Agenda
PROJECT LOAN AGREEMENT
among
CITY OF SAN JOSE,
as Governmental Lender
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
and
KEYES, L.P.,
as Borrower
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
All of the right, title and interest of the City of San José (except for its Unassigned Rights) in and to this Project Loan Agreement are being assigned to U.S. Bank Trust Company, National Association, as Fiscal Agent, as security for the Funding Loan made pursuant to that certain Funding Loan Agreement dated as of June 1, 2023 by and among the Governmental Lender, the Initial Funding Lender named therein and the Fiscal Agent under which the Funding Lender is originating a loan to the Governmental Lender to fund the Project Loan made under this Project Loan Agreement.
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........................................................................................................ 2 Section 1.02. Interpretation .................................................................................................... 4
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations of the Governmental Lender .................................................. 4 Section 2.02. Representations, Warranties and Covenants of the Borrower ......................... 6 Section 2.03. Representations and Warranties of the Fiscal Agent ....................................... 9 Section 2.04. Arbitrage and Rebate Fund Calculations ....................................................... 11 Section 2.05. Tax Covenants of the Borrower ..................................................................... 11 Section 2.06. Hazardous Waste Covenant ........................................................................... 12 Section 2.07. Additional Environmental Matters ................................................................ 13
ARTICLE III
THE PROJECT LOAN
Section 3.01. Conditions to Funding the Project Loan ........................................................ 15 Section 3.02. Terms of the Project Loan; Servicing ............................................................ 16 Section 3.03. Deposits.......................................................................................................... 17 Section 3.04. Pledge and Assignment to Fiscal Agent ........................................................ 17 Section 3.05. Investment of Funds ....................................................................................... 17 Section 3.06. Damage; Destruction and Eminent Domain .................................................. 17 Section 3.07. Enforcement of Financing Documents .......................................................... 17 Section 3.08. Grant of Security Interest ............................................................................... 17
ARTICLE IV
LOAN PAYMENTS
Section 4.01. Payments Under the Project Notes; Independent Obligation of Borrower ........................................................................................................ 18 Section 4.02. Additional Payments Under the Project Notes and this Project Loan Agreement ...................................................................................................... 19 Section 4.03. Payments to Rebate Fund ............................................................................... 20 Section 4.04. Prepayment .................................................................................................... 21 Section 4.05. Borrower’s Obligations Upon Prepayment .................................................... 21 Section 4.06. Limits on Personal Liability ........................................................................... 22
ARTICLE V
SPECIAL COVENANTS OF BORROWER
Section 5.01. Performance of Obligations ........................................................................... 22 Section 5.02. Compliance With Applicable Laws ............................................................... 22 Section 5.03. Funding Loan Agreement Provisions ............................................................ 22 DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
ii
Section 5.04. [Reserved] ...................................................................................................... 23 Section 5.05. Borrower to Maintain Its Existence; Certification of No Default .................. 23 Section 5.06. Borrower to Remain Qualified in State and Appoint Agent .......................... 23 Section 5.07. Sale or Other Transfer of Project ................................................................... 23 Section 5.08. Right to Perform Borrower’s Obligations...................................................... 23 Section 5.09. Notice of Certain Events ................................................................................ 23 Section 5.10. Survival of Covenants .................................................................................... 23 Section 5.11. Access to Project; Records............................................................................. 24 Section 5.12. Regulatory Agreement ................................................................................... 24 Section 5.13. Damage, Destruction and Condemnation ...................................................... 24 Section 5.14. Obligation of the Borrower to Construct the Project ..................................... 25 Section 5.15. Filing of Financing Statements ...................................................................... 25
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification .............................................................................................. 25 Section 6.02. Limitation With Respect to the Funding Lender ........................................... 28
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default ........................................................................................... 29 Section 7.02. Remedies on Default ...................................................................................... 30 Section 7.03. No Remedy Exclusive.................................................................................... 31 Section 7.04. Agreement to Pay Attorneys’ Fees and Expenses ......................................... 31 Section 7.05. No Additional Waiver Implied by One Waiver ............................................. 31 Section 7.06. Control of Proceedings .................................................................................. 31 Section 7.07. Assumption of Obligations ............................................................................ 33
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices ........................................................................................................... 34 Section 8.02. Concerning Successors and Assigns .............................................................. 34 Section 8.03. Governing Law .............................................................................................. 35 Section 8.04. Entire Agreement, Modifications in Writing ................................................. 35 Section 8.05. Further Assurances and Corrective Instruments ............................................ 35 Section 8.06. Captions ......................................................................................................... 35 Section 8.07. Severability .................................................................................................... 35 Section 8.08. Counterparts ................................................................................................... 35 Section 8.09. Amounts Remaining in Loan Payment Fund or Other Funds ........................ 35 Section 8.10. E
ffective Date and Term ................................................................................ 36 Section 8.11. Cross References ............................................................................................ 36 Section 8.12. No Third Party Beneficiaries ......................................................................... 36 Section 8.13. [Reserved] ...................................................................................................... 36 Section 8.14. Non-Liability of Governmental Lender ......................................................... 36 Section 8.15. No Liability of Officers ................................................................................. 38 Section 8.16. Capacity of the Fiscal Agent .......................................................................... 38 Section 8.17. Reliance.......................................................................................................... 38 DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
iii
Section 8.18. Construction of Documents ........................................................................... 39 Section 8.19. Assignment .................................................................................................... 39 Section 8.20. Governmental Lender, Funding Lender and Servicer Not in Control; No Partnership ............................................................................................... 39 Section 8.21. Release ........................................................................................................... 40 Section 8.22. Counterparts ................................................................................................... 40 Section 8.23. Captions ......................................................................................................... 40 DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
PROJECT LOAN AGREEMENT
THIS PROJECT LOAN AGREEMENT (this “Project Loan Agreement”) is made and entered into as of June 1, 2023, by and among the CITY OF SAN JOS E (the “Governmental Lender”), a municipal corporation and charter city organized and existing under the laws of the State of California (the “Sta te”), U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, duly organized and existing under the laws of the United States of America (together with any successor Fiscal Agents appointed under the Funding Loan Agreement, the “Fiscal Agent”), and KEYES, L.P. , a limited partnership duly organized and existing under the laws of the State of California (together with its successors and assigns permitted hereunder, the “Borrower”).
RECITALS:
A. The Act (as defined in the Funding Loan Agreement hereinafter defined) authorizes the Governmental Lender (a) to make loans to any person to provide financing for residential rental developments located within the City of San José (the “City”), and intended to be occupied in part or in whole by persons of low and moderate income; (b) to borrow funds for the purpose of obtaining moneys to make such loans and provide such financing, to establish necessary reserve funds and to pay administrative costs and other costs incurred in connection with any su ch borrowing by 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 repayment of any such borrowing by the Governmental Lender.
B. The Borrower has requested the Governmental Lender to enter into that certain Funding Loan Agreement, of even date herewith (the “Funding Loan Agreement”) by and among Wells Fargo Bank, National Association, a national banking association, in its capacity as Initial Funding Lender (the “ Initial Funding Lender”), the Governmental Lender and the Fiscal Agent, pursuant to which the Initial Funding Lender will make a loan (the “Funding Loan”) to the Governmental Lender, the proceeds of which will be loaned under this Project Loan Agreement to the Borrower (the “Project Loan”) for the acquisition, construction and equipping of a multifamily affordable rental housing development located at 551 Keyes Street, San José, California known or to be known as “The Charles”, and the Borrower’s repayment obligations under this Project Loan Agreement are evidenced by the Project Notes, as defined herein.
C. The Funding Loan is evidenced by the Governmental Lender’s City of San José Multifamily Housing Revenue Note ( The Charles) Series 202 3B-1 (together with all riders and addenda thereto, the “Series B-1 Governmental Note”) and City of San José Multifamily Housing Revenue Note ( The Charles ) Series 2023B-2 (Taxable) (together with all riders and addenda thereto, the “ Series B -2 Governmental Note” and, together with the Series B- 1 Governmental Note, the “Governmental Notes”), each dated [Closing Date], and delivered by the Governmental Lender to the Initial Funding Lender.
D. The Initial Funding Lender, pursuant to the terms and subject to the conditions of the Funding Loan Agreement and the Construction and Permanent Loan Agreement, has agreed DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
2 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 this Project Loan Agreement. The Initial Funding Lender will administer the Loan during the Construction Phase in accordance with the Financing Documents, as defined in the Funding Loan Agreement.
E. The Borrower has agreed to use the proceeds of the Project Loan to finance the acquisition and construction of the Project.
F. 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”) and a Promissory Note (Taxable) dated the Delivery Date (together with all riders and modifications thereto, the “Series B-2 Project Note” and, together with the Series B-1 Project Note, the “Project Notes”) delivered to the Governmental Lender, which Project Note s will be endorsed by the Governmental Lender without recourse to the Fiscal Agent as security for the Funding Loan.
G. 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 (as the same may be amended, supplemented and restated, the “Security Instrument”) with respect to the Project, which Security Instrument will be assigned by the Governmental Lender to the Fiscal Agent as security for the Funding Loan.
H. Pursuant to that certain Loan Purchase Agreement dated as of June 1, 2023, between California Community Reinvestment Corporation, a California nonprofit public benefit corporation, as permanent lender (“CCRC”) and the Borrower, CCRC has agreed, subject to the satisfaction of the terms and conditions set forth therein, 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 Project 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 the Funding Loan Agreement, the Series B-1 Governmental Note, the Projec t Loan Agreement, the Series B-1 Project Note, the Security Instrument and certain other documents executed in connection with the Project Loan.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the mutual covenants and representations hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All words and phrases (except for Event of Default) defined in the Funding Loan Agreement shall have the same meanings for the purposes of this Project Loan Agreement. In addition to the words and phrases defined in the Funding Loan Agreement and elsewhere herein, the following words and phrases shall have the following meanings:
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
3 “Borrower’s Governing Agreement” means Borrower’s Amended and Restated Agreement of Limited Partnership, dated as of the Delivery Date, as such agreement may be supplemented or amended.
“Event of Default ” means any of those events specified in and defined by the applicable provisions of Article VII hereof to constitute an event of default. “Fee Component” means the regular, ongoing fees due from time to time to the Fiscal Agent and the Rebate Analyst, if any, expressed as a flat, fixed amount or in terms of a percentage of the unpaid principal amount of the Funding Loan on an annual basis. “General Partner” means Keyes Charities LLC, a California limited liability company, together with its successors and assigns.
“Ground Lease” means that certain Ground Lease dated on or about the date of this Project Loan Agreement by and between the County, as landlord, and the Borrower, as tenant. “Hazardous Substance” means and includes asbestos or any substance containing asbestos, polychlorinated biphenyls, any explosives, radioactive materials, chemicals known or suspected to cause cancer or reproductive toxicity, pollutants, effluents, contaminants, emissions, infectious wastes, any petroleum or petroleum -derived waste or product or related materials and any items defined as hazardous, special or toxic materials, substances or waste under any Hazardous Substance Law, o r any such material which shall be removed from the Project pursuant to any administrative order or enforcement proceeding or in order to place the Project in a condition that is suitable for ordinary use. “Hazardous Substance” shall not include substances typically used in the ordinary course of developing, operating and maintaining apartment complexes provided that such substances are used in accordance with applicable laws. “Hazardous Substance Laws” collectively means and includes any present and future local, state, federal or international law or treaty relating to public health, safety or the environment including without limitation, the Resource Conservation and Recovery Act, as amended (“RCRA”), 42 U.S.C. § 6901 et seq., the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, as amended 42 U.S.C. § 7401 at seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the Uranium Mill Tailings Radiation Control Act, 42 U.S.C. § 7901 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 655 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq., the National Environmental Policy Act, 42 U.S.C. § 4321 et seq., the Noise Control Act, 42 U.S.C. § 4901 et seq., and the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq., and the amendments, regulations, orders, decrees, permits, licenses or deed restrictions now or hereafter promulgated thereunder, and any similar law, regulation, order, decree, permit, license or deed restriction of the State.
“Investor Limited Partner ” means Wells Fargo Affordable Housing Corp., and its permitted successors and assigns.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
4 “Project Loan Agreement ” means this Project Loan Agreement, together with any amendments hereto.
“Project Loan Payment ” means each payment of the Project Loan on each Project Loan Payment Date pursuant to the Project Notes and this Project Loan Agreement. “Project Loan Payment Date ” means (A) the first B usiness Day of each calendar month, commencing [July 1], 2023, pursuant to the terms of the Project Note s or (B) any other date on which the Project Loan is prepaid or paid, whether at scheduled maturity or upon prepayment or acceleration of the maturity thereof.
