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TC Council Packet 02-12-2002Town Council Meetings Roll Call Check Sheet Date: 2/12/02 Michael Brown ? Debbie Buckley Peter Buckley Rick Cuny Mac McDevitt Buz Reynolds V Judy Yoder XII 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 Sta Present: Bill Efting V Larry Brooks ?P? Bwt-tevin tom: Kris Nash ?Jacquie Halburnt Scott Wright V Jeff Layman V Norm Wood Meryl Jacobs j Bob Reed Harry Taylor Ruth Borne Other Staff 1ATown 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 12, 2002, AT 4:15 PM IN THE MUNICIPAL BUILDING, 400 BENCHMARK ROAD, AVON, COLORADO FOR THE PURPOSE OF DISCUSSING AND CONSIDERING THE FOLLOWING: 4:15 PM - 4:30 PM 1.) Town Clerk Discussions 4:30 PM - 4:45 PM 2) Eagle River Bikepath to Confluence Sewer District Easement (John Dunn, Norm Wood) 4:45 PM - 5:00 PM 3.) Grant Awards (Transit -Harry Taylor) (Police - Jeff Layman) 5:00 PM - 5:15 PM 4.) Bravo (Jeanne Reid) 5:15 PM - 5:30 PM 5.) Staff Updates t Consent Agenda Questions b Council Committee Updates 1. AND SUCH OTHER BUSINESS AS MAY COME BEFORE THE COUNCIL THIS MEETING IS OPEN TO THE PUBLIC OF AVON, COLORADO B Kristen Nash Town Clerk POSTED AT THE FOLLOWING PUBLIC PLACES WITHIN THE TOWN OF AVON ON FEBRUARY 8,2002: AVON MUNICIPAL BUILDING IN THE MAIN LOBBY ALPINE BANK AVON RECREATION CENTER CITY MARKET IN THE MAIN LOBBY IATown Clerk\Council\Agendas & Worksessions\Agenda-Worksession.doc Memo To: Honorable Mayor and Town Council Thru: Bill Efting, Town Manager From: Norm Wood, Town Englnee(7 l/ Date: February 5, 2002 Re: Eagle River Bikepath to Confluence Sewer District Easement s u m m a Ky: John Dunn has contacted Jim Collins, attorney for the Eagle River Water & Sanitation District Board, regarding the attached easement conditions requested by their board. John's Memo summarizing that discussion is attached. We have also reviewed the proposed bikepath plans with respect to possibility of the installation of irrigation and landscaping across a portion of the sanitation district site. The plans currently call for the existing irrigation system to be maintained and to relocate as necessary. There is an area along the proposed path that could be enhanced by the installation of landscaping and a minimal irrigation system to establish new trees in this area. This section is about 350 feet long and the attached Cost Estimate indicates an approximate cost of $11,000 to landscape this area. We would recommend the sanitation district maintain the irrigation system and landscaping consistent with their other on site landscaping. We would like to discuss these issues and available options with council during Tuesday's Work Session. Town Manager Comments: \\PW\SHARED\Engineering\CIP\Eagle River Ree II\6.0 R-W Acquisition\6.1 Gen Correspondence\ERW&SD Memo-2.Doc DUNN & ABPLANALP, P. C. M emorandum DATE: January 29, 2002 TO: Norman Wood FROM: John Dunn RE: Eagle River Bike Path/Eagle River Water and San. Dist. Easement On January 28, 2002,1 exchanged voice messages with Jim Collins, attorney for the Eagle River Water and Sanitation District. I expressed to Jim the Council's dissatisfaction with the form of the easement the District is willilig to sign, both with respect to the requirement of irrigated landscaping and with respect to the acknowledgment that the emission of odors are occasionally an inherent part of normal operations of a sewage treatment plant. The message I got back from Jim was that, with respect to the landscaping, there was room for negotiation and he was willing to consider any alternative language. However, with respect to the emission of odors, the message was that he was given specific direction by the District's board that that language be included. It apparently is not negotiable. It is my understanding that this matter will be returned to Counci 1 for further direction. I talked with Jim today and let him know that that will be our course of action. jwd:ipse Eagle River Recreation Path II Easement Landscaping Estimate nPCrintinn Quantity Unit Unit Cost Cost 2" aspen tree 13 EACH $ 150.00 $ 1,950.00 10' Spruce 6 EACH $ 600.00 $ 3,600.00 irrigation system 15000 S.F. $ 0.19. $ 2,850.00 soil preparation and seed 15000 S.F. $ 0.17 $ 2,550.00 Total = $ 10,950 Assumptions 1) Cost data for 2" aspen, 10' spruce, and irrigation system was taken from the Nottingham Road Bike Path, Phase I, Final Design Cost Estimate. 2) Cost data for soil preparation and seed were calculated using an application rate of 65 pounds per 1000 square feet and a low grade seed mix price of $2.50 per pounds. 3) All calculations are shown below. Calculations Irrigation System. Nottingham Road Bike Path Irrigation Area = 85,500 S.F. Nottingham Road Bike Path Irrigation Cost = $15,750 Cost per Square Foot Irrigation Area = 15,750 / 85,500 S.F. = $0.19 / S.F. Soil Preparation and Seed Cost per Square Foot Soil Preparation and Seed = (65 lbs / 1000 S.F.) * $2.50 / lbs = $0.17 / S.F. V TER & `31NIIA11VN Dtsmdc,, w ro ast ROSI . ua!. C-0-TWO O M57 WO) 476 74W , FAX (970) 47$4M October 18, 2001 - Mayor Ludy Yoder TcA-A,o.f Avon Post Me vox 975 Avon, Colorado 81620 Re: Avon Bike Path Dear Mayor Coder: VIA FACSOMLE W 949-6395 Our 8oaxd of Dkoams has agreed to g=t the Town of Avon an easement for construction of a bike pad; across the Dist ct's ,Avon Wastewater Treau nwt Plant PmPe rtY I have enclosed a form of Deed of Easement that we }propose to use for this purpose. i believe we have paid or committed more than $33,000 in District funds for en&ming and design for the bilrepat& We will continue to share in the Costs of engineering and design nand we have a design that meets your needs and ours- The District will also eorstmct aid ma U14, at its ex xmse, a sa&ty fence to separate the bike path fmm the District's treatment plant. This will reduce the estimdted cost of construction of the bdce path bey aboat S 18,000. We regret that we will not be able to comrtbute additional fm&- to the construction of this project. COW luck with the project. Please let me know, if there is anything else we can do to help. Feel free to can me at 376-0179 if you have questions or dents. Sincerely, Y, SGLSa- Rick Sa uer, Chaff-man Enclosure: Deed of Ru ment Form c.c. Town Maasger Bill Elting ERW&SD Boyd AV wATM, W-->TtWATa1, ATIONS & MANAGElv1ENT SERVCF-s DEED OF EASEL` ' TM DEED, made this _ day of , 2001. between We River Water and Sanitation District (the Owner), whose address is 846 Forest Road, Vail; CO 316571, and Town ofAvon, whose address is P.O. Box M, Avon, CO 81620; W SSEIH: I . For and in consideration of the covenants and agmements.hen ein set forth, the sum of ten (SIC) DoHms, and other good and valuable consideration in hand paid by the Town to the Owner, the receipt and adequacy of which is hereby ac3mowledged, the Owner hereby grants, sells and conveys to the Town, its suocessors and assigns, a perpetual non. exclusive easement and right-of-way to install, operate, maintain, r pmr, wonst»=ct, r?placc, inspect and remove, at any time and from time to time, a bike trail across those certain lands which are situate in the County ofF.,agle, State of Gordo, being d -W mom ugly on Exhibit "A" attached hereto and by this referetnce made a part Hereof. 2. The Owner reserves the tight to use said easement for purposes which will not interfere with the Tcr--Ws full enjoyment of the right hereby granted subject to the conditions in Section 3; and the parties further agree that the uses of said easement by the Owner and the agreements c Oncerrung those uses shall be as follows` (a) The Owner shall not crect or construct any building or other structure, or construct any penis neat obstruction, or sub#ract h`o`rn or add substa nfuMy to the ground level, or allow the insiallafion of other utilities in said pcrp*al casement without obtaining the specific written permission of the Town, which pmlission shall not be unreasonably withheld; (b) The Owner shall take no action which would unpair, or in any way modify the eajrth corer over, or the Lum-4 or subjacent support for the aforementioned bike trail within the perpetual easement without obtaining the specific written permission of the Town, which pernitsaion shall not be unreasonably, withheld; 3. Town acknowledges that the ememernt T ' • adja er-t to a wastewater treatment plant, and in the vicinity of a water pump station, and tinat conveyance of-this easement is outside of the original intended use of the property by Owner, brut that Owner desires to be a cooperative party subject to the following ackriww1e4ements and conditions: (a) Town agrees not to allow the path to interfere with the wastewater or water opcxations of Owner, and to cooperate in reasonable accommodations to avoid such interfereanm W) Town agrees to provide for the installation and rnainten,anee of irrigated landscaping adjacent to the bike trial, which is the subject of this easemerd- The irrigated landscaping shall extend from Owner's fence adjacent to the bike path to the high water line of the Eagle River. Owner agrees to provide water for Town's landscape irrigation system at no cast to Town. {c) Town enpressl; ac mowle dges that Owner uses adjoining Popery as a pl=t, --nd :cogn es %at despite Owner's beat efforts to minimize they emissions of any odors, such odors are occasionally an Whermt part of normal op t of a sewage treatment plant. Town farther acknowledges and recognizes that dul* times of maintenance and expansion of the plant, it is likely that odors will be emitted from the plant Town agrees to make re asormable efforts to diss=mte information to users of the bike nail and others regarding the potential of ;=.?ion of odors from Owner's sewage treatment plant, and Town's acceptance of such occunvacm and affirmative ire to ner? t+ele locate this bike pA on flrwner's property. In the event any members of the public overly criticize Owner for such oc1ors as the Odor re, late to the ,De age, iiAM $g= to cooperate: wim Owner in making any public statement deemed necessary- Such coopwation my T„ :_ • include 1.,wu si0inirg Owner in a press rieiease that recites Town's knowing acceptance of the condition of the property use adjacent to the bilee _traiL (d) Town acknowledges that Owner may close the bike path te+l7porav iy or otherwise is the event baffiic on the bike path is deemed to pnesmtt an undue risk to the security of Owner's sewage trearrncnt ptauL 4- C"Unt-e-0- age th,* 0on."brucdon of be bZLo trait sJhQ- be in accordance with the plans for the 2041 Ea4a River Ramon path Il coustructi Dn project. 5. The parties hero agree that neither, has made, or authorized any agreemat with respect ttr the subject matter of this instrument other than expressly set forth herein. 6- The Owner warrants that it has full and lawful authority to make the grant hereinabove contained and promises and agrees to defend the Town in tie ex= ° w rights hereunder against any persons claiming by, thouggl or under the Owner,, but not otherwise. 7- All -WA the coverts herein routtahwd s'nall be binding upon and inure to the benefit of the parties hereto, their respective heirs, personal represeru&e s, successors and assip& 2 TNT .• , 1gTES0 WNTREOF, the undersigned have set heir hands hereto on the day and year Erst above w fitta, BAGIZ Ri V-ER WATER AND SANrTATTON DISTRICT By- _ Frederick P. SacEbmuer, pmidem TOWN OF AVON BY Judy Y vda, Mayor STATE OF COLORADO ? COUNTY OF EAGLE )SS- This Contract '41" ae-kaowledged before me this day of 2001, by : , crick P. Saekbang(, as president. of Eagle River Water and Sanitation District. Witness my band and official seal. My commission expires: Notary Public STATE OF COLORADO ) COUNTY OF EAGLE ?. This Contract was acknowledged before me this day of 2001 by Judy Yoder as Mayor of the Town of Avon ' Witness my hand and official seaL My commission expires: Notary Public 3 Memo To: Bill Efting, Town Manager From: Harry N. Taylor, Director of Transportation CC: Lary Brooks, Assistant Town Manager Dates. February 7, 2002 Re: FTA Section 5309 Capital Equipment Grants for 2001 & 2002 The year 1999 was the first year the Town of Avon provided year round service on both the Hurd Lane Route and the Town Shuttle Route. By providing year round transportation service to the local community we then qualified for Federal funding to replace our rolling stock of buses. We succeeded in our first attempt for Section 5309 funding (FY 2000 submittal) with a total of $187,552 in federal dollars. The monies received for the FY 2000 grant helped pay for the replacement of two (2) People Movers, purchased two (2) bus shelters for West Beaver Creek Boulevard and paid for a large portion of the conversion to the 800 mhz radio system. The Section 5309 grants are based on an 80/20 matching program. Avon's share is 20% and the federal share is 80%. This obviously works well for us as a mechanism to replace worn-out buses. The Transportation Department vehicles are not included in the Capital Equipment Replacement Fund (CERF) program for the town. We therefore look to other means to fund the replacement of our Buses and People Movers. Federal grants have been our answer. We have been successful in our 2001 request (awarded $195,995) and the 2002 request (awarded $167,961) for federal funds. With the effects of 9/11 and a downturn in the economy, we have deferred using these funds for bus replacement until now. Deliveries on new buses are now between 12 to 18 months from date of order. We are at a point where we need to make a decision on whether to take advantage of the federal dollars available for bus replacements or defer the replacements until a later date. Recommendation I recommend that we accept the 2001 FTA grant for $195,995 and replace the (eighteen year old) 1984 Orion Bus. The estimated cost of a new 35-ft Transit coach is $250,000. The town's share of the cost on this grant is $54,005. 1 also recommend that we accept the 2002 FTA grant for $167,961 and replace the (seventeen year old) 1985 Orion Bus. The estimated cost of a new bus is $250,000 leaving our share of the cost on the second bus at $82,039. Accepting either grant may require amending the 2002 Transportation budget. 0 Page 1 February 12, 2002 To: Town of Avon Members, Town of Avon Council From: Bravo! Vail Valley Music Festival In regard: Bravo! Festival Sponsorship Dear Members of the Avon Town Council, On behalf of the Board of Trustees of the Vail Valley Music Festival we thank you for the opportunity to update you on the upcoming 15th Anniversary Season and the Festival's future plans. The Bravo! Festival will enter its 15th Anniversary Season during the summer of 2002 and will again bring to the Valley three great American orchestras and over 40 international solo artists in the presentation of 60 concerts serving residents and visitors alike. The request to the Town of Avon is for a multi-year agreement with the Bravo! Festival as follows: A. 2002-2004 Avon Music Education Programs - $25,000 During July of 2002, (6) music education programs designed for school-age children will be presented at the Town of Avon Library. In partnership with the Avon Library District's Summer Reading Program, the series, Reading, Rhythm and Rhyme, consists of hour-long programs at the library featuring stories, guest visitors, games and crafts. The Bravo! Festival will provide guest musicians to educate and entertain children with instruments and music. The Library's Summer Reading programs are held in Avon on Tuesdays and Wednesdays from 10:00 am to 11:00 am and Thursdays from 1:00 to 2:00 pm. Last year, over 600 children in Eagle County participated in this educational outreach program. During the school year, a free concert will be presented to Avon Elementary students at the Vilar Center for the Arts at Beaver Creek, in addition to Music Education programs in the school. B. 2002-2004 Classical Concert Series at the Vilar Center, Beaver Creek - $25,000: Underwriting of five (5) classical chamber music concerts at the Vilar Center in Beaver Creek, all of which will be recorded for broadcast by National Public Radio, Washington, D. C. JOHN W. GIOVANDO • Esecatire Director EUGENIA ZUKERMAN • Arti,,tie Director Post Office Box 2270, Vail, Colorado 81658 • 201 Main Street, Minturn, Colorado 81645 Phone 970.827.5700 • Toll Free 1.877.827.5700 • Fax 970.827.5707 • wN?v.vailmusicfestival.org • E-mail bravo@vail.net Music FiESTIVAL Town of Avon Proposal Page Two C. 2002-2004 Complimentary Patriotic Concert at Beaver Creek Resort - $25,000: The annual complimentary Patriotic Concert features a world-class American orchestra presented as a service to the community. Programming features traditional Independence Day favorites, including a sing-along and the Salute to the Armed Forces and their veterans. D. 2003-2005 Friends of the New York Philharmonic - $25,000: The summer of 2003 marks the beginning of an exciting new era with the presentation of a new resident orchestra, the incomparable New York Philharmonic under the baton of Lorin Maazel as an orchestra in residency for 2003, 2004 and 2005. The Philharmonic has sought out Bravo! for this residency understanding the Festival's unique position with the presentation of resident orchestras and the valley's identity as a world-class resort. The New York project will not only elevate the summer marketing opportunities to a new level, but will also help to position the valley as a summer destination resort. Nos 3S W a a L r 11 1 N 3 .1. ;1 11 1 U ? cj • N O O Qlz! too v .N =L } L7? max` .? 