HomeMy WebLinkAboutRS2- Economic Development Agency ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: RONALD E. WINKLER SUBJECT: AMENDMENT NO. ONE-
Development Director HARRIS COMPANY SECTION 108
LOAN AGREEMENT
DATE: May 16, 1996
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Synopsis of Previous Commission/council/Committee Action(s):
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(Mayor and Common Council)
MOTION: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO,CALIFORNIA,APPROVING A CERTAIN AMENDMENT NO. 1
TO THE HUD SECTION 108 LOAN AGREEMENT BY AND BETWEEN THE CITY
OF SAN BERNARDINO AND THE HARRIS COMPANY,APPROVING CERTAIN
CONTRACTS FOR LOAN GUARANTEE ASSISTANCE UNDER HUD SECTION
108 AS AMENDED,AND AUTHORIZING EXECUTION OF NECESSARY
DOCUMENTS IN CONNECTION WITH THE PENDING PUBLIC OFFERING OF
TRUST CERTIFICATES GUARANTEED UND D SECTION 1108..
Adm)nistrator RONALD E. INKLER
Development Director
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Contact Person(s): Ronald_E.__Winkler - _- __ Phone: 50$1___
Project Area(s): Central City Ward(s): One(])
Supporting Data Attached: Staff Report;Resolution,Letter
FUNDING REQUIREMENTS: Amount:S N/A Source: N/A
Budget Authority: N/A
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Commission/Council Notes:
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REW:Imp:harris2.cdc COMMISSION MEETING AGENDA
MEETING DATE: 05/20/1996
Agenda Item Number:
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
Amendment No. -1-Harris Company Section_108_I o nAgretmenr
Background
Amendment No. 1 to the City of San Bernardino's ("City") HUD Section 108 Loan Agreement
("Agreement") with the Harris Company ("Harris")would allow Harris an additional six (6)
months (i.e. until November 1, 1996)to complete the $1,000,000 improvements required by the
Agreement and an additional three (3)months (i.e. until December 1, 1996)to prepare the final
report of sums expended for the improvements and the specific nature of the improvements.
HUD has recently advised the City that it intends to include the City's Promissory Notes relative
to the Harris and to the Westside Shopping Center projects (collectively "Notes") in a trust,
together with other HUD Section 108 Notes issued by other borrowers, and that certificates
based on the trust will be sold in a June 5, 1996 public offering. In order for the Notes to be
included in the public offering, HUD requires the City to enter into Contracts for Loan Guarantee
Assistance under HUD Section 108, as Amended ("Contracts"), issue the Notes, pledge the grant
funds, and provide an opinion of counsel pursuant to paragraph 4(b) of the Contracts by May 23,
1996, and to execute necessary or desirable instruments to accomplish the transaction and to
ensure the Notes are included in the public offering.
Based on the foregoing, staff recommends adoption of the form resolutions.
p
�/?L / ,-�
RONALD t. WINKLER, Director
P Development Department
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REW:lmp:harris2.cdc COMMISSION MEETING AGENDA
MEETING DATE: 05/20/1996
Agenda Item Number: P) - 2
1 EXHIBIT "A"
2 (AMENDMENT NO. 1 TO HUD SECTION 108 LOAN AGREEMENT)
3
1 EXHIBIT "B"
2 (PROMISSORY NOTE NOS. B-93-MC-06-0539
and B-94-MC-06-0539)
3
4
1 EXHIBIT "C"
2 (CONTRACTS FOR LOAN GUARANTEE ASSISTANCE
UNDER HUD SECTION 108, AS AMENDED)
3
4
5
6
7
8
9
10
11
12
13
14 �,
AMENDMENT NO. 1 TO
HUD SECTION 108
LOAN AGREEMENT
This AMENDMENT NO. 1 ("Amendment")to that certain HUD Section 108 Loan
Agreement which is dated as of May 4, 1995 ("Agreement"), is made and entered into this day
of May, 1996, by and between the CITY OF SAN BERNARDINO, a municipal corporation
("City")and THE HARRIS COMPANY('Borrower"). Except as specifically amended herein, the
terms and conditions of the Agreement shall remain in full force and effect.
1. Amendment to Section 8.
In accordance with Section 18 of the Agreement,the City and the Borrower hereby
agree to amend the fourth and fifth sentences contained in the third paragraph of Section 8 of the
Agreement to read as follows:
The Improvements shall be accomplished during the period of January 30, 1995 to
November 1, 1996. Borrower shall prepare semiannual reports from the date of the Loan that
provide a detailed accounting of the sums expended for the Improvements and the specific nature
of the Improvements, and shall prepare a final report not later than December 1, 1996.
2. Authorization to Prepare Composite Agreement.
The appropriate personnel on behalf of the City are hereby authorized and directed
to prepare a composite of the Agreement indicating the changes that will take effect as a result of
this Amendment.
3. Effective Date.
This Amendment shall become effective upon execution thereof by both the City and
the Borrower. Prior to such time, the Agreement shall continue in full force and effect.
- 1 -
i
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their proper representatives, on the day and year set forth opposite the name of each of
the parties.
Dated: May_, 1996 CITY OF SAN BERNARDINO, CALIFORNIA
By:
Tom Minor
Mayor
ATTEST:
By:
Title:
Approved As To Form and Content:
Dated: May A, 1996 THE HARRIS C PANY
By:
We tont
Presi nt and Chief Executive Officer
ATTEST:
By:G9 z4f
Title:.5
Approved As To Form and Content:
SBEO/0001-43/DOC/3107
5/9/96 10:20 ew
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WASHINGTON.O.C.20410.70(Z
OFFICE OF THE ASB18TAKT MCAETAAV MR ,
001MUMIT PLWa4 NW 0VAM0PMElfr APR 25 10
Dear sir or Madam:
Enclosed are documents related to the pending public
offering of trust certificates guaranteed under Section 108 of
the Housing and Community Development Act of 1974 , as amended.
The public offering schedule is firm for June 5, 1996, except for
adverse market conditions. The offering will be underwritten by:
(i) Merrill Lynch & Co. , (ii) Dillon, Read & Co. Inc . , and (iii)
Smith Barney Inc.
This underwritten public offering will be conducted pursuant
to legislation which permits the Department of Housing and Urban
Development ("HUD") to guarantee trust certificates that are
backed by a trust composed of notes or other obligations
guaranteed under Section 108 . Your note will be included in such
a -trust, together with the notes of other participating
borrowers.
The enclosed public offering documents which must be
executed by the authorized representative of the borrower are the
Promissory Note ( "Note") and the Contract for Loan Guarantee
Assistance ("Contract") . Finally, an opinion of counsel to the
borrower is required pursuant to paragraph 4 . (b) of the Contract;,
model opinions with attached instructions are also enclosed for
the guidance of counsel.
After it is executed by the borrower and returned to HUD,
the Note (which is not effective until guaranteed by HUD) will be
delivered by HUD to Chemical Hank, as' trustee ("Trustee") , two
days before the public offering date and will be held in trust.
At closing, the Trustee will issue a single, separate certificate
for each principal due date specified in the Note. Each such
certificate shall specify the applicable pass-through interest
rate, which rate (s) will also be entered in the schedule attached
to the Note for the applicable Principal Due Dates . At that
time, the Trustee will also fill in the "Date" blank on the Note,
which will be the public offering date .
2
The principal amount of the Note shall be repaid in
accordance with the schedule attached thereto. Interest will
accrue on each principal installment at the pass-through interest
rate on the related trust certificate, up to the applicable
interest Due Date (each February 1 or August 1) or Principal Due
Date on the schedule attached to the Note (which dates correspond
to the related distribution dates of payments to investors on the
trust certificates) .. Each interest payment will consist of the
aggregate of the interest amounts accrued to the applicable date
on the entire principal balance of the Note. However, all
payment: on the Note are actually due to the Trustee seven
business days before the applicable Interest Due Date or
Principal Due Date. This is necessary to enable the Trustee to
aggregate the payments and direct them to the proper investors,
and also to enable HUD to honor its guarantee by making payment
on behalf of the borrower from pledged grant funds if necessary.
The interest rate will be established for each trust certificate
the week before the public offering date .
The Note and Contract reference the Trust Agreement.
