Agenda
FUNDING LOAN AGREEMENT
among
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Initial Funding Lender
CITY OF SAN JOSE,
as Governmental Lender
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
relating to
$______________
City of San José
Multifamily Housing Revenue Note
(The Charles) Series 2023B-1
and
$______________
City of San José
Multifamily Housing Revenue Note
(The Charles) Series 2023B-2 (Taxable)
Dated as of June 1, 2023
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions........................................................................................................ 3 Section 1.02. Interpretation .................................................................................................. 15
ARTICLE II
THE FUNDING LOAN
Section 2.01. Terms ............................................................................................................. 16 Section 2.02. Pledged Security ............................................................................................ 18 Section 2.03. Limited Obligations ....................................................................................... 19 Section 2.04. Funding Loan Agreement Constitutes Contract ............................................ 20 Section 2.05. Form and Execution ....................................................................................... 20 Section 2.06. Authentication ................................................................................................ 20 Section 2.07. Mutilated, Lost, Stolen or Destroyed Governmental Note ............................ 20 Section 2.08. Registration; Transfer of Funding Loan; Transferee Representations Letter .............................................................................................................. 20 Section 2.09. [Reserved] ...................................................................................................... 21 Section 2.10. Funding Loan Closing Conditions; Delivery of Governmental Note ............ 22 Section 2.11. Establishment of Project Loan Fund; Application of Funding Loan Proceeds and Other Money ............................................................................ 24 Section 2.12. [Reserved] ...................................................................................................... 24 Section 2.13. Conversion ..................................................................................................... 24
ARTICLE III
PREPAYMENT OF THE FUNDING LOAN
Section 3.01. Prepayment of the Funding Loan Prior to Maturity ....................................... 24 Section 3.02. Notice of Prepayment .................................................................................... 25
ARTICLE IV
REVENUES AND FUNDS
Section 4.01. Establishment of Funds .................................................................................. 26 Section 4.02. Project Loan Fund .......................................................................................... 27 Section 4.03. Application of Revenues ................................................................................ 29 Section 4.04. Application of Loan Payment Fund ............................................................... 30 Section 4.05. Application of Loan Prepayment Fund .......................................................... 30 Section 4.06. Administration Fund ...................................................................................... 30 Section 4.07. [Reserved] ...................................................................................................... 31 Section 4.08. Investment of Funds ....................................................................................... 31 Section 4.09. [Reserved] ...................................................................................................... 32 Section 4.10. Accounting Records ....................................................................................... 32 Section 4.11. Amounts Remaining in Funds ....................................................................... 32 Section 4.12. Rebate Fund; Compliance w ith Tax Certificate ............................................. 33 DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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Section 4.13. Costs of Issuance Fund .................................................................................. 34 Section 4.14. Reports From the Fiscal Agent ...................................................................... 35
ARTICLE V
GENERAL COVENANTS AND REPRESENTATIONS
Section 5.01. Payment of Principal and Interest .................................................................. 35 Section 5.02. Performance of Covenants ............................................................................. 35 Section 5.03. Instruments of Further Assurance .................................................................. 36 Section 5.04. Inspection of Books and Records .................................................................. 36 Section 5.05. No Modification of Security; Additional Indebtedness ................................. 37 Section 5.06. Damage, Destruction or Condemnation ......................................................... 37 Section 5.07. Tax Covenants ............................................................................................... 37 Section 5.08. Representations and Warranties of the Governmental Lender ...................... 39 Section 5.09. Performance by the Borrower ........................................................................ 40 Section 5.10. Immunities and Limitations of Responsibility of Governmental Lender ...... 40
ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES OF FISCAL
AGENT AND FUNDING LENDER
Section 6.01. Events of Default ........................................................................................... 41 Section 6.02. Acceleration; Other Remedies Upon Event of Default .................................. 41 Section 6.03. Funding Lender Representative Control of Proceedings ............................... 43 Section 6.04. Waiver by Governmental Lender ................................................................... 43 Section 6.05. Application of Money After Default .............................................................. 43 Section 6.06. Remedies Not Exclusive ................................................................................ 44 Section 6.07. Fiscal Agent May Enforce Rights Without Governmental Note ................... 44 Section 6.08. [Reserved] ...................................................................................................... 45 Section 6.09. Termination of Proceedings ........................................................................... 45 Section 6.10. Waivers of Events of Default ......................................................................... 45 Section 6.11. Interest on Unpaid Amounts and Default Rate for Nonpayment ................... 45 Section 6.12. [Reserved] ...................................................................................................... 45 Section 6.13. Substitution .................................................................................................... 45
ARTICLE VII
CONCERNING THE FISCAL AGENT
Section 7.01. Standard of Care ............................................................................................ 46 Section 7.02. Reliance Upon Documents ............................................................................ 47 Section 7.03. Use of Proceeds .............................................................................................. 49 Section 7.04. [Reserved] ...................................................................................................... 49 Section 7.05. Trust Imposed ................................................................................................ 49 Section 7.06. C
ompensation of Fiscal Agent ....................................................................... 50 Section 7.07. Qualifications of Fiscal Agent ....................................................................... 51 Section 7.08. Merger of Fiscal Agent .................................................................................. 51 Section 7.09. Resignation by the Fiscal Agent .................................................................... 51 Section 7.10. Removal of the Fiscal Agent .......................................................................... 51 Section 7.11. Appointment of Successor Fiscal Agent ........................................................ 52 Section 7.12. Concerning Any Successor Fiscal Agent ....................................................... 52 DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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Section 7.13. [Reserved] ...................................................................................................... 53 Section 7.14. Appointment of Co -fiscal Agent or Separate Fiscal Agent ........................... 53 Section 7.15. Notice of Certain Events ................................................................................ 55 Section 7.16. [Reserved] ...................................................................................................... 55 Section 7.17. Filing of Financing Statements ...................................................................... 55 Section 7.18. USA Patriot Act Requirements of the Fiscal Agent ...................................... 55
ARTICLE VIII
AMENDMENTS OF CERTAIN DOCUMENTS
Section 8.01. Amendments to This Funding Loan Agreement ............................................ 55 Section 8.02. Amendments to Financing Documents Require Consent of Funding Lender Representative ................................................................................... 56 Section 8.03. Opinion of Tax Counsel Required ................................................................. 56
ARTICLE IX
SATISFACTION AND DISCHARGE OF FUNDING
LOAN AGREEMENT
Section 9.01. Discharge of Lien ........................................................................................... 56 Section 9.02. Discharge of Liability on Funding Loan ........................................................ 57 Section 9.03. Payment of Funding Loan After Discharge of Funding Loan Agreement ...................................................................................................... 58
ARTICLE X
INTENTIONALLY OMITTED .................................................................................................. 58
ARTICLE XI
MISCELLANEOUS
Section 11.01. Servicing of the Loans ................................................................................... 58 Section 11.02. Limitation of Rights ....................................................................................... 58 Section 11.03. Construction of Conflicts; Severability ......................................................... 58 Section 11.04. Notices ........................................................................................................... 59 Section 11.05. Funding Lender Representative ..................................................................... 62 Section 11.06. Payments Due on Non Business Days ........................................................... 63 Section 11.07. Counterparts ................................................................................................... 63 Section 11.08. Laws Governing Funding Loan Agreement .................................................. 63 Section 11.09. Successors and Assigns .................................................................................. 63 Section 11.10. Electronic Transactions .................................................................................. 63 Section 11.11. Recycling Transactions .................................................................................. 63
EXHIBIT A FORM OF GOVERNMENTAL NOTES
EXHIBIT B FORM OF NOTICE OF APPOINTMENT OF FUNDING LENDER
REPRESENTATIVE
EXHIBIT C FORM OF TRANSFEREE REPRESENTATIONS LETTER
EXHIBIT D COSTS OF ISSUANCE REQUISITION
EXHIBIT E PROJECT LOAN FUND REQUISITION
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
FUNDING LOAN AGREEMENT
THIS FUNDING LOAN AGREEMENT (this “Funding Loan Agreement”), is made and entered into as of June 1, 2023, by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, in its capacit y as Initial Funding Lender (the “Initial Funding Lender”), the CITY OF SAN JOSE (together with any successor to its rights, duties and obligations hereunder, the “Governmental Lender” or the “City”), a charter city and a municipal corporation organized and existing under the laws of the State of California (the “State”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, organized and operating under the laws of the United States of America, having a corporate trust office in San Francisco, California, as Fiscal Agent (the “Fiscal Agent”).
Capitalized terms are defined in Section 1.01 of this Funding Loan Agreement.
RECITALS:
A. The Governmental Lender is authorized to provide financing for multifamily rental housing pursuant to Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code, as amended (the “Act”).
B. The Governmental Lender is authorized: (a) to make loans to any person to provide financing for multifamily rental housing located within the jurisdiction of the Governmental Lender and intended to be occupied in part by persons of low and moderate income; (b) to incur indebtedness for the purpose of obtaining moneys to make such loans and provide such financing, to establish any required reserve funds and to pay administrative costs and other costs incurred in connection with the incurrence of such indebtedness of the Governmental Lender; and (c) to pledge all or any part of the revenues, receipts or resources of the Governmental Lender, including, the revenues and receipts to be received by the Governmental Lender from or in connection with such loans, and to mortgage, pledge or grant security interests in such loans or other property of the Governmental Lender in order to secure the payment of the principal of, Prepayment Premium, if any, on and interest on such indebtedness of the Governmental Lender.
C. Pursuant to the Act and the Project Loan Agreement dated as of June 1, 2023 (the “Project Loan Agreement”) by and among the Governmental Lender, the Fiscal Agent and Keyes, L.P., a California limited partnership (the “ Borrower”), the Governmental Lender is agreeing to make a mortgage loan to the Borrower in the maximum aggregate principal amount of $______________ (the “Project Loan ”) to provide for the financing of the construction , development and equipping of a 99 -unit (including two managers’ units) multifamily rental housing development to be located at an address currently referred to as 551 Keyes Street within the City and known or to be known as “The Charles” (the “Project”).
D. The Governmental Lender is making the Project Loan to the Borrower with the proceeds received from the loan made to the Governmental Lender by the Initial Funding Lender pursuant to this Funding Loan Agreement in the maximum aggregate principal amount of $[Funding Loan Amount] (the “Funding Loan” and together with the Project Loan, the “Loans”).
The Funding Loan is evidenced by the Governmental Lender’s City of San José Multifamily Housing Revenue Note (The Charles) Series 2023B-1 dated the Delivery Date in the form attached hereto as Exhibit A (together with all riders and addenda thereto and as further defined below, the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
2 “Series B-1 Governmental Note”) and the Governmental Lender’s City of San José Multifamily Housing Revenue Note (The Charles ) Series 2023B-2 (Taxable) dated the Delivery Date in the form attached hereto as Exhibit A (together with all riders and addenda thereto and as further defined below, the “Series B -2 Governmental Note ” and, together with the Series B -1 Governmental Note, the “Governm ental Notes”), each delivered by the Governmental Lender to the Initial Funding Lender.
E. The Initial Funding Lender, pursuant to the terms and subject to the conditions of this Funding Loan Agreement and the Construction and Permanent Loan Agreement, has agreed to originate and fund the Funding Loan to the Governmental Lender on a draw-down basis, which proceeds of the Funding Loan will be used by the Governmental Lender to fund the Project Loan to the Borrower in corresponding installments pursuant to the Project Loan Agreement.
F. The Borrower has agreed to use the proceeds of the Project Loan to finance the construction, development and equipping of the Project.
G. The Borrower ’s repayment obligations in respect of the Project Loan will be evidenced by a Promissory Note (Tax-Exempt), dated the Delivery Date (together with all riders and modifications thereto, the “ Series B-1 Project Note”) delivered to the Governmental Lender and a Promissory Note (Taxable), dated the Delivery Date (together with all rid ers and modifications thereto, the “Series B-2 Project Note” and, together with the Series B-1 Project Note, the “Project Notes”) , which Project Note s will be endorsed by the Governmental Lender to the Fiscal Agent as security for the Funding Loan.
H. To secure the Borrower ’s obligations under the Project Note s, the Borrower will execute and deliver to the Governmental Lender a Construction and Permanent Leasehold Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of the date hereof (the “Security Instrument”) with respect to the Project, which Security Instrument will be assigned by the Governmental Lender to the Fiscal Agent (other than its Unassigned Rights) as security for the Funding Loan.
I. Pursuant to that certain Loan Purchase Agreement dated as of even date herewith (as more particularly defined herein, the “Loan Purchase Agreement”), by and among the Borrower, the Initial Funding Lender and California Community Reinvestment Corporation, a California nonprofit public benefit corporation, as permanent lender (“CCRC”), CCRC has agreed, subject to the satisfaction of the terms and conditions set forth ther ein, to purchase up to $____________ in principal amount of the Series B-1 Governmental Note from the Initial Funding Lender and thereafter for all purposes of this Funding Loan Agreement, CCRC shall become the Funding Lender. In connection therewith, the Initial Funding Lender shall assign to CCRC as of the Conversion Date its rights, interests and obligations under this Funding Loan Agreement, the Series B -1 Governmental Note , the Project Loan Agreement, the Series B -1 Project Note, the Security Instrument and certain other documents executed in connection with the Project Loan.
J. If the Conversion Conditions are satisfied on or before the Termination Date as provided for in the Loan Purchase Agreement, the Project Loan will convert from the Construction Phase to the Permanent Phase on the Conversion Date and, on such Conversion Date, the Initial DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
3 Funding Lender shall deliver, and CCRC shall purchase, the Funding Loan, as evidenced by the Governmental Notes.
K The Governmental Lender has determined that all things necessary to incur the Funding Loan and to execute and deliver the Governmental Note s, when executed by the Governmental Lender and authenticated by the Fiscal Agent and issued in accordance with this Funding Loan Agreement, the valid, binding and legal limited obligation s of the Governmental Lender and to constitute this Funding Loan Agreement a valid lien on the properties, interests, revenues and payments herein pledged to the payment of the principal of, Prepayment Premium, if any, and interest on the Governmental Note s, have been duly taken, and the execution and delivery of this Funding Loan Agreement and the execution and delivery of the Governmental Notes, subject to the terms of this Funding Loan Agreement, have in all respects been duly authorized.
L. The Governmental Lender is entering into this Funding Loan Agreement and the Project Loan Agreement solely as a “conduit issuer,” and the Funding Loan and the Governmental Notes will be limited obligations of the Governmental Lender as described in Section 2.03 hereof.
M. The Fiscal Agent has the power and authority to enter into this Funding Loan Agreement, including trust powers to accept the duties of the Fiscal Agent hereunder and to accept and assume its other responsibilities hereunder as Fiscal Agent as evidenced by its execution of this Funding Loan Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and of the origination and funding of the Funding Loan by the Funding Lender, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The terms used in this Funding Loan Agreement (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Funding Loan Agreement and of any amendment or supplement hereto shall have the respective meanings specified below. Terms used herein not otherwise defined shall have the respective meanings set forth in the Project Loan Agreement. “Act” means Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code, as amended.
“Administration Fund” means the Administration Fund established by the Fiscal Agent pursuant to Section 4.01 hereof.
“Advance Request” shall mean a request by the Borrower to the Initial Funding Lender that the Initial Funding Lender disburse proceeds of the Funding Loan to the Fiscal Agent as provided DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
4 hereunder, which request shall be in the form prescribed by the Construction and Permanent Loan Agreement.
“Advance Termination Date” means the earliest to occur of (i) the date when the sum of the aggregate advances of the Funding Loan made by the Initial Funding Lender equals the Authorized Amount, (ii) December 31, 2026, (iii) the Conversion Date, (iv) the date of a Determination of Taxability or (v) the occurrence of an Event of Default hereunder. “Assignment” means the Assignment of Deed of Trust and Loan Documents dated as of the date hereof by the Governmental Lender assigning its interest in the Security Instrument to the Fiscal Agent.
“Authorized Amount” shall mean $ ______________, that being the maximum principal amount of the Funding Loan authorized under this Funding Loan Agreement. “Authorized Officer” means (a) when used with respect to the Governmental Lender, each of the City Manager, the Director of Housing, the Assistant Director of Housing, the Director of Finance, the Assistant Director of Finance, Treasury Division Manager and Debt Administrator of the Governmental Lender such addit ional Person or Persons, if any, duly designated by the Governmental Lender in writing to act on its behalf, as evidenced by a written certificate furnished to the Funding Lender, the Fiscal Agent and the Borrower containing the specimen signature of such person and signed on behalf of the Governmental Lender by an Authorized Officer, which certificate may designate an alternate or alternates, each of whom shall be entitled to perform all duties of the Authorized Officer; (b) when used with respect to the Borrower, any general partner of the Borrower and such additional Person or Persons, if any, duly designated by the Borrower in writing to act on its behalf, (c) when used with respect to the Fiscal Agent, any authorized signatory of the Fiscal Agent, or any Person who is authorized in writing to take the action in question on behalf of the Fiscal Agent, (d) when used with respect to the Servicer, any Person or Persons duly designated by the Servicer in writing to act on its behalf, and (e) when used with re spect to the Funding Lender Representative, any Person who is authorized in writing to take the action in question on behalf of the Funding Lender Representative. “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor federal statute. “Borrower” means Keyes, L.P., a limited partnership duly organized and existing under the laws of the State, or any of its permitted successors or assigns, as owner of the Project. “Borrower Equity Account” means the Borrower Equity Account of the Project Loan Fund established by the Fiscal Agent pursuant to Section 2.11 hereof. “Borrower Equity Deposit” means $0, which shall be comprised of sources other than the proceeds of the Project Loan.
“Business Day” means a day of the week (but not a Saturday, Sunday or holiday) on which the offices of Fiscal Agent and Funding Lender are open to the public for carrying on substantially all of Fiscal Agent’s and Funding Lender’s business functions.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
5 “CCRC” shall mean California Community Reinvestment Corporation, a California nonprofit public benefit corporation.
“Certificate of the Governmental Lender” and “Request of the Governmental Lender” mean, respectively, a written certificate or request signed in the name of the Governmental Lender by an Authorized Officer of the Governmental Lender or such other Person as may be designated and authorized to sign for the Governmental Lender. Any such instrument and supporting opinions or representations, if an y, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
“Code” means the Internal Revenue Code of 1986, as amended, a nd the regulations promulgated thereunder.
“Construction and Permanent Loan Agreement ” means the Construction and Permanent Loan Agreement dated as of the date hereof by and between the Borrower and the Initial Funding Lender, as the same may be amended, modified or supplemented from time to time. “Construction Loan Documents” means the Construction and Permanent Loan Agreement and the other “Project Loan Documents” (as defined in the Construction and Permanent Loan Agreement).
“Construction Phase” means the construction phase of the Project Loan, which time period shall commence on the Delivery Date and remain in effect to, but not including, the Conversion Date.
“Construction Phase Interest Rate” means the rate of interest applicable to the Project Loan prior to the Conversion Date, as set forth in the respective Project Notes. “Conversion” means conversion of the Project Loan from the Construction Phase to the Permanent Phase on the Conversion Date.
“Conversion Conditions ” has the meaning given to that term in the Loan Purchase Agreement.
“Conversion Date” means the date CCRC purchases the Series B -1 Governmental Note from the Initial Funding Lender upon the satisfaction of the Conversion Conditions. “Cost,” “Costs” or “Costs of the Project” means costs paid with respect to the Project that (i) are properly chargeable to a capital account (or would be so chargeable with a proper election by the Borrower or but for a proper election by the Borrower to deduct such costs) in accordance with general federal inco me tax principles and in accordance with United States Treasury Regulations Section 1.103-8(a)(1), (ii) are paid with respect to a qualified residential rental project or projects within the meaning of Section 142(d) of the Code, (iii) are paid after the e arlier of (A) 60 days prior to the date of a declaration of intent of the Governmental Lender to reimburse costs of the Project with proceeds of the Funding Loan or (B) the Delivery Date, and (iv) if the Costs of the Project were previously paid and are to be reimbursed with proceeds of the Loans such costs were (A) costs of issuance of the Governmental Notes , (B) preliminary capital DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
6 expenditures (within the meaning of United States Treasury Regulations Section 1.150-2(f)(2)) with respect to the Project (such as architectural, engineering and soil testing services) incurred before commencement of acquisition or construction of the Project that do not exceed 20% of the issue price of the Series B-1 Governmental Note (as defined in United States Treasury Regulations Section 1.148-1), or (C) were capital expenditures with respect to the Project that are reimbursed no later than 18 months after the later of the date the expenditure was paid or the date the Project is placed in service (but no later than three years after the expenditure is paid); provided however, that if any portion of the Project is being constructed by the Borrower or an affiliate (whether as a developer, a general contractor or a subcontractor), “Cost,” “Costs” or “Costs of the Project” shall include only (a) the actual out -of-pocket costs incurred by the Borrower or such affiliate in developing or constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services actually rendered by the Borrower or such affiliate (but excluding any profit component) and (c) any overhead expenses incurred by the Borrower or such affiliate which are directly attributable to the work performed on the Project, and shall not include, for examp le, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) participating in the acquisition, construction or development of the Project or payments received by such affiliate due to early completion of the Project (or any portion thereof). Costs of the Project shall not include Costs of Issuance. “Costs of Issuance Fund” means the Costs of Issuance Fund established by the Fiscal Agent pursuant to Section 4.01 hereof.
“Costs of Issuance” means, as applicable, (i) the fees (excluding ongoing fees), costs and expenses of (a) the Governmental Lender, the Governmental Lender ’s counsel and the Governmental Lender’s municipal advisor, (b) Tax Counsel, (c) the Fiscal Agent and the Fiscal Agent’s counsel, (d) the Initial Funding Lender and the Initial Funding Lender ’s counsel , (e) CCRC and CCRC’s counsel, and (f) the Borrower’s counsel attributable to the funding of the Loans and the Borrower ’s financial advisor, if any, and (ii) all other fees, costs and e xpenses directly associated with the Funding Loan and the Project Loan, including, without limitation, printing costs, costs of reproducing documents, filing and recording fees. “Costs of Issuance Deposit” means the deposit to be made by the Borrower with the Fiscal Agent on the Delivery Date, which deposit shall equal $________ and shall be comprised of sources other than the proceeds of the Project Loan.
“Default Rate” means the lower of (i) the Construction Phase Interest Rate or Permanent Phase Interest Rate, as applicable, otherwise in effect notwithstanding the default plus five percent (5.00%) per annum or (ii) the Maximum Interest Rate.
“Delivery Date” means [Closing Date], the date of funding of the initial advance of the Funding Loan and the delivery of the Governmental Note s by the Governmental Lender to the Initial Funding Lender.
“Determination of Taxability” shall mean, (a) a determination by the Commissioner or any District Director of the Internal Revenue Service, (b) a private ruling or Technical Advice Memorandum issued by the National Office of the Internal Revenue Service in which Governmental Lender and Borrower were afforded the opportunity to participate, (c) a DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
7 determination by any court of competent jurisdiction, (d) the enactment of legislation or (e) receipt by Fiscal Agent or Funding Lender Representative, at the request of Governmental Lender, Borrower, Fiscal Agent or Funding Lender Representative, of an opinion of Tax Counsel, in each case to the effect that the interest on the Series B -1 Governmental Note may no longer be excludable from gross income for federal income tax purposes of the Funding Lender or any former Funding Lender other than a Funding Lender who is a “ substantial user” of the Project or a “related person” (as such terms are defined in Section 147(a) of the Code); provided, however, that no such Determination of Taxability under clause (a) or (c) shall be deemed to have occurred if the Governmental Lender (at the sole expense of the Borrower) or the Borrower i s contesting such determination, has elected to contest such determination in good faith and is proceeding with all applicable dispatch to prosecute such contest until the earliest of (i) a final determination from which no appeal may be taken with respect to such determination, (ii) abandonment of such appeal by the Governmental Lender or the Borrower, as the case may be, or (iii) one year from the date of initial determination (provided, further, that in the event the Funding Lender is required to include the interest paid on the Series B -1 Governmental Note in its income taxes during the pendency of such contest, the Borrower shall be obligated to reimburse the Funding Lender for the amount of tax liability, including interest and penalties, incurred by the Funding Lender). “Disbursement Documents” shall include this Funding Loan Agreement, the Project Loan Agreement and other Funding Lender credit documents relating to the disbursement of Project Loan proceeds.