“Taxes” means all taxes, water rents, sewer rents, assessments and other governmental or municipal or public or private dues, fees, charges and levies and any liens (including federal tax liens) which are or may be levied, imposed or assessed upon the Project or any part thereof, or upon any leases pertaining thereto, or upon the rents, issues, income or profits thereof, whether any or all of the aforementioned be levied directly or indirectly or as excise taxes or as income taxes.
Section 1.02. Interpretation. 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. Words importing persons include firms, partnerships, limited liability companies, joint ventures, associations and corporations. References to Articles, Sections and other subdivisions of this Project Loan Agreement are the Articles, sections and other subdivisions of this Project Loan Agreement as originally executed.
The terms “herein,” “hereunder,” “hereby,” “hereto,” “hereof” and any similar terms refer to this Project Loan Agreement; the term “heretofore” means before the date of execution of this Project Loan Agreement; and the term “hereafter” means after the date of execution of this Project Loan Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations of the Governmental Lender. The Governmental Lender makes the following representations as the basis for the undertaking on its part herein contained:
(a) The Governmental Lender is a municipal corporation and charter city duly organized, validly existing and in good standing under the laws of the State. (b) The Governmental Lender has all necessary power and authority to make the Project Loan from the proceeds thereof, and to execute, and deliver this Project Loan Agreement, the Funding 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 Governmental Lender has taken all necessary action on its part to make the Project Loan from the proceeds of the Funding Loan.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
5 (d) The Governmental Lender is not in default under or in violation of, and the execution and delivery of the Financing Documents to which it is a party, and its compliance with the terms and conditions thereof will not conflict or constitute a default under or a violation of (i) the Act, (ii) to its knowledge, any other existing laws, rules, regulations, judgments, decrees and orders applicable to it, or (iii) to its knowledge, the provisions of any agreements and instruments to which the Governmental Lender is a party, a default under or violation of which would prevent it from entering into the Funding Loan Agreement, executing and delivering the Governmental Note s, financing the Project, executing and delivering the other Financing Documents to which it is a party or consummating the transactions contemplated thereby, and, to its knowledge, no event has occurred and is continuing under the provisions of any such agreement or instrument or otherwise that with the lapse of time or the giving of notice, or both, would constitute such a default or violation (it being understood, however, that the Governmental Lender is making no representations as to the necessity of registering the Project Notes pursuant to any securities laws or complying with any other requirements of securities laws). (e) No authorization, consent, approval, order, registration, declaration or withholding of objection on the part of, or filing of or with any governmental authority, other than those already obtained, is required for the due execution and delivery by the Governmental Lender of, and performance by the Governmental Lender of its obligations under, the Financing Documents.
(f) There is no action, suit, proceeding, inquiry or investigation pending or, to the knowledge of the Governmental Lender, threatened against the Governmental Le nder by or before any court, governmental agency or public board or body, which (i) affects or questions the existence or the territorial jurisdiction of the Governmental Lender or the title to office of any member of the governing body of the Governmental Lender; (ii) affects or seeks to prohibit, restrain or enjoin the execution and delivery of any Financing Documents to which the Governmental Lender is a party, or the issuance, sale, execution or delivery of the Governmental Note s; (iii) affects or quest ions the validity or enforceability of the Governmental Notes or any Financing Document to which the Governmental Lender is a party; (iv) questions the tax-exempt status of the Series B-1 Governmental Note under the Code; or (v) questions the power or authority of the Governmental Lender to perform its obligations under the Governmental Note s or any Financing Document to which it is a party, or to carry out the transactions contemplated by the Governmental Note s and the Financing Documents to which it is a party.
(g) To its knowledge, no officer or other official of the Governmental Lender has any personal financial interest in the Project or the Borrower or in the transactions contemplated by this Project Loan Agreement.
(h) Upon the discovery by the Governmental Lender of any noncompliance by the Borrower with this Project Loan Agreement, the Tax Certificate or the Regulatory Agreement, the Governmental Lender will promptly notify the Fiscal Agent, the Servicer and the Funding Lender Representative of such noncompliance and will, subject to the provisions of Article VII hereof, promptly institute action, or cause the Fiscal Agent to institute action, to correct such noncompliance, will diligently pursue such action and will DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
6 attempt to correct such noncompliance within 60 days after such discovery, subject to the provisions of the Funding Loan Agreement, this Project Loan Agreement, the Tax Certificate and the Regulatory Agreement.
It is expressly acknowledged that the Governmental Lender makes no representation as to the financial position or business condition of the Borrower and does not represent or warrant as to any of the statements, materials (financial or otherwise), representations or certifications furnished or to be made and furnished by the Borrower in connection with the issuance, sale, execution and delivery of the Governmental Note s, or as to the correctness, completeness or accuracy of such statements.
Section 2.02. Representations, Warranties and Covenants of the Borrower. The Borrower makes the following representations, warranties and covenants, all of which, together with the other representations and agreements of the Borrower contained in this Project Loan Agreement, are relied upon by the Governmental Lender, the Funding Lender, the Servicer and the Fiscal Agent and serve as a basis for the undertakings of the Governmental Lender, the Servicer and the Fiscal Agent contained in this Project Loan Agreement:
(a) The Borrower is a limited partnership duly organized, validly existing and in good standing under the laws of the state in which it has been organized and is duly qualified to conduct its business under the laws of the State and in every other state in which the nature of its business requires such qualification, has full legal right, power and authority to enter into this Project Loan Agreement and the other Financing Documents, and to carry out and consummate all transactions contemplated hereby and by the other Financing Documents, and by proper action has duly authorized the execution, delivery and performance of this Project Loan Agreement and the other Financing Documents. All corporate general partners, if any, of the Borrower are duly organized and in good standing under the laws of their respective states of organization and are duly qualified to transact business in the State as either domestic or foreign corporations, as applicable. All partnership general partners, if any, are duly formed and in good standing under the laws of their respective states of formation and, to the extent required by the laws of the State, are duly qualified to transact business in the State as either domestic or foreign partnerships or limited liability companies, as applicable.
(b) The Borrower has the legal right, power and authority to (i) own its properties and assets, including, but not limited to, the Project, (ii) to carry on its business as now being conducted and the Borrower contemplates it to be conducted with respect to the Project and (iii) execute and deliver, carry out its obligations under, and close the transactions provided for in, the Financing Documents to which it is a party. (c) Each of the Financing Documents to which the Borrower is a party has been duly authorized, executed and delivered by the Borrower and, assuming due authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and general principles of equity.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
7 (d) No authorization, consent, approval, order, registration, declaration or withholding of objection on the part of, or filing of or with any governmental authority, other than those already obtained or those necessary to be obtained during the course of construction of the Project, is required for the due execution and delivery or approval, as the case may be, by the Borrower of, and the performance by the Borrower of its obligations under, the Financing Documents.
(e) None of the execution and delivery of the Financing Documents to which the Borrower is a party, the consummation of the transactions provided for in the Financing Documents, or the Borrower’s fulfillment of or compliance with the terms and conditions of the Financing Documents (i) violates or will violate any law, rule or regulation of any governmental agency or body having jurisdiction over the Borrower, or any of its activities or properties, or any judgment, orde r, writ, injunction or decree to which the Borrower is subject, or any of the organizational or other governing documents of the Borrower, (ii) conflicts or will conflict with any agreement, instrument or license to which the Borrower is now a party or by which it or any of its properties or assets is bound or results or will result in a breach of, or constitutes or will constitute a default (with due notice or the passage of time or both) under, any such agreement, instrument or license, (iii) contravenes or will contravene any such law, rule or regulation or any such judgment, order, writ, injunction or decree, or (iv) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, except for any lien, charge or encumbrance permitted under the terms of the Financing Documents.
(f) There is no action, suit, proceeding, inquiry or investigation pending or, to the Borrower’s knowledge, threatened against or affecting the Borrower or any of its properties (including, without limitation, the Project), which, if adversely determined, would (i) impair the right of the Borrower to carry on its business substantially as now conducted and as contemplated by the Financing Documents, (ii) a dversely affect the financial condition of the Borrower, (iii) prohibit, restrain or enjoin the making of the Funding Loan or the Project Loan or the execution and delivery of any of the Financing Documents, (iv) adversely affect the validity or enforceability of any of the Financing Documents, or (v) adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series B-1 Governmental Note. (g) The Project and the operation of the Project (in the manner contemplated by the Financing Documents) conform and, following completion of the construction of the Project, will continue to conform in all material respects with the requirements of the Act as well as all applicable zoning, planning, building and environmental laws, ordi nances and regulations of governmental authorities having jurisdiction over the Project. (h) The Borrower has filed or caused to be filed all federal, state and local tax returns which are required to be filed or has obtained appropriate extensions therefor, a nd has paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
8 (i) The Borrower is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party which default would materially adversely affect the transactions contemplated by the Financing Documents or the operations of the Borrower or the enforceability of the Financing Documents to which the Borrower is a party or the ability of the Borrower to perform all obligations thereunder.
(j) The Borrower agrees to pay all costs of maintenance and repair, and all Taxes and assessments, insurance premiums (including public liability insurance and insurance against damage to or destruction of the Project) concerning or in any way related to the Project, or any part thereof, and any expenses or renewals thereof, and any other governmental charges and impositions whatsoever, foreseen or unforeseen, and all utility and other charges and assessments concerning or in any way related to the Project. (k) All of the partnership interests in the Borrower are validly issued and are fully registered, if required, with the applicable governmental authorities and/or agencies, and there are no outstanding options or rights to purchase or acquire those interests (other than pursuant to the terms of the Borrower’s limited partnership agreement and related agreements in connection therewith). Nothi ng in this Project Loan Agreement shall prevent the Borrower from issuing additional partnership interests or ownership interests if such units are issued in accordance with all applicable securities laws. (l) The representations and warranties of the Borrower contained in the Tax Certificate and Regulatory Agreement are true and accurate in all material respects. (m) The information, statements or reports furnished in writing to the Governmental Lender, the Servicer and the Funding Lender Representative by the Borrower in connection with this Project Loan Agreement or the consummation of the transactions contemplated hereby do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and the representations and warranties of the Borrower and the statements, information and descriptions contained in the Borrower’s closing certificates, as of the Delivery Date, are true and correct in all material respects, do not contain any untrue statement of a material fact, and do not omit to state a material fact necessary to make the representations, warranties, statements, information and descriptions contained therein, in the light of the circumstances under which they were made, not misleading; and any estimates or assumptions contained in any certificate of the Borrower delivered as of the Delivery Date are reasonable. (n) To the knowledge of the Borrower, no commissioner, member, officer or employee of the Governmental Lender has been or is in any manner interested, directly or indirectly, in that person’s own name or in the name of any other person, in the Financing Documents, the Borrower or the Project, in any contract for property or materials to be furnished or used in connection with the Project, or in any aspect of the transactions contemplated by the Financing Documents.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
9 (o) The Borrower intends to hold the Project for its own account and has no current plans to sell, and has not entered into any agreement, to sell all or any portion of the Project (other than pursuant to the terms of the Borrower’s Governing Agreement and related agreements in connection therewith).
(p) The Project is located wholly within the boundaries of the City. (q) The Borrower shall make no changes to the Project or to the operation thereof which would adversely affect the qualification of the Project under the Act or impair the exclusion from gross income for federal income tax purposes of the interest on the Series B-1 Governmental Note. The Borrower shall operate the Project as required by the Regulatory Agreement.
(r) The Funding Loan Agreement has been submitted to the Borrower for examination, and the Borrower, by execution of this Project Loan Agreement, acknowledges and agrees that it has participated in the drafting of the Funding Loan Agreement and that it is bound by, shall adhere to the provisions of, covenants and agrees to perform all obligations required of the Borrower pursuant to, and shall have the rights set forth by the applicable terms and conditions of, the Funding Loan Agreement. (s) The Borrower will have a ground leasehold interest in the Project site and a fee ownership interest in the improvements subject to the Ground Lease , subject only to liens permitted under the Security Instrument.
(t) The Borrower acknowledges that (i) it understands the nature and structure of the transactions relating to the financing of the Project, (ii) it is familiar with the provisions of all of the documents and instruments relating to the financing, (iii) it understands the risks inherent in such transactions, including without limitation the risk of loss of the Project, (iv) it has not relied on the Governmental Lender, the Fiscal Agent, CCRC, the Initial Funding Lender, the Funding Lender Representative or the Servicer for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by the Financing Documents or otherwise relied on the Governmental Lender, the Fiscal Agent, CCRC, the Initial Funding Lender, the Funding Lender Representative or the Servicer in any manner, and (v) neither the Governmental Lender nor the Funding Lender makes any warranty, either express or implied, as to the condition of the Project or that it will be suitable for the Borrower’s purposes or needs. (u) The Borrower shall provide no less than 30 days’ written notice to CDLAC and to the Issuer prior to the redemption of the Project Notes, in whole or in part, on the Conversion Date.
