July 1, 1996 C/HP Cove, Inc., a Florida corporation not-for-profit (the "Borrower,), for value received, hereby promises to pay to the order of City of Boynton Beach (the "Issuer"), or assigns, on 1, , the principal sum of Million Hundred Thousand Dollars ~$ ), subject to prior payment, with interest on the unpaid-principal sum at the same rate borne by the hereinafter described Bonds, from July 1, 1996 until said principal sum shall be paid, and to the extent permitted by law, interest on overdue installments of such interest, at the then maximum interest rate payable on any of the Bonds, as hereinafter defined. Principal and interest hereon shall be payable at the time ~principal and interest is payable on the Bonds. Payments shall be made in lawful money of the United States of AmeTica in immediately available funds on the date payment is due at the designated corporate trust office (initially New York, New York) of The Bank of New York, as trustee, acting by and through The Bank of New York Trust Company of Florida, N.A., its agent (the "Trustee"), or at such other place as the Trustee may direct in writing. The Issuer, by the execution, of the Indenture (as -hereinafter defined), and the assignment form at the foot of this Note, is assigning this Note and the payments thereon to the Trustee pursuant to an Indenture of Trust and Assignment of Mortgage, dated as of July ii 1996 (the "Indenture"), between the Issuer and the Trustee as secunity for the Issuer's $ Multi-Family Housing Mortgage Revenue Bonds, ~Series 1996 (Clipper Cove Apartments) (the "Bonds"), and any Additional Bonds (as defined in the Indenture), all as issued ~pursuant to the Indenture. Payments of principal of, premium, if any, and interest on this Note shall be made directly to the Trustee for the account of the Issuer pursuant to such assignment and applied only to the principal of% premium, if any and interest on the Bonds. All obligations of the Borrower hereunder shall terminate when all sums due and to become due pursuant to the Indenture, this Note, the Loan Agreement (hereinafter defined) and the Bonds have been paid. In addition to the payments of principal and interest specified in t~he first paragraph hereof, the Borrower shall also pay such additional amounts, if any., which, together with other ~monies available therefor pursuant to the Indenture, may be necessary to provide for payment when due (whether at maturity, by acceleration or call for redemption, elective purchase, sinking fund redemption or otherwise) of principal of, premium, if any, and interest on the Bonds. The Borrower shall have the option or may be required to prepay this Note in Whole or in part upon the terms and conditions and in the manner specified in the Loan Agreement, dated as o~f July 1, 1996 (the "Loan Agreement"), between the Issuer and the Borrower. This Note is issued pursuant to the Loan Agreement in satisfaction of the Borrower's payment obligation in Section 4.1 thereof and is entitled to the benefits of and is subject to the conditions thereof, including the provisions of Section 4.4 thereof that the Borrower's obligations thereunder and hereunder shall be unconditional as provided in such Section 4.4. All the terms, conditions and provisions of the Loan Agreement and the applicable provisions of the Bonds and the Indenture are, by this reference thereto, incorporated herein as a part of this Note. This Note is secured by a Mortgage and Security Agreement (the "Mortgage"), dated as of July 1, 1996, from the Borrower to the Issuer, which Mortgage has been assigned to the Trustee under the Indenture. In case an Event of Default (as defined in the Loan Agreement) shall occur, upon acceleration of the maturity of the Bonds pursuant to the Indenture, the principal of and interest on this Note shall immediately be due and payable in full without notice or declaration, all as provided in the Loan Agreement. This Note shall 'be governed by, and construed in accordance with, the laws of the State of Florida. The Issuer expressly agrees that the personal liability of the Borrower and the members, officers and directors of the Borrower shall be strictly and absolutely limited to the property encumbered by the Mortgage, and the leases, rents, profits and issues thereof and any other collateral securing the Borrower's obligations hereunder or under the Loan Agreement. The Issuer and any assignee of any of the Financing Instruments shall not and may not seek any judgment for a deficiency against the BOrrower or any member, officer or director of the Borrower in any action under any of the Financing Instruments, or in any action to foreclose, to exercise a power of sale, or to exercise any other rights or power under or by reason of the Mortgage or any other instrument evidencing or securing the obligations of the Borrower under any .of the Financing Instruments. If any suit is brought on the Mortgage as part of judicial proceedings · o foreclose the Mortgage, or to confirm any foreclosure or Sale pursuant to a power of sale hereunder, any judgment obtained in such ~suit shall constitute a lien on, and will be and can be ,'enforced only against the property encumbered by the Mortgage, and any such other security instrument and the leases, rents, profits and issues thereof and not against any other asset of the Borrower or any member, officer or director thereof, and the terms of such judgment shall expressly so provide. Notwithstanding anything~ to the contrary contained in this paragraph, the obligations of the Borrower under Sections 5.3 and 4.1(b) (other than Section 4.1(b)(2)) of the Loan Agreement shall be recourse to the assets and general credit of the Borrower-(but not the members, officers or directors thereof). IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its duly authorized officer all as of July 1, 1996. C/HP COVE, INC. By: Its President ASS IGNMENT The -City of Boynton Beach, Florida (the "Issuer") hereby irrevocably assigns, without recourse, the foregoing Promissory Note and its ~ights as the original payee thereof to The Bank of New ~ork, as Trustee acting by and through The Bank of New York Trust Company of Florida, N.A., its agent (the "Trustee',) and hereby directs C/HP-Cove, Inc., as the maker of the Promissory Note to make all payments with respect to principal and interest thereon and all other payments reguired thereby (except as may be required to be paid to the Issuer pursuant to Sections 4.1(b), 5.3 or 6.4 of the Loan Agreement) directly to the Trustee at the a~ress set forth therein, or at such other place as the Trustee may,direct in writing. CITY OF BOYNTON BEACH, FLORIDA By: Mayor 7967M/34 Exhibit B Mortqaqe 7967M/35 Form of Declaration of Restrictive Covenants Exhibit 810OM/10 EXHIBIT "C" MORTGAGE PREPARED BY/RETURN TO: Moyte, Flanigan, Katz, FitzGerald & Sheehan, P.A. Mark E. 'Raymond, Esquire P.O. Box 3888 West Palm Beach, FL 33402 Sixth Draft 6/20/96 C/HP COVE, INC. as Mortgagor AND CITY OF BOYNTON BEACH, FLORIDA as Mortgagee MORTGAGE AND SECURITY AGREEMENT Dated July 1, 1996 T~I$ MORTGAGE AND SECURITY AGREEMENT (the "Mortgage,~) is made as 'of the first .day of July, 1996, from C/HP COVE, INC., a Florida corporation ~not-for-profit (the "Borrower") to CITY OF ~N BEACH, FLORIDA, a municipal corporation of the State of Florida ~the "Issuer") and its successors and assigns, including but not limited to the Trustee (hereinafter defined) (the 'Mortgagee"),: Whereas, pursuant to an Indenture of Trust and Assignment of Mortgage between the Issuer and The Bank of New York, as trustee, acting by and through The Bank of New York Trust Company of Florida, N.A., its agent (together with its successors and assigns., the "Trustee") the Issuer has issued its $ ~Multi-Fa~mily ~Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) ~the "1996 Bonds") and used the proceeds thereof to make a loan to the Borrower under the terms of a Loan Agreement, dated as of the date hereof (the "Loan Agreement") .between the Issuer and the Borrower, to be used by the Borrower for the principal purpose of refinancing a multi-family residential rental project within the jurisdiction of the Issuer (the "Project"); and Whereas, under the Loan Agreement the Borrower will evidence its obligation to repay the loan by issuing and delivering to the Issuer its $ Promissory Note (the "Note"), dated the same date as the Bonds, payable initially to the Issuer but assigned to ~he Trustee as security for the Bonds. In the Note, the Borrower ,agrees to pay amounts sufficient to pay the principal of, ~edemption premium, if any, and interest on the Bonds as the same become .due as well as any other amounts becoming due thereunder; and Whereas, the Issuer by the Indenture shall assign this Mortgage and its rights 'hereunder to the Trustee as security for ~the 1996 Bonds, and 'the Trustee shall constitute the Mortgagee hereunder for all purposes after such assignment; WITNESSETH: That in consideration of the premises and in order to secure the 2ayment of the p~incipal of, premium, if any, and interest on the 1996 'Bonds and any Additional Bonds issued pursuant to the Indenture (collectively, the "Bonds") and the Note and all fees, expenses and any other sums of any nature or type payable under ~he Loan Agreement, and all amounts due under this Mortgage and the performance and observance of all of the provisions hereof and of said Indenture, Note and Loan Agreement (collectively, the "~Obligations"), the Borrower hereby grants, sells, warrants, conveys, assigns, transfers, mortgages and sets over, confirms and Grants a lien upon and security interest~ unto the Issuer, all of Borrower's estate, right, title and interest in, to and under all of the land described on Exhibit A hereto (the "Land"). TOGETHER WITH all improvements now or hereafter located on said Land and all fixtures and articles of personal property of Whatsoever kind and nature and renewals and replacements thereof now or hereafter affixed to, attached to, placed or located upon, or used in any way in connection with the complete and comfortable use, occupancy, or operation of the Land (the "Improvements"), all licenses and permits used, useful or required in connection with 'the use ~of said Land~ and the Improvements, including, without limitation, all leases, occupancy agreements, residency agreements or use agreements of said Land and the Improvements now or hereafter entered into and all right, title and interest of Borrower thereunder, including without limitation, cash or securities deposited thereunder pursuant to said leases, occupancy agreements or use agreements, and all rents, issues, proceeds, revenues and pr~ofits accruing from said Land and the Improvements and together with all proceeds of the conversion, voluntary or involuntary of any of the foregoing into cash or liquidated -claims, including without limitation, proceeds of insurance and condemnation awards and all products of any of the foregoing (the ~foregoing said real property, fixtures and tangible and intangible personal property hereinafter referred to collectively as the "Mortgaged P~operty"). Borrowe~ hereby grants to the Issuer a security interest in the foregoing Mortgaged Property as · co~nstitutes fixtures and tangible and intangible personal property. TO HAVE AND TO HOLD the Mortgaged Property, together with all and singular the tenements, hereditaments and appurtenances %hereunto belonging or in anywise appertaining thereto and the .reversion and rever.sions thereof and all the estate, right, title, ~nterest, homestead, dower and right of dower, separate estate, ~ossession, claim and demand whatsoever, as well in law as in equity, of Borrower and unto the same, and every part thereof, ~ith the appurtenances of the Borrower in and to the same, and every part and parcel thereof unto the Mortgagee. The Borrower warrants that the Borrower has good and ~marketable title to an indefeasible fee estate in the Land subject ~to no lien, charge or encumbrance except Permitted Encumbrances (hereinafter defined) and the Borrower covenants that this Mortgage is and will remain a valid and enforceable mortgage on · he Mortgaged Property subject only to the exceptions herein provided. The Borrower has full power and lawful authority to mortgage the Mortgaged Property in the manner and form herein done or intended hereafter to be done. The Borrower will preserve such title and will forever warrant and defend the same to the ~Mortgagee and will forever warrant and -defend the validity and priority of the lien hereof against the claims of all persons and parties whOmsoever. The Borrower will, at the cost of the Borrower, and without expense to the Mortgagee, do~ execute, acknowledge and deliver all and every such further acts, deeds, conveyances, -2- 7968M mortgages:, assignments, notices of assignment, transfers and assurances as the Mortgagee .shall from time to time require in order to preserve the priority of the lien of this Mortgage or to facilitate the perfor.mance of ~the terms hereof. PROVIDED, HOWEVER, that if the Borrower shall pay to the Mortgagee all such amounts as may from time to time remain outstanding and owing under the Note and the Loan Agreement tog~ether with ~nt'erest as may accrue and upon the terms as provided therein, and together with all'other sums advanced by the to or on of the Borrower (including, withoUt any made for the payment of taxes, levies and ~nsurance Telated to the Mortgaged Property) or otherwise due from the Borrower pursuant to the Note or Loan Agreement or this Mortgage, and shall perform all other covenants and conditions .of 'the Note ,~nd Loan Agreement and this Mortgage, all of the terms of which are incorporated herein by reference as though set forth fully here~n, and of any renewal, extension or modification thereof and of this Mortgage, then this Mortgage and the estate hereby c~eated shall cease and terminate. The Borrower further covenants and agrees with Mortgagee as follows: Section 1. RestriCtions -on Mort.qa~e, Sale or Assignment. Except for the conveyance provided herein and other Permitted Encumbrances, the Borrower .will not sell, mortgage, assign, encumber, transfer or convey the Project or any portion thereof either directly or indirectly, voluntarily or involuntarily, without (i) delivery of an opinion of Bond Counsel that such transfer will not result i:n loss of the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes and (ii) written confirmation from the Rating Agency that the rating on the 1996 Bonds will not be reduced or Withdrawn, except that such rating confirmation shall not be required in the case of a foreclosure (or deed in lieu of foreclosure) on any portion of .any or all of the ~Project after an Event of Default. "Permitted Encumbrances~ shall mean, as of any particular time, (a) liens for ad valorem taxes and special assessments not then delinquent, (b) this Mortgage, and any liens created hereby, (c) the Restrictive Covenants, (d) any exceptions to title listed in Schedule B II of the title insurance policy or commitment referred to in Section 5(e) of this Mortgage, (e) utility,access and other easements and rights-of-way, mineral rights, restrictions and .exceptions that do not interfere with or impair the operation of the Project, (f) inchoate unperfected and unfiled mechanics' and materialmen's liens as permitted by Section 2 of this Mortgage, (g) reasements and other rights granted pursuant to Section 3 of this Mortgage, (h) any leases of all or any part of the Project, such leases to be subordinate to the lien of this Mortgage, {i) such minor defects, irregularities, encumbrances, -3- 7968M easements, rights-of-way and clouds on title as normally exist with respect to property similar in character to the Project and as do not, in an Opinion of Counsel, interfere with or impair the use of the Project as multi-family rental housing facilities and do not render title to the Land unmarketable, and (j) liens which by t~heir terms are expr~essly subordinate to the lien of this Mortgage and which do not permit sale or foreclosure thereunder until the Bonds are no longer outstanding. Section 2. Mechanics' and Other Liens. The Borrower shall not permit any mechanics' or other liens (except Permitted Encumbrances) to be perfected or remain against the Project. The Borrower may, however, after giving the Mortgagee ten days' notice of its intention to do so, and ~posting security with the Mortgagee in the amount of the lien, at :its own expense and in its own name, contest in good faith and by appropriate proceedings any such lien, 'in which event it may permit such lien to remain unsatisfied and undischarged during the period, not to exceed thirty (30) days, of such contest after which time such lien shall be promptly satisfied or secured by posting with an appropriate court of record a ,bond or other indemnity in form, amount and with surety as may be required to discharge such lien of record. Section 3. Granting of Easements. Provided no Event of 'Default shall have occurr-ed and be continuing, the Borrower, with the prior written consent -of and upon terms and conditions acceptable to the Mortgagee (based solely upon an Opinion of .Counsel upon which the Mortgagee may solely rely), may (i) grant 'such easements, licenses, rights-of-way (including the dedication of public highways) and other rights or privileges in the Nature of easements with respect to the Land free from the lien of this Mortgage, or (ii) release existing easements, licenses, rights-of-way and other rights or privileges, with or without consideration, or (iii) release any part of the Land which is not then being used for the Project. Nothing herein prohibits the creation of P~ermitted Encumbrances by the Borrower. Once such consent of the Mortgagee is obtained, the Mortgagee shall execute and deliver any and all instruments necessary or appropriate to confirm and grant any such easement, license, right-of-way, or other right or privilege or to release the same from the lien hereof. Section 4. Damage. Destru.ction and Condemnation. The Borrower shall promptly notify the Mortgagee if any or all of the Project shall be materially damaged or destroyed by fire or other casualty, condemned or lost because of failure of title. Within 60 days after such damage or destruction, condemnation or loss, the Borrower Shall elect whether to repair or restore the Project so affected to substantially the same condition as prior to such damage or destruction, condemnation or loss or to prepay the Note and shall notify the Mortgagee of its election; provided the Borrower need not prepay the Note in part (if it elects not to -4- 7968M repair or restore the Project) if the proceeds of insurance with respect to such damage, destruction or loss or condemnation proceeds are 'less than $50,000. If the Borrower shall elect to ~repair or restore the Project, the net proceeds of any insurance reco~er'y or condemnation award and any additional funds necessary t.o complete such repair or restoration shall be deposited with the Mortgagee as received by the Borrower or the Mortgagee or as required ~for such repair or restoration and requisitiOned by the B.or-rower to pay such costs. If the Borrower shall elect not to Cepair or restore the Project, it shall prepay the Note to the extent of the insurance or condemnation proceeds received except as :provided above. ' Section 5. ~. The Borrower shall continuously maintain .insurance against such risks as are customarily insured against by businesses of like size and character, paying as the same become due .all premiums with respect thereto, including without limitation: (a) Casualty insurance in the amount of the full replacement cost of the Project against loss or damage by fire and lightning, with broad 'form extended coverage including damage by windstorm, explosion, aircraft, smoke, sprinkler leakage, vandalism, malicious mischief and such other risks as are normally included within such coverage (limited only as may be provided in the standard form for such coverage at the time in use in the State of Florida). (b) Insurance in the amount of the full replacement cost of the Project as may be available from the United States of America -or a governmental agency against loss or damage from the risks and hazards of war or public emergency, but only in time of war or public emergency and only if such insurance is generally carried ~by owners of similar facilities in the State of Florida. (c) Primary comprehensive public liability insurance to the extent of $500,000 per person and $1,000,000 per occurrence against liability for bodily injury, including death resulting therefrom, and to the extent of $1,000,000 per occurrence against liability for damage to property, including loss of use thereof, arising out of the 'ownership, maintenance or use of the Project. (d) Workers' compensation insurance as required by law. {e) Mortgagee title insurance on the Mortgaged Property in the face amount of the Bonds. Complimnce with the requirements of this Section shall be evidenced by a certificate of the Borrower filed with the Issuer and the Trustee. -5- 7968M Any determination of replacement cost required pursuant to this .paragraph shall be made by a recognized appraiser or insurer selected by the Borrower. Ail such insurance shall be taken out and maintained with generally recognized responsible insurance companies qualified to do business an the State and, except for the policy required by subsection {e} above, may be written with deductible amounts =omparable to those on similar policies carried by other businesses of like size and character. The pQlicies required by subsections (a) and (b) above shall contain standard clauses naming the Mortgagee 'as mortgagee and requiring that all net proceeds resulting from any claim shall be paid to the Mortgagee. If the net proceeds payable under any one claim shall not exceed ~$50,000 and no event has occurred or exists that constitutes or tlhat, with notice or lapse of time, or both, would constitute an Event of Default under the Loan Agreement, any net proceeds payable %0 the Mortgagee shall be paid to the Borrower. The policy required by subsection (c) shall name the Mortgagee under this Mortgage as an additional insured. Unless a policy with such an undertaking is unavailable or is available only at a cost which the Borrower r.easonably determines to be unreasonable, each such ~policy, except for the policy required by subsection (e), shall contain an undertaking by the insurer that such policy shall not be modified adversely to the interests of, or canceled without at least 30 days' prior notice to, the Mortgagee. Ail policies of insurance may, at the request of the Mortgagee, be deposited with the Mortgagee, provided that in lieu of such policies there may be deposited with the Mortgagee a certificate or certificates of the respective insurers attesting the fact that the insurance required by this Section is in full force 'and effect. Prior to the expiration of any such policy, the Borrower shall, at the request of the Mortgagee, furnish the Mortgagee evidence satisfactory to the Mortgagee that the policy has been renewed or replaced. The Borrower shall not cancel any such insurance or permit any such insurance to expire without the consent of the Mortgagee. Section 6. Removal of Equipment. The Borrower shall not ~remove or permit the removal of any Improvements except in accordance with its provisions of this Section. Provided that no Event of Default shall have occurred and be continuing, if the Borrower reasonably determines that any items of Improvements have become unnecessary or unsuitable for use at the Project and that the removal thereof will not interfere with the capacity or character of the Project for the purpose for which it is then being used .or is intended to be used, the Borrower may remove and sell, trade-in ~or ot~herwise dispose of such items of Improvements. -6- 7968M .Section 7. Assiqnment of Leases. {~a) As security for its obligations hereunder, the Borrower 'hereby gr~nts, transfers and assigns to the Mortgagee, and grants :to the Mortgagee a security interest in, (1) all of the Borrower"s right, title .and interest (but none of the Borrower's obligations) in leases now existing, or that may hereafter any and ail -extensio rents and other including any award involving any .tenant reorgan and all~ p rent; provided no with respect to the Project, together with and renewals thereof, and (.2) all of the :s due and to become due thereunder, to the Borrower in any couTt proceeding any lease in bankruptcy, insolvency or ngs in any state or Federal court, and any ~by any tenant under any lease in lieu of interest is granted hereby in any collect any such award or payment; provided, however, that the Trustee shalt not be obligated to prosecute any such action. {b) The way impair or ~ under the ~Loan imposed on the Mo performance and this .assignment .of I ~ment provisions hereunder shall not in any h any obligation of the Borrower hereunder or mt nor shall any of such obligations be ee. Upon Payment of the Bonds and mce of the provisions of this Mortgage, es shall cease and terminate and all of the right, title, interest., claim and demand of the Mortgagee in such leases shall revert o 'the Borrower or to such other person as may be legally en~titt~ thereto, and 'the Mortgagee shall, at the request of the Bor or any such person, deliver to the Borrower or such p~rson 'an instrument, in recordable form if requested, canceltingi and ~disc'harging such assignment. (c) The foregoing assignment is a present assignment, provided, however, ~hat so long as no Event of Default has occurred and is cont%nuing, the Borrower shall have a license to collect all rents, income and profits from the leases of the Project and to use all rents, income -an for deposit in the Proj.ect is released shall not apply to le (d) The Bo full right %o-assign due and 'to become d~ any interest therein ~nd enjoy the same, although it shall deposit ~ profits from the leases with the Mortgagee Revenue Fund. If any part of any of the pursuant to Section 3 above, this assignment ~ses of such part. rower represents and warrants that it has such leases and the rents and other payments e thereunder and that no other assignment of has been made. (e) The Borrower agrees that the assignment made in this Section is irrevocable and that the Borrower will not, while such -7- 7968M ~assignment is in effect, take any action which is inconsistent ~with ~suCh ~assignment, or make or suffer to be made any ~otherassignment, designation or direction of the subject matter of the assignment ~made in this Section, and that any such assignment Shall be void. The Borrower will from time to time, upon request of the Mortgagee, execute all instruments of further assurance as ~the Mortgagee may reasonably request. Section '8. shall be an "Event of D Default. Each of the following events under this Mortgage: {a) The failure of the Borrower to observe or perform any other covenant, condition or agreement of the Borrower ':hereunder ~or a period of thirty (30) days after notice specifying such failure and requesting that it be remedied, given by the ~Eortgagee to the Borrower; or (b) An Event of Default shall have occurred and be continuing under the Loan Agreement. Section '.9. Remedies on Default. Whenever an Event of ~Default shall have occurred and be continuing, the Mortgagee shall: (a) Have access to, and the right to inspect, examine .and make copies of, the Borrower's books, records and accounts pertaining to the Project; (b) Have the right to exercise any of its rights under this Mortgage, the Loan Agreement, any other Financing Instrument and any other instruments and agreements given to secure the Obligations; (.c) Have the right to exercise any remedy afforded a secured party under the Uniform Commercial Code of the State of Florida (the "UCC") to the extent that property subject to this .Mortgage is property subject to the UCC; (d) Take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and to ~become due :or to enforce observance or performance of the Obligations.; (e) As a matter of right without regard to the adequacy of the security, and to the extent permitted by law without notice to the Borrower, be entitled, upon application to a court of competent jurisdiction, to the immediate appointment of a receiver for all or any part of the PrOject and the revenues therefrom, whether ~such receivership be incidental to a proposed sale of the Project or otherwise, and the Borrower hereby consents to the appointment of such a receiver; -8- 7968M (f) To the extent permitted by law, and with or without the appointment of a receiver, on an application therefor, have the right to (i) enter upon, and take possession of (and the Borrower Shall surrender actual possession of), the Project or any part thereof, without notice to the Borrower and without bringing any legal action or proceeding, or, if necessary by force, legal proceedings, ejectment or otherwise, and (ii) remove and exclude the Borrower and its agents and employees therefrom. Upon obtaining possession of the Project or upon the appointment of a tlhe Mortgagee .or the receiver, as the case may be, may, option, (A) make all necessary or proper repairs and additions %o or upon the Project, (B) operate, maintain, control, make secure and preserve the Project, (C) receive all rents and revenues, and (D) complete the construction of any unfinished improvements ~on the Project and, in connection therewith, continue any an~d all ~utstanding contracts for the erection and completion of such improvements and make and enter into any further contracts which may be necessary, either in their or its own name or in the name of the Borrower (the cost of completing the improvements shall be expenses secured by this Mortgage and shall accrue interest as the ,rate provided for in SectiOn 4.3 of the Loan Agreement). In doing so, the Mortgagee or such receiver shall have t~e right to manage the Project and to carry on the business of the Borrower and may exeDcise all of the rights and powers of %he Borrower, eithe:r in the name of the Borrower, or otherwise, including, but without limiting the generality of the foregoing, the right to lease the Project, to cancel, modify, renew or extend amy lease or sublease of the Project or any portion thereof and to carry on any contracts entered into by the Borrower with respect to the Project. The Mortgagee or such receiver shall be under no liability for, or by reason of, any such taking of possession, entry, holding, ~emoval, maintaining, operation or management, ·except for gross negligence or willful misconduct. Any demand by the Mortgagee upon any tenant of the Project, accompanied by a copy of this Mortgage, shall be sufficient authority for that tenant thereafter to make all lease payments directly to the Mortgagee and that tenant shall have no obligation or authority to inquire into the propriety of any such demand. Upon making lease payments to the Mortgagee pursuant to the Mortgagee's demand, any tenant of the Project will be as fully discharged of its obligations under any lease to the extent of those payments as if those payments had .been made directly to the Borrower. If at any ~ime lease payments are required to be made directly to the Mortgagee under the terms of this paragraph and those payments are .made to the Borrower, the Borrower will receive those payments in trust for the Mortgagee and shall forward them immediately to the .Mortgagee in the form received, endorsed, if appropriate, to the order of the Mortgagee. Any rents and revenues shall be applied (t) first, to pay all expenses, and (2) the balance, if any, to the payment of the other Obligations. -9- 7968M The exercise of the remedies provided in this Section shall not cure or waive any Event of Default, and the enforcement of such remedies, once commenced, shall continue for so long as the Event of Default shall continue. No remedy .set forth in this Section is intended to be exclusive of any other remedy, and every remedy shall be cumulative and in addition to every other remedy in this Mortgage or now or hereafter existing at law, in equity or by statute. No delay or failure to exercise any right or power accruing upon an Event of Default .shall impair any such right or power or shall be construed to be ~a waiver-thereof, and any such right or power may be exercised from time to time and as often as may be deemed expedient. Upon the -occurrence of an Event of Default, the Borrower shall follow any reasonable directions given by the Mortgagee to .assemble the Improvements and other personal property in which the Mortgagee is granted a security interest herein and make it awailable to the Mortgagee at a place which is reasonably convenient to the Borrower and the Mortgagee. If the Borrower fails to promptly pay or perform any of the Obligations, the Mortgagee, without notice to or demand upon the Borrower, and without waiving or releasing any Obligation or default, may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of the Borrower. The Mortgagee may enter upon any or all of the Project for that purpose and take all action thereon as the Mortgagee considers necessary or appropriate. All ex~penses incurred by the Mortgagee pursuant to this Section, together with interest thereon at the default rate provided for in Section 4.3 of the Loan Agreement, shall be paid by the Borrower to the Mortgagee upon demand. To the extent permitted by law, the Mortgagee shall be subrogated, notwithstanding its release of record, to any lien now or hereafter existing on the Project to %he extent that such lien is paid or discharged by the Mortgagee whether or not from the proceeds of the Bonds. This Section shall not be deemed or construed, however, to obligate the Mortgagee kd pay ~or discharge any lien. Any and all deposits or other sums at any time credited by or due from the Mortgagee to the Borrower shall at all times constitute security for any and all indebtedness secured hereby, and the Mortgagee may apply or set off those deposits or other sums against the Borrower's indebtedness to the Mortgagee at any time whether or not the indebtedness Shall then be due or other collateral is considered by the Mortgagee to be adequate. To the full extent that the Borrower may do so, the Borrower hereby: -10- 7968M {t) agrees that it will not at any time plead, claim or take any laws now or hereafter in force providing for any valuation, stay, extension or redemption, and waives and releases all rights of redemption, valuation, appraisement, stay of execution, extension and notice of election to accelerate t~he Obligations; (2) waives all rights to a marshalling of the assets of the- BorroWer, including without limitation, the Project, or to a sale in the inverse order of alienation in the event of a foreclosure of any portion of any or all of the Project, and agrees not to assert any right under any law pertaining to the marshalling of assets, the sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents, or other matters whatsoever to defeat, reduce or affect ~the right ~f the Mortgagee under the terms of this Mortgage to a sale of any portion of any or all of the Project without any prior or different resort for collection, or the right of the Mortgagee to the payment of the Obligatlions out of the proceeds of the sale of any portion of the Project in preference to every other claimant whatsoever; (3) waives any right to bring or utilize any defense, counterclaim or set-off~, other than one which denies the existence or sufficiency of the facts upon which any foreclosure action is grounded. I'f any defense, counterclaim or set-off, other than one permitted ~y the preceding clause, is timely raised in a foreclosure action, such defense, counterclaim or set-off shall be dismissed. If such defense, counterclaim or set-off is based on a claim which could be tried in an action for money damages, such claim may be brou~ght in a separate action which shall not thereafter be consolidated with the foreclosure action. The bringing of such separate action for money damages shall not be deemed to~ afford any grounds for staying the fo'reclosure action; and (4) waives and relinquishes any and all rights and remedies which the Borr-ower may have or be able to assert by reason of the provisions of any laws pertaining to the rights and remedies of sureties. 'Section 10. Security Agreement. This Mortgage, in addition to creating ~a lien on real estate, is a security agreement granting a security interest in personal property and shall support any financing statement filed showing the Mor~gagee's interest as 'secured party with respect to any property described in such financing statement, including but not limited to the Improvements and the other personal property described herein. The BOrrower and the Mortgagee agree that all portions of the Improvements which will be acquired and installed on the Land are and shall remain personal property to the extent permitted by the laws of t-he State and shall not become a part of, or be deemed to be, real estate regardless of the manner of affixation. -11- 7968M Section 11. Fur~ther Assurances. At any time, and from time to time, upon request by the Mortgagee, the Borrower will, at the Borrower's expense, (a) correct any defect, error or omission which may be disCovered in the form or content of any of the Financing Instruments, and (b) make, execute, deliver and record, or cause to be made, executed, delivered and recorded, any and all further instruments, certificates, and other documents as may, in the opinion of the .Mortgagee, be necessary or desirable in order to-complete, perfect or continue and preserve the lien of this Mortgage. Upon any failure by the Borrower to do so, the Mortgagee may make, execute and record any and all such instruments, certificat~es and documents for and in the name of the Borrower, all a't the sole expense of the Borrower, and the Borrow~er hereby irrevocably.appoints the Mortgagee the agent and attorney-in-fact of t~he Borrower to do so, this appointment being coupled with an interest. Section 12. Envir.onmental Laws. The Borrower represents .and warrants that to its knowledge (a) no Hazardous Materials are located on the Project, (b) the Project has never been used as a manufacturing, storage or dump site for Hazardous Materials, nor is the Project affected by any HaZardous Materials Contamination, and (c) no property adjoining the Project has ever been used as a manufacturing, storage or dump site for Hazardous Materials nor is any such property affected by Hazardous Materials Contamination. The Borrower agrees to (1) give notice to the Mortgagee immediat~ely upon the Borrower's acquiring knowledge of any leak, spill, other release or presence of any Hazardous Materials on the Project or of any Hazardous Materials Contamination with a full description thereof or of any violation Of any environmental, health, fire or safety laws with respect to the Project; (2) comply with any governmental requirements applicable to Hazardous Materials, and other environmental, health, fire and safety laws or regulations, including, but not limited to, the Occupational Health and Safety Act and the Americans with Disabilities. Act; (3) promptly comply with any laws requiring the removal, treatment or disposal of such Hazardous Materials or Hazardous Materials Contamination and with all laws relating to other environmental, hsalth, fire or safety matters and provide the Mortgagee with satisfactory evidence of such compliance; (4) provide the Mortgag.ee, within thirty (30) days after a demand by the Mortgagee, with a bond, letter of credit or similar financial assurance evidencing to the Mortgagee's satisfaction that the necessary funds -are available to pay the cost of removing, treating and disposing of such Hazardous Materials or Hazardous Materials Contamination .and discharging any lien which may b~ established on the Project as a result thereof or to correct a violation of any environmental, health, fire or safety laws; and (5) defend, indemnify and hold harmless the Mortgagee from any and all claims which may now or in the future (whether before or after the release of this Mortgage) be asserted as a result of the presence of any Hazardous Materials on the Project or any -12- 7968M Hazardous Materials Contamination or the violation of any enviTonmental, health, fire or safety laws. The Borrower shall .not ~lace, manufacture, store, or dump or permit to be placed, manufactured, stored, or dumped on the Project any Hazardous Materials. As used in this Section, the following terms have the following meanings: "Controlled Substances" means any substances or materials, 'the presence of which may allow forfeiture of property pursuant to 21 U.S.C. /881, as amended from time to time. "Hazardous Materials" means any substance (i) the presence ~of which requires investigation, remediation, or special handling under any federal, state or local statute, regulation, ordinance, order, policy or common law; (ii) which is or becomes a'~hazardous substance" or "hazardous waste" under any federal, state or local statute, regulation, ordinance, order, policy or :commoln law., including the Resource Conservation and Recovery Act of 1976 (42 ~.S.C. ~6901 et. seq.), as amended from time to time, or the Comprehensive Environmental Response, Compensation and Liability Act of 1980 .(42 U.S.C. ~9601 et. seq.), as amended from time ~o time; (iii) which is a Controlled Substance; and (iv) without limitation, which includes any lead, oil or petroleum :products, polychlorinated bi-phenyls (PCB's), asbestos, urea formaldehyde foam insulation or radon gas. 