Office of The Chicago City Clerk
2022 DEC 28pm3:1G
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Andrea M. Valencia Office ofthe City Clerk 121 North LaSalle Street Room 107
Chicago, Illinois 60602
RE: Multifamily Mortgage Revenue Note, 2022 Series A (Auburn Gresham Apartments) Dear Ms. Valencia:
Attached is the Funding Loan Notification which is required to be filed with your office pursuant to Section 6 of the ordinance authorizing the issuance of a Multi-Family Mortgage Revenue Note, 2022 Series A (Auburn Gresham Apartments) in an aggregate principal amount not to exceed $25,000,000 for the Auburn Gresham Apartments project, which ordinance was enacted by the City Council on July 20, 2022.
Please direct this filing to the City Council.
Jennie Huang Bennett Chief Financial Officer
Very Truly Yours,
Respectfully submitted this 1% day of l)ZCZmk*e < , 2022.
Chief Financial Officer
Office of fhechir-,,',--.-¦:+,,.-¦/ ¦ 2022 DEC 28 ph3:1S
Funding loan Notification
Designation and Determination and Funding Loan Notification oi
City oi Chic ago $25,000,000
Multifamily Mortgage Revenue Note, 2022 Series A (Auburn Gresham Apartments)
To: The City Council of the City of Chicago
Please be advised that responsive to authority contained in the Ordinance adopted by the City Council (the "City Council") ofthe City of Chicago (thc "City") on July 20, 2022 (the "Note Ordinance"), providing for the incurrence of not to exceed $25,000,000 aggregate principal amount of multi-family housing revenue obligations for the Auburn Gresham Apartments project (the "Multi-Family Housing Financing"), a Funding Loan Agreement dated as of December 1, 2022 (the "Funding Loan Agreement") and a promissory note in the original principal amount not to exceed S25.000.000 (the "Governmental Lender Note"), providing for the making ofa loan of the Multi-Family Housing Financing (the "Funding Loan ") to Auburn Gresham Apartments LP, an Illinois limited paitnership (the "Borrower"), was entered into by me, as the Chief Financial Officer, on behalf of the City with and to Fifth Third Commercial Funding, Inc., a Nevada corporation (the "Construction Funding Lender") and Cedar Rapid Bank & Trust Company, an Iowa state-chartered banking corporation (the "Permanent Funding Lender", and together with the Construction Funding Lender, the "Funding Lender"). Capitalized terms defined in the Note Ordinance are used with the same meanings herein.
The Note Ordinance provided that the Multi-Family Housing Financing may be incurred in such aggregate principal amount not to exceed $25,000,000, the maximum term ofthe Funding Loan shall not exceed forty (40) years from the date of execution and delivery ofthe Governmental Lender Note, which shall bear interest at a rate or rates equal to thc rate of interest on the Borrower Loan (as provided in the Borrower Loan Agreement by and between the City and the Borrower dated as of December I, 2022 (the "Borrower Loan Agreement")) (which shall not exceed the lesser of 10% or the maximum rate of interest allowable under state law), shall be payable at the place and on the payment dates as set forth in the Funding Loan Agreement and Governmental Lender Note, provide for tender rights granted to the holder and containing prepayment provisions, respectively, as set forth in Appendix A. Thc aggregate costs of origination of the Funding Loan paid from the proceeds ofthe Funding Loan shall not exceed two percent (1.5%) ofthe aggregate principal amount ofthe Governmental Lender Note. The compensation (including all fees) being paid to the Funding Lender in connection with the incurrence of the Multi-Family Housing Financing is $125,000.
Attached hereto as Exhibits A, B, C, D and F respectively, are executed copies of the Funding Loan Agreement, the Governmental Lender Note, the Borrower Loan Agreement, the Land Use Restriction Agreement by and between the City and the Borrower dated as of December 1, 2022. and the Low Income Housing Tax Credit Extended Use Agreement, dated as of December 1, 2022, by and between the City and the Borrower.
submitted this 28th day of December
¦xt
Jennie Huang Bennett Chief Financial Officer
Funding Loan Notification
ACKNOWLEDGEMENT OF FILING
The Funding Loan Notification of $25,000,000 multi-family housing revenue obligations ¦for the Auburn Gresham Apartments project was filed in the office ofthe City Clerk ofthe City of Chicago, this 28th day of December, 2022.
By:
Andrea M. Valencia City Clerk
ACKNOWLEDGEMENT OF FILING
Appendix A
Terms ok Multi-Family Housing Financing
Re: City of Chicago multi-family housing revenue obligations for the Auburn Gresham Apartments project
The Governmental Lender Note is dated December 28, 2022, matures on January 1, 2043, is in the principal amount of not to exceed 525,000,000, and is payable on and in such places and in such manner, is subject to prepayment, and bears interest as described in the Funding Loan Agreement.
Exhibit A Funding Loan Agreement (See Item No. 1)
FUNDING LOAN AGREEMENT
Bv and Anion"
Firm THIRD COMMERCIAL FUNDING, INC., as Construction Funding Lender
And
CEDAR RAPIDS BANK & TRUST COMPANY, as Permanent Funding Lender
And
CITY OF CHICAGO, as Governmental Lender
Dated as of December 1, 2022
Relating to
$25,000,000 CITY OF CHICAGO MULTIFAMILY MORTGAGE REVENUE NOTE 2022 SERIES A (AUBURN GRESHAM APARTMENTS)
(Funding Loan originated by FIFTH THIRD COMMERCIAL FUNDING, INC., as Construction Funding Lender; To Be Assumed After Construction by CEDAR RAPIDS BANK & TRUST COMPANY, as Permanent Funding Lender)
TABLE Ol CONTENTS
Pane
ARTICLE I DEFINITIONS: PRINCIPLES OF CONSTRUCTION|910|Section 1.1. Definitions|910|Section 1.2. LtTect of Headings and Table ol" Contents 13
Section 1.3. Date of Funding Loan Agreement 13
Section 1.4. Designation of Time for Performance 13
Section 1.5. Interpretation 13
ARTICLE II TERMS; GOVERNMEN TAL LENDER NOTE 13
Section 2.1. Terms 13
Section 2.2. Form of Governmental Lender Note 15
Section 2.3. Execution and Delivery of Governmental Lender Note ' 15
Section 2.4. Required Transferee Representations; Participations; Sale and
Assignment 15
ARTICLE III PREPAYMENT 16
Section 3.1. Prepayment ofthe Governmental Lender Note from Prepayment under
the Borrower Note '. 16
Section 3.2. Notice of Prepayment 16
ARTICLE IV SECURITY 16
Section 4.1. Security for the Funding Loan 16
Section 4.2. Delivery of Security 17
ARTICLE V LIMITED LIABILITY 18
Section 5.1. Source of Payment of Governmental Lender Note and Other Obligations;
Disclaimer ol"General Liability 18
Section 5.2. Exempt from Individual Liability 18
ARTICLE VI CLOSING CONDITIONS; APPLICATION OF FUNDS 19
Section 6.1. Conditions Precedent to Closing 19
ARTICLE VII FUNDS AND ACCOUNTS 19
Section 7.1. Authorization to Create Funds and Accounts 19
Section 7.2. Investment of Funds 20
ARTICLE VIII REPRESENTATIONS AND COVENANTS 20
Section 8.1. General Representations 20
Section 8.2. Further Assurances 20
Section 8.3. Payment of Funding Loan Obligations 21
Section 8.4. Funding Loan Agreement Performance 21
Section 8.5. Servicer 21
Section 8.6. Tax Covenants 21
Section 8.7. Performance by the Borrower 22
Section 8.8. Repayment of Funding Loan 22
Section 8.9. Borrower Loan Agreement Performance 22
Section 8.10. Maintenance of Records; Inspection of Records 22
Section 8.1 1. Representations and Warranties ofthe Funding Lender 23
Section 8.12. Funding Lender Limitations 23
ARTICLE IX DEFAULT; REMEDIES 23
Section 9.1. Events of Default 23
Section 9.2. Acceleration of Maturity; Rescission and Annulment 24
Section 9.3. Additional Remedies: Funding Lender Enforcement 24
Section 9.4. Application ol" Money Collected 26
Section 9.5. Remedies Vested in Funding Lender 26
Section 9.6. Restoration of Positions 26
Section 9.7. Rights and Remedies Cumulative 26
Section 9.8. Delay or Omission Not Waiver 27
Section 9.9. Waiver of Past Defaults 27
Section 9.10. Remedies Under Borrower Loan Agreement or Borrower Note 27
Section 9.11. Waiver of Appraisement and Other Laws 27
Section 9.12. Suits to Protect the Security 27
Section 9.13. Remedies Subject to Applicable Law 28
Section 9.14. Assumption of Obligations 28
Section 9.15. Remedies upon Unremedied Material Funding Lender Event 28
ARTICLE X AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT
AND OTHER DOCUMENTS 28
Section 10.1. Amendment of Funding Loan Agreement 28
Section 10.2. Amendments Requiring Funding Lender Consent 29
Section 10.3. Consents and Opinions 29
Any consents required pursuant to this Article X from, or on behalf of,
the Governmental Lender may be executed by an Authorized City
Representative 29
ARTICLE XI MISCELLANEOUS 29
Section 11.1. Notices 29
Section 1 1.2. Term of Funding Loan Agreement 31
Section 11.3. Successors ami Assigns 32
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Section 11.4. Legal Holidays 32
Section 11.5. Governing Law 32
Section 11.6. Severability 32
Section I 1.7. Execution in Several Counterparts 32
Section 11.8. Nonrecourse Obligation ofthe Borrower 32
Section 11.9. Reserved 32
Section 11.10. Electronic Transactions 32
Section 11.11. Reference Date 32
Exhibit A — Form of Governmental Lender Note
Exhibit B — Form of Required Transferee Representations
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FUNDING LOAN AGREEMENT
This Funding Loan Agreement, dated as of December 1. 2022 (this "Funding Loan Agreement"), is entered into by FIFTH THIRD COMMERCIAL FUNDING. INC., as Construction Funding Lender (the 'Construction Funding Lender "), and CEDAR RAPIDS BANK & TRUST COMPANY, as Permanent Funding Lender (the "Permanent Funding Lender" and, together with the Construction Funding Lender and any successor thereto, the "Funding Lender") and CITY OF CHICAGO, a municipality and home rule unit of local government duly organized and validly existing under the constitution and laws of the State of Illinois (together with its successors and assigns, the "Governmental Lender").
RECITALS
WHEREAS, the Governmental Lender has been duly created and organized pursuant to and in accordance with the provisions of Article VII, Section 6(a) ofthe 1970 Constitution ofthe State Illinois, is a home rule unit of local government and as such may provide a means of financing the costs of residential ownership and development that will provide decent, safe and sanitary housing for persons of low and moderate income at prices or rentals they can afford; and
WHEREAS, the Governmental Lender is authorized: (a) to make loans to any person to provide financing for rental residential developments located within the jurisdiction ofthe Governmental Lender and intended to be occupied in part by persons of low and moderate income, as determined by the Governmental Lender; (b) to incur indebtedness for the purpose of obtaining moneys to make such loans and provide such financing, to establish any required reserve funds and to pay administrative costs and other costs incurred in connection with the incurrence of such indebtedness ofthe Governmental Lender; and (c) to pledge all or any part of the revenues, receipts or resources of the Governmental Lender, including the revenues and receipts to be received by the Governmental Lender from or in connection with such loans, and to mortgage, pledge or grant security interests in such loans or other property ofthe Governmental Lender in order to secure the payment ofthe principal of, prepayment premium, if any, on and interest on such indebtedness ofthe Governmental Lender: and
WHEREAS, Auburn Gresham Apartments LP, an Illinois limited paitnership (the "Borrower"), has requested the Governmental Lender to enter into this Funding Loan Agreement under which the Funding Lender (i) will advance funds (the "Funding Loan") to or lor the account ofthe Governmental Lender, and (ii) apply the proceeds of the Funding Loan to make a loan (the "Borrower Loan") to the Borrower to finance the acquisition, construction, development, and equipping of two low- and moderate-income residential facilities and related facilities, one located at 838 West 79"' Street, consisting of a 3-story building with 28 units and 28 parking spaces, and the second located at 757 West 79"' Street, consisting ofa 5-story building with 30 units and 14 parking spaces (together, the "Project"). Each building will also include ground floor retail space which will be financed by sources other than bond proceeds; and
WHEREAS, simultaneously with the delivery of this Funding Loan Agreement, the Governmental Lender and the Borrower will enter into a Borrower Loan Agreement of even date herewith (as it may be supplemented or amended, the "Borrower Loan Agreement"), whereby the Borrower agrees to make loan payments to the Governmental Lender in an amount which, when added to other funds available under this Funding Loan Agreement, will be sufficient to enable the Governmental Lender to repay the Funding Loan and to pay all costs and expenses related thereto when due; and
WHEREAS, to evidence its payment obligations under the Borrower Loan Agreement, the Borrower will execute and deliver to the Governmental Lender its Borrower Note as defined in the
Borrower Loan Agreement (tlie "Borrower Note") and the obligations of the Borrower under the Borrower Note will be secured by a lien on and security interest in the Project pursuant to one or more Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and Rents of even date herewith (collectively, the "Security Instruments"), made by the Borrower in favor ofthe Governmental Lender, as such document may be modified, supplemented or amended, as assigned to the Funding Lender to secure the performance by the Governmental Lender of its obligations under the Funding Loan; and
WHEREAS, the Governmental Lender has executed and delivered to the Funding Lender its not to exceed S25.000.000 City of Chicago Multifamily Mortgage Revenue Note, 2022 Series A (Auburn Gresham Apartments) (the "Governmental Lender Note"), dated as ofthe Closing Date (defined below) evidencing ils obligation lo make the payments due lo the Funding Lender under the Funding Loan as provided in this Funding Loan Agreement, all things necessary to make the Funding Loan Agreement the valid, binding and legal limited obligation ofthe Governmental Lender, have been done and performed and the execution and delivery ofthis Funding Loan Agreement and the execution and delivery ofthe Governmental Lender Note, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, in consideration ol" the premises and the mutual representations, covenants and agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this Funding Loan Agreement, except as otherwise expressly provided or unless the context otherwise clearly requires:
Unless specifically defined herein, all capitalized terms shall have the meanings ascribed thereto in thc Borrower Loan Agreement.
The terms "herein, "hereof" and "hereunder" and other words of similar import refer to this Funding Loan Agreement as a whole and not to any particular Article, Section or other subdivision. Thc terms "agree" and "agreements" contained herein arc intended lo include and mean "covenant" and "covenants."
All references made (i) in the neuter, masculine or feminine gender shall be deemed to have been made in all such genders, and (ii) in the singular or plural number shall be deemed to have been made, respectively, in thc plural or singular number as well. Singular terms shall include the plural as well as lhe singular, and vice versa.
All accounting terms not otherwise defined herein shall have the meanings assigned lo them, and all computations herein provided for shall be made, in accordance with the Approved Accounting Method. All references herein to "Approved Accounting Method" refer to such principles as they exist at the date of application thereof.
All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions ofthis instrument as originally executed.
All references in this instrument to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
References to thc Governmental Lender Note as "tax-exempt" or lo the "tax-exempt status" ofthe Governmental Lender Note are to thc exclusion of interest payable on thc Governmental Lender Note
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(other than any portion ofthe Governmental Lender Note held by a "substantial user" ofthe Project or a "related person" (within the meaning of Section 147 ofthe Code) thereto) from gross income for federal income tax purposes pursuant to Section 103(a) ofthe Code.
The following terms have the meanings set forth below:
"Additional Borrower Payments" shall have thc meaning given such term in thc Borrower Loan Agreement.
"Affiliate" shall mean, as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person.
"Approved Transferee" means (1) the Permanent Funding Lender, (2) a "qualified institutional buyer" ("QIB") as defined in Rule 144A promulgated under the Securities Act of 1933, as in effect on the date hereof (the "Securities Act") that is a financial institution or commercial bank having capital and surplus of $5,000,000,000 or more, (3) an affiliate of the Funding Lender, or (4) a trust or custodial arrangement established by the Funding Lender or one of its affiliates the beneficial interests in which will be owned only by QlBs."
Authorized Amount" shall mean an amount not to exceed 525,000,000, the maximum aggregate principal amount ofthe Funding Loan under this Funding Loan Agreement.
"Authorized City Representative" shall have the meaning as set forth for thc term "Authorized Officer" in thc Ordinance.
"Borrower" shall mean Auburn Gresham Apartments LP, an Illinois limited partnership.
"Borrower Controlling Entity" shall mean, ifthe Borrower is a partnership, any general partner or managing partner ofthe Borrower, or ifthe Borrower is a limited liability company, the manager or managing member ofthe Borrower.
"Borrower Loan" shall mean the mortgage loan made by the Governmental Lender to the Borrower pursuant to the Borrower Loan Agreement in thc aggregate principal amount ofthe Borrower Loan Amount, as evidenced by the Borrower Note.
"Borrower Loan Agreement" shall mean the Borrower Loan Agreement, of even date herewith, between the Governmental Lender and the Borrower, as supplemented, amended or replaced from lime to time in accordance with its terms.
"Borrower Loan Agreement Default" shall mean any event of default set forth in Section 8.1 of the Borrower Loan Agreement. A Borrower Loan Agreement Default shall "exist" if a Borrower Loan Agreement Default shall have occurred and be continuing beyond any applicable notice and cure period.
"Borrower Loan Amount" shall mean an amount not to exceed $25,000,000.
"Borrower Loan Documents" shall have the meaning given such term in the Borrower Loan Agreement.
"Borrower Note" shall mean the "Borrower Note" as defined in the Borrower Loan Agreement.
"Business Day" shall mean any day other than (i) a Saturday or a Sunday, or (ii) a day on which federally insured depository institutions in New York. New York, Chicago, Illinois or the cities in which
lhe offices of lhe Funding Lender are located are authorized or obligated by law, regulation, governmental decree or executive order to be closed.
"Closing Date" shall mean December 28. 2022, the date that initial Funding Loan proceeds are disbursed hereunder.
"Code" shall mean the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
"Construction Escrow Agreement" shall mean that certain Escrow Agreement, dated December 28, 2022, among the Title Company named therein, in its capacity as escrow agent. Governmental Lender, the Construction Funding Lender, certain subordinate lenders named therein, and Borrower, as such agreement may be amended, modified, supplemented and replaced from time to time.
"Construction Funding Agreement" shall mean that certain Construction Loan Agreement of even date herewith, between the Construction Funding Lender, as agent for the Governmental Lender, and Borrower, pursuant to which the Borrower Loan will be advanced by the Construction Funding Lender (or the Servicer on its behalf), as agent ofthe Governmental Lender, to the Borrower and setting forth certain provisions relating to disbursement ofthe Borrower Loan during construction, insurance and other matters, as such agreement may be amended, modified, supplemented and replaced from time to time.
"Construction Funding Lender" shall mean Fifth Third Commercial Funding, Inc. and any successor under this Funding Loan Agreement and the Borrower Loan Documents.
"Contingency Draw-Down Agreement" shall mean the Contingency Draw-Down Agreement of even date herewith between the Funding Lender and the Borrower relating to possible conversion ofthe Funding Loan from a draw-down loan to a fully funded loan.
"Control" shall mean, with respect to any Person, either (i) ownership directly or through other entities of more than 50% of all beneficial equity interest in such Person, or (ii) the possession, directly or indirectly, ofthe power to direct or cause thc direction ofthe management and policies of such Person, through the ownership of voting securities, by contract or otherwise.
"Conversion Conditions" shall have the meaning given such term in the Forward Bond Purchase Agreement.
"Draw-Down Notice" shall mean a notice described in Section 1.01 ofthe Contingency Draw-Down Agreement regarding the conversion ofthe Funding Loan from a draw down loan to a fully funded loan.
"Event of Default" shall have the meaning ascribed thereto in Section 9.1 hereof. "Fitch" shall mean Fitch. Inc.
"Forward Bond Purchase Agreement" shall mean the Forward Loan Purchase Agreement by and among the Construction Funding Lender, the Permanent Funding Lender and Borrower pursuant to which the Permanent Funding Lender shall acquire the outstanding principal amount ofthe Governmental
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Note under certain circumstances following Construction of the Project and subject to the requirements set forth therein.
"Funding Lender" shall mean the Construction Funding Lender as long as the construction loan remains in place and shall mean the Permanent Funding Lender as long as the permanent loan is funded and in place.
"Funding Loan Agreement" shall mean this Funding Loan Agreement, by and between thc Funding Lender and the Governmental Lender, as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof.
"Funding Loan Documents" shall mean (i) this Funding Loan Agreement, (ii) the Borrower Loan Agreement, (iii) the Regulatory Agreement, (iv) the Tax Compliance Agreement, (v) the Borrower Loan Documents, (vi) all other documents evidencing, securing, governing or otherwise pertaining to the Funding Loan, and (vii) all amendments, modifications, renewals and substitutions of any of the foregoing.
"Government Obligations" shall mean noncallable, nonprepayable (i) direct, general obligations of the United States of America, or (ii) any obligations unconditionally guaranteed as to the full and timely payment of all amounts due thereunder by the full faith and credit ofthe United States of America (including obligations held in book entry form), but specifically excluding any mutual funds or unit investment trusts invested in such obligations.
"Governmental Lender" shall mean the City of Chicago, a municipality and home rule unit of local government duly organized and validly existing under the constitution and laws of the State of Illinois, together with its successors and assigns.
"Governmental Lender Note" shall mean the Governmental Lender Note described in the recitals ofthis Funding Loan Agreement.
"Highest Rating Category" shall mean, with respect to a Permitted Investment, that the Permitted Investment is rated by each Rating Agency in the highest rating category given by that Rating Agency for that general category of security. If at any time the Governmental Lender Note is not rated (and, consequently, there is no Rating Agency), then the term "Highest Rating Category" means, with respect to a Permitted Investment, that thc Permitted Investment is rated by S&P or Moody's in thc highest rating given by that rating agency for that general category of security. By way of example, thc Highest Rating Category for tax-exempt municipal debt established by S&P is "A 1+" for debt with a term of one year or less and "AAA" for a term greater than one year, with corresponding ratings by Moody's of "MIG 1" (for fixed rate) or "VMIG I" (for variable rate) for three months or less and "Aaa" for greater than three months. If at any time (i) the Governmental Lender Note is not rated, (ii) both S&P and Moody's rate a Permitted Investment and (iii) one of those ratings is below the Highest Rating Category, then such Permitted Investment will, nevertheless, be deemed to be rated in the Highest Rating Category ifthe lower rating is no more than one rating category below the highest rating category of that rating agency. For example, a Permitted Investment rated "AAA" by S&P and "Aa3" by Moody's is rated in the Highest Rating Category. If, however, the lower rating is more than one full rating category below the Highest Rating Category of that rating agency, then the Permitted Investment will be deemed to be rated below the Highest Rating Category. For example, a Permitted Investment rated "AAA" by S&P and "A I" by Moody's is not rated in the Highest Rating Category.
"Material Funding Lender Event" shall mean the occurrence and continuation of one or more ofthe following:
Prior to the advancement by the Funding Lender of the entire amount of the Funding Loan, the Funding Lender fails to advance funds requisitioned by the Borrower pursuant to the Borrower Loan Agreement and the Construction Funding Agreement other than by reason of non-conformance of such requisition with the requirements ofthe Borrower Loan Agreement or the Construction Funding Agreement or other failure of any condition to the funding of a requisition set forth in Article 4 ofthe Construction Funding Agreement, AND (i) a petition has been filed and is pending against the Funding Lender under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and has not been dismissed within 60 days after such filing; (ii) the Funding Lender has filed a petition, which is pending, under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or has consented to the filing of any petition against it under such law; or (iii) the Funding Lender shall have a receiver, liquidator or trustee appointed for it or for the whole or substantially all of its property. The occurrence ofa Material Funding Lender Event under this subsection (a) and the exercise of remedies upon any such declaration shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding such declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings;
Prior to the advancement by the Funding Lender of thc entire amount of the Funding Loan (i) the Funding Loan Agreement or the Construction Funding Agreement for any reason ceases to be valid and binding on the Funding Lender or is declared to be null and void, or the validity or enforceability of any provision of the Funding Loan Agreement or the Construction Funding Agreement material to the performance by the Funding Lender of its obligations thereunder is denied by the Funding Lender or any court of applicable jurisdiction, or the Funding Lender is denying further liability or obligation under the Funding Loan Agreement or the Construction Funding Agreement, in all of the above cases contrary to the terms of the Funding Loan Agreement and the Construction Funding Agreement, in any case, in a final nonappealable judgment; (ii) the Funding Lender has rescinded, repudiated or terminated the Funding Loan Agreement or the Construction Funding Agreement; or (iii) the Funding Lender is dissolved or confiscated by action of government due to war or peace time emergency or the United States government declares a moratorium on the Funding Lender's activities; or
Failure by the Funding Lender (i) to respond to a complete and compliant funding requisition properly presented by the Borrower to the Funding Lender for advancement of Loan funds pursuant to the Borrower Loan Agreement and the Construction Funding Agreement within 7 clays ofthe receipt of such funding requisition, or (ii) to fully fund within 10 days after the Funding Lender approves a funding requisition from the Borrower to the Funding Lender and has confirmed such requisition for payment pursuant to the terms ofthe Borrower Loan Agreement and the Construction Funding Agreement.
"Maturity Date" shall mean, with respect to the Governmental Lender Note, January 1. 2043.
"Maximum Rate" shall mean the lesser of (i) 12% per annum and (ii) the maximum interest rate that may be paid on the Funding Loan under State law.
"Minimum Beneficial Ownership Amount" shall mean an amount no less than fifteen percent (15%) ofthe outstanding principal amount ofthe Funding Loan.
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"Moody's" shall mean Moody's Investors Service. Inc or its successor.
"Notcowner" or "owner of the Governmental Lender Note" mean the owner, or as applicable, collectively the owners, ofthe Governmental Lender Note as shown on the registration books maintained by the Funding Lender pursuant to Section 2.4(d).
"Negative Arbitrage Deposit" has the meaning set forth in the Contingency Draw-Down Agreement.
"Ongoing Governmental Lender Lee" shall mean (i) thc bond issuer closing fee of $361,500 due at closing, a S 100,876.20 LIHTC issuer fee due at closing, $24,100 due at closing for bond legal reserve fee, and (ii) the semi-annual fee ofthe Governmental Lender in the amount of 15 (.0015) basis points ofthe total outstanding bond amount, accruing monthly but paid semiannually. The fee due on a semi-annual basis and is payable by the Borrower to thc Governmental Lender on each June and January 1. commencing on the Closing Date so long as any parties ofthe Funding Loan is outstanding.
"Opinion of Counsel" shall mean a written opinion from an attorney or firm of attorneys, acceptable lo the Funding Lender and the Governmental Lender with experience in the matters to be covered in the opinion; provided that whenever an Opinion of Counsel is required to address the exclusion of interest on the Governmental Lender Note from gross income for purposes of federal income taxation, such opinion shall be provided by Tax Counsel.
"Ordinance" shall mean the Ordinance adopted by the Governmental Lender on July 20, 2022, authorizing the Funding Loan and the execution and delivery ofthe Funding Loan Documents to which Governmental Lender is a party.
"Permanent Funding Lender" shall mean Cedar Rapids Bank & Trust Company.
"Permitted Investments" shall mean, to thc extent authorized by law for investment of any moneys held under this f unding Loan Agreement:
Government Obligations.
Direct obligations of, and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by, any agency or instrumentality of the United States of America (other than the Federal Home Loan Mortgage Corporation) or direct obligations ofthe World Bank, which obligations are rated in the Highest Rating Category.
Obligations, in each case rated in the Highest Rating Category, of (i) any state or territory of the United States of America, (ii) any agency, instrumentality, authority or political subdivision ofa state or territory or (iii) any public benefit or municipal coiporation the principal of and interest on which are guaranteed by such slate or political subdivision.
Any written repurchase agreement entered into with a Qualified Financial Institution whose unsecured short term obligations arc rated in the Highest Rating Category.
Commercial paper rated in the Highest Rating Category.
(1) Interest bearing negotiable certificates of deposit, interest bearing lime deposits, interest bearing savings accounts and bankers' acceptances, issued by a Qualified Financial Institution if either (i) the Qualified Financial Institution's unsecured short term obligations are
rated in the Highest Rating Category or (ii) such deposits, accounts or acceptances are fully collateralized by investments described in clauses (a) or (b) of this definition or fully insured by the Federal Deposit Insurance Coiporation.
(g) An agreement held by the Funding Lender for the investment of moneys at a guaranteed rate with a Qualified Financial Institution whose unsecured long term obligations are rated in the Highest Rating Category or the Second Highest Rating Category, or whose obligations are unconditionally guaranteed or insured by a Qualified Financial Institution whose unsecured long term obligations are rated in the Highest Rating Category or Second Highest Rating Category; provided lhat such agreement is in a form acceptable lo the Funding Lender; and provided further that such agreement includes the following restrictions:
the invested funds will be available for withdrawal without penalty or premium, at any time that (A) the Funding Lender is required to pay moneys from the Fund(s) established under this Funding Loan Agreement to which the agreement is applicable, or (B) any Rating Agency indicates that it will lower or actually lowers, suspends or withdraws the rating on the Funding Loan on account of the rating of thc Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the agreement;
the agreement, and if applicable the guarantee or insurance, is an unconditional and general obligation of thc provider and, if applicable, the guarantor or insurer of the agreement, and ranks pari passu with all other unsecured unsubordinated obligations ofthe provider, and if applicable, the guarantor or insurer of the agreement;
the Funding Lender receives an Opinion of Counsel, which may be subject to customary qualifications, that such agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and, if applicable, an Opinion of Counsel that any guaranty or insurance policy provided by a guarantor or insurer is legal, valid, binding and enforceable upon the guarantor or insurer in accordance with its terms; and
the agreement provides that if during its term the rating ofthe Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the agreement, is withdrawn, suspended by any Rating Agency or falls below the Second Highest Rating Category, the provider must, within ten days, either: (A) collateralize the agreement (if the agreement is not already collateralized) with Permitted Investments described in paragraph (a) or (b) by depositing collateral with the Funding Lender or a third party custodian, such collateralization to be effected in a manner and in an amount reasonably satisfactory to the Funding Lender, or. ifthe agreement is already collateralized, increase thc collateral with Permitted Investments described in paragraph (a) or (b) by depositing collateral with the Funding Lender or a third party custodian, in an amount reasonably satisfactory to thc Funding Lender, (B) at the request of thc Funding Lender, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium unless required by law or (C) transfer the agreement, guarantee or insurance, as applicable. ,to a replacement provider, guarantor or insurer, as applicable, then meeting thc requirements ofa Qualified Financial Institution and whose unsecured long term obligations arc then rated in thc Highest Rating Category or the Second Highest Rating Category. The agreement may provide that the downgraded provider may elect which ofthe remedies to the down grade (other than the remedy set out in (B)) to perform.
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Notwithstanding anything else m this Paragraph (g) to the contrary and with respect only to any agreement described in this Paragraph (g) or any guarantee or insurance for any such agreement which is to be in effect for any period after the Conversion Date, any reference in this Paragraph to the "Second Highest Rating Category" will be deemed deleted so that the only acceptable rating category for such an agreement, guarantee or insurance will be the Highest Rating Category.
(h) Subject lo the ratings requirements set forth in this definition, shares in any
money market mutual fund (including those of the funding Lender or any of its affiliates)
registered under the Investment Company Act of 1940, as amended, lhat have been rated
"AAAm-G" or "AAAm" by S&P or "Aaa" by Moody's so long as the portfolio of such money
market mutual fund is limited to Government Obligations and agreements to repurchase
Government Obligations. If approved in writing by the funding Lender, a money market mutual
fund portfolio may also contain obligations and agreements to repurchase obligations described in
paragraphs (b) or (c). Tf the Governmental Lender Note is rated by a Rating Agency, the money
market mutual fund must be rated "AAAm-G" or "AAAm" by S&P, if S&P is a Rating Agency,
or "Aaa" by Moody's, if Moody's is a Rating Agency. If at any time the Governmental Lender
Note is not rated (and, consequently, there is no Rating Agency), then the money market mutual
fund must be rated "AAAm-G" or "AAAm" by S&P or Aaa by Moody's. If at any time (i) the
Governmental Lender Note is not rated, (ii) both S&P and Moody's rate a money market mutual
fund and (iii ) one of those ratings is below the level required by this paragraph, then such money
market mutual fund will, nevertheless, be deemed to be rated in the Highest Rating Category if
the lower rating is no more than one rating category below the highest rating category of that
rating agency.
(i) Any other investment authorized by the laws ofthe State, if such investment is
approved in writing by the Funding Lender.
Permitted Investments shall not include any ofthe following:
Except for any investment described in the next sentence, any investment with a final maturity or any agreement with a term greater than one year from the date of the investment. This exception (1) shall not apply to Permitted Investments listed in paragraphs (g) and (i).
Except for any obligation described in paragraph (a) or (b), any obligation with a purchase price greater or less than the par value of such obligation.
Any asset backed security, including mortgage backed securities, real estate mortgage investment conduits, collateralized mortgage obligations, credit card receivable asset backed securities and auto loan asset backed securities.
Any interest only or principal only stripped security.
Any obligation bearing interest at an inverse floating rate.
Any investment which may be prepaid or called at a price less than its purchase price prior lo stated maturity.
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Any investment the interest rate on which is variable and is established other than by reference to a single index plus a fixed spread, if any, and which interest rate moves proportionately with that index.
Any investment described in paragraph (d) or (g) with, or guaranteed or insured by, a Qualified financial Institution described in clause (iv) ofthe definition of Qualified Financial Institution if such institution does not agree to submit to jurisdiction, venue and service of process in the United States of America in the agreement relating to the investment.
Any investment to which S&P has added an "r" or "f' highlighter.
"Person" shall mean any individual, corporation, limited liability company, partnership, joint venture, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
"Pledged Revenues" shall mean the amounts pledged under this Funding Loan Agreement to the payment of the principal of, prepayment premium, if any, and interest on the Funding Loan and the Governmental Lender Note, consisting of the following: (i) all income, revenues, proceeds and other amounts to which the Governmental Lender is entitled (other than amounts received by the Governmental Lender with respect to the Unassigned Rights) derived from or in connection with the Project and the Funding Loan Documents, including all Borrower Loan Payments due under the Borrower Loan Agreement and the Borrower Note, payments with respect to the Borrower Loan Payments and all amounts obtained through thc exercise ofthe remedies provided in the Funding Loan Documents and all receipts credited under the provisions ofthis Funding Loan Agreement against said amounts payable, and (ii) moneys held in thc funds and accounts established under this Funding Loan Agreement, together with investment earnings thereon.
"Potential Default" shall have the meaning ascribed to that term in the Borrower Loan Agreement.
"Prepayment Premium" shall mean (i) any premium payable by the Borrower pursuant to the Borrower Loan Documents in connection with a prepayment of the Borrower Note (including any Prepayment Premium as set forth in the Borrower Note) and (ii) any premium payable on the Governmental Lender Note pursuant to this Funding Loan Agreement.
"Project" shall have the meaning given to that term in the Ordinance.
"Qualified Financial Institution" shall mean any (i) bank or trust company organized under the laws of any state of the United States of America, (ii) national banking association, (iii) savings bank, savings and loan association, or insurance company or association chartered or organized under the laws of any state of the United States of America, (iv) federal branch or agency pursuant to the International Banking Act of 1978 or any successor provisions of law or a domestic branch or agency ofa foreign bank which branch or agency is duly licensed or authorized to do business under the laws of any state or territory of the United States of America, (v) government bond dealer reporting to. trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, (vi) securities dealer approved in writing by the Funding Lender thc liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation and (vii) other entity which is acceptable to the Funding Lender. With respect to an entity which provides an agreement held by the Funding Lender for the investment of moneys at a guaranteed rate as set out in paragraph (g) of thc definition of the term "Permitted
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Investments" or an entity which guarantees or insures, as applicable, the agreement, a "Qualified Financial Institution" may also be a corporation or limited liability company organized under the laws of any state ofthe United States of America.
"Ratin« Agency" shall mean any one and each of S&P, Moody's and Fitch then rating the Permitted Investments or any other nationally recognized statistical rating agency then rating the Permitted Investments, which has been approved by thc Funding Lender.
"Regulations" shall mean with respect to the Code, thc relevant U.S. Treasury regulations and proposed regulations thereunder or any relevant successor provision to such regulations and proposed regulations.
"Regulatory Agreement" shall mean that certain Land Use Restriction Agreement, dated as of the Closing Date, by and between the Governmental Lender and the Borrower, as hereafter amended or modified.
"Remaining Funding Loan Proceeds Account" has the meaning set forth in the Contingency Draw-Down Agreement.
"Remaining Funding Loan Proceeds Account F.arnings Subaccount" has the meaning set forth in the Contingency Draw-Down Agreement.
"Required Transferee Representations" shall mean the representations in substantially the form attached to this Funding Loan Agreement as Exhibit B."
"Second Highest Rating Category" shall mean, with respect to a Permitted Investment, that the Permitted Investment is rated by each Rating Agency in the second highest rating category given by that Rating Agency for that general category of security. If at any time the Governmental Lender Note is not rated (and, consequently, there is no Rating Agency), then the term "Second Highest Rating Category" means, with respect to a Permitted Investment, lhat the Permitted Investment is rated by S&P or Moody's in the second highest rating category given by that rating agency for that general category of security. By way of example, the Second Highest Rating Category for tax-exempt municipal debt established by S&P is "AA" for a term greater than one year, with corresponding ratings by Moody's of "Aa." If at any time (i) the Governmental Lender Note is not rated, (ii) both S&P and Moody's rate a Permitted Investment and (iii) one of those ratings is below the Second Highest Rating Category, then such Permitted Investment will not be deemed to be rated in the Second Highest Rating Category. For example, an Investment rated "AA" by S&P and "A" by Moody's is not rated in the Second Highest Rating Category.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security" shall mean the security for the performance by the Governmental Lender of its obligations under the Governmental Lender Note and this Funding Loan Agreement as more fully set forth in Article IV hereof
"Security Instrument" shall mean the Mortgage. Security Agreement, Fixture Filing and Assignment of Leases and Rents (as amended, restated and/or supplemented from time to time) of even date herewith, made by the Borrower in favor of the Governmental Lender, as assigned to the Funding Lender to secure the performance by the Governmental Lender of its obligations under the Funding Loan.
"Servicer" shall mean any Servicer appointed by the Funding Lender to perform certain servicing functions with respect to thc Funding Loan and on the Borrower Loan pursuant to a separate servicing
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agreement to be entered into between the Funding Lender and the Servicer. Initially the Servicer shall be the Funding Lender pursuant to this Funding Loan Agreement.
"Servicing Agreement" shall mean any servicing agreement entered into between the Funding Lender and a Servicer with respect to the servicing ofthe Funding Loan and/or the Borrower Loan, if any.
"S&P" shall mean Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business division, and its successors.
"State" shall mean thc State of Illinois.
"Tax Compliance Agreement" shall mean the fax Compliance Agreement, dated the Closing Date, executed and delivered by the Governmental Lender and the Borrower.
"Tax Counsel" shall mean ArentFox Schiff LLP, or any other attorney or firm of attorneys designated by the Governmental Lender and approved by the Funding Lender having a national reputation for skill in connection with the authorization and issuance of municipal obligations under Sections 103 and 141 through 150 (or any successor provisions) of the Code.
"Tax Counsel Approving Opinion" shall mean an opinion of Tax Counsel substantially to the effect that the Governmental Lender Note constitutes a valid and binding obligation ofthe Governmental Lender and that, under existing statutes, regulations published rulings and judicial decisions, the interest on thc Governmental Lender Note is excludable from gross income for federal income lax purposes (subject to thc inclusion of such customary exceptions as are acceptable to the recipient thereof).
"Tax Counsel No Adverse Effect Opinion" shall mean an opinion of Tax Counsel to the effect that the taking of thc action specified therein will not impair thc exclusion of interest on the Governmental Lender Note from gross income for purposes of federal income taxation (subject to the inclusion of such customary exceptions as arc acceptable to the recipient thereof).
"UCC" shall mean the Uniform Commercial Code as in effect in the State.
"Unassigned Rights" shall mean the Governmental Lender's rights to reimbursement and payment of its fees, costs and expenses and the Rebate Amount under Section 2.5 ofthe Borrower Loan Agreement, its right to payment of the Governmental Lender's Closing Fee, the Ongoing Fee and any other fees payable to the Governmental Lender under Section 2.5 thereof, its rights to attorneys' fees under Section 5.14 thereof, its rights to indemnification under Section 5.15 thereof, its rights of access under Section 5.17 thereof, its rights to enforce the terms of the Regulatory Agreement, including Borrower's covenants to comply with applicable laws, its rights to give and receive notices, reports and other statements and to enforce notice and reporting requirements and restrictions on transfers of ownership of the Project, and its rights to consent to certain matters, as provided in this Funding Loan Agreement and the Borrower Loan Agreement.
"Written Certificate," "Written Certification," "Written Consent," "Written Direction," "Written Notice," "Written Order," "Written Registration," "Written Request," and "Written Requisition" shall mean a written certificate, direction, notice, order or requisition signed by an Authorized Borrower Representative, an Authorized City Representative or an authorized representative ol the Funding Lender and delivered to the Funding Lender, the Servicer or such other Person as required under the Funding Loan Documents.
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"Yield" shall mean yield as defined in Section 148(h) of tlie Code and any regulations promulgated thereunder.
Section 1.2. Effect of Headings and Table of Contents. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.
Section 1.3. Date of Funding Loan Agreement. The date ofthis Funding Loan Agreement is intended as and for a date for the convenient identification ofthis Funding Loan Agreement and is not intended to indicate that this Funding Loan Agreement was executed and delivered on said date.
Section 1.4. Designation of'Time for Performance. Except as otherwise expressly provided herein, any reference in this Funding Loan Agreement to thc time of day shall mean the time of day in the eity where the Funding Lender maintains its place of business for the performance of its obligations under this Funding Loan Agreement.
Section 1.5. Interpretation. The parties hereto acknowledge that each of them and their respective counsel have participated in the drafting and revision of this Funding Loan Agreement. Accordingly, the parties agree that any rule of construction that disfavors the drafting parly shall not apply in the interpretation ofthis Funding Loan Agreement or any amendment or supplement or exhibit hereto.
ARTICLE 11 TERMS; GOVERNMENTAL LENDER NOTE
Section 2.1. Terms.
Principal Amount. The total aggregate principal amount ofthe Funding Loan is hereby expressly limited to the Authorized Amount.
Draw-Down Funding. The Funding Loan is originated on a draw-down basis. The proceeds of the Funding Loan shall be advanced by the Funding Lender directly to the Title Company who will then advance the proceeds to Borrower in accordance with the terms ofthe Construction Escrow Agreement for the account of the Governmental Lender as and when needed lo make each advance in accordance with the disbursement provisions of the Borrower Loan Agreement and thc Construction Funding Agreement. Upon each advance of principal under the Borrower Loan Agreement and the Construction Funding Agreement, a like amount ofthe Funding Loan shall be deemed concurrently and simultaneously advanced under this Funding Loan Agreement, including the initial advance of $55,000. Notwithstanding anything in this Funding Loan Agreement to the contrary, no additional amounts of the Funding Loan may be drawn down and funded hereunder after [December 1, 2025]; provided, however, lhat upon the delivery ofa Tax Counsel No Adverse Effect Opinion to the Governmental Lender and the Funding Lender such date may be changed to a later date as specified in such Tax Counsel No Adverse Effect Opinion. The Governmental Lender has reviewed and approved the form of Contingency Draw-Down Agreement and consents to the terms thereof and agrees to take all actions reasonably required of the Governmental Lender in connection with the conversion of the Funding Loan to a fully drawn loan pursuant to the provisions ofthe Contingency Draw-Down Agreement in the event a Draw-Down Notice is filed by the Funding Lender or the Borrower.
Origination Date; Maturity. The Funding Loan shall be originated, and thc Governmental Lender Note shall be issued, on the Closing Date and shall mature on the Maturity Date at which time the entire principal amount, to the extent not previously paid, and all accrued and unpaid interest, shall be due and payable.
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Principal. The outstanding principal amount ofthe Governmental Lender Note and ofthe Funding Loan as ofany given date shall be the tolal amount advanced by the funding Lender to or for the account of the Governmental Lender to fund corresponding advances under the Borrower Loan Agreement and the Construction Funding Agreement as proceeds of the Borrower Loan, less any payments of principal of thc Governmental Lender Note previously received upon payment of corresponding principal amounts under the Borrower Note, including regularly scheduled principal payments and voluntary and mandatory prepayments. The principal amount ofthe Governmental Lender Note and interest thereon shall be payable on the basis specified in this paragraph (d) and in paragraphs (e) and (I) ofthis Section 2.1.
The Funding Lender shall keep a record of all principal advances and principal repayments made under the Governmental Lender Note and shall upon written request provide thc Governmental Lender with a statement ofthe outstanding principal balance of the Governmental Lender Note and lhe Funding Loan.
