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HomeMy WebLinkAbout11- Economic Development DEVELOPMENT DEPARTMENT ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REOUEST FOR COMMISSION/COUNCIL ACTION FROM: KENNETH J.HENDERSON SUBJECT: WARM CREEK Executive Director APARTMENTS DATE: April 13,1994 -------------------------------------------------- -------------------------------------------------- Synonsis of Previous COmmission/COuneWCOmmittee Action(sk In 1955,the Mayor and Common Council approved the issuance of multifamily mortgage revenue bonds to finance the construction of Warm Creek Apartments. Recommended Motlon(s): (Mayor And Common CouncM MOTION: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A FIRST SUPPLEMENTAL INDENTURE AND A SECOND SUPPLEMENTAL INDENTURE FOR ITS MULTIFAMILY HOUSING REVENUE BONDS (WARM CREEK APARTMENTS PROJECT)SERIES 1985 Administrator KENNitH J.HE ERSON Executive Director Contact Person(s): Kenneth J.Henderson Phone: 5081 ProjectArea(s): N/A Ward(s): N/A Supporting Data Attached: Staff Report:Resolution:Tmst Indenture FUNDING REQUIREMENTS: Amount $ N/A Source: N/A Budget Authority: N/A ----------------------------—----- ------------------------------------------------—-------—----—---- ----'-"--'---- Commission/Council Notes: KJH:lag:04-02-02.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/18/1994 Agenda Item Number. DEVELOPMENT DEPARTMENT STAFF REPORT ------------------------------------------------------------------------------------------------------------------ Warm Creek Apartments Project In 1985 the City of San Bernardino (the "City")issued industrial development bonds(the "Bonds") on behalf of the developer of the Warm Creek Apartments Project(the "Project"). The Bonds were secured by a Letter of Credit purchased by Great American First Bank("Great American")which has since been taken over by the RTC. The Letter of Credit is a direct pay Letter of Credit delivered by Banque Paribas. For the purchase price paid for the Letter of Credit, Banque Paribas is required to make payments on the Bonds. Under the original bond documents, the developer was required to make payments to Great American. The developer is in default on the loan payments. The RTC , however, has not foreclosed on the Project. Instead, the RTC seeks to purchase the Bonds, extinguish the letter of credit and then resell the Bonds to General Electric Capital Corporation("GECC"). To effect the foregoing, the RTC seeks to amend the original Bond documents. Under the original Bond documents, once there has been a default, the Bonds are subject to mandatory redemption. The RTC desires to amend the Indenture to provide for the purchase of the Bonds from the Bondholders in lieu of redemption to preserve the tax-exempt status of the Bonds. This amendment may be accomplished without bondholder consent because said amendment does not affect the rights of the bondholders. After purchase of the Bonds by the RTC, as sole bondholder, the RTC would then agree to amend the Indenture to release the Letter of Credit and sell the Bonds to GECC. Apparently, GECC plans to resell the Bonds within the next six months and is aware that such sale will require a fee from the City. The RTC has agreed to indemnify the City for attorneys'fees and costs to carry out this transaction and any fees or costs resulting from any litigation or claim arising from the amendments. Staff recommends adoption of Resolution of the Mayor and Common Council of the City of San Bernardino approving a First Supplemental Indenture and a Second Supplemental Indenture for its Multifamily Housing Revenue Bonds (Warm Creek Apartments Project) Series 1985. W1��ZN�A, KENNETH J. HE11DERSON,Executive Director Development Department ------------------------------------------------------------------------------------------------------------------ KJH:lag:04-02-02.cdc COMMISSION MEETING AGENDA MEETING DATE: 04118/1994 Agenda Item Number: i 0 1 MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA 2 AGENDA 3 4 April 18, 1994 5 Item: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE 6 CITY OF SAN BERNARDINO APPROVING A FIRST SUPPLEMENTAL INDENTURE AND A SECOND SUPPLEMENTAL 7 INDENTURE FOR ITS MULTIFAMILY HOUSING REVENUE BONDS (WARM CREEK APARTMENTS PROJECT) SERIES 1985 8 9 Action to 10 be Taken: Adopt Resolution. 11 Certified copy of Resolution to be returned to Sabo & Green, A 12 Professional Corporation. 13 14 15 16 17 18 19 20 21 22 23 SHE0f00011D00747 24 3/30!94330 25 26 27 28 1 RESOLUTION NO. 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A 3 FIRST SUPPLEMENTAL INDENTURE AND A SECOND SUPPLEMENTAL INDENTURE FOR ITS MULTIFAMILY 4 HOUSING REVENUE BONDS (WARM CREEK APARTMENTS PROJECT) SERIES 1985 5 6 WHEREAS, the City of San Bernardino, California (the 7 "City") , is a charter city and municipal corporation duly 8 organized and existing pursuant to the Constitution and the laws 9 of the State of California; and 10 11 WHEREAS, in 1985 the City issued its $9, 625, 000 City of 12 San Bernardino, Multifamily Housing Revenue Bonds (Warm Creek 13 Apartments Project) series 1985 (the "Bonds") in order to provide 14 financing for the development of said project (the "Project") ; 15 16 WHEREAS, the Bonds were secured by a Letter of Credit 17 purchased by Great American First Bank ("Great American") which 18 has since been taken over by the Resolution Trust Company 19 ("RTC") ; and 20 21 WHEREAS, the Letter of Credit is a direct pay Letter of 22 Credit delivered by Banque Paribas and for the purchase price 23 paid for the Letter of Credit, Banque Paribas is required to make 24 payments on the Bonds; and 25 26 WHEREAS, the RTC seeks to purchase the Bonds, 27 extinguish the letter of credit and then resell the Bonds to 28 General Electric Credit Corporation ("GECC") ; and -1- 1 WHEREAS, the RTC desires to amend the Indenture to 2 provide for the purchase of the Bonds from the Bondholders in 3 lieu of redemption and after said purchase, as sole bondholder, 4 the RTC would then agree to amend the Indenture of Trust dated 5 November 1, 1985 (the "Original Indenture") to release the Letter 6 of Credit and sell the Bonds to GECC; and 7 8 WHEREAS, the RTC has agreed to indemnify the City for 9 all costs and fees in connection with the execution of the First 10 Supplemental Indenture and Second Supplemental Indenture (the 11 "Indentures") in order to carry out this transaction and has 12 further agreed to indemnify the city for any claims or liability 13 arising out of said execution; and 14 15 WHEREAS, said sale will be of benefit to the City in 16 that it will prevent the Project from going into foreclosure. 17 18 NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE 19 CITY OF SAN BERNARDINO, CALIFORNIA, DO HEREBY FIND, RESOLVE, 20 DETERMINE AND ORDER AS FOLLOWS: 21 22 section 1. The recitals contained herein are 23 incorporated by reference as if fully set forth. 24 25 Section 2. The City finds and determines that the 26 execution of the Indentures are in the best interests of the City 27 in that it will prevent the project from going into foreclosure. 28 -2- 0 1 Section 3. The City hereby finds that it is 2 authorized to consent to an amendment to the Original Indenture 3 as provided in section 1101 thereof. 4 5 Section 4. Approval of Final Form of Indentures. 