SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13237
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
---------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3949418
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Participating first mortgage bonds-at fair value $376,620,228 $346,300,000
Temporary investments 8,250,000 3,500,000
Cash and cash equivalents 1,396,518 2,296,899
Interest receivable 1,018,695 879,519
Promissory notes receivable 7,513,987 7,080,265
Deferred costs, net 4,386,136 2,292,409
Other assets 75,316 41,471
------------ ------------
Total assets $399,260,880 $362,390,563
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Note payable $ 0 $ 21,445,340
Accounts payable, accrued expenses and
other liabilities 892,509 635,691
Due to affiliates 933,680 674,946
Distributions payable 4,735,205 4,735,120
Excess of acquired net assets over cost 3,065,561 3,231,267
------------ ------------
Total liabilities 9,626,955 30,722,364
------------ ------------
Minority interest in subsidiary
(subject to mandatory redemption) 58,000,000 0
------------ ------------
Commitments and Contingencies
Shareholders' equity:
Beneficial owner's equity-manager 125,770 24,788
Beneficial owners' equity-other shareholders
(50,000,000 shares authorized;
20,587,837 and 20,587,465 shares issued
and outstanding, respectively) 311,840,509 311,322,765
Accumulated other comprehensive income:
Net unrealized gain on first mortgage bonds 19,667,646 20,320,646
------------ ------------
Total shareholders' equity 331,633,925 331,668,199
------------ ------------
Total liabilities and shareholders' equity $399,260,880 $362,390,563
============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ------------------------
1998 1997 1998 1997
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Interest income:
Participating first
mortgage bonds $6,561,808 $2,937,554 $12,452,072 $5,654,579
Temporary investments 62,868 40,854 104,394 73,146
Promissory notes 144,631 10,249 290,430 18,079
---------- ---------- ----------- ----------
Total revenues 6,769,307 2,988,657 12,846,896 5,745,804
---------- ---------- ----------- ----------
Expenses:
Interest expense 328,875 0 673,645 0
Management fees 0 202,656 0 405,312
Loan servicing fees 233,604 101,051 451,578 200,991
General and administrative 347,854 107,158 567,881 193,234
Amortization 74,134 46,181 120,990 92,361
Minority interest in
income of subsidiary 256,757 0 256,757 0
---------- ---------- ----------- ----------
Total expenses 1,241,224 457,046 2,070,851 891,898
---------- ---------- ----------- ----------
Net Income $5,528,083 $2,531,611 $10,776,045 $4,853,906
========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Beneficial Net Unrealized
Beneficial Owners' Gain (Loss) on
Owner's Equity - Participating
Equity - Other First Mort-
Manager Shareholders gage Bonds Total
--------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 $ 24,788 $ 311,322,765 $ 20,320,646 $ 331,668,199
Net Income 778,354 9,997,691 0 10,776,045
Issuance of shares of 0 5,000 0 5,000
beneficial interest
Consolidation costs 0 (14,628) 0 (14,628)
Distributions (677,372) (9,470,319) 0 (10,147,691)
Net Change in Fair Value
of Participating First
Mortgage Bonds 0 0 (653,000) (653,000)
--------- ------------- ------------ -------------
Balance at June 30, 1998 $ 125,770 $ 311,840,509 $ 19,667,646 $ 331,633,925
========= ============= ============ =============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,776,045 $ 4,853,906
------------ -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 120,990 92,361
Amortization of excess of acquired net
assets over cost (165,706) 0
Amortization of deferred income (33,106) (33,106)
Changes in assets and liabilities:
(Increase) decrease in interest receivable (139,176) 228,067
(Increase) decrease in other assets (33,845) 23,775
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 276,696 (43,585)
Decrease in due from affiliates 0 84,225
Increase in due to affiliates 238,908 336,222
------------ -----------
Total adjustments 264,761 687,959
------------ -----------
Net cash provided by operating activities 11,040,806 5,541,865
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of participating first mortgage bonds (30,960,000) 0
Increase in deferred bond selection costs (644,787) 0
Net purchase of temporary investments (4,750,000) (200,000)
Loans made to properties (529,972) (280,000)
Principal payments received from loans made to
properties 96,250 63,981
------------ -----------
Net cash used in investing activities (36,788,509) (416,019)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid (10,127,780) (4,855,961)
Proceeds from note payable 33,423,898 0
Repayments of notes payable (54,869,238) 0
Increase in deferred costs relating to the
revolving credit enhanced facility (1,569,930) 0
Increase in minority interest 58,000,000 0
Issuance of shares of beneficial interest 5,000 0
Consolidation costs paid (14,628) 0
------------ -----------
Net cash provided by (used in) financing activities 24,847,322 (4,855,961)
------------ -----------
</TABLE>
(continued)
See accompanying notes to financial statements
5
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1998 1997
------------ -----------
<S> <C> <C>
Net (decrease) increase in cash and
cash equivalents (900,381) 269,885
Cash and cash equivalents at the
beginning of period 2,296,899 249,192
------------ -----------
Cash and cash equivalents at the
end of the period 1,396,518 $ 519,077
============ ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ 673,958 $ 0
============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
FINANCING ACTIVITIES:
Distributions declared $(10,147,691) $(4,855,961)
Increase in distributions payable to shareholders 85 0
Increase in special distribution payable
to the Manager 19,826 0
------------ -----------
Distributions paid $(10,127,780) $(4,855,961)
============ ===========
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
NOTE 1 - General
Charter Municipal Mortgage Acceptance Company (the "Company") is a Delaware
business trust which is engaged in the acquisition and ownership (either
directly or indirectly) of tax-exempt participating and non-participating First
Mortgage Bonds ("FMBs") and other tax-exempt instruments issued by various state
or local governments or other agencies or authorities and secured by
participating and non-participating mortgage loans on the underlying properties.
As of June 30, 1998 the Company owned a portfolio of 37 FMBs.
The Company was formed by the consolidation (the "Consolidation"), on October 1,
1997, of Summit Tax Exempt Bond Fund, L.P., Summit Tax Exempt L.P. II ("Tax
Exempt II") and Summit Tax Exempt L.P. III, three publicly registered limited
partnerships (the "Partnerships") co-sponsored by affiliates of Related Capital
Company ("Related"), as part of the settlement of class action litigation
described below. Unless otherwise indicated, the "Company", as hereinafter used,
refers to Charter Municipal Mortgage Acceptance Company and, prior to October 1,
1997, Tax Exempt II. Pursuant to the Consolidation, the Company issued shares of
beneficial interest (the "Shares") to all partners in each of the Partnerships
in exchange for their interests in the Partnerships based upon each partner's
proportionate interest in the Shares issued to his or its Partnership in the
Consolidation.
The Company has engaged Related Charter LP, an affiliate of Related (the
"Manager"), to manage its day-to-day affairs.
For financial accounting and reporting purposes, the Consolidation was accounted
for using the purchase method of accounting. Under this method, the Partnership
with the investor group receiving the largest ownership in the Company, in this
case Tax Exempt II, is deemed to be the acquirer. As the surviving entity for
accounting purposes, Tax Exempt II's assets and liabilities were recorded by the
Company at their historical cost, with the assets and liabilities of the other
Partnerships recorded at their estimated fair values for each Partnership.
Results of operations and other operating financial data for the Company for the
three and six months ended June 30, 1997 is only with respect to Tax Exempt II.
The consolidated financial statements include the accounts of the Company and
its majority owned subsidiary business trust (see Note 5). All intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying financial statements have been prepared without audit. In the
opinion of management, the financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the financial position of the Company as of June 30, 1998, the results of its
operations for the three and six months ended June 30, 1998 and 1997 and its
cash flows for the six months ended June 30, 1998 and 1997. However, the
operating results for the interim periods may not be indicative of the results
for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these financial
statements should be read in conjunction with the
7
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
financial statements and notes thereto included in the Company's Form 10-K/A-1
for the year ended December 31, 1997.
Certain reclassifications have been made to prior year amounts to conform to the
current year's presentation.
NOTE 2 - Participating First Mortgage Bonds ("FMBs")
The Company accounts for its investments in the FMBs as "available for sale"
debt securities under the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"). Accordingly, investments in FMBs are carried at their
estimated fair values, with unrealized gains and losses reported in a separate
component of partners' capital.
Because the FMBs are not readily marketable, the Company estimates fair value
for each bond as the present value of its expected cash flows using a discount
rate for comparable tax-exempt investments. This process is based upon
projections of future economic events affecting the real estate collateralizing
the bonds, such as property occupancy rates, rental rates, operating cost
inflation and market capitalization rates, and upon determination of an
appropriate market rate of interest, all of which are based on good faith
estimates and assumptions developed by the Company's management. Changes in
market conditions and circumstances may occur which would cause these estimates
and assumptions to change, therefore, actual results may vary from the estimates
and the variance may be material.
As of June 30, 1998, the Company owned 37 FMBs which are secured by mortgages on
apartment complexes in 12 different states across the continental United States.
The face amount of the FMBs ranges from $2,840,000 to $19,450,000 with carrying
amounts from $2,840,000 to $20,571,000. The FMBs have maturity dates from
December 2003 through May 2040, however, they are callable from June 1998 to
June 2010. The stated interest rates range from 4.87% to 8.5%. The weighted
average interest rate recognized on the face amount of the portfolio of FMBs for
the three and six months ended June 30, 1998 and 1997 was 7.02% and 7.25% and
6.89% and 6.98%, respectively.
The original obligors and owners of the Underlying Properties of ten of the
Company's FMBs have been replaced with affiliates of the Manager who have not
made equity investments. These entities have assumed the day to day
responsibilities and obligations of the Underlying Properties. These properties
are paying as interest an amount equal to the net cash flow generated by
operations which in some cases is not equal to the stated rate of the FMB. The
Company has no present intention of declaring a default under these FMBs.
Effective January 1, 1998 the Highland Ridge, Willow Creek, Bristol Village and
Thomas Lake FMBs were modified to reflect a change in their stated interest
rate, allow for deferred base and other interest accrued and unpaid through
December 1997 to be paid at maturity or upon event of sale or refinancing and
extend the mandatory call and prepayment lock-out dates. In addition, the
maturities of the Highland Ridge and Willow Creek FMBs were extended to 2017 and
the maturities of the Bristol Village and Thomas Lake FMBs were extended to 2027
with
8
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
mandatory call dates at January 2010. The Company is currently anticipating
modifying certain other FMBs, with terms generally similar to those above, where
appropriate.
In addition to the stated base rates of interest, each of the FMBs which have
not been modified provides for "contingent interest". During the six months
ended June 30, 1998 and 1997, five and three FMBs paid contingent interest
amounting to approximately $404,000 and $186,000, respectively.
Certain of the FMBs have been previously modified. These modifications have
generally encompassed an extension of the maturity together with a prepayment
lock out feature and/or prepayment penalties together with an extension of the
mandatory redemption feature (5-10 years from modification). Stated interest
rates have also been adjusted together with the participation and contingent
interest features. Base interest rates, contingent interest, prepayment
lock-outs, mandatory redemption features vary dependent on the facts of a
particular FMB, the developer, the property's performance and requirements of
bond counsel and local issuers.
From time to time, the Company enters into forbearance agreements and permanent
modifications with certain borrowers. The determination as to whether it is in
the best interest of the Company to enter into forbearance agreements on the
FMBs, advance second mortgages, or alternatively, to pursue its remedies under
the loan documents, including foreclosure, is based upon several factors. These
factors include, but are not limited to, property performance, owner cooperation
and projected costs of foreclosure and litigation. Payments under each of the
existing forbearance agreements are current as of June 30, 1998.
With respect to the FMBs which are subject to forbearance agreements with the
respective obligors, the difference between the stated interest rates and the
rates paid (whether deferred and payable out of available future cash flow or,
ultimately, from sale or refinancing proceeds) on FMBs is not accrued for
financial statement purposes. The accrual of interest at the stated interest
rate will resume once a property's ability to pay the stated rate has been
adequately demonstrated. Unrecorded contractual interest income was
approximately $1,670,000 and $777,000 for the six months ended June 30, 1998 and
1997, respectively.
From time to time the Company has advanced funds to owners of certain underlying
properties in the form of promissory notes in order to complete construction or
when properties have operating difficulties including past due real estate taxes
and/or deferred maintenance items. As of June 30, 1998, the face amount of
promissory notes outstanding was $12,746,528, and their carrying value was
$7,513,987, which is net of purchase accounting adjustments, and a reserve for
collectibility of $452,119.
9
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
During the period January 1, 1998 through June 30, 1998 the Company acquired
five FMBs for an aggregate purchase price of $30,960,000, not including bond
selection fees and expenses of approximately $619,000. The purchases were
financed entirely from borrowings under the Interim Credit Facility. Further
information regarding the five FMBs is as follows:
<TABLE>
<CAPTION>
Stated No. of
Project Closing Face Interest Rental
Name Date Amount of Bond Rate Units
---- ---- -------------- ---- -----
<S> <C> <C> <C> <C>
Ocean Air
Norfolk, VA 4/20/98 $10,000,000 7.25% 434
Phoenix
Stockton, CA 4/28/98 3,250,000 7.125% 184
Stone Creek
Watsonville, CA 4/28/98 8,820,000 7.125% 120
Cedarbrook
Hanford, CA 4/28/98 2,840,000 7.125% 70
Marsh Landings
Portsmouth, VA 5/20/98 6,050,000 7.25% 250
</TABLE>
The cost basis of the Company's portfolio of 37 and 32 FMBs at June 30, 1998 and
December 31, 1997 was $356,952,582 and $325,979,355, respectively. The net
unrealized gain on FMBs at June 30, 1998 consists of gross unrealized gains and
losses of $28,331,175 and $8,663,529, respectively. The net unrealized gain on
FMBs at December 31, 1997 consists of gross unrealized gains and losses of
$28,984,175 and $8,663,529, respectively.
NOTE 3 - Deferred Costs
The components of deferred costs are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
<S> <C> <C>
Deferred bond selection costs $ 4,401,751 $ 3,756,964
Deferred costs relating to the revolving credit
enhanced facility (see Note 4) 2,112,157 542,227
----------- -----------
6,513,908 4,299,191
Less: Accumulated amortization (2,127,772) (2,006,782)
----------- -----------
$ 4,386,136 $ 2,292,409
=========== ===========
</TABLE>
10
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
NOTE 4 - Minority Interest In Subsidiary
On May 21, 1998 the Company closed its revolving credit enhanced facility (the
"Facility") in order to raise additional capital of up to $150 million to
acquire additional First Mortgage Bonds ("FMBs"). The initial transaction with
respect to the Facility involved the contribution by the Company of thirteen
issues of FMBs owned by the Company in the aggregate principal amount of
$144,625,000 to a Delaware business trust (the "Origination Trust"), a wholly
owned subsidiary of the Company, which immediately contributed the same FMBs to
another Delaware business trust (the "Owner Trust") , a wholly owned subsidiary
of the Origination Trust. The Owner Trust issued two certificates: a Senior
Certificate, with an outstanding face amount of $58,000,000, which was itself
deposited into another Delaware business trust (the "Certificate Trust") which
issued and sold Floater Certificates representing proportional interests in the
Senior Certificate to new investors; and a Residual Certificate representing the
remaining beneficial ownership interest in the FMBs, which was issued to the
Origination Trust, whose sole owner is the Company. At the same time, the Owner
Trust acquired a municipal bond insurance policy from MBIA to credit enhance
Certificate distributions for the benefit of the holders of the Floater
Certificates and also arranged for a liquidity facility, issued by a consortium
of highly rated European banks, with respect to the Floater Certificates. The
Floater Certificates were privately placed raising $58,000,000, which proceeds
were used by the Company to repay outstanding debt under the Interim Credit
Facility and to acquire additional FMBs.
The end result of the transaction is that a portion of the interest received by
the Owner Trust on the FMBs is distributed through the Senior Certificate to the
holders of the Floater Certificates in an amount determined each week by the
remarketing agent ("Goldman Sachs & Co."), as the distribution amount that is
necessary (but not greater than necessary) to enable the remarketing agent to
sell the Floater Certificates at par on any weekly determination date.
For financial accounting and reporting purposes, the Senior Certificate is
classified as "Minority interest in subsidiary (subject to mandatory
redemption)" in the accompanying consolidated balance sheets. Income is
allocated first to the minority interest in an amount equal to the distribution
through the Senior Certificate to the holders of the Floater Certificates. Such
special allocation of income is classified as "minority interest in income of
subsidiary" in the accompanying consolidated statements of income. Deferred
costs relating to the Facility are being amortized using the straight line
method over 10 years, which approximates the average remaining term to maturity
of the FMBs expected to be contributed to the Owner Trust.
It is anticipated that when the Company has need of additional capital it will
either: (1) cause the Owner Trust to increase the outstanding face amount of the
Senior Certificate from $58,000,000 to no more than $72,312,000 (50% of the
value of the FMBs currently owned by the Owner Trust); or (2) contribute
additional FMBs to the Owner Trust and cause an increase in the outstanding face
amount of the Senior Certificate to an amount that will then be no more than 50%
of the aggregate value of the FMBs then owned by the Owner Trust. The maximum
amount of Floater Certificates that may be issued to raise capital under the
Facility is up to $150 million.
11
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
NOTE 5 - Note Payable
Until the Company causes the Owner Trust to increase the outstanding face amount
of the Senior Certificate, an interim credit facility with Goldman Sachs &
Company (the "Interim Credit Facility") is available to the Company at
prevailing rates of interest for such accounts. At June 30, 1998, the
outstanding balance was $0. Any outstanding balance under the Interim Credit
Facility, which is secured by certain of the Company's FMBs, will be repaid with
proceeds from the Facility, however it is payable on demand.
The outstanding face amount of the Senior Certificate and indebtedness under the
Interim Credit Facility, together with any other leveraging of the Company, will
not exceed 50% of the Company's total market value as of the date incurred.
NOTE 6 - Related Parties
Charter Municipal Mortgage Acceptance Company (After the Consolidation)
Pursuant to the Management Agreement, the Manager receives (i) bond selection
fees equal to 2% of the principal amount of each FMB or other tax-exempt
instrument acquired or originated by the Company; (ii) special distributions
equal to .375% of total invested assets of the Company; (iii) loan servicing
fees equal to .25% of the outstanding principal amount of FMBs; (iv) a
liquidation fee based on the gross sales price of assets sold by the Company in
connection with a liquidation of the Company's assets; and (v) reimbursement of
certain administrative costs incurred by the Manager on behalf of the Company.
Each independent trustee is entitled to receive compensation for serving as a
trustee at the rate of $5,000 per year in cash and shares of beneficial interest
having an aggregate value of $10,000, based on the fair market value at the date
of issuance. On June 4, 1998, 186 shares, having an aggregate value of $2,500,
were issued to each independent trustee relating to their services for the
quarter ended December 31, 1997.
The costs, expenses and the special distribution incurred to the Manager for the
three and six months ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
---------- ----------
<S> <C> <C>
Bond selection fees $ 619,200 $ 619,200
Expense reimbursement 114,000 162,734
Loan servicing fees 233,604 451,578
Special distribution 350,406 677,367
Trustee fees 7,500 22,500
---------- ----------
$1,324,710 $1,933,379
========== ==========
</TABLE>
Tax Exempt II (Prior to the Consolidation)
Prior to the Consolidation, the general partners of Tax Exempt II were Related
Tax Exempt Associates II, Inc., a Delaware corporation (the "Related General
Partner"), and Prudential
12
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
Bache Properties, Inc. ("PBP"), together the "General Partners". The General
Partners managed and controlled the affairs of Tax Exempt II prior to the
Consolidation.
The General Partners and their affiliates performed services for Tax Exempt II
which included, but were not limited to: accounting and financial management;
registrar, transfer and assignment functions; asset management; investor
communications; printing and other administrative services. The General Partners
and their affiliates received reimbursements for costs incurred in connection
with these services, the amount of which was limited by the provisions of the
partnership agreement of Tax Exempt II. The General Partners were paid, in
aggregate, an annual management fee equal to .5% of the total invested assets
(which equaled the total original face amount of the FMBs). An affiliate of the
Related General Partner received loan servicing fees in an amount of .25% per
annum of the principal amount outstanding on mortgage loans serviced by the
affiliate.
The costs and expenses incurred to related parties for the three and six months
ended June 30, 1997 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
------------- -------------
<S> <C> <C>
PBP and affiliates
General and administrative $ 17,276 $ 34,722
Management fee 101,328 202,656
-------- --------
118,604 237,378
-------- --------
Related General Partner
and affiliates
General and administrative 19,000 31,309
Management fee 101,328 202,656
Loan servicing fee 101,051 200,991
-------- --------
221,379 434,956
-------- --------
$339,983 $672,334
======== ========
</TABLE>
General
The original obligors of the Suntree, Players Club and River Run FMBs are
affiliates of the Manager.
As of June 30, 1998, the original owners of the underlying properties and
obligors of the Cedar Creek, Cypress Run, Highpointe, Greenway Manor, Sunset
Terrace, Pelican Cove, Loveridge, Sunset Downs, Sunset Creek and Sunset Village
FMBs had been replaced with affiliates of the Manager who have not made equity
investments. These entities have assumed the day-to-day responsibilities and
obligations of the Underlying Properties. Buyers are being sought who would make
equity investments in the underlying properties and assume the nonrecourse
obligations for the FMB.
NOTE 7 - Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" in the first quarter of 1998. The Company's
only element of other
13
<PAGE>
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
comprehensive income is the change in the unrealized gain or loss on the
Company's FMBs. Thus, comprehensive income, which consists of net income plus or
minus other comprehensive income, for the three and six months ended June 30,
1998 and 1997 was $5,528,083 and $2,531,611 and $10,123,045 and $4,853,906
respectively.
NOTE 8 - Earnings Per Share
Basic income per share in the amount of $.25 and $.49 is computed based on the
net income for the three and six months ended June 30, 1998 ($5,528,083 and
$10,776,045, respectively), less the special allocations to the Manager
($402,183 and $778,354, respectively), divided by the weighted average number of
shares outstanding for the period (20,587,575 and 20,587,520, respectively). Net
income per unit information for 1997 is not presented because it is not
indicative of the Company's continuing capital structure.
As the Company has only one type of security at June 30, 1998, diluted net
income per share is the same as basic net income per share.
NOTE 9 - Subsequent Events
During the period July 1, 1998 through August 14, 1998 the Company acquired two
FMBs for an aggregate purchase price of $13,600,000, not including bond
selection fees and expenses of approximately $272,000. The purchases were
financed primarily from borrowings under the Interim Credit Facility. Further
information regarding the two FMBs is as follows:
<TABLE>
<CAPTION>
Stated No. of
Project Closing Face Interest Rental
Name Date Amount of Bond Rate Units
---- ---- -------------- ---- -----
<S> <C> <C> <C> <C>
Gulfstream
Dania, FL 7/23/98 $3,500,000 7.25% 96
College Park
Naples, FL 7/15/98 $10,100,000 7.25% 210
</TABLE>
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
When used in this quarterly report on form 10-Q, the words "believes,"
"anticipates," "expects" and similar expressions are intended to identify
forward-looking statements. Statements looking forward in time are included in
this quarterly report on form 10-Q pursuant to the "safe harbor" provision of
the private securities litigation reform act of 1995. Such statements are
subject to certain risks and uncertainties which could cause actual results to
differ materially, including, but not limited to, those set forth in
"management's discussion and analysis of financial condition and results of
operations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events.
Liquidity and Capital Resources
Charter Municipal Mortgage Acceptance Company (the "Company") is a Delaware
business trust which is engaged in the acquisition and ownership (either
directly or indirectly) of tax-exempt participating and non-participating First
Mortgage Bonds ("FMBs") and other tax-exempt instruments issued by various state
or local governments or other agencies or authorities and secured by
participating and non-participating mortgage loans on the underlying properties.
As of June 30, 1998, the Company owned 37 FMBs and had net assets of
approximately $331,324,000.
The Company was formed by the consolidation (the "Consolidation"), on October 1,
1997, of Summit Tax Exempt Bond Fund, L.P. ("Tax Exempt I"), Summit Tax Exempt
L.P. II ("Tax Exempt II") and Summit Tax Exempt L.P. III ("Tax Exempt III"),
three publicly registered limited partnerships (the "Partnerships") co-sponsored
by affiliates of Related Capital Company ("Related").
In order to generate increased tax exempt income and as a result enhance the
value of the Company's stock, the Company intends to originate and acquire
additional tax-exempt bonds secured by multifamily properties. The Company
believes that it can earn above market rates of interest on its bond
acquisitions by focusing its efforts primarily on affordable housing. The
Manager estimates that nearly 50% of all new multifamily development contains an
affordable component which produces tax credits pursuant to Section 42 of the
Internal Revenue Code. The Manager also believes that each year a growing number
of these properties are financed with tax-exempt bonds. The Company has designed
a Direct Purchase Program specifically designed to appeal to developers of such
properties. In general, these properties are smaller than traditional
multifamily housing properties, averaging 150 units. The traditional method of
financing tax-exempt properties requires the involvement of credit enhancement,
rating agencies and investment bankers. Therefore, the up-front cost of such
financing is generally much higher than traditional multifamily financing.
Through its Direct Purchase Program, the Company will originate and acquire
tax-exempt bonds without the cost associated with credit enhancement, rating
agencies and investment bankers. The Company believes that the up-front cost
savings to the developer will translate into a higher than market interest rate
on the bonds acquired by the Company.
On May 21, 1998 the Company closed its revolving credit enhanced facility (the
"Facility") in order to raise additional capital of up to $150 million to
acquire additional First Mortgage Bonds ("FMBs"). The initial transaction with
respect to the Facility involved the contribution by the Company of thirteen
issues of FMBs owned by the Company in the aggregate principal
15
<PAGE>
amount of $144,625,000 to a Delaware business trust (the "Origination Trust"), a
wholly owned subsidiary of the company, which immediately contributed the same
FMBs to another Delaware business trust (the "Owner Trust") , a wholly owned
subsidiary of the Origination Trust. The Owner Trust issued two certificates: a
Senior Certificate, with an outstanding face amount of $58,000,000, which was
itself deposited into another Delaware business trust (the "Certificate Trust")
which issued and sold Floater Certificates representing proportional inter-ests
in the Senior Certificate to new investors; and a Residual Certificate
representing the re-maining beneficial ownership interest in the FMBs, which was
issued to the Origination Trust, whose sole owner is the Company. At the same
time, the Owner Trust acquired a municipal bond insurance policy from MBIA to
credit enhance Certificate distributions for the benefit of the holders of the
Floater Certificates and also arranged for a liquidity facility, issued by a
con-sortium of highly rated European banks, with respect to the Floater
Certificates. The Floater Certificates were privately placed raising
$58,000,000, which proceeds were used by the Com-pany to repay outstanding debt
under the Interim Credit Facility and to acquire additional FMBs.
The end result of the transaction is that a portion of the interest received by
the Owner Trust on the FMBs is distributed through the Senior Certificate to the
holders of the Floater Certifi-cates in an amount determined each week by the
remarketing agent ("Goldman Sachs & Co."), as the distribution amount that is
necessary (but not greater than necessary) to enable the re-marketing agent to
sell the Floater Certificates at par on any weekly determination date.
It is anticipated that when the Company has need of additional capital it will
either: (1) cause the Owner Trust to increase the outstanding face amount of the
Senior Certificate from $58,000,000 to no more than $72,312,000 (50% of the
value of the FMBs currently owned by the Owner Trust); or (2) contribute
additional FMBs to the Owner Trust and cause an increase in the outstanding face
amount of the Senior Certificate to an amount that will then be no more than 50%
of the aggregate value of the FMBs then owned by the Owner Trust. The maximum
amount of Floater Certificates that may be issued to raise capital under the
Facility is up to $150 million.
Until the Company causes the Owner Trust to increase the outstanding face amount
of the Senior Certificate, an interim credit facility with Goldman Sachs &
Company (the "Interim Credit Facility") is available to the Company at
prevailing rates of interest for such accounts. At June 30, 1998, the
outstanding balance was $0. Any outstanding balance under the Interim Credit
Facility, which is secured by certain of the Company's FMBs, will be repaid with
pro-ceeds from the Facility, however it is payable on demand.
Although the Facility may be increased, the Company's conservative financing
strategy dictates that the outstanding face amount of the Senior Certificate and
indebtedness under the Interim Credit Facility, together with any other
leveraging of the Company, will not exceed 50% of the Company's total market
value as of the date incurred.
During the period January 1, 1998 through August 14, 1998 the Company acquired
seven FMBs for an aggregate purchase price of $44,560,000, not including bond
selection fees and expenses of approximately $891,000. The purchases were
financed primarily from borrowings under the Interim Credit Facility.
During the six months ended June 30, 1998, cash and cash equivalents of the
Company decreased approximately $900,000. This decrease was primarily due to the
purchase of participating FMBs ($30,960,000), an increase in deferred bond
selection costs ($645,000), the net purchase of temporary investments
($4,750,000), loans made to properties ($530,000), net repay-
16
<PAGE>
ments of notes payable ($21,445,000), an increase in deferred costs relating to
the revolving credit enhanced facility ($1,570,000) and distributions paid
($10,128,000) which exceeded cash provided by operating activities
($11,041,000), principal repayments received from loans made to properties
($96,000), an increase in minority interest ($57,743,000) and an increase in
distribution payable to minority interest ($257,000). Included in the
adjustments to reconcile the net income to cash provided by operating activities
is amortization in the amount of $78,000.
Future liquidity is expected to result from cash generated from the Company's
portfolio of FMBs and interest earned on funds invested in short-term tax-exempt
money market instruments. The Company has entered into forbearance agreements on
several FMBs and may be required to extend these agreements or enter into new
agreements in the future. Such agreements may adversely impact liquidity;
however interest payments from FMBs are anticipated to provide sufficient
liquidity to fund the Company's operating expenditures, debt service and
distributions in future years.
Effective January 1, 1998 the Highland Ridge, Willow Creek, Bristol Village and
Thomas Lake FMBs were modified to reflect a change in their stated interest
rate, allow for deferred base and other interest accrued and unpaid through
December 1997 to be paid at maturity or upon event of sale or refinancing and
extend the mandatory call and prepayment lock-out dates. In addition, the
maturities of the Highland Ridge and Willow Creek FMBs were extended to 2017 and
the maturities of the Bristol Village and Thomas Lake FMBs were extended to 2027
with mandatory call dates at January 2010. The Company is currently anticipating
modifying cer-tain other FMBs, with terms generally similar to those above,
where appropriate.
In August 1998 a distribution of $4,735,205 (.23 per share) which was declared
in June 1998 was paid to the shareholders from cash flow from operations for the
quarter ended June 30, 1998.
Cash Available for Distribution
The Company uses cash available for distribution ("CAD") as the primary measure
of its dividend paying ability. The difference between CAD and net income
results from slight variations between generally accepted accounting principles
("GAAP") and cash received. The primary difference between CAD and GAAP is the
amortization of loan origination costs, the costs of the Facility and the excess
of acquired assets over the cost. These amounts have been excluded from CAD due
to their noncash nature. The second difference is the noncash gain and loss
associated with bond impairments and sales for GAAP purposes, which are not
included in the calculation of CAD. During the three and six months ended June
30, 1998, there were no FMB impairments or sales. CAD should not be considered
an alternative to net income as a measure of the Company's financial performance
or to cash flow from operating activities (computed in accordance with GAAP) as
a measure of the Company's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company's needs.
Cash available for distribution ("CAD") for the three and six months ended June
30, 1998 is summarized in the following table:
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
------------------- -------------
Sources of Cash
Interest income:
Participating first mortgage bonds ....... $ 6,561,808 $ 12,452,072
Temporary investments .................... 62,868 104,394
Promissory notes ......................... 144,631 290,430
Less: Amortization ...................... (99,406) (198,812)
------------ ------------
Total sources of cash .................... 6,669,901 12,648,084
------------ ------------
Uses of Cash
Operating expenses ....................... 1,241,224 2,070,851
Less: Amortization ...................... (74,134) (120,990)
------------ ------------
Total uses of cash ....................... 1,167,090 1,949,861
------------ ------------
Cash available for distribution .......... $ 5,502,811 $ 10,698,223
============ ============
Actual distributions paid ................ $ 5,062,081 $ 10,127,780
============ ============
Payout ratio ............................. 92.0% 94.7%
============ ============
Cash flows from:
Operating activities .................. $ 5,877,038 $ 11,040,806
============ ============
Investing activities .................. $(35,047,836) $(36,788,509)
============ ============
Financing activities .................. $ 19,861,253 $ 24,847,322
============ ============
Results of Operations
For the three and six months ended June 30, 1998 as compared to 1997, total
revenues, total expenses and net income increased and the results of operations
are not comparable due to the Consolidation of Tax Exempt II with two other
Partnerships on October 1, 1997, which resulted in the formation of the Company,
and the acquisition of six FMBs after the Consolidation. The Company's results
of operations for the three and six months ended June 30, 1998 consisted
primarily of the results of the Company's investment in thirty seven FMBs. The
Company's results of operations for the three and six months ended June 30, 1997
consisted primarily of the results of Tax Exempt II's investment in fifteen
FMBs.
General
The determination as to whether it is in the best interest of the Company to
enter into forbearance agreements on the FMBs or, alternatively, to pursue its
remedies under the loan documents, including foreclosure, is based upon several
factors including, but not limited to, property performance, owner cooperation
and projected legal costs.
The difference between the stated interest rates and the rates paid by FMBs is
not accrued as interest income for financial reporting purposes. The accrual of
interest at the stated interest rate will resume once an underlying property's
ability to pay the stated rate has been adequately demonstrated. Interest income
of approximately $1,670,000 and $777,000 was not recognized for the six months
ended June 30, 1998 and 1997, respectively.
17
<PAGE>
Recently Issued Accounting Standards
In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities". This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. Because the
Company does not currently utilize derivatives or engage in hedging activities,
management does not anticipate that implementation of this statement will have a
material effect on the Company's financial statements.
Year 2000 Compliance
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. The Advisor is in the process of working with the Company's service
providers to prepare for the year 2000. Based on information currently
available, the Company does not expect that it will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.
18
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
A proxy and proxy statement soliciting the vote of the Company's
shareholders for the Company's annual meeting of shareholders was sent to
shareholders on or about May 6, 1998. Such meeting was held on June 18, 1998.
Peter T. Allen, Arthur P. Fisch, J. Michael Fried, Stuart J. Boesky and Alan P.
Hirmes were reelected as trustees.
Item 5. Other Information -
Stuart J. Boesky ceased to serve as Chief Executive Officer and Alan P.
Hirmes ceased to serve as Chief Financial Officer and Chief Accounting Officer
effective June 18, 1998. Effective June 18, 1998, J. Michael Fried was elected
Chief Executive Officer and John B. Roche was elected Chief Financial Officer
and Chief Accounting Officer.
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
(a) Exhibits: Sequential Page
--- --------- ---------------
<S> <C> <C>
10(aaan) First Mortgage Bond, dated as of February 2, 1987,
with respect to the Highland Ridge Project in the
principal amount of $15,000,000 (incorporated by
reference to Exhibit 10 (aaan) in the Company's
March 31, 1998 Quarterly Report on Form 10-Q)
10(aaao) First Mortgage Bond, dated as of March 2, 1987,
with respect to the Mortenson I Project in the
principal amount of $6,100,000 (incorporated by
reference to Exhibit 10 (aaao) in the Company's
March 31, 1998 Quarterly Report on Form 10-Q)
10(aaap) First Mortgage Bond, dated as of September 2, 1986,
with respect to the Thomas Lake Place Apartments
Project in the principal amount of $12,975,000
(filed herewith) 22
10(aaaq) First Mortgage Bond, dated as of July 31, 1987,
with respect to the Bristol Village Apartments
Project in the principal amount of $17,000,000
(filed herewith) 38
10(aaar) First Mortgage Bond, dated as of April 20, 1998,
with respect to the Ocean Air Apartments Project in
the principal amount of $10,000,000 (filed
herewith) 53
10(aaas) First Mortgage Bond, dated as of April 28, 1998,
with respect to the Cedarbrook Apartments Project
in the principal amount of $2,840,000 (filed
herewith) 59
10(aaat) First Mortgage Bond, dated as of April 28, 1998,
with respect to the Phoenix Apartments Project in
the principal amount of $3,250,000 (filed herewith) 64
19
<PAGE>
10(aaau) First Mortgage Bond, dated as of April 28, 1998,
with respect to the Stone Creek Project in the
principal amount of $8,820,000 (filed herewith) 69
10(aaav) First Mortgage Bond, dated as of May 20, 1998, with
respect to the Lee Hall Project (Marsh Landings) in
the principal amount of $6,050,000 (filed herewith) 74
10(aaaw) Contribution Agreement between CharterMac and
CharterMac Origination Trust ("Origination Trust")
dated as of May 21, 1998 (filed herewith) 80
10(aaax) Contribution Agreement between Origination Trust
and CharterMac Owner Trust ("Owner Trust") dated as
of May 21, 1998 (filed herewith) 99
10(aaay) Insurance Agreement among MBIA, CharterMac,
Origination Trust, Owner Trust, CharterMac Floater
Certificate Trust ("Floater Certificate Trust"),
First Tennessee Bank National Association ("First
Tennessee"), Related Charter LP, and Bayerische
Landesbank Girozentrale, New York Branch
("Bayerische") dated as of May 21, 1998 (filed
herewith) 119
10(aaaz) Liquidity Agreement among Owner Trust, Floater
Certificate Trust, First Tennessee, MBIA and
Bayerische dated as of May 21, 1998 (filed
herewith) 180
10(aaaaa) Liquidity Pledge and Security Agreement among
Origination Trust, Owner Trust, Floater
Certificate Trust, MBIA, First Tennessee and
Bayerische dated as of May 21, 1998
(filed herewith) 263
10(aaaab) Fee Agreement among Wilmington Trust Company,
Floater Certificate Trust and CharterMac dated as
of May 21, 1998 (filed herewith) 286
10(aaaac) Certificate Placement Agreement (filed herewith) 290
10(aaaad) Remarketing Agreement (filed herewith) 312
27 Financial Data Schedule (filed herewith). 328
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
Date: August 13, 1998 By: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
Managing Trustee, President
and Chief Operating Officer
Date: August 13, 1998 By: /s/ John B. Roche
-----------------
John B. Roche
Chief Financial Officer
and Chief Accounting Officer
UNITED STATES OF AMERICA
STATE OF MINNESOTA
THE CITY OF EAGAN
Multifamily Housing Revenue Bond
(Thomas Lake Place Apartments Project)
Series 1986
Number: R-2
Dated Date: September 2, 1986
Amendment Date: January 1, 1998
Maturity Date: December 31, 2027
Registered Owner: Goldman, Sachs & Co.
Principal Amount: $12,975,000
The City of Eagan (the "Issuer"), a municipal corporation and political
subdivision of the State of Minnesota (the "State"), hereby acknowledges itself
indebted and for value received promises to pay to the registered owner hereof
stated above, or registered assigns, at the maturity date stated above, or
earlier upon redemption or acceleration, but only from the sources and as
hereinafter provided, upon presentation and surrender of this Bond at the
principal office of U.S. Bank Trust National Association (formerly First Trust
Company, Inc.) (the "Trustee") in Saint Paul, Minnesota or its successor as
Fiduciary under the Resolution (described below), the principal amount stated
above, and to pay Interest on said principal amount, from and including the
dated date hereof until the principal amount shall have been paid in accordance
with the terms of this Bond and the Resolution, as and when set forth below, but
only from the sources and as hereinafter provided, by wire transfer if there be
one Owner of all of the Bonds or otherwise by check or draft mailed to the
record Owners of Bonds as the same appear upon the books of registry to be
maintained by the Fiduciary, as registrar. Payments made on the Mortgage Loan to
the Owner of this Bond shall be for the account of the Issuer, shall constitute
payments on this Bond and shall discharge the Issuer's obligations on this Bond
to the extent of such payments, applying any payments first to the Interest
payable on the due date of such payment and thereafter to principal and premium,
if any.
This Bond is one of a series of bonds (the "Bonds") issued pursuant to the
Multifamily Housing Revenue Bond Resolution (Thomas Lake Place Apartments
Project) of the Issuer adopted as of August 1, 1986 (the "Original Resolution")
(as amended and supplemented by a further First Supplemental Resolution of the
Issuer dated as of May 19, 1998, and as further amended and supplemented from
time to time, the "Resolution"),
<PAGE>
and Minnesota Chapters 462C and 462A (the "Act"). Reference is made to the
Resolution and the Act for a full statement of their respective terms.
Capitalized terms used herein and not otherwise defined herein or in the
definitional appendix attached hereto have the respective meanings accorded such
terms in the Resolution, which definitions are expressly incorporated herein by
reference. The Bonds issued under the Resolution are expressly limited to
$12,975,000 principal amount at any time Outstanding and are all of like tenor,
except as to numbers and denominations, and are issued for the purpose of
providing construction and permanent financing for qualified multifamily rental
housing units in the State and of paying certain expenses incidental thereto.
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER. NEITHER THE STATE OF
MINNESOTA NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE BONDS,
AND THE BONDS DO NOT AND SHALL NOT CONSTITUTE A DEBT OF THE STATE OF MINNESOTA.
Interest on the Bonds.
(a) General. The Bonds shall bear interest as provided below.
(b) Base Interest. The Bonds shall bear base interest calculated and
payable as follows (which interest is referred to herein as "Base Interest"):
(1) During the Initial Period, the Bonds shall bear Base
Interest at a rate equal to (A) 10.75% per annum to (and including) the
day which is eight (8) months after the date of original issuance of
the Bonds, and (B) 10.0% per annum thereafter, payable on each payment
date specified in paragraph (e)(1) below up to and including the last
day of the Initial Period.
(2) During the Second Period, the Bonds shall bear Base
Interest at a rate equal to 9.25% per annum to (and including) the 15th
day of the 18th month of the Second Period; 8.5% per annum from the
16th day of the 18th month of the Second Period to (but not including)
the Amendment Date; and 7.5% per annum thereafter, payable on each
payment date specified in paragraph (e)(1) below.
(3) As of the Amendment Date, Base Interest accrued and unpaid
(including interest thereon as provided in Section 7.10 of the Original
Resolution) amounted to $648,623.19 (the "Accrued Base Interest"). Of
this amount, the agreed sum of $400,000 (which sum is referred to as
the "Base Deferred Interest Amount") shall be deferred without interest
until paid. The Base Deferred Interest Amount shall be payable
subsequent to the Amendment Date on any Event of Sale
Page 2
<PAGE>
or Refinancing on the earliest possible payment dates specified in
paragraph (e)(3) below, after the payment of accrued and unpaid Base
Interest (and interest thereon) other than the Base Deferred Interest
Amount. All Accrued Base Interest accrued prior to the Amendment Date in
excess of the Base Deferred Interest Amount is abrogated and discharged.
Notwithstanding that the Base Deferred Interest Amount shall be deferred
without interest until paid as provided in this paragraph (b)(3), any
Base Interest due and payable from and after the Amendment Date which
remains unpaid from time to time (specifically excluding the Base
Deferred Interest Amount) shall accrue interest thereon at the rate of
12.0% per annum, compounded annually, as provided in Section 7.10 of the
Resolution.
Base Interest shall be calculated on the basis of a year of 365 days, actual
days elapsed.
(c) Contingent Interest. Prior to the Amendment Date, the Bonds also
accrued interest calculated and payable as follows:
(1) During each year or part thereof of the Second Period, to
(but not including) the Amendment Date, the Bonds accrued interest at
an annual rate equal to the Primary Contingent Interest Rate (as
defined in the Original Resolution) payable on the basis and to the
extent of 100% of Net Cash Flow for each such year or part thereof, or,
to the extent not fully paid on or before the Amendment Date because
100% of Net Cash Flow was insufficient, on the basis and to the extent
of 100% of Net Sale or Refinancing Proceeds.
Prior to the Amendment Date, no payments of Primary Contingent
Interest (as defined in the Original Resolution) were made from either
Net Cash Flow or Net Sale or Refinancing Proceeds. From and after the
Amendment Date no further Primary Contingent Interest, or interest
thereon, shall accrue, and all accrued and unpaid Primary Contingent
Interest (constituting "Primary Deferred Interest" as defined in the
Original Resolution) as of the Amendment Date shall be due and payable,
if at all, in accordance with the Interest Assignment (as defined in
the Resolution).
(2) During each year or part thereof of the Second Period, to
(but not including) the Amendment Date, the Bonds also accrued interest
at an annual rate equal to the Supplemental Contingent Interest Rate
(as defined in the Original Resolution) payable on the basis and to the
extent of 25% of Net Cash Flow for each such year or part thereof, or,
to the extent not fully paid on or before the
Page 3
<PAGE>
Amendment Date because 25% of Net Cash Flow was insufficient, on the
basis and to the extent of 25% of Net Sale or Refinancing Proceeds.
Prior to the Amendment Date, no payments of Supplemental Contingent
Interest (as defined in the Original Resolution) were made from either
Net Cash Flow or Net Sale or Refinancing Proceeds. From and after the
Amendment Date no further Supplemental Contingent Interest, or interest
thereon, shall accrue, and all accrued and unpaid Supplemental
Contingent Interest (constituting "Supplemental Deferred Interest" as
defined in the Original Resolution) as of the Amendment Date shall be
due and payable, if at all, in accordance with the Interest Amendment
(as defined in the Resolution).