Interest. Interest shall be paid on the outstanding principal amount ofthe Governmental Lender Note at the rate or rates set forth in the Borrower Note and otherwise as set forth in thc Borrower Loan Agreement.
(t) Corresponding Payments. The payment or prepayment of principal, interest and premium, if any, due on the Governmental Lender Note shall be identical with and shall be made on the same dates, terms and conditions, as the principal, interest, premiums, late payment fees and other amounts due on the Borrower Note. Any payment or prepayment made by the Borrower of principal, interest, premium, if any, due on the Borrower Note shall be deemed to be like payments or prepayments of principal, interest and premium, if any, due on the Governmental Lender Note.
(g) Usury. The Governmental Lender intends to conform strictly to the usury laws applicable to this Funding Loan Agreement and the Governmental Lender Note and all agreements made in the Governmental Lender Note, this Funding Loan Agreement and the Funding Loan Documents are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid as interest or the amounts paid for the use of money advanced or to be advanced hereunder exceed the highest lawful rate prescribed under any law which a court of competent jurisdiction may deem applicable hereto. If, from any circumstances whatsoever, the fulfillment ofany provision ofthe Governmental Lender Note, this Funding Loan Agreement or the other Funding Loan Documents shall involve the payment of interest in excess ofthe limit prescribed by any law which a court of competent jurisdiction may deem applicable hereto, then the obligation to pay interest hereunder shall be reduced to the maximum limit prescribed by law. If from any circumstances whatsoever, the Funding Lender shall ever receive anything of value deemed interest, the amount of which would exceed the highest lawful rate, such amount as would be excessive interest shall be deemed lo have been applied, as ofthe date of receipt by the Funding Lender, to the reduction ofthe principal remaining unpaid hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance, such excess shall be refunded to the Borrower. This paragraph shall control every other provision ofthe Governmental Lender Note, this Funding Loan Agreement and all other Funding Loan Documents.
In determining whether the amount of interest charged and paid might otherwise exceed the limit prescribed by law, the Governmental Lender intends and agrees that (i) interest shall be computed upon the assumption that payments under the Borrower Loan Agreement and other Funding Loan Documents will be paid according to thc agreed terms, and (n) any sums of money that are taken into account in the calculation of interest, even though paid at one time, shall be spread over the actual term ofthe Funding Loan.
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Section 2.2. Form of Governmental Lender Note. As evidence of its obligation to repay thc Funding Loan, simultaneously with the delivery ofthis Funding Loan Agreement to the Funding Lender, the Governmental Lender hereby agrees to execute and deliver the Governmental Lender Note. The Governmental Lender Note shall be substantially in the form set forth in Exhibit A attached hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Funding Loan Agreement and the Ordinance.
Section 2.3. Execution and Delivery of Governmental Lender Note. The Governmental Lender Note shall be executed on behalf of the Governmental Lender by the manual or facsimile signature of its Chief Financial Officer, and its corporate seal (or a facsimile thereof) shall be thereunto affixed, imprinted, engraved or otherwise reproduced, and attested by the manual or facsimile signature of its City Clerk or Deputy City Clerk. In case any officer ofthe Governmental Lender whose signature or facsimile signature shall appear on the Governmental Lender Note shall cease to be such officer before the Governmental Lender Note so signed and sealed shall have been actually delivered, such Governmental Lender Note may, nevertheless, be delivered as herein provided, and may be executed and delivered as if the persons who signed or sealed such Governmental Lender Note had not ceased to hold such offices or be so employed. The Governmental Lender Note may be signed and sealed on behalf of the Governmental Lender by such persons as, at the actual lime of the execution of the Governmental Lender Note, shall be duly authorized or hold the proper office in or employment by the Governmental Lender, although at the date of the Governmental Lender Note such persons may not have been so authorized nor have held such office or employment.
Section 2.4. Required Transferee Representations; Participations; Sale and Assignment.
The Funding Lender shall deliver to the Governmental Lender the Required Transferee Representations in substantially the form attached hereto as Exhibit B on the Closing Date.
The Funding Lender shall have the right to sell (i) the Governmental Lender Note and thc Funding Loan or (ii) any portion of or a participation interest in the Governmental Lender Note and the Funding Loan, to the extent permitted by Section 2.4(c) below, provided that (A) such sale shall be only to Approved Transferees that execute and deliver to the Funding Lender, with a copy to the Governmental Lender, the Required Transferee Representations and (B) if any amendment is to be made to this Funding Loan Agreement or any other Funding Loan Document in conjunction with such transfer, a Tax Counsel No Adverse Effect Opinion.
Notwithstanding the other provisions ofthis Section 2.4, no beneficial ownership interest in the Governmental Lender Note and Funding Loan shall be sold in an amount that is less than the Minimum Beneficial Ownership Amount.
The Governmental Lender Note or any interest therein, shall be in fully-registered form transferable lo subsequent holders only on the registration books which shall be maintained by the Funding Lender for such purpose and which shall be open to inspection by the Governmental Lender. The Governmental Lender Note shall not be transferred through the services of the Depository Trust Company or any other third parly registrar.
The parties agree that no rating shall be sought from a rating agency with respect to the Funding Loan or the Governmental Lender Note.
No service charge shall be made for any sale or assignment ofthe Governmental Lender Note or a participation therein, but the Governmental Lender may require payment ofa sum sufficient to cover any tax or other charge that may be imposed in connection with any such sale or assignment and
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payment of any fees and expenses incurred by tlie Governmental Lender in connection therewith. Such sums shall be paid in every instance by the purchaser or assignee ofthe Governmental Lender Note or a participation therein.
ARTICLE III PREPAYMENT
Section 3.1. Prepayment ofthe Governmental Lender Note from Prepayment under thc Borrower Note. Thc Governmental Lender Note is subject to voluntary and mandatory prepayment as follows:
The Governmental Lender Note shall be subject to voluntary prepayment in full or in part by thc Governmental Lender, from funds of the Governmental Lender received by the Governmental Lender to the extent and in the manner and on any dale that the Borrower Note is subject to voluntary prepayment as set forth therein, at a prepayment price equal to the principal balance ofthe Borrower Note to be prepaid, plus interest thereon to thc date of prepayment and the amount ofany Prepayment Premium payable under the Borrower Note, plus any Additional Borrower Payments due and payable under the Borrower Loan Agreement through the date of prepayment.
The Borrower shall not have the right to voluntarily prepay all or any portion of the Borrower Note, thereby causing the Governmental Lender Note lo be prepaid, except as specifically permitted in the Borrower Note, without the prior written consent of Funding Lender, which may be withheld in Funding Lender's sole and absolute discretion.
The Governmental Lender Note shall be subject to mandatory prepayment in whole or in part upon prepayment ofthe Borrower Note at the direction ofthe Funding Lender in accordance with the terms of the Borrower Note at a prepayment price equal to the outstanding principal balance of the Borrower Note prepaid, plus accrued interest plus any other amounts payable under the Borrower Note or the Borrower Loan Agreement.
Section 3.2. Notice of Prepayment. Notice of prepayment ofthe Governmental Lender Note shall be deemed given to the extent that notice of prepayment ofthe Borrower Note is timely and properly given to Funding Lender in accordance with the terms of the Borrower Note and the Borrower Loan Agreement, and no separate notice of prepayment of thc Governmental Lender Note is required to be given.
ARTICLE IV SECURITY
Section 4.1. Security for the Funding Loan. To secure the payment ofthe Funding Loan and the Governmental Lender Note, to declare thc terms and conditions on which the Funding Loan and the Governmental Lender Note are secured, and in consideration ofthe premises and ofthe funding ofthe Funding Loan by the Funding Lender, the Governmental Lender by these presents docs grant, bargain, sell, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to thc Funding Lender (except as limited herein), a lien on and security interest in the following described property (excepting, however, in each case, thc Unassigned Rights) (said property, rights and privileges being herein collectively called, the "Security"):
(a) All right, title and interest of the Governmental Lender in, to and under the Borrower Loan Agreement and the Borrower Note," including, without limitation, all rents, revenues and receipts derived by the Governmental Lender from the Borrower relating to the Project and including, without
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limitation, all Pledged Revenues, Borrower Loan Payments and Additional Borrower Payments derived by the Governmental Lender under and pursuant to, and subject to the provisions of, the Borrower Loan Agreement; provided that the pledge and assignment made under this Funding Loan Agreement shall not impair or diminish the obligations of thc Governmental Lender under the provisions of the Borrower Loan Agreement;
All right, title and interest ofthe Governmental Lender in, to and under, together with all rights, remedies, privileges and options pertaining to. the Funding Loan Documents, and all other payments, revenues and receipts derived by the Governmental Lender under and pursuant to, and subject to the provisions of, the Funding Loan Documents;
Any and all moneys and investments from time to time on deposit in, or forming a part of, all funds and accounts created and held under this Funding Loan Agreement and any amounts held at any time in the Remaining Funding Loan Proceeds Account and the Remaining Funding Loan Proceeds Account Earnings Subaccount, any Negative Arbitrage Deposit and any other amounts held under the Contingency Draw-Down Agreement, subject to thc provisions of this Funding Loan Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein; and
Any and all other real or personal property of every kind and nature or description, which may from time to time hereafter, by delivery or by writing ofany kind, be subjected to the lien ofthis Funding Loan Agreement as additional security by the Governmental Lender or anyone on its part or with its consent, or which pursuant to any of the provisions hereof or of the Borrower Loan Agreement may come into the possession or control of the Funding Lender or a receiver appointed pursuant to this Funding Loan Agreement; and the Funding Lender is hereby authorized to receive any and all such property as and for additional security for the Funding Loan and the Governmental Lender Note and to hold and apply all such property subject to thc terms hereof.
The pledge and assignment of and thc security interest granted in thc Security pursuant to this Section 4.1 for the payment ofthe principal of, premium, if any, and interest on the Governmental Lender Note, in accordance with its terms and provisions, and for the payment of all other amounts due hereunder, shall attach and be valid and binding from and after the time of the delivery of the Governmental Lender Note by the Governmental Lender, l he Security so pledged and then or thereafter received by the Funding Lender shall immediately be subject to the lien of such pledge and security interest without any physical delivery or recording thereof or further act. and the lien of such pledge and security interest shall be valid and binding and prior to the claims ofany and all parties having claims of any kind in tort, contract or otherwise against lhe Governmental Lender irrespective of whether such parties have notice thereof.
Section 4.2. Delivery of Security. To provide security for the payment ofthe Funding Loan and thc Governmental Lender Note, thc Governmental Lender has pledged and assigned to secure payment of the Funding Loan and thc Governmental Lender Note its right, title and interest in the Security lo the Funding Lender. In connection with such pledge, assignment, transfer and conveyance, the Governmental Lender shall deliver to thc Funding Lender thc following documents or instruments promptly following their execution and, to the extent applicable, their recording or filing:
The Borrower Note endorsed without recourse to the Funding Lender by the Governmental Lender;
The originally executed Borrower Loan Agreement and Regulatory Agreement:
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(c) Thc originally executed Security Instrument and all other Borrower Loan Documents existing at the time of delivery of the Borrower Note and an assignment for security of the Security Instrument from the Governmental Lender to the Funding Lender, in recordable form;
(cl) Uniform Commercial Code financing statements or other chattel security documents giving notice of the Funding Lender's status as an assignee of the Governmental Lender's security interest in any personal property forming part ofthe Project, in form suitable for filing; and
(c) Uniform Commercial Code financing statements giving notice of thc pledge by the Governmental Lender ofthe Security pledged under this Funding Loan Agreement.
The Governmental Lender shall deliver and deposit with the Funding Lender such additional documents, financing statements, and instruments as the Funding Lender may reasonably require from time to time for the better perfecting and assuring to thc Funding Lender of its lien and security interest in and to the Security including, at thc request of the Funding Lender, any amounts held under the Contingency Draw-Down Agreement, at the expense ofthe Borrower.
ARTICLE V LIMITED LIABILITY
Section 5.1. Source of Payment of Governmental Lender Note and Other Obligations; Disclaimer of General Liability. The Governmental Lender Note, together with premium, if any, and interest thereon, are special, limited obligations of the Governmental Lender, payable solely from the security pledged hereunder. The Governmental Lender Note is not a general obligation of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability ofthe Governmental Lender, and neither the Governmental Lender, the Slate nor any other political subdivision thereof shall be liable for the payments of principal of and, premium, if any, and interest on the Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement. No holder of the Governmental Lender Note or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or premium, if any, thereon.
Section 5.2. Exempt from Individual Liability. No recourse shall be had for the payment of the principal of, premium, if any, or the interest on the Governmental Lender Note or for any claim based thereon or any obligation, covenant or agreement in this Funding Loan Agreement against any official, officer, agent, employee or independent contractor ofthe Governmental Lender or any person executing the Governmental Lender Note in his or her personal capacity. No covenant, stipulation, promise, agreement or obligation contained in the Governmental Lender Note, this Funding Loan Agreement or any other document executed in connection herewith shall be deemed to be the covenant, stipulation, promise, agreement or obligation of any present or future official, officer, agent or employee of the Governmental Lender in his or her individual capacity and neither any official of the Governmental Lender nor any officers executing the Governmental Lender Note shall be liable personally on the Governmental Lender Note or under this Funding Loan Agreement or be subject to any personal liability or accountability by reason of the execution and delivery of the Governmental Lender Note or the execution ofthis Funding Loan Agreement.
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ARTICLE VI
CLOSING CONDIT IONS; APPLICATION OF FUNDS
Section 6.1. Conditions Precedent to Closing. Closing ofthe Funding Loan on the Closing Date shall be conditioned upon satisfaction or waiver by the Funding Lender in its sole discretion of each ofthe conditions precedent to closing set forth in this Funding Loan Agreement, including but not limited lo the following:
Receipt by the Conslruclion Funding Lender ofthe original Governmental Lender Note;
Receipt by the Construction Funding Lender of the original executed Borrower Note, endorsed to the Funding Lender by the Governmental Lender:
Receipt by the Funding Lenders of executed counterpart copies of this Funding Loan Agreement, the Borrower Loan Agreement, the Construction Funding Agreement, the Regulatory Agreement, the Tax Compliance Agreement, lhe Forward Bond Purchase Agreement and the Security Instrument;
A certified copy ofthe Ordinance;
(c) Executed Required Transferee Representations from each Funding Lender;
(f) Delivery into escrow of all amounts required to be paid in connection with the origination of the Borrower Loan and thc Funding Loan and any underlying real estate transfers or transactions, including the Costs of Funding Deposit, in accordance with Section 2.3(c)(ii) of the Borrower Loan Agreement;
(gj Receipt by the Funding Lender ofa Tax Counsel Approving Opinion;
(h) Receipt by thc Funding Lender of an Opinion of Counsel from Co-Bond Counsel to the
effect that the Governmental Lender Note is exempt from registration under the Securities Act, and this
Funding Loan Agreement is exempt from qualification under the Trust Indenture Act of 1939, as
amended;
(i) Delivery of an opinion of counsel to the Borrower addressed to the Governmental Lender
and the Funding Lender to the effect that the Borrower Loan Documents and the Regulatory Agreement
are valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with
their terms, subject to such exceptions and qualifications as are acceptable to the Governmental Lender
and the Funding Lender; and
(j) Receipt by the Funding Lender of any other documents or opinions that thc Funding Lender or Co-Bond Counsel may reasonably require.
ART ICLE VII FUNDS AND ACCOUNTS
Section 7.1. Authorization to Create Funds and Accounts. No tunds or accounts shall be established in connection with the Funding Loan at the time of closing and origination of the Funding Loan. The Funding Lender and the Servicer, if any, are authorized to establish and create from time to time such other funds and accounts or subaccounts as may be necessary for the deposit of moneys (including, without limitation, insurance proceeds and/or condemnation awards), if any, received by the
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Governmental Lender, lhe Funding Lender or the Servicer pursuant to tlie terms hereof or any ofthe other Funding Loan Documents and not immediately transferred or disbursed pursuant to the terms of the Funding Loan Documents and/or the Borrower Loan Documents.
Section 7.2. Investment of Funds. Amounts held in any funds or accounts created under this Funding Loan Agreement shall be invested in Permitted Investments al the direction of the Borrower, subject in all cases to the restrictions of Section 8.7 hereof and ofthe 'fax Compliance Agreement.
ARTICLE Vlll REPRESENTATIONS AND COVENANTS
Section 8.1. General Representations. The Governmental Lender makes the following representations as the basis for the undertakings on its part herein contained:
The Governmental Lender is a municipality and home rule unit of local government duly organized and validly existing under the Constitution and laws ofthe State. Thc Governmental Lender has power and lawful authority to adopt the Ordinance, to execute and deliver lhe Funding Loan. Documents to which it is a party (the "Governmental Lender Documents"), to execute and deliver the Governmental Lender Note and receive the proceeds ofthe Funding Loan, to apply the proceeds ofthe Funding Loan to make the Borrower Loan, to assign the revenues derived and to be derived by the Governmental Lender from the Borrower Loan to the Funding Lender, and to perform and observe the provisions of the Governmental Lender Documents and the Governmental Lender Note on its part to be performed and observed.
Thc City Council of the Governmental Lender has approved the Ordinance and the Ordinance has not been amended, modified or rescinded and is in full force and effect as of the date hereof.
Thc Governmental Lender has duly authorized the execution and delivery of each ofthe Funding Loan Agreement and the Governmental Lender Note and the performance ofthe obligations of the Governmental Lender thereunder.
Thc Governmental Lender makes no representation or warranty, express or implied, that the proceeds ofthe Funding Loan will be sufficient to finance the acquisition, construction and equipping ofthe Project or that thc Project will be adequate or sufficient for the Borrower's intended purposes.
Thc revenues and receipts to be derived from the Borrower Loan Agreement, the Borrower Note and this Funding Loan Agreement have not been pledged previously by thc Governmental Lender to secure any of its notes or bonds other than the repayment ofthe Funding Loan.
THE GOVERNMENTAL LENDER MAKES NO REPRESENTATION, COVENANT OR AGREEMENT AS TO THE FINANCIAL POSITION OR BUSINESS CONDITION OF THE BORROWER OR THE PROJECT AND DOES NOT REPRESENT OR WARRANT AS TO ANY STATEMENTS. MATERIALS, REPRESENTATIONS OR CERTIFICATIONS FURNISHED BY THE BORROWER IN CONNECTION WITH THE FUNDING LOAN OR THE BORROWER LOAN OR AS TO THE CORRECTNESS, COMPLETENESS OR ACCURACY THEREOF.
Section 8.2. Further Assurances. The Governmental Lender will do, execute, acknowledge, when appropriate, and deliver from time to time at the request of the Funding Lender, to the extent permitted by the Ordinance, such further acts, instruments, financing statements and other documents as are necessary or desirable to better assure, transfer, pledge or assign to the Funding Lender or holders of
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interest in the Funding Loan, and grant a security interest unto the Funding Lender or holders of interests in the Funding Loan in ami to the Security and the other properties and revenues herein described ami otherwise to cany out the intent and purpose ofthe Funding Loan Documents and the Funding Loan.
Section 8.3. Payment of Funding Loan Obligations. The Governmental Lender will pay or cause to be paid thc principal of. prepayment premium, if any, and the interest on the Funding Loan as the same become due. but solely from the Security, as described in Section 5.1 of this Funding Loan Agreement.
Section 8.4. Funding Loan Agreement Performance. The Funding Lender, on behalf of the Governmental Lender and with thc Written Consent ofthe Governmental Lender, may (but shall not be required or obligated) perform and observe any such agreement or covenant ofthe Governmental Lender under the Funding Loan Agreement, all to thc end that the Governmental Lender's rights under thc Borrower Loan Agreement may be unimpaired and free from default.
Section 8.5. Servicer. Thc Funding Lender may appoint a Servicer lo service and administer the Governmental Loan and the Borrower Loan on behalf of the Funding Lender, including without limitation thc fulfillment of rights and responsibilities granted by Governmental Lender to Funding Lender pursuant to Section 2.1 ofthe Borrower Loan Agreement; provided, however, that no appointment ofa Servicer shall release the Funding Lender from ultimate responsibility for any obligation hereunder.
Section 8.6. Tax Covenants. The Governmental Lender covenants to and for the benefit of the Funding Lender and any other holders of an interest in the Governmental Lender Note that, notwithstanding any other provisions ofthis Funding Loan Agreement or ofany other instrument, it will:
At all times do and perform all acts and things permitted by law and this Funding Loan Agreement which are necessary or desirable in order to assure, and will not knowingly take any action which will adversely affect, the tax-exempt status of the Governmental Lender Note; and
Not use or knowingly permit the use of any proceeds of the Funding Loan or other funds ofthe Governmental Lender, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions, which would result in any ofthe Governmental Lender Note being treated as an obligation not described in Section 142(a)(7) of the Code by reason of the Governmental Lender Note or interest thereon not meeting the requirements of Section 142(d) of the Code;
In furtherance of the covenants in this Section 8.6, thc Governmental Lender and thc Borrower shall execute, deliver and comply with the provisions of the Tax Compliance Agreement, which are by this reference incorporated into this Funding Loan Agreement and made a part of this Funding Loan Agreement as if set forth in this Funding Loan Agreement in full, and by its acceptance ofthis Funding Loan Agreement the Funding Lender acknowledges receipt of the Tax Compliance Agreement and acknowledges its incorporation in this Funding Loan Agreement by this reference. The Funding Lender agrees it will invest funds held under this Funding Loan Agreement in Permitted Investments in accordance with the direction ofthe Borrower and the terms ofthis Funding Loan Agreement and the Tax Compliance Agreement (this covenant shall extend throughout the term ofthe Funding Loan, to all funds and accounts created under or in connection with this Funding Loan Agreement and all moneys on deposit to the credit ofany Fund or Account); provided that thc Funding Lender shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows directions ofthe Borrower not inconsistent with the terms ofthis Funding Loan Agreement and the Tax Compliance
Agreement or otherwise complies with the provisions ofthe Funding Loan Agreement relating to funds and accounts.
For purposes ofthis Section 8.6 the Governmental Lender's compliance shall be based solely on matters within the Governmental Lender's control and no acts, omissions or directions of the Borrower, the Funding Lender or any other Persons shall be attributed lo the Governmental Lender.
In complying with the foregoing covenants, the Governmental Lender may rely from time to time on a Tax Counsel No Adverse Effect Opinion or other appropriate opinion of Tax Counsel.
Section 8.7. Performance by the Borrower. Without relieving the Governmental Lender from the responsibility for performance and observance ofthe agreements and covenants required to be performed and observed by it hereunder, the Borrower, on behalf of the Governmental Lender and with the Written Consent of thc Governmental Lender, may perform any such agreement or covenant if no Borrower Loan Agreement Default or Potential Default under thc Borrower Loan Agreement exists.
Section 8.8. Repayment of Funding Loan. Subject to the provisions of Article V hereof, the Governmental Lender will duly and punctually repay, or cause to be repaid, but solely from the Security set forth in Article IV hereof, the Funding Loan, as evidenced by thc Governmental Lender Note, as and when the same shall become due, all in accordance with the terms ofthe Governmental Lender Note and this Funding Loan Agreement.
Section 8.9. Borrower Loan Agreement Performance.
The Servicer and thc Funding Lender, on behalf of the Governmental Lender and with the Written Consent ofthe Governmental Lender, may (but shall not be required or obligated to) perform and observe any such agreement or covenant of the Governmental Lender under the Borrower Loan Agreement, all to the end that the Governmental Lender's rights under the Borrower Loan Agreement may be unimpaired and free from default.
The Governmental Lender will promptly notify the Borrower, the Servicer and the Funding Lender in writing ofthe occurrence ofany Borrower Loan Agreement Default, provided that the Governmental Lender has received written notice or otherwise has actual knowledge of such event; and further provided that the Governmental Lender shall have no liability to any person for its failure to provide any such notice so long as it has made a good faith effort to comply with such provisions.
The Funding Lender will promptly notify the Borrower, the Servicer, if any, and the Governmental Lender in writing of the occurrence of any Event of Default or any Borrower Loan Agreement Default known to the Funding Lender.
Section 8.10. Maintenance of Records; Inspection of Records.
(a) Thc Funding Lender shall keep and maintain adequate records pertaining to the funds and accounts, if any, established hereunder, including all deposits to and disbursements from said funds and accounts and shall keep and maintain the registration books for the Funding Loan and interests therein. The Funding Lender shall retain in its possession all certifications and other documents presented to it, all such records and all records of principal, interest and prepayment premium, if any, paid on the Funding Loan, subject to the inspection of the Borrower, the Governmental Lender, lhe Servicer and their representatives at all reasonable times and upon reasonable prior notice.
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(b) Tlie Governmental Lender will at any and all times, upon the reasonable request ofthe Servicer, the Borrower or the Funding Lender, afford ami procure a reasonable opportunity by their respective representatives to inspect the books, records, reports and other papers of the Governmental Lender relating to the Project and the Funding Loan, if any. and to make copies thereof.
Section 8.11. Representations and Warranties of the Funding Tender. The Funding Lender hereby represents to the Governmental Lender and the Borrower that it is duly authorized to enter into and perform this Funding Loan Agreement, and has full authority to take such action as it may deem advisable with respect to all matters pertaining to this Funding Loan Agreement.
Section 8.12. Funding Lender Limitations. Notwithstanding anything herein or in the Borrower Loan Agreement to the contrary, prior to the advancement by the Funding Lender of all advances of loan funds hereunder (and, by virtue hereof, under the Borrower Loan Agreement and the Construction Funding Agreement), and only prior to such final advancement of all loan funds hereunder, no notice to or consent ofthe Funding Lender shall be required under any provision ofthis Funding Loan Agreement or the Borrower Loan Agreement nor shall the Funding Lender have any right to receive notice of, consent to, direct or control any actions, restrictions, rights, remedies, waivers or acceleration pursuant to any provision of this Funding Loan Agreement or the Borrower Loan Agreement during any time that (a) any Material Funding Lender Event shall have occurred and be continuing; or (b) thc Funding Loan Agreement and thc Construction Funding Agreement are not in effect and all obligations of thc Governmental Lender and the Borrower, including payment obligations, pursuant to the Funding Loan Agreement, Governmental Lender Note, Borrower Loan Agreement and Borrower Note have been fully satisfied.
ARTICLE IX DEFAULT; REMEDIES
Section 9.1. Events of Default. Any one or more ofthe following shall constitute an event of default (an "Event of Default") under this Funding Loan Agreement (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or Governmental body):
A default in the payment ofany interest upon the Governmental Lender Note when such interest becomes due and payable; or
A default in the payment of principal of, or premium on, the Governmental Lender Note when such principal or premium becomes due and payable, whether at its stated maturity, by declaration of acceleration or call for mandatory prepayment or otherwise; or
Subject to Section 8.7 hereof, default in the performance or breach of any material covenant or warranty of the Governmental Lender in this Funding Loan Agreement (other than a covenant or warranty or default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given written notice, as provided in Section 11.1 hereof, to the Governmental Lender and the Borrower by the Funding Lender or the Servicer, specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under this Funding Loan Agreement: provided that, so long as thc Governmental Lender has commenced to cure such failure to observe or perform within the thirty (30) day cure period and the subject matter ofthe default is not capable of cure within said thirty (30) day period and the Governmental Lender is diligently pursuing such cure to the Funding Lender's satisfaction, with the Funding Lender's Written Direction or Written Consent, then the
Governmental Lender shall have an additional period of time as reasonably necessary (not to exeeeil 30 days unless extended in writing by the Funding Lender) within which to cure such default; or
A default in the payment ofany Additional Borrower Payments; or
Any other "Default" or "Event of Default" under any of the other Funding Loan Documents (taking into account any applicable grace periods therein).
Section 9.2. Acceleration of Maturity; Rescission and Annulment.
Subject to the provisions of Section 9.9 hereof, upon the occurrence of an Event of Default under Section 9.1 hereof, then and in every such case, the Funding Lender may declare the principal of the Funding Loan and the Governmental Lender Note and the interest accrued to be immediately due and payable, by notice to the Governmental Lender and the Borrower and upon any such declaration, all principal of and Prepayment Premium, if any, and interest on the Funding Loan and the Governmental Lender Note shall become immediately due and payable.
At any time after a declaration of acceleration has been made pursuant to subsection (a) of this Section, the Funding Lender may by Written Notice to the Governmental Lender, rescind and annul such declaration and its consequences if:
There has been deposited with the Funding Lender a sum sufficient to pay (1) all overdue installments of interest on thc Governmental Lender Note, (2) the principal of and Prepayment Premium on thc Governmental Lender Note that has become due otherwise than by such declaration of acceleration and interest thereon at thc rate or rates prescribed therefor in the Governmental Lender Note, (3) to thc extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate or rates prescribed therefor in thc Governmental Lender Note, and (4) all sums paid or advanced by the Funding Lender and the reasonable compensation, expenses, disbursements and advances of the Funding Lender, its agents and counsel (but only to the extent not duplicative with subclauses (I) and (3) above); and
All Events of Default, other than the non payment of thc principal of the Government Lender Note which have become due solely by such declaration of acceleration, have been cured or have been waived in writing as provided in Section 9.9 hereof.
No such rescission and annulment shall affect any subsequent default or impair any right c onsequcn11hereon.
Notwithstanding the occurrence and continuation of an Event of Default, it is understood that the Funding Lender shall pursue no remedies against the Borrower or the Project if no Borrower Loan Agreement Default has occurred and is continuing. An Event of Default hereunder shall not in and of itself constitute a Borrower Loan Agreement Default or a default under any other Funding Loan Document.
Section 9.3. Additional Remedies; Funding Lender Enforcement.
(a) Upon thc occurrence of an Event of Default, the Funding Lender may. subject to the provisions of this Section 9.3 and Section 9.9 hereof, proceed to protect and enforce its rights by mandamus or other suit, action or proceeding at law or in equity. No remedy conferred by this Funding Loan Agreement upon or remedy reserved to the Funding Lender is intended to be exclusive ofany other
remedy, but each such remedy shall be cumulative and shall be in addition to anv other remedy given to the Funding Lender hereunder or now or hereafter existing at law or in equity or by statute.
(b) Upon the occurrence and continuation ofany Event of Default, the Funding Lender may proceed forthwith to protect and enforce its rights and this Funding Loan Agreement by such suits, actions or proceedings as the Funding Lender, in its sole discretion, shall deem expedient! Funding Lender shall have upon the occurrence and continuation ofany Event of Default all rights, powers, and remedies with respect to the Security as arc available under the Uniform Commercial Code applicable thereto or as are available under any other applicable law at the time in effect and, without limiting the generality of the foregoing, the Funding Lender may proceed at law or in equity or otherwise, to the extent permitted by applicable law:
to take possession of the Security or any part thereof, with or without legal process, and to hold, service, administer and enforce any rights thereunder or thereto, and otherwise exercise all rights of ownership thereof, including (but not limited to) the sale of all or part ofthe Security;
to become mortgagee of record for the Borrower Loan including, without limitation, completing the assignment ofthe Security Instrument by thc Governmental Lender lo the Funding Lender as anticipated by this Funding Loan Agreement, and recording the same in the real estate records of the jurisdiction in which the Project is located, without further act or consent ofthe Governmental Lender, and to service and administer the same for its own account;
to service and administer thc Funding Loan as agent and on behalf of the Governmental Lender or otherwise, and, if applicable, to take such actions necessary to enforce the Borrower Loan Documents and the Funding Loan Documents on its own behalf, and to take such alternative courses of action, as it may deem appropriate; or
to take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Governmental Lender Note, this Funding Loan Agreement or the other Funding Loan Documents, or the Borrower Loan Documents, or in and of the execution of any power herein granted, or for foreclosure hereunder, or for enforcement ofany other appropriate legal or equitable remedy or otherwise as the Funding Lender may elect.
Whether or not an Event of Default has occurred, and except as provided in Section 9.15, the Funding Lender, in its sole discretion, shall have the sole right to waive or forbear any term, condition, covenant or agreement of thc Security Instrument, the Borrower Loan Agreement, the Borrower Note or any other Borrower Loan Documents or Funding Loan Documents applicable to the Borrower, or any breach thereof, other than a covenant that would adversely impact thc tax-exempt status ofthe interest on the Governmental Lender Note, and provided that the Governmental Lender may enforce specific performance with respect to the Unassigned Rights; provided, however, that any such forbearance by the Funding Lender in the exercise of its remedies under the Funding Loan Documents shall not be construed as a waiver by the Funding Lender ofany Conditions to Conversion.
If the Borrower defaults in the performance or observance of any covenant, agreement or obligation ofthe Borrower set forth in the Regulatory Agreement, and if such default remains uncured for a period of 60 days after the Borrower and the Funding Lender receive Written Notice staling that a default under the Regulatory Agreement has occurred and specifying the nature of the default, the Funding Lender shall have the right to seek specific performance of the provisions of the Regulatory Agreement or to exercise its other rights or remedies thereunder; provided, however, that any such
forbearance by lhe Funding Lender in the exercise of its remedies under the Funding Loan Documents shall not be construed as a waiver by the Funding Lender ofany Conditions to Conversion.
II" the Borrower defaults in the performance of its obligations under the Borrower Loan Agreement to make rebate payments, to comply with any applicable continuing disclosure requirements, or to make payments owed pursuant to Sections 2.5, 5.14 or 5.15 ofthe Borrower Loan Agreement for fees, expenses or indemnification, the Funding Lender shall have thc right to exercise all its rights and remedies thereunder (subject to the last paragraph of Section 9.14 hereof).
Section 9.4. Application of Money Collected. Any money collected by the Funding Lender pursuant to this Article and any other sums then held by thc Funding Lender as part ofthe Security, shall be applied in the following order, at the date or dates fixed by the Funding Lender:
First: To the payment ofany and all fees due the Governmental Lender, thc Servicer or thc Rebate Analyst under thc Borrower Loan Documents;
Second: To the payment ofany and all amounts due under the Funding Loan Documents other than with respect to principal and interest accrued on the Funding Loan;
Third: To the payment of the whole amount of" the Funding Loan, as evidenced by the Governmental Lender Note, then due and unpaid in respect of which or for thc benefit of which such money has been collected, with interest (to thc extent that such interest has been collected or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the Governmental Lender Note) on overdue principal of, and Prepayment Premium and overdue installments of interest on the Governmental Lender Note; provided, however, that partial interests in any portion ofthe Governmental Lender Note shall be paid in such order of priority as may be prescribed by Written Direction ofthe Funding Lender in ils sole and absolute discretion; and
Fourth: The payment ofthe remainder, if any, to the Borrower or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
(c) If and to the extent this Section 9.4 conflicts with the provisions of the Servicing Agreement, the provisions of the Servicing Agreement shall control. Capitalized terms used in this Section 9.4 but not otherwise defined in this Funding Loan Agreement shall have the meanings given such terms in the Servicing Agreement.
Section 9.5. Remedies Vested in Funding Lender. All rights of action and claims under this Funding Loan Agreement or the Governmental Lender Note may be prosecuted and enforced by the Funding Lender without the possession ofthe Governmental Lender Note or the production thereof in any proceeding relating thereto.
Section 9.6. Restoration of Positions. If Funding Lender shall have instituted any proceeding to enforce any right or remedy under this Funding Loan Agreement and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Funding Lender, then and in every such case the Governmental Lender and the Funding Lender shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies ofthe Governmental Lender and the Funding Lender shall continue as though no such proceeding had been instituted.
Section 9.7. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Funding Lender is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law. be cumulative and in addition lo every other light and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment ofany right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment ofany other appropriate right or remedy.
Section 9.8. Delay or Omission Not Waiver. No delay or omission ofthe Funding Lender to exercise any right or remedy accruing upon an Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Funding Lender may be exercised from time to time, and as often as may be deemed expedient, by Funding Lender. No waiver ofany default or Event of Default pursuant to Section 9.9 hereof shall extend to or shall affect any subsequent default or Event of Default hereunder or shall impair any rights or remedies consequent thereon.
Section 9.9. Waiver of Past Defaults. Before any judgment or decree for payment of money due has been obtained by thc Funding Lender, the Funding Lender may, subject to Section 9.6 hereof, by Written Notice to the Governmental Lender and the Borrower, waive any past default hereunder or under the Borrower Loan Agreement and its consequences except for default in obligations due the Governmental Lender pursuant to or under the Unassigned Rights. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose ofthis Funding Loan Agreement and the Borrower Loan Agreement; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 9.10. Remedies Under Borrower Loan Agreement or Borrower Note. As set forth in this Section 9.10 but subject to Section 9.9 hereof, the Funding Lender shall have the right, in its own name or on behalf of the Governmental Lender, to declare any default and exercise any remedies under the Borrower Loan Agreement or the Borrower Note, whether or not the Governmental Lender Note has been accelerated or declared due and payable by reason of an Event of Default.
Section 9.11. Waiver of Appraisement and Other Laws.
To the extent permitted by law, the Governmental Lender will not at any lime insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement ofthis Funding Loan Agreement; and the Governmental Lender, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Governmental Lender, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Security marshaled upon any enforcement hereof.
If any law now in effect prohibiting the waiver referred to in Section 9.11(a) shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part ofthe conlract herein contained or to preclude the application ofthis Section 9.11.
Section 9.12. Suits to Protect the Security. Thc Funding Lender shall have power to institute and to maintain such proceedings as it may deem expedient to prevent any impairment ofthe Security by any acts that may be unlawful or in violation of this Funding Loan Agreement and to protect its interests in the Security and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any Governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would impair the security hereunder or be prejudicial to thc interests ofthe Funding Lender.
Section 9.13. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does noi violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Funding Loan Agreement invalid, unenforceable or not entitled to be recorded, registered or Hied under the provisions ofany applicable law.
Section 9.14. Assumption of Obligations. In the event lhat the Funding Lender or its permitted assignee or designee in accordance with Section 2.4 hereof shall become the legal or beneficial owner ofthe Project by foreclosure or deed in lieu of foreclosure, such parly shall succeed to the rights and the obligations of the Borrower under the Borrower Loan Agreement, the Borrower Note, the Regulatory Agreement and any other Funding Loan Documents to which the Borrower is a party. Such assumption shall be effective from and after the effective date of such acquisition and shall be made with the benefit ofthe limitations of liability set forth therein and without any liability for the prior acts ofthe Borrower.
It is the intention ofthe parties hereto that upon the occurrence and continuance of an Event of Default hereunder, rights and remedies may be pursued pursuant to the terms of the Funding Loan Documents, subject to the last paragraph of Section 9.2.
Section 9.15. Remedies upon Unremedied Materia! Funding Lender Event. Upon the occurrence of a Material Funding Lender Event which shall continue unremedied for a period of 60 days (a "Funding Lender Event of Default"), (i) the Governmental Lender may direct that the Governmental Lender Note be transferred to and obligations and liabilities thereunder be assumed by another lender approved to act as Funding Lender by the Governmental Lender pursuant to Section 2.4(b) hereof and acceptable to the Borrower; provided, however, that no such transfer shall become effective until the Funding Lender has been fully reimbursed for all advances made and all expenses incurred and all other amounts owed to Funding Lender with respect to the Governmental Lender Note through the date of transfer, and shall be fully released in writing by the Governmental Lender, thc Borrower and the successor Funding Lender from any and all continuing obligations and liabilities with respect to the Funding Loan and, unless the loss has not in any material respect been caused by the action or inaction of the Borrower, be indemnified by the Borrower for any losses incurred by Funding Lender with respect thereto (except for losses resulting from remedies awarded at law or equity pursuant to clause (ii) below, as to which no indemnity shall be provided), and (ii) the Governmental Lender (or the Borrower pursuant to the Borrower Loan Agreement or the Construction Funding Agreement) may pursue any other remedy available at law or in equity.
ARTICLE X
AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT AND OTHER DOCUMENTS
Section 10.1. Amendment of Funding Loan Agreement. Any of the terms of this Funding Loan Agreement and the Governmental Lender Note may be amended or waived only by an instrument signed by the Funding Lender and thc Governmental Lender, provided, however, no such amendment which materially affects thc rights, duties, obligations or other interests ofthe Borrower shall be made without thc consent ofthe Borrower, and, provided further, that ifthe Borrower is in default under any Funding Loan Document, no Borrower consent shall be required unless such amendment has a material adverse effect on the rights, duties, obligations or other interests ofthe Borrower. All ofthe terms ofthis Funding Loan Agreement shall be binding upon the successors and assigns of and all persons claiming
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under or through the Governmental Lender or any such successor or assign, and shall mure to the benefit of and be enforceable by the successors and assigns ofthe Funding Lender.
Section 10.2. Amendments Requiring Funding Lender Consent. The Governmental Lender shall not consent to any amendment, change or modification ofthe Borrower Loan Agreement or any other Borrower Loan Document or Funding Loan Document without thc prior Written Consent of the Funding Lender; provided, however, that such prior Written Consent shall not be required with respect to any such amendment, change or modification undertaken by the Governmental Lender in order to preserve one or more of its Unassigned Rights. Governmental Lender agrees to provide the Funding Lender with prompt notification of any such amendments, modifications or changes not requiring the prior Written Consent ofthe Funding Lender.
Section 10.3. Consents and Opinions. No amendment to this Funding Loan Agreement or any other Funding Loan Document entered into under this Article X or any amendment, change or modification otherwise permitted under this Article X shall become effective unless and until (i) the Funding Lender shall have approved the same in writing in its sole discretion and (ii) the Funding Lender and the Governmental Lender shall have received, at thc expense of the Borrower, a Tax Counsel No Adverse Effect Opinion and an Opinion of Counsel to the effect that any such proposed amendment is authorized and complies with the provisions of this Funding Loan Agreement and is a legal, valid and binding obligation ofthe parties thereto, subject to normal exceptions relating to bankruptcy, insolvency and equitable principles limitations. No modification or amendment ofthe terms ofthe Borrower Loan Agreement or the Borrower Note may be undertaken without the prior Written Consent of the Governmental Lender and the Funding Lender and the provision to the Funding Lender and the Governmental Lender, at the expense ofthe Borrower, ofa Tax Counsel No Adverse Effect Opinion with regard to such proposed modification.
Any consents required pursuant to this Article X from, or on behalf of, the Governmental Lender may be executed by an Authorized City Representative.
ARTICLE XI MISCELLANEOUS
Section 11.1. Notices.
(a) All notices, demands, requests and other communications required or permitted to be given by any provision ofthis Funding Loan Agreement shall be in writing and sent by first class, regular, registered or certified mail, commercial delivery service, overnight courier, telegraph, telex, telecopier or facsimile transmission, air or other courier, or hand delivery to the party to be notified addressed as follows.
If to the Governmental Lender: City of Chicago
Department of Housing
121 North LaSalle Street, 10"' Floor
Chicago, Illinois 60602
Attention: Commissioner, Department of Housing Telephone: (312) 744-4190 Facsimile: (312) 742-2271
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and with a copy to: City of'Chicago
Office of Corporation Counsel
121 North LaSalle Street. Room 600
Chicago. Illinois 60602
Attention: finance and Economic Development Division Telephone: (312) 744-0200 Facsimile: (312) 742-0277
(refer to "Finance & Econ. Development Division" on cover sheet)
and with a copy lo: City ol"Chicago
Office ofthe City Comptroller's Office 33 North LaSalle Street, Suite 600 Chicago, Illinois 60602 Attention: City Comptroller Telephone: (312) 744-7106 Facsimile: (312) 742-6544
If to the Borrower: Auburn Gresham Apartments LP
c/o Evergreen Redevelopment LLC 566 W. Lake Street, Suite 400 Chicago, Illinois 60661 Attention: David Block
and with a copy to: Auburn Gresham Apartments LP
c/o Imagine Development Group LLC 5504 S. Michigan Avenue Chicago, Illinois 60637 Attention: Fred Spencer
and with a copy to: Applegate & Thorne-Thomsen. P.C.
425 South Financial Place, Suite 1900 Chicago, Illinois 60605 Attention: Paul Davis
and with a copy to: Wincopin Circle LLLP
c/o Enterprise Community Asset Management, Inc.
70 Corporate Center
11000 Broken Land Parkway, Suite 700
Columbia, Maryland 21044
Attention: General Counsel
And with a copy to: Gallagher Evclius & Jones LLP
218 North Charles Street, Suite 400 Baltimore, Maryland 21201 Attention: Kenneth S. Gross
11" to tlie Construction Funding Fifth Third Commercial Funding. Inc.
