92-54RESOLUTION NO. 92 -54
A RESOLUTION AUTHORIZING THE ISSUANCE OF $3,425,000
AGGREGATE PRINCIPAL AMOUNT OF CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992 (FHA
INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT) ;
PROVIDING FOR THE FORMS OF TRUST INDENTURE AND LOAN WORK-
OUT AGREEMENT; AUTHORIZING EXECUTION OF TRUST INDENTURE
AND LOAN WORK -OUT AGREEMENT; APPROVING BOND PURCHASE
AGREEMENT RELATING TO THE NEGOTIATED SALE OF THE BONDS TO
THE UNDERWRITERS; APPOINTING A TRUSTEE, REGISTRAR AND
PAYING AGENT WITH RESPECT TO THE BONDS; AUTHORIZING THE
DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH
THE ISSUANCE AND DELIVERY OF SUCH BONDS; AUTHORIZING
REDEMPTION OF CERTAIN PRIOR BONDS; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, the City Commission of the City of Clearwater,
Florida (the "Issuer ") by this Resolution (the "Resolution ") and as
authorized by Ordinance No. 5256 -92 (the "Ordinance ") , expresses
its agreement as to the issuance of the Issuer's Mortgage Revenue
Refunding Bonds, Series 1992 (FHA Insured Mortgage Loan - Drew
Gardens Apartments Project) (the "Bonds "), in the aggregate
principal amount of $3,425,000, for the purpose stated in the
ordinance and providing for other matters consistent therewith; and
WHEREAS, the Issuer desires to approve the forms of Trust
Indenture and Loan Work -Out Agreement to be executed in connection
with the issuance of the Bonds; and
WHEREAS, the Issuer wishes to approve the form of the Official
Statement and to authorize distribution thereof in connection with
the issuance and delivery of its Bonds; and
WHEREAS, the Issuer intends to negotiate the sale of the Bonds
as hereinafter provided with Banc One Capital Corporation and
Newman & Associates, Inc. (collectively, the "Underwriters ")
pursuant to a Bond Purchase Agreement; and
WHEREAS, the Issuer now desires to provide for the form of the
foregoing documents to facilitate the issuance and delivery of the
Bonds.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF CLEARWATER, FLORIDA, as follows:
SECTION 1. In accordance with the Ordinance, there is hereby
authorized and directed to be issued the Issuer's Mortgage Revenue
Refunding Bonds, Series 1992 (FHA Insured Mortgage Loan - Drew
Gardens Apartments Project) (the "Bonds "), in the aggregate
principal amount of $3,425,000. The Bonds shall be issued under
and secured by the Indenture referred to below which by reference
is hereby incorporated in this Resolution as if set forth in full
herein. The Bonds shall mature in the amounts and at the times,
shall bear interest at the rates, be redeemable at the redemption
prices and upon the terms as shall be set forth in the Indenture
(as hereinafter defined) and in the Bond Purchase Agreement (as
hereinafter approved) . The Bonds shall be executed, authenticated
and delivered by the officers of the Issuer authorized below in
substantially the form set forth in the Indenture in fully regis-
tered form.
SECTION 2. The Trust Indenture (the "Indenture ") , in sub-
stantially the form attached hereto as Exhibit "A ", is hereby
approved, and the Mayor and Clerk of the Issuer are hereby
authorized and directed to execute and deliver the Indenture on
2
behalf of and in the name of the Issuer with such additional
changes, insertions and omissions therein including, but not
limited to, the insertion of rates, maturities and other details of
the Bonds determined as herein provided and as may be made prior to
the delivery of the Bonds, and as may be otherwise made and
approved by the said officers of the Issuer executing the same,
such execution to be conclusive evidence of such approval.
SECTION 3. The Loan Work -Out Agreement in substantially the
form attached hereto as Exhibit "B" (the "Agreement "), is hereby
approved, confirmed and ratified and the Mayor and Clerk are hereby
authorized and directed to execute and deliver the Agreement on
behalf of and in the name of the Issuer with such additional
changes, insertions and omissions therein as implement the
provisions of the Bond Purchase Agreement (hereinafter mentioned),
and as may be otherwise made and approved by the said officers of
the Issuer executing the same, such execution to be conclusive
evidence of such approval.
SECTION 4. It is hereby found and determined that due to the
complexity of the financinq�.and the need to coordinate matters
among the Rating Agency, the Issuer, Drew Gardens Associates, Ltd.
(the "Owner "), and Bond purchasers, it is in the best interest of
the Issuer to negotiate the sale of the Bonds. The disclosure
required by Section 218.385, Florida Statutes, as amended, shall be
provided to the Issuer, as evidenced by a schedule attached to the
Bond Purchase Agreement hereinafter described, wherein the
Underwriters agrees to provide disclosure to the Issuer prior to
3
execution by the Issuer of the Bond Purchase Agreement. The
negotiated sale of $3,425,000 City of Clearwater, Florida Mortgage
Revenue Refunding Bonds, Series 1992 (FHA Insured Mortgage Loan -
Drew Gardens Apartments Project) is hereby approved to the
Underwriters upon the terms and conditions set forth in the Bond
Purchase Agreement, which is hereby approved in substantially the
form attached hereto as Exhibit "C ". The Bond Purchase Agreement,
with such changes, alterations and corrections as may be approved
by the Mayor of the Issuer, such approval to be presumed by her
execution thereof, is hereby approved by the Issuer, and the Issuer
hereby authorizes said Mayor of the Issuer to execute and deliver
(attested by the Clerk of the issuer) , said Bond Purchase Agreement
in the name of and on behalf of the Issuer, 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 instrument as fully and
to the same extent as if incorporated verbatim herein. The Bonds
are hereby sold to the Underwriters in the amount, at the price and
upon the final terms set forth in the Bond Purchase Agreement.
SECTION 5. The Issuer hereby approves the Preliminary
Official Statement, relating to the Bonds in substantially the form
attached hereto as Exhibit "D" and authorizes the use and
distribution by the Underwriters of said Preliminary Official
Statement and a Final Official Statement relating to the Bonds with
such revisions as shall hereafter be approved by the Mayor of the
Issuer and, with such approval and authorization, the distribution
of such Final Official Statement by said Underwriters in connection
4
l�'S�
with the sale and issuance of the Bonds. The Preliminary Official
statement in the form attached hereto as Exhibit "D" is hereby
deemed "nearly final" on behalf of the Issuer, as required by Rule
15c2 -12 of the Securities Exchange Commission.
SECTION 6. With respect to the Bonds, Bank One, Columbus, NA,
Columbus, Ohio, is hereby appointed as Trustee, Registrar and
Paying Agent pursuant to the Indenture.
SECTION 7. All prior resolutions and motions of the Issuer
inconsistent with the provisions of this Resolution are hereby
modified, supplemented and amended to conform with the provisions
herein contained and except as otherwise modified, supplemented and
amended hereby shall remain in full force and effect.
SECTION 8. To the extent that the Mayor or the Clerk of the
Issuer are unable for any reason to execute or deliver the
documents referred to above, such documents may be executed,
a
attested and /or delivered by any Commission Member of the Issuer or
by an Assistant Clerk, with the same effect as if executed and/ or
delivered by the Mayor or Clerk.
SECTION 9. The Mayor and the Clerk and all other Commission
members of the Issuer and the staff of the Issuer are hereby
authorized and directed to execute any and all certifications or
other instruments, agreement or documents required by the
Indenture, the Agreement, the Bond Purchase Agreement, Bond Counsel
or any other document referred to above as a prerequisite or
precondition to the issuance of the Bonds and any representation
made therein shall be deemed to be made on behalf of the Issuer.
5
tc 5V
All action taken to date by the members of the Issuer and the staff
of the Issuer in furtherance of the issuance of the Bonds is hereby
i
approved, confirmed and ratified.
SECTION 10. The Issuer recognizes that Bank One, Columbus,
NA, Columbus, Ohio, as trustee (the "Prior Trustee ") for the
Issuer's Mortgage Revenue Bonds, Series 1983, (FHA Insured Mortgage
Loan - Drew Gardens Apartments Project) (the "Prior Bonds ") , has
issued notice of.redemption of the Prior Bonds for redemption on
September 1, 1992, in accordance with directions from the United
States Department of Housing and Urban Development ( "HUD ") and
pursuant to an assignment of the insured mortgage to HUD. To the
extent as may be required in order to refund a portion of the Prior
Bonds with proceeds of the Bonds, such redemption and the giving of
notice is hereby ratified and approved.
SECTION 11. This Resolution shall become effective
immediately upon its adoption.
PASSED AND ADOPTED by the City Commission of the City of
Clearwater, Florida, this 13th day of August, 1992.
(SEAL) CITY C014MISSION OF THE CITY OF
CLEARW ER, FLO DA
ATTEST: By:
Mayor
Ci C1eYk
APPROVED AS TO FOP AND
CORRECTN S:
City A torn _y
6
EXHIBIT "A"
TRUST INDENTURE
CITY OF CLEARWATER, FLORIDA
to
BANK ONE, COLUMBUS, NA,
Columbus, Ohio,
As Trustee
Securing the Issuance of
$3,425,000
Principal Amount of
Mortgage Revenue Refunding Bonds,
Series 1992A
(FHA Insured Mortgage Loan - Drew Gardens Project)
Dated as of August 1, 1992
This Instrument Prepared by:
Robert C. Reid, Esquire
BRY.ANT, MILLER AND OLIVE, P.A,
201 South Monroe Street
Suite 500
Tallahassee, Florida 32301
5
I
TABLE OF CONTENTS
(This Table of Contents is not a part of the Trust Indenture
but is only for convenience of reference.)
Page
PARTIES . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . 1
FORM OF BOND . . . . . . . . . . . . . . . . . 3
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . 12
TRUST CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE I
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . 14
Section 1.02 Interpretation . . . . . . . . . . . . . . . . 20
ARTICLE II
ARTICLE III
REDEMPTION OR TENDER OF BONDS PRIOR TO MATURITY
Section
3.01
THE BONDS
. . 27
Section
2.01a
The Bonds . . . . . . . . . . . . . .
. 21
Section
2.01b
Payments of Principal, Redemption Price
. . 30
Section
3.04
and Interest . . . . . . . . . . . . . .
22
Section
2.02
Restriction on Issuance of Bonds . . . . . .
. 22
Section
2.03
Limited Obligations . . . . . . . . . . . . .
. 22
Section
2.04
Indenture Constitutes Contract . . . . . . .
. 23
Section
2.05
Execution . . . . . . . . . . . . . . . .
. 23
Section
2.06
Authentication . . . . . . . . . .
. 23
Section
2.07
Mutilated, Lost, Stolen or Destroyed Bonds
23
Section
2.08
Transfer and Exchange of Bonds;
Persons Treated as Owners . . . . . . . . . .
. 24
Section
2.09
Temporary Bonds . . . . . . . . . . . . . .
. 25
Section
2.10
Delivery of the Bonds . . . . . . . . . . . .
. 25
ARTICLE III
REDEMPTION OR TENDER OF BONDS PRIOR TO MATURITY
Section
3.01
Redemption of Bonds Prior to Maturity . . .
. . 27
Section
3.02
Selection of Bonds for Redemption . . . . .
. . 29
Section
3.03
Notice of Redemption . . . . . . . . . . .
. . 30
Section
3.04
Cancellation . . . . . • . .
. . 32
Section
3.05
Effect of Notice of Redemption . . . . . .
. . 32
i
Page
ARTICLE IV
FUNDS; INVESTMENTS
Section
4.01
Establishment of Bond Funds . . . . . . . . .
. 33
Section
4.02
Application of Bond Proceeds
and Other Amounts . . . . . . . . . . . . . .
. 33
Section
4.03
Costs of Issuance Fund . . . . . . . . . . .
. 33
Section
4.04
Program Fund . . . . . . . . . . . . . . . .
. 33
Section
4.05
[Reserved] . . . . . . . . . . . . . . . . .
. 33
Section
4.06
Bond Fund . . . . . . . . . . . . . . . . .
. 33
Section
4.07
Debt Service Reserve Fund . . . . . . . . . .
. 34
Section
4.08
Final Balances . . . . . * . . . . .
35
Section
4.09
Custody of Funds; Money to be Held in Trust
35
Section
4.10
Cancellation of Obligations . . . . . . . .
. 35
Section
4.11
Investment of Funds . . . . . . . . . . .
. 36
Section
4.12
Non - Presentment of Bonds . . . . . . . . .
36
Section
4.13
Calculations of Annual Debt Service; Yield . .
37
Section
4.14
Maintenance of Rebate Fund . . . . . . . . . .
38
Section
4.15
Prevention of Bonds Becoming Arbitrage Bonds
39
Section
4.16
Prohibited Payments . . . . . . . . . . . . . .
39
Section
4.17
Change in Regulations . . . . . . . . . . . . .
39
ARTICLE V
GENERAL COVENANTS
Section
5.01
Payment of Principal and Interest . . . . . .
. 41
Section
5.02
Performance of Covenants;
Authority of Issuer . . . . . . . . . . . . .
. 41
Section
5.03
Instruments of Further Assurance . . . . . .
. 41
Section
5.04
Inspection of Project Books . . . . . .
. 42
Section
5.05
No Modification of Security; Additional
Indebtedness . . . . . . . . . . . .
. 42
Section
5.06
Damage, Destruction or Condemnation . . . . .
. 42
Section
5.07
Ownership of FHA Note;
Instruments of Further Assurance . . . . . .
. 43
Section
5.08
Required Insurance . . . . .
. 43
Section
5.09
Representations, Warranties and Additional
Covenants of the Issuer . . . . . . . . . . .
. 43
Section
5.10
Tax Covenants . . . . . . . . . . . . . . . .
. 44
ii
4%
Paae
ARTICLE VI
DEFAULT PROVISIONS AND
REMEDIES OF TRUSTEE AND BONDHOLDERS
Section
6.01
Events of Default . . . . . . . . . . . .
. 45
Section
6.02
Acceleration; Other Remedies Upon Default . .
. 45
Section
6.03
Rights of Bondholders . . . . . . . . . . . .
. 47
Section
6.04
Waiver by Issuer . . . . . . . . . . . . . .
. 47
Section
6.05
Application of Money . . . . . . . . . . . .
. 47
Section
6.06
FHA Mortgage Insurance . . . . . . . . . . .
. 48
Section
6.07
Opportunity to Cure Default Under
. . 60
Section
7.08
Mortgage Note . . . . . . . . . . . . . .
. 49
Section
6.08
Prepayment Penalty Lockout Period Claim
. . 60
Section
7.10
Processing Procedures . . . . . . . . . . . .
. 51
Section
6.09
Partial Assignment Option . . . . . . . . . .
. 53
Section
6.10
Remedies Vested in Trustee . . . . . . . . .
. 53
Section
6.11
Remedies of Bondholders . . . . . . . . . . .
. 53
Section
6.12
Termination of Proceedings . . . . . . . . .
. 54
Section
6.13
Waivers of Events of Default . . . . . . . .
. 54
Section
6.14
Notice to Bondholders if Default Occurs . . .
. 55
ARTICLE VII
CONCERNING THE TRUSTEE
Section
7.01
Standard of Care . . . . . . . . . . . . .
. . 56
Section
7.02
Reliance Upon Documents . . . . . . . . .
. . 57
Section
7.03
Use of proceeds . . . . . . . . . . . .
. . 59
Section
7.04
Trustee May Hold Bonds . . . . . . . . . .
. . 59
Section
7.05
Trust Imposed . . . . . . . . . . . . . . .
. . 59
Section
7.06
Compensation of Trustee . . . . . . . . . .
. . 59
Section
7.07
Maintenance of Office . . . . . . . . . . .
. . 60
Section
7.08
Successor Trustee . . . . . . . . . . . . .
. . 60
Section
7.09
Resignation by the Trustee . . . . . . . .
. . 60
Section
7.10
Removal of the Trustee . . . . .
.by
60
Section
7.11
Appointment of. Successor Trustee the
Bondholders; Temporary Trustee . . . . . .
. . 61
Section
7.12
Concerning Any Successor Trustee . . . . .
. . 61
Section
7.13
Successor Trustee as Trustee,
Paying Agent and Bond Registrar . . . . . .
. . 62
Section
7.14
Servicing the Mortgage Loan;
Mortgage Servicing Agreement . . . . . . .
. . 62
Section
7.15
Co- Trustee or Separate Trustee . . . . . .
. . 63
Section
7.16
Additional Security . . . . . . . . . . . .
. . 65
Section
7.17
Representation by Trustee . . . . . . . . .
. . 65
Section
7.18
Appointment, Resignation or Removal
of Paying Agent; Successors . . . . . . . .
. . 66
Section
7.19
Reports . . . . . . . . . . . . . . . . . .
. . 67
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Section 7.20 Audit and Records . . . . . . . . . . . . . 67
Section 7.21 Special Procedures for Bonds Registered
to DTC . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VIII
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF CERTAIN DOCUMENTS
Section 8.01 Supplemental Indentures Not Requiring
Consent of Bondholders . . . . . . . . . . . . 68
Section 8.02 Supplemental Indentures Requiring
Consent of Bondholders . . . . . . . . . . . . 68
Section 8.03 Amendment of Unanimous Consent . . . . . . . . 70
Section 8.04 Amendment of Certain Documents . . . . . . . . 70
iv
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section
9.01
Discharge of Lien . . . . . . . . . . . . .
. 72
ARTICLE X
MISCELLANEOUS
Section
10.01
Consents and Other Instruments
of Bondholders . . . . . . . . . . . . . . .
. 73
Section
10.02
Limitation of Rights . . .
. 74
Section
10.03
Construction of Conflicts; Severabl:lity . . .
. 74
Section
10.04
Notices . . . . . . . . . . . . . . . . . .
. 74
Section
10.05
Trustee as Paying Agent and Bond Registrar
74
Section
10.06
Payments Due on Saturdays,
Sundays and Holidays . . . . . . . . . . . .
. 74
' Section
10.07
Counterparts . . . . . . . . . . . . . .
. 75
Section
10.08
Laws Governing Indenture and Situs and
Administration of Trust . . . . . . . . . . .
. 75
Section
10.09
No Recourse . . . . . . . . . . . . . . . . .
. 75
Section
10.10
Role of Issuer . . . . . . . . . . . . .
. 75
Section
10.11
Successors and Assigns . . . . . . . . . . .
. 76
Section
10.12
HUD and FHA Requirements to Control . . . . .
. 76
iv
Pace
TESTIMONIUM . . . . . . . • • • ' ' ' ' ' ' . . . 76
SIGNATURES AND SEALS . . . . . . . . . . . . . . . .
EXHIBIT A -- LEGAL DESCRIPTION
EXHIBIT B -- SCHEDULE OF MINIMUM CARRY - FORWARD BALANCES IN BOND
FUND
EXHIBIT C -- HUD LETTER OF JUNE 23, 1987
V
4"N
TRUST INDENTURE
THIS TRUST INDENTURE, made and entered into as of August 1,
1992, from the City of Clearwater, Florida (the "Issuer "), a muni-
cipal corporation, organized and existing under the laws of the
State of Florida, to Bank One, Columbus, NA, Columbus, Ohio, a
national banking association duly organized and existing under the
laws of the United States of America and authorized to accept and
execute trusts of the character herein set out, with its principal
office in the City of Columbus, Ohio, as Trustee (such trustee or
any of its successors in trust being the "Trustee ");
WHEREAS, the Issuer is authorized under the laws of the State
of Florida, particularly Chapter 166, Part II, and Chapter 159,
Part IV, Florida Statutes, and other applicable provisions of law
(the "Act ") , to provide funds for the acquisition, construction,
rehabilitation, remodeling and improvement of privately owned pro-
jects comprising residential rental property for dwelling units;
and
WHEREAS, the Issuer is authorized and empowered pursuant to
the Act to issue its revenue bonds and take other actions to
finance, refinance, and provide other incentives for development of
certain facilities; and
WHEREAS, on October 12, 1983, the Issuer issued $6,450,000
aggregate principal amount of its Mortgage Revenue Bonds, Series
1983 (FHA Insured Mortgage Loan - Drew Gardens Apartments Project)
(the "Refunded Bonds "), for the purpose of making a loan (the
"Mortgage Loan ") to Drew Gardens Associates, Ltd., a Florida
limited partnership, (the "Owner ") for the acquisition, construc-
tion and equipping of a multifamily residential rental project
located in Clearwater, Florida (the "Project "); and
WHEREAS, pursuant to a Financing Agreement, dated as of
September 1, 1983 (the "Prior Agreement ") , among the Issuer, the
Prior Trustee (as defined below), Sun Bank, National Association,
as co- trustee and the Owner, the Issuer provided funds to Bank One,
Columbus NA, Columbus, Ohio, as trustee (the "Prior Trustee ") under
the indenture (the "Prior Indenture ") securing the Refunded Bonds
(i) to finance the Mortgage Loan insured by the Federal Housing
Administration ( "FHA "), an organizational unit within the United
States Department of Housing and Urban Development ( "HUD ") , in the
principal amount of $6,094,900 evidenced by a Mortgage Note (the
"Note ") from the Owner to the Prior Trustee secured by a first
mortgage on the Project (the "Mortgage ") , the proceeds of which
were advanced pursuant to a Building Loan Agreement between the
Prior Trustee, as mortgagee of record, and the Owner, and (ii) to
fund a Debt Service Reserve Fund under the Prior Indenture; and
WHEREAS, the Owner is in default of its obligation to make
payments to the Prior Trustee under the Note, and the Prior Trustee
has, therefore, assigned the Note and the Mortgage to HUD pursuant
to the provisions of the Prior Indenture;
WHEREAS, HUD has confirmed that the FHA mortgage insurance
benefits are payable to the Prior Trustee as a result of the
default with respect to the Mortgage Loan and has paid mortgage
insurance benefits to the Prior Trustee in connection with such
Mortgage Loan default; and
WHEREAS, under the terms of the Prior Indenture, the Refunded
Bonds are subject to mandatory redemption at a redemption price
equal to the principal amount thereof, plus accrued interest to the
redemption date, to the extent money is available in the Bond Fund
thereunder from whatever source on any date at the earliest prac-
ticable date, as a whole or in part if FHA mortgage insurance pro-
ceeds are payable to the Prior Trustee; and
WHEREAS, the Owner and HUD have agreed to amend the Note to
provide for, among other things, a reduction in the rate of
Interest on the Note; and
WHEREAS, in order to fulfill the public purpose of providing
residential rental property for dwelling units within its juris-
diction, the Issuer has determined to issue its Mortgage Revenue
Refunding Bonds, Series 1992A (FHA Insured Mortgage Loan - Drew
Gardens Project), in the aggregate principal amount of $3,425,000
(the "Bonds ") to provide for the current refunding of the Refunded
Bonds; and
WHEREAS, the proceeds of the Bonds transferred to the Prior
Trustee will be sufficient, together with other amounts available
for such purpose, to redeem the Refunded Bonds pursuant to the pro -
visions described above; and
WHEREAS, upon the receipt of amounts released from the Prior
Indenture, the Trustee is to remit a portion of such. amounts to HUD
(together with certain other amounts available to the Trustee for
such purpose) in exchange for HUD's delivery to the Trustee of the
Note, as amended, pursuant to a Loan Work -Out Agreement, dated as
of the date hereof (the "Loan Work -Out Agreement "), by and among
the Issuer, the Owner and the Trustee; and
WHEREAS, all things necessary to make the Bonds when issued as
provided in this Indenture, valid, binding and legal obligations of
the Issuer according to the import thereof, and to constitute this
Indenture a valid lien on the properties, interests, revenues and
payments herein pledged to the payment of the Bonds, have been done
and performed, and the creation, execution and delivery of this
Indenture, and the execution and issuance of the Bonds, subject to
the terms hereof, have in all respects been duly authorized; and
WHEREAS, the Bonds and the Trustee's Certificate of Authenti-
cation to be endorsed on such Bonds are all to be in substantially
the following form with necessary and appropriate variations, omis-
sions and insertions as permitted or required by this Indenture:
No. R
Interest
R_--
6.5%
Registered
owner:.
(Form of Bond)
CITY OF CLEARWATER, FLORIDA
Mortgage Revenue Refunding Bonds,
Series 1992A
(FHA Insured Mortgage Loan -
Drew Gardens PrOject)
Maturity
Dat
October 1, 2025
Dated
Dam
August 1, 1992
CUSIP_
185267AA9
Principal Amount: anized
a municipal core °ration11issuer ")I
FLORIDA, Florida (the from the
CITY OF CLEARWATER, of the State of ut solely
under the laws promises to pay 0: owner identified
and existing hereby P to the registered above,
for value received, maturity date set forth set
hereinafter described) rincipal sum as
istered assigns, on the the p
sources reg set forth
above, called for redemption, the rate next pre-
forth with interest thereon at below)
unless prev Date (as defined this Bond is
forth abd °e, unless of
the Interest ion of this B° the sixteenth day
above fthe date of reg the period to to such Interest
ceding during meT7t Da. such
any Interest Pay bear interest from
registered x 0' ceding it shall istered before
the month next preceding which event this Bond is reg 1,
Payment Date, or unless bear interest from August aid,
Payment Date event it shall and
Interest 1993 in which shall have been 1
April 1, principal amount hereof Pa 1993
the ,Interest
1992) until the P forth above per annum, P1, 1993
rate set commencing April da year cons' on
the each year, 36o-day if any, on
October 1 of �� calculated on the bass of a premium, States
° f and p of
Payment Dates") months. Principal of the united Bank One,
of twelve 30 -day in lawful money office of
ing Bond are payable corporate trust in trust (the
this the principal or its successors check mailed to
America at the Columbus, Ohio, shall be made by shall
Pd thereto as such address
Columbus, Payment of interest o� by wire transfer
nTrustee ). of the person entitle the Bonds designated in
the address istration books for: domestic account g ate principal
appear on the
registration to a 250,000
of immediately owner at least $
writing by any owner Owner's expense.
amount of the Bonds at such
This Bond shall not be entitled to any benefit under the
Indenture (as hereinafter defined) or become valid or obligatory
for any purpose until such Bond shall have been authenticated by
the certificate of the Trustee endorsed hereon.
This Bond and the issue of Bonds of which it is a part and the
premium, if any, and interest thereon are limited obligations of
the Issuer, payable solely from the revenues or other moneys to be
received in connection with the refinancing of the Project or other
moneys to be made available to the Issuer for such purpose.
Neither the Bonds nor any premium or the interest thereon shall
ever constitute an indebtedness or a charge against the general
credit or taxing powers of the State of Florida, the Issuer or any
other public body within the meaning of any constitutional or char-
ter provision or statutory limitation and neither shall ever con-
stitute or give rise to any pecuniary liability of the State of
Florida, the Issuer or any other public body. The Bonds do not
constitute an indebtedness to which the faith or credit of the
State of Florida, the Issuer or any other public body is pledged.
Notwithstanding anything to the contrary contained in the
Bonds, Indenture or Loan Work -Out Agreement, or in any other
instrument or document executed by or on behalf of the Issuer in
connection herewith, no stipulation, covenant, agreement or
obligation contained herein or therein shall be deemed or construed
to be a stipulation, covenant, agreement or obligation of any
present or future member, commissioner, director, trustee, officer,
employee or agent of the Issuer or of any successor to the Issuer,
or of any incorporator, member, commissioner, director, trustee,
officer, employee or agent of the Issuer or of any successor to the
Issuer, in any such person's individual capacity, and no such
person, in his individual capacity, shall be liable personally for
any breach or non - observance of or for any failure to perform,
fulfill or comply with any such stipulations, covenants, agreements
or the principal of, premium, if any, or interest on any of the
Bonds or for any claim based thereon or on any such stipulation,
covenant, agreement or obligation, against any such person, in his
individual capacity, either directly or through the Issuer, under
any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such
liability of any such person, in his individual capacity, is hereby
expressly waived and released.
No recourse under or upon any obligation, covenant or agree-
ment contained in the Indenture or in any Bond, or under any judg-
ment obtained against the Issuer, or by the enforcement of any
assessment or by any legal or equitable proceeding by virtue of any
constitution or statute or otherwise or under any circumstances,
under or independent of the Indenture, shall be had against any
member, officer or employee, as such, past, present or future, of
the Issuer, either directly or through the Issuer, or otherwise,
for the payment for or to the Issuer or any receiver thereof, or
for or to the holder of any Bond issued thereunder or otherwise of
any sum that may be due and unpaid by the Issuer upon any such
Bond. Any and all personal liability of every nature, whether at
common law or in equity, or by statute or by constitution or other-
wise, of any such member, officer or employee, as such, to respond
by reason of any act or omission on his or her part or otherwise,
for the payment for or to the Issuer or any receiver thereof, or
for or to the holder of any Bond issued thereunder or otherwise, of
any sum that may remain due and unpaid upon the .Bonds thereby
secured or any of them, is hereby expressly waived and released as
a condition of and consideration for the execution of the Indenture
and the issuance of the Bonds.
It is hereby certified, recited and declared that all acts,
conditions and things required to exist, happen and be performed
precedent to and in the execution and delivery of the Indenture and
the issuance of this Bond, do exist, have happened and have been
performed in the time, form and manner as required by law; that
payment in full for the Bonds has been received; and that the Bonds
do not exceed or violate any constitutional or statutory
limitation.
IN WITNESS WHEREOF, the City Commission of the City of
Clearwater, Florida has caused this Bond to be duly executed by its
Mayor with her manual or facsimile signature, and its official seal
to be impressed or printed hereon, attested by the manual or fac-
simile signature of its Clerk, all as of the date of registration
hereof.
[SEAL] CITY OF CLEARWATER, FLORIDA
By :_ (facsimile)
e Mayor - Commissioner
Attest:
(facsimile)
City Clerk ti
DATE OF REGISTRATION:
t
`f
`f 5
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds issued under the provisions of
and described in the within- mentioned Indenture.
BANK ONE, COLUMBUS, NA,
Columbus, Ohio, as Trustee
By:
6
7
Authorized Signer
�a
tT
(Back of Bond)
This Bond is one of a duly authorized issue of Bonds of the
Issuer known as its Mortgage Revenue Refunding Bonds, Series 1992A
(FHA Insured Mortgage Loan - Drew Gardens Project) issued in the
aggregate principal amount of $3,425,000, (the "Bonds") pursuant to
the laws of the State of Florida, particularly Chapter 266, Part
II, and Ch-pter 159, Part IV, Florida Statutes, and other applic-
able provisions of law (the "Act "), and under and pursuant to a
resolution of the Issuer. The Bonds are issued under a Trust
Indenture dated as of August 1, 1992, from the Issuer to the
Trustee (the "Indenture "), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of
the trust estate under the Indenture, the nature and extent of the
security, the terms and conditions upon which the Bonds are issued
and secured and the rights of the holders thereof. All of the
Bonds are equally and ratably secured under the Indenture.
The Bonds are limited obli
practicable date as a whole or in part upon the occurrence of any
of the following events: (i) if FHA mortgage insurance proceeds are
payable to the Trustee, (ii) to the extent the proceeds of any con -
demnation award or casualty insurance recovery are applied to the
prepayment of the Note, (iii) without notice in the event that the
Owner becomes subject to any bankruptcy proceedings and the trustee
in bankruptcy causes the Note to be prepaid without notice and
without premium, or (iv) to the extent of any prepayment of the
Note made upon the determination of HUD in order to avoid an FHA
insurance claim.
The Bonds are also subject to redemption on any date on and
after October 1, 2002, as a whole or in part to the extent of any
optional prepayment of the Note by the Owner (and from any reduc-
tion of the Debt Service Reserve Fund under the terms of the Inden-
ture), or from the proceeds of refunding bonds or otherwise from
any moneys provided by the Issuer, at the redemption prices
expressed as percentages of the principal amount to be redeemed,
plus accrued interest to the date of redemption, as set forth in
the following table:
Redemption Dates Redemption Prices
October 1, 2002, through September 30, 2003 102%
October 1, 2003, through September 30, 2004 101
October 1, 2004 and thereafter 100
The Bonds are also required to be retired by mandatory sinking
fund payments from money in the Bond Fund, as set forth in the
Indenture.
In the event of a redemption of less than all of the Bonds
other than by scheduled mandatory sinking fund redemption (i) the
Trustee shall redeem an amount of Bonds, and the scheduled manda-
tory sinking fund payments shall be reduced, so that the resulting
decrease in debt service on the Bonds during each six -month period
ending on an Interest Payment Date is proportional, as nearly as
practicable, to the decrease in payments on the Note in each
period, and the Bonds shall be selected by lot, and (ii) the
Trustee shall transfer from the Debt Service Reserve Fund to the
Bond Fund an amount that bears the same proportion to the amount
then on deposit in the Debt Service Reserve Fund as such reduction
in the principal balance of the Mortgage Loan bears to the out-
standing balance of the Mortgage Loan immediately prior to such
reduction, and use such amounts to redeem Bonds; provided that the
Bonds shall only be redeemed in a principal amount of $5,000 or an
integral multiple thereof. The particular Bonds to be redeemed
shall be selected by lot.
Unless notice of redemption is not required under this Bond
and the terms of the Indenture, notice of intended redemption of
this Bond shall be given by first class mail, postage prepaid, to
the registered owner hereof at the address of such owner shown on
the Trustee's Bond Register. All such redemption notices shall be
given not less than thirty (30) days or more than sixty (60) days
prior to the date fixed for redemption by first class mail, postage
prepaid to the holders of each Bond to be redeemed at the address l
of each holder shown on the Bond Register and by registered mail,
overnight delivery service or other secure means to holders of
$250,000 or more in aggregate principal amount of Bonds and to each
registered securities depositary known to the Trustee to be holding
Bonds on behalf of a registered holder and to certain information
services as described in the Indenture. Failure to give notice by
mailing to the registered owner of any Bond designated for redemp-
tion shall not affect the validity of the proceedings for the
redemption of any other Bond if notice of such redemption shall
have been mailed as herein provided.
Notwithstanding the foregoing or any other provision hereof,
in the event of a redemption by reason of the Trustee receiving
prepayments on the Mortgage Loan representing prepayments on the
Mortgage Loan made by the Owner without notice or prepayment
penalty while under the supervision of a trustee in bankruptcy,
notice of redemption of Bonds shall not be required if the circum-
stances do not permit the Trustee to give such notice in accordance
with the provisions provided herein.
In addition to providing notice of redemption as set forth
above, the Trustee shall send a second notice of redemption, by
registered mail, overnight delivery service, or other secure means,
postage prepaid -to the registered owners of any Bonds called for
redemption, at their addresses appearing on the Bond Register
maintained by the Trustee, who have not surrendered their Bonds for
redemption within 30 days following the redemption date.
The owner of this Bond shall have no right to enforce the pro-
visions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any event
of default under the Indenture, or to institute, appear in or
defend any suit or other proceeding with respect thereto, except as
provided in the Indenture.
Modifications or alterations of the Indenture or of any inden-
ture supplemental thereto may be made only to the extent and in the
circumstances permitted by the Indenture.
This Bond is transferable by the registered owner hereof in
person or by his attorney duly authorized in writing at the princi-
pal corporate trust office of the Trustee, but only in the manner,
subject to the limitations and upon payment of the charges provided
in the Indenture, and upon surrender and cancellation of this Bond.
Upon such transfer, a new registered Bond or Bonds of the same
series, maturity and interest rate and of authorized denomination
or denominations for the same aggregate principal amount will be
9
issued to the transferee in exchange therefore. The Bonds are
issuable only as fully registered Bonds without coupons.
The Issuer and the Trustee may deem and treat the registered
holder hereof as the absolute owner hereof for the purpose of
receiving payment of or on account of principal hereof and interest
due hereon and for all other purposes and neither the Issuer nor
the Trustee shall be affected by any notice to the contrary.
This Bond shall not be entitled to any benefit under the
Indenture or become valid or obligatory for any purpose until such
Bond shall have been authenticated by the certificate of the
Trustee endorsed hereon.
a
4
i
10
ASSIGNMENT FOR TRANSFER
FOR VALUE RECEIVED, the undersigned, hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE)
(Please print or Typewrite Name and Address of Assignee)
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney to
transfer the within Bond on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
Signature Guaranteed
NOTICE: Signature(s) must be
guaranteed by a member firm of
the New York Stock Exchange or
a commercial bank or trust
company.
11
Signature
NOTICE: The signature to this
assignment must correspond with
the name as it appears upon the
face of the within Bond in
every particular, without
alteration or enlargement or
any change whatever.
AOL
NOW, THEREFORE, the Issuer, in consideration of the premises
and the acceptance by the Trustee of the trusts hereby created and
of the purchase and acceptance of the Bonds by the holders and
owners thereof, and of the sum of one dollar, lawful money of the
United States of America, to it duly paid by the Trustee at or
before the execution and delivery of these presents, and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, in order to secure the payment of the principal of,
premium, if any, and interest on the Bonds according to their tenor
and effect and the performance and observance by the Issuer of all
the covenants expressed or implied herein and in the Bonds, does
hereby grant, bargain, sell, convey, pledge and assign a security
interest, unto the Trustee, and its successors in trust and its and
their assigns in and to the following (said property being herein
referred to as the "Trust Estate "), to wit:
GRANTING CLAUSES
I.
Except for the Rebate Fund, all right, title and interest of
the Issuer in and to any money or letters of credit held under this
Indenture by the Trustee, including the proceeds of the Bonds, the
payments made under the Note and the interest, profits, and other
income derived from the investment thereof.
II.
All right, title and interest of the Issuer in and to the
Mortgage Loan and the security therefor, including the Note, the
Mortgage, all FHA or casualty insurance benefits or condemnation
awards payable with respect thereto and any interest, profits and
other income derived from the investment thereof.
III.
All right, title and interest of the Issuer in and to the Loan
Work -Out Agreement.
IV.
Except for the Rebate Fund, all funds, money and securities
and any and all other rights and interests in property whether
tangible or intangible from time to time hereafter by delivery or
by writing of any kind, conveyed, mortgaged, pledged, assigned or
transferred as and for additional security hereunder for the Bonds
by the,Issuer or by anyone on its behalf or with its written con-
sent to the Trustee, which is hereby authorized to receive any and
all such property at any and all times and to hold and apply the
same subject to the terms hereof.
PROVIDED, HOWEVER AND NOTWITHSTANDING THE FOREGOING, THE TRUST
ESTATE SHALL NOT INCLUDE THE REBATE FUND OR ANY MONEYS OR INVEST-
MENTS REQUIRED TO BE DEPOSITED IN THE REBATE FUND AND ANY OTHER
12
AMOUNT RE4UIR BENEFIT PAID TO THE UNITED
UNITED MERICA
AND SNOT LFOR
HELD FOR THE
THE BENEFIT OF THE HOLDERS OF THE BONDS.
PROVIDED, HOWEVER, that the pledge and assignment of the
Issuer's right, title and interest in and to the Loan Work -Out
Ac3'reement pursuant to this Indenture is intended solely for fpthe
the Bonds, the enforcement of the payment when
poses of securing remium and interest thereon,
principal thereof and any p
payable, according to the erformancetofn and meaning
compliance owithdthe
and the p and such pledge
this Indenture, diminish or impair the
covenants, terms and conditions wa taffectden Indenture,
and assignment shall not in any Y reement or impose
Issuer's obligations under the Loan Work-out
or be deemed to constitute a
any such obligations on or affect the collection by or receipt by
e or assignment of, avments) which, pursuant to
pledge other than Note p to the Issuer.
the Issuer, of money ( are to be paid directly
the Loan Work -Out Agreement,
TO HAVE AND TO HOLD, all the same with all privileges and
or agreed or intended
appurtenances hereby conveyed and assigned, the parties
so to be, to the Trustee and its tsbeingsundersto d by the and to
ore of FHA do not permit a gross revenues
them and their assigns forever
hereto that the requirements hold certain other funds in connec-
pledge and that thTrustee may
tion with the Project Pursuant to documents ofj this nIndenture);�
which funds shall not be subject
IN TRUST NEVERTHELESS, upon the terms and trusts herein set
forth for the equal and proportionate benefit,
security and p
tion of all Holders tore without privilege,n prioritvdo under d'ofithe
secured by t1lis Inden of. the Bonds over any
tion as to lien Or otherwise of any
other Bonds, except as set forth in ths Indenture:
that if the Issuer shall pay or cause to be
PROVIDED, HOWEVER, principal, interest and pre-
paid to the Holders of the Bonds the p perform
mium, if any, to become due thereon at the times and ke the manner
Performed and observed all Of its
provided in Article IX hereof and if the Issuer shall keep,
and observe, or cause to be kept, p at the
warranties and agreements contained herein,
covenants, A ranted shall,
determine and be void, and thereupon
presents and the estate and rights he g
option of the Issuer, cease, a the lien of this Indenture
the Trustee shall cancel and di,scharg and, subject to
and execute and deliver
si eeto satisfystheylienhhIx hereof, reconvey�to instruments in
as shall be requislt
the p conveyed; and assign and deliver to
provisions of Section 4.07 and Article IX hereof,
the Issuer the estate r the e the time I ect to the lien of this
then be in its possession, except for the
the Issuer any p p of
Indenture which may the Trustee for the payment
Rebate Fund and cash held by otherwise this Indenture
interest on and retirement of the Bonds;
Upon the trusts and
to be and remain in full force and effect and up
subject to the covenants and conditions hereinafter set forth.
13
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The terms defined in this Section
1.01 and in the Recitals hereto (except as herein otherwise
expressly provided or unless the context otherwise requires) for
all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section
1.01 and said Recitals.
"Accrued Interest" means all interest due to date.
"Act" means Chapter 166, Part II, and Chapter 159, Part IV,
Florida Statutes, and other applicable provisions of law.
"Authorized Denomination" means $5,000 principal amount or any
integral multiple thereof.
"Bond Fund" means the Bond Fund established by the Trustee
pursuant to Section 4.01 hereof.
"Bondholder" or "Holder" or "owner of [or "the "] Bond[s]"
means the person in whose name such Bond is registered, from time
to time.
"Bond Obligation" means, as of any date of calculation, the
principal amount of all Outstanding Bonds plus accrued interest to
the date of calculation (if other than an Interest Payment Date).
"Bond Purchase Agreement" means the Bond Purchase Agreement
among the Bond Purchaser, the issuer, and the Owner relating to the
Bonds.
"Bond Purchaser" means collectively, Banc One Capital
Corporation and Newman & Associates, Inc.
"Bonds" means the Bonds issued under this Indenture.
"Bond Year" means each twelve -month period ending on the first
day of March of each year, with the initial Bond Year beginning on
the day of issuance of the Bonds.
"Certificate of the Issuer," "Statement of the Issuer,"
"Request of the Issuer" and "Requisition of the Issuer" mean,
respectively, a written certificate, statement, request or requisi-
tion signed in the name of the Issuer by the Mayor of the Issuer or
such other person as may be designated and authorized to sign for
the Issuer. Any such instrument and supporting opinions or
representations, if any, may, but need not, be combined in a single
instrument with any other instrument, opinion or representation,
14
and the two or more so combined shall be read and construed as a
single instrum e
Date means the date of in
delivery of the Bonds
tiClosing �� against payment therefor.
to the Bond Purchaser as amended and
11Code" means the Internal e Revenue Code of 1986,
contemporaneously as
"1954 Code" means the internal oe C to the end n actme t of the
amended and in effect immediately pri
Code.
11Contract of Mortgage Insurance" means the comae° insurance
and FHA with respect to mortgage created
the Trustee as mortgagee of the National Housing terms of the
pursuant to Section 221(d)(4) provisions.
and regulatory p
by FHA endorsement of the Note and incorporating
FHA Commitment and certain statutory the Bonds
11costs of Issuance" means all costs of issuing
the underwriter's fee, to be paid by the Trustee as
including regiment.
identified in the Bond purchase Agreement.
the Costs of Issuance Fund
11Costs of Issuance Fund"
established by the Trustee pursuant to Section 4.01 hereof.
"Debt Service Reserve Fund" meaner the Debt Service Reserve
Fund established by the Trustee pursuant to Section 4.01 hereof.
Requirement" means the sum of (i) the
mandatory sinking fund payments) and
"Debt Service Reserve
maximum principal (including the last
in respect of the Bonds in any consecutive e eight-
in payable on an Interest Payment Date, principal
month period ending equal to one payment of p
such period, and (ii) an amount
and interest on the Mortgage Loan.
n "event
of default" means any of those
"Event of Default or the applicable provisions of
events specified in and defined by
Article vi hereof to constitute an event of default.
Trustee's Fees and Expense means all those
"Extraordinary the Trustee
fees, an Bond Year in excess of
expenses and disbursements earned or incurred Y
as described under Feesland7Expensesng Y
ordinary d Expenses" means all
"Extraordinary Mortgage Servicing gees an
expenses of the Servicer under the Mortgage
fees and exp Mortgage any Bond Year in excess of ordinary
Servicing Agreement during
Mortgage Servicing Fees and Expenses.
15
"FHA" means the Federal Housing Administration and may refer
to the Commissioner thereof, any authorized representative thereof
or the successor thereof.
"FHA Regulations" means the regulations promulgated by FHA
regarding insurance under Section 221(d) (4) of the National Housing
Act.
"Final Calculation Date" means October 1, 2025, or any earlier
date on which the last Bond is discharged.
"Indenture" means this Indenture together with any other
indentures supplemental hereto.
"Initial Payment" means the payment on the Note which is due
on September 1, 1992, in accordance with the modification of the
Note and Mortgage.
"Installment Calculation Date" means April 1 of 1997, 2002,
2007, 2012, 2017, and 2025, unless the Final Calculation Date has
been reached.
"Interest Payment Date" means each April 1 and October 1,
commencing April 1, 1993.
"Investment Agreement" means the investment agreement by and
between the Trustee and Bayerische Landesbank, or any successor
provider, which provider shall have a rating on its unsecured long
term debt equal to or higher than -the rating on the Bonds, with
respect to money held in the Bond Fund, the Debt Service Reserve
Fund created by this Indenture. Any successor Investment Agreement
shall have the same terms and conditions as the original Investment
Agreement. The Rating Agency shall be notified of any substituted
Investment Agreement provider.
"Issuer" means the City of Clearwater, Florida.
"Loan Work -Out Agreement" means the Loan Work -Out Agreement,
dated as of August 1, 1992, among the Issuer, the Trustee and the
Owner.
"Modification Agreement" means the Modification of Mortgage
Note and Mortgage, dated as of August 18, 1992, among the Owner and
the Trustee, as approved by HUD.
"Mortgage" means that certain mortgage, including any
supplements thereto, from the Owner to the Trustee, as mortgagee,
with respect to the Project, securing payment of the Mortgage Loan.
"Mortgage Insurance" means the insurance provided for by the
Contract of Mortgage Insurance.
16
"Mortgage Loan" means the loan made to the Owner pursuant to
the Note, Mortgage and the Mortgage Loan Documents.
