financing agreement by and among bernalillo county, …
TRANSCRIPT
SHERMAN & HOWARD L.L.C.
DRAFT – JANUARY 14, 2021
FINANCING AGREEMENT
By and Among
BERNALILLO COUNTY, NEW MEXICO
CEDAR RAPIDS BANK & TRUST COMPANY,
as Lender
and
SAN ROQUE APARTMENTS, LLC,
as Borrower
Dated as of [DATED DATE], 2021
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TABLE OF CONTENTS
(THIS TABLE OF CONTENTS IS NOT A PART OF THIS FINANCING AGREEMENT, BUT
IS ONLY FOR CONVENIENCE OF REFERENCE.)
Page
ARTICLE I DEFINITIONS AND INTERPRETATION ............................................................... 5
Section 1.1 Definitions............................................................................................................ 5 Section 1.2 Interpretation ........................................................................................................ 9 Section 1.3 Recitals, Titles and Headings ............................................................................... 9
Section 1.4 Exhibits and Schedules ........................................................................................ 9
ARTICLE II REPRESENTATIONS AND WARRANTIES ....................................................... 10
Section 2.1 Representations and Warranties of the County .................................................. 10
Section 2.2 Representations, Warranties and Covenants of the Borrower ........................... 11 Section 2.3 Representations and Warranties of the Lender .................................................. 13
ARTICLE III ISSUANCE OF THE BOND ................................................................................. 15
Section 3.1 Issuance and Sale of the Bond ........................................................................... 15 Section 3.2 Delivery of the Bond and Closing of the Loan .................................................. 15 Section 3.3 Terms of the Bond ............................................................................................. 16
Section 3.4 Redemption of the Bond .................................................................................... 16 Section 3.5 Registration and Transfer ................................................................................... 17
Section 3.6 Limitation on Liability of County ...................................................................... 18 Section 3.7 No Warranty....................................................................................................... 19
ARTICLE IV THE LOAN............................................................................................................ 20
Section 4.1 Amount, Source and Funding of Loan ............................................................... 20
Section 4.2 Loan Repayment ................................................................................................ 20 Section 4.3 Additional Payments .......................................................................................... 21 Section 4.4 Nature of the Borrower’s Obligations................................................................ 21
Section 4.5 Prepayment of Note ........................................................................................... 22 Section 4.6 Servicing and Reporting Requirements ............................................................. 22
Section 4.7 Rights Under Loan Agreement .......................................................................... 23 Section 4.8 Rights Under Security ........................................................................................ 23 Section 4.9 Insurance and Condemnation Proceeds ............................................................. 23
ARTICLE V FURTHER AGREEMENTS ................................................................................... 25
Section 5.1 Covenants of the County .................................................................................... 25 Section 5.2 Borrower to Maintain its Existence; Conditions Under Which Exceptions
Permitted ............................................................................................................ 25
Section 5.3 Sale or Conveyance of the Facilities .................................................................. 26 Section 5.4 Tax-Exempt Status of Bond; Arbitrage ............................................................. 27 Section 5.5 Additional Instruments....................................................................................... 28 Section 5.6 Books and Records. ........................................................................................... 28 Section 5.7 Notice of Certain Events .................................................................................... 29 Section 5.8 Indemnification of the County and the Lender .................................................. 29
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Section 5.9 Compliance with Usury Laws ............................................................................ 30
Section 5.10 Compliance with Other Laws ............................................................................ 30 Section 5.11 Maintenance and Repair of Facilities ................................................................ 30
Section 5.12 Additional Covenants Required by the Lender .................................................. 31
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ........................................................ 32
Section 6.1 Defaults .............................................................................................................. 32 Section 6.2 Loan Acceleration Default ................................................................................. 33 Section 6.3 Remedies ............................................................................................................ 33
Section 6.4 Attorneys’ Fees and Costs ................................................................................. 33 Section 6.5 No Remedy Exclusive........................................................................................ 34 Section 6.6 No Additional Waiver Implied by One Waiver ................................................. 34
ARTICLE VII MISCELLANEOUS ............................................................................................. 35
Section 7.1 Entire Agreement ............................................................................................... 35 Section 7.2 Notices ............................................................................................................... 35
Section 7.3 Assignments ....................................................................................................... 36 Section 7.4 Waiver of Jury Trial ........................................................................................... 36 Section 7.5 Severability ........................................................................................................ 36
Section 7.6 Execution of Counterparts ................................................................................. 37 Section 7.7 Amendments, Changes and Modifications ........................................................ 37
Section 7.8 Governing Law .................................................................................................. 37 Section 7.9 Term of Agreement ............................................................................................ 37 Section 7.10 Non-Business Days ............................................................................................ 37
Section 7.11 No Violations of Law......................................................................................... 37
Exhibit A – Additional Terms A-1
Exhibit B – Form of Bond B-1
Exhibit C – Form of Investor Letter C-1
Schedule I – Litigation S-1
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FINANCING AGREEMENT
THIS FINANCING AGREEMENT (this “Agreement”), dated as of [DATED DATE],
2021, is by and among BERNALILLO COUNTY, NEW MEXICO (the “County”), a body
corporate and political subdivision of the State of New Mexico, CEDAR RAPIDS BANK &
TRUST COMPANY, an Iowa banking corporation qualified to do business under the laws of the
State of New Mexico, as lender and initial purchaser (the “Lender”), and SAN ROQUE
APARTMENTS, LLC, a New Mexico limited liability company (the “Borrower”).
W I T N E S S E T H:
WHEREAS, Act authorizes the County to issue bonds and other obligations to finance
the cost of the provision of decent, safe and sanitary dwelling accommodations constituting a
“housing project” (as such term is defined in the Act); and
WHEREAS, the County, the Lender and the Borrower each have full power and authority
to enter into this Agreement; and
WHEREAS, pursuant to an authorizing ordinance, the County has authorized the
issuance of its Multifamily Housing Revenue Bond (San Roque Apartments Project) Series 2021
in the maximum principal amount of $[PAR AMOUNT] (the “Bond”), the proceeds of which are
to be used to fund a loan to the Borrower in the maximum principal amount of $[PAR
AMOUNT] (the “Loan”) in order to (a) finance the acquisition, construction and equipping by
the Borrower of a 136-unit multifamily housing project to be located on Coors Blvd. NW
between Los Volcanes Road NW and Bluewater Road NW, Albuquerque, NM 87121, adjacent
to the Bank of Albuquerque, and (b) to pay for certain costs of issuance associated with the
issuance of the Bond (collectively, the “Project”); and
WHEREAS, the Borrower desires to borrow funds to finance the Project and to pay such
costs of issuance upon the terms and conditions in this Agreement set forth below; and
WHEREAS, the Lender has duly entered into that certain Continuing Covenants
Agreement dated as of [CLOSING DATE], 2021 (as the same may from time to time be
amended or supplemented as provided therein, the “Loan Agreement”) dated as of the Closing
Date between the Lender and the Borrower under which the proceeds of the Bond will be
advanced and loaned to the Borrower to finance the Project; and
WHEREAS, the Lender, in its capacity as servicer, has agreed (a) to collect amounts
from the Borrower, (b) to apply such amounts to the payment of the principal and interest due on
the Bond as provided herein, and (c) to supply the County with periodic statements regarding
such transactions, all as provided herein; and
WHEREAS, the payment of the Bond will be secured by an assignment primarily for
security purposes of the Note evidencing the Loan, together with other collateral, and the
security for the payment of the Loan as described in Section I.B of Exhibit A hereto
(collectively, the “Security”);
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WHEREAS, the parties hereto desire to confirm the underlying financial transactions
between the Lender and the Borrower, and in particular that in the event of a default under the
Loan, at the Lender’s option the Bond would be accelerated and the Lender may exercise its
rights under the Security pledged thereto.
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants
herein contained, the parties hereto formally covenant, agree and bind themselves as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. Capitalized words and terms as used in this Agreement shall
have the following meanings, unless the context or use otherwise requires:
“Act” means, collectively, the New Mexico Municipal Housing Act, Sections 3-45-1
through 3-45-25, NMSA 1978, as amended, the New Mexico County Revenue Bonds Act,
Sections 4-62-1 through 4-62-10, NMSA 1978, as amended, and Section 4-37-1, NMSA 1978 as
amended.
“Act of Bankruptcy of the Borrower” means the filing of a petition in bankruptcy (or
other commencement of a bankruptcy or similar proceeding) by or against the Borrower, under
any applicable bankruptcy, insolvency or similar law now or hereafter in effect which has not
been dismissed within sixty (60) days of such filing.
“Agreement” means this Financing Agreement dated as of [DATED DATE], 2021 by
and among the County, the Lender and the Borrower, as amended and supplemented from time
to time.
“Assignment of Security” means the assignment by the County of the Security (except
for the Unassigned Issuer’s Rights) to the Lender, as registered owner of the Bond pursuant to
the Assignment of Loan Documents dated the Closing Date from the County to and for the
benefit of the Lender.
“County” means Bernalillo County, New Mexico, a body corporate and political
subdivision of the State, or any successor thereto.
“Bond” means the County’s Multifamily Housing Revenue Bond (San Roque Apartments
Project) Series 2021 in the maximum Principal Amount of $[PAR AMOUNT].
“Bond Counsel” means an attorney at law or a firm of attorneys, designated by the
County, of nationally recognized standing in matters pertaining to the tax status of interest on
bonds issued by states and their political subdivisions, duly admitted to the practice of law before
the highest court of any state of the United States of America or the District of Columbia.
“Borrower” means San Roque Apartments, LLC, a New Mexico limited liability
company, and its successors and assigns.
“Borrower Representative” means the person or persons at the time designated by the
Borrower to act on behalf of the Borrower by written certificate furnished to the County and the
Lender containing the specimen signatures of such person or persons and signed on behalf of the
Borrower by one of the Borrower’s officers. Such certificate may designate an alternate or
alternates.
“Business Day” means a day other than a Saturday, a Sunday or a day on which banks in
(a) the city in which the principal office of the Lender from which the Loan is serviced from time
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to time is located, or (b) the State of New Mexico are authorized or obligated by law or executive
order to close.
“Closing Date” means [CLOSING DATE], 2021, being the date of initial issuance and
delivery of the Bond.
“Code” means the Internal Revenue Code of 1986, as amended to the Closing Date, and
the Regulations thereunder or any successor to the Internal Revenue Code of 1986. Reference to
any particular Code section shall, in the event of such successor Code, be deemed to be reference
to the successor to such Code section.
“Conditions to Conversion” means the conditions to conversion of the Loan from a
construction loan to a permanent loan as defined in Section 2.9 of the Loan Agreement.
“Conversion Date” has the meaning as defined in the Loan Agreement.
“Default” means any occurrence described in Section 6.1 hereof.
“Determination of Taxability” means the issuance of (a) a final judgment or order of a
court of competent jurisdiction, or a final ruling or decision of the IRS, in any such case to the
effect that the interest on the Bond is includable in gross income for federal income tax purposes
(other than interest on the Bond for any period during which the Bond is held by a “substantial
user” of any facility financed with the proceeds of the Bond or a “related person,” as such terms
are used in Section 147(a) of the Code), or (b) the enactment of federal legislation that would
cause the interest on the Bond to be includable in gross income for federal income tax purposes.
Any judgment or order of a court of competent jurisdiction or ruling or decision of the IRS shall
be considered final only if no appeal or action for judicial review has been filed (and is pending)
and the time for filing the appeal or action has expired.
“Environmental Indemnity Agreement” means the Environmental and ADA Indemnity
Agreement dated as of [CLOSING DATE], 2021, executed by the Borrower and the Guarantor
in favor the Lender.
“Facilities” means 136-unit multifamily housing project to be located on Coors Blvd.
NW between Los Volcanes Road NW and Bluewater Road NW, Albuquerque, NM 87121,
adjacent to the Bank of Albuquerque.
“Financing Documents” means this Agreement, the Tax Certificate, the Regulatory
Agreement, the Note, the Loan Agreement, the Lease Agreement, the Security, the
Environmental Indemnity Agreement, all guaranties of the Loan, the Assignment of Security and
all other documents and instruments executed by the Borrower or the Guarantor in connection
with the Loan or the Bonds.
“Guarantor” means, individually and collectively, Thomas Development Co., Northwest
Integrity Housing Co. and Thomas C. Mannschreck, and their respective successors and assigns.
“Interest Payment Date” means (a) the [___th (__th)] day of each month, commencing on
[PAYMENT DATE], 2021, (b) any other date on which principal of, premium, if any, and
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interest on the Bond is due and payable, whether at maturity, prior redemption, acceleration or
otherwise, or (c) any other date on which principal of, premium, if any, and interest on the Note
is due and payable, whether at maturity, prepayment, acceleration or otherwise.
“Interest Rate” means the rate or rates on the Bond as in effect from time to time and
specified in Section I.A of Exhibit A hereto.
“Issuance Costs” means all costs and expenses of issuance of the Bond, which amounts
may be payable from proceeds of the Bond or from other sources. Issuance Costs payable from
proceeds of the Bond may not exceed 2% of the proceeds of the Bond.