6 The Mayor and Common Council hereby approve the form of 7 Indentures presently on file with the City Clerk together with 8 any changes therein or additions thereto as may be approved by 9 the Mayor or any authorized staff member and as necessary to 10 incorporate other terms and conditions when such terms and 11 conditions have been ascertained. The Mayor and Common Council 12 hereby further authorizes and directs that the form of Indentures 13 presently on file with the City Clerk be converted into the final 14 form of Indentures, together with such changes or modifications 15 as deemed necessary or desirable by the Mayor or any authorized 16 staff member upon the recommendation of Counsel. The Mayor or 17 such other authorized officer of the City are each hereby 18 authorized, and any one of them is hereby directed, to execute 19 and deliver, and the City Clerk is hereby authorized and directed 20 to attest to, the final form of the Indentures when the same have 21 been prepared and such execution and delivery shall be deemed to 22 be conclusive evidence of the approval thereof. The Mayor and 23 Common Council hereby authorize the delivery and performance of 24 the terms of the Indentures. 25 26 Section 5. Official Action. The Mayor, City 27 Clerk, Counsel and any and all other officers or authorized staff 28 of the City are hereby authorized and directed, for and in the -3- O 0 1 name and on behalf of the City, to do any and all things and take 2 any and all actions, including execution and delivery of any and 3 all assignments, certificates, requisitions, agreements, notices, 4 consents, instruments of conveyance, warrants and other 5 documents, which they, or any of them, may deem necessary or 6 advisable in order to consummate the execution and delivery of 7 the Indentures. Whenever in this Resolution any officer of the 8 City is authorized to execute or countersign any document or take 9 any action, such execution, countersigning or action maybe taken 10 on behalf of such officer by any person designated by such 11 officer to act on his or her behalf in the case such officer 12 shall be absent or unavailable. The Mayor and Common Council 13 hereby appoints the Mayor as agent of the City for purposes of 14 executing any and all documents and instruments which any officer 15 of the City is authorized to execute hereunder. 16 17 18 19 20 21 22 23 24 25 26 © 27 28 -4- , l d 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN 2 BERNARDINO APPROVING A FIRST SUPPLEMENTAL INDENTURE AND A SECOND SUPPLEMENTAL INDENTURE FOR ITS MULTIFAMILY HOUSING REVENUE BONDS 3 (WARM CREEK APARTMENTS PROJECT) SERIES 1985 Section 6. This resolution shall take effect on the 4 5 date of execution subject to and contingent upon the execution of 6 a purchase agreement by GECC. 7 I HEREBY CERTIFY that the foregoing Resolution was 8 duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting 9 _ 10 thereof, held on the day of 1994, by the following vote, to wit: 11 12 AYES: Council Members 13 14 NAYS: 15 ABSENT: 16 17 City Clerk 18 The foregoing resolution is hereby approved this 19 day of , 1994. 20 21 Mayor of the City of 22 San Bernardino 23 Approved as to form and legal content: JAMES F. PENMAN 24 City Attorney 25 By: 26 27 28 -5- o 1 STATE OF CALIFORNIA ) 2 COUNTY OF ) 3 On before me, (here insert name and title of the officer) , personally appeared 4 , personally known to me (or proved to me on the bas s of sat sfactory evidence) to be the person(s) 5 whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in 6 his/her/their authorized capacity(ies) , and that by his/her/their signatures) on the instrument the person(s) , or the entity upon 7 behalf of which the persons) acted, executed the instrument. 8 WITNESS my hand and official seal. 9 10 Signature (Seal) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Draft of March 23, 1994 Marked to Show Changes From Draft of March 3, 1994 Double underscore indicates insertion. Overs: k indicates deletion. FIRST SUPPLEMENTAL TRUST INDENTURE [San BemadineBemardino-Warm Creek] THIS FIRST SUPPLEMENTAL TRUST INDENTURE is made and entered into as of March 1, 1994 by and between the CITY OF SAN BER?bkD!ItABERNARDINO, CALIFORNIA, a municipal corporation, being a charter city duly organized and existing under the laws of the State of California (the "Issuer") and SEATTLE — FIRST NATIONAL BANK, a national banking association having its principal corporate trust office located at Seattle, Washington, as trustee, (the "Trustee") and consented to by the RESOLUTION TRUST CORPORATION ("RTC") as conservator for Great American Federal Savings Association (the "Lender"),and WARM CREEK ASSOCIATES, a California limited partnership (the "Company")and BANOUE PARIBAS, a French banking organization acting through its Los Angeles Agency (the "Credit Fa"Provider"). WITNESS: WHEREAS, the Issuer issued its Multifamily Housing Revenue Bonds (Warm Creek Apartments Project) Series 1985 (the "Bonds") in the original aggregate principal amount of $9,625,000 pursuant to a Trust Indenture dated as of November 1, 1985 (the "Original Indenture") by and between the Issuer and the Trustee; WHEREAS, Great American Bank, a Federal Savings Bank, formerly Great American First Savings Bank ("Old Great American") caused a letter of credit to be acquired and delivered to the Trustee pursuant to the Credit Enhancement Agreement by and between Old Great American and the Company, dated as of November 1, 1985 (the "Credit Enhancement Agreement"); WHEREAS, under the terms of the Letter of Credit Purchase Agreement by and between Old Great American and Banque Paribas, a French banking organization, duly organized and validly existing under the laws of the Republic of France, the Los Angeles Agency of Banque Paribas being duly licensed by the Superintendent of Banks of the State of California and qualified to do business as a California Agency (herein called the "Credit Facility Provider"), dated as of November 1, 1985 (the "Getter of Credit Purchase Agreement"), the Credit Facility Provider has executed and delivered to the Trustee, for the purpose of making payments directly to the Trustee in satisfaction of the obligations of the company pursuant to the Loan Agreement, an irrevocable direct pay letter of credit(the "Letter of Credit"); and V 158528.03.00.D WRDaf/1027499/March 23,1994 ill WHEREAS, Section 1101 of the Original Indenture provides that the Issuer and the Trustee may, with the consents of the Company, the Credit Facility Provider and Old Great American, but without the consent of, or notice to, any of the Bondholders, modify or amend the Original Indenture by supplemental indentures in such manner which, in the judgment of the Trustee, is not materially adverse to the Owners; WHEREAS, the Trustee has mailed notice of the proposed execution to the holders of the Bonds and has mailed a copy of this First Supplemental Trust Indenture to the Issuer, the Company and the Credit Facility Provider; WHEREAS, on August 9, 1991, the Office of Thrift Supervision ("OTS")appointed the Resolution Trust Corporation ("RTC") as conservator for Old Great American and on October 25, 1991, the OTS: (i)replaced the RTC as conservator for Old Great American with the RTC as receiver for Old Great American; (ii) authorized the charter of Great American Federal Savings Association ("New Great American"), a new federal mutual savings association; and (iii) appointed the RTC as conservator for New Great American (the "Lender"); WHEREAS,the Lender has assumed all the obligations of Old Great American under the Credit Enhancement Agreement(as defined in the Original Indenture) and all other documents contemplated therein or executed in connection therewith; WHEREAS, the Lender has succeeded to all rights of Old Great American under the Original Indenture, the Credit Enhancement Agreement, the Letter of Credit Purchase Agreement and all other documents relating to the issuance of the Bonds; WHEREAS,presently, the primary source of money for redemption of the Bonds is from payments to be made to the Trustee under the Letter of Credit and other moneys held by the Trustee for the benefit of the