Lender: 3S Fountain Square Plaza
Cincinnati. Ohio 45263
Attention: David Batey, Senior Vice President
Bricker & Eekler LLP 100 South Third Street Columbus, Ohio 43215 Attention: Christopher N. Swank
If to the Permanent Funding Lender:
Cedar Rapids Bank and Trust Company 500 First Avenue NE Cedar Rapids, Iowa 52401 Attention: Michael Goerdt E-mail: mnoerdt@cibt.com Telephone: (319) 743-7029
And a copy ofany notices of default sent to:
Winthrop & Weinstine, P.A. 225 S. 6,h Street, Suite 3500 Capella Tower
Minneapolis, Minnesota 55402 Attention: Holly Stocker E-mail: hstocker@winthrop.com Telephone: (612)^604-6490
Any such notice, demand, request or communication shall be deemed to have been given and received for all purposes under this Funding Loan Agreement: (i) three Business Days after the same is deposited in any official depository or receptacle of the United States Postal Service first class, or, if applicable, certified mail, return receipt requested, postage prepaid; (ii) on the date of transmission when delivered by telecopier or facsimile transmission, telex, telegraph or other telecommunication device, provided any telecopy or other electronic transmission received by any party after 4:00 p.m., local time, as evidenced by the time shown on such transmission, shall be deemed to have been received the following Business Day; (iii) on the next Business Day after the same is deposited with a nationally recognized overnight delivery service that guarantees overnight delivery; and (iv) on the date of actual delivery to such party by any other means; provided, however, ifthe day such notice, demand, request or communication shall be deemed to have been given and received as aforesaid is not a Business Day, such notice, demand, request or communication shall be deemed to have been given and received on the next Business Day; and provided further lhat notice to the Governmental Lender shall not be deemed to have been given until actually received by the Governmental Lender. Any facsimile signature by a Person on a document, notice, demand, request or communication required or permitted by this Funding Loan Agreement shall constitute a legal, valid and binding execution thereof by such Person.
Any party to this Funding Loan Agreement may change such party's address for the purpose of notice, demands, requests and communications required or permitted under this Funding Loan Agreement by providing written notice of such change of address to all ofthe parties by written notice as provided herein.
Section 11.2. Term of Funding Loan Agreement. T his Funding Loan Agreement shall be in full force and effect until all payment obligations ofthe Governmental Lender hereunder have been paid in full and the Funding Loan has been retired or the payment thereof has been provided for (such payment or provision to be solely from the Security set forth in Article IV hereof as further provided in Section 8.8
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hereof); except that on and after payment in full ofthe Governmental Lender Note, this funding loan Agreement shall be terminated, without further action by the parties hereto.
Section 11.3. Successors and Assigns. All covenants and agreements in this Funding Loan Agreement by the Governmental Lender shall bind its successors and assigns, whether so expressed or not.
Section 11.4. Legal Holidays. In any case in which the date of payment ofany amount due hereunder or the dale on which any other act is to be performed pursuant to this Funding Loan Agreement shall be a day that is not a Business Day, then payment of such amount or such act need not be made on such date but may be made on the next succeeding Business Day, and such later payment or such act shall have thc same force and effect as if made on the date of payment or the date fixed for prepayment or the date fixed for such act, and no additional interest shall accrue for the period after such date and prior to the date of payment.
Section 11.5. Governing Law. This Funding Loan Agreement shall be governed by and shall be enforceable in accordance with thc laws ofthe State.
Section 11.6. Severability. If any provision ofthis Funding Loan Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability ofthe remaining portions shall not in any way be affected or impaired. In case any covenant, stipulation, obligation or agreement contained in the Governmental Lender Note or in this Funding Loan Agreement shall for any reason be held to be usurious or in violation of law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement ofthe Governmental Lender or the Funding Lender only to the full extent permitted by law.
Section 11.7. Execution in Several Counterparts. This Funding Loan Agreement may be contemporaneously executed in several counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original.
Section 11.8. Nonrecourse Obligation ofthe Borrower. Except as otherwise provided in the Borrower Loan Agreement, any obligations of the Borrower under this Funding Loan Agreement arc without recourse to the Borrower or to the Borrower's managers or members, as the case may be. and the provisions of Section 11.1 ofthe Borrower Loan Agreement are by this reference incorporated herein.
Section 11.9. Reserved.
Section 11.10. Electronic Transactions. The transactions described in this Funding Loan Agreement may be conducted, and related documents and may be stored, by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including thc filing ofany claim, action or suit in the appropriate court of law.
Section 11.11. Reference Date. This Funding Loan Agreement is dated for reference purposes only as ofthe first day of December, 2022.
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IN WITNESS WHEREOF, the Funding Lender and the (jovcrnmcntal Lender have caused this Funding Loan Agreement to be duly executed as ofthe date first written above.
FIFTH THIRD COMMERCIAL FUNDING, INC.,
as Construction Funding Lender
Name: David Batev
Title: _ Senior Vice President
CEDAR RAPIDS BANK & TRUST COMPANY,
as Permanent Funding Lender
By:
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IN WITNESS WHEREOF, thc Funding Lender and the Governmental Lender have caused this Funding Loan Agreement to be duly executed as ofthe date first written above.
FIFTH THIRD COMMERCIAL FUNDING, INC.,
as Construction Funding Lender
By:_. Name: Title:
CEDAR RAPIDS BANK & TRUST COMPANY, as Permanent Funding Lender
G O V E RN M ENT AL LEND ER:
CITY OF CHICAGO
By: C
erluane Bennett
Name: JennieTluang' Title: Chief Financial Officer
Name: Anna M. Valencia Title: City Clerk
EXHIBIT A
EORiVl OF GOVERNMENTAL LENDER NOTE
THIS NOTE MAY BE OWNED ONLY BY A PERMITTED TRANSFEREE IN ACCORDANCE WITH THE TERMS OF THE FUNDING LOAN AGREEMENT, AND THE HOLDER HEREOF, BY THE ACCEPTANCE OF THIS FUNDING LOAN AGREEMENT (A) REPRESENTS THAT IT IS A PERMITTED TRANSFEREE AND (B) ACKNOWLEDGES THAT IT CAN ONLY TRANSFER THIS GOVERNMENTAL LENDER NOTE TO ANOTHER PERMUTED TRANSFEREE IN ACCORDANCE WITH THE TERMS OF IHE FUNDING LOAN AGREEMENT".
CITY OF CHICAGO $25,000,000 MULTIFAMILY MORTGAGE REVENUE NOTE 2022 SERIES A (AUBURN GRESHAM APARTMENTS)
DATED December 28, 2022 not to exceed $25,000,000
FOR VALUE RECEIVED, the undersigned CITY OF CHICAGO ("Obligor") promises to pay to the order of FIFTH THIRD COMMERCIAL FUNDING, INC. ("Holder") the maximum principal sum of Twenty-Four Million One Hundred Thousand and no/100 Dollars $25,000,000, on January 1. 2043, or earlier as provided herein, together with interest thereon at the rates, at the times and in the amounts provided below.
Obligor shall pay to the Holder on or before each date on which payment is due under that certain Funding Loan Agreement, dated as of December 1, 2022 (the "Funding Loan Agreement"), between Obligor and Holder, an amount in immediately available funds sufficient to pay the principal amount of and Prepayment Premium, if any, on the Funding Loan then due and payable, whether by maturity, acceleration, prepayment or otherwise. In thc event that amounts held derived from proceeds of thc Borrower Loan, condemnation awards or insurance proceeds or investment earnings thereon arc applied to the payment of principal due on the Funding Loan in accordance with the Funding Loan Agreement, the principal amount due hereunder shall be reduced to the extent of the principal amount ofthe Funding Loan so paid. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Funding Loan Agreement.
Obligor shall pay to the Holder on or before each date on which interest on the Funding Loan is payable interest on the unpaid balance hereof in an amount in immediately available funds sufficient to pay thc interest on the Funding Loan then due and payable in the amounts and at the rate or rates set forth in the Funding Loan Agreement.
The Funding Loan and this Governmental Lender Note are pass-through obligations relating to a construction loan (the "Borrower Loan") made by Obligor from proceeds ofthe Funding Loan to Auburn Gresham Apartments LP, an Illinois limited partnership, as borrower (the "Borrower"), under that certain Borrower Loan Agreement, dated as of December 1, 2022 (as thc same may be modi tied, amended or supplemented from time to time, the "Borrower Loan Agreement"), between the Obligor and the Borrower, evidenced by the Borrower Note (as defined in the Borrower Loan Agreement). Reference is made to the Borrower Loan Agreement and to the Borrower Note for complete payment and prepayment
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terms of the Borrower Note, payments on which are passed-through under the Governmental Lender Note.
This Governmental Lender Note is a limited obligation ofthe Obligor, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned under the Funding Loan Agreement. This Governmental Lender Note is not a general obligation of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability ofthe Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal of and, premium, if any, and interest on this Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement. No holder of this Governmental Lender Note or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or premium, if any, thereon.
All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Funding Loan Agreement or in the Borrower Loan Agreement.
This Governmental Lender Note is subject to the express condition that at no time shall interest be payable on this Governmental Lender Note or the Funding Loan at a rate in excess of the Maximum Rate provided in the Funding Loan Agreement; and Obligor shall not be obligated or required to pay, nor shall thc Holder be permitted to charge or collect, interest at a rate in excess of such Maximum Rate. If by the terms ofthis Governmental Lender Note or ofthe Funding Loan Agreement, Obligor is required to pay interest at a rate in excess of such Maximum Rate, the rate of interest hereunder or thereunder shall be deemed to be reduced immediately and automatically to such Maximum Rate, and any such excess payment previously made shall be immediately and automatically applied to the unpaid balance of the principal sum hereof and not to the payment of interest.
Amounts payable hereunder representing late payments, penalty payments or the like shall be payable to the extent allowed by law.
This Governmental Lender Note is subject to all ofthe terms, conditions, and provisions ofthe Funding Loan Agreement, including those respecting prepayment and the acceleration of maturity.
If there is an Event of Default under the Funding Loan Documents, then in any such event and subject to the requirements set forth in the Funding Loan Agreement, the Holder may declare the entire unpaid principal balance ofthis Governmental Lender Note and accrued interest, if any, due and payable at once. All ofthe covenants, conditions and agreements contained in the Funding Loan Documents are hereby made part ofthis Governmental Lender Note.
No delay or omission on the part ofthe Holder in exercising any remedy, right or option under this Governmental Lender Note or the Funding Loan Documents shall operate as a waiver of such remedy, right or option. In any event a waiver on any one occasion shall not be construed as a waiver or bar lo any such remedy, right or option on a future occasion. The rights, remedies and options of the Holder under this Governmental Lender Note and the Funding Loan Documents are and shall be cumulative and are in addition to all ofthe rights, remedies and options ofthe Holder al law or in equity or under any other agreement.
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Obligor shall pay all costs of collection on demand by the Holder, including without limitation, reasonable attorneys" lees and disbursements, which costs may be added to the indebtedness hereunder, together with interest thereon, to the extent allowed by law, as set forth in the Funding Loan Agreement.
This Governmental Lender Note may not be changed orally. Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived. The acceptance by the Holder ofany amount after the same is due shall not constitute a waiver ofthe right to require prompt payment, when due, of all other amounts due hereunder. The acceptance by the Holder of any sum in an amount less than the amount then due shall be deemed an acceptance on account only and upon condition that such acceptance shall not constitute a waiver ofthe obligation of Obligor to pay the entire sum then due, and Obligor's failure to pay such amount then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid. Consent by the Holder to any action of Obligor which is subject to consent or approval ofthe Holder hereunder shall not be deemed a waiver ofthe right lo require such consent or approval to future or successive actions.
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Governmental Lender Note or caused this Governmental Lender Note to be duly executed ami delivered by its authorized representative as ofthe date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument.
OBLIGOR:
CIT Y OF CHICAGO
By:
Name: Jennie Huang Bennett Title: Chief Financial Officer
[SEAL] Attest:
By:
Name: Andrea M. Valencia Title: City Clerk
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EXHIBIT B
FORM OF REQUIRED TRANSFEREE REPRESENTATIONS
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Tlie undersigned, us holder (lhe "Holder"' or the "Funding Lender") of the not to exceed $25,000,000 Multifamily Mortgage Revenue Construction Note, 2022 Series A (Auburn Gresham Apartments), dated as of the Closing Date (the "Governmental Lender Note") issued pursuant to an Ordinance adopted on July 20, 2022 (the "Ordinance") by the City of Chicago (the "Governmental Lender") and under a funding Loan Agreement dated as of December 1, 2022 (the "Funding Loan Agreement") between thc Governmental Lender and Holder, as Funding Lender, hereby represents that:
The Funding Lender hereby acknowledges the execution and delivery of the Governmental Lender Note in the original aggregate principal amount of up to $25,000,000.
The Funding Lender has authority to make the Funding Loan and to execute and deliver these representations and any other instrument and documents required to be executed by the Funding Lender in connection with the execution and delivery of the Governmental Lender Note.
The Holder has sufficient knowledge and experience in financial and business matters with respect to thc evaluation of residential real estate developments such as the Project to be able to evaluate the risk and merits ofthe investment represented by the Governmental Lender Note. We are able to bear thc economic risks of such investment.
The Holder acknowledges that it has either been supplied with or been given access to information, including financial statements and other financial information, to which a reasonable lender would attach significance in making investment decisions, and thc Holder has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Governmental Lender, the Project, the use of proceeds of the Governmental Lender Note, the Funding Loan Agreement and the Funding Loan and the security therefor so that, as a reasonable lender, the Holder has been able to make its decision to extend the Funding Loan [or an interest therein] and purchase the Governmental Lender Note [or an interest therein]. The Funding Lender understands that the Governmental Lender Note and thc Borrower Loan Agreement are not registered under the Securities Act of 1933, as amended, and that such registration is not legally required as of the date hereof; and further understands that the Governmental Lender Note and thc Borrower Loan Agreement (i) are not being registered or otherwise qualified for sale under the "Blue Sky"" laws and regulations ofany state, (ii) will not be listed in any stock or other securities exchange, (iii) will not carry a rating from any rating service and (iv) will be delivered in a form which is not readily marketable. Thc Holder acknowledges that it has not relied upon the Governmental Lender for any information in connection with the Holder's purchase of the Governmental Lender Note [or an interest therein].
Thc Holder is an Approved Transferee (as defined in the Funding Loan Agreement).
The Holder acknowledges that it is purchasing [an interest in] the Governmental Lender Note for investment for its own account and not with a present view toward resale or the distribution thereof, in that we do not now intend lo resell or otherwise dispose of all or any part of our interests in the Governmental Lender Note. Subject to paragraph 7 below, the Funding Lender acknowledges and agrees that the Governmental Lender Note, or interests therein, can be sold and subsequently transferred only lo purchasers that execute and deliver to the Governmental Lender an representations from the transferee to
B-l
substantially the same effect as these required transferee representations or in such other form authorized under the Funding Loan Agreement with no revisions except as may be approved in writing by the Governmental Lender.
In the event any placement memorandum to be provided to any subsequent buyer or beneficial owner of such portion ofthe Governmental Lender Note will disclose information with respect to the Governmental Lender other than its name, location and type of political subdivision and general information with respect to the Funding Loan and Borrower Loan and related documents, the Holder will provide the Governmental Lender with a draft of such placement memorandum and the Governmental Lender shall have the right to approve any description of the Governmental Lender therein (which approval shall not be unreasonably withheld).
The Funding Lender understands that the Governmental Lender Note is a limited obligations of thc Governmental Lender; payable solely from funds and moneys pledged and assigned under the Funding Loan Agreement, and that the liabilities and obligations ofthe Governmental Lender with respect to the Governmental Lender Note are expressly limited as set forth in the Funding Loan Agreement and related documents. The Funding Lender acknowledges that the Governmental Lender Note is not an indebtedness of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability ofthe Governmental Lender, and neither the Governmental Lender, thc State nor any other political subdivision thereof shall be liable for the payments of principal of and, premium, if any, and interest on the Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the Security and receipts of the Governmental Lender derived pursuant to the Funding Loan Agreement and the Borrower Loan Agreement. The Funding Lender acknowledges that no holder of the Governmental Lender Note or any interest therein, has the right to compel any exercise of thc taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or premium, if any, thereon.
Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Funding Loan Agreement.
[Remainder of page intentionally left blank.]
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[Signature Page to Required Transferee Representations]
[FIFTH THIRD COMMERCIAL FUNDING, INC.], as Holder
By:_ Name: Its:
[CEDAR RAPIDS BANK & TRUST COMPANY]
By:_ Name: Its:
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Exinmr B Governmental Lender Note (See Item No. 3)
THIS NOTE MAY HE OWNED ONLY BY A PERMITTED TRANSFEREE IN ACCORDANCE WITH THE TERMS OF THE FUNDING LOAN AGREEMENT, AND THE HOLDER HEREOF, BY THE ACCEPTANCE OF THIS FUNDING LOAN AGREEMENT (A) REPRESENTS THAT IT IS A PERMITTED TRANSFEREE AND (B) ACKNOWLEDGES THAT IT CAN ONLY TRANSFER THIS GOVERNMENTAL LENDER NOTE TO ANOTHER PERMITTED TRANSFEREE IN ACCORDANCE WITH THE TERMS OF THE FUNDING^LOAN AGREEMENT.
CIT Y OF CHICAGO ^ v
$25,000,000 MULTIFAMILY MORTGAGE REVENUE/NOTE
2022 SERIES A ~JW ^
(AUBURN GRESHAM APARTMENTS)!^ ^ N"' X'X X#v v.
DATED December 28, 2022 VX\-V not to exceed $25,000,000
FOR VALUE RECEIVED, the undersigned CITY*OF CHICAGO ("Omigor'Y promises to pay to thc order of FIFTH THIRD COMMERCIAL FUNDINC5^g(|. pHolder^the maximum principal sum of Twenty-Four Million One Hundred Thousand and.no/ lO^polfara^^i0fJ,OOOr on January 1, 2043, or earlier as provided herein, together with interest^thereon at tl|t ni^?*a|wie times and in the amounts
provided below. Obligor shall pay to the HoldeEg>n"ior before each date\on which payment is due under that certain Funding Loan Agreement, dated as Jit? December l,^2022\thei> "Funding Loan Agreement"), between Obligor and Holder, an amount in immediately availablejfunds sufficient to pay the principal amount of and Prepayment Premium, if^aiiy, o&c Funding Loan then due and payable, whether by maturity, acceleration, prepayment o.r^Tierwise^||n^the event^rfat amounts held derived from proceeds of the Borrower Loan, condemnation awards or insurance-proceeds or investment earnings thereon are applied to the payment of principaLdue on theTninding Loari'in accordance with the Funding Loan Agreement, the principal amount dueMiefeundcrshall be reduced to thc extent ofthe principal amount ofthe Funding Loan so paid. Capitalized tei:rris^i.Q.tiothcrwise.defined herein shall have thc meaning assigned in the Funding Loan AgrcemeJfSrr--, j&'y
^pbligor shall pay to tlW^KRiTder on or before each date on which interest on thc Funding Loan i.s payable interest on theXinpaid balance hereof in an amount in immediately available funds sufficient to pay thc intercsroiithe Eiinding Loan then due and payable in the amounts and at the rate or rates set forth in the pilmg Loarf^greement.
rr^h^;Funding fjoan and this Governmental Lender Note are pass-through obligations relating to a
cons^riicfion loan (the "Borrower Loan") made by Obligor from proceeds ofthe Funding Loan to Auburn
Gresham Apartments LP, an Illinois limited partnership, as borrower (the "Borrower"), under that certain
Borrower Loan Agreement, dated as of December 1, 2022 (as the same may be modified, amended or
suppl'emeiited from time to time, the "Borrower Loan Agreement"), between the Obligor and the Borrower.
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evidenced by the Borrower Note (as defmed m thc Borrower Loan Agreement). Reference is made to thc
Borrower Loan Agreement and to the Borrower Note for complete payment and prepayment terms ofthe
Borrower Note, payments on which are passed-through under the Governmental Lender Note.
This Governmental Lender Note is a limited obligation of the Obligor, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned under the
Funding Loan Agreement. This Governmental Lender Note is not a general obligation of lhe Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability ofthe Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal of and, premium, if any, and interest on this Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement. No holder ofthis Governmental Lender Note or any interest therein has the right to compel any exercise ofthe taxing power ofthe State^the Governmental Lender or any other political subdivision thereof to pay the^Governniental Lender Note or the interest or premium, if any, thereon. /^/^
All capitalized terms used but not defined herein shall have the
This Governmental Lender Note is subject to thc express condition that aten.o time-shall interest be payable on this Governmental Lender Note or the Funding Loan at at^aSu^^ Rate provided in thc Funding Loan Agreement; and Obligor shall not be ob.li'gatcc^)rrequired to pay, nor shall thc Holder be permitted to charge or collect, interest at^a rat^in.excess^o\sucn^Iaximum Rate. If by the terms ofthis Governmental Lender Note or of the Funding\l^^^greemcnt, Obligor is required to pay interest at a rate in excess of such Maximum Rate" the rate.ollintereSfeliereunder or thereunder shall be deemed to be reduced immediately and automatically-Jo such Maximum Ratefand any such excess payment previously made shall be immediately and anjpmaticallyapplied to jlie unpaid balance ofthe principal sum hereof and not to thc payment of interest^!-• -¦
Amounts payable hereunder freprcsenting late/paymerits, penalty payments or the like shall be payable to the extent allowed by law.i
This Governmentalyicnder Note^^&ubject^tosall ofthe terms, conditions, and provisions ofthe Funding Loan Agreement, ihcluding-lhose respecting prepayment and the acceleration of maturity.
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If there is an Eyent oM3:efault under the Funding Loan Documents, then in any such event and subject to the requirements seWorth in theTunding Loan Agreement, the Holder may declare the entire unpaid principafbalalfee of thi^C^vcramiehtal Lender Note and accrued interest, if any, due and payable at once. AlKfof the covenants, conditions and agreements contained in the Funding Loan Documents are hereby . . ... .
No delay,;or omission on the part of the Holder in exercising any remedy, right or option under this
|G6ve"mmental Lender Note or the Funding Loan Documents shall operate as a waiver of such remedy, right or option.-Jn any event a waiver on any one occasion shall not be construed as a waiver or bar to any such rcmc^dy^h' ght > or option on a future occasion. The rights, remedies and options ofthe Holder under this
^Governmental Lender Note and the Funding Loan Documents are and shall be cumulative and arc in addition to all|of the rights, remedies and options ofthe Flolder at law or in equity or under any other agreement:' "
Obligor shall pay all costs of collection on demand by the Holder, including without limitation, reasonable attorneys' fees and disbursements, which costs may be added to thc indebtedness hereunder, together with interest thereon, to thc extent allowed by law, as set forth in the Funding Loan Agreement.
This Governmental Lender Note may not be changed orally. Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived. The acceptance by the Holder ofany amount after thc same is due shall not constitute a waiver ofthe right to require prompt payment, when due, of all other amounts due hereunder. The acceptance by the Holder ofany sum in an amount less than the amount then due shall be deemed an acceptance on account only and upon condition that such acceptancc^hall not constitute a waiver ofthe obligation of Obligor to pay the entire sum then due, and Obligor's faifur^to pay such amount then due shall be and continue to be a default notwithstanding such acceptance of suchamount on account, as aforesaid. Consent by the Holder to any action of Obligor which is subject to consent or approval ofthe Holder hereunder shall not be deemed a waiver ofthe right to rcqinre|||jch consent or approval to future or successive actions.
IN WITNESS WHEREOF, thc undersigned has duly executed and delivered this Governmental Lender Note or caused this Governmental Lender Note to be duly executed and delivered by its authorized representative as of thc date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a scaled instrument.
Exhibit C Borrow er Loan agreement (See Item No. 2)
BORROWER LOAN AGREEMENT
Between
GU Y OF CHICAGO, as Governmental Lender,
and
AUBURN GRESHAM APARTMENTS LP an Illinois limited partnership, as Borrower
Dated as of December 1, 2022
Relating to:
$25,000,000 CITY OF CHICAGO MULTIFAMILY MORTGAGE REVENUE NOTE 2022 SERIES A (AUBURN GRESHAM APARTMENTS)
(Funding Loan originated by FIFTH THIRD COMMERCIAL FUNDING, INC., as Construction Funding Lender and CEDAR RAPIDS BANK & TRUST COMPANY, as Permanent Funding Lender)
The interest of the City of Chicago (the "Governmental Lender") in this Borrower Loan Agreement (except for certain rights described herein) has been pledged and assigned to Fifth Third Commercial Funding, Inc as Construction Funding Lender and subsequently to Cedar Rapids Bank & Trust Company, as Permanent Funding Lender (collectively, the "Funding Lender"), under that certain Funding Loan Agreement, of even date herewith, by and between the Governmental Lender and the Funding Lenders, under which thc Funding Lenders are originating a loan to the Governmental Lender the proceeds of which are to be used to fund the Borrower Loan made under this Borrower Loan Agreement.
TABLE Ol CONTENTS
Page
ARTICLE I DEFINITIONS; PRINCIPLES 01' CONSTRUCTION|910|Section I.I. Specific Definitions|910|Section 1.2. Definitions|910|ARTICLE 11 GENERAL 16
Section 2.1. Origination of Borrower Loan 16
Section 2.2. Security for the Funding Loan 16
Section 2.3. Loan; Borrower Note; Conditions to Closing 17
Section 2.4. Borrower Loan Payments 18
Section 2.5. Additional Borrower Payments 18
Section 2.6. Overdue Payments; Payments if Default 19
Section 2.7. Calculation of Interest Payments and Deposits to Real Estate Related
Reserve Funds 19
Section 2.8. Grant of Security Interest; Application of Funds 19
Section 2.9. Marshalling; Payments Set Aside 20
Section 2.10. Borrower Loan Disbursements 20
ARTICLE III CONVERSION 20
Section 3.1. Conversion Date and Extension of Outside Conversion Date 20
Section 3.2. Notice from Funding Lender; Funding Lender's Calculation Final 21
Section 3.3. Mandatory Prepayment ofthe Borrower Loan 21
Section 3.4. Release of Remaining Loan Proceeds 21
Section 3.5. No Amendment 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES 22
Section 4.1. Borrower Representations 22
Section 4.2. Survival of Representations and Covenants 31
ARTICLE V AFFIRMATIVE COVENANTS 32
Section 5.1. Existence 32
Section 5.2. 'faxes and Other Charges 32
Section 5.3. Repairs: Maintenance and Compliance; Physical Condition 32
Section 5.4. Litigation 32
Section 5.5. Performance of Other Agreements 32
Section 5.6. Notices '. 32
Section 5.7. Cooperate in Legal Proceedings 33
i
Section 5.8. Section 5.9. Section 5.10 Section 5.11 Section 5.12 Section 5.13 Section 5.14 Section 5.15 Section 5.16
Further Assurances .:
Delivery of Financial Information
Environmental Matters I
Governmental Lender's and Funding Lender's Fees
Estoppel Statement
Defense of Actions
Expenses|910|Indemnity
No Warranty of Condition or Suitability by the Governmental Funding
Lender I
Section 5.17. Right of Access to the Project _
Section 5.18. Notice of Default _
Section 5.19. Covenant with Governmental Lender and Funding Lender
Section 5.20. Obligation ofthe Borrower to Construct the Project
Section 5.21. Maintenance of Insurance|910|Section 5.22. Information; Statements and Reports
Section 5.23. Additional Notices|910|Section 5.24. Compliance with Other Agreements; Legal Requirements|910|Section 5.25. Completion and Maintenance of Project|910|Section 5.26. Fixtures|910|Section 5.27. Income from Project|910|Section 5.28. Leases and Occupancy Agreements|910|Section 5.29. Projects Agreements and Licenses|910|Section 5.30. Payment of Debt Payments|910|Section 5.31. ERISA|910|Section 5.32. Patriot Act Compliance|910|Section 5.33. Funds from Equity Investor|910|Section 5.34. Tax Covenants|910|Section 5.35. Payment of Rebate|910|Section 5.36. Covenants under Funding Loan Agreement|910|Section 5.37. Notice of Default 5'
Section 5.38. Continuing Disclosure Agreement 5'
ARTICLE VI NEGATIVE COVENANTS 5<
Section 6.1. Management Agreement 5'
Section 6.2. Dissolution 5i
u
Section 6.3. Change m Business or Operation of Property 51
Section 6.4. Debt Cancellation 51
Section 6.5. Assets 51
Section 6.6. Transfers 51
Section 6.7. Debt 51
Section 6.8. Assignment of Rights 51
Section 6.9. Principal Place of Business 51
Section 6.10. Partnership Agreement 51
Section 6.11. ERISA 5)
Section 6.12. No Hedging Arrangements 51
Section 6.13. Loans and Investments; Distributions; Related Party Payments 52
Section 6.14. Amendment of Related Documents or CC&R's 52
Section 6.15. Personal Property 52
Section 6.16. fiscal Year 52
Section 6.17. Publicity 52
Section 6.18. Subordinate Loan Documents 53
ARTICLE VII RESERVED 53
ARTICLE VIII DEFAULTS 53
Section 8.1. Events of Default 53
Section 8.2. Remedies 57
ARTICLE IX SPECIAL PROVISIONS 61
Section 9.1. Sale of Note and Secondary Market Transaction 61
ARTICLE X MISCELLANEOUS 63
Section 10.1. Notices 63
Section 10.2. Brokers and Financial Advisors 65
Section 10.3. Survival 65
Section 10.4. Preferences 65
Section 10.5. Waiver of Notice 66
Section 10.6. Offsets, Counterclaims and Defenses 66
Section 10.7. Publicity 66
Section 10.8. Construction of Documents 66
Section 10.9. No Third Party Beneficiaries 66
Section 10.10. Assignment 66
Section 10.11. [Intentionally Omitted] 67
in
Section 10.12. Governmental Lender, Funding Lender and Servicer Not in Control; No
Partnership 67
Section 10.13. Release 67
Section 10.14. Term of Borrower Loan Agreement 67
Section 10.15. Reimbursement of Expenses 68
Section 10.16. Permitted Contests 68
Section 10.17. Funding Lender Approval of Instruments and Parlies 68
Section 10.18. Funding Lender Determination of Facts 69
Section 10.19. Calendar Months 69
Section 10.20. Determinations by Lender 69
Section 10.21. Governing Law 69
Section 10.22. Consent lo Jurisdiction and Venue 69
Section 10.23. Successors and Assigns 69
Section 10.24. Severability 69
Section 10.25. Entire Agreement; Amendment and Waiver 69
Section 10.26. Counterparts 70
Section 10.27. Captions 70
Section 10.28. Servicer 70
Section 10.29. Beneficiary Parties as Third Party Beneficiary 70
Section 10.30. Waiver of Trial by Jury 70
Section 10.31. Time of thc Essence 70
Section 10.32. [Reserved] 70
Section 10.33. Reference Date 70
ARTICLE XI LIMITATIONS ON LIABILITY 71
Section 11.1. Limitation on Liability 71
Section I 1.2. Limitation on Liability of Governmental Lender 71
Section 11.3. Waiver of Personal Liability 71
Section 11.4. Limitation on Liability of Funding Lender's Officers, Employees. Etc 71
Section 11.5. Delivery of Reports, Etc 72
IV
BORROWER LOAN AGREEMENT
IHIS BORROWER LOAN AGREEMENT (this 1 Borrower Loan Agreement") is entered into as of the fust day ol' December 1. 2022, between the CITY OF CHICAGO, a municipality and home rule unit of local government duly organized and validly existing under the constitution and laws of the State of Illinois (together with its successors and assigns, the "Governmental Lender"), and AUBURN GRESHAM APARTMENTS LP. an Illinois partnership (together with its successors and assigns, the "Borrower").
WITNESSETH: RECITALS
WHEREAS, the Governmental Lender has been duly created and organized pursuant to and in accordance with the provisions of Article VII, Section 6 ofthe 1970 Constitution ofthe State of Illinois, for the purpose of providing a means of financing the costs of residential ownership and development that will provide decent, safe and sanitary housing for persons of low and moderate income at prices or rentals they can afford; and
WHEREAS, the Governmental Lender is authorized: (a) to make loans to any person to provide financing for rental residential developments located within the jurisdiction of the Governmental Lender and intended to be occupied in part by persons of low and moderate income, as determined by the Governmental Lender; (b) to incur indebtedness for the purpose of obtaining moneys to make such loans and provide such financing, to establish necessary reserve funds and to pay administrative costs and other costs incurred in connection with the incurrence of such indebtedness ofthe Governmental Lender; and (c) to pledge all or any part ofthe revenues, receipts or resources ofthe Governmental Lender, including the revenues and receipts to be received by the Governmental Lender from or in connection with such loans, and to mortgage, pledge or grant security interests in such loans or other property of the Governmental Lender in order to secure the payment ofthe principal or redemption price of and interest on such indebtedness ofthe Governmental Lender; and
WHEREAS, the Borrower has applied to the Governmental Lender for a loan (the "Borrower Loan") for the acquisition, construction, development, and equipping of two multifamily residential projects located in the City of Chicago, Cook County, Illinois, known or to be known as Auburn Gresham Apartments, one located at 838 West 79,h Street, consisting ofa 3-story building with 28 units and 28 parking spaces, and the second located at 757 West 79l1' Street, consisting ofa 5-story building with 30 units and 14 parking spaces (together, thc "Project"). Each building will also include ground floor retail space which will be financed by sources other than bond proceeds; and
WHEREAS, the Borrower's repayment obligations under this Borrower Loan Agreement are evidenced by the Borrower Note, as defined herein; and
WHEREAS, the Borrower has requested the Governmental Lender to enter into that certain funding Loan Agreement, of even date herewith (the "Funding Loan Agreement"), by and among the Governmental Lender and Fifth Third Commercial Funding, Inc., as Construction Funding Lender and Cedar Rapids Bank & Trust Company, as Permanent Funding Lender (the "Funding Lenders"), under which the Construction Funding Lender will make a construction loan to the Borrower and the Permanent Funding Lender will acquire the outstanding principal amount ofthe Governmental Lender Note after the conditions have been met (collectively, the "Funding Loan") to the Governmental Lender, the proceeds of which will be loaned under this Borrower Loan Agreement to the Borrower to finance the acquisition, construction, development, equipping and/or operation ofthe Project; and;
WHEREAS, the Borrower Loans will be secured by certain mortgages, assignments and other instruments securing the Construction Funding Lenders and the Permanent Funding Lender, respectively (collectively, the "Security Instruments"), encumbering the Project, and the Construction Funding Lender Loan will be advanced lo Borrower pursuant to this Borrower Loan Agreement and the Construction Funding Agreement.
NOW, THEREFORE, in consideration of thc premises and the mutual representations, covenants and agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Specific Definitions. For all purposes ofthis Borrower Loan Agreement, except as otherwise expressly provided or unless the context otherwise requires:
Unless specifically defined herein, all capitalized terms shall have the meanings ascribed thereto in the Security Instrument or, if not defined in the Security Instrument, in the Funding Loan Agreement.
All accounting terms not otherwise defined herein shall have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP.
All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions ofthis instrument as originally executed.
All references in this instrument to a separate instrument arc to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
Unless otherwise specified, (i) all references to sections and schedules are to those in this Borrower Loan Agreement, (ii) the words "hereof," "herein" and "hereunder" and words of similar import refer to this Borrower Loan Agreement as a whole and not to any particular provision, (iii) all definitions are equally applicable to the singular and plural forms ofthe terms defined and (iv) the word "including" means "including but not limited to."
Section 1.2. Definitions. The following terms, when used in this Borrower Loan Agreement (including when used in the above recitals), shall have the following meanings:
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or any other commencement of a bankruptcy or similar proceeding) under any applicable bankruptcy, insolvency, reorganization, or similar law, now or hereafter in effect; provided that, in the case of an involuntary proceeding, such proceeding is not dismissed within ninety (90) days after the commencement thereof.
"ADA" shall have the meaning set forth in Section 4.1.38 hereof.
"Additional Borrower Payments" shall mean thc payments payable pursuant to Section 2.5 (Additional Borrower Payments), Section 2.6 (Overdue Payments; Payments in Default), Section 5.14 (Expenses) and Section 10 ofthe Borrower Note (Voluntary and Involuntary Prepayments).
"Agreement of Environmental Indemnification" shall mean any Environmental and ADA Indemnity Agreement, executed by the Borrower for the benefit ofthe Funding Lender and any lawful holder, owner or pledgee ofthe Borrower Note from time to time.
''Architect'" shall mean any licensed architect, space planner or design professional that Borrower may engage from time to time, with the approval of Construction Funding Lender, to design any portion ofthe Improvements, including the preparation ofthe Plans and Specifications.
"Architect's Agreement" means any agreement that Borrower and any Architect from time to time may execute pursuant to which Borrower engages such Architect to design any portion of the Improvements, including the preparation of the Plans and Specifications, as approved by Construction Funding Lender.
"Authorized Borrower Representative'" shall mean a person at the time designated and authorized to act on behalf of thc Borrower by a written certificate furnished lo the Governmental Lender, the Funding Lender and the Servicer and containing the specimen signature of such person and signed on behalf of the Borrower by its Borrower Controlling Entity which certificate may designate one or more alternates.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of 1978, as amended from time to time, or any substitute or replacement legislation.
"Bankruptcy Proceeding" shall have the meaning set forth in Section 4.1.8 hereof.
"Beneficiary Parties" shall mean, collectively, the Funding Lenders and the Governmental
Lender.
"Borrower" shall have thc meaning set forth in thc recitals to this Borrower Loan Agreement.
"Borrower Affiliate" means, as to the Borrower, its General Partner or the Guarantor, (i) any entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more ofthe outstanding voting securities of Borrower, its General Partner or thc Guarantor, (ii) any corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vole by the Borrower, its General Partner or the Guarantor, (iii) any partner, shareholder or, if a limited liability company, member of Borrower, its General Partner or the Guarantor, or (iv) any other person that is related by blood or marriage to the Borrower, ils General Partner or the Guarantor (to thc extent any ofthe Borrower, its General Partner or the Guarantor is a natural person).
"Borrower Controlling Entity" shall mean, ifthe Borrower is a partnership, any general partner or managing partner of thc Borrower, or if thc Borrower is a limited liability company, thc General Partner or managing member of the Borrower, or if thc Borrower is a not for profit corporation, the shareholders thereof.
"Borrower Deferred Equity" shall mean the Equity Contributions to be made by the Equity Investor to Borrower pursuant to the Partnership Agreement other than Borrower Initial Equity.
"Borrower Initial Equity" shall mean an initial installment ofthe Equity Contributions made to Borrower by the Equity Investor lo be made on or prior to the Closing Date.
"Borrower Loan" shall mean the mortgage loans made by the Governmental Lender to the Borrower pursuant to this Borrower Loan Agreement, in the maximum principal amount ofthe Borrower Loan Amount, as evidenced by the Borrower Note.
"Borrower Loan Agreement" shall mean this Borrower Loan Agreement.
"Borrower Loan Amount" shall mean not to exceed $25,0011000, the original maximum aggregate principal amount ofthe Borrower Note.
"Borrower Loan Documents" shall mean this Borrower Loan Agreement, the Construction Funding Agreement, the Borrower Note, any Security Instrument, and all other documents or agreements evidencing or relating to the Borrower Loan.
"Borrower Loan Payment Date" shall mean (i)the date upon which regularly scheduled Borrower Loan Payments are due pursuant to the Borrower Note, or (ii) any other date on which the Borrower Note is prepaid or paid, whether at the scheduled maturity or upon the acceleration of the maturity thereof.
"Borrower Loan Payments" shall mean the monthly loan payments payable pursuant to the Borrower Note.
"Borrower Loan Proceeds" shall mean proceeds of the Borrower Loan, to be disbursed in accordance with Section 2.10 of this Borrower Loan Agreement and the Construction Funding Agreement.
"Borrower Note" shall mean that certain Promissory Note dated as of the Closing Dale in the original maximum principal amount of not to exceed $25,000,000 made by Borrower and payable to Governmental Lender, as endorsed and initially assigned to the Construction Funding Lender, with the expectation that the Borrower Note shall be transferred to the Permanent Funding Lender after the Conversion Date, as il may be amended, supplemented or replaced from lime lo time.
"Borrower Payment Obligations" shall mean all payment obligations ofthe Borrower under the Borrower Loan Documents, including, but not limited to, thc Borrower Loan Payments and the Additional Borrower Payments.
"Business Day" shall mean any day other than (l) a Saturday or Sunday, or (ii) a day on which federally insured depository institutions in New York, New York, Chicago, Illinois or the cities in which the offices ofthe Funding Lender are located are authorized or obligated by law, regulation, governmental decree or executive order to be closed.
"Calendar Month" shall mean each ofthe twelve (12) calendar months ofthe year.
"CC&R's" shall mean any covenants, conditions, restrictions, maintenance agreements or reciprocal easement agreements affecting thc Project.
"City" shall mean the City of Chicago, Illinois.
"Closing Date" shall mean December 28, 2022, the date that the initial Borrower Loan Proceeds arc disbursed hereunder.
"Code" shall mean thc Internal Revenue Code of 1986 as in effect on thc Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
"Collateral" shall mean all collateral described in (i) this Borrower Loan Agreement (including, without limitation, all property in which the Funding Lender is granted a security interest pursuant to any
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provision ofthis Borrower Loan Agreement), (n)tlie Security Instruments, or (iii) any other security document, which Collateral shall include the Project, all of which collateral is pledged and assigned to one ofthe respective Funding Lenders under the Funding Loan Agreement to secure the Funding Loan.
"Completion" shall have the meaning set forth in Section 5.25.
"Completion Date" shall mean September 30, 2024.
"Computation Date" shall have the meaning ascribed thereto in Section 1.148-3(e) ofthe Regulations.
"Condemnation" shall mean any action or proceeding or notice relating to any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Project, whether direct or indirect.
"Construction Consultant" shall mean a third-party architect or engineer selected and retained by Funding Lender, at the cost and expense of Borrower, to monitor the progress of construction of the Projects and to inspect the Improvements to confirm compliance with this Borrower Loan Agreement.
"Construction Contract" shall mean any agreement that Borrower and any Contractor from lime to time may execute pursuant to which Borrower engages the Contractor to construct any portion ofthe Improvements, as approved by the Construction Funding Lender.
"Construction Escrow Agreement" shall mean that certain Construction Escrow Agreement, dated December 28, 2022, among thc Title Company named therein, in its capacity as escrow agent, Governmental Lender, the Construction Funding Lender, certain subordinate lenders named therein, and Borrower, as such agreement may be amended, modified, supplemented and replaced from time to time.
"Construction Funding Agreement" means that certain Construction Loan Agreement of even date herewith, between the Construction Funding Lender, as agent for the Governmental Lender, and Borrower, pursuant to which the Borrower Loan will be advanced by the Funding Lender (or the Servicer on its behalf), as agent ofthe Governmental Lender, to the Borrower and setting forth certain provisions relating to disbursement ofthe Borrower Loan during construction, insurance and other matters, as such agreement may be amended, modified, supplemented and replaced from time to time.
"Construction Schedule" shall mean a schedule of construction progress with the anticipated commencement and completion dates of each phase of construction and the anticipated dale and amounts of each Disbursement for the same, as approved by the Construction Funding Lender, as assignee ofthe Governmental Lender.
"Contingency Draw-Down Agreement" means the Contingency Draw-Down Agreement of even date herewith, between the Construction Funding Lender and the Borrower relating to possible conversion ofthe Funding Loan from a draw down loan to a fully funded loan.
"Continuing Disclosure Agreement" shall mean that certain Continuing Disclosure Agreement of even date herewith, between thc Borrower and thc Construction Funding Lender (as the same may be replaced by a Continuing Disclosure Agreement between the Borrower and the Permanent Funding Lender), pursuant to which the Borrower agrees to provide certain information with respect to the Project, the Borrower and the Funding Loans subsequent to the Closing Date, as amended, supplemented or restated from time to time.
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"Contractor" shall mean any licensed general contractor or subcontractor that Borrower may directly engage from time to time, with the approval ofthe Construction funding Lender, to construct any portion ofthe Improvements.
"Contractual Obligation" shall mean, for any Person, any debt or equity security issued by that Person, and any indenture, mortgage, deed of trust, contract, undertaking, instrument or agreement (written or oral) to which such Person is a party or by which it is bound, or to which it or any of its assets is subject.
"Conversion" shall mean Funding Lenders' mutual determination that thc Conversion Conditions have been satisfied in accordance with the provisions ofthis Borrower Loan Agreement and the Forward Bond Purchase Agreement.
"Conversion Conditions" shall have the meaning ascribed thereto in the Forward Bond Purchase Agreement.
"Conversion Date" shall mean the date to be designated by Permanent Loan Funding Lender once the Conversion Conditions have been satisfied, the determination ofthe Permanent Loan Purchase Price has been made and any loan balancing payments in accordance with Section 3.3 hereof and the Construction Funding Agreement have been made. The Conversion Date must occur no later than the Outside Conversion Date
"Cost Breakdown" shall mean the schedule of costs for the Improvements, as set forth in the Construction Funding Agreement, and as the same may be amended from time to time with Construction Funding Lender's consent.
v "Costs of Funding" shall mean the Governmental Lender's Closing Fee and the fees, costs, expenses and other charges incurred in connection with the funding of the Borrower Loan and the Funding Loans, the negotiation and preparation ofthis Borrower Loan Agreement and each ofthe other Borrower Loan Documents and Funding Loan Documents and shall include, but shall not be limited to, the following: (i) counsel fees (including but not limited to Tax Counsel, counsel to the Governmental Lender, Borrower's counsel, and Funding Lenders' counsel); (ii) financial advisor fees incurred in connection with the closing of the Borrower Loan and the funding Loan; (iii) certifying and authenticating agent fees and expenses related to funding ofthe funding Loan; (iv) printing costs (for any preliminary and final offering materials relating to the Funding Loan); (v) any recording fees; (vi) any additional fees charged by the Governmental Lender: and (vii) costs incurred in connection with thc required public notices generally and costs ofthe public hearing.