(d) Construction Period Deferred and Contingent Interest. During the
Initial Period, the Bonds accrued interest at an annual rate equal to the
Construction Period Deferred and Contingent Interest Rate (as defined in the
Original Resolution) payable from 25% of certain portions of Net Cash Flow
during the Second Period, or, to the extent not fully paid because 25% of Net
Cash Flow was insufficient, on the basis and to the extent of 25% of certain Net
Sale or Refinancing Proceeds.
Prior to the Amendment Date, no payments of Construction Period Deferred and
Contingent Interest (as defined in the Original Resolution) were made from
either Net Cash Flow or Net Sale or Refinancing Proceeds. All Construction
Period Deferred and Contingent Interest accrued and unpaid as of the Amendment
Date is abrogated and discharged. From and after the Amendment Date, no further
Construction Period Deferred and Contingent Interest shall accrue or be due or
payable.
(e) Payment Dates for Interest. The Interest payable on the Bonds as
provided above shall be payable on the following dates:
(1) Base Interest shall be payable (i) on each Interest
Payment Date for Base Interest, (ii) on each redemption date before the
Conversion Date (but only with respect to the Bonds redeemed), and
(iii) on the Conversion Date.
(2) Reserved.
(3) The Base Deferred Interest Amount shall be payable on any
Event of Sale or Refinancing, on the next Interest Payment Date for any
interest succeeding by at least thirty (30) days the date of such Event
of Sale or Refinancing relating to the Sale of the Project
Page 4
<PAGE>
or Refinancing of the Project, except in the case of (x) a Refinancing
of the Project described in clause (i) or (iv) of the definition
thereof, in which case it shall be payable on the redemption date or
payment date, as the case may be, (y) a Sale of the Project described
in clause (i) of the definition thereof resulting in a call of the
Bonds for redemption pursuant to Section 4.01(f) of the Resolution, in
which case it shall be payable on the redemption date, or (z) a
Refinancing of the Project described in clause (ii) of the definition
thereof, in which case it shall be payable on the Initial Remarketing
Date.
(f) Annual Audit. No later than March 30 of each calendar year (up to
and, unless the Conversion Date falls before delivery of the audit, including
the calendar year in which the Conversion Date occurs) the Developer shall
provide to the Issuer, the Trustee and the Owners of the Bonds (if fewer than
three) an audit of the operations of the Project for the preceding calendar year
prepared and certified by an Accountant acceptable to the Trustee and the Owners
(if fewer than three) in accordance with generally accepted auditing standards.
(g) Reserved.
(h) Interest During a Variable Rate Period. From and after the Initial
Remarketing Date (if all of the Bonds then Outstanding have been remarketed as
provided in the Resolution on the Initial Remarketing Date in accordance with
the Resolution) the Bonds shall bear interest at a rate determined as follows:
(1) On a Business Day not prior to ten (10) Business Days
prior to the Initial Remarketing Date and each subsequent Remarketing
Date, the Remarketing Agent, having due regard to prevailing market
conditions, shall determine the interest rate which may vary based upon
an independent index (the "Variable Rate") which, if borne by the
Remarketed Bonds on such date, would be the interest rate, but would
not exceed the interest rate, which would result in the market value of
the Remarketed Bonds on such day (as if such day were the first day of
such Remarketing Period) being 100% of the principal amount thereof
(together with interest if any, accrued thereon); provided, however,
that in no event shall the Variable Rate exceed 16% per annum or the
maximum lawful rate, whichever is less. If for any reason the Variable
Rate so determined by the Remarketing Agent shall be held to be invalid
or unenforceable by a court of competent jurisdiction, the Remarketing
Agent shall determine the interest rate for such Remarketing Period,
which shall be a percentage of the 11-Bond Index (as published in The
Bond Buyer; or if such Index is not available, an index comparable to
such Index, in the judgment of the Remarketing
Page 5
<PAGE>
Agent) for the most recent period for which information is available, computed
in accordance with the following table:
<TABLE>
<CAPTION>
If the length of But the length of The applicable
the Remarketing the Remarketing percentage of
Period (in years) Period (in years) the 11-Bond
is at least: is less than: Index is:
- ---------------------- ----------------- ---------------
<S> <C> <C>
5 or greater (N.A.) 85%
1 5 80
</TABLE>
The Remarketing Agent shall promptly, upon the determination of the Variable
Rate, notify the Issuer, the Developer, the Owners and the Trustee of the
Variable Rate. The determination of the Variable Rate for a Remarketing Period
shall be conclusive and binding upon the Owners of the Bonds, the Issuer, the
Trustee and the Developer. The Trustee shall immediately give written notice
(which may include written notice by electronic means) to the Owners of all of
the Bonds of the Variable Rate for the period between the next succeeding
Remarketing Date and the second succeeding Remarketing Date.
(2) No more than sixty (60) days, but at least forty-five (45)
days prior to the Initial Remarketing Date, the Developer shall notify
the Owners (if no more than three), the Trustee and the Remarketing
Agent of the length of the proposed Remarketing Period commencing on
the Initial Remarketing Date, which shall extend for one (1) or more
years. Subsequent to the Initial Remarketing Date, the Developer will
establish subsequent Remarketing Dates as follows: no more than sixty
(60) days, but at least forty-five (45) days, prior to each Remarketing
Date, the Developer will notify the Owners of the Bonds, the Issuer,
the Trustee and the Remarketing Agent of the proposed subsequent
Remarketing Date, which shall be one (1) or more years from the next
Remarketing Date. The Developer shall also specify the interest payment
dates if different than January 1 and July 1; provided that the
interest payment dates specified may be no more frequent than once each
month.
(3) Notice of the Remarketing Date shall be given by the
Trustee not later than the twenty-fifth (25th) day preceding such
Remarketing Date by registered or certified mail to the Owners of all
Outstanding Bonds and such notice shall state that the Bonds are
subject to mandatory tender on the Remarketing Date, unless the Owner
thereof waives such tender, shall indicate the subsequent Remarketing
Date, if any, and shall include a form to indicate the election not to
tender Bonds.
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<PAGE>
(4) Interest on the Bonds during the Variable Rate Period
shall be payable on each Interest Payment Date therefor and shall be
calculated, to the extent allowed by applicable law, on the basis of a
year of 365 days and the actual number of days elapsed.
Notwithstanding anything elsewhere contained in the Resolution, (a) total
Interest paid on the Bonds (including any Interest payable in accordance with
Section 7.10 of the Resolution), cumulative from the original date of issuance
of the Bonds, shall not exceed the sum of 12.0% per annum, simple and
noncompounded, for each year (calculated on the basis of a 365-day year, actual
number of days elapsed) from such date of issuance of the Bonds to the date of
calculation; and (b) if the interest rate on the Bonds shall at any time be
deemed to be in excess of the maximum rate allowed by law then the Bonds shall
instead bear interest at the maximum rate permitted by such law. Any excess
payment of such interest shall be deemed to be a credit against the unpaid
principal amount of the Bonds.
The foregoing interest provisions are a summary of those contained in
the Resolution, and reference is hereby made to the Resolution for a full
statement of their terms, which are incorporated herein by reference.
Limited Recourse. Pursuant to a Loan Agreement dated as of August 1,
1986, as amended (the "Loan Agreement"), and a Note dated September 2, 1986, as
amended (the "Note"), Thomas Lake Housing Associates, a Limited Partnership, a
Minnesota limited partnership (the "Developer"), has agreed to make payments to
the Issuer in amounts equal to amounts of principal of and premium, if any, and
Interest on the Bonds. THE OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY
LIMITED TO AND ARE PAYABLE SOLELY FROM (I) THE PAYMENTS MADE PURSUANT TO THE
LOAN AGREEMENT AND THE NOTE BY THE DEVELOPER, AND THE SECURITY THEREFOR PROVIDED
BY THE BUILDING LOAN MORTGAGE AND SECURITY AGREEMENT FROM THE DEVELOPER TO THE
ISSUER, DATED AS OF AUGUST 1, 1986, AS AMENDED (THE "MORTGAGE"), AND THE
ASSIGNMENT OF LEASES, RENTS AND OTHER INCOME FROM THE DEVELOPER TO THE ISSUER,
DATED AS OF AUGUST 1, 1986, AS AMENDED (THE "ASSIGNMENT OF LEASES"), ALL OF
WHICH HAVE BEEN ASSIGNED TO CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
("CHARTERMAC") AS SUCCESSOR (BY MERGER) TO SUMMIT TAX EXEMPT BOND FUND, L.P.
("SUMMIT") PURSUANT TO AN ASSIGNMENT AGREEMENT FROM THE ISSUER TO SUMMIT DATED
AS OF AUGUST 1, 1986 AND (II) ANY ADDITIONAL SECURITY PROVIDED IN THE
RESOLUTION. THE OBLIGATIONS OF THE DEVELOPER UNDER THE LOAN AGREEMENT, THE NOTE
AND THE MORTGAGE ARE NON-RECOURSE TO THE DEVELOPER, AND ARE ENFORCEABLE SOLELY
AGAINST THE PROJECT, EXCEPT AS OTHERWISE PROVIDED THEREIN. ANY PAYMENTS MADE ON
THE
Page 7
<PAGE>
MORTGAGE LOAN TO THE OWNER OF THIS BOND SHALL BE FOR THE ACCOUNT OF THE ISSUER,
SHALL CONSTITUTE PAYMENTS ON THIS BOND AND SHALL DISCHARGE THE ISSUER'S
OBLIGATIONS ON THIS BOND TO THE EXTENT OF SUCH PAYMENT, APPLYING ANY PAYMENT TO
INTEREST FIRST.
Transfer. This Bond is transferable by the registered owner hereof in
person or by his attorney duly authorized in writing at the office of the
Trustee as registrar, but only in the manner, subject to the limitations and
upon payment of the charges provided in the Resolution, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds, of
any authorized denomination or denominations, of the same maturity and for the
same aggregate principal amount will be issued to the transferee in exchange
herefor.
Prior to the Conversion Date a Bond may only be transferred (i) to any
affiliate of the Partnership, to an affiliate of one of the general partners of
the Partnership, to any entity arising out of any merger or consolidation of the
Partnership, by operation of law, or to a trustee in bankruptcy of the
Partnership; (ii) by an assignment to a bank or other financial institution
issuing a letter of credit or like instrument in connection with the Mortgage
Loan; or (iii) to one or more Institutional Investors if, in each instance, the
Issuer and the Trustee receive from the transferee (A) its agreement to the
transfer restrictions set forth in this paragraph in connection with subsequent
transfers of the Bond and (B) evidence of the assignment by the transferor to
the transferee (or, if there is to be thereafter more than one Owner of the
Bonds, evidence of the appointment and acceptance of a Trustee and assignment to
the Trustee) of the transferor's rights in and to the Mortgage Loan and the
other rights and interests as theretofore conveyed to it by the Assignment, or
an assignment of the Assignment.
The Bonds are issuable as fully registered Bonds in Authorized
Denominations as provided in the Resolution.
Redemption of Bonds. The Bonds are subject to redemption by the Issuer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Resolution.
Remarketing in Lieu of Redemption of Bonds on Initial Remarketing Date.
Upon an election by the Owner of a redemption in whole of the Bonds pursuant to
Section 4.01(h) of the Resolution, at the direction of the Developer given not
less than sixty (60) days in advance, either (i) the Bonds shall be redeemed on
the date specified in the notice to the Issuer, the Trustee, and the Developer
from the Owners described in Section 4.01(h) of the Resolution or (ii) the Bonds
will be deemed tendered for
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<PAGE>
purchase and remarketed as provided in Article V of the Resolution on the date
specified in the notice to the Issuer, the Trustee, and the Developer from the
Owner described in Section 4.01(h), or on such earlier Interest Payment Date
selected by the Developer in its direction to remarket the Bonds but in no event
before the first Interest Payment Date following the Reference Month in 2002.
Failure by the Developer to make an election shall be deemed an election in
favor of redemption. The Bonds may only be remarketed if the conditions
specified in the Resolution are met. The purchase price of Bonds so remarketed
in lieu of redemption shall be the principal amount thereof together with all
accrued and unpaid Interest (including all Base Interest and the Base Deferred
Interest Amount) and all unpaid Interest and shall be payable on the Initial
Remarketing Date. If the conditions to remarketing of the Bonds set forth in
Article V of the Resolution are not satisfied, or if the Bonds are not
successfully remarketed, or if the full purchase price thereof is not paid or
available for payment on the Initial Remarketing Date, or if all Interest
(including the Base Deferred Interest Amount) and principal payable on the Bonds
up to and including the Initial Remarketing Date has not been fully paid, then
all Bonds tendered shall be redeemed and not remarketed pursuant to Section
4.01(e) of the Resolution.
Mandatory Tender of Bonds. The Bonds shall be subject to mandatory
tender to the Remarketing Agent on each Remarketing Date after the Initial
Remarketing Date for purchase by the Remarketing Agent, at a purchase price
equal to the principal amount thereof plus accrued Interest to the purchase
date; provided, however, that there need not be tendered on such Remarketing
Date any Bonds with respect to which the Remarketing Agent shall have received
from the Owners thereof a written notice at least five (5) Business Days prior
to the applicable Remarketing Date expressly electing not to tender their Bonds
for purchase. Any such election may not relate to a portion of any Bond held by
the Owner, such election may apply only to the entire principal amount of any
Bond or Bonds.
Tendered Bonds. Any Bonds that are the subject of mandatory tender for
purchase but are not the subject of elections to retain the Bonds received by
the Remarketing Agent in a timely fashion shall be conclusively deemed tendered
for purchase on the Remarketing Date. If the Owner selects a redemption date for
redemption of the Bonds in accordance with Section 4.01(h) of the Resolution and
the Developer makes the remarketing election permitted by Section 4.04 of the
Resolution, all Bonds shall be conclusively deemed tendered for purchase on the
Initial Remarketing Date. All Bonds that are actually tendered for purchase
pursuant to the Resolution or are deemed tendered for purchase on a Remarketing
Date, including the Initial Remarketing Date, shall constitute tendered Bonds
for purposes of the Resolution; all tendered Bonds that are not actually
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<PAGE>
delivered for purchase on a Remarketing Date, including the Initial Remarketing
Date shall constitute "Undelivered Bonds" for purposes of the Resolution.
Subject to Sections 4.01(e) and 4.04 of the Resolution, Undelivered Bonds that
have been remarketed in accordance with the Resolution shall be deemed to have
been purchased if the Bonds have been remarketed and if the purchase price
therefor shall have been deposited therefor and held by the Remarketing Agent;
and the parties to whom the Remarketing Agent shall have so remarketed
Undelivered Bonds shall be the owners of such Undelivered Bonds for all purposes
under the Resolution, including without limitation the right to transfer such
Bonds. Interest accruing from and after the Remarketing Date on such Undelivered
Bonds shall no longer be payable to the former Owners thereof but shall be paid
to the new registered Owners thereof. Former Owners of Undelivered Bonds so
remarketed shall not be deemed to be Owners of Bonds under the Resolution, and
such Undelivered Bonds shall not be deemed Outstanding for purposes of the
Resolution, except for purposes of payment of the purchase price of such
Undelivered Bonds upon surrender thereof to the Remarketing Agent.
Enforcement. Only the Acting Party shall have the right to enforce the
provisions of this Bond or the Resolution or to institute any action to enforce
the covenants herein or therein, or to take any action with respect to any Event
of Default under the Resolution, or to institute, appear in or defend any suit
or other proceedings with respect thereto, except as provided in the Resolution.
If an Event of Default occurs and is continuing, the principal of all Bonds then
outstanding may be declared due and payable by the Acting Party upon the
conditions and in the manner and with the effect provided in the Resolution.
The Issuer, the Trustee, and any other person may treat the person in
whose name this Bond is registered on the books of registry as the Owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Bond be overdue, and no person shall be affected
by notice to the contrary.
Discharge. The Resolution prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Resolution, except for the
purposes of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Resolution, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Resolution.
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<PAGE>
By its acceptance of this Bond, the Owner hereof agrees that it will be
bound by and accepts the provisions of the Resolution and the Loan Documents (as
defined in the Loan Agreement). This Bond shall not be valid or obligatory for
any purpose until it shall have been signed on behalf of the Issuer and such
signature attested, by the officer, and in the manner, provided in the
Resolution, and authenticated by a duly authorized officer of the Trustee, as
Authenticating Agent.
It is hereby certified and recited that all conditions, acts and things
required by the Constitution or statutes of the State or by the Act or the
Resolution to exist, to have happened or to have been performed precedent to or
in the issuance of this Bond exist, have happened and have been performed and
that the issue of the Bonds, together with all other indebtedness of the Issuer,
is within every debt and other limit prescribed by said Constitution or
statutes.
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<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as of the
Amendment Date stated above.
CITY OF EAGAN
By: /s/ [illegible]
------------------------------------
Mayor
By: /s/ [illegible]
------------------------------------
City Clerk
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<PAGE>
FORM OF CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned
Resolution and is one of the Multifamily Housing Revenue Bonds (Thomas Lake
Place Apartments Project) Series 1986 of the City of Eagan.
U.S. BANK TRUST NATIONAL ASSOCIATION
(formerly First Trust Company, Inc.)
as Trustee
By: /s/ [illegible]
------------------------------------
Authorized Officer
Date of Authentication:
July 23, 1998
- -------
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________________________________the
within Multifamily Housing Revenue Bond (Thomas Lake Place Apartments Project)
Series 1986, of the City of Eagan and hereby authorizes the transfer of this
Bond on the registration books of the Trustee.
Dated:
-------------------
-----------------------------------
Authorized Signature
-----------------------------------
Name of Transferor
Signature Guaranteed by:
-----------------------------------
-----------------------------------
Name of Bank
By:
-------------------------------
Title:
----------------------------
<PAGE>
DEFINITIONAL APPENDIX
"Amendment Date" shall mean January 1, 1998.
"Interest" shall mean all Base Interest (including the Base Deferred
Interest Amount), any interest thereon as provided in Section 7.10 of the
Resolution, and, subject to Section 3.12 of the Resolution, any and all amounts
paid other than principal of and premium with respect to the Bonds.
"Reference Month" shall mean the Month of January in each case.
"Refinancing of the Project" means (i) any redemption of the Bonds in
whole (or the requirement that the Bonds be redeemed in whole) (including such a
redemption or requirement pursuant to a Sale of the Project described in clause
(ii) of the definition thereof, but excluding such a redemption or requirement
pursuant to a Sale of the Project described in clause (i) of the definition
thereof) on or before the Conversion Date, (ii) a remarketing of all of the
Bonds on the Initial Remarketing Date (or the delivery of the required notice to
the Fiduciary by the Remarketing Agent on the Initial Remarketing Date that the
remarketing of all of the Bonds will occur on the Initial Remarketing Date
according to the terms hereof), (iii) a secondary financing of the Project in
which the Project is further encumbered to secure the financing or (iv) a
payment in full of the Bonds upon maturity, acceleration or otherwise on or
before the Conversion Date (or the requirement that the Bonds be so paid)
(including such a payment or requirement that is a redemption or requirement for
redemption pursuant to a Sale of the Project described in clause (ii) of the
definition thereof, but excluding such a payment or requirement that is a
redemption or requirement for redemption pursuant to a Sale of the Project
described in clause (i) of the definition thereof).
"Sale of the Project" means (i) a sale, transfer or other disposition
of more than a 10% interest in the Project in any one transaction or more
than one transaction occurring within any three year period (aggregating all
dispositions during any such period for purposes of calculation), or (ii) a
sale, transfer or other disposition of more than a 50% interest in the entity or
entities which own, directly or indirectly, more than a 50% interest in the
Project within any three year period to one or more persons or entities acting
in concert (aggregating all dispositions during any such period for purposes of
calculation). There shall be excluded from clause (ii) of the preceding
sentence, however, a transfer on account of death without consideration or with
consideration if the transfer is to an existing partner or to the Developer.
Indirect ownership by an entity or entities of an interest in the Project shall
be measured by multiplying the percentage of interest such entity or entities
own in the entity or entities that own directly
<PAGE>
an interest in the Project times the percentage of interest in the Project so
owned directly. For purposes of this definition, an interest in the Project or
an entity or entities shall include, without limitation, an interest
representing legal ownership, an equitable interest or an economic interest.
UNITED STATES OF AMERICA
STATE OF MINNESOTA
THE CITY OF BLOOMINGTON
Multifamily Housing Revenue Refunding Bond
(Bristol Village Apartments Project)
Series 1987
Number: R-2
Dated Date: July 31, 1987
Amendment Date: January 1, 1998
Maturity Date: December 31, 2027
Registered Owner: Goldman, Sachs & Co.
Principal Amount: $17,000,000
The City of Bloomington (the "Issuer"), a municipal corporation and political
subdivision of the State of Minnesota (the "State"), hereby acknowledges itself
indebted and for value received promises to pay to the registered owner hereof
stated above, or registered assigns, at the maturity date stated above, or
earlier upon redemption or acceleration, but only from the sources and as
hereinafter provided, upon presentation and surrender of this Bond at the
principal office of U.S. Bank Trust National Association (formerly First Trust
Company, Inc.) (the "Trustee") in Saint Paul, Minnesota or its successor as
Fiduciary under the Indenture (described below), the principal amount stated
above, and to pay Interest on said principal amount, from and including the
dated date hereof until the principal amount shall have been paid in accordance
with the terms of this Bond and the Indenture, as and when set forth below, but
only from the sources and as hereinafter provided, by wire transfer if there be
one Owner of all of the Bonds or otherwise by check or draft mailed to the
record Owners of Bonds as the same appear upon the books of registry to be
maintained by the Fiduciary, as registrar. Payments made on the Mortgage Loan to
the Owner of this Bond shall be for the account of the Issuer, shall constitute
payments on this Bond and shall discharge the Issuer's obligations on this Bond
to the extent of such payments, applying any payments first to the Interest
payable on the due date of such payment and thereafter to principal and premium,
if any.
This Bond is one of a series of bonds (the "Bonds") issued pursuant to the terms
of an Indenture of Trust dated as of June 1, 1987 between the Issuer and the
Trustee (the "1987 Indenture"), as amended and supplemented by a First
Supplemental Indenture dated as of January 1, 1998 (the "First Supplemental
Indenture") between the Issuer and the Trustee (the 1987 Indenture and the First
Supplemental Indenture, as further amended or
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<PAGE>
supplemented from time to time, being hereinafter collectively referred to as
the "Indenture"), and Minnesota Statutes, Chapters 462C and 462A (the "Act").
Reference is made to the Indenture and the Act for a full statement of their
respective terms. Capitalized terms used herein and not otherwise defined herein
or in the definitional appendix attached hereto have the respective meanings
accorded such terms in the Indenture, which definitions are expressly
incorporated herein by reference. The Bonds issued under the Indenture are
expressly limited to $17,000,000 principal amount at any time Outstanding and
are all of like tenor, except as to numbers and denominations, and are issued
for the purpose of providing construction and permanent financing for qualified
multifamily rental housing units in the State and of paying certain expenses
incidental thereto.
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER. NEITHER THE STATE OF
MINNESOTA NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE BONDS,
AND THE BONDS DO NOT AND SHALL NOT CONSTITUTE A DEBT OF THE STATE OF MINNESOTA.
Interest on the Bonds.
(a) General. The Bonds shall bear interest as provided below.
(b) Base Interest. The Bonds shall bear base interest calculated and
payable as follows (which interest is referred to herein as "Base Interest"):
(1) During the Initial Period, the Bonds shall bear Base
Interest at a rate equal to (A) 9.25% per annum to (and including) the
365th day of the Initial Period, and (B) 9.00% per annum thereafter,
payable on each payment date specified in paragraph (e)(1) below up to
and including the last day of the Initial Period.
(2) During the Second Period, the Bonds shall bear Base
Interest at a rate equal to 9.0% per annum for the first 549 days
thereof; 8.0% per annum from the 550th day to (but not including) the
Amendment Date; and 7.5% per annum thereafter, payable on each payment
date specified in paragraph (e)(1) below.
(3) The Bonds shall also bear Additional Interest payable to (or
upon the order of) the registered Owners of the Bonds on the first
Interest Payment Date for Base Interest in an amount equal to $680,000.
(4) As of the Amendment Date, Base Interest accrued and unpaid
(including interest thereon as provided in Section 7.10 of the
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<PAGE>
1987 Indenture) amounted to $549,970.73 (the "Accrued Base Interest").
Of this amount, the agreed sum of $400,000 (which sum is referred to as
the "Base Deferred Interest Amount") shall be deferred without interest
until paid. The Base Deferred Interest Amount shall be payable
subsequent to the Amendment Date on any Event of Sale or Refinancing on
the earliest possible payment dates specified in paragraph (e)(3) below,
after the payment of accrued and unpaid Base Interest (and interest
thereon) other than the Base Deferred Interest Amount. All Accrued Base
Interest accrued prior to the Amendment Date in excess of the Base
Deferred Interest Amount is abrogated and discharged.
Notwithstanding that the Base Deferred Interest Amount shall be deferred
without interest until paid as provided in this paragraph (b)(3), any
Base Interest due and payable from and after the Amendment Date which
remains unpaid from time to time (specifically excluding the Base
Deferred Interest Amount) shall accrue interest thereon at the rate of
12.0% per annum, compounded annually, as provided in Section 7.10 of the
Indenture.
Base Interest shall be calculated on the basis of a year of 365 days, actual
days elapsed.
(c) Contingent Interest. Prior to the Amendment Date, the Bonds also
accrued interest calculated and payable as follows:
(1) During each year or part thereof of the Second Period, to
(but not including) the Amendment Date, the Bonds accrued interest at an
annual rate equal to the Primary Contingent Interest Rate (as defined in
the 1987 Indenture) payable on the basis and to the extent of 100% of
Net Cash Flow for each such year or part thereof, or, to the extent not
fully paid on or before the Amendment Date because 100% of Net Cash Flow
was insufficient, on the basis and to the extent of 100% of Net Sale or
Refinancing Proceeds.
Prior to the Amendment Date, no payments of Primary Contingent
Interest (as defined in the 1987 Indenture) were made from either Net
Cash Flow or Net Sale or Refinancing Proceeds. From and after the
Amendment Date no further Primary Contingent Interest, or interest
thereon, shall accrue, and all accrued and unpaid Primary Contingent
Interest (constituting "Primary Deferred Interest" as defined in the
1987 Indenture) as of the Amendment Date shall be due and payable, if at
all, in accordance with the Interest Assignment (as defined in the
Indenture).
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<PAGE>
(2) During each year or part thereof of the Second Period, to
(but not including) the Amendment Date, the Bonds accrued interest at an
annual rate equal to the Supplemental Contingent Interest Rate (as
defined in the 1987 Indenture) payable on the basis and to the extent of
25% of Net Cash Flow for each such year or part thereof, or, to the
extent not fully paid on or before the Amendment Date because 25% of Net
Cash Flow was insufficient, on the basis and to the extent of 25% of Net
Sale or Refinancing Proceeds.
Prior to the Amendment Date, no payments of Supplemental
Contingent Interest (as defined in the 1987 Indenture) were made from
either Net Cash Flow or Net Sale or Refinancing Proceeds. From and after
the Amendment Date no further Supplemental Contingent Interest, or
interest thereon, shall accrue, and all accrued and unpaid Supplemental
Contingent Interest (constituting "Supplemental Deferred Interest" as
defined in the 1987 Indenture) as of the Amendment Date shall be due and
payable, if at all, in accordance with the Interest Assignment (as
defined in the Indenture).
(d) Reserved.
(e) Payment Dates for Interest. The Interest payable on the Bonds as
provided above shall be payable on the following dates:
(1) Base Interest shall be payable (i) on each Interest Payment
Date for Base Interest, (ii) on each redemption date before the
Conversion Date (but only with respect to the Bonds redeemed), and (iii)
on the Conversion Date.
(2) Reserved.
(3) The Base Deferred Interest Amount shall be payable on any
Event of Sale or Refinancing, on the next Interest Payment Date for any
interest succeeding by at least thirty (30) days the date of such Event
of Sale or Refinancing relating to the Sale of the Project or
Refinancing of the Project, except in the case of (x) a Refinancing of
the Project described in clause (i) or (iv) of the definition thereof,
in which case it shall be payable on the redemption date or payment
date, as the case may be, (y) a Sale of the Project described in clause
(i) of the definition thereof resulting in a call of the Bonds for
redemption pursuant to Section 4.01(f) of the Indenture, in which case
it shall be payable on the redemption date, or (z) a Refinancing of the
Project described in clause (ii) of the definition thereof, in which
case it shall be payable on the Initial Remarketing Date.
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<PAGE>
(f) Annual Audit. No later than March 30 of each calendar year (up to
and, unless the Conversion Date falls before delivery of the audit, including
the calendar year in which the Conversion Date occurs) the Developer shall
provide to the Issuer, the Trustee and the Owners of the Bonds (if fewer than
three) an audit of the operations of the Project for the preceding calendar year
prepared and certified by an Accountant acceptable to the Trustee (subject to
Sections 8.02(c) of the Indenture) and the Owners (if fewer than three) in
accordance with generally accepted auditing standards.
(g) Reserved.
(h) Interest During a Variable Rate Period. From and after the Initial
Remarketing Date (if all of the Bonds then Outstanding have been remarketed as
provided in the Indenture on the Initial Remarketing Date in accordance with the
Indenture) the Bonds shall bear interest at a rate determined as follows:
(1) On a Business Day not prior to ten (10) Business Days prior
to the Initial Remarketing Date and each subsequent Remarketing Date,
the Remarketing Agent, having due regard to prevailing market
conditions, shall determine the interest rate which may vary based upon
an independent index (the "Variable Rate") which, if borne by the
Remarketed Bonds on such date, would be the interest rate, but would not
exceed the interest rate, which would result in the market value of the
Remarketed Bonds on such day (as if such day were the first day of such
Remarketing Period) being 100% of the principal amount thereof (together
with interest if any, accrued thereon); provided, however, that in no
event shall the Variable Rate exceed 16% per annum or the maximum lawful
rate, whichever is less. If for any reason the Variable Rate so
determined by the Remarketing Agent shall be held to be invalid or
unenforceable by a court of competent jurisdiction, the Remarketing
Agent shall determine the interest rate for such Remarketing Period,
which shall be a percentage of the 11-Bond Index (as published in The
Bond Buyer; or if such Index is not available, an index comparable to
such Index, in the judgment of the Remarketing Agent) for the most
recent period for which information is available, computed in accordance
with the following table:
<TABLE>
<CAPTION>
If the length of But the length of The applicable
the Remarketing the Remarketing percentage of
Period (in years) Period (in years) the 11-Bond
is at least: is less than: Index is:
---------------- ----------------- ---------------
<S> <C> <C>
5 or greater (N.A.) 85%
1 5 80
</TABLE>
Page 5
<PAGE>
The Remarketing Agent shall promptly, upon the determination of the
Variable Rate, notify the Issuer, the Developer, the Owners and the
Trustee of the Variable Rate. The determination of the Variable Rate for
a Remarketing Period shall be conclusive and binding upon the Owners of
the Bonds, the Issuer, the Trustee and the Developer. The Trustee shall
immediately give written notice (which may include written notice by
electronic means) to the Owners of all of the Bonds of the Variable Rate
for the period between the next succeeding Remarketing Date and the
second succeeding Remarketing Date.
(2) No more than sixty (60) days, but at least forty-five (45)
days prior to the Initial Remarketing Date, the Developer shall notify
the Owners (if no more than three), the Trustee and the Remarketing
Agent of the length of the proposed Remarketing Period commencing on the
Initial Remarketing Date, which shall extend for one (1) or more years.
Subsequent to the Initial Remarketing Date, the Developer will establish
subsequent Remarketing Dates as follows: no more than sixty (60) days,
but at least forty-five (45) days, prior to each Remarketing Date, the
Developer will notify the Owners of the Bonds, the Issuer, the Trustee
and the Remarketing Agent of the proposed subsequent Remarketing Date,
which shall be one (1) or more years from the next Remarketing Date. The
Developer shall also specify the interest payment dates if different
than January I and July 1; provided that the interest payment dates
specified may be no more frequent than once each month.
(3) Notice of the Remarketing Date shall be given by the Trustee
not later than the twenty-fifth (25th) day preceding such Remarketing
Date by registered or certified mail to the Owners of all Outstanding
Bonds and such notice shall state that the Bonds are subject to
mandatory tender on the Remarketing Date, unless the Owner thereof
waives such tender, shall indicate the subsequent Remarketing Date, if
any, and shall include a form to indicate the election not to tender
Bonds.
(4) Interest on the Bonds during the Variable Rate Period shall
be payable on each Interest Payment Date therefor and shall be
calculated, to the extent allowed by applicable law, on the basis of a
year of 365 days and the actual number of days elapsed.
Notwithstanding anything elsewhere contained in the Indenture, (a) total
Interest paid on the Bonds (including any Interest payable in accordance with
Section 7.10 of the Indenture), cumulative from the original date of issuance of
the Bonds, shall not exceed the sum of 12.0% per annum,
Page 6
<PAGE>
simple and noncompounded, for each year (calculated on the basis of a 365-day
year, actual number of days elapsed) from such date of issuance of the Bonds to
the date of calculation; and (b) if the interest rate on the Bonds shall at any
time be deemed to be in excess of the maximum rate allowed by law then the Bonds
shall instead bear interest at the maximum rate permitted by such law. Any
excess payment of such interest shall be deemed to be a credit against the
unpaid principal amount of the Bonds.
The foregoing interest provisions are a summary of those contained in
the Indenture, and reference is hereby made to the Indenture for a full
statement of their terms, which are incorporated herein by reference.
Limited Recourse. Pursuant to a Loan Agreement dated as of June 1, 1987,
as amended (the "Loan Agreement"), and a Note dated July 31, 1987, as amended
(the "Note"), Bristol Apartments Limited Partnership, a Minnesota limited
partnership (the "Developer"), has agreed to make payments to the Issuer in
amounts equal to amounts of principal of and premium, if any, and interest on
the Bonds. THE OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY LIMITED TO
AND ARE PAYABLE SOLELY FROM (I) THE PAYMENTS MADE PURSUANT TO THE LOAN AGREEMENT
AND THE NOTE BY THE DEVELOPER, AND THE SECURITY THEREFOR PROVIDED BY THE
BUILDING LOAN MORTGAGE AND SECURITY AGREEMENT FROM THE DEVELOPER TO THE TRUSTEE,
DATED AS OF JUNE 1, 1987, AS AMENDED (THE "MORTGAGE"), AND THE ASSIGNMENT OF
LEASES, RENTS AND OTHER INCOME FROM THE DEVELOPER TO THE TRUSTEE, DATED AS OF
JUNE 1, 1987, AS AMENDED (THE "ASSIGNMENT OF LEASES"), ALL OF WHICH HAVE BEEN
ASSIGNED TO THE TRUSTEE PURSUANT TO THE INDENTURE AND (II) ANY ADDITIONAL
SECURITY PROVIDED IN THE INDENTURE. THE OBLIGATIONS OF THE DEVELOPER UNDER THE
LOAN AGREEMENT, THE NOTE AND THE MORTGAGE ARE NON-RECOURSE TO THE DEVELOPER, AND
ARE ENFORCEABLE SOLELY AGAINST THE PROJECT, EXCEPT AS OTHERWISE PROVIDED
THEREIN. ANY PAYMENTS MADE ON THE MORTGAGE LOAN TO THE OWNER OF THIS BOND SHALL
BE FOR THE ACCOUNT OF THE ISSUER, SHALL CONSTITUTE PAYMENTS ON THIS BOND AND
SHALL DISCHARGE THE ISSUER'S OBLIGATIONS ON THIS BOND TO THE EXTENT OF SUCH
PAYMENT, APPLYING ANY PAYMENT TO INTEREST FIRST.
Transfer. This Bond is transferable by the registered owner hereof in
person or by his attorney duly authorized in writing at the office of the
Trustee as registrar, but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds, of
any authorized denomination or
Page 7
<PAGE>
denominations, of the same maturity and for the same aggregate principal amount
will be issued to the transferee in exchange herefor.
Prior to the Conversion Date a Bond may only be transferred (i) to any
affiliate of the Partnership, to an affiliate of one of the general partners of
the Partnership, to any entity arising out of any merger or consolidation of the
Partnership, by operation of law, or to a trustee in bankruptcy of the
Partnership; (ii) by an assignment to a bank or other financial institution
issuing a letter of credit or like instrument in connection with the Mortgage
Loan; or (iii) to one or more Institutional Investors if, in each instance, the
Issuer and the Trustee receive from the transferee (A) its agreement to the
transfer restrictions set forth in this paragraph in connection with subsequent
transfers of the Bond and (B) evidence of the assignment by the transferor to
the transferee in accordance with the Indenture.
The Bonds are issuable as fully registered Bonds in Authorized
Denominations as provided in the Indenture.
Redemption of Bonds. The Bonds are subject to redemption by the Issuer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Indenture.
Remarketing in Lieu of Redemption of Bonds on Initial Remarketing Date.
Upon an election by the Owner of a redemption in whole of the Bonds pursuant to
Section 4.01(h) of the Indenture, at the direction of the Developer given not
less than sixty (60) days in advance, either (i) the Bonds shall be redeemed on
the date specified in the notice to the Issuer, the Trustee, and the Developer
from the Owners described in Section 4.01(h) of the Indenture or (ii) the Bonds
will be deemed tendered for purchase and remarketed as provided in Article V of
the Indenture on the date specified in the notice to the Issuer, the Trustee,
and the Developer from the Owner described in Section 4.01(h), or on such
earlier Interest Payment Date selected by the Developer in its direction to
remarket the Bonds but in no event before January 1, 2002. Failure by the
Developer to make an election shall be deemed an election in favor of
redemption. The Bonds may only be remarketed if the conditions specified in the
Indenture are met. The purchase price of Bonds so remarketed in lieu of
redemption shall be the principal amount thereof together with all accrued and
unpaid Interest (including all Base Interest and the Base Deferred Interest
Amount) and all unpaid Interest and shall be payable on the Initial Remarketing
Date. If the conditions to remarketing of the Bonds set forth in Article V of
the Indenture are not satisfied, or if the Bonds are not successfully
remarketed, or if the full purchase price thereof is not paid or available for
payment on the Initial Remarketing Date, or if all Interest (including the Base
Deferred Interest Amount) and principal payable on the Bonds up to
Page 8
<PAGE>
and including the Initial Remarketing Date has not been fully paid, then all
Bonds tendered shall be redeemed and not remarketed pursuant to Section 4.01(e)
of the Indenture.
Mandatory Tender of Bonds. The Bonds shall be subject to mandatory
tender to the Remarketing Agent on each Remarketing Date after the Initial
Remarketing Date for purchase by the Remarketing Agent, at a purchase price
equal to the principal amount thereof plus accrued Interest to the purchase
date; provided, however, that there need not be tendered on such Remarketing
Date any Bonds with respect to which the Remarketing Agent shall have received
from the Owners thereof a written notice at least five (5) Business Days prior
to the applicable Remarketing Date expressly electing not to tender their Bonds
for purchase. Any such election may not relate to a portion of any Bond held by
the Owner, such election may apply only to the entire principal amount of any
Bond or Bonds.
Tendered Bonds. Any Bonds that are the subject of mandatory tender for
purchase but are not the subject of elections to retain the Bonds received by
the Remarketing Agent in a timely fashion shall be conclusively deemed tendered
for purchase on the Remarketing Date. If the Owner selects a redemption date for
redemption of the Bonds in accordance with Section 4.01(h) of the Indenture and
the Developer makes the remarketing election permitted by Section 4.04 of the
Indenture, all Bonds shall be conclusively deemed tendered for purchase on the
Initial Remarketing Date. All Bonds that are actually tendered for purchase
pursuant to the Indenture or are deemed tendered for purchase on a Remarketing
Date, including the Initial Remarketing Date, shall constitute tendered Bonds
for purposes of the Indenture; all tendered Bonds that are not actually
delivered for purchase on a Remarketing Date, including the Initial Remarketing
Date shall constitute "Undelivered Bonds" for purposes of the Indenture. Subject
to Sections 4.01(e) and 4.04 of the Indenture, Undelivered Bonds that have been
remarketed in accordance with the Indenture shall be deemed to have been
purchased if the Bonds have been remarketed and if the purchase price therefor
shall have been deposited therefor and held by the Remarketing Agent; and the
parties to whom the Remarketing Agent shall have so remarketed Undelivered Bonds
shall be the owners of such Undelivered Bonds for all purposes under the
Indenture, including without limitation the right to transfer such Bonds.
Interest accruing from and after the Remarketing Date on such Undelivered Bonds
shall no longer be payable to the former Owners thereof but shall be paid to the
new registered Owners thereof. Former Owners of Undelivered Bonds so remarketed
shall not be deemed to be Owners of Bonds under the Indenture, and such
Undelivered Bonds shall not be deemed Outstanding for purposes of the Indenture,
except for purposes of payment
Page 9
<PAGE>
of the purchase price of such Undelivered Bonds upon surrender thereof to the
Remarketing Agent.
Enforcement. Only the Acting Party shall have the right to enforce the
provisions of this Bond or the Indenture or to institute any action to enforce
the covenants herein or therein, or to take any action with respect to any Event
of Default under the Indenture, or to institute, appear in or defend any suit or
other proceedings with respect thereto, except as provided in the Indenture. If
an Event of Default occurs and is continuing, the principal of all Bonds then
outstanding may be declared due and payable by the Acting Party upon the
conditions and in the manner and with the effect provided in the Indenture.
The Issuer, the Trustee, and any other person may treat the person in
whose name this Bond is registered on the books of registry as the Owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Bond be overdue, and no person shall be affected
by notice to the contrary.
Discharge. The Indenture prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Indenture, except for the purposes
of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Indenture, or of any
supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
By its acceptance of this Bond, the Owner hereof agrees that it will be
bound by and accepts the provisions of the Indenture and the Loan Documents (as
defined in the Loan Agreement). This Bond shall not be valid or obligatory for
any purpose until it shall have been signed on behalf of the Issuer and such
signature attested, by the officer, and in the manner, provided in the
Indenture, and authenticated by a duly authorized officer of the Trustee, as
Authenticating Agent.
It is hereby certified and recited that all conditions, acts and things
required by the Constitution or statutes of the State or by the Act or the
Indenture to exist, to have happened or to have been performed precedent to or
in the issuance of this Bond exist, have happened and have been performed and
that the issue of the Bonds, together with all other indebtedness of the Issuer,
is within every debt and other limit prescribed by said Constitution or
statutes.
Page 10
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as of the
Amendment Date stated above.
CITY OF BLOOMINGTON
By: /s/ [illegible]
-----------------------------------
Deputy Mayor
By: /s/ [illegible]
-----------------------------------
City Manager
<PAGE>
FORM OF CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned
Indenture and is one of the Multifamily Housing Revenue Refunding Bonds (Bristol
Village Apartments Project) Series 1987 of the City of Bloomington.
U.S. BANK TRUST NATIONAL ASSOCIATION
(formerly First Trust Company, Inc.)
as Trustee
By: /s/ [illegible]
-----------------------------------
Authorized Officer
Date of Authentication:
July 23, 1998
- -------
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________________________________the
within Multifamily Housing Revenue Refunding Bond (Bristol Village Apartments
Project) Series 1987, of the City of Bloomington and hereby authorizes the
transfer of this Bond on the registration books of the Trustee.
Dated:
-------------------
-----------------------------------
Authorized Signature
-----------------------------------
Name of Transferor
Signature Guaranteed by:
-----------------------------------
-----------------------------------
Name of Bank
By:
-------------------------------
Title:
----------------------------
<PAGE>
DEFINITIONAL APPENDIX
"Amendment Date" shall mean January 1, 1998.
"Interest" shall mean all Base Interest (including the Base Deferred
Interest Amount), any interest thereon as provided in Section 7.10 of the
Indenture, and, subject to Section 3.12 of the Indenture, any and all amounts
paid other than principal of and premium with respect to the Bonds.
"Refinancing of the Project" means (i) any redemption of the Bonds in
whole (or the requirement that the Bonds be redeemed in whole) (including such a
redemption or requirement pursuant to a Sale of the Project described in clause
(ii) of the definition thereof, but excluding such a redemption or requirement
pursuant to a Sale of the Project described in clause (i) of the definition
thereof) on or before the Conversion Date, (ii) a remarketing of all of the
Bonds on the Initial Remarketing Date (or the delivery of the required notice to
the Fiduciary by the Remarketing Agent on the Initial Remarketing Date that the
remarketing of all of the Bonds will occur on the Initial Remarketing Date
according to the terms hereof), (iii) a secondary financing of the Project in
which the Project is further encumbered to secure the financing or (iv) a
payment in full of the Bonds upon maturity, acceleration or otherwise on or
before the Conversion Date (or the requirement that the Bonds be so paid)
(including such a payment or requirement that is a redemption or requirement for
redemption pursuant to a Sale of the Project described in clause (ii) of the
definition thereof, but excluding such a payment or requirement that is a
redemption or requirement for redemption pursuant to a Sale of the Project
described in clause (i) of the definition thereof).