(v) All representations an d warranties of the Borrower in any Financing Documents are incorporated herein by reference for the benefit of the Governmental Lender and the Fiscal Agent as if fully set forth herein.
Section 2.03. Representations and Warranties of the Fiscal Agent . The Fiscal Ag ent makes the following representations and warranties for the benefit of the Governmental Lender, the Borrower, the Funding Lender and the Servicer:
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
10 (a) The Fiscal Agent is a national banking association, duly organized and existing under the laws of the Unit ed States of America. The Fiscal Agent is duly authorized to act as a fiduciary and to execute the trust created by the Funding Loan Agreement, and meets the qualifications to act as Fiscal Agent under the Funding Loan Agreement.
(b) The Fiscal Agent has comp lied with the provisions of law which are prerequisite to the consummation of, and has all necessary power (including trust powers) and authority (i) to execute and deliver this Project Loan Agreement and the other Financing Documents to which it is a party, (ii) to perform its obligations under this Project Loan Agreement and the other Financing Documents to which it is a party, and (iii) to consummate the transactions contemplated by this Project Loan Agreement and the other Financing Documents to which it is a party.
(c) The Fiscal Agent has duly authorized (i) the execution and delivery of this Project Loan Agreement and the other Financing Documents to which it is a party, (ii) the performance by the Fiscal Agent of its obligations under this Project Loan Agreement and the other Financing Documents to which it is a party, and (iii) the actions of the Fiscal Agent contemplated by this Project Loan Agreement and the other Financing Documents to which it is a party.
(d) Each of the Financing Documents to which the Fiscal Agent is a party has been duly executed and delivered by the Fiscal Agent and, assuming due authorization, execution and delivery by the other parties thereto, constitutes a valid and binding obligation of the Fiscal Agent, enforceable against the Fiscal Agent in accordance with its terms, except as enforceability may be limited by national bank receivership, bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (e) The Fiscal Agent meets the qualifications to act as Fiscal Agent under the Funding Loan Agreement.
(f) The Fiscal Agent has complied with the provisions o f law which are prerequisites to the consummation of the transactions on the part of the Fiscal Agent described or contemplated in the Financing Documents.
(g) No approval, permit, consent, authorization or order of any court, governmental agency or public board or body not already obtained is required to be obtained by the Fiscal Agent as a prerequisite to (i) the execution and delivery of this Project Loan Agreement and the other Financing Documents to which the Fiscal Agent is a party, (ii) the authentication or delivery of the Governmental Notes, (iii) the performance by the Fiscal Agent of its obligations under this Project Loan Agreement and the other Financing Documents to which it is a party, or (iv) the consummation of the transactions contemplated by this Project Loan Agreement and the other Financing Documents to which the Fiscal Agent is a party. The Fiscal Agent makes no representation or warranty relating to compliance with any federal or state securities laws.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
11 Section 2.04. Arbitrage and Rebate Fund Calculations. The Borrower shall (a) take or cause to be taken all actions necessary or appropriate in order to fully and timely comply with the obligations of the Borrower as set forth in Section 4.12 of the Funding Loan Agreement, and (b) if required to do so under Section 4.12 of the Funding Loan A greement, select at the Borrower’s expense, a Rebate Analyst reasonably acceptable to the Governmental Lender for the purpose of making any and all calculations required under Section 4.12 of the Funding Loan Agreement.
Such calculations, if required, sha ll be made in the manner and at such times as specified in Section 4.12 of the Funding Loan Agreement. The Borrower shall cause the Rebate Analyst to provide such calculations to the Fiscal Agent and the Governmental Lender at such times and with such directions as are necessary to comply fully with the arbitrage and rebate requirements set forth in the Funding Loan Agreement and to comply fully with Section 148 of the Code, including the timely payment of any arbitrage rebate owed.
Section 2.05. Tax Covenants of the Borrower. The Borrower covenants and agrees that:
(a) It will at all times comply with the terms of the Tax Certificate and the Regulatory Agreement;
(b) It will not take, or permit to be taken on its behalf, any action which would cause the interest payable on the Series B-1 Governmental Note to be included in gross income of the Funding Lender for federal income tax purposes, and will take such action as may be necessary in the opinion of Tax Counsel to continue such exclusion from gross income, including, without limitation, the preparation and filing of all statements required to be filed by it in order to maintain the exclusion (including, but not limited to, the filing of all reports and certifications required by the Regulatory Agreement); (c) No changes will be made to the Project, no actions will be taken by the Borrower and the Borrower will not omit to take any actions, which will in any way adversely affect the tax-exempt status of the Series B-1 Governmental Note; (d) It will comply with the requirements of Se ction 148 of the Code and the Regulations issued thereunder throughout the term of the Funding Loan and the portion of the Project Loan corresponding to the Funding Loan (the “Project Loan”) and will not make any use of the proceeds of the Funding Loan or the Project Loan, or of any other funds which may be deemed to be proceeds of the Series B-1 Governmental Note under the Code and the related regulations of the United States Treasury, which would cause the Series B- 1 Governmental Note to be “arbitrage bonds” within the meaning of Section 148 of the Code; and
(e) If the Borrower becomes aware of any situation, event or condition which would, to the best of its knowledge, result in the interest on the Series B -1 Governmental Note becoming includable in gross income of the Funding Lender for purposes of federal income tax purposes, it will promptly give written notice of such circumstance, event or condition to the Governmental Lender, the Fiscal Agent, the Funding Lender Representative and the Servicer.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
12 (f) The full amount of each disbursement of proceeds of the Project Loan will be applied to pay or to reimburse the Borrower for the payment of Costs of the Project and, after taking into account any proposed disbursement, (i) at least 95% of the net proceeds of the Series B-1 Governmental Note (as defined in Section 150 of the Code) will be used to provide a qualified residential rental project (as defined in Section 142(d) of the Code) and (ii) less than 25% of the net proceeds of the Series B-1 Governmental Note will have been disbursed to pay or to reimburse the Borrower for the cost of acquiring an interest in land; none of the proceeds (as defined for purposes of Section 147(g) of the Code) of the Series B-1 Governmental Note will be disbursed to provide working capital; (g) The Borrower will cause all of the residential units in the Project to be rented or available for rental on a basis which satisfies the requirements of the Act, the Code and the Regulatory Agreement;
(h) All leases will comply with all applicable laws and the Regulatory Agreement;
(i) In connection with any lease or grant by the Borrower of the use of the Project, the Borrower will require that the lessee or user of any portion of the Project not use that portion of the Project in any manner that would violate the covenants set forth in this Project Loan Agreement or the Regulatory Agreement; (j) No proceeds of the Funding Loan shall be used for the acquisition of any tangible property or an interest therein, other than land or an interest in lan d, unless the first use of such property is pursuant to such acquisition; (k) From the proceeds of the Funding Loan and investment earnings thereon, an amount not in excess of two percent of the proceeds of the Funding Loan, will be used for Costs of Issuance of the Series B -1 Governmental Note, all within the meaning of Section 147(g)(1) of the Code;
(l) No proceeds of the Funding Loan shall be used directly or indirectly to provide any airplane, skybox or other private luxury box, health club facility, facility used for gambling or store the principal business of which is the sale of alcoholic beverages for consumption off premises; and
(m) The Borrower shall not 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.
In the event of a conflict between the terms and requirements of this Section 2.05 and the Tax Certificate, the terms and requirements of the Tax Certificate shall control.
Section 2.06. Hazardous Waste Covenant . The Borrower further represents, warrants and covenants that (a) the Borrower will not use Hazardous Substances on, in or under the Project except those that are both (i) in compliance with all Hazardous Substance Laws and with permits issued pursuant thereto, if and to the extent required, and (ii) in amounts not in excess of that necessary to operate the Project, and (b) to the best of the Borrower’s knowledge, there are no DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
13 Hazardous Substances in, on or under the Property except those that are in complia nce with Hazardous Substances Laws and with permits issued pursuant thereto (if such permits are required). The Borrower shall use its best efforts to not allow any tenant of the Property to violate any Hazardous Substance Law. The Borrower shall defend, indemnify, and hold harmless the Governmental Lender from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to, (a) the presence, disposal, release, or threatened release of any Hazardous Substances which are on or from the Project which affect, the soil, water, vegetation, buildings, personal property, persons, animals, or otherwise, (b) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Substances on or from the Project, and/or (c) any violation of Hazardous Substances Laws, without limitation, attorney and consultant fees, investigation and laboratory fees, court costs, and litigation expenses. The provisions of this paragraph: (a) shall be in addition to any and all other obligations and liabilities the Borrower may have to the Governmental Lender at common law, and (b) with respect to any liability or cost arising as a result of acts or omissions of the Borrower during the term of this Project Loan Agreement, shall survive the termination of this Project Loan Agreement. This paragraph shall not obligate the Borrowe r in any way with respect to any acts or omissions of any entity to which the Project is sold or transferred in accordance with the provisions of Section 13 of the Regulatory Agreement or to the extent to the willful misconduct of the Governmental Lender or its agents or assigns.
The indemnifications and protections set forth in this Section 2.06 shall be extended, with respect to the Governmental Lender, to its Councilmembers, directors, officers, employees, agents and servants and persons under the Governmental Lender’s control or supervision but shall not extend to the Funding Lender.
Anything to the contrary in this Borrower Loan Agreement notwithstanding, the covenants of the Borrower contained in this Section 2.06 shall remain in full force and effect after the termination of this Project Loan Agreement until the later of (i) the expiration of the period stated in the applicable statute of limitations during which a claim or cause of action may be brought and (ii) payment in full or the satisfaction of such claim or cause of action and of all expenses and charges incurred by the Governmental Lender relating to the enforcement of the provisions herein specified.
For the purposes of this Section 2.06, the Borrower shall not be deemed an employee, agent or servant of the Governmental Lender or person under Governmental Lender’s control or supervision.
Section 2.07. Additional Environmental Matters.
(a) The Borrower shall require in any management agreement for the Project that the management company shall operate and mai ntain the Project in material compliance with all applicable Hazardous Substances Laws. (b) The Borrower shall use its best efforts to prevent the imposition of any liens or encumbrances against the Project for the costs of any response, removal or remedial action or cleanup of Hazardous Substances.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
14 (c) The Borrower covenants and agrees that it will not knowingly conduct or allow to be conducted any business, operations or activity on the Project, or employ or use the Project to manufacture, treat, store (except with respect to storage in the ordinary operation of the Project), or dispose of any Hazardous Substance (including, without limitation, petroleum, its derivatives, crude oil or any fraction thereof), or any other substance the disposal of which is prohibited, controlled or regulated under applicable law, or which poses a threat or nuisance to safety, health or the environment, including, without limitation, any business, operation or activity which would bring the Project within the ambit of, or otherwise violate, the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq., or cause or knowingly allow to be caused, a release or threat of release, of a nondiminimis quantity of hazardous substances on the Project as defined by, and within the ambit of, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section 9601 et seq., or any similar state, county, regional or local statute providing for financial responsibility for cleanup for the release or threatened release of substances provided for thereunder.
(d) The Borrower covenants and agrees that it shall take all approp riate response action, including any removal and remedial action, in the event of a release of Hazardous Substances in violation of Hazardous Substances Laws. (e) The Borrower shall, as soon as practical and in any event within 15 days, notify the Governmental Lender and the Funding Lender of any notice, letter, citation, order, warning, complaint, claim or demand that (i) any non- compliance with any Hazardous Substances Laws related to the Project, (ii) a Release or material threat of Release of Hazardous Substances from the Project, (iii) any required or proposed remediation of environmental conditions relating to the Project or (iv) the Project is subject to an environmental lien.