3- Y G ?> k . t 1 x L c ?USV;I% IIl.V;l ,l, ;1111 lllll? IN 1111% - j ® 8 V IL U_ ¦ .N N• ? o f :1" 'VRR u P- i awigaik? IL? 't Ile 't ?i O AMP 2 m O L ca M O O N N O O N r? O O N O O O N O? O? 00 O? O? r CN r-I 110 ? L O V--I 01 M N O CN ro CN 00 CN r-q 00 00 ON 0 0 0 0 0 0 0 0 0 601 0 0 0 0 0 0 0 C 0 0 0 0 0 0 0 0 0 0 o ? o ? o ? o rt ? M M N N -- --i ? bR bR b4 6r4 bf3 bH 6n bR 4unowv a. v r y N y 4?1 a? v 0 A O JC2 CO) C.30 cc cm O E W act now- O cis L m 1 O r r' O 0 r? O 0 N LCI> O O O O O O O 0 00 00 00 C9 mod- MN ? q?, lS/ X/ Ac?? 5& ?/0 a o .? v TO ti O J TC U U 7 O Brapo!VAIL VALLEY _ Music FE STIVAL Is this the first Bravo! Vail Valley Music Festival concert that you have attended? Yes 35% No 65% 2. How many performances will you attend this year? 1 27% More than 5 25% 2-3 23% Almost All 12% 3-5 13% 3. Are you: A seasonal resident (live in the Vail Valley less than 6 months per year) 26% A full-time resident (live in the Vail Valley more than 6 months per year) 33% Visiting the Vail area just for the day (NOT staying overnight in the Vail Valley) 6% A visitor staying overnight in the Vail Valley (from East Vail to Eagle) 35% How many nights will you stay Where are you staying? in the Vail Valley this visit? 1 -2% 6 13% Lodging in Town of Vail 63% 2 -26% 7 9% Lodging down valley 8% 3 -13% 8 4% With friends 24% 4 -2% 9 4% Other 4% 5 -9% 10 or more 19% 4. Did you plan a special trip to the Vail Valley in order to attend a Bravo! performance? Yes 23% Became aware after arriving 36% N/A (local resident) 41% 5. Will the Festival influence your decision to return to the Vail Valley? Yes 55% No 29% Uncertain 16% 6. What other summer activities do you enjoy? Hiking 59% Horseback Riding 11% Biking 42% Shopping 70% Camping 17% Golf 33% Fishing 16% Sightseeing 49% Rafting 27% Other 16% 7. Will you be patronizing a Vail Valley restaurant after the concert? Yes 63% No 37% 8. Age: 10. Annual Household Income: Under 21 5% Under $25,000 5% 21 - 35 18% $25,001 - $50,000 11% 36 - 50 21% $50,001 - $100,000 28% 51 - 65 40% $100,001 - $150,000 14% 65 & better 17% $150,001 + 43% 9. Region of Origin Northeast (ME, VT, NH, RI, CT, NY, NJ, PA, DE, MD, MA) 3.6% Southeast (VA, WV, DC, NC, SC, GA, FL, KY, TN, AL, MS) 8.9% Midwest (OH, IN, IL, MI, WI, MN, IA, MO, KS, SD, ND, NE) 11.7% South (TX, OK, LA, AR) 12.7% West (CO, NV, CA, WA, OR, MT, ID, WY, NM, AZ, UT) 6.1% Hawaii and Alaska 0.0% Canada and Mexico 1.4% Bringing Communities FRIDAY JANUARY 11, 2002 VOLUME XX1, NUMBER 208 Bravo!, brings on New York Philharmonic By Robert Kelly-Goss ARTS AND ENTERTAINMEN"r EDITOR If the Bravo! Vail Valley Music Festival's lineup of orchestras hasn't been enough for symphony lovers. how about the New York Philharmonic? That's right, Bravo! has brought in "Americas First Orchestra" for a three-year engagement as a resident orches- tra beginning in the 2003 summer season. according to festival exec- utive director John Giovando. "It's been in the works for about a year;" Giovando said in an interview from New York. Melissa Sanders, the public relations director with the Philharmonic, said the orchestra has in the past been concentrating on largely international engage- ments and realized that it was time to bring the music home. Additionally, while the orchestra has done residencies, the three- year engagement with the Vail Valley Music Festival is a first. Festival artistic director Eugenia Zuckerman said she is "thrilled and honored" to have the New York Philharmonic play at Vail's Ford Amphitheater. "The Philharmonic's residen- cy in Vail will not only bring the highest musical standard to the valley, but it will also invigorate the entire region." she said. "With its artistic legacy and its profound dedication to music, the New York Philharmonic will inspire and delight our audi- ences." Giovando said this artistic coupe for the valley brings a higher level of a cultural appre- ciation to the summer season. "We hope it will be a tremendous economic stimulus and put us on the cultural map. not that we were already there." Giovando said. The Philharmonics residen- cv with the festival is scheduled to begin in the summer of 2003 and run through the 2005 sea- son. Beyond that. Giovando said valley symphony lovers will have to wait and see. Special to the Daily Bravo! has negotiated a deal with the New York Philharmonic tp play three seasons beginning the summer of 2003. FOR IMMEDIATE RELEASE January 1, 2002 Contact: Katie Campbell (970) 827-5700 email: bravo@vail.net VAIL VALLEY MUSIC FESTIVAL CELEBRATES 15 YEARS IN 2002 Vail, Co.- The Bravo! Vail Valley Music Festival is proud to present its 15th Anniversary Season in 2002. Over 60 concerts will be performed by over 40 acclaimed soloists, ensembles and the Festival's three returning resident orchestras - the Colorado Symphony Orchestra, the Dallas Symphony Orchestra and the Rochester Philharmonic Orchestra. "The last fifteen years have been incredibly successful," said founder and Executive Director John Giovando. "We're thrilled to have the ability to continue bringing the finest talent in the performing arts, nationally and internationally, to the Vail Valley." The celebration sparkles with international stars, including mezzo-soprano Susan Graham, pianists Boris Berezovsky and Andr6-Michel Schub, Composer-in-Residence Jake Heggie, flutist and Artistic Director Eugenia Zukerman, soprano Maureen O'Flynn, cellist Alisa Weilerstein, television host Pat Sajak, and Ensemble-in-Residence the Shanghai String Quartet, and violinist, Mark O'Connor, among others. Conductor Marin Alsop will open the 15"' season with the Colorado Symphony Orchestra's performance of Beethoven's Ninth Symphony with the Colorado Symphony Chorus. Their residency will include a performance of Stravinsky's Rite of Spring and special patriotic concert with the Colorado Children's Chorale. Los Camperos di Nato Cano, America's hottest mariachi band, will travel from Los Angeles to perform with its 17 musicians and dancers as the Festival's Special Guest on Friday, July 6. Conductor Andrew Litton returns with the Dallas Symphony Orchestra to perform seven concerts in their fourth year of residency. Their performances include the full concert version of the Verdi's beloved opera La Traviata, Berlioz' Les Nuits d'ete featuring Susan Graham, and Holst's The Planets, including the recent addition of Pluto by Colin Matthews. The Rochester Philharmonic Orchestra finishes the orchestral season led by Conductor Christopher Seaman. Performances include Conductor Michael Butterman leading the orchestra at the free family concert, Mahler's Symphony No. 5, Shostakovich's Symphony No. 5 and Bartok's Concerto for Orchestra. The Festival's nationally acclaimed Chamber Music Classics series will continue its performances at the Vilar Center for the Arts in Beaver Creek. This intimate and powerful series will feature the Festival's 2002 Commission Premiere written by Jake Heggie for mezzo-soprano, flute and piano. It will be performed on July 16 by Susan Graham, Eugenia Zukerman and Jake Heggie, and features a text written by Sister Helen Prejean. Three Introduction to Chamber Music concerts and the ever-favorite Soiree Series will also be held at various locations and private residences throughout the Vail Valley. Many internationally renowned artists will return to the Festival, including pianists Anne-Marie McDermott and Jonathan Biss, violinists Chee-Yun and Anne Akiko Meyers, cellist Eric Kim and Zuill Bailey, violist Toby Appel and clarinetist Bil Jackson. JOHN W. GIOVANDO • Esecutire Director EUGENIA ZUKERMAN . Arti,,tie Director Post Office Box 2270, Vail, Colorado 81658 • 201 Main Street, Minturn, Colorado 81645 Phone 970.827.5700 • Toll Free 1.877.827.5700 • Fax 970.827.5707 . www.vailmusicfestival.org • E-mail bravo@vail.net 4? Music FESTIVAL FOR IMMEDIATE RELEASE January 8, 2002 Contact: Kathryn Campbell (970) 827-5700 kcampbell(c?,vailmusicfestival.com VAIL VALLEY MUSIC FESTIVAL ADDS NEW YORK PHILHARMONIC AS RESIDENT ORCHESTRA IN 2003 Vail, CO - Executive Director John Giovando and Artistic Director Eugenia Zukerman were pleased to announce today that America's First Orchestra, the New York Philharmonic, has committed to participate in the Vail Valley Music Festival as a resident orchestra. The three-year commitment will begin in 2003, the Festival's 16th Season, and includes six performances, July 18 through July 26. The New York Philharmonic will arrive in Vail under the direction of its new Music Director, Lorin Maazel, who will succeed Kurt Masur in the orchestra's 2002-2003 season. The Vail Valley Music Festival, presented by Alberto W. Vilar, is the only summer festival in the United States that hosts resident orchestras, currently including the Colorado Symphony, the Rochester Philharmonic and the Dallas Symphony Orchestras. On February 18, 1999, the New York Philharmonic, by far the oldest orchestra in America and one of the oldest in the world, performed its 13,000th concert - a milestone unmatched by any other symphony orchestra. Under the influence of its celebrated music directors - among them Damrosch, Thomas, Mahler, Toscanim, Walter, Bernstein, Boulez, Mehta, and Masur - the Philharmonic has played a leading role in American musical life and has maintained a tradition of musical excellence since its founding in 1842. In the 20th century, the New York Philharmonic's remarkable achievements in radio, television, and other media helped shape communications history. In 1922 it became one of the first orchestras to broadcast a live concert, and the live coast-to-coast radio broadcast of 1930 was the first of its kind. Today, the Philharmonic is the only American symphony orchestra to be broadcast live on a national and regular basis. In 1997, on the diamond jubilee of the first Philharmonic radio broadcast, the Orchestra unveiled a set of expertly re-mastered historic recordings spanning six decades of its live broadcasts on its own label, New York Philharmonic Special Editions. Since then, the Philharmonic has released to wide critical acclaim additional CDs collections documenting the works of Mahler; Bernstein's conducting; groundbreaking performances of American music; and Kurt Masur at the New York Philharmonic, a ten-CD set documenting the Maestro's legacy. Each year, the Philharmonic performs approximately 170 concerts for live audiences of nearly one million and appears on the Live From Lincoln Center television broadcasts, which are seen by combined audiences of more than 15 million. Eugenia Zukerman declared today, "As the Artistic Director of the Vail Valley Music Festival, I am thrilled and honored that America's flagship orchestra, the New York Philharmonic, will be joining us, beginning in 2003. The Philharmonic's residency in Vail will not only bring the highest musical standard to the Valley, but it will also invigorate the entire region. With its artistic legacy and its profound dedication to music, the New York Philharmonic will inspire and delight our audiences, and I am looking forward with enormous excitement to working with Maestro Maazel, the administration, and the entire orchestra." In making today's announcement John Giovando stated, "We are truly honored and very excited to bring the Philharmonic to Vail. Their quality of musicianship and reputation are unmatched in the United States and throughout the world. It is through this extraordinary collaboration that we intend to enhance our level of programming, and intensify the alread high international level of the pperformances we offer." JOHN N7. G10VAND? • -Execithre Director EUGENIA - TRAIAN ?lrt?;[u Dire<hu- more - Post Office Box 2270, Vail, Colorado 816,58 • 201 Main Street, 1Alinturn, Colorado 81645 Phone 970.827.5700 • Toll Free 1.877.827.5700 • Fax 970.827.5707 • wcvw.vailmusicfestival.org • E-mail 6ravo(aDvail.net ?r Music FESTIVAL Board of Trustees Chair Karin Weber stated, "The extraordinary combination of the musical excellence of the New York Philharmonic and our mountain setting will provide for a rare experience not found anywhere else in the world." The Festival's 15t" Anniversary Season will be presented by New York resident and Amerindo Investments founder Alberto W. Vilar, who has contributed greatly to the performing arts around the world. Mr. Vilar has committed to supporting the Vail Valley Music Festival as its presenting sponsor for the years 2002 through 2004, and was a major catalyst in uniting the Festival and the New York Philharmonic. Albert W. Vilar presents the Festival's 15th Anniversary Season June 29 - August 4, 2002. For ticket and schedule information, please visit www.vailmuslefestival.org or call toll free at (877) 827-5700. W. Pf z z z G y M cj? cm? POW* Cr cws? •Tv?/ PWMO E f7Z 7j) E'z Gr U O ._ ^ y ' EE _ _ u C y .?' an a c °D 3 e v= T ? caU >^ m° ?, °1 ? . y n ? , `° O nny? -uEmy ? y uav-_- c_nm-- o'om `n,.. Q1 O ? = J U .? _ = to - j O r' t : ` - V = • cU• j '' J] ~ = C L GO y' ?9 O ' > co . y to to - - t.. ^.. N 7 = in ?c _, - F_ m^ E N '? 0 3 m m J.S > C Mau =? m av •o v .?," o n. o m c_ m °` a y m 3 c v s ?e CC v c S m m _ u '? Y c °-' `? °-' x cn ._ c ca c -'.YC, G ° m c m E ` m o pi ?. = m u x '- ¢cj W ° c? ai ._ J cD o a.S ca c ? = = u c G] ?, y '?, '? L .._, ti a o v cn y •> an,5 I ?' ? - o'er - v y ? ?. - E= D D -• °•- ? ? E?? v v ?•^ ? k°'D._ ?, 3 ``o v ,v J mC - `u ° '? G -a •?y E E `c 2,0 ?.S - v S rn - u °- ?° y_ w m cif v L oo c v y `9 E •? is d '? 3- E E n° c u- o g Z o s `D = 3} y E •- a v V 30 L J U .J •_ C- U ?9 'n V 6UJ c? •- '? O O- N U ...? V C E R O L ?`y v-. .°. ? 'v o ?._ a ? ? ?c E v ?_°? ?•y'3 v m3'a?^ = ?'•? c `--° t9.u °? `° v°,q? v m `v ?.= uG a o.? c °o° - m o T°- °°? cw u v o o c° m d I ami¢ c? C ?- W y C T J U _y _ :.1 D C? ..y., J U L. C `C - v y E C.+ c- v oa g 3`•?, m? ?,¢¢m a ,_• .,c G.t c _, y T m•u = n ?, __ L - " 3 •` >, ca '-_ o -- `y c c ° •c 25 =_ m m m T H o `?' a y, . - G• = . J on m °c°? °-' .? .`?, °-? m .°_' 'a,'= 3 a? c? c in M D ur _ C7 '- u h E J o y 3 x _ u ^- L m bn o a? ^ -- MIC 1: E- _ ? ,•'?? 3 ._ ? C. ? r, ? ? ? •.' _'; ? ? c ? c,i ? ? ? ? O ? E Z =e o ? °_? ? •m? f° ? > a, c° ?' d U [an U C .:. Q - U? 1 - :J ? D E? (, y ? :J Er V? r U DD O ma y. o _, cn o v U J U = ?_GE-vvm a _ y = ? c O QJ (? = v) Ctl y- O a _ v y rC G 3 o 'y-yE = ? o G E .r-i A U :J N DD U¢ y v :J c ? m •a . _ M> p Y _ _.. N? C N? E U cd ;J =J v.°. v y? D v U E? t9 U V? rn uG "'-?vi?uv,ovcon C to y y? N 0 -, N C O v°i _ 7 a ? D is N u E ci o? •^ v .c >? V ..? C p? U U D ?, ? c=?? ? m 3 G S y 0 o L? o N v -' °.' o m .y y ? ? 