“Electronic Notice” means delivery of notice in a Word format or a Portable Document Format (PDF) by electronic mail to the electronic mail addresses listed in Section 11.04 hereof; provided, that if a sender receives notice that the electronic mail is undeliverable, notice must be sent as otherwise required by Section 11.04 hereof.
“Escrow Instructions” means written instructions delivered to the Title Company. “Event of Default” or “event of default” means any of those events specified in and defined by the applicable provisions of Article VI hereof to constitute an event of default. “Extraordinary Fiscal Agent ’s Fees and Expenses” means all those fees, expenses and reimbursements earned or incurred by the Fiscal Agent as described under Section 7.06 hereof during any Rebate Year for Extraordinary Services, as set forth in a detailed invoice to the Borrower, the Servicer and the Funding Lender Representative. “Extraordinary Services ” means and includes, but not by way of limitation, services, actions and things carried out and all expenses incurred by the Fiscal Agent, in respect of or to prevent default under this Funding Loan Agreement or the Project Loan Documents, including any reasonable attorneys’ or agents’ fees and expenses and other litigation costs that are entitled to reimbursement under the terms of the Project Loan Agreement, and other actions taken and carried out by the Fiscal Agent that are not expressly set forth in this Funding Loan Agreement or the Project Loan Documents.
“Fair Market Value ” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
8 the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm ’s length transaction (as referenced above) if (a) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (b) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (c) the investment is a United States Treasury Security --State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (d) any commingled investment fund in which the Governmental Lender and related parties do not own more than a 10% beneficial interest therein if the return paid by the fund is without regard to the source of investment.
“Fannie Mae” means the Federal National Mortgage Association, a shareholder -owned government-sponsored enterprise organized and existing under the laws of the United States of America, and its successors and assigns.
“Fee Component” has the meaning set forth in the Project Loan Agreement. “Financing Documents ” means, collectively, this Funding Loan Agreement, the Governmental Note s, the Tax Certificate, the Project Loan Documents, the Construction Loan Documents and all other documents or instruments evidencing, securing or relating to the Loans, and any amendments, modifications, renewals or substitutions of any of the foregoing pursuant to their respective terms.
“Fiscal Agent” means U.S. Bank Trust Company, National Association, and its successors hereunder.
“Funding Lender” means any Person who is the holder of the Governmental Notes. “Funding Lender Representative” means the Funding Lender or any Person designated by the Funding Lender to act on behalf of the Funding Lender as provided in Section 11.05, or an assignee of such Person as provided in Section 11.05. The initial Funding Lender Representative shall be the Initial Funding Lender. CCRC shall become the Funding Lender Representative upon the occurrence of the Conversion Date.
“Funding Loan Agreement” means this Funding Loan Agreement, dated as of June 1, 2023, by and among the Initial Funding Lender, the Governmental Lender and the Fiscal Agent as it may from time to time be supplemented, modified or amended purs uant to the applicable provisions hereof.
“Funding Loan” the loan in the maximum aggregate principal amount of $______________ made to the Governmental Lender pursuant to this Funding Loan Agreement by the Funding Lender and evidenced by the Governmental Notes. “Government Obligations” means investments meeting the requirements of clause (a) or (b) of the definition of “Qualified Investments” herein.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
9 “Governmental Lender” means City of San José, a charter city and a municipal corporation organized and existing under the laws of the State.
“Governmental Note s” means, collectively, the Series B -1 Governmental Note and the Series B-2 Governmental Note and “Governmental Note” means either one of them. “Initial Funding Lender ” means Wells Fargo Bank, National Association, a national banking association, as initial holder of the Governmental Notes. “Initial Installment” means $[55,000], being the initial advance of the Funding Loan by the Initial Funding Lender pursuant to Section 2.01 hereof. “Interest Payment Date ” means (i) the first Business Day of each calendar month, commencing [July] 1, 2023, (ii) the date of any prepayment of the Funding Loan, but only with respect to the portion of the Funding Loan subject to prepayment, and (iii) the Maturity Date. “Investment Income” means the earnings and profits derived from the investment of money pursuant to Section 4.08 hereof.
“Loan Payment Fund” means the Loan Payment Fund established by the Fiscal Agent pursuant to Section 4.01 hereof.
“Loan Prepayment Fund” means the Loan Prepayment Fund established by the Fiscal Agent pursuant to Section 4.01 hereof.
“Loan Purchase Agreement” shall mean that certain Loan Purchase Agreement dated as of even date herewith, by and among the Borrower, the Initial Funding Lender and CCRC, pursuant to which the Funding Lender has agreed to sell and CCRC has agreed to purchase, subject to the satisfaction of the terms and conditions set forth therein, up to $ __________ in principal amount of the Series B-1 Governmental Note on the Conversion Date. “Loans” means, together, the Project Loan and the Funding Loan. “Maturity Date” means, with respect to the Series B-1 Governmental Note, [B-1 Maturity], and, with respect to the Series B-2 Governmental Note, [B-2 Maturity]. “Maximum Interest Rate” means the lesser of 12% per annum or the maximum interest rate allowed by law.
“Moody’s” means Moody ’s Investors Service, Inc., its successors and assigns, if such successors and assigns continue to perform the services of a securities rating agency. “Net Proceeds” when used with respect to any insurance or condemnation award, means the 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 insurance proceeds or condemnation award, including reasonable attorneys’ fees.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
10 “No Adverse Effect Opinion” means an opinion of Tax Counsel substantially to the e ffect that the taking of the action specified therein will not, in and of itself, adversely affect any exclusion of interest on the Series B -1 Governmental Note from gross income for purposes of federal income taxation (subject to the inclusion of such cus tomary exceptions as are acceptable to the recipient thereof).
“Notes” means, together, the Project Notes and the Governmental Notes. “Ordinary Fiscal Agent’s Fees and Expenses” means the annual administration fee for the Fiscal Agent ’s ordinary fees and expenses in rendering its services under this Funding Loan Agreement during each twelve month period, which fee is equal to $5,000.00, and shall be payable on the Delivery Date and annually in advance on June 1, 2024, and each June 1 thereafter. “Permanent Phase” means the permanent phase of the Project Loan, which time period shall commence on the Conversion Date and remain in effect through the remaining term of the Project Loan.
“Permanent Phase Interest Rate ” means, during the Permanent Phase, the fixed interest rate of ______% per annum; provided during the continuance of any Event of Default hereunder, the Permanent Phase Interest Rate shall be the Default Rate, in each case computed on the basis of a 360 day year consisting of twelve 30-day months.
“Person” means an individual, a corporation, a partnership, an association, a joint stock company, a joint venture, a trust, an unincorporated association, a limited liability company or a government or any agency or political subdivision thereof, or any ot her organization or entity (whether governmental or private).
“Pledged Security” shall have the meaning given to that term in Section 2.02 hereof. “Pre-Conversion Loan Equalization Payment” means a prepayment of the Project Loan by the Borrower (and corresponding prepayment of the Funding Loan hereunder) prior to the Conversion Date in order to reduce the Project Loan, pursuant to Exhibit F of the Loan Purchase Agreement.
“Prepayment Premium” shall mean any premium payable hereunder in connection with a prepayment of the Funding Loan, which premium shall be, during the Prepayment Premium Period (as defined in the respective Project Notes), an amount equal to the amount of premium payable by the Borrower under Section 4 of the respective Project Notes, in each case in connection with a prepayment of the Project Loan.
“Principal Office of the Fiscal Agent” means the office of the Fiscal Agent referenced in Section 11.04(a) hereof, or such other office or offices as the Fiscal Agent may designate in writing from time to time, or the office of any successor Fiscal Agent where it principally conducts its business of serving as Fiscal Agent under indentures or loan agreements pursuant to which municipal or governmental obligations are issued.
“Project” means, collectively, the leasehold interest in the land and the fee interest in the residential rental apartment units, and related fixtures, equipment, furnishings and site DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
11 improvements known or to be known as The Charles located at 551 Keyes Street in San José, California, including the real property described in the Security Instrument. “Project Account” means the Project Account of the Project Loan Fund established by the Fiscal Agent pursuant to Section 2.11 hereof.
“Project Loan Agreement” means the Project Loan Agreement dated as of the date hereof among the Borrower, the Governmental Lender and the Fiscal Agent, as amended, supplemented or restated from time to time.
“Project Loan Documents” means the Security Instrument, the Project Note s, the Project Loan Agreement, the Regulatory Agreement, the Assignment, any Subordination Agreement(s) and any and all other instruments and other documents evidencing, securing, or otherwise relating to the Project Loan or any portion thereof.
“Project Loan Fund” means the Project Loan Fund established by the Fiscal Agent pursuant to Section 2.11 hereof.
“Project Loan” the loan made by the Governmental Lender to the Borrower pursuant to the Project Loan Agreement in the maximum aggregate principal amount of $______________, as evidenced by the Project Notes.
“Project Notes” means, collectively the Series B-1 Project Note and the Series B-2 Project Note and “Project Note” means either one of them.
“Qualified Investments” means any of the following if and to the extent permitted by law:
(a) direct and general obligations of the United States of America; (b) obligations of any agency or instrumentality of the United States of America the payment of the principal of and interest on which are unconditionally guaranteed by the full faith and credit of the United States of America; (c) senior debt obligations of Freddie Mac; (d) senior debt obligations of Fannie Mae; (e) demand deposits or time deposits with, or certificates of deposit issued by, the Fiscal Agent or its affiliates or any bank organized under the laws of the United States of America or any state or the District of Columbia which has combined capital, surplus and undivided profits of not less than $50,000,000; provided that the Fiscal Agent or such other institution has been rated at least “VMIG 1”/“A 1+” by Moody’ s or S&P which deposits or certificates are fully insured by the Federal Deposit Insurance Corporation or collateralized pursuant to the requirements of the Office of the Comptroller of the Currency; (f) shares or units in any money market mutual fund rated “Aaa”/“AAA” by Moody’s or S&P (or if a new rating scale is implemented, the equivalent rating category given by the Rating Agency for that general category of security) (including mutual funds of the Fiscal Agent or its affiliates or for which the Fiscal Agent or an affiliate thereof serves as investment advisor or provides other services to such mutual fund and receives reasonable compensation therefor) registered under the Investment Company Act of 1940, as amended, whose investment portfolio consists solely of (A) direct obligations of the government of the United States of America, or (B) tax-exempt obligations; (g)(i) tax-exempt obligations rated in the highest short term rating category by Moody’ s or S&P, or (ii) shares of a tax -exempt municipal money market mutual fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the federal Securities Act of 1933, having DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
12 assets of at least $100,000,000, and having a rating of “Aaa”/“AAA” by Moody’s or S&P (or if a new rating scale is implemented, the equivalent rating category given by the Rating Agency for that general category of security), for which at least 95% of the income paid to the holders on interest in such money market fund will be excludable from gross income under Section 103 of the Code, including money market funds for which the Fiscal Agent or its affilia tes receive a fee for investment advisory or other services to the fund; or (h) any other investments approved in writing by the Funding Lender Representative with the written consent of the Governmental Lender.
For purposes of this definition, the “highes t rating ” shall mean a rating of at least “VMIG 1”/“A 1+” for obligations with less than one year maturity; at least “Aaa”/“VMIG 1”/“AAA”/“A 1+” for obligations with a maturity of one year or greater but less than three years; and at least “Aaa”/“AAA” for obligations with a maturity of three years or greater.
Qualified Investments must be limited to instruments that have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change and interest, if tied to an index, shall be t ied to a single interest rate index plus a single fixed spread, if any, and move proportionately with such index.
“Qualified Transferee” means (i) prior to the Conversion Date: (a) an affiliate of the Initial Funding Lender; (b) a trust or custodial arrangement established by the Initial Funding Lender or one of its affiliates, the owners of the beneficial interests in which are limited to qualified institutional buyers, as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (“QIBs”); (c) a government sponsored entity (including, without limitation, Fannie Mae or Freddie Mac), which is also a QIB or an Accredited Investor, (d) CCRC; or (e) to a Person that is a QIB and a commercial bank having capital and surplus of $5,000,000,000 or more and (ii) upon the Conversion Date: (a) a Person that is a QIB having capital and surplus of $1,000,000,000 or more; (b) a limited partnership or limited liability company or other entity in which the Funding Lender or an affiliate of the Funding Lender is the sole managing general partner, mana ging member or manager and in which all other partners or members, as applicable, are banks, insurance companies or other financial institutions (or affiliates thereof) who are QIBs; (c) any fund established and managed by the Funding Lender or by a limited liability company in which the Funding Lender is the sole member in which all investors/funders are banks, insurance companies or other financial institutions (or affiliates thereof) who are QIBs, or (d) a commercial bank that is a member of CCRC.
“Rebate Analyst” means Tax Counsel, a certified public accountant, or financial analyst, or any firm of the foregoing, or financial institution (which may include the Fiscal Agent) experienced in making the arbitrage and rebate calculations required pursuant to Section 148 of the Code, selected and retained by the Borrower at the expense of the Borrower, with the prior written consent of the Governmental Lender, to make the rebate computations required under this Funding Loan Agreement, the Tax Certificate and the Project Loan Agreement. Initially, the Rebate Analyst will be Kutak Rock Arbitrage Consulting LLC. “Rebate Fund” means the Rebate Fund established by the Fiscal Agent pursuant to Section 4.01 hereof.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
13 “Rebate Year” means each one-year period that ends at the close of business on the day in the calendar year that is selected by Borrower as indicated in the Tax Certificate. The first and last Rebate Years may be short periods. If no day is selected by Borrower before the earlier of the Maturity Date or the date that is five years after the Delivery Date, each Rebate Year ends on each anniversary of the Delivery Date and on the Maturity Date or date of earlier payment in full of the Series B-1 Governmental Note.
“Record of Advances” shall have the meaning given to it in Section 2.01(c) hereof. “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants dated as of June 1, 2023, between the Governmental Lender, the Fiscal Agent and the Borrower.
“Requisition” means, with respect to the Project Loan Fund, the requisition in the form of Exhibit E to this Funding Loan Agreement required to be submitted in connection with disbursements from the Project Account and/or the Borrower Equity Account of the Project Loan Fund, and with respect to the Costs of Issuance Fund, the requisition in the form of Exhibit D to this Funding Loan Agreement required to be submitted in connection with disbursements from the Costs of Issuance Fund.
“Resolution” means the resolution adopted by the Governmental Lender authorizing the Funding Loan, the Project Loan and the execution and delivery of the Financing Documents to which it is a party.
“Responsible Officer” means any officer of the Fiscal Agent employed within or otherwise having regular responsibility in connection with the corporate trust department of the Fiscal Agent and the trusts created hereunder.
“Revenue Fund” means the Revenue Fund established by the Fiscal Agent pursuant to Section 4.01 hereof.
“Revenues” means (a) all payments made with respect to the Project Loan pursuant to the Project Loan Agreement, the Project Note s or the Security Instrument, including but not limited to all casualty or other insurance benefits and condemnation awards paid in connection therewith and all payments obtained through the exercise of remedies under the Financing Documents, and (b) all money and securities held by the Fiscal Agent in the funds and accounts established pursuant to this Funding Loan Agreement (excluding money or securities designated for deposit into and held in the Costs of Issuance Fund, the Administration Fund and the Rebate Fund), together with all investment earnings thereon.
“S&P” means S&P Global Ratings, and its successors and assigns, if such successors and assigns continue to perform the services of a securities rating agency. “Security Instrument” means the Constru ction and Permanent Leasehold Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of the date hereof, by the Borrower, granting a first priority mortgage and security interest in the Project to the Governmental Lender to secure the repayment of the Project Loan and related DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
14 obligations, which Security Instrument has been assigned by the Governmental Lender to the Fiscal Agent.
“Series B-1 Governmental Note” means the City of San José Multifamily Housing Revenue Note (The Charles) Series 2023B-1 dated the Delivery Date, executed by the Governmental Lender and authenticated by the Fiscal Agent in favor of the Funding Lender and evidencing a portion of the Funding Loan, in the form attached hereto as Exhibit A, as the same may be amended, restated, supplemented or otherwise modified from time to time, or any mortgage note executed in substitution therefor, as such substitute note may be amended, restated, supplemented or otherwise modified from time to time.
“Series B-2 Governmental Note” means the City of San José Multifamily Housing Revenue Note ( The Charles) Series 2023B- 2 (Taxable) dated the Delivery Date, executed by the Governmental Lender and authenticated by the Fiscal Agent in favor of the Funding Lender and evidencing a portion of the Funding Loan, in the form attached hereto as Exhibit A, as the same may be amended, restated, supplemented or otherwise modified from time to time, or any mortgage note executed in substitution therefor, as such substitu te note may be amended, restated, supplemented or otherwise modified from time to time.
“Series B-1 Project Note ” means the Promissory Note (Tax -Exempt) dated the Delivery Date from the Borrower, including all riders and addenda thereto, evidencing the Bor rower’s obligation to repay the portion of the Project Loan represented thereby, which Series B-1 Project Note will be delivered to the Governmental Lender and endorsed by the Governmental Lender to the Fiscal Agent as security for the Funding Loan, as the same may be amended, restated, supplemented or otherwise modified from time to time, or any note executed in substitution therefor, as such substitute note may be amended, restated, supplemented or otherwise modified from time to time.
“Series B-1 Subaccount” means the Series B -1 Subaccount of the Project Account of the Project Loan Fund established by the Fiscal Agent pursuant to Section 2.11 hereof. “Series B-2 Project Note” means the Promissory Note (Taxable) dated the Delivery Date from the Borrower, including all riders and addenda thereto, evidencing the Borrower’s obligation to repay the portion of the Project Loan represented thereby, which Series B-2 Project Note will be delivered to the Governmental Lender and endorsed by the Governmental Lender to the Fiscal Agent as security for the Funding Loan, as the same may be amended, restated, supplemented or otherwise modified from time to time, or any note executed in substitution therefor, as such substitute note may be amended, restated, supplemented or otherwise modified from time to time. “Series B-2 Subaccount” means the Series B -2 Subaccount of the Project Account of the Project Loan Fund established by the Fiscal Agent pursuant to Section 2.11 hereof. “Servicer” means any entity appointed by the Funding Lender Representative to service the Loans and any successor in such capacity as appointed by the Funding Lender Representative pursuant to Section 3.02 of the Project Loan Agreement. From the Delivery Date to the Conversion Date, the Servicer shall be Wells Fargo Bank, National Association. From and after the Conversion Date, the Servicer shall be CCRC.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
15 “State” means the State of California.
“Subordination Agreement” means any subordination or intercreditor agreement(s) entered into with respect to any subordinate financing related to the Project, as the same may be amended, supplemented or restated.
“Tax Certificate” means, collectively, (a) the Certificate as to Arbitrage of the Borrower and the Governmental Lender, dated the Delivery Date, and (b) the Certificate Regarding Use of Proceeds of the Borrower, dated the Delivery Date.
“Tax Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other firm of attorneys selected by the Governmental Lender that is experienced in matters relating to the issuance of obligations by states and their political subdivisions that is listed as municipal bond attorneys in The Bond Buyer ’s Municipal Marketplace and is acceptable to the Funding Lender Representative.
“Title Company” means Old Republic Title Company.
“Transferee Representations Letter” has the meaning set forth in Section 2.08 hereof. “Unassigned Rights” means all of the rights of the Governmental Lender and its directors, officers, commissioners, elected officials, attorneys, accountants, employees, agents and consultants under the Financing Documents: (a) (i) to be held harmless and indemnified, (ii) to be paid its fees and expenses and the Rebatable Arbitrage pursuant to Section 4.12 hereof, (iii) to be paid its other fees and expenses (including attorneys’ fees) under the Financing Documents (iv) to give or withhold consent to amendments, changes, modifications and alterations, (v) to have access to the Project and Project records, and (vi) to receive notices; (b) the Governmental Lender’s rights under the Regulatory Agreement, including but not limited to, rights to reimbursement and payment of its fees, costs and expenses; (c) regarding governing law and venue pursuant to Section
8.03 of the Project Loan Agreement, (d) regarding hazardous waste and other environmental matters pursuant to Sections 2.06 and 2.07 of the Project Loan Agreement, and (e) and the right to enforce all of the foregoing, subject to Section 7.06 of the Project Loan Agreement.
Section 1.02. Interpretation. The words “hereof,” “herein,” “hereunder,” and other words of similar import refer to this Funding Loan Agreement as a whole and not to any particular Article, Section or other subdivision. 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. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect from time to time.
References to Articles, Sections, and other subdivisions of this Funding Loan Agreement are to the designated Articles, Sections and other subdivisions of this Funding Loan Agreement as originally executed. The headings of this Funding Loan Agreement are for convenience only and shall not define or limit the provisions hereof. All references in this instrument to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. References to the Funding Loan as “tax-exempt” or to the “tax-exempt status” of the Funding Loan or to the exclusion of interest on DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
16 the Funding Loan from gross income, are to the exclusion of interest on the portion of the Funding Loan represented by the Series B-1 Governmental Note and corresponding Series B-1 Project Note (other than any portion of the Funding Loan owned by a “substantial user” of the Project or a “related person” within the meaning of Section 147 of the Code) from gross income for federal income tax purposes pursuant to Section 103(a) of the Code.
ARTICLE II
THE FUNDING LOAN
Section 2.01. Terms.
(a) The total principal amount of the Funding Loan is hereby expressly limited to the Authorized Amount. The Funding Loan shall be originated and funded by the Initial Funding Lender to the Governmental Lender in accordance with Section 2.01(b) below.
The proceeds of the Funding Loan shall be deposited with the Fiscal Agent and disbursed in accordance with this Funding Loan Agreement. The Funding Loan shall be evidenced by the Governmental Note s and shall bear interest and be paid in accordance with the payment terms set forth in the Governmental Notes and this Funding Loan Agreement. (b) The Funding Loan shall be originated by the Initial Funding Lender on a draw-down basis. The Initial Installment may be deposited by the Initial Funding Lender with the Title Company or the Fiscal Agent on the Delivery Date on behalf of the Governmental Lender and shall be disbursed in accordance with the settlement statement.
Subsequent advances of the proceeds of the Funding Loan shall be advanced by the Initial Funding Lender in installments directly to the Fiscal Agent for deposit to the Project Account upon receipt of an Advance Request and the satisfaction of the conditions to such advance set forth in the Construction and Permanent Loan Agreement and the form of requisition attached as Exhibit E hereto. Advances on the Funding Loan shall be allocated, first, to the Series B- 1 Governmental Note and related Series B-1 Project Note until they are fully funded and, then, to the Series B- 2 Governmental Note and Series B-2 Project Note. Upon the advancement of the proceeds of the Funding Loan in accordance with the terms hereof, the principal amount of the applicable Governmental Note, being the amount so advanced, shall be deemed to be increased automatically and without further acts on the part of the Governmental Lender or the Fiscal Agent. The Initial Installment of the Funding Loan shall be advanced by the Initial Funding Lender and shall be transferred to the Title Company on the Delivery Date for application as provided in Section 2.11.