'Hazardous Materials Contamination" means the ~ontamfnation (whether presently existing or occurring after the date of this Mortgage) of the Project, facilities, soil, ground water, air or other elements on, or of, the Project by Hazardous Materials, or the contamination of the building, faciAities, soil, ground water, air or other elements on, or of, any other property as a result of 'Hazardous Materials at any time (whether before or after the date of this Mortgage) emanating from the Project. Section 13. .Reimbursement; Interest. If the Mortgagee shall incur any expenses or pay any claims to which the Mortgagee :~becomes a party -by reason of this Mortgage or the rights and remedies provided hereunder (regardless of whether this Mortgage expressly provid.es for an indemnification against such claims by the Borrower), such expenses and claims shall be (a) paid by the Borrower to the Mortgagee on demand, together with interest '.thereon from the date incurred until paid in full by the Borrower at the rate provided for in Section 4.3 of the Loan Agreement, and (b) a part of the Obligations secured by this Mortgage. ~otwithstanding t'he foregoing, however, in any action or proceeding t.o foreclose this Mortgage or to recover or collect the Obligations, the provisions of law governing the recovery of · costs, disbursements and allowances shall prevail unaffected by this'Section. -13- 7968M Section 14. Fu%ur:e Advances. This Mortgage shall secure not only existing indebtedness, but also such future advances made pursuant to the Financing Instruments, whether in respect of the issuance of Additional Bonds or .otherwise, as are made within thirty (30) years from the date hereof, to the same extent as if such future advances were made on the date of the execution of this Mortgage, but Such secured indebtedness shall not exceed at any time the maximum principal amount of $20,000,000, plus -interest thereon and'other f.ees, costs, and expenses owed by the Borrower pursuant and any disbursements made for the payment of taxes, or insurance, on the Mortgaged Property, -with interest .on such disbursements. Any such future advances may be made either prior to or after the due date of the 1996 Bonds or any Other obligations secured by this Mortgage. This Mortgage is given for the s? indebtedness by under the Loan c~venants and Mortg~age shall be %his !future advance c purpose of securing any and all of the Borrower to the Mortgagee t and the other Financing Instruments. All contained in or incorporated into this icable to all further advances made under Section t5. Miscellaneous. (a) Successors and Assiqns. This Mortgage shall be binding on, inure to the benefit of, and be enforceable by, the parties, the Mortgagee and their .respective successors and assigns. (b) Severabilit¥. If any clause, provision or section of this Mortgage is h~ld to be illegal or invalid by any court, t-he illegality or invalidity of such clause, provision or section shall not affect any o.f the remaining clauses, provisions or sections of this Mortgage, and this Mortgage shall be construed and enforced as if such illegal or invalid clause, provision or -section had not been contained in it. (c) Applicabl~ Law. This Mortgage shall be governed by and construed in :accordance wit'h the applicable laws of the State of.Florida. (d) Release and Discharqe. Upon the Payment of the Bonds and payment of the Note and the discharge of the other Obligations of the Borrower under this Mortgage, the Mortgagee shall at the expense of the Borrower (i) cause the lien created by .this Mortgage to be released, -cancelled and discharged, (ii) execute and deliver to the Borrower instruments necessary to cause such release, cancellation and discharge, and (iii) assign and deliver to the Borrower any property that the Mortgagee then may hold pursuant to this Mortgage. Upon Payment of the Bonds, the Mortgagee, at the exFense o.f the Borrower, shall execute and .deliver, or cause to be .executed and delivered, such instruments of satisfaction or termination with respect to all liens in favor -of the Mortgagee created hereby, in proper form for recording or -14- 7968M filing, as may be necessary to evidence such satisfaction and .termination. <e) No.tices. Ail demands, notices, approvals, consents, requests, opinions and other communications under this Mortgage shall be given in accordance with the provisions of the Indenture. {f) COurse of Dealing. No course of dealing or conduct between the Mortgagee and the Borrower shall be effective to amend, modify or Change any provisions of this Mortgage or the other Financing Instruments. By accepting payment after the due date of any of the Obligations, the Mortgagee shall not be deemed to waive the rig'ht either to require prompt payment when due of all other Obligations, or to declare an Event of Default for failure to make prompt payment of any such other Obligations. Neither the ~Borrower mot any other person now or hereafter obligated for the payment of the whole or any part of the Obti.gations shall be relieved of such liability by reason of (a) ~the failure of the Mortgagee to comply with any request of the Borrower -or of any ot-her person to take action to foreclose this Mortgage or otherwise enforce any of the provisions of this Mortgage, or (b) any agreement or stipulation between any subsequent owner or owners of any or all of the Projects and the Mortgagee, or (c) ~he Mortgagee extending the time of payment or modifying the ~erms of this Mortgage or any of the other Financing Instruments without first having obtained the consent of the Borrower or suCh other person. Regardless of consideration, and without 'the necessity for any notice to or consent by the holder of any subordinate lien on the Project, the Mortgagee may release any person at any time liable for any of the Obligations or any part of the security for the Obligations, and may extend the time of payment or otherwise modify the terms of this Mortgage or any of the other Financing Instruments without in any way impairing or affecting the lien of this Mortgage or the priority of this Mortgage 'over any subordinate lien. The holder of any subordinate lien shall have no right to terminate any lease regardless of whether or not such lease is subordinate to this Mortgage. The Mortgagee may resort to the security or collateral described in this Mortgage or any of the other Financing Instruments in such order and manner as the Mortgagee may elect in its sole discretion. (g) Definitions. Ail terms used herein and not otherwise .defined herein shall have the meanings ascribed thereto by the Indenture. Section 16. Non:recourse Mortqage. The Issuer expressly agrees that, except as provided below in this Section, the personal liability of the Borrower and the members, officers and directors of the Borrower shall be strictly and absolutely limited to the property encumbered by the Mortgage, and the leases, rents, profits and issues thereof and any other collateral securing the Borrower's obligations under the Loan Agreement or under the -15- 7968M Note. The Issuer and .any assignee of any of the Financing Instrume~nts shall not and may not seek any judgment for a deficiency against the Borrower or any member, officer or director of the Borrower in any action under any of the Financing Instruments, or in any action to foreclose, to exercise a power of sale, or to exercise any other rights or power under or by reason Of the Mortgage or any other instrument evidencing or securing the obligations of the Borrower under any of the Finsncing If any suit is brought on the Mortgage as part of proceedings to foreclose the Mortgage, or to confirm any foreclosure or sale pursuant to a power of sale hereunder, any judgment obtained in such suit shall constitute a lien on, and will be and can be enforced only against the property encumbered ~by the Mortgage, and any such other security instrument and the leases, rents, profits and issues thereof and not against any other asset of the Borr~ower or any member, officer or director {he~eof, and the terms of such judgment shall expressly so provide. ~Otwithstanding anything to the contrary contained herein, the ~obligations of the Borrower under Sections 5.3 and/or 4.1(b) (other than 4.1(b)(2)) of the Loan Agreement shall be recourse to the assets and general credit of the Borrower (but not to the members, officers or directors thereof). IN WITNESS WHEREOF, the Borrower has caused this Mortgage and Security Agreement to be duly executed by its authorized representative as of the date first above written. C/HP COVE, INC. Witness By: Name: Title: Witness -16- 7968M STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrument was acknowledged before me this day of , 1996, by as of C/HP COVE, INC., who is __ personally known to me, OR ~ has produced as identification. (NOTARY STAMP) Notary Name: Notary Public Serial (Commission) Number (if any) -17- 7968M ~xhibit A DE~CR~PTION O~ LAND '8100~/11 BOND PURCHASE AGREEMENT P.2/54 Bond l~drc~ Ag~ment Cit~ of Boynton.Beach, Florida 100 ~ Boynton Reach ~Boulevard P;O. Box 310 Boyr~ton Beach, Flori~ 33425 C/HP Cove, La=. c/o Cornerstone Housing Corporation ~350 Beverly Road, Suite 200 McLean, Virginia 22102-~6~4 ~ ~.C~.. p_ar~,/nco~(colleciivcly' the "Par ,, Inc. and $£ifel, Nicolaus with thC O~ of Bo ~ _% . clms~ )off'ertoenter' ,Yntoal~aCh. l~lorida, (the ", ..... -- - ~o this Bond Purchase - --,,,=r ) mad C/HP Cove, Inc. (thc "'Owner'), ~ubject to acc~tance:at or prior to 11 :$9 P.m., Florida t/me, on the dace hereof. l. htrod~. The Issuer is authorized to issue $11,400,000 pr/ncipal amount iff its Multi- Family HOUsin~ Mor~a~e Revenue Bonds, Series I996 (Clipper Cove Apam'nents) (the 'Tax Bonds" or'the "'Bonds')pursuant to and in accordance wi& ~ ~?~Flo,~_~ Co~t~lo' '." , ' · . Article VI~. Section 2 arid Article VII, ~ ~'[q~'~' ~ Th~ B~,Of NmYork . Indenture-), r,,,,-~-.uz wiortgagc dated a.s of luly 1, 1996 (the ,w~ be issued and mthc amounts, will ~have ser~,o ~,~*.----. ' ag m~.ee (the Tru~t~-~. and -.-, I lmrc~. *.,.- ,,~$mons and will ~,es,. ~ ...... - _ ,,,- zaamre on the da~ Zz~,emsc on the Bonds is io be - ,-'~ ,-,=~-esr at me rates shown on Schedule excludable ~om federal gross income of the holders thereof. The proceeds iff thc ~onds will bc used to provide mOney for thc fundin~ ora mortgage loan (the 'MortgaSe 'Loan") to th~-Owner to r~t"mance its illultifamily he, in8 '.l~orida. (the "Project"), fund certain ...... -~a,~s, pay certain costsPr°ject located in the City of Boynton Beach, recurred in connection with the issuance.of the Bonds. of rehabiliratin~ the Project and pay costs 2..~ Sale and D~livery og Bonds. On the basis of the rcpresenraQo~, warranties and a~r~ts contai~ .herein, but subjec~ £o the terms and conditions herein set forth, the PUrchasers hereby a~rce to purchase item ~the '-Issuer, and the Issuer hereby i ~ ,' ~ . . a~rccs to sell to thc Purchasers, 1996-to thc ~osm~ Date (deffmed below). The c ' Purchasers, a~e se~ fo, ' .- stzmated issuance . _ . . , U~y 1, ,. zth m Schedule II herete, expenses, mcludir~ raefees of the at ~he off'ge oi' th~ Tru~-,,,-~ -,~ ~ "; ' ~ ansz~r or checks navable ;,, ~ ...... ers against pla~ ag ~ PUrch~--- -. - · . .m., i~londa Time. on .tm,, ,~ ,,,,,- amiy available funds · -,,~r,r~ me issuer and the Owner .,.~,,, .i.._ ;.7'" ~' ~'~'aL°r at such other time '"""~' ,-,~ tree c;losin~ Date") P.3/54 : ,mm iv aays armr the Closing Daze tn d~tdve form, shall be delivered to 21. Closing Doc.me~. At or, prior to thc CloSing Date, the Purchasers ~hall h~ve ~eived the The Official &atement relating to thc Bonds ( Official Statement"). (b) The Indent, duly executed by the ISsuer and the Truatc~, (c) The ,Lo~ Agreement (thc "Lo~ Agreement"), duly executed by the Issuer and ~the ~Ow~er. ~,wncr an~ the Trustcc, Owner. (e) The l~'omi~ory Note (the "Prom/asory/Vote") £o the Issuer duly executed by the ' (f) Thc Mon~-a~e and $ccurit A the' Promisso Note Y _ greernent sec ' ry and Loan Agreement r,~,,. -.. .... :~,urmg ~ Owner's obligadOm Under (g) A cez~ed copy or cop~ of ~ ~o~u~c~ of ~e City Com~.~ o~ the ~ ~upplem~ed ~ ame~dc~, ~u~ofi~ng* ~ ~u~ce of the Bor~/s, a~l the execution ~d de~vczy of ~ ~/e~c, rJ~e ~ Agre~menL d~e T~x Rcguhror~ Agreemcm and this Bond · /nvestors. ~ The Ow~,,,. ~- - anmary ufiiclal Stat ,.,,+,,, ..... /enlerlt dated .. ,, . % ,.. -=muy represents to the em_c., ~ ~u prospective -no more than the foUow/Rg: th~ offerht prices, thc interest rates,-'"-,,S=scUing .~C~compen~ation,O~ 1934 (i.e.,..:amountit om/r~of proceeds :alld thc.delivezy date of the Bor~ds a.,ld other tet111s dcpc/lding oi1 such factors). On or before th~ Closing Date, the Issuer gha/1 have delivered to the Ptlrchas~rs the Of'ftc/a/ Statement duly completed with the information permitted to b~ omitt under thcSecurities .Bxchan~e Act of 1934 and .... ,.., . ed therefrom by Rule $c2-12 bccn approved by the II~uerslid approved by the'"'aPurchascrs.°mer arnendmcnts and supplemcnts as lshal1 s zhe use ther ' :.P net, as thc Pur cop of all eof in connccUon w* chasers shall . ~th thc offer, sale and a~,,,~,_., ...... reilu_ es! and tim Issuer Parties tgreio: and Warranlle~ of the ISsuer. Th= Issuer represents and warfares £~ by ~he IisUer. Stiuemen; and the Official Stalerne~ to th~ Issuer), docs not and "NO LITIGATION contain ;ay untrue statement of to make me star~.aent;.conra~~ Offic~ i they were made, riot mislead. :The/ssue: section of the l:~relirninar) of ; appendices thereto, excep£ ~ha~, to thc appendices make an untrue statement ozher sect to make the statements rmde in such mb;leadin~ the c/rcunut~inccs Under Which they Were madc, not .fo) ~By officia/action of the Issuer ' ~hereof, tile ~suer has duly approv~ prior to or concurrently has duly author ~ ra~ified the u with ized a~l a roy se of the P~ ' ' acceptance · ' n and dehve of, ,,,,~ ,~,- _ _~_,~aricial _St,~.enle~, has dul ~ ~ on ~ part :comaine~ ry ' "'"' '"' l~rormance by the I~Suer of ~hey in. ~ ~, the Bonds. this BoM Loan ~, and thc Tax ReSula/o A l~rchase _.cons~nmalion ___ ry ,greemen .of all other ~ . t Agreemcm, the ..a~d.._l_l_~as. duly author/zed and '"-r'-ved-- i'umhae Agreement. araactiora on ac part ,,. ,a= iis,,er co,,,..., ..... .... ~,,,,,r,a oy,~ 'rais Bond rd) To rI~ best oftl~ Issuer's knowledge, fi) the ISsuer Under any 'applicable law or ' , would ' - admi~r, ra~ive r is not in of or defaul/ - impair the ~,.,, .......... . egulanon of thc State breach the ~'",,,,~uce or zr~ obllgailons under t~,;o ~,__., .. or the Un/ted States which execution ~ delivery of ~ Bonds. the -.~ o,,.u rurchase Indenture, this Ai'reemcr~; and (ii) A~reement and the 'lax Ret"4atoz7 agreement, and Bond Purchase Agreemen:, the Loan thereol~ will-not conflict with or co~titut¢ · compliance with the provisions of each . ch rite Issuer ~s a Party or is ..... .at, note, resolu~/on, under any law, ~ omer¢.,i~¢ subject agreement or other instrument or perrormaz~ b -, waca woui · authori , bo ~, ~, '-~-=rc~nacr nave been obta/ne~ precec!,,ent m me fl) Thc Issuer has received no notice of an.v action, suit, proceedin$, :::inquiry or im'est/~t/on.: ~t law or in equity, bdore or by any ~OUr~. publ/o board or body, pendir~, and has '96 ~B.~:EgFF~ SEHT ~Y RITTER EICHHER & HORRIS P. S/~ or sffeaing ~ affecting Iht caistcnc~ of the Issuer or ~ their resp~fiv¢ offices or seeking to prohibit, restrain or enjoin the of ~ Bonds or the pledge of reveries or assets of the on thc Bonds, or in any way con~estin~ of ~e Bonds, this Bond Purchase Agre. e~r~, the authort~ : BOnds, ~he ~,ecu~ion loan Agreemem or an or ~ would ~e~ly · c h~mre, o~ ~ Bor~ ~rc~ ~~. ~) The Bo~, when ~su~, ~enti~ ~ deliv~r~ ~rc ~ sold ~ .~ ~~s ~ pro~id~ here~, w21 b~ v~idly ~s~ ~ outs~d~ ~ revue obl~o~ of ~e Bsucr ~o~c~ble ~ a~r~ce wi~ ~ar ~e~ ~ e~tl~ ~o ~e ~l~ of ~e ~re, subj~ ~o (a) ~e exercise of o~r ~imit~ laws ~ a~' ~s h~ofore or hcr~f~r Bo~ ]~r~e A~~ up~ ~e ex~ugon ~ .delivery ~f, ~l ~timte leg~, v~id ~ b~d~ obl~afio~ of ~e hsuer cMor~ble ~ ~co~snce wi~ ~cir ~, ~bj~ w (a) ~e ~ of j~ic~ di~retion ~ :~rd~c~ wi~ gener~ p~ples of c~i~, b~p~, ~olv~y, ~o~m~on~ ~.~ori~ ~d o~ s~l~ laws Mfe~ cr~iw~' fig~ h~o~rc or he~e~ en~ ~ ~e ex~ ~m~o~ly ~lic~le. (i) T~ Is~r E ~ now ~ de~ul~, nor ~ ~ s~ ~ ~1, 1~5 ~ ~o princip~ or :~t~st wi~ rc~ ~y ~~ s~ by ~ ~~ offi~r of ~ hsu~ ~d d~Bver~ ~o ~c ~~ s~l ~ he~o: (a) ~ .O~er (i) is a Florida ~ofi~ co~cr~on, q~ifi~ ~o ~act b~css Slate, (fi) h~ ~ ~l l~ fig~, pow~ ~ ~ho~ to own i~ pr~effies ~d ~s~, ~d w .~m ~ ~ ~ ~ b~ ~ ~ 2, ~d ~ contempla~ by ~ ~ ~men~, ~ :T~ ~o~ ~r~en~, ~s B~ ~r~ A~ ~d ~ Nole ~ ~e Mo~a~e ~Bver ~ ~ ~~, ~'T~ ~~ A2re~e~, ~ 2G '~6 83:28PM SEh~ BY RITTER EICHMER & NORRIS P.G/54 .lb) The ~e~ecution amd delivery of ,this Bond Purchaso Agreement, the Loan ,Ag~om'~ont, ,the Tax ~ulatory ~, ~he .Note and the Mongale have been duly authorized by tim Owner arid have'been duly exccu~l and delivercd by the Owner. ; (c) The execation.azul clelivery by tl~ Owner ~of this Bond Purchase Agreement, and thepefformance r the Owner of the of or which (d) Ass ~g due authorization, hereto: ~ Bond Pttr~e AgreemenI ,is a lcgal, valid enforceable :~ reorgmflz~ion, mo~oriUm aud othe~ :hereafter enacted ~ the.~zcnt constitutionally, applicable. Thc' Corne~swne ~ omi~ to Cornerstor~ the other parries of hhe Owner of judicial insolvency, or m proje ,t Owr r, Hou i 'armership, , :M~ag m~ .of Floridal inc. h~e ~el~ Official .~ ~ not ~c ~y ~e sta~ of a m~i~ ~ or wi~ resp~ to '~ ~oj~t. ~ O~r. Ho~i~ P~ership, n~ss~ ~ or~r to ~ &e und~ wM~ &ey wore ~ ~o~tion ~: ' ~c Lo~ Agr~t," L2tgation~ (i~ofat M ~e s~ "Appendix C' and ,6.? Covemmas of,the Issuer. Th~ Issuer covenants with the parties hmr~to d~a~: (a) ~ between ~ ~ of ~s Bo~ ~e A~t ~ ~e da~ ~ days ~Ho~-~~ Da~ ~ ~e~ o~ts, w~ch :~ ~y ~wn to ~c hsuer, ~ ~e v..,,~ which ~d ~e ~ ~r~on in ~e ~ici~ St~em~ ~der ~~s ~e ~~ ~e~ ~ :es~ct w ~e Issuer, m light of ~e circu~s ~der:. wMm ~ were m~, not ~l~, ~e Issuer ~ ~t~ ~ ~tch~en ~, ~ in ~ op~on of ~ O3:~DPM SENT BY RITTEREICHNER ~ NORRIS P. ?/54 Issuer or the Purchss~rs such event recluims an smen~aent or supplcmer~ m the Official ~, the Issuer, soldy at thc ,~pe, me of the Owner, will amend or supplement the Official Statcmer~ in a form and in a ro~r~er jointly approv~ by the Lssuer and thc Purchuers; provided, however, if such evcat shall occur .on or prior £o the Closing Daie, the Purchasers in tl~ir sole discr~on shall I~ve the ~ht to ,tenninae the obligations of the Purchasers hemunde~ by wri~en notice to r. he Owner and the Issuer, and ~hc Purckssers ~all be under, no obligation tn purchase and pay for the Bonds. (b) Thc Issuer will, solely at tI~ Owner's expemc, furnish such information, ~xecum such insu, umcnts sr~l r~ke such.other ~ction consistent with ~he provisions of thc Indenture, the ,'.Loan Agreement and the Tax ttegUlatory Agree_men! ~ coo~ratio_n w!th the Purc~_.e, rs,~ the Pur~s may reasonably reques£ to qualify ~he Bonds for offer and sale under the Blue ~ or other securities laws ami ~egUlations of such sta~e~ and other jurisdictions of ~ United Sr~es of America ss the Purchasers may deSignae; provided, however, the Issuer shall not be required to register .as ~ .dealer or broker in .any such state or.jurisdiction or be required to file a gencral cov. se,_nt to service-of process o~ become subject to service of process in any .jurisdiction in which the Issuer is not now subject to service of process. 7, Covemauts of the Owner. The Owner covenants wir, h the Issuex and the Purchasers that: (a) If between ,the date of this Bond Purchase Agreement and the date 90 days following the Closing Date ~ event occurs, which is known to the Owne,~, which would cause th~ Official Statement to conta/n an untrue statemem of a material fac~ or to omit £o s~ate a mamfi~I f~.necessary in order to .make ~ statements therein with resp~t to the OWner or the Projcct, in light of the circumstances under which they were made, not misleading, the Owner shall not/fy the bauer and .the Purchasers and, .if in the opinion of the Purchasers or the Issuer such event ~ an amendmem or supplcmem to the Official Statemcnt, the Purchssers, at the expeme of the Owner, will amend or supPlemcnt the Official Statement in a form ~1 in a ~- jointly.~proved by ~he Issuer and the Pure' ~h~sers; provided, however, if such even~ :occur on or prior to th~ Closing Date, the Purchasers in theLr sole discr~ion shall have the right to term-i~m the obligations of d~ l:'urchaSers her~mder by writmn no£ice to the Issuer and the Owne~, and the Pttrchssers shall be under no obligation to purchase and pay for the Bonds. (b) The Owner si'all Uk¢ ~I1 ~cessar~ action on i~ p~ to ~use ~c Bo~s to ~ly ~ ~e p~i~ of ~c laws ~d r~om of ~c $ta~ punu~t to w~ch ~ Bo~ ~e issued ~ of ~ ~e~l Rcv~ue Code of 1986, ~ ~~, ~d ~c ze~atio~ pro~tga~ '.~cm~d~ (~e "C~e")~ w!~ not t~ ~y action,' or pc~t ~y action witMa im-'~l w '~ :~, w~ wo~d ~'~h provisiom or wM~ w~d ~use ~tcr~t ~ ~ B~ 'to lose &e~ ~fion from f~era income z~a~on. 8. Conditiens to.Obl~atio~ of Purchasers, The obligation of the Purchasers to purchase and pay for the Bonds will b~ subject to (i) the accuracy of the reprcsentafions and warranties of thc Issuer ar~ the Owner herein. (ii) the accuracy of the representations and warranties made by the Tr~e~ ~ ~he Owne~ pursuant to the Loan Agreement and by the Owner l:~lmm~ to thc T~x l~gulatory Agreement, (iii) thc perfo, mance by the Issuer and the Owner .of thei~ .oblig,t'.m...ns he. reur~,.r., (iv) the r.ecCipt of the doall~ts spelled ill Section 3 hereof, and (¥) the followlllg adclitionsl corlalr, lolls preceaent: ~ .P_~ '~' .88:SBPM SENT BY RITTE]~ EICHNER & NORRIS P. 8/54 ~ ({) P,x ~ ~c~)t as:.may :haw been a~reed to by the Purchasers, a~ tho Closing Date, ~ :!nd~-e, th~ Losn ~, ~ Note, ~he Mortgago and:tho Tax R~gulatory Agre~m~n~ t, and ~ ~ action of~ Issuer or ~ Owner rei~ting thereto shall be in full force and e, ff~t ancl ~shall no/have beau smended, modified.or suppl~ncated, and the Official Statameox sh~I1 not have ~bee. n..~ or supplemeated. the Closin~ :Exhibit A'~reto. , Katz, ' in the form Date arid addressed to, or with mpplemcntal oPinion of'Bond Counsel dated to the Purchasers ~ the OWNS} substantially in thc form of lc) The PurcJusers shall have received a c~nificate of the Issuor, dated ~he Closing Da~e ~ signed on be.half of.r. he: Issuer, substantially in the form of Exhibit B hereto. (d) The Purchasers and the Issucr shall have received written evidence that Standard & Pom"s Ratin~ Oroup has issued a rating of "A" on tho Bonds and the documents delivored at thc'Closing Da~e Shall sa~fy the conditions ~o the confinuancc of such rsting; and as of the ,Clos~ Da~, the,rafln~ shall not have been suspended or wRhdrawn. (e) The PurChasers and hhc Issuer shall have received (i) a certificate dated thc Closir~ Date and signed by .an authorized officer of lt~o Owner substantially in thc form of Exhibk C hereto and (ii)~ opinion of co-counsel to r. he Owner substantially in the form of Exhibit D 'hereto. :(fi The Purchasers.shall have received oPinions of Purch~ers co-counsel, dated the Closing Dace.and addressed to the purchasers tn the effect that the Bonds are not subject to tho registration requireme, n~s ofr~ Securities Act of 1933, as amended, and thc Ind~mre is not ~ubjeci wthequal/ficsfion requirements of ~ Tntst Indenture Act of 1939, as amended, (~) At ~ CJosir~ Da~e, the Tmstcc shall receive in inuncdiately available funds ~he ~r~ou~ set for~ in Schedule H hereof for deposk in the Cost of.hsuance Pund under the th) The Purch.~crs and the Issuer shall have received an oPinion of counsel co tho 'Trus~e~ in form aud substance :satisfactory m them. (i) The pumtmscrs shall have received an opinion of Iosias, Gorcn, Chemf, Doody & Ezrol, P,A., counsel io the Issuer .substantially in the form of Exhibk E hereto. ? ~ (j) Wheat, First Securities, Inc..shall have received a Disclosuro Certificate from each Co-Underwriter in substantially the form attached hereto as li~r. hibi£ F duly executed by an authorized rcpresenr~ive of thc respective Co. Underwrit~r. '~ (k) The Purchasers shall have r~ceived such additional logaI opinions, cerlifmates, proceedings, ~ and other documea~ as the Purchasurs or Bond Counsel may.reasonably ~ 7 L:%RA1~OYNTON%I.~PA. ~al ~, JUM ~ 'gG B2:~BOPM SEMT BY RITTER EICH~R & NORRIS P.gx54 l , All ~ opinions, let~rs, certificates, inswc~ments and other doaune~s mentioned above or ~-~ i ,elsewhere in fl~ BOnd Purchase Agreemelu shall be deemed to be in compliance with the P~rovisions i hereof~, but only if, they arein fora and substance:satisfactory to ~he Purchasers. 9. Termination. The Purchasers may terminate their obligatMns hereunder by written notice ~.to ~e Iasucr and the Owner if, at any timc subsequent to the da~e hereof and at or prior t¢ the Closing Datc: ~(a) (i) Legislation shall have been enacted by the Congress, or recommend~l to thc Congrcss for ~e by the Prcsident of the United Sines or ihe U.S. Depanme~ of the Treasury or the htcmal l~,~,m¢ Se~i~ or ~y m~cr of~e U~ Smt~ Co~r~s, o~ ~vo~ ~ for ~ w ~cr H~se of ~ Con~s by ~Y Co~U~ of such Home to wM~ 's~ letiaa~on ~ ~n refe~ed ~r ~mider~on, or (ii) a d~ision s~l .~vc ~ ~e~ ~ a co~t ~abli~d .~cr Artklc HI of ~ Co~fimfion of ~ UMt~ Smt~, or ~e U~ ~ ~ ~ or (fii)~ ord~, ~, relation or c~u~cafion (~1~ a p~s rele~) sh~l ~ve b~n ~u~ by ~ D~~ of ~e Tre~ of ~e ~t~ Sta~ or ~ ~e~l ~~ ~, ~ ~ch c~ ~e~ ~ in cl~ (i), (~) ~ (~), ~i~ ~e p~se or ~, ~ ~ombl~ ti~l~ood, ~recfly or ~direcdy, of ~pOsi~ fed~ ~me ~on u~n ~r~t ~o be re~iv~ by ~y hoI~rs of ~e Bonds. (b) Legislation shall .have bccn enacted or any action token by the Securities and [Excha~lg¢ Commission .which, 'in the reasonable opinion of counsel to the Pu~hasers, has the effect of requiri~ fl-,e offer or sale of ~ Bonds to be registercd uridcr the Securities Act of 1933 or ~hc IndentUre to be qualified ss an indenture under the Trust Indenture Ac~ of 1939 or any event shall have occurred which, in ihcir reasonable judgment, makes untrue or incorrect in any material rcapoc~ any, statemcnt 'or info--on contained in the Official Stalcmop/or which, in g~cir ~cason~hle judgmc, ut. should be reflect, cd therein in order £o mak~ the statements 'contained t~rein not misle~dlng in any material respect ' (c) (i) In the Purchasers' rcasormble judgment the marke~ price of t,h~ Bonds is adversely affected because: (a) -dditlonal material rcsr~icdo~ notiin forcc ss of the dale hereof shall h,ve'been imposed upon ~ng in securities generally. by ~_y govemmenml.au,~or!?y or. by any national securities exchange; (b)the New York Stock Bxchan~c or omer nauona~ scc~urifies exch~c, or any govemmenmI authority, ahall impos~, as to the Bonds or similar obU~a~ions, an~ rna~ial restric~iom no~ now in force, o~ increase materially those now in force, with respect w the extension of credit by, or the charge ~o th.~ net capital requircmcnts of, underwriters; (c)a ieneral bankin~ moratorium shall have been, established by Federal, New York or Nlorida authofit/cs; or (d) a war involvin~ the , of America shall have been declared, or .an) ., or any conflict involviv~ ~ armed shall bo insfi~tned, or .in any way or tl~ existence or enacted bY imposint (iv) any~ or c/f.~t, dkecd~ escalated W such a Oi) any litigation restrain or e~oin the] issuance or sale off the Bonds ~ or securky for or thc validity of'thc :Bonds, introduced in or or indirectly, of , any holders of the~Bonda, or with the purpose mxatlon upon interest to bo reccived i .TUN 2_~ ',9G ~':31P~l~TE~YRITTE~'~CH~_R & NORRIS P. I0/54 I 1 judging, adversely affec~ ~ s~arity for the :Bonds. ; ,(d) Ihere.shatlhav¢ occurred a.y change which, in the reasonable iud .g~,. n.t of the purchasers, rr~t~s ~onabte or un~eliablc any of.the assumptions upon which (i) yield for purposes of Se~on 103 ortho Code, (ii) paymcn~ of debt service on the Bonds or (iii) the basi~ for the exeml~on :of/nteres[ on thc Tax-Exempt Bonds from federal income mxaI/on, is ~(a) In addition.to the provisions of Section 5.3 of the Loan A~rccmcnt, the Owner ag/ecs to~ andhold harmless the Issuer atains, t .a~.y.and all t.osscs, d,ma. ges,.¢xpemes /i tudi r o ble, al and oth biiiues or. (or ?a.,o? m re p? thcrcol), joint or sc-~erat, to ~hich ~e Issue~ or'~c persons described l~.l.ow m this subsection (a) may bccim~ actually liable to tl~d parties under federal or state securities laws or any other statutory law or at mmmonlaw or ~se, ~ising out of or based upon or in any Way r. ela.}ng to any tmm~:~ or misleadi~ staemerl or alleged untrue statem,m or alleged misleadmg Stammenl ~r l:he Bonds other than under r. hc Captions TI-lB I$$,,UB_P[,_ and NO LITIOATION (imofar as the ~ relates to ~h¢lssucr) (the "Issuer sections ) or caused by any omission or ~Icg~ omission from the Pre'~ Official Statement (other than the Issuer Sections) or the ~ Smmmeat for.die Bonds iother than ~he Issuer $cciio~) of any material fa. ct necessary iobc ,stated ther~ia in o~derto make the statemcm made therein, in light of thc circumstances ux~lcr which dicy were made, not misleading. to :thc 'Issuer shall ~:upon- thc same ter employee of.the Issuer.and each person, Section 15 of thc Securities Act of 1933, Securities NxChange Act of 1934, as amen by any '~ed party w third parties defending ag~r~t, or provided evidence, pr action/in respea of any'such toss, the /), or re lting ,in any ]iab aggmgate,~.paid in setd~¢nt of my li whatsoever asse~ forth her~in, provided, wri[mn ~ of ~he Owner. Thc indemnity provided under this subsection (a) .z~ and .condition w each officer, commissioner or ny who comrols thc ISsuer, within the mem2ng of amended, (the '1933 Act") o~ SecQon 20 of the ied (the '1934 Act"). Such indemnity shall also ,~ses whatsoever reasonably and actually incurred a connection with investigating, prep~in!/for or ~duci~g documer~ or taking any otheff' reasonable expense, liability or: claim (or action in respect ity, and shall include any loss to thc extem of the lation, c~mmcnced or thrcatcned, or of any claim ,wever, only if such seRlcrnent is effected with thc (b) The Owner agrees-to alIlos~es, clamag~. upon or [y and hold harmless the Purdmsers a~ainst any and nable legal and other fees and expenses), liabilities or several, to which ~e PurchaSers or tho persons tctually liable to third parties under federal or stye common law or otherwise, arising out of or based tatemen[ or misleading statement or alleged un~ruc staigmcm or alleged misleading. Statement of material fact contained in the Prelim/nary Official ~ or the Official Statem~t for ~ Bqncls un&r the eaptio.,ns, "THE OWN'ER.~AND THE CT." and "APPF.,NDIX A D 'pfion of the Project' and thc actual filancial and PROtt~ _ ' ' - ' : ':' L operational information contained .in ~LPPENDIX B - PRO FORMA K~IANCIA ~UN ~6 '96 03:31PM SE~T ~Y RIIT~R :EIC~tMER & HOR~I$ P.11/54 PROIECTIONS (tl~ "Owner Disclosure") or caused by any omission or alleged omission from the Owner ~D' ..zsclos~e in :the 'iPrgimirlary Official Statement or Official .Statemt~ for thc Boris ~of any ma~ial fact ne~ssary to be stated therein iu order to m~lee th~ s~ made ~ hi ligtE .of the.circumstances under which they wcr~ made, not misleading. Ti~ ~-provided under,this subsection (b) shall extend upon the same and coudirions wench officer, commissioner or employee and each person, if any, who collR'ols the the ~crs, of 1933, as amended, (the '1933 Ace') or Section 20 as ~ (~"'1934 Act'). Such ib_dem~ty and all ex~nses wimIso~ver reasambly .and acmalty incur~ by~ parties in connection with invesfigaiing, preparing producing &x;ume~ or ~-~ny .other reasonable ,' eap~, ~ or claim (or action'in rcsp~-~ thereof), -and skall include any loss io the .extent of the any litigation, comincncecl or,threa;ened, or of any claim provi&xl, however, onIy if such seU. I~ is effected with the (c) Within a reasonable ~ af~ an party of this Section I0 shall h~ve been served with tbesnmraons or have received written noqce of the threat claimed, such.~ified pazty shall, against thc Owner under this Section 10, notify thereof; but .the omission so to nofi~ the Owner shall no~ thai it may .have to any indemnified parry other than pursuar~ Section t0. ~TheOwner .~l~s~! be entitled to ~ Oxmcr so elects wi~ a reasonable ~ after paitics s~eking indernnit~cation 'in such notice so direct, any suit brough~ lo enforce any such claim, and such chosell promptly by :the Owller and reasonabl} illdemuified parry shall have been advised by its betw~n Uh¢ Own~ or another defe~ant indcnmified of such cotms¢l are sufficienl w make it ttudesirabl¢ for '~lnified party and thc Owner and/or another defendant party shall .have the .right. to employ C~'a~r shall not be eniitled to assume the No~i~g contained ~om ret~ini~ additional cotms¢l io represcm such indemnity mayb~ sougl~'heretmder. (b) or shall indemnity n~y be ~ be made :omm~m~ment tu~ liability of this andif all indemnified of any tach interest ; opinion such · respect to which (d) The indan~ny provided by ttds Secti~ 10 he~eof shall be in addition to any other liability :that r~e Owner .may otherwise have heretmder, at common law or otherwise, m-~d is provided .solely for the l~u~t of the Issuer arid the Purchasers, as applicable, each ~oner. offr~r~ ,-.-mployee and con~rolling person referred to therein, and thcir~ respective successors, assil~ and .legal ~eprese~afives, and .no other person sludl acquire or have. any right under or by virtue of such :provisions of this Bond Purchase Agre~men£. .gl_~ ~ ~6 O~:3~PM SEhFF BY RITTER EICH~ER ~ ~ORRIS P.1~/54 (a) The Owner sl~l cause to be paid all teas of i,ssuan~ incurred in connection with the issuance of the Bonds, Which arc set forth on Schedule II hereto. (b) The Owner shall pay its own expenses, including the fees and expenses of its coun~l, except ~ otherwise provided on Schedule H hereto. (c) The Pur~ shall pay all advertising expenses incurred in connection with the .public offering of the Bonds. The Issuer ~ not bc respomible for the payment of any expenses relating to rim issuance, sale and,delivery of thc Bonds. 12. Truth in Bonding. The Issuer is proposing to issue $11,400,000.00 of debt for the propose of rei~mancing certain debt of the Owner relating to the Project. This debt is expected to be l~fid over a period of &irLy and one-half years. The Bonds are being issued al au average interest rate .of % and the total interest to bc paid from the Closin/Date to lanuary 1, 2027 is expected to be $ (assuming that the interest rate on the Bonds shall not be subject to gross-up pursuant to the terms of the Indenture). The source of repayment for this issue will be the payments on the Promissory Note assigned to the Trustee, together with the Mortgage, to secure the Bonds under the Indenture. Author/~! this debt will not have any adverse impact on the moneys of the Issuer available to finance other services of the Issuer while the Bonds are Outstanding. 13. Notices.. Any notice or other cornmuui~ion to be given to the Issuer under this Bond ,Purchase Agreement may be given by delivering the same in writing to the Owner or the Issuer at their addresses set forth above, and any notiee or other communication to be given to the Purch~ers under :this Band Purchase Agr~ment may be given by delivering the same in writing to Wheat Fir~ Butcher Singer, Raymond James & Associates, I~c., and Stifel, Nicolaus & Company, Incorporated, c/o Whea~, 'Fire Secur/fies, Inc., 465 South Street, Suite 310. Morristown, New Jersey, 06830 Attention: Mr. Robert '$pangler, Senior Vice President. 14. Stw. cessors. This Bond Purchase Agreanent is made solely for the benefit of the Issuer, the Purchasers and the Owner (including their successors or assigns) and no other person shall acquire or have any right hereur~r or by virtue hereof. The representations, warranties, and agreements contained herein shall remain operative and in full force and effect and shall survive delfvery of and payment for the Bonds hereunder, regardless of any investigation made by or on behalf of the Purchasers. 15. Govemi~ Law. This Bond Purchase Agreement shall be governed by the laws of the State of Florida. 16. Counterparts. This Bond Purchase Agreement may be executed in one or. more cmmterparr~, each of which shail be deemed to be one and the same document. J~N 26 '96 f53:SESr~ SENT BY RITTER EICHNER & NOP~RIS P. 19/54 17. Eit~iveness. This Bond Purchase Agre. eme. m shall b~come effective upon the execution · ortho acceptance hereof by .the'Issuer and th~ Owner. Veay truly yours, WHEAT, FIRST SECURITIES, INC. RAYMOND lAMES & ASSOCIATES, INC. STIFEL, NICOLAUS & COMPANY, INCORPORATED By: WHEAT, FI~T SECURITIES, INC. 'By: Title: S~nior Vice Pre, sidcm Thc foregoing is confirmed and accepted as of the date first above written. CITY OF BOYNTON BEACH, FLORIDA Title: Mayor C/lIP COVE, INC. Title: 12 i JUN 26 "96 OB:BBPM SENT BY RITTER EIC~R & NORRIS P.14/54 MATURITIES, PRINCIPAL AMOUNTS, INTEREST I~TF~ $CI-W.r)ULE I ].TUN 26 '96 ~B:BBPM SENT BY RITTER EICHNER & NORRIS P.15/54 ESTIMATED ISSUANCE EXPENSES SCi~OULE H ,Bond Counsel Fe~ and Expenses Underwriters, Co-Counsel Trustee's Counsel &Sei Up Trus~'s Initial Accounting l~s Printing and Mailing of POS & OS Underwriters' Compensation Ratings Appraisals Phase I Studi~s A~/$u'uctural Studi~s Market StUdies Title & RecordL~ Misc~llan~us/Confingenc¥ Toufl Costs of Issuance 3'L~6 '5~5 '83:3~PM:~E~fl'~Y RITTER Ei~H~ & ~)RRIS P.16/54 LEGAL 'OPINIONS OF BOND COUNSEL (Clo~ing Dam) ~, F~-st,Secur/~, Inc. Raymond ~hmes & .k. ssochtes, Inc. do .~, ~st S~, I~. ~ Sou~ S~, ~ 310 ~M~w~, N~ 07~0 City of Boynton Beach, Florida C/HP Cove, Inc. c/o Cornerstone Housing Corporation 1350 Beverly Road, Suite 200 McLean, Virginia 22102-3634 $11,400,000 CITY OF BOYNTON 'BEACH, FLORIDA MuK/-F~mily .Housin~ Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apsmnents) La&es and C-entl~m We have acted as Bond Counsel in cormection with the issuance by the City of Boymon Beach, Florida (the Issu ) of the captioned Bond~ (the 'Bonds~). We hr~ve e~mined.the law and such certified proceedings and other papers as we have deemed necessary to-sender this opinion. 'Unless the comext clearly i~ica~ otherwise, each capitalizeg term used in ~ opinion shall have ~ same mtanil~ ~s set ford~ in the hdeature of Trust a~d Assi~rnen~ of Monga~e'damd as of July 1.199g by and between the ,Issuer and Th~ Bank of New York, as Trustee. We r~fcr youto ~he Bonds and to the Indem-ure for a description of the purposes for which the Bon/h ~/ssued, dl¢~ ~the Bonds, d~ mann~ in which ~md times at which the principal of and prcm/um ('ff any) and interco-on the Bonds are payablc, the huerc~t rate or ~atcs payable on the Bonds, fl~e provi~ions under which the Bonds may be purchased or rc&.emed prior to their s~a~'d maturity, and all other dec. ils of the Bonds. , As .w que.~om .of fac~ nm~rial to this opinion, without under.king to verify the same by /nde~ inv~afion, we have relied upon rcpresemafions of the Owner and the Issuer in the l~inancin~ Documemx, the certified pwceedin~s of the Issuer, ccnificafions by public officials, and ..TUN 26 'gE, I~I3:34PM SENT BY ..RITTER EIC~'& NO~S P.17/54 cer~_C~i~ns by the pann~s, em~oyee, s and representatives of the Owner (including, without limir~Iion, cerfificatiom as to the ~uure and use of the Projec~ and Ihc use of the proceeds of thc Bond~). We. havc assumed the accuracy and truthfulne~$ of all public records and of all certifications, .~ and other proceeding-examined by us that have been executed or c~rtlfied by public officials ~ vri,hin the S¢OlX~ of their official capacities, and we have no~. '.mdep, endently verh~i~ thc accura? or ~~ thereof. We.have also ass~ rim genuineness of the signatures appeann~ upon SUCh tmbBc records, c~nificatious, docurncms and proceedings. Further, wc have assumed ff~e authenticity of all documents submitted to us as originals, the ~ness cf all signatures, the conformity re original docomenls of all documents submiued to us as -ccrtifiixi or photostatic copies and thc authenticity of the originals of such latter documents. We do not express ,,any opinion hcr~in concewlng any law other than thc law of the S~ate of Florida and ,the federal law of r. he Unit~l States of America. We have not examin~ and expr~s no opinion as to, thc existence of or title to real or personal :property, and, except as expressly stated herein, we express no opinion as to the creation, validity or -priority of my lien upon, assignnmU of, pledge of or security interest in any real or personal property. We have not reviewed or examined any financial information or other information with respect to theOvag, r or any other .person, and we express no opinion relating thereto. Based upon, and subject to, the foregoing, and on the basis of existing law, it is our opinion, as of rhe.dat~ ~hereof, that: 1. The Issuer :has full legal right, power and authority tn execute and :- deliver the Indenture, :to authorize and issue the .Bonds and to carry out the transactions con~mpliled by thc Indenture'and thc Bonds; ~-d the Indenture, ~¢ Loan Agreement, the Restrictive Covenants, the Bond 'Purchase Agre~em and the Bonds (collectively, tl~ "Isstmr Dec,menus") have been duly ~xid validly authorized, exeaited and delivered by the Issuer, are in full force and effect and, assuming the due au~lofiz~on, ~ecufion ~nd delivery by .the other parties thereto, constitute the valid, legal and binding obligations of the Issuer and, subject to paragr~h 3 below, are enforceable in accordance with their 2. Thc Bo~ls me not requir~ to be registered under the Securities Act of 1933, as amended, and ~ Indenture is not required m be qualified under the Trust Indenuu-e Act of 1939. as 3. Thc right of any holder of the Bonds and the enforceability of the Bonds and the oth~ Is.suer Documa'~s are sabjccl to: (a).the ~ercise and judicial discretion including judicial, limit.