"Mortgage Loan Documents" means Loan Work -out Agreement, the
Note, the Mortgage and the Supplemental Regulatory Agreement.
"Mortgage Servicer" means Continental Securities corporation,
Syracuse, New York 13202, or its successor as servicer under the
Mortgage Servicing Agreement referred to in Section 7.14 hereof.
"Net Proceeds" when used with respect to any insurance or
condemnation award, means the gross proceeds from the insurance or
condemnation award with respect to which that term is used
remaining after payment of all reasonable expenses incurred in the
collection of such gross proceeds.
"Note" means the nonrecourse deed of trust note of the Owner
evidencing the Mortgage Loan, including any allonge thereto,
delivered to the Trustee in substantially the form attached as
Exhibit A to the Loan Work -out Agreement.
"Ordinary Mortgage Servicing Fees and Expenses" shall mean the
fees and expenses of the Mortgage Servicer under the Mortgage Ser-
vicing Agreement equal to 1 /8th of 1.00% of the outstanding
principal balance of the Note computed monthly, deducted by the
Mortgage Servicer from the monthly payments on the Mortgage Loan.
"Ordinary Trustee's Fees and Expenses" means those fees,
expenses and disbursements payable to the Trustee pursuant to
Section 4.05 hereof and as described under Section 7.06, equal to
1 /8th of 1.00% of the outstanding principal balance of the Bonds
computed and payable semiannually in arrears.
"Outstanding" when used with respect to the Bonds or "Bonds
Outstanding" means, as of any date, all Bonds that have been duly
authenticated and delivered by the Trustee under this Indenture,
except:
(a) Bonds surrendered and replaced upon exchange or
transfer, or canceled because of payment or redemption, at or
prior to such date;
(b) Bonds for the payment, redemption or purchase for
cancellation of which sufficient money has been deposited
prior to such date with the Trustee (whether upon or prior to
the maturity, amortization or redemption date of any such
Bonds), or which are deemed to have been paid and discharged
pursuant to the provisions of Section 9.01 hereof; provided
that if such Bonds are to be redeemed prior to the maturity
thereof, other than by scheduled amortization, notice of such
redemption shall have been given or arrangements satisfactory
to the Trustee shall have been made therefor, or waiver of
17
7
such notice satisfactory in form to the Trustee shall have
been filed with the Trustee; and
(c) Bonds in lieu of which others have been authenticated
(or payment, when due, of which is made without replacement)
under Section 2.07 hereof; and also except that
(d) For the purpose of determining whether the holders of
the requisite principal amount of Bonds plus accrued but
unpaid interest thereon have made or concurred in any notice,
request, demand, direction, consent, approval, order, waiver,
acceptance, appointment or other instrument or communication
under or pursuant to the Indenture, Bonds owned by or for the
account of the Owner or any person owned, controlled by, under
common control with or controlling the Owner shall be disre-
garded and deemed to be not Outstanding. The :erm "control"
(including the terms "controlling ", "controlled by" and "under
common control with ") means the possession, directly or indi-
rectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
Beneficial ownership of 5% or more of a class of securities
having general voting power to elect a majority of the board
of directors of a corporation shall be conclusive evidence of
control of such corporation.
"Owner" means Drew Gardens Associates, Ltd., a Florida limited
partnership, or any of its FHA - approved successors as owner of the
Project.
"Owner Deposit" means the cash in the amount of $
to be deposited in immediately available funds by the Owner with
the Trustee on the Closing Date in the Costs of Issuance Fund as
provided in Section 4.02 hereof.
"Paying Agent" means the Trustee acting as such, and any other
paying agent appointed pursuant to this Indenture.
"Pledged Revenues" means the revenues, receipts and other
money received or to be received from the Owner under the Note, the
Mortgage and the Project, or other charges, interest and income
derived or to be derived on any money held by the Trustee
hereunder, and all money paid pursuant to the Contract of Mortgage
Insurance and other benefits thereunder.
"Prior Indenture" means the Trust Indenture dated as of
September 1, 1983, between the Issuer and the Prior Trustee with
respect to the Refunded Bonds.
"Prior Trustee" means collectively, Bank One, Columbus, NA,
Columbus, Ohio, in its capacity as trustee and Sun Bank, National
Association, as co- trustee under the Prior Indenture.
18
"Program Fund" means the Program Fund established by the
Trustee pursuant to Section 4.01 hereof.
"Prohibited Payment" means a payment, or an agreement to pay,
to a person other than the United States of America, an amount that
is required to be paid to the United States of America by the Code,
by entering into a transaction that reduces or eliminates any
excess nonpurpose obligations earnings (as discussed in Section
4.14 hereof) because such transaction results in a lower yield,
smaller profit or larger loss than would have resulted if the
transaction had been at arm's length and had the Yield on the Bonds
not been relevant to either party, as more specifically provided in
Section 1.148 -0 -9 of the United States Income Tax Regulations.
"Project" means the multifamily residential rental project in
Clearwater, Florida, owned by Owner, including the real estate
described in Exhibit A hereof and identified as FHA Project No.
067 - 35276 -PM.
"Qualified Investments" means any of the following if and
to the extent permitted by law:
(i) direct obligations of or obligations the principal of
and interest on which are fully guaranteed by the full faith
and credit of the United States Government, or (ii) obli-
gations of any agency or instrumentality of the United States
Government backed by the full faith and credit of the United
States, or (iii) certificates of deposit issued by the Trustee
or any of its affiliates or by any state or national bank that
has a short term rating from Standard & Poor's Corporation of
A -1+ or higher, or which deposits are fully insured by FDIC
(excluding a bank where the Issuer is a settlor of a trust
account evidenced by deposits therewith), or (iv) investment
agreements, in substantially the same form as the Investment
Agreement, which will not adversely affect the rating on the
Bonds, with a financial institution whose unsecured long term
debt is rated by Standard & Poor's Corporation at least as
high as the rating on the Bonds or (v) interests in any money
market funds rated either "AAAm" or "AAAm -G" by Standard k,,
Poor's Corporation that invest exclusively in obligations
issued and guaranteed by the United States Government or its
agencies._or instrumentalities. Qualified Investments under
(i) -(iii) or (v) hereof shall have a maturity date not to
exceed the lesser of 180 days from the date of purchase of
such Qualified Investments or as needed under this Indenture.
"Rating Agency" means Standard & Poor's Corporation, or any
successor thereto.
"Rebate Analyst" means Peck, Shaffer & Williams, Cincinnati,
Ohio.
19
"Rebate Analyst Fee" means a fee of $2,500 payable on the
first rebate calculation date together with a $250 set up fee, and
thereafter, $2,500 on each rebate calculation date.
"Rebate Fund" means the Rebate Fund established by the Trustee
pursuant to Section 4.01 hereof.
"Record Date" or "Regular Record Date" means the close of
business on the 15th day of the month next preceding each Interest
Payment Date..
"Refunded Bonds" means the Issuer's Mortgage Revenue Bonds,
Series 1983 (FHA Insured Mortgage Loan - Drew Gardens Apartments
Project) in the initial aggregate principal amount of $6,450,000.
"Regulatory Agreement" means that certain Regulatory Agreement
dated October 12, 1983 between the Owner and FHA with respect to
the Project.
"Second Mortgage" means the second lien mortgage encumbering
the Project in favor of HUD which arose out of the Loan Work -Out
Agreement and the Modification Agreement.
"State" means the State of Florida.
"supplemental Regulatory Agreement" means the Supplemental
Regulatory Agreement as to Tax Exemption dated as of August 1, 1992
between the Owner, the Issuer and the Trustee, to be recorded in
the Official Records of Pinellas County, Florida.
"Trustee" means Bank One, Columbus, NA, Columbus, Ohio, and
its successors in trust hereunder.
r Section 1.02. Interpretation. The words "hereof," "herein,"
"hereunder," and other words of similar import refer to this Inden-
ture as a whole. Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter
genders. Words importing the singular number shall include the
plural number and vice versa unless the context shall otherwise
indicate. References to Articles, Sections, and other subdivisions
of this Indenture are to the designated Articles, Sections and
other subdivisions of this Indenture as originally executed. The
headings of this Indenture are for convenience only and shall not
define or limit the provisions hereof.
20
ARTICLE II
THE BONDS
Section 2.01(a). The Bonds. Bonds may not be issued under
this Indenture except in accordance with this Article. The Bonds
in the aggregate principal amount of $3,425,000 shall be designated
"City of Clearwater, Florida Mortgage Revenue Refunding Bonds,
Series 1992A (FHA Insured Mortgage Loan - Drew Gardens Apartments
Project)." The Bonds shall be issued only as fully registered
secured. All of the
numberedofromaRelyupward and ratably
,
Each Bond shall be dated and bear interest until paid from the
Interest Payment Date next preceding the date of registration
thereof unless it is registered as of a day during the period from
the sixteenth day of the month next preceding any Interest Payment
Date to such Interest Payment Date, inclusive, in which event it
shall be dated and bear interest from such Interest Payment Date,
or unless it is registered before April 1, 1993, in which event it
shall be dated and bear interest from August 1, 1992; provided,
however, that if, at the time of registrationsucha B ndn shall
is in default on any Outstanding Bonds,
interest from the Interest payment Date to which interest has pre-
viously been paid or made available for payment on the Outstanding
Bonds.
The Bonds shall be issued in the Authorized Denominations,
shall bear interest payable on each Interest Payment Date, and
shall mature on the dates and in the amounts, and bear interest at
the rates per annum, all as set forth below:
Maturity Date
Principal Amount Interest Rate
October 1, 2025
$3,425,000 6.50%
The person in whose name any Bond is register e e Dateh on shall Regular
Record Date with respect to an interest Paym be
entitled to receive the interest payable on such Interest Payment
Date (unless such Bond has been called for redemption on a redemp-
tion date which is prior to such Interest Payment Date) notwith-
standing the cancellation of such Bond upon any registration of
transfer or exchange thereof subsequent to such Regular Record if
and prior to such Interest Payment Date; provided, however,
and to the extent the Issuer shall default in the payment of the
interest due on any Interest Payment Date, such defaulted interest
shall be paid as provided in the next paragraph.
Any interest on any Bond that is payable, but is not punctu-
ally paid or duly provided for, on any Interest Payment Date
payable tolthe Bondholder ontthes cease by
payable
21
virtue of having been such Bondholder. The Trustee may elect to
make payment of any Defaulted Interest to the Persons in whose
names the Bonds (or their respective predecessor Bonds) are
registered at the close of business on a special record date for
the payment of such Defaulted Interest (a "Special Record Date "),
which shall be fixed in the following manner. The Trustee shall
determine the amount of Defaulted Interest proposed to be paid on
each Bond and the date of the proposed payment, shall fix a Special
Record Date for the payment of such Defaulted Interest which shall
be not more than 15 nor less than 10 days prior to the date of the
proposed payment and shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first class, postage prepaid, to each Bondholder at his
address as it appears in the Bond Register not less than 10 days
prior to such Special Record Date. notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be
paid to the persons in whose names the Bonds (or their respective
predecessor Bonds) are registered on such Special Record Date.
The Bonds shall be subject to redemption as provided in
Article III hereof.
Section 2.01(b). Payments of Principal Redemption Price and
Interest. (i) Payment of principal, premium, and interest on the
Bonds shall be paid by check or draft mailed to the registered
owner thereof at his address as it appears on the registration
books of the Issuer on the Record Date. Upon request of and at the
expense of a registered owner of at least $250,000 in principal
amount of Bonds Outstanding, all payments of principal, premium,
and interest on the Bonds shall be paid by wire transfer in
immediately available funds to an account designated by such
registered owner. (ii) Before the date fixed for redemption, funds
shall be deposited with the Trustee to pay, and the Trustee is
hereby authorized and directed to apply such funds to the payment
of, the Bonds or portions thereof called, together with accrued
interest thereon to the redemption date. CUSIP number
identification with appropriate dollar amounts for each CUSIP
number must accompany all payments of principal, premium, and
interest, whether by check or by wire transfer.
Section 2.02. Restriction on Issuance of Bonds. No Bonds may
be issued under the provisions of this Indenture except in accor-
dance with this Article. The total principal amount of Bonds that
may be issued hereunder, or in substitution for other Bonds
pursuant to Section 2.07, is expressly limited to $68,500.
Section 2.03. Limited Obligations. The Bonds, together with
premium, if any, and interest thereon, are limited obligations of
the Issuer payable solely from the revenues, receipts and security
pledged therefor in the Granting Clauses hereof. The Bonds do not
constitute a debt or pledge of the faith and credit of the State,
the Issuer or any other public body, and the holders or owners
22
thereof have no right to have taxes levied by any public body for
the payment of the principal thereof or premium, if any, or
interest thereon. Money raised by taxation shall not be obligated
or pledged for the payment of principal of or premium, if any, or
interest on the Bonds, and the Bonds shall be payable solely from
the revenues and security interests pledged for their payment as
authorized by this Indenture.
Section 2.04. Indenture Constitutes Contract. In considera-
tion of the purchase and acceptance of the Bonds issued hereunder
by those who shall hold them from time to time, the provisions of
this Indenture shall be part of the contract of the Issuer with the
Holders of the Bonds and shall be deemed to be a contract between
the Issuer and the Holders of the Bonds from time to time.
Section 2.05. Execution. The Bonds shall be executed on
behalf of the Issuer by the manual or facsimile signature of its
Mayor, and a facsimile of its seal shall be imprinted or otherwise
reproduced thereon, and attested by the manual or facsimile signa-
ture of its Clerk. Any facsimile signatures shall have the same
force and effect as if said officers had manually signed said
Bonds. Any reproduction of the official seal of the Issuer on the
Bonds shall have the same force and effect as if the official seal
of the Issuer had been impressed on the Bonds.
In case any officer whose manual or facsimile signature shall
appear on any Bonds shall cease to be such officer before the
delivery of such Bonds, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes, the same as
if he had remained in office until delivery, and also any Bond may
bear the facsimile signatures of, or may be signed by, such persons
as at the actual time of the execution of such Bond shall be the
proper officers to sign such Bond although at the date of such Bond
such persons may not have been such officers.
Section 2.06. Authentication. Only such Bonds as shall have
endorsed thereon a certificate of authentication substantially in
the form hereinabove set forth duly executed by the Trustee shall
be entitled to any right or benefit under this Indenture. No Bond
shall be valid or obligatory for any purpose unless and until such
certificate of authentication shall have been duly executed by the
Trustee; and such executed certificate upon any such Bond shall be
conclusive evidence that such Bond has been authenticated and
delivered under this Indenture. The Trustee's certificate of
authentication on any Bond shall be deemed to have been executed by
it if signed by an authorized signer of the Trustee, but it shall
not be necessary that the same person sign the certificate of
authentication on all of the Bonds.
Section 2.07. Mutilated, Lost Stolen or Destroyed Bonds. In
the event any Bond is mutilated, lost, stolen or destroyed, the
Issuer shall execute and the Trustee shall authenticate a new Bond
of like date, series, maturity and denomination as that mutilated,
23
lost, stolen or destroyed. Any mutilated Bond shall first be
surrendered to the Trustee; and in the case of any lost, stolen or
destroyed Bond, there shall first be furnished to the Trustee and
the Issuer evidence of such loss, theft or destruction reasonably
satisfactory to them together with indemnity reasonably satisfac-
tory to them. In the event any such Bond shall have matured,
instead of issuing a duplicate Bond or Bonds the Issuer may pay the
same without surrender thereof. The Issuer and the Trustee may
charge the holder or owner of any lost, mutilated, stolen or
destroyed Bond with their reasonable fees and expenses of replacing
such Bond.
Section 2.08. Transfer and Exchange of Bonds, Persons Treated
as Owners. The Trustee as Bond Registrar shall cause a bond
register to be kept for the registration of transfers of Bonds.
Any Bond may be transferred only upon an assignment duly executed
by the registered owner or his duly authorized representative in
such form as shall be satisfactory to the Bond Registrar and upon
surrender of such Bond to the Trustee for cancellation. Whenever
any Bond or Bonds shall be surrendered for transfer, the Issuer
shall execute and the Trustee shall authenticate and deliver to the
transferee a replacement fully registered Bond or Bonds, of
Authorized Denomination or Denominations and for the amount of such
Bond or Bonds so surrendered.
Any Bond may, in accordance with its terms, be exchanged, at
the office of the Trustee, for a new fully registered Bond or
Bonds, of the same maturity, of any Authorized Denomination or
Denominations and for the aggregate amount of such Bond then
remaining outstanding.
In all cases in which Bonds shall be transferred or exchanged
hereunder, the Trustee may make a charge sufficient to reimburse it
for any tax, fee or other governmental charge required to be paid
with respect to such transfer or exchange. The Trustee shall not
be required to transfer any Bond after the mailing of notice
calling such Bond for redemption, or during the period of fifteen
days next preceding the mailing of a notice of redemption of any
Bonds.
The person in whose name any Bond shall be registered shall be
deemed and regarded as the absolute owner thereof for all purposes
and payment of or on account of the principal of and premium and
interest on any such Bond shall be made only to or upon the order
of the registered owner thereof, or his legal representative, and
neither the Issuer nor the Trustee shall be affected by any notice
to the contrary. All such payments shall be valid and effectual to
satisfy and discharge the liability upon such Bond to the extent of
the sum or sums to be paid.
Neither the Issuer nor the Trustee shall be required to make
any such exchange, registration or transfer of Bands during the 15
days immediately preceding an Interest Payment Date, or, in the
24
case of any proposed redemption of Bonds, during the 15 days imme-
diately preceding the selection of Bonds for such redemption and
after the giving of notice of redemption, the Trustee is not
required to transfer or exchange any Bond or portion thereof which
has been called for redemption.
Section 2.09. Temporary Bonds. Until definitive Bonds are
ready for delivery, there may be executed, and upon the request of
the Issuer the Trustee shall authenticate and deliver, in lieu of
definitive Bonds, temporary printed, typewritten, engraved or
lit:ographed Bonds, in such denomination or denominations as shall
be determined by the Issuer, in fully registered form, in substan-
tially the tenor hereinabove set forth and with such appropriate
omissions, insertions and variations as may be required.
If temporary Bonds shall be issued, the Issuer shall cause the
definitive Bonds to be prepared and to be executed and delivered to
the Trustee, and the Trustee, upon presentation to it at its prin-
cipal trust office of any temporary Bond shall cancel the same and
authenticate and deliver in exchange therefor, without charge to
the owner thereof, a definitive Bond or Bonds, as the case may be,
of an equal aggregate principal amount, of the same maturities and
bearing interest at the same rates as the temporary Bond sur-
rendered. Until so exchanged the temporary Bonds shall in all
respects be entitled to the same benefit and security of this
Indenture as the definitive Bonds to be issued and authenticated
hereunder. Interest on temporary Bonds, when due and payable, if
the definitive Bonds shall not be ready for exchange, shall be paid
on presentation of such temporary Bonds and notation of such pay-
ment shall be endorsed thereon by the Trustee.
Section 2.10. Deliverer of the Bonds. Upon the execution and
delivery of this Indenture, the Issuer shall execute and deliver to
the Trustee, and the Trustee shall authenticate the Bonds and
deliver them to or upon the order of the Issuer upon receipt by the
Trustee of the following:
(a) An executed counterpart of this Indenture and of the
Loan Work -Out Agreement;
(b) an opinion of nationally recognized bond counsel to
the effect that the -ssuer is duly organized and existing
under the laws of the State and has duly authorized, executed
and delivered the Indenture, other loan documents, and the
Bonds and that the Bonds are entitled to the benefits of this
Indenture and are valid and binding limited obligations of the
Issuer, which opinion, to the extent described in this para-
graph (b), may rely upon a written opinion of counsel to the
Issuer delivered in connection with the issuance of the Bonds;
(c) a resolution of the Issuer certified by the clerk of
the Issuer, authorizing the execution and delivery of this
25
Indenture and other necessary documents and the issuance, sale
and delivery of the Bonds;
(d) the Bond Purchase Agreement; duly executed by each
party thereto;
(e) the executed Modification Agreement;
(f) the Owner Deposit;
(g) conformed copies of all other Loan Documents;
(h) a policy of title insurance in the face amount of the
Mortgage insuring the Trustee in its capacity hereunder as the
holder of the Mortgage that the Mortgage constitutes a valid
first lien upon the Project;
(i) an opinion of counsel to the owner to the effect that
the owner is duly organized and validly existing and in good
standing under the laws of the State and has full power and
authority to enter into the agreements described herein to
which it is a party, that its execution and delivery of and
performance of its covenants in such agreements do not contra-
vene law or any provision of any other agreement to which it
is a party or by which it or such property is bound or
affected, that all such agreements described herein are legal,
valid and .binding agreements of the owner enforceable against
the owner in accordance with their respective terms, and
addressing in a manner satisfactory to the 'Trustee such other
matters as the Trustee may reasonably require, and that the
Trustee's interest in the Project is a valid, perfected first
security interest under the laws of the State;
(j) an opinion of nationally recognized bond counsel to
the effect that the Bonds have been validly issued and consti-
tute legal, valid and binding limited obligations of the
Issuer, and that the interest on the Bonds, under law in
effect on the date of such opinion, is excluded from gross
income for federal income purposes and that the lien of the
Prior Indenture upon the Note and the amount transferred from
the Prior Indenture to the Indenture has been validly
released;
(k) a letter of instructions from the Issuer directing
the Trustee to authenticate the Bonds; and
(1) such other documents as the Trustee may reasonably
request.
26
ARTICLE III
REDEMPTION OR TENDER OF BONDS PRIOR TO MATURITY
Section 3.01. Redemption of Bonds Prior to Maturity.
(a) Casualty and Condemnation Redemption. The Bonds are sub-
ject to redemption on any date, on the earliest practicable date,
as a whole or in part, at a redemption price equal to the principal
amount thereof plus accrued interest to the date fixed for redemp-
tion to the extent the Net Proceeds of any condemnation award or
insurance recovery (and, in the case of the Bonds, as a result of
a reduction in the Debt Service Reserve Fund pursuant to Section
3.02) are applied to the prepayment of the Note as further provided
in Section 5.06 hereof.
(b) Optional Redemption. The Bonds are subject to redemption
as a whole or in part on October 1, 2002, or any date thereafter on
the earliest practicable date to the extent of, any optional
prepayment of the Note by the Owner (and as a result of a reduction
in the Debt Service Reserve Fund pursuant to Section 3.02), or from
the proceeds of any refunding bonds or otherwise from any monies
provided by the Issuer, at the redemption prices, expressed as
percentages of the principal amount to be redeemed, plus accrued
interest to the date of redemption set forth in the table below:
Redemption Dates Redemption Prices
October 1, 2002, through September 30, 2003 102%
October 1, 2003, through September 30, 2004 101
October 1, 2004, and thereafter 100
(c) Special Redemption Upon a Default Under the Mortctacge Loan.
If insurance benefits under the Contract of Mortgage Insurance are
paid by FHA to the Trustee, or if such benefits are payable by FHA
and the proceeds of refunding bonds of the Issuer or other moneys
are deposited with the Trustee for such purposes, the Trustee shall
call the Bonds for redemption on the earliest practicable date as
a whole or in part to the extent of available money, at a redemp-
tion price equal to 100% of the principal amount thereof plus
accrued interest to the date fixed for redemption.
(d) Mandatory Sinking Fund Redemption. The Bonds described
below are required to be retired by mandatory sinking fund payments
from money in the Bond Fund:
27
Maturity Date
In the event of a redemption of less than all of the Out-
standing Bonds other than by mandatory sinking fund payments of the
Bonds, as appropriate, scheduled redemptions above shall be reduced
so that the resulting decrease in debt service on the Bonds during
each six -month period ending on an Interest Payment Date is
proportional, as nearly as practical, to the decrease in payments
on the Note in each period.
(e) Special Bankruptcy Redemption. In the event that the
Owner becomes subject to any bankruptcy proceedings and the trustee
28
BONDS MATURING
OCTOBER 1, 2025
Principal Amount
Principal Amount
D_ a _te
To Be Redeemed
Date
To Be Redeemed
April 1
p ,
1993
$15,000
October 1, 2009
$45,000
45 000
October It 1993
15,000
April 1, 2010
October 1, 2010
,
45,000
April 1,
1994
15,000
15,000
April 1, 2011
50,000
October 1,
1994
20,000
October 1, 2011
50,000
April 1 1995
A p
October 1, 1995
15 000
,
April 1, 2012
50,000
50 000
April 1 ,
1996
20,000
October 1, 2012
April 1, 2013
,
55,000
October
1, 1996
20,000
20,000
October 1, 2013
55,000
April 1, 1997
October 1, 1997
20,000
Ap ril 1 2014
60,000 60 000
April 1
1998
20,000
October 1, 2014
April 1, 2015
,
60,000
October
1, 1998
20,000
20 000
October 1 2015
'
65,000
April
October
1191999
25,000
1,
65 000
,
65,000
April 1,
2000
25,000
, 20
October 1, 2016
October
April 1, 2017
70,000
October
1, 2000
25,000
25 000
October 1, 2017
75 000
,
April 1,
p
October
2001
1, 2001
+
25;000
April 1,
75,000
75 000
April 1,
p
202002
25,000
, 20
October 1, 2018
April 1, 2019
,
75,000
October
1,
25,000
30,000
October 1, 2019
85 000
,
April 1 `
October
2003
1, 2003
30,000
April 1, 2020
85,000
85,000
April 1,
p
20004
30,000
October 1 2020
'
April 1, 2021
90 000
,
October
1,
30,000
30,OG0
October 1, 2021
95,000
April 1,
2005
2005
35,000
April 1, 2022
95 000
,
October
April 1
p
1,
2006
35,000
October 1, 2022
100,000
100,000
October
1, 2006
35,000
35,000
April 1 2023
Ap
October 1, 2023
105 000
,
April 1,
October
2007
1, 2007
40,000
April 1, 2024
110,000
115 000
April 1 '
2008
40,000
October 1, 2024
April 1, 2025
,
115,000
October
1, 2008
40 000
40,
October 1, 2025*
195,000
April 1,
2009
,000
Maturity Date
In the event of a redemption of less than all of the Out-
standing Bonds other than by mandatory sinking fund payments of the
Bonds, as appropriate, scheduled redemptions above shall be reduced
so that the resulting decrease in debt service on the Bonds during
each six -month period ending on an Interest Payment Date is
proportional, as nearly as practical, to the decrease in payments
on the Note in each period.
(e) Special Bankruptcy Redemption. In the event that the
Owner becomes subject to any bankruptcy proceedings and the trustee
28
0
in bankruptcy causes there to be a prepayment of the Note without
notice and without premium, Bonds in the amount of such prepayment
(and as a result of a reduction in the Debt Service Reserve Fund
pursuant to Section 3.02) , shall be redeemed, as a whole or in
part, without any otherwise required notice of redemption on the
earliest practicable date at a redemption price equal to the
principal amount thereof plus accrued interest to the date of
redemption.
(f) Redemption Upon Determination of HUD. On any date, as a
whole or in part, Bonds shall be redeemed to the extent of any pre-
payments of the Note made upon the determination of HUD in order to
avoid an insurance claim under the Contract of Mortgage Insurance
(and as a result of a reduction in the Debt Service Reserve Fund
pursuant to Section 3.02).
In the event of an optional redemption of Bonds on a date on
which the redemption price includes a redemption premium, the
Trustee shall not give notice of such redemption unless (i) the
Trustee shall have had in its possession, for a period of at least
91 days prior to the giving of such notice, an amount paid by the
Owner as a prepayment premium on the Mortgage Loan equal to such
redemption premium; (ii) there shall not have occurred at any time
during or after such 91 -day period any filing by or against the
Owner under any bankruptcy act or any similar law for the relief of
debtors and the Owner has filed with the Trustee a certificate to
that effect; and (iii) the Trustee shall have received the pre-
payment of the Mortgage Loan.
Section 3.02. Selection of Bonds for Redemption.
(a) In the event of a redemption of less than all the Out-
standing Bonds pursuant to the scheduled mandatory redemption
provisions provided for in Section 3.01(d) above and in the form of
the Bonds, the particular Bonds to be redeemed are to be selected
by the Trustee by lot.
(b) If less than all the Bonds then outstanding shall be
called for redemption other than from mandatory sinking fund pay-
ments pursuant to Section 3.01(d) hereof, (i) the Trustee shall
redeem an amount of Bonds of each series so that the resulting
decrease in debt service on the Bonds of each series in each semi-
annual period ending in an interest Payment Date is proportional,
as nearly as practicable, to the decrease in the payments on the
Note in each such semiannual period, and the Bonds shall be
selected by lot within each maturity, and (ii) the Trustee shall
transfer from the Debt Service Reserve Fund to the Bond Fund an
amount that bears the same proportion to the amount then on deposit
in the Debt Service Reserve Fund as the reduction in the principal
balance of the Mortgage Loan bears to the outstanding balance of
the Mortgage Loan immediately prior to such reduction.
29
(c) Bonds shall be redeemed pursuant to this Article III, only
in the principal amount of $5,000 or any integral multiple thereof.
Section 3.03. Notice of Redemption. Except that Bonds
redeemed under Section 3.01(e) hereof shall be redeemed without
notice, notice of the intended redemption of each Bond shall be
given by the Trustee by first class mail, postage prepaid, to the
registered owner at the address of such owner shown on the
Registrar's bond register. All such redemption notices shall be
given not less than thirty (30) days nor more than sixty (60) days
prior to the date fixed for redemption. Each notice shall state
that payment of the applicable redemption price plus accrued
interest to the date fixed for redemption will be made upon presen-
tation and surrender of the Bonds. The Trustee shall not give
notice of any redemption of Bonds (other than pursuant to section
3.01 (d) hereof), unless the Trustee shall have, at the time such
notice is given, sufficient funds on hand to make such redemption.
Notices shall state the redemption date and the redemption
price and, if less than all of the then Outstanding Bonds are
called for redemption, shall state (i) the numbers of the bonds to
be redeemed by giving the individual certificate number of each
Bond to be redeemed or shall state that all Bonds between two
stated certificate numbers, both inclusive, are to be redeemed or
that all of the Bonds of one or more maturities have been called
for redemption; (ii) the cusIP numbers of all Bonds being redeemed
if available, (iii) the amount of each Bond being redeemed (in the
case of a partial redemption) ; (iv) the date of issue of the Bonds
as originally issued; (v) the rate of interest borne by each Bond
redeemed; (vi) the maturity date of each Bond being redeemed, (vii)
any other descriptive information needed to identify accurately the
Bonds being redeemed, (vii.i) the place or places when amounts due
upon redemption will be payable, and (ix) the name, address and
contact person at the office of the Trustee with respect to such
redemption. The notice shall require that such Bonds be sur-
rendered at the principal corporate trust office of the Trustee and
shall state that further interest on such Bonds will not accrue
from and after the redemption date.
cusIP number identification with appropriate dollar amos
for each cusIP number shall also accompany each redemption payment.
Notice of such redemption shall also be sent by registered
mail, overnight delivery service or other secure means, postage
prepaid, to the original purchaser of the Bonds, to any holders of
$250,000 or more in principal amount of Bonds to be redeemed, to
all municipal registered securities Depositories (described below)
and to at least two of the national Information Services (described
below) that disseminate securities redemption notices, when pos-
sible, at least five (5) days prior to the provided, mailing hof either
required by the first paragraph above;
failure to receive such notice nor any defect in any notice so
30
mailed shall affect the sufficiency of the proceedings for the
redemption of such Bonds.
Securities Depositories include The Depository Trust Company,
711 Stewart Avenue, Garden City, New York 11530, Fax -(516) 227 -4039
or 4190; Midwest Securities Trust Company, Capital Structures -
Call Notification, 440 South LaSalle Street, Chicago, Illinois
60605, Fax (312) 663 -2343; Philadelphia Depository Trust Company,
Reorganization Division, 1900 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Bond Department, Fax (215) 496 -5058;
or, in accordance with the then current guidelines of the
Securities and Exchange Commission to such other addresses and /or
such other securities depositories or to any such depositories as
the Issuer may designate in writing to the Trustee.
Information Services include Financial Information, Inc.'s
"Daily Called Bond Service," 30 Montgomery Street, 10th Floor,
Jersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services' "Called Bond Service," 55 Broad Street, 28th
Floor, New York, New York 10004; Moody's Investors Service
"Municipal and Government," 99 Church Street, 8th Floor, New York,
New York, 10007, Attention: Municipal News Reports; and Standard
& Poor's Corporation "Called Bond Record," 25 Broadway, New York,
New York 10004; or, in accordance with then current guidelines of
the Securities and Exchange Commission to such other addresses
and /or such other services providing information with respect to
called bonds, or to such services as the Agency may designate in
writing to the Trustee.
In addition to providing notice of redemption as set forth
above, the Trustee shall send a second notice of redemption within
60 days of the redemption date, by registered mail, overnight
delivery service, or other secure means, postage prepaid to the
registered owners of any Bonds called for redemption, at their
addresses appearing on the Bond Registration books maintained by
the Trustee, who have not surrendered their Bonds for redemption
within 30 days fa)-?.owing the redemption date.
Notice of redemption under Section 3.01(b) shall be given only
if the Trustee has received (i) money sufficient to pay the redemp-
tion premium, if any, together with an amount equal to all costs of
redeeming the Bonds, including any loss of investment earnings and
including accrued interest to the redemption date, at least 91 days
prior to the giving of notice of redemption 'T'rustee receives a cer-
tificate from the Owner to the effect that during such period no
petition in bankruptcy has been filed with respect to the Owner and
(ii) the amount of such prepayment, prior to the giving of a notice
of redemption.
Failure to give notice by mailing to the registered owner of
any Bond designated for redemption or to any depository or informa-
tion service shall not affect the validity of the proceedings for
31
the redemption of any other Bond if notice of such redemption shall
have been mailed as herein provided.
Section 3.04. Cancellation. All Bonds that the have Trustee,
redeemed shall be canceled and thereupon destroyed by
and shall not be reissued. destruction rshallt certificate
up n request, be
destruction evidencing
furnished by the Trustee to the Issuer.
Section 3.05. Effect of Notice of rov dedli in this Notice of
Article
redemption having been given in the manner p
III (or in the event no such notice is held by the Trustee or
3.03), and money for the redempthereueongthe Bonds so called for
Paying Agent for that purpose, P
redemption shall become due and payable on the redemption date, and
interest thereon shall cease to accrue on such dsecur security or such
benefit
shall under thiseIndenture except to nreceive tpaym payment of the redemption
price thereof.
32
ARTICLE IV
FUNDS, INVESTMENTS
Section 4.01. Establishment of Bond Funds. The following
funds shall be established and maintained by the Trustee under this
Indenture:
(a) Costs of Issuance Fund;
(b) Program Fund;
(c) Bond Fund.
(d) Debt Service Reserve Fund; and
(e) Rebate Fund.
Section 4.02. Application of Bond Proceeds and Other Amounts.
From the proceeds of the Bonds ($ )' the Trustee shall to the
deposit the accrued interest in the amount of $ to the
Bond Fund; $ to the Program Fund; $
to the Debt Service Reserve
Cost of Issuance Fund; and $ o£ the Owner Deposit
Fund. The Trustee shall deposit $ to the Program
into the Costs of Issuance Fund and $
Fund.
After making the required deposits referred to above, any
excess moneys shall be deposited in the Costs of Issuance Fund.
Section 4.03. Costs of Issuance Fund. The Owner Deposit
shall be deposited into the Costs of Issuance Fund. The Trustee
shall use moneys in the Costs of Issuance Fund to pay Costs of
Issuance in accordance with Schedule II of the Bond Purchase Agree-
ment upon presentation to it of invoices not in excess of the
amounts set forth therein. On the date which is 180 days following
shall distribute any funds remaining
the Closing Date, the Trustee
in the Costs of Issuance Fund to the Owner.
Section 4.04. Program Fund. There shall be deposited in the
Program Fund the amount set forth-in Section 4.02. The Trustee
shall remit amounts held in the Program Fund constituting Bond
proceeds to the Prior Trustee for the purpose of refunding the
Refunded Bonds and the funds constituting Owner contribution to the
Prior Trustee for repayment to HUD of certain reserves, mortgage
escrows and related fees.
Section 4.05. (Reserved)
Section 4.06. Bond Fund. There shall be deposited in the
Bond Fund the amounts indicated in Section 4.02 and the amounts
33
disbursed thereto from the Debt Service Reserve Fund. There shall
be deposited in the Bond Fund all payments on the Note and all
interest,, profits or other income derived from the investment of
all funds held hereunder as provided herein. FHA Insurance
Mortgage benefits, if any, are to be deposited in the Bond Fund and
used, together with other amounts on deposit in the Bond Fund, to
the extent necessary for the redemption of Bonds in accordance with
Section 3.01 at the earliest practicable date.
On each Interest Payment Date, and on any other date when the
Bonds are to be redeemed or otherwise paid pursuant to this inden-
ture, the Trustee shall apply moneys in the Bond Fund in the
following order of priority:
(i) to pay all principal and /or interest due on the Bonds
(including mandatory sinking fund payments, if any),
(ii) to pay the Trustee its ordinary Trustee's Fees and
Expenses,
(iii) to pay or provide for payment on October 1 of each
year commencing October 1, 1943, of the ongoing surveillance
°ee of Standard « Poor's Corporation of $500 per year;
(iv) to pay the Mortgage Servicer any amounts due and
payable on such date;
(v) to transfer any amounts required to be deposited in
the Debt Service Reserve Fund in order to restore the amount
of money or deposit therein to the amount required pursuant to
the terms of this Indenture;
(vi) to pay on each Installment Calculation Date the
Rebate Analyst the Rebate Analyst Fee; and
(vii) to maintain in the Bond Fund a carry- forward
balance of at least equal to that set forth as Exhibit B
hereto.
Section 4.07. Debt Service Reserve Fund. The Trustee shall
deposit in the Debt Service Reserve Fund the amounts set forth in
Section 4.02. If on any interest Payment Date the amount in the
Bond Fund after making all required deposits therein shall be
insufficient to pay the interest on, principal of, and premium, if
any, then due on the Bonds, the Trustee shall, subject to the
limitations in the paragraph below, transfer cash from the Debt
Service Reserve Fund to the Bond Fund in an amount equal to such
deficiency; provided, however, that any such transfer by the
Trustee shall not relieve the Owner of any of its obligations under
the Note or under the Mortgage and that the Trustee shall notify
the Rating Agency of such withdrawal. The Trustee shall on each
Interest Payment Date transfer to the Bond Fund from the Debt
34
Service Reserve Fund interest earnings on the Debt Service Reserve
Fund. The Trustee shall value the Debt Service Reserve Fund on
each Interest Payment Date at the lowest of cost, market, or
amortized value.
Notwithstanding the foregoing, except when all Outstanding
Bonds are to be redeemed, or unless the Trustee has filed with FHA
notice of Default and intent and election to assign pursuant to
Section 6.03 hereof, no money in the Debt Service Reserve Fund
shall be used for payments of principal of or interest on the
Bonds, other than an amount not to exceed one payment on the Note
on each Interest Payment Date and the transfer of earnings on the
Debt Service Reserve Fund to the Bond Fund as provided herein, if
such use would result in the amount in the Debt Service Reserve
Fund being reduced to less than the Debt Service Reserve
Requirement.
Section 4.08. Final Balances. When provision has been made
for payment of all Bonds Outstanding in full, either at maturity or
upon redemption, and for the payment of the Trustee's, Mortgage
Servicer's, Rating Agency's and Rebate Analyst's fees and expenses
and all other costs due under this Indenture after such payment in
full, money remaining under the Indenture shall be transferred to
the Owner.
Section 4.09. Custody of Funds; Money to be Held in Trust.
All moneys required to be deposited with or paid to the Trustee for
the account of any fund referred to in any provision of this Inden-
ture or the Loan Work -Out Agreement, except moneys required to be
deposited in the Rebate Fund, shall be held by the Trustee in
trust, and except for moneys deposited with or paid to the Trustee
for the redemption of Bonds, notice of the redemption of which has
been duly given, shall, while held by the Trustee, constitute part
of the Trust Estate and be subject to the lien or security interest
created hereby. Notwithstanding that moneys deposited in the
Rebate Fund are not part of the Trust Estate, such moneys are to be
held by the Trustee in trust and rebated to the United States
Treasury as provided in this Indenture.
Section 4.10. Cancellation of Obligations. Upon the redemp-
tion or payment of all the outstanding Bonds in accordance with the
terms of this Indenture, the Issuer and the Trustee shall take
whatever steps may be necessary to cancel. the Note and release the
lien of the Mortgage to the extent then held by the Trustee. In
the event of the redemption or payment of the Bonds in accordance
with the terms of this Indenture and the satisfaction and discharge
of this Indenture, any amounts .remaining in the funds and accounts
established under this Indenture (other than the Rebate Fund) shall
be remitted to the Owner after payment or provision for payment of
any amounts due the Issuer, the Trustee or the Mortgage Servicer as
provided in Section 4,08.
35
Section 4.11. Investment of Funds. Any money held as part of
any fund created in this Article, other than the Rebate Fund, shall
be invested or reinvested by the Trustee under the Investment
Agreement to the maximum extent possible and otherwise in Qualified
Investments. Moneys in the Rebate Fund shall only be invested in
obligations described in clauses (i) and (ii) of the definition of
Qualified Investments. The investments so made shall be held by
the Trustee and shall be deemed at all times to be a part of the
fund in which such money was held; provided that for purpose of
investment money held in any of the funds established hereunder may
be commingled. The Trustee may act as principal or agent in the
making or disposing of any investment. The Trustee is directed to
sell and reduce to cash a sufficient amount of such investments
whenever the cash balance in any fund shall be insufficient to
cover a proper disbursement from any fund. Subject to the neces-
sary withdrawals and deposits of interest earnings from various
Funds to the Rebate Fund according to the instructions of Section
4.10 hereof, all interest, profits or other income derived from the
investment of any Fund created by this Article shall be deposited
in the Bond Fund. The Trustee shall not be liable for any losses
resulting from any such investments consistent with this Section.
Money held in the funds created by this Indenture shall be
invested in securities and obligations maturing not later than the
dates on which such money will be needed to pay principal of or
interest on the Bonds.
Any subsequent investment made by the Trustee shall be in
Qualified Investments.
For the purpose of determining the amount on deposit to the
credit of any Fund, obligations purchased as an investment of money
therein shall be valued semiannually at the lowest of cost, market
or amortized value thereof, inclusive of accrued interest.
Section 4.12. Non - Presentment of Bonds. If any Bond shall
not be presented for payment when the principal thereof becomes
due, either at maturity or otherwise or at the date fixed for
redemption thereof, if moneys sufficient to pay such Bond shall
have been deposited with the Trustee, it shall be the duty of the
Trustee to hold such moneys, without liability to the Issuer, any
Bondholder or any other person for interest thereon, for the Bene-
fit of the owner of such Bond. Any moneys so deposited with and
held by the Trustee due to nonpresentment of Bonds on any redemp-
tion date must be retained by the Trustee for a period of at least
one year after the final maturity date of the Bonds or advance
refunding date, if applicable, thereafter, such amounts shall be
paid "y the Trustee to the Owner, free from the trusts created by
this indenture. Thereafter, Bondholders shall be entitled to look
only to the Owner for payment, and then only to the extent of the
amount to repaid by the Trustee.
36
Notwithstanding any provision of this Indenture any money
deposited with the Trustee: or any other paying agent in trust for
the payment of the principal of or interest or premium on any
Bonds, and remaining unclaimed for four (4) years after such pay-
due due and payable (whether at maturity or upon
ment shall have becom e
call for redemption) shall then be repaid to the owner upon its
written request, and the Holders of such Bondsgthereofedandrall
entitled to look only to the Owner for repayment agent with respect to other
liability of the Trustee or
cease. In the e en t of the repayment of
such money shall thereupon s in
such money to the Owner as aforesaid, the Holders of the Bond
respect of which such money was deposited shall thereafter be
deemed to be unsecured creditors o u
o ited for the payment of such
lent to the respective amounts dep
Bonds and so repaid to the Owner (without interest thereon).
Section 4.13. Calculations of Annual Debt Service- Yield.
as
The annual debt service on the Bonds shaltheeBandsuscheduledtand
amount of principal of, and interest on,
expected to be due and payable to Holders of the Bonds during the
Bond Year, taking into account any redemptions gi Bonds previously on
made. Such calculation shall be made at the beginning
Year and at the dale six of investments the Bond debt
Year, and shall apply p
service over the twelve -month period then next following.
The yield on the Bonds shall be calculated as that discount
rate (determined on the basis of semi -ant al interest compounding)
that, when used in computing the p
principal and interest to be paid thereon, produces an amount equal
to the purchase price thereof, all according to the requ e of ther.a Bonds of
Income Tax Regulations 51.148 -0 -9. The purchase pr f thetBondso
is an amount equal to the original offering price
the public, including accrued interest, as of the date of issuance,
and without allowance for discount al or any fees in to insure the nectioifwith not
such issuance. However, premiums p
in excess of the present value of the interest saved as a result ld on
such insurance, shall be treated as interest paid. The variable
the Bonds, if the Bonds should constitute, or include, under its
rate obligation, being an obligation the yield on escribed formula
terms, is adjusted periodically according to a p
so that yield over its term cannot be determined on s the date
nitial
issue, shall be calculated, for the first Bond Year, and,
interest rate borne by the oblig weighted averagelinterest rate
for subsequent Bond Years, receding Bond Year.
borne by the obligation during -the p
hall be calculated according to the
Yield on investments s
above- stated definition, provided additionally that (1) the
administrative costs of acquiring investments shall not be
included; (2) investments must be acquy ad adjusts their yield; (3)
and not in a manner which artificially
37
investments previously owned and subsequently attributed to the
Bonds shall be valued at their fair market value at the time of
such attribution; (4) notwithstanding any other provisions of this
Indenture as to valuations of investments for security purposes,
investments once acquired shall not be revalued for purposes of
Sections 4.10 and 4.12; and (5) the yield on a variable rate
investment shall not be its initial rate once acquired by the Owner
if it had been previously issued, but shall be its prior year's
weighted average.
Section 4.14. Maintenance of Rebate Fund. The Owner
covenants to take all actions necessary to comply with the rebate
requirements applicable to investments of proceeds of the Bonds
contained in Section 148 the Code and the Treasury Regulations
thereunder. The Owner further agrees and covenants that it will
cooperate with the Trustee in keeping accurate accounts of the
investment earnings on all investments of gross proceeds, within
the meaning of the Code and the Treasury Regulations, and the Owner
and Trustee will cause a timely rebate to the United States
Treasury of all the Net Rebate Liability.