Pursuant to the Contract, the Borrower consents to the selection
of Chemical Bank as trustee and agrees to the terms of the public
offering, including the Trust Agreement . The Trust Agreement
principally sets forth duties and responsibilities of the
Trustee, but certain provisions of interest to borrowers are
included, including compensation and indemnification of the
Trustee, which is secured only by the pledge of grants. (Please
note that you do not need to execute and return the Trust
Agreement. )
The Contract provides when and how payment of the costs of
the public offering is to be made. The final amount of the costs
will not be known until the week before the public offering date.
we will notify you of the amount at that time, as well as the
amount of accrued interest on the interim loan.
The enclosed form provides the information that you will
need to wire transfer funds to the Trustee in payment of the
issuance costs and accrued interest . This wire transfer
information is also applicable to subsequent payments of interest
. and principal on the Note.
Return the executed documents and the legal opinion(s) by
May 23, 1996, to:
U.S. Department of Housing and Urban Development
ATTN: Paul Webster, Director, Financial Management Division
451 Seventh St. , S.W. , Room 7180
Washington, D.C. 20410
Even though the public offering will not be held until
June 5, 1998, it is neeessarty tlti we receive the documents from
you by close of business on ay"23. we must verify that we have
all documents from all borro"'is and that -they are satisfactory
before we can sign the underwriting agreement . If we do not
receive the documents from you by May 23, your notes will not be
included in the June s offering.
If you have any questions regarding this letter, please
contact the Financial Management Division at 202/708-1871. If
your counsel have any questions about preparation of the legal
opinion(a) , please have them contact John Wingard or Kathy Bialas
of our Office of General Counsel on 202/708-2027 .
Very sincerel yours,
• lr
,Ian C. Opper
Acting Deputy Director
office of Block Grant Assistance
Enclosures
MAY 16 '96 03:34PM .P.2
NOTE
BORROWER: SAN BERNARDINO,
CALIFORNIA NOTE NO. 13-94-MC-06•-6539
REGISTERED DATE: June 5, 1996
HOLDER: CHEMICAL BANK
AGGREGATE PRINCIPAL
AMOUNT: $7,350,000
For value received, the undersigned, SAN BERNP-nnINO,
CALIFORNIA (the "Borrower, " which term includes any succeEltjors or
assigns) , a public entity or agency organized and exiating undar
the laws of the State (or commonwealth, if applicable) of
CALIFORNIA, promises to pay to the order of CHEMICAL, BAIgK, as
Registered Holder (the "Registered Holder, 11 which term includes any
successors or assigns) , the principal amounts set forth on the
attached Schedule, together with interest thereon at the rates
applicable thereto as specified on the Schedule. Interest shall be
calculated and payments shall be made in the manner set forth
below. The Registered Holder is acting hereunder on behalf of a
trust (the "Trust") created pursuant to a Trust Agreement by and
between the Secretary (the "Secretary") of Housing and urban
Development and Chemical Bank, as trustee (the "Trustee") , d, tr-.3d as
of January 1, 1995, as amended (the "Trust Agreement") , as
supplemented by a Supplement to the Trust Agreement, by and b;, twecn
the Secretary and the Trustee, dated June 5, 1996.
Interest on a principal amount of this Mote that is due —0 of
a given date specified on the schedule (such date, the "Principal
Due Date" for such principal amount) shall accrue at the per annum
rate specified on the Schedule from (and including) the data hereof
to (but excluding) such Principal Due Date or, if applica.blo, to
the applicable Interest Due Date for an Optional Redemption (as
defined below) . The aggregate of the interest amounts accrued can
the entire unpaid principal amount of this Note shall )5e due
semiannually as of February 1 and August 1 of each year (each, an
"Interest Due Date") commencing on August 1, 1996, until the
Aggregate Principal Amount of this Note is paid in full. interest
shall be calculated on the basis of a 360-day year consi8ting of
twelve 30-day months.
Certain principal amounts that are indicated as being eligible
for Optional Redemption on the schedule may be prepaid, in who?e or
in part, at the option of the Borrower as of any Interest Due Date
on or after August 1, 2005 (an "Optional Redemption") . In order to
elect an Optional Redemption of a prepayable principal amount, the
Borrower shall give notice of its intention to prepay a principal
amount to the Trustee and the Secretary not less than so dt,ys nor
more than 90 days prior to the Interest Due Date as of which the
Borrower intends to prepay the principal amount. The Tru-ter shall
apply any payments received in respect of Optional Redemptions in
MAY 16 '96 03:35PM P.3
accordance with written instructions of the Borrower, an approved
by the Secretary. Principal amounts that are not indicated as
being eligible for optional Redemption on the Schedule way not be
prepaid.
Notwithstanding anything Contained herein, the Sorrow�� , in
accordance with the Contract for Loan Guarantee Aesistance (the
"Contract") , shall be required to make all payments of interest: and
principal, including any optional Redemption payment, directly to
the Trustee on the seventh Business Day prior to the apprcp:!_iatc
Interest Due Date or Principal Due -Date, as applicable.
For purposes of this Dote, "Business Day" shall mean a. cl?y on
which banking institutions in New York City are not required or
authorized to remain Closed and on which the Federal Reeerwe :Bank
and the New York stock Exchange are not closed. if any payment
(including a payment by the Secretary) is required to be matte on a
day that is not a Business Day, then payment shall be made on the
next Business Day.
A default under this Note shall occur upon failure by the
Borrower to pay principal or interest on this Note by the
applicable Principal Due Date or Interest Due Date. The Borrower
hereby waives notice of default and opportunity for hearing for
such failure to make a payment when due. It a Borrower defaul.t:s oii
the payment of any interest or principal amounts when due, the
Secretary may, but is not obligated to, make on any Interest Due
Date on or after August 1, 2005 an acceleration payment to the
Trustee equal to the principal amount due, together with accrued
and unpaid interest thereon to such Interest Due Date. In the
event that any such acceleration payment is .made, the amounts paid
on behalf of the Borrower shall be deemed to be immediately due- and
payable to the Secretary. Nothing in this paragraph shall be
construed as permitting or implying that the Borrower may, v:ithout
the written consent of the Registered Holder and the Secretary,
modify, extend, alter or affect in any manner whatsoever the. right
of the Registered Holder to receive any and all paytici,.ts of
principal and interest specified in this Note.
If a payment of principal or interest due hereunder not
been duly received by the Registered Holder from eiblv-, the
Borrower or the Secretary by the close of business on the
applicable Interest Due Date or Principal Due Date, interest shall
accrue on the amount of such payment at the interest: rate (g)
applicable to the missed payment, from the relevant Interest Due
Date or Principal Due Date until the date of payment to the
Registered Holder.
This Note evidences indebtedness incurred pursuant to and in
accordance with the Contract and any amendments thereto, between
the Borrower, the public entity named therein (if other than the
Borrower) and the Secretary and pursuant to Section 108 of Title I
2
MAY 16 196 63:3GPM P.4
of the Housing and Community Development Act Of 1974, as amended
(42 U.S.C. §5308) (the "HCD Act") . This Note is subject to the
terms and provisions of the Contract, to which Contract reference
is hereby made for a statement of said terms and provisions ana for
a description of the collateral security for this Note. The
payment of principal on the applicable Principal Due Dates and
interest on the Interest Due Dates under this Xote is
unconditionally guaranteed by the Secretary to the Regirt_Ared
Holder through a guaranty (the "Guaranty") . Execution of the
Secretary's Guaranty is required before this Note is effective, and
such Guaranty shall be issued pursuant to and in accordance with
the terms and provisions of the Contract and Section 108 of the HCD
Act.
This Note may be modified only by such amendments as may be
agreed upon in writing from time to time by the Secretary and the
Borrower under this Note. No such change in the terms of this Note
shall alter or affect the Guaranty.
As provided in the Contract, the Secretary may also declare
the Borrower in default under this Note if the Secretary makes a
final decision in accordance with the provisions of 24 C.P.R.
§570.913 (or any successor regulation thereof) , incitiding
requirements for reasonable notice and opportunity for hearing,
that the Borrower has failed to Comply substantially with Title I
of the HCD Act.
Following a default by the Borrower under the terms of this
Note, the Registered Holder agrees to rely wholly and exclusively
for repayment of such Note upon the Secretary. The enforcement of
any instruments or agreements securing or otherwise related to such
Note shall be the sole responsibility of the Secretary, an-6, the
Registered Holder shall not be responsible for the prepa!r�ntion,
contents or administration of such instruments and agreement-8, or
for any actions taken in connection with such instrumenit-,i�t a.ncl
agreements. The Registered Holder, to the extent it is loga.11y
able to do so, shall bind or cause to be bound its succi�:ssorr- and
assigns to all limitations imposed upon the Registered Holler by
this Note.