“Lease Agreement” means that Lease Agreement dated as of [DATED DATE], 2021, by
and between the County, as lessor, and the Borrower, as lessee, as the same may be amended
from time to time.
“Lender” means Cedar Rapids Bank & Trust Company, any surviving, resulting or
transferee corporation of Cedar Rapids Bank & Trust Company and any transferee owner of the
Bond then Outstanding.
“Loan” means the secured loan originated by the County, as secured lender, to the
Borrower and assigned to the Lender pursuant to the Assignment of Security, maturing on
[EARLY MATURITY DATE], 20[__] (if Conversion has not occurred by such date) or [FINAL
MATURITY DATE], 20[__] (if Conversion occurs), in the maximum Principal Amount of
$[PAR AMOUNT] plus interest at the Interest Rate specified in Section II.A of Exhibit A hereto
for the purpose of acquiring, constructing and equipping the Project.
“Loan Acceleration Default” means any occurrence described in Section 6.2 hereof.
“Loan Agreement” has the meaning set forth in the recitals.
“Managing Member” means San Roque-NIHC Associates, LLC, a New Mexico limited
liability company, as the sole Managing Member of the Borrower.
“Minimum Beneficial Ownership Amount” means an amount no less than the greater of
(a) fifteen percent (15%) of the outstanding principal amount of the Bond or (b) $500,000.
“Note” means the Promissory Note (Series 2021) executed by the Borrower and payable
to the order of the Lender, as assignee of the County, to evidence the Loan.
“Outstanding” means, when used as of any particular time with reference to the Bond, the
initial Principal Amount of the Bond plus the Principal Amount of each draw delivered pursuant
to Section 3.3 hereof, less any payments of such principal previously received by the Lender.
“Permanent Loan” means the Loan upon its conversion after satisfaction of the
Conditions to Conversion, at which time the Principal Amount of the Loan will not exceed the
lesser of: (a) $[PAR AMOUNT], (b) the amount necessary to achieve a proforma debt service
coverage ratio of 1.15 to 1.00, or (c) 90% of the as-stabilized appraised value of the Project, and
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the maturity date will be extended to a date not later than [seventeen (17) years] from
[CONVERSION DATE], 20[__].
“Person,” unless the context requires, includes any individual, corporation, partnership,
joint venture, association, joint-stock company, trust company, trust, unincorporated organization
or government or agency or political subdivision thereof.
“Prepayment Premium” or “premium” means the prepayment premium payable pursuant
to the Note and the other Financing Documents for prepayment of the Note after the Conversion
Date.
“Principal Amount” means $[PAR AMOUNT], the maximum principal amount of the
Bond and the Loan.
“Project” means the financing of the Facilities and the payment of Issuance Costs.
“Rebate Amount” means the amount, if any, determined to be payable with respect to the
Bond by the Borrower to the United States of America in accordance with Section 5.4 hereof and
Section 148(f) of the Code.
“Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive
Covenants dated as of [DATED DATE], 2021, between the County and the Borrower, required
to be executed, delivered and recorded with respect to the Project, as the same may be amended
from time to time in accordance with the provisions thereof.
“Revenues” means all moneys paid or payable to the County in respect of payments or
prepayments of principal of, Prepayment Premium, if any, and interest on the Note, and all
receipts of the Lender, including but not limited to payment and prepayments of the Note,
proceeds of insurance or condemnation awards that are not used to repair or replace the Facilities
and proceeds of Transfers pursuant to Section 5.3(b) hereof, which reduce the principal balance
of the Note.
“Security” means the security for the Loan as specified in Section I.B of Exhibit A hereto
together with all other current and future security for the Loan.
“State” means the State of New Mexico.
“Tax Certificate” means, collectively, the County’s and the Borrower’s respective
Federal Tax Exemption Certificates, each dated as of the Closing Date.
“Tax Credit Regulatory Agreement” means the Low Income Housing Tax Credit Land
Use Restriction Agreement with respect to the allocation of Federal low income housing tax
credits available to the Project.
“Transfer” means the sale, transfer, lease, encumbrance or other conveyance of title to
ownership of or an interest in the Facilities or any portion thereof, including to a “related person”
pursuant to the provisions of Section 267 or 707(b) or under Section 1563(a) of the Code.
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“Transferee” means the Person to whom the Borrower Transfers the Facilities or any
portion thereof.
“Unassigned Issuer’s Rights” means the County’s rights to reimbursement and payment
of its fees, costs and expenses under Section 4.3 hereof, its rights to review books and records
under Sections 4.6(d) and 5.6 hereof, its rights to indemnification under Sections 2.3(m), 3.5(c)
and 5.8 hereof, its rights to attorneys’ fees and costs under Sections 2.3(m), 3.5(c) and (e) and
6.4 hereof, its rights to receive notices, reports and other statements and its rights to consent to
certain matters, as provided herein, but not including those rights assigned under the Assignment
of Security.
Section 1.2 Interpretation. Unless the context clearly requires otherwise, words of
masculine gender shall be construed to include correlative words of the feminine and neuter
genders and vice versa, and words of the singular number shall be construed to include
correlative words of the plural number and vice versa. Any reference herein to the County or to
any officer, employee or official thereof includes entities, officers, employees or officials
succeeding to their respective functions, duties or responsibilities pursuant to or by operation of
law or who are lawfully performing their functions. This Agreement and all the terms and
provisions hereof shall be construed to effectuate the purpose set forth herein and to sustain the
validity hereof.
Section 1.3 Recitals, Titles and Headings. The terms and phrases used in the recitals
of this Agreement have been included for convenience of reference only, and the meaning,
construction and interpretation of all such terms and phrases for purposes of this Agreement shall
be determined by references to Section 1.1. hereof. The titles and headings of the articles and
sections of this Agreement have been inserted for convenience of reference only and are not to
be considered a part hereof, and shall not in any way modify or restrict any of the terms or
provisions hereof and shall never be considered or given any effect, in construing this Agreement
or any provision hereof or in ascertaining intent, if any question of intent should arise.
Section 1.4 Exhibits and Schedules. All exhibits and schedules to this Agreement,
including but not limited to any additional terms or provisions contained therein, are hereby
incorporated into this Agreement. In the event of any conflict between the provisions of Article I
through VII hereof and of said exhibits, the terms and provisions of said exhibits shall control.
(End of Article I)
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the County. The County represents
and warrants as follows:
(a) The County is a body corporate and political subdivision of the State.
(b) The County has lawful power and authority under the laws of the State,
including, without limitation, the Act, acting through its Board of Commissioners, to enter into
the transactions contemplated by this Agreement and to carry out its obligations hereunder,
including but not limited to lending the proceeds of the sale of the Bond to the Borrower to
finance the Project, and to enter into and perform its obligations under this Agreement, the Bond
and the Assignment of Security.
(c) To the County’s knowledge, no member of the Board of Commissioners
of the County or any other officer of the County has any significant or conflicting interest,
financial, employment or otherwise, in the Borrower, the Project or the transactions described
herein.
(d) The County has duly authorized the execution and delivery of this
Agreement, the Bond, the Assignment of Security and the Regulatory Agreement, has duly
executed and delivered this Agreement, the Bond, the Assignment of Security and the
Regulatory Agreement, and, assuming due authorization, execution and delivery by the other
parties thereto, this Agreement, the Bond, the Assignment of Security and the Regulatory
Agreement are the valid, legal and binding obligations of the County enforceable in accordance
with their respective terms except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability affecting the
enforcement of creditors’ rights and to general principles of equity and judicial discretion.
(e) To the County’s knowledge, the performance and the consummation of
the transactions on the part of the County contemplated in this Agreement and the compliance by
the County with the terms, conditions and provisions of this Agreement, the Bond, the
Assignment of Security and the Regulatory Agreement do not conflict with, or constitute on the
part of the County a violation of, breach of or default under (i) the Act; (ii) any order, rule or
regulation applicable to the County; (iii) any agreement or instrument to which the County is a
party or by which the County is bound; or (iv) any court order or consent decree to which the
County is subject.
(f) No litigation at law or in equity or administrative action of any nature has
been served on the County and is now pending materially adversely affecting (i) the existence of
the County; (ii) the authority of the County to accept or perform the duties and obligations of the
County under this Agreement, the Bond, the Assignment of Security and the Regulatory
Agreement; or (iii) the County’s ability to fulfill its duties and obligations under this Agreement,
the Bond, the Assignment of Security and the Regulatory Agreement.
(g) The County makes no other representations, either expressly or impliedly,
as to the Project or the financing thereof. THE COUNTY MAKES NO WARRANTY,
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EXPRESS OR IMPLIED, WITH RESPECT TO THE PROJECT OR ANY PORTION
THEREOF, INCLUDING, WITHOUT LIMITATION, THE HABITABILITY THEREOF; THE
MERCHANTABILITY OR FITNESS OR SUITABILITY THEREOF FOR ANY
PARTICULAR PURPOSES; THE DESIGN OR CONDITION THEREOF; THE
WORKMANSHIP, QUALITY OR CAPACITY THEREOF; LATENT DEFECTS THEREIN;
OR THE COMPLIANCE THEREOF WITH ANY LEGAL REQUIREMENTS.
Section 2.2 Representations, Warranties and Covenants of the Borrower. The
Borrower represents, as of the date hereof and as of the date of each request for disbursement,
and warrants and covenants that:
(a) The Borrower is a limited liability company duly organized, validly
existing and in good standing under the laws of the State and is qualified to transact business in
the State.
(b) The Financing Documents to which the Borrower is a party have been
duly executed and delivered by the Borrower and, when executed by all applicable parties, will
constitute the legal, valid and binding obligation of the Borrower, enforceable in accordance with
their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws or judicial decisions affecting the rights of creditors generally and by
general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) The Borrower has duly authorized as necessary (i) the execution and
delivery of the Financing Documents to which the Borrower is a party, (ii) the performance by
the Borrower of its obligations hereunder and thereunder, and (iii) the consummation of the
transactions contemplated by the Financing Documents to which the Borrower is a party.
(d) The execution and delivery of the Financing Documents to which the
Borrower is a party, the performance by the Borrower of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and thereby (i) do not
and will not violate any law, regulation, rule or ordinance or any order, judgment or decree of
any Federal, state or local court applicable to the Borrower, (ii) do not and will not conflict with
or constitute a breach of, or a default under, the Borrower’s organizational documents, and (iii)
do not and will not conflict with or constitute a breach of, or a material default under, any
document, instrument or commitment to which the Borrower is a party or by which the Borrower
or any of its property is bound.
(e) Except as shown on Schedule I hereto, there is no action, suit, proceeding,
inquiry or investigation by or before any court, governmental agency or public board or body
pending against the Borrower or, to the Borrower’s knowledge, threatened against the Borrower
(nor, to the Borrower’s knowledge, is there any basis therefor) which (i) affects or seeks to
prohibit, restrain or enjoin the execution and delivery of the Financing Documents to which the
Borrower is a party, (ii) affects or questions the validity or enforceability of the Financing
Documents to which the Borrower is a party or (iii) questions the existence of the Borrower or
the power or authority of the Borrower to carry out the transactions contemplated by, or to
perform its obligations contemplated by, or to perform its obligations under the Financing
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Documents to which the Borrower is a party, or the powers of the Borrower to acquire, own,
construct, equip, develop and/or operate the Facilities or to finance the Facilities.
(f) The Borrower is not in default under any document, instrument or
commitment to which the Borrower is a party or to which it or any of its property is subject
which default would or could materially and adversely affect the ability of the Borrower to carry
out its obligations under the Financing Documents.
(g) Neither the Financing Documents nor any document, certificate or written
statement (including but not limited to information with respect to the Facilities or the financing
thereof, but excluding any projections, opinions and forward looking statements), when taken as
whole, prepared and furnished to the Lender, the County or Bond Counsel by or on behalf of the
Borrower, contains any untrue statement of a material fact by the Borrower or omits to state a
material fact with respect to the Borrower or the Project necessary in order to make the
statements contained herein and therein, in light of the circumstances under which they were
made, not misleading. It is specifically understood by the Borrower that all such statements,
representations and warranties shall be deemed to have been relied upon by the County and the
Lender as an inducement to issue the Bond and effectuate the Loan, and that if any such
statements, representations and warranties were materially incorrect at the time they were made
or as of Closing Date, the County and the Lender may consider any such misrepresentation or
breach a Loan Acceleration Default, subject to the terms set forth in Section 6.1(a)(iii) hereof.
(h) The Borrower shall admit, treat and/or serve individuals, as applicable, in
the Facilities without regard to race, creed, color, sex, sexual preference, source of income (e.g.,
TANF, SSI), disability, religion, national origin, marital status, familial status or political opinion
or affiliation and shall respect, permit and not interfere with the religious beliefs of persons using
the Project. Except to the extent permitted by the constitutions, statutes and laws of the United
States and the State, the Borrower further agrees that it will not use or permit the use of the
Project as a place of religious worship or sectarian instruction.
