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HomeMy WebLinkAboutR11-Redevelopment Agency ..&~ MJDt:Y.a..ST FOR -"'/COUNCIL AIION i:: GLENDA SAUL Subject: APPROVING A CERTAIN AMENDMENT NO. 2 TO BOND DOCUMENTS - CASTLEPARK APARTMENTS PROJECT Redevelopment Agency Date: APRIL 14. 1986 Synopsis of Previous Commission/Council action: Ordinance #3815 providing for the issuance of multifamily mortgage revenue bonds. On January 28. 1985. the Mayor and Common Council adopted Resolution #85-38. inducement resolution. On August 5. 1986. the Mayor and Common Council adopted Resolution #85-294 setting a TEFRA Public Hearing. On September 9. 1985. the Mayor and Common Council adopted Resolution #85-374 to hold the TEFRA Public Hearing. On November 11. 1985. the Mayor and Common Council adopted Resolution #85-470 approving final bond documents. On March 3. 1986. the Mayor and Common Council adopted Resolution #86-63 approving a certain amendment No. 1 to bond documents. Recommended motion: (MAYOR AND COMMON COUNCIL) - RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO. CALIFORNIA. APPROVING A CERTAIN AMENDMENT NO.2 TO THE INDENTURE OF TRUST. A CERTAIN AMENDMENT NO. 2 TO THE LOAN AGREEMENT AND A CERTAIN INTERCREDITOR AGREEMENT IN CONNECTION WITH ITS CITY OF SAN BERNARDINO. CALIFORNIA. MULTIFAMILY HOUSING REVENUE BONDS 1985 SERIES (CASTLEPARK APARTMENTS PROJECT). ~~~ ~<-jJ Signature Contact person: Glenda Saul FUNDING REQUIREMENTS: Amount: S N/A Phone: 383-5081 Ward: 5 Project: N/A Date: April ?1. lqRfi Supporting data attached: YES/STAFF REPORT No edverse Impact on City: .Cil Notes: Agenda Item No. II - - - . CI. OF SAN BERNARD. - REQU.T FOR COUNCIL AC"N . e . 75-0264 STAFF REPORT On November II, 1985, the Mayor and Common Council adopted Resolution #85-470 approving final bond documents for the Castlepark Apartment project. On March 3, 1986, the Mayor and Common Council adopted Resolution #86-63 approving Amendment No. 1 making certain changes to the Indenture of Trust and the Loan Agreement In order to clarify both documents for submission to Moody's for a rating. The purpose of the amendments before you today and the Inclusion of the Intercredltor Agreement Is to Incorporate certain provisions of the Letter of Credit to be Issued by the Bank of Tokyo, Ltd. The Letter of Credit will ensure that the bonds continue to receive a "AM" rating from Moody's. The amendments are to the Indenture of Trust and the Loan Agreement. Following Is a summary of the project: Name of Project: Applicant: Amount of Issued Bonds: Project: Castlepark Apartments Project) Mr. Robert Stanlec $20,400,000 Location: Construction of a 508 unit multifamily rental housing development. Near the southwest corner of the Intersection of College Avenue and Varsity Drive bounded on the southwest by the Interstate l5E Freeway. Construction Schedule: Have already begun grading. Three (3) construction phases will take between 12 and 24 months to complete. Reserve & Development Fee: 11 of $20,400,000 - $204,000 Rent Schedule: Market 201 set-aside a. 1 bedroom, 1 bathroom b. 2 bedroom, 2 bathrooms c. 2 bedroom, 2 bathrooms* $395.00 $495.00 $595.00 $380.00 $475.00 $520.00 Trustee: First Interstate Bank of California Interest Rate: Floating Attached Is a map showing the project location. *Larger square footage per unit. 7l0L 2/86 ~ .. . . , . :g ~ ~ .., ! ~ .. f I I :\ 1. II 'I I ! a I I ~ . . . . . SBE 066-5l/l628S/kl 04/09186 #58 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING A CERTAIN AMENDMENT NO. 2 TO THE INDENTURE OF TRUST, A CERTAIN AMENDMENT NO. 2 TO THE LOAN AGREEMENT ANI:> A CERTAIN INTERCREDITOR AGREEMENT IN CONNECTION WITH ITS CITY OF SAN BERNARDINO, CALIFORNIA, MULTIFAMILY HOUSING REVENUE BONDS 1985 SERIES (CASTLE PARK APARTMENTS PROJECT) WHEREAS, the City of San Bernardino, California (the .City.), is authorized and empowered by Ordinance No. 3815, as amended (the .Ordinance"), to make construction loans and mortgage loans to finance various types of projects, as defined in the Ordinance, and to issue its special revenue bonds for the purpose of enabling various developers to finance the cost of such projects, ~ and has amended the same from time to time; and WHEREAS, said Ordinance is intended to finance the development of industry and commerce and to thereby broaden the employment opportunities and to increase the availability of safe and sanitary housing which is affordable at rental rates by persons and families in the lower end of the rental spectrum and there is a consequent need to encourage the construction or development of rental units affordable by such persons and otherwise to increase the rental housing supply in the City for such persons without any liability to the City whatsoever; and . - 1 - . fa . . . . . WHEREAS, the City is authorized and empowered to issue multifamily mortgage revenue bonds pursuant to Health and Safety Code Section 52000, et seq. (the "Act"); and WHEREAS, CastleBar, Inc., a California corporation, or its successors or assigns (the "Developer"), has previously submitted a certain application (the "Application"), to the Mayor and Common Council of the City of San Bernardino, California (the "Mayor and Common Council"), for tax-exempt financing for a certain multifamily rental housing development pursuant to Ordinance 3815, as amended, as more fully described in said Application (the "Project"); and WHEREAS, the Mayor and Common Council, pursuant to its Resolution No. 85-476, adopted on November 18, 1985, approved, among other items, the execution and delivery of a certain Indenture of Trust by and between the City and Security Pacific National Bank, as Trustee (the 1985 (the "Trustee") , dated as of November 1, "Indenture") and a certain Loan Agreement by and among the City, the Trustee, and the Developer dated as of November 1, 1985 (the "Loan Agreement"); and WHEREAS, the Indenture has provided for the issuance by the Ci ty of its $20,400,000 City of San Bernardino, California, Multifamily Housing Revenue Bonds, 1985 Series A (Castle Park Apartments Project) (the "Bonds"), for the purpose of providing funds to pay a portion of the cost of the Project of the Developer; and - 2 - . . . . WHEREAS, the Mayor and Common Council, pursuant to its . Resolution No. 86-63, adopted on March 3, 1986, approved a certain Amendment No. 1 to the Indenture of Trust by and between the City and the Trustee, dated as of February 26, 1986, and a certain Amendment No. 1 to the Loan Agreement by and among the City, the Trustee and the Developer dated as of February 26, 1986; and WHEREAS, the Bank of Tokyo, Ltd., Los Angeles Agency, has proposed to deliver to the Trustee its irrevocable direct-pay Letter of Credit as further security for the repayment of the obligation of the Developer to the City pursuant to the Loan Agreement, as amended; and WHEREAS, Section 10.01(iii) of the Indenture provides that - the City and the Trustee may modify or amend the Indenture at any time by entering into a supplemental indenture, without the consent of any bondholders, to subject the Indenture to additional revenues, properties or collateral, including the Letter of Credit, which does not have an adverse effect upon the interest of the Bond Owners; and WHEREAS, Section 6.3 of the Loan Agreement and Section 11.Ol(i) of the Indenture provide that the Trustee, the City and the Developer may enter into any amendment of the Loan Agreement as may be required to grant to the City and the Trustee additional rights, remedies, ~owers or authorities, including those granted by delivery of the Letter of Credit to the Trustee, which in the opinion of Bond Counsel does not have an adverse effect upon the . interest of the Bond Owners; and - 3 - . . . . WHEREAS, Section 5.17 of the Indenture provides that, on or . before the Letter of Credit Date, the Trustee and the Issuer agree to enter into any Intercreditor Agreement, if and to the extent necessary, to effect the purposes of the Indenture; and WHEREAS, it is now desirable for the City to approve a certain Amendment No. 2 to the Indenture of Trust in the form as on file with the City Clerk ("Amendment No.2 to the Indenture