"Costs of Funding Deposit" shall mean the amount required to be deposited by the Borrower with the Title Company (or a separate escrow company, if applicable) to pay Costs of Funding in connection with the closing ofthe Borrower Loan and the Funding Loan on the Closing Date.
"Cost of Improvements" shall mean thc costs for thc Improvements, as set forth on the Cost Breakdown.
"County" shall mean Cook County, Illinois.
"Date of Disbursement" shall mean the date ofa Disbursement.
"Day" or "Days" shall mean calendar days unless expressly stated to be Business Days.
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"Debt" shall mean, as to any Person, any of such Person's liabilities, including all indebtedness (whether recourse and nonrecourse, short term and long term, direct and contingent), all committed and unfunded liabilities, and all unfunded liabilities, that would appear upon a balance sheet of such Person prepared in accordance with GAAP.
"Default Rate" shall have the meaning given to that term in the Borrower Note.
"Determination of Taxability" shall mean (i) a determination by thc Commissioner or any District Director ofthe Internal Revenue Service, (ii) a private ruling or Technical Advice Memorandum concerning the Governmental Lender Note issued by the National Office ofthe Internal Revenue Service in which Governmental Lender and Borrower were afforded the opportunity to participate, (iii) a determination by any court of competent jurisdiction, (iv) the enactment of legislation or (v) receipt by the Funding Lender, at the request ofthe Governmental Lender, thc Borrower or the Funding Lender, of an opinion of Tax Counsel, in each case to the effect that the interest on thc Governmental Lender Note is includable in gross income for federal income tax purposes ofany holder or any former holder of all or a portion ofthe Governmental Lender Note, other than a holder who is a "substantial user" ofthe Projects or a "related person" (as such terms are defined in Section 147(a) of the Code) to a "substantial user"; provided, however, that no such Determination of Taxability under clause (i) or (iii) shall be deemed to have occurred ifthe Governmental Lender (at the sole expense ofthe Borrower), the Funding Lender (at the sole expense ofthe Borrower) or the Borrower is contesting such determination, has elected to contest such determination in good faith and is proceeding with all applicable dispatch to prosecute such contest until the earliest of (a) a final determination from which no appeal may be taken with respect to such determination, (b) abandonment of such appeal by the Governmental Lender or the Borrower, as the case may be, or (c) one year from the date of initial determination.
"Developer Fee" shall mean the fees and/or compensation payable to Evergreen Imagine .IV LLC in thc amount of 52,500,000.00, which fees and/or compensation shall not be paid prior to the Conversion Date, of which $460,000.00 will be paid at Closing, except as otherwise permitted pursuant to Section 6.13(b).
"Disbursement" means a disbursement of Borrower Loan Proceeds and Other Borrower Moneys pursuant to this Borrower Loan Agreement.
"Engineer" shall mean any licensed civic, structural, mechanical, electrical, soils, environmental or other engineer that Borrower may engage from time to time, with the approval of the Construction Funding Lender, to perform any engineering services with respect to any portion ofthe Improvements.
"Engineer's Contract" shall mean any agreement that Borrower and any Engineer from time to time may execute pursuant to which Borrower engages such Engineer to perform any engineering services with respect to any portion ofthe Improvements, as approved by Funding Lender.
"Equipment" shall have the meaning given to the term "Personal Property" or "Personalty" in any Security Instrument.
"Equity Contributions" shall mean the equity to be contributed by, or on behalf of, the Equity Investor to Borrower, in accordance with and subject to the terms ofthe Pailnership Agreement.
"Equity Investor" shall mean Wincopin Circle LLLP, a Maryland limited liability limited partnership and its successors and assigns.
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"ERISA" shall mean the Employment Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated hereunder.
"ERISA Affiliate" shall mean all members ofa controlled group of corporations and all trades and business (whether or not incorporated) under common control and all other entities which, together with the Borrower, are treated as a single employer under any or all of Section 414(b), (c). (m) or (o) of the Code.
"Event of Default" shall mean any Event of Default set forth in Section 8.1 ofthis Borrower Loan Agreement. An Event of Default shall "exist" if a Potential Default shall have occurred and be continuing beyond any applicable cure period.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Expenses of the Project" shall mean, for any period, the current expenses, paid or accrued, for the operation, maintenance and current repair ofthe Project, as calculated in accordance with GAAP, and shall include, without limiting the generality ofthe foregoing, salaries, wages, employee benefits, cost of materials and supplies, costs of routine repairs, renewals, replacements and alterations occurring in the usual course of business, costs and expenses properly designated as capital expenditures (e.g., repairs which would not be payable from amounts on deposit in a repair and replacement fund held pursuant to the Borrower Loan Documents), a management fee (however characterized) not to exceed 6.0% of Gross Income, costs of billings and collections, costs of insurance, and costs of audits. Expenses ofthe Projects shall not include any payments, however characterized, on account of any subordinate financing in respect ofthe Projects or other indebtedness, allowance for depreciation, amortization or other non-cash items, gains and losses or prepaid expenses not customarily prepaid.
"Extended Outside Conversion Date" shall have thc meaning set forth in the Construction Funding Agreement.
"Fair Market Value" shall mean the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as ofthe date the contract to purchase or sell the investment becomes binding) ifthe investment is traded on an established securities market (within the meaning of Section 1273 ofthe Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security State and Local Government Series that is acquired in accordance with applicable regulations ofthe United States Bureau of Public Debt, or (iv) the investment is an interest in any commingled investment fund in which the Governmental Lender and related parties do not own more than a ten percent (10%) beneficial interest therein ifthe return paid by the fund is without regard to the source of investment.
"Fitch" shall mean Fitch, Inc.
"Funding Lender" shall mean thc Construction Funding Lender and the Permanent Funding Lender, respectively.
"Funding Lenders" shall mean the Construction Funding Lender and Permanent Funding Lender collectively.
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"Funding Loan" means tlie original Funding Loan in the original maximum principal amount of $25,000,000 made by Construction Funding Lender to Governmental Lender under the Funding Loan Agreement, after the Conversion Date, the amount of the permanent Funding Loan assumed by the Permanent Funding Lender to the Governmental Lender under the Funding Loan Agreement, in each case, the proceeds of which arc used by the Governmental Lender to make the Borrower Loan.
"Funding Loan Agreement" means the Funding Loan Agreement, of even date herewith, between the Governmental Lender and the Funding Lender, as it may from lime lo time be supplemented, modified or amended by one or more amendments or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof
"Funding Loan Documents" shall have thc meaning given to that term in thc Funding Loan Agreement.
"GAAP" shall mean generally accepted accounting principles as in effect on thc date of the application thereof and consistently applied throughout the periods covered by thc applicable financial statements.
"Governmental Authority" shall-, mean (i) any governmental municipality or political subdivision thereof, (ii) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or (iii) any court, administrative tribunal or public utility, agency, commission, office or authority ofany nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise), now or hereafter in existence.
"Governmental Lender" shall have the meaning set forth in the recitals to this Borrower Loan Agreement.
"Governmental Lender Note" shall mean that certain City of Chicago Multifamily Housing Revenue Note, 2022 Series A (Auburn Gresham Apartments), dated thc Closing Date in thc original maximum principal amount of $25,000,000, made by the Governmental Lender and payable to the holders of Governmental Lender Notes from time to time, as it may be amended, supplemented or replaced from time lo lime.
"Governmental Lender's Closing Fee" shall mean an amount equal to 1.5% ofthe original principal amount ofthe Governmental Lender Note. The Governmental Lender's Closing Fee is payable to thc Governmental Lender on the Closing Date, pursuant to Section 2.3(c)(iii) hereof.
"Gross Income" shall mean all receipts, revenues, income and other moneys received or collected by or on behalf of Borrower and derived from the ownership or operation ofthe Project, if any, and all rights to receive the same, whether in the form of accounts, accounts receivable, contract rights or other rights, and the proceeds of such rights, and whether now owned or held or hereafter coming into existence and proceeds received upon the foreclosure sale ofthe Project. Gross Income shall not include loan proceeds, equity or capital contributions, or tenant security deposits being held by Borrower in accordance with applicable law.
"Gross Proceeds" shall mean, without duplication, the aggregate of:
(a) the net amount (after payment of all expenses of originating the Funding Loan) of Funding Loan proceeds received by the Governmental Lender as a result ofthe origination of the Funding Loan;
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all amounts received by the Governmental Lender as a result ofthe investment of the Funding Loan proceeds;
any amounts held in any fund or account to the extent that the Governmental Lender reasonably expects lo use the amounts in such fund to pay any portion of the Funding Loan; and
(cl) any securities or obligations pledged by thc Governmental Lender or by the Borrower as security for the payment ofany portion ofthe Funding Loan.
"Guarantor" shall mean Auburn Gresham Apartments GP LLC. an Illinois limited liabity company and any other person or entity which may hereafter become a guarantor of any of the Borrower's obligations under the Borrower Loan.
"Guaranty" shall mean, collectively, (i) the Guaranty of Payment, dated as ofthe Closing Date, by the Guarantor for the benefit of the Construction Funding Lender, (ii) the Guaranty of Completion, dated as ofthe Closing Dale, by the Guarantor for the benellt ofthe Construction Funding Lender and (iii) the Guaranty of Non-Recourse Carveouts to be entered into by the Guarantor for the benefit ofthe Permanent Funding Lender.
"Improvements" shall mean the multifamily residential projects, all of which will be income-restricted, together with related common areas, to be acquired and constructed upon thc Land and known as Auburn Gresham Apartments, and all other buildings, structures, fixtures, wiring, systems, equipment and other improvements and personal property to be constructed and/or installed at or on the Land in accordance with the Cost Breakdown and the Plans and Specifications.
"Indemnified Party" shall have the meaning set forth in Section 5.15 hereof.
"Installment Computation Date" shall mean any Computation Date other than the first Computation Date or the final Computation Date.
"Interest Rate" shall mean the rate of interest accruing on the Borrower Loan pursuant to the Borrower Note.
"Interim Phase Amount" shall mean $25,000,000.
"Land" means the real property described on Exhibit A to the Security Instrument.
"Late Charge" shall mean the amount due and payable as a late charge on overdue payments under the Borrower Note, as provided in Section 7 ofthe Borrower Note and Section 2.5 hereof.
"Legal Action" shall mean an action, suit, investigation, inquiry, proceeding or arbitration at law or in equity or before or by any foreign or domestic court, arbitrator or other Governmental Authority.
"Legal Requirements" shall mean statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting all or part of the Projects or any property (including the Project) or the construction, use. alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instrument, either of record or known to the Borrower, at any time in force affecting all or part ofthe Project, including any
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that may (i) require repairs, modifications or alterations in or to all or part ofthe Project, or (ii) in any way limit the use and enjoyment thereof.
"Liabilities'* shall have the meaning set forth in Section 5.15 hereof.
''Licenses'" shall have thc meaning set forth in Section 4.1.22 hereof.
"Lien" shall mean any interest, or claim thereof, in thc Projects securing an obligation owed to, or a claim by, any Person other than thc owner ofthe Project, whether such interest is based on common law, statute or contract, including the lien or security interest arising from a deed of trust, mortgage, deed to secure debt, assignment, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, casements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting the Project.
"Management Agreement" shall mean the Management Agreement between thc Borrower and the Properly Manager, pursuant to which the Property Manager is to manage the Project, as same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
"Material Adverse Change" means any set of circumstances or events which (a) has or could reasonably be expected lo have any material adverse effect whatsoever upon thc validity or enforceability of this Borrower Loan Agreement or any other Borrower Loan Document; (b) is or could reasonably be expected to be material and adverse to thc business, properties, assets, financial condition, results of operations or prospects ofthe Borrower, General Partner, Guarantor or the Mortgaged Property; (c) could reasonably be expected to impair materially the ability ofthe Borrower, General Partner, or Guarantor to duly and punctually pay or perform any of their respective obligations under any ofthe Borrower Loan Documents to which they are a party; or (d) impairs materially or could reasonably be expected to impair materially any rights of or benefits available to the Governmental Lender under this Borrower Loan Agreement or any other Borrower Loan Document, including, without limitation, the ability of Governmental Lender or, upon the assignment ofthe Borrower Loan to it, ofthe Funding Lenders, to the extent permitted, to enforce its legal remedies pursuant to this Borrower Loan Agreement or any other Borrower Loan Document.
"Moody's" shall mean Moody's Investors Service, Inc., or its successor.
"Mortgaged Property" shall have the meaning given to that term in thc Security Instrument.
".Net Operating Income" shall mean: (i) the Gross Income, less (ii) thc Expenses ofthe Project.
"Nonpurpose Investment" shall mean any investment property (as defined in Section 148(b) of the Code) that is acquired with the Gross Proceeds ofthe Funding Loan and which is not acquired to carry out the governmental purpose ofthe Funding Loan.
"Ongoing Governmental Lender Fee" shall mean (i)the bond issuer closing fee of 5361,500 due at closing, a 5100,876.20 LIHTC issuer fee due at closing, 524,100 due at closing for bond legal reserve fee, and (ii) the semi-annual fee ofthe Governmental Lender in the amount of 15 basis points (.0015) of the total outstanding bond amount, accruing monthly but paid semi-annually. The fee due on an semi-annual basis is payable annually in advance by the Borrower to the Governmental Lender on each January 1 and June 1, commencing on the Closing Date so long as any parties ofthe Funding Loan is outstanding.
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"Other Borrower Moneys" shall mean monies of Borrower other than Borrower Loan Proceeds and includes, but is not limited to, the Subordinate Debt, Nel Operating Income, the Borrower's Equity Contributions and any other funds contributed by or loaned to the Borrower for application lo the Costs of the Improvements or other costs associated with the Project.
"Other Charges" shall mean all maintenance charges, impositions other than Taxes, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Project, now or hereafter levied or assessed or imposed against the Projects or any part thereof.
"Outside Conversion Date" shall mean the Termination Date defined in the Forward Bond Purchase Agreement.
"Partnership Agreement" shall mean that certain first Amended and Restated Partnership Agreement ofthe Borrower with respect to the Projects, dated as of December 28, 2022, as the same may be amended, restated or modified in accordance with its terms.
"Patriot Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.
"Patriot Act Offense" shall have the meaning set forth in Section 4.1.48 hereof
"Permanent Loan Continuing Covenants Agreement" means that certain Continuing Covenants Agreement to be entered into by and between Borrower and Permanent Loan Funding Lender.
"Permanent Loan Purchase Price" shall mean the principal amount of thc Borrower Loan following the calculation provided for in the Forward Bond Purchase Agreement.
"Permanent Period" shall mean the period of time from the Conversion Date to the Maturity Date (as defined in the Funding Loan Agreement).
"Permitted Encumbrances" shall have the meaning given to that term in the Security Instrument.
"Permitted Lease" shall mean a lease and occupancy agreement pursuant to the form approved by Funding Lender, to a residential tenant in compliance with the Legal Requirements, providing for an initial term of not less than six (6) months nor more than two (2) years.
"Person" shall mean a natural person, a paitnership, a joint venture, an unincorporated association, a limited liability company, a corporation, a trust, any other legal entity, or any Governmental Authority.
"Plan" shall mean (i) an employee benefit or other plan established or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions and (if) which is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 ofthe Code.
"Plans and Specifications" shall mean the plans and specifications for the construction, as the case may be, ofthe Projects approved by Funding Lender.
"Potential Default" shall mean lhe occurrence of an event which, under this Borrower Loan Agreement or any other Borrower Loan Document, would, but for the giving of notice of passage of lime, be an Event of Default.
"Prepayment Premium" shall mean any premium payable by the Borrower pursuant to the Borrower Loan Documents in connection with a prepayment of the Borrower Note (including any prepayment premium as set forth in the Borrower Note).
"Prohibited Transfer" shall have the meaning given to that term in thc Construction Funding Agreement.
"Project" shall mean thc Mortgaged Property (as defined in any Security Instrument) and Improvements thereon owned by thc Borrower and encumbered by the Security Instruments, together with all rights pertaining to such real property and Improvements, as more particularly described in the Granting Clauses ofany Security Instrument and referred to therein as thc "Mortgaged Property."
"Projects Agreements and Licenses" shall mean any and all Construction Contracts, Engineer's Contracts and Management Agreements, and all other rights, licenses, permits, franchises, authorizations, approvals and agreements relating to use, occupancy, operation or leasing of the Projects or the Mortgaged Property.
"Property Manager" shall mean the management company to be employed by the Borrower and approved by the Funding Lender in accordance with the terms ofthe Construction Funding Agreement, this Borrower Loan Agreement or any of the other Borrower Loan Documents.
"Provided Information" shall have the meaning set forth in Section 9.1.1 (a) hereof.
"Qualified Projects Costs" shall mean costs paid with respect to the Projects that meet each of the following requirements: (i) the costs arc properly chargeable to capital account (or would be so chargeable with a proper election by the Borrower or but for a proper election by thc Borrower to deduct such costs) in accordance with general federal income tax principles and in accordance with Section 1.103-8(a)(l) ofthe Regulations, provided, however, that only such portion ofthe interest accrued during construction ofthe Projects shall be eligible to be a Qualified Projects Cost as bears the same ratio to all such interest as the Qualified Projects Costs bear to all costs ofthe acquisition and construction of the Project; and provided further that interest accruing after the date of completion ofthe Projects shall not be a Qualified Projects Cost; and provided still further that if any portion of the Projects is being constructed by an Affiliate (whether as general contractor or a subcontractor), Qualified Projects Costs shall include only (A) the actual out of pocket costs incurred by such affiliate in constructing the Projects (or any portion thereof), (B) any reasonable fees for supervisory services actually rendered by such affiliate, and (C) any overhead expenses incurred by such affiliate which are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an "affiliated group" (within thc meaning of Section 1504 ofthe Code) participating in the construction ofthe Projects or payments received by such affiliate due to carly completion ofthe Projects (or any portion thereof); (ii) the costs are paid with respect to a qualified residential rental Projects or projects within thc meaning of Section 142(d) ofthe Code, (iii) thc costs are paid after the earlier of 60 days prior to February 23, 2022, being the date on which the Governmental Lender first declared its "official intent" to reimburse costs paid with respect lo the Projects (within the meaning of Section 1.150-2 ofthe Regulations) or the date of issue ofthe Funding Loan, and (iv) ifthe costs ofthe acquisition and construction ofthe Projects were previously paid and are to be reimbursed with proceeds ofthe Funding Loan such costs were (A) "preliminary expenditures" (within the meaning of Section 1.150-2(0(2) ofthe Regulations) with respect to the Projects (such as architectural, engineering and soil testing services)
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incurred before commencement of acquisition and construction ofthe Projects lhat do not exceed twenty percent (20%) ofthe issue price ofthe Governmental Lender Note (as defined in Section 1.148-1 ofthe Regulations), or (B) were capital expenditures with respect to the Projects that are reimbursed no later than 18 months after the later ofthe dale the expenditure was paid or the date the Projects is placed in service (but no later than three years after the expenditures is paid); provided, however, that (w) Costs of Funding shall not be deemed to be Qualified Projects Costs; (x) fees, charges or profits (including, without limitation, developer fees) payable to the Borrower or a "related person" (within the meaning of Section 144(a)(3) ofthe Code) shall not be deemed to be Qualified Projects Costs; (y) letter of credit fees and municipal bond insurance premiums which represent a transfer of credit risk shall be allocated between Qualified Projects Costs and other costs and expenses to be paid from the proceeds of the Funding Loan; and (z) letter of credit fees and municipal bond insurance premiums which do not represent a transfer of credit risk (including, without limitation, letter of credit fees payable to a "related person" to the Borrower) shall not constitute Qualified Projects Costs.
"Rebate Amount" shall mean, for any given period, the amount determined by the Rebate Analyst as required lo be rebated or paid as a yield reduction payment to the United States of America with respect to the Funding Loan.
"Rebate Analyst" shall mean the rebate analyst selected by the Borrower prior to the Closing Date and acceptable to the Governmental Lender and the Funding Lender.
Rebate Analyst's Fee" shall mean the annual Ice ofthe Rebate Analyst as established from time to time. T he Rebate Analyst's Fee is payable by the Borrower to the Rebate Analyst as invoiced.
"Rebate Fund" shall mean the Rebate Fund created pursuant to Section 5.35 hereof.
"Related Documents" shall mean, collectively, any agreement or other document (other than the Borrower Loan Documents) granting a security interest (including each agreement that is the subject of any Borrower Loan Document), the Partnership Agreement, and any other agreement, instrument or other document (not constituting a Borrower Loan Document) relating to or executed in connection with the transactions contemplated by this Borrower Loan Agreement.
"Replacement Reserve Agreement" shall mean any Replacement Reserve Agreement between the Borrower and thc Funding Lender, as the same may be amended, restated or supplemented from time to time.
"Replacement Reserve Fund Requirement" means Borrower's funding obligations from time to time under the Replacement Reserve Agreement.
"Retainage" shall mean, for each Conslruclion Contract, the greater of (a) ten percent (10%) of all amounts required to be paid by a Contractor under the Construction Contract and (b) the actual retainage required under such Construction Contract, which shall be released (or reduced) upon satisfaction ofthe conditions set forth in Section 4.1 1 ofthe Construction Funding Agreement.
"Secondary Market Disclosure Document" shall have the meaning set forth in Section 9.1.2
hereof.
"Secondary Market Transaction" shall have the meaning set forth in Section 9.1.1 hereof. "Securities" shall have the meaning set forth in Section 9.1.1 hereof.
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"Securities Act'" shall mean the Securities Act of 1933, as amended.
"Security" shall have the meaning set forth m Article IV ofthe Funding Loan Agreement.
"Security Documents'* shall mean any Security Instrument, Replacement Reserve Agreement, any Collateral Agreements and the Collateral Assignments (as such terms are defined in the Security Instruments), this Borrower Loan Agreement, thc Agreement of Environmental Indemnification, and such other security instruments that funding Lenders may reasonably request.
"Security Instrument" shall have the meaning set forth in the recitals to this Borrower Loan Agreement.
"Servicer" shall mean the Servicer contracting with or appointed by the Funding Lender to service the Borrower Loan.
"Servicing Agreement" shall mean any servicing agreement or master servicing agreement, among the Servicer and the Funding Lender relating to the servicing of the Borrower Loan and any amendments thereto or any replacement thereof, if any.
"Standard & Poor's" or "S&P" shall mean Standard & Poor's Ratings Services, a division of McGraw-Hill Financial, Inc., or its successors.
"State" shall mean the State in which the Projects is located.
"Subordinate Debt" means, collectively, any subordinate debt approved by the Funding Lenders with respect to the Project.
"Subordinate Lender" shall mean any lender providing Subordinate Debt.
"Subordinate Loan Documents" shall mean, collectively, all instruments, agreements and other documents evidencing, securing or otherwise relating to the Subordinate Debt or executed and delivered by Borrower and/or Subordinate Lender in connection with the Subordinate Debt.
"Substantial Completion Date" means thc date that is three (3) months prior to thc Completion
Date.
"Substantially Complete" or "Substantially Completed" means the Funding Lender has determined that construction, as the case may be, ofthe Improvements is sufficiently complete such that the Improvements can be occupied by tenants as a multifamily residential rental project.
"SWAP Obligations" means the obligations of Borrower and any guarantors thereunder in connection with that certain ISDA Master Agreement by and between Borrower and Permanent Funding Lender.
"Tax Counsel" shall have the meaning set forth in the Funding Loan Agreement.
"Taxes'" shall mean all real estate and personal property taxes, assessments, water rales or scwcr rents, now or hereafter levied or assessed or imposed against all or part ofthe Project.
"Term" shall mean thc term ofthis Borrower Loan Agreement pursuant to Section 10.14.
"Title Company" means Greater Illinois Title Company.
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"Title Insurance Policy" shall mean the mortgagee title insurance policy, in form acceptable lo the Funding Lender, issued with respect to the Mortgaged Property and insuring the lien of the Security Instrument.
"UCC" shall mean the Uniform Commercial Code as in effect in the State. "Unit" shall mean a residential apartment unit within the Improvements.
"Written Consent" and "Written Notice" shall mean a written consent or notice signed by an Authorized Borrower Representative or an authorized representative of the Governmental Lender or the Funding Lender, as appropriate.
ARTICLE II GENERAL
Section 2.1. Origination of Borrower Loan. In order to provide funds for the purposes provided herein, the Governmental Lender agrees lhat it will, in accordance with the Ordinance, enter into the Funding Loan Agreement and accept the Funding Loan from the Funding Lenders. The proceeds of the Funding Loans shall be advanced by the Construction Funding Lender to the Title Company and then to Borrower in accordance with the terms of the Construction Funding Agreement, the Construction Escrow Agreement, and this Borrower Loan Agreement and by thc Permanent Funding Lender in accordance with the terms of this Borrower Loan Agreement.
The Governmental Lender hereby appoints the respective Funding Lenders, for such time as their respective loans arc in place, as its agent with full authority and power to act on its behalf to disburse the Borrower Loan for the account of the Governmental Lender, to take certain actions and exercise certain remedies with respect to thc Borrower Loan, and for the other purposes set forth in this Borrower Loan Agreement and to do all other acts necessary or incidental to the performance and execution thereof. This appointment is coupled with an interest and is irrevocable except as expressly set forth herein. Accordingly, references to the rights of the Funding Lender to take actions under this Borrower Loan Agreement shall refer to such Funding Lender in its role as agent of the Governmental Lender. The Funding Lender may designate Servicer to fulfill the rights and responsibilities granted by Governmental Lender to Funding Lender pursuant to this Section 2.1; provided, however, lhal such designation shall not release or absolve Funding Lender from ultimate responsibility for fulfillment of such rights or responsibilities.
Section 2.2. Security for the Funding Loan.
As security for the Funding Loan, the Governmental Lender has pledged and assigned the Security to the Funding Lender under and pursuant to the Funding Loan Agreement. All revenues and assets pledged and assigned thereby shall immediately be subject to thc lien of such pledge without any physical delivery thereof or any further act, except in thc case of the Borrower Note, which shall be delivered initially to the Construction Funding Lender, and then is expected to be transferred to the Permanent Funding Lender. The Borrower hereby acknowledges and consents to such assignment.
With respect to the Unassigned Rights, subject to the limitations set forth in this Section 2.2, the Governmental Lender may:
(i) Tax Covenants. Seek specific performance of, and enforce, the tax covenants ofthe Funding Loan Agreement and the other Funding Loan Documents, seek
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injunctive relief against acts which may he in violation ofany ofthe tax covenants, and enforce the Borrower's obligation to pay amounts for credit to the Rebate Fund;
(ii) Reserved Rights. Take whatever action at law or in equity which appears necessary or desirable to enforce thc other Unassigned Rights.
(c) The Governmental Lender shall provide written notice lo the Funding Lender and the Servicer immediately upon taking any action at law or in equity to exercise any remedy or direct any proceeding under the Borrower Loan Documents or thc Funding Loan Documents.
Section 2.3. Loan; Borrower Note; Conditions to Closing.
The Funding Loan shall be funded directly to the Title Company and then to Borrower by the Construction Funding Lender through the Construction Funding Agreement and the Construction Escrow Agreement, in one or more installments not lo exceed the Borrower Loan Amount in accordance with the disbursement procedures set forth in the Construction Funding Agreement and the Construction Escrow Agreement. Upon funding of each installment ofthe Funding Loan, the Governmental Lender shall be deemed to have made the Borrower Loan to the Borrower in a like principal amount. The Borrower Loan shall mature and be payable at the times and in the amounts required under the terms hereof and ofthe Borrower Note. The proceeds of the Borrower Loan shall be used by the Borrower to pay costs of the acquisition, construction, development, equipping and/or operation of the Project. The Borrower hereby accepts the Borrower Loan and acknowledges that the Governmental Lender shall cause the Construction Funding Lender to fund the Borrower Loan in the manner set forth herein and in the Funding Loan Agreement. The Governmental Lender acknowledges that the Borrower Loan shall be funded by the Construction Funding Lender for the account ofthe Governmental Lender.
The Borrower hereby accepts the Borrower Loan. As evidence of its obligation to repay the Borrower Loan, simultaneously with the delivery ofthis Borrower Loan Agreement to the Governmental Lender, the Borrower hereby agrees to execute and deliver the Borrower Note. The Borrower Loan shall mature and be payable at the times and in the amounts required under the terms hereof and ofthe Borrower Note.
Closing of the Borrower Loan on the Closing Date shall be conditioned upon satisfaction or waiver by the Governmental Lender and the Funding Lenders, in their sole discretion of each ofthe conditions precedent to closing set forth in the Funding Loan Agreement and this Borrower Loan Agreement, including but not limited to the following:
evidence of proper recordation of the Security Instruments, an assignment of the Security Instrument from the Governmental Lender to thc appropriate Funding Lender, the Regulatory Agreement, and each of thc other documents specified for recording in instructions delivered to the Title Company by counsel to thc appropriate Funding Lender (or that such documents have been delivered to an authorized agent of thc Title Company for recordation under binding recording instructions from appropriate Funding Lender's counsel or such other counsel as may be acceptable lo the respective Funding Lender); and
delivery into escrow with the Title Company (or separate escrow company, if applicable) of all amounts required to be paid in connection with the origination of the Borrower Loan and the Funding Loan and any underlying real estate transfers or transactions, including the Costs of Funding Deposit and thc Borrower Initial
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Equity, all as specified in written instructions delivered to the Title Company by counsel to the appropriate Funding Lender (or such other counsel as may be acceptable to the respective Funding Lender); and
(iii) payment of all lees payable in connection with the closing ol' the Borrower Loan, including the Governmental Lender's Closing Fee.
Section 2.4. Borrower Loan Payments.
The Borrower shall make Borrower Loan Payments in accordance with thc Borrower Note. Each Borrower Loan Payment made by the Borrower shall be made in funds immediately available to thc Funding Lender or thc Servicer by 2:00 p.m New York City time, on the Borrower Loan Payment Date. Each such payment shall be made to the Funding Lender or the Servicer by deposit to such account as the Funding Lender or Servicer, as applicable, may designate by Written "Notice to the Borrower. Whenever any Borrower Loan Payment shall be stated to be due on a day that is not a Business Day, such payment shall be due on the first Business Day immediately thereafter. In addition, the Borrower shall make Borrower Loan Payments in accordance with thc Borrower Note in the amounts and at the times necessary to make all payments due and payable on thc Funding Loan. All payments made by thc Borrower hereunder or by the Borrower under the other Borrower Loan Documents, shall be made irrespective of, and without any deduction for. any set-offs or counterclaims, but such payment shall not constitute a waiver ofany such set offs or counterclaims.
Unless there is no Servicer, payments of principal and interest on the Borrower Note shall be paid to the Servicer. If there is no Servicer, payments of principal and interest on the Borrower Note shall be paid directly to Funding Lender.
Section 2.5. Additional Borrower Payments.
(a) The Borrower shall pay on demand the following amounts:
to the Servicer or the Funding Lender, the Rebate Amount then due, if any, to be deposited in the Rebate Fund as specified in Section 5.35 hereof and the Rebate Analyst's Fee and any other costs incurred to calculate such Rebate Amount (to the extent such costs arc not included in thc Borrower Loan Payment);
to the Governmental Lender, the Ongoing Governmental Lender Fee and all fees, charges, costs, advances, indemnities and expenses, including agent and counsel fees, of the Governmental Lender incurred under the Borrower Loan Documents or the Funding Loan Documents, and any taxes and assessments with respect to the Project, as and when thc same become due;
[Reserved];
all Costs of Funding and fees, charges and expenses, including agent and counsel fees incurred in connection with the origination of the Borrower Loan and the Funding Loan, as and when the same become due:
to the Funding Lender, all charges, costs, advances, indemnities and expenses, including agent and counsel fees, ol" the Funding Lender incurred by thc Funding Lender at any time in connection with the Borrower Loan, the Funding Loan or
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the Project, including, without limitation, reasonable counsel fees and expenses inclined in connection with the interpretation, performance, or amendment and all counsel fees and expenses relating to the enforcement of the Borrower Loan Documents or the Funding Loan Documents or any other documents relating to the Projects or the Borrower Loan or in connection with questions or other matters arising under such documents or in connection with any federal or state tax audit; and
(vi) any Late Charge due and payable under the terms ofthe Borrower Note and Section 2.6 hereof; provided, however, that all payments made pursuant to this subsection (vi) shall be made to the Servicer, and if there is no Servicer, such payments shall be made to the Funding Lender.
(b) Thc Borrower shall pay to the party entitled thereto as expressly set forth in this Borrower Loan Agreement or the other Borrower Loan Documents or Funding Loan Documents:
all expenses incurred in connection with the enforcement of any rights under this Borrower Loan Agreement or any other Borrower Loan Document, the Regulatory Agreement, or any Funding Loan Document by the Governmental Lender, Funding Lender or the Servicer;
all other payments of whatever nature that the Borrower has agreed to pay or assume under the provisions of this Borrower Loan Agreement or any other Borrower Loan Document or Funding Loan Document; and
all expenses, costs and fees relating to inspections of the Projects required by the Governmental Lender, the Funding Lender, the Servicer or the Construction Consultant, in accordance with the Borrower Loan Documents or the Funding Loan Documents or to reimburse such parties for such expenses, costs and fees.
Section 2.6. Overdue Payments; Payments if Default. If any Borrower Payment Obligation is not paid by or on behalf of the Borrower when due, the Borrower shall pay to the Servicer, a Late Charge in the amount and to the extent set forth in the Borrower Note, if any.
Section 2.7. Calculation ol" Interest Payments and Deposits to Real Estate Related Reserve Funds. The Borrower acknowledges as follows: (a) calculation of all interest payments shall be made by the Funding Lender: (b) deposits with respect to thc Taxes and Other Charges shall be calculated by thc Servicer or if there is no Servicer, the Funding Lender in accordance with the Security Instrument; and (c) deposits with respect to any replacement reserve funds required by the Funding Lender shall be calculated by thc Servicer in accordance with the Replacement Reserve Agreement. In the event and to the extent that the Servicer or the Funding Lender, pursuant to the terms hereof, shall determine at any time that there exists a deficiency in amounts previously owed but not paid with respect to deposits to such replacement reserve fund, such deficiency shall be immediately due and payable hereunder following Written Notice to the Borrower.
Section 2.8. Grant of Security Interest; Application of Funds. To the extent not inconsistent with the Security Instrument and as security for payment of the Borrower Payment Obligations and the performance by the Borrower of all other terms, conditions and provisions of the Borrower Loan Documents, the Borrower hereby pledges and assigns to thc Funding Lender, and grants to the Funding Lender, a security interest in, all thc Borrower's right, title and interest in and to all payments to or moneys held in thc funds and accounts created and held by thc Funding Lender or the Servicer for the Project. This Borrower Loan Agreement is. among other things, intended by the panics
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to be a security agreement for purposes ofthe UCC. Upon the occurrence and during tlie continuance of an Event of Default hereunder, the Funding Lender and the Servicer shall apply or cause to be applied any sums held by the Funding Lender and the Servicer with respect to the Projects in any manner and in any order determined by Funding Lender, in Funding Lender's sole and absolute discretion.
Section 2.9. Marshalling; Payments Set Aside. The Governmental Lender and Funding Lender shall be under no obligation to marshal any assets in favor of Borrower or any other Person or against or in payment of any or all of the proceeds. To the extent that Borrower makes a payment or payments or transfers any assets to the Governmental Lender or Funding Lender, or the Governmental Lender or Funding Lender enforces its liens, and such payment or payments or transfers, or the proceeds of such enforcement or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other parly in connection with any insolvency proceeding, or otherwise, then: (i) any and all obligations owed to the Governmental Lender or Funding Lender and any and all remedies available to the Governmental Lender or Funding Lender under the terms ofthe Borrower Loan Documents and the Funding Loan Documents or in law or equity against Borrower, Guarantor or General Partner and/or any of their properties shall be automatically revived and reinstated to the extent (and only to the extent) ofany recovery permitted under clause (ii) below; and (ii) the Governmental Lender and Funding Lender shall be entitled to recover (and shall be entitled to file a proof of claim to obtain such recovery in any applicable bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent transfer proceeding) either: (x) the amount of payments or the value of the transfer or (y) if the transfer has been undone and the assets returned in whole or in part, the value of the consideration paid to or received by Borrower for the initial asset transfer, plus in each case any deferred interest from the date of the disgorgement to the date of distribution to the Governmental Lender or Funding Lender in any bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent transfer proceeding, and any costs and expenses due and owing, including, without limitation, any reasonable attorneys' fees incurred by the Governmental Lender or Funding Lender in connection with the exercise by the Governmental Lender or Funding Lender of its rights under this Section 2.9.
Section 2.10. Borrower Loan Disbursements. The Borrower Loan shall be disbursed by the Funding Lender, as agent for the Governmental Lender, pursuant to the Construction Funding Agreement.
ARTICLE III
CONVERSION
Section 3.1. Conversion Date and Extension of Outside Conversion Date. Borrower shall satisfy each ofthe Conversion Conditions to occur and cause the Conversion Date to occur on or before the Outside Conversion Date (including thc Extended Outside Conversion Date, if any), as further provided in the Forward Bond Purchase Agreement. The failure to satisfy each of the Conversion Conditions on or before the Outside Conversion Date shall constitute an Event of Default under the Borrower Loan Documents. Upon satisfaction ofthe Conversion Conditions, the Permanent Lender shall replace the Construction Funding Lender as the Funding Lender.
Section 3.2. Notice from Funding Lender; Funding Lender's Calculation Final.
Following satisfaction of all of the Conversion Conditions, Permanent Funding Lenders shall deliver Written Notice to Borrower and the Governmental Lender of: (i) the Conversion Date, (ii) the amount of the Permanent Loan Purchase Price, (iii) any required prepayment ofthe Borrower Note (as described below in Section 3.3) and (iv) any amendments to the amortization schedule, as applicable.
Permanent Funding Lender's calculation of thc Permanent Loan Purchase Price and any amendments to thc amortization of the Borrower Loan shall be. in the absence of manifest error, conclusive and binding on all parties.
Section 3.3. Mandatory Prepayment ofthe Borrower Loan.
As further provided in the Forward Bond Purchase Agreement, if and to the extent the Permanent Loan Purchase Price is less than the Interim Phase Amount, Funding Lenders may require Borrower to make a partial prepayment ofthe Borrower Loan in an amount equal to the difference between the Interim Phase Amount and the Permanent Loan Purchase Price (a "Pre-Conversion Loan Equalization Payment").
Any prepayment in full or in part of thc Borrower Loan required pursuant to Section 3.3(a) above shall be subject to a prepayment premium under certain circumstances as more particularly set forth in the Borrower Note.
Section 3.4. Release of Remaining Loan Proceeds. If and to the extent that the Permanent Loan Purchase Price is greater than thc principal amount ofthe Borrower Loan which has previously been disbursed to Borrower, Funding Lender shall deliver Written Notice thereof to Borrower on or before the Conversion Date. Within ten (10) business days after delivery of such notice, but in no event later than thc Outside Conversion Date, the Construction Funding Lender shall disburse Borrower Loan proceeds to Borrower so that the aggregate principal amount of the Borrower Loan disbursed equals the Permanent Loan Purchase Price. Any Borrower Loan proceeds previously disbursed to the Borrower in excess ofthe Permanent Loan Purchase Price shall be paid by Borrower to the Construction Funding Lender.
Section 3.5. No Amendment. Nothing contained in this Article 111 shall be construed to amend, modify, alter, change or supersede the terms and provisions of the Borrower Note, Security Instrument, the Construction Funding Agreement, the Forward Loan Purchase Agreement or any other Borrower Loan Document and, if there shall exist a conflict between the terms and provisions of this Article III and those ofthe Borrower Note, Security Instrument, the Construction Funding Agreement, the Forward Loan Purchase Agreement or other Borrower Loan Documents, then the terms and provisions of thc Borrower Note, Security Instrument, the Construction Funding Agreement, the Forward Loan Purchase Agreement and other Borrower Loan Documents shall control, provided, however, that in the event ofa conflict between thc terms and provisions ofthis Article III and those ofthe Borrower's loan application with the Funding Lender, thc terms and provisions ofthis Article III shall control.
Determinations by Funding Lender. In any instance where the consent or approval of Funding Lender may be given or is required, or where any determination, judgment or decision is to be rendered by Funding Lender under this Article 111, including in connection with the Construction Funding Agreement, the granting, withholding or denial of such consent or approval and the rendering of such determination, judgment or decision shall be made or exercised by the Funding Lender (or its designated representative), al its sole and exclusive option and in its sole and absolute discretion.
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ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1. Borrower Representations. To induce the Governmental Lender to execute this Borrower Loan Agreement and to induce Funding Lender to make Disbursements. Borrower represents and warrants for the benefit of" the Governmental Lender, Funding Lender and the Servicer, that the representations and warranties set forth in this Section 4.1 are complete and accurate as ofthe Closing Dale and will be complete and accurate, and deemed remade, as ofthe date of each Disbursement, as of the original Outside Conversion Date, as ofthe date ofany extension thereof and as ofthe Maturity Date in accordance with the terms and conditions of the Borrower Note. Subject to Section 4.2 hereof, the representations, warranties and agreements set forth in this Section 4.1 shall survive the making ofthe Borrower Loan, and shall remain in effect and true and correct in all material respects until the Borrower Loan and all other Payment Obligations have been repaid in full.
Section 4.1.1 Organization; Special Purpose. The Borrower is in good standing under the laws of the State (and under the laws of the state in which the Borrower was formed if the Borrower was not formed under the laws of the State), has full legal right, power and authority to enter into the Borrower Loan Documents to which it is a party, and to carry out and consummate all transactions contemplated by the Borrower Loan Documents to which it is a party, and by proper corporate limited partnership or limited liability company action, as appropriate has duly authorized the execution, delivery and performance of the Borrower Loan Documents to which it is a party. Thc Pcrson(s) ofthe Borrower executing the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party are fully authorized to execute the same. The Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party have been duly authorized, executed and delivered by the Borrower. The sole business ofthe Borrower is the ownership, management and operation ofthe Project.
Section 4.1.2 Proceedings; Enforceability. Assuming due execution and delivery by thc other parties thereto, the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party will constitute the legal, valid and binding agreements of thc Borrower enforceable against the Borrower in accordance with their terms: except in each case as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally, by the application of equitable principles regardless of whether enforcement is sought in a proceeding at law or in equity and by public policy.
Section 4.1.3 No Conflicts. The execution and delivery of the Borrower Loan Documents and the Funding Loan Documents to which thc Borrower is a party, the consummation ofthe transactions herein and therein contemplated and the fulfillment of or compliance with thc terms and conditions hereof and thereof, will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under thc Paitnership Agreement ofthe Borrower, or to the best knowledge ofthe Borrower and with respect to the Borrower, any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Borrower is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets ol" the Borrower, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation ol" the transactions contemplated by the Borrower Loan Documents and thc Funding Loan Documents, or the financial condition, assels, properties or operations ofthe Borrower.
Section 4.1.4 Litigation; Adverse Facts. There is no Legal Action, nor is there a basis known to Borrower for any Legal Action, before or by any court or federal, slate, municipal or other governmental authority, pending, or to the knowledge of thc Borrower, after reasonable investigation, threatened, against or affecting thc Borrower, the General Partner or the Guarantor, or their respective assets, properties or operations which, if determined adversely to the Borrower or its interests, would have a material adverse effect upon the consummation ofthe transactions contemplated by, or the validity of, the Borrower Loan Documents or the Funding Loan Documents, upon the ability of each of Borrower, General Partner and Guarantor to perform their respective obligations under the Borrower Loan Documents, the Funding Loan Documents and the Related Documents to which it is a party, or upon the Financial condition, assets (including the Project), properties or operations of the Borrower, the General Partner or the Guarantor. None ofthe Borrower, General Partner or Guarantor is in default (and no event has occurred anil is continuing which with the giving of notice or the passage of time or both could constitute a default) with respect to any order or decree ofany court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Borrower Loan Documents and the Funding Loan Documents, the ability of each of Borrower, General Partner and Guarantor to perform their respective obligations under thc Borrower Loan Documents, the Funding Loan Documents and the Related Documents to which it is a party, or the financial condition, assets, properties or operations of the Borrower, General Partner or Guarantor. None of Borrower, General Partner or Guarantor arc (a) in violation ofany applicable law, which violation materially and adversely affects or may materially and adversely affect the business, operations, assets (including the Project), condition (financial or otherwise) or prospects of Borrower, General Partner or Guarantor, as applicable; (b) subject lo, or in default with respect to, any other Legal Requirement that would have a material adverse effect on the business, operations, assets (including the Project), condition (financial or otherwise) or prospects of Borrower, General Partner or Guarantor, as applicable; or (c) in default with respect to any agreement to which Borrower, General Partner or Guarantor, as applicable, arc a party or by which they are bound, which default would have a material adverse effect on thc business, operations, assets (including the Project), condition (financial or otherwise) or prospects of Borrower, General Partner or Guarantor, as applicable; and (d) there is no Legal Action pending or, to thc knowledge of Borrower, threatened against or affecting Borrower, General Partner or Guarantor questioning the validity or the enforceability of this Borrower Loan Agreement or any ofthe other Borrower Loan Documents or the Funding Loan Documents or of any of thc Related Documents. All lax returns (federal, state and local) required to be tiled by or on behalf of the Borrower have been tiled, and all faxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Borrower in good faith, have been paid or adequate reserves have been made for the payment thereof which reserves, if any, are reflected in thc audited financial statements described therein. The Borrower enjoys the peaceful and undisturbed possession of all of the premises upon which it is operating its facilities.