(i) The acquisition, development, construction, equipping, ownership and
operation of the Facilities is consistent with the Borrower’s organizational documents.
(j) Any statements regarding the Project or the Borrower and set forth in a
certificate signed by a Borrower Representative and delivered pursuant to this Agreement shall
be deemed a representation and warranty by the Borrower as to such statements.
(k) The Borrower has filed or caused to be filed all Federal, state and local tax
returns or information returns which are required to be filed with respect to the Facilities on or
before the date hereof, and has paid or caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have become due and payable other
than those presently being or to be contested by the Borrower in good faith in accordance with
Section 4.3(a) hereof.
(l) To the extent a Loan is to be treated as a “program investment” as defined
in Treasury Regulation Section 1.148-1(b), the Borrower (or any “related person,” as such term
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is used in Section 147(a) of the Code) shall not purchase the Bond in an amount related to the
amount of the Loan.
Section 2.3 Representations and Warranties of the Lender. The Lender makes the
following representations and warranties:
(a) The Lender is a banking corporation duly organized and validly existing
under the laws of the State of Iowa and qualified to do business under the laws of the State.
(b) The Lender has all power and authority necessary (i) to execute and
deliver this Agreement and the Loan Agreement, (ii) to perform its obligations under this
Agreement and (iii) to consummate the transactions contemplated by this Agreement and the
Loan Agreement.
(c) The Lender has taken all actions necessary to authorize (i) its execution
and delivery of this Agreement and the Loan Agreement, (ii) the performance of its obligations
under this Agreement and the Loan Agreement, and (iii) the consummation of the transactions
contemplated by this Agreement and the Loan Agreement.
(d) Each of this Agreement and the Loan Agreement has been duly executed
and delivered by the Lender and constitutes, assuming due execution and delivery by the other
parties hereto, the valid and binding obligation of the Lender, enforceable against the Lender in
accordance with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors generally and the exercise of
judicial discretion in accordance with principles of general equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(e) To the Lender’s knowledge, neither the execution and delivery by the
Lender of this Agreement and the Loan Agreement, nor the performance by the Lender of its
obligations under any of the Financing Documents to which it is a party, nor the consummation
of the transactions contemplated by such Financing Documents will violate any law, rule,
regulation or ordinance, or any order, judgment or decree of any Federal, state or local court or
will conflict with, or constitute a breach of, or a default under, the charter or by-laws of the
Lender or under any agreement, instrument or commitment to which the Lender is a party or by
which the Lender or any of its property is bound.
(f) To the Lender’s knowledge, there is no action, suit, proceeding, inquiry or
investigation by or before any court, governmental agency or public board or body pending or
threatened against the Lender (nor, to the Lender’s knowledge, is there any basis therefor), which
(i) affects or seeks to prohibit, restrain or enjoin the execution and delivery by the Lender of any
of the Financing Documents to which it is a party; the performance by the Lender of its
obligations under such Financing Documents, or the consummation of the transactions
contemplated by such Financing Documents, or (ii) affects or questions the validity or
enforceability of such Financing Documents.
(g) To the Lender’s knowledge, no approval, permit, consent, authorization or
order of any court, governmental agency or public board or body not already obtained is required
to be obtained by the Lender as a prerequisite to the execution and delivery by the Lender of the
14
Financing Documents to which it is a party, the performance by the Lender of its obligations
under such Financing Documents or the consummation of the transactions contemplated by such
Financing Documents.
(h) To the Lender’s knowledge, the Lender is not, as of the Closing Date,
under any order, judgment or decree from any state or federal regulatory agency that would
restrict or impede the Lender’s ability to provide services required under this Agreement.
(i) As is the case with many major financial services firms, the Lender is
involved in a number of regulatory matters arising out of the ordinary course of its business.
However, the Lender believes none of those matters would materially affect the Lender’s ability
to perform the services required under this Agreement.
(j) All fees charged by the Lender in connection with the Loan are no more
than those which are reasonable and customary for the Lender to charge in connection with
similar loans not financed through the issuance of tax-exempt bonds.
(k) To the Lender’s knowledge, the Lender is not a party to or bound by any
agreement or instrument or subject to any other restriction or any judgment, order, writ,
injunction, decree, law or regulation which now or in the future may materially and adversely
affect the ability of the Lender to perform its obligations under any Financing Document to
which it is a party, or which requires the consent of any third person to the execution of such
Financing Document, or the consummation of the transaction contemplated hereby.
(l) Any certificate signed by a representative of the Lender and delivered
pursuant to and concurrently with this Agreement shall be deemed a representation of the Lender
as to the statements made therein.
(m) The Lender represents that if it purchases the Bond, it will purchase the
Bond for its own account and not for reoffering to the public. In connection with its purchase of
the Bond, the Lender agrees to deliver to the County on the Closing Date an investor letter
substantially in the form of Exhibit C hereto. The Bond may be transferred only in whole and
not in part, and such transfer shall be subject to the restrictions in Section 3.5 hereof. THE
LENDER AND ANY TRANSFEREE SHALL AGREE TO INDEMNIFY THE COUNTY
FROM AND AGAINST ANY AND ALL LIABILITY, COST OR EXPENSE (INCLUDING
ATTORNEYS’ FEES AND EXPENSES) THAT MAY RESULT IF THE
REPRESENTATIONS OF THE LENDER OR ANY SUCH TRANSFEREE, RESPECTIVELY,
CONTAINED IN ITS INVESTOR LETTER ARE FALSE IN ANY MATERIAL RESPECT,
BUT ONLY WITH RESPECT TO THEIR OWN REPRESENTATIONS.
(End of Article II)
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ARTICLE III
ISSUANCE OF THE BOND
Section 3.1 Issuance and Sale of the Bond. In order to provide funds to make the
Loan, the County will issue the Bond and sell and deliver it to the Lender on the Closing Date,
subject to and as provided in the Loan Agreement. The Bond shall be issued as a draw-down
bond, as further described in Section 3.3 below, and shall be deemed issued for federal income
tax purposes only upon receipt by the County (or by the Borrower, as the borrower of proceeds
of the Bonds loaned to it by the County hereunder) of not less than $50,001 from the Lender on
account of its purchase of the Bond.
Simultaneously with the delivery of the Bond on the Closing Date and subject to the
provisions set forth below, the County, as secured lender, shall make the Loan to the Borrower
and shall assign the Note, the Security and the Financing Documents to the Lender (except for
the Unassigned Issuer’s Rights) pursuant to the Assignment of Security. The Loan shall be
initially funded on the Closing Date and in periodic draws thereafter, subject to and as provided
in the Loan Agreement and the Security.
Section 3.2 Delivery of the Bond and Closing of the Loan. The delivery of the
Bond and the closing of the Loan shall not occur until the following conditions are met:
(a) The County and the Lender shall have received the original executed
Financing Documents.
(b) The County and the Lender shall have received (i) certified copies of
resolutions of the Borrower authorizing all actions taken or to be taken in connection with each
of the Financing Documents, if applicable, (ii) copies of the Borrower’s formation documents
and (iii) an opinion of counsel to the Borrower in a form reasonably acceptable to the County
and the Lender.
(c) The Lender shall have received such additional documents required to be
delivered under the Loan Agreement and as the Lender may reasonably require.
(d) The County shall have executed and delivered to the Lender an
endorsement of the Note and the Assignment of Security, without recourse and for security
purposes only (except as otherwise provided therein), to secure all obligations of the County
under the Bond.
(e) No Default nor any event which with the passage of time or the giving of
notice would constitute a Default under the Financing Documents shall have occurred, as
certified by a Borrower Representative.
(f) All legal matters incident to the transactions contemplated by the
Financing Documents shall be concluded to the reasonable satisfaction of Bond Counsel.
(g) The Borrower shall have paid to the County a closing fee equal to
$[________] (0.10% of the Original Principal Amount of the Bonds).
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(h) Bond Counsel shall have delivered to the County, with a reliance letter to
the Lender, an opinion with respect to the tax-exempt status of the interest on the Bond.
Section 3.3 Terms of the Bond. The Bond shall be deemed issued for federal income
tax purposes only upon a funding of not less than $50,001 from the Lender. Other than with
respect to the first draw on the Closing Date, the Borrower shall provide notice to the Lender of
the principal amount of each draw to be made hereunder at least ten (10) Business Days (or such
shorter period, if any, as may be permitted under the Loan Agreement) in advance of such draw.
The Bond shall be issued as a fully registered bond in the authorized denomination of the
lesser of the Principal Amount Outstanding and the maximum Principal Amount of $[PAR
AMOUNT]. The Bond shall bear interest on the Principal Amount Outstanding at the Interest
Rate (calculated on a 360-day basis for the actual number of days principal is outstanding) and
shall contain such terms as are described in Section I of Exhibit A hereof. The Bond shall be in
the form contained in Exhibit B hereto. Payments of principal of, premium, if any, and interest
on the Bond shall be made to the Lender, as the servicer and registered owner of the Bond.
Principal of, premium, if any, and interest on the Bond shall be payable only from the
Revenues. The County hereby directs the Lender, as servicer, to pay to the Lender, as the
registered owner, when due and payable principal of, premium, if any, and interest on the Bond
from the Revenues. Upon receipt of payment in full of the outstanding principal balance of the
Bond plus all accrued and unpaid interest, the Lender, shall immediately deliver the Bond to the
County for cancellation.
The County hereby agrees to assign to the Lender, as the registered owner, without
recourse and only as security for payment of amounts payable on the Bond, the Note, the
Financing Documents and the Security (except as otherwise provided in the Assignment of
Security). The Lender and the County agree that the County shall have no responsibility for the
perfection of the Lender’s security interest in the Note and the Security.
Section 3.4 Redemption of the Bond.
(a) Mandatory Redemption. The Bond is subject to redemption at a price
equal to the Outstanding Principal Amount of the Bond to be redeemed plus accrued interest
thereon to the date fixed for redemption, plus premium, if any, as follows:
(i) in whole, upon the receipt by all parties of a Notice of Loan
Acceleration Default hereunder;
(ii) in whole or in part, upon the occurrence of events described in
Sections 4.5(a) and 4.9(b) hereof, if all or part of any insurance or condemnation proceeds will
not be used to repair or replace the Facilities or to reimburse the Borrower therefor, in a principal
amount equal to the proceeds not used for such repair or replacement; or
(iii) with respect to the Bond, in part, in a principal amount sufficient to
achieve an Outstanding principal Loan balance which satisfies the Conditions to Conversion, in
connection with a prepayment of the Note in accordance with Sections 4.2(a) and 4.5(c) hereof.
17
(b) Optional Redemption. The Bond is subject to redemption, in whole or in
part, upon and in the amount of the prepayment of the Note in accordance with Section 4.5(b)
hereof, on any day permitted under the Note and for which notice of such prepayment is given in
accordance with Section 3.4(c) hereof, at a price equal to the Outstanding Principal Amount of
the Bond to be redeemed, plus accrued interest thereon to the date fixed for redemption, plus any
the Prepayment Premium, if any.
(c) Notice. The Borrower shall give written notice to the Lender and the
County of redemption of the Bond pursuant to Sections 3.4(a)(i) and (ii) hereof not less than ten
Business Days (or such shorter period as may be permitted under the Loan Agreement) prior to
the date set for redemption, specifying the reason for the redemption, the date set for redemption
and the Principal Amount of the Bond to be redeemed. If notice of prepayment of the Note shall
be given pursuant to Section 4.5 hereof, such notice shall be deemed to constitute notice of
redemption of the Bond pursuant to Section 3.4(b) hereof, and the parties hereto waive any
further notice of redemption pursuant to Section 3.4(b) hereof.
(d) Miscellaneous. Upon payment of the redemption price in accordance with
this Section, the Bond (or portion thereof so redeemed) shall cease to bear interest from and after
the date on which the redemption price is paid. If the Bond is redeemed in whole, the Lender
shall immediately deliver the Bond to the County for cancellation.
Section 3.5 Registration and Transfer.
(a) The County shall maintain the registration records containing the name
and address of the registered owner of the Bond.
(b) The Lender hereby acknowledges that the County has agreed to sell the
Bond to the Lender, enter into this Agreement and consummate the transactions hereunder only
upon the Lender’s agreeing that it will only sell, assign or transfer the Bond or any interest
therein, or any interest in the proceeds thereof, as described in this Section or with the County’s
prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed
if the transfer is within the County’s policy for the transfer of unrated, non-credit enhanced
bonds, and the Lender so agrees.