In the event that the Gross Proceeds of the Bonds (not
including, for this purpose, Gross Proceeds periodically deposited
and withdrawn for current debt service into and from the Bond Fund
and Gross Proceeds held in the Debt Service Reserve Fund and Gross
Proceeds which arise after six months from the date hereof which
are not reasonably anticipated as of the date hereof) are not
completely expended by the date six (6) months from the date of
issuance of the Bonds, then the Trustee and the Owner shall under-
take and perform the following requirements:
(1) On each Installment or Final Calculation Date, the
Owner shall retain the Rebate Analyst and shall cause such
Rebate Analyst to calculate any net rebate liability. The
Rebate Analyst shall be paid in accordance with clause (vi) of
Section 4.06 hereof.
(2) On written direction of the Owner, the Trustee shall
withdraw from available funds or accounts held under the
Indenture (unless the Owner shall pay) the amount of any net
rebate liability set forth in the report of said Rebate
Analyst and deposit the same into the Rebate Fund hereby cre-
ated, and the Trustee shall, solely from amounts then con-
tained in the Rebate Fund, then remit to the United States
Treasury, not later than sixty (60) days after each Install-
ment Calculation Date the amount then constituting 90% of such
net rebate liability. Within sixty (60) days after the Final
Calculation Date, the Owner shall cause said Rebate Analyst to
compute, and shall direct, in writing, the Trustee to remit to
the United States Treasury the net rebate liability set forth
in the report of said Rebate Analyst. Said payments shall be
made to the Internal Revenue service Center, Philadelphia,
38
AMK
Adk
Pennsylvania, or such other location determined under the
Code, and filed together with a copy of the Form 8038T (which
Form 803ST shall be supplied to the Trustee) with respect to
the Bonds, and the Trustee shall retain records of all such
calculations and rebate payments required by this Section for
a period ending six (6) years after final payment of the
Bonds.
Section 4.15. Prevention of Bonds Becoming Arbitrage Bonds.
If at any time and from time to time the Issuer determines (upon
the advice of Bond Counsel) that it is necessary to restrict the
yield or limit the investment of money held by the Trustee here-
under in order to prevent the Bonds from becoming "arbitrage bonds"
within the meaning of Section 148(d) and Section 148(f) of the
Code, the Issuer shall (upon the advice of Bond Counsel) so
instruct the Trustee in writing, and the Trustee shall and hereby
agrees to take such action or actions as may be necessary to so
restrict or limit on such investments as set forth in, and in
accordance with, such instructions.
Notwithstanding the foregoing, the Trustee shall not be
required to take any action that in its judgment diminishes the
security of the Bondholders if the Trustee obtains an opinion of
nationally recognized bond counsel to the effect that failing to
take such action would not jeopardize the exclusion of interest on
the Bonds from gross income for federal income tax purposes.
Section 4.16. Prohibited Payments. To the extent necessary
to preserve the exclusion from gross income of the interest on the
Bonds for federal tax purposes, neither the Trustee nor the Issuer
shall make, or enter into any agreement to make, a Prohibited Pay-
ment. In determining whether any amount is a Prohibited Payment,
the Trustee and the Issuer may rely on an opinion of Bond Counsel.
Section 4.17. Change in Regulations. The covenants and
agreements contained in Sections 4. 14, 4.15 and 4.16 of this Inden-
ture are intended to assure compliance with the Code, and with
Section 1.148 -0 -9 of the Regulations (the "Regulations ") to the
extent made applicable by the Code. In the event the Regulations
are hereafter modified, or final regulations are promulgated in
substitution for such regulations, and such modifications or such
final Regulations modify or delete any elements of the covenants
contained in such Sections in the opinion of Bond Counsel delivered
to the Trustee, the Trustee and the Issuer shall be relieved of
their obligations to comply with such covenants to the extent of
such modification or deletion. In the event such modifications or
final regulations impose additional requirements which are
applicable to the Bonds in the opinion of Bond Counsel delivered to
the Trustee and the Issuer, the Trustee and the Issuer hereby agree
to comply with the provisions of the Regulations, as so modified,
or with such final regulations. Further, in the event that in the
opinion of Bond Counsel delivered to the Trustee and the Issuer,
39
failure to comply with all or a specified portion of such covenants
will not adversely affect the tax - exempt status of interest on the
Bonds, the Trustee and the Issuer shall be relieved of their
obligations to comply with such covenants to the extent set out in
such opinion of Bond Counsel.
y
,4
:r
i
40
ARTICLE V
GENERAL COVENANTS
Section 5.01. Payment of Principal and Interest. The Issuer
covenants that it shall promptly pay, but only from the sources
provided herein, the principal of, including any applicable redemp-
tion premiums, and interest on every Bond issued under this Inden-
ture at the place, on the dates and in the manner provided herein
and in the Bonds, according to the true intent and meaning thereof.
Section 5.02. Performance of Covenants; Authority of Issuer.
The Issuer covenants that it shall faithfully perform at all times
any and all covenants, undertakings, stipulations and provisions
contained in this Indenture, in any and every Bond executed,
authenticated and delivered hereunder and in all proceedings per-
taining thereto. The Issuer covenants and represents that it is
duly authorized under the constitution and laws of the State to
issue the Bonds authorized hereby and to execute this Indenture, to
convey the interests described in and conveyed hereby and to pledge
the revenues, receipts and other amounts hereby pledged in the
manner and to the extent herein set forth; that all action on its
part for the issuance of the Bonds and the execution and delivery
of this Indenture has been duly and effectively taken; and that the
Bonds are and will be valid and enforceable obligations of the
interest of the Bondholders in the Trust Estate or the revenues or
receipts therefrom.
Section 5.03. Instruments of Further Assurance. The Issuer
covenants that it will do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered, such inden-
tures supplemental hereto, and such further acts, instruments and
transfers as may be reasonably required for the better assuring,
transferring, conveying, pledging, assigning and confirming unto
the Trustee all and singular its interest in the property herein
described and the revenues, receipts and other amounts pledged
hereby to the payment of the principal of, premium, if any, and
interest on the Bonds. Any and all interest in property hereafter
acquired which is of any kind or nature herein provided to be and
become subject to the lien hereof shall and without any further
conveyance, assignment or act on the part of the Issuer or the
Trustee, become and be subject to the lien of this Indenture as
fully and completely as though specifically described herein, but
nothing in this sentence contained shall be deemed to modify or
change the obligations of the Issuer under this Section of this
Indenture. The Issuer covenants and agrees that, except as herein
otherwise expressly provided, it has not and will not sell, convey,
mortgage, encumber or otherwise dispose of any part of its interest
in the Trust Estate or the revenues or receipts therefrom.
41
M Aft
Section 5.04. Inspection of Project Books. The Issuer
covenants and agrees that all books and documents in its possession
relating to the Project shall at all times during regular business
hours be open to inspection and copying by such accountants or
other agents as the Trustee may from time to time reasonably
designate.
Section 5.05. No Modification of Security; Additional Indeb
tedness. The Issuer covenants that it will not, without the writ-
ten consent of the Trustee and notification to the Rating Agency,
alter, modify or cancel, or agree to consent to alter, modify or
cancel any agreement to which the Issuer is a party, or which has
been assigned to the Issuer, and which relates to or affects the
security for the Bonds. The Issuer further covenants not to incur
any additional indebtedness prior to or on a parity with the lien
of this Indenture.
Section 5.06. Damac(e Destruction or Condemnation. If, as a
result of fire or other casualty, the Project, or any material part
thereof, is damaged or destroyed, or the Project, or any material
part thereof, shall be condemned or acquired for public use, the
Trustee as mortgagee shall within thirty (30) days after receiving
actual notice of such damage, destruction or condemnation, and
after written notice to the Owner, FHA and the Issuer, shall take
the course of action set forth below:
(a) Repair and Restoration. If the Project can be
repaired or restored to substantially the same condition as it
existed prior to the event causing such damage or destruction,
or the effect of the condemnation can be relieved so that the
status of the Project will be restored to substantially the
same status as it existed prior to the event causing such
condemnation, without, in either case, jeopardizing repayment
of the principal of and interest on the Bonds, all in
accordance with the opinion of an expert or experts selected
as referred to below, then, upon receipt by the Trustee of the
written consent of the Issuer and FHA, the Owner may so repair
and restore the Project and the Owner may and /or the Trustee
shall apply the net proceeds of any insurance relating to such
damage, destruction or condemnation or any condemnation award
to the payment or the reimbursement of the costs of such
repair or restoration. Such reimbursement of the costs of
repair or restoration shall be paid to the Owner by the
Trustee periodically as construction progresses. The Trustee
may rely on the advice of architects, engineers, accountants,
financial consultants, attorneys and other experts reasonably
selected by it in the foregoing matters.
(b) Prep 1ption of Bonds. If the
above is not followed, the Trustee shall apply the Net Pro-
ceeds of any insurance relating to such damage, destruction or
condemnation to the reduction of indebtedness under the Note.
42
In sc:':h event the Trustee shall deposit such net proceeds in
the Bond Fund and apply such money to the redemption of Bonds
in accordance with Section 3.01 of this Indenture.
Section 5.07. Ownership of Note; Instruments of Further
Notice. The Trustee will defend its title to the Note for the
benefit of the Holders of the Bonds against the claims and demands
of all persons whomsoever and the Issuer and Trustee will do, exe-
cute, acknowledge, and deliver or cause to be done, executed,
acknowledged and delivered, such indentures supplemental hereto,
and such further acts, instruments and transfers as the Trustee may
reasonably require for the better assuring, transferring, con -
veying, pledging, assigning and confirming unto the Trustee all and
singular its interest in the property herein described and the
revenues, receipts and other amounts pledged hereby to the payment
of the principal of, and premium, if any, and interest on the
Bonds. Any and all interest in property hereafter acquired which
is of any kind or nature herein provided to be and become subject
to the lien hereof shall and without any further conveyance,
assignment or act on the part of the Issuer or the Trustee, become
and be subject to the lien of this Indenture as fully and com-
pletely as though specifically described herein, but nothing con-
tained in this sentence shall be deemed to modify or change the
obligations of the Issuer under this Section.
Section 5.08. Required Insurance. The Trustee shall require
that the Owner maintain all insurance policies required to be main-
tained pursuant to the Mortgage and by FHA. All such policies
shall include standard loss payable provisions naming the Trustee
and the commissioner of Housing and Urban Development as loss
payees as their interests appear and all proceeds of such insurance
shall be applied in accordance with the provisions of Section 5.06
hereof.
Section 5.09. Representations Warranties and Additional
Covenants of the Issuer. The Issuer hereby represents, warrants
and covenants as follows:
(a) The Issuer has been duly organized and is now validly
existing and in good standing as a body politic and corporate
and a political subdivision of the State under the laws of the
State, and the Issuer has all necessary power and authority to
execute and deliver this Indenture, to execute, deliver and
issue the Bonds and perform its duties and discharge its obli-
gations hereunder and thereunder. The revenues and assets
pledged for the repayment of the Bonds are and will be free
and clear of any pledge, lien or encumbrance prior to, or
equal with, the pledge created by this Indenture, and all
action on the part of the Issuer to that end has been duly and
validly taken. The Issuer shall at all times, to the extent
permitted by law, defend and protect the pledge created here-
under against any and all claims whatsoever.
43
ry. 1 ,
(b) The Issuer shall at all times do and perform all acts
and things permitted by law and necessary or desirable in
order to assure that the interest paid on the Bonds shall be
excluded from gross income for federal income tax purposes.
Section 5.10. Tax Covenants. The Issuer covenants to the
Holders of the Bonds that notwithstanding any other provisions
hereof or of any other instrument, it will neither make nor cause
to be made any investment or other use of the proceeds of the Bonds
that would cause the Bonds to be arbitrage be---.Is under Section
103(c) of the 1954 Code or Section 148 of the Coca and the Regula-
tions thereunder or otherwise cause the interest on the Bonds to
become included in gross income for federal income tax purposes.
This covenant shall extend throughout the term of the Bonds, to all
funds created hereunder and all money on deposit to the credit of
any such fund.
44
ARTICLE VI
DEFAULT PROVISIONS AND
REMEDIES OF TRUSTEE AND BONDHOLDERS
Section 6.01. Events of Default. Each of the following shall
be an "event of default" with respect to the Bonds (a "Default ")
under this Indenture:
(a) default in the due and punctual payment of any
interest on any Bond; or
(b) default in the due and punctual payment of the prin-
cipal of or premium, if any, on any Bond whether at the stated
maturity t..ereof, or on proceedings for redemption thereof, or
on the maturity thereof by declaration; or
(c) default, and the continuation thereof for a period of
30 days following notice to the Trustee, in the performance or
observance of any other of the covenants, agreements or con-
ditions on the part of the Issuer in this Indenture or in the
Bonds after written notice to the Issuer from the Trustee or
the registered owners of at least 25% of the Bond Obligation
at such time specifying such default and requiring the same to
be remedied.
The Trustee and the Issuer agree that, notwithstanding the
provisions hereof, no default under the terms of this Indenture
shall be construed as resulting in a default under the Mortgage
Note, the Mortgage or related Mortgage Loan Documents, unless such
event also constitutes a default thereunder.
Section 6.02. Acceleration, Other. Remedies Upon Default.
Upon the occurrence of a Default as provided in Section 6.01(x) and
(b) , (i) the Trustee may, and (ii) upon the written request of the
holders of not less than 25% of the Bond Obligation then outstand-
ing, the Trustee shall, or (iii) in the case of a Default under
Section 6.01(c) and one upon the written request of the holders of
100% of the Bond Obligation then Outstanding the Trustee shall, by
notice in writing delivered to the Issuer, declare the principal of
all Bonds then outstanding and the interest accrued thereon
immediately due and payable, and such principal and interest shall
thereupon become and be immediately due and payable.
If at any time after the Bonds shall have been so declared due
and payable, and before any judgment or decree for the payment of
the money due shall have been obtained or entered, the Issuer or
the owner shall pay to or deposit with the Trustee a sum sufficient
to pay all principal of the Bonds then due (other than solely by
reason of such declaration) and all unpaid installments of interest
(if any) upon all the Bonds then due, with interest at the rate
45
borne by the Bonds on such overdue principal and (to the extent
legally enforceable) on such overdue installments of interest, and
the reasonable expenses of the Trustee shall have been made good or
cured or adequate provisions shall have been made therefor, and all
other defaults hereunder either (i) have been made good or cured or
(ii) waived in writing by 100% of the owners of the Bond Obligation
then Outstanding, then and in every case, the Trustee on behalf of
the holders of all the Bonds shall rescind and annul such
declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default,
nor shall it impair or exhaust any right or power consequent
thereon.
Upon the happening and continuance of a Default, the Trustee
in its own name and as trustee of an express trust, on behalf and
for the benefit and protection of the holders of all Bonds with
respect to which such a Default has occurred, may also proceed to
protect and enforce any rights of the Trustee and, to the full
extent that the holders of such Bonds themselves might do, the
rights of such Bondholders under the laws of the State or under
this Indenture by such of the following remedies as the Trustee
shall deem most effectual to protect and enforce such rights:
(1) by mandamus or other suit, action or proceeding at
law or inequity, to enforce the payment of the principal of,
premium, if any, or interest on the Bonds then Outstanding, or
for the specific performance of any covenant or agreement
contained herein or in the Mortgage Note or the Mortgage, or
to require the Issuer to carry out any other covenant or
agreement with Bondholders and to perform its duties under the
Act;
(2) by pursuing any available remedies under the Mortgage
Note or the Mortgage;
(3) in connection with a Default under Section 6.01 by
realizing or causing to be realized through sale or otherwise
upon the security pledged hereunder; and
(4) by action or suit in equity, to enjoin any acts or
things that may be unlawful or in violation of the rights of
the holders of the Bonds.
No remedy by the terms of this Indenture conferred upon or
reserved to the Trustee or to the Bondholders is intended to be
exclusive of any other remedy, but each and every such remedy shall
be cumulative and shall be in addition to any other remedy given to
the Trustee or to the Bondholders hereunder or under the Mortgage
Note or the Mortgage, or now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right
or power accruing upon any Default shall impair any such right or
power or shall be construed to be a waiver of any such Default or
46
acquiescence therein, and every such right and power may be
exercised from time to time and as often as may be deemed expedi-
ent. No waiver of any Default hereunder, whether by the Trustee or
by the Bondholders, shall extend to or shall affect any subsequent
default or event of default or shall impair any rights or remedies
consequent thereto.
Section 6.03. Rights of Bondholders. If any event of default
shall have occurred and if requested in writing so to do by the
owners of not less than 25% of the Bond Obligation with respect to
which there is a default, and if indemnified as provided herein,
the Trustee shall be obliged to exercise one or more of the rights
and powers conferred by this Article as the Trustee, being advised
by counsel, shall deem most expedient in the interest of the
affected Bondholders. Subject to the provisions of Section 6.07,
the holders of a majority of the Bond Obligation with respect to
which an event of default has occurred shall have the right at any
time, by an instrument in writing executed and delivered to the
Trustee, to direct the time, method and place of conducting all
proceedings to be taken in connection with the enforcement of the
terms and conditions of this Indenture, or for the appointment of
a receiver or any other proceedings hereunder, in accordance with
the provisions of law and of this Indenture.
Section 6.04. Waiver by Issuer. Upon the occurrence of an
event of default, to the extent that such right may then lawfully
be waived, neither the Issuer nor anyone claiming through or under
it shall set up, claim or seek to take advantage of any appraisal,
valuation, stay, extension or redemption laws now or hereinafter in
force, in order to prevent or hinder the enforcement of the Inden-
ture; and the Issuer, for itself and all who may claim through or
under it, hereby waives, to the extent that it lawfully may do so,
the benefit of all such laws and all right of appraisement and
redemption to which it may be entitled under the laws of the State
and the United States.
Section 6.05. Application of Money. Any money received by
the Trustee in the event of a default pursuant to this Article
shall be applied in the following order, at the date or dates fixed
by the Trustee and, in the case of the distribution of such money
on account of principal, or premium, if any, or interest, upon
presentation of Bonds, and notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
(a) first, to the payment of all amounts then due on the
Bonds for principal, premium, if any, and interest, in respect
of which or for the benefit of which, money has been collected
(other than Bonds which have matured or otherwise become pay-
able prior to such event of default and money for the payment
of which is held in the Bond Fund), ratably without preference
or priority of any kind, according to the amounts due and
47
payable on such Bonds, for principal, premium, if any, and
interest respectively;
(b) next, to the payment of all amounts due the Trustee
under Section 7.06, any Extraordinary Mortgage Servicing Fees
and Expenses and any amounts owed to the Issuer;
(c) next, to the reimbursement of HUD or FHA for any
claims it may have for reimbursement for any payment made by
either HUD or FHA under the mortgage insurance; and
(d) next, any money remaining in any fund or account held
by the Trustee after payment of all amounts due pursuant to
(a), (b) and (c) above shall be paid to the Owner by the
Trustee.
Section 6.06. FHA Mortgage Insurance.
(a) The Trustee shall, at all times so long as the Mortgage
Loan is held by it hereunder, take all steps necessary to maintain
the Mortgage Insurance with respect to the Mortgage Loan. In the
event of a failure by the Owner to make the entire amount of any
payment due under the Mortgage Note or to perform any other
covenant under the provisions of the Mortgage, the Trustee shall
take all steps necessary not to impair the interests of the Bond-
holders and to obtain the Mortgage Insurance benefits in cash.
(b) Subject to the foregoing, upon such payment default or
performance default, the Trustee shall:
(i) immediately upon becoming entitled to do so, and not
later than the 30th day following the due date of the payment
under the Mortgage Note after a failure by the Owner to make
such payment:
(A) Subject to subsection (ii) below, give written
notice of Default and Intention and Election to Assign in
writing to HUD Central (with a copy to the applicable HUD
area office and the Rating Agency) which notice shall:
1. state that the Mortgage Loan was funded
with the proceeds of tax - exempt bonds rated by the
Rating Agency entitled to priority processing and
expedited processing procedures by FHA; and
2. provide a schedule of payments of Debt
Service with respect to the Bonds indicating funds
available to make such payments; and
3. request forms and instructions relating to
assignment of the Mortgage and shall attach to such
request a copy of the letter from HUD to the Rating
48
Agency, dated June 23, 1987, a copy of which is
attached hereto as Exhibit C; and
4. request payment in cash; and
(B) give notice, in writing, to the HUD area office
of the occurrence of the default entitling the Trustee to
claim Mortgage Insurance benefits.
(ii) within five days of receiving the forms and instruc-
tions described in (i)(A)(3) above, the Trustee shall submit
the required legal documentation to HUD's Office of 3eneral
Counsel;
(iii) as soon as possible, but in no event later than 30
days after recordation and assignment of the Mortgage, submit
fiscal documentation to HUD's Office of Finance and Accounting
and complete and submit any outstanding legal documents;
(iv) as soon as practicable after filing its election to
assign with FHA, but not later than 30 days thereafter (or any
shorter period required by FHA), the Trustee shall:
(A) assign the Mortgage, the Mortgage Note, and such
other necessary documents as shall be required by FHA
directly to FHA, giving all required notices,
(B) record the Assignment of the Mortgage Note to
FHA in accordance with instruction from HUD, and
(C) submit to HUD the Application for Mortgage
Insurance benefits and request payment of the mortgage
insurance benefits in cash.
(c) Subject to Subsection (a) above, the Trustee shall not
consent to any adjustments or revisions of the terms of the Mort-
gage Loan or the contract of FHA Mortgage Insurance, or take, or
fail to take, any action in the event of a default, which would
cause there to be insufficient money available for the scheduled
payment of principal and interest on the Bonds, or for the payment
of the Ordinary Trustee's Fees and Expenses and Ordinary Mortgage
Servicing Fees and Expenses, subject to Section 6.08. The Trustee
may not foreclose upon the Mortgage.
(d) Request confirmation from the Rating Agency of the rating
prior to pursuing a partial payment under Section 207.258(b) of the
FHA Regulations.
Section 6.07. Opportunity to Cure Default Under Mortgage
Note. Prior to the date the Mortgage Note and the Mortgage are
assigned to FHA pursuant to Section 6.06 hereof and prior to the
date of notice of redemption of the Bonds pursuant to Section 3.03
49
hereof, the Trustee may allow the Owner to cure any default under
the Mortgage Note and the Mortgage but only subject to the
following conditions and provided that during the period the
Trustee is allowing the Owner to cure, it shall continue to pursue
benefits under the FHA Mortgage Insurance:
(1) The Owner must pay to the Trustee any overdue pay-
ments of principal and interest on the Mortgage Note.
(2) The Owner must cure any non - monetary defaults under
the Mortgage, this Indenture and any related documents to the
satisfaction of the Trustee.
(3) If any money has been withdrawn from the Trust Estate
to be used in connection with the default, the Owner must:
(a) Redeposit under the Trust Estate an amount at
least equal to the amount withdrawn, or
(b) Provide the Trustee with cash or a letter of
credit in such form acceptable to the Trustee (and which
would not adversely affect the Rating Agency's rating on
the Bonds) that (i) provides a source for the payment of
the principal and interest on the Bonds and (ii) is in an
amount at least equal to the amount withdrawn from the
Trust Estate plus an amount equal to the interest that
would have been earned on the withdrawn amount had it
been invested at the rate of 8.1% per annum, and
(c) Provide to the Trustee an unqualified opinion of
nationally recognized bankruptcy counsel, satisfactory to
the Trustee (and approved by the Trustee's counsel) with
respect to the deposit specified in (a) or (b) above and
which opinion (i) if the deposit is in the form of a
letter of credit (which letter of credit must be issued
or confirmed by a bank whose unsecured long -term debt is
rated by the Rating Agency at least as high as the rating
then in effect on the Bonds) states that the letter of
credit is a valid and binding obligation of the bank
issuing the letter of credit and is enforceable against
the bank or (ii) if the deposit is in any other form
states that such amounts are exempt from claims of
creditors of the provider of such funds pursuant to 11
t, U.S.C. Sections 362(a) and 547(b).
(4) The Owner, must deposit with the Trustee an amount
equal to any loss of investment income resulting from the
failure to make any Mortgage Note payments when due and pro-
vide to the Trustee an opinion of counsel of the type des-
cribed in paragraph (3)(c) above with respect thereto.
50
(5) The Trustee must receive written confirmation from
FHA that the cure of any such default and the withdrawal of
any notice of assignment of the Mortgage Note and Mortgage
that had been given under Section 6.06 will not adversely
affect the FHA Mortgage Insurance on the Mortgage Note or be
construed as a waiver or reduction thereof.
(6) Cash flows, prepared by a qualified independent third
party, must be delivered to the Trustee which show that after
the action taken under (3) above, the timely payment of the
principal and interest on the Bonds and the Ordinary Trustee's
Fees and Expenses, and the Ordinary Mortgage Servicing Fees
and Expenses, as set forth in the original cash flows, will
not be adversely affected.
(7) The Trustee shall not allow the cure of the default
if it would adversely affect the Bondholders.
(8) The Owner shall pay all fees and expenses of the
Trustee, the Issuer and the Mortgage Servicer, extraordinary
or otherwise (and including, without limitation, any reason-
able legal fees and expenses) incurred in connection with such
default and shall fully fund all FHA project reserves and
reserves under this Indenture to their required levels
(including restoration of any interest income loss due to a
withdrawal from such reserve) and provide to the Trustee an
opinion of counsel of the type described in paragraph 3(c)
above with respect thereto.
(9) If the FHA project reserves are called upon to effect
a Mortgage cure, notify the Rating Agency.
The allowance by the Trustee of any cure upon a default under
the Mortgage Note will not affect any subsequent default pro -
ceedings with respect to the FHA Mortgage Insurance or any claims
thereunder.
Section 6.08. Prepayment Penalty Lockout Period Claim Pro -
cessing Procedures. The Issuer and the Trustee on behalf of the
Issuer certifies that, in the event of a default on the Mortgage
Loan during the term of a prepayment lock -out and /or penalty (i.e.,
prior to the date an which prepayments may be made with a premium
of one percent or less), the Trustee on behalf of the Issuer will
immediately after the Owner has been in default on the Mortgage
Note for 30 days:
(1) file a request in writing with HUD Central (with a
copy to the Rating Agency) for a three month extension of the
time to notify HUD of the Intention and Election to Assign
simultaneously with the filing of the notice of default with
the HUD area office. The Trustee shall include with the
notice of default to the HUD area office and with the
51
communication to HUD Central (i) a statement that the Project
is financed with rated bonds subject to priority processing
and expedited processing procedures as described in HUD's
letter to Standard & Poor's Corporation dated June 23, 1987,
which is an Exhibit hereto (attaching a copy of such letter),
(ii) a schedule of debt service payments on the Bonds,
indicating the funds available to make debt service payments
on the Bonds and (iii) a request for priority processing and
the forms and instructions necessary to assign the Mortgage
Loan to FHA;
(2) if HUD grants the requested (or a shorter) extension
of the notice filing deadline, cooperate with the Owner in
connection with a refinancing to cure the default and avert an
insurance claim, but simultaneously pursue full assignment of
the Mortgage Note pursuant to Section 6.06 hereof;
(3) report to HUD at least monthly on any progress in
arranging a refinancing;
(4) otherwise cooperate with HUD in taking reasonable
steps in accordance with prudent business practices to avoid
an insurance claim;
(5) submit legal documents to HUD Office of General Coun-
sel within five days of receipt of forms and instructions from
FHA;
(6) require any successors or assigns to certify in
writing that they agree to be bound by these conditions for
the remainder of the term of the prepayment lock -out and /or
premium;
(7) submit fiscal documents required by HUD office of
Finance and Accounting and any additional legal documents as
soon as possible but in no event later than 30 days after
recordation;
(8) notify HUD 30 days prior to any Payment Date on the
Bonds that insufficient moneys are available to make such
payment and request immediate payment of Mortgage Insurance
benefits in cash as specified in Subsection (a) above;
(9) if at any time during the extension period the
Trustee determines that a workout is infeasible, immediately
request HUD to make such a determination and submit Notice of
Intention and Election to Assign to HUD Central;
(10) obtain prior written confirmation of the rating from
the Rating Agency prior to consent to any workout agreement or
any adjustment or revision of the contract of Mortgage
Insurance;
52
(11) obtain written confirmation of the rating from the
Rating Agency prior to requesting an extension of initial
three month extension period;
(12) if request for further extension is not met, imme-
diately submit Notice of Intention and Election to Assign to
HUD Central; and
(13) as soon as possible after submitting Notice of
with
Intention and Election to Assign, o in accordance
Insurance
instructions from FHA, submit Application
Benefits and record assignment of Mortgage Note to FHA.
Section 6.09. Partial Assignment Option. In the event HUD
requests that the Trustee on behalf of the Trissuermayree to such
partial assign the Mortgage Loan to confirmation in writing of the
partial assignment only up
rating on the Bonds from the Rating Agency. The Trustee may
request or accept an extension of time to file a Notice of Inten-
tion and Election to Assign, other than pursuant to this Section
on the
6.09, only after a confirmation in writing e ent shallating Trustee
Bonds from the Rating Agency.
request an extension of time for filing the Notice of such Intention and
Election to Assign in excess of three months
period required by HUD) from the date of the notice of default.
Section 6.10. Remedies Vested in Trustee. All rights of
action, including the right to file proof of claims, under this
Indenture or under any of the Bonds may be B of ror d the the Trustee
without the possession of any of the
thereof in any trial or other proceedings relating thereto and any
such suit or proceeding instituted by the Trustee joining be brought
in its name as Trustee without the necessity of j g
tiffs or defendants any holders of the Bonds, and any recovery of
judgment shall be for the benefit as provided herein of the holders
of the Outstanding Bonds.
Section 6.11. Remedies of Bondholders. No holder of any Bond
shall have any wgfo then enforcement fith his Indentureooreforgthe
equity or at la ointment of a
execution of any trust hereunder or for the app
receiver or any other remedy hereunder, unless (a) a default shall
have occurred of which h the Tr default shall have been
become notified eevent pro-
have
default; herein;
default; (c) the holders of at least 25% of the Bond Obligation
with respect to which there is an event of default shall have made
written request to the 'Trustee and shall have offered reasonable
opportunity to the Trustee either to proceed to exercise t o r pros
hereinbefore granted or. to such holders shall have offered to the
ceeding in its own name; (d) the Trustee shall
Trustee indemnity as provided herein; and ( e ) powers
within 60 days thereafter fail or refuse to exercise the
53
hereinbefore granted, or to institute such action, suit or pro-
ceeding; it being understood and intended that no one or more
holders of the Bonds shall have any right in any manner whatsoever
to affect, disturb or prejudice the lien of this Indenture or the
rights of any other holders of Bonds or to obtain priority or pre-
ference over any other holders or to enforce any right under this
Indenture, and for the equal and ratable benefit of all holders of
Bonds with respect to which there is a default. Nothing contained
in this Indenture shall, however, affect or impair the right of any
Bondholder to enforce the payment of the principal of, the premium,
if any, and interest on any Bond at the maturity thereof or the
obligation of the Issuer to pay the principal of, premium, if any,
and interest on the Bonds issued hereunder to the respective
holders thereof, at the time, in the place, from the sources and in
the manner expressed in said Bonds.
Section 6.12. Termination of Proceedincfs. In case the
Trustee shall have proceeded to enforce any right under this Inden-
ture by the appointment of a receiver, by entry or otherwise, and
such proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely, then and in every
such case the Issuer and the Trustee shall be restored to their
former positions and rights hereunder with respect to the Trust
Estate herein conveyed, and all rights, remedies and powers of the
Trustee shall continue as if no such proceedings had been taken.
i Section 6.13. Waivers of Events of Default. The Trustee
shall waive any event of default hereunder and its consequences and
rescind any declaration of maturity of principal of and interest on
the Bonds upon the written request of the holders of 100% of the
Bond Obligation with respect to which there is a default; provided,
however, that there shall not be waived (a) any event of default in
principal of any Bonds at the date of maturity
the payment of the
specified therein, or upon proceedings for mandatory redemption,
(b) any default in the payment when due of the interest or premium
on any such Bonds, unless prior to such waiver or rescission all
arrears of interest, with interest (to the extent permitted by law)
at the rate borne by the Bonds in respect of which such default
shall have occurred on overdue installments of interest or all
arrears of payments of principal or premium, if any, when due
(whether at the stated maturity thereof or upon proceedings for
mandatory redemption) as the case may be, and all expenses of the
Trustee (including attorney's fees), in connection with such
default shall have been paid or provided for, and in case of any
such waiver or rescission, or in case any proceeding taken by the
Trustee on account of any such default shall have been discontinued
or abandoned or determined adversely, then and in every such case
the Issuer, the Trustee and the Bondholders shall be restored to
their former positions and rights hereunder, respectively, but no
such waiver or rescission shall extend to any subsequent or other
default, or impair any right consequent thereto.
54
M
i
Section 6.14, Notice to Bondholders if Default Occurs. Upon
the occurrence of an event of default, or if an event occurs which
could lead to a default with the passage of time and of which the
Trustee is required to take notice, the Trustee shall, within 30
days, give written notice thereof by first -class mail to the owners
of all Bonds then Outstanding, shown by the list of Bondholders
required to be kept at the office of the Trustee.
t,
J
x
hi
55
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Standard of Care. The Trustee shall, prior to
an event of default as defined in Section 6.01, and after the
curing of all such events which may have occurred, perform such
duties and only such duties as are specifically set forth in this
Indenture. The Trustee shall, during the existence of any such
event of default (which shall not have been cured) exercise such
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 under the circumstances in the conduct of his own
affairs. No implied covenants or obligations shall be read into
this Indenture against the Trustee.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own neglect or willful miscon-
duct, except that:
(a) prior to such an event of default hereunder, and
after the curing of all such events of default which may have
occurred:
(i) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Indenture; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon any certificate or
opinion furnished to the Trustee by the person or persons
authorized to furnish the same;
(b) at all times, regardless of whether or not any such
event of default shall exist:
(i) the Trustee shall not be liable for any error of
judgment made in good faith by an officer or employee of
the Trustee; and
(ii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of
not less than a majority (or such lesser or greater per-
centage as is specifically required or permitted by this
Indenture) in aggregate principal plus accrued but unpaid
interest on the outstanding Bonds relating to the time,
56
method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee under this Indenture.
Section 7.02. Reliance Upon Documents. Except as otherwise
provided in Section 7.01:
(a) the Trustee may rely upon the authenticity or truth
of the statements and the correctness of the opinions
expressed in, and shall be protected in acting upon any reso-
lution, certificate, statement, instrument, opinion, report,
notice, notarial seal, stamp, acknowledgment, verification,
request, consent, order, bond, or other paper or document of
the proper party or parties;
(b) any notice, request, direction, election, order or
demand of the Issuer mentioned herein shall be sufficiently
evidenced by an instrument signed in the name of the Issuer by
any officer of the Issuer (unless other evidence in respect
thereof be herein specifically prescribed), and any resolution
of the Issuer may be evidenced 'to the Trustee by a copy of
such resolution duly certified by the Clerk of the Issuer;
(c) any notice, request, direction, election, order or
demand of the Owner mentioned herein shall be sufficiently
evidenced by an instrument purporting to be signed in the name
of the Owner by any officer of the Owner (unless other evi-
dence in respect thereof be herein specifically prescribed),
and any resolution or certification of the Owner may be
evidenced to the Trustee by a copy of such resolution duly
certified by an officer of the Owner;
(d) in the administration of the trusts of this Inden-
ture, the Trustee may execute any of the trusts or powers
hereby granted directly or through its agents or attorneys,
and the Trustee may consult with counsel (who may be counsel
for the Issuer) and the opinion or advice of such counsel
shall be full and complete authorization and protection in
respect of any action taken or permitted by it hereunder in
good faith and in accordance with the opinion of such counsel;
(e) whenever in the administration of the trusts of this
Indenture, the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or
permitting any action hereunder, such matters (unless other
evidence in respect thereof be herein specifically pre-
scribed), may in the absence of negligence or willful miscon-
duct on the part of the Trustee, be deemed to be conclusively
proved and established by a certificate of an officer or
authorized agent of the Issuer or the Owner and such certif-
icate shall in the absence of bad faith on the part of the
Trustee be full warrant to the Trustee for any action taken or
57
permitted by it under the provisions of this Indenture, but in
its discretion the Trustee may in lieu thereof accept other
evidence of such matter or may require such further or addi-
tional evidence as it may deem reasonable;
(f) the recitals herein and in the Bonds (except the
Trustee's Certificate of Authentication thereon) shall be
taken as the statements of the Issuer and the Owner and shall
not be considered as made by or imposing any obligation or
liability upon the Trustee. The Trustee makes no representa-
tions as to the value or condition of the Trust Estate or any
part thereof, or as to the title of the Issuer or the Owner to
the Trust Estate, or as to the security of this Indenture, or
of the Bonds issued hereunder, and the Trustee shall incur no
liability or responsibility in respect of any of such matters;
(g) the Trustee shall not be personally liable for debts
contracted or liability for damages incurred in the management
or operation of the Trust Estate; and every provision of this
Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to
the provisions of this subsection (g);
(h) the Trustee shall not be required to ascertain or
inquire as to the performance or observance of any of the
covenants or agreements herein or in any contracts or securi-
ties assigned or conveyed to or pledged with the Trustee
hereunder, except for monetary defaults that are evident from
the funds and accounts held hereunder, the Trustee shall not
be required to take notice or be deemed to have notice or
actual knowledge of any default or event of default specified
in Section 6.01 hereof unless the Trustee shall receive from
the Issuer, or the Holder of any Bond written notice stating
that a default or event of default has occurred and specifying
the same, and in the absence of such notice the Trustee may
conclusively assume that there is not such default. Every
provision contained in this Indenture or related instruments
or in any such contract or security wherein the duty of the
Trustee depends on the occurrence and continuance of such
default shall be subject to the provisions of this subsection
(h); and
(i) the Trustee shall be under no duty to confirm or
verify any financial or other statements or reports or certif-
icates furnished pursuant to any provisions hereof, and shall
be under no other duty in respect of the same except to retain
the same in its files and permit the inspection of the same at
reasonable times by the Holder of any Bond.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
58
duties or in the exercise of any of its rights or powers. Nothing
in this Section 7.02 shall in any way reduce the duties and obliga-
tions of the Trustee with respect to the Note and Mortgage.
Section 7.03. Use of Proceeds. The Trustee shall not be
accountable for the use or application by the Issuer of any of the
Bonds authenticated or delivered hereunder, or of the proceeds of
the Bonds, except as provided in Articles IV and V hereof.
Section 7.04. Trustee May Hold Bonds. The Trustee and its
officers and directors may acquire and hold, or become the pledgee
of Bonds and otherwise deal with the Issuer and the Owner in the
manner and to the same extent and like effect as though it were not
Trustee hereunder.
Section 7.05. Trust Imposed. All money received by the
Trustee shall, until used or applied as herein provided, be held in
trust for the purposes for which they were received, but need not
be segregated from other funds except to the extent required by
law.
Section 7.06. Compensation of Trustee. The Trustee shall be
entitled to compensation for all services rendered by it, including
but not limited to its obligations under Section 4.14 hereof in the
execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the
Trustee to the extent funds are available therefor, in accordance
with Section 4.02 or 4.06 hereof. If any property, other than
cash, shall at any time by held by the Trustee subject to,this
Indenture, or any supplemental indenture, as. security for the
Bonds, the Trustee, if and to the extent authorized by a receiver-
ship, bankruptcy, or other court of competent jurisdiction or by
the instrument subjecting such property to the provisions of this
Indenture as such security for the Bonds, shall be entitled to make
advances for the purpose of preserving such property or of dis-
charging tax liens or other liens or encumbrances thereon. The
Trustee shall also be indemnified by the Owner for, and held harm-
less against, any loss, liability, expense or advance incurred or
made without gross negligence or willful misconduct on the part of
the Trustee, arising out of or in connection with the acceptance of
this trust, including the costs and expenses of defending itself
against any claim or liability in connection with the Project.
Payment to the Trustee for its services and reimbursement to the
Trustee for its expenses, disbursements, liabilities and advances,
shall be limited to the sources described in Section 4.05 hereof
and in the Loan Work -Out Agreement. The Issuer shall have no
liability for Trustee's fees, costs or expenses. Subject to the
provision of Section 7.09 hereof, the Trustee agrees that it shall
continue to perform its duties hereunder even in the event that
funds designated for payment of its fees or the fees of the Mort-
gage Servicer shall be insufficient for such purposes or in the
59
event that the owner fails to pay the ordinary Trustee's Fees and
Expenses, as required by the Loan work -Out Agreement.;
Section 7.07. Maintenance of Office. There shall at all
times be a Trustee hereunder which shall be a corporation organized:
and doing business under the laws of the United States of America
or any State thereof authorized under such laws to exercise corpor-
ate trust powers, having its principal office and place of business
in any state, having a combined capital and surplus of at least
Fifty Million Dollars ($50,000,000), and subject to supervision or
examination by Federal or state authority. The Trustee shall be an
If mortgagee and maintain that status. If such cor-
poration or association publishes reports of condition at least
annually, pursuant to law or to the requirements of any supervising
or examining authority above referred to, then for the purposes of
this Section the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and sur-
plus as set forth in its most recent report of conditions so pub-
lished. In case at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect spe-
cified in section 7.09 hereof.
Section 7.08. Successor Trustee. Any corporation or associa-
tion into which the Trustee may be converted or merged, or with
which it may be consolidated, or to which it may sell or transfer
its trust business and assets as a whole or substantially as a
whole, or any corporation or association resulting from any such
conversion, sale, merger, consolidation or transfer to which it is
a party shall, Aso facto, be and become successor Trustee here-
under and vested with all the title to the whole property or Trust
Estate and all the trusts, powers, discretions, immunities, privi-
leges and all other matters as was its predecessor, without the
execution or filing o � nyofi instruments rear further t,annything
conveyance on the p Y
herein to the contrary notwithstanding.
Section 7.09. Resignation by the Trustee. The Trustee and
any successor Trustee may at any time resign from the trusts hereby
created by giving written notice to the Issuer and to the owner,
and by giving notice by registered or certified mail to each
registered owner of the Bonds then Outstanding. Such notice to the
Issuer and to the Owner may be served personally or sent by
registered mail. The Trustee shall not resign until a successor
Trustee has been appointed. If no successor Trustee shall have
been appointed and have accepted appointment within thirty (30)
days following delivery of all required notices of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
Section 7.10. Removal of the Trustee. The Trustee may be
removed at any time, by an instrument or concurrent instruments in
60
writing delivered to the Trustee, the Issuer and the Owner, and
signed by the owners of a majority in aggregate principal plus
accrued but unpaid interest on the Outstanding Bonds.
Section 7.11. Appointment of Successor Trustee by the Bond-
holders; Temporary Trustee. In case the Trustee hereunder shall
resign or be removed, or be dissolved, or shall be in course of
dissolution or liquidation, or otherwise become incapable of acting
hereunder, or in case it shall be taken under the control of any
public officer or officers, or of a receiver appointed by a court,
a successor may be appointed by the owners of a majority in aggre-
gate principal plus accrued but unpaid interest on the outstanding
Bonds, by an instrument or concurrent instruments in writing signed
by such Holders, or by their duly authorized attorneys; provided,
nevertheless, that in case of vacancy the Issuer may appoint a
temporary Trustee to fill such vacancy until a successor Trustee
shall be appointed by such Bondholders in the manner above pro-
vided; and any such temporary Trustee so appointed by the Issuer
shall immediately and without further act be superseded by the
Trustee so appointed by such Bondholders. Every such Trustee
appointed pursuant to the provisions of this Section shall be a
trust company or bank organized under the laws of the United States
of America or any state thereof and which is in good standing,
within or outside the State, having a reported capital and surplus
of not less than $50,000,000 and at least $50,000,000 in trust
assets under management if there be such an institution willing,
qualified and able to accept the trust upon reasonable or customary
terms and qualified to act as a HUD approved FHA mortgagee. The
Rating Agency shall be notified if a successor Trustee is
appointed.
Section 1.12. Concerning Any Successor Trustee. Every suc-
cessor Trustee appointed hereunder shall execute, acknowledge and
deliver to its predecessor and also to the Issuer an instrument in
writing accepting such appointment hereunder and accepting assign-
ment of the Mortgage to it as mortgagee, and thereupon such succes-
sor, without any further act, deed or conveyance, shall become
fully vested with all the estates, properties, rights, powers,
trusts, duties and obligations of its predecessor; but such prede-
cessor shall, nevertheless, on the written request of the Issuer or
the owner, or of its successor, and upon payment of all amounts due
such predecessor, execute and deliver such instruments as may be
appropriate to transfer to such successor Trustee all the estates,
properties, rights, powers and trusts of such predecessor
hereunder; and every predecessor Trustee shall deliver all securi-
ties and money held by it as Trustee hereunder to its successor.
Should any instrument in writing from the Issuer be required by a
successor Trustee for more fully and certainly vesting in such
successor the estate, rights, powers and duties hereby vested or
intended to be vested in the predecessor, any and all such instru-
ments in writing shall, on request, be executed, acknowledged and
delivered by the Issuer. The resignation of any Trustee and the
61
instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all other instruments provided
for in this Article, shall be filed and /or recorded by the succes-
sor Trustee in each recording office where the Indenture shall have
been filed and /or recorded.
Section 7.13. Successor Trustee as Trustee Paying Agent and
Bond Registrar. In the event of a change in the office of Trustee,
the predecessor Trustee which shall have resigned or shall have
been removed shall cease to be trustee and Paying Agent on the
Bonds and Bond Registrar, and the successor Trustee shall become
such Trustee, Paying Agent and Registrar upon giving notice to and
obtaining consent of the Rating Agency.
Section 7.14. Servicing the Mortgage Loan, Servicing
Agreement. There shall be engaged an FHA - approved mortgage banking
company or financial institution to service the Mortgage Loan.
The Trustee is authorized to execute a Mortgage Servicing
Agreement in substantially the form heretofore furnished to the
Trustee providing for the servicing of the Mortgage by the Mortgage
Servicer. Such Mortgage Servicing Agreement shall require the
Mortgage Servicer to transfer money received by it in respect of
the Note to the Trustee within three (3) business days provided
that payments under the Mortgage Servicing Agreement shall be pay-
able as provided herein. The Mortgage Servicing Agreement shall
require that Note payments shall be deposited in fully insured FDIC
accounts prior to such transfer. In the event such Mortgage Ser-
vicing Agreement is terminated, the Trustee shall service the Mort-
gage Loan itself until it can engage a qualified successor Mortgage
Servicer to service the Mortgage Loan in accordance with the provi-
sions of this Section and shall give the Rating Agency immediate
notice of such fact.
