TC Council Packet 02-26-2002
Town Council Meetings
Roll Call Check Sheet
Date: 2/26/02
Michael Brown f ?
Debbie Buckley
Peter Buckley V/,
Rick Cuny _
Mac McDevitt /
Buz Reynolds Jr
Judy Yoder
V
J 'I 'I 'I
\; •` r
`Y`4
?
Roll calls are called at start of meeting and for Ordinances. Do not call Mayor except for
meeting roll call or to break a tie vote.
Seating arrangements from west to east: P. Buckley, Cuny, Reynolds, Yoder, McDevitt,
D. Buckley, Brown
Staff Present:
Bill Efting
X Larry Brooks
I Kris Nash
A,_Jacquie Halburnt
Scott Wright
Jeff Layman
'r Norm Wood
Meryl Jacobs
k Bob Reed
X Harry Taylor
Ruth Borne
Other Staff
4e
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IATown ClerkTouncilTacketsTouncil Meeting Check List.doc
STATE OF COLORADO )
COUNTY OF EAGLE ) SS
TOWN OF AVON )
NOTICE IS HEREBY GIVEN THAT A WORK SESSION OF THE TOWN COUNCIL
OF THE TOWN OF AVON, COLORADO, WILL BE HELD FEBRUARY 26, 2002,
AT 4:45 PM IN THE MUNICIPAL BUILDING, 400 BENCHMARK ROAD, AVON,
COLORADO FOR THE PURPOSE OF DISCUSSING AND CONSIDERING THE
FOLLOWING:
4:45 PM - 5:00 PM 1.) Catholic Charities
5:00 PM - 5:15 PM 2.) Staff Updates
Consent Agenda Questions
Council Committee Updates
AND SUCH OTHER BUSINESS AS MAY COME BEFORE THE COUNCIL
THIS MEETING IS OPEN TO THE PUBLIC
TOWN OF AVON, COLORADO
BY:
listen Nash
Town Clerk
POSTED AT THE FOLLOWING PUBLIC PLACES WITHIN THE TOWN OF AVON
ON FEBRUARY 22,2002:
AVON MUNICIPAL BUILDING IN THE MAIN LOBBY
ALPINE BANK
AVON RECREATION CENTER
CITY MARKET IN THE MAIN LOBBY
1ATown Clerk\Council\Agendas & Worksessions\Agenda-Worksession.doc
TOWN OF AVON
REGULAR COUNCIL MEETING AGENDA
February 26, 2002 - 5:30 PM
1. Call to Order / Roll Call
2. Citizen Input
3. Ordinances
a.) Second Reading of Ordinance No. 02-03, Series of 2002, An Ordinance Authorizing and
Directing the Issuance of up to $15,305,000 of the Town's Multifamily Housing Revenue
l? Bonds (GNMA Mortgage-Backed Securities Program - Buffalo Ridge II Apartments
Project), Series 2002, the Execution and Delivery of a Financing Agreement, a Trust
i Indenture, a Bond Purchase Agreement, and Related Documents; Authorizing and
Directing the Execution and Delivery of Such Bonds; Making Certain Determinations
` with Respect Thereto; Providing for the Principal Amount, Numbers, Provisions for
Redemption and Tender and Maturity of, and Rates of Interest on, the Bonds; Requesting
V the Trustee to Authenticate the Bonds; Authorizing Investments; Authorizing Incidental
i' Action; and Repealing Inconsistent Actions (Larry Brooks) Public Hearing
4. Resolutions
a.) Resolution No. 02-09, Series of 2002, A Resolution Authorizing a Contract with the
Colorado Department of Transportation Relating to the Maintenance of Proposed
Roundabouts at Post Boulevard and I-70 Interchange in the Town of Avon
5. Unfinished Business
6. New Business
j'
7. Town Manager Report R P4 0` W.
8. Town Attorney Report )
ell
9. Mayor Report E9. ; T-
rk.
10. Other Business
I:\Town Clerk\Council\Agendas & Worksessions\Agenda-Regular Meeting.doc
11. Consent Agenda
a.) Approval of the February 12, 2002 Council Meeting Minutes
b.) Resolution No. 02-08, Series of 2002, A Resolution Approving the Temporary Easement
for Lot 30, Block 1, Benchmark at Beaver Creek Subdivision, Town of Avon, Eagle
County, Colorado
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Resolution No. 02-10, Series of 2002, A Resolution Revising Fee Schedule
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Pertaining to Fees for Building, Mechanical, Plumbing, Grading and Electrical Permits,
Town of Avon, Eagle County, Colorado
?y. d.) Resolution No. 02-11, Series of 2002, A Resolution Affirming Avon Town Council's
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f F,? e.) Resolution No. 02-12, Series of 2002, A Resolution Adopting a Restated and Amended
Plan Document for the Town of Avon Public Employees Money Purchase Pension Plan
-` £) Resolution No. 02-13, Series of 2002, A Resolution Adopting a Restated and Amended
Plan Document for the Town of Avon Police Employees Money Purchase Pension Plan
g.) Resolution No. 02-14, Series of 2002, A Resolution Amending a Deferred Compensation
Plan
h.) Resolution No. 02-15, Series of 2002, A Resolution Approving and Authorizing
Execution of a Pipeline Crossing Agreement with the Union Pacific Railroad Company
as Required for Completion of the Metcalf Stormwater Drainage Project in the Town of
Avon, Colorado
12. Adjournment
I:\Town Clerk\Council\Agendas & Worksessions\Agenda-Regular Meeting.doc
C O L O R A D O
Tom cfAwn
P.O. Bca975
900 Bid TE rk Rwd
Awn, Cdaacb 81620
970-798.9005
Office of the Assistant Town Manager
To: Honorable Mayor and Town Council
Fr: Larry Brooks, Assistant Town Manager
Via: Bill Efting, Town Manager
Dt: 2/20/02
Re: Buffalo Ridge II
The attached ordinance will authorize the funding of 176 units of Buffalo Ridge Affordable
Housing Project. The remaining 68 units will be funded separately as conduit debt that will
be discussed and approved at the 3/26 meeting. At the meeting of March 26, the council will
also review the final pricing resolution for the PAB bonds, which provides the information
needed to fill in the blanks that currently exist in the documents.
Bond Counsel (Hogan and Hartson), will be present in the event there are any questions
regarding the funding documents. We will not require that the attorneys or stake holders in
the agreement make any presentations since this was done at first reading. These bonds do
not result in debt, indebtedness or financial obligation of the Town of Avon, but rather are
payable solely from the revenues derived from the project.
Recommended Action: Approve Ordinance No. 02-03, Series of 2002 at second reading.
Town Manager Comments:
STATE OF COLORADO )
COUNTY OF EAGLE ) SS
TOWN OF AVON )
NOTICE IS HEREBY GIVEN OF A PUBLIC HEARING BEFORE THE TOWN COUNCIL
OF THE TOWN OF AVON, COLORADO AT 5:30 P.M. ON THE 26th DAY OF FEBRUARY
2002, AT THE TOWN OF AVON MUNICIPAL BUILDING FOR THE PURPOSE OF
CONSIDERING THE ADOPTION OF ORDINANCE NO. 02-03, SERIES OF 2002:
An Ordinance Authorizing and Directing the Issuance of up to $15,305,000 of the Town's
Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program - Buffalo
Ridge II Apartments Project), Series 2002, the Execution and Delivery of a Financing
Agreement, a Trust Indenture, a Bond Purchase Agreement, and Related Documents;
Authorizing and Directing the Execution and Delivery of Such Bonds; Making Certain
Determinations with Respect Thereto; Providing for the Principal Amount, Numbers, Provisions
for Redemption and Tender and Maturity of, and Rates of Interest on, the Bonds; Requesting the
Trustee to Authenticate the Bonds; Authorizing Investments; Authorizing Incidental Action; and
Repealing Inconsistent Actions
A copy of said Ordinance is attached hereto, and is also on file at the office of the Town Clerk,
and may be inspected during regular business hours.
Following this hearing, the Council may consider final passage of this Ordinance.
This notice is given and posted by order of the Town Council of the Town of Avon, Colorado
Dated this 12th day of February, 2002.
TOWN AVON, COLORADO
BY:
Ktgen Nash
Town Clerk
POSTED AT THE FOLLOWING PUBLIC PLACES WITHIN THE TOWN OF AVON ON
FEBRUARY 14,2002:
AVON MUNICIPAL BUILDING IN THE MAIN LOBBY
ALPINE BANK
AVON RECREATION CENTER
CITY MARKET IN THE MAIN LOBBY
TOWN OF AVON, COLORADO
ORDINANCE NO. 02-03
AN ORDINANCE AUTHORIZING AND DIRECTING THE
ISSUANCE OF UP TO $15,305,000 OF THE TOWN'S
MULTIFAMILY HOUSING REVENUE BONDS (GNMA
MORTGAGE-BACKED SECURITIES PROGRAM - BUFFALO
RIDGE II APARTMENTS PROJECT), SERIES 2002, THE
EXECUTION AND DELIVERY OF A FINANCING
AGREEMENT, A TRUST INDENTURE, A BOND PURCHASE
AGREEMENT, AND RELATED DOCUMENTS;
AUTHORIZING AND DIRECTING THE EXECUTION AND
DELIVERY OF SUCH BONDS; MAKING CERTAIN
DETERMINATIONS WITH RESPECT THERETO;
PROVIDING FOR THE PRINCIPAL AMOUNT, NUMBERS,
PROVISIONS FOR REDEMPTION AND TENDER AND
MATURITY OF, AND RATES OF INTEREST ON, THE
BONDS; REQUESTING THE TRUSTEE TO AUTHENTICATE
THE BONDS; AUTHORIZING INVESTMENTS;
AUTHORIZING INCIDENTAL ACTION; AND REPEALING
INCONSISTENT ACTIONS.
WHEREAS, the Town of Avon, Colorado (the "Town") is authorized by its Home
Rule Charter (the "Charter") and by the Colorado County and Municipality Development
Revenue Bond Act (the "Act") to issue revenue bonds for the purpose of financing certain
residential housing facilities for commercial and business enterprises; and
WHEREAS, the Town has been requested to enter into a Financing Agreement
(the "Agreement") dated as of April 1, 2002, with Buffalo Ridge II, LLLP, a Colorado limited
liability limited partnership (the "Borrower"), AMI Capital, Inc. (the "Lender") and Wells Fargo
Bank West, National Association (the "Trustee") to finance the development of certain
residential rental housing facilities to be occupied by persons or families of low- or moderate-
income (the "Project") and related costs by the issuance and delivery of its bonds to be known as
"Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program - Buffalo
Ridge II Apartments Project), Series 2002A" (the "Series 2002A Bonds") and "Taxable
Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities Program - Buffalo
Ridge II Apartments Project), Series 2002B" (the Series 2002B Bonds") (the Series 2002A and
the Series 2002B Bonds being referred to together as the "Bonds"), such Bonds to be issued in an
aggregate principal amount not to exceed $15,305,000 and pursuant to a Trust Indenture dated as
of April 1, 2002 (the "Trust Indenture") with the Trustee; and
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WHEREAS, to effect the financing of the Project, pursuant to the Agreement, the
Lender will originate a mortgage loan to the Borrower, which mortgage loan will be evidenced
by the Borrower's promissory note in favor of the Lender and secured by a mortgage on the
Project;
WHEREAS, upon the issuance and delivery of the Bonds, the Town shall cause
the proceeds thereof to be delivered to the Trustee to be applied, in accordance with the
Financing Agreement, toward the purchase from the Lender of fully modified mortgage-backed
securities which will be guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE
TOWN OF AVON, COLORADO, AS FOLLOWS:
Section 1. APPROVAL OF AGREEMENT, TRUST INDENTURE AND
BOND PURCHASE AGREEMENT. The forms of the Agreement, the Trust Indenture, and the
Bond Purchase Agreement with the Borrower and Kirkpatrick Pettis Smith Polian, Inc. (the
"Underwriter"), presented to this meeting (copies of which shall be filed with the records of the
Town) are hereby approved and incorporated by reference as if set forth in full, and the Mayor of
the Town (the "Mayor") is hereby authorized to execute and deliver, and the Town Clerk and
Recorder of the Town (the "Town Clerk") is hereby authorized to affix the seal of the Town
where appropriate to, and attest, such documents in substantially such form and upon the terms
and conditions set forth herein and therein, with such changes therein as such officers shall
approve (including changes in dates and amounts necessary to conform such documents to the
final terms as approved by the Borrower and the Underwriter), such approval to be evidenced by
their execution thereof. Town Council also acknowledges the use and distribution of an official
statement relating to the Bonds by the Borrower and the Underwriter in such form as they deem
appropriate and adequate for the sale of the Bonds.
In accordance with the requirements of the Act, the Town hereby determines that
the following provisions shall be as set forth in the form of the Trust Indenture hereinbefore
approved, which form is hereby incorporated herein by reference as if set forth in full:
(a) Custody of the proceeds from the sale of the Bonds, including their
investment and reinvestment until used to defray the costs of the Project;
(b) The creation of funds or an account into which any Bond proceeds,
revenues and income may be deposited or created;
(c) Limitation on the purpose to which proceeds of any Bonds may be
applied;
(d) Limitation on the issuance of additional bonds, the terms upon
which additional bonds are issued and secured, the refunding of Bonds and the
replacement of Bonds;
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(e) The procedure by which the terms of any contract with
Bondholders may be amended or abrogated;
(f) Vesting in the Trustee such properties, rights, powers and duties in
trust as the Town determines and limiting the rights, duties and powers of the
Trustee; and
(g) The rights and remedies available in case of a default to the
Bondholders or to the Trustee under the Agreement or the Trust Indenture.
In accordance with the requirements of the Act, the Town hereby determines that
(a) the fixing and collection of revenues in respect of the Project shall be as set forth in the form
of Agreement, which form is hereby incorporated herein by reference as if set forth in full, and
(b) as required by the Act, the Town has determined that occupants of the Project shall have
income not to exceed 80% of Adjusted Median Income as published from time to time by the
United States Department of Housing and Urban Development, and that such persons or families
lack the financial ability to pay rentals sufficient to induce private enterprise in the Town of
Avon, Colorado to build a sufficient supply of adequate, safe, and sanitary dwellings without the
special assistance afforded by the Act.
Section 2. ISSUANCE OF BONDS. The issuance of the Bonds is hereby
authorized. The forms of the Bonds set forth in the Trust Indenture are hereby approved; the
Bonds shall be executed with the manual or facsimile signatures of the Mayor and the Town
Clerk on the face of the Bonds in substantially such forms with appropriate insertions and
variations, and the seal of the Town or a facsimile thereof is hereby adopted and authorized to be
affixed or imprinted thereon; and the Mayor or the Town Clerk is authorized and directed to
deliver the Bonds to the Trustee for authentication under the Trust Indenture and, when they have
been authenticated, to deliver them or cause them to be delivered to the Underwriter pursuant to
the Bond Purchase Agreement against receipt of the purchase price as specified therein, plus any
accrued interest due, and to deposit the amount so received with the Trustee as provided in the
Trust Indenture.
Section 3. TERMS OF BONDS. The Bonds shall be in the aggregate
principal amount not to exceed $15,305,000. The actual principal amounts and maturity dates of,
and the interest rates borne by, the Bonds shall be as set forth in a supplemental resolution
adopted by the Town Council and as further provided in the Trust Indenture. The Bonds shall be
dated as of April 1, 2002, and shall be issued as fully registered bonds in minimum
denominations of $5,000 and as shall be specified in the Trust Indenture. Pursuant to the Act,
the maximum net effective interest rate for the Bonds, with which the Bond Purchase Agreement
complies, shall not exceed 10% per annum. Pursuant to the Charter, the final maturity of the
Bonds shall be no later than December 20, 2044. The provisions for optional and mandatory
redemption of the Bonds prior to their maturity, the registration and exchangeability privileges,
the medium of payment, and the priorities in revenues of the Town, shall be as set forth (a) in the
aforesaid form of such Bonds, which form is hereby approved and incorporated by reference as if
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\ \ \DE - 86736 / 1 - #138301 v1
set forth in full, and (b) in the form of the Trust Indenture hereinbefore approved and
incorporated.
The Town hereby confirms the appointment of Wells Fargo Bank West, National
Association under the terms of the Trust Indenture, as the Trustee, Paying Agent and Registrar.
Section 4. DETERMINATION OF REVENUES. In accordance with the Act,
it is hereby determined that (a) no amount is necessary for payment into a reserve fund for
retirement of the Bonds and maintenance of the Project and (b) the Borrower shall be required
under the terms of the Agreement to pay all taxes levied by the State of Colorado and local
taxing bodies with respect to the Project. The scheduled payments of principal and interest on
the Bonds for each year shall be as set forth in a supplemental resolution adopted by the Town
Council.
It is hereby further determined that the Borrower shall be required, under the terms of the
Agreement, to maintain the Project and carry all proper insurance with respect thereto.
Section 5. AUTHENTICATION OF BONDS. The Trustee is hereby
requested to authenticate the Bonds and to deliver them to, or upon the order of, the Mayor or the
Town Clerk.
Section 6. INVESTMENT OF FUNDS. The Trustee shall be, by virtue of
this Ordinance and without further authorization from the Town, authorized, directed and
requested to invest and reinvest all moneys available therefor held by it pursuant to the Trust
Indenture which by the terms of said Trust Indenture may be invested, or to deposit and redeposit
such moneys in such accounts as may be permitted by said Trust Indenture all subject to the
terms and limitations contained in the Trust Indenture.
Section 7. INCIDENTAL ACTION. The Mayor and Town Clerk of the
Town are hereby authorized and directed to execute and deliver such other documents and to take
such other action as may be necessary or appropriate in order to effectuate the delivery of the
aforesaid Agreement, Trust Indenture, and Bond Purchase Agreement, the performance of the
Town's obligations thereunder, and the issuance and sale of the Bonds. Notwithstanding any
other provision of this Ordinance, the Mayor and Town Clerk are hereby authorized to make or
approve such revisions in the Agreement, the Trust Indenture and the Bond Purchase Agreement
as, in the opinion of the Town Attorney, may be necessary or convenient to carry out or assist in
carrying out the purposes of this Ordinance and the financing of the Project through the issuance
of the Bonds, including without limitation determining the actual principal amount of the Bonds.
Section 8. BONDS SHALL NOT CONSTITUTE A PECUNIARY
LIABILITY OF THE TOWN. The Bonds shall be special, limited obligations of the Town,
payable solely from the revenues derived from the Project and shall never constitute the
debt or indebtedness or financial obligation of the Town within the meaning of any
provision or limitation of the Colorado Constitution, the Charter, or Colorado Statutes,
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and shall not constitute or give rise to a pecuniary liability of the Town or a charge against
its general credit or taxing powers.
Section 9. REPEALER. All acts, orders, resolutions, ordinances or parts
thereof, taken by the Town in conflict with this Ordinance are hereby repealed, except that this
repealer shall not be construed so as to revive any act, order, resolution, ordinance or part
thereof, heretofore repealed.
Section 10. ORDINANCE IRREPEALABLE. This Ordinance is, and shall
constitute, a legislative measure of the Town, and after the Bonds are issued and outstanding, this
Ordinance shall constitute a contract between the Town and the owner or owners of the Bonds,
and shall be and remain irrepealable until the Bonds and the interest accruing thereon shall have
been fully paid, satisfied and discharged.
Section 11. SEVERABILITY. If any paragraph, clause or provision of this
Ordinance is judicially adjudged invalid or unenforceable, such judgment shall not affect, impair
or invalidate the remaining paragraphs, clauses or provisions hereof, the intention being that the
various paragraphs, clauses or provisions hereof are severable.
Section 12. PUBLIC HEARING. A public hearing on the proposed issuance
of the Bonds shall be held at the Town Council Chambers on February 26, 2002, at 5:00 p.m.
prior to the final consideration of this Ordinance. The action of the Town Clerk heretofore taken
to publish notice of such a public hearing at least fourteen (14) days prior to February 26, 2002,
is ratified and confirmed.
Section 13. LIMITATION OF ACTIONS. In accordance with the Act, no
action may be brought questioning the legality of the Agreement, the Trust Indenture, the Bonds,
the Bond Purchase Agreement or any agreements related thereto on or after thirty days from the
effective date of this Ordinance.
Section 14. EFFECTIVE DATE. This Ordinance shall take effect seven days
after its passage and public notice thereof.
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PASSED FOR PUBLICATION this 12th day of February, 2002.
TOWN OF AVON, COLORADO
(TOWN SEAL) By:
ayor
TEST:
? Z??
To n Clerk
The foregoing Ordinance will be presented for final passage at the Council's
regular meeting, to be held at Town Council Chambers, on Tuesday, the 26"' day of February,
2002, at 5:00 p.m.
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\\\DE - 86736/1 - #138301 v1
FINALLY PASSED AND ADOPTED the 26`' day of February, 2002.
TOWN OF AVON, COLORADO
(TOWN SEAL) By: -1-6?
or v (j
ATTEST:
Town Clerk
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\\\DE - 86736/1 - #138301 v1
The motion to pass the foregoing Ordinance for publication was duly made by
Council Member M; ha Brow and seconded by Council Member Debbie Buckley ,
and the roll was called with the following results:
Council Members voting "Yes":
Council Members voting "No":
Michael Brown
Debbie Buckley:-
Peter Buckley
Mac McDevitt
The Mayor thereupon declared the Ordinance duly passed for publication and
instructed the Town Clerk to post the Ordinance once in full in at least three public places within
the Town, in addition to the office of the Town Clerk, at least seven days before its consideration
for final passage.
After consideration of other business to come before the Town Council, the
meeting was adjourned.
(TOWN SEAL)
TEST:
Town Clerk
By:
o
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STATE OF COLORADO )
ss.
COUNTY OF EAGLE )
The Town Council of the Town of Avon, Colorado, held a regular meeting open
to the public at the Town Council Chambers at , on Tuesday, the 26"' of
February, 2002, at 5:00 p.m.
The following members of the Town Council, constituting a quorum thereof, were
present:
Council Members:
The following members of the Town Council were absent:
The following persons were also present:
The Town Clerk informed the Town Council that the proposed Ordinance, which
was passed for publication and ordered posted once in full at a regular meeting of the City
Council held on February 12, 2002, was posted in full in at least three public places within the
Town, in addition to the office of the Town Clerk, on February _, 2002.
The Mayor further announced that, in accordance with federal tax law relating to
the issuance of the Bonds which is the subject of such Ordinance, a notice of public hearing has
been published once in the Eagle , a newspaper of general circulation in the Town, in its
issue of February 7, 2002. Valley Enterprise
At or after 5:00 p.m., the Town Council held a public meeting on the proposed
Ordinance, including the issuance of the Bonds and the nature and location of the facilities to be
financed therewith, and all interested persons present were heard by the Town Council.
Thereupon, Council Member moved that the Ordinance be
finally passed, adopted, numbered and ordered posted. Council Member
seconded the motion, and the question being upon the final passage and
adoption of the Ordinance, the roll was called with the following results:
Council Members voting "Yes":
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\\\DE - 86736/1 - #138301 v1
Council Members voting "No":
The Mayor thereupon declared the Ordinance finally passed and adopted and
instructed the Town Clerk to number the same as moved and post the Ordinance once in full in at
least three public places within the Town, in addition to the office of the Town Clerk.
After consideration of other business to come before the Town Council, the
meeting was adjourned.
(TOWN SEAL) By:
M r
ATTEST:
Town Clerk
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\\\DE - 86736/1 - #138301 v1
STATE OF COLORADO )
ss.
COUNTY OF EAGLE )
I, , Town Clerk of the Town of Avon, Colorado, do hereby certify that
the attached copy of Ordinance No. 02-_, is a true and correct copy; that said Ordinance was
passed by the Town Council of the Town of Avon, Colorado, at its regular meeting held at
, the regular meeting place thereof, on Tuesday, the 26th day of
February, 2002; that a true copy of said Ordinance has been authenticated by the signatures of the
Mayor of the Town of Avon and myself as Town Clerk thereof, sealed with the seal of the Town,
and numbered and recorded in a book kept for that purpose in my office; that the foregoing pages
1 through 10, inclusive, constitute a true and correct copy of the record of the proceedings of said
Town Council at its regular meetings of February 12, 2002 and February 26, 2002, insofar as
said proceedings relate to said Ordinance; that said proceedings were duly had and taken, that the
meeting was duly held; and that the persons were present at said meeting as therein shown.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of the Town
of Avon, Colorado this day of February, 2002.
(TOWN SEAL)
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Town Clerk
Town of Avon, Colorado
\\\DE - 86736/1 - #138301 v1
V%
i
FINANCING AGREEMENT
Dated as of April 1, 2002
By and Among
TOWN OF AVON, COLORADO,
as Town
BUFFALO RIDGE II, LLLP,
a Colorado. limited partnership, as Borrower
AMI CAPITAL, INC.,
a Delaware corporation,
as Lender
and
WELLS FARGO BANK WEST, NATIONAL ASSOCIATION,
as Trustee
Relating to:
$11,100,000
Town of Avon, Colorado
Multifamily Housing Project Revenue Bonds
(GNMA Mortgage-Backed Securities Program -
Buffalo Ridge H Apartments Project)
Series 2002A
and
$4,205,000
Town of Avon, Colorado
Taxable Multifamily Housing Project Revenue Bonds
(GNMA Mortgage-Backed Securities Program -
Buffalo Ridge II Apartments Project)
Series 2002B
Pursuant to a Trust Indenture dated as of April 1, 2002, between the Town and the
Trustee, the Town has granted a security interest in and assigned to the Trustee for the benefit of
the Bondholders all right, title and interest of the Town in this Financing Agreement, except for
any deposits to the Excess Investment Earnings Fund and the Town's Unassigned Rights.
///DE - 86736.0001 - 129949 v3
FINANCING AGREEMENT
THIS FINANCING AGREEMENT (this "Financing Agreement") is entered into as of
April 1, 2002, by and among the TOWN OF AVON, COLORADO, a political subdivision of
the State of Colorado (the "Town"), BUFFALO RIDGE II, LLLP, a Colorado limited
partnership (together with its successors and assigns, the "Borrower"), AMI CAPITAL, INC.,
a Delaware corporation (the "Lender") and WELLS FARGO BANK WEST, NATIONAL
ASSOCIATION, as trustee (together with its successors and assigns, the "Trustee") under. a
Trust Indenture of even date herewith between the Town and the Trustee (as amended or
supplemented from time to time, the "Indenture").
BACKGROUND
A. The County and Municipality Development Revenue Bond Act, article 3 of title
29, Colorado Revised Statutes (the "Act") and the Home Rule Charter of the Town (the
"Charter") , authorize the Town to promote the public health, welfare, safety, convenience and
prosperity by financing or refinancing one or more projects (which includes any land, building or
other improvement and real and personal properties) to the end that residential facilities for low-
and middle-income families or persons intended for use as the sole place of residence by the
intended occupants maybe provided; and
B. The Town is further authorized by the Act and the Charter to issue revenue bonds
for the purpose of defraying the cost of financing, refinancing, acquiring, improving, and
equipping any project, the funding of any reserve funds which the governing body of the Town
may deem advisable to establish in connection with the retirement of such revenue bonds or the
maintenance of the project and all incidental expenses incurred in issuing such revenue bonds,
and to secure payment of such revenue bonds as provided in the Act; and
C. By proceedings duly adopted pursuant to and in accordance with the provisions of
the Act and the Charter, the Town has authorized the issuance of its Multifamily Housing
Revenue Bonds (GNMA Mortgage-Backed Securities Program - Buffalo Ridge H Apartments
Project), Series 2002A in the aggregate principal amount of $11,100,000 (the "Series A Bonds")
and its Taxable Multifamily Housing Revenue Bonds (GNMA Mortgage-Backed Securities
Program - Buffalo Ridge H Apartments Project), Series 2002B in the aggregate principal amount
of $4,205,000 (the "Series B Bonds") (the Series A Bonds and the Series B Bonds, together with
any Additional Bond issued under the Indenture, are collectively referred to herein as the
"Bonds") for the purpose of financing the acquisition, construction and equipping of a 178-unit
multifamily housing project known as the Buffalo Ridge Apartments (the "Project") for low-
and middle-income families and persons intended for use as the sole place of residence by the
intended occupants thereof, which Project will be located within the boundaries of the Town; and
D. To finance the Borrower's acquisition, construction and equipping of the Project,
the Lender will originate a mortgage loan to the Borrower (the "Mortgage Loan"); the Mortgage
Loan will be evidenced by the Borrower's promissory note (the "Mortgage Note") in favor of
the Lender and secured by a mortgage (the "Mortgage") on the Project; the Mortgage Loan as
Y
originated by the Lender will be insured by the Federal Housing Administration (the "FHA"), an
organizational unit within the United States Department of Housing and Urban Development
("HUD") pursuant to Section 221(d)(4) of the National Housing Act of 1934, as amended
(the "National Housing Act"); and, to fund the Mortgage Loan and to provide security for the
Bonds, the Trustee will use the proceeds of the Bonds to purchase from the Lender fully
modified mortgage-backed securities (the "GNMA Securities") which will be guaranteed as to
timely payment of principal and interest by the Government National Mortgage Association
("GNMA").
AGREEMENTS
NOW, THEREFORE, in consideration of the respective representations, covenants and
agreements hereinafter contained, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Terms used in this Financing Agreement and defined in the
Indenture or the Borrower's Declaration of Restrictive Covenants of even date herewith (the
"Declaration of Restrictive Covenants") shall have the meanings given to them by the
Indenture or the Declaration of Restrictive Covenants, unless the context clearly indicates
otherwise.
Section 1.02. Rules of Construction. The words "hereof," "herein," "hereunder,"
"hereto" and other words of similar import refer to this Financing Agreement in its entirety.
The terms "agree" and "agreements" contained herein are intended to include and mean
"covenant" and "covenants."
References to Articles, Sections, and other subdivisions of this Financing Agreement are
to the designated Articles, Sections, and other subdivisions of this Financing Agreement as
originally executed.
The headings of this Financing Agreement are for convenience only and shall not define
or limit the provisions hereof.
ARTICLE H
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
Section 2.01. General Representations and Warranties of the Town. The Town
makes the following representations and warranties:
(a) The Town is a political subdivision of the State, created and existing under
the Constitution and laws of the State, with full power and authority to execute and
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deliver the Bond Purchase Agreement, this Financing Agreement, and the Indenture, to
issue the Bonds, and to carry out and perform its obligations under such documents;
(b) The Town has found and hereby declares that the issuance of the Bonds to
assist the financing of the Project is in furtherance of the public purposes set forth in the
Act;
(c) In order to finance the costs of acquisition, construction and equipping of
the Project, in an amount estimated by the Borrower, the Town has duly authorized the
execution, delivery, and performance on its part of the Bonds, the Bond Purchase
Agreement, the Indenture, and this Financing Agreement;
(d) The Town makes no representation or warranty that the amount of the
Mortgage Loan will be adequate or sufficient to finance the acquisition, construction and
equipping of the Project or that the Project will be adequate or sufficient for the purposes
of the Borrower; and
(e) The Town has not pledged, assigned, or granted, and will not pledge,
assign, or grant any of its rights or interest in or under this Financing Agreement for any
purpose other than as provided for in the Indenture.
Section 2.02. Representations, Warranties and Undertakings by the Borrower. The
Borrower makes the following representations and warranties:
(a) Good Standing. The Borrower (i) is a limited liability limited partnership
duly organized and existing, and in good standing, under the laws of the State of
Colorado and is authorized to do business in the State, (ii) has the power to own its
property and to carry on its business as now being conducted and as contemplated by this
Financing Agreement, the Declaration of Restrictive Covenants and the FHA Loan
Documents, and (iii) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary, including, but not limited
to, the State.
(b) Authority. The Borrower has full power and authority to execute and
deliver this Financing Agreement, the Declaration of Restrictive Covenants, and the
FHA Loan Documents, and to incur the obligations provided for herein and therein, all of
which have been duly authorized by all proper and necessary action. All consents or
approvals of any public authority which, to the best of the Borrower's knowledge, are
required as a condition to the validity of this Financing Agreement, the Declaration of
Restrictive Covenants, or the FHA Loan Documents executed and delivered by the
Borrower have been obtained to the extent that the same are obtainable as of the date of
issuance of the Bonds.
(c) Binding Agreements. This Financing Agreement, the Declaration of
Restrictive Covenants, and the FHA Loan Documents executed and delivered by the
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Borrower have been properly executed by the duly authorized representatives of the
Borrower, constitute valid and legally binding obligations of the Borrower, and are fully
enforceable against the Borrower in accordance with their respective terms, subject,
however, to bankruptcy, insolvency or other laws affecting creditors' rights generally, and
with respect to certain remedies which require, or may require, enforcement by a court of
equity, such principles of equity as the court having jurisdiction may impose.
(d) Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or the Project
before any court or administrative agency which, in the opinion of the Borrower or its
counsel, if determined adversely to the Borrower, will materially adversely affect the
Borrower or the Project, or the authority of the Borrower to enter into this Financing
Agreement, the. Declaration of Restrictive Covenants, . or any of the FHA Loan
Documents executed and delivered by the Borrower.
(e) Conflicts, Defaults.
(i) There is (A) no provision of the Borrower's organizational
documents or resolutions of the Borrower and no provision of any existing
mortgage, indenture, contract or agreement binding on the Borrower or affecting
any of the Borrower's property, and (B) to the best of the Borrower's knowledge,
no provision of law or order of court binding upon the Borrower or affecting any
of the Borrower's property, in either case which would conflict with or in any way
prevent the execution, delivery, or performance of the terms of this Financing
Agreement, the Declaration of Restrictive Covenants, or any of the other FHA
Loan Documents executed and delivered by the Borrower, or which would be in
default or violated as a result of such execution, delivery or performance.
(ii) The Borrower is not in material default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party.
(f) Title to Property. The Borrower has secured good and marketable title to
the Land free and clear of any liens or encumbrances (other than the Mortgage and any
encumbrances on the Project approved by HUD and/or the Lender), and it will defend the
title thereto and every part thereof against the claims and demands of all persons
whomsoever claiming by, through or under Borrower.
(g) Approval of Indenture. The Indenture has been submitted to the
Borrower for its examination, and the Borrower acknowledges, by execution of this
Financing Agreement, that it has reviewed the Indenture, and it hereby approves, and
agrees to be bound by the terms and conditions of, the Indenture. The Borrower agrees to
perform fully and faithfully all the duties and obligations which the Town has covenanted
and agreed in the Indenture to cause the Borrower to perform and any duties and
obligations which the Borrower is required by the Indenture to perform, which can be
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performed by the Borrower. The foregoing shall not apply to any duty or undertaking of
the Town, which by its nature cannot be delegated or assigned.
(h) Events Affecting Tax Exemption. If the Borrower becomes aware of any
situation, event or condition which would result in the interest on the Series A Bonds
being included in gross income for federal income tax purposes, the Borrower shall
promptly give written notice thereof to the Town, the Trustee and the Underwriter.
(i) Compliance With Laws. The Project is of the type authorized and
permitted to be financed under the Act and will at all times be operated by the Borrower
in compliance with any applicable provisions of the Act, the Code and the Declaration of
Restrictive Covenants. The Borrower will use due diligence to cause the Project to be
acquired, constructed, and equipped and to be operated in accordance with the Code and
the Act and all other applicable laws, rulings, regulations and ordinances of the State and
the departments, agencies and political subdivisions thereof. The Borrower has obtained
or will obtain on or before the date of the Initial Advance all requisite approvals of the
State and of other federal, state, regional and local governmental bodies for the
commencement of construction of the Project.
(j) No Reliance on Town. The Borrower acknowledges, represents and
warrants that it understands the nature and structure of the transactions relating to the
financing of the Project; that it is familiar with the provisions of all of the documents and
instruments relating to such financing to which it is a party or of which it is a beneficiary;
that it understands the risks inherent in such transactions, including without limitation the
risk of loss of the Project; and that it has not relied on the Town for any guidance or
expertise in analyzing the financial or other consequences of such financing transactions
or otherwise relied on the Town in any manner except to issue the Bonds.
(k) Changes to Project. The Borrower shall make no changes to the Project
or to the operation thereof which would affect the qualification of the Project under the
Act or impair the exclusion from gross income under federal tax law of interest on the
Series A Bonds. The Borrower intends to utilize the Project as residential rental housing
facilities in compliance with Section 142(d) of the Code.
(1) Cost of Issuance Limit. The aggregate amount of the proceeds of the
Series A Bonds used to pay costs of issuance of the Series A Bonds will not exceed 2%
of the proceeds of the Series A Bonds.
(m) Operation of the Project. The construction and operation of the Project in
the manner presently contemplated and as described herein will not conflict with any
zoning, water or air pollution or other ordinance, order, law or regulation applicable
thereto in any material respect. The Borrower will cause the Project to be constructed
and operated in accordance with all applicable federal, state and local laws or ordinances
(including rules and regulations) relating to zoning, building, safety and environmental
quality.
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(n) Taxes. The Borrower will file or cause to be filed all federal, state and
local tax returns which are required to be filed, and will pay or cause to be paid all taxes
as shown on said returns or on any assessment received by it, to the extent that such taxes
have become due.
(o) Conflict With Town. To the best of the Borrower's knowledge, no
member of the Town's Town Council or any officer, director, counsel, advisor or agent of
the Town has any personal or conflicting interest, financial, employment or otherwise, in
the Borrower, the Project or the transactions contemplated hereby or by the FHA Loan
Documents, or in any contract for property or materials to be furnished or used in
connection with the Project.
(p) Disclosure Statement. The information contained in the Official
Statement with respect to the Bonds, insofar as such information relates to the Borrower
and the Project, is accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(q) Sale of Project. The Borrower intends to hold the Project for its own
business purposes, has no current plans to sell and has not entered into any agreement to
sell the Project.
(r) Purchase of Bonds. Neither the Borrower nor any "related person"
(within the meaning of Section 147(a) of the Code) shall, at any time, pursuant to any
arrangement, formal or informal, acquire any Bond.
(s) Useful Life. Within the meaning of Section 147(b) of the Code, the
average maturity of the Series A Bonds does not exceed 120% of the average reasonably
expected remaining economic life of the facilities being financed or refinanced with the
proceeds of the Series A Bonds.
(t) Project Location. The Project is located wholly within the Town of Avon,
Colorado.
(u) Commencement of Acquisition, Construction and Equipping. The
acquisition, constructing and equipping of the Project commenced subsequent to
January _, 2001 (60 days prior to January _, 2001); and neither the Borrower nor any
"related person" (as defined in of the Code) entered into any binding agreement in
connection with the acquisition, construction and equipping of the Project prior to such
date under which the Borrower's obligations will be paid from the proceeds of the Series
A Bonds.
(v) Financial Information. Any financial statement which has been
furnished to the Town is complete and accurate in all material respects and presents fairly
the financial condition of the Borrower as of its date in accordance with generally
6
accepted accounting principles, and since the date of the financial statement there has not
been any material adverse change, financial or otherwise, in the condition of the
Borrower, and there has not been any material transaction entered into by the Borrower
other than transactions in the ordinary course of business, and the Borrower does not
have any material contingent obligations which are not otherwise disclosed in its
financial statement, other than as required and contemplated by this Financing Agreement
in connection with the issuance of the Bonds.
(w) Defaults. No event has occurred and no condition exists with respect to
the Borrower that would constitute an "Event of Default" under this Financing
Agreement or which, with the lapse of time, if not cured, or with the giving of notice or
both, would become an "Event of Default" under this Financing Agreement.
(x) Bond Proceeds. (i) Substantially all (at least 95%) of the sum of the
aggregate amount disbursed from the Series A Bond proceeds to pay directly to third
parties or to reimburse the Borrower for paying Project Costs, including an allocable
portion of any costs which are neutral Project. costs pursuant to the Code, have been or
will be used to finance the acquisition, construction and equipping of facilities qualifying
for financing under the Code; and (ii) the Borrower will not use any proceeds of the
Series A Bonds (A) for the construction of any commercial, retail or office space (other
than an on-site office for the Project Manager), (B) to provide an airplane, a skybox or
other private luxury box, any 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, (C) to acquire land or any interest therein in an amount
equal to or greater than 25% of the proceeds of the Series A Bonds, or (D) to provide
funding for parking spaces not required for the use of the residents of the Project.
(y) Breaches. The Borrower agrees, upon receiving knowledge thereof, to
notify the Trustee and the Town immediately in writing of any default by the Borrower in
the performance or observance of any covenant, agreement, representation, warranty or
obligation of the Borrower set forth in this Financing Agreement, the Declaration of
Restrictive Covenants or the FHA Loan Documents.
(z) Discrimination. The Borrower will not discriminate on the basis of color,
creed, age, race, religion, handicap, sex, marital status or national origin in the lease, use
or occupancy of the Project or in connection with the employment or application for
employment of persons for the operation and management of the Project.
(aa) Project Improvements. The Project will consist of a building or structure
or several proximate buildings or structures that have similarly constructed units, are
owned or subject to control at all times, for federal tax purposes, by one person, and are,
financed pursuant to a common plan of financing. The Project may include facilities
functionally related and subordinate thereto.
(bb) Project Units. All of the residential units in the Project will contain
complete living, sleeping, eating, and cooking and sanitation facilities for a single person
7
or a family. None of the units in the Project will at any time be used on a transient basis,
or used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house,
hospital, nursing home, sanitarium, rest home or trailer park and court.
(cc) Payment of Fees Under Mortgage Note. The Borrower shall pay all fees
under the Mortgage Note and any cash, collateral and fees required by FHA, the Lender
and GNMA in connection with the Mortgage Loan.
(dd) Disbursement of Acquisition Account. The Borrower acknowledges that
if the Acquisition Account of the Project Fund has not been disbursed to acquire the PLC
on or before the PLC Delivery Date, except as such date may be extended pursuant to
Section 4.04(d) of the Indenture, the Borrower will lose its right to utilize such funds, and
the obligations of the Trustee hereunder and under the Indenture to accept the PLC shall
terminate.
(ee) Compliance With ERISA. The Borrower has not received any notice that
it is not in full compliance with the Employment Retirement Income Security Act of
1974, as amended, and the Department of Labor regulations thereunder, with the Code
and Regulations thereunder and with terms of such plan or plans with respect to each
pension or welfare benefit plan to which the Borrower is a party or makes any employer
contributions with respect to its employees, for the current or prior plan years of such
plans.
(ff) Payment of Costs and Expenses. The Borrower covenants to pay when
due all costs and expenses incurred in connection with the Bonds or the Project not paid
from the Cost of Issuance Fund, including, without limitation, each and all of the
following:
(i) all indemnity payments;
(ii) all expenses incurred by the Town in connection with the Project,
the Bonds, the Indenture or any related document, executed in connection with the
issuance of the Bonds, including, without limitation, its attorneys' fees and
expenses and its advisors' fees and expenses;
(iii) the fees and expenses of the Trustee and the Rebate Analyst.
(gg) Direction of Investments. Except during the continuance of an Event of
Default, the Borrower shall have a duty to direct the Trustee to invest or reinvest all
money held for the credit of funds established by the Indenture in accordance with
Article N of the Indenture.
(hh) Town's and Trustee's Right of Access to the Project. The Borrower
agrees that during the term of this Financing Agreement the Town, the Trustee and their
duly authorized agents shall have the right during regular business hours, with reasonable
notice, to enter upon the premises and examine and inspect the Project. The Borrower
agrees that the Town, the Trustee and their duly authorized agents have, subject to such
8
limitations, restrictions and requirements as the Borrower may reasonable prescribe, such
rights of access to the Project.
(ii) Maintenance and Repair, Insurance. The Borrower will maintain the
Project in a reasonably safe and sound operating condition, making from time to time all
reasonably needed material repairs thereto, and shall maintain reasonable amounts of
insurance coverage with respect to the Project and shall pay all costs of such
maintenance, repair and insurance.
6j) HUD Information True. All material information given by the Borrower
to HUD concerning the Project and the FHA Loan Documents was and is true and correct
as of the date hereof.
(kk) Audited Financial Statements. The Borrower will prepare or cause to be
prepared, at its expense, annual audited financial statements of the Borrower and all
audits of the Borrower or of the Project required by HUD. Such annual audited financial
statements shall be completed no later than June 1 of each year. The Borrower agrees to
provide its audited financial statements to the Trustee and to the Town.
(11) No Liens, Etc. The Borrower covenants and agrees that from the date
hereof until payment in full of all of the obligations hereunder, unless the Trustee shall
otherwise consent in writing, it will not incur, create, assume or suffer to exist any
mortgage, pledge, security interest, lien, charge or other encumbrance of any nature on
the Project, other than (i) any liens, taxes or other governmental charges which are not
yet due and payable, (ii) any pledge relating to syndication of the Project, (iii) any lien,
including, but without limiting the generality of the foregoing, mechanics' liens, or other
liens resulting from a good-faith dispute on the part of the Borrower, which dispute the
Borrower agrees to resolve diligently, or which liens are insured over by a title insurance
company acceptable to HUD, (iv) other liens or encumbrances approved by HUD and (v)
such other pledges or liens subordinate to the lien of the Bonds as may be approved in
writing by the Trustee in accordance with the Indenture, which approval shall not be
unreasonably withheld.
(mm) Borrower's Financial Resources. The Borrower represents and warrants
that it has sufficient financial resources to meet its obligations under this Financing
Agreement, the Declaration of Restrictive Covenants, the Continuing Disclosure
Agreement, the Bond Purchase Agreement and the FHA Loan Documents.
Section 2.03. Representations, Warranties and Undertakings of the Lender. In
addition to the other representations and covenants of the Lender contained herein, the Lender
hereby represents and warrants as follows:
(a) Corporate Authority. The Lender (i) is duly and lawfully organized
corporation under the laws of the State of Delaware and is duly authorized to transact
business in the State, (ii) is organized and operated for the purposes, among others, of
making mortgage loans to provide financing for the acquisition, construction and
9
equipping of multifamily rental residential developments and of issuing mortgage-backed
securities guaranteed by GNMA to obtain funds to make such mortgage loans, (iii) has
full lawful power and authority under its organizational documents and applicable laws to
execute and deliver this Financing Agreement, to issue, execute and deliver the GNMA
Securities and to perform its obligations hereunder and thereunder and (iv) by proper
action has duly authorized the execution and delivery of this Financing Agreement and
the issuance, execution and delivery of the GNMA Securities.
(b) Binding Agreements. This Financing Agreement and the GNMA
Securities constitute the legal, valid and binding obligations of the Lender enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency or other laws
affecting creditors' rights generally, and with respect to certain remedies which require, or
may require, enforcement by a court of equity, such principles of equity as the court
having jurisdiction may impose, provided that the GNMA- Securities do not constitute a
liability of, or evidence any recourse against, the Lender, since the GNMA Securities are
based on and backed by the Mortgage, and recovery may be made from GNMA in the
event of any failure of timely payment as provided for in the GNMA Securities and the
GNMA Guaranty Agreement.
(c) No Conflicting Agreements. The execution and delivery of this Financing
Agreement and the issuance, execution and delivery of the GNMA Securities, and the
consummation of the transactions contemplated hereby and thereby, do not conflict with
or constitute a breach of or a default under the Lender's organizational documents or
under the terns and conditions of any agreement or commitment to which the Lender is a
party or by which the Lender is bound.
(d) Litigation. There is no action, suit, proceeding, inquiry or investigation
by or before any court, governmental agency, public board or body pending or, to the
knowledge of the Lender, threatened against the Lender which questions or affects the
power or authority of the Lender to carry out the transactions contemplated by, or to be
performed under, this Financing Agreement or the GNMA Securities.
(e) Lender as FHA Approved Servicer. The Lender (i) is approved by
FHA to originate and service mortgage loans insured by FHA under Section 221(d)(4) of
the National Housing Act and applicable regulations thereunder and (ii) meets all the
issuer eligibility requirements (including net worth requirements) of, and is approved by,
GNMA to issue mortgage-backed securities guaranteed by GNMA pursuant to
Section 306(g) of the National Housing Act and applicable regulations thereunder.
(f) . Eligibility of Mortgage for GNMA Guarantee. The Project, including the
Mortgage, meets the eligibility requirements set forth in the GNMA Mortgage-Backed
Securities Guide as of the Closing Date. The Lender warrants and represents that at all
times until the CLC Maturity Date, or the PLC Delivery Date, it will reserve a
Commitment of GNMA to Guaranty Mortgage-Backed Securities for the benefit of the
Trustee and the Town sufficient to fully fund at any time the total amount of the
Mortgage Loan and has paid or will pay to GNMA the fees for such Commitment.
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(g) Approval of Indenture. The Indenture has been submitted to the Lender
for, examination, and the Lender acknowledges, by execution of this Financing
Agreement, that it has reviewed and understands the Indenture with respect to the
payment to the Lender for the acquisition of the GNMA Securities and it hereby approves
the Indenture as it relates to the purchase and delivery of the GNMA Securities.
(h) Events Affecting Tax Exemption. The Lender shall not knowingly take
any action or fail to take any action that would adversely affect the exclusion of interest
on the Series A Bonds from gross income for purposes of federal income taxation;
provided, however, that nothing herein shall be construed to restrict or adversely affect
the duties and obligations of the Lender under the Contract of Mortgage Insurance
between the Lender and HUD with respect to the Mortgage Loan or the GNMA Guaranty
Agreement with respect to the GNMA Securities.
(i) Fees of Lender. The fees charged by the Lender in connection with
making the Mortgage Loan are reasonable and customary for financings of the kind
represented by the Mortgage Loan and do not exceed the fees that would have been
charged by the Lender for making the Mortgage Loan if the funds for the financing had
been provided other than from the Bonds or from any other obligation the interest on
which is exempt from federal income taxes.
0) Delivery of Documents and Certificates. The Lender covenants to make
reasonable efforts to deliver such documents and certificates to the Trustee as shall be
required hereunder and under the Indenture in connection with the disbursement of the
moneys in the Acquisition Account of the Project Fund and the delivery of the
GNMA Securities.
(k) Lender's Certificate. The Lender covenants that the certifications in the
Lender Certificate delivered on the Closing Date are true and correct and agrees that they
shall be incorporated herein by reference.
(1) PLC Delivery Date After Commencement of Amortization. If the PLC
Delivery Date is after the Commencement of Amortization Date, the Lender shall retain
all payments of principal on the Mortgage Note, and shall reduce the amount of the PLC
by such amount, until after the PLC Delivery Date and after such date shall pass such
principal payments through the GNMA Security to the Trustee.
Section 2.04. Environmental Indemnity. In addition to the indemnification set forth in
Section 5.08 hereof [and Section 14 of the FHA Regulatory Agreement], the Borrower and its
successors, heirs and assigns shall and do hereby indemnify and hold harmless the Town, the
Lender and the Trustee, their successors, assigns, trustees, directors, Council members, officers,
counsel, advisors, employees, agents, contractors, subcontractors, licensees and invitees
(collectively referred to in this Section 2.04 as "Indemnified Parties"), for, from and against any
and all Environmental Damages that the Indemnified Parties may incur as well as any and all
losses, costs, damages, exemplary damages, natural resources damages, liens and expenses
(including, but not limited to, attorneys' fees and any and all other costs incurred in the
11
investigation, defense and settlement of claims) that Indemnified Parties may incur as a result of
or in connection with the assertion against any of the Indemnified Parties, or against all or a
portion of the Project, of any claim, civil, criminal or administrative, that:
(a) arises out of the actual, alleged or threatened discharge, dispersal, release,
storage, treatment, generation, disposal or escape of any Regulated Chemical, including,
but not limited to, any solid, liquid, gaseous or thermal irritant or contaminant, including,
but not limited to, smoke, vapor, soot, fumes, acids, alkalis, chemicals, medical waste and
waste (including materials to be recycled, reconditioned or reclaimed);
(b) actually or allegedly arises out of the use of any Regulated Chemical, the
existence or failure to detect the existence or proportion of any Regulated Chemical in the
soil, air, surface water or groundwater, or the performance or failure to perform the
abatement or removal of any Regulated Chemical or of any soil, water, surface water or
groundwater containing any Regulated Chemical;.
(c) arises out of the actual or alleged existence of any Regulated Chemical on,
in, under or affecting all or a portion of the Project;
(d) arises out of any misrepresentation of the Borrower concerning any matter
involving Regulated Chemicals or Environmental Requirements; or
(e) arises out of the Borrower's failure to provide all information, make all
submissions and filings and take all steps required by appropriate government authority
under any applicable environmental law, regulation, statute or program, whether federal,
state or local, whether currently existing or hereinafter enacted.
Without prejudice to the survival of any other agreements of the Borrower hereunder, this
indemnification shall survive any termination, payment or satisfaction of the Borrower's
obligation to repay the Mortgage Loan evidenced hereby and the termination of this Financing
Agreement, and any foreclosure or any other transfer of any kind of the Project and shall
continue and survive ad infinitum.
The Borrower's indemnification contained herein shall be effective not only with any
existing Environmental Requirements affecting the Borrower, Indemnified Parties and/or the
Project, but also for any hereinafter enacted environmental law, regulation, statute or program,
whether federal, state or local, affecting the Borrower, the Indemnified Parties and/or the Project.
The Borrower's indemnification contained herein shall extend to any and all like claims
that arise from the acts or omissions of any user, tenant, lessee, agent or invitee of the Borrower.
The obligations under this Section shall not be affected by any investigation by or on
behalf of Indemnified Parties, or by any information that Indemnified Parties may have or obtain
with respect thereto.
The Borrower's indemnification shall include the duty to defend any and all claims, and
Indemnified Parties may participate in the defense of any claim without relieving the Borrower
12
of any obligation hereunder. This duty to defend shall apply and constitute an obligation of the
Borrower regardless of any challenge by the Borrower to this provision, the indemnification
contained herein or any other provision of this Financing Agreement. This duty to defend shall
apply regardless of the validity of the Borrower's indemnification, as may ultimately be
determined by a court of competent jurisdiction.
This Section 2.04 intends to provide indemnification to each Indemnified Party for his or
her active or passive negligence or misconduct; notwithstanding anything to the contrary
contained in this Section 2.04, no indemnification shall be required for any Environmental
Damage incurred solely as the result of the gross negligence or willful misconduct of the party
seeking indemnification.
Notwithstanding anything in this Section 2.04 or in Section 2.05 of this Financing
Agreement, nothing herein shall in any way amend the FHA Loan Documents.
Section 2.05. Environmental Covenants.
(a) Use of Property. The Borrower will not intentionally or unintentionally
conduct, or allow to be conducted, any business, operation or activity on, under or in the
Project, or employ or use the Project or allow it to be employed or used, to manufacture,
transport, treat, store or dispose of any Regulated Chemical that would violate or
potentially violate Environmental Requirements, including, but not limited to, any action
that would:
(i) bring the Borrower, or the Project, within the ambit of, or
otherwise violate, the Resource Conservation and Recovery Act of 1976, as
amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C.
§ 6901 et seq.;
(ii) cause, or allow to be caused, a release or threat of release of
hazardous substances on, under, in or about the Project as defined by, and within
the ambit of, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfand Amendments and
Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; or
(iii) violate the Clean Air Act of 1970, as amended, 42 U.S.C. § 7401 et
seq., or other similar state, regional or local statute, law, regulation, rule or
ordinance, including, without limitation, the laws of the State, or any other statute
providing for the financial responsibility for cleanup of the release or threatened
release of substances provided for thereunder.
The Borrower will not do or permit any act or thing, business or operation that
materially increases the dangers or poses an unreasonable risk of harm or impairs, or may
impair, the value of the Project or any part thereof.
(b) Maintenance of Property. The Borrower shall maintain the Project free
from contamination by Regulated Chemicals and shall not intentionally or unintentionally
13
allow a release, discharge or emission, or threat of release, discharge or emission, of any
Regulated Chemical on, under, in or about the Project and shall, to the extent within its
power, not permit the migration or threatened migration from other properties upon,
about or beneath the Project.
(c) Notice of Environmental Problem. The Borrower shall and shall cause
any tenant and/or sublessee to promptly provide a copy to the Trustee, in no event later
than 15 days from the Borrower's and/or any tenant's and/or sublessee's actual receipt or
submission, of any notice, letter, citation, order, warning, complaint, inquiry, claim or
demand that:
(i) the Borrower and/or any tenants or sublessees have violated, or are
about to violate, any federal, state, regional or local environmental, health or
safety statute, law, rule, regulation, ordinance, judgment or order;
(ii) there has been a release, or there is a threat of release, of any
Regulated Chemical from the Project;
(iii) the Borrower and/or any tenants or sublessees may be or are liable,
in whole or in part, for the costs of cleaning up, remedying, removing or
responding to a release of any Regulated Chemicals; or
(iv) any portion of the Project is subject to a lien in favor of any
governmental entity for. any liability, costs or damages under Environmental
Requirements arising from, or costs incurred by such governmental entity in
response to, a release of any Regulated Chemical.
(d) Response Action. The Borrower shall take all appropriate responsive
action, including any removal and remedial action ("Response Action"), in the event of a
release, emission, discharge or disposal of any Regulated Chemical in, on, under or about
the Project, so as to remain in compliance with the above, and to keep the Project free
from, and unaffected by, Regulated Chemicals. The Borrower shall (i) provide the
Trustee, within 30 days after providing the notice required under this Section 2.05, with a,
bond, letter of credit or similar financial assurance that is equal to the cost of the
Response Action, which may be drawn upon by the Trustee for the purpose of
completing the Response Action if an Event of Default hereunder occurs or if the
Response Action is not completed within six months of the issuance of the financial
assurance, and (ii) discharge any assessment that may be established on the Project as a
result thereof.
(e) No Liens or Encumbrances. The Borrower shall prevent the imposition
of any liens or encumbrances against the Project for the costs of any response, removal or
remedial action or cleanup of any Regulated Chemicals. Should such a lien or
encumbrance be levied on the Project, the Borrower shall follow the procedure set forth
in subsection (d) above.
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(f) Compliance With Environmental Requirements. The Borrower shall
carry on the business and operations at the Project to comply in all respects and will
continue to remain in compliance with all applicable Environmental Requirements and
maintain all permits and licenses required thereunder.
Section 2.06. Warranty of Truth. The Borrower covenants that no information,
certificate, statement in writing or report required by this Financing Agreement or the
Declaration of Restrictive Covenants or otherwise furnished by the Borrower to the Town or the
Trustee in connection with this Financing Agreement or the Declaration of Restrictive Covenants
will contain any untrue statement of a material fact or omit a material fact necessary to make
such information, certificate, statement or report not misleading.
The Lender covenants that no information, certificate, statement in writing or report to
the Town or the Trustee required by this Financing Agreement to be prepared by the Lender will
knowingly contain any untrue statement of a material fact or omit a material fact required to be
stated therein or necessary to make such information, certificate, statement or report not
misleading.
ARTICLE III
THE FINANCING TRANSACTION
Section 3.01. Financing Structure.
(a) The Lender agrees, subject to the terms and conditions of this Financing
Agreement and the Commitment, to make the. Mortgage Loan to the Borrower in an
amount at least equal to the aggregate principal amount of the Bonds. The Town agrees,
subject to the terms and conditions hereof, to issue the Bonds and to make the proceeds
thereof available to the Trustee to purchase the GNMA Securities. The Borrower agrees,
subject to the terms and conditions hereof, to use the proceeds of the Mortgage Loan to
acquire, construct and equip the Project.
(b) The Trustee is authorized and directed pursuant to Section 3.03 hereof and
the Indenture to use moneys in the Acquisition Account to make interim advances to
purchase CLCs with respect to the Project in accordance with Section 3.03 hereof and
Section 4.04 of the Indenture, at the price specified in Section 3.03(f) hereof. Upon
issuance of the PLC by the Lender, the Trustee is authorized and directed under the
Indenture to purchase the PLC from the Lender with funds in the Acquisition Account in
accordance with Section 3.03 hereof and Section 4.04 of the Indenture, at a price
specified in Section 3.03(g) hereof. The Trustee agrees to acquire the CLCs and the PLC
as set forth herein and in the Indenture.
(c) Pursuant to the GNMA Mortgage-Backed Securities Guide, the Lender
agrees to make all payments on the GNMA Securities in accordance with their terms,
provided such agreement shall not be construed as the Lender's guaranty.
15
(d) Nothing herein shall be construed to impose a duty on the Town to
provide financing for the Project in excess of $15,305,000.
(e) Nothing herein shall be construed to impose a duty on the Trustee to
purchase GNMA Securities in a principal amount in excess of $15,305,000, plus the
aggregate principal amount of any Additional Bonds issued under the Indenture.
(f) The Borrower promises (i) to repay the principal of the Mortgage Loan
with interest thereon as provided in the Mortgage Note subject to the conditions
contained therein, and (ii) to comply with the provisions of this Financing Agreement and
the FHA Loan Documents as provided therein, provided that such promise is subject to
the provisions of Section 9.11 hereof.
Section 3.02. Delivery of the GNMA Securities.
(a) The Borrower and the Lender agree to use their best efforts to deliver to
the Trustee the CLCs in connection with the funding of each construction advance by the
Trustee from the Acquisition Account of the Project Fund and to deliver the PLC in
exchange for the CLCs as soon as practicable after final endorsement of the Mortgage
Note. The Borrower and the Lender expect to deliver the PLC to the Trustee on or before
the PLC Delivery Date (or such later date as permitted by Section 4.04(d) of the
Indenture). Neither the Borrower nor the Lender has actual knowledge of a material fact
that causes it to believe that the PLC will not be delivered to the Trustee on or before
such date.
(b) The Lender immediately shall deliver to the Trustee any CLCs held by it
with respect to the Bonds (i) if the PLC has not been delivered to the Trustee on or before
the PLC Delivery Date (or such later date as permitted under Section 4.04(d) of the
Indenture) or (ii) if it knows that, for any reason, the PLC will not be delivered to the
Trustee, provided that the Trustee shall purchase such CLCs in accordance with
Section 3.03 hereof.
Section 3.03. The GNMA Securities; Disbursements From the Acquisition
AccountError! Bookmark not defined..
(a) The obligation of the Trustee to acquire the Initial CLC is subject to
Section 4.04(c)(i) of the Indenture and receipt on, and whenever practicable, at least five
Business Days before, the date of acquisition of such Initial CLC by the Trustee of the
following documents:
(i) the Initial CLC issued to the Trustee in a principal amount not to
exceed amounts available in the Acquisition Account of the Project Fund as of the
date of delivery of the CLC, bearing interest at the Pass-Through Rate, maturing
on [December 15, 2003] (the 150' day of the 20a` month following the initial
endorsement of the Mortgage for insurance by the FHA), and delivered to the
16
Trustee within 30 days of its date of issuance (which shall be the first day of a
month);
(ii) a copy of the Application for Insurance of Advances of Mortgage
Proceeds pertaining to the Initial Advance, executed by the Lender and approved
by FHA;
(iii) a certificate of the Lender certifying that, to the best of its
knowledge, it is not in default under this Financing Agreement;
(iv) an opinion of counsel to the Lender that the GNMA Guaranty
Agreement will be a valid and binding agreement of the Lender enforceable in
accordance with its terms upon the issuance of the Initial CLC;
(v) a GNMA prospectus relating to the GNMA Securities;
(vi) a copy of the executed and recorded Mortgage;
(vii) a copy of the executed Mortgage Note initially endorsed by
FHA evidencing the Mortgage Loan;
(viii) a copy of the executed Building Loan Agreement with respect to
the Project;
(ix) a copy of a mortgagee's policy of title insurance issued as. of the
date of initial endorsement of the Mortgage Note and approved by HUD;
(x) a copy of the executed and recorded FHA Regulatory Agreement;
and
(xi) a copy of the executed and recorded Declaration of Restrictive
Covenants.
. (b) After acquisition of the Initial CLC and except for the disbursement
relating to the Final Advance, the Trustee shall make periodic advances of moneys
available in the Acquisition Account of the Project Fund to the Lender, on behalf of the
Borrower, to acquire subsequent CLCs, but only in accordance with the conditions of
Section 4.04(c)(ii) of the Indenture and the terms and provisions of the Commitment and
this Financing Agreement.
The obligation of the Trustee to make interim advances to acquire subsequent
CLCs is further subject to the timely receipt by the Trustee of all payments due on
previously delivered CLCs.
The Trustee shall review each CLC delivered to it in connection with the initial
advance and each interim advance to ensure that (i) the amount of such CLC, when added
to all previous CLCs issued to the Trustee, does not exceed $15,305,000 (plus the
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At
principal amount of Additional Bonds, if any, issued under the Indenture), (ii) such CLC
bears interest at the Pass-Through Rate, (iii) such CLC matures on the CLC Maturity
Date and (iv) such CLC is delivered to the Trustee by the last day of the month in which
it was issued.
(c) The Trustee shall deliver to the Lender, as requested, the Trustee's
authorization to cancel all CLCs held by it upon issuance by the Lender and delivery of
the PLC on the PLC Delivery Date; provided, however, that the CLCs shall not be so
cancelled if the principal balance of the Mortgage Note as of the PLC Delivery Date is
less than the aggregate principal amount of such CLCs unless the Lender has paid to the
Trustee, as a partial prepayment of such CLCs, an amount equal to the difference
between the then current outstanding principal balance of the Mortgage Note as of the
PLC Delivery Date and the aggregate principal amount of the CLCs.
(d) The obligation of the Trustee to acquire the PLC is subject to
Section 4.04(c)(iii) of the Indenture and receipt of the following documents:
(i) written evidence from the Lender that the PLC will be issued to the
Trustee in the principal amount determined in accordance with Section 3.03(8)
hereof no later than [December 20, 2003] (the 20th day of the 20th month
following the initial endorsement of the Mortgage for insurance by the FHA) (or
such later date as permitted by Section 4.04(d) of the Indenture), will be dated no
later than the first day of the month in which the CLCs mature and will be
delivered no later than the last day of the month in which it is issued and will bear
interest at the Pass-Through Rate;
(ii) the final certificate in the form attached hereto as Exhibit B
executed by an Authorized Borrower Representative certifying, among other
things, that the amount of the PLC represents Qualified Project Costs, the
principal amount of the PLC in excess of the aggregate principal amount of the
CLCs is a proper charge against the Acquisition Account of the Project Fund and
that the principal amount of the PLC in excess of the aggregate principal amount
of the CLCs represents the payment of an obligation incurred by the Borrower
presently due and payable and not previously paid or requisitioned; and
(iii) such other documents as are reasonably required from the
Borrower by the Rating Agency or are required under federal tax law, in the
opinion of Bond Counsel.
(e) All GNMA Securities issued with respect to the Mortgage Loan shall be
dated the first day of a month, shall be delivered no later than the last day of the month in
which the GNMA Securities are issued and shall pay interest on the fifteenth day of each
month, commencing the fifteenth day of the month following the month of the date of
issue. Interest payments on each CLC shall continue to be made to and including the
earlier of its stated maturity or the fifteenth day of the month in which the PLC is dated.