(c) The Lender hereby agrees that in the event the Lender transfers the Bond:
(i) prior to the Conversion Date, the Bond shall only be transferred to (x) an affiliate of a
registered owner of the Bond, (y) a trust or custodial arrangement established by a registered
owner of the Bond or one of its affiliates, the owners of the beneficial interests in which are
limited to “qualified institutional buyers”, as defined in Rule 144A promulgated under the
Securities Act of 1933, as amended (the “Securities Act”), or (z) any other Person that is a
qualified institutional buyer that is a commercial bank having a combined capital and surplus,
determined as of the date of any transfer pursuant to this Section, of $5,000,000,000 or more that
has, in any such case, executed and delivered to the County an investor letter substantially in the
form of Exhibit C hereto; (ii) on and after the Conversion Date, the Bond shall be subject to
transfer in whole and not in part, and the Bond shall only be transferred to (y) a Person that is a
qualified institutional buyer, or (z) a Person that is an “accredited investor” (as defined in Rule
501(a)(1), (2), (3), (4), (7) or (8) of Regulation D promulgated under the Securities Act, other
18
than entities described in Rule 501(a)(8) that admit equity owners described in Rule 501(a)(5) or
Rule 501(a)(6)), that has executed and delivered to the County an investor letter substantially in
the form of Exhibit C hereto; (iii) whether before or after the Conversion Date, in Minimum
Beneficial Ownership Amounts, and (iv) in the event of a transfer of the Bond (or any beneficial
interest therein), by the Lender other than in accordance with the provisions herein and the
securities laws of the United States, the Lender agrees to indemnify the County against any
liability, cost and expense (including attorney’s fees) that may result therefrom. Any transferee
of the Bond must assume in writing the obligations of the Lender hereunder and under the
applicable Loan Agreement, including the obligation to fund additional draws under the
applicable Loan as provided herein and in the Loan Agreement, if applicable.
(d) The County and the Borrower each hereby approves the assignment or
transfer of the Bond in whole (i) to an entity succeeding or resulting from a merger or acquisition
of the Lender or (ii) so long as such assignment or transfer complies with the provisions of
Section 3.5(c) above.
(e) All costs and fees associated with the transfer and re-registration of the
Bond, if any, will be paid by the Borrower or the transferee of the Bond.
Section 3.6 Limitation on Liability of County. The County shall not be obligated to
pay the principal of, premium, if any, or interest on the Bond, except from Revenues. The
Lender hereby acknowledges that the County’s sole source of moneys to pay principal of,
premium, if any, or interest on the Bond will be provided by such Revenues.
THE BOND IS A LIMITED OBLIGATION OF THE COUNTY, PAYABLE SOLELY
FROM THE REVENUES PLEDGED HEREUNDER. NEITHER THE COUNTY, ANY OF
ITS MEMBERS, THE STATE, NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT
THE COUNTY, BUT ONLY 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 BONDS OR FOR THE
PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND
WHATSOEVER EXCEPT AS SET FORTH HEREIN, AND NONE OF THE BONDS OR
ANY OF THE COUNTY’S AGREEMENTS OR OBLIGATIONS 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.
NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF
OR INTEREST ON THE BOND AGAINST ANY PAST, PRESENT OR FUTURE MEMBER
OF THE COUNTY’S GOVERNING BODY, OR THE OFFICERS, COUNSEL, FINANCIAL
ADVISORS OR AGENTS OF THE COUNTY, OR OF ANY SUCCESSOR THERETO,
UNDER ANY RULE OF LAW OR EQUITY, STATUTE OR CONSTITUTION, AND ALL
SUCH LIABILITY IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A
CONDITION OF, AND CONSIDERATION FOR, THE EXECUTION AND ISSUANCE OF
THE BOND.
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Section 3.7 No Warranty. The obligation of the County hereunder to issue the Bond
to provide funds to finance the Project does not in any way constitute a representation, warranty,
guaranty, advice or suggestion by the County as to the feasibility or viability of the Facilities or
the financing thereof, and may not be relied on as such by the Borrower, the Lender or any
tenant, lender or other Person, for any reason.
(End of Article III)
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ARTICLE IV
THE LOAN
Section 4.1 Amount, Source and Funding of Loan. The County, as secured lender,
hereby makes the Loan to the Borrower, on the terms and subject to the conditions set forth in
this Agreement and the Financing Documents. The Borrower hereby (a) accepts the Loan from
the County, upon the terms and conditions set forth in this Agreement and the Financing
Documents, (b) agrees to execute and deliver the Note and the Security simultaneously with the
execution of this Agreement, and (c) agrees to have the proceeds of the Loan applied and
disbursed in accordance with this Agreement and the other Financing Documents. The Loan
shall be deemed made when the Lender acknowledges receipt of the Bond, upon satisfaction of
the conditions specified in Section 3.2 hereof and upon the delivery of the first installment of the
purchase price of the Bond. The Loan shall be initially funded on the Closing Date and in
periodic draws thereafter, subject to and as provided in the Loan Agreement. To the extent there
is an inconsistency between the terms of the Note and the terms of this Agreement, the terms of
this Agreement shall prevail; provided, however, that all rights and remedies of the Lender and
the County, and all obligations of the Borrower, in each case as set forth in this Agreement and
the other Financing Documents are cumulative and not exclusive, and the failure to set forth any
thereof in more than one Financing Document shall not be deemed an inconsistency.
On the Closing Date, the County shall assign without recourse or warranty (except for
warranties and representations made as of their date and for the Unassigned Issuer’s Rights) the
Note and the Security to the Lender, which shall accept such assignment. The Borrower hereby
consents to the County’s assignment of the Note and the Security, as provided in the Assignment
of Security, to the Lender. The Lender shall file financing statements and other documents as it
deems necessary or desirable to perfect its security interests, and the Borrower hereby consents
to all such filings.
Section 4.2 Loan Repayment.
(a) On a date fixed to satisfy the Conditions to Conversion, the Borrower shall
pay the principal of, premium if any, and the interest on the Note due in accordance with
Section 3.4(a)(iii) hereof and the Loan Agreement.
(b) On each Interest Payment Date, the Borrower shall pay, in repayment of
the Loan, to the Lender as servicer, until the principal of, premium, if any, and interest on the
Note shall have been paid in full as provided in the Note, an amount which will equal the sum of
(i) the interest on the Note which is due on such Interest Payment Date and (ii) the principal of
the Note due on such Interest Payment Date.
(c) The County hereby directs the Lender, as servicer, to apply the amounts
paid pursuant to Sections 4.2(a) and 4.2(b) hereof to pay principal of, premium, if any, and
interest on the Bond, and the Lender and Borrower hereby agree that the application of such
amounts to payments due on the Bond in accordance with Sections 3.3 and 3.4 hereof shall
reduce the amount owing on the Note. Payments made on the Bond shall be deemed to be made
on the same date and in the same amount on the Note.
21
(d) Notwithstanding anything to the contrary contained herein, if the
Conditions to Conversion do not occur under the terms of the Loan Agreement for any reason
whatsoever, the Loan will not convert into the Permanent Loan and will instead be due and
payable on [CONVERSION DATE], 20[__], under the terms and conditions of the Loan
Agreement.
Section 4.3 Additional Payments. In addition to the payments of principal and
interest on the Loan, the Borrower shall make the following additional payments:
(a) All applicable taxes and assessments, general or special, concerning or in
any way related to the Facilities, or any part thereof, and any other governmental charges and
impositions whatsoever, foreseen or unforeseen, and all utility and other charges and
assessments; provided, however, that the Borrower reserves the right to contest in good faith the
legality or amount of any tax or governmental charge concerning or in any way related to the
Facilities to the extent permitted by the Security.
(b) The costs incurred by the Borrower for the calculation of the Rebate
Amount, and any amounts required to be paid to the United States of America as the Rebate
Amount.
(c) On [DATED DATE] of each year, commencing [DATED DATE], 2020,
to the County an annual fee, payable in arrears, equal to one-tenth of one percent (0.10%) of the
original Principal Amount of the Bond.
(d) Any out-of-pocket expenses incurred by the County in connection with
any Transfer, in accordance with Section 5.3(a)(vi) hereof.
(e) Any additional payments required by the Financing Documents or the
Security.
Section 4.4 Nature of the Borrower’s Obligations. The Borrower shall repay the
Loan and make the additional payments pursuant to the terms of Sections 4.2 and 4.3 hereof and
the Note, irrespective of any rights of set-off, recoupment or counterclaim it might have against
the County, the Lender or any other Person; provided, that any such payment shall not constitute
a waiver by the Borrower of any claim for recoupment or of any counterclaim. The Borrower
will not suspend, discontinue or reduce any such payment or (except as expressly provided
herein) terminate this Agreement for any cause, including, without limiting the generality of the
foregoing: (i) any delay or interruption in the acquisition, construction, equipping or operation of
the Facilities; (ii) the failure to obtain any permit, order or action of any kind from any
governmental agency relating to the Loan or the Facilities; (iii) any event constituting force
majeure; (iv) any acts or circumstances that may constitute commercial frustration of purpose;
(v) the termination of this Agreement or any of the other Financing Documents; (vi) any change
in the laws of the United States of America, the State or any political subdivision thereof; or (vii)
any failure of the County to perform or observe any covenant whether expressed or implied, or to
discharge any duty, liability or obligation arising out of or connected with the Note; it being the
intention of the parties that, as long as the Note or any portion thereof remains outstanding and
unpaid, the obligation of the Borrower to repay the Loan and provide such moneys shall continue
22
in all events. This Section shall not be construed to release the County from any of its
obligations hereunder, or, except as provided in this Section, to prevent or restrict the Borrower
from asserting any rights which it may have against the County or the Lender under this
Agreement, or under any provision of law, or to prevent or restrict the Borrower, at its own cost
and expense, from prosecuting or defending any action or proceeding by or against the County or
the Lender or taking any other action to protect or secure its rights.
Section 4.5 Prepayment of Note.
(a) As and to the extent provided in the Note, the Note shall be prepaid in
whole or in part, in the principal amount equal to any insurance or condemnation proceeds
received by the Lender not used for repair or replacement or applied to other amounts secured by
the Security, plus accrued interest thereon to the date fixed for prepayment, plus Prepayment
Premium, if any, upon no less than ten (10) Business Days written notice to all parties of the
determination of the Lender or the Borrower, as set forth in the Security, if applicable, that all or
part of such insurance or condemnation proceeds will not be used to repair or replace the
Facilities (or to reimburse the Borrower therefor) or applied to other amounts secured by the
Security.
(b) The Note may be prepaid in whole or in part, in accordance with its terms,
at a price equal to the Principal Amount of the Note to be prepaid, plus Prepayment Premium, if
any, and accrued interest to the date fixed for such prepayment, upon no less than ten (10)
Business Days’ written notice to the County and the Lender (or such shorter period as the County
and the Lender may agree), as follows: (i) on any day permitted under the terms of the Note (but
in no event prior to placement in service of the Facilities), if the Borrower in its sole discretion
and to the extent permitted by the Note or the Security, if applicable, shall choose to prepay all or
a portion of the Note or (ii) concurrently with the Transfer, if the Borrower shall Transfer all or a
portion of the Facilities pursuant to Section 5.3(b) hereof.
(c) The Note, upon no less than five (5) days written notice to the Lender and
the County, shall be prepaid in part, in accordance with its terms, at a price equal to the principal
amount sufficient to achieve an outstanding principal Loan balance, which satisfies the
Conditions to Conversion, plus accrued interest thereon to the date fixed for prepayment, plus
premium, if any.
(d) In the event of a partial prepayment of the Note made in accordance with
this Agreement, the Principal Amount of the Borrower’s obligation under the Note shall be
reduced by the Principal Amount of the Note prepaid, and such prepayment shall
correspondingly reduce the principal balance of the Bond.
(e) Each notice of prepayment required by this Section shall state the date set
for prepayment, the principal to be prepaid on the Note and the reason for prepayment. Such
notice also shall state that the Bond shall be redeemed, in whole or in part, in a Principal Amount
equal to the amount of the prepayment of the Note, on the date set for such prepayment.
Section 4.6 Servicing and Reporting Requirements.
23
(a) The Lender shall service the Loan on behalf of the County. The Lender
shall have full power and authority to do any and all things in connection with such servicing
which it may deem necessary or desirable, and will exercise at least the same degree of care with
respect to the Loan that the Lender exercises with respect to servicing loans for its own account.
(b) The Lender will notify the County as soon as practicable if the Borrower
has failed to make a payment due under the Note, but failure to so notify the County shall not
affect the validity of, or the Lender’s rights under, the Financing Documents, the applicable Loan
Agreement or the Security or result in any liability of the Lender to the County.
(c) The County shall have no obligation to service the Loan on behalf of the
Lender, as registered owner, or to enforce any remedies against the Borrower, it being
understood among the parties that all servicing of the Loan and enforcement of any obligations
of the Borrower shall be the sole responsibility of the Lender, as servicer.
(d) The Lender covenants that so long as the Bond shall be unpaid, the Lender
will keep proper books or records and accounts, in which full, true, and correct entries will be
made of all interest and principal paid to the Lender on the Note, the Outstanding Principal
Amount of the Bond and any other payments derived from the applicable Loan Agreement, this
Agreement, the Note and the Security. Upon reasonable notice and at reasonable times during
the Lender’s regular business hours and under reasonable regulations established by the Lender,
such books shall be open to the inspection of the Borrower or the County, and such accountants
or other agencies as the Borrower or the County may from time to time designate in writing to
the Lender.