of Trust"), a certain Amendment No.2 to the Loan Agreement in the form as on file with the City Clerk ("Amendment No. 2 to the Loan Agreement") and a certain Intercreditor Agreement in the form as on file with the City Clerk (the "Intercreditor Agreement"); and WHEREAS, a 11 acts, conditions and things requi red by the It Ordinance, and by all other laws of the State of California, to exist, to have happened and to have been performed precedent to and in connection with the issuance of the aforesaid multifamily residential mortgage revenue bonds exist, have happened, and have been performed in regular and due time, form and manner as required by law, and the City has duly authorized, pursuant to each and every requirement of law, the issuance of such mUltifamily residential mortgage revenue bonds for the purpose, in the manner and upon the terms therein provided. . - 4 - . - . . . . . NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DO HEREBY FIND, RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct. Section 2. The Mayor and Common Council hereby approves the form of Amendment No. 2 to the Indenture of Trust, the form of Amendment No. 2 to the Loan Agreement and the form of the Intercreditor Agreement. The Mayor and Common Council further authorizes the execution of the final form of Amendment No. 2 of the Indenture of Trust, Amendment No. 2 to the Loan Agreement and the Intercreditor Agreement when the same shall be presented for execution by the Mayor and City Clerk of the City or such other appropriate City official, subject to such changes, additions or deletions as may be recommended by the City Attorney and Bond Counsel. The execution thereof by the Mayor and City Clerk of the City or such other appropriate City official shall be deemed to be conclusive as to the approval thereof by and on behalf of the City. Section 3. This Resolution and the final version of the Amendment No. 2 of the Indenture of Trust, Amendment No. 2 to the Loan Agreement and the Intercreditor Agreement will be sUbject to the approval of the City Attorney. - 5 - . . . . Section 4. This Resolution shall take effect upon adoption. . I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the day of , 1986, by the following vote, to wit: AYES: Council Members NAYS: ABSENT: City Clerk - of The foregoing resolution is hereby approved this _ day , 1986. Mayor of the City of San Bernardino Approved as to form: ~/I~ ".JM;t,ci ty Attorney . - 6 - . .' " .'. . - . . . STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) ss CITY OF SAN BERNARDINO ) I, SHAUNA CLARK, City Clerk in and for San Bernardino, DO HEREBY CERTIFY that the foregoing copy of San Bernardino City Resolution No. true and correct copy of that now on file in this office. the and is . City of attached a full, IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Bernardino this day of , 1986. City Clerk . tit . . . . . SBE066-50/1609S/ak 04/10/86 AMENDMENT NO. 2 TO THE INDENTURE OF TRUST This Amendment No.2 to the Indenture of Trust by and between the City of San Bernardino, California (the RIssuerR) and Security Pacific National Bank, as trustee (the RTrusteeR) is dated this day of May, 1986 (RAmendment No. 2R). This Amendment No.2 shall amend the Indenture of Trust by and between the Issuer and the Trustee dated as of November 1, 1985, as amended by Amendment No. 1 to the Indenture of Trust by and between the Issuer and the Trustee dated as of February 26, 1986, to the extent as hereinafter set forth: (1) Section 2.06(e) R$16,900,000R for R$l,690,000". is by substituting amended (2) Section 6.04 is amended to read as follows: ROn or before 1:00 P.M., California time one (1) Business Day before any Interest Payment Date occurring after the Letter of Credit Date, the Trustee shall submit to the Bank such documents as may be required under the Letter of Credit to draw on the Letter of Credit an amount sufficient so that the amount on deposit in the Bond Fund derived by the Trustee with respect to the Letter of Credit shall be sufficient for the purpose of paying the principal of and interest on the Bonds coming due and payable (whether at maturity or upon prior redemption in accordance herewith) on such Interest Payment Date. All amounts derived by the Trustee with respect to the Letter of Credit shall be in immediately available funds and shall be deposited in the Bond Fund upon receipt thereof by the Trustee, and the portion of such amounts representing principal amortization shall be deposited in the Redemption Account. Amounts in the Redemption Account shall be applied to make sinking fund redemptions of Bonds on December 1 of the years indicated below in the following principal amounts: Year Amount Year Amount Year Amount 1990 $100,000 1996 $200,000 2001 $ 350,000 1991 100,000 1997 200,000 2002 350,000 1992 100,000 1998 250,000 2003 400,000 1993 150,000 1999 250,000 2004 450,000 1994 150,000 2000 300,000 2005 16,900,000 1995 150,000 - 1 - . e . - . . . . Except as otherwise expressly provided in this Indenture, moneys in the Bond Fund shall be used solely for the payment of the principal of and interest on the Bonds. The Issuer hereby authorizes and directs the Trustee to withdraw sufficient funds from the Bond Fund to pay the principa 1 of and interest on the Bonds as the same become due and payable and to make said funds so withdrawn available for the purpose of paying said principal of and interest on the Bonds, which authorization and direction the Trustee hereby accepts. On May 5 and November 5 of each year until all of the Bonds have been paid in full, the Trustee shall withdraw from the Bond Fund and transfer to the Operating Expense Fund all amounts then remaining in the Bond Fund (other than (i) amounts held in the Seasoned Funds Account and the Redemption Account other than investment earnings thereon and (ii) amounts required to pay principal of and interest not previously paid but having come due and payable). In addition, on or before 4:00 p.m., California time, one (1) Business Day before any date on which Bonds are to be purchased by the Tender Agent pursuant to the provisions of Section 3.01 and 4.01 of the Indenture, the Trustee shall submit to the Bank such documents as may be required under the Letter of Credit to draw on the Letter of Credit an amount required pursuant to such Sections. From the date of original issuance and delivery of the Bonds to the ear lier of the Let ter of Credi t Date or November 1, 1986, the interest earnings and principal attributable to the Investment Agreement shall be credited to the Bond Fund and used and applied for the payment of the interest which is due and payable on the Bonds on May 1, 1986, and principal and interest payments due on November 1, 1986. After the Letter of Credit Date, the Trustee shall draw upon the Letter of Credit at the times and in the manner as required by this Indenture and the interest earnings and the principal attributable to the Investment Agreement shall be credited to the Construction Fund for disbursement pursuant to Section 3.6(b) of the Loan Agreement." (3) Section 6.05 is amended to read as follows: "There is hereby established with a Trustee a trust fund to be designated "City of San Bernardino, California, Multifamily Housing Revenue Bonds, 1985 Series A (Castle Park Apartments Project)--Operating Expense Fund" (the "Operating Expense Fund"). The Trustee shall deposit into the Operating Expense Fund (i) all amounts remaining in the Bond Fund on May 5 and November 5 in each year, pursuant to Section 6.04, (ii) all earnings from the investment or reinvestment of moneys held in all accounts and funds created under this Indenture, except the Construction Fund and except as provided in Section 6.04 with respect to investment earnings on the Investment Agreement, and (iii) any other moneys - 2 - . tt . . . . . directed to be transferred to the Operating Expense Fund pursuant to Sections 3.6(b) and 3.10 of the Loan Agreement. The Trustee shall periodically pay to itself from the Operating Expense Fund, to the extent not paid by the Developer pursuant to Section 3.10 of the Loan Agreement, its fees, charges