1U- 7 '7 C ti _' - ._- V) _ 4 3 ' v v N > Cl ? y VI _ - ? ? J L 3 2 Leisure SUNDAY, MAY E, 2001 CLASSICAL NfUSLC c Q ? e r This list is selective, and programs are sub. ject to change. More information i through individual tichet offices. s available Colorado VAIL VALLEY MUSIC FESTIVAL - Vail, Beaver Creep and environs, June 27-Aug. 5 (877-827-5700). Orchestral and jazz concerts .in mountain settings, under the theme "A Mu- sical Odyssey: Masters of the Past and Present." The Dallas Symphony, conducted by Andre,,av Litton, and the Rochester Philhar- monic, conducted by Christopher Seaman, are in residence. Other artists include Andre Watts, Kurt Nikkanen, the Avalon String Quartet,.Valentina Lisitsa and Eugenia Zuk- erman_ www,vail.net/bravo SUMMER. FESTIVALS MOnika Aichele 4do pyright © 2001 The New York rimes NEW YORK, TUESDAY, ANUARY 30, 2001 ? it beyond the greater New York mev Maazells to Dead Philharmonic; Will Succeed Masur as Director By RALPH BLUMENTHAL The New York Philharmonic end- ed a difficult three-year search for a new music director yesterday by naming Lorin Maazel, a 70-year-old American conductor, composer and violinist, as the successor to Kurt Masur, 73, starting late next year. Mr. Maazel, who has held prime podiums in Berlin, Cleveland, Vienna and Pittsburgh and will leave his current post as music director of the Symphony Orchestra of the Bavar- ian State Radio next year, had been a front-runner for weeks while orches- tra officials insisted that they were still considering other candidates. Mr. Maazel, reached on tour in Spain, said he was "totally happy" to accept the job as the orchestra's 24th music. director in a line 'stretching back to 1842 and to return to New York, the city of his parents' births, where he promised to nurture new composers as well as to tend to the classics. "As Stravinsky said, revolution means turning the wheel," Mr. Maa- zel said from Madrid, where he was performing a Brahms violin and pi- ano program with Yefim Bronfman. Paul B. Guenther, the Philharmon- ic's chairman, and Zarin Mehta, its executive director, would not release Mr. Maazel's salary in the four-year contract beginning with the 2002-03 season - and Mr. Maazel himself ec me o lscuss 1 - u lu 1 from accounts of what he has been paid in Munich, his annual compen- sation may be well above Mr. Ma- sur's $1.5 million. Like Mr. Masur, they said, Mr. Maazel will make New York his conducting focus, playing 10 weeks of subscription concerts the first season and 14 weeks for the next three seasons, while also taking the orchestra on tour. As recently as Jan. 17, denying m article m The Washington Post star- I Continued on Page 34 Lorin Maazel as guest conductor of the Philharmonic in November. Xgazells Philharmonic AAter Masur Continued From page .Al including Mr. McDonough, ap- proached Mr. Masur after he. had ing that Mr.. Maazel's appointment 'completed seven years on the job an d suggested he ste was i down b e h p y t mm W e nt, Mr. Guenther said that any decision was "a minimum season beginning September 2000. Of weeks if not months away Mr. Masur, infuriated, resisted and . yesterday, in response to questions, Mr. Guenther said that on the night hisended t- negotiating an e c[ension of contract until September 2002. of the 17th, he and. William MCDon_ Mr. Masur worked under a so- ough, head of the Philharmonic's called . evergreen contract whose search committee, met with Mr. third year came up for renewal an- Maazel over dinner in Manhattan , ' nually: that is, Mr. Masur always giving the appointment a.strong for . had two years' warning, of any ward push: The decision was further cement- change. Mr. Maazel's contract is for a straight four years, Mr. Guenther ed a week later, Mr.,Mehta said Said. , when he met with Mr. Maazel in Mr. Maazel said yesterday that he Munich after. the Philharmonic's ' had not yet discussed the job with tour of Spain and found the conductor ' " Mr, Masur whom, he said, he had so excited about coming to New " known since they were artistic col York. 'This all happened in less than two " - leagues 35 years ago, although work- ing. on different sides of the wall i weeks, continued Mr. Mehta, who also had been telling reporters that n .divided Berlin.. he was considering other candidates According to Mr.. Maazel's re . Asked yesterday if Mr Maazel sume, he has conducted: more than' . was his particular choice Mr Mehta 150 orchestras in more. than 5,000 , . said, "1t was a choice of a variety of opera and concert performances o people. involved in the picture." But he said that Mr. Maazel's nationalit ver the last half-century, including 10 of the .last 18. traditional New y certainly did not hurt. "He is an Year's' concerts from Vienna with American, and this is the oldest American orchestra " he said the Vienna Philharmonic, the. last broadcast to more than a billion , . On Sunday night, when "it became viewers. Since serving the. i evident that Lorin was getting the . Berl n director of the Deutsche e Oper Berlin nod," Mr. Mehta said, he notified the from 1965 to 1971, was .music' orchestra committee representing director of the Cleveland Orchestra the musicians. The public announce from 1972 to 1-982, general manager ment was. made after the. Philhar- f the Vienna State oState Opera from 1982 monic board approved the appoint- to 1984, and music director of the, ment at a meeting yesterday. - Pittsburgh Symphony from 1988 to Mr. Guenther said the Philhar- 1996. He is now music director of the monic was delighted with Mr. Maa- ' Bavarian Radio Symphony Orches- zel s appointment. "Under his antis- . tra, a position that the British music tic leadership we look forward to a writer Norman Lebrecht reported vibrant and adventurous collabora= paid Mr. Maazel the equivalent of tion, linking the future to our orches- ' $3.8 million when he began in 1994 tra s long and majestic history," he . . Mr, Maazel is also a composer a said. The musicians, who have been un- ; symphony he wrote for the Vienna Philharmonic had it abashed admirers of Mr. Maazel s world pre- miere last February He has co since he led them last November in a . . m- posed an opera based on Geor series of concerts, seemed equally delighted. "I'm hopeful we hav th ge Orwell's novel "1984" that is sched- l e e most virtuosic conductor in the world about to engage the most vi u ed to have its premiere in 2005 at ' an opera house that he declined to r- tuosic orchestra," said Joseph Rob- inson, the principal oboist He called identify. Mr. Maazel was born outside of ' . Mr. Maazel "a young 70 " Paris in 130 to American parents . The choice of Mr. Maazel, the first who traveled there in 1928 so that his f h American to lead the Phiiha at er, Lincoln Maazel, -an actor. rmon since Leonard Bernstein stepped down in 1969, ended a succession of ill-starred flirtations with other sig- nificant conductors, some of whom seemed to leave the Philharmonic jilted at the altar. Among them was Riccardo Muti of La Scala, who was the runaway choice of the manage- ment and the musicians last year, until he and the Philharmonic could not come to terms over the number Of weeks he would commit to the Philharmonic's season. Before and after Mr. Muti -were other conductors, like Ch.r stof Esch- enbach, chief conductor of the NOR Symphony Orchestra in Hamburg, who embraced other Orchestras as they were being mentioned as prime suitors for the Philharmonic. Mr. Eschenbach reached an agreement to join the Philadelphia Orchestra in 2003, The search began on a bitter note in early 1998 when board members, Named to Le. returned a few years later to Los Angeles, and Mr. Maazel at age 5 began taking violin and conducting lessons under the Russian master Vladimir Bakaleinikoff. He per- formed publicly at 8, and at 23 stepped in for an ailing conductor in Italy. By 1960, he had become the first American to lead the orchestra at Bayreuth. He is married to a German ac- tress, Die[lmde Turban, who ap- peared in 10 German movies from 1979 to 1986, including "Mussolini: The Decline and Fall if if Duce" (1985). They have two sons, ages 13 and Id, and a daughter, 8. Thev divide their time between a farm in Virgin- ia and homes in Europe. He said they had not yet found a place in New York. "It's so new," Mr. Maazel said. "There's been no time to come up for air." :] v NEW YORK PHILHARMONIC HISTORY On February 18, 1999 the New York Philharmonic, by far the oldest orchestra in America and one of the oldest in the world, per- formed its 13,000th concert-a milestone unmatched by anv other orchestra. Under the influence of its celebrated music directors- among them Damrosch, Thomas, Mahler, Toscanini, Walter, Bernstein, Boulez, Mehra, and Masur-the Philharmonic has played a leading role in American musical life and has maintained a tradition of musical excellence since its found- ing in 1842. In the 20th century, the New York Philharmonic's remarkable achievements in radio, teievision, and other media have helped shape communications history. In 1922 it became one of the first orchestras to broadcast a live radio concert, and the live coast-to-coast broadcast of 1930 was the first of its kind. Today, the Philharmonic is the only American symphony orchestra to be broadcast live on a national and regular basis. In 1997, on the diamond jubilee of the first Philharmonic radio broadcast, the Orchestra unveiled a set of expertly remastered historic recordings spanning six decades of its live broadcasts. Since then, the Philharmonic has released additional CDs documenting its record- ings of Mahler, American music, and never- before-released Bernstein performances - all to critical acclaim. Each year, the Philharmonic per- SUMMARY.- OF FACTS • Founded in 1842, first concert December 7, 1842 • First conductor: Ureli forelli Hill, American-born • 1928: the Philharmonic Society of New York merged with Walter Domrosch's Symphony Society of New York • 106 contracted musicians (67 men, 35 women, 4 open) • Musicians' contract: 52 weeks • Annual operating budget: more than $40 million • Sources of funding: Ticket sales, royalties, fees 47% Annual fundraising campaign 30% Government (city, state, and Federal) 1% Investment income 22% forms approximately 170 concerts for live audi- ences of nearly one million and appears on the "Live From Lincoln Center" television broadcasts, which are seen by combined audiences of more than 15 million. 2000-2001 The 2000-2001 season consists of 129 perform- ances arranged in 40 different programs. In addi- tion to the subscription concerts, the Orchestra will present an Opening Night Gala Concert and a series of Special Holiday Concerts. This season marks the New York Philharmonic's inaugural season of the new millennium. A roster of inter- nationally acclaimed artists and guesr conductors will make their appearances during the season, nine of the Orchestra's distinguished musicians will be featured soloists, and Principal Guest Conductor Sir Colin Davis will conduct three weeks. Music Director Kurt Masur opens the new season with a three-week celebration of the genius of Felix Mendelssohn; the legac of Leonard Bernstein will be honored on the 10th anniver- sary of his death; Hans %Verner Henze's 75th birthday will be celebrated with the U.S. premiere of his Symphony No. 9; Yo-Yo Ma returns for the FA C T S H E E T 2000-2001 Season world-premiere pertormance of a new work com- missioned by the Philharmonic; and Maestro Kurt ivIasur opens a four-week tribute to Arnold Schoenberg on the 50th Anniversary of the com- poser's death. Audiences will also enjoy Young People's Concerts,o and performances at Long Island Universin's C. W. Post Campus, the New -Jersey Performing Arts Center (Newark), and the Cathedral of St. John the Divine. Maestro Nlasur, entering his 10th season as the New York Philharmonic's Music Director, will conduct 15 weeks of the 34-week subscription season. Returning guest conductors include James Conlon, Andrew Davis, Charles Dumit, Christoph Eschenbach, Joseph Flummerfelt, Lorin Nfaazel, Bobby McFerrin, Andre Previn, Leonard Slarkin, Franz Weiser-iVldst, and David Zinman. Five guest conductors, Roberto Abbado, Georg Christoph Biller, David Robertson, Bramwell Tovey (Young People's Concerts), and Marcello Vioni, will make their Philharmonic debuts. TOURS The New York Philharmonic will undertake a diversified touring schedule during the 2000-2001 season. In January, Music Director Kurt Masur and the Philharmonic will travel to Valencia, Madrid, Zaragoza, Barcelona, Oviedo, and Santiago de Compostela for a two-week tour of Spain. In June 2001, the Philharmonic will embark on its third Latin American tour under Music Director Kurt Masur. Sponsored by Citibank and Salomon H I S T O R I C T 0 U R S 1882: Midwest states, (Symphony Society) under Leopold Damrosch 1910: New England states, (Philharmonic Society) under Gustav Mahler 1920: Europe, (Symphony Society) under Walter Damrosch 1930: First European tour of the combined orchestra, under Arturo Tosconini 1959: First tour to U.S.S.R., under Leonard Bernstein, Thomas Schippers, and Seymour Lipkin 1975: 20-concert European tour, under Pierre Boulez 1984: Asian tour, including the Philharmonic's first tour of India, under Zubin Mehto 1993: 150th Anniversary tour of Europe, under Kurt Masur RECENT MAJOR TOURS June 2000: Europe (Masur) January 2000 Residency in Canary Islands, Madrid, Lisbon (Masur) January and June 1999: North America (Masur) October 1998: Cologne Residency (Masur) June 1998: Asia (Masur) June 1997: Latin America (Masur) August - September 1006: European Festivals Wosur) June 1995: Europe (Masur) June - July 1994: Asia (Masur) Smith Barney, the Orchestra will perform in Sao Paulo, Rio de Janeiro, Santiago, Buenos ,Mires, and in Central America. Over the past two decades, Citibank, a member of Cicigroup, has sponsored 15 of the Orchestra's tours, helping to creare per- formances in 90 cities and 45 countries. LIVE RADIO BROADCASTS Featuring the only American orchestra currently broadcasting live, monthly, and nationally, "Time Warner Presents: The New York Philharmonic Live!" reaches approximately 5 million listeners per radio broadcast. The 2000-2001 season broadcast dares are: September 28, October 26, November 9, December 14, January 4, February 8, March 15, April 19, and May 31. The broadcasts are spon- sored by Time Warner Inc., and are produced and syndicated by WFMT Chicago. New York's 96.3FM WQXR airs the broadcasts locally. TELEVISION The Philharmonic's first televised concert was June 26, 1950 on NBC, from Lewisohn Stadium in New York City. The New York Philharmonic inaugurated "Live From Lincoln Center" on January 30, 1976 and continues to perform two telecasts each year. This season's first broadcast is Wednesday, September 20: Kurt Masur, conductor; Kiri Te Kanawa, soprano. Available in a home-video edition are 25 of the now-legendary Philharmonic Young People's Concerts@ conducted by Leonard Bernstein. Originally broadcast on CBS from 1958 to 1972, the programs were eventually shown in 29 countries. NEW YORK PHILHARMONIC WEBSITE Located at www.newyorkphitharmonic.org, the Orchestra's website offers the most up-co-dare information on the New York Philharmonic. Browse the pages for season listings; find the dates of live radio and TV broadcasts; get information on Orchestra members, conductors and soloists; listen to sound clips; and even order tickets online. New this season: complete program notes available online two weeks before each concert. EDUCATIONAL ACTIVITIES The New `fork Philharmonic offers a variew of educational activities designed for children and adults. During the 2000-2001 season, these acrivi- ties %vill include Childrens Promenades"' and Young Peoples Concerts® (families and children ages 6-12); Musical Storvtime (families and chil- dren ages 3-6); ivtusical Encounters (school groups, grades -12); School Day Concerts (school groups, grtdes 3-12); Philharmonic Teens (ages 12- Young Subscribers Club (ages 18-29); Nlencors and Proteges (all ages); and Pre-Concern Lectures (adults). A series of seminars will be offered for both classroom teachers and music educators. Debuting in Fall 2000, the New York Philharmonic %vill host Take Note, with online teachers' guides to the Philharmonic's live televi- sion and radio broadcasts. For