Section 4.1.5 Agreements; Consents; Approvals. Except as contemplated by the Borrower Loan Documents and the Funding Loan Documents, the Borrower i.s not a party to any agreement or instrument or subject to any restriction that would materially adversely affect the Borrower, thc Project, or the Borrower's business, properties, operations or financial condition or business prospects, except thc Permitted Encumbrances. Thc Borrower is not m default in any material respect in thc performance, observance or fulfillment ofany ofthe obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which il is a party or by which it or the Projects is bound.
No consent or approval ofany trustee or holder ofany indebtedness ofthe Borrower, and to the best knowledge of the Borrower and only with respect to the Borrower, no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority (except no
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representation is made with respect to any state securities or "blue sky" laws) is necessary in connection with the execution and delivery ofthe Borrower Loan Documents or the Funding Loan Documents, or the consummation ofany transaction herein or therein contemplated, or the fulfillment of or compliance with the terms and conditions hereof or thereof, except as have been obtained or made and as are in full force and effect.
Section 4.1.6 Title. The Borrower shall have marketable title to the Project, free and clear of all Liens except the Permitted Encumbrances. The Security Instrument, when properly recorded m the appropriate records, together with any UCC financing statements required to be filed in connection therewith, will create (i) a valid, perfected first priority lien on the fee (or leasehold, if applicable) interest in the Projects and (ii) perfected security interests in and to, and perfected collateral assignments ol", all personalty included in the Projects (including the Leases), all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances. To the Borrower's knowledge, there are no delinquent real property taxes or assessments, including water and sewer charges, with respect to the Project, nor are there any claims for payment for work, labor or materials affecting the Projects which are or may become a Lien prior to, or of equal priority with, the Liens created by the Borrower Loan Documents and the Funding Loan Documents.
Section 4.1.7 Survey. To the best knowledge ofthe Borrower, the survey for thc Projects delivered lo the Governmental Lender and the Funding Lender does not fail lo reflect any material matter affecting the Projects or the title thereto.
Section 4.1.8 No Bankruptcy Filing. The Borrower is not contemplating cither the filing ofa petition by il under any state or federal bankruptcy or insolvency law or the liquidation of all or a major portion of its property (a "Bankruptcy Proceeding"), and the Borrower has no knowledge ofany Person contemplating thc filing of any such petition against it. As of the Closing Date, the Borrower has the ability to pay its debts as they become due.
Section 4.1.9 Full and Accurate Disclosure. No statement of fact made by thc Borrower in any Borrower Loan Document or any Funding Loan Document contains any untrue statement of a material fact or omits to slate any material fact necessary to make statements contained therein in light ofthe circumstances in which they were made, not misleading. There is no material fact or circumstance presently known to the Borrower that has not been disclosed to thc Governmental Lender and the Funding Lender which materially and adversely affects the Projects or the business, operations or financial condition or business prospects ofthe Borrower or thc Borrower's ability to meet its obligations under this Borrower Loan Agreement and the other Borrower Loan Documents and funding Loan Documents to which it is a party in a timely manner.
Section 4.1.10 No Plan Assets. The Borrower is not an "employee benefit plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none ofthe assets ofthe Borrower constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. Section 2510.3 101.
Section 4.1.11 Compliance The Borrower, the Projects and the use thereof will comply, to the extent required, in all material respects with all applicable Legal Requirements. The Borrower is not in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which would materially adversely affect the financial condition or business prospects or the business ofthe Borrower. There has not been committed by the Borrower or any Affiliate involved with the operation or use of the Projects any act or omission affording any Governmental Authority the right of forfeiture as against lhe Projects or any part thereof or any moneys
paid m performance ofthe Borrower's obligations under any Borrower Loan Document or any funding Loan Documents.
Section 4.1.12 Contracts. All service, maintenance or repair contracts affecting the Projects have been entered into at arm's length (except for such contracts between the Borrower and its affiliates or the affiliates ofthe Borrower Controlling Entity ofthe Borrower) in the ordinary course ofthe Borrower's business and provide for the payment of fees in amounts and upon terms comparable to existing market rates.
Section 4.1.13 Financial Information. All financial data, including any statements of cash flow and income and operating expense, lhat have been delivered lo the Governmental Lender or thc Funding Lender in respect ofthe Projects by or on behalf of the Borrower, to the best knowledge ofthe Borrower, (i) arc accurate and complete in all material respects, (ii) accurately represent the financial condition ofthe Projects as ofthe date of such reports, and (iii) to thc extent prepared by an independent certified public accounting firm, have been prepared in accordance with GAAP consistently applied throughout the periods covered, except as disclosed therein. Other than pursuant to or permitted by thc Borrower Loan Documents or the Funding Loan Documents or the Borrower organizational documents, the Borrower has no contingent liabilities, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business ofthe Borrower from that set forth in said financial statements.
Section 4.1.14 Condemnation. No Condemnation or other proceeding has been commenced or, to the Borrower's knowledge, is contemplated, threatened or pending with respect to all or part ofthe Projects or for the relocation of roadways providing access to the Project.
Section 4.1.15 Federal Reserve Regulations. No part ofthe proceeds ofthe Borrower Loan will be used for the purpose of purchasing or acquiring any "margin stock" within the meaning of Regulation U of thc Board of Governors of the Federal Reserve System or for any other purpose that would be inconsistent with such Regulation U or any other regulation of such Board of Governors, or for any purpose prohibited by Legal Requirements or any Borrower Loan Document or Funding Loan Document.
Section 4.1.16 Utilities and Public Access. To the best ofthe Borrower's knowledge, the Projects is or will be served by water, sewer, sanitary sewer and storm drain Facilities adequate to service it for its intended uses. All public utilities necessary or convenient to the full use and enjoyment ofthe Projects are or will be located in the public right-of-way abutting the Project, and all such utilities are or will be connected so as to serve the Projects without passing over other property absent a valid easement. All roads necessary for thc use ofthe Projects for its current purpose have been or will be completed and dedicated to public use and accepted by all Governmental Authorities. Except for Permitted Encumbrances, the Projects does not share ingress and egress through an easement or private road or share on-site or off-site recreational facilities and amenities that are not located on the Projects and under thc exclusive control ofthe Borrower, or where there is shared ingress and egress or amenities, there exists an easement or joint use and maintenance agreement under which (i) access to and use and enjoyment ofthe easement or private road and/or recreational facilities and amenities is perpetual, (ii) the number of parties sharing such casement and/or recreational facilities and amenities must be specified, (iii) the Borrower's responsibilities and share of expenses arc specified, and (iv) the failure to pay any maintenance fee with respect to an casement will not result in a loss of usage ofthe easement.
Section 4.1.17 Not a Foreign Person. The Borrower is not a "foreign person" within the meaning of § 1445(f)(3) ofthe Code.
Section 4.1.18 Separate Lots, Each parcel comprising the Land is a separate tax lot and is not a portion ofany other tax lot that is not a part of the Land.
Section 4.1.19 Assessments. There arc no pending or, to the Borrower's best knowledge, proposed special or other assessments for public improvements or otherwise affecting the Project, or any contemplated improvements to the Projects that may result in such special or other assessments.
Section 4.1.20 Enforceability. The Borrower Loan Documents and thc Funding Loan Documents are not subject to, and thc Borrower has not asserted, any right of rescission, set-off, counterclaim or defense, including the defense of usury.
Section 4.1.21 Insurance. The Borrower has obtained the insurance required by this Borrower Loan Agreement, if applicable, and the Security Instrument and has delivered to thc Servicer copies of insurance policies or certificates of insurance reflecting the insurance coverages, amounts and other requirements set forth in this Borrower Loan Agreement, if applicable, and thc Security Instrument.
Section 4.1.22 Use of Property; Licenses. The Projects will be used as a multifamily residential rental Projects and other appurtenant and related uses, which use is consistent with the zoning classification for the Project, all certifications, permits, licenses and approvals, including certificates of completion and occupancy permits required for the legal use or legal, nonconforming use, as applicable, occupancy and operation of the Projects (collectively, the "Licenses") required at this time for the construction, as appropriate, and equipping of thc Projects have been obtained. To the Borrower's knowledge, all Licenses obtained by the Borrower have been validly issued and are in full force and effect. The Borrower has no reason to believe that any of the Licenses required for the future use and occupancy of the Projects and not heretofore obtained by the Borrower will not be obtained by the Borrower in the ordinary course following the Completion Dale. No Licenses will terminate, or become void or voidable or terminable, upon any sale, transfer or other disposition ofthe Project, including any transfer pursuant to foreclosure sale under the Security Instrument or deed in lieu of foreclosure thereunder. The Projects does not violate any density or building setback requirements ofthe applicable zoning law except to the extent, if any, shown on the survey, no proceedings are. to the best of the Borrower's knowledge, pending or threatened that would result in a change ofthe zoning ofthe Project.
Section 4.1.23 Flood Zone. Either all Improvements will be constructed above the flood grade or the Borrower will obtain appropriate Hood insurance as directed by the Servicer.
Section 4.1.24 Physical Condition. The Project, including all Improvements, parking facilities, systems, fixtures, Equipment and landscaping, are or. after completion of the construction and/or repairs, as appropriate, will be in good and habitable condition in all material respects and in good order and repair in all material respects (reasonable wear and tear excepted). The Borrower has not received notice from any insurance company or bonding company of any defect or inadequacy in the Project, or any part thereof, which would adversely affect its insurability or cause the imposition of extraordinary premiums or charges thereon or any termination ofany policy of insurance or bond. The physical configuration ofthe Projects is not in material violation ofthe ADA, if required under applicable law.
Section 4.1.25 Encroachments. All ofthe Improvements included in determining the appraised value ofthe Projects will lie wholly within thc boundaries and building restriction lines ofthe Project, and no improvement on an adjoining property encroaches upon the Project, and no easement or other encumbrance upon the Projects encroaches upon any ofthe Improvements, so as to affect the value
or marketability ofthe Project, except those insured against by the Title Insurance Policy or disclosed in the survey ofthe Projects as approved by the funding Lender.
Section 4.1.26 State Law Requirements. Thc Borrower hereby represents, covenants and agrees to comply with the provisions of all applicable Stale laws relating to the Borrower Loan, thc Funding Loan and the Project.
Section 4.1.27 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements in connection with the transfer ofthe Projects lo the Borrower have been paid. All mortgage, mortgage recording, stamp, intangible or other similar taxes required to be paid by any Person under applicable Legal Requirements in connection with the execution, delivery, recordation, tiling, registration, perfection or enforcement of any of thc Borrower Loan Documents and thc Funding Loan Documents have been or will be paid.
Section 4.1.28 Investment Company Act. The Borrower is not (i) an "investment company" or a company "controlled" by an "investment company," within the meaning ofthe Investment Company Act of 1940, as amended; or (ii) a "holding company" or a "subsidiary company" ofa "holding company" or an "affiliate" of cither a "holding company" or a "subsidiary company" within the meaning ofthe Public Utility Holding Company Act of 1935, as amended.
Section 4.1.29 Fraudulent Transfer. The Borrower has not accepted the Borrower Loan or entered into any Borrower Loan Document or Funding Loan Document with the actual intent to hinder, delay or defraud any creditor, and the Borrower has received reasonably equivalent value in exchange for its obligations under the Borrower Loan Documents and the Funding Loan Documents. Giving effect to the transactions contemplated by the Borrower Loan Documents and the Funding Loan Documents, the fair saleable value ofthe Borrower's assets exceeds and will, immediately following the execution and delivery ofthe Borrower Loan Documents and the Funding Loan Documents, exceed the Borrower's total liabilities, including subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value ofthe Borrower's assets is and will, immediately following the execution and delivery of thc Borrower Loan Documents and the Funding Loan Documents, be greater than the Borrower's probable liabilities, including the maximum amount of its contingent liabilities or its debts as such debts become absolute and matured. The Borrower's assets do not and, immediately following the execution and delivery of the Borrower Loan Documents and the Funding Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed lo be conducted. The Borrower does not intend to, and does not believe that it will, incur debts and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of the Borrower).
Section 4.1.30 Ownership of the Borrower. Except as set forth in the Partnership Agreement of the Borrower, the Borrower has no obligation to any Person lo purchase, repurchase or issue any ownership interest in it.
Section 4.1.31 Environmental "Matters, to the best of Borrower's knowledge and except as disclosed in environmental reports previously delivered to the Funding Lender and the Governmental Lender and in the no further remediation letter (the "Prior Environmental Disclosures"), lhe Projects is not in violation ofany Legal Requirement pertaining lo or imposing liability or standards of conduct concerning environmental regulation, contamination or clean-up, and will comply with covenants and requirements relating to environmental hazards as set forth in the Security Instrument. The Borrower will execute and deliver the Agreement ol"Environmental Indemnification.
Section 4.1.32 Name; Principal Place of Business. Unless prior Written Notice is given to the Funding Lender, the Borrower does not use and will not use any trade name, and has not done and will not do business under any name other than its actual name set forth herein. The principal place of business ofthe Borrower is ils primary address for notices as set forth in Section 10.1 hereof, and the Borrower has no other place of business, other than lhe Projects and such principal place of business.
Section 4.1.33 Subordinated Debt. There is no secured or unsecured indebtedness with respect to the Projects or any residual interest therein, other than Permitted Encumbrances and the permitted secured indebtedness described in Section 6.7 hereof, except an unsecured deferred developer fee not to exceed the amount permitted by Funding Lender as determined on the Closing Dale.
Section 4.1.34 Filing of Taxes. Thc Borrower has tiled (or has obtained effective extensions for tiling) all federal, state and local tax returns required to be filed and has paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments, if any, payable by the Borrower.
Section 4.1.35 General Tax. All representations, warranties and certifications ofthe Borrower set forth in the Regulatory Agreement and thc fax Compliance Agreement are incorporated by reference herein and thc Borrower will comply with such as if set forth herein.
Section 4.1.36 Approval of the Borrower Loan Documents and Funding Loan Documents. By its execution and delivery ofthis Borrower Loan Agreement, the Borrower approves the form and substance of the Borrower Loan Documents and the Funding Loan Documents, and agrees to carry out the responsibilities and duties specified in the Borrower Loan Documents and the Funding Loan Documents to be carried out by the Borrower. The Borrower acknowledges that (a) it understands the nature and structure ofthe transactions relating to thc financing ofthe Project, (b) it is familiar with lhe provisions of all of the Borrower Loan Documents and the Funding Loan Documents and other documents and instruments relating lo the financing, (c) it understands the risks inherent in such transactions, including without limitation the risk of loss of the Project, and (d) it has not relied on the Governmental Lender, the Funding Lender or the Servicer for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by the Borrower Loan Documents and thc Funding Loan Documents or otherwise relied on the Governmental Lender, the Funding Lender or the Servicer in any manner.
Section 4.1.37 Funding Loan Agreement. The Borrower has read and accepts and agrees that it is bound by thc Funding Loan Agreement and the Funding Loan Documents.
Section 4.1.38 Americans with Disabilities Act. The Project, as designed, will conform in all material respects with all applicable zoning, planning, building and environmental laws, ordinances and regulations of governmental authorities having jurisdiction over the Project, including, but not limited to, the Americans with Disabilities Act of 1990 ("ADA"), to the extent required (as evidenced by an architect's certificate to such effect).
Section 4.1.39 Requirements of Code and Regulations. The Projects satisfies all requirements ofthe Code and the Regulations applicable to the Project.
Section 4.1.40 Regulatory Agreement. The Projects is, as ofthe date of origination of the Funding Loan, in compliance with all requirements ofthe Regulatory Agreement to the extent such requirements arc applicable; and thc Borrower intends to cause thc residential units in the Projects to be rented or available for rental on a basis which satisfies the requirements ofthe Regulatory Agreement,
including all applicable requirements of the Code and the Regulations, and pursuant to leases which comply with all applicable laws.
Section 4.1.41 Intention to Hold Project. The Borrower intends to hold the Projects for its own account and has no current plans, and has not entered into any agreement, to sell the Projects or any part of it; and the Borrower intends to occupy the Projects or cause the Projects to be occupied and to operate it or cause it to be operated at all times during the term ofthis Borrower Loan Agreement in compliance with the terms ofthis Borrower Loan Agreement and the Regulatory Agreement and does not know ofany reason why the Projects will not be so used by it in the absence of circumstances not now anticipated by it or totally beyond its control.
Section 4.1.42 Concerning General Partner.
The General Partner is an Illinois limited liability company, duly organized and validly existing under the laws ofthe Stale. General Partner has all requisite power and authority, rights and franchises to enter into and perform its obligations under the Borrower Loan Documents and the Funding Loan Documents to be executed by such General Partner for its own account and on behalf of Borrower, as General Partner of Borrower, under this Borrower Loan Agreement and the other Borrower Loan Documents and the Funding Loan Documents.
General Partner has made all filings (including, without limitation, all required Filings related to the use of fictitious business names) and is in good standing in the Stale and in each other jurisdiction in which the character ofthe property it owns or the nature ofthe business it transacts makes such filings necessary or where the failure to make such filings could have a material adverse effect on the business, operations, assets, condition (financial or otherwise) or prospects of General Partner.
General Partner is duly authorized to do business in the State.
The execution, delivery and performance by Borrower of the Borrower Loan Documents and the Funding Loan Documents have been duly authorized by all necessary action of General Partner on behalf of Borrower, and by all necessary action on behalf of General Partner.
The execution, delivery and performance by General Partner, on behalf of Borrower, ofthe Borrower Loan Documents and thc Funding Loan Documents will not violate (i) the General Partner's organizational documents; (ii) any other Legal Requirement affecting General Partner or any of its properties: or (iii) any agreement lo which General Partner is bound or to which it is a party; and will not result in or require thc creation (except as provided in or contemplated by this Borrower Loan Agreement) ofany Lien upon any of such properties, any of the Collateral or any ofthe property or funds pledged or delivered to Funding Lender pursuant to the Security Documents.
Section 4.1.43 Government and Private Approvals. All governmental or regulatory orders, consents, permits, authorizations and approvals required for the construction, use. occupancy and operation of the Improvements, that may be granted or denied in the discretion of any Governmental Authority, have been obtained and are in full force and effect (or, in the case ofany ofthe foregoing that Borrower is not required to have as ofthe Closing Date, will be obtained), and will be maintained in full force and effect at all times during the construction of the Improvements. All such orders, consents, permits, authorizations and approvals that may not be denied in the discretion of any Governmental Authority shall be obtained prior to the commencement of any work for which such orders, consents.
permits, authorizations or approvals are required, and, once obtained, such orders, consents, permits, authorizations and approvals will be maintained in full force and effect at all times during the construction ofthe Improvements. Fxccpt as set forth in the preceding two sentences, no additional governmental or regulatory actions, filings or registrations with respect to the Improvements, and no approvals, authorizations or consents ofany trustee or holder ofany indebtedness or obligation of Borrower, are required for the due execution, delivery and performance by Borrower, or General Partner ofany ofthe Borrower Loan Documents or the Funding Loan Documents or the Related Documents executed by Borrower or General Partner, as applicable. All required zoning approvals have been obtained, and the zoning ofthe Land for the Projects is not conditional upon the happening ofany further event.
Section 4.1.44 Concerning Guarantor. The Borrower Loan Documents and the Funding Loan Documents to which the Guarantor is a party or a signatory executed simultaneously with this Borrower Loan Agreement have been duly executed and delivered by the Guarantor and are legally valid and binding obligations of Guarantor, enforceable against the Guarantor in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by general principles of equity.
Section 4.1.45 No Material Defaults. Except as previously disclosed to Funding Lender in writing, there exists no material violation of or material default by Borrower under, and, to the best knowledge of Borrower, no event has occurred which, upon the giving of notice or the passage of time, or both, would constitute a material default with respect to: (i) the terms of any instrument evidencing, securing or guaranteeing any indebtedness secured by the Projects or any portion or interest thereof or therein: (ii) any lease or other agreement affecting the Projects or to which Borrower is a party; (iii) any license, permit, statute, ordinance, law, judgment, order, writ, injunction, decree, rule or regulation of any Governmental Authority, or any determination or award of any arbitrator lo which Borrower or the Projects may be bound; or (iv) any mortgage, instrument, agreement or document by which Borrower or any of its respective properties is bound; in the case of any of thc foregoing: (I) which involves any Borrower Loan Document or Funding Loan Document; (2) which involves the Projects and is not adequately covered by insurance; (3) that might materially and adversely affect the ability of Borrower, General Partner or Guarantor or lo perform any of its respective obligations under any ofthe Borrower Loan Documents or the Funding Loan Documents or any other material instrument, agreement or document to which it is a parly; or (4) which might adversely affect the priority ofthe Liens created by this Borrower Loan Agreement or any ofthe Borrower Loan Documents or the Funding Loan Documents.
Section 4.1.46 Payment of Taxes. Except as previously disclosed to Funding Lender in writing: (i)all tax returns and reports of Borrower, General Partner and Guarantor required to be filed have been timely filed, and all taxes, assessments, fees and other governmental charges upon Borrower, General Partner and Guarantor, and upon their respective properties, assets, income and franchises, which are due and payable have been paid when due and payable; and (ii) Borrower knows of no proposed tax assessment against it or against General Partner or Guarantor that would be material to thc condition (financial or otherwise) of Borrower, General Partner or Guarantor, and neither Borrower, nor General Partner have contracted with any Government Authority in connection with such taxes.
Section 4.1.47 Rights to Projects Agreements and Licenses. Borrower is the legal and beneficial owner of all rights in and to the Plans and Specifications and all existing Projects Agreements and Licenses, anil will be the legal and beneficial owner of all rights m anil to all future Projects Agreements and Licenses. Borrower's interest in thc Plans and Specifications and all Projects Agreements and Licenses is not subject to any present claim (other than under thc Borrower Loan Documents and the Funding Loan Documents or as otherwise approved by Funding Lender in its sole discretion), set-off or deduction other than in the ordinary course of business.
Section 4.1.48 Patriot Act Compliance. Borrower is not now, nor lias ever been (i) listed on any Government Lists (as defined below), (ii) a person who has been determined by a Governmental Authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23. 2001) or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense, or (iv) under investigation by any Governmental Authority for alleged criminal activity. For purposes hereof, the term "Patriot Act Offense" shall mean any violation of the criminal laws ofthe United States of America or ofany ofthe several states, or that would be a criminal violation if committed within the jurisdiction ofthe United States of America or any ofthe several states, relating to terrorism or the laundering of monetary instruments, including any offense under (A) the criminal laws against terrorism; (B) the criminal laws against money laundering, (C) Bank Representative Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act. "Patriot Act Offense" also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the term "Government Lists" shall mean (l)the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control ("OFAC"), (2) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any ofthe Rules and Regulations of OFAC lhat Funding Lender notified Borrower in writing is now included in "Government Lists", or (3) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Government Authority or pursuant to any Executive Order of thc President of thc United States of America that Funding Lender notified Borrower in writing is now included in "Government Lists".
Section 4.1.49 Rent Schedule. Intentionally omitted.
Section 4.1.50 Other Documents. Each of the representations and warranties of Borrower or General Partner contained in any of the other Borrower Loan Documents or the Funding Loan Documents or Related Documents is true and correct in all material respects (or, in the case of representations or warranties contained in any of the other Borrower Loan Documents or Funding Loan Documents or Related Documents that speak as ofa particular date, were true and correct in all material respects as of such date). All of such representations and warranties are incorporated herein for the benefit of Funding Lender.
Section 4.1.51 Subordinate Loan Documents. Thc Subordinate Loan Documents are in full force and effect and the Borrower has paid all commitment fees and other amounts due and payable to the Subordinate Lender(s) thereunder. There exists no material violation of or material default by the Borrower under, and no event has occurred which, upon thc giving of notice or thc passage of time, or both, would constitute a material default under the Subordinate Loan Documents.
Section 4.1.52 [Reserved]
Section 4.2. Survival of Representations and Covenants. All of thc representations and warranties in Section 4.1 hereof and elsewhere in lhe Borrower Loan Documents (i) shall survive for so long as any portion ofthe Borrower Payment Obligations remains due and owing and (ii) shall be deemed to have been relied upon by the Governmental Lender and the Servicer notwithstanding any investigation heretofore or hereafter made by the Governmental Lender or thc Servicer or on its or their behalf, provided, however, that the representations, warranties and covenants set forth in Section 4.1.31 hereof shall survive in perpetuity and shall not be subject to thc exculpation provisions of Section 11.1 hereof.
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ARTICLE V AFFIRMATIVE COVENANTS
During thc term ol' this Borrower Loan Agreement, the Borrower hereby covenants and agrees with the Governmental Lender, the Funding Lender and the Servicer that:
Section 5.1. Existence. The Borrower shall (i) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence and its material rights, and franchises, (ii) continue to engage in the business presently conducted by it, (iii) obtain and maintain all material Licenses, and (iv) qualify to do business and remain in good standing under the laws ofthe Stale.
Section 5.2. Taxes and Other Charges. The Borrower shall pay all faxes and Other Charges as the same become due and payable and prior to their becoming delinquent in accordance with the Security Instrument, except to the extent that the amount, validity or application thereof is being contested in good faith as permitted by the Security Instrument.
The Borrower covenants to pay all taxes and Other Charges of any type or character charged to the Funding Lender affecting the amount available lo the Funding Lender from payments to be received hereunder or in any way arising due to lhe transactions contemplated hereby (including taxes and Other Charges assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Funding Lender and taxes based upon or measured by the net income of thc Funding Lender; provided, however, that the Borrower shall have thc right to protest any such taxes or Other Charges and to require the Funding Lender, at the Borrower's expense, to protest and contest any such taxes or Other Charges levied upon them and that thc Borrower shall have the right to withhold payment of any such taxes or Other Charges pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect thc rights or interests ofthe Funding Lender. This obligation shall remain valid and in effect notwithstanding repayment ofthe Borrower Loan hereunder or termination ofthis Borrower Loan Agreement.
Section 5.3. Repairs; Maintenance and Compliance; Physical Condition. The Borrower shall cause the Projects to be maintained in a good, habitable and safe (so as to not threaten the health or safety of the Project's tenants or their invited guests) condition and repair (reasonable wear and tear excepted) as set forth in the Security Instrument and shall not remove, demolish or materially alter the Improvements or Equipment (except for removal of aging or obsolete equipment or furnishings in thc normal course of business), except as provided in the Security Instrument.
Section 5.4. Litigation. The Borrower shall give prompt Written Notice to the Governmental Lender, the Funding Lender and the Servicer of any litigation, governmental proceedings or claims or investigations regarding an alleged actual violation ofa Legal Requirement pending or, to the Borrower's knowledge, threatened against the Borrower which might materially adversely affect the Borrower's condition (financial or otherwise) or business or the Project.
Section 5.5. Performance of Other Agreements. The Borrower shall observe and perform in all material respects each and every term to be observed or performed by it pursuant to the terms ofany agreement or instrument materially affecting or pertaining to the Project.
Section 5.6. Notices. Thc Borrower shall promptly advise thc Governmental Lender, the Funding Lender and thc Servicer of (i) any Material Adverse Change in the Borrower's financial condition, assets, properties or operations other than general changes in thc real estate market, (ii) any fact or circumstance affecting the Borrower or thc Projects that materially and adversely affects the
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Borrower's ability to meet its obligations hereunder or under any ofthe other Borrower Loan Document to which it is a party in a timely manner, or (iii) the occurrence ofany Potential Default or Event of Default of which the Borrower has knowledge. If the Borrower becomes subject lo federal or state securities law tiling requirements, the Borrower shall cause to be delivered to the Governmental Lender, the Funding Lender and the Servicer any Securities and Exchange Commission or other public filings, if any, ofthe Borrower within two (2) Business Days of such filing.
Section 5.7. Cooperate in Legal Proceedings. The Borrower shall cooperate fully with the Governmental Lender, the Funding Lender and the Servicer with respect to. and permit the Governmental Lender, the Funding Lender and the Servicer at their option, to participate in, any proceedings before any Governmental Authority that may in any way affect the rights of the Governmental Lender, the Funding Lender and/or the Servicer under any Borrower Loan Document or Funding Loan Document.
Section 5.8. Further Assurance's. The Borrower shall, at thc Borrower's sole cost and expense (except as provided in Section 9.1 hereof), (i) furnish to thc Servicer and thc Funding Lender all instruments, documents, boundary surveys, footing or foundation surveys (to the extent that Borrower's construction or renovation of the Projects alters any existing building foundations or footprints), certificates, plans and specifications, appraisals, title and other insurance reports and agreements, reasonably requested by the Servicer or thc Funding Lender for the better and more efficient carrying out of thc intents and purposes of thc Borrower Loan Documents and the Funding Loan Documents; (ii) execute and deliver to thc Servicer and thc Funding Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Borrower Loan, as the Servicer and the Funding Lender may reasonably require from time to time; (iii) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out ofthe intents and purposes ofthe Borrower Loan Documents and the Funding Loan Documents, as the Servicer or the Funding Lender shall reasonably require from time to time; provided, however, with respect to clauses (i)-(iii) above, the Borrower shall not be required to do anything that has the effect of (A) changing the essential economic terms of the Borrower Loan or (B) imposing upon the Borrower greater personal liability under the Borrower Loan Documents and the Funding Loan Documents; and (iv) upon the Servicer's or the Funding Lender's request therefor given from time to time after the occurrence ofany Potential Default or Event of Default for so long as such Potential Default or Event of Default, as applicable, is continuing pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and pending litigation searches with respect to the Borrower and (b) searches of title to the Project, each such search to be conducted by search firms reasonably designated by the Servicer or the Funding'Lender in each ofthe locations reasonably designated by the Servicer or the Funding Lender.
Section 5.9. Delivery of Financial Information. After notice to the Borrower of a Secondary Market Disclosure Document, the Borrower shall, concurrently with any delivery to the Funding Lender or the Servicer, deliver copies of all financial information required under Article IX.
Section 5.10. Environmental Matters. So long as the Borrower owns or is in possession of the Project, the Borrower shall (a) keep the Projects in compliance with all Hazardous Materials Laws (as defined in the loan documents with thc Funding Lenders), (b) promptly notify the Funding Lender and thc Servicer if the Borrower shall become aware that any Hazardous Materials (as defined in thc loan documents with the Funding Lenders) are on or near the Projects in violation of Hazardous Materials Laws, and (c) commence and thereafter diligently prosecute to completion all remedial work necessary with respect to the Projects required under any Hazardous Material Laws, in each case as set forth in the Security Instrument or the Agreement of Environmental Indemnification.
Section 5.11. Governmental Lender's and Funding Lender's Fees. The Borrower covenants to pay the reasonable fees and expenses ofthe Governmental Lender (including the Ongoing Governmental Lender Fee) and the Funding Lender or any agents, attorneys, accountants, consultants selected by the Governmental Lender or the Funding Lender to act on its behalf in connection with this Borrower Loan Agreement and thc other Borrower Loan Documents, the Regulatory Agreement and the Funding Loan Documents, including, without limitation, any and all reasonable expenses incurred in connection with the making ofthe Borrower Loan or in connection with any litigation which may at any time be instituted involving the Borrower Loan, this Borrower Loan Agreement, the other Borrower Loan Documents, the Regulatory Agreement and the Funding Loan Documents or any ofthe other documents contemplated thereby, or in connection with the reasonable supervision or inspection ofthe Borrower, its properties, assels or operations or otherwise in connection with the administration of lhe foregoing. This obligation shall remain valid and in effect notwithstanding repayment ofthe Borrower Loan hereunder or termination ofthis Borrower Loan Agreement.
Section 5.12. Estoppel Statement. The Borrower shall furnish lo the Funding Lender or the Servicer for the benefit ofthe Funding Lender or the Servicer within ten (10) days after request by the Funding Lender and the Servicer, with a statement, duly acknowledged and certified, setting forth, as applicable, with respect to the Borrower Note, (i) the unpaid principal of the Borrower Note, (ii) the applicable Interest Rate, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment ofthe Borrower Payment Obligations, and (v) that the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party arc valid, legal and binding obligations ofthe Borrower and have not been modified or, if modified, giving particulars of such modification, and no Event of Default exists thereunder or specify any Event of Default that does exist thereunder. The Borrower shall use commercially reasonable efforts to furnish to the Funding Lender or the Servicer, within 30 days ofa request by the Funding Lender or Servicer, tenant estoppel certificates from each commercial tenant at the Project, if any, in form and substance reasonably satisfactory to the Funding Lender and the Servicer; provided that the Funding Lender and the Servicer shall not make such requests more frequently than twice in any year.
Section 5.13. Defense of Actions. The Borrower shall appear in and defend any action or proceeding purporting to affect the security for this Borrower Loan Agreement hereunder or under the Borrower Loan Documents and the Funding Loan Documents, and shall pay, in the manner required by Section 2.4 hereof, all costs and expenses, including the cost of evidence of title and attorneys' fees, in any such action or proceeding in which Funding Lender may appear. If the Borrower fails to perform any ofthe covenants or agreements contained in this Borrower Loan Agreement or any other Borrower Loan Document, or if any action or proceeding is commenced that is not diligently defended by the Borrower which affects the Funding Lender's interest in the Projects or any part thereof, including eminent domain, code enforcement or proceedings ofany nature whatsoever under any Federal or stale law, whether now existing or hereafter enacted or amended, then the Funding Lender may make such appearances, disburse such sums and take such action as the Funding Lender deems necessary or appropriate to protect its interests. Such actions include disbursement of attorneys' fees, entry upon the Projects to make repairs or take other action to protect the security ofthe Project, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of Funding Lender appears to be prior or superior to the Borrower Loan Documents or the Funding Loan Documents. The Funding Lender shall have no obligation to do any ofthe above. The Funding Lender may take any such action without notice to or demand upon the Borrower. No such action shall release the Borrower from any obligation under this Borrower Loan Agreement or any ofthe other Borrower Loan Documents or Funding Loan Documents. In the event (i) that the Security Instrument is foreclosed in whole or in part or that any Borrower Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, or (ii) of the foreclosure ofany mortgage, deed of trust or deed to secure debt prior to or subsequent to the Security Instrument or any Borrower Loan Document in which proceeding the Funding Lender is made a party or
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(iii) ofthe bankruptcy of tlie Borrower or an assignment by the Borrower for the benefit of its creditors, the Borrower shall be chargeable with and agrees to pay all costs of collection and defense, including actual attorneys" fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes.
Section 5.14. Expenses. The Borrower shall pay all reasonable expenses incurred by the Governmental Lender, thc Funding Lender and the Servicer (except as provided in Section 9.1 hereof) in connection with the Borrower Loan and the Funding Loan, including reasonable fees and expenses ofthe Governmental Lender's, the Funding Lender's and the Servicer's attorneys, environmental, engineering and other consultants, and fees, charges or taxes for the recording or filing of Borrower Loan Documents and the Funding Loan Documents. The Borrower shall pay or cause lo be paid all reasonable expenses of the Governmental Lender, the Funding Lender and the Servicer (except as provided in Section 9.1 hereof) in connection with the issuance or administration of the Borrower Loan and the Funding Loan, including audit costs, inspection fees, settlement of condemnation and casualty awards, and premiums for title insurance and endorsements thereto. The Borrower shall, upon request, promptly reimburse the Governmental Lender, the Funding Lender and the Servicer for all reasonable amounts expended, advanced or incurred by the Governmental Lender, the Funding Lender and the Servicer to collect the Borrower Notes, or to enforce the rights of the Governmental Lender, the Funding Lender and the Servicer under this Borrower Loan Agreement or any other Borrower Loan Document, or to defend or assert the rights and claims of the Governmental Lender, the Funding Lender and the Servicer under the Borrower Loan Documents and the Funding Loan Documents arising out of an Event of Default or with respect to the Projects (by litigation or other proceedings) arising out of an Event of Default, which amounts will include all court costs, attorneys' fees and expenses, fees of auditors and accountants, and investigation expenses as may be reasonably incurred by the Governmental Lender, the Funding Lender and the Servicer in connection with any such matters (whether or not litigation is instituted), together with interest at the Default Rate on each such amount from the Date of Disbursement until the date of reimbursement to the Governmental Lender, the Funding Lender and the Servicer, all of which shall constitute part ofthe Borrower Loan and the Funding Loan and shall be secured by the Borrower Loan Documents and the Funding Loan Documents. The obligations and liabilities ofthe Borrower under this Section 5.14 shall survive the Term of this Borrower Loan Agreement and the exercise by the Governmental Lender, the Funding Lender or the Servicer, as the case may be, of any of its rights or remedies under the Borrower Loan Documents and the Funding Loan Documents, including the acquisition of the Projects by foreclosure or a conveyance in lieu of foreclosure. Notwithstanding the foregoing, the Borrower shall not be obligated to pay amounts incurred as a result ofthe gross negligence or willful misconduct ofany other party, and any obligations ofthe Borrower to pay for environmental inspections or audits will be governed by thc Agreement of Environmental Indemnification.
Section 5.15. Indemnity. In addition to its other obligations hereunder, and in addition to any and all rights of reimbursement, indemnification, subrogation and other rights of Governmental Lender or Funding Lender pursuant hereto and under law or equity, to the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Governmental Lender, the Funding Lender, the Servicer, the Beneficiary Parties, and each of their respective officers, directors, employees, attorneys and agents (each an "Indemnified Party"), against any and all losses, damages, claims, actions, liabilities, reasonable costs and expenses ofany nature, kind or character (including, without limitation, reasonable attorneys" fees, litigation and court costs, amounts paid in settlement (to the extent that the Borrower has consented to such settlement) and amounts paid to discharge judgments) (hereinafter, the "Liabilities'") to which the Indemnified Parlies, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise, to the extent arising out of or based upon or in any way relating to:
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Tlie Borrower Loan Documents and the Funding Loan Documents or lhe execution or amendment thereof or in connection with transactions contemplated thereby, including the sale, transfer or resale of the Borrower Loan or the Funding Loan, except with respect to any Secondary Market Disclosure Document (other than any Borrower's obligations under Article IX);
Any act or omission ofthe Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Borrower Loan, thc Funding Loan or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, construction, installation of, the Projects or any part thereof;
Any lien (other than a Permitted Lien) or charge upon payments by the Borrower to the Governmental Lender or the Funding Lender hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and Other Charges imposed on the Governmental Lender or the Funding Lender in respect of any portion of thc Project;
Any violation ofany environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Projects or any part thereof during the period in which the Borrower is in possession or control of thc Project, except as disclosed in the Prior Environmental Disclosures;
The enforcement of, or any action taken by the Governmental Lender or the Funding Lender related to remedies under, this Borrower Loan Agreement and the other Borrower Loan Documents and the Funding Loan Documents;
(I) [Reserved];
Any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement ofa material fact by the Borrower made in the course of Borrower applying for the Borrower Loan or the Funding Loan or contained in any ofthe Borrower Loan Documents or Funding Loan Documents to which the Borrower is a party;
Any Determination of Taxability;
(i) Any breach (or alleged breach) by Borrower ofany representation, warranty or
covenant made in or pursuant to this Borrower Loan Agreement or in connection with any written
or oral representation, presentation, report, appraisal or other information given or delivered by
Borrower. General Partner, Guarantor or their Affiliates to Governmental Lender, the Funding
Lender, Servicer or any other Person in connection with Borrower's application for the Borrower
Loan and the Funding Loan (including, without limitation, any breach or alleged breach by
Borrower ofany agreement with respect to thc provision ofany substitute credit enhancement):
(j) any failure (or alleged failure) by Borrower, the Funding Lender or Governmental Lender to comply with applicable federal and state laws and regulations pertaining to the making ofthe Borrower Loan and the Funding Loan;
(k) the Project, or the condition, occupancy, use, possession, conduct or management of, or work done in or about, or from the planning, design, acquisition, installation, construction of, the Projects or any part thereof; or
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the use ofthe proceeds ofthe Borrower Loan and the Funding Loan.
except in the case ofthe foregoing indemnification ofthe Governmental Lender, the Funding Lender or the Servicer or any related Indemnified Party, to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party.
Without limiting the foregoing, to the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Governmental Lender, and each of its officers, officials, directors, employees, attorneys and agents ("City Indemnified Parties") against any Liability to which the City Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise, to the extent arising out of or based upon or in anyway relating to any declaration of taxability of interest on the Funding Loan or allegations (or regulatory inquiry) that interest on the Funding Loan is taxable for federal income tax purposes, except to thc extent such damages arc caused by the gross negligence or willful misconduct ofa City Indemnified Party.
Notwithstanding anything herein to the contrary, the Borrower's indemnification obligations to the parties specified in Section 9.1.4 hereof with respect to any securitization or Secondary Market Transaction described in Article IX hereof shall be limited to the indemnity set forth in Section 9.1.4 hereof. In thc event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party (which notice shall be timely given so as not to materially impair the Borrower's right lo defend), shall assume thc investigation and defense thereof, including the employment of counsel reasonably approved by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in ils sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement, which approval shall not be unreasonably withheld. Each Indemnified Parly shall have the right to employ separate counsel in any such action or proceeding and to participate in the investigation and defense thereof; provided, however, the Governmental Lender shall have the absolute right to employ separate counsel at the expense ofthe Borrower. The Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense ofthe Borrower if and only if in such Indemnified Party's good faith judgment (based on the advice of counsel) a conflict of interest exists or could arise by reason of common representation, excepl that thc Borrower shall always pay the reasonable fees and expenses of the Governmental Lender's separate counsel.
Notwithstanding any transfer of the Projects to another owner in accordance with the provisions of this Borrower Loan Agreement or thc Regulatory Agreement, the Borrower shall remain obligated to indemnify each Indemnified Party pursuant to this Section 5.15 if such subsequent owner fails to indemnify any party entitled to be indemnified hereunder, unless the Governmental Lender and the Funding Lender have consented to such transfer and to the assignment ofthe rights and obligations ofthe B o n o wc r h e rc u n d e r.
The rights of any persons to indemnity and the right to payment of fees and reimbursement of expenses hereunder shall survive the final payment or defeasance ofthe Borrower Loan and the Funding Loan and in thc case ofthe Servicer, any resignation or removal. The provisions of this Section 5.15 shall survive the termination ofthis Borrower Loan Agreement.
Nothing in this Section 5.15 shall in any way limit the Borrower's indemnification and other payment obligations set forth in the Regulatory Agreement.
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Section 5.16. No Warranty of Condition or Suitability by the Governmental Funding Lender. Neither the Governmental Lender nor the Funding Lender makes any warranty, either express or implied, as to the condition ofthe Projects or that it will be suitable for the Borrower's purposes or needs.
Section 5.17. Right of Access to the Project. The Borrower agrees that thc Governmental Lender, the Funding Lender, the Servicer and the Construction Consultant, and their duly authorized agents, attorneys, experts, engineers, accountants and representatives shall have the right, but no obligation at all reasonable times during business hours and upon reasonable notice, to enter onto the Land (a) to examine, test and inspect the Projects without material interference or prejudice to the Borrower's operations and (b) to perform such work in and about the Projects made necessary by reason of the Borrower's default under any of the provisions of this Borrower Loan Agreement. The Governmental Lender, the Funding Lender, the Servicer, and their duly authorized agents, attorneys, accountants and representatives shall also be permitted, without any obligation to do so, at all reasonable times and upon reasonable notice during business hours, to examine the books and records of the Borrower with respect to the Project.
Section 5.18. Notice of Default. The Borrower will advise the Governmental Lender, the Funding Lender, and the Servicer promptly in writing ofthe occurrence ofany Potential Default or Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto.
Section 5.19. Covenant with Governmental Lender and Funding Lender. Thc Borrower agrees lhat this Borrower Loan Agreement is executed and delivered in part to induce thc purchase by others ofthe Governmental Lender Note and, accordingly, all covenants and agreements ofthe Borrower contained in this Borrower Loan Agreement arc hereby declared to be for thc benefit of thc Governmental Lender, the Funding Lender and any lawful owner, holder or pledgee of the Borrower Note or the Governmental Lender Note from time to time.
Section 5.20. Obligation of the Borrower to Construct the Project. The Borrower shall proceed with reasonable dispatch to construct, as appropriate, and equip the Project. Ifthe proceeds of the Borrower Loan, together with the Other Borrower Moneys, available to be disbursed to the Borrower are not sufficient to pay the costs of such construction, as appropriate, and equipping, the Borrower shall pay such additional costs from its own funds. The Borrower shall not be entitled to any reimbursement from the Governmental Lender, the Funding Lender or the Servicer in respect ofany such costs or to any diminution or abatement in the repayment of the Borrower Loan. The Governmental Lender and the Funding Lender shall not be liable to the Borrower or any other person if for any reason the Projects is not completed or ifthe proceeds ofthe Borrower Loan are insufficient to pay all costs ofthe Project. The Governmental Lender and thc Funding Lender do not make any representation or warranty, either express or implied, that moneys, if any, which will be made available to the Borrower will be sufficient to complete the Project, and the Governmental Lender and thc Funding Lender shall not be liable to the Borrower or any other person if for any reason the Projects is not completed.
