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Home My WebLink About06 120312 SA HA WASHINGTON Pl FLA - Attach 2FUNDING LOAN AGREEMENT Among CITIBANK, N.A., as Funding Lender and HOUSING AUTHORITY OF THE CITY OF SANTA ANA, as Governmental Lender and WILMINGTON TRUST, NATIONAL ASSOCIATION, as Fiscal Agent Dated as of December 1, 2012 relating to: $ [PermPrinAmt] Housing Authority of the City of Santa Ana Multifamily Housing Revenue Real Estate Note (Flower Terrace) 2012 Series A-1 ~ [ l~ V lll l lllt-1111 l.] Housing Authority of the City of Santa Ana Multifamily Housing Revenue IRP Note Flower Terrace) 2012 Series A-2 Doc ID Include Draft Include Date Include Time TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; PRINCIl'LES OF CONSTRUCTION Section l.l. De~nitions ........................................................................................................................... 2 Section 1.2. Effect of Headings and Table of Contents ......................................................................... 12 Section 1.3. Date of Funding Loan Agreement ..................................................................................... 12 Section 1.4. Designation of Time for Performance ............................................................................... 12 Section 1.5. Interpretatlon ..................................................................................................................... ARTICLE II TERMS; GOVER~ENTAL LENDER NOTE Section 2.2. Form of Governmental Lender Notes ................................................................................14 Section 2.3. Execution and Delivery of Governmental Lender Notes ...................................................14 Section 2.4. Investor Letter; Participations; Sale and Assignment ........................................................14 ARTICLE III PREPAYMENT Section 3.1. Prepayment of the Governmental Lender Note from Prepayment Under the Related Borrower Note ........................................................................................................................................16 Section 3.2. Notice of Prepayment ........................................................................................................16 ARTICLE IV SECURITY Section 4.1. Security for the Funding Loan ...........................................................................................17 Section 4.2. Delivery of Security ..........................................................................................................18 ARTICLE V LIMITED LIABILITY Section 5.1. Source of Payment of Funding Loan and Other Obligations ............................................18 ....19 Section 5.2. Exempt from Individual Liability .................................................................................. ARTICLE VI CLOSING CONDITIONS; APPLICATION OF FUNDS Section 6.1. Conditions Precedent to Closing .......................................................................................19 C:1UsersltadlDesktoplSantaRna HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM ARTICLE VII FUNDS AND ACCOUNTS Section 7.1. Authorization to Create Funds and Accounts ................. . ..................... . .............. . ............. 20 Section 7.2. Investment of Funds .......................................................................................................... 20 ARTICLE VIII REPRESENTATIONS AND COVENANTS Section 8.1. General Representatlons ................................................. . ................................................. . 5 Section 8.2. No Encumbrance on Security ............................................................................................ 26 Section 8.3. Repayment of Funding Loan ............................................ .................................. Section 8.4. Servicer ............................................................................................ Section 8.5. Borrower Loan Agreement Performance ........................................................................... 26 Section 8.6. Maintenance of Records; Inspection of Records .......................................... . ...... . ............ . 26 ..................................... 7 Section 8.7. Tax Covenants .............................................................................. Section 8.8. Performance by the Borrower ................................................................................... Section 8.9. Maintenance of Records . ................................................................................................... 28 ARTICLE IX DEFAULT; REMEDIES Section 9.1. Events of Default ............................................................................................................... 28 Section 9.2. .. Acce eration o Maturity; Resclsslon an Annu ment .... . ... . ...... . ....................................... 29 Section 9.3. Additional Remedies; Funding Lender Enforcement ........................................................ 30 Section 9.4. Application of Money Collected ....................................................................................... 31 Section 9.5. Remedies Vested in Funding Lender ................................................................................. 32 Section 9.6. Restoration of Positions ................................................................. .................................... 32 Section 9.7. Rights and Remedies Cumulative ...................................................................................... 32 Section 9.8. Delay or Omission Not Waiver ......................................................................................... 32 Section 9.9. Waiver of Past Defaults ................................................................................. .................... 32 Section 9.10. Remedies Under Borrower Loan Agreement or Borrower Notes ................................... 32 Section 9.11. Waiver of Appraisement and Other Laws .................. . ................... . ......... . .. . ......... . ......... 3 3 Section 9.12. Suits to Protect the Security ............................................................................................. 33 Section 9.13. Remedies Subject to Applicable Law .............................................................................. 33 Section 9.14. Assumption of Obligations .............................................................................................. 33 ARTICLE X AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT AND OTHER DOCUMENTS Section 10.1. Amendment of Funding Loan Agreement ....................................................................... 34 Can~inv~ ~ n 7 /,mv~n~mnv-+r ~on»>rn ~i~iv-~~r-~r T nr~~c~r (~nr~rnr~~ Z/) -J~+V61V11 1V.G. L7111t~111i111V11W 1\lrliU111~ 1 U11U111~ L1.+11UV1 VVll~t~ll~ .............................................................. J'T ........................................................ 34 Section 10.3. Consents and Opinions ............................................ ARTICLE XI MISCELLANEOUS Section 11,1. Notices ............................................................................................................................. 34 Section 11.2. Term o f Funding Loan Agreement ........................... . ........... . ........................... . .. . ........... 43 Section 11.3. Successors and Assigns ................................................................................................... 43 C:1UsersltadlDesktoplSantaRna HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM Section 11.4. Legal Holidays ................................................................................................................. 43 Section 11.5. Governing Law ................................................................................................................ 43 Section 11.6. Severability ...................................................................................................................... 43 Section 11.7. Execution in Several Counterparts .................................................................................. 43 Section 11.8. Nonrecourse Obligation of the Borrower ........................................................................ 43 Section 11.9. Electronic Transactions ................................................................................................... 44 Section 11.10. Reference Date .............................................................................................................. 44 EXHIB IT A F0~ OF GOVERNMENTAL LENDER NOTES ... . ............................................. . ... A-1 EXHIBIT B FORM OF IT~VESTOR LETTER ................................................................................. B-1 C:1Users\tadlDesktoplSantaAm HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM FUNDING LOAN AGREEMENT This Funding Loan Agreement, dated as of December 1, 2012 (this "Funding Loan Agreement"), is entered into by CITIBANK, N.A., (together with any successor hereunder, the "Funding Lender"), Housing Authority of the City of Santa Ana, a public body corporate and politic, organized and existing under the laws of the State of California (together with its successors and assigns, the "Governmental Lender") and Wilmington Trust, National Association, a national banking association organized and existing under the laws of the United States of America, as fiscal agent (the "Fiscal Agent"). RECITALS WHEREAS, pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, as now in effect and as it may be supplemented from time to time (the "Act"), the Governmental Lender is authorized: (a} to make loans to any person to provide financing for rental residential developments located within the jurisdiction of the Governmental Lender and intended to be occupied in part by persons of low and very low income; (b) to incur indebtedness for the purpose of obtaining moneys to make such loans and provide such financing, to establish any required reserve funds and to pay administrative costs and other costs incurred in connection with the incurrence of such indebtedness of the Governmental Lender; and (c) to pledge all or any part of the revenues, receipts or resources of the Governmental Lender, including the revenues and receipts to be received by the Governmental Lender from or in connection with such loans, and to mortgage, pledge or grant security interests in such loans or other property of the Governmental Lender in order to secure the payment of the principal of, prepayment premium, if any, on and interest on such indebtedness of the Governmental Lender; and WHEREAS, Washington Place Partners, LP, a California limited partnership, (the "Borrower"), has requested the Governmental Lender to enter into this Funding Loan Agreement under which the Funding Lender (i) will advance funds (the "Funding Loan") to or for the account of the Governmental Lender, and (ii) apply the proceeds of the Funding Loan to make two loans (collectively, the "Borrower Loan") to the Borrower to finance the acquisition, rehabilitation, development and equipping of a 200- unitmultifamily rental housing development located in the City of Santa Ana, California, to be known as Flower Terrace (the "Project"); and WHEREAS, simultaneously with the delivery of this Funding Loan Agreement, the Governmental Lender and the Borrower will enter into a Borrower Loan Agreement of even date herewith (as it may be supplemented or amended, the "Borrower Loan Agreement"), whereby the Borrower agrees to make loan payments to the Governmental Lender in an amount which, when added to other funds available under this Funding Loan Agreement, will be sufficient to enable the Governmental Lender to repay the Funding Loan and to pay all costs and expenses related thereto when due; and WHEREAS, to evidence its payment obligations under the Borrower Loan Agreement, the Borrower will execute and deliver to the Governmental Lender its Borrower Real Estate Note and its Borrower IRP Note as defined in the Borrower Loan Agreement (each a "Borrower Note" and collectively; the "Borrower Notes"1 and the obligations of the Borrower l.~nder the Borrower Notes will he secured by a lien on and security interest in the Project pursuant to a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing of even date herewith (the "Security Instrument"), made by the Borrower in favor of the Governmental Lender, as assigned to the Funding Lender to secure the performance by the Governmental Lender of its obligations under the Funding Loan; and WHEREAS, the Governmental Lender has executed and delivered to the Funding Lender its 1Vlultifamily Housing Revenue Real Estate Note (the "Governmental Lender Real Estate Note") and its C:\UsersltadlDesktoplSanta Ana HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM Multifamily Housing Revenue IRP Note (the "Governmental Lender IRP Note") (each a "Governmental Lender Note" and collectively, the "Governmental Lender Notes") each dated as of the Closing Date (defined below) collectively evidencing its obligation to make the payments due to the Funding Lender under the Funding Loan as provided in this Funding Loan Agreement, all things necessary to make the Funding Loan Agreement, the valid, binding and legal limited obligations of the Governmental Lender, have been done and performed and the execution and delivery of this Funding Loan Agreement and the execution and delivery of the Governmental Lender Note, subj ect to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements herein contained, the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION Section 1.1. Definitions. For all purposes of this Funding Loan Agreement, except as otherwise expressly provided or unless the context otherwise clearly requires: (a) Unless specifically defined herein, all capitalized terms shall have the meanings ascribed thereto in the Borrower Loan Agreement. (b) The terms "herein, "hereof' and "hereunder" and other words of similar import refer to this Funding Loan Agreement as a whole and not to any particular Article, Section or other subdivision. The terms "agree" and "agreements" contained herein are intended to include and mean "covenant" and "covenants." (c) All references made (i) in the neuter, masculine or feminine gender shall be deemed to have been made in all such genders, and (ii) in the singular or plural number shall be deemed to have been made, respectively, in the plural or singular number as well. Singular terms shall include the plural as well as the singular, and vice versa. (d) All accounting terms not otherwise defined herein shall have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with the Approved Accounting Method. All references herein to "Approved Accounting Method" refer to such principles as they exist at the date of application thereof. (e) All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed. (~ All references in this instrument to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. (g) References to the Governmental Lender Notes as "tax exempt" or to the "tax exempt status" of the Governmental Lender Notes are to the exclusion of interest on the Governmental Lender Notes (other than any portion of the Governmental Lender Notes held by a "substantial user" of the Project or a "related person" within the meaning of Section 147 of the Code) from gross income for federal income tax purposes pursuant to Section 103(a) of the Code. C:1UsersltadlDesktoplSantaAna 1-lA Washington Place 2 FLA.doc DRAFT 11/28/12 8:39AM (h) The following terms have the meanings set forth below: "Additional Borrower Payments" shall have the meaning given such term in the Borrower Loan Agreement. "Affiliate" shall mean, as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person. "Authorized Amount" shall mean $30,000,000, the maximum principal amount of the Funding Loan under this Funding Loan Agreement. "Authorized Denomination" shall mean $100,000 principal amount and any multiple of $0.01 in excess thereof; provided, however, that the initial advance of the Funding Loan may be in an amount of $55,000 or greater. "Authorized Governmental Lender Representative" shall mean the Chairperson, Vice Chairperson, Executive Director and Treasurer of the Governmental Lender, or such other person at the time designated to act on behalf of the Governmental Lender as evidenced by a written certificate furnished to the Funding Lender and the Borrower containing the specimen signature of such person and signed on behalf of the Governmental Lender by an Authorized Governmental Lender Representative. Such certificate may designate an alternate or alternates, each of whom shall be entitled to perform all duties of the Authorized Governmental Lender Representative. "Borrower" shall mean Washington Place Partners, LP, a California limited partnership, and its successors and assigns. "Borrower Controlling Entity" shall mean, if the Borrower is a partnership, any general partner or managing partner of the Borrower, or if the Borrower is a limited liability company, the manager or managing member of the Borrower. "Borrower Loan" shall mean the mortgage loan made by the Governmental Lender to the Borrower pursuant to the Borrower Loan Agreement in the aggregate principal amount of the Borrower Loan Amount, as evidenced by the Borrower Notes. "Borrower Loan Agreement" shall mean the Borrower Loan Agreement, of even date herewith, between the Governmental Lender and the Borrower, as supplemented, amended or replaced from time to time in accordance with its terms. "Borrower Loan Agreement Default" shall mean any event of default set forth in 8.1 of the Borrower Loan Agreement. A Borrower Loan Agreement Default shall "exist" if a Borrower Loan Agreement Default shall have occurred and be continuing beyond any applicable cure period. "Borrower Loan Amount" shall mean the amount of $30,000,000. "Borrower Loan Documents" shall have the meaning given such term in the Borrower Loan Agreement. "Borrower Notes" shall mean the "Borrower Notes" as defined in the Borrower Loan Agreement. C:1tJsersltadlDesktoplSanta Ana HA Washington Place 3 FLA.doc DRAFT 11/28/12 8:39AM "Business Day" shall mean any day other than (i) a Saturday or a Sunday, or (ii) a day on which federally insured depository institutions in New York, New York are authorized or obligated by law, regulation, governmental decree or executive order to be closed. "Closing Date" shall mean December _, 2012, the date that initial Funding Loan proceeds are disbursed hereunder. "Code" shall mean the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code. "Conditions to Conversion" shall have the meaning given such term in the Construction Funding Agreement. "Construction Funding Agreement" means that certain Construction Funding Agreement of even date herewith, between the Funding Lender, as agent for the Governmental Lender, and Borrower, pursuant to which the Borrower Loan will be advanced by the Funding Lender (or the Servicer on its behalfj, as agent of the Governmental Lender, to the Borrower and setting forth certain provisions relating to disbursement of the Borrower Loan during construction, insurance and other matters, as such agreement maybe amended, modified, supplemented and replaced from time to time. "Contingency Draw-Down Agreement" means the Contingency Draw-Down Agreement of even date herewith among the Funding Lender, the Fiscal Agent and the Borrower relating to possible conversion of the Funding Loan from a draw down loan to a fully funded loan, if required by the Funding Lender. "Control" shall mean, with respect to any Person, either (i) ownership directly or through other entities of more than 50% of all beneficial equity interest in such Person, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise. "Default" shall mean the occurrence of an event, which, under any Funding Loan Document, would, but for the giving of notice or passage of time, or both, be an event of default under the applicable Funding Loan Document or a Borrower Loan Agreement Default. "Draw-Down Notice" shall mean a notice described in Section 1.01 of the Contingency Draw- Down Agreement regarding the conversion of the Funding Loan from a draw down loan to a fully funded loan. "Event of Default" shall have the meaning ascribed thereto in Section 9.1 hereof. "Event of Dissolution" shall mean the dissolution of a trust or other custodial arrangement, which holds the Governmental Lender Notes or interests therein, where such dissolution results in the distribution of the assets held by the trust or custodial arrangement to the holders of the interests. "Fiscal Agent's Fees" shall mean the ongoing annual compensation and expenses of the Fiscal Agent payable annually in advance, each December 1, in an amount equal to $2,500 per annum (the first payment being made on the Closing Date). "Fitch" shall mean Fitch, Inc. C:1UsersltadlDesktoplSanta Ana HA Washington Place 4 FLA.doc DRAFT 11/28/12 8:39AM "Funding Lender" shall mean Citibank N.A., a national banking association, and any successor under this Funding Loan Agreement and the Borrower Loan Documents. "Funding Loan Agreement" shall mean this Funding Loan Agreement, of even date herewith, by and among the Funding Lender, the Governmental Lender and the Fiscal Agent, as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "Funding Loan Documents" shall mean (i) this Funding Loan Agreement, (ii) the Borrower Loan Agreement, (iii) the Regulatory Agreement, (iv) the Tax Certificate, (v) the Borrower Loan Documents, (vi} all other documents evidencing, securing, governing or otherwise pertaining to the Funding Loan, and (vii) all amendments, modifications, renewals and substitutions of any of the foregoing. "Government Obligations" shall mean noncallable, nonprepayable (i) direct, general obligations of the United States of America, or (ii} any obligations unconditionally guaranteed as to the full and timely payment of all amounts due thereunder by the full faith and credit of the United States of America (including obligations held in book entry form), but specifically excluding any mutual funds or unit investment trusts invested in such obligations. "Governmental Lender" shall mean the Housing Authority of the City of Santa Ana, and its successors and assigns. "Governmental Lender Noteholder Representative" shall mean the Person or Persons who are designated by the Holders of a Maj ority Share to act as provided below. Citibank, N.A. shall be the initial Governmental Lender Noteholder Representative. The Governmental Lender Noteholder Representative may appoint a third party to act as its representative in certain capacities, provided it does so in writing and provides such written designation to the Fiscal Agent and the Governmental Lender. The Governmental Lender Noteholder Representative shall have the authority to bind the owners of the Governmental Lender Note for all purposes hereunder and under each of the other Funding Loan Documents. The Fiscal Agent and the Governmental Lender shall be entitled to rely upon the acts of any such Governmental Lender Noteholder Representative as binding upon the Governmental Lender Noteholder Representative and the owners of the Governmental Lender Note. "Governmental Lender Notes" shall mean the Governmental Lender Notes described in the recitals of this Funding Loan Agreement. "Highest Rating Category" shall mean, with respect to a Permitted Investment, that