children, the inter- active website Kdzone offers fun and learning about the orchestra to children in the U.S. and 55 countries. The New York Philharmonic continues to offer Residency Programs and its School Partnership Program, an ongoing sequential (three- year minimum) program involving a select group of New York City public schools. College music students may learn from master artists through the Philharmonic's Conservatory Collaborations. COMMISSIONS AND PREMIERES Placing newer compositions alongside established classics has historically been one the Philharmonic's responsibilities to its community, and the New York Philharmonic is well known as a leader in contemporary programming and commissioning. The first work written expressly for the Philharmonic Society of New York was Frederick Schneider's Symphony, performed in 1854. The first work commissioned by the Philharmonic- Symphony Society of New York (the combined orchestra) was Philip James' overture Bret Harte, which premiered December 20, 1936. During the 1962-63 season, its first at Lincoln Center, the Philharmonic instituted its first large-scale com- missioning series. A second series in 1967-68 marked the Orchestra's 125th anniversary, and the NOTABLE HISTORIC PREMIERES Beethoven Symphony No. 8 (U.S., 1844) Symphony No. 9 (U.S., 1846) Berlioz Symphonie fantastique (U.S., 1866) Brahms Symphony No. 4 (U.S., 1886) Dvotdk Symphony No. 9 (World, 1893) Gershwin Piano Concerto in F (World, 1925) Mahler Symphony No. 2 (U.S., 1908) Symphany No. 4 (U.S., 1904) Symphony No. 6 (U.S., 1947) Rochmanincif Piano Concerto No. 3 (World, 1909) R. Strauss Death and Transfiguration (U.S., 1892) Stravinsky Symphony in Three Movements (World, 1946) Violin Concerto iU.S., 1889) Piano Concerto ilo. 2 (World, 1881) Sympnony No. 6 (U.S., 1894) Vagner Die Noikure, Act 1 (U.S., 1876) I-choikovsky Romeo ondJulietOverrure-Fantasy (U.S., 1876) 150th Anniversary Commissions represented the most ambitious commissioning project in the Orchestra's history; encompassing 36 new works. The 2000-2001 season will include three world premieres: a new work by Oliver Knussen, Richard Danielpour's New Cello Concerto based on Silk Road themes, and Stephen Paulus' New Work for Chorus and Orchestra; two U.S. premieres: Hans Wtrner Henze's Symphony No. 9, and Siegfried Malthus' Concerto for Flute, Harp and Orchestra; and four New York premieres: Bright Sheng's Red Silk Dance, Capriccio for Piano and Orchestra, Andre Previn's Diversions; Aaron Jay Kernis' Simple Songs; and Christopher Rouse's Violin Concerto. PREMIERES IN RECENT SEASONS 1999-2000 Kernis A Garden of fight (World) Torke Four Seasons (World) PS 199 Students The Colorful Variations 16 (Young People's Concert) (World) Ades America for Mezzo-Soprano 8 Orchestra (World) - Satoh Kisetsu for Orchestra (World) Henze Froternite Air for Orchestra (World) Sar iaho Oltre Mar, 7 Preludes for the New Millenium for Orchestra and Mixed Choir (World) Corigliono Vocolise for Soprano, Electronics, and Orchestra (World) Kancheli And Farewell Goes Out Sighing for Violin, Countertenor, and Orchestra (World) Kamen Canadian Bross Dectet (NYP Presents Holiday Brass) (World) Marsalis All Rise (World) Pugh Trombone Concerto (New York) Weill Street Scenes (World) Daugherty UFO for Solo Percussion and Orchestra (New York) Uebermann Trumpet Concerto (World) 1998.99 Ellington/Mai Afro Bosso (BUIa); Blues in Blueprint, Happy Go Lucky LocoF A Tone Poem to Horlem (World) Gubaidulina Two Paths Music for Two Solo Violas and Symphony Orchestra (World) MacMillan The World's Ransoming (U.S.) Rouse Seeing for Piano and Orchestra (World) Seltzer Lament to Yitzhak (U.S.) Ton Dun Concerto for Water Percussion and Orchestra in Memory of Toru Tokemitsu (World) 7997-98 Beaser Manhattan Roll (World) Del Tredici The Spider and the Fly (World) Undberg Feria (U.S.) Pendeiecki Symphony No. S (New'(ork) Previn ;oily Chisum Remembers Billy the Kid (New York) Corn Orrne:tro Variations !'Nand) r„ - k RECORDINGS Recordings of the New York Philharmonic are available on major labels, including Deutsche Grammophon, London, New World, RCA, Sonv Classical, and Teldec, with which Kurt ilMasur and the New York Philharmonic have recorded exten- sively since 1991. • First Philharmonic recording, January 1917-Stranskv conducting Thomas: Raymond Overture; Weber: Der F,etschiitz Overture; Beethoven: Symphony No. 5, Andante (2nd Movement) • Nearly 2,000 recordings made to date; more than 250 currently available • First recording of synchronized music score from a movie soundtrack, Don japan, 1926 New York Philharmonic Special Editions New York Philharmonic. Bernstein LIVE (To be released October 2000) This 10-disc set contains 13 hours of Leonard Bernscein's never- before-released New York Philharmonic live per- formances recorded berween 1951 and 1981. Also included are two companion booklets with essays, new program notes, and 200 archival photos. Sweeney Todd: Live at the New York Philharmonic (To be released Fall 2000) Recorded live during once-in-a-lifetime perform- ances of Stephen Sondheim's legendary musical theater work, featuring George Hearn, Patti LuPone and Audra MacDonald, this rwo-disc set also includes a 130-page companion book. New York Philharmonic: An American Celebration (Released 1999) This 10-disc set is the most in-depth recorded exploration of American music to date, covering 49 works by 39 composers from live concert per- formances recorded between 1936 and 1999. New York Philharmonic: The Mahler Broadcasts 1948-1987 (Released 1998) This 12-di5c set, the Orchestra's first comprehensive collection of the composer's symphonies, includes audio interviews with famous Mahler interpreters and musicians who played under Mahler. 1Vew York Philharmonic: The Historic Broadcasts 1923-1987 (Released 1997) This 10-disc set contains over 12 hours of digitally remastered recordings, spanning 64 years, repre- senting 21 conductors and 18 soloists. Leonard Bernstein's New York Philharmonic Debut The historic radio broadcast of November 14, 1943 is avaiiabie on CD. stores, or online ac iuww.new,orkphilharmonic.o:o To order in the U.S. and Canada, call roll-free 1-800-557-8268. For international orders, call 1-317-781-1861. Foreign and domestic orders may be faxed to 1-317-781-4608. IMajor funding for all Special Editions releases has been generously provided by Rica E. and Gustave Vl. Hauser. RELEASES WITH KURT MASUR AND THE NEW YORK PHILHARMONIC Teldec Beethoven Symphony No. 5; Egmont0verture Beethoven Piano Concerfo No. 1 and Mozart: Piano Concerto No. 23 (with Helen Huang) Beethoven Piano Concerto No. 4 (with Helene Grimaud) Brahms Complete Symphonies Brahms Ein Deutsches Requiem Brohms, Reger, Ives-Schuman Variations Britten War Requiem Bruckner Symphony No. 4, "Romantic" Bruckner Symphony No. 7 DVOFdk Symphony No. 8 and lanaiek: Sinfonietto Dvofdk Symphony No. 9, "From the New World"; Slavonic Dances Dvofbk Violin Concerto (with Maxim Vengerov, to be released Fall 2000) Franck Symphony in D minor; Les Eolides Gershwin Rhapsody in Blue, "I Got Rhythm" Variations (with Fazil Say) Kodaly Hdry Janos Suite, Theatre Overture and Liszt: Mephisto Waltz; Mozeppa Mahler Symphony No. l; Songs of G Wayfarer (with Hakon Hageg6rd) Mahler Symphony No. 9 Mozart Piano Concerto No. 21 and Mendelssohn: Piano Concerto No. 1 (with Helen Huang) Prokofiev Symphony No. 5 and Romeo 8 Juliet (excerpts) Ravel Bolero, La Volse and Debussy: La Met, Prelude d I'opres-midi d'un foune, Ropsodie pour orchestre et saxophone Rimsky-Korsokov Scheherozade, Capriccio Espognol, Flight of the Bumblebee Schubert Symphony Nos. 3, 5 and Wonderer Fontasie (with Boris Berezovsky) Shostakovich Symphony No. 7, "Leningrad" Shostakovich Symphony No. 13, "Babi Yor" R. Strauss Four Lost Songs (with Deborah Voigt), Don Juan, Death and Transfiguration Tchaikovsky The Piano Concertos (with Elisobeth Leonskola) Tchaikovsky Waltzes Weill The Seven Deadly Sins and Berg: Lulu Suite Sony Classical !formerly CBS Masterworks) Dvotbk Cello Concerto and Herbert: Cello Concerto No. 2 (with Yo-Yo Mo) ew tarp Philharmonic . ecial Editions -the Nets York Philharmonic's own recording label- are available worldwide at selecr Tower Records Deutsche Grammophon Brahms Violin Concerto and Schumann: contosvfor '/iolin and Orchestra (with Anne-Sophie muter) FREE PARKS CONCERTS In the summer of 2001, the New York Philharmonic Time Warner Concerts in the Parks will mark the 37th season of free outdoor concerts in the Five boroughs of New York Cin% Major underwriting has ybeen provided by Time Warner Inc.; The City of New York, through the Deparrmenr of Cultural Affairs, Schuyler G. Chapin, Commissioner; and The Starr Foundation. Additional support is provided by Eleanor Naylor Dana Charitable Trust; Thctore Herman Goldman Foundation; The Vi Herberr Foundation; Kathryn and Gilbert Miller Fund, Inc.; and The Seth Sprague Educational and Charitable Foundation. The Carlos Moseley Pavilion was made possible by generous and deeply appreciated gifts from the City of New York, and The Fan Fox and Leslie R. Samuels Foundation. The parks concerts are presented in cooperation with the City of New York Department of Parks and Recreation, Rudolph W. Giuliani, Mayor; Henry J. Stern, Commissioner; the five Borough Presidents; and the City Council of New York. Since their founding in 1965, the Parks Concerts have been attended by nearly 13 million people. OPEN REHEARSALS During the 2000-2001 season, 30 selected Philharmonic rehearsals will be open to the public ($12 per ticket) on selected days at 9:45a.m. More than 30,000 people attend Philharmonic Open Rehearsals each season. ENSEMBLES CONCERTS In their 18th season, the New York Philharmonic Ensembles will present a series of six Sunday matinee chamber music concerts at Merlon Concert Hall near Lincoln Center during the 2000-2001 season. VOLUNTEER COUNCIL As it begins its third decade, the Volunteer Council consists of 300 members and 25 committees. They serve the New York Philharmonic in several areas, including audience relations, Fundraising through the gift shop and special events, service to the Orchestra and management, public awareness, and education. KURT MASUR, MUSIC DIRECTOR Kurt Masur is one of the most widely admired and respected musicians of his generation, known co orchestras and audiences not only as a distin- guished conductor, but also as a humanist. His close and incense collaboration with the New York Philharmonic, where he has been Vlusic Director since 1991, has been marked by a consisrencly high qualirl of playing and artistic spirit. Under Mr. Vtasurs guidance, the Philharmonic has launched a number of succe including the return to ssful initiatves, live, nationai radio broad- casts and the establishment of New York Philharmonic Special Editions, the Orchestra's own award-winning recording label. From 19- until 1996, he served as Gewandhaus Kapellmeister of the Leipzig Gewandhaus Orchestra, a position of profound historic impor- tance that has been held by such figures as ilendelssohn, Nikisch, Furuwangler, and Walter, and upon his retirement from that post, the Gewandhaus named him its First-ever Conductor Laureate. Mr. Ivlasur is a guest conductor,,vith the world's leading orchestras and holds the lifetime title of Honorary Guest Conductor of the Israe! Philharmonic Orchestra. A professor at the Leipzig Academy of Music since 1975, he has received numerous honorary degrees: in 1996 he received the Gold Medal of Honor for Music from the National Arts Club;-in 1997 came the titles of Commander of the Legion of Honor from the French governmenr and New York Ciry Cultural Ambassador from the City of New York. In September 2000, Maestro Masur assumes the position of principal conductor of the London Philharmonic Orchestra. At the end of his con- tract with the New York Philharmonic in 2002, he will become the Music Director of the Orchestre National de France. In 1998, Mr. Masur celebrac- ed 50 years as a professional conductor. PAUL B. GUENTHER, CHAIRMAN Paul B. Guenther, 60, was president of PaineWebber Group, Inc., the parent company PaineWebber Incorporated, until his reriremenr in 1995. Since then he has focused on the nonprofit sector. Mr. Guenther was appointed Chairman of the New York Philharmonic in September 1996 and Chairman of Fordham University in May 1998. He is an investor in Walden Capital Partners L.P., a Small Business Investment Company, and a member of its advisory commit- tee. In addition, he serves on the Consolidated Freightways Board of Directors. Mr. Guenther earned a bachelor's degree in Economics from Fordham University in 1962 and an MBA in Finance From the Columbia Graduate School of Business in 1964. In the same year, he began his career as a credit analyst with Manufacturers Hanover Trust Co. He Joined PaineWebber Incorporated in 1966 as a securities analyst and served in a variety of positions. In 1984, when the company realigned its three principal subsidiaries into one, Mr. Guenther became chief adminisrra- rive officer responsible for Administrative Serz.,ices, Operations, and Systems. He assumed resoonsibil- irv for the firm's retail sales business in 199- and For investment banking activities in mid-1988. In lair 1988, he was named president of PaineWebber Incorporated, and in 1994, presi- dent of PaineWebber Group, Inc. Mr. Guenthc was the 1992 recipient of an honorarv degree, LL.D., from Concordia College. His or-Saniza- rional associations include: Columbia University Graduate School of Business, Board of Overseers; Lenox Hill Hospital, Trustee; Frost Valley YMCA, Chairman; Mary Flagler Cary Charitable Trust, Trustee; Lincoln Cenrer for the Performing Arts, Board of Directors; and the Governor's Commirtee on Scholastic Achievement, Trustee. He is also a former Director of the Securities lndusrrv Association, and the Former President and Director of Columbia's Graduate School of Business Alumni Association. ZARIN MEHTA, EXECUTIVE DIRECTOR Zarin Mehra was born in Bombay in 1938, the son of violinisr and conductor Mehli Mehra, and brorher of conductor Zubin Mehra, former Music Director of the New York Philharmonic. He qual- ified as a Chartered Accountant in 1962 in England and moved to Canada to join the firm of Coopers & Lybrand. While a partner in that pres- tigious firm, he joined the Montreal Symphony Orchestra Board of Directors and later became its vice president. In 1981, he was appointed manag- ing director of the Montreal Symphony, and served until 1990 during its most expansive period. For his work there, the Canadian Government named Mr. Mehra a Member of the Order of Canada. He then ran the Ravinia Festival from 1990-2000 as President and CEO. The Chicago-based international music festival presents the summer residency of the Chicago Symphony Orchestra. He has been praised for his leadership of Ravinia, where he oversaw the start of several audience development programs, inno- vative new music series, and extended community outreach efforts. He has been honored with awards for his contributions to the fine arts from such institutions as Columbia College, Dominican University, and the Music Institute of Chicago. In May 1998, Mr. Mehra received an honorary doctorate from Chicago's Roosevelt University. AVERY FISHER HALL: HOME OF THE NEW YORK PHILHARMONIC • Completed in 1961 (Max Abramowitz, architect) and originally named Philharmonic Hall; First building of Lincoln Center for the Performing Arts. • Renamed Avery Fisher Hall in 1973 in recognition of a major gift from Avery Fisher to Lincoln Center. • Major renovation in 1976 (Philip Johnson, architect, Cyril Harris, acoustical consultant). • Renovation to stage area in 1992 (John Burgee, architect; Russell Johnson, acoustical consultant). • Capacirv: 2,738 seats. • Owned and operated by Lincoln Cenrer for the Performing Arts, inc.; principal tenant, New York Philharmonic. TENURES OF PREVIOUS MUSIC DIRECTORS , MUSIC ADVISORS AND PRINCIPAL CONDUCTORS OF THE NEW YORK PHILHARMONIC' Ureli Corelli Hill 1842-1847 Theodore Eisfeld 1848-1865 Carl Bergmann 1855-1876 Leopold Damrosch 1876-1877 Theodore Thomas 1877-1891 Anton Seidl 1891-1898 Emil Pour 1898-1902 Walter Damrosch. 