"Sale of the Project" means (i) a sale, transfer or other disposition of
more than a 10% interest in the Project in any one transaction or more than one
transaction occurring within any three year period (aggregating all dispositions
during any such period for purposes of calculation), or (ii) a sale, transfer or
other disposition of more than a 50% interest in the entity or entities which
own, directly or indirectly, more than a 50% interest in the Project within any
three year period to one or more persons or entities acting in concert
(aggregating all dispositions during any such period for purposes of
calculation). There shall be excluded from clause (ii) of the preceding
sentence, however, a transfer on account of death without consideration or with
consideration if the transfer is to an existing partner or to the Developer.
Indirect ownership by an entity or entities of an interest in the Project shall
be measured by multiplying the percentage of interest such entity or entities
own in the entity or entities that own directly
<PAGE>
an interest in the Project times the percentage of interest in the Project so
owned directly. For purposes of this definition, an interest in the Project or
an entity or entities shall include, without limitation, an interest
representing legal ownership, an equitable interest or an economic interest.
UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
Norfolk Redevelopment and Housing Authority
Multifamily Housing Revenue Bond
(Ocean Air Apartments Project)
Series 1998A
Number: R-1
Dated Date: April 20, 1998
Maturity Date: November 1, 2030
Registered Owner: Charter Municipal Mortgage Acceptance Company
Principal Amount: $10,000,000
Interest Rate: 7.25%
Norfolk Redevelopment and Housing Authority (the "Issuer"), a
political subdivision of the Commonwealth of Virginia (the "State"), created and
existing under and by virtue of the laws of the State, hereby acknowledges
itself indebted and for value received promises to pay to the registered owner
hereof stated above, or registered assigns, at the maturity date stated above,
but only from the sources and as hereinafter provided, upon presentation and
surrender of this Bond at the principal office of Crestar Bank in Richmond,
Virginia, or its successor as trustee (the "Trustee"), under the Indenture
(described below), the principal amount stated above, and to pay interest on
said principal amount at the interest rate set forth above, from and including
the date of issuance of this Bond until the principal amount shall have been
paid in accordance with the terms of this Bond and the Indenture, as and when
set forth below, but only from the sources and as hereinafter provided, by wire
transfer if there be one Owner of all of the Bonds or otherwise by check or
draft mailed to the record Owners of Bonds as the same appear upon the books of
registry to be maintained by the Trustee, as registrar.
This Bond is one of a series of bonds (the "Bonds") issued pursuant
to, and is subject to, the Trust Indenture dated as of April 1, 1998 between the
Issuer and the Trustee (as amended and supplemented from time to time, the
"Indenture"), and the Housing Authorities Law, Chapter 1, Title 36 of the Code
of Virginia, as amended (the "Act"). Reference is made to the Indenture and the
Act for a full statement of their respective terms. Capitalized terms used
herein and not otherwise defined herein have the respective meanings accorded
such terms in the Indenture, which are hereby incorporated herein by reference.
The Bonds issued under the Indenture are expressly limited to $10,000,000 in
aggregate principal amount at any time Outstanding and are all of like tenor,
except as to numbers and denominations, and are issued for the purposes of
providing construction and permanent financing for qualified multifamily rental
housing units in the State and of paying certain expenses incidental thereto.
The Bonds shall be special and limited obligations of the Issuer
payable only from the sources provided in this Indenture and neither the State
nor any other political
<PAGE>
subdivision thereof shall be liable on the Bonds. Neither the Commonwealth of
Virginia nor any political subdivision thereof shall in any event be liable for
the payment of the principal of or interest on any Bonds, or for the performance
of any pledge, deed of trust, obligation or agreement of any kind whatsoever
that may be undertaken by the Issuer, and none of the Bonds or any of its
agreements or obligations shall be construed to constitute a debt or a pledge of
the faith and credit of the Commonwealth of Virginia or any political
subdivision thereof within the meaning of any constitutional or statutory
provision whatsoever, and shall not directly, indirectly or contingently
obligate the Commonwealth of Virginia or any of its political subdivisions to
levy or to pledge any form of taxation whatsoever therefor or to make an
appropriation for the payment thereof; nor shall any breach of any such pledge,
deed of trust, obligation or agreement impose any pecuniary liability upon any
member, officer, employee or agent of the Issuer, or any charge upon the general
credit of the Issuer, or any pecuniary liability upon the Issuer payable from
any moneys, revenues, payments and proceeds other than those first above
specified.
NEITHER THE COMMISSIONERS OF THE ISSUER NOR ANY PERSONS EXECUTING THE
BONDS SHALL BE LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF.
THE BONDS SHALL NOT BE A DEBT OF THE CITY OF NORFOLK, THE COMMONWEALTH OF
VIRGINIA, OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE ISSUER), AND
NEITHER THE CITY OF NORFOLK, THE COMMONWEALTH OF VIRGINIA, NOR ANY POLITICAL
SUBDIVISION THEREOF (OTHER THAN THE ISSUER) SHALL BE LIABLE THEREON, NOR IN ANY
EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE
OF THE ISSUER SPECIFICALLY PLEDGED THERETO. THE BONDS SHALL NOT CONSTITUTE AN
INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATION OR RESTRICTION. THE ISSUER HAS NO TAXING POWER.
Interest on the Bonds. The Bonds (including this Bond) shall bear
interest on the outstanding principal amount thereof from the date of issuance
of the Bonds to the Maturity Date or the date of redemption or acceleration
prior to maturity at a rate of seven and one-quarter percent (7.25%) per annum
calculated on the basis of a 360-day year comprised of twelve 30-day months. The
interest payable on the Bonds as provided above shall be payable on the first
Business Day of each month, commencing June 1, 1998 and on each Bond Payment
Date.
Limited Recourse. Pursuant to a Loan Agreement dated as of April 1,
1998, and a Promissory Note dated (the "Note") dated the date of issuance of the
Bonds, Ocean Air Associates, L.L.C., a Virginia limited liability company (the
"Developer"), has agreed to make payments to the Issuer in amounts equal to
amounts of principal of and premium, if any, and interest on the Bonds. THE
OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY LIMITED TO AND ARE PAYABLE
SOLELY FROM (I) THE PAYMENTS MADE PURSUANT TO THE LOAN AGREEMENT AND THE NOTE BY
THE DEVELOPER, AND THE SECURITY THEREFOR PROVIDED BY THE FIRST LEASEHOLD DEED OF
TRUST AND SECURITY AGREEMENT FROM THE DEVELOPER TO THE BENEFIT OF THE TRUSTEE,
TO BE DATED AS OF THE DATE OF
2
<PAGE>
INITIAL DISBURSEMENT, AND THE ASSIGNMENT OF LEASES, RENTS AND OTHER INCOME FROM
THE DEVELOPER TO THE TRUSTEE, TO BE DATED AS OF THE DATE OF INITIAL
DISBURSEMENT, ALL OF WHICH HAVE BEEN ASSIGNED TO THE TRUSTEE PURSUANT TO THE
INDENTURE AND (II) ANY ADDITIONAL SECURITY PROVIDED IN THE INDENTURE.
Registration and Transfer. This Bond is transferable by the
registered owner hereof in person or by his attorney duly authorized in writing
at the office of the Trustee as registrar, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and
upon surrender and cancellation of this Bond. Upon such transfer a new
registered Bond or Bonds, of any authorized denomination or denominations, of
the same maturity and for the same aggregate principal amount will be issued to
the transferee in exchange herefor. The Bonds are issuable as fully registered
Bonds in Authorized Denominations as provided in the Indenture.
Redemption of Bonds. The Bonds are subject to optional and mandatory
redemption by the Issuer and purchase in lieu of redemption by the Developer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Indenture.
Enforcement. Only the Majority Owner shall have the right to enforce
the provisions of this Bond or the Indenture or to institute any action to
enforce the covenants herein or therein, or to take any action with respect to
any Event of Default under the Indenture, or to institute, appear in or defend
any suit or other proceedings with respect thereto, except as provided in the
Indenture. If an Event of Default occurs and is continuing, the principal of all
Bonds then outstanding may be declared due and payable by the Majority Owner
upon the conditions and in the manner and with the effect provided in the
Indenture. As provided in the Indenture, and to the extent permitted by law,
interest and a penalty rate of interest shall be payable on unpaid amounts due
hereon.
Discharge. The Indenture prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Indenture, except for the purposes
of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Indenture, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
This Bond shall not be valid or obligatory for any purpose until it
shall have been signed on behalf of the Issuer and such signature attested, by
the officer, and in the manner, provided in the Indenture, and authenticated by
a duly authorized officer of the Trustee, as Authenticating Agent.
It is hereby certified and recited that all conditions, acts and
things required by the statutes of the State or by the Act or the Indenture to
exist, to have happened or to have been performed precedent to or in the
issuance of this Bond exist, have happened and have been
3
<PAGE>
performed and that the issue of the Bonds, together with all other indebtedness
of the Issuer, is within every debt and other limit prescribed by said statutes.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as
of the Dated Date stated above.
NORFOLK REDEVELOPMENT AND
HOUSING AUTHORITY
By: /s/ Doyle E. Hull
------------------------------------
Name: Doyle E. Hull
Title: Chairman
(SEAL)
Attest:
/s/ David H. Rice
- ---------------------
Name: David H. Rice
Title: Secretary
4
<PAGE>
FORM OF CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned
Indenture and is one of the Multifamily Housing Revenue Bonds (Ocean Air
Apartments Project) Series 1998A of the Norfolk Redevelopment and Housing
Authority.
CRESTAR BANK,
as Trustee and Authenticating Agent
By: /s/ [Illegible]
-----------------------------------
Authorized Signatory
Date of Authentication: April 20, 1998
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________________________________________________
the within Bond and hereby authorizes the transfer of this Bond on the
registration books of the Trustee.
Dated:
----------------------------
-----------------------------------
Authorized Signature
-----------------------------------
Name of Transferee
- -----------------------------------
Signature Guaranteed by
- -----------------------------------
Name of Bank
By:
-------------------------------
Title:
----------------------------
Number: RR-1 $2,840,000
California Statewide Communities Development Authority
Multifamily Housing Revenue Bond
(Cedarbrook Apartments Project) Series 1998R
<TABLE>
<CAPTION>
Dated Date: Maturity Date: Interest Rate:
- ----------- -------------- --------------
<S> <C> <C>
April 28, 1998 May 1, 2040 7.125%
</TABLE>
Registered Owner: CHARTER MUNICIPAL MORTGAGE ACCEPTANCE CO.
Principal Amount: TWO MILLION EIGHT HUNDRED FORTY THOUSAND DOLLARS
California Statewide Communities Development Authority (the
"Issuer"), a joint powers agency duly organized and existing under the laws of
the State of California (the "State"), hereby acknowledges itself indebted and
for value received promises to pay to the registered owner hereof stated above,
or registered assigns, at the maturity date stated above, but only from the
sources and as hereinafter provided, upon presentation and surrender of this
Bond at the corporate trust office of U.S. Bank Trust National Association in
St. Paul, Minnesota, as agent for U.S. Bank Trust National Association, San
Francisco, California, or its successor as trustee (the "Trustee"), under the
Indenture (described below), the principal amount stated above, and to pay
interest on said principal amount at the interest rate set forth above, from
and including the date of issuance of this Bond until the principal amount shall
have been paid in accordance with the terms of this Bond and the Indenture, as
and when set forth below, but only from the sources and as hereinafter provided,
by wire transfer if there be one Owner of all of the Bonds or otherwise by check
mailed to the record Owners of Bonds as the same appear upon the books of
registry to be maintained by the Trustee, as registrar.
This Bond is one of a series of bonds (the "Bonds") issued
pursuant to the provisions of Chapter 5 of Division 7 of Title 1 of the
California Government Code, together with the provisions of Chapter 7 of Part 5
of Division 31 of the California Health and Safety Code, as the same may be
amended (collectively, the "Act"), and a Trust Indenture, dated as of April 1,
1998, between the Issuer and the Trustee (as amended and supplemented from time
to time, the "Indenture"). Reference is made to the Indenture and the Act for a
full statement of their respective terms. Capitalized terms used herein and not
otherwise defined herein have the respective meanings accorded such terms in the
Indenture, which are hereby incorporated herein by reference. The Bonds issued
under the Indenture are expressly limited to $2,840,000 in aggregate principal
amount at any time Outstanding and are all of like tenor, except as to numbers
and denominations, and are issued for the purposes of providing construction and
permanent financing for qualified multifamily rental housing units in the State
and of paying certain expenses incidental thereto.
<PAGE>
The Bonds shall be special and limited obligations of the Issuer
payable only from the sources provided in this Indenture and neither the State
nor any other political subdivision thereof shall be liable on the Bonds.
Neither the State nor any political subdivision thereof shall in any event be
liable for the payment of the principal of or interest on any Bonds, or for the
performance of any pledge, deed of trust, obligation or agreement of any kind
whatsoever that may be undertaken by the Issuer, and none of the Bonds or any of
its agreements or obligations shall be construed to constitute a debt or a
pledge of the faith and credit of the State or any political subdivision thereof
within the meaning of any constitutional or statutory provision whatsoever, and
shall not directly, indirectly or contingently obligate the State or any of its
political subdivisions to levy or to pledge any form of taxation whatsoever
therefor or to make an appropriation for the payment thereof; nor shall any
breach of any such pledge, deed of trust, obligation or agreement impose any
pecuniary liability upon any member, officer, employee or agent of the Issuer,
or any charge upon the general credit of the Issuer, or any pecuniary liability
upon the Issuer payable from any moneys, revenues, payments and proceeds other
than those first above specified.
NEITHER THE MEMBERS OF THE ISSUER NOR ANY PERSONS EXECUTING THIS BOND
SHALL BE LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF. THE
BONDS SHALL NOT BE A DEBT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF
(OTHER THAN THE ISSUER TO THE EXTENT PROVIDED HEREIN), AND NEITHER THE STATE NOR
ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE ISSUER) SHALL BE LIABLE
THEREON, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR
PROPERTIES OTHER THAN THOSE OF THE ISSUER SPECIFICALLY PLEDGED THERETO. THE
BONDS SHALL NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE ISSUER HAS NO
TAXING POWER.
Interest on the Bonds. The Bonds (including this Bond) shall bear
interest on the outstanding principal amount thereof from the date of issuance
of the Bonds to the Maturity Date or the date of redemption or acceleration
prior to maturity at a rate of seven and 125/1000 percent (7.125%) per annum
calculated on the basis of a 360-day year comprised of twelve 30-day months. The
interest payable on the Bonds as provided above shall be payable on the first
day of each month, commencing June 1, 1998, and on each Bond Payment Date.
Limited Recourse. Pursuant to a Loan Agreement dated as of April 1,
1998, and a Promissory Note (the "Note") dated the date of issuance of the
Bonds, Hanford Cedarbrook Limited Partnership, a California limited partnership
(the "Developer"), has agreed to make payments to the Issuer in amounts equal to
amounts of principal of and premium, if any, and interest on the Bonds. THE
OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY LIMITED TO AND ARE PAYABLE
SOLELY FROM (I) THE PAYMENTS MADE PURSUANT TO THE LOAN AGREEMENT AND THE NOTE BY
THE DEVELOPER, AND THE SECURITY THEREFOR PROVIDED BY THE FIRST DEED OF TRUST AND
SECURITY AGREEMENT FROM THE DEVELOPER TO THE BENEFIT OF THE TRUSTEE, TO BE DATED
AS OF INITIAL DISBURSEMENT, AND THE ASSIGNMENT OF LEASES, RENTS AND OTHER INCOME
FROM THE DEVELOPER TO THE TRUSTEE, TO BE DATED AS OF APRIL 1, 1998, ALL OF WHICH
HAVE BEEN ASSIGNED TO THE TRUSTEE PURSUANT TO THE INDENTURE AND (II) ANY
ADDITIONAL SECURITY PROVIDED IN THE INDENTURE.
2
<PAGE>
Registration and Transfer. This Bond is transferable by the
registered owner hereof in person or by his attorney duly authorized in writing
at the office of the Trustee as registrar, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and
upon surrender and cancellation of this Bond. Upon such transfer a new
registered Bond or Bonds, of any authorized denomination or denominations, of
the same maturity and for the same aggregate principal amount will be issued to
the transferee in exchange herefor. The Bonds are issuable as fully registered
Bonds in Authorized Denominations as provided in the Indenture.
Redemption of Bonds. The Bonds are subject to optional and mandatory
redemption by the Issuer and purchase in lieu of redemption by the Developer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Indenture.
Enforcement. Only the Majority Owner shall have the right to enforce
the provisions of this Bond or the Indenture or to institute any action to
enforce the covenants herein or therein, or to take any action with respect to
any Event of Default under the Indenture, or to institute, appear in or defend
any suit or other proceedings with respect thereto, except as provided in the
Indenture. If an Event of Default occurs and is continuing, the principal of all
Bonds then outstanding may be declared due and payable by the Majority Owner
upon the conditions and in the manner and with the effect provided in the
Indenture. As provided in the Indenture, and to the extent permitted by law,
interest and a penalty rate of interest shall be payable on unpaid amounts due
hereon.
Discharge. The Indenture prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Indenture, except for the purposes
of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Indenture, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
This Bond shall not be valid or obligatory for any purpose until it
shall have been signed on behalf of the Issuer and such signature attested, by
the officer, and in the manner, provided in the Indenture, and authenticated by
a duly authorized officer of the Trustee, as Authenticating Agent.
It is hereby certified and recited that all conditions, acts and
things required by the statutes of the State or by the Act or the Indenture to
exist, to have happened or to have been performed precedent to or in the
issuance of this Bond exist, have happened and have been performed and that the
issue of the Bonds, together with all other indebtedness of the Issuer, is
within every debt and other limit prescribed by said statutes.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as
of the Dated Date stated above.
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
By: /s/ [illegible]
-----------------------------------
Chairman
Attest:
/s/ [illegible]
- --------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee and Authenticating Agent
By: /s/ [illegible]
-----------------------------------
Authorized Signatory
Date of Authentication: April 28, 1998
--------------
4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- ------------------------------------------------------------------------ the
within Bond and hereby authorizes the transfer of this Bond on the
registration books of the Trustee.
Dated:
--------------------------
-----------------------------------
Authorized Signature
-----------------------------------
Name of Transferee
Signature Guaranteed by:
- ----------------------------------
Name of Bank
By:
-----------------------------
Title:
---------------------------
5
Number: RP-1 $3,250,000
California Statewide Communities Development Authority
Multifamily Housing Revenue Bond
(Phoenix Apartments Project) Series 1998P
<TABLE>
<CAPTION>
Dated Date: Maturity Date: Interest Rate:
----------- -------------- --------------
<S> <C> <C>
April 28, 1998 October 1, 2029 7.125%
</TABLE>
Registered Owner: CHARTER MUNICIPAL MORTGAGE ACCEPTANCE CO.
Principal Amount: THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
California Statewide Communities Development Authority (the
"Issuer"), a joint powers agency duly organized and existing under the laws of
the State of California (the "State"), hereby acknowledges itself indebted and
for value received promises to pay to the registered owner hereof stated above,
or registered assigns, at the maturity date stated above, but only from the
sources and as hereinafter provided, upon presentation and surrender of this
Bond at the corporate trust office of U.S. Bank Trust National Association in
St. Paul, Minnesota, as agent for U.S. Bank Trust National Association, San
Francisco, California, or its successor as trustee (the "Trustee"), under the
Indenture (described below), the principal amount stated above, and to pay
interest on said principal amount at the interest rate set forth above, from and
including the date of issuance of this Bond until the principal amount shall
have been paid in accordance with the terms of this Bond and the Indenture, as
and when set forth below, but only from the sources and as hereinafter provided,
by wire transfer if there be one Owner of all of the Bonds or otherwise by check
mailed to the record Owners of Bonds as the same appear upon the books of
registry to be maintained by the Trustee, as registrar.
This Bond is one of a series of bonds (the "Bonds") issued
pursuant to the provisions of Chapter 5 of Division 7 of Title 1 of the
California Government Code, together with the provisions of Chapter 7 of Part 5
of Division 31 of the California Health and Safety Code, as the same may be
amended (collectively, the "Act"), and a Trust Indenture, dated as of April 1,
1998, between the Issuer and the Trustee (as amended and supplemented from time
to time, the "Indenture"). Reference is made to the Indenture and the Act for a
full statement of their respective terms. Capitalized terms used herein and not
otherwise defined herein have the respective meanings accorded such terms in the
Indenture, which are hereby incorporated herein by reference. The Bonds issued
under the Indenture are expressly limited to $3,250,000 in aggregate principal
amount at any time Outstanding and are all of like tenor, except as to numbers
and denominations, and are issued for the purposes of providing construction and
permanent financing for qualified multifamily rental housing units in the State
and of paying certain expenses incidental thereto.
Additional Bonds of the Issuer designated as the "California
Statewide Communities Development Authority Multifamily Housing Revenue Bonds
(Phoenix Apartments Project) Series 1998P-S, limited in aggregate principal
amount to $3,600,000 (the "Series P-S Bonds"), are issued concurrently with the
Bonds under the Indenture. Pursuant to the Indenture, the lien of the Series P-S
<PAGE>
Bonds on the moneys and assets pledged under the Indenture (other than amounts
in the Series P-S Loan Account and the Series P-S Revenue Account) is
subordinate to the lien of the Bonds.
The Bonds shall be special and limited obligations of the Issuer
payable only from the sources provided in this Indenture and neither the State
nor any other political subdivision thereof shall be liable on the Bonds.
Neither the State nor any political subdivision thereof shall in any event be
liable for the payment of the principal of or interest on any Bonds, or for the
performance of any pledge, deed of trust, obligation or agreement of any kind
whatsoever that may be undertaken by the Issuer, and none of the Bonds or any of
its agreements or obligations shall be construed to constitute a debt or a
pledge of the faith and credit of the State or any political subdivision thereof
within the meaning of any constitutional or statutory provision whatsoever, and
shall not directly, indirectly or contingently obligate the State or any of its
political subdivisions to levy or to pledge any form of taxation whatsoever
therefor or to make an appropriation for the payment thereof; nor shall any
breach of any such pledge, deed of trust, obligation or agreement impose any
pecuniary liability upon any member, officer, employee or agent of the Issuer,
or any charge upon the general credit of the Issuer, or any pecuniary liability
upon the Issuer payable from any moneys, revenues, payments and proceeds other
than those first above specified.
NEITHER THE MEMBERS OF THE ISSUER NOR ANY PERSONS EXECUTING THIS BOND
SHALL BE LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF. THE
BONDS SHALL NOT BE A DEBT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF
(OTHER THAN THE ISSUER TO THE EXTENT PROVIDED HEREIN), AND NEITHER THE STATE NOR
ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE ISSUER) SHALL BE LIABLE
THEREON, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR
PROPERTIES OTHER THAN THOSE OF THE ISSUER SPECIFICALLY PLEDGED THERETO. THE
BONDS SHALL NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE ISSUER HAS NO
TAXING POWER.
Interest on the Bonds. The Bonds (including this Bond) shall bear
interest on the outstanding principal amount thereof from the date of issuance
of the Bonds to the Maturity Date or the date of redemption or acceleration
prior to maturity at a rate of seven and 125/1000 percent (7.125%) per annum
calculated on the basis of a 360-day year comprised of twelve 30-day months. The
interest payable on the Bonds as provided above shall be payable on the first
day of each month, commencing June 1, 1998, and on each Bond Payment Date.
Limited Recourse. Pursuant to a Loan Agreement dated as of April 1,
1998, and a Promissory Note (the "Note") dated the date of issuance of the
Bonds, Stockton Phoenix Limited, a California limited partnership (the
"Developer"), has agreed to make payments to the Issuer in amounts equal to
amounts of principal of and premium, if any, and interest on the Bonds. THE
OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY LIMITED TO AND ARE PAYABLE
SOLELY FROM (I) THE PAYMENTS MADE PURSUANT TO THE LOAN AGREEMENT AND THE NOTE BY
THE DEVELOPER, AND THE SECURITY THEREFOR PROVIDED BY THE FIRST DEED OF TRUST AND
SECURITY AGREEMENT FROM THE DEVELOPER TO THE BENEFIT OF THE TRUSTEE, TO BE DATED
AS OF APRIL 1, 1998, ALL OF WHICH HAVE BEEN ASSIGNED TO THE TRUSTEE PURSUANT TO
THE INDENTURE AND (II) ANY ADDITIONAL SECURITY PROVIDED IN THE INDENTURE.
2
<PAGE>
Registration and Transfer. This Bond is transferable by the
registered owner hereof in person or by his attorney duly authorized in writing
at the office of the Trustee as registrar, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and
upon surrender and cancellation of this Bond. Upon such transfer a new
registered Bond or Bonds, of any authorized denomination or denominations, of
the same maturity and for the same aggregate principal amount will be issued to
the transferee in exchange herefor. The Bonds are issuable as fully registered
Bonds in Authorized Denominations as provided in the Indenture.
Redemption of Bonds. The Bonds are subject to optional and mandatory
redemption by the Issuer and purchase in lieu of redemption by the Developer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Indenture.
Enforcement. Only the Majority Owner shall have the right to enforce
the provisions of this Bond or the Indenture or to institute any action to
enforce the covenants herein or therein, or to take any action with respect to
any Event of Default under the Indenture, or to institute, appear in or defend
any suit or other proceedings with respect thereto, except as provided in the
Indenture. If an Event of Default occurs and is continuing, the principal of all
Bonds then outstanding may be declared due and payable by the Majority Owner
upon the conditions and in the manner and with the effect provided in the
Indenture. As provided in the Indenture, and to the extent permitted by law,
interest and a penalty rate of interest shall be payable on unpaid amounts due
hereon.
Discharge. The Indenture prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Indenture, except for the purposes
of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Indenture, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
This Bond shall not be valid or obligatory for any purpose until it
shall have been signed on behalf of the Issuer and such signature attested, by
the officer, and in the manner, provided in the Indenture, and authenticated by
a duly authorized officer of the Trustee, as Authenticating Agent.
It is hereby certified and recited that all conditions, acts and
things required by the statutes of the State or by the Act or the Indenture to
exist, to have happened or to have been performed precedent to or in the
issuance of this Bond exist, have happened and have been performed and that the
issue of the Bonds, together with all other indebtedness of the Issuer, is
within every debt and other limit prescribed by said statutes.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as
of the Dated Date stated above.
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
By: /s/ [illegible]
-----------------------------------
Chairman
Attest:
/s/ [illegible]
- --------------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee and Authenticating Agent
By: /s/ [illegible]
-----------------------------------
Authorized Signatory
Date of Authentication: April 28, 1998
--------------
4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_________________________________________ the within Bond and hereby authorizes
the transfer of this Bond on the registration books of the Trustee.
Dated:
------------------------
----------------------------------
Authorized Signature
----------------------------------
Name of Transferee
Signature Guaranteed by:
- -----------------------------------
Name of Bank
By:
--------------------------------
Title:
-----------------------------
5
Number: RQ-1 $8,820,000
California Statewide Communities Development Authority
Multifamily Housing Revenue Bond
(Stone Creek Project) Series 1998Q
Dated Date: Maturity Date: Interest Rate:.
----------- -------------- ---------------
April 28, 1998 April 1, 2040 7.125%
Registered Owner: CHARTER MUNICIPAL MORTGAGE ACCEPTANCE CO
Principal Amount: EIGHT MILLION EIGHT HUNDRED TWENTY THOUSAND
DOLLARS
California Statewide Communities Development Authority (the
"Issuer"), a joint powers agency duly organized and existing under the laws of
the State of California (the "State"), hereby acknowledges itself indebted and
for value received promises to pay to the registered owner hereof stated above,
or registered assigns, at the maturity date stated above, but only from the
sources and as hereinafter provided, upon presentation and surrender of this
Bond at the corporate trust office of U.S. Bank Trust National Association in
St. Paul, Minnesota, as agent for U.S. Bank Trust National Association, San
Francisco, California, or its successor as trustee (the "Trustee"), under the
Indenture (described below), the principal amount stated above, and to pay
interest on said principal amount at the interest rate set forth above, from and
including the date of issuance of this Bond until the principal amount shall
have been paid in accordance with the terms of this Bond and the Indenture, as
and when set forth below, but only from the sources and as hereinafter provided,
by wire transfer if there be one Owner of all of the Bonds or otherwise by check
mailed to the record Owners of Bonds as the same appear upon the books of
registry to be maintained by the Trustee, as registrar.
This Bond is one of a series of bonds (the "Bonds") issued pursuant
to the provisions of Chapter 5 of Division 7 of Title 1 of the California
Government Code, together with the provisions of Chapter 7 of Part 5 of Division
31 of the California Health and Safety Code, as the same may be amended
(collectively, the "Act"), and a Trust Indenture, dated as of April 1, 1998,
between the Issuer and the Trustee (as amended and supplemented from time to
time, the "Indenture"). Reference is made to the Indenture and the Act for a
full statement of their respective terms. Capitalized terms used herein and not
otherwise defined herein have the respective meanings accorded such terms in the
Indenture, which are hereby incorporated herein by reference. The Bonds issued
under the Indenture are expressly limited to $8,820,000 in aggregate principal
amount at any time Outstanding and are all of like tenor, except as to numbers
and denominations, and are issued for the purposes of providing construction and
permanent financing for qualified multifamily rental housing units in the State
and of paying certain expenses incidental thereto.
<PAGE>
Additional Bonds of the Issuer designated as the "California
Statewide Communities Development Authority Multifamily Housing Revenue Bonds
(Phoenix Apartments Project) Series 1998P-S, limited in aggregate principal
amount to $3,600,000 (the "Series P-S Bonds"), are issued concurrently with the
Bonds under the Indenture. Pursuant to the Indenture, the lien of the Series P-S
Bonds on the moneys and assets pledged under the Indenture (other than amounts
in the Series P-S Loan Account and the Series P-S Revenue Account) is
subordinate to the lien of the Bonds.
The Bonds shall be special and limited obligations of the Issuer
payable only from the sources provided in this Indenture and neither the State
nor any other political subdivision thereof shall be liable on the Bonds.
Neither the State nor any political subdivision thereof shall in any event be
liable for the payment of the principal of or interest on any Bonds, or for the
performance of any pledge, deed of trust, obligation or agreement of any kind
whatsoever that may be undertaken by the Issuer, and none of the Bonds or any of
its agreements or obligations shall be construed to constitute a debt or a
pledge of the faith and credit of the State or any political subdivision thereof
within the meaning of any constitutional or statutory provision whatsoever, and
shall not directly, indirectly or contingently obligate the State or any of its
political subdivisions to levy or to pledge any form of taxation whatsoever
therefor or to make an appropriation for the payment thereof; nor shall any
breach of any such pledge, deed of trust, obligation or agreement impose any
pecuniary liability upon any member, officer, employee or agent of the Issuer,
or any charge upon the general credit of the Issuer, or any pecuniary liability
upon the Issuer payable from any moneys, revenues, payments and proceeds other
than those first above specified.
NEITHER THE MEMBERS OF THE ISSUER NOR ANY PERSONS EXECUTING THIS BOND
SHALL BE LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF. THE
BONDS SHALL NOT BE A DEBT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF
(OTHER THAN THE ISSUER TO THE EXTENT PROVIDED HEREIN), AND NEITHER THE STATE NOR
ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE ISSUER) SHALL BE LIABLE
THEREON, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR
PROPERTIES OTHER THAN THOSE OF THE ISSUER SPECIFICALLY PLEDGED THERETO. THE
BONDS SHALL NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE ISSUER HAS NO
TAXING POWER.
Interest on the Bonds. The Bonds (including this Bond) shall bear
interest on the outstanding principal amount thereof from the date of issuance
of the Bonds to the Maturity Date or the date of redemption or acceleration
prior to maturity at a rate of seven and 125/1000 percent (7.125%) per annum.
calculated on the basis of a 360-day year comprised of twelve 30-day months.
The interest payable on the Bonds as provided above shall be payable on the
first day of each month, commencing June 1, 1998, and on each Bond Payment Date.
Limited Recourse. Pursuant to a Loan Agreement dated as of April 1,
1998, and a Promissory Note (the "Note") dated the date of issuance of the
Bonds, Watsonville Westbridge Limited, a California limited partnership (the
"Developer"), has agreed to make payments to the Issuer in amounts equal to
amounts of principal of and premium, if any, and interest on the Bonds. THE
OBLIGATIONS OF THE ISSUER ON THIS BOND ARE EXPRESSLY LIMITED TO AND ARE PAYABLE
SOLELY FROM (I) THE PAYMENTS MADE PURSUANT TO THE LOAN AGREEMENT AND THE NOTE BY
THE DEVELOPER, AND THE SECURITY THEREFOR
2
<PAGE>
PROVIDED BY THE FIRST DEED OF TRUST AND SECURITY AGREEMENT FROM THE DEVELOPER TO
THE BENEFIT OF THE TRUSTEE, TO BE DATED AS OF APRIL 1, 1998, ALL OF WHICH HAVE
BEEN ASSIGNED TO THE TRUSTEE PURSUANT TO THE INDENTURE AND (II) ANY ADDITIONAL
SECURITY PROVIDED IN THE INDENTURE.
Registration and Transfer. This Bond is transferable by the
registered owner hereof in person or by his attorney duly authorized in writing
at the office of the Trustee as registrar, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and
upon surrender and cancellation of this Bond. Upon such transfer a new
registered Bond or Bonds, of any authorized denomination or denominations, of
the same maturity and for the same aggregate principal amount will be issued to
the transferee in exchange herefor. The Bonds are issuable as fully registered
Bonds in Authorized Denominations as provided in the Indenture.
Redemption of Bonds. The Bonds are subject to optional and mandatory
redemption by the Issuer and purchase in lieu of redemption by the Developer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Indenture.
Enforcement. Only the Majority Owner shall have the right to enforce
the provisions of this Bond or the Indenture or to institute any action to
enforce the covenants herein or therein, or to take any action with respect to
any Event of Default under the Indenture, or to institute, appear in or defend
any suit or other proceedings with respect thereto, except as provided in the
Indenture. If an Event of Default occurs and is continuing, the principal of all
Bonds then outstanding may be declared due and payable by the Majority Owner
upon the conditions and in the manner and with the effect provided in the
Indenture. As provided in the Indenture, and to the extent permitted by law,
interest and a penalty rate of interest shall be payable on unpaid amounts due
hereon.
Discharge. The Indenture prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Indenture, except for the purposes
of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Indenture, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
This Bond shall not be valid or obligatory for any purpose until it
shall have been signed on behalf of the Issuer and such signature attested, by
the officer, and in the manner, provided in the Indenture, and authenticated by
a duly authorized officer of the Trustee, as Authenticating Agent.
It is hereby certified and recited that all conditions, acts and
things required by the statutes of the State or by the Act or the Indenture to
exist, to have happened or to have been performed precedent to or in the
issuance of this Bond exist, have happened and have been performed and that the
issue of the Bonds, together with all other indebtedness of the Issuer, is
within every debt and other limit prescribed by said statutes.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as
of the Dated Date stated above.
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
By: /s/ [illegible]
-------------------------------
Chairman
Attest:
/s/ [illegible]
- -----------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee and Authenticating Agent
By: /s/ [illegible]
------------------------------------
Authorized Signatory
Date of Authentication: April 28, 1998
--------------
4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_________________________ the within Bond and hereby authorizes the transfer of
this Bond on the registration books of the Trustee.
Dated:
-------------------------
-------------------------------
Authorized Signature
-------------------------------
Name of Transferee
Signature Guaranteed by:
- -------------------------------
Name of Bank
By:
----------------------------
Title:
-------------------------
5
UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
Portsmouth Redevelopment and Housing Authority
Multifamily Housing Revenue Bond
(Lee Hall Project)
Series 1998
Number: R-1
Dated Date: May 20, 1998
Maturity Date: July 1, 2030
Registered Owner: Charter Municipal Mortgage Acceptance Company
Principal Amount: $6,050,000
Interest Rate: 7-1/4%
Portsmouth Redevelopment and Housing Authority (the "Issuer"), a
political subdivision of the Commonwealth of Virginia (the "Commonwealth"),
created and existing under and by virtue of the laws of the Commonwealth, hereby
acknowledges itself indebted and for value received promises to pay to the
registered owner hereof stated above, or registered assigns, at the maturity
date stated above, but only from the sources and as hereinafter provided, upon
presentation and surrender of this Bond at the principal office of Crestar Bank
in Richmond, Virginia, or its successor as trustee (the "Trustee"), under the
Indenture (described below), the principal amount stated above, and to pay
interest on said principal amount at the interest rate set forth above, from and
including the date of issuance of this Bond until the principal amount shall
have been paid in accordance with the terms of this Bond and the Indenture, as
and when set forth below, but only from the sources and as hereinafter provided,
by wire transfer if there be one Owner of all of the Bonds or otherwise by check
or draft mailed to the record Owners of Bonds as the same appear upon the books
of registry to be maintained by the Trustee, as registrar.
This Bond is one of a series of bonds (the "Bonds") issued pursuant to,
and is subject to, the Trust Indenture dated as of May 1, 1998 between the
Issuer and the Trustee (as amended and supplemented from time to time, the
"Indenture"), and the Housing Authorities Law, Chapter 1, Title 36 of the Code
of Virginia, as amended (the "Act"). Reference is made to the Indenture and the
Act for a full statement of their respective terms. Capitalized terms used
herein and not otherwise defined herein have the respective meanings accorded
such terms in the Indenture, which are hereby incorporated herein by reference.
The Bonds issued under the Indenture are expressly limited to $6,050,000 in
aggregate principal amount at any time Outstanding and are all of like tenor,
except as to numbers and denominations, and are issued for the purposes of
providing construction and permanent financing for qualified multifamily rental
housing units in the Commonwealth and of paying certain expenses incidental
thereto.
<PAGE>
The Bonds shall be special and limited obligations of the Issuer payable
only from the sources provided in this Indenture and neither the Commonwealth
nor any other political subdivision thereof shall be liable on the Bonds.
Neither the Commonwealth of Virginia nor any political subdivision thereof shall
in any event be liable for the payment of the principal of or interest on any
Bonds, or for the performance of any pledge, deed of trust, obligation or
agreement of any kind whatsoever that may be undertaken by the Issuer, and none
of the Bonds or any of its agreements or obligations shall be construed to
constitute a debt or a pledge of the faith and credit of the Commonwealth of
Virginia or any political subdivision thereof within the meaning of any
constitutional or statutory provision whatsoever, and shall not directly,
indirectly or contingently obligate the Commonwealth of Virginia or any of its
political subdivisions to levy or to pledge any form of taxation whatsoever
therefor or to make an appropriation for the payment thereof; nor shall any
breach of any such pledge, deed of trust, obligation or agreement impose any
pecuniary liability upon any member, commissioner, officer, employee or agent of
the Issuer, or any charge upon the general credit of the Issuer, or any
pecuniary liability upon the Issuer payable from any moneys, revenues, payments
and proceeds other than those first above specified.
NEITHER THE COMMISSIONERS OF THE ISSUER NOR ANY PERSONS EXECUTING THE
BONDS SHALL BE LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF.
THE BONDS SHALL NOT BE A DEBT OF THE CITY OF PORTSMOUTH, THE COMMONWEALTH OF
VIRGINIA, OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE ISSUER), AND
NEITHER THE CITY OF PORTSMOUTH, THE COMMONWEALTH OF VIRGINIA, NOR ANY POLITICAL
SUBDIVISION THEREOF (OTHER THAN THE ISSUER) SHALL BE LIABLE THEREON, NOR IN ANY
EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE
OF THE ISSUER SPECIFICALLY PLEDGED THERETO. THE BONDS SHALL NOT CONSTITUTE AN
INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATION OR RESTRICTION. THE ISSUER HAS NO TAXING POWER.
Interest on the Bonds. The Bonds (including this Bond) shall bear
interest on the outstanding principal amount thereof from the date of issuance
of the Bonds to the Maturity Date or the date of redemption or acceleration
prior to maturity at a rate of seven and one-half percent (7-1/4%) per annum
calculated on the basis of a 360-day year comprised of twelve 30-day months. The
interest payable on the Bonds as provided above shall be payable on the first
Business Day of each month, commencing July 1, 1998 and on each Bond Payment
Date.
Limited Recourse. Pursuant to a Loan Agreement dated as of May 1, 1998,
and a Promissory Note (the "Note") dated the date of issuance of the Bonds, Lee
Hall Limited Partnership, a Virginia limited partnership (the "Developer"), has
agreed to make payments to the Issuer in amounts equal to amounts of principal
of and premium, if any, and interest on the Bonds. THE OBLIGATIONS OF THE ISSUER
ON THIS BOND ARE EXPRESSLY LIMITED TO AND ARE PAYABLE SOLELY FROM (I) THE
PAYMENTS MADE PURSUANT TO THE LOAN AGREEMENT AND THE NOTE BY THE DEVELOPER, AND
THE SECURITY THEREFOR PROVIDED BY THE FIRST LEASEHOLD DEED OF TRUST
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<PAGE>
AND SECURITY AGREEMENT FROM THE DEVELOPER TO THE BENEFIT OF THE TRUSTEE, TO BE
DATED AS OF THE DATE OF INITIAL DISBURSEMENT. AND THE ASSIGNMENT OF LEASES,
RENTS AND OTHER INCOME FROM THE DEVELOPER TO THE TRUSTEE, TO BE DATED AS OF THE
DATE OF INITIAL DISBURSEMENT, ALL OF WHICH HAVE BEEN ASSIGNED TO THE TRUSTEE
PURSUANT TO THE INDENTURE AND (II) ANY ADDITIONAL SECURITY PROVIDED IN THE
INDENTURE.
Registration and Transfer. This Bond is transferable by the registered
owner hereof in person or by his attorney duly authorized in writing at the
office of the Trustee as registrar, but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon
surrender and cancellation of this Bond. Upon such transfer a new registered
Bond or Bonds, of any authorized denomination or denominations, of the same
maturity and for the same aggregate principal amount will be issued to the
transferee in exchange herefor. The Bonds are issuable as fully registered Bonds
in Authorized Denominations as provided in the Indenture.
Redemption of Bonds. The Bonds are subject to optional and mandatory
redemption by the Issuer and purchase in lieu of redemption by the Developer
prior to maturity as a whole or in part at such time or times, under such
circumstances, at such redemption prices and in such manner as is set forth in
the Indenture.
Enforcement. Only the Majority Owner shall have the right to enforce the
provisions of this Bond or the Indenture or to institute any action to enforce
the covenants herein or therein, or to take any action with respect to any Event
of Default under the Indenture, or to institute, appear in or defend any suit or
other proceedings with respect thereto, except as provided in the Indenture. If
an Event of Default occurs and is continuing, the principal of all Bonds then
outstanding may be declared due and payable by the Majority Owner upon the
conditions and in the manner and with the effect provided in the Indenture. As
provided in the Indenture, and to the extent permitted by law, interest and a
penalty rate of interest shall be payable on unpaid amounts due hereon.
Discharge. The Indenture prescribes the manner in which it may be
discharged and after which the Bonds shall be deemed to be paid and no longer be
secured by or entitled to the benefits of the Indenture, except for the
purposes of registration and exchange of Bonds and of such payment.
Modifications. Modifications or alterations of the Indenture, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
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This Bond shall not be valid or obligatory for any purpose until it
shall have been signed on behalf of the Issuer and such signature attested, by
the officer, and in the manner, provided in the Indenture, and authenticated by
a duly authorized officer of the Trustee, as Authenticating Agent.
It is hereby certified and recited that all conditions, acts and things
required by the statutes of the Commonwealth or by the Act or the Indenture to
exist, to have happened or to have been performed precedent to or in the
issuance of this Bond exist, have happened and have been performed and that the
issue of the Bonds, together with all other indebtedness of the Issuer, is
within every debt and other limit prescribed by said statutes.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed as of
the Dated Date stated above.
PORTSMOUTH REDEVELOPMENT
AND HOUSING AUTHORITY
By: /s/ Lee E. King
-------------------------------
Name: Lee E. King
Title: Vice-Chairman
(SEAL)
Attest:
/s/ Danny E. Cruce
- -----------------------------------
Danny E. Cruce, Secretary-Treasurer
4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned
Indenture and is one of the Multifamily Housing Revenue Bonds (Lee Hall Project)
Series 1998 of the Portsmouth Redevelopment and Housing Authority.
CRESTAR BANK,
as Trustee and Authenticating Agent
By: /s/ [illegible]
-------------------------------
Authorized Signatory
Date of Authentication:
May 20, 1998
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________________________the within Bond and
hereby authorizes the transfer of this Bond on the registration books of the
Trustee.