Section 5.21. Maintenance of Insurance. Borrower will maintain the insurance required by the Security Instrument.
Section 5.22. Information; Statements and Reports. Borrower shall furnish or cause to be furnished to Governmental Lender and Funding Lender:
Notice of Default. As soon as possible, and in any event not later than live (5) Business Days after the occurrence ofany Event of Default or Potential Default, a statement of an
Authorized Representative of Borrower describing the details of such Event of Default or Potential Default and any curative action Borrower proposes to take;
Financial Statements; Rent Rolls. In the manner and to the extent required under the Security Instrument, such financial statements, expenses statements, rent rolls, reports and other financial documents and information as required by the Security Instrument and the other Borrower Loan Documents and Funding Loan Documents, in the form and within the time periods required therein;
General Partner. As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of General Partner, copies ofthe financial statements of General Partner as of such date, prepared in substantially the form previously delivered to the Governmental Lender and Funding Lender and in a manner consistent therewith, or in such form (which may include a form prepared in accordance with GAAP) as Funding Lender may reasonably request;
Leasing Reports. Prior to the Conversion Date, On a monthly basis (and in any event within fifteen (15) days after the end of each Calendar Month), a report of all efforts made by Borrower, if any, to lease all or any portion ofthe Projects during such Calendar Month and on a cumulative basis since Projects inception, which report shall be prepared and delivered by Borrower, shall be in form and substance satisfactory to Funding Lender, and shall, if requested by Funding Lender, be supported by copies of letters of intent, leases or occupancy agreements, as applicable;
Audit Reports. Promptly upon receipt thereof, copies of all reports, if any, submitted to Borrower by independent public accountants in connection with each annual, interim or special audit ofthe financial statements of Borrower made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit;
Notices; Certificates or Communications. Immediately upon giving or receipt thereof, copies ofany notices, certificates or other communications delivered at the Projects or to Borrower or General Partner naming Governmental Lender or Funding Lender as addressee or which could reasonably be deemed to affect the structural integrity ofthe Projects or the ability of Borrower to perform its obligations under thc Borrower Loan Documents and the Funding Loan Documents;
Certification of Non-Foreign Status. Promptly upon request of Funding Lender from time to time, a Certification of Non-Foreign Status, executed on or after thc date of such request by Funding Lender;
Compliance Certificates. Together with each ofthe documents required pursuant to Section 5.22(b) hereof submitted by or on behalf of Borrower, a statement, in form and substance satisfactory to Funding Lender and certified by an Authorized Borrower Representative, to the effect that Borrower is in compliance with all covenants, terms and conditions applicable to Borrower, under or pursuant to the Borrower Loan Documents and the Funding Loan Documents and under or pursuant to any other Debt owing by Borrower to any Person, and disclosing any noncompliance therewith, and any Event of Default or Potential Default, and describing the status of Borrower's actions to correct such noncompliance, Event of Default or Potential Default, as applicable; and
fi) Other Items and Information. Such other information concerning the assets, business, finaneial condition, operations, property, prospects and results of operations of Borrower. General Partner, Guarantor or the Project, as funding Lender or Governmental Lender reasonably requests from time to time.
Section 5.23. Additional Notices. Borrower will, promptly after becoming aware thereof, give notice to Funding Lender and the Governmental Lender of:
any Lien affecting the Project, or any part thereof, other than Liens expressly permitted under this Borrower Loan Agreement;
any Legal Action which is instituted by or against Borrower, General Partner or Guarantor, or any Legal Action which is threatened against Borrower, General Partner or Guarantor which, in any case, if adversely determined, could have a material adverse effect upon the business, operations, properties, prospects, assets, management, ownership or condition (financial or otherwise) of Borrower, General Partner, Guarantor or the Project;
any Legal Action which constitutes an Event of Default or a Potential Default or a default under any other Contractual Obligation to which Borrower, General Partner or Guarantor is a party or by or to which Borrower, General Partner or Guarantor, or any of their respective properties or assets, may be bound or subject, which default would have a material adverse effect on the business, operations, assets (including the Project), condition (financial or otherwise) or prospects of Borrower, General Partner or Guarantor, as applicable;
any default, alleged default or potential default on the part of Borrower under any ofthe CC&R's (together with a copy of each notice of default, alleged default or potential default received from any other party thereto);
any notice of default, alleged default or potential default on the part of Borrower received from any tenant or occupant of thc Projects under or relating to its lease or occupancy agreement (together with a copy of any such notice), if, in the aggregate, notices from at least fifteen percent (15%) ofthe tenants at the Projects have been received by Borrower with respect to, or alleging, the same default, alleged default or potential default;
any change or contemplated change in (i) thc location of Borrower's, or General Partner's executive headquarters or principal place of business; (ii) the legal, trade, or fictitious business names used by Borrower or General Partner; or (iii) the nature ofthe trade or business of Borrower; and
any default, alleged default or potential default on the part of any general or limited partner (including, without limitation, General Partner and thc Equity Investor) under the Pa rt nci s h i p A grce me n t.
Section 5.24. Compliance with Other Agreements; Legal Requirements.
(a) Borrower shall timely perform and comply with, and shall cause General Partner to timely perform and comply with the covenants, agreements, obligations and restrictions imposed on them under the Partnership Agreement, and Borrower shall not do or permit to be done anything to impair any such party's rights or interests under any ofthe foregoing.
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(b) Borrower will comply and. to the extent it is able, will require others lo comply with, all Legal Requirements of all Governmental Authorities having jurisdiction over the Projects or construction ofthe Improvements, and will furnish Funding Lender with reports of any official searches for or notices of violation of any requirements established by such Governmental Authorities. Borrower will comply and, to the extent it is able, will require others to comply, with applicable CC&R's and all restrictive covenants and all obligations created by private contracts and leases which affect ownership, construction, equipping, lixturing, use or operation ofthe Project, and all other agreements requiring a certain percentage ofthe Units to be rented to persons of low or moderate income. The Improvements, when completed, shall comply with all applicable building, zoning and other Legal Requirements, and will not violate any restrictions of record against the Projects or the terms ofany other lease of all or any portion of the Project. Funding Lender shall at all times have the right to audit, at Borrower's expense, Borrower's compliance with any agreement requiring a certain percentage of the Units to be rented to persons of low or moderate income, and Borrower shall supply all such informalion with respect thereto as Funding Lender may request and otherwise cooperate with Funding Lender in any such audit. Without limiting the generality of the foregoing, Borrower shall properly obtain, comply with and keep in effect (and promptly deliver copies lo Funding Lender ol) all permits, licenses and approvals which are required to be obtained from Governmental Authorities in order to construct, occupy, operate, market and lease the Project.
Section 5.25. Completion and Maintenance of Project. Borrower shall cause the construction, as the case may be. ofthe Improvements, lo be prosecuted with diligence and continuity and completed substantially in accordance with the Plans and Specifications, and in accordance with the Construction Funding Agreement, free and clear ofany liens or claims for liens (but without prejudice to Borrower's rights of contest under Section 10.16 hereof) ("Completion") on or before thc Completion Date. Borrower shall thereafter maintain the Projects and the related and appurtenant uses as a residential apartment complex in good order and condition, ordinary wear and tear excepted. A maintenance program shall be in place at all times to assure the continuation of first class maintenance, which shall mean and be no less than the highest quality of maintenance provided by thc Property General Partner for similarly situated properties managed by the Property General Partner.
Section 5.26. Fixtures. Borrower shall deliver to Funding Lender, on demand, any contracts, bills of sale, statements, receipted vouchers or agreements under which Borrower or any other Person claims title to any materials, fixtures or articles incorporated into the Improvements.
Section 5.27. Income from Project. Borrower shall first apply all Gross Income to Expenses ofthe Project, including all amounts then required to be paid under the Borrower Loan Documents and thc Funding Loan Documents and thc funding of all sums necessary to meet thc Replacement Reserve Fund Requirement before using or applying such Gross Income for any other purpose. Prior to thc Conversion Date, Borrower shall not make or permit any distributions or other payments of Net Operating Income to its partners, shareholders or members, as applicable, in each case, without the prior Written Consent of Funding Lender (which prohibition shall not be in force after the Conversion Date).
Section 5.28. Leases and Occupancy Agreements.
(a) Lease Approval.
(i) If requested by Permanent Funding Lender, Borrower shall submit to Permanent Funding Lender Borrower's standard form of tenant lease (the "Tenant Lease Form") for use in the Project. Borrower shall not materially modify the Tenant Lease Form without Permanent Funding Lender's prior Written Consent in each instance, which
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consent shall not be unreasonably withheld or delayed. Borrower may enter into leases of space within the Improvements (and amendments to such leases) in the ordinary course of business with bona fide third party tenants without Permanent funding Lender's prior Written Consent if:
(A) The Tenant Lease Form is a Permitted Lease, and is executed in thc form previously approved by Permanent Funding Lender without m a t e r i a 1 m od i fi c a t i o n;
Borrower, acting in good faith following the exercise of due diligence, has determined that the tenant meets requirements imposed under any applicable CC&R and is financially capable of performing all of its obligations under the Tenant Lease Form; and
The Tenant Lease Form conforms to the Rent Schedule attached as an exhibit to the Construction Funding Agreement and reflects an arm's-length transaction, subject to the requirement that the Borrower comply with any applicable CC&R.
If any Event of Default has occurred and i.s continuing, Funding Lender may make written demand on Borrower to submit all future leases for Funding Lender's approval prior to execution. Borrower shall comply with any such demand by Funding Lender.
No approval of any lease by Funding Lender shall be for any purpose other than to protect Funding Lender's security for the Borrower Loan and to preserve Funding Lender's rights under the Borrower Loan Documents and the Funding Loan Documents. No approval by Funding Lender shall result in a waiver of any default of Borrower. In no event shall any approval by Funding Lender of a lease be a representation ofany kind with regard to the lease or its enforceability, or the financial capacity ofany tenant or guarantor.
Obligations. Borrower shall perform all obligations required lo be performed by it as landlord under any lease affecting any part of the Projects or any space within thc Improvements.
Leasing and Marketing Agreements. Except as may be contemplated in the Management Agreement with the Property General Partner, Borrower shall not without thc approval of Funding Lender enter into any leasing or marketing agreement and Funding Lender reserves the right to approve the qualifications ofany marketing or leasing agent.
Section 5.29. Projects Agreements and Licenses. To the extent not heretofore delivered to Funding Lender, Borrower will furnish to Funding Lender, as soon as available, true and correct copies of all Projects Agreements and Licenses and thc Plans and Specifications, together with assignments thereof to funding Lender and consents to such assignments where required by Funding Lender, all in form and substance acceptable to Funding Lender. Neither Borrower nor General Partner has assigned or granted, or will assign or grant, a security interest in any of the Projects Agreements and Licenses, other than to Funding Lender.
Section 5.30. Payment of Debt Payments. In addition to its obligations under the Borrower Note. Borrower will (i) duly and punctually pay or cause to be paid all principal of and interest on any
Debt of Borrower as and when the same become due on or before the due date; (ii) comply with and perform all conditions, terms and obligations of other instruments or agreements evidencing or securing such Debt; (iii) promptly inform Funding Lender ofany default, or anticipated default, under any such note, agreement, instrument: and (iv) forward to Funding Lender a copy ofany notice of default or notice of any event that might result in default under any such note, agreement, instrument, including Liens encumbering the Project, or any portion thereof, which have been subordinated to the Security Instrument (regardless of whether or not permitted under this Borrower Loan Agreement).
Section 5.31. ERISA. Borrower will comply, and will cause each of its ERISA Affiliates to comply, in all respects with the provisions of ERISA.
Section 5.32. Patriot Act Compliance. Borrower shall use its good faith and commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Project, including those relating to money laundering and terrorism. Funding Lender shall have the right to audit Borrower's compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Project, including those relating to money laundering and terrorism. In thc event that Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Funding Lender may, at its option, cause Borrower to comply therewith and any and all costs and expenses incurred by Funding Lender in connection therewith shall be secured by the Security Instrument and shall be immediately due and payable.
Section 5.33. Funds from Equity Investor. Borrower shall cause the Equity Investor to fund all installments ofthe Equity Contributions in the amounts and at the times subject and according to the terms of the Partnership Agreement.
Section 5.34. Tax Covenants. The Borrower further represents, warrants and covenants as
follows:
(a) General. The Borrower shall not take any action or omit lo take any action which, if taken or omitted, respectively, would adversely affect the exclusion of inlcrcsl on the Governmental Lender Note from gross income (as defined in Section 61 ofthe Code), for federal income tax purposes and, if it should take or permit any such action, the Borrower will take all lawful actions that it can take to rescind such action promptly upon having knowledge thereof and that the Borrower will take such action or actions, including amendment ofthis Borrower Loan Agreement, the Security Instrument and the Regulatory Agreement, as may be necessary, in the opinion of Tax Counsel, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service applicable to the Governmental Lender Note, the Funding Loan or affecting the Project. Capitalized terms used in this Section 5.34 shall have the respective meanings assigned to them in the Regulatory Agreement or, if not defined therein, in the Funding Loan Agreement. With the intent not to limit the generality of Ihe foregoing, the Borrower covenants and agrees that, prior to the final maturity ofthe Governmental Lender Note, unless it has received and filed with the Governmental Lender and the Funding Lender a Tax Counsel No Adverse Effect Opinion (other than with respect to interest on any portion of the Governmental Lender Note for a period during which such portion ofthe Governmental Lender Note is held by a "substantial user" of any facility financed with the proceeds of the Governmental Lender Note or a "related person," as such terms are used in Section 147(a) ofthe Code), the Borrower will comply with this Section 5.34.
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(b) Use of Proceeds. The use of lhe net proceeds ofthe Funding Loan at all times will satisfy the following requirements:
Limitation on Net Proceeds. At least 95% ofthe net proceeds ofthe funding Loan (within the meaning ofthe Code) actually expended shall be used to pay Qualified Projects Costs that are costs ofa "qualified residential rental project'' (within the meaning of Sections 142(a)(7) and 142(d) of thc Code) and property that is "functionally related and subordinate" thereto (within the meaning of Sections 1.103-8(a)(3) and 1.103-8(b)(4)(iii) ofthe Regulations).
Limit on Costs of Funding. The proceeds ofthe Funding Loan will be expended for the purposes set forth in this Borrower Loan Agreement and in the Funding Loan Agreement and no portion thereof in excess of two percent ofthe proceeds ofthe Funding Loan, within the meaning of Section 147(g) ofthe Code, will be expended to pay Costs of Funding ofthe Funding Loan.
Prohibited Facilities. The Borrower shall not use or permit the use of any proceeds ofthe Funding Loan or any income from the investment thereof to provide any airplane, skybox, or other private luxury box, health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.
Limitation on Land. Less than 25 percent of the net proceeds of the Funding Loan actually expended will be used, directly or indirectly, for the acquisition of land or an interest therein, nor will any portion ofthe net proceeds ofthe Funding Loan be used, directly or indirectly, for the acquisition of land or an interest therein to be used for farming purposes.
Limitation on Existing Facilities. No portion of the net proceeds of the Funding Loan will be used for thc acquisition of any existing property or an interest therein unless (A) the first use of such property is pursuant to such acquisition or (B) the expenditures with respect to any building and thc equipment therefor equal or exceed 15 percent ofthe cost of acquiring such building financed with thc proceeds ofthe Funding Loan (with respect to structures other than buildings, this clause shall be applied by substituting 100 percent for 15 percent). For purposes ofthe preceding sentence, thc term "expenditures" shall have the meaning set forth in Section 147(d)(3) ofthe Code.
Accuracy of Information, lhe information furnished by thc Borrower and used by the Governmental Lender in preparing ils certifications with respect to Section 148 ofthe Code and thc Borrower's information statement pursuant to Section 149(c) ofthe Code is accurate and complete as ofthe date of origination ofthe Funding Loan.
Limitation of Projects Expenditures. The acquisition, construction and equipping ofthe Projects were not commenced (within the meaning of Section 144(a) of the Code) prior to the 60th day preceding the adoption of thc resolution of the Governmental Lender with respect to the Projects on December 10, 2014, and no obligation for which reimbursement will be sought from proceeds ofthe Funding Loan relating to the acquisition, construction or equipping ofthe Projects was paid or incurred prior lo 60 days prior to such date, except for permissible "preliminary expenditures", which include architectural, engineering surveying, soil testing, reimbursement bond
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issuance and similar costs incurred prior to the commencement of construction or acquisition ofthe Project, and which do not exceed 20% ofthe aggregate issue price of the Governmental Lender Note.
(viii) Qualified Costs. The Borrower hereby represents, covenants and warrants that the proceeds ofthe funding Loan shall be used or deemed used exclusively to pay costs which arc (A) capital expenditures (as defined in Section 1.150-1 (b) ofthe Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code and that for the greatest number of buildings the proceeds ofthe Governmental Lender Note shall be deemed allocated on a pro rata basis to each building in the Projects and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%i) or more by the proceeds of the Governmental Lender Note for the purpose of complying with Section 42(h)(4)(B) of the Code; provided however, the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its partners and neither the funding Lender nor the Governmental Lender shall have any obligation to enforce this statement nor shall they incur any liability to any person, including without limitation, thc Borrower, the partners of the Borrower, any other affiliate ofthe Borrower or the holders or payees of the Governmental Lender Note and the Borrower Note for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or event of default under this Borrower Loan Agreement or the Funding Loan Agreement.
(c) . Limitation on Maturity, l he average maturity of the Governmental Lender Note
does not exceed 120 percent ofthe average reasonably expected economic life ofthe Projects to
be financed by the Funding Loan, weighted in proportion to the respective cost of each item
comprising the property the cost of which has been or will be financed, directly or indirectly, with
thc Net Proceeds of the Funding Loan. For purposes of thc preceding sentence, the reasonably
expected economic life of property shall be determined as ofthe later of (A) thc Closing Date for
thc Funding Loan or (B) the date on which such property is placed in service (or expected to be
placed in service). In addition, land shall not be taken into account in determining the reasonably
expected economic life of property.
(d) No Arbitrage. The Borrower shall not take any action or omit to take any action
with respect to the Gross Proceeds ofthe Governmental Lender Note or ofany amounts expected
lo be used to pay the principal thereof or the interest thereon which, if taken or omitted,
respectively, would cause the Governmental Lender Note to be classified as an "arbitrage bond"
within the meaning of Section 148 of the Code. Except as provided in the Funding Loan
Agreement and this Borrower Loan Agreement, the Borrower shall not pledge or otherwise
encumber, or permit the pledge or encumbrance ol". any money, investment, or investment
property as security for payment ofany amounts due under this Agreement or the Borrower Note
relating to the Governmental Lender Note, shall not establish any segregated reserve or similar
fund for such purpose and shall not prepay any such amounts in advance ofthe redemption date
of an equal principal amount ofthe Governmental Lender Note, unless the Borrower has obtained
in each case a Tax Counsel No Adverse Effect Opinion with respect to such action, a copy of
which shall be provided to the Governmental Lender and the Funding Lender. T he Borrower
shall not, al any lime prior to the final maturity ofthe Governmental Lender Note, invest or cause
any Gross Proceeds to be invested in any investment (or to use Gross Proceeds to replace money
so invested), if. as a result of such investment thc Yield of all investments acquired with Gross
Proceeds (or with money replaced thereby ) on or prior to thc date of such investment exceeds the
Yield ofthe Governmental Lender Note to the Maturity Date, except as permitted by Section 148 of the Code and Regulations thereunder or as provided in the Regulatory Agreement. The Borrower further covenants and agrees that it will comply with all applicable requirements of said Section 148 and the rules and Regulations thereunder relating to the Governmental Lender Note and the interest thereon, including the employment of a Rebate Analyst acceptable to the Governmental Lender and funding Lender at all times from and after the Closing Dale for the calculation of rebatable amounts to lhe United Slates Treasury Department. The Borrower agrees that it will cause the Rebate Analyst to calculate the rebatable amounts not later than forty-five days after the fifth anniversary ofthe Closing Date and each five years thereafter and not later than forty-five days after the final Computation Date and agrees that the Borrower will pay all costs associated therewith. The Borrower agrees to provide evidence ofthe employment ofthe Rebate Analyst satisfactory to the Governmental Lender and funding Lender.
(e) No Federal Guarantee. F.xccpt to the extent permitted by Section 149(b) ofthe Code and the Regulations and rulings thereunder, the Borrower shall not take or omit to take any action which would cause the Governmental Lender Note to be "federally guaranteed" within the meaning of Section 149(b) of the Code and the Regulations and rulings thereunder.
(!) Representations. The Borrower has supplied or caused to be supplied to Tax Counsel all documents, instruments and written information requested by Tax Counsel, and all such documents, instruments and written information supplied by or on behalf of thc Borrower al the request of Tax Counsel, which have been reasonably relied upon by Tax Counsel in rendering its opinion with respect to the exclusion from gross income of thc interest on the Governmental Lender Note for federal income lax purposes, are true and correct in all material respects, do not contain any untrue statement of a material fact and do not omit to slate any material fact necessary to be stated therein in order to make the information provided therein, in light ofthe circumstances under which such information was provided, not misleading, and the Borrower is not aware ofany other pertinent information which fax Counsel has not requested.
Qualified Residential Rental Project. The Borrower hereby covenants and agrees that the Projects will be operated as a "qualified residential rental project" within the meaning of Section 142(d) ofthe Code, on a continuous basis during the longer ofthe Qualified Projects Period (as defined in the Regulatory Agreement) or any period during which any portion ofthe Governmental Lender Note remains outstanding, to the end that the interest on the Governmental Lender Note shall be excluded from gross income for federal income tax purposes. The Borrower hereby covenants and agrees, continuously during the Qualified Projects Period, to comply with all the provisions ofthe Regulatory Agreement.
Information Reporting Requirements. The Borrower will comply with the information reporting requirements of Section 149(e)(2) ofthe Code requiring certain information regarding the Governmental Lender Note to be filed with the Internal Revenue Service within prescribed lime limits.
(i) Governmental Lender Note Not a Fledge Bond. Thc Borrower covenants and
agrees that not more than 50% ofthe proceeds ofthe Governmental Lender Note will be invested
in Nonpurpose Investments having a substantially guaranteed Yield for four years or more within
the meaning of Section 149(f)(3)(A)(ii) ofthe Code, and the Borrower reasonably expects that at
least 85% ofthe spendable proceeds ofthe Governmental Lender Note will be used to carry out
thc governmental purposes of thc Governmental Lender Note within thc three-year period
beginning on the Closing Date.
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(j) Termination of Restrictions. Although the parties hereto recognize that, subject to the provisions ofthe Regulatory Agreement, the provisions ofthis Borrower Loan Agreement shall terminate in accordance with Section 10.14 hereof, the parties hereto recognize that pursuant to the Regulatory Agreement, certain requirements, including the requirements incorporated by reference in this Section, may continue in effect beyond the term hereof.
(k) Public Approval. The Borrower covenants and agrees that the proceeds of thc Governmental Lender Note will not be used in a manner that deviates in any substantial degree from the Projects described in the written notice ofa public hearing regarding thc Governmental Lender Note.
(I) 4.0/60 Test Election. The Borrower and thc Governmental Lender hereby elect to apply the requirements of Section 142(d)(1)(B) to the Project. The Borrower hereby represents, covenants and agrees, continuously during the Qualified Projects Period, to comply with all thc provisions ofthe Regulatory Agreement.
(m) Modification of fax Covenants. Subsequent to the origination of the Funding Loan and prior to its payment in full (or provision for the payment thereof having been made in accordance with the provisions ofthe Funding Loan Agreement), this Section 5.34 hereof may not be amended, changed, modified, altered or terminated except as permitted herein and by the Funding Loan Agreement and with the Written Consent of the Governmental Lender and the Funding Lender. Anything contained in this Agreement or the Funding Loan Agreement to the contrary notwithstanding, the Governmental Lender, the Funding Lender and the Borrower hereby agree to amend this Borrower Loan Agreement and, if appropriate, the Funding Loan Agreement and the Regulatory Agreement, to the extent required, in the opinion of Tax Counsel, in order for interest on the Governmental Lender Note to remain excludable from gross income for federal income tax purposes. The party requesting such amendment, which may include the Funding Lender, shall notify thc other parties to this Borrower Loan Agreement ofthe proposed amendment and send a copy of such requested amendment to Tax Counsel. After review of such proposed amendment, fax Counsel shall render to thc Funding Lender and the Governmental Lender an opinion as to thc effect of such proposed amendment upon thc ineligibility of interest on thc Governmental Lender Note in the gross income of lhe recipient thereof for federal income tax purposes. The Borrower shall pay all necessary fees and expenses incurred with respect to such amendment. The Borrower, thc Governmental Lender and, where applicable, thc Funding Lender per written instructions from the Governmental Lender shall execute, deliver and, if applicable, the Borrower shall file of record, any and all documents and instruments, including without limitation, an amendment to the Regulatory Agreement, with a file-stamped copy to thc Funding Lender, necessary to effectuate thc intent of this Section 5.34, and the Borrower and the Governmental Lender hereby appoint the Funding Lender as their true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of thc Borrower or the Governmental Lender, as is applicable, any such document or instrument (in such form as may be approved by and upon instruction of Tax Counsel) if either the Borrower or the Governmental Lender defaults in thc performance of its obligation under this Section 5.34; provided, however, that the Funding Lender shall take no action under this Section 5.34 without first notifying the Borrower or the Governmental Lender, as is applicable, of its intention to take such action and providing the Borrower or the Governmental Lender, as is applicable, a reasonable opportunity to comply with thc requirements ofthis Section 5.34.
Thc Borrower irrevocably authorizes and directs the Funding Lender and any other agent designated by the Governmental Lender to make payment of such amounts from funds of thc Borrower, if any, held by the Funding Lender, or any agent ofthe Governmental Lender or the
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Funding Lender. The Borrower further covenants and agrees that, pursuant to the requirements of Treasury Regulation Section 1.148-1(b). it (or any related person contemplated by such regulations) will not purchase interests in the Governmental Lender Note in an amount related to the amount ofthe Borrower Loan.
Section 5.35. Payment of Rebate.
(a) Arbilragc Rebate. Thc Borrower agrees to take all steps necessary to compute and pay any rebatable arbitrage relating to the Funding Loan or the Governmental Lender Note in accordance with Section 148(f) ofthe Code including:
Delivery of Documents and Money on Computation Dates. The Borrower will deliver to the Servicer, within 55 days after each Computation Date:
a statement, signed by the Borrower, stating the Rebate Amount as of such Computation Date;
if such Computation Date is an Installment Computation Date, an amount that, together with any amount then held for the credit of thc Rebate Fund, is equal to at least 90% of the Rebate Amount as of such Installment Compulation Date, less any "previous rebate payments" made to the United States (as that term is used in Section 1.148-3(0(1) ofthe Regulations), or (2) if such Computation Date is the final Computation Date, an amount that, together with any amount then held for the credit of the Rebate Fund, is equal to the Rebate Amount as of such final Computation Date, less any "previous rebate payments" made to the United States (as that term is used in Section 1.148-3(f)( 1) ofthe Regulations); and
an Internal Revenue Service Form 8038-T properly signed and completed as of such Computation Date.
Correction of Underpayments. If the Borrower shall discover or be notified as ofany date that any payment paid to the United States Treasury pursuant to this Section 5.35 of an amount described in Section 5.35(a)(i)(A) or (B) above shall have failed to satisfy any requirement of Section 1.148-3 ofthe Regulations (whether or not such failure shall be due to any default by the Borrower, the Governmental Lender or the Funding Lender), the Borrower shall (I) pay to the Servicer (for deposit to the Rebate Fund) and cause the Servicer to pay to the United States Treasury from thc Rebate Fund the underpayment ofthe Rebate Amount, together with any penalty and/or interest due, as specified in Section I.I48-3(h) ofthe Regulations, within 175 days after any discovery or notice and (2) deliver to the Servicer an Internal Revenue Service Form 8038-T' completed as of such dale. If such underpayment ofthe Rebate Amount, together with any penalty and/or interest due, is not paid to the United States Treasury in the amount and manner and by the time specified in the Regulations, the Borrower shall take such steps as are necessary to prevent the Governmental Lender Note from becoming an arbitrage bond within the meaning of Section 148 ofthe Code.
Records, 'flic Borrower shall retain all of its accounting records relating to the funds established under this Borrower Loan Agreement and all calculations made in preparing lhe statements described in this Section 5.35 for at least six years after the
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later ofthe final maturity ofthe Governmental Lender Note or the date the funding Loan is retired in full.
Costs. The Borrower agrees to pay all ofthe fees and expenses ofa nationally recognized "fax Counsel, the Rebate Analyst, a certified public accountant and any other necessary consultant employed by thc Borrower or the funding Lender in connection with computing the Rebate Amount.
No Diversion of Rebatable Arbitrage. Thc Borrower will not indirectly pay any amount otherwise payable to thc federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the Gross Proceeds ofthe funding Loan which is not purchased at fair Market Value or includes terms that the Borrower would not have included ifthe funding Loan were not subject to Section 148(f) ofthe Code.
Modification of Requirements. If at any time during the term of this Agreement, the Governmental Lender, the Funding Lender or the Borrower desires to take any action which would otherwise be prohibited by the terms of this Section 5.35, such Person shall be permitted to take such action if it shall first obtain and provide to the other Persons named herein a Tax Counsel No Adverse Effect Opinion with respect lo such action.
Rebate fund. The Servicer shall establish and hold a separate fund designated as the "Rebate fund." The Servicer shall deposit or transfer to the credit of the Rebate Fund each amount delivered to the Servicer by the Borrower for deposit thereto and each amount directed by the Borrower to be transferred thereto.
Within 15 days after each receipt or transfer of funds to the Rebate fund, thc Servicer shall withdraw from the Rebate Fund and pay to the United States of America the entire balance ofthe Rebate fund.
All payments to the United States of America pursuant to this Section 5.35 shall be made by the Servicer for thc account and in thc name ofthe Governmental Lender and shall be paid through the United States Mail (return receipt requested or overnight delivery), addressed to thc appropriate Internal Revenue Service Center and accompanied by the appropriate Internal Revenue Service forms (such forms to be provided to the Servicer by the Borrower or the Rebate Analyst as set forth in this Section 5.35).
The Borrower shall preserve all statements, forms and explanations received delivered pursuant this Section 5.35 and all records of transactions in the Rebate Fund until six years after the retirement ofthe Funding Loan.
Moneys and securities held in the Rebate Fund shall not be deemed funds ofthe Funding Lender or ofthe Governmental Lender and are not pledged or otherwise subject to any security interest in favor of the Funding Lender lo secure the Funding Loan or any other obligations.
Notwithstanding anything to the contrary in this Borrower Loan Agreement, no payment shall be made to the United States if the Borrower shall furnish to the Governmental Lender and the Funding Lender an opinion of Tax Counsel to the effect that such payment is not required under Section 148(d) and (f) ofthe Code in order to maintain the exclusion from gross
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income for federal income tax purposes of interest on the Governmental Lender Note. In such event, the Borrower shall be entitled to withdraw funds from the Rebate Fund to the extent the Borrower shall provide a Tax Counsel No Adverse Effect Opinion to the Governmental Lender and the Funding Lender with respect to such withdrawal.
(h) Notwithstanding the foregoing, the computations and payments of rebate amounts referred to in this Section 5.35 need not be made to the extent that neither the Governmental Lender nor the Borrower will thereby fail to comply with any requirements of Section 148(f) ofthe Code based on a Tax Counsel No Adverse Effect Opinion, a copy of which shall be provided to the Funding Lender.
Section 5.36. Covenants under Funding Loan Agreement. The Borrower will fully and faithfully perform all the duties and obligations which the Governmental Lender has covenanted and agreed in thc Funding Loan Agreement to cause the Borrower to perform and any duties and obligations which the Borrower is required in the Funding Loan Agreement to perform. The foregoing will not apply to any duty or undertaking of the Governmental Lender which by its nature cannot be delegated or assigned.
Section 5.37. Notice of Default. The Borrower will advise thc Governmental Lender, the Funding Lender, and thc Servicer promptly in writing ofthe occurrence ofany Potential Default or Event of Default hereunder, specifying thc nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto.
Section 5.38. Continuing Disclosure Agreement. The Borrower and the Funding Lender shall enter into the Continuing Disclosure Agreement to provide for the continuing disclosure of information about the Governmental Lender Note, the Borrower and other matters as specifically provided for in such agreement.
ARTICLE VI NEGATIVE COVENANTS
Borrower hereby covenants and agrees as follows, which covenants shall remain in effect so long as any Payment Obligation or other obligation of Borrower under any of thc other Borrower Loan Documents or the Funding Loan Documents remains outstanding or unperformed. Borrower covenants and agrees that it will not, directly or indirectly:
Section 6.1. Management Agreement. Without first obtaining the Funding Lender's prior Written Consent, enter into thc Management Agreement, and thereafter thc Borrower shall not, without the Funding Lender's prior Written Consent (which consent shall not be unreasonably withheld) and subject to thc Regulatory Agreement: (i) surrender, terminate or cancel the Management Agreement or otherwise replace the Property General Partner or enter into any other management agreement; (ii) reduce or consent to the reduction of the term of the Management Agreement: (iii) increase or consent lo the increase ofthe amount ofany charges under the Management Agreement; (iv) otherwise modify, change, supplement, alter or amend in any material respect, or waive or release in any material respect any of its rights and remedies under, thc Management Agreement; or (v) suffer or permit the occurrence and continuance ofa default beyond any applicable cure period under the Management Agreement (or any successor management agreement) if such default permits the Property General Partner to terminate the Management Agreement (or such successor management agreement).
Section 6.2. Dissolution. Dissolve or liquidate, in whole or in part, merge with or consolidate into another Person.
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Section 6.3. Change in Business or Operation of Property. Enter into any line of business other than the ownership and operation ofthe Project, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business and activities incidental or related thereto or otherwise cease to operate the Projects as a multi-family property or terminate such business for any reason whatsoever (other than temporary cessation in connection with construction, as appropriate, ofthe Project).
Section 6.4. Debt Cancellation. Cancel or otherwise forgive or release any claim or debt owed to the Borrower by a Person, except for adequate consideration or in the ordinary course of the Borrower's business in its reasonable judgment.
Section 6.5. Assets. Purchase or own any real property or personal property incidental thereto other than the Project.
Section 6.6. Transfers. Make, suffer or permit the occurrence ofany Prohibited Transfer nor transfer any material License required for thc operation ofthe Project.
Section 6.7. Debt. Other than as expressly approved in writing by the funding Lender, create, incur or assume any indebtedness for borrowed money (including subordinate debt) whether unsecured or secured by all or any portion of the Projects or interest therein or in the Borrower or any partner thereof (including subordinate debt) other than (i) the Borrower Payment Obligations, (ii)the Subordinate Debt, (iii) secured indebtedness incurred pursuant to or permitted by the Borrower Loan Documents and the funding Loan Documents, and (iv) trade payables incurred in the ordinary course of business.
Section 6.8. Assignment of Rights. Without the Funding Lender's prior Written Consent, attempt to assign the Borrower's rights or interest under any Borrower Loan Document or Funding Loan Document in contravention ofany Borrower Loan Document or Funding Loan Document.
Section 6.9. Principal Place of Business. Change its principal place of business without providing 30 days' prior Written Notice ofthe change to the Funding Lender and the Servicer.
Section 6.10. Partnership Agreement. Without the Funding Lender's prior Written Consent (which consent shall not be unreasonably withheld) surrender, terminate, cancel, modify, change, supplement, alter or amend in any material respect, or waive or release in any material respect, any of its rights or remedies under the Partnership Agreement; provided, however, the consent of Funding Lender is not required for an amendment of the Partnership Agreement resulting solely from thc "Permitted Transfer" of partnership interests of Borrower as defined in and permitted by the Security Instrument.
Section 6.11. ERISA. Maintain, sponsor, contribute to or become obligated to contribute to. or suffer or permit any ERISA Affiliate of the Borrower to, maintain, sponsor, contribute to or become obligated to contribute to, any Plan, or permit the assets ofthe Borrower to become "plan assels," whether by operation of law or under regulations promulgated under ERISA.
Section 6.12. No Hedging Arrangements. Without the prior Written Consent ofthe Funding Lender, other than the Swap Obligations, or unless otherwise required by this Borrower Loan Agreement, thc Borrower will not enter into or guarantee, provide security for or otherwise undertake any form of contractual obligation with respect to any interest rate swap, interest rate cap or other arrangement that has the effect of an interest rate swap or interest rate cap or that otherwise (directly or indirectly, derivatively or synthetically) hedges interest rate risk associated with being a debtor of variable rate debt
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or any agreement or other arrangement to enter into any of (lie above on a future date or after the occurrence of one or more events in the future.
Section 6.13. Loans and Investments; Distributions; Related Party Payments.
Without the prior Written Consent of Funding Lender in each instance. Borrower shall not (i) lend money, make investments, or extend credit, other than in thc ordinary course of its business as presently conducted; or (ii) repurchase, redeem or otherwise acquire any interest in Borrower, any Affiliate or any other Person owning an interest, directly or indirectly, in Borrower, or make any distribution, in cash or in kind, in respect of interests in Borrower, any Affiliate or any other Person owning an interest, directly or indirectly, in Borrower (except to the extent permitted by the Security Instrument and subject to the limitations set forth in Section 5.27 hereof).
Disbursements for fees and expenses ofany Affiliate of Borrower and developer fees (however characterized) will only be paid to the extent that such fee or expense bears a proportionate relationship to the percentage of completion of tlie construction, as thc case may be, ofthe Improvements, as determined by thc Construction Consultant, and only after deducting the applicable Retainage. Lxccpt as otherwise permitted hereunder or by the Funding Lender, no Disbursements for the Developer Fee or any "deferred developer fees" shall be made prior to the Conversion Date.
Section 6.14. Amendment of Related Documents or CC&R's. Without the prior Written Consent of Funding Lender in each instance, except as provided herein. Borrower shall not enter into or consent to any amendment, termination, modification, or other alteration ofany ofthe Related Documents or any ofthe CC&R's (including, without limitation, those contained in the Borrower Loan Agreement, any Architect's Agreement or Lmgineer's Contract, any Construction Contract, and any Management Agreement, but excluding thc Partnership Agreement, which is covered by Section 6.10), or any assignment, transfer, pledge or hypothecation ofany of its rights thereunder, if any.
Section 6.15. Personal Property. Borrower shall not install materials, personal property, equipment or fixtures subject to any security agreement or other agreement or contract wherein the right is reserved to any Person other than Borrower to remove or repossess any such materials, equipment or fixtures, or whereby title to any of the same is not completely vested in Borrower at the time of installation, without Funding Lender's prior Written Consent; provided, however, that this Section 6.15 shall not apply to laundry equipment or other equipment that is owned by a third-party vendor and commercial tenants.
Section 6.16. Fiscal Year. Without Funding Lender's Written Consent, which shall not be unreasonably withheld, neither Borrower nor General Partner shall change the times of commencement or termination of its fiscal year or other accounting periods, or change its methods of accounting, other than to conform to GAAP.
Section 6.17. Publicity. Neither Borrower nor General Partner shall issue any publicity release or other communication to any print, broadcast or on-line media, post any sign or in any other way identify Funding Lender or any of its Affiliates as the source ofthe financing provided for herein, without the prior written approval of Funding Lender in each instance (provided that nothing herein shall prevent Borrower or General Partner from identifying Funding Lender or its Affiliates as the source of such financing to the extent that Borrower or General Partner arc required lo do so by disclosure requirements applicable lo publicly held companies). Borrower and General Partner agree that no sign shall be posted on the Projects in connection with the construction of the Improvements unless such sign identifies
Citigroup and its affiliates as the source ofthe financing provided for herein or funding Lender consents to not being identified on any such sign.
Section 6.18. Subordinate- Loan Documents. Without Funding Lender's prior written consent. Borrower will not surrender, terminate, cancel, modify, change, supplement, alter, amend, waive, release, assign, transfer, pledge or hypothecate any of its rights or remedies under the Subordinate Loan Documents.