1902-1903 Wassily Safonoff 1906-1909 Gustav Mahler 1909-1911 Josef Stronsky 1911-1923 Willem Mengelberg 1922-1930 Arturo Toscanini 1928-1936 John Borbirolli 1936-1941 Artur Rodzinski 1943-1947 Bruno Walter 1947.1949 Leopold Stokowski 1949-1950 Dimitri Mitropoulos 1949.1958 Leonard Bernstein 1958-1969 Laureate Conductor 1943-1990 George Szell 1969-1970 Pierre Boulez 1971-1977 Zubin Mehta 1978.1991 *In some years there was no designee for these positions. The Philharmonic-Symphony Society of New York, Inc. Chairman: Paul B. Guenther Executive Director: Zarin Mehra The New York Philharmonic is located at Avery Fisher Hall, Lincoln Center 67th Street and Broadway i The mailing address is: Avery Fisher Hall 10 Lincoln Center Plaza ' New York, NY 10023-6973 Phone: (212) 875-5000 Fax: (212) 875-5717 To order tickets, call CenterCharge: (212) 721-6500, or order online: www.newyorkphilharmoaic.org For subscription information, call Audience Services: (212) 875-5656 For current program information, call the New York Philharmonic Hotline: (212) 875-5709 TOWN OF AVON REGULAR COUNCIL MEETING AGENDA February 12, 2002 - 5:30 PM l% 1. Call to Order / Roll Call 2. Citizen Input 3. Ordinances a.) 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 .(Ruth Borne) ?Public Hearing b.) First Reading of Ordinance No. 02-03, Series of 2002, An Ordinance Authorizing and %lc Directing the Issuance of up to $15,305,000 of the Town's Multifamily Housing Revenue F Bonds (GNMA Mortgage-Backed Securities Program - Buffalo Ridge II Apartments n r Project), Series 2002, the Execution and Delivery of a Financing Agreement, a Trust 2 VJ 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 (Larry Brooks) 4. Resolutions N a.) 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 (Norm Wood) 5. Unfinished Business 6. New Business 7. Town Manager Report S. Town Attorney Report IATown Clerk\Council\Agendas & Worksessions\Agenda-Regular Meeting.doc 9. Mayor Report 10. Other Business ' e.. k"-, -- 1 ', v, r a P, L c-? ?-?. 11. Consent Agenda a.) Approval of the January 22, 2002 Council Meeting Minutes f V/ b.) Approval of the January 8, 2002 Housing Authority Meeting r ` 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 12. Adjournment I A, v? IATown Clerk\Council\Agendas & Worksessions\Agenda-Regular Meeting.doc Memo TO. Honorable Mayor and Town Council Thru: Bill Efting, Town Manager From: Ruth Borne, Director of Community Development Yf. Al-- Norman Wood, Town Engineer Date February 8, 2002 Re: Second Reading of Ordinance 02-02, An Ordinance Repealing and Reenacting Provisions of Chapter 15.36 of the Avon Municipal Code PUBLIC HEARING Summary On July 1, 2001 the Colorado Division of Housing adopted new rules governing the installation of manufactured homes in order to improve the quality of manufactured home installations. These new rules govem mobile homes, manufactured homes, and factory built homes. C Currently, the Avon Municipal Code does not address any distinctions between the different types of homes and the respective distinctions for construction and installation. Ordinance 02- 02 creates definitions consistent with current state law and authorizes the inspections to be performed by state inspectors for manufactured housing. Recommendation Staff recommends that the Town Council pass Ordinance 02-02 an Ordinance Repealing and Reenacting Provisions of Chapter 15.36 of the Avon Municipal Code. Alternatives 1. Approve on Second Reading 2. Deny on Second Reading Proposed Motion "I move to approve on second reading Ordinance 02-02, an Ordinance Repealing and Reenacting Provisions of Chapter 15.36 of the Avon Municipal Code. Town Manager Comments :?' - c6, ', cq--- Attachments: A. Ordinance 02-02 Memo to Town Council, February 12, 2002 Ordinance 02-02, An Ordinance regarding Mobile Homes Page 1 of 1 TOWN OF AVON ORDINANCE NO. 02-02 SERIES OF 2002 AN ORDINANCE REPEALING AND REENACTING PROVISIONS OF CHAPTER 15.36 OF THE AVON MUNICIPAL CODE: WHEREAS, the Town of. Avon wishes to adopt the current state law requirements of the Division of Housing governing factory built housing and manufactured homes. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF AVON, COUNTY OF EAGLE, STATE OF COLORADO, THAT: I. Chapter 15.36 of the Avon Municipal Code shall be titled "Factory Built Housing and Manufactured Homes" The following provisions of Chapter 15.36 are hereby repealed and reenacted to read as follows: SECTIONS: 15.36.010 Definitions. 15.36.020 Park Site and General Requirements 15.36.030 General Requirements - Manufactured Housing 15.36.040 General Requirements - Factory Built CHAPTER 15.36 FACTORY BUILT HOUSING AND MANUFACTURED HOMES 15.36.010 Definitions: A. "Factory built housing" means any structure, or component thereof, designed primarily for permanent residential occupancy, including a mobile home which is wholly or in substantial part made, fabricated, formed, or assembled in manufacturing facilities for installation, or assembly and installation, on the building site. B. "Nonresidential factory built housing" means any structure, or component thereof, designed primarily for permanent nonresidential occupancy, including a manufactured unit which is wholly or in substantial part made, fabricated, formed, or assembled in manufacturing facilities for installation, or assembly and installation, on the building site. C. "Manufactured housing unit" means a preconstructed complete building unit or combination of preconstructed complete building units without motor power designed and commonly used for single-family, single-unit residential occupancy by persons in either temporary or permanent locations, which unit or units are manufactured in a factory or at a location other than the residential site of the completed home and which unit or units are not licensed as a recreational vehicle. D. "Mobile home" means a structure, transportable in one or more sections, which is eight body feet or more in width and is thirty-two body feet or more in length and which is built on a permanent chassis and designed to be used as a dwelling without permanent foundation when connected to required utilities and includes the plumbing, heating, air-conditioning and electrical systems contained therein. 15.36.020 Park site and general requirements. A. Provisions of this chapter shall not apply to a manufactured home located within the town on the effective date of the ordinance. B. Each new park or addition to an existing park shall conform to all provisions of this chapter. C. Manufactured home space. Each space shall contain at least three thousand square feet of area for a single-wide unit, and four thousand two hundred square feet for a double-wide unit. The minimum space between any appurtenance or deck thereto shall be a minimum of twelve (12'0") feet. The minimum space between any two manufactured home or habitable appurtenance thereto shall be a minimum of twenty feet. Each space shall provide paved parking spaces for at least two automobiles, either on the space adjacent to it or within the park, or by any combination of these locations. D. Driveways and Walkways. All mobile home spaces shall abut upon a driveway graded for drainage and maintained in a rat and dust-free condition and which provides unobstructed access to a public street or highway. The minimum unobstructed width of such driveways shall be sixteen feet. An additional eight feet of width shall be constructed for each parallel parking space adjacent thereto, or twenty-eight feet for double-loaded perpendicular parking spaces. All driveways and walkways within the park shall be illuminated to insure safety for park residents. 2 E. Paving of Parking and Driving Areas. All manufactured home parks shall have paving in the parking and driving areas thereof. F. Maintenance of Lots. All lots and stands shall be maintained in a clean and sanitary condition, free from hazardous or noxious materials, weeds, refuse and motor vehicles having no current license plates. 15.36.030 General Requirements - Manufactured housing. A. No person, firm or corporation shall place a manufactured home within the town without first obtaining a permit therefore from the State of Colorado Division of Housing and approval for the installation by the State of Colorado Division of Housing. B. No person, firm, or corporation shall make any alteration or addition to a manufactured home thereto without first obtaining a permit therefore from the building official. C. All manufactured homes, including mobile homes shall comply with the installation requirements set forth in the Colorado Revised Statutes, Part 31, Manufactured Home Installation, Section 24-32-3101 et al., and any other rules and regulations adopted by the Colorado Division of Housing governing manufactured housing. D. All manufactured homes must comply with either the Colorado Revised Statutes, Section 24-32-701 governing labeling and construction compliance with state and federal standards or bear the red HUD label. E. All manufactured homes shall be designed with the snow load requirements as set forth in Section 15.08.190 of the Avon Municipal Code unless it complies with one of the following: 1. An approved snow removal maintenance program or 2. A protective shelter built over the home, not connected to the home 3. A shelter designed by a Professional Engineer or Architect. 15.36.040 General Requirements - Factory Built Units. A. No person, firm, or corporation shall place a factory built unit within the town without first obtaining a permit therefore from the building official. B. No permit for a factory built home or any alteration or addition thereto shall be issued unless the same complies with all requirements of the building code, including electrical, plumbing, and mechanical in effect in the town at the time. C. All factory built homes will be required to comply with the requirements set forth in the Colorado Revised Statutes, Section 24-32-701 et al. U. It is unlawful for any person to violate any of the provisions of this Ordinance. Every person convicted of a violation of any of the provisions of this Ordinance shall be punished by a fine not exceeding one thousand dollars or by imprisonment not exceeding one hundred eighty days or by both such fine and imprisonment. INTRODUCED, PASSED ON FIRST READING, APPROVED AND ORDERED POSTED, this, LE j iday of,Jj , 2002, and a public hearing on the Ordinance shall be held at the regular meeting of the Town Council of the Town of Avon, Colorado on the 11L day of , 2002, at 5:30 P.M. in the Municipal Building of the Town of Avon, Colorado. TOWN OF AVON, COLORADO: f? or ATTEST: -N" & Town Clerk INTRODUCED, PASSED ON SECOND READING, APPROVED AND ORDERED POSTED, this day of 92002. 4 ATTEST: Town Clerk APPROVED AS TO FORM: Town Attorney TOWN OF AVON, COLORADO: Mayor Torun dAwn P.O. B)(975 VON 400 Be rh1-akRoad AwryCd3ado81620 970-748x4005 C O L O R A D O Office of the Assistant Town Manager To: Honorable Mayor and Town Council Fr: Larry Brooks, Assistant Town Manager Via: Bill Efting, Town Manager / Dt: 2/7/02 f? 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 2/26 meeting, (reference the attached schedule and organizational diagram). Bond Counsel (Hogan and Hartson), as well as the Town's Counsel (Sherman and Howard) will be present to explain the ordinance and the funding documents. 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 on first reading. Town Manager Comments: 5 ?? Cc?elGU?I ?V?I BUFFALO RIDGE I & II TOWN OF AVON KEY DATES DATE DESCRIPTION 1/8/02 Avon Housing Authority Resolution Project Financing Overview 2/7/02 Documents due for 2/12 TC Meeting 2/12/02 1St Reading of Bond Ordinance (PAB) authorizing Bonds, Financing Agreement, Trust Indenture, Bond Project Agreement, POS 2/26/02 2"d Reading of Bond Ordinance (PAB) TEFRA / Public Hearing 3/12/02 Resolution Approving 6320 Bonds and Project Agreement Final Pricing Resolution (PAB) Sign Bond Purchase Agreement(s) 3/26/02 Avon Council Meeting - No Action Needed 3/28/02 30-Day Referendum period expires 4/9/02 Sign Documents 4/10/02 Bond Closing - 6320 Bond Closing - PAB ACTION BY TOA Housing Authority Council Council Council Council Council Mayor, Town Clerk Mayor, Town Clerk GF: 1/8/02 C:\WINDOWS\Temporary Internet Files\0LK8184\T0A.Key Dates.doc H rH V A O w w A4 /? r? V W F? O F? ?? ?./ MCI O O N W a 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 H 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 \\\DE - 86736/1 - #138301 v1 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; -2- \\\DE - 86736/1 - #138301 v1 (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 -3- \\\DE - 86736/1 - 5138301 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, -4- \ \ \DE - 86736/1 - #138301 v1 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. -5- \\\DE - 86736/1 - #138301 v1 PASSED FOR PUBLICATION this 12th day of February, 2002. TOWN OF AVON, COLORADO (TOWN SEAL) By: ATTEST: Town Clerk Mayor 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. -6- \ \ \DE - 86736/1 - #138301 v1 FINALLY PASSED AND ADOPTED the 26`h day of February, 2002. TOWN OF AVON, COLORADO (TOWN SEAL) By: Mayor ATTEST: Town Clerk -7- \ \ \DE - 86736/1 - #138301 v1 The motion to pass the foregoing Ordinance for publication was duly made by Council Member and seconded by Council Member , and the roll was called with the following results: Council Members voting "Yes": Council Members voting "No": 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) By: Mayor ATTEST: Town Clerk -8- \\\DE - 86736/1 - #138301 v1 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 , a newspaper of general circulation in the Town, in its issue of February _, 2002. 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": -9- \\\DE - 86736/1 - #138301 v1 I 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: Mayor ATTEST: Town Clerk -10- \\\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) -11- Town Clerk Town of Avon, Colorado \\\DE - 86736/1 - #138301 v1 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 II 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 may be 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 II 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 II 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 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 II 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 2 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 3 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 4 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. 0) 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. 5 (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 parry 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 IV 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 terms 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. 10 (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. 14 (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 15th day of the 20th 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 17 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. 18 (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 [Decemb'er 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. 21 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. 24 (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 25 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; 26 (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 6) 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. 28 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 29 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 Parry 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. 31 (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. 32 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 34 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 Loan Documents, 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. 