(f) During the period in which this Project Loan Agreement is in effect, the Borrower hereby grants, and will cause any tenants to grant, to the Governmental Lender and the Funding Lender , their respective agents, attorneys, employees, consultants and contractors an irrevocable license and authorization upon reasonable notice of not less than 24 hours and at a reasonable time to enter upon and inspect the Project and perform such tests, including, without limitation, subsurface testing, soils and ground water testing, and other tests which may physically invade the Project, as the Governmental Lender or the Funding Lender, in its respective reasonable discretion, determines are necessary to protect the lien created by the Security Instrument. The Governmental Lender and the Funding Lender and their officers, employees and agents shall indemnify and hold harmless the Borrower, its partners, employees and agents from any and all claims for damages to persons or property arising from any activity of the Governmental Lender, the Funding Lender, their employees, officers, agents, representative s, contractors, subcontractors or consultants on the Property. The provisions of this Section 2.07 shall be for the full and equal benefit of the Governmental Lender and of the Funding Lender as assignee of the Governmental Lender.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
15 ARTICLE III
THE PROJECT LOAN
Section 3.01. Conditions to Funding the Project Loan. On the Delivery Date and thereafter, the Governmental Lender shall cause the proceeds of the Funding Loan to be deposited with the Fiscal Agent in accordance with Sections 2.02 and 2.11 of the Funding Loan Agreement and Section 3.03 hereof. The Fiscal Agent shall use such proceeds as provided in Article II of the Funding Loan Agreement to fund advances of the Project Loan, provided that no initial disbursements of proceeds shall be made until the following conditions have been met:
(a) The Borrower shall ha ve executed and delivered to the Governmental Lender the Project Note s and the Governmental Lender shall have endorsed the Project Notes to the Fiscal Agent;
(b) The Security Instrument and the Assignment, with only such changes therein as shall be approved in writing by Funding Lender Representative, shall have been executed and delivered by the Borrower and the Governmental Lender, respectively, and delivered to the Title Company for recording in the appropriate office for officially recording real estate documents in the jurisdiction in which the Project is located (the “Recorder’s Office”);
(c) The Regulatory Agreement shall have been executed and delivered by the parties thereto and shall have been delivered to the Title Company for recording in the Recorder’s Office, and the Governmental Lender shall have received evidence satisfactory to it of such delivery;
(d) All other Financing Documents not listed above shall have been executed and delivered by all parties thereto and delivered to the Fiscal Agent; (e) The Borrower shall have delivered to the Fiscal Agent, the Governmental Lender, the Funding Lender Representative and the Servicer a certificate confirming, as of the Delivery Date, the matters set forth in Section 2.02 hereof and an opinion of its counsel or other counsel satisfactory to the Fiscal Agent, the Governmental Lender, Tax Counsel, and the Funding Lender Representative;
(f) Delivery to the Fiscal Agent or into escrow with the Title Company (or separate escrow company, if applicable) 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 (as defined in Section 3.03 herein), all as specified in Escrow Instructions provided by counsel to the Funding Lender or the Governmental Lender (or such other counsel as may be acceptable to the Funding Lender) and/or as specified in a closing memorandum of the Funding Lender and approved by the Governmental Lender;
(g) Delivery to the Title Company of Borrower’s Escrow Instructions in form acceptable to the Governmental Lender and the Funding Lender; and DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
16 (h) Payment of all fees payable in connection with the closing of the Project Loan, including the portion of the Governmental Lender Fee due on the Closing Date, and the initial fees and expenses of the Fiscal Agent and the Funding Lender.
Section 3.02. Terms of the Project Loan; Servicing.
(a) The Project Loan shall (i) be evidenced by the Project Notes; (ii) be secured by the Security Instrument; (iii) be in the maximum aggregate principal amount of $_________________________; (iv) bear interest as provided in the Project Note s; (v) provide for principal and interest payments in accordance with the Project Notes; and (vi) be subject to optional and mandatory prepayment at the times, in the manner and on the terms, and have such other terms and provisions, as provided herein and in the Project Notes. The outstanding principal balance of the Project Loan at any time shall be an amount equal to the aggregate proceeds of the Funding Loan advanced by the Funding Lender and deposited by the Fiscal Agent into the Project Loan Fund under the Funding Loan Agreement minus any principal amounts prepaid in accordance with the terms hereof and the Project Notes. In the event that principal of or interest payable on the Project 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 th e Project Loan shall accrue at the Default Rate until the unpaid amount, together with interest thereon, shall have been paid in full and all other defaults and Events of Default (if any) have been cured.
(b) The Funding Lender Representative may appoint a Ser vicer to service the Loans for all or a portion of the term of the Loans. The initial Servicer of the Loans is Wells Fargo Bank, National Association. O n and subject to the occurrence of the Conversion Date, CCRC shall become the Servicer. The Funding L ender Representative may remove a Servicer or appoint a replacement Servicer, in its discretion, by written notice provided to the Governmental Lender, the Fiscal Agent and the Borrower. Any successor Servicer shall signify its acceptance of the duties and obligations imposed upon it by the Funding Loan Agreement and this Project Loan Agreement by executing such instrument(s) as shall be acceptable to the Funding Lender Representative, a copy of which shall be provided to the parties hereto.
(c) During any period that the Servicer services the Loans, the Borrower shall make all payments in connection with the Project Loan to the Servicer, and the Servicer will remit to the Funding Lender all payments of principal of, Prepayment Premium, if any, and interest due with respect to the Funding Loan, together, with any other amounts due to the Funding Lender. During a period in which there is no Servicer, all notices to be sent to the Servicer shall be sent to the Funding Lender Representative (to the extent not already provided) and all amounts to be paid to the Servicer by the Borrower shall be paid directly to the Fiscal Agent (unless otherwise directed by the Funding Lender Representative). (d) The Governmental Lender, the Fiscal Agent and the Borrower hereby acknowledge and agree that (i) the Funding Lender Representative has appointed the Servicer to service and administer the Project Loan, (ii) the selection or removal of any Servicer is in the sole and absolute discretion of the Funding Lender Representative, and DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
17 (iii) none of the Governmental Lender, the Fiscal Agent or the Borrower shall terminate or attempt to terminate any Servicer as the servicer for the Project Loan or appoint or attempt to appoint a substitute servicer for the Project Loan.
Section 3.03. Deposits. On t he Delivery Date, pursuant to Section 2.11 of the Funding Loan Agreement, the Initial Installment shall be deposited in the Series B-1 Subaccount of the Project Account of the Project Loan Fund. Thereafter, on each date of an advance of the proceeds of the Funding Loan, such proceeds shall be deposited in the Project Account of the Project Loan Fund in accordance with Section 4.02(a) of the Funding Loan Agreement. On the Delivery Date, the Borrower will cause to be transferred to the Fiscal Agent from the closing escrow, from Borrower funds, for credit to the Costs of Issuance Fund, the Cost of Issuance Deposit.
To the extent that amounts in the Costs of Issuance Fund from the above-mentioned sources are insufficient to pay all costs of closing the Loans, the Borrower shall cause the payment of such additional costs of closing the Loans to be made on its behalf as such amounts become due.
Section 3.04. Pledge and Assignment to Fiscal Agent. The parties hereto acknowledge, and the Borrower consents to, the pledge and assignment by the Governmental Lender to the Fiscal Agent pursuant to the Funding Loan Agreement of all of the Governmental Lender’s right, title and interest in this Project Loan Agreement (excluding the Unassigned Rights), the Project Loan, the Project Notes, the Security Instrument, the other Project Loan Documents and the Revenues as security for the payment of the principal of, any Prepayment Premium and interest on the Governmental Notes and the payment of any other amounts due under the Financing Documents.
Section 3.05. Investment of Funds. Except as otherwise provided in the Funding Loan Agreement, any money held as a part of any fund or account established under the Funding Loan Agreement shall be invested or reinvested by the Fiscal Agent in Qualified Investments in accordance with Section 4.08 of the Funding Loan Agreement.
Section 3.06. Damage; Destruction and Eminent Domain . If, prior to payment in full of the Project Loan, the Project or any portion thereof is destroyed or damaged in whole or in part by fire or other casualty, or title to, or the temporary use of, the Project or any portion thereof shall have been taken by the exercise of the power of eminent domain, and the Governmental Lender, the Borrower, the Fiscal Agent or the Servicer receives Net Proceeds from insurance or any condemnation award in connection therewith, such Net Proceeds shall be utilized as provided in the Project Loan Documents and the Funding Loan Agreement.
Section 3.07. Enforcement of Financing Documents. The Fiscal Agent or the Funding Lender Representative may enforce and take all reasonable steps, actions and the proceedings necessary for the enforcement of all terms, covenants and conditions of the Funding Loan Agreement and the other Financing Document s (excluding the Unassigned Rights) as and to the extent set forth herein and therein.
Section 3.08. Grant of Security Interest. To the extent not inconsistent with the Security Instrument and as security for payment and the performance by the Borrower of all other terms, conditions and provisions of the Financing Documents, the Borrower hereby pledges and assigns to the Fiscal Agent, and grants to the Fiscal Agent, a security interest in all the Borrower’s right, DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
18 title and interest in and to all payments to or moneys held in the funds and accounts created and held by the Fiscal Agent or the Servicer for the Project for the benefit of the holder(s) of the Governmental Notes. This Project Loan Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC.
ARTICLE IV
LOAN PAYMENTS
Section 4.01. Payments Under the Project Note s; Independent Obligation of Borrower.
(a) Payment Obligations. The Borrower agrees to repay the Project Loan on each Project Loan Payment Date as provided in the Project Note s, and in all instances at the times and in the amounts necessary to enable the Fiscal Agent, on behalf of the Governmental Lender, or the Servicer, to pay all amounts payable with respect to the Funding Loan when due, whether at maturity or upon prepayment (with Prepayment Premium, if applicable), acceleration or otherwise. To ensure such timely payment during the Permanent Phase, the Servicer shall collect from the Borrower, and the Borrower shall provide to the Servicer the foregoing payments not less than two Business Days prior to each respective Project Loan Payment Date.
The obligation of the Borrower to make the payments set forth in this Article IV shall be an independent obligation of the Borrower, separate from its obligation to make payments under the Project Note s, provided that in all events payments made by the Borrower under and pursuant to the Project Notes shall be credited against the Borrower’s obligations hereunder on a dollar for dollar basis. If for any reason the Project Note s or any provision of the Project Note s shall be held invalid or unenforceable against the Borrower by any court of competent jurisdiction, the Project Note s or such provision of the Project Note s shall be deemed to be the obligation of the Borrower pursuant to this Project Loan Agreement to the full extent permitted by law and such holding shall not invalidate or render unenforceable any of the provisions of this Article IV and shall not serve to discharge any of the Borrower’s payment obligations here under or eliminate the credit against such obligations to the extent of payments made under the Project Notes. (b) Obligations Unconditional; No Set-Off. The obligation of the Borrower to repay the Project Loan, to perform all of its obligations under the Project Loan Documents, to provide indemnification pursuant to Section 6.01 hereof, to pay costs, expenses and charges pursuant to Section 4.02 hereof and to make any and all other payments required by this Project Loan Agreement, the Funding Loan Agreement or any other documents contemplated by this Project Loan Agreement or by the Project Loan Documents shall, subject to the limitations set forth in Section 4.06 hereof, be absolute and unconditional, and shall be paid or performed without notice or demand, and without abatement, deduction, set -off, counterclaim, recoupment or defense or any right of termination or cancellation arising from any circumstance whatsoever, whether now existing or hereafter arising, and irrespective of whether the Borrower’s title to the Project or to any part thereof is defective or nonexistent, and notwithstanding any damage due to loss, theft or DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
19 destruction of the Project or any part thereof, any failure of consideration or frustration of commercial purpose, the taking by eminent domain of title to or of the right of temporary use of all or any part of the Project, legal curtailment of the Borrower’s use thereof, the eviction or constructive eviction of the Borrower, any change in the tax or other laws of the United States of America, the State or any political subdivision thereof, any change in the Governmental Lender’s legal organization or status, or any default of the Governmental Lender or the Fiscal Agent hereunder or under any other Financing Document, and regardless of the invalidity of any action of the Governmental Lender or the invalidity of any portion of this Project Loan Agreement.
(c) Payments from Borrower to Fiscal Agent or Servicer. Each payment by the Borrower hereunder or under the Project Notes shall be made in immediately available funds to the Fiscal Agent on each Project Loan Payment Date or such other date when such payment is due. Each such payment shall be made to the Fiscal Agent by deposit to such account as the Fiscal Agent may designate by written notice to the Borrower. Whenever any Project Loan Payment or any other payment under this Project Loan Agreement or under the Project Notes shall be stated to be due on a day that is not a Business Day, such payment shall be made on the first Business Day immediately thereafter.
Section 4.02. Additional Payments Under the Project Note s and this Project Loan Agreement.