-ions on ~ to specific performance; (b) the valid exercise of the constitutional powers of the Unir~l States .of America and of gee sovereign police and taxin~ powers of state or other governmentsl units havLng jurisdiction; and(c)bankn~y, imolvency, re. organization, moratorium or other similar laws heretofore or hercaf-o~ in effect affe~in~ credkors' rights, to ~he exteI~ constitutionally applicable. Enforceability of the provisions contained in the Bond Purch~e Agreement and th~ other Issuer Doclllll¢Itts pertaining Io indemnification may also be limited by-applicable securities laws and public policy. A-2 L:~,R.A~tlOyNTO~IlPA. l~m~ 2g, 1~96 ~TUN .,~tS ~"~ 'I~:~4PM SENT ]BY RITTER E~'CHNER & NORRIS P. 1B/54 4. Thc statements con~ain~ in the Official Sr~emem under the captions :-SERIES t~ BONDS". ,SECURITY I~OR'THE'$EKIES 1996 BONDS," 'THE INDENTUR.E", "THE LOAN AGRt~I~MENT". "THI~ NOTE AND THE MORTGAGE," THE R~TRICTIVti 'COVI~NANTS,~ ~'TAX TREATMENT OF THE SERIES 1996 BONDS," APPI~NDIX C -- ~SLTMMARY-OF ADDITIONAL SELECTED PROVISIONS OF TIlE INDENTUR~ AND LOAN .A(~REEMENT," and APPISNDIX D -- 'PROPOSED FORM OF OPINION OF BOND ~COUNSEL,,i~ofar as su~ staIe, mcn~s purport -to summarize rl~ Act,: the Indenture, the Bonds, the Loan ~eat, ~ Mortgage Note and Mortgage, the Restrictive Covenants imposed on the Project and the ~ taxation of interest on the Bonds, fairly sunm~arizes the legal matters.referred to therein. This opinion is furnished by us to meet c~tain requirements oi' paragraph 8(b) of the Bond 'Parcbase Agreement. No-one other flma the addressees may rely upon this' opinion. Very tmly yours, 3L~i igS ~95 ,~B:B4PM 'SEh~ BY RITTER ETCH~ER ~. HORRt~ P. lgx54 CLOSING CERTIFICATE OF THE ISSUER $11,400,000 '-.CITY OF BOYNTON BEACH, FLORIDA -MUlti-Family Housing Mortgage Revanue Bonds, Series 1996 *(Clipper Cove Al~ilments) E _X!~alT B ISSUER'S GRNERAL CERTIFICATE This Cenifi~e is being execumd and delivered in connection with the issuance and sale of the $11,400,000 principal amount of i~s Multi-Family Housing Mortgage Revenue Bonds. Series 1996 (Clipper Co~¢ Ap~) :(the "Tax Ex,rapt ,Bonds" or the 'Bonds'). Each capitalized ~erm used herein and defined in'~ Indenture of Trust ,and Assignment of Mortgage dated as of July 1, 1996 between ~he CL~ of Boy.on-Beach, Plorida (t~e "Issuer') and The Bank of New York (the '!Trustee'), which is being entered into in conlllxIion with the issuance of the Bonds (the '~Ind~nture') shall have the meaning set forth fi~rein,-unless the conlext clearly indica~ otherwise. ~, We Ihe City of Boyixon Beach, Florida, hereby respech~ly certify as to ~ matters set forth in all of the following paragraphs, except as otherwise provided for herein: (1) is 1h¢ duly elecIed, qualified arid acting _ of the City of Boyl~n Beach, Plofic~a (the "Issuer'), and the signature set forth i~ the space indicaied for his v~me below 'is his lxue and §~muin~ signature- (2) The Issuer is a polMcal subdivision and municipality of the State of'Florida. (5) The proper and correct corporate name of the Issuer is 'City of Boynton Beach, :Florida. ': (4) The person hereinbefore named has not held or exercised any office' or place of ,trust or profit under the .Uniw. d States of America, or any department ~hcreof, or under thc State of Florida, :o~ under any other state govemuzm (cxc~t thc respective office to which he or she was elected or appointed as hereinabove sr. ated) at the time of his or her election or appointment to the respective office to which he or she was elected .or appointed as hereinabove stated, or during his or her term of of~.e. (5) 'The Issuer's seal. an impression of which appears below, is the adoptS, proper and only official seal -of ~ =Issuer. (6) Attached hereto as Auachment A is a true, correct and complete copy of Resolution 'No- , adopted by ~he City Commission of the City of Boynton Beach, Florida (the 'Board") a~ a regular m~ing duty called and held on __, 1996 (the 'Bond Resolution'). A proper :quorum was .present throughout such meeting-znd the Bond Resolution was duly proposed, considered and adoplcd ~ conformity with all applicablc requirements, and all other requirements and proc,,~li,~os (including any and all required po.~in~s a~xl publicatiom) incident to the proper adoption and JIJR ,~S '-96 .03::35RM SEHT BY RITTER EICHRER & RORRIS P.~0/54 :e. ffe, cfiven~ss of the .Bond Resolution/haw'b~n duly ~lled, carried out and otherwise observed. The iBond .Resolution has not be~n ammded, r~aled ar rescinded since its original adoption and is in full ,force ~i~xi eff¢ci on the date of this Certificate. :C/) A public healing with r~specI w file Bonds and the loca~on and nature of the was held:on m, 1996. The thne and locaIion of the public hearing Journal .on __ and __ ., 1996. Such r~wspaper is a newspaper of g~neral 'circulation available to r~ider~ of Such notke of same ms~ner ~ in the sam~ locations as required of the Issuer fo~: other purposes for or:local .law specifies a notice of public hearing requimmen~ (including public heari~s of Pahn Beach County). (8) The certifies that he has received no notice of any litigation, nor, -to the best of'his lw__owtedg¢--~-is there any litigation threau:ned against the Issuer, (a) contesting the creation, orl/afization or co~poraI¢ exis,¢ncc or me bo .u~l. afi,es o.f the Iss~uer or. ,me,en .it!_e present,officers of hh¢ Issuer w their respective otliccs, lo) wncrem an un~avoraot¢ acc~s~on, nulng ~/~,~rlln~ .would mar. crially adversely affect the transactions contemplated by the Bond Pmchasc.Agreem~nt and by the Offmial ,Statement 'relating ~o die BOnds (the ~Official Statement'), (c) which in any way woUld.adversely affect flu~ validity or enforc~abilit~ of the BoM R/solution, or any of the documents execu~ and delivered in connection with d~ issuance of the Bonds to which the Issuer is a pan~, (d) .restraining or.enjoining the issuance, sale, execution or delivery of the Bonds, the collection of thc revenues and receipls of thc Issuer pledged or w be pledi~ed to the Trustee w pay the principal of and ~erest on the Bonds, or the pledge thercof, (e) affecting the Issuer which calls inw question or affects th, v idiV or ar ,b iV or th, th¢ p,o . dings and a a? authorized to be issued, sold, and dehvered, or any documents executea vy m'~ on venau pursuant to the Bond Resolution, or the performance by the Issuer of i~s obligations under such documcl~, or (f) affec~in~ the tax status of .the Issuer or the Bonds and t~ interest to be paid thereon. (9) Thc c~rtifies that each of the documents in connection with the Bonds .to which the~Issuer is a party, th~ compliance with the ten'ns and conditions thereof and the consummation of thc transactions therein and in the Official Stammcnt contemplated to be performed by .lhe Issuer, do not ~nd Will not (i) w the best of his knowledge, vioh~e any law or any regulaion, order, .injunction o~ decree of any court, governmental body, agency or other public inswamentality w which the Issuex :is subject, or '(ii)result in a conf4i~ with or a breach of any of the terms and conditions of, or constitute a default under, or, except as contemplated by the Indenture, result in the creation or imposition :of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the propcrt/~ ar assets of the Issuer pursuant ~o the terms of, any indenture, morzgage, agreement or other imllumem w which the Issuer is a party or by which the Issuer or any of its properties is bound and of which we,'haV~ knowledge. No approval of, notice £o, regiswaion o~ fil/n~ with or other action by any .govewmenla4 authority or agency is required hi connec~io~ with thc execution or performance of any of such doam~s'bY the Issuer, except such as may be required under applicable "blue sky' or securities laws in connection with the offering and sale of ~he Bonds by thc Purchascrs. No a~thority or proceedings for thc issuance and sale of the Bonds have been repealed, revoked or rescinded., (10) · , :~s , h~s officially caused thc Bonds ~o bc executed in ~be ~,r~of~,the lssue~ by~ .manual-o~ facsim~e ~signature .(and if by facsimile, which facsimile ~m~e-hc,,does by these,prese~adopt as and;for his ow~) and an impression or facsimile of the ~ seal of ~hc Issuer to be impressed,or otherwise reproduced uhereon, and attes~t by the manual ot f~..S~e .si~nat~c of _, as (and if by facsimile, which facsimile .~ ~he riots by these ~--res~t.s adopt as and fo~ his own).' ~(11) Thc Spechncn of the Bond atac~d ,hereto as Exhibit C is a true and genuine specimen of suCh Bond. ~ (12) ~e Indesm~, the Loan A~eemen~, the Bond Purchase A~reement, the Official ' $iate~ent, and the Tax Regulaloty ~emcnt 'have bccu executed in the ,~m¢ of the Issuer' and on its beJl~by ,as _ .'by his mamlal si~natut'e, arid thc fi_r~naing statemellt required .Jo be.executed and delivercd by thc Issuer has also been executed in thc name of the Issuer and on its ~-by . as _ . by.his mamial sil~tature- -(13) Thc c~rporale seal of the l~su~ has been impressed on the Indenture, the Loan A~-reemcnt and ihe Tax .Rc----------------~latory ~ and atestecl by ., as , by his manual s~e. ~ Indenture, .the Loan Al~reement, th~-Bond Purchase At~reement, the Official Statemcnt~an~ the Tax Re~llatory ~cmeni, tof;ethcr with all closing certificates and financing statements, areherein sometimes colleaivcly .called the "Bond DocumenIs." (14) On the date of delivery of the 'Bond DoCUments, which is also the date of this Ccnifica~ we are the ~tly chosen, qualif~l, :and acti~ officers indicated on thc Bond Documents, and r -- on this ~, and ate. duly awho~ to ca~e ~c Bond Documents to bc ex~cuted as recited above and.to'effcct all other transactions contimplat~d by the Bond Documents. (15) l~leither lhe Bond Resolution n~r any other pwceedir~ of the Issuer (a) authorizing thc issuance and sale of the Bonds, ~) appro-,4ng the Bond Documents, or (c) authorizin~ the execution and delivery (where applicable)of thc. Bond Documents on behalf of the Lssuer have been rescinded or t-epcaled or modified and nmended in any r~-pe~t, and th~ Bond Resolution and such other proceedings are in full force and-effect on the ga~ l~eof. ' (16) Thc _ccllifies lhal, ~s of the date of this Certificate w thc bes~ of his ~knowledgc, t~l~suer has the powen a.nd lawful authority to issue the Bonds, w execute and deliver thc Bond D~ and all requkemems .and conditions spccified in the Act, and all othe, r laws and · et~dafio~ apglicable to. the adoptt~ of the Bond tL~:olution and (where applicable) thc Bond-Documents : have becn fillt=illed- : (17) To the. best o~ our knowledge, no ,event which (wiuh or without no~ice or lapse , of ~Jmc or'both) would constitut~ an l/vent of Default with respect to the Lssuer tm_der any of the Bond Doannents h.-,.~ occtured and is continuing as of thc date hereof. The IsSUer will not take any action or onfit to .t~ anyaction requested by the Trt~tee to bc taken, Which action or omission wlll in any way .... ,cause the pwceeds from the snk~ of thc Bonds W 'be aPPlied in a manner other than as provided in the L:~RARItO~N'd..EI~BPA- J"~ ~, .zTLIbl L:~iS ".9~. ~EI3:36PM SEINT BY RITTER '~i'~H~R & MORRIS P.~2/54 I (1.8) Each and,all of r~e.repre~nuriom and warramie~ made by th~ Issuer in the Bond Documtmis in-~nno:~on with th~ sale:of the Bonds are Lrue and corr~r on the dare hereof as if the same -w~ made 'on the darz hereof. , whosc true and genuin~ signature appcars below, is'hereby auihoriz~ tomk~ all actions and to do all things on behalf of the Issuer which are ~ or permit~d .and= ~ terms of thc ~Bond Docum~. *~0) ThC Issuer-is not now in default, nor has the Issuer been in default at any time ~.~~r 31, I975 as ~o principal or inter~s~ with respeat to any obligalions issued by the Issuer or ~or so the Issuer. (21) (a) Pursuam ~ and i~ accordar~ with the Loan Agreement, the proceeds of the ~Ban~ .are to,be.loaned to the Owner in order to ~efumn~ a portion of the costs of the acquisilion and ~construcraon by thc Owr~r of a multifamily housing proje~ and f~:ilides funotion~ly related and ~te thor=to loca~ in thc City of Boymon B~aoh, Florida (the 'Project'). (b) In his capacity as the duly elected, qualified and ac~ing of the ~ of B°yn~on Be, ach, Florida, hereby approves the Bonds and thc Project. WITR"~$ ,our official signatures in execution of this Issuer's General Certificate, and the seal of.ll~ Issue, all as of this _ day of Suly, 1996. Title: ;EXEIlBIT A - Bond Resolution ,EXItIBIT.B - Notices of Publication ;IDaflBIT C - Specimen Bond B-4 L~DJ~'ll]OYlqT~PA. ~ 26, 1~ JUN ~2G ~B,:-~TI~M SE~NT BY RITTER EICF~'~'R & H~RIS P.A3/54 E~~ C C~OSING CE~T"~ICATE ,OF OWNER " r" hereby certifies, The und~ C/HP .'Cove, Inc. (the Owrie: ), by , represents and warl-~n~ to .the Issuer and :the Undo'writers named in the OfQcla] Slatement described below, as follows: (1) To tl~ :best :of our.knowledge, thc represen~fions and warranties of the Owner contained · in the Bond Purchase Agreement among the Owner, the City of Boynton Beach, Florida (th,e 'Issuer'') aud the Under~aiters mined ~in,r~ OCncial-SW. ement rderrcd to below (the 'Bond Purchase Agr,. cement") are.tree and correct in all material respects- (2) To ~h¢ best of our.knowledge, the Owner has materially compiled with all agreements ~ satisfied al'[ maler'~ condin'o~s co~ in the.Bond 'Purchase Agreement for the Bonds (as defined below) on its part robe performed or sari.vied prior.w thc date hereof. (3) To the best of our-knowledge, there has not been any material adverse change in thc financial position at 'which affects the operation of thc Owner or the Clipper Cove Apartments in its businesses or any nmtefial adverse change affecting the housing project in the City of Boynlon Beach, Florida .known as the Clipper Cove Apartments (the "Project') which would impair the ability of the :Owner to ~ the Pwjeci as con~emplat~l by the Loan Agreement between file Owner and the Issuer relating to file issuance by fll~ Issuer of itsl $1'1,400,000 principal amount of its Multi-l~amily Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) (the 'Tax, l/;xempt Bonds" or the (4) *~ztc in:~on ~elatJ~ to the Pwject, thc Owne~, Housin~ Paz~neTsb~p, Cornerswne and Property Asset ManaS~ztent of l~lorida, ]nc. in thc Prel~ Official Statement and thc Of~cial Statement do~s no~ ~ any'.unmm statement of a ~ fa~t or omit to state a material fact with respect to the 'Project, the Owns, .Housing Parmership, Come,one or Property Asset M~nsgcment of Nlorida. ]~nc. neces~ in order ~o make the statements made with ~espect ~hcreto. in the light of the circumstances under which ~hey were made, not misleading, provided that no representation is made conceroin~ the information under the captio~ "THE SERIES 1996 BONDS," 'TH~ ISSUER,' "THtl .INDENTURE,' 'THE LOAN A/3REEMENT,' 'THE NOTE AND MORTGAGI/," 'THE RESTRICTIVE COVENANTS," "NO LITIGATION' (insofar as the same relates to the Issuer), "TAX TREA~r OF S]~F-,S ~199~ BONDS,' "APPROVAL OF L]~GAL MATTERS,' 'CONTINUING DISCLOSUI~,* '~RATIN~,* 'UNDEI~WP. ITING' AND ~MISCELLANEOUS,' 'APPt/NDIX C" and "APPEI'~D]~X D" ~xce~ ~fila~, to thc knowledge of file Owner, such secQons do not make an untrue s~te. me~ of.a ~:la~ial fact or oink 1o s~atea'fact necessary in order to make th~ s~atements rrmde in such secQons, in light of .the circumsmnces unde~ which they .were made, no~ misleading. (5) To the besc of our knowledge, there is no action, suit, proceeding, inquiry or illvesfigatio~ at law or .in equity, or before or by any c. our~, public board or body pending oi, to the best of our ]/xlowledge, thrU_ ~d again.st or.affe.~ti~ ~ Ownet, nor, to the best of our knowledge, is there any b~s/s ~, wherein an unfavorable.deCision,, ruling or finding would, in any way, adversely affect the-wansactio~ contemplated bythe .Loan'Agr~m~nt or which, in any way, would adversely affect the dev¢lopme~, construction or operation of'rely of th~ Project or which might result in any mar~rial r :adve~se:.change in thc ~s, operations, pr~opertia., assets, liabilities or condition (f~,m.cial or other) ~of the ,Owner or ,which afl. ts/he information conc~min~ the Owner or the Project (insofar as such ~n~orJ~l~on p~l.t;:~inR r~O .t~ :OwIICF el' ~xle Project) contained in the Official Smement. (6) ~ ~in~ry Oki=~c)al Star~rient was deemed fl~lal by the Owner for purposes of Rule 15c~12 und~ the Secures tbrchange Act of 1934, as amcmcl~l, and such prel~m~uary Official Statement was delivered tothe Unde~vrkers for the above,-referenced Bonds prior to the purchase thereof by the purchaser. (7) TIl~ (i) is a nor!profit corporation duly formed and existing under the laws of thc ,Sram of :~ 'and it is duly authorized to execute and deliver thc .Loan Agreement. the Restrictive Cov~ants. the 'Note ~ the Mortgage (eaxch as defined in the Loan Agreemen0 and the FHA Loan Documents, and ,(ii)the ownership-and operation of the Projec~ will not violate its Articles of Incor~ration or By-Laws. . (8) Thc Own~ has duly ax~ated ~ delivered ~ certain Loan Agreen~nt dated as of July 1, 1996 (th~ ".Loan Agreera~nt"), among the .Owner and thc Issuer; and that certain Declaration of Restrictive ~Cov~u'lts as of July 1, 1996 (the ~Tax Regulatory Agre~meIlt"), amoxlg the Issuer, tha Owner and Th; Bank of New York, as Trustee; th~ Bond Purchase A~ent; thc Continuing Disclosure Agxeemer~ ~ as of ~Iuly 1, 1996 b~mm the Owner, the Trustee and the Dissemination Agcn~ n~rned r. herein (the 'Disclosure Ag~e~II~nt"); ~¢ Note and the l~oIt§age (as defirmd in the Indenture); the Certificate dared the.dam hereof (the "Tax Certificate"); and thc execution and delivery o~f the Loan Agreement, the Tax Regulaxory Agreement, ~h¢ Bond Purchase Agr~mem, the Tax Certificate and the No~¢ and Mortgage and the p~rforrnanc~ by the Owner of its obligations thereunder .will not COnstitute a breach of or defauk by the Owner under its articles of incorporation or by-laws or r~ term~ and p~visions Of any agreement or commitmcat to which the Owner is presently a party or by which L~ Owner is prcselltiy boule1. ~IN WI~ WHEI~OF, th~ undersignecl have signed this certificate as of July __, 1996. C/HP COVE, INC. By: Title: C-2 .;TUH *26 ~96 :03:38RM SENT BY RITTER EICHHER & HORRIS P.:~5/54 i OPINION OF CO-COUNSEL TO OWNER ~ITD 1996 -City of Boynton Beach 100 East Boynton Beach Boulevard .Post Offic~ Box 310 Boynton Beach, ,Florida 33425 The Bank Of New York, .as Truste~ ¢/0 The Bank of New York Trust Company of Florida, 10161 Centurion Parkway 2nd Floor Jacksonville, Plorida 322~6 Wheat, First Secu~ties, ~In¢. '.Raymond Jon~ & Associates, Inc. Stifel, Nicolaus & Company, Incorporated c/o Wheat, First Securities, Inc. 465 South Street, Suite 310 Morristown, Now Jersey 06830 C/I-rP Cove, Inc. cdo Housing Partnership, Inc. $19 Clematis Street. Sukc 409 W~t P~]m Beach, Florida 33409 $11,400,000 th~ City of Boynton Beach Muld-l~amily Housing Mortgage Revenue Bonds Serie~ 1996 (Clipper Cove Ap~tuients) Ladies and Gentlemen: This .finn is special counsel to C/HP Cove, Inc. (the 'Borrower',), in connection with the isnnncc oftl~ above-referenced bonds (thc 'Bonds")- In acting as such counsel, and in order ro re~icr this ,opilliOll, we hav~ exar~ined; (a) Inde~ of Trust and Assignment of Mortgage, dated as of Suly 1, 1996, by and between theCity of Boynmn Beach, Florida(the ~Issuer') and The Bank of New York, as trustee (the 'Trustee'); ~ 2S '96 I~3:~PM SENT BY RITTER £IcHNER & NORRIS P.26/54 ,ih) Loan Agreemcnt~ dared ss or luly I, 1996, baween thc borrower and tho City of Boynton Beach, Florida (th~ 'Issuer"); Promissory Note. dated July _, 1996. exccutecl by the Borrower for the benefit of hhe id) Mongage and 'Security Agreement, dated as of July 1, 1996, by the Borro ~.w~r in favor ,,of,the Issuer; i(e) ,DeClaration of Res~i~ive Covenants, dated as of ~Iuly 1, 1996, by r~e BorroWer ami for ~the benefit of the Trustee and the Issuer;. (f)' ,[Tax Regulatory Agreement] daed July ~, 1996, [among tha Borrower, the Issuer and ~thc Trustee]; (§) A copy of the Articles of Inco~omIion of the Borrower flied with the Florida Department :of State on September 29, :1995 and all amendments thereto, including specifically the Articles of ~ent to Ai'dcles of incorporation of C/HP Cove, Inc. fflcd with the Department of State on June __ 1996 all as certified by the Secretory of Stare of the State of Florida on July __, 1996 (collectively, the .Articles ), (h) The 'Bylaws of the Borrower together with all amendments thereto as certified by the s~. Of the Borrower on the,date hereof; ~cl (i) Certificate of Good Standing of the Borrower, dated July __, 1995, issued by thc :Secretary of State of the State of Florida with respect to thc Borrower (the 'Certificate"). fi) General and Nonlitigation Certificatc of the Borrower, dated July __, 199'6, auached hereto as .Exhibit A; 'The documents identified in paragraphs Co) through and including (f) above are hereinafter collectively referred to as the "Borrower Documents." The documents idexttified lit paragraphs (g) ~thrOU~.~nd including 0) above are hereinafter collectively referred to as the 'certificates." 'We ~lso have ex,mined ~11 other documents and records which we dcen~ed ncce~sary to the furnish~ of this opinion. In .conducting our examination, we have assumed the gewdrieness of all signatures, other uhan thc :signatures of ~ames H. Edmondson, on all doc,,raents submitted to us as ~originals, and.the conformity :to originals of all documents submi~ed to us as conformed copies or ~photocopies. As to questions of fact Cout not legal conclusions) mau;rial to this opinion, we have made no independent investigation ~,d have relied solely upon thc representations and warranties xv~_cle by the .Borrower in 'the Borrowcr Documents and the Certificates and upon other facts of which we have knowledge. The phrase 'to our knowledgc' as used in this opinion means solely (i) the knowledge derived from the Borrower Documents and the Certificates, and (ii) the actual presem knowledge, as of the date hereOf of the auomeys .in our firm 'who have devoted substantive attention to the Ir~n~actions collated :by ~the Borrower' Documents, based on inquiry of James H. F_Amcoclson, President of the i JL~N E~G "gG ,~03:~BPM SENT BY RITTER EIO-~R ii MORRIS P.aTx54 Borrower, but not based on any independent review or investigation of court dockets or governmental records. In .reaching the opinions set forth below, we have assmed that (i) each of the Borrower Documents ami addiiional documa,as as cor~mplated by the Borrower Documents, and the performanco of the obligadom,thereandcr, is within the power of the parties thereto, other than the Borrower, and has ~been du4y .a.acl'zalidly alnhofized by eadl such party, oilier than the Borrower; (ii) each of rile Borrower '~, ar~.any other doamienli relating to file Bonds, has been duly authorized, executed and · deliv~:d by each party thereto, exc~pt the Borrower, and is the legal, valid and ,b~rling obligaion of each ~ fliereio and is enforceable a~almt each such pan7 in accordance with i~ terms; (iii) each Docume~ by m~y party, other than the Borrower, will not violate or be in conflict with, or require nonprofit-corpOratiom authorization fo~ities other than those formalities required under the orgauiz~o~l documen~ of such corporariom. In '.this regard, we tmdersumd that you are relying on an opinion, dated the date hereof, of the ]Law Off/ce of Frank Brady, P.A., Florida co, m.~el to the Borrower, to the effect that (i) upon excc~ttion an~ delivery of.dm Borwwer Documenus by the Borrower and the other parties thereto, the ~Bon'ow~ ~ will be-the legal, valid and binding obligation~ of the Borrower enforceable against ':the ~Borrower -in accordance with their respective icrrns, (ii) the Borrower is duly org~ni;,~xl, validly existing and in good standing ss a nonprofit corporation under thc laws of the State of Florida, (iii) F~orida hw dc~s not impose on Florida nonprofit corporations authorization formalities other than those formalkics requited under the orgmizational documents of such corporations and (iv) other matters s~t forth therein.. Based.alton th~ foregoing, we arc of the opinion that, as of this date: 1. ~ ~~:~.~.~w~r ~.au~ to ~ ~ ~ ~rfo~ its ob~om ~r ~ ~~ ~~, ~ ~e ~wer Doc~ts have ~en ~o~d by ~1 n~s~ action on ~e ~ or ~ Bo~wer. ~ Boaow~ Do~ts have bc~n d~y cx~t~ ~d deli~r~ by ~e Bo~ow~. 2. To o~ ~wl~ge, ~ ~ution, deliv~ ~ p~o~ by ~e Bo~ower of ~e Bo~o~r ~, ~ ~e co~~~ of ~e ~fio~ comemplated by ~ Bo~ower D~~, do ~ ~ ~ ~t ~i~ ~, or core,irate on &e p~ of ~e Borwwer a violation of, ~ of or ;~ ~r (i) ~ Article, (fi) ~Y con~em, ~re~nt or o~or ~t~nt to w~ch or~ or o&~ l~d r~m~, or ~y jud~ent, order or d~r~ to whi~ &e Bo~ower o~ ~e -m~ti~y ~ pmj~ o~ by .~e Bo~ower ~d ~o~y ~o~ a ~e Clipper Cove 3. To ~ ~wl~ge, ~ ~ no.ffii~ with, or ~me~, appro~, pe~it, ~ogmfion or order of, .~y f~ ~, f~ ~Y ~ o~er f~al gove~ age~ ~t ~r~ady ~ or ob~'~ hr~u~ wi~ r~p~i w ~e Borwwer for ~e v~id au~ion, ~fion ~d JUN ,86 '~S ~:39PM 'SEHT BY RITTEE EiCHHEE & NOPJBIS P.8]B~54 delivery ..of the Borrower ~ bY the Borrower or .for the performance by the Borrower of its .ob '!ig~ons-ltu~retmder, v~ exp~'ess no opizion in this paragraph 3 as io any matter governed by federal or state sccm'itie~ or ~vizo~ law. 4. To our lmowted~, there curr~tly exist no lawsuits, proceedi%~s or investigations (a) with ~ ~o which ~h¢ Borrower has r~eived service of process or o~. ~.z written n.o~ic~ or ..(b) the l~rOjeci orthe ~al ~ or operallons of lbe Borrower, or the transamuons COlllempiazea oy the Borrower DOC'~rnents, or which hi any way would adversely affect the validit~ or enforceabiliLT of the Bo~rowe~ D~Ls, o: whicla would preclude the Bozrowcr's exex:ution, de. livery or performance of :he Borrower .Docum~. ' The .;foregoing opinions ar~ subject lo the £ollowhlg qualil~cations: ~(a) Wa assume t~¢ ~ a~l conditions of the Borrower Documents have not be~n ameoded, modified or suppl~ by any other agreement crt understanding of the parties or waiver of any of the material provisions of the Borrower Documents, although to ouz knowledge no sam amendment, raodih'calion or supplement has beea made by'the {b) We express 'no op'mion as .to the.laws of any jtttJsdictions other than (i) the laws of the United $~a~s of America, .(ii) with respect to the opinion $¢t forth in pamgzaph 1 hereinabove, the laws of · State of Plorida aod ('fii) g~e~al ~principles of contract law. The opinions expr~sed above concern only 1~ affect-of r~ laws .(¢xchidirig ,~he prin~iples of :o~ilict of laws, if any) of the United States of America and gimeml.~les of contract law, as applicable, 'as currently in affect. We assume no obligation to st.~ppl~aer~ lhis opinion if any applicable'taws or.fa~ change thc opiaions expressed above a~,¢r the date of ~ opinio.a. :(~) We tenor no opinion as to title to the Proj~-t, the sams of iicns on thc Project or its revenues,,or m priorities with respect thereto. (d) We render no opinio~ as to anymalters other than as expr~sly set forth above, and, in conjtlncIion :herewith, ,,ye specifically express no option as to the issuance of the Bonds o~ the imctest t_hereon tinder'any federal secuzitie~ laws, in¢ludh!g but not limit~ to, the Semlrities Act of 1933, as sme. lKlecl, ancl the Trust Indergllre A~ of 1939, as amended, or any state securities or "Blue Slcy~ law. (e) We r~ier no opinion cozr. arni~ tax ma~r~rs zelating to the Borrower under federal, state or local.tax laws. if) We ,express no oph~ion under United Sta~ bankruptcy laws or state insolvency laws concer~_ in~ ~ ma=ers. TI~ opinion :is provided solely for :he bemd'~ of the addressees in connection with :he transa~on described above .and may noi be relied upon by, or furnished to, any other p~son without our prior - approval. ~e~fully submiued, D-4 L:\e. Ab'LBOYI~OI~L~b'~IIPA, lu~ ~. l~ ~ ~_~ "96 :~03:.~ ~ZTTER :'E-I~R & MORRIS P.29/54 X.Hi [T A GENERAL '~D NONLITIGATION CERTIFICATE C/I:IP Cove, Inc. a Florida nonprofit corporation (th~ "Borrower,) hereby cenilies to for reliance/n conuecQon w/th its opinion letter (the 'Opinion') as follows: 1. ,Thc~ ~ tmcl pedo~c by the Borrower ofthe dbcmncnts lis~cd below (colleaively, the "Bon~wcr ~") and the'consummation of thc transactiOll~' contcraplated by the BarroWcr ~Documcnts, ,ilo noi and will no£ corfflict with, ,or constitute on thc pan of the Borrower a of, breach of,ordef, m~;cmd~ (i) th~ :Articles of Incorporation of the Borrower as filed with the - " ' "' 'OCt lmown as file Clipper,Cove Apartments .(the Project ) ~s subj . ::(a) .l~an Agreement, dated as of luly 1, 1996, between the Borrower and the Ci~ of Boyr_nton Beach, Florida (thc 'Issuer"); Issuer; 'Promissory Note, dated'July _._, -1996, executed by thc Borrower for the benefit of thc Mortgage and Security Agrccmelu, datcd as of July 1, 1996, by the Borrower in favor (d) ~DcchraionofRestficflveCovenams, dazed as .of July 1, 1996, by d~¢ Borrower and foz ~he benefit-of, The Bank of New York fl~e 'Trustee") and the Issuer; ~(e) [TaxRe~atory Agreement] dated July __ 1996, [among thc Borrower, fix Issuer and the Trustee]; 2. .,All aciions necessary to be taken by .the Borrower in conuection with the Borrower's execution and ,dClivet~ of 6ae ;Borwwer Documents have 'been taken, and no additional approval, al~hori~on, consent or withholdi~ of objection on thc pazt of any other cnQty or any federal or state govemmcnl~ body is-zeqUircd asa condition to the Bon-owcr's execution and delivery of thc Borwwer The, re is. no filir~ with, or come~ spproval, :permit, authorization or order of, any court ;or federal body or other federal govemmenial aSeacy no~ already filed or obtained.which is requir~ with respe~.W the Borrower forfl~ valid auihorization, execration and delivery of thc Borrower Documents .by the Borrower or for-the performance bythe Borrower of ils obligations thereunder. -knowlcdge, ~cateoed ~ainst the BorroWer, which, if advcrsely de~rmmeo, coula materially aa ersc~) affcc~-the Borrowc~.-fl~e Projea o~ r~he financial 'condifiom or operaQons of thc Borrower or the D~ IZ~,A~O¥~'O1T~EO~aPA. ~uae ~, z~ JUM ~6 "gE, 03:40PM SE~T BY RITTER EICHMER & HORRIS P.38x54 ~u-ansactionS co~templat~l by the Borrower Documents, or which in any w~y would adversely aff¢c~ the validity or :eaforccability of r~e Borrower Docur~nt~, or which would preclude the Borrower's' execution and delivery of th~ Borrower Docurn~c~. · This General and Nonlitig~tion Certificate is rnsd¢ as of the thy of July, 1996. C/tiP COVE, INC. By: Namc: 3ames H, Bdmondson Title: President ~E6 'gE, 03:481PHSENTBY RITTE~EICHNER& NORRIS P.31/54 July _, 1996 Boyat_ on Bear~ Florida 33425 ~Ttm Baak of New York, as Trustee clo The Bank of New York Trust Company of Florida, N.A. Second Floor 10161 ~North Centurion Parkway J~lc, ~ofida 32256 Wheat, First ~.cufi~, Inc. Raymoad lames & Assodatea, Inc. Stifei, Nicolans & Company Incorporated c/o Wheat, ..First Securities, Inc. Suite 310 465 South Street Morristown, 'New Je~ 06830 $11,400,000 City of Boynton Beach, Florida Mulfi-P~miiy Housin~ Mortgage Revenue Bonds Series 1996 (Clipper Cove Apartments) Lad/es and Gentlem~: ~ cormecfion ~ r~ delive~ office abov~-referenc~ bonds (&e 'Bonds"), we have acted as special tax cotmsel w:C/lIP Cove. Inc. a not-for-profit corporation formed under ~ lawSof ~ S~ate of'Florida (~ "Corporaiion',) ~ respect to the rcfumndng of Clipper Cove Apa~un~. a 384-unit remal apartment.project loca~d in fl~ City of Boynton Beach, Florida (the 'Project'). In .acting '.as such .counsel and in order to render this opinion, we have exaroined and relied exclusively-upon tlae fiallo~ing documents: (a) ~the dem-miration leater, dated April 3, 1996, from the Internal Revenue Service (the "IP~") to the Coqxa-ati~a (the .'Determination Letter"); (b) the Corporation's 1023 - Application for Recognition of Exemption Under Section S01(cX3) of the Internal Revenue Code (flae "Application") to .the I~, dated February $, 1996, and execuIed by the Corporation's Pre, idem; (c) the Corporation, s articles of inco~or~on, dated September 29, I995 (the 'Articles"), and certified by the Secretary of State of Florida; and D-7 I~RAL~o¥~rob~LE~n- ~me ~, i~gs JUN '~6 "96 [~:41PM SENT ]BY RITTER EICHNER & NORRIS P.38/54 ~e ~Corporation's Bylaws, as amended, certified as tru¢ and correc~ by thc Corporation's The documents identified in (a) tl~ough and including (d) are referred m collectively as the "Corporation Domuneats." -In ~ our examinahon, we have assumed, without investigation, the compl¢{eness of ail Corporation Dommm. nts ,and :that no other instruments exist which would modify the Corporation -COlffO~ to ~vri~ls of~! docttmellts submitted t0 lls as COpl~. We also asslll~ [hat the l-rojcCt I~ operated in acc~r~ with the requirements of the Corporation Documems. ,Based solely upon the forgoing, we are of the opinion that, as of this date: 1. Tim Corporation is orgaaizcd as a charitable org~niTation described in Section 501(c)(3) ofthe Int~ Reveauc Code of 1986 as ,amended (the Code ), ex~mpt from federal income tax. on under Section .~ll(a) of the Code 'and is not a private foundation under Section 509(a) of the Code. 2. According to the Articles, no pan of the income or principal of the Corporation shall inure to the benefil of any direcior or officer of the Corporation or any other private individual. The operation of :the Project by the Corporation in the manner described in the Application constimms a charitable activity within the meaning of the term ~charity" used in Section .501(c){3) or thc Code and the regulazions thereunder. 4. Th~ acquisition, ownvzship and operation of th~ Project by the Corporation is substantially rented te the corporation's per/ormanc~ of its exempt functions ~ncl any moneys r~ceived by the Corporation from the operation of the Projm in accordance with the Corporation Documents will not :comritute uraelzted trade or business income within the meaning of the Code and the regulations flmreunder. In re~dng thc foregoing opinions, we express no opinion as to laws other than the laws of the Unir~ States of America. This opinion letter is b~ing dslivered to you pursuant to the provisions of the documJmIs rel~ above, ,and is ren~ed solely for tl~ benefit of the p~nies to whom it is addressed. This opinion .shall not be used or relied upon by any other person or entity other than the persons to whom it is addr~s~ or in any other conneciion, and is not to be quoted in whole or in part 'in any letter or dom~l~llt.s withou~ the prior written.consent of this firm. Very truly yours, By: D-8 JUN ~6 'g6:8B:41PM SENT BY RITTER EICHNER & NORRIS P. BBz54 July_, 1996 City.of Boynron Beach 100 Bas~ Boynt0n Beach Boulevard Posi Office Box 1~10 Boynton Bcach, :Florida 3:3425 The B~k of New York, as Trust~ c/o The Bank of New york Trust .Company, N.A- ~1016'1 Cenmcion Parkway 2nd Floor SacK~onvillc, ,Florida 32256 Whea Ni~st Secur/ges, Inc. Raymond Jones & Associates, Inc. Stifel, Nicola~zs & Company, Iuco~oraed c/o Wheat, Fi~ Securities, Inc. 465 South Streot, Suite ~10 Morri~mwn, flow Jersey 06830 C/HP Cove, inc. c/o 'Housing Parmership, Inc. 319 Clematis Street, Suite 409 W~t Palm B~aCh, Florida 33409 $11,~00,000 The City of Boyn~on Beach Multi-Family Housing Mortgage Revenue Bonds Series 1996 (Clipper Cove Apa,i~uents) .Ladies and Gentl~nen: Lam Florida counsel for C/lIP Cove, Inc., a.florida nonprofit corporation (the 'Borrowgr") in connection with thc issuance of the above-referenced bonds (the 'Bonds"). In acting as such counsel, and in order to render this opinion, I have e~amine, d: (a) i..oan Agreement, dated as of lul¥ 1, 1996 (the "Loan Agreement'), between th, :Borrower.m,t the Cit~ of Boynton Beach, Florida (uhe "Issuer'); (b) Promissory Note, dated July ~, 1996 (the "Note"), executed by the Borrower for the benefit of thc Issuer; (c) Mortgage and Securio' Agreemerit, dated as of July I, 1996, by the Bon'ower in favor -of the Lssuer; D-9 JUN ~6 '96 03:.4F_.PM SENTBYR~TTER EICHNER & NORRIS P.:B4/54 (d) ~ of Reslxicfivo Covenants, dated as of July 1, 1996, by the Borrower and for the b~cfit of, Thc Bankof New Yo~k the .("Trustee') and'the Issuer; (c) {Tax--fy AS!eeme. nt], dated.July ~, I996, [among the Bo=ower, the Issuer and the'Trustee]; (0 A cop), ofth~ Arfi~ of lnwr~or~on of-~ Borrower ~ed with file Florida __ specifically ~h¢ Ar~/cles of of State on ~eptember 29, 199S of State on July of file State of l:]orida on July ~, 1996; (g) Th~ Bylaws of file Borrower together with all amendmenis thereto as cen!fied by the .$¢~r,~ary of fl~e Borrower on lhe date l~reof; and 0~) Ce~cate of Caood Srmlding of file Borrower, dated Suly m, 1995, is.su~cl by thc Secretary of State of the State of Florida wifil .resp~t w 'the Borrower ,(the 'Certificate"). The documents identifi~xl in paragraphs iL)~through and including (a) above are hereinaRer collectively .referral to.as thc 'Borrower Do~." I have also examined all 'other doannen~ and records which we drained necessary to file furnishing of :this opinion..h conducling my examination, I have assum~ the genuineness of all signam~ onall documeats submiv.~d to m~ as originals, and tl~ conformky to originals of all documents s~bmirted w me as conformed copies ot PhoW~opies. In re_~:ching.the opinions set fonhbelow, Ihave ~ssumed that (i).each of file Borrower Documents and addition,'d do--ts as conmmplated by fil~ Borrower Documents, and th~ performance of thc by ~ ~ pa~; 0i) ~.h of the Borrower,Docum~,ts, aha any omer aocum~-nr~ ~=mm~ ,- u~. ,-, .... has'been.dull/aufilo~, executed and deliv~d by each,party .thereto and is the legal, valid ancl binding obligation of each pan'y-flmmw, other than the Borrower, ,and is enforceable ag~in.~t each such party, other glad the Borrows, hi accordance wifil its terlIls; (iii) each natural person executing or approving fl~ execution of any immmmm, docmner~ or agr~ment related m herein is legally competenI to do so; andtiv) th~ ~,mcufion, delivery and tm'iormm~ of the Borrower Documents by any parry will not violam or be in ¢or~lict with, 'or require consenI under ar6, agr¢~aents or other documents or any judgment, -decrees or other orders ~o which any parlyis a pa_~'y or:to which 'any such party may b¢ subject. Based upon d~¢ foregoing, I'am of file opinion that, as of this date: 1. Each of the Borrower Documents are :the legal, valid and binding obligations of the Borrower arad are enforceable in accordance with their terms. 2. Tile Borrower is a rionprofil co.ration duly org~ni~cl and validly existing nnder Florida hw with tiff[ power w own, operate a~d encumber the Project, incur the obligations represented by the Borrower Docaments and carry ou~ its obligation~ and duties under the Borrower Documents. 3. The Borrower has foil power and. aufiloriry to conduct irs business and io own property in tl~ Sine of Flor/da. D-10 L:W,A~OYN'I'Oi~Lii~I~A..k~ 26. SUN2~ ~'~ i~3:'42PM ,SENT ~Y ,,RITTER EICH:'ER. & NORRIS P.35/54 · I rTlle -MOrtgage is in .proper form for recording in thc real estate records and, upon t, eco~ w~ crone a valid hen on the propW~' descn'bed ~erein. 'Thc obligatio~s of the Borrower under th~ Loan Agre~men~ and the Note are not Tomy knoWledt~e, there is no filing with, or consent, approval, permiT, autho~on or Which'is req~ed with respect to the Borrower [or Borrower of ~e .Borrower Documents or .for ~ p¢ffo~ by the Borrower of its obli~ations .therelllldcr. To my knowledge, there are no lawsuks, proceedings or investigations (a) with respect ~to which the Bot'rower has received service of process or other written notice, or (b) to the best of my knowledge, lhrea~ened asainst r~e Borrower which, if adversely dcter~i-ed, could maerially adversely ~ffec~ ri~ Borrower, the Proje~ or thc financial conditions or operations of the Borrower, or the uansa~ons cont~nplalcd by the Borrower Doctmtents, or which in any way would adversely affect the validity or enforceability of the Borrower Documents, o~ which would preclude the BorroweFs execution and delivery of the Borrower Documents. The foregoing opinions arc subjec~ ~o ~e followin~ qualifications: (a) The enforceability of the Borrower Docum~ may be limiled by (i) bankruptcy insolv~, r~-organizalion, morau~rium, general equitable principles (including the exercise of judicial discreli~iin.~:cordan~ with such:principles) and other laws rclath~ to or aff~tin~ the rigbis of creditors or oth~ obligors l~cnerally, and (ii)federal and state securities laws in respeci to certain indemnification Obligations 'of the Borrower. (b) The enforceability of thc Borrower Documents may be limited by applicable :p~inciples of equity includinf~, 'but not ~im.iu:d to, principles tha require good faith, fair dealing and commercial-reasonableness in the performance and enforcement of agreemen~ on the pan of a par~y smlcln~ ~er~ w~.such principles are applied by a cour~ of equity or a court of laW, and may ~:be subject to ~hc axercise of judicial discretion which may limi~ certain rem~lies provided in the Bond (c) I express no .opinion as ~o the validity or enforceability of any indenmity in the Borrower Docum~ts or any othe~ agreement to the extent the enforceability Of such indemnity with ~ to any. relevan~st~ .or fed~aI securities laws, rules or regulations or any other similar laws, rules or rcg,_~laio~ may b~ ~ to be a~ainst public policy. '(il) '.I.~pr~s no op'mion as to the laws of any Jurisdictions other than thc laws of the Stat~ of Florida. The.Opinions expressed above concern only the effect of the laws (excludin~ the pr'uxiples of zonflicI of l~ws: if ~y) of ~ Star~ of Florida as aurently in effect. I assume no oblil~ation ~o suppIcrm~ tkis opinion if any.applicable .laws or facts chan~e the opinions expressed abov~, after the date of ~ds opinion. (¢) I ~xpress no opinion as to the due authorization, execution or delivery of the Bon'ower Do~,~eras and mxlcrstand tha~ you are relying on the opinion of with D-11 ~UN '86 'gE~ 8B:43PM SENT BY RITTER EiCH~ER & NORRIS P.