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(f) The Lender shall use its best efforts to deliver each CLC to the Trustee as
soon as practicable after the date of issue thereof, but in no event later than the last day of
the month in which it is issued. The Lender shall notify the Trustee at least three
Business days prior to the date on which the Trustee is expected to make an interim
advance and acquire a CLC. Upon receipt of the Initial CLC but only in accordance with
the conditions of Section 4.04(c)(ii) of the Indenture, the Trustee shall pay to the Lender
an amount equal to 100% of the principal amount thereof plus accrued interest thereon at
the Pass-Through Rate. Accrued interest on each CLC at the Pass-Through Rate
(calculated on the basis of 360-day year with twelve 30-day months) from the date of
issue of each such CLC to but not including the date of its acquisition and payment by the
Trustee shall be paid to the Lender by the Trustee pursuant to Section 4.04 of the
Indenture.
(g) The Lender shall use its best efforts to deliver the PLC to the Trustee as
soon as practicable after Final Endorsement of the Mortgage Note, but in no event later
than the last day of the month in which the PLC is issued. The principal amount of the
PLC shall be equal to the then current outstanding principal balance of the Mortgage
Note as of the PLC Delivery Date. The Lender shall notify the Trustee at least five
Business Days prior to the date on which the Trustee is expected to acquire the PLC.
Upon delivery of the PLC to the Trustee, the Trustee shall pay to the Lender an amount
equal to the difference between 100% of the then current outstanding principal balance of
the Mortgage Note and 100% of the aggregate principal amount of all CLCs theretofore
acquired by the Trustee plus accrued interest on such PLC at the Pass-Through Rate.
Accrued interest on the PLC described above at the Pass-Through Rate (calculated on the
basis of a 360-day year with twelve 30-day months) to but not including the date of its
acquisition and payment by the Trustee shall be paid to the Lender pursuant to Section
4.04 of the Indenture. The Lender shall use its best efforts to obtain GNMA approval and
issuance of the PLC as soon as practicable.
The Borrower has no reason to believe that completion of construction of the
Project will not occur on or before the last day of the 10th month following the initial
endorsement of the Mortgage Note for insurance by FHA. The Borrower and the Lender
expect to deliver the PLC to the Trustee before [December 19, 2003] (the Business Day
next preceding the 20th day of the 20th month following the initial endorsement of the
Mortgage for insurance by the FHA). Neither the Borrower nor the Lender has actual
knowledge of a material fact that causes it to believe that the Mortgage Note will not be
finally endorsed by FHA prior to [December 19, 2003]. The parties acknowledge,
however, that the Lender cannot issue the PLC until after Final Endorsement of the
Mortgage Note by FHA, and that the Lender cannot guarantee or assure the parties that
Final Endorsement will occur prior to [December 19, 2003].
(h) All GNMA Securities shall be issued solely for the benefit of the Trustee
on behalf of the Bondholders in accordance with the terms of this Financing Agreement
and the Indenture and shall be registered in the name of the Trustee or its designee, and
any and all payments received with respect to the GNMA Securities shall be solely for
the benefit of the Bondholders whether the GNMA Securities at the time of such
19
payments are held by the Trustee or the Lender (at such times as are permitted under this
Financing Agreement and the Indenture).
Section 3.04. Establishment of Completion Date. The Completion Date with respect
to the Project shall be evidenced to the Trustee by a certificate signed by the Borrower stating
that, except for amounts retained by the Trustee at the Borrower's direction for any Project Costs
not then due and payable, (a) construction of the Project has been completed and all costs of
labor, services, materials and supplies used in such construction have been paid for or provisions
have been made for their payment, (b) all equipment necessary for the Project has been installed
to its satisfaction, such equipment so installed is suitable for the efficient operation of the Project
for the intended purposes and all costs and expenses incurred in the acquisition and installation
of such equipment have been paid, (c) all other facilities necessary in connection with the Project
have been acquired, constructed, improved and equipped and all costs and expenses incurred in
connection therewith have been paid, and (d) the Project has been approved by HUD under the
FHA Regulations as evidenced by Final Endorsement by FHA of 'the Mortgage Note for
mortgage insurance. Notwithstanding the foregoing, such certificate shall state that it is given
without prejudice to any rights against third parties, which exist at the date of such certificate or
which, may subsequently come into being. Forthwith upon completion of the acquisition,
construction, improving and equipping of the Project and Final Endorsement of the Mortgage
Note for mortgage insurance, the Borrower agrees to cause such certificate to be furnished to the
Town and the Trustee.
Section 3.05. Sufficiency of Funds. The Town does not make any warranty, either
express or implied, that the moneys deposited in the Acquisition Account of the Project Fund
under the Indenture and available for payment of the costs of acquiring the GNMA Securities
will be sufficient to pay all the costs thereof. The Borrower agrees that if the Borrower should
pay any costs relating to the acquisition of the GNMA Securities other than from the Bond
proceeds, the Borrower shall not be entitled to any reimbursement therefor from the Lender, the
Town, the Trustee or the Bondholders; provided, however, that if the Borrower shall incur such
costs as a result of the negligent or willful misconduct of either the Lender or the Trustee, the
Borrower may be entitled to reimbursement therefor from the party responsible for such conduct.
Section 3.06. Investment of Moneys. Any moneys held as part of any fund created
under the Indenture (other than the Excess Investment Earnings Fund) shall be invested or
reinvested, from time to time, by the Trustee in Permitted Investments. The Borrower has
reviewed those provisions of the Indenture relating to investment of funds held under the
Indenture and the use of such investment earnings, and has reviewed the proposed initial
investment of funds deposited to the various funds under the Indenture by the Trustee in the
Investment Agreement for such funds, and hereby approves and directs the same.
Section 3.07. Lender Loan to Borrower.
(a) Upon compliance with the terms and conditions of the Commitment, the
Lender agrees to make a loan to the Borrower in the amount of $15,305,000 at an interest
rate of % per annum to be evidenced by the Mortgage Note, which is to be insured
by FHA on the terms and conditions specified herein. The Mortgage Loan (i) shall be
20
insured by FHA pursuant to and in accordance with the provisions of Section 221(d)(4)
of the National Housing Act and applicable regulations thereunder, as evidenced by the
endorsement by FHA of the Mortgage Note; (ii) shall be in such principal amount as may
be approved by HUD, but in no event in excess of $15,305,000; (iii) shall bear interest at
a rate of % per annum; (iv) shall mature not later than 2043;
(v) shall be payable in equal monthly installments of principal and interest following
Commencement of Amortization; (vi) shall be secured on a nonrecourse basis pursuant to
the FHA Loan Documents; and (vii) shall be subject to prepayment prior to maturity as
provided in the Mortgage Note; provided that the amount of the Mortgage Loan and the
terms thereof may be modified in connection with the issuance of any Additional Bonds
under the Indenture.
(b) The Lender's obligation to make disbursements of Mortgage Loan
proceeds to the Borrower is conditional upon and subject to the issuance of the Bonds
and all the terms and conditions set forth in this Financing Agreement and the FHA Loan
Documents:
(i) With respect to issuance of all disbursements of Mortgage Loan
proceeds except the Final Advance, the Borrower shall deliver or cause to be
delivered to the Lender, at the time the disbursement is requested, such other
documents required by the Building Loan Agreement.
(ii) With respect to the Final Advance, the Borrower shall deliver or
cause to be delivered to the Lender and the Trustee, on or before the date of final
closing of the Mortgage Loan, the final Borrower's Certificate to Lender in the
form attached hereto as Exhibit B certifying, among other things, that the
Borrower is not in default under the Mortgage Loan or this Financing Agreement.
Section 3.08. Failure To Deliver the PLC by the PLC Delivery Date Required
Under Indenture. Any provisions in any other document to the contrary notwithstanding, in the
event the PLC in a principal amount equal to the principal amount of the Mortgage Loan insured
at Final Endorsement is not delivered to the Trustee by. the. date required therefor under the
Indenture (as such date may be extended pursuant to the terms of the Indenture), funds held
under the Indenture shall be used in accordance with the terms of the Indenture, and neither the
Borrower nor the Lender shall be entitled to any use of such funds, except as otherwise provided
therein. Furthermore, if the Lender is unable to arrange for the exchange of the CLCs for the
PLC by the date required therefor under the Indenture (as such date may be extended pursuant to
the terms of the Indenture), the CLCs shall mature and their principal amount shall be payable on
the CLC Maturity Date. Upon the CLC Maturity Date, the Trustee shall deliver all CLCs held
by it to the Lender and demand immediate payment therefor.
The Borrower, the Lender, and the Trustee agree to comply with the requirements of
Section 4.04(d) of the Indenture in the event it is necessary to extend the PLC Delivery Date or
the CLC Maturity Date, and the Borrower agrees to pay all expenses in connection therewith. If
the Borrower fails to make payment of such expenses, the Lender may do so at the expense of
the Borrower.
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Section 3.09. Payments by Borrower. In addition to all payments required to be made
with respect to the Mortgage Note, the Borrower agrees to make the following additional
payments, to the extent not paid pursuant to the Mortgage Note:
(a) To the extent not paid from the Costs of Issuance Account of the Project
Fund, all Costs of Issuance of the Bonds.
(b) All taxes and assessments of any type or character charged to the Town or
to the Trustee affecting the amount available to the Town or the Trustee to pay the
principal of or interest on the Bonds or in any way arising due to the transactions
contemplated hereby (including taxes and assessments assessed or levied by any public
agency or governmental issuer of whatsoever character having power to levy taxes or
assessments) but excluding taxes based upon the capital and/or income of the Trustee and
taxes based upon or measured by the net income of the Trustee; provided, however, that
the Borrower shall have the right to protest any such taxes or assessments (other than
such taxes and assessments imposed by the Town) and to require the Town or the
Trustee, at the Borrower's expense, to protest and contest any such taxes or assessments
assessed or levied upon them and that the Borrower shall have the right to withhold
payment of any such taxes or assessments pending disposition of any such protest or
contest unless such withholding, protest or contest would adversely affect the rights or
interests of the Town or the Trustee.
(c) To the extent the amount on deposit in the Available Moneys Account
pursuant to Section 4.01 of the Indenture is insufficient to pay the fees of the Trustee, or
the dissemination agent under the Continuing Disclosure Agreement, or the Rebate
Analyst, the Borrower shall, not later than five days after notification from the Trustee of
such deficiency, pay such amount to the Trustee, or the dissemination agent, or the
Rebate Analyst as appropriate, when the same shall be due and payable.
(d) All fees, expenses and responsibilities of the Borrower to the Lender or of
either the Borrower or the Lender to FHA or GNMA in connection with the Mortgage
Loan shall be the obligation of the Borrower or of the Lender, as the case may be, and
shall not be the obligation of the Town.
(e) All fees, expenses and/or deposits required to obtain an extension of the
PLC Delivery Date or the CLC Maturity Date under Section 4.04(d) of the Indenture and
the Borrower agrees to deposit with the Trustee for deposit in the General Receipts Fund
such amounts at the time of the request for the extension.
(f) In the event the Borrower is in default under any provision of this
Financing Agreement, the FHA Loan Documents (subject to the nonrecourse provisions
thereof) or the Declaration of Restrictive Covenants, to the Town, the Trustee and the
Lender all reasonable fees and disbursements by such persons and their agents (including
reasonable attorneys' fees and expenses) which are reasonably connected therewith or
incidental thereto, except to the extent such fees and disbursements are paid from moneys
available therefor under the Indenture; provided that the Borrower shall not be liable to
22
the Trustee for any fees or disbursements arising out of a default caused by the
negligence or willful misconduct of the Trustee.
(g) Upon the written demand of the Trustee, to the Trustee, on behalf of the
Town, any amount required to be rebated to the United States of America pursuant to
Section 4.06 of the Indenture, to the extent that funds are not available therefor under the
Indenture. .
(h) To the party conducting any annual compliance review on behalf of the
Town or the Trustee under the Declaration of Restrictive Covenants, the reasonable fees
and expenses of such party incurred in connection with such review.
(i) If moneys on deposit in the Acquisition Account are insufficient to acquire
the GNMA Securities, the Borrower agrees to deposit Available Moneys with the Trustee
in an amount equal to such deficiency upon notification by the Trustee.
Section 3.10. Borrower's Repayment of Mortgage Loan.
(a) The Borrower agrees to pay to the Lender the principal of, premium, if
any, and interest on the Mortgage Loan at the times, in the manner, in the amounts and at
the rate of interest provided in the Mortgage Note. Such rate of interest shall be
sufficient to pay the ongoing GNMA guaranty and servicing fee and the Pass-Through
Rate, and which shall provide for payment of the fees of the Trustee and Rebate Analyst
and the Dissemination Agent under the Continuing Disclosure Agreement.
(b) The obligation of the Borrower to make such Mortgage Loan payments
(including payments due by reason of acceleration of the maturity of the Mortgage Note)
under the Mortgage Note, subject to the nonrecourse provisions of the Mortgage, shall be
absolute and unconditional and shall not be subject to abatement, diminution,
postponement or deduction, or to any defense other than payment, or to any right of
setoff, counterclaim or recoupment arising out of any breach under this Financing
Agreement, the Indenture, the FHA Loan Documents or otherwise by the Town, the
Lender, the Trustee, the Borrower or any other person, or out of any obligation or liability
at any time owing to the Borrower by any of the foregoing. Nothing herein contained,
however, shall be interpreted to abridge the right of the Borrower to seek judicial remedy
for any breach of covenant or contract in a separate legal proceeding.
(c) Notwithstanding the foregoing, neither the Borrower nor its principals
shall be personally liable for the amounts owing under this Financing Agreement, the
Mortgage Note or the Mortgage, except as provided therein, and the remedies in the event
of a default under this Financing Agreement, the Mortgage Note and the Mortgage shall
be limited to those remedies set forth herein. Nothing in this Section shall preclude the
Town, the Trustee or the Lender from proceeding directly against the Borrower (or its
principals) in connection with the obligation of the Borrower to indemnify the Town, the
Trustee and the Lender under Section 5.08 hereof or to make any payment to the Town
23
and the Trustee under said Section 5.08 or Sections 2.02(ff), 3.09(d), 3.09(f) or 4.04
hereof or to pay the Rebate Amount, if any.
Section 3.11. Bond Purchase or Redemption. The Trustee shall (i) in the case of an
optional redemption (as such term is used in the Indenture) upon notice from the Town at the
Borrower's request, and (ii) in the case of a mandatory redemption (as such term is used in the
Indenture) or (iii) in the case of purchase pursuant to the Indenture, take all steps or cause all
steps to be taken as may be necessary, under the Indenture, to effect the earliest possible
redemption or purchase, as determined in the reasonable discretion of the Trustee, as provided
under the Indenture, of any or all of the Bonds or portions thereof as may be specified by the
Borrower or the Trustee, as the case may be.
In the event of any redemption, the Borrower will pay, or cause to be paid, an amount
equal to the principal amount of such Bonds or portions thereof.called for redemption, together
with interest accrued to the redemption date.
ARTICLE IV
PAYMENTS; SPECIAL COVENANTS OF THE BORROWER
Section 4.01. Additional Payments.
(a) The Borrower covenants to pay the Rebate Amount, if any, payable to the
United States Treasury or otherwise required to be remitted to the Trustee, as provided
herein and in Sections 3.10(e) and 4.04 of the Indenture. The Borrower agrees to employ
a Rebate Analyst acceptable to the Town to perform the functions described in
Section 4.04 of the Indenture for the term of the Series A Bonds, and to pay all fees and
expenses of such Rebate Analyst and of the Trustee or the Town incurred in connection
with Sections 3.10(e) and 4.04 of the Indenture.
(b) Subject to the restrictions imposed by FHA and HUD with respect to the
use thereof, to the extent not otherwise paid pursuant to the Indenture, the Borrower
agrees to pay from Surplus Cash, all fees and expenses as may be required to be paid by
the Borrower pursuant to the terms and provisions of this Financing Agreement, the
Declaration of Restrictive Covenants, the Indenture and the Continuing Disclosure
Agreement.
(c) The Borrower further reconfirms its agreement in the Mortgage, subject to
the nonrecourse provisions thereof, to pay all costs of maintenance and repair, all taxes
and assessments, insurance premiums (including public liability insurance and insurance
against damage to or destruction of the Project) concerning or in any way related to the
Project, or any part thereof, and any expenses or renewals thereof, and any other
governmental charges and impositions whatsoever, foreseen or unforeseen, and all utility
and other charges and assessments concerning or in any way related to the Project.
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(d) The Borrower agrees to pay to the Trustee on the Original Issue Date the
amounts set forth in Section 3.02 of the Indenture, other than the amounts attributable to
the proceeds of the Bonds.
(e) Upon notice from the Trustee, the Borrower agrees to promptly pay to the
Trustee for deposit in the Excess Investment Earnings Fund amounts required to be
deposited therein pursuant to Section 4.04 of the Indenture.
Section 4.02. Operation of the Project. ' The Borrower shall operate or cause the
Project to be operated as a "housing project" pursuant to Section 221(d)(4) of the National
Housing Act of 1934, as "residential rental property" in accordance with the requirements of
Section 142(d) of the Code and the Declaration of Restrictive Covenants and in accordance with
the requirements of the Code and the Act.
Section 4.03. Compliance With Applicable Laws. All work performed in connection
with the Project shall be performed in compliance with all applicable federal, state, county and
municipal laws, ordinances, rules and regulations now in force or that may be enacted hereafter.
Section 4.04. Other Payments by Borrower. The Borrower agrees that it shall pay all
expenses incurred by it, including the expenses of its counsel and those incurred in closing the
Mortgage Loan, and the fees and expenses of the Trustee required pursuant to the Indenture,
including fees and expenses incurred following an Event of Default. The Borrower shall also
pay the costs of preparing and filing any financing statements reasonably required by Bond
Counsel and any continuation statements pursuant to Section 5.06 of the Indenture, and all costs
and other amounts mentioned in Sections 5.07, 5.08 and 6.01 hereof.
Section 4.05. Lender's Rights to Mortgage Loan. The Lender shall, notwithstanding
any provision hereof to the contrary, be entitled to assign its rights with respect to the Mortgage
Loan to another entity which is an FHA-approved mortgagee and a GNMA Seller/Servicer in
accordance with the rules and regulations of FHA and GNMA.
Section 4.06. Taxes and Other Governmental Charges and Utility Charges. The
Borrower will make, or will cause to be made, promptly all payments due so long as the Bonds
are Outstanding on taxes and special assessments lawfully levied upon or with respect to the
Project, other charges lawfully made by any governmental body for public improvements that
may be or become secured by a lien on the Project, and utility and other charges incurred in the
operation, maintenance, use, occupancy and upkeep of the Project, including but not limited to
taxes or governmental charges on any property of the Borrower brought in or upon the Project,
sales and other excise taxes on products thereof, and any taxes levied upon or with respect to
income or profits from the Project which, if not paid, would become a lien upon the Project.
With respect to special assessments or other governmental charges that may lawfully be paid in
installments over a period of years, with or without interest, the Borrower shall be obligated to
pay only such installments and interest as are required to be paid so long as the Bonds are
outstanding. The Borrower may in good faith contest any such taxes, assessments and other
charges and, in the event of such contest, may permit the items so contested to remain unpaid
during the period of the contest and any appeal therefrom, provided that the Borrower shall first
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furnish to the Trustee, an opinion of Counsel, addressed to the Trustee, that nonpayment of any
such will not subject the Project or any material part thereof to loss or forfeiture.
Section 4.07. Maintenance and Management of the Project. So long as the Bonds are
outstanding, the Borrower will keep the Project and all parts thereof in good repair and good
operating condition, making all repairs thereto and renewals and replacements thereof necessary
for this purpose, so that the Project will remain suitable and efficient for use as a facility of the
character described in and contemplated by this Indenture or such other uses as are not
inconsistent with this Indenture. The Borrower shall keep the Project under competent and
professional management at all times so long as the Bonds are Outstanding and may appoint, re-
appoint, terminate or replace the Project manager without the consent of any Bondholders,
subject to Section 5.10 hereof.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.01. Absolute and Unconditional Obligation; Limited Recourse. The
obligations of the Borrower under this Financing Agreement shall be absolute and unconditional
and shall remain in full force and effect until the entire principal of and premium, if any, and
interest on the Bonds and all amounts payable by the Borrower to the Lender, the Town and the
Trustee under the Financing Documents shall have been paid or provided for, and such
obligations shall not be affected, modified or impaired upon the happening' from time to time of
any event, including without limitation any of the following, whether or not with notice to, or the
consent of, the Borrower:
(a) the compromise, settlement, release or termination of any or all of the
obligations, covenants or agreements of the Town under the Indenture;
(b) the failure to give notice to the Borrower of the occurrence of an event of
default under the terms and provisions of this Financing Agreement, the Indenture, the
FHA Regulatory Agreement, the Declaration of Restrictive Covenants, the Mortgage
Note or the Mortgage;
(c) the waiver of the payment, performance or observance by the Town or the
Borrower of any of the obligations, covenants or agreements contained in the Indenture,
the Declaration of Restrictive Covenants, the Mortgage Note, the Mortgage, the
FHA Regulatory Agreement or this Financing Agreement;
(d) the extension of the time for payment of any principal of, premium, if any,
or interest on any Bond or under this Financing Agreement, or of the time for
performance of any other obligations, covenants or agreements under or arising out of the
Indenture, the Declaration of Restrictive Covenants, the Mortgage Note, the Mortgage,
the FHA Regulatory Agreement or this Financing Agreement;
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(e) the modification or amendment (whether material or otherwise) of any
obligation, covenant or agreement set forth in the Indenture, the Declaration of
Restrictive Covenants, the Mortgage Note, the Mortgage or the FHA Regulatory
Agreement;
(f) the taking or the omission of any of the actions referred to in the
Indenture, the Declaration of Restrictive Covenants, the Mortgage Note, the Mortgage or
the FHA Regulatory Agreement or any actions under this Financing Agreement;
(g) any failure, omission, delay or lack on the part of Town or the Trustee to
enforce, assert or exercise any right, power or remedy conferred on the Town or the
Trustee in the Declaration of Restrictive Covenants, this Financing Agreement or any
document relating to the Bonds or the Indenture, or any act or acts on the part of the
Town, the Trustee or any of the owners from time to time of the Bonds;
(h) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting, the Borrower or the Town or any of the assets of either of
them, or any allegation or contest of the validity of this Financing Agreement in any such
proceeding;
(i) to the extent permitted by law, the release or discharge of the Borrower
from the performance or observance of any obligation, covenant or agreement contained
in this Financing Agreement by operation of law (other than the release or discharge from
payment on the Mortgage Note); or
0) the default or failure of the Borrower fully to perform any of its
obligations set forth in this Financing Agreement.
The specific enumeration of the above-mentioned acts, failures or omissions shall not be
deemed to exclude any other acts, failures or omissions, though not specifically mentioned
above, it being the purpose and intent of this paragraph that the obligations of the Borrower-shall
be absolute and unconditional to the extent herein specified and shall not be discharged, impaired
or varied except by the payment of or provision for the entire principal of and premium, if any,
and interest on the Bonds and all amounts payable by the Borrower to the Lender, the Town and
the Trustee under the Financing Documents. Without limiting any of the other terms or
provisions hereof, it is understood and agreed that, in order to hold the Borrower liable
hereunder, there shall be no obligation on the part of the Trustee or any Bondholder to resort, in
any manner or form for payment, to the Town or to any other Person or their properties or
estates.
Except with respect to the Borrower's obligations under Sections 2.04, 3.09(c), 3.09(f),
5.07 and 5.08 hereof, (i) the liability of the Borrower, under this Financing Agreement, the FHA
Loan Documents, the Declaration of Restrictive Covenants, and any other document relating to
27
the Bonds, to any Person or entity, including, but not limited to, the Trustee or the Town and
their successors and assigns, is limited to the Borrower's interest in the Project and the amounts
held in the funds and accounts created under the Indenture or other documents relating to the
Bonds or any rights of the Borrower under any guarantees relating to the Project, and such
persons and entities shall look exclusively thereto, or to such other security as may from time to
time be given for the payment of obligations arising out of this Financing Agreement or any
other agreement securing the obligations of the Borrower under this Financing Agreement; and
(ii) from and after the date of this Financing Agreement, no deficiency or other personal
judgment, nor any order or decree of specific performance (other than pertaining to this
Financing Agreement, any agreement pertaining to the Project or any other agreement securing
the Borrower's obligations under this Financing Agreement), shall be rendered against the
Borrower, the assets of the Borrower (other than the Borrower's interest in the Project, this
Financing Agreement, amounts held in the funds and accounts created under the documents
relating to the Bonds, any rights of the Borrower under the documents relating to the Bonds or
any rights of the Borrower under any guarantees relating to the Project), its partners or their
heirs, personal representatives, successors, transferees or assigns, as the case may be, in any
action or proceeding arising out of this Financing Agreement and the Indenture or any agreement
securing the obligations of the Borrower under this Financing Agreement, or any judgment,
order or decree rendered pursuant to any such action or proceeding.
Nothing contained herein shall in any way be construed to limit any indemnification
provided by the Borrower to the Town, the Lender, the Trustee or any other Person pursuant to
any other agreement to which the Borrower is a party except as the terms of such agreement shall
provide to the contrary.
Section 5.02. No Defense. No setoff, counterclaim, reduction or diminution of any
obligation, or any defense of any kind or nature which the Borrower has or may come to have
against the Town or the Trustee shall be available hereunder to the Borrower against the Trustee
other than the payment of sums owing.
Section 5.03. Waiver of Notice. The Borrower hereby expressly waives notice from the
Trustee or the Bondowners from time to time of their acceptance and reliance on this Financing
Agreement. The Borrower agrees to pay all reasonable costs, expenses and fees, including all
reasonable attorneys' fees which may be incurred by the Town and the Trustee in enforcing or
attempting to enforce this Financing Agreement following any default on the part of the
Borrower hereunder, whether the same shall be enforced by suit or otherwise; provided, however
that the Borrower shall not be liable for any costs, expenses or fees incurred by the Trustee as a
result of the Trustee's willful misconduct or breach of this Financing Agreement or the Indenture.
The Trustee shall be entitled to the benefits of Article VIII of the Indenture in the exercise of its
rights and duties hereunder.
Section 5.04. Inspections. The Borrower agrees that all equipment, buildings, plans,
offices, apparatus, devices, books, contracts, records, documents, and other papers relating to the
Project shall at all times be maintained in reasonable condition for proper audit, and shall, upon
prior written notice and during regular business hours, be subject to examination and inspection
at any reasonable time by the Town, the Trustee, the Lender or their authorized agents.
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Section 5.05. Reports and Information. At the request of the Town or the Trustee,
their agents, employees or attorneys, the Borrower shall furnish to the Town and the Trustee,
concurrently with delivery to the Lender or GNMA or HUD, copies of any reports and
information furnished to the Lender or GNMA or HUD pursuant to the FHA Loan Documents.
Additionally, the Borrower shall furnish to the Town and the Trustee, if so requested, such
information as may be reasonably requested in writing from time to time relative to compliance
by the Borrower with the provisions of this Financing Agreement and the Declaration of
Restrictive Covenants, and such other information as may be necessary to enable the Town or the
Trustee to complete and file all forms and reports required by the laws of the State and the Code
in connection with the Project and the Bonds.
The Borrower hereby further agrees to file with the Town and the Trustee (in the time
and manner set forth in the Declaration of Restrictive Covenants) such information and
documentation required to be collected and provided by the Borrower under the Declaration of
Restrictive Covenants, which shall be subject to independent investigation and verification by
the Town or the Trustee upon request. The books and records of the Borrower pertaining to the
incomes of tenants residing in the Project shall be open to inspection by any authorized
representative of the Town and the Trustee. Nothing herein is intended to create a duty on the
part of the Town to inspect or review the certificates and records referred to in this paragraph.
Section 5.06. Assignment. No assignment or transfer of title to the Project shall be
made unless (i) GNMA (if GNMA shall hold the Mortgage Note), the Lender and HUD (so long
as the Mortgage Loan is insured by FHA) consent to such assignment or transfer, and (ii) the
transferee or assignee, as the case may be, assumes all of the duties of the Borrower under this
Financing Agreement, the Declaration of Restrictive Covenants and the FHA Loan Documents,
subject to the provisions of such documents. Upon the assumption of the duties of the Borrower
by an assignee as provided herein, the Borrower shall be released from all executory obligations
so assumed. Nothing contained in this Section shall be construed to supersede any provisions
regarding assignment and transfer of the Project contained in the FHA Loan Documents, FHA
Regulations or FHA administrative requirements.
Section 5.07. Fees and Expenses. The Borrower agrees to pay, whether out of the
proceeds of the Mortgage Loan or other funds, all reasonable fees and expenses of the Town, the
Trustee, the Rebate Analyst and the Dissemination Agent (including the reasonable fees and
expenses of their counsel) in connection with the issuance of the Bonds and the performance of
their duties in connection with the transactions contemplated hereby, including, without
limitation, all costs of recording and filing, to the extent such fees and expenses are not otherwise
paid from the Costs of Issuance Account of the Project Fund in accordance with Section 4.01 of
the Indenture. All such amounts shall be paid directly to the parties entitled thereto for their own
account as and when such amounts become due and payable. The Borrower shall also pay any
reasonable expenses in connection with any redemption of the Bonds.
Section 5.08. Indemnification.
(a) The Lender shall indemnify and hold harmless each of the Indemnified
Parties from and against any and all claims arising from any act or omission of the
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Lender or any of its respective agents, contractors, servants, employees or licensees in
connection with the Mortgage Loan prior to the delivery of the GNMA Securities to the
Trustee and all costs, counsel fees, expenses or liabilities incurred in connection with any
such claim or proceeding brought thereon.
(b) The Borrower hereby releases the Town, its Councilors, officers, agents,
employees, attorneys and consultants, and the Trustee, its officers, agents, employees,
attorneys and consultants (the "Indemnified Parties") from, agrees that the Indemnified
Parties shall not be liable for, and agrees to reimburse, indemnify and hold the
Indemnified Parties harmless from and against, any and all claims, liabilities, costs and
expenses (i) arising from damage or injury (including death), actual or claimed, of
whatsoever kind or character, to property or persons, occurring or allegedly occurring in,
on or about the Project, or arising or allegedly arising by reason of or in connection with
the acquisition, design, construction, equipping, maintenance, occupation, use, nonuse or
condition of the Project; (ii) incurred without the gross negligence, wrongful act or bad
faith of the Town or the Trustee, respectively, or because of any action taken or omitted
to be taken by the Town or the Trustee, respectively, in accordance with the terms of this
Financing Agreement, the Indenture, the Declaration of Restrictive Covenants or the
Bonds or because of any action taken by the Town with the consent of the Borrower;.
(iii) arising out of or related to the issue, offering, sale or delivery of the Bonds;
(iv) arising from violation of any contract, agreement or restriction by the Borrower
relating to the Project; (v) arising in connection with the offering or sale of the Bonds;
(vi) arising from violation of any law, ordinance or regulation resulting from the
ownership, occupancy or use of the Project or a part thereof; and (vii) arising from the
performance of the obligations of the Town or the Trustee, respectively, under this
Financing Agreement, the Indenture, the Declaration of Restrictive Covenants or any
other document herein contemplated.
This Section 5.08 is intended to provide the Trustee and its officers, agents and
employees with indemnification from liability which did not result from their negligence, breach
of trust or willful misconduct.
Further, this Section 5.08 is intended to provide indemnification to the Town and its
Commissioners, officers, agents and employees from liability which did not result from their
fraud, gross negligence or willful misconduct.
Any party entitled to indemnification hereunder shall notify the Borrower or Lender (as
applicable) of the existence of any claim, demand or other matter to which the Borrower's or
Lender's indemnification obligation applies and shall give the Borrower or Lender (as
applicable) a reasonable opportunity to defend the same at its own expense and with counsel
satisfactory to the Indemnified Party, provided that the Indemnified Parties shall at all times also
have the right to fully participate in the defense. If (a) an Indemnified Party is advised in an
opinion of counsel that there may be legal defenses available to it that are different from or in
addition to those available to the Borrower or Lender (as applicable) or (b) the Borrower or
Lender (as applicable) shall, after receiving notice of its indemnification obligation and within a
period of time necessary to preserve any and all defenses to any claim asserted, fail to assume the
30
defense or to employ counsel for that purpose satisfactory to the Indemnified Party, then the
Indemnified Party shall have the right, but not the obligation, to undertake the defense of, and to
compromise or settle the claim or other matter on behalf of, for the account of, and at the risk of,
the Borrower or Lender (as applicable). The Borrower or Lender (as applicable) shall be
responsible for the reasonable counsel fees, costs and expenses of the Indemnified Parties in
conducting their defenses.
The obligations of the Borrower and the Lender under this Section shall survive any
assignment or termination of this Financing Agreement.
Section 5.09. Environmental Representations. The Borrower and its successors and
assigns do hereby represent and warrant:
(a) Condition of the Project. The Project, including all personal property,
shall be free from contamination by Regulated Chemicals, including, but not limited to,
friable asbestos in any quantity that violates any Environmental Requirements, and there
has not been thereon a release, discharge or emission, or a threat of release, discharge or
emission, of any Regulated Chemical on, under, in or about the Project in any quantity
that violates any Environmental Requirements.
(b) Previous Use of the Land. To the best of the Borrower's knowledge, and
based on a Phase I Environmental Inspection Report prepared by Waste Engineering, Inc.
(the "Phase I Report"), neither the Borrower nor any previous owner, tenant, occupant
or user of the Land, nor any other Person, has engaged in or permitted any operations or
activities upon, or any use or occupancy of, the Land, or any portion thereof, whether
legal or illegal, accidental or intentional, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Regulated Chemical on, under, in or about the Land in any
quantity that violates any Environmental Requirements, nor has any such party
transported any Regulated Chemical to, from or across the Land in any quantity that
violates any Environmental Requirements.
(c) Property Adjoining the Project. To the best of its knowledge, based
solely on the Phase I Report, the adjoining property has not been used as a
manufacturing, storage or disposal site for Regulated Chemicals nor is any other property
adjoining the Project affected by a violation of Environmental Requirements.
(d) Compliance With Environmental Requirements. To the best of its
knowledge, based solely on the Phase I Report, the Land is in compliance with and has at
all times been in compliance with all applicable Environmental Requirements, and the
Borrower will have all permits and licenses required to be issued under the
Environmental Requirements and will be in full compliance with the terms and
conditions of such permits and licenses, such permits and licenses will be in full force
and effect, and no changes will exist in the facts or circumstances reported or assumed in
the application for or granting of such permits or licenses.
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(e) No Notice of Violations of Environmental Requirements. The Borrower
has. not received any notice, whether written or oral, concerning the Land, for any alleged
violation or requiring compliance of Environmental Requirements, whether or not
corrected to the satisfaction of the appropriate authority, or notice or other
communication concerning alleged liability for Environmental Damages in connection
with the Land, and to the best of the Borrower's knowledge, based solely on the Phase I
Report, there exists no investigation, administrative order, consent order and agreement,
litigation, settlement or judgment, whether proposed, threatened, anticipated or in
existence with respect to the Land.
(f) Survival of Representations and Warranties. The representations and
warranties set forth in this Section shall survive the expiration or termination of this
Financing Agreement, the payment of the Bonds and the discharge of any obligations
owed by the parties to each other and will survive any transfer of title to the Project,
whether by foreclosure or otherwise, and shall not be affected by any investigation by or
on behalf of the Town or the Trustee, or any information which the Town or the Trustee
may have or obtain with respect hereto.
Moreover, the Borrower does hereby and specifically represent and warrant that it has no
affirmative knowledge or reason to believe that any condition, previous use, compliance or
violation of Environmental Requirements is contrary to the description in Section 5.09(a), (b),
(c), (d) and (e).
Section 5.10. Right To Perform Borrower's Obligations. In the event.the Borrower
fails to perform any of its obligations under this Financing Agreement, the Town and/or the
Trustee, after giving the requisite notice, if any, may, but shall be under no obligation to, perform
such obligation and pay all costs related thereto, and all such costs so advanced by the Town or
the Trustee shall become an additional obligation of the Borrower to the Town or the Trustee
hereunder, payable on demand with interest thereon at the Maximum Rate. Any obligation of
the Borrower to the Town or the Trustee created hereunder shall survive termination of this
Financing Agreement.
Section 5.11. Certificate as to Qualified Project Costs. With respect to issuance of all
disbursements of Mortgage Loan proceeds, the Borrower shall deliver or cause to be delivered to
the Trustee, at the time the disbursement is requested, a certificate in the form attached hereto as
Exhibit B executed by an Authorized Borrower Representative certifying, among other things,
that at least 95% of the amount of the disbursement represents Qualified Project Costs, that the
disbursement is a proper charge against the Mortgage Loan, that the costs incurred by the
Borrower are presently due and payable and have not previously been paid or requisitioned and
the Borrower is not in default under the Mortgage Loan or this Financing Agreement. Such
certificate shall not be a condition to the purchase of GNMA Securities by the Trustee. In the
event that the Borrower fails to deliver the certificate as provided in this Section 5.11, the
Trustee shall notify the Town and Bond Counsel in writing; provided however, that failure of the
Borrower to deliver such certificate shall not, by itself, constitute a violation of or default under
this Financing Agreement.
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Section 5.12. Continuing Disclosure. The Borrower hereby covenants and agrees that
the Borrower will execute a written undertaking (the "Undertaking") for the benefit of the
Bondholders sufficient to comply with the terms of Securities and Exchange Commission
Rule 15c2-12 as then in effect, which Undertaking shall be assigned to the Trustee for the benefit
of the Bondholders, and each Bondholder shall be a third-party beneficiary of this Section and
the Undertaking with the right to enforce this Section and the Undertaking directly against the
Borrower. Notwithstanding any other provision of this Financing Agreement, failure of the
Borrower to comply with the Undertaking shall not be considered an event of default under this
Financing Agreement; however, the Trustee, at the written request of the holders of at least 25%
in aggregate principal amount of Outstanding Bonds, shall (only to the extent the Trustee has
been provided indemnity satisfactory to it from any costs, liabilities or expenses, including fees
and expenses of its attorneys), or any Bondholders may, take such actions as may be necessary
and appropriate, including seeking specific performance by court order, to cause the Borrower to
comply with its obligations pursuant to this Section 5.12.
Section 5.13. Insurance Proceeds. The Lender covenants that in the event of a default
on the Mortgage Loan resulting in a claim by the Lender for insurance proceeds pursuant to
Section 221(d)(4) of the National Housing Act, the Lender shall request that such claim be paid
only in cash and not debentures.
ARTICLE VI
SPECIAL TERMS AND PROVISIONS
Section 6.01. Further Assurances and Corrective Instruments. The Town, the
Trustee, the Lender and the Borrower agree that they will, from time to time, execute and deliver
or cause to be executed and delivered such supplements hereto and such further instruments as
may reasonably be required for carrying out the intention of the parties to, or facilitating the
performance of, this Financing Agreement.
Section 6.02. Tax Covenants.
(a) The Town and the Borrower have entered into this Financing Agreement
with the intention that the interest on the Series A Bonds be and remain excluded from
gross income under the Code. Accordingly, for the benefit of the Town, the Trustee and
each Series A Bondholder, the Borrower covenants that, subject to the FHA Regulations
and the FHA Loan Documents, it will not (i) take any action, (ii) fail to take any action,
or (iii) make any use of the Project or the proceeds of the Series A Bonds, which would
cause the interest on any of the Series A Bonds to be or become includable in the gross
income of the Series A Bondholders for federal income tax purposes.
(b) The Borrower covenants and agrees that it will not use or permit the use of
any of the funds provided by the Town hereunder or any other funds of the Borrower,
directly or indirectly, or direct the Trustee to invest any funds held by it hereunder or
33
under the Indenture, in such manner as would, or take or omit to take any other action
that would cause any Series A Bond to be an "arbitrage bond" within the meaning of
Section 148 of the Code and applicable regulations promulgated from time to time
thereunder. The Borrower will take such action or actions as may be reasonably
necessary in the opinion of Bond Counsel, or of which it otherwise becomes aware, to
fully comply with Section 148 of the Code.
(c) The Borrower recognizes that certain of the facts, estimates and
circumstances required to be set forth in the instruments of the Town, including Internal
Revenue Service Form 8038, will be based upon the representations of the Borrower.
The Borrower covenants to provide, or cause to be provided, such facts, estimates and
circumstances as are necessary to enable the Town to execute and deliver such
instruments. The Borrower further covenants that (i) such facts, estimates and
circumstances will be based on the Borrower's reasonable expectations on the Original
Issue Date and will be, to the best of the knowledge of the officer or representative of the
Borrower furnishing such facts, estimates and circumstances, true, correct and complete
as of that date, and (ii) the Borrower will make reasonable inquiries to insure such truth,
correctness and completeness.
(d) The 'Borrower recognizes that (i) the Trustee will hold and invest the
proceeds of the Bonds within its control in accordance with the Indenture; and (ii) if it is
necessary to further restrict or. limit the yield on the investment of any proceeds of the
Series A Bonds in order to avoid the Series A Bonds being considered "arbitrage bonds"
within the meaning of Section 148 of the Code, the Trustee will take such action as is
necessary to restrict or limit the yield on such investment.
(e) The Borrower hereby agrees to comply with the requirements of the Tax
Certificate and the Declaration of Restrictive Covenants, which are incorporated herein
and made a part of this Financing Agreement.
(f) The obligations of the Borrower under this Section shall survive the
termination of this Financing Agreement and the payment and performance of the other
obligations of the Borrower hereunder and under the FHA Loan Documents and the
Declaration of Restrictive Covenants.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.01. Events of Default; Remedies. Upon notice or discovery of a violation by
the Borrower of, or default by the Borrower under, any of the provisions of this Financing
Agreement or the FHA Loan Documents, the Borrower shall give written notice thereof to the
Town, the Lender, GNMA and the Trustee by certified mail, postage prepaid, return receipt
requested. If a Responsible Officer of the Trustee has actual knowledge of a violation by the
Borrower of, or default by the Borrower under, any of the provisions of this Financing
Agreement, the Trustee shall give written notice thereof to the Borrower, the Town, the Lender
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and GNMA by certified mail, postage prepaid, return-receipt requested. If a violation or default
by the Borrower of any of the provisions of this Financing Agreement is not corrected to the
reasonable satisfaction of the Trustee within 30 days after the date such notice is mailed, the
Trustee may without further notice declare a default under this Financing Agreement effective on
the date of such declaration of default, and upon such default the Trustee may apply to any state
or federal court having jurisdiction (i) for specific performance of this Financing Agreement or
for an injunction against any violation of this Financing Agreement, since the injury to the
Bondholders and the Trustee arising from a default under any of the terms of this Financing
Agreement would be irreparable, and the amount of damage would be difficult to ascertain, or
(ii) for other relief in law or equity which may be appropriate; provided, however, that if the
violation or default is not a payment default and could not be corrected within such 30 day
period, the Trustee may agree to such longer period as may be necessary, in the reasonable
opinion of the Trustee, to correct such violation or default if the Trustee reasonably determines
that: (i) the Borrower has commenced and is diligently pursuing appropriate action to correct
such violation, and (ii) there will be no material adverse effect on the rights of the Town, the
Trustee, the Lender, GNMA or the Bondholders under this Financing Agreement or any of the
FHA Loan Documents or the Indenture as a result of such extension. A default hereunder shall
not, in itself, constitute an Event of Default under the Indenture or under the FHA Loan
Documents (unless a default under the FHA Loan Documents is the reason for the default
hereunder) or the documents relating to the GNMA Securities. In addition, subject to the
provisions of the Indenture, the Lender shall be entitled to exercise such remedies as may be
available under the FHA Loan Documents.
Whenever any Event -of Default has occurred and is continuing, the Trustee, may, but
except as otherwise provided in the Indenture shall not be obligated to, exercise any or all of the
rights of the Town under this Section, upon notice as required to the Town. In addition, the
Trustee shall have available to it all of the remedies prescribed by the Indenture. If the Trustee is
not enforcing the Town's rights in a manner to protect the Town or is otherwise taking action that
brings adverse consequences to the Town, then the Town may, without the consent of the
Trustee, take whatever action at law or in equity may appear necessary or appropriate to enforce
the Town's Unassigned Rights and to collect all sums then due and thereafter to become due to
the Town under this Financing Agreement. Any amounts collected pursuant to action taken
under this Section 7.01 (other than sums collected for the Town on account of the Town's
Unassigned Rights which sums shall be paid directly to the Town) shall be applied in accordance
with the provisions of the Indenture.
Section 7.02. No Remedy Exclusive. No remedy conferred upon or reserved to the
Town, the Lender or the Trustee by this Financing Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Financing Agreement and the
Indenture or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default hereunder shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
Town, the Lender or the Trustee to exercise any remedy reserved to it in this Article, it shall not
be necessary to give any notice, other than such notice as may be expressly required herein.
35
. Section 7.03. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Financing Agreement should be breached by any party and thereafter
waived by the other parties, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.
Section 7.04. Payment of Costs. In the event the Borrower is in default under any
provision of this Financing Agreement, the FHA Loan Documents or the Declaration of
Restrictive Covenants, the Borrower shall be liable to, and upon demand shall pay to the Town,
the Trustee and the Lender all reasonable fees and disbursements of such persons and their
agents (including attorneys' fees and expenses) which are reasonably connected therewith or
incidental thereto except to the extent such fees and disbursements are paid from moneys
available therefor under the Indenture.
ARTICLE VIII
TERMINATION AND PREPAYMENT
Section 8.01. Option To Terminate. The Borrower shall have the option to terminate
this Financing Agreement (subject to the provisions hereof which expressly survive termination
of this Financing Agreement) at any time when (i) the Indenture shall have been discharged
pursuant to Article XII thereof, and (ii) sufficient moneys are on deposit.with the Trustee, or the
Town, or either of them, to meet all additional payments due or to become due through the date
on which the last of the Bonds are then scheduled to be retired or redeemed, or, with respect to
additional payments to become due, provisions satisfactory to the Trustee and the Town are
made for paying such amounts as they come due; provided, however, that under no
circumstances shall this Financing Agreement be terminated prior to the acquisition by the
Trustee of the PLC.
Section 8.02. Option To Prepay Loan. The Borrower shall have and is hereby granted
the option to prepay the Mortgage Loan in full or in part prior to the payment and discharge of
all the Outstanding Bonds, but only in accordance with the provisions of the Mortgage Note and
the Indenture.
Section 8.03. Notice of Prepayment; Timing of Prepayment. The Lender shall within
24 hours notify the Trustee in writing of the receipt of any notice of prepayment by the Borrower
and of the receipt of any prepayment or prepayment penalties paid by the Borrower pursuant to
the terms of the Mortgage Note and shall promptly confirm any such notice or receipt in writing.
The written notice shall state the date such prepayment will be passed through to the Trustee,
which date shall be not later than the 15th day of the month following the month in which such
prepayment occurs and shall state the effect such prepayment (if a partial prepayment) would
have on the remaining scheduled payments on the GNMA Securities. The Lender shall transfer
to the Trustee, in accordance with the provisions of the Mortgage Note, the portion of any
prepayment penalties paid by the Borrower pursuant to the Mortgage Note which is attributable
to the GNMA Securities. If such prepayment is not made by the time required therefor by the
terms of the Mortgage Note, any prepayment premiums previously received by the Lender shall
be returned to the Borrower by the person holding such prepayment.
36
ARTICLE IX
MISCELLANEOUS
Section 9.01. Term of Agreement. This Financing Agreement shall be in full force and
effect from the date hereof, and shall continue in effect until the earlier of (i) payment in full of
all principal of, premium, if any, and interest on the Bonds, or provision for the payment thereof
shall have been made pursuant to the Indenture, all fees, charges and expenses of the Town, the
Lender and the Trustee have been fully paid or provision made for such payment (the payment of
which fees, charges, indemnities and expenses shall be evidenced by a written certification of the
Borrower that it has fully paid all such fees, charges, indemnities and expenses) and all other
amounts due hereunder have been duly paid or provision made for such payment, or (ii) such
time as this Financing Agreement shall have been terminated in accordance with the provisions
of the Indenture and Section 8.01 hereof. All representations, certifications and covenants by the
Borrower as to the indemnification of various parties and the payment of fees and expenses of
the Town as described in Sections 5.07, 5.08 and 5.09 hereof, and all matters affecting the
tax-exempt status of the Series A Bonds shall survive the termination of this Financing
Agreement.
Section 9.02. Assignment by the Town. The Town has, simultaneously with the
delivery of this Financing Agreement, by execution and delivery of the Indenture, assigned to the
Trustee, as security for the Bonds, all of the Town's right,, title and interest in and to and
remedies under this Financing Agreement (excepting only the Town's Unassigned Rights,
including without limitation, its right to indemnification by the Borrower and to payments to the
Town (or for its account) for expenses incurred by the Town itself, or its officials, officers,
agents or employees on its behalf).
Section 9.03. Notices. All notices, certificates or other communications hereunder shall
be sufficiently given by hand delivery, overnight commercial delivery or certified mail and shall
be deemed given when hand delivered, or three days after mailing if mailed by certified mail,
postage prepaid, return receipt requested, addressed to the Town, the Borrower, the Trustee, the
Lender or any other person to whom any such notice, certificate or other communication is to be
given, at the appropriate address set forth in Section 13.08 of the Indenture. The Town, the
Borrower, the Lender and the Trustee, by notice given hereunder, may designate any further or
different addresses to which subsequent notices, certificates or other communications shall be
sent.
Section 9.04. Binding Effect. This Financing Agreement shall inure to the benefit of
and shall be binding upon the Town, the Borrower, the Lender, the Trustee and their respective
successors and assigns, subject to the limitation that any obligation of the Town created by or
arising out of this Financing Agreement shall not be an indebtedness or a multiple fiscal year
financial obligation of the Town or a charge against the general credit or taxing powers of the
Town or the State or any political subdivision thereof, or give rise to any pecuniary.. liability of
the Town, but shall be payable solely out of the sources described in the Indenture.
37
Section 9.05. Successors and Assigns. Whenever in this Financing Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on behalf of the
Borrower which are contained in this Financing Agreement shall bind its successors and assigns
and inure to the benefit of the successors and assigns of the Town.
Section 9.06. Severability. In the event any provision of this Financing Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provision thereof.
Section 9.07. Amendments, Changes and Modifications. This Financing Agreement
may be amended, changed, modified, altered or terminated only by a written instrument executed
by each of the parties hereto, and only as permitted by Article XI of the Indenture.
Section 9.08. Execution of Counterparts. This Financing Agreement may be executed
in several counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.
Section 9.09. Law Governing Construction of Agreement. This Financing Agreement
shall be governed by and construed in accordance with the laws and judicial decisions of the
State, without regard to conflict of laws principles. The parties hereto expressly acknowledge
and agree that any judicial action to interpret or enforce the terms of this Financing Agreement
.against the Town shall be brought and maintained in the District Court of the State in Eagle
County, Colorado, or the United States District Court in and for the District of Colorado,
including the United States Bankruptcy Court.
Section 9.10. Amounts Remaining in Indenture Funds. It is agreed by the parties
hereto that upon the expiration or sooner termination of this Financing Agreement, and after
payment in full of the principal of and redemption premium, if any, and interest on the Bonds (or
after provision has been made for the payment thereof as provided in the Indenture), the Rebate
Amount and the fees and expenses of the Trustee, the Town and the Rebate Analyst, any moneys
remaining in the General Receipts Fund and in any other fund established under the Indenture
shall be paid only in accordance with the Indenture.
Section 9.11. FHA Loan Documents and Regulations Control.
(a) To the extent that there is any conflict, inconsistency or ambiguity
between or among this Financing Agreement and (i) any applicable FHA mortgage
insurance, or other applicable HUD, FHA or. GNMA statutory, regulatory or
administrative requirements, (ii) any of the documents which have been or are required
by FHA and/or the Lender to be executed by the Borrower, FHA and/or the Lender in
connection with the subject transaction (each, an "FHA Loan Document," or
collectively, the "FHA Loan Documents" as the context may require) or (iii) any of the
documents which have been or are required by GNMA to be executed by the Borrower,
FHA, GNMA and/or the Lender in connection with the subject transaction (each, a
"GNMA Document" or collectively, the "GNMA Documents" as the context may
38
require), said FHA mortgage insurance and other applicable FHA and GNMA statutory,
regulatory and administrative requirements and said FHA Loan Documents and GNMA
Documents will be deemed to be controlling and any such ambiguity or inconsistency
will be resolved in favor of, and pursuant to the FHA mortgage insurance, and other
applicable FHA and GNMA statutory, regulatory or administrative requirements and the
terms of the FHA Loan Documents and GNMA Documents, as applicable. For purposes
hereof, the reference to FHA's statutory, regulatory and administrative requirements shall
be deemed to include, but shall not be limited to, any statutory, regulatory or
administrative requirements pertaining to Section 8 of the United States Housing Act of
1937, as may be applicable. The parties hereto agree to amend this instrument as may be
necessary or required by FHA, GNMA or the Lender to conform this instrument to the
above-cited requirements and FHA Loan Documents and GNMA Documents. No
amendment to this Financing Agreement shall be made if such amendment would result
in a conflict with the National Housing Act, any applicable FHA or GNMA statutory,
regulatory or administrative' requirements, the FHA LoanDocuments, or the GNMA
Documents. In addition, it is understood and agreed that any default under this Financing
Agreement shall not constitute a default under the FHA Loan Documents or the GNMA
Documents; and further, that nothing herein contained shall be construed to limit or affect
the Lender's rights under the FHA Loan Documents or the GNMA Documents.
(b) Notwithstanding anything contained to the contrary herein, the
enforcement of this Financing Agreement shall not result in any claim against the Project,
the Mortgage Loan, the proceeds of the Mortgage Loan, any reserve or deposit made with
FHA or the Lender or another person or entity required by FHA or the Lender in
connection with the Mortgage Loan or against the rents or other income from the Project
except to the extent of "Residual Receipts" (as such term is defined in the FHA
Regulatory Agreement) available for distribution to the Borrower.
(c) In each provision herein requiring the Borrower or any other party to the
transaction to take any action necessary to preserve the tax exemption of interest on the
Series A Bonds, or prohibiting the Borrower or any other party to the transaction from
taking any action that might jeopardize such tax exemption, such provision is qualified to
except any actions required (or prohibited) by HUD, FHA, GNMA or the Lender
pursuant to (i) the National Housing Act, as amended, including, but not limited to, any
applicable FHA mortgage insurance or other HUD, FHA or GNMA statutory, regulatory
or administrative requirements therein contained or promulgated thereunder,
(ii) Section 8 of the United States Housing Act of 1937 and the administrative regulations
and guidelines promulgated thereunder, or (iii) any of the FHA Loan Documents and the
GNMA Documents, as applicable.
(d) Notwithstanding any provision of this Financing Agreement to the
contrary, the parties hereto acknowledge and agree that all of their respective rights and
powers under this Financing Agreement are subordinate and subject to the lien of the
Mortgage created by the Borrower in favor of the Lender under the FHA Loan
Documents, together with any and all amounts from time to time secured thereby, and
interest thereon, and to all of the terms and provisions of the Mortgage, and any and all
39
other FHA Loan Documents and GNMA Documents executed by the Borrower, FHA,
GNMA and/or the Lender, as required by FHA, GNMA or the Lender in connection with
the Mortgage Loan.
(e) Notwithstanding any provision contained in this Financing Agreement to
the contrary, the transfer restrictions contained herein shall in no way be deemed to affect
or otherwise impair the rights of FHA or the Lender, as applicable, to approve or
disapprove the proposed sale or transfer of the Project as required by the FHA Regulatory
Agreement. The decision of FHA or the Lender, as applicable, with respect to any such
proposed sale or transfer of the Project will be binding and determinative on the parties
hereto, notwithstanding the approval or disapproval by the Town or the Trustee of any
such proposed sale or transfer.
(f) Any Project funds held by Lender for or on behalf of the Borrower shall
be maintained separate and apart from the funds established and held by the Trustee for
the holders of the Bonds and the various escrows and funds, if any, under this Financing
Agreement.
. (g) This Financing Agreement shall not be construed to restrict or adversely
affect the duties and obligations of the Lender under the Contract of Mortgage Insurance
between the Lender and HUD with respect to the Mortgage Loan.
(h) Nothing in this Section 9.11 shall be interpreted (i) to increase the
obligations of the Town hereunder or otherwise impose additional obligations on the
Town or (ii) to limit the Town's ability to otherwise seek indemnification from the
Borrower (subject to the provisions of (b) above).
(i) The Borrower shall not be deemed to be in violation of this Financing
Agreement if it shall take (or refrain from taking) any actions required (or prohibited) by
HUD pursuant to the National Housing Act, applicable mortgage insurance regulations,
related administrative requirements, the FHA Loan Documents, applicable GNMA
regulations, related administrative requirements and, if applicable, Section 8 of the U.S.
Housing Act of 1937 and regulations promulgated thereunder.
(j) The provisions of this Section 9.11 shall inure to the benefit of the
Borrower, the Lender and HUD, and their successors and assigns.
(k) Any assignment, transfer or pledge of the. Mortgage Loan or a
participation in the Mortgage Loan by way of a participation or other arrangement which
may be made pursuant to the terms of this Financing Agreement shall be made in
accordance with the National Housing Act and the HUD regulations, including
specifically 24 C.F.R. 207.261 or any successor regulation. Any assignment, transfer or
pledge not made in accordance with the terms of this Section 9.11 and HUD regulations
shall be void.
40
(1) A default under this Financing Agreement shall not constitute a default
under the Mortgage Note, Mortgage or any other FHA Loan Document.
(m) Except for funds held under the Indenture, any pledge of Project funds for
the benefit of the Owners of the Bonds is limited to a pledge of principal and interest
payments received by the Trustee on the GNMA Securities. There is no pledge of gross
revenues of the Project or any Project assets.
(n) The Lender will maintain certain HUD-required escrow funds outside the
terms of this Financing Agreement. The enforcement of this Financing Agreement will
not result in the Trustee or the Borrower having any right to, interest in, or claim against
any HUD-required escrow fund, the Project, the Mortgage Loan proceeds, any reserve or
deposit required by HUD in connection with the Mortgage Loan, or the rents or other
income from the Project (other than available Residual Receipts).
(o) The Bonds are not a debt of the United States of America, HUD or any
other governmental agency and are not guaranteed by the full faith and credit of the
United States of America.
(p) In the event that proceeds are received from a condemnation award or
from the payment of a claim under a hazard insurance policy, early redemption of the
Bonds can arise only subsequent to a prepayment of the Mortgage Loan and subsequent
payment under the GNMA Securities.
(q) This Financing Agreement does not provide for the creation of a Project
reserve for replacement.
Section 9.12. Limitation of Town's Liability. Any obligation of the Town created by
or arising out of this Financing Agreement shall be a special, limited obligation of the Town
and shall never constitute a debt or indebtedness or a multiple fiscal year direct or indirect
debt or other financial obligation whatsoever of the Town, and shall not constitute or give
rise to a pecuniary liability of the Town or a charge against its general credit or taxing
power, nor shall it ever be deemed to be an obligation or agreement of any member of
Town Council, officer, agent or employee of the Town in such person's individual capacity,
and none of such persons shall be subject to any liability by reason of entering into this
Financing Agreement.
No recourse shall be had for the enforcement of any obligation, covenant, promise or
agreement of the Town contained in this Financing Agreement, any other document related
hereto to which it is a party or any Bond or for any claim based hereon or otherwise in respect
hereof or upon any obligation, covenant, promise or agreement of the Town contained in any
agreement, instrument or certificate executed in connection with the Project or the issuance and
sale of the Bonds, against any member of Town Council, officer, agent, employee, attorney or
consultant of the Town, whether by virtue of any constitutional provision, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and
understood that no personal liability whatsoever shall attach to, or be incurred by, any member of
41
Town Council, officer, agent, employee, attorney or consultant of the Town, either directly or by
reason of any of the obligations, covenants, promises or agreements entered into by the Town
with the Lender, the Borrower or the Trustee to be implied therefrom as being supplemental
hereto or thereto, and that any personal liability against each and every any member of Town
Council, officer, agent, employee, attorney or consultant of the Town is, by the execution of the
Bonds, this Financing Agreement, the Indenture and the other documents related thereto to
which it is a party, and as a condition of, and as part of the consideration for, the execution of the
Bonds, this Financing Agreement, the Indenture and the other documents related thereto,
expressly waived and released.
The Borrower recognizes that, because the Project is to be acquired, constructed
and equipped by the Borrower, THE ISSUER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO
THE PROJECT OR THE LOCATION, USE, DESCRIPTION, DESIGN,
MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR PURPOSE,
CONDITION OR DURABILITY THEREOF, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS
INCIDENT THERETO ARE TO BE BORNE BY THE BORROWER IN THE EVENT
OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROJECT, ANY
ADDITIONAL PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A
PORTION THEREOF, WHETHER PATENT OR LATENT, THE ISSUER SHALL
HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO.
Section 9.13. Town's Performance. None of the provisions of this Financing
Agreement shall require the Town to expend or risk its own funds or to otherwise incur financial
liability in the performance of any of its duties or in the exercise of any of its rights or powers
hereunder, unless payable from the Revenues pledged under the Indenture. The Town shall not
be under any obligation hereunder to perform any record keeping or to provide any legal
services, it being understood that such services shall be performed or provided as arranged by the
Lender, the Trustee or the Borrower.
Section 9.14. Survival. Notwithstanding the payment in full of the Bonds, the discharge
of the Indenture and the termination or expiration of the Mortgage Loan and this Financing
Agreement, all provisions in this Financing Agreement concerning (a) the tax-exempt status of
the Series A Bonds (including, but not limited to, provisions concerning Rebate), (b) the
interpretation of this Financing Agreement, (c) the governing law, (d) the forum for resolving
disputes, (e) the indemnity of the Indemnified Parties from liability and (f) the Town's lack of
pecuniary liability shall survive and remain in full force and effect.
Section 9.15. Notices of Changes in Fact. The Borrower will notify the Town, the
Lender and the Trustee promptly after the Borrower becomes aware of (a) any change in any
material fact or circumstance represented or warranted by the Borrower in this Financing
Agreement or in connection with the issuance of the Bonds, (b) any default or event which, with
notice or lapse of time or both, could become an Event of Default under this Financing
Agreement, or the Indenture, specifying in each case the nature thereof and what action the
Borrower has taken, is taking and/or proposes to take with respect thereto, (c) any Internal
42
Revenue Service audit of the Borrower or the Series A Bonds, (d) any material litigation
affecting the Bonds, the Borrower or the Project and (e) any default in indebtedness of the
Borrower in excess of $100,000.
IN WITNESS WHEREOF, the parties hereto have executed this Financing Agreement by
their respective duly authorized representatives, all as of the date first above written.
[SEAL]
Attest:
By
Town Clerk
TOWN OF AVON, COLORADO
Mayor
By
BUFFALO RIDGE II, LLLP, as Borrower
By a
Colorado corporation, General Partner
By
President
WELLS FARGO BANK WEST, NATIONAL
ASSOCIATION, as Trustee
By
Title
AMI CAPITAL, INC.,
as Lender
By
Title
43
EXHIBIT A
DESCRIPTION OF THE PROJECT
The Project is located on 10.29 acres on the north side of Interstate 70 east of the Town
of Avon Municipal Bus Maintenance Yard in Avon, Colorado. The project will consist of
approximately 176 units in eleven (11) three-story buildings and a single-story building that
contains the management offices and the management units, all with wood frame structures. All
ground floor units will open to a backyard and all second floor units will have balconies.
The planned unit-mix for the Project is as follows:
No. of Units Unit Type Square Feet Proposed Rent Per
Square Foot
44 Studio 325
2 bedroom/2 bath 873
48 1 bedroom/1 bath 599
Upon completion of the construction, each unit will have a refrigerator, an electric stove
and microwave, a dishwasher, a disposal, and full size washer and dryer connections. Each unit
will be separately metered for gas heat. Common area amenities will include a
. There will be approximately 425 parking spaces, including 148 garage
spaces, to serve the Project and the adjacent development. The construction of the Project is
expected to begin when the Mortgage Note is initially endorsed for insurance by FHA and is
scheduled to be completed [fourteen] months later.
A-1
EXHIBIT B
BORROWER'S CERTIFICATE TO LENDER AND TRUSTEE
Reference is made to that certain Financing Agreement dated as of April 1, 2002 (the
"Financing Agreement"), by and among Town of Avon, Colorado (the "Town"), Buffalo Ridge
H, LLLP (the"Borrower"), Wells Fargo Bank West, National Association (the "Trustee") and
AMI Capital, Inc. (the "Lender"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Financing Agreement.
To induce the Lender to consent to the disbursement under the Mortgage Loan as shown
on Schedule 1 attached hereto, and to induce the Trustee io purchase a CLC or the PLC, as
applicable, the undersigned represents, warrants and certifies to the Trustee:
(a) the costs set forth in Schedule 1 hereto are presently due and payable,
have been, properly incurred by the Borrower in connection with the Project being
financed with the proceeds of the Mortgage Loan, are reimbursable Project Costs
properly chargeable against the Mortgage Loan and have not been the basis of any
previous disbursement;
(b) the costs specified in Schedule 1 hereto, when added to all previous
disbursements under the Mortgage Loan, will result in at least 95% of the aggregate
amount of all disbursements having been used to pay or reimburse the Borrower for
amounts which are Qualified Project Costs;
(c) none of the costs set forth in Schedule 1 hereto are Costs of Issuance; and
(d) [FOR A CLC, INSERT: at least 95% of the amount of the CLC being
purchased by the Trustee in reliance on this Borrower's Certificate represents Qualified
Project Costs and the purchase of such CLC is a proper charge against the Acquisition
Account; and]
[FOR THE PLC, INSERT: at least 95% of the amount of the PLC being
purchased by the Trustee in reliance on this Borrower's Certificate represents Qualified
Project Costs, the principal amount of the PLC in excess of the aggregate principal
amount of the CLCs is a proper charge against the Acquisition Account, and the principal
amount of the PLC in excess of the aggregate principal amount of the CLCs represents
the payment of an obligation incurred by the Borrower presently due and payable and not
previously paid or requisitioned; and]
B-1
(e) all representations in the Tax Certificate are true and correct, the Borrower
is not in default under the Financing Agreement, the Declaration of Restrictive
Covenants, or the Mortgage Loan.
Dated: 200 BUFFALO RIDGE II, LLLP
By:
By: , Inc.,
its general partner
Authorized Borrower Representative
B-2
SCHEDULEI
ITEMIZATION OF REQUESTED DISBURSEMENT
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01.
Section 1.02.