and expenses relating to the Bonds and the Project Loan and the performance of its duties hereunder. The Trustee also shall periodically pay to all co-trustees acting under this Indenture from the Operating Expense Fund, to the extent not previously paid by the Developer pursuant to Section 3.10 of the Loan Agreement, such co-trustees' fees, charges and expenses relating to the Bonds and the Project Loan. On November 10 of each year until all of the Bonds have been paid in full, the Trustee shall pay all funds held in the Operating Expense Fund to the Developer (except to the extent that the Developer owes any sum to the Bank under the Reimbursement Agreement as determined in a written notice delivered by the Bank to the Trustee prior to such date, in which event and to such extent such funds shall first be paid to the Bank on behalf of the Developer or to the extent that any moneys are owing to the Trustee under the Indenture)." (4) Section 6.06 is amended to read as follows: "There is hereby created and established with the Trustee a trust fund to be designated "City of San Bernardino, California, Multifamily Housing Revenue Bonds, 1985 Series A (Castle Park Apartments)--Construction Fund" (the "Construction Fund"). No funds may be withdrawn from the Construction Fund for the payment of Project Costs until such time as the Letter of Credit has been delivered to and accepted by the Trustee and the conditions set forth in Section 3.9(a) of the Loan Agreement with respect to delivery of the Letter of Credit have been satisfied and the Trustee has received satisfactory written evidence from Moody's or S&P that the the Bonds have received the highest municipal bond rating obtainable for short-term ratings of either rating agency." (5) Section 6.09 is amended to read as follows: "Any moneys held in the Bond Fund shall be invested and reinvested by the Trustee, as it deems appropriate, in Government Obligations, maturing so as to be available to be paid out hereunder in a timely manner, provided that in no event shall any such Government Obligations mature later than thirty (30) days following the date of such investment. Any moneys held in the Construction Fund, the Insurance and Condemnation Fund or the Operating Expense Fund shall be invested and reinvested by the Trustee, as it deems appropriate, in Eligible Obligations; provided, however, that moneys on deposit in the Construction Fund shall be invested pursuant to the Investment Agreement. All investments and reinvestments hereunder shall mature no later than the date on which the Trustee estimates such moneys will be required to be paid out hereunder. - 3 - . -- . - . . . . The Trustee may make any and all such investments through its own or affiliated investment department. The Trustee shall not be responsible or liable for the performance of or losses resulting from any such investments or for keeping the moneys held by it hereunder fully invested at all times. Any obligations acquired by the Trustee as a result of such investment or reinvestment shall be held by or under the control of the Trustee and shall be deemed to constitute a part of the fund from which the moneys used for its purchase were taken. As provided in Section 6.05. a 11 earnings on the investment or reinvestment of moneys held in all accounts and funds created under this Indenture. except the Construction Fund and except as provided in Section 6.04 with res~ect to investment earnings on the Investment Agreement. shall be transferred to the Operating Expense Fund. Prior to the Letter of Credit Date. the earnings on the investment or reinvestment of moneys held in the Construction Fund shall be credited to the Bond Fund pursuant to the Investment Agreement. After the Letter of Credit Date. such earnings shall be retained in each respective account of the Construction Fund and shall be invested and reinvested and shall be used as set forth in Section 3.6{b) of the Loan Agreement. - 4 - i . . e . . . . . (6) Section 8.01 (iv) is amended to read as follows: Receipt by the Trustee an event of default shall Reimbursement Agreement. of written notice from the Bank that have occurred as defined in the (7) The first paragraph of Section 8.02 is amended to read as follows: Prior to the Letter of Credit Date, the Trustee shall not accelerate the maturity of the Bonds then Outstanding. Subject to the provisions of Section 8.13 hereof, upon the occurrence of an Event of Default described in Sections 8.01(i), (iii) or (iv), the Trustee shall accelerate the maturity of the Bonds then Outstanding, whereupon the principal of and all accrued interest on the Bonds shall become immediately due and payable, without premium. Subject to the provisions of Section 8.13 hereof, upon the occurrence of any other Event of Default, the Trustee may, and if requested so to do by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding shall, accelerate the maturity of the Bonds, whereupon the principal of, and all accrued interest on, the Bonds shall become immediately due and payable. - 5 - . - . . . . . IN WITNESS WHEREOF, the parties have executed and attested this Amendment No. 2 to the Indenture of Trust by their officers thereunto duly authorized as of the date and year first written above. SECURITY PACIFIC BANK as Trustee By: Vice President CITY OF SAN BERNARDINO, CALIFORNIA as Issuer By: Mayor (SEAL) ATTEST: By: City Clerk . e e . . . . SBE066-49/1608S/ak 04/10/86 AMENDMENT NO. 2 TO THE LOAN AGREEMENT This Amendment No. 2 to the Loan Agreement by and among the City of San Bernardino, California (the "Issuer"), Security Pacific National Bank (the "Trustee") and CastleBar, Inc., a California corporation (the "Developer") is dated this day of May, 1986 ("Amendment No.2"). This Amendment No. 2 shall amend the Loan Agreement by and among the Issuer, the Trustee and the Developer dated as of November I, 1985, as amended by Amendment No. 1 to the Loan Agreement by and among the Issuer, the Trustee and the Developer dated as of February 26. 1986, to the extent as hereinafter set forth: (1) The definition of "Developer Commitment Fee" in Section 1.1 is deleted. (2) Section 3.6(b) is amended to read as follows: "On or after the Letter of Credit Date and so long as no Event of Default has occurred and is continuing, the moneys in the Construction Fund. but only as specified, shall be disbursed first to pay the amounts due with respect to any deed of trust prior to the lien of the Deed of Trust securing the obligations of the Developer under the Agreement and the Note. Second. after the Letter of Credit Date and prior to the Completion Date, the Trustee shall disburse moneys in the Construction Fund attributable to investment earnings on the Investment Agreement to the Bank immediately upon receipt by the Trustee of the proceeds of a draw under the Letter of Credit representing a payment of interest under the Project Loan and the remainder, if any, to the Operating Expense Fund. Third, the moneys in the Construction Fund shall then be used to pay the Construction Costs and (to the extent not paid from other funds under the Indenture) the Delivery Costs, upon written orders executed and delivered to the Trustee directing such disbursements as follows: the Trustee shall disburse moneys in the Construction Fund by wire transfer to California First Bank on the first and/or fifteenth (15th) day of each month upon (i) receipt by the Trustee of a requisition executed by the Developer Representative and accompanied by a written approval by the Bank Representative at least five (5) business days prior to the disbursement date, (ii) receipt by the Corporation of a request for remittance of invested funds pursuant to Section 5 of the Investment Agreement and (iii) receipt by the Trustee of said remittance. The requisition must: (A) state with respect to each disbursement to be made: (i) the requisition number. - 1 - . -- . . . . . (ii) the name and address of the person, firm or corporation to whom payment will be made, (iii) the amount to be disbursed, (iv) that proper charge been the Basis each obligation mentioned therein is a against the Construction Fund