The Trustee covenants and agrees that the Mortgage Loan will
be serviced in accordance with all applicable provisions of the
National Housing Act of 1934, as amended, and all applicable rules
and regulations thereunder. The Trustee further covenants and
agrees that it- shall at all times do and perform all acts permitted
by law and necessary in order to assure that the Mortgage Insurance
shall remain in full force and effect for as long as the Bonds are
Outstanding. Such acts include without limitation assuring the
timely payment of the Mortgage Insurance premium and of the casu-
alty insurance premium, that the annual inspection required by FHA
is accomplished and that FHA is given timely notice of any default
under the Mortgage. The Trustee also covenants and agrees that it
shall at all times perform all acts required herein in a timely
manner to protect the Bondholders. If requested, the Trustee shall
annually provide the Owner a statement of account indicating all
interest and principal payments credited to the owner on the Note.
The Trustee shall not release any funds or letter of credit held by
it as FHA mortgagee without written approval from HUD.
62
The Trustee and any successor trustees appointed hereunder
represent and warrant that they are FHA approved mortgagees and
will continue to maintain that status at all times, and that they
are experienced in administering trusts similar to those of the
Trust Estate.
Section 7.15. Co- Trustee or Separate Trustee. It is the pur-
pose of this Indenture that there shall be no violation of any law
of any jurisdiction (including particularly the laws of the State)
denying or restricting the right of barking corporations or associ-
ations to transact business as Trustee in such jurisdiction. It is
recognized that in case of litigation under this Indenture or the
Loan Work -Out Agreement, and in particular in case of the
enforcement thereof on Default, or in case the Trustee deems that
by reason of any present or future law of any jurisdiction it may
not exercise any of the powers, rights or remedies herein or
therein granted to the Trustee or hold title to the properties, in
trust, as herein granted, or take any other action which may be
desirable or necessary in connection therewith, the Issuer and the
Trustee shall have power to appoint an institution or individual as
a co- trustee or separate trustee, and upon the request of the
Trustee or of the Holders of at least ten percent (100) of the
aggregate principal amount of the Bonds at the time Outstanding the
Issuer shall for such purpose join with the Trustee in the
execution, delivery and performance of all instruments and
agreements necessary or proper to appoint such institution or
individual to act as co- trustee jointly with the Trustee or as a
separate trustee of all or any part of the Trust Estate, and to
vest in such person or institution, in such capacity, such title to
the Trust Estate, or any part thereof, and such rights, powers,
duties, trusts or obligations as the Issuer and the Trustee may
consider necessary or desirable, subject to the remaining
provisions of this Section.
If the Issuer shall not have made such appointment within
thirty (30) days after the receipt by it of a request so to do, or
in case an event of default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment.
The Trustee, the Issuer and the owner shall execute, acknow-
ledge and deliver all such instruments as may be required by any
such co- trustee or separate trustee for more fully confirming such
title, rights, powers, trusts, duties and obligations to such
co- trustee or separate trustee.
Every co- trustee or separate trustee shall, to the extent per-
mitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(a) The Bonds shall be authenticated and delivered, and
all rights, powers, trusts, duties and obligations by this
Indenture conferred upon the Trustee in respect of the
63
custody, control or management of money, papers, securities
and other personal property shall be exercised solely by the
Trustee;
(b) all rights, powers, trusts, duties and obligations
conferred or imposed upon the Trustee shall be conferred or
imposed upon or exercised or performed by the Trustee, or by
the Trustee and such co- trustee, or separate trustee jointly,
as shall be provided in the instrument appointing such
co- trustee or separate trustee, except to the extent that
under the law of any jurisdiction in which any particular act
or acts are to be performed the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event
such act or acts shall be performed by such co- trustee or
separate trustee;
(c) any request in writing by the Trustee to any
co- trustee or separate trustee to take or to refrain from
taking any action hereunder shall be sufficient warrant for
the taking or the refraining from taking of such action by
such co- trustee or separate trustee;
(d) any co- trustee or separate trustee to the extent
permitted by law shall delegate to the Trustee the exercise of
any right, power, trust, duty or obligation, discretionary or
otherwise;
(e) the Trustee at any time by an instrument in writing
with the concurrence of the Issuer evidenced by a certified
resolution may accept the resignation of or remove any
co- trustee or separate trustee appointed under this Section
and in case an event of default shall have occurred and be
continuing, the Trustee shall have power to accept the resig-
nation of or remove any such co- trustee or separate trustee
without the concurrence of the Issuer, and upon the request of
the Trustee, the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation
or removal. A successor to any co- trustee or separate trustee
so resigned or removed may be appointed in the manner provided
in this Section;
(f) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
(g) any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing executed by
the Bond Holders and delivered to the Trustee shall be deemed
to have been delivered to each such co- trustee or separate
trustee; and
64
(h) any money, papers, securities or other items of per-
sonal property received by any such co- trustee or separate
trustee hereunder shall forthwith, so far as may be permitted
by law, be turned over to the Trustee.
Upon the acceptance in writing of such appointment, any such
co- trustee or separate trustee shall be vested with such title to
the Trust Estate or any part thereof, and with such rights, powers,
duties, trusts or obligations as shall be specified in the instru-
ment of appointment jointly with the Trustee (except insofar as
local law makes it necessary for any such co- trustee or separate
trustee to act alone) subject to all the terms of this Indenture.
Every such acceptance shall be filed with the Trustee and the
Issuer.
In case any co- trustee or separate trustee shall die, become
incapable of acting, resign or be removed, the title to the Trust
Estate and all rights, powers, trusts, duties and obligations of
said co- trustee or separate trustee shall, so far as permitted by
law, vest in and be exercised by the Trustee unless and until a
successor co- trustee or separate trustee shall be appointed in the
manner herein provided.
The total compensation of the Trustee and co- trustee or separ-
ate trustee shall be as provided in (and may not exceed the amount
provided in) Sections 7.06 and 4.06(a) hereof.
Section 7.16. Additional Security. It is hereby expressly
provided that the Trustee shall have a set -off against any -oney in
its custody from any funds created by this instrument, except money
in the Rebate Fund to pay interest on or principal of any Bonds
secured hereby, if for any reason, the Pledged Revenues and other
income pledged hereunder are insufficient at any time to service
the Bonds.
Section 7.17. Representations by Trustee. The Trustee hereby
represents and warrants that as of the date of execution of this
Indenture:
(a) It is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organiza-
tion and has the power and authority to enter into and perform
its obligations under this Indenture;
(b) it was an FHA approved mortgagee at the time of ini-
tial endorsement of the Mortgage for FHA mortgage insurance
and is currently an FHA approved mortgagee; and
(c) this Indenture has been duly authorized, executed and
delivered by it.
65
a
Section 7.18. Appointment Resignation or Removal of Pavina
Anent Successors. The Trustee is hereby designated and, by
executing this Indenture, agrees to act as paying agent for and in
respect to the Bonds.
The Issuer from time to time may appoint one or more addi-
tional Paying Agents and, in the event of the resignation or
removal of any Paying Agent, successor Paying Agents by an instru-
ment signed by an officer of the Issuer and delivered to such
Paying Agent and the Trustee. Any such additional Paying Agent or
successor Paying Agent shall be a national banking association,
trust company or bank which is authorized by law to perform all the
duties imposed upon a Paying Agent by this Indenture and has a com-
bined capital and surplus of at least $25,000,000. Any such addi-
tional Paying Agent or successor Paying Agent shall signify its
acceptance of the duties and obligations imposed upon it by this
Indenture by executing and delivering to the Issuer and the Trustee
a written acceptance thereof.
The Paying Agents shall enjoy the same protective provisions
in the performance of their duties hereunder as are specified in
Section 7.01 hereof with respect to the Trustee, insofar as such
provisions may be applicable.
Any bank or trust company with or into which any Paying Agent
other than the Trustee may be merged or consolidated, or to which
the assets and business of such Paying Agent may be sold, shall be
deemed the successor of such paying Agent for the purposes of this
Indenture.
The principal office of each Paying Agent is hereby designated
as the respective office or agency of the Issuer for the payment of
the principal of, premium, if any, and the interest on the Bonds.
Any additional Paying Agent shall hold all money received by it for
the payment of the principal of, premium, if any, and interest on
the Bonds in trust for the Holders of such Bonds. Any additional
Paying Agent, and its directors, officers, employees or agents, may
in good faith buy, sell, own, hold and deal in any of the Bonds,
and may join in any action which any Bondholder may be entitled to
take with like effect as if such association, bank or trust company
were not such Paying Agent.
A Paying Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least
thirty (30) days written notice to the Issuer and the Trustee. A
Paying Agent may be removed at any time on at least thirty (30)
days prior written notice by an instrument signed by the Issuer and
delivered to such Paying Agent and the Trustee.
In the event of the resignation or removal of a Paying Agent
such Paying Agent shall pay over, assign and deliver any money held
66
by it as paying Agent to its successor, or if there be no succes-
sor, to the Trustee.
Section 7.19. Rep_ orts• The Trustee shall provide to the
Rating Agency notice of a default on the Note that necessitates a
filing of a . claim r FHA serving ns trustee hereunder notice
and such ninformae
in the institution uest from time to time to maintain the
tion as it may reasonably req
rating on the Bonds. The Trustee shall provide the Rating Agency
with:
1. all information the Rating Agency reasonably requests,
2. notification of a partial Mortgage payment,
3. notification of the use of any FHA project reserves to
make a principal or interest payment on the Bonds. at all
Section 7.20. Audit and Records. The Trustee will
er books
times maintain an accurate system of accounts and keep p p
of records and account relating to this Indenture. The audit shall by the
f the deposits
include a schedule oro a e
isionsof this Indenture. Funds signed
Trustee pursuant to the p
copy of the audit with financial statements shall be lenivereear.
the Trustee within 120 the days after the
shalld furnish copies calendar ysuch
Upon written request,
audit to any Registered Holder, r ting agenciespresentative of such
Holder, and to the applicable
Section 7.21. Special Procedures for Bonds Re istered to DTC.
t of DTC or its
In the case of any Bonds register o the m e maximum extent possible
nominee, the Trustee shall comply,
a Letter of Representation uto, be with
executed gbyrandn among DTC, the
a Lett
Trustee and the Issuer.
67
�
ARTICLE VIII
SUPPLEMENTAL INDENTURES AND
AMENDMENTS OF CERTAIN DOCUMENTS
Section 8.01. Supplemental Indentures Not Requiring Consent
of Bondholders, The Issuer and the Trustee may without the consent
of, or notice to, any of the Bond Holders enter into an indenture
or indentures supplemental to this Indenture as shall not be incon-
sistent with the terms and provisions hereof or materially adverse
to the Holders of the Bonds for any one or more of the following
purposes:
(a) to cure any ambiguity or formal defect or omission
herein;
(b) to change or modify any provision hereof so as to
harmonize to the maximum extent practicable the provisions
hereof with existing rules, regulations and procedures of FHA;
(c) to grant to or confer upon the Trustee for the bene-
fit of the Bond Holders any additional rights, remedies,
powers or authority that may lawfully be granted to or con-
ferred upon the Bond Holders or the Trustee or either of them;
(d) to subject to the lien and pledge of this Indenture
additional revenues, properties or collateral;
(e) to modify, amend or supplement this Indenture or any
indenture supplemental hereto or the Loan Work -Out Agreement,
the Note or the Mortgage in such manner as to permit the qual-
ification hereof and thereof under the Trust Indenture Act of
1939 or any similar Federal statute hereafter in effect or
under any state Blue Sky Law;
(f) in connection with any other change in this Indenture
which, in the judgment of the Trustee, is not to the prejudice
of the Trustee or the Bondholders; or
(g) to modify or amend the Indenture as necessary to
secure a rating on the Bonds acceptable to the Issuer, except
no change may be made to the maturity, interest rate or amount
of the Bonds.
Section 8.02. Supplemental Indentures Requiring Consent of
Bondholders. The Holders of not less than two - thirds of the Bond
Obligation then Outstanding shall have the right, from time to
time, anything contained in this Indenture to the contrary notwith-
standing, to consent to and approve the execution by the Issuer and
the l shallr be e deemed uCnecessary indenture
and desirable sby supplemental hereto as
the Issuer for the
68
purpose of modifying, altering, amending, adding to or rescinding,
in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing in this Section con-
tained shall permit, or be construed as permitting without the
consent of the Holders of all of the Bonds then Outstanding, (a) an
extension of the stated maturity or reduction in the principal
amount or reduction in the rate of interest on or extension of the
time of payment, of interest on, or reduction of any premium
payable on the redemption of, any Bonds, or a reduction in the
Owner's obligation on the Note, or (b) the creation of any lien
prior to or on a parity with the lien of this Indenture, or (c) a
reduction in the aforesaid aggregate principal amount of Bonds the
Holders of which are required to consent to any such supplemental
indenture, or (d) the modification of the rights, duties or immuni-
ties of the Trustee, without the written consent of the Trustee, or
(e) a privilege or priority of any Bond over any other Bonds or (f)
any action that results in the interest on the Bonds becoming
included in gross income for federal income tax purposes.
If at any time the issuer shall request the Trustee to enter
into any such supplemental indenture for any of the purposes of
this Section, the Trustee shall, upon being satisfactorily indemni-
fied with respect to expenses, cause notice of the proposed execu-
tion of such supplemental Indenture to be published or mailed,
postage prepaid, to all registered Bond holders. Such notice shall
briefly set forth the nature of the proposed supplemental indenture
and shall state that copies thereof are on file at the corporate
trust office of the Trustee for inspection by all Bondholders. If,
within 60 days or such longer period as shall be prescribed by the
Issuer following the mailing of such notice, the Holders of not
less than two- thirds in or in the case of certain amendments, all
of the aggregate principal plus accrued but unpaid interest on the
Bonds Outstanding at the time of the execution of any such
supplemental indenture shall have consented to and approved the
execution thereof as herein provided, no Holder of any Bond shall
a have any right to object to any of the terms and provisions
contained therein, or the operation thereof, or in any manner to
question the propriety of the execution thereof, or to enjoin or
restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof. Upon the
execution of any such supplemental indenture as in this Section
permitted and provided, this Indenture shall, be and be deemed to be
modified and amended in accordance therewith. The Trustee may rely
upon an opinion of counsel as conclusive evidence that execution
and delivery of a supplemental indenture has been effected in
compliance with the provisions of this Article.
Anything herein to the contrary notwithstanding, a supplemen-
tal indenture under this Article which affects any rights of the
Owner shall not become effective unless and until the Owner shall
have expressly consented in writing to the execution and delivery
of such supplemental indenture. In this regard, the Trustee shall
69
cause notice of the proposed execution and delivery of any such
supplemental indenture to be mailed by certified or registered mail
to the Owner or the Owner's attorney at least 15 days prior to the
proposed date of execution and delivery of any supplemental
indenture.
Section 8.03. Amendment by Unanimous Consent. Notwith-
standing any other provision of this Indenture, the Issuer and the
Trustee may consent to any supplemental indenture or to any amend-
ment, change or modification of the Loan Work -Out Agreement, the
Note, or the Mortgage upon receipt of the consent of the holders of
all Bonds then Outstanding or as permitted in Section 8.04. Except
for redemption of the mortgage amount at final endorsement, 100%
bondholder approval is required to reduce the mortgage obligations
on the Note.
Section 8.04. Amendment of Certain Documents. The Issuer and
the Trustee may, with the approval of FHA, make or consent to any
amendment, change or modification of the Note, the Mortgage, and
the Loan Work -Out Agreement, except to extend the Initial Payment
or maturity date thereof, for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective or incon-
sistent provision ccntained therein, or in regard to matters or
questions arising under said documents, as the Issuer and the
Trustee may deem necessary or desirable and not inconsistent with
said documents or this Indenture and which shall not adversely
affect the interests of the Holders of the Bonds.
The Trustee agrees to cooperate with the Owner in obtaining
FHA's consent to a transfer of physical assets and to execute any
documents required by FHA to effect any such transfer. The Issuer
and the Trustee also agree to consent to encumbrance(s) of all or
any portion(s) of the Project by mortgage, security agreement or
otherwise, where such encumbrance is junior to the lien of the
Mortgage, subject only to the consent of FHA to any such encum-
brance. In addition, the Trustee shall cooperate with the owner in
its attempts to increase the principal amount of the Note, and the
granting of any easements, partial release of the Mortgage, the
transfer of any other property rights or the making of any cove-
nants or dedications which FHA approves.
With the approval of FHA and the Rating Agency, the Owner may
request and the Trustee shall consent to an amendment to the Note
and Mortgage to reduce the debt service payable thereunder to an
amount sufficient to pay the scheduled debt service on the Bonds
only in the event that the Project fails to produce sufficient
revenues to make the regular debt service payment on the Note.
This amendment shall be made only upon the Owner demonstrating to
the satisfaction of FHA, the Rating Agency and. the Trustee that the
Project will generate sufficient revenues to support the scheduled
debt service on the Bonds.
70
W
on
Except as provided herein, neither
the Issuer nor the Trustee
amendment, change or modification of the Note
shall consent to any
or the Mortgage without the written
adverse effect on the Bo of not less n than one hundred nds),
approval or consent of the Holders igation outstanding-
percent ercent in aggregate amount of the Bond obl
71
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.01. Discharge of Lien. If the Issuer shall pay or
cause to be paid to the Holders of the Bonds the principal,
interest and premium, if any, to become due thereon at the times
and in the manner stipulated therein and herein, and shall have
paid or caused to be paid all fees and expenses of the Trustee, the
Mortgage Servicer and each paying agent, and if the Issuer shall
keep, perform and observe all and singular the covenants and
promises in the Bonds and in this Indenture expressed as to be
kept, performed and observed by it or on its part, then these pre-
sents and the estates and rights hereby granted shall cease, deter-
mine and be void, and thereupon the Trustee shall cancel and dis-
charge the Note, the Mortgage and the lien of this Indenture and
execute and deliver to the Issuer such instruments in writing as
shall be requisite to satisfy the lien thereof, and reconvey to the
Issuer the estate hereby conveyed, and assign and deliver to the
Issuer any interest in property at the time subject to the lien of
this Indenture which may then be in its possession, except amounts
held by the Trustee for the payment of principal of, interest and
premium, if any, on the Bonds.
All Outstanding Bonds of any series shall prior to the
maturity or redemption date thereof be deemed to have been paid
within the meaning and with the effect expressed in the first para-
graph of this section if, under circumstances which do not render
interest on the Bonds subject to federal income taxation, the
following conditions shall have been fulfilled: (a) in ca.:•a any of
the Bonds are to be redeemed on any date prior to their maturity,
the Issuer shall have given to the Bondholders and the Trustee in
form satisfactory to it irrevocable notice of redemption of the
Bonds on said date; and (b) there shall be on deposit with the
Trustee either money or direct obligations of the United States of
America in an amount, together with anticipated earnings thereon as
provided in the related investment agreement which will be suffi-
cient to pay, when due, the principal or redemption price, if
applicable, and interest due and to become due on the Bonds on the
redemption date or maturity date thereof, as the case may be.
72
.A,
ARTICLE X
MISCELLANEOUS
Section 10.01. Consents and Other Instruments of Bondholders.
Any consent, request, direction, approval, waiver, objection,
appointment or other instrument required by this Indenture to be
signed and executed by the Bond Holders may be signed and executed
in any number of concurrent writings of similar tenor and may be
signed or executed by such Bond Holders in person or by agent
appointed in writing. Proof of the execution of any such instru-
ment, if made in the following manner, shall be sufficient for any
of the purposes of this Indenture, and shall be conclusive in favor
of the Trustee with regard to any action taken under such instru-
ment, namely:
(a) The fact and date of the execution by any person of
any such instrument may be proved by the affidavit of a wit-
ness of such execution or by the certificate of any notary
public or other officer of any jurisdiction, authorized by the
laws thereof to take acknowledgments of deeds, certifying that
the person signing such instrument acknowledged to him the
execution thereof. Where such execution is by an officer of
a corporation or association or a member of a partnership on
behalf of such corporation, association or partnership such
affidavit or certificate shall also constitute sufficient
proof of his authority;
(b) the ownership of registered Bonds shall be proved by
the bond register;
(c) any request, consent or vote of the Holder of any
Bond shall bind every future holder of the same Bond and the
holder of every Bond issued in exchange thereof or in lieu
thereof, in respect of anything done or permitted to be done
by the Trustee or the Issuer in pursuance of such request,
consent or vote; and
(d) in determining whether the Holders of the requisite
aggregate principal plus accrued but unpaid interest on the
Bonds have concurred in any demand, request, direction, con-
sent or waiver under this Indenture, Bonds which are owned by
the Issuer or the Owner or by any person directly or indi-
rectly controlling or controlled by or under direct or
indirect common control with the Issuer or the Owner shall be
disregarded and deemed not to be Outstanding for the purpose
of determining whether the Trustee shall be protected in
relying on any such demand, request, direction, consent or
waiver. Only Bonds which the Trustee knows to be so owned
shall be disregarded. Bonds so owned which have been pledged
in good faith may be regarded as Outstanding for the purposes
73
of this Section if the pledgee shall establish to the satis-
faction of the Trustee the pledgee's right to vote such Bonds.
In case of a dispute as to such right, any decision by the
Trustee taken upon the advice of counsel shall be full protec-
tion to the Trustee.
Section 10.02. Limitation of Rights. With the exception of
rights herein expressly conferred, nothing expressed or to be
implied from this Indenture or the Bonds is intended or shall be
construed to give to any person other than the Parties hereto, the
Owner and the Holders of the Bonds, any legal or equitable right,
remedy or claim under or in respect to this Indenture or any
covenants, conditions and provisions hereof.
Section 10.03. Construction of Conflicts, . Not-
withstanding anything provided herein, or in any of the documents
referred to herein, in the event that any contracts or other docu-
ments executed by the Owner or any other arrangements agreed to by
the Owner in order to finance the Mortgage with bonds the interest
on which is excluded from gross income for federal income tax pur-
poses under Section 103 of the 1954 Code and Section 103(a) of the
Code are inconsistent with the Loan Documents then the Loan Docu-
ments shall be controlling in all respects. If any provision of
this Indenture shall be held or deemed to be, or shall in fact be
inoperative or unenforceable as applied in any particular case in
any jurisdiction or jurisdictions or in all jurisdictions, or in
all cases because it conflicts with any other provision or provi-
sions hereof or any constitution, statute, rule of law or public
policy, or for any other reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses
or sections in this Indenture contained, shall not affect the
remaining portions of this Indenture, or any part thereof.
Section 10.04. Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be
deemed given when mailed by certified or registered mail, postage
prepaid, or dispatched by telegram, addressed, unless notice of a
different address is given, as provided in the Loan Work -Out
Agreement.
Section 10.05. Trustee as_Pavina Agent and Bond Registrar.
The Trustee is hereby designated and agrees to act as paying agent
and Registrar for and in respect to the Bonds.
Section 10.06. Payments Due on Saturdays, Sundays and Holi-
days. In any case where the date of maturity of interest on or
principal of the Bonds, or the date fixed for redemption of any
14
Bonds, shall be a Saturday, Sunday, legal holiday or a day on which
the Trustee is authorized by law to close and is closed, then pay-
ment of interest or principal need not be made on such date but may
be made on the next succeeding business day with the same force and
effect as if made on the date of maturity or the date fixed for
redemption, and no interest shall accrue for the period after such
date providing that payment is made on such next succeeding
business day.
Section 10.07. Counterparts. This Indenture may be executed
in several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
Section 10.08. Laws Governing Indenture and Situs and Admini-
stration of Trust. The effect and meanings of this Indenture and
the rights of all parties hereunder shall be governed by, and con-
strued according to, the laws of the State.
Section 10.09. No Recourse. No recourse under or upon any
obligation, covenant or agreement contained in the Indenture or in
any Bond, or under any judgment obtained against the Issuer, or the
enforcement of any assessment, or any legal or equitable pro-
ceedings by virtue of any constitution or statute or otherwise, or
under any circumstances under or independent of the Indenture,
shall be had against any member, commissioner, officer or employee,
as such, past, present or future of the Issuer, either directly or
through the Issuer or otherwise, for the payment for or to the
Issuer or any receiver thereof, or for or of the Holder of any Bond
issued thereunder, or otherwise, of any sum that may be due and
unpaid by the Issuer upon any such Bond. Any and all personal
liability of every nature whether at common law or in equity or by
statute or by constitution or otherwise of any such member, com-
missioner, officer or employee, as such, to respond by reason of
any act of omission on his /her part or otherwise, for the payment
for or to the Holder of any Bond issued thereunder or otherwise of
any sum that may remain due and unpaid upon the Bond thereby
secured or any of them is, by the acceptance hereof, expressly
waived and released as a condition of and in consideration for the
execution of the Indenture and the issuance of the Bonds.
Section 10.10. Role of Issuer. The Issuer shall not be
required to take any action or perform any specific act unless spe-
cifically requested to do so by the Trustee or other appropriate
party. In addition, the Issuer shall have no obligation to review,
control, or oversee the activities of the Trustee in (a) collecting
any amounts payable pursuant to the Mortgage or (b) making any pay-
ments on the Bond. Furthermore, the Issuer shall not be obligated
to take any action which might in its reasonable judgment involve
it in any expense or liability unless it shall have been furnished
with assurance of payment or reimbursement for any expense and with
reasonable indemnity for liability of the issuer, its officers and
employees.
75
Section 10.11. Successors and Ass icrns . All the covenants and
representations contained in this Indenture, by or on behalf of the
Issuer, shall bind and inure to the benefit of its successors and
assigns, whether so expressed or not.
Section 10.12. HUD and 'FHA Reguirements to control. Notwith-
standing anything in this Indenture to the contrary, the provisions
of this Indenture and the Loan Work -Out Agreement are subject and
subordinate to the National Housing Act, all applicable HUD coin-
surance (and Section 8, if applicable) regulations and related
administrative requirements and the Mortgage Loan Documents, and
all applicable FHA regulations and related administrative require-
ments in effect as of the date hereof; and in the event of any con-
flict between the provisions of this Indenture or the Loan Work -out
Agreement and the provisions of the National Housing Act, any
applicable HUD regulations, related administrative requirements and
the Mortgage Loan Documents, and any applicable FHA regulations and
related administrative requirements, the said National Housing Act,
HUD regulations, related administrative requirements and Mortgage
Loan Documents, and the said FHA regulations and related admini-
strative requirements in effect as of the date hereof shall be
controlling in all respects.
IN WITNESS WHEREOF', the Issuer and the Trustee have executed
the Indenture as of the day and year first hereinabove written.
ATTEST:
Clerk
CITY OF CLEARWATER, FLORIDA
By:
Mayor- Commissioner
BANK ONE, COLUMBUS, NA,
Columbus, Ohio, as Trustee
By:
Authorized Officer
76
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
SCHEDULE OF MINIMUM CARRY- FORWARD
BALANCES IN BOND FUND
EXHIBIT "B"
CLEARWATER, FLORIDA
BOND FUND
SUMMARY STATEMENT
PERIOD
BEGINNING
ENDING
ENDING
BALANCE
DEPOSITS
WITHDRAWALS
BALANCE
8 -18
-1992
0.00
34512.85
0.00
34512.85
4-
1 -1993
34512.85
141008.25
- 165547.92
9973.18
10-
1 -1993
9973.18
129120.89
- 129446.88
9647.20
4-
1 -1994
9647.20
129123.95
- 127450.00
11321.14
10-
1 -1994
11321.14
129163.58
- 128453.13
12031.59
4-
1 -1995
12031.59
129186.06
- 131453.13
9764.53
10-
1 -1995
9764.53
129154.92
- 127293.75
11625.70
4-
1 -1996
11625.70
129198.95
- 130293.75
10530.90
10-
1 -1996
10530.90
129189.76
- 131131.25
8589.41
4-
1 -1997
8589.41
129165.60
- 128968.75
8786.26
10-
1 -1997
8786.26
129180.58
- 132556.25
5410.59
4-
1 -1998
5410.59
129131.21
- 127643.75
6898.05
10-
1 -1998
6898.05
129170.40
- 128481.25
7587.19
4-
1 -1999
7587.19
129195.54
- 126318.75
10463.99
10-
1 -1999
10463.99
129260.78
- 132153.13
7571.65
4--
1 -2000
7571.65
129221.92
- 129825.00
6968.56
10-
1 -2000
6968.56
129225.02
- 130496.88
5696.70
4-
1 -2001
5696.70
129216.49
- 128168.75
6744.44
10-
1 -2001
6744.44
129250.51
- 128840.63
7154.32
4-
1 -2002
7154.32
129273.49
- 126512.50
9915.31
10-
1 -2002
9915.31
129339.64
- 129684.38
9570.58
4-
1 -2003
9570.58
129350.05
- 129853.13
9067.50
10-
1 -2003
9067.50
129358.18
- 130359.38
8066.31
4-
1 -2004
8066.31
129357.89
- 127865.63
9558.57
i
10-
1 -2004
9558.57
129403.41
- 128371.88
10590.11
4-
1 -2005
10590.11
129441.23
- 125878.13
14153.21
10-
1 -2005
14153.21
129525.60
- 131381.25
12297.56
4-
1 -2006
12297.56
129512.45
- 128721.88
13088.14
10-
1 -2006
13088.14
129547.98
°129062.50
13573.63
4-
1 -2007
13573.63
129578.73
- 126403.13
16749.23
10-
1 -2007
16749.23
129659.00
- 134240.63
12167.60
4-
1 -2008
12167.60
129599.46
- 128915.63
12851.44
10-
1 -2008
12851.44
129636.19
- 129090.63
13397.00
4-
1 -2009
13397.00
129671.26
- 126265.63
16802.63
3.0 -1
-2009
16802.63
129759.04
- 131437.50
15124.17
4-
1 -2010
15124.17
129755.60
- 128446.88
16432.90
10-
1 -2010
16432.90
129807.24
- 3.28456.25
17783.88
4-
1 -2011
17783.88
129860.62
- 130462.50
17182.00
10-
1 -2011
17182.00
129879.62
- 130306.25
16755.37
4-
1 -2012
16755.37
129902.84
- 127150.00
19508.21
10-
1 -2012
19508.21
129984.77
- 129493.75
19999.23
4-
1- 2013
19999.23
130026.83
- 128834.38
21191.68
10-
1 -2013
21191.68
130082.76
-128512.50
22761.94
4-
1 -2014
22761.94
130146.74
- 130187.50
22721.18
10-
1 -2014
22721.18
130182.77
- 129700.00
23203.95
i
PERIOD
BEGINNING
ENDING
ENDING
BALANCE
DEPOSITS
WITHDRAWALS
BALANCE
4-
1 -2015
23203.95
130229.57
- 126212.50
27221.02
10-
1 -2015
27221.02
130341.76
- 130721.88
26840.90
4-
1 -2016
26840.90
130375.63
- 127068.75
30147.78
10-
1 -2016
30147.78
130477.75
- 126415.63
34209.91
4-
1 -2017
34209.91
130595.04
- 127759.38
37045.57
10-
1 -2017
37045.57
130691.63
- 134437.50
33299.70
4-
1 -2018
33299.70
130670.51
- 127953.13
36017.09
10-
1 -2018
36017.09
130768.17
- 126968.75
39816.51
4-
1 -2019
39816.51
130887.14
- 122984.38
47719.28
10-
1 -2019
47719.28
131082.24
- 131993.75
46807.76
4-
1 -2020
46807.76
131119.39
- 127678.13
50249.03
10-
1 -2020
50249.03
131237.31
- 126362.50
55123.84
4-
1 -2021
55123.84
131383.17
- 127043.75
59463.26
10-
1 -2021
59463.26
131521.33
- 130559.38
60425.21
4-
1 -2022
60425.21
131600.35
- 125912.50
66113.07
10-
1 -2022
66113.07
.131767.19
- 131762.50
66117.76
4-
1 -2023
66117.76
131833.26
- 124450.00
73501.02
10-
1 -2023
73501.02
132035.37
- 127634.38
77902.01
4-
1 -2024
77902.01
132185.81
- 127653.13
82434.69
10-
1 -2024
82434.69
132341.12
- 130506.25
84269.56
4-
1 -2025
84269.56
132450.08
- 125196.88
91522.77
10-
1 -2025
91522.77
201533.85
- 205337.50
87719.12
4-
1 -2026
8771.9.12
264.98
- 87984.10
0.00
Total
0.00
8700713.27
- 8700713.27
0.00
EXHIBIT C
HUD LETTER OF JUNE 23, 1987
M �
%..m
F3
EXHIBT,T "B"
LOAN WORK -OUT AGREEMENT
among
CITY OF CLEARWATER, FLORIDA
BANK ONE, COLUMBUS, NA,
Columbus, Ohio,
As Trustee
and
DREW GARDENS ASSOCIATES, LTD.
A Florida Limited partnership
$3,425,000
Principal Amount of
Mortgage Revenue Refunding Bonds,
Series 1992A
(FHA Insured Mortgage Loan -- Drew Gardens Project)
Dated as of August 1, 1992
I ,x -, V
TABLE OF CONTENTS
(This Table no) a part of the Agreement but is
only for convenience of referen
Paae
1
Preambles • • • ' ' . ' . . . . . . .
ARTICLE I
DEFINITIONS
4
Section 1.1 General . • • • ' • . . . . . . • . . . . 4
Section 1.2 Definitions . • • . . . . . . . . • . . 6
Section 1.3 Construction .
ARTICLE II
THE MORTGAGE LOAN MODIFICATION, LOAN PAYMENTS
AND ADDITIONAL PAYMENTS
Section 2.1 Amount and Terms of the Mortgage Loan 7
Modification; the Note . . . . . 7
Section 2.2 Additional Payments . . . . . . . . . 7
Section 2.3 Redemption of Bonds
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.1 Issuance of Bonds; Deposit and Disbursement 9
of Bond Proceeds . • 9
Section 3.2 Investment of Fund Money
i
ARTICLE IV
INSURANCE; DAMAGE; DESTRUCTION AND EMINENT
DOMAIN
_. MAINTENANCE;
.
10
Section
4.1
Maintenance . • • • • ' ' • . . . . •
Removal of Portions of the Project
10
10
Section
4.2
10
Section
Section
4.3
4.4
Insurance e
, ensation coverage • • • ' ' .
Worker's Comp
Eminent Domain
10
Section
4.^
Damage; Destruction and
i
ARTICLE VII
TERMINATION, PREPAYMENT AND AMENDMENT OF NOTE
Section 7.1 Option to Terminate . . . . . . . . . . . 20
Section 7.2 Option to Prepay Loan . . . . ... . . . 20
Section 7.3 Amendment of Note . . . . . . . . . . . . 20
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section
8.1
ARTICLE V
. 21
21
Section
8.2
WARRANTIES, REPRESENTATIONS AND SPECIAL
COVENANTS
Section
Section
5.1
Representations and Warranties of
Issuer
11
Section
5.2
Representations of the Owner . .
. . . . .
12
Section
5.3
Owner's Approval of Indenture .
• • • • .
Section
5.4
Indemnification . • • . . • • •
• • •
16
Section
5.5
Owner Not to Adversely Affect Tax
Exempt
Status of Interest on Bonds .
. . . . .
17
Section
5.6
Notice of Certain Events . . . .
. . . .
17
Section
5.7
Taxes, Other Governmental Charges
and
Utility Charges . . . . . . . . .
. . . .
18
ARTICLE VI
ASSIGNMENT
Section
6.1
Assignment by Owner . . . . . .
. . . . .
19
Section
6.2
Issuer Pledge of Certain Rights Under Loan
Work -Out Program . . . . . •
• • •
19
Section
6.3
Assignment by the Issuer . . . .
. . . . .
19
ARTICLE VII
TERMINATION, PREPAYMENT AND AMENDMENT OF NOTE
Section 7.1 Option to Terminate . . . . . . . . . . . 20
Section 7.2 Option to Prepay Loan . . . . ... . . . 20
Section 7.3 Amendment of Note . . . . . . . . . . . . 20
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section
8.1
Events of Default . . . . . . . . . . .
. 21
21
Section
8.2
Remedies on Default . . . . . . . . . .
.
22
Section
8.3
No Remedy Exclusive . . . . . . . . . .
.
Section
8.4
Agreement to pay Attorneys'
22
Fees and Expenses . . . . . . . . . . .
Section
8.5
No Additional Waiver Implied by One
Waiver . . . . . . . . . . . . . . . . .
. 23
ii
ARTICLE IX
MISCELLANEOUS
Section
9.1
Term of Agreement • • • • • • • ' ' . . _
24
24
Section
9.2
Notices . . . . . . . . . . . ' . •
24
Section
9.3
9.4
Binding Effect . . . . . . . . . • ' ' . .
Amendments, Changes and Modifications
24
Section
Section
9.5
Executive Counterparts . . .
24
24
Section
9.6
Severability . • • • • • • •
25
Section
9.7
Captions . . • • • • • • • • ' • '
25
Section
Section
9.6
9.9
Governing Law . • • • • • • . ' ' . • ,
HUD and FHA Requirements to Control .
25
Section
9.10
Limited Liability of Owner; No Recourse
26
Against Project Assets . . . . . . . . . .
27
Section
9.11
No Liability of Issuer Officers . • .
•
27
SIGNATURES
• • • • • • • • ' ' ' . • •
EXHIBIT
A -
Form of Modification of Mortgage Note and
Mortgage
iii
LOAN WORK -OUT AGREEMENT
, Among
CITY OF CLEARWATER, FLORIDA,
BANK ONE, COLUMBUS, NA,
and
DREW GARDENS ASSOCIATES, LTD.
THIS LOAN WORK -OUT AGREEMENT (this "Loan Work -Out Agreement ")
made and entered into as of the first day of August, 1992, among
the CITY OF CLEARWATER, FLORIDA (the "Issuer ") , a municipal corpor-
ation, organized and existing under the laws of the State of
Florida, BANK ONE, COLUMBUS, NA, Columbus, Ohio, as Trustee under
the Indenture referred to herein (the "Trustee ") and DREW GARDENS
ASSOCIATES, LTD. (the "Owner "), a Florida limited partnership,
W I T N E S S E T H•
WHEREAS, the Issuer is authorized under the laws of the State
of Florida, particularly Chapter 166, Part II, and Chapter 159,
Part Iv, Florida Statutes, and other applicable provisions of law
(the "Act ") , to provide funds for the acquisition, construction,
rehabilitation, remodeling and improvement of privately owned
facilities including a rental housing facility and to issue its
bonds, and refund bonds issued for such purposes, for the purposes
set forth in the Act; and
WHEREAS, the Issuer is authorized and empowered pursuant to
the Act to issue its revenue bonds and take other actions to
finance, refinance and provide other incentives for development of
certain facilities; and
WHEREAS, on October 12, 1983, the Issuer issued $6,450,000
aggregate principal amount of its Mortgage Revenue Bonds, Series
1983 (FHA Insured Mortgage Loan - Drew Gardens Apartments Project)
(the "Refunded Bonds "), for the purpose of making a loan (the
"Mortgage Loan ") to the Owner, the acquisition, construction and
equipping of a multifamily residential rental project located in
Clearwater, Florida and identified as FHA Project No. 067 - 35276 -PM
(the "Project "); and
WHEREAS, pursuant to a Financing Agreement, dated as of
September 1, 1983 (the "Prior Agreement "), among the Issuer, the
Prior Trustee (as defined below), Sun Bank, National Association,
as co- trustee, and the Owner, the Issuer provided funds to Bank
One, Columbus NA, Columbus, Ohio, as trustee (the "Prior Trustee ")
under the indenture (the "Prior Indenture ") securing the Refunded
Bonds (i) to finance the Mortgage Loan insured by the Federal
Housing Administration ( "FHA"), an organizational unit within the
United States Department of Housing and Urban Development ( "HUD "),
in the principal amount of $6,094,900 evidenced by a Mortgage Note
by a first
(the "Note ") from the Owner to the prior Trus tee proceeds of which
mortgage on the Project (the "Mortgage") ,
were advanced pursuant to a Loan Agreement between the Prior
Trustee, as mortgagee of record, and the Owner, and (ii) to fund a
Debt Service Reserve Fund under the Prior Indenture; and
WHEREAS, the Owner is in default of its obligation to make Trustee
payments to the Prior
ned the Note a d the Mortgage htoP HUD rpursuant
has, therefore, g
to the provisions of the Prior Indenture; and
WHEREAS, the Owner is entering into this Loan Work -Out
Agreement in order to provide for a modification o of the Mortgage
Loan because the Owner defaulted in its payment
the Mortgage Loan and continued to be in such default from August
the Prior
1, 1991, to immediately prior to the date hereof and
of mortgage
Trustee assigned the Mortgage Loan to FHA for pay
insurance benefits because of such default; and
WHEREAS, HUD has confirmed that the FHA mortgage insurance
benefits are payable to the Prior Trustee as a result Of the
default with respect to the Mortgage Loan and has paid mortgage
insurance benefits to the Prior Trustee in connection with such
Mortgage Loan default; and
WHEREAS, under the terms of the Prior Indenture, tphe Refunded
Bonds are subject to mandatory redemption ptlus accrued interest o the
equal to the principal amount thereof ,,s available in the Bond Fund
redemption date, to the extent money
thereunder from whatever if u F'HA mortgage earliest insurance proceeds date,
are
as a whole or in p
payable to the Prior Trustee; and
WHEREAS, the Owner and HUD have agreed to amend the Note to
provide for, among other things, a reduction in the rate of
interest an the Note; and
WHEREAS, in order to fulfill the public purpose of providing
rental housing facilities within its jurisdic-
facilities such as
tion, the Issuer has determined to issue its Mortgage Revenue
Refunding Bonds, Series 1992A (FHA Insured Mortgage Loan $3,425,000 Drew
Gardens Project), in the aggregate principal amount of de
(the "Bonds ") to provide for the refunding of the Refunded Bonds;
and
WHEREAS, the proceeds of the Bonds will be sufficient, to redeem
the Refunded hBonds pursuant to the provisions e descrpibed�
the above; and
2
WHEREAS, the Owner, the Trustee and the Issuer each have full
right and authority to enter into this Loan Work -Out Agreement and
to perform and observe the provisions hereof on their respective
parts to be performed and observed;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto
covenant, agree and bind themselves as follows, provided, that any
obligation of the Issuer created by or arising out of this Loan
Work -Out Agreement shall never constitute a debt or a pledge of the
faith and credit of the Issuer but shall be payable solely out of
Pledged Revenues as herein defined, anything herein contained to
the contrary by implication or otherwise notwithstanding:
Alk
ARTICLE I
DEFINITIONS
Section 1.1. General. In addition to the words and terms
elsewhere defined in this Loan Work -out Agreement, certain words
and terms as used in this Loan Work -Out Agreement shall have the
meanings given to them by the definitions and descriptions in this
Article unless the context or use indicates another or different
meaning or intent and such definitions shall be equally applicable
to both the singular and plural forms of any of the words and terms
herein defined. Those words and terms not specifically defined
herein and used in this Loan Work -Out Agreement and Article, as
defined words or terms shall have the meanings set forth in the
Indenture, as defined herein.
Section 1.2. Definitions. The following words and terms are
defined under this Loan Work -Out Agreement:
"Act" means Chapter 166, Part II, and Chapter 159, Part IV,
Florida Statutes, and other applicable provisions of law.
"Bond Purchaser" means Banc One Capital Corporation.
"Code" means the Internal Revenue Code of 1986, as amended and
contemporaneously in effect.
111954 Code" means the Internal Revenue Code of 1954, as
amended and in effect prior to the enactment of the Code.
"Indenture" means the Indenture of Trust between the Issuer
and the Trustee, of even date herewith, as the same may be duly
amended, modified or supplemented in accordance with the provisions
i
thereof.
"Loan" means the Mortgage Loan as defined in the Indenture.
"Modification Agreement" means the Modification of Mortgage
Note and Mortgage, dated as of August 18, 1992, among the Owner,
the Prior Trustee and as approved by HUD.
"Mortgage Loan Documents" means the Loan Work -out Agreement,
the Note, the Mortgage and the Supplemental Regulatory Agreement.
"Mortgage Servicer" means Continental Securities Corporation,
Syracuse, New York, or its successor or assigns, which will service
the Loan on behalf of the Trustee pursuant to the provisions of the
Servicing Agreement.
`1 4
"Notice Address" means:
(a) As to the Issuer: City of Clearwater
City Hall
Finance Department, 3rd Floor
112 South Osceola Avenue
Clearwater, Florida 34616
Attention:
(b) As to the Owner: Drew Gardens Associates, Ltd.
c/o Reynolds Metals Development
Company
General Partner
4501 N.W. 31st Avenue
Ft. Lauderdale, Florida 33309
Attention:
with a copy to: Drew Gardens Associates, Ltd.
6601 West Broad Street
Richmond, Virginia 23260
Attention: Corporate Secretary
(c) As to the Trustee: Bank One, Ohio Trust Company, NA
100 East Broad Street
Columbus, Ohio 43215
Attention:
or such different address notice of which is given under Section
9.2 hereof, but no such notice shall thereby be required to be sent
to more than two addresses.
"Owner" means Drew Gardens Associates, Ltd., a Florida limited
partnership.
"Owner Deposit" means the deposit made by the Owner in
immediately available funds to the Cost of Issuance Fund.
"Partnership Mortgage" means the existing second mortgage on
the Project in favor of Presidential Development Corporation, which
mortga ,qe is subordinated to the Mortgage and the Second Mortgage.
"Prior Indenture" means the Trust Indenture dated as of
September 1., 1983, between the Issuer and the Prior Trustee with
respect to the Refunded Bonds.
"Prior Trustee" means collectively, Bank One, Columbus, NA,
Columbus, Ohio, in its capacity as trustee and Sun Bank, National
Association, as co- trustee under the Prior Indenture.
"Refunded Bonds" means $6,450,000 initial aggregate principal
amount of the Issuer's Mortgage Revenue Bonds, Series 1983 (FHA
Insured Mortgage Loan - Drew Gardens Apartments Project).
5
"Regulatory Agreement" means that certain Regulatory Agreement
dated October 12, 1983 between the Owner and FHA with respect to
the Project.
"Second Mortgage" means the second lien mortgage encumbering
the Project in favor of HUD which arose out of the Loan Work -Out
Agreement and the Modification Agreement.
"Servicing n
Agreemen� +- means the Agreement between the Mortgage
Servicer and the Trustee, of even date herewith, pursuant to which
the Mortgage Servicer will service the Loan.
"Supplemental Regulatory Agreement" means the Supplemental
Regulatory Agreement as to Tax Exemption dated as of September 1,
1983 among the Issuer, the Owner and the Prior Trustee.
"Termination Date" means October 1, 2025, subject to earlier
termination as herein provided.
"Trustee" means, collectively, the banks or trust companies at
the time serving as Trustee under the Indenture, one of which shall
at all times be an FHA approved Mortgagee, initially Bank One,
Columbus, NA, Columbus, Ohio.
Section 1.3. Construction. Any reference herein to the
Issuer shall include any entity which succeeds to its functions,
duties or responsibilities pursuant to or by operation of law.