Dated:
-------------------------------
-------------------------------
Authorized Signature
-------------------------------
Name of Transferee
- -------------------------------
Signature Guaranteed by
- -------------------------------
Name of Bank
- -------------------------------
By:
- -------------------------------
Title:
6
CONTRIBUTION AGREEMENT
Dated as of May 21, 1998
Between
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
and
CHARTER MAC ORIGINATION TRUST I
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions..................................................... 1
SECTION 2. Assignment; Contribution........................................ 2
SECTION 3. Conditions Precedent to Initial Assignment by Charter........... 3
SECTION 4. Representations, Warranties and Covenants....................... 6
SECTION 5. Repurchase or Substitution of Ineligible Bond................... 8
SECTION 6. Events of Termination........................................... 9
SECTION 7. Servicing of Loan Documents..................................... 10
SECTION 8. No Assumption................................................... 10
SECTION 9. Further Assurances.............................................. 10
SECTION 10. Amendments, etc................................................. 11
SECTION 11. Notices......................................................... 11
SECTION 12. No Waiver; Remedies and Severability............................ 12
SECTION 13. Binding Effect; Assignability; Acknowledgments.................. 13
SECTION 14. GOVERNING LAW................................................... 15
SECTION 15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL................... 15
SECTION 16. Costs, Expenses and Taxes....................................... 15
SECTION 17. Counterparts.................................................... 16
SECTION 18. Captions........................................................ 16
SECTION 19. Notice of Limitation of Liability............................... 16
<PAGE>
CONTRIBUTION AGREEMENT (the "Agreement"), dated as of May 21,
1998, by and between CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY, a Delaware
business trust ("Charter"), and CHARTER MAC ORIGINATION TRUST I, a Delaware
business trust (the "Origination Trust").
WHEREAS, Charter wishes to sell, assign, transfer and contribute
to the Origination Trust certain Assigned Assets (as hereinafter defined),
including certain Bonds and related Bond Collateral (each as hereinafter
defined), now or from time to time hereafter owned by Charter, and the
Origination Trust is willing, on the terms and subject to the conditions
contained in this Agreement, to acquire and accept the assignment, transfer and
contribution of such Assigned Assets from Charter;
NOW, THEREFORE, in consideration of the premises and of the
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
SECTION 2. Definitions. (a) For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
given to such terms in Appendix A hereto which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
(b) All defined terms in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
<PAGE>
(f) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified, consolidated, continued, extended or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
SECTION 3. Assignment; Contribution. (a) On the terms and
conditions hereinafter set forth and without recourse (except to the extent as
is specifically provided herein), Charter, from time to time during the period
from the date hereof to the Facility Termination Date, hereby agrees to sell,
assign, transfer and contribute (collectively, "Assign") to the Origination
Trust, and the Origination Trust hereby agrees to acquire and accept the
assignment, transfer and contribution from Charter (each such sale, assignment,
transfer and contribution, an "Assignment"), all of Charter's right, title and
interest in, to and under (i) the Bonds identified on the Bond Schedule attached
hereto as Exhibit A, as the same may be supplemented from time to time by
Charter; (ii) all Bond Collateral relating to the Bonds; (iii) all monies and
other property of any kind that relate to any of the Bonds and that are now or
at any time or times hereafter in the possession or under the control of
Charter, the Servicer, or any bailee of the Servicer, and all monies, including
monies not yet received, that represent payments of Bond Interest due from May
15, 1998; (iv) all books and records of Charter to the extent pertaining to any
of (i) through (iii) above, including all computer programs, disks, tapes and
related electronic data processing media, credit files, account cards, payment
records, correspondence and ledgers in which any of the foregoing are reflected
or maintained; (v) the present and continuing exclusive right, power and
authority, subject to the provisions of the Servicing Agreement, to give and
receive notices and other communications, to make waivers or other agreements,
to make claims for and demand performance on, under or pursuant to any of the
Bonds or the Bond Collateral, to bring actions and proceedings thereunder or for
the enforcement of the Bonds or the Bond Collateral, and to exercise all
remedies, powers, privileges and options and to take any and all actions which
Charter is or may become entitled to take under the Bonds or the Bond
Collateral; (vi) any and all property of every name and nature, now or hereafter
transferred, mortgaged, pledged or assigned as security or additional security
for payment or performance of any obligation of the Bond Issuers and/or Bond
Obligors to Charter under the Bonds or any of the Bond Collateral, and the
liabilities, obligations and indebtedness evidenced thereby or reflected
therein; and (vii) all income, revenues, issues, products, revisions,
substitutions, replacements, profits and proceeds of and from all of the
foregoing (collectively, the "Assigned Assets").
(b) In consideration for the Assignment of the Assigned
Assets hereunder, the Origination Trust shall issue and deliver to Charter the
shares representing beneficial interests in the Origination Trust and shall pay
Charter the Cash Consideration, if any, relating to the Assigned Bonds and Bond
Collateral as specified on the Bond Schedule. The Origination Trust Certificate
shall be issued and delivered to Charter on the initial Closing Date. The Cash
Consideration with respect to each Bond and related Bond Collateral and Assigned
Assets shall be payable on the Closing Date relating to such Bond and related
Bond Collateral
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<PAGE>
and Assigned Assets. On each Closing Date, the Origination Trust shall, upon
satisfaction of the applicable conditions set forth in Section 3, make available
to Charter the Cash Consideration, in cash in same day funds. To the extent any
Bond and related Bond Collateral and Assigned Assets have any value in excess of
the Cash Consideration therefor, such value shall be deemed a contribution by
Charter to the capital of the Origination Trust as of the related Closing Date.
(c) Charter and the Origination Trust hereby confirm
their intent and agree that, by the Assignment of the Assigned Assets hereunder,
Charter is selling, assigning, transferring and contributing the Assigned Assets
absolutely and irrevocably and not as collateral or security. If,
notwithstanding the parties' intent to effect an absolute sale, assignment,
transfer and contribution, the transactions contemplated hereby are
characterized as a financing, Charter hereby grants the Origination Trust a
security interest in the Assigned Assets and this Agreement shall be deemed a
security agreement, within the meaning of the Uniform Commercial Code, which (or
a copy hereof) the Origination Trust may file in any applicable filing office.
Each of Charter and the Origination Trust hereby agrees to treat each Assignment
as a sale and contribution for tax, reporting and accounting purposes (except to
the extent that such assignment is not recognized due to the reporting of taxes
on a consolidated basis where applicable and the application of consolidated
financial reporting principles under GAAP). Charter agrees to respond to any
inquiries with respect to any Assignment hereunder by confirming the sale,
assignment, transfer and contribution of the Assigned Assets to the Origination
Trust, and to note on its financial statements that such Assigned Assets have
been sold and/or contributed to the Origination Trust.
(d) Charter hereby agrees to protect and defend the
Origination Trust's interest in the Assigned Assets, and each of Charter and the
Origination Trust hereby agree, at any time and from time to time, to obtain,
procure, execute, deliver, affix and file all such further agreements, bills of
sale and assignments, instruments, documents, receipts, notices, statements,
powers, writings and information, and to do and cause to be done all such
further acts and things as the other party may reasonably request in connection
herewith.
SECTION 4. Conditions Precedent to Initial Assignment by Charter.
(a) The initial Assignment of Bonds and related Bond Collateral and Assigned
Assets by Charter hereunder is subject to the conditions precedent that each
Transaction Party shall have received on or before the Initial Closing Date the
following, each (unless otherwise indicated) dated as of the Initial Closing
Date, in form and substance satisfactory to each Transaction Party:
(i) Certified copies of the resolutions of the
Managing Trustees of Charter authorizing the execution, delivery and performance
of this Agreement and the other Transaction Documents to which it is a party,
and certified copies of all documents evidencing other necessary corporate
action and Governmental Approvals, if any, with respect to this Agreement and
the other Transaction Documents and the transactions contemplated thereby;
(ii) A certificate of the Managing Trustees of
Charter certifying the names, offices and true signatures of the Persons
authorized on behalf of Charter to sign this
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<PAGE>
Agreement and the other documents to be delivered by Charter hereunder;
(iii) Copies of all organizational documents of
Charter, certified by an Authorized Representative of Charter;
(iv) Copies of officially certified documents,
dated not more than 30 days prior to the Initial Closing Date, evidencing the
due organization and good standing of Charter under the laws of the State of
Delaware;
(v) Executed financing statements, in form
suitable for filing, naming Charter as the debtor and the Origination Trust as
the secured party, or other similar instruments or documents, as the Origination
Trust may deem necessary or desirable under the UCC of all appropriate
jurisdictions or other applicable law to perfect the Origination Trust's
ownership of and security interest in the Assigned Assets;
(vi) Evidence of the filing of, or duly executed
in form suitable for filing, proper financing statements, if any, necessary (x)
to release all Liens or (y) to subordinate all security interests which do not
constitute Liens, in each case, of any Person in the Assigned Assets previously
granted by Charter;
(vii) A favorable opinion of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel, counsel for Charter, substantially in the form
of Exhibit B hereto, and as to such other matters as any Transaction Party may
reasonably request;
(viii) Evidence that each Bond Trustee has been
notified to remit all payments in respect of the Bonds and the Bond Collateral
to the Administrative Agent;
(ix) Evidence that the Administrative Agent has
been notified of the Assignment of the Assigned Assets to the Origination Trust;
and
(x) Complete copies of each Transaction Document,
certified by Charter (as to Charter and the Charter Entities) to be true and
complete and in full force and effect.
(b) Conditions Precedent to All Assignments. Each
Assignment (including the initial Assignment unless specifically excluded
herein) hereunder shall be subject to the further conditions precedent that:
(i) with respect to any such Assignment, on or
prior to the Closing Date, Charter shall have delivered to each Transaction
Party a Bond Schedule identifying the Bonds to be included in such Assignment
and otherwise containing complete and accurate information relating to the Bonds
as of such Closing Date; provided that for each Assignment after but excluding
the initial Assignment, the delivery of the Bond Schedule to each Transaction
Party shall occur at least 16 calendar days prior to the date of the Assignment;
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<PAGE>
(ii) Charter shall have delivered unqualified
opinions of bond counsel to the effect that interest payable on the Bonds is
excludable from gross income tax for purposes of federal income taxation under
the Code, based on customary assumptions;
(iii) Charter shall have marked its master data
processing records, stating that Charter's interest in the Bonds and related
Bond Collateral and other Assigned Assets have been Assigned in accordance with
this Agreement;
(iv) Charter shall have delivered each Bond,
together with a duly executed bond power attached thereto, endorsed in blank, or
such other necessary instruments of transfer or assignment, and originals or
copies of each material Bond Document related thereto to the Administrative
Agent (as designee of the Origination Trust);
(v) on the Closing Date the following statements
shall be true (and Charter, by accepting the Cash Consideration on such Closing
Date, shall be deemed to have certified that):
A. The representations and warranties of
Charter contained in Section 4 hereof and in each Transaction Document are
correct on and as of such Closing Date as though made on and as of such date;
and
B. No event has occurred and is continuing,
or would result from such Assignment, that constitutes, or would constitute, an
Event of Termination; and
(vi) The Origination Trust shall have received
such other approvals, opinions or documents as any Transaction Party may
reasonably request; and
(vii) The Surety Provider shall have approved the
Assignment pursuant to Section 4.03 of the Insurance Agreement.
SECTION 5. Representations, Warranties and Covenants: (a) Each of
Charter and the Origination Trust represents and warrants to the other, as of
each Closing Date, (i) it is duly organized, validly existing and in good
standing in the jurisdiction of its organization (and with respect to Charter,
its principal place of business and chief executive office is in the State of
New York), (ii) it has all requisite power and authority to (A) own its
properties, (B) carry on its business as now conducted and proposed to be
conducted, and (C) execute and deliver this Agreement and each of the other
Transaction Documents to which it is a party and to perform its obligations
hereunder and thereunder in accordance with their respective terms, (iii)
neither the execution and delivery of this Agreement and each of the other
Transaction Documents to which it is a party, nor the performance of its
obligations hereunder or thereunder, will (A) conflict with or result in a
breach or default under any of its organizational documents, any Applicable Laws
or any contract, agreement, mortgage, instrument or other undertaking to which
it is a party or by which any of its properties is subject or (B) result in the
creation or imposition of any Lien, other
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<PAGE>
than pursuant to the Transaction Documents, (iv) it has obtained any
Governmental Approval required for the execution, delivery and performance by it
of this Agreement and each of the other Transaction Documents to which it is a
party, (v) there is no action, suit or proceeding pending against it in any
court or by or before any Governmental Authority which would materially affect
its ability to carry out the transactions contemplated by this Agreement or any
of the other Transaction Documents to which it is a party, (vi) the execution,
delivery and performance by it of this Agreement and each of the other
Transaction Documents to which it is a party, have been duly authorized by all
necessary corporate or other action on its part, (vii) this Agreement and each
of the other Transaction Documents to which it is a party have been duly
executed and delivered by it and constitute its legal, valid and binding
obligations enforceable against it in accordance with their respective terms,
(viii) all of the representations and warranties made by it in any other
Transaction Document were true and correct when made and are true and correct as
of the Closing Date and are hereby made by it as if the same were set forth in
full in this Agreement, (ix) the execution and delivery of this Agreement and
each of the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby were not made
(A) in contemplation of the insolvency of any Person, (B) with the intent to
hinder, delay or defraud any Person, any creditor of any Person or any federal
banking agency, (C) after the commission of any act of insolvency by any Person
or (D) without fair consideration; and (x) its assets or capital are not
unreasonably small in value in relation to its business, and its remaining
assets or capital will not be unreasonably small in value in relation to and
after giving effect to the consummation of the transactions contemplated hereby
or by the other Transaction Documents to which it is a party; it is not
insolvent at the time of, and will not be rendered insolvent by virtue of, the
consummation of the transactions contemplated hereby or by the other Transaction
Documents to which it is a party; by consummating the transactions contemplated
hereby or by the other Transaction Documents to which it is a party, it does not
intend to, or believe that it will, incur debts beyond its ability to pay such
debts as they become due.
(b) Charter hereby represents, warrants and covenants to
the Origination Trust as follows:
(i) The information pertaining to the Bonds set
forth in the Bond Schedule is true and correct in all material respects at the
date or dates respecting which such information was furnished.
(ii) Immediately prior to the Assignment of the
Assigned Assets pursuant hereto, Charter was the sole legal and beneficial owner
of such Assigned Assets and had good and marketable title thereto, free and
clear of any Lien or participation or ownership interest in favor of any other
Person, and the form of this Agreement and the related instruments of transfer
or assignment are in form sufficient to transfer all right, title and interest
of Charter in the Assigned Assets to the Origination Trust. The Assignment of
the Assigned Assets by Charter to the Origination Trust constitutes a valid and
enforceable sale, assignment, transfer and contribution of the Assigned Assets
to the Origination Trust, enforceable against creditors of, and purchasers from,
Charter. Upon the Assignment of the Assigned Assets
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<PAGE>
hereunder, Charter has no remaining interest in any Assigned Asset. Charter has
given or caused to be given all notices legally necessary to be given by Charter
to effect the sale of the Assigned Assets pursuant hereto. Charter has obtained
any and all consents required for Charter to convey to the Origination Trust all
right, title and interest in the Assigned Assets.
(iii) Each Bond has been duly authorized and
validly issued by the related Bond Issuer and is a valid and binding obligation
of such Bond Issuer, and an unqualified opinion of bond counsel to such effect
was rendered at the time the Bonds were issued. Each Bond and related Bond
Document is genuine, has not been impaired, altered or modified in any respect
and is the legal, valid and binding obligation of the maker thereof, enforceable
in accordance with its terms (except as such enforceability may be limited by
Bankruptcy Law and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law), and is
not subject to any dispute, right of setoff, counterclaim or defense of any
kind.
(iv) Each Bond and related Bond Document contains
customary and enforceable provisions so as to render the rights and remedies of
the holder thereof adequate for the practical realization against the related
Bond Collateral of the benefits of the security interests intended to be
provided thereby, including by judicial foreclosure. There is no exemption under
existing law available to the related Bond Issuer and/or any Bond Obligor which
would interfere with the right of Charter or any assignee to foreclose or
realize upon such Bond and related Bond Documents, other than which may be
available under applicable Bankruptcy Law, debt relief or homestead statutes.
(v) Charter has not taken (or omitted to take),
and has no notice that the related Bond Issuer and/or any Bond Obligor has taken
(or omitted to take), any action that would impair or invalidate the coverage
provided by any existing insurance policy relating to any Property or prevent
the Origination Trust or any assignee from enforcing the provisions of any Bond
or related Bond Documents.
(vi) As of the Closing Date relating to a Bond,
the Bond is not currently delinquent or in default, and Charter has not waived
any material default, breach, violation or event of acceleration, and to
Charter's knowledge, no Bond Issuer and/or any Bond Obligor is currently in
default in complying with the terms of its Bond Documents.
(vii) To Charter's knowledge, after having
conducted reasonable investigation with due diligence, as of the Closing Date
relating to a Bond, (i) the Bond Obligor and the Bond Issuer are in compliance
with any covenants that they have agreed to satisfy in order for the interest
payable on the Bond to be excludable from gross income for purposes of federal
income taxation, (ii) there exists no reason why such interest would not be
excludable from gross income for purposes of federal income taxation, (iii) the
amount paid to obtain credit enhancement with respect to the Bonds from the
Surety Provider is reasonable and customary, and (iv) it is reasonably expected
that the Bond Obligor, rather than the Surety Provider, will pay debt service on
the Bonds.
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<PAGE>
(viii) The Assignment of the Assigned Assets by
Charter pursuant to this Agreement is not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(ix) As of the Closing Date relating to a Bond,
the Bond is not subject to a bankruptcy plan.
(x) Charter has caused all of its records to be
marked to indicate that the Assigned Assets have been Assigned by Charter to the
Origination Trust.
(xi) To Charter's knowledge, there exists no
violation of any Environmental Laws with respect to any Property.
(xii) No Bond will be deposited with market
discount in excess of a de minimis amount within the meaning of Section
1278(a)(2)(C) of the Internal Revenue Code.
For purposes of the representations made herein, the phrase "to
the best knowledge of Charter" or "to Charter's knowledge" means to the actual
knowledge of Charter after reasonable inquiry.
SECTION 5. Repurchase or Substitution of Ineligible Bond. (a) If
any of the representations or warranties of Charter contained in Section 4(b)
hereof shall prove to be, in any material and adverse respect, false, incorrect
or misleading (a "Breached Representation") as to any Bond (each an "Ineligible
Bond"), Charter, at its expense, shall use commercially reasonable efforts to
cause such Breached Representation to be, in all material respects, true,
correct and not misleading. Failure by Charter to cure a Breached Representation
shall not create an Event of Default. Charter agrees promptly to notify the
Origination Trust and the Administrative Agent if Charter discovers that any
Bond is an Ineligible Bond.
(b) Charter hereby grants the Origination Trust the
option (the "Repurchase Option"), exercisable by the Origination Trust at any
time on and after occurrence of, and during the continuance of, an Event of
Default under the Insurance Agreement, to require Charter to repurchase the
applicable Ineligible Bond for a purchase price equal to the outstanding
principal amount of the Ineligible Bond at the date of repurchase, plus accrued
and unpaid interest to the date of repurchase (the "Repurchase Price"). Charter
agrees to repurchase the applicable Ineligible Bond within 60 days of the
exercise of the Repurchase Option by the Origination Trust. The Repurchase
Option may be exercised by the Origination Trust by delivery to Charter of a
notice of election to exercise the Repurchase Option. In lieu of repurchasing an
Ineligible Bond, Charter may, with the consent of the Controlling Person, assign
to the Origination Trust a Bond (a "Substituted Bond") in substitution for such
Ineligible Bond. Charter agrees to promptly notify the Administrative Agent if
the Origination Trust exercises the Repurchase Option or if a Substituted Bond
is Assigned to the Origination Trust.
-8-
<PAGE>
SECTION 6. Events of Termination. If any of the following events
(each an "Event of Termination") shall occur and be continuing:
(a) The occurrence of an Event of Default (as such term
is defined in each Transaction Document) under any Transaction Document; or
(b) Any representation or warranty made by Charter in
Section 4(a) hereof or in any Transaction Document, or any information or report
delivered by Charter pursuant to this Agreement or any Transaction Document
shall prove to have been incorrect or untrue in any material respect when made
or deemed made or delivered; or
(c) Charter shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for 30 days
after written notice thereof shall have been given to Charter by the Origination
Trust; or
(d) Charter or any of its subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
Charter or any of its subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
Bankruptcy Law, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or Charter or any of its subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this subsection (d);
or
(e) There shall have occurred any Material Adverse
Change with respect to Charter since the date of this Agreement; or
(f) The Facility Termination Date;
then, and in any such event, the Origination Trust shall, by notice to Charter
and the Administrative Agent, declare the Contribution Termination Date to have
occurred (in which case the Contribution Termination Date shall be deemed to
have occurred); provided that automatically upon the occurrence of any event
(without any requirement for the passage of time or the giving of notice)
described in paragraph (d) of this Section 6, the Contribution Termination Date
shall occur. Upon any such declaration or designation or upon such automatic
termination, Charter shall have no further right to sell and contribute Assigned
Assets to the Origination
-9-
<PAGE>
Trust.
SECTION 7. Servicing of Loan Documents. Consistent with the
Origination Trust's ownership of all Assigned Assets, and subject to the terms
of the Servicing Agreement and the rights of the Servicer thereunder, the
Origination Trust shall have the sole right to service, manage and administer
all Assigned Assets, to assign such right, and to delegate such right to others.
Charter agrees to cooperate fully with the Servicer, the Origination Trust and
any assignee of the Origination Trust in the exercise of such rights.
SECTION 8. No Assumption. The Assignments of the Assigned Assets
from Charter to the Origination Trust do not constitute and are not intended to
result in a creation or an assumption by the Origination Trust of any pecuniary
or financial liability, debt or obligation of Charter or any other Person in
connection with the Assigned Assets or under the related Bond Documents or any
other agreement or instrument relating thereto. No such obligation or liability
is intended to be assumed by the Origination Trust hereunder, and any such
assumption is expressly disclaimed.
SECTION 9. Further Assurances. Upon the request of the Origination
Trust, Charter shall, at its expense, promptly execute and deliver all further
instruments and documents, and take all further action (including, without
limitation, the execution and filing of such financing or continuation
statements, or amendments thereto or assignments thereof), that may be necessary
or desirable, or that the Origination Trust may reasonably request, as are
necessary to (a) effect or evidence the Assignment of the Assigned Assets
hereunder, (b) perfect and protect any security interest granted or purported to
be granted under any Bond Document and (c) perfect and protect any ownership or
security interest granted or purported to be granted to the Origination Trust
hereunder or (d) to enable the Origination Trust to exercise and enforce its
rights and remedies hereunder with respect to any Assigned Assets. Charter
hereby authorizes the Origination Trust to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any part of the Assigned Assets now existing or hereafter
arising without the signature of Charter where permitted by law.
SECTION 10. Amendments, etc. No amendment, waiver or modification
of any provision of this Agreement, nor any consent hereunder, shall in any
event be effective unless in writing and signed by each of the parties hereto.
Any waiver or consent hereunder shall be effective only in the specific instance
and for the specific purpose for which given. This Agreement, together with the
other Transaction Documents, contains a final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement (together with the exhibits
hereto) among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings. Notice of any amendment
hereto shall be given to the Administrative Agent.
SECTION 11. Notices. Except to the extent otherwise expressly
provided herein, all notices, requests, and demands to or upon the respective
parties hereto to be effective shall be in writing (and if sent by mail,
certified or registered, return receipt requested) or facsimile
-10-
<PAGE>
transmission and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three business days
after being deposited in the mail, postage prepaid, or, in the case of facsimile
transmission, when sent, addressed as follows:
If to Charter:
--------------
Charter Municipal Mortgage Acceptance Company
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
and to
Attention: Bruce Brown, Senior Vice President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
If to the Origination Trust:
----------------------------
Charter MAC Origination Trust I
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
and to
Attention: Bruce Brown, Senior Vice President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
If to the Administrative Agent:
-------------------------------
First Tennessee Bank National Association
4385 Poplar Avenue
Memphis, Tennessee 38117
Attention: Dennis Gillespie
Telephone: (901) 681-2462
-11-
<PAGE>
Facsimile: (901) 681-2450
SECTION 12. No Waiver; Remedies and Severability. No failure on
the part of the Origination Trust to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. No failure on the
part of the Origination Trust or any other Person to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor will any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law. The
parties hereto further agree that the holding by any court of competent
jurisdiction that any remedy pursued by the parties hereto and hereunder is
unavailable or unenforceable will not affect in any way the ability of such
parties to pursue any other remedy available to them. In the event any provision
of this Agreement shall be held to be invalid or unenforceable by any court of
competent jurisdiction, such provision shall be ineffective only to the extent
of such invalidity or unenforceability, without invalidating the remainder of
such provision or any other provisions of this Agreement.
SECTION 13. Binding Effect; Assignability; Acknowledgments. (a)
This Agreement shall be binding upon Charter, the Origination Trust and their
respective successors and assigns (which successors and assigns shall include a
trustee in bankruptcy), and shall inure to the benefit of each such Person and
each of their respective successors and assigns. Charter may not assign or
delegate any of its rights or obligations hereunder or any interest herein
without the prior written consent of the Origination Trust. Charter will give
notice of any such assignment or delegation to the Administrative Agent.
(b) Each of the parties hereto hereby acknowledges that,
without the prior consent of Charter, the Origination Trust may further assign
the Assigned Assets and all or any portion of its rights under this Agreement,
and any assignee of the Origination Trust may (except as otherwise agreed to by
such assignees) further assign the Assigned Assets and their rights under this
Agreement, and Charter hereby consents to any such assignments. All such
assignees shall be third-party beneficiaries of, and shall be entitled to
enforce the Origination Trust's rights and remedies under, this Agreement to the
same extent as if they were parties thereto, except to the extent specifically
limited under the terms of their assignment.
(c) Charter hereby agrees and acknowledges that the
Origination Trust is on the Initial Closing Date including the Assigned Assets
and this Agreement in the Trust Estate of the Owner Trust, and that each of the
parties to the Transaction Documents have relied and will continue to rely upon
each of the foregoing representations and warranties, and further agrees that
such Persons are entitled to so rely thereon.
(d) Without limiting the foregoing, Charter hereby
acknowledges that, as provided in the Transaction Documents, all of the
Origination Trust's rights, remedies, powers
-12-
<PAGE>
and privileges, and all claims of the Origination Trust against Charter, under
or with respect to this Agreement and the other Transaction Documents (whether
arising pursuant to the terms of this Agreement or otherwise available at law or
in equity), including, without limitation, (i) the right to determine whether or
not a Event of Termination has occurred and is continuing, (ii) the right of the
Origination Trust, at any time, to receive all notices hereunder and to enforce
this Agreement against Charter and the obligations of Charter hereunder, (iii)
the right to appoint a successor to the Servicer at the times and upon the
conditions set forth in the Servicing Agreement, and (iv) the right, at any
time, to give or withhold any and all consents, requests, notices, directions,
approvals, demands, extensions or waivers under or with respect to this
Agreement, any other Transaction Documents or any obligations of Charter
hereunder and thereunder, may be exercised and/or enforced by the other
Transaction Parties to the same extent as the Origination Trust may do. Charter
acknowledges and agrees that such parties are third- party beneficiaries of this
Agreement and the other Transaction Documents to which Charter is a party, and
may rely on Charter's representations, warranties, covenants and indemnities
made herein and therein as if made directly to them.
(e) Charter hereby agrees (i) to execute all agreements,
instruments and documents, and to take all other action, that the Origination
Trust, or any other Transaction Party, reasonably determines is necessary or
appropriate to evidence its consent described in paragraph (b) above and (ii) to
give to the other Transaction Parties, at the time and in the manner given to
the Origination Trust, copies of all notices, consents, requests and other
writings to be given to the Origination Trust by Charter under this Agreement.
To the extent that Charter has granted the Origination Trust any powers of
attorney under this Agreement, Charter agrees that the other Transaction Parties
may exercise all such powers of attorney on behalf of the Origination Trust as
provided in the Transaction Documents and Charter agrees to cooperate fully with
the other Transaction Parties in the exercise of such rights.
(f) This Agreement (including, without limitation, the
representations, warranties and covenants contained in Section 4) shall survive
the sale and contribution of the Assigned Assets hereunder and shall constitute
the continuing obligations of the parties hereto in accordance with its terms,
and shall remain in full force and effect until such time, after the Facility
Termination Date, as the Final Distribution Date shall occur. Without limiting
the foregoing, (i) the rights and remedies of Section 5 with respect to any
breach of any representations, warranties or covenants made by Charter shall be
continuing and shall survive the occurrence of the Facility Termination Date and
any termination of this Agreement, and (ii) that to the extent that a payment,
transfer or deposit is made by or on behalf of Charter to the Origination Trust
which payment, transfer or deposit (or any part thereof) is subsequently
invalidated, declared to be fraudulent or preferential or set aside and required
to be repaid to any of Charter or its respective estate, trustee or receiver or
any other Person, under any Bankruptcy Law, state or federal law, common law or
equitable cause, then to the extent of such repayment, all rights and
obligations of the parties hereunder in respect of such payment, transfer or
deposit shall be reinstated and continued in full force and effect as if such
initial payment, transfer or deposit had never been made.
-13-
<PAGE>
The Origination Trust, its successors and assigns hereby
acknowledge that Charter is selling, assigning, conveying, transferring and
delivering the Assigned Assets without recourse (except to the extent as is
specifically provided herein), and, except as expressly set forth above, without
representation or warranty of any kind or description.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT
IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, THEREBY OR BY THE OWNER TRUST
AGREEMENT AND THE CERTIFICATE ISSUER TRUST AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
SECTION 16. Costs, Expenses and Taxes. (a) Charter agrees to pay
on demand all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing and any
requested amendments, waivers or consents) of this Agreement and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for any Transaction Party
with respect thereto and with respect to advising any Transaction Party as to
their rights and remedies under this Agreement, and the other agreements
executed pursuant hereto and all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the
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<PAGE>
enforcement of this Agreement and the other agreements and documents to be
delivered hereunder.
(b) In addition, Charter shall pay any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other agreements and documents to be delivered hereunder, and agrees to
indemnify the Origination Trust and its assignees against any liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees.
SECTION 17. Counterparts. This Agreement may be executed in any
number of separate counterparts by the parties hereto and each counterpart when
so executed shall be deemed to be an original and all such counterparts when
taken together shall constitute one and the same agreement.
SECTION 18. Captions. The various captions (including, without
limitation, the table of contents) in this Agreement are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
SECTION 19. Notice of Limitation of Liability. Pursuant to Section
10.6 of the Origination Trust Agreement, all Persons with whom the Origination
Trust does business are on notice that the Shareholders, the Trustees, and the
Manager (each as defined in the Origination Trust Agreement) are not liable for
the Origination Trust's obligations, and all persons shall look solely to the
assets of the Origination Trust for payment. The Origination Trust is a business
trust created under the Trust Act; but the Board of Trustees or Manager shall
not be liable for failure to give notice to such Persons, and any failure to
give such notice shall not imply that the Shareholders, the Managing Trustees,
the Manager, and the Registered Trustee are liable for the Trust's obligations.
[Signature page to follow]
-15-
<PAGE>
IN WITNESS WHEREOF, Charter and the Origination Trust have duly
executed this Agreement as of the date first written above.
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC,
its General Partner
By: /s/ Stuart J. Boesky
-------------------------------
Name: Stuart J. Boesky
-----------------------------
Title: President & COO
-----------------------------
CHARTER MAC ORIGINATION TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC,
its General Partner
By: /s/ Stuart J. Boesky
-------------------------------
Name: Stuart J. Boesky
-----------------------------
Title: President & COO
-----------------------------
<PAGE>
EXHIBIT A
---------
BOND SCHEDULE
CONTRIBUTION AGREEMENT
Dated as of May 21, 1998
Between
CHARTER MAC ORIGINATION TRUST I
and
CHARTER MAC OWNER TRUST I
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions ..................................................... 1
SECTION 2. Assignment; Contribution ........................................ 2
SECTION 3. Conditions Precedent to Initial Assignment
by the Origination Trust ........................................ 4
SECTION 4. Representations, Warranties and Covenants ....................... 6
SECTION 5. Repurchase or Substitution of Ineligible Bond ................... 9
SECTION 6. Events of Termination ........................................... 9
SECTION 7. Servicing of Loan Documents ..................................... 11
SECTION 8. No Assumption ................................................... 11
SECTION 9. Further Assurances .............................................. 11
SECTION 10. Amendments, etc. ................................................ 11
SECTION 11. Notices ......................................................... 12
SECTION 12. No Waiver; Remedies and Severability ............................ 13
SECTION 13. Binding Effect; Assignability; Acknowledgments .................. 13
SECTION 14. GOVERNING LAW ................................................... 15
SECTION 15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL ................... 15
SECTION 16. Costs, Expenses and Taxes ....................................... 16
SECTION 17. Counterparts .................................................... 16
SECTION 18. Captions ........................................................ 16
SECTION 19. Notice of Limitation of Liability ............................... 16
<PAGE>
CONTRIBUTION AGREEMENT (the "Agreement"), dated as of May 21, 1998,
by and between CHARTER MAC ORIGINATION TRUST I, a Delaware business trust (the
"Origination Trust"), and CHARTER MAC OWNER TRUST I, a Delaware business trust
(the "Owner Trust").
WHEREAS, Origination Trust wishes to sell, assign, transfer and
contribute to the Owner Trust certain Assigned Assets (as hereinafter defined),
including certain Bonds and related Bond Collateral (each as hereinafter
defined), now or from time to time hereafter owned by the Origination Trust, and
the Owner Trust is willing, on the terms and subject to the conditions contained
in this Agreement, to acquire and accept the assignment, transfer and
contribution of such Assigned Assets from the Origination Trust;
NOW, THEREFORE, in consideration of the premises and of the
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
SECTION 2. Definitions. (a) For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
given to such terms in Appendix A hereto which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
(b) All defined terms in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
<PAGE>
(f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified, consolidated, continued, extended or supplemented and includes (in the
case of agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
SECTION 3. Assignment; Contribution. (a) On the terms and conditions
hereinafter set forth and without recourse (except to the extent as is
specifically provided herein), the Origination Trust, from time to time during
the period from the date hereof to the Facility Termination Date, hereby agrees
to sell, assign, transfer and contribute (collectively, "Assign") to the Owner
Trust, and the Owner Trust hereby agrees to acquire and accept the assignment,
transfer and contribution from the Origination Trust (each such sale,
assignment, transfer and contribution, an "Assignment"), all of the Origination
Trust's right, title and interest in, to and under (i) the Bonds identified on
the Bond Schedule attached hereto as Exhibit A, as the same may be supplemented
from time to time by the Origination Trust; (ii) all Bond Collateral relating to
the Bonds; (iii) all monies and other property of any kind that relate to any of
the Bonds and that are now or at any time or times hereafter in the possession
or under the control of the Origination Trust, the Servicer, or any bailee of
the Servicer, and all monies, including monies not yet received, that represent
payments of Bond Interest due from May 15, 1998; (iv) all books and records of
the Origination Trust to the extent pertaining to any of (i) through (iii)
above, including all computer programs, disks, tapes and related electronic data
processing media, credit files, account cards, payment records, correspondence
and ledgers in which any of the foregoing are reflected or maintained; (v) the
present and continuing exclusive right, power and authority, subject to the
provisions of the Servicing Agreement, to give and receive notices and other
communications, to make waivers or other agreements, to make claims for and
demand performance on, under or pursuant to any of the Bonds or the Bond
Collateral, to bring actions and proceedings thereunder or for the enforcement
of the Bonds or the Bond Collateral, and to exercise all remedies, powers,
privileges and options and to take any and all actions which the Origination
Trust is or may become entitled to take under the Bonds or the Bond Collateral;
(vi) any and all property of every name and nature, now or hereafter
transferred, mortgaged, pledged or assigned as security or additional security
for payment or performance of any obligation of the Bond Issuers and/or Bond
Obligors to the Origination Trust under the Bonds or any of the Bond Collateral,
and the liabilities, obligations and indebtedness evidenced thereby or reflected
therein; and (vii) all income, revenues, issues, products, revisions,
substitutions, replacements, profits and proceeds of and from all of the
foregoing (collectively, the "Assigned Assets"). In addition, the Origination
Trust assigns to the Owner Trust all rights of the Origination Trust that the
Origination Trust obtained from Charter under the Charter Contribution
Agreement.
(b) In consideration for the Assignment of the Assigned
Assets hereunder, the Owner Trust shall issue and deliver to the Origination
Trust the Residual Certificate representing beneficial interests in the Owner
Trust and shall pay the Origination
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<PAGE>
Trust the Cash Consideration, if any, relating to the Assigned Bonds and Bond
Collateral as specified on the Bond Schedule. The Residual Certificate shall be
issued and delivered to the Origination Trust on the initial Closing Date. The
Cash Consideration with respect to each Bond and related Bond Collateral and
Assigned Assets shall be payable on the Closing Date relating to such Bond and
related Bond Collateral and Assigned Assets. On each Closing Date, the Owner
Trust shall, upon satisfaction of the applicable conditions set forth in Section
3, make available to the Origination Trust the Cash Consideration, in cash in
same day funds. To the extent any Bond and related Bond Collateral and Assigned
Assets have any value in excess of the Cash Consideration therefor, such value
shall be deemed a contribution by the Origination Trust to the capital of the
Owner Trust as of the related Closing Date.
(c) The Origination Trust and the Owner Trust hereby confirm
their intent and agree that, by the Assignment of the Assigned Assets hereunder,
the Origination Trust is selling, assigning, transferring and contributing the
Assigned Assets absolutely and irrevocably and not as collateral or security.
If, notwithstanding the parties' intent to effect an absolute sale, assignment,
transfer and contribution, the transactions contemplated hereby are
characterized as a financing, the Origination Trust hereby grants the Owner
Trust a security interest in the Assigned Assets and this Agreement shall be
deemed a security agreement, within the meaning of the Uniform Commercial Code,
which (or a copy hereof) the Owner Trust may file in any applicable filing
office. Each of the Origination Trust and the Owner Trust hereby agrees to treat
each Assignment as a sale and contribution for tax, reporting and accounting
purposes (except to the extent that such assignment is not recognized due to the
reporting of taxes on a consolidated basis where applicable and the application
of consolidated financial reporting principles under GAAP). The Origination
Trust agrees to respond to any inquiries with respect to any Assignment
hereunder by confirming the sale, assignment, transfer and contribution of the
Assigned Assets to the Owner Trust, and to note on its financial statements that
such Assigned Assets have been sold and/or contributed to the Owner Trust.
(d) The Origination Trust hereby agrees to protect and
defend the Owner Trust's interest in the Assigned Assets, and each of the Owner
Trust and the Origination Trust hereby agree, at any time and from time to time,
to obtain, procure, execute, deliver, affix and file all such further
agreements, bills of sale and assignments, instruments, documents, receipts,
notices, statements, powers, writings and information, and to do and cause to be
done all such further acts and things as the other party may reasonably request
in connection herewith.
SECTION 4. Conditions Precedent to Initial Assignment by the
Origination Trust. (a) The initial Assignment of Bonds and related Bond
Collateral and Assigned Assets by the Origination Trust hereunder is subject to
the conditions precedent that each Party shall have received on or before the
Initial Closing Date the following, each (unless otherwise indicated) dated as
of the Initial Closing Date, in form and substance satisfactory to each party:
(i) Certified copies of the resolutions of the
Managing Trustees of the Origination Trust authorizing the execution, delivery
and performance of this Agreement and the other Transaction Documents to which
it is a party, and certified copies of all documents
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evidencing other necessary corporate action and Governmental Approvals, if any,
with respect to this Agreement and the other Transaction Documents and the
transactions contemplated thereby;
(ii) A certificate of the Trustees of the Origination
Trust certifying the names, offices and true signatures of the Persons
authorized on behalf of the Origination Trust to sign this Agreement and the
other documents to be delivered by the Origination Trust hereunder;
(iii) Copies of all organizational documents of the
Origination Trust, certified by an Authorized Representative of the Origination
Trust;
(iv) Copies of officially certified documents, dated
not more than 30 days prior to the Initial Closing Date, evidencing the due
organization and good standing of the Origination Trust under the laws of the
State of Delaware;
(v) Executed financing statements, in form suitable
for filing, naming the Origination Trust as the debtor and the Owner Trust as
the secured party, or other similar instruments or documents, as the Owner Trust
may deem necessary or desirable under the UCC of all appropriate jurisdictions
or other applicable law to perfect the Owner Trust's ownership of and security
interest in the Assigned Assets;
(vi) Evidence of the filing of, or duly executed in
form suitable for filing, proper financing statements, if any, necessary (x) to
release all Liens or (y) to subordinate all security interests which do not
constitute Liens, in each case, of any Person in the Assigned Assets previously
granted by the Origination Trust;
(vii) A favorable opinion of Greenberg Traurig Hoffman
Lipoff Rosen & Quentel, counsel for the Origination Trust, substantially in the
form of Exhibit B hereto, and as to such other matters as any Transaction Party
may reasonably request;
(viii) Evidence that each Bond Trustee has been notified
to remit all payments in respect of the Bonds and the Bond Collateral to the
Administrative Agent;
(ix) Evidence that the Administrative Agent has been
notified of the Assignment of the Assigned Assets to the Owner Trust; and
(x) Complete copies of each Transaction Document,
certified by the Origination Trust (as to the Origination Trust) to be true and
complete and in full force and effect.
(b) Conditions Precedent to All Assignments. Each Assignment
(including the initial Assignment) hereunder shall be subject to the further
conditions precedent that:
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(i) with respect to any such Assignment, on or prior
to the Closing Date, the Origination Trust shall have delivered to each
Transaction Party a Bond Schedule identifying the Bonds to be included in such
Assignment and otherwise containing complete and accurate information relating
to the Bonds as of such Closing Date; provided that for each Assignment after
but excluding the initial Assignment, the delivery of the Bond Schedule to each
Transaction Party shall occur at least 16 calendar days prior to the date of the
Assignment;
(ii) the Origination Trust shall have delivered
unqualified opinions of bond counsel to the effect that interest payable on the
Bonds is excludable from gross income tax for purposes of federal income
taxation under the Code, based on customary assumptions;
(iii) the Origination Trust shall have marked its master
data processing records, stating that the Origination Trust's interest in the
Bonds and related Bond Collateral have been Assigned in accordance with this
Agreement;
(iv) the Origination Trust shall have delivered each
Bond, together with a duly executed bond power attached thereto, endorsed in
blank, or such other necessary instruments of transfer or assignment, and
originals or copies of each material Bond Document related thereto to the
Administrative Agent (as designee of the Owner Trust);
(v) on the Closing Date the following statements shall
be true (and the Origination Trust, by accepting the Cash Consideration on such
Closing Date, shall be deemed to have certified that):
A. The representations and warranties of the
Origination Trust contained in Section 4 hereof and in each Transaction Document
are correct on and as of such Closing Date as though made on and as of such
date; and
B. No event has occurred and is continuing, or
would result from such Assignment, that constitutes, or would constitute, an
Event of Termination; and
(vi) The Owner Trust shall have received such other
approvals, opinions or documents as any Transaction Party may reasonably
request; and
(vii) The Surety Provider shall have approved the
Assignment pursuant to Section 4.03 of the Insurance Agreement.
SECTION 5. Representations, Warranties and Covenants: (a) Each of
the Origination Trust and the Owner Trust represents and warrants to the other,
as of each Closing Date, (i) it is duly organized, validly existing and in good
standing in the jurisdiction of its organization, (ii) it has all requisite
power and authority to (A) own its properties, (B) carry on its business as now
conducted and proposed to be conducted, and (C) execute and deliver this
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Agreement and each of the other Transaction Documents to which it is a party and
to perform its obligations hereunder and thereunder in accordance with their
respective terms, (iii) neither the execution and delivery of this Agreement and
each of the other Transaction Documents to which it is a party, nor the
performance of its obligations hereunder or thereunder, will (A) conflict with
or result in a breach or default under any of its organizational documents, any
Applicable Laws or any contract, agreement, mortgage, instrument or other
undertaking to which it is a party or by which any of its properties is subject
or (B) result in the creation or imposition of any Lien, other than pursuant to
the Transaction Documents, (iv) it has obtained any Governmental Approval
required for the execution, delivery and performance by it of this Agreement and
each of the other Transaction Documents to which it is a party, (v) there is no
action, suit or proceeding pending against it in any court or by or before any
Governmental Authority which would materially affect its ability to carry out
the transactions contemplated by this Agreement or any of the other Transaction
Documents to which it is a party, (vi) the execution, delivery and performance
by it of this Agreement and each of the other Transaction Documents to which it
is a party, have been duly authorized by all necessary corporate or other action
on its part, (vii) this Agreement and each of the other Transaction Documents to
which it is a party have been duly executed and delivered by it and constitute
its legal, valid and binding obligations enforceable against it in accordance
with their respective terms, (viii) all of the representations and warranties
made by it in any other Transaction Document were true and correct when made and
are true and correct as of the Closing Date and are hereby made by it as if the
same were set forth in full in this Agreement, (ix) the execution and delivery
of this Agreement and each of the other Transaction Documents to which it is a
party, and the consummation of the transactions contemplated hereby and thereby
were not made (A) in contemplation of the insolvency of any Person, (B) with the
intent to hinder, delay or defraud any Person, any creditor of any Person or any
federal banking agency, (C) after the commission of any act of insolvency by any
Person or (D) without fair consideration; and (x) its assets or capital are not
unreasonably small in value in relation to its business, and its remaining
assets or capital will not be unreasonably small in value in relation to and
after giving effect to the consummation of the transactions contemplated hereby
or by the other Transaction Documents to which it is a party; it is not
insolvent at the time of, and will not be rendered insolvent by virtue of, the
consummation of the transactions contemplated hereby or by the other Transaction
Documents to which it is a party; by consummating the transactions contemplated
hereby or by the other Transaction Documents to which it is a party, it does not
intend to, or believe that it will, incur debts beyond its ability to pay such
debts as they become due.