Definitions ........................................................................................................ 2
Rules of Construction ...................................:.................................................. 2
ARTICLE II
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
General Representations and Warranties of the Town .................................... 2
Representations, Warranties and Undertakings by the Borrower .................... 3
Representations, Warranties and Undertakings of the Lender ......................... 9
Environmental Indemnity ..............................................................................11
Environmental Covenants ..............................................................................13
Warranty of Truth ..........................................................................................15
ARTICLE III
THE FINANCING TRANSACTION
Section 3.01. Financing Structure ........................................................................................ 15
Section 3.02. Delivery of the GNMA Securities ................................................................. 16
Section 3.03. The GNMA Securities; Disbursements From the Acquisition Account ........ 16
Section 3.04. Establishment of Completion Date ................................................................ 19
Section 3.05. Sufficiency of Funds ...................................................................................... 20
Section 3.06. Investment of Moneys .................................................................................... 20
Section 3.07. Lender Loan to Borrower ............................................................................... 20
Section 3.08. Failure To Deliver the PLC by the PLC Delivery Date Required Under
indenture ........................................................................................................ 21
Section 3.09. Payments by Borrower ................................................................................... 21
Section 3.10. Borrower's Repayment of Mortgage Loan ..................................................... 23
Section 3.11. Bond Purchase or Redemption ....................................................................... 23
ARTICLE IV
PAYMENTS; SPECIAL COVENANTS OF THE BORROWER
Section 4.01. Additional Payments ...................................................................................... 24
Section 4.02. Operation of the Project ................................................................................. 24
Section 4.03. Compliance With Applicable Laws ............................
Section 4.04. Other Payments by Borrower ......................................................................... 25
Section 4.05. Lender's Rights to Mortgage Loan ................................................................. 25
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.01. Absolute and Unconditional Obligation; Limited Recourse .......................... 25
Section 5.02. No Defense ..................................................................................................... 27
Section 5.03. Waiver of Notice ............................................................................................ 27
Section 5.04. Inspections ..................................................................................................... 28
Section 5.05. Reports and Information ................................................................................ 28
Section 5.06. Assignment .................................................................................................... 28
Section 5.07. Fees and Expenses ......................................................................................... 29
Section 5.08. Indemnification .............................................................................................. 29
Section 5.09. Environmental Representations ..................................................................... 30
Section 5.10. Right To Perform Borrower's Obligations ..................................................... 31
Section 5.11. Certificate as to Qualified Project Costs ........................................................ 32
Section 5.12. Continuing Disclosure ................................................................................... 32
Section 5.13. Insurance Proceeds ......................................................................................... 32
ARTICLE VI
SPECIAL TERMS AND PROVISIONS
Section 6.01. Further Assurances and Corrective Instruments ............................................ 33
Section 6.02. Tax Covenants ............................................................................................... 33
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.01. Events of Default; Remedies ......................................................................... 34
Section 7.02. No Remedy Exclusive .:.................................................................................. 35
Section 7.03. No Additional Waiver Implied by One Waiver ............................................. 35
Section 7.04. Payment of Costs ..................................................................................:........ 35
ARTICLE .VIII
TERMINATION AND PREPAYMENT
Section 8.01. Option To Terminate ...................................................................................... 36
Section 8.02. Option To Prepay Loan ...............................
Section 8.03. Notice of Prepayment; Timing of Prepayment .............................................. 36
ii
ARTICLE IX
MISCELLANEOUS
Section 9.01. Term of Agreement ........................................................................................ 37
Section 9.02. Assignment by the Town ............................................................................... 37
Section 9.03. Notices ........................................................................................................... 37
Section 9.04. Binding Effect ................................................................................................ 37
Section 9.05. Successors and Assigns .................................................................................. 37
Section 9.06. Severability .................................................................................................... 38
Section 9.07. Amendments, Changes and Modifications .................................................... 38
Section 9.08. Execution of Counterparts ............................................................................. 38
Section 9.09.
...............................
Law Governing Construction of Agreement ...................
38
Section 9.10. Amounts Remaining in Indenture .................................................................. 38
Section 9.11. FHA Loan Documents and Regulations Control ........................................... 38
Section 9.12. Limitation of Town's Liability ....................................................................... 41
Section 9.13. Town's Performance ...................................................................................... 42
Section 9.14. Survival .......................................................................................................... 42
Section 9.15. Notices of Changes in Fact ............................................................................ 42
EXHIBIT A- DESCRIPTION OF THE PROJECT
EXHIBIT B- BORROWER'S CERTIFICATE TO LENDER AND TRUSTEE
iii
Y
TRUST INDENTURE dated as of April 1, 2002, between THE TOWN OF
AVON, COLORADO (the "Town"), and WELLS FARGO BANK WEST, NATIONAL
ASSOCIATION, as Trustee (the "Trustee"), a national banking association.
RECITALS:
A. The County and Municipality Development Revenue Bond Act, article 3 of title
29, Colorado Revised Statutes (the "Act"), authorizes the Town to promote the public health,
welfare, safety, convenience and prosperity by financing or refinancing one or more projects (which
includes any land, building or other improvement and real and personal properties) to the end that
residential facilities for low- and middle-income families or persons intended for use. as the sole
place of residence by the intended occupants may be provided; and
B. The Town is further authorized by the Act to issue revenue.bonds for the
purpose of defraying the cost of financing, refinancing, acquiring, improving, and equipping any
project, including the payment of principal and interest on.such revenue bonds for not exceeding
three years, the funding of any reserve funds which the governing body of the Town may deem
advisable to establish in connection with the retirement of such revenue bonds or the maintenance
of the project and all incidental expenses incurred in issuing such revenue bonds, and to secure
payment of such revenue bonds as provided in the Act; and
C. In furtherance of the purposes of the Act, the Town has authorized the
issuance of its Multifamily Housing Project Revenue Bond (GNMA Mortgage-Backed Securities
Program - Buffalo Ridge II Apartments Project), Series 2002A in the aggregate principal amount
of $11,100,000 (the "Series 2002A Bonds") and its Taxable Multifamily Housing Project
Revenue Bonds (GNMA Mortgage - Backed Securities Program - Buffalo Ridge Apartments H
Project), Series 2002B in the aggregate principal amount of $4,205,000 (the "Series 2002B
Bonds") (the Series 2002A Bonds and the Series 2002B Bonds are collectively referred to herein
as the "Series 2002 Bonds" and, together with any Additional Bonds issued pursuant to this
Indenture, are collectively referred to herein as the "Bonds") for the purpose of financing the
acquisition, construction and equipping of a 176-unit multifamily housing project known as the
Buffalo Ridge II Apartments (the "Project") for low and middle-income families or persons
intended for use as the sole place of residence by the intended occupants thereof, which Project
will be located within the boundaries of the Town and will be owned by Buffalo Ridge II LLLP, a
Colorado limited liability limited partnership (the "Borrower"); and
D. Pursuant to its lawful authority under the Act, the Town has entered into a
Financing Agreement dated as of April 1, 2002 (the "Financing Agreement") among the Town,
the Borrower, the Trustee and AMI Capital, Inc. or its successors and assigns or, if AMI Capital,
Inc. loses its status as an FHA-approved mortgagee, any other mortgagee approved by FHA and
its respective successors or assigns (the "Lender"), pursuant to which the Town agrees to issue
the Bonds and to have the Trustee apply the proceeds thereof for the purpose of financing the
Borrower's acquisition, construction and equipping of the Project; and
1
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E. To effect the financing of the Project, the Lender will originate a mortgage
loan to the Borrower (the Mortgage Loan"), which Mortgage Loan will be evidenced by the
Borrower's promissory note (the "Mortgage Note") in favor
Loan as originated by the Lender
mortgage (the "Mortgage") on the Project, and the Mortgage organizational unit
g
will be insured by the Federal Housing Administration (the "FHA"), an or ani ursuant to
within the United States Department of Housing and
amended (12 U.S.C. §I1710 et seq., as
Section 221(d)(4) of the National Housing Act of 1934, as
amended, the "National Housing Act"); and, to fund the Mortgage Loan and to provide security
from the Lender fully
for the Bonds, the Trustee will use the proceeds of the Bonds to purchase
modified mortgage-backed securities (each a "GNMA Security" and together, the "GNMA
Securities") which will be guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association ("GNMA")• with F. The Series 2002 Bonds are to be in subst iand the text to be contained on
such alterations and variations in the arrangement of paragraphs
the face and reverse of each Bond, as may be necessary to comply with industry standards or
requirements for preparation of definitive Series 2002 Bonds):
2
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- 6637418 - #130700 J2
[FORM OF BONDS]
CEDE & CO. HAS AN INTEREST HEREIN: UNLESS THEY BOND IS OPRESEN MPATE (' Y AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITOR
ER,
TO THE ISSUER OR THE BOND REGISTRAR FOR RES IGR'TION IN R NNFAME
EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED RERED THE D BY OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQ ES OT R AN AUTHO O?OR
REPRESENTATIVE OF DTC, ANY TRANSFER, ?S?T?R PLEDGE, IS WRONGFUL.
-VALUE OR OTHERWISE BY
No. [AR]1 [BR]2
UNITED STATES OF AMERICA STATE OF COLORADO
EAGLE COUNTY
TOWN OF AVON, COLORADO
[TAXABLE] 2MULTIFAMILY HOUSING PROJECT REVENUE BOND
(GNMA MORTGAGE-BACKED SECURITIES BUFFALO RIDGE II APARTMENTS PROJECT)
SERIES 2001 [A] [B]
Per Annum Date Original Date CUSIP
Interest Rate Maturity
1, 2002
Registered Owner:
. Principal Sum:
DOLLARS
the "Town! % for value received, hereby
TOWN OF AVON, COLORADO
promises to pay, from the sources hereinafter described, to the Registered Owner D o (specified
ecified
(P
above), or registered assigns, the Principal Sum (specified above) on the Maturity
above), unless this Bond shall have been duly called for previous eor redemption
for upole or in d
and payment of the redemption price shall have been duly provided hereof, and to pay to the person in whose name this Bond he last ay ofat the close of businesn x h interest, which shall the regular record date a or e t date (the "Regular Record Date"), by check or draft mailed to such
preceding an interest p yin
1 Included in Series 2002A Bonds only
Z included in Series 2002B Bonds only
3
....,.w r,amm.2
person at his address as it appears on the registration books of the Town maintained by the
Trustee, interest on said principal sum at the per annum Interest Rate (specified above); provided
that at the written request of any owner of this Bond received by the Trustee at least one business
day prior to the Regular Record Date, interest hereon shall be payable in immediately available
funds by wire transfer within the United States. Interest in respect of this Bond shall accrue from
the interest payment date next preceding the date of authentication to which interest shall have
been paid, (i) unless such date of authentication is an interest payment date.to which interest shall
have been paid, in which case, from such authentication date, or (ii) unless authenticated after a
Record Date and prior to an interest payment date with respect to such Record Date, in which
case from such interest payment date, or (iii) unless this Bond is authenticated prior to the first
interest payment date in which case interest in respect of this Bond shall accrue from its Original
Date shown above. Payments of interest hereunder shall be payable semi-annually on
20 and 20 in each year, commencing 20, 200_, at the per annum Interest Rate
(specified above), until payment of said principal sum and (to the extent payment of such interest
shall be legally enforceable and only as provided below and in the Indenture) on any overdue
installment of interest.
Interest is computed on the basis of a 360-day year of twelve 30-day months. The
principal and any premium due in connection with the redemption of this Bond shall be payable
at the principal corporate trust office of Wells Fargo Bank West, National Association (the
"Trustee") currently located in Minneapolis, Minnesota. Principal, premium, if any, and interest
shall be paid in any coin or currency of the United States of America which, at the time of
payment, is legal tender for the payment of public and private debts. Any interest not punctually
paid shall forthwith cease to be payable to the registered owner on such Regular Record Date,
and may be paid to the person in whose name this Bond is registered at the close of business on a
special record date for the payment of such defaulted interest to be fixed by the Trustee, notice
whereof being given by first class postage prepaid mail to registered Bondholders not more than
15 nor less than 10 days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange on which the
Bonds may be listed and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.
The Bonds shall be registered in a book-entry system of registration for the
Bonds. Except as specifically provided otherwise in the Indenture, the Securities Depository (or
its nominee) will be the Registered Owner of this Bond. By acceptance of a confirmation of
purchase, delivery or transfer, the Beneficial Owner of this Bond shall be deemed to have agreed
to this arrangement. The Securities Depository (or its nominee), as Registered Owner of this
Bond, shall be treated as its owner for all purposes.
The Bonds are issued under and secured by a Trust Indenture dated as of April 1,
2002 (the "Indenture") between the Town and the Trustee and a Financing Agreement dated as of
April 1, 2002 (the "Financing Agreement") among the Town, Buffalo Ridge II LLLP, a Colorado
limited liability limited partnership (the "Borrower"), the Trustee and AMI Capital, Inc., as
lender (the "Lender"). The Bonds are being issued by the Town for the purpose of providing
funds to acquire from Lender fully modified, mortgage-backed securities guaranteed as to timely
4
\\\DE - 6637418 - 8130700 v2
r
payment of principal and interest by the Government National Mortgage Association. The
Lender will use the proceeds of the Bonds to make a loan (the "Mortgage Loan") to the
Borrower, that is insured by the Federal Housing Administration of the Department of Housing
and Urban Development, to finance the acquisition, construction and equipping of a multifamily
rental housing project (the "Project") located in the Town of Avon.
THE BONDS AND THE INTEREST THEREON SHALL CONSTITUTE
SPECIAL, LIMITED OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE
INCOME, REVENUES AND RECEIPTS SPECIFICALLY PLEDGED THEREFOR UNDER
THE INDENTURE, SHALL NEVER CONSTITUTE THE DEBT OR INDEBTEDNESS OF
THE TOWN WITHIN THE MEANING OF ANY PROVISION OR LIMITATION OF THE
COLORADO CONSTITUTION, THE TOWN'S CHARTER OR STATUTES, AND SHALL
NOT CONSTITUTE NOR GIVE RISE TO A PECUNIARY LIABILITY OF THE TOWN OR
A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWER. THE BONDS AND
THE INTEREST THEREON SHALL NOT CONSTITUTE A "MULTIPLE FISCAL YEAR
DIRECT OR INDIRECT DEBT OR OTHER FINANCIAL OBLIGATION WHATSOEVER"
OF THE TOWN UNDER ARTICLE X, SECTION 20 OF THE COLORADO
CONSTITUTION. THE UNITED STATES OF AMERICA SHALL NOT BE OBLIGATED TO
PAY THE PRINCIPAL OF OR THE INTEREST ON THE BONDS OR OTHER COSTS
INCIDENTAL THERETO. THE BONDS AND THE INTEREST THEREON DO NOT
CONSTITUTE A LOAN, CREDIT OR PLEDGE OF THE FAITH AND CREDIT OR TAXING
POWER OF THE STATE OF COLORADO OR ANY POLITICAL SUBDIVISION THEREOF,
INCLUDING THE TOWN.
If the Town deposits or causes to be deposited with the Trustee funds sufficient to
pay the principal or redemption price of any Bonds becoming due at maturity, by call for
redemption, or otherwise, together with the premium, if any, and interest accrued to the due date,
interest on such Bonds will cease to accrue on the due date, and thereafter the owners will be
restricted to the funds so deposited as provided in the Indenture.
If an Event of Default as defined in the Indenture occurs, the principal of all
Bonds issued under the Indenture may be declared due and payable upon the conditions and in
the manner and with the effect provided previously herein and in the Indenture.
No recourse shall be had for the payment of the principal or redemption
price of, or premium, if any, or interest on, this Bond, or for any claim based hereon or on
the Indenture, against any official, officer, agent or employee, past, present or future, of the
Town or of any successor body, as such, either directly or through the Town or any such
successor body, under any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or by any legal or equitable proceeding or otherwise.
THIS BOND IS SUBJECT TO REDEMPTION PRIOR TO MATURITY AS
FURTHER DESCRIBED HEREIN.
5
AM - 6637118 - #130700 Y2
This Bond is a special limited obligation of the Town secured by (a) a pledge of
the Funds and Revenues (as defined in and with the exceptions provided in the Indenture) and
(b) the lien and security interest in the GNMA Securities issued by the Lender, in each case
subject to the provisions of the Indenture. No mortgage or other lien on the Project has been
created in favor of the Trustee or Bondholders. The Bonds are issued under and are secured by
and entitled to the protection of the Indenture, to which reference is made for a description of the
respective priorities and security pledged for payment of the Bonds; the rights of the owners. of
the Bonds; the rights and obligations of the Town; the rights, duties and obligations of the
Trustee; and the provisions relating to amendments to and modifications of the Indenture. The
owner of this Bond shall have no right to enforce the provisions of the Indenture, the Financing
Agreement or the GNMA Securities or to institute action to enforce the covenants thereof or
rights or remedies thereunder, .except as provided in the Indenture.
Optional Redemption in Whole or in Part. The Bonds maturing 20,
20_, 20, 20 and 20, 20 are subject to optional redemption
prior to maturity in whole or in part to the extent of payments on the GNMA Securities
representing optional prepayments on the Mortgage Loan or otherwise at the option of the Town,
at the direction of the Borrower, with Available Moneys from the proceeds of refunding bonds or
other funds by the Borrower on or after 20, 20_, at the Redemption Prices set forth in
the Indenture.
Sinking Fund Redemption. Bonds maturing 20, 20_,
20, 2C , 20, 20 and 20, 20 are also subject to
mandatory sinking fund redemption prior to maturity, in part by lot, on the dates and in the
principal amounts set forth in the Indenture at a price equal to 100% of the principal amount of
each Bond so redeemed, plus interest accrued to the redemption date.
At the option of the Town, the principal amount of Bonds required to be redeemed
pursuant to mandatory sinking fund payments may be reduced, in inverse chronological order, by
the principal amount of such Bonds which shall have been delivered to the Trustee for
cancellation or which shall have been retired (otherwise than through the operation of the sinking
fund payments).
Extraordinary Mandatory Redemption in Whole or in Part. The Bonds are
subject to mandatory redemption prior to maturity in whole or in part and if in part by lot, on any
date at a redemption price equal to 100% of the principal amount thereof, plus interest accrued to
the redemption date, if one or more of the events shall have occurred in accordance with
Section 7.02 of the Indenture.
Any redemption under the preceding paragraphs shall be made as provided in the
Indenture upon not more than 15 days' nor less than 10 days' notice to the Bondholder. Notice of
the call for any such redemption, identifying the Bonds to be redeemed, will be given by mailing
copies of such notice to the registered owners of Bonds to be redeemed at their addresses. as they
appear on the registry books maintained by the Trustee. All Bonds so called for redemption will
cease to bear interest on the specified redemption date provided funds for their redemption price
6
r
\\\DE - 6637418 - #130700 W2
and any accrued interest payable on the redemption date are on deposit at the principal place of
payment at that time. Notice of optional redemption may be conditioned upon the deposit of
moneys with the Trustee before the date fixed for redemption and such notice shall be of no
effect unless such moneys are so deposited and provided further that in the event moneys
sufficient for the redemption are not on deposit five business days prior to the scheduled
redemption date, then the redemption shall be canceled and on such date of cancellation notice
shall be mailed to the holders of such Bonds to be redeemed, by overnight mail, notifying them
that the redemption has been canceled.
Any moneys deposited and held by the Trustee for the benefit of claimants, if any,
for three years after the date on which payment therefor became due shall be repaid to the
Borrower, unless there is a dispute as to the payment thereof, and thereupon and thereafter no
claimant shall have any rights to or in respect of such moneys.
This Bond is transferable by the registered owner hereof or his duly authorized
attorney at the principal corporate trust office of the Trustee, upon surrender of this Bond,
accompanied by a duly executed instrument of transfer in form and with guaranty of signature
satisfactory to the Trustee,. subject to such reasonable regulations as the Town or the Trustee may
prescribe, and upon payment of any taxes or other governmental charges incident to such
transfer. Upon any such transfer a new registered Bond of the same maturity and in the same
aggregate principal amount will be issued to the transferee. The person in whose name this Bond
is registered shall be deemed the owner hereof for all purposes, and the Town and the Trustee
shall not be affected by any notice to the contrary.
In any case where the date of maturity of interest on or principal of the Bonds or
the date fixed for redemption of any Bonds shall be a Saturday or Sunday or a legal holiday or a
day on which banking institutions in the city of payment are authorized by law to close, then
payment of interest or principal or redemption price need not be made on such date but may be
made on the next succeeding business day with the same force and effect as if made on the date
of maturity or the date fixed for redemption.
This Bond is not valid unless the Trustee's Certificate of Authentication endorsed
hereon is duly executed.
IN WITNESS WHEREOF, the Town has caused this Bond to be executed in its
name by the manual or facsimile signature of its Mayor and its seal or a facsimile thereof to be
affixed, imprinted, lithographed or reproduced hereon and attested to by the manual or facsimile
signature of its Town Clerk.
TOWN OF AVON, COLORADO
[SEAL]
By:
Mayor
7
%DE - 6637418 - #130700 W2
Attest:
Town Clerk
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Date of Authentication
This Bond is one of the Bonds described in the within-mentioned Indenture.
Printed hereon or annexed hereto is the complete text of the opinion of bond counsel, Hogan &
Hartson L.L.P., a signed copy of which, dated the date of original issuance of such Bonds, is on
file with the undersigned.
WELLS FARGO BANK WEST,
NATIONAL ASSOCIATION,
Trustee
By:
Authorized Representative
8
\\\DE - 6637118 - #130700 v2
ABBREVIATIONS
The following abbreviations, when used in the Inscription on the face of this
Bond, shall be construed as though they were written out in full according to applicable laws or
regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common
UNIFORM GIFT
MIN ACT - Custodian
(Cust) (Minor)
under Uniform Gifls to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
9
\\\DE - 6637478 - 5130700 v2
[FORM OF ASSIGNMENT]
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond of Town of Avon, Colorado and all rights thereunder,
and hereby irrevocably constitutes and appoints
attorney to transfer the said Bond on the Bond Register, with full power
of substitution in the premises.
Dated:
Signature Guaranteed:*
NOTICE: The Assignor's signature to this assignment must correspond with the
name as it appears upon the face of the within Bond in every particular without alteration or any
change whatever.
* Signature guaranty must be made by a guarantor institution participating in the Securities
Transfer Agents Medallion (STAMP) Program.
[END OF BOND FORM]
G. The execution and delivery of this Indenture and the issuance and sale of the
Series 2002 Bonds have been in all respects duly and validly authorized by an ordinance duly
enacted by the Town, and all things necessary to make the Series 2002 Bonds, when
authenticated by the Trustee and issued as provided in this Indenture, the valid, binding and legal
obligations of the Town according to the import thereof, and to constitute this Indenture a valid
assignment and pledge of the properties, interests, revenues and payments herein pledged to the
payment of the Bonds, have been done and performed, and the creation, execution and delivery
of this Indenture, and the execution and issuance of the Series 2002 Bonds, subject to the terms
hereof, have in all respects been duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to provide for
the payment of principal or redemption price (as the case may be) in respect of all Bonds issued
and outstanding under this Indenture, together with premium, if any, and interest thereon, the
rights of the Bondholders and the performance of the covenants contained in said Bonds and
herein, the Town does hereby sell, assign, transfer, set over and pledge unto, and grant a security
interest in, Wells Fargo Bank West, National Association, Trustee, its successors in trust and its
assigns forever, all and singular the following described property, franchises and income
(collectively, the "Trust Estate"):
10
\\\DE - 66374/8 - #130700 v2
Granting Clause First. All Funds and accounts created under this Indenture,
except the Excess Investment Earnings Fund; provided that the funds held in such Funds and
accounts are to be used only for the purposes and in accordance with the instructions and
provisions set forth in this Indenture.
Granting Clause Second. All right, title and interest of the Town in the GNMA
Securities and the Revenues, as hereinafter defined (other than Unassigned Town's Rights),
including all payments and proceeds with respect thereto and any interest, profits or other income
derived from the investment thereof.
Granting Clause Third. All right, title and interest of the Town in the Financing
Agreement, and the other Project Documents as defined herein. (other than the Unassigned
Town's Rights).
Granting Clause Fourth. Any and all other interests in real and personal
property of every name and nature granted to the Trustee from time to time hereafter by delivery
or by writing of any kind specifically mortgaged, pledged or hypothecated as and for additional
security hereunder by the Town or by anyone in its behalf or with its written consent in favor of
the Trustee, which is hereby authorized to receive any and all such property at any and all times
and to hold and apply the same subject to the terms hereof.
TO HAVE AND TO HOLD in trust, nevertheless, for the equal and ratable
benefit and security of all present and future owners of the Bonds issued and to be issued under
this Indenture, without preference, priority or distinction as to lien and in payment or otherwise
(except as otherwise expressly provided herein) of any one Bond over any other Bond upon the
terms and subject to the conditions hereinafter set forth.
ARTICLE I
DEFINITIONS AND REPRESENTATIONS OF THE TOWN
Section 1.01: Definitions. In this Indenture and any indenture supplemental
hereto (except as otherwise expressly provided or unless the context otherwise requires) the
singular includes the plural, the masculine includes the feminine, and the following terms shall
have the meanings specified in the foregoing recitals:
Act
Bonds
Borrower
Financing Agreement
II
Lender
National Housing Act
Project
Town
Trust Estate
\\\DE - 6637418 - #130700 v2
In addition, the following terms shall have the meanings specified in this Article,
unless the context otherwise requires, and all capitalized terms not otherwise defined herein shall
have the respective meanings given in the Financing Agreement:
"Acquisition Account" means the account of that name within the Project Fund,
created and held by the Trustee under Sections 4.02 and 4.04.
"Act of Bankruptcy" means the filing of a petition in bankruptcy (or other
commencement of a bankruptcy or similar proceeding) by or against the Borrower, or guarantor
of the Borrower, under any applicable bankruptcy, insolvency or similar law as now or hereafter
in effect.
"Additional Bonds" means Additional Bonds issued and secured under this
indenture as provided in Section 3.02 hereof.
"Affiliated Party" means a person whose relationship with the Borrower would
result in a disallowance of losses under Section 267 or 707(b) of the Code or a person who,
together with the Borrower, is a member of the same controlled group of corporations (as defined
in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at
least 80 percent" each place it appears therein).
"Authorized Denomination" means $5,000 or any integral multiple thereof.
"Authorized Newspaper" means The Bond Buyer, or its successor, and if The
Bond Buyer or its successor is no longer in business, then a newspaper of general circulation in
the Borough of Manhattan, City and County of New York.
"Available Moneys" means (a) proceeds of the Bonds received
contemporaneously with the issuance and sale of the Bonds, (b) moneys deposited by the
Borrower with the Trustee and so designated by the Borrower, which moneys shall have been
held by the Trustee for at least 366 days prior to the date such moneys are to be used to make
payments on the Bonds, provided that no Act of Bankruptcy shall have occurred during such
366-day period after such moneys were deposited with the Trustee (as evidenced by a certificate
of the Borrower or guarantor, as applicable, to the effect that no Act of Bankruptcy has occurred
during such period), (c) any moneys received as a payment under a GNMA Security (including
moneys representing the payment of premium on the Mortgage Note), (d) moneys with respect to
which there has been delivered to the Trustee an opinion of nationally recognized bankruptcy
counsel to the effect that payment of such moneys to the bondholders in payment of principal of,
premium, if any, or interest on the Bonds will not constitute a preferential payment recoverable
under Section 547 of the United States Bankruptcy Code and will not be subject to, or will
promptly be released from, the automatic stay or transfer provisions provided for in
Sections 362(a) and 550(a), respectively, of the United States Bankruptcy Code in the event of
the bankruptcy of the Town, the Borrower or any guarantor of the Borrower, (e) the investment
earnings of funds qualifying as Available Moneys under the foregoing clauses, or (f) proceeds of
bonds issued by Town to refund all or any portion of the Bonds.
12
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"Available Moneys Account" means the account of that name created by
Section 4.02 hereof.
"Beneficial Owner" means any person who, through any contract, arrangement or
otherwise, has or shares investment power with respect to any of the Bonds, which includes the
power to dispose, or direct the disposition, of any of the Bonds, and who has filed his or her
name and address with the Trustee for purposes of receiving certain notices hereunder.
"Bondholder" or "holder of Bonds" or "owner of Bonds" means the registered
owner of any Bond.
'Bond Counsel' means counsel of national recognition in the field of tax-exempt
obligations and public finance reasonably acceptable to the Trustee and the Town.
"Bond Register" and "Bond Registrar," in respect of a particular Series of
Bonds, have the respective meanings specified in Section 2.03 hereof.
"Building Loan Agreement" means that Building Loan Agreement between the
Lender and the Borrower, relating to the Project.
"Business Day" means a day which is not (a) a Saturday, Sunday or legal holiday
on which banking institutions in (i) the State, or (ii) the State of New York are authorized or
required by law to close or (b) a day on which the New York Stock Exchange is closed.
"CLC" means a construction loan certificate, which is a GNMA Security that
represents an amount advanced by the Lender to the Borrower for Project Costs and which bears
interest at the Pass-Through Rate.
"CLC Maturity Date" means 2003 (the 15th day of the _'month
following the initial endorsement of the Mortgage Note for insurance by the FHA), or such later
date permitted pursuant to Section 4.04 hereof.
"Closing Date" means the date on which there is an exchange of the Bonds for
the proceeds representing the purchase price of the Bonds.
"Code" means the Internal Revenue Code of 1986, or its successor provisions as
amended at the time in question and the regulations promulgated thereunder.
"Commencement of Amortization Date" means the date on which the Borrower
will begin to repay principal on the Mortgage Note, which pursuant to the Mortgage Note is
scheduled to occur on _, 2003 (the 1st day of the _th month following the initial
endorsement of the Mortgage Note for insurance by the FHA).
"Commitment" means the firm commitment and all amendments thereto to be
issued by HUD to make and insure a Mortgage Loan with regard to the Project pursuant to
Section 221(d)(4) of the National Housing Act of 1934, as amended.
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"Completion Date" means the date of the completion of the acquisition,
construction and equipping of the Project, as that date shall be certified as provided in
Section 3.04 of the Financing Agreement.
"Continuing Disclosure Agreement" means the Continuing Disclosure
Agreement dated the date of issuance of the Bonds, between the Borrower and the Trustee, as
Dissemination Agent.
"Costs of Issuance" means items of expense related to the authorization, sale and
issuance of the Bonds, including, without limitation, printing costs, costs of reproducing
documents, fees and charges of the Trustee, fees and expenses of the Town, fees and expenses of
Bond Counsel, Town's counsel, Borrower's counsel and Lender's counsel, underwriting fees and
expenses, advertising expenses, legal and accounting fees and charges, professional consultants'
fees and charges, costs of credit ratings, fees and charges for execution, transportation and
safekeeping of Bonds, and other costs, charges and fees in connection with the foregoing.
"Costs of Issuance Account" means the account of that name within the Project
Fund, created and held by the Trustee under Sections 4.02 and 4.04.
"Credit Facility" means any direct pay letter of credit or other credit
enhancement or support facility delivered to the Trustee to pay any portion of the principal or
redemption price of, or interest on, the Bonds and having administrative provisions reasonably
acceptable to the Trustee.
"Declaration of Restrictive Covenants" means that certain Declaration of
Restrictive Covenants dated as of April 1, 2002, executed by the Borrower, relating to the Project
and recorded in the real estate records of Eagle County, Colorado.
"Dissemination Agent" means Wells Fargo Bank West, National Association, as
dissemination agent under the Continuing Disclosure Agreement.
"Environmental Damages" means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability), encumbrances, liens, privileges, costs and
expenses of investigation and defense of any claim, whether or not such claim is ultimately
defeated, and of any good-faith settlement or judgment, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, including, without limitation,
reasonable attorneys' fees and expert consultants' fees and disbursements, any of which are
incurred at any time as a result of the existence of Regulated Chemicals upon, about, beneath or
migrating, or threatening to migrate, onto or from the Project or the Land, or the existence of a
violation of Environmental Requirements pertaining to the Project or the Land, regardless of
whether or not such Environmental Damages were caused by or within the control of the
Borrower.
"Environmental Requirements" means all applicable federal, State, regional or
local laws, statutes, rules, regulations or ordinances concerning public health, safety or the
environment, including, but not limited to, the Comprehensive Environmental Response,
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Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq., the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976, as amended by the Solid and
Hazardous Waste Amendments of 1984, 42 U.S.C. § 9601 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251 et seq., the Toxic
Substances Control Act of 176, 15 U.S.C. § 2601 et seq., the Emergency Planning and
Community Right-To-Know Act of 1986, 42 U.S.C. § 11001 et seq., the Clean Air Act of 1966,
as amended, 42 U.S.C. § 7401 et seq., the National Environmental Policy Act of 1975, 42 U.S.C.
§ 4321, the Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq., the Endangered Species Act
of 1973, as amended, 16 U.S.C. § 1531 et seq., the Occupational Safety and Health Act of 1970,
as amended, 29 U.S.C. § 651 et seq., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C. § 300(f) et seq. and all rules, regulations, policies and guidance documents promulgated
or published thereunder and any state, regional, county or local statute, law, rule, regulation or
ordinance relating to public health, safety or the environment, including, without limitation,
those relating to:
(a) releases, discharges, emissions or disposals to air, water, land or
groundwater;
(b) the withdrawal or use of groundwater;
(c) the use, handling or disposal of polychlorinated biphenyls ("PCB"),
asbestos or urea formaldehyde;
(d) the transportation, treatment, storage, disposal, release or management of
hazardous substances or materials (including, without limitation, petroleum, its
derivatives, by-products or other hydrocarbons), and any other solid, liquid or gaseous
substance, exposure to which is prohibited, limited or regulated or may or could pose a
hazard to the health and safety of the occupants of the Project or any property adjacent to
or surrounding the Project;
(e) the exposure of persons to toxic, hazardous or other controlled, prohibited
or regulated substances; and
(f) any Regulated Chemical.
"Event of Default" means any of the events described in Section 8.01 hereof.
"Excess Investment Earnings" is as defined in Section 148 of the Code.
"Excess Investment Earnings Fund" means the trust account of that name
created by Section 4.02 of this Indenture.
"FHA" means the Federal Housing Administration, an organizational unit within
HUD, and any successor entity and any authorized representatives or agents thereof, including
the Secretary of HUD, the Federal Housing Commissioner and their representatives or agents.
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"FHA Loan Documents" means, collectively, the Mortgage Note, the Mortgage,
the FHA Regulatory Agreement, the Building Loan Agreement and any other documents
required in connection with the endorsement of the Mortgage Loan by FHA for Mortgage
Insurance.
"FHA Regulations" means the regulations promulgated by FHA regarding
insurance under Sections 221(d)(4) of the National Housing Act.
"FHA Regulatory Agreement" means the Regulatory Agreement for
Multifamily Housing Projects, by and between the Borrower and HUD, relating to the Project,
together with any and all Supplements thereto.
"Final Advance" means the final advance of the Mortgage Loan proceeds to the
Borrower upon Final Endorsement.
"Final Endorsement" means the date on which the Mortgage Note is finally
endorsed for mortgage insurance by FHA, following completion of the Project and compliance
with the terms and conditions of the Commitment.
"Funds" means the General Receipts Fund, the Project Fund, the Redemption
Fund, and the Excess Investment Earnings Fund, and the accounts, if any, established therein.
"General Receipts Fund" means the fund created by Section 4.02 of this
Indenture.
"GNMA" means Government National Mortgage Association, an organizational
unit within HUD, or any successor entity and any authorized representatives or agents thereof,
including the Secretary of HUD and his representatives or agents.
"GNMA Guaranty Agreement" means an agreement between GNMA and the
Lender pursuant to which GNMA agrees to guaranty any GNMA Security.
"GNMA Security" means a fully modified pass-through security in the form of a
CLC or a PLC issued by the Lender, registered in the name of the Trustee or its designee and
guaranteed by GNMA as to timely payment of principal of and interest on a PLC and as to
timely payment of interest only until maturity and timely payment of principal at maturity on a
CLC, pursuant to Section 306(g) of the National Housing Act and the regulations promulgated
thereunder, backed by the Mortgage Loan made by the Lender to finance the Project in
accordance with the Financing Agreement, which Mortgage Loan is insured by the Secretary of
HUD by and through the FHA.
"Government Obligations" means bonds, notes and other evidences of
indebtedness of the United States of America or of any agency or instrumentality thereof backed
by the full faith and credit of the United States of America.
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"HUD" means the United States Department of Housing and Urban Development,
any authorized representative thereof or any successor thereto.
"Indenture" means this Trust Indenture as amended or supplemented at the time
in question.
"Initial Advance" means the first advance under the Mortgage Loan by the
Lender to the Borrower.
"Initial CLC" means the CLC delivered by the Lender to the Trustee with respect
to the Initial Advance.
"Interest Payment Date" means each 20 and 20, commencing
20, 2002.
"Investment Agreement" means the Investment Agreement by and among the
Trustee, the Town, the Borrower and , with respect to funds on deposit in
the Acquisition Account and the General Receipts Fund, and any substitute investment
agreement, provided that the Rating Agency confirms in writing that the proposed substitute
investment agreement shall not adversely affect the rating on the Bonds.
"Investment Income" means the earnings, profits and accreted value derived
from the investment of moneys in the Project Fund, the Redemption Fund, and the General
Receipts Fund pursuant to Section 6.02 hereof.
"Land" means the Borrower's fee estate in the parcels of real property described
in [Exhibit A] to the Declaration of Restrictive Covenants.
"Liabilities" means any causes of action (whether in contract, tort or otherwise),
claims, costs, damages, demands, judgments, liabilities, losses, suits and expenses (including,
without limitation, reasonable costs of investigation, and attorneys' fees and expenses) of every
kind, character and nature whatsoever.
"MBS Submission Schedule" means the Document Delivery Schedule for Serial
Note, Construction Loan and Project Loan Pools issued by GNMA from time to time.
"Maturity Date" means 20, 20
["Miscellaneous Costs" means items of expenses associated with funding an
operational account, offsite construction costs, and any other costs determined by the Borrower
to be necessary for the Project and not funded by the Mortgage Loan.]
"Mortgage" means the FHA approved deed of trust executed by the Borrower for
the benefit of the Lender securing the Mortgage Note.
"Mortgage Insurance" means the insurance against certain losses under the
Mortgage Loan provided by the FHA, as evidenced by the endorsed Mortgage Note.
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"Mortgage Loan" means the loan made by the Lender to the Borrower in
connection with the financing of the Project and evidenced by the Mortgage Note in the original
principal amount of $15,305,000, together with any supplement or amendment thereto delivered
in connection with the issuance of Additional Bonds.
"Mortgage Note" means the Deed of Trust Note executed by the Borrower in
favor of the Lender in the amount of $15,305,000, and any riders thereto or amendments thereof,
including any supplement or amendment thereto delivered in connection with the issuance of
Additional Bonds hereunder.
"Opinion of Counsel" means a written opinion of legal counsel, who may be
counsel to the Town, the Borrower or the Trustee.
"Original Date" means April 1, 2002.
"Outstanding" in connection with Bonds (or a series of Bonds) means, as of the
time in question, all Bonds (or all Bonds of such series) authenticated and delivered under this
Indenture, except:
A. Bonds for the payment or redemption of which the necessary
amount shall have been or shall concurrently be deposited with the Trustee or for which
provision for the payment of which shall have been made in accordance with Article KIV
hereof; provided that, if such Bonds are being redeemed prior to maturity, the required
notice of redemption shall have been given or provisions satisfactory to the Trustee shall
have been made therefor;
B. Bonds in substitution for which other Bonds have been
authenticated and delivered pursuant to Article H hereof; and
C. For purposes of any consent or other action to be taken by the
owners of a majority or a specified percentage of Bonds hereunder, Bonds held by or for
the account of the Borrower, the Borrower or any Person controlling, controlled by or
under common control with any of them.
"Pass-Through Rate" means the rate of interest on the GNMA Securities which
shall be %.
"Paying Agent" means, in respect of a particular series of Bonds, the Person or
Persons authorized by the Town to pay the principal of (and premium, if any, on), or interest on,
such Bonds on behalf of the Town.
"Permitted Investments" means any of the following:
(i) Government Obligations;
(ii) obligations, purchased at par, with a maturity of one year or less of
any of the following federal agencies which obligations represent full faith and
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credit of the United States of America, including: Export-Import Bank, Farmers
Home Administration, General Services Administration, U.S. Maritime
Administration, Government National Mortgage Association, HUD, and Federal
Housing Administration;
(iii) bonds, notes or other evidences of indebtedness with a maturity of
one year or less rated in the highest rating category of the Rating Agency and
issued by the Fannie Mae or the Federal Home Loan Mortgage Corporation;
(iv) U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which have a rating on
their short term certificate of deposit or a long-term rating in the highest rating
category of the Rating Agency and maturing no more than 270 days after the date
of purchase;
(v) commercial paper which is rated in the highest rating category of
the Rating Agency;
(vi) any bonds or other obligations of any state of the United States of
America or of any agency, instrumentality or local governmental unit of any such
state with a maturity of one year or less which are not callable at the option of the
obligor prior to maturity or as to which irrevocable instructions have been given
by the obligor to call on.the date specified in the notice; and (a) which are rated in
the highest rating category of the Rating Agency and (b)(1) which are fully
secured as to principal and interest and redemption premium, if any, by a fund
consisting only of cash or Government Obligations, which fund may be applied
only to the payment of such principal of and interest and redemption premium, if
any, on such bonds or other obligations on the maturity date or dates thereof or
the specified redemption date or dates pursuant to such irrevocable instructions, as
appropriate, and (2) which fund is sufficient, as verified by a certified public
accountant acceptable to the Rating Agency, to pay principal of and interest and
redemption premium, if any, on the bonds or other obligations described in this
paragraph on the maturity date or dates thereof or on the redemption date or dates
specified in the irrevocable instructions referred to above, as appropriate;
(vii) obligations with a maturity of one year or less by any corporation
organized and operating within the United States of America having assets in
excess of $500,000,000 which obligations are rated in the highest rating category
of the Rating Agency;
(viii) any investment agreement, guarantee or other investment vehicle
or security, in form and substance satisfactory to the Trustee, which has been
submitted to and approved by the Rating Agency, and is issued or secured by or
otherwise representing a general obligation of a financial institution, whose
long-term unsecured general obligations are rated in the highest rating category of
the Rating Agency;
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(ix) the Investment Agreement;
(x) any other investment which is issued or secured by or otherwise
representing a general obligation of a financial institution whose long-term
unsecured general obligations are rated in the highest rating category of the Rating
Agency; and
(xi) money market funds rated in the highest rating category of the
Rating Agency investing solely in investments described in clauses (i) and (ii)
above.
If such investment is rated, it may not have an "r" or "t" highlighter affixed to its
rating. Interest should be tied to a single interest rate index plus a single fixed spread, if any, and
move proportionately with that index.
"Person" or "Persons" means an individual, firm, corporation, partnership,
company, association, joint stock company, trust, body politic or any other unincorporated
organization or any trustee, receiver, assignee, or other similar representative thereof.
"PLC" means the project loan certificate which is the GNMA Security issued
after Final Endorsement which shall bear interest at the Pass-Through Rate and which shall be in
a principal amount equal to the outstanding balance of the Mortgage Loan upon Final
Endorsement.
"PLC Delivery Date" means the earlier of (a) the date on which the PLC is
delivered to the Trustee or (b) _, 2003 (the Business Day next preceding the 15' day
of the _' month following the initial endorsement of the Mortgage Note for insurance by the
FHA), or such later date as may be permitted by the provisions of Section 4.04(d) hereof;
provided, however, that the PLC Delivery Date may not be extended to a date beyond the CLC
Maturity Date.
"Project Costs" means any and all costs incurred by the Borrower with respect to
the acquisition, construction and equipping of the Project permitted under the Act, including,
without limitation, costs for site preparation, the planning of housing and related facilities and
improvements, the acquisition of property, the removal or demolition of existing structures, the
construction of housing and related facilities and improvements, and all other work in connection
therewith, and all costs of financing, including, without limitation, the cost of consultant,
accounting and legal services, other expenses necessary or incident to determining the feasibility
of the Project, contractors' and Borrower's overhead and supervisors' fees and costs directly
allocable to the Project, administrative and other expenses necessary or incident to the Project
and the financing thereof (including reimbursement to any municipality, county or entity for
expenditures made for the Project), and interest on the Bonds accrued during construction and
prior to the Completion Date.
"Project Documents" means this Indenture, the Financing Agreement, the
GNMA Guaranty Agreement and the GNMA Securities.
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"Project Fund" means the fund of that name created by Section 4.02 of this
Indenture.
"Qualified Project Costs" means Project Costs ([including] Costs of Issuance),
payable from proceeds of the Series 2002A Bonds, incurred after 2001 which
either constitute land or property of a character subject to the allowance for depreciation under
Section 167 of the Code or are chargeable to a capital account with respect to the Project for
federal income tax and financial accounting purposes, or would be so chargeable either with a
proper election by the Borrower or but for the proper election by the Borrower to deduct those
amounts within the meaning of Regulation 1.103-8(a)(1)(i); provided, however, that only such
portion of interest accrued on the Bonds during construction of the Project shall constitute a
Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs
bear to all Project Costs; and provided, further, that interest accruing after the Completion Date
shall not be a Qualified Project Cost. If any portion of the Project is being constructed by an
Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Project Costs"
shall include only (a) the actual out-of-pocket costs incurred by such Affiliated Party in
constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services
actually rendered by the Affiliated Party and (c) any overhead expenses incurred by the Affiliated
Party 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 the
meaning of Section 1504 of the Code) participating in the construction of the Project or
payments received by such Affiliated Party due to early completion of the Project (or any portion
thereof).
"Rating Agency" means Moody's Investors Service, Inc. and/or S&P, according
to which of such rating agencies then rates the Bonds; provided that if neither of such rating
agencies then rates the Bonds, the term "Rating Agency" shall refer to any national rating agency
(if any) which provides such rating.
"Rebate Analyst" means any person or entity acceptable to the Borrower and the
Trustee and retained to calculate the Excess Investment Earnings.
"Redemption Date" means the date or dates upon which Bonds are to be' called
for redemption pursuant to this Indenture.
. "Redemption Fund" means the fund of that name created by Section 4.02 of this
indenture.
"Regular Record Date" means, in respect of a particular series of Bonds, the last
day (whether or not a Business Day) of the calendar month next preceding each Interest Payment
Date.
"Regulated Chemicals" means any substance the presence of which requires
investigation, permitting, control or remediation under any federal, state or local statute,
regulation, ordinance or order, including, without limitation;
21
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(a) any substance defined as "hazardous waste" under the Resource
Conservation and Recovery Act, as amended (42 U.S.C. § 6901 et seq.);
(b) any substance defined as "hazardous waste" under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended (42 U.S.C.
§ 9601 et seq.);
(c) any substance defined as a "hazardous material" under the Hazardous
Materials Transportation Act (49 U.S.C. § 1800 et seq.);
(d) any substance defined under any Colorado statute analogous to (a), (b) or
(c), to the extent that said statute defines any term more expansively;
(e) asbestos;
(f) urea formaldehyde;
(g) PCBs;
(h) petroleum, or any distillate or fraction thereof;
(i) any hazardous or toxic substance designated pursuant to the laws of the
State; and
(j) any other chemical, material or substance exposure to which is prohibited,
limited or regulated by any governmental authority..
"Residual Receipts" has the meaning assigned to it in the FHA Regulatory
Agreement.
"Revenues" means the revenues, receipts, interest, income, investment earnings
and other moneys received or to be received by the Trustee, including moneys received or to be
received from the GNMA Securities and all investment earnings derived or to be derived on any
moneys or investments held by the Trustee hereunder, but excluding amounts in the Excess
Investment Earnings Fund.
"S&P" means Standard & Poor's Ratings Group, a Division of The McGraw-Hill
Companies, Inc., or any successor thereto.
"Securities Depository" means The Depository Trust Company, New York, New
York, or its nominee and the successors and assigns of such nominee appointed under Section
2.12 hereof.
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"Special Record Date" means, in respect of a particular series of Bonds, such
date as may be fixed for the payment of defaulted interest in accordance with the form of Bond
set forth in this Indenture.
"State" means the State of Colorado.
"Substantial User" means with respect to any "facilities" (as the term "facilities"
is used in the Code), a "substantial user" of such "facilities" within the meaning of the Code.
"Tax Certificate" means the certificates executed by the Town and the Borrower
on the Closing Date setting forth the expectations of the Town (whose expectations are based
solely on those of the Borrower) and the Borrower, respectively, with respect to the use of
proceeds of the Bonds.
"Term" means the duration of this Indenture, which is from the execution and
delivery hereof to the date the Town has satisfied all of its obligations under this Indenture,
unless sooner terminated in accordance with the provisions hereof.
"Town" means Town of Avon, Colorado.
"Town Representative" means such person or persons duly designated by the
town to act on its behalf and, if there is no such specific designation, shall mean
"Town's Unassigned Rights" means the rights of the Issuer to (a) inspect books
and records, (b) give or receive notices, approvals, consents, requests and other communications,
(c) payment or reimbursement for expenses, (d) immunity and limitation from liability,
(e) indemnification from liability by the Borrower and (f) security for the Borrower's
indemnification obligation.
"Trustee" means Wells Fargo Bank West, National Association and its successor
for the time being in the trust hereunder and any Co-Trustee appointed in accordance with
Section 9.17 of this Indenture.
"Trustee Administrative Fee" means, for any particular year, the annual fee of
the Trustee in an amount equal to the greater of _% per annum of the principal amount of the
Bonds then outstanding or $
"Underwriter" means Kirkpatrick, Pettis, Smith, Polian, Inc.
The words "hereof," "herein," "hereto," "hereby" and "hereunder" (except in the
form of Bond) refer to the entire Indenture.
Every "request," "order," "demand," "application," . "appointment," "notice,"
"statement," "certificate," "consent" or similar action hereunder by the Town shall, unless the
form thereof is specifically provided, be in writing signed by the Town Representative.
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Section 1.02. Representations of the Town. The Town makes the following
representations as the basis for its undertakings herein contained: '
(a) The Town is a municipality of the State of Colorado authorized pursuant
to the Act to issue the Series 2002 Bonds and to enter into the transactions contemplated
by this Indenture and the Financing Agreement and to carry out its obligations hereunder
and thereunder, and has duly authorized, executed and delivered this Indenture, the
Financing Agreement, and the FHA Loan Documents.
(b) The Town will utilize the proceeds of the Series 2002 Bonds to provide for
the financing of the Project, for the purpose of providing dwelling accommodations at
rentals within the means of persons of low or moderate income.
(c) Neither the execution and delivery of the Series 2002 Bonds, this
Indenture, the Financing Agreement, or the other Project Documents, the consummation
of the transactions contemplated hereby or thereby, nor the fulfillment of or compliance
with the terms and conditions of the Series 2002 Bonds, this Indenture, the Financing
Agreement, or the other Project Documents, conflict with or result in a breach of any of
the terms, conditions or provisions of any restriction or any agreement or instrument to
which the Town is now a party or by which it is bound or constitute a default under any
of the foregoing or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the Town
under the terms of any instrument or agreement.
ARTICLE II
THE BONDS
Section 2.01. Amounts and Terms. Except as provided in Section 2.10 hereof,
the Series 2002A Bonds shall be limited to $11,100,000 in aggregate principal amount and the
Series 2002B Bonds shall be limited to $4,205,000 in aggregate principal amount, and shall
contain substantially the terms recited in the form of Series 2002 Bonds above.
The Town may cause a copy of the text of the opinion of recognized bond counsel
to be printed on or annexed to any of its Bonds, and, upon deposit with the Trustee of an
executed counterpart of such opinion, the Trustee shall certify to the correctness of the copy
appearing on the.Bonds by manual or facsimile signature.
The Series 2002 Bonds shall be issuable only in fully registered form and in
Authorized Denominations, subject to the further provisions regarding transfer set forth in
Section 2.04 hereof. No Bond shall be issued in any denomination larger than the aggregate
principal amount maturing on the maturity date of such Bond, and no Bond shall be made
payable on more than one maturity date.
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Pursuant to the recommendations of the Committee on Uniform Security
Identification Procedures, CUSIP numbers may be printed on the Bonds. The Bonds may bear
such other endorsement or legend not unsatisfactory to the Trustee as may be required to
conform to usage or law with respect thereto.
The Series 2002A Bonds shall mature on the dates and in the aggregate principal
amounts, and shall bear interest at the per annum interest rates to their respective maturity dates,
unless redeemed prior thereto, as follows:
Aggregate Principal Interest Rate
Maturity Date Amount Per Annum
The Series 2002B Bonds shall mature on the dates and in the aggregate principal
amounts, and shall bear interest at the per annum interest rates to their respective maturity dates,
unless redeemed prior thereto, as follows:
Maturity Date
Aggregate Principal
Amount
Interest Rate
Per Annum
THE BONDS AND THE PREMIUM, IF ANY, AND INTEREST THEREON
SHALL CONSTITUTE SPECIAL, LIMITED OBLIGATIONS OF THE TOWN PAYABLE
SOLELY FROM THE INCOME, REVENUES AND RECEIPTS SPECIFICALLY PLEDGED
THEREFOR UNDER THIS INDENTURE, SHALL NEVER CONSTITUTE THE DEBT OR
INDEBTEDNESS OF THE TOWN WITHIN THE MEANING OF ANY PROVISION OR
LIMITATION OF THE COLORADO CONSTITUTION OR STATUTES, AND SHALL NOT
CONSTITUTE NOR GIVE RISE TO A PECUNIARY LIABILITY OF THE TOWN OR A
CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWER. THE BONDS AND
THE PREMIUM, IF ANY, AND INTEREST THEREON SHALL NOT CONSTITUTE A
"MULTIPLE FISCAL YEAR DIRECT OR INDIRECT DEBT OR OTHER FINANCIAL
OBLIGATION WHATSOEVER" OF THE TOWN UNDER ARTICLE X, SECTION 20 OF
THE COLORADO CONSTITUTION. THE UNITED STATES OF AMERICA SHALL NOT
BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON
THE BONDS OR OTHER COSTS INCIDENTAL THERETO. THE BONDS AND THE
PREMIUM, IF ANY, AND THE INTEREST THEREON DO NOT CONSTITUTE A LOAN,
CREDIT OR PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE
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STATE OF COLORADO OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING
THE TOWN.
No agreement or obligation contained herein shall be deemed to be an agreement or
obligation of any member of the Town or any member of Town Council, officer, employee or
agent of the Town in his or her individual capacity, and neither the Town nor any official thereof
executing any Bond shall be liable personally on such Bond or be subject to any personal
liability or accountability by reason of the issuance thereof. No member of the Town Council,
officer, employee. or agent of the Town shall incur any personal liability with respect to any other
action taken by him or her pursuant to this Indenture.
Notwithstanding any other provision of this Indenture, neither the Borrower, the Trustee
nor any Bondholder shall look to the Town for damages suffered by the Borrower, the Trustee or
such Bondholder as a result of the failure of the Town to perform any covenant, undertaking or
obligation under this Indenture, the Financing Agreement, the Bonds, any of the FHA Loan
Documents or any of the other documents referred to herein, or as a result of the incorrectness of
any representation made by the Town in any of such documents, nor for any other reason.
Although this Indenture recognizes that such documents shall not give rise to any pecuniary
liability of the Town, nothing contained in this Indenture shall be construed to preclude in any
way any action or proceeding (other than any action or proceeding involving a claim for
monetary damages against the Town) in any court or before any governmental body, agency or
instrumentality or otherwise against the Town or any member of its Town Council, officers or
employees to enforce the provisions of any of such documents which the Town is obligated to
perform and the performance of which the Town has not assigned to the Trustee or any other
person; provided, however that as a condition precedent to the Town proceeding pursuant to this
Section, the Town shall have received satisfactory indemnification.
Section 2.02. Interest Accrual. The Bonds of a series shall be dated the
Original Date and shall bear interest from the Interest Payment Date in respect of that series to
which interest has been paid next preceding the date of authentication, (i) unless the date of
authentication is an Interest Payment Date to which interest has been paid, in which case Bonds
shall be bear interest from the date of authentication, or (ii) unless authenticated after a Record
Date, in which case from such Interest Payment Date or (iii) unless the Bonds are authenticated
prior to the first Interest Payment Date, in which case such Bonds shall bear interest from the
Original Date as shown on the form of the Bond. Interest on each Bond shall be payable
semiannually on each Interest Payment Date until the principal sum is paid, and shall be
calculated on the basis of a 360-day year of twelve 30-day months.
Section 2.03. Bond Registrar and Bond Register. The Bonds shall be
registered upon original issuance and upon subsequent transfer or exchange as provided in this
Indenture. The Town shall designate, in respect of each series of Bonds, a person to act as "Bond
Registrar" for such series, provided that the Bond Registrar appointed for any series of Bonds
shall be either the Trustee or a person which would meet the requirements for qualification as a
Trustee imposed by Section 9.14 hereof. The Town hereby appoints the Trustee its Bond
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Registrar in respect of the Bonds. Any other person undertaking to act as Bond Registrar shall
first execute a written agreement, in form satisfactory to the Trustee, to perform the duties of a
Bond Registrar under this Indenture, which agreement shall be filed with the Trustee.
The Bond Registrar shall act as registrar and transfer agent. The Town shall cause
to be kept at an office of the Bond Registrar a register (herein sometimes referred to as the "Bond
Register") in which, subject to such reasonable regulations as it or the Bond Registrar may
prescribe, the Town shall provide for the registration of the Bonds and for the registration of
transfers of such Bonds. The Town shall cause the Bond Registrar to designate, by a written
notification to the Trustee, a specific office location (which may be changed from time to time,
upon similar notification) at which the Bond Register is kept. The principal corporate trust office
of the Trustee, currently located in Minneapolis, Minnesota, shall be deemed to be such office in
respect of any Bonds for which the Trustee is acting as Bond Registrar.
Each Bond Registrar shall, in any case where it is not also the Trustee, forthwith
following each Regular Record Date in respect of the Bonds and at any other time as reasonably
requested by the Trustee, certify and furnish to the Trustee, and to any Paying Agent as the
Trustee shall specify, the names, addresses, and holdings of Bondholders and any other relevant
information reflected in the Bond Register, and the Trustee and any such Paying Agent shall for
all purposes be fully entitled to rely upon the information so furnished to it and shall have no
liability or responsibility in connection with the preparation thereof.
Section 2.04. Registration, Transfer and Exchange. Upon their execution and
authentication and prior to their delivery, the Bonds shall be registered for the purpose of
payment of principal and interest by the Bond Registrar. To the extent that typewritten Bonds,
rather than printed Bonds, are to be delivered, such modifications to the form of Bond as may be
necessary or desirable in such case are hereby authorized and approved. There shall be no
substantive change to the terms and conditions set forth in the form of Bond, except as otherwise
authorized by this Indenture or any amendment thereto.
As provided in Section 2.03 hereof, the Town shall cause a Bond Register for
each series of Bonds to be kept at the designated office of the Bond Registrar for such series.
Upon surrender for transfer of any Bond at such office, the Town shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees, one or more new fully
registered Bonds of the same series of authorized denomination for the aggregate principal
amount which the registered owner is entitled to receive.
At the option of the owner, Bonds may be exchanged for other Bonds of any
authorized denomination, of a like aggregate principal amount, upon surrender of the Bonds to be
exchanged at any such office or agency. Whenever any Bonds are so surrendered for exchange,
the Town shall execute, and the Trustee shall authenticate and deliver, the Bonds which the
Bondholder making the exchange is entitled to receive.
All Bonds presented for transfer or exchange, redemption or payment (if so
required by the Town, the Bond Registrar or the Trustee), shall be accompanied by a written
instrument or instruments of transfer or authorization for exchange, in form and with guaranty of
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signature satisfactory to the Trustee, duly executed by the owner or by his attorney duly
authorized in writing.
No service charge shall be made for any exchange or transfer of Bonds, but the
Town may require payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto.
Neither the Town nor any Bond Registrar on behalf of the Town shall be required
(i) to issue, transfer or exchange any Bond during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption of Bonds selected for redemption
and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any
Bond so selected for redemption in whole or in part.
New Bonds delivered upon any transfer or exchange shall be valid obligations of
the Town, evidencing the same debt as the Bonds surrendered, shall be secured by this Indenture
and entitled to all of the security and benefits hereof to the same extent as the Bonds surrendered.
Section 2.05. Execution. The Bonds shall be executed by the manual or
facsimile signature of the Mayor of the Town, and the seal of the Town or facsimile thereof shall
be affixed, imprinted, lithographed or reproduced thereon and shall be attested by the manual or
facsimile signature of the Town Clerk for the Town.
Bonds executed as above provided may be issued and shall, upon request of the
Town, be authenticated by the Trustee, notwithstanding that any officer of the Town signing such
Bonds shall have ceased to hold office at the time of issuance or authentication or shall not have
held office at the date of the Bond.
Section 2.06. Authentication. No Bond shall be valid for any purpose until the
certificate of authentication shall have been duly executed by the Trustee, and such
authentication shall be conclusive proof that such Bond has been duly authenticated and
delivered under this Indenture and that the owner thereof is entitled to the benefit of the trust
hereby created.
Section 2.07. Payment of Principal and Interest; Interest Rights Preserved.
The principal and redemption price of any Series 2002 Bond shall be payable as provided in the
form of Series 2002 Bonds hereinbefore recited.
Subject to the foregoing provisions of this Section 2.07, each Bond delivered
under this Indenture upon transfer of or exchange for or in lieu of any other Bond shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond.
Section 2.08. Persons Deemed Owners. The Town, the Trustee, any Paying
Agent and the Bond Registrar may deem and treat the person in whose name any Bond is
registered as the absolute owner thereof (whether or not such Bond shall be overdue and
notwithstanding any notation of ownership or other writing thereon made by anyone other than
the Town, the Trustee, the Paying Agent or the Bond Registrar) for the purpose of receiving
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payment of or on account of the principal of (and premium, if any, on), and (subject to Section
2.07 hereof) interest on, such Bond, and for all other purposes, and neither the Town, the Trustee,
the Paying Agent nor the Bond Registrar shall be affected by any notice to the contrary. All such
payments so made to any such registered owner, or upon his order, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Bond.
Section 2.09. Mutilated, Destroyed, Lost or Stolen Bonds. If any Bond shall
become mutilated, the Town shall execute, and the Trustee shall thereupon authenticate and
deliver, a new Bond of like tenor and denomination in exchange and substitution for the Bond so
mutilated, but only upon surrender to the Trustee of such mutilated Bond for cancellation,
subject to the Trustee and the Town being furnished such reasonable indemnity as either of them
may require therefor. If any Bond shall be reported lost, stolen or destroyed, evidence as to the
ownership and the loss, theft or destruction thereof shall be submitted to the Trustee; and if such
evidence shall be satisfactory to it and such indemnity satisfactory to the Trustee and the Town
shall be given, the Town shall execute, and thereupon the Trustee shall authenticate and deliver,
a new Bond of like tenor and denomination as the original Bond, but carrying such additional
marking as will enable the Trustee to identify such Bond as a replacement Bond. The cost of
providing any substitute Bond under the provisions of this Section shall be borne by the
Bondholder for whose benefit such substitute Bond is provided. If any such mutilated, lost,
stolen or destroyed Bond shall have matured or be about to mature, the Trustee shall pay to the
owner the principal amount of such Bond upon the maturity thereof and the compliance with the
aforesaid conditions by such owner, without the issuance of a substitute Bond therefor.
Every substituted Bond issued pursuant to this Section 2.09 shall constitute an
additional contractual obligation, whether or not the Bond alleged to have been destroyed, lost or
stolen shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Bonds duly issued hereunder.
All Bonds shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Bonds, and shall preclude any and all other rights or remedies, notwithstanding any law
or statute existing or hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or investment or other securities without their surrender.
Section 2.10. Temporary Bonds. Pending preparation of definitive Bonds of
any series, or by agreement with the purchasers of all Bonds of any series, the Town may issue
and, upon its request, the Trustee shall authenticate in lieu of definitive Bonds one or more
temporary printed or typewritten Bonds in authorized denominations of substantially the tenor
recited above. Upon request of the Town, the Trustee shall authenticate definitive Bonds in
exchange for and upon surrender of an equal principal amount of temporary Bonds. Until so
exchanged, temporary Bonds shall have the same rights, remedies and security hereunder as
definitive Bonds.
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Section 2.11. Cancellation and Destruction of Surrendered Bonds. Bonds
surrendered for payment, redemption, transfer or exchange, and Bonds purchased from any
moneys held by the Trustee hereunder or surrendered to the Trustee by the Borrower, shall be
canceled and destroyed by the Trustee. The Trustee shall deliver to the Town a certificate of
destruction identifying all Bonds so destroyed.
Section 2.12. Book-Entry System.
(a) All Bonds shall be initially issued in the form of a separate single
certificated fully registered Bond for each maturity of each series of Bonds. Upon initial
issuance, the ownership of each Bond shall be registered in the Register in the name of
Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC"), as the
Securities Depository for the Bonds. Except as provided in Section 2.12(d) hereof, all
Outstanding Bonds shall be registered in the Register in the name of Cede, as nominee of
DTC.
(b) With respect to Bonds registered in the registration books of the Trustee in
the name of Cede, as nominee of DTC, the Town and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede
or any Participant (as defined by DTC) with respect to any ownership interest in the
Bonds, (ii) the delivery to any Participant or any other person, other than a Bondholder,
as shown in the Register, of any notice with respect to the Bonds, including any notice of
redemption, or (iii) the payment to any Participant or any other person, other than a
Bondholder, as shown in the Register, of any amount with respect to principal of,
premium, if any, interest on, or purchase price of the Bonds. The Town and the Trustee
may treat and consider the person in whose name each Bond is registered in the Register
as the holder and absolute owner of such Bond for the purpose of payment of principal,
premium, if any, the purchase price and interest with respect to such Bond, for the
purpose of giving notices of redemption and other matters with respect to such Bond, for
the purpose of registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Trustee shall pay all principal of, premium, if any, the purchase price
and interest on the Bonds only to or upon the order of the respective Bondholder, as
shown in the Register, as provided herein, or their respective attorneys duly authorized in
writing, and all such payments shall be valid and effective to fully satisfy and discharge
the Town's obligations with respect to payment of principal of, premium, if any, the
purchase price and interest on the Bonds to the extent of the sum or sums so paid. No
person other than a Bondholder, as shown in the Register, shall receive a certificated
Bond evidencing the obligation of the Town to make payments of principal, premium, if
any, the purchase price and interest pursuant to this Indenture. Upon delivery by DTC to
the Trustee of written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede, and subject to the provisions herein with respect to record
dates, the word "Cede & Co." in this Indenture shall refer to such new nominee of DTC.
(c) The delivery of the Representation Letter ("Representation Letter" as
used herein, means the Letter of Representation from the Town to DTC with respect to
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the Bonds, and any similar letter or other agreement with any successor depository for the
Bonds) by the Town shall not in any way limit the provisions of Section 2.12(b) hereof or
in any other way impose upon the Town any obligation whatsoever with respect to
persons having interests in the Bonds other than the Registered Owners, as shown on the
Register. The Trustee. shall take all action necessary for all representations in the
Representation Letter with respect to the Town to at all times be complied with. The
Trustee shall comply, to the maximum extent possible consistent with this Indenture, with
the requirements stated in the DTC Operational Arrangements memorandum dated
December 12, 1994 (as it may be amended, modified or superseded). Specifically, the
Trustee shall make payments on the Bonds and will provide notices of redemption to
DTC in the manner and at the times set forth in such memorandum.