Bondholders; WHEREAS, the Lender desires to amend the Original Indenture in a manner which would not materially and adversely affect the interests of the Bondholders by granting the RTC an option to purchase the Bonds in lieu of redemption; -WHEREAS-Ihe WHEREAS, upon execution hereof. Lender will notify the Trustee of an event of default under the Credit Enhancement Agreement and direct the Trustee to purchase the Bonds in lieu of redemption; WHEREAS, the Issuer and the Trustee, pursuant to the terms of the Original Indenture,' desire to enter into this First Supplemental Trust Indenture to supplement the Original Indenture of Trust to grant RTC the power to purchase the Bonds in lieu of redemption and to grant certain other rights in connection therewith; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein set forth, the parties hereto agree as follows: -2- ARTICLE I fftiele Article I of the Original Indenture is hereby amended by adding the following phrase at the conclusion of the definition of "Available Moneys" contained in Section 101 thereof: "and (vi) amounts deposited by the Lender with the Trustee pursuant to Section 307(a) hereof." Article VI of the Original Indenture is hereby amended by adding a new Section 307 to read in its entirety as follows: "Section 307. Right to Purchase Bonds upon Occurrence of an Event Causing Acceleration. In the event the Lender shall notify the Trustee of the occurrence of an Event of Default under the Credit Enhancement Agreement authorizing the Lender to direct the Trustee to redeem the Bonds with the approval of the Credit Facility Provider, in accordance with Section 302(B)(2) hereof, the RTC shall have the option to purchase all, but not less than all, of the Bonds in lieu of their redemption. At the option of RTC, RTC may direct the Trustee to draw on the Letter of Credit in order to obtain the Deposit Amount (as defined herein) to effect such purchase. This option (the "Purchase Option") shall be exercised by the RTC by: (a) depositing with the Trustee prior to the date the Trustee notifies the Bondholders of redemption (a "Default Notice") pursuant to Section 304 hereof, (the "RTC Purchase Date") the consent of the Credit Facility Provider to a draw on the Letter of Credit one Business Day prior to the RTC Purchase Date or funds provided by the RTC in an amount equal to the sum of: (i) the full outstanding principal amount of the Bonds plus, (ii) interest on such principal amounts to such date, less (iii) the amount of funds held by the Trustee under the Indenture which may be applied toward the payment of the Bonds (the "Existing Funds") which amount shall be certified to RTC by the Trustee by telephonic notice, confirmed in writing by the close of business on the Business Day after receipt of the Default Notice. -3- 0 (b) in the event amounts deposited with the Trustee are not derived from a draw on the Letter of Credit, the RTC shall certify to the Trustee that the funds deposited with the Trustee pursuant to Section 307(a) above are to be applied to the purchase of the Bonds in lieu of their redemption,and that such funds are the Lender's own funds and not funds of the Company. The Trustee shall use the amount described in Section 307(a) or any amounts derived from a draw on the Letter of Credit (the "Deposit Amount"), together with the Existing Funds, to purchase the Bonds on the RTC Purchase Date for an amount equal to the entire principal amount of the Bonds, plus accrued interest through the RTC Purchase Date (the "Purchase Amount"). In the event amounts deposited with the Trustee are not derived from a draw on the Letter of Credit prior to disbursement to pay the purchase price of Bonds, the Deposit Amount shall be invested by the Trustee in Government Obligations as instructed by the RTC notwithstandin¢ any provision of this Indenture to the contrary. To the extent the Existing Funds are used to pay any portion of the Purchase Amount, the RTC hereby instructs the Trustee to waive any default created by the deficiency in such funds and accounts. Upon the exercise of the Purchase Option by RTC, all Bonds shall be subject to mandatory tender in whole by the owners thereof to the Trustee on the RTC Purchase Date at a purchase price equal to 100% of the principal amount thereof,plus accrued interest if any to such date. Any Bond which is not surrendered to the Trustee for purchase on or before the RTC Purchase Date (an "Undelivered Bond") shall, if moneys sufficient and available for the purchase of such Bonds have been deposited with the Trustee on such date, be deemed to have been tendered for purchase on such date. Owners of Undelivered Bonds shall have no rights or benefits under this Indenture with respect to such Bonds other than to receive the purchase price for such Bonds upon surrender of such Bonds to the Trustee. No purchase of Bonds pursuant to this Section or advance or use of any funds to effectuate any such purchase shall be deemed to be a payment or redemption of the Bonds or a prepayment of the amounts due under the Loan Agreement or of any portion thereof and such purchase will not operate to extinguish or discharge the indebtedness evidenced by such Bonds or the amounts due under the -4- Loan Agreement, it being the intention of the parties that the Bonds remain outstanding after such purchase and that interest on the Bonds will continue to accrue after such date. Upon exercise of the Purchase Option, the Trustee shall make appropriate notation of payment in the bond registration books and authenticate and deliver a new Bond or Bonds to the RTC in the principal amount equal to the aggregate principal amount of the Bonds purchased." ARTICLE II Article VII of the Original Indenture is hereby amended by adding new Section 707 to read in its entirety as follows: aequisition of the Bonds by R-TG pursuant to Seetion 307-hereaf-, no interest in the Bonds may be transferfed or othefwise eenveyed exeept (i) by the RTG to one holder and (H) in all other cases, with the wfitten eensent of the Issuer.' "Section 707. Limitation on Number of Bondholders. Upon acquisition of the Bonds by RTC pursuant to Section 307 hereof, no interest in the Bonds may be transferred or otherwise conveyed except M by the RTC to one holder and (ii) in all other cases, with the written consent of the Issuer by official action of its Mayor and Common Council. The Issuer shall have no duty or obligation of any nature whatsoever to provide any such written consent as to a S n tra ance of the Bonds pursuant to (ii) above and-tltc—� Issuer may in its sole estgnaa withhold any suc en consent either with or without cause, or for any reason a Issuer may impose any conditions upon a Bondholder subseaur_nt to the RTC in its sole discretion for the granting of such written consent." ARTICLE III Article IX of the Original Indenture is hereby amended by adding a new Section 914 to read in its entirety as follows: "Section 914. Trustee Approval; Successor Trustee. Notwithstanding any other provision of this Indenture, no amendment, change or modification to this Indenture, the effect of which is to release the Letter of Credit from the lien of this Indenture shall become effective unless it shall be approved and consented to by the entity serving as Trustee, nor shall the execution of the First -5- ' C 4 Supplemental Indenture obligate BankAmerica State Trust Company, as authorized agent for Seattle-First National Bank to consent to such an amendment BankAmerica State Trust Company, as authorized agent for Seattle-First National Bank hereby resigns as Trustee, effective upon: (a) the consent of the registered owners of all Bonds Outstanding and (b)the appointment and acceptance of an entity to act as successor