The Borrower hereby waives any requirement for preset)tnent,
protest or other demand or notice with respect to this Note.
This Note is issued, executed, and delivered on behalf of the
Borrower by its authorized official.
3
MAY 16 '96 03:37PM P.5
SN WITNE89 WHEREOF, the undersigned, as an authorised official
of the Borrower, has executed and delivered this NOte, dated
June 5, 1996.
SAN BERNARDINO, GAI,IPORITI .
BORROWER
• By.
(Signature)
(Name)
ATTEST: --- - -
(Signature) (Title)
(Name)
(Title)
4
SCHLDULM
Optional.
Redemption
Principal Principal Interest Available
Amount Due Date Rate YM No
$ 150, 000 August 1, 1996 x
165, 000 August 1, 1997 x
180, 000 August 1, 1998 X
195, 000 August 1, 1999 x
210, 000 August 1, 2000 x
230, 000 August 1, 2001 x
250, 000 August 1, 2002 x
270, 000 August 1, 2003 x
295,000 August 1, 2004 x
320, 000 August 1, 2005 X
345, 000 August 11 2006
375,000 August 1, 2007 x
405, 000 August 1, 2008 X.
440, 000 August 1, 2009 x
480, 000 August 1, 2010 X
520, 000 August 1, 2011 x
565, 000 August 1, 2012 x
610,000 August 1, 2013 x
665, 000 August 1, 2014 x
680, 000 August 1, 2015 x
Aggregate
Principal
Amount of Note: $7,350,000
5
MAY 16 '96 03:37PM . P.6
NOTE
BORROWER: SAN BERNARDINO,
CALIFORNIA NOTE NO. R-93-MC-06-053°
REGISTERED DATEc June 51 7996
HOLDER: CHEMICAL BANK
AGGREGATE PRINCIPAL
AMOUNT: $490,000
For value received, the undersigned, SAN BEIt1Ii.Rn1:1
CALIFORNIA (the °Borrower, " which terra includes any success7:i's or
as*signs) , a public entity or agency organized and existing tinder
the laws of the State (or Commonwealth, if applicable) of
CALIFORNIA, promises to pay to the order of C14EIAICAL, 13A1,T K, as
Registered Holder (the "Registered Holder, " which term includes any
successors or assigns) , the principal amounts set forth on the
attached schedule, together with interest thereon at the rates
applicable thereto as specified on the Schedule. Interest sljall be
calculated and payments shall be made in the manner set forth
below. The Registered Holder is acting hereunder on behalf of a.
trust (the "Trust") created pursuant to a Trust Agreement b-tie and
between the secretary (the "Secretary°) of Housing and Y7rba.n
Development and Chemical Bank, as trustee (the "Trustee") , dated are
of January 1, 1995, as amended (the "Trust Agreement") , as
supplemented by a Supplement to the Trust Agreement, by and l ei.wreen
the Secretary and the Trustee, dated June 5, 1996 .
Interest on a principal amount of this Note that is due -,s of
a given date specified on the Schedule (such date, the "Pri.nc i.pa.l
Due Date" for such principal amount) shall accrue at the pu-,, r-.nnum
rate specified on the Schedule from (and including) the date hr-,reo•L"-
to (but excluding) such Principal Due Date or, if appli.cabLr, to
the applicable Interest Due Date for an Optional Redemption («s
dgfi.ned below) . The aggregate of the interest amounts a.ccri!hd on
the entire unpaid principal amount of this Note shall !7e due
semiannually as of February 1 and August 1 of each year (ez-tcl , an
"Interest Due Date") commencing on August 1, 1996, until, the
Aggregate Principal Amount of this Note is paid in full_ Interest
shall be calculated on the basic of a 360-day year consisting of
twelve 30-day months.
Certain principal amounts that are indicated as being eligible
for Optional Redemption on the Schedule may be prepaid, in whcle or
in part, at the option of the Borrower as of any Interest; Due Date
on or after August 1, 2005 (an "Optional Redemption") . In order to
elect an Optional Redemption of a prepayable principal amount, the
Borrower shall give notice of its intention to prepay a principal
amount to the Trustee and the Secretary not less than 60 days nor
more than 90 days prior to the Interest Due Date as of which the
Borrower intends to prepay the principal amount. The Tru stew! Esha.11
apply any payments received in respect of Optional. Redernption5, in
MAY 16 '96 03:3ePM P.7
C0MACT FOR LOAN GQAEAME A98I8TAReg WMEn ,
SBCTrdN 108 OF THS HOUSING Am CMUMMTy Immy op+kil, r'
or 1974. AS QED, 42 V.S.C. 95308
Date of Coutr&c't
This Contract for Loan Guarantee Assistance ("Contract") in
entered into between the, ; of San B�rnar.dino_ t� as ?�org tyre>e
(the "Borrower") and the Secretary of Housing and Urban
Development ("Secretary") as guarantor for the Guaranty mAOe
pursuant to section 108 ("Section 1081~) of title I of thcs Roti5ing
and Community Development Act of 1.974, as amended (the '°.Actw and a4' CFR Part 570, Subpart M, of the promissory mote executcd
contemporaneously herewith and numbered -R-94-Mc-06-0539, in Y:!Ye
Aggregate Principal Amount of $7, _S0._000 (thb "N'ote") . The fends
received by the Borrower pursuant to the Note, or any prior
Section 109-guaranteed note being refinanced by this Nate, a�,:e
referred to herein as the "Guaranteed Loan Funds. it The Not& _is
hereby incorporated into the Contract. Terms used in the
Contract with initial capital 10tters and not otherwise defin-_d
in the text hereof shall have the respective meanings givcn
thereto in the Note.
The Note is payable to a Trustee (as defined in the Nate) ,
and trust certificates based on the Note .(and similar notes
issued by other Section 108 borrowers) will be purchased by
underwriters selected by the Secretary (the "Underwriterly")
pursuant to an Underwriting Agreement between the Undercut_=r!j
and the Secretary at a closing on a date to be determined b ,. the
Secretary and the Underwriters (the "Public Offering natc'i) , In
accordance with Section 1o8, by execution of this Contract
Borrower ratifies and consents to the Secretaryrs sa7eCtiiorx n,_
the Underwriters and authorizes the Secretary to n.egotiC to jgii ,
the Underwriters the terms of the Underwriting Agreement end r_f
the public offering to investors of interests in the trust
certificates (including interest rates) . The Borrower agren5
that the interest rate at. which the trust certificate of a
specified maturity is sold to the Underwriters shall govern tr.e
interest rate inserted on the Public Offering Date in the A?ot
for the principal amount of corresponding maturity, in addl.tion,
the Borrower ratifies and consents to the Secretary's selecti
of the Trustee and to the terms of the Trust Agreement (the on
"Trust Agreement") between the Secretary and the Trustee covering
the Note and governing the administr-ation of the Note and the
trust certificates by the Trustee (subject to paragraph 4 . (c) of
this Contract) . Upon the secretary's execution of the Guaranty
of the Note at the closing on the public Offering bate, the mots
shall be effective, and any prior note covering the Guaranteed
Loan Funds shall be cancelled.
MAY 16 '96 03:39PM P.e
This Contract supersedes any prior Contract for Loan
Guarantee Assistance entered into between the parties with
respect to the Guaranteed Loan Funds, the terms of the
Secretary's Guaranty, and any other matter covered by thirj
Contract, provided that any such prior Contract continues to
govern any action taken by the Borrower or the Secretary purs-a-tL ,t
thereto and prior to -the secretary's Cuaranty of the Note (e-_zcept
for the provisions of paragraph 4 of this Contract) . Howevc.r, if
such prior Contract contained additional security provisions
incorporated in paragraph 5 . (c) thereof and any related
provisions incorporated in paragraph 12 or paragraph 15 then f,
such additional provisions of paragraphs 5. (c) , 12- and 15 of the
prior Contract are hereby incorporated in paragraphs 5. (G) , y
and 15, respectively, of this Contract and shall be deemed a vast
hereof.