(d) (i) DTC may determine to discontinue providing its services with respect
to the Bonds at any time by giving written notice to the Town and the Trustee and
discharging its responsibilities with respect thereto under applicable law.
(ii) The Town; in its sole discretion and without the consent of any
other person, may terminate the services of DTC with respect to the Bonds if the
Town determines that:
(A) DTC is unable to discharge its responsibilities with respect
to the Bonds, or
(B) a continuation of the requirement that all Outstanding
Bonds be registered in the registration books of the Trustee in the name of
Cede, or any other nominee of DTC, is not in the best interest of the
Beneficial Owners of such Bonds.
(iii) Upon the termination of the services of DTC with respect to the
Bonds pursuant to subsection 2.12(d)(ii)(B) hereof, or upon the discontinuance or
termination of the services of DTC with respect to the Bonds pursuant to
subsection 2.12(d)(i) or subsection 2.12(d)(ii)(A) hereof after which no substitute
Securities Depository willing to undertake the functions of DTC hereunder can be
found which, in the opinion of the Town, is willing and able to undertake such
functions upon reasonable and customary terms, the Town shall cause the Trustee
to deliver Bond certificates as described in this Indenture, and the Bonds shall no
longer be restricted to being registered in the Register in the name of Cede & Co.
as nominee of DTC, but may be registered in whatever name or names
Bondholder transferring or exchanging Bonds shall designate to the Trustee in
writing, in accordance with the provisions of this Indenture.
(e) Notwithstanding any other provisions of this Indenture to the contrary, as
long as any Bond is registered in the name of Cede, as nominee of DTC, all payments
with respect to principal of, premium, if any, the purchase price and interest on such
Bond and all notices with respect to such Bond shall be made and given, respectively, in
the manner provided in the Representation Letter.
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ARTICLE III
ISSUE OF BONDS
Section 3.01. Issue of Bonds. The Town may issue the Series 2002 Bonds
following the execution of this Indenture; and the Trustee shall, at the Town's request,
authenticate such Series 2002 Bonds and deliver them as specified in the request; provided, there
shall be filed with the Trustee the following items:
(a) an order of the Town directing the Trustee to authenticate and deliver the
Bonds against receipt of the purchase price therefor;
(b) original executed counterparts of this Indenture, the Financing Agreement,
the Continuing Disclosure Agreement, the Declaration of Restrictive Covenants and the
Investment Agreement;
(c) an opinion of Bond Counsel as to the validity of the Bonds and the
exclusion of interest on the Series 2002A Bonds from gross income for federal income
tax purposes;
(d) payment to the Trustee, but for the account of the Town, of the purchase
price for the Bonds;
(e) an opinion of counsel to the Lender to the effect that the Lender is
authorized to issue GNMA Securities in an aggregate principal amount equal to at least
$15,305,000; and
(f) any other documents, statements, certificates or opinions that the Trustee,
the Town or Bond Counsel may reasonably require.
Section 3.02. Issue of Additional Bonds. Subject to receipt by the Trustee of
the documents listed below, at any time prior to or simultaneously with Final Endorsement of the
Mortgage Note by FHA the Town may, but shall not be obligated to, issue one or more series of
Additional Bonds to fund increases in the amount of the Mortgage Note approved by HUD and
an appropriate increase, if any, in the Negative Arbitrage Account. Each series of Additional
Bonds shall be issued pursuant to a supplement to this Indenture and shall be equally and ratably
secured under this Indenture with the Series 2002 Bonds and any other series of Additional
Bonds without preference, priority or distinction of any Bonds over any other Bonds. Unless
provided otherwise in a supplement to this Indenture, all such Additional Bonds shall be in
substantially the same form as the Series 2002 Bonds, but shall be of such denomination or
denominations, bear such date or dates, bear interest at such rate or rates, have such maturity date
or dates, redemption dates and redemption premiums, contain an appropriate series designation
and be issued at such price as shall be approved by the Town. The Trustee shall authenticate and
deliver such Additional Bonds, but only upon receipt of the following:
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(a) A certificate of the Borrower, dated as of the date of delivery of such
Additional Bonds, requesting the issuance and approving the terms of the Additional
Bonds and stating either that (i) as of the date of such certificate no event or condition has
happened or is existing which constitutes, or which, with notice or lapse of time or both,
would constitute, an event of default under the Financing Agreement or the FHA Loan
Documents or (ii) if any such event or condition has happened or is existing, specifying
such event or condition and stating in detail acceptable to the Trustee that such event or
condition will be corrected promptly after the issuance of such Additional. Bonds.
(b) A certified copy of appropriate official action of the Town authorizing (i)
the execution and delivery of any amendment or supplement to the Financing Agreement,
(ii) the execution and delivery of a supplement to this Indenture, and (iii) the issuance,
award, execution and delivery of such Additional Bonds;
(c) An original executed counterpart of a supplement to this Indenture
authorizing the issuance of the Additional Bonds and providing for, if necessary, the
deposit into the Negative Arbitrage Account of Additional Bond proceeds or Available
Moneys in an appropriate amount;
(d) An original executed amendment or supplement to the Mortgage Note
increasing the installments of principal and interest payable thereunder by the Borrower
to include amounts sufficient to provide for the payment of principal and interest on such
Additional Bonds as the same become due;
(e) A firm commitment issued by FHA to insure, pursuant to Section
221(d)(4) of the National Housing Act, or any comparable Federal legislation, the
additional amounts payable by the Borrower on the same basis as the Mortgage Note
initially insures;
(f) A written opinion of Bond Counsel that the issuance of such Additional
Bonds is permitted under the terms of this Indenture and has been duly authorized and
that the issuance of such Additional Bonds will have no adverse effect upon the exclusion
from gross income for federal and State of Colorado income tax purposes of interest on
any Series 2002A Bonds or Additional Bonds previously issued, the interest on which is
exempt from taxation then Outstanding;
(g) A written statement from the Rating Agency confirming the rating then in
effect for the Bonds Outstanding will remain in effect upon the issuance of the Additional
Bonds;
(h) Evidence satisfactory to the Trustee, dated as of the date of delivery of
such Additional Bonds, that the amount of revenues to be receivable thereafter for deposit
in the General Receipts Fund will be sufficient in amount and available in time in the
current and in each future year in which Bonds including the Additional Bonds) are
Outstanding to pay the principal and interest required to be paid on the Bonds (including
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the Additional Bonds on each Interest Payment Date and on each date on which the
Bonds (including the Additional Bond) mature or are required to be redeemed;
(i) All documentation required by FHA to implement an increase in the
amount of the Mortgage Note; and
0) A request and authorization of the Town to the Trustee to authenticate and
deliver such Additional Bonds to such person or persons named therein upon payment to
the Trustee for the account of the Town of a specified sum plus accrued interest to the
date of delivery.
The proceeds of such Additional Bonds shall be deposited by the Trustee as
provided in the supplement to this Indenture referred to above.
Section 3.03. Disposition of Proceeds of Series 2002 Bonds. On the Closing
Date there shall be deposited from proceeds of the sale of the Series 2002 Bonds:
(a) $ into the Acquisition Account; and
(b) $ into the Available Moneys Account; and
(c) $ (from premium received in connection with the sale of the
Bonds and deposited into the Acquisition Account) into the Negative Arbitrage
Account; and
(d) $ into the Cost of Issuance Account.
ARTICLE IV
PLEDGE OF TRUST ESTATE; REVENUES AND FUNDS
Section 4.01. Pledge of Trust Estate. Subject only to the rights of the Town to
apply amounts under the provisions of this Article IV, a pledge of the Trust Estate to the extent
provided herein is hereby made, and the same is pledged to secure the payment of the principal
of, premium, if any, and interest on the Bonds. The pledge hereby made shall be valid and
binding from and after the time of the delivery of the first Bond authenticated and delivered
under this Indenture. The security so pledged and then or thereafter received by the Town shall
immediately be subject to the lien of such pledge and the obligation to perform the contractual
provisions hereby made shall have priority over any or all other obligations and liabilities of the
Town with regard to the Trust Estate, to the extent provided herein, and the lien of such pledge
shall be valid and binding as against all parties having claims of any kind in tort, contract or
otherwise against the Town irrespective of whether such parties have notice thereof.
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Section 4.02. Establishment of Funds. The Town hereby establishes and
creates the following funds and accounts, which shall be special trust accounts held by the
Trustee:
(a) General Receipts Fund and therein the Available Moneys Account and the
Negative Arbitrage Account.
(b)
Issuance Account.
(c)
(d)
Project Fund, and therein the Acquisition Account and the Costs of
Redemption Fund.
Excess Investment Earnings Fund.
Revenues and investments thereof shall, until applied as provided in this
Indenture, be held by the Trustee for the benefit of the owners of all outstanding Bonds, except
that any portion of the Revenues in the General Receipts Fund or the Redemption Fund
representing principal or redemption price of, and premium, if any, and interest on, any matured
Bonds, or any Bonds previously called for redemption in accordance with Article VII of this
Indenture, shall be held for the benefit of the owners of such Bonds only.
Section 4.03. General Receipts Fund. The Trustee shall deposit in the
Available Moneys Account when and as received:
(a) amounts, if any, paid by the Underwriter as accrued interest;
(b) all income, revenues, proceeds and other amounts received from or in
connection with the PLC and the CLCs; however, any amounts received by the Trustee
prior to the date on which the Trustee acquires the PLC which, to the actual knowledge of
the Trustee, represent principal amortization payments on the Mortgage Note, shall be
returned to the Lender;
(c) all earnings and gains from the investment of money held in the
Acquisition Account of the Project Fund;
(d) all amounts transferred to the Available Moneys Account pursuant to
Section 4.04 hereof; and
(e) any Credit Facility delivered by the Corporation to provide for payment of
principal of or interest on the Bonds.
No other moneys except for other Available Moneys shall be deposited in the Available Moneys
Account.
Each GNMA Security shall, upon its acquisition, be held and registered in the
name of the Trustee or its nominee, so that each GNMA Security is held for the benefit of the
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Trustee and the Trustee has a first perfected security interest in each such GNMA Security at all
times. The Trustee shall give written notice on the seventeenth day of any month (or the next
succeeding Business Day if the seventeenth day is not a Business Day) to GNMA of the failure
of the Lender to make any payment on the GNMA Security by the seventeenth day of such
month (or the next succeeding Business Day if the seventeenth day is not a Business Day) and
demand payment under the terms of GNMA's guaranty thereof.
Moneys in the Available Moneys Account shall be used solely for the payment of
the principal of, the premium, if any, and interest on the Bonds as the same become due, whether
at maturity or upon redemption or acceleration or otherwise, and for the payment of Trustee
Administrative Fee and any other amounts then due to the Trustee pursuant to Section 9.04
hereof and fees due to the Trustee or a Rebate Analyst, if any.
Moneys in the Available Moneys Account of the General Receipts Fund shall be
applied in the following manner and order of priority:
(a) On each Interest Payment Date, Redemption Date, or Maturity Date, the
Trustee shall withdraw from the Available Moneys Account of the General Receipts Fund
an amount equal to the amount of principal and/or interest, due on the Bonds on such
date, and shall cause such amount to be applied to the payment of such interest and
principal so due. In the event that funds on deposit in the Available Moneys Account are
not sufficient to make such payment, the Trustee shall make demand for payment, in the
amount of such shortfall, under any Credit Facility then on deposit in the Available
Moneys Account.
(b) Provided that the amounts specified in subparagraph (a) have been paid in
full, on each 20 and 20, commencing 20, 20_, the
Trustee shall (i) withdraw from the Available Moneys Account moneys sufficient to pay
one-half of the annual Trustee Administrative Fee and any other amounts then due to the
Trustee pursuant to Section 9.04 hereof; and (ii) pay from the Available Moneys Account
any fees due to a rebate analyst, if any.
(c) Provided that amounts specified in subparagraphs (a) and (b) above have
been paid in full and the PLC has been acquired by the Trustee, the Trustee shall
withdraw from the Available Moneys Account on each Interest Payment Date on or after
20, 20_, and remit to the Borrower all amounts on deposit in the Available
Moneys Account in excess of $
Moneys in the Negative Arbitrage Account shall be used to pay interest due on the
Bonds on each Interest Payment Date to the extent that moneys then on deposit in the Available
Moneys Account are insufficient to do so. The Trustee shall on each Interest Payment Date
occurring prior to the purchase of the PLC by the Trustee, transfer from the Negative Arbitrage
Account and deposit into the Available Moneys Account an amount which, together with funds
on deposit in the Available Moneys Account, is equal to the interest due on the Bonds on such
Interest Payment Date; provided however, that amounts transferred from the Negative Arbitrage
Account shall not be used to pay any principal of the Bonds. Following the Interest Payment
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Date immediately succeeding the PLC Delivery Date, the Trustee shall transfer to the Available
Moneys Account all amounts then remaining in the Negative Arbitrage Account.
Provided that any rebate requirements to the United States Treasury, are first
satisfied, any amounts remaining in the General Receipts Fund, the Project Fund or the
Redemption Fund after payment in full of the principal of, premium, if any, and interest on the
Bonds will be applied (a) to pay all amounts required to be paid under the Indenture or the
Financing Agreement, and (b) to pay the Borrower the balance.
Amounts in the Available Moneys Account shall be withdrawn therefrom at any
time that the amounts in the Available Moneys Account and the Redemption Fund are sufficient
to pay the principal of, premium, if any, and interest on all Bonds that remain Outstanding on
such date and the Borrower has paid any fees and expenses due under the Indenture or the
Financing Agreement, including, without limitation, Trustee Administrative Fees and other fees
due to the Trustee pursuant to Section 9.04 hereof, and fees and expenses to the Town, the
Rebate Analyst or the Dissemination Agent. Such amounts in the Available Moneys Account,
after the payment of such fees and expenses, will be deposited in the Redemption Fund and
applied to the redemption of Bonds.
Section 4.04. Project Fund.
(a) The amounts set forth in Section 3.02 hereof shall be delivered to the
Trustee for deposit into the Acquisition Account and the Costs of Issuance Account of the
Project Fund.
(b) Moneys on deposit in the Costs of Issuance Account [, including moneys
deposited therein by the Borrower,] shall be applied to pay Costs of Issuance [and
Miscellaneous Costs] at any time as directed by the Borrower in writing. Amounts
deposited in the Costs of Issuance Account shall be invested in Permitted Investments.
The Trustee shall disburse amounts from the Costs of Issuance Account of the Project
Fund upon submission of a written request from a duly authorized officer or agent of the
Borrower to the Trustee stating that the amount indicated thereon is due and owing (or
has been paid by the Borrower and is properly reimbursed to the Borrower), has not been
the subject of another written request which has been paid, and is a proper cost of issuing
the Bonds or implementing the financing for the Project. Interest earnings on amounts on
deposit in the Costs of Issuance Account of the Project Fund shall remain in such
Account. Any moneys remaining in the Costs of Issuance Account after
2002 and not specifically committed to the payment of any specific Cost of Issuance shall
be transferred to the Available Moneys Account of the General Receipts Fund.
(c) All amounts held in the Acquisition Account shall be applied as provided
below and in accordance with Section 3.03 of the Financing Agreement. All amounts in
the Acquisition Account shall be invested by the Trustee in the Investment Agreement.
All investment earnings on funds held in the Acquisition Account shall be transferred to
the Available Moneys Account of the General Receipts Fund. Subject to the satisfaction
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of all conditions set forth in Section 3.03 of the Financing Agreement, moneys in the
Acquisition Account shall be disbursed by the Trustee as follows:
(i) On each date upon which the Trustee acquires from the Lender a
CLC, the Trustee shall transfer from the Acquisition Account to the Lender an
amount equal to 100% of the principal amount of such CLC. The portion of the
purchase price of the CLC representing accrued and unpaid interest on such CLC
at the Pass-Through Rate shall be paid to the Lender from the Available Moneys
Account of the General Receipts Fund on the first date after acquisition of the
CLC that the Trustee receives an interest payment on such CLC.
(ii) Following the delivery to the Trustee of the Initial CLC, the
Trustee shall disburse from the Acquisition Account to the Lender, on behalf of
the Town, the amount requisitioned by the Borrower from the Lender with respect
to any disbursement except for the Initial Advance or the Final Advance, but only
if the Trustee has (A) received a copy of the Application for Insurance of
Advances of Mortgage Proceeds with respect to such disbursement executed by
the Lender, (B) actual possession of all CLCs representing prior disbursements
and payments due thereon registered in the name of the Trustee or its designee,
(C) received the CLC from the Lender representing the current draw, (D) received
a certificate of the Lender to the effect that neither the Borrower nor the Lender is
in default under any of the FHA Loan Documents or the Financing Agreement
and a certificate of the Borrower to the effect that it is not in default under any of
the FHA Loan Documents or the Financing Agreement, (E) received notice of the
amount of such draw no later than two Business Days prior to such disbursement;
provided, however, that the Trustee shall make no disbursements with respect to
Mortgage Loan advances (including the amount used to purchase the Initial CLC
and including the amounts transferred to the Redemption Fund from the
Acquisition Account) in excess of $15,305,000 (or the amount of the Mortgage
Loan as it may be increased in connection with the issuance of Additional Bonds)
nor shall the Trustee permit any draw from the Acquisition Account unless
immediately after such draw the amount on deposit in the Acquisition Account
would be equal to the amount of $15,305,000 (or the amount of the Mortgage
Loan as it may be increased in connection with the issuance of Additional Bonds)
minus the sum of (I) the amount of the CLC representing the draw and '(II) the
aggregate principal amount of all CLCs previously delivered to the Trustee or
requested from GNMA.
(iii) On the date on which the Trustee acquires from the Lender the
PLC, the Trustee shall remit to the Lender, to the extent of available funds on
deposit in the Acquisition Account, an amount equal to the difference between
100% of the aggregate original principal amount of all CLCs theretofore acquired
by the Trustee and the principal amount of the PLC, but only upon receipt of the
following: (A) the PLC bearing interest at the pass-through rate of % and
maturing not later than 15, 20 with prepayment provisions
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corresponding to the redemption provision set forth in Section 7.02(a) and (b)
hereof; and (B) a certificate of the Lender stating that, to the best of its
knowledge, the Lender is not in default under the Financing Agreement. The
purchase price of the PLC shall be paid from the Acquisition Account but the then
accrued interest on such difference at the interest rate per annum borne by the
PLC from the first day of the month in which the PLC is delivered to (but not
including) the date of its acquisition by the Trustee shall be paid to the Lender
from the Available Moneys Account of the General Receipts Fund on the first
date after the acquisition of the PLC that the Trustee receives a principal and
interest payment on such PLC.
If the Commencement of Amortization Date occurs before the PLC Delivery
Date, the Trustee shall not accept any principal payments on the Mortgage Loan which are
passed through the CLC prior to the PLC Delivery Date, but shall transfer funds in the
Acquisition Account to the Redemption Fund in an amount equal to such principal payments to
pay a portion of the scheduled sinking fund redemption on 20, 20 under
Section 7.02(b)(iv). Any such principal payments will be held by the Lender until delivery of the
PLC.
In the event the principal balance of the Mortgage Note as of the PLC Delivery
Date is less than the aggregate principal amount of all CLCs theretofore acquired by the Trustee,
the Trustee shall not exchange the CLCs held by it for the PLC unless and until the Lender
causes to be paid to the Trustee, as partial prepayment on such CLCs, an amount equal to the
difference between the then current outstanding principal balance of the Mortgage Note as of the
PLC Delivery Date and the aggregate principal amount of the CLCs theretofore acquired by the
Trustee, which amount shall be transferred to the Redemption Fund pursuant to paragraph (d)
below.
(d) If the PLC is not delivered on or by the Business Day next preceding the
PLC Delivery Date, the Trustee shall transfer to the Redemption Fund all amounts on
deposit in the Acquisition Account for application to the mandatory redemption of Bonds
in accordance with Section 7.02(b)(ii)(C) hereof; provided, however, that such transfer
and such redemption shall be delayed for no more than twelve successive 30-day periods
if an Event of Default has not occurred and is not then continuing and the Trustee shall
have received no later than the Business Day next preceding the PLC Delivery Date, a
request from either the Lender or the Borrower for such delay (whether or not a
conflicting request is received from the other such party) accompanied by (i) a cash flow
projection accompanied by a verification report by a nationally recognized firm of
certified public accountants or financial consultants acceptable to the Rating Agency
demonstrating that the sum of (A) the amount in the Acquisition Account and the General
Receipts Fund, (B) the investment earnings to accrue on the amounts held in the
Acquisition Account and the General Receipts Fund during the period ending 30 days
after the end of any period of delay requested, (C) the payments on the PLC assuming it
is dated not earlier than the latest date on which it may be delivered to the Trustee, and
(D) any additional sums paid to or held by the Trustee by or on behalf of the Borrower or
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the Lender for deposit into the Acquisition Account or General Receipts Fund
(accompanied by an opinion of counsel acceptable to the Trustee to the effect that such
sums are not subject to the provisions of Sections 362(a) and 547 of the Federal
Bankruptcy Code in the event of a bankruptcy of the Borrower) will be at least equal to
(1) the debt service on the Bonds as originally scheduled and will also be at least equal to
(2) the debt service on the Bonds through the date which is 30 days after the end of any
such extension period, plus, in each case, originally scheduled and accrued unpaid
Trustee fees and rebate calculation fees (assuming redemption of all Bonds on that date)
and any other amounts which were shown to be available at such time for debt service on
the Bonds in the original cash flows prepared in connection with the issuance of the
Bonds; (ii) an opinion of Bond Counsel addressed to the Town and the Trustee to the
effect that such extension will not adversely affect the interests of the Bondholders or the
exclusion of interest on the Bonds from gross income for federal income tax purposes;
(iii) written evidence that the Commitment from HUD will remain valid and in effect at
least through the end of such period; (iv) arrangements satisfactory to the Trustee for the
making of the investments contemplated by the cash flow projection; (v) written evidence
or confirmation from the Lender that the CLC Maturity Date and the PLC Delivery Date
will be extended at least to the end of the period of such requested delay (subject to the
requirements set forth in the next succeeding paragraph); and (vi) written notice from the
Rating Agency that the rating then assigned to the Bonds will not be lowered or
withdrawn as a result of such extension of the CLC Maturity Date and the PLC Delivery
Date. In connection with any extension, the Trustee shall not consent to the extension of
the CLC Maturity Date unless the CLC will then mature in the same month in which the
PLC is then required to be delivered. Upon the receipt of the documents and upon the
arrangements listed in this subdivision, the Trustee shall permit the extension(s);
provided, however, that if such documents have not been received and such arrangements
have not been made by the Business Day next preceding the PLC Delivery Date, then the
moneys remaining on deposit in the Acquisition Account on such date shall be transferred
to the Redemption Fund on the Business Day next preceding the PLC Delivery Date and
applied to the redemption of Bonds.
In connection with any such extension, the Trustee shall not consent to the
extension of the maturity date of the CLCs held by it unless such maturity date is
extended at least to the date which is 15 days after the date on which the PLC would be
issued pursuant to such extension. The Trustee's consent shall be conditional upon
GNMA's and the Lender's consent to the extension of the maturity date of the CLC(s) and
the Lender's agreement that in submitting the CLCs to GNMA in exchange for the PLC it
will use its best efforts to follow the MBS Submission Schedule issued by GNMA from
time to time to ensure delivery of the PLC in the same month as the CLCs mature. The
Trustee shall provide the Lender with the Trustee's written consent to the extension upon
its receipt of the items required in (i) through (v) above and prior to the Lender's
requesting GNMA's consent to such extension, provided the Trustee shall not consent to
any such extension if such extension would in the opinion of the Trustee materially
adversely impact the Bondholders.
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The Trustee shall notify the Rating Agency at least 30 days prior to the maturity
of the respective CLCs of a proposed extension of such maturity date of the CLCs.
The Trustee shall disburse.such remaining moneys on deposit in the Acquisition
Account for purchase of the PLC only upon delivery of the PLC or such other evidence of
issuance of the PLC as GNMA provides under its book-entry system of securities transactions.
The Trustee shall, prior to acquisition of the PLC, receive a certificate of the Lender specifying
the amount of principal, if any, received by the Lender as regularly scheduled payments of
principal on the Mortgage Loan prior to the delivery of the PLC.
On the PLC Delivery Date, amounts remaining in the Acquisition Account after
the Trustee's receipt of the PLC shall, be. transferred first to the Redemption Fund for the
redemption of the Bonds as set forth in Section 7.02(b)(ii)(E) hereof, and second to the Available
Moneys Account. The Trustee shall transfer to the Lender all CLCs held by it against delivery of
the PLC.
(e) The Trustee shall not be required to acquire a GNMA Security unless the
GNMA Security pays interest at the Pass-Through Rate and, in the case of the PLC,
matures no later than 15, 20-. All GNMA Securities shall be registered in the
name of the Trustee or its designee.
(f) If the PLC is not delivered by the Business Day next preceding the PLC
Delivery. Date, the Trustee shall redeem all CLCs held by it upon their maturity and
redeem Bonds as provided in Section 7.02(b)(ii)(C) and shall also transfer the proceeds
remaining in the Acquisition Account to the Redemption Fund pursuant to
Section 4.04(d) to redeem Bonds on the earliest date possible for the redemption of
Bonds. In the event the Bonds are redeemed pursuant to Section 7.02(b)(ii)(C), the
Trustee shall also transfer to the Redemption Fund amounts on deposit in the Negative
Arbitrage Account to the extent necessary to pay interest on the Bonds.
(g) The Trustee shall compare each GNMA Security or its book-entry form
with the GNMA prospectus relating to the GNMA Securities and GNMA Guaranty
Agreement provided by the Lender to assure delivery of correct GNMA Securities. The
Trustee shall not sell the GNMA Securities in whole or in part without the written
consent of the owners of all Outstanding Bonds. Notwithstanding any other provision of
this Indenture, the requirement of the written consent of the owners of all Outstanding
Bonds to a sale of the GNMA Securities may be amended only with the written consent
of the owners of all Outstanding Bonds.
(h) The Trustee shall, prior to the acquisition of any GNMA Security (by itself
or through an agent or affiliate) enter into a custody agreement with respect to the GNMA
Securities with a participant (the "Participant") of Participants Trust Co. ("PTC") and
shall have received assurances from the Participant and/or PTC prior to the acquisition of
any GNMA Security that: (A) acting on behalf of the Trustee, the Participant has
established a limited purpose account with PTC for the Trustee called the "Limited
Purpose Account"; (B) the Participant has delivered an irrevocable instruction to PTC to
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the effect that all fees arising in connection with the Limited Purpose Account are to be
charged to another account maintained by PTC for the Participant; (C) that PTC has
delivered a certificate to the Participant acknowledging that PTC will not charge the
specified Limited Purpose Account while the instruction remains in effect (with
exceptions only for mistake or to secure and repay any advance of principal and interest
made by PTC); (D) the Participant has received written evidence that PTC has made an
appropriate entry in its records of the transfer of such book-entry securities to the
Participant's account; and (E) the GNMA Securities will be transferred and received into
the Limited Purpose Account free of any payment obligation.
Section 4.05. Redemption Fund.
(a) There is hereby created and established with the Trustee a special fund to
be designated the "Redemption Fund." The Redemption Fund will be funded from
transfers from the Available Moneys Account of the General Receipts Fund pursuant to
clause (b) of Section 4.03, and from other transfers required under the provisions of this
Indenture.
(b) The Trustee shall redeem the Bonds on any date of redemption of the
Bonds as required pursuant to Section 7.02(b)(i), 7.02(b)(iv) and 7.02(b)(v).
Section 4.06. Excess Investment Earnings Fund. Promptly upon the close of
each Bond Year and also upon the retirement of the Bonds, the Trustee shall provide the
Borrower and the Rebate Analyst with a statement of earnings on Funds and Accounts with
respect to the Bonds held under this Indenture during any period not covered by a prior
statement, and (unless all of the Bonds have heretofore been retired) a final statement or a
supplement thereto covering the period ending on the Maturity Date. Each statement shall
include the purchase and sale prices of each investment, if any, (including any commission paid
thereon which shall be separately stated if such information is available), the dates of each
investment transaction, information as to whether such transactions were made at a discount or
premium, and such other information known or reasonably available to the Trustee as the Rebate
Analyst shall reasonably require.
The Trustee shall promptly transfer to the Excess Investment Earnings Fund each
amount required to be deposited therein pursuant to the Code upon receipt of written direction
from the Rebate Analyst delivered to the Trustee, from revenues which have been deposited with
the Trustee pursuant to the Financing Agreement. To the extent that the amount previously
deposited into the Excess Investment Earnings Fund is less than that required hereunder, the
Trustee shall promptly notify the Borrower and an amount equal to such deficiency shall be paid
promptly by the Borrower to the Trustee for deposit into the Excess Investment Earnings Fund.
All investment earnings on amounts held in the Excess Investment Earnings Fund shall be held
in the Excess Investment Earnings Fund. At the written direction of the Borrower, the Trustee
shall pay over to the United States of America, not later than 60 days after the fifth anniversary
of the date of issuance of the Bonds, an amount equal to 90% of the aggregate amount transferred
to or earned on the Excess Investment Earnings Fund during such period and not theretofore paid
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to the United States of America and, not later than 60 days after the redemption of the last Bond,
100% of the aggregate in the Excess Investment Earnings Fund.
The Borrower shall engage a Rebate Analyst, as required by Section 5.06(c)
hereof and Section 4.01(a) of the Financing Agreement, as may be necessary in connection with
such responsibilities. For purposes of the computation of the Excess Investment Earnings Fund
required under Section 5.06(c) hereof, the Trustee shall make available to the Borrower, the
Issuer and the Rebate Analyst during normal business hours, and subject to such other reasonable
regulations as the Trustee may impose, all information in the Trustee's control which is
necessary to such computations. The Trustee may conclusively rely upon and shall be fully
protected from all liability in relying upon the calculations and determinations of the Rebate
Analyst.
Notwithstanding the foregoing, the Trustee shall not be required to take any action
which in its judgment diminishes the security of the Bondholders if the Trustee obtains an
opinion of Bond Counsel to the effect that failing to take such action would not adversely affect
the exclusion of interest on the Series 2002A Bonds from federal income taxation. The Trustee
shall be deemed conclusively to have complied with the requirements of this Section if it
(i) provides the Borrower, the Town or the Rebate Analyst, as applicable, with the statements and
records specified above and (ii) complies with the written instructions of the Rebate Analyst.
Section 4.07. Instruments of Further Assurance. Subject to the provisions of
Article IX hereof, the Trustee shall defend its title to the GNMA Securities for the benefit of the
holders of the Bonds against the claims and demands of all persons whomsoever and the Town
shall do, execute, acknowledge and deliver, such indentures supplemental hereto, and such
further acts, instruments and transfers as the Trustee may reasonably require for the better
assuring, transferring, conveying, pledging, assigning and confirming unto the Trustee all its
interest in the property herein described and the revenues, receipts and other amounts pledged
hereby to the payment of the principal of, premium, if any, and interest on the Bonds. Any and
all interest in property hereafter acquired which is of any kind or nature herein provided to be and
become subject to the lien hereof shall, without any further conveyance, assignment or act on the
part of the Town or the Trustee, become and be subject to the lien of this Indenture as fully and
completely as though specifically described herein, but nothing contained in this sentence shall
be deemed to modify or change the obligations of the Town under this Indenture.
Section 4.08. No Disposition of GNMA Securities. The Trustee shall not,
without the prior written consent of the holders of 100% of the Bonds then Outstanding, sell or
otherwise dispose of the GNMA Securities after their acquisition for an amount less than an
amount sufficient, together with other amounts then held under this Indenture and available for
the payment of principal of and interest on the Bonds, to provide for the payment in full of the
Bonds in accordance with Article XII. Upon the redemption or payment of all the Outstanding
Bonds in accordance with the terms of this Indenture, the Town and the Trustee shall take
whatever steps may be necessary to release the lien of this Indenture with respect to the GNMA
Securities, which GNMA Securities shall then be disposed of in accordance with Section 12.01
hereof and the Financing Agreement.
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Section 4.09. Preservation of Trust Estate. To the. extent possible under
applicable law, as in effect in the jurisdiction in which the Trust Estate is located, the Trustee
will protect, preserve and defend its interest in the Trust Estate and the security interest of the
Trustee therein and all rights of the Trustee under this Indenture against all actions, proceedings,
claims and demands of all persons, all paid solely from the Trust Estate and subject to the
provisions of Article IX hereof.
ARTICLE V
COVENANTS AND AGREEMENTS OF THE TOWN
Section 5.01. Performance of Covenants. The Town covenants that it will
timely and faithfully perform at all times any and all covenants, undertakings, stipulations and
provisions contained in this Indenture and the Financing Agreement, in any and every Bond and
in all proceedings of the Town pertaining thereto. The Town covenants, represents, warrants and
agrees that it is duly authorized under the Constitution and laws of the State, including the Act
and its Home Rule Charter, to issue the Bonds and to execute this Indenture and the Financing
Agreement, to pledge the property described herein and in the Financing Agreement and pledged
hereby or thereby and to pledge the Trust Estate in the manner and to the extent herein and
therein set forth, that all actions on its part required for the issuance of the Bonds and the
execution and delivery of this Indenture and the Financing Agreement have been duly and
effectively taken or will be duly taken as provided herein, and that this Indenture and the
Financing Agreement are valid and enforceable instruments of the Town and that the Bonds in
the hands of the owners thereof are and will be valid and enforceable obligations of the Town
according to the terms thereof.
Section 5.02. Further Assurances. The Town covenants that it will cooperate
to the extent necessary with the Borrower and the Trustee in their defenses of the, Trust Estate
against the claims and demands of all persons, and will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto
and such further acts, financing statements, documents, instruments and transfers as the Trustee
may reasonably require to perfect and maintain perfected the security interest in the Trust Estate;
provided that the entity requesting the assistance of the Town pays all costs of the Town in
connection therewith. The Town shall not agree to any amendment, modification, supplement,
waiver or consent with respect to the Financing Agreement without the prior written consent of
the Trustee, which consent shall be governed by Article VIII of this Indenture. Notwithstanding
anything contained herein to the contrary, (a) the Town expressly reserves its right to exercise the
Unassigned Town's Rights without obtaining the consent or approval of the Borrower and the
Trustee; and (b) nothing herein contained shall be construed as a waiver or relinquishment of the
Unassigned Town's Rights.
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Section 5.03. No Other Encumbrances. The Town covenants that, except as
otherwise provided herein and in the Financing Agreement, it will not sell, convey, mortgage,
encumber or otherwise dispose of any portion of the Trust Estate.
Section 5.04. Reports. The Trustee shall famish annually to any Bondholder
who requests in writing copies thereof, and furnishes an address to which such reports and
statements are to be sent, at the sole cost and expense of such Bondholder, copies of (a) any
reports furnished to the Trustee with regard to the Project and (b) annual statements of the
Trustee with regard to fund balances under this Indenture. The Trustee shall also furnish to the
Rating Agency such information in its possession as may be reasonably requested in writing by
the Rating Agency in order to maintain the rating on the Bonds.
Section 5.05. Tax Covenants.
(a) Subject to the provisions of Article IX, the Trustee covenants for
the benefit of the Bondholders to enforce all obligations of the Borrower under this
Indenture and the Financing Agreement and to seek correction of any violation within a
reasonable period after a Responsible Officer has actual knowledge of any such violation
of this Indenture or the Financing Agreement; provided, however that any provision
.contained in this Indenture, the Declaration of Restrictive Covenants or the Financing
Agreement which requires the Borrower to take any action necessary to preserve the tax
status of the Bonds (or prohibits the Borrower from taking any action that might.
jeopardize the tax status of the Bonds) is qualified to except actions prohibited (or
required) by HUD pursuant to the National Housing Act, FHA Regulations or the FHA
Loan Documents.
(b) The Town covenants that, to the extent- within its control, it shall
comply with the requirements of the Tax Certificate and otherwise shall not use or cause
the use of any proceeds of the Series 2002A Bonds or any other funds of the Town,
directly or indirectly, in any manner, and shall not take or cause to be taken any other
action or actions, or fail to take any action or actions, which would result in interest on
any of the Series 2002A Bonds becoming includable in gross income of any holder
thereof.
(c) The Trustee hereby agrees to cause such calculations of such
excess investment earnings to be made, and the Trustee hereby agrees to demand in
writing from the Borrower any amounts required to be rebated to the United States
Treasury pursuant to Section 4.06. The Borrower has covenanted to take all actions
necessary to ensure compliance with this Section 5.05(c) and Section 4.06 hereof,
including the employment of a Rebate Analyst for the term of the Series 2002A Bonds,
pursuant to Section 4.01(a) of the Financing Agreement. Any fees or expenses incurred
by the Trustee or the Town under or pursuant to this Section 5.05(c) or Section 4.06 shall
be billed to and paid by the Borrower. The Town hereby covenants to enforce the
obligations of the Town and Borrower hereunder.
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In order to provide for the administration of this Section 5.05(c) and
Section 4.06, the Trustee may provide for the employment of independent attorneys
(including Bond Counsel), accountants and consultants compensated on such reasonable
basis as the Trustee may deem appropriate, and the Trustee may rely conclusively upon
and shall be fully protected from all liability in relying upon the opinions, calculations,
determinations, directions and advice of such attorneys, accountants and consultants
employed by the Trustee hereunder.
(d) If at any time when the Trustee is required to retain or pay the
Rebate Analyst there is an insufficient amount of moneys on deposit in the Rebate Fund
to pay any rebatable arbitrage to the United States of America or to pay the fees and
expenses of the Rebate Analyst, the Trustee, after delivering to the Borrower a demand
for payment of an amount sufficient to pay the fees of the Rebate Analyst, shall withdraw
sufficient amounts, to the extent available, first, from the Project Fund, and, second, from
any other Funds established hereunder, such amounts as may be needed to pay the fees
and expenses of the Rebate Analyst and transfer the amounts so withdrawn in each case
to the Excess Investment Earnings Fund. This Section 5.05(e) shall supersede all other
Sections of this Indenture, to the end that the exclusion from gross income for the
purposes of federal income taxation of interest on the Series 2002A Bonds shall not be
adversely affected. as a result of the inadequacy at any time of the Excess Investment
Earnings Fund, unless the total amount held by the Trustee under all Funds established
hereunder is insufficient, and no money for such purpose is provided by the Borrower.
Section 5.06. Town's Obligation Limited. Notwithstanding the foregoing, the
Town's Unassigned Rights are hereby reserved, without in any way limiting the rights of the
Trustee under the Financing Agreement or hereunder, either on its own behalf or as the assignee
of the Issuer, subject to the rights of HUD upon a determination by HUD that the provisions of
this paragraph threaten the financial viability of the Project.
Section 5.07. Conditions Precedent. Upon the date of issuance of any of the
Bonds, the Town hereby covenants that all conditions, acts and things required of it by the laws
of the State or by this Indenture to exist, to have happened or to have been performed precedent
to or in the issuance of the Bonds by the Town shall exist, have happened and have been
performed.
Section 5.08. Financing Statements. The Trustee shall from time to time cause
this Indenture and the Financing Agreement or financing statements relating thereto (including,
without limitation, continuation statements) to be filed, in such manner and at such places as may
be required by law fully to protect the security of the owners of the Bonds and the right, title and
interest of the Trustee in and to the trust estate or any part thereof. From time to time, as
reasonably requested by the Trustee, the Borrower shall furnish to the Trustee an opinion of
Counsel setting forth what, if any, actions by the Town or Trustee should be taken to preserve
such security. The Trustee shall execute or join in the execution of any such further or additional
instrument and file or join in the filing thereof at such time or times and in such place or places
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as it may be advised by an opinion of Counsel will preserve the lien of this Indenture upon the
trust estate or any part thereof until the aforesaid principal shall have been paid.
ARTICLE VI
SECURITY FOR AND INVESTMENT OR DEPOSIT OF FUNDS
Section 6.01. Deposits and Security Therefor. All moneys received by the
Trustee under this Indenture shall, except as hereinafter provided, be deposited as trust funds
with the Trustee, until or unless invested or deposited as provided in Section 6.02. All deposits
with the Trustee (whether original deposits under this Section or deposits or re-deposits in time
accounts under Section 6.02) shall be secured by Government Obligations or by the Federal
Deposit Insurance Corporation.
Section 6.02. Investment or Deposit of Funds. The Trustee shall, at the request
and written direction of the Borrower so long as there is no Event of Default, invest or reinvest
moneys held in any Fund or Account established under this Indenture exclusively in Permitted
Investments, or deposit such moneys in time accounts (including accounts evidenced by time
certificates of deposit), which may be maintained with the commercial department of the Trustee
or with its affiliate, secured as provided in Section 6.01 above and under the terms permitted by
applicable law; provided that all investments shall mature, or be subject to redemption by the
owner at not less than the principal amount thereof or the cost of acquisition, whichever is lower,
and all deposits in time accounts shall be subject to withdrawal not later than the date when the
amounts will foreseeably be needed for purposes of this Indenture. Any Permitted Investments
shall be held by or under the control of the Trustee. Investment income on amounts in the
Excess Investment Earnings Fund will remain in such Fund and the investment income from
amounts held in the Acquisition Account will be transferred to the Available Moneys Account
and all investment income from amounts held in the Available Moneys Account, the Costs of
Issuance Account and the Negative Arbitrage Account shall remain in such respective Accounts.
The Trustee is authorized to cause to be sold and reduced to cash a sufficient amount of
Permitted Investments whenever the cash balance is or will be insufficient to make a requested or
required disbursement. The Trustee shall not be accountable for any depreciation in the value of
any Permitted Investment or for any loss resulting from such sale. All Permitted Investments
shall be made by the Trustee, at the written direction of the Borrower (provided, however, that
moneys deposited in the Acquisition Account of the Project Fund and the Available Moneys
Account of the General Receipts Fund shall be invested in the Investment Agreement), subject to
the limitations contained herein. If no written direction is provided to the Trustee by the
Borrower as of 12:00 noon Mountain Time on any date, the Trustee will invest such moneys in
investments described in clause (xi) of Permitted Investments, subject to the limitations
contained herein (including, without limitation, the requirements contained in the proviso to the
first sentence of this paragraph). The written direction of the Borrower shall constitute a
certification to the Trustee that such investments constitute Permitted Investments hereunder.
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Any investment acquired with proceeds of the Bonds, including investment in a
guaranteed investment contract, shall be acquired at fair market value within the meaning of
Treas. Reg. § 1.148-5(d)(6).
ARTICLE VII
REDEMPTION OF BONDS
Section 7.01. Bonds Subject to Redemption; Selection of Bonds to be Called
for Redemption. The Bonds are subject to redemption prior to maturity as provided herein and
in the form of Bonds hereinbefore recited. Unless otherwise provided in respect of a series of
Bonds, if less than all the Bonds of a series or of a maturity are to be redeemed, the particular
Bonds of such series or maturity to be called for redemption shall be selected by lot by the
Trustee in any manner deemed fair and reasonable by the Trustee and in the case of optional or
extraordinary mandatory redemptions, in such order of maturities as shall be specified by the
Borrower Representative on a reasonably proportionate basis among all outstanding Bonds and
so as to best maintain level annual debt service on the Bonds, not including the final payment of
principal due -'20-.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Bonds shall relate, in the case of any Bond redeemed or
to be redeemed only in part, to the portion of the principal of such Bond which has been or is to
be redeemed. .
Section 7.02. Redemption of Bonds. The Bonds are subject to redemption prior
to maturity at the times, under the circumstances, in the manner and at the redemption prices set
forth below:
(a) Optional Redemption. The Bonds are subject to optional redemption prior
to maturity in. whole or in part to the extent of payments on the GNMA Security
representing voluntary prepayments of the Mortgage Note or otherwise at the option of
the Town, at the direction of the Borrower, with Available Moneys from the proceeds of
refunding bonds or other funds of the Borrower on or after _, 20-:
(i) with respect to the [Series 2002_] Bonds maturing 20 at a
Redemption Price equal to the principal amount of such Bonds to be redeemed, plus
interest accrued to the redemption date (which date shall be the earliest practicable date
under this Indenture) without premium.
(ii) with respect to the [Series 2002) Bonds maturing 20, 20 and
20, 20-, at the Redemption Prices set forth in the following schedule
(expressed as percentages of the principal amount of such Bonds to be redeemed), plus
interest accrued to the redemption date (which date shall be the earliest practicable date
under this Indenture).
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Period During Which Redeemed
20,20 - through 19, 20
20,20 - through 19, 20
20,20 - through 19, 20
20,20 - through 19, 20
_ 20, 20 through 19, 20
20, 20 and thereafter
Redemption Price
(b) Extraordinary Mandatory Redemption. All extraordinary mandatory
redemptions shall be on the earliest practicable date under the terms of this Indenture.
(i) The Bonds shall be subject to mandatory redemption without
premium, in whole, to the extent that the aggregate amount on deposit in the
Redemption Fund and the Available Moneys Account is sufficient to pay the
principal of and interest on all Bonds Outstanding on such date.
(ii) The Bonds shall be subject to mandatory redemption at a price
equal to the principal amount thereof plus accrued but unpaid interest:
(A) in whole or in part, at any time on the earliest practicable
date as determined by the Trustee in its discretion, to the extent that any
payment on a GNMA Security received by the Trustee exceeds a level
payment of principal and interest thereon as a result of payments
representing (I) casualty insurance proceeds or condemnation awards
applied to the prepayment of the Mortgage Loan following a partial or
total destruction or condemnation of the Project, (11) mortgage insurance
proceeds or other amounts received with respect to the Mortgage Loan
upon the occurrence of an event of default thereunder, (III) a prepayment
of the Mortgage Loan required by the applicable rules, regulations,
policies and procedures of HUD or GNMA, or (IV) a prepayment if HUD
determines that prepayment will avoid a mortgage coinsurance claim and
is therefore in the best interest of the federal government; and
(B) in whole or in part, at any time on the earliest practicable
date as determined by the Trustee in its discretion, to the extent that the
Trustee receives payments on a GNMA Security representing prepayments
on the Mortgage Loan made by the Borrower without notice or
prepayment penalty while under the supervision of a trustee in bankruptcy;
and
(C) in whole or in part, on the fifteenth (15') day following the
PLC Delivery Date (as such date may be extended pursuant to
Section 4.04(d) hereof), in an amount equal to the remainder, if any, of
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(i) the aggregate principal amount of the Bonds then Outstanding less
(ii) the amount of the CLCs as delivered to the Trustee or its nominee, plus
the amount of regularly scheduled principal payments due on the
Mortgage Loan through and including the principal payment due on the
first day of the month in which the PLC Delivery Date occurs; and
(D) in whole, on the fifteenth (15') day following the maturity
date of the CLCs (as such date may be extended pursuant to Section
4.04(d) hereof) if the PLC is not delivered to the Trustee or its nominee on
or before the maturity date of the CLCs (as the same may be extended);
and
(E) in part, on the fifteenth (151) day following the date on
which the PLC is delivered to the Trustee, in an amount equal to the
remainder, if any, of (A) the aggregate principal amount of the Bonds then
Outstanding less (B) the amount of the PLC delivered to the Trustee or its
nominee; and
(iii) The [Series 2002_] Bonds maturing 20, 20 shall be
redeemed in part in the amounts and on the dates set forth below at a redemption
price equal to 100% of the principal amount thereof to be redeemed plus interest
accrued to the sinking fund redemption date:
Date
20,20 -
20,20
20,20 -
20,20 -
20, 20_
20,20 -
20,20 -
20,20
Amount Date
Amount
20, 20_ $
20, 20_
20, 20
20, 20_
20, 20_
20, 20_
20, 20_
20, 20_
Maturity
Date
(iv) The [Series 2002) Bonds maturing 20, 20 shall be
redeemed in part in the amounts and on the dates set forth below at a redemption
price equal to 100% of the principal amount thereof to be redeemed plus interest
accrued to the sinking fund redemption date:
20,20
20, 20_
20, 20_
Amount Date Amount
$ 20, 20_ $
20, 20_
20, 20_
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20,20 - 20, 20_
20,20 - 20, 20_
20,20 - 20, 20_
20,20 - 20, 20_
20,20 - 20,20
20,20 - 20, 20_
20, 20_ 20, 20-*
"Maturity
(v) The [Series 2002] Bonds maturing 20,20 shall be
redeemed in part in the amounts and on the dates set forth below at a redemption
price. equal to 100% of the principal amount thereof to be redeemed plus interest
accrued to the sinking fund redemption date:
Date Amount Date Amount
20, 20_ $ 20,20 $
20, 20_ 20, 20_
20, 20_ 20, 20_
20, 20 20, 20_
20, 20_ 20, 20_
20, 20_ 20,20
20, 20_ 20, 20_
20,20 - 20,20
20, 20_ 20, 20_
20, 20_ 20, 20-*
"Maturity
(vi) The [.Series 2002) Bonds maturing 20,20 shall
be redeemed in part in the amounts and on the dates set forth below at a
redemption price equal to 100% of the principal amount thereof to be redeemed
plus interest accrued to the sinking fund redemption date:
Date Amount
20, 20_ $
20, 20_
20, 20
20, 20_
_
_20,20
20, 20
Date Amount
20, 20_ $
20, 20_
20, 20_
20, 20_
20, 20_
20, 20
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20,20 - 20, 20_
20,20 - 20, 20_
20,20 -
_
_20,20
20, 20_ 20, 20_*
Maturity
On or before the 40th day prior to each such sinking fund redemption date, the
Trustee shall proceed to select the applicable Bonds for redemption from such sinking fund on
the next 20 or 20, as applicable, and thereafter give notice of such call.
If less than all of the Bonds then Outstanding shall be redeemed other than from
the sinking fund installments set forth above, the amount of Bonds to be redeemed in each year
from sinking fund installments as provided above shall be decreased by an amount (and the
Trustee shall redeem as nearly as practicable a corresponding amount of such Bonds), in
proportion, as nearly as practicable, to the decrease in the payments on the GNMA Securities in
each such year; provided that no such adjustment to sinking fund installments shall affect the
next scheduled sinking fund installment if such redemption shall be noticed to the Trustee less
than 40 days before such sinking fund installment; and further provided that Bonds to be
redeemed pursuant to Section 7.02(b)(ii)(E) as a result of a reduction in the PLC due to Mortgage
Note principal amortization payments shall be selected from the sinking fund payments due on
.20, 20 . Notice of such redemption shall be given at the same time and in the
same manner as notices of redemption under Section 7.03 hereof.
The Borrower. may deliver Bonds purchased by it as a credit against future sinking
fund payments in inverse chronological order; provided that such Bonds so delivered by the
Borrower shall be of the same series and maturity in respect of which the sinking fund payment
is to be made and shall be delivered no less than 40 days before the sinking fund redemption
date. Bonds so delivered shall be credited at the sinking fund redemption price set forth in the
form of Bonds. If at any time all the Bonds shall have been purchased, redeemed or paid, the
Trustee shall make no further transfers to the sinking fund.
Section 7.03. Notice of Redemption. When required to redeem Bonds under
any provision of this Indenture, the Trustee shall cause notice of the redemption to be given by
first-class mail, postage prepaid, mailed to all registered owners of Bonds to be redeemed at their
registered address not more than 15 days nor less than 10 days prior to the redemption date. In
addition, the Trustee shall send a copy of such notice by registered or certified mail or overnight
delivery service, return receipt requested, postage prepaid, to each registered securities
depository and nationally recognized information service that disseminates redemption
information, sent at least two Business Days in advance of the mailing of notice to Bondholders.
In addition the Trustee shall at all reasonable times make available to any interested party
complete information as to Bonds which have been redeemed or called for redemption. Any
such notice shall be given in the name of the Town, shall identify the.Bonds to be redeemed (and,
in the case of partial redemption of any Bonds, the respective principal amounts thereof to be
redeemed), shall specify the redemption date and the redemption price, shall state that on the
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redemption date the Bonds called for redemption will be payable at the principal corporate trust
office of the Trustee that from that date interest will cease to accrue. Failure to mail any notice
or defect in the mailed notice or in the mailing thereof in respect of any Bond shall not affect the
validity of the redemption of any other Bond.
The Trustee shall use "CUSIP" numbers on notices of redemption as a
convenience to Bondholders provided that any such notice shall state that no representation is
made as to the correctness of such numbers either as printed on the Bonds or as contained in any
notice of redemption and that reliance may be placed only on the identification numbers
containing the prefix established under the Indenture.
If at the time of mailing of notice of an optional redemption there shall not have
been deposited with the Trustee moneys sufficient to redeem all the Bonds called for redemption,
such notice may state that it is. conditional, that is, subject to the deposit of the redemption
moneys with the Trustee not later than the opening of business five Business Days prior to the
scheduled redemption date, and such notice shall be of no effect unless such moneys are so
deposited. In the event sufficient moneys are not on deposit on the required date, then the
redemption shall be canceled and on such cancellation date notice shall be mailed to the holders
of such Bonds, to be redeemed in the manner provided in the form of Bonds hereinbefore recited.
Anything to the contrary herein notwithstanding, in the case of a redemption of
the Bonds due to an optional prepayment of the Mortgage Loan, the Trustee shall not give notice
of redemption of the Bonds unless the Trustee has received moneys sufficient to pay principal of
and interest on the Bonds to be redeemed from such Mortgage Loan prepayment.
Section 7.04. Payment of Redemption Price. If (a) unconditional 'notice of
redemption has been duly published or duly waived by the owners of all Bonds called for
redemption or (b) conditional notice of redemption has been so given or waived and the
redemption moneys have been duly deposited with the Trustee, then in either case the Bonds
called for redemption shall be payable on the redemption date at the applicable redemption price.
Payment of the redemption price together with the premium, if any, and accrued interest shall be
made by the Trustee to or upon the order of the owners of the Bonds called for redemption upon
surrender of such Bonds. The redemption price and premium, if any, in respect of Bonds, the
expenses of giving notice and any other expenses of redemption (except accrued interest), shall
be paid out of the Fund from which redemption is to be made or from other moneys which the
Borrower makes available for such purpose. Accrued interest shall be paid out of the General
Receipts Fund.
Section 7.05. Bonds Redeemed in Part. Any Bond which is to be redeemed
only in part shall be surrendered at a place stated for the surrender of Bonds called for
redemption in the notice provided for in Section 7.03 (with due endorsement by, or a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the owner thereof or
his attorney duly authorized in writing) and the Town shall execute and the Trustee shall
authenticate and deliver to the owner of such Bond without service charge, a. new Bond or
Bonds, of any authorized denomination as requested by such owner in aggregate principal
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amount equal to and in exchange for the unredeemed portion of the principal of the Bond so
surrendered.
Section 7.06. Bond Redemption Fund for Refunding Issues. Whenever the
Town issues bonds for refunding purposes, the Town may direct the Trustee to establish a
separate bond redemption fund and to deposit therein the proceeds of the refunding bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default Defined. Any one of the following constitute
an "Event of Default" hereunder:
(a) Default in the payment of any interest on any Bond when and as the same
shall have become due.
(b) Default in the payment of the principal of or premium, if any, on any Bond
when and as the same shall become due, whether at the stated maturity thereof, or on
proceedings for redemption thereof, or on the maturity thereof by declaration, or upon
any Interest Payment Date.
(c) Default in the observance or performance of any other of the covenants,
agreements or conditions on the part of the Town included in this Indenture or the
Financing Agreement and on the part of the Borrower included in the Financing
Agreement (other than a Default set forth in Section 8.01(a)_ or (b) above), and the
continuance thereof for a period of 60 days after receipt of written notice to the Town and
the Borrower given by the Trustee.
Except for (i) a default under (a) or (b) of this Section 8.01, or (ii) the failure of
the Borrower to file any financial statements, documents or certificates specifically required to be
filed with the Trustee pursuant to the provisions of this Indenture or the Financing Agreement, or
(iii) any other event of which the "responsible trust officer" has "actual knowledge"' and which
event, with the giving of notice or lapse of time or both, would constitute an Event of Default
under this Indenture, the Trustee shall not be deemed to have notice of any default or event
unless specifically notified in writing of such event by the Town, or the owners of at least 25% in
aggregate outstanding principal amount of the Bonds. The Trustee shall immediately give notice
to the owners of the Bonds of the occurrence of any default or event of which it has, or is deemed
to have, notice pursuant to the foregoing provisions. As used above, the term "responsible trust
officer" means the trust officer of the Trustee assigned to supervise this Indenture, and "actual
knowledge" means the actual fact or statement of knowing, without any duty to make any
investigation with regard thereto.
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Section 8.02. Acceleration and Annulment Thereof. Subject to Section 8.06,
if any Event of Default occurs, the Trustee shall, upon request of owners of a majority in
aggregate principal of the Bonds, with respect to Events of Default described in Section 8.01(a)
and (b), and owners-of 100% of the Bonds, with respect to Events of Default described in
Section 8.01(c), by notice in writing to the Town and the Borrower declare the principal of all
Bonds then Outstanding to be immediately due and payable; and upon such declaration the said
principal, together with premium, if any, and interest accrued thereon, shall become due and
payable immediately at the place of payment provided therein, anything in the Indenture or in
said Bonds to the contrary notwithstanding; provided that, the principal of all Bonds shall be
deemed to be due and payable without declaration or further notice immediately upon the
occurrence of an Event of Default specified in Section 8.01(a) or (b) hereof.
If, after the principal of the Bonds has been so declared to be due and payable, all
arrears of interest upon such Bonds (and interest on overdue installments of interest at the rate
borne by such Bonds) are paid or caused to be paid by the Town, and the Town also performs or
causes to be performed all other things relating to such Bonds in respect to which it may have
been in default hereunder and the Borrower pays or causes to be paid the reasonable charges of
the Trustee. and the Bondholders, including reasonable attorney's fees, then, and in every such
case, by notice to the Town and the Borrower, the Trustee may annul such declaration and its
consequences and such annulment shall be binding upon the Trustee and upon all owners of
Bonds issued hereunder; but no such annulment shall extend to or affect any subsequent default
or impair any right or remedy consequent thereon.
Section 8.03. Legal Proceedings by Trustee. If any Event of Default has
occurred and is continuing, the Trustee in, its discretion may, and upon the written request of the
owners of a majority in aggregate principal amount of the Bonds and receipt of indemnity to its
satisfaction, shall, in its own name, or in combination with the Town:
A. By suit, action or proceeding at law or in equity, enforce all rights of the
Bondholders, including the right to require collection of the amounts payable under the Bonds
and to require the carrying out of any other provisions of this Indenture, the Financing
Agreement and the GNMA Securities for the benefit of the Bondholders;
B. Bring suit upon the Bonds or the GNMA Securities.;
C. By action or suit in equity enjoin any acts or things which may be
unlawful or in violation of the rights of the Bondholders.
Section 8.04. Waiver of Default; Discontinuance of Proceedings by Trustee.
To the extent not precluded by the Financing Agreement or Section 8.02 hereof, the Trustee may
waive any default or Event of Default hereunder, except for an Event of Default under
Section 8.01(a) or (b) hereof, and its consequences, and rescind any declaration of acceleration of
maturity of principal; provided, however, that there shall be no such waiver or rescission unless
the principal and interest on the Bonds in arrears, together with interest thereon (to the extent
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permitted by law) at the applicable rate or rates of interest borne by the Bonds and all fees and
expenses (including legal fees and costs) of the Trustee, shall have been paid or provided for.
Unless (i) any Rating Agency then rating the Bonds is notified, (ii) Bondholders are advised by
the Trustee that ratings on the Bonds may be reduced or withdrawn upon the occurrence of such
waiver, and (iii) 100% of the Bondholders otherwise approve, the Trustee may not waive any
default or Event of Default hereunder. If any proceeding taken by the Trustee on account of any
Event of Default is discontinued or is determined adversely to the Trustee, the Town, the Trustee
and the Bondholders shall be restored to their former positions and rights hereunder as though no
such proceeding had been taken, but subject to the limitations of any such adverse determination.
Section 8.05. Bondholders May Direct Proceedings. The owners of a majority
in aggregate principal amount of the Bonds shall have the right, by an instrument or concurrent
instruments in writing delivered to the Trustee, to direct the method and place of conducting all
remedial proceedings to be taken by the Trustee hereunder provided that such directions shall not
be otherwise than in accordance with the law or the provisions of this Indenture. Without
limitation of the foregoing, any such remedial proceeding may include forbearance or non-action
on the part of the Trustee and the waiver of claims or the granting of a covenant not to sue.
Section 8.06. Limitations on Actions by Bondholders. No Bondholders shall
have any right to pursue any remedy hereunder unless:
(a) the Trustee shall have been given written notice of an Event of Default,
(b) the owners of at least 25% in principal amount of the Bonds Outstanding
shall have requested the Trustee, in writing, to exercise the powers hereinabove granted
or to pursue such remedy in its or their name or names,
(c) the Trustee shall have been offered indemnity satisfactory to it against
costs, expenses and liabilities such satisfaction in.all respects subject to Section 8.13
hereof, and
(d) the Trustee shall have failed to comply with such request within a
reasonable time;
provided, however, that nothing herein shall preclude the owner of any Bond with respect to
which an Event of Default under Section 8.01(a) or (b) has occurred and is continuing from
bringing an action at law to enforce the right of payment on such Bond.
Section 8.07. Trustee May Enforce Rights Without Possession of Bonds. All
rights under this Indenture, the Financing Agreement, the GNMA Securities and the Bonds may
be enforced by the Trustee without the possession of any Bonds or the production thereof at the
trial or other proceedings relative thereto, and any proceedings instituted by the Trustee shall be
brought in its name for the ratable benefit of the owners of the Bonds, subject to the priorities
and limitations set forth in this Indenture.
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Section 8.08. Delays and Omissions Not to Impair Rights. No delay or
omission in respect of exercising any right or power accruing upon any Event of Default shall
impair such right or power or be a waiver of such Event of Default and every remedy given by
this Article may be exercised from time to time and as often as may be deemed expedient.
Section 8.09. Application of Moneys in Event of Default. Moneys realized by
the Trustee following its exercise of remedies hereunder shall be applied as provided below;
provided that (except as provided in the next sentence) amounts held in the Acquisition Account,
Available Moneys Account and Redemption Fund shall be applied solely to pay the principal of
and interest on the Bonds and will not be applied to pay any fees or expenses or advances of the
Trustee or the Town. Notwithstanding the previous sentence, in the case of the happening of an
Event of Default described in Section 8.01 (a) or (b) all moneys received by the Trustee pursuant
to any action taken under the Indenture shall be deposited into the Available Moneys Account of
the General Receipts Fund and applied to the payment of the unpaid fees and expenses of the
Trustee, including expenses, liabilities and advances incurred in taking such action and fees and
expenses of its attorneys before payment to Bondholders as follows:
(a) Unless the principal on all Bonds shall have become or been declared due
and payable, all such moneys shall be applied:
First-To the payment of all installments of interest then due on the Bonds and, if
the amount available shall not be sufficient to pay in full any particular installment, then
to the ratable payment of the amounts due on such installment, and
Second-To the payment of the unpaid principal of any of the Bonds which shall
have become due (other than Bonds called for redemption for payment of which moneys
are held pursuant to the provisions of this Indenture), with interest on such Bonds from
the respective dates upon which they became due (at the rate or rates borne by the Bonds,
to the extent permitted by law) and, if the amount available shall not be sufficient to pay
in full Bonds due on any particular date, together with such interest, then to the ratable
payment of the amounts due on such date.
(b) If the principal of all the Bonds shall have become or been declared due
and payable, all such moneys shall be applied first to the payment of the principal and
interest then due and unpaid upon the Bonds, without preference or priority of principal
over interest or of interest over principal, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably according to the
amounts due respectively for principal and interest to the persons. entitled thereto.
(c) If the principal on all the Bonds shall have been declared due and payable,
and if such declaration shall thereafter have been rescinded. under this Article, then,
subject to paragraph (b) of this Section in the event that the principal of all the Bonds
shall later become or be declared due and payable, the moneys shall be applied in
accordance with paragraph (a) of this Section.
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Whenever moneys are to be applied pursuant to this Section 8.09, such moneys
shall be applied at such times, and from time to time, as the Trustee shall determine, having due
regard for the amount of such moneys available for application, the likelihood of additional
moneys becoming available for such application in the future, and potential expenses relating to
the exercise of any remedy or right conferred on the Trustee by the Indenture. Whenever the
Trustee shall apply such moneys, it shall fix the date (which shall be an Interest Payment Date
unless it shall deem another earlier date more suitable) upon which such application is to be
made, and upon such date interest on the amounts of principal to be paid on such date shall cease
to accrue.
Section 8.10. Trustee and Bondholders Entitled to All Remedies; Remedies
Not Exclusive. It is the purpose of this Article to provide to the Trustee and the Bondholders all
rights and remedies as may be lawfully granted under State law; but should any remedy herein or
in the GNMA Securities or the Financing Agreement granted be held unlawful, the Trustee and
the Bondholders shall nevertheless be entitled to every remedy permitted under State law. It is
further intended that, insofar as lawfully possible, the provisions of this Article shall apply to and
be binding upon any trustee or receiver appointed under State law.
No remedy herein conferred is intended to be exclusive of any other remedy or
remedies, and each remedy is in addition to every other remedy given hereunder or under the
GNMA Securities or the Financing Agreement or now or hereafter existing at law or in equity or
by statute.
Section 8.11. Trustee's Right to Receiver. As provided by the Act, the Trustee
shall be entitled as of right to the appointment of a receiver ex parte and without notice; and the
Trustee, the Bondholders and any receiver so appointed shall have such rights and powers and be
subject to such limitations and restrictions as may be contained in or permitted by State law.
Section 8.12. Bankruptcy Proceedings. The Trustee is hereby authorized and
directed, on behalf of the owners of the Bonds, to file a proof or proofs of claim in any
bankruptcy, receivership or other insolvency proceeding involving the Town or the Borrower.
With respect to any matter in any such proceeding which requires the vote of any claimant, the
Trustee is hereby authorized and directed to vote on behalf and in the name of the owners of all
Bonds outstanding hereunder in the manner designated by the owners of a majority in principal
amount of the Bonds Outstanding.
Section 8.13. Certain Additional Provisions With Respect to Bondholder
Remedies, Receipt of Notice and Other Matters. In the event that a Bond is registered to a
nominee or a securities depository holding such Bond on behalf of a beneficial owner, for
purposes of consents to amendments, receipt of reports and notices and other actions hereunder,
and the direction of election of remedies and proceedings (including, without limitation,
acceleration and waiver of acceleration), the beneficial owner of such Bond upon provision of
reasonable evidence of its status as beneficial owner shall be deemed to be the holder hereunder
and shall have the right to give or receive the aforementioned consents, directions, reports and
notices hereunder.