~6/54 .i respccx .to such matters. I assume the terms and conditions of thc Borrower Documen~ have not been amended, modified or supplemented by any other agreemerlt or understanding of the parties or waiver of any of thc martial provisions of the Borrower Documents, although to my knowledge no such amendment, modification or supplement has been made by the BOrrower. This ,opinion is provided solely for the benefit of r.h¢ addressees hereof and may not be relied ,llpon by any ~ PerSon without my prior approval. Respectfially submitted, D-12 L:~R.a.~BOY~PA. ~ ~. 1~96 ~L~ 2G '96 83:43PMSEHTBY RITTEREICHNER & NORRIS P.37/54 EI/'IHRIT E July _, 1996 -OPINION OF COUNSEL TO ISSUER 'City of. Boymon Bea~, Florida C/HP Cove. Inc. c/o Corneimone 'Housing Corporatiou 1350 BevewlyRoad, Suite 200 McLean, Vkginia 22102-3634 Moyle, Flanigan, Katz, Fitzgerald & 5heehan, P.A. West Palm Beach, Florida The Bank of New York c/o TheBank of New York Trust Company of ~o~ N.A. 10161 ~~ ~y 2~ ~or .la~on~e, ~o~ 3~6 Wheat, First Securities, Inc. Raymond lames & Associates, Inc. Stifel, Nicolaus & Company, Incorporated c/o Whe~u, First Securifi~, Inc. 465 South Street, Suite Morristown, NJ 06830 $x1 oo,ooo CITY OF ~BOYNTON BEACH, FLORIDA Multi,Family Housing Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartmems) Ihavo acted as counsel to the City.of Boynton Beach, Florida (the 'Issuer") in connection with the issuance and sale by,thc Issuer of its $11,400,000 principal amount of its Multi-Family Homing Mong~ge.:Re,~enu¢ Bond~, Series 1996 (Clipper Cove Apartments) (the "Tax Exempt Bonds' or the "'Bonds'~). The Bonds are being issued for:the purpose of assis0.ug in refinancing ~ its multifamily ~ prOJealc~ala:l in fl~e-Cit~ of:Boyixon BeaZh, Florida, and known as Clipper Cove Apartments (the "Projectg. All capkalized terms used 'herein and not otherwise defined shall have the moating as set iorth in the;Loan Agreemem dated as of luIy 1, 1996, by and between the Issuer and the Bon:ower. Incom2ection ~my opinion I have reviewS, among other things, Article VIII, Section 2 and Article VII, Section 10(c), of the Florida Constitution, thc Charter of the Issuer, Chapter 166, Florida statutes (the 'Act'), and .originals or copies, certified or otherwise identified to my satisfaction, of the following: A. C.' ~ resolnfion of the Issuer adopted on Bond Documcnus, and Aspec'~ of the Bond. ,1996 (the "Bond Resolution'), { P.38/54 I haw also ~.suchor~rdocumem.s, cem'~catss, ~ings sad matters of law ~ I have ~:~ n~ m ~le~ m rend~ ~ op~on. ~ m ~~ ~ ~ ~t~ zo my opi~on, I .~ve reli~ upon ~~om of ~e E~er ~ ~ ~ ~ Do~ ~om of.~b~c offi~s ~~ to~ ~ ~c~om by rep~e~atiom ~ ~ifi~o~ ~e s~ on do~s ~d ~e~ ~n~ by me ~e ~er) ~e genU~e, ~1 ~~ s~~ to me or vefific~on, ~ due audition, ~i~ ) o~er ~ the d~m~ ~ss~ or a~rop~te ~ order to render Based on ~ foregoing, I aa of the opinion, as of the cla~e hereof, that: I. The Issuer is a :political subOivision ~,vl a mu~ipality of the S~ate of Florida duly crealed and validly existing tlllder t~,Act a~l ha~ th~ requisite authority and power to (i) execute and,deliver the Bond ~, (/0 issue, <sell and delivcr ..the Bonds mxl (ii/) consumma~ the transactions ~ntemplated by, and perform its obligations under, the 'BOnds and each Bond Document. 2. Th~ Bond Resolution has been dUly adopted by the Issuer and is in full force and effect as of the date hereof in the form adopted. 3.. Thc Bonds have 'be~n duly .authorized, executed, issued and delivered by,the Issuer, constitute valid and binding limited obligations of the Issuer and, subject to paragraph ? below, are enforceable against the Issuer in accordance with their 4. The Bond Documenr~ have been duly authorized, executed and ddivered by the Issuer, are in ~ force and effect, constitute valid .and legally binding obligations and a~ents of the Issuer and, subjec~ to paIagraph 7 below,-are enforccabl~ against :the Issuer in acco~ce with their respe~ive $.: The Issuer's ~ri~t, title and ~intercsl in the Note :and the Loan Agreement (except for certain rights ~o inderrmificafion, payment of its fees and expenses, receipt of notices and giving of consents) have been duly and legally assigned by the .Issuer .to The Bank of New York, as Trustee and have not been ~p~ously ~ by the Issuer, and suCh assignment constitutes a valid and binding assignment of thc Issuer-and, -subject :to paragraph 7'below, is enforceable against the Issuer iu accordance with its r~'ms. 6. ~ 'The City Commissioners of the Issuer identified in the Issuer's general certificat~ delivered on the date hereof have been dUly appointed and are qualified to serve as such. 7. The enforceability of the obligations of the Issuer under the Bonds and. the Bond Documents is subjcci to the provisions of applicable bankrup[cy, insolvency, reorganization, moratorium or other similar 'laws relating :to or affecting th~ enforcement of creditors' rights generally now or h~eafter in;:cf'fr~ and subject to usual ~uiv~ principles that may limit the specific enforcement of certain JU~ ~ ~gG ':8~:44PM SEhFF BY RITTER EICHNER & MORRIS P.8~/54 ~maedies but :do.not affect the Validity of stlch documents. Certain indemnity provisions of the Bond ~~may bemmfforceable pursuant to court decisions invalidating such indemnity provisiom on grounds of ~pticable scourges laws or public policy. $. No additional or fmther approval, eoment or authorization of any governmental or public agency or amhofiry not already obtained is required by the Issuer in connection with the transacfiom ctmtm~lated by the Resolution, thc Bonds or the Bond Documents; provided, I~owever, that I express no Opiv.4on relating to state or federal, securiti~ 'hws, and no opinion is expressed as to the exclusion of interest on the .Bonds from gross income for purposes of federal or Florida income taxation. 9. The adoption of the Resolution and the exe~-'ution, delivery and clue Imfformanee by the lssuerof the Eona~ and the Bond Documents Will nor violate any r~solution of the Issuer or, to the best of my knowledge, (i) violate any indenn~e or other agreement or instrument to which the Issuer is a party or by wNeh it or its p~ are or may be bound, 0i) violate any regulation, order or :decree to which the Issuer is subject or :(iii) result in the-creation or imposition of any lien, charge or other s~curity ,intmm~ or en~m~bmme of any nature whatsoever upon any of the property or assets of the Issuer except zs comemplated by the Bond Documents. 10. Them is no action, mit, proceeding or investigation at hw or in equity before or by any court or govwnmental agea~y or body pending or, to the best of my lmowledge, threatened against the Issuer, nor to my knowledge is there any basis there/or, wherein an unfavorable decision, ruling or ~ would adversely affec~ (i) the creation or existence of the Issuer, (ii) the transactions contemplated bY the Resolution and the Bond Documents, (iii)'the validity or ~forceability of the Bonds Or the Bond Documents or (v)any authority or proceed~s relating to the execution and delivery of the Bonds and ~he Bond Documents. My s~.'vices as cotmsel ~o ,the Issuer have been limited to rendering the foregoing opinion based :Ul~?n my review of such legal proct~lings :as ! have deemed necessary to make the statements herein contained and to approve-the validity of the Bonds. I have not examined any documents or other information.~ming th~ business or financial resources of the Borrower and, therefore, express no opinion.as to the acemracy or completeness of any information that may have been relied upon by the owr~,~s'of the Bonds in making their decisions ~o purchase them. Very truly yours, IOSIAS, Cd)PEN, CHEROF, DOODY & EZROL, .P.A. ,--~sowro~oxsvX. s~ a~, l~ i i. I: 83:Z64F99 SEFf[ BY RITTER EICHHER & HORRIS P.40/54 Form of Disclosure Cextificate of Underwriter under ~ion 215~7~/5(6), Florida Statutes EXIT~IT F The andcrsigmd, a .follows: of [Underwriter] (thc 'Underwriter"), hereby certifies as (1) An i~nized 'Iist of estimar~l expense~ to be incurred by the Underwriter and and (collectively, the "Underwriting Group') in connection with the hsuance of.thc Bonds. See-SahedUle I attached. (2) The names, addresses, andcsfimated amounts of comlx~afion of any person who enter~xi fi'to.au umie~ru~ug with either the Civ of Boynton Beach, Eorida (the "Issuer'), the Underwriter, or both, .for any tm/d-or promised comp~on or vaIuabIe consideration, directly or indirectly, expressly or/mplied, to .ac~ solely as an imemmdiary between the Issuer and Underwriu~r or who exercises or ~ w exercise any influence to effect any ~ransacfion in the purchase of thc Bonds: None. (3) The amount of underwriting spread expected co be realized by the Underwriting Oroup is as follows (coltwam may not equal wtal~ due to rounding): Amount Dollar Amount per $1.000 Principal Takc6~wn $ $ Managcracnt Fee $ $ $ (4) Any other fee, bonus, and other compema~on estimated to be paid by thc Underwriter in connection with'the issuance .of the Bonds to any person not regularly employed or retained by the U~ter: None. (5) TI~ nam~ and address :of the Underwriter is: lin.sen name and address of Underwrirzr) 1996 JUN ~6 '96 03:45PM SEMT BY RITTER EICH~-R& MORRIS P.41/54 I understand that you do not require any flirter disclosure from the Underwrimr Pursuan~ m Section 218~38~(6), l~lorida Statute, as amend,d, i Very truly yours, By: Tide: 8 io OM/i2 EXHIBIT "E" PRELIMINARY OFFICIAL STATEMENT Mark Raymond,. Esq. .: Moyle, .Lanigan, .Katz, Fitzg(From: SusanFvan~..~ 215-972-8302 6/26t96~ 12:48:48 Page 2 of 49 ~/hisPreliminary Official Statement and certain of the information contained heroin is in a form deemed final for purposes of Rule 15c2-12 u~ Act of 1934..as amended (except for the Omission of certain information pertained to be omitted under Rule 15c2-12(b)(1 )), The information completion or amendment in a final Official Statement, The Series 1996 Bonds mav not be sold, nor may an offer to buy be accepted l Statement is delivered in final form. Under no circumstances shall this Preliminary Official Sta~emen~ constitute an offer to sell or a solicitatio t~re be any sale of these securities in any jurisdiction in which such offer, solicitation ot sale would be unlawful p[ior to registration or qua ~laws of a~¥ such jurisdiction. I To: Mark Raymond, Esq. Moyte, LanJgan, Katz, Fitzg(From: Susan Evans 215-972-8302 PRELIMINARY OFFICIAL STATEMENT DATED _JULY 6/26/96 .i 1996 12:49:10 Page3of49 NEW ISSUE Rating: S&P: "_A" ] In the opinion of Bond Court, el, assuming continuing compliance with certain covenants described herein designed to meet the requirements of the Internal Revenue Code of ~986, as amended, and the regulations thereunder, interest on the Series 1996 Bonds is .excluded .from gross income for ff_dfral income tax purPoses t~on the conditions and subject to the limitations stated in ~Tax Treatment of the .~ries 1996 Bonds herein. Such interest is not an item of tax preference for purposes of the fede~l alternative minimum tax imposed on individuals and corporations, but can be included ~n the calcutatwn of certain corporatwns alternattve tm'nimurn tax and a holder can be sUbject to other federal tax consequences as described in ~Tax Treatment of the Series 1996 Bonds. In the opinion of.Bond Counsel, interest on the Series ~996 Bonds is exempt from all intangible personal property taxes presently imposed by the State of Florida. Date~: July 1, 1996 $11,__5_00,000' ~ CITY OF BOYNTON BEACH, FLORIDA :~ Mulfi-Fannily Hotr~in~ Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) Due: January 1 and JUly 1 as shown on the inside cover The City of Boynton Beach, Florida (the 'Issuer'), is issuing $11,500,00~_* aggregate principal amount of its Multi-Family ,Hotming Mortgage Revenue Bonds, Series 1996 (Clipper Cove Apartments) (the "Series 1996 Bonds"). The Series 1996 Bonds will be issued in full registered form, registered in the name of Cede & Co., as nominee for The 'Depository Trust Company, New York, New York ('DTC'), which will act as securities depository for the Series 1996 Bonds. Individual purchases of beneficial ownership interests in the Series 1996 Bonds will be made in book-entry form only and individual .... purchasers will not ~reeeive physical delivery of Series 1996 Bond certificates. Individual purchases will be in principal amounts of $5,000 or integral multiples:thereof. Tbe.Series 1996 Bonds will bear interest from their dated date, payable s6miannually on each January 1 and July !, commencing on January 1, 1997. Payment of principal of and premium, if any, and interest'on the Series 1996 Bonds will be made by The Bank of New York, New York, New York, as trustee, acting by and through its agent, The Bank of New York Trust Company of Florida, N.A., Jacksonville, Florida, directly to Cede & Co., as nominee for DTC, for d~sbursement to DTC participants, tobe disbursed subsequently to Beneficial Owners of the Series 1996 Bonds. The Series 1996 Bonds ~ be subject to redemption before maturity as described herein. See 'THE SERIES 1996 BONDS -- :Redemption of the Series 1996 Bonds.~ ~ou.~mg tt~V~lOpltt~at tU~ rro~ct ~, auct.payaow ~,CXC~pL to m~ ~xwat payam~ out ot o~i'w~ ~r¢o Dona procccu~] ~uw~y out ui iuntm to be provided by C/HP Cove, Inc., a Florida nonstoek not-for-profit corporation (the 'Owner') whose sole asse~: is the l>cojeet and ,whose activities consist solely of owning.ami operating the Project. NEITHER THE SERIES 1996 BONDS NOR THE INTEREST THEREON SHALL BE DEEMED TO CONSTITUTE A DEBT OF,PALM-BEACH COUNTY OR OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE ISSUER. THE SERIES t996 BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER AND TI-IE ISSUER SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, ON, OR INTEREST ON THE SERIES 1996 BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES AND RECEIPTS PLEDGED AND ASSIGNED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, 'IF ANY, OR INTEREST ON THE SERIES 1996 BONDS OR OTHER COSTS INCIDENT THERETO. . There are risks associated with the purchase of the Series 1996 Bonds. For a discussion of certain 6f these risks, see -~"BONDHOLDERS' RISKS" herein. This cover page contains certain information for quick reference only. It is not a summary of the issue. InVestors must read ~the eatire Off'~eial Statement to obtain information essential to the ,making of an informed investment decision. The Series 1996 Bonds are offered when, as and if issued by the Issuer and received by the Underwriters, subject to the approval of their validity by Moyle, Flanigan, Kart, FitzGerald & Sheehan~ P.A., West Palm Beach, Florida, Bond Counsel. Legal matters will be passed upon for the Issuer by Josias. Goren. Chef_of. Doody & Ezrol. P.A.. Ft. Lauderdale, Florida; for the Owner by Baber & KalJnowski, P.C., Fairfax, Virginia and the Law Office of Frank Brady, P.A., Boca Raton, F~orida; and for the Underwriters by their co-counsel Ritter Eiehner & Norris, Washing;on, D.C. and Mikel D. Jones, Assoehtes, Philadelp~ 'To:,Mark Raymond, Esq., Moyle, Lanigan, Katz. Fitzg~From: Susan Evans 215-972-8302 6/26/96 12:50:10 Page 4 of 49 Pennsylvania. It ~s expected that Series 1996 ,Bonds in book~enwy only form will be available for delivery to DTC in New York, New York, on or.about ~ly __, 1996. WHEAT FIRST BUTCHER :SINGER ~RAYMOND JAMES & .ASSOCIATES, INC. STIFEL, NICOLAUS & COMPANY, INCORPORATED ~Iuly . 1996. Preliminary. subject'to change. -2- I To: ~k Raymond,:-Esq./Moyle,. Lanigan, Katz, ~Fitzg~'From: Su-san EEv--ans 2~l~5-972-8302 6/26196 12:50:36 Page 5 of 49 [~NSB)E COVER] ~MATURYrlEs, AMOUNTS AND INTEREST RATES SCHEDULE $3,1~5,000' Serial Bonds ~laturiW ,Amount* Interest Rate Maturity January'l. 1997 July t. 1997 'January 1, 1998 -July 1. 1998 Januaxy 1, 1999 July t, 1999 January 1.2000 :,July 1. 2000 Sarmary 1, 2001 July 1, 2001 3anuary 1, 2002 Suly 1. 2002 January 1. 2003 July 1, 2003 Amount* Interest Rate $ 60,000 % January 1, 2004 $100,000 70,000 Iuly 1, 2004 100,000 7~000 January 1, 2005 105,000 75,000 July 1, 2005 105,000 75,000 January 1, 2006 110,000 8~.000 July I, 2006 115,000 ~80.000 Jgnuary t, 2007 115,000 :80.000 July 1, 2007 120,000 ~85.000 January 1, 2008 125,000 85.000 July 1, 2008 1)_Q, O00 9_Q. O00 January 1; 2009 130,000 90,000 July 1, 2009 135,000 9~000 January 1, 2010 140,000 95,000 July 1, 2010 145,000 Sanua~ 1. 2011 15~ July 1,2011 155,000 ,$1,850,000 * %Tenn Bonds Due July 1, 2016 $2,5.!~0,000 * % Term Bonds Due July 1, 2021 $3,92~000' % T~um Bonds Due January 1, 2027 Price of all Series 1996 Bbnds: % (plus accrued interest) *Preliminary, subject'to change. -2- I 'To: Mark Raymond, Esq..~'Moyte, Lanigan,-~Katz, 'FiizgeFrom: Susan Evans 215:972-8302 6/26/9~?~ 12:51 :-06 Page 6 of 49 NO PERSON HAS :BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY ~ ~>~EPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. ~ OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR Tile SOLICITATION .,OF AN OFFER TO BUY A~Y SECURrrlES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFEER TO SELL OR THE SOLICITATION OFiAN OFFER TO BUY SUCH SECURIT~$ IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. i THE INFORMATION SET :FORTH HEREIN HLiS BEEN OBTAINED FROM THE ISSUER, THE OWNER AND OTHER SOURCES THAT ARE DEEMED TO BE RELIABLE, !- BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS BY, AND IS NOT TO BE COlqSTRUED AS A REPRESENTATION OF, -THE UNDERWRITERS. THE INFORMATION HEREIN IS SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER OR ~ OWNER SINCE THE DATE :HEREOF ~OR THAT THE INFORMATION CONTAINED SUBSEQUENT TO TI-IE DATE OF SUCH INFORMATION. THE THE O~rNER HAS MADE ONLY THOSE COVENANTS DISCLOSURE AS ARE DESCRIBED HEREIN UNDER THE CAPTION CERTAIN OF TIlE ,INFORMATION HEREIN OTHER THAN CAPTIONS "THE ISSUER" AND "LITIGATION" IS BEYOND TIlE THE ISSUER HAS NO REASON TO BELIEVE TItAT SUCH INACCURATE, THE, ~SUER HAS NOT INDEPENDENTLY .... ACCURACY OR COMPLETENESS II-IEREOF. AT ANY TIME IS DATED AND SECONDARY MARKET INFORMATION UNDER THE 'IS INChDMPLETE OR OR CONFIRMED THE THE SERIES 1996 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 1996 BONDS UNDER THE SECURITIES LAWS OF THE JURISDICTIONS IN WHIG THEY HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE PASSED LrpoN THE MERITS OF THE SERIES 1996 BONDS OR THE .ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. i 'To: Mark Raymo~, EsqJ~Moyte, LanJgan, Katz, FitzgeFrom: Susan Evans 215-972-8302 6/26/96; 12:51:58 TABLE-OF CONTENTS Page 7 of 49 Page ~ storms ~:L~ BONDS ............................................................................................................. !; ............... 2 SE~ F6R THE SER/ES 1996 BONDS .................................................................................. : ............... 9 SOURCES AND USES OF Y~3NDS ................................................................................................................ 1~ TI~ ISSUER. .............................................................................................................................................. 13 THE o~ArNER ~AND THE PROJECT .............................................................................................................. 1,4 13ONDHOLD~I;*.S' RISKS .............................................................................................................................. 15 LOAN AGRF. F. MENT ............................................................................................................................ 25 THE NOTE AND THE MORTGAGE ............................................................................................................. 2tl RESTR/CTIV~ COVENANTS .............................................................................................................. 2~ NO LITIGATION ........................................................................................................................................... 3~ TAX TREATMENT 'OF THE S~S .1996 BONDS ..................................................................................... ~ !I:~OSSIRT ;F CHANGE IN TAX STATUS ........................................................................................................ 33 APPROVAL OF I.FGAL MATTERS ............................................................................................................ 33 CO~G DISCLOSUR.E ........................................................................................................ ~. .............. 33_ ~I~2ING ~...~ ............................................................................................................................................... 32 !UNDERWRII1NG ....................................................................................................................................... 31 NIISC'ELLANEOUS ..................................................................................................................................... 31 ~ _ APPENDIX c !- ~*~PENDIX D i - Description oftheprOject - Pro FmmaFinancial Projections - Summary oflahe Indenture, Loan Agreement, Mortgage and Restrictive Covenants - Form ofOpirdon of Bomt Counsel OFFICIAL STATEMENT To: Mark-Raymond, Esq. :, .Moyle, Lanigan, Katz, Fitzg(From:'Susan Evans 215-972-8302 6/26/9~!! 12:52:~2 Page 8 of 49 $11~o0,000~ CITY OF BOYNTON BEACH Multi.Family Housing Mortgage Revenue Bonds, Series 1996 :~(Clipper Cove Apartments) -INTRODUCTION This Official Statement, including the cover page and appendices, sets forth cert~iin information relating to the issuance and sale 'by the City of Boynton Beach, Florida (the "Issuer"), a political subdivision of ~l~he State of.Florida, of $tl,500,000' aggregate principal amoum of its Multi-Family HoUSing Mortgage Revenue Bonds, Series '1996 (Clipper Cove Apartments) (the "Series 1996 Bonds'). ~The Series 1996 .Bonds are ~being issued pursuant to Article vm, Section 2 and Article VII, Section 10(c) of the Florida Constitution and.Chapter 166, .Florida Statutes (the "Act') and in accordance with a resolmion No. 96- of the City Commission of the IsSuer (the "Resolution") aLtthorizing said issnanee. The Series 1996 Bonds will be issued under, and equally and ratably secured by, an Indenture of Trust and Assignment of Mortgage dated as of Julyl, 1996 (the "Indenture~), between the issuer thereof and 'The Bank of New York, New York, New York, as trustee, acting by and through its agent, The Ba~ of New York Trust Company of Florida, N.A., Jacksonville, Florida (the "Trustee"). The Series 1996 Bonds will be issued ~to provide funds with which the Issuer will haake a loan to C/HP Cove, Inc., a Florida nonstock not-for-prOfit-corporation (the "Owner') purstmnt to a Loan Agreement dated as of July 1, 1996 (the "Loan Agreement"), between the Issuer and th6 Owner. Such .... funds, tog~her with other available funds, will be used: (i) to refinance and make minor repairs to a multi,family housing development.~(the "Project") located in the City of Boynton Beach, Florida; (ii) to' :leposit funds .in_to an Expense_Frond, a Debt Service Reserve Fund, an Operating Reserve Fund and a Maintenance Reserve Fund securing the Series 1996 Bonds; and (iii) to pay certain costs of issuing the Series 1996 Bonds. See "SOURCES ~ USES OF FUNDS" herein. The Owner's .obligations m repay.the loan of the Series 1996 Bond proceeds will b;~ evidenced by its nonrecourse promissory note payable to lhe Issuer (the "Note'), secured by a mortgage on and security interest in the Project (the "Mortgage"). Thirty percent (30%) of the units in the_Project will be dedicated for occupancy by individuals and families whose income is 80 % or less Of area median .gross ,income and twenty percent (20%) of the units will be dedicated for occupancy by ~adividuals and families whose income is50% or less of.the area median income. The use restrictions t~e COntained in two agreeme~ts which encumber the Project. Certain of.the restrictions are imposed f6r purposes of .complYing with .the Internal~ Revenue Code of 1986, as amended (the "Code") and are ..c9., ntained in the Declarations of Restrictive Covenants (the "Restrictive Covenants") to be executed, .!delivered and recorded at the time of issuance of lhe series 1996 Bonds (see "RF_~TRICTIVE COVENANTS" herein) and additional restrictions are imposed pursuant to a Land Use Restriction ~greement (the ~LURA") between the Owner and the Resolution Trust Corporation ("RTC"), the entity from which -~the Project was acquired (see Appendix A "DESCRIPTION OF TH~ PROJECT - Acquisition of the Project; RTC Use Restrictions"). Prelimina~, s ibjeet to Change. -2- I To:'Mark Raymond, Esq. iMoyle, Lanigan, Katz, EitzgeFrom: Susan Evans 215-972-8302 6/26/96~:; 1-2:53:-26 ; Page 9 of 49 NEITHER THE SERIFS 1996 BONDS NOR THE INTEREST THEREON SHALL BE DEEMED TO CONSTrIIJTE A DEBT OF PALM BEACH COUNTY OR OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE ISSUER. THE SERIFS 1996 BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY,. ON, OR INTEREST ON THE SERIFS 1996 BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES.?AND RF_~EIPTS PLEDGED .AND ASSIGNED THEREFOR, AND NEITHER ~ FAITH AND-: CREDIT NOR ~ TAXING POWER OF THE ISSUER IS PLEDGED TO THE PAYMENT 0F THE PRINCIPAL OF, P,~RE~ IF ANy, ON OR INTEREST ON,?, THE SERIES 1996 BONDS OR O~ COSTS INCIDENT THERETO. [~ DesCriptions of the Series 1996 Bonds and the security therefor, and summaries (~f certain other documents are set forth below and in the Appendices hereto. Copies of documents and reports referred to herein are on file ,with the Trustee and Bondholders may obtain copies thereof upon payment to the Trustee of the required fee. Terms used in such descriptions and summaries which arc not otherwise defined in:this Official :Statement shall have the meanings set forth in the applicable documents. An investment in the Series 1996 Bonds involves certain risks. See "BONDHOLDERS' RISKS". ,. THE SERIES 1996 BONDS ~ General Desci'iption ~ The Series rt996 Bonds will be dated as of Ju_ly 1, 1996, will bear interest from such date payable on January l, 1997 and semi-annuaIly thereafter on each July I and January 1, at the rates, calculated on the basis of a 360-day year of twelve 30-day months and will mature, subject to prior redemption, on the dates and in the amounts set forth on the inside cover page of this Official Statement. The Series 1996 Bonds will be issued in fully registered form in authorized denominations of integral multiples of $5,000. Book-Entry System Unl~s tl~e :boOk-entry system described herein is terminated, as hereinafter described, The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the ,Series 1996 Bonds. The Series 1996 Bonds will be issued as fully registered securities rbgistered in the name of Cede .& Co. (DTC's parmership nominee). One fully registered Series 1996 Bond certificate will be issued, for.each maturity, and will 'be deposited with DTC. ? The following description of DTC and DTC's book-entry system , is based 0n information furnished by DTC,.and no .representation is made herein by the Issuer as the accuracy c.~r completeness of such information. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organizafion'i within the meaning of the New York Banking Law, a member of the Federal Reserve System, a '~clgaring corporation" within the meaning of the New York Uniform Commercial. Code, and To: Mark Raymond Esq.-:Moyle, Lanigan, K,~tz, Fit;zg~From: 'Susan Evans 2t5-972=8302 6/26)96 ~i 12:54:2-~-' Page 10 of 49 a "clearing a~ency" registexed ~rsuant m .the provisions of Section 17A of the Securities Exchange -,Act of 1934. DTC holds securities that its participants (the "Direct Participants") deposit with DTC. DTC also facilitates thc selxlcment through electronic computerized book-entry changes in Participants' accounts, thereby e~ting .the need for Physical movement of securities certificates. Direct Participants include securities ,brokers and .dealers, banks, .trust companies, clearing corporations, and certain other ;iorganizations. DTC ;is owned by a number of its Direct Participants and by the New ,York Stock Exchange, Inc., .the American Stock Exchange, Inc., and thc National ~Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as se~arides brokers and .dealers, banks, and trust-companies'that clear through or maintain a custodial rela.~onship with a Direct ParticiPant, either direc~ly or indirectly (the "Indirect Participants" and, together ewith the Direct Participants, the "Participants"). The rules applicable to DTC and its PartiCipants arc on file with the Securities and Exchange CommisSion. Purchases of Series 1996 .Bonds under thc DTC system must be made by or through Direct ~Participants, which will receive a credit for the Series 1996 Bonds on DTC's records. The ownership interest of each acxual purchaser of.each :Bond (each a "Beneficial Owner") is in turn to be recorded on the Direct and Indirect PartiCipants' records. Beneficial Owner will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owner entered into the transaction.: Transfers of ownership 'interests in the Series .1996 Bonds are to be accomplished by entries made qn the books of Participants acting on behalf of :Beneficial Owners. Beneficial Owners will not rec~ve certificates representing iheir ownership interests in Series 1996 .Bonds, except in the event that use, of the book- entry system for the Series 1996 Bonds is.discontinued. To facilitate subsequent transfers, all Series 1996 Bonds deposited by Participants with DTC are registered in the .name of DTC's partnership nominee, Cede & Co. The deposit of Series 1996 Bonds with DTC and their registxation in the name o.f Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 1996 Bonds; DTC's records xeflect only the identity of the Direct Participants to whose accounts such Series 1996 Bonds are credited, which may or may not ~be the Beneficial Owners. The 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 Participams, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owner will be governed by .arrangements among them, subject to any statutory ~- or regulatory requirements,as may 'be in effect ~om time retiree. Redemption notices .shall be sent to Cede & Co. If less ,than all of the Series 1996 Bonds within a maturity are .being redeemed, DTC's practice is to-determine by lot the amount of interest of each ......... :Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & :Co. will consent or vote with respect to Series 1996 Bonds. Under its ~ usual procedt~res, DTC mails an Omnibus Proxy tothe Issuer of the Series 1996 Bonds with respect to ..... which a consent or vote is sought as soon as possible after 'the record date. The Omnibus Proxy assigns To: MarkRaymo~d,.Esq.'!Moyle, Lanigan, Katz, Fitzg(From: Susan Evans 215-972-8302 6/26/96 12:55:22 Page 11 of 49 Cede &',Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 1996 Bonda are cr .edited on the.record date (identified in a listing attached to the Omnibus Pro~y). Principal of and premium, if any, and interest payments on the Series 1996 Bonds ~ill be made to DTC. DTC'~Practice is to credit Direct Participants' accounts on the payable date in a...~cordance with ~ r~*~pe~ave holdings shown on DTC s records unless DTC has reason to beheve ~hat it will not recerve payment on the payable date. Payments by Participants to Beneficial Owners will be governed ~by s .mmti.ng instructions and customary practices, as is the case with securities held for hhe accounts of :customers in bearer form or registered in "street name," and Will be the responsibility of such Part'~nt an~t not of DTC, the Trustee, the Owner or the Issuer, subject to any statutory or regulatory requirements :as may be in effect from time to time. Payment of principal, premium, if any, and interest to DTC :is the responsibility of the Issuer or the Trustee, disbursement of such payments to Direct ~Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTCcan disconfinueproviding .its services as securities depository with respect to the Series 1996 Bonds at .any time by giving reasonable notice to the Issuer or the Trustee. Under such~circumstances, in.the event that a successor securities depository is not obtained, Bond certificates ~ ' are,~xeqmred to be prepared, executed and delivered. The Issuer, at the direction of the Owner, can decide to discontinue use of the system of book-entry Iransfcrs through DTC (Or a successor securities depository). In that event, Bond certificates will be ..... prepared, executed and delivered. The .: foregoing .~information in this section concerning DTC and DTC's book-entry system has been obtainexl from DTC and neither the Issuer nor the Owner take any responsibility for the accuracy thereof. ~Neither Ihe Issuer, the'Owner nor the Trustee have any responsibility or obligation to the Direct ':Participants, the Indirect ~Participants or the Beneficial Owner with respect to (a) the a.gcuracy of any :re. cords maintained by the DTC or any Direct Participant or Indirect Participant; (b) [.he payment by any Direct Participant or Indirect Participant of any amount due to any Beneficial Owner in respect of the principal of and premium, .if any, and interest on the Series 1996 Bonds; (c) [he delivery or .fimefiness of delivery by any Direct Participant or Indirect Participant of any notice to,,an3, Beneficial Owner whichis required or permitted under the terms of the Indenture to be given to Bondholders; or ~(d) :any other action taken by DTC, or its nominee, Cede & Co., as Bondholder, including the -effoctix~eness of any-action pursuant to an Omnibus Proxy. So long as Cede & Co..is the registered owner of the Series 1996 Bonds, as nominee of DTC, :references in this Official Statement to the Owner of the Series 1996 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owner and the Trustee will treat Cede & Co. as the only holder of the ...... Series 1996 Bonds for all purposes under the Indenture. 'i ';To: Mark-Raymond, Esq. Moy~e, Lanigan, Katz, Fitzg(From: Susan Evans 215-972~8302 6/26t96 12: 56:16 Page 12 of 49 :Redemption of Serles 1996 Bonds Thc Series 1996 .Bonds will be subject-to redemption prior to maturity as follows: Ol:~ional'~ll~ption ,Upon.Determlnation of Taxability. The Series 1996 Bonds are subject to re. demptioa the Issuer at the optiOn and direction of the Owner in whole but n~t in part at a principal amount thereof plus accrued interest to the r~r~empfion date at ~ny time within 365 :days after the occurren~ of a Determination of Taxability. Mandatory Casualty Redemption. If, after damage to or destruction of any or ali of the Project ;by fire or other casualty, condemnation thereof or loss thereof because of failure of title, equal to at ~least $1,000,000 .('Material Damage'), the Owner shall elect not to repair or restore the Project to substantially the 'same condition as prior to such Material Damage, the Series 1996 Bonds are required to be redeemed in whole or in part at the earliest practicable date at a redemption price of 100% of the principal mount thereof Plus accrued interest to the redemption date; provided that no such partial redemption shall be permitted untess such .partial redemption will not affect the outstanding rating of the (Series 1996 Bonds. ' Optional Redemption. The Series t996 Bonds maturing aRer January 1, 2006~are subject to redemption by the Issuer at the option and direction of the Owner, on or aRer January 1~2006 in whole at any time o~.in part on any Interest Payment Date, at the following redemption prices (expressed as a percentageof the prir~ipal amount to be redeemed) plus accrued interest to the redemption date: Redemption Period January 1, 2006 through December 31, 2006 January 1, 2007 through December 31, 2007 January 1, 2008 and thereafter Redemption Price 102% 101% 100% Mandatory S'mking Fund Redemption of Series 1996 Bonds. The Series 1996 Bonds maturing 'July 1, 2016.,i~ July 1, 2021 and January 1, 2027 are required to be redeemed by the Issuer through operation of the sinking fund provided for in the Indenture on each Interest Payment D~ate as set forth below in the principal amounts respectively set forth below at a redemption price of 100% of the ;principal amoUnt of the Series 1996 Bonds to be redeemed plus accrued interest to the redemption date: Series 1996 Bonds ; Maturing ;luiv 1, 2016 D~.te Amount Date Smxaaxy 1.2012 $ January 1, 2014 July ~1.2012 July 1, 2014 SamaO' 1. 2013 January 1, 2015 Ju~y 1.20t3 July 1, 2015 January 1, 2016' Alt3ount -fi- Mark Raymond,-Esqf,~Moyie, Lanigan, Katz, Fitzg(From: Susan Evans 215-972-8302 Mnturin~ July 1. 2021 .~ J~uary !~ 2020 January_ A~18 July 1.2_0_2_.0_. Da~ JanuaO, 1, 2022 July '1, 2022 Janua _ry.t._ 2023 January_ 1. 2024 6/26/96 12:57:02 Series 1996 Bonds Maturing January 1, 2027 '~ Amount Date AmOunt $ July 1, 2024 $ January l, 2025 July 1, 2025 January 1, 2026 July 1, 2026 January 1, 2027' Page 13 of 49 · · The weighted average maturity, taking into account scheduled redemptions, of the Term Bond maturing July 1, 2016 is. years, oftheTerm Bond maturing July 1. 2021 is ._..~ears, dasd of the Term Bond maturing January 1, 2027.is years. 'Purchase.in-Lieu of Mandatory Shddng Fund Redemption or Maturity of Bonds. On or before :lhe sixtieth day next,preceding any 'sinking fund redemption date as described above under the subcapfion "Mandatory Sinking Fund Redemption of Bonds," or maturity date of the Issuer, or the Owner on behalf of the 'Issuer, may: (I) cause to be paid to the Trustee for deposit in the Bond Fund, as an advance payment under the Note, :such amount-as the Owner may .determine, accompanied by a certificate directing the Trustee to >apply such amount on or before such sixtieth day to the purchase of Series 1996 Bonds .and the Trustee shall lhereupon use ail .reasonable efforts to expend such funds as nearly as may be pr~acticable in the :purchase of such Series 1996 Bonds at a price not exceeding the principal amount th....ereof plus the ..~applicable prdraium for optional redemption of Series 1996 Bonds plus accrued interest-to such sinking '~Jnd redemption date or maturity date; or (2) deliver to the Trustee for cancellation Series 1996 Bonds of the Issuer in any aggregate :?rindpal amolmt desired; and receive a credit against its sinking fund redemption obligation or maturity ~-'~date obligation for any such Series 1996 Bonds of the same maturity which prior to suchdate have been ~'3:o::Mark Rayrno~d,"Esq. M~e, Laa~gan,-~,atz, FitZg~r(~m:~$u~a~n ~¥~'i~9~2-~3~2-- 6/26/96 12:57:4~ Page 14 of 49 redeemed ~(otherwise than tbaough the 9peration of the s~g 'fund) and canceled by the Trustee and not ~h~etofore applied as aeredit against such sinking fund redemption obligation or maturity date obligation. Each such Bo~so ~pttt~ detiveredor previously redeemed shall be credited b~i the Trustee at ~00% of lhe prin~ipalamotmt thereof against the obligation of the Issuer on such sinking f-and redemption date or maturiW date ~tla a corresponding credit on amounts otherwise due on the applica~ble Note. Any excess .over stwla obligation ~shall be credited against future sinking fund redemption ~obligations or maturity.date ~obliga~ons pro'ratain chronological order, and the principal amount of such Series 1996 t?~nds to be red~emed by operation of the Sinking fund or to be paid upon maturity shall be accordingly reduced. Any funds received by.the Trustee pursuant to (1)but not expended as provided therein for the purchase of Seri~s 1996 Bonds.on or before said .siXtieth day shall be retained in the Bond Fund and shall !thereafter ~be Used only £or thepurehase of such Series 1996 Bonds or as a credit against future sinking fund obligations or ma ~tmdly date obligations of the Series 1996 Bonds on a pro rata amount of each maturity out~eling to ~,extent otherwise payable out of payments thereafter becomin~ due under the Note: Manner,and Not/ce,of Redemption. If less than all,of the Series 1996 Bonds are to be redeemed, the particular Series 1996 Bonds or portions thereof to ,be called for redemption shall be ~elected by the Trustee from ~aeh malaxfity on a pro-rata basis based upon tie outstanding principal of the.iserial and term Series 1996 Bonds. tn any event, (a) the portion of any Bond to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof~ and (b) in selecting Series 1996 Bonds for redemption, each Bond shall be considered as representing thatnumber of Series 1996 Bonds which is obtained by dividing the principal amountof such ::Bond by $5,000. 'If a portion of a Bond shall be called for ~ ~ :~'~'~redemption, a new:Bona :.in principal amotmt equal tothe unredeemed portion thereof shall be issued to the Bondholder ur~n the sm'render lihereo£ The Trustee will apply anyprcpayments on the Note to'the redemption of the Series 1996 Bonds on :the earliest pi;acticabl¢ rate for-which :'timely notice can be given after the Trustee's ~eceipt of such prepayment. If any of.~e Series 1996 Bonds or portions thereof are-called for redemption (or are 'io be redeemed pursuant to the apphe~ble provisions of the Indenture), the Trustee shall send to the registered owner of each Bond to be redeemed notification thereof which notice shall (1) specify the Series 1996 Bonds to be ~teemed, the redemption date, the redemption price and the place or places where amounts due upon such redemption will be payable(Which shall be the Principal Office of the Trustee) and, if: less than all of the Series 19¢)6 Bonds are to be redeemed, the nmnbers of the Series 1996 Bonds and ithe portions of Series 1996 Bonds to be -redeemed, (2) ~ate any condition to such redemption and (3) state that on the redemption d~te,-and upon the satisfaction of any' such condition, the Series 1996 Bonds to be redeemed shall cease to :bear ,interest Such.notice may ~set forth .any additional information relating to such ~redempfion. ~ueh notice shall' be-given by mail not. less ~ thirty (30) days nor more than ,sixty (60) days Prior to the d~e fixeA for. redemption (a) by registered or certified mail to the owner of each such bond to ~be redeemed, at his address as it appears onthe registration books of the Trustee, (b) to all organizations registered wi~ the Securities and Exchange Commission as securities depositories, and (c?. to at least one information :~ce of national recognition which disseminates securities redemption i~ormafion with ~respect to tax--pt securities. In prepar4ng' such notice, the Trustee shall take into accou,fl, t, to the extent "To: Ma~k Raymond, Esq?