trustee hereunder. The Issuer hereby appoints First Trust of California,National Association, as successor trustee, effective upon (a) the acceptance of such appointment by First Trust of California, N-.A-. National Association and (b) the consent of the registered owners of all Bonds Outstanding, the Company, the Lender and the Credit Egga ty Provider" ARTICLE IV This First Supplemental Trust Indenture may be executed in any number of counterparts, each of which,when so executed and delivered, shall be an original. ARTICLE V The laws of the State of California, both substantive and remedial, shall govern the construction and enforcement of this First Supplemental Trust Indenture. ARTICLE VI The Issuer shall have no duty or obligation to consider or approve any subsequent amendment to the Indenture, the Bonds or any other documents, agreement or instrumeri in connection with the Bonds. The approval by the Issuer of the First Supplemental Trust Indenture or any one or more subsequent supplemental trust indentures shall not.be considered by any person or party to be a waiver by the Issuer of the provision as t4 any subsequent requirement for consideration and approval of other supplemental trust indentures. The Issuer and its agents, officers and officials have made no representations as to/issuing any refunding obligations to refund or refinance the Bonds. The Issuer shall/be required under any circumstances to consider or approve the issuance of any refunding obligations or refunding of the Bonds and may withhold any such approval for any reason whatsoever or for no reason. ARTICLE VII The provisions of this First Supplemental Trust Indenture shall become effective immediately upon the execution and delivery hereof. This First Supplemental Trust Indenture and all terms and provisions herein contained shall form a part of the Original Indenture as fully and with the same effect as if all such terms and provisions had been set forth therein, and the Original Indenture remains in full force and effect in accordance with the terms and © provisions thereof, as supplemented hereby. All terms used herein shall have the meanings specified in the Original Indenture unless the context otherwise specifies or requires. -6- W WITNESS WHEREOF, the Issuer has caused this First Supplemental Trust Indenture to be executed by its Mayor, and the Trustee and the successor Trustee have caused this First Supplemental Trust Indenture to be executed on their behalf by their respective authorized officers, and the Resolution Trust Corporation, the Company and the Credit Facility Provider have evidenced their respective consents to its execution by causing it to be executed by its authorized officer all as of the date and year first above written. CITY OF SAN BERNAMNABERNARDINO, CALIFORNIA By Mayor ATTEST: City Clerk BANKAMERICA STATE TRUST COMPANY,as authorized agent for SEATTLE-FIRST NATIONAL BANK, as Trustee By R. Bruce Colwell,Jr. Vice President and Trust Officer V -7- j } CONSENTS �✓ RESOLUTION TRUST CORPORATION, as conservator for Great American Federal Savings Association By Attomey-in-Fact WARM CREEK ASSOCIATES, as Company,hereby irrevocably consents to the foregoing First Supplemental Trust Indenture. By: Oakmont Investments, Inc., a California corporation,general partner By Its By: Oro Ventures,Inc., a California corporation, general partner By Its -8- 0 0 © BANQUE PARIBAS, as Credit Facility Provider, hereby consents to the foregoing First Supplemental Indenture and the purchase of the Bonds in lieu of redemption in accordance with Section 307 of the Indenture. Furthermore, the Credit Facility Provider agrees that in the event the Bonds are purchased in lieu of redemption and the Letter of Credit is released from the lien of the Indenture, the Credit Facility Provider will,within one Business Day of receipt of the Letter of Credit from the Trustee compute and pay to the Lender an Adjustment in the same manner and in the same amount as if the Bonds were redeemed in whole from sources other than the Letter of Credit in accordance with Section 33(a) of the Letter of Credit Purchase Agreement. By: Its: By: Its: -9- 0 4 Draft of March 23, 1994 Marked to Show Changes From Draft of March 3, 1994 Double underscore indicates insertion. Overstrike indicates deletion. SECOND SUPPLEMENTAL TRUST INDENTURE [San BemadineBemardino-Warm Creek] THIS SECOND S UPPLEMENTALTRUST INDENTURE is made and entered into as of April 1, 1994 by and between the CITY OF SAN BERNABHr9BERNARDINO, CALIFORNIA,a municipal corporation, being a charter city duly organized and existing under the laws of the State of California (the "Issuer'), FIRST TRUST OF CALIFORNIA,NATIONAL ASSOCIATION, as successor trustee (the "Trustee") and consented to by the RESOLUTION TRUST CORPORATION ("RTC") as conservator for Great American Federal Savings Association (the "Lender"), and WARM CREEK ASSOCIATES, a California limited partnership (the "Company") and BANOUE PARIBAS, a French banking organization acting through its Los Angeles Agency (the "Credit Facility Provider"J. r, WITNESS: WHEREAS, the Issuer issued its Multifamily Housing Revenue Bonds (Warm Creek Apartments Project) Series 1985 (the "Bonds") in the original aggregate principal amount of $9,625,000 pursuant to a Trust Indenture dated as of November 1, 1985,as amended by a First Supplemental Trust Indenture dated as of March 1, 1994 (collectively, the "Original Indenture") by and between the Issuer and the Trustee; WHEREAS, Great American Bank, a Federal Savings Bank, formerly Great American First Savings Bank ("Old Great American") caused a letter of credit to be acquired and delivered to the Trustee pursuant to the Credit Enhancement Agreement by and between Old Great American and the Company, dated as of November 1, 1985 (the "Credit Enhancement Agreement"); WHEREAS, under the terms of the Letter of Credit Purchase Agreement by and between Old Great American and Banque Paribas, a French banking organization, duly organized and validly existing under the laws of the Republic of France, the Los Angeles Agency of Banque, Paribas being duly licensed by the Superintendent of Banks of the State of California and qualified to do business as a California Agency (herein called the "Credit Facility Provider"), dated as of November 1, 1985 (the "Letter of Credit Purchase Agreement"), the Credit Facility Provider has executed and delivered to the Trustee, for the purpose of making payments directly to the Trustee in satisfaction of the obligations of the company pursuant to ® the Loan Agreement, an irrevocable direct pay letter of credit(the "Letter of Credit"); 159278.03.00.D WRD'at/1027499/March 23, 1994 WHEREAS, RTC is the owner of all Bonds Outstanding under the Original Indenture; WHEREAS, Section 1102 of the Original Indenture provides that the Issuer and the Trustee may, with the consents of the owners of all Bonds Outstanding, the Company, the Credit Facility Provider and Old Great American, modify or amend the Original Indenture by supplemental indentures; WHEREAS, on August 9, 1991, the Office of Thrift Supervision ("OTS") appointed the Resolution Trust Corporation ("RTC") as conservator for Old Great American and on October 25, 1991, the OTS: (i)replaced the RTC as conservator for Old Great American with the RTC as receiver for Old Great American; (ii)authorized the charter of Great American Federal Savings Association ("New Great American"), a new federal mutual savings association; and (iii) appointed the RTC as conservator for New Great American (the "Lender"); WHEREAS, the Lender has assumed all the obligations of Old Great American under the Credit Enhancement Agreement (as defined in the Original Indenture) and all other documents contemplated