Notwithstanding anything in this Funding Loan Agreement to the contrary, no additional amounts of the Funding Loan may be drawn down and funded hereunder after the Advance Termination Date. Any extension of the Advance Termination Date shall be subject to the receipt by the Fiscal Agent of (i) the prior written consent of the Initial Funding Lender and (ii) an opinion of Tax Counsel (which shall also be addressed to the Funding Lender Representative) to the effect that such extension wil l not adversely affect the tax -exempt status of the Series B-1 Governmental Note.
(c) The Fiscal Agent shall maintain in its books a log, which shall reflect the principal amount of the Funding Loan advanced by the Initial Funding Lender from time DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
17 to time in a ccordance with the provisions of Section 2.01(b) above (the “Record of Advances”). The principal amount due on the Governmental Note s shall be only such amount as has been advanced by the Initial Funding Lender as reflected in the Record of Advances and not otherwise prepaid or repaid pursuant to the terms of this Funding Loan Agreement. The records maintained by the Fiscal Agent in such regard will be conclusive evidence of the principal amount of the Funding Loan (absent manifest error). The Fiscal Agent shall notify the Governmental Lender , CCRC and the Borrower if any advance of the proceeds of the Funding Loan is not made by the Initial Funding Lender when due hereunder pursuant to Section 2.01(b) above.
(d) The Funding Loan shall bear interest payable on each Interest Payment Date at (i) the Construction Phase Interest Rate during the Construction Phase and (ii) the Permanent Phase Interest Rate during the Permanent Phase. Interest shall accrue on the principal amount of the Funding Loan that has been advanced hereunder and is outstanding as reflected on the Record of Advances.
(e) The Governmental Notes shall mature on the Maturity Date, subject to scheduled monthly principal payments, and to optional and mandatory prepayment prior to maturity as provided in Article III hereof. All unpaid principal and all accrued and unpaid interest outstanding under the Governmental Notes shall be due and payable on the Maturity Date. The outstanding principal amount of the Governmental Note s and of the Funding Loan as of any given date shall be the total amount advanced by the Funding Lender to or for the account of the Governmental Lender to fund corresponding advances under the Project Notes and the Project Loan Agreement as proceeds of the Project Loan, less any payments of principal of the Governmental Note s previously received from payments of corresponding principal amounts under the Project Notes, including regularly scheduled principal payments and voluntary and mandatory prepayments. (f) Payment of principal of, Prepayment Premium, if any, and interest on the Funding Loan shall be paid by wire transfer in immediately available funds to an account within the United States of America designated by the Funding Lender (unless otherwise directed by the Funding Lender).
(g) On or before the date fixed for payment, money shall be deposited with the Fiscal Agent to pay, and the Fiscal Agent is hereby authorized and directed to apply such money to the payment of, the Funding Loan, together with accrued interest thereon to t he date of payment.
(h) In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder and charged or collected pursuant to the terms of this Funding Loan Agreement exceed the highest rate permissible under any law which a c ourt of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such court determines the Funding Lender has charged or received interest hereunder in excess of the highest applicable rate, the Funding Lender shall apply, in its sole discretion, and set off such excess interest received by the Funding Lender against other obligations due or to become due under the Financing Documents and such rate shall automatically be reduced to the maximum rate permitted by such law.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
18 In no event will a payment be due and payable on the Funding Loan or the Governmental Notes except to the extent such amount is due and payable under the Project Loan Agreement and the corresponding Project Note s. In the event of any conflict as to the payment terms of the Governmental Notes and the corresponding Project Notes, the terms of the corresponding Project Notes shall control and the terms of the Governmental Note s shall be deemed amended thereby, provided that no such amendment shall increase the obligations of the Governmental Lender under the Funding Loan or the Governmental Notes except to the extent payable solely from the Pledged Security. Further, no such amendment shall cause the Governmental Lender ’s obligations hereunder and under the Governmental Notes to be other than limited obligations as set forth in Section 2.03 below.
Section 2.02. Pledged Security. To secure the payment of the principal of, premium, if any, and interest on, and other amounts owing under, the Funding Loan according to its tenor and effect, and the performance and observance by the Governmental Lender of all the covenants expressed or implied herein and in the Governmental Notes, and the payment and performance of all amounts and obligations of the Borrower under the Construction and Permanent Loan Agreement, the Governmental Lender does hereby grant, bargain, sell, convey, pledge and assign a security interest, unto the Fiscal Agent, and its successors in such capacity and its and their assigns in and to the following (excepting, however, in each case, the Unassigned Rights) (said property being herein referred to as the “Pledged Security”) for the benefit of the Funding Lender:
(a) All right, title and interest of the Governmental Lender in and to all Revenues;
(b) All right, title and interest of the Governmental Lender in and to the Project Loan Agreement, the Project Note s, the Security Instrument and the other Project Loan Documents, including all extensions and renewals of the terms thereof, if any, including, but without limiting the generality of the foregoing, the present and continuing right to receive, receipt for, collect or make claim for any of the money, income, revenues, issues, profits and other amounts payable or receivable thereunder (including all casua lty insurance benefits or condemnation awards), whether payable under the above referenced documents or otherwise, to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which the Governmental Lender or any other Person is or may become entitled to do under said documents; and (c) Except for funds, money or securities in the Costs of Issuance Fund, the Administration Fund and 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 Funding Loan by the Governmental Lender or by anyone on its behalf or with its written consent to the Fiscal Agent, 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.
The pledge and assignment of and the security interest granted in the Pledged Security pursuant to this Section 2.02 for the payment of the principal of, Prepayment Premium, if any, and interest on the Governmental Notes, in accordance with their respective terms and provisions, and DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
19 for the payment of all other amounts due hereunder, shall attach and be valid and binding from and after the Delivery Date. The Pledged Security so pledged and then or thereafter received by the Fiscal Agent shall immediately be subject to the lien of such ple dge and security interest without any physical delivery or recording thereof or further act, and the lien of such pledge and security interest shall be valid and binding and prior to the claims of any and all parties having claims of any kind in tort, cont ract or otherwise against the Governmental Lender irrespective of whether such parties have notice thereof.
The foregoing notwithstanding, if the Governmental Lender or its successors or assigns shall pay or cause to be paid to the Funding Lender in full the principal, interest and premium, if any, and all other amounts owing under the Funding Loan, to become due with respect to the Funding Loan at the times and in the manner provided in Article IX hereof, and if the Governmental Lender shall keep, perform and observe, or cause to be kept, performed and observed, all of its covenants, warranties and agreements contained herein, then these presents and the estate and rights hereby granted shall, at the option of the Governmental Lender, cease, terminate and be void, and thereupon the Fiscal Agent shall cancel and discharge the lien of this Funding Loan Agreement and execute and deliver to the Governmental Lender such instruments in writing as shall be requisite to satisfy the lien hereof, and, subject to the provisions of Sections 4.11 and 4.12 hereof and Article IX hereof, reconvey to the Governmental Lender the estate hereby conveyed, and assign and deliver to the Governmental Lender any property at the time subject to the lien of this Funding Loan Agreement that may then be in its possession, except for the Rebate Fund and cash held by the Fiscal Agent for the payment of interest on and principal of the Governmental Notes; otherwise this Funding Loan Agreement to be and shall remain in full force and effect.
Section 2.03. Limited Obligations. Notwithstanding anything to the contrary herein or to the contrary in any Financing Document:
(a) The Funding Loan and the Governmental Note s are limited obligations of the Governmental Lender, payable solely from the Pledged Se curity and any other revenues, funds and assets pledged under this Funding Loan Agreement. None of the Governmental Lender, the State or any political subdivision thereof (except the Governmental Lender, to the limited extent authorized by the Act and set forth herein) nor any public agency shall in any event be liable for the payment of the principal of, Prepayment Premium (if any) or interest on the Funding Loan or the Governmental Notes or for the performance of any pledge, obligation or agreement of any kind whatsoever except as set forth herein, and, notwithstanding anything herein or in any other instrument to the contrary, none of the Funding Loan or the Governmental Note s or any of the Governmental Lender ’s agreements or obligations thereunder shall be construed to constitute an indebtedness of or a pledge of the faith and credit of or a loan of the credit of or a moral obligation of any of the foregoing within the meaning of any constitutional or statutory provision whatsoever.
(b) No covenant, condition or agreement contained herein shall be deemed a covenant agreement or obligation of any past, present or future officer, director, employee or agent of the Governmental Lender in his or her individual capacity and neither the officers, directors, employe es or agents of the Governmental Lender executing the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
20 Governmental Notes or under this Funding Loan Agreement shall be liable personally on the Governmental Note s or under this Funding Loan Agreement or be subject to any personal liability or accountability by reason of the issuance of the Governmental Notes or the execution of this Funding Loan Agreement.
Section 2.04. Funding Loan Agreement Constitutes Contract. In consideration of the origination and funding of the Funding Loan by the Initial Funding Lender, the provisions of this Funding Loan Agreement shall be part of the contract of the Governmental Lender with the Initial Funding Lender and any successors or assigns thereof in such capacity from time to time.
Section 2.05. Form and Execution. The Governmental Note s shall be in substantially the form attached as Exhibit A, and shall be delivered to the holder thereof in physical form and not as book- entry bonds . The Governmental Note s shall be executed on behalf of the Governmental Lender by the manual or facsimile signatur e of an Authorized Officer of the Governmental Lender. The signature of the individual who was the proper officer of the Governmental Lender at the time of execution shall bind the Governmental Lender, notwithstanding that such individual shall have ceased to hold such office prior to the delivery of the Governmental Notes or shall not have held such office at the date of the Governmental Notes.
Section 2.06. Authentication. The Governmental Note s shall not be valid or obligatory for any purpose or entitled to any security or benefit under this Funding Loan Agreement unless a certificate of authentication on the respective Governmental Note, substantially in the form set forth in Exhibit A, shall have been duly executed by an Authorized Officer of the Fiscal Agent; and such executed certificate of authentication upon the respective Governmental Notes shall be conclusive evidence that the respective Governmental Notes have been duly executed, registered, authenticated and delivered under this Funding Loan Agreement.
Section 2.07. Mutilated, Lost, Stolen or Destroyed Governmental Notes. In the event that the Governmental Note s are mutilated, lost, stolen or destroyed, the Governmental Lender shall execute and the Fiscal Agent shall authenticate new Governmental Notes substantially in the form set forth in Exhibit A, in exchange and substitution for and upon cancellation of the mutilated Governmental Note s, or in lieu of and in substitution for such lost, stolen or destroyed Governmental Notes, upon payment by the Funding Lender of any applicable tax or governmental charge and the reasonable expenses and charges of the Governmental Lender and the Fiscal Agent in connection therewith, and in the case where the Governmental Note s are lost, stolen or destroyed, the filing with the Fiscal Agent of evidence satisfactory to it that the Governmental Notes were lost, stolen or destroyed, and of the ownership thereof, and furnishing the Governmental Lender and the Fiscal Agent with indemnity satisfactory to each of them . In the event where the Governmental Notes shall have matured, instead of delivering new Governmental Notes, the Fiscal Agent may pay the same without surrender thereof.
Section 2.08. Registration; Transfer of Funding Loan; Transferee Representations Letter.
(a) The Funding Loan, as evidenced by the Governmental Notes, shall be fully registered as to principal and interest in the manner and with any additional designation as the Fiscal Agent deems necessary for the purpose of identifying the registered owner DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
21 thereof. The Funding Loan, as evidenced by the Governmental Notes, shall be transferable only on the registration books of the Fiscal Agent. The Fiscal Agent shall maintain books or other records showing the name and date of registration, address and employer identification number of the registered owner of the Funding Loan, as evidenced by the Governmental Note s, and any transfers of the Funding Loan, as evidenced by the Governmental Notes, as provided herein, which books, with respect to the Funding Loan, shall be maintained by the Fiscal Agent for such purpose consistent with the registration requirements of the Code applicable to tax-exempt obligations and which shall be open to inspection by the Governmental Lender. The Funding Loan, as evidenced by the Governmental Notes, shall initially be registered to the Initial Funding Lender, which shall provide a Transferee Representations Letter (defined below) to the Governmental Lender and Fiscal Agent on the Delivery Date . Upon the Conversion Date, the Governmental Notes shall be registered to CCRC, which shall provide a Transferee Representations Letter to the Governmental Lender and Fiscal Agent on the Delivery Date on such date. (b) The Funding Lender may not sell or assign the Funding Loan and the Governmental Notes, except in whole to a transferee who agrees to become the “Funding Lender” under the Financing Documents and assume all of the obligations and perform all of the duties of the Funding Lender thereunder; provided, however, that the Funding Lender shall have the right to sell, grant or otherwise convey participation interests in the Funding Loan in a percentage of not less than 25% of the outstanding principal amount of the Funding Loan; and provided further that the Funding Loan m ay be transferred, or any participation interest therein granted, only to a Qualified Transferee that delivers a letter to the Governmental Lender and the Fiscal Agent substantially in the form attached hereto as Exhibit C setting forth certain representat ions with respect to such Qualified Transferee (the “Transferee Representations Letter ”). In connection with any sale, assignment or transfer of the Funding Loan, the Funding Lender shall give notice of such sale, assignment or transfer (and the name and address of the purchaser, assignee or transferee) to the Fiscal Agent and Borrower, and the Fiscal Agent shall record such sale, assignment or transfer on its books or other records maintained for the registration of transfer of the Funding Loan, as evidenced by the Governmental Notes.
(c) No service charge shall be made for any sale or assignment of any portion of the Funding Loan or the Governmental Notes, but the Governmental Lender may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such sale or assignment. Such sums shall be paid in every instance by the purchaser or assignee of the Funding Loan or portion thereof. No placement agent shall be involved in the issuance and sale of the Governmental Notes. (d) The Governmental Lender hereby consents to the transfer of the Governmental Note s to CCRC upon the terms and at the times set forth in the Loan Purchase Agreement and acknowledges and agrees that no further consent or approval of the Governmental Lender shall be required in connection with the transfer of the Governmental Notes to CCRC as set forth thereunder.
Section 2.09. [Reserved].
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
22 Section 2.10. Funding Loan Closing Conditions; Delivery of Governmental Note s.
Closing of the Funding Loan on the Delivery Date shall be conditioned upon, and the Governmental Lender shall only execute and deliver to the Fiscal Agent, and the Fiscal Agent shall only authenticate the Governmental Note s and deliver the Governmental Note s to the Initial Funding Lender upon satisfaction of the following conditions, in the sole discretion of the Governmental Lender or the Funding Lender, as applicable:
(a) Receipt by the Funding Lender and the Governmental Lender of executed counterparts of this Funding Loan Agreement, the Project Loan Agreement, the Regulatory Agreement and the Tax Certificate;
(b) Receipt by the Funding Lender and the Governmental Lender of an opinion of counsel to the Governmental Lender to the effect that the Governmental Lender is duly organized and existing under the laws of the State and has duly authorized, executed and delivered this Funding Loan Agreement, the Governmental Notes and the other Financing Documents to which it is a party, and such documents are valid and binding special, limited obligations of the Governmental Lender enforceable in accordance with their terms subject to customary exceptions;
(c) Receipt by the Title Company of the initial advance of the proceeds of the Funding Loan from the Initial Funding Lender in the amount of the Initial Instal lment set forth in Section 2.01(b) hereof;
(d) Receipt by the Fiscal Agent of the executed Project Notes and an endorsement of the Project Notes by the Governmental Lender in favor of the Fiscal Agent; (e) Receipt by the Funding Lender of a copy of the executed Se curity Instrument, the Assignment and the Construction and Permanent Loan Agreement and the other Financing Documents;
(f) Receipt by the Funding Lender and the Governmental Lender of an opinion of counsel to the Borrower to the effect that the Borrower is duly organized and validly existing and in good standing under the laws of the state in which it has been organized and in good standing under the laws of each other state in which the Borrower transacts business and has full power and authority to enter into the Financing Documents to which it is a party, that its execution and delivery of and performance of its covenants in such documents do not contravene law or any provision of any other documents to which it is a party or by which it or such property is bound or affected, and that all such agreements have been duly authorized, executed and delivered by the Borrower, and are legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms;
(g) Receipt by the Funding Lender and the Governmental Lender of a customary approving opinion of Tax Counsel, including but not limited to, an opinion to the effect that the Governmental Note s have been executed and delivered by the Governmental Lender and constitute valid and binding special limited obligations of the Governmental Lender, that this Funding Loan Agreement has been executed and delivered DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
23 by the Governmental Lender and constitutes a valid and binding obligation of the Governmental Lender, subject to customary expectations, and the interest on the Series B- 1 Governmental Note, under laws in effect on the date of such opinion, is excluded from gross income for federal income tax purposes and, where applicable, for State income tax purposes (subject to customary exceptions);
(h) Receipt by the Funding Lender of a certified copy of the Resolution; (i) Receipt by the Fiscal Agent of the written request and authorization to the Fiscal Agent by the Governmental Lender to authenticate and deliver the Governmental Notes to the Initial Funding Lender upon funding to the Title Company of the Initial Installment of the Funding Loan;
(j) Receipt by the Fiscal Agent of the amounts specified in Section 2.11 of this Funding Loan Agreement and Section 3.03 of the Project Loan Agreement; (k) Receipt by the Fiscal Agent and the Governmental Lender of a Transferee Representations Letter from the Initial Funding Lender substantially in the form attached hereto as Exhibit C;
(l) Delivery into escrow of all amounts required to be paid in connection with the origination of the Project Loan and the Funding Loan and any underlying real estate transfers or transactions, including the Costs of Issuance Deposit, in accordance with Section 3.03 of the Project Loan Agreement, and delivery of the Borrower Equity Deposit into the Borrower Equity Account pursuant to Section 2.11(c) hereof; (m) [Reserved]; and
(n) Receipt by the Funding Lender and the Governmental Lender of any other documents or opinions that Funding Lender or Tax Counsel may require.
Section 2.11. Establishment of Project Loan Fund; Application of Funding Loan Proceeds and Other Money.
(a) The Fiscal Agent shall establish, maintain and hold in trust and there is hereby established with the Fiscal Agent a Project Loan Fund and therein a Project Account and a Borrower Equity Account. No amount shall be charged against the Project Loan Fund except as expressly provided in this Section 2.11 and Section 4.02 hereof. (b) The proceeds of the Funding Loan shall be delivered by the Initial Funding Lender to the Title Company on behalf of the Governmental Lender in the amount of the Initial Installment on the Delivery Date to be disbursed in accordance with the settlement statement, and thereafter on a drawdown basis as provided for in Section 2.01(b) hereof.
Upon receipt, the Fiscal Agent shall deposit such proceeds to the credit of the Project Account of the Project Loan Fund in accordance with Section 4.02(a) hereof. Amounts in the Project Loan Fund shall be disbursed as provided in subparagraph (d) below, subject to the conditions set forth in Section 3.01 of the Project Loan Agreement. Upon the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
24 disbursement of all amounts in the Project Loan Fund, the Fiscal Agent shall close the Project Loan Fund.
(c) The Governmental Lender shall cause the Borrower to deliver from sources other than the Loans, to the Fiscal Agent, on or prior to the Delivery Date, the Costs of Issuance Deposit for deposit to the credit of the Costs of Issuance Fund (if any) and the Borrower Equity Deposit for deposit to the credit of the Borrower Equity Account (if any).
The Fiscal Agent shall also deposit in the Borrower Equity Account any additional amounts delivered from time to time to the Fiscal Agent and directed by the Borrower or Servicer to be deposited therein, excluding any proceeds of the Loans. (d) Upon the making of the initial deposits described above in this Section 2.11, the Governmental Lender shall originate the Project Loan pursuant to the Project Loan Agreement and the Fiscal Agent shall make the initial disbursements of amounts in the Project Loan Fund to the Borrower or otherwise as provided in Section 4.02 hereof.
Section 2.12. [Reserved].
Section 2.13. Conversion. If the Conversion Conditions are not satisfied by the Termination Date, Conversion will not occur, and CCRC will have no obligation with respect to the purchase of the Series B -1 Governmental Note or otherwise with respect to the Series B-1 Governmental Note or the Project.
ARTICLE III
PREPAYMENT OF THE FUNDING LOAN
Section 3.01. Prepayment of the Funding Loan Prior to Maturity. (a) Optional Prepayment. The Funding Loan, together with accrued interest thereon, are subject to optional prepayment by the Governmental Lender in whol e or in part from the funds that the Governmental Lender received from or on behalf of the Borrower upon optional prepayment of the Project Loan in accordance with the notice and other prepayment provisions set forth in the Project Note s and the Constructi on and Permanent Loan Agreement.
(b) Funding Loan Mandatory Prepayment. The Funding Loan, together with accrued interest thereon, and together with Prepayment Premium (to the extent payable under the Project Note s), is subject to mandatory prepayment on any Business Day, in whole or in part as indicated below, at the earliest practicable date upon the occurrence of any of the following:
(i) in whole or in part, upon the occurrence of a mandatory prepayment of the Project Loan pursuant to the Project Note s and the Construction and Permanent Loan Agreement and receipt by the Fiscal Agent of a written direction by the Funding Lender Representative that the Funding Loan shall be subject to mandatory prepayment as a result thereof;
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
25 (ii) in part, on the next Interest Payment Date that is at least 10 days following the completion of the construction of the Project, to the extent amounts remaining in the Series B-1 Subaccount of the Project Account of the Project Loan Fund are transferred to the Loan Prepayment Fund pursuant to Section 4.02(e) hereof;
(iii) in part, in the event the Borrower elects to make a Pre -Conversion Loan Equalization Payment, in the amount of such payment; (iv) in whole, on or after the Termination Date, at the written direction of the Initial Funding Lender, if the Conversion Conditions are not satisfied prior to the Termination Date; or
(v) in whole on the Conversion Date, at a prepayment price equal to the principal balance of the Governmental Note s outstanding, plus interest thereon to the Conversion Date, and the Governmental Notes will be cancelled for all purposes hereunder, in the event that CCRC exercises the Loan Purchase Option (as defined in the Loan Purchase Agreement) as set forth in Section 1.7 of the Loan Purchase Agreement and purchases the corresponding Project Loan in lieu of the Governmental Notes.
If CCRC shall so elect by notice to the Governmental Lender, the Fiscal Agent, and the Borrower, upon the Conversion Date, to purchase the Project Loan in accordance with the terms and provisions of Section 1.7 of the Loan Purchase Agreement, the Governmental Notes shall be delivered to the Fiscal Agent and cancelled, and the Governmental Lender shall transfer and assign, or cause the Fiscal Agent to transfer and assign, to CCRC all of its right, title and interest in, to and under the Project Note s, the Project Loan Agreement, the Security Instrument and the other Project Loan Documents (excluding the Regulatory Agreement) and the related collateral. Upon such election and purchase and transfer of the Project Loan and the Project Loan Documents (excluding the Regulatory Agreement) and cancellation of the Governmental Notes , neither the Governmental Lender nor the Fiscal Agent shall have any further interest in the Funding Loan, the Project Loan or the Financing Documents (excluding the Regulatory Agreement), and this Funding Loan Agreement shall be terminated in accordance with Article IX hereof, subject to the survival of any rights expressly agreed to survive, including, without limitation, the survival of the indemnification of the Governmental Lender by the Borrower pursuant to the Project Loan Agreement. Upon the purchase of the Project Loan by CCRC as described in thi s paragraph, the Governmental Lender and the Fiscal Agent shall execute and deliver any additional documents and take any other actions that are reasonably necessary in order to effect the cancellation of the Governmental Notes and the transfer of the Project Loan and the Project Loan Documents (excluding the Regulatory Agreement) to CCRC.