~Moyle, Lanigan, Katz, 'Flag,From: Susan Evans 215-972-8302 ,! 6/26/96 ~: 12:58:44 Page 15 of 49 applicable, the ,prevailing tax-exempt securities industry standards. Failure to give any notice specified in ~(a) or any defect therein, shall not affect the va~dity of any proceedings for the redempfiOh of any Series 1996 Bonds'with respect to which no such failure has occurred, and failure to give any notice specified in .... (b) or (c),:or any defect therein, shall not affect the validity of any proceedings for the redemption of any Series 1996 Bonds with respect to which the notice specffied in (a) is correctlY given and shall not give ~rise .to any liability on the part ol~ the Trustee to the Issuer, the Owner or any bondholder. Any notice mailed or provided herein shall conclusively be presumed to have been given whether or not actually receivedby any bondholder. Provided funds for their redemption are on deposit at the place of payment on:the redemption date, all Series 1996 Bonds or portions thereof so called for redemption shall cease to bear .interest On such date, Shall no longer be secured by the Indenture and shall not be: deemed to be outstanding under the provisions of the Indenture ~' Mandatory Tender ' At any time the Series 1996 Bonds are subject 'to redemption pursuant to the Section 301(a) or 301 (b), at~ Material Damage, or 301(c) of the Indenture, the Series 1996 Bonds may in lieu of such redemption, be subject 'to mandatory tender, .in whole but not in part, to the Trustee for the purchase by the O~er's designee, at a tender price equal to the principal amount thereof, plus accrued interest to 'the tender date, ~plus any premium that would apply were such Series 1996 Bonds to be called for redemption on the tender date pursuant to Section 30 l(a), 301__0__0__0__0__0_~.or 30 l(c), as applicable. ] ~In order m execute its right to requke the Series 1996 Bonds to be tendered, the Owner shall provide ..... written notice, of its election to exercise such right to the Trustee, at least 20 and not mor~, than 30 days .prior to ltae tender date, which.date shall be designated in such notice. On or before the tender date there .shall be deposited with the 'Trustee, by the Owner's designee, funds sufficient to pay the tender price of such principal amount of Series 1996 Bonds and the Trustee shall deposit such funds in a :Special account which the Trustee is hereby authorized to create. The Trustee shall send to the registered owner of each Series 1996 Bond to be subject to mandatory tender notification thereof, which shall specify the Series 1996 Bonds to be subject to mandatory tender, the ..tender ~ date, the tender price and the place or places where amounts due upon such'tender will be payable (which-shall be the Principal Office of the Trustee) and shall state that on the tender date, the Bondholders of the Series '1996 Bonds subject to mandatory tender shall cease to be entitled to any further interest thereon. Such notice may state that the tender is subject to conditions, including but not limited to, the availability of ftmds to ~pay the applicable tender price of the Series 1996 Bonds to be tendered. Such notice Shall be given by-mail not less than ten (10) days nor more than thirty (30) days pri. or to the date fmeXt for tender by registered or certified mail to the owner of each Series 1996 Bond ~.o be subject to mandatory tender at his address as it appears on the registration books of the Trustee. Failure to give any notice of tender.or any defect therein shall not affect the validity of any proceedings for the tender of any Series 1996 Bonds with respect to which no such failure has occurred, and any notice mailed as provided .herein shall conclusively be presumed to have been given whether or not actually m~eived by any ...... Bondholder, On the re'rider date, Series 1996 Bonds subject to mandatory tender will be deemed to have been purchased whether or not delivered by the Bondholder thereon provided funds are on deposit with the To:.Mark Raymond, Esq. Moyte, LanJgan, Katz, .FitzgeFrom: SUsan Evahs 215-972-8302 6126196 12:59:48 Page 16 of 49 Trustee for tl~ purchase of tendered Series 1996 Bonds. In the event funds sufficient to p/~y the purchase '?rice of all Seres 1996 Bonds are not on deposit with the Trustee for purchase of all Ser~es 1996 Bonds )n the tender date, the lender shall be rescinded, and the Trustee shall return all Series 19 ~"~ Bonds to the ~endering Bondholders, and shall also send notice, by first class mail, the holders of the Series 1996 Bonds notifying them that the tender has been rescinded. In the event any Series 1996 Bonds subject to mandatory tender is not so tendered, the Trustee will authenticate and deliver a replacement Series 1996 Bond of the same series and of like maturity as the Series 1996 Bonds of the same series and of like maturity,as the .Series 1996 Bonds.not tendered, and bearing a number not:contemporaneously outstanding, and the Series 1996 Bonds which were not tendered shall no longer be Outstanding under this Indenture, except that the Bondholders .thereof shall be entitled to receive the tender price therefor upon tender to the Trustee. On the tender date, the Trustee shall authenticate and register replacement Series 1996 Bonds for the Series 1.996 Box~zds tendered or deemed .tendered in the name of the Owners or its designee, shall pay the tender price of Series 1996 Bonds tendered to it from amounts held by: it in the special account established for such purpose as hereinabove provided, and, except for any amounts held bY it for Series 1996 Bonds deemed tendered, Shall pay to the Owners or its designee any amount reraaining in such special account. Additional Bonds Subject to receipt by the Trustee of the documents listed in the Indenture, the Issuer can issue one or more Series of additional bonds .("Additional Bonds") for the purposes set forth below. Each such Series of Additional Bonds shall be issued pursuant to a supplement to the Indenture and shall be equally and ratably secured under the Indenture with any ether'bonds issued under the Indenture, without preference, ~priority ~or distinction of any bonds over any other bonds; provided, that certain Bonds c~xt be issued as subordinated Bonds. No Series of Additional Bonds shall have a lien on revenues deposited into the .Revenue Fund senior to the lien created for the Series 1996 Bonds. For so long asany Series 1996 Bonds are rated by the Rating Agency, no Additional Bonds can be issued without written evi3.ence from the Rating Agency that such rating will not be reduced or withdrawn as a consequence of the('?suance of the Additional Bonds. ~ Additional Bonds can be issued (i) to pay the costs of adding to, renovating, repairing, improving and equipping the Project that are of such nature as to be chargeable to a fixed capital account by generally accepted accounting principals, (ii)to refund any Series 1996 Bonds or Additional Bonds previously · issued by the issuer, (iii) to .provide working capital for the Owner (iv) for any combination of such purposes. SECURITY FOR THE SERIES 1996 BONDS Pledge Under' the Indenture The Series 1996 Bonds are limited obligations of'the Issuer under the terms of the Inderiture. Pursuant to the Loan ,a, greement the' Issuer will lend the proceeds of the Series 1996 Bonds to the 'Owner and the Owner will agree to make :loan payments, subject to the nonrecourse terms of the Loan Agreement and the Note, in amounts sufficient to pay the debt service requirements on the Series 1996 Bonds. The Series To: Mark'Raymond, Esq. MoYie, Lanigan, .Katz, Fitzg~From: Susan Evans 215-972-8302 6/26/96 13:00:42 Page 17of49 1996 Bonds are payable solely from the paymems due under the Loan Agreement and the ~ote and certain funds established under the .Indenture and held by the Trustee. The Issuer has pledged ~e revenues and receipts received by it .under the Loan Agreement and Note and all monies and securities and funds established and created ,by the Indenture or which are held by the Trustee thereunder to the repayment of the principal ot~ redemption premium, if any, and interest on the Series 1996 Bonds. Reference Should-be made to Appendix B "Pro Forma Financial Projections" for furiher discussion ccmc~g the anticipated rent from the Project. .Reserve Funds and Other Funds Established and Created under the Indenture. Debt Service Reserve Fund. Series 1996 Bond proceeds equal in mount to $855,348*, the maximum amount required to be paid on account of principal of and interest on all Series 1996 Bonds in any Bond Year (the "I996 Bonds Debt Service Reserve .Fund Requirement') will .be deposited in the 1996 Bonds Reserve Account of the Debt servt'ce Reserve Fund. The Trustee will use amounts from the 1996 Bonds Reserve Acceunt of the Debt "Service Reserve Fund to the extent necessary to pay debt service on the Series I996 Bonds if transfers from the Revenue, Operating Reserve, Maintenance Reserve and Surplus Funds are insufficient therefor. :,If the :balance in the 1996 'Bonds Reserve Account falls below the 1996 Debt Service Reserve Fund Requirement, the Trustee shall transfer funds to the 1996 Bonds Reserve Account to provide therein the amount:of the 1996 Bonds :Debt Service Reserve Fund Requirement, first, to the extent and in the manner provided in the 'indenture, from the Revenue Fund, then the Surplus Fund and then from the Operating ~--~Reserve Fund, and then from the Mainlenance Reserve Fund. If on any January 1 or July 1 the amount in any account in the Debt Service Reserve Fund is less than the Debt Service Reserve Fund Requirement therefor solely by.reason of a change in the valuation of investments therein, no transfers to such account shall be required so long as all investment earnings and amounts in such account remain therein until such account contains-the amount of the .Debt Service Reserve Fund Requirement therefor and on the next January I or July 1, as the case may be, such account contains an amount equal to tlie Debt Service Reserve Fund Requirement therefor, if such account at that time does not contain an amount equal to the Debt SerVice Reserve .Fund Requirement therefor, the Trustee shall begin the transfers thereto of the amounts required. lVIaintenance Reserve Fund. Series 1996 Bond proceeds equal in amoum to $96,000* (the "Maintenance Reserve Fund Requiromen ) will .be deposited in the Maintenance Reserve Fund. The Trustee will use amounts in the Maintenance Reserve Fund under the Indenture (i) to make transfers to the Expense Fund to the extent that the balance therein after transfers from the Revenue Fund, the Surplus Fund and the Op?rating Reserve Fund and the Operating Reserve Fund is less than the sum of the Expense Requirement and the Tax/Insurance Requiremeng (ii) to make transfers to the Interest Account and then t? the Principal ~.~Account Io the extent necessary to pay interest on and principal of (whether at miiturity or upon Preliminary, 'subject to change To:' Mark Raymond,Esq. Moyie, Lanigan, Katz, Fi~zg(From: Susan Evans 215-972-8302 6/26/96 13:01:38 Page 18 of 4~c acceleration or redemption), lhe Series 1996 'Bonds as the same may become due, in the event transfers from the Re~.:enue Fund, the Surplus .!Fund and the Operating Reserve Fund are insufficient for such purpose; and ~fii) to:make lrarmfers to the Debt Service Reserve Fund ifrequired under the.?!ndenture. At the dir ~ection of the Owner (which direction .shall be accompanied by a certificate to ~e effect that it ,is in eomplian? with ~s.paragraph), the Trustee shall use amounts in the Maintenance R0serve Fund not utilized :pnr~ to the previous paragraph to pay the cost of acqui~g, constmcting~and equipping fmtures, ma¢~, equipment, .furniture,-real property and additions to, or improvements, extensions or enlargements ot~':.the ~Project, and ~the coster extraordinary maintenance, or repairs (repairs or maintenance .not recuning annually), renewals and replacements and repairs resulting from an emergency caused by :some extraordinary.occurrence; provided, .however, that such ,disbursements shall be made to pay only costs .which are capital expenditures normally subject to depreciation in accordance with GAAP as evidenced : in the certificate_of ~:Owner hereinabove mentioned. Property acquired with payments made pursuant to this section shall 'become part of the Project. In addition,to ::the use of monies inthe Maintenance Reserve Fund for any of the purposes set forth above, amourrts transferred.from lhe Surplus Fund and deposited into the Additional Deposit Account shall be available to pay and .shall :be .disbursed by the Trustee, at the written direction of the; Owner (which direction shatl be accompanied by a certificate to the effect that it is in compliance with this.' paragraph), (i) .lo repay advances made by the ~Owner orby third parties or to pay principal and interes[ on borrowings obtained'by the Owner, provided amounts so :advanced or the proceeds of such borrowing were used by -are Owner to provide for the operation, maintenance or 'improvement of the Project, (ii) to establish ~reserves for maintenance or repair expenses which the Owner estimates will be needed within a reasonable period of time and :that, when incurred, will exceed 'the amounts then expected to be available in the Monthly Deposit Account of Ire Maintenance Fund for such purpose and to pay other Expenses or capital expenses of the:Project. Opera~ Reserve 'Fund. Requirement on any July I or January t will be transferred to 'the Revenue Fund. Series 1996 Bond proceeds, equal in amount to $71,279' will be deposited in the operating Reserve Fund. The amount on deposit in the Operating Reserve Fund is required to .equal one-twelfth of the :maximum annUal debt service :(on a BOnd Year basis) on the Series 1996 Bonds (~e "Operating Reserve Fund' Requirement'). The Trustee will use amounts in the Operating Reserve Fund under the Indenture (i) to make transfers to the Expense Fund to the extent the balance therein after, transfers from ~the Revenue Fund and the. Surplus Fund is less than the sum of the Expense Requirement and the Tax/Insurance:Requirement, (ii) to make ~ansfers to the various accounts of the Bond Fund as required by the Indenture.to.the extent-necessary to pay whenl due debt service on the Series 1996 Bonds in the event transfers from the Revenue Farad and the Surplus Fund are insufficient for such purpose, and (iii) to make transfers to the Debt Service Reserve ~Fund to provide therein the Debt Service Reserve R ' eqmrement m the event transfers from the Revenue Fund and the Surplus Fund are insufficient for such purpose~ Any amount on deposit in.the Operating Reserve Fund in excess of the Operatingi Reserve Fund To: Mark Raymond, 'Esq.'~ Moyle, Lanigan, Katz, FitzgEFr0m: Susan Evans 215-972-8302 6126/96 13:02:38 Page 19 of 49 ,Project Fund ? Series 1996 Bond proceeds (exclusive of accrued interest) remaining after deposits into the Debt ,.Service Reserve Fund, Maintenance Reserve Fund, Operating Reserve Fund, Expense Fund and Cost of Issuance Fund will be deposited in the Project Fund. Any monies-held in the Project Fund shall be -disbursed only for payment of costs related to the Project, as follows: (i) to make a payment to the Owner in the amount of $ , which the .Owner agrees will be used to pay amounts constituting operating or non-operating expenses of the Project or amounts chargeable m capital account of the Project in accordance with generally accepted accounting principles; (ii) to pay the amount of $ to Resolution Trust Corporation or its successor or assign, as holder of that certain 'Promissory Note made December 18, 1995 by the Owner in the principal amount of $8,:835,000.00, in satisfaction thereof; ('fii) to pay the amount of $ to The Enterprise Foundation, ~c., as holder ~of that certain Promissory Note made, DeCember, 1995 by the Owner in the principal amount of $495,000.00 in satisfaction thereof,(the ~ Loan"); (iv) to pay the~ amount of $184,000.00 to the Issuer as partial consideration for the assignment by the Issuer to the Owner of the 'Issuer's right to acquire the Project from Resolution Trust Corporation; (v) to pay such.other amounts as are directed in writing by the Owner to satis~ all existing indebtedness and obligations of the Owner with respect to -the Project; and (vi) the remaining amount shall be disbursed by the Trustee to the Owner, m be used by the Owner to pay costs of repairs, replacements and other amount's chargeable to the capital account of the Project, pursuant to Requisitions signed by the Owner. The ivStial deposit of Series 1996 Bond proc~& to the Project Fund Will be $ limited Obligations of/ssuer · NEITHER THE SERIES 1996 BONDS NOR'THE INTEREST THEREON SHALIiBE DEEMED TO CONSTrrUTE A DEBT OF PALM BEACH COUNTY OR OF THE STATE OF ~FLORIDA OR ~NY POLITICAL SUBDIVISION THEREOF OTHER THAN THE ISSUER. THE~SER_IF3 1996 BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, ON, OR INTEP~ST ON THE SERIFS 1996 BONDS OR OTIJF~R COSTS INCIDENT THERETO EXCEPT FROM THE REVEN~ AND RECEIPTS PLEDGED AND ASSIGNED THEREFOR, AND 1NEITHER THE !FAITH AND CR~T~IT NOR THE TAXING POWER OF THE ISSUER IS PLEDGED TO THE · PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, ON OR INTF_~-~ST ON THE SERIF_3 1996 BONDS .OR OTI-IER COSTS INCIDENT THERETO. ~To:' Mark:Raymond, Esq.jTMoyte, Lanigan, Katz, 'Fitzg(F~0m: ~u~n~-~ns 215-972-8302 6/26/96 i 13:03:~8 Page 20 of 40' SOURCES AND USES OF FUNDS' The folloWing tables set forth approximately the sources and uses of funds in connection with the issuance and sale Ofthe Series 1996 Bonds(exclusive of accrued interest). .:Sources: Bond Proceeds PartnerShip ~ty_ :Contribution TOTAL SOURCES OF FUNDS I)eposR to Project Fund Payoff of RTC Obligation 8 835 000 Payoff of,Entemrise Loan Pa~offof City - Rehovations - Deposii to Debt Service Reserve Fund Deposit to Maintenance Reserve Fund Deposit to Operating Reserve Fund ~ParmeChip Development Fee PartnerShip Working Capital ' 465, O~Q~ 100.000 384.000 250,000 Costs of Issuance TOTAL USES OF FUNDS * ~mary, subject to change. THE ISSUER The Issuer .is a municipal corporation of the State of Florida. Pursuant to the Act, the Issuer is authorized to issue :the Series 1996 Bonds and to loan the proceeds thereof to the Owner f6r the purposes described herein. :~ The IsSUer ~has not.provided :the information hereto concerning the Owner or the Pro'ject and is not · '', , ). p eq' y , ' investigation and makes.no representation conc~ng the fiscal condition of the Owner, or the accuracy or sufficimcy of any information:herein concerning the Owner, , CERTAIN OF THE INFORMATION HEREIN OTHER THAN THE INFORMATION UNDER THE CAPTION "THE ISSUER" AND "LITIGATION" IS BEYOND THE KNOWLEDGE OF THE ISSUER. W~LE THE ISSUER HAS NO REASON TO BELIEVE THAT SUCH INFORMATION IS To:Mark Raymond,. Esq., Moyle, Lanigan, Katz, FitzgeFrom: .Susan Evans 215-972-8302 6126/96 13:04:10 Page21 of4~c INCOMPLETE OR INACCURATE, THE ISSUER HAS NOT INDEPENDENTLY IN~STIGATED :~OR CONFIRMED THE ACCURACY OR'COMPLETENESS THEREOF. THE OWNER AND TIlE PROJECT The ~er .The Project is owned by C/HP Cove, Inc. (the "Owner") a nonprofit Florida corpomiion which was incorporated September 29, 1995 ~ough the efforts of Cornerstone Hous_mg Corporation ( Cornerstone ). Comerstohe and Housing P _artnership were selected by th,e,,City in the summer of 1995 to participate in a pr_op0sal made to lfie Resolution Trust Corporation ("RTC) to acquire the Project thr6/agh the RTC's Affc~uda~le. 'Hou_sing Program. The-proposal made by the City, Comerstone and Housing Partnership ~spec. itied that~f the proposal were successful, Comers-tone andHousing Partnership wou!d ~reate a new :~mgle-pu~se :corporation contrOlled by Co..m_~_,stone and. Housing Pajrtnership to acquit? and ovxaa the ~_oject uk~on ~sfer from the RTC. The City. s j~roposal was selected by the RTC. Cornerstone and Housing Partnership then caused the Owner m be incorPorated, and the Owner acquired the Project from ,the RTC. The .prirfiary source of financing for the Project was provided by the RTC together with a loan made by The Ehterprise Foundation, Inc. ("Enterprise"). The Owner will ~efmance the RTC loan and the .Enterprise Loan with proceeds of the Series 199.6 Bonds. Under the~:bvlaws of the Owner, Iwo-flfirds of the members of the Board of Directors of the Owner are to be .elected or hppointed by the Board of Directors or .officers of Cornerstone and the remaining members of:the Board orDi~ectors of the Owner are to be elected or appointed by the Board of Directors Or officers ~,,,-ofHousing Partnership. Relationship~-nong Owner, Cornerstone and tlousing Partnership COrnerstone and 'Housing Partnership, as described above, control the Board of Directors of the Owner. In ~dition, pursuant .to agreements made in connection with the acquisition ~of the Project, Cornerstone Will provide asset management services for the Project and HousingPartnership will pr6;dde · social service ~mahagemem for the P}oject2 Cornerstone and Housing Partnership will receive fees from ,the Owner for providing such services. In addition, with respect to any net cash flow which is distributed pe~i_'odically by the Trustee to the Owner from the Surplus Fund, llae Owner has agreed to pay 28% of such ~nount to the City in recognition of the :City's role in the acquisition of the Pi~oject from the RTC (See Appendix A DE:gCRIPTION OF TftE PROJECT -; Adqui.s. ifion of the Project"), and the remaining ~7,2_% the Owner expects to contribute ~o the extent such conlributions to Housing Partnership and the Cornerstone are ,consistent with the charitable purposes of the Owner. Cornerstone ~ Cornerstone is a .Maryland nonprofit corporation incorporated July 24, 1991 through the efforts of E. nterl?ri. 'se, a pUblicly-supported chai-itable oq}anizafion. Comer.stone w. as recognized as ~m organization described in Section 501(c)(3) of the Code 'by determination letter dated November 2!, 1991. The directors of Cornerstone a}6 appointed or .elected by Enterprise. In addition to its involqemem with the ~.~.Project, Comer_stone is involyed ip. the acquisifi6n, deve!.o, pm. ent and operafi, on of _.thirt.ee~..~hous.ing ..d.e. velopments-for low and moderate income persons and families m Texas, Georgm and Maryland~ 2,627 units. - ~._~ Housing Partnership To: Mark. Raymond, ~sq. Mo¥le, Lanigan, Katz, FitzgEFrom: Susan Evans 215-972-8302 6/26t96 13:05:10 Page 22 of 49 Housing 'Parmerslfip is a Florida nonprofit corporation incorporated January 23, 1986. Housing .Partn~ship Was recognized as an organizafibn described in Section 50,1(c)(3) of the Code by determination letter dat~ May 21, 1987. ~It.is a community-based organization with its corporate office~ in West Palm Beach, .Florida. The members of the Board of Directors of Housing Partnership areal elected by its .,~embership and suCh membership is open to all residents of Palm Beach County. Pfilm ~each County is "the cotmty in ~ch the City and the P/eject are located. Housing Partnership v~ill provide,; social services at the Pr0ject. fl~ough its program known as the "Campus for Living" prograni..,i~ The Project .~ ~Clipper Cove Ap ~aflrnents (the "Project") is loc.ated at 1500 Southern Cross Lane in Boynton Beach, Florida and.consists of 25 :garden Style apai'lment buildings Containing a total of 384 rental units. The Owner acquired the ProjeCt from the Resolution Tm~t Corporation on December 20, 1995, and commenced operations of the 'Project as of such date and prior to such date had no involvement with the Project and no information concerning ,its operation. The Owner currently operates the Project ~rough a management agreement dated January 1, 1996 xvith'Property ..Asset Management of Fl~id_a~General Partnershi_~. The o _peration of the Project wifl be subject to the restrictions imposed in connection with the issuance of the Series ~.1996 Bonds ~ts described in lifts Official Statement a~_d ,~ooendices and subject to the restrictions ' _m~posed by the RTC which are des,,eribed in Appendix A Description Ol3The Project -- Acquisition ofthe Project, RTC Use Restrictions. ~ Further information concerning the Project is contained in Appendix A -- "Deschption Of The Project," : C/HP Co e, Inc. (tbe Owner ),has no assets other than the Project and does not at this: time engage in any activities unrelated to the Project. BONDHOLDERS' RISKS ,AN INVESTMENT IN THE SERIES 1996 BONDS INVOLVES CERTAIN RISKS. IN ORDER TO IDENTIFY RISK ~FACTORS AND MAKE AN INFORMED INVESTMENT DE£~ISION AS TO WHETHER THE SERIES 1,996 'BONDS ARE AN APPROPRIATE INVESTMENT~ INVESTORS SHOULD REVIEW THE ENTIRE OFFICIAL STATEMENT. INVESTORS, PARTICULARLY INVESTORS. THAT ARE CORPORATIONS (~,INCLUDING S CORPORATIONS AND FOREIGN CORPORATIONS' ,OPERATING BRANCHES IN THE UNITED STATES OF AMERICA), iPROPERTY ~OR CASUALTY INSURANCE COMPANIES, BANKS, THRIFTS,! OR OTHER FINANCIAL INSTITUTIONS OR CERTAIN RECIPIENTS OF SOCIAL SECURITY BENEFITS, ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF PURCHASING THE SERIES 1996 BONDS. INVESTORS SHOULD CONSIDER cAREFULLY ALL FACTORS THAT CAN AFFECT THE OWNER AND THE OPERATIONS AND REVENUES OF THE PROJECT AND THAT CAN CONSEQUENTLY CREATE THE POSS~ILITY THAT THE SERIES 1996 'BONDS WILL NOT BE PAID, WILL BE REDEEMED BEFORE MATURITY OR ACCELERATED OR THAT INTEREST ON THE SERIES 1996 BONDS MAY BE TAXABLE FROM THEIR .DATE OF ISSUANCE, SOME, BUT NOT ALL, OF THE FACTORS X~rtICH SHOULD BE CONSIDERED ARE DISCUSSED BELOW. To: Mark Raymond, Esq. !'Moyte, Lanigan, Katz, 'Fitzg(From: Susan Evans 215-972-8302 6/26/96 ~ 13:06:08 Page 23 of 49 Series 1996 Bonds Are L'nnited Obligations The Series 1996 Bonds and the interest thereon are limited obligations of the ISsuerpaya_ble solely ~rom the revenues and rece'rpts derived :by the Issuer from the Not6 and other security theiefor, which revenues and ~eceipts have ~ pledged and assigned to secure payment thereof. The Series 1996 Bonds will be secured by and payable from certain moneys held under the Inden__,t~_e, including payments to be ,made by the .Owner unde{ the ~ Agreement and the Note. The Owner s obligations finder the Loan Agreement ~ Note are nonrecourse obligations. In addition the Owner:has, and ~s expe~ed to have, no '.assets other than the Project. Holders of the Series 1996 Bonds will therefore have reco.fl.'rse only to the :Project and .the moneys on deposit in the funds maintained under the_ Indenture to satisfy ~se obligations. No other reVenueS ,bt asset~ will be available .for the payment oi; or as seCUrity for, ~e Seri~s 1996 Bonds. No r~presenation or assurance can be given flat the Project will generate sufficient revenues to enable the Owher to meet its obligations .under the Loan Agreement and the Note. The Owner .has no assets other than its interest in the Project and, the enforcement of payments required by the Loan Agreement may be made only against the Pr6ject. The Owner's obligations under the Loan Agreement are nonrecourse in nature, and any judgment or decree to enforce the Ow~_.er's obligations under the :Loan Agreement will be enforceal~le against the 'Owner only to the extent .of its interest in ,the Project. Accordingly, the enforcement of payments required .by the Loan Agreement may be only against the .Project. ' It has been the exp. erience .of lenders in recent years that attempts to foreclose on commercial property are frequently:met with defensive measures, such as :protracted htigation and/or bankruptcy proceed'rags, and,that such defensive measures can greatly' increase the expense ifivolved in achieving so~h realization. The 'facilities comprising the .Project are ~yecifically constructed as multi-family housing facilities and are subject to physical restrictions ti/at may Iimit ~the alternative uses that can be made of such properties. If 'the Owner is Unable to operate the Project successfully as multi-family housing, the numbeP of entities that would be 'interested'in ~_urc _has____ing ~or leasing the Pr6ject t~om the Trustee for o~er pu~oses could be extremely limited, and the abili~ of :the Trustee to lease or sell the Project to flfirdpdrties woUld be adversely.affected. Therefore, there is no assurance that the Trustee could realize sufficieni proceeds from ~'the foreclosure of the mortgage and .lite sale of~e Project thereunder to pay the Series ~1996 Bonds in whole or .in part. Prospec~ for the ~uninterrupt_ed :payment of principal and interest on the Series 1996~ Bonds in ac~rdance with their terms .are therefore taZimadly dePendent upon the successful operation th~ Project. Tax Exempt Status of the Owner Theax exempt satus of the Series 1996 Bonds is conditioned, '_m pa~,_ .upon the Owner's _sa.ms as an organization described in S .ection 501(c)(3) of the Code and exempt Ii,om t~deral income aX. In the event ~ltmt the Owner ceases to be an .exempt organization described under Section 501(c)(3) of the Code, interest on the Series 1996 Bonds may be subject to federal income taxation. -~- Loss of Exemption of'Interest on Series 1996 Bonds ~;, The excludability of interest on the Series 1,996 Bonds from gross income for federal income ax purposes is dependent upon continuing cgmpliance by the Owner with various requirenxents, including ~erfain of.the requiremehts summarized her~in; however, the remedies available to the Issuer and ~e Trustee to comPdl c9_ mpliance are limited. Upon the occurrence of a Determination of Taxability, the interest rates Otherwise borne by the_Series 1996 Bonds shall be increased, but not decreased, .to rates determined by the Owner (in a certificate delivered to the Trustee) by multiplying the rates otherwise ~borne by the Series 1996 Bonds (from ~and after the Determination of TaxAbility) by a fraction, the_ numeratBr of which is one and the denominator Of'which is one minus the Maximum Corp°rate Rate as of the date of the Determination of Taxability, ,provided that if such fraction is less than one, then no interest rate adjuslment shall be made. To: Mark,Raymond, Esq. Moyte,'Lan[ga~ Katz, FY~zg(From: Susan Evans 215-972f8302-' 6/26/96 13:07:16 Page 24 of 49 Loss-from R~lemption or Mandatory Tender :Prior to Maturity A.pe_rson ~vho purchases aBond at a price in excess of par or .who holds a Bond trad~g at aprice in ~xcess of. par:ShoUld consider the possibility of redemption or mandatory tender of the Se~s 1996Bonds Risks,of ~ Estate Investments :! Ownership and.operation of real estate, such as the Project, involves certain risks, inclu~ting the risk of' adverse _changes in g~meral economic and local conditions, including an oversupply and lagging demand for housing; ~versupply of similar units in .the area; population d~creaseS; ~shred losses;failure of residents m p~y renf;.o~g deficits and foreclosure; la~ck of attractiveness of the Property to residents; adverse chahges in n~ghborfiood values; and adverse changes in zoning laws, f~de£al ~nd local rent controls, other laws and-~tions and real property tax rates. Such risks also include [he possibility of damage or .destruction.by _:~e, hurricane or 6th& casualty, and condemnation. If the Project should be ,~rtialty or completely tini~abitable during restoration after damage or deslructiOn, the ihability of the ~Owner m rent.th~ affected mrs Would impa~ revenues available for payment of debt service on the Series 1996 Bonds. ~ Insufficient Insurance ~ V~tile the~-Owner int~ls ~o .maintain certain types of insurance, and is required to do so under the Loan ~greem'~nt and the M.o~g. age, the Project may ~nonetheless not be insured agains~t~ all hazards to which it may be exposed or liabilities which can arise in connection with its operation. If the Owner incurs uninsured casualty losses or liabilities, its ability to make timely payments urider the Loan ,Agreement and Note canbe adversely affected. Set Aside for:Low:Income Tenants ' The economic.feasibility of the Project depends in large part upon its being substantially occupied. The Owner is required to maintain the Project as a "qualified residential rental project" as defined in Section 142(0) of the Code and is required to comply with the terms of the LURA with the RTC asa ~result, the Owner is req_uir' e_d to have 20% of the units in the Project occupied (or treated as occupied) by persons Whose income for federal'~x.hwpurposes does not, at the time oi~ initial occ.u;pancy, exceed 50% of.the medianl, gross income of the ~Wes. t Palrfi Beach Boca Raton,~Florida, Metropolitan Statistical Area whiCh is ~and to .mak~ an ~-d-d~%_--~ units available for tenants whose income is 80% or less of the median :gross income. There:can be no assurance that the Owner will be able~m rent units to .comply with ~ose r~ts or at rentals which will enable it to make timely payment of its obligations.I i~ Competition: ',The muttifamily .rental housing market in the Pr?ject, s location is highly competitive. While the Owner believes that the Project compete effectively within its service area, there can be no assurance that it will .continue to do so in ~he future. Future.competition can include projects (i) designed a~.~d built with the benefit of advanced te~_~ogy not.utilized in the :Project, (ii) which are able to reduce significantly their costs lhrough economies of s~le or other methods not available to the Owner or (iii) which are perceived to offer more attractive faciliti~ or services. Other Operating Risk;Factors The occurrence of any of the following events, or other una~, a.'cipated events, could a~lversely affect ,the o~perationg of the owner and"the ProjeTct: inability to control increases in operating Costs, inclu, ding salaries, wageS and fringe :benefits, supplies and other expenses, without being hble to obtain corres~in~ rent increases from residents of the Project whose income will largel~i~be fixed; and employee strikes and other adverse labor actions which could result in a substantial increase in To: Mark. Raymond, Esq. Moyie,'Lanigan, Katz,'Fitzg~From: ~Usan Evans 215-972-8302 6t26/96 ~13:08:16 Page 25 of 4.c e~ditures Without a corresponding increase in Project revenues; and adoption of federal, state or local ~le~islation or regulations havirig an a~lverse effect on the furore operations of'the Owner of the Project. Reserve Funds ~ ~ ; . 'rpl. s Fund for Payment of Bond principal and interest to the ex~nt moneys on det~_ sit in lhe,Bond Fufifl are insufficidnt therefor. The Debt Service Reserve Fund Reqt/irement f~r the :~eides 1996 .~}" nds is ~e maximum mount required to be paid on account of principal ahfi interest in the ~en, c..m!yent.or .any s.u~e.quent B. ond Y _ear. ~e Operatin~ Reserve Fund Requirement isi~ one-twelfth of .the Maxtmum Annual Debt SerVice on the Series 1996 Bonds. The Maintenahce Reserv~ Fund Deposit Re§u. iremea.t is $8,000 per month. 'Althougl. a. :the Owner believes such reserves to be reasonable and anticipates that revenues from the Prgject will be sufficient to cover the debt service on the Series 1996 Bonds, there ~is no assurance that funds reserved and future revenues from the Project will be sufficient for this purpose. :Limited Market for Project on Foreclosure As a result of the lack of alternative uses of the Project for other than multifamily rental housing, the Tmstee's remedies and, in the event of a foreclosure of the Mortgage lien against the Project, the ntimber 'of entities that Would be interested in p~chasing or leasing the P_r6ject would be limited..: No assurance can ~be made that the mount realized upon any forced sale of the Project will be sufficient to pay the _Series 1996 .Bonds. In particular, there can be no aSsurance that the co~t of the proPerty }included in the Project would be realized upon any forced sale thereof. ;Loss or Subol-dination of Liens Securing Series 1996 Bonds Although the Indenture creates prior hens on the funds and accounts established therein for the benefit ,of the Bond. holders, in the event of ~ b _ankmptcy or other type of insolvency of the Owner, ~ere can be no ~"~ assurance that the proceeds of the Series 1996Bonds held under the Ind6nture would not be considered part of the estate or assets of the .:Owner or otherwise be subject to such proceedings. In addition, the Oarious security interests estabhshed under the Indenture, the Loan Agreerrient and the Mortgage can be ~ited by or ~abject to other claims and interests. Examples of such claims and interest are: statutory liens; righ~ .arising in favor of the United States of America or any agency thereof; constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its _equitable jurisdiction; federal bankruptcy laws affeCting mounts earned by the Owner after institution of ::b -anlsm__ pt_c-y proceedings by or against the Owner; the r6quirement that appropriate continUation statements be filed 'in/mCordance with .the Uniform Commercial Code, as from lime to time in effect, and other indebtedness. Enforceability of Remedies The Series ~996 Bonds are secured :by the Indenture and the Mortgage which proyide 'tbr the grant of 'liens on. and security interests in the _Project, including a security interest m furniture, furnishings arid other ~]~ersonal-propc.~y in the Project, :and in the revenue~ pledged to the payment of the Serie~ 1996 Bonds. The practical re~dization of Value from the property ~bject to the moi'tgage lien upon ~,a~ default will .depend upon .the exercise of various remedies specified by the Indenture, ihe Loan Agreement and the 'M~rtgagd. These and other remedies can, in many respects, recluire judicial actions which are often ~ubject to discretion and delay. Under existing law, the remedies specified by the Indenture and the Mortgage may not be readily available or can be limited. _A court c/n decide hot to order the specific perfo-mfance of the covenant~ c. ontained in those documents. Although the Owner has no present in~enfion · to institute bankruptcy proceedings or to seek protection under Title 11 of the United States Code or any ~other federal or stiite d~btor relief laws, the Owner cannot be prevented from instituting such proceedings or seeking sugh protection or rebel. The various legal opinlons to be delivered concurrenily with lfie ..deli.yer~ 6£the Series 1996 Bonds will be qualified as ~o the enforceability of the various legal instruments ,by Jhra.m/ons aposed by state ..and f ral laws, rulings and aecisions affec ng re edies ~'t~anlcmptcy, reorganization or other laws affecting the enforcement of creditors' rights ~enefally. To:'- Mark Raymond, Esq. Moyle, Lanigan, Katz, FitzgE'From: Susan Eva~ 215-972-8302 6/26/96 13:09:24 Page 26 of 49 Lack of FeaSibility Study ~ No feasibility study or similar analysis of the projected future operations of the P~oject h~.s been included in ~s Official Statement, and neither the issuer, the Owner nor the Under, rs make any represemaliom whatsoever regarding the future operations of the Project. ,!~ '.The Pro-[orma Financial Projections included in Appendix B are based on certain assumptions ;significant to the operation of the Project as described th&;ein, and sets forlh information as of the date ~reof. 'Some aSstimed events and circumstances inevitably will not materialize and unanticipated events and circums~Eces .may occur subs .equent to the date of th6 forecast. Therefore, even if the kssumptions con _oeming utilization levels are ~eved and maintained, lhe ac.tu, al results achieved during: the perioit will ~vary from the forecasted results and the variations may be material. Neither the Issuer, the Owner, the Underwriters, the Trustee nor any legal counsel rendering approving or other .opinions wilh respect to the transaction described herein, have verified the assumptidns and conclusions contained in are Pro-Forma Financial Projections included in Appendix B. Prospective :~investors are advised to read the Pro-Forma Financial Projections in their entirety, including all notes, assumptions and supplementary information set forth therein. THERE ~ NO: ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND V~rlTH THE ASSUMPTIONS MADE, AND NO REPRESENTATION CAN BE MADE, THAT TE{E FORECAST IN THE PRO-FORMA FINANCIAL PROJECTIONS WILL CORRESPOND WITH 'I:HE RESULTS .ACTUALLY ACHIEVED IN THE FUTURE. The..rating assigned to the Series 1996' Bonds reflects only the views of Standard & Poor's at the time such rating ~s assigned, .and the Issuer and the UnderWriters make no representation as to the -appropriateness of the rating. There is no assurance that the rating will continue for any given period of ti~e .6r :that the raf.mg will not'be revised downward or withdraw~ entirely by Standard ~ Poor s. Any such downward revisaon or withdrawal of the rating is likely to cause the market price of the Series 1996 · ·Bonds to decline. SecOndary Market and Prices : The Underwriters will not :be obligated to repurchase any of the Series 1996 ~Bonds and no representation: is made concerning .any secondary market for the Series 1996 Bond~. 