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ARTICLE IX
THE TRUSTEE
Section 9.01. Acceptance of Trust. The Trustee accepts and agrees to execute
the trusts hereby created, but only upon the additional terms set forth in this Article, to all of
which the parties hereto and the Bondholders are bound.
Section 9.02. No Responsibility for Recitals, etc. The recitals, statements and
representations in the Indenture or in the Bonds, save only the Trustee's Certificate upon the
Bonds, have been made by the Town and not by the Trustee; and the Trustee shall be under no
responsibility for the correctness thereof.
The Trustee shall not be responsible for the validity or adequacy of this Indenture
or the Bonds or for the validity, priority, recording or re-recording, filing or re-filing of any
financing statements, amendments thereto or continuation statements, except as otherwise
provided in Section 5.06 hereof, provided that the Trustee shall be responsible for filing
continuation statements for the security interests granted under this Indenture, or for the Town's
use of the proceeds from the Bonds or any money paid under any provision hereof, or for the use
or application of any money received by any Paying Agent other than the Trustee, or for the
Borrower's use of proceeds of the Mortgage Loan or for the validity of the execution by the
Town of this Indenture or of any supplements thereto or instruments of further assurance, or for
the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby,
or for the value.or title of the Project or as to the maintenance of the security hereof; except that
in the event the Trustee enters into possession of a part or all of the Project pursuant to any
provision of this Indenture it shall use due diligence in preserving such property.
Section 9.03.. Trustee May Act Through Agents; Answerable Only for
Willful Misconduct or Negligence. The Trustee may exercise any powers hereunder and
perform any duties required of it through attorneys, agents, officers or employees, and shall be
entitled to advice of Counsel concerning all questions hereunder. The Trustee shall not be
answerable for the exercise of any discretion or power under this Indenture nor for anything
whatever in connection with the trust hereunder, except only its own willful misconduct or
negligence or that of its agents, officers and employees.
Section 9.04. Fees; Expenses. The Trustee shall be entitled to payment and/or
reimbursement for (a) reasonable Trustee Administrative Fee for its ordinary services rendered
hereunder and all advances, counsel fees (including in-house counsel), agent fees and other
ordinary expenses reasonably made or incurred by the Trustee in connection with such ordinary
services, which amounts shall be paid from amounts deposited in the Available Moneys Account,
and (b) in the event that it should become necessary that the Trustee perform extraordinary
services (including, without limitation, services rendered under Article VIII hereof and Section
12 of the Declaration of Restrictive Covenants), it shall be entitled to reasonable extra
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compensation therefor, which shall be payable by the Borrower, and to reimbursement for
reasonable extraordinary expenses in connection therewith, provided that if such extraordinary
services or extraordinary expenses in connection therewith are occasioned by the negligence or
willful misconduct of the Trustee it shall not be entitled to compensation or reimbursement
therefor.
. The Trustee shall also be indemnified by the Borrower as provided in the
Financing Agreement.
Section 9.05. Notice of Default; Right to Investigate The Trustee shall, within
five days after the occurrence thereof, give written notice by first-class mail to owners of Bonds,
the Town and the Underwriter of all defaults known to the Trustee and send a copy of such
notice to the Borrower, unless such defaults have been remedied (the term "defaults" for
purposes of this Section is defined to include the events specified in Section 8.01 hereof, not
including any notice or periods of grace provided for therein). The Trustee may, however, at any
time require of the Town full information as to the performance of any covenant hereunder; and,
if information satisfactory to it is not forthcoming, the Trustee may make or cause to be made an
investigation into the affairs of the Town related to this Indenture and the properties covered
hereby.
Section 9.06. Obligation to Act on Defaults. If any Event of Default shall have
occurred and be continuing, the Trustee shall exercise such of the rights and remedies vested in it
by this Indenture and shall use the same degree of care in their exercise as a prudent man would
exercise or use in the circumstances in the conduct of his own affairs; provided, that if in the
opinion of the Trustee such action may tend to involve expense or liability, it shall not be
obligated to take such action unless it is furnished with indemnity reasonably satisfactory to it.
Section 9.07. Provision of Fund Statements. The Trustee shall provide written
monthly fund statements by the 15th day of each month depicting the balances as of the end of
the preceding month in each fund and account established under this Indenture. The Trustee
shall furnish annually to any Bondholder or Beneficial Owner who requests in writing copies
thereof, and furnishes an address to which such reports and statements are to be sent, at the sole
cost and expense of such Bondholder or Beneficial Owner, copies of (a) any reports furnished to'
the Trustee with regard to the Project and (b) annual statements of the Trustee with regard to
fund balances under this Indenture. The Trustee shall also furnish to the Rating Agency and the
Town, such information in its possession as may be reasonably requested in writing by the
Rating Agency and the Town in order to maintain the rating on the Bonds.
Section 9.08. Reliance on Requisition, Counsel, Etc. The Trustee may act on
any requisition, resolution, notice, telegram, request, consent, waiver, certificate, statement,
affidavit, voucher, bond, or other paper or document which it in good faith believes to be genuine
and to have been passed or signed by the proper persons or to have been prepared and furnished
pursuant to any of the provisions of the Indenture; and the Trustee shall be under no duty to make
any investigation as to any statement contained in any such instrument, but may accept the same
as conclusive evidence of the accuracy of such statement.
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The Trustee will be entitled to rely upon opinions of Counsel and will not be
responsible for any loss or damage resulting from reliance in good faith thereon, except for its
own negligence or willful misconduct.
Section 9.09. Trustee May Own Bonds. The Trustee may in good faith buy,
sell, own and hold any of the Bonds and may join in any action which any Bondholders may be
entitled to take with like effect as if the Trustee were not a party to the Indenture. The Trustee
may also engage in or be interested in any financial or other transaction with the Town or the
Borrower, provided that if the Trustee determines that any such relation is in conflict with its
duties under this Indenture, it shall eliminate the conflict or resign as Trustee.
Section 9.10. Construction of Ambiguous Provisions. The Trustee may
construe any ambiguous or inconsistent provisions of this Indenture, and any such construction
by the Trustee shall be binding upon the Bondholders. In construing any such provision, the
Trustee will be entitled to rely upon opinions of Counsel and will not be responsible for any loss
or damage resulting from reliance in good faith thereon except for its own negligence or willful
misconduct.
Section 9.11. Resignation of Trustee. The Trustee may resign and be
discharged of the trusts created by this Indenture by written resignation filed with the Town and
the Borrower not less than 60 days before the date when it is to take effect, with copies of such
notice to the owners of the Bonds; provided notice of such resignation is mailed by registered or
certified mail to all Bondholders not less than three weeks prior to the date when the resignation
is scheduled to take effect. Such resignation shall take effect only upon the appointment of a
successor trustee.
Section 9.12. Removal of Trustee. Any Trustee hereunder may be removed at
any time by an instrument appointing a successor to the Trustee so removed, executed by the
Town Representative, if no Event of Default has occurred, or by the owners of a majority in
principal amount of the Bonds, filed with the Trustee and the Town. Such removal shall take
effect only upon the payment of all fees and expenses owed to the Trustee being removed and the
appointment of a successor trustee.
Section 9.13. Appointment of Successor Trustee. If the Trustee or any
successor trustee resigns or is removed (other than by owners of a majority in principal amount
of the Bonds pursuant to Section 9.12 hereof) or dissolved, or if its property or business is taken
under the control of any state or federal court or administrative body, a vacancy shall forthwith
exist in the office of the Trustee, and the Town (so long as there is no Event of Default
hereunder) with the consent of the Borrower (provided the Borrower is not in default under the
Financing Agreement), shall appoint a successor and shall mail notice of such appointment by
registered or certified mail to all Bondholders. If the Town fails to make such appointment
within 30 days after the date notice of resignation is filed, if there is an Event of Default
hereunder, or if the Trustee is removed by owners of a majority in principal amount of the Bonds
pursuant to Section 9.12 hereof, the owners of a majority in principal amount of the Bonds may
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appoint a successor Trustee. In the event that a successor trustee will receive fees in excess of
the fees received by the prior trustee, the appointment of such successor trustee shall be subject
to confirmation by the Rating Agency.
Section 9.14. Qualification of Successor. A successor trustee shall be a
national bank with trust powers or a bank and trust company or a trust company organized under
the laws of one of the States of the United States, in each case having capital and surplus of at
least. $50,000,000, if there be one able and willing to accept the trust on reasonable and
customary terms.
Section 9.15. Instruments of Succession. Any successor trustee shall execute,
acknowledge and deliver to the Town and the Borrower an instrument accepting such
appointment hereunder; and thereupon such successor trustee, without any further act,. deed or
conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts,
duties and obligations of its predecessor in the trust hereunder, with like effect as if originally
named Trustee herein. The Trustee ceasing to act hereunder shall pay over to the successor
trustee all moneys held by it hereunder; and, upon request of the successor trustee, the Trustee
ceasing to act and the Town shall execute and deliver an instrument transferring to the successor
trustee all the estates, properties, rights, powers and trusts hereunder of the Trustee ceasing to act.
The Town shall be provided with a copy of each instrument mentioned herein.
Section 9.16. Merger of Trustee. Any corporation into which any Trustee
hereunder may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which any Trustee hereunder shall be a party, shall be the
successor trustee under this Indenture, without the execution or filing of any paper or any further
act on the part of the parties hereto, anything herein to the contrary notwithstanding.
Section 9.17. Appointment of Co-Trustee. It is the purpose of this Indenture
that there shall be no violation of any law of any jurisdiction (including particularly. the laws of
the State of Colorado) denying or restricting the right of banking corporations or associations to
transact business as Trustee in such jurisdiction. It is recognized that in case of litigation under
this Indenture, and in particular in case of the enforcement of any such document in default, or in
case the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint an additional
individual or institution as a separate or Co-Trustee. The following provisions of this Section are
adopted to these ends.
The Trustee may appoint an additional individual or institution as a separate or
Co-Trustee, in which event such and every remedy, power, right, claim, demand, cause of action,
indemnity, estate, title, interest and lien expressed or intended by this Indenture to be exercised
by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or Co-Trustee but only to the extent necessary to enable such separate or
Co-Trustee.to exercise such powers, rights and remedies, and every covenant and obligation
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necessary to the exercise thereof by such separate or Co-Trustee shall run to and be enforceable
by either of them.
Should any deed, conveyance or instrument in writing from the Town be required
by the separate or Co-Trustee so appointed by the Trustee for more fully and certainly vesting in
and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and
all such deeds, conveyances and instruments in writing shall, on reasonable request, be executed,
acknowledged and delivered by the Town. In case any separate or Co-Trustee, or a successor to
either, shall die, become incapable of acting, resign or be removed, all the estates, properties,
rights, powers, trusts, duties and obligations of such separate or Co-Trustee, so far as permitted
by law, shall vest in and be exercisable by the Trustee until the appointment of a new Trustee or
successor to such separate or Co-Trustee.
Section 9.18. Intervention by Trustee. In any judicial proceeding to which the
Town is a party and which in the opinion of the Trustee and its Counsel has a substantial bearing
on the interests of owners of the Bonds, the Trustee may intervene on behalf of Bondholders and
shall do so if requested in writing by the owners of at last 25% in principal amount of Bonds then
Outstanding and furnished indemnity. The rights and obligations of the Trustee under this
Section are subject to the approval of a court of competent jurisdiction.
Section 9.19. Records. The Trustee shall file at least annually an accounting
(which may be the Trustee's regular statements) thereof with the Town, such accounting to
provide evidence as to the Trustee's possession of the GNMA Securities. Subject to reasonable
notice and such other reasonable regulations as the Trustee may impose, the Town and its duly
authorized agents shall have the right at all reasonable times during normal business hours with
reasonable prior notice to enter the offices of the Trustee to inspect and audit the books of the
Trustee as they relate to the duties and trusts imposed under this Indenture, the Town and its duly
authorized agents may make copies of any such records at their own expense, provided however,
the Town shall have no affirmative duty to perform any such inspection or audit hereunder.
ARTICLE X
ACTS OF BONDHOLDERS: EVIDENCE OF OWNERSHIP OF BONDS
Section 10.01. Acts of Bondholders; Evidence of Ownership. Any action to be
taken by Bondholders.may be evidenced by one or more concurrent written instruments of
similar tenor signed or executed by such Bondholders in person or by agent appointed in writing.
The fact and date of the execution by any person of any such instrument may be proved by
acknowledgment before a notary public or other officer empowered to take acknowledgments of
deeds or by an affidavit of a witness to such execution. Where such execution is by an officer of
a corporation or a member of a partnership, on behalf of such corporation or partnership, such
certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of
the execution of any such instrument or writing, or the authority of the person executing the
same, may also be proved in any other manner which the Trustee deems sufficient. The
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ownership of Bonds shall be proved by the Bond Register. Any action by the owner of any Bond
shall bind all future owners of the same Bond in respect of anything done or suffered by the
Town or the Trustee in pursuance thereof.
ARTICLE XI
AMENDMENTS AND SUPPLEMENTS
Section 11.01. Amendments and Supplements Without Bondholders'
Consent. This Indenture may be amended or supplemented at any time and from time to time,
without notice to or the consent of the Bondholders by a supplemental indenture authorized by a
Certified Resolution filed with the Trustee, and consented to by the Town, for one or more of the
following purposes:
(a) - to add additional covenants of the Town or to surrender any right or power
herein conferred upon the Town;
. (b) to cure any ambiguity or to cure, correct or supplement any defective
provision of this Indenture in such manner as shall not be inconsistent with this Indenture
and shall not impair the security hereof or adversely affect the Bondholders;
(c) to issue the Bonds of any series in coupon form or in form acceptable to
any securities depository, subject in each case to the receipt by the Trustee of an opinion
of Bond Counsel to the effect that any such changes will not adversely affect the
exemption of interest on the Bonds from federal income tax;
(d) to amend or supplement the provisions of this Indenture in a manner that
would not materially and adversely affect the existing owners of Bonds or the security
afforded by this Indenture; and
(e) to grant to or confer upon the Trustee for the benefit of the Bondholders
any additional rights, remedies, powers or authority that may lawfully be granted to or
conferred upon the Bondholders or the Trustee;
(f) to grant or pledge to the Trustee for the benefit of the Bondholders any
additional security other than that granted or pledged under this Indenture;
(g) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to permit the qualification hereof under the Trust
Indenture Act of 1939, as amended, or any similar federal statute then in effect, or to
permit the qualification of the Bonds for sale under the securities laws of any of the states
of the United States;
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(h) to appoint a successor trustee, separate trustee or co-trustee in the manner
provided in Article IX hereof;
(i) to comply with requirements of any Rating Agency which are determined
by the Trustee not to be materially adverse to the interests of the Bondholders;
0) to comply with regulations or rulings issued with respect to the Code or
otherwise to preserve the exclusion of interest on the Bonds from gross income for
federal income tax purposes, to the extent determined as necessary or desirable in Bond
Counsel's opinion; or
(k) to change or modify any provision of this Indenture in order to harmonize,
to the maximum extent possible, the provisions hereof with the applicable rules,
regulations and procedures of HUD, FHA and GNMA; or
(1) . to provide for the issuance of additional bonds under the Indenture to fund
the acquisition of additional GNMA Securities in the event that HUD approves an
increase in the amount of the Mortgage.
Copies of any such amendments or supplemental indentures shall be promptly
furnished to the Borrower by the Trustee.
Section 11.02. Amendments • With Bondholders' Consent. Other than.
amendments permitted under Section 11.01 hereof and amendments with respect to this
Article XI, this Indenture may be amended from time. to time only with the prior written consent
of the Town, by a supplemental indenture approved by the owners of a majority in principal
amount of the Bonds; provided, however, that nothing contained in this Section shall permit, or
be construed as permitting, (a) an extension of the maturity of the principal of, or the mandatory
redemption date of, or any date for payment of interest on, any Bond, or (b) a reduction in the
principal amount of, or the rate of interest on, any Bond, (c) a preference or priority of any Bond
or Bonds over any other Bond or Bonds, (d) the creation of a lien prior to the lien of this
Indenture, (e) a reduction in the aggregate principal amount of the Bonds required for consent to
any supplemental indenture, (f) a modification or change in the duties of the Trustee hereunder,
or (g) a change in the percentage of Bondholders necessary to waive an Event of Default or
otherwise approve matters requiring Bondholder approval hereunder, without the consent of
100% of the holders of the Bonds then Outstanding. Copies of any such amendments shall be
promptly furnished to the Borrower by the Trustee.
Section 11.03.Amendment of Financing Agreement. The Financing
Agreement may be supplemented and amended as necessary to facilitate the issuance from time
to time of the Bonds, to reflect the redemption of the Bonds, and as otherwise required or
requested by the Town or the Borrower from time to. time. If the Town and the Borrower
propose to amend the Financing Agreement, the Trustee may consent thereto without notice to or
consent. of any Bondholder; provided, that if such proposal would amend the Financing
Agreement in such a way as would materially and adversely affect the interests of the
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Bondholders, the Trustee shall notify Bondholders of the proposed amendment and may consent
thereto only with the written consent of the owners of a majority in principal amount of the
Bonds; provided, that no amendment shall be. consented to which adversely affects the rights of
some but less than all the Outstanding Bonds without the consent of the Owners of at least a
majority in aggregate principal amount of all the Outstanding Bonds so affected.
Notwithstanding anything in this Indenture to the contrary, no amendment to the Financing
Agreement which affects the rights, duties, obligations or immunities of the Trustee may be
effected without the express written consent of the Trustee.
Section 11.04. Waivers. The Trustee shall not waive, on its own behalf or on
behalf of the Issuer, any obligation of the Borrower under the Financing Agreement.
Section 11.05. Consent of Borrower. Anything herein to the contrary
notwithstanding, a supplemental indenture, amendment or other document described under this
Article VIII which affects any rights or obligations of the Borrower shall not become effective
unless and until the Borrower shall have consented in writing. to the execution of such
supplemental indenture, amendment or other document.
Section 11.06. Opinion of Counsel and Consent of FHA Required. The
Trustee shall not consent to any supplemental indenture or any amendment, change or
modification of the Financing Agreement or the FHA Documents unless (i) there shall have been
filed with the Trustee an Opinion of Counsel that such supplemental indenture or such
amendment, change or modification is authorized or permitted by this Indenture and complies
with its terms and that on execution it will be valid and binding on the party or parties executing
it in accordance with its terms and (ii) with respect to the FHA Documents, the Trustee has
received the prior written consent of FHA.
ARTICLE XII.
DEFEASANCE
Section 12.01. Defeasance. When the principal or redemption price (as the case
may be) of, and premium, if any, and interest on, all Bonds issued hereunder, and all other
amounts due under this Indenture have been paid, or provision has been made for payment of the
same, together with all other sums payable hereunder to the Town and the Trustee, the Trustee's
right, title and interest in this Indenture and the moneys payable hereunder shall thereupon cease
and the Trustee, shall release this Indenture in respect thereto and shall execute such documents
to evidence such release as may be reasonably required by the Town, shall turn over to the
Borrower or its assigns all balances then held by it hereunder not required for the payment of the
Bonds and such other sums, shall take all action necessary to forgive or cause forgiveness of the
outstanding balance of the Mortgage Loan and shall cancel and return to the Lender all GNMA
Securities then held by the Trustee.
Without limiting the generality of the foregoing, provision for the payment of
Bonds shall be deemed to have been made (a) upon the delivery to the Trustee of (i) Available
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Moneys in an amount sufficient to make all payments specified above, or (ii) non-callable
Government Obligations, maturing on or before the date or dates when the payments specified
above shall become due, the principal amount of which and the interest thereon, when due, is or
will be, in the aggregate, sufficient without reinvestment to make all such payments, or (iii) any
combination of Available Moneys and such Obligations; (b) any Bonds to be redeemed prior to
maturity shall have been duly called for redemption or irrevocable instructions to call such Bonds
for redemption shall have been given to the Trustee; and (c) an opinion of Bond Counsel
acceptable to the Trustee that any exclusion from gross income for federal income tax purposes
of the interest on the Outstanding Bonds will not be impaired by the defeasance: Upon request of
the Trustee, the Trustee shall also receive a report from an accountant verifying to the Trustee's
satisfaction that the Available Moneys and Government Obligations delivered will be sufficient
to provide for the payment of the Bonds as aforesaid. Neither the obligations nor moneys
deposited with the Trustee pursuant to this Section shall be withdrawn or used for any purpose
other than, and shall be segregated and held in trust for, the payment of the principal or
redemption price of, and premium, if any, and interest, on the Bonds. In the event that such
moneys or obligations are to be applied to the payment of principal or redemption price of any
Bonds more than 60 days following the deposit thereof with the Trustee, the Trustee shall
publish once in an Authorized Newspaper, and send by registered mail to each owner of Bonds, a
notice stating that such moneys or obligations have been deposited and identifying the Bonds for
the payment of which such moneys or obligations are being held.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. No Personal Recourse. No recourse shall be had for any claim
based on the Indenture or the Bonds, including but not limited to the payment of the principal or
redemption price of, or premium, if any, or interest on, the Bonds, against any council member,
officer, agent or employee, past, present or future, of the Town or of any successor body, as such,
either directly or through the Town or any such successor body, under any constitutional
provision, statute or rule of law or by the enforcement of any assessment or penalty or by any
legal or equitable proceeding or otherwise.
Section 13.02. Deposit of Funds for Payment of Bonds. If there are on deposit
with the Trustee funds (including proceeds of government obligations as provided in
Section 12.01) sufficient to pay the principal or redemption price of any Bonds becoming due,
either at maturity or by call for redemption or otherwise, together with the premium, if any, and
all interest accruing thereon to the due date, all interest on such Bonds shall cease to accrue on
the due date and all liability with respect to such Bonds shall likewise cease, except as
hereinafter provided. Thereafter the owners of such Bonds shall be restricted exclusively to the
funds so deposited for any claim of whatsoever nature with respect to such Bonds and the
Trustee shall hold such funds in trust for such owners.
Moneys (including proceeds of government obligations as provided in
Section 12.01) so deposited with the Trustee which remain unclaimed three years after the date
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payment thereof becomes due shall, if the Town is not at the time, to the knowledge of the.
Trustee, in default with respect to any covenant in the Indenture or the Bonds, be paid to the
Town, unless there is a dispute as to the payment thereof, upon receipt by the Trustee of
indemnity satisfactory to it, and the owners of the Bonds for which the deposit was made shall
thereafter be limited to a claim against the Town; provided, however, that the Trustee, before
making payment to the Town, may send notice by registered mail to each owner of Bonds who
hasn't claimed such moneys at such owner's last known address, stating that the moneys
remaining unclaimed will be returned to the Town after a specified date.
Upon the deposit with the Trustee of funds for the payment of any Bonds as
contemplated by Section 12.01 and this Section 13.02, the Town's liability with respect to such
Bonds shall be satisfied in full, regardless of the source of payment of such Bonds.
Section 13.03. Notices to Rating Agency. (a) The Trustee shall, if the Bonds are
then rated by a Rating Agency, give prior written notice to that Rating Agency of the following:
(i) any change in the Trustee serving under this Indenture (including
appointment of successor Trustee or co-Trustee);
(ii) any modifications, amendments, supplements or revisions to this Indenture
or the Financing Agreement;
(iii) any optional or mandatory redemption or defeasance of the Bonds in
whole;
(iv) any pending sale of collateral securing the Bonds (including any portion of
the Trustee Estate or GNMA Securities);
(v) the acquisition of the PLC;
(vi) any partial prepayment of the Mortgage Loan; or
(vii) any new provider of the Investment Agreement.
(b) The Trustee shall, if the Bonds are then rated by a Rating Agency, give
notice by mail to that Rating Agency upon the occurrence of any of the following:
(i) an Event of Default hereunder;
(ii) the acquisition of the initial CLC; or
(iii) an extension of the period for acquisition of the PLC.
Section 13.04. GNMA/HUD Documents and Regulations Control.
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(a) To the extent that there is any conflict, inconsistency or ambiguity
between or among this Indenture and (i) any applicable FHA mortgage insurance, or
other applicable FHA or GNMA statutory, regulatory or administrative requirements,
(ii) any of the documents which have been or are required by FHA and/or the Lender to
be executed by the Borrower, FHA and/or the Lender in connection with the subject
transaction (each, an "FHA Loan Document," or collectively, the "FHA Loan
Documents" as the context may require) or (iii) any of the documents which have been or
are required by GNMA to be executed by the Borrower, FHA, GNMA and/or the Lender
in connection with the subject transaction (each, a "GNMA Document" or collectively,
the "GNMA Documents" as the context may require), said FHA mortgage insurance and
other applicable FHA and GNMA statutory, regulatory and administrative requirements
and said FHA Loan Documents and GNMA Documents will be deemed to be controlling
and any such ambiguity or inconsistency will be resolved in favor of, and pursuant to the
FHA mortgage insurance, and other. applicable FHA and GNMA statutory, regulatory or
administrative requirements and the terms of the FHA Loan Documents and GNMA
Documents, as applicable. For purposes hereof, the reference to FHA's statutory,
regulatory and administrative requirements shall be deemed to include, but shall not be
limited to, any statutory, regulatory or administrative requirements pertaining to Section 8
of the United States Housing Act of 1937, as may be applicable. 'The parties hereto agree
to amend this instrument as may be necessary or required by FHA, GNMA or the Lender
to conform this instrument to the above-cited requirements and FHA Loan Documents
and GNMA Documents. In addition, it is understood and agreed that any default under
this Indenture shall not constitute a default under the FHA Loan Documents or the
GNMA Documents; and further, that nothing herein contained shall be construed to limit
or affect the Lender's rights under the FHA Loan Documents or the GNMA Documents.
. (b) Notwithstanding anything contained to the contrary herein, the
enforcement of this Indenture shall not result in any claim against the Project, the
proceeds of the Mortgage Loan, any reserve or deposit made with FHA or the Lender or
another person or entity required by FHA or the Lender in connection with the Mortgage
Loan or against the rents or other income from the Project except to the extent of
"Residual Receipts" (as such term is defined in the FHA Regulatory Agreement)
available for distribution to the Borrower.
(c) With respect to each provision herein requiring the Borrower or any other
party to the transaction to take any action necessary to preserve the tax exemption of
interest on the Series 2002A Bonds, or prohibiting the Borrower or any other party to the
transaction from taking any action that might jeopardize such tax exemption, each such
provision shall not apply to, or operate to prohibit (or require), any actions required (or
prohibited) by FHA, GNMA or the Lender pursuant to (i) the National Housing Act,
including, but not limited to, any applicable FHA mortgage insurance or other FHA or
GNMA statutory,. regulatory or administrative requirements therein contained or
promulgated thereunder or (ii) any of the FHA Loan Documents and the GNMA
Documents, as applicable.
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(d) Notwithstanding any provision of this Indenture to the contrary, the parties
hereto acknowledge and agree that all of their respective rights and powers under this
Indenture are subordinate and subject to the lien of the Mortgage created by the Borrower
in favor of the Lender under the FHA Loan Documents, together with any and all
amounts from time to time secured thereby, and interest thereon, and to all of the terms
and provisions of the Mortgage, and any and all other FHA Loan Documents and GNMA
Documents executed by the Borrower, FHA, GNMA and/or the Lender, as required by
FHA, GNMA or the Lender in connection with the Mortgage Loan.
(e) Notwithstanding any provision contained in this Indenture to the contrary,
the transfer restrictions contained herein shall in no way be deemed to affect or otherwise
impair the rights of FHA or the Lender, as applicable, to approve or disapprove the
proposed sale or transfer of the Project as required by the FHA Regulatory Agreement.
The decision of FHA or the Lender, as applicable, with respect to any such proposed sale
or transfer of the Project will be binding and determinative on the parties hereto,
notwithstanding the approval or disapproval by the Trustee of any such proposed sale or
transfer.
(f) Any Project funds held by Lender for or on behalf of the Borrower shall be
maintained separate and apart from the funds established and held by the Trustee for the
holders of the Bonds and the various escrows and funds, if any, under this Indenture.
(g) This Indenture shall not be construed to restrict or adversely affect the
duties and obligations of the Lender under the Contract of Mortgage Insurance between
the Lender and HUD with respect to the Mortgage Loan.
(h) Nothing in this Section 13.04 shall be interpreted to create any pecuniary
liability upon the Town or a charge against its general credit or taxing powers.
Section 13.05. No Rights Conferred on Others. Nothing herein contained shall
confer any right upon any person other than the parties hereto, the owners of the Bonds, and the
Lender.
Section 13.06. Illegal, etc. Provisions Disregarded. In case any provision in
this Indenture or the Bonds shall for any reason be held invalid, illegal or unenforceable in any
respect, this Indenture shall be construed as if such provision had never been contained herein.
Section 13.07. Substitute Notice. If for any reason it shall be impossible to
make publication of any notice required hereby in an Authorized Newspaper, then such
publication in lieu thereof as shall be made with the approval of the Trustee shall constitute a
sufficient publication of such notice.
Section 13.08. Notices to Trustee, Town and Lender. . Any notice to or
demand upon the Trustee may be served, presented or made at its principal operations center at
Wells Fargo Bank West, National Association, 1740 Broadway, Denver, Colorado 80274,
70
MME - 66374/8 - A 130700 v2
Attention: Corporate Trust Department. Any notice to or demand upon the Town shall be deemed
to have been sufficiently given or served by the Trustee for all purposes by being sent by
registered United States mail to Town of Avon, 400 Benchmark Road, P.O. Box 975, Avon,
Colorado 81620, Attention: , or such other address as may be filed in writing by the
Town with the Trustee. Any notice to or demand upon the Borrower shall be deemed to have
been sufficiently given or served by the Trustee for all purposes.by being sent by registered
United States mail to , , Attention:
, or such other address as may be filed in writing by the Borrower with the Trustee.
Notices or demands on the Lender shall be given to ANH Capital, Inc.,
Attention:
Section 13.09. Successors and Assigns. All the covenants, promises and
agreements in this Indenture contained by or on behalf of the Town, or by or on behalf of the
Trustee, shall bind and inure to. the. benefit of their respective successors and assigns, whether so
expressed or not.
Section 13.10. Headings for Convenience Only.. The descriptive headings in
this Indenture are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 13.11. Counterparts. This Indenture maybe executed in any number of
counterparts, each of which when so executed and delivered shall be an original; but such
counterparts shall together constitute but one and the same instrument.
Section 13.12. Information Under Commercial Code. The following
information is stated in order to facilitate filings under the Uniform Commercial Code:
The secured party is Wells Fargo Bank West, National Association. Its address
from which information concerning the security interest may be obtained is 1740 Broadway,
Denver, Colorado 80274. The debtor is Town of Avon, Colorado. Its mailing address is P.O.
Box 975, Avon, Colorado 81620.
Section 13.13. Payments Due On Saturdays, Sundays and Holidays. In any
case where the date of maturity of interest on or principal of the Bonds or the date fixed for
redemption of any bonds shall be a Saturday or Sunday or a legal holiday or a day on which
banking institutions in the city of payment are authorized by law to close, then payment of
interest, premium, if any, or principal or redemption price need not be made on such date but
may be made on the next succeeding business day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest on such payment. shall
accrue for the period after such date.
Section 13.14. Applicable Law. This Indenture shall be, governed by and
construed in accordance with the laws of the State of Colorado.
71
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IN. WITNESS WHEREOF, intending to be legally bound, TOWN OF AVON,
COLORADO, has caused this Indenture to be executed by its Mayor and its seal to be hereunto
affixed and attested by its Town Clerk, WELLS FARGO BANK WEST, NATIONAL
ASSOCIATION, as Trustee, has caused this Indenture to be executed by one of its
Vice-Presidents, Assistant Vice-Presidents or Trust Officers and its seal to be hereunto affixed
and attested by one of its duly authorized officers, all as of the day and year first above written.
[SEAL]
TOWN OF AVON, COLORADO
Attest: By:
Town Clerk
[SEAL]
Attest: By:
Authorized Officer
WELLS FARGO BANK WEST,
NATIONAL ASSOCIATION
Trustee
Vice President/Trust Officer
72
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STATE OF COLORADO )
ss:
COUNTY OF EAGLE )
On this, the day of April, 2002, before me, the undersigned notary public,
personally appeared Judy Yoder and , who acknowledged themselves to be Mayor
and Town Clerk, respectively, of TOWN OF AVON, COLORADO, that, as such officials, being
authorized to do so, executed the foregoing instrument for the purposes therein contained by
signing and attesting the name of said Town as such officials.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
My commission expires:
Notary Public
[NOTARIAL SEAL]
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
On. this, the day of April, 2002, before me, the undersigned notary public,
personally appeared , who acknowledged himself/herself to be a Vice
President of Wells Fargo Bank West, National Association, and that he/she, as such officer,
being authorized to do so, executed the foregoing instrument for the purposes therein contained
by signing the name of said Bank by himself/herself as such officer.
I hereby certify that I am not a director or officer of the above named Bank.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
My commission expires:
Notary Public
[NOTARIAL SEAL]
71
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DRAFT: 02/5/02
TOWN OF AVON, COLORADO
to
WELLS FARGO BANK WEST, NATIONAL ASSOCIATION
as Trustee
TRUSTINDENTURE
Dated as of April 1, 2002
Securing
Town of Avon, Colorado
Multifamily Housing Project Revenue Bonds,
(GNMA Mortgage-Backed Securities Program-Buffalo Ridge II Apartments Project)
Series 2002
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DRAFT: 02/5/02
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND REPRESENTATIONS OF THE TOWN .................11
Section 1.01. Definitions ......................................................................................................11
Section 1.02. Representations of the Town .........................................................................24
ARTICLE II
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
Section 2.07.
Section 2.08.
Section 2.09.
Section 2.10.
Section 2.11.
Section 2.12.
THE BONDS .................................................................................................24
Amounts and Terms .......................................................................................24
Interest Accrual .......... ....................................................................................26
Bond Registrar and Bond Register ................................................................26
Registration, Transfer and Exchange .............................................................27
Execution ........................................................................................................28
Authentication ................................................................................................28
Payment of Principal and Interest; Interest Rights Preserved .......................28
Persons Deemed Owners ...............................................................................28
Mutilated, Destroyed, Lost or Stolen Bonds .................................................29
Temporary Bonds ...........................................................................................29
Cancellation and Destruction of Surrendered Bonds ....................................30
Book-Entry System ...............................................:........................................30
ARTICLE III ISSUE OF BONDS ........................................................................................32
Section 3.01. Issue of Bonds ................................................................................................32
Section 3.02. Unrelated Bond Issues ..................................................................................32
Section 3.03. Disposition of Proceeds of Bonds ..................................................................34
ARTICLE IV PLEDGE OF TRUST ESTATE, REVENUES AND FUNDS .................... 34
Section 4.01. Pledge of Trust Estate .................................................................................... 34
Section 4.02. Establishment of Funds .................................................................................. 35
Section 4.03. General Receipts Fund ................................................................................... 35
Section 4.04. Project Fund ................................................................................................... 37
Section 4.05. Redemption Fund ........................................................................................... 42
Section 4.06. Excess Investment Earnings Fund ................................................................. 42
Section 4.07. Instruments of Further Assurance .................................................................. 43
Section 4.08. No Disposition of GNMA Securities ............................................................. 43
Section 4.09. Preservation of Trust Estate ........................................................................... 44
ARTICLE V COVENANTS AND AGREEMENT OF THE TOWN ...............................44
Section 5.01. Performance of Covenants .............................................................................44
Section 5.02. Further Assurances .........................................................................................44
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Section 5.03. No Other Encumbrances ................................................................................ 45
Section 5.04. Reports ............................................................................................................ 45
Section 5.05. Tax Covenants ................................................................................................ 45
Section 5.06. Town's Obligation Limited ............................................................................ 46
Section 5.07. Conditions Precedent ..................................................................................... 46
Section 5.08. Financing Statements ..................................................................................... 46
ARTICLE VI SECURITY FOR AND INVESTMENT OR DEPOSIT OF FUNDS .........47
Section 6.01. Deposits and Security Therefor ................................:....................................47
Section 6.02. Investment or Deposit of Funds ................................................:........:...........47
ARTICLE VII REDEMPTION OF BONDS .........................................................................48
Section 7.01. Bonds Subject to Redemption; Selection of Bonds to be Called for
Redemption ....................................................................................................48
Section 7.02. Redemption of Bonds ....................................................................................48
Section 7.03. Notice of Redemption ....................................................................................52
Section 7.04. Payment of Redemption Price .......................................................................53
Section 7.05. Bonds Redeemed in Part ................................................................................53
Section 7.06. Bond Redemption Fund for Refunding Issues ..............................................54
ARTICLE VIII
Section 8.01.
Section 8.02.
Section 8.03.
Section 8.04.
Section 8.05.
Section 8.06.
Section 8.07.
Section 8.08.
Section 8.09.
Section 8.10.
Section 8.11.
Section 8.12.
Section 8.13.
EVENTS OF DEFAULT AND REMEDIES ...............................................54
Events of Default Defined ..............................................................................54
Acceleration and Annulment Thereof ...........................................................55
Legal Proceedings by Trustee ........................................................................55
Waiver of Default; Discontinuance of Proceedings by Trustee ....................55
Bondholders May Direct Proceedings ...........................................................56
Limitations on Actions by Bondholders ........................................................56
Trustee May Enforce Rights Without Possession of Bonds .....:................... 56
Delays and Omissions Not to Impair Rights .................................................57
Application of Moneys in Event of Default ..................................................57
Trustee and Bondholders Entitled to All Remedies; Remedies Not
Exclusive ........................................................................................................ 58
Trustee's Right to Receiver ............................................................................58
Bankruptcy Proceedings ................................................................................58
Certain Additional Provisions With Respect to Bondholder
Remedies, Receipt of Notice and Other Matters ...........................................58
ARTICLE IX THE TRUSTEE .............................................................................................59
Section 9.01. Acceptance of Trust .......................................................................................59
Section 9.02. No Responsibility for Recitals, etc ................................................................59
Section 9.03. Trustee May Act Through Agents; Answerable Only for Willful
Misconduct or Negligence .............................................................................59
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Section 9.04. Fees; Expenses ............................................................................................... 59
Section 9.05. Notice of Default; Right to Investigate .......................................................... 60
Section 9.06. Obligation to Act on Defaults ........................................................................ 60
Section 9.07. Provision of Fund Statements ........................................................................ 60
Section 9.08. Reliance on Requisition, Counsel, Etc .......................................................... 60
Section 9.09. Trustee May Own Bonds ............................................................................... 61
Section 9.10. Construction of Ambiguous Provisions ......................................................... 61
Section 9.11. Resignation of Trustee ................................................................................... 61
Section 9.12. Removal of Trustee ........................................................................................61
Section 9.13. Appointment of Successor Trustee ................................................................61
Section 9.14. Qualification of Successor .............................................................................62
Section 9.15. Instruments of Succession ..............................................................................62
Section 9.16. Merger of Trustee ...........................................................................................62
Section 9.17. Appointment of Co-Trustee ...........................................................................62
Section 9.18. Intervention by Trustee ..................................................................................63
Section 9.19. Records ...........................................................................................................63
ARTICLE X ACTS OF BONDHOLDERS: EVIDENCE OF OWNERSHIP OF
BONDS ..........................................................................................................63
Section 10.01. Acts of Bondholders; Evidence of Ownership ..............................................63
ARTICLE XI AMENDMENTS AND SUPPLEMENTS ....................................................64
Section 11.01. Amendments and Supplements Without Bondholders' Consent .................. 64
Section 11.02. Amendments With Bondholders' Consent ....................................................65
Section 11.03. Amendment of Financing Agreement ...........................................................65
Section 11.04 Waivers ............................................................................................................66
Section 11.05. Consent of Borrower ......................................................................................66
Section 11.06. Opinion of Counsel and Consent of FHA Required .....................................66
ARTICLE X11 DEFEASANCE ..............................................................................................66
Section 12.01. Defeasance ......................................................................................................66
ARTICLE )(III MISCELLANEOUS PROVISIONS .......................................................................67
Section 13.01. No Personal Recourse ....................................................................................67
Section 13.02. Deposit of Funds for Payment of Bonds .......................................................67
Section 13.03. Notices to Rating Agency ..............................................................................68
Section 13.04. GNNL /HUD Documents and Regulations Control .....................................68
Section 13.05. No Rights Conferred on Others .....................................................................70
Section 13.06. Illegal, etc. Provisions Disregarded ...............................................................70
Section 13.07. Substitute Notice ............................................................................................70
Section 13.08. Notices to Trustee, Town and Lender ............................................................70
Section 13.09. Successors and Assigns ..................................................................................71
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Section 13.10. Headings for Convenience Only ....................................................................71
Section 13.11. Counterparts ...................................................................................................71
Section 13.12. Information Under Commercial Code ...........................................................71
Section 13.13. Payments Due On Saturdays, Sundays and Holidays ...................................71
Section 13.14. Applicable Law ...................................................................................:..........71
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XMDB - 66374/8 - #130700 V2
PSW Draft 2/06/02
TOWN OF AVON, COLORADO
$11,100,000
Multifamily Housing Project Revenue Bonds
(GNMA Mortgage - Backed Securities Program - Buffalo Ridge H Apartments Project) Series 2002A
and
$4,205,000
Taxable Multifamily Housing Project Revenue Bonds
(GNMA Mortgage - Backed Securities Program - Buffalo Ridge II Apartments Project) Series 2002B
BOND PURCHASE AGREEMENT
Town of Avon
400 Benchmark Road
Avon, Colorado 81620
Attention: Larry Brooks
Colleagues:
Buffalo Ridge II LLLP
c/o Corum Real Estate Group
28 Second Street, Suite 215
Edwards, Colorado 81632
Attention: Gerry Flynn
April , 2002
Kirkpatrick Pettis (the "Underwriter") hereby offers to enter into the following agreement
with the Town of Avon, Colorado (the "Issuer") and Buffalo Ridge II LLLP (the "Borrower"), for the sale
by the Issuer on behalf of the Borrower and the purchase by the Underwriter of the Bonds described below.
Upon your acceptance of this offer and your execution and delivery of this Agreement, this Agreement will
be binding upon each of you and the Underwriter. This offer is made subject to your acceptance, evidenced
by your execution and delivery of this Agreement to the Underwriter, at or prior to 5:00 p.m., mountain
time, on the date hereof, and will expire if not so accepted at or prior to such time (or such later time as the
Underwriter may agree in writing). ,
Section 1. Definitions. The capitalized terms used in this Agreement have the meanings assigned to them
in the Glossary of Terms attached as Exhibit A hereto or as defined in the Trust Indenture. .
Section 2. Purchase and Sale.
2.1 Subject to the terms and conditions set forth in this Agreement, the Underwriter will
purchase all (but not less than all) of the Bonds identified in Item 1 in Exhibit B attached hereto for a total
purchase price equal to the aggregate purchase price set forth as Item 2 on Exhibit B attached hereto.
2.2 The Bonds will (i) be issued pursuant to the Trust Indenture and (ii) have the payment
related terms (that is, the dated date, maturity date, interest rate, interest payment dates, and redemption
provisions) set forth in Item 3 of Exhibit B attached hereto, and will otherwise correspond to the description
thereof contained in the Official Statement.
2.3 The Underwriter will make a bona fide public offering of the Bonds at the initial price
or prices shown in the Official Statement only in a manner consistent with applicable federal and state
securities laws. The Underwriter reserves the right to change such prices as it deems necessary in
connection with the offering of the Bonds. Concessions from the public offering price may be allowed to
selected dealers and special purchasers. The Issuer and the Borrower authorize the Underwriter to complete
the inside front cover page of the Official Statement to insert the offering prices for the Bonds selected by
the Underwriter in its complete discretion.
Section 3. Official Statement: the Issuer
3.1 The Issuer hereby acknowledges the use by the Underwriter of the Preliminary Official
Statement in respect of the Bonds dated March 2002 and acknowledges the preparation and use by the
Underwriter (at the expense of the Borrower) of the Official Statement in final form in connection with the
offering and sale of the Bonds.
. 3.2 During the period commencing on the date hereof and ending 25 days following the
End of the Underwriting Period, if the Issuer becomes aware of any event shall occur which might or would
cause the Official Statement to contain any untrue statement of a material fact or to omit to state any
material fact necessary to make the statements therein, in the light of the circumstance under which they
were made, not misleading, and in the judgment of the Underwriter, such event requires the preparation and
publication of a supplement or amendment to the Official Statement, the Issuer will advise the Underwriter
and the Borrower and the Borrower will prepare or cooperate in the preparation of such supplement or
amendment to the Official Statement in a form approved by the Underwriter and furnish or cooperate in the
furnishing to the Underwriter (at the expense of the Borrower) a reasonable number of copies of an
amendment of, or a supplement to, the Official Statement so that, as amended or supplemented, it will not
contain any untrue statement of a material fact or omit to state a material fact that is necessary to make the
statements made therein, in light of the circumstances under which they were made, not misleading. If the
Official Statement is so supplemented or amended prior to the Closing, the approval by the Underwriter of a
supplement or amendment to the Official Statement shall not preclude the Underwriter from thereafter
terminating this Agreement in accordance with the provisions of Section 12(d) hereof. The Underwriter
will undertake to file the Official Statement with the Municipal Securities Rulemaking Board and one or
more nationally recognized municipal securities information repositories as and to the extent required of the
Underwriter by federal law or regulation. The "End of the Underwriting Period" means the later of the
delivery of the Bonds by the Issuer to the Underwriter or when an Underwriter no longer retains (directly or
as a syndicate member) an unsold balance of the Bonds for sale to the public; provided, that the "End of the
Underwriting Period" shall be deemed to be the Closing Date, unless the Underwriter otherwise notifies the
Issuer and the Borrower in writing prior to such date that there is an unsold balance of the Bonds, in which
case the End of the Underwriting Period shall be deemed to be extended for 30 days. The deemed End of
the Underwriting Period may be extended for two additional periods of 30 days each upon receipt of an
additional written notification from the Underwriter containing the same information as required in the
initial written notice.
3.3 If, during the period referred to in the preceding paragraph, the Issuer becomes aware
of any event which might or would cause the Official Statement to contain any untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein, in the light of the
circumstance under which they were made, not misleading, the Issuer will promptly notify the Underwriter
of such event.
64.185.02 (02/06/02) PSW JWP/gag
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3.4 The Issuer has not participated in the preparation of the Official Statement and
makes no representations with respect thereto except as expressly set forth in Section 6.1(g) hereof.
Section 4. Official Statement: the Borrower
4.1 The Borrower hereby ratifies the use by the Underwriter of the Preliminary Official
Statement in respect of the Bonds dated March 2002 and approves the form of the Official Statement
and authorizes the Underwriter to prepare and use (at the expense of the Borrower) the Official Statement in
final form in connection with the offering and sale of the Bonds. As of its date, the Preliminary Official
Statement has been "deemed final" by the Borrower for purposes of Rule 150-12 promulgated under the
Securities Exchange Act of 1934, as amended. The Borrower's acceptance, execution and delivery of this
Agreement will constitute its consent and authorization to the use by the Underwriter, in connection with
the offering and sale of the Bonds, of copies of the Official Statement and the information contained therein.
4.2 The Borrower agrees to deliver to the Underwriter (at the Borrower's expense) at such
addresses as the Underwriter shall specify as many copies of the Official Statement as the Underwriter shall
request as necessary to enable the Underwriter to comply with Rule G-32 and all other applicable rules of
the Municipal Securities Rulemaking Board. The Borrower agrees to deliver such Official Statement within
seven business days after the execution thereof or by the Closing Date, whichever occurs first.
4.3 If, during the period commencing on the date hereof and ending 25 days following the
End of the Underwriting Period, the Borrower becomes aware of any event which might or would cause the
Official Statement to contain any untrue statement of a material fact or to omit to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading, the Borrower will promptly notify the Underwriter of such event. If, in the judgment of the
Underwriter, such event requires the preparation and publication of a supplement or amendment to the
Official Statement, the Borrower will supplement or amend the Official Statement in a form approved by
the Underwriter and furnish to the Underwriter (at the expense of the Borrower) a reasonable number of
copies of an amendment of, or a supplement to, the Official Statement so that, as amended or supplemented,
it will not contain any untrue statement of a material fact or omit to state a material fact that is necessary to
make the statements made therein, in light of the circumstances under which they were made, not
misleading. If the Official Statement is so supplemented or amended prior to the Closing, the approval by
the Underwriter of a supplement or amendment to the Official Statement shall not preclude the Underwriter
from thereafter terminating this Agreement in accordance with the provisions of Section 12(d) hereof.
Section 5. Closin .
The Closing will take place at the time on the date set forth in Item 4 of Exhibit B or at such other
time or on such other date as might have been mutually agreed upon by the Issuer, the Borrower and the
Underwriter.
Section 6. Representations and Warranties of the Issuer.
6.1 The Issuer hereby makes the following representations and warranties to the
Underwriter:
64185.02 (02/06/02) PSW JWP/gag
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(a) The Issuer is duly organized and existing under and pursuant to the
constitution and the laws of the State of Colorado.
(b) The Issuer has, and as of the Closing Date will have, full legal right, power
and authority to (i) execute and deliver the Issuer Documents and (ii) otherwise consummate the
transactions contemplated by the Issuer Documents.
(c) The Issuer has duly authorized the (i) execution and delivery of the Issuer
Documents, (ii) performance by the Issuer of its obligations contained in the Issuer Documents and (iii)
consummation by the Issuer of all of the transactions contemplated on the part of the Issuer by the Issuer
Documents and the Official Statement.
(d) This Agreement is, and, when executed and delivered by the Issuer and the
other parties thereto, the other Issuer Documents will be, the legal, valid and binding obligations of the
Issuer, enforceable in accordance with their respective terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally, or by
the exercise of judicial discretion in accordance with general principles of equity.
(e) The execution and delivery by the Issuer of the Issuer Documents, and the
consummation by the Issuer of the transactions contemplated hereby and thereby are not prohibited by, do
not violate any provision of, and will not result in the breach of or default under (i) the Act or any
organizational documents of the Issuer, (ii) to the Issuer's knowledge, any applicable law, rule, regulation,
judgment, decree, order or other requirement to which the Issuer is subject, or (iii) to the Issuer's knowledge
any contract, indenture, agreement, mortgage, lease, note, commitment or other obligation or instrument to
which the Issuer is a party or by which the Issuer or its properties is bound.
(f) The information in the Official Statement under the headings "THE
ISSUER" and "LITIGATION - Issuer" is, and, at the Closing Date will be, true and correct in all material
respects and does not and will not, at the Closing Date, contain any untrue statement of a material fact or
omit to state a material fact that is necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(g) To the Issuer's knowledge, there is no legal action, suit, proceeding,
investigation or inquiry at law or in equity, before or by any court, agency, arbitrator, public board on body
or other entity or person, pending or threatened against or affecting the Issuer or its officials, in their
respective capacities as such, nor, to the knowledge of the Issuer, any basis therefor, (i) which would
restrain or enjoin the issuance or delivery of the Bonds or the collection of revenues pledged under the Trust
Indenture or (ii) which would in any way contest or affect the organization or existence of the Issuer or the
entitlement of any officers of the Issuer to their respective offices or (iii) which would contest or have a
material and adverse effect upon (A) the due performance by the Issuer of its obligations as contemplated
by the Official Statement or the Issuer Documents or (B) the validity or enforceability of the Bonds, the
Issuer Documents or any other agreement or instrument to which the Issuer is a party and that is used or
contemplated for use in the consummation of the transactions contemplated hereby and thereby, or (iv)
which would contest the exclusion from gross income for federal income tax purposes of the interest on the
Series 2002A Bonds or (v) which contests in any way the completeness or accuracy of the Official
Statement.
64185.02 (02/06/02) PSw JWP/gag
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(h) On the Closing Date, each of the representations and warranties of the.
Issuer contained in the Issuer Documents and all other documents executed by the Issuer in connection with
the Bonds shall be true, correct and complete.
6.2 Any certificate signed by any official of the Issuer and delivered to the Underwriter in
connection with the delivery of the Bonds will be deemed to be a representation and warranty by the Issuer
to the Underwriter as to the statements made therein.
. 6.3 It is understood that the representations, warranties and covenants of the Issuer.
contained in this Section 6 and elsewhere in this Agreement shall not create any pecuniary liability of the
Issuer. It is further understood and agreed that the Issuer makes no representations or warranties, except,as .
set forth in paragraph 6.1(g) above, as to the Preliminary Official Statement and the Official Statement or as.,
to (i) the financial condition, results of operation, business or prospects of the Borrower, (ii) any statements
(financial or otherwise), representations, documents or certification provided or to be provided by the.
Borrower in connection with the offer or sale of the Bonds, or (iii) the correctness, completeness or
accuracy of such statements, representations, documents or certifications.
Section 7. Representations and Warranties of the Borrower.
7.1 The Borrower hereby makes the following representations and warranties to the
Underwriter, all of which will continue in effect subsequent to the purchase of the Bonds:
(a) The Borrower is a limited partnership duly organized and existing under
and pursuant to the constitution and the laws of the State of Colorado.
(b) The Borrower has, and as of the Closing Date will. have, full legal right,
power and authority to (i) execute and deliver the Borrower Documents, (ii) assist in the preparation of the
Official Statement, and (iii) otherwise consummate the transactions contemplated by the Borrower
Documents.
(c) The Borrower has duly authorized the (i) execution and delivery of the
Borrower Documents, (ii) performance by the Borrower of the obligations contained in the Borrower
Documents, (iii) preparation of the Official Statement and (iv) consummation by the Borrower of all of the
transactions contemplated by the Borrower Documents.
. (d) This Agreement is, and, when executed and delivered by the Borrower and.
the other parties hereto, the Borrower Documents will be, the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terns, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally,
or by the exercise of judicial discretion in accordance with general principles of equity.
(e) To the best of the Borrower's knowledge, all consents, approvals,. orders
or authorizations of, notices to, or filings, registrations or declarations with any governmental authority,
board, agency, commission or body having jurisdiction which are required on behalf of the Borrower for the
64185.02 (02/06/02) PSW JWP/gag
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execution and delivery by the Borrower of the Borrower Documents or the consummation by the Borrower
of the transactions contemplated hereby or thereby, have been obtained or will be obtained prior to Closing.
(f) The execution and delivery by the Borrower of the Borrower Documents
and the consummation by the Borrower of the transactions contemplated hereby and thereby are not
prohibited by, do not violate any provision of, and will not result in the breach of or default under (i) the
organizational documents of the Borrower, (ii) to the best of the Borrower's knowledge, any applicable law,
rule, regulation, judgment, decree, order or other requirement to which the Borrower is subject, or (iii) any
contract, indenture, agreement, mortgage, lease, note, commitment or other obligation or instrument to
which the Borrower is a party or by which the Borrower or its properties is bound.
(g) The information in the Official Statement, other than information related
to the Issuer, for which no assurance is provided by the Borrower, is, and, at the Closing Date will be, true
and correct in all material respects and does not and will not, at the Closing Date, contain any untrue
statement of a material fact or omit to state a material fact that is necessary to make the statements made
therein, in light of the circumstances under which they were made, not misleading.
(h) There is no legal action, suit, proceeding, investigation or inquiry at law or
in equity, before or by any court, agency;- arbitrator, public board on body or other entity or person, pending
or threatened against or affecting the Borrower or its general partner, in their respective capacities as such,
nor, to the best knowledge of the Borrower, any basis therefor, (i) which would restrain or enjoin the
issuance or delivery of the Bonds or the collection of revenues pledged under or pursuant to the Borrower
Documents or (ii) which would in any way contest or affect the organization or existence of the Borrower or
the entitlement of any general partner of the Borrower to its position or (iii) which would contest or have a
material and adverse effect upon (A) the due performance by the. Borrower of the transactions contemplated
by the Official Statement or the Borrower Documents, (B) the validity or enforceability of the Bonds, the
Borrower Documents or any other agreement or instrument to which the Borrower is a party and that is used
or contemplated for use in the consummation of the transactions contemplated hereby and thereby, (C) the
exclusion from gross income for federal income tax purposes of the interest on the Series 2002A Bonds or
(D) the fmancial condition or operations of the Borrower, or (iv) which. contests in any way the
completeness or accuracy of the Official Statement. The Borrower is not subject to any judgment, decree or
order entered in any lawsuit or proceeding brought against it that would have such an effect.
(i) On the Closing Date, the Borrower shall not have granted any interests in
or rights or options to sell the Bonds to any other party.
0) All permits (including building permits), licenses and authorizations
necessary for the ownership and operation of the Project in the manner contemplated by the Official
Statement and each of the Borrower Documents have been obtained or will be obtained, and said ownership
and operation are not, to the best knowledge of the Borrower, in conflict with any zoning or similar
ordinance applicable to the Project. The Project conforms to all material environmental regulations known
to the Borrower.
(k) None of the Borrower, any guarantor of the Borrower or any "related
person" to the Borrower within the meaning of Section 147 of the Code has acquired or shall acquire,
pursuant to any arrangement, formal or informal, any Bonds.
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(1) . On the Closing Date, each of the representations and warranties of the
Borrower contained in the Borrower Documents and all other documents executed by the Borrower in
connection with the Bonds shall be true, correct and complete.
(m) The Borrower has reviewed and agreed to the conditions for purchase of
the GNMA Security and funding of draws set forth in the Indenture and the Financing Agreement. .
7.2 Each of the representations and warranties set forth in this section will survive the
Closing.
7.3 Any certificate signed by any general partner of the Borrower and.delivered to the
Underwriter in connection with the delivery of the Bonds will be deemed to be a representation and
warranty by the Borrower to the Issuer and the Underwriter as to the statements made therein.
Section 8. Covenants of the Issuer.
8.1 The Issuer hereby makes the following covenants with the Underwriter:
(a) Prior to the delivery of the Bonds, The Issuer will not supplement or
amend the Official Statement, the Bonds or the Trust Indenture, the Financing Agreement, the Declaration
of Restrictive Covenants, the Tax Certificate and this Agreement (the "Bond Documents") or cause the
official statement, the Bonds or the Bond Documents to be supplemented or amended without providing
reasonable notice of such proposed supplement or amendment to the Underwriter. It is understood that, in
the event the Official Statement, the Bonds or the Bond Documents are amended or supplemented in such a
way as to have, in the reasonable judgment of the Underwriter, a material and adverse effect upon the
ability of the Underwriter to sell the Bonds at the contemplated offering price, the Underwriter shall have
the right, pursuant to Section 12(d) hereof, to terminate this Agreement without liability. Neither the receipt
by the Underwriter of notice of a proposed supplement or amendment nor the consent by the Underwriter to
such supplement or amendment shall abrogate the Underwriter's rights under Section 12(d) hereof.
(b) Prior to the Closing, the Issuer will not amend, terminate or rescind, and
will not agree to any amendment, termination or rescission of the Issuer Documents without the prior
written consent of the Underwriter.
(c) Prior to the Closing, the Issuer will not create, assume or guarantee any
indebtedness payable from, or pledge or otherwise encumber, the revenues, assets, properties, funds or
interests which will be pledged pursuant to the Trust Indenture, including, without limitation, the Bonds or
the Bond Documents.
(d) The Issuer will cooperate with the Underwriter, without cost to the Issuer,
in the qualification of the Bonds for offering and sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Underwriter may designate; provided that the.
foregoing shall not require the Issuer to expend its own funds, execute a general consent to service of
process or to qualify as a foreign corporation in connection with such qualification in any foreign
jurisdiction.
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Section 9. Covenants of the Borrower.
9.1 The Borrower hereby makes the following covenants with the Underwriter and the
Issuer:
(a) The Borrower will not supplement or amend the Official Statement, the
Bonds or the Bond Documents or cause the Official Statement, the Bonds or the Bond Documents to be
supplemented or amended without providing reasonable notice of such proposed supplement or amendment
to the Underwriter. It is understood that, in the event the Official Statement, the Bonds or the Bond
Documents are amended or supplemented in such a way as to have, in the reasonable judgment of the
Underwriter, a material and adverse effect upon the ability of the Underwriter to sell the Bonds at the
contemplated offering price, the Underwriter shall have the right, pursuant to Section 12(d) hereof, to
terminate this Agreement without liability. Neither the receipt by the Underwriter of notice of a proposed
supplement or amendment nor the consent by the Underwriter to such supplement or amendment shall
abrogate the Underwriter's rights under Section 12(d) hereof.
(b) Prior to the Closing (except as provided in the Borrower Documents), the
Borrower will not amend, terminate or rescind, and will not agree to any amendment, termination or
rescission of the Borrower Documents without the prior written consent of the Underwriter.
(c) Prior to the Closing, the Borrower will not create, assume or guarantee any
indebtedness payable from, or pledge or otherwise encumber, the revenues, assets, properties, funds or
interests which will be pledged pursuant to the Trust Indentures, including, without limitation, the Bonds or
the Bond Documents.
(d) The Borrower will cause the Bonds to be delivered to the address and at
the time specified by the Underwriter in conjunction with the Closing.
(e) The Borrower will not take or omit to take any action which will in any
way cause the proceeds of the Bonds, or other moneys on deposit in any fund or account in connection with
the Bonds, to be applied in a manner other than as provided in the Trust Indenture and described in the
Official Statement or which would cause the interest on the Series 2002A Bonds to be includable in the
gross income of the holders thereof for federal income tax purposes.
(f) The Borrower will cooperate with the Underwriter in the qualification of
the Bonds for offering and sale and the determination of their eligibility for investment under the laws of
such jurisdictions as the Underwriter may designate but will not be required to consent to service of process
or to qualify for business in any jurisdiction other than Colorado.
(g) The Borrower shall cause to be included in any instrument transferring any
interest in the Project (except the FHA Loan Documents) specific reference to the covenants, conditions and
restrictions contained in the Financing Agreement.
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(h) The Borrower agrees to cause the necessary amount to be paid to the
Trustee on the Closing Date for deposit in the Costs of Issuance Account of as set forth in the Trust
Indenture to pay costs of issuance not payable from amounts available in the FHA Loan.
Section 10. Conditions of Closing.
10.1 The obligations of the Underwriter to consummate at the Closing the transactions
contemplated hereby are subject to receipt by the Underwriter of the items described in Section 10.2 hereof
and to the satisfaction of the following conditions:
(a) The Underwriter will not have discovered any material error, misstatement
or omission in the representations and warranties made in this Agreement, which representations and
warranties will be deemed to have been made again at and as of the time of the Closing and will then be true
in all material respects.
(b) The Issuer, the Borrower and the Lender will have performed and
complied with all agreements and conditions required by this Agreement to be performed or complied with
by such respective parties at or prior to Closing.
(c) The Bonds, the Bond Documents and the FHA Loan Documents shall
each have been executed and delivered by each of the parties thereto, shall be in full force and effect on and
as of the Closing Date and shall not have been amended, modified or supplemented prior to the Closing
except as may have been agreed to in writing by the Underwriter and no event of default shall exist under
any such documents.
(d) The Lender shall have made its FHA Loan with respect to the Project, and
FHA shall have initially endorsed the Mortgage Note for FHA Insurance providing for a principal amount
equal to $15,305,000 bearing interest at a rate of % per annum, and the Lender shall provide a letter
confirming its authorization from GNMA to issue the GNMA Security.
(e) The Rating Agency shall have published and not withdrawn a rating with
respect to the Series 2002A Bonds of "AAA' and a rating with respect to the Series 2002B Bonds of
"AAA" and such ratings shall be in effect on the Closing Date, the documents delivered at the Closing shall
satisfy the conditions to the continuance of such ratings and no action shall have been taken or threatened
with a view to the suspension or withdrawal of such ratings as of the Closing.
10.2 In addition to the conditions set forth in Section 10.1, the obligations of the
Underwriter to consummate at the Closing the transactions contemplated hereby are subject to receipt by
the Underwriter of the following items:
(a) An approving opinion of Hogan & Hartson, L.L.P., as Bond Counsel,
dated the Closing Date and addressed to or with a reliance letter to the Underwriter, together with a
supplemental opinion of Hogan & Hartson, L.L.P., as Bond Counsel, satisfactory in form and substance to
the Underwriter, dated the Closing Date and addressed to the Underwriter.
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(b) An opinion of Isaacson, Rosenbaum Wood & Levy counsel to the
Borrower, satisfactory in form and substance to the Underwriter, dated the Closing Date and addressed to
the Underwriter, the Issuer and Bond Counsel.
(c) An opinion of Sherman & Howard, L.L.C., counsel to the Issuer,
satisfactory in form and substance to the Underwriter, dated the Closing Date and addressed to the
Underwriter, the Issuer and Bond Counsel.
(d) An opinion of Harding, Shultz & Downs, counsel to the Lender,
satisfactory in form and substance to the Underwriter, dated the Closing Date and addressed to the
Underwriter, the Trustee and Bond Counsel.
(e) An opinion of Peck, Shaffer & Williams LLP, counsel to the Underwriter,
satisfactory in form and substance to the Underwriter.
(f) A certificate of the Issuer, dated the Closing Date and signed by an
authorized official or officer of the Issuer, to the effect that (i) each of the Issuer's representations and
warranties contained herein and in all other Issuer Documents, which representations and warranties will be
deemed to have been made again at and as of the, time of Closing, are true and correct in all material
respects; (ii) the Issuer has performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it at or prior to the Closing; and (iii) such other matters as
the Underwriter may request.
(g) A certificate of the Borrower, dated the Closing Date and signed by its
general partners, to the effect that (i) each of the Borrower's representations and warranties contained herein
and in all Borrower Documents, which representations and warranties will be deemed to have been made
again at and as of the time of Closing, are true and correct in all material respects; (ii) the Borrower has
performed and complied with all agreements and conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing; (iii) since the date of the Official Statement and except as set
forth therein, there has not been any material adverse change in its operations, financial or otherwise; and
(iv) such other matters as the Underwriter may request.
(h) A certificate of the Lender, dated the Closing Date, and signed by an
authorized officer of the Lender in form and substance satisfactory to the Underwriter.
(i) A certificate of the Trustee, dated the Closing Date and signed by an
authorized officer of the Trustee, in form and substance satisfactory to the Underwriter.
0) A certificate of the Issuer, dated the Closing Date and signed by an
authorized official or officer of the Issuer, to the effect that the information regarding the Issuer contained in
the Official Statement under the headings "THE ISSUER" and "LITIGATION - Issuer" is true and correct
in all material respects.
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(k) Certified copies of the Borrower's organizational documents and
resolutions of its general partners (if applicable) authorizing the execution and delivery of the Borrower
Documents.
(1) Copies of the proposed forms of management agreement and residency
agreement to be used by the Borrower.
(m) Certificates of the Manager, the architect and the contractor for the Project
as to the information describing such parties in the Official Statement and their authority to enter into their
respective agreements with respect to the Project.
(n) One or more investment agreements or similar instruments consistent with
the final cash flow analysis approved by the Rating Agency.