and has not of any previous disbursement, (v) that to be paid to and the Trustee compute the amount of interest California First Bank with such disbursement, (vi) that at least ninety percent (90%) of the amount of such disbursement, together with all other disbursements therefor made from the Construction Fund, has been or will be used: (1) for payment of amounts incurred after January 21, 1985, for the acquisition, construction, reconstruction or improvement of land or property subject to the allowance for depreciation under Section 167 of the Code; or (2) for payment of amounts incurred after January 21, 1985, which are. for federal income tax purposes, chargeable to the Proj ect. scapi tal account or would be so chargeable either with a proper election or but for a proper election to deduct such amounts and less than twenty-five percent (25%) of the amount initially deposited in the Construction Fund from the Bond proceeds having been used to payor reimburse the Developer for the cost of acquiring land; and (3) certifies that the disbursement requested is for the purpose specified herein and states the total amount of funds disbursed up to the date prior to the present request from this Section 3.6; states the total amount of funds which will have been disbursed subsequent to the requested disbursement from this Section 3.6; states that the disbursement together wi th other disbursements made for said purpose does not exceed the total amount specified herein; and (B) specify in reasonable detail the nature of the obligation; and (C) be accompanied by a bill or statement of account for such obligation. with respect to this subparagraph, the Trustee will rely solely on the certificate provided by the Developer and shall have - 2 - . - . . . . . no duty to verify the accuracy of any statements or to determine that the purpose for which requested are proper costs. set forth therein disbursements are The Trustee shall be responsible for the safekeeping and investment of the moneys held in the Construction Fund in accordance wi th the Indenture and the payment thereof in accordance wi th thi s Section. (3) Section 3.9(d) is amended to read as follows: "The Developer agrees that on or prior to the Conversion Date it shall deliver or cause to be delivered to the Trustee (A) an amendment to the Letter of Credit or an Alternate Letter of Credit obligating the Bank to pay to the Trustee, upon request and in accordance with the terms thereof up to (i) an amount equal to the aggregate principal amount of Bonds then outstanding to pay principal of the Bonds, whether at maturity, upon redemption or otherwise, plus (ii) an amount equal sixty-five (65) days' accrued and unpaid interest on the Bonds at an interest rate equal to the Fixed Rate (or such greater or lesser amount as shall be sufficient (x) to provide for the timely payment of interest on the Bonds regardless of any bankruptcy proceeding which may involve the Developer or the Issuer or (y) to maintain any applicable rating of the bonds by Moody's or S&P, according to evidence described under Section 3.9(b)(ii) above and (b) the opinion of Bond Counsel as described in Section 3.9(b)(i) above." This Amendment No. 2 may be simultaneously executed in several counterparts, each of which shall constitute but one and the same instrument. - 3 - . - . . . . . IN WITNESS WHEREOF, the parties have executed and attested this Amendment No. 2 to the Loan Agreement by their officers thereunto duly authorized as of the date and year first written above. CASTLEBAR, INC. By: Larry B. Harvey, President CITY OF SAN BERNARDINO, CALIFORNIA By: Mayor (SEAL) ATTEST: By: City Clerk SECURITY PACIFIC BANK By: Vice President .. . e . - . .eo . INTERCREDITOR AGREEMENT THIS INTERCREDITOR AGREEMENT (this "Agreement") dated as o~ 1, 1986 for reference pUrposes only, is entered into byii:nQ among the CITY OF SAN BERNARDINO, CALIFORNIA, a public body corporate and politic of the State of California ("Issuer"), SECURITY PACIFIC NATIONAL BANK, a national banking association, as trustee under the below described Indenture ("Bond Trustee"), and THE BANK OF TOKYO, LTD., LOS ANGELES AGENCY, a California nondepositary agency of a banking corporation duly organized and existing under the laws of Japan (the "Bank"): ! ! ~ ! ! ! !! !: A. Issuer has issued its City of San Bernardino, Multifamily Housing Revenue Bonds, 1985 Series A (Castle Park Apartments Project) (the "Bonds"), in the aggregate principal amount of $20,400,000 and has lent the proceeds from the sale of the Bonds to CASTLEBAR, INC., a California corporation ("Developer"). B. The Bonds have been issued pursuant to an Indenture of Trust dated as of November 1, 1985 by and between Issuer and Bond Trustee (the "Indenture"), and the loan of the Bond proceeds to Developer (the "Loan") has been made pursuant to a Loan Agreement dated as of November 1, 1985 by and among Issuer, Bond Trustee and Developer (the "Loan Agreement") for the purpose of financing the development pf that certain 508-unit multifamily residential rental housing development described in the Loan Agreement (the "Project") on real prop- erty located in the City of San Bernardino, California. C. Issuer and Developer have entered into that certain First Amended and Restated Regulatory Agreement dated as of November 1, 1985 (the "Regulatory Agreement") imposing upon Developer certain obligations intended to assure the exemp- tion of interest on the Bonds from income taxation. D. The obligations of Developer to repay the Loan unde~ the Loan Agreement are evidenced by Developer's promis- sory note in the principal amount of $20,400,000 (the "Note"), payable to the order of Issu~r. The Loan is secured by that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing Financing Statement dated as of November 1, 1985 with respect to the Project (the "First Deed of Trust"), and certain other security documents, executed by Developer for the benefit of Issuer. The First Deed of Trust and this Agreement together with the Note, the Loan Agree- ment, the Regulatory Agreement, and all other documents evi- 32 100006 10014 . . . .. . . . dencing and securing the obligations of Developer to repay the Loan, are collectively referred to herein as the "Loan Documents". Pursuant to the Indenture, Issuer will assign to Bond Trustee all of its rights under the Note, the First Deed of Trust and certain of its rights under the other Loan Docu- ments. E. Pursuant to that certain Reimbursement Agreement of even date herewith (the "Reimbursement Agreement) by and between the Bank and Developer, the Bank, for the account of Developer, as principal, will issue its Letter of Credit in the amount of $20,945,000 to Bond Trustee for the benefit of the holders of the Bonds outstanding under the Indenture (the "Bondholders"). As used herein, the term "Letter of Credit" shall mean the above-described Letter of Credit. Under the Reimbursement Agreement, Developer is Obligated, . inter alia, to reimburse the Bank for any amounts paid by the Bank under its Letter of Credit. F. The obligations of Developer to the Bank under the Reimbursement Agreement shall be secured by that certain Second Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing of even date herewith with respect to the Project (the "Second Deed of Trust"), the Pledge Agreement of even date herewith (the "Pledge Agreement") among Developer, Bond Trustee, the CUstodian, and the Bank and certain other security documents, executed by Developer for the benefit of the Bank, all of which are subject and subordinate to the Loan Documents. The Second Deed of Trust, together with the Reimbursement Agreement, the Letter of Credit, the Pledge Agreement and all other documents evidencing.and securing the obligations of Developer to the Bank under the Reimbursement Agreement are collectively referred to herein as the "Bank Documents." G. The parties desire to enter into this Intercreditor Agreement with respect to their exercise of certain rights, remedies and options under the above described documents. All capitalized terms not otherwise defined in this Agreement shall have the same meanings as