(b) the Origination Trust hereby represents, warrants and
covenants to the Owner Trust as follows:
(i) The information pertaining to the Bonds set forth
in the Bond Schedule is true and correct in all material respects at the date or
dates respecting which such information was furnished.
(ii) Immediately prior to the Assignment of the
Assigned Assets pursuant hereto, the Origination Trust was the sole legal and
beneficial owner of such
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Assigned Assets and had good and marketable title thereto, free and clear of any
Lien or participation or ownership interest in favor of any other Person, and
the form of this Agreement and the related instruments of transfer or assignment
are in form sufficient to transfer all right, title and interest of the
Origination Trust in the Assigned Assets to the Owner Trust. The Assignment of
the Assigned Assets by the Origination Trust to the Owner Trust constitutes a
valid and enforceable sale, assignment, transfer and contribution of the
Assigned Assets to the Owner Trust, enforceable against creditors of, and
purchasers from, the Origination Trust. Upon the Assignment of the Assigned
Assets hereunder, the Origination Trust has no remaining interest in any
Assigned Asset. The Origination Trust has given or caused to be given all
notices legally necessary to be given by the Origination Trust to effect the
sale of the Assigned Assets pursuant hereto. The Origination Trust has obtained
any and all consents required for the Origination Trust to convey to the Owner
Trust all right, title and interest in the Assigned Assets.
(iii) Each Bond has been duly authorized and validly
issued by the related Bond Issuer and is a valid and binding obligation of such
Bond Issuer, and an unqualified opinion of bond counsel to such effect was
rendered at the time the Bonds were issued. Each Bond and related Bond Document
is genuine, has not been impaired, altered or modified in any respect and is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms (except as such enforceability may be limited by
Bankruptcy Law and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law), and is
not subject to any dispute, right of setoff, counterclaim or defense of any
kind.
(iv) Each Bond and related Bond Document contains
customary and enforceable provisions so as to render the rights and remedies of
the holder thereof adequate for the practical realization against the related
Bond Collateral of the benefits of the security interests intended to be
provided thereby, including by judicial foreclosure. There is no exemption under
existing law available to the related Bond Issuer and/or any Bond Obligor which
would interfere with the right of the Origination Trust or any assignee to
foreclose or realize upon such Bond and related Bond Documents, other than which
may be available under applicable Bankruptcy Law, debt relief or homestead
statutes.
(v) The Origination Trust has not taken (or omitted to
take), and has no notice that the related Bond Issuer and/or any Bond Obligor
has taken (or omitted to take), any action that would impair or invalidate the
coverage provided by any existing insurance policy relating to any Property or
prevent the Owner Trust or any assignee from enforcing the provisions of any
Bond or related Bond Documents.
(vi) As of the Closing Date relating to a Bond, the
Bond is not currently delinquent or in default, and the Origination Trust has
not waived any material default, breach, violation or event of acceleration, and
to the Origination Trust's knowledge, no Bond Issuer and/or any Bond Obligor is
currently in default in complying with the terms of its Bond Documents.
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(vii) To the knowledge of the Origination Trust, after
having conducted reasonable investigation with due diligence, as of the Closing
Date relating to a Bond, (i) the Bond Obligor and the Bond Issuer are in
compliance with any covenants that they have agreed to satisfy in order for the
interest payable on the Bond to be excludable from gross income for purposes of
federal income taxation, (ii) there exists no reason why such interest would not
be excludable from gross income for purposes of federal income taxation, (iii)
the amount paid to obtain credit enhancement with respect to the Bonds from the
Surety Provider is reasonable and customary, and (iv) it is reasonably expected
that the Bond Obligor, rather than the Surety Provider, will pay debt service on
the Bonds.
(viii) The Assignment of the Assigned Assets by the
Origination Trust pursuant to this Agreement is not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(ix) As of the Closing Date relating to a Bond, the
Bond is not subject to a bankruptcy plan.
(x) The Origination Trust has caused all of its
records to be marked to indicate that the Assigned Assets have been Assigned by
the Origination Trust to the Owner Trust.
(xi) To the Origination Trust's knowledge, there exists
no violation of any Environmental Laws with respect to any Property.
(xii) No Bond will be deposited with market discount in
excess of a de minimis amount within the meaning of Section 1278(a)(2)(C) of the
Internal Revenue Code.
For purposes of the representations made herein, the phrase "to the
best knowledge of the Origination Trust" or "to the Origination Trust's
knowledge" means to the actual knowledge of the Origination Trust after
reasonable inquiry.
SECTION 5. Repurchase or Substitution of Ineligible Bond. (a) If any
of the representations or warranties of the Origination Trust contained in
Section 4(b) hereof shall prove to be, in any material and adverse respect,
false, incorrect or misleading (a "Breached Representation") as to any Bond,
making such Bond with respect to which the representation was made an Ineligible
Bond and giving rise to the Repurchase Obligation on the part of Charter
(pursuant to Section 5 of the Charter Contribution Agreement), then the
Origination Trust hereby agrees to repurchase from the Owner Trust such
Ineligible Bond. The Origination Trust agrees to promptly notify the Owner Trust
and the Administrative Agent if the Origination Trust discovers that any Bond is
an Ineligible Bond.
(b) The Origination Trust hereby grants the Owner Trust the
option (the "Repurchase Option"), exercisable by the Owner Trust at any time on
and after occurrence
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<PAGE>
of, and during the continuance of, an Event of Default under the Insurance
Agreement, to require the Origination Trust to repurchase the applicable
Ineligible Bond for a purchase price equal to the outstanding principal amount
of the Ineligible Bond at the date of repurchase, plus accrued and unpaid
interest to the date of repurchase (the "Repurchase Price"). The Origination
Trust agrees to repurchase the applicable Ineligible Bond within 60 days of the
exercise of the Repurchase Option by the Owner Trust. The Repurchase Option may
be exercised by the Owner Trust by delivery to the Origination Trust of a notice
of election to exercise the Repurchase Option. In lieu of repurchasing an
Ineligible Bond, the Origination Trust may, with the consent of the Controlling
Person, assign to the Owner Trust a Bond (a "Substituted Bond") in substitution
for such Ineligible Bond. The Origination Trust agrees to promptly notify the
Administrative Agent if the Owner Trust exercises the Repurchase Option or if a
Substituted Bond is Assigned to the Owner Trust.
SECTION 6. Events of Termination. If any of the following events
(each an "Event of Termination") shall occur and be continuing:
(a) The occurrence of an Event of Default (as such term is
defined in each Transaction Document) under any Transaction Document; or
(b) Any representation or warranty made by the Origination
Trust in Section 4(a) hereof or in any Transaction Document, or any information
or report delivered by the Origination Trust pursuant to this Agreement or any
Transaction Document shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered; or
(c) The Origination Trust shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied for 30
days after written notice thereof shall have been given to the Origination Trust
by the Owner Trust; or
(d) The Origination Trust or any of its subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Origination Trust or any of its subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any Bankruptcy Law, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Origination Trust or any of its subsidiaries shall
take any corporate action to authorize any of the actions set forth above in
this subsection (d); or
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(e) There shall have occurred any Material Adverse Change
with respect to the Origination Trust since the date of this Agreement; or
(f) The Facility Termination Date;
then, and in any such event, the Owner Trust shall, by notice to the Origination
Trust and the Administrative Agent, declare the Contribution Termination Date to
have occurred (in which case the Contribution Termination Date shall be deemed
to have occurred); provided that automatically upon the occurrence of any event
(without any requirement for the passage of time or the giving of notice)
described in paragraph (d) of this Section 6, the Contribution Termination Date
shall occur. Upon any such declaration or designation or upon such automatic
termination, the Origination Trust shall have no further right to sell and
contribute Assigned Assets to the Owner Trust.
SECTION 7. Servicing of Loan Documents. Consistent with the Owner
Trust's ownership of all Assigned Assets, and subject to the terms of the
Servicing Agreement and the rights of the Servicer thereunder, the Owner Trust
shall have the sole right to service, manage and administer all Assigned Assets,
to assign such right, and to delegate such right to others. The Origination
Trust agrees to cooperate fully with the Servicer, the Owner Trust and any
assignee of the Owner Trust in the exercise of such rights.
SECTION 8. No Assumption. The Assignments of the Assigned Assets
from the Origination Trust to the Owner Trust do not constitute and are not
intended to result in a creation or an assumption by the Owner Trust of any
pecuniary or financial liability, debt or obligation of the Origination Trust or
any other Person in connection with the Assigned Assets or under the related
Bond Documents or any other agreement or instrument relating thereto. No such
obligation or liability is intended to be assumed by the Owner Trust hereunder,
and any such assumption is expressly disclaimed.
SECTION 9. Further Assurances. Upon the request of the Owner Trust,
the Origination Trust shall, at its expense, promptly execute and deliver all
further instruments and documents, and take all further action (including,
without limitation, the execution and filing of such financing or continuation
statements, or amendments thereto or assignments thereof), that may be necessary
or desirable, or that the Owner Trust may reasonably request, as are necessary
to (a) effect or evidence the Assignment of the Assigned Assets hereunder, (b)
perfect and protect any security interest granted or purported to be granted
under any Bond Document and (c) perfect and protect any ownership or security
interest granted or purported to be granted to the Owner Trust hereunder or (d)
to enable the Owner Trust to exercise and enforce its rights and remedies
hereunder with respect to any Assigned Assets. The Origination Trust hereby
authorizes the Owner Trust to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all or
any part of the Assigned Assets now existing or hereafter arising without the
signature of the Origination Trust where permitted by law. Notice of any
amendment hereto shall be given to the Administrative Agent.
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SECTION 10. Amendments, etc. No amendment, waiver or modification of
any provision of this Agreement, nor any consent hereunder, shall in any event
be effective unless in writing and signed by each of the parties hereto. Any
waiver or consent hereunder shall be effective only in the specific instance and
for the specific purpose for which given. This Agreement, together with the
other Transaction Documents, contains a final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement (together with the exhibits
hereto) among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.
SECTION 11. Notices. Except to the extent otherwise expressly
provided herein, all notices, requests, and demands to or upon the respective
parties hereto to be effective shall be in writing (and if sent by mail,
certified or registered, return receipt requested) or facsimile transmission
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when delivered by hand, or three business days after being
deposited in the mail, postage prepaid, or, in the case of facsimile
transmission, when sent, addressed as follows:
If to the Origination Trust:
----------------------------
Charter MAC Origination Trust I
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
and to
Attention: Bruce Brown, Senior Vice President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
If to the Owner Trust:
----------------------
Charter MAC Owner Trust I
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
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and to
Attention: Bruce Brown, Senior Vice President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
If to the Administrative Agent:
-------------------------------
First Tennessee Bank National Association
4385 Poplar Avenue
Memphis, Tennessee 38117
Attention: Dennis Gillespie
Telephone: (901) 681-2462
Facsimile: (901) 681-2450
SECTION 12. No Waiver; Remedies and Severability. No failure on the
part of the Owner Trust to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law. No failure on the part of the
Owner Trust or any other Person to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor will any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. The parties hereto
further agree that the holding by any court of competent jurisdiction that any
remedy pursued by the parties hereto and hereunder is unavailable or
unenforceable will not affect in any way the ability of such parties to pursue
any other remedy available to them. In the event any provision of this Agreement
shall be held to be invalid or unenforceable by any court of competent
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity or unenforceability, without invalidating the remainder of such
provision or any other provisions of this Agreement.
SECTION 13. Binding Effect; Assignability; Acknowledgments. (a) This
Agreement shall be binding upon the Origination Trust, the Owner Trust and their
respective successors and assigns (which successors and assigns shall include a
trustee in bankruptcy), and shall inure to the benefit of each such Person and
each of their respective successors and assigns. The Origination Trust may not
assign or delegate any of its rights or obligations hereunder or any interest
herein without the prior written consent of the Owner Trust. The Origination
Trust will give notice of any such assignment or delegation to the
Administrative Agent.
(b) Each of the parties hereto hereby acknowledges that,
without the prior consent of the Origination Trust, the Owner Trust may further
assign the Assigned Assets and all or any portion of its rights under this
Agreement, and any assignee of the Owner Trust
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may (except as otherwise agreed to by such assignees) further assign the
Assigned Assets and their rights under this Agreement, and the Origination Trust
hereby consents to any such assignments. All such assignees shall be third-party
beneficiaries of, and shall be entitled to enforce the Owner Trust's rights and
remedies under, this Agreement to the same extent as if they were parties
thereto, except to the extent specifically limited under the terms of their
assignment.
(c) The Origination Trust hereby agrees and acknowledges
that the Owner Trust is on the Initial Closing Date including the Assigned
Assets and this Agreement in the Trust Estate of the Owner Trust, and that each
of the parties to the Transaction Documents have relied and will continue to
rely upon each of the foregoing representations and warranties, and further
agrees that such Persons are entitled to so rely thereon.
(d) Without limiting the foregoing, the Origination Trust
hereby acknowledges that, as provided in the Transaction Documents, all of the
Owner Trust's rights, remedies, powers and privileges, and all claims of the
Owner Trust against the Origination Trust, under or with respect to this
Agreement and the other Transaction Documents (whether arising pursuant to the
terms of this Agreement or otherwise available at law or in equity), including,
without limitation, (i) the right to determine whether or not a Event of
Termination has occurred and is continuing, (ii) the right of the Owner Trust,
at any time, to receive all notices hereunder and to enforce this Agreement
against the Origination Trust and the obligations of the Origination Trust
hereunder, (iii) the right to appoint a successor to the Servicer at the times
and upon the conditions set forth in the Servicing Agreement, and (iv) the
right, at any time, to give or withhold any and all consents, requests, notices,
directions, approvals, demands, extensions or waivers under or with respect to
this Agreement, any other Transaction Documents or any obligations of the
Origination Trust hereunder and thereunder, may be exercised and/or enforced by
the other Transaction Parties to the same extent as the Owner Trust may do. The
Origination Trust acknowledges and agrees that such parties are third-party
beneficiaries of this Agreement and the other Transaction Documents to which the
Origination Trust is a party, and may rely on the Origination Trust's
representations, warranties, covenants and indemnities made herein and therein
as if made directly to them.
(e) The Origination Trust hereby agrees (i) to execute all
agreements, instruments and documents, and to take all other action, that the
Owner Trust, or any other Transaction Party, reasonably determines is necessary
or appropriate to evidence its consent described in paragraph (b) above and (ii)
to give to the other Transaction Parties, at the time and in the manner given to
the Owner Trust, copies of all notices, consents, requests and other writings to
be given to the Owner Trust by the Origination Trust under this Agreement. To
the extent that the Origination Trust has granted the Owner Trust any powers of
attorney under this Agreement, the Origination Trust agrees that the other
Transaction Parties may exercise all such powers of attorney on behalf of the
Owner Trust as provided in the Transaction Documents and the Origination Trust
agrees to cooperate fully with the other Transaction Parties in the exercise of
such rights.
(f) This Agreement (including, without limitation, the
representations,
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warranties and covenants contained in Section 4) shall survive the sale and
contribution of the Assigned Assets hereunder and shall constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time, after the Facility
Termination Date, as the Final Distribution Date shall occur. Without limiting
the foregoing, (i) the rights and remedies of Section 5 with respect to any
breach of any representations, warranties or covenants made by the Origination
Trust shall be continuing and shall survive the occurrence of the Facility
Termination Date and any termination of this Agreement, and (ii) that to the
extent that a payment, transfer or deposit is made by or on behalf of the
Origination Trust to the Owner Trust which payment, transfer or deposit (or any
part thereof) is subsequently invalidated, declared to be fraudulent or
preferential or set aside and required to be repaid to any of the Origination
Trust or its respective estate, trustee or receiver or any other Person, under
any Bankruptcy Law, state or federal law, common law or equitable cause, then to
the extent of such repayment, all rights and obligations of the parties
hereunder in respect of such payment, transfer or deposit shall be reinstated
and continued in full force and effect as if such initial payment, transfer or
deposit had never been made.
The Owner Trust, its successors and assigns hereby acknowledge that
the Origination Trust is selling, assigning, conveying, transferring and
delivering the Assigned Assets without recourse (except to the extent as is
specifically provided herein), and, except as expressly set forth above, without
representation or warranty of any kind or description.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT
IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THE SUIT, ACTION OR PROCEEDING
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IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, THEREBY OR BY THE OWNER TRUST
AGREEMENT AND THE CERTIFICATE ISSUER TRUST AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
SECTION 16. Costs, Expenses and Taxes. (a) The Origination Trust
agrees to pay on demand all reasonable costs and expenses in connection with the
preparation, execution, delivery and administration (including periodic auditing
and any requested amendments, waivers or consents) of this Agreement and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for any Transaction Party
with respect thereto and with respect to advising any Transaction Party as to
their rights and remedies under this Agreement, and the other agreements
executed pursuant hereto and all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement of
this Agreement and the other agreements and documents to be delivered hereunder.
(b) In addition, the Origination Trust shall pay any and all
stamp, sales, excise and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other agreements and documents to be delivered hereunder, and
agrees to indemnify the Owner Trust and its assignees against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
SECTION 17. Counterparts. This Agreement may be executed in any
number of separate counterparts by the parties hereto and each counterpart when
so executed shall be deemed to be an original and all such counterparts when
taken together shall constitute one and the same agreement.
SECTION 18. Captions. The various captions (including, without
limitation, the table of contents) in this Agreement are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
SECTION 19. Notice of Limitation of Liability. Pursuant to Section
10.6 of the Origination Trust Agreement and Section 12.7 of the Owner Trust
Agreement, all suppliers and Persons with whom the Origination Trust and the
Owner Trust do business are on notice that the Shareholders, the Trustees, and
the Manager (each as defined in the Origination Trust Agreement) and the Senior
Holder, Residual Holder, Trustees and Manager (each as defined in the Owner
Trust Agreement) are not liable for the obligations of the Origination Trust or
the Owner Trust, and all suppliers and persons shall look solely to the assets
of the Origination Trust or the Owner Trust, as the case may be, for payment.
The Origination Trust and the Owner Trust are both business trusts created under
the Trust Act; but the Board of Trustees or Manager of neither the
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<PAGE>
Origination Trust nor the Owner Trust shall be liable for failure to give notice
to such Persons, and any failure to give such notice shall not imply that the
Shareholders, the Managing Trustees, the Manager, and the Registered Trustee are
liable for the Origination Trust's obligations, nor shall such failure imply
that the Senior Holder, Residual Holder, Managing Trustees, the Manager and the
Registered Trustee are liable for the Owner Trust's obligations.
[Signature page to follow]
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<PAGE>
IN WITNESS WHEREOF, the Origination Trust and the Owner Trust have
duly executed this Agreement as of the date first written above.
CHARTER MAC ORIGINATION TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC,
its General Partner
By: /s/ Stuart J. Boesky
-------------------------------
Name: Stuart J. Boesky
-----------------------------
Title: President & COO
-----------------------------
CHARTER MAC OWNER TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC,
its General Partner
By: /s/ Stuart J. Boesky
-------------------------------
Name: Stuart J. Boesky
-----------------------------
Title: President & COO
-----------------------------
<PAGE>
EXHIBIT A
---------
BOND SCHEDULE
INSURANCE AGREEMENT
among
MBIA INSURANCE CORPORATION
and
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
and
CHARTER MAC ORIGINATION TRUST I
and
CHARTER MAC OWNER TRUST I
and
CHARTER MAC FLOATER CERTIFICATE TRUST I
and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
as Administrative Agent
and
RELATED CHARTER LP,
as Servicer
and
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as Liquidity Agent for the Liquidity Banks
and as an Insured Party
Dated as of May 21, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I DEFINITIONS
Page
<S> <C> <C>
SECTION 1.01 Definitions...................................................................3
ARTICLE II THE SURETY BONDS AND PREMIUM
SECTION 2.01 Commitment to Issue Surety Bonds; Increase of Commitment......................4
SECTION 2.02 Conditions Precedent to Issuance of the Surety Bonds..........................4
SECTION 2.03 Premium.......................................................................6
SECTION 2.04 Reimbursement.................................................................7
SECTION 2.05 Fees and Expenses.............................................................8
SECTION 2.06 Payments......................................................................8
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01 Representations, Warranties and Covenants.....................................9
SECTION 3.02 Further Representations and Warranties of Charter............................10
SECTION 3.03 Representations and Warranties of the Surety Provider........................12
SECTION 3.04 Affirmative Covenants of the Charter Entities................................13
SECTION 3.05 Negative Covenants...........................................................15
SECTION 3.06 Affirmative Covenants of the Surety Provider.................................16
ARTICLE IV CONCENTRATION LIMITS; APPRAISALS AND VALUATIONS;NONAPPROVED BONDS
SECTION 4.01 Concentration Limits.........................................................17
SECTION 4.02 Appraisals and Valuations....................................................17
SECTION 4.03 Nonapproved Bonds............................................................18
ARTICLE V EVENTS OF DEFAULT; REMEDIES; RIGHT OF THE CONTROLLINGPERSON TO DIRECT THE OWNER
TRUST AND THE COLLATERAL AGENT
SECTION 5.01 Defaults.....................................................................18
SECTION 5.02 Remedies; No Remedies Exclusive..............................................21
SECTION 5.03 Right of Controlling Person to Direct Actions of the Origination Trust,
the Owner Trust and the Administrative Agent.................................22
ARTICLE VI FURTHER AGREEMENTS
SECTION 6.01 Obligations Absolute.........................................................23
SECTION 6.02 Liability of the Surety Provider.............................................24
SECTION 6.03 Rights of Subrogation; Further Assurances....................................24
SECTION 6.04 Reimbursement of Expenses....................................................25
SECTION 6.05 Indemnification..............................................................25
SECTION 6.06 Reinsurance and Participations...............................................26
SECTION 6.07 No Proceedings...............................................................26
2
<PAGE>
SECTION 6.08 Successor Servicer...........................................................26
SECTION 6.09 Litigation...................................................................27
SECTION 6.10 Increased Costs; Increased Capital...........................................27
SECTION 6.12 Liquidity Surety Bond Assignment Obligation..................................29
ARTICLE VII MISCELLANEOUS
SECTION 7.01 Amendments, Third-Party Rights...............................................30
SECTION 7.02 Notices......................................................................31
SECTION 7.03 No Waiver: Remedies and Severability.........................................32
SECTION 7.04 Binding Effect; Assignment...................................................33
SECTION 7.05 Termination of this Insurance Agreement and the Surety Bonds;
Continuing Obligations.......................................................34
SECTION 7.06 GOVERNING LAW................................................................34
SECTION 7.07 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL................................34
SECTION 7.08 No Recourse..................................................................35
SECTION 7.09 No Bankruptcy................................................................35
SECTION 7.10 Non-Petition.................................................................36
SECTION 7.11 Counterparts.................................................................36
SECTION 7.12 Captions.....................................................................36
SECTION 7.13 Notice of Limitation of Liability............................................37
EXHIBIT A CERTIFICATE SURETY BOND
EXHIBIT B LIQUIDITY SURETY BOND
EXHIBIT C SCHEDULE OF BONDS
</TABLE>
3
<PAGE>
INSURANCE AGREEMENT
INSURANCE AGREEMENT (the "Agreement"), dated as of May 21, 1998,
by and among MBIA INSURANCE CORPORATION, a New York stock insurance company (the
"Surety Provider"), CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY, a Delaware
business trust ("Charter"), CHARTER MAC ORIGINATION TRUST I, a Delaware business
trust (the "Origination Trust"), CHARTER MAC OWNER TRUST I, a Delaware business
trust (the "Owner Trust," and an Insured Party as hereinafter defined), CHARTER
MAC FLOATER CERTIFICATE TRUST I, a Delaware business trust (the "Certificate
Issuer"), FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as Administrative Agent and
Custodian (the "Administrative Agent") pursuant to the Administration and
Custody Agreement (as hereinafter defined), RELATED CHARTER LP (the "Servicer")
and BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as agent (the
"Liquidity Agent") for the Liquidity Banks (as hereinafter defined) pursuant to
the Liquidity Agreement (as hereinafter defined) and as an Insured Party.
PRELIMINARY STATEMENTS
WHEREAS, pursuant to the contribution agreement (the "Charter
Contribution Agreement"), dated as of May 21, 1998, by and between Charter and
the Origination Trust, Charter will from time to time sell, assign, transfer and
contribute Assigned Assets, including Bonds and Bond Collateral (each as
hereinafter defined), to the Origination Trust;
WHEREAS, pursuant to the contribution agreement (the "Origination
Contribution Agreement"), dated as of May 21, 1998, by and between the
Origination Trust and the Owner Trust, the Origination Trust will from time to
time sell, assign, transfer and contribute such Assigned Assets, together with
all of the Origination Trust's rights in, to and under the Charter Contribution
Agreement, to the Owner Trust;
WHEREAS, pursuant to the trust agreement (the "Owner Trust
Agreement"), dated as of May 21, 1998, by and among the Managing Trustees, the
Origination Trust and Wilmington Trust Company, as Registered Trustee, the Owner
Trust will issue its Senior Certificate and its Residual Certificate (each as
hereinafter defined) evidencing beneficial interests in the Owner Trust;
WHEREAS, pursuant to the trust agreement (the "Certificate Issuer
Trust Agreement"), dated as of May 21, 1998, by and between the Owner Trust and
Wilmington Trust Company, as Registered Trustee, the Owner Trust will contribute
the Senior Certificate to the Certificate Issuer and the Certificate Issuer will
issue Low Floater Certificates (as hereinafter defined);
WHEREAS, pursuant to the terms of the Certificate Issuer Trust
Agreement, the
4
<PAGE>
Low Floater Holders (as hereinafter defined) may tender the Low Floater
Certificates to the Certificate Issuer for purchase upon seven days' notice;
WHEREAS, pursuant to the Liquidity Agreement (the "Liquidity
Agreement"), dated as of May 21, 1998, by and among the Owner Trust, the
Certificate Issuer, the Tender Agent, the Liquidity Banks, the Liquidity Agent
and the Surety Provider, the Liquidity Banks will advance funds to the Tender
Agent, on behalf of the Certificate Issuer, solely for the purpose of purchasing
Low Floater Certificates (i) that have been tendered for purchase and have not
been remarketed by the Remarketing Agent (as hereinafter defined) or (ii) are
subject to mandatory purchase pursuant to Section 6.13 of the Certificate Issuer
Trust Agreement, for which Section 6.13 directs the Tender Agent to draw funds
under the Liquidity Facility;
WHEREAS, the Surety Provider is authorized to transact a surety
and insurance business in the State of New York and, upon entering into this
Insurance Agreement, subject to the terms and conditions set forth below, shall
(i) issue to the Owner Trust for the benefit of the owner of the Senior
Certificate a surety bond in the form of Exhibit A hereto (as amended from time
to time, the "Certificate Surety Bond") guaranteeing the payment of Senior
Certificate Distribution Payments due on the Senior Certificate issued by the
Owner Trust and the Senior Certificate Redemption Price for redemptions of the
Senior Certificate (or portion thereof) pursuant to Section 6.5(b) of the Owner
Trust Agreement, and (ii) issue to the Liquidity Agent a surety bond in the form
of Exhibit B hereto (as amended from time to time, the "Liquidity Surety Bond"
and, together with the Certificate Surety Bond, the "Surety Bonds") guaranteeing
the repayment of the advances (together with the interest thereon) made by the
Liquidity Banks under the Liquidity Facility (as hereinafter defined); and
WHEREAS, Charter, the Surety Provider, the Origination Trust, the
Owner Trust, the Certificate Issuer, the Administrative Agent and the Liquidity
Agent desire to specify conditions precedent to the issuance by the Surety
Provider of the Surety Bonds and to provide for certain other matters related
thereto;
NOW, THEREFORE, in consideration of the premises and of the
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
5
<PAGE>
ARTICLE I
DEFINITIONS
Section I.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
given to such terms in Appendix A hereto which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
(a) All defined terms in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified, consolidated, continued, extended or supplemented and includes (in the
case of agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
ARTICLE II
THE SURETY BONDS AND PREMIUM
6
<PAGE>
SECTION II.1 Commitment to Issue Surety Bonds; Increase of
Commitment.
(a) The Surety Provider agrees, on the terms and subject to the
conditions hereinafter set forth, including, without limitation, the conditions
set forth in Section 2.02 hereof, to issue the Certificate Surety Bond and the
Liquidity Surety Bond on the Date of Issuance.
(b) The aggregate Outstanding Face Amount of Low Floater
Certificates shall not at any time exceed the Facility Limit. The Facility Limit
may be increased or decreased by agreement of the parties to this Agreement.
SECTION II.2 Conditions Preecedent to Issuance of the Surety
Bonds. The obligation of the Surety Provider under this Agreement to issue the
Surety Bonds is subject to the satisfaction of the following conditions
precedent:
(a) On or prior to the Date of Issuance, the Surety Provider
shall have received the following documents, each in form and substance
satisfactory to the Surety Provider:
(i) Complete copies of each Transaction Document
(other than the Surety Bonds), with each document to which
Charter is a party being certified by Charter to be accurate and
complete and in full force and effect;
(ii) A copy of the Private Placement Memorandum,
certified by Charter to be final and complete, other than the
information about the Surety Provider and Liquidity Banks that
the Surety Provider and Liquidity Banks have provided for
inclusion in the Private Placement Memorandum;
(iii) Copies, certified by an Authorized
Representative of each of the respective Transaction Parties,
dated the Closing Date, of (A) the respective organizational
documents and (B) the resolutions of each of the governing body
of each entity, or a duly authorized committee thereof (and of
the equity owners of such entity, as may be necessary),
authorizing the execution, delivery and performance by such
Transaction Party of the Transaction Documents to which it is a
party, and certified copies of all documents evidencing other
necessary corporate action and Governmental Approvals, if any,
with respect to this Agreement and the other Transaction
Documents and the Transactions contemplated thereby;
(iv) A certificate, dated the Date of Issuance, of
the appropriate Authorized Representative of each of the
respective Transaction Parties certifying the names, offices and
true signatures of all Authorized Representatives of such entity;
(v) Copies of officially certified documents,
dated not more than 30 days prior to the Date of Issuance,
evidencing the due organization and good standing of each
Transaction Party in the jurisdiction in which it is organized;
7
<PAGE>
(vi) A certificate, dated the Date of Issuance, of
an Authorized Representative of each of the respective
Transaction Parties certifying with respect to the respective
entity that the representations and warranties of such entity set
forth or incorporated by reference in this Agreement are true and
correct as of the Date of Issuance as if made on the Date of
Issuance;
(vii) A favorable legal opinion or opinions
addressed to the Surety Provider, dated the Date of Issuance,
from counsel to each of the respective Transaction Parties, as
appropriate, in form and substance reasonably satisfactory to the
Surety Provider and covering such matters as the Surety Provider
shall reasonably request, together with a certificate from such
counsel's client directing such counsel to deliver such opinion
and certifying to such factual matters as may be appropriate in
connection with the delivery of such opinions;
(viii) Evidence that each Bond Trustee has been
notified to remit all payments in respect of the Bonds and the
Bond Collateral to the Administrative Agent;
(ix) Evidence that the Administrative Agent is in
possession of the Bonds in accordance with the Administrative and
Custody Agreement; and
(x) Such other documents, certificates, receipts,
instruments, approvals, licenses or consents (and, if requested
by the Surety Provider, certified duplicates or executed copies
thereof) or opinions as may be reasonably necessary to effect the
Transactions, as the Surety Provider shall have reasonably
requested prior to the Date of Issuance.
(b) The Surety Provider shall have received an executed copy of
all legal opinions, certificates and other documents required to be furnished to
or by the respective Transaction Parties or their respective counsel in
connection with the issuance of the Senior Certificate and the Low Floater
Certificates (including, without limitation, all such opinions, certificates and
other documents described in the Transaction Documents or required by any Rating
Agency). Such documents shall be in form and substance satisfactory to the
Surety Provider and each such legal opinion or certificate shall be addressed to
the Surety Provider or accompanied by appropriate reliance letters to the Surety
Provider except as otherwise agreed by the Surety Provider.
(c) Ratings. The Surety Provider shall have received confirmation
from each of the Rating Agencies that (i) the Senior Certificate is rated
investment grade (within the meaning of each such Rating Agency's standard for
investment grade), without consideration of the Surety Bonds, on the Date of
Issuance, and (ii) the Low Floater Certificates, when issued, will be rated
"AAA/A-1+" by Standard & Poor's and "Aaa/P-1" by Moody's.
(d) Conditions and Representations. All conditions in the
respective Transaction Documents relating to the Transactions shall have been
satisfied or waived. Each of the representations and warranties of the
respective Transaction Parties contained in the Transaction Documents shall be
true on and as of the Date of Issuance as if made on the Date of
8
<PAGE>
Issuance.
(e) Senior Certificate; Low Floater Certificates. The Surety
Provider shall have received specimens of the Senior Certificate and the Low
Floater Certificates. Simultaneously with the issuance of the Surety Bonds, the
Senior Certificate shall have been duly executed and authenticated and delivered
to the Certificate Trust Agent on behalf of the Certificate Issuer and the Low
Floater Certificates shall have been duly authenticated and delivered to The
Depository Trust Company on behalf of the purchasers thereof.
(f) No Legal Impediment. No Applicable Laws shall have been
enacted, entered or deemed applicable by any court or Governmental Authority
which would make the Transactions illegal or otherwise prevent the consummation
thereof.
(g) No Suit, Action or Proceeding. No suit, action or other
proceeding, investigation or injunction, or final judgment relating thereto,
shall be pending or threatened before any court or Governmental Authority in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with the Transaction Documents or the consummation of the
Transactions, which, if adversely decided, would have a Material Adverse Change
with respect to any Transaction Party.
(h) Information received. The Surety Provider shall have received
any information which the Surety Provider shall have reasonably requested
regarding the Bonds, the Assigned Assets, the Transaction Documents, the
Transaction Parties and all other financing arrangements with respect thereto,
and the Surety Provider shall have approved and accepted all such matters.
(i) Fees Paid. The Surety Provider shall have received payment of
all amounts due and payable to it on or prior to the Date of Issuance pursuant
to any Transaction Document.
SECTION II.3 Premium. On each Senior Certificate Distribution
Payment Date, in consideration of the issuance by the Surety Provider of the
Surety Bonds, the Owner Trust shall pay or cause to be paid to the Surety
Provider the Surety Bond Premium. The Owner Trust shall receive a credit against
its obligation to pay the Surety Provider the Surety Bond Premium to the extent
the Surety Provider receives payment pursuant to Section 8.3(a) SIXTH(3) of the
Owner Trust Agreement. The Surety Bond Premium shall be calculated on the basis
of a 365-day year, and shall be nonrefundable without regard to whether the
Surety Provider makes any payment under the Surety Bonds or any other
circumstances relating to the Senior Certificate or the Low Floater
Certificates, or provision being made for the payment of the Senior Certificate
or the Low Floater Certificates prior to maturity. All payments of the Surety
Bond Premium shall be made by wire transfer to an account designated from time
to time by the Surety Provider by written notice to Charter, the Owner Trust and
the Administrative Agent. Any failure to pay any Surety Bond Premium will not
affect the Surety Provider's obligations under the Surety Bonds.
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<PAGE>
SECTION II.4 Reimbursement
(a) The Surety Provider shall be entitled to reimbursement for
any payment made under the Certificate Surety Bond or the Liquidity Surety Bond.
Such reimbursement shall be due and payable to the Surety Provider on the date
that any amount (the "Reimbursement Amount") is to be paid pursuant to a Notice
for Payment (as defined in the Surety Bonds), in an amount equal to the amount
to be so paid and all amounts previously paid that remain unreimbursed, together
with interest on any and all amounts remaining unpaid (to the extent permitted
by law, if in respect of any unpaid amounts representing interest), from the
date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Reimbursement Rate. Amounts on
deposit in the Collection Account, the Redemption Account under the Owner Trust
Agreement, the Cash Trust Account and the Gainshare Account shall be available
to pay the Reimbursement Amount in accordance with the priorities set forth in
Section 8.3(a) of the Owner Trust Agreement.
(b) Reimbursement Related to Deposits. The Surety Provider shall
be entitled to reimbursement from the Administrative Agent for payments made
under the Surety Bonds as a result of Administrative Agent's failure to properly
deposit or properly direct the deposit of any amount required to be deposited in
the Collection Account or the Cash Trust Account pursuant to any Transaction
Document after having received the moneys to make such deposits, together with
interest from the date such amounts became due until paid in full (after as well
as before judgment), at a rate of interest equal to the Default Rate.
(c) No Demand Required; Several Obligations. All amounts payable
under this Section 2.04 are and shall be immediately due and payable on the date
of payment thereof. Each of Charter and the Servicer agrees to pay to the Surety
Provider the respective amounts to which the Surety Provider is entitled as set
forth in clause (a) and (b) of this Section 2.04 with respect to the amounts
owed by it and to pay interest at the Reimbursement Rate on any amounts
described in clauses (a) and (b) of this Section 2.04 from the date payable or
paid by such party until the payment thereof in full. In addition, Charter
agrees to pay the Surety Provider interest at the Reimbursement Rate on any and
all amounts described in Section 2.03 from the date due until payment thereof in
full. Except as provided in this Section 2.04, the obligation to pay to the
Surety Provider the Reimbursement Amount shall not be recourse to Charter, the
Servicer (or any person or organization acting on any its behalf), the
Administrative Agent, any Senior Holder or any Low Floater Holder or any
Affiliate, officer or director of any of them. The Surety Provider shall have
full recourse against the Administrative Agent with respect to amounts payable
to the Surety Provider pursuant to paragraph (b) of this Section 2.04.
SECTION II.5 Fees and Expenses.
(a) Legal Fees. Charter agrees to pay or cause to be paid to the
Surety Provider's attorneys, on the Date of Issuance, the Surety Provider's
reasonable legal fees and disbursements incurred, in connection with the
negotiation, execution and delivery of the Transaction Documents and the
issuance of the Surety Bonds.
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(b) Other Transaction Expenses. Charter further agrees to pay all
out-of-pocket costs and expenses reasonably incurred by the Surety Provider as
of the Date of Issuance in connection with the Surety Provider's due diligence
review of the Assigned Assets and the operations of Charter, the Manager, the
Servicer, the Origination Trust, the Owner Trust and the Certificate Issuer and
otherwise in connection with the Transactions (including, without limitation,
rating agency, engineering, and appraisal fees and expenses). All such costs and
expenses shall be payable on the Date of Issuance.
(c) Costs of Any Modification or Enforcement. Charter agrees to
pay all out-of-pocket costs and expenses (including reasonable fees and expenses
of auditors, legal counsel and any Rating Agency) incurred by the Surety
Provider in connection with (i) maintaining any rating on the Senior Certificate
or Low Floater Certificates, (ii) any amendment, modification, waiver or similar
action regarding any Transaction Document and/or (iii) any enforcement or
exercise of the Surety Provider's rights or remedies under any Transaction
Document.
SECTION II.6 Payments.
(a) All payments to the Surety Provider under this Article II
shall be made in lawful currency of the United States and in immediately
available funds and shall be made prior to 2:00 p.m. (New York City time) on the
date such payment is due by wire transfer in accordance with the instructions
attached hereto as Schedule 2.06 or to such other office or account as the
Surety Provider may direct by notice to Charter, the Servicer, and the
Administrative Agent. Payments received by the Surety Provider after 2:00 p.m.
(New York City time) shall be deemed to have been received on the next
succeeding Business Day, and such extension of time shall be included in
computing interest, premiums, commissions or fees, if any, in connection with
such payment.
(b) Whenever any payment under this Agreement shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such cases be
included in computing interest, premiums, commissions or fees, if any, in
connection with such payment.
(c) Unless otherwise specified herein, the Surety Provider shall
be entitled to interest on all overdue amounts owed to the Surety Provider
hereunder at a rate of interest equal to the Default Rate.
(d) Unless otherwise specified herein, interest payable to the
Surety Provider shall be calculated on the basis of a 365 day year and shall be
payable on demand.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION III.1 Representations, Warranties and Covenants.
(a) Each of the parties hereto (other than the Surety Provider
and the Liquidity Agent) represents and warrants to the Surety Provider and each
other, as of the Date of Issuance, (i) it is duly organized, validly existing
and in good standing in the jurisdiction of its organization, (ii) it has all
requisite power and authority to (A) own its properties, (B) carry on its
business as now conducted and proposed to be conducted, and (C) execute and
deliver this Agreement and each of the other Transaction Documents to which it
is a party and to perform its obligations hereunder and thereunder in accordance
with their respective terms, (iii) neither the execution and delivery of this
Agreement and each of the other Transaction Documents to which it is a party,
nor the performance of its obligations hereunder or thereunder, will (A)
conflict with or result in a breach or default under any of its organizational
documents, any Applicable Laws or any material contract, agreement, mortgage,
instrument or other undertaking to which it is a party or by which any of its
properties is subject or (B) result in the creation or imposition of any Lien
other than those created pursuant to the Transaction Documents, (iv) it has
obtained any Governmental Approval required for the execution, delivery and
performance by it of this Agreement and each of the other Transaction Documents
to which it is a party, and such Governmental Approvals remain in full force and
effect and are subject to no further administrative or judicial review, and no
other Governmental Approval is necessary for the due execution, delivery and
performance by any Charter Entity of this Agreement or such Transaction
Documents, (v) there is no action, suit or proceeding pending against it in any
court or by or before any Governmental Authority which would materially affect
the ability of it to carry out the transactions contemplated by this Agreement
or any of the other Transaction Documents to which it is a party, (vi) the
execution, delivery and performance by it of this Agreement and each of the
other Transaction Documents to which it is a party, have been duly authorized by
all necessary corporate or other action on its part, (vii) this Agreement and
each of the other Transaction Documents to which it is a party have been duly
executed and delivered by it and constitute its legal, valid and binding
obligations enforceable against it in accordance with their respective terms,
(viii) all of the representations and warranties made by it in any other
Transaction Document were true and correct when made and are true and correct as
of the Date of Issuance and are hereby made by it as if the same were set forth
in full in this Agreement, (ix) the execution and delivery of this Agreement and
each of the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby were not made
(A) in contemplation of the insolvency of any Person, (B) with the intent to
hinder, delay or defraud any Person, any creditor of any Person or any federal
banking agency, (C) after the commission of any act of insolvency by any Person
or (D) without fair consideration, (x) its assets or capital are not
unreasonably small in value in relation to its business, and its remaining
assets or capital will not be unreasonably small in value in relation to and
after giving effect to the consummation of the transactions contemplated hereby
or by the other Transaction Documents to which it is a party, (xi) it is not
insolvent at the time of, and will not be rendered insolvent by virtue of, the
consummation of the transactions contemplated hereby or by the other Transaction
Documents to which it is a party; and (xii) by consummating the transactions
contemplated hereby or by the other Transaction Documents to which it is a
party, it
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does not intend to, or believe that it will, incur debts beyond its
ability to pay such debts as they become due.
SECTION III.2 Further Representations and Warranties of Charter.
Charter, on behalf of itself and the other Charter Entities, hereby further
represents and warrants to the Surety Provider that:
(a) Transaction Documents. The representations and warranties
made by each Charter Entity in any of the other Transaction Documents to which
it is a party were true and correct when made and are true and correct as of the
Date of Issuance and are hereby incorporated by reference for the benefit of the
Surety Provider as if fully set forth herein.
(b) Senior Certificate and Low Floater Certificates. The Senior
Certificate and Low Floater Certificates, when executed, authenticated and
issued in accordance with the Owner Trust Agreement and Certificate Issuer Trust
Agreement, respectively, will constitute the legal, valid and binding
obligations of the Owner Trust and the Certificate Issuer, as applicable,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, general reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws.
(c) Securities and Registration and Legal Requirements. The offer
and sale of the Senior Certificate and the Low Floater Certificates comply in
all material respects with all requirements of law, including all registration
requirements of applicable securities laws. Neither the offer nor the sale of
the Senior Certificate and the Low Floater Certificates has been or will be in
violation of the 1933 Act, the 1939 Act or any other federal or state securities
laws. Neither Charter, the Origination Trust, the Owner Trust or the Certificate
Issuer is required to be registered as an "investment company" under the 1940
Act. The Senior Certificate and Low Floater Certificates are not required to be
registered under the 1934 Act. Charter is not required to be registered as a
broker, dealer or investment adviser. The Transactions do not violate any margin
rules or regulations, including Regulations U, T and X of the Federal Reserve
Board, or any usury or other laws limiting the rate of interest that may be
contracted for, charged, or received.