therein or executed in connection therewith; WHEREAS, the Lender has succeeded to all rights of Old Great American under the Original Indenture, the Credit Enhancement Agreement, the Letter of Credit Purchase Agreement and all other documents relating to the issuance of the Bonds; WHEREAS,presently, the primary source of money for redemption of the Bonds is from payments to be made to the Trustee under the Letter of Credit and other moneys held by the Trustee for the benefit of the Bondholders; WHEREAS, the Lender and the sole Bondholder desire to amend the Original Indenture to reflect the release of the Letter of Credit from the lien of the Original Indenture; Now, THEREFORE, in consideration of the foregoing and of the mutual covenants herein set forth, the parties hereto agree as follows: ARTICLE I The following definitions are hereby amended and restated in their entirety or added as follows: "Bank" means, as the context may require, (i) Resolution Trust Corporation, as receiver for Great American Federal Savings Association or(ii) the Purchaser. "Purchaser" means the initial transferee of RTC of all Bonds Outstanding. -2- ARTICLE II The Original Indenture is hereby supplemented and amended by releasing the Letter of Credit from the Original Indenture. From and after the date of execution of this Second Supplemental Indenture, neither the Bondholders, the Issuer or the Trustee shall have any interest whatsoever in the Letter of Credit specifically described in Exhibit A hereto under the Original Indenture as supplemented hereby (the "Indenture') or otherwise, and all references in the Indenture to the Letter of Credit shall be of no force or effect. The Trustee and the Issuer shall take whatever action as RTC, as the owner of all Bonds Outstanding under the Indenture, shall direct to effectuate the purpose of this Second Supplemental Indenture. Attached hereto as Exhibit A is the written direction of RTC, as the owner of all Bonds Outstanding under the Indenture, to return the Letter of Credit specifically described in said Exhibit A and the manner in which it is to be effectuated. Notwithstanding the release of the Letter of Credit or the absence of any Alternate Credit Facility, the Purchaser, as assignee of the Association, shall retain all rights granted to the Association under this Indenture. The Issuer and the Trustee each hereby irrevocably waives any and all rights it may have in the Letter of Credit. ARTICLE III The Issuer and the Trustee agree, notwithstanding any provisions of this Indenture to the contrary, that the Letter of Credit will be permanently released from the lien hereof. Consequently: (a) the Letter of Credit shall hereafter be unavailable as sources of repayment for the Bonds, and the references herein, unless related to the Alternate Credit Facility, to the Credit Facility Provider and the Letter of Credit shall be of no further force and effect; and (b) unless and until an Alternate Credit Facility is provided, and for the purposes of construction and effectuation of this Indenture and the Loan Agreement, (i) amounts payable from the Alternate Credit Facility and any concomitant instrument providing collateral for security for the obligations under such Alternate Credit Facility shall not be a source of payment for the Bonds; (ii) the Trustee shall be unable to draw on the Alternate Credit Facility, but the Trustee shall make payments to Bondholders from, among other sources, the Bond Fund and the Redemption Fund, whether or not funds on deposit therein constitute Available Moneys and (iii) the absence of the Alternate Credit Facility in replacement of the Letter of Credit shall not constitute an event of default under the Agreement. ARTICLE IV Article XII of the Original Indenture is hereby amended by revising Section 914 to read in its entirety as follows: SECTION 914. TRUSTEE RESIGNATION; SUCCESSOR TRUSTEE. By the execution hereof: (a) the resignation of Seattle-First National Bank is effective immediately; (b) the Issuer appoints First Trust of California, National -3- Association, as successor Trustee; (c) First Trust of California, National Association, represents that it meets the capital requirements provided in Section 911 of the Original Indenture and accepts its appointment as successor Trustee; and (d) the RTC, as owner of all Bonds Outstanding consents to the foregoing. ARTICLE V The form of Bond provided in the recitals to the Original Indenture is hereby amended in its entirety with the form of Bond attached hereto as Exhibit B. ARTICLE V1 This Second Supplemental Trust Indenture may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original. ARTICLE VII The laws of the State of California, both substantive and remedial, shall govern the construction and enforcement of this Second Supplemental Trust Indenture. ARTICLE VIII The provisions of this Second Supplemental Trust Indenture shall become effective immediately upon the execution and delivery hereof. This Second Supplemental Trust Indenture and all terms and provisions herein contained shall form a part of the Original Indenture as fully and with the same effect as if all such terms and provisions had been set forth therein, and the Original Indenture remains in full force and effect in accordance with the terms and provisions thereof, as supplemented hereby. All terms used herein shall have the meanings specified in the Original Indenture unless the context otherwise specifies or requires. -4- 0 C: IN WITNESS WHEREOF, the Issuer has caused this Second Supplemental Trust Indenture to be executed by its Mayor, and the Trustee has caused this Second Supplemental Trust Indenture to be executed on its behalf by its respective authorized officer, and the Resolution Trust Corporation, the Company and the Credit Facility Provider have evidenced their respective consents to its execution by causing it to be executed by its authorized officer all as of the date and year fast above written. CITY OF SAN BER?hkDi?ABERNARDINO, CALIFORNIA By Mayor ATTEST: City Clerk FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Successor Trustee By Denise Bums Authorized Signatory ATTEST: Assistant-Seeretary Authorized Signatory -5- CONSENTS RESOLUTION TRUST CORPORATION, as conservator for Great American Federal Savings Association By Attorney-in-Fact RESOLUTION TRUST CORPORATION, as agent for Resolution Trust Corporation in its capacity as conservator for Great American Federal Savings Association, as registered owner of all Bonds Outstanding By Attorney-in-Fact WARM CREEK ASSOCIATES, as Company hereby irrevocably consents to the foregoing Second Supplemental Trust Indenture and the appointment of First Trust of California, National Association, as successor Trustee By: Oakmont Investments, Inc., a California corporation, general partner By Its By: Oro Ventures, Inc., a California corporation, general partner By Its -6- d BANQUE PARIBAS, as Credit Facility Provider, hereby consents to the foregoing Second Supplemental Trust Indenture and agrees the appointment of First Trust of California. National Association as successor Trustee and agrees that it will,within one Business Day of receipt of the Letter of Credit,compute and pay to the Lender the Adjustment in the same manner and in the same amount as if the Bonds were redeemed in full in from sources other than the Letter of Credit in accordance with Section 3.3(a) of the Letter of Credit Purchase Agreement. By: Its: By: Its: -7- EXHIBIT A The Resolution Trust Corporation, as registered owner of all Bonds Outstanding, hereby directs that the Letter of Credit be released from the lien of the Indenture and returned to Banque Paribas as the issuer thereof and waives any default resulting from such release: RESOLUTION TRUST CORPORATION, as agent for Resolution Trust Corporation in its capacity as conservator for Great American Federal Savings Association By Attomey-in-Fact EXHIBIT A EXHIBIT B (FORM OF BOND) THIS BOND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH THE TRANSFER RESTRICTIONS SET FORTH IN THE HEREINAFTER DESCRIBED INDENTURE No. $ United States of America State of California $9,625,000 CITY OF SAN BERNARDINO,CALIFORNIA MuLTIFAMH,Y HOUSING REVENUE BONDS (WARM CREEK APARTMENTS PROJECT) SERIES 1985 Interest Rate: Cusip No.: Original Issue Date: Maturity Date: Registered Owner: Dollars: $ The CITY OF SAN BERNARDINO (the "Issuer"), a municipal corporation and charter city, duly formed and validly existing under the Constitution and laws of the State of California for value received, hereby promises to pay, but solely from the special fund provided therefor as hereinafter set forth, to the Registered Owner identified above, or registered assigns, upon the presentation and surrender hereof at the principal corporate trust office of First Trust of California,National Association(the "Trustee"),in the City of Seattle, Washington (the 'Principal Office"), or its successors in trust, as Trustee under the Indenture (as hereinafter defined), the principal of, premium, if any, and interest on the Bonds (as hereinafter defined) in any lawful money of the United States of America which on the respective dates of payment thereof shall be legal tender for the payment of public and private debts. The interest on the Bonds shall be paid by the Trustee on the applicable Interest Payment Date (as hereinafter defined) to the person appearing as the registered owner of each Bond on the registration books of the Trustee as of the Record Date (as defined in the Indenture), by check or draft mailed to such registered owner at the address as it appears on the registration books of the Trustee or,under the conditions set forth in the Indenture,by wire transfer, at the address or to the account designated by such registered owner, irrespective of the cancellation of such Bond upon any transfer or exchange thereof subsequent to such Record Date and prior to the applicable May 1 or November 1 (an `Interest Payment Date"). Except as otherwise provided in the Indenture, the principal of and premium, if any, shall be paid only upon the presentation and surrender of Bonds at the Principal Office of the Trustee as the same shall become due and payable. Only such Bonds as shall have endorsed thereon a EXHIBIT B Certificate of Authentication as set forth hereon, duly executed by the Trustee, shall be entitled to any benefit or security under the Indenture. As to any Bond, the registered owner shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal of, premium, if any, or interest on any Bond shall be made only to or upon the order of the registered owner thereof as of the Record Date for such payment or of his attorney duly authorized in writing, but such registration may be changed as hereinafter provided. This Bond is issued under and pursuant to the Constitution and laws of the State of California, particularly Health and Safety Code Section 52075, fjZW., of the State of California, as amended (the "Act"),and under and pursuant to resolutions duly adopted by the Issuer. The Bonds are limited obligations of the Issuer and shall not be deemed to constitute a debt or liability of the Issuer, the County of San Bernardino or the State of California and shall not give rise to a pecuniary liability on the part of the Issuer,the County of San Bernardino,or any of their respective commissioners, officers, agents or employees. No registered owner of any Bonds shall ever have the right to enforce payment of the Bonds against any property of the Issuer or the County of San Bernardino except as herein provided. The Bonds,redemption premium and the interest thereon do not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Issuer. The Bonds shall not be construed to create any moral obligation on the part of the Issuer, the County or the State of California with respect to the payment thereof. THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED ON THE REVERSE HEREOF, AND SUCH ADDITIONAL TERMS AND PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. In the event of any default in the payment of interest hereon, such defaulted interest shall be payable to the registered owner of this Bond (or its respective predecessor Bond) on a special Record Date for the payment of such defaulted interest, which date shall be established by notice mailed by the Trustee on behalf of the Issuer to the registered owner of Bonds not less than fifteen(15)days preceding such special Record Date. B-2 t IN wnwas wHEREOF, the City of San Bernardino has caused this Bond to be executed with the manual or facsimile signature of the Mayor and a manual or facsimile of its official seal to be imprinted hereon and attested by the manual or facsimile signature of the City Clerk, all as of the 1st day of November, 1985. CITY of SAN BERNARDINo [SEAL.] ATTEST: By: Mayor City Clerk B-3 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds issued under the provisions of the within-mentioned Indenture. Date of Authentication: FIRST TRUST OF CALIFORNIA,NATIONAL ASSOCIATION,as Trustee By: Authorized Officer s : : B-4 FORM OF REVERSE SIDE OF BOND This Bond is one of a duly authorized issue of multifamily housing revenue bonds of the Issuer in the aggregate principal amount of $9,625,000 known as the "City of San Bernardino, California, Multifamily Housing Revenue Bonds (Warm Creek Apartments Project) Series 1985" (herein called the "Bonds"), dated as of November 1, 1985, subject to prior redemption as hereinafter mentioned and issued for the purpose of providing permanent financing for a 304-unit multifamily apartment complex located within the City of San Bernardino,California (herein called the "Project"). All of the Bonds are issued or are to be issued under and pursuant to a Trust Indenture dated as of the first (Ist) day of November, 1985, as amended by a First Supplemental Trust Indenture dated as of 1, 1994 and a Second Supplemental Trust Indenture dated as of 1, 1994 (said Trust Indenture, together with all supplements and amendments thereto as therein permitted, being herein called the 'Indenture"), by and between the Issuer and the Trustee. Copies of the Indenture are on file at the Principal Office of the Trustee. The Issuer has entered into a Loan Agreement, dated as of November 1, 1985 (said Loan Agreement, together with all supplements and amendments thereto as permitted by the Indenture, being herein called the "Agreement"), with Warm Creek Associates, a California limited partnership (herein called the "Company"), under which the Issuer has agreed to lend the proceeds of the Bonds to the Company as evidenced by a promissory note (herein called the "Note")pursuant to which the Company has agreed to make payments on the Note at such times and in such amounts to assure that the payment of the principal of and interest on the Bonds shall be made when due whether at maturity, by call for redemption prior to maturity, by declaration or otherwise(herein called the "Basic Payments"). Pursuant to the Agreement, the Company has also agreed to pay an amount equal to the redemption premium, if any, on the Bonds, and certain fees and expenses of the Issuer and the Trustee as provided in the Agreement(all such premiums, fees and expenses, together with any payments required of the Company as Basic Payments being herein called the "Payments"). The Agreement further obligates the Company to pay the costs of maintaining, repairing and operating the Project and of keeping the same insured and also provides