set fo;th in the Reimburse- ment Agreement. NOW, THEREFORE, the parties hereto covenant and agree as follows: ARTICLE 1. Exercise of Riqhts Onder Loan Documents and Bank Documents. To the extent that the Bank is not in default in the payment of any amount required to be paid pursuant to its - 2 - 32 100006 10014 '. . . . . . . Letter of Credit, the following provisions shall be appli- cable: section 1.1. Upon the occurrence of an Event of Default under any Related Document (as defined in the Reimbursement Agreement), the Bank shall be permitted and is hereby authorized to take any and all actions and to exercise any and all rights, remedies and options which it may have thereunder, pursuant to the Reimburse- ment Agreement or at law or in equity to cause such default to be cured, or to foreclose the Second Deed of Trust and sell the Project or any part thereof (or accept a deed thereof in lieu of foreclosure), and sell or otherwise realize upon the property mortgaged, pledged or assigned to or for the benefit of Bank under the Related Documents, without objection or interference by Issuer or Bond Trustee, so long as the lien of the First Deed of Trust and the other Loan Documents shall not have been discharged thereby. Section 1.2. (a) To the extent that the Bank shall not be in default in the payment of any amount required to be paid pursuant to the terms of the Letter of Credit and except as otherwise expressly permitted by paragraphs (b) and (c) below with respect to defaults by Developer under the Regulatory Agreement, neither Issuer nor Bond Trus- tee shall, without the Bank's prior written consent: (i) take any action to declare the outstand- ing balance of the Bonds or the Note to be due pur- suant to the Indenture or the Loan Agreement or to foreclose the lien of the First Deed of Trust or to sell any property covered thereby, or to enforce any other remedy against any of the property described in the First Deed of Trust or the secu- rity agreement contained therein (the 'Bank's Col- lateral'): or (ii) take any other action or enforce any other remedy against the Developer on account of any default by Developer under the Loan Documents other than a default by Developer in the pa~aent of any amount due and payable to Issuer or Bond Trus- tee thereunder. (b) If Developer defaults in the performance or observance of any covenant, agreement or obligation of Developer set forth in the Regulatory Agreement, and if such default remains uncured for a period of thirty (30) - 3 - 32 100006 10014 .... e e e . . . days after Developer and the Bank receive written notice from the Bond Trustee or the Issuer stating that a Regu- latory Agreement default has occurred and specifying the nature of such default, then Issuer and Bond Trustee shall thereafter have the right, without the Bank's con- sent, to declare the outstanding balance of the Bonds and the Note to be due pursuant to the Indenture and the Loan Agreement on account of such default, and. to call the Bonds for redemption in accordance with the Inden- ture, and to draw upon the Letter of Credit and, if any portion of such draw is not paid in accordance with the terms of the Letter of Credit, to foreclose the lien of the First Deed of Trust; unless (i) Bond Trustee, prior to the end of such 30-day period, determines, or receives an opinion of Bond Counsel (as defined in the Indenture) to the effect that, the failure to cure such default will not have a materially adverse effect on the exemption from income taxation of interest on the Bonds, or (ii) action to cure such default is instituted within said 30-day period and diligently pursued thereafter until such default is cured, or (iii) if such default is not reasonably curable by the Bank without first securing possession of the Project, the Bank (subject to extension during any stay on account of the bankruptcy of Developer) (A) institutes, within said 30-day period, fore- closure proceedings or other action for the purpose of obtaining such possession, (B) thereafter dili- gently pursues such proceedings until such posses- sion is obtained, and (C) diligently pursues action to cure such default after it obtains possession of the Project, until such default is cured; provided, however, that no extension pursuant to para- .graphs (ii) or (iii) above of the 30-day period within .which the cure of a Regulatory Agreement default must be completed shall be effective unless, in the opinion of Bond Counsel (as set forth in an opinion delivered to Bond Trustee), such extension will not matarially adversely affect the exemption from income taxation of interest on the Bonds; and provided, further, that Bond Trustee, upon five (5) business days (as defined in the Indenture) prior written notice to the Bank following any such default under the Regulatory Agreement, may reduce the 30-day period provided above to such shorter period of time as is specified in such notice (but in no - 4 - 32 100006 10014 ... . . . . . . event less than fifteen (15) business days), but only if Bond Trustee receives an opinion of bond counsel that such reduction of such period is necessary to preserve the exemption from federal income taxation of interest on the Bonds. (c) In the event of a default under the Regulatory Agreement which remains uncured after (i) written notice thereof to Developer and the Bank and (ii) expiration of the applicable cure period set forth in the Regulatory Agreement, nothing in this Section 1.2 shall restrict or in any way limit the right of Issuer or Bond Trustee to take any action available under the Regulatory Agreement or at law or in equity in order to enforce the terms of the Regulatory Agreement, so long as neither Issuer nor Bond Trustee takes any action to declare the outstanding balance of the Bonds or the Note to be due pursuant to the Indenture or the Loan Agreement on account of such default or to foreclose any liens or security interests or enforce any other remedy against any of the Bank's Collateral, except in accordance with paragraphs 1.2(a) and (b) above. (d) Nothing in this Section 1.2 shall restrict or in any way limit the actions required to be taken by Bond Trustee or Issuer under the Indenture in connection with any purchase of Bonds, or the payment of interest thereon, or in connection with any mandatory redemption of the Bonds at or prior to maturity (other than a man- datory redemption after default, pur~uant to Section 8.02 of the Indenture), or the application by Bond Trus- tee of any funds held under the Indenture, or the sub- mission of any claim and the collection and application of any funds paid to Bond Trustee under the Letter of Credit. Sec~ion 1.3. The Bank (or an affiliate of the Bank) may become the legal or beneficial owner of the Project by foreclosure, deed in lieu of foreclosure, or otherwise, whereupon: (a) Issuer and Bond Trustee shall, for all intents and purposes, deem the Bank or such affiliate (the "Bank Transferae") to be the "Developer" under the Loan Docu- ments, as substitute obligor thereunder, effective when and if such Bank Transferee delivers to Bond Trustee, within ten (10) days after such transfer, (i) a written notice of such substitution, (ii) written confirmation that the Letter of Credit is still in force and effect, (iii) all fees and expenses of the Bond Trustee and the Issuer under the Indenture unpaid and outstanding as of - 5 - 32 100006 10014 - .e. e e e . the date of such transfer, and (iv) a written instrument assuming and agreeing to perform all of the Developer'S obligations and covenants under the Loan Documents accruing from and after the date of such transfer; provided, however, that Issuer and Bond Trustee agree (and such assumption agreement shall provide) that such Bank Transferee shall have no liability beyond its interest in the Project for any of Developer's Obliga- tions under the Loan Documents, except that the Bank Transferee shall be personally liable for (1) Devel- oper's obligation under the Loan Documents to indemnify Issuer and Bond Trustee to the extent set forth in Sec- tion 5.3 of the Loan Agreement and Section 3.03 of the Regulatory Agreement for