(d) Disclosure. On the Date of Issuance, the Private Placement
Memorandum does not contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation is made with respect
to information contained in the Private Placement Memorandum which was provided
by the Surety Provider, Liquidity Agent or Liquidity Banks.
(e) Financial Information. Since the formation of Charter, there
has been no Material Adverse Change with respect to Charter and its Affiliates.
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(f) Taxes. Each of the Charter Entities and their respective
parent company or companies, if any, have filed prior to the date hereof all
federal and state tax returns that are required to be filed and paid all taxes,
including any assessments received by them that are not being contested in good
faith, to the extent that such taxes have not become delinquent, except for any
failures to file or pay that, individually or in the aggregate, would not result
in a Material Adverse Change with respect to such Charter Entity.
(g) Compliance with Applicable Law. Each Charter Entity is in
compliance with all Applicable Laws, including all Governmental Approvals,
except for non-compliances that, singly or in the aggregate, have not had and
will not result in a Material Adverse Change with respect to such Charter
Entity.
(h) No Default. No Charter Entity is in default in the
performance, observance or fulfillment of (i) any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which such Charter Entity or any of its property is bound, or (ii) any
judgment, decree or order, except for defaults that, singly or in the aggregate,
will not result in a Material Adverse Change with respect to such Charter
Entity.
(i) No Taxable Interest. No Charter Entity has taken any action
or omitted to take any action and, without undertaking any independent
investigation, knows of no action taken or omitted to be taken by any other
Person or entity, which action, if taken or omitted, would cause the amounts
distributed to the Low Floater Holders (excluding payments of the face amount on
redemption or maturity) to be included in the gross income of such owners for
Federal income tax purposes.
SECTION III.3 Representation and warranties of the Surety
Provider. Surety Provider represents and warrants to each of the Transaction
Parties that:
(a) Due Organization. It is a duly incorporated and subsisting
New York stock insurance company authorized under an effective certificate of
authority to do business in the State of New York, and in each jurisdiction
where the failure to be so authorized under an effective certificate of
authority would result in a Material Adverse Change with respect to the Surety
Provider, individually or taken as a whole.
(b) Power and Authority. The Surety Provider has all necessary
power and authority to execute and deliver this Insurance Agreement and each
Transaction Document to which it is a party, to issue the Surety Bonds and to
perform all of its obligations hereunder and thereunder.
(c) Due Authorization. The execution, delivery, and performance
of this Insurance Agreement by the Surety Provider, the Surety Bonds and the
other Transaction Documents to which it is a party:
(i) have been duly authorized by all necessary
corporate action;
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and
(ii) do not require any approvals or consents of,
or any notice to or filing with, any person or governmental
agency or department (except for filings with the Insurance
Department of the State of New York, all of which have been
made), the failure to obtain or make which would result in a
Material Adverse Change with respect to the Surety Provider,
individually or taken as a whole.
(d) Valid and Binding Agreement. This Insurance Agreement, the
Surety Bonds and the other Transaction Documents to which the Surety Provider is
a party, when executed and delivered by all the parties thereto, will constitute
the legal, valid and binding obligations of the Surety Provider, enforceable
against the Surety Provider in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
conservation, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or law).
(e) No Conflict. The execution, delivery and performance of this
Insurance Agreement, the Surety Bonds and the other Transaction Documents to
which the Surety Provider is a party do not contravene (i) the Surety Provider's
charter or by-laws, (ii) any law, rule or regulation applicable to the Surety
Provider, (iii) any material indenture, loan or credit agreement or other
instrument binding on the Surety Provider or its property or (iv) any order,
writ, judgment, award or injunction binding on or affecting the Surety Provider.
(f) No Litigation. There are no actions, suits or proceedings at
law or in equity by or before any governmental authority now pending, or, to the
Surety Provider's knowledge, threatened, against the Surety Provider or its
property which purport to challenge the legality, validity or enforceability of
this Insurance Agreement, the Surety Bonds or the other Transaction Documents to
which the Surety Provider is a party or which may reasonably be expected to have
a material adverse effect on the Surety Provider's ability to perform its
obligation under any such Transaction Documents.
(g) No Default. The Surety Provider is not in default in the
performance, observance or fulfillment of (i) any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which the Surety Provider or any of its property is bound, or (ii) any
judgment, decree or order, except for defaults that, singly or in the aggregate,
will not result in a Material Adverse Change with respect to the Surety
Provider.
(h) Disclosure. On the Date of Issuance, the information provided
by the Surety Provider for inclusion in the Private Placement Memorandum is
true, complete and correct.
SECTION III.4 Affirmative Covenants of the Charter Entities. Each
Charter Entity hereby covenants and agrees that during the term of this
Agreement and until payment in
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full of all amounts payable to the Surety Provider under any Transaction
Document, it will:
(a) Performance of Obligations. Observe and perform fully and
faithfully all of its respective obligations under this Agreement and each of
the Transaction Documents to which it is a party.
(b) Compliance with Law. Comply in all material respects with all
Applicable Laws, such compliance to include, without limitation, paying and
discharging, as the same may become due and payable, all taxes, assessments and
other governmental charges or levies against or on any of its property, as well
as claims of any kind that, if unpaid, might become a Lien upon any of its
properties.
(c) Reports and Financial Statements. Furnish or cause to be
furnished to the Surety Provider:
(i) within 45 days after the end of each month, a
Servicer's Report, a copy of which shall also be furnished to
each Liquidity Bank;
(ii) within 60 days after the end of the first
three fiscal periods in each fiscal year of Charter, a statement
of financial condition of Charter and of The Related Companies,
L.P. as at the end of such quarter, prepared in accordance with
generally accepted accounting principles and certified, subject
to changes resulting from subsequent audit adjustments, by the
respective Authorized Representative with responsibility for
financial reporting matters;
(iii) within 120 days after the end of each fiscal
year of Charter, the Manager and the Servicer, a statement of
financial condition of Charter and of The Related Companies, L.P.
as at the end of such year, and a statement of revenues and
expenses of Charter for such year, such financial statements to
be audited by, and accompanied by an opinion of, independent
certified public accountants of nationally recognized standing
selected by Charter, the Manager and the Servicer, which opinion
shall state that such financial statements have been prepared in
accordance with generally accepted accounting principles
consistently applied (except as otherwise stated in such opinion)
and that the audit by such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards;
(iv) promptly after receipt thereof (unless
already received by the Surety Provider), a copy of each
certificate, report, statement, notice, demand, or other
communication received by it from any Person in connection with
the Senior Certificate or the Low Floater Certificates, this
Agreement or any other Transaction Document that is material and
had not otherwise been reported to the Surety Provider;
(v) within one Business Day after receipt thereof,
a copy of each Certificate Trust Agent Report furnished by the
Certificate Trust Agent;
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(vi) within one Business Day after receipt
thereof, such information received by it pursuant to any
Transaction Document respecting the business, properties or the
condition or operations, financial or otherwise, of any Charter
Entity; and
(vii) such other information available to it and
relating to the Assigned Assets, the Transaction Parties and the
Transaction, as the Surety Provider may from time to time
reasonably request in writing.
(d) Notice of Defaults. Furnish to the Surety Provider, the
Administrative Agent and the Liquidity Agent one Business Day after obtaining
actual knowledge of the occurrence of an Event of Default, an Unmatured Event of
Default, a Servicer Default, an Unmatured Servicer Default, an Event of
Termination or an Unmatured Termination Event, notice of such event, and
immediately after receiving any certificate, report, statement, notice, or other
communication from Charter, the Servicer or the Owner Trust relating to any such
event, a copy of any such communication.
(e) Maintenance of Existence; Net Worth. Preserve and maintain
its existence as a validly existing business trust (or limited partnership in
the case of the Manager and the Servicer) in good standing under the laws of the
State of Delaware. Each of the Origination Trust and the Owner Trust shall at
all times maintain a positive net worth of at least $10,000 each.
(f) Audits. Upon written request by the Surety Provider,
(i) permit the Surety Provider to participate in
any audit conducted by the Administrative Agent pursuant to the
provisions of the Owner Trust Agreement and
(ii) permit, at any time and from time to time
during regular business hours, upon prior written notice, the
Surety Provider to visit the offices of any Charter Entity to
review the books, records and accounts of the Charter Entities
relating to the Assigned Assets, the Transaction Documents and
the Transactions.
(g) Assignment. In consideration of this Agreement and the Surety
Provider's execution and delivery of the Surety Bonds, the Origination Trust
assigns all of its right, title and interest in the Charter Contribution
Agreement to the Surety Provider and the Owner Trust assigns all of its right,
title and interest in the Origination Trust Contribution Agreement and the
Charter Contribution Agreement to the Surety Provider, including, without
limitation the right to declare the occurrence of a Contribution Termination
Date under each of the aforementioned Contribution Agreements, such assignment
to be subject to the provisions of the Liquidity Pledge and Security Agreement.
SECTION III.5 Negative Covenants. Each of the Charter Entities
(other than Charter), and with respect to paragraphs (a), (e), (f), (g), (h),
(i) and (j), Charter agrees and
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covenants that, without the Surety Provider's prior written consent, it will not
during the term of this Insurance Agreement or until payment in full of all
amounts payable to the Surety Provider under any Transaction Document:
(a) Liens. Create, incur or assume any Lien, upon or with respect
to any Assigned Assets other than pursuant to any of the Transaction Documents.
(b) Mergers, Sales of Assets. Merge into or consolidate with any
Person or assign, transfer, sell, or otherwise dispose of all or substantially
all of its assets to any Person.
(c) Limited Business. Engage in any business or other activity,
directly or indirectly (including through a subsidiary), except those
contemplated by the Transaction Documents.
(d) Creation of Indebtedness. Create, incur, assume, or suffer to
exist any Debt other than (i) with respect to any Transaction Documents, and
(ii) indebtedness in respect of taxes, assessments or governmental charges, and
indebtedness in respect of claims for labor, materials or supplies to the extent
that the nonpayment thereof shall result in the creation of a Lien.
(e) Impairment of Rights. Take any action not required by law, or
fail to take any lawful action, if such action or failure to take such action
will interfere with the enforcement of any rights of the Surety Provider
hereunder or under any Transaction Document.
(f) Amendments or Waivers. Amend, waive or otherwise modify,
after the date hereof, any provision of the Transaction Documents, including,
without limitation, any waiver of any Event of Default, Unmatured Event of
Default, Servicer Default, Unmatured Servicer Default, Event of Termination or
Unmatured Termination Event or any of the Concentration Limits required by
Section 4.01 hereof.
(g) Surety Provider Information. Include in any information
memorandum for the Low Floater Certificates or any loan syndication memorandum,
correspondence or other communication relating to the Low Floater Certificates,
or any information concerning the Surety Provider that is not supplied or
consented to in writing by the Surety Provider expressly for inclusion therein.
(h) Termination of Trusts; Tax Exemption. Take any action or omit
to take any action that, if taken or omitted, would result in the termination of
the Origination Trust, the Owner Trust or the Certificate Issuer otherwise than
as contemplated by the Transaction Documents, or would adversely affect the
exclusion of Certificate Distribution Payments received by the owners of the Low
Floater Certificates from gross income of such owners for Federal income tax
purposes.
(i) Delegation of Obligations. Delegate in whole or in part,
except to the
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Surety Provider, any of its obligations under this Insurance Agreement, consent
to which will be not unreasonably withheld by the Surety Provider.
(j) No Transfer of Residual Certificate. Permit, without the
prior consent of the Surety Provider, the Residual Holder to sell, encumber,
assign, pledge, convey or otherwise transfer the Residual Certificate other than
as pledged pursuant to the Liquidity Pledge and Security Agreement.
SECTION III.6 Affirmative Covenants of the Surety Provider. The
Surety Provider agrees and covenants with the Owner Trust and the Liquidity
Agent that during the term of this Insurance Agreement it will:
(a) Compliance with Laws. Comply with all Applicable Laws, to the
extent that noncompliance would result in a Material Adverse Change with respect
to the Surety Provider.
(b) Corporate Existence. Maintain its corporate existence and at
all times continue to be a corporation organized under the laws of the State of
New York, duly qualified to do business in each jurisdiction in which the
failure to be so qualified would result in a Material Adverse Change with
respect to the Surety Provider.
(c) Financial Statements. Provide to the Administrative Agent,
Charter and the Liquidity Agent (i) as soon as available and in any event within
120 days after the end of each fiscal year of the Surety Provider, a copy of the
Surety Provider's financial statements, as delivered to the Superintendent of
Insurance for the State of New York, for such fiscal year then ended and (ii) as
soon as available and in any event within 90 days after the end of each fiscal
quarter of the Surety Provider, a copy of the Surety Provider's unaudited
financial statements for such fiscal quarter.
(d) Other Information to the Administrative Agent. Provide to the
Administrative Agent, Charter and the Liquidity Agent such other information as
each may reasonably request in writing.
ARTICLE IV
CONCENTRATION LIMITS; APPRAISALS AND VALUATIONS;
NONAPPROVED BONDS
SECTION IV.1 Concentration Limits. In addition to the covenants
contained in Article III hereof, the Owner Trust shall comply with each and
every one of the Concentrations Limits during the term of this Agreement and
until payment in full of all amounts payable to the Surety Provider under any
Transaction Document; provided, however, that the Owner Trust is not obligated
to comply with the Concentration Limits during the first six months following
the
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Date of Issuance; provided further that after the occurrence of a Contribution
Termination Date, the Owner Trust will no longer be obligated to comply with the
Concentration Limits unless (i) the aggregate principal amount of Bonds held by
the Owner Trust is equal to or less than 110% of the Outstanding Face Amount of
Low Floater Certificates and (ii) six months have passed since the Date of
Issuance.
SECTION IV.2 Appraisals and Valuations. In the event any
Property shall experience Deteriorating Property Performance as determined by
the Surety Provider, a new Appraised Value for such Property and Carrying Value
for the Bond secured by such Property shall be determined. Determination of new
Appraised Values and Carrying Values for each Property and Bond respectively
also shall be required upon the occurrence of an Event of Default. In addition,
new Appraised Values and/or Carrying Values of Properties and Bonds,
respectively, may be required, from time to time, as a condition of extension of
the Facility Termination Date. The cost of all appraisals shall be borne by
Charter; provided that if more than one appraisal on a particular Property is
conducted in a particular year at the request of the Surety Provider, the Surety
Provider shall pay for the additional appraisals. The Surety Provider shall have
the right to select the entity that will conduct appraisals and determine
Appraised Values. If an appraisal is unacceptable to Charter, Charter will be
entitled, at its expense, to have an additional appraisal conducted. If such
appraisal indicates a higher Appraised Value for the related Property, Charter
and the Surety Provider shall select and retain a third independent appraiser to
determine which of the two appraisals shall be the Appraised Value. The cost of
such determination shall be borne equally by Charter and the Surety Provider.
SECTION IV.3 Nonapproved Bonds. Any Bonds contributed to the
Owner Trust must be approved by the Surety Provider in writing prior to such
contribution. The Bonds listed on Schedule C hereto have been approved by the
Surety Provider. Any Bonds contributed to the Owner Trust that have not been
approved in writing by the Surety Provider ("Nonapproved Bonds") will constitute
part of the Trust Property (as defined in the Owner Trust Agreement); provided,
however, that until such time as (i) the Bonds are approved in writing by the
Surety Provider and (ii) Moody's and S&P have stated in writing that the
increase in the Outstanding Face Amount of the Senior Certificate to reflect any
portion of the principal amount of the such Bonds will not result in a reduction
or withdrawal of the then current rating assigned to the Low Floater
Certificates, the Senior Certificate shall not be increased to reflect any
portion of the principal amount of such Nonapproved Bonds. Each party to this
Agreement (other than the Administrative Agent) who has knowledge of a
Nonapproved Bond being held by the Owner Trust hereby agrees to give notice of
such Nonapproved Bond to the Administrative Agent.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES; RIGHT OF THE CONTROLLING
PERSON TO DIRECT THE OWNER TRUST AND THE COLLATERAL AGENT
SECTION V.1 Defaults. The occurrence of any of the following
events shall
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constitute an Event of Default hereunder:
(a) Any representation or warranty made by any Charter Entity
hereunder or under any other Transaction Document (other than those
representations and warranties contained in Section 4(b) of the Charter
Contribution Agreement and such representations and warranties as incorporated
by reference into any other Transaction Document), or in any certificate
furnished hereunder or under any Transaction Document, shall prove to be untrue
or incomplete in any material respect on any date when made;
(b) Charter or any Charter Entity shall fail to pay any amount
payable by such Person, as applicable, under any Transaction Document, (i) with
respect to any Reimbursement Amount or Surety Bond Premium, when due, and (ii)
with respect to any other amount payable other than the Reimbursement Amount or
Surety Bond Premium, within 5 Business Days, without giving effect to any grace
period provided in any of the Transaction Documents;
(c) Any failure on the part of any Charter Entity duly to observe
or perform in any material respect any of the covenants or agreements on the
part of such Charter Entity, as applicable, contained in this Agreement (other
than those specified in paragraphs (a) and (b) above and paragraphs (g) through
(i) below) or any other Transaction Document which continues unremedied for a
period of 30 days after notice of such failure, which period may be extended for
another 30 days if, in the judgment of the Surety Provider, the Charter Entity
is diligently attempting to cure said breach;
(d) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under any
present or future Bankruptcy Law or the appointment of a conservator or receiver
or liquidator or other similar official in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against any
Charter Entity and such decree or order shall have remained undischarged or
unstayed for a period of 90 consecutive days;
(e) Any Charter Entity shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Charter Entity or of or relating to
all or substantially all of its property;
(f) Any Charter Entity shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take advantage of
or otherwise voluntarily commence a case or proceeding under any applicable
Bankruptcy Law, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
(g) A Level I Trigger Event shall have occurred and has not been
cured within 180 days from the Level I Trigger Date;
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(h) A Level II Trigger Event shall have occurred and has not been
cured within the earlier of (i) 90 days after the Level II Trigger Date, or (ii)
180 days from the Level I Trigger Date that occurred because of the related
event;
(i) A Level III Trigger Event or Level IV Trigger Event has
occurred;
(j) Any Charter Entity is an investment company under the
Investment Company Act of 1940;
(k) The Owner Trust shall for any reason fail to possess good and
marketable title to the Assigned Assets and to all other property in the Owner
Trust, free and clear of all Liens, except as provided in the Transaction
Documents;
(l) Any judgment or order for the payment of money or the
issuance of warrants in excess of $50,000 shall be rendered against any Charter
Entity and such judgment shall remain unsatisfied and either (i) the time for
filing any appeal has expired and enforcement proceedings have been commenced by
any creditor upon such judgment or order and shall remain unstayed or (ii) there
shall be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect unless such judgment or order shall have been
vacated, dismissed or bonded pending appeal or, in the case of a judgment or
order the entire amount (other than an amount not in excess of $50,000) of which
is covered by insurance, is the subject of a binding agreement with the
plaintiff and the insurer covering payment therefor;
(m) Any final, nonappealable judgment or order for the payment of
money or the issuance of warrants in excess of (i) $5,000,000 has been rendered
against Charter and has not been paid, or (ii) $100,000 shall be rendered
against any of the Charter Entities other than Charter;
(n) Failure to replace the Servicer upon the occurrence of a
Servicer Default in accordance with the Servicing Agreement;
(o) Failure of Charter to substitute an Alternate Credit Facility
in lieu of the Surety Provider within two years after the Facility Termination
Date;
(p) Any Advance by any Liquidity Bank under the Liquidity
Agreement is outstanding for two years;
(q) Failure of Charter to substitute an Alternate Liquidity
Facility in the event the Liquidity Facility is not renewed within two years
after the Liquidity Commitment Termination Date, except where such Liquidity
Commitment Termination Date was caused due to a Liquidity Event of Default
described in Section 6.01(a), (b), (c) or (d) of the Liquidity Agreement; or
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(r) Any provision of this Agreement or any other Transaction
Document shall for any reason other than by the express terms thereof cease to
be valid and binding on any party thereto, or any Transaction Party (other than
the Surety Provider) shall so assert in writing.
SECTION V.2 Remedies; No Remedies Exclusive.
(a) Pursuant to the terms of the Owner Trust Agreement and this
Agreement, upon the occurrence of an Event of Default, the Surety Provider may:
(i) inform the Administrative Agent and the Owner
Trust of the occurrence of any Event of Default and any other
information the Surety Provider may have with respect to the
performance of any Charter Entity under this Agreement;
(ii) take whatever action at law or in equity as
may appear necessary or desirable in its judgment to collect the
amounts then due under this Agreement or any Transaction Document
or to enforce performance and observance of any obligation,
agreement or covenant of any Charter Entity under this Agreement
or any Transaction Document;
(iii) direct the Liquidity Collateral Agent to
exercise any remedy available under the Liquidity Pledge and
Security Agreement; or
(iv) if the Surety Provider, and not the Liquidity
Agent, is the Controlling Person, take all actions necessary to
maintain the Assigned Assets and other Bond Collateral of the
Origination Trust and the Owner Trust, by exercising all rights
to direct the actions of the Origination Trust and the Owner
Trust to maintain, negotiate, sell, exchange, liquidate, or
otherwise dispose of the Trust Property (as defined in the Owner
Trust Agreement). After the occurrence of an Event of Default,
the Surety Provider shall have the sole right to direct the
actions of the Origination Trust, the Owner Trust and the
Certificate Issuer (other than the power to appoint Trustees of
the Trust pursuant to Section 3.1 of the Origination Trust
Agreement, the Owner Trust Agreement and the Certificate Issuer
Trust Agreement); provided that if a Liquidity Trigger Date has
occurred and the Liquidity Agent is the Controlling Person, then
the Liquidity Agent shall have those rights until such time as
all Liquidity Obligations have been paid in full and the
Liquidity Facility has terminated.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved to the Surety Provider is intended to be exclusive of
any other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under this Insurance Agreement, any Transaction
Document or existing at law or in equity. No delay or omission to exercise any
right or power accruing under this Insurance Agreement or upon the happening of
any event set forth in Section 5.01 hereof 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 by the Surety
Provider to be expedient. In order to entitle the Surety Provider to exercise
any remedy reserved to the Surety Provider in this Article, it shall not be
necessary to give any notice, other than such notice as may be required in this
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Article.
(c) Upon learning that an Event of Default exists under this
Agreement, the Surety Provider will promptly give notice of the existence of
such Event of Default to the Administrative Agent.
SECTION V.3 Right of Controlling Person to Direct Actions of the
Origination Trust, the Owner Trust and the Administrative Agent. Each of the
Owner Trust and the Administrative Agent agrees that following the Controlling
Person's written request it will take or refrain from taking any action, and
exercise or refrain from exercising any rights of the Owner Trust or the
Administrative Agent under the Transaction Documents in the manner described in
the Controlling Person's written request, provided, however, that the obligation
of the Owner Trust and the Administrative Agent to take or refrain from taking,
or to exercise or refrain from exercising any such action or rights shall be
limited to those actions and rights that can be exercised or taken (or not
exercised or taken, as the case may be) in full compliance with the provisions
of the Transaction Documents and applicable law. Without limiting the generality
of the preceding sentence, each of the Owner Trust and the Administrative Agent
agrees that, subject to the proviso clause in the next preceding sentence, it
will, upon the Controlling Person's prior written request following the
occurrence of the respective events or conditions described below, take, or
cause to be taken, the following actions:
(a) upon the occurrence and continuance of a Servicer Default,
(i) deliver a Servicer Termination Notice, thereby causing a Servicer Transfer
to take place, (ii) designate a Person selected by the Controlling Person as the
Successor Servicer thereunder and (iii) give notice of such Servicer Termination
Notice and designation of Successor Servicer to the Administrative Agent;
(b) upon the occurrence and continuance of an Event of Default
(i) declare the Facility Termination Date to have occurred, (ii) cause the Owner
Trust to cease purchasing or otherwise acquiring any additional Assigned Assets,
(iii) pursuant to the Owner Trust Agreement, direct the Servicer to commence or
settle any legal action to enforce collection of any amounts then due and
payable under any Bonds and to enforce any rights with respect to any Bond
Collateral or other Assigned Assets relating thereto, (iv) notify Bond Trustees
to make payments thereon as designated by the Controlling Person and exercise
all other remedies of the Owner Trust and/or the Administrative Agent on its
behalf as set forth in the Owner Trust Agreement, and (v) give notice of any
action taken pursuant to this subsection (b) to the Administrative Agent.
(c) with respect to the Administrative Agent, request from the
Owner Trust, Charter or the Servicer, under the Servicing Agreement, any
information, documents, records, or reports respecting the assets comprising the
Trust Property (as defined in the Owner Trust Agreement) or the conditions or
operations, financial or otherwise, of Charter or the Servicer as the
Controlling Person may specify from time to time.
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ARTICLE VI
FURTHER AGREEMENTS
SECTION VI.1 Obligations Absolute. The obligations of the parties
to this Agreement are absolute and unconditional and will be paid or performed
strictly in accordance with the respective terms thereof, irrespective of:
(a) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver with respect to, the Transaction Documents;
(b) any amendment or waiver of, or consent to departure from the
Surety Bonds or the Transaction Documents to the extent such do not result in a
default with respect to payment under the Surety Bonds and does not materially
and adversely affect the obligations of the Charter Entities under this
Agreement or the Transaction Documents;
(c) the existence of any claim, set-off, defense or other rights
any party may have at any time against any Charter Entity, any beneficiary or
any transferee of the Surety Bonds (or any persons or entities for whom the
Administrative Agent, any such beneficiary or any such transferee may be
acting), or against any other person or entity whether in connection with the
Transaction Documents, the Transactions or any unrelated transactions;
(d) any statement or any other document presented under or in
connection with any Transaction Document (including any Notice for Payment)
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
(e) the inaccuracy or alleged inaccuracy of any Servicer's
Certificate or Notice of Payment upon which any drawing under the Surety Bond is
based;
(f) payment by the Surety Provider under the Surety Bonds against
presentation of a draft or certificate which does not comply with the terms of
the respective Surety Bond; provided that such payment shall not have
constituted gross negligence or willful misconduct of the Surety Provider;
(g) the bankruptcy or insolvency of the Surety Provider, the
Certificate Issuer or of either Insured Party, or any other Transaction Party,
provided that it is understood that in the event the Surety Provider's debt
ratings are downgraded by a Rating Agency and the Surety Bonds are returned to
the Surety Provider, then the Surety Provider shall be entitled to no further
premiums hereunder or under the Owner Trust Agreement or under the Certificate
Issuer Trust Agreement, and provided further that obligations hereunder of the
Servicer, the Origination Trust, the Owner Trust, the Certificate Issuer, the
Administrative Agent and Charter incurred before the return of the Surety Bonds
shall remain in effect;
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(h) any default or alleged default of the Surety Provider under
the Surety Bonds other than a default with respect to payment thereunder;
(i) any defense based upon the failure of Charter to receive all
or part of the proceeds of the sale of the Senior Certificate or of the Servicer
to receive any or all of the servicing fee or other compensation required under
the Servicing Agreement or otherwise, or any nonapplication or misapplication of
the proceeds of any drawing upon the Surety Bonds; or
(j) any other circumstance or happening whatsoever, provided that
the same shall not have constituted gross negligence or wilful misconduct of the
Surety Provider, and to the extent that such circumstance or happening does not
result in a default with respect to payment under the Surety Bonds.
SECTION VI.2 Liability of the Surety Provider. Each of the
Charter Entities agrees that neither the Surety Provider, any of its Affiliates,
nor any of their respective officers, directors, or employees, is or will be
liable or responsible for (except to the extent of its own or their gross
negligence or willful misconduct):
(a) the use which may be made of the Surety Bonds by another
Person, or for any acts or omissions of such other Person in connection
therewith; or
(b) the validity, sufficiency, accuracy, or genuineness of
documents, or of any endorsement(s) thereon, even if such documents should in
fact prove to be in any or all respects invalid, insufficient, fraudulent, or
forged.
In furtherance and not in limitation of the foregoing, the Surety Provider may
accept documents that appear on their face to be in order, without
responsibility for further investigation. The provisions of this Section 6.02
shall survive the termination of this Agreement.
SECTION VI.3 Rights of Subrogation; Further Assurances. The
interests, rights, and remedies of the Surety Provider described in Sections
5.02 and 5.03 of this Insurance Agreement are in addition to, and not in lieu
of, the Surety Provider's equitable rights of subrogation, and the Surety
Provider reserves all of such rights; provided that the Surety Provider shall
not exercise such rights of subrogation until all Liquidity Obligations have
been paid in full. Each of the Charter Entities, the Insured Parties, the
Certificate Issuer and the Administrative Agent agrees to take, or cause to be
taken, all reasonable actions deemed desirable by the Surety Provider to
preserve, enforce, perfect, or maintain the perfection in the Surety Provider's
favor of such interests, rights, and remedies and such equitable rights of
subrogation.
For the avoidance of doubt, the parties hereto acknowledge and
agree that receipt of any payment under a Surety Bond shall not constitute (x) a
reduction of any unpaid amounts of principal or interest of advances outstanding
under the Liquidity Agreement or of the Senior Certificate outstanding under the
Owner Trust Agreement, or (y) a discharge of any other obligations whatsoever of
the Certificate Issuer under the Liquidity Agreement or of the Owner
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Trust under the Owner Trust Agreement.
SECTION VI.4 Reimbursement of Expenses. Charter agrees to remit
to the Surety Provider, promptly upon receipt by Charter of written demand
therefor by the Surety Provider, all reasonable out-of-pocket costs, expenses,
and disbursements, including reasonable attorneys' fees and expenses and other
costs and expenses incurred by the Surety Provider in connection with the
preparation, execution, delivery, administration, modification, amendment,
termination, waiver or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, either of the Surety Bonds, each of the
other Transaction Documents to which it is a party, and any other agreement
related to the foregoing (including, without limitation, any reasonable
out-of-pocket costs in respect of initial and ongoing audit and due diligence of
the Surety Provider reasonably incurred in connection with this transaction),
and Charter agrees to direct the Administrative Agent to pay over to the Surety
Provider any amounts received by it under the Owner Trust Agreement in respect
of any such demand for payment by the Surety Provider. Without prejudice to the
foregoing, Charter agrees that in the event that the Surety Provider seeks to
enforce any of its rights hereunder against the Owner Trust, Charter shall remit
to the Surety Provider, after written demand therefor, all reasonable
out-of-pocket costs, expenses, and disbursements, including attorneys' fees and
expenses and other such costs and expenses incurred by the Surety Provider in
connection with the enforcement of such rights. The reimbursement provisions of
this Section 6.04 will survive the termination of this Agreement.
SECTION VI.5 Indemnification. In addition to any and all rights
of reimbursement, subrogation or any other rights pursuant hereto or under law
or equity, and without limiting any reimbursement or indemnification right of
the Surety Provider under any Transaction Document, Charter hereby agrees to
pay, indemnify, and hold the Surety Provider and its Affiliates and the
officers, directors, employees of the Surety Provider or any such Affiliates
(each an "Indemnitee") harmless from and against any and all out-of-pocket
liabilities (including penalties), obligations, losses, damages, actions, suits,
demands, claims, judgments, taxes, costs, expenses or disbursements of any kind
or nature whatsoever that arise out of or in any way relate to or result from or
out of (a) any material breach of any representation or warranty made by any
Charter Entity in Section 3.01 and 3.02 hereof (other than representations and
warranties contained in Section 4(b) of the Charter Contribution Agreement
incorporated by reference herein), (b) failure of any Charter Entity to pay the
Surety Provider any fees or expenses pursuant to any Transaction Document, (c)
any taxes imposed upon the Surety Provider arising out of the transactions
contemplated by the Transaction Documents (other than the income taxes imposed
on the Surety Bond Premium and other income earned by the Surety Provider
pursuant to the Fee Letter), (d) any violation of any Environmental Law at any
Property, or (e) any investigation or defense of, or participation in, any legal
proceeding relating to the execution, delivery, enforcement, performance or
administration of the Transaction Documents (whether or not such Indemnitee is a
party thereto) (collectively, the "Indemnified Liabilities"); provided that
Charter shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of any Indemnitee. Any payments required to be made by Charter under this
section shall be due upon
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demand. The indemnity provisions of this section shall survive the termination
of this Agreement.
SECTION VI.6 Reinsurance and Participations. Each of the
Transaction Parties acknowledges that the Surety Provider shall have the right
to grant participations in its rights under this Agreement and to enter into
contracts of reinsurance with respect to the Surety Bond, provided that (i) the
Surety Provider gives Charter prior written notice of any such participation or
reinsurance contract, (ii) the Surety Provider agrees that any such disposition
will not alter or affect in any way whatsoever the Surety Provider's direct
obligations hereunder and under the Surety Bonds, (iii) that any reinsurer or
participant will not have any rights against any Transaction Party and that none
of the Transaction Parties shall have any obligation to have any communication
or relationship whatsoever with any reinsurer or participant in order to enforce
the obligations of the Surety Provider hereunder and under the Surety Bonds, and
(iv) no such participation or reinsurance agreement or arrangement shall be
executed if such transaction would adversely affect any then current rating of
any Senior Certificate or the Low Floater Certificates.
SECTION VI.7 No Proceedings. Each of the Surety Provider, the
Liquidity Agent and the Administrative Agent hereby agrees (which agreement
shall, pursuant to the terms of this Agreement, be binding upon its successors
and assigns) that it shall not institute against, or join any other Person in
instituting against, any Charter Entity any bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law, for one year and a day after the
latest maturing Low Floater Certificate or Senior Certificate or other rated
indebtedness issued by the Owner Trust or the Certificate Issuer is paid.
SECTION VI.8 Successor Servicer. Any successor Servicer, by
accepting its appointment pursuant to the Servicing Agreement (a) shall agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Servicer and subject to the duties and obligations of the Servicer
hereunder, and (b) shall agree to indemnify and hold harmless the Surety
Provider from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which the Surety Provider may incur (or which may
be claimed against the Surety Provider) by reason of the negligence or willful
misconduct of the successor Servicer in exercising its powers and carrying out
its obligations as Servicer under the Servicing Agreement. No such appointment
shall make the successor Servicer responsible with respect to any liabilities of
the outgoing Servicer incurred prior to such appointment or for any acts,
omissions or misrepresentations of such outgoing Servicer. No such appointment
shall make the initial Servicer responsible with respect to any liabilities of
the successor Servicer incurred after such appointment or for any acts,
omissions or misrepresentations of such successor Servicer.
SECTION VI.9 Litigation. Each of Charter, Servicer, Owner Trust,
Certificate Issuer and the Administrative Agent shall (i) provide written notice
to the Controlling Person immediately upon obtaining actual knowledge of the
commencement of any judicial proceeding (including, without limitation,
bankruptcy, insolvency, receivership, and other such proceedings)
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which relates to, or arises in connection with, the Owner Trust Agreement or the
Trust Property (as defined in the Owner Trust Agreement) (each, a "Relevant
Proceeding"); (ii) consult with the Controlling Person with respect to, and the
Controlling Person may participate in any discussions and decisions relating to
any such Relevant Proceeding with a view towards minimizing the potentially
adverse effect that such Relevant Proceeding may have on the Controlling
Person's interest in the Trust Property (as defined in the Owner Trust
Agreement) or the Owner Trust Agreement and (iii) shall not agree to any
settlement of any such Relevant Proceeding without the Controlling Person's
prior written consent. The Controlling Person may elect at any time after
receipt of the notice described in the first sentence of this Section 6.09, to
assume responsibility for and control over the Relevant Proceeding. Such
election shall be made by delivery to the Administrative Agent of a written
notice thereof, signed by the Controlling Person, which notice shall contain the
Controlling Person's agreement to pay for, and indemnify each Charter Entity and
the Administrative Agent against any claims, demands, liabilities, damages,
losses, costs, and expenses (including attorneys' fees and expenses accrued only
from the date the Controlling Person assumed control over such Relevant
Proceeding) that may be incurred by each such Person in connection with such
Relevant Proceeding.
SECTION VI.10 Increased Costs; Increased Capital.
(a) If, after the date hereof due to either (i) the introduction
of or any change in or to the interpretation of any law or regulation by the
governmental authority that promulgated or administers compliance with such law
or regulation (other than laws or regulations with respect to income taxes) or
(ii) the compliance with any guideline or request from any state insurance
regulator or other governmental authority, rating agency or similar agency
(whether or not having the force of law), and taking into account the Surety
Provider's obligations under the other Transaction Documents, any reserve or
similar requirement shall be imposed, modified or deemed applicable or, any
basis of taxation shall be changed or any other condition shall be imposed, and
there shall be any increase in the cost to the Surety Provider of issuing or
maintaining the Surety Bonds or of entering into or performing its obligations
under this Agreement (including the reduction of any premium, fee or other sum
received or receivable hereunder), then Charter shall from time to time, upon
demand by the Surety Provider by the submission of the certificate described
below, pay to the Surety Provider additional amounts sufficient to compensate it
for such increased cost. A certificate setting forth in reasonable detail the
amount of such increased cost submitted to Charter by the Surety Provider shall
be conclusive and binding for all purposes, absent manifest error.
(b) If the Surety Provider determines that compliance with any
law or regulation or any guideline or request or any written interpretation from
any state insurance regulator or other governmental authority, rating agency or
similar agency (whether or not having the force of law) which is introduced,
implemented or received by the Surety Provider after the date hereof, affects or
would affect capital adequacy or the amount of capital required or expected to
be maintained by the Surety Provider or any corporation controlling the Surety
Provider and that the amount of such capital is increased by or based upon the
obligations of the Surety Provider under either of the Surety Bonds, this
Agreement or any of the other Transaction
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Documents, and other obligations of this type, or has or would have the effect
of reducing the rate of return on capital, then, upon demand by the Surety
Provider by the submission of the certificate described below, Charter shall pay
to the Surety Provider additional amounts sufficient to compensate the Surety
Provider in the light of such circumstances, to the extent that the Surety
Provider reasonably determines such increase in capital to be allocable to the
obligations of the Surety Provider under either of the Surety Bonds or this
Agreement. A certificate setting forth in reasonable detail such amounts
submitted to Charter by the Surety Provider shall be conclusive and binding for
all purposes, absent manifest error.
SECTION VI.11 Surety Provider's Option to Purchase Low Floater
Certificates.
(a) The Liquidity Agent, on behalf of the Liquidity Banks, hereby
grants to the Surety Provider or its designee the option (the "Liquidity
Purchase Option"), in lieu of making a payment under the Liquidity Surety Bond,
to purchase, at any time after the later of the occurrence of (x) the Liquidity
Commitment Termination Date and (y) the presentation of a Notice for Payment
under the Liquidity Surety Bond, all of the Liquidity Banks' respective right,
title and interest in the Low Floater Certificates at a price equal to the
Liquidity Obligations outstanding under the Liquidity Agreement (the "Option
Price"). Payments made by the Surety Provider of the Option Price shall be made
in immediately available funds to the Liquidity Agent by 2:00 P.M. New York City
time on the second Business Day next succeeding the date of receipt of the
relevant Notice for Payment, and all calculations of amounts of the principal
and interest then accrued and unpaid or otherwise outstanding and all other
obligations of the Certificate Issuer under the Liquidity Agreement shall be
made as of such day. The Liquidity Purchase Option is irrevocable by the
Liquidity Agent for so long as the Surety Provider has any liability under the
Liquidity Surety Bond. The Surety Provider may exercise the Liquidity Purchase
Option by telephonic notice confirmed in writing by the Surety Provider to the
Liquidity Agent immediately upon receipt of such Notice for Payment.
(b) Any purchase pursuant to the exercise of the Liquidity
Purchase Option hereunder will be without recourse to or representation or
warranty by the Liquidity Agent other than for a breach by the Liquidity Agent
of a representation that all its right, title, and interest in and to the Low
Floater Certificates have passed to the Surety Provider free and clear of any
Lien created by or arising as a result of actions by the Liquidity Agent.
(c) Simultaneously with the payment of the Option Price, the
Liquidity Agent will deliver the Low Floater Certificates that were Liquidity
Provider Certificates held by the Liquidity Agent to the Surety Provider.
SECTION VI.12 Liquidity Surety Bond Assignment Obligation. In
consideration for the issuance of the Liquidity Surety Bond, the Liquidity
Agent, on behalf of the Liquidity Banks, as an Insured Party hereby agrees that
if the Surety Provider honors all of its payment obligations under the Liquidity
Surety Bond, the Liquidity Agent shall, on the Payout Date, transfer, assign,
and convey to the Surety Provider, without recourse, representation or warranty,
all of its respective right, title and interest in, to and under the following:
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(i) the Low Floater Certificates;
(ii) all UCC-1 Financing Statements filed against
the Certificate Issuer in connection with the Transaction
Documents and all related UCC-3 Financing Statements pursuant to
which the Certificate Issuer assigned its right, title and
interest in and to the Senior Certificate;
(iii) all other Transaction Documents; and
(iv) all other documents, instruments, agreements
and property relating to the foregoing;
and, in addition, the Liquidity Agent, on behalf of the Liquidity Banks, on the
Payout Date, shall assign to the Surety Provider, without recourse,
representation or warranty, all right, title and interest in, to and under (x)
the Advances made under and as defined in the Liquidity Agreement, and (y) the
Liquidity Agreement, the Liquidity Security Agreement and all UCC-1 Financing
Statements filed against the Certificate Issuer in connection with the
Transaction Documents (collectively, all of the foregoing property and interests
in property being, the "Acquired Assets") (the obligations of the Insured
Parties to transfer, assign, and convey the Acquired Assets is herein
collectively referred to as the "Assignment Obligation"). The Liquidity Agent
agrees that the transfer, assignment and conveyance of its interest in the
Acquired Assets shall become effective automatically on the applicable Payout
Date, without any further act by the Surety Provider or the Liquidity Agent;
provided, however, that the Surety Provider may request the Liquidity Agent to
execute and deliver to the Surety Provider, on or after the applicable Payout
Date, the Low Floater Certificates. The Liquidity Agent further agrees that any
payments made by the Surety Provider under the Liquidity Surety Bond will not
reduce the principal, interest or any other amount payable under the Low Floater
Certificates.
ARTICLE VII
MISCELLANEOUS
SECTION VII.1 Amendments, Third-Party Rights.
(a) No amendment, waiver or modification of any provision of this
Agreement, nor any consent hereunder, shall in any event be effective unless in
writing and signed by each of the parties hereto; provided that any amendment,
waiver or modification of Section 2.04, 3.04, 3.05, 6.06 or 6.11 or any consent
thereunder or to any departure therefrom, insofar as such amendment, waiver,
modification or consent would not have a material adverse effect on the
Liquidity Agent or the Liquidity Banks, may be effective without the consent of
the Liquidity Agent (except that Liquidity Banks must continue to receive the
Servicer's Report pursuant to Section 3.04(c)(i)). Any waiver or consent
hereunder shall be effective only in
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the specific instance and for the specific purpose for which given. No amendment
to the Surety Bonds shall in any event be effective until each Rating Agency
confirms that such amendment would not cause the then current rating assigned to
the Low Floater Certificates to be reduced or withdrawn. The parties to this
Agreement will give notice of any amendment to this Insurance Agreement, the
Owner Trust Agreement, the Certificate Issuer Trust Agreement, the Liquidity
Agreement, the Charter Contribution Agreement, the Origination Trust
Contribution Agreement and the Certificate Surety Bond to the Administrative
Agent at least twenty (20) calendar days prior to the effectiveness of any such
amendment.
(b) This Agreement, together with the other Transaction
Documents, contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement (together with the exhibits hereto) among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
(c) Except as provided herein with respect to participants,
reinsurers and parties entitled to indemnification hereunder, nothing in this
Agreement shall confer any right, remedy or claim, express or implied, upon any
Person, including, particularly, any Low Floater Holder, other than the Surety
Provider against the Charter Entities, and all the terms, covenants, conditions,
promises and agreement contained herein shall be for the sole and exclusive
benefit of the parties hereto and their successors and permitted assigns.
Neither the Administrative Agent nor any Senior Holder or Low Floater Holder
shall have any right to payment from any Surety Bond Premiums paid or payable
hereunder or under the Owner Trust Agreement or Certificate Issuer Trust
Agreement or from any other amounts paid by the Servicer or Charter pursuant to
Article II hereof.