Section 4.7 Rights Under Loan Agreement. The Loan Agreement sets forth
covenants and obligations of the Lender and the Borrower, and reference is hereby made to the
same for a detailed statement of said covenants and obligations. The County agrees to cooperate
in the enforcement of all covenants and obligations of the Borrower under the Loan Agreement,
at the expense of the Borrower.
Section 4.8 Rights Under Security. The County acknowledges that it has assigned its
interest in and to the Security (except for the Unassigned Issuer’s Rights) to the Lender under
this Agreement and that the Security further secures payment of the Loan, interest thereon, and
amounts due under certain other Financing Documents, and reference is hereby made to the same
for a detailed statement of the obligations of the parties thereto.
Section 4.9 Insurance and Condemnation Proceeds.
(a) The Borrower shall, throughout the term of this Agreement, obtain
insurance for the Facilities to the extent required and in accordance with the Financing
Documents and Security, if applicable.
(b) The Lender shall hold and disburse all insurance proceeds or
condemnation awards in accordance with the Security if applicable, and the Loan Agreement.
Insurance proceeds or condemnation awards shall be used to repair or replace the Facilities (or
reimburse the Borrower therefor) or to pay or prepay amounts owing under the Financing
Documents in accordance with the Security and the Loan Agreement. The Lender or the
24
Borrower, as appropriate, shall forthwith notify the other parties to this Agreement in writing of
the use of any such proceeds or award; provided that such notice shall be sent no later than five
(5) Business Days prior to prepayment of the Note with the proceeds or award.
(End of Article IV)
25
ARTICLE V
FURTHER AGREEMENTS
Section 5.1 Covenants of the County. The County covenants that it will faithfully
perform at all times any and all covenants, undertakings, stipulations and provisions contained in
this Agreement, in the Bond executed, authenticated and delivered hereunder and in all of its
proceedings pertaining thereto; provided, however, that (except for payment of the principal of,
premium, if any, and interest on the Bond from the Revenues as herein provided) the County
shall not be obligated to take any action or execute any instrument pursuant to any provision
hereof until it shall have been requested to do so by the Borrower or by the Lender, or shall have
received the instrument to be executed, and at the County’s option shall have received from the
Borrower or the Lender, respectively, assurance satisfactory to the County that the County shall
be reimbursed by the Borrower or the Lender for its reasonable expenses incurred or to be
incurred in connection with taking such action or executing such instrument. The County
covenants that it is duly authorized under the Constitution and laws of the State, including
particularly and without limitation the Act, to issue the Bond and to enter into this Agreement, to
pledge the Revenues and other funds derived from this Agreement in the manner and to the
extent herein set forth; that all action on its part for the issuance of the Bond and the execution
and delivery of this Agreement has been duly and effectively taken; and that the Bond in the
hands of the owners thereof is and will be a valid and enforceable obligation of the County
according to the tenor and import thereof.
Section 5.2 Borrower to Maintain its Existence; Conditions Under Which
Exceptions Permitted. The Borrower agrees that during the term of this Agreement it will
maintain its existence as a limited liability company, will continue to be duly qualified to do
business in the State, will maintain an agent in the State on whom service of process may be
made in connection with any actions against the Borrower, and will neither dispose of all or
substantially all of its assets nor consolidate with or merge into another entity, unless the
Borrower shall have prepaid the Note in full (subject to any Prepayment Premium) or (a) the
Borrower shall have first filed with the County an opinion of Bond Counsel, at the sole cost and
expense of the Borrower, to the effect that such disposal of assets, consolidation or merger will
not adversely affect the exclusion from gross income of interest on the Outstanding Bond for
federal income tax purposes (other than interest on the Bond for any period during which the
Bond is held by a “substantial user” of any facility financed with the proceeds of the Bond or a
“related person,” as such terms are used in Section 147(a) of the Code), (b) the acquirer of its
assets or the entity with which it shall consolidate or into which it shall merge shall be an entity,
organized and existing under the laws of the United States of America or one of the states of the
United States of America and shall be qualified and admitted to do business in the State, (c) such
acquiring or remaining entity shall assume in writing all of the obligations of the Borrower under
the Financing Documents, subject to all of the limitations of liability applicable to the Borrower,
(d) such acquisition shall comply with the provisions of the Security and (e) the Lender shall
have provided prior written consent to such disposition, consolidation or merger, and shall have
furnished to the County within 10 days after any such action notice thereof and an executed
original document evidencing said consent.
As soon as practicable, but not less than fifteen (15) days prior to the intended disposition
of assets, consolidation or merger, the Borrower shall notify the County and the Lender of such
26
intended transaction and shall provide the county with such documentation and information
describing the intended transaction as the County may reasonably request.
Section 5.3 Sale or Conveyance of the Facilities. For so long as any amounts remain
owing by the Borrower hereunder or under any of the other Financing Documents, the Borrower
shall not voluntarily Transfer the Facilities or any portion thereof except in compliance with the
terms of the Loan Documents and the other Security. Unrecorded leases to residents with a term
of less than two (2) years and no right or option to purchase any interest in the Facilities shall not
be considered to constitute such a Transfer. In addition:
(a) The Borrower shall obtain the prior written consent of the County, which
consent shall not be unreasonably withheld, conditioned or delayed, and shall be conditioned
upon:
(i) reasonable evidence satisfactory to the County that the Borrower is
not then in default hereunder beyond any applicable grace period or cure period;
(ii) an opinion of counsel for the Transferee, delivered to the County
and the Lender, to the effect that (A) the Transferee is a validly existing entity that meets the
then applicable requirements of the County, (B) the Transferee has assumed in writing and in full
all duties and obligations of the Borrower under the Financing Documents, (C) the Financing
Documents constitute the legal, valid and binding obligations of the Transferee and (D) operation
of the Facilities by the Transferee will be within its charter, bylaws and/or comparable
organizational documents;
(iii) an opinion of Bond Counsel, at the sole cost and expense of the
Borrower or the transferee, to the effect that such sale or conveyance of the Facilities will not
cause the interest on the Bond to become subject to Federal income taxation;
(iv) said written assumption of the Transferee and the written
agreement of the Transferee to comply with all provisions of state and Federal law applicable to
the Borrower under this Agreement, the Lease and the Regulatory Agreement;
(v) evidence satisfactory to the County, with regard to any project of
the Transferee financed by the County, that
(A) the Transferee is not now in arrears on any payments of
fees due and owing to the County or in default under any agreement with the County, beyond
any applicable grace period or cure period, and
(B) the Transferee does not have a documented history of
repeated instances of noncompliance with provisions of the County equivalent to those in this
Agreement, the Regulatory Agreement, the Tax Credit Regulatory Agreement or the Tax
Certificate which are not cured after notice thereof and within the applicable cure period or grace
period;
(vi) payment to the County of any out-of-pocket expenses in
connection with such Transfer; and
27
(vii) any other conditions which may be reasonably imposed by the
County to assure compliance with Federal or State law.
Notwithstanding the foregoing, the County’s consent shall not be required (i) for a sale,
transfer or change in any managing member of the Borrower, including the addition, removal or
withdrawal of any such managing member in accordance with the Borrower’s operating
agreement; (ii) the transfer of membership interests by any membership interest in the Borrower;
or (iii) following foreclosure or with respect to a deed in lieu of foreclosure (but not upon the
subsequent transfer of the Project following foreclosure or a deed in lieu of foreclosure).
Nothing in this paragraph shall be construed as a waiver of any conditions to such transfers
contained in the Loan Agreement.
(b) If the Transferee does not meet all requirements set forth in Section 5.3(a)
hereof, the Borrower shall notify the County in writing no later than fifteen (15) days prior to the
intended Transfer. The Borrower hereby agrees that the proceeds of such Transfer shall,
concurrently with such Transfer, be used to prepay the Note in full pursuant to Section 4.5(b)
hereof and to redeem the Bond in full pursuant to Section 3.4(b) hereof; provided, that all
proceeds of said Transfer in excess of the Outstanding principal balance of the Note and accrued
interest to such date shall be retained by the Borrower and, provided further, that until
prepayment in full of the Note and the corresponding redemption of the Bond, this Agreement,
the Tax Certificate, the Note, the Security and the other Financing Documents shall remain in
full force and effect, and the Borrower shall retain all obligations hereunder and thereunder.
(c) As soon as practicable and not later than fifteen (15) days prior to the
intended date of any transfer of the Facilities, the Borrower shall notify the County and the
Lender of such transaction. As soon as practicable following such transaction, the Borrower
shall provide to the County and the Lender copies of any executed documents evidencing the
transfer of title to the Facilities and any written assumption by the Transferee of the Financing
Documents, as well as copies of all other documents obtained by the Borrower that may be
executed in regard to such Transfer.
(d) No Transfer of the Facilities in violation of Section 5.3(a) or (b) hereof
shall relieve the Borrower of obligations under this Agreement or the Tax Certificate.
Section 5.4 Tax-Exempt Status of Bond; Arbitrage. It is the intention of the parties
hereto that interest on the Bond shall be and remain excluded from gross income of the holders
of the Bond under Federal tax law, and to that end the covenants and agreements of the County,
the Lender and the Borrower in this Section are for the benefit of the County as issuer of the
Bond and the Lender as owner of the Bond.
The Lender, the Borrower and the County covenant and agree that they have not taken or
permitted to be taken and will not take or permit to be taken any action that will cause the
interest on the Bond to become included in gross income for Federal tax purposes pursuant to the
Code or cause the Bond to become an “arbitrage bond” within the meaning of Section 103 of the
Code; provided, that none of the covenants and agreements herein contained shall require the
Lender, the Borrower or the County to enter an appearance or intervene in any administrative,
legislative or judicial proceeding in connection with any changes in applicable laws, rules or
28
regulations or in connection with any decisions of any court or administrative agency or other
governmental body affecting the taxation of interest on the Bond; and provided further, that each
party’s responsibility under this Section shall be limited to actions within its respective control.
The Borrower agrees to pay in accordance with Section 4.3(b) hereof, the costs of the
calculation of the Rebate Amount and the amount of the Rebate Amount, if any, owing to the
United States of America on the Bond.
The Borrower specifically covenants to comply with the provisions of the Tax
Certificate.
Without limiting the generality of the foregoing, the Borrower and the other parties
hereto covenant and agree that they will take such action or actions (including, without
limitation, consenting and agreeing to amendments to the Financing Documents as may be
necessary in the opinion of Bond Counsel), at the sole cost and expense of the Borrower, so that
the Borrower, all subsequent owners of the Facilities, and the Facilities comply fully and
continuously with Section 148 of the Code, as amended, and applicable to the Bond from time to
time, all applicable rules, rulings, policies, procedures, regulations or other official statements
now or in the future promulgated or proposed by the Department of the Treasury or the Internal
Revenue Service pertaining to obligations issued under Section 148 of the Code, including,
without limitation, the Treasury Regulations, and with all applicable legislative enactments or
applicable final decisions of courts of competent jurisdiction.
By virtue of the Borrower’s agreeing to comply with future laws or regulations, the
parties do not intend nor shall they be deemed to waive any rights or defenses they may have,
individually or collectively, to contest the application of such laws or regulations to the Facilities
or the Project on the grounds that such application would constitute a prohibited impairment of
contract or on any other applicable grounds. Nevertheless, while contesting the application of
any such laws or regulations, the Borrower shall take such actions deemed necessary in the
opinion of Bond Counsel to maintain the exclusion from gross income of interest on the Bond.
To the extent necessary to retain the exclusion of the interest on the Bond from gross
income for purposes of Federal income taxation or otherwise required by law, the provisions of
this Section shall survive termination of this Agreement.
Section 5.5 Additional Instruments. The Borrower hereby covenants to execute and
deliver such additional instruments and to perform such additional acts as may be necessary, in
the reasonable opinion of the County or the Lender, to carry out the intent of the Financing
Documents or to perfect or give further assurances of any of the rights granted or provided for in
the Financing Documents; provided that no such instruments or acts shall change the economic
terms of the transactions described herein or expand the liabilities of the parties hereunder
without the consent of all the parties hereto.
Section 5.6 Books and Records.
(a) The Borrower hereby covenants to permit the County, the Lender or their
duly authorized representatives access, upon reasonable notice, during normal business hours to
the books and records of the Borrower pertaining to the Loan and the Facilities, and to make
29
such books and records available for audit and inspection, at reasonable times and under
reasonable conditions, to the County and the Lender and their duly authorized representatives.
(b) The Borrower hereby agrees to retain all draw requests submitted by the
Borrower to the Lender pertaining to the Loan and the Facilities for a period of seven (7) years
from the date of the final payment on the Bond.
Section 5.7 Notice of Certain Events. The Borrower and the Lender each hereby
covenants to advise the County and the other parties hereto promptly in writing of the occurrence
of any Default hereunder of which it has actual notice or any event which, with the passage of
time or service of notice, or both, would constitute a Default hereunder of which it has actual
notice, specifying the nature and period of existence of such event and the actions being taken or
proposed to be taken with respect thereto. In addition, the Borrower hereby covenants to advise
the County and the Lender promptly in writing of the occurrence of any default under the
Financing Documents or of the occurrence of an Act of Bankruptcy of the Borrower.