the Permitted Investment is rated by each Rating Agency in the highest rating category given by that Rating Agency for that general category of security. If at any time the Governmental Lender Notes are not rated (and, consequently, there is no Rating Agency), then the term "Highest Rating Category" means, with respect to a Permitted Investment, that the Permitted Investment is rated by S&P or Moody's in the highest rating given by that rating agency for that general category of security. By way of example, the Highest Rating Category for tax exempt municipal debt established by S~,P is "A 1+" for debt with a term of one year or less and "AA.A" for a term greater than one year, with corresponding ratings by Moody's of "MIG 1" (for fixed rate) or "VMIG 1" (for variable rate) for three months or less and "Aaa" for greater than three months. If at any time (i) the Governmental Lender Notes are not rated, (ii) both S&P and Moody's rate a Permitted Investment and (iii) one of those ratings is below the Highest Rating Category, then such Permitted Investment will, nevertheless, be deemed to be rated in the Highest Rating Category if the lower rating is no more than one rating category below the highest rating category of that rating agency, For example, a Permitted Investment rated "AAA" by S&P and "Aa3" by Moody's is rated in the Highest Rating Category. If, however, the lower rating is more than one full rating category below the Highest C:1Usersltad\DesktoplSantaRna HA Washington Place 5 FLA.doc DRAFT 1 ll2$/12 8:39AM Rating Category of that rating agency, then the Permitted Investment will be deemed to be rated below the Highest Rating Category. For example, a Permitted Investment rated "AAA" by S&P and "Al" by Moody's is not rated in the Highest Rating Category. "Holder of a Majority Share" shall mean the registered owner of more than 50% of the aggregate principal amount of the Governmental Lender Notes (or beneficial interests therein). "Investor Letter" shall mean a letter in substantially the form attached to this Funding Loan Agreement as Exhibit B, duly executed by the holder of a Governmental Lender Note and delivered to the Governmental Lender and the Fiscal Agent. "Maturity Date" shall mean with respect to the Government Lender Real Estate Note, January 1, 2045, and with respect to the Government Lender IRP Note, 1, 20_. "Maximum Rate" shall mean the lesser of (i) 12% per annum and (ii) the maximum interest rate that may be paid on the Funding Loan under State law. 66Moody'S" shall mean Moody's Investors Service, Inc., or its successor. "Noteowner" or "owner of the Governmental Lender Notes" means the owner, or as applicable, collectively the owners, of the Governmental Lender Notes as shown on the registration books maintained by the Funding Lender pursuant to Section 2.4(d). "Negative Arbitrage Deposit" has the meaning set forth in the Contingency Draw-Down Agreement. "Ongoing Governmental Lender Fee" shall mean the annual fee of the Governmental Lender in the amount of ~ The Ongoing Governmental Lender Fee is payable in equal semiannual installments in advance by the Borrower to the Governmental Lender on each June 1 and December 1, commencing on the Closing Date, so long as any portion of the Funding Loan is outstanding. "Opinion of Counsel" shall mean a written opinion from an attorney or firm of attorneys, acceptable to the Funding Lender and the Governmental Lender with experience in the matters to be covered in the opinion; provided that whenever an Opinion of Counsel is required to address the exclusion of interest on the Governmental Lender Notes from gross income for purposes of federal income taxation, such opinion shall be provided by Tax Counsel. "Permitted Investments" shall mean, to the extent authorized by law for investment of any moneys held under this Funding Loan Agreement: (a) Government Obligations. (b) Direct obligations of, and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by, any agency or instrumentality of the United States of America (other than the Federal Home Loan Mortgage Corporation) or direct obligations of the World Banlc, which obligations are rated in the Highest Rating Category. (c) Obligations, in each case rated in the Highest Rating Category, of (i) any state or territory of the United States of America, (ii) any agency, instrumentality, authority or political subdivision of a state or territory or (iii) any public benefit or municipal corporation the principal of and interest on which are guaranteed by such state or political subdivision. C:1tTsersltadlDesktoplSanta Ana HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM (d) Any written repurchase agreement entered into with a Qualified Financial Institution whose unsecured short term obligations are rated in the Highest Rating Category. (e) Commercial paper rated in the Highest Rating Category. (~ Interest bearing negotiable certificates of deposit, interest bearing time deposits, interest bearing savings accounts and bankers' acceptances, issued by a Qualified Financial Institution if either (i) the Qualified Financial Institution's unsecured short term obligations are rated in the Highest Rating Category or (ii) such deposits, accounts or acceptances are fully collateralized by investments described in clauses (a) or (b) of this definition or fully insured by the Federal Deposit Insurance Corporation. (g) An agreement held by the Fiscal Agent for the investment of moneys at a guaranteed rate with a Qualified Financial Institution whose unsecured long term obligations are rated in the Highest Rating Category or the Second Highest Rating Category, or whose obligations are unconditionally guaranteed or insured by a Qualified Financial Institution whose unsecured long term obligations are rated in the Highest Rating Category or Second Highest Rating Category; provided that such agreement is in a form acceptable to the Funding Lender and the Fiscal Agent; and provided further that such agreement includes the following restrictions: (1) the invested funds will be available for withdrawal without penalty or premium, at any time that (A) the Funding Lender is required to pay moneys from the Fund(s) established under this Funding Loan Agreement to which the agreement is applicable, or (B) any Rating Agency indicates that it will lower or actually lowers, suspends or withdraws the rating on the Funding Loan on account of the rating of the Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the agreement; (2) the agreement, and if applicable the guarantee or insurance, is an unconditional and general obligation of the provider and, if applicable, the guarantor or insurer of the agreement, and ranks pari passu with all other unsecured unsubordinated obligations of the provider, and if applicable, the guarantor or insurer of the agreement; (3) the Funding Lender and the Fiscal Agent receive an Opinion of Counsel, which may be subject to customary qualifications, that such agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and, if applicable, an Opinion of Counsel that any guaranty or insurance policy provided by a guarantor or insurer is legal, valid, binding and enforceable upon the guarantor or insurer in accordance with its terms; and (4) the agreement provides that if during its term the rating of the Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the agreement, is withdrawn, suspended by any Rating Agency or falls below the Second Highest Rating Category, the provider must, within ten days, either: (A) collateralize the agreement (if the agreement is not already collateralized) with Permitted Investments described in paragraph (a) or (b) by depositing collateral with the Fiscal Agent or a third party custodian, such collateralization to be effected in . ~ . a manner and in an amount reasonably satisfactory to the Funding Lender, or, if the agreement is already collateralized, increase the collateral with Permitted Investments described in paragraph (a) or (b) by depositing collateral with the Fiscal Agent or a third party custodian, in an amount reasonably satisfactory to the Funding Lender, (B) at the request of the Funding Lender, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium unless required by law or (C) transfer the agreement, guarantee or insurance, as applicable, to a replacement provider, guarantor or insurer, as applicable, then meeting the requirements of a Qualified Financial Institution and whose unsecured long term obligations are C:\UsersltadlDesktoplSanta Ana HA Washington Place '] FLA.doc DRAFT 11/28/12 8:39AM then rated in the Highest Rating Category or the Second Highest Rating Category. The agreement may provide that the down graded provider may elect which of the remedies to the down grade (other than the remedy set out in (B)) to perform. Notwithstanding anything else in this Paragraph (g) to the contrary and with respect only to any agreement described in this Paragraph (g) or any guarantee or insurance for any such agreement which is to be in effect for any period after the Conversion Date, any reference in this Paragraph to the "Second Highest Rating Category" will be deemed deleted so that the only acceptable rating category for such an agreement, guarantee or insurance will be the Highest Rating Category. (h) Subject to the ratings requirements set forth in this definition, shares in any money market mutual fund (including those of the Funding Lender or the Fiscal Agent or any of their affiliates) registered under the Investment Company Act of 1940, as amended, that have been rated "AAAm G" or "AAAm" by SAP or "Aaa" by Moody's so long as the portfolio of such money market mutual fund is limited to Government ®bligations and agreements to repurchase Government Obligations. If approved in writing by the Funding Lender, a money market mutual fund portfolio may also contain obligations and agreements to repurchase obligations described in paragraphs (b) or (c). If the Governmental Lender Notes are rated by a Rating Agency, the money market mutual fund must be rated "AAAm G" or "AAAm" by S&P, if SB~P is a Rating Agency, or "Aaa" by Moody's, if Moody's is a Rating Agency. If at any time the Governmental Lender Notes are not rated (and, consequently, there is no Rating Agency), then the money market mutual fund must be rated "AAAm G" or "AA.Am" by S&P or Aaa by Moody's. If at any time (i) the Governmental Lender Notes are not rated, (ii) both S&P and Moody's rate a money market mutual fund and (iii) one of those ratings is below the level required by this paragraph, then such money market mutual fund will, nevertheless, be deemed to be rated in the Highest Rating Category if the lower rating is no more than one rating category below the highest rating category of that rating agency. (i) Any other investment authorized by the laws of the State, if such investment is approved in writing by the Funding Lender. Permitted Investments shall not include any of the following: (1) Except for any investment described in the next sentence, any investment with a final maturity or any agreement with a term greater than one year from the date of the investment. This exception (1) shall not apply to Permitted Investments listed in paragraphs (g) and (i). (2) Except for any obligation described in paragraph (a) or (b), any obligation with a purchase price greater or less than the par value of such obligation. (3) Any asset backed security, including mortgage backed securities, real estate mortgage investment conduits, collateralized mortgage obligations, credit card receivable asset backed securities and auto loan asset backed securities. (4) Any interest only or principal only stripped security. ~ v b r L 1 ~ i t ~ (5) Any obligation bearing interest at an inverse floating rate. (6) Any investment which may be prepaid or called at a price less than its purchase price prior to stated maturity. C:lUsersitadlDesktoplSantaRna HA Washington Place $ FLA.doc DRAFT 11/28/12 8:39AM (7) Any investment the interest rate on which is variable and is established other than by reference to a single index plus a fixed spread, if any, and which interest rate moves proportionately with that index. (8) Any investment described in paragraph (d) or (g) with, or guaranteed or insured by, a Qualified Financial Institution described in clause (iv) of the definition of Qualified Financial Institution if such institution does not agree to submit to jurisdiction, venue and service of process in the United States of America in the agreement relating to the inveshnent. (9) Any investment to which S&P has added an "r" or "t"highlighter. "Person" shall mean any individual, corporation, limited liability company, partnership, joint venture, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing. "Pledged Revenues" shall mean the amounts pledged under this Funding Loan Agreement to the payment of the principal of, prepayment premium, if any, and interest on the Funding Loan and the Governmental Lender Notes, consisting of the following: (i) all income, revenues, proceeds and other amounts to which the Governmental Lender is entitled (other than amounts received by the Governmental Lender with respect to the Unassigned Rights) derived from or in connection with the Project and the Funding Loan Documents, including all Borrower Loan Payments due under the Borrower Loan Agreement and the Borrower Notes, payments with respect to the Borrower Loan Payments and all amounts obtained through the exercise of the remedies provided in the Funding Loan Documents and all receipts credited under the provisions of this Funding Loan Agreement against said amounts payable, and (ii) moneys held in the funds and accounts established under this Funding Loan Agreement, together with investment earnings thereon. "Prepayment Premium" shall mean (i) any premium payable by the Borrower pursuant to the Borrower Loan Documents in connection with a prepayment of the Borrower Notes (including any Prepayment Premium as set forth in the Borrower Notes) and (ii) any premium payable on the Governmental Lender Notes pursuant to this Funding Loan Agreement. "Project" shall have the meaning given to that term in the Borrower Loan Agreement. "Qualified Buyer" shall mean (a) a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended ("Rule 144A"), or (b) an "accredited investor" as defined in Rule 501 promulgated under the Securities Act of 1933, as amended, and in either case such buyer shall not be an Ineligible Purchaser. For purposes of this Funding Loan Agreement, any accredited investor which is a natural person shall have: (i) individually or with his/her spouse a minimum net worth of $5,000,000 and an individual annual income of not less than $750,000 in each of the two most recent years or joint income with that person's spouse in excess of $1,000,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; and (ii) retained, .. . , consulted with and relied upon the advice of a sophisticated investment advisor in connection with his/her purchase of an interest in the Governmental Lender Notes. "Qualified Financial Institution" shall mean any (i) bank or trust company organized under the laws of any state of the United States of America, (ii) national banking association, (iii) savings bank, savings and loan association, or insurance company or association chartered or organized under the laws of any state of the United States of America, (iv) federal branch or agency pursuant to the International Banking Act of 1978 or any successor provisions of law or a domestic branch or agency of a foreign bank C:IUsersltadlDesktoplSanta Am HA Washington Place 9 FLA.doc DRAFT 11/28/12 8:39AM which branch or agency is duly licensed or authorized to do business under the laws of any state or territory of the United States of America, (v) government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, (vi) securities dealer approved in writing by the Funding Lender the liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation and (vii) other entity which is acceptable to the Funding Lender. With respect to an entity which provides an agreement held by the Fiscal Agent for the investment of moneys at a guaranteed rate as set out in paragraph (g) of the definition of the term "Permitted Investments" or an entity which guarantees or insures, as applicable, the agreement, a "Qualified Financial Institution" may also be a corporation or limited liability company organized under the laws of any state of the United States of America. "Rating Agency" shall mean any one and each of S&P, Moody's and Fitch then rating the Governmental Lender Notes or any other nationally recognized statistical rating agency then rating the Governmental Lender Notes, which has been approved by the Funding Lender. "Regulations" shall mean with respect to the Code, the relevant U.S. Treasury regulations and proposed regulations thereunder or any relevant successor provision to such regulations and proposed regulations. "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Restrictive Covenants, dated as of the date hereof, by and among the Governmental Lender, the Borrower and the Fiscal Agent, as hereafter amended or modified. "Remaining Funding Loan Proceeds Account" has the meaning set forth in the Contingency Draw-Down Agreement. "Remaining Funding Loan Proceeds Account Earnings Subaccount" has the meaning set forth in the Contingency Draw-Down Agreement. "Resolution" shall mean the resolution of the Governmental Lender authorizing the Funding Loan and the execution and delivery of the Funding Loan Documents to which the Governmental Lender is a party. "Responsible Officer" shall mean any officer within the Corporate Trust Department (or any successor group) of the Fiscal Agent, including any vice president, assistant vice president, assistant secretary or any other officer or assistant officer of the Fiscal Agent customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, who is responsible for the administration of this Funding Loan Agreement. "Second Highest Rating Category" shall mean, with respect to a Permitted Investment, that the Permitted Investment is rated by each Rating Agency in the second highest rating category given by that Rating Agency for that general category of security. If at any time the Governmental Lender Notes is not r~t~~ ~anri rnnePrniPntly t11PrP is nn Rating AQPnrvl t~hPn the term "~Prnnr~ Hi hest Rating r',AtPQn~1" 1f.44V V- \4411`L, VVl1UVM KV1141 ), 411ViV lU i1V 1~{A~4111}~.. tly-V11V t~, 411V11 411V 4Vi 111 1JVV V.aaN iiagai vv wvala},~ ~wv~~v means\\, with respect to a Permitted Investment, that the Permitted Investment is rated by S&P or Moody's in the second highest rating category given by that rating agency for that general category of security. By way of example, the Second Highest Rating Category for tax exempt municipal debt established by SAP is "AA" for a term greater than one year, with corresponding ratings by Moody's of "Aa." If at any time (i) the Governmental Lender Notes is not rated, (ii) both S&P and Moody's rate a Permitted Investrilent and (iii) one of those ratings is below the Second Highest Rating Category, then such Permitted Investment will not be deemed to be rated in the Second Highest Rating Category. For example, an Investment rated "AA" by S&P and "A" by Moody's is not rated in the Second Highest Rating Category. C:IUsersltadlDesktoplSantaRna HA Washington Place 1 Q FLA.doc DRAFT 11/2~/12 8:39AM "Securities Act" shall mean the Securities Act of 1933, as amended. "Security" shall mean the security for the performance by the Governmental Lender of its obligations under the Governmental Lender Notes and this Funding Loan Agreement as more fully set forth in Article IV hereof. "Security Instrument" shall mean the Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (as amended, restated and/or supplemented from time to time) of even date herewith, made by the Borrower in favor of the Governmental Lender, as assigned to the Funding Lender to secure the performance by the Governmental Lender of its obligations under the Funding Loan. "Servicer" shall mean any Servicer appointed by the Funding Lender to perform certain servicing functions with respect to the Funding Loan and on the Borrower Loan pursuant to a separate servicing agreement to be entered into between the Funding Lender and the Servicer. Initially the Servicer shall be the Funding Lender pursuant to this Funding Loan Agreement. "Servicing Agreement" shall mean any servicing agreement entered into between the Funding Lender and a Servicer with respect to the servicing of the Funding Loan and/or the Borrower Loan. "S&P" shall mean Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business division, and its successors. "State" shall mean the State of California. 66Tax Certificate" shall mean the Tax Certificate and Agreement, dated the Closing Date, executed and delivered by the Governmental Lender and the Borrower. "Tax Counsel" shall mean Orrick, Herrington & Sutcliffe LLP, or any other attorney or firm of attorneys designated by the Governmental Lender having a national reputation for skill in connection with the authorization and issuance of municipal obligations under Sections 103 and 141 through 150 (or any successor provisions) of the Code, "Tax Counsel Approving Opinion" shall mean an opinion of Tax Counsel substantially to the effect that the Governmental Lender Notes constitutes a valid and binding obligation of the Governmental Lender and that, under existing statutes, regulations published rulings and judicial decisions, the interest on the Governmental Lender Notes is excludable from gross income for federal income tax purposes (subject to the inclusion of such customary exceptions as are acceptable to the recipient thereof. "Tax Counsel No Adverse Effect Opinion" shall mean an opinion of Tax Counsel to the effect that the taking of the action specified therein will not impair the exclusion of interest on the Governmental Lender Notes from gross income for purposes of federal income taxation (subject to the inclusion of such customary exceptions as are acceptable to the recipient thereof}. "UCC" shall mean the Uniform Commercial Code as in effect in the State. "tTnassigned Rights" shall mean the rights of the Governmental Lender, its officers, council members, other elected officials, attorneys, accountants, employees, agents and consultants, past, present and future under the Borrower Loan Agreement and the Regulatory Agreement to be held harmless and indemnified, to be paid its fees and expenses, to give or withhold consent to certain matters, as provided in this Funding Loan Agreement and the Borrower Loan Agreement, to receive notices and the right to enforce such rights, including the Governmental Lender's rights under and relating to the enforcement of C:1[lsers~tadlDesktoplSanta Ana HA Washington Place 11 FLA.doc DRAFT 11/28/12 8:39AM the Regulatory Agreement, to receive the Rebate Amount under Section 2.5 of the Borrower Loan Agreement, its rights of access under Section 5.17 of the Borrower Loan Agreement, its right to activate defaults and remedies under Article IX hereof, and to the extent not included above, the rights specifically reserved by the Governmental Lender under this Funding Loan Agreement. "Written Certificate " "Written Certification "Written Consent " "Written Direction " "Written > > Notice," "Written Order," "Written Registration," "Written Request," and "Written Requisition" shall mean a written certificate, direction, notice, order or requisition signed by an Authorized Borrower Representative, an Authorized Governmental Lender Representative or an authorized representative of the Funding Lender and delivered to the Funding Lender, the Servicer or such other Person as required under the Funding Loan Documents. "Yield" shall mean yield as defined in Section 148(h) of the Code and any regulations promulgated thereunder. Section 1.2. Effect of Headings and Table of Contents. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.3. Date of Funding Loan Agreement. The date of this Funding Loan Agreement is intended as and for a date for the convenient identification of this Funding Loan Agreement and is not intended to indicate that this Funding Loan Agreement was executed and delivered on said date. Section 1.4. Designation of Time for Performance. Except as otherwise expressly provided herein, any reference in this Funding Loan Agreement to the time of day shall mean the time of day in the city where the Funding Lender maintains its place of business for the performance of its obligations under this Funding Loan Agreement. Section 1.5. Interpretation. The parties hereto acknowledge that each of them and their respective counsel have participated in the drafting and revision of this Funding Loan Agreement. Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not apply in the interpretation of this Funding Loan Agreement or any amendment or supplement or exhibit hereto. ARTICLE II TERMS; GOVE~ENTAL LENDER NOTE Section 2.1. Terms. (a) Principal Amount. The total principal amount of the Funding Loan is hereby expressly limited to the Authorized Amount. (b) Draw-Down Funding. The Funding Loan is originated on a draw-down basis. The proceeds of the Funding Loan shall be advanced by the Funding Lender directly to the Fiscal Agent for the account of the Governmental Lender as and when needed to make each advance in accordance with the disbursement provisions of the Borrower Loan Agreement and the Construction Funding Agreement. Upon each advance of principal under the Borrower Loan Agreement and the Construction Funding Agreement, a like amount of the Funding Loan shall be deemed concurrently and simultaneously advanced under this Funding Loan Agreement, including the initial advance of $ .Borrower Loan advances and Funding Loan advances shall be allocated first to the Multifamily IRP Note and the related Governmental Lender IRP Note and, once the foregoing Notes have been fully funded, then to the C:1UsersltadlDesktoplSantaRna HA Washington Place 12 FLA.doc DRAFT 11/28/12 8:39AM Multifamily Real Estate Note and the related Governmental Lender Real Estate Note. Notwithstanding anything in this Funding Loan Agreement to the contrary, no additional amounts of the Funding Loan may be drawn down and funded hereunder after December 1, 2015; provided, however, that upon the delivery of a Tax Counsel No Adverse Effect Opinion to the Governmental Lender and the Funding Lender such date may be changed to a later date as specified in such Tax Counsel No Adverse Effect Opinion. The Governmental Lender has reviewed and approved the form of Contingency Draw-Down Agreement and consents to the terms thereof and agrees to take all actions reasonably required of the Governmental Lender in connection with the conversion of the Funding Loan to a fully drawn loan pursuant to the provisions of the Contingency Draw-Down Agreement in the event aDraw-Down Notice is filed by the Funding Lender or the Borrower. (c) Origination Date; Maturity. The Funding Loan shall be originated on the Closing Date and shall mature on the Maturity Date at which time the entire principal amount, to the extent not previously paid, and all accrued and unpaid interest, shall be due and payable. (d) Principal. The outstanding principal amount of each Governmental Lender Note and of the Funding Loan as of any given date shall be the total amount advanced by the Funding Lender to or for the account of the Governmental Lender to fund corresponding advances with respect to the related Borrower Note under the Borrower Loan Agreement and the Construction Funding Agreement as proceeds of the Borrower Loan, less any payments of principal of the Governmental Lender Note previously received upon payment of corresponding principal amounts under the related Borrower Note, including regularly scheduled principal payments and voluntary and mandatory prepayments. The principal amount of each Governmental Lender Note and interest thereon shall be payable on the basis specified in this paragraph (d) and in paragraphs (e) and (fl of this Section 2.1. The Funding Lender shall keep a record of all principal advances and principal repayments made under each Governmental Lender Note and shall upon written request provide the Governmental Lender with a statement of the outstanding principal balance of the Governmental Lender Note and the Funding Loan. (e) Interest. Interest shall be paid on the outstanding principal amount of each Governmental Lender Note at the rate or rates set forth in the related Borrower Note and otherwise as set forth in the Borrower Loan Agreement. (~ Corresponding Payments. The payment or prepayment of principal, interest and premium, if any, due on each Governmental Lender Note shall be identical with and shall be made on the same dates, terms and conditions, as the principal, interest, premiums, late payment fees and other amounts due on the related Borrower Note. The Governmental Lender Real Estate Note shall be payable from payments on the related Borrower Real Estate Note, and the Governmental Lender IRP Note shall be payable from payments on the related Borrower IRP Note. Any payment or prepayment made by the Borrower of principal, interest, premium, if any, due on a Borrower Note shall be deemed to be like payments or prepayments of principal, interest and premium, if any, due on the related Governmental Lender ivote. (g) Usury. The Governmental Lender intends to conform strictly to the usury laws applicable to this Funding Loan Agreement and the Governmental Lender Notes and all agreements made in the Governmental Lender Notes, this Funding Loan Agreement and the Funding Loan Documents are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid as interest or the amounts paid for the use of money advanced or to be advanced hereunder exceed the highest lawful rate prescribed under any law which a court of competent jurisdiction may deem applicable hereto. If, from any circumstances whatsoever, the fulfillment of any provision of the Governmental Lender Notes, C:\UsersltadlDesktop\SantaAm HA Washington Puce 13 FLA.doc DRAFT 11/28/12 8:39AM this Funding Loan Agreement or the other Funding Loan Documents shall involve the payment of interest in excess of the limit prescribed by any law which a court of competent jurisdiction may deem applicable hereto, then the obligation to pay interest hereunder shall be reduced to the maximum limit prescribed by law. If from any circumstances whatsoever, the Funding Lender shall ever receive anything of value deemed interest, the amount of which would exceed the highest lawful rate, such amount as would be excessive interest shall be deemed to have been applied, as of the date of receipt by the Funding Lender, to the reduction of the principal remaining unpaid hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance, such excess shall be refunded to the Borrower. This paragraph shall control every other provision of the Governmental Lender Notes, this Funding Loan Agreement and all other Funding Loan Documents. ~ determining whether the amount of interest charged and paid might otherwise exceed the limit prescribed by law, the Governmental Lender intends and agrees that (i) interest shall be computed upon the assumption that payments under the Borrower Loan Agreement and other Funding Loan Documents will be paid according to the agreed terms, and (ii) any sums of money that are taken into account in the calculation of interest, even though paid at one time, shall be spread over the actual term of the Funding Loan. Section 2.2. Form of Governmental Lender Notes. As evidence of its obligation to repay the Funding Loan, simultaneously with the delivery of this Funding Loan Agreement to the Funding Lender, the Governmental Lender hereby agrees to execute and deliver the Governmental Lender Notes. The Governmental Lender Notes shall be substantially in the respective form set forth in Exhibit A attached hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Funding Loan Agreement. Section 2.3. Execution and Delivery of Governmental Lender Notes. The Governmental Lender Notes shall be executed on behalf of the Governmental Lender by the manual or facsimile signature of Authorized Governmental Lender Representative. The manual or facsimile signatures of individuals who were the proper officers of the Governmental Lender at the time of execution shall bind the Governmental Lender, notwithstanding that such individuals or any of them shall have ceased to hold such offices prior to the authentication and delivery of the Governmental Lender Notes or shall not have held such offices at the date of the Governmental Lender Notes. Section 2.4. Authentication. The Governmental Lender Notes shall not be valid or obligatory for any purpose or be entitled to any security or benefit under this Funding Loan Agreement unless a certificate of authentication on such Governmental Lender Notes, substantially in the form set forth in Exhibit A hereto, shall have been manually executed by the Fiscal Agent. The Fiscal Agent shall authenticate the Governmental Lender Notes by execution of the certificates of authentication on or attached to the Governmental Lender Notes, and the certificates of authentication so executed on or attached to the Governmental Lender Notes shall be conclusive evidence that they have been authenticated and delivered under this Funding Loan Agreement. Section 2.5. registration and 'l~ransfer of Governmental Lender ivote. (a) The Fiscal Agent acknowledges that the Funding Lender is the initial holder of the Governmental Lender Notes and shall remain the sole holder of the Governmental Lender Notes except as otherwise provided herein. (b) The Fiscal Agent, on behalf of the Governmental Lender, shall provide for the registration of the Governmental Lender Notes and the registration of transfers thereof. In that regard, the Fiscal Agent shall maintain a register which shall contain a record of every Governmental Lender Note at C~1Usersltad\DesktoplSanta Ana HA Washington Place 14 FLA.doc DRAFT 11/28/12 8:39AM any time authenticated hereunder, together with the name and address of the holder thereof, the date of authentication, the date of transfer or payment, and such other matters as maybe deemed appropriate by the Fiscal Agent or the Governmental Lender. The Governmental Lender, the Fiscal Agent and any agent of the Governmental Lender or the Fiscal Agent may treat the person in whose name a Governmental Lender Note is registered as the owner of the Governmental Lender Note for the purpose of receiving payment of such Governmental Lender Note and for all other purposes whatsoever whether or not the Governmental Lender Note payments are overdue, and, to the extent permitted by law, neither the Governmental Lender, the Fiscal Agent nor any such agent shall be affected by notice to the contrary. (c) The transfer of the Governmental Lender Notes is subject to registration by the holder thereof only upon compliance with the conditions for registration of transfer imposed on the holder under this Section 2.5 and under Section 2.6 hereof. Upon surrender of a Governmental Lender Note at the principal corporate trust office of the Fiscal Agent, the Governmental Lender shall execute (if necessary), and the Fiscal Agent shall authenticate and deliver, in the name of the designated transferee or transferees (but not registered in blank or to "bearer" or a similar designation), a new Governmental Lender Note of a like principal amount, and having the same stated maturity, tenor and interest rate. (d) A Governmental Lender Note delivered in exchange for or upon transfer of a Governmental Lender Note shall be a valid limited obligation of the Governmental Lender evidencing the same debt, and entitled to the same benefits under this Funding Loan Agreement, as the Governmental Lender Note surrendered for such exchange or transfer. (e) Registration of the transfer of the Governmental Lender Notes may be made on the Fiscal Agent's register by the holder thereof in person or by such holder's attorney duly authorized in writing. The Governmental Lender Notes presented or surrendered for registration of transfer or exchange shall (i) be accompanied by evidence of compliance with the provisions of Section 2.6 hereof, (ii) be duly endorsed or be accompanied by a written instrument or instruments of transfer, in a form satisfactory to the Fiscal Agent, duly executed and with guaranty of signature of the holder thereof or his, her or its attorney duly authorized in writing and (iii) include written instructions as to the details of the transfer of the Governmental Lender Notes. (f j No service charge shall be made to the registered holder of the Governmental Lender Notes for any registration, transfer or exchange, but the Fiscal Agent and the Governmental Lender may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection with any transfer or exchange of the Governmental Lender Notes, and any legal or unusual costs of transfers. (g) There shall at all times be a Holder of a Majority Share except in the case of an Event of Dlssolutl0n, where such Event of Dissolution results in no Holder of a Majority Share, in which case the Holder of a 1VIaj ority Share shall appoint or confirm a Governmental Lender Noteholder Representative, which shall be the Funding Lender or an Affiliate thereof, immediately prior to the Event of Dissolution. ~nn+inr~ '~ ~ Dno~rin~'n~o n~ Trr~r•r~' r TT„lor 4-~,n ~n~~orr~mat^~t ~ T aYt~Ar l~TntPC Sara r~1-ar~ in tea Ct,11V11 b•V• 1\Ca111V1~V1W Vll 111I11a1~G1• V1111r~J t,llV VVVV111111V11La1 Lvttu~t 1~Vwo city tci~vu ttt ~itv "A" category without regard to a modifier (or the equivalent) or better by a Rating Agency, the Governmental Lender Notes or participation interests in the Governmental Lender Notes shall be sold and subsequently transferred and held only in compliance with the applicable terms of the Investor Letter set forth in Exhibit B and only to Qualified Buyers that execute and deliver to the Fiscal Agent such an Investor Letter in substantially the form attached hereto as Exhibit B. The Funding Lender shall execute and deliver such an Investor Letter in connection with its initial purchase of the Governmental Lender Notes. Notwithstanding the preceding two sentences, no Investor Letter shall be required for the Funding Lender to (i) assign the Governmental Lender Notes or any participation interests in the Governmental C:1UsersltadlDesktop\Santa Ana HA Washington Place 15 FLA.doc DRAFT 11/28/12 8:39AM Lender Notes to a Qualified Institutional Buyer as defined in Rule 144A of the Securities Act (a "QIB") or to any Affiliate which the transferor represents in writing to the Fiscal Agent is an Affiliate of the Funding Lender so long as the Funding Lender, in this instance, is itself a QIB or (ii) sell or assign the Governmental Lender Note or any participation interests in the Governmental Lender Notes to a special purpose entity, a trust or custodial arrangement, with respect to which either (A) the Funding Lender as transferor represents in writing to the Fiscal Agent that all of the beneficial owners of which are QIBs; or (B) the Funding Lender as transferor represents in writing to the Fiscal Agent that all of the interests in such trust or arrangement (other than residual interests retained by QIBs) are rated in the "A" category or higher by a Rating Agency provided, however, that a single QIB shall at all times hold a controlling interest in the residual interests and such trust or arrangement shall be controlled by the Funding Lender. There shall be no option to transfer the Governmental Lender Notes to a trust or similar arrangement pursuant to the provisions set forth in clause (ii) above where: (A) any of the interests (other than a residual interest held by a QIB) are not rated in the "A" category or higher by a Rating Agency; or (B) the transferor is a party other than the Funding Lender. ARTICLE III PREPAYMENT Section 3.1. Prepayment of a Governmental Lender Notes from Prepayment under the Related Borrower Note. Each Governmental Lender Note is subject to voluntary and mandatory prepayment as follows: (a) Each Governmental Lender Note shall be subject to voluntary prepayment in full or in part by the Governmental Lender, from funds of the Governmental Lender received by the Governmental Lender to the extent and in the manner and on any date that the related Borrower Note is subject to voluntary prepayment as set forth therein, at a prepayment price equal to the principal balance of the related Borrower Note to be prepaid, plus interest thereon to the date of prepayment and the amount of any Prepayment Premium payable under the Borrower Note, plus any Additional Borrower Payments due and payable under the Borrower Loan Agreement through the date of prepayment. The Borrower shall not have the right to voluntarily prepay all or any portion of a Borrower Note, thereby causing the related Governmental Lender Note to be prepaid, except as specifically permitted in the Borrower Note, without the prior written consent of Funding Lender, which may be withheld in Funding Lender's sole and absolute discretion. (b) Each Governmental Lender Note shall be subject to mandatory prepayment in whole or in part upon prepayment of the related Borrower Note at the direction of the Funding Lender in accordance with the terms of the related Borrower Note at a prepayment price equal to the outstanding principal balance of the related Borrower Note prepaid, plus accrued interest plus any other amounts pay able >>nriPr the related Bnrrnwer Nnte nr the Bor~'ower Loan Agreement. Section 3.2. Notice of Prepayment. Notice of prepayment of a Governmental Lender Note shall be deemed given to the extent that notice of prepayment of the related Borrower Note is timely and properly given to Funding Lender in accordance with the terms of the related Borrower Note and the Borrower Loan Agreement, and no separate notice of prepayment of the Governmental Lender Note is required to be given. C:1UsersltadlDesktoplSantaAna HA Washington Place 16 FLA.doc DRAFT 11128f 12 8:39AM ARTICLE IV SECURITY Section 4.1. Security for the Funding Loan. To secure the payment of the Funding Loan and each Governmental Lender Note, to declare the terms and conditions on which the Funding Loan and each Governmental Lender Note are secured, and in consideration of the premises and of the funding of the Funding Loan by the Funding Lender, the Governmental Lender by these presents does grant, bargain, sell, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to the Funding Lender (except as limited herein), a lien on and security interest in the following described property (excepting, however, in each case, the Unassigned Rights) (said property, rights and privileges being herein collectively called, the "Security"): (a) All right, title and interest of the Governmental Lender in, to and under the Borrower Loan Agreement and the related Borrower Note, including, without limitation, all rents, revenues and receipts derived by the Governmental Lender from the Borrower relating to the Project and including, without limitation, all Pledged Revenues, Borrower Loan Payments and Additional Borrower Payments derived by the Governmental Lender under and pursuant to, and subject to the provisions of, the Borrower Loan Agreement; provided that the pledge and assignment made under this Funding Loan Agreement shall not impair or diminish the obligations of the Governmental Lender under the provisions of the Borrower Loan Agreement; (b) All right, title and interest of the Governmental Lender in, to and under, together with all rights, remedies, privileges and options pertaining to, the Funding Loan Documents, and all other payments, revenues and receipts derived by the Governmental Lender under and pursuant to, and subject to the provisions of, the Funding Loan Documents; (c) Any and all moneys and investments from time to time on deposit in, or forming a part of, all funds and accounts created and held under this Funding Loan Agreement and any amounts held at any time in the Remaining Funding Loan Proceeds Account and the Remaining Funding Loan Proceeds Account Earnings Subaccount, any Negative Arbitrage Deposit and any other amounts held under the Contingency Draw-Down Agreement, subject to the provisions of this Funding Loan Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein; and (d) Any and all other real or personal property of every kind and nature or description, which may from time to time hereafter, by delivery or by writing of any kind, be subjected to the lien of this Funding Loan Agreement as additional security by the Governmental Lender or anyone on its part or with its consent, or which pursuant to any of the provisions hereof or of the Borrower Loan Agreement may come into the possession or control of the Funding Lender or a receiver appointed pursuant to this Funding Loan Agreement; and the Funding Lender is hereby authorized to receive any and all such property as and for additional security for the Funding Loan and each Governmental Lender Note and to hold and apply all such property subj ect to the terms hereof; The pledge and assignment of and the security interest granted in the Security pursuant to this Section 4.1 for the payment of the principal of, premium, if any, and interest on each Governmental Lender Note, in accordance with its terms and provisions, and for the payment of all other amounts due hereunder, shall attach and be valid and binding from and after the time of the delivery of the Governmental Lender Note by the Governmental Lender. The Security so pledged and then or thereafter received by the Funding Lender shall immediately be subject to the lien of such pledge and security interest without any physical delivery or recording thereof or further act, and the lien of such pledge and security interest shall be valid and binding and prior to the claims of any and all parties having claims of C:1IJsersltadlDesktoplSantaAna HA Washington Place 1'] FLA.doc DRAFT 11/28/12 8:39AM any kind in tort, contract or otherwise against the Governmental Lender irrespective of whether such parties have notice thereof. Section 4.2. Delivery of Security. To provide security for the payment of the Funding Loan and each Governmental Lender Note, the Governmental Lender has pledged and assigned to secure payment of the Funding Loan and the Governmental Lender Note its right, title and interest in the Security to the Funding Lender. In connection with such pledge, assignment, transfer and conveyance, the Governmental Lender shall deliver to the Funding Lender the following documents or instruments promptly following their execution and, to the extent applicable, their recording or filing: (a) Each Borrower Note endorsed without recourse to the Funding Lender by the Governmental Lender; (b) The originally executed Borrower Loan Agreement and Regulatory Agreement; (c) The originally executed Security Instrument and all other Borrower Loan Documents existing at the time