Unless the context shall otherwise indicate, words of the
masculine gender shall be deemed and construed to include correla-
tive words of the feminine and neuter genders, words, importing the
singular number shall include the plural number, and vice versa,
and the terms "hereof," "hereby," "hereto," "hereunder," and
similar terms mean this Loan Work -Out Agreement.
All accounting terms not otherwise defined herein shall have
the meanings assigned to them in accordance with generally accepted
accounting principles.
The title to any section in this Loan Work -Out Agreement shall
not be controlling with respect to the subject matter contained
therein but is for convenience of reference only.
Ank
ARTICLE II
THE MORTGAGE LOAN MODIFICATION, LAN PAYMENTS
AND
Section 2. 1. Amount and Terms subject the t °o the terms and ifica=
tion• the Note. The Issuer agrees,
tie mortgage to e Loan throughtther issuance oand cause
salethe
of the Bonds nand
the M g g the
the redemption of the Refunded Bonds in accordance deposited wwlt the
Indenture. The proceeds of the Bonds shall be
Trustee and used as provided in Section 4.02 of the Indenture to
pay accrued interest to the Bond Fund plus additional moneys
required to be deposited to such Fund to provide for payment lags,
to fund the Program Fund and to fund a portion of the Costs of
Issuance Funds and conditions ionstof Section 4. shall,
02 of the Indenture, be
with the term
remitted eand Prior the Trelease of the li n of the Prior Indenture.
Ref unded Bonds
ts transferred by the Prior Trustee to the Trustee shall
The amoun including the
be used to fund the Debt Service Reserve Fund
Mortgage Reserve Account therein) . The Owner Deposit shall be used
to pay a portion of the costs of issuing the Bonds and to fully
funadsthe
of bt Servfrom the Prior I dent re extent not funded by a
tr
The Owner agrees to amend the d Mortgage in substanti-
ally the Modification of Mortgag e Note a
ally the form attached as r hbi to he veto and to make loan
payments under the Note as pvided
Section 2.2• Additional Payments. In addition to payments
ture and the ' required of the Owner under rht he the reasonable Loan
the owner agrees to pustee as trustee, paying agent, and of any
and expenses of the are not
other paying agent on the Bonds under the Indenture includin t the cost
g
payable from the funds held under the Indenture, the Issuer the expenses of
of the Rebate Calculation and to pay without granting
the Issuer, if any; provided that the Owner may,
a default hereunder, contest in good faith the reasonableness of
any such extraordinary fees, charges or expenses.
2.3. RedeM t'1�Bonds. The Issuer, at the written
Section rovision first made for upon
request at any time of the Owner, hall forthwith take all steps that
the Issuer's expenses, if any, e all of the
may be necessary under the applicable redemption provisions the then out-
s Indenture to effect the redemption of all the Owner, on the earliest
standing Bonds, as may h specified by be made under such
redemption date on which such redemption may 1 to any
applicable provisions. This provision shall not apply
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.1. Issuance of Bonds;-Deposit and Disbursement of
Bond Proceeds. In order to provide funds to refund the Refunded
Bonds, the Issuer will issue, sell and deliver the Bonds and will
deposit the proceeds of the Bonds with the Trustee as provided in
the Indenture and will direct the Trustee to disburse funds for the
purposes and on the terms and conditions provided in Section 2.1
hereof and Section 4.02 of the Indenture.
Section 3.2. Investment of Fund Money. Any money held as
part of the Bond Fund, the Rebate Fund, the Costs of Issuance Fund,
the Collateral Fund, the Program Fund, the Debt Service Reserve
Fund, or the Mortgage Reserve Account shall be invested and
reinvested by the Trustee as specified in the Indenture. The
Issuer and the Owner jointly and severally covenant that the use of
the proceeds of the Bonds, including any money held as part of any
fund and any other amounts received by the Issuer in respect to
property directly or indirectly financed with the proceeds of the
Bonds, and proceeds from interest earned on the investment and
reinvestment of such fund and proceeds, shall be invested or
otherwise used and shall be restricted in such manner and to such
extent, if any, as may be necessary, after taking into account
reasonable expectations at the time of issuance of the Bonds, so
that the Bonds will not constitute "arbitrage bonds" within the
meaning of Section 148 of the Code. Any officer of the Issuer
having responsibility with respect to the issuance of the Bonds is
authorized and directed, alone or in conjunction with any other
officer, employee or consultant of the Issuer or the owner, and
upon receipt of satisfactory indemnities, to give an appropriate
certificate on behalf of the Issuer, for inclusion in the
transcript of proceedings for the Bonds, setting forth the facts,
estimates and circumstances and reasonable expectations pertaining
to Section 148 of the Code.
ARTICLE IV
MAINTENANCE, INSURANCE, DAMAGE,
DESTRUCTION AND EMINENT DOMAIN
Section 4.1. 'Maintenance. So long as any of the Bonds are
outstanding within the meaning of the Indenture, the Owner shall,
as required under the Loan Documents, keep and maintain the
Project, including all appurtenances thereto and any personal
property therein or thereon, in good repair and good operating
condition.
Section 4.2. Removal of Portions of the Project. The Owner
shall have the right from time to time to substitute personal
property or fixtures for any portions of the Project, provided such
actions are permitted under the Loan Documents. Removal of any
portion of the Project pursuant to this Section shall be made only
with the prior written concurrence of FHA.
Section 4.3. Insurance. The Owner agrees to insure the
project as required by FHA and by Section 5.08 of the Indenture.
Section 4.4. Worker's Compensation Coverage. Throughout the
term of this Loan Work -Out Agreement, the Owner shall comply, or
cause compliance, with applicable worker's compensation laws of the
State of Florida.
Section 4.5. Damage Destruction and Eminent Domain. If,
prior to full payment of all Bonds outstanding (or provision for
payment thereof having been made in accordance with the provisions
of the Indenture) ; the Project or any portion thereof is destroyed
or damaged as a whole or in part by fire or other casualty, or
title to, or the temporary use of, the project or any portion
thereof shall have been taken by the exercise of the power of
eminent domain, and the Issuer, the Owner or Trustee receives Net
Proceeds from insurance or any condemnation award in connection
therewith, such proceeds shall be applied as provided in the Loan
Documents and the Indenture.
10
ARTICLE V
WARRANTIES, REPRESENTATIONS AND SPECIAL COVENANTS
Section 5.1. Representations and Warranties of the Issuer.
The Issuer represents, warrants and covenants as follows:
(a) The Issuer is a municipal corporation, organized and
existing under the laws of the State of Florida. The Issuer agrees
that it will do or cause to be done all things necessary, so far as
lawful, to preserve and keep in full force and effect its
existence. The Issuer has duly accomplished all conditions neces-
sary to be accomplished by it prior to issuance and delivery of the
Bonds and execution and delivery of this Loan Work -Out Agreement,
it is not in default under any of the provisions contained in the
laws of the State in any manner that would impair its ability to
carry out its obligations hereunder, it has power under the Act to
enter into the transactions contemplated by this Loan Work -Out
Agreement, and it has been duly authorized to execute and deliver
this Loan Work -Out Agreement.
(b) The Issuer will, solely from Pledged Revenues, pay or
cause to be paid the principal of and interest on the Bonds on the
dates, at the places and in the manner provided therein.
(c) The Issuer will at all times faithfully_ observe and
perform all agreements, covenants, undertakings, stipulations and
provisions contained in this Loan Work -Out Agreement, the Indenture
and in any and every Bond executed, authenticated and delivered
under the Indenture, and in all proceedings of the Issuer pertain-
ing to the Bonds, the Indenture or this Loan Work -Out Agreement.
The Issuer warrants and covenants that it is, and upon delivery of
the Bonds will be, duly authorized by the laws of the State of
Florida, including particularly and without limitation, the Act, to
issue the Bonds and to execute the Indenture and this Loan Work -Out
Agreement, to provide the security for payment of the Bonds and
interest thereon in the manner and to the extent herein and in the
Indenture set forth; that all actions on its part for the issuance
of the Bonds and execution and delivery of the Indenture and the
Loan Work -Out Agreement have been or will be duly and effectively
taken; and that the Bonds will be valid and enforceable limited
obligations of the Issuer according to the terms thereof and are
payable solely from revenues pledged to the payment thereof under
the Indenture, and do not constitute a debt of the Issuer within
the meaning of any constitutional or statutory provision. The
Bonds are not secured by any obligation or pledge of any money
received, or to be received, from taxation or from the State of
Florida or any political subdivision, taxing district or public
body thereof and do not now and never shall constitute a charge
against the general credit or taxing powers of the State of
Florida, the Issuer or any other public body, pursuant to the laws
11
of the State of Florida. Each provision of the Indenture, Loan
Work -Out Agreement and Bonds is binding upon each such officer of
the Issuer as may from time to time have the authority under law to
take such actions as may be necessary to perform all or any part of
the duties required by such provision; and each duty of the Issuer
and of its officers undertaken pursuant to such proceedings for the
Bonds is established as a duty of the Issuer and of each such
officer having authority to perform such duty.
(d) Except as otherwise provided in the Indenture and Loan
Work -Out Agreement, the Issuer will not create or suffer to be
created any debt, lien or charge thereon, or make any pledge or
assignment of or create any debt, lien or charge on the Project, or
make any pledge or assignment of or create any lien or encumbrance
upon the Pledged Revenues, including the money in the Bond Funds,
other than the pledge and assignment thereof under the Indenture
and this Loan Work -Out Agreement.
(e) The Trustee, in its name or in the name of the Issuer,
may, for and on behalf of the Bondholders, enforce all rights of
the Issuer and all obligations of the Owner under and pursuant to
this Loan Work -Out Agreement, the Note and the Loan Documents,
whether or not the Issuer has pursued or attempted to enforce any
of such rights and obligations.
Section 5.2. Representations of the Owner. As a condition to
the Issuer's entering into this Loan Work -Out Agreement, the Owner
represents, warrants and covenants to the Issuer as follows;
(a) The Owner is a limited partnership duly organized and
existing under and by virtue of the laws of the State and is not in
violation of any provision of its partnership agreement or any laws
of the State relevant to the transactions contemplated by this Loan
Work -Out Agreement, the Note, the Indenture or the Loan Documents. `
(b) The Owner has full power and authority to execute and
deliver this Loan Work -Out Agreement and the Modification
Agreement, and t >p carry out the transactions provided for therein.
This Loan Work -Out Agreement and the Modification Agreement have by
proper action been duly authorized, executed and delivered by the
Owner and all actions necessary have been taken to constitute this
Loan Work -Out Agreement and the Modification Agreement, when
executed and delivered by the respective parties thereto, valid and
binding obligations of the Owner.
(c) The execution, delivery and performance by the Owner of
this loan Work -out Agreement and the Modification Agreement and the
consummation of the transactions contemplated hereby and thereby
will not violate any provision of law or regulation applicable to
the Owner, or of any writ or decree of any count or governmental
instrumentality, or of the partnership agreement of the owner, or
of any mortgage, indenture, contract, agreement or other
12
undertaking to which the Owner is a party or that purports to be
binding upon the Owner or upon any of its assets.
(d) The use of the Project will be in accordance with the
Act, and the Project will be utilized and maintained in such manner
as to conform with all applicable zoning, planning, building and
other similar regulations of all governmental authorities having
jurisdiction of the Project, and all necessary permits, licenses,
consents and permissions have been obtained as of the date of
execution of this Loan Work -Out Agreement to the extent that the
same are obtainable as of such date and the Project conforms to all
environmental regulations known to the Owner.
(e) There are no actions, suits or proceedings pending, or to
the knowledge of the Owner, threatened against or affecting it or
the Project or involving the validity or enforceability of the
Mortgage or the priority of the lien thereof, at law or in equity
or before or by any governmental authority, except actions, suits
and proceedings fully covered by insurance or that, if adversely
determined, would not substantially impair the ability of the Owner
to pay when due any amounts which may become payable in respect of
the Note; and to the Owner's knowledge it is not in default with
respect to any order, writ, injunction, decree or demand of any
court or any governmental authority that will not be cured by the
transactions contemplated herein.
(f) The consummation of the transactions hereby contemplated
and performance of this Loan Work -Out Agreement and the
Modification Agreement will not result in any breach of, or
constitute a default under any mortgage, deed of trust, lease, bank
loan, credit agreement, or other instrument to which the owner is
a party or by which it,may be bound or affected.
(g) No assessments of any nature with respect to the Project
remain unpaid, including but not limited to assessments relating to
streets, roads, entrances, waterlines, sanitary and storm sewers,
gas lines and all other utilities including acreage fees and trunk
sewers.
(h) The Owner shall do or cause to be done all things
necessary to preserve, maintain and keep in full force and effect
its legal existence and comply with all laws applicable to it.
(i) The owner agrees to promptly give notice in writing to
the Trustee and the Issuer of the occurrence or existence of any
material litigation, labor dispute or governmental proceeding or
investigation affecting the Owner that could reasonably be expected
to interfere substantially with its normal operations or materially
and adversely affect, its financial condition.
(j) The owner lawfully owns and is possessed of the real
property and interests therein described in the Mortgage and has
13
good and marketable title and fee simple estate therein subject
only to such encumbrances as are described in the Trustee's policy
of title insurance and approved by FHA, and it will defend the
title thereto and every part thereof against the claims and demands
of all persons whomsoever.
(k) No counterclaim, offset, defense or right o:
exists that can be asserted and maintained by the Owner
Issuer.
(1) The statements made in the final Official Statement
relating to the Bonds (the "Official statement ") that are descrip-
tive of the Owner, the Project, this Loan Work -Out Agreement or the
Loan Documents have been prepared or reviewed by the Owner and did
not on the date of the Official Statement, do not on the date of
this Loan Work -Out Agreement and will not on the date of delivery
of the Bonds contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make such
statements, in light of the circumstances under which they were
made, not misleading.
(m) The Owner will prepare or cause to be
expense all audits of the Owner or of the Project
in accordance with HUD regulations.
If the Owner receives notice from the Trustee that any
required to be paid by the Owner into the Rebate Fund,
shall promptly make such payment.
(o) The Owner agrees to pay all of the fees and expenses of
Bond Counsel, a certified public accountant and any other necessary
consultant employed by the Owner, the Trustee or the Issuer in
connection with any of the requirements imposed by Sections 4.14,
4.15 or 4.16 of the Indenture. The Owner shall provide or cause to
be provided all information and moneys (including moneys necessary
to make deposits to the Rebate Fund required by the Indenture) to
the Trustee to enable the Trustee to perform the duties imposed on
the Trustee by the Indenture with respect to any excess nonpurpose
obligation earnings and investment of amounts held under the
Indenture.
(p) The Owner covenants and agrees that from the date hereof
until payment in full of all of the obligations hereunder, unless
the Trustee shall otherwise consent in writing, the Owner will not:
(i) incur, create, assume or suffer to exist any mort-
gage, pledge, security interest, lien, charge or other encumbrance
of any nature on any of the owner's assets, now or hereafter owned
other than (1) any liens, taxes or other governmental charges which
are not yet due and payable, (2) any pledge relating to syndication
of the Project, (3) any lien, including, but without limiting the
generality of the foregoing, mechanics' liens, or other liens
resulting from a good -faith dispute on the part of the Owner, which
dispute the Owner agrees to resolve diligently, or which liens are
insured over by a title insurance company acceptable to FHA, (4)
the Second Mortgage and the Partnership Mortgage, (5) other liens
or encumbrances approved by FHA, (6) purchase money liens on
personal property arising in the ordinary course of business, and
(7) such other pledges as may be approved in writing by the
Trustee;
(ii) To the extent required by FHA, make changes with
respect to the general partner(s) now acting as the duly authorized
general partner(s) of the Owner without approval of FHA;
(iii) No general partner shall be permitted to sell,
assign, give, transfer or otherwise dispose of his entire share
ownership interest in the Owner without first presenting to the
Trustee a certificate with respect to compliance with the Tax
Regulatory Agreement; or
(iv) Create, incur, assume or suffer to exist any
indebtedness for borrowed money or any other obligation whatsoever,
regardless of how evidenced or secured except indebtedness of the
Owner to the Issuer or the Trustee or provided in the Note,
Mortgage, Indenture and the documents referred to therein or in the
normal course of business.
(q) The Project constitutes land or property of a character
subject to the allowance for depreciation for purposes of Section
103(b) of the Code, and substantially all of the net proceeds
received from the sale of the Bonds (net proceeds being those
proceeds remaining after paying all of the expenses incurred in
connection with the issuance of the Bonds) will be used to finance
the acquisition, construction and equipping of the Project. Not
more than 25% of the proceeds of the Bonds shall be used to provide
a facility described in Section 144(a) (8) of the Code, and no
portion of the proceeds of the Bonds shall be used to provide any
property or facility described in Sections 144(a)(8) or 147(e) of
the Code.
(r) The average weighted maturity of the Bonds does not
exceed the average weighted estimated economic life of the compo-
nents comprising the Project by more than 20 %, determined pursuant
to Section 147(b) of the Code.
(s) (1) No portion of the proceeds of the Refunded Bonds was
applied directly or indirectly, to the acquisition of land, or an
interest therein, to be used for farming purposes, except and only
to the extent that the Owner is a first -time farmer, as defined in
and pursuant to the conditions of section 144(a)(11) and Section
147(c) of the Code; and
15
4F,
(2) No portion equal to 25% or more of the proceeds of
the Refunded Bonds was applied, directly or indirectly, to the
acquisition of land, or an interest therein, except and only to the
extent that the Project is an industrial park, in which case no
portion equal to 5o; or more the proceeds shall be so applied, or
that the Project is an airport, mass transit or port development
project consisting of facilities described in Sections 141(a)(1),
141(a)(2) or 141(a)(3) of the Code, in which case land may be
acquired for noise abatement, wetland preservation, further use or
other public purposes.
(t) To its knowledge, the Owner is now, an' at all times
since the issuance of the Refunded Bonds has been, in compliance
with all of the material obligations imposed upon it by (i) the
Supplemental Regulatory Agreement (except to the extent that its
default under the Mortgage Loan may constitute a default under such
agreement) and (ii) the other agreements and instruments executed
and delivered or otherwise binding upon it in connection with the
issuance of the Refunded Bonds.
Section 5.3. Owner's Approval of Indenture. The Indenture
has been submitted to the Owner for examination, and the Owner
acknowledges, by execution of this Loan Work -Out Agreement, that it
has approved the Indenture.
Section 5.4. Indemnification. Except for any liability
arising out of or in connection with the gross negligence or
willful misconduct of the Issuer or the Trustee or their respective
members, commissioners, officers, agents, employees, attorneys and
consultants, the Owner hereby releases the Issuer and the Trustee,
and their respective members, commissioners, officers, agents,
employees, attorneys and consultants from, agrees that the Issuer
and the Trustee, and their respective members, commissioners,
officers, agents, employees, attorneys and consultants, shall not
be liable for, and agrees to reimburse and indemnify and hold the
Issuer and the Trustee, and their respective members,
commissioners, agents, employees, attorneys and consultants
harmless from and against, any and all: (1) liability for loss or
damage to property or any injury to or death of any and all persons
that may be occasioned by any cause whatsoever pertaining to the
project or arising by reason of or in connection with the
acquisition, construction, equipping, occupation, or use of said
Project; (2) liability arising from, or expense incurred by reason
of, the Issuer's financing of the acquisition, construction and
equipping of the Project, and all causes of action and attorneys'
fees and any other expense incurred in defending any suits or
actions which may arise as a result of any of the foregoing; and
(3) all costs and expenses of the Issuer and the Trustee and their
respective commissioners, officers, directors, employees, agents
and attorneys incurred as a result of carrying out their respective
obligations under this Loan Work -Out Agreement, the Indenture or
any other document herein contemplated.
16
Notwithstanding that it is the intention of the parties that
the issuer and the Trustee shall not incur any pecuniary liability
by reason of this Loan Work -out Agreement, the Indenture or the
issuance of the Bonds, or by reason of any actions, documents,
statutes, ordinances, or regulations pertaining to the foregoing,
the Owner hereby agrees to promptly pay any and all costs and
expenses, including reasonable attorney fees, as such costs and
expenses accrue, which may be incurred by, or judgments which may
be rendered against, the Issuer or the Trustee or any of their
respective officers, directors, employees, commissioners, agents or
attorneys, at any time or times during, or subsequent to, the term
of this Loan Work -Out Agreement, including any costs and expenses
incurred as part of any bankruptcy proceedings: (1) in enforcing
any of the terms, covenants, conditions or provisions of this Loan
Work -Out Agreement, the Indenture or any other document herein
contemplated; (2) in taking any action as a result of the
occurrence of any Default; or (3) in defending any action, suit, or
proceeding brought against the Issuer or the Trustee, or any of
their respective officers, directors, employees, agents or attor-
neys, as a result of the violation by or on behalf of the Owner of,
or failure by or on behalf of the Owner to comply with, any present
or future federal, state or municipal law, ordinance, regulation or
order, or as a result of any alleged failure, neglect, misfeasance
or default on the part of the Owner, or any of the Owner's
officers, directors, employees, servants, agents or independent
contractors, as applicable, or the Owner in connection with,
arising from, or growing out of, this Loan Work -Out Agreement, the
Indenture or in connection with the issuance of the Bonds, or the
Project, or the acquisition, construction or equipping thereof, or
any operations conducted in, or any use or occupancy of, said
Project, or any action pertaining to, or connected with, any of the
foregoing. The provisions of this Section 5.4 shall survive the
termination of this Loan Work -Out Agreement.
Section 5.5. Owner Not to Adversely Affect Tax - Exempt Status
of Interest on Bonds. The Owner, for the benefit of the Issuer and
each Holder, hereby represents it has not taken, or permitted to be
taken on its behalf, and agrees that it will not take, or permit to
be taken on its behalf, any action which would adversely affect the
exclusion of the interest paid on the Bonds from gross income for
federal income tart purposes, and that it will make and take, or
require to be made and taken, such acts and filings as may from
time to time be required under the Code to maintain such exclusion.
Section 5.6. Notice of Certain Events. If the Owner becomes
aware of any situation, event or condition that would result in the
interest on the Bonds becoming included in gross income for federal
income tax purposes, the owner shall promptly give written notice
thereof to the Issuer, Mortgage Servicer, the Trustee and the Bond
Purchaser.
17
section 5.7. Tares, Other Governmental Charges and Utility
Chartres. The Owner may, at its own expense and in its own name and
behalf, in good faith contest any property taxes, governmental
charges, assessments and other charges and, in the event of any
such contest, may permit the taxes, assessments or other charges so
contested to remain unpaid during the period of such contest, and
any appeal therefrom unless by such action the title of the Issuer
to any part of the Project shall be materially endangered or the
Project or any part thereof shall become subject to loss or
forfeiture, in which event such taxes, assessments or charges shall
be paid prior to their becoming delinquent.
a
+ 18
i
ARTICLE VI
ASSIGNMENT
Section 6.1. Assignment by Owner. This art o Work -Out
Agreement may not be assigned as a whole or in p
ownership of the 'th a transfer of the
except in accordance wi
to HUD regulations and procedures
Project pursuant
Section 6.2. Issuer Pled e of Certain eRthe project Lo and
Out A reement. The Owner shall mortgage money eceivable
Issuer shall assign its interest in to phedTrustee as security for
under this Loan Work -Out Agreement,
payment of the principal of and interest on the Bonds.
Assi nment b the Issuer. The Issuer shall
Section 6.3. and pledge the Pledged
assign its rights under and
her t hngs,l loan payments hereunder to
Revenues including, among for payment of
the Trustee pursuant to the Indenture as premium security n the Bonds and
the principal of and interest and any P ledg e except as may
shall not make any further such assignment or p of principal
be necessary or required to enforce or secure payment
of and interest and any premium on the Bonds.
19
ARTICLE VII
TERMINATION, PREPAYMENT AND AMENDMENT OF NOTE
Section 7.1. Option to Terminate. The Owner shall have the
option to terminate this Loan Work -Out Agreement at any time when
(i) the Indenture shall have been released pursuant to its provi-
sions and (ii) sufficient money is on deposit with the Trustee, the
Mortgage Servicer or the Issuer, or all of them combined, to meet
all additional payments due or to become due through the date on
which the last of the Bonds is then scheduled to be retired or
redeemed, or, with respect to additional payments to become due,
provisions satisfactory to the Trustee, the Mortgage Servicer and
the Issuer are made for paying such amounts as they come due. Such
option shall be exercised by the Owner giving the Issuer, the
Mortgage Servicer and the Trustee notice of such termination and
such termination shall thereupon become effective.
Section 7.2. Option to Prepay Loan. The Owner shall have,
and is hereby granted, the option to prepay the Loan in full or in
part prior to the payment and discharge of all the outstanding
Bonds only in accordance with the provisions of the Note and the
Indenture.
The mutual agreements contained in this Section are indepen-
dent of, and constitute an agreement separate and distinct from,
any and all provisions of this Loan Work -Out Agreement and shall be
unaffected by any fact or circumstances that might impair or be
alleged to impair the validity of any other provision.
Section 7.3. Amendment of Note. The Owner may request an
amendment of the Note and the Mortgage in accordance with Section
8.04 of the indenture in the event the Project fails to produce
sufficient revenues to make the debt service payment required under
the Note. This amendment will be permitted only if the Owner can
demonstrate to the satisfaction of FHA, Standard & Poor's
Corporation and the Trustee that the Project will produce suffi-
cient revenues to meet the scheduled debt service on the Bonds.
20
ARTICLE 'VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default. The following shall be
"events of default" under this Loan Work -Out Agreement and the
terms "event of default" or "default" shall mean, whenever they are
used in this Loan Work -Out Agreement, any one or more of the
following events:
(a) The occurrence of an event of default as defined in
Section 6.01 (a) or (b) of the Indenture, or a default in payment
under the Note.
(b) The occurrence of an event of default pursuant to the
terms of any of the Loan Documents, or pursuant to the regulations
promulgated by FHA relating to projects to be insured pursuant to
Section 221(d) (4) of the National Housing Act of 1934, as amended.
The provisions of paragraph (b) of this Section are subject to any
notice or grace provisions permitted or required by the Loan
Documents.
Section 8.2. Remedies on Default. Whenever any event of
default under Section 8.1 of this Loan Work -Out Agreement shall
have happened and be subsisting, any one or more of the following
remedial steps may be taken, provided that in no event shall the
Issuer be obligated to take any step which in its opinion will or
might cause it to expend time or money or otherwise incur liability
unless and until a satisfactory indemnity bond has been furnished
to it:
(a) The Issuer shall cooperate with the Trustee as the
Trustee acts pursuant to Section 6.02 of the Indenture.
(b) In the event any of the Bonds shall at the time be
outstanding and not paid and discharged in accordance with the
provisions of the Indenture, the Issuer or the Trustee may have
access to and inspect, examine and make copies of the books and
records and any and all accounts, data and income tax and other tax
returns of the Owner.
(c) The Issuer may, without being required to give any notice
(other than to the Trustee), except as provided herein, pursue all
remedies of a creditor under the laws of the State, as supplemented
and amended, or any other applicable laws,
(d) The Issuer or Trustee may take whatever action at law or
in equity may appear necessary or desirable to collect the payments
due under Article II hereof then due and thereafter to become due,
21
or to enforce performance and observance of any obligation, agree-
ment or covenant of the Owner under this Loan Work -Out Agreement.
(e) The Trustee shall, upon the occurrence of an event of
default under any of the Loan Documents, pursuant to applicable FHA
regulations immediately give notice and assign the Note and the
Mortgage to FHA in exchange for cash payment of insurance benefits
pursuant to the terms of the Loan Documents and Section 221(d)(4)
of the National Housing Act of 1934, as amended.
Any amounts collected pursuant to Article II hereof and any
other amounts that would be applicable to payment of principal of
and interest and any premium on the Bonds collected pursuant to
action taken under this Section shall be applied in accordance with
the provisions of the Indenture.
The provisions of this Section are subject to the further
limitation that the rescission or annulment of a declaration that
all the Bonds outstanding under the Indenture are immediately due
and payable shall also constitute rescission or annulment of any
corresponding declaration made pursuant to paragraph (a) of this
Section and a waiver and rescission of the consequences of such
declaration and of the event of default with respect to which such
declaration had been made, provided that no such waiver or
rescission shall extend to or affect any subsequent or other event
of default or impair any right consequent thereon.
Notwithstanding anything herein or in the Indenture to the
contrary, the Issuer shall not be required to take any affirmative
action to enforce any remedies in the event of default hereunder.
Section 8.3. No Remedy Exclusive. No remedy conferred upon
or reserved to the Issuer or the Trustee by this Loan Work -Out
Agreement is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Loan
Work -Out Agreement or now or hereafter existing at law or in equity
or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Issuer or the Trustee to
exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be
expressly required herein.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses.
In the event the Owner should default under any of the provisions
of this Loan Work -Out Agreement and the Issuer, the Trustee or the
Mortgage Servicer should employ attorneys or incur other expenses
for the collection of Loan Payments or the enforcement of perfor-
mance or observance of any obligation or agreement on the part of
22
the owner contained in this Loan Work -Out Agreement or represented
by the Note, the owner shall on demand therefor reimburse the
reasonable fee of such attorneys and such other expenses so
incurred.
Section 8.5. No Additional Waiver Implied by One Waiver. In
the event any agreement contained in this Loan Work -Out Agreement
should be breached by any party and thereafter waived by the other
parties, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder.
23
R
ARTICLE IX
MISCELLANEOUS
Section 9.1. Term of Agreement. This Loan Work -Out Agreement
shall remain in full force and effect from the date hereof to and
including October 1, 2025, or until such time as all of the Bonds
shall have been fully paid (or provision made for such payment
pursuant to the Indenture), whichever shall be earlier.
Section 9.2. Notices. All notices, certificates, requests or
other communications hereunder shall be sufficiently given and
shall be deemed given when mailed by registered or certified mail,
postage prepaid, addressed to the appropriate Notice Address. A
duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Mortgage Servicer
or the Owner shall also be given to the Trustee. The Owner, the
Issuer and the Trustee may, by notice given hereunder, designate a
different Notice Address for it than the one specified in Section
1.2 hereof.
Section 9.3. Binding Effect. This Loan Work -Out Agreement
shall inure to the benefit of and shall be binding upon the Issuer,
the Owner, the Trustee and their respective successors and assigns,
subject, however, to the specific provisions hereof, and subject to
the further limitation that any obligation of the Issuer created by
or arising out of this Loar Work -Out Agreement shall not constitute
an indebtedness or a charge against the general taxing power of the
Issuer or the State or any political subdivision, taxing district
or public body thereof, but shall be payable solely out of the
Pledged Revenues, as provided herein, nor is any such obligation
secured by any obligation or pledge of any money received, or to be
received, from taxation or from the Issuer, the State or any
political subdivision, taxing district or public body thereof.
Section 9.4. Amendments Changes and Modifications. Except
as otherwise provided in this Loan Work -Out Agreement or in the
Indenture, subsequent to the issuance of the Bonds and prior to all
conditions provided for in the Indenture for release of the
Indenture having been met, this Loan Work -Out Agreement may not be
effectively amended, changed, modified, altered or terminated
without the prior written consent of the Trustee.
Section 9.5. Execution Counterparts. This Loan Work -Out
Agreement may be executed in several counterparts, each of which
shall be regarded as an original and all of which shall constitute
but one and the same Loan Work -Out Agreement.
Section 9.6. Severability. In case any clause, provision or
section of this Loan Work -out Agreement, or any covenant,
stipulation, agreement, act or action, or part thereof, made,
24
assumed, entered into, or taken under this Loan above- captioned, or
any application thereof, is for any reason held to be illegal,
invalid or inoperable, such illegality, invalidity, or inoperabil-
ity shall not affect the remainder thereof or make any other
clause, provision or section or any other covenant, stipulation,
obligation, agreement, act or action or part thereof, made,
assumed, entered into, or taken thereunder, illegal or invalid or
inoperable as if such illegal, invalid or inoperable portion were
not contained therein, nor shall such illegality or invalidity or
inoperability of any application thereof affect any legal and valid
and operable application thereof, from time to time, and each such
clause, provision or section, covenant, stipulation, obligation,
agreement, act, or action, or part thereof shall be deemed to be
effective, operative, made, entered into or taken in the manner and
to the full extent from time to time, and each such clause,
provision or section, covenant, stipulation, obligation, agreement,
act, or action, or part thereof shall be deemed to be effective,
operative, made, entered into or taken in the manner and to the
full extent from time to time permitted by law.
Section 9.7. Cautions. The captions or headings in this Loan
Work -Out Agreement are for convenience only.
Section 9.8. Governing Law. This Loan Work -Out Agreement
shall be deemed to be a contract made under the laws of the State
of Florida and for all purposes shall be governed by and construed
in accordance with the laws of the State of Florida.
Section 9.9. HUD and FHA Requirements to Control.
(a) Notwithstanding anything in the Indenture or this Loan
Work -Out Agreement to the contrary, the provisions hereof are
subject and subordinate to the National Housing Act, all applicable
HUD insurance (and Section 8, if applicable) regulations and
related administrative requirements and the Mortgage Loan Docu-
ments, and all applicable FHA regulations and related administra-
tive requirements; and in the event of any conflict between the
provisions of said Indenture or this Loan Work -out Agreement and
the provisions of the National Housing Act, any applicable HUD
regulations, related HUD administrative requirements, or the
Mortgage Loan Documents, or the FHA regulation and related
administrative requirements, the said National Housing Act
regulations, related administrative requirements or Mortgage Loan
Documents shall be controlling in all respects.
(b) This Loan Work -Out Agreement shall not be construed to
restrict or adversely affect the duties and obligations of the
Trustee under the Contract of Insurance between the Trustee and HUD
with respect to the Mortgage Loan.
(c) Any project funds held by the Mortgage Servicer for or on
behalf of the Owner shall be maintained separate and apart from the
25
funds established and held by the Trustee for the holders of the
Bonds and the various escrows and funds, if any, under the
Indenture.
(d) Neither the Issuer, the Trustee, nor any of the Bond-
holders has or shall be entitled to assert any claim against the
Project, the Mortgage proceeds, any reserve or deposit required by
HUD in connection with the Mortgage Loan, or the rents or income of
the property other than "surplus cash" as defined in the Regulatory
Agreement, or as otherwise permitted by HUD; provided, however, the
foregoing shall not restrict any rights of the Issuer, the Trustee,
the Mortgage Servicer or any of the Bondholders against any
guarantor of the obligations of the owner, if any, with respect to
this Loan Work -Out Agreement.
Section 9.10. Limited Liability of Owner, Recourse Against
Project Assets.
(a) The monetary obligations of the Owner contained in this
Loan Work -Out Agreement (except for indemnification under Section
5.4 hereof and payments required to be made pursuant to Sections
2.2, 5.2 (p), 5.4 and 8.4 hereof) shall be limited obligations
payable solely from the income and assets of the Project and
neither the Owner or any successor or assignee thereof nor any
officer, director or employee of the Owner or any successor or
assignee thereof shall have personal liability for the satisfaction
of any obligation of the Owner or claim arising out of this Loan
Work -Out Agreement against the Owner other than from revenues of
the Project. Notwithstanding anything contained in this Loan Work-
out Agreement to the contrary, neither the Issuer, nor the Trustee
may assert any claim arising hereunder against the Owner's interest
in the Project, the proceeds of the Mortgage on the Project, any
reserve or deposit made with the Mortgage Servicer or with any
other entity that is required by HUD in connection with the giving
of the Mortgage Loan, or in the rents or other income of the
Project for the payment of any charge due hereunder except to the
extent available from "surplus cash" as that term is defined in the
Regulatory Agreement,
(b) Notwithstanding any provisions in this Loan Work -Out
Agreement to the contrary, enforcement of the provisions of this
Loan Work. -Out Agreement shall not result in any claim against the
Project, Mortgage Loan proceeds, any reserve or deposit required by
HUD or the Mortgage Servicer in connection with the Mortgage Loan,
or the rents or other income from the Project (other than available
Excess Surplus Cash as defined in the FHA Regulatory Agreement or
distributions thereof). By execution hereof, each of the
undersigned affirms that no pledge has been made and that it has no
claim, and will not later assert any claim, against the Project,
the Mortgage Loan proceeds, any reserve or deposit made with the
Mortgage Servicer or any other amounts required by HUD in
connection with the Mortgage Loan, or against the income from the
26
Project for payment of any obligation contained herein (other than
available surplus cash as defined in the FHA Regulatory Agreement
or distributions thereof); provided, however, that this provision
shall not alter, affect or diminish the rights of the Trustee or
the Mortgage Servicer under the Mortgage Loan Documents.
Section 9.11. No Liability of Issuer Officers. Notwithstand-
ing anything to the contrary contained in the Bonds, Indenture or
this Loan Work -Out Agreement, or in any other instrument or docu-
ment executed by or on behalf of the Issuer in connection herewith,
no stipulation, covenant, agreement or obligation contained herein
or therein shall be deemed or construed to be a stipulation,
covenant, agreement or obligation of any present or future member,
commissioner, director, trustee, officer, employee or agent of the
Issuer, or of any incorporator, member, commissioner, director,
trustee, officer, employee or agent of any successor to the Issuer,
and no such other person in any such person's individual capacity
shall be liable personally for any breach or non- observance of or
for any failure to perform, fulfill or comply with any such stipu-
lations, covenants, agreements or the principal of, premium, if
any, or interest on any of the Bonds or for any claim based thereon
or on any such stipulation, covenant, agreement or obligation,
against any such person, in his or her individual capacity, either
directly or through the Issuer or any successor to the Issuer,
under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such
liability of any such person, in his or her individual capacity, is
hereby expressly waived and released.
CITY OF CLEARWATER, FLORIDA
By:
Mayor
BANK ONE, COLUMBUS, NA,
Columbus, Ohio, as Trustee
By:
Its:
DREW GARDENS ASSOCIATES, LTD.,
a Florida Limited Partnership
By: Reynolds Metals
Development Company, as
General Partner
By:
27
Title:
12041.18 JHH W:RWN :rst 08/12/41
Y
$3,425,000
CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992A
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
BOND PURCHASE AGREEMENT
City of Clearwater
City Hall
Mayor and City Commission
112 South Osceola Avenue
Clearwater, Florida 34616
Drew Gardens Associates, Ltd.,
a Florida limited partnership
c/o Reynolds Metals Development Company
4501 N.W. 31st Avenue
Foist Lauderdale, Florida 33309
August 13, 1992
Ladies and Gentlemen:
Banc One Capital Corporation and Newman and Associates, Inc. (collectively, the
"Underwriters "), understand that the City of Clearwater, Florida (the "Issuer "),
proposes to issue and sell to a purchaser or purchasers to be designated by the
Underwriters $3,425,000 aggregate principal amount of the City of Clearwater, Florida
Mortgage Revenue Refunding Bonds, Series 1992A (FHA Insured Mortgage Loan - Drew
Gardena Apartments Project) (the "Bonds "), to be issued pursuant to a Trust Indenture
dated as of August 1, 1992 (the "Indenture "), between the Issuer and Bank One,
Columbus, NA, as Trustee (the "Trustee "), as set forth in the Official Statement of the
Issuer prepared for use by the Underwriters in making an offering of the Bonds (the
"Official Statement "). The proceeds from the sale of the Bonds will be used to provide
funds to refund, in part, a prior issue of bonds (the "Prior Bonds ") of the Issuer that were
issued to pay the cost of acquiring, constructing, improving and equipping a 180 -unit
multifamily residential rental housing facility project located in Clearwater, Florida (the
"Project'), owned by Drew Gardens Associates, Ltd., a Florida limited partnership (the
"Owner ").
Section 1. Purchase, Sale and Delivery of Bonds. On the basis of the representations
and agreements contained herein, but subject to the terms and conditions herein set
forth, the Underwriters agree to place on behalf of the Issuer, and the Issuer agrees to
sell to the purchaser designated by the Underwriters, all, but not less than all of the
$3,425,000 aggregate principal amount of the Bonds at a purchase price equal to the
principal amount thereof, plus accrued interest from August 1, 1992, to the Closing Date
specified below. The Issuer will deliver the Bonds to the purchaser designated by the
Underwriters in good deliverable form (including the printing of CUSIP numbers
thereon) against payment of the purchase price therefor by immediately available funds
at 10:00 a.m., pastern time, on August 18, 1992, or at such other time thereafter as may
be mutually agreed upon by the parties, such time being hereinafter referred to as the
"Closing Date."
The maturities, principal amounts, interest rates and other terms and conditions
of the Bonds shall be as set forth in Schedule I hereto.
For our services hereunder, we shall be paid fees and expenses as set forth in
Section 10 and Schedule II hereof,
Section 2. Offering, Security and Authorization. The Underwriters propose to offer
and sell the Bonds on behalf of the Issuer as set forth in the Official Statement. The
Issuer and the Owner acknowledge that they have been advised that the Underwriters
may offer the Bonds at prices above or below their principal amounts.
Section 3. Delivery of Official Statement. At the time of the acceptance of this Bond
Purchase Agreement by the Issuer (or such later date as the Underwriters may consent
to), the Issuer shall deliver to the Underwriters for review copies of the Official Statement
relating to the Bonds (which, including all appendices thereto, and with such changes
therein and supplements thereto as are consented to by the Underwriters, are referred to
as the ":Preliminary Official Statement "). The Issuer hereby ratifies the use of the
Preliminary Official Statement by the Underwriters in the marketing of the Bonds. The
Preliminary Official Statement shall be final as of its date of review, except for final
information as to the offering prices, interest rates, selling compensation, amount of
proceeds, delivery dates, other terms depending on such factors, and other information
permitted to be omitted under Rule 15c2- 12(b)(1) under the Securities Exchange Act of
1934, as amended. The Issuer shall provide to the Underwriters, within seven business
days following the date hereof (or earlier, if reasonably requested by the Underwriters), a
quantity of final Official Statements, including such final information listed in the
previous sentence (the "Official Statement ") adequate to enable the Underwriters to meet
the continuing obligations imposed on it by Rule 15c2 -12 under the Securities Exchange
Act of 1934; provided that the Underwriters shall have advised the Issuer of such quantity
within two business days following the date hereof.
Section d. Financing Documents. On or prior to the Closing Date, the Underwriters
shall have received the following:
(a) The Indenture, duly executed by the Issuer and the Trustee;
(b) The Official Statement, duly executed by the Issuer and the Owner;
(c) The Investment Agreement dated August 18, 1992, between the Trustee and
Bayerische Landesbank Oirozentrale (the "Investment Agreement "), with respect to
amounts held in the Bond Fund, the Debt Service Reserve Fund and the Mortgage
Reserve Account of the Debt Service Reserve Fund under the Indenture;
(d) The Loan Work -Out Agreement dated as of August 1, 1992, duly executed by
the Issuer, the Owner and the Trustee (the "Loan Work -Out Agreement ");
(e) The Supplemental Regulatory Agreement as to Tax Exemption (the
"Supplemental Regulatory Agreement ") dated September 1, 1992, duly executed by the
Issuer, the Owner and the Prior Trustee; and
(f) A copy of the Mortgage Note (the "Note ") duly executed by the Owner,
endorsed for insurance by FHA and amended by the Modification of Mortgage Note and
Mortgage (the "Modification Agreement ") executed by FHA in the form attached as
Exhibit A to the Loan Work -Out Agreement.
i-
r
Section 5. Representations and Warranties by the Issuer.
(a) The Issuer is a municipal corporation organized and existing under the
laws of the State of Florida (the "State ") and has full legal right, power and authority (i) to
enter into this Bond Purchase Agreement, (ii) to issue, sell and deliver the Bonds as
provided herein, (iii) to use the proceeds of the Bonds to refund the Issuer's Mortgage
Revenue Bonds, Series 1983 (FHA Insured Mortgage Loan -- Drew Gardens Apartments
Project ) (the "Prior Bonds ") and (iv) to carry out the transactions contemplated by this
Bond Purchase Agreement, the Indenture, the Official Statement, the Loan Work -Out
Agreement and the Supplemental Regulatory Agreement.
(b) The information in the Official Statement relating to the Issuer does not on
the date hereof contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements relating to the Issuer contained therein,
in light of the circumstances under which they were made, not misleading.
(c) By official action of the Issuer prior to or concurrently with the acceptance
hereof, the Issuer has duly authorized and approved the Official Statement, has duly
authorized and approved the execution and delivery of, and the performance by the
Issuer of the obligations on its part contained in, the Indenture, the Bonds, this Bond
Purchase Agreement, the Loan Work -Out Agreement and the Supplemental Regulatory
Agreement and has duly authorized and approved the consummation of all other
transactions contemplated by this Bond Purchase Agreement.
(d) The Issuer is not in breach of or default under any applicable law or
administrative regulation of the State or the United States that would impair materially
the performance of its obligations under the Indenture, the Loan Work -Out Agreement,
the Supplemental Regulatory Agreement or, this Bond Purchase Agreement or any
applicable judgment or decree or any loan agreement, note, resolution, agreement or
other instrument to which the Issuer is a party or is otherwise subject; and the execution
and delivery of the Bonds, the Indenture, this Bond Purchase Agreement, the Loan
Work -Out Agreement and the Supplemental Regulatory Agreement, and compliance
with the provisions of each thereof, will not conflict with or constitute a material breach
of or default under any law, administrative regulation, judgment, decree, loan
agreement, note, resolution, agreement or other instrument to which the Issuer is a
party or is otherwise subject.
(e) All approvals, consents and orders of any governmental authority, board,
agency or commission having jurisdiction which would constitute a condition precedent
to the performance by the Issuer of its obligations hereunder and under the Indenture,
the Bonds, the Loan Work -Out Agreement and the Supplemental Regulatory Agreement
have been obtained.
(r') Except as disclosed in the Official Statement, the Issuer has received no
notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, pending, and to its knowledge, no such action or
suit is threatened, against the Issuer affecting the existence of the Issuer or the titles of
its officials to their respective offices or seeking to prohibit, restrain or enjoin the
financing or the sale, issuance or delivery of the Bonds or the pledge of revenues or assets
of the Issuer pledged or to be pledged to pay the principal of and interest on the Bonds, or
in any way contesting or affecting the validity or enforceability of the Bonds, the
Indenture, this Bond Purchase Agreement, the Loan Work -Out Agreement, or the
Supplemental Regulatory Agreement or contesting in any way the completeness or
accuracy of the Official Statement, or contesting the powers of the Issuer or any authority
-3-
f
Aft i
for the issuance of the Bonds, the execution and delivery of this Bond Purchase
Agreement, the Indenture, the Loan Work -Out Agreement or the Supplemental
Regulatory Agreement, wherein an unfavorable decision, ruling or finding would
materially adversely affect the validity or enforceability of the Bonds, the Indenture, the
Loan Work -Out Agreement, the Supplemental Regulatory Agreement or this Bond
Purchase Agreement.
(g) The issuance and sale of the Bonds are not subject to any transfer or other
documentary stamp taxes of the State or any political subdivision thereof.