Section 5.8 Indemnification of the County and the Lender.
(a) The Borrower shall indemnify, hold harmless and defend the County and
the Lender (except to the extent of gross negligence or willful misconduct by the County or the
Lender, respectively) and the officers, members, directors, officials, agents and employees of
each of them from and against: (i) any and all claims or proceedings by or on behalf of any
Person directly or indirectly arising from any cause whatsoever in connection with the Facilities,
the Project, the Financing Documents or any act or omission of the Borrower or any of its agents,
servants, employees or licensees, in connection with the Loan or the Facilities and (ii) all
reasonable costs, expenses, damages, counsel fees or liabilities incurred in connection with any
such claim or proceeding brought thereon. In the event that any action or proceeding is brought
against the County or the Lender or any of its officers, members, directors, officials, agents or
employees, with respect to which indemnity may be sought from the Borrower hereunder, the
Borrower, upon written notice from the County or the Lender, shall assume the investigation and
defense of the County and/or the Lender thereof, including the employment of counsel selected
by the County or the Lender and the payment of all reasonable expenses related thereto;
provided, that no settlement of a claim or proceeding against an indemnified party shall occur
without the consent of such indemnified party (which consent may be given or withheld in such
indemnified party’s sole discretion). Notwithstanding any Transfer of the Facilities in
accordance with the provisions of this Agreement and the other Financing Documents, the
Borrower shall remain obligated to indemnify the County and the Lender against claims arising
from the period prior to such Transfer and during all times when the Borrower owned or had an
interest in the Facilities.
(b) The Lender shall indemnify, hold harmless and defend the County (except
to the extent of gross negligence or willful misconduct by the County) and its officers, members,
directors, officials, agents and employees and each of them from and against: (i) any and all
losses, claims, damages or liabilities caused by or on behalf of any Person arising directly or
indirectly from the willful misconduct or gross negligence of the Lender in connection with the
servicing of the Loan by the Lender, the maintenance of and disbursement of Revenues, material
violation by the Lender of its covenants, obligations or representations under the Financing
30
Documents or any written statements or representations with respect to the Lender made or given
to the County by the Lender or any of its agents or employees, including, but not limited to,
statements or representations of facts or financial information; and (ii) all reasonable costs,
expenses, counsel fees, damages or liabilities incurred in connection with any such claim or
proceeding.
In the event that any action or proceeding is brought against the County or any of its
officers, members, directors, officials or employees, with respect to which indemnity may be
sought from the Lender hereunder, the Lender, upon written notice from the County, shall
assume the investigation and defense of the County, including the employment of counsel
selected by the County and acceptable to the Lender or the payment of all expenses related
thereto; provided, that no settlement of a claim or proceeding against the County shall occur
without the consent of the County.
(c) The rights of the County and the Lender under this Section shall survive
the payment in full of the Bond and termination of this Agreement.
Section 5.9 Compliance with Usury Laws. Notwithstanding any other provision of
this Agreement, it is agreed and understood that in no event shall this Agreement, with respect to
the Note or other instrument of indebtedness, be construed as requiring the Borrower or any
other Person to pay interest and other costs or considerations that constitute interest under any
applicable law which are contracted for, charged or received pursuant to this Agreement in an
amount in excess of the maximum amount of interest allowed under any applicable law.
In the event of any acceleration of the payment of the Principal Amount of the Note, that
portion of any interest payment in excess of the maximum legal rate of interest, if any, provided
for in this Agreement or related documents shall be canceled automatically as of the date of such
acceleration, or if theretofore paid, shall be credited against the Borrower’s obligations under the
Note and the payments due on the Bond shall be correspondingly reduced.
The provisions of this Section shall prevail over any other provision of this Agreement.
Section 5.10 Compliance with Other Laws. To the Borrower’s knowledge, the
acquisition, design, construction and operation of the Facilities as described herein do not and
will not conflict with any applicable Federal, state and local laws or ordinances (including rules
and regulations) relating to zoning, building, safety, and environmental quality; and the
Borrower has not failed to obtain (or will obtain when required) and maintain in effect any
licenses, permits, franchises or other governmental authorizations necessary for the operation
and conduct of the Facilities.
The Borrower shall comply with Federal housing policy governing nondiscrimination and
accessibility, as determined under the Americans with Disabilities Act, the Fair Housing
Amendments Act of 1988, the rules and regulations of HUD and any other applicable Federal,
state and local law.
Section 5.11 Maintenance and Repair of Facilities. The Borrower agrees to maintain
the Facilities or cause the Facilities to be maintained, during the term of this Agreement, (a) in a
31
reasonably safe condition and (b) in good repair and in good operating condition, ordinary wear
and tear excepted.
Section 5.12 Additional Covenants Required by the Lender. The Borrower
covenants to comply with the terms and conditions set forth in the Loan Agreement, the
Financing Documents and the other Security, which are required by the Lender as a condition for
providing the Loan.
(End of Article V)
32
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Defaults.
(a) A “Default” of the Borrower under this Agreement shall exist when any
one or more of the following shall occur (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 authority):
(i) The Borrower fails to pay (A) any installment of principal or
interest payable pursuant to the Note or the Loan Agreement on the date when due, subject to
any cure period herein or in the Financing Documents, or (B) any other amount payable under
the Note, the Loan Agreement, this Agreement, or the Security within ten (10) days after the date
when any such payment is due, or in the case of amounts payable other than principal or interest
pursuant to the Note or the Loan Agreement, Borrower’s receipt of written notice of such
amount, in accordance with the terms of such document and not cured within applicable cure
periods.
(ii) The Borrower and the County shall receive written notice from the
Lender that an “Event of Default”, however defined, has occurred under the Loan Agreement,
the Note and/or the Security, if applicable (other than a failure to pay any amount due on the
Note), and that the Lender declares that such occurrence shall be treated as a Default hereunder,
and such notice is not subsequently waived, revoked or dismissed.
(iii) The Borrower (A) shall transfer the Facilities in violation of the
provisions hereof or the Security, (B) shall receive written notice from the Lender or the County
(with a copy to the other parties hereto) that the Borrower has failed to observe any of its
obligations, covenants or agreements hereunder (other than as specified in Section 6.l(a)(i)
hereof), under the Tax Certificate, the Regulatory Agreement or the Tax Credit Regulatory
Agreement, if applicable, and such failure shall continue for thirty (30) days following such
notice, or if such failure cannot reasonably be cured within said thirty days, within such
additional time not to exceed sixty (60) days following such notice, unless the Lender and the
County shall agree in writing to an extension of such time prior to its expiration, or (C) shall
receive written notice from the Lender or the County (with a copy to the other parties hereto) that
the Borrower has made any material representation or warranty hereunder or under the Tax
Certificate or the Regulatory Agreement, if applicable, that was false when made.
(iv) The Borrower purports to revoke, disputes the validity of or
disputes the enforceability of its obligations under any of the Financing Documents.
(v) An Act of Bankruptcy of the Borrower.
(b) A “Default” of the Lender shall occur when (i) the Lender shall receive
written notice from the County that the Lender has materially failed to observe any of its
obligations, covenants or agreements hereunder, and such failure shall continue for thirty (30)
days following such notice, or if such failure cannot reasonably be cured within said thirty days,
33
within such additional time not to exceed sixty (60) days following such notice, or (ii) the Lender
shall receive written notice from the County that the Lender has made any material
representation or warranty hereunder or the Regulatory Agreement, if applicable, that was false
when made.
(c) A “Default” shall occur when a Determination of Taxability has occurred;
provided, that in the event of a Determination of Taxability pursuant to clause (a) or (b) of the
definition thereof, the Borrower shall have a cure period of at least thirty (30) days unless, in the
judgment of the County, in reliance on the advice of Bond Counsel, no cure is possible.
(d) Any party, including any managing member of the Borrower, may, but is
not obligated to, cure an action or inaction of another party that, if uncured within the applicable
time period, would become a Default hereunder and such cure shall be accepted or rejected on
the same basis as if made or tendered by the party.
Section 6.2 Loan Acceleration Default. No Default under Section 6.1 hereof shall
constitute a Loan Acceleration Default unless or until the Borrower and the County receive a
written “Notice of Loan Acceleration Default” from the Lender.
Section 6.3 Remedies.
(a) Whenever any Loan Acceleration Default under Section 6.2 hereof shall
have occurred and be continuing:
(i) The Bond shall be subject to mandatory redemption in whole
pursuant to Section 3.4(a)(i) hereof.
(ii) Subject to the provisions of Section 4.4 hereof, the non-defaulting
parties also may take whatever action at law or in equity appears necessary or desirable to
enforce performance and observance of any obligation or agreement in respect of which the Loan
Acceleration Default has occurred.
(iii) The Lender may exercise any and all of its rights under the
Financing Documents, including but not limited to its rights under the Assignment of Security
and the Security.
(b) Whenever any Default under Section 6.1 hereof shall have occurred and
be continuing, the non-defaulting parties, subject to the provisions of Section 4.4 hereof, may
exercise any or all remedies set forth in the Security and may take whatever additional action at
law or in equity that appears necessary or desirable to enforce performance and observance of
any obligation or agreement in respect of which the Default has occurred.
(c) Any amounts collected as payments of principal of, premium, if any, or
interest on the Note, or applicable to such payments, pursuant to action taken under this Section
shall be applied to payments of amounts due on the Bond.
Section 6.4 Attorneys’ Fees and Costs. If (a) a Default pursuant to Section 6.1
hereof occurs or (b) any non-defaulting party should employ attorneys or incur expenses for the
34
enforcement of any obligation or agreement of the defaulting party or parties contained herein,
then the defaulting party or parties, as applicable, on demand will pay to the non-defaulting party
the reasonable fees of such attorneys and the reasonable costs so incurred, including, without
limitation, reasonable fees and costs of court appeals.
Section 6.5 No Remedy Exclusive. No remedy herein conferred upon or reserved to
any party is intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement, the Loan Agreement or the Security or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle any non-defaulting party or parties to exercise any remedy reserved
to it in this Article VI, it shall not be necessary to give any notice, other than such notice as may
be herein expressly required.
Section 6.6 No Additional Waiver Implied by One Waiver. In the event any
agreement or covenant contained in this Agreement should be breached by a party hereto and
thereafter waived by another party, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder.
Section 6.7 Bridge Loan and Managing Member Pledge. The following actions
shall not constitute a Default under the Financing Documents:
(a) the making of any bridge loan to Borrower by the Investor Member or a
third party; and
(b) the pledge to the Investor Member or Lender by the Managing Member of
the Managing Member’s interest in the Operating Agreement, as security for the performance of
all of the Managing Member’s obligations under the Operating Agreement.
(End of Article VI)
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement, the Tax Certificate and the other
Financing Documents constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the County, the Lender and the Borrower with
respect to the subject matter hereof.
Section 7.2 Notices. All notices, certificates or other communications shall be in
writing and shall be sufficiently given and shall be deemed received on the Business Day on
which the same have been sent by facsimile (provided that said notice is immediately followed
by notice mailed as provided below), on the next Business Day following the day on which the
same have been personally delivered (either by messenger or courier service which guarantees
next day delivery) or (if not by such messenger or by courier service), on the second Business
Day following the date on which the same has been mailed by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to County:
Bernalillo County, New Mexico
10th Floor
One Civic Plaza NW
Albuquerque, NM 87102
Telephone: (505) 468 7000
Facsimile: (505) 468 9813
Attn: County Manager
With a copy to:
Sherman & Howard L.L.C.
500 Marquette Avenue NW, Suite 1203
Albuquerque, NM 87102
Telephone: (505) 814-6958
Attn: Jill K. Sweeney and T. Parker Schenken
If to the Lender:
Cedar Rapids Bank & Trust Company
500 1st Avenue NE, Suite 100
P.O. Box 789
Cedar Rapids, IA 52401
Attn: Sam D. Kramer
With a copy to:
Winthrop & Weinstein, P.A.
225 South Sixth Street, Suite 3500
36
Minneapolis, MN 55402
Attn: Holly Stocker
If to the Borrower:
San Roque Apartments, LLC
413 W. Idaho Street, Suite 200
Boise, ID 83702
Attn: Thomas C. Mannschreck
With a copy to Investor Member:
With a copy to:
A duplicate copy of each notice, certificate or other communication given hereunder by
any party hereto to another party hereto shall also be given to all of the parties. All other
documents required to be submitted to any of the foregoing parties shall also be submitted to
such party at its address set forth above. Any of the foregoing parties may, by notice given
hereunder, designate any further or different addresses to which subsequent notices, certificates,
documents, or other communications shall be sent.
Section 7.3 Assignments. This Agreement may not be assigned by any party without
the prior written consent of all parties hereto, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, that (a) the Borrower may assign to any transferee or any
surviving or resulting entity its rights under this Agreement as provided by Section 5.2 or Section
5.3 hereof and (b) the Lender may assign this Agreement without the further consent of any party
hereto to any assignee of the Bond in accordance with Section 3.5 hereof.