0) 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 parry, 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 fall 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] TOWN OF AVON, COLORADO By Attest: By Town Clerk Mayor 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 II, 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: its general partner Inc., By: 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 ............................................................... 25 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 .................................................................................. 36 Section 8.03. Notice of Prepayment; Timing of Prepayment .............................................. 36 11 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 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 II 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 \\\DE - 6637418 - #130700 v2 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") a°Loan as originated by the Lender mortgage (the "Mortgage") on the Project, and the Mortgage will be insured by the Federal Housing Administration (the "FHA"), an organizational anumo pursu within the United States Department of Housing and Urban ended (12 U.S!C. §I1710 et seq., as Section 221(d)(4) of the National Housing Act of 1934, amended, the "National Housing Act"); and, to field the Mortgage Loan and to provide security purchase from the Lender fully for the Bonds, the Trustee will use the proceeds of the Bon P paan together, th est NMthAe modified mortgage-backed securities (each a "GNMA St" and Securities") which will be guaranteed as to timely payment of prin inte by Government National Mortgage Association ("GNMA"). F. The Series 2002 Bonds are to be in substantially the following forms (with such alterations and variations in the arrangement of paragraphs and the text to be contained on the face and reverse of each Bond, as may be necessary comply with industry standards or requirements for preparation of definitive Series 2002 Bonds): 2 \\\DE - 6637418 - #130700 v2 [FORM OF BONDS] EDE & CO. HAS AN INTEREST HEREIN: UNLESS THEY BOND IS OPRESEN MPATE (" C Y AN TRUST AUTHORIZED REPRESENTATIVE OF THE DEPOSITOR SFER, TO THE ISSUER OR THE BOND REGISTRAR FOR RES IISETGR ASTERED IN TIION OF T TH NNAME EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED O HER AS HAUTHO EREOF FOR REPRESENTATIVE OF DTC, ANY OTRANSFER, THER PERSON IS WRONGFUL. VALUE OR OTHERWISE BY O 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 pROJECT?M BUFFALO RIDGE II SERIES 2001 [A] 1 [B] 2 Per Annum Maturit Date Original Date CUSIP Interest Rate y April 1, 2002 Registered Owner: Principal Sum: DOLLARS " for value received, hereby TOWN OF AVON, COLORADO (the "Town), ecified romises to pay, from the sources hereinafter described, to the Registered owner Date (pified p the Principal Sum (specified above) on the Maturity ( pec hole r in part above), or registered assigns, redem tion in above), unless this Bond shall have been duly called f duprmadesor provpded for,vupon surrender s on and payment of the redemption price shall have been y hereof, and to pay to the person in whose name this Bond is registered at the closoerof busines next the regular record date for such interest, which shall be the last day hof - eck or draft mailed to such preceding an interest payment date (the "Regular Record Date"), by 1 Included in Series 2002A Bonds only 2 Included in Series 2002B Bonds only 3 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 - 66374/8 - #130700 v2 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 \\\DE - 66374/8 - #130700 v2 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, 20_, 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 \\\DE - 66374/8 - #130700 v2 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 - 66374/8 - #130700 v2 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 - 66374/8 - #130700 Q 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 Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list. 9 \\\DE - 66374/8 - #130700 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 Lender National Housing Act Project Town Trust Estate II \\\DE - 66374/8 - #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 \\\DE - 66374/8 - #130700 v2 "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 15fl' 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. 13 \ME - 66374/8 - #130700 v2 "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, 14 \\\DE - 66374/8 - #130700 v2 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. 15 \\\DE - 66374/8 - #130700 v2 "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. 16 \\\DE - 66374/8 - #130700 v2 "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. 17 \\\DE - 66374/8 - #130700 v2 "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 XIV 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 II 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 18 \\\DE - 66374/8 - #130700 v2 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; 19 \\\DE - 66374/8 - #130700 v2 (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'h 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. 20 \\\DE - 66374/8 - #130700 v2 "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 \\\DE - 66374/8 - #130700 v2 (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; (fl 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 0) 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. 22 \\\DE - 6637418 - #130700 v2 "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. 23 \\\DE - 6637418 - #130700 v2 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. 24 \\\DE - 6637418 - #130700 v2 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: Aggregate Principal Interest Rate Maturity Date Amount 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 25 \\\DE - 66374/8 - #130700 v2 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 26 \\\DE - 66374/8 - #130700 v2 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 27 \\\DE - 66374/8 - #130700 v2 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 28 \\\DE - 66374/8 - #130700 v2 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. 29 \\\DE - 66374/8 - #130700 v2 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 30 \\\DE - 66374/8 - #130700 v2 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. 31 \\\DE - 66374/8 - #130700 v2 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: 32 \\\DE - 66374/8 - #130700 v2 (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 33 \\\DE - 6637418 - #130700 v2 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. 34 \\\DE - 66374/8 - #130700 v2 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) Project Fund, and therein the Acquisition Account and the Costs of Issuance Account. (c) Redemption Fund. (d) 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 35 \\\DE - 6637418 - #130700 v2 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 36 \\\DE - 66374/8 - #130700 v2 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 37 \\\DE - 66374/8 - #I 307DO v2 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 38 \\\DE - 66374/8 - #130700 v2 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 39 \\\DE - 66374/8 - #130700 v2 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. 40 \\\DE - 66374/8 - #130700 v2 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 41 \\\DE - 66374/8 - #130700 v2 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 42 \\\DE - 66374/8 - #130700 v2 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. 43 \\\DE - 66374/8 - #130700 v2 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. 44 \\\DE - 66374/8 - #130700 v2 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 furnish 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. 45 \\\DE - 66374/8 - #130700 v2 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 46 \\\DE - 66374/8 - #130700 Q 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. 47 \\\DE - 66374/8 - #130700 v2 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). 48 \ME - 66374/8 - #130700 v2 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, (II) 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 49 \\\DE - 66374/8 - #130700 v2 (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 (15th) 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 (15`x) 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 Amount 20, 20_ $ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ "Maturity Date Amount 20, 20_ $ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ (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: Date 20, 20_ 20, 20_ 20, 20_ Amount Date Amount $ 20, 20_ $ 20, 20_ 20, 20_ 50 \\\DE - 66374/8 - #130700 v2 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 20,20 - 20, 20_ 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 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_ 51 Date Amount 20, 20_ $ 20, 20_ 20, 20_ 20, 20_ 20, 20_ 20, 20_ \\\DE - 66374/8 - #130700 v2 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 52 \\\DE - 66374/8 - #130700 v2 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 53 \\\DE - 66374/8 - #130700 v2 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. 54 \\\DE - 66374/8 - #130700 v2 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 55 \\\DE - 66374/8 - #130700 v2 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. 56 \\\DE - 66374/8 - #130700 v2 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. 57 \\\DE - 66374/8 - #130700 v2 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. 58 \\\DE - 66374/8 - #130700 v2 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 59 \\\DE - 6637418 - #130700 v2 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. 60 \\\DE - 66374/8 - #130700 v2 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 61 \\\DE - 66374/8 - #130700 v2 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 62 \\\DE - 66374/8 - #130700 v2 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 63 \\\DE - 66374/8 - #130700 v2 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; 64 \\\DE - 66374/8 - # 130700 v2 (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 65 \\\DE - 66374/8 - #130700 v2 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 66 \\\DE - 66374/8 - #130700 v2 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 67 \\\DE - 6637418 - #130700 v2 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. 68 \\\DE - 66374/8 - #130700 v2 (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. 69 \\\DE - 66374/8 - #130700 v2 (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 \\\DE - 66374/8 - #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 AMI 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 may be 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 \\\DE - 66374/8 - #130700 v2 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] Attest: Town Clerk [SEAL] Attest: Authorized Officer TOWN OF AVON, COLORADO By: WELLS FARGO BANK WEST, NATIONAL ASSOCIATION Trustee By: Vice President/Trust Officer 72 \\\DE - 66374/8 - #130700 v2 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 CITY AND COUNTY OF DENVER ss. 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 \\\DE - 6637418 - #130700 v2 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 \\\DE - 66374/8 - X130700 v2 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 -1- MDE - 66374/8 - #130700 v2 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 EVENTS OF DEFAULT AND REMEDIES ............................................... 54 Section 8.01. Events of Default Defined .............................................................................. 54 Section 8.02. Acceleration and Annulment Thereof ........................................................... 55 Section 8.03. Legal Proceedings by Trustee ........................................................................ 55 Section 8.04. Waiver of Default; Discontinuance of Proceedings by Trustee .................... 55 Section 8.05. Bondholders May Direct Proceedings ........................................................... 56 Section 8.06. Limitations on Actions by Bondholders ........................................................ 56 Section 8.07. Trustee May Enforce Rights Without Possession of Bonds .......................... 56 Section 8.08. Delays and Omissions Not to Impair Rights ................................................. 57 Section 8.09. Application of Moneys in Event of Default .................................................. 57 Section 8.10. Trustee and Bondholders Entitled to All Remedies; Remedies Not Exclusive ........................................................................................................ 58 Section 8.11. Trustee's Right to Receiver ............................................................................ 58 Section 8.12. Bankruptcy Proceedings ................................................................................ 58 Section 8.13. 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 - -2- \\\DE - 66374/8 - #130700 v2 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 XII DEFEASANCE ..............................................................................................66 Section 12.01. Defeasance ......................................................................................................66 ARTICLE XIII 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. GNMA/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 -3- \\\DE - 66374/8 - #130700 v2 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 -4- \\\DE - 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 II 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 -2- 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 15c2-12 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 -3- (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 -4- (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 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) 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 -5- 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 financial 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. (j) 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. 64185.02 (02/06/02) PSW JWP/gag -6- (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. 64185.02 (02/06/02) PSW JWP/gag -7- 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. 64185.02 (02/06/02) PSW JWP/gag -8- (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. 64185.02 (02/06/02) PSW JWP/gag -9- (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. (j) 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. 64185.02 (02/06/02) PSW JWP/gag -10- (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 parries 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: 64185.02 (02/06/02) PSW JWP/gag -11- (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 $ (__% 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 definitive 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 64185.02 (02/06/02) PSW JWP/gag -12- 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 Underwriter 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 kind, 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). 64185.02 (02/06/02) PSW JWP/gag -13- 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. 