Section 3.02. Notice of Prepayment. Notice of the intended prepayment of the Funding Loan shall be given by the Fiscal Agent by first class mail, postage prepaid, or by overnight delivery service, to the Funding Lender. All such prepayment notices shall be given not less than 10 days (not less than 30 days in the case of optional prepayment) nor more than 60 days prior to the date fixed for prepayment. Notices of prepayment shall s tate (i) the prepayment date, (ii) the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
26 prepayment amount, and (iii) the place or places where amounts due upon such prepayment will be payable. Notice of prepayment may be given initially by mutually acceptable electronic means, then confirmed by mail or other delivery service as aforesaid.
Notice of such prepayment shall also be sent by mutually acceptable electronic means, and/or by first class mail, postage prepaid, or by overnight delivery service, to the Servicer (if the Servicer and the Funding Lender are different entities), not later than the time of mailing of notices required by the first paragraph above, and in any event no later than simultaneously with the mailing of notices required by the first paragraph above; provided, that nei ther failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the prepayment of the Funding Loan.
ARTICLE IV
REVENUES AND FUNDS
Section 4.01. Establishment of Funds . In addition to the Project Loan Fund and the accounts therein established pursuant to Section 2.11 hereof, the Fiscal Agent shall establish, maintain and hold in trust the following funds and accounts, each of which is hereby established and each of which shall be disbursed and applied only as herein authorized:
(a) Revenue Fund;
(b) Loan Payment Fund;
(c) Loan Prepayment Fund;
(d) Administration Fund;
(e) Costs of Issuance Fund; and
(f) Rebate Fund.
The funds and accounts established pursuant to Section 2.11 and this Section 4.01 shall be maintained in the corporate trust department of the Fiscal Agent as segregated trust accounts, separate and identifiable from all other funds held by the Fiscal Agent. The Fiscal Agent shall, at the written direction of an Authorized Officer of the Governmental Lender, and may, in its discretion, establish such additional accounts within any Fund, and subaccounts within any of the accounts, as the Governmental Lender or the Fiscal Agent may deem necessary or useful for the purpose of identifying more precisely the sources of payments into and disbursements from that Fund and its accounts, or for the purpose of complying with the requirements of the Code relating to arbitrage, but the establishment of any such account or subaccount shall not alter or modify any of the requirements of this Funding Loan Agreement with respect to a deposit or use of money in the funds established hereunder, or result in commingling of funds not permitted hereunder.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
27 All money required to be deposited with or paid to the Fiscal Agent for the account of any of the funds or accounts created by this Funding Loan Agreement shall be held by the Fiscal Agent for the benefit of the Funding Lender, and, except for money held in the Costs of Issuance Fund, the Administration Fund or the Rebate Fund, shall, while held by the Fiscal Agent, constitute part of the Pledged Security and be subject to the lien hereof.
Section 4.02. Project Loan Fund.
(a) Deposit. The Fiscal Agent shall deposit the proceeds of the Series B-1 Governmental Note into a Series B-1 Subaccount of the Project Account of the Project Loan Fund upon receipt of each advance thereof, except in connection with the Initial Installment, as provided in Section 2.11(b) hereof, and shall deposit proceeds of the Series B-2 Governmental Note into a Series B-2 Subaccount of the Project Account of the Project Loan Fund upon receipt of each advance thereof. The Fiscal Agent shall deposit the Borrower Equity Deposit into the Borrower Equity Account of the Project Loan Fund, as well as any additional amounts delivered from time to time to the Fiscal Agent and directed by the Borrower or Servicer to be deposited therein (excluding any proceeds of the Governmental Notes), as provided in Section 2.11(c) hereof. (b) Disbursements. Amounts on deposit in the Project Loan Fund shall be disbursed from time to time by the Fiscal Agent in accordance with the Construction and Permanent Loan Agreement for the purpose of paying (i) interest on the Funding Loan and the Fee Component, in each case when due and (ii) Costs of the Project, and will be disbursed pursuant to a Requisition, except as otherwise set forth in Section 4.02(c) below.
In addition, amounts in the Project Loan Fund shall be transferred to the Loan Prepayment Fund, the Rebate Fund and the Borrower at the times and in the manner provided in subsection (e) of this Section 4.02.
(c) Transfers and Requisitions. Unless the Fiscal Agent is instructed otherwise by the Funding Lender Representative, the Fiscal Agent shall automatically transfer amounts from the Borrower Equity Account of the Project Loan Fund to the Administration Fund to pay to the appropriate party its accrued fees that are included in the Fee Component that are due and payable as set forth herein or upon receipt of an invoice, without any need for a Requisition or other written direction. Unless the Fiscal Agent is instructed otherwise by the Initial Funding Lender, the Fiscal Agent shall automatically transfer amounts in the Borrower Equity Account of the Project Loan Fund to the Loan Payment Fund to pay interest on the Project Loan and Funding Loan without any need for a Requisition or other written direction. Except for the foregoing transfers, the Fiscal Agent shall make disbursements from the respective accounts of the Project Loan Fund only upon the receipt of Requisitions signed by an Authorized Officer of the Borrower and countersigned by an Authorized Officer of the Servicer (signifying the consent to the Requisition by the Servicer). The Fiscal Agent shall have no right or duty to determine whether any request ed disbursement from the Project Loan Fund complies with the terms, conditions and provisions of the Construction and Permanent Loan Agreement. The countersignature of the Authorized Officer of the Servicer on a Requisition shall be deemed a certification and, insofar as the Fiscal Agent and the Governmental Lender are concerned, constitute conclusive evidence, that all of the terms, DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
28 conditions and requirements of the Construction and Permanent Loan Agreement applicable to such disbursement have been fully satisfied or waived. The Fiscal Agent shall, immediately upon each receipt of a completed Requisition signed by an Authorized Officer of the Borrower and countersigned by an Authorized Officer of the Servicer, initiate procedures with the provider of a Q ualified Investment to make withdrawals as necessary to fund the Requisition.
Notwithstanding anything to the contrary contained herein, no signature of an Authorized Officer of the Borrower shall be required during any period in which a default has occurred and is then continuing under the Loans or any Financing Document (notice of which default has been given in writing by the Funding Lender Representative or the Servicer to the Fiscal Agent and the Governmental Lender, and the Fiscal Agent shall be entitled to conclusively rely on any such written notice as to the occurrence and continuation of such a default).
(d) If a Requisition signed by an Authorized Officer of the Borrower and countersigned by an Authorized Officer of the Servicer or (as permitted hereunder) solely by an Authorized Officer of the Servicer, is received by the Fiscal Agent, the requested disbursement shall be paid by the Fiscal Agent as soon as practicable, but in no event later than three Business Days following receipt thereof by the Fiscal Agent. Upon final disbursement of all amounts on deposit in the Project Loan Fund, including all interest accrued therein, the Fiscal Agent shall close the Project Loan Fund. (e) Immediately prior to any mandatory prepayment of the Funding Loan pursuant to Section 3.01(b)(i) hereof, any amount then remaining in the Project Loan Fund shall, at the written direction of the Funding Lender Representative, be transferred to the Loan Prepayment Fund to pay amounts due on the Funding Loan, if any. In addition, any amount remaining in the Series B-1 Subaccount of the Project Account of the Project Loan Fund following completion of the construction of the Project in accordance with the Construction and Permanent Loan Agreement, evidenced by an instrument signed by the Funding Lender Representative or the Servicer, shall be transferred to the Loan Prepayment Fund and used to prepay the Funding Loan in accordance with Section 3.01(b)(ii) hereof, unless the Fiscal Agent receives an opinion of Tax Counsel (which shall also be addressed to the Funding Lender Representative) to the effect that a use of such money for other than prepayment of the Funding Loan will not adversely affect the tax -exempt status of the Series B-1 Governmental Note; provided, that any amounts in t he Series B-1 Subaccount of the Project Account of the Project Loan Fund in excess of the amount needed to fund the related prepayment of the Funding Loan shall be transferred to the Rebate Fund to the extent required by the Tax Certificate . In the event there are funds remaining in the Borrower Equity Account following completion of the construction of the Project in accordance with the Construction and Permanent Loan Agreement and the Conversion Date has occurred, and provided no default by the Borrower exists under this Funding Loan Agreement or any Project Loan Document, such funds shall be paid by the Fiscal Agent to the Borrower at the written direction of the Funding Lender Representative or the Servicer and the Borrower Equity Account shall be closed.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
29 (f) Amounts on deposit in the Project Loan Fund shall be invested as provided in Section 4.08 hereof. All Investment Income on amounts on deposit in the Project Loan Fund shall be retained in and credited to and become a part of the amounts on deposit in the Project Loan Fund, and shall constitute part of any transfers required by subsection (b) or (e) of this Section 4.02.
Section 4.03. Application of Revenues.
(a) All Revenues received by the Fiscal Agent shall be deposited by the Fiscal Agent, promptly upon receipt thereof, to the Revenue Fund, except (i) the proceeds of the Funding Loan received by the Fiscal Agent pursuant to Section 2.01(b), which shall be applied in accordance with the provisions of Section 2.11 hereof; (ii) as otherwise specifically provided in subsection (c) of this Section 4.03 with respect to certain deposits into the Loan Prepayment Fund; (iii) with respect to Investment Income to the extent required under the terms hereof to be retained in the funds and accounts to which they are attributable; and (iv) with respect to amounts required to be transferred between funds and accounts as provided in this Article IV.
(b) On each Interest Payment Date or any other date on which payment of principal of or interest on the Funding Loan becomes due and payable, the Fiscal Agent, out of money in the Revenue Fund, shall credit the following amounts to the following funds, but in the order and within the limitations hereinafter indicated with respect thereto, as follows:
FIRST: to the Loan Payment Fund, an amount equal to the principal of and interest due on the Funding Loan on such date; and
SECOND: to the Loan Prepayment Fund, an amount equal to the principal and interest due on the Funding Loan on such date with respect to a mandatory prepayment of all or a portion of the Funding Loan pursuant to Section 3.01(b) or
3.01(c) hereof (other than any extraordinary mandatory prepayment as described in Section 4.03(c)(i) or (iii) below).
(c) Promptly upon receipt, the Fiscal Agent shall deposit directly to the Loan Prepayment Fund (i) Net Proceeds representing casualty insurance proceeds or condemnation awards paid as a prepayment of the Project Loan, such amount to be applied to provide for the extraordinary mandatory prepayment of all or a portion of the Funding Loan pursuant to Section 3.01(b)(i) hereof; (ii) funds paid to the Fiscal Agent to be applied to the optional prepayment of all or a portion of the Funding Loan pursuant to Section 3.01(a); and (iii) amounts transferred from the Project Loan Fund pursuant to Section 4.02(e) hereof.
(d) Should the amount in the Loan Payment Fund be insufficient to pay the amount due on the Funding Loan on any given Interest Payment Date, the Fiscal Agent shall credit to the Loan Payment Fund the amount of such deficiency by charging t he following funds and accounts in the following order of priority: (1) the Revenue Fund; and (2) the Loan Prepayment Fund, except no such charge to the Loan Prepayment Fund shall DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
30 be made from money to be used to effect a prepayment for which notice of prepayment has been provided for hereunder.
Section 4.04. Application of Loan Payment Fund. T he Fiscal Agent shall charge the Loan Payment Fund, on each Interest Payment Date, an amount equal to the unpaid interest and principal due on the Funding Loan on such Interest Payment Date as provided in Section 4.03 (b), and shall cause the same to be applied to the payment of such interest and principal when due.
Any money remaining in the Loan Payment Fund on any Interest Payment Date after application as provided in the preceding sentence may, to the extent there shall exist any deficiency in the Loan Prepayment Fund to prepay the Funding Loan if called for prepayment on such Interest Payment Date, be transferred to the Loan Prepayment Fund to be applied for such purpose.
Any Investment Income on amounts on deposit in the Loan Payment Fund shall be deposited by the Fiscal Agent upon receipt thereof in the Revenue Fund.
No amount shall be charged against the Loan Payment Fund except as expressly provided in this Article IV and in Section 6.05 hereof.
Section 4.05. Application of Loan Prepayment Fund. Any money credited to the Loan Prepayment Fund shall be applied as set forth in Sections 4.03(b) and 4.03(c) hereof; provided, however, that to the extent any money credited to the Loan Prepayment Fund is in excess of the amount necessary to effect the prepayments described in Sections 4.03(b) and 4.03(c) hereof it shall be applied to make up any deficiency in the Loan Payment Fund on any Interest Payment Date, to the extent money then available in accordance with Section 4.03(d) hereof in the Revenue Fund is insufficient to make up such deficiency; provided that no money to be used to effect a prepayment for which a notice of prepayment has been provided shall be so transferred to the Loan Payment Fund.
On or before each Interest Payment Date, any Investment Income on amounts on deposit in the Loan Prepayment Fund shall be credited by the Fiscal Agent to the Revenue Fund.
No amount shall be charged against the Loan Prepayment Fund except as expressly provided in this Article IV and in Section 6.05 hereof.
Section 4.06. Administration Fund. T he Fiscal Agent shall deposit into the Administration Fund, promptly upon receipt thereof, all amounts received from the Servicer (or the Borrower if no Servicer exist s for the Loans) designated for deposit into such fund, together with amounts transferred by the Fiscal Agent from the Project Loan Fund for deposit to the Administration Fund pursuant to Section 4.02. Amounts in the Administration Fund shall be withdrawn or maintained, as appropriate, by the Fiscal Agent and used FIRST, to pay to the Fiscal Agent when due the Ordinary Fiscal Agent’s Fees and Expenses; SECOND, to pay when due the reasonable fees and expenses of a Rebate Analyst in connection with the computations relating to arbitrage rebate required under this Funding Loan Agreement and the Project Loan Agreement, upon receipt of an invoice from the Rebate Analyst; THIRD, to pay to the Fiscal Agent any Extraordinary Fiscal Agent’s Fees and Expenses due and payable from time to time, as set forth in an invoice submitted to the Borrower and the Servicer; F OURTH, to pay to the Governmental Lender any extraordinary expenses it may incur in connection with the Loans or this Funding Loan DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
31 Agreement from time to time, as set forth in an invoice submitted to the Fiscal Agent and the Servicer; FIFTH, to pay to the Funding Lender Representative any unpaid amounts due under the Construction and Permanent Loan Agreement, as certified in writing by the Funding Lender Representative to the Fiscal Agent; S IXTH, to make up any deficiency in the Loan Prepayment Fund on any prepayment date of the Funding Loan, to the extent money then available in accordance with Section 4.03(d) hereof in the Loan Prepayment Fund is insufficient to prepay the Funding Loan scheduled for prepayment on such prepayment date; and SEVENTH, to transfer any remaining balance after application as aforesaid to the Revenue Fund.
In the event that the amounts on deposit in the Administration Fund are not equal to the amounts payable from the A dministration Fund as provided in the preceding paragraph on any date on which such amounts are due and payable, the Fiscal Agent shall give notice to the Borrower and the Servicer of such deficiency and of the amount of such deficiency and request payment within two Business Days to the Fiscal Agent of the amount of such deficiency. Upon payment by the Borrower or the Servicer of such deficiency, the amounts for which such deficiency was requested shall be paid by the Fiscal Agent.
The Fiscal Agent shall provide to the Borrower the outstanding principal amount of the Governmental Notes at the times required under Section 7(a) of the Regulatory Agreement.
On or before each Interest Payment Date, any Investment Income on amounts on deposit in the Administration Fund not needed to pay the foregoing amounts shall be credited by the Fiscal Agent to the Revenue Fund.
No amount shall be charged against the Administration Fund except as expressly provided in this Article IV and Section 6.05 hereof.
Section 4.07. [Reserved].
Section 4.08. Investment of Funds. The money held by the Fiscal Agent shall constitute trust funds for the purposes hereof. Any money attributable to each of the funds and accounts hereunder shall be, except as otherwise expressly provided herein, invested by the Fis cal Agent, at the written direction of the Borrower (or, in the case of the Rebate Fund, as provided in Section 5.07(b)), in Qualified Investments which mature or shall be subject to prepayment or withdrawal at par without penalty on or prior to the earlie r of (i) six months from the date of investment and (ii) the date such money is needed; provided, that if the Fiscal Agent shall have entered into any investment agreement requiring investment of money in any fund or account hereunder in accordance with such investment agreement and if such investment agreement constitutes a Qualified Investment, such money shall be invested in accordance with such requirements. In the absence of written direction from the Borrower, the Fiscal Agent shall invest amounts on deposit in the funds and accounts established under this Funding Loan Agreement in investments of the type described in subparagraph (g) of the definition of Qualified Investments, which shall have the same maturity and other restrictions as set forth above. Such investments may be made through the investment or securities department of the Fiscal Agent. The Fiscal Agent may purchase from or sell to itself or an affiliate, as principal or agent, securities herein authorized. The Fiscal Agent shall be en titled to assume, absent receipt by the Fiscal Agent of DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
32 written notice to the contrary, that any investment which at the time of purchase is a Qualified Investment remains a Qualified Investment thereafter.
Qualified Investments representing an investment of money attributable to any fund or account shall be deemed at all times to be a part of said fund or account, and, except as otherwise may be provided expressly in other Sections hereof, the interest thereon and any profit arising on the sale thereof sha ll be credited to the Revenue Fund, and any loss resulting on the sale thereof shall be charged against the Revenue Fund. Such investments shall be sold at the best price obtainable (at least par) whenever it shall be necessary to do so in order to provide money to make any transfer, withdrawal, payment or disbursement from said fund or account. In the case of any required transfer of money to another such fund or account, such investments may be transferred to that fund or account in lieu of the required money if permitted hereby as an investment of money in that fund or account. The Fiscal Agent shall not be liable or responsible for any loss resulting from any investment made in accordance herewith.
The Governmental Lender acknowledges that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory agency grant the Governmental Lender the right to receive brokerage confirmations of the security transactions as they occur, to the extent permitted by law, the Governmental Lender specifically waives compliance with 12 C.F.R. 12 and hereby notifies the Fiscal Agent hereunder, that no brokerage confirmations need be provided relating to the security transactions as they occur.
Except as otherwise provided in the following paragraph of this Section, the Governmental Lender and the Borrower (by their execution of the Project Loan Agreement) each covenant that all investments of amounts deposited in any fund or account created by or pursuant to this Funding Loan Agreement, or otherwise containing Gross Proceeds of the Funding Loan or the Governmental Notes (within the meaning of Section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Funding Loan Agreement or the Code) at Fair Market Value.
The Governmental Lender and the Borrower (by their execution of the Project Loan Agreement) each covenant that investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provis ions of the Code and (unless valuation is undertaken at least annually) investments in any reserve fund shall be valued at their present value (within the meaning of Section 148 of the Code).
Section 4.09. [Reserved].
Section 4.10. Accounting Records. The Fiscal Agent shall maintain accurate books and records for all funds and accounts established by the Fiscal Agent hereunder.
Section 4.11. Amounts Remaining in Funds . After full payment of the Funding Loan (or provision for payment thereof having been made in accordance with Section 9.01 hereof) and full payment of the fees, charges and expenses of the Governmental Lender, the Fiscal Agent, the Rebate Analyst, the Funding Lender, the Funding Lender Representative, and the Servicer and other amounts required to be paid hereunder or under any Project Loan Document, including, but not limited to, the Construction and Permanent Loan Agreement (as certified in writing to the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
33 Fiscal Agent by the Governmental Lender with respect to amounts due to the Governmental Lender and by the Funding Lender Re presentative or the Servicer on its behalf with respect to amounts owed under the Construction and Permanent Loan Agreement and by the Rebate Analyst with respect to amounts due to the Rebate Analyst), any amounts remaining in any fund or account hereunder other than the Rebate Fund shall be paid to the Borrower.
Section 4.12. Rebate Fund; Compliance with Tax Certificate. The Rebate Fund shall be established by the Fiscal Agent and held and applied as provided in this Section 4.12. On any date on which any amounts are required by applicable federal tax law to be rebated to the federal government, amounts shall be deposited into the Rebate Fund by the Borrower for such purpose.
All money at any time deposited in the Rebate Fund shall be held by the Fiscal Agent in trust, to the extent required to satisfy the rebate requirement (as set forth in the Tax Certificate) and as calculated by the Rebate Analyst, for payment to the government of the United States of America, and neither the Governmental Lender, the Borrower nor the Funding Lender shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section 4.12 and by the Tax Certificate. The Fiscal Agent shall conclusively be deemed to have comp lied with such provisions if it follows the written instructions of the Governmental Lender, Tax Counsel or the Rebate Analyst, including supplying all necessary information in the manner set forth in the Tax Certificate, and shall not be required to take any actions under the Tax Certificate in the absence of written instructions from the Governmental Lender, Tax Counsel or the Rebate Analyst.
Within 55 days of the end of each fifth Rebate Year, the Borrower shall cause the Rebate Analyst to calculate the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148- 3 of the Treasury Regulations (taking into account any exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Sections 148(f)(4)(B) and (C) of the Code)), for this purpose treating the last day of the applicable Rebate Year as a (computation) date, within the meaning of Section 1.148 1(b) of the Treasury Regulations (the “Rebatable Arbitrage”). Pursuant to Section 2.04 of the Project Loan Agreement, the Borrower shall cause the Rebate Analyst to provide such calculations to the Fiscal Agent and the Governmental Lender. In the event that the Borrower fails to provide such information to the Fiscal Agent and the Governmental Lender within 55 days of the end of each fifth Rebate Year, the Fiscal Agent, at the expense of the Borrower, shall select the Rebate Analyst, with the prior written approval of the Governmental Lender, and shall cause the Rebate Analyst to calculate the amount of Rebatable Arbitrage as required herein.
Within 55 days of the end of each fifth Rebate Year, upon the written direction of the Governmental Lender, Tax Counsel or the Rebate Analyst, an amount shall be deposited to the Rebate Fund by the Fiscal Agent from amounts provided by the Borrower, if and to the extent required so that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with the preceding paragraph.
The Fiscal Agent shall pay, as directed by the Governmental Lender, Tax Counsel or the Rebate Analyst, to the United States Department of the Treasury, out of amounts in the Rebate Fund:
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
34 (i) Not later than 60 days after the end of (A) the fifth Rebate Year, and (B) each applicable fifth Rebate Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Rebate Year; and (ii) Not later than 60 days after the payment in whole of the Funding Loan, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Rebate Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.
Each payment required to be made under this Section shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 (or such other address provided in such direction), on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 T, which shall be prepared by the Rebate Analyst and provided to the Fiscal Agent.
Notwithstanding any provision of this Funding Loan Agreement to the contrary, the obligation to remit payment of the Rebatable Arbitrage to the United States of America and to comply with all other requirements of Sections 2.04 and 4.03 of the Project Loan Agreement and this Section 4.12, and the requirements of the Tax Certificate shall survive the defeasance or payment in full of the Funding Loan.
Any funds remaining in the Rebate Fund after payment in full of the Funding Loan and payment and satisfaction of any Rebate Requirement, or provision made therefor satisfactory to the Fiscal Agent, shall be withdrawn and remitted to the Borrower.
The Fiscal Agent shall obtain and keep such records of the computations made pursuant to this Section 4.12 as are required under Section 148(f) of the Code to the extent furnished to the Fiscal Agent. The Borrower shall or shall cause the Rebate Analyst to provide to the Governmental Lender and the Fiscal Agent copies of all rebate computations made pursuant to this Section 4.12.
The Fiscal Agent shall keep and make available to the Borrower and the Governmental Lender, until six years after the date on which no portion of the Governmental Note s is outstanding, such records concerning the investments of the gross proceeds of the Funding Loan and the investments of earnings from those investments made by the Fiscal Agent as may be requested by the Borrower in order to enable the Borrower to cause the Rebate Analyst to make the aforesaid computations as are required under Section 148(f) of the Code.