ARTICLE VII RESERVED
ARTICLE VIII DEFAULTS
Section 8.1. Events of Default. Each ofthe following events shall constitute an "Event of Default" under the Borrower Loan Agreement:
failure by thc Borrower lo pay any Borrower Loan Payment in the manner and on the date such payment is due in accordance with the terms and provisions of the Borrower Note, or the failure by thc Borrower to pay any Additional Borrower Payment on the date such payment is due in accordance with the terms and provisions ofthe Borrower Note, the Security Instrument, this Borrower Loan Agreement or any other Borrower Loan Document;
failure by or on behalf of the Borrower to pay when due any amount (other than as provided in subsection (a) above or elsewhere in this Section 8.1) required to be paid by the Borrower under this Borrower Loan Agreement, lhe Borrower Note, the Security Instrument, the Permanent Loan Continuing Covenants Agreement or any of the other Borrower Loan Documents or funding Loan Documents, including a failure to repay any amounts that have been previously paid but are recovered, attached or enjoined pursuant to any insolvency, receivership, liquidation or similar proceedings, which default remains uncured for a period of five (5) days after Written Notice thereof shall have been given to the Borrower;
an Event of Default, as defined by the Borrower Note, the Security Instrument, the Permanent Loan Continuing Covenants Agreement or any other Borrower Loan Document, occurs (or to the extent an "Event of Default" is not defmed in any other Borrower Loan Document, any default or breach by the Borrower or any Guarantor of its obligations, covenants, representations or warranties under such Borrower Loan Document occurs and any applicable notice and/or cure period has expired);
any representation or warranty made by any of the Borrower, the Guarantor or the General Partner in any Borrower Loan Document or funding Loan Document to which it is a party, or in any report, certificate, financial statement or other instrument, agreement or document furnished by the Borrower, the Guarantor or the General Partner in connection with any Borrower Loan Document or funding Loan Document, shall be false or misleading in any material respect as ofthe Closing Date;
the Borrower shall make a general assignment for the benefit of creditors, or shall generally not be paying its debts as they become due;
the Borrower Controlling Entity shall make a general assignment for the benefit of creditors, shall generally not be paying its debts as they become due, or an Act of Bankruptcy with respect to the Borrower Controlling Entity shall occur, unless in all cases the Borrower Controlling Entity is replaced with a substitute Borrower Controlling Entity that satisfies thc requirements of the Construction Funding Agreement; which, in the case of a non-profit Borrower Controlling Entity, may be replaced within sixty (60) days of such event with another non-profit Borrower Controlling Entity acceptable to the Funding Lender, in which case no Event of Default shall be deemed to have occurred;
any portion of Borrower Deferred Equity to be made by the Equity Investor and required for (i) completion ofthe construction, as the case may be, ofthe Improvements, (ii) thc satisfaction of the Conditions of Conversion or (iii) the operation of the Improvements, is not received in accordance with thc terms of the Partnership Agreement after the expiration of all applicable notice and cure periods;
the failure by Borrower or any ERISA Affiliate of Borrower to comply in all respects with ERISA, or thc occurrence of any other event (with respect to the failure of Borrower or any ERISA Affiliate to pay any amount required to be paid under ERISA or with respect to the termination of, or withdrawal of Borrower or any ERISA Affiliate from, any employee benefit or welfare plan subject to ERISA) the effect of which is to impose upon Borrower (after giving effect to the tax consequences thereof) for the payment ofany amount in excess of Fifty Thousand Dollars ($50,000);
(i) a bankruptcy event shall occur with respect to Borrower, General Partner or
Guarantor, or there shall be a change in the assets, liabilities or financial position of any such
Person which has a material adverse effect upon the ability of such Person to perform such
Person's obligations under this Borrower Loan Agreement, any other Borrower Loan Document
or any Related Document, provided that any such bankruptcy event with respect to a Guarantor
shall not constitute an Event of Default: (i) if such bankruptcy event occurs on or after the date
upon which the Guaranty terminates in accordance with its terms (or thc date upon which all of
the Guaranties have terminated in accordance with their terms, if more than one Guaranty was
executed by such Guarantor), or (ii) if such bankruptcy event occurs prior to the date upon which
the Guaranty terminates in accordance with its terms (or the date upon which all ofthe Guaranties
have terminated in accordance with their terms, if more than one Guaranty was executed by such
Guarantor) and the Borrower replaces such Guarantor with a person or entity satisfying the
Funding Lender's mortgage credit standards for principals and acceptable to the Funding Lender
in its sole and absolute discretion within thirty (30) days after notice thereof from the Funding
Lender;
(j) all or any part ofthe property of Borrower is attached, levied upon or otherwise seized by legal process, and such attachment, levy or seizure is not quashed, stayed or released: (i) prior to completion ofthe construction, as the case may be, ofthe Improvements, within ten (10) days ofthe date thereof or (n) after completion ofthe construction, as the case may be, ofthe Improvements, within thirty (30) days ofthe date thereof;
(k) subject to Section 10.16 hereof, Borrower fails to pay when due any monetary obligation (other than pursuant to this Borrower Loan Agreement) lo any Person in excess of
$100,000, and such failure continues beyond the expiration of any applicable cure or grace periods;
(1) any material litigation or proceeding is commenced before any Governmental Authority against or affecting Borrower. General Partner or Guarantor, or property of Borrower. General Partner or Guarantor, or any part thereof, and such litigation or proceeding is not defended diligently and in good faith by Borrower, General Partner or Guarantor, as applicable, provided that any such material litigation or proceeding against Guarantor shall not constitute an Event of Default: (i) if such material litigation is commenced on or after the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all ofthe Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed by such Guarantor), or (ii) if such material litigation or proceeding is commenced prior to the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed by such Guarantor) and the Borrower replaces such Guarantor with a person or entity satisfying the Funding Lender's mortgage credit standards for principals and acceptable to the Funding Lender in its sole and absolute discretion within thirty (30) days after notice thereof from the Funding Lender;
(m) a final judgment or decree for monetary damages in excess of $50,000 or a monetary line or penalty (not subject to appeal or as to which the time for appeal has expired) is entered against Borrower, General Partner or Guarantor by any Governmental Authority, and such judgment, decree, line or penalty is not paid and discharged or stayed (i) prior to completion ofthe construction, as the case may be, ofthe Improvements, within ten (10) days after entry thereof or (ii) after completion of the construction, as the case may be, of the Improvements, within thirty (30) days after entry thereof (or such longer period as may be permitted for payment by the terms of such judgment, fine or penalty) , provided that any such judgment, decree, fine or penalty against the Guarantor shall not constitute an Event of Default: (i) if such judgment, decree, line or penalty is entered on or after the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed by such Guarantor), or (ii) if such judgment, decree, line or penalty is entered prior to the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed by such Guarantor) and the Borrower replaces such Guarantor with a person or entity satisfying the Funding Lender's mortgage credit standards for principals and acceptable to the Funding Lender in its sole and absolute discretion within thirty (30) days after notice thereof from the Funding Lender;
(n) a final, un-appealable and uninsured money judgment or judgments, in favor of any Person other than a Governmental Authority, in the aggregate sum of $50,000 or more shall be rendered against Borrower, General Partner or Guarantor, or against any of their respective assets, that is not paid, superseded or stayed (i) prior to completion ofthe construction, as the case may be. ofthe Improvements, within ten (10) days after entry thereof or (ii) after completion of the construction, as the case may be. of the Improvements, within thirty (30) days after entry thereof (or such longer period as may be permitted for payment by the terms of such judgment); or any levy of execution, writ or warrant of attachment, or similar process, is entered or filed against Borrower, General Partner or Guarantor, or against any of their respective assets (that is likely to have a material adverse effect upon the ability of Borrower, General Partner or Guarantor to perform their respective obligations under this Ekirrower Loan Agreement, any other Borrower Loan Document or any Related Document), and such judgment, writ, warrant or
process shall remain unsatisfied, unsettled, unvaeated, unhanded and unstayed (i) prior to completion ofthe construction, as the case may be, ofthe Improvements, for a period often (10) days or (ii) after completion ofthe construction, as the case may be, ofthe Improvements, for a period of thirty (30) days, or in any event later than five (5) Business Days prior to the date ofany proposed sale thereunder, provided that any such judgment, levy, writ, warrant, attachment or similar process against the Guarantor shall not constitute an IZvent of Default: (i) if such judgment, levy, writ, warrant, attachment or similar process is entered on or after the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed by such Guarantor), or (ii) if such judgment, levy, writ, wanant, attachment or similar process is entered prior to the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed by such Guarantor) and the Borrower replaces such Guarantor with a person or entity satisfying the Funding Lender's mortgage credit standards for principals and acceptable to the Funding Lender in its sole and absolute discretion within thirty (30) days after notice thereof from the Funding Lender;
(o) the inability of Borrower to satisfy any condition for the receipt of a Disbursement hereunder (other than an Event of Default specifically addressed in this Section 8.1) and failure lo resolve the situation to the satisfaction of Funding Lender for a period in excess of thirty (30) days after Written Notice from Funding Lender unless (i) such inability shall have been caused by conditions beyond the control of Borrower, including, without limitation, acts of God or the elements, fire, strikes and disruption of shipping; (ii) Borrower shall have made adequate provision, acceptable to Funding Lender, for the protection of materials stored on-site or off-site and for the protection of the Improvements to thc extent then constructed against deterioration and against other loss or damage or theft; (iii) Borrower shall furnish lo Funding Lender satisfactory evidence that such cessation of construction will not adversely affect or interfere with the rights of Borrower under labor and materials contracts or subcontracts relating to the construction or operation ofthe Improvements; and (iv) Borrower shall furnish to Funding Lender satisfactory evidence that the completion ofthe construction ofthe Improvements can be accomplished by the Completion Date;
(p) the construction of the Improvements is abandoned or halted prior to completion for any period of thirty (30) consecutive days;
(q) Borrower shall fail to keep in force and effect any material permit, license, consent or approval required under this Borrower Loan Agreement, or any Governmental Authority with jurisdiction over the Mortgaged Properly or the Projects orders or requires that construction ofthe Improvements be stopped, in whole or in part, or that any required approval, license or permit be withdrawn or suspended, and the order, requirement, withdrawal or suspension remains in effect for a period of thirty (30) days;
(r) failure by the Borrower to Substantially Complete the construction, as the case may be. ofthe Improvements in accordance with this Borrower Loan Agreement on or prior to the Substantial Completion Date:
(s) failure by Borrower to complete the construction, as thc case may be, of the Improvements in accordance with this Borrower Loan Agreement on or prior to the Completion Date;
(t) failure by Borrower to satisfy the Conversion Conditions on or before the Outside Conversion Date;
(u) failure by any Subordinate Lender to disburse the proceeds of its Subordinate Loan in approximately such amounts and at approximately such times as set forth in the Cost Breakdown and in the Subordinate Loan Documents;
(v) an '"Event of Default" or '"Default" (as defined in the applicable agreement) shall occur under any ofthe Subordinate Loan Documents, after thc expiration of all applicable notice and cure periods;
(w) Borrower fails to obtain all grading, foundation, building and all other construction permits, licenses and authorizations from all applicable Government Authorities or third parties necessary for thc completion of the construction, as thc case may be, of the Improvements, and thc operation of. and access to, the Project, within 425 days after the Closing Date;
(x) A Determination of Taxability occurs; or
(y) any failure by the Borrower to perform or comply with any of its obligations under this Borrower Loan Agreement (other than those specified in this Section 8.1), as and when required, which continues for a period of thirty (30) days after written notice of such failure by Funding Lender or the Servicer on its behalf to the Borrower; provided, however, if such failure is susceptible of cure but cannot reasonably be cured within such thirty (30) clay period, and the Borrower shall have commenced to cure such failure within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) clay period shall be extended for an additional period of time as is reasonably necessary for the Borrower in the exercise of clue diligence to cure such failure, such additional period not to exceed sixty (60) days. However, no such notice or grace period shall apply to the extent such failure could, in the Funding Lender's judgment, absent immediate exercise by the Funding Lender of a right or remedy under this Borrower Loan Agreement, result in harm to the Funding Lender, impairment of the Borrower Note or this Borrower Loan Agreement or any security given under any other Borrower Loan Document.
Section 8.2. Remedies.
Section 8.2.1 Acceleration. Upon the occurrence of an Event of Default (other than an Event of Default described in paragraph (e), (t) or (i) of Section 8.1) and at any time and from time to time thereafter, as long as such Event of Default continues to exist, in addition to any other rights or remedies available to the Governmental Lender pursuant to the Borrower Loan Documents or at law or in equity, the Funding Lender may, take such action, without notice or demand, as the Funding Lender deems-advisable lo protect and enforce its rights against the Borrower and in and to the Project, including declaring thc Borrower Payment Obligations to be immediately clue and payable (including, without limitation, the principal of. Prepayment Premium, if any, and interest on and all other amounts due on the Borrower Note to be immediately due and payable), without notice or demand, and apply such payment ofthe Borrower Payment Obligations in any manner and in any order determined by Funding Lender, in Funding Lender's sole and absolute discretion; and upon any Event of Default described in paragraph (e), (f) or (i) of Section 8.1, the Borrower Payment Obligations shall become immediately due and payable, without notice or demand, and thc Borrower hereby expressly waives any such notice or demand, anything contained in any Borrower Loan Document to the contrary notwithstanding. Notwithstanding
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anything herein to the contrary, enforcement of remedies hereunder and under the funding Loan Agreement shall be controlled by the Funding Lender.
Section 8.2.2 Remedies Cumulative. Upon the occurrence of an Event of Default, all or any one or more ofthe rights, powers, privileges and other remedies available to the Funding Lender against the Borrower under the Borrower Loan Documents or at law or in equity may be exercised by the Funding Lender, at any time and from time to time, whether or not all or any ofthe Borrower Payment Obligations shall be declared due and payable, and whether or not the Funding Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Borrower Loan Documents. Any such actions taken by the Funding Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as the Funding Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of the Funding Lender permitted by law, equity or contract or as set forth in the Borrower Loan Documents. Without limiting the generality of the foregoing, the Borrower agrees that if an Event of Default is continuing, all Liens and other rights, remedies or privileges provided to the Funding Lender shall remain in full force and effect until they have exhausted all of its remedies, the Security Instrument has been foreclosed, the Projects has been sold and/or otherwise realized upon satisfaction of the Borrower Payment Obligations or the Borrower Payment Obligations has been paid in full. To thc extent permitted by applicable law, nothing contained in any Borrower Loan Document shall be construed as requiring the Funding Lender to resort to any portion of the Projects for thc satisfaction of any of the Borrower Payment Obligations in preference or priority to any other portion, and the Funding Lender may seek satisfaction out ofthe entire Projects or any part thereof, in its absolute discretion.
Notwithstanding any provision herein lo the contrary, the Governmental Lender and the Funding Lender agrees that any cure of any default made or tendered by thc Equity Investor shall be deemed to be a cure by the Borrower and shall be accepted or rejected on thc same basis as if made or tendered by the Borrower.
Section 8.2.3 Delay. No delay or omission to exercise any remedy, right, power accruing upon an Event of Default, or the granting of any indulgence or compromise by the Funding Lender shall impair any such remedy, l ight or power hereunder or be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Potential Default or Event of Default shall not be construed to be a waiver of any subsequent Potential Default or Event of Default or to impair any remedy, right or power consequent thereon. Notwithstanding any other provision of this Borrower Loan Agreement, the Funding Lender reserves the right lo seek a deficiency judgment or preserve a deficiency claim, in connection with the foreclosure of the Security Instrument to the extent necessary to foreclose on the Project, the Rents, the funds or any other collateral.
Section 8.2.4 Set Off; Waiver of Set Off. Upon the occurrence of an Event of Default, Funding Lender may, at any time and from time to time, without notice to Borrower or any other Person (any such notice being expressly waived), set off and appropriate and apply (against and on account ofany obligations and liabilities ol' Borrower to Funding Lender arising under or connected with this Borrower Loan Agreement and the other Borrower Loan Documents and thc Funding Loan Documents, irrespective of whether or not Funding Lender shall have made any demand therefor, and although such obligations and liabilities may be contingent or unmatured), and Borrower hereby grants to Funding Lender, as security for the Payment Obligations, a security interest in, any and all deposits (general or special, including but not limited to Debt evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Debt at any time held or owing by Funding Lender to or for the credit or the account of Borrower.
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Section 8.2.5 Assumption of Obligations. In the event that the Funding Lender or its assignee or designee shall become the legal or beneficial owner ofthe Projects by foreclosure or deed in lieu of foreclosure, such party shall succeed to the rights and the obligations ofthe Borrower under this Borrower Loan Agreement, the Borrower Note, the Regulatory Agreement, and any other Borrower Loan Documents and Funding Loan Documents to which the Borrower is a party. Such assumption shall be effective from and after the effective date of such acquisition and shall be made with the benefit ofthe limitations of liability set forth therein and without any liability for the prior acts ofthe Borrower.
Section 8.2.6 Accounts Receivable. Upon the occurrence of an Event of Default, Funding Lender shall have the right, to the extent permitted by law, lo impound and take possession of books, records, notes and other documents evidencing Borrower's accounts, accounts receivable and other claims for payment of money, arising in connection with the Project, and to make direct collections on such accounts, accounts receivable and claims for the benefit of Funding Lender.
Section 8.2.7 Defaults under Other Documents. Funding Lender shall have the right to cure any default under any ofthe Related Documents, but shall have no obligation to do so.
Section 8.2.8 Abatement of Disbursements. Notwithstanding any provision to the contrary herein or any ofthe other Borrower Loan Documents or the Funding Loan Documents, Funding Lender's obligation to make further Disbursements shall abate (i) during the continuance ofany Potential Default, (ii) after any disclosure to Funding Lender of any fact or circumstance lhat, absent such disclosure, would cause any representation or warranty of Borrower to fail to be true and correct in all material respects, unless and until Funding Lender elects to permit further Disbursements notwithstanding such event or circumstance; and (iii) upon the occurrence ofany Event of Default.
Section 8.2.9 Completion of Improvements. Upon the occurrence of any Event of Default, Funding Lender shall have the right to cause an independent contractor selected by Funding Lender to enter into possession of the Projects and to perform any and all work and labor necessary for thc completion ofthe Projects substantially in accordance with the Plans and Specifications, if any, and to perform Borrowers obligations under this Borrower Loan Agreement. All sums expended by Funding Lender for such purposes shall be deemed to have been disbursed to and borrowed by Borrower and shall be secured by thc Security Documents.
Section 8.2.10 Right to Directly Enforce. Notwithstanding any other provision hereof to the contrary, the Funding Lender shall have the right to directly enforce all rights and remedies hereunder with or without involvement ofthe Governmental Lender, provided that only the Governmental Lender may enforce the Unassigned Rights and Funding Lender shall not impair Governmental Lender's enforcement of Unassigned Rights. In the event that any ofthe provisions set forth in this Section 8.2.10 are inconsistent with the covenants, terms and conditions ofthe Security Instrument, the covenants, terms and conditions ofthe Security Instrument shall prevail.
Section 8.2.11 Power of Attorney. Effective upon the occurrence of an Event of Default, and continuing until and unless such Event of Default is cured or waived. Borrower hereby constitutes and appoints Funding Lender, or an independent contractor selected by Funding Lender, as its true and lawful attorney-in-fact with full power of substitution, for the purposes of completion of the Projects and performance of Borrower's obligations under this Borrower Loan Agreement in the name of Borrower, and hereby empowers said attorney-in-fact to doNany or all of the following upon the occurrence and continuation of an Event of Default (it being understood and agreed lhat said power of attorney shall be deemed to be a power coupled with an interest which cannot be revoked until full payment and performance of all obligations under this Borrower Loan Agreement and the other Borrower Loan Documents and the Funding Loan Documents):
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to use any ofthe funds of Borrower or General Partner, including any balance of the Borrower Loan, as applicable, and any funds which may be held by Funding Lender for Borrower (including all funds in all deposit accounts in which Borrower has granted to Funding Lender a security interest), for the purpose of effecting completion ofthe construction, as the case may be, ofthe Improvements, in the manner called for by the Plans and Specifications;
to make such additions, changes and corrections in the Plans and Specifications as shall be necessary or desirable to complete the Projects in substantially the manner contemplated by the Plans and Specifications:
to employ any contractors, subcontractors, agents, architects and inspectors required for said purposes;
to employ attorneys to defend against attempts to interfere with the exercise of power granted hereby;
to pay, settle or compromise all existing bills and claims which are or may be liens against the Project, the Improvements or the Project, or may be necessary or desirable for the completion of the construction, as thc case may be, of the Improvements, or clearance of objections to or encumbrances on title;
to execute all applications and certificates in the name of Borrower, which may be required by any other construction contract;
to prosecute and defend all actions or proceedings in connection with the Projects and to take such action, require such performance and do any and every other act as is deemed necessary with respect to the completion of the construction, as the ease may be, of the Improvements, which Borrower might do on its own behalf;
to let new or additional contracts to the extent not prohibited by their existing contracts;
(i) to employ watchmen and erect security fences to protect the Projects from injury;
and
(j) to take such action and require such performance as it deems necessary under any of the bonds or insurance policies to be furnished hereunder, to make settlements and compromises with the sureties or insurers thereunder, and in connection therewith to execute instruments of release and satisfaction.
It is the intention ofthe parties hereto that upon the occurrence and continuance of an Event of Default, rights and remedies may be pursued pursuant to the terms ofthe Borrower Loan Documents and the Funding Loan Documents. The parties hereto acknowledge that, among the possible outcomes to the pursuit of such remedies, is the situation where the Funding Lender assignees or designees become the owner ofthe Projects and assume the obligations identified above, and the Borrower Note, the Borrower Loan and thc other Borrower Loan Documents and Funding Loan Documents remain outstanding.
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ARTICLE IX SPECIAL PROVISIONS
Section 9.1. Sale of Note and Secondary Market Transaction.
Section 9.1.1 Cooperation. Subject to the restrictions of Section 2.4 of the funding Loan Agreement, at thc funding Lender's or the Servicer's request (to the extent not already required to be provided by the Borrower under this Borrower Loan Agreement), the Borrower shall use reasonable efforts to satisfy thc market standards to which thc funding Lender or the Servicer customarily adheres or which may be reasonably required in thc marketplace or by the Funding Lender or the Servicer in connection with one or more sales or assignments of all or a portion of the Governmental Lender Note and the Funding Loan or participations therein or securitizations of single or multi-class securities (the "Securities") secured by or evidencing ownership interests in all or a portion ofthe Governmental Lender Note and the Funding Loan (each such sale, assignment and/or securitization, a "Secondary Market Transaction"); provided that neither the Borrower nor thc Governmental Lender shall incur any third party or other out-of-pocket costs and expenses in connection with a Secondary Market Transaction, including the costs associated with the delivery ofany Provided Information or any opinion required in connection therewith, and all such costs shall be paid by the Funding Lender or the Servicer, and shall not materially modify Borrower's rights or obligations. Without limiting the generality of the foregoing, the Borrower shall, so long as the Borrower Loan is still outstanding:
(i) provide such financial and other information with respect to the Borrower Loan, and with respect to the Project, thc Borrower, the Property General Partner, thc contractor ofthe Projects or the Borrower Controlling Entity, (ii) provide financial statements, audited, if available, relating to thc Projects with customary disclaimers for any forward looking statements or lack of audit, and (iii), at the expense ofthe Funding Lender or the Servicer, perform or permit or cause to be performed or permitted such site inspection, appraisals, surveys, market studies, environmental reviews and reports (Phase Fs and, if appropriate. Phase IPs), engineering reports and other due diligence investigations ofthe Project, as may be reasonably requested from time to time by the Funding Lender or the Servicer or the Rating Agencies or as may be necessary or appropriate in connection with a Secondary Market Transaction or Exchange Act requirements (the items provided to the Funding Lender or the Servicer pursuant to this paragraph (a) being called the "Provided Information"), together, if customary, with appropriate verification of and/or consents to the Provided Information through letters of auditors or opinions of counsel of independent attorneys acceptable to the Funding Lender or the Servicer and thc Rating Agencies;
make such representations and warranties as ofthe closing date ofany Secondary Market Transaction with respect to the Project, the Borrower, the Borrower Loan Documents and the Funding Loan Documents reasonably acceptable to thc Funding Lender or thc Servicer, consistent with thc facts covered by such representations and warranties as they exist on the date thereof; arid
execute such amendments to the Borrower Loan Documents and the Funding Loan Documents to accommodate such Secondary Market Transaction so long as such amendment does not affect the material economic terms of the Borrower Loan Documents and the Funding Loan Documents and is not otherwise adverse to the Borrower in its reasonable discretion.
Section 9.1.2 Lise of Information. The Borrower understands that certain ofthe Provided Information anil the required records may be included in disclosure documents in connection with a Secondary Market Transaction, including a prospectus or private placement memorandum (each, a
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"Secondary Market Disclosure Document"), or provided or made available to investors or prospective investors in the Securities, the Rating Agencies and service providers or other parties relating to the Secondary Market Transaction. In the event that the Secondary Market Disclosure Document is required to be revised, the Borrower shall cooperate, subject to Section 9.1.1(c) hereof, with the funding fender and the Servicer in updating the Provided Information or required records for inclusion or summary in the Secondary Market Disclosure Document or for other use reasonably required in connection with a Secondary Market Transaction by providing all reasonably requested cunent information pertaining to the Borrower and the Projects necessary to keep the Secondary Market Disclosure Document accurate and complete in all material respects with respect to such matters. The Borrower hereby consents to any and all such disclosures of such information.
Section 9.1.3 Borrower Obligations Regarding Secondary Market Disclosure Documents. In connection with a Secondary Market Disclosure Document, the Borrower shall provide, or in the case ofa Borrower-engaged third party such as the Property General Partner, cause it to provide, information reasonably requested by the Funding Lender pertaining to the Borrower, the Projects or such third party (and portions of any other sections reasonably requested by the Funding Lender pertaining to the Borrower, the Projects or the third party). The Borrower shall, if requested by the Funding Lender and the Servicer, certify in writing that the Borrower has carefully examined those portions of such Secondary Market Disclosure Document, pertaining to the Borrower, the Projects or the Property General Partner, and such portions (and portions ofany other sections reasonably requested and pertaining to the Borrower, the Projects or the Property General Partner) do not contain any untrue statement ofa material fact or omit to slate a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; provided thai the Borrower shall not be required lo make any representations or warranties regarding any Provided Information obtained from a third party except with respect to information it provided to such parties. Furthermore, the Borrower hereby indemnifies thc Funding Lender, the Governmental Lender and thc Servicer for any Liabilities to which any such parties may become subject to the extent such Liabilities arise out of or are based upon the use of the Provided Information in a Secondary Market Disclosure Document; provided that the Borrower shall not provide any indemnification regarding any Provided Information obtained from unrelated third parties except with respect to information it provided to such parties.
Section 9.1.4 Borrower Indemnity Regarding Filings. In connection with filings under the Exchange Act or the Securities Act. the Borrower shall (i) indemnify Funding Lender, the Governmental Lender and the underwriter group for any securities (the "Underwriter Group") and all officials, employees and agents ofany of them for any Liabilities to which Funding Lender, the Servicer or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon the omission or alleged omission to state in the Provided Information ofa material fact required to be stated in the Provided Information in order to make the statements in the Provided Information, in the light of the circumstances under which they were made not misleading and (ii) reimburse the Funding Lender, the Servicer, the Underwriter Group and other indemnified parties listed above for any legal or other expenses reasonably incurred by the Funding Lender, the Servicer or the Underwriter Group in connection with defending or investigating such Liabilities; provided that the Borrower shall not provide any indemnification regarding any Provided Information obtained from unrelated third parties except with respect to information it provided to such parties.
Section 9.1.5 Indemnification Procedure. Promptly after receipt by an indemnified party under Sections 9.1.3 and 9.1.4 hereof of notice ofthe commencement ofany action for which a claim for indemnification is to be made against the Borrower, such indemnified party shall notify the Borrower in writing of such commencement, but the omission to so notify the Borrower will not relieve the Borrower from any liability that it may have lo any indemnified party hereunder except to the extent that failure to notify causes prejudice to the Borrower. In the event that any action is brought against any
indemnified party, and it notifies tlie Borrower of the commencement thereof, the Borrower will be entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it (or they) may elect by Written Notice delivered to thc indemnified party promptly after receiving the aforesaid notice of commencement, to assume the defense thereof with counsel selected by the Borrower and reasonably satisfactory to such indemnified parly in its sole discretion. After notice from the Borrower to such indemnified party under this Section 9.1.5, the Borrower shall not be responsible for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnified party shall settle or compromise any claim for which thc Borrower may be liable hereunder without the prior Written Consent ofthe Borrower.
Section 9.1.6 Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 9.1.4 hereof is for any reason held to be unenforceable by an indemnified party in respect ofany Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.1.4 hereof, the Borrower shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities (or action in respect thereof); provided, however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) shall be entitled to contribution from any Person not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties arc entitled, the following factors shall be considered: (i) the indemnified parties and the Borrower's relative knowledge and access to information concerning the matter with respect to which the claim was asserted; (ii)the opportunity to correct and prevent any statement or omission; and (iii) any other equitable considerations appropriate in the circumstances. The parties hereto hereby agree that it may not be equitable ifthe amount of such contribution were determined by pro rata or per capita allocation.
ARTICLE X MISCELLANEOUS
Section 10.1. Notices. All notices, consents, approvals and requests required or permitted hereunder or under any other Borrower Loan Document or Funding Loan Document (a "notice") shall be deemed to be given and made when delivered by hand, by recognized overnight delivery service, confirmed facsimile transmission (provided any telecopy or other electronic transmission received by any party after 4:00 p.m., local time, as evidenced by the time shown on such transmission, shall be deemed to have been received the following Business Day), or five (5) calendar days after deposited in the United States mail, registered or certified, postage prepaid, with return receipt requested, addressed as follows:
If to the Borrower: Auburn Gresham Apartments LP
c/o Evergreen Redevelopment LLC 566 W. Lake Street. Suite 400-Chicago, Illinois 60661 Attention: David Block
and with a copy to: Auburn Gresham Apartments LP
c/o Imagine Development Group LLC 5504 S. Michigan Avenue Chicago, Illinois 60637 Attention: Fred Spencer
and with a copy to: Applegate & Thorne-Thomsen, P.C.
425 South Financial Place. Suite 1900 Chicago, Illinois 60605 Attention: Paul Davis
and with a copy to: Wincopin Circle LLLP
c/o Enterprise Community Asset Management, Inc. 70 Corporate Cnter
1 1000 Broken Land Parkway, Suite 700 Columbia, Maryland 21044 Attention: General Counsel
and with a copy to: Gallagher Cvelius & Jones LLP
218 North Charles Street, Suite 400 Baltimore, Maryland 21201 Attention: Kenneth S. Gross
If to the Governmental Lender:
and with a copy to:
and with a copy to:
City of Chicago
Department of Housing
121 North LaSalle Street, Suite 1006
Chicago, Illinois 60602
Attention: Commissioner, Department of Housing Telephone: (312) 744-9476 Facsimile: (312) 742-2271
Cily of Chicago
Office of Corporation Counsel
121 North LaSalle Street, Room 600
Chicago, Illinois 60602
Attention: Finance and Economic Development Division Telephone: (312) 744-0200
Facsimile: (312) 742-0277 (refer to "Finance & Econ. Development Division" on cover sheet)
Cily of Chicago
Office ofthe City Comptroller's Office 33 North LaSalle Street, Suite 600 Chicago, Illinois 60602 Attention: City Comptroller Telephone: (312) 744-7106 Facsimile: (312) 742-6544
If to the Construction Lender:
Fifth Third Commercial Funding, Inc. 38 Fountain Square Plaza Cincinnati. Ohio 45264
Attention: Da\id Batcy, Senior Vice President
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Bricker & Eckler LLP 100 South Third Street Columbus, Ohio 43215
Attention: Christopher N. Swank
If to the Funding Lender:
Cedar Rapids Bank and Trust Company 500 First Avenue NL
Cedar Rapids, Iowa 52401 Attention: Michael Goerdt F.-mai I: mgoerdt:V/'.ci bt.com Telephone-" (319) 743-7029
Winthrop & Wcinstcin, P.A. 225 S. 6lh Street, Suite 3500 Capella Tower
Minneapolis, Minnesota 55402 Attention: Holly Stocker E-mail: hstockcr(fijwinlhrop.com Telephone: (612) 604-6490
Any party may change such party's address for the notice or demands required under this Borrower Loan Agreement by providing written notice of such change of address to the other parties by written notice as provided herein.
Section 10.2. Brokers and Finaneial Advisors. The Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the Borrower Loan, other than those disclosed to the Funding Tender and whose fees shall be paid by the Borrower pursuant to separate agreements. The Borrower and the Funding Lender shall indemnify and hold the other harmless from and against any and all claims, liabilities, costs and expenses of any kind in any way relating to or arising from a claim by any Person that such Person acted on behalf of the indemnifying party in connection with the transactions contemplated herein. The provisions of this Section 10.2 shall survive the expiration and termination of this Borrower Loan Agreement and the repayment ofthe Borrower Payment Obligations.
Section 10.3. Survival. This Borrower Loan Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive thc making by the Governmental Lender of the Borrower Loan and the execution and delivery to the Governmental Lender of thc Borrower Note and the assignment of the Borrower Note to the Funding Lender, and shall continue in full force and effect so long as all or any of the Borrower Payment Obligations is unpaid. All the Borrower's covenants and agreements in this Borrower Loan Agreement shall inure to the benefit of the respective legal representatives, successors and assigns of the Governmental Lender, the Funding Lender and the Servicer.
Section 10.4. Preferences. The Governmental Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by the Borrower to any portion of the Borrower Payment Obligations. To the extent the Borrower makes a payment to the Governmental Lender or thc Servicer, or thc Governmental Lender or the Servicer receives proceeds ofany collateral, which is in whole or part subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, lo the extent of such payment or proceeds received, the Borrower Payment Obligations or part thereof intended to be satisfied shall be revived and continue in
full force and effect, as if such payment or proceeds had not been received by thc Governmental Lender or the Servicer.
Section 10.5. Waiver of Notice. The Borrower shall not be entitled to any notices of any nature whatsoever from the Funding Lender or the Servicer except with respect to matters for which this Borrower Loan Agreement or any other Borrower Loan Document specifically and expressly provides for the giving of notice by the Funding L.ender or the Servicer, as the case may be. to the Borrower and except with respect to matters for which the Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. The Borrower hereby expressly waives the right to receive any notice from the Funding Lender or the Servicer, as the case may be, with respect to any matter for which no Borrower Loan Document specifically and expressly provides for thc giving of notice by the Funding Lender or thc Servicer to the Borrower.
Section 10.6. Offsets, Counterclaims and Defenses. Thc Borrower hereby waives thc right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by the Funding Lender or the Servicer with respect to a Borrower Loan Payment. Any assignee of Funding Lender's interest in and to thc Borrower Loan Documents or the Funding Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses that are unrelated to the Borrower Loan Documents or the Funding Loan Documents which the Borrower may otherwise have against any assignor of such documents, and no such unrelated offset, counterclaim or defense shall be interposed or asserted by the Borrower in any action or proceeding brought by any such assignee upon such documents, and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by the Borrower.
Section 10.7. Publicity. The Funding Lender and the Servicer (and any Affiliates of cither party) shall have the right to issue press releases, advertisements and other promotional materials describing the Funding Lender's or the Servicer's participation in the making ofthe Borrower Loan or the Borrower Loan's inclusion in any Secondary Market Transaction effectuated by the Funding Lender or thc Servicer or one of its or their Affiliates. All news releases, publicity or advertising by the Borrower or its Affiliates through any media intended to reach the general public, which refers to the Borrower Loan Documents or the Funding Loan Documents, the Borrower Loan, thc Funding Lender or thc Servicer in a Secondary Market Transaction, shall be subject to the prior Written Consent ofthe Funding Lender or the Servicer, as applicable.
Section 10.8. Construction of Documents. The parties hereto acknowledge that they were represented by counsel in connection with the negotiation and drafting of the Borrower Loan Documents and thc Funding Loan Documents and that thc Borrower Loan Documents and the Funding Loan Documents shall not be subject to the principle of construing their meaning against the party that drafted them.
Section 10.9. No Third Party Beneficiaries. The Borrower Loan Documents and the Funding Loan Documents are solely for the benefit ofthe Governmental Lender, the Funding Lender, the Servicer and thc Borrower and, with respect to Sections 9.1.3 and 9.1.4 hereof, thc Underwriter Group, and nothing contained in any Borrower Loan Document shall be deemed to confer upon anyone other than thc Governmental Lender, the Funding Lender, thc Servicer, and thc Borrower any right to insist upon or to enforce thc performance or observance ofany ofthe obligations contained therein.
Section 10.10. Assignment. The Borrower Loan, the Security Instrument, the Borrower Loan Documents and the Funding Loan Documents and all Funding Lender's rights, title, obligations and interests therein may be assigned by the Funding Lender, at any time in its sole discretion, whether by operation of law (pursuant to a merger or other successor in interest) or otherwise. Upon such
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assignment, all references to Funding Fender in this Borrower Loan Agreement and in any Borrower Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee or successor in interest shall thereafter stand in the place ofthe Funding Lender. Borrower shall accord full recognition to any such assignment, and all rights and remedies of Funding Lender in connection with the interest so assigned shall be as fully enforceable by such assignee as they were by Funding Lender before such assignment. In connection with any proposed assignment, Funding Lender may disclose to the proposed assignee any information that Borrower has delivered, or caused to be delivered, to Funding Lender with reference to Borrower, General Partner. Guarantor or any Affiliate, or the Project, including information that Borrower is required to deliver to Funding Lender pursuant to this Borrower Loan Agreement, provided that such proposed assignee agrees to treat such information as confidential. 'The Borrower may not assign its rights, interests or obligations under this Borrower Loan Agreement or under any ofthe Borrower Loan Documents or Funding Loan Documents, or Borrower's interest in any moneys to be disbursed or advanced hereunder, except only as may be expressly permitted hereby.
Section 10.11. [Intentionally Omitted).
Section 10.12. Governmental Lender, Funding Lender and Servicer Not in Control; No Partnership. None of the covenants or other provisions contained in this Borrower Loan Agreement shall, or shall be deemed to, give the Governmental Lender, the Funding Lender or the Servicer the right or power to exercise control over the affairs or management of thc Borrower, the power of the Governmental Lender, the Funding Lender and the Servicer being limited to the rights to exercise the remedies referred to in thc Borrower Loan Documents and the Funding Loan Documents. The relationship between the Borrower and the Governmental Lender, the Funding Lender and the Servicer is, and at all times shall remain, solely lhat of debtor and creditor. No covenant or provision ofthe Borrower Loan Documents or the Funding Loan Documents is intended, nor shall it be deemed or construed, to create a partnership, joint venture, agency or common interest in profits or income between the Borrower and the Governmental Lender, the Funding Lender or the Servicer or to create an equity in the Projects in the Governmental Lender, the Funding Lender or thc Servicer. Neither the Governmental Lender, the Funding Lender nor the Servicer undertakes or assumes any responsibility or duty to the Borrower or to any other person with respect to the Projects or the Borrower Loan, except as expressly provided in the Borrower Loan Documents or the Funding Loan Documents; and notwithstanding any other provision of the Borrower Loan Documents and the Funding Loan Documents: (1) the Governmental Lender, the Funding Lender and the Servicer are not, and shall not be construed as, a partner, joint venturer, alter ego, General Partner, controlling person or other business associate or participant ofany kind ofthe Borrower or its stockholders, members, or partners and the Governmental Lender, the Funding Lender and the Servicer do not intend to ever assume such status; (2) thc Governmental Lender, the Funding Lender and the Servicer shall in no event be liable for any the Borrower Payment Obligations, expenses or losses incurred or sustained by the Borrower; and (3) the Governmental Lender, the Funding Lender and the Servicer shall not be deemed responsible for or a participant in any acts, omissions or decisions ofthe Borrower, the Borrower Controlling Entities or its stockholders, members, or partners. The Governmental Lender, the Funding Lender and the Servicer and the Borrower disclaim any intention to create any paitnership, joint venture, agency or common interest in profits or income between thc Governmental Lender, the Funding Lender, the Servicer and the Borrower, or to create an equity in the Projects in the Funding Lender or the Servicer, or any sharing of liabilities, losses, costs or expenses.
Section 10.13. Release. I he Borrower hereby acknowledges that it is executing this Borrower Loan Agreement and each ofthe Borrower Loan Documents and the Funding Loan Documents to which il is a parly as ils own voluntary act free from duress and undue influence.
Section 10.14. Term of Borrower Loan Agreement. This Borrower Loan Agreement shall be in full force and effect until all payment obligations ofthe Borrower hereunder have been paid in full and
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ihe Borrower Loan and the Funding Loan have been retired or the payment thereof lias been provided for; except that on and after payment in full ofthe Borrower Note, this Borrower Loan Agreement shall be terminated, without further action by the parties hereto; provided, however, lhat the obligations of the Borrower under Sections 5.1 1 (Governmental Lender's Fees), 5.14 (Expenses'), 5.15 (Indemnity). 9.1.3, 9.1.4. 9.1.5, 9.1.6 and 10.15 (Reimbursement ol" Expenses) hereof, as well as under Section 5.7 ofthe Construction Funding Agreement, shall survive the termination ofthis Borrower Loan Agreement.
Section 10.15. Reimbursement of Expenses. 11", upon or after the occurrence ofany Event of Default or Potential Default, the Governmental Lender, the Funding Lender or the Servicer shall employ attorneys or incur other expenses for the enforcement of performance or observance ofany obligation or agreement on the part ofthe Borrower contained herein, the Borrower will on demand therefor reimburse the Governmental Lender, the Funding Lender and the Servicer for fees of such attorneys and such other expenses so incurred.
Thc Borrower's obligation to pay the amounts required to be paid under this Section 10.15 shall be subordinate to its obligations to make payments under the Borrower Note.
Section 10.16. Permitted Contests. Notwithstanding anything to the contrary contained in this Borrower Loan Agreement, Borrower shall have the right to contest or object in good faith to any claim, demand, levy or assessment (other than in respect of Debt or Contractual Obligations of Borrower under any Borrower Loan Document or Related Document) by appropriate legal proceedings that are not prejudicial to Funding Lender's rights, but this shall not be deemed or construed as in any way relieving, modifying or providing any extension of time with respect to Borrower's covenant to pay and comply with any such claim, demand, levy or assessment, unless Borrower shall have given prior Written Notice to thc Governmental Lender and the Funding Lender of Borrower's intent to so contest or object thereto, and unless (i) Borrower has, in thc Governmental Lender's and the Funding Lender's judgment, a reasonable basis for such contest, (ii) Borrower pays when due any portion ofthe claim, demand, levy or assessment to which Borrower docs not object, (iii) Borrower demonstrates to Funding Lender's satisfaction that such legal proceedings shall conclusively operate to prevent enforcement prior to final determination of such proceedings, (iv) Borrower furnishes such bond, surety, undertaking or other security in connection therewith as required by law, or as requested by and satisfactory to funding Lender, to stay such proceeding, which bond, surety, undertaking or other security shall be issued by a bonding company, insurer or surety company reasonably satisfactory to Funding Lender and shall be sufficient to cause the claim, demand, levy or assessment to be insured against by thc Title Company or removed as a lien against the Project, (v) Borrower at all times prosecutes the contest with due diligence, and (vi) Borrower pays, promptly following a determination ofthe amount of such claim, demand, levy or assessment due and owing by Borrower, the amount so determined to be due and owing by Borrower. In the event that Borrower does not make, promptly following a determination ofthe amount of such claim, demand, levy or assessment due and owing by Borrower, any payment required to be made pursuant to clause (vi) ofthe preceding sentence, an Event of Default shall have occurred, and Funding Lender may draw or realize upon any bond or other security delivered to Funding Lender in connection with thc contest by Borrower, in order to make such payment.
Section 10.17. Funding Lender Approval of Instruments and Parties. All proceedings taken in accordance with transactions provided for herein, and all surveys, appraisals and documents required or contemplated by this Borrower Loan Agreement and the persons responsible for the execution and preparation thereof, shall be satisfactory to and subject to approval by Funding Lender. Funding Lender's approval of any matter in connection with the Projects shall be for the sole purpose of protecting thc security and rights of Funding Lender. No such approval shall result in a waiver of any default of Borrower. In no event shall Funding Lender's approval be a representation ofany kind with regard to the matter being approved.
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Section 10.18. Funding Lender Determination of Facts. Funding Lender shall at all times be free to establish independently, to its reasonable satisfaction, the existence or nonexistence ofany fact or facts, the existence or nonexistence of which is a condition ofthis Borrower Loan Agreement.
Section 10.19. Calendar Months. With respect lo any payment or obligation that is due or required to be performed within a specified number of Calendar Months after a specified date, such payment or obligation shall become due on the day in the last of such specified number of Calendar Months that corresponds numerically to the date so specified; provided, however, that with respect to any obligation as to which such specified date is the 29lh. 30th or 31st day ofany Calendar Month: ifthe Calendar Month in which such payment or obligation would otherwise become due does not have a numerically corresponding date, such obligation shall become due on the first day ofthe next succeeding Calendar Month.
Section 10.20. Determinations by Lender. Except to the extent expressly set forth in this Borrower Loan Agreement to the contrary, in any instance where the consent or approval of the Governmental Lender and the Funding Lender may be given or is required, or where any determination, judgment or decision is to be rendered by the Governmental Lender and the Funding Lender under this Borrower Loan Agreement, the granting, withholding or denial of such consent or approval and the rendering of such determination, judgment or decision shall be made or exercised by the Governmental Lender and the Funding Lender, as applicable (or its designated representative) at its sole and exclusive option and in its sole and absolute discretion.
Section 10.21. Governing Law. This Borrower Loan Agreement shall be governed by and enforced in accordance with the laws ofthe State, without giving effect to thc choice of law principles of the State that would require the application ofthe laws of a jurisdiction other than the State.
Section 10.22. Consent to Jurisdiction and Venue. Borrower agrees that any controversy arising under or in relation lo this Borrower Loan Agreement shall be litigated exclusively in the State. Thc state and federal courts and authorities with jurisdiction in the State shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Borrower Loan Agreement. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing herein is intended to limit Beneficiary Parties' right to bring any suit, action or proceeding relating to matters arising under this Borrower Loan Agreement against Borrower or any of Borrower's assets in any court ofany other jurisdiction.
Section 10.23. Successors and Assigns. This Borrower Loan Agreement shall be binding upon and shall inure to the benefit of thc parties hereto and their respective heirs, legal representatives, successors, successors-in-interest and assigns, as appropriate. Thc terms used to designate any of the parties herein shall be deemed to include the heirs, legal representatives, successors, successors-in-interest and assigns, as appropriate, of such parties. References to a "person" or "persons" shall be deemed to include individuals and entities.
Section 10.24. Severability. The invalidity, illegality or unenforceability of any provision of this Borrower Loan Agreement shall not affect the validity, legality or enforceability of any other provision, and all other provisions shall remain in full force and effect.
Section 10.25. Entire Agreement; Amendment and Waiver. This Borrower Loan Agreement contains the complete and entire understanding ofthe parties with respect to the matters covered. 'This Borrower Loan Agreement may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except by a written instrument signed by the party against whom
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enforcement ofthe waiver, amendment, change, or modification is sought, and then only to the extent set forth in that instrument. No specific waiver ofany ofthe terms ofthis Borrower Loan Agreement shall he considered as a general waiver. Without limiting the generality ofthe foregoing, no Disbursement shall constitute a waiver ofany conditions to the Governmental Lender's or the funding Lender's obligation lo make further Disbursements nor, in the event Borrower is unable to satisfy any such conditions, shall any such waiver have the effect of precluding the Governmental Lender or thc funding Lender from thereafter declaring such inability to constitute a Potential Default or Event of Default under this Borrower Loan Agreement.
Section 10.26. Counterparts. This Borrower Loan Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement.
Section 10.27. Captions. The captions ofthe sections ofthis Borrower Loan Agreement are for convenience only and shall be disregarded in construing this Borrower Loan Agreement.
Section 10.28. Servicer. Borrower hereby acknowledges and agrees that, pursuant to the terms of the Borrower Loan Documents: (a) from time to time, the Governmental Lender or the funding Lender may appoint a servicer to collect payments, escrows and deposits, to give and to receive notices under thc Borrower Note, this Borrower Loan Agreement or the other Borrower Loan Documents, and lo otherwise service thc Borrower Loan and (b) unless Borrower receives Written Notice from thc Governmental Lender or the funding Lender to the contrary, any action or right which shall or may be taken or exercised by the Governmental Lender or the funding Lender may be taken or exercised by such servicer with the same force and effect.
Section 10.29. Beneficiary Parties as Third Party Beneficiary. Each of the Beneficiary Parties shall be a third party beneficiary ofthis Borrower Loan Agreement for all purposes.
Section 10.30. Waiver of Trial by Jury. TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF BORROWER AND THE BENEFICIARY PARTIES (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS BORROWER LOAN AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
Section 10.31. Time ofthe Essence. Time is ofthe essence with respect to this Borrower Loan Agreement.
Section 10.32. |Reserved]
Section 10.33. Reference Date. This Borrower Loan Agreement is dated for reference purposes only as ofthe first day of December. 2022, and will not be effective and binding on the parties hereto unless and until the Closing Date (as defined herein) occurs.
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ARTICLE XI LIMITATIONS ON LIABILITY
Section ILL Limitation on Liability. Notwithstanding anything to the contrary herein. 1 he liability ofthe Borrower hereunder and under the other Borrower Loan Documents and the Funding Loan Documents shall be limited to thc extent set forth in the Borrower Note.