of delivery of the Borrower Notes and an assignment for security of the Security Instrument from the Governmental Lender to the Funding Lender, in recordable form; (d) Uniform Commercial Code financing statements or other chattel security documents giving notice of the Funding Lender's status as an assignee of the Governmental Lender's security interest in any personal property forming part of the Project, in form suitable for ding; and (e) Uniform Commercial Code financing statements giving notice of the pledge by the Governmental Lender of the Security pledged under this Funding Loan Agreement. The Governmental Lender shall deliver and deposit with the Funding Lender such additional documents, financing statements, and instruments as the Funding Lender may reasonably require from time to time for the better perfecting and assuring to the Funding Lender of its lien and security interest in and to the Security including, at the request of the Funding Lender, any amounts held under the Contingency Draw-Down Agreement, at the expense of the Borrower. ARTICLE V LIMITED LIABILITY Section 5.1. Source of Payment of Funding Loan and Other Obligations. The Funding Loan and the Governmental Lender Notes are limited obligation of the Governmental Lender, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned hereunder. None of the Governmental Lender, the City of Santa Ana, the State, or any political subdivision thereof (except the Governmental Lender, to the limited extent set forth herein) nor any public agency shall in any event be liable for the payment of the principal of, premium (if any) or interest on the Governmental Lender Notes and the Funding Lnan nr fir the perfnrmanre of any pledge, nbligation or agreement of ~.ny kind whatsoever with respect thereto except as set forth herein, and none of the Funding Loan or the Governmental Lender Notes or any of the Governmental Lender's agreements or obligations with respect to the Funding Loan, the Governmental Lender Notes, or hereunder, shall be construed to constitute an indebtedness of or a pledge of the faith and credit of or a loan of the credit of or a moral obligation of any of the foregoing within the meaning of any constitutional or statutory provision whatsoever. The Governmental Lender has no taxing power. C:1UsersltadlDesktop\Santa Am HA Washington Place 1$ FLA.doc DRAFT 11/28/12 8:39AM Section 5.2. Exempt from Individual Liability. No covenant, condition or agreement contained herein shall be deemed to be a covenant, agreement or obligation of any present or future officer, director, employee or agent of the Governmental Lender in his individual capacity, and neither the officers, directors, employees or agents of the Governmental Lender executing the Governmental Lender Notes or this Funding Loan Agreement shall be liable personally on the Governmental Lender Notes or under this Funding Loan Agreement or be subj ect to any personal liability or accountability by reason of the issuance of the Governmental Lender Notes or the execution of this Funding Loan Agreement. ARTICLE VI CLOSING CONDITIONS; APPLICATION OF FUNDS Section 6.1. Conditions Precedent to Closing. Closing of the Funding Loan on the Closing Date shall be conditioned upon satisfaction or waiver by the Funding Lender in its sole discretion of each of the conditions precedent to closing set forth in this Funding Loan Agreement, including but not limited to the following: (a) Receipt by the Funding Lender of the original Governmental Lender Notes; (b) Receipt by the Funding Lender of the original executed Borrower Notes, endorsed to the Funding Lender by the Governmental Lender; (c) Receipt by the Funding Lender of executed counterparts of this Funding Loan Agreement, the Borrower Loan Agreement, the Construction Funding Agreement, the Regulatory Agreement, the Tax Certificate, the Security Instrument, and any UCC financing statement required by the Security Instrument; (d) A certified copy of the Resolution; (e) An executed Investor Letter or Investor Letters from the Funding Lender; (~ Delivery into escrow of all amounts required to be paid in connection with the origination of the Borrower Loan and the Funding Loan and any underlying real estate transfers or transactions, including the Costs of Funding Deposit, in accordance with Section 2.3(c)(ii) of the Borrower Loan f~greement; (g) Receipt by the Funding Lender of a Tax Counsel Approving Opinion; (h) Receipt by the Funding Lender of an Opinion of Counsel from Tax Counsel to the effect that the Governmental Lender Notes are exempt from registration under the Securities Act of 1933, and this Funding Loan Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; (i) delivery of an opinion of counsel to the Borrower addressed to the Governmental Lender to the effect that the Borrower Loan Documents and the Regulatory Agreement are valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms, subject to such exceptions and qualifications as are acceptable to the Governmental Lender; and (j) Receipt by the Funding Lender of any other documents or opinions that the Funding Lender or Tax Counsel may require. C:\UsersltadlDesktoplSantaAna 1-IA Washington Place 19 FLA.doc DRAFT 11/28/12 8:39AM ARTICLE III FUNDS AND ACCOUNTS Section 7.1. Authorization to Create Funds and Accounts. Except as provided in Section 7.3 hereof, no funds or accounts shall be established in connection with the Funding Loan at the time of closing and origination of the Funding Loan. The Funding Lender, the Fiscal Agent and the Servicer, if any, are authorized to establish and create from time to time such other funds and accounts or subaccounts as may be necessary for the deposit of moneys (including, without limitation, insurance proceeds and/or condemnation awards), if any, received by the Governmental Lender, the Fiscal Agent, the Funding Lender or the Servicer pursuant to the terms hereof or any of the other Funding Loan Documents and not immediately transferred or disbursed pursuant to the terms of the Funding Loan Documents and/or the Borrower Loan Documents. Section 7.2. Investment of Funds. Amounts held in any funds or accounts created under this Funding Loan Agreement shall be invested in Permitted Investments at the direction of the Borrower, subject in all cases to the restrictions of Section 8.7 hereof and of the Tax Certificate. Section 7.3. Establishment of Funds. There are established with the Fiscal Agent the following funds and accounts: (a) The Funding Loan Payment Fund; (b) The Project Fund (and within such fund, the Note Proceeds Account); (c) The Expense Fund; (d) The Closing Costs Fund; and (e) The Rebate Fund. All money required to be deposited with or paid to the Fiscal Agent for the account of any of the funds or accounts created by this Funding Loan Agreement shall be held by the Fiscal Agent in trust for the benefit of the Funding Lender, and except for money held in the Expense Fund or the Rebate Fund, shall, while held by the Fiscal Agent, constitute part of the Pledged Revenues and be subject to the lien hereof. Section 7.4. Funding Loan Payment Fund. The Governmental Lender and the Borrower shall have no interest in the Funding Loan Payment Fund or the moneys therein, which shall always be maintained by the Fiscal Agent completely separate and segregated from all other moneys held hereunder and from any other moneys of the Governmental Lender and the Borrower. The Fiscal Agent shall deposit into the Funding Loan Payment Fund any amounts received from the Borrower as payments of principal of or premium on interest on the Borrower Loan and any other amounts received by the Fiscal Agent that are subject to the lien and pledge of this Funding Loan Agreement, including any Pledged Revenues not required to be deposited to the Expense Fund or not otherwise specifically directed in writing to be deposited into other funds created by this Funding Loan Agreement. The Fiscal Agent shall apply all amounts on deposit in the Funding Loan Payment Fund in the following order of priority: C:IUsersltadlDesktoplSantaAna HA Washington Place 20 FLA.doc DRAFT 11/28/12 8:39AM Fia~st, to pay or provide for the payment of the interest then due on the Funding Loan; Second, to pay or provide for the payment or the prepayment of principal on the Funding Loan, provided moneys have been transferred or deposited into the Funding Loan Payment Fund for such purpose; and ~'~iird, to pay or provide for the payment of the Funding Loan on the Maturity Date. Section 7.5. Expense Fund. The Fiscal Agent shall deposit in the Expense Fund the amounts required by the Regulatory Agreement or the Borrower Loan Agreement to be paid by the Borrower to the Governmental Lender or the Fiscal Agent. Amounts on deposit in the Expense Fund shall be used to pay the fees and expenses of the Governmental Lender and the Fiscal Agent, as and when the same become due. In that regard, moneys in the Expense Fund shall be withdrawn or maintained, as appropriate, by the Fiscal Agent to pay (i) the Annual Administration Fee (as defined in the Regulatory Agreement) to the Government Lender as and when due, (ii) the Fiscal Agent amounts due pursuant to the definition of "Fiscal Agent's Fees" herein, (iii) upon receipt, to the Fiscal Agent, any amounts due to the Fiscal Agent which have not been paid, other than amounts paid in accordance with clause (ii) hereof, and (iv) upon receipt, to, or at the direction of, the Governmental Lender, any amounts owing the Governmental Lender by the Borrower and then due and unpaid, other than amounts paid in accordance with clause (i) hereof, In the event that the amounts on deposit in the Expense Fund are not equal to the amounts payable from the Expense Fund as provided in the preceding paragraph on any date on which such amounts are due and payable, the Fiscal Agent shall give notice to the Borrower of such deficiency and of the amount of such deficiency and request payment within two Business Days to the Fiscal Agent of the amount of such deficiency. UVritten notice of any insufficiency, which results in the Governmental Lender not receiving the Governmental Lender Fee on the applicable due date, shall be provided by the Fiscal Agent to the Governmental Lender (with a copy to the Borrower and the Funding Lender) within 10 days of the respective due date. Upon payment by the Borrower of such deficiency, the amounts for which such deficiency was requested shall be paid by the Fiscal Agent. Notwithstanding anything herein to the contrary, the Fiscal Agent, on behalf of the Governmental Lender, shall prepare and submit a written invoice to the Borrower for payment of the Governmental Lender Fee not later than 30 days prior to the due date for payment of such the Governmental Lender Fee, and shall remit moneys received by the Borrower to the Governmental Lender for payment of such fee. Section 7.6. Closing Costs Fund. On the Closing Date, the Borrower shall deposit or cause to be deposited with the Fiscal Agent, for deposit in the Closing Costs Fund, the amount of A~rno>>ntc in the Clnsin~ Cnsts F»nd shall be disbursed by the Fiscal. Agent to pay a Closing Costs on the Closing Date or as soon as practicable thereafter as follows: moneys on deposit in the Closing Costs Fund shall be applied to pay Closing Costs at the written direction of the Authorized Borrower Representative, countersigned by the Funding Lender and the Governmental Lender, in the form attached hereto as EXHIBIT D. Any interest earnings on amounts on deposit in the Closing Costs Fund shall remain in the Fund. Any moneys remaining in the Closing Costs Fund (including investment proceeds) after the earlier of (i) the payment of all costs of issuance as certified in writing to the Fiscal Agent by the Borrower or (ii) a period of six (6) months after the Closing Date, shall be paid to or at the direction of the Borrower and the Closing Costs Fund shall be closed. C:IUsersltadlDesktoplSantaRna HA Washington Place 21 FLA.doc DRAFT 11/28/12 8:39AM Section 7.7. Project Fund. (a) All proceeds of the Funding Loan provided by the Funding Lender shall be deposited to the Note Proceeds Account of the Project Fund and disbursed as herein provided. The Fiscal Agent shall use moneys in the Project Fund for the acquisition, rehabilitation, development and equipping of the Project, to pay other Qualified Project Costs and to pay other costs related to the Project as provided herein. Not less than 97% of the moneys deposited in and credited to the Project Fund, and taking into account proceeds of the Funding Loan (if any} deposited in the Closing Costs Fund, representing the proceeds of the Funding Loan, including Investment Income thereon, will be expended for Qualified Project Costs (the "97% Requirement"). The amounts on deposit in the Proj ect Fund shall not be applied to the payment of Closing Costs. Before any payment shall be made from the Project Fund, the Regulatory Agreement shall have been executed and submitted to a title company for recordation in the official records of the County of ®range and there shall be filed with the Fiscal Agent a Written Requisition of the Borrower substantially in the form attached hereto as EXHIBIT C and approved by the Funding Lender pursuant to the terms, conditions and provisions of the Construction Funding Agreement, with a copy to the Governmental Lender. The Fiscal Agent shall be entitled to conclusively rely upon any Written Requisition in determining whether to disburse amounts from the Project Fund. In connection with a Written Requisition, except for a written request for amounts representing accrued interest due and payable on the Governmental Lender Notes: (1) Only the signature of an authorized officer of the Funding Lender shall be required on a Written Requisition during any period in which a default by the Borrower has occurred and is then continuing under the Borrower Loan (notice of which default has been given in writing by an authorized officer of the Funding Lender to the Fiscal Agent and the Governmental Lender, and the Fiscal Agent shall be entitled to conclusively rely on any such Written Notice as to the occurrence and continuation of such a default). (2) The Fiscal Agent shall disburse amounts in the Project Fund upon receipt of a Written Requisition signed only by the Funding Lender (and without any need for any signature by an Authorized Borrower Representative), so long as the amount to be disbursed is to be used solely to make payments of principal, interest and/or fees due under the Funding Loan Documents. (3) The Fiscal Agent may conclusively rely on all Written Requisitions, the execution of the Written Requisitions by the Authorized Borrower Representative and the approval of all Written Requisitions by the Funding Lender, as required by this Section, as conditions of payment from the Project Fund, which Written Requisitions constitute, as to the Fiscal Agent, irrevocable determinations that all conditions to payment of the specified amounts from the Project Fund have been satisfied. These r1r~~~imPnte c~hall hP rPtainPr~ h ~ t11P Fiscal A crPnt e»hiP~.t at all rPacnnahlP times to Pxaminatinn by the \.i VfrL111V11bU Ullb-~11 VV 1VVµ111Vk V~ H11V 1lUV Wl L1L.Vllb, UKVIVVY ~WV M~ii iVwi,rvaawVi'v vaaaa v vv w J Borrower, the Governmental Lender, the FundVVing Lender and the agents and representatives thereof upon reasonable notice to the Fiscal Agent. The Fiscal Agent is not required to inspect the Project or the construction work or to make any independent investigation with respect to the matters set forth in any Written Requisition or other statements, orders, certifications and approvals received by the Fiscal Agent. The Fiscal Agent is not required to obtain completion bonds, lien releases or otherwise supervise the acquisition, construction, renovation, equipping, improvement and installation of the Project. C:1Users\tadlDesktoplSantaAna HA Washington Place ZZ FLA.doc DRAFT 11/28/12 8:39A1~I (b) Upon receipt of each Written Requisition submitted by the Borrower and approved in writing by the Funding Lender, the Fiscal Agent shall promptly, but in any case within one Business Day, make payment from the appropriate account within the Project Fund in accordance with such Written Requisition. The Fiscal Agent shall have no duty to determine whether any requested disbursement from the Project Fund complies with the terms, conditions and provisions of the Funding Loan Documents, constitutes payment of Qualified Project Costs or complies with the 97% Requirement. The approval in writing of a Written Requisition by the Funding Lender shall be deemed a certification and, insofar as the Fiscal Agent and the Governmental Lender are concerned, shall constitute conclusive evidence that all of the terms, conditions and requirements of the Funding Loan Documents applicable to such disbursement have been fully satisfied or waived and the Written Requisition from the Borrower shall, insofar as the Fiscal Agent and the Governmental Lender are concerned, constitute conclusive evidence that the costs described in the Written Requisition constitute Qualified Project Costs or other permitted Project costs. The Fiscal Agent shall immediately provide Written Notice to the Borrower, the Funding Lender and the Governmental Lender if there are not sufficient funds available to or on deposit with the Fiscal Agent to make the transfers as and when required by this Section 7.7(b). Except as provided in the next sentence, all such payments shall be made by check or draft payable, or by wire transfer, either (i) directly to the person, firm or corporation to be paid, (ii) to the Borrower and such person, firm or corporation, or (iii) upon receipt by the Funding Lender and the Governmental Lender of evidence that the Borrower has previously paid such amount and Written Direction to the Fiscal Agent as to such as evidenced by the Funding Lender's approval of the Written Requisition, to the Borrower. Upon the occurrence of an Event of Default of the Borrower of which the Fiscal Agent has knowledge as provided herein, which is continuing under the Funding Loan Documents, with the Written Consent of the Funding Lender, the Fiscal Agent may apply amounts on deposit in the Project Fund to the payment of principal of and interest on the Funding Loan. If a Written Requisition signed by the Authorized Borrower Representative and countersigned by an authorized officer of the Funding Lender is received by the Fiscal Agent, the requested disbursement shall be paid by the Fiscal Agent as soon as practicable, but in no event later than three Business Days following receipt thereof by the Fiscal Agent. Upon final disbursement of all amounts on deposit in the Project Fund, the Fiscal Agent shall close the Project Fund. (c) Immediately prior to any mandatory prepayment of the Funding Loan pursuant to hereto, any amounts then remaining in the Project Fund shall, at the written direction of the Funding Lender, be transferred to the Funding Loan Payment Fund to be applied to the prepayment of the Funding Loan pursuant hereto. (d) Amounts on deposit in the Project Fund shall be invested in Permitted Investments directed in writing by the Borrower. Investment Income earned on amounts on deposit in each account of the Project Fund shall be retained in and credited to and become a part of the amounts on deposit in that account of the Project Fund. (e) Prior to the Completion Date, the Funding Lender may provide a written request for accrued interest due and payable on the Governmental Lender Note which shall be pro- vided to the ~T/~ty~4'Y14Y1pt1~' ~ 1 l~Yfft cS 14'N1» t~r411~ ~Z 1 Kl1Cr1Y1L~rr 1 14/0 F117~ ~Ir~t!-~ QY-al~ Y1/l~' ~P Q11~1P1~~ I!1 ~~P 1 Tll~1PY'Y1Y1'1Pt1~~~ V V tl V111111V11da1 LVllller V~1~11111 111 VV '~J J L 14~.7111'1~~J-7 LGL~ -7, V i.l~ YV 111V11 Oll 11 11V L IIJJV ~.7liVJ VV ~ ~V ~11V V V Y v111111V11L61.1 Lender's prior approval. Section 7.~. Rebate Fund. (a) The Fiscal Agent shall deposit or transfer to the credit of the Rebate Fund each amount delivered to the Fiscal Agent by the Borrower for deposit thereto and each amount directed by the Borrower to be transferred thereto. C:IUsersltadlDesktopiSantaRna HA Washington Place 23 FLA.doc DRAFT 11/28/12 8:39AM (b) Within 15 days after each receipt or transfer of funds to the Rebate Fund, the Fiscal Agent shall withdraw from the Rebate Fund and pay to the United States of America the entire balance of the Rebate Fund. (c) All payments to the United States of America pursuant to this Section shall be made by the Fiscal Agent for the account and in the name of the Governmental Lender and shall be paid through the United States Mail (return receipt requested or overnight delivery), addressed to the appropriate Internal Revenue Service Center and accompanied by the appropriate Internal Revenue Service forms (such forms to be provided to the Fiscal Agent by the Borrower or the Rebate Analyst). (d) The Fiscal Agent shall preserve all statements, forms and explanations received from the Borrower and delivered to the Fiscal Agent and all records of transactions in the Rebate Fund until six years after the retirement of all of the Governmental Lender Notes. (e) The Fiscal Agent may conclusively rely on the instructions of the Borrower (based upon the report of the Rebate Analyst) with regard to any actions to be taken by it pursuant to this Section and shall have no liability for any consequences of any failure of the Borrower or the Rebate Analyst to perform its duties or obligations or to supply accurate or sufficient instructions. Except as specifically provided in Subsection (b) above, the Fiscal Agent shall have no duty or responsibility with respect to the Rebate Fund or the Borrower's duties and responsibilities with respect thereto except to follow the Borrower's specific written instruction related thereto. (f) If at any time during the term of this Funding Loan Agreement the Governmental Lender, the Fiscal Agent or the Borrower desires to take any action which would otherwise be prohibited by the terms of this Section, such person shall be permitted to take such action if it shall first obtain and provide to the other persons named herein, a Tax Counsel No Adverse Effect Opinion and an opinion of Tax Counsel that such action shall be in compliance with the laws of the State and the terms of this Funding Loan Agreement. (g) Moneys and securities held by the Fiscal Agent in the Rebate Fund shall not be deemed funds of the Governmental Lender and are not pledged or otherwise subject to any security interest in favor of the Owners to secure the Governmental Lender Notes or any other obligations. (h) Moneys in the Rebate Fund may be separately invested and reinvested by the Fiscal Agent, at the request of and as directed in writing by the Borrower, in Permitted Investments, subject to the Code. The Fiscal Agent shall sell and reduce to cash a sufficient amount of such Permitted Investments whenever the cash balance in the Rebate Fund is insufficient for its purposes. (i) Notwithstanding anything to the contrary in this Funding Loan Agreement, no payment shall be made by the Fiscal Agent to the United States if the Borrower shall furnish to the Governmental Lender and the Fiscal Agent, an opinion of Tax Counsel to the effect that such payment is not required under Section 148(4) and (~ of the Code in order to maintain the exclusion from gross income for federal ancome tax purposes of iifterest nn the CToVernmental Lender NoteC, Tn s»ch event the Borrower shall be entitled to