(a) In addition to the payments set forth in Section 4.01 hereof, payments to be made by the Borrower under the Project Notes include certain money to be paid in respect of, among others, the Fee Component, and amounts required to be deposited pursuant to the Construction and Permanent Loan Agreement and the other Project Loan Documents, as set forth in subsection (b) of this Section 4.02. To the extent that any portion of the Fee Component, and amounts required to be deposited pursuant to the Construction and Permanent Loan Agreement and the other Project Loan Documents remain due and owing at any time, such amounts remaining d ue and owing shall be payable from money on deposit in the Administration Fund as provided in Section 4.06 of the Funding Loan Agreement or from other money of the Borrower, to the extent that money in the Administration Fund is insufficient for such purposes. All other fees and expenses shall be payable from money of the Borrower as provided in subsection (b) of this Section 4.02. (b) In addition to the funding of the initial deposits required of the Borrower described in Section 3.03, the Borrower shall pay (or cause to be paid by the Servicer or the Fiscal Agent (to the extent paid from money on deposit in the Administration Fund or the Costs of Issuance Fund, as applicable)), in consideration of the funding of the Project Loan, the following fees, expenses and other money payable in connection with the Loans:
(i) On the Delivery Date, from money on deposit in the Costs of Issuance Fund or, to the extent such money is insufficient for such purpose, from other money of the Borrower, to the Initial Funding Lender, its origination fees, together with all third party and out of pocket expenses of the Initial Funding Lender (including but not limited to the fees and expenses of counsel to the Initial Funding Lender) in connection with the Loans.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
20 (ii) On the Delivery Date, f rom money on deposit in the Costs of Issuance Fund or, to the extent such money is insufficient for such purpose, from other money of the Borrower, to the Governmental Lender, the Governmental Lender Fee due on the Closing Date, together with all third party and out of pocket expenses of the Governmental Lender (including but not limited to the fees and expenses of Tax Counsel and counsel to the Governmental Lender) in connection with the Loans and the execution and delivery of the Governmental Notes. (iii) On the Delivery Date, to the Fiscal Agent, its initial annual fee in an amount equal to $5,000.00, together with all third party and out of pocket expenses of the Fiscal Agent (including but not limited to the fees and expenses of counsel to the Fiscal Agent) in connection with the Loans and the execution and delivery of the Governmental Notes.
(iv) To the Fiscal Agent, the Ordinary Fiscal Agent’s Fees and Expenses and the Extraordinary Fiscal Agent’s Fees and Expenses when due from time to time.
(v) To the Governmental Lender, the Governmental Lender Fee when due and any extraordinary expenses not covered by the Governmental Lender Fee the Governmental Lender may incur in connection with the Financing Documents or the Project from time to time including all fees, charges , costs, advances, indemnities and expenses, including agent and counsel fees, of the Governmental Lender incurred under the Project Loan Documents or the Financing Documents, and any taxes and assessments levied on the Governmental Lender with respect to the Project, as and when the same become due.
(vi) To the Rebate Analyst, the reasonable fees and expenses of such Rebate Analyst in connection with the computations relating to arbitrage rebate required under the Funding Loan Agreement and this Project Loan Agreement when due from time to time.
(vii) To the Funding Lender Representative, any amount due and owing to the Funding Lender Representative from time to time but unpaid under the Construction and Permanent Loan Agreement.
(viii) To the Servicer, the amounts required to be deposited in respect of the reserves and impounds required under the Construction and Permanent Loan Agreement and the other Project Loan Documents.
(ix) If the Fiscal Agent is collecting and remitting loan payments under the Funding Loan Agreement, to the Fiscal Agent, within two Business Days of receipt from the Fiscal Agent of a notice of deficiency in the Administration Fund as provided in Section 4.06 of the Funding Loan Agreement, the amount of any such deficiency in the Administration Fund.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
21 Section 4.03. Payments to Rebate Fund. The Borrower shall pay when due to the Fiscal Agent at the Principal Office of the Fiscal Agent any amount required to be deposited in the Rebate Fund in accordance with Section 4.12 of the Funding Loan Agreement.
Section 4.04. Prepayment.
(a) Optional Prepayment of the Project Loan . The Borrower shall have the option to prepay the Project Loan in whole, together with all accrued and unpaid interest thereon, as provided in the Project Notes.
(b) Mandatory Prepayment of the Project Loan . The Borrower shal l be required to prepay all or a portion of the outstanding principal balance of the Project Loan, together with accrued interest thereon, and together with any Prepayment Premium due under the Project Notes, as provided in the Project Notes. Additionally, the Borrower shall be required to prepay all or a portion of the outstanding principal balance of the Project Loan, together with accrued interest thereon, and together with any Prepayment Premium due under the Project Notes, in connection with the following:
(i) In part, in the event the Borrower elects to make a Pre -Conversion Loan Equalization Payment; and
(ii) In whole, on the Mandatory Conversion Date (as defined in the Construction and Permanent Loan Agreement), at the written direction of the Initial Funding Lender, if the conversion Conditions are not satisfied on or prior to the Mandatory Conversion Date.
(c) Defeasance of the Funding Loan . In addition, after the Conversion Date and prior to the Window Period, the Borrower may cause a defeasance of the Funding Loan resulting in a release of the Pledged Security by satisfying the conditions set forth hereunder and in Article IX of the Funding Loan Agreement. In connection therewith, the Borrower will give written notice (a “Defeasance Notice”) to the Funding Lender Representative, the Servicer, the Governmental Lender and the Fiscal Agent of the date the Borrower desires to defease the Funding Loan (the “Defeasance Date”). The Defeasance Date may not be more than 60 calendar days, nor less than 30 calendar days, after the delivery of the Defeasance Notice. In addition to, and not in limitation of any other provisions of this Project Loan Agreement, the Borrower shall pay all fees, costs and expenses in connection with any defeasance whether or not such defeasance occurs.
Following such defeasance in accordance with the terms and conditions hereof and the Funding Loan Agreement, the Project Loan shall be deemed paid in full, and the Borrower shall be entitled to the release of the Security Instrument, the Pledged Security and other security provided by it for the Project Loan, subject to the terms and conditions hereof and the other Financing Documents.
Section 4.05. Borrower’s Obligations Upon Prepayment . In the event of any prepayment, the Borrower will timely pay, or cause to be paid through the Servicer, an amount equal to the principal amount of the Funding Loan or portion thereof called for prepayment, together with interest accrued to the prepayment date and any Prepayment Premium. In addition, DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
22 the Borrower will timely pay all fees, costs and expenses associated with any prepayment of the Funding Loan.
Section 4.06. Limits on Personal Liability.
(a) Except as otherwi se set forth in the Project Note s and subsection 4.06(b) below, from and after the Conversion Date, the obligations of the Borrower under this Project Loan Agreement and the other Financing Documents are non-recourse liabilities of the Borrower, which shall be enforced only against the Project and other property of the Borrower encumbered by the Financing Documents and not personally against the Borrower or any partner of the Borrower or any successor or assign of the Borrower.
However, nothing in this Section 4.06 shall limit the right of the Governmental Lender, the Fiscal Agent, the Servicer or the Funding Lender Representative to proceed against the Borrower to recover any fees owing to any of them or any actual out -of-pocket expenses (including but not limited to actual out-of-pocket attorneys’ fees incurred by any of them) incurred by any of them in connection with the enforcement of any rights under this Project Loan Agreement or the other Financing Documents. Nothing in this Section 4.06 shall limit any right that the Servicer or the Funding Lender Representative may have to enforce the Project Notes, the Security Instrument, or any other Financing Document in accordance with their terms.
(b) Notwithstanding anything contained in any other provision of t his Project Loan Agreement to the contrary (but subject to the provisions of Section 7.06 hereof), the following obligations of the Borrower shall be and remain the joint and several full recourse obligations of the Borrower and the Borrower’s General Part ner: (i) the Borrower’s obligations to the Governmental Lender and the Fiscal Agent under subsections (b)(iii), (b)(v), (b)(vi), and (b)(vii) of Section 4.02 hereof; (ii) the Borrower’s obligations under Sections 2.05 and 6.01 of this Project Loan Agreemen t; (iii) the Borrower’s obligation to pay any and all rebate amounts that may be or become owing with respect to the Funding Loan and fees and expenses of the Rebate Analyst as provided in Sections 2.04 and 4.03 of this Project Loan Agreement and the Tax Certificate; and (iv) the Borrower’s obligation to pay legal fees and expenses under Section 7.04 hereof.
ARTICLE V
SPECIAL COVENANTS OF BORROWER
Section 5.01. Performance of Obligations . The Borrower shall keep and faithfully perform all of its covenants and undertakings contained herein and in the Financing Documents, including, without limitation, its obligations to make all payments set forth herein and therein in the amounts, at the times and in the manner set forth herein and therein.
Section 5.02. Compliance With Applicable Laws . All work performed in connection with the Project shall be performed in strict compliance with all applicable federal, state, county and municipal laws, ordinances, rules and regulations now in force or that may be enacted hereafter.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
23 Section 5.03. Funding Loan Agreement Provisions. The execution of this Project Loan Agreement shall constitute conclusive evidence of approval of the Funding Loan Agreement by the Borrower. Whenever the Funding Loan Agreement by its terms imposes a duty or obligation upon the Borrower, such duty or obligation shall be binding upon the Borrower to the same extent as if the Borrower were an express party to the Funding Loan Agreement, and the Borrower shall carry out and perform all of its obligations under the Funding Loan Agreement as fully as if the Borrower were a party to the Funding Loan Agreement.
Section 5.04. [Reserved].
Section 5.05. Borrower to Maintain Its Existence; Certification of No Default. (a) The Borrower agrees to maintain its existence and maintain its current legal status with authority to own and operate the Project.
(b) In addition to performing all other similar requirements under the Financing Documents to which the Borrower is a party, the Borrower shall, within 30 days after the end of each calendar year, render to the Fiscal Agent a certificate executed by an Authorized Officer of the Borrower to the effect that the Borrower is not, as of the date of such certificate, in default of any of its covenants, agreements, representations or warranties under any of the Financing Documents to which the Borrower is a party and that, to the best of the Borrower’s knowledge, after reasonable investigation, there has occurred no default or Event of Default (as such terms are defined in each respective Financing Document) under any of the Financing Documents.
Section 5.06. Borrower to Remain Qualified in State and Appoint Agent. The Borrower will remain duly qualified to transact business in the State and will maintain an agent in the State on whom service of process may be made in connection with any actions against t he Borrower.
Section 5.07. Sale or Other Transfer of Project. The Borrower may convey and transfer the Project only upon strict compliance with the provisions of the Financing Documents, and upon receipt of the prior written consent of the Funding Lender Representative.
Section 5.08. Right to Perform Borrower’s Obligations. In the event the Borrower fails to perform any of its obligations under this Project Loan Agreement, the Governmental Lender, the Fiscal Agent, the Servicer and/or the Funding Lender Representative, after g iving requisite notice and opportunity to cure, if any, and subject to Section 5.05 of the Funding Loan Agreement, may, but shall be under no obligation to, perform such obligation and pay all costs related thereto, and all such costs so advanced shall become an additional obligation of the Borrower hereunder, payable on demand and if not paid on demand with interest thereon at the default rate of interest payable under the Project Loan Documents.
Section 5.09. Notice of Certain Events. The Borrower shall promptly advise the Governmental Lender, the Fiscal Agent, the Funding Lender Representative and the Servicer in writing of the occurrence of any Event of Default hereunder or any event which, with the passage of time or service of notice or both, would constitute an Event of Default, specifying the nature DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
24 and period of existence of such event and the actions being taken or proposed to be taken with respect thereto.
Section 5.10. Survival of Covenants. The provisions of Sections 2.04, 2.05, 4.02, 4.03,
6.01 and 7.04 hereof shall survive the expiration or earlier termination of this Project Loan Agreement and, with regard to the Fiscal Agent, the resignation or removal of the Fiscal Agent.
Section 5.11. Access to Project; Records. Subject to reasonable notice and the rights of tenants at the Project, the Governmental Lender, the Fiscal Agent, the Servicer and the Funding Lender Representative, and the respective duly authorized agents of each, shall have the right (but not any duty or obligation) at all reasonable times and during normal business hours: (a) to enter the Project and any other location containing the records relating to the Borrower, the Project, the Loans and the Borrower’s compliance with the terms and conditions of the Financing Documents; (b) to inspect and audit any and all of the Borrower’s records or accounts pertaining to the Borrower, the Project, the Loans and the Borrower’s compliance with the terms and conditions of the Financing Documents; and (c) to require the Borrower, at the Borrower’s sole expense, (i) to furnish such documents to the Governmental Lender, the Fiscal Agent, the Servicer and the Funding Lender Representative, as the Governmental Lender, the Fiscal Agent, the Servicer or the Funding Lender Representative, as the case may be, from time to time, deems reasonably necessary in order to determine that the provisions of the Financing Documents have been complied with and (ii) to make copies of any records that the Governmental Lender, the Fiscal Agent, the Servicer or the Funding Lender Representative or the respective duly authorized agents of each, may reasonably require. The Borrower shall make available to the Governmental Lender, the Fiscal Agent, the Servicer and the Funding Lender Representative, such information concerning the Project, the Security Instrument and the Financing Documents as any of them may reasonably request.
Section 5.12. Regulatory Agreement. The covenants of the Borrower in the Regulatory Agreement shall be deemed to constitute covenants of the Borrower running with the land and an equitable servitude for the benefit of the Governmental Lender and the Funding Lender and shall be binding upon any owners of the Project until such time as such restrictions expire as provided in the Regulatory Agreement. The Borrower covenants to file of record the Regulatory Agreement and such other documents, and to take such other steps as are necessary in order to assure that the restrictions contained in the Regulatory Agreement will, subject to the terms of the Regulatory Agreement, be binding upon all owners of the Project. The Borrower covenants to include such restrictions or a reference to such restrictions in any documents transferring any interest in the Project to another to the end that such transferee has notice of, and is bound by, the Regulatory Agreement. Subject to the provisions of Section 7.06 of this Project Loan Agreement, the Governmental Lender and the Fiscal Agent shall have the right to seek specific performance of or injunctive relief to enforce the re quirements of any covenants of the Borrower contained in the Regulatory Agreement.