Notwithstanding the foregoing, the computations and payments of Rebatable Arbitrage need not be made to the extent that neither the Governmental Lender nor the Borrower will thereby fail to comply with any requirements of Section 148(f) of the Code based on a No Adverse Effect Opinion, a copy of which shall be provided to the Fiscal Agent and the Funding L ender Representative, at the expense of the Borrower.
Section 4.13. Costs of Issuance Fund. The Fiscal Agent shall use money on deposit to the credit of the Costs of Issuance Fund to pay the costs of issuance on the Delivery Date or as soon as practicable thereafter as follows: (a) in accordance with a Requisition in the form of Exhibit D to be given to the Fiscal Agent by the Borrower on the Delivery Date, along with appropriate invoices for such expenses, provided that no requisition shall be required for the payment of Costs of Issuance set forth on the closing memorandum delivered to the Fiscal Agent DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
35 on the Delivery Date and (b) pay the California Debt and Investment Advisory Commission (“CDIAC”) the CDIAC fee of up to $ 5,000 upon receipt of an invoice therefor. Amounts in the Costs of Issuance Fund funded with proceeds of the Funding Loan, if any, shall be expended prior to the application of the Costs of Issuance Deposit. Investment Income on amounts on deposit in the Costs of Issuance Fund shall be retained in such fund. Amounts remaining on deposit in the Costs of Issuance Fund six months after the Delivery Date shall be transferred to the Borrower.
Upon such final disbursement, the Fiscal Agent shall close the Costs of Issuance Fund.
Section 4.14. Reports From the Fiscal Agent. The Fiscal Agent shall, on or before the 15th day of each month, file with the Funding Lender Representative, the Servicer, the Governmental Lender (at its written request) and the Borrower a statement setting forth in respect of the preceding calendar month:
(i) the amount withdrawn or transferred by it, and the amount deposited within or on account of each fund and account held by it under the provisions of this Funding Loan Agreement, including the amount of investment income on each fund and account; (ii) the amount on deposit with it at the end of such month to the credit of each fund and account;
(iii) a brief description of all obligations held by it as an investment of money in each such fund and account; and
(iv) any other information which the Funding Lender Representative or the Governmental Lender may reasonably request and to which the Fiscal Agent has access in the ordinary course of its operations.
Upon the written request of the Funding Lender, the Fiscal Agent, at the cost of the Borrower, shall provide a copy of such statement to Funding Lender. All records and files pertaining to the Pledged Security shall be open at all reasonable times to the inspection of the Governmental Lender and the Funding Lender Representative or the Servicer and their agents and representatives upon reasonable prior notice during normal business hours.
ARTICLE V
GENERAL COVENANTS AND REPRESENTATIONS
Section 5.01. Payment of Principal and Interest . Subject to the provisions of Section 2.03 and Article III hereof, the Governmental Lender will duly and punctually repay, or cause to be repaid, the Funding Loan, as evidenced by the Governmental Note s, as and when the same shall become due, all in accordance with the terms of the Governmental Notes and this Funding Loan Agreement, to the extent of repayments and prepayments received by the Governmental Lender with respect to the Project Loan.
Section 5.02. Performance of Covenants. T he Governmental Lender covenants that it will faithfully perform at all times any and all of its covenants, undertakings, stipulations and provisions contained in this Funding Loan Agreement, in the Governmental Note s and in all proceedings pertaining thereto.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
36 Section 5.03. Instruments of Further Assurance. The Governmental Lender covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such supplements 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 Fiscal Agent 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 Funding Loan, at the expense of the Borrower, provided, however, that no such act or instrument shall change the essential economic terms of the Funding Loan.
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 Governmental Lender or the Fiscal Agent, become and be subject to the lien of this Funding Loan Agreement 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 Governmental Lender under this Section 5.03. The Governmental Lender covenants and agrees that, except as herein otherwise expressly provided, it has not and wil l not sell, convey, mortgage, encumber or otherwise dispose of any part of its interest in the Pledged Security or the revenues or receipts therefrom.
The Governmental Lender will promptly notify the Fiscal Agent, the Funding Lender Representative and the Servicer in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal process, litigation or administrative or judicial investigation against the Governmental Lender with respect to the Loans of which it has received written notice;
(ii) any change in the location of the Governmental Lender’s principal office or any change in the location of the Governmental Lender’s books and records relating to the transactions contemplated hereby;
(iii) the occurrence of any defau lt or Event of Default of which the Governmental Lender has received written notice;
(iv) the commencement of any proceedings or any proceedings instituted by or against the Governmental Lender in any federal, state or local court or before any governmental body or agency, or before any arbitration board, relating to the Notes, of which it has received written notice; or
(v) the commencement of any proceedings by or against the Governmental Lender under any applicable bankruptcy, reorganization, liquidation, rehabil itation, insolvency or other similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator, conservator, trustee or similar official shall have been, or may be, appointed or requested for the Governmental Lender or any of its assets relating to the Loans.
Section 5.04. Inspection of Books and Records. The Governmental Lender covenants and agrees that all books and documents in its possession relating to the Project shall, upon DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
37 reasonable prior notice, during normal business hours, be open to inspection and copying by such accountants or other agents as the Servicer, Fiscal Agent or the Funding Lender Representative may from time to time reasonably designate; provided that the Fiscal Agent shall have no duty to so designate.
Section 5.05. No Modification of Security; Additional Indebtedness . The Governmental Lender covenants to and for the benefit of the Funding Lender that it will not, without the prior written consent of the Funding Lender Representative, take any of the following actions:
(i) alter, modify or cancel, or agree to consent to alter, modify or cancel a ny agreement to which the Governmental Lender is a party, or which has been assigned to the Governmental Lender, and which relates to or affects the security for the Loan or the payment of any amount owed under the Financing Documents; or (ii) create or suffer to be created any lien upon the Pledged Security or any part thereof other than the lien created hereby and by the Security Instrument.
Section 5.06. Damage, Destruction or Condemnation . Net Proceeds resulting from casualty to or condemnation of the Project shall be applied as provided in the Construction and Permanent Loan Agreement and, to the extent consistent therewith, Section 3.01(b)(i) hereof.
Section 5.07. Tax Covenants.
(a) Governmental Lender’s Covenants. The Governmental Lender covenants to and for the benefit of the Funding Lender that it will:
(i) neither make or use nor cause to be made or used any investment or other use of the proceeds of the Funding Loan or the money and investments held in the funds and accounts in any manner which would cause the Series B -1 Governmental Note to be an “ arbitrage bond” under Section 148 of the Code and the Regulations issued under Section 148 of the Code (the “Regulations”) or which would otherwise cause the interest payable on the Series B -1 Governmental Note to be includable in gross income of the Funding Lender for federal income tax purposes;
(ii) enforce or cause to be enforced all obligations of the Borrower under the Regulatory Agreement in accordance with its terms and seek to cause the Borrower to correct any violation of the Regulatory Agreement within a reasonable period after it first receives written notice of any such violation; (iii) not knowingly take or cause to be taken any other action or actions, or fail to take any action or actions, if the same would cause the interest payable on the Series B-1 Governmental Note to be includable in gross income for federal income tax purposes;
(iv) whenever and so often as requested by the Funding Lender, do and perform all acts and things permitted by law and necessary in order to en sure that DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
38 interest paid by the Governmental Lender on the Series B -1 Governmental Note will be excluded from the gross income of the holders of the Series B -1 Governmental Note, for federal income tax purposes; and (v) not knowingly take any action or permit or suffer any action to be taken if the result of the same would be to cause the Series B-1 Governmental Note to be “federally guaranteed” within the meaning of Section 149(b) of the Code and the Regulations.
In furtherance of the covenants in this Section 5.07, the Governmental Lender and the Borrower shall execute, deliver and comply with the provisions of the Tax Certificate, which is by this reference incorporated into this Funding Loan Agreement and made a part of this Funding Loan Agreement as if set forth in this Funding Loan Agreement in full, and by its acceptance of this Funding Loan Agreement the Fiscal Agent acknowledges receipt of the Tax Certificate and acknowledges its incorporation into this Funding Loan Agreement by this reference and agrees to comply with the terms specifically applicable to it.
For purposes of this Section 5.07(a): (1) the Governmental Lender is assuming, with the consent of the parties hereto, the truth of the covenants and representations of the Borrower in the Project Loan Agreeme nt, the Regulatory Agreement and the Tax Certificate, and the Borrower’ s compliance therewith; (2) the Governmental Lender’ s compliance shall be based solely on matters within the Governmental Lender’s knowledge and control; (3) no acts, omissions or directions of the Borrower, the Funding Lender or any other Persons shall be attributed to the Governmental Lender; and (4) in complying with the foregoing covenants, the Governmental Lender may rely on an opinion of Tax Counsel.
(b) Fiscal Agent’s Covenants. The Fiscal Agent agrees that it will invest funds held under this Funding Loan Agreement in accordance with the covenants and terms of this Funding Loan Agreement and the Tax Certificate (this covenant shall extend through the term of the Funding Loan, to all funds and accounts created under this Funding Loan Agreement and all money on deposit to the credit of any such fund or account). The Fiscal Agent covenants to and for the benefit of the Funding Lender that, notwithstanding any other provisions of this Funding Loan Agreement or of any other Financing Document, it will not knowingly make or cause to be made any investment or other use of the money in the funds or accounts created hereunder which would cause the Series B -1 Governmental Note to be classified as an “arbitrage bond” within the meaning of Sections 103(b) and 148 of the Code or would cause the interest on the Series B -1 Governmental Note to be includable in gross income for federal income tax purposes; provided that the Fiscal Agent shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows the written directions of the Borrower, the Governmental Lender, the Funding Lender Representative, Tax Counsel or the Rebate Analyst. This covenant shall extend, throughout the term of the Funding Loan, to all funds created under this Funding Loan Agreement and all money on deposit to the credit of any such fund.
Pursuant to this covenant, with respect to the investments of the funds and accounts under this Funding Loan Agreement, the Fiscal Agent obligates itself to comply throughout the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
39 term of the Funding Loan with the requirements of Sections 103(b) and 148 of the Code; provided that the Fiscal Agent shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows the written directions of the Borrower, the Governmental Lender, Tax Counsel or the Rebate Analyst. The Fiscal Agent further covenants that should the Governmental Lender or the Borrower file with the Fiscal Agent (it being understood that neither the Governmental Lender nor the Borrower has an obligation to so file), or should the Fiscal Agent receive, an opinion of Tax Counsel to the effect that any proposed investment or other use of proceeds of the Funding Loan would cause the Series B -1 Governmental Note to become an “ arbitrage bond,” then the Fiscal Agent will comply with any written instructions of the Governmental Lender, the Borrower, the Funding Lender Representative or Tax Counsel regarding such investment (which shall, in any event, be a Qualified Investment) or use so as to prevent the Series B- 1 Governmental Note from becoming an “arbitrage bond,” and the Fiscal Agent will bear no liability to the Governmental Lender, the Borrower, the Funding Lender or the Funding Lender Representative for investments made in accordance with such instructions.
In the event of any conflict between this Section 5.07 and the Tax Certificate, the terms of the Tax Certificate shall control.
Section 5.08. Representations and Warranties of the Governmental Lender. The Governmental Lender hereby represents and warrants as follows:
(a) The Governmental Lender is a municipal corporation and charter city of the State.
(b) The Governmental Lender has all necessary power and authority to execute and deliver the Governmental Note s and to execute and deliver this Funding Loan Agreement, the Project Loan Agreement and the other Financing Documents to which it is a party, and to perform its duties and discharge its obligations hereunder and thereunder. (c) The Revenues and Pledged Security are and will be free and clear of any pledge, lien or encumbrance prior to, or equal with, the pledge created by this Funding Loan Agreement, and all action on the part of the Governmental Lender to that end has been duly and validly taken.
(d) The Financing Documents to which the Governmental Lender is a party have been validly authorized, executed and delivered by the Governmental Lender and, assuming due authorization, execution and delivery by oth er parties thereto, constitute valid and binding obligations of the Governmental Lender, enforceable against the Governmental Lender in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights generally and the application of equitable principles.
THE GOVERNMENTAL LENDER MAKES NO REPRESENTATION, COVENANT
OR AGREEMENT AS TO THE FINANCIAL POSITION OR BUSINESS CONDITION OF
THE BORROWER OR THE PROJECT AND DOES NOT REPRESENT OR WARRANT AS
TO ANY STATEMENTS, MATERIALS, REPRESENTATIONS OR CERTIFICATIONS DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
40 FURNISHED BY THE BORROWER IN CONNECTION WITH THE FUNDING LOAN OR AS TO THE CORRECTNESS, COMPLETENESS OR ACCURACY THEREOF.
Section 5.09. Performance by the Borrower. Without relieving the Governmental Lender from the responsibility for performance and observance of the agreements and covenants required to be performed and observed by it hereunder (except with respect to Section 5.07(a)(ii)), the Borrower, on behalf of the Governmental Lender, may perform any such agreement or covenant so long as the Borrower is not in default (beyond any applicable notice and cure period) under the Project Loan Agreement.
Section 5.10. Immunities and Limitations of Responsibility of Governmental Lender. (a) The Governmental Lender shall be entitled to the advice of counsel, and the Governmental Lender shall be wholly protected as to action taken or omitted in reliance on such advice. The Governmental Lender may rely conclusively on any written notice or other document furnished to it hereunder or under the Project Loan Agreement and reasonably believed by it to be genuine. The Governmental Lender shall in no event be liable for the application or misapplication of funds or for other acts or defaults by any person, except its own officers and employees. When any payment or consent or other action by it is called for hereby, it may defer such action pending receipt of such evidence (if any) as it may require in support thereof (excluding the payment of any principal, interest or Prepayment Premium on the Governmental Note s to the extent the Borrower has properly paid such amounts to the Governmental Lender). The Governmental Lender shall not be required to take any remedial action (other than the giving of notice) hereunder or under any of the other Financing Documents unl ess indemnity in a form acceptable to the Governmental Lender is furnished for any expense or liability to be incurred in connection with such remedial action. The Governmental Lender shall be entitled to reimbursement from the Borrower for its expenses reasonably incurred or advances reasonably made, with interest at the maximum rate of interest permitted under applicable law, in the exercise of its rights or the performance of its obligations hereunder, to the extent that it acts without previously obtaining indemnity. No permissive right or power to act which the Governmental Lender may have shall be construed as a requirement to act; and no delay in the exercise of a right or power shall affect its subsequent exercise of the right or power.
(b) A default by the Borrower in any of its covenants, representations and agreements in the Project Loan Agreement, Regulatory Agreement or Tax Certificate on which the Governmental Lender is relying in the various sections of this Article V shall not be considered a default hereunder by the Governmental Lender. (c) The Borrower has indemnified the Governmental Lender against certain acts and events as set forth in Section 6.01 of the Project Loan Agreement and Section 9 of the Regulatory Agreement. Such indemnities shall s urvive payment of the Funding Loan and discharge of this Funding Loan Agreement.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
41 ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES OF FISCAL AGENT AND FUNDING LENDER
Section 6.01. Events of Default. Each of the following shall be an event of default with respect to the Funding Loan (an “Event of Default”) under this Funding Loan Agreement:
(a) failure to pay the principal of, premium, if any, or interest on the Funding Loan, as evidenced by the Governmental Notes, when due, whether on an Interest Payment Date, at the stated maturity thereof, by proceedings for prepayment thereof, by acceleration or otherwise; or
(b) failure to observe the covenants set forth in Section 5.05 hereof; or (c) Subject to Section 5.09, failure to observe or perform any of the covenants, agreements or conditions on the part of the Governmental Lender (other than those set forth in Sections 5.01 and 5.05 hereof) set forth in this Funding Loan Agreement or in the Governmental Notes and the continuance thereof for a period of 30 days (or such longer period, if any, as is specified herein for particular defaults) after written notice thereof to the Governmental Lender from the Fiscal Agent or the Funding Lender Representative specifying such default and requiring the same to be remedied; provided that if such default cannot be cured within such 30 day period through the exercise of diligence and the Governmental Lender commences the required cure within such 30 day period and continues the cure with diligence and the Governmental Lender reasonably anticipates that the default could be cured within 60 days, the Governmental Lender shall have 60 days following receipt of such notice to effect the cure; or (d) receipt by the Fiscal Agent of written notice from the Funding Lender Representative of the occurrence of an “ Event of Default” under any of the Project Loan Documents or any of the Construction Loan Documents.
The Fiscal Agent or the Funding Loan Representative will endeavor to provide a courtesy copy of any notice given to the Governmental Lender to the Borrower. However, the failure to provide such courtesy copy will not affect the validity or sufficiency of any notice provided to the Governmental Lender.
The Fiscal Agent will promptly notify the Governmental Lender, the Servicer and the Funding Lender Representative after a Responsible Officer obtains actual knowledge of the occurrence of an Event of Default or obtains actual knowledge of the occurrence of an event which would become an Event of Default with the passage of time or the giving of notice or both.
Section 6.02. Acceleration; Other Remedies Upon Event of Default . Upon the occurrence of an Event of Default, the Fiscal Agent shall, upon the written request of the Funding Lender Representative, by notice in writing delivered to the Governmental Lender (with a courtesy notice given to the Borrower), declare the principal of the Funding Loan, as evidenced by the Governmental Notes, and the interest accrued thereon immediately due and payable, and interest shall continue to accrue thereon until such amounts are paid.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
42 At any time after the Funding Loan 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 Fiscal Agent may, but only if directed in writing by the Funding Lender Representative, by written notice to the Governmental Lender, the Borrower, and the Fiscal Agent, rescind and annul such declaration and its consequences if the Governmental Lender or the Borrower shall pay to or deposit with the Fiscal Agent a sum sufficient to pay a ll principal on the Funding Loan then due (other than solely by reason of such declaration) and all unpaid installments of interest (if any) on the Funding Loan then due, with interest at the rate borne by the Funding Loan on such overdue principal and (to the extent legally enforceable) on such overdue installments of interest, and the reasonable fees and expenses of the Fiscal Agent (including its counsel) shall have been made good or cured or adequate provision shall have been made therefor, and all outstanding amounts then due and unpaid under the Financing Documents (collectively, the “Cure Amount”) shall have been paid in full, and all other defaults and Events of Default hereunder shall have been made good or cured or waived in writing by the Funding Lender Representative; but no such rescission and annulment shall extend to or shall affect any subsequent default or Events of Default, nor shall it impair or exhaust any right or power consequent thereon.
Upon the occurrence and during the continuance of an Event of Default, the Fiscal Agent in its own name and as trustee of an express trust, on behalf and for the benefit and protection of the Funding Lender, may also proceed to protect and enforce any rights of the Fiscal Agent and, to the full extent that the Funding Lender itself might do, the rights of the Funding Lender under the laws of the State or under this Funding Loan Agreement by such of the following remedies as the Fiscal Agent shall deem most effectual to protect and enforce such rights; pro vided that, the Fiscal Agent may undertake any such remedy only upon the receipt of the prior written consent of the Funding Lender Representative (which consent may be given in the sole discretion of the Funding Lender Representative):
(i) 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 Funding Loan and to require the Governmental Lender to carry out any covenants or agreements with or for the benefit of the Funding Lender and to perform its duties under the Act, this Funding Loan Agreement, the Project Loan Agreement or the Regulatory Agreement (as applicable) to the extent permitted under the applicable provisions thereof; (ii) by pursuing any available remedies under the Project Loan Agreement, the Regulatory Agreement or any other Financing Document;
(iii) by realizing or causing to be realized through sale or otherwise upon the security pledged hereunder; and
(iv) by action or suit in equity enjoin any acts or things that may be unlawful or in violation of the rights of the Funding Lender and execute any other papers and documents and do and perform any and all such acts and things as may be necessary or advisable in the opinion of the Fiscal Agent in order to have the claim of the Funding Lender against the Governmental Lender allowed in any bankruptcy or other proceeding.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
43 No remedy by the terms of this Funding Loan Agreement conferred upon or reserved to the Fiscal Agent or to the Funding Lender 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 Fiscal Agent or the Funding Lender hereunder or under the Project Loan Agreement, the Regulatory Agreement, the Construction and Permanent Loan Agreement or any other Financing Document, as applicable, or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any Event of Default hereunder, whether by the Fiscal Agent or the Funding Lender, 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. Funding Lender Representative Control of Proceedings. If an Event of Default has occurred and is continuing, notwithstanding anything to the contrary herein, the Funding Lender Representative shall have the sole and exclusive right at any time 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 Funding Loan Agreement, or for the appointment of a receiver or any other proceedings hereunder, in accordance with the provisions of law and of this Funding Loan Agreement. In addition, the Funding Lender Representative shall have the sole and exclusive right at any time to directly enforce all rights and remedies hereunder and under the other Financing Documents (excluding with respect to the Unassigned Rights) with or without the involvement of the Fiscal Agent or the Governmental Lender (and in connection therewith the Fiscal Agent shall transfer or assign to the Funding Lender Representative all of its interest in the Pledged Security at the request of the Funding Lender Representative) . In no event shall the exercise of any of the foregoing rights result in an acceleration of the Funding Loan without the express direction of the Funding Lender Representative.
Section 6.04. Waiver by Governmental Lender . Upon the occurrence of an Event of Default, to the extent that such right may then lawfully be waived, neither the Governmental Lender nor anyone claiming through or under it shall set up, claim or seek to take advantage of any appraisal, valuation, stay, extension or prepayment laws now or hereina fter in force, in order to prevent or hinder the enforcement of this Funding Loan Agreement; and the Governmental Lender, 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 prepayment to which it may be entitled under the laws of the State and the United States of America.
Section 6.05. Application of Money After Default. All money collected by the Fiscal Agent at any time pursuant to this Article shall, except to the extent, if any, otherwise directed by a court of competent jurisdiction, be credited by the Fiscal Agent to the Revenue Fund. Such money so credited to the Revenue Fund and all other money from time to time credited to the Revenue Fund shall at all times be held, transferred, withdrawn and applied as prescribed by the provisions of Article IV hereof and this Section 6.05.
In the event that at any time the money credited to the Revenue Fund, the Loan Payment Fund and the Loan Prepayment Fund available for the payment of interest or principal then due DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
44 with respect to the Governmental Notes shall be insufficient for such payment, such money shall be applied as follows and in the following order of priority:
(a) For payment of all amounts due to the Fiscal Agent incurred in performance of its duties under this Funding Loan Agreement, including, without limitation, the payment of all reasonable fees and expenses of the Fiscal Agent incurred in exercising any remedies under this Funding Loan Agreement.
(b) To the extent directed in writing by the Funding Lender Representative, to the reimbursement of any unreimbursed advances made by or on behalf of the Funding Lender pursuant to the Construction and Permanent Loan Agreement or the Security Instrument.
(c) Unless the full principal amount of the Funding Loan shall have become or have been declared due and payable:
FIRST: to the Funding Lender, all installments of interest then due and payable on the Funding Loan in the order of the maturity of such installments; and SECOND: to the Funding Lender, unpaid principal of and Prepayment Premium, if any, on the Funding Loan that shall have become due, whether at maturity or by call for prepayment, in the order in which they became due and payable.
(d) If the full principal amount of the Governmental Note s shall have become or have been declared due and payable, to the Funding Lender for the payment of the principal of, premium, if any, interest and any other amounts then due and unpaid on the Funding Loan, in such order as the Funding Lender shall determine in its sole and absolute discretion.
(e) To the payment of any and all amounts due under the Financing Documents other the amounts described in subsections (b), (c) and (d) above, including, without limitation, any amounts due to the Governmental Lender, the Funding Lender, the Servicer and the Rebate Analyst.