'ih. ere can be no asSurance.that any secondary market wilt develop follo~w~ the completion of the offeriff~ of the Series 1996 Bonds or ltiat the inifihl offering prices for the Series 1996 Bohd~s will continue for any period of time. Investors should understand~the long-term and economic aspects ot an investment in the Series 1996 Bonds and should assume that they will liave to :bear the economic risks of their investment indefinitely. An.investment in the Series 1996 Bonds is unsuitable for any investor who is not able to hold the Series 1996 Bonds to maturity. Tax Laws May Change Beginning in .approximately April 1995, various proposals have been mentioned by members of the C0ngress of the Unlfed Slates of America and others concerning reform of the internal revenue (mx.) laws ofth~ United States. ~ertain of these proposals, if implemented, could have the effect of diminishing the value of obligations of states and their pohtical subdivisions, such as the Series 1996 Bonds,i by elimir~ting _.~or changing the tax-exempt status-of '~m~rest on such bonds. Whether any of such?proposals will ultimately becOme law, and if so, what effect such proposals could have upon the value of bonds such as the Series 1996 Bonds cannot be predicted, however, ii ~s possible that any such law couldi~mve a material and adverse effect upon the value of the S6ries 1996 Bonds. .... Effect of Bankruptcy To::'Mark Raymond, ,Esq.. Moyle, Lan~gan. Katz. FitzgEFrorn: SusaniEvans 215-972-8302 . Bankruptcy proceedings may adversely affect the enforcement of Bondowners' rights. Federal >ankruptcy la-&s may have :an ad;verse effect on the ability of the Trustee and the Bondowners to enlbrce heir claim tothe Se:cnz/ty g _~ted by the Indenture and the Loan Agreement..Federal bankruptcy law ~rmits adoption ofa reo~g/niza00n plan even though it has not been accepted by the owners of a majority "'in ~g _gregate principal! : am6unt',,, of~. Series. 1996 ',B,-onds,: if the Bondowners are proxaded' with the benefit of their (Srigifi_al lienor the indubitabte'eqmvalent. In addition, if the bankruptc~ Court concludes that the Bondowners have "adeg. uale protection'~ it may: (i) substitute other security :subject to the lien of the Bondovmers, .and (ii)sut~ordin~te the lien of the Bondowners (a) to claims by persons supplying goods and Services-to file Owner after bankruptcy, and (b) to the administrative expenses of the bknkruptcy p_roceedings. In the ?_v-~_e~__,of'b~ptcy of the O.~wn, e...r, the amount realize,d, by t~,,e_ Boridowners might .depend on the b_a3flSxu_ ptcy s. court s ihtei-pretat!on of indubitable equivalenf and ' adeqdate protecfi6n" un-der the then:existing circumstances. The bankruptcy court may also have the power to ir/Validate certain provisions of the Leah Agreement and Indenture which make bankruptcy and ~elated proceedings by the Owner an event of defautf thereUnder. THE INDENTURE Funds; Application of Bond Proceeds The ~denture establishes a Project Fund, a Debt Service Reserve Fund, a Maintenance Reserve Fund, an Operating Reserve Fund, a Cos~ of Issuance Fund, a Revenue Fund, a Bond Fund, an Expense Fund, a Rebate Fund and a Surplus :Fund. All accrued interest on the Series 1996 Bonds paid by the purchasers thereof will be deposited in the Bond 'Fund and used to pay a portion of the interest due on such Series 1996 Bonds on Jahua~' 1, 1997. As described below, the proceeds of sale of the Series 1996 Bonds as well as equity of the Owner will.be deposited in the Debt Service Reserve Fund, the Main(enance Reserve Fund, the Operating Reserve :FUnd, the Cost of Issuance Fund, the Expense Fund and th0'.iProject Fund. }~a ~n~_g~s on all funds under 'the Indenture-other than the Rebate Fund and Debt Service Regerve FUnd will be transferred to :the Revenue Fund. Earnings on the Rebate FUnd will be retained in the. Rebate Fund. Earnings from the investment of the amounts on deposit in .any account in the Debt Service Reserve Fund shall b~ retained therein to .the extent the amount on deposit therein is less than the Debt Service Reserve FUnd Requirement therefor, and otherwise shall be deposited in the Revenue Fund as received. Cost of Issuance Fund Series~ 19~6 Bond pr _oqeeds in an amount-eqUal to the estimated costs of issuance of the Series 1996 Bonds, including coun~l fees and .underwriting' fees, will be deposited in the Cost of Issuance Fund and will be used to pay any such costs. Any amourits remaining in the Cost of Issuance.Fund on Septembe.r 1, 1996, will be transferred to the Bond Fund and applied as a credit against principal payments required to be made by the Owner on'the Series 1996 Bonds. Revenue Fund The 'Trustee will ,deposit in the Revenue .'Fund, as received, all receipts with respec.f?o the Project, whether derived from th& Note, Loan Agreement, the Mortgage, the proceeds from the inmrance or from a~_y other source. ~s from investment of the. Revenue Fund shall be retained therein as received. As of the first Business DaYof each month, but not later than the tenth day of such month the Trustee shall :transfer.moneys from th~ Revenue Fund monthly as follows and in the following order: (1) to the Rebate Fund, if any, to the extent the Rebate Analys, t, determines,,p, ursuant to the Indenture that a Rebate AmoUnt must bedeposited in the Rebate Fund. (see' Rebate Fund below); (2) to the General Expense Account the amoUnt needed to cause the amount therein to equal the Expense Requirement and to the Tax/InsUrance Account and the amount needed to cause the amount hherein to equal the 'Tax/insurance Requirement. To: Mark Raymond,: Esq." MoYle,.Lan~gan, Katz, Fitzg(From: Susan Evahs 2'15-97~-8302 6/26/96 ~- t3:11:28 Page 28 of 49 (3) . to ~the Interest Account ~beginning in August, 1996, one-fifth of the difference between the amount that will become due on the S~ries 1996 Bonds on January 1, 1997 and the amount deposited in the Interest Account pursuant to flue Indenture and beginning in January, 1997, one-sixth of he amount of interest that will becdme due on the Series 1996 Bonds on the next succeeding Interest Payment Date; (4) to :~ Princip~_1 Account.beginning in Janu ~ary, 1997, one-sixth of the principal amount of such Series 1996 Bonds ma~ring ~ subject to mandatory ,sinking fund redemption on the next succeeding July I or January 1; as ~ c~se may be. (5) . subject to certain provisions of the Indenture, if the balance in the Debt Service, Reserve Fund is less .than th6 aggregate Debt Service Reserve Fund Requirement, to the accounts in the Debt Service Reserve Fund th6 amount necessary to cause the amount necessary to satisfy the Debt S~rvice Reserve Fund Requirement.for all Series 1996 Bonds secured by an account in theDebt Servic6 Reserve Fund PRODDED HOWEVER, that if the .revenues available to the .Trustee for transfer to the Debt Service i~eserve .Fund in any mop. th-are not sufficient to satisfy the aggregate amount to be deposited therein, the Trustee-shaH deposrtsuch revenues on a pro rata basis, based upon the relative deficiencies from the Debt ;Service Reserve Fund Requirements therefor, between all those accounts therein; (6) : to flue 'Monthly 'Requirement Account of the Maintenance Reserve Fund the Maintenance Reserve Fund Deposit. Requirement, (7) if the ~ce in :the Operating Reserve Fund was less than the Operating Reserve Fund .Requirement as of the immediately .preceding January l, to the Operating Reserve Fhnd the amount necessary-to cause flue amount therein to equal the Operating Reserve Fund Requirement, (8) to the Trustee, the Rating Agency and 'the Rebate .Analyst the amount of any outstanding 'Trustee Fees and Expenses, 'Rating Agency Fees and Rebate Analyst Fees; [. (9) to the Asset Mantager, the Asset Management Fee and to the Social Service Provider, the Social Service'Fee, pro rata, if necessary; and (10) a~qer making the above deposits in each month, any monies remaining m the Revenue Fund shall be deposited in the Deposit AcCOunt of the Surplus Fund. ~Expense Fund Amounts in ~ Expense Fund will be used to pay the Expenses of the Project in_acCOrdance with the 3.nnual Budge. ~ aCany ,~ne the amoum in fl~e Expense Fund is insufficient ~6r payment of such · amounts, the Trustee 'shall transfer the necessary additional amounts to such Expense Fund from the Surplus Fun& ltaen from the Operating Reserve Fund and then from the Maintenance Reserve Fund. , Rebate Fund The Rebate Yund istO be established by,~e_ Trustee and shall be maintained by the ~mstee until the Trustee shall have received a Rebate Analyst s report concerning the computation period ,e~ading upon the retirement,Of,,the:last outstanding Series 1996 Bonds and until any Rebate Amount in resp6ct thereof shall have. been paid. To: Mark Raymond, Esq. MoyJe, Lanigan,:Katz, Fitzg{From: Susan Evans 215~972-8302 6/26/96 13:12:20 Page 29 of 49 ;Bond Fund ~ Amoun~ in the In~es~ Account ~d ~e P~c[pal A~ount of ~e ~nd F~d under ~ ~denmre will ~ u~ ~ meTmst~ :for ~ ~mt of ~d ~t~st on m~ S~es 1996 ~ndS. h m~ ev~t ~t mounts ~ ~e ~o~ ~ ~ ~gd F~d es~lishedn, for,'~e, p~ose of p~ymg' m~est' ~d p~cip~ on ~e Series I~6 ~nds ~e ~uffic~gt:,for such pt.~ose~, ~e. ~ms~ee will ~fer fist ~m ~e hterest Accoum e~ed for ~pa~t of ~est ~d ~ to ~e P~mpal Account created for ~e pa~t of principal -such ~o~ ~s :~I ~ ne~ss~ ~efor f~st ~om ~ S~lus.F~d, ~en ~om ~e ~pera~g RescUe F~d, ~d ~en ~om ~ M~t~mce Rescue'Fund. h~e event ~t ~e aforem~fioned k~f~s s~tl be ~ci~I pay ~e ~est or ~ipal com~g due on ~e Series 1996 ~nds ~en ~e amount ~ ~e ~t~e~ Accou~ ~d ~ P~cipa[ A~o~t res~cfivelY ~all be applied pro ram to pa~ents due on ~e 'Series 1~6 Bonds ~d ~e ~a~g mount due wi~ respect to ~y S~es secured by ~ account ~ ~e ~btSe~i~ Rede F~d s~ll be p~d ~Om such ~coufft. Surplus Fund On each january I, l~_.g~g January 1, 1997 (or as'soon at~er January 1 a.s the requirements set forth in this sentence can be satisfied), as long as and Series 199,,67 Bonds are outstanding, any amounts in excess of $10,000 in lhe Surplus ,Fund, after .giving effecl to_ an) reqUired transfers prescribed ?rein, shall be ,transferred by ~e TrUsiee to the Owner t'ollo~ing certilicafion that fine following conditiong!:have oc_curred:~ (l) the Bond .Coverage Ratio?as been met for the preceding Fiscal Year (as shown by ~ue Certificate Co'verage); {2) pursfiant to the current Annual Bridget, the Bond CoVerage Ratio will (be met for the current'Fiscal year, and (3) no Extraordinary Trustee Fees :and Expenses are due and owing. During the .period-from the date of initial delivery of the Series 1996 Bonds, to and including December 31; 1996, the .Bond Coverage Ratio, shall be calculated by multiplying the sum of (a) Gross. Revenues deposited into the 'Revenue Fund during the period from and including , , 1996 to and including De~ember 31, [I996 less Expenses paid during such period frOm the General E~-~ense Account ~and fro~ the Tax/Insurance Accoun(, the Maintenance Reserve Fund Deposit Requirement for such period, .any deposit made m the Operating Reserve Fund during such period, amounts paid for Trustee Fees .and Expenses, Rating Agendy 'Fees, Rebate Analyst Fees, Asset Management Fees and Social Service mandgement Fees durKng ~uch :period by , and dividing the result by the Maximum Annual Debt Service. Investment of Moneys The Trustee will separately invest and. reinvest any moneys held in the funds est~blisbed by .the Indenture at hhe .request of.and as directed in writing by the Owner in Investment Obligations. Any moneys held in the Bond rFund shall be separately invested and reinvested by the Trustee~~ as directed by the Owner, in'investment Obligations as defined in the Indenture. Event of Default and Remedies Each oflhe following constitutes an Event of Default under the Indenture; (a) ':indenture; default in the ~due and punctual payment of any interest on any Bond issued under the (b) - default in the due and punctual payment of the principal of or premium, if any, on any Bond (wheltiet at maturity, by acceleratiofior call fbr redemption or otherwise); ~ (c) subject to ~ grace .period :provi_'sions, default in the observance o.r performance of any.other of the covewhats, conditions or agreements of the Issuer under the Indenture; .and ~ (d) the occurrence of an Event of Default under the Loan Agreement. ~ .To: MarkRaymor~:Esq. '.Moyle, Lanigan, Katz, Fitzg~From: Susan Evans 215-972-8302 6126/96 ' 13:t3:20 Page 30 of 49 The :occurrence of a Determination of Taxability with respect to the' Series 1996 Bonds shall not ..constitute an Event of Default under the Indenture. ~. Upon'the occurrence of an Event of Defaul~ described in (a) and/b).above, the Trustee ~.ay, and at the ,-~qu~t of the. holders of not less than a majority in aggregate principal amount of the ou~stafiding Series 19i~6 .Bonds shaI1, and.upon the occurrence ~of afl Event 6f Defa/~lt under (c) or (d) above, the TruStee, only at the request%of the holders of.not:less than 100% of the aggregate principal amount of the Series 1996 Bonds th~n outstanding shall, by noficedelivere.d to the issuer and the Owner, declare the!principal of all sach S~es '~I~ Bonds and the interest accrued to the date of such declaration due. and payable. Upon .any such :acceleration, the ~Trustee shall immediately declare all payments required to be made by the :O~mer under ihe Note and Loan Agreement to be immediately due and payable and shall also transfer ali moneys from all other funds and accounts under the Indenture to the Bond Fund :established thereby. Theown~s ora majori~, of the aggregate principal amount of the Series 1996 Bonds issued under the 'I~enlure have the right to direct, .in iCcordance with the provisions of law and, the Indenture, the method and. place~.ofconducling all.proceedings to be taken to enf6rce such provisions of the Indenture. The Trustee-can in its di. screti:on, waive, a~.y Event qf Default und~ the Indenture and the conse, quences of such Eventof Default and rescind any declaration of acceleration of maturity of principa~t of and interest onthe Series t996 Bonds and shall do ~o upon the request of the holders of at least a majbn~ in aggregate :pri~:ipal-amount of such Series 1:996 Bonds then outstanding; provided, however, that nb ~ent of Default i~hail be waiv~d.~ess prior to such waiver all arrears of principal and interest (other that.?principal of or interest on ~ 'Series 1996 Bonds which became due andpayable by declaration of accelb-ration) and all expenses of the Trustee in connection with Such Event of Default shall:have been paid or Provided for or ~unless the holders of 100% in aggregate principal amount of the Series 1996 BOnd~ then ofitstanding shall 'have consented thereto. In casd of may Waiver or rescission described .above, or in case any proceedings ~en by. the Trustee on accOUnt of an~ such Event of Default shall have been discontinued or concluded or ,dcterm~aed adversely to-the Trustee o~ the Bondholders, then and in every such Case: the IsSuer, the Trustee and:the Bondholder~ shall.be restored to their former positions and rights under the IndentUre, but no such ~waiveror rescission ~shall extend :to any subsequent or other Event of DefaulL or imPair any right consequent thereor~ 'No .owner of any 'Bond shall have the right to institute any proceeding for the enforcement of the Indenture or for the e~recution of any lrust or reinedy thereunder unless (a) a default shall h~ve occurred of which the.Trustee has been given n6tice or is deemed to have notice as provided in the Indgnture, (b) such -default shall ~ave become hn Event of Default and the owner of at least a majority ~ the aggregate principal amount of the Series 1996 ,Bonds outstap~ dit.~g under the Indenture shall have offered to the tmste.e keasofiabte op' _p0mmity either to exercise its enforcement powers under the Indenture or~ institute the proceeding .~;.its own name, (c) such owners, have offered the Trustee the indemnity ~quired by the Indenture; ,(d)i the Trustee for60 days after such notice shall have failed to exercise such powers or to institute such proceeding inits own name of such owners, (e) no inconsistent notice is giveii to the Trustee bythe ,holders ofa maj_~rity of the prin6ipal amount of the Series 1996 Bonds during sucl~, 60 day period a/ad(f) the Trustee is giveri notice of such proceeding. Nothing contained inthe Indenture shall affect or im~ the fight of any Bondholder.to enforce the payfiaent of the principal o£ premium, if any, and interest on m~ Bond,.~daen due. - ..Any morays received .by 'the Trustee fol.~.owing an Event of Default under the Indenture and acceleration of maturity .of the:Series 1'996 Bonds shall, after payment of all unpaid fees and expenses ltae 'Trustee and of the costs and expenses resulting in the collection of such monies and the creation oI a reserve for an~cipated .fees, costs ahd expenses, be deposited in the Bond Fund. Such amounts shall be applied to pa3~any prinCip~ and interest.due on the Series 1996 Bonds. .,To:. Mark:Raymond,'~.sq.TM Moyte, Lanigan, Katz, FitzgeF¢°~i Su~J'~i~"~i~'~ 2~5-972~830~ .... 6/26/96 "13:14:2~ Page 31 of Supplemental.. Indentures The Inderiture can be modified or amended without the consent of, or notice to the 'Series 1996 Bonds issued under the Indenture for , one or more of the of _gra. n__ .ted tOor ~ddifioxtal reVenues, properties or collateral; (d) mended, or any similar federal statute hereafter in to the Indenture such ~of 1939, lawfully be A~et of 1939, as and to add Indenture Act for the issuance, sale · of the Indenture Bonds to pay the of the facilities io be the payment of the principal preserve prejudice in ao.~ of then to for of the not .In addififn, the holders of at least a majority of the aggregate principal amount of ~e Series 1996 · Bonds then outstanding under the Indenture can cSnsent to and approxTe the execution by th~ Issuer and the Trustee-of such .other supplemenhal indentures as can be deemed necessary or desirable by the Issuer for the purpo, se.ofmodifying~ altering, amending, adding to or rescinding, in any particular, any of the terms ~or p~rovisions ~ontained in the Indenture or ar/y supplemental indenturd; provided, however, that ~ no event ~ sh~ll the Indenture be amended without the wi'itteh consent of the holdei~ of all the Series 1996 Bonds then ..... ~outstanding thereunder to ~it (a) an extension of the: maturity of the principal of or the 'interest on any such Bond, (b) a reduction in the i~rincipal amount of or premium, if an3~, on any such Bond or the rate of interest there°n, or the amount .6f intekest pa.¥ab, le thereon, (c) a reduction in amount of any payment · ~reqtfired by any sinking fund that can be aPphcable to any such Bond, (d) a privilege or priority of~any · such Bond or ~Bonds over any other such B6nd or Bonds,~ (e) a change in the privileges or priorities of any Bond.or Bondsover any other Bond or Bonds, or (f) a redu6tion in the aggregate principal :amount of such Bonds required for con~ent to any such supPlemental indenture. ~. Amendments of Other Documents ~ The Indenture provides that the Issuer and the Trustee shall, without the consent of 6r nOtice to the .holders of the Series '1996 Bonds Outstanding under the Indenture, consent to any ~amendment, change or modification of the .Loan Agreement, Note, Mortgage or Restrictive Covenants: as can be required (/0 by the.provisions of the Loan.~eement, the Note, the Mgrtgage or the RestriCtive Covenants, or by the Ind6nture; (b).for the purpose ofc~g any ambiguity or fomaal defect or omission in such documents; (c) in, connectiOn with the~Project to.identify the same more precisely or substitute or add additional property acquired with the procee3s of SUch Bonds; (d) in conhection with the issuance, sale and dehvery of Additional Bonds ~/S provided in.and in compliance with the provisions of the Indenture to provide for payments of additiorml :amounts and/or revenues sufficient to pay the principal: of, premium, if any, and interest on such Additional Bonds and .such other changes as are necessary_ in connection with the issuance of such Additional Bonds as shall not, in the opinion 6f the Trustee, prejudice in any material respect the · fights of the Owner of the Series 1996 Bonds then outstanding; (e) to make any change ~tl?rein which, in the opinion of Bond Counsel, is necessary to preserve the exclusion of interest on the Series 1996 Bonds ....... from gross income for federal .iht. omc taxP ~. Bses; or (f) in connection .wil~..any other _clam)g? therein that, in the opinion of the Trustee, shall not preji~ice in any material respect the rights of such h~lders. In all other circumstances the documents.can be amended only with the written conse.~t of the holders ~.~ofat least a majority in aggregate principal amount of the Series 1996 Bonds then outstanding. The Issuer ~05~26-1996 B2:OSPM ~ROM 91~076591789 P.02 the same shall become du~. se~ by the Mortgage. ~Piedge to Trustee xece, .. , .... , an.a .a!.l re_venues and [ j ~ ~q~t io cnlolw..¢ m~ Ke,~trlcllv~ ~ov~nliLtlL~, The Owner's obligations to repay the Loan shall be evidenced by the Note and ;Lim~ Ob ,!i~afions of Owner ~ ~.Thc Is~..uer ~cxp~sl.y a.a..grccs .that the .P.P.P.P.P.P.P.P.P.~_nal li .~.itity of the Owner and the members, omccrs and i: ~e~e l°tm¢ ~ sn~.l :be, .s~.ctI¥ a l.. ,ab te!y hmi~d to ti!..¢ prO.l~rty encumbered by the Mortgage, !/t~:~ec~, ircla, u_, ~'_P~_ ~? ~a _ .x:~_ e~,m?,eo? anLany' other co!lateral seyuring thc Ov~¢r's .~l.,_.o~_,,~~c~ or u~.aer.me i~pm.. 11~. 2ssu~ .aha any asszgn~ of any of the Financin~ ~ r ~ ' ~s,.~t. no.~?m~may not seek any judgment tora cg'liciency against thc Owz~ or any member ~a~'~r~ :~r r~.~_~_a ,p~,~wer._o.x.aml, ~o_r_ x? exerc,se .~y o?er .n..glats.or power under or by reason of the Lg~y_~_.,~_~,~_? ~? .a~s. manen~ .ev~?enc ~m~. or i.see~.ng me Obllgatio~ o~f the Owner under any of the ~_~i~.~w-~n~_~_en_r~. ,~x any Su.~ ~s ?ought on.me ~ortgage as part of judicial proqeedings to foreclose . ~ ~ _,.~ n oomz~_ea, m_ ~ $ _~ maa consumm a uen on, ana w~ll be and can ~ enforced only aga/ns~ . i :~°a~r~i cncun~.~ bY the Mort. gage, andany such other security instrument and the leases, rents, ;.,profi~ a~ _Ls.~ues'thcreof. and ngt .against any other asset of thc Owner or any member, officer or director · ~.m¢ .~ st~u_ oe mcoms¢ ~o me assetsnna gcnczal cm~ oIthe O~vner Co~ not ~¢ ~ecln~tioA of Restrictive Covenants ,.,~'~!~.e~_~C~._~'_cLo~__e~__.~ ..and agrees to .p.erfo..m~, .each a~.d .ev.c_ ~,,, covenant, a~.d agreement set forth in the .remr~a Kestnctrv¢ t.~avenants, a SUmmary ozwm¢i~ ts set torth tn The Restrictive Covenants." B5-~-199~ ~P.:~PM PROM TO 914076591789 P.O~ 'Tax Covenant~ 996 Bonds from 1 ~e proceeds of of interest on the Series 103 of the Code, and to The Owner shall not lake, or omit Series .any is" within the Events,of Default and Remedies F_ach of the followingconstitutes an '.Event olD,fault under the Loan Agreement: (a) F~lure of'the Owner to make any payment under such Loan Agreement or the Note or ~Mongage when duc and payable. {b)_ :~Except as provided in {c) belpw, failure by the Owner to observe and perform any ~a~ ?r-r~. lvi,?n~age ama ?,on~unua~. on ox. suc~n ranure for a pe~od of 30 days after notice thereof shall ~ mien g~v~n vy me issuer.or,Re 'li'ustee to tl~ Owner. ,o_n..r~ma .oI ..me o.~r .~nlamea ~, mi ~ ~.~ m~.nt or the Indenture or in any ~armsnea in connccuon .vain me'issuance of the ~¢nes l~vo t~onds. (d) An.Event of Default under the Indenture. the ;_Certain of the ?b,liga!i~-ons o.f tim ..Owner can be SUSl~. nded if by mason of force majeure, as defined in Loan agreement, ~ owner is urm~le to carry ow such obligations. d~E,on .thc _ac~fflera~ ~,on ofma?urity of?he S?ies 1996 Bonds upon the _oc:cun~nce of an Event of Defauh .tm r ,.t~. ~na. enrm-e; au ~a~, ou~.~ payabl? under .the L. oan _Agreement and under the Note shall become lmmeolately aue aha payaOle without notice or declaration of any kind. ., ..U n the occ . ence and continuation, of an E_v~t of Default under the Loan Agreement, the holder of ~e r~o. te can'ex .ercts,e, ~y. o.r~, o.r.more o~f~e follo..win, g m_medies: (i) declare all mounts payable un&r thc .~,oan_ _ ~,ent ~ uno~ ,the,.N.,ot.e, to b~. ' .u~n.ed. iately d~ and payable, whereupon the same shall become ?/~m. ea_~ateiy 9uc a~?,Pa~/at~,le; iii) tt~-, oug~, its aul~y au~.,o '~n~ agen. E.have access to and inspect, ¢xami.c 'anq, ~axe cop?s o.~, me ?oo..lcs, .recoras,..aga ~a~oun.ts~,ot ~.e cr, vne~; .('di) exercise any remedy of a mortgagee ana/.pr.secur~ party unacr me l.aw.s o.~ the S~t_e oz zion&; and _(iv) take whatever other a6fion at law or in eq~ty.ca~., appear necessary_ or aeswabl_e to.collect the amounts then due and thereafter to become due or to gree~nent or u~¢ Ke..$~t~ave Covenants. Ongoing Di~dosur~ . ~TI~_.¢ ~.O!~ner v~, de.liver,, to the. d.th.e. ti g A~, ,en~ (a)?nn_ual statements of operations of the ~ m]ec3..iq) ?nnua~..r~nt..roa._s ~r me i'roject, (c) me annual budget for the Project and (d) audited annual THE NOTE AND 'TILE MORTGAGE ~OW~r's · Obligations; Security . .Note is secured by a first t Owner w ~ssu~ upon certain Land, to the property colI~ter~l he Mortgage is contained in Appendi~ B, ee THE NOTE Loan Agreement, :Payments lxinci~]~Owner promises topay principal, premium and interest in amounts and at times sufficient to pay ofand premium andhiteTrest, ifan3~, on the Serie~ 1996 Bonds, as the same become due. ail, pa ,y~, vat~ th?em~e.r a~,,ass.~gn~%d to ~e Trustee as security for the Series 1996 Bonds. ~l~ .ctwner ~nml maice au l~Yments re~lmred 'by the Note directly ~o the Trustee. 'l~lor~g~e on Project '~~o~n~:~ft~oI~ro~ecat. L,oan Agreemem. ,ne Mortgage includes, conditional collateral f~h~leaauce ofProject, Compli~ee With Law, T~xe~ ~d Other Ch~rge~ _ _'.~i~ ~O~-n, er is. requi ~r~d at .~ts p~w~. ~. to ma~_' rain the Project in good repair, to comply with ?~_cmmemai r.eq.mrem~s appm~_', le.mJ~e ~va'93ect and to pay when due all faxes and other governmental ~~ a~a. c~rge~ m connecuon with the Project. Lu~_~ ~ ~a4~m~er'~qum..mes-~ a..~ms,u~?r uncter worlmrs ~compensatxon law) workers' eomoensafion .m~. l.n_e ~ Is requlreo'oy the MO ' age 'tO con~_nuouslv ~ 'nsur~nce ~ni~~~ns~--~ .~ag_~a~ bz~_u_s~s- Of like s,, ~ pha~.a?e.r., paying az the same become due all ~w=a~axga~eap~zn~.~V_m' ~ _mn?un_t ~,,f the Se~es 1996 Bonds. The title insurer is~ ------------ -ce "x~t~ l~O-l~ AND THE MORTGAGE herein. lhnm~ge, De~trucfio~ Condemnation and Loss of ~itle ~-.toss exceeas ~.uuu.uuu ,,~,,tm~.cc~ ~ ~me. ~ ~t:r~.?rmen c ..l~'tSownerJ.O prepay ~ Note m whole or in pm'Land if the darnaoe, destruction I ~dRmn as pnor :~o su~ flamage, destruction, condem%~fion or lois'-. FROM TO 914076591789 P.05 are less than $1~O00,O00_and. in ~ueh event, is not required ge or Transfer,:ofProject not s~u, u'ansxer or encurnOer its Pro~,,~ .w~mo~ (i) ~ ~nt of ~e Tms~, (ii) ~t not re~t in loss of~e ~cl~i~ of ~ or ~~ ex.pt on ~e Proj~t ~r ~ Ev~n~ , 'Upor~ ~ ~~ of an event of default under the Mortgage, the indebtedness secured thereby i:'becomes ~ly due' and payable and the Mortgage can be foreclosed. THE RESTRICTIVE COVENANTS w/Il ~n/s~ of~ S~5es'1996 Bonds, Restrictive Covenants relating to the operation of ~he Projea ~ by the Owner.and recorded in the Public Rex, orals of Paln~ Beach County, Florida. Such ~,c_?~_ve, C~..? .wil!, .a~_ ~I~Jo.~e' Proj .ect (or. and d _ut?2ng the_ "Qualified Project Period" for the Project. , ~{~mah.ttod~.}'~o]ec't pc'nod' is clelmcd m.ea~h of the Restrictive Covenants to m~an the period ~ on ,~-~ q~ o.f?~s~ 1~2~' ~ona _~_ _,nam on ~ l~st of(a) th, ~ w~ich i' 15 y~r~ acr (.tt~ ~ o..I.? ~_ o/the ?~s.'l 9..~ ~onds, ~) th, fi~.. day on which no lax-exempt private activit7 bond ~ssu~ ~w~ll~ .mfi~?c~ ~. ~ suc. h ~t~Oject is_ o~ng,.o_r lc) the date on which any assii~uce provided with ~pect w sucla ~roject miner ~ction. 1~ of the :United States Housing Act of 1937 terminates. OI1}~ ~mstfi~tio_m- ~ ~fion to thos¢.dcgribed in this Secfior~ ~ also imposed upon the Project. See appendix A.- "DESCRIPTION OF THE PROJECT- Acquisition oithc Project; RTC Restrictions." R~ Ren~ Proj~t :The'P~. j_~.-is ~ed .lobe 0_W~..ed, ~ .man,geol. and o _p~ted as a "qualified residential renlal project" as .~su~,~ ~m~, ?such---- ~~u .~e~aon 142(d) ofth¢ Code. The Owner agrees, among other things, that during the ~ rrojec~.tenon- - . . (a) ~ .Th.e Project _will .1~. owned, ~ and operated on a continuous bads as a residential ~ prS..j.m co.~lai~.' g. gve..~.;~ro..~rn?~ ~d m ~t~.e~a.~..b. ui~din~ or s_ _~tures, _each containing at least one. a~,,y~g~mt amt ~~¥ ali oxwlatcn_c_on .tarn dweuing umts and facilities functionally rolated and su~rdma2 meat~, ngct~ rig r~luimmcnts ol.sections 142(a)(7) and 142(d) of the Code. .., (b) 'Ti? d~m. 1..1~..g u~i_'ts ~ ./he Project wi.Il consist of simi_'larly constructed units each of :~-~mcrl_.contaim. s. ~ ,l~e. facili,'.ti~s for ~.. '.ring, sl .eepm.g, .e~ti.'ng, c.~.king :and sanitation separate and distinct · 4rom ottmr~unlts, including cooiang tac~lmeseqmpped with a cooking range, refrigerator and sink. _(~;) , _Non¢'_ofthe dwelling units in the Pr_ oject will at any time be utilized on a transient basis; ~..on.~'eo.l .Will oc usc~. a~. a hotel, ;motel, do .m~.'tory,.fralernity .house, sorority house, roow. ing house, 6p~rm, nm'stag nome, samtanum, rem nome or trailer parle or court/or usc on a transient basis. ~ .~ ~d).., Ex~ce~ f. or .d,,w,elling Un?s oceu~oied b_y resident manage~ or ~_~ perso~el, thc ~~g um m me rrojec~ wm ye rented or arm]able for rental on a continuous basis to persons who are ES=2-~-l~::~'~B2:llPM FR~M TO 91407~591789 P.06 and the not g/ye .pref-crence to any particular class or group of , as dcscr/bcd t~IOw: ~ ~Lower-Income Tenants .. !'Pursuant to ~on 142(d)(1)(A) of the Code the Owner agree, among other things, during the Qualified Project Period to: least 20% to/ndividuals ~ median 'Applicable any unit it' Tenant even as the ~s of rent thc next however, that any unit of tunit,is ,rented_ Obtain from each · time th~ unit and who is not a Lower- aside for occupancy by and the~ n& and ! or Series 1996 <Tt, mnts rexidin~ ~Projec~ of the_Issuer, the Trustee, the Owner of the Revenue Service to 'm~pec~ t during the to the income of Lower-Income F-Income Tenn~ts and provide the Issuer with a (i) mi . ~ ~ i~., l.not ~ suni.eased, ~cept.wh~rc the ??, ~i z~.u~., oCth¢ subter~nt to quali~ as a a mS ~._~_ ~v:e E.ov.e .r~.ts: (iii)tt~ Ie~s~ sI~t~ ~rtxor, .au, y su~s_r~, ual vmlation of thc terms and o: (A) any talsc or misleading statement or ~t~ as a L?.we.r-lncorn.e Tenant or in such other ~,~rst~ proy~de information..mt, u. im__d to recerti~ ary ox oc, c_upancy, ana (.iv} Lowcr-Incorn'¢ ~y to enforce ~C R~rictiv¢ Cov¢)~-ts for'and ;eaeral Complim~ee ,,income : any a~tion that would; affect the exclusion from gross if it ' to comply woUld interest on the Series Owner to cme such'~ ~Repor~; Ce~fions the Owner income tax purposes of necessary or desirable to cause the During the Qualifiefl PrOject pariod tl~eOwner agrees to file with the Trustee an annual report which shall contain the £ollowing: (1) the number of .Lowcr-~eorne Units in the Project; ,'(2) the.number of dwelling:~urfits in the Project v~'ntcd and the number of units held available for rental other:~ aSLower;Income unii~.; (3) ;the;~ that the number of Lower-Income Units constitutes of the total number of ,units; (4) <_ eertifical= of the ~ that the information contain=d in the report is tree, aecm'ate xt co~.as ofthe.dat~ thereo~,-and - "- (~) a cenifica~ of the ,Owner tha~ the Owner is in compliance with the Restrictive Covcnants. : Enforeem~nt ~' ~ m2~tesh~1 _p~o__~ any ~,at .,aw o. m e!j.m, ty ..~ .eiffo .t~ such provisions. The Restrictive ,~or~ sv. all_ .~cea~. ? _al~!y ~n'ce~..x?~n.. ,~et}.,~ :,r~. ul,.ting .~ pvo!untary non.-..co, mpIiance (including i~ o s~a'?.;on a r~jec~-or.~.oz uq~ oy Cleea m ~zc!a- oI loreclosure) providcd certain conditions 'o~ .~.t~euse ol::pmceeas Il'om any st~.tl eveat are satisfied and none of the Series 1996 Bonds remain ~O:LITIGATION .any w'q..y quesgo.ns or' _.ma.r?!au. y attex-.ts the validity of llje Series 1996 Bonds, or any proceedings_ or ~roa?~m. m~s r~latin~ ,o their issumace, sale:or &livery or that can materially affect thc refinancing 6f the ~ -- ~ is no.. tiligafion ~ or_, lo h~., ]mollie o_f .thc Ow~_ er, thre, at~ed against the Owner tha~ in vy ._wa.~..y quesp, o..ns Or ~auy al:teots. ~-Ea~i.'.aity of ~ Series 1996 Bonds, or any proceedings or msaenom ~atmg to me~r xssuaneeo sale !or ~eavery or mat can materially affect the refinancing of the i~!]5-26-iS9602:14PM .FROI~ TO 914076591789 P.08 TAX TREATMENT OF THE SER1]~S 1996 BONDS the interest on state and ."or federal and the · requirements couM income tax:purposes on which st~ch' non- periodical '?The Series 1996 Boncls.~ West Palm Beach, Florida, the aforementioned owners thereof for federal alternative and 996 g pr/cas to the public at OID represents interest i,vbich is /n the collateral federal Series 1996 Bonds at a constant the time an owner owns a __~ taxable tax Bonds which are not ~ rules which as to the of Series 1996 ..~.~, ,.,~..,,- The. law~ ~chBond: .Couns.cl is basing ~ir opinion is subject to chsnge by the Congress and the _ __ m~ _ : _~ not be chart ed m a manner which w ~ ould adversely affect the tax tmaunent of o~ ofthe~ries 1 , ,, .p' ' 996 Bonds. See 'BONDHOLDERS RISKS hcre~ Inl~iition, in the opinion of Bond Counsel the Series 1996 Bonds are exempt from all present ~' p~rsonalpm~ ~xes oftheStat¢ of F10rid~. I~6'%~',.d;'~~ ,._w~_..(~ ?_..,p~_ ~ o~ ~..~,?.,. ,,.o ~on~s. ~o. _s_p¢~u~ p~er~ of tho s~i~ · ~ . emp obli ations m~ result In col ~edeml :me om,. ~-- , - . , ,n ,. ~ . +.,,.. ~ . g .Y lateral ~ 'd~i~ti~ ~o,,;~o ~c~~~L~-.-.l~__an~_..ml,- l?~u,.,tu~oris, p.ro. pert~r_ and casualty .msuranca companies, - ' - ~ - m ems, .aye? who may be deemed to ,,,~-.. ,~.., w,,a paS~lvc mve~nent income wmen E5-2~S-1C~ ~2:lb-'PM I~ TO 91~0765917B9 P.OD · ~op . Ky mese consequences. TAX DISPOSITION OF APPROVAL OF LEGAL MATTERS com'ImJr mSCLOSU no..ia or .sen ;mc ~.en~s l~p.,~pn~s, ~d ~ Is~r ~II not pr0~ ~y ~ x~ ~ ~ve no ~mty .W ~e holde~ of ~e Sm~ 1996 Bon~ or my o~er Lo~.A~~t ~ ~ ~p~ ~ S~iti~s ~d Exch~ge ~m~s~n R~e ~i~~ ~_~.5~,9~ 19}4, ~ ~~ (1 ~CFR ~ 240 ~ 15c2-12) (~ RMe"), ~~m[ ~?[ ~, m~nt oz ~9 nSt~= 0~ the Series 1996 Bon~ ~d~ by · ~on~o~ ~ ~y ~en~ o~e~ of Senes 1996 Bo~s ~ a ~efici~ of 85-L:~5-1~B~ig~:ITPM FROM ~140765~178~ P.18 · Ti~ Owner, 'as an '"obli~,ated .ne(son' wim;~ bllowin~ information (ali m.defin&lbqow): (I) Annual. Fimnciat Infonna-'don; (2) Financial STatements, .if any;, arid (3) Malefial EventNotiees. meaning of the Rule, will undertake to provide *the ~e ~er ~y ~j~ ~e R~ Date o~ F~ Y~ ~d ~e new ~e new ~n [R~n Dme if ~e O~ ~ x ~,~,o esonas are Outstanding to the Trustee. If Material Event (defined below w ' · · . . . .. ) occurs 'hilt any Series 1996 Bon ~all. rovide ma timel . . ds arc Outstanding, the Owner P y mariner aMatCrial Event Nolie - btiee c ~ the Trustee and the Issuer. Each Material Event c,,, .a shall be so captioned and shall prominently stme the date title a~el Ct tom ' :a!~o ~sond~ - - .... , ........ aw numvers oi the ~enes t~a, ne, r toprovide a:Material Event Notice ~urs .t ' ' . . , ..-,.. . p Uan to ~ preceding par h- ovided that Trus so to ad . . pr of re, s~ib~l~ti Iud° ~thsee lth~e~n aO~n~s~J~ n,o~t,c~o.~,i.~t~ a breach by ~ Tmsr~e of any of its duties and __ es ___ _._ ~=~.A~t or Indenture. rlsySTl~Jr~tga~L~e~hr~,Y.ear...~.e _tl~e_.:_C_°.n_tie.t~n_ g..?i_'sclo .s~..e C_,_o,v. en~.. t is ol~ra.tive, at least thirty (30) _~--~-_~-; ;£-~fv-,-%.--.-~ .v;y,,V-~ "Yg~ ~0-me ?ya. er ot ~ ooagauon under the Loan Alzreement ~g ~.a,_,~.~U~l~ ~to~on ~ ~_cia{~ S,t,a~_~ts to each NRMSIR and SID, provided tha~ th, failurc ' ~~ I~~ sucll nouce-snail not consti~te a brc. ach by the Tdlstee of the duties and · lalements,...~,.,, copy mereot-to each then eXisting NRMSIR and thc SID- , zI any. ~.re~o~ ~ ,,~i~th~ ~.(1..0)' Busjm. ess..Days, al%f receipt of a Mat,~ Event Notice, send a copy · ~ ...... u~ lvmnwipa~ .~e~unnes l~memalm~ i~oarcl, each NRMS~ and the SID, if any. . ~.~nualFinanci-' '-" ........ n .a . ;:. u-,i~ vy mc ~rerner zo provme - ' ~t ~mormallOll onol' Dclore 'rlle.['tepOTt Date. ~85-26-1~96 ,~:'18PM FROM TO 914076591789 P. 11 ~_~zl'~Thenot otherwisef?ll°wingdefmedare theherein.defmitions of the capitalized terms used in the Continuing Disclosure Covenant ~pre~mc~ ~m~me~n~v~he~eeSne~a~l finaeean~te~n~rm,a, ti~°.n,~ (~w~.~c;h..,~osl~J.~_be~ ~ on fman?.ial · ilala~va'th ~ to the Own~ to ' ~ y .: un ~, r-?':~,,es t up, AP )) or operatm ........ : , p v!c~'-- at least annually, of the typ~ mclucl~I in this Offia ~ '~ln connection with the sale o~ ' e ' :-,- . . /al Statemcnt~ :;includeFinanc~ S~iements. f th Series 1996 Bonds, whmh Annual Financial Information shall . ~ '~'t~, s.u~ au~tcmg C~lXl/.le~ pUOllC accountant. :"~~ Event" means any of th~ following events, if material, with respect to the Series 1996 Bonds. ti) ;Principal andintcrest payment delinquencies; :k~) Non-Paymean related defaults; (iii) ~Unschedulcd draws on debt service reserves reflecting financial difficulties; ~iv) :Unsch~uled draws on crexlit c~ancements mflecl~ financia/difficulties; ~.(v) :~$ubsfitution of credit or liquid/ty providers, or their failure to perform; (vi) ,'~ ~Advers, t~x opini°ns or events affe~-~ing th~ tax-exeanpt smms of the Series 1996 Bonds; (vh') ,Modific~om torights of holders of the Series 1996 Bonds; --- (viii) Bond calls of the Series 1996 Bonds (otlmr than scheduled mandatory sinking fund redemptions); (ix) ,:Defeasances; (x) .Re, lease, substitution, or sale ofprop~3, securing repayment ofthe Series 1996 Bonds; and (xi) ~ Changes. "~ ~v~nt Notice" means written or electronic notice of a Material Event. ., . ,, ~a~mmge ~,ommlssion wr me purposes relerrec[ to in the Rule. "SID"means 'a state ,information depository as operated or designated by the State as such for the ~.purposes refen~ to inthe Rule. 85-26-19~6 ,B~:lDPM ~ROM TO 914076591789 P.12 As of' the da~ o£.~is 'Ofiic/al Statement, (l)thc SEC has recogn/zed the following ent/ties as  loomberg _NJ[~ R.epositoFies O.'~Box ~ The Bond Buyer S_ciq_ _ndary Market Disclosure .395 Huron Street/3rd Fl°Or New York, NY 10014 Interact address:, Disclos~uller. com Phone: (2~ 2)807-3514 FAX: (~ I2y)89-9~.82 51~5 .un.i.cipaldSecurifies 'Disclosure Ar'cbOe ~ Mmn S~e~t Hud~n, MA 01749 Phone:(800)580-3670 Public Finance Information Center .99 Church Street New York, NY 10007 Phone: (800)339.6306 F~:(212)~53-1460 ~ (2)no SID :has been created for the State of Eorida. ~ ~ (202) ~om.~..~imfle ~r~ ~ reqt~.~ang Document -.-,-~-.~,-,t,~uc~ ~.~,~n= ana. me trus~ to cm 1o such, c ' ' - · : P.. ~ m moas oi Imormanon transmission ,b~ requ~te~ or re~x. nm~ncled by the designated recipients of the Owner's informafiorr as shall I ' ' ~ ' ~ . . ' ' - · . immediately once the Series 1996 ]~)~tl; ' · - no Ion er are Ou dm .Thc Con ng Disclosure Co~ or an · ~. 'tstm' ' P y ~ on s 1996 B~ rov~ .. ve pro dea no, ce or.an ,canc 'o .... ' - d. eU the Owner sh U ..... · ~Y .llati n of the Contmum D~sclo theft exi.~n~'l~r~qID ..,a +~.. ~v~ ;~___ -~_ ..... ~ ~; . ~ g $11r~ Covcnan! to each ._the cons-~'-~-~ser~t ~of ...... thc Sc-ties'~' ~1996"~Bondholders'°~" ~any, butlneonl~°nanUm~u la~losure, . t:o~tc-nam may be amended without r of the . . ~ Y thc Trustee and. the , ~ on.,thc delivery b the Owner to · . ~ sel to the effect that such an arne · . y m-'Yect the corn hance -of the Contax; · ' and fla~ Owner va · - E . umg D~selosure Covenant by th ~ Rule; provided that the Trast ~ · · . ee Shall ·have ,rov~ded noti ' . of the amendment to each th,-,, ,-~o,~-,,- ~,~-~or~, __.,.,:_.~ .... P ce of such delivery and ..- ~ ,-,~,,~,-~,~ ~u am ngms aha remext/es ovidea b Loan Agreement upon ~h~ ~ ofan 'Event of Defaulf' ~1~. .y. the ~._ _. shall not apply to any such failum. Neither ~5-2E~-Z~'O2:2~P~ 'FROFi TO 9&407~5957~9 P.&3 -whatsoever to ~fforc,~ the Continuing Disclosure Covenant. take remedial act/on to ; however, any action to be pursued only in accordance w/th the provisions RATING · - : ,~'igA.,..~.L"'E-~?~' L~?!~?.n. o~,.m.e ,~c.uraw-~u, ,~o.mp.~¢s "S~d a Poo~s". ~ & Pools ~u~ ~s.~m ~'~ m"W dem~.e relive mv~nt q~fi~s of bon~. ~~ ~l~n ~ ,si~~ o~ &is ~g.~ ob~ned bom S~d & P~r's. The ~~-..d~L~121~_~ ~.}~ ~g ~u ~,m~n~ed for ~y ~ of ~e or ~at ~e Y Z P ors. ~ s~hdo~ Poor's .~iil ~ surveillance on the Series 1996 Bonds for which it will be paid an :~surv~-t~... its.surveillance act/vities include requiring p~iodic reports on the Project and their UNDER~G : ~ .at a ~~ ~ P~m. ~5~ jn~ ~ .~[e~tem ~11 ~ ~d a f~ of $ for i~ ~~~~ ~~s -o~u~a?on ~ me ~.~a P~c~! A~ment to ~g ~livc. of .~~ ~1..l~i~~! a~gi~ff~[ ~e Sg? 1996 ~nds a ~ pubic off~ ~ces ~~--~ ~ ~ ~? ~?~oq o{ m, pm~s.. ~, Und,mte~ ~ offer-~ se~ Series MISCELLANEOUS a~r.~e~..rn~em ?et~ve~n the Issuer, ~h¢ Owner or the Underwriters and ~¢ 05-26-1996 02:22PM ~ROM TO 914076591789 P.14 ~,This Official Statement has been authorized by the Isiuer and_a_~proved by the Owner. APPROVED: C;/"]P COVE, INC. CJTY OF BOYNTON BEACH, FLORIDA BY~layor By: ~0~-~6-1~96 O2:22PM FROM TO 914076S91789 P.I~ APPENDIX A DESCRIPTION OF ~ PROJECT ~UN ~6 '96 W~:45PM Sl~T .BY RITTER 'EICHHER & MORRIS P. 4?/54 i APPENDIX A DESCR/FIION OF THE PROJECT 'The lo, owing contains a brief description .of the Project. 