Section 5.13. Damage, Destruction and Condemnation. If prior to full payment of the Funding Loan (or provision for payment of the Funding Loan in accordance with the provisions of the Funding Loan Agreement) the Project or any portion of it is destroyed (in whole or in part) or is damaged by fire or other casualty, or title to, or the temporary use of, the Project or any portion of it shall be taken under the exercise of the power of eminent domain by any governmental DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
25 body or by any person, firm or corporation acting under governmental authority, or shall be transferred pursuant to an agreement or settlement in lieu of eminent domain proceedings, the Borrower shall nevertheless be obligated to continue to pay the amounts specified in this Project Loan Agreement and in the Project Note s to the extent the Project Loan are not prepaid in full in accordance with the terms of the Project Loan Documents.
Section 5.14. Obligation of the Borrower to Construct the Project. The Borrower shall proceed with reasonable dispatch (and in no event later than required under the Financing Documents) to complete the construction, development and equipping of the Project as required by the Financing Documents. If amounts on deposit in the Project Loan Fund designated for the Project and available to be disbursed to the Borrower are not sufficient to pay the costs of the acquisition, construction, development and equipping, the Borrower shall pay such additional costs from its own funds. The Borrower shall not be entitled to any reimbursement from the Governmental Lender, the Fiscal Agent, the Servicer, the Funding Lender Representative or the Funding Lender in respect of any such additional costs or to any diminution or abatement in the repayment of the Project Loan. None of the Fiscal Agent, the Governmental Lender, the Funding Lender, the Funding Lender Representative or the Servicer makes any representation or warranty, either express or implied, that money, if any, which will be paid into the Project Loan Fund or otherwise made available to the Borrower will be sufficient to complete the Project, and none of the Fiscal Agent, the Governmental Lender, the Funding Lender, the Funding Lender Representative or the Servicer shall be liable to the Borrower or any other person if for any reason the Project is not completed.
Section 5.15. Filing of Financing Statements. The Borrower shall file or record or cause to be filed or recorded on or prior to the Delivery Date all UCC financing statements that are required to be filed or recorded in order fully to protect and preserve the security interests relating to the priority of the Project Loan, the Funding Loan, the Pledged Security and the Security Instrument, and the rights and powers of the Governmental Lender, the Fiscal Agent and the Funding Lender in connection with such security interests. The Borrower shall cooperate with the Fiscal Agent in connection with the filing of any continuation statements for the purpose of continuing without lapse the effectiveness of such financing statements.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification.
(a) Indemnified Losses. To the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend (by counsel approved by the indemnitee in its reasonable discretion) the Governmental Lender, the Fiscal Agent, the Administrator (as defined in the Regulatory Agreement), the S ervicer, the Funding Lender and each of their respective officers, governing commissioners, members, directors, officials, employees, attorneys and agents past, present and future (collectively, the “Indemnified Parties”), against any and all losses, damages (including, but not limited to, consequential and punitive damages), claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys’ fees, DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
26 litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise (collectively, “Losses”), to the extent arising, directly or indirectly, out of or based upon or in any way relating to:
(i) The Financing Documents or the execution, amendment, restructuring or enforcement thereof, or in connection with transactions contemplated thereby, including the issuance, sale, transfer or resale of the Project Loan, the Funding Loan, the Project Note s or the Governmental Note s, including any secondary market transaction;
(ii) any act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Project Loan or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation, construction or equipping of, the Project or any part thereof;
(iii) any accident, injury to, or death of persons or loss of or damage to property occurring in, on or about the Project or any part thereof; (iv) any lien (other than liens permitted under the Construction and Permanent Loan Agreement) or charge upon payments by the Borrower to the Governmental Lender, the Fiscal Agent or the Servicer hereunder, or any Taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Governmental Lender or the Fiscal Agent in respect of any portion of the Project (other than income and similar taxes on fees received or earned in connection therewith);
(v) any violation of any environmental law, rule or regulation, including any Hazardous Substances Law with respect to, or the release of any hazardous materials from, the Project or any part thereof;
(vi) the payment or prepayment, in whole or in part, of the Project Notes; (vii) the enforcement of, or any action taken by the Governmental Lender, the Fiscal Agent or the Funding Lender Representative related to remedies under this Project Loan Agreement, the Funding Loan Agreement or any other Financing Document;
(viii) any untrue statement or misleading stateme nt or alleged untrue statement or alleged misleading statement of a material fact by the Borrower made in the course of Borrower’s applying for the Project Loan or contained in any of the Financing Documents to which the Borrower is a party or any untrue statement of a material fact or alleged untrue statement of a material fact by the Borrower contained in any offering statement or document for the Governmental Note s or any of the Financing Documents to which the Borrower is a party, or any omission DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
27 or alleged omission by the Borrower of a material fact from any offering statement or document for the Governmental Notes necessary to be stated therein in order to make the statements made therein by the Borrower, in the light of the circumstances under which they were made, not misleading;
(ix) any declaration of taxability of interest on the Series B -1 Governmental Note or allegations (or regulatory inquiry) that interest on the Series B-1 Governmental Note is includable in gross income for federal income tax purposes;
(x) any audit or inquiry by the Internal Revenue Service with respect to the Project and/or the tax-exempt status of the Series B-1 Governmental Note; or (xi) the Fiscal Agent’s acceptance or administration of the trust of the Funding Loan Agreement, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Governmental Notes to which it is a party, including all amounts owed under Section 7.06 of the Funding Loan Agreement;
(xii) Any breach (or alleged breach) by the Borrower of any representation, warranty or covenant made in or pursuant to this Project Loan Agreement or in connection with any written or oral representation, presentation, report, appraisal or other information given or delivered by the Borrower, the General Partner, Guarantor or their Affiliates to Governmental Lender, the Fiscal Agent, the Funding Lender, Servicer or any other Person in connection with Borrower’s application for the Project Loan (including, without limitation, any breach or alleged breach by Borrower of any agreement with respect to the provision of any substitute credit enhancement, if applicable); (xiii) Any failure (or alleged failure) by the Borrower to comply with applicable federal and state laws and regulations pertaining to the making of the Project Loan and the Funding Loan;
(xiv) The Project, or the condition, occupancy, use, possession, conduct or management of, or work done in or about, or from the planning, design, acquisition, installation or construction of, the Project or any part thereof; or (xv) The use of the proceeds of the Project Loan and the Funding Loan, except (A) in the case of the foregoing indemnification of the Fiscal Agent, or any of its respective officers, commissioners, members, directors, officials, employees, attorneys and agents, to the extent such Losses are caused by the negligence, unlawful acts or willful misconduct of such Indemnified Party; or (B) in the case of the foregoing indemnification of the Servicer, or the Funding Lender or any of their respective officers, commissioners, members, directors, officials, employees, attorneys and agents, to the extent such Losses are caused by the gross negligence or willful misconduct of such Indemnified Party; or (C) in the case of the foregoing indemnification of the Governmental Lender or any related DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
28 Indemnified Party, to the extent such damages are caused by the willful misconduct of such Indemnified Party.
(b) Procedures. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from such Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected or approved by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that such Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and to participate in the investigation and defense thereof. The Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may employ separate counsel at the expense of the Borrower if in the judgment of such Indemnified party a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel . In addition thereto, the Borrower will pay upon demand all of the fees and expenses paid or incurred by the Fiscal Agent and/or the Governmental Lender in enforcing the provisions hereof, as more fully set forth in this Project Loan Agreement.
(c) Borrower to Remain Obligated. Notwithstanding any transfer of the Project to another owner in accordance with the provisions of this Project Loan Agreement, the Security Instrument and the Regulatory Agreement, the Borrower shall remain obligated to indemnify each Indemnified Party pursuant to this Section 6.01 for Losses with respect to any claims based on actions or events occurring prior to the date of such transfer unless (i) such subsequent owner assumed in writing at the time of such transfer all obligations of the Borrower under this Section 6.01 (including obligations under this Section 6.01 for Losses with respect to any claims based on actions or events occurring prior to the date of such transf er) and (ii) any such transfer is in compliance with the requirements of the Financing Documents.
(d) Survival. The rights of any persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses pursuant to this Project Loan Agreement shall survive the final payment or defeasance of the Governmental Note s and, in the case of the Fiscal Agent, any resignation or removal. The provisions of this Section 6.01 shall survive the termination of this Project Loan Agreement. Nothing containe d in this Section 6.01 shall in any way be construed to limit the indemnification rights of the Governmental Lender contained in Section 9 of the Regulatory Agreement. With respect to the Governmental Lender, the Regulatory Agreement shall control in any conflicts between this Section 6.01 and Section 9 of the Regulatory Agreement.
Section 6.02. Limitation With Respect to the Funding Lender . Notwithstanding anything in this Project Loan Agreement to the contrary, in the event that the Funding Lender (or its nominee) shall become the owner of the Project as a result of a foreclosure or a deed in lieu of foreclosure, or comparable conversion of the Project Loan, the Funding Lender (or its nominee) shall not be liable for any breach or default of any prior owner of the Project under this Project DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
29 Loan Agreement and shall only be responsible for defaults and obligations incurred or occurring during the period that the Funding Lender (or its nominee) is the owner of the Project.
Accordingly, during any period that the Funding Lender (or its nominee) owns the Project and that this Article VI is applicable to the Funding Lender (or its nominee), the Funding Lender’s (or its nominee’s) obligations under this Article VI shall be limited to acts and omissions of the Funding Lender (or its nominee) occurring during the period of the Funding Lender’s (or its nominee’s) ownership of the Project.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following shall be “Events of Default” under this Project Loan Agreement, and the term “Event of Default” shall mean, whenever it is used in this Project Loan Agreement, one or all of the following events:
(a) Any representation or warranty made by the Borrower in the Financing Documents or any certificate, statement, data or information furnished by the Borrower in connection therewith or included by the Borrower in its application to the Governmental Lender for assistance proves at any time to have been incorrect when made in any material respect;
(b) Failure by the Borrower to pay any amounts due under this Project Loan Agreement, the Project Notes, the Financing Documents or the Security Instrument at the times and in the amounts required by this Project Loan Agreement, the Project Note s, the Financing Documents, and the Security Instrument, as applicable, subject to any applicable cure periods expressly granted to Borrower hereunder;
(c) The Borrower shall fail to observe or perform any other term, covenant, condition or agreement (after taking into account any applicable notice and cure period) set forth in this Project Loan Agreement, which failure continues for a period of 30 days after notice of such failure by the Governmental Lender, the Fiscal Agent or the Funding Lender Representative to the Borrower (with the Government al Lender, the Fiscal Agent or the Funding Lender Representative providing a courtesy copy of any notice given to the Borrower to the Investor Limited Partner), (unless such default cannot with due diligence be cured within 30 days but can be cured within a reasonable period and will not, in the Funding Lender Representative’s sole discretion, adversely affect the Funding Lender or result in impairment of this Project Loan Agreement or any other Financing Document, in which case no Event of Default shall be deemed to exist so long as Borrower and/or the Investor Limited Partner shall have commenced to cure the default or Event of Default within 30 days after the Borrower’s receipt of notice, and thereafter diligently and continuously prosecutes such cure to completion) provided, however, no such notice or grace periods shall apply in the case of any such failure which could in the Funding Lender Representative’s judgment, absent immediate exercise by the Funding Lender Representative of a right or remedy unde r this Project Loan Agreement, result in harm to the Funding Lender, impairment of this Project Loan Agreement or any other Financing Document; or
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
30 (d) The occurrence of a default or event of default under the Construction and Permanent Loan Agreement, the Fina ncing Documents or the Security Instrument (after taking into account any applicable cure period thereunder) shall at the discretion of the Funding Lender Representative constitute an Event of Default under this Project Loan Agreement but only if the Fisca l Agent is provided written notice by the Funding Lender Representative that an Event of Default has occurred under such Financing Document and the Fiscal Agent is instructed by the Funding Lender Representative that such default constitutes an Event of Default hereunder. The occurrence of an Event of Default hereunder shall in the discretion of the Funding Lender Representative constitute a default under the other Financing Documents.
The Investor Limited Partner shall be entitled to cure on behalf of the Borrower any Event of Default with respect to which a cure by the Borrower is expressly permitted, but only to the extent and subject to the same terms and conditions applicable to the Borrower. Any cure of an Event of Default tendered by the Investor Li mited Partner shall be treated as a cure tendered by Borrower and shall be accepted or rejected on the same terms as if the cure had been directly tendered by Borrower.