(o) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy as of the
Closing Date of the respective representations and warranties of the Issuer and the Borrower herein
contained and of the Official Statement, and to evidence compliance by the Issuer and the Borrower with
this Agreement and all applicable legal requirements, and the due performance and satisfaction by the
Issuer, the Borrower and the Lender at or prior to such time of all agreements then to be performed and all
conditions then to be satisfied by the Issuer, the Borrower and the Lender.
10.3 If any of the conditions set forth in Section 10.1 or 10.2 have not been met on the
Closing Date, the Underwriter may, at its sole option, terminate this Agreement or proceed to Closing upon
waiving any rights under this Agreement with respect to any such condition. If this Agreement is
terminated pursuant to this Section, no party will have any rights or obligations to any other, except as
provided in Section 13.
Section 11. Actions and Events at the Closing. The following events will take place at the Closing:
(a) The Issuer will cause the Trustee to deliver the Bonds to the Underwriter,
at the place set forth in Item 4 in Exhibit B. The Bonds so delivered will be in the form required by the
Trust indenture, duly authenticated by the Trustee, and will be fully registered in the name of CEDE & Co.,
as nominee of The Depository Trust Company, New York, New York.
(b) The Borrower will deliver or cause to be delivered to the Underwriter at
the place set forth in Item 4 in Exhibit B, or at such other place or places as the Issuer, the Borrower and the
Underwriter may mutually agree upon, the materials described in Section 10.1 and Section 10.2.
(c) The Underwriter will deliver to the Trustee, for the account of the Issuer, a
wire, payable in immediately available funds, in an amount equal to the purchase price of the Bonds as set
forth in Item 2 of Exhibit B.
Section 12. Termination of Agreement. The Underwriter may terminate this Agreement, without liability
therefor, by notifying the Issuer and the Borrower at any time prior to the Closing, if:
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(a) Legislative, executive or regulatory action or a court decision which, in the
reasonable judgment of the Underwriter, casts sufficient doubt on the legality of obligations such as the
Series 2002A Bonds or the exclusion of interest on obligations such as the Series 2002A Bonds from gross
income for federal income tax purposes or for Colorado state income tax purposes, so as to impair
materially the marketability of the Series 2002A Bonds;
(b) Any action by the Securities and Exchange Commission or a court which
would require any registration under the Securities Act, in connection with the issuance, placement or sale
of the Bonds, or qualification of the Trust Indenture under the Trust Indenture Act of 1939, as amended;
(c) Any general suspension of trading in securities on the New York Stock
Exchange or the establishment by the New York Stock Exchange, by the Securities and Exchange
Commission, by any federal or state agency or by the decision of any court, of any limitation on prices for
such trading, or any outbreak of hostilities or occurrence of any other national or international calamity or
crisis, the effect of which on the financial markets of the United States shall be such as to make it
impracticable for the Underwriter to proceed with the purchase and offering of the Bonds;
(d) Any event or condition which, in the judgment of the Underwriter, (i)
renders untrue or incorrect, in any material respect as of the time to which the same purports to relate, the
information contained in the Official Statement, or (ii) requires that information not reflected in the Official
Statement should be reflected therein in order to make the statements and information contained therein not
misleading in any material respect as of such time, or (iii) has a material adverse effect upon the
marketability of the Bonds, or (iv) would materially and adversely affect the ability of the Underwriter to
enforce contracts for the sale of the Bonds; or
(e) The rating of either series of Bonds shall have been downgraded or
withdrawn by the Rating Agency.
Section 13. Fees and Expenses.
13.1 The Borrower shall pay to the Underwriter a fee in the amount of $
(L__% of the principal amount of the Bonds) payable in immediately available funds on the Closing
Date.
13.2 The Borrower shall pay the costs of issuance of the Bonds, including all expenses
incident to the performance of the Underwriter's obligations hereunder, including, but not limited to, (i) the
cost of the preparation, printing or other reproduction of this Agreement, the preliminary and final Official
Statement, the Trust Indenture and the other Bond Documents in reasonable quantities for distribution; (ii)
the cost of engraving, reproducing and signing the defmitive Bonds; (iii) the reasonable fees and
disbursements of all applicable legal counsel, including Bond Counsel, Lender's Counsel, Trustee's
Counsel (if any), Issuer's Counsel and Underwriter's Counsel; (iv) the initial fees and costs of .paying the
Trustee and all paying agents, transfer agents and registrars; (v) the fees and expenses of the Issuer; (vi)
cash flow preparation and certification fees and expenses; (vii) Rating Agency fees; (viii) Lender fees and
related costs; (ix) CUSIP fees; (x) the cost of qualifying the Bonds for sale in various states chosen by the
Underwriter and the cost of preparing or printing any Preliminary Blue Sky Survey to be used in connection
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with such sale; and (xi) all other applicable fees of professionals hired in conjunction with the issuance of
the Bonds.
13.3 The Underwriter will pay all expenses (other than those described in Section 13.2)
incurred by the Underwriter in connection with its public offering and sale of the Bonds.
13.4 In the event that the Issuer, the Borrower or the Underwriter shall have paid
obligations of the other as set forth in this Section, appropriate adjustments will promptly be made.
13.5 The Borrower shall indemnify the Issuer and the Underwriter with respect to the
foregoing costs and expenses in the event that the purchase provided for herein is not consummated unless,
insofar as indemnification of the Underwriter is concerned, such purchase is prevented at the Closing Date
by the Underwriter's default.
Section 14. Indemnification.
14.1 The Borrower will indemnify and hold harmless the Issuer and the Underwri ter
against any losses, claims, expenses (including, without limitation, to the extent permitted by law,
reasonable attorneys fees and expenses), damages or liabilities, causes of action (whether in.contract, tort or
otherwise), suits, claims, demands and judgments of any Idnd, character and nature (collectively referred to
herein as the "Liabilities"), joint or several, to which the Issuer, the Lender or the Underwriter may be
threatened or become subject, caused by or directly or indirectly arising from or in any way relating to (i)
the Bonds, the Project, the loan of the proceeds of the Bonds, this Agreement or any document related to the
Bonds, the Project or the loan of the proceeds of the Bonds or any transaction or agreement, written or oral,
pertaining to the foregoing, (ii) any untrue statement or alleged untrue statement of any material fact
contained in the Official Statement, or any amendment or supplement thereto so long as the. Borrower shall
have participated in or agreed to any such amendment or supplement, or (iii) the omission or alleged
omission to state in the Official Statement a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading. This
indemnification provision shall not be construed as a limitation on any other liability which the Borrower
may otherwise have to any indemnified person, provided that in no event shall the Borrower be obligated
for double indemnification.
14.2 The indemnity agreements in paragraph 14.1 of this Section shall be in addition to
any liability which any indemnifying party may otherwise have and shall extend on the same terms and
conditions to each partner, principal, official, officer, attorney or employee of such party and to each person,
if any, who controls (as such term is used in Section 15 of the Securities Act of 1933 and Section 20 of the
Securities Exchange Act of 1934, as amended) such party (with respect to the Issuer and the Underwriter,
referred to collectively as an "Indemnified Party" and with respect to the Underwriter only, referred to as an
"Underwriter Indemnified Party"); provided, however, that an indemnifying party under paragraph 14.1 of
this Section shall not be liable to the Underwriter under this Section to the extent that any such Liabilities
arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished by the Underwriter expressly
for use in the Official Statement; and provided further that no indemnifying party hereunder shall be liable
for any settlement effected by an Indemnified Party without the written consent of the indemnifying party
(which consent shall not be unreasonably withheld).
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14.3 Promptly after receipt by an Indemnified Party under paragraph 14.1 of this Section
of notice of the commencement of any action against such Indemnified Party in respect of which indemnity
or reimbursement may be sought against any indemnifying party under any such paragraph, such
Indemnified Party will notify the indemnifying party in writing of the commencement thereof; provided that
any delay or failure to give such notification shall be of no effect except to the extent that the indemnifying
party is prejudiced thereby.
14.4 In case any action, claim or proceeding, as to which the indemnifying party is to
provide indemnification hereunder, shall be brought against the Indemnified Party and the Indemnified
Party notifies the indemnifying party of the commencement thereof, the indemnifying party may, or if so
requested by the Indemnified Party shall, participate therein or assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Party; provided that, except as provided below, the indemnifying
party shall not be liable for the expenses of more than one separate counsel representing the Indemnified
Parties in the action, claim or proceeding.
14.5 If the indemnifying party shall not have employed counsel to have charge of the
defense of the action, claim or proceeding, or if any Underwriter Indemnified Party shall have concluded
reasonably that there may be a defense available to it or to any other Indemnified Party which is different
from or in addition to those available to the indemnifying party or to any other Indemnified Party
(hereinafter referred to as a "separate defense"), (i) the indemnifying party shall not have the right to direct
the defense of the action, claim or proceeding on behalf of the Indemnified Party, and (ii) legal and other
expenses incurred by the Indemnified Party (including without limitation, to the extent permitted by law,
reasonable attorney's fees and expenses) shall be borne by the indemnifying party. For the purpose of this
paragraph, an Underwriter Indemnified Party shall be deemed to have concluded reasonably that a separate
defense is available to it or any other Indemnified Party if (a) such Underwriter Indemnified Party shall
have requested an unqualified written opinion from Independent Counsel to the effect that a separate
defense exists, and such Independent Counsel shall have delivered such opinion to the Underwriter
Indemnified Party within ten (10) days after such request or (b) the indemnifying party agrees that a
separate defense is so available. For purposes of this paragraph, Independent Counsel shall mean any
attorney, or firm or association of attorneys, duly admitted to practice law before the supreme court of any
state and not a full-time employee of any indemnifying party. Nothing contained in this paragraph 14.5
shall preclude any Indemnified Party, at its own expense, from retaining additional counsel to represent
such party in any action with respect to which indemnity may be sought for the indemnifying party
hereunder.
14.6 In order to provide for just and equitable contribution in circumstances in which the
indemnity provided for in paragraph 14.1 or 14.2 of this Section 14 is for any reason held to be unavailable,
the Borrower and the Indemnified Party shall contribute proportionately to the aggregate Liabilities to
which the Borrower and the Indemnified Party may be subject, so that the Indemnified Party is responsible
for that portion represented by the percentage that the fees paid by the Borrower to the Indemnified Party in
connection with the issuance and administration of the Bonds bears to the aggregate offering price of the
Bonds, with the Borrower responsible for the balance; provided, however, that in no case shall the
Indemnified Party be responsible for any amount in excess of the fees paid by the Borrower to the
Indemnified Party in connection with the issuance and administration of the Bonds and the Issuer shall not
be required to contribute to any Liabilities.
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14.7 The Indemnified Parties, other than the Underwriter and the Issuer, shall be
considered to be third-party beneficiaries of this Agreement for purpose of this Section 14. The provisions
of this Section 14 will be in addition to all liability which the Borrower may otherwise have and shall
survive any termination of this Agreement, the offering and sale of the Bonds and the payment or provisions
for payment of the Bonds.
Section 15. No Pecuniary Liability of Issuer. No provision, covenant, or agreement contained in this
Agreement, or the Bonds and no obligation herein imposed upon the Issuer, or the breach thereof,
shall constitute an indebtedness or financial obligation of the Issuer, the County of Eagle or the State
of Colorado or any political subdivision thereof within the meaning of any Colorado Constitutional
provision or statutory limitation or shall constitute or give rise to a pecuniary liability of the Issuer,
the County of Eagle, or the State of Colorado or any political subdivision thereof or a charge against
its general credit or taxing powers. In making the agreements, provisions and covenants set forth in
this Agreement, the Issuer has not obligated itself, except to the extent that the Issuer is authorized to
act pursuant to Colorado law and except with respect to the Trust Estate, as defined in the Indenture.
The Issuer and any of its officials, officers, employees, members or agents shall have no monetary
liability arising out of the obligations of the Issuer hereunder or in connection with any covenant,
representation or warranty made by the Issuer herein, and neither the Issuer nor its officials shall be
obligated to pay any amounts in connection with the transactions contemplated hereby other than
from revenues or moneys received from the Borrower.
Section 16. Limitation of Liability. Notwithstanding any provision herein to the contrary, none of any
member, officer, partner, agent or employee of the Issuer or the Borrower, including any person executing
this Agreement, shall bear any liability as a result of any failure of the Issuer or the Borrower to perform the
obligations of each, respectively, set forth in this Agreement.
Section 17. Miscellaneous.
17.1 All notices, demands and formal actions hereunder will be in writing and mailed,
telecopied or delivered to the following address or such other address as either of the parties shall specify:
If to the Underwriter:
Kirkpatrick Pettis
1700 Lincoln Street, Suite 1300
Denver, Colorado 80203
If to the Issuer:
Town of Avon, Colorado
400 Benchmark Road
Avon, Colorado 81020
Attention: Larry Brooks
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If to the Borrower:
Buffalo Ridge II LLP
c/o Corum Real Estate Group
28 Second Street, Suite 215
Edwards, Colorado 81032
Attention: Gerry Flynn
17.2 This Agreement will inure to the benefit of and be binding upon the parties hereto and .
their successors and assigns and except as provided in Sections 14, 18 and 19 will not confer any rights
upon any other person. The terms "successor" and "assigns" will not include any purchaser of any of the
Bonds from the Underwriter merely because of such purchase.
17.3 This Agreement may not be assigned by any of the parties hereto..
17.4 If any provision of this Agreement is held or deemed to be or is, in fact, inoperative,
invalid or unenforceable as applied in any particular case, other than Section 15 hereof, which if deemed
inoperative, invalid or unenforceable, shall void any and all obligations of the Issuer hereunder, in any
jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provision of any constitution,
statute, rule of public policy, or any other reason, such circumstances will not have the.effect of rendering
the provision in question inoperable or unenforceable in any other case. or circumstance or of rendering any
other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent
whatever.
17.5 This Agreement will be governed by and construed in accordance with the laws of the
State of Colorado.
17.6 This Agreement may be executed in several counterparts, each of which will be
regarded as an original and all of which will constitute one and the same document.
Section 18. Limitation on Claims. Notwithstanding anything contained in this Agreement to the contrary,
neither the Issuer, nor the Underwriter, nor any other person may assert any claim arising hereunder against
the Borrower's interest in the Project, the proceeds of the mortgage on the Project, any reserve or deposit
made with the Lender or with any other entity that is required by FHA in connection with the giving of the
FHA Loan, or in the rents or other income of the Project for the payment of any charge due hereunder
except to the extent available from ["Residual Receipts"] as that term is defined in the FHA Regulatory
Agreement; provided, however, that nothing contained in this Section 18 or elsewhere in this Agreement or
any other documents executed in connection with the Bonds shall alter, affect or diminish the rights of the
Lender under the FHA Loan Documents.
64185.02 (02/06/02) PSW JWP/gag
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Section 19. HUD Requirements. For purposes of this Section 19, the words and terms defined in the
Indenture shall have the same meanings when used herein as are ascribed thereto in the Indenture. In the
event of any conflict between the provisions of this Agreement and the National Housing Act (other than
the provisions of Section 15 hereof), as amended, the regulations and administrative requirements.
promulgated thereto or the FHA Loan Documents, such acts, regulations, administrative requirements
and FHA Loan Documents shall control. No amendment of this Agreement shall conflict with any such
acts, regulations, administrative requirements or FHA Loan Documents. This Agreement and the
restrictions hereunder are subordinate to the FHA Loan Documents.
64185.02 (02/06/02) PSW JWP/gag
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If the foregoing is in accordance with your understanding, please sign and return to us
two counterparts hereof and, upon the acceptance hereof by you, this Agreement and such acceptance
shall constitute the binding agreement among us as to the matters set forth above.
Very truly yours,
KIRKPATRICK PETTIS
By:
Executive Vice President
64185.02 (02/06/02) PSW JWP/gag
-18-
[Signature page of Issuer to Bond Purchase Agreement]
Accepted and Agreed:
TOWN OF AVON, COLORADO
Attest
By:
Clerk
By:
Mayan
64185.02 (02/06/02) PSW JWP/gag
-19-
[Signature page of Borrower to Bond Purchase Agreement]
Accepted and Agreed:
BUFFALO RIDGE II LLLP
By:
Corum Buffalo Ridge LLC
Its General Partner
By:
Its President
By:
Wintergreen Homes LLC
Its General Partner
By:
Its President
64185.02 (02/06/02) PSW JWP/gag
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EXHIBIT A
GLOSSARY OF TERMS
"Agreement" means this Bond Purchase Agreement, as amended from time to time.
"Bond Documents" means this Agreement, the Trust Indentures, the Financing Agreement,
the Declaration of Restrictive Covenants, the Tax Certificates, the Continuing Disclosure Agreement, the
FHA Loan Document and other applicable documents related to this financing.
"Bonds" means the Series 2002A Bonds and the Series 2002B Bonds.
"Borrower" means Buffalo Ridge II LLLP, an Colorado limited liability limited
partnership.
"Borrower Documents" means the Bond Documents and the FHA Documents to which the
Borrower is a party.
"Closing" means the proceeding at which the actions described in Section 11 are
performed.
"Closing Date" means the date on which the Closing takes place, expected to be
April , 2002.
"Code" means the Internal Revenue Code of 1986, as amended, and all applicable
regulations promulgated thereunder.
"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement dated as
of April 1, 2002 between the Borrower and the Trustee, as dissemination agent.
"FHA" means the Federal Housing Administration, and any successors thereto.
"FHA Insurance" means the insurance by FHA of the repayment of the Mortgage Loan
under Section 207 pursuant to Section 221(d)(4) of the National Housing Act of 1934, as amended.
"FHA Loan Documents" means the Mortgage Note, security deed, regulatory agreement,
and other documents and instruments required to be executed and delivered in connection with the closing
of the FHA Loan.
"Financing Agreement" means the Financing Agreement dated as of April 1, 2002 among
the Issuer, the Borrower, the Trustee and the Lender relating to the Bonds, as amended from time to time.
"GNMA" means the Government National Mortgage Association, and any successors
thereto.
64185.02 (02/06/02) PSW JWP/gag
A-1
"GNMA Security" means the fully modified mortgage-backed pass-through security to be
issued by the Lender with respect to the Mortgage Loan and guaranteed as to timely payment of principal
and interest by GNMA.
"HUD" means the United States Department of Housing and Urban Development.
"Indenture" means the Trust Indenture dated as of April 1, 2002 relating to the Bonds,
between the Trustee and the Issuer, as amended from time to time.
"Issuer" means the Town of Avon, Colorado.
"Issuer Documents means the Bond Documents to which the Issuer is a party or has
executed and delivered.
"Lender" means AMI Capital Inc., Englewood, Colorado
"Mortgage Note" means the security deed note from the Borrower to the Lender
evidencing the obligation to repay the FHA Loan.
"Official Statement" means together the Preliminary Official Statement dated as of March
2002 and the Final Official Statement relating to the Bonds (including the cover page and appendices),
dated April ___, 2002.
"Rating Agency" mean the Standard & Poor's Ratings Service.
"Series 2002A Bonds" means the $11,100,000 in original aggregate principal amount of
the Town of Avon, Colorado Multifamily Housing Project Revenue Bonds, (GNMA Mortgage - Backed
Securities Program - Buffalo Ridge II Apartments Project) Series 2002A.
"Series 2002B Bonds" means the $4,205,000 in original principal amount of the Town of
Avon, Colorado Taxable Multifamily Housing Project Revenue Bonds, (GNMA Mortgage - Backed
Securities Program - Buffalo Ridge II Apartments Project) Series 2002B
"Trustee" means Wells Fargo Bank West, National Association, or a successor thereto, as
Trustee under the Trust Indenture.
"Underwriter" means Kirkpatrick Pettis.
64185.02 (02/06/02) PSW PAT/gag
A-2
Item
EXHIBIT B
1. Title of Bonds: Town of Avon, Colorado Multifamily Housing Project
Revenue Bonds (GNMA Mortgage - Backed Securities
Program - Buffalo Ridge II Apartments Project) Series
2002A and Taxable Multifamily Housing Project
Revenue Bonds (GNMA Mortgage - Backed Securities
Program - Buffalo Ridge II Apartments Project) Series
2002B
2. Purchase Price:
3. (a) Date of the Bonds:
(b) Interest Payment Dates:
4.
(c) Aggregate Principal Amount:
(d) Maturity and Interest Rate:
(i) Maturity:
(ii) Interest Rate:
(e) Redemption Provisions:
(a) Time of Closing:
(b) Date of Closing:
(c) Place of Closing:
(d) Delivery of Bonds:
64185.02 (02/06/02) PSW JWP/gag
As set forth on Schedule I
April 1, 2002
as described in the Final Official Statement, dated as of
even date herewith used in conjunction with the sale of
the Bonds,
Series 2002A: $11,100,000
Series 2002B: $4,205,000
See Schedule I
See Schedule I
as described in the Final Official Statement,
dated as of even date herewith used in
conjunction with the sale of the Bonds.
10:00 a.m., mountain time
April , 2002, or such other date as may be approved
by the Underwriter
Offices of Hogan & Hartson, L.L.P., Denver, Colorado
Well Fargo Bank West, National Association, as agent for
The Depository Trust Company, New York, New York
B-1
1
SCHEDULEI
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND PURCHASE PRICES
Series 2002A Bonds
Maturity Date
Principal Amount Interest Rate Purchase Price
October 20, 2023
October 20, 2034
October 20, 2045
Series 2002B Bonds
Maturity Date
Principal Amount Interest Rate
Purchase Price
October 20, 2006
October 20, 2013
(Plus Accrued Interest)
64185.02 (02/06/02) PSW JWP/gag
B-2
Memo
To: Honorable Mayor and Town Council
Thru: Bill Efting, Town Manager 4 49-
From: Norm Wood, Town Engineer 0/l/
Date: February 18, 2002
Re: I-70 / Post Boulevard Interchange Roundabout Maintenance Agreement
Resolution No. 02-09, Series of 2002
Summary: Because of the unique nature and maintenance requirements
of roundabout intersections, the Colorado Department of Transportation (CDOT) has
requested that the Town of Avon agree to share maintenance responsibilities for the
proposed roundabout intersections at the proposed I-70 and Post Boulevard Interchange.
Attached Resolution No. 02- 09 approves the accompanying Contract (Exhibit A) defining
the shared maintenance responsibilities for these roundabouts.
There are no costs to the Town associated with the approval of this contract or the
maintenance of the proposed roundabout intersections. All costs related to required
maintenance of the intersections will be reimbursed by Traer Creek Metropolitan District
along with all other maintenance costs associated with streets in The Village (at Avon) in
accordance with the Annexation and Development Agreement.
We recommend approval of Resolution No. 02-09, Series of 2002, A Resolution
Authorizing a Contract with the Colorado Department of Transportation Relating to. the
Maintenance of Proposed Roundabouts at Post Boulevard and I-70 Interchange in the
Town of Avon.
It should be noted that Chapter XVI of the Town Charter requires approval of
intergovernmental agreements by 2/3 vote of the entire Council.
IAFngineeringV.von VillageTiling ITinal P1atWgreements\Post Blvd-I-70 Mtce Res Memo.Doc
Recommendations: Approve Resolution No. 02-09, Series of 2002, A
Resolution Authorizing a Contract with the Colorado Department of Transportation
Relating to the Maintenance of Proposed Roundabouts at Post Boulevard and I-70
Interchange in the Town of Avon.
Proposed Motion: I move to approve Resolution No. 02-09, Series of 2002, A
Resolution Authorizing a Contract with the Colorado Department of Transportation
Relating to the Maintenance of Proposed Roundabouts at Post Boulevard and I-70
Interchange in the Town of Avon.
Town Manager Comments:
CO.If crv
IAEngineering\Avon VillageTiling ITinal P1atWgreements\Post Blvd-1-70 Mtce Res Memo.Doc 2
TOWN OF AVON
RESOLUTION NO. 02-09
SERIES OF 2002
A RESOLUTION AUTHORIZING A CONTRACT
WITH THE COLORADO DEPARTMENT OF
TRANSPORTATION RELATING TO THE
MAINTENANCE OF PROPOSED ROUNDABOUTS
AT POST BOULEVARD AND 1-70 INTERCHANGE
IN THE TOWN OF AVON
WHEREAS, the Colorado Department of Transportation (CDOT) has approved
project CC 0702-237 for the construction of a new Interchange with roundabout
intersections at Post Boulevard and 1-70 in the Town of Avon, Colorado; and
WHEREAS, CDOT desires that, upon completion of the construction of the
roundabout intersections that the Town of Avon (Town) assume responsibility for
maintenance of certain portions of the roundabout intersections; and
WHEREAS, the Town is willing to assume responsibility for its portion of the
maintenance of the roundabout intersections; and
WHEREAS, the Town is authorized pursuant to Chapter XVI of the Home Rule
Charter of the Town of Avon, Colorado, by 2/3 vote of the entire council, to enter into
contracts with other governmental units for the joint use of facilities and furnishing or
receiving services of public benefit.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE
TOWN OF AVON, COLORADO, that the attached Contract (Exhibit A) with CDOT
regarding maintenance of a proposed roundabout intersection at Post Boulevard and
State Highway 6 is hereby approved pursuant to Chapter XVI of the Home Rule Charter
of the Town of Avon, Colorado.
ADOPTED THIS DAY OF FEBRUARY, 2002.
TOWN COUNCIL
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
IAEngineering\Avon VillageTiling ITinal Plat\Agreements\Post Blvd-I-70 Mtce Res.Doc
ATTEST:
Kris Nash,
Town Clerk
IAEngineering\Avon VillageTiling 1\Final P1at\Agreements\Post Blvd-I-70 Mtce Res.Doc
EXHIBIT "A"
02 HA3 00035
Post Boulevard at I-70 Interchange CMS ID: 02-182
Town of Avon/Region 3 (NSO)
CONTRACT
THIS CONTRACT, made this day of , 20_, by and between the
State of Colorado for the use and benefit of THE COLORADO DEPARTMENT OF
TRANSPORTATION, hereinafter referred to as the State or CDOT, and TOWN OF AVON,
COLORADO, PO Box 975, Avon, Colorado 81620, FEIN: 84771088, hereinafter referred to as "the
Local Agency" or "the Town",
WHEREAS, pursuant to 1989 CDOT procedural directive 1601.0, a new interchange, the
Nottingham Interchange, has been approved under project CC 0702-237. As part of this project, the
Local Agency anticipates construction of an Roundabout intersections at Post Boulevard and I-70
Interchange in the Town of Avon, Colorado, hereinafter referred to as "the Project"; and
WHEREAS, required approval, clearance and coordination has been accomplished from and
with appropriate agencies; and
WHEREAS, the new Roundabout intersection falls within the jurisdiction of the Town; and
WHEREAS, CDOT desires that, upon completion of the construction of the project, that
the Town annex the new Roundabout intersection and assume responsibility for maintenance of
certain portions of the Roundabout intersection as outlined herein; and
WHEREAS, CDOT will, upon completion of the construction of the project, also assume
responsibility for maintenance of certain portions of the Roundabout intersections, as outlined
herein; and
WHEREAS, upon completion of the construction of the project, the Town is willing to
assume responsibility for its portion of the maintenance, subject to the provision described
above; and
WHEREAS, this contract is executed by the State under authority of Sections 43-1-106,
43-1-110, 43-1-201 et seq., 43-2-102 and 43-2-144 C.R.S., as amended; and
-1-
WHEREAS, this contract is executed by the Town under the authority of an appropriate
ordinance or resolution duly passed and adopted by the authorized representatives of the Town,
which also establishes the authority under which the Town enters into this contract and is
attached hereto and made a part hereof; and
WHEREAS, the Town is adequately staffed and suitably equipped to undertake and
satisfactorily carry out its responsibilities under this contract; and
NOW, THEREFORE, it is hereby agreed that:
1. PROJECT DESCRIPTION
"The Work" under this contract shall consist of the maintenance responsibility/activities
for a newly constructed Roundabout intersections at Post Boulevard and I-70 Interchange
in Avon, Colorado, as further described in Exhibit A, which is attached hereto and made a
part hereof. The newly constructed Roundabout intersections, which is the subject of this
maintenance agreement, is located within the Town's jurisdiction.
II. CDOT COMMITMENTS
A. The State will provide liaison with the City through the State's Region Transportation
Director, CDOT Region 3, 222 South Sixth Street, Room 317, Grand Junction, Colorado
81501, (970)-248-7225. Said Director will also be responsible for coordinating the
State's activities under this contract.
B. 1. The CDOT portion of maintenance responsibility shall consist of.
Standard repair and/or replacement of the driving surface, striping, guardrail, and
gravel shoulders, within the traveled way except for those portions of Post Blvd,
including the roundabouts within CDOT Right Of Way.
2. Snow removal within and through the Roundabouts, consisting of usual and
customary "pass through", within the traveled way, in accordance with 43-2-135 (a)
C.R.S., as amended.
3. CDOT will not be responsible for any of the maintenance issues of Post Boulevard
including areas that fall in CDOT Right-Of-Way at no expense to CDOT.
-2-
C. Upon the Town's passing its resolution for its portion of maintenance responsibility for
the newly constructed Roundabout intersections as described above, the execution of this
contract and the completion and acceptance of the construction by the State as evidenced
by an acceptance letter from the CDOT Region 3 Transportation Director, the State shall
transfer the maintenance responsibility for the said portion of the "work" to The Town of
Avon, Colorado.
III. LOCAL AGENCY COMMITMENTS
A. The City will provide liaison with the State through the Local Agency's Town Engineer,
P.O. Box 975, Avon, CO 81620, (970) 748-4000.
B. The Town's portion of maintenance responsibility shall consist of:
1. Repair and/or replacement of lighting, landscaping, special signage, islands and all
curb and gutter. Which will include the pavement repairs and maintenance issues of
both Roundabouts.
2. Snow removal inherent to the appurtenances and peculiarities of the Roundabout,
including curbs, drainage structures, and islands and beyond the traveled way.
3. Local Agency's shall be responsible of all maintenance issues of Post Boulevard
including areas that fall in CDOT Right-Of-Way at the local agency's expense.
C. Upon the execution of this contract, completion of construction, and acceptance of the
project by the State as evidenced by an acceptance letter from CDOT Region 3
Transportation Director, the Town shall annex the new Roundabout intersections and
accept its portion of maintenance responsibility for the newly constructed Roundabouts
intersection as described above.
D. The Town shall perform the maintenance services in a satisfactory manner, in accordance
with the terms of this Contract, and pursuant to 43-1-135(a) and (e) C.R.S., as amended.
IV. GENERAL PROVISIONS
A. Upon the execution of this contract, the State will no longer be liable or responsible in
any manner for the maintenance and repair of said portions of the work outlined in
Section III. B., to the extent the Local Agency is obligated under this Contract.
-3-
B. Notwithstanding anything herein to the contrary, the parties understand and agree that all
terms and conditions of this contract and attachments hereto which may require continued
performance or compliance beyond the termination date of the contract shall survive such
termination date and shall be enforceable by the State as provided herein in the event of
such failure to perform or comply by the Local Agency.
C. This contract is subject to such modifications as may be required by changes in federal or
State law, or their implementing regulations. Any such required modification shall
automatically be incorporated into and be part of this contract on the effective date of
such change as if fully set forth herein. Except as provided above, no modification of this
contract shall be effective unless agreed to in writing by both parties in an amendment to
this contract that is properly executed and approved in accordance with applicable law.
D. To the extent that this contract may be executed and performance of the obligations of the
parties may be accomplished within the intent of the contract, the terms of this contract
are severable, and should any term or provision hereof be declared invalid or become
inoperative for any reason, such invalidity or failure shall not affect the validity of any
other term or provision hereof. The waiver of any breach of a term hereof shall not be
construed as a waiver of any other term, or the same term upon subsequent breach.
E. This contract is intended as the complete integration of all understandings between the
parties. No prior or contemporaneous addition, deletion, or other amendment hereto shall
have any force or effect whatsoever, unless embodied herein by writing. No subsequent
novation, renewal, addition, deletion, or other amendment hereto shall have any force or
effect unless embodied in a written contract executed and approved pursuant to the State
Fiscal Rules.
F. Except as herein otherwise provided, this contract shall insure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
G. 1. With the exception of the maintenance responsibilities outlined in Sections II B
and III B, the term of this contract shall begin the date first above written and
shall extend until the completion and acceptance of the construction of the project
by the State, the issuance of a final acceptance letter by the State's Region 3
-4-
Transportation Director and the acceptance by the Town of its portion of the
maintenance of the newly constructed Roundabout intersection.
2. The maintenance responsibilities outlined in Sections II B and III B of this
contract shall extend beyond the term of this contract and shall continue through the
useful life of the Roundabout intersection unless modified by written agreement between
the parties.
H. It is expressly understood and agreed that the enforcement of the terms and conditions of
this contract, and all rights of action relating to such enforcement, shall be strictly
reserved to the parties hereto, and nothing contained in this contract shall give or allow
any such claim or right of action by any other or third person on such contract. It is the
express intention of the parties that any person or entity other than the parties receiving
services or benefits under this contract be deemed to be an incidental beneficiary only.
1. The Local Agency assures and guarantees that it possesses the legal authority to enter into
this contract. The Local Agency warrants that it has taken all actions required by its
procedures, by-laws, and/or applicable law to exercise that authority, and to lawfully
authorize its undersigned signatory to execute this contract and to bind the Local Agency
to its terms. The person(s) executing this contract on behalf of the Local Agency
warrants that they have full authorization to execute this contract.
-5-
IN WITNESS WHEREOF, the parties hereto have executed this contract the day and year
first above written.
ATTEST:
By
Chief Clerk
STATE OF COLORADO
BILL OWENS, GOVERNOR
By
Executive Director
DEPARTMENT OF TRANSPORTATION
ATTEST: (SEAL) TOWN OF AVON, COLORADO
By By
Title Title
Federal Employer Identification
Number: 84771088
-6-
EXHIBIT "A"
PROJECT NUMBER: CC 0702-237
Project Code: 13695
Date: February 4, 2002
Maintenance of Post Boulevard
DESCRIPTION
Centerline for POST Boulevard, a road crossing under Interstate Highway No. 70, of the
Colorado Department of Transportation, State of Colorado, Project No. CC 0702-237, in the
SE1/4 of Section 7 of Township 5 South, Range 81 West of the Sixth Principal Meridian, in
Eagle County, Colorado, said centerline being more particularly described as follows:
Commencing at the Southeast corner of Sec. 8, T. 5 S., R. 81 W, 6t'' P.M., thence N. 78°
27' 42" W. a distance of 6,657.06 feet to the intersection of the centerline of Post Boulevard with
the projected southerly right-of-way line of Interstate 70 (Feb. 2002), as shown on CDOT project
CC 0702-237, the TRUE POINT OF BEGINNING;
1. Thence S. 45°13'46" E., along the centerline of said Post Boulevard, a distance of
59.57 feet;
2. Thence continuing along said centerline, along the arc of a curve to the left having
a radius of 200.00 feet, a distance of 229.78 feet, (the chord of said arc bears S.
78°08'36" E., a distance of 217.35 feet;
3. Thence N. 68°56'34" E., continuing along said centerline, a distance of 66.09 feet
to the intersection with the eastbound off ramp of said S.H. 70;
4. Thence along the centerline of said ramp, along the arc of a curve to the right
having a radius of 1432.39 feet, a distance of 20.41 feet, (the chord of said arc
bears S. 20°38'55" E., a distance of 20.41 feet, to the center of the southerly
roundabout;
5. Thence N. 68°36'07" E., along the centerline of Post Boulevard, a distance of
442.76 feet to the center of the northerly roundabout;
6. Thence N. 54°48'36" E., continuing along said centerline a distance of 342.00
feet, to the intersection with the proposed northerly right-of-way of I-70, from
which point the Southeast corner of said Section 8 bears S 73 43 12 E a distance
of 5736.95 feet.
Basis of Bearings: All bearings are based on a line connecting the southeast corner of
Section 8 (found GLO brass cap) and the east'/4 corner of Section 8 (found GLO brass
cap), being N. 1 ° 32' 00" E.
-7-
MINUTES OF THE REGULAR MEETING OF THE TOWN COUNCIL
HELD FEBRUARY 12, 2002
A regular meeting of the Town of Avon, Colorado was held in the Municipal Building,
400 Benchmark Road, Avon, Colorado in the Council Chambers.
Mayor Judy Yoder called the meeting to order at 5:30 PM. A roll call was taken with
Councilors Michael Brown, Debbie Buckley, Peter Buckley, and Mac McDevitt present.
Councilor Rick Cuny and Mayor Protein Buz Reynolds were absent. Also present were
Town Manager Bill Efting, Town Attorney John Dunn, Assistant Town Manager Larry
Brooks, Town Clerk Kristen Nash, Human Resource Director Jacquie Halburnt, Police
Chief Jeff Layman, Town Engineer Norm Wood, Public Works Director Bob Reed,
Transportation Director Harry Taylor, and Community Development Director Ruth
Borne as well as members of the press and public.
Citizen Input:
Ms. Martha Miller, Mr. Cliff Thompson, and Mr. Ken Rhoads of the Eagle County Trails
Committee approached the Council. Ms. Miller stated that it is the goal of the trails
committee to connect the bike path from Vail Pass to Glenwood Canyon. She stated that
the next section that they are working on is the Dowd Junction to Avon section. She
stated that they estimate that section to cost $3.5 million. She stated that the most
expensive part of that section would be the area by the River Run Apartments. Ms.
Miller stated that the committee has appreciated all of the Town's efforts in the past to
support trails. She said that tonight they are here to talk to the Council about the trail on
the north side of I-70, which will connect to the trail in Dowd Junction. She said that
they have secured the easement on the south side through the Village at Avon, and are
now looking at the north side. They are asking the Town, while reviewing plans for the
Village at Avon, that they possibly secure an easement or a financial contribution from
the developer for the north side of I-70.
Assistant Town Manager Brooks will discuss the issue with Mr. Bill Post, of the Village
at Avon, at their meeting tomorrow.
Ordinances:
Second Reading of Ordinance No. 02-02, Series of 2002, An Ordinance Repealing and
Reenacting Provisions of Chapter 15.36 of the Avon Municipal Code
Mayor Yoder stated this is a public hearing.
Comm. Dev. Director Borne stated that this ordinance would update the building code to
be in compliance with the Division of Housing's new rules and regulations. It also
updates the code so the language is correct.
There being no comments from the public, Mayor Yoder closed the public hearing.
Councilor McDevitt motioned approval of Ordinance No. 02-02, Series of 2002.
Councilor Brown seconded the motion.
Mayor Yoder asked for a roll call.
The motion carried unanimously.
First Reading of Ordinance No. 02-03, Series of 2002, An Ordinance Authorizing and
Directing the Issuance of up to $15,305,000 of the Town's Multifamily Housing Revenue
Bonds (GNMA Mortgage-Backed Securities Program - Buffalo Ridge II Apartments
Project), Series of 2002, the Execution and Delivery of a Financing Agreement, a Trust
Indenture, a Bond Purchase Agreement, and Related Documents; Authorizing and
Directing the Execution and Delivery of Such Bonds; Making Certain Determinations
with Respect Thereto; Providing for the Principal Amount, Numbers, Provisions for
Redemption and Tender and Maturity of, and Rates of Interest on the Bonds; Requesting
the Trustee to Authenticate the Bonds; Authorizing Investments; Authorizing Incidental
Action; and Repealing Inconsistent Actions
Mr. Calvin Hanson of Sherman and Howard, special counsel to the Town to review the
documents on the Town's behalf, stated that this is a private activity bond issue for a
multifamily housing project, largely directed at employee housing. The maximum
principal amount is $15,305,000. He stated that the borrower is a partnership called
Buffalo Ridge II, LLP, and they are applying for an FHA HUD insured mortgage, which
will finance the project. The proceeds of the bonds will be used to purchase certain pass
through securities, which gives the Town an interest in the mortgage. That mortgage will
pay off the bondholders. From a private activities point of view, it is a very secure
transaction. The borrower has submitted their proposal to FHA HUD and they are in the
review process now, which is moving along contemporaneously with the Town's
approval.
Mr. Hanson stated that the bonds are issued under an Act that allows the Town to issue
the bonds on behalf of a private entity. The Town has no debt or financial obligation on
the bonds; they are strictly paid from project revenues.
Councilor Peter Buckley confirmed that the Avon taxpayer is not at risk. Mr. Hanson
confirmed.
Regular Council Meeting
February 12, 2002
Mr. Hanson stated that the Town will enter into a financing agreement, which is basically
a loan instrument with the borrower and they are obligated to make payments under that
loan.
Councilor Peter Buckley confirmed that the reason the Town is doing this is to provide
more affordable housing and not put the Avon taxpayer at risk in the process.
Councilor Brown motioned approval of Ordinance No. 02-03, Series of 2002 on first
reading. Councilor Debbie Buckley seconded the motion.
Mayor Yoder asked for a roll call.
The motion carried unanimously.
Resolutions:
Resolution No. 02-04, Series of 2002, A Resolution Authorizing a Contract with the
Colorado Department of Transportation Relating to the Maintenance of a Proposed
Roundabout Intersection at Post Boulevard and State Highway 6 in the Town of Avon
Town Engineer Norm Wood stated that CDOT (Colorado Department of Transportation)
has requested that the Town accept maintenance responsibilities of the proposed
roundabout at Post Blvd. This agreement is similar to the agreement of the Avon Road
roundabouts, in which they did not want to maintain them either. In this case, the Town
has a cost recovery with Traer Creek that essentially the Town will be responsible and
Traer Creek will reimburse the cost associated with street maintenance. Staff
recommends approved.
Councilor Debbie Buckley motioned approval of Resolution No. 02-04, Series of 2002.
Councilor McDevitt seconded the motion. The motion carried unanimously.
Other Business:
Councilor Peter Buckley stated that the new date for the permanently assigned Postmaster
has been changed to March 11, 2002.
Also, Mr. Buckley stated that the FAA no longer allows commercial mail to go on
commercial aircraft from the US Postal Service so mail that leaves here is now going by
truck.
Consent Agenda:
a.) Approval of the January 22, 2002 Council Meeting Minutes
Regular Council Meeting
February 12, 2002
b.) Approval of the January 8, 2002 Housing Authority Meeting
c.) Resolution No. 02-03, Series of 2002, A Resolution Approving the Final Plat,
a Resubdivision of Lot 6, Block 3, Wildridge, Town of Avon, Eagle County,
Colorado
d.) Resolution No. 02-07, Series of 2002, Notice of Meetings
Councilor Debbie Buckley motioned approval of the Consent Agenda. Councilor Brown
seconded the motion. The motion carried unanimously.
There being no further business to come before the Council, Councilor McDevitt
motioned to adjourn the meeting. Councilor Brown seconded the motion. The motion
carried unanimously and the meeting adjourned at 5:44 PM.
TFULLY SUBMITTED:
Clerk
APPROVED:
Michael Brown
Debbie Buckley
Peter Buckley
Rick Curly
Mac McDevitt
Buz Reynolds
Judy Yoder
Regular Council Meeting
February 12, 2002
Memo
To: Honorable Mayor and Town Council
Thru: Bill Efting, Town Manager-Wr
Ji/??: Ruth Borne, Director of Community Development,
Eric Johnson, Planning Technician
Date February 20, 2002
Re: Resolution 02-08, A Temporary Easement on Tract B, Block 1,
Benchmark at Beaver Creek
Summary
The applicant, Steve M. Grow, is proposing a carwash on Lot 30, Block 1, Benchmark at Beaver
Creek Subdivision (adjacent to the Pet Center). In order to reduce the size of the retaining walls on
the east side of the property the applicant is requesting a Temporary Easement on a portion of Tract B,
Block 1, Benchmark at Beaver Creek Subdivision for the purpose of grading and construction of
retaining walls.
Recommendation
Staff recommends approval of the attached Temporary Easement with the owner of Lot 30, Block 1,
Benchmark at Beaver Creek Subdivision, Steven M. Grow.
Town Manager Comments
':?6 hCG(v
Attachments:
A - Temporary Easement
B - Exhibit A
C - Resolution 02-08
Memo to Town Council, February 26, 2002 Page 1 of 1
Re: Ordinance 02- 08, Temporary Easement for Lot 30, Block 1, BMBC
TOWN OF AVON
RESOLUTION NO. 02-08
SERIES OF 2002
A RESOLUTION APPROVING THE TEMPORARY EASEMENT FOR, LOT 30,
BLOCK 1, BENCHMARK AT BEAVER CREEK SUBDIVISION, TOWN OF AVON,
EAGLE COUNTY, COLORADO
WHEREAS, the Temporary Easement (a copy of which is attached hereto and made a
part hereof) complies with Town Standards; and
WHEREAS, the Temporary Easement authorizes the property owner of Lot 30, Block 1,
Benchmark at Beaver Creek Subdivision, to access a portion of the Town of Avon's property,
known as Tract B, Block 1, Benchmark at Beaver Creek Subdivision and described therein as the
"Easement Area" for the purposes of temporary construction access, slope contouring and
grading and slope maintenance, including entering upon said Easement Area to grade, level, fill,
drain, pave, build, and construct retaining walls; and
WHEREAS, the exercise of the Temporary Easement will be limited to the Planning &
Zoning approval dated September 18, 2001 for the special review use of the car wash located at
Lot 30, Block 1, Benchmark at Beaver Creek Subdivision and shall not be recorded with the
Clerk and Recorder of Eagle County until the building permit is issued and construction
commences on the property.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN
OF AVON, COLORADO, that the Town Council of the Town of Avon, Colorado does hereby
approve the attached Temporary Easement for Lot 30, Block 1, Benchmark at Beaver Creek
Subdivision.
ADOPTED THIS DAY OF 92002.
TOWN COUNCIL
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Kris Nash
Town Clerk
FACounci1\Reso1utions\2002\Res 02-08 L30 BI BMBC temporary easement.doc
TEMPORARY EASEMENT
THIS GRANT OF EASEMENT made and entered into this day of , 2002,
by and between TOWN OF AVON, a municipal corporation, whose address is P. 0. Box 975,
Avon, Colorado 81620 (hereinafter referred to as the "Grantor"), and Steven M. Grow whose
address is: 8 Manette Road, Morristown, New Jersey 07960-6344 (hereinafter referred to as the
"Grantee");
WITNESSETH THAT:
For Ten Dollars ($10.00) and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Grantor by these presents does hereby
grant unto the Grantee, its successors and assigns, a non-exclusive easement (herein after referred
to as "Easement Area"), generally described as; the westerly twenty-five (25) feet of that portion
of Tract B, Block 1, Benchmark at Beaver Creek Subdivision, Town of Avon, Eagle County,
Colorado that is adjacent to and parallel with the common easterly lot line of Lot 30, Block 1,
Benchmark at Beaver Creek Subdivision, Town of Avon, Eagle County, Colorado and as
depicted on Exhibit "A" attached hereto and incorporated herein, for the purposes of temporary
construction access, slope contouring, grading and slope maintenance in accordance with plans
approved by the Grantor.
At the time of final landscaping, Grantee shall cause the Easement Area to be
restored to substantially the same condition as it was prior to construction work being
commenced. The Grantee shall post a surety in the amount of three thousand dollars ($3,000.00)
to guarantee the successful restoration of the Easement Area to the satisfaction of the Grantor.
The Grantee shall in the future maintain the Easement Area and the retaining wall to the
satisfaction of the Grantor.
This easement is for the benefit of and appurtenant to that land described as Lot
30, Block 1, Benchmark at Beaver Creek Subdivision, Town of Avon, Eagle County, Colorado.
This easement shall be used so as not to interfere with the rights of public utilities having
easements or rights-of-way, either in existence or of record. Grantee, for itself, its successors and
assigns, agrees that it will repair and maintain the Easement Area at its own cost and expense.
Grantor shall have the right to use and occupy the Easement Area for any purpose
not inconsistent with Grantee's full enjoyment of the rights hereby granted.
Any liability for injury to person or property of Grantor, its employees, agents and
invitees, or of any third persons, as a result of or arising out of or relating to the use or occupancy
of the Easement Area by Grantee shall be borne by Grantee. Further, Grantee agrees to
indemnify, defend, and hold harmless Grantor, its successors and assigns, against any claims for
loss or damage which should result from, arise out of or be attributable to the use of the
Easement Area.
GRANTOR:
STATE OF COLORADO
COUNTY OF EAGLE
ss.
The foregoing instrument was acknowledged before me this
2002, by Judy Yoder, Mayor, Avon Town Council.
My commission expires:
Witness my hand and official seal.
GRANTEE:
STATE OF NEW JERSEY
COUNTY OF MORRIS
ss.
The foregoing instrument was acknowledged before me this
, 2002, by Steven M. Grow.
My commission expires:
Witness my hand and official seal.
Town of Avon, Colorado
Town Council
Judy Yoder, Mayor
Notary Public
day of
Steven M. Grow
day of
Notary Public
------------
TRpcT 6
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TO ALLOW 5AFER VISIBILITY
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ARTIAL SITE PLAN
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Memo
To: Honorable Mayor and Town Council
Thru: Bill Efting, Town Manager
From: j ./-'---Ruth Borne, Director of Community Development
Norman Wood, Town Engineer
Date February 20, 2002
Re: Resolution 02-10, A Resolution Revising Fee Schedule "A" Pertaining to
Fees for Building, Mechanical, Plumbing, Grading, and Electrical Permits,
Town of Avon, Eagle County, Colorado
Summary In order to update and clarify the building permit fee schedule, staff has revised the
fee schedule to incorporate changes for the electrical inspections being performed by the State
of Colorado Electrical Board, manufactured home inspections, and how fees are calculated.
The fee schedule also allows for duplicate or identical buildings to have a reduced fee after
the initial permit and plan review.
Proposed Motion I move to approve Resolution 02-10, A Resolution Revising Fee Schedule
"A" Pertaining to Fees for Building, Mechanical, Plumbing, Grading, and Electrical Permits, Town
of Avon, Eagle County, Colorado
Town Manager Comments
Attachments:
A. Resolution 02-10
Memo to Town Council, January 3, 2002 Page 1 of 1
Ordinance 02-01, Lot 25, Block 2, Wildridge PUD Amendment
TOWN OF AVON
RESOLUTION NO. 02-10
SERIES OF 2002
A RESOLUTION REVISING FEE SCHEDULE "A" PERTAINING TO FEES FOR
BUILDING, MECHANICAL, PLUMBING, GRADING AND ELECTRICAL PERMITS,
TOWN OF AVON, EAGLE COUNTY, COLORADO
WHEREAS, the Town Council has enacted ordinances establishing standards relating to
the issuance of permits for building, mechanical, plumbing, electrical and grading work in the
Town of Avon; and
WHEREAS, the Town Council wishes to establish this Fee Schedule "A" setting the fees
for such permits.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN
OF AVON, COLORADO:
Section 1. The Town Council hereby adopts the following Schedule A, setting fees
for issuance of building, mechanical, plumbing, electrical and grading permits.
Section 2. SCHEDULE A
1. Plan Review Fees: The plan review fee for building, commercial plumbing and
commercial mechanical permits shall be 65% of the permit fee associated with the work.
2. Building Permit Fees:
(a) All new construction, additions, and remodels shall be computed for value
of construction using cost per square foot as shown in the latest edition of
the Building Standards Magazine as published by the International
Conference of Building Officials by computing the Colorado factor and
then the local factor of 135%.
(b) Once the value has been established, then the fee will be determined as set
forth in the latest adopted edition of the Uniform Building Code, Table 1-
A Building Permit Fees.
3. Mechanical Permit Fees:
(a) New Work. As part of a new building, the mechanical permit fees shall be
fifteen percent (15%) of the building permit fee, and shall be collected
with the building permit fee. The actual permit will not be issued until the
owner or responsible party representing the mechanical contractor has
FACouncil\Resolutions\2002\Res 02-10 Revised building fees.doc
signed the applicable permit and it is on file at the Town of Avon
Community Development Department.
(b) Other Work. For other work, the fee shall be based upon the actual value
of the work, and calculated as in the latest adopted edition of the Uniform
Building Code, Table 1-A Building Permit Fees.
4. Plumbing Permit Fees:
(a) New Work. As part of a new building, the plumbing permit fees shall be
fifteen percent (15%) of the building permit fee, and shall be collected
with the building permit fee. The actual permit will not be issued until the
owner or responsible party representing the plumbing contractor has
signed the applicable permit and it is on file at the Town of Avon
Community Development Department.
(b) Other Work. For other work, the fee shall be based upon the actual value
of the work, and calculated as in the latest adopted edition of the Uniform
Building Code, Table 1-A Building Permit Fees.
5. Grading Permit and Grading Plan Review Fees:
All grading permit fees and grading plan review fees shall be as shown in the
latest adopted version of the Uniform Building Code, Table A-33(A) and A-
33(B).
6. Electrical Permit Fees:
An Electrical Plan Review Fee for Commercial Projects will be assessed at sixty-
five percent (65%) of ten percent (10%) of value established as set forth in
Section 2A above.
All other electrical permit fees are administered by the State of Colorado
Electrical Board in accordance with the C.R.S., Section 12-23-77.
7. Additional Fees:
The following specific fees shall be collected for the applicable permits:
(a) Re-inspection fees for all trades when a correction has not
been made prior to recalling the inspection $100.00
(b) For removal or demolition of a building, per inspection
$ 50.00
(c) Inspections outside of normal business hours $ 75.00
FACouncil\Resolutions\2002\Res 02-10 Revised building fees.doe
(d) Plan Review Fees for 1" Building of a group of identical buildings: A
Plan Review Fee for the 1St building shall be based upon the value and fee
as set forth in Section 2A and 2B above. For each additional building,
either a minimum plan review fee of $50./hr for in-house review or the
actual cost plus an administrative fee in the amount of thirty-five percent
(35%) for contract review.
ADOPTED THIS DAY OF , 2002.
TOWN COUNCIL
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Town Clerk
FACouncil\Resolutions\2002\Res 02-10 Revised building fees.doc
:Memo
To: Honorable Mayor and Town Council
Thru: Bill Efting, Town Managerol".*,-
From: Tambi Katieb, Al
Date February 21, 2002
Re: Resolution 02-11 Master Plan Compliance with HB 0152-1006
Summary:
The State of Colorado House of Representatives adopted House Joint Resolution HB 01S2-1006
effective January 8, 2002 requiring that municipalities exceeding a ten percent growth rate during the
years 1994 to 1999 (or for any five-year period ending in the year 2000) adopt a master plan within
two years. Likewise, all municipalities that have a population of 2,000 permanent residents and are
located within Counties that have exceeded the specified growth rate are also required to adopt a
master plan.
In addition to requiring the adoption of a master plan, HB O1S2-1006 also mandates that plans
adopted in accordance with this act contain a "recreational and tourism element" indicating how a
municipality intends to provide for the recreational and tourism needs of both residents and visitors.
Our Town comprehensive plan contains details meeting this requirement.
The Department of Local Affairs (DOLA) recently notified the Town to confirm that we are subject to
the master plan adoption requirement under this new regulation. However, since the Town of Avon
has already adopted a master plan (Town of Avon Comprehensive Plan, 1996) that fulfills the statutory
requirements of this new act, we are under no further obligation to revise, update, or otherwise adopt a
new plan at this time.
Conclusion:
Staff recommends that you approve Resolution 02-11, reaffirming that Town's compliance with
HBO1S2-1006 regarding the mandatory adoption of master plans in Colorado. Town Staff will
forward a copy of this resolution to the State DOLA office for their records.
Town Manager Comments:
?oY1Cyv ,
Attachments:
A - Resolution 02-11
Memo to Town Council, February 21, 2002
Re: Resolution 02 -11, Master Plan Compliance with 1-11301 S2-1006
TOWN OF AVON
RESOLUTION NO. 02-11
SERIES OF 2002
A RESOLUTION AFFIRMING AVON TOWN COUNCIL'S COMPLIANCE
WITH HB 01S2-1006, CONCERNING THE MANDATORY ADOPTION OF
LOCAL GOVERNMENT MASTER PLANS
WHEREAS, in the Second Extraordinary Session of 2001, the Colorado General Assembly
passed HB 01 S2-1006, requiring certain municipalities and counties to adopt master
plans, also known as comprehensive plans, for the development of their communities; and
WHEREAS, HB 01 S2-1006 also requires that each such plan contain a "recreational tourism
element," pursuant. to. which the municipality "shall indicate how it intends to provide for
the recreational and tourism needs of residents of the municipality and visitors to the
municipality through delineated areas dedicated to, without limitation, hiking mountain
biking, rock climbing, skiing, cross country skiing, rafting, fishing, boating, hunting and
shooting, or any other form of sports or recreational activity, as applicable, and
commercial facilities supporting such uses"; and
WHEREAS, the Town of Avon, Colorado adopted a comprehensive plan entitled the Town
of Avon Comprehensive Plan on November 5, 1996; and
WHEREAS, the Town's plan addresses the recreation and tourism requirement of HB
01 S2-1006 in the following manner:
Goal GI Provide an exceptional system of parks, trails, and recreational programs to
serve the year-round leisure-time needs of area residents and visitors.
Policy G1.1 New residential and resort developments will incorporate recreational
amenities.
Policy G1.2 The Town will continue to evaluate and acquire parcels or easements for
open space, trails and recreation.
Policy G1.3 The Town's recreational system will integrate with the regional trail system.
Policy GIA New annexations and development will include or otherwise contribute to
land for trails, open space, and recreation purposes.
FACouncil\Resolutions\2002\Res 02- Master Plan Conformance.doc
Policy G1.5 The Town will coordinate with Eagle County and other government and non-
profit agencies in planning, protecting, and managing public open space, and
in providing access and linkage opportunities.
In addition to these goals and policies, the Town Comprehensive Plan contains a number of
specific recommendations related to recreation and tourism as "Subarea Design
Recommendations" located in the Urban Design Plan portion of the document.
WHEREAS, this information provided in the Town's existing comprehensive plan
describes how the Town of Avon intends to provide for the recreation and tourism needs
of both residents of the Town and visitors to the Town.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF AVON, The
Town hereby finds and declares that it is in compliance with the requirements of HB 01 S2-
1006 requiring a recreation and tourism element in its comprehensive plan.
ADOPTED THIS 26`'' DAY OF FEBRUARY 2002.
TOWN COUNCIL
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Town Clerk
F:\Council\Res0lutions\2002\Res 02- Master Plan Conformance.doc
Memo
To: Honorable Mayor and Town Council
Thru: Bill Efting, Town Manager
From: Scott Wright, Finance Director
Date: February 20, 2002
Re: Resolutions Nos. 02-12, 02-13, and 02-14
Summary:
The above referenced resolutions for the Town of Avon retirement plans and the deferred
compensation plan, amend those plan documents pursuant to the Internal Revenue Code changes that
were signed into law late last year by President Bush. In addition, Town staff took this opportunity to
amend certain administrative provisions in order to clarify and ease the administration of the plans.
I would be happy to go over these amendments in detail with the Council at the Tuesday afternoon
worksession.
Town Manager Comments:
Page 1
RESOLUTION NO. 02-12
SERIES OF 2002
A RESOLUTION ADOPTING A RESTATED AND AMENDED PLAN DOCUMENT FOR THE
TOWN OF AVON PUBLIC EMPLOYEES MONEY PURCHASE PENSION PLAN
WHEREAS, the Town of Avon maintains a defined contribution retirement plan for certain
eligible employees, called the Town of Avon Public Employees Money Purchase Pension Plan ("the
Plan"); and
WHEREAS, the Town of Avon wishes to restate the Plan to include various changes
required or permitted by applicable tax laws;
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF
AVON, COLORADO:
Section 1. That the Plan is restated in the form of the attached document.
Section 2. That the Finance Director, as Chairperson of the Board of Retirement, is
hereby authorized to execute the Plan.
ADOPTED this 26th day of February, 2002.
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Kris Nash, Town Clerk
TOWN OF AVON PUBLIC EMPLOYEES
MONEY PURCHASE PENSION PLAN
Restated to Include Amendments
Through December 31, 2001
TOWN OF AVON PUBLIC EMPLOYEES
MONEY PURCHASE PENSION PLAN
Table of Contents
Page
ARTICLE I
Definitions
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20 General ...................................................................................................... I-1
After-Tax Contribution ............................................................................. I-1
Beneficiary ...........I-1
Board of Retirement (..Board") ................................................................. I-1
Break in Service ........................................................................................ I-1
Code ..........................................................................................................I-1
Compensation ...........................................................................................I-1
Defined Contribution Plan ........................................................................ I-2
Disability ..................................................................................................1-2
Employee .................................................................................................. I-2
Employer .................................................................................................. I-3
Entry Date ................................................................................................. I-3
Forfeiture .................................................................................................. I-3
Fund ............ ................................................................... ...........................1-3
Hour of Service ......................................................................................... I-3
Life Expectancy I-4
Limitation Year ......................................................................................... I-5
Mandatory Employee Pre-Tax Contributions ........................................... I-5
Normal Retirement Age ............................................................................ I-5
Participant .................................................................................................I-5
1.21
1.22
1.23
1.24 Plan ........................................................................................................... I-5
Plan Administrator .................................................................................... I-5
Plan Year .................................................................................................. I-5
Qualified Deferred Compensation Plan .................................................... I-5
1.25
1.26
1.27 Restatement Date ..............................................
Rollover Contribution .......................................
Spouse (Surviving Souse ........................................ I-5
........................................ I-6
I-6
1.28 Trustee .............................................................. ........................................ I-6
1.29 Valuation Date .................................................. ........................................ I-6
1.30 Voluntary After-Tax Contribution .................... ........................................ I-6
1
15237:MAB
Page
1.31 Year of Service ......................................................................................... I-6
ARTICLE II
Eligibility Requirements
2.1 Participation .............................................................................................II-1
2.2 Employment Rights .................................................................................II-1
2.3 Change in Classification of Employment ................................................II-1
ARTICLE III
Employer Contributions
3.1 Matching Employer Contributions .........................................................III-1
3.2 [INTENTIONALLY LEFT BLANK] ....................................................III-1
3.3 Transfer Contributions ....................... .....................................................III-1
3.4 Expenses and Fees ............................. .....................................................III-1
3.5 Responsibility for Contribution ......... ..................................................... III-1
3.6 Return of Contributions ..................... .....................................................III-2
3.7 Military Service ................................. .....................................................III-2
ARTICLE IV
Employee Contributions
4.1 Mandatory Employee Pre-Tax Contributions ........................................ IV-1
4.2 Voluntary Employee Contributions ....................................................... IV-1
4.3 Rollover Contribution ............................................................................ IV-1
ARTICLE V
Participant Accounts
5.1 Separate Accounts ...................................................................................V-1
5.2 Adjustments To Participant Accounts .....................................................V-1
5.3 Participant Statements .............................................................................V-2
ARTICLE VI
Eligibility For Benefits
6.1 Retirement ............................................................................................. VI-1
6.2 Disability ............................................................................................... VI-1
6.3 Death ...................................................................................................... VI-1
ii
15237:MAB
Page
6.4 Termination of Employment Before Retirement,
Disability or Death .............................................................................. VI-2
6.5 Claims Procedures ................................................................................. VI-2
6.6 Disposition of Unclaimed Payments ..................................................... VI-3
ARTICLE VII
Payments
7.1 Commencement of Payments ........... .................................................... VII-1
7.2 Method of Payment .......................... .................................................... VII-1
7.3 De minimis Accounts ....................... .................................................... VII-2
7.4 Minimum Distributions .................... .................................................... VII-2
7.5 Direct Rollover ................................. .................................................... VII-2
7.6 In-Service Withdrawals .................... .................................................... VII-4
ARTICLE VIII
Vesting
8.1 Employee Contributions ......................................................................VIII-1
8.2 Employer Contributions ......................................................................VIII-1
8.3 Years of Service Upon Rehire .............................................................VIII-2
8.4 Calculating Vested Interest ..................................................................VIII-2
8.5 When Forfeiture Occurs ......................................................................VIII-2
8.6 Reallocation of Forfeiture ....................................................................VIII-2
8.7 Amendment of Vesting Schedule ........................................................VIII-2
ARTICLE IX
Limitations on Allocations
9.1 Maximum Limits on Allocations ........................................................... IX-1
9.2 Disposition of Excess Annual Additions ................. .. IX-2
9.3 Participation in This Plan and a Defined Benefit Plan (Not Effective
for Plan Years Beginning on or After January 1, 2000) ..................... IX-3
ARTICLE X
Administration
10.1 Employer .................................................................................................X-1
10.2 Plan Administrator ...................................................................................X-1
10.3 Trustee .....................................................................................................X-2
10.4 Administrative Fees and Expenses ..........................................................X-3
iii
15237:MAB
Page
10.5 Governing Law ........................................................................................X-3
10.6 Election and or Appointment of Employee Board Members ..................X-3
10.7 Written Communication ..........................................................................X-3
ARTICLE XI
Trust Fund
11.1 The Fund ................................................................................................ XI-1
11.2 Control of Plan Assets ........................................................................... XI-1
11.3 Exclusive Benefit Rules ......................................................................... XI-1
11.4 Assignment and Alienation of Benefits ............................................... XI-1
11.5 Trust Agreement .................................................................................... XI-1
ARTICLE XII
Participant Loans
12.1 Application ...........................................................................................XII-1
12.2 Maximum Amount ............................................................................... XII-1
12.3 Application Forms ................................................................................ XII-1
12.4 Interest on Loans .................................................................................. XII-1
12.5 Security ................................................................................................. XII-1
12.6 Terms of Repayment ............................................................................ XII-1
12.7 Principal and Interest Allocation .......................................................... XII-2
12.8 Deemed Distribution of Loan Upon Default ........................................ XII-2
12.9 Approval of Application ....................................................................... XII-2
12.10 Loan Policy ........................................................................................... XII-2
ARTICLE XIII
Insurance Policies
13.1 Limitations ...........................................................................................XIII-1
13.2 Administrative Requirements ..............................................................XIII-1
ARTICLE XIV
Amendment and Termination
14.1 Amendments ....................................................................................... XIV-1
14.2 Termination ........................................................................................ XIV-1
14.3 Qualification of Employer's Plan ........................................................ XIV-1
14.4 Mergers and Consolidations ............................................................... XIV-2
iv
15237:MAB
TOWN OF AVON PUBLIC EMPLOYEES
MONEY PURCHASE PENSION PLAN
The Town of Avon, hereby amends and restates in its entirety its
Public Employees Money Purchase Pension Plan for the exclusive benefit of
certain employees and their beneficiaries under the following terms and
conditions:
15237:MAB
ARTICLE I
DEFINITIONS
1.1 General. The rights of a Participant who terminates
Employment shall be covered by the Plan as in effect at the time of such
termination of Employment.
1.2 After-Tax Contribution. An Employee contribution to the
Plan that is not made as a pre-tax "pick up" contribution under section 414(h)(2) of
the Code.
1.3 Beneficiary. The individual designated by the Participant,
according to section 6.3(c), to receive distribution of the Participant's Account
upon death.
1.4 Board of Retirement ("Board"). The Board of Retirement
appointed, in accordance with all applicable statutes or ordinances, to oversee the
Plan's operations. The Board consists of five individuals, three employees elected
by the Participants, one appointee of the Town Manager, and the Finance Director
or his or her designee.