SECTION VII.2 Notices. Except to the extent otherwise expressly
provided herein, all notices, requests, and demands to or upon the respective
parties hereto to be effective shall be in writing (and if sent by mail,
certified or registered, return receipt requested) or facsimile transmission
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when delivered by hand, or three business days after being
deposited in the mail, postage prepaid, or, in the case of facsimile
transmission, when sent, addressed as follows:
If to Charter, the Origination Trust, the Owner Trust, the
Certificate Issuer Trust, or the Servicer:
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
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also to:
Attention: Bruce Brown, Senior Vice President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
If to the Surety Provider:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Telephone: (914) 273-4545
Facsimile: (914) 765-3161
(a) with respect to any notice of draws under the Surety Bonds,
Termination Date, Event of Default, Unmatured Event of Default, Servicer
Default, Unmatured Servicer Default, Event of Termination, Unmatured Termination
Event or breach of any covenant or agreement hereunder:
Attention: Vice President and Manager, IPM Structured Finance
(b) with respect to the financial statements of Charter and the
Servicer and other regular correspondence:
Attention: Structured Finance Surveillance
If to the Administrative Agent:
First Tennessee Bank National Association
4385 Poplar Avenue
Memphis, Tennessee 38117
Attention: Dennis Gillespie
Telephone: (901) 681-2462
Facsimile: (901) 681-2450
If to the Liquidity Agent:
Bayerische Landesbank Girozentrale, New York Branch
560 Lexington Avenue, 17th floor
New York, New York 10022
Attention: Scott M. Allison, First Vice President
Manager of Public Finance
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Telephone: (212) 310-9869
Facsimile: (212) 310-9868
SECTION VII.3 No Waiver: Remedies and Severability. No failure on
the part of the Surety Provider or the Controlling Person to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
will any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided or by law.
The parties hereto further agree that the holding by any court of competent
jurisdiction that any remedy pursued by the parties hereto and hereunder is
unavailable or unenforceable will not affect in any way the ability of such
parties to pursue any other remedy available to them. In the event any provision
of this Insurance Agreement shall be held to be invalid or unenforceable by any
court of competent jurisdiction, such provision shall be ineffective only to the
extent of such invalidity or unenforceability, without invalidating the
remainder of such provision or any other provisions of this Insurance Agreement.
SECTION VII.4 Binding Effect; Assignment. This Insurance
Agreement shall be binding upon each of Charter, the Origination Trust, the
Owner Trust, the Certificate Issuer, the Administrative Agent, the Surety
Provider and the Liquidity Agent on behalf of the Liquidity Banks and their
respective successors and permitted assigns (which successors and assigns shall
include a trustee in bankruptcy), and shall inure to the benefit of each such
Person and each of their respective successors and permitted assigns. None of
the Charter Entities or the Administrative Agent shall sell, assign or transfer
to any Person, or otherwise dispose of, at any time, any of its rights or
obligations hereunder or under any of the Transaction Documents, or any of its
interests herein or therein, unless:
(a) such sale, assignment, transfer, or other disposition
constitutes a full assignment of all of the Charter Entities' and/or the
Administrative Agent's rights and obligations under, and interests in, this
Insurance Agreement and the other Transaction Documents, and in all interests in
Assigned Assets under the Owner Trust Agreement;
(b) the Charter Entity and/or the Administrative Agent obtains
the prior written consent of the Surety Provider to such sale, assignment,
transfer or other disposition (which, in the case of Charter, if such transfer
is to an Affiliate, the consent of the Surety Provider shall not be unreasonably
withheld); and
(c) such sale, assignment, transfer or other disposition
otherwise complies with the requirements set forth therefor in each of this
Insurance Agreement, the other Transaction Documents, any restrictions set forth
in the Owner Trust Agreement and the Certificate Issuer Trust Agreement and
applicable law.
Subject to any restrictions set forth in the Liquidity Agreement,
the Surety Provider may, with the prior consent of all the Liquidity Banks,
assign any of its rights or
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obligations under this Insurance Agreement, the Liquidity Pledge and Security
Agreement or the Surety Bonds or sell, assign or transfer any interest it may
acquire in respect of any Assigned Assets, the Owner Trust Agreement or the
other Transaction Documents to any Person; provided, however, that
(i) any such sale, assignment or transfer shall be
subject to all applicable restrictions on sales, assignments and
transfers of interests that may be applicable under the Owner
Trust Agreement and
(ii) the Surety Provider shall acquire the prior
written consent of Charter, the Owner Trust and the Liquidity
Agent prior to assigning, delegating or otherwise transferring
any obligation of the Surety Provider to make a payment under any
Surety Bond.
Notwithstanding anything to the contrary contained herein, prior
to any assignment by the Surety Provider of any of its obligations hereunder or
under the Surety Bonds, the Surety Provider shall obtain written confirmation
from each Rating Agency that such assignment will not result in a downgrading of
the ratings applicable to the Low Floater Certificates.
SECTION VII.5 Termination of this Insurance Agreement and the
Surety Bonds; Continuing Obligations. This Agreement shall create and constitute
continuing obligations of the Surety Provider, Charter, Origination Trust, Owner
Trust, Certificate Issuer, the Administrative Agent and the Liquidity Agent in
accordance with its terms, and such obligations will terminate on the date which
occurs after the termination of the Surety Bonds on which the Surety Provider
has recovered all of the payments it has made, if any, under the Surety Bonds.
The obligation of the Surety Provider to make a payment under the Surety Bonds
may be terminated only upon receipt by the Surety Provider of written consent
and notice (a "Termination Notice") signed by the Owner Trust, the Certificate
Issuer and Liquidity Agent, as Liquidity Agent for the Liquidity Banks,
terminating this Insurance Agreement and the Surety Bonds and signed by the
Liquidity Agent. Any termination of this Insurance Agreement will be effective
only upon the delivery to the Surety Provider of the Surety Bonds, whereupon the
Surety Bonds will be canceled and the Surety Provider's liability thereunder
will cease except as specified therein with respect to Avoided Payments. The
expense provision of Section 6.04 and the indemnity provision of Section 6.05 as
well as the reimbursement provisions set forth in Section 2.04 shall survive the
termination of this Insurance Agreement until all claims, including without
limitation all suits filed as a result thereof, have been finally concluded.
SECTION VII.6 GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION VII.7 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
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(a) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY
AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SURETY BOND OR ANY TRANSACTION
CONTEMPLATED HEREBY, THEREBY OR BY THE OWNER TRUST AGREEMENT AND THE CERTIFICATE
ISSUER TRUST AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(b) Nothing contained in this Agreement shall limit or affect the
Surety Provider's right to serve process in any other manner permitted by law or
to start legal proceedings relating to any of the Transaction Documents against
any party hereto or such party's property in the courts of any jurisdiction.
SECTION VII.8 No Recourse.
(a) No recourse shall be had for the payment of any amount owing
hereunder or any other obligation or claim arising out of or based upon this
Agreement against any shareholder, employee, officer, director, or incorporator
of the Origination Trust, Owner Trust or the Certificate Issuer except for any
claim arising out of the gross negligence or misconduct of such shareholder,
employee, officer, director, or incorporator of the Owner Trust or the
Certificate Issuer.
(b) Anything contained in this Agreement or any other Transaction
Document to the contrary notwithstanding, all payments to be made by the Owner
Trust or the Certificate Issuer under this Agreement shall be made by the Owner
36
<PAGE>
Trust or the Certificate Issuer solely from available cash, which shall be
limited to (a) with respect to payments owed by the Owner Trust, the proceeds of
collections and other amounts payable on the Bonds, or with respect to payments
owed by the Certificate Issuer, the proceeds of amounts paid on the Senior
Certificate, and (b) with respect to both the Owner Trust and the Certificate
Issuer, amounts received otherwise in connection with any of the Transaction
Documents, and (c) amounts paid to the Liquidity Collateral Agent pursuant to
the terms of the Liquidity Pledge and Security Agreement (collectively
"Available Amounts"). The provisions of this Section shall survive the
termination of this Agreement.
SECTION VII.9 No Bankruptcy. The parties to this Agreement hereby
acknowledge that, pursuant to the terms and conditions of this Agreement and the
other Transaction Documents, the Origination Trust, Owner Trust and the
Certificate Issuer are or may be required, from time to time, to make certain
payments to such parties, either as compensation for services rendered,
reimbursement for out of pocket expenses, indemnification, or otherwise, as set
forth herein and therein. Such parties hereby agree that, notwithstanding any
provision of any Transaction Document, (i) the Origination Trust, Owner Trust
and the Certificate Issuer shall not make any such payment to any such party,
(ii) the Origination Trust, Owner Trust and the Certificate Issuer shall have no
duty, liability or obligation to make any such payment to any such party, (iii)
no such payment shall be due from the Origination Trust, Owner Trust or the
Certificate Issuer and (iv) no such party shall have any right to enforce any
claim against the Origination Trust, Owner Trust or the Certificate Issuer in
respect of any such payment, in each case at any time that the Senior
Certificate or any Low Floater Certificate is outstanding and no Bankruptcy
Event (as defined below) has occurred and is continuing, provided, however, that
such payment shall be made if and to the extent that (x) the making of such
payment by the Origination Trust, Owner Trust or the Certificate Issuer would
not render the Origination Trust, Owner Trust or the Certificate Issuer
insolvent and (y) the Origination Trust, Owner Trust or the Certificate Issuer
has received funds with respect to such obligations which may be used to make
such payment and which funds are not required to make payments when due on the
Senior Certificate or Low Floater Certificates; provided, however, that the
foregoing shall not be construed to prohibit a drawing on the Liquidity Surety
Bond by the Liquidity Agent. As used in this Section the term "Bankruptcy Event"
shall mean the entry against the Origination Trust, Owner Trust or the
Certificate Issuer of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the winding
up or liquidation of its affairs, or the institution of any proceeding against
the Origination Trust, Owner Trust or the Certificate Issuer seeking any of the
foregoing, and the continuance of any such decree or order, or any such
proceeding, in each case unstayed and in effect for a period of 60 consecutive
days.
SECTION VII.10 Non-Petition. The parties to this agreement shall
not, prior to the date that is one year and one day after the payment in full of
all the Low Floater Certificates, petition or otherwise invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Owner Trust under any Bankruptcy Law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Owner Trust, or ordering the winding up or liquidation of the affairs of
the Owner
37
<PAGE>
Trust.
SECTION VII.11 Counterparts. This Agreement may be executed in
any number of separate counterparts by the parties hereto, and each counterpart
when so executed shall be deemed to be an original and all such counterparts
taken together shall constitute one and the same agreement.
SECTION VII.12 Captions. The various captions (including, without
limitation, the table of contents) in this Agreement are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
SECTION VII.13 Notice of Limitation of Liability. Pursuant to
Section 10.6 of the Origination Trust Agreement and Section 12.7 of the Owner
Trust Agreement, all suppliers and Persons with whom the Origination Trust and
the Owner Trust do business are on notice that the Shareholders, the Trustees,
and the Manager (each as defined in the Origination Trust Agreement) and the
Senior Holder, Residual Holder, Trustees and Manager (each as defined in the
Owner Trust Agreement) are not liable for the obligations of the Origination
Trust or the Owner Trust, and all suppliers and persons shall look solely to the
assets of the Origination Trust or the Owner Trust, as the case may be, for
payment. The Origination Trust and the Owner Trust are both business trusts
created under the Trust Act; but the Board of Trustees or Manager of neither the
Origination Trust nor the Owner Trust shall be liable for failure to give notice
to such Persons, and any failure to give such notice shall not imply that the
Shareholders, the Managing Trustees, the Manager, and the Registered Trustee are
liable for the Origination Trust's obligations, nor shall such failure imply
that the Senior Holder, Residual Holder, Managing Trustees, the Manager and the
Registered Trustee are liable for the Owner Trust's obligations.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Stuart J. Boesky
------------------------
Name: Stuart J. Boesky
Title: President & COO
CHARTER MAC ORIGINATION TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Stuart J. Boesky
------------------------
Name: Stuart J. Boesky
Title: President & COO
CHARTER MAC OWNER TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Stuart J. Boesky
------------------------
Name: Stuart J. Boesky
Title: President & COO
CHARTER MAC FLOATER CERTIFICATE TRUST I
By: FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
as Certificate Trust Agent, pursuant to the
Certificate Issuer Trust Agreement, of CHARTER
MAC FLOATER CERTIFICATE TRUST I
By: /s/ Stuart J. Boesky
------------------------
Name: Stuart J. Boesky
Title: President & COO
MBIA INSURANCE CORPORATION
<PAGE>
By: /s/ Steven S. Cooke
-----------------------
Name: Steven S. Cooke
Title: Director
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as
Administrative Agent
By: /s/ Dennis Gillespie
-------------------------
Name: Dennis Gillespie
Title:
RELATED CHARTER LP, as Servicer
By: RELATED CHARTER LLC, its General Partner
By: /s/ Stuart J. Boesky
------------------------
Name: Stuart J. Boesky
Title: President & COO
BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH, as Liquidity Agent
By: /s/ Scott M. Allison
------------------------
Name: Scott M. Allison
Title: Vice President
<PAGE>
EXHIBIT A
CERTIFICATE SURETY BOND
<PAGE>
EXHIBIT B
LIQUIDITY SURETY BOND
<PAGE>
EXHIBIT C
SCHEDULE OF BONDS
<PAGE>
APPENDIX A
The following definitions are incorporated into and made a part
of each Transaction Document (as defined below).
"Acquired Assets" has the meaning given to such term in Section
6.12 of the Insurance Agreement.
"Actual Debt Service" means, for any applicable period, scheduled
distributions on the Low Floater Certificates plus Surety Bond Premium, all
amounts due and owing under the Liquidity Agreement including interest on
Advances, Tender Agent fees, Certificate Trust Agent fees, Registered Trustee
fees, Certificate Trustee fees, Administrative Agent fees, Servicer fees,
Managers fees, and all other financing costs payable during such period by
Charter, the Origination Trust, the Owner Trust or the Certificate Issuer
pursuant to any Transaction Document.
"Administration and Custody Agreement" means the Administration
and Custody Agreement, dated as of May 21, 1998, by and among the Administrative
Agent, the Owner Trust, the Liquidity Collateral Agent and the Servicer.
"Administrative Agent" means the Administrative Agent and
Custodian pursuant to the Administration and Custody Agreement, initially First
Tennessee Bank National Association.
"Affiliate" means with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Alternate Credit Facility" shall mean any instrument delivered
pursuant to Section 9.2 of the Owner Trust Agreement in lieu of the Initial
Credit Facility.
"Alternate Liquidity Commitment" means a Liquidity Commitment
provided by a Liquidity Bank to replace all or part of the Liquidity Commitment
initially provided by a Liquidity Bank upon the termination, expiration or
dishonor of such initial Liquidity Commitment.
"Alternate Liquidity Facility" means any instrument delivered
pursuant to Section 9.2 of the Certificate Issuer Trust Agreement in lieu of the
Liquidity Agreement.
"Applicable Laws" means with respect to any Person, all laws,
rules and regulations applicable to such Person or its conduct, including,
without limitation, all applicable state and federal constitutions, all
statutes, rules, regulations and orders of governmental bodies, all orders,
judgments and decrees of all courts and arbitrators and all applicable common
law and equitable principles relating to the foregoing.
<PAGE>
"Appraised Value" means with respect to a Property, the value of
such Property as set forth in the most recent appraisal of the Property.
"Assign" has the meaning given to such term in Section 2 of the
Charter Contribution Agreement.
"Assigned Assets" has the meaning given to such term in Section 2
of the Charter Contribution Agreement.
"Assignment" has the meaning given to such term in Section 2 of
the Charter Contribution Agreement.
"Assignment Obligation" has the meaning given to such term in
Section 6.12 of the Insurance Agreement.
"Authorized Representative" means in the case of Charter, the
Manager; in the case of the Origination Trust, the Owner Trust or the
Certificate Issuer, the Certificate Trust Agent and any Managing Trustee; and in
the case of the Surety Provider, the Administrative Agent or the Liquidity
Agent, any Vice President or more senior officer.
"Avoided Payments" with respect to either Surety Bond has the
meaning given to such term in Section 10 of such Surety Bond.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended (Title 11 of the United States Code, as amended).
"Bankruptcy Law" means any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution, or
liquidation or similar law, whether now or hereafter in effect.
"Bond" means each issue of mortgage revenue bonds identified by
Charter from time to time on the Bond Schedule.
"Bond Collateral" means with respect to each Bond, all property
and interests in property now or hereafter securing such Bond, and the
obligations of the Bond Issuer and/or any Bond Obligor in respect of such Bond,
including, without limitation, all contract rights, accounts receivable,
accounts, documents, instruments, general intangibles, escrows and Bond
Documents.
"Bond Documents" means with respect to each Bond, those
instruments, mortgages, indentures, agreements, guaranties, certificates or
other writings, now or hereafter evidencing or securing the obligations of the
Bond Issuer and/or any Bond Obligor in respect of such Bond.
"Bond Issuer" means with respect to each Bond, the state or local
government unit, authority or instrumentality that is the issuer of such Bond.
"Bond Obligor" means with respect to each Bond, each Person
directly or indirectly obligated to repay the indebtedness evidenced by such
Bond (including any guarantor of any such Person).
<PAGE>
"Bond Schedule" means the schedule attached to the Charter
Contribution Agreement, the Origination Trust Contribution Agreement and the
Administration and Custody Agreement as Exhibit A, as the same may be
supplemented from time to time.
"Bond Trustee" means with respect to each Bond, the entity acting
as trustee for the benefit of the holders of such Bond.
"Business Day" means any day (a) other than a Saturday, Sunday,
or other day in which banking institutions in the City of New York, New York, or
in the city in which the principal offices of the Administrative Agent, the
Certificate Trust Agent, the Tender Agent, the Liquidity Banks, Remarketing
Agent or the Surety Provider are located, are required to be closed, and (b) on
which the New York Stock Exchange is open for trading.
"Capped Bond Value" means, on any date of determination with
respect to each Bond, an amount equal to the principal amount of such Bond, or
allocable principal portion thereof to the extent such Bond is not in violation
of any Concentration Limits.
"Carrying Value" means with respect to a Bond on any date of
determination, the carrying value of such Bond as calculated by the Owner Trust
in accordance with FSAS 115 and accepted by the Owner Trust's independent
auditors.
"Cash Consideration" means with respect to each Bond and related
Bond Collateral and Assigned Assets, the amount specified with respect to such
Bond on the Bond Schedule.
"Cash Trust Account" means the bank account maintained at the
Administrative Agent established by the Owner Trust pursuant to Section 8.1 of
the Owner Trust Agreement.
"Certificate Issuer" means Charter MAC Floater Certificate Trust
I, a Delaware business trust, its successors and assigns.
"Certificate Issuer Trust Agreement" means the amended and
restated trust agreement, dated as of May 21, 1998, between the Owner Trust, the
Tender Agent and Certificate Trust Agent, and Wilmington Trust Company, as
Certificate Trustee.
"Certificate Surety Bond" has the meaning given to such term in
the Insurance Agreement.
"Certificate Trust Agent" means First Tennessee Bank National
Association, as Certificate Trust Agent, pursuant to the Certificate Issuer
Trust Agreement, for the Certificate Issuer.
"Certificate Trust Agent Report" means an accounting report
prepared monthly by the Certificate Trust Agent in form reasonably satisfactory
to the Surety Provider.
"Certificate Trustee" means, with respect to the Certificate
Issuer, Wilmington Trust Company, not in its individual capacity, but solely as
trustee of the Certificate Issuer.
<PAGE>
"Charter" means Charter Municipal Mortgage Acceptance Company, a
Delaware business trust.
"Charter Contribution Agreement" means the contribution
agreement, dated as of May 21, 1998, by and between Charter and the Origination
Trust.
"Charter Entity" means each of Charter, the Origination Trust,
the Owner Trust and the Certificate Issuer.
"Closing Date" means with respect to each Bond, the date on which
occurs the Assignment of such Bond from Charter to the Origination Trust
pursuant to the terms of the Charter Contribution Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
or corresponding provisions of subsequent revenue laws.
"Collateral Value" means with respect to any Eligible Bond on any
date of determination, the lowest of:
(a) the aggregate Appraised Value of all
Properties securing such Eligible Bond;
(b) the Carrying Value of such Eligible Bond; and
(c) the Capped Bond Value of such Eligible Bond.
The Collateral Value with respect to any Ineligible Bond on any
date of determination shall be zero.
"Collateral Value Ratio" means, on any date of determination, the
percentage obtained by dividing the Net Face Amount by the sum of (i) the Net
Collateral Value, (ii) the amount then on deposit in the Cash Trust Account, and
(iii) all accrued and unpaid interest on the Eligible Bonds.
"Collection Account" means the account maintained at the
Administrative Agent established pursuant to Section 8.1 of the Owner Trust
Agreement.
"Concentration Limit" means each of the following calculations,
with respect to the Bonds held by the Owner Trust:
(i) Ten Bond Minimum. The Owner Trust shall own at least ten (10)
Bonds at all times. For purposes of this definition, each amount
held in the Cash Trust Account in an amount equal to one-half of
the average outstanding principal amount of the Bonds held by the
Administrative Agent shall count as one Bond.
(ii) One Bond May Not Exceed 20%. At no time shall the
outstanding principal amount of any one Bond exceed the sum of
20% of the aggregate principal amount outstanding of all Bonds
plus 100% of all amounts held in the Cash Trust Account.
<PAGE>
(iii) Bonds Secured by Properties in California Limited to 30%.
At no time shall the aggregate outstanding principal amount of
Bonds secured by Properties located in California exceed 30% of
the aggregate outstanding principal amount of all Bonds.
(iv) Bonds Secured by Properties in any State other than
California. At no time shall the aggregate outstanding principal
amount of Bonds secured by Properties located in any one state
(other than California) exceed 20% of the aggregate outstanding
principal amount of all Bonds.
"Contribution Termination Date" means the earlier to occur of (i)
the date on which an Event of Termination occurs, and (ii) the Facility
Termination Date.
"Control" (and its correlative forms) has the meaning given to
such term in the 1940 Act.
"Controlling Person" means (i) prior to the occurrence of an
Event of Default, the Residual Holder and (ii) on and after the occurrence of an
Event of Default, the Surety Provider, unless the Liquidity Pledge and Security
Agreement is then in effect and the Liquidity Trigger Date (as defined in the
Liquidity Pledge and Security Agreement) has occurred, in which case the
Liquidity Agent shall be the Controlling Person.
"Credit Facility" means initially, the Certificate Surety Bond,
or any Alternate Credit Facility delivered in lieu of the Certificate Surety
Bond.
"Credit Facility Account" means the account established pursuant
to Section 8.1 of the Owner Trust Agreement.
"Credit Provider" means the Surety Provider or the provider of an
Alternate Credit Facility.
"Credit Provider Certificate" means the portion of the Senior
Certificate paid with the proceeds of a drawing on the Certificate Surety Bond
or an Alternate Credit Facility.
"Custody Account" has the meaning given to such term in Section 3
of the Administration and Custody Agreement.
"Date of Issuance" means the date on which the conditions
specified in Section 2.02 of the Insurance Agreement are satisfied in full and
the Surety Provider executes and delivers the Surety Bonds to the Insured
Parties or their agents.
"Debt" means with respect to any Person on any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, (iv) all obligations of such Person as
lessee which are capitalized in accordance with generally accepted accounting
principles, (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (vi) all
non-contingent obligations of such Person to reimburse any bank or other
<PAGE>
Person in respect of amounts paid under letters of credit or similar
instruments, and (vii) all Debt of others guaranteed by such Person.
"Debt Service Coverage" means, for any applicable period, all
Earnings during such period divided by Actual Debt Service for such period.
"Default Rate" shall be equal to the greater of (i) the average
Prime rate of money center banking institutions plus 200 basis points (2.0%) and
(ii) the rate then payable on the Low Floater Certificates.
"Deteriorating Property Performance" means with respect to a
Property securing a Bond the occurrence of either of the following conditions:
(i) At any time of determination, the Net Cash
Flow from the Property over the preceding twelve months is 10%
below the Net Cash Flow from the Property in the twelve months
preceding the assignment of the related Bond to the Owner Trust,
or
(ii) At any time of determination average
occupancy at such Property during the preceding twelve months is
less than 85%.
"Distribution Account" has the meaning given to such term in
Section 8.1 of the Certificate Issuer Trust Agreement.
"Distributions" means Senior Certificate Distribution Payments
and/or Residual Distributions, as the context requires.
"Earnings" means, for any applicable period, (i) Interest Revenue
during such period less (ii) the average aggregate outstanding principal amount
of Bonds during such period times the Pro Forma Servicing Fee.
"Eligible Assignee" means a commercial bank with a short-term
unsecured indebtedness rating of at least A-1 by S&P and P-1 by Moody's, and
which is acceptable to the Liquidity Agent, the Liquidity Borrower and the
Surety Provider, which acceptance neither the Liquidity Agent, Liquidity
Borrower nor the Surety Provider shall unreasonably withhold.
"Eligible Bonds" means, at any time of determination, all Bonds
that are not the Ineligible Bonds.
"Environmental Law" means collectively all federal, state and
local laws, rules, regulations, ordinances, programs, permits, guidances, orders
and consent decrees relating to health, safety or environmental matters,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980.
"Event of Bankruptcy" means the commencement of a case by or
against any Bond Obligor under the Bankruptcy Code or under any other Bankruptcy
Law.
"Event of Default" means any event of default specified in
Section 5.01 of the Insurance Agreement.
<PAGE>
"Event of Termination" has the meaning given to such term in
Section 6 of the Charter Contribution Agreement.
"Facility Limit" means initially $150,000,000, subject to
increase or decrease as provided in Sections 2.01(b) of the Insurance Agreement.
"Facility Termination Date" means May 20, 2003, unless extended
by the parties to the Insurance Agreement or determined to have occurred at an
earlier date pursuant to Section 5.03(b) of the Insurance Agreement.
"Fee Letter" means the Fee Letter Agreement, dated as of May 21,
1998, by and between Charter, the Origination Trust, the Owner Trust, the
Certificate Issuer and the Surety Provider.
"Final Distribution Date" means one year after the last scheduled
principal payment on the Bonds.
"Gainshare Account" has the meaning given to such term in Section
8.1 of the Owner Trust Agreement.
"Gainshare Amount" has the meaning given to such term in Section
8.1 of the Owner Trust Agreement.
"Gainshare Percentage" means a percentage equal to ten percent
(10%) times a fraction the numerator of which is equal to Outstanding Face
Amount of Low Floater Certificates and the denominator of which is equal to the
sum of the principal amount of the Bonds plus the amount, if any, on deposit in
the Cash Trust Account.
"Gainshare Purchase Subaccount" has the meaning given to such
term in Section 6.16 of the Certificate Issuer Trust Agreement.
"Governmental Approval" means any authorization, permit, consent,
approval, license or exemption from, registration or filing with, or report to,
any court or Governmental Authority.
"Governmental Authority" means any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions.
"Indemnified Liabilities" has the meaning given to such term in
Section 6.06 of the Insurance Agreement.
"Indemnitee" has the meaning given to such term in Section 6.05
of the Insurance Agreement.
"Ineligible Bond" shall have the meaning given to such term in
Section 5 of the Charter Contribution Agreement.
<PAGE>
"Initial Closing Date" shall mean the date on which the first
Bond is contributed to the Owner Trust.
"Initial Credit Facility" means the Certificate Surety Bond.
"Insurance Agreement" means the Insurance Agreement, dated as of
May 21, 1998, by and among Charter, the Surety Provider, the Origination Trust,
the Owner Trust, the Certificate Issuer, the Administrative Agent, the Servicer
and the Liquidity Agent.
"Insured Amount," with respect to each Surety Bond shall have the
meaning given to such term in such Surety Bond.
"Insured Party" means (i) with respect to the Certificate Surety
Bond, the Owner Trust and (ii) with respect to the Liquidity Surety Bond, the
Liquidity Agent as agent for the Liquidity Banks.
"Interest Account" has the meaning given to such term in Section
8.1 of the Owner Trust Agreement.
"Interest Revenue" means, for any applicable period, the lower
of:
(b) the sum of total interest payments on all
Eligible Bonds actually received by the Owner Trust during such
period plus interest earned on amounts held in the Cash Trust
Account during such period, and
(c) 95% of Net Cash Flow generated by all
Properties, plus interest earned on amounts held in the Cash
Trust Account during such period.
Funds generated by any sale or refinancing of a Property or a
Bond (other than monies constituting payment of contingent interest) or other
non-operating source (other than interest earning on amounts held in the Cash
Trust Account) shall not constitute Interest Revenue.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time.
"Level I Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) the Collateral Value Ratio is greater
than 50% but not greater than 60% or, (ii) if the Three-Month Average Debt
Service Coverage is less than 2, but not less than 1.7; or (iii) if the Pro
Forma Debt Service Coverage is less than 1.7 but not less than 1.5. The first
date upon which a Level I Trigger Event occurs is a "Level I Trigger Date."
"Level II Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) the Collateral Value Ratio is greater
than 60% but not greater than 70% or, (ii) the Three-Month Average Debt Service
Coverage is less than 1.7, but not less than 1.35; or (iii) if the Pro Forma
Debt Service Coverage is less than 1.5 but not less than 1.25. The first date
upon which a Level II Trigger Event occurs is a "Level II Trigger Date."
<PAGE>
"Level III Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) the Collateral Value Ratio is greater
than 70%; or (ii) if the Three-Month Average Debt Service Coverage is less than
1.35; or (iii) the Pro Forma Debt Service Coverage is less than 1.25.
"Level IV Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) if the Three-Month Average Debt Service
Coverage is less than 1.20; or (ii) the Pro Forma Debt Service Coverage is less
than 1.10.
"Lien" means any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute or contract. The term "Lien" shall also
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting the property.
"Liquidity Agent" means the agent for the Liquidity Banks
pursuant to the Liquidity Agreement, initially Bayerische Landesbank
Girozentrale, New York Branch, its successor and assigns.
"Liquidity Agreement" means the Liquidity Agreement, dated as of
May 21, 1998, by and among the Owner Trust, Certificate Issuer, the Tender
Agent, the Certificate Trust Agent, the Liquidity Agent, the Liquidity Banks
named therein and the Surety Provider, as the same may be amended, restated, or
supplemented.
"Liquidity Bank" and "Liquidity Banks" have the meanings given to
such terms in the first paragraph of the Liquidity Agreement.
"Liquidity Bank Default" means the failure of a Liquidity Bank to
make payment in full under the Liquidity Agreement when required.
"Liquidity Collateral" has the meaning given to such term in
Section 2.1 of the Liquidity Pledge and Security Agreement.
"Liquidity Collateral Agent" means the Liquidity Collateral Agent
pursuant to the Liquidity Pledge and Security Agreement, initially the Liquidity
Agent.
"Liquidity Commitment" has the meaning given to such term in the
Liquidity Agreement.
"Liquidity Commitment Fee" has the meaning given to such term in
the Liquidity Agreement.
"Liquidity Commitment Termination Date" has the meaning given to
such term in Section 1.01 of the Liquidity Agreement.
"Liquidity Event of Default" has the meaning given to such term
in Section 6.01 of the Liquidity Agreement.
<PAGE>
"Liquidity Facility" means the revolving line of credit described
in the Liquidity Agreement, and any Alternate Liquidity Facility, as the same
shall be modified, supplemented, amended or extended in accordance with the
terms thereof and of the Certificate Issuer Trust Agreement.
"Liquidity Facility Purchase Subaccount" has the meaning given to
such term in Section 6.16 of the Certificate Issuer Trust Agreement.
"Liquidity Facility Rate" means the rate (or rates) payable (i)
as the Senior Certificate Distribution Rate to the Senior Holder on that portion
of the Outstanding Face Amount of the Senior Certificate that is equal to the
Outstanding Face Amount of the Low Floater Certificates that have become
Liquidity Provider Certificates, and (ii) as the Low Floater Certificate
Distribution Rate on any Low Floater Certificates that are Liquidity Provider
Certificates, which rate shall be equal to the interest rate that is payable, as
of such Low Floater Certificate Distribution Payment Date, on the Advance (or
Advances) made by the Liquidity Provider to the Certificate Issuer pursuant to
the Liquidity Facility with which such Low Floater Certificates were purchased,
as determined in accordance with Section 2.06(a) of the Liquidity Agreement.
"Liquidity Obligations" has the meaning given to such term in
Section 1.01 of the Liquidity Agreement.
"Liquidity Pledge and Security Agreement" means the Liquidity
Pledge and Security Agreement, dated May 21, 1998, by and among the Origination
Trust, the Owner Trust, the Certificate Issuer, the Surety Provider, the
Administrative Agent, the Liquidity Agent and the Liquidity Collateral Agent.
"Liquidity Provider" means the Liquidity Banks named in the
Liquidity Agreement and the issuer of any Alternate Liquidity Facility, together
with their respective successors and assigns.
"Liquidity Provider Certificates" means all Low Floater
Certificates purchased with the proceeds of a drawing under the Liquidity
Facility, unless and until the conditions under clauses (1) and (2) of Section
6.17(a) of the Certificate Issuer Trust Agreement have been satisfied.
"Liquidity Purchase Option" has the meaning given to such term in
Section 6.11 of the Insurance Agreement.
"Liquidity Surety Bond" has the meaning given to such term in the
Insurance Agreement.
"Liquidity Trigger Date" has the meaning given to such term in
Section 5.1(a) of the Liquidity Pledge and Security Agreement.
"Low Floater Certificate Distribution Payment" means the amount
payable on each Low Floater Distribution Payment Date to the Low Floater Holders
as provided in Section 10.1 of the Certificate Issuer Trust Agreement.
<PAGE>
"Low Floater Certificate Distribution Payment Date" means the
first Business Day of each month, commencing July 1, 1998.
"Low Floater Certificate Distribution Rate" means the
distribution rate for the Low Floater Certificates as it appears in the Low
Floater Certificates.
"Low Floater Certificate Distribution Rate Determination Date"
means Wednesday in each calendar week or, if such Wednesday is not a Business
Day, the last Business Day preceding such Wednesday; provided, however, that the
first Low Floater Certificate Distribution Rate Determination Date shall be May
27, 1998.
"Low Floater Certificate Distribution Rate Period" means the
seven-day period commencing on the first Thursday, whether or not a Business
Day, following the corresponding Low Floater Certificate Distribution Rate
Determination Date and running through and including the Wednesday, whether or
not a Business Day, of the following calendar week, except (i) the first Low
Floater Certificate Distribution Rate Period shall commence on May 21, 1998 and
(ii) the last Low Floater Certificate Distribution Rate Period shall end on the
date upon which the events specified in Section 6.7(b) or (c) of the Owner Trust
Agreement occur.
"Low Floater Certificates" means the Low Floater Certificates
issued from time to time by the Certificate Issuer pursuant to Section 6.1 of
the Certificate Issuer Trust Agreement.
"Low Floater Holder" means any registered holder of a Low Floater
Certificate.
"Low Floater Redemption Price" has the meaning given to such term
in Section 6.4 of the Certificate Issuer Trust Agreement.
"Management Agreement" means the Management Agreement, dated as
of May 21, 1998, by and between Charter and the Manager.
"Manager" means Related Charter LP, a Delaware limited
partnership and its successors and assigns.
"Material Adverse Change" means, in respect of any Person, a
material adverse change in the business, financial condition, results of
operations or properties of such Person, which change adversely affects the
ability of such Person to perform its obligations under any of the Transaction
Documents.
"Maximum Rate" means for each Senior Certificate Distribution
Rate Determination Date, the lesser of (i) twelve percent (12%) per annum and
(ii) the maximum interest rate permitted under applicable law; provided,
however, that the Maximum Rate shall never exceed the rate payable from (A) all
Bond Interest payable by the Owner Trust for any distribution accrual period
less (B) Bond Interest payable on any bonds for which the Administrative Agent
receives an opinion of nationally recognized bond counsel to the effect that, as
a result of an ongoing default in respect of such Bonds, it is no longer
appropriate under federal income tax principles to accrue interest on such
Bonds.
<PAGE>
"Moody's" means Moody's Investors Service, Inc., or its successor
in interest.
"Net Cash Flow" means, with respect to a Property for any
applicable period, the net operating income of such Property during the
applicable period less any leasing commissions, capital expenditures, deferred
maintenance, reserves or other capital expenses incurred during such period.
"Net Collateral Value" means, on any date of determination, the
then aggregate Collateral Value of all Eligible Bonds (less any portion of the
Collateral Value attributable to any Bond which exceeds any Concentration Limit
to the extent such Bond exceeds the applicable Concentration Limit).
"Net Face Amount" means, on any date of determination, an amount
equal to (i) the Outstanding Face Amount of Low Floater Certificates less (ii)
the amount then on deposit in the Cash Trust Account.
"1933 Act" means the Securities Act of 1933, including, unless
the context requires otherwise, the rules and regulations thereunder, as amended
from time to time.
"1934 Act" means the Securities Exchange Act of 1934, including,
unless the context requires otherwise, the rules and regulations thereunder, as
amended from time to time.
"1939 Act" means the Trust Indenture Act of 1939, including,
unless the context requires otherwise, the rules and regulations thereunder, as
amended from time to time.
"1940 Act" means the Investment Company Act of 1940, including,
unless the context requires otherwise, the rules and regulations thereunder, as
amended from time to time.
"Nonapproved Bond" has the meaning given to such term in Section
4.03 of the Insurance Agreement.
"Notice for Payment" has the meaning given to such term in each
of the Surety Bonds.
"Notice of Tender" has the meaning given to such term in Section
6.12 of the Certificate Issuer Trust Agreement.
"Option Price" has the meaning given to such term in Section 6.11
of the Insurance Agreement.
"Origination Trust" means Charter MAC Origination Trust I, a
Delaware business trust, its successors and assigns.
"Origination Trust Agreement" means the amended and restated
trust agreement, dated as of May 21, 1998, by and among Charter Municipal
Mortgage Acceptance Company, the Managing Trustees, and Wilmington Trust
Company, as Registered Trustee, as such may be amended, modified, supplemented,
or assigned from time to time.
<PAGE>
"Origination Trust Certificate" means a certificate issued by the
Origination Trust evidencing a 100% beneficial ownership interest in and to the
Origination Trust.
"Origination Trust Contribution Agreement" means the contribution
agreement, dated as of May 21, 1998, by and between the Origination Trust and
the Owner Trust.
"Origination Trust Management Agreement" means the Management
Agreement dated as of May 21, 1998 between the Origination Trust and the
Manager, as amended from time to time, pursuant to which the Manager will be
engaged by the Origination Trust to conduct the business and affairs of the
Origination Trust upon the terms and conditions therein.
"Outstanding Face Amount" means (i) with respect to the Senior
Certificate, the face amount of the Senior Certificate, as such may have been
increased, or decreased as a result of redemption and (ii) with respect to any
Low Floater Certificate, the face amount thereof, in each case, not including
any accrued Senior Certificate Distribution Payments or Low Floater Certificate
Distribution Payments.
"Owner Trust" means Charter MAC Owner Trust I, a Delaware
business trust, its successors and assigns.
"Owner Trust Agreement" means the amended and restated trust
agreement, dated as of May 21, 1998, by and among Charter MAC Origination Trust
I, the Managing Trustees, and Wilmington Trust Company, as Registered Trustee,
as such may be amended, modified, supplemented, or assigned from time to time.
"Owner Trust Management Agreement" means the Management Agreement
dated as of May 21, 1998 between the Owner Trust and the Manager, as amended
from time to time, pursuant to which the Manager will be engaged by the Owner
Trust to conduct the business and affairs of the Owner Trust upon the terms and
conditions therein.
"Payout Date" means the date on which all of the following have
occurred; (i) the Liquidity Commitment Termination Date, (ii) all Liquidity
Obligations have been paid in full, and (iii) the Surety Provider has satisfied
all payment obligations under the Surety Bonds, exclusive of the obligations
with respect to Avoided Payments.
"Periodic Fee" means, collectively, all fees and premiums payable
to the Surety Provider pursuant to the Fee Letter on a periodic basis.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Prime Rate" means the prime rate as published in the Wall Street
Journal.
"Private Placement Memorandum" means the offering circular dated
May 21, 1998 prepared in connection with the sale of the Low Floater
Certificates.
"Pro Forma Debt Service" means, for any applicable period, Actual
Debt Service
<PAGE>
plus assumed redemption payments in respect of the Face Amount of Floater
Certificates based on a level pay 25-year amortization schedule (assuming the
actual rate payable on the Low Floater Certificate in effect on the immediately
preceding Payment Date).
"Pro Forma Debt Service Coverage" means, for any applicable
period, all Earnings during such period divided by Pro Forma Debt Service for
such period.
"Pro Forma Servicing Fee" means .125%.
"Property" means with respect to each Bond, all real property
which is subject to any lien securing the obligations of the Bond Issuer and/or
any Bond Obligor in respect of such Bond.
"Purchase Account" has the meaning given to such term in Section
6.16 of the Certificate Issuer Trust Agreement.
"Purchase Date" has the meaning given to such term in Section
6.12 and Section 6.13 of the Certificate Issuer Trust Agreement.
"Purchase Price" has the meaning given to such term in Section
6.15 of the Certificate Issuer Trust Agreement.
"Rating Agency" means "Moody's" and/or "S&P," if each and/or
either is currently maintaining a rating on the Low Floater Certificates.
"Redemption Account" has the meaning given to such term in
Section 8.1 of the Owner Trust Agreement.
"Registered Trustee" means, with respect to the Origination Trust
and the Owner Trust, Wilmington Trust Company, not in its individual capacity,
but solely as trustee of the Origination Trust or the Owner Trust, as the case
may be.
"Reimbursement Agreement" means initially the Insurance
Agreement, and any Reimbursement Agreement executed in connection with any
Alternate Credit Facility.
"Reimbursement Amount" has the meaning given to such term in
Section 2.04 of the Insurance Agreement.
"Reimbursement Rate" means a per annum interest rate equal to the
greater of (i) Prime Rate plus 2.0% and (ii) the then current rate on the Low
Floater Certificates.
"Remarketing Agent" means Goldman, Sachs & Co., in its capacity
as remarketing agent pursuant to the Remarketing Agreement, or any successor
remarketing agent appointed by the Owner Trust.
"Remarketing Agreement" means the Remarketing Agreement, dated as
of May 21, 1998, by and between the Remarketing Agent and the Certificate
Issuer, together with all amendments or supplements thereto and any remarketing
agreement entered into between the
<PAGE>
Certificate Issuer and any successor Remarketing Agent.
"Remarketing Proceeds Subaccount" has the meaning given to such
term in Section 6.16 of the Certificate Issuer Trust Agreement.
"Residual Certificate" means the Residual Certificate issued by
the Owner Trust pursuant to the Owner Trust Agreement evidencing a residual
beneficial interest in the Owner Trust.
"Residual Distribution" means the amount payable to the Residual
Holder pursuant to Section 8.3 of the Owner Trust Agreement.
"Residual Holder" means the Person in whose name the Residual
Certificate is registered or any Person which is the successor to such Person as
a result of a foreclosure or other similar action with respect to the Residual
Certificate.
"Securities Law Opinion" means the legal opinion of Greenberg
Traurig Hoffman Lipoff Rosen & Quentel delivered on the Initial Closing Date to
the effect that (i) the offer and sale of the Senior Certificate, the Residual
Certificate and the Low Floater Certificates are not subject to registration
under the 1933 Act; (ii) none of the Origination Trust, the Owner Trust and the
Certificate Issuer is an investment company or a company controlled by an
investment company within the meaning of the 1940 Act; and (iii) none of the
Origination Trust Agreement, the Owner Trust Agreement or the Certificate Issuer
Trust Agreement is required to be qualified under the 1939 Act.
"Senior Certificate" means the Senior Certificate issued from
time to time by the Owner Trust pursuant to the Owner Trust Agreement evidencing
beneficial interests in the Owner Trust.
"Senior Certificate Distribution Payment" means the amount
payable on each Senior Certificate Distribution Payment Date to the Senior
Holder as provided in Section 8.3(a) of the Owner Trust Agreement representing a
portion of the Bond Interest payable at the Senior Certificate Distribution Rate
in respect of the Outstanding Face Amount of the Senior Certificate.
"Senior Certificate Distribution Payment Date" means the first
Business Day of each month, commencing July 1, 1998.
"Senior Certificate Distribution Rate" means the distribution
rate applicable to the Senior Certificate determined as provided in Section 6.7
of the Owner Trust Agreement, or with respect to Liquidity Provider
Certificates, the Liquidity Facility Rate.
"Senior Certificate Distribution Rate Determination Date" means
Wednesday in each calendar week or, if such Wednesday is not a Business Day, the
next Business Day preceding such Wednesday; provided, however, that the first
Senior Certificate Distribution Rate Determination Date shall be May 27, 1998.
"Senior Certificate Distribution Rate Period" means the seven-day
period commencing on the first Thursday, whether or not a Business Day,
following the corresponding Senior Certificate Distribution Rate Determination
Date and running through and including the
<PAGE>
Wednesday of the following calendar week, whether or not a Business Day, except
(i) the first Senior Certificate Distribution Rate Period shall commence on May
21, 1998 and (ii) the last Senior Certificate Distribution Rate Period shall end
on the date upon which the events specified in Section 6.7(b) or (c) of the
Owner Trust Agreement occur.
"Senior Certificate Gainshare Payment" shall mean the amount
payable on each Distribution Payment Date to the Senior Holder as provided in
Section 8.5 of the Owner Trust Agreement.
"Senior Certificate Redemption Price" has the meaning given to
such term in Section 6.5(a) of the Owner Trust Agreement.
"Senior Holder" means the registered owner of the Senior
Certificate issued by the Owner Trust.
"Servicer" means the party acting as "Servicer" pursuant to the
Servicing Agreement, initially Related Charter LP, a Delaware limited
partnership.