Nothing contained in this Section 7.01 is intended to amend or modify any of the provisions of the Financing Documents or to bind the Governmental Lender, the Fiscal Agent, the Servicer or the Funding Lender Representative to any notice and cure periods other than as expressly set forth in the Financing Documents.
Section 7.02. Remedies on Default. Subject to Section 7.06 hereof, whenever any Event of Default hereunder shall have occurred and be continuing, the Funding Lender (or the Fiscal Agent at the written direction of the Funding Lender), may take any one or more of the following remedial steps:
(a) The Funding Lender (or the Fiscal Agent at the written direction of the Funding Lender) may take such action, without notice or demand, as the Funding Lender deems advisable to protect and enforce its rights against the Borrower and in and to the Project, including declaring the Project Loan to be immediately due and payable (including, without limitation, declaring the principal of, Prepayment Premium, if any, and interest on and all other amounts due on the Project Note s to be immediately due and payable).
(b) The Funding Lender (or the Fiscal Agent at the written direction of the Funding Lender) may, without being required to give any notice (other than to the Governmental Lender or the Fiscal Agent, as applicable), except as provided herein, pursue all remedies of a creditor under the laws of the State, as supplemented and amended, or any other applicable laws.
(c) The Funding Lender (or the Fiscal Agent at the written direction of the Funding Lender) may take whatever action at law or in equity may appear necessary or desirable to collect the payments under this Project Loan Agreement then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Project Loan Agreement.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
31 In addition, subject to Section 7.06 hereof, the Governmental Lender and the Fiscal Agent may pursue remedies with respect to the Unassigned Rights.
Any amounts collected pursuant to Article IV hereof and any other amounts which would be applicable to payment of principal of and interest and any Prepayment Premium on the Funding Loan collected pursuant to action taken under this Section 7.02 shall be applied in accordance with the provisions of the Funding Loan Agreement.
Section 7.03. No Remedy Exclusive. Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available against the Borrower hereunder or under the Financing Documents or otherwise at law or in equity may be exercised by the Funding Lender (or the Fiscal Agent at the written direction of the Funding Lender), at any time and from time to time, whether or not the Funding Lender has accelerated the Project Loan, and whether or not the Funding Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Financing Documents. No remedy conferred upon or reserved to the Funding Lender or the Fiscal Agent by this Project Loan Agreement is intended to be exclusive of any other avai lable remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Project Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Funding Lender (or the Fiscal Agent at the written direction of the Funding Lender) to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be expressly required by this Project Loan Agreement.
Section 7.04. Agreement to Pay Attorneys’ Fees and Expenses. In the event the Borrower shall default under any of the provisions of this Project Loan Agreement and the Governmental Lender, the Fiscal Agent, the Servicer or the Funding L ender Representative shall employ attorneys or incur other expenses for the collection of loan payments or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower contained in this Project Loan Agreement or in the Project Note s, the Borrower shall on demand therefor reimburse the reasonable fees of such attorneys and such other expenses so incurred.
Section 7.05. No Additional Waiver Implied by One Waiver . In the event any agreement contained in this Project Loan Agreement shall be breached by any party and thereafter waived by the other parties, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
Section 7.06. Control of Proceedings.
(a) 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 Project Loan Agreement, or for the appointment of a receiver or any other proceedings hereunder, in accordance with the provisions of law and of this Project Loan Agreement.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
32 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 the Unassigned Rights) with or without the involvement of the Fiscal Agent or the Governmental Lender. In no event shall the exercise of any of the foregoing rights result in an acceleration of the Project Loan without the express direction of the Funding Lender Representative.
(b) The Governmental Lender and the Fiscal Agent covenant that they will not, without the prior written consent of the Funding Lender Representative, take any of the following actions:
(i) prosecute any action with respect to a lien on the Project; or (ii) initiate or take any action which may have the effect, directly or indirectly, of impairing the ability of the Borrower to timely pay the principal of, interest on, or other amounts due under, the Project Loan; or (iii) interfere with or attempt to influence the exercise by the Funding Lender Representative of any of its rights under the Financing Documents upon the occurrence of any event of default by the Borrower under the Financing Documents (it being understood that enforcement of the Unassigned Rights will not constitute such any interference or attempt to influence); or
(iv) take any action to accelerate or otherwise enforce payment or seek other remedies with respect to the Project Loan or the Funding Loan. (c) Notwithstanding anything to the contrary herein, the Governmental Lender or the Fiscal Agent may:
(i) specifically enforce the tax covenants of the Borrower specified in Section 2.04 and 2.05 hereof and the Tax Certificate or seek injunctive relief against acts which may be in violation thereof; and
(ii) specifically enforce the Regulatory Agreement or seek injunctive relief against acts which may be in violation of the Regulatory Agreement or are otherwise inconsistent with the operation of the Project in accordance with applicable requirements of the Code and the State, including the Act, and local law (but in neither the case of subsection (c)(i) above or this subsection (c)(ii) may the Governmental Lender or the Fiscal Agent seek any form of monetary damages from the Borrower in connection with such enforcement except (x) against Excess Revenues (defined below), if any, of the Borrower, unless Funding Lender Representative otherwise specifically consents in writing to the use of other funds, or (y) with respect to Section 7(a) and 7(b) of the Regulatory Agreement). (d) In addition, notwithstanding Section 7.06(a) and 7.06(b) hereof, nothing herein shall be construed to limit the rights of the Governmental Lender, the Fiscal Agent or the Indemnified Parties related to the Governmental Lender or the Fiscal Agent under Section 6.01 (each a “Related Indemnified Party”) to enforce their respective rights against DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
33 the Borrower under Sections 4.02, 4.03, 6.01 and 7.04 hereof, provided that no obligation of the Borrower to the Governmental Lender, the Fiscal Agent or any Related Indemnified Party under such sections shall be secured by or in any manner constitute a lien on, or security interest in, the Project, whether in favor of the Governmental Lender, the Fiscal Agent or any Related Indemnified Party, and all such obligations (except for the fees required to be paid by the Borrower to the Governmental Lender under Section 7 of the Regulatory Agreement) are and shall be subordinate in priority, in right to payment and in all other respects to all other obligations, liens, rights (including without limitation the right to payment) and interests arising or created under the Financing Documents (except for the Fiscal Agent’s right to receive payment of reasonable fees and expenses pursuant to Section 6.05(a) of the Funding Loan Agreement after an event of default with respect to the Funding Loan, which reasonable fees and expenses of the Fiscal Agent shall be payable as provided thereunder). Accordingly, none of the Governmental Lender, the Fiscal Agent or any Related Indemnified Party shall have the right to enforce any monetary obligation arising under such sections other than directly against the Borrower, without recourse to the Project. In addition, any such enforcement must not cause the Borrower to file a petition seeking reorganization, arrangement, adjustment or composition of or in res pect of the Borrower under any applicable liquidation, insolvency, bankruptcy, rehabilitation, composition, reorganization, conservation or other similar law in effect now or in the future.
(e) As used in this Section 7.06, the term “Excess Revenues” means, fo r any period, the net cash flow of the Borrower available for distribution or payment to shareholders, members or partners (as the case may be) for such period, after the payment of all interest expenses, the amortization of all principal of all indebtedne ss coming due during such period (whether by maturity, mandatory sinking fund payment, acceleration or otherwise) with respect to the Project, the payment of all fees, costs and expenses on an occasional or recurring basis in connection with the Project Lo an or the Funding Loan under any Financing Document or any other indebtedness of the Borrower, the payment of all operating, overhead, ownership and other expenditures of the Borrower directly or indirectly in connection with the Project (whether any such expenditures are current, capital or extraordinary expenditures), and the setting aside of all reserves for taxes, insurance, water and sewer charges or other similar impositions, capital expenditures, repairs and replacements and all other amounts which the Borrower is required to set aside pursuant to agreement, but excluding depreciation and amortization of intangibles.
Section 7.07. Assumption of Obligations . In the event that the Fiscal Agent or the Funding Lender or their respective assignee or designee shall become the legal or beneficial owner of the Project by foreclosure or deed in lieu of foreclosure, such party shall succeed to the rights and the obligations of the Borrower under this Project Loan Agreement, the Project Note s, the Regulatory Agreement, and any other Financing Documents to which the Borrower is a party or with respect to which it is a third-party beneficiary. Such assumption shall be effective from and after the effective date of such acquisition and shall be made with the benefit of the limitations of liability set forth therein and without any liability for the prior acts of the Borrower.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
34 ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices.
(a) Whenever in this Project 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 Funding Lender Representative, the Borrower, the Investor Limited Partner or the Servicer shall be sufficiently given and shall be deemed given (unless another form of notice shall be specifically set forth herein) if by hand on the date of such delivery and otherwise on the Business Day following the date on which such notice or other communication shall have been delivered to a national overnight delivery service (in each case, receipt of which to be evidenced by a signed receipt from such hand or overnight delivery service or by the recipient party) addressed to the appropriate party at the addresses set forth in Section 11.04 of the Funding Loan Agreement or as required or permitted by this Project 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.
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 a duplicate copy of each notice or other communication given hereunder by any party to the Funding Lender Representative shall be given to the Servicer.
The Fiscal Agent is authorized and agrees to accept and act upon Electronic Notice of written instructions and/or directions pursuant to this Project 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 Default hereunder and (ii) any written information or other communication received by the Fiscal Agent hereunder within 10 Business Days of receiving a written request from the Funding Lender Representative for any such information or other communication.
Section 8.02. Concerning Successors an d Assigns . All covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the financing herein contemplated and shall continue in full force and effect so long as the obligations here under are outstanding. Whenever in this Project Loan Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower which DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
35 are contained in this Project Loan Agreement shall bind its successors and assigns and inure to the benefit of the successors and assigns of the Governmental Lender, the Fiscal Agent, the Servicer, the Funding Lender and the Funding Lender Representative, as applicable.
Section 8.03. Governing Law . This Project Loan Agreement and the Governmental Notes are contracts made under the laws of the State and shall be governed by and construed in accordance with the Constitution and laws of the State applicable to contracts made and performed in the State. This Project Loan Agreement and the Governmental Notes shall be enforceable in the State, and any action arising out of this Project 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 8.04. Entire Agreement, Modifications in Writing . This Project Loan Agreement contains the complete and entire understanding of the parties with respect to the matters covered. Modification or the waiver of any provisions of this Project Loan Agreement or consent to any departure by the parties therefrom, shall in no event be effective unless the same shall be in writing approved by the parties hereto and shall require the prior written consent of the Funding Lender Representative and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Borrower in any case shall entitle it to any other or further notice or demand in the same circumstances.
Section 8.05. Further Assurances and Corrective Instruments. The Governmental Lender (at the expense of the Borrower), the Fiscal Agent and the Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required (including such supplements or further instruments requested by the Funding Lender Representative) for correcting any inadequate or incorrect description of the performance of this Project Loan Agreement; provided, however, that no such supplement or further instruction shall change the essential economic terms of the Project L oan or impose on the Borrower greater liability in connection with the Project Loan Documents without the written consent of the Borrower.
Section 8.06. Captions. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Project Loan Agreement.
Section 8.07. Severability. The invalidity or unenforceability of any provision of this Project Loan Agreement shall not affect the validity of any other provision, and all other provisions shall remain in full force and effect.
Section 8.08. Counterparts. This Project Loan Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument.
Section 8.09. Amounts Remaining in Loan Payment Fund or Other Funds . It is agreed by the parties hereto that any amounts remaining in the Loan Payment Fund or other funds and accounts established under the Funding Loan Agreement upon expiration or sooner termination of the term hereof (and the repayment in full of the Project Loan and all other amounts DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
36 owing under the Project Loan Documents), shall be paid in accordance with the Funding Loan Agreement.
Section 8.10. Effective Date and Term . This Project Loan Agreement shall become effective upon its execution and delivery by the parties hereto, shall be effective and remain in full force from the date hereof, and, subject to the provisions hereof, shall expire on such date as the Funding Loan Agreement shall terminate.
Section 8.11. Cross References. Any reference in this Project Loan Agreement to an “Exhibit,” an “Article,” a “Section,” a “Subsection” or a “Paragraph” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit attached to this Project Loan Agreement, an article of this Project Loan Agreement, a section of this Project Loan Agreement, a subsection of the section of this Project Loan Agreement in which the reference appears and a paragraph of the subsection within this Project Loan Agreement in which the reference appears. All exhibits attached to or referred to in this Project Loan Agreement are incorporated by reference into this Project Loan Agreement.