Section 7.4 Waiver of Jury Trial. TO THE EXTENT ALLOWED BY LAW, THE
COUNTY, THE BORROWER AND THE LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR EXECUTION OF THIS AGREEMENT BY THE
LENDER.
Section 7.5 Severability. If any provision of this Agreement shall be held or deemed
to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other
37
provision or provisions herein contained or render the same invalid, inoperative, or
unenforceable to any extent whatever.
Section 7.6 Execution of Counterparts. This Agreement may be simultaneously
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 7.7 Amendments, Changes and Modifications. Except as otherwise
specifically provided in this Agreement, this Agreement may not be effectively amended,
changed, modified, altered or terminated without the written consent of all the parties hereto. In
addition to all requirements contained therein, the terms of this Agreement, the Bond, the Note,
the Regulatory Agreement or the Tax Certificate may not be amended, changed, modified,
altered or terminated without the written consent of the County. The Lender or the Borrower
shall provide the County with notice of any change, modification, alteration, or termination of
the Security.
Section 7.8 Governing Law. This Agreement shall be governed exclusively by and
construed in accordance with the applicable laws of the State.
Section 7.9 Term of Agreement. This Agreement shall be in full force and effect
from the date hereof until such time as the Bond, and all other payment obligations of the
Borrower hereunder and under the other Financing Documents (other than contingent
obligations), shall have been fully paid; provided, that the Lender’s and the County’s rights to
indemnification under Section 5.8 hereof and the provisions of Section 5.4 hereof, and Section
5.3 hereof and other provisions hereof to the extent provided therein, shall survive the
termination of this Agreement. Time is of the essence in this Agreement.
Section 7.10 Non-Business Days. Any payment or act required to be done or made on
a day that is not a Business Day shall be done or made on the next succeeding day that is a
Business Day with the same force and effect as if it had been done on the date originally
scheduled for such payment or act.
Section 7.11 No Violations of Law. Any other term or provision in this Agreement to
the contrary notwithstanding, (a) in no event shall this Agreement be construed as (i) depriving
the County of any right or privilege, or (ii) requiring the County or any member of its Board of
Commissioners, official, officer, agent, employee, representative or advisor of the County to take
or omit to take, or to permit or suffer the taking of, any action by itself or by anyone else, which
deprivation or requirement would violate, or result in the County’s being in violation of the Act
or any other applicable state or federal law; and (b) at no time and in no event will the Borrower
permit, suffer or allow any of the proceeds of the Bond to be transferred to any Person in
violation of, or to be used in any manner which is prohibited by, the Act or any other state or
federal law.
(Signature pages follow)
(COUNTY’S SIGNATURE PAGE TO SAN ROQUE APARTMENTS FINANCING AGREEMENT)
IN WITNESS WHEREOF, the County, the Borrower and the Lender have executed this
Financing Agreement, all as of the day and year first above written above.
BERNALILLO COUNTY, NEW MEXICO
By:
Chair, Board of Commissioners
Attest:
County Clerk
(BORROWER’S SIGNATURE PAGE TO SAN ROQUE APARTMENTS FINANCING AGREEMENT)
SAN ROQUE APARTMENTS, LLC,
a New Mexico limited liability company
By: San Roque-NIHC Associates, LLC,
a New Mexico limited liability company,
its Managing Member
By: Northwest Integrity Housing Co.,
an Idaho nonprofit corporation,
its Managing Member
By:
Name: Chris Bent
Title: Executive Director
Executive Director
(LENDER’S SIGNATURE PAGE TO SAN ROQUE APARTMENTS FINANCING AGREEMENT)
CEDAR RAPIDS BANK & TRUST COMPANY,
an Iowa banking corporation, as Lender
By:
Name:
Title:
A-1
EXHIBIT A
ADDITIONAL TERMS
I. BOND
A. Interest Rate:
Commencing as of the date hereof until [CONVERSION DATE], 20[__]:
[__]%.
Commencing on [CONVERSION DATE], 20[__], through the term of the loan:
[0.79*LIBOR + 2.00%].
As used herein, “LIBOR” shall have the meaning provided in the Note.
B. Security: The “Security” includes the items listed below together with all other
security documents the Borrower and the Guarantor may at any time execute in favor of the
County or the Lender to secure the Loan:
1. Loan Agreement.
2. Leasehold and Fee Deed of Trust, Security Agreement, Assignment of
Leases and Rents and Fixture Filing.
3. Environmental and ADA Indemnity Agreement.
5. Guaranties.
6. Promissory Note (Series 2021).
7. Assignment and Subordination of Property Management Agreement.
8. Assignment of Loan Documents from the County for the benefit of the
Lender.
II. LOAN AND NOTE
A. Interest Rate:
Commencing as of the date hereof until [CONVERSION DATE], 20[__]:
[__]%
Commencing on [CONVERSION DATE], 20[__], through the term of the loan:
[0.79*LIBOR + 2.00%].
B. Premium for prepayment of the Note: As described in the Loan Agreement.
B-1
EXHIBIT B
FORM OF BOND
No. R-1
BERNALILLO COUNTY, NEW MEXICO
MULTIFAMILY HOUSING REVENUE BOND
(SAN ROQUE APARTMENTS PROJECT)
SERIES 2021
DATED DATE: [CLOSING DATE], 2021
MATURITY DATE: [MATURITY DATE], 20[__]
REGISTERED OWNER: CEDAR RAPIDS BANK & TRUST
MAXIMUM PRINCIPAL AMOUNT: $[PAR AMOUNT]
NOTICE: THIS BOND IS NOT REGISTERED UNDER STATE OR
FEDERAL SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, PLEDGED
(EXCEPT BY A PLEDGE WHICH REQUIRES THAT ANY OFFER OR SALE MADE
FOLLOWING A FORECLOSURE WOULD BE MADE IN A MANNER THAT WOULD
NOT VIOLATE THE REGISTRATION PROVISIONS OF FEDERAL OR STATE
SECURITIES LAWS) OR OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY
THIS BOND BE TRANSFERRED ON THE BOOKS OF THE COUNTY, EXCEPT IN
ACCORDANCE WITH SECTION 3.5 OF THE FINANCING AGREEMENT. ANY
ATTEMPT TO TRANSFER THIS BOND IN VIOLATION OF THIS RESTRICTION
SHALL BE VOID.
THIS BOND AND THE ISSUE OF WHICH IT FORMS A PART ARE NOT
GENERAL OBLIGATIONS OF THE COUNTY BUT ARE LIMITED OBLIGATIONS
PAYABLE SOLELY FROM THE MONEY AND PROPERTIES PLEDGED FOR PAYMENT
THEREOF AS PROVIDED IN THE FINANCING AGREEMENT.
BERNALILLO COUNTY, NEW MEXICO (the “County”), a body corporate and
political subdivision of the State of New Mexico (the “State”), for value received, promises to
pay to the registered owner specified above or registered assigns, but solely from the sources and
in the manner referred to herein, the Principal Amount specified above on the aforesaid Maturity
Date or on such earlier date as provided herein and interest on the balance of said Principal
Amount from time to time as determined by the records of the Lender (as defined in the below-
referenced Financing Agreement) and remaining unpaid from the later of the date hereof or the
most recent Interest Payment Date (as defined below) to which interest has been paid, at the
“Interest Rate” (as defined in the below referenced Financing Agreement), payable on (a) the
[___th (__th)] day of each month, commencing on [PAYMENT DATE], 2021, (b) any other date
on which principal of, premium, if any, and interest on this Bond is due and payable, whether at
maturity, prior redemption, acceleration or otherwise (each, an “Interest Payment Date”).
Principal of, premium, if any, and interest on this Bond are payable at the principal office of the
Registered Owner, or at such other place and in such other manner as may be elected by the
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Registered Owner hereof in accordance with the Financing Agreement (as defined below). Upon
payment in full of the principal of this Bond, whether at maturity or prior redemption, the
Registered Owner shall forthwith deliver this Bond to the County for cancellation.
Principal, interest and any required premium are payable at the times and in the amounts
that principal, interest and any premium, respectively, are payable under that certain Promissory
Note by the Borrower (as defined in the Financing Agreement and referred to herein as the
“Note”).
NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF,
PREMIUM, IF ANY, OR INTEREST ON THIS BOND AGAINST ANY PAST, PRESENT OR
FUTURE MEMBER OF THE COUNTY’S BOARD OF COMMISSIONERS, OR THE
OFFICERS, COUNSEL OR AGENTS OF THE COUNTY, OR OF ANY SUCCESSOR
THERETO, UNDER ANY RULE OF LAW OR EQUITY, STATUTE OR CONSTITUTION,
AND ALL SUCH LIABILITY IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A
CONDITION OF, AND CONSIDERATION FOR, THE EXECUTION AND ISSUANCE OF
THIS BOND.
THIS BOND IS A LIMITED OBLIGATION OF THE COUNTY, PAYABLE SOLELY
FROM THE REVENUES PLEDGED UNDER THE FINANCING AGREEMENT. NEITHER
THE COUNTY, ANY OF ITS MEMBERS, THE STATE, NOR ANY POLITICAL
SUBDIVISION THEREOF (EXCEPT THE COUNTY, BUT ONLY TO THE LIMITED
EXTENT SET FORTH IN THE FINANCING AGREEMENT) NOR ANY PUBLIC AGENCY
SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF,
PREMIUM (IF ANY) OR INTEREST ON THIS BOND OR FOR THE PERFORMANCE OF
ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER EXCEPT
AS SET FORTH IN THE FINANCING AGREEMENT, AND NONE OF THE BOND OR
ANY OF THE COUNTY’S AGREEMENTS OR OBLIGATIONS 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.
This Bond shall not constitute the personal obligation, either jointly or severally, of the
County or of any director, officer, employee or official of the County.
This Bond constitutes the single bond of a duly authorized issue of Bernalillo County,
New Mexico Multifamily Housing Revenue Bond (San Roque Apartments Project) Series 2021
(the “Bond”), issuable under the Financing Agreement dated as of [DATED DATE], 2021 (the
“Financing Agreement”) among the County, Cedar Rapids Bank & Trust Company (the
“Lender”) and San Roque Apartments, LLC, a New Mexico limited liability company (the
“Borrower”). This Bond is issued pursuant to the New Mexico Municipal Housing Act, Sections
3-45-1 through 3-45-25, NMSA 1978, as amended, the New Mexico County Revenue Bonds
Act, Sections 4-62-1 through 4-62-10, NMSA 1978, as amended (collectively, the “Act”) and an
ordinance duly adopted by the County.
B-3
This is a draw-down Bond. This Bond is issued in an authorized denomination equal to
the principal amount of this Bond as of any given date which shall be equal to (i) the total
amount of principal advanced by the Lender, less (ii) any payment of principal on this Bond
received by the owners thereof. Principal amounts advanced by the Lender are noted on the
principal draw-down schedule attached as Schedule A to this Bond.
This Bond is issued to provide funds for the County’s making of a loan (the “Loan”) to
finance eligible facilities of the Borrower and to pay certain costs of such financing. The County
has assigned the Loan, the Note and the Security (to the extent granted for the benefit of the
County and except for the Unassigned Issuer’s Rights) to the Lender as the initial Registered
Owner of this Bond.
Reference is hereby made to the Financing Agreement, the Note, the Security, and the
Loan Agreement between the Lender and the Borrower, for the provisions, among others, with
respect to the nature and extent of the rights, duties and obligations of the County, the Lender,
the Borrower and the Registered Owner, the terms upon which this Bond is issued and secured;
the collection and disposition of Revenues; a description of the properties and interests pledged;
the modification or amendment of the Financing Agreement; and other matters, to all of which
the Registered Owner of this Bond assents by the acceptance of this Bond.
This Bond is subject to mandatory redemption at a price equal to the outstanding
principal amount of this Bond plus accrued interest thereon to the date fixed for redemption, plus
premium, if any, as follows:
(a) in part, in a principal amount sufficient to achieve an outstanding principal Loan
balance which satisfies the Conditions to Conversion;
(b) in whole, upon the receipt by all parties of notice of Loan Acceleration Default
under the Financing Agreement; and
(c) in whole or in part, upon the occurrence of events described in Sections 4.5(a) and
4.9(b) of the Financing Agreement, if all or part of any insurance or condemnation proceeds will
not be used to repair or replace the Facilities or to reimburse the Borrower therefor, in a principal
amount equal to the proceeds not used for such repair or replacement and any premium.
(d) This Bond also is subject to optional redemption, in whole or in part, upon and in
the amount of the prepayment of the Note at the option of the Borrower in accordance with
Section 4.5(b) of the Financing Agreement on any day permitted under the Note and for which
notice of such prepayment is given in accordance with the Financing Agreement and the Note, at
a price equal to the outstanding principal amount of this Bond, plus accrued interest thereon to
the date fixed for redemption, and Prepayment Premium (as defined in the Financing
Agreement), if any.