(h) The Bonds, when issued, authenticated and delivered in accordance with
the Indenture and sold to the Underwriters as provided herein, will be validly issued and
outstanding limited obligations of the Issuer enforceable in accordance with their terms
and entitled to the benefits of the Indenture as provided therein; provided, however, that
the remedies available are subject to certain limitations as more fully described in the
Official Statement.
(i) The Issuer has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that the Issuer is a bond issuer whose arbitrage
certifications may not be relied upon.
Section 6. Representations and Warranties of the Owner.
(a) The Owner is a duly organized and existing limited partnership under the
laws of the State and has full legal right, power and authority (i) to enter into this Bond
Purchase Agreement, (ii) to fulfill its obligations under the FHA Note and the Mortgage,
and (iii) to carry out the transactions contemplated by this Bond Purchase Agreement,
the Indenture, the Official Statement, the Loan Work -Out Agreement and the
Supplemental Regulatory Agreement.
(b) The information in the Official Statement under the captions "THE
PRIVATE PARTICIPANTS -- The Owner," "THE PROJECT," and "ABSENCE OF
LITIGATION," does not on the date hereof containn any untrue statement of a material
fact or omit to state a material fact necessary to make the statements relating to the
Owner contained therein in light of the circumstances under which they were made not
misleading.
(c) The Owner has duly authorized and approved the Official Statement and
has duly authorized and approved the execution, delivery of and the performance by the
Owner of the obligations on its part contained in the Bond Purchase Agreement, the Loan
Work -Out Agreement and the Supplemental Regulatory Agreement and has duly
authorized. and approved the consummation of all the transactions contemplated by this
Bond Purchase Agreement.
(d) The Owner is not in breach of or default under any applicable law or
administrative regulation of the State or of the United States that would, subsequent to the
issuance of the Bonds, impair materially the performance of its obligations under the
Loan Work -Out Agreement, this Bond Purchase Agreement, the Supplemental
Regulatory Agreement, the FHA Note, the Mortgage or any applicable judgment or
decree or any loan agreement, note, resolution, agreement or other instrument to which
the Owner is a party or otherwise subject; and the execution and delivery of this Bond
Purchase Agreement, the Loan Work-Out Agreement and the Supplemental Regulatory
Agreement: and compliance with the provisions of each thereof will not conflict with or
constitute a material breach of or default under any law, administrative regulation,
-4-
judgment, decree, loan agreement, note, resolution, agreement or other instrument- to
which the Owner is a party or otherwise subject.
(e) All approvals, consents and orders of any governmental authority, board or
commission having jurisdiction over the Owner or the Project that would constitute a
condition precedent to the performance by the Owner of its obligations hereunder and
under the Loan Work -Out Agreement, the Supplemental Regulatory Agreement, the
FHA Note or the Mortgage have been obtained.
(f) The Owner has received no notice of any pending or threatened action, suit,
proceeding, inquiry or investigation, at law or in equity, before any court, other board or
body affecting the existence of the Owner or seeking to prohibit, restrain or enjoin the
financing or the sale, issuance or delivery of the .Bonds, the refunding of the Prior Bonds
or in any way contesting or affecting the validity or enforceability of this Bond Purchase
Agreement, the Loan Work -Out Agreement, the FHA Note, the Mortgage or the
Supplemental Regulatory Agreement, or contesting the execution and delivery of this
Bond Purchase Agreement, the Loan Work -Out Agreement or the Supplemental
Regulatory Agreement, wherein an unfavorable decision relating or finding would
adversely affect the validity or enforceability of any of such documents.
(g) The Indenture has been sabmitted to the Owner for examination, and the
Owner acknowledges, by the execution of this Bond Purchase Agreement, that it has
reviewed and approved the Indenture.
(h) Neither the Issuer, nor the Underwriters nor any party on behalf of the
foregoing, prior to the date of the default on the FHA Note relating to the Project
encouraged the Owner to participate in the issuance of the Bonds and the redemption of
the Prior Bonds as a 'means to facilitate the refinancing of the FHA Note.
(4) The date on which the first missed payment on the FHA Note was due was
August 1, 1991, and prior to July 31, 1991, the FHA Note was not in default.
0) The Owner represents that it has operated and managed the Project in a
professional and appropriate manner and has taken all reasonable steps and used all
available funds to continue to make all mortgage payments due under the Mortgage
Loan, but due to economic conditions within the Clearwater, Florida area, beyond the
control of the Owner, the market rents for the Project have produced insufficient
revenues to cover the costs of operating and maintaining that Project and to pay the debt
service required under the original terms of the Mortgage Loan, which resulted on
August 1, 1991 in a default under the Mortgage Loan, subsequent to which the trustee for
the Prior Bonds (the "Prior Trustee ") assigned the Mortgage Loan to HUD, and it is
expected that HUD will pay mortgage insurance benefits to the Prior Trustee. Based on
the Owner's projection for the rental apartment market place in the Clearwater, Florida
area and the Project, the Project could not have reached a bre kk -even level of operations
in the foreseeable future under the original terms of the Mortgage Loan.
Section 7. Termination. The Underwriters may terminate their obligations
hereunder by written notice to the Issuer and the Owner if at or prior to the Closing Date:
(a) (i) Legislation shall have been enacted by the Congress, or recommended to
the Congress for passage by the President of the United States or the U.S. Department of
the Treasury or the Internal Revenue Service or any member of the United States
Congress or favorably reported for passage to either House of the Congress by any
Committee of such House to which such legislation has been referred for consideration,
-5-
or (ii) a decision shall have been rendered by a court established under Article III of the
Constitution of the United States, or the United States Tax Court, or (iii) an order, ruling,
regulation or communication (including a press release) shall have been issued by the
Treasury Department of the United States or the Internal Revenue Service, in each case
referred to in clauses (i), (ii) and (iii), with the purpose or effect, directly or indirectly, of
including in gross income for federal income tax purposes interest to be received by any
owners of the Bonds;
(b) Legislation shall have been enacted, or action taken by the Securities and
Exchange Commission, that, in the opinion of counsel to the Underwriters, has the effect
of requiring the contemplated offering of the Bonds to be registered under the Securities
Act of 1933, as amended, or the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended;
(c) There shall have occurred any material adverse change in the business or
affairs of the Owner or any material adverse change in the Project that, in the
Underwriters' reasonable judgment, has any material adverse effect on the security for
the Bonds; or
(d) There shall have occurred after the date hereof a general suspension of
trading in securities, or the declaration of a general banking moratorium by the United
States of America, State of New York or State of Florida authorities, or any war involving
the United States or other national calamity, the effect of which, in the Underwriters' .
reasonable judgment, will adversely affect the marketability of the Bonds.
Section 8. Conditions to Underwriters' Obligation. The Underwriters' obligation
hereunder to place the Bonds shall be subject to the accuracy of the representations and
warranties of the Issuer and the Owner herein, to the accuracy of statements to be made
on behalf of the issuer and the Owner, to the performance by the Issuer and the Owner of
their respective obligations hereunder, and to the following additional conditions:
(a) All official or corporate action of the Issuer and the Owner (as, and if,
applicable) relating to the Indenture, this Bond Purchase Agreement, the Supplemental
Regulatory Agreement, the Loan Work -Out Agreement and the Bonds shall be in full
force and effect and shall not have been amended, modified or supplemented, except as
may have been agreed to by the Underwriters.
(b) The Underwriters shall have received the unqualified approving legal
opinion of Bryant, Miller and Olive, P.A., Tallahassee, Florida, Bond Counsel, dated the
Closing Date with respect to the Bonds, or a reliance letter with respect thereto, together
with a supplementary letter in substantially the form attached hereto as Exhibit A.
(c) The Underwriters shall have received an opinion of counsel for the Owner
dated the Closing Date in substantially the form attached as Exhibit B.
(d) The Underwriters shall have received an opinion of the City Attorney of the
Issuer, in substantially the form attached as Exhibit C hereto.
(e) The Underwriters shall have received a certificate from the Owner in
substantially the form attached as Exhibit D hereto.
(f) The Underwriters shall have received an opinion of its counsel, Jones Hull
Hill & White, A Professional Law Corporation, San Francisco, California, dated the
Closing Date, as to such matters as the Underwriters may reasonably request. In
rendering such opinion, such counsel may rely upon the opinions of Bond Counsel with
respect to matters of State law. The Issuer and the Owner shall furnish to such counsel
such documents as they may reasonably request for the purpose of enabling them to pass
on such matters.
(g) The Underwriters shall have received a certificate, dated the Closing Date
and signed by an authorized officer of the Trustee, to the effect that (i) he or she is an
authorized officer of the Trustee; (ii) the Indenture has been duly executed and delivered
by the Trustee; (iii) the Trustee has all necessary corporate and trust powers required to
carry out the trust created by the Indenture; and (iv) to the best of his or her knowledge,
the acceptance by the Trustee of the duties and obligations of the Trustee under the
Indenture and compliance with the provisions thereof will not conflict with or constitute
a breach of or default under any law, administrative regulation, consent decree or any
agreement or other instrument to which the Trustee is subject.
(h) The Underwriters shall have received an opinion of counsel to the Trustee
in substantially the form attached as Exhibit E hereto.
(i) The Underwriters shall have received a certificate, dated the Closing Date
and signed on behalf of the Issuer, to the effect that:
(A) except as disclosed in the Official Statement under the caption
"ABSENCE OF LITIGATION," no litigation or other proceedings are pending or,
to the knowledge of the person or persons signing the certificate, threatened in any
court or other tribunal of competent jurisdiction, state or federal, in any way (A)
restraining or enjoining the issuance, sale or delivery of the Bonds, (B)
questioning or affecting the validity of this Bond Purchase Agreement, the Bonds,
the Indenture, the pledge to the Bondholders of any money or other security
provided under the Indenture, the Loan Work -Out Agreement, the Supplemental
Regulatory Agreement, or any other transaction referred to in the Official
Statement, (C) questioning or affecting the validity of any of the proceedings for the
authorization, sale, execution, issuance or delivery of the Bonds, (D) questioning
or affecting the organization or existence of the Issuer or the title to any office of
the executive officers thereof or (E) questioning or affecting the power and
authority of the Issuer to issue the Bonds, or to execute this Bond Purchase
Agreement, the Indenture, the Supplemental Regulatory Agreement, the Loan
Work -Out Agreement or the Official Statement;
(B) the information in the Official Statement and the Placement
Memorandum regarding the Issuer under the captions "THE ISSUER" and
"ABSENCE OF LITIGATION" does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading; and
(C) the Issuer has complied with and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date and the
representations and warranties of the Issuer contained herein are true, complete
and correct as of the Closing Date.
0) The Underwriters shall have received arbitrage certifications by the Issuer
and the Owner in form and substance satisfactory to Bond Counsel.
.7.
fi
W The Underwriters shall have received a certificate dated the Closing Date
and signed by an authorized officer of the Trustee, with respect to the sources and uses of
funds deposited under the Indenture.
(1) The Underwriters shall have received an opinion 'of Bond Counsel to the
effect that the Prior Bonds have been refunded or defeased and are no longer entitled to
any lien on the assets of the Issuer or the Owner.
(m) Standard & Poor's Corporation shall have issued a rating of "AAA" on the
Bonds and no action shall have been taken, discussed or proposed with a view to the
suspension or withdrawal of such rating as of the Closing Date.
(n) At the Closing Date, the Underwriters shall receive an opinion from
counsel to each institution providing an Investment Agreement, and counsel to any
guarantor thereof, to the effect that the Investment Agreement, or the guaranty, as the
case may be, constitutes a legal, valid and binding obligation of said institution,
enforceable in accordance with its terms, except as may be limited by applicable
reorganization, insolvency, liquidation, readjustment of debt or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
(o) At the Closing Date, the Purchaser shall receive satisfactory evidence that
the Trustee has received the Owner Deposit and the Collateral Deposit (each as defined in
the Indenture) in an amount and in such form that is satisfactory to the Underwriters
and to satisfy the rating requirement of Standard & Poor's Corporation, with respect to
the Bonds.
Section 9. Covenants. The Issuer and the Owner covenant and agree with the
Underwriters as follows:
(a) If between the date of this Bond Purchase Agreement and the date 90 days
following the Closing Date an event occurs that is known to the Issuer or the Owner that
would cause the Official Statement to contain an untrue statement of a material fact or to
omit to state a material fact necessary in order to make the statements therein in light of
the circumstances under which they were made, not misleading, the Issuer or the
Owner, as the case may be, shall notify the Underwriters, and if in the opinion of the
Issuer or the Underwriters, such event requires an amendment or supplement to the
Official Statement, the Issuer will amend or supplement the Official Statement in a form
and in a manner approved by the Issuer and the Underwriters; provided however, that if
such event shall occur on or prior to the Closing Date, the Underwriters in their sole
discretion shall have the right to terminate the Underwriters' obligations hereunder by
written notice to the Issuer and the Owner, and the Underwriters shall be under no
obligation to purchase and pay for the Bonds.
(b) To the extent required by the Indenture, the Supplemental Regulatory
Agreement or the Loan Work -Out Agreement, the Owner and the Issuer each shall take
all necessary actions to cause the Bonds to comply with the provisions of the laws and
regulations of the State pursuant to which the Bonds are issued and of the Code, as that
terns is defined in the Indenture, and will not take any action, or permit any action
within its control to be taken, in violation of such provisions or that would cause interest
on the Bonds to be included in gross income for federal income tax purposes.
Section 10, Payment to Underwriters and Payment of Expenses. The Underwriters
shall pay their own expenses; the fees and expenses of their counsel; the initial rating
agency fees; the cost of printing the Bonds, the Preliminary Official Statement and the
-K.
Official Statement; takedown and concession for selling the Bonds (portions of which,-to
the extent the Bonds are placed by the Underwriters, will be retained by the Underwriters
as part of their compensation) and certain additional expenditures, estimates of which
are all more particularly set forth in Schedule II hereof. The Owner shall pay or cause to
be paid from the Costs of Issuance Fund (established under the Indenture), a payment to
the Underwriters of $146,817, the fees and expenses of Bond Counsel; the fees and
expenses of Financial Advisor to the Issuer; the initial Trustee fees and expenses; and
the fees and expenses of counsel to the Trustee; estimates of which are set forth in
Schedule II hereof.
Section 11. Survival of Covenants and Representations. The respective agreements,
covenants, representations, warranties and other statements of the Issuer, the
Underwriters, and the Owner and of their respective officers set forth in or made
pursuant to this Bond Purchase Agreement will remain in full force and effect,
notwithstanding any investigation made by or on behalf of any party hereto, and shall
survive the delivery of and payment for the Bonds.
Section 12. Notices. Any notice or other communication to be given to the Issuer
under this Bond Purchase Agreement may be given by delivering the same in writing to
the Issuer at its address set forth above, and any notice or other communication to the
Owner may be given by delivering the same in writing to the Owner at its address set
forth above with a copy to: Drew Gardens Associates, Ltd., 6601 West Broad Street,
Richmond, Virginia 23230, Attention: Corporal,.; Secretary. Any notice or other
communication to be given to the Underwriters under this Bond Purchase Agreement
may be given by delivering the same in writing to Banc One Capital Corporation, 90 North
High Street, Columbus, Ohio 43215, Attention: James F. Croft, 'Mice President.
Section 13. Governing Lave. This Bond Purchase Agreement shall be governed by
the laws of the State.
Section 14. Indemnification and Contribution. (a) To the fullest extent permitted by
applicable law, the Owner and the undersigned General Partner of the Owner (jointly
and severally) (each, an "Indemnifying Party" and collectively, the "Indemnifying
Parties ") agree to indemnify and hold harmless the Issuer, the Trustee and the
Underwriters and the additional persons described in subsection (b) hereof (each, an
"Indemnified Party" and collectively, the "Indemnified Parties ") against any and all
losses, damages, expenses (including legal and other fees and expenses), liabilities or
claims (or actions in respect thereof), joint or several, to which the Indemnified Parties,
or any of them, may become subject under the federal or state securities laws or any other
statutory law or at common law or otherwise, arising out of or based upon or in any way
relating to:
(i) the redemption of the Prior Bonds and/or the issuance, sale or
delivery of the Bonds to the extent involving the redemption of the Prior Bonds,
including, without limitation, any claim against any Indemnified Party by MBIA
or any other person relating to the application of the residual funds held by the
Prior Trustee under the Prior Indenture;
(ii) any untrue statement or misleading statement or alleged untrue
statement or alleged misleading statement of a material fact contained in the
Preliminary Official Statement or the Official Statement for the Prior Bonds or in
the Preliminary Official Statement or the Official Statement for the Bonds relating
to the matters described in paragraph (i) above, the Owner, the Project or the
defaulted Mortgage Loan or any omission or alleged omission from the
-9-
Preliminary Official Statement or the Official Statement for the Prior Bonds'or
from the Preliminary Official Statement or the Official Statement for the Bonds of
any material fact relating in any way to the matters described in paragraph (i)
above, the Owner, the Project or the defaulted Mortgage Loan, necessary to be
stated therein in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; or
(iii) claims against any Indemnified Party by the United States
Department of Housing and Urban Development ( "HUD ") or any authorized agent
or employee thereof asserting a right to indemnification (other than pursuant to a
contractual arrangement) and/or defense against any loss or expense allegedly
incurred by HUD as a result of any claim against HUD or such agent or employee
relating to the redemption of the Prior Bonds and/or the issuance, sale or delivery
of the Bonds for the purpose of redeeming the Prior Bonds or the defaulted
Mortgage Loan.
It is the intention of the parties that such indemnification shall cover liabilities,
losses, damages, costs, expenses and fees (including reasonable legal and other fees and
expenses) and claims (or actions in respect thereof) arising out of the negligence of any
Indemnified Party and, to the fullest extent permitted by applicable law, that such
indemnification shall also cover liabilities, losses, damages, costs, expenses and fees
(including reasonable legal and other fees and expenses) and claims (or actions in
respect thereof) arising out of conduct by the Indemnifying Parties which is deemed to
involve "scienter" within the meaning of Rule 10b -5 under the Securities Exchange Act of
1934, as amended (the "1934 Act "), but shall not otherwise cover conduct deemed to
involve the gross negligence or willful misconduct of any Indemnified Party. This
indemnification is in addition to any liability which each Indemnifying Party may
otherwise have.
(b) The indemnity provided under this Section 14 shall extend upon the same
terms and conditions to each officer, commissioner, employee, agent and attorney of the
Issuer, the Trustee and the Underwriters, Bond Counsel, and each person, if any, who
controls the Issuer, the Trustee or the Underwriters within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "1933 Act ") or Section 20 of the 1934 Act. Such
indemnity shall also extend, without limitation, to any and all expenses (subject to
paragraph. (c) below) whatsoever reasonably incurred by any Indemnified Party in
connection with investigating, preparing for or defending against, or providing evidence,
producing documents or taking any other reasonable action in respect of, any such loss,
damage, expense, liability or claim (or action in respect thereof), whether or not resulting
in any liability, and shall include any loss to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened, or of any claim whatsoever as set
forth herein if such settlement is effected with the written consent of each Indemnifying
Party.
(c) Within a reasonable time after an Indemnified Party under paragraphs (a)
and (b) of this Section 14 shall have been served with the summons or other first legal
process or shall have received written notice of the threat of a claim in respect of which
an indemnity may be claimed hereunder, such Indemnified Party shall, if a claim for
indemnity in respect thereof is to be made against any Indemnifying Party under this
Section 14, notify each Indemnifying Party from whom indemnity is sought in writing of
the commencement thereof; but the omission so to notify an Indemnifying Party shall not
relieve that Indemnifying Party from any liability that it may have to any Indemnified
Party other than pursuant to paragraphs (a) and (b) of this Section 14 and the omission
so to notify an Indemnifying Party by the Issuer shall have no effect on the
W.
indemnification of the Issuer. The Indemnifying Party from which indemnity is sought
shall be entitled to participate at its own expense in the defense, and if the Indemnifying
Party so elects within a reasonable time after receipt of such notice, or all Indemnified
Parties seeking indemnification in such notice so direct, the Indemnifying Party shall
assume the defense of any suit brought to enforce any such claim, and in either such
case, such defense shall be conducted by counsel chosen promptly by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party ( "Litigation Counsel ");
provided, however, that if the defendants in any such action include such an Indemnified
Party and one or more Indemnifying Parties or include more than one Indemnified
Party, and any such Indemnified Party shall have been advised by Litigation Counsel
that there may be legal defenses available to such Indemnified Party which are different
from or additional to those available to one or more of the Indemnifying Parties or
another defendant Indemnified Party, and which in the reasonable opinion of Litigation
Counsel are sufficient to make it undesirable for the same counsel to represent such
Indemnified Party and one or more of the Indemnifying Parties and/or another
defendant Indemnified Party, such Indemnified Party shall have the right to employ
separate counsel in such action (and the Indemnifying Party or Indemnifying Parties
shall not be entitled to assume the defense thereof on behalf of such Indemnified Party),
and in such event the reasonable fees and expenses of such counsel shall be borne by the
Indemnifying Parties. Nothing contained in this paragraph (c) shall preclude any
Indemnified Party, at its own expense, from retaining additional counsel to represent
such party in any action with respect to which indemnity may be sought from the one or
more of the Indemnifying Parties hereunder.
(d) In order to provide for just and equitable contribution in circumstances in
which the indemnity provided for in paragraphs (a), (b) and (c) of this Section 14 is for any
reason held to be unavailable from one or more of the Indemnifying Parties, or is
inadequate, or the Issuer, the Trustee, the Underwriters or the Owner or undersigned
General Partner of the Owner, or any person described in subsection 14(b) hereof, has
incurred any loss, damage, expense (including legal and other fees and expenses),
liability or claim (or any action in respect thereof) of the nature described in subsection (a)
above, then the Owner and the undersigned General Partner (jointly and severally) agree
to contribute to any such loss, damage, expense (including legal and other fees and
expenses), liability or claim (or action in respect thereof) in proportion to the net present
value of the savings resulting from the refunding (computed at a discount rate equal to
the yield on the Bonds) and the Underwriters agree to contribute in proportion to its fee as
set forth in Schedule II of this Bond Purchase Agreement; provided, however, that the
total contribution of the Underwriters hereunder shall not exceed the fee of the
Underwriters set forth in Schedule II of this Bond Purchase Agreement. Neither the
Issuer, the Trustee, nor any other persons described in paragraph 14(b) above shall have
any obligation to contribute. The contribution provided by this paragraph (d) shall also
extend, without limitation, to any and all expenses whatsoever reasonably incurred in
connection with investigating, preparing for or defending against, or providing evidence,
producing documents or taking any other reasonable action in respect of, any such loss,
damage, expense, liability or claim (or action in respect thereof), whether or not resulting
in any liability, and shall include any loss to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened, or of any claim whatsoever as set
forth herein if such settlement is effected with the written consent of the party from
whom contribution is sought hereunder. For purposes of this paragraph (d) each officer,
commissioner, employee, agent or attorney of the Issuer, the Trustee, the Underwriters
or the Owner or any of the undersigned General Partner and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall, under the same circumstances, have the same rights to
contribution as do the Issuer, the Trustee, the Underwriters and the Owner and each of
the undersigned General Partner hereunder. Within a reasonable time after a person
entitled to contribution under this paragraph (d) of Section 14 shall have been served with
the summons or other first legal process or shall have received written notice of the
threat of a claim in respect of which contribution may be sought hereunder, such person
shall, if a claim for contribution is to be made against the foregoing contributing parties
under this paragraph (d), notify the contributing parties in writing of the commencement
thereof; but the omission so to notify the contributing parties shall not relieve the
contributing parties from any liability that they or any of them may have other than
pursuant to this paragraph (d); provided, however, that any notice given by any
Indemnified Party for purposes of, and as provided in, paragraph (c) of this Section 14
shall constitute notice for purposes of this paragraph (d).
(e) The indemnity provided by Sections 14(a) through 14(c) hereof shall be in
addition to any other liability that each Indemnifying Party may have, and the
contribution provided in Section 14(d) hereof shall be in addition to any other liability
which the Owner and each of the undersigned General Partner and the Underwriters
may otherwise have hereunder, at common law or otherwise, and is provided solely for
the benefit of the persons specified above, as applicable, and each commissioner, officer,
employee, agent, attorney and controlling person referred to therein, and their respective
successors, assigns and legal representatives, and no other person shall acquire or have
any right under or by virtue of such provisions of this agreement.
Section 15. Effectiveness. This Bond Purchase Agreement shall become effective
upon the execution of the acceptance hereof by the Issuer and the Owner.
Section 16. HUD and FHA Requirements to Control. Notwithstanding anything in
this Bond Purchase Agreement to the contrary, the provisions of this Bond Purchase
Agreement are subject and subordinate to the National Housing Act, all applicable HUD
insurance (and Section 8, if applicable) regulations and related administrative
requirements and the Mortgage Loan Documents, and all applicable FHA regulations
and related administrative requirements in effect as of the date hereof, and in the event of
any conflict between the provisions of this Bond Purchase Agreement and the provisions
of the National Housing Act, any applicable HUD regulations, related administrative
requirements and the Mortgage Loan Documents, and any applicable FHA regulations
and related administrative requirements, the said National Housing Act, HUD
regulations, related administrative requirements and Mortgage Loan Documents, and
the said FHA regulations and related administrative requirements shall be controlling in
all respects.
Section 17. Counterparts. This Bond Purchase Agreement may be executed in two
or more counterparts, each of which shall be deemed the same document.
-12-
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed copy of this Bond Purchase Agreement,
whereupon it will become a binding agreement among the Underwriters, the Issuer and
the Owner in accordance with its terms.
Very truly yours,
BANC ONE CAPITAL CORPORATION
N]EWMAN AND ASSOCIATES, INC.
By: BANC ONE CAPITAL CORPORATION
By:
Title:
The foregoing is confirmed and accepted as of the date first above written.
CITY OF CLEARWATER, FLORIDA
By:
Title:
DREW GARDENS ASSOCIATES, LTD.,
z
A FLORIDA LIMITED PARTNERSHIP
By: Reynolds Metals Development Company
By:
Title: _
13
SCHEDULEI
MATURITIES, PRINCIPAL AMOUNTS AND INTEREST RATES
Maturity Principal Interest
I2� ��
$3,425,000 6.50%
October 1, 2025
-14-
mm-
100%
t J.
,.r
r
a
SCHEDULE II
DISCLOSURE STATEMENT
The undersigned, as Underwriters, propose to negotiate with City of Clearwater,
Florida, (the City) for the sale of $3,425,000 principal amount of its Mortgage Revenue
Refunding Bonds, Series 1992A (FHA Insured Mortgage Loan -- Drew Gardens
Apartments Project) (the "Bonds "), to be completed on this date. Prior to the award of the
Bonds, the following information is hereby furnished to the City:
1. Set forth is an itemized list of the nature and estimated amounts of
expenses to be incurred by the Underwriters and the Owner in connection with the
issuance of the Bonds:
ESTIMATED COST OF ISSUANCE
Payment to Underwriters* $146,817
Bond Counsel Fees and Expenses 38,000
Issuer's Fees and Expenses 10,)00
Issuer's Financial Advisor Fees and Expenses 12,600
Initial Trustee Fees and Expenses including Trustee Counsel 5.000
TOTAL $210,417
'From such amount (which includes the Underwriters' Management Fee and
Underwriting Fee), the Underwriters will pay the following additional costs of issuing
and selling the Bonds (to the extent that such additional costs vary from the estimates
thereof, the Underwriters will be responsible to cover such variance from their
- Management and Underwriting Fees):
E)(PENSES TO BE PAID BY UNDERWRITERS
Underwriters' Counsel Fees and Expenses
$25,000
30,000
Owner's Counsel Fees and Expenses
Initial Rating Agency Fees and Expenses (Estimate)
12,500
Preliminary Official Statement and Official Statement
5,000
Printing Costs (Estimate)
3 000
Printing of Bonds (Estimate)
2,854
Federal Funds Charge (Estimate)
3,000
Miscellaneous Expenses (Estimate)
750
CUSIP, MSRB, PSA Expenses (Estimate)
1,713
Bond Clearance (Estimate)
3,000
Title Policy Fees (Estimate)
$86,817
1WAL
2. Set forth below are the names, addresses and estimated amounts of
compensation of all "finders" as defined in Section 218.386, Florida Statutes:
NONE
15-
3. The amount of the underwriting spread expected to be realized by the
Underwriters is $146,817 ($42.87 per Bond) which includes the following:
PerBond
Management Fee $60,000 $17.50
Expenses 86,817 25.35
4. The management fee to be charged by the Underwriters is $60,000 ($17.50
per Bond).
5. Set forth below are all other fees, bonuses and other compensation
estimated to be paid by the Underwriters on behalf of the City from Bond proceeds in
connection with the Bond issue to all persons not regularly employed or retained by them.
All amounts listed as expenses to be paid by Underwriters under paragraph 1.
6. The names and addresses of the Underwriters connected with the Bonds
are set forth below:
Banc One Capital Corporation
90 North High Street
Columbus, Ohio 43215
Newman and Associates, Inc.
9428 Baymeadows Road, Suite 240
Jacksonville, FL 32256
7. The City is proposing to issue $3,425,000 of debt or obligations for the
purpose of refunding certain revenue bonds currently outstanding and to pay costs of
issuance of the Bonds. This debt or obligation is expected to be repaid over a period of
thirty -two and one half years (32.5) years. At a forecasted interest rate of 6.50 %, total
interest paid over the life of the debt or obligation will be $5,026,667.
8. The source of repayment or security for this proposal is the payments on the
Mortgage Loan for the Project, which Mortgage Loan is insured by the Federal Housing
Administration, an agency of the federal government. Authorizing this debt will result
in no funds of the Issuer being available to meet debt service on the Bonds nor will it
result in any money otherwise available not to be available to meet any operating
expenses of the Issuer.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
«1h-
EXHIBIT A
[LETTERHEAD OF BOND COUNSEL]
[Closing Date]
Banc One Capital Corporation
Columbus, Ohio
Newman and Associates, Inc.
Jacksonville, Florida
City of Clearwater
Clearwater, Florida
$3,425,000
CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992A
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
Ladies and Gentlemen:
We have acted as Bond Counsel in connection with the authorization and issuance
of the above - captioned Bonds (the "Bonds ") by the City of Clearwater, Florida (the
"Issuer ").
In our capacity as Bond Counsel, we have reviewed the statements set forth in the
Official Statement of the Issuer relating to the Bonds (the "Official Statement ") under the
captions "INTRODUCTION," "THE BONDS," "THE INDENTURE," "TI'!E
SUPPLEMENTAL REGULATORY AGREEMENT," "THE LOAN 'WORK -OUT
AGREEMENT," "TAX EXEMPTION" and "LEGAL MATTERS ". Insofar as such
statements constitute summaries of certain provisions of the documents, instruments
and matters referred to therein, we are of the opinion that the information called for with
respect to such documents, instruments and matters is fairly presented. The limitations
inherent in our review are such, however, that we assume no responsibility for the
accuracy, completeness or fairness of the statements contained in the Official Statement
except for those made under the captions set forth above.
The proceedings to redeem the Issuer's $6,450,000 aggregate original principal
amount of the Issuer's Mortgage Revenue Bonds, Series 1933 (FHA Insured Mortgage
Loan -- Drew Gardens Apartments Project ) (the "Prior Bonds ") without premium on
September 1, 1992, are permitted under the trust indenture securing the Prior Bonds (the
"Prior Indenture "), and the lien of the Prior Indenture upon the trust estate established
thereunder has been released.
You may rely upon our opinion of even date herewith addressed to the Issuer with
respect to the Bonds as if such opinion had been addressed to you.
Very truly yours,
A -1
n
EXH BrF B
[FORM OF OWNER'S COUNSEL OPINION]
[Closing Date]
k
Banc One Capital Corporation
Columbus, Ohio
f'
City of Clearwater
Clearwater, Florida
Jones Hall Hill & White, A Professional Law Corporation'.
San Francisco, California
Bank One, Columbus, NA, {
as Trustee
Columbus, Ohio
$3,425,000
CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992A
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
Ladies and Gentlemen:
We have acted as counsel to Drew Gardens Associates, Ltd., a Florida limited
partnership (the "Owner "), in connection with its acquiring, constructing, improving
and equipping a 180 -unit multifamily residential rental housing facility project located in
Clearwater, Florida (the "Project "). In connection with the issuance on this date by the
City of Clearwater, Florida (the "Issuer "), of the above - referenced Bonds (the "Bonds "),
we have examined the following: the Owner's Partnership Agreement, dated
the Trust Indenture (the "Indenture "), dated as of August 1,
"Trustee
the Issuer and Bank One, Columbus, NA, as Trustee (the t the Loan Work -Out
Agreement (the "Loan Work -Out Agreement "), dated as of August 1, 1992, between the
Issuer, the Owner and the Trustee; the Supplemental Regulatory Agreement dated as of
August 1, 1992, among the Issuer, the Owner and the Trustee (the "Supplemental
Regulatory Agreement "); the Mortgage Note (the "Note "), dated October s amended on
amended on August , 1992, and the Mortgage dated October 12,
August _, 1992 (the "Mortgage "); the Bond Purchase Agreement (the "Bond Purchase
Agreement) dated August 18, 1992, by and among the Issuer, the Owner and Banc One
Capital Corporation and Newman and Associates, Inc. (collectively, the
"Underwriters "); and the Official Statement relating to the Bonds (the "Official
Statement "). The Note and the Mortgage are hereinafter referred to for convenience as
the Security Documents.
We have investigated such matters of law and the aforesaid documents necessary
F' 1
to render the opinions set forth below. In rendering such opinion we have relied upon the
foregoing documents with respect to the accuracy and completeness of the factual
matters contained herein. In our examination of such documents we have assumed the
genuineness of signatures on original documents (except as otherwise opined as to
execution) and the conformity to original documents of all copies submitted to us as
B -1
certified, conformed, or photographic copies and as to certificates of public officials, we
have assumed the same to have been properly given and to be accurate.
The opinions given herein are limited to the laws of the United States and the State
of Florida and no opinion is expressed with respect to the laws of any other jurisdiction or
state with respect to the effect of any such laws or the matters dealt with herein.
On the basis of the foregoing, we are of the opinion that:
(1) The Owner is a limited partnership duly formed and validly existing under
the laws of the State of Florida, and all requirements for its legal formation in accordance
with the provisions of the laws of the State of Florida, have been complied with, and the
Owner has full power and authority to conduct its business as presently conducted, to
own its properties in its name, and to consummate the transactions contemplated by the
Bond Purchase Agreement, the Indenture, the Loan Work -Out Agreement, the
Supplemental Regulatory Agreement and the Security Documents;
(2) The execution, delivery and due performance of the Security Documents,
the Supplemental Regulatory Agreement, the Loan Work -Out Agreement and the Bond
Purchase Agreement have been duly authorized by all necessary action on the part of the
Owner and have been duly executed and delivered by the Owner and the Security
Documents constitute legal, valid and binding agreements or obligations of the Owner
enforceable against the Owner in accordance with their respective terms except as
enforcement may be limited by bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally;
(3) The Note has been finally endorsed by FHA for Mortgage Insurance;
(4) The Owner has a fee simple interest in the real property upon which the
Project is 'located, subject to the Security Documents. [Except as described in the policy of
title insurance issued by to on the date hereof (and to
which we render no opinion)], there is no contract or other obligation providing for or
requiring the Owner to convey the Owner's interest in the Project or any estate or interest
therein to any party other than as provided in the Security Documents, and no party other
than the Issuer and the Trustee under the Security Documents has any beneficial or
equitable right, title or interest in the Project;
(5) The execution, delivery and due performance of the Security Documents by
the Owner and compliance by the Owner with all the provisions thereof, (a) is not and
will not be in contravention of any law, ordinance or governmental rule or regulation
currently applicable to the Owner, (b) is not and will not conflict with, or constitute, on
the part of the Owner, a breach or default under the provisions of its partnership
agreement and certificate of limited partnership or of any indenture, mortgage, deed of
trust, note, or other instrument or agreement to which the Owner is a party or by which
it is bound, or of any statute or license or judgment, decree or order of any court, agency
or body having jurisdiction over the Owner or any of its activities or properties, and (c) is
not and will not result in the creation of any lien or encumbrance upon any property of
the Owner (other than the lien contemplated by the Indenture and the Security
Documents);
(6) The information contained in the Official Statement and the Placement
Memorandum under the captions "PRIVATE PARTICIPANTS- -The Owner" and "THE
PROJECT" presents a true and accurate statement with respect to the information
purported to be summarized therein;
B -2
S
(7) All consents, approvals, authorizations and orders of, or filing, registration
j or qualification with, any governmental or regulatory authority which are required to be
obtained by the Owner for the consummation of the transactions contemplated by the
Supplemental Regulatory Agreement, the Loan Work -Out Agreement and the Security
Documents have been duly and validly obtained or performed and are in full force and
effect;
(S) There is no action, suit, proceeding or investigation at law or in equity
before or by any court, arbitration board or tribunal, public board or body pending or
In- eatened against or affecting the Owner, 'or, to the best of our knowledge, any basis
therefor, wherein an unfavorable decision, ruling or finding (i) would restrain or enjoin
or question the execution or delivery of the Supplemental Regulatory Agreement, the
Indenture, the Loan Work -Out Agreement, the Security Documents or the Bond
Purchase Agreement or (ii) could adversely affect the transactions contemplated by the
Supplemental Regulatory Agreement, the Bond Purchase Agreement, the Indenture, the
Loan Work -Out Agreement and the Security Documents or any other agreement or
instrument to which the Owner is a party and which is used or contemplated for use in
consummation of the transactions contemplated by the Supplemental Regulatory
Agreement, the Bond Purchase Agreement, the Indenture, the Loan Work -Out
Agreement or the Security Documents; and
On the basis of information developed in the course of our representation of the
Owner, no facts have come to our attention that would lead us to believe that the Official
Statement contains an untrue statement of a material fact or omits to state a material
fact necessary to be stated therein in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Very truly yours,
B•;
EXHIBIT C
[LETTERHEAD OF COUNSEL TO THE ISSUER]
[Closing Date]
City of Clearwater
Clearwater, Florida
Bank One, Columbus, NA,
as Trustee
Columbus, Ohio
Bryant, Miller and Olive, P.A.
Tallahassee, Florida
$3,425,000
CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992A
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
Ladies and Gentlemen:
I have acted as counsel to the City of Clearwater, Florida, (the "Issuer ") in
connection with the issuance of its $3,425,000 Mortgage Revenue Refunding Bonds, Series
1992A (FICA Insured Mortgage Loan -- Drew Gardens Apartments Project) (the "Bonds ").
In so acting, I have examined:
(i) Ordinance No. 5256 -92 (the "Ordinance') adopted by the City Commission of
City of Clearwater, Florida on August 13, 1992, authorizing the issuance and sale of the
Bonds;
(ii) Trust Indenture between the Issuer and Bank One, Columbus, NA,
Columbus, Ohio (the "Trustee') dated as of August 1, 1992 (the "Indenture");
(iii) Loan Work -Out Agreement among the Issuer, the Trustee, and Drew
Gardens Associates, Ltd., a Florida limited partnership (the "Owner "), dated as of
August 1, 1992 (the "Loan Work -Out Agreement ");
(iv) Supplemental Regulatory Agreement as to Tax Exemption dated September
1, 1983, among the Issuer, the Owner and the Prior Trustee named therein, (the
"Supplemental Regulatory Agreement ");
(v) executed financing statements;
(vi) an executed and authenticated Bond;
(vii) an Official Statement dated August 13, 1992, relating to the Bonds (the
"Official Statement ");
(viii) a Bond Purchase Agreement dated August 13 1992 (the "Bond Purchase
Agreement"), by and among Banc One Capital Corporation and Newman and
Associates, Inc. (collectively, the "Underwriters "), the City and the Owner;
C -1
(ix) relevant provisions of the Constitution and laws of the State of Florida; and
(x) other proofs submitted to us relative to the issuance and sale of the Bonds.
Unless the context clearly indicates otherwise, each capitalized term used in this
opinion letter shall have the same meaning as set forth in the Indenture.
As to questions of fact material to my opinion I have relied upon representations of
the City and the Owner contained in the Indenture and the Loan Work -Out Agreement,
the certified proceedings and other certifications of public officials furnished to me,
without undertaking to verify the same by independent investigation.
I am qualified to practice law in the State of Florida, and I do not purport to be
experts on, or to express any opinion herein concerning, any law other than the law of
the State of Florida and the Federal law of the United States of America.
I have not examined, and express no opinion as to, the existence of or title to real
or personal property and I express no opinion as to the creation, validity or priority of any
lien upon, assignment of, pledge of, or security interest in, real or personal property.
I have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the conformity to original documents of all documents
submitted to me as certified or photostatic copies and the authenticity of the originals of
such latter documents.
Reference is made to the opinion of even date herewith of Byrne, Costello &
Pickard, P.C., counsel to the Owner, with respect to certain matters pertaining to the
Owner and to the documents executed and delivered by the Owner. I express no opinion
as to any of the matters set forth in such opinion.
Based on my examination and subject to the foregoing, and having regard to legal
questions which I deem relevant, I am of the opinion, as of the date hereof and under
existing law, as follows:
1. The Issuer is a duly organized body politic and corporate and a municipal
corporation of the State of Florida, validly existing under the Constitution and statutes of
the State of Florida. The Issuer has all necessary power and authority (i) to enter into,
perform and consummate all transactions contemplated by the Indenture, the Loan
Work -Out Agreement, the Official Statement, the Supplemental Regulatory Agreement
and the Bond Purchase Agreement; and (ii) to execute and deliver the documents and
instruments to be executed and delivered by it in connection with the issuance and sale of
the Bonds.
2, The Issuer has complied with all of the requirements of Florida law with
respect to the authorization, execution and delivery of the documents and instruments
referred to above.
3. The Loan Work -Out Agreement, the Indenture, the Supplemental
Regulator Agreement and the Bond Purchase Agreement have been duly executed and
delivered by the Issuer, and assuming the validly authorized execution and delivery
thereof by each party thereto in addition to the Issuer, and are valid and binding limited
obligations of the Issuer in accordance with their respective terms.
('
4. No additional or further approval, consent or authorization of any
governmental or public agency or authority not already obtained is required by the Issuer
in connection with the refinancing of the Project or entering into and performing its
obligations under the Loan Work -Out Agreement, the Indenture, the Supplemental
Regulatory Agreement and the Bond Purchase Agreement.
5. The execution, delivery and performance by the Issuer of the Loan Work -
Out Agreement, the Indenture, the Supplemental Regulatory Agreement and the Bond
Purchase Agreement will not violate any provision of Federal or Florida law or any
applicable order or regulation of any court or of any public or governmental agency or
authority of the State of Florida, and will not conflict with, or result in the breach of any of
the provisions of, or constitute a default under the provisions of any law applicable to the
powers and functions of the Issuer, or, to the best of my knowledge, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Issuer is a party
or by which it or its properties are bound.
6. To the best of my knowledge after diligent inquiry of representatives of the
Issuer but without having made any further investigation, there is no action, suit,
proceeding, inquiry or investigation at law or in equity, before or by any judicial or
administrative court or agency, pending or, threatened against or affecting the Issuer or
its property wherein an unfavorable decision, ruling or finding would adversely affect the
validity or enforceability of the Loan Work -Out Agreement, the Indenture, the
Supplemental Regulatory Agreement or the Bond Purchase Agreement in accordance
with their respective terms, or in any way relating to, affecting the issuance, sale,
execution or delivery of the Bonds or of any of the proceedings had or actions taken
leading up to the execution and delivery of the same or the Loan Work -Out Agreement,
the Indenture, the Supplemental Regulatory Agreement , the Official Statement or Bond
Purchase Agreement or the acquisition and rehabilitation or operation of the Project for
which the Bonds are being issued, or the payment of interest on or principal of the Bonds,
or otherwise affecting or questioning the validity of the Bonds.
7. All resolutions, ordinances and actions of the Issuer relating to the above -
mentioned documents and all related proceedings comply with all applicable statutes
governing the Issuer and all rules and regulations of the Issuer.
8. None of the proceedings had or actions taken with regard to any of the
documents mentioned herein, including without implied limitation the proceedings
relating to the execution, issuance, sale and delivery of the Bonds, has or have been
repealed, rescinded or revoked, and all such proceedings and actions remain in full force
and effect on the date hereof.
9. The execution and delivery of the Official Statement by the Issuer and its
distribution have been authorized by the Issuer. After reasonable investigation, I have no
reason to believe that the information contained in the Official Statement under the
captions "THE ISSUER" and "ABSENCE OF LITIGATION" is not complete and accurate
or contains any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
It is to be understood that the rights of any holder of the Bonds and the
enforceability of the Indenture, the Loan Work -Out Agreement, the Supplemental
Regulatory Agreement and the Bond Purchase Agreement may be subject to (a)
bankruptcy, insolvency, reorganization, moratorium and other similar laws heretofore
or hereafter in effect affecting creditors' rights, to the extent constitutionally applicable,
C" -4
(b) the valid exercise of the constitutional powers of the United Sates of America and- of
the sovereign police and taxing powers of state or other governmental units having
jurisdiction, and (c) the exercise of judicial discretion in accordance with general
principles of equity (whether applied in a court of law or a court of equity). In addition,
enforceability of the provisions of the Bond Purchase Agreement and the Loan Work -Out
Agreement pertaining to indemnification may also be limited by applicable securities
laws and public policy.
I hereby consent to the reference to me on the front cover and under the caption
"LEGAL MATTERS" in the Official Statement. This opinion may be relied upon by Bond
Counsel in connection with an opinion of such counsel relating to the Bonds.
Very truly yours,
C-4
• f
EXHIBIT D
CLOSING CERTIFICATE OF OWNER
$3,425,000
CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992A
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
Drew Gardens Associates, Ltd., a Florida limited partnership (the "Owner "),
hereby certifies, represents and warrants to the Underwriters named in the Bond
Purchase Agreement described below, as follows:
(1) The representations and warranties of the Owner contained in the Bond
Purchase Agreement executed by the Owner, the City of Clearwater, Florida (the
"Issuer "), and the Underwriters named therein (the "Bond Purchase Agreement ") are
true and correct as of the date hereof.
(2) The Owner has complied with all agreements and satisfied all conditions
contained in the Bond Purchase Agreement on its part to be performed or satisfied prior
to or on the date hereof.
(3) There has not been any material adverse change in the financial position or
results of operations of the Owner or its general partner in their businesses or any
material adverse change affecting the Owner's project in Clearwater, Florida (the
"Project "), that would impair the ability of the Owner to carry out the Project as
contemplated by the Official Statement (the "Official Statement ") relating to the issuance
of the above - captioned Bonds (the "Bonds "), the proceeds from the sale of which will be
used to provide refinancing for the Project.