(f) The remainder, if any, to the Borrower or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
Section 6.06. Remedies Not Exclusive. No right or remedy conferred upon or reserved to the Fiscal Agent, the Funding Lender or the Funding Lender Representative by the terms of this Funding Loan Agreement is intended to be exclusive of any other right or remedy, but ea ch and every such remedy shall be cumulative and shall be in addition to every other right or remedy given to the Fiscal Agent, the Funding Lender or the Funding Lender Representative under this Funding Loan Agreement or existing at law or in equity or by statute (including the Act).
Section 6.07. Fiscal Agent May Enforce Rights Without Governmental Note s. All rights of action and claims, including the right to file proof of claims, under this Funding Loan Agreement may be prosecuted and enforced by the Fiscal Agent a t the written direction of the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
45 Funding Lender Representative without the possession of the Governmental Note s or the production thereof in any trial or other proceedings relating thereto. Subject to the rights of the Funding Lender Representative to direc t proceedings hereunder, any such suit or proceeding instituted by the Fiscal Agent shall be brought in its name as Fiscal Agent without the necessity of joining as plaintiffs or defendants any Funding Lender, and any recovery or judgment shall be for the benefit as provided herein of the Funding Lender.
Section 6.08. [Reserved].
Section 6.09. Termination of Proceedings. In case the Fiscal Agent (at the written direction of the Funding Lender Representative) or the Funding Lender Representative shall have proceeded to enforce any right under this Funding Loan Agreement 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 Governmental Lender, the Fiscal Agent, the Funding Lender Representative, the Borrower and the Funding Lender shall be restored to their former positions and rights hereunder with respect to the Pledged Security herein conveyed, and all rights, remedies and powers of the Fiscal Agent and the Funding Lender Representative shall continue as if no such proceedings had been taken.
Section 6.10. Waivers of Events of Default. The Fiscal Agent shall waive any Event of Default hereunder and its consequences (except with respect to Unassigned Rights) and rescind any declaration of maturity of principal of and interest on the Funding Loan upon the written direction of the Funding Lender Representative. In case of any such waiver or rescission, or in case any proceeding taken by the Fiscal Agent on account of any such Event of Default shall have been discontinued or abandoned or determined adversely, then and in every such case the Governmental Lender, the Fiscal Agent, the Borrower, the Servicer, the Funding Lender Representative and the Funding Lender shall be restored to their former positions and rights hereunder, respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereto.
Section 6.11. Interest on Unpaid Amounts and Default Rate for Nonpayment. In the event that principal of or interest payable on the Funding Loan is not paid when due, there shall be payable on the amount not timely paid, on each Interest Payment Date, interest at the Default Rate, to the extent permitted by law. Interest on the Funding Loan shall accrue at the Default Rate until the unpaid amount, together with interest thereon, shall have been paid in full.
Section 6.12. [Reserved].
Section 6.13. Substitution. Upon receipt of written notice from the Funding Lender Representative and the written approval of the Governmental Lender as and to the extent permitted under the Regulatory Agreement in connection with a transfer of the Project, the Fiscal Agent shall exchange the outstanding Project Not es and the Security Instrument for new Project Note s and Security Instrument, evidencing and securing a new loan or loans (the “New Project Loan”), which may be executed by a person other than the Borrower (the “ New Borrower”), provided that if the Fiscal Agent, the Funding Lender or a nominee of the Fiscal Agent or the Funding Lender has acquired the Project through foreclosure, by accepting a deed in lieu of foreclosure or by comparable conversion of the Project, no approval from the Governmental Lender of such DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
46 exchange shall be required. Prior to accepting a New Project Loan, the Fiscal Agent shall have received (i) written evidence that the New Borrower shall have executed and recorded a document substantially in the form of the Regulatory Agreement (or executed and recorded an assu mption of all of the Borrower’ s obligations under the Regulatory Agreement) and that the Project Loan Documents have been modified as necessary to be applicable to the New Project Loan, and (ii) an opinion of Tax Counsel, to the effect that such exchange a nd modification, in and of itself, shall not affect the tax -exempt status for federal income tax purposes of the interest payable on the Series B-1 Governmental Note.
ARTICLE VII
CONCERNING THE FISCAL AGENT
Section 7.01. Standard of Care. The Fiscal Agent, prior to an Event of Default as defined in Section 6.01 hereof and after the curing or waiver of all such events which may have occurred, shall perform such duties and only such duties as are specifically set forth in this Funding Loan Agreement. The Fiscal Agent, during the existence of any such Event of Default (which shall not have been cured or waived), shall exercise such rights and powers vested in it by this Funding Loan Agreement and use the same degree of care and skill in its exercise as a prudent person would exercise or use under similar circumstances in the conduct of such person’s own affairs.
No provision of this Funding Loan Agreement shall be construed to relieve the Fiscal Agent from liability for its breach of trust, own negligence or willful misconduct, except that:
(a) prior to an Event of Default hereunder, and after the curing or waiver of all such Events of Default which may have occurred:
(i) the duties and obligations of the Fiscal Agent shall be determined solely by the express provisions of this Funding Loan Agreement, and the Fiscal Agent shall not be liable except with regard to the performance of such duties and obligations as are specifically set forth in this Funding Loan Agreement; and (ii) in the absence of bad faith on the part of the Fiscal Agent, the Fiscal Agent 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 Fiscal Agent by the Person or Persons authorized to furnish the same; (b) at all times, r egardless of whether or not any such Event of Default shall exist:
(i) the Fiscal Agent shall not be liable for any error of judgment made in good faith by an officer or employee of the Fiscal Agent except for willful misconduct or negligence by the officer or employee of the Fiscal Agent as the case may be; and
(ii) the Fiscal Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the Funding Lender Representative relating to the time, method and place of DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
47 conducting any proceeding for any remedy available to the Fiscal Agent, or exercising any duty or power conferred upon the Fiscal Agent under this Funding Loan Agreement.
Section 7.02. Reliance Upon Documents. Except as otherwise provided in Section 7.01 hereof:
(a) the Fiscal Agent 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 resolution, 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, including any Electronic Notice as permitted hereunder or under the Project Loan Agreement;
(b) any notice, request, direction, election, order or demand of the Governmental Lender mentioned herein shall be sufficiently evidenced by an instrument signed in the name of the Governmental Lender by an Authorized Officer of the Governmental Lender (unless other evidence in respect thereof be herein specifically prescribed), and any resolution of the Governmental Lender may be evidenced to the Fiscal Agent by a copy of such resolution duly certified by an Authorized Officer of the Governmental Lender;
(c) any notice, request, certificate, statement, requisition, direction, election, order or demand of the Borrower mentioned herein shall be sufficiently evidenced by an instrument purporting to be signed in the name of the Borrower by any Authorized Officer of the Borrower (unless other evidence in respect thereof be herein specifically prescribed), and any resolution or certification of the Borrower may be evidenced to the Fiscal Agent by a copy of such resolution duly certified by a secretary or other authorized representative of the Borrower;
(d) any notice, request, certificate, statement, requisition, direction, election, order or demand of the Servicer mentioned herein shall be sufficiently evidenced by an instrument signed in the name of the Servicer by an Authorized Officer of the Servicer (unless other evidence in respect thereof be herein specifically prescribed); (e) any notice, request, direction, election, order or demand of the Funding Lender Representative mentioned herein shall be sufficiently evidenced by an instrument purporting to be signed in the name of the Funding Lender Representative by any Authorized Officer of the Funding Lender Representative (unless other evidence in respect thereof be herein specifically prescribed);
(f) [Intentionally Omitted];
(g) [Intentionally Omitted];
(h) in the administration of the trusts of this Funding Loan Agreement, the Fiscal Agent may execute any of the trusts or powers hereby granted directly or through its agents, receivers or attorneys, and the Fiscal Agent may consult with counsel (who may be DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
48 counsel for the Governmental Lender, the Servicer or the Funding Lender Representative) 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;
(i) whenever in the administration of the trusts of this Funding Loan Agreement, the Fiscal Agent 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 prescribed), may in the absence of negligence or willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of an officer or authorized agent of the Governmental Lender or the Borrower and such certificate shall in the absence of bad faith on the part of the Fiscal Agent be full warrant to the Fiscal Agent for any action take n or permitted by it under the provisions of this Funding Loan Agreement, but in its discretion the Fiscal Agent may in lieu thereof accept other evidence of such matter or may require such further or additional evidence as it may deem reasonable; (j) the recitals herein and in the Governmental Notes (except the Fiscal Agent’s certificate of authentication thereon) shall not be considered as made by or imposing any obligation or liability upon the Fiscal Agent. The Fiscal Agent makes no representations as to the value or condition of the Pledged Security or any part thereof, or as to the title of the Governmental Lender or the Borrower to the Pledged Security, or as to the security of this Funding Loan Agreement, or of the Governmental Note s issued hereunder, a nd the Fiscal Agent shall incur no liability or responsibility in respect of any of such matters; (k) the Fiscal Agent shall not be personally liable for debts contracted or liability for damages incurred in the management or operation of the Pledged Security except for its own willful misconduct or negligence; and every provision of this Funding Loan Agreement relating to the conduct or affecting the liability of or affording protection to the Fiscal Agent shall be subject to the provisions of this Section 7.02(k); (l) the Fiscal Agent shall not be required to ascertain or inquire as to the performance or observance of any of the covenants or agreements (except to the extent they obligate the Fiscal Agent) herein or in any contracts or securities assigned or conveyed to or pledged with the Fiscal Agent hereunder, except Events of Default that are evident under Section 6.01(a) hereof. The Fiscal Agent 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 (except defaults under Section 6.01(a) hereof to the extent they are collecting loan payments hereunder) unless the Fiscal Agent shall receive from the Governmental Lender or the Funding Lender Representative written notice stating that a default or Event of Default has occurred and specifying the same, and in the absence of such notice the Fiscal Agent may conclusively assume that there is no such default. Every provision contained in this Funding Loan Agreement or related instruments or in any such contract or security wherein the duty of the Fiscal Agent depends on the occurrence and continuance of such default shall be subject to the provisions of this Section 7.02(l); DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
49 (m) the Fiscal Agent shall be under no duty to confi rm or verify any financial or other statements or reports or certificates furnished pursuant to any provisions hereof, except to the extent such statement or reports are furnished by or under the direction of the Fiscal Agent, 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 Funding Lender; and
(n) the Fiscal Agent shall be under no obligation to exercise those rights or powers vested in it by this Funding Loan Agreement, other than such rights and powers which it shall be obliged to exercise in the ordinary course of acting as Fiscal Agent under the terms and provisions of this Funding Loan Agreement and as required by law, at the request or direction of the Funding Lender Representative pursuant to Section 6.03 hereof, unless the Funding Lender Representative shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in the compliance with such request or direction.
None of the provisions contained in this Funding Loan Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.
The Fiscal Agent is authorized and directed to execute in its capacity as Fiscal Agent, the Project Loan Agreement and the Regulatory Agreement and shall have no responsibility or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the delivery of the Governmental Notes.
The Fiscal Agent or any of its affiliates may act as advisor or sponsor with respect to any Qualified Investments.
The Fiscal Agent agrees to accept and act upon Electronic Notice of written instructions and/or directions pursuant to this Funding Loan Agreement.
Any resolution, certification, notice, request, direction, election, order or demand delivered to the Fiscal Agent pursuant to this Section 7.02 shall remain in effect until the Fiscal Agent receives written notice to the contrary from the party that delivered such instrument accompanied by revised information for such party.
The Fiscal Agent shall have no responsibility for the value of any collateral or with respect to the perfection or priority of any security interest in any collateral except as otherwise provided in Section 7.17 hereof.
Section 7.03. Use of Proceeds. The Fiscal Agent shall not be accountable for the use or application of the Governmental Notes authenticated or delivered hereunder or of the proceeds of the Funding Loan except as provided herein.
Section 7.04. [Reserved].
Section 7.05. Trust Imposed. All money received by the Fisc al Agent shall, until used or applied as herein provided, be held in trust for the purposes for which it was received.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
50 Section 7.06. Compensation of Fiscal Agent . The Fiscal Agent shall be entitled to its Ordinary Fiscal Agent’s Fees and Expenses in connection with t he services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties of the Fiscal Agent hereunder or under any Financing Document to the extent money is available therefor, in accordance with Section 4.06 hereof, exclusive of Extraordinary Services.
The Fiscal Agent shall be entitled to Extraordinary Fiscal Agent’s Fees and Expenses in connection with any Extraordinary Services performed consistent with the duties hereunder or under a ny of the Financing Documents; provided the Fiscal Agent shall not incur any Extraordinary Fiscal Agent’s Fees and Expenses without the consent of the Funding Lender Representative which shall not be unreasonably withheld, conditioned or delayed. If any property, other than cash, shall at any time be held by the Fiscal Agent subject to this Funding Loan Agreement, or any supplement hereto, as security for the Funding Loan, the Fiscal Agent, if and to the extent authorized by a receivership, bankruptcy, or other court of competent jurisdiction or by the instrument subjecting such property to the provisions of this Funding Loan Agreement as such security for the Funding Loan, shall be entitled to make advances for the purpose of preserving such property or of discharging tax liens or other liens or encumbrances thereon. Payment to the Fiscal Agent for its services and reimbursement to the Fiscal Agent for its expenses, disbursements, liabilities and advances, shall be limited to the sources described in the P roject Loan Agreement and in Sections 4.06, 4.11 and 6.05 hereof. The Governmental Lender shall have no liability for Fiscal Agent’s fees, costs or expenses. Subject to the provisions of Section 7.09 hereof, the Fiscal Agent agrees that it shall continue to perform its duties hereunder and under the Financing Documents even in the event that money designated for payment of its fees shall be insufficient for such purposes or in the event that the Borrower fails to pay the Ordinary Fiscal Agent ’s Fees and Expenses or, if applicable, the Extraordinary Fiscal Agent’s Fees and Expenses as required by the Project Loan Agreement.
The Borrower shall indemnify and hold harmless the Fiscal Agent and its officers, directors, officials, employees, agents, receivers, attorneys, accountants, advisors, consultants and servants, past, present or future, from and against (a) any and all claims by or on behalf of any person arising from any cause whatsoever in connection with the Project Loan Documents, this Funding Loan Agreement or transactions contemplated hereby, the Project, or the delivery of the Governmental Notes or the Loans; (b) any and all claims arising from any act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Project, or the delivery of the Governmental Note s or the Loans; and (c) all costs, counsel fees, expenses or liabilities incurred in connection with any such claim or proceeding brought thereon; except that the Borrower shall not be required to indemnify any person for damages caused by the gross negligence, willful misconduct or unlawful acts of such person or which arise from events occurring after the Borrower ceases to own the Project. In the event that any action or proceeding is brought or claim made against the Fiscal Agent, or any of its officers, directors, officials, employees, agents, receivers, attorneys, accountants, advisors, consultants or servants, with respect to which indemnity may be sought hereunder, the Borrower, upon written notice thereof from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel and the payment of all expenses. The indemnified party shall have the right to approve a settlement to which it is a party and to employ separate counsel in any such action or proceedings and to participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel. The provisions of this Section 7.06 shall survive the termination of this Funding Loan Agreement.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
51 Section 7.07. Qualifications of Fiscal Agent. There shall at all times be a Fiscal Agent hereunder which shall be an association or 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 corporate trust powers in the State and approved in writing by the Governmental Lender. Any successor Fiscal Agent shall have a combined capital and surplus of at least $50,000,000 (or shall be a wholly-owned subsidiary of an association or corporation that has such combined capital and surplus), and be subject to supervision or examination by federal or state authority, or shall have been appointed by a court of competent jur isdiction pursuant to Section 7.11 hereof. If such association or corporation publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority referred to above, then for the purposes of this Section 7.07, the combined capital and surplus of such association or corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Fiscal Agent shall cease to be eligible in accordance with the provisions of this Section 7.07 and another association or corporation is eligible, the Fiscal Agent shall resign immediately in the manner and with the effect specified in Section 7.09 hereof.
Section 7.08. Merger of Fiscal Agent . Any association or corporation into which the Fiscal Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any association or corporation resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party shall, ipso facto, be and become successor Fiscal Agent hereunder and vested with all the title to the whole property or Pledged S ecurity and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instruments or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding, and shall also be and become successor Fiscal Agent in respect of the legal interest of the Fiscal Agent in the Loans.
Notwithstanding the foregoing, the Fiscal Agent, in anticipation of such merger, or any such successor Fiscal Agent, shall cause written notice of such succession to be delivered to the Governmental Lender and the Funding Lender as soon as reasonably practicable, but in any case , not later than 30 days following such succession.
Section 7.09. Resignation by the Fiscal Agent. The Fiscal Agent may at any time resign from the trusts hereby created by giving written notice to the Governmental Lender, the Borrower, the Servicer and the Funding Lender Representative. Such notice to the Governmental Lender, the Borrower, the Servicer and the Funding Lender Representative may be served personally or sent by certified mail or overnight delivery service. The resignation of the Fiscal Agent shall not be effective until a successor Fiscal Agent has been appointed as pro vided herein and such successor Fiscal Agent shall have agreed in writing to be bound by the duties and obligations of the Fiscal Agent hereunder.
Section 7.10. Removal of the Fiscal Agent . The Fiscal Agent may be removed at any time, either with or without cause, with the written consent of the Funding Lender Representative (which consent of the Funding Lender Representative shall not be unreasonably withheld), by a written instrument signed by the Governmental Lender and delivered to the Fiscal Agent, the Servicer and the Borrower. The Fiscal Agent may also be removed by a written instrument signed by the Funding Lender Representative, with the written consent of the Governmental Lender, and delivered to the Fiscal Agent, the Servicer, the Governmental Lender and the Borrower. In each DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
52 case written notice of such removal shall be given to the Servicer, the Borrower and to the Funding Lender. Any such removal shall take effect on the day specified in such written instrument(s), but the Fiscal Agent shall not be discharged from the duties of the Fiscal Agent hereby created until a successor Fiscal Agent has been appointed and has accepted such appointment and has agreed in writing to be bound by the duties and obligations of the Fiscal Agent hereunder.
Section 7.11. Appointment of Successor Fiscal Agent.
(a) In case at any time the Fiscal Agent 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 shall be adjudged a bankrupt or insolvent, or if a receiver of the Fiscal Agent or of its property shall be appointed, or if a public supervisory office shall take charge or control of the Fiscal Agent or of its property or affairs, a vacancy shall forthwith and ipso facto be created in the office of such Fiscal Agent hereunder, and the Governmental Lender, with the written consent of the Funding Lender Representative, shall promptly appoint a successor Fiscal Agent. Any such appointment shall be made by a written instrument executed by an Authorized Officer of the Governmental Lender. If the Governmental Lender fails to appoint a successor Fiscal Agent within 10 days following the resignation or removal of the Fiscal Agent pursuant to Section 7.09 or Section 7.10 hereunder, as applicable, the Funding Lender Representative may appoint a successor Fiscal Agent (from any of the institutions approved by the Governmental Lender to serve as a fiscal agent or trustee) with written notice thereof delivered to the Governmental Lender, the Borrower, the Ser vicer, if any, and if applicable, the retiring Fiscal Agent.
(b) If, in a proper case, no appointment of a successor Fiscal Agent shall be made pursuant to subsection (a) of this Section 7.11 within 60 days following delivery of all required notices of resigna tion given pursuant to Section 7.09 hereof or of removal of the Fiscal Agent pursuant to Section 7.10 hereof, the retiring Fiscal Agent may apply to any court of competent jurisdiction, at the expense of the Borrower, to appoint a successor Fiscal Agent. The court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Fiscal Agent.
Section 7.12. Concerning Any Successor Fiscal Agent . Every successor Fiscal Agent appointed hereunder shall execute, acknowledge and del iver to its predecessor and also to the Governmental Lender a written instrument accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the Pledged Security and the rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of the Governmental Lender, the Borrower or the Funding Lender Representative, or of its successor, and upon payment of al l amounts due such predecessor, including but not limited to fees and expenses of counsel, execute and deliver such instruments as may be appropriate to transfer to such successor Fiscal Agent all the Pledged Security and the rights, powers and trusts of s uch predecessor hereunder; and every predecessor Fiscal Agent shall deliver all securities and money held by it as Fiscal Agent hereunder to its successor. Should any instrument in writing from the Governmental Lender be required by a successor Fiscal Agent for more fully and certainly vesting in such successor the Pledged Security and all rights, powers and duties hereby vested or intended to be vested in the predecessor, any DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
53 and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Governmental Lender. The resignation of any Fiscal Agent and the instrument or instruments removing any Fiscal Agent and appointing a successor hereunder, together with all other instruments provided for in this Article, shall be filed and/or recorded by the successor Fiscal Agent in each recording office where this Funding Loan Agreement shall have been filed and/or recorded. Each successor Fiscal Agent shall mail notice by first class mail, postage prepaid, at least once within 30 days of such appointment, to the Funding Lender. No successor Fiscal Agent shall accept its appointment unless at the time of such acceptance such successor Fiscal Agent shall be qualified and eligible under this Article, to the extent operative.
Section 7.13. [Reserved].
Section 7.14. Appointment of Co-Fiscal Agent or Separate Fiscal Agent. It is the intent of the Governmental Lender and the Fiscal Agent 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 banking corporations or associations to transact business as Fiscal Agent in such jurisdiction. It is recognized that in case of litigation under or connected with this Funding Loan Agreement, the Project Loan Agreement or any of the other Financing Documents, and, in particular, in case of the enforcement of any remedies on default, or in case the Fiscal Agent 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 Fiscal Agent or hold title to the properties in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary, and the Fiscal Agent is hereby authorized upon written notice to the Governmental Letter, Funding Lender Representative and the Borrower, and with the consent of the Governmental Lender and the Funding Lender Representative, to appoint an additional individual or institution as a co-fiscal agent or separate fiscal agent.
In the event that the Fiscal Agent appoints an additional individual or institution as a co - fiscal agent or separate fiscal agent, in the event of the incapacity or lack of authority of the Fiscal Agent, by reason of any present or future law of any jurisdiction, to exercise any of the rights, powers, trusts and remedies granted to the Fiscal Agent herein or to hold title to the Pledged Security or to take any other action that may be necessary or desirable in connection therewit h, each and every remedy, power, right, obligation, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Funding Loan Agreement to be imposed upon, exercised by or vested in or conveyed to the Fiscal Agent with respect thereto shall be imposed upon, exercisable by and vest in such separate fiscal agent or co-fiscal agent, but only to the extent necessary to enable such co -fiscal agent or separate fiscal agent to exercise such powers, rights, trusts and remedies, and every covenant and obligation necessary to the exercise thereof by such co-fiscal agent or separate fiscal agent shall run to and be enforceable by either of them, subject to the remaining provisions of this Section 7.14. Such co- fiscal agent or separate fiscal agent shall deliver an instrument in writing acknowledging and accepting its appointment hereunder to the Governmental Lender and the Fiscal Agent.
Should any instrument in writing from the Governmental Lender be required by the co- fiscal agent or separate fiscal agent so appointed by the Fiscal Agent for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
54 by the Governmental Lender, the Fiscal Agent and the Borrower. If the Governmental Lender shall fail to deliver the same within 30 days of such request, the Fiscal Agent is hereby appointed attorney-in-fact for the Governmental Lender to execute, acknowledge and deliver such instruments in the Governmental Lender’s name and stead. In case any co-fiscal agent or separate fiscal agent, or a successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such co -fiscal agent or separate fiscal agent, so far as permitted by law, shall vest in and be exercised by the Fiscal Agent until the appointment of a new Fiscal Agent or successor to such co-fiscal agent or separate fiscal agent.