Written notice of redemption pursuant to subparagraphs (b) and (c) above shall be given
by the Borrower to the Lender and the County, in accordance with the Financing Agreement, not
less than ten Business Days prior to the date set for redemption. By the acceptance of this Bond,
the Registered Owner agrees that the notices required under the Financing Agreement regarding
the use of insurance or condemnation proceeds and the prepayment of the Note will provide
B-4
sufficient notice of any redemption of this Bond pursuant subparagraph (c) above, and the
Registered Owner waives any additional notice from the County of such redemption. Failure of
the Registered Owner to receive notice by mail or any defect in any notice so mailed shall not
affect the validity of the proceedings for such redemption. This Bond or portion thereof called
for redemption will cease to bear interest on the specified redemption date if, on such date, the
redemption price is paid or is deemed paid as provided in the Financing Agreement.
If this Bond is redeemed pursuant to subparagraph (a) above, payment of the redemption
price shall be deemed to have been made in accordance with the County’s prior absolute
assignment to the Lender of all right, title and interest of the County in the Note, the Security and
the other Financing Documents (except for the Unassigned Issuer’s Rights) on the date of
issuance of this Bond. In the event of any other redemption of this Bond, payment of the
redemption price shall be made from the Revenues.
No recourse for the payment of the principal of, premium, if any, or interest on this Bond
or for any claim based thereon or under or upon any obligation, covenant, acceptance or
agreement contained in the Financing Agreement, or in this Bond, or under any judgment
obtained against the County or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise, or under any circumstances,
shall be had against any member or officer, as such, past, present, or future, of the County, for
the payment for or to the County or any receiver thereof, or for or to the Registered Owner of
this Bond, or otherwise, of any sum that may be due and unpaid by the County upon this Bond.
Any and all personal liability of every nature, whether at common law or in equity, or by statute
or by constitution or otherwise, of any such member or officer, as such, to respond by reason of
any act or omission on his or her part, or otherwise, for, directly or indirectly, the payment for or
to the County or any receiver thereof, or for or to the owner or the Registered Owner of this
Bond, or otherwise, of any sum that may remain due and unpaid upon this Bond, shall be deemed
to be and is hereby expressly waived and released as a condition of and consideration for the
execution and delivery of the Financing Agreement and the issuance of this Bond.
The Registered Owner shall have no right to enforce the provisions of the Financing
Agreement or to institute action to enforce the covenants therein, or to take any action with
respect to any Default under the Financing Agreement, or to institute, appear in or defend any
suit or other proceedings with respect thereto, except as provided in the Financing Agreement. If
a Loan Acceleration Default occurs, this Bond shall be subject to mandatory redemption in
whole.
Any capitalized term not defined herein shall have the meaning assigned in the Financing
Agreement or the Note.
It is certified and recited that there have been performed and have happened in regular
and due form, as required by law, all acts and conditions necessary to be done or performed by
the County or to have happened (a) precedent to and in the issuing of this Bond in order to make
it a legal, valid and binding special limited obligation of the County, and (b) precedent to and in
the execution and delivery of the Financing Agreement; and that this Bond does not exceed or
violate any constitutional or statutory limitation.
B-5
It is certified, recited, and warranted that this Bond is issued under the County of an
ordinance duly adopted by the Board of Commissioners of the County, the Act (as defined in the
Financing Agreement) and the New Mexico Public Securities Act, constituting Sections 6-14-1
et seq., NMSA. It is the intention of the County, as expressed in said ordinance, that this recital
shall conclusively impart full compliance with all of the provisions of said ordinance and shall be
conclusive evidence of the validity and the regularity of the issuance of this Bond after its
delivery for value and that this Bond is incontestable for any cause whatsoever after its delivery
for value.
This Bond will not be entitled to any security or benefit under the Financing Agreement,
or be valid or become obligatory for any purpose, until the Certificate of Authentication hereon
shall have been manually signed by the Registrar.
IN WITNESS WHEREOF, Bernalillo County, New Mexico has caused this Bond to be
executed in its name by the manual or facsimile signature of its Chair and its corporate seal (or a
facsimile thereof) to be impressed or imprinted hereon and attested by the manual or facsimile
signature of its Executive Director.
BERNALILLO COUNTY, NEW MEXICO
By:
Chair, Board of Commissioners
(SEAL)
Attest:
County Clerk
B-6
CERTIFICATE OF AUTHENTICATION
This Bond is the Bond described in the Financing Agreement referred to herein.
Date of Authentication: ________________________
BERNALILLO COUNTY, NEW MEXICO, as
Registrar
Authorized Officer
B-7
SCHEDULE A
PRINCIPAL DRAW-DOWN SCHEDULE
TO
BERNALILLO COUNTY, NEW MEXICO
MULTIFAMILY HOUSING REVENUE BOND
(SAN ROQUE APARTMENTS PROJECT)
SERIES 2021
Date
Amount of Bond
Advance
Disbursed
Amount
[CLOSING DATE],
2021
$___________ $___________
C-1
EXHIBIT C
FORM OF INVESTOR LETTER
To: Bernalillo County, New Mexico
RE: Bernalillo County, New Mexico Multifamily Housing Revenue Bond (San Roque
Apartments Project) Series 2021
In connection with the purchase by [PURCHASER] (the “Purchaser”) of the captioned
Bond (the “Bond”) issued pursuant to the terms of, and as defined in, the Financing Agreement
dated as of [DATED DATE], 2021 (the “Financing Agreement”) among Bernalillo County, New
Mexico (the “County”), Cedar Rapids Bank & Trust Company, as the initial purchaser of the
Bond (the “Lender”) and San Roque Apartments, LLC, a New Mexico limited liability company
(the “Borrower”) relating to the Bond, the Purchaser hereby certifies, represents and warrants for
the benefit of the County that the Purchaser is [IF PRIOR TO CONVERSION DATE: a
“qualified institutional buyer” (a “QIB”) as defined in Rule 144A under the Securities Act of
1933, as amended (the “1933 Act”) that is a commercial bank having a combined capital and
surplus of $5,000,000,000.] [OR] [ON AND AFTER THE CONVERSION DATE: either a
“qualified institutional buyer” (a “QIB”) as defined in Rule 144A under the Securities Act of
1933, as amended (the “1933 Act”), or an “accredited investor” (as defined in Rule 501(a)(1),
(2), (3), (4), (7) or (8) of Regulation D promulgated under the 1933 Act, other than entities
described in Rule 501(a)(8) that admit equity owners described in Rule 501(a)(5) or Rule
501(a)(6)) (an “Accredited Investor”).]
The Purchaser hereby further acknowledges, represents, and warrants to, and agrees with,
the County as follows:
[A. IF PRIOR TO THE CONVERSION DATE:]
A. The Bond is being acquired by the Purchaser for investment for its own account and not
with a present view toward resale or distribution; provided, however, that the Purchaser
reserves the right to sell, transfer or redistribute a participation interest in the Bond in an
amount not less than the Minimum Beneficial Ownership Amount, but agrees that any
such sale, transfer or distribution by the Purchaser shall be to a Person:
1. that is an affiliate of the Purchaser; or
2. that is a trust or other custodial arrangement established by the Purchaser or one
of its affiliates, the owners of any beneficial interest in which are limited to
qualified institutional buyers; or
3. that is a commercial bank having capital and surplus determined as of the date of
any transfer, of $5,000,000,000 or more and, in any such case, who executes and
delivers to the Purchaser, the County and the Borrower an investor letter
substantially in the form of this letter.
C-2
[A. ON AND AFTER THE CONVERSION DATE:]
A. The Purchaser is purchasing the Bond with its own funds (or with funds from accounts
over which it has sole investment authority) and not the funds of any other person, and
for its own account (or for accounts over which it has sole investment authority) and not
as nominee or agent for the account of any other person and not with a view to any
distribution thereof; other than the deposit or sale of the Bond in or to a custodial or trust
arrangement each of the beneficial owners of which shall be required to be a QIB or an
Accredited Investor.
B. The Purchaser has sufficient knowledge and experience in financial and business matters,
including purchase and ownership of municipal and other tax exempt obligations, to be
able to evaluate the risks and merits of the investment represented by the purchase of the
Bond.
C. The Purchaser has authority to purchase the Bond and to execute this letter and any other
instruments and documents required to be executed by the Purchaser in connection with
the purchase of the Bond.
D. The undersigned is a duly appointed, qualified and acting representative of the Purchaser
and is authorized to cause the Purchaser to make the certifications, representations and
warranties contained herein by execution of this letter on behalf of the Purchaser.
E. The Purchaser understands that no official statement, prospectus, offering circular, or
other comprehensive offering statement is being provided with respect to the Bond. The
Purchaser has made its own inquiry and analysis with respect to the Borrower, the Bond
and the security therefor, and other material factors affecting the security for and payment
of the Bond.
F. The Purchaser acknowledges that it has either been supplied with or been given access to
information, including financial statements and other financial information, regarding the
Borrower, to which a reasonable investor would attach significance in making investment
decisions, and has had the opportunity to ask questions and receive answers from
knowledgeable individuals concerning the Borrower, the Bond and the security therefor,
so that as a reasonable investor, it has been able to make its decision to purchase the
Bond.
G. The Purchaser understands that the Bond (i) is not registered under the Securities Act and
is not registered or otherwise qualified for sale under the “Blue Sky” laws and regulations
of any state, (ii) is not listed on any stock or other securities exchange, and (iii) carries no
rating from any credit rating agency.
H. The Purchaser understands that it will not receive from the County, Sherman & Howard
L.L.C., as Bond Counsel (“Bond Counsel”), their governing bodies, their members or any
of their officers, employees, partners or agents any information with respect to the use of
the proceeds of the Bond and the Project (as defined in the Financing Agreement), the
Note, the provisions for payment thereof, the security therefor or the sufficiency of such
C-3
provisions for payment thereof and security therefor, except information that is contained
in the following (as defined in the Financing Agreement):
1. the Financing Agreement;
2. the Loan Agreement;
3. the Note;
4. the Security;
5. the Lease Agreement;
6. the Environmental Indemnity Agreement;
7. the Assignment of Loan Documents; and
8. the closing certificates of the Borrower, the Tax Certificate, the opinion(s) of
counsel to the Borrower, and in the other documentation and items to be executed
or delivered in connection with the issuance of the Bond.
Copies of each of the documents referred to in clauses (1) through (8) (the “Transaction
Documents”) above have been provided to the Purchaser by the Borrower or the County or its
respective counsel and reviewed by the Purchaser prior to its purchase of the Bond (together the
“Document Information”). In addition, information, data, financial statements and other matters
which have been specifically requested by the Purchaser from the Borrower or the County or its
respective accountants (or other sources at the direction of the Borrower) have been provided to
the Purchaser and reviewed by the Purchaser prior to its purchase of the Bond (the “Additional
Information”).
I. Neither the County, its governing body, nor any of its officers, employees, partners or
agents or Bond Counsel will have any responsibility to the Purchaser for the accuracy or
completeness of information obtained by the Purchaser from any source regarding
(including, but not limited to, payment and security information with respect to the
Bond), the Project, the Borrower or its assets, businesses, circumstances, financial
condition and properties, or, regarding the Bond, the provisions for payment thereof or
the sufficiency of any security therefor (including, but not limited to, payment and
security information with respect to the Bond), and, in each case, including, without
limitation, any information specifically provided by any of such parties contained in the
Document Information. The Purchaser acknowledges that, as between the Purchaser and
such parties: (a) the Purchaser has assumed responsibility for requesting and obtaining
such information and making such review as the Purchaser has deemed necessary or
desirable in connection with its decision to purchase the Bond, and (b) the Document
Information and the Additional Information constitute all the information and, with the
investigation made by the Purchaser (including specifically its investigation of the
Borrower, the County and the Project) prior to its purchase of the Bond, all the review
that the Purchaser has deemed necessary or desirable in connection with its purchase of
the Bond.
C-4
J. The Purchaser understands that (a) the Bond is not secured by any obligation or pledge of
any moneys received or to be received from taxation or from the State of New Mexico or
any political subdivision or taxing authority thereof, and that the Bond does not represent
or constitute a general obligation, debt, bonded indebtedness or pecuniary obligation of
the County, the State of New Mexico or any political subdivision thereof, and that no
right will exist to have taxes levied by the State of New Mexico or any political
subdivision thereof for the payment of principal of or interest on the Bond, and (b) the
Bond is a special, limited obligation of the County, payable solely out of and secured by
income and revenues related to the Project, as described in the Financing Agreement.
All confirmations, affirmations, statements and provisions of the Purchaser in this
Investor Letter are made solely and exclusively for the benefit of the County in connection with
its purchase of the Bond. The Purchaser is aware of the significance to the County of the
foregoing representations, and they are made with the intention that the County will rely on
them.
[SIGNATURE(S) ON FOLLOWING PAGE]
C-5
The foregoing representation shall survive the execution and delivery to the Purchaser of
the Bond and the instruments and documents contemplated thereby.
Very truly yours,
_____________________________,
Purchaser
By:
Name:
Title:
[Signature Page to Investor Letter]
S-1
SCHEDULE I
LITIGATION
[NONE]