'rbe Pr°jec ~Clipper Cove Apartments (the ~"Project') is located at 1500 Southern Cross Lane in BoyntonBeach, Florida and consists of 25 garden style apartment buildings containing a total of 384 renta! units. The pwpeny was consU'vcu~d in 1987 for multifamily u,~. The unit mix includ~ 48 OlaC-~, olio-bath llriiLs each conrainin..v approximately 734 square feet; 56 two- .bedroom, one-bath uni~ each containing approximately 878 square feet, and 280 two-bedroom, two-bath units each containing approximately 939 square feet. The buildings and improvements .are loeate, d on and .tbe Project includes approximately 53 acres of land. The buildings contain approximately 360,888 .gross scgaare feet a~I approximately 346,522 of rentable apartment area. The exterior .of the buildings is wood frame covered with vinyl siding and sUicco with windows accented by canvas awnings. The property is surrounded by a ring road which circles the property and is designed ~to decrease traffic through the parking areas. Site amenities illclude, ~ lakes, two S'wimmlnE pools, a clubhouse and cabana, four lighted tennis courts, :four outdoor.lighted racquetball courts, a lighted volleyball court, jogging trail, playground area 'and car Washing and v~ area. Aparmacnts are ~dividually metered and eqtfippod with central air conditioning and hearing, wall to wall carpeting, refrigerators with ice makers, an electric range/oven, a :microwave even, a dishwasher, garbage disposal; washer/dryer hook-ups, walk in closets and ceiling Pa~s. ~' Project Management The Owner emcrcd imo a Property Management Agreement with Property Asset Managcmi~ of Florida, Inc. '(thc "Manager") cffec~ January 1, 1996. The Manager has been enga~xl .in the. manag~nt of multifamily reside~a~ re, rs! projects in Florida for 18 years and currently-manages projects in sixteen states. Thc Manager has a staff of more than 1,200 employees. The Manager currently manages approximately 10,000 units, of which more than 5,000 receive government assistance-and the balance arc market rate rental units. The initial .term of thc Property Management Agreement with the Manager extends to December 21, 1996 and, under thc term Of the Property Management Agreement shall automatically renew every year unless termmatcd at the option of the Owner or the* Manager, but will not ~xtend .for more than a total of five years. Either thc Owner or the Maimger may terminate ~ Property Management Agreement at any time on 30 days notice for any reason. A-1 L:~RAS~BOYNTON',LF~DIX. June 26, 1996 JLIH ~5 ~6 '8~:~C~ ~NT BY RITTF_J2 EICH~E]2 & NOPJ2IS ~The cun~ Property Managemen~ Agreement provides ~t, for the tim year, the Manager wJll'bc paid ~,% of the gross .collected revenues of the Project and, thereafter, ff the Property Man~geme~ Agreement remains in effect, the Manager will' be compensated on the basis of(i) a fixed fee to be determined after the end of tbeflrst year plus (ii) 2% of projocted gross COllected .revenues-subject to the limitation that the 2 % of gross collected revenues not , exceed :the ~mouat payable as a fixed fee described in provision (i). Duties of the Manager under the Property Management Agreement include leasing, collection~of rents, cnforc~ment of leases, maintenance and repair respons~ilities, payment of operating e~q)enses, preparation of .budgets, hiring and supervision of propen2 personnel; m~in~inj,_n~ O1XC~g ag,~ilnts; boOP, P~epillg ~ tenant rchfions, ,Asset .Management Services Cornerstone :Housing Corporation ("Cornerstone") will pwvide asset ma~gement services for the Project under the terms .of an agreement that will extend for so long as the Owner owns _the Project or until terminated by mutual agreement of the Owner and .~ne. Under such agreement, Cornerstone will act as a liaison with city, staxe and local -age~c/~,/will ~ Project operations, oversee Project financial affairs, mon/tor compliance with ,income guidelines, the Restrictive .Covenants and the LURA (defined below)., negotiate management agreements, .imPlement marketing a~ operating plans and budgetsand other services as requested by the-Owner. Pursuant to the agreement with Cornerstone, ~ Owner v~Jl pay a fee,m Cornerstone equal w 1.25% of the Gross Revenues of the Project for such Sodal .~ce.s ~Oversight and Management Housk~g P~hip, Inc. (=Housing Partnership") will provide social services and management ~at ,th~ Project fl~rough an agreement with the Owner. Such services will be provkicd through a program referred to as th~ ~Campus for Living" program and which includes working-to encourage cooperation among the Owner, thc property manager, thc tenants' association and community service providers to crea~e a comprehensive and supportive social services program. Through the 'Campus for Living" program, Housing Parmership will encourage or provide such services as health care services and progrzm~, family ~ud social services :programs, ~planned recreational programs and services, educational services including tutoring and :after school ,programs, economic development and job training and phcement programs, a tenants' ~association and special services for the elderly. Pursuant to the agreement with Housing Parmer~hip, the Owner will pay a fee m Housing Partnership equal to 1.25 % of the .Gross- Revenues of.the Project for such services. A-2 L:\RA~OYN'I'ON~-'h~PPi/NDIX. Suuc 2~, 199~ · ~ ~6 '96 B3:46PM SEb~ BYRITTER EICHMER & NORRIS ~ii '~elui~ifi°n °f the Pr°j~t; RTC :Use Restricti°ns P.44/54 The Project was 2~ufred by the Own~ in December 1995 from the ResolUtion Trust Corporation CKTC") ~ fl~ Affordable Housing Program as a result of tl~ submission ms~e ~ the RTC in .~u~ ~mmer of 1995 by the City, in conjUnCtion with Cornerstone and U~ute~ ~he terms ~of'the proposal subn'dU_ed to thc RTC, the Project, was ~ be acquired fromfl~e RTC bytbe City and reconveyed by the City to an entity to be created m~' conUoll, xl by Comerswne"and :Housing Partnership. The RTC accept~ thc proposal, the ~ assi~ its right to aatuirc fl~c Property to the Owner and, in December 1995, the Owner purchased ~e Project from the RTC for a purchase price of $9,300,.000 of which 95% was ~ by r~e RTC and 5%was'loaned by The En~rprise Foundation. In conn~tion with the ap~on'by the City: to the RTC, the'City, Cornerstone ~nd Housing Partncrsl~p entered into a ~ of Under~ndi~dated.August 3, .1995 with respect to thc owr~rship and operation of :~ PrOje~t, if the app~ wt~re success~ ara with respect to certain benefits accruing to the par~ipafion in thc acquisition of the Project. The City, Cornerstone and the application were successful, they would enter into Parmership forth ~ mrms ~of their ongoing relationship with msp~ct to the of ~he City was ~cccpted by the RTC, Cornerstone .and ;Homing iss~ ~of ~ 'Ser/e~ 1:996 Bonds, enter into such Definitive A~eemcnt. the .City's concern for is m be in ,effetr for a thc RTC and the requirements ,of the Definitive The Definkiv¢ Agreement. among other in:lieu of ~x~ to the City and ;that 28 the ~ (or any subs~tuem own~ of,the Project)from ~ Inde~m-~ ~:is .in effec,~ will be that mnount distributed m the Owner is not to .Yom the : Owner prior to the time of The Definitive inthe of the toa assum~l by the that the Owner flow received by as the such Consent. . As :a condition.to ~,~n~fer of the Project, the 'Owner entered into a Land Us~ R~stricfion ~ (the "LURA") dat~ D~ 18, 1995, with the RTC. The LURA states that th~ covenants, reservations and restrict, ions containexl the land ;for the bemfit of RTC and its sur~so~, and pa~s to and are ' heirs, assigns and successor in.. __title to the Project. The LUKA the term of the LURA, ~ Proj~r willbe ma~ a~ multifami/~ to matte continuously available for occupancy by Lower-Income ~nits (50% of.~c wtal mzif~) of the Projea of which nnit, O ~ be mad.-available for occupancy by Very Low-lncom~ Families, ; A-3 L:hV, AL~OY~O~P~IDIY,- Suo~ 26, 199~ ~LIN?EG "gE 83:47PM SENT BY RITTER EICHHER & NORRIS P.45/54 The LURA defines "Lower-Iucomc Families' as families and individuals whose annuaJ ~.'~omes do ~ot :~-80 percent of arc~ median income and "Very Low-Income Families~ as '~cs anti individuals whose a~naj incomes do not exceed 50 percent of the area median The ~LURA also restricts the amount of rent which can be charged to Very Low4ncome Families and to Lower-Income Families for Qualifying Units. Thc :rent charged .for Qualifying Units occupied by Very Low-Income Families cannot exceed the maximum rent for such purposes as established by the RTC, thc Agency or thc Secret, Such maximum rent shall not be greater than 30% of the adjusted income of a family whose income equals 50% of the area median income. The rent charged for c?~iqying units occupied by Lower-Income F~cs other than the Very Low,Income Families .~hatl not exceed the m~imum rent for such purposes as established by the RTC or the ~ or the Secretary. Such maximum rent shall not be greater than 30% of the adjusted income of a family whose income equals 65 % of area median income. For the purposes of the foregoing three paragraphs, thc following definitions were used in the LURA: "Agency" means the State Housing Fir~nce Agency or any agency, corporation or .~authority of the United States government that normally engages in gtivities related to the .preservation of ~ffordable housing which is a successor to or assignee of the RTC. 'Qualifying Unit"means a unit that is rentvaI to a Lower-Income Family or Very Low- Income Family and is used in complying with the lower-income occupancy requirements ~ above. "Secretary" means the Secretary of Housing and Urban Development. There. tm of tt~ LURA extends until the later of 40 years from thc date of the LURA or 50 years from the date the Project was initially occupied as mulfifamily housing which ,,~ occun~ in 1987. The term may end earlier, however, under certain circumstances such as involmmu-y loss of the Project as a result of fire or casualty or upon an involuntary loss ,:caused by.Seizure, condemnation, foreclosure or deed in lieu of foreclosure of a mortgage or ~ of mm securing a :bona fide loan from an institutional lender. : ~Capital Improvements ....... , Rehabilitation expenditures equal to $I00,000 arc proposed by the Owner which will ~ limited exterior ~, repah-ing gutters, making certain rop~ to fencing and repair Xcn~i$ court surfaces. Bond proceeds in an amount sufficient to complete the above capital ...... ,improvements will be deposited inW thc Project Fund created and held under the Indenture. A-4 L:~AL;LSOYNTON~LEG'~,~.PP~DI~. JUn'" 26, ]~)6 .~:~?~f ' ,~B~Ff -BY :.R~TTER EICNNER ~ 'MORRIS P.4~/54 An i~depenit~I appraisal was performed for Nevander Asset Management, Inc. at/h~ request of the R~sol~ 'on Trust.Corporation ( RTC ) with l~,spect to/he Project. The Owner does not accept.rc~pons~t'y for/he .accuracy 'or complctencss of/he information set forth under this , .-subhe~_~h~. Thc ~ re-.pon ,,vas dated May 3. 1995 and was effective on March 30, 1995, and es6mai~ ftmI, as of~lh~ ~vc-date oflhe appraisal, the market value of the Project, in fee simple :iitle.and in ,,as is' ~ was $17~000,000. Such valuation was based upon estimated values for ,Ihe Project which w~re csfimat~ ~o be between $18,100,000 (based on/he cost approach) and $ I6,500,000 (bas~xl on 'the. income, approach). This appraised market value assumes, among o/her ~, flint thc mark/:i/ngtime for sale of flue Project ~d. i1 be up to 12 mon~, adequate mark~ ~effortsand that reazonablc ~ rates are available during the sales period. No aSsurance can be given/ha~,$t~ ~- ~,~'uratety ~cpresenr~d the fair market value of the Project as of its dale, and since maiicct cOnd~ons may have changed and the income of/he Projcet may decrease due to increased.levels of lower-income ~cnanls since the dale of ~he appraisal, no assurance can be given that :Ihe appraisal cunently.represents the fair market value of the Project. Owners of the Series 1996 Bonds would ~hav¢ no l'ecourse against thc finn that prepared the appra/sal in the event the appraisal' is iucon~:t. -Enviro-menial ~~s A Phase I environmental si~e assessment dated June 9, 1994 for the Project (the "Report,) was conduci~-at the reques~ of the :P, TC. The Owner does not accept responsibility for/hc accuracy or ocanpP, tcne. ss of thc information se~ forth below under this subhcading. Thc Report found .no pas~ or present adverse usagc or cvcnts rclatcd to the Project that would pose an advcr~ el~ironmental impact W the Project sitc, except with respect to an irrigation system used at fl~e projecx wi/hmu a penniI from ~ South Florida Wa~cr Managcmcrn Disuict. ,Owners of/he,'Sefie.s 1996 'Bonds would ,have no recourse against ~he finn that prepared thc Report h the, even~ ihaI'fl~e Repori is incorrect. A compleu; copy of the Report is on file with the ..Underwrites ~lhe Underwriting Period and with the Trustee foLlowi~ such period. Market A maflax s~ was ~ for.Corners~orie by Howell Associ .ates, Inc. dated April 1996and is summarized below. The Owner does not accept responsibility for the accuracy or -completim~ss office infonnafion ~-for~h Ulvter/his-subheading. A complete copy of the market analysis 'will be on file with.the-Underwfimrs ,,duril~ ~ Underwriting Period and with the Trusu~ folk~wing such p~l'iod. As of .l~sr_~ 129. 1996. strong occupawy-levels were ~ecorded at ali of the Boynton Beach rental propellies excel~ the Project (new ownership and managemen0, The Vinings a~ Bolmion Be~:h (r~ew consuucfion), Ashley l~ke Park .(new management) and the VillaS at Cove Crossing, (n~w cons~n). Thc Villas aI Covc Crossing is comparablC in that it includcs JUN 2~ ':~ ,03:48PM SENT BY RITTER EICHNER & NORRIS P.47/54 .fix:ome m~tric~om sim~ to Clipper Cover, Rental activity at the Villas has filled th~ one ~nd two bedroom -~its, with a waitin~ list. TI~ ~oj~'s market rate rent levels are on the lower end of the market. A r~nt analysis ,of-~ PrOject's competition indica~.s ~at fi= adjus~l rental range and medhn rem as compared ~wi~ flu: subj~ property is as follows: Per Unit Onc B.edroem Rental range: $630-690 .70-1,07 Media~u rent: $652 ,87 Project market rent: $625 .78 Two Bedroom-On= Bath_ Rental range: $673-$775 .63-.84 Median rent: $716 .72 Project market rent: $690 .74 Two Bedroom-Two Bath .Rental range: $710-$835 .63-.84 M~lian rcm: $754 .72 Project market rem: $735 .74 Parsuam w the LURA, 30% of the aparunents, or 115 unks, am se~ aside for homcholds · ~o~ ~me ~-l~s ~ 80% of ~c ~a ~ (low ~cmc). ~o~ ~%, or 77 ~, ~ r~ for ~ who ~ less ~50% of ~ ~ea ~ (vc~ low ~ome). ~:~ ~~m ~ ~ low ~m~ ~low $26,~ m $38,~ ~ ve~ low .:~ $16,8~ w $~,~0, b~ed on ~hold sk~. h ~difion m ~e re~on ~posed by ~ L~, ~,~t m ~ ~fficfiom ~pos~ on ~c Proj~ under ~e ~ U~'~icfion .~.~ ~~r 30, 19~ (~ ~Pfior L~') which ~ ~ eff~t wi~ reset :W.~ Projca ~ , 1997, ~e Project c~y ~s ~ overa~ ~)~m x~n of ~2~ (w~& ~ ~ m 150~ of~ m~m ~ome for ~ West p~lm ~h- ~ ~0~ ~O~ ~O~ ~~ ~)- ~ fo~oW~g c~ ~mm~S ~e ~ome ~ffi~om ~ ~y p~se~y ~lym C~pper Cove ap~enu. A-6 Li\RAE~ItOYNTOIq[LF~APpENDIX, Jm~e 2~. 1~6 1 ,I '1 1 Income Restrictions Affor,~bility of the very low income units, when factoring in estimated milkies, indicates that the react levels are on the upper end of the income restrictions. The market analysis s~ts forth the roi:lowing analysis m summarize the affordability of the rents for Qualifying Units occupied by Very Low-Jncome Families. TABLE 2 Affor~b~ of the Very Low Income Rents .One Be. droom ~M'~nim~m I]~COX]IC Rent $460 Total $500 ~= $17,143 .35 Two Bedroom/one bath One to two persons $16,800 to 18,200 Minimum Income Rent $518 Total $57:3 TW° B~roongtwo bath ~= $19,644; .35 Minimm:n Incolne Rent $518 Total $578 $578 x 12 = $19,817 .35 $16,800 (for a sing~ person) and $19,200 to $24,000 (based on famuy mz~ mr xamums ox u,~ A-7 L;iRAE%BOYNTOI~LEGk~PrdqDIX, ~ 26. l~g ~TLtR ,~6 "~6 03~4~PM SERT ]~Y RTTTER '-E~'C~'-R~RR~[s P,4~54 m fora pertain). For ~fio~ inf~oa mh~g m ~e L~, ~ "Ac~mon of ~e ~j~ RTC Use ~mo ~ ~ Ap~ A. Accordi~ ~ ~e Issuer's pe~g offi~, ~: new r~ ap~ent ~mplexes ~ ~y pro~ss~ ~m~fion pe~ ~ Boy~n ~ach. .! 1 A-8 L:~A]~BO'YNTON\LRG~APFg-ND~- Sum~ 25, ]~ OB:4DPM SENT BY RITTER EICHMER & NORRIS P.50/54 APPENDIX B PRO FORMA FINANCIAL PROJECTIONS 1 'I~ pro forma operagng and d~bt service coverage information preseimxl in th~ following '{ ,.tables is based upon unaudited information for the Project for the months of Janua~ fl~ough : 'May, 1~- The Owner has reviewed the assumptions used with respect to the income, capital expenditures and expenses of the Project and, based on its knowledge of the. Project and its '; operations sin~ acquisition, has found such assumptions' reasonable; however, the Owner did { not pa~cipal~ in and makes no representation concerning the projections, h should be noted ~ fl~Ihe openI~ resul~ for the five month period from January through May of 1996 used to fiuancial projections reflect % occupancy by ¥¢ry Low- prepare i~me F~mi|ies % occupancy by tenants whose income do~; 'not exceed 150% of the ama median income at market rate rents, and upon the l following rates]. -~Proj~ons for per OF f ratcs of 14.0%; %; annnal social services fee $250 OPERATING Th~s~ page hereof. been prepared in COllfOrl~_ n_nc,~ with the tuidelincs _and shown on the front cover 'Prertminary; sabject to change. B-1 Iz\EAE~OYNTON~F=~'XAPPENDIX. Iur~ ~.g, 05'26-1996 02:2~PM FROM 914076591989 P.I? ~PPEND~ C SUMMARY OF rile INDENTURE, LOAN AGREEMENT, MORTGAGE AND RESTRICTIVE COVENANTS JU~ 86 'gE 03:50PM SENT.BY RITTER ~iCH~ER, & ~ORRIS P.5,?./54 PROPOSH~ FORM OF OPINION OF BOND COUNSEL APPENDIX D [For review only-- camera-ready copy to be provided] City of Boyr~n Beach, Florida Boynton'Beach, Florida p~: $ City of Boynton Beach, Florida Multi-Family Housing Mortgage : l~venue B~nds, Series 1996 (Clipper Cove Apartments) Ladies ~ Gentlemen: We have acted as :bond co-un~el in con~e.x;tion with the issuance and sale by the City of Boynton Beaah, Florida (the "Issuer") of its $ agg~gate principal ~mount Multi-Family Housing Mo.ngage P,~erae Bonds, Series 1996 (Clipper Cove Apartments) (the 'Bonds"). The Bonds ar~ issued purstmnt to the Constil~tion a~d Laws of the S~ate of Florida, including .particularly Article VIII, Section 2 and Article VII, Section 10(c) of the Florida Constitution (collectively, the 'Act'), a resolution adopr~l by the Issuer on , 1996, and an Indenlm'e of Trust and Assist of Mortgage dated as of ~, 1996 b~tween the Issuer and The Bank of N~ York, as tm.----~ (the 'Indenture'). All terms used herein in caPit~li?ed foIIn ~ no£ otl~rwise ~ h~l'¢in shall have the ine.~nings ascrib~l thereto ill th~ Illd~nture- TI~ Bonds have been issued for the purpose of making a loan to C/lIP Cove, Inc. (the 'Borrower") for the principal purpose of providing funds to enable the Borrower ~ refmanc~ a mulii-family t-esidential :housing facility all as further described in the Loan Agre~ment dated as of__ 1, 1996 between the Issuer and the Borrower (the As ~,lecllrity for ~ payment of the Bonds, the Issuer has pledged and assigned to the Tn~'tee ~ of its right, title ad interest in and to (i) the Agreement (other than certa~ rights the Issuer to reim~ent and indemnification and certain other rights thereunder), iii) the Promissory Note dated ~, 1996 (th~ ~Note"), issued by the Borrower W the Issuer, (iii) the Mortgage and Security Agreement, dated as of ,1996 from the Borrower to the ~ pursuant to which :the Borrower grants the Issue~ a~mo'--rtgage on and security interest in cer~i~ ieal and personal property in order to secure ~mou~ owing w the Issuer purS~rtt to the Agreement and the Note and(iv) the trus~ funds held by the Trustee under In rendering the opinions set forth herein, we have examined (i) the ~solution of the Issuer dated ~, 1996 (the "Resolution"), (ii) executed counterparts of each of the Agree. men~, ~ Inden~e, the Mortgage, the Restrictive Covenants and the Note and (iii) other D-2 ~ '8~S ':'~ tB.~:'5~ SEhT BY RITTER EICHNER & NORRIS P.53/54 I ~fications, agreen=nts, doc~men~ and opinions of public officials and otber officers and ~~ves ,of r~ various parties participating in this tramaction. ~'w qaes~m of fact material to our opinion we have relied upon representatiOns of the 'and the R~tricfive Covemnrs and upon omer cerancauom, agreemenu, ~ , :~lm'l~ge ~ . . vari6us parties m~! opinions of public officials and other officers and representatives, of the. ,~alillg in this transactioll, furnished to us, without under,rig to verify ,?1~ ~,ma~me~ b.~ ..and .insets, the authenticity ot documents suonuttea as ongnm~ o~iginllsof docnmelltS submitled as copies. We have ftltther assumed file due authorization, enmmion,.,mathenticafion 8ha deEmery, as applicable, by the Trustee and by the Borrower of all doemnenm'to which either.or both thereof are a party. '? opinion shall not.be.deemed or treated az aa offering circular, prospectus or official ~ g:~md is not intended in any way to be a disclosure document used in connection with ?the sale or deliveryof the Bonds. The opi~ons set forth ~ow a~ expressly ]imi~i to, aad we opiv-e only with;respect to, thetaws of R~e Sta~ of Florida :mc1 the federal income tax laws of the United States of America. ~ upo- a~l subject-to the foregoing, we are of the opinion as of the date,hereof and nnfiet existing law, as follows: 1. The Issuer is duly created and valklly existing as a public body corporate and polil~ purmmit to the Constitution .~nd I~aws of ~e State of Florida, with the power to enter into tl~nlau~ ~ the Agree~nt, perform the agreements o~ its part contained filerein and to issue ~e ~- ,-2. TheResOlufion has been duly adop~d by the Issuer and comtitutes the valid and b~rlinv agti~m of tbe Is~er. Tim Indenture and the Agreement have been duly authorized and exeeu~d.by the Issuer and corette valid and binding obligations of the Issuer enforceable awain~ the Issuer in'accordance .with ,their terms. The Indenture constitutes a valid and binding az.4~ tolhe Trust~ of the Issuer's rights under the ~ent, the Note and the Mortgage (exc~t for ~fights rcscrvefl to the Issuer in the Indenture). 3. The.Bonds have,been duly authorized, executed and delivered by thc Issuer and, assuming du~ ~'cation by the Trustee, arc valid and binding special obligations of thc Issuer, payable salcly fwm fl~e sources provided therefor in thc Indenture. 4~ The interest on the Bonds is excludable fxom thc g~oss income of the owners lhefeof for fedcraI ~ mx purposes and is not an item of tax preference described in Section '57 of thc Code for purposes of the federal alternafiYe minimum ~x imposed on individuals and cor~oIatio~s. Such intercst may be requ/red W be token into account in dctcrmi~g, adjusted L,:\RA~BOYNTOI~.EG~A~laL:~KD~,. $~me 2,6, 199~ ! l 3'UI'"t ~6 '96 '03:5:1.PM sEr, IT BY RITTER EICHi',IER & HoP, RIS ~] P.54/54 :Borwwcr with various covenants contah~ in the IndcnUtre, the Agrecmc~. thc Mor~agc and the Rcsl~/cfivc Covenants, including, withou~ ]imi~afion, th¢/r co~cnants to comply with th~ Bonds from gross income ~or zcu~t~ m~v,,,,. ~ i,~-r - . Borrower w comply with such requirements could cause the interest on the B0~ds to be includable in :gross income for federal income tax purposes retroactive W the date 6f issuance of Rg Bonds. No opinion is expressed herein regarding other federal tax consequenc~:s that may ~ due'~to .ownership of the Bonds. ;- 5. ~The Bonds are exempt from all present ivt~n~ble persimal property taxe~ imposed by :the State of Florida. Our opinions expressed herein are predicated upon presem laws and interpretations ,~hereof. 'We assume no obligation with respect to any change of circumstances or law .(including hws that.may result from legishtion pending before Congress) that may adversely affect the tax- exempt statas of interest on the Bonds after the date hereof. It is to be under.od that the rights of owners of the Bonds and the enforceability of the Bonds, the Indenture, the Mortgage, the Agr~ment, the Restrictive Covenants, th~ Note and ~ otherdcxalmezas referred to herein may be subject to the provisions of the banlaup~ laws of the Unittxt States of America and to other applicable bankrup~y, insolvency, reorganization, moratorium, or sirnitar laws relatil!g to or affecting creditors' righu, and that their enforcement may also be subject to equitable principles that may affect remedies or other equitable relief. Very truly yours, D-4 8100M/13 EXHIBIT "F" RESTRICTIVE COVENANTS Fifth Draft 6/~20/96 THIS INSTRUMENT PREPARED BY/RETURN TO: MARKE. RAYMOND MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN, P,A. POST OFFICE BOX 3888 WEST PALM BEACH, FL 33402 DECLARATION OF RESTRICTIVE COVENANTS THIS .DECLARATION OF RESTRICTIVE COVENANTS (the "Declaration") is made as of the 1st day of July, 1996, by C/HP COVE, INC. (the "Borrower"), for the benefit of the CITY OF BOYNTON BEACH, FLORIDA (the "Issuer") and The Bank of New York, as Trustee, acting by and through The Bank of New York Trust Company of Florida, N.A., its agent (the "Trustee") under the Indenture referred to below: Section 1. Definitions. The following words and terms as used herein shall have the following meanings unless a different meaning clearly appears in the context: "Annual Income" of an individual occupying a Unit shall mean anticipated total annual income from all sources of such individual, and "Annual Income" of a family occupying a Unit shall mean anticipated total annual income from all sources of the family head (even if temporarily absent), and each additional member of the household who is not a minor, of such family, in each case determined in accordance with Attachment I attached hereto. "Applicable Income Limit" shall mean, as of any date as of which determined, 50% or less of area median gross income as most ~ecently determined pursuant to Section 142(d)(2)(B) of the Code. · 'Bond Counsel" shall mean an attorney or firm of attorneys nationally recognized on the subject of tax-exempt bonds. "Bonds" shall .mean the 1996 Bonds, as defined authorized to be issued pursuant to, the Indenture. in, and "Code" shall mean the Internal Revenue Code of 1986, as amended, including applicable final, temporary or proposed regulations and revenue rulings applicable thereunder. Reference herein to any specific provision of the Code shall be deemed to include any successor provision of such provision of the Code. · 'Eligible Tenants" shall mean members of the charitable class of persons which the Borrower has been established to serve. ~-Indentur~e shall mean the Indenture of Trust and Assignment of Mortgage of .even date herewith between the Issuer and the 'Trustee, including any amendments or supplements thereto. "Land" shall mean the real property desCribed in Exhibit A hereto. "Loan Agreement" shall mean the Loan Agreement of even date ~herewith between the Issuer and the Borrower, including any amendments thereto. ,LOwer-Income Tenant" shall mean an individual or family occupying a Unit whose Annual Income does not exceed the Applicable Income Limit, adjusted for family size as provided in Section 142{d)(2)(B) of the Code. For this purpose, the occupants of a Unit shall not be considered Lower-Income Tenants if all of such occupants are students (as defined in Section 151(e)(4) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code. The income of individuals and area median gross income shall be determined in a manner consistent with determinations of lower-income families and area median gross income under Section 8 of the United States Housing Act of 1937 (or, if such .program is terminated, under such program as in effect immediately before such termination). Section 7872(g) of the Code shall Rot apply in determining the income of individuals under this definition. "Lower-Income Un[ts" shall mean Units rented to Lower-Income Tenants. "Proj.ect" shall mean Clipper Cove Apartments, consisting of 384 rental units, located at 1500 Southern Cross Lane, Boynton Beach,~Florida, and owned by the Borrower. "Qualified Project Period" shall mean a period beginning on the date hereof and ending on the latest of (a) the date which is 15 years after the date hereof, (b) the date on which no tax-exempt private activity bond with respect to such Project is outstanding or (c) the date on which any assistance with respect to such Project under Section 8 of the United States Housing Act of 1937 terminates. "Unit" shall mean a "unit", as defined in 26 C.F.R. ~1.103-(b)(8), comprising a portion of any of the Project rented or held available for rental to tenants. Unless the context clearly requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. All the terms and provisions hereof shall be construed to effectuate the purposes -2- 7998M set forth herein and to sustain the validity hereof. The titles and headings of the sections hereof have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the t.erms or provisions :hereof and shall never be considered or given any effeCt in -construing this instrument or any provision hereof Qr in ascertaining intent, if any question of intent should arise. Section 2. Residential R~ntal Property. The Borrower shall own, manage and operate the Project continuously as "qualified .residential rental projects" meeting the requirements of Sections 142(d) and 145(d)(2)(B) of the Code. The Issuer and the Borrower hereby elect to use for the Project the 20-50 test described in Section 142(d)(1)<A) of the Code. At all times during the Qualified Project Period: (a) The Borrower shall own, manage and operate the Project on a continuous basis as a residential rental project comprising several proximate and interrelated buildings or structures each of which contain at least one Unit and substantially all of which contain Units and facilities functionally related and subordinate thereto meeting the requirements of Sections 142(a)(7) and 142(d) of the Code; (b) Units shall consist of similarly constructed Units each of which contains complete facilities for living, sleeping, eating, cooking and sanitation separate and distinct from other Units, including cooking facilities equipped with a cooking range, refrigerator and sink; (c) None of the Units shall at any time be used on a transient basis; none of the Units shall be rented for a period of less than 31 days; and no portion of the Project shall be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, hospital, nursing home, sanitarium, rest home or %railer park or court for use on a transient basis; (d) Except for Units occupied by resident managers or .maintenance personnel, the Units shall be rented or available for rental on a continuous basis to persons who are members of the general public, and the Borrower shall not give preference in .renting Units to any particular class or group of persons, other than Eligible Tenants and Lower-Income Tenants as provided in Section 4 hereof; (e)~ The Project is and shall be located on a single tract of land within the meaning of 26 C.F.Ro ~l.103-8(b)(4)(ii)(b), and all of the improvements thereon shall comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership, management, financing and operation of such Project; and (f) Any building which contains fewer than five Units shall -3- 7998M not .have a Unit occupied by the Borrower or a related person (as defined in Section 147(a) of the Code). SeCtion 3. Rental Requirement. Once available for occupancy, the Bor.rower shall rent .or hold available for rental each of the Units of the Project (except for Units occupied by resident managers or maintenance or security personnel) on a continuous basis during the ~Qualified Project Period. ~$ection 4. Lower-Income Tenants. For the purpose of satisfying the low and moderate income occupancy requirements of -~Section 142(d) of the Code, the Borrower shall, at all times during the Qualified Project Period: (a) Rent on a continuous basis to Lower-Income Tenants at least 20% of the 'Units in the Pr~oject; provided, however, that, as provided in Section t42(d)(3)(B) of the Code, any Unit occupied by a Lower-Income Tenant at the commencement of occupancy shall ~ontinue to be treated as if occupied by a Lower-Income Tenant during tenanc)- of such Unit by such Lower-Income Tenant even :though such Lower-Income Tenant may subsequently cease to be a Lower-Income Tenant, so long as the Annual Income of such Lower-Income Tenant as of the most recent certification pursuant to subsection (b) below does not exceed 140% of the Applicable Income Limit as of such certification. In the event that the Annual Income of a Lower-Income Tenant shall exceed 140% of such Applicable Income Limit, if (treating such tenant as if it were ~not a Lower-Income Tenant) less than 20% of the Units in the Project are occupied by Lower-Income Tenants, the Borrower shall rent the next available Unit in the Project of comparable or smaller size to a Lower-Income Tenant (provided, however, that any Unit in such Project of a larger size may be rented to a tenant who is not a Lower-Income Tenant if such Unit was previously occupied by such a tenant) and, upon renting such Unit to such Lower-Income Tenant, the Borrower shall make a new certification pursuant to subsection~b) In addition, any Unit vacated by a Lower-Income Tenant sha~ ~e treated as being occupied by such vacating Lower-In.come Tenant until reoccupied by another tenant {other than occupancy fOr 31 days or less) at which time the chmracter of the Unit shall be redetermined, provided that reasonable att~empts are made to rent the Unit and no other Units of comparable or smaller size in the Project are rented to a tenant who is not m Lower-Income Tenant before such Unit is rented. (b) Obtain from each Lower-Income Tenant who occupies Units set aside for occupancy by Lower-Income Tenants pursuant to Subsection (a) above, upon or prior to such Tenant's initial occupancy in the Project, and thereafter not less than 60 days prior to the anniversary date of each such Lower-Income Tenant's occupancy, and maintain o~ file, copies of: (i) the Federal income tax ~return of such Lower-Income Tenant for the taxable year immediately preceding such occupancy or anniversary, or such other -4- 7998M ~third party income verification as may substantiate such Lower-Income Tenant's sources of income during the year preceding such occupancy or anniversary, and (ii) an annual income certification (substantially in the form of Attachment I hereto or such other form as may be approved by Bond Counsel) evidencing compliance with Section 142(d) of the Code, as the same may be fzo.m time to time amended, and an income verification therefor f~om such Lower-Income Tenant's employer or other source of income; (c) Permit any duly authorized representative of the Issuer, the Trustee, the .Department of the Treasury or the Internal Revenue Service to inspect, during the Borrower's business hours and upon not less than 48 hours advance noticef the books and records of the Borrower pertaining to the income of Lower-Income Tenants residing in the Project (including each occupant treated as a Lower-Income Tenant in accordance with subsection (a) above); and (d) Use forms of lease for rental of Lower-Income Units and provide the Trustee with a copy of each such form, which shall contain .specific provisions requiring that (i) the minimum rental period for each Lower-Income Unit shall be at least one year, (ii) such Unit shall not be subleased, except where the Borrower approves the subtenant as an eligible tenant in accordance with this Section 4 or when the failure of the subtenant to qualify as a Lower-Income Tenant will not result in noncompliance with this Section 4, and (iii) the lease shall terminate and the Borrower shall have the right to evict the tenant for any substantial violation of the terms and conditions of the tenant's tenancy, including, but not limited to: (A) any false or misleading statement in information supplied by the tenant to evidence the tenant's status as a Lower-Income Tenant or in such other certifications as may be required to implement the provisions hereof or (B) any failure or refusal to provide information required to recertify the Lower-Income Tenant's annual income not less than 60 days prior to each anniversary of such Lower-Income Tenant's occupancy. Section 5. Tax-Exempt Status of Bonds. The Borrower shall not take or permit any action that would adversely affect the exclusion from gross income for Federal income tax purposes of ~nterest on the Bonds and, if it should take or permit any such action, the Borrower shall take all lawful action necessary to rescind such action promptly upon obtaining knowledge thereof. ~The Borrower shall take and shall refrain from taking any action as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements proposed or promulgated by the Department of Treasury or the Internal Revenue Service -pertaining to obligations issued under Sections 142(a)(7) and 145(d) of the .Code or any successors thereto. -5- 7998M ~S.ec'%ion 6. ~Reports; Certifications. The Borrower shall file ~wi~ the Department of the Treasury the annual certifications required:~by Section 142(d)(7) of the Code at the times and in the ~manner i~therein prescribed and shall simultaneously furnish copies of such cert~ifications to the Issuer and the Trustee. During the Qualified Project period, the Borrower shall file with the Trustee an annual report in ~riting at least once each twelve months, commencing with ~%he period ending July 1, 1997 (substantially in the form ~of ~ttachment II) for the Project which shall contain the following: The number of Lower-Income Units; {b) The number of Units rented and the number of Units held available for ~rental other than as Lower-Income Units; ~(c) ~The percentage that the number of Lower-Income Units ~omst'itutes of t~he total number of Units; ~(d) ~ cer.tificate of the Borrower that the information contained in ~the report is true, accurate and correct as of the date ,~hereof; and ~e) .A certificate of the Borrower that the Borrower is in compliance in .all material respects with all covenants contained in this Declaration. Section 7. Compliance; Involuntary Non-Compliance. (a) The Borrower covenants to inform the Issuer and the Trustee by written notice ~'of any violation of the Borrower's covenants in this Declaration within 14 days of discovery of such breach. The Borrower shall take all actions to cure any default under the provisions set forth in Section 4 as soon as practicable and, in any event, .within sixty (~60) days of becoming aware of such default, The Trustee shall receive and monitor any reports submitted .by the Borrower pursuant to Section 6 and notify the Borrower and the Issuer of the breach of any such covenant based upon information contained in any such report or otherwise. In ~the .