Section 8.12. No Third Party Beneficiaries . The Financing Documents are solely for the benefit of the Governmental Lender, the Funding Lender, the Funding Lender Representative, the Servicer, the Fiscal Agent and the Borrower, and nothing contained in any Financing Document shall be deemed to confer upon anyone other than the foregoing parties any right to insist upon or to enforce the performance or observance of any of the obligations contained therein.
Section 8.13. [Reserved].
Section 8.14. Non-Liability of Governmental Lender. The Governmental Lender shall not be obligated to pay the principal (or prepayment price) of or interest on the Funding Loan, except from money and assets received by the Fiscal Agent or Funding Lender on behalf of the Governmental Lender pursuant to this Project Loan Agreement. Neither the faith and credit nor the taxing power of the State, or any political subdivision ther eof, nor the faith and credit of the Governmental Lender is pledged to the payment of the principal (or prepayment price) of or interest on the Funding Loan. The Governmental Lender shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Project Loan Agreement or the Funding Loan Agreement, except only to the extent amounts are received for the payment thereof from the Borrower under this Project Loan Agreement. No holder of the Governmental Lender Note s shall ever have the right to compel any exercise of the taxing power of the State or any political subdivision thereof or of the Governmental Lender for the payment of the Governmental Lender Notes or the Funding Loan, nor to enforce the payment of the Governmental Lender Notes or the Funding Loan against any property of the State or any such political subdivision thereof or of the Governmental Lender except as provided in the Funding Loan Agreement.
It is recognized that notwithstanding any other provision of this Project Loan Agreement, and except for the Pledged Security, the Security Instrument and certain funds pledged under the Funding Loan Agreement, none of the Borrower, the Funding Lender, the holder of the Governmental Lender Notes or the Servicer shall look to the Governmental Lender for damages suffered by the Borrower, the Funding Lender, the holder of the Governmental Lender Note s or DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
37 the Servicer as a result of the Governm ental Lender’s performance, failure to perform or insufficient performance of any covenant, undertaking or obligation under this Project Loan Agreement or any of the other Financing Documents or the Project Loan Documents, or as a result of the incorrectne ss of any representation made by the Governmental Lender in any of such documents, nor for any other reason, unless such damages result solely from the willful misconduct, fraud or intentional misrepresentation of the Governmental Lender. Although this Project Loan Agreement recognizes that such documents shall not give rise to any pecuniary liability of the Governmental Lender, nothing contained in this Project Loan Agreement shall be construed to preclude in any way any action or proceeding (other than that element of any action or proceeding involving a claim for monetary damages against the Governmental Lender) in any court or before any governmental body, agency or instrumentality or otherwise against the Governmental Lender or any of its officers or employees to enforce the provisions of any of such documents which the Governmental Lender is obligated to perform and which the Governmental Lender has not assigned to the Funding Lender or any other person.
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 good faith in reliance on such advice. The Governmental Lender shall not be liable for any action (a) taken by it in good faith and reasonably believed by it to be within its discretion or powers hereunder, or (b) in good faith omitted to be taken by it because such action was reasonably believed to be beyond its discretion or powers hereunder, or (c) taken by it pursuant to any direction or instruction by which it is governed hereunder, or (d) omitted to be taken by it by reason of the lack of any direction or instruction required hereby for such action; nor shall it be responsible for the consequences of any error of judgment reasonably made by it. 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 or entity, except for the fraud or willful misconduct of its own agents, 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. The Governmental Lender shall not be required to take any remedial action (other than the giving of notice) unless indemnity in a form acceptable to the Governmental Lender is furnished for any cost or liability to be incurred in connection with such remedial action, other than liability for failure to meet the standards set forth in this Section. The Governmental Lender shall be entitled to reimbursement for its costs reasonably incurred or advances reasonably made, with interest at the rate of 5% per annum, 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 it 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.
The Borrower hereby acknowledges that the Governmental Lender’s sole source of money to repay the Funding Loan will be provided by the payments made by the Borrower pursuant to this Project Loan Agreement and the Project Note s, together with inves tment income on certain funds and accounts held by the Fiscal Agent under the Funding Loan Agreement, and hereby agrees that if the payments to be made hereunder shall ever prove insufficient to pay all principal (or Prepayment Premium) of and interest on the Funding Loan as the same shall become due (whether by maturity, redemption, acceleration or otherwise), then upon notice from the Funding Lender, the Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal (or Prepayment Premium) of or interest on DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
38 the Funding Loan, including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Funding Lender, the Borrower, the Governmen tal Lender, the Fiscal Agent or any third party, subject to any right of reimbursement from the Funding Lender, the Governmental Lender or any such third party, as the case may be, therefor.
Section 8.15. No Liability of Officers. Notwithstanding anything to the contrary herein or in any other instrument to the contrary, no recourse under or upon any obligation, covenant, or agreement or in the Governmental Note s, or under any judgment obtained against the Governmental Lender, or by the enforcement of any assessme nt or by any legal or equitable proceeding by virtue of any constitution or statute or otherwise or under any circumstances, shall be had against any incorporator, member, director, commissioner, employee, agent or officer, as such, past, present, or futur e, of the Governmental Lender, either directly or through the Governmental Lender, or otherwise, for the payment for or to the Governmental Lender or any receiver thereof, or for or to the Funding Lender, of any sum that may be due and unpaid by the Governmental Lender upon the Funding Loan. Any and all personal liability of every nature, whether at common law or in equity, or by statute or by constitution or otherwise, of any such incorporator, member, director, commissioner, employee, agent or officer, as such, to respond by reason of any act or omission on his or her part or otherwise, for the payment for or to the Governmental Lender or any receiver thereof, or for or to the Funding Lender, of any sum that may remain due and unpaid upon the Funding Loan, is hereby expressly waived and released as a condition of and consideration for the execution of this Project Loan Agreement and the issuance of the Governmental Notes.
Section 8.16. Capacity of the Fiscal Agent. The Fiscal Agent is entering into this Project Loan Agreement solely in its capacity as Fiscal Agent and shall be entitled to the rights, protections, and limitations from liability and immunities afforded it as Fiscal Agent under the Funding Loan Agreement. The Fiscal Agent shall be responsible only for the duties of the Fiscal Agent expressly set forth herein and in the Funding Loan Agreement.
Section 8.17. Reliance. The representations, covenants, agreements and warranties set forth in this Project Loan Agreement may be relied upon by the Governmental Lender, the Fiscal Agent, Tax Counsel, the Servicer, the Funding Lender and the Funding Lender Representative. In performing their duties and obligations under this Project Loan Agreement and under the Funding Loan Agreement, the Governmental Lender and the Fiscal A gent may rely upon statements and certificates of the Borrower, upon certificates of tenants believed to be genuine and to have been executed by the proper person or persons, and upon audits of the books and records of the Borrower pertaining to occupancy of the Project. In addition, the Governmental Lender and the Fiscal Agent may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Governmental Lender or the Fiscal Agent under this Project Loan Agreement and under the Funding Loan Agreement in good faith and in conformity with the opinion of such counsel. It is expressly understood and agreed by the parties to this Project Loan Agreement (other than the Governmental Lender) that:
(a) the Governmental Lender may rely conclusively on the truth and accuracy of any certificate, opinion, notice or other instrument furnished to the Governmental Lender by the Fiscal Agent, the Funding Lender or the Borrower as to the existence of a DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
39 fact or state of affairs required under this Project Loan Agreement to be noticed by the Governmental Lender;
(b) the Governmental Lender shall not be under any obligation to perform any record keeping or to provide any legal service, it being understood that such services shall be performed or caused to be performed by the Fiscal Agent, the Funding Lender Representative, the Servicer or the Borrower, as applicable; and (c) none of the provisions of this Project Loan Agreement shall require the Governmental Lender or the Fiscal Agent to expend or risk its own funds (apart from the proceeds of Funding Loan issued under the Funding Loan Agreement) or otherwise endure financial liability in the performance of any of its duties or in the exercise of any of its rights under this Project Loan Agreement, unless it shall first have been adequately indemnified to its satisfaction against the costs, expenses and liabilities which may be incurred by taking any such action.
Section 8.18. Construction of Documents . The parties hereto acknowledge that they were represented by counsel in connection with the negotiation and drafting of the Financing Documents and that the Financing Documents shall not be subject to the principle of construing their meaning against the party that drafted them.
Section 8.19. Assignment. The Project Loan Agreement, the Security Instrument, the Project Notes and the Project Loan Documents and all Funding Lender’s or Fiscal Agent’s rights, title, obligations and interests therein may be assigned by the Funding Lender or the Fiscal Agent, as appropriate, at any time in its sole discretion, whether by operation of law (pursuant to a merger or other successor in interest) or otherwise, provided that neither the Funding Lender nor the Fiscal Agent may assign or transfer its interest in the Project Loan Documents separately from its interest in the Funding Loan Agreement and the Governmental Notes, any assignment or transfer of which must be in conformity with the requirements of Section 2.08 of the Funding Loa n Agreement.
Upon such assignment, all references to Funding Lender or the Fiscal Agent, as appropriate, in this Project Loan Agreement and in any Project Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee or successor in interest shall thereafter stand in the place of the Funding Lender or the Fiscal Agent, as appropriate. The Borrower shall accord full recognition to any such assignment, and all rights and remedies of Funding Lender in connection with the interest so assigned shall be as fully enforceable by such assignee as they were by Funding Lender before such assignment. In connection with any proposed assignment, Funding Lender may disclose to the proposed assignee any information that the Borrower has delivered, or caused to be delivered, to Funding Lender with reference to the Borrower, the General Partner, any Affiliate of any of them, or the Project, including information that the Borrower is required to deliver to Funding Lender pursuant to this Project Loan Agreement, provided that such proposed assignee agrees to treat such information as confidential. The Borrower may not assign its rights, interests or obligations under this Project Loan Agreement or under any of the Project Loan Documents or Financing Documents, or the Borrower’s interest in any moneys to be disbursed or advanced hereunder, except only as may be expressly permitted hereby.
Section 8.20. Governmental Lender, Funding Lender and Servicer Not in Control; No Partnership . None of the covenants or other provisions contained in this Project Loan DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
40 Agreement shall, or shall be deemed to, give the Governmental Lender, the Funding Lender, the Fiscal Agent or the Servicer the right or power to exercise control over the affairs or management of the Borrower, the power of the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer being limited to the rights to exercise the remedies referred to in the Project Loan Documents and the Financing Documents. The relationship between the Borrower and the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer is, and at all times shall remain, solely that of debtor and creditor. No covenant or provision of the Project Loan Documents or the Financing Documents is intended, nor shall it be deemed or construed, to create a partnership, joint venture, agency or common interest in profits or income between the Borrower and the Governmental Lender, the Funding Lender, the Fiscal Agent or the Servicer or to create an equity in the Project in the Governmental Lender, the Funding Lender, the Fiscal Agent or the Servicer. None of the Governmental Lender, the Funding Lender, the Fiscal Agent or the Servicer undertake or assume any responsibility or duty to the Borrower or to any other person with respect to the Project or the Project Loan, except as expressly provided in the Project Loan Documents or the Financing Documents; and notwithstanding any other provision of the Project Loan Documents and the Financing Documents: (1) the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer are not, and shall not be construed as, a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of the Borrower or its stockholders, members, or partners and the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer do not intend to ever assume such status; (2) the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer shall in no event be liable for any of the Borrower’s obligations under or with respect to the Project Loan Agreement or the Project Notes, or expenses or losses incurred or sustained by the Borrower; and (3) the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer shall not be deemed responsible for or a participant in any acts, omissions or decisions of the Borrower, or its stockholders, members, or partners, as applicable. The Governmental Lender, the Funding Lender, the Fiscal Agent, the Servicer and the Borrower disclaim any intention to create any partnership, joint venture, agency or common interest in profits or income between the Governmental Lender, the Funding Lender, the Servicer, the Fiscal Agent and the Borrower, or to create any equi ty interest in the Project on behalf of the Governmental Lender, the Funding Lender, the Fiscal Agent or the Servicer, or any sharing of liabilities, losses, costs or expenses.
Section 8.21. Release. The Borrower hereby acknowledges that it is executing this Project Loan Agreement and each of the Project Loan Documents and the Financing Documents to which it is a party as its own voluntary act free from duress and undue influence.
Section 8.22. Counterparts. This Project Loan Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement.
Section 8.23. Captions. The captions of the sections of this Project Loan Agreement are for convenience only and shall be disregarded in construing this Project Loan Agreement. [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 parties hereto have executed this Project Loan Agreement, all as of the date first set forth above.
CITY OF SAN JOSE
By
Richard G. Bruneau
Director of Finance
APPROVED AS TO FORM:
By
Hana Hardy Gunther
Senior Deputy City Attorney
[Signature Page to The Charles Project Loan Agreement]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
S-2
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
By:
Name:
Title:
[Signature Page to The Charles Project Loan Agreement]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
S-3
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 The Charles Project Loan Agreement]
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.