(4) To the best of the knowledge of the undersigned, the statements and
information contained in the Official Statement with respect to the Owner and the Project
do not contain an untrue statement of a material fact or fail to state a material fact
necessary in order to make the statements made therein not misleading as of the date
hereof (the "Closing Date').
(5) Except as described in the Official Statement there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, or before or by any court, public
board or body, pending or, to the best knowledge of the Owner after due inquiry,
threatened against or affecting the Owner nor, to the best knowledge of the Owner, is
there any basis therefor, wherein an unfavorable decision, ruling or finding would, in
any way, adversely affect the transactions contemplated by the Official Statement, or that,
in any way, would adversely affect the operation of the Project or that might result in any
material adverse change in the business, operations, properties, assets, liabilities or
condition (financial or other) of the Owner and its related companies or that affects the
information contained in the Official Statement.
(6) The expenses associated with the Project and the Owner, as outlined in the
audited and unaudited financial statements presented to the Underwriters, are
reasonable in light of the circumstances governing the Project.
FOM
f�
Y '
(7) The date of the first missed payment on the FHA Note relating to the Project
was August 1, 1991, and from such date to the date immediately prior to the date hereof,
the FHA Note has been in default.
IN WITNESS WHEREOF, the undersigned has signed this certificate as of August
1992.
DREW GARDENS ASSOCIATES, LTD.,
A FLORIDA LIMITED PARTNERSHIP
By: Reynolds Metals Development Company
General Partner
By:
Title:
v
t
D•2
EXHIBIT E
(LETTERHEAD OF COUNSEL TO THE TRUSTEE)
[Closing Date]
City of Clearwater
Clearwater, Florida
Bryant, Miller and Olive, P.A.
Tallahassee, Florida
Banc One Capital Corporation
Columbus, Ohio
Jones Hall Hill & White, A Professional Law Corporation
San Francisco, California
$3,425,000
CITY OF CLEARWATER, FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 1992A
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
Ladies and Gentlemen:
We have acted as counsel for Bank One, Columbus, NA (the "Bank "), in
connection with the Bank's serving as Trustee under a Trust Indenture dated as of
August 1, 1992 (the "Indenture "), between the City of Clearwater, Florida (the "Issuer "),
and the Bank relating to the issuance of the Issuer's above - mentioned bonds (the
"Bonds "). Certain capitalized terms not defined herein have the same meaning as in the
Indenture.
In such capacity we have examined originals or copies certified or otherwise
identified to our satisfaction of: W the Indenture, (ii) the Articles of Incorporation and
By -Laws of the Bank, (iii) the Loan Work -Out Agreement (the "Loan Work -Out
Agreement ") dated as of August 1, 1992, among the Issuer, the Bank and the Owner
named therein (the "Owner "), (iv) the Supplemental Regulatory Agreement dated as of
August 1, 1992, among the Issuer, the Bank and the Owner (the "Supplemental
Regulatory Agreement "), and (v) the Investment Agreement (the "Investment
Agreement ") dated as of August 18, 1992, between Bayerische Landesbank Girozentrale
and the Trustee.
Based on the foregoing we are of the opinion that:
(i) The Bank is a duly created and lawfully existing national banking
association created and existing under the laws of the United States of America.
(ii) The Bank has taken all corporate action necessary to assume the duties and
obligations of the Trustee under the Indenture, the Investment Agreement, the Loan
Work -Out Agreement and the Supplemental Regulatory Agreement.
(iii) The Bank has duly authorized the execution and delivery of the Indenture,
the Investment Agreement, the Loan Work -Out Agreement and the Supplemental
E -1
3
Regulatory Agreement and the Indenture, when executed, will be the valid, legal and
binding obligation of the Bank in its capacity as Trustee enforceable in accordance with
i its terms.
(iv) The Bank has all necessary trust powers required to carry out the trust
intended under the Indenture.
(v) All approvals, consents and orders of any governmental authority or
agency having jurisdiction in the matter that would constitute a condition precedent to
the performance by the Bank of its duties and obligation, under the Indenture, the
Investment Agreement, the Loan Work -Out Agreement and the Supplemental
Regulatory Agreement have been obtained and are in full force and effect.
(v) No litigation is pending or, to the best of our knowledge, threatened in any
way contesting or affecting the existence of powers (including trust powers) or the Bank's
ability to fulfill its duties and obligations under the Indenture, the Investment
Agreement, the Loan Work -Out Agreement and the Supplemental Regulatory
Agreement.
Very truly yours,
E•2
4 c PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 6, 19Y2 Standard & Poor's:
Refunding Issue (See "RATING" herein.)
c.6 = re ula-
ri $ In the opinion of Bond Counsel, assuming continuing compliance with the certain covenants, under existing statutes, 8
person who is a
Lions, rulings and judicial decisions, (i) interest on the Bonds is excluded from gross income for federal income tax purposes except
$ g 13 o the 1954 Code, as amended,
that such exclusion shalt not apply ry interest on any Bond jot any period during which such Bond is held y any p
634-
"substantial user' ` of the Project or a "related person" within the meaning of Section 103(6)( ) f
and (ii) the Bonds are exempt from all present intangible personal property fazes imposed pursuant to Chapter, 199, Florida Statures.
Agreement
z 0 See,
ax treatment " AX TR A the Bonds.
The CiryJ hesTrustee and the have entered nto arSupplemental egular ry q8 affect the nimurn and
e A and the ability
gas to rite Tax Exemption (tththe Code. The covenants to Comply +with ' the requirements of Section 103(b)(4)( the requirements
M2% of Section 103(b)( 4)(A) f
V; subjec�to compliance ce wirhr certain FHAsrequ rcovenants enrs and subject
otherr !'mutations as+described under the rcapt caption The Suppl met tions. The
m $ ? Regulatory Agreement'. Am ong
regulations thereunder and the MorrgageeLoan documents, even though such acsoe may adversely affect
m c National Housing Act, the Agreement, enforcement
the tax exemption i Regulatory be inadequate to
w iron on the Bonds. !n addition, if the Ownerjails to comply with the St Re ulato Ag
(nag a remedies available o to the City, the Trustee and
registered owners of the Bonds are severely limited and may 9
M o prevent the loss of tax exemption of interest on the Bonds retroactive to the dated date of the Bonds. See "THE SUPPLEMENTAL
E *a o REGULATORY AGREEMENT"' and 'TAX TREATMENT' herein.
d $3,400,000*
CITY OF CLEARWATER, FLORIDA
c m MORTGAGE- REVENUE REFUNDING BONDS, SERIES 1992A
a
(FHA Insured Mortgage Loan —Drew Gardens Apartments Project)
e m Due: October 1, 2025
�$
" q e
Dated: August 1, 1992
C b m
o w c Price of All Bonds: % c
o $ (Accrued interest to be added.)
Eat
E u principal amount or any multiple
� � o Interest on the Bonds is payable on April 1, 1993, and thereafter on October l and April 1 of each year (each an "Interest
—,°, v °' Payment Date "). The Bonds are issuable on tfhuIlIIo wtl�be bonds
ayable at the principal oorporatetr s office of Bank One, Columbus,
-50 ® thereof. Principal of and premium, if any,
aw a NA, f Trustee, in Columbus, Ohio. Interest on the Bonds will be payable by check or draft mailed to the person in whose name
c such Bond (or any predecessor Bond) is registered at the close of business on the 15th day of the month preceding each Interest
Payment Date (provided that, principal, premium, if any, and interest may be paid by wire transfer as described herein).
a The Bonds are issued by the City of Clearwater, Florida (the "Issuer"), to provide a portion in the money required to refund
ide ca prior issue of bonds of the Issuer that were issued to pro the National Housing Act o mortgage 1934, as amend d to pay he cost r of
�r Administration ( "FHA ") pursuant to Section 221(d)(4)
e 0 acquiring, constructing, improvingDredµegCruaPdengAssoci Associates
Ltdmultifamily orida limited partnershipt(the facility ) acrd in ro pay certain
Florida (the "Project "), owned by
costs of the refunding.
O� T
Any person who purchased or holds a Bond at a price in excess of its principal amount should consider the fact that the Bonds rued
c ?e a are subject to redemption prior to ma n without u premium,cir the times and to the to the principal
herein. See a THE BONDS
—
3 6 5 interest to the redemption date, but
c m Redemption" herein. HE ISSUER, THE
4 THE INTEREST g THE BONDS, TOGETHER ANY, AND INTEREST ON WHIOCH ARE PAYABLDE SOLELY FROM THE REVENUES OR
5 m 2 PRINCIPAL OF, PREMIUM,
u o OTHER MONEYS TO BE RECEIVED N CONNECTION WITH THE REFINANCING OR THE PROJECT OR OTHER REST
o= L EYS TO BE MADE AVAILABLE TO THE ISSUER FOR SUCH OR
CHARGE AGAINST BTHE GENERAL CREDIT OR
o r THEREON SHALL EVER CONSTITUTE AN R PUBLIC BO
o TAXIN L POWERS TER PROVISION OR STATUTORY LIMITAT ON AND NEITHER HALL EVER CONSTITUTE OR GIVE
E�, TIO
r RISE TO ANY PECUNIARY LIABILITY OF THE ISSUER. ant,
"
Tire Bonds are offered when, as and if issued and received by the Underwriters subject to the approval of legality by Dry
o bfiiler and Olive, PA., Tallahassee, Florida. Certain legal matters will be passed upon for the Underwriters by their counsel, Jones
s y °�� /!all Hill & White, A Professional Law Corporation, San Francisco, California, and for the Owner by its counsel, Byrne, Costello
p C
Picka on It is ezneded that he Boorul n delfit& lie j Altman, 1 benavaflable jot ddivcry n New Yo k! New York, n +o Owner
bout August
fro Coq q
� dr.. -. transact!
®e2 ,1992.
p8a=
BANC ONE CAPITAL CORPORATION NEWMAN 8c ASSOCIATES, INC.
C
aAa
Dated- August , 1992
e a ------ i�bleet to change L/� r�i
No dealer, broker, salesman or other person has been authorized by the Own
Underwriters or the Issuer to
respect to the Bonds other thangthosencontaaiinein this o� is s� Statement, an err, the
made, such information or representations Y representations with
authorized by any of the foregoing. must not be relied upon � d' even or
sell nor the solicitation of an offer to buy nor shall there be an p having been
g g• This Official Statement does not constitute an offer to
person in any jurisdiction in which such offer, solicitation or sale is not authorized or ' y
which the person m y sale of the Bonds by an
Ong such offer, solicitation or sale is not qualified to do so or to any
Person to whom it is unlawful to make such offer, solicitation or sale The information in
forth herein has been obtained from sources that are believed le be re '
information herein has not been independently verified and is not gu ble b set
accuracy and is not to be construed as a representation of such by the haute t he O t the
or the Underwriters and is subject to revision and teed as to the
Statement. The information and expressions of opinion stated herein are caner
chap a amendment in a final Official
g without notice. The delivery of this Official Statement shall not
circumstances, create any implication that there has been no change subject to
or opinions set forth herein since the date hereof. under any
ange in the information
IN CONNECTION WITH THE OFFERING OF THE
UNDERWRITERS MAY OVERALLOT OR E
STABILIZE OR r EFFECT TRANSACIBIONSDS�TT
ABOVE THAT H MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL
WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ARTY
TI1dI:E,
TABLE OF CON'S'ENTS
THEINDENTURE ................................................................... .............................12
Definitions.............. ............................... .................... .............................13
Security........................................................................ .............................13
Establishment of Funds ................................................. .............................14
Application of Bond Proceeds and Other Amounts ....... .............................14
Costs of Issuance Fund ................................................. .............................14
ProgramFund .............................................................. .............................14
BondFund .............................................................:..... .............................15
Debt Service Reserve Fund ............................................ .............................15
FinalBalances ............................................................... .............................16
RebateFund ................................................................. .............................16
Investmentof Funds ..................................................... .............................16
Eventsof Default .......................................................... .............................16
Remedies of Bondholders ............................................. .............................18
Servicing the Mortgage Loan... .............................................................. I ... 18
Mortgage Insurance Benefits ........................................ .............................18
Supplemental Indentures .............................................. .............................19
TheTrustee ...................... ......................................... .............................20
THE FHA NOTE AND MORT GAGE ....................................... .............................20
THE FHA REGULATORY AGREEMENT ............................... .............................21
THE SUPPLEMENTAL REGULATORY AGREEMENT .......... .............................22
THE LOAN WORK -OUT AGREEMENT ................................. .............................25
Representations and Warranties of the Owner ................ .............................25
TaxCovenant. .............................................. .............................26
Non - Recourse Obligation ........................................... .............................26
TAXTREATMENT ................................................................. .............................26
ABSENCE OF LITIGATION .................................................... .............................28
LEGALMATTERS ................................................................. .............................29
ENFORCEABILITY OF REMEDIES ........................................ .............................29
MARKETING......................................................................... .............................29
RATING................................................................................ ..............................2 9
OTHERMATTERS .................................................................. .............................30
-i -
PAM.
INTRODU CTION....................................................................
..............................1
THEBONDS .... ................................................................
..............................2
General Description ..................................................
..............................2
LimitedObligations .... ...........................................
..............................3
Registration and Transfer .............................................
..............................3
Redemption...............................................................
..............................3
FHAiNSURANCE..... ............................................................. ..............................7
THEISSUER ...........................................................................
..............................7
THEPROJECT ........................................................................ ..............................8
Location and Description of the Project
....................... ..............................8
Prior Operating History ............................................... ..............................8
Secondary Project Financing ....................................... ..............................9
THE PRIVATE PARTICIPANTS ..............................................
.............................10
TheOwner ..... ........................................................
.............................10
TheManaging Agent ....................................................
.............................11
TheMortgage Servicer ................................................
..............................1 l
TheTrustee .................................................................
..............................I I
RISKS TO THE BONDHOLDERS ............................................
.............................11
THEINDENTURE ................................................................... .............................12
Definitions.............. ............................... .................... .............................13
Security........................................................................ .............................13
Establishment of Funds ................................................. .............................14
Application of Bond Proceeds and Other Amounts ....... .............................14
Costs of Issuance Fund ................................................. .............................14
ProgramFund .............................................................. .............................14
BondFund .............................................................:..... .............................15
Debt Service Reserve Fund ............................................ .............................15
FinalBalances ............................................................... .............................16
RebateFund ................................................................. .............................16
Investmentof Funds ..................................................... .............................16
Eventsof Default .......................................................... .............................16
Remedies of Bondholders ............................................. .............................18
Servicing the Mortgage Loan... .............................................................. I ... 18
Mortgage Insurance Benefits ........................................ .............................18
Supplemental Indentures .............................................. .............................19
TheTrustee ...................... ......................................... .............................20
THE FHA NOTE AND MORT GAGE ....................................... .............................20
THE FHA REGULATORY AGREEMENT ............................... .............................21
THE SUPPLEMENTAL REGULATORY AGREEMENT .......... .............................22
THE LOAN WORK -OUT AGREEMENT ................................. .............................25
Representations and Warranties of the Owner ................ .............................25
TaxCovenant. .............................................. .............................26
Non - Recourse Obligation ........................................... .............................26
TAXTREATMENT ................................................................. .............................26
ABSENCE OF LITIGATION .................................................... .............................28
LEGALMATTERS ................................................................. .............................29
ENFORCEABILITY OF REMEDIES ........................................ .............................29
MARKETING......................................................................... .............................29
RATING................................................................................ ..............................2 9
OTHERMATTERS .................................................................. .............................30
-i -
OFFICIAL STATEMENT
$3,400,000
MY OF CLEAI{WATER,FLORIDA
MORTGAGE REVENUE REFUNDING BONDS, SERIES 19!
(FHA INSURED MORTGAGE LOAN - DREW GARDENS APARTMENTS PROJECT)
INTRODUCTION
provided to furnish information in conn of 101earwater,
This Official Statement isp principal amount of CiInsured Mortgage
issuance and sale of $3,400,000 aggregate onds, Series 19920E the City of Clearwater,
Florida, Mortgage Revenue Refunding
Drew Gardens Apartments Project) (the "Bonds') pursuant to the laws of the
Loan - The Bonds will be issued under and
Florida, (the "Issuer ). Chapter 166, Florida Statutes, Or o an ons of 5256(the
State of Florida, particularly applicable P Indenture dated
the Issuer on August 13, 1992 ands 13,1992, and a Trust One, Columbus,
enacted by adopted Augu
Act "), a resolution of the Issuer sure
as of August 1, 1992 (the "Indenture "), between the Issuer and B
NA, Columbus, Ohio, as Trustee (the "Trustee ").
the Issuer to provide a Portion of the funds to refund
The Bonds are being issued by a e Revenue Bonds,
original principal amount of the Issuer 'S Mo g Project) (the
$6,450,000 aggregate Insured Mortgage Loan -- Drew Gardens Apartments
Series 1983 (FHA provide funds to make a mortgage partnership
"prior Bonds "). The Prior Bonds were issued top d equipping a 180 -
Ltd. a Florida limited p
a e Loan') to Drew Gardens Associates, .proving an Florida (the
(the 'M °rtg g the cost of acquiring, constructing,
(the "Owner' ), to pay facility located in Clearwaeenote (the "F
unit elderly residential rental housing a nonrecourse mortgag Note is insured
"Project°). The Mortgage Loan is evidenced by on the Project. The FHA
Note') secured by a Mortgage (the ,Mortgage ) an organizational unito the
Administration ("FHA"), ("I-IUD' pursuant ended
by the Federal Housing Act D' 1934, as am
United States Department of Housing and Urban Development mortgage insurance
Act ,,). Under applicable regulations,
provisions of Section 221(d)(4) of Title II of the 1a e Housing
(the "National Housing
benefits are payable in cash. See "FHA INSURAN
e trustee with respect to the prior Bondq (the
e
Since August 11 1991, the Owanner s been in default in its obligation to make
e Loan, payment PP under the Mortgage went, FHA has paid a portion of the
Prior Trustee ") has as the Mortgage Loan to FHA or P y and the Prior
insurance benefits.
As result to such assign with the issuance of the Bonds, the
respect to the Mortgage Loan,
insurance claim to the Prior Trustee with Bement dated as
Bonds are subject to redemption. Concurrently Work -Out
Work -Out Agreement "). Pursuant to the Loan
Issuer, the Owner and tLo stee will enter into a Loan d d t Work-out the interest ,the
of August 1, 1992 (the e Loan will be am %per annum, which
,Agreement, the terms of the Mortgage annum to a rate of anti and projected
al rate of 10.625% p support' the Project's p Loan,
from the origin History herein.) The Mortgage Owner believes is HE PROJFCT - which Operating
operations. (See "THE and to
ed will be transferred from the retire of the Prior Bonds Outstandin delivery to
as so amend ,
the prior Trustee of sufficient moneys to
"preliminary, subject to change.
1-
pay any trustee's and mortgage servicing fees and expenses, and the prior HUD
mortgage insurance payment (together with interest thereon) will be returned by the
Prior Trustee to HUD.
The Bonds will be secured by a pledge of W payments on the FHA Note, (ii) money
held by the Trustee under the Indenture (other than amounts subject to rebate to the
United States Government), (iii) FHA insurance proceeds payable in the event of a default
on the Mortgage Loan, and (iv) all right, title and interest of the Issuer in the Loan Work -
Out Agreement.
Any person who purchases or holds a Bond at a price in excess of its principal
amount should consider the fact that the Bonds are subject to redemption under certain
circumstances at a price equal to the principal amount thereof, plus accrued interest to
the redemption date, but without premium, at the times and to the extent described
herein. See "THE BONDS -- Redemption."
The exclusion of interest on the Bonds from gross income for federal income tax
pur-poses is dependent upon, among other things, continuing compliance with certain
provisions of the Internal Revenue Code of 1986, as amended (the "Code ") and of the
Internal Revenue code of 1954, as amended prior to the enactment of the Code, and
applicable Treasury regulations. There is no provision for acceleration of the
indebtedness evidenced by the Bonds or for payment of additional interest if interest on
the Bonds becomes included in gross income for federal income tax purposes due to
noncompliance by the Owner with the provisions of the Loan Work -Out Agreement or the
Supplemental Regulatory Agreement as to Tax Exemption among the Issuer, the Owner
and the Trustee (the "Supplemental Regulatory Agreement ") under which the
enforcement remedies of the Trustee and the Issuer are substantially limited by the
requirements of FHA. See'THE SUPPLEMENTAL REGUIXrORY AGR.EEIIIENT' and
'TAX TREAT1%1ENT."
Brief descriptions of the Bonds, the security for the Bonds, FHA insurance, the
Indenture, the Loan Work -out Agreement, the Supplemental Regulatory Agreement and
other documents are included in this Official Statement. All references to such
documents and agreements are qualified in their entirety by reference thereto, copies of
which are available for inspection at the office of the Trustee.
THE BONDS
General Description
The Bonds will bear interest at the rates and mature on the dates set forth on the
cover page. Interest on the Bonds will be payable on April 1, 1993, and thereafter
semiannually on October 1 and April 1 of each year (each an "Interest Payment Date ").
The Bonds are issuable in denominations of $5,000 principal amount or any multiple
thereof. Principal of and premium, if any, on the Bonds will be payable at the principal
corporate trust office of the Trustee. Interest on the Bonds will be payable by check or
draft mailed to the person in whose name such Bond (or any predecessor Bond) is
registered at the close of business on the 15th day of the month preceding each Interest
Payment Date; except that the owner of at least $250,000 aggregate principal amount of
Bonds may be paid principal, premium, if any, and interest, at the bond owner's option
and at the bond owner's expense, by wire transfer in immediately available funds to an
account designated by such owner.
.2-
Limited Obligations
The Bonds, together with the interest thereon, are limited obligations of the
Issuer, the principal of, premium, if any, and interest on which are payable solely from
the revenues or other moneys to be received in connection with the refinancing of the
Project or other moneys to be made available to the Issuer, for such purpose. Neither the
Bonds nor the interest thereon shall ever constitute an indebtedness or a charge against
the general credit or taxing powers of the Issuer, or any other public body within the
meaning of any constitutional or charter provision or statutory limitation and neither
shall ever constitute or give rise to any pecuniary liability of the Issuer.
Registration and Transfer
Bonds may be exchanged, and the transfer of Bonds must be registered, at the
corporate trust office of Bank One, Columbus, NA, as Trustee in Columbus, Ohio.
If any Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the
Trustee is to authenticate a new Bond. In the case of a lost, stolen or destroyed Bond, the
Issuer and the Trustee may require satisfactory indemnification prior to authenticating
a new Bond. The Issuer and the Trustee may charge reasonable fees and expenses in
connection with replacing Bonds mutilated, lost, stolen or destroyed.
Redemption
Optional Redemption. The Bonds are subject to redemption on any date on and
after October 1, 2002, as a whole or in part, to the extent of any optional prepayment of the
FIIA Note by the Owner (and from any reduction of the Debt Service Reserve Fund under
the terms of the Indenture), or from the proceeds of refunding bonds or otherwise from
any monies provided by the Issuer, at the redemption prices set forth in the table below,
expressed as percentages of the principal amount to be redeemed (together with accrued
interest to the redemption date), as follows:
Redemption
Redemption Dates Prices
October 1, 2002, through September 30, 2003 102%
October 1, 2003, through September 30, 2004 101
October 1, 2004, and thereafter 100
In the event of an optional redemption of Bonds on a date on which the redemption
price includes a redemption premium, the Trustee shall not give notice of such
redemption unless W the Trustee shall have had in its possession, for a period of at least
91 days prior to the giving of such notice, an amount paid by the Owner as a prepayment
premium on the Mortgage Loan equal to such redemption premium; (ii) there shall not
have occurred at any time during or after such 91 -day period any filing by or against the
Owner under any bankruptcy act or any similar law for the relief of debtors and the
Owner has filed with the Trustee a certificate to that effect; and (iii) the Trustee shall
have received the prepayment of the Mortgage Loan.
1 ggfla.tory Sinking Fund Redemption. The Bonds are subject to mandatory
sinking fund redemption in the amounts and on the dates set forth below (subject to
adjustment as described below to the extent that the Bonds are redeemed prior to
maturity other than pursuant to scheduled mandatory redemption) at a redemption price
.3.
I
equal to the principal amount thereof, together with accrued interest to the redemption
date:
Principal Principal
Amount Amount
to be to be
Date Redeemed Ito Redeemed
In the event of a redemption of less than all of the outstanding Bonds other than by
mandatory sinking fund redemption, the mandatory sinking fund payments scheduled
above are to be reduced so that the resulting decrease in debt service on the Bonds during
each six -month period ending on an Interest Payment Date is proportional, as nearly as
practicable, to the decrease in payments on the FHA Note in each period.
C mqua tv and Condemnation Redemption. The Bonds are subject to redemption on
any date, on the earliest practicable date, as a whole or in part, at a redemption price
equal to the principal amount thereof plus accrued interest to the date fixed for
redemption to the extent the Net Proceeds of any condemnation award or insurance
recovery (and, in the case of the Bonds, as a result of a reduction in the Debt Service
Reserve Fund pursuant to the Indenture) are applied to the prepayment of the Note.
-4-
S
pecial Redpmnti�» ZTnon (�Defaujt TTnr�or th Mortgage Loan. If insurance
benefits under the Contract of Mortgage Insurance are paid by FHA to the Trustee, or if
such benefits are payable by FHA and the proceeds of refunding bonds of the Issuer or
other moneys are deposited with the Trustee for such purposes, the Trustee shall call the
Bonds for redemption, on the earliest practicable date as a whole or in part to the extent of
available money, at a redemption price equal to 100% of the principal amount thereof plus
accrued interest to the date fixed for redemption.
Special Bankruptcy Redemption. In the event that the Owner becomes subject to
any bankruptcy proceedings and the trustee in bankruptcy causes there to be a
prepayment of the Note without notice and without premium, Bonds in the amount of
such prepayment (and as a result of a reduction in the Debt Service Reserve Fund
pursuant to the Indenture), shall be redeemed, as a whole or in part, without any
otherwise required notice of redemption on the earliest practicable date at a redemption
price equal to the principal amount thereof plus accrued interest to the date of
redemption.
Redemption aon Determination of HUD. On any date, as a whole or in part,
Bonds shall be redeemed to the extent of any prepayments of the Note made upon the
determination of HUD in order to avoid an insurance claim under the Contract of
Mortgage Insurance (and as a result of a reduction in the Debt Service Reserve Fund
pursuant to the Indenture).
Selection of Bonds for Redem tion. In the event of a redemption of less than all the
Outstanding Bonds pursuant to the scheduled mandatory redemption provisions
described above, the particular Bonds to be redeemed are to be selected by the Trustee by
lot.
If less than all the Bonds then Outstanding shall be called for redemption other
than from mandatory sinking fund payments pursuant to the Mandatory Sinking Fund
provisions, (i) the Trustee shall redeem an amount of Bonds of each series so that the
resulting decrease in debt service on the Bonds of each series in each semi - annual period
ending in an Interest Payment Date is proportional, as nearly as practicable, to the
decrease in the payments on the Note in each such semiannual period, and the Bonds
shall be selected by lot within each maturity, and (ii) the Trustee shall transfer from the
Debt Service Reserve Fund to the Bond Fund an amount that bears the same proportion to
the amount then on deposit in the Debt Service Reserve Fund as the reduction in the
principal balance of the Mortgage Loan bears to the outstanding balance of the Mortgage
Loan immediately prior to such reduction.
Bonds shall be redeemed pursuant to the Indenture, only in the principal amount
of $5,000 or any integral multiple thereof.
.Notice of Redemption. Except that Bonds redeemed under the Special Bankruptcy
Redemption provisions described above shall be redeemed without notice, notice of the
intended redemption of each Bond shall be given by the Trustee by first class mail,
postage prepaid, to the registered owner at the address of such owner shown on the
Registrar's bond register. All such redemption notices shall be given not less than thirty
(30) days nor more than sixty (60) days prior to the date fixed for redemption. Each notice
shall state that payment of the applicable redemption price plus accrued interest to the
date fixed for redemption will be made upon presentation and surrender of the Bonds.
The Trustee shall not give notice of any redemption of Bonds (other than pursuant to the
Mandatory Sinking Fund provisions), unless the Trustee shall have, at the time such
notice is given, sufficient funds on hand to make such redemption.
A second notice of redemption shall be sent within 30 days of the redemption date,
by registered mail, overnight delivery service or other secure means, postage prepaid to
the registered owners of any Bonds called for redemption, at their addresses appearing
on the Bond registration books maintained by the Trustee.
Each notice of redemption shall state the redemption date and the redemption
price and, if less than all of the outstanding Bonds are called for redemption, (i) the
numbers of the Bonds to be redeemed by giving the individual certificate number of each
Bond to be redeemed (or equivalent information); (ii) the CUSIP numbers of all Bonds
being redeemed; (iii) in the case of a partial redemption, the principal amount of each
Bond being redeemed; (iv) the date of issue of the Bonds as originally issued; (v) the rate
or rates of interest borne by each Bond being redeemed; (vi) the maturity date of each
Bond being redeemed; (vii) any other descriptive information needed to identify accurately
the Bonds being redeemed; (viii) the place or places where amounts due upon such
redemption will be payable: and (ix) the name, address, telephone number and contact
person at the office of the Trustee with respect to such redemption. The notice shall
require that such Bonds be surrendered at the principal corporate trust office of the
Trustee for redemption at the redemption price and shall state that further interest on
such Bonds will not accrue from and after the redemption date. CUSIP number
identification with appropriate dollar amounts for each CUSIP number also shall
accompany all redemption payments.
Notice of such redemption also shall be sent by registered mail, overnight delivery
service or other secure means, postage prepaid, to the original purchaser of the Bonds
and to any holder of $250,000 or more in aggregate principal amount of Bonds to be
redeemed, to certain municipal registered securities depositories (described in the
Indenture) which are known to the Trustee to be holding Bonds on behalf of a registered
Bondholder and to at least two of the national information services (described in the
Indenture) that disseminate securities redemption notices, when possible, at least five (5)
days prior to the mailing of notices required described in the first paragraph above,
provided that neither failure to receive such notice nor any defect in any notice so mailed
shall affect the sufficiency of the proceedings for the redemption of such Bonds.
Notwithstanding the foregoing or any other provision of the Indenture, in the
event of a redemption by reason of the Trustee receiving prepayments on the Mortgage
Loan representing prepayments on the Mortgage Loan made by the Owner without notice
or prepayment penalty while under the supervision of a trustee in bankruptcy, notice of
redemption of Bonds shall not be required if the circumstances do not permit the ^trustee
to give such notice in accordance with the provisions described above.
The Indenture provides that failure to give notice by mailing to the holder of any
Bond designated for redemption or to any depository or information service will not affect
the 'validity of the proceedings for the redemption of any other Bond if notice of such
redemption shall have been mailed as provided herein.
Lass of Premium. fr . Early Redern tion, Any person who purchases or holds a
Bond at a price in excess of its principal amount should consider the fact that the Bonds
are subject to redemption under certain circumstances at a price equal to the principal
amount thereof, plus accrued interest to the redemption date, but without premium, at
the times and to the extent described herein.
FHA INSURANCE
The Federal Housing Administration has insured the FHA Note pursuant to
Section 221(d)(4) of the National Housing Act. Applicable FHA regulations are contained
in 24 CFR 221 which, with certain exceptions (requiring payment of insurance benefits in
cash rather than FHA debentures), incorporates by reference the provisions of 24 CFR. 207
(covering mortgages insured under Section 207 of the National Housing Act).
The National Housing Act defines an event of default under an FHA- insured
mortgage as failure to make any payment due under the mortgage or to perform any
other mortgage covenant if the mortgagee, because of such failure, has accelerated the
debt. In the event of a payment default continuing for a period of 30 days (as such period
may be extended up to 90 days upon request to HUD), the Trustee may give notice to the
Federal Housing Commissioner (the "Commissioner ") of the default and of its intention
to file an insurance claim. Promptly thereafter, the Trustee may take the necessary steps
to file a claim for insurance. Under FHA regulations, the Trustee may either assign the
FHA Note (and the Mortgage) to the Commissioner or acquire title to the Project by
foreclosure and convey it to the Commissioner. If the Trustee were to acquire title to the
Project and convey it to the Commissioner, the expenses of foreclosure proceedings would
be payable out of the proceeds received on account of the insurance claim. The Trustee
has been directed by the Indenture to make an assignment rather than acquire and
convey title to the Project.
In connection with a claim for insurance benefits, FHA may require delivery to it
of certain cash items. Cash items include any balance of the Mortgage Loan and any
undrawn balance due under the letters of credit required to be obtained in connection
with the endorsement of the FHA Note by FHA.
In the event of a default on the FHA Note, its assignment to FHA and the filing of a
claim for FHA insurance, FHA will pay in cash (unless FHA were requested by the
Trustee to pay in FHA debentures, which is not permitted under the Indenture)
insurance benefits equal to the sum of (a) the unpaid principal amount of the FHA Note
computed as of the date of default, (b) certain eligible payments (such as taxes,
insurance, special assessments and water rates) made by the Trustee and (c) interest on
the insurance proceeds from the date of default at the applicable FHA debenture rate
10.375% (which interest may be limited if certain notices are not given to FHA within the
prescribed time periods), less 1% of the principal amount of the FHA Note and certain
amounts realized by the Trustee from the Owner on the mortgaged property,
including cash items. In addition, insurance benefits do not include up to one
month's interest which may have accrued on the Mortgage Loan prior to the date of a
default. In the past, it has been FHA's policy, during the construction period, to pay 70%
of the insurance claim within 15 days of recordation and the balance, after audit,
within three to twelve months. After final endorsement, it has been. FHA's policy to pay
90% of the insurance claim within 15 days of recordation and the balance, after audit,
within three to twelve months.
THE ISSUER
The Issuer is a municipality duly organized and existing under the laws of the
State of Florida. The Issuer is authorized by the State of Florida, particularly Chapter
166, Florida Statutes, Ordinance No. 5256 -92, enacted by the Issuer on August 13, 1992
-7-
provisions of law (the "Act "), to issue he a Bonds ta facility-
proceeds the
and other applicable p purpose of refinancing
proceeds thereof to the Owner for the pure
an elected Mayor - Commissioner and four Commission
The Issuer is governed by resent
administered by the appointed City Manager. The p
ether comprise the City Commission. The 1tY
Commissioners of Policy which is
establishes p Commission and other Officials are as follows:
members of the City Eg ion
Rita J. Garvey
Sue Berfield
Arthur X. Deegan
Richard Fitzgerald
Lee Regulski
Michael J. Wright
M.A. Galbraith, Jr.
Cyndie Goudeau
Mayor -City Commissioner
City Commissioner
City Commissioner
City Commissioner
City Commissioner
The offices of the Issuer are located at 112
Florida 34616.
City Manager
City Attorney
City Clerk
South Osceola Avenue, Clearwater,
THE PROJECT
Location and Description of the Project
The Project, known as Drew Gardens Apartments, consists of one four -story
building containing
of ow housing units and is located on Drew Street 1 3 and was
Pinellas County, Florida. construction A its arehfurnrosh d cwitth window hades, ele The
completed in December, 1984. orts in
range and refrigerator, kitchen exhaust fans and board court and to carp
Project also
tootin 74 es a g parking o, a storage building,
SP
aces. The characteristics of the units are as follows:
addition
Number
N, of Unit
°f Tnits.
Studio
72
One Bedroom
90
Two Bedroom
18
Prior Operating History the closing of
1883, following
Construction of the Project commenced in October, of the acquisition, construction
e Loan on October 12, 1983 and the issuance °f the Prior $°nom ° substantially
tr Construction the Mortgage
1983 to provide construction and
and equipping 1984 and the Mortgage Loan was finally
of the Project. Construction of the Project was determYn
completed by �D/FHA on December August 27, 1955.
endorsed for insurance by FHA
.8-
ik
Since that time, due to the depressed conditions in the rental apartment market in
Clearwater, Florida and the surrounding area for projects of this type and other factors,
the Project has experienced occupancy levels and rent levels per unit which have been
lower than those projected at the time the Mortgage 'Loan was underwritten, as well as
higher than anticipated operating expenses. The Project has therefore been unable to
generate sufficient levels of revenues after payment of operating expenses to pay the
required debt service on the Mortgage Loan and to cover mortgage insurance premiums,
escrow requirements and similar items, as shown in the following table, derived from
the audited financial statements of the Owner prepared by Coopers & Lybrand, Certified
Public Accountants, Richmond, Virginia, for the years ended December 31, 1989, 1990
and 1991:
Due to the foregoing factors, the Owner ceased making regularly scheduled
payments on the Mortgage Loan in August, 1991. The Mortgage Loan has been in default
since that time.
As a result of the default, the Prior Trustee assigned the Mortgage Loan to HUD
on July 15, 1992, and on July 17, 1992, the Prior Trustee received a payment of FHA
mortgage insurance benefits from HUD with respect to the defaulted Mortgage Loan.
Secondary Project Financing
A second mortgage of $1,770,530 on the Project closed in December 1985 when
operating deficit advances in excess of the $500,000 maximum provided for in the
Operating Deficit Guarantee Agreement were converted to a second mortgage payable to
Presidential Development Corporation, an affiliate of the Owner. The loan is due on
demand and bears interest at the rate of prime plus 1 %; the interest rate is determined on
December 31 each year. The mortgage is collateralized by a second mortgage on the
Project's real estate. The mortgage is to be repaid only from surplus cash of the Project
as defined in the regulatory agreement. Upon the closing of the refunding, this
obligation will become a third lien on the Project subordinate to both the Mortgage and the
new second deed of trust described below.
In connection with the work -out of the defaulted Mortgage Loan, the Owner has
agreed to an arrangement under which the loan will be partially assigned to HUD, in an
amount equal to $2,766,672 principal plus accrued interest, leaving an outstanding
-9-
I&
Total Income
$1,574,679
$1,353,891
$1,861,081
Cost of Operations before
Depreciation
aj2i7641
a2i6.9591
M536343)
Operating Profit (Loss)
Before Depreciation
($617,085)
($863,068)
($675,662)
Depreciation
(2
t2�
(239.362)
Operating.Profit (Loss)
($854,753)
($1,100,737)
($915,024)
Due to the foregoing factors, the Owner ceased making regularly scheduled
payments on the Mortgage Loan in August, 1991. The Mortgage Loan has been in default
since that time.
As a result of the default, the Prior Trustee assigned the Mortgage Loan to HUD
on July 15, 1992, and on July 17, 1992, the Prior Trustee received a payment of FHA
mortgage insurance benefits from HUD with respect to the defaulted Mortgage Loan.
Secondary Project Financing
A second mortgage of $1,770,530 on the Project closed in December 1985 when
operating deficit advances in excess of the $500,000 maximum provided for in the
Operating Deficit Guarantee Agreement were converted to a second mortgage payable to
Presidential Development Corporation, an affiliate of the Owner. The loan is due on
demand and bears interest at the rate of prime plus 1 %; the interest rate is determined on
December 31 each year. The mortgage is collateralized by a second mortgage on the
Project's real estate. The mortgage is to be repaid only from surplus cash of the Project
as defined in the regulatory agreement. Upon the closing of the refunding, this
obligation will become a third lien on the Project subordinate to both the Mortgage and the
new second deed of trust described below.
In connection with the work -out of the defaulted Mortgage Loan, the Owner has
agreed to an arrangement under which the loan will be partially assigned to HUD, in an
amount equal to $2,766,672 principal plus accrued interest, leaving an outstanding
-9-
I&
balance of $3,242,452 (the `Partial Assignment "). As a result of the Partial Assignment,
HUD will take back a second mortgage, evidencing the Owner's indebtedness to HUD for
the amount paid by HUD under the Partial Assignment. The HUD second mortgage will
have a final maturity which is the same as that on the first mortgage. The interest rate
on the second mortgage will be equal to the mortgage note rate following the refunding.
Interest on the second mortgage will be partially accrued but unpaid for the first seven
years. At the end of seven years the unpaid principal and 'interest will be reamortized
and will be repayable in level monthly payments of principal and interest over the
remaining term of the note. The second mortgage will have a ten year "lock out"
provision for prepayment by the Owner.
In connection with the issuance of the Bonds to provide work -out refinancing for
the defaulted Mortgage Loan, the Owner will enter into the Loan Work -Out Agreement
(see "THE LOAN WORK -OUT AGREEMENT" herein) and the Modification of Mortgage
Note and Mortgage (see THE FHA NOTE AND MORTGAGE "), pursuant to which the
Owner will cure all arrearages on the Mortgage Loan, the FHA insurance will be
reinstated and the interest rate on the Mortgage Loan will be lowered from 10.625% to
per annum and the Owner will enter into the arrangements described under
"Secondary Project Financing" above. The Owner believes that this reduction in the
interest rate on the Mortgage Loan will bring the cash flow requirements for the Project
in line with present and projected project revenues; however, due to the uncertainties of
the apartment rental marketplace in Clearwater, Florida, and other factors, there can be
no assurance that the Project will produce sufficient income, even after these
modifications of the Mortgage Loan, to cover operating expenses and to pay debt service
on the Mortgage Loan, to cover the Owner's obligations under the secondary project
financing and to pay related items. The Mortgage Loan, as modified, and the secondary
project financing will continue to be non - recourse obligations of the Owner. See "THE
FHA NOTE AND MORTGAGE" and "THE LOAN WORK -OUT AGREEMENT" herein for
a description of the terms of the modified Mortgage Loan. If the Owner were to default
under the terms of the modified Mortgage Loan or the Loan Work -Out Agreement, it is
likely that the Bonds would be called at par prior to their scheduled maturities. See "THE
BONDS -- Redemption' and "RISKS TO THE BONDHOLDERS " herein.
"FHE PRIVATE PARTICIPANTS
The Owner
The Owner of the Project is Drew Gardens Associates, Ltd., a Florida limited
partnership formed for the principal purpose of owning the Project. The General
Partner of the Owner is Reynolds Metals Development Company, who will have general
responsibility and sole authority for supervising the operations of the Owner, and is
responsible for the management and operation of the Project subject to regulation,
supervision and inspection by HUD. An affiliate of the General Partner, Presidential
Development Corporation, is a Limited Partner of the Owner.
The General Partner has had previous experience with the development,
ownership and/or management of HUD subsidized housing projects in 8 states. The
General Partner has previously managed or owned 35 multifamily housing projects
comprising over approximately 3,500 units.
III-
Aak
substantial assets or engage the
The Owner has not and does not intend to acquire any continue to
ed in and may es of
.n an substantial business activities he Ownerm Y be engaged ton of similar types 1 Y partners o and management
Project. However, the p development, ownership
engage in the acquisition,
housing projects. liable for payments on the
Neither the Owner nor its partners will be personally
lied to pay the principal °f and lnresentation s m de that e Owner
FHA Note to be applied ressly set forth herein, no rep neither the Owner's
except to the extent exp
artners are included in this Official Statement.
will have substantial funds available for the Project. Accor ing Y+
financial statements nor those of its p
The Managing Agent presently employs 140
Judge By Results, Inc. began its operations in 1988 and g'
persons 11. The firm
The Principal of the Managing Agent is Michael r projects locat d in Florida
manages approximately 260 units of multifamily housing in p J
The Mortgage Servicer Syracuse,
oration located in Syr
Continental Securities Corporation, a New York Corp roved FHA
New York, has agreed to service the mortgage
Securities Corporate n is an Pp a Mortgage
approximately 100 multifamily
Servicing Agreement. Continental r0 nately $400
Mortgagee and GNMA issuer. It is currently servial balances of app
and nursing home loans with aggregate princip
million. O£ these, app
roximately 80 loans are FHA insured under Sections 221 or 232 0
the National Housing Act.
The Trustee under the
ink One, Columbus, NA, Columbus, Ohio, will serve zed under the laws of
B n association organized fiduciary
Indenture. The Trustee is a national banking powers of a bank,
oration and the Federal
the United States of America, having of record and as trustee for
powers and is a member of the Federal aeFsRA mortgagee Corp
Reserve System. The Trustee will e loans totaling over $250
The Trustee currently serves as trustee or escrowee for over 80 other ax-
the Bonds• FHA- insured multifamily mortgage
exempt financings backed by mount. The Trustee currently serves as trustee ate
million in aggregate principal
525 other tax-exempt financings in excess of $1.5 billion in aggregate
approximately
principal
RISKS TO THE BONDHOLDERS Limited
BONDS --
and payable only from payments to be
The Bonds are The Bonds will be secured under the indenture for the benefit of the
Obligations" herein. held under
made on the FHA Note and from money s thereon.
owners of the Bonds and investment earning should consider carefully all
Prospective purchasers of the Bonds, therefore, prior t e maturity or
factors that may affect both the operations be redeemed p f the Project y and
possible possibility that the Bonds may
consequently create the
that the
Bonds might bear taxable interest retroactively from their date of issuance. e
11-
following list of possible factors, while not setting forth all the factors which must be
considered, contains some of the factors that should be considered prior to purchasing
Bonds:
(1) V c L c E
PM-as In ome. E Z I r
being substantially
The
at rents per uniithwhich willdcpends in large F upon its
r
service and other cash requirements. There can be no assurance that the Owner will be
able to rent units at rentals that will enable it to make timel over operating expenses, debt
See "Prior Unsuccessful Operating History of the Project" below.
The on the FHA Note.
The exclusion of interest on the Bonds from federal
gross
continuing compliance by the Owner with certain requirements referred to below;
income is dependent upon
however, the enforcement remedies available to the Issuer and the
Trustee are severely
limited. See "THE SUPPLEMENTAL REGULATORY AGREEMENT" and "TAX
TREATMENT." There is no provision for an acceleration of the indebtedness evidenced by
the Bonds or payment of additional interest if interest on the Bonds becomes included in
gross income for federal income tax purposes.
(2) Pri r c s ul erati . Hi .!2!!!,:1:!
encountered substantial difficulties in operations in its Prior oPeratin. history T Project has
PROJECT - Prior Operating History" above). on assurance can ra g (See "THE
per od following the issuance of the Bonds, the cash flow from the Project that operating the
expenses, taxes, insurance, mortgage insurance premium, and other expenses) b„
sufficient to cover the stated debt service on the Mortgage Loan and other fees and
xP .
expenses. In such an event, the Owner could default once again on the FHA Note, which
default, if not cured within the time permitted under the terms of the Mortgage Loan,
could result in the assignment of the FHA Note to HUD for a
and would result in a redemption of the Bonds prior to maturity, as described herein. See
"THE BONDS __ payment of FHA insurance
Redemption -- Extraordinary, Mandatory Redemption."
(a) �aonslary Mark t and Prices. The Underwriters will not be obligated to
repurchase any of the Bonds, and no representation is made concerning the existence of
market secondary market following Bonds completion o assurance can of erin
given that any secondary
assurance can be given that the initial offering prices for the Bonds will continue for any of the Bonds, and no
period of time.