that the Company is unconditionally obligated to meet its obligations to make the Payments and to perform and observe the other agreements on its part contained therein. Great American First Savings Bank, a California corporation and a state chartered savings bank headquartered in San Diego, California (herein called "Great American"), initially caused a letter of credit to be acquired and delivered to the Trustee pursuant to the Credit Enhancement Agreement by and between the Bank and the Company, dated as of November 1, 1985 (the "Credit Enhancement Agreement"). Such letter of credit has been released from the Gen of the Indenture. Great American or its successor may transfer its rights under the Credit Enhancement Agreement (such entity referred to herein as the `Bank'). The Bonds are not secured by a Letter of Credit or other credit enhancement. In the event such credit is provided, such instrument is referred to herein as an "Alternate Credit Facility." Until such time as an Alternate Credit Facility is provided, references to Seasoned Funds or Available Moneys shall be of no force or effect B-5 Under the Indenture, the Issuer has, for the benefit of the registered owners of the Bonds, pledged and assigned to the Trustee in trust (i) all of the Issuer's rights under the Agreement (except*its rights to reimbursements, indemnification and notice), (ii) all of the Issuer's rights, title and interest in and the mortgage Gen on and security interest in the Project created by the Third Deed of Trust (as defined in the Indenture), including any proceeds thereunder and (iii) all moneys and securities in each of the Project Fund, the Bond Fund and the Redemption Fund (as each are defined in the Indenture). The Indenture further provides that moneys received by the Trustee which are required, or are accompanied by direction from the Issuer or the Company with the written approval of the Bank, that such moneys are to be paid into the Bond Fund are to be deposited with the Trustee to the credit of the Bond Fund, which Fund is pledged to and charged with the payment of the principal of premium,if any, and interest on the Bonds; provided, however, that in no event shall the Trustee pay any premium on any Bond from moneys derived from demands for payment under any Alternate Credit Facility. Reference is hereby made to the Indenture and the Agreement, for the provisions, among others, with respect to the custody and application of the proceeds of the Bonds, the collection and disposition of income and other revenues, a description of the funds charged with and pledged to the payment of the principal of, premium, if any, and interest on the Bonds, the nature and extent of the security for the Bonds, the terms and conditions under which the Bonds are issued, the rights, duties and obligations of the Issuer and the Trustee, and the rights of the registered owners of the Bonds. By the acceptance of this Bond, the registered owner hereof assents to all of the provisions of the Indenture. The Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof. At the Principal Office of the Trustee, in the manner and subject to the limitations,conditions and charges provided in the Indenture, Bonds may be exchanged for an equal aggregate principal amount of Bonds of authorized denominations and bearing interest at the same rate as the Bonds surrendered for exchange. The amount of interest to be paid on the Bonds shall be calculated at the interest rate hereon on the basis of a 360-day year comprised of twelve 30-day months. Interest on the Bonds shall be payable commencing on May 1, 1986, and semiannually thereafter on each November 1 and May 1 of each year(an "Interest Payment Date") until the principal sum thereof has been paid, except as otherwise provided in the Indenture. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof to which interest has been duly paid or provided for, unless such Bond is authenticated before May 1, 1986, in which case interest will accrue from November 1, 1985, or unless authenticated as of a date during the period from the Record Date to the next Interest Payment Date, in which case it shall bear interest from such Interest Payment Date; provided, however, that if at the time of authentication of any Bond interest on such Bond is then in default, such Bond shall bear interest from the date to which interest has been paid or, if prior to May 1, 1986, or if no interest has previously been paid on the Bonds, interest shall be payable from the date of the Bonds. The Trustee shall insert the date of authentication of each Bond in the place provided for such purpose in the form of Trustee's Certificate of Authentication as printed hereon. Each Bond shall bear interest on overdue principal at the _ rate then in effect on such Bond. B-6 The Bonds shall be subject to mandatory redemption as follows (in each case accrued interest to the redemption date shall be paid to the registered owner of each Bond as of the applicable Record Date): (1) in whole and not in part, on the first day for which notice of redemption can be timely given by the Trustee after the Alternate Credit Facility shall have expired if at least forty-five (45) days prior to the expiration date of any Alternative Credit Facility the Company or the Bank does not cause to be delivered to the Trustee an Alternate Credit Facility satisfying the criteria set forth below: (0 The Alternatw Credit Facility shall be a credit facility of an institution (ft "Alternate Credit Facility Provider") equal in amount and substantially identical in form and substance to the Credit Facility, which shall have a minimum term of one (1) year and which shall be reasonably acceptable to the Trustee. (ii) Contemporaneously with the issuance of the Alternate Credit Facility; (1) The Trustee shall receive an opinion of counsel, which counsel shall be satisfactory to the Trustee,to the effect that(A) the Alternate Credit Facility is the valid and binding obligation of the Alternate Credit Provider, enforceable against the Alternate Credit Facility Provider in accordance with its terms,except insofar as its enforceability may be limited by any insolvency or similar proceedings applicable to the Alternate Credit Facility Provider or by proceedings affecting generally the rights of the Alternate Credit Facility Provider's creditors, (B) a payment on the Bonds from the proceeds of a demand for payment under the Alternate Credit Facility will not constitute a voidable preference under the Federal Bankruptcy Code or under other applicable laws and regulations in the event of a bankruptcy or insolvency of any entity other than the Alternate Credit Facility Provider and (C) that the delivery of such Alternate Credit Facility will not adversely affect the exemption from federal income taxation of the interest on the Bonds; and (2) The Trustee shall receive either (i) written evidence from the rating agency that may hereafter maintain a rating on the Bonds to the Trustee that said substitution will not result in a reduction of any rating of the Bonds and the Trustee shall have received written evidence from any national rating agency hereafter, if any, maintaining a rating on the Bonds to such effect or (ii) written evidence from a nationally recognized rating agency that the proposed Alternate Credit Facility Provider as the issuer of the Alternate Credit Facility is an institution which is rated or whose long-term debt obligations are rated at least "AAA" or "Aaa" or their equivalent by a nationally recognized rating agency; and (3) The Alternate Credit Facility Provider must agree in writing not to take security which would reduce or diminish the security of the Bondholders; B-7 it (2) in whole or in part, on