1. (a) Except for funds paid at the public offering pursuant to
paragraph 4. (a) of this Contract and funds previously
received and deposited pursuant to a prior note supe se,'e t by
the Note, the Guaranteed Loan Funds shall be deposited
immediately on receipt in a separate, identifiable caotc)0,1.a`!
account (the "Guaranteed Loan Funds Account') Frith a
financial, institution whose deposits or accounts are
Federally insured. The Guaranteed Loan Funds account s)-,all
be established and designated as prescribed in the attao_hc�.d
form document entitled "Letter Agreement for Section 108 Doan
Guarantee Program Custodial Account' (Attachment 1) and s-h:al.l
be continuously maintained for the Guaranteed Loan Vundp .
Such Letter Agreement must be executed when the Guarfntecc!
Loan Funds Account is established. (A fully executed, copy of
such Letter Agreement shall be submitted to- the Secretary
within thirty days of its execution.) The Borrower is
authorized to make withdrawals from said account only for the
payment of the costs of approved Section 108 activities, or
for transfer to the Loan Repayment Account or the tempa:i°ary
investment of funds pursuant to this paragraph I. W . 8u.tih,
temporary investment of funds shall be required when thr:
balance of deposited funds exceeds the amount of the Federal
deposit 'insurance on the Guaranteed Loan Funds Accauint. At
that time, at least the balance of funds in the Guarant(. .d
Loan Funds Account exceeding such insurance coverage shr,AA be
fully (100;;) and continuously invested in Government
Obligations, as defined in paragraph 10 hereof.
All temporary investments, whether or not required a!-i al,ove,
shall be limited to Government Obligations having matur1.t:;.es
that are consistent with the cash requirements of the
approved activities. In no event shall the invaatmgnt
mature on or after , or have mates-1 ties
which exceed one year. All such investments shall he h rIrt in
trust for the benefit of the secretary by the above financial
institution in an account (the "Guaranteed Loan Funds.
Investment Account") established and designated as pre�ar .bed
in the attached form document entitled "Letter Agreement for
Section 108 Loan Guarantee Program Custodial Investment
MRY 16 '96 03:40PM P.9
Account" (Attachment 2) , which account shall be maintain,-C
for all Government Obligdtiong purchased with funds from the
Guaranteed Loan Funds Account. The Guaranteed Loan PunO.s
Investment Account need only be established if -and .r,rhen + lia
Borrower invests the Guaranteed Loan Funds in Government:
obligations. Such Fetter Agreement must be executedwhc.=n the
Guaranteed Loan Funds Investment Account is established. (A
fully executed copy of such Letter Agreement shall be
submitted to the Secretary within thirty days of its
execution.) All proceeds and income derived from such
investments shall be returned to the Guaranteed Loan FUIid_s
Account. All fundg in the Guaranteed Loan funds Accounts or
the Guaranteed Loan Funds Investment Account must be
withdrawn and disbursed by the Borrower for approved
activities *by . Any funds
remaining in either Account after this date shall be
immediately transferred to the Loan Repayment Account
established pursuant to paragraph 6 of this Contract .
(b) Borrower shall by the fifteenth day of each month
provide the, Secretary with a written statement showing thF�-
balance of funds in the Guaranteed Loan Funds Account aAd the
withdrawals from such account during the preceding calencl_r
month, and a statement identifying the obligations and Ehoi-r
assignments in the Guaranteed Loan Funds Investment P cc.:-svnt.
(c) Upon the Secretary giving notice that the Borrower it in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Guaranteed Loan
Funds Account and Guaranteed Loan Funds Investment Account
shall immediately vest in the Secretary for use in nakin� of
payment on the Note, purchase of Government obligations in
accordance with paragraph 10, or payment of any other
obligations of the Borrower under this Contract or the Trust
Agreement.
2. The Borrower shall pay to the Trustee, as collection agent
for the Note, all amounts due pursuant to the terms of the
Note. In accordance with the Trust Agreement, payment shall
be made by 3 :00 P. M. (New York City time) on -the seventh
Business Day (the "Note Payment Date') preceding the relevant
Interest Due Date or Principal Due Date (each as defined in
the Note) . ("Business Day" shall mean a day on which hanks
in the city [currently New York City] in which this principal
office of the Trustee is located are not required or
authorized to remain closed and on which the Federal. Re s4rvn
Bank of New York and the New York Stock Exchange are not
closed.) If any Note Payment Date falls on a day that in not
a Business Day, then the required payment shall be mado on
the next Business Day. Payment may be made by check or uvire
transfer.
MAY 16 '96 03:41PM P.10
3. The Secretary shall select a new Trustee it the. TrueLee
resigns or is removed by the Secretary. The Borrower htn:eby
consents in advance to any such selection and to any ch-1-.gTe5
in the Trust Agreement agreed to by any Trustee and the
Secretary, subject to paragraph 4. (c) .of this Contract.
4. (a) The Borrower shall pay the customary and usual issci,_nca,
underwriting, and other costa related to the public offr.r ng
and future administration of the Note and the trust
certificates, as approved by the Secretary, including tile
cost of reimbursement and/or compensation of the Trustee
pursuant to the Trust Agreement, including Sections 3.11 and .
7.01 thereof. In connection with the public offering, ,such
payment shall either be made by wire transfer to the Trustee
on the day prior to the Public Offering Date or shall be
deducted from the Guaranteed Loan Funds on the public
Offering Date.
(b) The Borrower shall submit to the Secrets
ry no 1.a.ter. than
Ray 23. 1996 this executed Contract, the executed Note, and
an opinion acceptable to the Secretary from the lBorrowex' o
counsel to the effect that: (i) the governing body of tai,_:
Borrower has authorized by resolution or ordinance, in
• accordance with applicable State and local law, the ioattalace
of the Note and the execution of this Contract; (Ji) the 1g0ta
and thia Contract are valid, binding, and enforceable
obligations of the Borrower; (iii) the pledge of funds
pursuant to 24 -C.F.R. 9570.705 (b) (2) and the Contrast in
valid and binding] and (iv) there is no outstanding
litigation that will affect the validity of the Note or this
Contract. The Borrower shall reimburse the Underwriters v�pon
demand by the secretary for all out-of-pocket expenses
(including reasonable fees and disbursements of counsels
incurred in connection with the proposed public offering, if
the public offering does not occur because of any refusal,
inability, or failure on the part .of the Borrower to submit
in acceptable form the documents required by •this paragraph.
(c) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Trust
Agreement shall in no event require payment of fees or
charges, reimbursement of expenses, or any indemnift(c_ .tion by
the Borrower -from any source other than funda pledged
pursuant to paragraph 5 of this Contract.
5. The Borrower hereby pledges as security for repayment of the
Note, and such other charges as may be authorized in th�.o
Contract, the following:
(a) All allocations or grants which have been made or foe -
which the Borrower may become eligible under Section. 1.06 t-�:C_
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108 (q) .
4 •
MAY 16 '96 03:41PM P.11
(b) Program income, as defined at 24 •CFR Section
570 .500 (a) (or any successor regulation) , directly genl�:ated
from the use of the Guaranteed Loan Funds.
(c) other security:
(d) All proceeds (including insurance and condemnation*
proceeds) from any of the foregoing.
(e) All funds or investments in the accounts egtablisht�cY
pursuant to paragraph 1 and 6 of this Contract.
6. (a) All amounts pledged pursuant to paragraphs 5. (b) , 5. (c) ,
and 5. (d) of this Contract shall be deposited immediately on
receipt in a separate identifiable custodial account (the
"Loan Repayment Account") with a financial institution Whose
deposits or accounts are Federally insured. The Loan:
Repayment Account shall be established and designated as
proscribed in the attached form document' entitled "Letter
Agreement for section 108 Loan Guarantee Program Custo6lal
Account" (Attachment 1) and shall be maintained for such .
pledged funds. The Loan Repayinent Account need only be
established if and when the Borrower receives amounts pledged
pursuant to paragraph 5. (b) , 5. (c) or S. M . Such Lette1
Agreement must be executed when the Loan Repayment ktdouYit is
established. (A: fully•executed copy of such Letter Agr,oment
shall be submitted to the Secretary within thirty days o3 its
execution. ) Borrower is authorized to make withdtawal!!i 27rom
said account only for the purpose of paying interest aid
principal due on the Note (including the purchase of
Government obligations in accordance with paragraph 10
hereof) , for payment of any other obligation of the for ';•ro°r
under this Contract or the Trust Agreement, or for the
temporary investment of funds pursuant to this paragra.p;a,
until final payment and discharge of the indebtednecg
evidenced by the Note, unless otherwise expressly anthor,.Jed
by the secretary in writing. Such temporary investment ref
funds shall be required when the balance of deposited Eunds
exceeds the amount of the' Federal deposit insurance on the
Loan Repayment Account. At that time, the balance of funds
in the Loan Repayment Account exceeding such insurance
coverage shall be fully (loot) and continuously invested in
Government Obligations, as defined in paragraph 10 hereof.