withdraw funds from the Rebate Fund to the extent the Borrower shall provide a Tax Counsel No Adverse Affect Opinion to the Governmental Lender and the Fiscal Agent with respect to such withdrawal. (j) The Fiscal Agent shall keep and make available to the Governmental Lender and the Borrower records concerning the investments of all funds held by the Fiscal Agent pursuant to the Funding Loan Agreement including date bought and sold, price and commission paid, and bids taken, if any, and shall keep all such records until six years after the date on which neither of the Governmental C:1tlsers\tad\DesktoplSanta Ana I-lA Washington Place 24 FLA.doc DRAFT l 1128/12 8:39AM Lender Notes are Outstanding in order to enable the Borrower to make the computations required under Section 148(fl of the Code. (k) Notwithstanding the foregoing, the computations and payments of rebate amounts referred to in this Section 7.8 need not be made to the extent that neither the Governmental Lender nor the Borrower will thereby fail to comply with any requirements of Section 1480 of the Code based on a Tax Counsel No Adverse Effect Opinion, a copy of which shall be provided to the Fiscal Agent. ARTICLE VIII REPRESENTATIONS AND COVENANTS Section 8.1. General Representations. The Governmental Lender makes the following representations as the basis for the undertakings on its part herein contained: (a) The Governmental Lender is a public body corporate and politic, organized and existing under the laws of the State, has the power and authority to (i) enter into the Funding Loan Documents to which it is a party and the transactions contemplated thereby, (ii) incur the limited obligation represented by the Governmental Lender Notes and the Funding Loan and apply the proceeds of such obligation or loan to finance the Project and (iii) carry out its other obligations under this Funding Loan Agreement and the Governmental Lender Notes, and by proper action has duly authorized the Governmental Lender's execution and delivery of, and its performance under, such Funding Loan Documents and all other agreements and instruments relating thereto. (b) The Governmental Lender is not in default under or in violation of, and the execution and delivery of the Funding Loan Documents to which it is a party and its compliance with the terms and conditions thereof will not conflict or constitute a default under or a violation of, (i) the Act, (ii) to its knowledge, any other existing laws, rules, regulations, judgments, decrees and orders applicable to it, or (iii) to its knowledge, the provisions of any agreements and instruments to which the Governmental Lender is a party, a default under or violation of which would prevent it from entering into the Funding Loan Agreement, executing and delivering the Governmental Lender Notes, financing the Project, executing and delivering the other Funding Loan Documents to which it is a party or consummating the transactions contemplated thereby, and, to its knowledge, no event has occurred and is continuing under the provisions of any such agreement or instrument or otherwise that with the lapse of time or the giving of notice, or both, would constitute such a default or violation (it being understood, however, that the Governmental Lender is making no representations as to the necessity of registering the Governmental Lender Notes or the Borrower Note pursuant to any securities laws or complying with any other requirements of securities laws). (c) To the knowledge of the Governmental Lender, no litigation, inquiry or investigation of any 'Tad i r or by al~y ~udlclal or admiiistrative coin or agency is pending or tl~ueatened against the Governmental Lender with respect to (i) the organization and existence of the Governmental Lender, (11) its authority to execute or deliver the Funding Loan Documents to which it is a party, (iii) the validity or enforceability of any such Funding Loan Documents or the transactions contemplated thereby, (iv) the title of any officer of the Governmental Lender who executed such Funding Loan Documents or (v) any authority or proceedings relating to the execution and delivery of such Funding Loan Documents on behalf of the Governmental Lender, and no such authority or proceedings have been repealed, revoked, rescinded or amended but are in full force and effect. C:1UsersltadlDesktoplSantaRna HA Washington Place 25 FLA.doc DRAFT 11/28/12 8:39AM (d) T'he revenues and receipts to be derived from the Borrower Loan Agreement, the Borrower Note and this Funding Loan Agreement have not been pledged previously by the Governmental Lender to secure any of its notes or bonds other than the Funding Loan as evidenced by the Governmental Lender Note. (e) The California Debt Limit Allocation Committee has provided an allocation of the State's 2012 private activity bond volume cap under section 146 of the Code to the Governmental Lender for the Governmental Lender Note, the Governmental Lender has timely made any required carry forward election with respect to such allocation. The Governmental Lender hereby elects to apply the alternative option under clause (2) of the first paragraph of Section 3.01 of IRS Notice 2011-63 with respect to the issue date of the Governmental Lender Note; and, in connection therewith, has directed Tax Counsel to include the information on Form 8038 filed for the Governmental Lender Note that is required by section 3.03 of said Notice. THE GOVER~]VIENTAL LENDER MAKES NO REPRESENTATION, COVENANT OR AGREEMENT AS TO THE FINANCIAL POSITION OR BUSINESS CONDITION OF THE BORROWER OR THE PROJECT AND DOES NOT REPRESENT OR WARRANT AS TO ANY STATEMENTS, MATERIALS, REPRESENTATIONS OR CERTIFICATIONS FURNISHED BY THE BORROWER IN CONNECTION WITH THE FUNDING LOAN OR AS TO THE CORRECTNESS, COMPLETENESS OR ACCURACY THEREOF, Section 8.2. No Encumbrance on Security. The Governmental Lender will not knowingly create or knowingly permit the creation of any mortgage, pledge, lien, charge or encumbrance of any kind on the Security or any part thereof prior to or on a parity with the lien of this Funding Loan Agreement, except as expressly permitted or contemplated by the Funding Loan Documents. Section 8.3. Repayment of Funding Loan. Subject to the provisions of Article III hereof, the Governmental Lender will duly and punctually repay, or cause to be repaid, the Funding Loan, as evidenced by the Governmental Lender Notes, as and when the same shall become due, all in accordance with the terms of the Governmental Lender Notes and this Funding Loan Agreement. Section 8.4. Servicer. The Funding Lender may appoint a Servicer to service and administer the Governmental Loan and/or the Borrower Loan on behalf of the Funding Lender, including without limitation the fulfillment of rights and responsibilities granted by Governmental Lender to Funding Lender pursuant to Section 2.1 of the Borrower Loan Agreement. Section 8.5. Borrower Loan Agreement Performance. (a) The Funding Lender and the Servicer, if any, on behalf of the Governmental Lender, may (but shall not be required or obligated) perform and observe any agreement or covenant of the Governmental Lender under the Borrower Loan Agreement, all to the end that the Governmental Lender's rights under the Borrower Loan Agreement may be unimpaired and free from default. (b) The Governmental Lender will promptly notify the Borrower, the Servicer and the Funding Lender in writing of the occurrence of any Borrower Loan Agreement Default, provided that the Governmental Lender has received written notice or otherwise has knowledge of such event. Section 8.6. Maintenance of Records; Inspection of Records. (a) The k'unding Lender shall keep and maintain adequate records pertaining to any funds and accounts established hereunder, including all deposits to and disbursements from said funds and C:\UsersltadlDesktoplSantaAna HAWashington Place 26 FLA.doc DRAFT 11/28/12 8:39AM accounts and shall keep and maintain the registration books for the Funding Loan and interests therein. The Funding Lender shall retain in its possession all certifications and other documents presented to it, all such records and all records of principal, interest and premium paid on the Funding Loan, subject to the inspection of the Governmental Lender and its representatives at all reasonable times and upon reasonable prior notice. (b) The Governmental Lender will at any and all times, upon the reasonable request of the Servicer, the Borrower or the Funding Lender, afford and procure a reasonable opportunity by their respective representatives to inspect the books, records, reports and other papers of the Governmental Lender relating to the Project and the Funding Loan, if any, and to make copies thereof. Section 8.7. Tax Covenants. The Governmental Lender covenants to and for the benefit of the Funding Lender that, notwithstanding any other provisions of this Funding Loan Agreement or of any other instrument, it will: (a) Enforce or cause to be enforced all obligations of the Borrower under the Regulatory Agreement in accordance with its terms and seek to cause the Borrower to correct any violation of the Regulatory Agreement within a reasonable period after any such violation is first discovered; (b) Not take or cause to be taken any other action or actions, or fail to take any action or actions, which would cause the interest payable on the Governmental Lender Notes to be includable in gross income for federal income tax purposes; (c) At all times do and perform all acts and things permitted by law and necessary or desirable in order to assure that interest paid by the Governmental Lender on the Governmental Lender Notes will be excluded from the gross income of the holders of the Governmental Lender Notes, for federal income tax purposes, pursuant to Section 103 of the Code, except in the event where any holder of the Funding Loan or a portion thereof is a "substantial user" of the facilities financed with the Funding Loan or a "related person" within the meaning of Section 147(a) of the Code; (d) Not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Funding Loan to be "federally guaranteed" within the meaning of Section 149(b) of the Code and the Regulations; and (e) Require the Borrower to agree, pursuant to the terms and provisions of the Borrower Loan Agreement, not to commit any act and not to make any use of the proceeds of the Funding Loan, or any other moneys which maybe deemed to be proceeds of the Funding Loan pursuant to the Code, which would cause the Funding Loan to be an "arbitrage bond" within the meaning of Sections 103(b) and 148 the Code, and to comply with the requirements of the Code throughout the term of the Funding Loan; and (fl Require the Borrower to take all steps necessary to compute and pay any rebatable arbitrage in accordance with Section 148(fl of the Code. In furtherance of the covenants in this Section 8.7, the Governmental Lender and the Borrower shall execute, deliver and comply with the provisions of the Tax Certificate, which are by this reference incorporated into this Funding Loan Agreement and made a part of this Funding Loan Agreement as if set forth in this Funding Loan Agreement in full. For purposes of this Section 8.7 the Governmental Lender's compliance shall be based solely on matters within the Governmental Lender's control and no acts, omissions or directions of the Borrower, the Funding Lender or any other Persons shall be attributed to the Governmental Lender. C:1UsersltadlDesktoplSantaAna HAWashington Place 27 FLA.doc DRAFT 11/28/12 8:39AM In complying with the foregoing covenants, the Governmental Lender may rely from time to time on a Tax Counsel No Adverse Effect Opinion or other appropriate opinion of Tax Counsel. Section 8.8. Performance by the Borrower. Without relieving the Governmental Lender from the responsibility for performance and observance of the agreements and covenants required to be performed and observed by it hereunder, the Borrower, on behalf of the Governmental Lender, may perform any such agreement or covenant if no Borrower Loan Agreement Default or Default under the Borrower Loan Agreement exists. Section 8.9. Maintenance of Records. The Funding Lender shall keep and maintain adequate records pertaining to the funds and accounts, if any, established hereunder, including all deposits to and disbursements from said funds and accounts and shall keep and maintain the registration books for the Funding Loan and interests therein. ARTICLE IX DEFAULT; REMEDIES Section 9.1. Provisions Regarding any Default and Acceleration. Upon a default by the Governmental Lender of its obligations hereunder or a default by the Borrower of its obligations under the Borrower Loan Documents, the Fiscal Agent shall, subject to the provisions of Article XI, take such actions, and only such actions, to enforce the provisions of this Funding Loan Agreement, the Borrower Loan Documents and the Funding Loan Documents as are specified in writing by the Governmental Lender Noteholder Representative or the Funding Lender. Notwithstanding the foregoing, or anything else to the contrary herein, no default by the Borrower under the Borrower Loan Agreement or the Borrower Notes shall constitute an event of default with respect to the Funding Loan (including, without limitation, a failure to make any payment due with respect to the Funding Loan as a consequence of the Borrower's failure to make any payment due under the Borrower Loan Agreement). The Governmental Lender's, Fiscal Agent's, Governmental Lender Noteholder Representative's, Funding Lender's and Servicer's remedies with respect to a default under the Borrower Loan Documents shall be as set forth under the Borrower Loan Documents. In the event of a default by the Borrower under the Borrower Loan Documents, the Funding Lender, in its discretion, may accelerate the amounts due under the Borrower Loan Agreement and take other remedial actions available thereunder without accelerating the amounts due with respect to the Funding Loan. Notwithstanding the foregoing, the Funding Lender may, upon the acceleration of the Borrower's obligations under the Borrower Loan Documents, direct the Fiscal Agent to simultaneously accelerate the maturity of the Funding Loan and apply any funds available hereunder to the payment of the Funding Loan (after paying the fees and expenses of the Fiscal Agent and the Governmental Lender). Any portion of the Funding Loan remaining outstanding upon such an acceleration of the Funding Loan shall be deemed paid upon transfer, to or at the direction of the Funding Lender, of the Borrower Loan Documents and all security therefor free and clear of the lien of this Funding Loan Agreement. T~+ ~nz ,orrn or~~n~ T ntirlnr n~tn ~ nnn+lL~r +A ~~7c ~tf'~1 ~ A H1 !~ I e (tPY1~ Y1~ ~~P Fillnllin T PY1(1PY 1Y1 1 !le V V 1~V111~i1V116Q1 LV11U~+1 -711Q11 1iVV~Jt~l a1,~+ YV 111 Lh,, x 1sVa1 1 1~V11~ all\.1 ~11V 1 bLllutllg l,Vll`iVl 111 exercising rights and remedies under the Borrower Loan Documents, but only upon being satisfactorily indemnified by the Borrower for any fees or expenses relating thereto as provided in the Borrower Loan Agreement and Regulatory Agreement. Section 9.2. Effectiveness of Sections 9.2 through 9.15 at the Direction of Governmental Lender; Events of Default. At the written request of the Governmental Lender Noteholder Representative or Funding Lender, the Governmental Lender shall authorize, by written notice to the Fiscal Agent, the effectiveness of this Section 9.2 and Sections 9.3 through 9.15. The Governmental C:1UsersltadlDesktoplSantaAna HA Washington Place 28 FLA.doc DRAFT 11/28/12 8:39AM Lender's authorization of such provisions maybe granted on such terms as the Governmental Lender may determine in its sole and absolute discretion, including, without limitation, provision by the Funding Lender of indemnification reasonably satisfactory to the Governmental Lender. Upon delivery of the above-referenced authorization the provisions of this Section 9.2 and Sections 9.3 through 9.15 shall be effective. Any one or more of the following shall constitute an event of default (an "Event of Default") under this Funding Loan Agreement (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) A default in the payment of any interest upon the Governmental Lender Notes when such interest becomes due and payable; or (b) A default in the payment of principal of, or premium on, the Governmental Lender Notes when such principal or premium becomes due and payable, whether at its stated maturity, by declaration of acceleration or call for mandatory prepayment or otherwise; or (c) Subject to Section 8.8 hereof, default in the performance or breach of any material covenant or warranty of the Governmental Lender in this Funding Loan Agreement (other than a covenant or warranty or default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given written notice, as provided in Section 11.1 hereof, to the Governmental Lender and the Borrower by the Funding Lender or the Servicer, specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under this Funding Loan Agreement; provided that, so long as the Governmental Lender has commenced to cure such failure to observe or perform within the thirty (30) day cure period and the subject matter of the default is not capable of cure within said thirty (30) day period and the Governmental Lender is diligently pursuing such cure to the Funding Lender's satisfaction, with the Funding Lender's Written Direction or Written Consent, then the Governmental Lender shall have an additional period of time as reasonably necessary (not to exceed 30 days unless extended in writing by the Funding Lender) within which to cure such default; or (d) A default in the payment of any Additional Borrower Payments; or (e) Any other "Default" or "Event of Default" under any of the other Funding Loan Documents (taking into account any applicable grace periods therein). Section 9.2. Acceleration of Maturity; Rescission and Annulment. (a) Subject to the provisions of Section 9.9 hereof, upon the occurrence of an Event of Default under Section 9.1 hereof, then and in every such case, the Funding Lender may declare the principal of the Funding Loan and the Governmental Lender Notes and the interest accrued to be immediately due and payable, by notice to the Governmental Lender and the Borrower and upon any such declaration, all principal of and Prepayment Premium, if any, and interest on the Funding Loan and the Governmental Le~'ider ~ToteS Sl'iaii beiuiiie iliiiiicdiatciy due grid payable. (b) At any time after a declaration of acceleration has been made pursuant to subsection (a) of this Section, the Funding Lender may by Written Notice to the Governmental Lender, rescind and annul such declaration and its consequences if: (i) There has been deposited with the Funding Lender a sum sufficient to pay (1) all overdue installments of interest on the Governmental Lender Notes, (2) the principal of and Prepayment Premium on the Governmental Lender Notes that has become due otherwise than by C:1LlsersltadlDesktoplSanta Ana HA Washington Place 29 FLA.doc DRAFT 11/28/12 8:39AM such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Governmental Lender Notes, (3) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate or rates prescribed therefor in the Governmental Lender Notes, and (4) all sums paid or advanced by the Funding Lender and the reasonable compensation, expenses, disbursements and advances of the Funding Lender, its agents and counsel (but only to the extent not duplicative with subclauses (1) and (3) above); and (11) All Events of Default, other than the non payment of the principal of the Government Lender Notes which have become due solely by such declaration of acceleration, have been cured or have been waived in writing as provided in Section 9.9 hereof. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. (c) Notwithstanding the occurrence and continuation of an Event of Default, it is understood that the Funding Lender shall pursue no remedies against the Borrower or the Project if no Borrower Loan Agreement Default has occurred and is continuing. An Event of Default hereunder shall not in and of itself constitute a Borrower Loan Agreement Default. Section 9.3. Additional Remedies; Funding Lender Enforcement. (a) Upon the occurrence of an Event of Default, the Funding Lender may, subject to the provisions of this Section 9.3 and Section 9.9 hereof, proceed to protect and enforce its rights by mandamus or other suit, action or proceeding at law or in equity. No remedy conferred by this Funding Loan Agreement upon or remedy reserved to the Funding Lender is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and shall be in addition to any other remedy given to the Funding Lender hereunder or now or hereafter existing at law or inequity or by statute. (b) Upon the occurrence and continuation of any Event of Default, the Funding Lender may proceed forthwith to protect and enforce its rights and this Funding Loan Agreement by such suits, actions or proceedings as the Funding Lender, in its sole discretion, shall deem expedient. Funding Lender shall have upon the occurrence and continuation of any Event of Default all rights, powers, and remedies with respect to the Security as are available under the Uniform Commercial Code applicable thereto or as are available under any other applicable law at the time in effect and, without limiting the generality of the foregoing, the Funding Lender may proceed at law or in equity or otherwise, to the extent permitted by applicable law: (i) to take possession of the Security or any part thereof, with or without legal process, and to hold, service, administer and enforce any rights thereunder or thereto, and otherwise exercise all rights of ownership thereof, including (but not limited to) the sale of all or part of the Security; n~~~~// 4n ~-,nnmm~ n,-f as n~ rannr~ ~nr ~l,e Rnrrr~~~C~Pr ~ nan inr~»r~ing ullt~nil4 "11~ ~V Ud1/Vllll+ 11^1V16gag~l~ Vl 1VVViu 1V1 Llt LVlt vl 11Vwll 111V 1bs\.