-event of ~the breach of any such covenant that continues to exist uncorrected for a period of 30 days after notice to the ~Borr~o~er, the ~Trustee, on behalf of the Issuer, after receiving any indemnity it ,deems necessary (i) shall take all action necessary to cause ~he Borrower to cure such breach, including, ,if necessary, enforcement o'f such covenant if a failure by the Borrower to comply with such covenant would in the opinion of Bond Counsel adversely affect the exclusion from gross income for Federal income tax purposes of interest on the Bonds, and (ii) may take any other action necessary or desirable to cause the Borrower to cure such breach. If at any time there are no Bonds outstanding under the Indenture, or if for any reason the Trustee fails to take any action reasonably requested by the Issuer, the Issuer may itself take any and all action which it may deem necessary or desirable to cure any breach hereunder. -6- 7998M (b) ~.he covenants contained in this Declaration shall cease to apply in the event of involuntary non-compliance caused by fir~, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in Federal law or an action of a Federal agency after the date of issue of the Bonds which prevents %he Trustee and the Issuer from enforcing such covenants, condemnation, or any other event which, in the opinion of the Truste~, is similar to the foregoing, but only if within a reasonable time after such event (including a reasonable period to resell the Project by a foreclosing lender which acquires the same, or whose controlled purchaser acquires the same, at ~foreclosure) (i) the Bonds will be no longer outstanding or (ii) the proceeds received as a result of any such event are used to provide a project which meets the requirements of Section 142(d) of the Code as evidenced by an opinion of Bond Counsel. (c) Subsection (b) hereof shall not apply if, in the event of foreclosure or transfer of title by deed in lieu of foreclosure or similar event, the Borrower or a related person (as defined in 26 ~C.F.R. ~§l.103-i0(e)) subsequently obtains an ownership interest for tax purposes in such Project during the Qualified Project Period. Section 8. Covenants Run with the Land; Term. The covenants, reservations, agreements and restrictions set forth herein shall ~be deemed covenants running with the Land and shall be an encumbrance on the Land and shall, without regard to technical classification or designation, be binding upon and enforceable against the Borrower and all successors in title to the Land, except as provided in Section 7. The Borrower covenants and .agrees that during the Qualified Project Period, the Borrower will cause or require that any subsequent transferee, purchaser, grantee, owner or lessee (excluding, however, transferees under Section 7(b) and lessees occupying Units for residential purposes) of the Project or the Land or any part thereof, shall accept, observe ~and assume all of the covenants of the Borrower in this Declaration, including its covenants in this Section 8. Except as provided in ~Section 7(b), every contract, deed or other instrument hereafter executed covering or conveying the Land or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, regardless of whether such cowenants are set forth in suCh contract, deed or o~her instrument. Except as provided in Sections 4 or 18 or unless sooner terminated in accordance with Section 7, such covenants shall continue in full force and effect ~during the Qualified Project Period, it being expressly agreed and understood that the provisions ~hereof are intended to survive the termination of the Loan Agreement and the repayment of the loan to the Borrower made pursuant thereto, if prior to the expiration of the Qualified Project Period. Section 9. Uniform; common Plan. The provisions hereof shall apply uniformly to the entirety of the Project in order to -7- 7998M esta~btish and carry out a common plan for the use, development and ~mprovement of t'hat portion of the Land upon which the Project is ~ocated. ~ection t0. Burden and Benefit. The burden of the covenants set forth herein touches and concerns the Land in that such covenants limit the use and development of the Land, and thereby render the Land less valuable. The benefit of such covenants touches and concerns the Land in that such covenants make the Project available for use and occupancy by Lower-Income Tenants, therefore furthering the public purpose sought to be advanced by the Issuer and furthering the charitable purposes for which the Borrower has been created, and further satisfying the Federal policies evidenced by the conditions for use of the Project required under Section 142(d) of the Code in order that interest on the Bonds may be excluded from gross income for Federal income 'tax purposes. Section 11. Remedies;. Enforceability. In the event of a breach of any of the pr.ovisions hereof, the Trustee upon receipt of actual notice -of such breach, and upon receipt of indemnity satisfactory to the Trustee, as required by the Indenture, acting on behalf of the owners of the Bonds or on behalf of the Issuer in its own right or as representative of the Lower-Income Tenants, ~may institute and prosecute any proceeding at law or in equity to enforce the provisions hereof or to 'abate, prevent or enjoin any such breach, or to enforce compliance or to recover monetary damages caused by such breach. No delay in enforcing the provisions hereof as to any breaCh shall impair, damage or waive the right of any party entitled to enforce the same or to obtain relief against or recover for the continuation or repetition of Such breach or any 'similar breach thereof at any later time or times. Section 12. Information Provided to. Trustee. shall provide the Trustee with copies of all .communications given to the Issuer hereunder, reports required by Section 4 hereof. The Borrower reports and including the Section 13. Consideration. The Issuer has determined to issue the Bonds to obtain funds to carry out the cost of the Project for the purpose, among others, of inducing the Borrower to operate the Project in the jurisdiction of the Issuer as a facility for use by an organization (other than an organization organized and operated exclusively for religious purposes) which is described in Section 501(c)(3) of the Code and which is exempt from federal income taxation pursuant to Section 501(a) of the Code, such Project being a "qualified residential rental project" within the meaning of Section 142(d) of the Code. In consideration of the adoption and implementation of the Project and the issuance of the Bonds by the Issuer, the Borrower has accepted the terms and provisions hereof. -8- 7998M Section 1-4. Occupancy Notification; Income Records; Additional~ Information. Concurrently with each annual report provided to the Trustee pursuant to Section 6 hereof, the Borrower shall make available for inspection by the Trustee copies of the income tax returns or current income verifications and income certifications of Lower-Income Tenants (or persons treated as Lower-Income Tenants under Section 4(a)) requi~ed by Section 4(b) hereof which have been obtained by the Borrower subsequent to filing the report for the immediately preceding year. In addition to the information provided for in Section 4(b) hereof, the Borrower shall submit any other information, documents or certifications requested by the Issuer or the Trustee which are reasonably necessary to substantiate the BOrrower's continuing compliance with the provisions hereof and Sections 142(d) and 145~d)(2) of the Code. Section 15. G0v:erninq Law. This instrument shall be governed by the laws of the State of Florida; provided, however, that with regard to any interpretation of the Code, Federal law shall apply. Section 16. Notice. Any notice required to hereunder shall be given as provided in the Indenture. be given Section 17. Severabilitv. If any provision hereof shall be held invalid, illegal .or unenforceable, the validity, legality and enforceability of the remaining portions shall not in any way be affected or impaired. Section 18. Release, Modification or Amendment of Declaration. This Declaration may be released, modified or amended in whole or in part as provided in Article XII of the Indenture. Any such release, modification or amendment shall be executed by the Issuer and the Trustee and shall be recorded at the expense of the Borrower in the Public Records of Palm Beach County, Florida. IN WITNESS WHEREOF, the Borrower has caused this Declaration · to be executed in its name and on its behalf by its duly -9- 7998M authorized officer, as of the date first written above. C/HP COVE, INC. Witness Witness By: Name: Title: Witness Witness ~Witness Witness Accepted: CITY OF BOYNTON BEACH, FLORIDA By: Name: Gerald Taylor Title: Mayor THE BANK OF NEW YORK, as Trustee, acting by and through THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.A., ITS AGENT By: Name: Title: STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrument was acknowledged before me this day of , 1996, by as of C/HP COVE, INC., who is personally known to me, OR has produced as identification. (NOTARY STAMP) Notary Name: Notary Public Serial (Commission) Number (if any) -10- 7998M STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrument was acknowledged before me this day of , 1996, by GERALD TAYLOR, Mayor of the CITY OF BOYNTON BEACH, FLORIDA, who is personally known to me. (NOTARY STAMP) Notary Name: Notary Public Serial (Commission) Number (if any) STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrument was acknowledged before me this day of , 1996, by who is personally known to me, OR has produced as identification. (NOTARY STAMP) Notary Name: Notary Public Serial (Commission) Number (if any) -11- 7998M ExHiBiT A TO DECLARATION OF RESTRICTIVE COVENANTS Land ATTACH~N~ I TO DECLARATION OF RESTRICTIVE COVENANTS [CLIPPER COVE APARTMENTS] Tenant Income Certification 1. I/We, state that I/we and the persons listed below will be or are the occupants of unit No. in the Clipper Cove housing development. Name of Members of the Family* Relationship Age SOcial Security Number Income Tax Return Filed for preceding Taxable Year (Yes or No) *Includes family head (even if temporarily absent) additional member of the family. and each 2. (a) The anticipated income of all the above persons during the 12-month period beginning on the date of this certification is listed below. Such amount includes all anticipated income including (without limitation) wages, salaries, investment income, social security benefits, alimony and child support, unemployment compensation and welfare benefits (but not the value of food stamps). Name of Members of the Family Amount Source Name and Address of Place of Employment (b) The total anticipated income of the family head, spouse and .all others listed above is $ 3. If any of the persons described above in paragraph 1 has an~ value of equity in real property, savings, stocks, bonds or other forms of capital investment, provide the following information: {a) the name of the asset and the total estimated market value of all such assets of all of such persons: $ ~b) the amount of income expected to be derived from such assets in the 12-mont'h period cor~mencing on the date of this certification: $ , and (c) 2 (b): amount of such income which is included in item -4. (a) Will all of the persons listed above be or have been full-time students during five calendar months of this year at an educational institution (other than a correspondence school) with regular faculty and students? Yes No (b') If yes, is any such person (other than nonresident aliens) married and eligible to file a joint federal income tax return? Yes No I/We acknowledge that all of the above information is relevant to the status under federal income tax law of the interest on the Obligations that have been issued to refinance the acquisition of the housing development. I/We consent to the disclosure of such information to the issuer of such obligations, the bond trustee for such obligations, any agent acting on their behalf, and any authorized agent of the United States Treasury Department or Internal Revenue Service. I/We understand that if the information reported in this certificate is discovered to be in any way materially false or 'misleading, it shall be viewed as a default and may result in termination of the lease and eviction of all occupant:s of ~he unit. I/We also agree to provide any further information required to validate this Certification and agree to .update the Certification, if required, at least sixty days prior to the anniversary .of any lease renewal. The undersigned, being first duly sworn, hereby acknowledge(s) that (s)he/they has/have read and answered each of the questions fully and truthfully. Signed: Applicant/Occupant Applicant/Occupant STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrument was acknowledged before me this day of , , by who is personally known to me, OR has produced as identification. (NOTARY STAMP) Notary Name: Notary Public Serial (Commission) Number (if any) STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrument was acknowledged before me this day of , , by who is personally known to me, OR has produced as identification. (NOTARY STAMP) Notary Name: Notary Public Serial (Commission) Number (if any) FOR COMPLETION BY PROJECT OWNER ONLY: Calculation of Annual Income*- Amount entered for entire household in 2(b) above: If the amount entered in 3(a) above exceeds $5,000, .SUBTRACT the amount entered in 3(c): (C) TOTAL INCOME (D) If the amount entered in 3(a) above exceeds $5,000 enter the greater of (i) the amount entered in 3(b) or (ii) a percentage of the amount entered in 3(a) based on the current passbook savings rate (as determined in accordance with 24 C.F.R. 813.106(b)(3)): (E) TOTAL ANNUAL INCOME (Line (C) + Line (D)): Based on the amount entered in (E) above, the tenant(s) [is/are] [is/are not] Lower-Income Tenants, as defined in the Declaration of Restrictive Covenants, dated as of 1, 1996, in the Public Records of Palm Beach County, Florida. Number of apartment unit assigned: [ NAME OF OWNER ] By. Authorized Representative *Reference shall be made to Title 24, Part 813 of the Code of Federal Regulations for determination of income inclusions and exclusions. ATTACHMENT II TO DECLARATION OF RESTRICTIVE COVENANTS Annual Report [Issuer] [Trustee] Clipper Cove Project Pursuant to ~Section 6 of the Declaration of Restrictive ~.Co~enants, dated as of 1, 1996, executed, delivered and recorded by the Borrower, for the benefit of City of Boynton Beach, Florida and as Trustee, the undersigned authorized r.epresentative of the Borrower, hereby certifies with respect to the operation and management of the ~roject referred to above (using the terms herein as defined in such Declaration), that as of the date shown below: 1. The total number of Units rented or held available for r~ntal is . · The ~umber of Lower-Income Units is 3. The percentage that the number of Lower-Income Units constitutes of the total number of Units is 4. The information contained in this .accurate and .correct as of the date hereof. report is true, 5. As of the date hereof, the Borrower is not in default ~nder ~any .covenant or agreement contained in the Declaration of Restrictive Covenants. IN WITNESS WHEREOF, the undersigned has signed this Report this day of C/HP COVE, INC. By: Name' Title: 8100M/14 EXHIBIT "G" DEFINITIVE AGREEMENT 06x26x96 16:50 BABER & KAL I N[]IiSKI, P.C. -~ RAYMOND N0.50~ P002~011 DEFINITIVE AGREEMENT B'&K Draft 6-20-96 This DEFINITIVE AGREEMENT (this ,,Agreement") ~ated 1996 is by and between C/HP COVE, INC., a Florida ~npro~i~ corporation ("C/HP") and the CITY OF BOYNTON BEACH, FLORIDA, a political subdivision and municipality of the State of Florida (the ,,City") and sets forth certain matters with respect to the ongoing agreement between C/HPand the City arising as a result of the City spart/czpatlon in the acquisition by C/HPCove of that multi-~amily housing facility known as Clipper Cove Apartments located at 1500 Southern Cross Lane Boynton Beach. Florida (the -Property"). SeCtion 1. Definitions. TezTns used in this Agreement shall have themeanings assigned to such terms in this Section 1, unless the connext, clearly indicates otherwise. "Agreement" means this Definitive Agreement. "Annual Budget" means the budget adopted prior to the beginning of each Fiscal Year by C/HP for such ensuing Fiscal Year. ~ "Asset Management Fee" means the fee o~ 1.25% 6f Gross Revenue per month paid or due to Cornerstone Housing Corporation as an asset management fee. "C/HP" means C/HP Cove, Inc. a Florida nonprofit corporation, and the ,,ultimate owner" within the meaning of the Letter of Understanding. ,'City" means the City of Boynton Beach, Florida, a political subdivisi°n and a municipality of =he State of Florida. ,,Expenses"means, for any period, all expenses related to the operation and maintenance of the Property and properly allocated to such period whether by reason of ac=ual cash expenditure or accrual of the obligation; such expenses include, but are not limited to, the following: =he Management Fees and Expenses. Asset Management Fees, Social ServiceManagement. Fees and all other fees and expenses for management and other services provided at or in connection with the Property; wages, salariesand employee benefits and other labor costs; maintenance, janitorial and cleaning expenses; repairs and replacements; lease payments and expenses; utilities; water and sewer charges and trash, garbage and solid waste disposal fees, charges and expenses; contracted services; legal, accounting andconsultin~ fees and expenses of the 86/26xo~6 16:i~l B~BER~ KALINCII~ISKI. P.C~ ~ RAYMOND NO.583 PO03X011 Property and'of C/HP; taxes, payments in lieu of taxes, assessments · s cOStS o~ licenses, and excess ; leasing permi'ts and similar ~ees to the Property or its and marketing cos=~; costs of goods i on debt incurred in connection with interest and principal ..on debt including ~gations 1 fees the property paid from and!~ll other maintenance revenues, opera= ing, limi or ncluded x sums received or -Gross ~b~venues" means, ~or any period, the aggregate on a ~cash basis, generated from owning, the Property xncludz 9, but not the -total amount paid by all tenants and o~hers right to occupy or use the Property thereof, bun not limited to all ren~s ~ tenants of operating expenses and forfeite~ by ~enants or otherwise license feesand other charges or 'credited .=o C/HP'under any lease, license or ~hout limitation, proceeds of rental insurance the applicable was to be paid), vending machine ~ncome all interest earned on the funds and Indenture into the Revenue that Gross borrowing (ii) (iv) o~ Mortgage to be executed. connection with which the 1996 Bonds are is amenCted and supplemented "Letter Un~ex Cornerstone Partnership, Inc., acquisition of the of August 3 ~ a Proper~y (i) the bonds or o~her to third parties, any . contributions, .ruptio~ insUrance deposite (until above). ~ Indenture of Trust an~ ASsignmen~ and The Bank of New York in of ~he 199~ ~on~s and pursuant to as such document ~me =o time. · ,, means shat Letter of on behalf of the City, a Maryland ~orporation and Housing in anticipation of the RTC. ~Loan Agreement'" means that Loan Agreemen~ to be executed by City and .C/HP in connection with the issuance of the - 2 - 16:31 t~ & KALINOWSKI, P.C. ~ RAYMOND 1996 Bonds and pursuant to which the proceeds of the 1996 Bonds wilI be l°aned to C/HP. -Management Pees and Expenses" means the amount sec ~orth each year as management fees and expenses in the Annual Budget payable tO the manager of the Project. "1996 Bonds" means the City of Boynton Beach Multi-Family Housing Mortgage Revenue Bonds Series 1996 (Clipper Cove Apartments) to be issued by the City primarily for the purpose of refinancing the Property. "Property" means the Clipper Cove Apartments located at 1500 Southern Cross Lane, Boynton Beach, Florida, including the land, building and all other improvements associated with such property. The'legal description of the Property is that attached 'hereto as Exhibit A. "RTC" means the Resolution Trust Corporation, the entity from which the Property was acquired by C/HP. "Social Service Management Fee" means the fee of 1.25% of Gross Revenue per month paid or due to Housing Partnership, Inc. or its successor for social service programs and management provided at the Project. .Trustee" means the Trustee acting in such capacity under the Indenture, which upon the issuance of the 1996 Bonds shall be The Bank of New York. S~ction 2. Purposes o~ Th~s Aqreement. Prior to its acquisition by C/HP, the ~roperty was owned by the ~TC. A~ part of a program for the disposition of the Property, and other similar properties owned by the RTC, the RTC engaged in a process of competitive selection of a purchaser of the Property. The City · some control over .the disposition of the desired to exercise Property, and the City according_l~ determined, to submit a proposal for the acquisition of the Property. In that regard, the City engagpd in a competitive process°f selecting a non-profit entity to become the ultimate owner of the Property. Through this process, ,the City selected the team of Cornerstone Housing Corporation and Housing Partnership, Inc. FolI~wing the selec~ion process, the City, Cornerstone Housing Partnership and Housing Partnership, Inc executed the Letter of Understanding. The criteria for the selection of Cornerstone Ho= sing Corporation and . Housing Partnership, Inc. include.~, the f? :t that they were willing to agree ~to make payments to ~he C==y in Ieu of taxes and to share net cash flow with the City as Provided il Sections' 6 and 7, respectively, of this Agreement. During its negotiations with the RTC, the City .understood =hat the City would be paid a fee by ~he RTC equal to 5% .roperCy as compensation for the ~ 'the disposition of the Property however, at the time of final negotiation of an by the RTC; - 3 - 06/26/96 16:51 Bt~BER & KRLINOb~KI., P.e. -)~YMOND N0.503 P005/011 width ~the ~RTC, the RTC was only willing to pay the'.~i City 3% the Property. C/HP, in recognition that the from the RTC than the City originally ~he expected, agrees in Sec=ion 3 hereof, _to .DaY~ to .City., as ~a~tiaI c~ideration ~or the assignment by the City to C/HP o= the ~' Pro rt , an amount e~ual to 2% of the right to acquire the pe y, -purchase 7. of ~the Property paid by C/HP to =he RTC, which .Payment L1 be made ~from the .~roceeds of the 199~6 Bonds. .' T.-.h.e parties ~tend that th~ Agreement shall constitute that #Definitiv-~ Agreement" referenced in the Letter of Understanding, and hereby state that ~this documenn does the Dez.~n~tl .~rstand&ng and · supersedes the Letter of ties between .the Letter Definitive Agreement, this Agre, Letter_-, and the Ho~sing Inc. will cr~ corpora=ion to become the ,'~ult~mate as that ,ultimate that C/HP ~he RTC. the With respect and this The corporation ~.~ Florida The and and owns the lien securing Section 3. Agreem~.nt to Make Payment =oCity. C/HP, as described in .Eection 2 above, recognizes that the City did not receive the full amount it had expected from the RTC and, therefore, C/HPhereby~grees ~o pay to the City an amountequal to 2% of~the purchase price of the Property from the RTC, .such 2% being the sum of $I86,000. Such $186,000 shall be paid solely from the proceeds of the 1996 Bonds and shall be payable to the City upon t'he condition that the 1996 Bonds are issued. $~ction4. ~Deliveryo~ Information. C/~P agrees that it will deliver-to the City eachof the following: (a) a listing (as of May 31, 1996 of ~he project development costs related to the Property, (b) financing plans and applications relating to the Property, (c) by January I of each year, commencing January 1, 1997, the AnmualBudget (as defined in the Indenture), [d) by April 30 of each year (or as soon thereafter as the annual audited f~nancial statements are available) annual audited financial statements of C/HP for the precedin g fiscalyear and {e) an annual calculation of Gross Revenues and .of Expenses. ~ $~ction ~. Property Mana~emenr~ C/HP has ~elected pr?.pe, rty Asset Managemen=~o~ F}ori~a! Tamp~, ~lori~a, as =he i~itial property .manager of the Proper=Y. C/HP xs not, however, obligated to continue to engage Property Asset Management as property manager for any period of time and may, at any time, ~o/E~ 16:31 t~R & KALtNOWSKI, P.C. a RAYT40ND H0.503 POO67011 select.such other property manager or elect to manage the Property directly, all as C/HP, in i=ssole discretion, may determine. C/HP agrees, however, that the City may, fromtime =o time, adv,.se C/HP with res~ec= to the City's p~efe~ences for key'vendors, ihcluding the property manager for the Property. . · C/HP shalt file a County Property APDraiser seeking an ad tax-exemption or take such other action on an annual basis as is appropriate ~omaintain such exemption..If such an exemption is granted oricontinUed forany year, then C/~P will in lieu of taxes '(''PILOT") onNovember I o~ each year as ad valorem taxes shall be lawfullydue and payable in amounts as close as possible to the tax payment the City received if the tax exemption hadnot been~ The be calculated as follows: (before as .shed by the City'~s rate. appeal ~tion is than a full ad valorem tax ~ormul. a .shall be applied pro rata. that any Surplus eight :shal'. is of o~ receipt times If less then =he PILOT For so long in effect, C/HP and th= City agree the Distribution Account of the under the Indenture Shall be paid as follows: twenty- (2~%) to tihe C~ty of Boynton Beach Community Division and percent (72%) to C/HP. C/HP thereunder, not year'of from the Dist by C/HP. the Indenture, if a distribution 120 days after the end of to the City the City's share .onAccount within five days .no bonds are outstanding un~er the Indenture, the City agree that C/HPmay retain the Gross Revenues and ~ay Expensesdirectly or may, in connecti°n with the acquisition of other fin.ancing, agree to deposit such Gross Revenues with another fiduciary, and, in either case, the Gross RevenUes shall .be use~ ,ay the Expenses and to ~rovide for debt service, and for such service reserves and reserves for the operation and maintenanceof property as may be reasonable and prudent an~/or by=he term~ 0~ any financing documents related ~o ~ ~rty and that, annually, within 120 days a~te~ th~ end of each year of C~HP, 28% of nhe excess of the Gross Expenses, the payment of debt fun~ing of such reserves, shall be =o the City of Bo~rnton Beach Community Redevelopment Division. ~ The City will use the distributions made to it for~'i housing programs in the City. If the City fails Co use the paym, ents for such'housing programs, then the distributions to the City hereunder - 5 - BRBSR & KRLINO~tSKI, P.O. * RRY~'ID M0.50~ shall cease until such time as the City has provided written .evidence to C/HP that all such payments previously made to the City have been used in the housing programs of the City. C/HP will market the Property units in the Property l~ocal social by contacting and working with service providers and other agencies in the area, as appropriate. Section 9...~ermination. This Definitive Agreement will Unless C/:HP and the City or terminate on December 20, 2035 'V respec~m e successors ~erminace writ=eh mutual agreement prior to respect to any distribution of net the year in which this shall be pro rated, based upon the Definitive Agreement was in effect, and such payment upon the terms set fo continue until, such distribution as this Definitive Agreement is hereto agree to execute interest hereunder and, in filed for public notice and C/HP agree promptly to exe. ~ocuments as shall be required uo public records and cause it to no longer property. the amount such year the to make 7 hereof shall made to the City. At such time of the parties release of its has been %he City ~te such from the upon the Section .10~ Sale of the prouertv. Subject to the terms of the Indenture and the Financing I~struments (as defined %n.the ~den~ure), C/HPmay sell ~he Property on such and at such 'time as it determines to be appropriate, provlaeo C/HP shall give prior ,written notice to the City of the proposed sale and re6eive the Citys consent~ The Cityagrees tha~ it will not unreasonably delay or withho%d its consen%. It is agreed that any entity to which the Property is Sold or transferred must accept th~ terms an~ conditions o~ th£sDefinitiveAgreement and agree be bound on the same terms as C/HP. All proceeds of the sale of the proceeds. an~ ~he City shall have no interest proceeds shall be in Gross in any of such Section 11. Amendments. This Definitive Agreemen~ is the partieshereto and may b~ amended at solely for the benefit of written document setting forth the any time and in any respect bya amended =erms and signed on behalf of the City and C/HP. S~c~ion ~2. No~i~es. Ali notice~ and requests required or permitted under uhms DefinitiveAg~eement shall be in writing and shall be deemed to have been properly given or served when mailed - 6 - .~6/2~/96 16:32 BABER & KALINO~SKI, P.C. ~ RAYMOND N0.50~ P008/011 pos=age prepaid by ceru~fied or regisnered mail, re=urn receip= eS=ed0 or by overnight delivery service when evidence of deliver~ is provided. Nouices shall be direc=ed as follows: The City.: City o£ Boynton Beach 100 East Boynton Beach B~ulevard Post Office Box Boynton Beach, Florida Attention: City Manager C/HP: C/HP Cove, Inc. c/o Cornerstone Housing ~orporation 1350 Beverly Road, Sui=ei20b McLean, VA 22102-3634 ~ Attention: President Each par~y may change the ad~r. ess provided for notification by deliver~o~ t~e new address in writing uo the o=her party. Sec~i0n 13. No A~encv. The paruies nei=her is an age~, employee, or servan~ o£ any Defini=ive Agreement does not and shall creating a partnership be=ween C/HP and t granted, nor shall any par=y r~present ~hat any right or au~horiuy =o assume or crea~ responsibility, express or implied, on behal of any other party, or to bind any o=h~r party in any manner not~provided her~in. gree =hat her, and that this lo~ be construed as e City. No party is has been gran=ed, any obligation or - 7 - S~ction 14. Choice of Law~ This Agreement shall bc construed under =he laws of the State of Florida and under federal 1.aw which applies in =he state of Florida. This Definitive Agreement may ¢oun~e~arts shall be executed in her such ¢ons=itute one and the same agreement. City Clerk Witness: CITY OF BOYNTON BEACH, FLORIDA By: Gerald Taylor, Mayor C/HP-COVE, INC, a Florida Corporation By: James H. Edmondso~, President - 8 - STATE OF FLORIDA ) COUNTY OF PALM BEACH ) The foregoing instrumen= was acknowledged before, me this day of June, 1996, by ., , as of C/HP COVe, INC., who is personally know to me, OR has produced . as identification. (NOTARY STAMP) Notary Name: .... Notary Public Serial (commission) Number (if any) .. . - 9 - 06/2~?:J6 16:33 ~BER & K~LI)qObd..~I, P.C. ~ P-,~YNOhtD b40.~3 EXHIBIT A L~.C~AL DESCRIPTION OF THE PROPERTY All of the Plat of'The Landings, according to the Plat thereof as recorded in Plat Book 52, Pages 48 through 52, of the Public Records of Palm Beach County, Florida. 8100M/15 EXHIBIT "H" LETTER OF REPRESENTATIONS Letter of Representations [Name of Issuer] Attention: General Counsel's Office The Depositor)' Trust Company 55 Water Street; 49th Floor New York, NY 10041-0099 [Name of Agent] ~Date } Re: (Issue Description Ladies and Gentlemen: This letter sets forth our understanding with respect to certain matters relating to the above-referenced issue (the "Bonds"). Agent x~411 act as trustee, paying agent, fiscal agent, or other agent of Issuer with respect to the Bonds. The Bonds will be issued pursuant to a trust indenture. bond resolution, or other such document authorizing the issuance of the Bonds dated . , 199~ (the "Document"). ('Underwriter") is distributing the Bonds through The Depository Trust Company ("DTC"). To induce DTC to accept the Bonds as eligible for deposit at DTC, and to act in accordance with its Rules with respect to the Bonds, Issuer and Agent, if an); make the following representations to DTC: 1.-Prior to elos~g on the ~Bonds on ,199 , there shall be deposited with :DTC one Bond ,eer6fmate 'registered in the name of DTC's nominee, Cede & Co., for each stated maturity .of ~the t~onds ,in the face amounts set :forth on Schedule A hereto, the total of which represents 100% of the principal amount of such' Bonds. If, however, the aggregate principal am~ount of~?y mamrit~ exceeds 8150 million, one.certificate will be issued with resp~ to each $150 million of ~rin-eipal amount and an additional certificate will be issued with ~ to any renmirfing.~ mount. Each $150 million Bond certificate shall bear the follo:,wing legend: Unless th~s certificate is presented by an authorized representative of The Depository Trust Gompan); to Issuer or its agent for registration of transfer, ; name of Cede & Co, or in .such other:name as.is requested by an of DTC (and any pa)~nent is made Io Cede & OR BY OB TO ANY'PERSON IS ~rRONGFUL inasmuch as the registered -owner hereof, ~ tk 'Co., has an interest 'herein. 2. In the.event :of any solicitation of consents from or voting by holders of the Bonds, Issuer or Agent shall estab~h a r~--ord clate (with no provision for revocation of consents or send notice of such record date to DTC $, In or an aak, ance refunding of part of the outstanding Bonds, notice-to DTC speci~Sng: (a) the amount of the redemption or ,_case of a refunding, the maturity date(s) established under the refunding: ~d (c) the .date SUch notice is.to be mailed to beneficial ox~mers or published (the "Publication Date' ). Such notice 'shall be .sent to DTC by a secure means (e.g., legible telecopy, registered or certified mail, overnight :deliver)') in a time~: manner designed to assure that such notice is in DTC's possession no later ithan the close of business on the business day before the Publication Date. Issuer.or Agent shall for~m'cl such notice either in a separate secure transmission for each CUSIP number or,in a secure :transmission for multiple CUSIP numbers (if apphcable) which includes a manifest or list of each CUSIP submitted in thati.transmission. (The part)., sending such notice shall have a method m and the timeliness of such notice.) The nor more than 60 dax~ prior to the redemption date , the cl~te that the proceeds are deposited in escrow. 4. In the ex,em of an im, itation to tender the i Bonds, notice by Issuer or Agent to Bondholders specifying the:terms of the tender and the Pubhcation Date of such notice shall be sent to DTC bra secure means'in thei manner set: forth in the prec'eding paragraph. -15, AIl notices anti,payment advices sent to DTC shall contain the CI2SIP number of the Bonds. ti..Notices to DTC ,pursuant to Paragraph 2 ,~' teleeopy shall be sent to DTC's Reo~ardzation Department at (212) 709-6896 .or (212) 709-6897, and receipt of such notices shall be COnfirmed by telephoning (212) 709-6870. Notices to DTC pursuant to Paragraph 2 by mail or by any other means Shall .be sent to: Supervisor; ,Proxy Reorganization Department The Depositor), Trust Company 7 Hanover Square: 23rd Floor New York, IVi' 10004-~95 'L Notices to DTC pursuant to Paragraph 3 by telecopy shall be sent to DTC% Call Notification Department at (51t5) ~.~974t64-or (516) 2274190. If the party sending the notice does not receive a telecopy receipt 'from DTC confirming that the notice has been reeeivec[ sueh part), shall telephone (516) 227-4070. 'N~ m DTC pure, ant to Paragraph 3 by mall or by any other means shall be · ent to: Call Notification Department The Depository Trust Company 711 'Stewart Avenue Garden City, NY 115304719 ' !8. Notices :to DTC pursuant to Paragraph 4 and notices of other actions (~n~cJucling mandatory tenders, exchanges, and capital-changes) by teleeopy shall be sent to DTC s Reorganization Department at (~)'709-1~3 or (2!2) 709-1094, and ~eipt of such notices shall be confirmed by telephoning (212)709-6884. Notices .to DTC pursuant to the above by mail or by an)- other means shall 'be sent to: Manager; lteorganization Department I:[eorga~ni. Tation V~rindow The Depository Trust Company 7 Hanover Square; 23rd Floor 'New York, NY 10004-g805 9. Transaetious in the Bonds shall 'be eligible £or next-clay funds settlement in DTC's Next-Day Funds Settlement ("NDFS") system. A. Interest pa)anents shall be received by Cede & Co., as nominee of DTC, or its registered assigns in next-day funds on each payment date (or the equivalent in accordance with ~eXisting arrangements between :Issuer or Agent and DTC). Such pa)ments shall be made payable to the order of Cede & Co. Absent any other existing arrangements such payments .shall be addressed as follows: Manager; Cash Iteeeipts Dividend Deparlmaent The Depositor), Trust Company 7 Hanover Square; ~4th Floor New York, NY 10004-21305 B. Principal payments shall be received by Cede & Co., as nominee of DTC, or its registered assigns in next-day funds on each payment date (or the equivalent in accordance with existing arrangements between Issuer or Agent and DTC). Such payments shall be made Payable to.the order.of Cede & Co., and shall be adckessed as follows: NDFS 'ltedemption Department The Depository Trust Company .55 'Water Street; 50th 'Floor New York, ~Nvtr 10041~ 10. DTC ma)' clireet Issuer or Agent to use any other telephone number or address as the number.or.address to which notices or payments of interest or principal may be sent. 11. In the event ora redemption, aeceleration, or any other similar transaction (e.g., tender made u,nd ~ in .response to Issuer's or Agent~ invitation) necessitating a reduction in the aggregate prin~p~ mount of Bonds outstanding or an advance refunding of part of the Bonds outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue and authenticate a new Bond eertifmate, or(b) mY make an appropriate notation on the Bond certificate indicating the date and amount of such reduction in .principal except in the ease of final maturity, in which ease the eertitleate will be presented to issuer or Agent prior to pa)vnent ff required. 12, In the event that Issuer determines that beneficial owners of Bonds shall be able to obtain certificated Bonds, Issuer or Agent shall notify DTC of the availability of Bond certificates. In such event, Issuer or Agent shall issue, transfer, and exchange Bond certificates in appropriate amounts, as required by DTC and others. 13, DTC may disconlJnue providing its services as securities depository with ~ to the Bonds at any time by giving reasonable n~8ce to Issuer or Agent (at which lime DTC will confirm with Issuer or Agent the aggregate principal amount of Bonds outstanding). Under such circumstances, at DTC's request Issuer and Agent shall cooperate fully with DTC by takin~ ~t~propriate action to make a~ailable one or more separate certificates evidencing Bonds to an) DTC Participant having Bonds credited to its DTC accounts. 14, Nothing herein shall be deemed to require Agent to advance funds on behalf of Issuer. Notes: A. If there is an Agent las defined in this Letter of Repre~_ntations), Agent as well as Issuer must ~ thxs Leiter. ~ there is n~ A~en~ in si~rti~ ~ Letter Issuer hem~. B. Under Rules of the M .u~icipa] Securities Rulemaking &aler must b~ able m demanin~ the date thai a no~ee ota .pa..r..t.t~.' call or of an advance nffundh'rg ora lX~. of an issue~ i~.lishe4 (the 'publication date').~ne ~atbk4nnent ol hx~h a pub 'heatioh date is addressed in Paragraph 3 of the C. Schedule B contains statements that DTC believes entry uafisfers of ~ d~ihaed th, uugh DTC, and eerthin ~ matters. Received and Accepted: THE DEPOSITORY TRUST COMPANY Very truly yours, (Issuer) (Authorized Officers Signature) (Agent) By; (Authorized Officer~ Signature) (Authorized Officer) (2~2: Underwriter Under~viter~ Counsel (Describe Issue) SCHEDULE A ~I:3USlP Principal Amount Maturity Date Interest Rate SCHEDULE B SAMiPLE-OFFIClAL STATEMENT LANGUAGE OESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Pmpareciby DTC,~bracketed material may be applicable on y to certain issues) .1. The ~ory Trust Company '("DTC"), New York, NY, will act as securities depository for the securities (the ~'~). ~q3e Secu~ .w'll be issued as fully-registered securities registered in the name of Cede & Co. (DTC's :~,lT"a,ship norm3ee)~Or~ ~l!y-registered Secudty certificate will be issued for [each issue of] the Securities, [each] in theaggregate principa~ amount of such 'issue, and will be deposited with DTC. [If, however, the aggregate pdncipat amount of [any] issue exceeds $t'50 m~llion,.one certificate will be issued with respect to each $150 million of principal amount and .an additional certificate will' be issued with respect to any remaining principal amount of such issue.] 2. DTC is a ~nfted~put3:~se truSt company,organized under the New York Banking Law, a "banking organization" .wifl3in t~ Law~ a member of the Federal Reserve System, a "clearing corporation" within-the ~ Uniforrn Commercial Code, and a "c~ring agency" registered pursuant to the .provisions of Section: 17AOfthe Act-of 1934. DTC holds securities that its participants (-Participants") deposit .with :~DTC. :DTC alSo Participants of securities transactions such as transfers and ~ic computerized book-entry changes in ~1 movement of securities certificates. Direct cleadng corporations, and certain other Participants and by the' New York Stock Exchange, Inc., the American Stock ExC',ange, lnc., Inc. Access to the DTC system is also available to banks, and trust companies that clear through or ~ or indirectly ("Indirect Participants"). The Rules 3ommission. 3. ~Purchases of Secu~s under the DTC system must ~be made by or through Direct Participants, which will receive a credit for the :Securities on DTC's records. The ownership interest of each actual purchaser of each Security ('Beneficial Owr~r")is in ~to be recorded.on the Direct and Indirect Participants' records. Beneficial Owners will the event,that useof the book-entrysystem-for the 4. To DTC~ ~[ & Co. effect ~no change 'in :beneficial ownership. but Ber~cial Owners are expected to receive written statements of their holdings, from the Direct or entered.into the transaction. Transfers of ownership interests ; on the books of Participants acting on behalf of Beneficial I their ownership interests in Securities, except in with DTC are registered in the name of Mth DTC and their registration in the name of Cede no knowledge of the actual Beneficial Owners of the Securities; , the identity ~ the~.Direct Participants to whose accounts such Securities are Participants will remain responsible for keeping 5. ~ of ~ices and other communications by DTC to. Direct Participants, by Direct Participants to Indirect Participants, :and by ~Participants and Indirect :Participants to Beneficial Owners will be governed by arrangements amongthem, ~.a3 any statutory er.regulatory requirements as may be in effect from time to time. [6. Redemptior~ ~ .sha~t be ~ '~o ~ I~[ CoJ ~f ~ess than all of the Securities within an issue are being redeemed, DTC~s practice is to ~ine by:tOt the amount of the interest of each Direct Participant in such issue to be redeamed.] 7. Neither DTC nor Cede & Co. w~l consent or'vote with respect to Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon.as possible after the record date. The Omnibus Proxy assigns Cede & Co.!s consenting or voting fights to those Direct Participants to whose accounts the Securities are credited on the record date (k~mfif,~l in a listing attached to the Omnibus Proxy). 8.-Principal and interest payments on the Securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC I~_s reason to believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will :be governed by standing instructions and customaw practices, as is the cass with securities held for the .... · be the responsibility of such Participam :accounts of customers ~n bearer form or registered ~n 'street name," and ancl not of DTC, the Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from ~rm to time. Payment of ~pai. and interest to DTC is the responsibility of the Issuer or the Agent, disbursement auch payments to Direct participants st'~l be the responsibility of DTC, and disbursement of such payments to the ~ Owners shall be the responsibility of Direct and Indirect Participants. ~J.' A Beneficial ~er shall give- notice to elect to have its Securities purchased or tendered, through its Participant, to the ['i'ender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct ~ to transfer the Participant's interest in the Securities, on DTC's records, to the [TenderA=lemarketing] Agent. The requirement for physical delivery of Securities in connection with a demand for purchase or a mandatory ~purct~...~ will be deemed satiCed when the ownership rights in the Securities are transferred by Direct Participants on DTO's records.] 10. :DTC may discontinue providing its services as securities depository with respect to the Securities at any time by gMng reasonable notice to the Issuer or the Agent. Under such circumstances, in the event that a successor ¢ depository is not obtained, Security certificates are required to be pdnted and delivered. 11. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. 12: The information in this section concerning DTC and DTC's book,entry system has been obtained from sources .that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. - ii-