All temporary investments, whether or not required a6 above,
shall be limited to Government Obligations having maturities
that are consistent with cash requirements for payment of
principal and interest as required under the Note. In no
event shall the maturities of such investments exceed ouch
year. All such investments shall be held in trust for tb.e
benefit of the Secretary by the above financial institution
in an account (the °Loan Repayment Investment Account")
established and designated as prescribed in the attached form
document entitled "Letter Agreement for Section 108 Loan
Guarantee Program Custodial Investment Account" (Atta.cl7rnr5nt
5
MAY 16 '96 63:42PM P.12
2) , which account shall be maintained for all Government
Obligations purchased with funds from the Loan Repayment
Account. The Loan Repayment Investment Account need only be
established if and when the Borrower invests funds in the
Loan Repayment Account in Government Obligations. sash
Letter Agreement must be executed when the Loan Aepaymer_t
Investment Account is established. (A fully elcecute.d COMP of
such Letter Agreement shall ba aubmitted to the Secrretary
within thirty days of its execution.) All proceeds :rid
income derived from such investments shall be returhod to the
Loan Repayment Account.
(b) Borrower shall by the fifteenth day of each marsth,
provide the Secretary with a written statement 6howi.ng
balance of funds in the Loan Repayment Account and the
deposits and withdrawals of all funds in such account din--ing
the preceding calendar month and a statement identifying the
obligations- and their assignments in the Loan Repayment
Investment Account.
(o) Upon the secretary giving notice that tha Borrower is In-
Default under this Contract or the Dote, all right, title,
and interest of the Borrower in and to the Loam Repayment
Account and Loan Repayment Investment Account shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government obligations in a.ccbra'ance
with paragraph 10, or payment of any other obligation of the
Borrower under this Contract or the Trust Agreement.
7. Any grants available to the Borrower under Section 10G oi-
Section 108 (g) of the Act (including program income derived
therefrom) are authorized to be used by the Borrower Eor -
payments due on the Note, Optional Redemption (as de.finn6 in the
Note) , payment of any other obligation of the norrowdr uYid.er
this Contract or the Trust Agreement, or the purchase or
Government obligations in accordance with paragraph lo . Unless
otherwise provided herein or unless otherwise expressly
authorized by the Secretary in writing, Borrower shall
substantially disburse funds available in the .Loan Repajemeftt
Account or the Loan Repayment Investment Account before such
grants are withdrawn from the U.S. Treasury for such purposes.
S. Upon a determination by the secretary that payments required by
paragraph 2 and/or paragraph 4 of this Contract are unlicel.y to
be made as specified, the secretary may give the Borrower notice
that the availability of funds pledged under paragraph 5. (s.) of
this Contract to the Borrower for purposea other than
satisfaction of the pledge is being restricted. This
restriction shall be in an amount estimated by the Secretary to
be sufficient to ensure that the payments referred to in
paragraph 2 and/or paragraph 4 hereof are made when due. `rhis
restriction may be effected by conditioning thq restricted
amounts against disbursement' for purposes other than
satisfaction of the ppledgge at the time such restricted f•bnds are
approved as grants, by limiting the Borrower's ability to draw
6
MY 16 '96 03:43PM P.13
down or expend the restricted funds for other purpdtoa, atd by
disapproving payment raquesto submitted with respect to such
grants for purposes other than satisfaction of the plodtge.
9. The Secretary may use funds pledged under paragraph S. {a) of
this Contrast or funds restrictea under grants purnua.nt to
paragraph 8 of this Contract to make any payment required of the
Borrower under paragraph 2 and/or paragraph 4, if such pay1 .ent
has not been timely made by the narrower.
10. For purposes of this Contract, the Note shall b-- decnt6d to have
been paid (defeased) if there shall have been dteposi.ted r;'c.th the
Trustee either moneys or Government obligations, which :i.n the
sole determination of the secretary, mature an6 bear interest at
times and in amounts sufficient, together with any othe_- rruoneyn
on deposit with the Trustee for such purpose, to pay when due
the principal and interest to become due on the Note , The
Aggregate Principal Amount of the Note or any unpaid PrIncipal.
Amount may be so defeased, in whole or ih part, as of any
Principal Due Date. In accordance with the Note and the 'Crust
Agreement, the Borrower shall give timely notice and V.Ttitt.en
instructions to the Secretary and the Trustee concerning my
principal amounts proposed to be defeased, including any
optional. Redemptions proposed, which instructioris ohall be
approved by the Secretary. if the unpaid Aggregate Principal
Amount of the Note guaranteed pursuant to this Contract thtl.l, be
defeased and deemed to have been paid in full., then the narrower
shall be released from all agreements, covenants, and further
obligations under the Note. "Government Obligation" means a.
direct obligation of, or any obligation for which the full and
timely payment of principal and interest is guaranteed ley, the
United States of America, including but not limited to, 7jai.ted
States Treasury Certificates of Yndebtedneeo, Noteo nad B:�ndo -•
State and Local. Government geries or certificates car
of the principal, of or interest on direct obligations oT, or
obligations unconditionally guaranteed by, the rlriite�r S3_:._E,,es of
America, which obligations are held in trust by a commc�;o :al
bank which is a member of the Federal-Reserve 8yatem and, has
capital and surplus (exclusive of undivided profits) in F-ece-sa
Of $100,000, 000.
11. (a) A Default under the Note and this Contract shall occ�lr
upon failure by the Borrower to:
(i) pay when due an installment of principal or interest
on the Note, unless such payment is made. on or befoo ,
the applicable Interest Due Date or Principal Due nat~e
(each as defined in the Note) by the Secretary purgtantt
to paragraph 9; or
MAY 16 '96 03:44PM P.14
(ii) punctually and properly perform, observe, and
comply with any covonant, agreement, or condition
contained ini (A) this Contract, (B) any security
agreement, deed of trust, mortgage, assignment,
guaranty, or other contract securing payment of
indebtedness evidenced by the Note, and (C) any future
amendmei`tts, modifications, restatements, renewals, or
extensions hereof or thereof.
(b) The Borrower waives notice of Default and opportunity
for hearing with respect to a Default under paragraph 11,(a.) .
(c) In addition to Defaults under paragraph 11. (a) , the
Secretary may declare the Mote in Default if the Secretary
makes a final decision in accordance with the provittion.9 of
section III of the Act and 24 CPR 9570.913• (or any
provisions) , including requirements for reasonable notloc: and
opportunity for hearing, that the Borrower has failed. to
comply substantially with title I of the• Act. Thic maY
include the Borrower repeatedly failing to make pawents on
the Note as required in paragraph a hereof, even if the
Secretary makes such paymente on behalf of the Borrower bider
paragraph 9 hereof. Notwithgtanding any other provision,
following the giving of such reasonable notice, the Secretary
may withhold the guarantee of any or all obl.iga.tione net yet
guaranteed on behalf of the Borrower under outstanding
commitments, and request the Borrower's financial institution
to refuse to honor any instruments drawn upon, or withdrawals
from, the Guaranteed Lean Funds Account or the Lean. Repayment
Account by the Borrower or to release obligations and
assignments from the Guaranteed Loan Funds Investment, Ad(�-ount
or the Loan Repayment Investment Account by the Borrower,
pending the Secretary's final decision.
12-. Upon a Default or declaration of Default under this CorrtW act,
the Secretary.may exercise any or all of the following r=h- Mtdies:
(a) with any funds or security pledged under paragraph 5 of
this Contract, the Secretary may .(i) - continue to make payTmtn.ts
due on the Note, (ii) make an acceleration payment with .-,_-espect
to principal amount of the Note subject to Optional Redemption
as provided in the Note, (iii) purchase Government oblig,5.tions
in accordance with paragraph 3.0 of this Contract, (iv) p:sy any
interest due for late payment as provided in the Note, this
Contract, or the Trust Agreement, (v) pay any other obligation
of the Borrower under this Contract or the 'gust Agreement, and
(vi) pay any reaaonable expenses caused to be incurred by the
Secretary.or the Trustee as result of .the Borrower's Default.