Section 11.2. Limitation on Liability of Governmental Lender. The f unding Loan, and interest thereon, are special, limited obligations of the Governmental Lender, payable solely from the Security pledged under the Funding Loan Agreement. The Funding Loan is not a general indebtedness of the Governmental Lender or a charge against its general credit or the general credit taxing powers ofthe State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability ofthe Governmental Lender, and neither thc Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal and interest on thc Funding Loan, and thc Funding Loan is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement (and not against any money due or to become due to the Governmental Lender pursuant to Unassigned Rights). No holder ofthe Funding Loan or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Funding Loan or the interest thereon.
No recourse shall be had for the payment of the principal of, premium, if any, or the interest on thc Funding Loan or for any claim based thereon or any obligation, covenant or agreement in this Funding Loan Agreement against any official of thc Governmental Lender, or any official, officer, agent, employee or independent contractor of the Governmental Lender or any person executing this Borrower Loan Agreement. No covenant, stipulation, promise, agreement or obligation contained in this Borrower Loan Agreement or any other document executed in connection herewith shall be deemed to be the covenant, stipulation, promise, agreement or obligation ofany present or future official, officer, agent or employee ofthe Governmental Lender in his or her individual capacity and neither any official of thc Governmental Lender nor any officers executing this Borrower Loan Agreement shall be liable personally or be subject to any personal liability or accountability by reason ofthis Borrower Loan Agreement.
Section 11.3. Waiver of Personal Liability. No member, officer, agent or employee of the Governmental Lender or any director, officer, agent or employee ofthe Governmental Lender shall be individually or personally liable for thc payment ofany principal (or prepayment price) of or interest on the Governmental Lender Note or any other sum hereunder or be subject to any personal liability or accountability by reason ofthe execution and delivery ofthis Borrower Loan Agreement; but nothing herein contained shall relieve any such member, director, officer, agent or employee from the performance ofany official duty provided by law or by this Borrower Loan Agreement.
Section 11.4. Limitation on Liability of f unding Lender's Officers, Employees, Etc.
(a) Borrower assumes all risks ofthe acts or omissions ofthe Governmental Lender and the Funding Lender (except to the extent that such acts or omissions constitute gross negligence or willful misconduct), provided, however, this assumption is not intended to, and shall not, preclude Borrower from pursuing such lights and remedies as it may have against the Governmental Lender and the Funding Lender at law or under any other agreement. None of Governmental Lender and the Funding Lender, nor the other Beneficiary Parties or their respective officers, directors, employees or agents shall be liable or responsible for (i) for any acts or omissions ofthe Governmental Lender and the Funding Lender; or(ii) the validity, sufficiency
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or genuineness ofany documents, or endorsements, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged. In furtherance and not in limitation of the foregoing, the Governmental Lender and the Funding Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless ofany notice or information lo the contrary, unless acceptance in light of such notice or informalion constitutes gross negligence or willful misconduct on the part ofthe Governmental Lender and the Funding Lender.
None of the Governmental Lender the Funding Lender, the other Beneficiary Parties or any of their respective officers, directors, employees or agents shall be liable to any contractor, subcontractor, supplier, laborer, architect, engineer or any other party for services performed or materials supplied in connection with the Project. The Governmental Lender and the Funding Lender shall not be liable for any debts or claims accruing in favor of any such parties against Borrower or others or against the Project. Borrower is not and shall not be an agent of thc Governmental Lender and the Funding Lender for any purpose. Neither the Governmental Lender nor the Funding Lender is a joint venture partner with Borrower in any manner whatsoever. Prior to default by Borrower under this Borrower Loan Agreement and the exercise of remedies granted herein, the Governmental f ender and the Funding Lender shall not be deemed to be in privity of contract with any contractor or provider of services to the Project, nor shall any payment of funds directly to a contractor, subcontractor or provider of services be deemed to create any third party beneficiary status or recognition of same by the Governmental Lender and the Funding Lender. Approvals granted by the Governmental Lender and the Funding Lender for any matters covered under this Borrower Loan Agreement shall be narrowly construed to cover only the parties and facts identified in any written approval or, if not in writing, such approvals shall be solely for the benefit of Borrower.
Any obligation or liability whatsoever of the Governmental Lender and the Funding Lender that may arise at any time under this Borrower Loan Agreement or any other Borrower Loan Document shall be satisfied, if at all, out ofthe Funding Lender's assets only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the Projects or any of the Governmental Lender's or the Funding Lender's shareholders (if any), directors, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.
Section 11.5. Delivery of Reports, Etc. Thc delivery of reports, information and documents to the Governmental Lender and thc Funding Lender as provided herein is for informational purposes only and the Governmental Lender's and the Funding Lender's receipt of such shall not constitute constructive knowledge ofany information contained therein or determinable from information contained therein. The Governmental Lender and thc Funding Lender shall have no duties or responsibilities except those that are specifically set forth herein, and no other duties or obligations shall be implied in this Borrower Loan Agreement against the Governmental Lender and the Funding Lender.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Borrower Loan Agreement or caused this Borrower Loan Agreement to be duly executed and delivered by its authorized representative as of the date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument.
BORROWER:
AUBURN GRESHAM APARTMENTS LP,
an Illinois limited partnership
By: Auburn Gresham Apartments GP LLC, an Illinois limited liability company, its general partner
Name: David Block-Title: Manager
(signatures follow on subsequent page)
CITY OF CHICAGO
By: J^^M^tl
Name: Jenmh^Hpang Bennett Title: Chief Financial Officer
[SEAL] Attest:
By:_
Name: Andrea M. Valencia Title: City Clerk
/,U„. (li ,
S-2
Agreed to and Acknowledged by: FUNDING LENDER:
FIFTH THIRD COMMERCIAL FUNDING, INC.
Its: Senior Vice President
CEDAR RAPIDS BANK & TRUST COMPANY
By: Its:
S-3
Agreed to and Acknowledged by: FUNDING LENDER:
FIFTH THIRD COMMERCIAL FUNDING, INC.
By: _
Its:
CEDAR RAPIDS BANK & TRUST COMPANY
S-3
Exiiimt D Land Use Restriction Agreement (See Item No. 7)
Recording Requested By and When Recorded Send to: ArentFox Schiff'LLP 233 South Wacker Drive Suite 7100
Chicago. Illinois 60606 Attention: Bruce P. Weisenthal
LAND USE RESTRICTION AGREEMENT between CITY OF CHICAGO
and
AUBURN GRESHAM APARTMENTS LP,
an Illinois limited partnership
Dated as of December 1. 2022
TABLE OF CONTENT'S
Pa»e
Section I. Term of Restrictions|910|Section 2. Projects Restrictions|910|Section 3. Occupancy Restrictions|910|Section 4. Rental Restrictions|910|Section 5. Transfer Restrictions|910|Section 6. Enforcement|910|Section 7. Covenants to Run with the Land|910|Section 8. Recording|910|Section 9. Agents ofthe Issuer|910|Section 10. No Conflict with Other Documents|910|Section 11. Interpretation|910|Section 12. Amendment|910|Section 13. Severability|910|Section 14. Notices|910|Section 15. Governing Law|910|Section 16. Limited Liability of Owner|910|
EXHIBIT A - LEGAL DESCRIPTION OF THE PROJECT
EXHIBIT B - INCOME COMPUTATION AND CERTIFICATION
EXHIBIT C - CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
t
LAND USE RESTRICTION AGREEMENT
THIS LAND USE RESTRICTION AGREEMENT (this 'Agreement '), entered into as of December 1. 2022. between the CITY OF CHICAGO, a municipal corporation and home rule unit of local government duly organized and validly existing under the Constitution and laws of the State of Illinois (the "Issuer"), and AUBURN GRESHAM APARTMENTS LP, an Illinois limited partnership (the "Owner"),
WITNESSETH:
WHEREAS, pursuant to an ordinance adopted by the Issuer on July 20, 2022 (the "Ordinance") and a funding loan agreement (the "Funding Loan Agreement") with Fifth Third Commercial Funding, Inc.(thc "Construction Funding Lender") and Cedar Rapids Bank & Trust Company (the "Permanent Funding Lender" and together with the Construction Funding Lender, the "Funding Lender"), pursuant to which the Issuer will borrow an aggregate principal amount not to exceed Twenty-Five Million Dollars (S25,000,()0) (the "Funding Loan") for a portion of the purposes set forth above and in evidence of its limited, special obligation lo repay that borrowing, issue a tax-exempt revenue note, to be designated as the Multifamily Mortgage Revenue Note, 2022 Series A (Auburn Gresham) (the "Note") under the terms and conditions ofthe Ordinance and the Funding Loan Agreement,
WHEREAS, thc proceeds derived from the issuance and sale ofthe Note have been lent by the Issuer lo the Owner pursuant to the a borrower loan agreement of even date herewith (the "Borrower Loan Agreement"), between the Issuer and the Owner for the purpose of financing a portion ofthe costs of acquiring, leasing, constructing, and equipping of two low- and moderate- income residential facilities and related common facilities located in the City of Chicago. Cook County, Illinois, known or to be known as Auburn Gresham Apartments, one located at 838 West 79'1' Street, consisting of a 3-story building with 28 units and 28 parking spaces, and thc second located at 757 West 79lh Street, consisting of a 5-story building with 30 units and 14 parking spaces (each, a "Project" and together, thc "Projects") in Chicago, Cook County, Illinois, as more particularly described on Exhibit F hereto (collectively, thc "Property"), and to pay a portion of the costs of issuance and other costs incurred in connection therewith; and
WHEREAS, in order to assure the Issuer and the Funding Lender that interest on the Note will be excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and to further the public purposes ofthe Issuer, certain restrictions on the use and occupancy ofthe Projects under the Code must be established;
NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, and of other good and valuable consideration, thc receipt, sufficiency and adequacy of which arc hereby acknowledged, the Owner and the Issuer agree as follows:
Section 1. Term of Restrictions.
(a) Occupancy Restrictions. The term ofthe Occupancy Restrictions set forth in Section 3 hereof shall commence on the first day on which at least 10% ofthe units are fust occupied following completion of such units and shall end on the latest of (i) the date which is 15 years after the date on which at least 50% ofthe units in a Project is first occupied; (ii) the first date on which no tax-exempt note or bond (including any refunding note or bond) issued with respect to a the Projects are outstanding (treating, for such purpose, the Projects are being financed in part by all Note); or (iii) the date on which any housing assistance provided with respect to a Project under Section 8 ofthe United States Housing
Act ol" 1937. as amended, terminates (which period is hereinafter referred with respect to the Projects as the "Qualified Projects Period").
Rental Restrictions. Thc Rental Restrictions with respect to the Projects set forth in Section 4 hereof shall remain in effect during thc Qualified Project Period.
Involuntary Loss or Substantial Destruction. The Occupancy Restrictions set forth in Section 3 hereof, and the Rental Restrictions set forth in Section 4 hereof, shall cease to apply to the Projects in the event of involuntary noncompliance caused by lire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in federal law or an action ofa federal agency (with respect to the Project) after the date of delivery ofthe Note, which prevents the Issuer from enforcing the Occupancy Restrictions and the Rental Restrictions (with respect to the Project), or condemnation or similar event (with respect to the Project), but only if, within a reasonable time, (i)all ofthe Note is promptly retired, or amounts received as a consequence of such event are used to provide a new project which meets all ofthe requirements ofthis Agreement, which new project is subject to new restrictions substantially equivalent to those contained in this Agreement, and which is substituted in place of the Projects by amendment ofthis Agreement; and (ii) an opinion from nationally recognized bond counsel (selected by the Issuer) is received to the effect that noncompliance with the Occupancy Restrictions and the Rental Restrictions applicable to the Projects as a result of such involuntary loss or substantial destruction resulting from an unforeseen event with respect to the Projects will not adversely affect the exclusion ofthe interest on the Note from the gross incomes ofthe owners thereof for purposes of federal income taxation; provided, however, that the preceding provisions ofthis paragraph shall cease to apply in the case of such involuntary noncompliance caused by foreclosure, transfer of title by deed in lieu of foreclosure or similar event if at any time during the Qualified Project Period with respect to the Projects subsequent to such event the Owner or any Affiliated Party (as hereinafter defined) obtains an ownership interest in the Projects for federal income tax purposes. "Affiliated Party" means a person whose relationship to another person is such that (i) the relationship between such persons would result in a disallowance of losses under Section 267 or 707(b) of the Code; or (ii) such persons are members ofthe same controlled group of corporations (as defined in Section 1563(a) ofthe Code, except that "more than 50%" shall be substituted for "at least 80%)" each place it appears therein).
Termination. This Agreement shall terminate with respect to each respective Project upon thc earliest of (i) termination ofthe Occupancy Restrictions and the Rental Restrictions with respect to that Project, as provided in paragraphs (a) and (b) ofthis Section 1; or (ii) delivery to the Issuer and the Owner of an opinion of nationally recognized bond counsel (selected by the Issuer) to the effect that continued compliance of that Project with the Rental Restrictions and thc Occupancy Restrictions applicable to the Projects arc not required in order for interest on the Note to remain excludiblc from gross income for federal income tax purposes.
Certification. Upon termination of this Agreement, the Owner and the Issuer shall execute and cause to be recorded (at thc Owner's expense), in all offices in which this Agreement was recorded, a certificate of termination, specifying which ofthe restrictions contained herein has terminated.
Encumbrance of Fee. In furtherance of enforcing compliance with the provisions of Section 142(d) of the Code and Section 1.103-8(b) ol" the Regulations applicable to this Agreement, unless the provisions of paragraph (c) or (d) above apply to the Projects resulting in a termination ofthe restrictions set forth herein, such restrictions shall continue to apply to the Projects following the termination ofthe Owner's or any other party's leasehold estate therein, whether or not the Projects are thereafter released by thc Issuer.
Section 2. Projects Restrictions. The Owner represents, warrants and covenants that:|10 10|
The Owner has reviewed the provisions of the Code and the Treasury Regulations thereunder (the "Regulations") applicable to this Agreement (including, without limitation. Section 142(d) ofthe Code and Section 1.103-8(b) ofthe Regulations) with its counsel and understands said provisions.
Each Project is being acquired, leased, constructed and equipped for the purpose of providing a "qualified residential rental project" (as such phrase is used in Section 142(d) ofthe Code) and will, during the term ofthe Rental Restrictions and Occupancy Restrictions hereunder applicable to each Project continue to constitute a "qualified residential rental project" under Section 142(d) ofthe Code and any Regulations heretofore or hereafter promulgated thereunder ami applicable thereto.
Substantially all (not less than 95%) of each Project will consist of a "building or structure" (as defined in Section I. l()3-8(b)(8)(iv) ofthe Regulations), or several proximate buildings or structures, of similar construction, each containing one or more similarly constructed residential units (as defined in Section 1.103-8(b)(8)(i) ofthe Regulations) located on a single tract of land or contiguous tracts of land (as defined in Section 1.103-8(b)(4)(ii)-(B) ofthe Regulations), which will be owned, for federal tax purposes, at all times by the same person, and financed pursuant to a common plan (within the meaning of Section 1.103-8(b)(4)(ii) of the Regulations), together with functionally related and subordinate facilities (within the meaning of Section 1.103-8(b)(4)(iii) ofthe Regulations). If any such building or structure contains fewer than five (5) units, no unit in such building or structure shall be Owner-occupied.
(dj None ofthe units in each Project will at any time be used on a transient basis, nor will any Projects itself be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or trailer park or court for use on a transient basis; nor shall any portion of each Project be operated as an assisted living facility which provides continual or frequent nursing, medical or psychiatric services; provided, however that nothing herein shall be understood to prohibit single room occupancy units occupied under month to month leases.
All ofthe units in the Projects will be leased or rented, or available for lease or rental, on a continuous basis to members of the general public (other than (i) units for resident managers or maintenance personnel, (ii) units for Qualifying Tenants as provided for in Section 3 hereof, and (iii) units which may be rented under thc Section 8 assistance program, which units (subject to the Section 8 assistance program) shall be leased to eligible tenants in accordance with Section 8 requirements), subject, however, to the requirements of Section 3(a) hereof. Each Qualifying Tenant (as hereinafter defined) occupying a Unit in the Projects shall be required to execute a written lease with a slated term of not less than 30 days nor more than one year.
Any functionally related and subordinate facilities (e.g., parking areas, swimming pools, tennis courts, etc.) which arc included as part of each Project, will be of a character and size commensurate with the character and size of such Projects and will be made available to all tenants in the Projects on an equal basis; fees will only be charged with respect to the use thereof if the charging of fees is customary for the use of such facilities at similar residential rental properties in the surrounding area (i.e., within a one-mile radius), or, if none, then within comparable urban settings in the City of Chicago, and then only in amounts commensurate with the fees being charged at similar residential rental properties within such area. In any event, any fees charged will not be discriminatory or exclusionary as to the Qualifying Tenants (as defmed in Section 3 hereof)- No functionally related and subordinate facilities will be made available to persons other than tenants or their guests.
Each residential unit in cither Project will contain separate and complete facilities for living, sleeping, eating, cooking and sanitation for a single person or family.
3 ~
(hj No portion of the Projects will be used to provide any health club Facility (except as provided in (f) above), any Facility primarily used For gambling, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises, in violation of Section 147(e) of the Code.
Section 3. Occupancy Restrictions. The Owner represents, warrants and covenants with respect to thc Projects that:
Pursuant to the election of the Issuer in accordance with the provisions of Section 142(d)(1)(A) ofthe Code, at all times during the Qualified Project Period with respect to the Projects at least 40% ofthe completed units in each Project shall be continuously occupied (or treated as occupied as provided herein) or held available for occupancy by Qualifying Tenants as herein defined. For purposes ofthis Agreement, "Qualifying Tenants" means individuals or families whose aggregate adjusted incomes do not exceed 60% ofthe applicable median gross income (adjusted for family size) for the area in which the Projects are located, as such income and area median gross income are determined by the Secretary ofthe United States Treasury in a manner consistent with determinations of income and area median gross income under Section 8 ofthe United States Housing Act of 1937, as amended (or, if such program is terminated, under such program as in effect immediately before such determination).
Prior to the commencement of occupancy ofany unit to be occupied by a Qualifying Tenant, the prospective tenant's eligibility shall be established by execution and delivery by such prospective tenant of an Income Computation and Certification in the form attached hereto as Exhibit B (the "Income Certification") evidencing that the aggregate adjusted income of such prospective tenant does not exceed the applicable income limit. In addition, such prospective tenant shall be required to provide whatever other information, documents or certifications arc reasonably deemed necessary by the Owner or the Issuer to substantiate the Income Certification.
Not less frequently than annually, the Owner shall determine whether the current aggregate adjusted income of each tenant occupying any unit being treated by the Owner as occupied by a Qualifying Tenant exceeds thc applicable income limit. For such purpose the Owner shall require each such tenant to execute and deliver the Income Certification; provided, however, that for any calendar year during which no unit in the Projects are occupied by a new resident who is not a qualifying tenant, no Income Computation and Certification for existing tenants shall be required.
Any unit vacated by a Qualifying Tenant shall be treated as continuing to be occupied by such tenant until reoccupied, other than for a temporary period not to exceed 31 days, at which time the character of such unit as a unit occupied by a Qualifying Tenant shall be redetermined.
If an individual's or family's income exceeds the applicable income limit as ofany date of determination, the income of such individual or family shall be treated as continuing not to exceed thc applicable limit, provided that the income of an individual or family did not exceed the applicable income limit upon commencement of such tenant's occupancy or as of any prior income determination, and provided, Further, that if any individual's or family's income as oFthe most recent income determination exceeds 140% of the applicable income limit, such individual or Family shall cease lo qualify as a Qualifying Tenant if, prior to the next income determination of such individual or Family, any unit in the Projects of comparable or smaller size to such individual's or family's unit is occupied by any tenant other than a Qualifying Tenant.
flic lease to be utilized by the Owner in renting any Unit in the Projects to a prospective Qualifying Tenant shall provide for termination of the lease and consent by such person to eviction following 30 days' written notice, subject to applicable provisions of Illinois law (including for such|1010|
purpose all applicable home rule ordinances). Tor any material misrepresentation made by such person with respect to the Income Certification with the effect that such tenant is not a Qualified Tenant.
All Income Certifications will be maintained on file at thc Projects as long as the Note is outstanding and for live years thereafter with respect lo each Qualifying Tenant who occupied a Unit in the Projects during the period the restrictions hereunder arc applicable, and the Owner will, promptly upon receipt, file a copy thereof with the Issuer.
On the first day ofthe Qualified Project Period with respect to a Projects on the fifteenth days of January, April, July and October of each year during thc Qualified Project Period with respect to such Project, and within 30 days after thc final day of each month in which there occurs any change in thc occupancy of a Unit in such Project, the Owner will submit to the Issuer a "Certificate of Continuing Program Compliance/' in the form attached hereto as Exhibit C executed by the Owner with respect to the Project.
(i) The Owner shall submit to the Secretary ofthe United States Treasury (at such lime and
in such manner as the Secretary shall prescribe) with respect to the Projects, an annual certification on
form 8703 as to whether such Projects continue to meet the requirements of Section 142(d) ofthe Code.
Failure to comply with such requirement may subject the Owner to the penalty provided in
Section 6652(j) ofthe Code.
Section 4. Rental Restrictions. The Owner represents, warrants and covenants with respect to each Project, that once available for occupancy, each Unit in thc Projects will be rented or available for rental on a continuous basis to members ofthe general public (other than (a) units for resident managers or maintenance personnel, (b) units for Qualifying Tenants as provided for in Section 3 hereof, and (c) units which may be rented under the Section 8 assistance program, which units (subject to the Section 8 assistance program) shall be leased to eligible tenants in accordance with Section 8 requirements). If a Housing Assistance Payments Contract is subsequently entered into with respect to the Projects under thc Section 8 assistance program, in administering the restrictions hereunder with respect to thc Project, thc Owner will comply with all Section 8 requirements.
Section 5. Transfer Restrictions. The Owner covenants and agrees that no conveyance, transfer, assignment or any other disposition of title to any portion ofthe Projects (a "Transfer") shall be made prior to the termination of the Rental Restrictions and Occupancy Restrictions hereunder with respect to thc Project, unless the transferee pursuant to the Transfer assumes in writing (the "Assumption Agreement"), in a form reasonably acceptable to the Issuer, all ofthe executory duties and obligations hereunder of the Owner with respect to such portion of the Project, including those contained in this Section 5, and agrees to cause any subsequent transferee to assume such duties and obligations in thc event ofa subsequent Transfer by the transferee prior to the termination ofthe Rental Restrictions and Occupancy Restrictions hereunder with respect to the Project. The Owner shall deliver the Assumption Agreement to the Issuer at least 30 days prior to a proposed Transfer. This Section 5 shall not apply to any involuntary transfer pursuant to Section 1(c) hereof. This Section shall not be deemed to restrict the transfer of any membership interest in the Owner or a transfer by foreclosure or deed in lieu of foreclosure.
Section 6. Enforcement.
(a) The Owner shall permit all duly authorized representatives ofthe Issuer to inspect any books and records of thc Owner regarding the Projects and thc incomes of Qualifying Tenants which pertain to compliance with the provisions ofthis Agreement and Section 142(d) ofthe Code and thc regulations heretofore or hereafter promulgated thereunder.|1010|
In addition to the information provided for in Section 3(i) hereof, the Owner shall submit any other information, documents or certifications reasonably requested by the Issuer, which the Issuer deems reasonably necessary to substantiate continuing compliance with the provisions ofthis Agreement and Section 142(d) of the Code and the regulations heretofore or hereafter promulgated thereunder.
The Issuer and the Owner each covenant that it will not take or permit to be taken any action within its control lhat il knows would adversely affect the exclusion of interest on the Note from the gross income of lhe owners thereof for purposes of federal income taxation pursuant to Section 103 of thc Code. Moreover, each covenants to take any lawful action within its control (including amendment of this Agreement as may be necessary in the opinion of nationally recognized bond counsel selected by thc Issuer) to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department ofthe Treasury or thc Internal Revenue Service from time lo time pertaining to obligations issued under Section 142(d) ofthe Code and affecting the Project.
The Owner covenants and agrees to inform the Issuer by written notice of any violation of its obligations hereunder within five days of first discovering any such violation. If any such violation is not corrected to the satisfaction ofthe Issuer within the period of time specified by either the Issuer, which shall be (i) the lesser of (A) 60 days after the effective date ofany notice to or from the Owner, or (B) 75 days from the date such violation would have been discovered by the Owner by the exercise of reasonable diligence, or (ii) such longer period as may be necessary to cure such violation, provided bond counsel (selected by the Issuer) of nationally recognized standing in matters pertaining to lhe exclusion of interest on municipal bonds from gross income for purposes of federal income taxation issues an opinion that such extension will not result in the loss of such exclusion of interest on the Note, without further notice, the Issuer shall declare a default under this Agreement effective on the date of such declaration of default, and the Issuer shall apply to any, court, state or federal, for specific performance of this Agreement or an injunction against any violation ofthis Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct noncompliance with this Agreement.
The Owner and the Issuer each acknowledge that the primary purposes for requiring compliance with the restrictions provided in this Agreement are to preserve lhe exclusion of interest on the Note from gross income for purposes of federal income taxation, and that the Issuer, on behalf of the owners of the Note, who are declared to be third-party beneficiaries of this Agreement, shall be entitled for any breach of the provisions hereof, to all remedies both at law and in equity in thc event of any default hereunder.
In the enforcement ofthis Agreement, thc Issuer may rely on any certificate delivered by or on behalf of the Owner or any tenant with respect to thc Project.
Nothing in this Section shall preclude the Issuer from exercising any remedies it might otherwise have, by contract, statute or otherwise, upon the occurrence ofany violation hereunder.
(hj Notwithstanding anything to the contrary contained herein, the Issuer hereby agrees that any cure ofany default made or tendered by one or more ofthe Owner's members shall be deemed to be a cure by the Owner and shall be accepted or rejected on the same basis as if made or tendered by the Owner.
Section 7. Covenants to Run with the Land, flic Owner hereby subjects each Project, and thc units to the covenants, reservations and restrictions set forth m this Agreement, l he Issuer and the Owner hereby declare their express intent that the covenants, reservations and restrictions set forth herein|1010|
shall be deemed covenants, reservations and restrictions running with the land to the extent permitted by law, and shall pass to and be binding upon the Owner's successors in title to the Project, the units, and the Property, throughout thc term ofthis Agreement. Each and every contract, deed, mortgage, lease or other instrument hereafter executed covering or conveying the Project, the units, or any portion thereof or interest therein (excluding any transferee ofa membership interest in thc Owner), shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed, mortgage, lease or other instrument.
Sections. Recording. Thc Owner shall cause this Agreement and all amendments and supplements hereto to be recorded in the conveyance and real property records of Cook County, Illinois, and in such other places as the Issuer may reasonably request. The Owner shall pay all fees and charges incurred in connection with any such recording.
Section 9. Agents of the Issuer. The Issuer shall have the right to appoint agents to carry out any of its duties and obligations hereunder, and shall, upon written request, certify in writing to the other party hereto any such agency appointment.
Section 10. No Conflict with Other Documents. Thc Owner warrants and covenants that it has not and will not execute any other agreement with provisions inconsistent or in conflict with the provisions hereof (except documents that are subordinate to the provisions hereof), and the Owner agrees that the requirements of this Agreement are paramount and controlling as to the rights and obligations herein set forth, which supersede any other requirements in conflict herewith.
Section 11. Interpretation. Any capitalized terms not defined in this Agreement shall have the same meaning as terms defined in the Funding Loan Agreement, thc Borrower Loan Agreement or Section 142(d) ofthe Code and the regulations heretofore or hereafter promulgated thereunder.
Section 12. Amendment. Subject to any restrictions set forth in the Funding Loan Agreement, this Agreement may be amended by thc parties hereto to reflect changes in Section 142(d) of thc Code, the regulations hereafter promulgated thereunder and revenue rulings promulgated thereunder, or in the interpretation thereof.
Section 13. Severability. The invalidity ofany clause, part or provision of this Agreement shall not affect the validity ofthe remaining portions thereof.
Section 14. Notices. Any notice, demand or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given if and when personally delivered and receipted for, or, if sent by private courier service or sent by overnight mail service, shall be deemed to have been given if and when received (unless the addressee refuses to accept delivery, in which case it shall be deemed to have been given when first presented to the addressee for acceptance), or on the first day after being sent by telegram, or on thc third day after being deposited in United States registered or certified mail, postage prepaid. Any such notice, demand or other communication shall be given as provided for in Section 11.1 ofthe Funding Loan Agreement.
Section 15. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Illinois, and where applicable, the laws of the United States of America.
Section 16. Limited Liability of Owner. Notwithstanding any other provision or obligation stated in or implied by this Agreement to the contrary, any and all undertakings and agreements ofthe|1010|
Owner contained herein shall not (other than as expressly provided hereinafter in this paragraph) be deemed, interpreted or construed as the personal undertaking or agreement of. or as creating any personal liability upon, any past, present or future member ofthe Owner, and no recourse (other than as expressly provided hereinafter in this paragraph) shall be had against the property ofthe Owner or any past, present or future member of the Owner, personally or individually for the performance of any undertaking, agreement or obligation, or the payment ofany money, under this Agreement or any document executed or delivered by or on behalf of the Owner pursuant hereto or in connection herewith, or for any claim based thereon. It is expressly understood and agreed that the Issuer and the registered owners ofthe Note, and their respective successors and assigns, shall have the right to sue for specific performance of this Agreement and to otherwise seek equitable relief for the enforcement ofthe obligations and undertakings of the Owner hereunder, including, without limitation, obtaining an injunction against any violation of this Agreement or the appointment ofa receiver to take over and operate all or any portion ofthe Projects in accordance with the terms ofthis Agreement. This Section shall survive termination ofthis Agreement.
[Signatures Appear on Following Page]
cS
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed and sealed by their respective, duly authorized representatives, as ofthe day and year First above written.
CITY OF CHICACO
Jennie^Huang Bennett, Chief Financial Officer
(SEAL) ATTEST: f
Andrea M. Valencia, City Clerk
Signature Page to Land Use Restriction Agreement
STATE OF ILLINOIS )
) ss:
COUNTY OF COOK )
BEFORE ME, the undersigned authority, on this day personally appeared JENNIE HUANG BENNETT and ANDREA M. VALENCIA, the CHIEF FINANCIAL OFFICER and CITY CLERK, respectively, ofthe CITY OF CHICAGO, a municipal corporation and home rule unit of local government duly organized and validly existing under the Constitution and laws ofthe State of Illinois (the "Issuer"), known to mc to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that each executed the same for the purposes and consideration therein expressed and in the capacity therein stated, as the act and deed of said Issuer. .
GIVEN UNDER MY HAND and seal of office, this tha2^J_ day of^fij^^022.
Notary Public in and for the State of Illinois
My commission expires on:
Acknowledged and agreed lo:
AUBURN GRESHAM APARTMENTS LP,
an Illinois limited partnership
By: Auburn Gresham Apartments GP LLC,
an Illinois limited liability company,
its general partner
Name: David Block Title: Manager
Signature Page to Land Use Restriction Agreement
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for thc county and State aforesaid, do hereby certify that David Block, personally known to me to be the Manager of Auburn Gresham Apartments GP LLC, an Illinois limited liability company (the "General Partner"), the general partner of Auburn Gresham Apartments LP, an Illinois limited partnership, and personally known to be to be the same person whose name is subscribed to the foregoing instrument, appeared before mc this day in person and severally acknowledged that as such manager, he signed and delivered the said instrument, pursuant to authority given by the members ofthe General Partner as his free and voluntary act, and as the free and voluntary act and deed of the General Partner and Auburn Gresham Apartments LP, for the uses and purposes therein set forth.
Given under my hand and official seal this day of , 2022.
(SEAL)
r ^iHCi. KAITLYN ELIZABETH NIBBELIN
I 4W OFFICIAL SEAL
EXHIBIT A
PROJECT LEGAL DESCRIPTION Auburn-Gresham Apartments
PARCEL 1:
LOTS 6. 7, 8, 9 AND 10 IN BLOCK 4 IN GEORGE A CHAMBERS SUBDIVISION OF THAT PART OFTHE NORTH 1/2 OF THE NORTH 1/2 OF THE NORTHWEST 1/4 OF SECTION 33, TOWNSHIP 38 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
Address: 757 West 79,h Street, Chicago, IL, 60620
PIN: 20-33-100-001-0000
PARCEL 2:
LOTS 15, 16, 17, 18, 19, 20, 21, 22 AND 23, IN BLOCK 31 IN WEST AUBURN, A SUBDIVISION OF BLOCKS 17, 18, 19, 20, 29, 30, 31 AND 32 IN THE SUBDIVISION OF THE SOUTHEAST 1/4 OF SECTION 29, TOWNSHIP 38 NORTH, RANGE 14. EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
Address: 838 West 79,h Street f/k/a 834-858 West 79th Street, Chicago, IL 60620
PINs: 20-29-430-027-0000 20-29-430-028-0000 20-29-430-029-0000 20-29-430-030-0000 20-29-430-031-0000 20-29^430-032-0000
PARCEL 3:
LOTS 13 AND 14 IN BLOCK 31 IN WEST AUBURN, A SUBDIVISION OF BLOCKS 17, 18, 19, 20, 29, 30, 31 AND 32 IN THE SUBDIVISION OF THE SOUTHEAST 1/4 OF SECTION 29, TOWNSHIP 38 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
Address: 838 West 79lh Street f/k/a 834 West 79th Street, Chicago, IL 60620
PINs: 20-29-430-033-0000 20-29-430-034-0000
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EXHIBIT B
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD'") Regulations (24 CTR Part 5). You should make certain that this form is at all times up to date with HUD Regulations. All capitalized terms used herein shall have the meanings set forth in the Land Use Restriction Agreement, dated as of December 1, 2022, among the City of Chicago and AUBURN GRESHAM APARTMENTS LP. an Illinois limited partnership (together with its successors and assigns, the "Owner").
Re: Auburn Gresham Apartments Chicago, IL
l/Wc, the undersigned, being first duly sworn, state that l/we have read and answered fully and truthfully each of thc following questions for all persons who are to occupy the unit in the above apartment project for which application is made. Listed below arc the names of all persons who intend to reside in the unit:
Name of Members of Relationship to Head Social Security Place of
the Household of Household Age Number Employment
HEAD
SPOUSE
6. Total Anticipated Income. The total anticipated income, calculated in accordance with this paragraph 6, of all persons listed above for the 12-month period beginning the date that l/we
plan to move into a unit (i.e., ) is S . Included in the total anticipated income listed above
are:
the full amount, before payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services;
the net income from operation ofa business or profession or net income from real or personal property (without deducting expenditures for business expansion or amortization or capital indebtedness); an allowance for depreciation of capital assets used in a business or profession may be deducted, based on straight-line depreciation, as provided in Internal Revenue Service regulation; include any withdrawal of cash or assets from the operation of a business or profession, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by thc above persons;
interest and dividends (see 7(C) below):
' The form olTncome Computation and Certification shall be conformed to any amendments made to 24 CT R Part 5, or any regulatory provisions promulgated in substitution therefor.
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the lull amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump sum payment for the delayed start ofa periodic payment;
payments in lieu of earnings, such as unemployment and disability compensation, workmen's compensation and severance pay:
thc amount ofany public welfare assistance payment; ifthe welfare assistance payment includes any amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of:
the amount of the allowance or grant exclusive ofthe amount specifically designated for shelter or utilities, plus
the maximum amount that thc welfare assistance agency could in fact allow thc family for shelter and utilities (ifthe family's welfare assistance is ratably reduced from the standard of need by applying a percentage, the amount calculated under this paragraph 6(0 shall be the amount resulting from one application ofthe percentage);
periodic and determinable allowances, such as alimony and child support payments and regular contributions or gifts received from persons not residing in the dwelling; and
all regular pay, special pay and allowances ofa member ofthe Armed Forces. Excluded from such anticipated total income are:
income from employment of children (including foster children) under the age of 18 years;
payment received for the care of foster children or foster adults:
lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses;
amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family member:
(c) income ofa live-in aide;
the full amount of student financial assistance paid directly to the student or to the educational institution;
special pay to a family member serving in thc Armed Forces who is exposed to hostile fire;
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(h) amounts received under training programs Funded by the Department oF I lousing
and Urban Development ("HUD");
(i) amounts received by a disabled person that arc disregarded For a limited time For
purposes oF Supplemental Security Income eligibility and benefits because they arc set
aside For use under a Plan to Attain Self-Sufficiency (PASS);
(j) amounts received by a participant in other publicly assisted programs which are specifically For or in reimbursement oF out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program;
(k) a resident service stipend in a modest amount (not to exceed $200 per month) received by a resident For performing a service For the Owner, on a part-time basis, that enhances the quality of life in the Project, including, but not limited to, fire patrol, hall monitoring, lawn maintenance and resident initiatives coordination (no resident may receive more than one stipend during the. same period of time);
(1) compensation from state or local employment training programs in training ofa family member as resident management staff, which compensation is received under employment training programs (including training programs not affiliated with a local government) with clearly defined goals and objectives, and which compensation is excluded only for the period during which the family member participates in the employment training program;
(m) reparations payment paid by a foreign government pursuant to claims filed under the laws of that government For persons who were persecuted during the Nazi era:
(n) earnings in excess of $480 for each full-time student, 18 years or older, but excluding the head of household and spouse;
(o) adoption assistance payments in excess of $480 per adopted child;
(p) deferred periodic payments of supplemental security income and social security benefits that are received in a lump sum payment;
(q) amounts received by the family in the form of refunds or rebates under state or local law for property taxes paid on the dwelling unit;
fr) amounts paid by a state agency to a family with a developmentally disabled Family member living al home to oFFsel the cost oF services and equipment needed to keep the developmentally disabled Family member at home;
(s) temporary, nonrecurring or sporadic income (including gifts); and
(t) amounts specifically excluded by any other federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program lo which thc exclusions set Forth in 24 CTR 5.609(c) apply.
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7. Assets.
(a) Do thc persons whose income or contributions are included in Item 6 above:
have savings, stocks, bonds, equity in real property or other form of
capital investment (excluding the values of necessary items of personal property
such as furniture and automobiles, equity in a housing cooperative unit or in a
manufactured home in which such family resides, and interests in Indian trust
land)? Yes No.
have they disposed ofany assets (other than at a foreclosure or
bankruptcy sale) during the last two years at less than fair market value?
Yes " No.
(b) Ifthe answer to (i) or (ii) above i.s yes, does the combined total value of all
such assets owned or disposed of by -all such persons total more than $5,000?
Yes No.
(c) If the answer to (b) above is yes, state:
the total value of all such assets: $
the amount of income expected to be derived from such assets in the
12-month period beginning on the date of initial occupancy ofthe unit that you
propose to rent: $ _; and
the amount of such income, if any, that was included in Item 6 above:
$ .
8. Full-time Students.
(a) Arc all ofthe individuals who propose to reside in the unit full-time students? Yes No.
A full-time student is an individual enrolled as a full-time student (carrying a subject load that is considered full-time for day students under the standards and practices of the educational institution attended) during each of five calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or ofa state or political subdivision thereof.
(b) Ifthe answer to 8(a) is yes, are at least two ofthe pioposcd occupants ofthe unit
a husband and wife entitled to lile a joint federal income tax return? Yes
No.
9. Relationship to Projects Owner. Neither myself nor any other occupant ofthe unit l/we propose to rent is thc Owner, has any family relationship to the Owner, or owns directly or indirectly any interest in thc Owner. For purposes ofthis paragraph, indirect ownership by an
B-4
individual shall mean ownership by a family member; ownership by a corporation, partnership, estate or trusl m proportion to the ownership or beneficial interest in such corporation, partnership, estate or trust held by the individual or a family member; and ownership, direct or indirect, by a partner ofthe individual.
Reliance. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit and is relevant to the status under federal income tax law ofthe interest on obligations issued lo provide financing for the apartment development for which application is being made. I/We consent lo the disclosure of such information lo the issuer of such obligations, the holders of such obligations, any fiduciary acting on their behalf and any authorized agent of the T reasury Department or the Internal Revenue Service. I/Wc declare that all informalion set forth herein is true, correct and complete and based upon information l/wc deem reliable, and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary.
Further Assistance. 1/We will assist the Owner in obtaining any information or documents required to verify the statements made herein, including, but not limited to, either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding two calendar years.
.Misrepresentation. I/We acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the unit, and may entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings.
[Signatures Appear on following Page]
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I/We declare under penalty of perjury that the foregoing is true and correct. Executed this
day of in . Illinois.
Applicant Applicant
Applicant Applicant
[Signature of all persons over the age of 18 years listed in 2 above required.]
SUBSCRIBED AND SWORN to before me this day of
(NOTARY SEAL)
Notary Public in and for the State of ¦¦
My Commission Expires:
FOR COMPLETION BY APARTMENT OWNER ONLY: 1. Calculation of eligible income:
a. Enter amount entered for entire household in 6 above: S
(1) ifthe amount entered in 7(c)(i) above is greater than $5,000, enter the
total amount entered in 7(c)(ii), subtract from lhat figure thc amount entered in
7(c)(iii) and enter thc remaining balance ($ );
multiply the amount entered in 7(c)(i) times the current passbook savings rate as determined by HUD to determine what the total annual earnings on the amount in
7(c)(ii) would be if invested in passbook savings ($ ), subtract from
that figure thc amount entered in 7(c)(iii) and enter the remaining balance (S
); and
enter al right the greater ofthe amount calculated under (1) or (2) above:
S .
TOTAL ELIGIBLE INCOME (Line La plus line l.b(3)): S
The amount entered in l.c is:
B-6
Less than 80% of Median Gross Income lor Area." More than 80% of Median Gross Income for the Area."'.
Number of apartment unit assigned:
Bedroom Size: _ Rent: $
The last tenants ofthis apartment unit for a period of 31 consecutive days [had/did not have] aggregate anticipated annual income, as certified in thc above manner upon their initial occupancy ofthe apartment unit, of less than 80%> of Median Gross Income for the Area.
5. Method used to verify applicant(s) income:
Employer income verification.
Copies of tax returns.
Other ( )
Owner or Manager
*' "Median Gross Income for the Area" means thc median income for the area where the Projects are located as determined by the Secretary of Housing and Urban Development under Section X(0(3 ) of the United States Housing Act of l°o7, as amended, or if programs under Section S(T) are terminated, median income determined under the method used by the Secretary prior to the termination. "Median Gross Income for the Area'" shall be adjusted for family size.
'" See footnote 2.
B-7
INCOME VEKIEICATION (for employed persons)
The undersigned employee has applied for a rental unit located in a project financed by the City of Chicago. Every income statement ofa prospective tenant must be stringently verified. Please indicate below thc employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis.
Annual wages
Overtime
Bonuses
Commissions
Tolal current income
I hereby certify that the statements above are true and complete to the best of my knowledge.
Signature Date Title
I hereby grant you permission to disclose my income to AUBURN GRESHAM APARTMENTS LP, an Illinois limited liability company, in order that it may determine my income eligibility for rental of an apartment located in one of its Projects which has been financed by the City of Chicago.
Signature Date Please send to:
13-8
INCOME VERIFICATION
(for self-employed persons)
I hereby attach copies of my individual federal and state income tax returns for the immediately preceding two calendar years and certify that the informalion shown in such income tax returns is true and complete to the best of my knowledge.
Signature Date
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EXHIBIT C
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
The undersigned, on behalf of AUBURN GRESHAM APARTMENTS LP, an Illinois limited partnership (together with its successors and assigns, the "Owner"), hereby certifies as follows:
The undersigned has read and is thoroughly familiar with the provisions ofthe Land Use Restriction Agreement, dated as of December I, 2022 (thc "Land Use Restriction Agreement"), between the City of Chicago and the Owner. All capitalized terms used herein shall have the meanings given in the Land Use Restriction Agreement.
Based on Certificates of Tenant Eligibility on tile with the Owner, as ofthe date ofthis Certificate the following number of completed units in thc Projects (i) are occupied by Qualifying Tenants (as such term is defmed in the Land Use Restriction Agreement), or (ii) were previously occupied by Lower-Income Tenants and have been vacant and not reoccupied except for a temporary period of no more than 31 days:
Occupied by Qualifying Tenants**** No. of Units
Previously occupied by Qualifying Tenants (vacant and not reoccupied except for a
temporary period of no more than 31 days): No of Units
Thc total number of completed units in the Projects are __.
Thc total number in 2 is at least 40% ofthe total number in 3 above.
"** A unit all ofthe occupants of which are full-time students does not qualify as a unit occupied by Qualifying Tenants, unless one or more ofthe occupants was entitled to file a ]oint tax return.
C-1
5. No Event ol" Default (as defined in the Land Use Restriction Agreement) has occurred and is subsisting under thc Land Use Restriction Agreement, except as set forth m Schedule A attached hereto.
AUBURN GRESHAM APARTMENTS LP,
an Illinois limited partnership
By: Auburn Gresham Apartments GP LLC, an Illinois limited liability company, its general partner
By: .
Name: David Block Title: Manager