claims, losses, costs, damages, fees, expenses, suits, judgments, actions.and liabili- ties resulting from defaults by the Bank Transferee under the Regulatory Agreement during the period that such Bank Transferee holds legal title to the Project, (2) Developer'S obligation under Section 3.10 of the Loan Agreement to pay the fees and expenses described in such Section accruing during the period that such Bank Transferee holds legal title to the Project, and (3) Developer'S obligation under Section 7.4 of the Loan Agreement to pay reasonable attorneys' fees and enforce- ment expenses with respect to any Event of Default (as defined in the Loan Agreement) by Bank Transferee occur- ring during the period that such Bank Transferee holds legal title to the Project; and . (b) Such Bank Transferee may thereafter transfer its interest in the Project to a third party who shall thereupon be deemed to be the MDeveloperM under the Loan Documents, as substitute obligor thereunder, effective when and if such transferee delivers to Bond Trustee, concurrently with such transfer, (i) a Letter of Credit or Substitute Credit Facility meeting the requirements of the Indenture or written confirmation of the Bank that its Letter of Credit is still in force and effect, (ii) a written instrument assuming and agreeing to p'er- form all Obligations of Developer . under the Loan Docu- 'ments (including Developer'S obligations under Sections 3.10, 5.3 and 7.4 of the Loan Agreement and Section 3.03 of the Regulatory Agreement) accruing from and after the date of such transfer, with the benefit, however, of any non-recourse provisions (subject to the same conditions as set forth in paragraphs 1.3 (a) (i11) (1), (2) and (3) above) contained in the Loan Documents, (iii) all fees and expenses of the Bond.Trustee and the Issuer under the Indenture unpaid and outstanding as of the date of such transfer, (iv) an opinion of Bond Counsel that such transfer will not materially adversely affect the exemp- . - 6 - 32 100006 10014 ..... . . e . . . tion from income taxation of interest on the Bonds, and (v) an opinion of counsel to the transferee that such transferee has duly assumed the obligations of the Developer under the Regulatory Agreement and that such obligations and the Regulatory Agreement are binding on the transferee. Upon completion of any transfer in accordance with this paragraph 1.3(b), the Bank (or such affiliate) shall thereafter be relieved of any' further liability for Developer's obligations under the Loan Documents accruing from and after the date of such transfer. (c) Pursuant to the Regulatory Agreement, Issuer and Bond Trustee hereby approve any transfer of title to the Project to the Bank (or its affiliate), or by the Bank or its affiliate to a third party, so long as such transfer complies with the requirements set forth in paragraph 1.3(a) or (b) above, whichever is applicable. Nothing contained in this Section 1.3 shall in any way limit the Bank's obligations under its Letter of Credit. (d) Whenever the Developer's right title and interest in the Project and the Project Site shall have been transferred by foreclosure or deed in lieu of foreclosure and theretofore or thereafter the Bonds shall have been redeemed in full (or provision therefor shall have been made pursuant to the Indenture), the Issuer and the Bond Trustee agree, upon request of the Bank, promptly to execute and deliver any and all documents or instruments which may be required by the Bank of any title insurer insuring title to the Developer's transferee in order to revoke and terminate the Regulatory Agreement and remove the Regulatory Agreement as a cloud upon title to the Project and the Project Site. Section 1.4. Issuer and Bond Trustee will 70~P- erate with the Bank and take any action, including Jo~n- ing in such proceedings at law or in equity and execut- ing such documents as the Bank m~y request and direct, to enforce the obligations of Developer under the Loan Documents and the Bank Documents (including the Regula- tory Agreement), .and in order that the rents, issues, profits, revenues and other' income from the Project (including any proceeds of rent or other insurance or of condemnation proceedings) that are mortgaged, pledged or assigned to Issuer and/or the Bank, shall be available, after the payment of all costs and expenses of collec- tion, to pay any outstanding and unpaid obligations of Developer under the Note and the Loan Agreement (but only if Issuer or Bond Trustee is entitled under the 32 100006 10014 - 7 - . ..... . -- . - . . . Loan Documents to receive and apply such rents, issues, profits, revenues and other income for such purpose), subject to the Bank's rights of subrogation and rights under the Reimbursement Agreement, in such Order and manner as the Bank shall determine. The Bank, in con- sideration for the foregoing agreement by Issuer and Bond Trustee, agrees to pay, and to indemnify Issuer and Bond Trustee against, all costs, fees and expenses (inClUding reasonable attorneys' fees and expenses) incurred by Issuer or Bond Trustee in connection with any action taken by either of them at the request and direction of the Bank: provided, however, that Bank shall not be obligated (i) to pay any costs, fees or expenses which Bond Trustee may suffer or incur by rea- son of the negligent or willful failure of. Bond Trustee to perform the trusts and duties imposed upon it under the Indenture, or (ii) to pay any costs, fees or expenses which Issuer or Bond Trustee may incur by rea- son of Issuer's or Bond Trustee's exercise or failure to exercise any power or discretion other than at Bank's direction. Section 1.5. Solely for the purposes of the First Deed of Trust and the security agreement contained therein, Issuer and Bond Trustee shall each be deemed to have approved any matters as to which Developer is required to obtain Issuer's or Bond Trustee's approval under the terms of such documents if the matter in ques- tion shall have been approved in writing by the Bank. Issuer and Bond Trustee shall each promptly execute and deliver to the Bank such instruments as the Bank may reasonably request to evidence such approval. ARTICLE 2. Notice of Default. Issuer and Bond Trustee shall each give to the Bank a copy of any notice or other communication given by it to Developer with respect to any Event of Default (as defined in the applicable Loan Documents), or with respect to any other occurrence that would give Issuer or ijond Trustee the right to accelerate the maturity or require prepayment of all or any portion of the Note, or. with :r.-espec.e to any event which, with notice or the lapse of time or both, would. constitute such an Event of Default 01: -won1.d. pe::""'lIIit such accelc:,:-ation (collectively, a MSignificant EventM). Such copy shall be given to the Bank in the same manner and at the same time as the corresponding notice or communication is given to Devel- oper under the applicable Loan Document, and before Issuer and Bond Trustee exercise any right or remedy available to either under any Loan Document or at law or in equity. If a Significant Event occurs for which no notice is required to 32 100006 10014 - 8 - ..... . . . . . . be given a notice promptly to Developer, Issuer and Bond Trustee shall deliver of such Significant Event to the Bank reasonably upon learning of its occurrence. ARTICLE 3. Disbursement Procedures. Notwithstanding the provisions of the Indenture, the Loan Agreement or any other Loan Document, so long as the Bank shall not be in default in the payment of any amount required to be paid pursuant to the terms of the Letter of Credit, all Bond proceeds which are to be used to pay Project Costs (as defined in the Loan Agreement) other than reim- bursements to the Bank for draws under the Letter of Credit shall be disbursed as follows, except as otherwise provided herein: (a) Developer shall submit to the Bank a requisi- tion ("Funding Requisition") in the form described in Section 3.6 of the Loan Agreement for such disbursement and shall otherwise comply with the applicable require- ments of the Reimbursement Agreement; (b) Upon approval