(b) The Secretary may withhold the guarantee of any or q1l
obligations not yet guaranteed under outstanding commitmi-_-rttg to
the Borrower.
8
MAY 16 '96 03:44PM
(c) The Secretary may exercise any other appropriate
or sanctionv available by law or regulation applicable i:.c: the
assistance provided under thin Contract, or may institu;t`, any
other action authorized by law to rocover Guar�tjnteed. Loan runds
or to reimburse the Secretary for any payment under the
Secretary's Guaranty or any reasonable expenses incurred by the
Secretary as a result of the Default.
13. Notwithstanding any other provision of this Contract, the Trust
Agreement or the Note, any recovery against the Borrower for anY
liability for amounts due pursuant to the dote, the `cruet
Agreement and this Contract shall be limited to the aourcee of
security pledged in paragraph 5 of this Contract. 11tither the
general credit nor the taxing power of the Borrower, or cE the
State in wliich the Borrower is located, or of any other
political subdivision thereof, is pledged for any payment, dub
under the Note, the Contract, or the Truet Agr�cment.
14. The Contract and the Note are hereby incorporated in arpc1 �a�d.e. a
part of the Grant Agreement authorized by the ecret_-arty ca
—- - L under the Funding . pro�.��l fbr
grant number -to the Borrower. T'n
carrying out activities with the Guaranteed horn Funds
hereunder, the Borrower agrees to comply with tihe Pict: and 24 CVA
Part 590, as provided in Subpart M thereof.
(This space intentionally blank.)
9
i
MAY 16 '96 03:45PM r°.16
15. Special, Conditions and Modifications:
( ] Check if continued on extra sheet and attach.
1'N WITNESS WHEREOF., the undersigned, as authori2ed offit!iftlg of
the Borrower and the Secretary, have executed this Contract= Tar Loan
Guarantee Assistance, which shall he effective as of the elate
entered on the firat page hereof (except that paragraph 4 shall be
effective when executed on behalf of the Borrower) .
BORROWER
ATTEST:
(Name) {N }
BY: _
(signature)
SECRETARY OF AOUSINGt AND 8BI-q
BY:
(Date) �.
10
n .
MRY 16 '96 03:45PM i P.17
CONTRACT FOR LOAN MARAMTBE ASSISTANCri WVn
SECTION 108 OP THE HOUSIM AM CONY n VM6'h�Mitl' M.—
OF 1974, AS =ED, 42 U.S.C. 95308
Date of Contract
This Contract for Loan Guarantee Assistance ("Contract") ig
entered into between the City of Say Bernardino, CA as Borror.,yer
(the "Borrower") and the Secretary of Housing and Urban
Development ("Secretary") as guarantor for the Guarantor made
pursuant to section 108 ('"Section 108f') of titlo 7 of the Housing
and Community Development Act of 1974, as amended (the "Act") and
24 CPR Part 570, Subpart M, of the promissory note executed
contemporaneously herewith and numbered B-93-MC 06-0539, in the
Aggregate Principal Amount of $490. 000 (the "Note") . The funds
received by the Borrower pursuant to the Note, or any prior
Section 108-guaranteed note being refinanced by thin Note, are
referred to herein as the "Guaranteed Loan Funds. " The Nate is
hereby incorporated into the Contract. Terms used in the
Contract with initial capital. Letters and not otheniise defyned
in' the text hereof shall have the respective meanings given
thereto in the Note.
The Note is payable to a Trustee (as defined in the dot a) ,
and trust certificates based on the Note (and simi�.ar notes
issued by other section 108 borrowers) will be purchased by
underwriters selected by the Secretary (the "Underwriters")
pursuant to an Underwriting Agreement between the TJnderwr .t,�rs
and the Secretary at a closing on a date to be determinecl by the
Secretary and the Underwriters (the "Public offering Date") . In
accordance with Section 108, by execution of this Contract the
Borrower ratifies and Consents to the secretary's selection of
the Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and of
the public offering to investors of interests in the trust
certificates (including interest rates) . The Borrower agrees
that the interest rate at which the trust certificate of a
specified maturity is sold to the Underwriters shall govern the
interest rate inserted on the Public Offering Date in the Note
for the principal amount of corresponding maturity. In addition,
the Borrower ratifies and consents to the Secretary's selection
of the Trustee and to the terms of the Trust Agreetnent, (the
"Trust Agreement") between the Secretary and the Trustee covering
the Note and governing the administration of the Note and the
trust Certificates by the Trustee (subject to paragraph 4. (c) of
this Contract) . Upon the Secretary's execution of the dua,ra.nty
of the Note at the closing -on the Public Offering Date, the Dote
shall be effective, and any prior note covering thc-t Cua.rant:�ed
Loan Funds shall be cancelled.
MRY 16 '96 03:46PM P.18
Thin Contract superaedem any prior Contract for Loan
Guarantee Agaietance entered into between the pa.rtiaa with
respect to the Guaranteed Loan Funds, the terms of the
Secretary,a •Guaranty, and any other matter covered by thi.o
Contract, provided that any such prior Contract coiibinues to
govern any action taken by the Borrower or the gecr6tary pugu trot
thereto and prior to the Secretary's Guaranty of the Note ( �tcopt
for the provisions of paragraph 4 of this Contract) . However, if
such prior Contract contained additional security prov lbionf i
incorporated in paragraph 5. (c) thereof and any related provisions incorporated in paragraph 12 or paragraph 15 theyeo:r,
such additional provisions of paragraphs 5. (c) , 12 and is o-- the
prior Contract are hereby incorporated in paragraphs 5. (c) , 12
and 15, respectively, of this Contract and shall be deemed a part
hereof.
1. (a) Except for funds paid at the public offering pursuant to
paragraph 4. (a) of this Contract and funds previously
received and deposited pursuant to a prior note superse ed by
the Note, the Guaranteed Loan Funda shall be depoaited
immediately on recaipt in a separate, identifiable custodial
account (the "Guaranteed Loan Punds Account") with a
financial institution whose deposits or accounto are
Federally insured. The Ouaranteed Loan Puftdg Accb=t oha.l.l
be established and designated as prescribed ixi, the attached
form document entitled "Letter Agreement for Section ing Loan
Guarantee Program Custodial Account" (Attachment 1) , I shall
be continuously maintained for the guaranteed Loan. Pundi.
Such Letter Agreement must be executed when the Oua.rantr;ad.
Loan Funds Account is established. (A fully eaeecutod ooiiy of
such Letter Agreement shall be submitted to the Secret Iry
within thirty days of its execution. ) The Sorrotiyer i.s
authorized to make withdrawals from said account only for the
payment of the costs of approved Section 106 activities, or
for transfer to the Loan Repayment Account or the temporary
investment of funds purauant to this paragraph 1.. (a) . Such.
temporary investment of funds shall be required when the
balance of deposited funds exceeds the amount of the Federal
deposit insurance on the 'Guaranteed Loan Fundo Account. At
that time, at least the balance of funds in the Oua.ranteed
Loan Funds Account exceeding much insurance coverage shall be
fully (100%-) and continuously invested in Government
obligations, as defined ire paragraph 10 hereof.
All temporary investments, whether or not required as above,
shall be limited to Government obligations having maturities
that are consistent with the cash requirements of the
approved activities. in no event shall the i.nvestmenta
mature on or after , or have maturities
which exceed one year. All such investments shall,, be hold in
trust for the benefit of the Secretary by the above fin.anci.a.l
institution in an account (the °duaranteed Loan. Pundb
• Investment Account") established and designated as prevcri,bed
in the attached form document entitled "Letter Agrer��ment for
Section 108 Loan Guarantee Program Custodial. lftvt8tm(ent
MRY 16 '96 03:47PM P.19
Account" (Attachment 2) , which account shall be maintained
for all Government Obligationa purchased with funde from the
Guaranteed Loan Funds Account. The guaranteed Loan Punde
Investment Account need only be established if and when the
Borrower invests the Guaranteed Loan Punds in r✓overntaent,
Obligations. Such Letter Agreement muot be executed wh,:gin the
Guaranteed Loan Funds Investment Account is established. (A
fully exeeuted•copy oe such Vetter Agreement shall be
submitted to the Secretary within thirty days of ito
execution.) All proceeds and income derived from such
investments shall be-returned to the Guaranteed Loan Vurrls
Account. All funds in the Guaranteed Loan Punds Accour_i or
the Guaranteed Loam Funds Investment Account most b
withdrawn and disbursed by the Borrower for approved
activities by . Any funds
remaining in either Account after this date shall b4:
immediately transferred to the Loan Repayment Account,
• . established pursuant to paragraph 6 of this Contract.