1.5 Break in Service. A Plan Year during which an Employee
fails to complete more than 500 Hours of Service.
1.6 Code. The Internal Revenue Code as amended from time to
time and the regulations and rulings in effect thereunder.
1.7 Compensation. The total wages or salary, and any other
taxable remuneration earned while a Participant,from the Employer during the
Plan Year, as reported on Form W-2, plus employer contributions made through a
salary reduction agreement described in sections 125, 401, 403, 414(h) or 457 of
the Internal Revenue Code of 1986, but excluding overtime (hours in excess of 40
per week paid at either straight-time or at time-and-one-half), compensatory time,
bonuses, commissions, volunteer pay, pay for occasional and sporadic work,
allowances, on-call pay, shift differential pay, life insurance coverage over
$50,000, wellness benefits, and severance payments. Wages and salary shall
include lump-sum pay for merit increases, vacation sell-back, and regular pay for
compensated absences such as vacations, holidays, sick leave, personal leave and
paid-time-off. Effective for Plan Years beginning on or after January 1, 1996,
Compensation for any Plan Year will be limited to the first $150,000 of
Compensation, subject to adjustment as provided in Code section 401(a)(17)). The
I-1
15237:MAB
limits of Code section 401(a)(17) shall not apply to a Participant who first became
a Participant in the Plan before January 1, 1996.
Effective January 1, 1997, the family member aggregation
rules set forth in Code Section 414(q) shall not apply.
Effective for Plan Years beginning on or after January 1,
2002, Compensation shall not exceed $200,000, subject to adjustment as provided
in Code section 401(a)(17)(B).
1.8 Defined Contribution Plan. A Plan under which individual
accounts are maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such Plan is based solely on the fair market value of his
or her account balance.
1.9 Disabili . An illness or injury of a potentially permanent
nature certified by a physician selected by or satisfactory to the Plan Administrator
which prevents the Employee from engaging in his or her occupation for wage or
profit for which the Employee is reasonably fitted by training, education or
experience. The Plan Administrator may require or accept, as sole proof of total
and permanent disability, the determination by the Social Security Administration
that the Employee is entitled to a disability insurance benefit under the Federal
Social Security Act.
1.10 Employee. Employee shall mean any regular full-time
employee of the Employer, excluding Police Officers and Firefighters hired prior
to May 11, 2000. Effective January 1, 1987, included are "leased employees" as
defined in this section 1.10. The term "leased employee" means any person (a)
who is not an Employee of the Employer, and (b) who pursuant to an agreement
between the Employer and any other person (a "leasing organization") has
performed services for the Employer on a substantially full-time basis for a period
of at least one (1) year, as such services are performed under primary direction or
control by the Employer. Notwithstanding the foregoing, if "leased employees"
constitute less than twenty percent (20%) of the Employer's nonhighly
compensated workforce within the meaning of Code Section 414(n)(5), a person
who is covered by a money purchase pension plan maintained by the leasing
organization which provides a non-integrated employer contribution rate of at least
ten percent (10%) of compensation, immediate participation, and full vesting shall
not be considered a "leased employee."
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1. 11 Employer. The Town of Avon, Colorado and any entity that
succeeds the Employer and adopts this Plan.
1.12 Entry Date. The date on which an Employee begins
employment as an Employee and first performs an Hour of Service for the
Employer.
1.13 Forfeiture. The portion of a Participant's Account which,
according to Article VIII, the Participant is not entitled to receive.
1.14 Fund. All contributions received by the Trustee under this
Plan and Trust, investments thereof and earnings and appreciation thereon.
1.15 Hour of Service.
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed due to vacation, holiday, illness, paid time off (effective January 1,
2002), incapacity (including Disability), jury duty, military duty or leave of
absence, but excluding leave hours accrued by the Employee which are paid to the
Employee upon separation from employment. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous period (whether or
not such period occurs in a single computation period); and
. (c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer. The same
Hours of Service shall not be credited both under paragraph (a) or paragraph (b),
as the case may be, and under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made.
(d) Hours of Service shall be credited for employment
with the Employer and with other members of an affiliated service group (as
defined in section 414(m) of the Code) and any other entity required to be
aggregated with the Employer pursuant to section 414(o) and the regulations
thereunder. Hours of Service shall also be credited for any individual considered
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an Employee for purposes of this Plan under section 414(n) or section 414(o) and
the regulations thereunder.
. (e) Solely for purposes of determining whether a Break in
Service, as defined in paragraph 1.5, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of Service which
would otherwise have been credited to such individual but for such absence, or in
any case in which such hours cannot be determined, eight Hours of Service per day
of such absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence by reason of the pregnancy of the
individual, by reason of a birth of a child of the individual, by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual, or for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of Service
credited under this paragraph shall be credited in the computation period in which
the absence begins if the crediting is necessary to prevent a Break in Service in
that period, or in all other cases, in the following computation period. No more
than 501 hours will be credited under this paragraph.
(f) Hours of Service shall be on the basis of actual hours
for which an Employee is paid or entitled to payment.
1.16 Life Expectancy. Life Expectancy and Joint and Last
Survivor Expectancy are computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations, using the
attained age of the Participant (or designated beneficiary) as of the Participant's (or
designated beneficiary's) birthday in the applicable calendar year reduced by one
for each calendar year which has elapsed since the date life expectancy was first
calculated. The applicable calendar year shall be the first distribution calendar
year, and if life expectancy is being recalculated such succeeding calendar year. If
distribution is in the form of an immediate annuity, purchased after the
Participant's death with the Participant's remaining interest, the applicable calendar
year is the year of purchase. If life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so recalculated. Unless otherwise
elected by the Participant by the time distributions are required to begin, Life
Expectancies shall be recalculated annually. Such election shall be irrevocable as
to the Participant and shall apply to all subsequent years. The Life Expectancy of
a nonspouse beneficiary may not be recalculated.
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1.17 Limitation Year. The calendar year or such other 12
consecutive month period designated by the Employer for purposes of determining
the maximum annual addition to a Participant's account.
1.18 Mandatory Employee Pre-Tax Contributions. Required
Employee contributions made to the Plan on behalf of the Participant, which are
treated as Employer contributions pursuant to section 414(h)(2) of the Code in lieu
of cash compensation.
1.19 Normal Retirement Age. The date on which a Participant has
reached his 65th birthday.
1.20 Participant. Any Employee who has met the eligibility
requirements and is-participating in the Plan. Effective January 1, 1987, also
excluded are "leased employees," as defined in Section 1. 10, Article I of the Plan.
Any individual who agrees with the Employer that the individual's services are to
be performed as a "leased employee" or an independent contractor will not be a
Participant regardless of any classification of such individual as a common-law
employee by the Internal Revenue Service, the Department of Labor or any court
of competent jurisdiction.
1.21 Plan. The Town of Avon Public Employees Money Purchase
Pension Plan described by the provisions in this document.
1.22 Plan Administrator. The Board of Retirement.
1.23 Plan Year. Each 12 consecutive month period commencing
on January 1, and ending on December 31.
1.24 Qualified Deferred Compensation Plan. Any pension, profit
sharing or other plan which meets the requirements of section 401 of the Code
which includes a trust exempt from tax under section 501(a) of the Code and any
annuity plan described in section 403(a) of the Code.
1.25 Restatement Date. January 1, 1987, except as otherwise
indicated in the document. The Plan was originally effective January 1, 1985,
amended January 1, 1988, amended and restated October 1, 1990, and was
amended in its entirety on February 26, 2002, to include amendments through
December 31, 2001.
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1.26 Rollover Contribution. A contribution made by a Participant
of an amount distributed to such Participant from another Qualified Deferred
Compensation Plan in accordance with section 4.3.
1.27 Spouse (Surviving Spouse). The spouse or surviving spouse
of the Participant, provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as the spouse or surviving
spouse to the extent provided under a qualified domestic relations order as
permitted by Colorado Statutes.
1.28 Trustee. Wells Fargo Bank West, N.A.
1.29 Valuation Date. The last day of the Plan Year and the
following date(s) on which Participant accounts are revalued in accordance with
Article V: March 31, June 30, and September 30. Effective July 1, 1998,
Participant accounts are revalued in accordance with Article V on each business
day of the Plan Year during which Plan assets for which there is an established
market are valued and the Trustee is conducting business.
1.30 Voluntary After-Tax Contribution. An Employee After-Tax
Contribution which is not tax deductible and which is not required as a condition
for participation in the Plan.
1.31 . Year of Service. A Plan Year during which an Employee has
not less than 1,000 Hours of Service, including periods prior to the January 1, 1985
original Plan effective date.
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ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation. An Employee shall become a Participant in the
Plan on the first day of employment as an Employee. Participants in the Plan that
was in effect on September 30, 1990 shall become Participants in this restated Plan
on October 1, 1990. An Employee who satisfied the eligibility requirements and
subsequently terminated employment shall become a Participant immediately upon
returning to the employ of the Employer.
2.2 Employment Rights. Participation in the Plan shall not confer
upon a Participant any employment rights, nor shall it interfere with the
Employer's right to terminate the employment of any Employee at any time.
2.3 - Change in Classification of Employment. In the event a
Participant becomes ineligible to participate because he or she is no longer a
member of an eligible class of Employees, such Employee shall participate
immediately upon his or her return to an eligible class of Employees.
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ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Matching Employer Contributions. The Employer shall
contribute to the Plan for each payroll period an amount equal to 100% of each
Participant's contribution to the Plan for that payroll period, reduced by any
Forfeitures used to replace such Matching Employer Contributions according to
section 8.6. However, the Employer's Contribution for any Plan Year shall be
subject to the limitations on allocations contained in Article IX.
3.2 F1NTENTIONALLY LEFT BLANK]
3.3 Transfer Contributions. Subject to the direction of the
Employer, the Trustee is authorized to receive and add to the Trust Fund as a direct
transfer assets attributable to the vested interest of any Participant in a retirement
plan qualified under Code section 401(a) if such individual is a Participant in this
Plan. Transfers shall be credited to the particular Participant's Transfer Account,
shall always be fully vested and nonforfeitable, and shall be distributed pursuant to
section 7.1 hereof.
3.4 Expenses and Fees. The Employer shall also be authorized to
reimburse the Fund for all expenses and fees incurred in the administration of the
Plan or Trust that were paid out of the assets of the Fund. Such expenses shall
include, but shall not be limited to, fees for professional services, printing, postage
and brokerage or other commissions, subject to the limits of Code section 415.
3.5 Responsibility for Contribution. The Trustee shall not be
required to determine if the Employer has made a contribution or if the amount
contributed is in accordance with the Plan or the Code. The Employer shall have
sole responsibility in this regard.
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3.6 Return of Contributions. Contributions made to the Fund by
the Employer shall be irrevocable, except as follows:
(a) Any contribution made to the Employer because of a
mistake of fact must be returned to the Employer within one year of the
contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the Internal Revenue Code,
any contribution made incident to that initial qualification by the Employer must
be returned to the Employer within one year after the date the initial qualification
is denied, but only if the application for the qualification is made by the time
prescribed by law for filing the Employer's return for the taxable year in which the
Plan is adopted, or such later date as the Secretary of the Treasury may prescribe.
3.7 Military Service. Effective on and after December 12, 1994,
notwithstanding any provision of this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service will be provided in
accordance with Code section 414(u).
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ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Mandatory Employee Pre-Tax Contributions. A Participant
shall be required to contribute toward the cost of the Plan, from amounts the
Participant would otherwise receive as Compensation, an amount equal to 8% of
the Participant's Compensation for the period October 1, 1990 through December
31, 1990, 10% of Participant's Compensation for the period January 1, 1991
through December 31, 1992 and 11% for periods after January 1, 1993. Such
contributions shall be designated as Mandatory Employee Contributions pursuant
to section 414(h)(2) of the Internal Revenue Code of 1986, contingent upon the
contributions being excluded from the Participant's gross income for federal
income tax purposes.
4.2 Voluntary Employee Contributions. A Participant may not
make Voluntary After-Tax Contributions to the Plan after September 30, 1990.
Participant Voluntary After-Tax Contributions made to the Plan before October 1,
1990 shall be held and administered according to the terms of this Plan governing
Voluntary After-Tax Contribution Accounts.
4.3 Rollover Contribution. A Participant may make a Rollover
Contribution to the Plan of all or any part of an amount distributed or distributable
to him or her from a Qualified Deferred Compensation Plan provided the Rollover
Contribution constitutes a direct transfer of eligible rollover distributions described
in section 401(a)(31) that are eligible to be rolled over and that would otherwise be
includible in gross income of the Code or a rollover described in section 402(c) of
the Code.
Such Rollover Contribution may also be made through an Individual Retirement
Account (IRA) qualified under section 408 of where the Code where the IRA was
used as a conduit from the Qualified Deferred Compensation Plan, the Rollover
Contribution is made in accordance with the rules of Code section 402(c) and the
Rollover Contribution does not include any regular IRA contributions, or earnings
thereon, that the Participant may have made to the IRA. The Trustee shall not be
held responsible for determining whether Rollover Contributions made hereunder
meet the requirements of this section 4.3.
Effective January 1, 2002, distributions from a retirement plan subject to section
403(b) of the Code, distributions from an eligible plan under section 457(b) of the
Code which is maintained by a state, political subdivision of a state, or any agency
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or instrumentality of a state or political subdivision of a state, and distributions
from IRAs and may also be rolled into this Plan, subject to applicable law.
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ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts. The Plan Administrator shall establish a
separate bookkeeping account for each Participant showing the total value of his or
her interest in the Fund. Each Participant's Account shall be separated for
bookkeeping purposes into the following subaccounts:
(a) Matching Employer Contributions.
(b) Transfer Contributions, which shall include
subaccounts as necessary for Employer Contributions, after-tax employee
contributions and before-tax employee contributions.
(c) Mandatory Employee Before-Tax Contributions.
(d) Voluntary After-Tax Contributions, with separate
accounting for contributions made before January 1, 1987 and contributions made
after December 31, 1986.
(e) Rollover Contributions, with separate subaccounts for
different rollovers as required by law.
5.2 Adjustments To Participant Accounts. As of each Valuation
Date of the Plan, the Plan Administrator shall credit to or deduct from each
Account:
(a) the Participant's share of the Employer's Contribution
and forfeitures,
(b) any Employee Contributions made by the Participant
since the last Valuation Date,
(c) withdrawals, and
(d) the Participant's proportionate share of any investment
earnings and increases or decreases in the fair market value of the Fund since the
last Valuation Date.
All allocations made hereunder will be made in a nondiscriminatory manner.
Accounts with segregated investments shall receive only the income or loss on
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such segregated investments. Terminated Participants' vested account balances
shall be credited with any investment earnings and increase or decrease in the fair
market value of the Fund until the Valuation Date preceding distribution.
Terminated Participants' nonvested account balances shall be credited with any
investment earnings and increase or decrease in the fair market value of the Fund
until forfeited pursuant to section 8.5.
5.3 Participant Statements. The Plan Administrator shall at least
annually prepare or cause to have prepared a statement for each Participant
showing the additions to and subtractions from his or her account since the last
Valuation Date and the fair market value of his or her account as of the current
Valuation Date.
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ARTICLE VI
ELIGIBILITY FOR BENEFITS
6.1 Retirement. If a Participant's Employment terminates for any
reason on or after his Normal Retirement Age, he shall be eligible to receive the
entire amount then credited to his account, which shall be fully vested and
nonforfeitable.
6.2 Disability. If a Participant's Employment terminates because
of his Disability at any time, he shall be eligible to receive the entire amount then
credited to his account, which shall be fully vested and nonforfeitable.
6.3 Death.
(a) Before Termination of Employment. If a Participant's
Employment terminates because of his death, the entire amount then credited to his
account shall become vested and nonforfeitable and payable pursuant to
subsection 6.3(c).
(b) After Termination of Employment. If a Participant
(including a former Participant) dies after terminating Employment, the Plan shall
pay the then undistributed vested balance, if any, of the Participant's account
pursuant to subsection (c) below.
(c) Recipient of Payment After Death and Timing of
Payment. Each Employee, upon becoming a Participant and on a form provided
by the Plan and filed with the Plan Administrator, may designate a Beneficiary and
may, in addition, name a contingent Beneficiary. Any Participant may at any time
revoke or change his designation of Beneficiary by filing a written notice of the
revocation or change with the Plan Administrator. The Plan shall distribute
benefits payable pursuant to subsection (a) or (b) above to the deceased
Participant's Beneficiary identified pursuant to a Beneficiary designation in effect
at the time of his death or, if no such designation exists, to the Participant's
surviving spouse or, if none, to his estate. The method and duration of payment
shall be consistent with the limits imposed in Article VII. If distribution had
commenced to the Participant prior to his death, it shall continue being paid after
the Participant's death at least as rapidly as under the method of distribution being
made as of the Participant's death. If distribution had not begun before the
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Participant's death, full distribution shall occur over period described in (i), (ii) or
(iii) below:
(i) Non-Spouse Beneficiary. If the distribution is
payable to a designated Beneficiary who is not the Participant's spouse, the
distribution shall occur over a period no longer than the Beneficiary's Life
Expectancy, commencing on or before December 31 of the calendar year
immediately following calendar year of the Participant's death.
(ii) Spouse Beneficiary. If the distribution is
payable to a designated Beneficiary who is the Participant's spouse, the
distribution shall occur over a period no longer than the spouse's Life Expectancy,
commencing no later than the later of [a] December 31 of the calendar year
immediately following the calendar year in which the Participant died, or
[b] December 31 of the calendar year in which the Participant would have attained
age 70-1/2. The surviving spouse may elect to have the distribution of the
Account commence within 90 days after Participant's death.
(iii) No Designated Beneficiary. In all other cases,
i.e., in the absence of a designated Beneficiary, the distribution shall occur over a
period ending no later than December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(d) Proof of Death. The Plan Administrator may require
such proper proof of death and such evidence as to a person's right to receive
payment from a deceased Participant's account as the Plan Administrator
reasonably deems appropriate.
6.4 Termination of Employment Before Retirement, Disability or
Death. If a Participant's employment with the Employer terminates prior to his
Normal Retirement Date for any reason other than his death or Disability, the
Participant shall be eligible to receive the vested portion of his account,
determined according to Article VIII.
6.5 Claims Procedures. Upon retirement, death, or other
severance of employment, the Participant or representative of such Participant may
request of the Plan Administrator payment of benefits due and the manner of
payment. If a request for benefits is made, the Plan Administrator shall accept,
reject, or modify such request and, in the case of a denial or modification, the Plan
Administrator shall:
. (a) state the specific reason or reasons for the denial,
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(b) provide specific reference to pertinent Plan provisions
on which the denial is based,
(c) provide a description of any additional material or
information necessary for the Participant or his or her representative to perfect the
claim and an explanation of why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained
herein.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Plan Administrator of its initial decision. Within 60 days following
such request for review, the Plan Administrator shall render its final decision in
writing to the Participant or representative stating specific reasons for such
decision. If the Participant or representative is not satisfied with the Plan
Administrator's final decision, the Participant or representative can institute an
action in a federal court of competent jurisdiction; for this purpose, process would
be served on the Plan Administrator.
6.6 Disposition of Unclaimed Payments. If the Trustee is unable
to make any payment due under the Plan to any person because it does not know
the identity or post office address of such person, the Trustee shall suspend all
further payment until it has received written direction from the Plan Administrator.
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ARTICLE VII
PAYMENTS
7.1 Commencement of Payments. The distribution of all or any
portion of a Participant's account shall commence in accordance with the
Participant's election, not earlier than termination of the Participant's employment
(unless specifically authorized elsewhere herein or in a "qualified domestic
relations order" as defined in Colorado Revised Statutes). Distribution of a
Participant's account shall commence no later than the April 1 of the calendar year
following the later of (a) the calendar year in which the Participant attains age
70-1/2 or (b) the calendar year in which the Participant's employment with the
Employer terminates. Distributions shall be made in accordance with Treasury
Regulations under Internal Revenue Code section 401(a)(9). Distribution may
commence less than 30 days after the notice required under section 402(f) of the
Code is given, provided that:
(a) the Board clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(b) the Participant, after receiving the notice, affirmatively
elects a distribution.
7.2 Method of Payment. Distribution of a Participant's account
shall occur in cash, in one of the following methods as chosen by the Participant
(or, if applicable, the Beneficiary):
(a) Single Lump Sum. A single, lump sum distribution of
the entire vested amount in the Participant's account. Payment shall be in a single
lump sum if the Participant's account is less than 100% vested or if the value of the
Participant's vested account (before payments begin) is not greater than $5,000
($3,500 prior to January 1, 2000). To the extent required by law, the distribution
shall be paid to an IRA.
(b) Partial Lump Sum. A lump sum distribution of a
portion of the Participant's account, which the Participant may choose to receive
separately from other Plan distribution(s).
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(c) Installment Payments. Distribution in substantially
equal monthly, quarterly, semiannual or annual payments. Such installments,
whether paid from the Plan assets or an annuity contract, shall be of such amount
and on such a schedule that the distribution is consistent with section 401(a)(9) of
the Code and applicable regulation, which the Plan hereby incorporates by
reference. Subject to such requirements, installment payments may be accelerated,
delayed or paid in a lump sum at the direction of the Participant.
7.3 De minimis Accounts. Notwithstanding the foregoing in this
article, an employee who separates from service for any reason other than death
and who has a combined nonforfeitable interest of $5,000 or less (effective
January 1, 2002, this amount can be determined without regard to any rollover
contributions made to the plan) in the Plan, shall be paid at the discretion of the
Plan Administrator, without the prior written consent of the Participant, his or her
lump sum value. To the extent required by law, payment shall be made to an IRA.
7.4 - Minimum Distributions. The Board shall not direct the
Trustee to distribute the Participant's Account, nor shall the Participant elect to
have the Trustee distribute his Account, under a method of payment which does
not satisfy the minimum distribution requirements of this section 7.4 for the
calendar year in which the Trustee must commence distribution of the Participant's
Account under section 7.1 and for each succeeding calendar year. The minimum
distribution is the value of the Participant's vested Account at the beginning of the
calendar year divided by the Participant's remaining life expectancy or divided by
the remaining joint life expectancy of the Participant and his spouse, if applicable.
With respect to distributions under the Plan made for calendar years beginning on
or after January 1, 2001, the Plan will apply the minimum distribution
requirements under section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary. This shall continue in
effect until the end of the last calendar year beginning before the effective date of
final regulations under section 401(a)(9) or such other date specified in guidance
published by the Internal Revenue Service.
7.5 - Direct Rollover. This section applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this section, a distributee
may elect, at the time and in the manner prescribed by the Board, to have any
portion of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
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(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does not include any
distribution that is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the distributee
and the distributee's designated beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan is
an individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an annuity
plan described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement account or
individual retirement annuity. For distributions made after December 31, 2001, an
eligible retirement plan shall also mean an annuity contract described in
section 403(b) of the Code and an eligible plan under section 457(b) of the Code
which is maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees to
separately account for amounts transferred into such plan from this plan. The
definition of eligible retirement plan shall also apply in the case of a distribution to
a surviving spouse, or to a spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section 414(p) of the
Code.
(c) Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(d) Direct rollover: A direct rollover is a payment by the
plan to the eligible retirement plan specified by the distributee.
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7.6 'In-Service Withdrawals.
(a) Voluntary After-Tax Contributions and Rollover
Contributions. A Participant who is employed by the Employer may withdraw all
or any part of his or her account attributable to Voluntary After-Tax Contributions
or Rollover Contributions upon written request to the Plan Administrator.
(b) Other Requirements. Such request shall include the
Participant's address, social security number, birth date, and amount of the
withdrawal. A Participant who elects an in-service withdrawal of his or her
Voluntary Contributions shall not be permitted to make a further Voluntary
Contribution for a period of one year from the date of the withdrawal.
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ARTICLE VIII
VESTING
8.1 Employee Contributions. A Participant shall always have a
100% vested and nonforfeitable interest in his or her Mandatory Employee
Pre-Tax Contributions, Transfer Contributions, After-Tax Contributions, and
Rollover Contributions plus the earnings thereon. No forfeiture of Employer
related contributions will occur solely as a result of an Employee's withdrawal of
any Employee Contributions.
8.2 Employer Contributions. A Participant shall vest in his or her
account attributable to Employer Contributions in accordance with the table stated
below, provided that if a Participant is not already fully vested, he or she shall
become so upon attaining Normal Retirement Age, upon death prior to Normal
Retirement Age, or upon termination due to Disability, or upon termination of the
Plan.
(a) Employees hired on or prior to September 30, 1990:
Immediate 100% vesting.
(b) Employees hired October 1, 1990 through December
31, 1997:
Years of Service
Percentage Vested and
Nonforfeitable
Less than 2 years
2 years
3 years
4 years
5 years
6 years
7 years
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0%
20%
30%
40%0
60%
80%
100%
15237:MAB
(c) Employees employed on or hired on or after January 1,
1998:
Years of Service
Percentage Vested and
Nonforfeitable
Less than 2 years
2 years
3 years
4 years
5 years
0%
40%
60%
80%
100%
8.3 Years of Service Upon Rehire. In the event a former
Employee is rehired, such Employee shall be credited for vesting with all Years of
Service, except that Years of Service before a Break in Service shall be canceled if
the Participant's Break in Service lasts at least one year and the Participant has
experienced a Forfeiture.
8.4 Calculating Vested Interest. A Participant's vested and
nonforfeitable interest shall be calculated by multiplying the fair market value of
his or her account aftributable to Employer Contributions on the Valuation Date
preceding payment by the vested percentage as of his or her termination date. A
Participant's vested percentage shall be determined according to the Participant's
Years of Service and the vesting schedule stated in section 8.2.
8.5 When Forfeiture Occurs. A Participant's forfeiture if any, of
his or her nonvested account balance derived from Employer Contributions shall
occur:
(a) As of the last day of the Plan Year in which the
Participant incurs a one-year Break in Service; or if earlier and if applicable,
(b) On the date the Participant receives a lump sum
distribution of his or her entire vested account balance as a result of his or her
termination of employment with the Employer.
8.6 Reallocation of Forfeiture. Forfeitures shall be applied, first,
to offset administrative expenses of the Plan and, second, to reduce Matching
Employer Contributions.
8.7 Amendment of Vesting Schedule. No amendment to the Plan
shall be effective to the extent that it has the effect of decreasing a Participant's
accrued benefit. For purposes of this paragraph, a Plan amendment which has the
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effect of decreasing a Participant's account balance, with respect to benefits
attributable to service before the amendment shall be treated as reducing an
accrued benefit. Furthermore, if the vesting schedule of a Plan is amended, in the
case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's right to his
Employer-derived accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
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ARTICLE IX
LIMITATIONS ON ALLOCATIONS
9.1 Maximum Limits on Allocations.
(a) Maximum Annual Additions. The maximum
contributions and other additions for a Participant under this Plan for any
Limitation Year shall not exceed, when expressed as an annual addition to the
Participant's account, and when added to the annual additions to the Participant's
account for the Limitation Year under all other defined contribution plans and all
welfare benefit funds, as defined in Internal Revenue Code section 419(e), and any
individual medical account, as defined in Internal Revenue Code section 415(1),
maintained by the Employer, the lesser of-
(i) $30,000 ($40,000 effective January 1, 2002), as
adjusted under Internal Revenue Code section 415(d); or
(ii) 25% (100% effective January 1, 2002) of the
Compensation paid to the Participant by the Employer in such year.
The Compensation limitation referred to in (ii) shall not apply to any contribution
for medical benefits (within the meaning of section 401(h) or section 419A(f)(2) of
the Code) which is otherwise treated as an annual addition under section 415(1)(1)
or 419A(d)(2) of the Code.
(b) Definition of Compensation. For purposes of this
Article IX, Compensation shall mean wages within the meaning of Internal
Revenue Code section 3401(a) (for purposes of income tax withholding at the
source) but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed. Effective with the first Plan Year beginning after 1997,
Compensation for purposes of this Article IX shall include any elective deferral as
defined in Code section 402(g)(3) and any amount which is contributed or deferred
by the Employer at the election of the Employee and which is not includible in the
gross income of the Employee by reason of Code section 125 or 457.
For purposes of applying the limitations of this Article, Compensation for a
Limitation Year is the Compensation actually paid or includable in gross income
during such year.
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(c) Definition of Annual Addition. For the purposes of
this Article IX, "annual, addition" shall mean the sum allocated to a Participant's
account for any Limitation Year of-
(i) Employer Contributions;
(ii) Employee Contributions;
(iii) Forfeitures;
(iv) Amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits allocated to the separate
account of a Key Employee, as defined in Internal Revenue Code
section 419A(d)(3), under a welfare benefit fund, as defined in Code
section 419(e) maintained by the Employer; and
(v) Amounts allocated after March 31, 1984 to an
individual medical account (as defined in Internal Revenue Code
section 415(1)(1)) which is part of a pension or annuity plan maintained by the
Employer.
The term "annual addition" shall not include the allocation to
a Participant's account of income, transfers according to section 3.2, or rollovers
according to section 4.3.
(d) For purposes of this Article IX, "Employer" means the
Employer that adopts this Plan.
9.2 Disposition of Excess Annual Additions. If, due to a
reasonable error in estimating a Participant's Compensation or other reasons
acceptable to the Commissioner of Internal Revenue, or as a result of the allocation
of forfeitures, an amount in excess of the limit, described in section 9.1 is allocated
to a Participant's account, the excess will be disposed of as follows (attributing all
excess amounts to this Plan first, if multiple plans are involved):
(a) One-half (Note: this assumes equal employee and
employer contributions) of the excess amount will be returned to the Participant as
a return of employee contributions, to the extent that the return would reduce the
excess amounts in the Participant's account.
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(b) If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's account will be used to
reduce Employer Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary.
(c) If after the application of paragraph (a) an excess
amount still exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the excess amount will be held unallocated in a suspense account.
The suspense account will be applied to reduce future Employer Contributions
(including allocation of any forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if necessary. If a suspense
account is in existence at any time during a Limitation Year pursuant to this
section, it will not participate in the allocation of the Trust's investment gains and
losses. If a suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated and
reallocated to Participants accounts before any Employer or any Employee
contributions may be made to the Plan for that Limitation Year. Excess amounts
may not be distributed to Participants or former Participants, except as provided in
section 9.2(a) above.
(d) If a suspense account is in existence at any time during
the Limitation Year.pursuant to this paragraph, it will not participate in the
allocation of investment gains and losses.
9.3 Participation in This Plan and a Defined Benefit Plan (Not
Effective for Plan Years Beginning on or After January 1, 2000). If the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering any
Participant in this Plan, the sum of the defined benefit plan fraction and the defined
contribution plan fraction for each Limitation Year may not exceed 1.0, as
described in section 415(e) of the Code, to the extent applicable to government
plans.
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ARTICLE X
ADMINISTRATION
10.1 Employer. The Employer shall be a named fiduciary. The
Employer's duties shall include but are not limited to appointing the Plan's
attorney, accountant, actuary, and any other party needed to administer the Plan,
and reviewing and approving any financial reports, investment review, or other
reports prepared by any party appointed by the Employer. The Employer shall
provide indemnification or insurance for breach of fiduciary duty or errors and
omissions insurance for all Board members on the same terms and conditions as
the Employer does for other Town boards and commissions.
10.2 Plan Administrator.
. (a) Powers and Duties of Plan Administrator. The Plan
Administrator shall be a named fiduciary. The Plan Administrator shall administer
the Plan and shall have all powers necessary for that purpose, including, but not by
way of limitation, power to interpret the Plan, to communicate with Employees
regarding their participation and benefits under the Plan, including the
administration of claims procedures, to determine the eligibility, status and rights
of all persons under the Plan and in general to decide any dispute. The Plan
Administrator shall have full authority to determine eligibility for benefits and to
construe the terms of the Plan. The Plan Administrator shall direct the Trustee
concerning all distributions from the Fund, in accordance with the provisions of
the Plan, and shall have such other powers in the administration of the Fund as
may be conferred upon it by the Trust Agreement. The Plan Administrator shall
file any returns and reports with the Internal Revenue Service, Department of
Labor, or any other governmental agency, establish a funding policy and
investment objective consistent with the purposes of the Plan and shall maintain all
Plan records. The Plan Administrator shall be agent of the Plan for service of all
process.
(b) Meetings. The Board shall meet whenever required for
the orderly and timely administration of the business of the Plan at such location as
may be acceptable to the Board.
(c) Quorum. A quorum for the transaction of business at a
duly called meeting shall consist of three (3) members.
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(d) Voting. All actions by and decisions of the Board shall
be by the vote of at least three (3) members. Each Board member shall have one
vote.
(e) Organization and Operation of the Board. The Town
Finance Director or his or her designee shall serve as Chair. At the
commencement of each year, the Board members shall select from among them a
Secretary who shall-each serve for a period of one (1) year. The Secretary shall be
responsible for maintaining an accurate record of all actions of the Board,
including minutes from all Board meetings. A copy of such minutes shall be
retained as a record of the Plan and one copy thereof shall be distributed to each
Board member. Documents requiring execution by the Board shall be signed by
the Chair and attested by the Secretary. The Board may adopt rules and
regulations necessary for the orderly election of Employee members of the Board
and for the proper and efficient administration of the Plan, provided such rules and
regulations are not inconsistent with the terms of the Plan or the provisions of
applicable law.
10.3 Trustee. The Trustee shall be responsible for the
administration of investments held in the Fund. These duties shall include:
(a) implementing an investment program based on the
Employer's investment objectives,
(b) receiving contributions under the terms of the Plan,
(c) making distributions from the Fund in accordance with
written instructions received from an authorized representative of the Plan
Administrator, and
(d) keeping accurate records reflecting its administration
of the Fund and making such records available to the Employer for review and
audit. Within 90 days after each Plan Year, and within 90 days after its removal or
resignation, the Trustee shall provide to the Employer an accounting of its
administration of the Fund during such year or from the end of the preceding Plan
Year to the date of removal or resignation. Such accounting shall include a
statement of cash receipts and disbursements since the date of its last accounting
and shall contain an asset list showing the fair market value of investments held in
the Fund as of the end of the Plan Year. The value of marketable investments shall
be determined using the most recent price quoted on a national securities exchange
or over-the-counter market. The value of non-marketable investments shall be
determined in the sole judgment of the Trustee. The value of investments in
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securities or obligations of the Employer in which there is no market shall be
determined by an independent qualified party selected by the Employer using a
method acceptable to the Trustee. The Employer shall review the Trustee's
accounting and notify the Trustee in the event of its disapproval of the report
within 90 days, providing the Trustee with a written description of the items in
question. The Trustee's duties shall be limited to those described above. The
Employer shall be responsible for any other administrative duties required under
the Plan or by applicable law.
10.4 Administrative Fees and Expenses. All reasonable costs,
charges and expenses incurred by the Trustee in connection with the
administration of the Fund and all reasonable costs, charges and expenses incurred
by the Plan Administrator in connection with the administration of the Plan
(including fees for legal services rendered to the Trustee or Plan Administrator)
may be paid by the Employer, but if not paid by the Employer when due, shall be
paid from the Fund. Such reasonable compensation to the Trustee as may be
agreed upon from time to time between the Employer and the Trustee and such
reasonable compensation to the Plan Administrator as may be agreed upon from
time to time between the Employer and Plan Administrator may be paid by the
Employer, but if not paid by the Employer when due shall be paid by the Fund.
Notwithstanding the foregoing, no compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is the Employer or a full-time
Employee of the Employer.
10.5 Governing Law. Construction, validity and administration of
the Plan and Trust shall be governed by Federal law to the extent applicable and to
the extent not applicable by the laws of the State of Colorado.
10.6 Election and/or Appointment of Employee Board Members.
The three (3) Employees who are to be elected to the Board by Participants shall
be elected to serve a term of three (3) years. If otherwise qualified, Employee
members of the Board may be reelected to the Board without limitation on the
number of terms they may serve. If an elected Board member separates from
service of the Employer, the Board shall appoint a new member to fulfill the
remaining term.
10.7 Written Communication. To the extent permitted by
applicable Treasury Regulations and accepted by the Plan Administrator, all
provisions of the Plan and Trust Agreement that require written notices and
elections shall be interpreted to mean authorized electronic or telephonic notices
and elections.
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ARTICLE XI
TRUST FUND
11.1 The Fund. The Fund shall consist of all contributions made
under Article III and Article IV of the Plan and the investment thereof and
earnings thereon. All contributions and the earnings thereon less payments made
under the terms of the Plan, shall constitute the Fund. The Fund shall be
administered as provided herein.
11.2 Control of Plan Assets. The assets of the Fund or evidence of
ownership shall be held by the Trustee under the terms of the Plan and Trust.
11.3 Exclusive Benefit Rules. No part of the Fund shall be used
for, or diverted to, purposes other than for the exclusive benefit of Participants,
former Participants with a vested interest, and the beneficiary or beneficiaries of
deceased Participants having a vested interest in the Fund at death.
11.4 Assignment and Alienation of Benefits. No right or claim to,
or interest in, any part of the Fund, or any payment therefrom, shall be assignable,
transferable, or subject to sale, mortgage, pledge, hypothecation, communication,
anticipation, garnishment, attachment, execution, or levy of any kind, and the
Trustee shall not recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, or anticipate the same, except to the extent required by law. The
preceding sentence shall also apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a Participant pursuant to a domestic
relations order, except to the extent that Colorado statutes and rules adopted by the
Plan Administration for enforcement of such order. The Plan Administrator may
adopt rules regarding payments pursuant to a domestic relations order.
11.5 Trust Agreement. The Employer has entered into a Trust
Agreement with the Trustee Wells Fargo Bank West, N.A., formerly United Bank
of Denver, N.A., to provide for the holding, investment and administration of the
funds of the Plan. The Trust Agreement shall be part of the Plan, and the right and
duties of any person under the Plan shall be subject to all terms and provisions of
the Trust Agreement.
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ARTICLE XII
PARTICIPANT LOANS
12.1 Application. A Plan Participant may make application to the
Plan Administrator requesting a loan from the Fund. The Plan Administrator shall
have the sole right to approve or disapprove a Participant's application provided
that loans shall be made available to all Participants and Beneficiaries on a
reasonably equivalent basis. Loans shall not be made available to highly
Compensated Employees in an amount greater than the amount made available to
other Employees.
12.2 Maximum Amount. No loan granted hereunder shall exceed
the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans during the one year period ending on the day before the loan is
made, over the outstanding balance of loans from the Plan on the date the loan is
made, or (b) one-half of the fair market value of a Participant's vested account
balance derived from Employer Contributions, Voluntary After-Tax Contributions,
Mandatory Employee Contributions, and Rollover Contributions. An assignment
or pledge of any portion of the Participant's interest in the Plan and a loan, pledge,
or assignment with respect to any insurance contract purchased under the Plan,
will be treated as a loan under this Article XII.
12.3 Application Forms. All applications must be made on forms
provided by the Plan Administrator and must be signed by the Participant.
12.4 Interest on Loans. Any loan granted hereunder shall bear
interest at a rate determined by the Plan Administrator to be reasonable at the time
of application, and subject to the approval of the Trustee.
12.5 Security. All loans made hereunder shall be secured by the
Participant's vested account balance and by such additional collateral as may be
required by the Plan Administrator.
12.6 Terms of Repayment. Any loan shall by its terms require that
repayment (principal and interest) be bi-weekly, over a period not extending
beyond five years from the date of the loan. A loan that is used to acquire or
construct a dwelling unit which is used within a reasonable time (determined at the
time the loan is made) as the principal residence of the Participant, may allow for
the repayment (principal and interest) over a period not exceeding beyond 30
years. The Plan Administrator may require the payment of principal and interest
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by means of payroll withholding. The Plan Administrator may allow loans to be
suspended during periods of leave of absence as permitted by tax laws.
12.7 Principal and Interest Allocation. The principal and interest
paid by a Participant on his or her loan shall be credited as a segregated
investment.
12.8 Deemed Distribution of Loan Upon Default. A Participant's
loan shall immediately become due and payable according to the rules prescribed
by the Plan Administrator if such Participant fails to make a principal or interest
payment when due. The defaulted loan shall be a deemed distribution in
accordance with applicable Treasury Regulations.
12.9 Approval of Application. If a Participant's loan application is
approved by the Plan Administrator, such Participant shall be required to sign a
note, loan agreement and assignment of his or her entire interest in the Fund as
collateral for the loan.
12.10 Loan Policy. The Employer will adopt a loan policy
establishing the rules and procedures that the Board of Retirement will use to
administer the Participant loan program.
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ARTICLE XIII
INSURANCE POLICIES
13.1 Limitations. If agreed upon by the Plan Administrator and the
Employer, Employees may elect the purchase of life insurance policies under the
Plan. If elected, the aggregate premiums for all ordinary life policies (contracts
with decreasing death benefits and non-decreasing premiums) shall not exceed
50% of the aggregate Employer Contributions allocated to the account of a
Participant. The aggregate premiums for term contracts or universal life contracts
shall not exceed 25% of aggregate Employer Contributions allocated to the
account of a Participant. The aggregate premiums for a Participant with both a
whole life and a term contract shall not exceed 25% of the aggregate Employer
Contributions allocated to the account of a Participant. Premium payments shall
be deducted from the Participant's Employer Contributions account, or if so
directed by the Participant, from the Participant's nondeductible Voluntary
Contributions account.
13.2 Administrative Requirements. Any policies purchased
hereunder shall be held subject to the following rules:
(a) The Trustee shall be applicant, owner and beneficiary
of any policies issued hereunder. The insurance contract (s) must provide that
proceeds will be payable to the Trustee, however the Trustee shall be required to
pay over all proceeds of the contract(s) to the Participant's designated Beneficiary
in accordance with the distribution provisions of this Plan. Under no
circumstances shall the Trust retain any part of the proceeds.
(b) Except as provided in subsection (f), all policies or
contracts purchased hereunder shall be endorsed as nontransferable.
(c) A Participant who is uninsurable or insurable at
substandard rates, may elect to receive a reduced amount of insurance, if available,
or may waive the purchase of any insurance.
(d) All dividends or other returns received on any policy
purchased hereunder, shall be applied as directed by the Trustee to reduce the next
premium due on such policy, to purchase paid-up additions, to accumulate under
the contract, or if no further premium is due, such amount shall be credited to the
Fund as part of the account of the Participant for whom the policy is held.
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(e) If Employer Contributions are inadequate to pay all
premiums on all insurance policies, the Trustee may, at the option of the Plan
Administrator, utilize other amounts remaining in each Participant's account to pay
the premiums on his respective policy or policies, allow the policies to lapse,
reduce the policies to a level at which they may be maintained, or borrow against
the policies on a prorated basis, provided that the borrowing does not discriminate
in favor of the policies on the lives of officers, shareholders, and highly
compensated employees.
(f) On retirement or termination of employment of a
Participant, the Plan Administrator shall direct the Trustee to cash surrender the
Participant's policy and credit the proceeds to his or her account for distribution
under the terms of the Plan. However, before so doing, the Plan Administrator
shall first offer to transfer ownership of the policy to the Participant in exchange
for payment by the Participant of the cash value of the policy at the time of
transfer. Such payment shall be credited to the Participant's account for
distribution under the terms of the Plan (including the applicable vesting schedule).
(g) The Plan Administrator shall be solely responsible to
see that these insurance provisions are administered properly and that if there is
any conflict between the provisions of this Plan and any insurance contracts issued
hereunder that the terms of this Plan will control.
(h) The Employer shall direct the Trustee as to the
insurance company and insurance agent through which the Trustee is to purchase
the insurance contracts, and the amount of the coverage.
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ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 . Amendments. The Employer shall have the right at any time,
and from time to time, to:
(a) Amend this Plan in such manner as it may deem
necessary or advisable in order to qualify this Plan and the Trust created in relation
hereto pursuant to sections 401(a) and 501(a) of the Internal Revenue Code of
1986 and any such amendment may, by its terms, be retroactive; and
(b) Amend this Plan in any other manner.
No amendment shall authorize any part of the Trust Fund to
be used for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates or to defray the reasonable expenses of
administering the Plan; no such amendment shall cause any reduction in the vested
portion of any Participant's interest in the Trust Fund or cause or permit any
portion of the Trust Fund to revert to, or become property of, the Employer and no
such amendment which affects the rights, duties or responsibilities of the Trustee
shall be effective without the Trustee's written consent. Any such amendment
shall become effective as of the effective date stated therein upon delivery of a
written instrument, executed on behalf of the Employer by its proper officers duly
authorized, to the Trustee and the written consent of the Trustee thereto, if such
consent is required. The Board of Trustees may amend this Plan by adopting the
amendment or amendments or may authorize, by standing resolution or otherwise,
a certain individual or individuals to adopt an amendment or amendments hereto,
which amendments shall bear the same effect as if adopted by the Board of
Trustees.
14.2 Termination. The Employer shall have the right to terminate
the Plan upon 60 days notice in writing to the Trustee. If the Plan is terminated,
partially terminated, or if there is a complete discontinuance of contributions under
the Plan by the Employer, all amounts credited to the accounts of Participants shall
vest and become nonforfeitable. In the event of termination, the Plan
Administrator shall direct the Trustees with respect to the distribution of accounts
to or for the exclusive benefit of Participants or their beneficiaries.
14.3 Qualification of Employer's Plan. If the Employer fails to
attain or retain Internal Revenue Service qualification, such Plan shall no longer be
considered a Plan.
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14.4 Mergers and Consolidations. In the case of any merger or
consolidation of the Employer's Plan with, or transfer of assets or liabilities of the
Employer's Plan to, any other plan, immediately after the merger, consolidation, or
transfer Participants in the Employer's Plan shall be credited with benefits which
are equal to or greater than the benefits they would have been credited with
immediately before the merger, consolidation, or transfer if the Plan had then
terminated.
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IN WITNESS WHEREOF, the parties hereto have executed this Plan
this day of ,
EMPLOYER:
Signed for the Employer By: _
Title:
Signature:
15237:MAB
RESOLUTION NO. 02-13
SERIES OF 2002
A RESOLUTION ADOPTING A RESTATED AND AMENDED PLAN DOCUMENT FOR THE
TOWN OF AVON POLICE EMPLOYEES MONEY PURCHASE PENSION PLAN
WHEREAS, the Town of Avon maintains a defined contribution retirement plan for certain
eligible employees, called the Town of Avon Police Employees Money Purchase Pension Plan ("the
Plan"); and
WHEREAS, the Town of Avon wishes to restate the Plan to include various changes
required or permitted by applicable tax laws;
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF
AVON, COLORADO:
Section 1. That the Plan is restated in the form of the attached document.
Section 2. That the Finance Director, as Chairperson of the Board of Retirement, is
hereby authorized to execute the Plan.
ADOPTED this 26th day of February, 2002.
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Kris Nash, Town Clerk
TOWN OF AVON POLICE OFFICERS
MONEY PURCHASE PENSION PLAN
Restated to Include Amendments
Through December 31, 2001
TOWN OF AVON POLICE OFFICERS
MONEY PURCHASE PENSION PLAN
Table of Contents
Page
ARTICLE I
Definitions
1.1 General ......................................................................................................I-1
1.2 After-Tax Contribution .............................................................................I-1
1.3 Beneficiary ................................................................................................I-1
1.4 Board of Retirement ("Board") ................................................................. I-1
1.5 Break in Service ........................................................................................ I-1
1.6 Code ..........................................................................................................I-1
1.7 Compensation ...........................................................................................I-1
1.8 Defined Contribution Plan ........................................................................ I-2
1.9 Disability .................................................................................................. I-2.
1.10 Employee .....................................................................................:............ I-2
1.11 Employer .................................................................................................. I-2
1.12 Entry Date ................................................................................................. I-2
1.13 Forfeiture .... :............................................................................................. I-3
1.14 Fund ..........................................................................................................1-3
1.15 Hour of Service ......................................................................................... I-3
1.16 Life Expectancy ........................................................................................ I-4
1.17 Limitation Year ......................................................................................... I-4
1.18 Mandatory Employee Pre-Tax Contributions ........................................... I-4
1.19 Normal Retirement Age ............................................................................ I-5
1.20 Participant .................................................................................................I-5
1.21 Plan ........................................................................................................... I-5
1.22 Plan Administrator ..................................................... :.............................. I-5
1.23 Plan Year .................................................................................................. I-5
1.24 Qualified Deferred Compensation Plan .................................................... I-5
1.25 Restatement Date ...................................................................................... I-5
1.26 Rollover Contribution ............................................................................... I-5
1.27 Spouse (Surviving Spouse) ....................................................................... I-5
1.28 Trustee ...................................................................................................... I-6
1.29 Valuation Date ..........................................................................................I-6
1.30 Voluntary After-Tax Contribution ............................................................ I-6
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Page
1.31 Year of Service ......................................................................................... I-6
ARTICLE II
Eligibility Requirements
2.1 Participation .............................................................................................II-1
2.2 Employment Rights .................................................................................II-1
2.3 Change in Classification of Employment ......................
ARTICLE III
Employer Contributions
3.1 Matching Employer Contributions .........................................................III-1
3.2 FINTENTIONALLY LEFT BLANK] ....................................................III-1
3.3 Transfer Contributions ....................... .....................................................III-1
3.4 Expenses and Fees ............................. .....................................................III-1
3.5 Responsibility for Contribution ......... .....................................................III-1
3.6 Return of Contributions ..................... .....................................................III-2
3.7 Military Service ................................. .....................................................III-2
ARTICLE IV
Employee Contributions
4.1 Mandatory Employee Pre-Tax Contributions ........................................ IV-1
4.2 Voluntary Employee Contributions ....................................................... IV-1
4.3 Rollover Contribution ............................................................................ IV-1
ARTICLE V
Participant Accounts
5.1 Separate Accounts ...................................................................................V-1
5.2 Adjustments To Participant Accounts .....................................................V-1
5.3 Participant Statements .............................................................................V-2
ARTICLE VI
Eligibility For Benefits
6.1 Retirement ............................................................................................. VI-1
6.2 Disability ............................................................................................... VI-1
6.3 Death ...................................................................................................... VI-1
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Page
6.4 Termination of Employment Before Retirement,
Disability or Death .............................................................................. VI-2
6.5 Claims Procedures ................................................................................. VI-2
6.6 Disposition of Unclaimed Payments ..................................................... VI-3
ARTICLE VII
Payments
7.1 Commencement of Payments ............................................................... VII-1
7.2 Method of Payment .............................................................................. VII-1
7.3 De minimis Accounts ........................................................................... VII-2
7.4 Minimum Distributions ........................................................................ VII-2
7.5 Direct Rollover ..................................................................................... VII-2
7.6 In-Service Withdrawals ........................................................................ VII-4
ARTICLE VIII
Vesting
8.1 Employee Contributions ......................................................................VIII-1
8.2 Employer Contributions .............. ........................................................VIII-1
8.3 Years of Service Upon Rehire ..... ........................................................VIII-2
8.4 Calculating Vested Interest .......... ........................................................VIII-2
8.5 When Forfeiture Occurs .............. ........................................................VIII-2
8.6 Reallocation of Forfeiture ............ ........................................................VIII-2
8.7 Amendment of Vesting Schedule ........................................................VIII-3 .
ARTICLE IX
Limitations on Allocations
9.1 Maximum Limits on Allocations ........................................................... IX-1
9.2 Disposition of Excess Annual Additions ........................................... IX-2
9.3 Participation in This Plan and a Defined Benefit Plan (Not Effective
for Plan Years Beginning on or After January 1, 2000) ..................... IX-3
ARTICLE X
Administration
10.1 Employer .................................................................................................X-1
10.2 Plan Administrator ...................................................................................X-1
10.3 Trustee .....................................................................................................X-2
10.4 Administrative Fees and Expenses ..........................................................X-3
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Page
10.5 Governing Law ........................................................................................X-3
10.6 Election and/or Appointment of Employee Board Members ..................X-3
10.7 Written Communication ..........................................................................X-3
ARTICLE XI
Trust Fund
11.1 The Fund ................................................................................................ XI-1
11.2 Control of Plan Assets ........................................................................... XI-1
11.3 Exclusive Benefit Rules ......................................................................... XI-1
11.4 Assignment and Alienation of Benefits ................................................. XI-1
11.5 Trust Agreement .................................................................................... XI-1
ARTICLE XII
Participant Loans
12.1 Application .:.........................................................................................XII-1
12.2 Maximum Amount ............................................................................... XII-1
12.3 Application Forms ................................................................................ XII-1
12.4 Interest on Loans .................................................................................. XII-1
12.5 Security .................................................................................................XII-1
12.6 Terms of Repayment ............................................................................ XII-1
12.7 Principal and Interest Allocation .......................................................... XII-2
12.8 Deemed Distribution of Loan Upon Default ........................................ XII-2
12.9 Approval of Application ....................................................................... XII-2
12.10 Loan Policy ........................................................................................... XII-2
ARTICLE XIII
Insurance Policies
13.1 Limitations ...........................................................................................XIII-1
13.2 Administrative Requirements ..............................................................XIII-1
ARTICLE XIV
Amendment and Termination
14.1 Amendments ....................................................................................... XIV-1
14.2 Termination ........................................................................................ XIV-1
14.3 Qualification of Employer's Plan ........................................................ XIV-2
14.4 Mergers and Consolidations ............................................................... XIV-2
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TOWN OF AVON POLICE OFFICERS
MONEY PURCHASE PENSION PLAN
The Town of Avon, hereby amends and restates in its entirety its
Police Officers Money Purchase Pension Plan for the exclusive benefit of certain
employees and their beneficiaries under the following terms and conditions:
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ARTICLE I
DEFINITIONS
1.1 General. The rights of a Participant who terminates
Employment shall be covered by the Plan as in effect at the time of such
termination of Employment.
1.2 After-Tax Contribution. An Employee contribution to the
Plan that is not made as a pre-tax "pick up" contribution under section 414(h)(2) of
the Code.
1.3 Beneficiary. The individual designated by the Participant,
according to section 6.3(c), to receive distribution of the Participant's Account
upon death.
1.4 Board of Retirement ("Board"). The Board of Retirement
appointed, in accordance with all applicable statutes or ordinances, to oversee the
Plan's operations. The Board consists of five individuals, three employees elected
by the Participants, one appointee of the Town Manager, and the Finance Director
or his or her designee.
1.5 Break in Service. A Plan Year during which an Employee
fails to complete more than 500 Hours of Service.
1.6 Code. The Internal Revenue Code as amended from time to
time and the regulations and rulings in effect thereunder.
1.7 Compensation. The total wages or salary, and any other
taxable remuneration earned while a Participant from the Employer during the
Plan Year, as reported on Form W-2, plus employer contributions made through a
salary reduction agreement described in sections 125, 401, 403, 414(h) or 457 of
the Internal Revenue Code of 1986, but excluding overtime (hours in excess of 40
per week paid at either straight-time or at time-and-one-half), compensatory time,
bonuses, commissions, volunteer pay, pay for occasional and sporadic work,
allowances, on-call pay, shift differential pay, life insurance coverage over
$50,000, wellness benefits, and severance payments. Wages and salary shall
include lump-sum pay for merit increases, vacation sell-back, and regular pay for
compensated absences such as vacations, holidays, sick leave, personal leave and
paid-time-off. Effective for Plan Years beginning on or after January 1, 1996,
Compensation for any Plan Year will be limited to the first $150,000 of
Compensation, subject to adjustment as provided in Code section 401(a)(17)). The
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limits of Code section 401(a)(17) shall not apply to a Participant who first became
a Participant in the Plan before January 1, 1996.
Effective January 1, 1997, the family member aggregation
rules set forth in Code Section 414(c) shall not apply.
Effective for Plan Years beginning on or after January 1,
2002, Compensation shall not exceed $200,000, subject to adjustment as provided
in Code section 401(a)(17)(B).
1.8 Defined Contribution Plan. A Plan under which individual
accounts are maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such Plan is based solely on the fair market value of his
or her account balance.
1.9 Disability. Disability shall be determined according to
criteria established by the State of Colorado Fire and Police Pension Association
(hereinafter referred to as FPPA).
1.10 Employee. Employee shall mean any individual employed as
a regular full-time, paid, sworn police officer of the Town of Avon. Effective
September 22, 1987, included are "leased employees" as defined in this section
1.10. The term "leased employee" means any person (a) who is not an Employee
of the Employer, and (b) who pursuant to an agreement between the Employer and
any other person (a "leasing organization") has performed services for the
Employer on a substantially full-time basis for a period of at least one (1) year, as
such services are performed under primary direction or control by the Employer.
Notwithstanding the foregoing, if "leased employees" constitute less than twenty
percent (20%) of the Employer's nonhighly compensated workforce within the
meaning of Code Section 414(n)(5), a person who is covered by a money purchase
pension plan maintained by the leasing organization which provides a non-
integrated employer contribution rate of at least ten percent (10%) of
compensation, immediate participation, and full vesting shall not be considered a
"leased employee."
1.11 Employer. The Town of Avon, Colorado and any entity that
succeeds the Employer and adopts this Plan.
1.12 Entry Date. The date on which an Employee begins
employment as an Employee and first performs an Hour of Service for the
Employer.
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1.13 Forfeiture. The portion of a Participant's Account which,
according to Article VIII, the Participant is not entitled to receive.
1.14 Fund. All contributions received by the Trustee under this
Plan and Trust, investments thereof and earnings and appreciation thereon.
1.15 Hour of Service.
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed due to vacation, holiday, illness, paid time off (effective January 1,
2002), incapacity (including Disability), jury duty, military duty or leave of
absence, but excluding leave hours accrued by the Employee which are paid to the
Employee upon separation from employment. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous period (whether or
not such period occurs in a single computation period); and
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer. The same
Hours of Service shall not be credited both under paragraph (a) or paragraph (b),
as the case may be, and under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made.
(d) Hours of Service shall be credited for employment
with the Employer and with other members of an affiliated service group (as
defined in section 414(m) of the Code) and any other entity required to be
aggregated with the Employer pursuant to section 414(o) and the regulations
thereunder. Hours of Service shall also be credited for any individual considered
an Employee for purposes of this Plan under section 414(n) or section 414(0) and
the regulations thereunder.
. (e) Solely for purposes of determining whether a Break in
Service, as defined in paragraph 1.5, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work for
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maternity or paternity reasons shall receive credit for the Hours of Service which
would otherwise have been credited to such individual but for such absence, or in
any case in which such hours cannot be determined, eight Hours of Service per day
of such absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence by reason of the pregnancy of the
individual, by reason of a birth of a child of the individual, by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual, or for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of Service
credited under this paragraph shall be credited in the computation period in which
the absence begins if the crediting is necessary to prevent a Break in Service in
that period, or in all other cases, in the following computation period. No more
than 501 hours will be credited under this paragraph.
(f) Hours of Service shall be on the basis of actual hours
for which an Employee is paid or entitled to payment.
1.16 Life Expectancy. Life Expectancy and Joint and Last
Survivor Expectancy are computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations, using the
attained age of the Participant (or designated beneficiary) as of the Participant's (or
designated beneficiary's) birthday in the applicable calendar year reduced by one
for each calendar year which has elapsed since the date life expectancy was first
calculated. The applicable calendar year shall be the first distribution calendar
year, and if life expectancy is being recalculated such succeeding calendar year. If
distribution is in the form of an immediate annuity, purchased after the
Participant's death with the Participant's remaining interest, the applicable calendar
year is the year of purchase. If life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so recalculated. Unless otherwise
elected by the Participant by the time distributions are required to begin, Life
Expectancies shall be recalculated annually. Such election shall be irrevocable as
to the Participant and shall apply to all subsequent years. The Life Expectancy of
a nonspouse beneficiary may not be recalculated.
1.17 Limitation Year. The calendar year or such other 12
consecutive month period designated by the Employer for purposes of determining
the maximum annual addition to a Participant's account.
1.18 Mandatory Employee Pre-Tax Contributions. Required
Employee contributions made to the Plan on behalf of the Participant, which are
treated as Employer contributions pursuant to section 414(h)(2) of the Code in lieu
of cash compensation.
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1. 19 Normal Retirement Age. The date on which a Participant has
reached his 55th birthday.
1.20 Participant. Any Employee who has met the eligibility
requirements and is participating in the Plan. Effective September 22, 1987,
excluded are "leased employees," as defined in Section 1. 10, Article I of the Plan.
Any individual who agrees with the Employer that the individual's services are to
be performed as a "leased employee" or an independent contractor will not be a
Participant regardless of any classification of such individual as a common-law
employee by the Internal Revenue Service, the Department of Labor or any court
of competent jurisdiction.
1.21 Plan. The Town of Avon Police Officers Money Purchase
Pension Plan described by the provisions in this document.
1.22 Plan Administrator. The Board of Retirement.
1.23 Plan Year. Each 12 consecutive month period commencing
on January 1, and ending on December 31.
1.24 Qualified Deferred Compensation Plan. Any pension, profit
sharing or other plan which meets the requirements of section 401 of the Code
which includes a trust exempt from tax under section 501(a) of the Code and any
annuity plan described in section 403(a) of the Code.
1.25 Restatement Date. September 22, 1987, except as otherwise
indicated in the document. The Plan was originally effective September 22, 1987,
amended and restated October 1, 1990, and was amended in its entirety on
February 26, 2002, to include amendments through December 31, 2001.
September 22, 1987, except as otherwise indicated in the document.
1.26 Rollover Contribution. A contribution made by a Participant
of an amount distributed to such Participant from another Qualified Deferred
Compensation Plan in accordance with section 4.3.
1.27 Spouse (Surviving Spouse). The spouse or surviving spouse
of the Participant, provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as the spouse or surviving
spouse to the extent provided under a qualified domestic relations order as
permitted by Colorado Statutes.
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1.28 Trustee. Wells Fargo Bank West, N.A.
1.29 Valuation Date. The last day of the Plan Year and the
following date(s) on which Participant accounts are revalued in accordance with
Article V: March 31, June 30, and September 30. Effective July 1, 1998,
Participant accounts are revalued in accordance with Article V on each business
day of the Plan Year during which Plan assets for which there is an established
market are valued and the Trustee is conducting business.
1.30 Voluntary After-Tax Contribution. An Employee After-Tax
Contribution which is not tax deductible and which is not required as a condition
for participation in the Plan.
1.31 Year of Service. A Plan Year during which an Employee has
not less than 1,000 Hours of Service, including periods prior to the September 22,
1987 original Plan effective date. Hours of Service as an employee with the
Eagle-Vail Metropolitan District from January 1, 1980 through October 1, 1987
shall also be included in determining a Participant's Years of Service.
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ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation. An Employee shall become a Participant in the
Plan on the first day of employment as an Employee. Participants in the Plan that
was in effect on September 30, 1990 shall become Participants in this restated Plan
on October 1, 1990: An Employee who satisfied the eligibility requirements and
subsequently terminated employment shall become a Participant immediately upon
returning to the employ of the Employer.
2.2 Employment Rights. Participation in the Plan shall not confer
upon a Participant any employment rights, nor shall it interfere with the
Employer's right to terminate the employment of any Employee at any time.
2.3 Change in Classification of Employment. In the event a
Participant becomes ineligible to participate because he or she is no longer a
member of an eligible class of Employees, such Employee shall participate
immediately upon his or her return to an eligible class of Employees.
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ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Matching Employer Contributions. The Employer shall
contribute to the Plan for each payroll period an amount equal to 100% of each
Participant's contribution to the Plan for that payroll period, reduced by any
Forfeitures used to replace such Matching Employer Contributions according to
section 8.6. However, the Employer's Contribution for any Plan Year shall be
subject to the limitations on allocations contained in Article IX.
3.2 [INTENTIONALLY LEFT BLANKI
3.3 Transfer Contributions. Subject to the direction of the
Employer, the Trustee is authorized to receive and add to the Trust Fund as a direct
transfer assets attributable to the vested interest of any Participant in a retirement
plan qualified under Code section 401(a) if such individual is a Participant in this
Plan. Transfers shall be credited to the particular Participant's Transfer Account,
shall always be fully vested and nonforfeitable, and shall be distributed pursuant to
section 7.1 hereof.
3.4 Expenses and Fees. The Employer shall also be authorized to
reimburse the Fund for all expenses and fees incurred in the administration of the
Plan or Trust that were paid out of the assets of the Fund. Such expenses shall
include, but shall not be limited to, fees for professional services, printing, postage
and brokerage or other commissions, subject to the limits of Code section 415.
3.5 Responsibility for Contribution. The Trustee shall not be
required to determine if the Employer has made a contribution or if the amount
contributed is in accordance with the Plan or the Code. The Employer shall have
sole responsibility in this regard.
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3.6
the Employer shall be irrevocable, except as follows:
(a) Any contribution made to the Employer because of a
mistake of fact must be returned to the Employer within one year of the
contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the Internal Revenue Code,
any contribution made incident to that initial qualification by the Employer must
be returned to the Employer within one year after the date the initial qualification
is denied, but only if the application for the qualification is made by the time
prescribed by law for filing the Employer's return for the taxable year in which the
Plan is adopted, or such later date as the Secretary of the Treasury may prescribe.
3.7 Military Service. Effective on and after December 12, 1994)
notwithstanding any provision of this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service will be provided in
accordance with Code section 414(u).
III-2
Return of Contributions. Contributions made to the Fund by
15237:MAB
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Mandatory Employee Pre-Tax Contributions. A Participant
shall be required to contribute toward the cost of the Plan, from amounts the
Participant would otherwise receive as Compensation, an amount equal to 8% of
the Participant's Compensation for the period October 1, 1990 through December
31, 1990, 10% of Participant's Compensation for the period January 1, 1991
through December 31, 1992 and 11% for periods after January 1, 1993. Such
contributions shall be designated as Mandatory Employee Contributions pursuant
to section 414(h)(2) of the Internal Revenue Code of 1986, contingent upon the
contributions being excluded from the Participant's gross income for federal
income tax purposes.
4.2 Voluntary Employee Contributions. A Participant may not
make Voluntary After-Tax Contributions to the Plan after September 30, 1990.
Participant Voluntary After-Tax Contributions made to the Plan before October 1,
1990 shall be held and administered according to the terms of this Plan governing
Voluntary After-Tax Contribution Accounts.
4.3 Rollover Contribution. A Participant may make a Rollover
Contribution to the Plan of all or any part of an amount distributed or distributable
to him or her from a Qualified Deferred Compensation Plan provided the Rollover
Contribution constitutes a direct transfer of eligible rollover distributions described
in section 401(a)(31) that are eligible to be rolled over and that would otherwise be
includible in gross income of the Code or a rollover described in section 402(c) of
the Code.
Such Rollover Contribution may also be made through an Individual Retirement
Account (IRA) qualified under section 408 of where the Code where the IRA was
used as a conduit from the Qualified Deferred Compensation Plan, the Rollover
Contribution is made in accordance with the rules of Code section 402(c) and the
Rollover Contribution does not include any regular IRA contributions, or earnings
thereon, that the Participant may have made to the IRA. The Trustee shall not be
held responsible for determining whether Rollover Contributions made hereunder
meet the requirements of this section 4.3.