(4) Cq t* Facilities. The Issuer and the Owner and persons who may be
affiliated with each have and may additionally finance, develop, construct, and operate
other facilities that could compete with the Project for tenants. Any com
if so constructed, could adversely affect occupancy and revenues of the Pro t ec eting facilities,
THE INDENTURE
The following is a brief summary of the Indenture. The summary does not purport
to be complete or definitive and is qualified in its entirety by reference to the Indenture,
copies of which are on file with the Trustee.
12-
w,
1'
I
Definitions
"Debt Service Reserve Requirement" andsum
interest 1payablei nnrespect of the
(including mandatory sinking fund payments)
Bonds in any eight -month period ending on an Interest Payment incipal and interest e the
such period, and (ii) an amount equal to one payment P
Mortgage Loan.
"Owner Deposit" means cash in the amount of $
to be deposited by the
Owner with the Trustee provided e ine is Indenture.
funds on the Closing Date in the Costs
of Issuance
"Pledged Revenues" means the revenues, receipts and other money received or to be
received from the Owner come denied orHto be derived on any money held by the oTrustee Note, the Mortgage and the Project
charges, interest and ursuant to the Contract of Mortgage
under the Indenture, and all money p aid P
Insurance between the Trustee and FHA, and other benefits thereunder.
"Qualified Investments" means any of the following if and to the extent permitted
bylaw:
(i) Direct obligations of or obligations the principal of and interest on which
are fully guaranteed by the full faith credit of the
instrumentality State Uniternme e,
or (ii) obligations of any
Governor s of deposit ssued by
full hfaith rustee orcanyof its taffil affiliates by any state or
certificates P
national 1+ ohig bank ortwhich deposit from
insured by FDIC (excludiCorporation
g a lbank
A
where the Issuer is a settler of a trust account evidenced by deposits
therewith), or (iv) investment agreements, in substantially the same form the
Investment Agreement (as defined in the Indenture), which will not adversely
affect the rating on the Bonds, with a financial institution whose unsecured long
term debt is rated by Standard & Poor's Corporation at least as high as the rating
on the BGndpy Sta lord &s poor s
Corporation ationt that invest ltexclusiivvelyy in
"AAAm es
obligains issued and guaranteed alified Inve the stments tmentseundere (G (e) oren(v)r above shall
or instrumentalities. da from the
of
have a su h Qualified date not to Investments cor as needed under he Indenture. date of purchase
Security
Under the Indenture, as security: payment of the principal of, premium, if any,
and interest on eand assigns to, and advanced ecuritye interest to he Trustee in, the
the Issuer pledges
following property:
A. Lxcepters of credit held uunderlthright, ndenture by the interest
Trustee, including the
to any money or le pro its and
proceeds of the Bonds, the payments under the FHA Note and the interest, p
other income derived from the investment thereof.
B. All right,
therefor, including interest issuer in
the Mortgage the alMortgage
FHA gor casualty
the security theref ,
-13-
insurance benefits or condemnation awards payable with respect thereto and any
interest, profits and other income derived from the investment thereof.
C. All right, title and interest of the Issuer in and to the Loan Work-Out
Agreement.
D. Except for the Rebate Fund, all funds, money and securities and any and all
other rights and interests in property whether tangible or intangible from time to time by
delivery or by writing of any kind, conveyed, mortgaged, pledged, assigned or transferred
as and for additional security under for the Bonds by the Issuer or by anyone on its behalf
or with its written consent to the Trustee, by which it is authorized to receive any and all
such property at any and all times and to hold and apply the same subject to the terms l
the Indenture. of
Establishment of Funds
The following funds are established under the Indenture:
Costs of Issuance Fund;
Program Fund;
Bond Fund;
Debt Service Reserve Fund (including the Mortgage Reserve Account
therein); and
Rebate Fund.
Application of ]Bond Proceeds and Other Amounts
From the proceeds of the Bonds ($) the Trustee shall deposit the accrued
interest in the amount of $
__ ,plus $ to the Bond Fund, and $ to
ustee s
the Program Fund. The Tr hall deposit the Owner Deposit in the Costs of Issuance
Fund. From the moneys released from the Prior Indenture, the Trustee shall deposit
$ to the Debt Service Reserve Fund (of which
Mortgage Reserve Account therein). $ shall be deposited to the
Costs of Issuance Fund
The Trustee is to use moneys in the Costs of Issuance Fund to pay costs of issuance
in accordance with a Bond Purchase Agreement among the Issuer, the Owner and the
Underwriters upon presentation to it of invoices not in excess of the amounts set forth
therein. On the date which is 180 days following the date of the issuance of the Bonds, the
Trustee is to distribute any funds remaining in the Costs of Issuance Fund to the Owner.
Program Fund
The Trustee is to remit amounts held in the Program Fund to the Prior Trustees for
the purpose of refunding the Prior Bonds.
-14-
Bond Fund
All payments on the FHA Note and all interest, profits or other income derived
from the investment of all funds held under the Indenture are to be deposited in the Bond
Fund. Subject to the limitations contained in the Indenture, in the event that on or before
any Interest Payment Date the Trustee does not receive the full amount of a payment then
due on the FHA Note, the Trustee is to on such Interest Payment Date, withdraw from
the Mortgage Reserve Account of the Debt Service Reserve Fund and deposit to the Bond
Fund the amount that when added to the amount therein, is sufficient to pay principal
and interest on the Bonds then due, provided, however, that any such transfer by the
Trustee shall not relieve the Owner of its obligations under the FHA Note or Mortgage.
Upon receipt of such payment the Trustee is to immediately deposit in the Mortgage
Reserve Account of the Debt Service Reserve Fund the amount previously withdrawn
therefrom, FRA mortgage insurance benefits, if any, are to be deposited in the Bond
Fund, and used, together with other amounts ou deposit in the Bond Fund, to the extent
necessary to redeem Bonds in accordance with the Indenture at the earliest practicable
date.
On each Interest Payment Date and on any other date when Bonds are to be
redeemed or otherwise paid pursuant to the Indenture, the Trustee is to apply the
amounts in the Bond Fund in the following priority:
(a) to the payment of all principal and/or interest due on the Bonds (including
any mandatory sinking fund payments) then due;
(b) to. the payment of the fees and expenses of the Trustee, as provided in the
Indenture;
(c) to the payment of the ongoing surveillance fee of Standard & Poor's
Corporation, in the amount of $500 per year;
(d) to the payment of any fees and expenses of the Mortgage Servicer, as
provided in the Indenture;
(e) to the transfer of any amounts required to be deposited in the Debt Service
Reserve Fund (and the Mortgage Reserve Account therein), in order to restore the
amount of money therein to the amounts required pursuant to the terms of the
Indenture; :L
(f) payment to the Rebate Analyst; and
(g) to the maintenance in the Bond Fund of a carry - forward balance as
required in the Indenture.
Debt Service Reserve Fund
If on any Interest Payment Date the amount in the Bond Fund after making all
required deposits therein is insufficient to pay the interest on, principal of, and premium,
if any, then due on the Bonds, the Trustee is, subject to the limitations described in the
paragraph below, to transfer cash in an amount equal to such deficiency to the Bond
Fund from the Debt Service Reserve Fund; provided, however, that any such transfer by
the Trustee is not to relieve the Owner of any of its obligations under the FHA Note or
under the Mortgage. The Trustee is, on each Interest Payment Date, to transfer to the
Bond Fund from the Debt Service Reserve Fund and the Mortgage Reserve Account
•15-
interest arnin sy luehtheDDeb SSe eC Service Reserve Fund and the Mortggage Restirve Account
The Trustee
f cost, market, or amortized value•
on each Interest Payment Date at the lowest o
Notwithstanding the foregoing, except when all outstanding Bonds are to be un
redeemed, insurance be efits Trustee
nd of is intention and f ele dionuto assign the Mortgage
mortgage
Loan to HUD Pursuant to the Indenture, no money in the Debt Service Reserve Fu is o not to
be used for payments of principal of or interest In the Bonds, other Dat and the transfer of
exceed one payment on the FHA Note on each Interest Bon
earaungse iftsuch use would result in the amount in the Debt Service Reserve Fund
Indenture,
being reduced to less than the Debt Service Reserve Requirement.
Final Balances either
When provision has been made for payment of all �nof the Trustees, Mortgage
at maturity or upon redemption, and for the payment'
Service 's, Rating
Indenture, after such paymyent in full,dmoneysremaining under the
due under
Indenture shall be transferred to the Owner.
Rebate Fund
The Trustee is to establish and maintain a fund separate from any other fund
established and deposited in the Rebate nFuud is t be h ld by the TrustRee in trusFund. o he
money at any payment to the federal government of the United States of America.
extent required for the
All amounts nd by -aeLetter of Instructions. The Trustee will be deemed conclusively by to
Indenture
l et
have complied with such Owner with the terms of the
no liability eweP o to enforce compliance by the
Letter of Instructions.
Investment of Funds
The money held in the Bond Fund, the Debt Service Reserve Fund (including the
Mortgage Reserve Account) is to be invested pursuant to an investment agreement (the
"Investment Agreement ") between the Trustee and
The Investment Agreement provides
on the Debt Service Reserve Fund (including the Sz
Bond Fund an
Mortgage Reserve Account thereon).
In addition, the Trustee is authorized to invest other amounts held under the
Indenture in Qualified Investments, as hereinbefore defined.
Events of Default
Each of the following is an "event of default" with respect to the Bonds (each a
Default) under the Indenture:
(a) default in the due and punctual payment of any interest on any Bond;
=1G-
(b) default in the due and punctual payment of the principal or premium, if
any, on any Bond whether at the stated maturity thereof, or on proceedings for
redemption thereof, or on the maturity thereof by declaration; or
(c) default, and the continuation thereof for a period of 30 days following notice
to the Trustee, in the performance or observance of any other of the covenants,
agreements or conditions on the part of the Issuer in the Indenture or in the Bonds after
written notice to the Issuer from the Trustee or the registered owners of at least 25 % of
the Bond Obligation as defined below) at such time specifying such default and requiring
the same to be remedied.
Upon the occurrence of a Default described in paragraph (a) or (b) above, the
Trustee may, and upon the written request of the holders of not less than 25% of the
aggregate principal amount of the Bonds then outstanding (the "Bond Obligation ") must,
by notice in writing delivered to the Issuer, declare the principal of all Bonds then
outstanding and the interest accrued thereon immediately due and payable, and such
principal and interest will thereupon become and be immediately due and payable.
If at any time after the Bonds have been so declared due and payable, and before
any judgment or decree for the payment of the money due has been obtained or entered,
the Issuer or the Owner, pays to or deposits with the Trustee a sum sufficient to pay all
principal of the Bonds then due (other than solely by reason of such declaration) and all
unpaid installments of interest (if any) upon all the Bonds then due, with interest at the
rate borne by the Bonds on such overdue principal and (to the extent legally enforceable)
on such overdue installments of interest, and the reasonable expenses of the Trustee have
been made good or cured or adequate provisions will have been made therefor, and all
other defaults under the Indenture have been made good or cured or waived in writing by
100% of the owners of the Bond Obligation, then and in every case, the Trustee on behalf of
the holders of all the Bonds is to rescind and annul such declaration and its
consequences.
Upon the happening and continuance of a Default, the Trustee in its own name
and as trustee of an express trust, on behalf and for the benefit and protection of the
holders of all Bonds with respect to which such Default has occurred, may also proceed to
protect and enforce any rights of the Trustee and, to the full extent that the holders of
such Bonds themselves might do, the rights of such Bondholders under the laws of the
State of Florida or under the Indenture by such of the following remedies as the Trustee
deems most effectual to protect and enforce such rights:
(1) by mandamus or other suit, action or proceeding at law or in equity, to
enforce the payment of the principal of, premium, if any, or interest on the Bonds then
outstanding, or for the specific performance of any covenant or agreement contained in
the Indenture or in the FHA Note or the Mortgage, or to require the Issuer to carry out
any other covenant or agreement with Bondholders and to perform its duties under the
Act;
(2) by pursuing any available remedies under the FHA Note and the Mortgage;
realizing or causing tocbereali realized through sale or otherwise auponhthe security pledged
under the Indenture; and
(4) by action or suit in equity, to enjoin any acts or things that may be
unlawful or in violation of the rights of the holders of Bonds.
WVA
If any Default has occurred and if requested in writing to do so by the holders of
not less than 25% of the Bond Obligation with respect to which there is a Default, and if
indemnified as provided in the Indenture, the Trustee is obligated to exercise such one or
more of the rights and powers conferred by the Indenture as the Trustee, being advised by
counsel, deems most expedient in the interest of the Bondholders. Subject to the
provisions of the Indenture, the holders of a majority of the Bond Obligation with respect
to which a Default has occurred have the right at any time, by an instrument in writing
executed and delivered to the Trustee, to direct the time, method and place of conducting
all proceedings to be taken in connection with the enforcement of the terms and
conditions of the Indenture, or for the appointment of a receiver or any other proceedings
under the Indenture, in accordance with the provisions of law and of the Indenture.
Remedies of Bondholders
No holder of any Bond has any right to institute any suit, action or proceeding in
equity or at law for the enforcement of the Indenture or for the execution of any trust
under the Indenture or for the appointment of a receiver or any other remedy under the
Indenture, unless (a) a default occurred of which the Trustee has been notified as
provided in the Indenture; (b) such default has become a Default; (c) the holders of at
least 25% of the Bond Obligation have made written request to the Trustee and have
offered reasonable opportunity to the Trustee either to proceed to exercise the powers
granted in the Indenture or to institute such action, suit or proceeding in its own name;
(d) such holders have offered to the Trustee indemnity as provided in the Indenture; and
(e) the Trustee within 60 days thereafter fails or refuses to exercise the powers granted in
the Indenture, or to institute such action, suit or proceeding; no holders of the ?•fonds,
however, will have any right to affect, disturb or prejudice the lien of the Indenture or the
rights of any other holders of Bonds or to obtain priority or preference over any other
holders or to enforce any right under the Indenture. Nothing contained in the
Indenture, however, affects or impairs the right of any Bondholder to enforce the
payment of the principal of, the premium, if any, and interest on any Bond at the
maturity thereof or the obligation of the Issuer to pay the principal of, premium, if any,
and interest on the Bonds issued under the Indenture to the owners thereof, at the time,
in the place, from the sources and in the manner set forth in the Bonds.
Servicing the Mortgage Loan; Mortgage Servicing Agreement
The Trustee is entering into a Mortgage Servicing Agreement dated as of August
1, 1992, by and between the Trustee and Continental Securities Corporation (the
"Mortgage Servicer "). The Trustee will have the right to replace the Mortgage Servicer,
upon a default by the Mortgage Servicer as provided for in the Mortgage Servicing
Agreement.
Mortgage Insurance Benefits
Upon a default by the Owner in the due and punctual payment of the principal of
(including, without limitation, a principal payment below what is required by the FHA
Note) and interest on the FHA Note, the Trustee is to immediately notify the Issuer, the
Owner, and any holder of 25% or more in aggregate principal amount of the Bonds then
outstanding who has filed a written request with the Trustee for such notification.
The Trustee is required to take all steps necessary to obtain mortgage insurance
benefits in cash, including giving FHA appropriate and timely notice of default,
assigning the FHA Note to FHA following the expiration of applicable grace periods on
.1€.
the FHA Note and specifically stating that a claim for mortgage insurance benefits
relates to a financing with tax - exempt bonds for which the Trustee will assert its right to
priority processing by FHA. The Trustee is to apply any FHA mortgage insurance
benefits received to the redemption of Bonds.
Supplemental Indentures
Without the consent of the Bondholders, the Issuer and the Trustee may enter into
supplemental indentures (not inconsistent with the terms of the Indenture or materially
adverse to the holders of the Bonds) .for any one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in the Indenture;
(b) to change or modify any provision of the Indenture so as to harmonize to the
maximum extent practicable the provisions of the Indenture with existing rules,
regulations and procedures of FHA;
(c) to grant to or confer upon the Trustee for the benefit of the Bondholders any
additional rights, remedies, powers or authority that may lawfully be granted to or
conferred upon the Bondholders or the Trustee or either of them;
(d) to subject to the lien and pledge of the Indenture additional revenues,
properties or collateral;
(e) to modify, amend or supplement the Indenture or any indenture
supplemental thereto in such manner as to permit the qualification thereof under the
Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in
effect or under any state securities laws;
(f) in connection with any other change in the Indenture which, in the
judgment of the Trustee, is not to the prejudice of the Trustee or the Bondholders; or
(g) to modify or amend the Indenture as necessary to secure a rating on the
Bonds acceptable to the Issuer, except no change may be made to the maturity, interest
rate or amount of the Bonds.
With the consent of the holders of not less than two - thirds of the principal amount
of the Bonds to be affected by the execution of the supplemental indenture, the Issuer and
the Trustee may from time to time enter into supplemental indentures for the purpose of
modifying, altering, amending, adding to or rescinding any of the terms or provisions
contained in the Indenture or in any supplemental indenture; provided, however, that
nothing in the Indenture or in any supplemental indenture permits, or can be construed
as permitting (a) an extension of the stated maturity or reduction in the principal amount
or reduction in the rate of interest on or extension of the time of payment, of interest on,
or reduction of any premium payable on the redemption of, any Bonds, or a reduction in
the Owner's obligation on the FHA Note, without the consent of the Holders of all of the
Bonds then outstanding, or (b) the creation of any lien prior to or on a parity with the lien
of the Indenture, or (c) a reduction in the aforesaid aggregate principal amount of Bonds
the holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all the Bonds at the time outstanding, or (d) the
modification of the rights, duties or immunities of the Trustee, without the written
consent of the Trustee, or (e) a privilege or priority of any Bond over any other Bonds, or (f)
any action that results in the interest on the Bonds becoming included in gross income
for federal income tax purposes.
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0
The Trustee
During any event of default, the Trustee is to exercise rights and powers vested in
it by the Indenture with the degree of care and skill a prudent person would exercise in
the conduct of his or her own affairs. Otherwise, the Trustee is to perform only such
duties as are specifically set forth in the Indenture.
In the absence of bad faith on the part of the Trustee, the Trustee may conclusively
rely upon any certificate or opinion furnished it. The Trustee is not liable in the absence act of bad faith for any error of judgment, able any aion of the Bonds. en in accordance with
the direction of the holders of any app prop
The Trustee may acquire and hold Bonds and otherwise deal with the Issuer and
the Owner as though it were not the Trustee.
THE FHA NOTE AND MORTGAGE
The following is a brief summary of the FHA Note and Mortgage. The summary
does not purport complete s f fi entirety by reference to
he FHA N and Mortgagecop e of are on e with the Trustee.
The FHA Note is a nonrecourse obligation (which means that the Owner is not
liable for the payment thereof beyond the amount realized upon the security therefor)
providing for level monthly payments of principal and interest. In the event of a failure to
make a payment when due and the failure to correct such failure by the next due date,
the entire amount of the FHA Note may be declared due and payable by the Trustee. In
the event of a late payment of more than fifteen days, the Trustee may charge and collect Note is
ercent of the late from prepayable he O only n accordance p to two e provisions thereof including the p y payment of
premiums.
Pursuant to the Modification of Mortgage Note and Mortgage executed by the
Owner in accordance with the terms of the Loan Work -Out Agreement,
the interest rate
on the FHA Note and Mortgage has been reduced from 10.625% to % per annum,
the level monthly payments of principal and interest have been reduced and the optional
prepayment provisions have been altered to conform to the optional redemption
provisions of the Bonds (see "TI-IF. BONDS -- Optional Redemption" herein).
Notwithstanding any prepayment prohibition or penalty otherwise required by the
ull without prepayment penalty if HUD
FHA Note, the indebtedness may be prepaid in full.
determines that prepayment to avoid an insurance claim is in the best interest of the
Federal Government. HUD has indicated that it would make its determination to exercise
this provision only if:
(a) the Owner has defaulted and HUD has received required notice of default;
(b) HUD determines that the Project has been experiencing a project income
deficiency that has not been caused solely by management inadequacy or lack of owner
interest and that is of such maanitaulderoje t ape Ot g expo seseand fund ball required
required debt service payments, p Y P
HUD reserves;
-20-
W HT`1D finds there is a reasonable likelihood that the Owner can arrange to
refinance the defaulted loan at a lower interest rate, or otherwise reduce the debt service
payments through partial prepayment; and
(d) HUD determines that refinancing the defaulted loans at a lower rate or
partial prepayment is necessary to restore the Project to a financially viable condition and
to avoid an insurance claim.
The Mortgage conveys the Owner's interest in the Project to secure the payment of
the FHA Note. The Mortgage (including the FHA Regulatory Agreement incorporated
therein) requires that:
(1) fire and casualty insurance be maintained on the Project payable to the
Trustee in an amount not less than necessary to comply with the applicable co- insurance
percentage but in no event less than 100% of the insurable values or the unpaid balance of
the FHA Note plus the Mortgage Loan whichever is lower:
(2) the mortgage insurance premiums, taxes and utility assessments, fire and
casualty insurance premiums, and deposit to the replacement fund be paid monthly to
the Mortgage Servicer together with the monthly payment on the FHA Note;
(3) the Owner not place any liens on the Project inferior (without FHA consent)
or superior to the Mortgage; and
(4) the Owner maintain the Project in good repair and condition.
THE FRA REGULATORY AGREEMENT
The following is a brief summary of the FHA Regulatory Agreement. The
summary does not purport to be complete or definitive and is qualified in its entirety by
reference to the FHA Regulatory Agreement, copies of which are on file with the Trustee.
Pursuant to the FHA firm commitment to insure the FHA Note (see "FHA
INSURANCE "), the Owner and HUD have entered into the FHA Form of Regulatory
Agreement (the "FHA Regulatory Agreement "). The FHA Regulatory Agreement
provides, among other things, that the Owner must rent the units in the Project to
eligible tenants, determined in accordance with FHA regulations. The FHA Regulatory
Agreement incorporates the provisions of the FLOP Contract by reference. The Owner is
required to give priority to persons and families designated in the National Housing Act
an absolute preference or priority and to maintain the Project in good condition. Dwelling
units are not to be rented for a period of less than 30 days nor more than three years.
The FHA Regulatory Agreement also prohibits the conveyance, transference or
encumbrance of the Project or any right to manage the Project without the prior written
approval of FHA. The Owner may not make, receive, or retain any distribution of assets
or income from the Project except from "surplus cash" and only as permitted under
applicable laws.
The Owner is prohibited, without the prior written approval of FHA, from
remodeling, adding to or demolishing any part of the Project or engaging in any other
business or activity or incurring any obligation or liability not in connection with the
-21-
Project or requiring as a condition of occupancy of any unit a deposit greater than the
prepayment of the first month's rent plus a security deposit of one month's rent or
permitting the use of the Project for any other use.
The Project and all books, records, and documents relating thereto are required to
be subject to examination and inspection at any reasonable time by FHA. Books and
accounts of the Project are to be kept in accordance with FHA requirements and complete
annual financial reports are to be furnished to FHA within 60 days of the end of each
fiscal year.
In the event of a default in the performance of the Owner's obligations under the
FHA Regulatory Agreement, even in the absence of a default under the FHA Note or the
Mortgage, FHA may (a) notify the Mortgagee of such default and request the Mortgagee
to declare a default under the FHA Note and the Mortgage and the Mortgagee may, at its
option, declare the whole indebtedness due and proceed with assignment of the FHA Note
and the Mortgage to FHA, (b) collect all rents and charges in connection with the
operation of the Project and use such collections to pay the Owner's obligations under the
FHA Regulatory Agreement and under the FHA Note and the Mortgage and the
expenses of maintaining the Project, (c) take possession of and operate the Project, and
(d) apply for an injunction, appointment of a receiver or such other relief as may be
appropriate.
THE SUPPLEMENTAL REGULATOR' AGREEMENT
The following is a summary of the Supplemental Regulatory Agreement. The
summary does not purport to be complete or definitive and is qualified in its entirety by
reference to the Supplemental Regulatory Agreement, copies of which are on file with the
Trustee.
The Issuer, as a condition of issuing the Prior Bonds, required the Owner to enter
into a Supplemental Regulatory Agreement as to Tax Exemption (the "Supplemental
Regulatory Agreement ") in which the Owner covenants, subject to certain limitations
described below, to comply with the requirements of Section 103(b)(4)(A) of the Internal
Revenue Code of 1954, as amended (the "1954 Code "), as made applicable by Section
1313(a) of the 1986 Code, and further represents that it has complied with such
requirements on a continuous basis since the date of issue of the Prior Bonds. Those
requirements must be continuously met subsequent to the date of issue of the Prior Bonds
in order that interest on the Bonds commencing from the dated date of the Bonds be
excludable from gross income for federal income tax purposes.
In the Supplemental Regulatory Agreement, the Issuer and the Owner each
covenant that they will not knowingly take or permit to be taken any action, and represent
that they have not knowingly taken or permitted to be taken any action, which would
adversely affect the exclusion of interest on the Bonds from gross income for federal
income tag purposes, except that the Owner may take any action required to be taken by it
under Section 221(d)(4) of the National Housing Act or the regulations thereunder, or the
Mortgage Loan Documents, even if the excludability of interest on the Bonds from gross
income for federal income tax purposes were thereby adversely affected. The Owner and
the Issuer have also agreed to take any lawful action (other than an action prohibited by
HUD), subject to prior approval by HUD (including amendment of the Supplemental
Regulatory Agreement as is necessary, in the opinion of Bond Counsel) to comply fully
with all applicable requirements affecting the exclusion of interest on the Bonds from
gross income for federal income tax purposes under Section 103(b)(4)(A) of the 1954 Code.
Under the Supplemental Regulatory Agreement, the Owner and its successors are
obligated, subject to the foregoing, to operate, and the Owner has represented that it has
operated at all times since the issuance of the Prior Bonds, the Project as a residential
rental project, as defined in Section 103(b)(4)(A) of the 1954 Code and the Treasury
Regulations thereunder. Furthermore, the Owner and its successors are obligated to
cause at least 20% of the units in the Project to be, and the Owner has represented, that in
fact, at least 20% of the units in the Project have been, occupied (or treated as occupied) by
low or moderate income persons (as defined in the Supplemental Regulatory
Agreement) continuously during a period commencing the date of issue of the Prior
Bonds, and ending on the later of (a) the date which is ten years after the date on which at
least 50% of the units were first occupied or (b) the date which is 50% of the total number
of days which comprise the stated term of the Prior Bonds which were outstanding and
the longest maturity of the Bonds or (c) the date on which any assistance under Section 8
of the United States Housing Act of 1937 terminates (the "Occupancy Restrictions
Period ").
In order to determine whether prospective tenants are of low or moderate income,
the Owner has agreed to require, and has represented that it did require at all times
since the issuance of the Prior Bonds, submission of income certifications in which
prospective low or moderate income tenants certify that the individuals or families to
occupy such units qualify under HUD's Section 8 guidelines (without adjustment for
family size) as being of low or moderate income (the "Income Certification "). A material
misrepresentation by such prospective tenant in the Income Certification will be and has
been at all times since the issuance of the Prior Bonds, under such tenant's lease,
grounds for default and eviction; the enforcement of that provision may, however, be
subject to limitations imposed now or in the future by laws designed to protect tenants'
rights.
The Supplemental Regulatory Agreement also requires that (a) the Project has
been acquired, constructed and equipped for the purpose of providing multi - family
residential rental. property and constitutes multi- family residential rental property (as
defined in the Supplemental Regulatory Agreement); (b) the Project consists of similarly
constructed dwelling units, together with functionally related and subordinated facilities
and has comprised and will comprise a building or structure or several proximate
buildings or structures which (i) are located on a single tract of land or two or more
parcels of land that are contiguous; (ii) are owned by the same person for federal income
tax purposes; and (iii) are financed pursuant to a common plan; (c) the Owner has not
occupied and will not occupy any dwelling unit in any building or structure containing
fewer than five dwelling units; (d) all the dwelling units in the Project have contained at
all times since the issuance of the Prior Bonds and will contain complete facilities for
living, sleeping, eating, cooking, and sanitation; (e) none of the units in the Project have
been at any time since the issuance of the Prior Bonds or will be at any time utilized on a
transient basis by being leased for a period of less than 30 days or by being used as a hotel,
motel, dormitory, fraternity house, sorority house, rooming house, hospital, nursing
home, sanitarium, rest home or trailer park or court; and (f) all the units in the Project
(other than a unit for a resident manager or maintenance personnel) have been at all
times since the issuance of the Prior Bonds and will be leased, rented, or available for
lease or rental on a continuous basis to members of the general public for the longer of
the Occupancy Restrictions Period or the remaining term of the Bonds (the "Rental
Restrictions Period ").
.23.
The Supplemental Regulatory Agreement
transfer of deed in lieu of foreclosure or similar event the Supplemental Regulatory
provides that upon foreclosure or
Agreement and its restrictions will terminate. In such event, the Owner or a related
person is prohibited from reacquiring an ownership interest in the Project during the
Occupancy Restrictions Period. In addition the Supplemental Regulatory Agreement
Provides for termination upon involuntary 3' e lt o f
unforeseen events such as fire, seizure, requisition or condemnation of the Project,
arY oss or substantial destruction as a result of
Provided that, within a reasonable time period, either the Bonds are retired in full or the
amounts received as a consequence of such event are used to provide a project which
satisfies the requirements of Section 103(b)(4)(A) of the 1954 Code.
The Supplemental Regulatory
representative of the Issuer to inspect Agreement permits any duly
Project with respect to the incomes of tenants a.nd require sthe LOwneOwner o submit
to Issuer other information, documents or certifications requested by the Issuer hick the
Issuer deems reasonably necessary to substantiate the Owner's
with the provisions of the Supplemental Regulato A en continuing compliance
determine whether the Owner is in compliance with theSu and the 1954 Code to
Agreement and requires that the Owner submit all Income Certifications to the Issuer
upon request and, each month after the Project is available for occupancy submit Issuer
Issuer and the Trustee a certificate stating he
occupied d treated as occupied, g percentage of the units whichtwere'
the preceding month by low or moderate income persons. In addition, the Owner is
required upon discoverin �' Regulations, at all times during
Provide immediate written notice f such violation tSupplemental he Issuer anRegulatory the
Agreement to
t Trustee.
The Owner has covenanted and agreed in the Supplemental Regulatory
Agreement to cause or require, as a condition precedent to an
assignment or any other disposition. of the Project termination Y conveyance transfer,
Occupancy Restrictions and the Rental Restrictions, thatt the transferee of' assume b thne
writing in a form acceptable to the Issuer, the Trustee and HUD, all duties and
obligations of the Owner under the Supplemental Regulatory Agreement
executed counterpart of such instrument of assumption be delivere to the Issuer that
nd the
Trustee prior to any conveyance, transfer, assignment or other disposition.
The Trustee is entitled for any breach of the provisions of the Supplemental
Regulatory Agreement to all remedies both at law or in equity. The availability of
equitable remedies such as specific performAce or an subject to
'
the discretion of the court and no assurances can be
e able
given that the Trustee would b injunction is generally subto obtain such relief after proving a breach by the Owner of any of the covenants contained
in the Supplemental Regulatory Agreement.
Agreement is made expressly su ordinte to theeMort Furthermore, Supplemental enforcement Regulatory
Supplemental Regulatory Agreement will not result in an enforcement of the
Loan., or claim against the Project, the Mortgage Loan proceeds, y claim under the Mortgage
made with the Trustee, as Mortgagee, or another person or entity requireserve U deposit or the
Trustee, as Mortgagee, in connection with the Mortgage
or other income from the Project, except that the Owner has agreed to pay to th Dssuer
g ge transaction, or against the rents
but only to the extent of any available "surplus cash" as defined in the FHA Regulat
Agreement, an amount equal to any rents or other amounts received by the Owner for
any units in the Project which were in violation of the Supplemental Re Ory
Agreement during the period such violation continued. the
Consequently, the rightory
ts la la
Issuer or the Trustee to enforce a claim for money damages are severely restricted.
Among other things, it would not be possible to accelerate the debt evidenced by the
Mortgage Note or to seek mortgage insurance benefits as a result of the violation by the
-z4-
Owner of the covenants contained in the Supplemental Regulatory Agreement.
IS NO PROVISION FOR AN ACCELERATION OF THE INDEBTEDNESS EVIDENCED
THERE
BY THE BONDS OR PAYMENT OI' INDEBTEDNESS EVIDENCED
SUCH INTEREST BECOMES INCLUDABLEOINAGROSS INTEREST INCOME FOR FEDERAL
INCOME TAX PURPOSES.
the Supplemental Regulatory 'g anything in the Indenture, the Loan Work -Out
t Agreement (collectively,'the'Bond Docu
ment
�7 to the
contrary, the provisions of the Bond Documents are subordinate to all applicable HUD
Mortgage Insurance Regulations and related administrative
of any con$ict between the provisions of the Bond ccents and the provisions of any
9luirements. In the event
applicable HUD Regulations, related HUD
administrative requirements or Mortgage Loan Documents, the HUD re gulations, related administrative requirements or ortg� Loan
shall control
THE LOAN WORKOUT AGREEMENT
The following is a brief summary of certain provisions of the Loan Work -Out
Agreement. This summary does not purport to be complete or definitive and is qualified
in its entirety by reference to the Loan Work -Out Agreement, copies of which are on file
with the Trustee.
Pursuant to the Loan Work -Out Agreement, the Issuer agrees to issue the Bonds
for the purpose of refunding the Prior Bonds, which are to be redeemed as a result of the
Owner's default under the FHA Note. See "THE PROJECT -Prior Operating History.
Pursuant to the Loan Work -Out Agreement, the Owner agrees to deposit $
the Trustee on or prior to the date of the delivery of the Bonds. Such amount is to be used
as provided in the Indenture. with
As described above under "THE INDENTURE," the Trustee is to apply
available to it to reimburse HUD for its payment of FHA mortgage insuranc amounts
thereby to acquire the FHA Note from HUD. The Owner agrees to amend the F
reduce the interest rate from 10.625% per annum to HA Note to
%per annum.
Representations and Warranties of the Owner
The Owner represents in the Loan Work -out Agreement that it is not as of the date
of the delivery of the Bonds in breach of or in default under any of the provisions of the
Supplemental Regulatory Agreement and that it has cont
103(bx4)(A) of the 1954 Code. inuously operated the Project as
a qualified multifamily residential rental housing facility within the meaning of Section
The Owner also represents that it has been in continuous default under its
obligations with respect to the FHA Note since August 1, 1991, and that the operating
income of the Project has been insufficient since such time to make full and timely
Payments with respect to the FHA Note.
-25-
Tax Covenant
resents that it has not taken or permitted to be taken action that would
ould.
The Owner rep gross income for federal
and covenants thaateitt will exclusion f o interest e or
td onethe{BoT a from b inane and taken such
adversely affect t
income tax Purposes, and that it will make and take q
acts of feting as may from time to time be required under the 1954 Code or to the 1986 Code
to maintain such exclusion.
r Limitations on Enforceability
Non - Recourse Obligation; Othe Agreement and under the
bl recourse to the Project. The Owner and its general Partners will
The Ownertseabhgations under the Loan Work -Out
FHA Note are lime
no personal liability with respect to a breach of or default under the Loan Work-Out
have P
Agreement or the FHA documents. IJ in the Loan
In the event of a breach by the Owner of the a covenants
pec fic performance of the Loan
Out Agreement, ction against any
`isolation or violations of equitable
eement, the Issuer or the Trustee may sue for specific
Work -Out Agreement or for an fij� uit The availability
other remedy available at law or in eq Y generally subject to the
pursue any dy erformance or an injunction i e will
remedies such as specific given that the Issuer or f e Treovenants
discretion of the court, and no assurances can be g� the Owner of any
eement. Furthermore, as a condition of FHA
be able to obtain such relief after proving a breach by reement is made expressly
contained in the Loan Work -Out Agr and enforcement of the Loan
insuring the Mortgage Loan, the Loan Work -Out Ag
atio is under the Mortgage Loa'
to the oblig ressly limited so that enforcement lLoan result ceeds, any
Work -Out Agreement i exp or against the Project, the mortgage re aired by
Loan, a gee or any other person or entity q
claim under the Mortgage
reserve or deposit, made with the Mge g ent under the Loan
UD in connection with the Mortgage Loan transaction, or against he rents or Other
H surplus cash) for paym
income from the Project (other than available Burp other things, it would not
Agreement. Consequently, the rights of the Issuer and the 'Trustee toe enforce
Work -Out Agr damages are severely restricted. Among
or claim for monetary the FHA Note or to seek FHA mortgage the
be possible to accelerate the debt evidenced by the Owner of a covenant
ro main form h e
insurance benefits ase menttwithout FHAbapproval. There is a° pent of additional
Loan Work -Out Agr the Bonds or for p Ym
accelerationmt f neon the Bonds becomes included in gross income for federal income tax
interest.
purposes.
TAX. TREATMENT
all as ects of federal taxation that may ' be
The following is a discussion of certain federal income tax matters under existing
u ort to deal with particularly those statutes. It does not p rP the federal
relevant to particular Bond owners. Prospective investors, p tax
subject to special nd disposing of the Bonds, �u isdiction. any
ecial rules, are advised to consult their own tax advisor regarding
income tax consequences of owning the Tax Reform Act of 1986,
consequences arising under the laws of any state or other t g
excepted from certain ofuiremenchanges. or he
though subssanions such as the Bonds,
certain were excepCode y compliance req
certain trap the 1954 Code in the comp
the result, rules established by
Project remain in effect for the Project subsequent to the issuance of the Bonds.
-26-
!p
Section 1.103 -8(b) of the Income Tax Regulations (the "Regulations ") sets forth one
requirements for compliance with Section 1093(bro4e(As located in Code. Tha Regulations
the
require, in part, that at least 20% (15% or projects
complete rental units in the Project must a Regulations ons equirelthat, once navailablelfor
the Qualified Project Period. In addition,
occupancy, each rental unit in the Project must be rented or available for rental on a
continuous basis during the longer a (a) the remainder of the Regulations pr vi e that
Bonds are Outstanding or (b) the Qualified Project Period. The Regal
the failure to satisfy the foregoing requirements on a continuous basis, unless corrected
within a reasonable cure peha a od of not less been discovered by the0exerese of reasonableodiligence,
is first discovered or would
will cause the loss of tag exclusion from gross income for federal income tax purposes of
the interest on the Bonds as of the date of the issuance of the Bonds.
In order to comply with these requirements, the City has required, among other
things, that the Owner execute the Supplemental Regulatory Agreement as to Tax
Exemption with respect to the Project, providing, among other things, that the Project
has been and will
escribed continue the foregoing maintained and available for rental for the periods and
in the manner d
See "THE SUPPLEMENTAL REGULATORY of causing the Project rto be operated d in
the covenants made by the Owner for the pure
compliance with the requirements of Section 103(b)(4)(A) aft he 1954 with such Code an
description of the representations of the Owner regarding p compliance
requirements.. As described therein,
the Owner's covenants axe, however, subject to
compliance with certain FHA requirements or if the representations sett forth therein
with the Supplemental Regulatory Agreement
are inaccuraeo enforcement e erely limi ed and m y ble inadequate to prevent the loss of
Bondholders
excludability of interest onthere�is n grovis-non o�acceleratio vortredemptio of the
the Bonds. In such event, d to hold the Bonds, which then bear
Bonds and the owners of the Bonds may be require
tameable interest, anti? maturity. onal The Code of contains the Bonds order t requirements
he into est on t e Bonds betandsremain
to the issuance purposes. Failure to comply with
excluded from gross income for federal income tax pure
such requirements date of issueeofthe Bonds. The Authority has o enantedl n the
retroactive to
Indenture antions required by the Codetoemainthaine exclusion nt from gross in income of
taking, the
interest on the Bonds.
In the opinion of Bryant, Miller and Olive,
P.A. Bond Counsel, assuming
continuing compliance bur the Authority and �n s and judicial with the Cisions, interest on the
above, under existing statutes, regulations, u oses except that such
Bonds is excluded from gross income for federal income tax od during which such Bond
exclusion shall not apply to interest on any Bond for any p
is held by any person who is a "substantial user" of the Project or a "related person"
within the meaning of Section 1 purposes Federal alternatrvr e
alternative Bonds is imposed d on
item of tax preference for pure
individuals or nimumr tax when any Bondeis held by eaBcorporation. eThe alt to rnative
alternative mi
-27-
E2
75% of the excess of such
mix mum taxable income of a corporation must be increased by "Adjusted
usted current earnings over its alternative loss deduction) taxable income
corporation's adj The Bonds are exempt from all
(before this adjustment and the alternative tax net Bonds. e Bt to Chapter pt Florida
Current Earning" will include interest taon thmP imposed p
present intangible personal property
Statutes.
Except as described above,
Bond Counsel will express n ooPiniO. receipt or accrual of
osition of Bonds. Prospective purchasers of Bonds should be aware
Federal income. tax consequences resulting from ral I'edeTa�ncome tax consequences,
interest on, or d1SP of Bonds may result in collate
that the ownership property
reduction of the loss reserve deductlone for p on the
including (i) the denial of a deductioneor interest on indebtedness din ed or continue
lnc g Bonds, (ii) the
to purchase or carry antes by 15% of certain items, Including
rn u g
and casualty it comp modified alternative minimum taxable
imposed on corporations, (iv) the inclusion
Bonds, (iii) the inclusion of interest on Bonds In corporations doing business in the
income" for purposes of the environ o f certain foreign rP
of interest on the Bonds in
of earning arch Profits tax, (v) the inclusion of interest corporations
United States for piuP and (vi) the
and Profits at the close of the taxable Yep reci Tents of
passive income subject to Federal income taxation of certain Subchapter
with Subchapter C earnings oss income" by P
and Railroad Retirement benefits for purposes of determining
inclusion of interest on the Bonds in "modified adjusted purposes
certain Social Security gross income for Federal income tax purr
whether such benefits are included in gr ADVERSE
CHASE, OyRSHIP, SALE OR DISPOSITION OF THE BONDS AND THE
PURCHASE,
FOR CERTAIN INDIVII CONSULT WITH THEIR
RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY
FEDERAL TAX CONSEQUENCES
BONDHOLDERS. PROSPECTIVE BONDHOLDERT SHOULD
TION IN THAT TAX SPECIALISTS FOR INFORMATION and
ears legislative proposals have been introduced in Congress) the
During recent y consequences resulting proposals
in some cases enacted, that altered c filar se he Bo ds es on retroactive basis. Such
ownership of obligations that alte ed then the Bonds. In some evalue of obligations
have contained provisions that have affected them ending which could
are p of Bonds
alteration of Federal tax Consequences. may from ownership
similar to the Bonds. From time to tme, legislative proposals ' g f rO e proposals will not be
have an effect on both the Federal tax consequences resulting the
enacted that would or might apply to, or have an adverse effect upon,
and their market value• a assurance can be given that legl
introduced or �
Bonds.
ABSENCE OF LITIGATION
e date of delivery of the Bonds, tthere is no controversy or litigation of any
On the of the
effect that, to its best restrain nleoTg enjnd belief, of the Bonds, the proceedings of
oin the issuance, sale, execution or delivery
nature pending or affecting the validity pledge or application of
Bonds, or in any waY contesting
of the Bonds and the existence ositions•or
the Issuer taken with respect to the issuance
d for the payment oeelof the
to their respective p
any money or secure officers of th
powers of the Issuer or the title of any
-28-
LEGAL MATTERS
All legal matters incident to the authorization, issuance, sale and delivery of the
Bonds by the Issuer to the Underwriters are subject to the approval of legality by Bryant,
Miller and Olive, P.A., Tallahassee, Florida, Bond Counsel. Certain legal matters will be
passed upon for the Underwriters by Jones Hall Hill & White, A Professional Law
Corporation, San Francisco, California, Counsel to the Underwriters, and for the Owner
by Byrne, Costello & Pickard, P.C., Syracuse, New York. Krooth & Altman, Washington,
I.C. has served as Special Counsel to the Owner in this transaction.
The compensation of Bond Counsel and counsel to the Underwriters is contingent
upon the issuance and delivery of the Bonds.
ENFORCEABILITY OF REMEDIES
The remedies available to the Trustee and the owners of the Bonds upon an event
of default under the Loan Work -Out Agreement, the Supplemental Regulatory
Agreement, the Indenture or any other document described herein are in many respects
dependent upon regulatory and judicial actions which are often subject to discretion and
delay. Under existing law and judicial decisions, the remedies provided for under such
documents may not be readily available or may be limited. The various legal opinions to
be delivered concurrently with the delivery of the Bonds will be qualified to the extent that
the enforceability of certain legal rights related to the Bonds is subject to limitations
imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the
rights of creditors generally and by equitable remedies and proceedings generally.
MARKETING
Banc One Capital Corporation and Newman & Associates, Inc. (collectively, the
"Underwriters ") are offering the Bonds at the prices set forth on the inside cover page
hereof. The initial offering prices may be changed from time to time and concessions
from the offering prices may be allowed to dealers, banks and others. The Underwriters
have received an underwriting fee in an amount equal to approximately _% of the
original principal amount of the Bonds in connection with their services as underwriters
for the Bonds. Out of this fee the Underwriters are obligated to pay certain costs of
issuance of the Bonds in an amount equal to approximately % of the original
principal amount of the Bonds.
RATING
Standard & Poor's Corporation has given the Bonds the rating set forth on the
cover page of this Official Statement. The rating agency may have obtained and
considered information and material that have not been included in this Official
Statement. Generally, the rating agency bases its ratings on information and material
furnished and on investigations, studies and assumptions made by it, The rating is not
a recommendation to buy, sell or hold the Bonds. The rating reflects only the views of the
rating agency and an explanation of the significance of such ratings may be obtained
from it. No assurance can be given that the rating will be maintained for any given
period of time or that the rating may not be revised downward or withdrawn entirely by
the rating agency. if in its judgment, circumstances warrant. Any such downward
.2g.
change in or withdrawal of the rating may have an adverse effect on the market price of
the Bonds. The Underwriters and the Issuer have undertaken no responsibility after the
offering of the Bonds to assure the maintenance of the rating or to oppose any such
revision or withdrawal.
OTHER MATTERS
The foregoing summaries and explanations do not purport to be comprehensive,
and are expressly made subject to the exact provisions of documents referred to herein.
Copies of the Indenture, the Supplemental Regulatory Agreement, the Loan Work -Out
Agreement and the other documents referred to herein may be obtained from the
Trustee. Any statements in this Official Statement involving matters of opinion or
forecast, whether or not expressly so stated, are intended as such and not as
representations of fact. This Official Statement is not to be construed as a contract or
agreement between the Issuer or the Underwriters and the purchasers or holders of any
Bonds.
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The execution and delivery of this Official Statement have been duly authorized by
the Issuer and the Owner.
CITY OF CLEARWATER, FLORIDA
By: _
Title:
DREW GARDENS ASSOCIATES, LTD.,
a Florida Iimited partnership
By:
General Partner
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