(b) Borrower shall by the fifteenth day of each mbAth
provide the Secretary with a written statement ahbwing the
balance of funds in the Guaranteed Loan Funda Account and the
withdrawals from such account during the preceding calendar
month, and a Statement identifying the obligations and their
assignments in the Guaranteed Loan Funds rnvegtwent Account.
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, tjti. ,,,
and interest of the Borrower in and to the Guaranteed Loan
Funds Account and Guaranteed Loan Funds Investment P ccount
shall immediately vest in the Secretary for use in makinc,, of
payment on the Note, purchase of Government Obligations �.n
accordance with paragraph 10, or payment of any other
obligations of the Borrower under this Contract or the 'r'rant
Agreement.
2. The Borrower shall pay to the Trustee, as collLction a.gcnt
for the Note, all amounts duce pursuant to the terms of the
Note. In accordance with the Trust Agreement, payment nhall
be made by 3 :00 P. m. (New York City time) on rho sevanth
Business Day (the "Note Payment Date") preceding the relevant
latereet Due Date or principal Due Date (each ao defined in
the Note) . ("Business Day" shall mean a day on which banke
in-the city [currently New York City] in which the principal
office of the Trustee ie located are not required or
authorized to remain closed and on which the Federal Reserve
Bank of New York and the New York Stock Bxchango are not
closed. ) If any Note payment Date falls on a day that is h6t
a Business Day, then the required payment shall be made on
the next Business Day. payment may be made by check or wire
transfer.
3
t
MAY 16 '96 03:48PM P.20
3. The secretary shall select a new trustee if the Trustee
resigns or is removed by the secretary. The Borrower hereby
consents in advance to any such selection and to any cha=nges
in the Trust Areomant agreed to by any Trustee and the
Secretary, subject to paragraph 4. (c) of this Contract.
4. (a) The Borrower shall pay the customary and usual isvua.n.ce,
underwriting, and ether Costa related to the public offering
and future adminiatrati.on of the Note and the trust
certificates, as approved by the Secretary, including the
coat of reimbursement and/or compensation of the Trustee
pursuant to the Trust Agreement, including Sections 3.11 aAa
7.81 thereof. In connection with the public offering, such
payment shall either be made by wire transfer to the Tr,Ystee
on the day prior to the Public Offering Date or shall hn-�
deducted from the Guaranteed Loan Funds on the Public
Offering bate.
(b) The Borrower shall submit to the Secretary xao late~ than
Mav_23., 1996 thin executed Contract, the executed Note, and
an opinion acceptable to the Secretary from the torr•owor's
counsel to the effect that: (i) the governing body of t;ho
Borrower has authorized by resolution or oxdinanco, in
accordance with applicable State and local law, the iosuance
of the Note and the execution of this Contract; Ui) the Note
and this Contract are valid, binding, and enforceable
obligations of the Borrower; (iii) the pledge of funds
pursuant to 24 C.F.R. 9570 .705 (b) (2) and the Contract is
valid and binding; and (iv) there is no outstanding
litigation that will affect the validity of the Nate or thi8
Contract. The Borrower shall reimburse the Underwriters upon
demand by the -Secretary for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel)
incurred in connection with the proposed public offor•ing, if
the public offering does not occur because of any refuel.,.
inability, or failure on the part of the norrowor• to gtLmit
in acceptable form the documents required by thi8 paragraph.
(c) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Trust
Agreement shall fn no event require payment of Enna or
charges, reimbursement of expenses, or any indc rmni ft ca,tl on by
the Borrower from any source other than funds pledged
pursuant to paragraph 5 of thin Contract.
S. The Borrower hereby pledges as security for repayment of the
Note, and such other charges as may be authorized in this
Contract, the following,
(a) All allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108 (q) .
4
MAY 16 '96 03:4BPM P.21
(b) Program income, as defined at 24 CFR Section
570.500 (a) (or any successor regulation) , directly gentn,- .ttd
from the use of the Guaranteed Loan Funds.
(c) Other security:
(d) All proaseds (including insurance and condetnha.tion
proceeds) from any of the foregoing.
(e) All funds or investments in the accounts established
pursuant to paragraph l and 6 of this Contract.
6. (a) All amounts pledged pursuant to paragraphs 5. (b) , 5 . (c) ,
and 5. (d) of this Contract shall be deposited immediately on
receipt in a separate identifiable custodial account (the
"Loan Repayment Account") with a financial institution Yihose
deposits or accounts- are Federally insured. The Loan
Repayment Account shall be established and designated ac_i
prescribed in the attached form document entitled "L6ttc.r
Agreement for Section 106 Loan Guarantee Progr;;kia Cu�DtoCWa7
Account" (Attachment 1) and shall be maintained for gush
pledged funds. The Loan Repayment Account need dnlV be_
established if and when the Borrower receives rmoun is pledgecl
pursuant to paragraph 5. (b) , 5. (c) or 5. (d) . Such Letter
Agreement must be executed when the Loan Repapnent Accc)unt is
established. (A fully executed copy of such Letter Agrt�emen.t
shall be submitted to the Secretary within thirty days of its
execution.. ) Borrower is authorised to make withdrawals from
said account only for the purpose of Saying interest and
principal due on the Nate (including the purchave of
Government Obligations in accordance with paragraph 10
hereof) , for payment of any other obligation of the Sorrower
under this Contract or the 'Trust Agreement, or for the
temporary investment of funds pursuant to this paragraph,
until final payment and discharge of the indebtedness
evidenced by tihe Note, unless otherwise expressly authorized
by the Secretary 'inwriting. Such temporary investment of
funds shall be required when the balance of deposited f ends
exceeds' the amount of the Federal deposit insurance on the
Loan Repayment Account. At that time, the balance of ft.nnds
in the Loan Repayment Account exceeding such insurance
coverage shall be fully (100v) and continuously invented in
Government obligations, as defined in paragraph 10 htaroof.
All temporary investments, whether or not required a.�j above,
shall be limited to Government obligations havt _ng matui`itieg
that are consistent with cash requirements for payment of
principal 'and interest as required under the Note. in no
event shall the maturities of such investments exceed one
year. All such investments shall be held in trust for the
benefit of the secretary by the above financial institution
in an account (the "Loan Repayment Investment ,A.ccount'l)
established and designated as prescribed in the attached farm
document entitled "Letter Agreement for SeCtio:.n 1:08 Loan
Guarantee Program Custodial Investment Account" (Attachment
5
MRY 16 '96 03:49PM P.22
2) , which account shah, be maintained for all tzswrer� rnr�t
Obligations purchaaod with funds frow the Loan nepayTac--rit
Account. The Lean Repayment Investment Account T1eed or?y be
established if and when the Borrower ingests frinds in E e
Loan Repayment Account in government obligations. Such
Letter Agreement must be executed when the Loma Repayment
Investment Account is established. (A fully executed topy of
such Letter Agreement shall be submitted to th,!� Secretary
within thirty days of its exetuti.on.) All pr6ceed8 and
income derived from such investments shall be returned to the
Loan Repayment Account.
(b) Borrower shall by the fifteenth .day of each month,
provide the Secretary with a. written statement showing the
balance of*funds in the Loan Repayment Account and the
deposits and withdrawals of all funds in such account during
the preceding calendar month and a statement identi.fyincq tho
obligations and their assignments in they Loan Pzepayme,�rltt
Investment Account.
(c) Upon the Secretary giving notice that the BbrrdWer is in
Default under this Contract or the Note, all right, tit-.:! ,
and interest of the Borrower in and to the Loait Rep IyMc- -Yt
Account and Loan Repayment Investment Account nhall
immediately serest in the Secretary for use in mul�.irrg payiq_anL
on the Note, purchase of Government Obligations: in acco ;da 7ce
with paragraph 10, or payment of any other obl±ga.ti.on et: the
Borrower under this Contract or the Trust Agreement.