Every co-fiscal agent or separate fiscal agent shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely:
(a) the Governmental Notes shall be authenticated and delivered, and all rights, powers, trusts, duties and obligations by this Funding Loan Agreement conferred upon the Fiscal Agent in respect of the custody, control or management of money, papers, securities and other personal property shall be exercised solely by the Fiscal Agent; (b) all rights, powers, trusts, duties and obligations conferred or imposed upon the Fiscal Agent shall be conferred or imposed upon or exercised or performed by the Fiscal Agent, or by the Fiscal Agent and such co -fiscal agent, or separate fiscal agent jointly, as shall be provided in the instrument appointing such co-fiscal agent or separate fiscal agent, except to the extent that under the law of any jurisdiction in which any particular act or acts are to be performed the Fiscal Agent shall be incompetent or unqualified to perform such act or acts, in which event such act or acts shall be performed b y such co-fiscal agent or separate fiscal agent;
(c) any request in writing by the Fiscal Agent to any co-fiscal agent or separate fiscal agent 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-fiscal agent or separate fiscal agent;
(d) any co-fiscal agent or separate fiscal agent to the extent permitted by law shall delegate to the Fiscal Agent the exercise of any right, power, trust, duty or obligation, discretionary or otherwise;
(e) the Fiscal Agent, at any time by an instrument in writing with the written concurrence of the Governmental Lender by an Authorized Officer, may accept the resignation of or remove any co -fiscal agent or separate fiscal agent appointed under this Section 7.14 and in case an Event of Default shall have occurred and be continuing, the Fiscal Agent shall have power to accept the resignation of or remove any such co -fiscal agent or separate fiscal agent without the concurrence of the Governm ental Lender, and upon the request of the Fiscal Agent, the Governmental Lender shall join with the Fiscal Agent 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-fiscal agent or separate fiscal agent so resigned or removed may be appointed in the manner provided in this Section 7.14;
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
55 (f) no Fiscal Agent or co- fiscal agent hereunder shall be personally liable by reason of any act or omission of any other Fiscal Agent hereunder; (g) any demand, request, direction, appointment, removal, notice, consent, waiver or other action in writing executed by the Funding Lender Representative and delivered to the Fiscal Agent shall be deemed to have been delivered to each such co-fiscal agent or separate fiscal agent; and
(h) any money, papers, securities or other items of personal property received by any such co-fiscal agent or separate fiscal agent hereunder shall forthwith, so far as may be permitted by law, be turned over to the Fiscal Agent.
The total compensation of the Fiscal Agent and any co-fiscal agent or separate fiscal agent shall be as, and may not exceed the amount, provided in Section 7.06 hereof.
Section 7.15. Notice of Certain Events. The Fiscal Agent shall give written notice to the Governmental Lender, the Servicer and the Funding Lender Representative of any failure by the Borrower to comply with the terms of the Regulatory Agreement or any Determination of Taxability of which a Responsible Officer has actual knowledge.
Section 7.16. [Reserved].
Section 7.17. Filing of Financing Statements. The Fiscal Agent shall, at the expense of the Borrower, at the direction of the Servicer, file or record or cause to be filed or recorded all UCC continuation statements for the purpose of continuing without lapse the effectiveness of those financing statements which have been filed on or approximately on the Delivery Date in connection with the security for the Funding Loan pursuant to the authority of the UCC. Upon the filing of any such continuation statement the Fiscal Agent shall immediately notify the Governmental Lender, the Borrower, the Funding Lender Representative and the Servicer that the same has been done. If direction is given by the Servicer or the Funding Lender Representative, the Fiscal Agent shall file all continuation statements in accordance with such directions.
Section 7.18. USA Patriot Act Requirements of the Fiscal Agent. To help the government of the United States of America fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. For a non-individual Person such as a business entity, a charity, a trust, or other legal entity, the Fiscal Agent may request documentation to verify such Person ’s formation and existence as a legal entity. The Fiscal Agent may also request financial statements, licenses, identification and authorization documents from individuals claiming authority to represent such Person or other relevant documentation.
ARTICLE VIII
AMENDMENTS OF CERTAIN DOCUMENTS
Section 8.01. Amendments to This Funding Loan Agreement. Any of the terms of this Funding Loan Agreement and the Governmental Note s may be amended or waived only by an DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
56 instrument signed by the Fiscal Agent and the Governmental Lender, and in each case only with the prior written consent of the Funding Lender Representative.
Section 8.02. Amendments to Financing Documents Require Consent of Funding Lender Representative. Neither the Governmental Lender nor the Fiscal Agent shall consent to any amendment, change or modification of any Financing Document without the prior written consent of the Funding Lender Representative. The Fiscal Agent shall enter into such amendments to the Financing Documents as shall be directed by the Funding Lender Representative, including entering into the amendments attached as exhibits to the Construction and Permanent Loan Agreement on the Conversion Date.
Section 8.03. Opinion of Tax Counsel Required. No amendment to this Funding Loan Agreement, the Governmental Notes, the Project Loan Agreement, the Project Notes, the Security Instrument or the Regulatory Agreement shall become effective unless and until (i) the Funding Lender Representative shall have consented to the same in writing in its sole discretion and (ii) the Funding Lender Representative, the Governmental Lender and the Fiscal Agent shall have received, at the expense of the Borrower, (A) a No Adverse Effect Opinion with respect to such amendment, change or modification, and (B) an opinion of counsel acceptable to the Funding Lender Representative and the Governmental Lender to the effect that any such proposed such amendment, change or modification is authorized and complies with the provisions of this Funding Loan Agreement and is a legal, valid and binding obligation of the parties thereto, subject to normal exceptions relating to bankruptcy, insolvency and equitable principles limitations.
ARTICLE IX
SATISFACTION AND DISCHARGE OF FUNDING LOAN AGREEMENT
Section 9.01. Discharge of Lien . If the Governmental Lender shall pay or cause to be paid to the Funding Lender the principal, interest and premium, if any, to become due with respect to the Funding Loan at the times and in the manner stipulated herein and in the Governmental Notes, in any one or more of the following ways:
(a) by the payment of all unpaid principal of (including Prepayment Premium, if any) and interest on the Funding Loan;
(b) after the Conversion Date (or, if the Conversion D ate does not occur, the latest date on which Conversion was permitted to occur under the Loan Purchase Agreement), by the deposit to the account of the Fiscal Agent, in trust, of money or securities in the necessary amount to pay the principal, Prepayment Premium and interest to the Maturity Date; or
(c) by the delivery of the Governmental Note s by the Funding Lender to the Fiscal Agent for cancellation;
and shall have paid all amounts due and owing under the other Financing Documents, and shall have paid, or caused to be paid, all fees and expenses of and any other amounts due to the Fiscal Agent, the Servicer and the Rebate Analyst, and if the Governmental Lender shall keep, perform and observe all and singular the covenants and promises in the Governmental N otes and DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
57 in this Funding Loan Agreement expressed as to be kept, performed and observed by it or on its part, then these presents and the estates and rights hereby granted shall cease, determine and be void, and thereupon the Fiscal Agent shall cancel and discharge the lien of this Funding Loan Agreement and execute and deliver to the Governmental Lender such instruments in writing as shall be requisite to satisfy the lien hereof, and reconvey to the Governmental Lender the estate hereby conveyed, and assign and deliver to the Governmental Lender any interest in property at the time subject to the lien of this Funding Loan Agreement which may then be in its possession, except amounts held by the Fiscal Agent for the payment of principal of, interest and Prepayment Premium, if any, on the Governmental Notes, and the payment of any amounts owed to the United States of America pursuant to Section 4.12 hereof.
After the Conversion Date (or, if the Conversion Date does not occur, the latest date on which Conversion was permitted to occur under the Loan Purchase Agreement) and subject to the satisfaction of the conditions set forth in Section 4.04(c) of the Project Loan Agreement, the Funding Loan shall, prior to the Maturity Date, be deemed to have been paid within the meaning and with the effect expressed in the first paragraph of this Section 9.01 based on a deposit of moneys or securities with the Fiscal Agent pursuant to Section 9.01(b) if, under circumstances that do not cause interest on the Series B -1 Governmental Note to become includable in the holders’ gross income for purposes of federal income taxation, the following conditions shall have been fulfilled: (a) there shall be on deposit with the Fiscal Agent either money or noncallable and nonprepayable direct obligations of the United States of America (or other defeasance securities constituting Qualified Investments approved in writing by the Funding Lender Representative) in an amount, together with anticipated earnings thereon (but not including any reinvestment of such earnings), which will be sufficient to pay, when due, the principal and interest due and to become due on the Funding Loan up to and on the applicable Maturity Date; (b) the Fiscal Agent shall have received a verification report of a firm of certified public accountants or financial analyst reasonably acceptable to the Fiscal Agent and the Funding Lender Representative as to the adequacy of the amounts or securities so deposited to fully pay the Funding Loan; (c) the Fiscal Agent and the Funding Lender Representative shall have received a written opinion of nationally recognized counsel experienced in bankruptcy matters to the effect that if the Borrower, any general partner, member or guarantor of the Borrower, or the Governmental Lender were to become a debtor in a proceeding under the Bankruptcy Code (x) payment of such money to the Funding Lender would not constitute a voidable preference under Section 547 of the Bankruptcy Code and (y) the automatic stay provisions of Section 362(a) of the Bankruptcy Code would not prevent application of such money to the payment of the Funding Loan; (d) the Fiscal Agent and the Funding Lender Representative shall have received an opinion of Tax Counsel to the effect that the defeasance of the Funding Loan is in accordance with the provisions of this Funding Loan Agreement and that such defeasance will not adversely affect the exclusion of interest on the Series B-1 Governmental Note from gross income for federal income tax purposes; (e) the Fiscal Agent shall have received written confirmation that all fees, expenses or reimbursement of any advances due to the Funding Lender and the Servicer under the Financing Documents have been fully paid; and (f) all fees and expenses of the Fiscal Agent have been paid.
Section 9.02. Discharge of Liability on Funding Loan. Upon the deposit with the Fiscal Agent, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 9.01 above) to pay or prepay the Funding Loan (whether upon or prior to the applicable Maturity Date or the prepayment date of the Funding Loan) provided that, if the Funding Loan is DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
58 to be prepaid prior to the maturity thereof, notice of such prepayment shall have been given as in Article III provided or provision satisf actory to the Fiscal Agent shall have been made for the giving of such notice, all liability of the Governmental Lender in respect of the Funding Loan shall cease, terminate and be completely discharged, except only that thereafter the Funding Lender shall be entitled to payment by the Governmental Lender, and the Governmental Lender shall remain liable for such payment, but only out of the money or securities deposited with the Fiscal Agent as aforesaid for their payment, subject, however, to the provisions of Section 9.03 hereof.
Section 9.03. Payment of Funding Loan After Discharge of Funding Loan Agreement. Notwithstanding any provisions of this Funding Loan Agreement, and subject to applicable unclaimed property laws of the State, any money deposited with the Fisc al Agent or any paying agent in trust for the payment of the principal of, interest or Prepayment Premium on the Governmental Notes remaining unclaimed for two years after the applicable Maturity Date or earlier payment date to the extent permitted by appl icable law, shall be paid to the Borrower, whereupon all liability of the Governmental Lender and the Fiscal Agent with respect to such money shall cease, and the Funding Lender shall thereafter look solely to the Borrower for payment of any amounts then due. All money held by the Fiscal Agent and subject to this Section 9.03 shall be held uninvested and without liability for interest thereon.
ARTICLE X
INTENTIONALLY OMITTED
ARTICLE XI
MISCELLANEOUS
Section 11.01. Servicing of the Loans. The Funding Lender Representative may appoint a Servicer (which may be the Funding Lender Representative if the Funding Lender Representative elects to service the Loans) to service the Loans as provided in Section 3.02 of the Project Loan Agreement. The Governmental Lender and the Fiscal Agent shall not be responsible for monitoring the performance of any Servicer or for any acts or omissions of such Servicer. The Funding Lender may, in its sole discretion, terminate or replace the Servicer.
Section 11.02. Limitation of Rights . With the exception of rights herei n expressly conferred, nothing expressed or to be implied from this Funding Loan Agreement or the Governmental Notes is intended or shall be construed to give to any Person other than the Parties hereto, the Funding Lender, the Funding Lender Representative, the Servicer and the Borrower, any legal or equitable right, remedy or claim under or in respect to this Funding Loan Agreement or any covenants, conditions and provisions hereof.
Section 11.03. Construction of Conflicts; Severability . Notwithstanding anything provided herein, or in any of the documents referred to herein, in the event that any contracts or other documents executed by the Borrower or any other arrangements agreed to by the Borrower in order to finance or refinance the Project with the proceeds of the Funding Loan are inconsistent with the Project Loan Documents, then the Project Loan Documents shall be controlling in all respects. If any provision of this Funding Loan Agreement shall be held or deemed to be, or shall DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
59 in fact be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution, statute, rule of law or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or sections in this Funding Loan Agreement contained, shall not affect the remaining portions of this Funding Loan Agreement, or any part thereof.
Section 11.04. Notices.
(a) Whenever in this Funding Loan Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Any notice, request, complaint, demand, communication or other paper required or permitted to be delivered to the Governmental Lender, the Fiscal Agent, the Fu nding Lender Representative, the Borrower or the Servicer shall be sufficiently given and shall be deemed given (unless another form of notice shall be specifically set forth herein) on the Business Day following the date on which such notice or other comm unication shall have been delivered to a national overnight delivery service (receipt of which to be evidenced by a signed receipt from such overnight delivery service) addressed to the appropriate party at the addresses set forth below or as may be required or permitted by this Funding Loan Agreement by Electronic Notice. The Governmental Lender, the Fiscal Agent, the Funding Lender Representative, the Borrower or the Servicer may, by notice given as provided in this paragraph, designate any further or different address to which subsequent notices or other communication shall be sent.
The Governmental Lender: City of San José
Finance Department
200 East Santa Clara Street, 13
th Floor
Tower
San José, CA 95113-1905
Attention: Debt Management
with a copy to
(which shall not
constitute notice
to the Governmental
Lender): City of San José
Department of Housing
200 East Santa Clara Street, 12
th Floor
Tower
San José, CA 95113-1905
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
60 Attention: Director of Housing
Facsimile: (408) 998-3183
with a copy to
(which shall not
constitute notice
to the Governmental
Lender): San José City Attorney’s Office
200 East Santa Clara Street, 16th Floor
Tower
San José, California 95113
Attention: Housing Attorney
Facsimile: (408) 998-3131
And a copy to: Jones Hall, A Professional Law Corporation 475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh Anzel, Esq.
Email: [email protected]
The Fiscal Agent: U.S. Bank Trust Company, National
Association
One California Street, Suite 1000
Mail Code: SF-CA-SFCT
San Francisco, California 94111
Attention: Andrew Fung, Vice President
Facsimile: (415) 677-3769
Email: [email protected]
The Borrower: Keyes, L.P.
c/o Charities Housing Development
Corporation of Santa Clara County
1400 Parkmoor Avenue, Suite 190
San José, CA 95126
Attention: Executive Director
and a copy to: (which
copy shall not
constitute notice to
Borrower) Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, California 94104
Attention: Lauren B. Fechter, Esq.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
61 and a copy to: Wells Fargo Affordable Housing Corp.
550 S. Tryon Street
23rd Floor, D1086-239
Charlotte, North Carolina 28202-4200
Attention: Director of Tax Credit Asset
Management
and a copy to: Pillsbury Winthrop Shaw Pittman LLP
1200 17
th Street NW
Washington, D.C. 20036
Attention: Craig A. de Ridder, Esq.
The Funding Lender, the
Servicer and the Funding
Lender Representative
(during the Construction
Phase): Wells Fargo Bank, National Association
Community Lending and Investment
550 S. Tryon Street
23rd Floor, D1086-239
Charlotte, North Carolina 28202-4200
Attention: Manager, Deal Management
Loan No.: 1021433
with a copy to: Wells Fargo Bank, National Association
Community Lending and Investment
MAC# A0101-069
420 Montgomery Street, 6th Floor
San Francisco, California 94104-1207
Attention: Lori Saito
Loan No. 10231433
with a copy to: FisherBroyles, LLP
3777 Long Beach Boulevard, Suite 280
Long Beach, California 90807
Attention: Caroline Woolsey, Esq.
Telephone: (213) 457-7226
CCRC: California Community Reinvestment
Corporation
100 West Broadway, Suite 1000
Glendale, California 91210
Attention: Maria Majczinger
with a copy to: FisherBroyles, LLP
3777 Long Beach Boulevard, Suite 280
Long Beach, California 90807
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
62 Attention: Caroline Woolsey, Esq.
Telephone: (213) 457-7226
A duplicate copy of each notice or other communication given hereunder by any party to the Servicer shall also be given to the Funding Lender Representative and by any party to the Funding Lender Representative to the Servicer.
The Fiscal Agent is authorized to, and agrees to accept and act upon Electronic Notice of written instructions and/or directions pursuant to this Funding Loan Agreement. (b) The Fiscal Agent shall provide to the Funding Lender Representative and the Servicer (i) prompt notice of the occurrence of any Event of De fault pursuant to Section 6.01 hereof and (ii) any written information or other written communication received by the Fiscal Agent hereunder within 10 Business Days of receiving a written request from the Funding Lender Representative and the Servicer for any such information or other communication.
Section 11.05. Funding Lender Representative.
(a) The Initial Funding Lender is the initial Funding Lender Representative with respect to the Governmental Note s. Upon and subject to the occurrence of the Conversion Date, CCRC shall become the Funding Lender Representative. The Funding Lender Representative shall be entitled to all the rights and privileges of the Funding Lender hereunder and under the other Financing Documents. (b) The Funding Lender Representative may provide written notice to the Fiscal Agent designating particular individuals or Persons authorized to execute any consent, waiver, approval, direction or other instrument on behalf of the Funding Lender Representative, and such notice may be amended or rescinded by the Funding Lender Representative at any time by subsequent written notice. The Funding Lender Representative may be removed and a successor appointed by a written notice in the form of Exhibit B hereto given by the Funding Lender to the Fiscal Agent, the Governmental Lender, the Servicer and the Borrower. The removal and reappointment shall be effective immediately upon receipt of such notice by the Fiscal Agent. The Funding Lender may appoint any Person to act as Funding Lender Representative, including, without limitation, the Servicer. If, for any reason, a Funding Lender Representative resigns by written notice provided to the Fiscal Agent, the Funding Lender, the Governmental Lender, the Servicer and the Borrower, all references to Funding Lender Representative herein and in the other Financing Documents shall be deemed to refer to the Funding Lender until a successor Funding Lender Representative is appointed by the Funding Lender. (c) Whenever pursuant to this Funding Loan Agreement or any other Financing Document, the Funding Lender Representative exercises any right given to it to approve or disapprove, any arrangement or term hereof, the decision of the Funding Lender Representative to approve or disapprove or to decide whether arrangements or terms are acceptable or not acceptable shall be in the sole discretion of the Funding Lender Representative, except as otherwise specifically indicated.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
63 (d) Each Funding Lender, by their purchase or other acquisition of the Funding Loan, shall be deemed to have acknowledged and agreed to the provisions of this Funding Loan Agreement and the other Financing Documents with respect to the Funding Lender Representative and the rights and privileges thereof, including but not limited to the right to control all remedies in respect of the Governmental Notes and the Loans, subject to the Unassigned Rights.
Section 11.06. Payments Due on Non Business Days . In any case where a date of payment with respect to the Funding Loan shall be a day other than a Business Day, then such payment 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 such date, and no interest shall accrue for the period after such date provided that payment is made on such next succeeding Business Day.
Section 11.07. Counterparts. This Funding Loan Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 11.08. Laws Governing Funding Loan Agreement . The effect and meani ngs of this Funding Loan Agreement and the Governmental Notes and the rights of all parties hereunder and thereunder shall be governed by, and construed according to, the internal laws of the State without regard to conflicts of laws principles. Any action arising out of this Funding Loan Agreement or the Governmental Notes shall be filed and maintained in the Superior Court of California, County of Santa Clara, unless the Governmental Lender waives this requirement.
Section 11.09. Successors and Assigns. All the covenants and representations contained in this Funding Loan Agreement by or on behalf of the parties hereto shall bind and inure to the benefit of their successors and assigns, whether so expressed or not.
Section 11.10. Electronic Transactions. The transactions described in this Funding Loan Agreement may be conducted and related documents and may be stored by electronic means.
Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.
Section 11.11. Recycling Transactions. Notwithstanding any provision of this Funding Loan Agreement or the Series B-1 Governmental Note to the contrary, the Governmental Lender shall be permitted to direct payments of the Series B-1 Project Note prepayments to be transferred to a custodian or trustee selected by the Governmental Lender, in lieu of application to prepay a like portion of the Series B -1 Governmental Note, so long as the Governmental Lender simultaneously causes other funds to be applied to prepay such portion of the Series B -1 Governmental Note. The preceding provisions shall apply only for purposes of preser ving or “recycling” private activity bond volume cap in accordance with Section 146(i)(6) of the Code. [Signature Pages Follow]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
S-1
IN WITNESS WHEREOF, the Governmental Lender, the Initial Funding Lender and the Fiscal Agent have caused this Funding Loan Agreement to be executed and delivered by duly authorized officers thereof as of the day and year first written above.
CITY OF SAN JOSE
By
Richard G. Bruneau
Director of Finance
APPROVED AS TO FORM:
By
Hana Hardy Gunther
Senior Deputy City Attorney
[Governmental Lender’s Signature Page to The Charles Funding Loan Agreement]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
S-2
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By:
Name: Patricia B. Parina
Title: Vice President
[Initial Funding Lender’s Signature Page to The Charles Funding Loan Agreement]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
By
Name:
Title:
[Fiscal Agent’s Signature Page to The Charles Funding Loan Agreement]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
EXHIBIT A
FORM OF GOVERNMENTAL NOTES
$____________
CITY OF SAN JOSE
MULTIFAMILY HOUSING REVENUE NOTE
(THE CHARLES)
SERIES 2023B-[1][2 (Taxable)]
THE TRANSFERABILITY HEREOF IS RESTRICTED BY THE TERMS OF SECTION 2.08 OF THE FUNDING LOAN AGREEMENT DESCRIBED HEREIN,
INCLUDING THE PROVISION THEREOF LIMITING OWNERSHIP OF THIS NOTE TO A “QUALIFIED TRANSFEREE” (AS DEFINED IN THE FUNDING LOAN AGREEMENT).
US $___________ [Closing Date]
FOR VALUE RECEIVED, the undersigned, CITY OF SAN JOS E (the “Obligor”), promises to pay (but solely from the sources and in the manner provided for in the Funding Loan Agreement referenced below) to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (the “ Funding Lender ”), and its assigns, t he maximum principal sum of _______________ DOLLARS (US $______________), plus premium, if any, and interest thereon and to pay the other amounts owing from time to time hereunder, all as set forth below.
This City of San José Multifamily Housing Revenue Note ( The Charles) Series 2023B - [1][2 (Taxable)] (this “Note”) is being delivered pursuant to that certain Funding Loan Agreement dated as of June 1, 2023 (together with any and all amendments, modifications, supplements and restatements, the “Funding Loan Agreement”), among the Funding Lender, the Obligor and U.S.
Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), pursuant to which the Obligor has incurred a loan in the maximum aggregate principal amount of $______________ (the “Funding Loan”), and this Note is entitled to the benefits of the Funding Loan Agreement and is subject to the terms, conditions and provisions thereof. The Obligor is using the proceeds of the Funding Loan to make a loan to Keyes, L.P., a California limited partnership (the “ Borrower”) pursuant to the Project Loan Agreement dated as of June 1, 2023 (the “Project Loan Agreement”), among the Obligor, the Borrower and the Fiscal Agent. The outstanding principal balance of this Note at any time shall be an amount equal to the proceeds of the Funding Loan advanced by the Funding Lender under the Funding Loan Agreement and not otherwise prepaid.
1. Defined Terms. As used in this Note, (i) the term “Funding Lender” means the holder of this Note, and (ii) the term “Indebtedness” means the principal of, premium, if any, and interest on or any other amounts due at any time under this Note or the Funding Loan Agreement. “Event of Default ” and other capitalized terms used but not defined in this Note shall have the meanings given to such term in the Funding Loan Agreement.
2. Payments of Principal and Interest . The Obligor shall pay (but solely from the sources and in the manner provided for in the Funding Loan Agreement) on the first calendar day of each month commencing [ July] 1, 2023, interest on this Note at (i) the Construction Phase DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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Interest Rate during the Construction Phase and (ii) the Permanent Phase Interest Rate during the Permanent Phase, and shall also pay interest on this Note at the foregoing rates on the date of any optional or mandatory prepayment or acceleration of all or part of the Funding Loan pursuant to the Funding Loan Agreement, in an amount equal to the accrued and unpaid interest to the date of prepayment on the portion of this Note subject to prepayment (each such date for payment an “Interest Payment Date”). Interest shall accrue on the principal amount of the Funding Loan which has been advanced under the Funding Loan Agreement and is outstanding as reflected on the Record of Advances. Interest on this Note shall be computed in accordance with the related Project Note.
The Obligor shall pay (but solely from the sources and in the manner provided for in the Funding Loan Agreement) the outstanding principal of this Note in full on _________ 1, 20___ (the “Maturity Date”) and in monthly installments or at such earlier times and in such amounts as may be required pursuant to the corresponding Project Note , in the event of an optional or mandatory prepayment or acceleration of the Funding Loan pursuant to the Funding Loan Agreement. The outstanding principal hereof is subject to acceleration at the time or times and under the terms and conditions, and with notice, if any, as provided under the Funding Loan Agreement.
3. Manner of Payment . All payments under this Note shall be made in lawful currency of the United States and in immediately available funds as provided for herein and in the Funding Loan Agreement.
4. Application of Payments. If at any time the Funding Lender receives any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, the Funding Lender may apply that payment to amounts then due and payable in any manner and in any order determined by the Funding Lender, in the Funding Lender ’s discretion. Neither the Funding Lender’s acceptance of a payment in an amount that is less than all amounts then due and payable nor the Funding Lender ’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.
5. Security. The Indebtedness is secured by the Pledged Security pledged pursuant to the Funding Loan Agreement.
6. Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, and all other amounts payable under this Note shall at once become due and payable, at the option of the Funding Lender, as governed by the Funding Loan Agreement, without any prior notice to the Obligor (unless required by applicable law). The Funding Lender may exercise this option to accelerate regardless of any prior forbearance.
7. Prepayment; Prepayment Premium . This Note is subject to prepayment as specified in the Funding Loan Agreement. Prepayment Premium shall b e payable as specified in the Funding Loan Agreement.
8. Forbearance. Any forbearance by the Funding Lender in exercising any right or remedy under this Note or any other document evidencing or securing the Funding Loan or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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any other right or remedy. The acceptance by the Funding Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of the Funding Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment.
Enforcement by the Funding Lender of any security for the obligations under this Note shall not constitute an election by the Funding Lender of remedies so as to preclude the exercise of any other right or remedy available to the Funding Lender.
9. Waivers. Presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace and diligence in collecting the Indebtedness are waived by the Obligor and all endorsers and guarantors of this Note and all other third party obligors.
10. Default Rate. [Series B-1][So long as (a) any monthly installment under this Note remains past due, (b) any other Event of Default has occurred and is continuing, or (c) a Determination of Taxability has occurred and is continuing, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment, the occurrence of any other Event of Default, or the occurrence of a Determination of Taxability, as applicable, at the Default Rate. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate.] [Series B-2] [So long as (a) any monthly installment under this Note remains past due, or (b) any other Event of Default has occurred and is continuing, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or the occurrence of any other Event of Default, as applicable, at the Default Rate. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate.]
11. Loan Charges. Neither this Note nor any of the other Financing Documents will be construed to create a contract for the use, forbearance, or detention of money requiring payment of interest at a rate greater than the rate of interest which results in the maximum amount of interest allowed by applicable law (the “ Maximum Interest Rate ”). If any applicable law limiting the amount of interest or other charges permitted to be collected from Obligor in connection with the Funding Loan is interpreted so that any interest or other charge provided for in any Financing Document, whether considered separately or together with other charges provided for in any other Financing Document, violates that law, and Obligor is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Funding Lender in excess of the permitted amounts will be applied by Funding Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Obligor has been violated, all indebtedness that constitutes interest, as well as all other charges made in connection with the indebtedness that constitute interest, will be deemed to be allocated and spread ratably over the stated term of this Note. Unless otherwise required by applicable law, such allocation and spreading will be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of this Note.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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12. Governing Law. This Note shall be governed by the internal laws of the State of California without regard to conflicts of laws principles.
13. Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.
14. Address for Payment. All payments due under this Note shall be payable at the principal office of the Funding Lender as designated by the Funding Lender in writing to the Fiscal Agent and the Servicer.
15. Project Note. Anything herein or in the Funding Loan Agreement to the contrary notwithstanding, amounts shall not be due and payable hereunder except at the rates, in the amounts, and at the times due and payable under the corresponding Project Note. In the event of any conflict between the payment terms of the corresponding Project Note and this Note, the terms of the corresponding Project Note shall control, provided, however, that the Governmental Lender’s obligation hereunder shall be limited as set forth herein and payable solely from the Pledged Security.
16. Limited Obligation . THIS NOTE IS A LIMITED OBLIGATION OF THE GOVERNMENTAL LENDER, PAYABLE SOLELY FROM THE PLEDGED SECURITY.
NONE OF THE GOVERNMENTAL LENDER, THE STATE, OR ANY POLITICAL
SUBDIVISION THEREOF (EXCEPT THE GOVERNMENTAL LENDER, TO THE LIMITED
EXTENT SET FORTH HEREIN) NOR ANY PUBLIC AGENCY SHALL IN ANY EVENT BE
LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST
ON THE FUNDING LOAN OR FOR THE PERFORMANCE OF ANY PLEDGE,
OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER WITH RESPECT
THERETO EXCEPT AS SET FORTH HEREIN AND IN THE FUNDING LOAN
AGREEMENT, AND NONE OF THE FUNDING LOAN OR THIS NOTE OR ANY OF THE GOVERNMENTAL LE NDER’S AGREEMENTS OR OBLIGATIONS WITH RESPECT TO
THE FUNDING LOAN OR THIS NOTE SHALL BE CONSTRUED TO CONSTITUTE AN
INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE
CREDIT OF OR A MORAL OBLIGATION OF ANY OF THE FOREGOING WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER.
NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR
PREMIUM OR INTEREST ON THIS NOTE AGAINST ANY PAST, PRESENT OR FUTURE
OFFICER, BOARD MEMBER, EMPLOYEE OR AGENT OF THE GOVERNMENT AL
LENDER, OR OF ANY SUCCESSOR TO THE GOVERNMENTAL LENDER, AS SUCH,
EITHER DIRECTLY OR THROUGH THE GOVERNMENTAL LENDER OR ANY
SUCCESSOR TO THE GOVERNMENTAL LENDER, 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 OFFICERS, BOARD MEMBERS, EMPLOYEES OR AGENTS, AS SUCH, IS HEREBY
EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF, AND CONSIDERATION FOR, THE EXECUTION AND ISSUANCE OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED IN ACCORDANCE WITH THE ACT.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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17. Registration and Transfer. The Funding Loan, or any interest therein, and this Note, shall be in fully-registered form transferable to subsequent holders, only on the registration books which shall be maintained by the Fiscal Agent for such purpose and which shall be open to inspection by the Governmental Lender. The Funding Loan, or any interest therein, and this Note, is only transferable subject to and in accordance with the limitations set forth in the Funding Loan Agreement.
[18. Recycling Transactions. Notwithstanding any provision of this Note or the Funding Loan Agreement to the contrary, the Governmental Lender shall be permitted to direct corresponding Project Note prepayments to be transferred to a custodian or trustee selected by the Governmental Lender, in lieu of application to prepay a like portion of this Note, so long as the Governmental Lender simultaneously causes other funds to be applied to prepay such portion of this Note. The preceding provisions shall apply only for purposes of preserving or “recycling” private activity bond volume cap in accordance with Section 146(i)(6) of the Code.][For Series B- 1]
This Note may not be changed orally.
[Signature page follows]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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IN WITNESS WHER EOF, the Obligor has caused this Note to be duly executed by the manual signature of its Authorized Officer as of the date first set forth above.
OBLIGOR:
CITY OF SAN JOSE
By
Richard G. Bruneau
Director of Finance
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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CERTIFICATE OF AUTHENTICATION
This Note is issued under the provisions of and described in the within mentioned Funding Loan Agreement.
Date of Authentication: _______________
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
By:
Name:
Title:
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
EXHIBIT B
FORM OF NOTICE OF APPOINTMENT OF FUNDING LENDER REPRESENTATIVE U.S. Bank Trust Company, National Association, as Fiscal Agent San Francisco, California
Keyes, L.P.
San José, California
City of San José
San José, California
Wells Fargo Bank, National Association
Community Lending and Investment
San Francisco, California
Re: $______________ City of San José Multifamily Housing Revenue Note s ( The Charles) Series 2023B-1 and 2023B-2
Ladies and Gentlemen:
The undersigned is the holder (the “Funding Lender”) of the City of San José Multifamily Housing Revenue Note s ( The Charles ) Series 2023B- 1 and 2023B -2 (Taxable) , each dated [Closing Date] (the “Governmental Notes”) delivered pursuant to the Funding Loan Agreement dated as of June 1, 202 3 (the “Funding Loan Agreement ”), among Wells Fargo Bank, National Association, in its capacity as initial Funding Lender (the “Initial Funding Lender”), the City of San José (the “Governmental Lender”) and U.S. B ank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). Pursuant to Section 11.05 of the Funding Loan Agreement, you are hereby notified that, effective immediately upon receipt of this notice by the Fiscal Agent, the Funding Lender Representative appointed under Section 11.05 of the Funding Loan Agreement shall be [______________________] . [The person or entity previously appointed as Funding Lender Representative shall upon the effectiveness of this notice no longer have any further rights or obligations as Funding Lender Representative.]
The following individual or individuals shall have the authority to execute any consent, waiver, approval, direction or other instrument on behalf of the Funding Lender Representative and the signature(s) set forth next to his/her (their) name(s) is (are) his/her (their) true and correct signature(s).
NAME SIGNATURE
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
B-2
Additional individuals may be given such authority by written notice to you from the Funding Lender Representative or from the Funding Lender.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
B-3
This notice is dated as of the __________________ day of ______________, ________.
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By
Name
Title
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
EXHIBIT C
FORM OF TRANSFEREE REPRESENTATIONS LETTER
[To be prepared on letterhead of transferee]
[Date]
City of San José
San José, California
U.S. Bank Trust Company, National Association, as Fiscal Agent San Francisco, California
Re: $______________ City of San José Multifamily Housing Revenue Note ( The Charles) Series 2023B-1
$______________ City of San José Multifamily Housing Revenue Note ( The Charles) Series 2023B-2 (Taxable)
Ladies and Gentlemen:
The undersigned (the “ Funding Lender ”) hereby acknowledges receipt of the City of San José Multifamily Housing Revenue Note s ( The Charles ) Series 2023B-1 and 2023B -2 (Taxable), each dated [Closing Date] (the “Governmental Note s”) delivered pursuant to the Funding Loan Agreement dated as of June 1, 2023 (the “Funding Loan Agreement”), among Wells Fargo Bank, National Association, in its capacity as Initial Funding Lender (the “Initial Funding Lender”), the City of San José (the “Governmental Lender ”) and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). Capitalized terms used herein and not otherwise defined have the meanings given to such terms in the Funding Loan Agreement.
In connection with the [origination/purchase] of the Funding Loan by the Funding Lender, the Funding Lender hereby makes the following representations upon which you may rely:
1. The Funding Lender has authority to [originate/purchase] the Funding Loan and to execute this letter, and any other instruments and documents required to be executed by the Funding Lender in connection with the [origination/purchase] of the Funding Loan.
2. The Funding Lender is a Qualified Transferee (as such term is defined in the Funding Loan Agreement), and therefore, has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by the Funding Loan.
3. The Funding Lender acknowledges that it is [originati ng/purchasing] the Funding Loan for investment for its own account and not with a present view toward resale or the distribution thereof (except as set forth below), in that it does not now intend to resell or otherwise dispose of all or any part of its in terests in the Funding Loan (except as set DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
C-2
forth below); provided, however, that the Funding Lender may, notwithstanding the foregoing and the terms of Paragraph 4 below, (i) transfer the Funding Loan to any affiliate or other party related to the Funding Lender that is a Qualified Transferee or (ii) sell or transfer the Funding Loan to a special purpose entity, a trust or a custodial or similar pooling arrangement from which the Funding Loan or securitized interests therein are not expected to be sold exce pt to (x) owners or beneficial owners thereof that are Qualified Transferees or (y) in circumstances where secondary market credit enhancement is provided for such securitized interests resulting in a rating thereof of at least “A” or better.
4. In addition to the right to sell or transfer the Funding Loan as set forth in Paragraph 3 above, the Funding Lender further acknowledges its right to sell or transfer the Funding Loan, subject, as required under the Funding Loan Agreement, to the delivery to the Fiscal Agent of a transferee representations letter from the transferee to substantially the same effect as this Transferee Representations Letter or in such other form authorized by the Funding Loan Agreement with no revisions except as may be approved in wr iting by the Governmental Lender.
5. The Funding Lender understands that the Governmental Note s are not registered under the Act and that such registration is not legally required as of the date hereof; and further understands that the Governmental Note s (a) are not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, (b) will not be listed in any stock or other securities exchange, (c) will not carry a rating from any rating service and (d) will be delivered in a form which may not be readily marketable.
The Funding Lender acknowledges that no disclosure document has been prepared in connection with the sale of the Governmental Notes.
6. The Funding Lender understands that (a) the Funding Loan is not secu red by any pledge of any moneys received or to be received from taxation by the State of California or any political subdivision thereof, (b) the Funding Loan does not and will not represent or constitute a general obligation or a pledge of the faith and c redit of the Governmental Lender, the State of California or any political subdivision thereof; and (c) the liability of the Governmental Lender with respect to the Funding Loan is limited to the Pledged Security as set forth in the Funding Loan Agreement.
7. The Funding Lender has either been supplied with or been given access to information, including financial statements and other financial information, which it considers necessary to make an informed decision in connection with the [origination/purchase] of the Funding Loan. The Funding Lender has not relied upon the Governmental Lender for any information in connection with its purchase of the Funding Loan.
8. The Funding Lender has made its own inquiry and analysis with respect to the Funding Loan and the security therefor, and other material factors affecting the security and payment of the Funding Loan. The Funding Lender is aware that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Funding Loan.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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9. The Funding Lender agrees to indemnify and hold harmless the Fiscal Agent and the Governmental Lender, each member, officer, director, partner or employee of the Fiscal Agent or the Governmental Lender, and each person who control s the Fiscal Agent or the Governmental Lender within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (collectively called the “Indemnified Parties”), against any and all losses, claims damages, liabilities or expenses (including any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions) whatsoever arising out of any sale, transfer or other disposition of the Funding Loan or any interest therein, by the Funding Lender in violation of the provisions hereof. No Indemnified Parties other than the Governmental Lender and its members, officers and employees shall be indemnified hereunder for any losses, claims, damages or liabilities resulting from the negligence of such Indemnified Parties. No Indemnified Party shall be indemnified hereunder for any losses, claims, damages or liabilities resulting from the willful misconduct of such parties.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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All agreements, representations and warranties made herein shall survive the execution and delivery of this letter agreement and, notwithstanding any investigation heretofore or hereafter, shall continue in full force and effect.
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By
Name: Patricia B. Parina
Title: Vice President
[Signature Page to Required Transferee Representations]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
EXHIBIT D
CITY OF SAN JOSE
MULTIFAMILY HOUSING REVENUE NOTE
(THE CHARLES)
SERIES 2023B-[1][2]
Maximum Note Amount: $______________
COSTS OF ISSUANCE REQUISITION
(Costs of Issuance Fund)
__________________,
as Fiscal Agent
You are requested to disburse funds from the Costs of Issuance Fund pursuant to Section 4.13 of the Funding Loan Agreement in the amount(s), to the person(s) and for the purpose(s) set forth in this requisition (the “Requisition”). The terms used in this requisition shall have the meaning given to those terms in the Funding Loan Agreement (the “ Funding Loan Agreement”), dated as of June 1, 2023, by and among Wells Fargo Bank, National Association, in its capacity as Initial Funding Lender (the “Initial Funding Lender”), the City of San José and U.S.
Bank Trust Company, National Association, as Fiscal Agent, securing th e City of San José Multifamily Housing Revenue Notes (The Charles) Series 2023B-1 and 2023B-2 (Taxable), each dated [Closing Date] (the “Governmental Note”).
REQUISITION NO.:____________
PAYMENT DUE TO:___________
AMOUNT TO BE DISBURSED: $____________
The undersigned, on behalf of Keyes, L.P. , a limited partnership duly organized and existing under the laws of the State of California (the “Borrower”), certifies that:
(a) the expenditures for which money is requisitioned by this Requisition represent proper charges against the Costs of Issuance Fund, have not been included in any previous requisition and are set forth in the Schedule attached to this Requisition, with invoices attached for any sums for which reimbursement is requested; and (b) the money requisitioned is not greater than those necessary to meet obligations due and payable or to reimburse the applicable party for funds actually advanced for Costs of Issuance.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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Attached to this Requisition is a Schedule, together with copies of invoices or bills of sale covering all items for which payment is being requested.
Date of Requisition: _________________________
KEYES, L.P., a California limited partnership
By: Keyes Charities LLC, a California limited
liability company, its general partner
By: Charities Housing Development
Corporation of Santa Clara County, a
California nonprofit public benefit
corporation, its sole member/manager
By:
Name: Mark J. Mikl
Title: Executive Director
[Signature Page to Costs of Issuance Fund Requisition]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
EXHIBIT E
CITY OF SAN JOSE
MULTIFAMILY HOUSING REVENUE NOTE
(THE CHARLES)
SERIES 2023B-[1][2]
Maximum Note Amount: $______________
PROJECT LOAN FUND REQUISITION
(Project Loan Fund)
__________________,
as Fiscal Agent
You are requested to disburse funds from the Project Loan Fund pursuant to Section 4.02 of the Funding Loan Agreement in the amount(s), to the person(s) and for the purpose(s) set forth in this requisition (the “ Requisition”). The terms used in this requisition shall have the meaning given to those terms in the Funding Loan Agreement (the “Funding Loan Agreement”), dated as of June 1, 2023, by and among Wells Fargo Bank, National Association, in its capacity as Ini tial Funding Lender (the “Initial Funding Lender”), the City of San José (the “Governmental Lender”) and U.S. Bank Trust Company, National Association, as Fiscal Agent (the “ Fiscal Agent ”), securing the City of San José Multifamily Housing Revenue Notes (The Charles) Series 2023B-1 and 2023B-2 (Taxable), each dated [Closing Date] (the “Governmental Note”).
REQUISITION NO.:
PAYMENT DUE TO:
AMOUNT(S) TO BE DISBURSED:
$__________ from the Project Account
$__________ from the Borrower Equity Account
The undersigned Borrower hereby represents and warrants that the following information and certifications provided in connection with this Requisition are true and correct as of the date hereof and authorizes Servicer to submit this Requisition to the Fiscal A gent on behalf of Borrower:
1. Purposes for which disbursement is requested are specified in the attached Schedule.
2. Party or parties to whom the disbursements shall be made are specified in the attached Schedule (may be the undersigned in the case of reimbursement for advances and payments made or cost incurred for work done by the undersigned); provided, that no reimbursement shall be made for advances and payments made prior to _________, 20___.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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3. The undersigned certifies that:
a. the conditions precedent to disbursement set forth in the Construction and Permanent Loan Agreement have been satisfied; b. the disbursement requested pursuant to this Requisition [(1) from the Project Account will be used solely to pay a Cost of the Project allowable under the Funding Loan Agreement and the Construction and Permanent Loan Agreement and (2) from the Borrower Equity Account will be used solely to pay a cost allowable under the Funding Loan Agreement and the Construction and Permanent Loan Agreement];
c. none of the items for which disbursement is requested pursuant to this Requisition has formed the basis for any disbursement previously made from the Project Loan Fund and all such items have been properly recorded in Borrower’s books and are set forth on the Schedule attached hereto, along with paid invoices attached for any sum for which reimbursement is requested and invoices or bills of sales for all other items;
d. all labor and materials for which disbursements have been requested have been incorporated into the Project in accordance with reasonable and standard building practices, the Construction and Permanent Loan Agreement and all applicable laws, ordinances, rules and regulations of any governmental authority having jurisdiction over the Project;
e. the materials, supplies and equipment furnished or installed for the Improvements are not subject to any lien or security interest or that the funds to be disbursed pursuant to this Requisition are to be used to satisfy any such lien or security interest;
f. all of the funds being requisitioned are being used in compliance with all tax covenants set forth in the Funding Loan Agreement, the Project Loan Agreement, the Regulatory Agreement and the Tax Certificate, including that none of the proceeds of the Funding Loan (including investment earnings thereon) will be used to provide an airplane, a skybox or any other private luxury box, any facility primarily used for gambling, health club facility or any store the principal business of which is the sale of alcoholic beverages for consumption off premises; g. not less than 95% of the sum of:
(A) the amounts requisitioned by this Requisition to be funded with the proceeds of the Series B-1 Governmental Note; plus (B) all amounts allocated to the Governmental Notes previously disbursed from the Series B-1 Subaccount of the Project Account of the Project Loan Fund;
have been or will be applied by Borrower to pay the Costs of the Project; DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
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h. Borrower is not in default under the Project Loan Agreement, the Construction and Permanent Loan Agreement or any other Project Loan Document to which it is a party and nothing has occurred to the knowledge of Borrower that would prevent the performance of its obligations under such documents; i. no amounts being requisitioned hereby from the Series B -1 Subaccount of the Project Account will be used to pay, or reimburse, any Costs of Issuance incurred in connection with the delivery of the Governmental Note s or pay debt service with respect to the Loans; and
j. Funds deposited with Borrower for further disbursement to third parties shall be paid to such third parties by check dated the date of such deposit and Borrower reasonably expects such funds will be disbursed from its account within five Business Days of such deposit.
[Following items shall not be required for Initial Disbursement]
4. Estimated costs of completing the uncompleted construction of the Project as of the date of this Requisition: _________________________.
5. Percent of construction of the Project completed as of the date this request:
________%
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
E-4
IN WITNESS WHEREOF, the undersigned has executed this Requisition as of the day and date first above written.
Date:
KEYES, L.P., a California limited partnership
By: Keyes Charities LLC, a California limited
liability company, its general partner
By: Charities Housing Development
Corporation of Santa Clara County, a
California nonprofit public benefit
corporation, its sole member/manager
By:
Name: Mark J. Mikl
Title: Executive Director
APPROVED:
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By
Name: Patricia B. Parina
Title: Vice President
[Signature Page to Project Loan Fund Requisition]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.