-111 , 1111~11V KY limitation, completing the assignment of the Security Instrument by the Governmental Lender to the Funding Lender as anticipated by this Funding Loan Agreement, and recording the same in the real estate records of the jurisdiction in which the Project is located, without further act or consent of the Governmental Lender, and to service and administer the same for its own account; (111) to service and administer the Funding Loan as agent and on behalf of the Governmental Lender or otherwise, and, if applicable, to take such actions necessary to enforce C:1tlsersltadlDes~top\Santa Ana Y-~A Washington Place 3Q FLA.doc DRAFT 11/28/12 8:39AM the Borrower Loan Documents and the Funding Loan Documents on its own behalf, and to take such alternative courses of action, as it may deem appropriate; or (iv) to take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Governmental Lender Notes, this Funding Loan Agreement or the other Funding Loan Documents, or the Borrower Loan Documents, or in and of the execution of any power herein granted, or for foreclosure hereunder, or for enforcement of any other appropriate legal or equitable remedy or otherwise as the Funding Lender may elect. (c) Whether or not an Event of Default has occurred, the Funding Lender, in its sole discretion, shall have the sole right to waive or forbear any term, condition, covenant or agreement of the Security Instrument, the Borrower Loan Agreement, the Borrower Notes or any other Borrower Loan Documents or Funding Loan Documents applicable to the Borrower, or any breach thereof, other than a covenant that would adversely impact the tax exempt status of the interest on the Governmental Lender Notes, and provided that the Governmental Lender may enforce specific performance with respect to the Unassigned Rights; provided, however, that any such forbearance by the Funding Lender in the exercise of its remedies under the Funding Loan Documents shall not be construed as a waiver by the Funding Lender of any Conditions to Conversion. (d) If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in the Regulatory Agreement, and if such default remains uncured for a period of 60 days after the Borrower and the Funding Lender receive Written Notice stating that a default under the Regulatory Agreement has occurred and specifying the nature of the default, the Funding Lender shall have the right to seek specific performance of the provisions of the Regulatory Agreement or to exercise its other rights or remedies thereunder; provided, however, that any such forbearance by the Funding Lender in the exercise of its remedies under the Funding Loan Documents shall not be construed as a waiver by the Funding Lender of any Conditions to Conversion. (e) If the Borrower defaults in the performance of its obligations under the Borrower Loan Agreement to make rebate payments, to comply with any applicable continuing disclosure requirements, or to make payments owed pursuant to Sections 2.5, 5.14 or 5.15 of the Borrower Loan Agreement for fees, expenses or indemnification, the Funding Lender shall have the right to exercise all its rights and remedies thereunder (subject to Section 9.13 hereof. Section 9.4. Application of Money Collected. Any money collected by the Funding Lender pursuant to this Article and any other sums then held by the Funding Lender as part of the Security, shall be applied in the following order, at the date or dates fixed by the Funding Lender: (a) First: To the payment of any and all amounts due under the Funding Loan Documents other than with respect to principal and interest accrued on the Funding Loan, including, without limitation, any amounts due to the Governmental Lender, the Funding Lender, the Servicer and the Rebate Aiiaiyst; (b) Second: To the payment of the whole amount of the Funding Loan, as evidenced by the Governmental Lender Notes, then due and unpaid in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the Funding Loan) on overdue principal of, and Prepayment Premium and overdue installments of interest on the Funding Loan; provided, however, that partial interests in any C:1UsersltadlDesktoplSanta Ana HA Washington Place 31 FLA.doc DRAFT 11/28/12 8:39AM portion of the Funding Loan shall be paid in such order of priority as may be prescribed by Written Direction of the Funding Lender in its sole and absolute discretion; and (c) Third: The payment of the remainder, if any, to the Borrower or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. If and to the extent this Section 9.4 conflicts with the provisions of the Servicing Agreement, the provisions of the Servicing Agreement shall control. Capitalized terms used in this Section 9.4 but not otherwise defined in this Funding Loan Agreement shall have the meanings given such terms in the Servicing Agreement. Section 9.5. Remedies Vested in Funding Lender. All rights of action and claims under this Funding Loan Agreement or the Governmental Lender Notes may be prosecuted and enforced by the Funding Lender without the possession of the Governmental Lender Notes or the production thereof in any proceeding relating thereto. Section 9.6. Restoration of Positions. If Funding Lender shall have instituted any proceeding to enforce any right or remedy under this Funding Loan Agreement and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Funding Lender, then and in every such case the Governmental Lender and the Funding Lender shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Governmental Lender and the Funding Lender shall continue as though no such proceeding had been instituted. Section 9.7. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Funding Lender is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 9.8. Delay or Omission Not Waiver. No delay or omission of the Funding Lender to exercise any right or remedy accruing upon an Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Funding Lender maybe exercised from time to time, and as often as maybe deemed expedient, by Funding Lender. No waiver of any default or Event of Default pursuant to Section 9.9 hereof shall extend to or shall affect any subsequent default or Event of Default hereunder or shall impair any rights or remedies consequent thereon. Section 9.9. Waiver of Past Defaults. Before any judgment or decree for payment of money due has been obtained by the Funding Lender, the Funding Lender may, subject to Section 9.6 hereof, by Written Notice to the Governmental Lender and the Borrower, waive any past default hereunder or under the Borro~~~er Loan Agreement and its consequences except for defa»lt in nbligatinnc due the Governmental Lender pursuant to or under the Unassigned Rights. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Funding Loan Agreement and the Borrower Loan Agreement; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 9.10. Remedies Under Borrower Loan Agreement or Borrower Notes. As set forth in this Section 9.10 but subject to Section 9.9 hereof, the Funding Lender shall have the right, in its own name or on behalf of the Governmental Lender, to declare any default and exercise any remedies under C:1UsersltadlDesktoplSantaAm HA Washington Place 32 FLA.doc DRAFT 11/28/12 8,39AM the Borrower Loan Agreement or the Borrower Notes, whether or not the Governmental Lender Notes has been accelerated or declared due and payable by reason of an Event of Default. Section 9.11. Waiver of Appraisement and Other Laws. (a) To the extent permitted by law, the Governmental Lender will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Funding Loan Agreement; and the Governmental Lender, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Governmental Lender, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Security marshaled upon any enforcement hereof. (b) If any law now in effect prohibiting the waiver referred to in Section 9.11(a) shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 9.11. Section 9.12. Suits to Protect the Security. The Funding Lender shall have power to institute and to maintain such proceedings as it may deem expedient to prevent any impairment of the Security by any acts that maybe unlawful or in violation of this Funding Loan Agreement and to protect its interests in the Security and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any Governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would impair the security hereunder or be prejudicial to the interests of the Funding Lender. Section 9.13. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subj ect to all applicable mandatory provisions of law which maybe controlling in the premises and to be limited to the extent necessary so that they will not render this Funding Loan Agreement invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. Section 9.14. Assumption of Obligations. In the event that the Funding Lender or its assignee or designee shall become the legal or beneficial owner of the Project by foreclosure or deed in lieu of foreclosure, such party shall succeed to the rights and the obligations of the Borrower under the Borrower Loan Agreement, the Borrower Note, the Regulatory Agreement and any other Funding Loan Documents to which the Borrower is a party. Such assumption shall be effective from and after the effective date of such acquisition and shall be made with the benefit of the limitations of liability set forth therein and without any liability for the prior acts of the Borrower. Tf ; 1,A ;,n+ „+in,n n~ tl,a p rf;a~ ~eretn ~~-~at ~tpnn t11e n~Cr„rrPn~a ar,rl f`nnt1n11aY1! ? f~lf art Event f~,lf 1L 1S tllV 111~e11L1V11 V1 ~llV al L1V 11 1 VV ~llu~ 6i Vtt {,11 vu11vt1 v itu NV11~111KW11VV ~ is . vair ~ Default hereunder, rights and remedies may be pursued pursuant to the terms of the Funding Loan Documents. C:IUsersltadlDesktoplSanta Am HA Washington Place 33 FLA.doc DRAFT 11/28/12 8:39AM ARTICLE X AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT AND OTHER DOCUMENTS Section 10.1. Amendment of Funding Loan Agreement. Any of the terms of this Funding Loan Agreement and the Governmental Lender Notes may be amended or waived only by an instrument signed by the Funding Lender and the Governmental Lender, provided, however, no such amendment which materially affects the rights, duties, obligations or other interests of the Borrower shall be made without the consent of the Borrower, and, provided further, that if the Borrower is in default under any Funding Loan Document, no Borrower consent shall be required unless such amendment has a material adverse effect on the rights, duties, obligations or other interests of the Borrower. All of the terms of this Funding Loan Agreement shall be binding upon the successors and assigns of and all persons claiming under or through the Governmental Lender or any such successor or assign, and shall inure to the benefit of and be enforceable by the successors and assigns of the Funding Lender. Section 10.2. Amendments Require Funding Lender Consent. The Governmental Lender shall not consent to any amendment, change or modification of the Borrower Loan Agreement or any other Borrower Loan Document or Funding Loan Document without the prior Written Consent of the Funding Lender. Section 10.3. Consents and Opinions. No amendment to this Funding Loan Agreement or any other Funding Loan Document entered into under this Article X or any amendment, change or modification otherwise permitted under this Article X shall become effective unless and until (i) the Funding Lender shall have approved the same in writing in its sole discretion and (ii) the Funding Lender shall have received, at the expense of the Borrower, a Tax Counsel No Adverse Effect Opinion and an Opinion of Counsel to the effect that any such proposed amendment is authorized and complies with the provisions of this Funding Loan Agreement and is a legal, valid and binding obligation of the parties thereto, subject to normal exceptions relating to bankruptcy, insolvency and equitable principles limitations. ARTICLE XI THE FISCAL AGENT Section 11.1. Appointment of Fiscal Agent; Acceptance. The Governmental Lender hereby appoints [Wilmington Trust, National Association] as Fiscal Agent hereunder. The Fiscal Agent shall signify its acceptance of the duties and obligations imposed upon it by this Funding Loan Agreement by executing this Funding Loan Agreement. Section 11.2. Certain Duties and Responsibilities of Fiscal Agent. (a) The Fiscal Agent undertakes to perform such duties and only such duties as are specifically set forth in this Funding Loan Agreement, and no implied covenants or obligations shall be read into this Funding Loan Agreement against the Fiscal Agent. C:1tJsersltadlDesktop\SantaRna HA Washington Place 34 FLA.doc DRAFT 11/28/12 8:39AM (b) If an event of default exists hereunder or under any Borrower Loan Document, the Fiscal Agent shall exercise such of the rights and powers vested in it by this Funding Loan Agreement, and subject to Section 11.2(c)(iii) hereof, use the same degree of care and skill in their exercise, as a prudent corporate trust officer would exercise or use under the circumstances in the conduct of corporate trust business. (c) No provision of this Funding Loan Agreement shall be construed to relieve the Fiscal Agent from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, in each case, as finally adjudicated by a court of law, except that: (1) This subsection shall not be construed to limit the effect of subsection (a) of this Section; (2) The Fiscal Agent shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts; (3) The Fiscal Agent shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Funding Lender relating to the time, method and place of conducting any proceeding for any remedy available to the Fiscal Agent, or exercising any trust or power conferred upon the Fiscal Agent under this Funding Loan Agreement; and (4) No provision of this Funding Loan Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not assured to it in its sole discretion. Subject to its rights to indemnification pursuant to Section 11.4 hereof, the Fiscal Agent is directed to enter into the Borrower Loan Documents to which it is a party and other related documents, solely in its capacity as Fiscal Agent. (d) Whether or not therein expressly so provided, every provision of this Funding Loan Agreement and the other Funding Loan Documents relating to the conduct or affecting the liability of or affording protection to the Fiscal Agent shall be subject to the provisions of this Section. (e) The Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Funding Loan Agreement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Funding Loan Agreement. (fl The permissive rights of the Fiscal Agent to do things enumerated in this Funding Loan Agreement shall not be construed as a duty. (g) The rights of the Fiscal Agent and limitations of liability enumerated herein and in Section 11.4 shall extend to actions taken or omitted in its role as assignee of the Governmental Lender under the Borrower Loan Agreement and the other Funding Loan Documents. Section 11.3. Notice of Defaults. Upon the occurrence of any default hereunder or under any Borrower Loan Document and provided that a Responsible Officer of the Fiscal Agent is aware of or has received Written Notice of the existence of such default, promptly, and in any event within 15 days, the C:ILlsersltadlDesktoplSantaAna 1-lA V~ashington Place 35 FLA.doc DRAFT 11/28/12 8:39AM Fiscal Agent shall transmit to the Governmental Lender, the Borrower, the Equity Investor, the Servicer, if any, and the Funding Lender, in the manner and at the addresses for notices set forth in Section 12.1 hereof, notice of such default hereunder known to the Fiscal Agent pursuant to Section 11.4(g) hereof, unless such default shall have been cured or waived. hereof: Section 11.4. Certain Rights of Fiscal Agent. Except as otherwise provided in Section 11.1 (a) The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, debenture, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) Any request or direction of the Governmental Lender mentioned herein shall be sufficiently evidenced by a certificate or order executed by an Authorized Governmental Lender Representative; (c) Whenever in the administration of this Funding Loan Agreement or any Borrower Loan Document the Fiscal Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Fiscal Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon a Written Certificate of the Governmental Lender, the Funding Lender, the Servicer or the Borrower, as appropriate; (d) The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Funding Loan Agreement or any Borrower Loan Document at the request or direction of the Funding Lender, pursuant to this Funding Loan Agreement, unless the Funding Lender shall have offered to the Fiscal Agent in writing security or indemnity reasonably satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction, except costs, expenses and liabilities which are adjudicated to have resulted from its own negligence or willful misconduct, provided, that nothing contained in this subparagraph (d) shall be construed to require such security or indemnity for the performance by the Fiscal Agent of its obligations under Article VIII hereof; (e) The Fiscal Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, debenture, coupon or other paper or document but the Fiscal Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Fiscal Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books and records of the Governmental Lender, if any, and of the Borrower, in either case personally or by agent or attorney after reasonable notice and during normal business hours; (f) The Fiscal Agent may execute any of the trusts or powers hereunder or perform any dut1es hereunder either directly or by or tl~rn»gh agents or attorneys and pay reasonable con~pensatior~ thereto and the Fiscal Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. The Fiscal Agent may act upon the advice of counsel of its choice concerning all matters hereof and the Fiscal Agent shall not be responsible for any loss or damage resulting from any action or inaction taken in good faith reliance upon said advice; and (g) The Fiscal Agent shall not be required to take notice or be deemed to have notice of any default hereunder or under any Borrower Loan Document except for failure by the Borrower to make payments of principal, interest, premium, if any, or Governmental Lender Fee when due, unless a C:1tJserslta~lDesktoplSanta Ana HA Washington Place 36 FLA.doc DRAFT 11/28/12 $:39AM Responsible Officer of the Fiscal Agent shall be specifically notified by a Written Direction of such default by the Governmental Lender, the Servicer or the Funding Lender, and all notices or other instruments required by this Funding Loan Agreement or under any Borrower Loan Document to be delivered to the Fiscal Agent, must, in order to be effective, be delivered in writing to a Responsible Officer of the Fiscal Agent at the Office of the Fiscal Agent, and in the absence of such tiVritten Notice so delivered the Fiscal Agent may conclusively assume there is no default as aforesaid. Section 11.5. Not Responsible for Recitals. The recitals contained herein and in the Governmental Lender Note shall be taken as the statements of the Governmental Lender, and the Fiscal Agent assumes no responsibility for their correctness. The Fiscal Agent makes no representations as to the value or condition of the Pledged Revenues, the Security or any part thereof, or as to the title of the Governmental Lender thereto or as to the security afforded thereby or hereby, or as to the validity or sufficiency of this Funding Loan Agreement or of the Funding Loan. The Fiscal Agent shall have no responsibility or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the funding of the Funding Loan. The Fiscal Agent shall not be required to monitor the f financial condition of the Borrower or the physical condition of the Project. Unless otherwise expressly provided, the Fiscal Agent shall be under no obligation to analyze, review or make any credit decisions with respect to any financial statements, reports, notices, certificates or documents received hereunder but shall hold such financial statements reports, notices, certificates and documents solely for the benefit of, and review by, the Funding Lender and such other parties to whom the Fiscal Agent may provide such information pursuant to this Funding Loan Agreement. The Fiscal Agent makes no representations as to and shall have no responsibility for the sufficiency of the insurance required under any of the Borrower Loan Documents. Section 11.6. May Hold Funding Loan. The Fiscal Agent in its individual or any other capacity may become the owner or pledgee of the Funding Loan and may otherwise deal with the Governmental Lender, the Funding Lender and the Borrower with the same rights it would have if it were not Fiscal Agent. Section 11.7. Moneys Held in Trust. Moneys held by the Fiscal Agent in trust hereunder need not be segregated from other funds except to the extent required by law. The Fiscal Agent shall be under no liability for interest on any moneys received by it hereunder except as otherwise provided herein, Section 11.x. Compensation and Reimbursement. Under the Borrower Loan Agreement, the Borrower has agreed to, except as otherwise expressly provided herein, reimburse the Fiscal Agent as provided in this Funding Loan Agreement or the Borrower Loan Agreement, upon its request for all reasonable expenses, d~sb'~rsements and advanjces incurred or made by the Fiscal A_gPnt in accordance with any provision of this Funding Loan Agreement (including the reasonable fees, expenses and disbursements of its agents and counsel}, except any such expense, disbursement or advance as may be attributable to the Fiscal Agent's negligence or willful misconduct, both as finally adjudicated by a court of law. When the Fiscal Agent incurs expenses or renders service in connection with any bankruptcy or insolvency proceeding, such expenses (including the fees and expenses of its counsel) and the CaUsersltadlDesktoplSantaAna HAWashington Place 3'] FLA.doc DRAFT 11/28/12 8:39AM compensation for such services are intended to constitute expenses of administration under any bankruptcy law or law relating to creditors rights generally. (a) The Governmental Lender has no obligation to pay the Fiscal Agent for services rendered. (b) As security for the performance of the obligations of the Borrower under this Section and for the payment of such compensation, expenses, reimbursements and indemnity, the Fiscal Agent shall have the right to use and apply any moneys held by it as Pledged Revenues. (c) The Fiscal Agent's rights to compensation and reimbursement shall survive its resignation or removal, the payment of the Funding Loan or the Borrower Loan or the release of this Funding Loan Agreement. Section 11.9. Fiscal Agent Required; Eligibility. Any successor Fiscal Agent shall at all times be a trust company, a state banking corporation or a national banking association with the authority to accept trusts in the State approved in writing by the Governmental Lender and either (a) have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition, (b) be a wholly owned subsidiary of a bank holding company, or a wholly owned subsidiary of a company that is a wholly owned subsidiary of a bank holding company, having a combined capital surplus of at least $50,000,000 as set forth in its most recent published annual report of condition, have at least $500,000,000 of trust assets under management and have a combined capital surplus of at least $2,000,000 as set forth in its most recent published annual report of condition, or (c) be otherwise acceptable to the Funding Lender in its sole and absolute discretion. Section 11.