Effective January 1, 2002, distributions from a retirement plan subject to section
403(b) of the Code, distributions from an eligible plan under section 457(b) of the
Code which is maintained by a state, political subdivision of a state, or any agency
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or instrumentality of a state or political subdivision of a state, and distributions
from IRAs and may also be rolled into this Plan, subject to applicable law.
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15237:MA 3
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts. The Plan Administrator shall establish a
separate bookkeeping account for each Participant showing the total value of his or
her interest in the Fund. Each Participant's Account shall be separated for
bookkeeping purposes into the following subaccounts:
(a) Matching Employer Contributions.
(b) Transfer Contributions, which shall include
subaccounts as necessary for Employer Contributions, after-tax employee
contributions and before-tax employee contributions.
(c) Mandatory Employee Before-Tax Contributions.
(d) Voluntary After-Tax Contributions, with separate
accounting for contributions made before January 1, 1987 and contributions made
after December 31, 1986.
(e) Rollover Contributions, with separate subaccounts for
different rollovers as required by law.
5.2 Adjustments To Participant Accounts. As of each Valuation
Date of the Plan, the Plan Administrator shall credit to or deduct from each
Account:
(a) the Participant's share of the Employer's Contribution
and forfeitures,
(b) any Employee Contributions made by the Participant
since the last Valuation Date,
(c) withdrawals, and
(d) the Participant's proportionate share of any investment
earnings and increases or decreases in the fair market value of the Fund since the
last Valuation Date.
All allocations made hereunder will be made in a nondiscriminatory manner.
Accounts with segregated investments shall receive only the income or loss on
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15237:MAB
such segregated investments. Terminated Participants' vested account balances
shall be credited with any investment earnings and increase or decrease in the fair
market value of the Fund until the Valuation Date preceding distribution.
Terminated Participants' nonvested account balances shall be credited with any
investment earnings and increase or decrease in the fair market value of the Fund
until forfeited pursuant to section 8.5.
5.3 Participant Statements. The Plan Administrator shall at least
annually prepare or cause to have prepared a statement for each Participant
showing the additions to and subtractions from his or her account since the last
Valuation Date and the fair market value of his or her account as of the current
Valuation Date.
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ARTICLE VI
ELIGIBILITY FOR BENEFITS
6.1 - Retirement. If a Participant's Employment terminates for any
reason on or after his Normal Retirement Age, he shall be eligible to receive the
entire amount then credited to his account, which shall be fully vested and
nonforfeitable.
6.2 Disability. If a Participant's Employment terminates because
of his Disability at any time, he shall be eligible to receive the entire amount then
credited to his account, which shall be fully vested and nonforfeitable.
6.3 Death.
(a) Before Termination of Employment. If a Participant's
Employment terminates because of his death, the entire amount then credited to his
account shall become vested and nonforfeitable and payable pursuant to
subsection 6.3(c).
(b) After Termination of Employment. If a Participant
(including a former Participant) dies after terminating Employment, the Plan shall
pay the then undistributed vested balance, if any, of the Participant's account
pursuant to subsection (c) below.
(c) Recipient of Payment After Death and Timing of
Payment. Each Employee, upon becoming a Participant and on a form provided
by the Plan and filed with the Plan Administrator, may designate a Beneficiary and
may, in addition, name a contingent Beneficiary. Any Participant may at any time
revoke or change his designation of Beneficiary by filing a written notice of the
revocation or change with the Plan Administrator. The Plan shall distribute
benefits payable pursuant to subsection (a) or (b) above to the deceased
Participant's Beneficiary identified pursuant to a Beneficiary designation in effect
at the time of his death or, if no such designation exists, to the Participant's
surviving spouse or, if none, to his estate. The method and duration of payment
shall be consistent with the limits imposed in Article VII. If distribution had
commenced to the Participant prior to his death, it shall continue being paid after
the Participant's death at least as rapidly as under the method of distribution being
made as of the Participant's death. If distribution had not begun before the
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Participant's death, full distribution shall occur over period described in (i), (ii) or
(iii) below:
(i) Non-Spouse Beneficiary. If the distribution is
payable to a designated Beneficiary who is not the Participant's spouse, the
distribution shall occur over a period no longer than the Beneficiary's Life
Expectancy, commencing on or before December 31 of the calendar year
immediately following calendar year of the Participant's death.
(ii) Spouse Beneficiary.. If the distribution is
payable to a designated Beneficiary who is the Participant's spouse, the
distribution shall occur over a period no longer than the spouse's Life Expectancy,
commencing no later than the later of [a] December 31 of the calendar year
immediately following the calendar year in which the Participant died, or
[b] December 31 of-the calendar year in which the Participant would have attained
age 70-1/2. The surviving spouse may elect to have the distribution of the
Account commence within 90 days after Participant's death.
(iii) No Designated Beneficiary. In all other cases,
i.e., in the absence of a designated Beneficiary, the distribution shall occur over a
period ending no later than December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(d) Proof of Death. The Plan Administrator may require
such proper proof of death and such evidence as to a person's right to receive
payment from a deceased Participant's account as the Plan Administrator
reasonably deems appropriate.
6.4 Termination of Employment Before Retirement, Disability or
Death. If a Participant's employment with the Employer terminates prior to his
Normal Retirement Date for any reason other than his death or Disability, the
Participant shall be eligible to receive the vested portion of his account,
determined according to Article VIII.
6.5 Claims Procedures. Upon retirement, death, or other
severance of employment, the Participant or representative of such Participant may
request of the Plan Administrator payment of benefits due and the manner of
payment. If a request for benefits is made, the Plan Administrator shall accept,
reject, or modify such request and, in the case of a denial or modification, the Plan
Administrator shall:
(a) state the specific reason or reasons for the denial,
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(b) provide specific reference to pertinent Plan provisions
on which the denial is based,
(c) provide a description of any additional material or
information necessary for the Participant or his or her representative to perfect the
claim and an explanation of why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained
herein.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Plan Administrator of its initial decision. Within 60 days following
such request for review, the Plan Administrator shall render its final decision in
writing to the Participant or representative stating specific reasons for such
decision. If the Participant or representative is not satisfied with the Plan
Administrator's final decision, the Participant or representative can institute an
action in a federal court of competent jurisdiction; for this purpose, process would
be served on the Plan Administrator.
6.6 Disposition of Unclaimed Payments. If the Trustee is unable
to make any payment due under the Plan to any person because it does not know
the identity or post office address of such person, the Trustee shall suspend all
further payment until it has received written direction from the Plan Administrator.
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ARTICLE VII
PAYMENTS
7.1 Commencement of Payments. The distribution of all or any
portion of a Participant's account shall commence in accordance with the
Participant's election, not earlier than termination of the Participant's employment
(unless specifically authorized elsewhere herein or in a "qualified domestic
relations order" as defined in Colorado Revised Statutes). Distribution of a
Participant's account shall commence no later than the April 1 of the calendar year
following the later of (a) the calendar year in which the Participant attains age
70-1/2 or (b) the calendar year in which the Participant's employment with the
Employer terminates. Distributions shall be made in accordance with Treasury
Regulations under Internal Revenue Code section 401(a)(9). Distribution may
commence less than 30 days after the notice required under section 402(f) of the
Code is given, provided that:
(a) the Board clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(b) the Participant, after receiving the notice, affirmatively
elects a distribution.
7.2 Method of Payment. Distribution of a Participant's account
shall occur in cash, in one of the following methods as chosen by the Participant
(or, if applicable, the Beneficiary):
(a) Single Lump Sum. A single, lump sum distribution of
the entire vested amount in the Participant's account. Payment shall be in a single
lump sum if the Participant's account is less than 100% vested or if the value of the
Participant's vested account (before payments begin) is not greater than $5,000
($3,500 prior to January 1, 2000). To the extent required by law, the distribution
shall be paid to an IRA.
(b) Partial Lump Sum. A lump sum distribution of a
portion of the Participant's account, which the Participant may choose to receive
separately from other Plan distribution(s).
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(c) Installment Payments. Distribution in substantially
equal monthly, quarterly, semiannual or annual payments. Such installments,
whether paid from the Plan assets or an annuity contract, shall be of such amount
and on such a schedule that the distribution is consistent with section 401(a)(9) of
the Code and applicable regulation, which the Plan hereby incorporates by
reference. Subject to such requirements, installment payments may be accelerated,
delayed or paid in a lump sum at the direction of the Participant.
7.3 * De minimis Accounts. Notwithstanding the foregoing in this
article, an employee who separates from service for any reason other than death
and who has a combined nonforfeitable interest of $5,000 or less (effective
January 1, 2002, this amount can be determined without regard to any rollover
contributions made to the plan) in the Plan, shall be paid at the discretion of the
Plan Administrator, without the prior written consent of the Participant, his or her
lump sum value. To the extent required by law, payment shall be made to an IRA.
7.4 Minimum Distributions. The Board shall not direct the
Trustee to distribute the Participant's Account, nor shall the Participant elect to
have the Trustee distribute his Account, under a method of payment which does
not satisfy the minimum distribution requirements of this section 7.4 for the
calendar year in which the Trustee must commence distribution of the Participant's
Account under section 7.1 and for each succeeding calendar year. The minimum
distribution is the value of the Participant's vested Account at the beginning of the
calendar year divided by the Participant's remaining life expectancy or divided by
the remaining joint life expectancy of the Participant and his spouse, if applicable.
With respect to distributions under the Plan made for calendar years beginning on
or after January 1, 2001, the Plan will apply the minimum distribution
requirements under section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary. This shall continue in
effect until the end of the last calendar year beginning before the effective date of
final regulations under section 401(a)(9) or such other date specified in guidance
published by the Internal Revenue Service.
7.5 Direct Rollover. This section applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this section, a distributee
may elect, at the time and in the manner prescribed by the Board, to have any
portion of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
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(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does not include any
distribution that is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the distributee
and the distributee's designated beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan is
an individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an annuity
plan described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement account or
individual retirement annuity. For distributions made after December 31, 2001, an
eligible retirement plan shall also mean an annuity contract described in
section 403(b) of the Code and an eligible plan under section 457(b) of the Code
which is maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees to
separately account for amounts transferred into such plan from this plan. The
definition of eligible retirement plan shall also apply in the case of a distribution to
a surviving spouse, or to a spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section 414(p) of the
Code.
(c) Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest of the spouse or
former spouse.
'(d) Direct rollover: A direct rollover is a payment by the
plan to the eligible retirement plan specified by the distributee.
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7.6 In-Service Withdrawals.
(a) Voluntary After-Tax Contributions and Rollover
Contributions. A Participant who is employed by the Employer may withdraw all
or any part of his or her account attributable to Voluntary After-Tax Contributions
or Rollover Contributions upon written request to the Plan Administrator.
(b) Other Requirements. Such request shall include the
Participant's address, social security number, birth date, and amount of the
withdrawal. A Participant who elects an in-service withdrawal of his or her
Voluntary Contributions shall not be permitted to make a further Voluntary
Contribution for a period of one year from the date of the withdrawal.
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ARTICLE VIII
VESTING
8.1 Employee Contributions. A Participant shall always have a
100% vested and nonforfeitable interest in his or her Mandatory Employee
Pre-Tax Contributions, Transfer Contributions, After-Tax Contributions, and
Rollover Contributions plus the earnings thereon. No forfeiture of Employer
related contributions will occur solely as a result of an Employee's withdrawal of
any Employee Contributions.
8.2 Employer Contributions. A Participant shall vest in his or her
account attributable to Employer Contributions in accordance with the table stated
below, provided that if a Participant is not already fully vested, he or she shall
become so upon attaining Normal Retirement Age, upon death prior to Normal
Retirement Age, or upon termination due to Disability, or upon termination of the
Plan.
(a) Employees hired on or prior to September 30, 1990:
Years of Service
Percentage Vested and
Nonforfeitable
Less than 2 years
2 years
3 years
4 years
5 years
0%
20%
30%
40%
100%
(b) Employees hired October 1, 1990 through December
31, 1997:
Years of Service
Percentage Vested and
Nonforfeitable
Less than 2 years
2 years
_ 3 years
4 years
5 years
6 years
7 years
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0%
20%
30%
40%
60%
80%
100%
15237:MAB
(c) Employees employed on or hired on or after January 1,
1998:
Percentage Vested and
Years of Service Nonforfeitable
Less than 2 years 0%
2 years 40%
3 years 60%
4 years 80%
5 years 100%
8.3 Years of Service Upon Rehire. In the event a former
Employee is rehired, such Employee shall be credited for vesting with all Years of
Service, except that Years of Service before a Break in Service shall be canceled if
the Participant's Break in Service lasts at least one year and the Participant has
experienced a Forfeiture.
8.4 Calculating Vested Interest. A Participant's vested and
nonforfeitable interest shall be calculated by multiplying the fair market value of
his or her account attributable to Employer Contributions on the Valuation Date
preceding payment by the vested percentage as of his or her termination date. A
Participant's vested percentage shall be determined according to the Participant's
Years of Service and the vesting schedule stated in section 8.2.
8.5 When Forfeiture Occurs. A Participant's forfeiture if any, of
his or her nonvested account balance derived from Employer Contributions shall
occur:
(a) As of the last day of the Plan Year in which the
Participant incurs a one-year Break in Service; or if earlier and if applicable,
(b) On the date the Participant receives a lump sum
distribution of his or her entire vested account balance as a result of his or her
termination of employment with the Employer.
8.6 Reallocation of Forfeiture. Forfeitures shall be applied, first,
to offset administrative expenses of the Plan and, second, to reduce Matching
Employer Contributions.
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8.7 Amendment of Vesting Schedule. No amendment to the Plan
shall be effective to the extent that it has the effect of decreasing a Participant's
accrued benefit. For purposes of this paragraph, a Plan amendment which has the
effect of decreasing-a Participant's account balance, with respect to benefits
attributable to service before the amendment shall be treated as reducing an
accrued benefit. Furthermore, if the vesting schedule of a Plan is amended, in the
case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's right to his
Employer-derived accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
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ARTICLE IX
LIMITATIONS ON ALLOCATIONS
9.1 Maximum Limits on Allocations.
(a) Maximum Annual Additions. The maximum
contributions and other additions for a Participant under this Plan for any
Limitation Year shall not exceed, when expressed as an annual addition to the
Participant's account, and when added to the annual additions to the Participant's
account for the Limitation Year under all other defined contribution plans and all
welfare benefit funds, as defined in Internal Revenue Code section 419(e), and any
individual medical account, as defined in Internal Revenue Code section 415(1),
maintained by the Employer, the lesser of:
(i) $30,000 ($40,000 effective January 1, 2002), as
adjusted under Internal Revenue Code section 415(d); or
(ii) 25% (100% effective January 1, 2002) of the
Compensation paid to the Participant by the Employer in such year.
The Compensation limitation referred to in (ii) shall not apply to any contribution
for medical benefits (within the meaning of section 401(h) or section 419A(f)(2) of
the Code) which is otherwise treated as an annual addition under section 415(1)(1)
or 419A(d)(2) of the Code.
(b) Definition of Compensation. For purposes of this
Article IX, Compensation shall mean wages within the meaning of Internal
Revenue Code section 3401(a) (for purposes of income tax withholding at the
source) but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed.- Effective with the first Plan Year beginning after 1997,
Compensation for purposes of this Article IX shall include any elective deferral as
defined in Code section 402(g)(3) and any amount which is contributed or deferred
by the Employer at the election of the Employee and which is not includible in the
gross income of the Employee by reason of Code section 125 or 457.
For purposes of applying the limitations of this Article, Compensation for a
Limitation Year is the Compensation actually paid or includable in gross income
during such year.
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(c) Definition of Annual Addition. For the purposes of
this Article IX, "annual, addition" shall mean the sum allocated to a Participant's
account for any Limitation Year of:
(i) Employer Contributions;
(ii) Employee Contributions;
(iii) Forfeitures;
(iv) Amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits allocated to the separate
account of a Key Employee, as defined in Internal Revenue Code
section 419A(d)(3), under a welfare benefit fund, as defined in Code
section 419(e) maintained by the Employer; and
(v) Amounts allocated after March 31, 1984 to an
individual medical account (as defined in Internal Revenue Code
section 415(1)(1)) which is part of a pension or annuity plan maintained by the
Employer.
The term "annual addition" shall not include the allocation to
a Participant's account of income, transfers according to section 3.2, or rollovers
according to section 4.3.
(d) For purposes of this Article IX, "Employer" means the
Employer that adopts this Plan.
9.2 Disposition of Excess Annual Additions. If, due to a
reasonable error in estimating a Participant's Compensation or other reasons
acceptable to the Commissioner of Internal Revenue, or as a result of the allocation
of forfeitures, an amount in excess of the limit, described in section 9.1 is allocated
to a Participant's account, the excess will be disposed of as follows (attributing all
excess amounts to this Plan first, if multiple plans are involved):
(a) One-half (Note: this assumes equal employee and
employer contributions) of the excess amount will be returned to the Participant as
a return of employee contributions, to the extent that the return would reduce the
excess amounts in the Participant's account.
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(b) If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's account will be used to
reduce Employer Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary.
(c) If after the application of paragraph (a) an excess
amount still exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the excess amount will be held unallocated in a suspense account.
The suspense account will be applied to reduce future Employer Contributions
(including allocation of any forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if necessary. If a suspense
account is in existence at any time during a Limitation Year pursuant to this
section, it will not participate in the allocation of the Trust's investment gains and
losses. If a suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated and
reallocated to Participants accounts before any Employer or any Employee
contributions may be made to the Plan for that Limitation Year. Excess amounts
may not be distributed to Participants or former Participants, except as provided in
section 9.2(a) above.
(d) If a suspense account is in existence at any time during
the Limitation Year pursuant to this paragraph, it will not participate in the
allocation of investment gains and losses.
9.3 Participation in This Plan and a Defined Benefit Plan (Not
Effective for Plan Years Beginning on or After January 1, 2000). If the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering any
Participant in this Plan, the sum of the defined benefit plan fraction and the defined
contribution plan fraction for each Limitation Year may not exceed 1.0, as
described in section 415(e) of the Code, to the extent applicable to government
plans.
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ARTICLE X
ADMINISTRATION
10.1 Employer. The Employer shall be a named fiduciary. The
Employer's duties shall include but are not limited to appointing the Plan's
attorney, accountant, actuary, and any other party needed to administer the Plan,
and reviewing and approving any financial reports, investment review, or other
reports prepared by any party appointed by the Employer. The Employer shall
provide indemnification or insurance for breach of fiduciary duty or errors and
omissions insurance for all Board members on the same terms and conditions as
the Employer does for other Town boards and commissions.
10.2 Plan Administrator.
(a) Powers and Duties of Plan Administrator. The Plan
Administrator shall be a named fiduciary. The Plan Administrator shall administer
the Plan and shall have all powers necessary for that purpose, including, but not by
way of limitation, power to interpret the Plan, to communicate with Employees
regarding their participation and benefits under the Plan, including the
administration of claims procedures, to determine the eligibility, status and rights
of all persons under the Plan and in general to decide any dispute. The Plan
Administrator shall have full authority to determine eligibility for benefits and to
construe the terms of the Plan. The Plan Administrator shall direct the Trustee
concerning all distributions from the Fund, in accordance with the provisions of
the Plan, and shall have such other powers in the administration of the Fund as
may be conferred upon it by the Trust Agreement. The Plan Administrator shall
file any returns and reports with the Internal Revenue Service, Department of
Labor, or any other governmental agency, establish a funding policy and
investment objective consistent with the purposes of the Plan and shall maintain all
Plan records. The Plan Administrator shall be agent of the Plan for service of all
process.
(b) Meetings. The Board shall meet whenever required for
the orderly and timely administration of the business of the Plan at such location as
may be acceptable to the Board.
(c) Quorum. A quorum for the transaction of business at a
duly called meeting shall consist of three (3) members.
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(d) Voting. All actions by and decisions of the Board shall
be by the vote of at least three (3) members. Each Board member shall have one
vote.
(e) Organization and Operation of the Board. The Town
Finance Director or his or her designee shall serve as Chair. At the
commencement of each year, the Board members shall select from among them a
Secretary who shall each serve for a period of one (1) year. The Secretary shall be
responsible for maintaining an accurate record of all actions of the Board,
including minutes from all Board meetings. A copy of such minutes shall be
retained as a record of the Plan and one copy thereof shall be distributed to each
Board member. Documents requiring execution by the Board shall be signed by
the Chair and attested by the Secretary. The Board may adopt rules and
regulations necessary for the orderly election of Employee members of the Board
and for the proper and efficient administration of the Plan, provided such rules and
regulations are not inconsistent with the terms of the Plan or the provisions of
applicable law.
10.3 Trustee. The Trustee shall be responsible for the
administration of investments held in the Fund. These duties shall include:
(a) implementing an investment program based on the
Employer's investment objectives,
(b) receiving contributions under the terms of the Plan,
(c) making distributions from the Fund in accordance with
written instructions received from an authorized representative of the Plan
Administrator, and
(d) keeping accurate records reflecting its administration
of the Fund and making such records available to the Employer for review and
audit. Within 90 days after each Plan Year, and within 90 days after its removal or
resignation, the Trustee shall provide to the Employer an accounting of its
administration of the Fund during such year or from the end of the preceding Plan
Year to the date of femoval or resignation. Such accounting shall include a
statement of cash receipts and disbursements since the date of its last accounting
and shall contain an asset list showing the fair market value of investments held in
the Fund as of the end of the Plan Year. The value of marketable investments shall
be determined using the most recent price quoted on a national securities exchange
or over-the-counter market. The value of non-marketable investments shall be
determined in the sole judgment of the Trustee. The value of investments in
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securities or obligations of the Employer in which there is no market shall be
determined by an independent qualified party selected by the Employer using a
method acceptable to the Trustee. The Employer shall review the Trustee's
accounting and notify the Trustee in the event of its disapproval of the report
within 90 days, providing the Trustee with a written description of the items in
question. The Trustee's duties shall be limited to those described above. The
Employer shall be responsible for any other administrative duties required under
the Plan or by applicable law.
10.4 Administrative Fees and Expenses. All reasonable costs,
charges and expenses incurred by the Trustee in connection with the
administration of the Fund and all reasonable costs, charges and expenses incurred
by the Plan Administrator in connection with the administration of the Plan
(including fees for legal services rendered to the Trustee or Plan Administrator)
may be paid by the Employer, but if not paid by the Employer when due, shall be
paid from the Fund. Such reasonable compensation to the Trustee as may be
agreed upon from time to time between the Employer and the Trustee and such
reasonable compensation to the Plan Administrator as may be agreed upon from
time to time between the Employer and Plan Administrator may be paid by the
Employer, but if not paid by the Employer when due shall be paid by the Fund.
Notwithstanding the foregoing, no compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is the Employer or a full-time
Employee of the Employer.
10.5 Governing Law. Construction, validity and administration of
the Plan and Trust shall be governed by Federal law to the extent applicable and to
the extent not applicable by the laws of the State of Colorado.
10.6 Election and/or Appointment of Employee Board Members.
The three (3) Employees who are to be elected to the Board by Participants shall
be elected to serve a term of three (3) years. If otherwise qualified, Employee
members of the Board may be reelected to the Board without limitation on the
number of terms they may serve. If an elected Board member separates from
service of the Employer, the Board shall appoint a new member to fulfill the
remaining term.
10.7 Written Communication. To the extent permitted by
applicable Treasury Regulations and accepted by the Plan Administrator, all
provisions of the Plan and Trust Agreement that require written notices and
elections shall be interpreted to mean authorized electronic or telephonic notices
and elections.
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ARTICLE XI
TRUST FUND
11.1 The Fund. The Fund shall consist of all contributions made
under Article III and Article IV of the Plan and the investment thereof and
earnings thereon. All contributions and the earnings thereon less payments made
under the terms of the Plan, shall constitute the Fund. The Fund shall be
administered as provided herein.
11.2 Control of Plan Assets. The assets of the Fund or evidence of
ownership shall be held by the Trustee under the terms of the Plan and Trust.
11.3 Exclusive Benefit Rules. No part of the Fund shall be used
for, or diverted to, purposes other than for the exclusive benefit of Participants,
former Participants with a vested interest, and the beneficiary or beneficiaries of
deceased Participants having a vested interest in the Fund at death.
11.4 Assignment and Alienation of Benefits. No right or claim to,
or interest in, any part of the Fund, or any payment therefrom, shall be assignable,
transferable, or subject to sale, mortgage, pledge, hypothecation, communication,
anticipation, garnishment, attachment, execution, or levy of any kind, and the
Trustee shall not recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, or anticipate the same, except to the extent required by law. The
preceding sentence shall also apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a Participant pursuant to a domestic
relations order, except to the extent that Colorado statutes and rules adopted by the
Plan Administration for enforcement of such order. The Plan Administrator may
adopt rules regarding payments pursuant to a domestic relations order.
11.5 Trust Agreement. The Employer has entered into a Trust
Agreement with the Trustee Wells Fargo Bank West, N.A., formerly United Bank
of Denver, N.A, to provide for the holding, investment and administration of the
funds of the Plan. The Trust Agreement shall be part of the Plan, and the right and
duties of any person under the Plan shall be subject to all terms and provisions of
the Trust Agreement.
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ARTICLE XII
PARTICIPANT LOANS
12.1 Application. A Plan Participant may make application to the
Plan Administrator requesting a loan from the Fund. The Plan Administrator shall
have the sole right to approve or disapprove a Participant's application provided
that loans shall be made available to all Participants and Beneficiaries on a
reasonably equivalent basis. Loans shall not be made available to highly
Compensated Employees in an amount greater than the amount made available to
other Employees. .
12.2 Maximum Amount. No loan granted hereunder shall exceed
the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans during the one year period ending on the day before the loan is
made, over the outstanding balance of loans from the Plan on the date the loan is
made, or (b) one-half of the fair market value of a Participant's vested account
balance derived from Employer Contributions, Voluntary After-Tax Contributions,
Mandatory Employee Contributions, and Rollover Contributions. An assignment
or pledge of any portion of the Participant's interest in the Plan and a loan, pledge,
or assignment with respect to any insurance contract purchased under the Plan,
will be treated as a loan under this Article XII.
12.3 Application Forms. All applications must be made on forms
provided by the Plan Administrator and must be signed by the Participant.
12.4 Interest on Loans. Any loan granted hereunder shall bear
interest at a rate determined by the Plan Administrator to be reasonable at the time
of application, and subject to the approval of the Trustee.
12.5 Securi . All loans made hereunder shall be secured by the
Participant's vested account balance and by such additional collateral as may be
required by the Plan Administrator.
12.6 Terms of Repayment. Any loan shall by its terms require that
repayment (principal and interest) be bi-weekly, over a period not extending
beyond five years from the date of the loan. A loan that is used to acquire or
construct a dwelling unit which is used within a reasonable time (determined at the
time the loan is made) as the principal residence of the Participant, may allow for
the repayment (principal and interest) over a period not exceeding beyond 30
years. The Plan Administrator may require the payment of principal and interest
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15237:MAB
by means of payroll withholding. The Plan Administrator may allow loans to be
suspended during periods of leave of absence as permitted by tax laws.
12.7 Principal and Interest Allocation. The principal and interest
paid by a Participant on his or her loan shall be credited as a segregated
investment.
12.8 Deemed Distribution of Loan Upon Default. A Participant's
loan shall immediately become due and payable according to the rules prescribed
by the Plan Administrator if such Participant fails to make a principal or interest
payment when due. The defaulted loan shall be a deemed distribution in
accordance with applicable Treasury Regulations.
12.9 Approval of Application. If a Participant's loan application is
approved by the Plan Administrator, such Participant shall be required to sign a
note, loan agreement and assignment of his or her entire interest in the Fund as
collateral for the loan.
12.10 Loan Policy. The Employer will adopt a loan policy
establishing the rules and procedures that the Board of Retirement will use to
administer the Participant loan program.
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ARTICLE XIII
INSURANCE POLICIES
13.1 Limitations. If agreed upon by the Plan Administrator and the
Employer, Employees may elect the purchase of life insurance policies under the
Plan. If elected, the aggregate premiums for all ordinary life policies (contracts
with decreasing death benefits and non-decreasing premiums) shall not exceed
50% of the aggregate Employer Contributions allocated to the account of a
Participant. The aggregate premiums for term contracts or universal life contracts
shall not exceed 25% of aggregate Employer Contributions allocated to the
account of a Participant. The aggregate premiums for a Participant with both a
whole life and a term contract shall not exceed 25% of the aggregate Employer
Contributions allocated to the account of a Participant. Premium payments shall
be deducted from the Participant's Employer Contributions account, or if so
directed by the Participant, from the Participant's nondeductible Voluntary
Contributions account.
13.2 Administrative Requirements. Any policies purchased
hereunder shall be held subject to the following rules:
(a) The Trustee shall be applicant, owner and beneficiary
of any policies issued hereunder. The insurance contract (s) must provide that
proceeds will be payable to the Trustee, however the Trustee shall be required to
pay over all proceeds of the contract(s) to the Participant's designated Beneficiary
in accordance with the distribution provisions of this Plan. Under no
circumstances shall the Trust retain any part of the proceeds.
(b) Except as provided in subsection (f), all policies or
contracts purchased hereunder shall be endorsed as nontransferable.
(c) A Participant who is uninsurable or insurable at
substandard rates, may elect to receive a reduced amount of insurance, if available,
or may waive the purchase of any insurance.
(d) All dividends or other returns received on any policy
purchased hereunder, shall be applied as directed by the Trustee to reduce the next
premium due on such policy, to purchase paid-up additions, to accumulate under
the contract, or if no further premium is due, such amount shall be credited to the
Fund as part of the account of the Participant for whom the policy is held.
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(e) If Employer Contributions are inadequate to pay all
premiums on all insurance policies, the Trustee may, at the option of the Plan
Administrator, utilize other amounts remaining in each Participant's account to pay
the premiums on his respective policy or policies, allow the policies to lapse,
reduce the policies to a level at which they may be maintained, or borrow against
the policies on a prorated basis, provided that the borrowing does not discriminate
in favor of the policies on the lives of officers, shareholders, and highly
compensated employees.
(f) On retirement or termination of employment of a
Participant, the Plan Administrator shall direct the Trustee to cash surrender the
Participant's policy and credit the proceeds to his or her account for distribution
under the terms of the Plan. However, before so doing, the Plan Administrator
shall first offer to transfer ownership of the policy to the Participant in exchange
for payment by the Participant of the cash value of the policy at the time of
transfer. Such payment shall be credited to the Participant's account for
distribution under the terms of the Plan (including the applicable vesting schedule).
(g) The Plan Administrator shall be solely responsible to
see that these insurance provisions are administered properly and that if there is
any conflict between the provisions of this Plan and any insurance contracts issued
hereunder that the terms of this Plan will control.
(h) The Employer shall direct the Trustee as to the
insurance company and insurance agent through which the Trustee is to purchase
the insurance contracts, and the amount of the coverage.
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ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 Amendments. The Employer shall have the right at any time,
and from time to time, to:
(a) Amend this Plan in such manner as it may deem
necessary or advisable in order to qualify this Plan and the Trust created in relation
hereto pursuant to sections 401(a) and 501(a) of the Internal Revenue Code of
1986 and any such amendment may, by its terms, be retroactive; and
(b) Amend this Plan in any other manner.
. No amendment shall take effect unless approved at the time of
adoption by 65% of all Participants employed at the time of adoption.
No amendment shall authorize any part of the Trust Fund to
be used for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates or to defray the reasonable expenses of
administering the Plan; no such amendment shall cause any reduction in the vested
portion of any Participant's interest in the Trust Fund or cause or permit any
portion of the Trust Fund to revert to, or become property of, the Employer and no
such amendment which affects the rights, duties or responsibilities of the Trustee
shall be effective without the Trustee's written consent. Any such amendment
shall become effective as of the effective date stated therein upon delivery of a
written instrument, executed on behalf of the Employer by its proper officers duly
authorized, to the Trustee and the written consent of the Trustee thereto, if such
consent is required. The Board of Trustees may amend this Plan by adopting the
amendment or amendments or may authorize, by standing resolution or otherwise,
a certain individual or individuals to adopt an amendment or amendments hereto,
which amendments shall bear the same effect as if adopted by the Board of
Trustees.
14.2 Termination. The Employer shall have the right to terminate
the Plan upon 60 days notice in writing to the Trustee. If the Plan is terminated,
partially terminated, or if there is a complete discontinuance of contributions under
the Plan by the Employer, all amounts credited to the accounts of Participants shall
vest and become nonforfeitable. In the event of termination, the Plan
Administrator shall direct the Trustees with respect to the distribution of accounts
to or for the exclusive benefit of Participants or their beneficiaries.
XIV-1
15237:MAB
14.3 Qualification of Employer's Plan. If the Employer fails to
attain or retain Internal Revenue Service qualification, such Plan shall no longer be
considered a Plan.
14.4 Mergers and Consolidations. In the case of any merger or
consolidation of the Employer's Plan with, or transfer of assets or liabilities of the
Employer's Plan to, -any other plan, immediately after the merger, consolidation, or
transfer Participants in the Employer's Plan shall be credited with benefits which
are equal to or greater than the benefits they would have been credited with
immediately before the merger, consolidation, or transfer if the Plan had then
terminated.
XIV-2
15237:MAB
IN WITNESS WHEREOF, the parties hereto have executed this Plan
this day of ,
EMPLOYER:
Signed for the Employer
By: _
Title:
Signature:
15237:MAB
RESOLUTION NO. 02-14
SERIES OF 2002
A RESOLUTION AMENDING A DEFERRED COMPENSATION PLAN
WHEREAS, the Town of Avon ("Town") has established a deferred compensation plan
for employees that serves the interest of the Town by enabling it to provide reasonable retirement
security for its employees, by providing increased flexibility in it personnel management system,
and by assisting in the attraction and retention of competent personnel; and
WHEREAS, the Town has determined that the continuance of the deferred compensation
plan will serve these objectives; and
WHEREAS, amendments to the Internal Revenue Code have been enacted that require
changes to the structure of and allow enhancement of the benefits of the deferred compensation
plan:
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN
OF AVON, COLORADO:
Section 1. That the Town hereby amends and restates the deferred. compensation plan
(the "Plan") in the form of the ICMA Retirement Corporation Deferred Compensation Plan and
Trust.
Section 2. That the assets of the Plan shall be held in trust, with the Town serving as
trustee ("Trustee"), for the exclusive benefit of Plan participants and their beneficiaries, and the
assets shall not be diverted to any other purpose. The Trustee's beneficial ownership of Plan
assets held in Vantage Trust shall be held for the further exclusive benefit of the Plan participants
and their beneficiaries;
Section 3. That the Town of Avon hereby agrees to serve as Trustee under the Plan.
ADOPTED this 26th day of February, 2002.
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Kris Nash, Town Clerk
Memo
To: Honorable Mayor and Town Council
Thru: Bill Efting, Town Manager
From: Norm Wood, Town Engineep' K/V
Date: 2/21/2002
Re: Metcalf Stormwater Drainage Project / Railroad Crossing Agreement
Resolution No. 02-15, Series of 2002
Summary: The Union Pacific Railroad Company requires execution of
the attached Pipeline crossing Agreement for the installation of the proposed 60-inch
underground drainage pipeline crossing of railroad property. This installation is a
necessary part of the Metcalf Stormwater Drainage Project. The railroad also requests a
resolution authorizing the execution of this document. Attached Resolution 02-15, Series
of 2002 approves and authorizes the execution of this Agreement. The costs associated
with this agreement will be covered by the project contingency fund.
We recommend approval of Resolution 02-15, Series of 2002, A Resolution Approving
and Authorizing Execution of a Pipeline Crossing Agreement with the Union Pacific
Railroad Company as Required for Completion of the Metcalf Stormwater Drainage
Project in the Town of Avon, Colorado.
Recommendations: Approve Resolution 02-15, Series of 2002, A
Resolution Approving and Authorizing Execution of a Pipeline Crossing Agreement with
the Union Pacific Railroad Company as Required for Completion of the Metcalf
Stormwater Drainage Project in the Town of Avon, Colorado.
Town Manager Comments:
I:\Engineering\CIP\Stormwater Metcalf-1\1.0 Administration\1.5 Permits\1.5.2 UPRR\Pipeline Resolution Memo.Doc
TOWN OF AVON
RESOLUTION NO. 02-15
SERIES OF 2002
A RESOLUTION APPROVING AND AUTHORIZING
EXECUTION OF A PIPELINE CROSSING
AGREEMENT WITH THE UNION PACIFIC
RAILROAD COMPANY AS REQUIRED FOR
COMPLETION OF THE METCALF STORMWATER
DRAINAGE PROJECT IN THE TOWN OF AVON,
COLORADO
WHEREAS, the Union Pacific Railroad Company requires a Pipeline Crossing
Agreement for the installation of a proposed 60-inch underground drainage pipeline
crossing of railroad property; and
WHEREAS, the installation of proposed 60-inch underground drainage pipeline
crossing of railroad property is necessary to complete the Metcalf Storm Drainage
Project.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE
TOWN OF AVON, COLORADO, that the Pipeline Crossing Agreement between the
Town of Avon and the Union Pacific Railroad Company for the installation of a 60-inch
Underground Drainage Pipeline Crossing of Railroad Property at Mile Post 309.15 on
the Tennessee Pass Subdivision at or near Avon, Eagle County, Colorado is hereby
approved and execution is authorized by the Town of Avon, Colorado.
ADOPTED THIS DAY OF FEBRUARY, 2002.
TOWN COUNCIL
TOWN OF AVON, COLORADO
Judy Yoder, Mayor
ATTEST:
Kris Nash,
Town Clerk
I:\Engineering\CIP\Stormwater Metcalf-1\1.0 Administration\1.5 PermitAI.5.2 UPRR\Pipeline Agmnt Resolution.Doc
PL X 940206
Form Approved, AVP-Law
PIPELINE CROSSING
AGREEMENT
Mile Post: 309.15, Tennessee Pass Subdivision
Location: Avon, Eagle County, Colorado
Folder No: 02022-95
THIS AGREEMENT is made and entered into as of February, 13, 2002, by and between UNION
PACIFIC RAILROAD COMPANY, a Delaware corporation (hereinafter the "Licensor"), and the
TOWN OF AVON, a Colorado municipal corporation, whose address is P.O. Box 975, Avon, Colorado
81620 (hereinafter the "Licensee").
IT IS MUTUALLY AGREED BY AND BETWEEN THE PARTIES HERETO AS
FOLLOWS:
Article I. LICENSE FEE.
Upon execution of this Agreement, the Licensee shall pay to the Licensor a one-time license fee
of ELEVEN THOUSAND NINETY FIVE DOLLARS ($11,095.00).
Article II. LICENSOR GRANTS RIGHT.
In consideration of the License Fee to be paid by the Licensee and in further consideration of the
covenants and agreements herein contained to be by the Licensee kept, observed and performed, the
Licensor hereby grants to the Licensee the right to construct and thereafter, during the term hereof, to
maintain and operate one
60-inch underground drainage pipeline crossing (hereinafter the "Pipeline")
in the location shown and in conformity with the dimensions and specifications indicated on the attached
print dated February 13, 2002, marked Exhibit A. Under no circumstances shall Licensee modify the use
of the Pipeline for a purpose other than the above-mentioned, and said Pipeline shall not be used for any
other use, whether such use is currently technologically possible, or whether such use may come into
existence during the life of this Agreement.
Article III. CONSTRUCTION, MAINTENANCE AND OPERATION.
The grant of right herein made to the Licensee is subject to each and all of the terms, provisions,
conditions, limitations and covenants set forth herein and in Exhibit B, hereto attached.
Article IV. IF WORK IS TO BE PERFORMED BY CONTRACTOR.
If a contractor is to do any of the work performed on the Pipeline (including initial construction
and subsequent relocation or substantial maintenance and repair work), then the Licensee shall require its
contractor to execute the Railroad's form Contractor's Right of Entry Agreement. Licensee acknowledges
receipt of a copy of the Contractor's Right of Entry Agreement and understanding of its terms, provisions,
and requirements, and will inform its contractor of the need to execute the Agreement. Under no
circumstances will Licensee's contractor be allowed onto Licensor's premises without first executing the
Contractor's Right of Entry Agreement.
Article V. INSURANCE.
A. The Licensee, at its expense, shall obtain the insurance described in Exhibit B-1, hereto attached.
The Licensee will also provide to the Licensor a Certificate of Insurance, identifying Folder No.
02022-95, issued by its insurance carrier confirming the existence of such insurance and that the
policy or policies contain the following endorsement:
UNION PACIFIC RAILROAD COMPANY is named as an additional insured
with respect to all liabilities arising out of the existence, use or any work
performed on or associated with the 'Pipeline' located on Railroad right-of-way at
Mile Post 309.15 on the Tennessee Pass Subdivision, at or near Avon, Eagle
County, Colorado.
B. If the Licensee named in this Agreement is a public entity subject to any applicable statutory tort
laws, the limits of insurance described in Exhibit B-1 shall be the limits the Licensee then has in
effect or which is required by applicable current or subsequent law, whichever is greater, a
portion of which may be self-insured with the consent and approval of the Licensor
C. All insurance correspondence shall be directed to:
Folder No. 02022-95
Union Pacific Railroad Company
Real Estate Department
1800 Farnam Street
Omaha, NE 68102
Article VI. TERM.
This Agreement shall take effect as of the date first herein written and shall continue in full force
and effect until terminated as herein provided.
Article VII. SPECIAL PROVISIONS.
1. The edge of the boring pit floor shall be at least 35 feet from the centerline of track as
. measured at right angles to the track.
2. Shoring shall be provided in accordance with the attached Shoring Drawing No. 106613.
The slope shall be 2 to 1, or vertical shoring is required.
3. The proposed rip-rap (which deviates from Licensor standards) is acceptable provided the
average weight per stone is 400 to 1,000 pounds and the average size is 17 to 24 inches.
4. Because of the size of the pipeline, a Railroad flagman shall be present during installation of
the pipeline to monitor track. Licensee shall be responsible for all costs associated with
Railroad flagman protection.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of
the date first herein written.
UNION PACIFIC RAILROAD COMPANY
By:
Contracts Representative
TOWN OF AVON
By
Title
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DIRECTION RELATIVE TO CROSSING
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(NEAREST R.R. TOWN) '4?111
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aP REV. 5- 15- 98
11 UNCAISED NON-FLA MMA?]BLEww.uprr.co
NO SCALE
PIPELINE CROSSING
NOTE: ALL AVAILABLE DIMENSIONS MUST BE
FILLED IN TO PROCESS THIS APPLICATION.
® RR'S R/W
^nA FT,
FT,
(SEE NOTE 3 1 5) LUF T.
I?FT.
FT.-
_dtj (SEE (SEE NOTE 3 B 5)
0
¢a
¢w
J MAIN TRACK
rr?ll?y SE
tn
e
7
k
" IDESCR BE FIXED OB
JECT)
(SEE NOTE 6)
(DISTANCE ALONG TRACK FROM SECTION LINE CROSSING)'
2? ?y -=FT.
y? (NOTE: THIS DIMENSION REOUIREO IN ALL CASES.
AT LOCATIONS NOT USING SECTIONS, D157ANCE
TO A LEGAL SURVEY LINE IS REOUIRED)
RR'S R/W
FT. _40- FT.
MIN. DIST
(See Noie 2)
SEAL CASING
gn • ao
(ANGLE OF CROSSING) ¢ J TO
I NEAREST R. R. TOWN.
qq,?
L? FF V?
(DESCRIBE FIXED OBJECT
(SEE NOTE 5)
FT.
MFT. -
GROUND
?a SURFACE
SUBGRAOE i
..v"..nw
(4.5 FT LN. )
I
(20 FT.
MAX.) _FT.
,
f CASING PIPEI ISee Noie 4) (3 FT 'L MIN.)
6ff ® -/ "PE N
/ i
2 D ,S FT.-
5 F T. FT.
-??
- CARRIER PIPE J/? F \
PIPE
FT. _ I
I RIP r24!' -42&FT. lyfrurI
FT. !P
NOTES (CASING LENGTH WHEN MEASURED ALONG PIPELINE.)
EI ALL HORIZONTAL DISTANCES TO BE MEASURED AT RIGHT ANGLES FROM q OF TRACK.
21 CASING TO EXTEND BEYOND THE CE OF TRACK AT RIGHT ANGLES THE GREATER OF 20 • 20 FT., OR 30 FT.,
AND BEYOND LIMIT OF RAILROAD RIGHT-OF-WAY IF NECESSARY TO PROVIDE PROPER LENGTH OUTSIDE OF TRACK.
3) MINIMUM OF 50' IRON THE END OF ANY RAILROAD BRIDGE, R. OF ANY CULVERT, OR FROM ANY SWITCHING AREA.
4) SIGNAL REPRESENTATIVE MUST BE PRESENT DURING INSTALLATION IF RAILROAD SIGNALS ARE IN THE VICINITY OF CROSSING.
51 ALLOWABLE FIXED OBJECTS INCLUDE: BACKWALLS OF BRIDGES; Q OF ROAD CROSSINGS B OVERHEAD VIADUCTS (GIVE ROAD NAME), OR CULVERTS.
61 CASING AND CARRIER PIPE MUST BE PLACED A MINIMUM OF 2 FEET BELOW THE EXISTING FIBER OPTIC CABLE. ANY EXCAVATION REOUIRED WITHIN
5 FEET OF THE EXISTING FIBER OPTIC CABLE MUST BE HAND DUG.
A) IS PIPELINE CROSSING WITHIN DEDICATED STREET ? YES; N0; ]EXHIBIT "A"
B) IF YES, NAME OF STREET
(FOR RAILROAD USE ONLY)
D) DISTRIBUTION LINE OR TRANSMISSION LINE
C) CARRIER PIPE UNION PACIFIC RAILROAD CO.
COMMODITY TO BE CONVEYED40 t??4R7rcW1ArM &4Gt" 72AJN?4 n 5
OPERATING PRESSURE !Nd PSI !'
WALL THICKNESS .95 ;DIAMETE R;MATERIAL ST?L - ,SUBDIVISION)
E) CASING PIPE ! M. P 3?9. IS E. S. 32,114.35'
WALL THICKNESS MA ;DIAMETER ;MATERIAL ;
NOTE : CASING MUST HAVE 2" CLEARANCE BETWEEN GREATEST UNCASED APE-!W-4- CROSSING AT
OUTSIDE DIAMETER OF CARRIER PIPE AND INTERIOR DIAMETER OF
CASING PIPE. WHEN FURNISHING DIMENSIONS, GIVE OUTSIDE OF JIMA/
CARRIER PIPE AND INSIDE OF CASING PIPE. (NEAREST CITY, ,cOUNYI ISTATO
F) METHOD OF INSTALLING CASING PIPE UNDER TRACK(S): ??
DRY BORE AND JACK (WET BORE NOT PERMITTED) ; aRFL1EANT1
TUNNEL ; OTHER RR F I L E NO. DAT E 02
G) WILL CONSTRUCTION BE BY AN OUTSIDE CONTRACTOR?-V-YES; N0;
DISTANCE FROM CENTER LINE OF TRACK TO NEAR FACE OF BORING AND W A R N I N G
JACKING PITS WHEN MEASURED AT RIGHT ANGLES TO TRACK ,a,!_
1 ) APPLICANT HAS CONTACTED I-800-336-9193, 130• MIN.) IN ALL OCCASIONS, U. P. COMMUNICATIONS
U. P. COMMUNICATION DEPARJMENT, AND HAS DETERMINED FIBER DEPARTMENT MUST BE CONTACTED IN ADVANCE
OPTIC CABLE DOES , DOES NOT X1ST IN VICINITY OF OF ANY WORK TO DETERMINE EXISTENCE AND
f LOCATION OF FIBER OPTIC CABLE.
WORK TO BE PERFORMED TICKET NO. 14 A?d19 PHONE : 1-BOD-336-9193
STEEL CASING WALL
THICKNESS CHART
CKNESS I CASING PIP
IL Un LLJ
3125" 5/16" OVER 12"-i1
3750" 3/8" OVER 18'-2:
4375" 7/16" OVER 22'-21
5000" 112" OVER 28"-3,
5625" 9/16" OVER 34"-4;
.6250" 5/8" OVER 42"- 4E
OVER 48" MUST BE
APPROVED BY R. R. CO.
NOTE: THIS CHART IS ONL
FOR SMOOTH STEEL CASINC
PIPES WITH MINIMUM YIEL
STRENGTH OF 35,000 PSI.
FORMULA TO FIGURE CASING
LENGTH WITH ANGLE OF
CROSSING OTHER THAN 90-
CC
B
!A SIN ??
?E'
L?`0 B
?'L MI N. GIST
(NOTE 2)
TRACK
PL X 980112
Fc°m Approved, AVP-Law
EXHIBIT B
Section 1. LIMITATION AND SUBORDINATION OF RIGHTS GRANTED.
(a) The foregoing grant of right is subject and subordinate to the prior and continuing right and obligation of the Licensor tc
use and maintain its entire property including the right and power of the Licensor to construct, maintain, repair, renew, use
operate, change, modify or relocate railroad tracks, signal, communication, fiber optics, or other wirelines, pipelines and other
facilities upon, along or across any or all parts of its property, all or any of which may be freely done at any time or times by the
Licensor without liability to the Licensee or to any other party for compensation or damages.
(b) The foregoing grant is also subject to all outstanding superior rights (including those in favor of licensees and lessees of
the Licensor's property, and others) and the right of the licensor to renew and extend the same, and is made without covenant of
title or for quiet enjoyment.
Section 2. CONSTRUCTION, MAINTENANCE AND OPERATION.
(a) The Pipeline shall be constructed, operated, maintained, repaired, renewed, modified and/or reconstructed by the
Licensee in strict conformity with Union Pacific Railroad Co. Common Standard Specification 1029 adopted November 1949, and
all amendments thereof and supplements thereto, which by this reference is hereby made a part hereof, except as may be modified
and approved by the Licensor's Vice President-Engineering Services. In the event such Specification conflicts in any respect with
the requirements of any federal, state or municipal law or regulation, such requirements shall govern on all points of conflict, but
in all other respects the Specification shall apply.
(b) All work performed on property of the Licensor in connection with the construction, maintenance, repair, renewal,
modification or reconstruction of the Pipeline shall be done to the satisfaction of the Licensor.
(c) Prior to the commencement of any work in connection with the construction, maintenance, repair, renewal, modification,
relocation, reconstruction or removal of the Pipeline where it passes underneath the roadbed and track or tracks of the Lice- r
the licensee shall submit to the licensor plans setting out the method and manner of handling the work, including the shorin(- 3
cribbing, if any, required to protect the Licensor's operations, and shall not proceed with the work until such plans have been
approved by the Vice President-Engineering Services of the Licensor and then the work shall be done to the satisfaction of the Vice
President-Engineering Services or his authorized representative. The Licensor shall have the right, if it so elects, to provide such
support as it may deem necessary for the safety of its track or tracks during the time of construction, maintenance, repair, renewal,
modification, relocation, reconstruction or removal of the Pipeline, and, in the event the Licensor provides such support, the
Licensee shall pay to the Licensor, within fifteen (15) days after bills shall have been rendered therefor, all expense incurred by the
Licensor in connection therewith, which expense shall include all assignable costs.
(d) The Licensee shall keep and maintain the soil over the Pipeline thoroughly compacted and the grade even with the
adjacent surface of the ground.
Section 3. NOTICE OF COMMENCEMENT OF WORK.
If an emergency should arise requiring immediate attention, the Licensee shall provide as much notice as practicable
to Licensor before commencing any work. In all other situations, the Licensee shall notify the Licensor at least ten (10) days (or
such other time as the Licensor may allow) in advance of the commencement of any work upon property of the Licensor in
connection with the construction, maintenance, repair, renewal, modification, reconstruction, relocation or removal of the Pipeline.
All such work shall be prosecuted diligently to completion.
Section 4. LICENSEE TO BEAR ENTIRE EXPENSE.
The Licensee shall bear the entire cost and expense incurred in connection with the construction, maintenance, repair
and renewal and any and all modification, revision, relocation, removal or reconstruction of the Pipeline, including any and all
expense which may be incurred by the Licensor in connection therewith for supervision, inspection, flagging, or otherwise.
plx.exb Page I of4 Exhibit B
PL X 980112
Fo:-m Approved, AVP-Law
Section 5. REINFORCEMENT RELOCATION OR REMOVAL OF PIPELINE.
(a) The license herein granted is subject to the needs and requirements of the Licensor in the operation of its railroad an(
in the improvement and use of its property, and the Licensee shall, at the sole expense of the Licensee, reinforce the Pipeline, o
move all or any portion of the Pipeline to such new location as the Licensor may designate, whenever, in the furtherance of it:
needs and requirements, the Licensor shall find such action?necessary or desirable.
(b) Al] the terms, conditions and stipulations herein expressed with reference to the Pipeline on property of the Licensor ir
the location hereinbefore described shall, so far as the Pipeline remains on the property, apply to the Pipeline as modified,
changed or relocated within the contemplation of this section.
Section 6. NO INTERFERENCE WITH LICENSOR'S OPERATION.
The Pipeline and all parts thereof within and outside of the limits of the property of the licensor shall be constructed and,
at all times, maintained, repaired, renewed and operated in such manner as to cause no interference whatsoever with the constant,
continuous and uninterrupted use of the tracks, property and facilities of the Licensor, and nothing shall be done or suffered to be
done by the Licensee at any time that would in any manner impair the safety thereof.
Section 7. PROTECTION OF FIBER OPTIC CABLE SYSTEMS.
(a) Fiber optic cable systems may be buried on the Licensor's property. Protection of the fiber optic cable systems is of
extreme importance since any break could disrupt service to users resulting in business interruption and loss of revenue and
profits. Licensee shall telephone the Licensor at 1-800-336-9193 (a 24-hour number) to determine if fiber optic cable is buried
anywhere on the Licensor's premises to be used by the Licensee. If it is, Licensee will telephone the telecommunications
company(ies) involved, arrange for a cable locator, make arrangements for relocation or other protection of the fiber optic cable,
all at Licensee's expense, and will commence no work on the right of way until all such protection or relocation has been
accomplished. Licensee shall indemnify and hold the Licensor harmless from and against all costs, liability and expense
whatsoever (including, without limitation, attorneys' fees, court costs and expenses) arising out of or caused in any way by
Licensee's failure to comply with the provisions of this paragraph.
(b) In addition to other indemnity provisions in this Agreement, the Licensee shall indemnify and hold the Licensor harmless
from and against all costs, liability and expense whatsoever (including, without limitation, attorneys' fees, court costs and expenses)
caused by the negligence of the Licensee, its contractor, agents and/or employees, resulting in (1) any damage to or destruction
of any telecommunications system on Licensor's property, and/or (2) any injury to or death of any person employed by or on behalf
of any telecommunications company, and/or its contractor, agents and/or employees, on Licensor's property, except if such costs,
liability or expenses are caused solely by the direct active negligence of the Licensor. Licensee further agrees that it shall not have
or seek recourse against Licensor for any claim or cause of action for alleged loss of profits or revenue or loss of service or other
consequential damage to a telecommunication company using Licensor's property or a customer or user of services of the fiber
optic cable on Licensor's property.
Section 8. CLAIMS AND LIENS FOR LABOR AND MATERIAL; TAXES.
(a) The Licensee shall fully pay for all materials joined or affixed to and labor performed upon property of the Licensor in
connection with the construction, maintenance, repair, renewal, modification or reconstruction of the Pipeline, and shall not permit
or suffer any mechanic's or materialman's lien of any kind or nature to be enforced against the property for any work done or
materials furnished thereon at the instance or request or on behalf of the Licensee. The Licensee shall indemnify and hold
harmless the Licensor against and from any and all liens, claims, demands, costs and expenses of whatsoever nature in any way
connected with or growing out of such work done, labor performed, or materials furnished.
(b) The Licensee shall promptly pay or discharge all taxes, charges and assessments levied upon, in respect to, or on account
of the Pipeline, to prevent the same from becoming a charge or lien upon property of the Licensor, and so that the taxes, charges
and assessments levied upon or in respect to such property shall not be increased because of the location, construction or
maintenance of the Pipeline or any improvement, appliance or fixture connected therewith placed upon such property, or on
account of the Licensee's interest therein. Where such tax, charge or assessment may not be separately made or assessed to the
Licensee but shall be included in the assessment of the property of the Licensor, then the Licensee shall pay to the Licensor an
quitable proportion of such taxes determined by the value of the Licensee's property upon property of the Licensor as compared
plr.exb Page 2 of4
Exhibit B
PL X 980112
Foam Approved, AVP-Law
with the entire value of such property.
Section 9. RESTORATION OF LICENSOR'S PROPERTY.
In the event the Licensor authorizes the Licensee to take down any fence of the Licensor or in any manner move or disturl
any of the other property of the Licensor in connection with the construction, maintenance, repair, renewal, modification
reconstruction, relocation or removal of the Pipeline, then in that event the Licensee shall, as soon as possible and at Licensee':
sole expense, restore such fence and other property to the same condition as the same were in before such fence was taken dowr
or such other property was moved or disturbed, and the Licensee shall indemnify and hold harmless the Licensor, its officers
agents and employees, against and from any and all liability, loss, damages, claims, demands, costs and expenses of whatsoever
nature, including court costs and attorneys' fees, which may result from injury to or death of persons whomsoever, or damage tc
or loss or destruction of property whatsoever, when such injury, death, damage, loss or destruction grows out of or arises from the
taking down of any fence or the moving or disturbance of any other property of the Licensor.
Section 10. INDEMNITY.
(a) As used in this Section, "Licensor" includes other railroad companies using the Licensor's property at or near the location
of the Licensee's installation and their officers, agents, and employees; "Loss" includes loss, damage, claims, demands, actions,
causes of action, penalties, costs, and expenses of whatsoever nature, including court costs and attorneys' fees, which may result
from: (a) injury to or death of persons whomsoever (including the Licensor's officers, agents, and employees, the Licensee's
officers, agents, and employees, as well as any other person); and/or (b) damage to or loss or destruction of property whatsoever
(including Licensee's property, damage to the roadbed, tracks, equipment, or other property of the Licensor, or property in its care
or custody).
(b) As a major inducement and in consideration of the license and permission herein granted, the Licensee agrees to
indemnify and hold harmless the Licensor from any Loss which is due to or arises from:
The prosecution of any work contemplated by this Agreement including the installation, construction,
maintenance, repair, renewal, modification, reconstruction, relocation, or removal of the Pipeline or any It
thereof; or
2. The presence, operation, or use of the Pipeline or contents escaping therefrom,
except to the extent that the Loss is caused by the sole and direct negligence of the Licensor.
Section 11. REMOVAL OF PIPE LINE UPON TERMINATION OF AGREEMENT.
Prior to the termination of this Agreement howsoever, the Licensee shall, at Licensee's sole expense, remove the
Pipeline from those portions of the property not occupied by the roadbed and track or tracks of the licensor and shall restore, to
the satisfaction of the Licensor, such portions of such property to as good a condition as they were in at the time of the construction
of the Pipeline. If the Licensee fails to do the foregoing, the Licensor may do such work of removal and restoration at the cost and
expense of the Licensee. The Licensor may, at its option, upon such termination, at the entire cost and expense of the licensee,
remove the portions of the Pipeline located underneath its roadbed and track or tracks and restore such roadbed to as good a
condition as it was in at the time of the construction of the Pipeline, or it may permit the Licensee to do such work of removal and
restoration to the satisfaction of the Licensor. In the event of the removal by the Licensor of the property of the Licensee and of the
restoration of the roadbed and property as herein provided, the Licensor shall in no manner be liable to the Licensee for any
damage sustained by the Licensee for or on account thereof, and such removal and restoration shall in no manner prejudice or
impair any right of action for damages, or otherwise, that the Licensor may have against the Licensee.
Section 12. WAIVER OF BREACH.
The waiver by the Licensor of the breach of any condition, covenant or agreement herein contained to be kept, observed
and performed by the Licensee shall in no way impair the right of the Licensor to avail itself of any remedy for any subsequent
breach thereof.
plx.exb Page 3 of4 Exhibit B
PL X 9801 12
Fo_m Approved, AVP-Law
Section 13. TERMINATION.
(a) If the Licensee does not use the right herein granted or the Pipeline for one (1) year, or if the Licensee continues in defaul
in the performance of any covenant or agreement herein contained for a period of thirty (30) days after written notice from the
Licensor to the Licensee specifying such default, the Licensor may, at its option, forthwith immediately terminate this Agreemen
by written notice.
(b) In addition to the provisions of subparagraph (a) above, this Agreement may be terminated by written notice given by either
party hereto to the other on any date in such notice stated, not less, however, than thirty (30) days subsequent to the date upon
which such notice shall be given.
(c) Notice of default and notice of termination may be served personally upon the Licensee or by mailing to the last known
address of the Licensee. Termination of this Agreement for any reason shall not affect any of the rights or obligations of the parties
hereto which may have accrued, or liabilities, accrued or otherwise, which may have arisen prior thereto.
Section 14. AGREEMENT NOT TO BE ASSIGNED.
The Licensee shall not assign this Agreement, in whole or in part, or any rights herein granted, without the written consent
of the Licensor, and it is agreed that any transfer or assignment or attempted transfer or assignment of this Agreement or any of
the rights herein granted, whether voluntary, by operation of law, or otherwise, without such consent in writing, shall be absolutely
void and, at the option of the Licensor, shall terminate this Agreement.
Section 15. SUCCESSORS AND ASSIGNS.
Subject to the provisions of Section 14 hereof, this Agreement shall he binding upon and inure to the benefit of the parties
hereto, their heirs, executors, administrators, successors and assigns.
pIx.exb Page 4 of 4
Exhibit 8
PLMUDRAINAGE INS. 02/16/01
Fo.•m Approved, AVP-Law
EXHIBIT B-1
Union Pacific Railroad Company
Insurance Provisions For
Pipeline / Wireline / Drainage License Agreements
Licensee shall, at its sole cost and expense, procure and maintain during the life of this Agreement the following insurance coverage:
A. Commercial General Liability insurance. This insurance shall contain broad form contractual liability with a single limit of at least
$2,000,000 each occurrence or claim and an aggregate limit of at least $4,000,000. Coverage must be purchased on a post 1998 ISO
or equivalent form, including but not limited to coverage for the following:
• Bodily injury including death and personal injury
• Property damage
• Fire legal liability (Not less than the replacement value of the portion of the premises occupied)
• Products and completed operations
The policy shall also contain the following endorsements which shall be indicated on the certificate of insurance:
• "For purposes of this insurance, Union Pacific Railroad payments related to the Federal Employers Liability Act or a Union
Pacific Wage Continuation Program or similar programs are deemed not to be either payments made or obligations assumed
under any Workers Compensation, disability benefits, or unemployment compensation law or similar law."
• The exclusions for railroads (except where the Job site is more than fifty feet (50') from any railroad including but not
limited to tracks, bridges, trestles, roadbeds, terminals, underpasses or crossings), and explosion, collapse and underground
hazard shall be removed.
• Coverage for Licensee's (and Licensor's) employees shall not be excluded
• Waiver of subrogation
B. Business Automobile Coverage insurance. This insurance shall contain a combined single limit of at least $2,000,00f>r
occurrence or claim, including but not limited to coverage for the following:
• Bodily injury and property damage
• Any and all motor vehicles including owned, hired and non-owned
The policy shall also contain the following endorsements which shall be indicated on the certificate of insurance:
• "For purposes of this insurance, Union Pacific Railroad payments related to the Federal Employers Liability Act or a Union
Pacific Wage Continuation Program or similar programs are deemed not to be either payments made or obligations assumed
under any Workers Compensation, disability benefits, or unemployment compensation law or similar law."
• The exclusions for railroads (except where the Job site is more than fifty feet (50) from any railroad including but not
limited to tracks, bridges, trestles, roadbeds, terminals, underpasses or crossings), and explosion, collapse and underground
hazard shall be removed.
• Motor Carrier Act Endorsement- Hazardous materials clean up (MCS-90) if required by law.
C. Workers Compensation and Employers Liability insurance including but not limited to:
• Licensee's statutory liability under the workers' compensation laws of the state(s) affected by this Agreement
• Employers' Liability (Part B) with limits of at least
$500,000 each accident, $500,000 disease policy limit
$500,000 each employee
If Workers Compensation insurance will not cover the liability of Licensee in states that require participation in state workers'
compensation fund, Licensee shall comply with the laws of such states. If Licensee is self-insured, evidence of state approval must be
provided along with evidence of excess workers compensation coverage. Coverage shall include liability arising out of the U. S.
Longshoremen's and Harbor Workers' Act, the Jones Act, and the Outer Continental Shelf Land Act, if applicable.
The policy shall also contain the following endorsement which shall be indicated on the certificate of insurance:
• Alternate Employer Endorsement
D. Umbrella or Excess Policies In the event Licensee utilizes Umbrella or excess policies, these policies shall "follow form" and
afford no less coverage than the primary policy.
Page 1 of 2
PL/WUDRAINAGE INS. 02116/01
Fc.'m Approved, AVP-Law
Other Requirements
E. Punitive damage exclusion must be deleted, which deletion shall be indicated on the certificate of insurance.
F. Licensee agrees to waive its right of recovery, and its insurers, through policy endorsement, agree to waive their right o-
subrogation against Licensor. Licensee further waives its right of recovery, and its insurers also waive their right of subrogation against
Licensor for loss of its owned or leased property or property under its care, custody and control. Licensee's insurance shall be primary
with respect to any insurance carried by Licensor. All waivers of subrogation shall be indicated on the certificate of insurance.
G. All policy(ies) required above (excluding Workers Compensation) shall provide severability of interests and shall name Licensor as
an additional insured. Severability of interest and naming Licensor as additional insured shall be indicated on the certificate of
insurance.
H. Prior to commencing the Work, Licensee shall furnish to Licensor original certificate(s) of insurance evidencing the required
coverage, endorsements, and amendments. The certificate(s) shall contain a provision that obligates the insurance company(ies)
issuing such policy(ies) to notify Licensor in writing of any cancellation or material alteration. Upon request from Licensor, a certified
duplicate original of any required policy shall be furnished.
1. Any insurance policy shall be written by a reputable insurance company acceptable to Licensor or with a current Best's Insurance
Guide Rating of A- and Class VII or better, and authorized to do business in the state(s) in which the service is to be provided.
J. Licensee WARRANTS that this Agreement has been thoroughly reviewed by Licensee's insurance agent(s)/broker(s), who have
been instructed by Licensee to procure the insurance coverage required by this Agreement and acknowledges that Licensee's
insurance coverage will be primary.
K. The fact that insurance is obtained by Licensee or Licensor on behalf of Licensee shall not be deemed to release or diminish the
liability of Licensee, including, without limitation, liability under the indemnity provisions of this Agreement. Damages recoverable by
Licensor shall not be limited by the amount of the required insurance coverage.
Page 2 of 2