November 1, 1988, or on the Date of Completion, to the extent that proceeds from the issuance of the Bonds remain on deposit in the Project Fund at a price equal to the principal amount of Bonds called for redemption, together with accrued interest to the date fixed for redemption. The Bonds shall be subject to optional redemption as follows (in each case accrued interest to the redemption date shall be paid to the registered owner of each Bond as of the applicable Record Date): (1) in whole or in part, on any Interest Payment Date with Seasoned Funds of the Company in an amount which shall be sufficient for such purpose at the respeotiva redemption prices set forth below, expressed as percentages of the principal amount of the Bonds called for redemption, provided that the Trustee has received written notice from the Bank that Bank has consented and the Alternate Credit Facility Provider, if any,has approved such payment by the Company: REDEMPTION RFDFMPnON PERIOD PRICES November 1, 1992,and May 1, 1993 103% November 1, 1993,and May 1, 1994 102 November 1, 1994, and May 1, 1995 101 November 1, 1995, and thereafter 100 (2) in whole, at the principal amount of Bonds so called for redemption,on the first day for which notice of redemption can be timely given next succeeding the Trustee's receipt of a written notice from the Bank and approval by the Alternate Credit Facility Provider that an "event of default" has occurred under the Credit Enhancement Agreement and the Bank is directing acceleration of the Bonds pursuant to Section 302(B)(2) of the Indenture; and (3) in whole or in part, on the first practicable date for which notice of redemption can be timely given next succeeding the Trustee's receipt of a written notice of the Bank and the approval of the Alternate Credit Facility Provider, at a price equal to the principal amount of the Bonds so called for redemption to the extent that moneys are available from the sources specified in this paragraph in the event of an involuntary loss or the substantial destruction of the Project as a result of unforeseen events (e.g., fire, seizure, requisition, change in a federal law or an action of a federal agency after the date of issuance of the Bonds which prevents the Issuer from enforcing the requirements of Section 1.103(b) of the Regulations or condemnation) provided that the Bank exercises its option to cause such redemption by delivering notice of its election, along with the consent of the Credit Facility Provider to the Trustee within one hundred eighty (180) days of the occurrence of the event; provided, however, that if amounts received as insurance proceeds or a condemnation award, if any, as a result of any of the foregoing events are deposited in the Project Fund and are used to rebuild, replace, repair or restore the Project, no redemption shall be required under this B-8 paragraph. Moneys to be applied to the redemption of Bonds pursuant to this paragraph shall be derived from the following sources: (i) insurance proceeds or condemnation awards deposited by the Trustee into the Redemption Fund pursuant to Article V of the Indenture which insurance proceeds or condemnation awards are Seasoned Funds; (ii) moneys available for such purpose under the Alternate Credit Facility; (ill) Seasoned Funds representing payments made by the Company or any general partner of the Company under the Agreement or moneys paid under the Third Deed of Trust provided that in either case such moneys have been on deposit with the Trustee for a period of at least one hundred twenty-six (126) days during which no petition in bankruptcy or similar insolvency proceeding has been filed by or against the Company or any general partner tlremot; aad (iv)all moneys held in any fund nr account established under the Indenture(other than the Cost of Issuance Account). All or a portion of any Bond may be redeemed in accordance with Section 302 of the Indenture, but only in a principal amount equal to $5,000 or any integral multiple thereof. In the event that less than all of the Bonds Outstanding are to be redeemed, the Trustee shall select the particular Bonds to be redeemed by lot. Upon surrender of any Bond for redemption in part, the Issuer shall execute and the Trustee shall authenticate and deliver to the registered owner thereof, at the expense of the Company, a new Bond or Bonds of authorized denominations of the same maturity and in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. The Trustee shall give notice of any redemption by sending such notice to the registered owner of each Bond to be redeemed by first class mail, postage prepaid, not less than ten (10) nor more than twenty (20) days prior to the date fixed for redemption;provided, however, that no such notice shall be sent by the Trustee until the Trustee shall have received the consent of the Bank and shall have on deposit Available Moneys in the Redemption Fund sufficient in an amount to effect such redemption. All notices of redemption shall be mailed to the Bank and the Alternate Credit Facility Provider and to the registered owner of each Bond to be redeemed in whole or in part at the address shown on the Bond registration books as of the applicable Record Date. Neither the failure of the registered owner of any Bond to receive a notice mailed nor any defect in any notice so mailed shall affect the validity of the proceedings for such redemption. Such notice shall state the redemption date, the redemption price, the amount of accrued interest payable on the redemption date, the place at which the Bonds are to be surrendered for payment, that from the redemption date interest on the Bonds will cease to accrue, and, if less than all of the Bonds are to be redeemed, an identification of the Bonds or portions thereof to be redeemed. All Bonds paid or redeemed either at or prior to maturity and all Bonds acquired by or delivered to the Trustee for cancellation shall be cancelled upon such payment or redemption or upon such acquisition or delivery of such Bonds. The registered owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. i B-9 r/ Modifications or alterations of the Agreement and the Indenture may be made only to the extent and in the circumstances permitted by the Indenture and may be made in certain cases without the consent of all of the registered owners of the Bonds. The transfer of this Bond may be registered by the registered owner hereof in person or by his attorney or legal representative at the Principal Office of the Trustee, but only in the manner and subject to the limitations and conditions provided in the Indenture and upon surrender and cancellation of this Bond. Upon any such registration of transfer the Issuer shall execute and the Trustee shall authenticate and deliver in exchange for this Bond a new registered Bond or Bonds, registered in the name of the transferee, of authorized denominations, in an aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. This Bond shall be governed by and construed in accordance with the laws of the State of California. All acts, conditions and things required to happen, exist and be performed precedent to and in the issuance of this Bond and the execution of the Indenture have happened, exist and have been performed as so required. This Bond shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Indenture until it shall have been authenticated by the execution by the Trustee on the Certificate of Authentication endorsed hereon. B-10 ASSIGNMENT Social Security No. or T.I.N. For value received the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) as the undersigned's attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises. DATED: Signature: Signature guaranteed by: Title: B-11