7. Any grants available to the Borrower under Section 10G or
Section 108(q) of the Act (including program income derived
therefrom) are authorized to be used by the Borrower for
payments due on the Note, Optional Redemption (as -defined in the
Note) , payment of any other obligation of the Borrower under
this Contract or the Trust Agreement, or the pvrchaoe of
Government Obligations iu accordance, with paragraph 10 . Unless
otherwise provided herein or unless otherw1be expreosl.y
authorized by the Secretary in writing, Borrower shall
substantially disburse funds available in the Loan Repayment
' Account or the Loan Repayment Investment Account before ouch
grants are withdrawn .from the U.S, Treasury for such purposea.
S. Upon a determination by -the Secretary that payunen.t;s rc*cixi.red by
paragraph 2 and/or paragraph 4 of this Contract are un7 utely to
be made as specified, the Secretary may -give tii.e Bo�rt�wr.r notice
that the availability of funds pledged- under paragraph 5_ (a) cif
this Contract to the Borrower for purpooes other than
satisfaction of the pledge is boring reotri.cted. Thio
restriction shall be in an amount estimated by the Secr:it.a,ry to
be sufficient to ensure that the payments referred to in
paragraph 2 and/or paragraph 4 hereof are made when due, This
restriction may be effected by Conditioning the restricted
amounts against disbursement for purposeg other than
satisfaction of the pledge at the time such restricted runds are
approved as grante, by limiting the $orrower's ability to drag
MAY 16 '96 03:50PM P.23
down or expend the restricted funds for other purponsEi, and by
disapproving payment requests submitted with respect tr tut)
grants for purpoaos other than satisfaction, of the plt--d e.
9. The Secretary may use funds pledged under paragraph 5. (a) of
this Contract or funds restricted under grants purijuan.t to
paragraph a of this Contract to make any payment requ.ized of the
Borrower under paragraph 2 and/or paragraph 4, if such payment
has not been timely made by the Borrower.
10. For purposes of this Contract, the Note ;shall be cl.eemec to have
been paid - (defeased) it there shall have been deposited with -the
Trustee either moneyo or Government Obligations, which in the
sole determination of the Secretary, mature and bear interest at
times and in amounts sufficient, together with any other moneys
on deposit with the Trustee for such purpose, to pay when due
the principal and interest to become due on the Neste. The
Aggregate Principal Amount of the Note or any unpaid Principal
Amount may be ao defeased, in whole or in part., as of ahy
Principal Due bate. In accordance with the Note and the *.I'Y.' of
Agreement, the Borrower shall give timely notice and wt-i.tten
instructions to the secretary and the 'Trustee concernissg any
principal amounts proposed to be defeased, including atiy
Optional Redemptions proposed, which instructicna -jha.11 bo
approved by the Secretary. If the 'unpaid Aggregate Principal .
Amount of the Note guaranteed pursuant to this Contract shall he
defeased and deemed to have been paid in full., their the norrouyer
shall be released from all agreements, covehantb, artd further
obligations under the mote. "Government c)bligationo means a
direct obligation of, or any obligation for Which the full anal
timely payment of principal and intereat is guaranteed -f y, the
Unit®d States of America, including but not limited to, `United
States Treasury Certificates of Indebtedneov, Not6s and Bards
State and Local Government Series or certificates of ow.r-ership
of the principal of or interest on direct obligations of, or
obli aprons unconditionally guaranteed by, the United States of
America, which obligations are held in trust 'by- a commerci. 1.
bank which is a member of the Federal Reserve System and has
capital and surplus (excl.udive of undivided profits) in excess
Of $100,000, 000.
11. (a) A Default under the Note and this Contract shall occur
upon failure by the Borrower to:
W pay when due an installment of principal or interact
on the Note, unless such payment is made on or before
the applicable interest Due sate or principal Duo »ate
(each, ad defined in the Note) by the Secretary purpustlt
to paragraph 9; or
7
MAY 16 '96 03:51PM P•24
punctually and properly perform, observe, aAe,
.comply with any covana.nt, agreement, or condition
contained In: (A) this Contraot, (B) any gecuri.ty
agreement, deed of trust, mortgage, as i g z tenc,
guaranty, or other contract securing payrnEnti 6f
indebtedness evidenced by the Vote, and (c) any rt��urc
amendments, modifications, restatements, �-c�7ewyal n, dr
extensions haraof or thereof.
(b) The Borrower waives notico of Default and opporttY.nity
for hearing with respect to a Default under paragraph 11 (a) .
(c) In addition to Defaults under paragraph 11. (a) , the
Secretary may declare the Note in Default if the Secret�F:ry
makes a final, docidion in accordance with the provi sior_.n of
section ill of the Act and 24 CPR •9570.91.3 - (or any successor
provisions) , including requirements for reasonable notice and
opportunity for hearing, that the Borrower has fa.il.ed to
comply substantially with title I of the' Act. This may
include the Borrower repeatedly failing .to snake payments on
the Note as required in paragraph 2 hereof, even if the
Secretary makes such payments on behalf of the Borruwt!r undar
paragraph 9 hereof. Notwithstanding any other provision,
following the giving of such reasonable notice, the Secretary
may withhold the guarantee of any or all obl,igati.ong nc�- yet
guaranteed on behalf of the Borrower under outntandi.ng
commitments, and request the Borrower's financial institution
to refuse to honor any instruments drawn, upon, or wri.th&,,—_1eyal.s
from, the Guaranteed Loan Funds Account or tho Loan Rop:-,ymen.t
Account by the Borrower or to release obligations and
assignments from the Guaranteed Loan Punds Investment Aucouht-
or the Loan•Repayment Investment Account by thti_ Bvrowr . -,
pending the Secretary's final decini.on.
12. Upon a Default or declaration of Default under this Contract,
the Secretary may exercise any or all of th6 fol.l.awying :z:ern��tli es
(a) With any funda or security pledged under paragraph 5 of
• this Contract, the Secretary may (i) continue to make payments
due on the Note, (ii) make an acceleration payment with respect
to principal amount of the Note subject to Optional Redemption
as provided in the Note, (iii) purchase Government obligations
L n accordance with paragraph 10 of this Contract, (iv) pay, any
interest due for late payment as provided in the xote, this
Contract, or the 'gust Agreement, (v) pay any other obligation
of the Borrower under this Contract or the Trust Agreement, and
(vi) pay any reasonable expenses caused to be i.ncurrad by the
Secretary or the Trustee as result of the Borrowrer'n Default.
(b) The Secretary may withhold the guarantee of any or all
obligations not yet guaranteed under outstanding commitment a -to
the Borrower.
MAY 16 '96 03:52PM P-25
(c) The secretary may exarcise any other appropriate reftedies
or sanctions available by law car regulation applicable to tho
assistance provided under this Contract, or Mav instztlu.i-e gray
other action authorized by law to recover auar�nt eu- Locan Punds
or to reimburse the Secretary for any payment under Ehe
Secretary' s Guaranty or any reasonable. expenoer; incurred bar the
Secretary as a• result of the Default. -
13. Notwithstanding any other provision of this contract, t1le i rust
Agreement or the Note, any recovery against the: Borrower for any
liability for amounts- due purauant to the Note, tha TruF,t
Agreement and thfa Contract shall be limited to the t5ources of
security pledged in paragraph 5 of this Contract. Neither the
general credit nor the taxing power of the Borrower, fly of the
State, in which the Borrower is located, or of any ether
Political subdivision thereof, is pledged for any payment due
under the Note, the Contract, or the Trust .Agreement.
14. The Contract and the Note are hereby incbrporated in and tirade a.
part of the Grant Agreement authorized by the secretary on
under the Punding Approval for
grant number to the Burrower. In
carrying out activities with the auaran•taed Loan Funds
hereunder, the Borrower agrees to comply with tha Act avid 2x- CV1Z
Part 570, as provided in Subpart M thereof.
[This spade intentionally blank,]
9
MRY 16 '96 03:52PM P.26
15. Special Conditions and Modificatione c
[ l Check if Continued on extra sheet and attach.
IN WMESS VM99MOV,, the undersigned, as authorized off:i_cia.ls of
the Borrower and the Secretary, have executed this Contract fo-- Yjcan •
Guarantee Assistance, which 0hall be effective as ref the date
entered on the first page hereof (except that paragraph 4 diall be
effective when executed on behalf of tho Borrower) .
BC�Yt1�0�?7'R
ATTEST.-
{NSA)
(art:spa)
BY,
(Title) (Title)
(signature) (signature)
SEC913TARY OF HOUSING AM =31M
• BY--
10