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Fiscal Agent hereunder and no appointment of a successor Fiscal Agent pursuant to this Article shall become effective until the written acceptance by the successor Fiscal Agent of such appointment. (b) The Fiscal Agent may resign at any time by giving 60 days' Written Notice thereof to the Governmental Lender, the Borrower, the Servicer, if any, and the Funding Lender. If an instrument of acceptance by a successor Fiscal Agent shall not have been delivered to the Fiscal Agent within 30 days after the giving of such notice of resignation, the resigning Fiscal Agent may petition any court of competent jurisdiction for the appointment of a successor Fiscal Agent. (c) The Fiscal Agent may be removed at any time with 30 days' notice by (i) the Governmental Lender, (ii) the Borrower (unless the Borrower is in default under any of the Borrower Loan Documents), subject to applicable notice and cure periods, with the Written Consent of the Funding Lender and the Governmental Lender, or (iii) the Funding Lender with the Written Consent of the Governmental Lender and Written Notice delivered to the Fiscal Agent and the Borrower. (d) If the Fiscal Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the Office of the Fiscal Agent for any cause, the Governmental Lender shall promptly appoint a successor Fiscal Agent, with the consent of the Funding Lender, which consent shall not be unreasonably withheld. In case all or substantially all of the Pledged Revenues and Security shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Governmental Lender. If, within 60 days after such resignation, removal or incapability or the occurrence of such vacancy, the Governmental Lender has failed to so appoint a successor Fiscal Agent, then a successor C:IUsersltadlDesktoplSantaRna HA Washington Place 3 $ FLA.doc DRAFT 11/28/12 8:39AM Fiscal Agent shall be appointed by the Funding Lender (from any of the institutions approved by the Governmental Lender to serve as a fiscal agent or trustee) with Written Notice thereof delivered to the Governmental Lender, the Borrower, the Servicer, if any, and the retiring Fiscal Agent, and the successor Fiscal Agent so appointed shall, forthwith upon its acceptance of such appointment, become the successor Fiscal Agent and supersede the successor Fiscal Agent appointed by such receiver or Fiscal Agent. If no successor Fiscal Agent shall have been appointed by the Governmental Lender or the Funding Lender and accepted appointment in the manner hereinafter provided, the Fiscal Agent may petition any court of competent jurisdiction for the appointment of a successor Fiscal Agent. (e) The retiring Fiscal Agent shall cause Written Notice of each resignation and each removal of the Fiscal Agent and each appointment of a successor Fiscal Agent to be provided to the Funding Lender. Each notice shall include the name of the successor Fiscal Agent and the address of the office of the successor Fiscal Agent. Section 11.11. Acceptance of Appointment by Successor. (a) Every successor Fiscal Agent appointed hereunder shall execute, acknowledge and deliver to the Governmental Lender and to the retiring Fiscal Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Fiscal Agent shall become effective and such successor Fiscal Agent, without any further act, deed or conveyance, shall become vested with all the estates, properties, rights, powers, trusts and duties of the retiring Fiscal Agent; notwithstanding the foregoing, on request of the Governmental Lender or the successor Fiscal Agent, such retiring Fiscal Agent shall, upon payment of its charges, execute and deliver an instrument conveying and transferring to such successor Fiscal Agent upon the trusts herein expressed all the estates, properties, rights, powers and trusts of the retiring Fiscal Agent, and shall duly assign, transfer and deliver to such successor Fiscal Agent all property and money held by such retiring Fiscal Agent hereunder. Upon request of any such successor Fiscal Agent, the Governmental Lender shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Fiscal Agent all such estates, properties, rights, powers and trusts. (b) No successor Fiscal Agent shall accept its appointment unless at the time of such acceptance such successor Fiscal Agent shall be qualified and eligible under this Article, to the extent operative. Section 11.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Fiscal Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Fiscal Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Fiscal Agent, shall be the successor of the Fiscal Agent hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, to the extent operative, without the execution or filing of any paper or any further act on the part of any of the parties hereto. Notwithstanding the foregoing, any such successor Fiscal Agent shall cause Written Notice of such succession to be delivered to the Funding Lender `vr'ithiii 3o days ^vf s'uCh S'~vicessio n. Section 11.13. Appointment of Co-Fiscal Agent. It is recognized that in case of litigation under this Funding Loan Agreement, the Borrower Loan Agreement, any other Borrower Loan Document or the Regulatory Agreement, and in particular in case of the enforcement of any of them on default, or in case the Fiscal Agent deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Fiscal Agent or hold title to the properties, in trust, as herein provided, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Fiscal Agent appoint an additional individual or C:1IlsersitadlDesktoplSanta Ana HA Washington Place 39 FLA.doc DRAFT 11/28/12 8:39AM institution as a separate or co-fiscal agent. The following provisions of this Section are adopted to these ends. The Fiscal Agent is hereby authorized to appoint an additional individual or institution as a separate or co-~ scal agent hereunder, upon Written Notice to the Governmental Lender, the Funding Lender and the Borrower, and with the consent of the Governmental Lender and the Funding Lender, but without the necessity of further authorization or consent, in which event each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Funding Loan Agreement, any Borrower Loan Document, the Regulatory Agreement or the Borrower Loan Agreement to be exercised by or vested in or conveyed to the Fiscal Agent with respect thereto shall be exercisable by and vest in such separate or co-fiscal agent but only to the extent necessary to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co-fiscal agent shall run to and be enforceable by either of them. Should any instrument in writing from the Governmental Lender be required by the separate fiscal agent or co-fiscal agent appointed by the Fiscal Agent for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request of the Fiscal Agent, be executed, acknowledged and delivered by the Governmental Lender. In case any separate fiscal agent or co-aiscal agent, or a successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate fiscal agent or co-fiscal agent, so far as permitted by law, shall vest in and be exercised by the Fiscal Agent until the appointment of a successor to such separate fiscal agent or co fiscal agent. Section 11.14. Loan Servicing. The Governmental Lender and the Fiscal Agent acknowledge that the Funding Lender shall have the right to appoint a Servicer to service and administer the Funding Loan and the Borrower Loan as set forth in a Servicing Agreement. The Governmental Lender and the Fiscal Agent shall not be responsible for monitoring the performance of any Servicer or for any acts or omissions of such Servicer. The Funding Lender may, in its sole discretion, terminate or replace the Servicer. Section 11.15. No Recourse Against Officers or Employees of Fiscal Agent. No recourse with respect to any claim related to any obligation, duty or agreement contained in this Funding Loan Agreement or any other Funding Loan Document shall be had against any officer or employee, as such, of the Fiscal Agent, it being expressly understood that the obligations, duties and agreements of the Fiscal Agent contained in this Funding Loan Agreement and the other Funding Loan Documents are solely corporate in nature. ARTICLE XII MISCELLANEOUS Section 1v.1. Notices. A11 notices, consents, approvals and requests required or pe,~,-,fitted hereunder or under any other Borrower Loan Document or Funding Loan Document (a "notice") shall be deemed to be given and made when delivered by hand, by recognized overnight delivery service, confirmed facsimile transmission (provided any telecopy or other electronic transmission received by any party after 4:00 p.m., local time, as evidenced by the time shown on such transmission, shall be deemed to have been received the following Business Day), or five (5) calendar days after deposited in the United States mail, registered or certified, postage prepaid, with return receipt requested, addressed as follows: If to the Governmental Lender: Housing Authority of the City of Santa Ana C.1UsersltadlDesktoplSanta Ana HA Washington Place 40 FLA.doc DRAFT 11/28/12 8:39AM cio Housing and Neighborhood Development Div. 20 Civic Center Plaza, M-3 7 Santa Ana, CA 92701 Attention: Executive Director Facsimile: (714) 667-2225 If to the Borrower: Washington Place Partners, LP c/o Washington Place Management, LLC 169 Saxony Road, Suite 103 Encinitas, California 92024 Attention: David A. Beacham Fax: 760.557.1480 david.beacham@vitusgroup.com With a copy to: Hearthstone Housing Foundation 5031 Birch Street, Suite F Newport Beach, CA 92660 Attention: Socorro Vasquez Facsimile: 949.553.9448 Email; coco@hearthstonehousing.org With a copy to: If to the Fiscal Agent: VLP Law Group LLP 548 Market Street San Francisco, California 94104 Attention: Byron A. Rodriguez Fax: 415.685.4866 bodriguez@vlplawgroup. com Wilmington Trust, National Association 650 Town Center Drive, Suite 680 Costa Mesa, California 92626 Attention: Corporate Trust Services Telephone: (714) 384-4152 Facsimile: (714) 3 84-4151 ] If to the Equity Investor: With a copy to: If to the Funding Lender: C:1UsersltadlDesktoplSanta Ana HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM CREA Washington Place Partners, LLC c/o City Real Estate Advisors, Inc 30 South Meridian Street, Suite 600 Indianapolis, IN 46204 Attention: Brian K. McDonnell Fax: (317) 808-7313 Holland & Knight LLP 10 St. James Avenue Boston, MA 02116 Attn: John Kelley, Esq. Fax: (617) 523-6850 Citibank, N.A. 41 c/o Citi Community Capital Middle Office 3 90 Greenwich Street, 2~d Floor New York, New York 10013 Attention: Desk Head Loan # 10-7045685 Facsimile: (212) 723-8939 and 325 East Hillcrest Drive, Suite 160 Thousand Oaks, California 91360 Attention: Operations Manager/Asset Manager Loan # 10-7045685 Facsimile: (805) 557 0924 With a copy to: Citibank, N.A. 787 W. Fifth Street, 29th Floor Los Angeles, California 90071 Attention: Don Munoz Loan # 10-7045685 Facsimile: (213) 624-3380 And a copy of any notices of default sent to: Citigroup, Inc. Citi Community Capital Municipal Securities Division 388 Greenwich Street New York, New York 10013 Attention: General Counsel's Office Loan # 10-7045685 Facsimile: (212) 723-8939 Any such notice, demand, request or communication shall be deemed to have been given and received for all purposes under this Funding Loan Agreement: (i) three Business Days after the same is deposited in any official depository or receptacle of the United States Postal Service first class, or, if applicable, certified mail, return receipt requested, postage prepaid; (ii) on the date of transmission when delivered by telecopier or facsimile transmission, telex, telegraph or other telecommunication device, provided any telecopy or other electronic transmission received by any party after 4:00 p.m., local time, as evidenced by the time shown on such transmission, shall be deemed to have been received the following Business Day; (iii) on the next Business Day after the same is deposited with a nationally recognized overnight delivery service that guarantees overnight delivery; and (iv) on the date of actual delivery to such party by any other means; provided, however, if the day such notice, demand, request or communication shall be deemed to have been given and received as aforesaid is not a Business Day, such notice, demand, request or communication shall be deemed to have been given and received on the next Business Day. Any facsimile signature by a Person on a document, notice, demand, request or communication required or permitted by this Funding Loan Agreement shall constitute a legal, valid and binding execution thereof by such Person. Any party to this Funding Loan Agreement may change such party's address for the purpose of notice, demands, requests and communications required or permitted under this Funding Loan Agreement C;1Users\tadlDesktoplSanta Ana HA Washington Place 42 FLA.doc DRAFT 11/28/12 8:39AM by providing written notice of such change of address to all of the parties by written notice as provided herein, Section 12.2. Term of Funding Loan Agreement. This Funding Loan Agreement shall be in full force and effect until all payment obligations of the Governmental Lender hereunder have been paid in full and the Funding Loan has been retired or the payment thereof has been provided for; except that on and after payment in full of the Governmental Lender Notes, this Funding Loan Agreement shall be terminated, without further action by the parties hereto. Section 12.3. Successors and Assigns. All covenants and agreements in this Funding Loan Agreement by the Governmental Lender shall bind its successors and assigns, whether so expressed or not. Section 12.4. Legal Holidays. In any case in which the date of payment of any amount due hereunder or the date on which any other act is to be performed pursuant to this Funding Loan Agreement shall be a day that is not a Business Day, then payment of such amount or such act need not be made on such date but maybe made on the next succeeding Business Day, and such later payment or such act shall have the same force and effect as if made on the date of payment or the date fixed for prepayment or the date fixed for such act, and no additional interest shall accrue for the period after such date and prior to the date of payment. Section 12.5. Governing Law. This Funding Loan Agreement shall be governed by and shall be enforceable in accordance with the laws of the State. Section 12.6. Severability. If any provision of this Funding Loan Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions shall not in any way be affected or impaired. In case any covenant, stipulation, obligation or agreement contained in the Governmental Lender Notes or in this Funding Loan Agreement shall for any reason be held to be usurious or in violation of law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the Governmental Lender or the Funding Lender only to the full extent permitted by law. Section 12,7. Execution in Several Counterparts. This Funding Loan Agreement may be contemporaneously executed in several counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original. Section 12.8. Nonrecourse Obligation of the Borrower. Except as otherwise provided in the Borrower Loan Agreement, any obligations of the Borrower under this Funding Loan Agreement are without recourse to the Borrower or to the Borrower's partners or members, as the case maybe, and the provisions of Section 11.1 of the Borrower Loan Agreement are by this reference incorporated herein. Section 12.9. Waiver of Trial by Jury. TO THE MAXI~-~IUM EXTENT PERMITTED TTl~TTIER A PPLTr A RLF L A W~ E~~f'~T (1F BORROWER ANi~ TI-IE BF,NEFICTARY PARTIES (A) COVENANTS .AND AGREES NOT TO ELECT A TR[AL BY J1JRY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS FUNDING LOAN AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TR:[AL BY JI;JRY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TR[AL BY J1JRY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. C:\UsersltadlDesktoplSantaRna HA Washington Place 43 FLA.doc DRAFT 11/28112 8:39AM IF FOR ANY REASON THIS WAIVER IS DETERMINED TO BE UNENFORCEABLE, ALL DISPUTES WILL BE RESOLVED BY JUDICIAL REFERENCE PURSUANT TO THE PROCEDURES SET FORTH IN THE SECURITY INSTRUMENT. Section 12.10. Electronic Transactions. The transactions described in this Funding Loan Agreement may be conducted and related documents and may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the ding of any claim, action or suit in the appropriate court of law. Section 12.11. Reference Date. This Funding Loan Agreement is dated for reference purposes only as of the first day of December, 2012. C:\UsersltadlDeslctoplSantaRna HA Washington Place 44 FLA.~oc DRAFT 11/28/12 8:39AM IN WITNESS WHEREOF, the Funding Lender, the Fiscal Agent and the Governmental Lender have caused this Funding Loan Agreement to be duly executed as of the date first Written above. By: CITIBANK, N.A. Authorized Signatory HOUSING AUTHORITY OF THE CITY OF SANTA ANA By: WILMINGTON TRUST, NATIONAL ASSOCIATION, as Fiscal Agent By: C;1tlsersltadlDesktoplSanta Am HA Washington Place FLA.doc DRAFT 1112/12 8:39AM EXHIBIT A-1 FORM OF GOVERI~~IVIENTAL LENDER REAL ESTATE NOTE HOUSING AUTHORITY OF THE CITY OF SANTA ANA MULTIFAMILY HOUSING REVENUE REAL ESTATE NOTE (FLOWER TERRACE) 2012 SERIES A-1 DATED DECEMBER _, 2012 $[FUNDING LOAN AMOiTNT] FOR VALUE RECEIVED, the undersigned HOUSING AUTHORITY OF THE CITY OF SANTA ANA ("Obligor") promises to pay to the order of CITIBANK, N.A. ("Holder") the maximum principal sum of MILLION HUNDRED THOUSAND DOLLARS $[PermPrinAmt], on January 1, 2045, or earlier as provided herein, together with interest thereon at the rates, at the times and in the amounts provided below. Obligor shall pay to the Holder on or before each date on which payment is due under that certain Funding Loan Agreement, dated as of December 1, 2012 (the "Funding Loan Agreement"), among Obligor, Holder and [Wilmington Trust, National Association], as fiscal agent ("Fiscal Agent"), an amount in immediately available funds sufficient to pay the principal amount of and Prepayment Premium, if any, on this Governmental Lender Real Estate Note then due and payable, whether by maturity, acceleration, prepayment or otherwise. In the event that amounts held derived from proceeds of this Governmental Lender Real Estate Note, condemnation awards or insurance proceeds or investment earnings thereon are applied to the payment of principal due on this Governmental Lender Real Estate Note in accordance with the Funding Loan Agreement, the principal amount due hereunder shall be reduced to the extent of the principal amount of this Governmental Lender Real Estate Note so paid. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Funding Loan Agreement. Obligor shall pay to the Holder on or before each date on which interest on the Funding Loan is payable interest on the unpaid balance hereof in an amount in immediately available funds sufficient to pay the interest on this Governmental Lender Real Estate Note then due and payable in the amounts and at the rate or rates set forth in the Funding Loan Agreement. This Government Lender Real Estate Note is apass-through obligation relating to the construction and permanent portion of a loan (the "Borrower Loan") made by Obligor from proceeds of the Funding Loan to Washington Place Partners, LP, a California limited partnership, as borrower (the "Borrower"), under that certain Borrower Loan Agreement, dated as of December 1, 2012 (as the same may be modified, amended or supplemented from time to time, the "Borrower Loan Agreement"), between the Obligor and the Borrower. The portion of the Borrower Loan related to this Governmental viii Lender Real Estate Note evidenced by the Borro~~'er Real Estate Note (as dP~ned in the Borrower Loan Agreement). Reference is made to the Borrower Loan Agreement and to the Borrower Real Estate Note for complete payment and prepayment terms of the Borrower Real Estate Note, payments on which are passed-through under the Governmental Lender Real Estate Note. This Governmental Lender Real Estate Note is a limited obligation of the Obligor, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned under the Funding Loan Agreement. None of the Governmental Lender, the City of Santa Ana, the State, or any political subdivision thereof (except the Governmental Lender, to the limited extent set forth herein) nor C:IUsersltad\DesktoplSantaAna HA Washington Place FLA.doc DRAFT 11/28/12 8:39AM any public agency shall in any event be liable for the payment of the principal of, premium (if any) or interest on this Governmental Lender Real Estate Note or the Funding Loan or for the performance of any pledge, obligation or agreement of any kind whatsoever with respect thereto except as set forth herein and in the Funding Loan Agreement, and none of the Funding Loan or this Governmental Lender Real Estate Note or any of the Governmental Lender's agreements or obligations with respect to the Funding Loan or this Governmental Lender Real Estate Note shall be construed to constitute an indebtedness of or a pledge of the faith and credit of or a loan of the credit of or a moral obligation of any of the foregoing within the meaning of any constitutional or statutory provision whatsoever. The Governmental Lender has no taxing power. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Funding Loan Agreement or in the Borrower Loan Agreement. This Governmental Lender Real Estate Note is subject to the express condition that at no time shall interest be payable on this Governmental Lender Real Estate Note or the Funding Loan at a rate in excess of the Maximum Rate provided in the Funding Loan Agreement; and Obligor shall not be obligated or required to pay, nor shall the Holder be permitted to charge or collect, interest at a rate in excess of such Maximum Rate. If by the terms of this Governmental Lender Real Estate Note or of the Funding Loan Agreement, Obligor is required to pay interest at a rate in excess of such Maximum Rate, the rate of interest hereunder or thereunder shall be deemed to be reduced immediately and automatically to such Maximum Rate, and any such excess payment previously made shall be immediately and automatically applied to the unpaid balance of the principal sum hereof and not to the payment of interest. Amounts payable hereunder representing late payments, penalty payments or the like shall be payable to the extent allowed by law. THE FISCAL AGENT IS PROHIBITED FROM REGISTERING THE OU~'NERSHIP OR TRANSFER OF OV~JNERSHIP OF THIS NOTE TO ANY PERSON WITHOUT MEETING .THE REQUIREMENTS SET FORTH IN THE FUNDING LOAN AGREEMENT DESCRIBED HEREIN, INCLUDING, IN CERTAIN INSTANCES, DELNERY OF AN EXECUTED IT~IVESTOR LETTER AS DEFINED IN AND ATTACHED TO THE FUNDING LOAN AGREEMENT. This Governmental Lender Real Estate Note is subject to all of the terms, conditions, and provisions of the Funding Loan Agreement, including those respecting prepayment and the acceleration of maturity. If there is an Event of Default under the Funding Loan Documents, then in any such event and subject to the requirements set forth in the Funding Loan Agreement, the Holder may declare the entire unpaid principal balance of this Governmental Lender Real Estate Note and accrued interest, if any, due and payable at once. Any portion of this Governmental Lender Real Estate Note remaining outstanding upon such an acceleration of this Governmental Lender Real Estate Note shall be deemed paid upon transfer, to or at the direction of the Funding Lender, of the Borrower Loan Documents and all security therefor fee aiid dear of the iien of this F'ui~d~n g Loan Agreement. Ail of the covenants, cond~t~ons and agreements contained in the Funding Loan Documents are hereby made part of this Governmental Lender Real Estate Note. No delay or omission on the part of the Holder in exercising any remedy, right or option under this Governmental Lender Real Estate Note or the Funding Loan Documents shall operate as a waiver of such remedy, right or option. In any event a waiver on any one occasion shall not be construed as a waiver or bar to any such remedy, right or option on a future occasion. The rights, remedies and options of the Holder under this Governmental Lender Real Estate Note and the Funding Loan Documents are C:1UsersltadlDesktoplSanta Ana HA Washington Place A_ 1 _2 FLA,doc DRAFT 11/28/12 8:39AM and shall be cumulative and are in addition to all of the rights, remedies and options of the Holder at law or in equity or under any other agreement. Obligor shall pay all costs of collection on demand by the Holder, including without limitation, reasonable attorneys' fees and disbursements, which costs may be added to the indebtedness hereunder, together with interest thereon, to the extent allowed by law, as set forth in the Funding Loan Agreement. This Governmental Lender Real Estate Note may not be changed orally. Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived. The acceptance by the Holder of any amount after the same is due shall not constitute a waiver of the right to require prompt payment, when due, of all other amounts due hereunder. The acceptance by the Holder of any sum in an amount less than the amount then due shall be deemed an acceptance on account only and upon condition that such acceptance shall not constitute a waiver of the obligation of Obligor to pay the entire sum then due, and Obligor's failure to pay such amount then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid. Consent by the Holder to any action of Obligor which is subj ect to consent or approval of the Holder hereunder shall not be deemed a waiver of the right to require such consent or approval to future or successive actions. C:1UsersltadlDesktoplSantaRna HA Washington Place A_ 1.3 FLA.doc DRAFT 11/28/12 8:39AM IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Governmental Lender Real Estate Note or caused this Governmental Lender Real Estate Note to be duly executed and delivered by its authorized representative as of the date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument. OBLIGOR: HOUSING AUTHORITY OF THE CITY OF SANTA ANA By: C:1tJsersltadlDesktoplSantaAna HAWashington Place A_ 1 _4 FLA.doc DRAFT 11/28/12 8:39AM CERTIFICATE OF AUTHENTICATION This Governmental Lender Note is the Governmental Lender Real Estate Note described in the within mentioned Funding Loan Agreement. Date of Authentication: WILMINGTON TRUST, NATIONAL ASSOCIATION, as Fiscal Agent By _ Name Title C:1~lsersltadlDesktoplSanta Ana HA Washington Place A_ ] _5 FLA.doc DRAFT 11/28/12 8:39AM ~~ EXHIBIT A-2 FORM OF GOVERNMENTAL LENDER IRP NOTE HOUSING AUTHORITY OF THE CITY OF SANTA ANA MULTIFAMILY HOUSING REVENUE IRP NOTE (FLOWER TERRACE) 2012 SERIES A-2 DATED DECEMBER _, 2012 $ [ConPrinAmt] FOR VALUE RECEIVED, the undersigned HOUSING AUTHORITY OF THE CITY OF SANTA ANA ("Obligor"} promises to pay to the order of CITIBANK, N.A. ("Holder") the maximum principal sum of MILLION H[t1NDRED THOUSAND DOLLARS $[ConPrinAmt], on 20_, or earlier as provided herein, together with interest thereon at the rates, at the times and in the amounts provided below. Obligor shall pay to the Holder on or before each date on which payment is due under that certain Funding Loan Agreement, dated as of December 1, 2012 (the "Funding Loan Agreement"), among Obligor, Holder and [Wilmington Trust, National Association], as fiscal agent ("Fiscal Agent"), an amount in immediately available funds sufficient to pay the principal amount of and Prepayment Premium, if any, on this Governmental Lender IRP Note then due and payable, whether by maturity, acceleration, prepayment or otherwise. In the event that amounts held derived from proceeds of this Governmental Lender IRP Note, condemnation awards or insurance proceeds or investment earnings thereon are applied to the payment of principal due on this Governmental Lender IRP Note in accordance with the Funding Loan Agreement, the principal amount due hereunder shall be reduced to the extent of the principal amount of this Governmental Lender IRP Note so paid. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Funding Loan Agreement. Obligor shall pay to the Holder on or before each date on which interest on the Funding Loan is payable interest on the unpaid balance hereof in an amount in immediately available funds sufficient to pay the interest on this Governmental Lender IRP Note then due and payable in the amounts and at the rate or rates set forth in the Funding Loan Agreement. This Government Lender IlZP Note is apass-through obligation relating to the construction and permanent portion of a loan (the "Borrower Loan") made by Obligor from proceeds of the Funding Loan to Washington Place Partners, LP, a California limited partnership, as borrower (the "Borrower"), under that certain Borrower Loan Agreement, dated as of December 1, 2012 (as the same may be modified, amended or supplemented from time to time, the "Borrower Loan Agreement"), between the Obligor and the Borrower. The portion of the Borrower Loan related to this Governmental Lender IRP Note evidenced by the Borrower IRP Note (as defined in the Borrower Loan Agreement). Reference is made to the Borrower Loan Agreement and to the Borrower TAp ?lTote for con~~rlete payment and prepayment terms of the Borrower IRP Note, payments on which are passed-through under the Governmental Lender IRP Note. This Governmental Lender IRP Note is a limited obligation of the Obligor, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned under the Funding Loan Agreement. None of the Governmental Lender, the City of Santa Ana, the State, or any political subdivision thereof (except the Governmental Lender, to the limited extent set forth herein) nor any public agency shall in any event be liable for the payment of the principal of, premium (if any) or interest C:\LJsers\tadlDesktoplSantaRna HA Washington Place FLA.doc DRAFT 11/28/12 ~:39AM on this Governmental Lender IRP Note or the Funding Loan or for the performance of any pledge, obligation or agreement of any kind whatsoever with respect thereto except as set forth herein and in the Funding Loan Agreement, and none of the Funding Loan or this Governmental Lender IRP Note or any of the Governmental Lender9s agreements or obligations with respect to the Funding Loan or this Governmental Lender IRP Note shall be construed to constitute an indebtedness of or a pledge of the faith and credit of or a loan of the credit of or a moral obligation of any of the foregoing within the meaning of any constitutional or statutory provision whatsoever. The Governmental Lender has no taxing power. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Funding Loan Agreement or in the Borrower Loan Agreement. This Governmental Lender IRP Note is subject to the express condition that at no time shall interest be payable on this Governmental Lender IRP Note or the Funding Loan Agreement at a rate in excess of the Maximum Rate provided in the Funding Loan Agreement; and Obligor shall not be obligated or required to pay, nor shall the Holder per permitted to charge or collect, interest at a rate in excess of such Maximum Rate. If by the terms of this Governmental Lender IRP Note or of the Funding Loan Agreement, Obligor is required to pay interest at a rate in excess of such Maximum Rate, the rate of interest hereunder or thereunder shall be deemed to be reduced immediately and automatically to such Maximum Rate, and any such excess payment previously made shall be immediately and automatically applied to the unpaid balance of the principal sum hereof and not to the payment of interest. Amounts payable hereunder representing late payments, penalty payments or the like shall be payable to the extent allowed by law. THE FISCAL AGENT IS PROHIBITED FROM REGISTERING THE OWNERSHIP OR TRANSFER OF OV4'NERSHIP OF THIS NOTE TO ANY PERSON WITHOUT MEETING THE REQUIREMENTS SET FORTH IN THE FUNDING LOAN AGREEMENT DESCRIBED HEREIN, INCLUDING, IN CERTAIN INSTANCES, DELIVERY OF AN EXECUTED Il~VESTOR LETTER AS DEFINED IN .AND ATTACHED TO THE FUNDING LOAN AGREEMENT. This Governmental Lender IRP Note is subject to all of the terms, conditions, and provisions of the Funding Loan Agreement, including those respecting prepayment and the acceleration of maturity. If there is an Event of Default under the Funding Loan Documents, then in any such event and subject to the requirements set forth in the Funding Loan Agreement, the Holder may declare the entire unpaid principal balance of this Governmental Lender IRP Note and accrued interest, if any, due and payable at once. Any portion of this Governmental Lender IRP Note remaining outstanding upon such an acceleration of this Governmental Lender IRP Note shall be deemed paid upon transfer, to or at the direction of the Funding Lender, of the Borrower Loan Documents and all security therefor free and clear of the lien of this Funding Loan Agreement. All of the covenants, conditions and agreements contained in the Funding Loan Documents are hereby made part of this Governmental Lender IRP Note. No delay or omiss~o~i on the pars of the Holder In exerc~s~ng any remedy, right or option 'tinder this Governmental Lender IRP Note or the Funding Loan Documents shall operate as a waiver of such remedy, right or option. In any event a waiver on any one occasion shall not be construed as a waiver or bar to any such remedy, right or option on a future occasion. The rights, remedies and options of the Holder under this Governmental Lender IRP Note and the Funding Loan Documents are and shall be cumulative and are in addition to all of the rights, remedies and options of the Holder at law or in equity or under any other agreement. C:1UsersltadlDesktoplSantaAna HA Washington Place A_2_2 FLA.doc DRAFT 11/28/12 8:39AM Obligor shall pay all costs of collection on demand by the Holder, including without limitation, reasonable attorneys' fees and disbursements, which costs may be added to the indebtedness hereunder, together with interest thereon, to the extent allowed by law, as set forth in the Funding Loan Agreement. This Governmental Lender IRP Note may not be changed orally. Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived. The acceptance by the Holder of any amount after the same is due shall not constitute a waiver of the right to require prompt payment, when due, of all other amounts due hereunder. The acceptance by the Holder of any sum in an amount less than the amount then due shall be deemed an acceptance on account only and upon condition that such acceptance shall not constitute a waiver of the obligation of Obligor to pay the entire sum then due, and Obligor's failure to pay such amount then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid. Consent by the Holder to any action of Obligor which is subject to consent or approval of the Holder hereunder shall not be deemed a waiver of the right to require such consent or approval to future or successive actions. C:1UsersltadlDesktoplSantaRna HA Washington Place A_2_3 FLA.doc DRAFT 11/28/12 8:39AM IN WITNESS WI-IEREOF, the undersigned has duly executed and delivered this Governmental Lender IRP Note or caused this Governmental Lender IRP Note to be duly executed and delivered by its authorized representative as of the date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument. OBLIGOR: HOUSING AUTHORITY OF THE CITY OF SANTA ANA By: C:1UsersltadlDesktoplSantaAm HA Washington Place A_2.4 FLA.doc ,. DRAFT 11/28/12 8:39AM CERTIFICATE OF AUTHENTICATION This Governmental Lender Note is the Governmental Lender IRP Note described in the within mentioned Funding Loan Agreement. Date of Authentications [WILMINGTON TRUST, NATIONAL ASSOCIATION], as Fiscal Agent By _ Name Title C:IiJsersltadlDesktoplSantaAna IIA Washington Place A_2_S FLA.doc DRAFT 11/28!12 8:39~M EXHIBIT B F(JRM OF INVEST~JR LETTER f , 20-] Housing Authority of the City of Santa Ana [Wilmington Trust, National Association] Re: Housing Authority of the City of Santa Ana Multifamily Housing Revenue [Real Estate][IRP] Note (Flower Terrace) 2011 Series A-1 [2] (the "Governmental Lender Note"), evidencing the [Real Estate] [IRP] portion of a loan (the "Funding Loan") in the maximum principal amount of $ from Citibank, N.A. (the "Funding Lender") to the Housing Authority of the City of Santa Ana (the "Governmental Lender") pursuant to a Funding Loan Agreement, dated as of December 1, 2012 (the "Funding Loan Agreement") among the Funding Lender, the Governmental Lender and [Wilmington Trust, National Association] ("Fiscal Agent") Ladies and Gentlemen: The undersigned, as holder (the "Holder") of the above referenced Governmental Lender Note evidencing a portion of the above referenced Funding Loan originated under a Funding Loan Agreement dated as of December 1, 2012 (the "Funding Loan Agreement") among the Housing .Authority of the City of Santa Ana (the ("Lender"), Holder, as funding lender, and [Wilmington Trust, National Association] ("Fiscal Agent"), hereby represents that: 1. The Holder has sufficient knowledge and experience in financial and business matters with respect to the evaluation of residential real estate developments such as the Project to be able to evaluate the risk and merits of the investment represented by the Funding Loan. We are able to bear the economic risks of such investment. 2. The Holder acknowledges that it has either been supplied with or been given access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and the Holder has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Governmental Lender, the Project, the Borrower, the use of proceeds of the Funding Loan and the Funding Loan, the Governmental Lender Note and the security therefor so that, as a reasonable investor, the Holder has been able to make its decision to extend the Funding Loan and acquire the Governmental Lender Note. The Holder acknowledges that it has not relied upon the addressees hereof for any information in connection with the Holder's purchase of Governmental Lender Note. 3. The Holder is a Qualified Buyer. 4. The Holder acknowledges that it is purchasing the Governmental Lender Note for investment for its own account and not with a present view toward resale or the distribution thereof, in that it does not now intend to resell or otherwise dispose of all or any part of its interests in the Governmental Lender Note; provided, however, that the Holder may sell or transfer the Governmental C:1tJsersltadlDesktop\Santa Ana HA Washington Place FLA.doc DRAFT 11/28/12 ~:39AM Lender Note in whole or any participation interests in the Governmental Lender Note, to Qualified Buyers, in each case only in Authorized Denominations, subject to, except as otherwise provided in Section 2.6 of the Funding Loan Agreement, delivery to the Governmental Lender and the Fiscal Agent of an investor letter from the transferee in substantially the same substance as this Investor Letter with no revisions except as maybe approved in writing by the Governmental Lender. The Holder shall not sell or transfer the Governmental Lender Note or any interest therein to a party related to or affiliated with the Borrower or any general partner, limited partner or member of the Borrower without the prior written consent of the Governmental Lender. 5. The Holder understands that the Governmental Lender Note is a limited obligation of the Governmental Lender, payable solely from funds and moneys pledged and assigned under the Funding Loan Agreement, and that the liabilities and obligations of the Governmental Lender with respect to the Governmental Lender Note are expressly limited as set forth in the Funding Loan Agreement and related documents. 6. The Holder hereby waives the requirement of any "due diligence investigation or inquiry" by the Governmental Lender, by each employee of the Governmental Lender, by each member of the Board of Commissioners of the Governmental Lender, and by counsel to the Governmental Lender, the Fiscal Agent, counsel to the Fiscal Agent and Tax Counsel in connection with the authorization, execution and delivery of the Governmental Lender Note and the Holder's purchase of the Governmental Lender Note, other than, in the case of counsel, such professional due diligence normally and customarily required for such counsel to deliver any opinion delivered by it in connection with the issuance of the Governmental Lender Note. The Holder recognizes and agrees that the Governmental Lender, each employee of the Governmental Lender, each member of the Board of Commissioners of the Governmental Lender, counsel to the Governmental Lender, the Fiscal Agent, counsel to the Fiscal Agent and Tax Counsel have made no representations or statements (expressed or implied) with respect to the accuracy or completeness of any of the materials reviewed by the Holder in connection with the Holder's purchase of the Governmental Lender Note. In making an investment decision, the Holder is relying upon its own examination of the Governmental Lender, the Borrower, the Project and the terms of the Governmental Lender Note. 7. The Holder understands that (a) the Governmental Lender Note has not been registered with any federal or state securities agency or commission, and (b) no credit rating has been sought or obtained with respect to the Governmental Lender Note, and the Holder acknowledges that the Governmental Lender Note is a speculative investment and that there is a high degree of risk in such investment. 8. The Holder acknowledges that the Governmental Lender Note is a limited obligation of the Governmental Lender, payable solely from amounts provided by or at the direction of the Borrower, and is not an obligation payable from the general revenues or other funds of the Governmental Lender, the State of California or any other political subdivision of the State of California. The Holder acknowledges that the Governmental Lender is issuing the Governmental Lender Note on a conduit, nonrecourse basis, and has no continuing obligations ~~~ith respect thereto except as expressly set forth ir. the Funding Loan Agreement. 9. The Holder agrees to indemnify and hold harmless the Governmental Lender, its officers, employees and agents and the members of the governing board of the Governmental Lender, past, present and future, with respect to any claim asserted against any of them that is based upon the Holder's sale, transfer or other disposition of its interest in the Funding Loan in violation of the provisions hereof or of the Funding Loan Agreement or any inaccuracy in any statement made by the Holder in this letter. C:\UsersltadlDesktoplSantaAna HAWashington Place $_~ FLA.doc DRAFT 11/28/12 8:39AM lo. Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Funding Loan Agreement. C:1UsersltadlDesktoplSantaAna HAWashington Place B_3 FLA.doc ~.~.~ DRAFT 11/28/12 8:39AM ~~~~~~ [Signature Page to Investor Letter] [ ], as Holder ~y Narrle Its C:1UsersltadlDesktoplSanta Ana HA Washington Place B_4 F1.A.doc DRAFT 11/28/12 8:39AM ~- EXHIBIT C FORM OF WRITTEN REQUISITION OF THE BORROWER To: Wilmington Trust, National Association, as Fiscal Agent (the "Fiscal Agent") under that certain Funding Loan Agreement, dated as of December 1, 2012, among Citibank, N.A., as Funding Lender, Housing Authority of the City of Santa Ana, as Governmental Lender, and the Fiscal Agent (the "Funding Loan A.. er~ement"). 1. You are requested to disburse funds from the Project Fund pursuant to Section 7.7 of the Funding Loan Agreement in the amount(s), to the person(s) and for the purpose(s) set forth on Schedule I attached hereto and incorporated herein by reference. An invoice or other appropriate evidence of the obligations described on Schedule I is attached hereto. 2. The undersigned certifies that: (i) there has been received no notice (A) of any lien, right to lien or attachment upon, or claim affecting the right of the payee to receive payment of, any of the moneys payable under such requisition to any of the persons, firms or corporations named therein, and (B) that any materials, supplies or equipment covered by such requisition are subject to any lien or security interest, or if any notice of any such lien, attachment, claim or security interest has been received, such lien, attachment, claim or security interest has been released, discharged, insured or bonded over or will be released, discharged, insured or bonded over upon payment of the requisition; (11) such requisition contains no items representing payment on account of any percentage entitled to be retained at the date of the certificate; (iii) the obligation stated on the requisition has been incurred in or about the construction or equipping of the Project, each item is a proper charge against the Project Fund, and the obligation has not been the basis for a prior requisition that has been paid; (iv) such requisition contains no items representing any Costs of Issuance or any other amount constituting an issuance cost under Section 147(g) of the Code; (v) not less than 97% of the sum of: (A) the amounts requisitioned by this Requisition to be funded with the proceeds of the Governmental Lender Note plus (B) all amounts allocated to the Governmental Lender Note previously disbursed from the Project Fund, have been or will be applied by the Borrower to pay Qualified Project Costs; (vi) as of the date hereof no event or condition has happened or is happening or exists that constitutes, or that with notice or lapse of time or both, would constitute, an Event of Default under the Funding Loan Agreement; and (vii) attached as Schedule I to this Requisition is an exhibit that allocates the amount requested hereby among the sources for payment. [3. The undersigned has provided you with this Requisition an endorsement to the mortgagee title insurance policy delivered to the Fiscal Agent at closing increasing the affirmative mechanics and materialmen's lien coverage to an amount equal to the aggregate amount paid out of the Project Fund C:1UsersltadlDesktoplSanta Ana HA Washington Place c_ 1 FLA.doc ~~ DRAFT ~ 1/28/12 8:39AM including the amount to be paid under the requisitions then being submitted, together with any lien waivers or reports with respect to title to the Project required for the issuance of such endorsement.] Dated: B®RROWER: i~VASHINGT4N PLACE PARTNERS, LP, a California limited partnership By: 'Washington Place Management, LLC, a California limited liability company, its Administrative General Partner By: David A. Beacham, Authorized Signatory By: Hearthstone Housing Foundation, a California nonprofit public benefit corporation its Managing General Partner By: Socorro Vasquez, Executive Director C:1IJsersltadlDesktoplSanta Ana HA Washington Place c_2 FLA.doc DRAFT 1 1128/1 2 8,39AM EXHIBIT D FORM OF WRITTEN REQUISITION OF THE BORROWER -CLOSING COSTS FUND To: Wilmington Trust, National Association, as Fiscal Agent (the "Fiscal Agent") under that certain Funding Loan Agreement, dated as of December 1, 2012, among Citibank, N.A., as Funding Lender, Housing Authority of the City of Santa Ana, as Governmental Lender, and the Fiscal Agent (the "Funding Loan A egr ement"). 1. You are requested to disburse funds from the Closing Costs Fund pursuant to Section 7.6 of the Funding Loan Agreement in the amount(s), to the person(s) and for the purpose(s) set forth on Schedule I attached hereto and incorporated herein by reference. An invoice or other appropriate evidence of the obligations described on Schedule I is attached hereto. 2. The undersigned certifies that as of the date hereof no event or condition has happened or is happening or exists that constitutes, or that with notice or lapse of time or both, would constitute, an Event of Default the Funding Loan Agreement. Dated: BORROWER: WASHINGTON PLACE PARTNERS, LP, a California limited partnership By: Washington Place Management, LLC, a California limited liability company, its Administrative General Partner By: David A. Beacham, Authorized Signatory By: Hearthstone Housing Foundation, a California nonprofit public benefit corporation its Managing General Partner By~ e Socorro Vasquez, Executive Director C:1IJsersltadlDesktoplSantaAna I-1A Washington Place D_ 1 FLA.doc DRAFT 11/28/12 8:39AM