by the Bank of such Funding Requisition, the Bank shall deliver such Funding Requi- sition to Bond Trustee, together with its written con- sent to such disbursement (a "Consent to Disbursement"); (c) Bond Trustee shall not approve or fund any request for disbursement unless and until it receives a Consent to Disbursement therefor, executed by the Bank; . (d) Upon receipt by Bond Trustee of both (i) a Funding Requisition that complies with all of the requirements set forth in Section 3.6 of the Loan Agree- ment (provided that Bond Trustee shall have no duty to verify the accuracy of any representation or other statement contained in or attached to such a Funding Requisition), and (ii) a Consent to Disbursement with respect thereto, executed by the Bank, Bond Trustee, subject to the limitations contained in the Loan Agree- ment and the Indenture, shall promptly disburse for the account of Developer and in the manner directed in such Funding Requisition (or if no directions are contained in such Funding Requisition, then as directed in writing by the Bank) the amount stated in such Funding Requisi- tion and Consent to Disbursement; (e) In the event Project Costs exceed the amount of available Bond proceeds, the Bank may, but shall not be obligated to, advance funds to or on behalf of Devel- oper. All such advances, together with any other cost 32 100006 10014 - 9 - ..... . e . . . . or expense incurred by the Bank in connection with the completion of the Project or arising out of or relating to the enforcement of its rights under the Related Docu- ments or this Agreement, shall be secured by the Second Deed of Trust and the Pledge Agreement; and (f) From and after the occurrence of an Event of Default (as defined in the Reimbursement Agreement) the Bank shall be entitled to request and receive for the account of the Developer all undisbursed Bond proceeds for the payment of Project Costs in accordance with the Indenture and the Loan Agreement, upon execution and delivery to the Bond Trustee of a Bank Funding Requisi- tion therefor in the form of Exhibit A attached hereto, whether or not the Bank succeeds to the _title of the Project as a result of such default. Nothing contained herein shall be construed as requiring Bond Trustee to make any disbursement not authorized or permitted by the Indenture. The Bank's approval of a Funding Requisi- tion and its execution of a Consent to Disbursement with respect thereto shall not be construed as a representation by the Bank that it has reviewed, considered, approved, or joined in the representations of Developer contained therein. Neither Bond Trustee nor the Bank shall have any obligation or duty to see to the application of the proceeds of any dis- bursement. ARTICLE 4. Amendment of Documents. Issuer and Bond Trustee each agrees 'that it will not enter into any amendment, change or modification of any of the documents referred to in this Agreement without the express prior written consent to such amendment, change or modification by the other parties hereto. ARTICLE S. Bond Trustee's Records. The Bank may at any reasonable time under reasonable circumstances and upon reasonable ~otice to Bond Trustee examine or copy any letter, account, or other documentation or information in the possession or control of Bond Trustee relating to or connected with the Project, the Bonds or col- lections under th~ Note and the Loan Agreement. Bond Tr~stee shall, at the 'request of the Bank, send the Bank copies of all reports delivered to the Issuer under Section 5.16 of the Indenture and take reasonable steps to obtain for the Bank any information or documents in the possession of any third party relating to or in connection with the Project or the Bonds. Any reasonable expenses incurred by Bond Trustee in 32 100006 10014 - 10 - - ..... . . . - - . . . its compliance with this Article 5 shall be promptly paid by the Bank. ARTICLE 6. Pledqed Funds: Certain Accounts. To the extent of Developer's interest therein, all pro- ceeds received by Bond Trustee from the sale of the Bonds, and any other funds or amounts now or hereafter deposited with Bond Trustee or the Bank, together with all earninqs on such proceeds, funds and amounts, and all investments made with the same, including, without limitation, deposit accounts, chattel paper, notes, checks, drafts, securities, certificates of deposit, and instruments (collectively, the 'Pledged Funds.) have been pledged by Developer to Issuer as Secured Party under the security agreement contained in the First Deed of Trust ('First Security Agreement'), and to the Bank as Secured Party under the security agreement contained in the Second Deed of Trust (the 'Second Security Agree- ment.), which Second Security Agreement is subject and sub- ordinate to the First Security Agreement. All such Pledged Funds now or hereafter in the possession of Bond Trustee shall be held by Bond Trustee as Secured Party under the First Security Agreement (as assignee of Issuer's rights ~ereunder), and as custodian for the Bank as Secured Party under the Second Security Agreement, subject to the provi- sions of the Indenture regarding the holding, application and disbursement of such Pledged Funds. All such Pledged Funds now or hereafter in the possession of the Bank shall be held by the Bank as Secured Party under the Second Security Agree- ment, and as custodian for Bond Trustee ~s Secured Party under the First Security Agreement (as assignee of Issuer's rights thereunder), subject to the provisions of the Reim- bursement Agreement regarding the holding, application and disbursement of such Pledged Funds. ARTICLE 7. Aqreement for Benefit of Parties Kereto. . Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any person other than Issuer, Bond Trustee and the Bank and their respective successors and assigns, any right, remedy or claim. This Agreement is for the sole and exclusive benefit of Issuer, Bond Trustee and the Bank and their respective successors and assigns. All rights of the Bank hereunder shall be contingent upon the Banks' not being in default of its payment obligations under the Letter of Credit. ARTICLE 8. Severability. more of the prov~s~ons contained in this be invalid, illegal or unenforceable in any If one or Agreement shall 32 100006 10014 - 11 - . - . .tt . tt tt . respect, the rema1n1ng provisions shall not in any way be affected or impaired. ARTICLE 9. Notices. All notices, certificates or other communications here- under shall be sufficiently given and shall be deemed given when mailed by first class mail, postage prepaid, with proper address as indicated below. Each party may, by written notice given to the other parties, designate any other address or addresses to which notices, certificates or other communications to them shall be sent when required as contem- plated by this Agreement. Until otherwise so provided by the respective parties, all notices, certificates and communica- tions to each of them shall be addressed as follows: If to Issuer: City of San Bernardino 300 North "0" Street, Room 320 San Bernardino, California 92418 Attention: Redevelopment Agency Security Pacific National Bank 333 South Beaudry Avenue, W24-30 Los Angeles, California 90017 Attention: Corporate Trust Department ! If to Bond Trustee: If to Bank: The Bank of Tokyo, Ltd., Los Angeles Agency 640 West Sixth Street, Suite 200 Los Angeles, California 90017 Attention: General Manager Bond Trustee and Issuer each agrees that immediately upon giving or receiving any notice, certificate or other communi- cation to or from Developer pursuant to the Loan Agreement, the Indenture or any other Loan Document, it shall send a copy of such notice, certificate, or communication to the Bank in the manner set forth in this Article. ARTICLE 10. Successors and Assiqn~. Whenever in this Agreement any of the par'eias hereto is named or referred to, the successors and assigns of such party shall be deemed to be included and all.covenants, prom- ises and agreements in this Agreement contained by and on behalf of the respective parties hereto shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not. - 12 - 32 