64185.02 (02/06/02) PSW JWP/gag -14- 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 64185.02 (02/06/02) PSW JWP/gag -15- If to the Borrower: Buffalo Ridge H 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 -16- 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 -17- 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] Attest Accepted and Agreed: TOWN OF AVON, COLORADO By: By: Clerk Mayor 64185.02 (02/06/02) PSW JWP/gag -19- [Signature page of Borrower to Bond Purchase Agreement] Accepted and Agreed: By: BUFFALO RIDGE II LLLP Corum Buffalo Ridge LLC Its General Partner By: By: Its President Wintergreen Homes LLC Its General Partner By: Its President 64185.02 (02/06/02) PSW JWP/gag -20- 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 H 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 JWP/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 H Apartments Project) Series 2002A and Taxable Multifamily Housing Project Revenue Bonds (GNMA Mortgage - Backed Securities Program - Buffalo Ridge R 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 SCHEDULEI MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND PURCHASE PRICES Series 2002A Bonds Maturity Date October 20, 2023 October 20, 2034 October 20, .2045 . Principal Amount Interest Rate Purchase Price 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 PSW Draft 2/6/02 $10,340,000 BUFFALO RIDGE AFFORDABLE HOUSING CORPORATION Multifamily Housing Project Revenue Bonds (GNMA Mortgage - Backed Securities Program - Buffalo Ridge I Apartments Project) Series 2002A BOND PURCHASE AGREEMENT April ___, 2002 Buffalo Ridge Affordable Housing Corporation c/o Town of Avon 400 Benchmark Road Avon, Colorado 81620 Attention: Larry Brooks Colleagues: Kirkpatrick Pettis (the "Underwriter") hereby offers to enter into the following agreement with the Buffalo Ridge Affordable Housing Corporation (the "Issuer") for the sale by the Issuer 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 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 standard 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 authorizes the Underwriter to complete the 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 Bonds 3.1 During the period commencing on the date hereof and ending 25 days following the End of the Underwriting Period, if 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, at its expense, 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 Issuer) 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 10(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 by 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 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. Section 4. Official Statement: the Issuer 4.1 The Issuer 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 Issuer) 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 Issuer for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended. The Issuer'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 Issuer agrees to deliver to the Underwriter (at the Issuer'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 Issuer agrees to deliver such Official Statement within seven business days after the execution thereof or by the Closing Date, whichever occurs first. 64198.02 (02/06/02) PSW JWP/gag -2- Section 5. Closing. 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 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, all of which will continue in effect subsequent to the purchase of the Bonds: (a) The Issuer is a non-profit corporation 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 Bond Documents, (ii) assist in the preparation of the Official Statement, and (iii) otherwise consummate the transactions contemplated by the Bond Documents. (c) The Issuer has duly authorized the (i) execution and delivery of the Bond Documents, (ii) performance by the Issuer of the obligations contained in the Bond Documents, (iii) preparation of the Official Statement and (iv) consummation by the Issuer of all of the transactions contemplated by the Bond Documents. (d) This Agreement is, and, when executed and delivered by the Issuer and the other parties hereto, the Bond 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) To the best of the Issuer'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 Issuer for the execution and delivery by the Issuer of the Bond Documents or the consummation by the Issuer of the transactions contemplated hereby or thereby, have been obtained or will be obtained prior to Closing. (f) The execution and delivery by the Issuer of the Bond 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 organizational documents of the Issuer, (ii) to the best of the Issuer's knowledge, any applicable law, rule, regulation, judgment, decree, order or other requirement to which the Issuer is subject, or (iii) 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. (g) The information in the Official Statement, other than information related to the Lender, the Investment Agreement Provider and DTC, 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. 64198.02 (02/06/02) PSW JWP/gag -3- (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 Issuer, nor, to the best 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 or pursuant to the Bond Documents or (ii) which would in any way contest or affect the organization or existence of the Issuer or (iii) which would contest or have a material and adverse effect upon (A) the due performance by the Issuer of the transactions contemplated by the Official Statement or the Bond Documents, (B) the validity or enforceability of the Bonds, the Bond 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, (C) the exclusion from gross income for federal income tax purposes of the interest on the Bonds or (D) the financial condition or operations of the Issuer, or (iv) which contests in any way the completeness or accuracy of the Official Statement. The Issuer 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 Issuer 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 Bond Documents have been obtained or will be obtained, and said ownership and operation are not, to the best knowledge of the Issuer, in conflict with any zoning or similar ordinance applicable to the Project. The Project conforms to all material environmental regulations known to the Issuer. (k) On the Closing Date, each of the representations and warranties of the Issuer contained in the Bond Documents and all other documents executed by the Issuer in connection with the Bonds shall be true, correct and complete. (1) The Issuer 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. 6.2 Each of the representations and warranties set forth in this section will survive the Closing. 6.3 Any certificate signed by any authorized signer 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. 64198.02 (02/06/02) PSW JWP/gag -4- Section 7. Covenants of the Issuer. 7.1 The Issuer hereby makes the following covenants with the Underwriter: (a) The Issuer 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 10(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 10(d) hereof. (b) Prior to the Closing (except as provided in the Bond Documents), the Issuer will not amend, terminate or rescind, and will not agree to any amendment, termination or rescission of the Bond 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 Indentures or, including, without limitation, the Bonds or the Bond Documents. (d) The Issuer 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 Issuer 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 Bonds to be includable in the gross income of the holders thereof for federal income tax purposes. (f) The Issuer 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 Issuer 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. (h) The Issuer 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. 64198.02 (02/06/02) PSW JWP/gag -5- Section 8. Conditions of Closin 8.1 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 8.2 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 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, the FHA Loan Documents and the Official Statement 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 $10,340,000 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 Bonds of "AAA" and such rating 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. 8.2 In addition to the conditions set forth in Section 8. 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. (b) An opinion of Isaacson, Rosenbaum Wood & Levy 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. 64198.02 (02/06/02) PSW JWP/gag -6- (c) An opinion of Sherman & Howard, L.L.C., counsel to the Town of Avon, Colorado, 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) Reserved (g) A certificate of the Issuer, dated the Closing Date and signed by an authorized signer, to the effect that (i) each of the Issuer's representations and warranties contained herein and in all Bond 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; (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) Certified copies of the Issuer's organizational documents and resolutions authorizing the execution and delivery of the Bond Documents. (k) Copies of the proposed forms of management agreement and residency agreement to be used by the Issuer, if any. (1) 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. (m) One or more investment agreements or similar instruments consistent with the final cash flow analysis approved by the Rating Agency. (n) 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 herein contained and of the Official Statement, and to evidence compliance by the Issuer with this Agreement and all applicable legal 64198.02 (02/06/02) PSW JWP/gag -7- requirements, and the due performance and satisfaction by the Issuer 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 and the Lender. 8.3 If any of the conditions set forth in Section 8.1 or 8.2 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 11. Section 9. 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 Issuer 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 Issuer and the Underwriter may mutually agree upon, the materials described in Section 8.1 and Section 8.2. (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 10. Termination of Agreement. The Underwriter may terminate this Agreement, without liability therefor, by notifying the Issuer and the Issuer at any time prior to the Closing, if (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 Bonds or the exclusion of interest on obligations such as the 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 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; 64198.02 (02/06/02) PSW JWP/gag -8- (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 the Bonds shall have been downgraded or withdrawn by the Rating Agency. Section 11. Fees and Expenses. 11.1 The Issuer shall pay to the Underwriter a fee in the amount of $ C--_%o of the principal amount of the Bonds) payable in immediately available funds on the Closing Date. 11.2 The Issuer 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 reproducing and signing the definitive 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) cash flow preparation and certification fees and expenses; (vi) Rating Agency fees; (vii) Lender fees and related costs; (viii) CUSIP fees; (ix) 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 with such sale; and (x) all other applicable fees of professionals hired in conjunction with the issuance of the Bonds. 11.3 The Underwriter will pay all expenses (other than those described in Section 11.2) incurred by the Underwriter in connection with its public offering and sale of the Bonds. 11.4 In the event that the Issuer or the Underwriter shall have paid obligations of the other as set forth in this Section, appropriate adjustments will promptly be made. 11.5 The Issuer shall indemnify 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. 64198.02 (02/06/02) PSW JWP/gag -9- Section 12. Indemnification. 12.1 The Issuer will indemnify and hold harmless the Underwriter 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 kind, character and nature (collectively referred to herein as the "Liabilities"), joint or several, to which 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 Issuer 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 other than information relating to the Lender, the Investment Agreement Provider or DTC. This indemnification provision shall not be construed as a limitation on any other liability which the Issuer may otherwise have to any indemnified person, provided that in no event shall the Issuer be obligated for double indemnification. 12.2 The indemnity agreements in paragraph 12.1 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 (the Underwriter, being referred to as an "Indemnified Party"); provided, however, that an indemnifying party under paragraph 12.1 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). 12.3 Promptly after receipt by an Indemnified Party under paragraph 12.1 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. 12.4 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. 64198.02 (02/06/02) PSW JWP/gag -10- 12.5 If the indemnifying party shall not have employed counsel to have charge of the defense of the action, claim or proceeding, or if any 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; provided, that an indemnifying party shall not be liable for the expenses of more than one additional separate counsel for each Indemnified Party with respect to such separate defenses. For the purpose of this paragraph, an 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 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 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 12.5 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. 12.6 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 Issuer 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 13. Limitation of Liability. Notwithstanding any provision herein to the contrary, none of any member, officer, partner, agent or employee of the Issuer, including any person executing this Agreement, shall bear any liability as a result of any failure of the Issuer to perform the obligations of each, respectively, set forth in this Agreement. Section 14. Miscellaneous. 14.1 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 64198.02 (02/06/02) PSW JWP/gag -11- If to the Issuer: Buffalo Ridge Affordable Housing Corporation c/o Town of Avon, Colorado 400 Benchmark Road Avon, Colorado 81020 Attention: Larry Brooks 14.2 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 12, 15 and 16 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. 14.3 This Agreement may not be assigned by any of the parties hereto. 14.4 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 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. 14.5 This Agreement will be governed by and construed in accordance with the laws of the State of Colorado. 14.6 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 15. 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 Issuer'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 15 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. Section 16. HUD Requirements. For purposes of this Section 16, 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, 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. 64198.02 (02/06/02) PSW JWP/gag -12- 0 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 64198.02 (02/06/02) PSW JWP/gag -13- [Signature page of Issuer to Bond Purchase Agreement] Accepted and Agreed: BUFFALO RIDGE AFFORDABLE HOUSING CORPORATION By: President 64198.02 (02/06/02) PSW JWP/gag -14- EXHIBIT A GLOSSARY OF TERMS "Agreement" means this Bond Purchase Agreement, as amended from time to time. "Bonds" means the $10,340,000 in original aggregate principal amount of the Buffalo Ridge Affordable Housing Corporation Multifamily Housing Project Revenue Bonds, (GNMA Mortgage - Backed Securities Program - Buffalo Ridge I Apartments Project) Series 2002A. "Bond Documents" means this Agreement, the Bond Resolution, the Trust Indentures, the Financing Agreement, the Official Statement, the Tax Certificate, the Continuing Disclosure Agreement, the Project Agreement, the FHA Loan Document and other applicable documents related to this financing. "Bond Resolution" means the resolution of the Issuer authorizing the issuance of the Bonds. "Closing" means the proceeding at which the actions described in Section 9 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 Issuer 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 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. "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. easter/02) PSW JWP/gag A-1 "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 Buffalo Ridge Affordable Housing Corporation. "Lender" means AMI Capital Inc., Englewood, Colorado "Mortgage Note" means the security deed note from the Issuer 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. "Trustee" means Wells Fargo Bank West, National Association, or a successor thereto, as Trustee under the Trust Indenture. "Underwriter" means Kirkpatrick Pettis. easter/02) PSW JWP/gag A-2 EXHIBIT B Item 1. Title of Bonds: Buffalo Ridge Affordable Housing Corporation Multifamily Housing Project Revenue Bonds (GNMA Mortgage - Backed Securities Program - Buffalo Ridge I Apartments Project) Series 2002A 2. Purchase Price: As set forth on Schedule I 3. (a) Date of the Bonds: April 1, 2002 (b) Interest Payment Dates: as described in the Final Official Statement, dated as of (c) (d) (e) Aggregate Principal Amount: Maturity and Interest Rate: (i) Maturity: (ii) Interest Rate: Redemption Provisions: 4. (a) Time of Closing: (b) Date of Closing: (c) Place of Closing: (d) Delivery of Bonds: 64198.01(01/29/02) PSW JWP/gag even date herewith used in conjunction with the sale of the Bonds, Series 2002A: $10,340,000 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 standard 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 SCHEDULEI MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND PURCHASE PRICES Maturity Date Principal Amount Interest Rate Purchase Price October 20, 2023 October 20, 2034 October 20, 2045 (Plus Accrued Interest) 64198.01(01/29/02) PSW JWP/gag B-2 Memo To: Honorable Mayor and Town Council Thru: Bill Efting, Town Manager _5 From: Norm Wood, Town Engineeri4/ Date: January 29, 2002 Re: Highway 6 / Post Boulevard Roundabout Maintenance Agreement Resolution No. 02-04, 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 intersection at State Highway 6 and Post Boulevard. Issuance of the Access Permit for construction of this intersection will be contingent upon execution of an acceptable agreement between the Town and CDOT for the shared maintenance responsibilities. Attached Resolution No. 02- 04 approves the accompanying Contract (Exhibit A) defining the shared maintenance responsibilities for this roundabout. There are no costs to the Town associated with the approval of this contract or the maintenance of this proposed roundabout intersection. All costs related to required maintenance of this intersection 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. 02-04, 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. It should be noted that Chapter XVI of the Town Charter requires approval of intergovernmental agreements by 2/3 vote of the entire Council. IAEngineedng\Avon VillageTiling ITinal P1at\Agreements\Avon Post-US6 Mtce Res-Memo.Doc Recommendations: Approve 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. Proposed Motion: I move to approve 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 Manager Comments: IAEngineering\Avon VillageTiling ITina1 P1at\Agreements\Avon Post-US6 Mtce Res-Memo.Doc 2 TOWN OF AVON 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 WHEREAS, the Colorado Department of Transportation (CDOT) has issued an access permit #301258 for the construction of a roundabout intersection at Post Boulevard and State Highway 6; and WHEREAS, CDOT desires that, upon completion of the construction of the roundabout intersection that the Town of Avon (Town) assume responsibility for maintenance of certain portions of the roundabout intersection; and WHEREAS, the Town is willing to assume responsibility for its portion of the maintenance of the roundabout intersection; 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 P1at\Agreements\Avon Post-US6 Mtce Res.Doc ATTEST: Cecelia Fenton Acting Town Clerk IAEngineering\Avon VillageTiling ITinal P1at\Agreements\Avon Post-US6 Mtce Res.Doc EXHIBIT A 02 HA3 00027 Post Boulevard at US 6 CMS ID: 02-128 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, CDOT issued an access permit #301258 to the Town, under which the Local Agency anticipates construction of an Roundabout intersection at Post Boulevard and State Highway 6 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, maintenance of the new Roundabout intersection at Post Boulevard and State Highway 6 is the responsibility of CDOT; 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 intersection, 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 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 intersection at Post Boulevard and State Highway 6 in Avon, Colorado. The newly constructed Roundabout intersection, 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 Town 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. The CDOT portion of maintenance responsibility shall consist of: 1. Standard repair and/or replacement of the driving surface, striping, guardrail, and gravel shoulders, within the traveled way. 2. Snow removal within and through the Roundabout, consisting of usual and customary "pass through", within the traveled way, in accordance with 43-2-135 (1)(a) C.R.S., as amended. -2- C. Upon the Town's passing its resolution for its portion of maintenance responsibility for the newly constructed Roundabout intersection 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 Town 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. 2. Snow removal inherent to the appurtenances and peculiarities of the Roundabout, including curbs, drainage structures, and islands and beyond the traveled way. 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 intersection and accept its portion of maintenance responsibility for the newly constructed Roundabout 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 43-2-135 (1)(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 inure 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. I. 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. STATE OF COLORADO ATTEST: BILL OWENS, GOVERNOR By By Chief Clerk Executive Director DEPARTMENT OF TRANSPORTATION ATTEST: (SEAL) TOWN OF AVON, COLORADO By By Title Title Federal Employer Identification Number: 84771088 -6- MINUTES OF THE REGULAR MEETING OF THE TOWN COUNCIL HELD JANUARY 22, 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, Mac McDevitt, and Mayor Protem Buz Reynolds present. Councilor Cuny was absent. Also present were Town Manager Bill Efting, Town Attorney John Dunn, Assistant Town Manager Larry Brooks, Deputy Town Clerk Miranda Steber, Town Planner Tambi Katieb, Human Resource Director Jacquie Halburnt, Police Chief Jeff Layman, Transportation Director Harry Taylor, Town Engineer Norm Wood, as well as members of the press and public. Citizen Input: Mayor Yoder presented Sarah Stoutenburgh with a Certificate of Appreciation for her dedication and service to the Town of Avon Recreation Department from December 1998 to January 2002. Congratulations and best of luck to Sarah. Employee Bonus Awards: Mayor Yoder presented Fourth Quarter Employee Bonus Awards for employees nominated by other employees for going above and beyond the call of their normal job duties. The award winners were: Kara Breci-Fenick, Police Department, for her dedication and time for working with those in need. She voluntarily worked in cooperation with the Salvation Army and Adopt-a-Family during Thanksgiving and Christmas. She also organized flag football games on her own time for the children who live in the Sunridge area. Christopher Fenick, Police Department, for his dedication and time for working with those in need. He voluntarily worked in cooperation with the Salvation Army and Adopt- a-Family during Thanksgiving and Christmas. He also organized flag football games on her own time for the children who live in the Sunridge area. John Curutchet, Recreation Department, for his dedication to the Recreation Center and for creating a pleasant work environment. He works late many nights to make sure everything is running smoothly, and works hard to keep everyone under him feeling important and appreciated. John's employees say he leads by example. Mark Sifers, Recreation Department, for demonstrating exemplary inter-personnel skills when dealing with the tragic loss of Brenda Ibarra, a maintenance employee in his division. Mark stepped forward and assisted Brenda's husband in the days immediately following her death, and showed compassion and strength during this very difficult time for her family. Rob Janusz, Public Works. Public Works has trimmed it's personnel department immensely over the passed couple of years, yet Rob has taken responsibility for filling in whenever he needs to. He continues to volunteer for extra work for which he does not get paid, and best of all, he does it with a smile. Congratulations to all of you for a job well done. Citizen Input: Assistant Town Engineer Anne Martens introduced the new Town of Avon Engineer I, Mark Spielbauer. Welcome to the Town of Avon. Ordinances: Second Reading of Ordinance No. 02-01, Series of 2002, An Ordinance Amending the Wildridge Planned Unit Development (PUD) for Lot 25, Block 2, Wildridge Subdivision, Town of Avon, Eagle County, Colorado. Mayor Yoder stated this is a public hearing. Town Planner Tambi Katieb advised the applicant is seeking the removal of two development rights from this lot, which is currently zoned for four units, to create two single family lots. Staff recommends approval of this Ordinance. There being no further comments, Mayor Yoder closed the public hearing. Councilor Debbie Buckley motioned approval of Ordinance No. 02-01 Series of 2002, on second reading. Councilor McDevitt seconded the motion. Mayor Yoder asked for a roll call. The motion carried unanimously. Ordinance: First Reading of Ordinance No. 02-02, Series of 2002, An Ordinance Repealing and Reenacting Provisions of Chapter 15.36 of the Avon Municipal Code. Town Planner Tambi Katieb stated that on July 1, 2001, the Colorado Division of Housing adopted new rules governing the installation of manufactured homes. Since that time, installation of homes has been covered by both the Town's building permit process and the State's process. The Staff is asking to use the State's regulations and not have the redundancy of the Town codes for the new installations. Mayor Protem Reynolds motioned approval of Ordinance No. 02-02, Series of 2002, on first reading. Councilor Brown seconded the motion. Mayor Yoder asked for a roll call. The motion carried unanimously. Town Manager Report: Town Manager Efting advised he will be out of the office Thursday and Friday at CAST. Mr. Efting also requested everyone to take a look at the ice rink on Nottingham Lake. Public Works and the Recreation Staff did a great job over the weekend putting in the oval rink and it looks great. Other Business: Councilor Peter Buckley gave an update on the Avon Post Office. He stated that in order to achieve the goal of getting mail delivery in the Town of Avon. Mr. Buckley is working with the Postmaster to get collection boxes for mail collection in the Town of Avon. The Post Office is required to contract with the employees who pick up the mail, and the Postmaster will work on getting a contract in the Town. Council has agreed to move forward discuss and explore the Non-Smoking Ordinance in the Town of Avon. Councilor Debbie Buckley motioned approval of the Consent Agenda without item d. 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 5:42 PM RESPECTFULLY SUBMITTED: Miranda Steber, De uty Town Clerk APPROVED: Michael Brown Debbie Buckley Peter Buckley Rick Cuny Mac McDevitt Buz Reynolds Judy Yoder MINUTES OF THE LOCAL HOUSING AUTHORITY MEETING HELD JANUARY 8, 2002 The Avon Town Council acting as the Local Housing Authority for the Town of Avon, Colorado, convened at 5:27pm in the Municipal Building, 400 Benchmark Road, Avon, Colorado in the Council Chambers. Boardmembers of the Authority present were Chairwoman Judy Yoder, Michael Brown, Debbie Buckley, Peter Buckley, Mac McDevitt and Buz Reynolds. Boardmember Cuny was absent. Also present were Town Manager Bill Efting, Town Attorney John Dunn, Assistant Town Manager Larry Brooks, Deputy Town Clerk Miranda Steber, Human Resources Director Jacquie Halburnt, Police Chief Jeff Layman, Transportation Director Harry Taylor, Director of Comm. Dev. Ruth Borne, Police Detective Mike Leake, Town Engineer Norm Wood, Finance Director Scott Wright, Public- Works Director Bob Reed, as well as members of the press and public. Resolutions: Resolution No. 02-01, Series of 2002, Town of Avon, Resolutions of the Housing Authority of the Town of Avon, Colorado, Buffalo Ridge Apartments. Assistant Town Manager Larry Brooks stated this resolution is to enter into a special limited partnership for one phase of the Buffalo Ridge Apartments. A substantial portion of Buffalo Ridge Apartments are being funded by private activity bonds. This is required in order for that part of the project to be tax exempt. Councilor Debbie Buckley motioned approval of Resolution No. 02-01, Series of 2002. Councilor Brown seconded the motion. The motion carried unanimously. There being no further business to come before the Housing Authority, Councilor Debbie Buckley motioned to adjourn the meeting. Councilor McDevitt seconded the motion. The motion carried unanimously and the meeting adjourned at 5:30pm. RESPECTFULLY SUBMITTED: 6"tfi,-?&Jvz Miranda Steber, D puty Town Clerk APPROVED: Michael Brown Debbie Buckley Peter Buckley Rick Curly Mac McDevitt Buz Reynolds Judy Yoder Special Council Meeting December 18, 2001 Memo To: Honorable Mayor and Town Council Thru: Bill Efting, Town Manager liv-_ From: Norman Wood, Town Engineer Matthew Spielbauer, Engineer I Date: 1/28/02 Re: Resolution No. 02 - 03, Approving the Final Plat, A Resubdivision of Lot 6, Block 3, Wildridge, Town of Avon, Eagle County, Colorado (5031A and 5031B Wildridge Road East) Summary: Trent and Bonnie Cole, owner's of Lot 6, Block 3, Wildridge, have submitted a Final Plat to resubdivide Lot 6, Block 3, Wildridge, Town of Avon, Eagle County, Colorado. This is a Duplex Subdivision of a developed lot, creating Duplex lots 6A and 6B. The Subdivision is in conformance with the Title 16 of the Avon Municipal Code, Subdivisions. Recommendations: Staff recommends approval of 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, subject to completion of technical corrections to be approved by staff. Town Manager Comments: T- CdIC0Ci I:\Engineering\Subdivision\Wildddge\L6B3W R.doc TOWN OF AVON 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. WHEREAS, Trent and Bonnie Cole have submitted a Final Plat for a Resubdivision of Lot 6, Block 3, Wildridge, Town of Avon, Eagle County, Colorado; and WHEREAS, the Final Plat has been reviewed by the Town Staff; and WHEREAS, the Final Plat was found to be substantially in conformance with Title 16 of the Avon Municipal Code; and WHEREAS, the proposed subdivision complies with the requirements for consideration as a Final Plat. NOW, THEREFORE BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF AVON, that the Final Plat for A Resubdivision of Lot 6, Block 3, Wildridge, Town of Avon, Eagle County, Colorado, is hereby approved by the Town of Avon subject to: The completion of technical corrections as identified by Town Staff. ADOPTED THIS DAY OF , 2002. TOWN COUNCIL TOWN OF AVON, COLORADO Judy Yoder, Mayor ATTEST: Kris Nash Town Clerk C:\Documents and Settings\amartens\Local SettingsUemporary Intemet Fi1es\0LK2\L6B3WRres0204.doc RESOLUTION NO. 02-07 SERIES OF 2002 NOTICE OF MEETINGS WHEREAS, Local Public Bodies, including the Avon Town Council, are required by Subsection 24-6-402 (2) (c) C.R.S., to designate annually at the Town Council's first regular meeting of each calendar year, the place at which notice will be posted at least 24 hours prior to each meeting. NOW, THEREFORE, BE IT RESOLVED BY THE AVON TOWN COUNCIL AS FOLLOWS: Notices of meetings of the Town Council required pursuant to Section 24-6-401, et se q., C.R.S. shall be posted within the boundaries of the Town at least 24 hours prior to each meeting at the following locations: Avon Municipal Complex, 400 Benchmark Road, Bulletin Board Avon Recreation Center, 325 Benchmark Road, Bulletin Board Alpine Bank, 10 W. Beaver Creek Boulevard, Bulletin Board City Market, 260 Beaver Creek Place, Front Lobby Bulletin Board ADOPTED this day of Council of the Town of Avon. 2002, by the Town TOWN OF AVON, COLORADO Judy Yoder, Mayor ATTEST: Kris Nash, Town Clerk APPROVED AS TO FORM: John Dunn, Town Attorney