100006 10014 - .... . ,. . . . . ARTICLE 11. Counterparts. This Agreement may be executed in any number of counter- parts, each executed counterpart constituting an original, but all counterparts together constituting only one instru- ment. ARTICLE 12. Governing Law. This Agreement and the rights and obligations of the parties shall be governed by and construed and enforced in accordance with the laws of the State of California. ARTICLE 13. No Im~airments of Other Rights. Nothing in this Agreement is intended or shall be con- strued to impair, diminish or otherwise adversely affect any other rights the Bank may have or may obtain against Devel- oper, including, but not limited to, the Bank's rights as a holder of Bonds, in the event it shall be or become a holder thereof, and the Bank's right(s) of subrogation. ARTICLE 14. Letter of Credit Not Be Im~aired: Remedies. No failure of Bond Trustee or Issuer to perform any undertakings or honor and agreements under this Agreement shall affect the obligation of the Bank under the Letter of Credit, but the Bank, Issuer and Bond Trustee shall each have full right and power to enforce the undertakings, covenants and agreements of the other parties hereto . directly against such other parties by suit for specific performance or claims for damages or a combination of the foregoing. In the event of any dispute between any of the parties hereto arising out of this Agreement, the prevailing party or parties shall be entitled to recover from the losing party or parties, all fees, costs, and expenses, including, without limitation, attorneys' fees, incurred by such prevailing party or parties in connection with such dispute; provided, however, that the Issuer shall be liable in damages for any fees, costs, and expenses, including, without limitation, attorneys' fees, only to the extent that revenues pledged for payment of the Bonds under the Indenture are available to pay such damages. !>RT:i:CLE . 1!>., P,ub:.:tlqat.i.on : Assignment. Issuer and Bond Trustee agree that the Bank shall be subrogated to their respective rights and remedies under the Loan Documents upon and to the extent of the Bank's payment (whether pursuant to the Letter of Credit or otherwise) of the prinCipal of or interest on the Bonds or the payment (whether pursuant to the Letter of Credit or otherwise) or 32 100006 10014 - 13 - . - . .' . . . performance of any obliqation under the Loan Documents. Sub- ject to the indemnification provisions of section 1.4 hereof, Issuer and Bond Trustee aqree to cooperate with the Bank in connection with the Bank's enforcement of any of such riqhts and remedies and aqree not to take any actions that would prejudice the exercise of such riqhts of subroqation. Upon payment by the Bank to Bond Trustee of an amount sufficient to payor redeem all amounts outstandinq, and receipt by Bond Trustee of all other amounts outstandinq under the Note and Indenture (or the makinq of adequate provisions for the pay- ment of such amounts, as permitted by the Indenture), Issuer and Bond Trustee, upon the request of the Bank, shall each promptly endorse the Note to the order of the Bank and shall deliver or cause to be delivered to the Bank (a) the Note, the First Deed of Trust and the other Loan Documents, and all funds, securities, and other property held by either of.them pursuant to the Loan Documents (includinq any documents or instruments evidencinq or securinq same), other than that required for the payment or redemption of Bonds not thereto- fore surrendered for such payment or redemption, and (b) assiqnments to the Bank, in form satisfactory to the Bank, of all of the respective riqhts, titles and interests of Issuer and Bond Trustee in and to the First Deed of Trust and the other Loan Documents, and in and to such funds, securities, and other property. ARTICLE 16. Headings. Headinqs herein are for convenience only and shall not be relied upon in interpretinq or enforcinq this Aqreement. . ARTICLE 17. Duties of Bond Trustee. Except as otherwise expressly set forth herein, nothinq contained herein shall be construed to impose any duties upon Bond Trustee beyond those contained in the Indenture. All immunities, indemnities and other provisions of the Indenture insofar as they relate to the duties and liabilities of Bond Trustee shall apply to this Aqreement. Issuer shall have no liability to Bank for any act or omiss~on on the part of Bond Trustee. ARTICLE 18. Tendination. This Aqreement shall terminate upon the latest to occur of (a) provision by Developer to Bond Trustee of a Substitute Credit Facility (as defined in the Indenture), issued by another bank, (b) surrender by Bond Trustee of the Bank's Letter of Credit in accordance with its terms, and (c) full - 14 - 32 100006 10014 - - .. . - . - . . . payment and performance of all of Developer's obligations to the Bank under the Reimbursement Agreement. XN WXTNESS WHEREOF, Issuer, Bond Trustee, and the Bank have caused this Intercreditor Agreement to be executed in their respective corporate names, all as of the date first above written. 'XSSUER" CXTY OF SAN BERNARDINO, CALIFORNIA, a public body corporate and pOlitic of the State of California By: Name: Title: 'BOND TROSTEE" SECURITY PACIFIC NATIONAL BANK, as Trustee By: Name: Title: 'BANK" THE BANK OF TOKYO, LTD., LOS ANGELES AGENCY By: Name: Titie: 32 100006 10014 - 15 - .' . . e . . CONSENT OF DEVELOPER The undersigned, as the Developer referred to in the foregoing Intercreditor Agreement, hereby acknowledges its receipt of such Intercreditor Agreement, and consents to the provisions thereof, inClUding, without limitation, Articles 3 and 6. 32 100006 10014 .DEVELOPER" CASTLEBAR, INC., a California corporation By: LARRY B. HARVEY, President . . .. . . . '.0 . . . BANK FUNDING REQUISITION Date: Requisition No. Bank Funding Requisition No. Developer's Loan No. 1. Amount due and to be disbursed to Account No. $ . . 2. The Bank of Tokyo, Ltd., Los Angeles Agency (the "Bank"), represents and warrants that: (a) each Obligation to which the amount specified above relates has been properly incurred in connection with the Project being financed with the proceeds of the Loan specified above (the "Loan"), is a reimbursable Qualified Project Cost properly chargeable against the Construction Fund and has not been the basis of any previous disbursement made to the Bank pursuant to a "Bank Funding Requisition": (b) the expenditure of the amount specified above, when added to all disbursements under previ- ous "Bank Funding Requisitions," other than disbursements to pay the costs of iSSUing the Bonds and other Neutral Costs, will result in not less than 90% of all such disbursements to the Bank Cexcept as otherwise permitted under the Loan Agree- ment referred to below) having been used to payor reimburse the Bank for Qualified Project Costs: (c) the Regulatory Agreement is in full force and effect; (d) tbe expenditure of the amount specified above, when added to all disbursements to the Bank under all previous "Bank Funding Requisitions" and to all amounts requested by the Developer pursuant to a Funding Requisition consented to by the Bank, will result in less.than 25% of all such disbursements, ,other than disburse- ments to pay the costs of iSSUing the Bonds and other Neutral Costs, having been used to acquire land or any interest therein: and Ce) this disbursement is for the items set forth on Exhibit 1 hereto. 3. Capitalized terms as used herein shall have the meanings given to them in the Loan Agreement dated as of November. 1, 1985, 'among the City of San Bernardino, .California. '("Issuez::").,' Security Pacific National Bank, as trustee, and CastleBar, Inc., a California corporation C"Developer"). As used herein, the term "Bank Funding Requi- sitions" means funding requisitions executed and submitted by the Bank on this form, requesting disbursements to the Bank 32 100006 10014 EXHIBIT A .' . . . . . under the Loan, and does not include any Funding Requisitions executed by Developer which may have been consented to by the Bank. THE BANK OF TOKYO, LTD., LOS ANGELES AGENCY By: Name: Title: 32 100006 10014 - 2 - . . ~