"Servicer Default" has the meaning given to such term in the
Servicing Agreement.
"Servicer Termination Notice" has the meaning given to such term
in the Servicing Agreement.
"Servicer Transfer" has the meaning given to such term in the
Servicing Agreement.
"Servicer's Certificate" has the meaning given to such term in
the Servicing Agreement.
"Servicer's Report" has the meaning given to such term in the
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of
May 21, 1998, by and among the Servicer, the Owner Trust and the Administrative
Agent.
"Servicing Fees" has the meaning given to such term in the Owner
Trust Agreement.
"Settlement Report" has the meaning given to such term in the
Owner Trust Agreement.
"Special Tax Opinion" means the legal opinion of Greenberg
Traurig Hoffman Lipoff Rosen & Quentel delivered on the Initial Closing Date
confirming the opinions set forth in the Private Placement Memorandum under the
heading "Certain Federal Income Tax Considerations."
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill
<PAGE>
Companies, Inc., and any successor thereto.
"Successor Servicer" has the meaning given to such term in the
Servicing Agreement.
"Surety Bond" means each of the Certificate Surety Bond and the
Liquidity Surety Bond.
"Surety Bond Premium" has the meaning given to such term in the
Fee Letter.
"Surety Provider" means MBIA Insurance Corporation, a New York
stock insurance company, its successors and assigns.
"Tax-Exempt Securities" means (i) securities, other than Bonds,
the income on which is excludable from gross income for purposes of federal
income taxation and which does not constitute an item of tax preference for
purposes of computing the federal alternative minimum tax, which are rated not
lower than "Aaa/P-1" by Moody's, or "AAA/A-1" by S&P, or (ii) participation or
other interests in tax-exempt mutual funds that, in each case, are rated not
lower than "Aaa/P-1" by Moody's, or "AAA/A-1" by S&P.
"Tender Agent" means First Tennessee Bank National Association,
its permitted successors and assigns.
"Tender Option Termination Event" means the discontinuance of the
tender option of the Low Floater Holders upon the occurrence of and during the
continuation of a Liquidity Event of Default.
"Termination Fee" has the meaning given to such term in the Fee
Letter.
"Termination Notice" has the meaning given to such term in
Section 7.05 of the Insurance Agreement.
"Three-Month Average Debt Service Coverage" means, on any date of
determination, the Debt Service Coverage averaged over the three full months
most recently ended.
"Transaction Document" means each of the Insurance Agreement, the
Administration and Custody Agreement, the Servicing Agreement, the Charter
Contribution Agreement, the Origination Trust Contribution Agreement, the
Origination Trust Agreement, the Owner Trust Agreement, the Certificate Issuer
Trust Agreement, the Fee Letter, the Liquidity Agreement, the Certificate Surety
Bond, the Liquidity Surety Bond, and the Liquidity Pledge and Security
Agreement.
"Transaction Party" means each of the Surety Provider, Charter,
the Origination Trust, Owner Trust, the Certificate Issuer, the Administrative
Agent, the Certificate Trust Agent, the Servicer, the Manager, the Liquidity
Agent (in its capacity as agent for the Liquidity Banks) and the Liquidity
Collateral Agent.
<PAGE>
"Transactions" means the transactions contemplated in the
Transaction Documents.
"Transfer" means sale, assignment, conveyance, transfer, gift,
pledge, hypothecation, mortgage, exchange or other disposition whether
voluntary, involuntary, by operation of law or otherwise.
"Trigger Event" means a Level I Trigger Event, a Level II Trigger
Event, a Level III Trigger Event, or a Level IV Trigger Event.
"Trust Act" means the Delaware Business Trust Act, 12 Del. C.
ss.ss.3801 et. seq., as amended from time to time, or the corresponding
provisions of any succeeding law.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial
Code as from time to time in effect in the State of New York.
"Unmatured Event of Default" means the event which, with the
giving of notice or the passage of time or both, would constitute an Event of
Default.
"Unmatured Servicer Default" has the meaning given to such term
in the Servicing Agreement.
"Unmatured Termination Event" means any event which, with the
giving of notice or the passage of time or both, would constitute a Event of
Termination.
"Voting Securities" has the meaning given to such term under the
1940 Act.
LIQUIDITY AGREEMENT
Dated as of May 21, 1998
among
CHARTER MAC OWNER TRUST I
as the Owner Trust
and
CHARTER MAC FLOATER CERTIFICATE TRUST I
as the Liquidity Borrower
and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
as the Tender Agent
and
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO AS LIQUIDITY BANKS
as the Liquidity Banks
and
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as the Liquidity Agent
and
MBIA INSURANCE CORPORATION,
as the Surety Provider
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Definitions.....................................................................................1
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01 The Advances....................................................................................9
SECTION 2.02 Use of Proceeds................................................................................11
SECTION 2.03 Making the Advances............................................................................11
SECTION 2.04 Increases and Decreases in the Liquidity Commitments...........................................12
SECTION 2.05 Payment of the Liquidity Obligations...........................................................15
SECTION 2.06 Interest on the Advances.......................................................................15
SECTION 2.07 Interest Rate Determination and Protection.....................................................17
SECTION 2.08 Voluntary Conversion and Continuation of Advances..............................................18
SECTION 2.09 Prepayments....................................................................................20
SECTION 2.10 Fees ..........................................................................................20
SECTION 2.11 Increased Costs; Increased Capital.............................................................20
SECTION 2.12 Payments and Computations......................................................................22
SECTION 2.13 Illegality.....................................................................................23
SECTION 2.14 Taxes .........................................................................................23
SECTION 2.15 Sharing of Payments. Etc.......................................................................25
SECTION 2.16 Evidence of Debt...............................................................................26
SECTION 2.17 Downgraded Bank Advances; Downgraded Bank Accounts.............................................26
ARTICLE III CONDITIONS PRECEDENT
SECTION 3.01 Conditions Precedent to the Effectiveness of this Agreement....................................27
SECTION 3.02 Conditions Precedent to Liquidity Borrowings, Conversions, and Continuations...................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Liquidity Borrower.......................................28
ARTICLE V COVENANTS OF THE LIQUIDITY BORROWER
SECTION 5.01 Affirmative Covenants..........................................................................30
SECTION 5.02 Negative Covenants.............................................................................32
SECTION 5.03 Amendment of Transaction Documents.............................................................32
ARTICLE VI EVENTS OF DEFAULT
SECTION 6.01 Events of Default..............................................................................33
SECTION 6.02 Remedies ......................................................................................34
SECTION 6.03 Notice of Certain Events.......................................................................34
-i-
<PAGE>
ARTICLE VII THE LIQUIDITY AGENT
SECTION 7.01 Authorization and Action.......................................................................35
SECTION 7.02 Liquidity Agent's Reliance Etc.................................................................36
SECTION 7.03 Tender Agent; Liquidity Agent and Affiliates...................................................37
SECTION 7.04 Liquidity Bank Credit and Lending Decision.....................................................37
SECTION 7.05 Indemnification................................................................................38
SECTION 7.06 Successor Liquidity Agent......................................................................38
ARTICLE VIII MISCELLANEOUS
SECTION 8.01 Amendments, Etc................................................................................39
SECTION 8.02 Notices, Etc...................................................................................39
SECTION 8.03 No Waiver; Remedies............................................................................40
SECTION 8.04 Costs, Expenses, and Indemnification...........................................................40
SECTION 8.05 Binding Effect; Termination....................................................................41
SECTION 8.06 Assignments and Participation..................................................................41
SECTION 8.07 No Proceedings.................................................................................45
SECTION 8.08 No Recourse....................................................................................45
SECTION 8.09 Execution and Performance of Liquidity Pledge and Security Agreement and Insurance
Agreement......................................................................................46
SECTION 8.10 Termination and Recommitment...................................................................46
SECTION 8.11 Confidentiality................................................................................47
SECTION 8.12 GOVERNING LAW..................................................................................47
-ii-
<PAGE>
SECTION 8.13 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..................................................47
SECTION 8.14 Counterparts...................................................................................48
SECTION 8.15 Captions ......................................................................................48
SECTION 8.16 Severability...................................................................................48
SECTION 8.17 Notice of Limitation of Liability..............................................................48
</TABLE>
SCHEDULES
Schedule I Commitments and List of Applicable Lending Offices
Schedule II Conditions Precedent Documents
Schedule III Notice Addresses
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Joinder Agreement
Exhibit C Form of Notice of Liquidity Borrowing
Exhibit D Form of Liquidity Commitment Increase
Exhibit E Form of Notice of Conversion/Continuation
Exhibit F Form of Liquidity Note
Exhibit G Form of Notice of Assignment Pursuant to Section 8.06
Exhibit H Forms of Opinion of Counsel to Liquidity Banks
Exhibit I Form of Notice of Recommitment
<PAGE>
LIQUIDITY AGREEMENT (the "Agreement"), dated as of May 21,
1998, by and among CHARTER MAC OWNER TRUST I, a Delaware business trust (the
"Owner Trust"), CHARTER MAC FLOATER CERTIFICATE TRUST I, a Delaware business
trust (the "Liquidity Borrower"), FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as
Tender Agent and Certificate Trust Agent (the "Tender Agent" and the
"Certificate Trust Agent"), THE FINANCIAL INSTITUTIONS parties hereto from time
to time as lenders (each, a "Liquidity Bank" and collectively, the "Liquidity
Banks"), BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as agent for the
Liquidity Banks hereunder (in such capacity, the "Liquidity Agent") and MBIA
INSURANCE CORPORATION (the "Surety Provider").
IT IS AGREED as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 Definitions.
(a) For all purposes of this Agreement, except as otherwise
expressly provided herein or unless the context otherwise requires, capitalized
terms not otherwise defined herein shall have the meanings given to such terms
in Appendix A hereto which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
"Advance" means an advance by a Liquidity Bank to the
Liquidity Borrower as part of a Liquidity Borrowing consisting of (a) a Funding
Advance consisting of either (i) a single Base Rate Advance or simultaneous Base
Rate Advances or (ii) a single Eurodollar Rate Advance or simultaneous
Eurodollar Rate Advances, in each case subject to Conversion or Continuation
pursuant to Section 2.08, or (b) a Downgraded Bank Advance, in each case
pursuant to Section 2.03.
"Agreement" has the meaning given to such term in the Preamble
hereto, as the same may be amended, restated, modified or supplemented from time
to time pursuant to Section 8.01.
"Applicable Lending Office" means, with respect to each
Liquidity Bank, the office of such Liquidity Bank specified as its lending
office for the relevant Type of Advances opposite its name on Schedule I hereto
or in the Assignment and Acceptance or Joinder Agreement pursuant to which it
became a Liquidity Bank, or such other office of such Liquidity Bank as such
Liquidity Bank may from time to time specify by notice given to the Liquidity
Borrower and the Liquidity Agent.
<PAGE>
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Liquidity Bank and an Eligible Assignee, and accepted by the
Liquidity Agent, in substantially the form of Exhibit A hereto.
"Available Funds" has the meaning given to such term in
Section 8.08.
"Available Liquidity Amount" has the meaning specified in
Section 2.01.
"Base Rate" means a fluctuating interest rate per annum equal
to the higher of (i) the rate of interest published in the New York edition of
The Wall Street Journal as the prime rate, or, in the event that no such rate is
published, the rate of interest announced by the Liquidity Agent in New York,
New York, from time to time as its base rate, whether or not such rate is the
lowest rate offered by such institution to its corporate borrowers and (ii) 1/2
of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance which bears interest at a
rate per annum determined on the basis of the Base Rate, as provided in Section
2.06(a).
"Business Day" means any day other than a Saturday, Sunday or
public holiday or the equivalent for banks in New York City and on which the New
York Stock Exchange is open for business, provided that, when used in connection
with any Eurodollar Rate Advance or other matters concerning the Eurodollar
Rate, the term "Business Day" means any such day on which dealings are carried
on in the London interbank market and on which banks are open for business in
London, England.
"Certificate Surety Bond" means Surety Bond No. 25961 issued
by the Surety Provider in favor of the Owner Trust which may be drawn by the
Administrative Agent to make payments owing on the Senior Certificates, as
amended, modified, supplemented, restated or replaced from time to time.
"Continue," "Continuation," and "Continued" each refers to a
continuation of Advances for additional Liquidity Interest Periods pursuant to
Section 2.08.
"Convert," "Conversion," and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type pursuant to
Section 2.08.
"Defaulting Liquidity Bank" has the meaning given to such term
in Section 2.03(c).
"Dollars" and the sign "$" each means lawful money of the
United States of America.
"Downgraded Bank Account" has the meaning given to such term
in Section 2.17(a).
<PAGE>
"Downgraded Bank Advance" means an advance by a Liquidity Bank
which is remitted to a
Downgraded Bank Account pursuant to Section 2.17.
"Downgrade Event" means, with respect to any Liquidity Bank,
when such Liquidity Bank ceases to have a short-term unsecured indebtedness
rating of at least A-1 by S&P and P-1 by Moody's.
"Effective Date" means the date on which the conditions
specified in Section 3.01 shall have been satisfied.
"Eligible Assignee" means a commercial bank with a short-term
unsecured indebtedness rating of at least A-1 by S&P and P-1 by Moody's, and
which is acceptable to the Liquidity Agent, the Liquidity Borrower and the
Surety Provider, which acceptance neither the Liquidity Agent, Liquidity
Borrower nor the Surety Provider shall unreasonably withhold.
"Eligible Depository Institution" means a depository
institution, the short term unsecured senior indebtedness of which is rated at
least A-1 by S&P and P-1 by Moody's, and which is acceptable to the Liquidity
Borrower and the Surety Provider, which acceptance neither the Liquidity
Borrower nor the Surety Provider shall unreasonably withhold.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title
IV of ERISA is a member of the Liquidity Borrower's controlled group, or under
common control with the Liquidity Borrower, within the meaning of Section 414 of
the IRC, and the regulations promulgated and rulings issued thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time. For purposes of this Definition, Eurodollar Rate
Advances shall be deemed to be "Eurocurrency Liabilities" as defined in
Regulation D without benefit or credit for any prorations, exemptions or offsets
under Regulation D.
"Eurodollar Rate" means for any Liquidity Interest Period with
respect to a Eurodollar Rate Advance, an interest rate per annum determined by
the Liquidity Agent rounded upward, if necessary, to the next highest
one-sixteenth (1/16th) of one percent, to be equal to the quotient of (i) the
rate at which the London Branch of the Liquidity Agent would offer deposits in
United States dollars to major banks in the London interbank market for a period
equal to such Liquidity Interest Period and in a principal amount comparable to
the relevant amount to be financed hereunder at or about 11:00 a.m. London time
on the second Business Day before (and for value on) the first day of such
Liquidity Interest Period, divided by (ii) a number equal to 1.00 minus the
Eurodollar Reserve Percentage (expressed as a decimal) applicable to that
Liquidity Interest Period.
"Eurodollar Rate Advance" means an Advance which bears
interest at a rate per
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annum determined on the basis of the Eurodollar Rate, as provided in Section
2.06(a).
"Eurodollar Reserve Percentage" means, for any Liquidity
Interest Period for any Eurodollar Rate Advance, the reserve percentage
applicable during such Liquidity Interest Period (or, if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such Liquidity Interest Period during which any such percentage
shall be so applicable) equal to the maximum aggregate reserve requirements
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) specified under regulations issued by the Board of
Governors of the Federal Reserve System (or any successor) and then applicable
to liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Liquidity Interest Period.
"Federal Funds Rate" means, for any day, the fluctuating
interest rate per annum at which the Liquidity Agent, as a branch of a foreign
bank, in its sole discretion, can acquire federal funds in the New York City
interbank federal funds market or other funding sources available to the
Liquidity Agent, through brokers of recognized standing, for a period and in an
amount comparable to the period and amount requested by the Liquidity Borrower.
"Funding Advance" means an Advance made under this Agreement
that is other than a Downgraded Bank Advance and that is made to purchase Low
Floater Certificates that were (i) tendered but not remarketed, or for which the
remarketing proceeds were insufficient to pay the purchase price thereof, or
(ii) subject to mandatory purchase pursuant to Section 6.13 of the Certificate
Issuer Trust Agreement, for which purchase Section 6.13 directs the Tender Agent
to draw funds under the Liquidity Facility.
"GAAP" means generally accepted accounting principles.
"Indemnified Party" has the meaning given to such term in
Section 8.04(a).
"Investment Proceeds" has the meaning given to such term in
Section 2.06(b).
"IRC" means the U.S. Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"IRS" means the U.S. Internal Revenue Service and any
successor agency.
"Joinder Agreement" means a Joinder Agreement executed by the
Liquidity Borrower, an Eligible Assignee, and the Surety Provider in
substantially the form of Exhibit B hereto.
"Liquidity Agent" has the meaning given to such term in the
Preamble hereto.
"Liquidity Banks" has the meaning given to such term in the
Preamble hereto.
"Liquidity Borrower" has the meaning given to such term in the
Preamble hereto.
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"Liquidity Borrowing" means a borrowing consisting either of
(i) a single Advance or (ii) a group of simultaneous Advances of the same Type,
in each case made by one or more of the Liquidity Banks (or, in the case of a
Downgraded Bank Advance, by the applicable Liquidity Bank subject to a
Downgraded Event) pursuant to the same Notice of Liquidity Borrowing described
in Section 2.03, subject to Conversion or Continuation pursuant to Section 2.08.
"Liquidity Commitment" means, at any time with respect to a
Liquidity Bank, the principal amount set forth beside such Liquidity Bank's name
under the heading "Liquidity Commitment" on Schedule I hereto or on the
signature page of the Assignment and Acceptance or Joinder Agreement pursuant to
which such Liquidity Bank became a Liquidity Bank hereunder in accordance with
the provisions of Section 8.06, as such Liquidity Commitment may be increased or
decreased from time to time in accordance with the provisions of Sections 2.01,
2.04, or 8.06, and "Liquidity Commitments" means, collectively, the aggregate
amount of the Liquidity Commitments of all of the Liquidity Banks.
"Liquidity Commitment Fee" means the fee to be paid by the
Liquidity Borrower to the Liquidity Agent, for the account of each Liquidity
Bank, which fee shall be equal to a rate per annum of 0.175% of each Liquidity
Bank's Unused Liquidity Commitment.
"Liquidity Commitment Termination Date" means the date ending
on the earlier to occur of (a) the close of business of the Liquidity Borrower
on the Scheduled Liquidity Commitment Termination Date, and (b) the close of
business of the Liquidity Borrower on the date of the termination in whole of
the Liquidity Commitments pursuant to Section 2.04(a), 6.02(a).
"Liquidity Event of Default" has the meaning given to such
term in Section 6.01.
"Liquidity Interest Period" means, for each Advance, the
period commencing on the date such Advance is made, Continued, or Converted, and
ending on the last day of the period selected by the Liquidity Borrower pursuant
to the terms set forth below. The duration of each Liquidity Interest Period
shall be (a) in the case of a Funding Advance which constitutes a Base Rate
Advance, any number of days not to exceed thirty-one and (b) in the case of a
Funding Advance which constitutes a Eurodollar Rate Advance, one, two, three,
six or nine months, in each case as the Liquidity Borrower may select by
delivery of a Notice of Liquidity Borrowing or Notice of
Conversion/Continuation, as the case may be, to the Liquidity Agent; provided,
however, that:
(i) whenever the last day of any Liquidity Interest Period
would otherwise occur on a day other than a Business Day, the last day of such
Liquidity Interest Period shall be extended to occur on the next succeeding
Business Day; provided, however, that in the case of a Liquidity Interest Period
for a Eurodollar Rate Advance which otherwise would occur in the next succeeding
calendar month, the last day of such Liquidity Interest Period shall be deemed
to occur on the immediately preceding Business Day;
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(ii) whenever a Liquidity Interest Period for any Funding
Advance which constitutes a Eurodollar Rate Advance commences on the last
Business Day in a month or on a day for which there is no numerically
corresponding day in the month in which such Liquidity Interest Period ends, the
last day of such Liquidity Interest Period shall occur on the last Business Day
of the month in which such Liquidity Interest Period ends; and
(iii) no Liquidity Interest Period may end later than the
Scheduled Liquidity Maturity Date.
The Liquidity Agent shall promptly advise each Liquidity Bank
of the Liquidity Interest Period determined as provided above for the Advances
constituting each Liquidity Borrowing.
"Liquidity Note" has the meaning given to such term in Section
2.16.
"Liquidity Obligations" means all obligations of the Liquidity
Borrower to the Liquidity Banks and the Liquidity Agent under this Agreement,
the Liquidity Notes and the Liquidity Pledge and Security Agreement (however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, or due or to become due) including, without limitation, (a) all
obligations to make payments to the Liquidity Banks of, and in respect of the
principal amount of, and interest on any Advance and (b) all obligations of the
Liquidity Borrower to the Liquidity Banks and/or the Liquidity Agent in respect
of fees, costs, expenses, and indemnities.
"Liquidity Surety Bond" means Surety Bond No. 25960 issued by
the Surety Provider in favor of the Liquidity Agent for the benefit of the
Liquidity Banks, as amended, modified, supplemented, restated or replaced from
time to time.
"Majority Liquidity Banks" means, at any time, Liquidity Banks
that are owed more than 66_% of the aggregate unpaid principal amount of the
Advances then outstanding or, if no Advances are then outstanding, Liquidity
Banks having more than 66_% of the aggregate Liquidity Commitments. For purposes
of this definition, "Advance" shall not include any Downgraded Bank Advance
(other than to the extent such Downgraded Bank Advance has been converted into a
Funding Advance).
"Notice of Conversion/Continuation" has the meaning given to
such term in Section 2.08(b).
"Notice of Liquidity Borrowing" has the meaning given to such
term in Section 2.03(a).
"Notice of Liquidity Commitment Increase" has the meaning
given to such term in Section 2.04(b).
"Other Taxes" has the meaning given to such term in Section
2.14(b).
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"Participant" has the meaning set forth in Section 8.06(e).
"Permitted Investments" means (i) non-callable direct
obligations of, or non-callable obligations fully guaranteed by, the United
States of America, or by any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and credit of the
United States of America; (ii) an investment in a no-load money market fund
rated AAAm-G by S&P and Aaa by Moody's, the assets of which are invested solely
in obligations described in clauses (iii) through (v) of this definition; (iii)
commercial paper having an original maturity of less than 270 days and a rating
in the highest rating category of S&P and Moody's at the time of such
investment; (iv) certificates of deposit of, banker's acceptances issued by or
federal funds sold by any depository institution or trust company (including the
Tender Agent) incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal and/or state
authorities, so long as at the time of such investment or contractual commitment
providing for such investment such depository institution or trust company has a
long-term unsecured debt rating in the highest rating category of S&P and
Moody's, and provided that each instrument has an original maturity of less than
365 days, and any other demand or time deposit or certificate of deposit which
is fully insured by the FDIC through the Bank Insurance Fund and rated at least
A-1 by S&P and P-1 by Moody's; (v) repurchase obligations with respect to (a)
any security described in clause (i) collateralized at 105% of the principal
amount of such repurchase obligations or (b) any other security issued or
guaranteed as to timely payment by an agency or instrumentality of the United
States of America, collateralized at 105% of the principal amount of such
repurchase obligations in either case entered into with a depository institution
or trust company (including the Tender Agent), acting as principal, whose
obligations having the same maturity as that of the repurchase agreement would
be Permitted Investments under clause (iii) above (provided that the
counterparty is rated at least "A-1" by S&P and "P-1" by Moody's); or (vi) money
market funds having ratings in the highest available rating category of S&P and
Moody's.
"Person" means any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Liquidity Borrower or any ERISA Affiliate
is, or within the immediately preceding six years was, an "employer" as defined
in Section 3(5) of ERISA, and in respect of which the Liquidity Borrower or an
ERISA Affiliate could have liability under Title IV of ERISA.
"Pro Rata Share" means, at any time, with respect to a
Liquidity Bank's obligations under this Agreement, for any Liquidity Bank, a
fraction (a) the numerator of which is such Liquidity Bank's Liquidity
Commitment at such time and (b) the denominator of which is the aggregate
Liquidity Commitments at such time.
"Register" has the meaning given to such term in Section
8.06(c).
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"Scheduled Liquidity Commitment Termination Date" means the
later of (i) 364 days from the Effective Date hereof or (ii) such other date to
which the Liquidity Commitments are extended pursuant to Section 8.10.
"Scheduled Liquidity Maturity Date" means the Business Day
next succeeding the "Principal Draw Date" under and as defined in the Liquidity
Surety Bond.
"Taxes" has the meaning given to such term in Section 2.14(a).
"Type" means, with reference to an Advance, a Base Rate
Advance or a Eurodollar Rate Advance.
"United States" and "U.S." each means the United States of
America.
"Unused Liquidity Commitment" means the average daily amount
of the unused portion of each Liquidity Bank's Liquidity Commitment (it being
understood that Downgraded Bank Advances do not constitute usage of the
applicable Liquidity Bank's Liquidity Commitment) from the Effective Date
thereof in the case of each Liquidity Bank that is a signatory hereto and from
the effective date specified in the Assignment and Acceptance or in the Joinder
Agreement pursuant to which it became a Liquidity Bank in the case of each other
Liquidity Bank, until the Liquidity Commitment Termination Date.
(b) All defined terms in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified, and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
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(f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified, consolidated, continued, extended or supplemented and includes (in the
case of agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
(g) In this Agreement in the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." Periods
of days referred to in this Agreement shall be counted in calendar days, unless
Business Days are expressly prescribed, and references in this Agreement to
months and years shall be to calendar months and calendar years, unless
otherwise specified.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION II.1 The Advances. Each Liquidity Bank severally agrees, on the
terms and conditions hereinafter set forth, to make Advances to the Liquidity
Borrower from time to time on any Business Day during the period from the
Effective Date to the Liquidity Commitment Termination Date in an aggregate
amount not to exceed at any time outstanding such Liquidity Bank's Liquidity
Commitment; provided, that, Funding Advances shall be made only for the purpose
of paying the purchase price of Low Floater Certificates that have been (a)
tendered for purchase but not remarketed, or for which the remarketing proceeds
are insufficient to pay the purchase price thereof, or (b) subject to mandatory
purchase pursuant to Section 6.13 of the Certificate Issuer Trust Agreement, for
which purchase Section 6.13 directs the Tender Agent to draw funds under the
Liquidity Facility; provided further that in no event shall the principal amount
of any Funding Advances made on any Business Day exceed the following (the
"Available Liquidity Amount"):
(i) an amount equal to the lesser of
(A) the total amount of the Liquidity Commitments and
(B) an amount equal to the lesser of (x) and (y), where
(x) equals the sum of:
(1) the Outstanding Face Amount of Low Floater
Certificates (including Liquidity Provider
Certificates), plus
(2) all accrued and unpaid Low Floater Certificate
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Distribution Payments accrued and unpaid since the
last Low Floater Certificate Distribution Payment
Date,
and (y) equals the Insured Amount as defined in the
Liquidity Surety Bond;
minus (ii) all amounts (if any) previously paid to the
beneficiary of the Liquidity Surety Bond pursuant to a Principal Notice for
Payment (as defined in the Liquidity Surety Bond);
minus (iii) all amounts (if any) previously paid to the
beneficiary of the Certificate Surety Bond pursuant to a Face Amount Notice for
Payment that have not yet been applied by the beneficiary to cause reduction
equal to the amount so drawn in the Outstanding Face Amount of the Senior
Certificate and in the Outstanding Face Amount of the Low Floater Certificates;
and
minus (iv) the aggregate outstanding principal balance of
Funding Advances.
Each Liquidity Borrowing shall consist of Advances of the same
Type made on the same day by the Liquidity Banks (or in the case of a Downgraded
Bank Advance, by the applicable Liquidity Bank subject to a Downgrade Event)
ratably according to their respective Pro Rata Shares, it being understood that
more than one Liquidity Borrowing may be made on the same day (provided,
however, that, solely under the circumstances described in the second sentence
of Section 2.03(d), a Liquidity Borrowing may consist of (x) a single Advance
made by a Liquidity Bank, or (y) multiple Advances of the same Type made on the
same day by one or more Liquidity Banks). Within the limits of each Liquidity
Bank's Liquidity Commitment, the Liquidity Borrower may borrow, repay pursuant
to Section 2.05, and reborrow under this Section 2.01. There shall be no
reborrowing, however, with respect to a payment that was previously made to the
beneficiary of either the Certificate Surety Bond pursuant to a Face Amount
Notice for Payment (as defined in the Certificate Surety Bond) or the Liquidity
Surety Bond pursuant to a Principal Notice for Payment (as defined in the
Liquidity Surety Bond). Prior to the Scheduled Liquidity Maturity Date, any
outstanding Advances may, at the option of the Liquidity Borrower, be Converted
or Continued pursuant to the terms of Section 2.08, subject to the terms of
Section 3.02. The Advances and all other Liquidity Obligations shall be repaid
or paid, as the case may be, solely out of the applicable funds described in
Section 2.05 without recourse to any other assets of the Liquidity Borrower.
SECTION II.2 Use of Proceeds. The Liquidity Borrower covenants and
agrees that (i) the proceeds of the Downgraded Bank Advances shall only be used
to fund the Downgraded Bank Accounts, and (ii) the proceeds of the Funding
Advances shall only be used to purchase Low Floater Certificates.
SECTION II.3 Making the Advances.
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(a) Each Liquidity Borrowing, in the case of Funding Advances
which constitute Base Rate Advances and in the case of Downgraded Bank Advances,
shall be made on telephonic notice, given not later than 10:30 A.M. (New York
City time) on the date of the proposed Liquidity Borrowing (which date shall be
a Business Day), by the Tender Agent to the Liquidity Agent, which shall then
give to each applicable Liquidity Bank promptly (and in any event not later than
11:30 A.M. (New York City time) on such date) notice thereof by telephone or
facsimile. As soon as practicable following delivery of such telephonic notice,
the Tender Agent shall deliver to the Liquidity Agent a notice of a Liquidity
Borrowing (a "Notice of Liquidity Borrowing") by facsimile, in substantially the
form of Exhibit C hereto. A Borrowing consisting of Base Rate Advances may be in
any available amount.
(b) Each Liquidity Borrowing, in the case of Funding Advances
which constitute Eurodollar Rate Advances, shall be made on telephonic notice,
given not later than 10:30 A.M. (New York City time) on the third Business Day
prior to the requested date of a proposed Liquidity Borrowing, by the Tender
Agent to the Liquidity Agent, which shall then give to each applicable Liquidity
Bank prompt notice thereof by telephone or facsimile (in any event not later
than 2:00 P.M. (New York City time) on such date). As soon as practicable
following delivery of such telephonic notice, the Tender Agent shall deliver to
the Liquidity Agent a Notice of Liquidity Borrowing by facsimile. Except as
provided in subsection (e) below, a Borrowing consisting of Eurodollar Rate
Advances shall be in an aggregate amount of not less than $1,000,000.
(c) Each Notice of Liquidity Borrowing to be delivered by the
Tender Agent to the Liquidity Agent pursuant to this Section 2.03 shall specify
(i) the date of such proposed Liquidity Borrowing, (ii) the aggregate amount of
such proposed Liquidity Borrowing, (iii) the Liquidity Interest Periods (all of
which shall be of the same duration) for the Advances to be made as part of such
proposed Liquidity Borrowing and (iv) in the case of a proposed Downgraded Bank
Advance, the Liquidity Bank required to make such Advance. Any Notice of
Liquidity Borrowing (or telephonic notice of Liquidity Borrowing) given by the
Tender Agent pursuant to this Section 2.03 shall be irrevocable and binding on
the Liquidity Borrower. Each Liquidity Bank shall, before 12:00 P.M. (New York
City time) on the date of such Liquidity Borrowing, make available for the
account of its Applicable Lending Office to the Liquidity Agent at The Chase
Manhattan Bank, New York Fed ABA #021000021, Account of: Bayerische Landesbank,
New York Branch, Account #544-7-07960 Reference: CMAC Certificate Trust, in same
day funds, such Liquidity Bank's Pro Rata Share of such requested Liquidity
Borrowing. After the Liquidity Agent's receipt of such funds (or, at the
Liquidity Agent's option, such earlier time as permitted pursuant to Section
2.12(c)), and upon fulfillment of the applicable conditions set forth in Section
3.02 hereof, the Liquidity Agent will make such funds available no later than
1:00 P.M. (New York City time) to the Tender Agent for such Low Floater
Certificates or will direct the deposit of such funds into appropriate
Downgraded Bank Accounts, as designated by the Liquidity Borrower to the
Liquidity Agent in the Notice of Liquidity Borrowing.
(d) The failure of any Liquidity Bank to make the Advance to
be made by it as part of any Liquidity Borrowing (each such Liquidity Bank being
a "Defaulting Liquidity
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Bank") shall not relieve any other Liquidity Bank of its obligation hereunder to
make its Advance on the date of such Liquidity Borrowing. In addition, subject
in all events to all of the other terms and conditions of this Agreement, the
Tender Agent shall request one or more additional Liquidity Borrowings, from one
or more Liquidity Banks which are not Defaulting Liquidity Banks, in an
aggregate amount sufficient (assuming the failure of each Defaulting Liquidity
Bank to participate in all such additional Liquidity Borrowings) to cover any
shortfall in requested Liquidity Borrowings resulting from the failure of one or
more Defaulting Liquidity Banks to make any requested Advances hereunder, and
each Liquidity Bank shall be obligated to participate in each such additional
Liquidity Borrowing so long as, after giving effect to each such requested
Advance, the aggregate outstanding principal balance of each Liquidity Bank's
Funding Advances does not exceed its Liquidity Commitment. The Tender Agent will
make a request, on behalf of the Liquidity Borrower, for additional Liquidity
Borrowings from Liquidity Banks that are not Defaulting Liquidity Banks by
giving notice to the Liquidity Agent by 1:00 P.M. (New York City time) of the
need for such additional Liquidity Borrowings.
(e) A Liquidity Borrowing consisting of Downgraded Bank
Advances shall be made in the amount of the then unused portion of the
applicable Liquidity Bank's Liquidity Commitment.
SECTION II.4 Increases and Decreases in the Liquidity Commitments.
(a) Decreases and Termination. The Liquidity Borrower shall
have the right, upon at least one Business Day's prior written notice to the
Liquidity Agent, to terminate in whole or reduce in part (ratably or
non-ratably, in the sole discretion of the Liquidity Borrower) the unused
portions of the respective Liquidity Commitments of the Liquidity Banks;
provided, however, that (i) each partial reduction shall be in the minimum
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
of that amount, and (ii) the Liquidity Borrower shall in no event reduce the
Liquidity Commitments at any time below an amount equal to (A) the Outstanding
Face Amount of Low Floater Certificates plus (B) the maximum amount of Low
Floater Certificate Distribution Payments that may accrue from one Low Floater
Certificate Distribution Payment Date to the next Low Floater Certificate
Distribution Payment Date, which is a maximum of 35 days of accrued Low Floater
Certificate Distribution Payments at 12% per annum.
(b) Increase in Liquidity Commitment of Existing Liquidity.
Bank. The Liquidity Borrower shall have the right, at any time and from time to
time, with the written consent of the Surety Provider and the Liquidity Bank
whose Liquidity Commitment is to be increased hereby (which consent is in such
Liquidity Bank's sole and absolute discretion), to increase the Liquidity
Commitment of any Liquidity Bank. Each such increase shall be effected by
delivery to the Liquidity Agent (i) by facsimile of a notice of Liquidity
Commitment increase (a "Notice of Liquidity Commitment Increase") in
substantially the form of Exhibit D, executed by the Liquidity Borrower, the
Surety Provider and the Liquidity Bank whose Liquidity Commitment is being
increased thereby, stating, among other things, the amount to which such
Liquidity Bank's Commitment is being increased, the effective date thereof,
which effective date shall be at least one Business Day after the execution of
such notice, and stating that such
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Liquidity Bank is authorized to endorse the increased amount of its Liquidity
Commitment on such Liquidity Bank's Liquidity Note and (ii) a replacement
Liquidity Surety Bond in an "Insured Amount" equal to the Liquidity Commitments
after giving effect to such increase plus "Yield" (each as defined in the
Liquidity Surety Bond) and otherwise substantially identical to the original
Liquidity Surety Bond. Upon receipt of an executed Notice of Liquidity
Commitment Increase pursuant to this Section 2.04(b), the Liquidity Agent shall
record the information contained therein in the Register and give prompt notice
thereof to the other Liquidity Banks.
(c) Increase in Liquidity Commitments by Addition of a New
Liquidity Bank.
(i) The Liquidity Borrower shall have the right, at any
time and from time to time, with the written consent of the Surety Provider and
the Liquidity Agent (which consent shall not be unreasonably withheld), to add
any Eligible Assignee as a Liquidity Bank hereunder; provided, that if such
addition of a Liquidity Bank shall cause the Liquidity Commitments to be
increased, then the Surety Provider shall be required to deliver a replacement
Liquidity Surety Bond to the Liquidity Agent in an "Insured Amount" equal to the
Liquidity Commitments after giving effect to such increase plus "Yield" and
otherwise substantially identical to the original Liquidity Surety Bond. Each
such addition shall be effected by delivery to the Liquidity Agent of a Joinder
Agreement executed by such new Liquidity Bank, the Liquidity Borrower and the
Surety Provider. The Liquidity Borrower, at its own expense, shall execute and
deliver to each new Liquidity Bank a Liquidity Note payable to the order of such
new Liquidity Bank, dated the effective date of the Joinder Agreement and
otherwise in substantially the form of Exhibit F hereto. Upon receipt of a
Joinder Agreement, if such Joinder Agreement has been fully executed, completed
and is substantially in the form of Exhibit B, the Liquidity Agent shall record
the information contained therein in the Register and give prompt notice thereof
to the other Liquidity Banks.
(ii) Notwithstanding the foregoing Section 2.04(c)(i)
and solely to the extent required by the Liquidity Borrower, the Liquidity
Agent, S&P or Moody's, no such Joinder Agreement shall be effective unless
counsel to the applicable new Liquidity Bank shall deliver an opinion in the
form of Exhibit H (or two or more opinions which collectively address the
matters set forth in such Exhibit H, and which, in any event, shall include an
opinion of New York counsel to such Liquidity Bank) to the Liquidity Borrower,
the Liquidity Agent, S&P and Moody's.
(iii) By executing and delivering a Joinder Agreement,
the new Liquidity Bank thereunder confirms to and agrees with each party hereto
as follows: (A) such new Liquidity Bank confirms that it has received a copy of
this Agreement, together with copies of such financial statements and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Joinder Agreement; (B) such new
Liquidity Bank will, independently and without reliance upon the Liquidity Agent
or any other Liquidity Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Transaction
Documents; (C) such new Liquidity Bank confirms that it
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is an Eligible Assignee; (D) such new Liquidity Bank appoints and authorizes the
Liquidity Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement or the other Transaction Documents, as the case may
be, as are delegated to the Liquidity Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; (E) such new
Liquidity Bank agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement or the other Transaction
Documents, as the case may be, are required to be performed by it as a Liquidity
Bank and (F) such new Liquidity Bank agrees that it will comply with the
provisions contained in Section 8.06 of this Agreement.
(d) Notice of Increases or Decreases in Liquidity Commitments
to the Liquidity Borrower.
Notice of increases or decreases in
Liquidity Commitments pursuant to paragraphs (a), (b) and (c) of this Section
2.04 shall be given by the Liquidity Agent to the Liquidity Borrower, the Tender
Agent, the Remarketing Agent and the Certificate Trust Agent at least thirty
days before the effective date of such increase or decrease in the Liquidity
Commitment of any Liquidity Bank or the joinder of any additional bank as a new
Liquidity Bank.
SECTION II.5 Payment of the Liquidity Obligations.
(a) The principal amount of each Advance shall be due and
payable on the Scheduled Liquidity Maturity Date. All interest, fees, and other
amounts owing hereunder shall be due and payable as specified elsewhere in this
Agreement. All outstanding Liquidity Obligations shall be due and payable on the
Scheduled Liquidity Maturity Date.
(b) Amounts due and payable hereunder are payable by the
Liquidity Borrower solely out of Available Funds.
(c) Any and all payments made by the Liquidity Borrower to the
Liquidity Agent hereunder with respect to the Liquidity Obligations on any date
and any and all proceeds of the Surety Bonds and amounts paid to the Liquidity
Collateral Agent pursuant to the terms of the Liquidity Pledge and Security
Agreement remitted to the Liquidity Agent by the Liquidity Collateral Agent or
directly by the Surety Provider (as the case may be) and any other Available
Funds paid to the Liquidity Agent shall be applied first, in payment pro rata of
the accrued but unpaid interest on any Advances then due and payable, second, in
payment pro rata of all other amounts then due and payable to the Liquidity
Banks and Liquidity Agent hereunder (other than the outstanding principal amount
of maturing Advances), and third, in payment pro rata of the outstanding
principal amount of all Advances.
(d) At any time that any amounts can be obtained from a
drawing under the Liquidity Surety Bond, the Liquidity Agent shall make a
drawing under the Liquidity Surety Bond in an amount equal to the full amount
available for drawing and then required to be paid under such Surety Bond.
Promptly after each such drawing, the Liquidity Agent shall
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distribute those proceeds to the Liquidity Banks for application to the Advances
and other amounts then owing hereunder in the order prescribed in Section
2.05(c).
(e) If on any day the funds received by the Liquidity Agent,
as contemplated by this Section 2.05, for application to the Liquidity
Obligations that are due and payable on such day are insufficient, when applied
in accordance with the terms of this Agreement, to repay in full all such
Liquidity Obligations, such unpaid amounts shall remain due and payable, subject
to payment in accordance with the terms of this Section 2.05, and while so
outstanding shall bear interest at the rate applicable to Base Rate Advances,
which interest shall be due and payable as it accrues.
SECTION II.6 Interest on the Advances.
(a) The Liquidity Borrower shall pay to the Liquidity Agent
for the account of each Liquidity Bank interest on the unpaid principal amount
of each Funding Advance made by such Liquidity Bank from the date of such
Advance until such principal amount shall be paid in full, at the Liquidity
Facility Rate, which shall be equal to (i) or (ii) below, at the option of the
Liquidity Borrower, as determined in accordance with this Agreement (the
"Liquidity Facility Rate"):
(i) for Eurodollar Rate Advances, a rate per annum equal
at all times during each applicable Liquidity Interest Period for such Advance
to the Eurodollar Rate for such Liquidity Interest Period, plus
<TABLE>
<CAPTION>
- ----------------------------------------------- -------------------------------------------- --------------------
To (but excluding) number
From the number of days after the date of any of days from date of Funding Margin (number of
Funding Advance Advance basis points)
<S> <C> <C>
- ----------------------------------------------- -------------------------------------------- --------------------
Date of any Funding Advance 90 days 100.0
- ----------------------------------------------- -------------------------------------------- --------------------
90 180 days 112.5
- ----------------------------------------------- -------------------------------------------- --------------------
180 270 days 125.0
- ----------------------------------------------- -------------------------------------------- --------------------
270 360 days 137.5
- ----------------------------------------------- -------------------------------------------- --------------------
360 450 days 150.0
- ----------------------------------------------- -------------------------------------------- --------------------
450 540 days 162.5
- ----------------------------------------------- -------------------------------------------- --------------------
540 630 days 175.0
- ----------------------------------------------- -------------------------------------------- --------------------
630 720 days 187.5
- ----------------------------------------------- -------------------------------------------- --------------------
720 and thereafter 200
- ----------------------------------------------- -------------------------------------------- --------------------
</TABLE>
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or
(ii) for Base Rate Advances, a rate per annum equal at
all times during each applicable Liquidity Interest Period for such Advance to
the Base Rate in effect from time to time during such Liquidity Interest Period.
(b) The Liquidity Agent shall remit, for the account of each
relevant Liquidity Bank subject to a Downgrade Event, any interest earnings on
the unpaid principal amount of each Downgraded Bank Advance from time to time
maintained in a Downgraded Bank Account in an amount equal to the amount of all
realized interest from its investment of such Liquidity Bank's Downgraded Bank
Advances pursuant to Section 2.17(c) (net of investment expenses and fees and of
losses on such investments, if any) (such net realized interest and other income
being hereinafter referred to collectively as the "Investment Proceeds").
(c) Interest on each Advance shall be payable (i) for each
Base Rate Advance, on the earliest of (x) the day on which such Base Rate
Advance is converted to a Eurodollar Rate Advance pursuant to Section 2.08, and
(y) the last day of each quarter, (ii) for each Eurodollar Rate Advance, on the
last day of each Liquidity Interest Period, and, if such Liquidity Interest
Period is longer than three months, on each three month anniversary of the first
day of such Liquidity Interest Period that occurs prior to the last day of such
Liquidity Interest Period, (iii) with respect to each Base Rate Advance and
Eurodollar Rate Advance, on each date upon which a prepayment of such Advance is
made (as to the principal portion being repaid), and (iv) with respect to each
Downgraded Bank Advance, pursuant to the terms of Section 2.17(c).
SECTION II.7 Interest Rate Determination and Protection.
(a) The Liquidity Agent shall give prompt notice to the
Liquidity Borrower and the Liquidity Banks of the applicable interest rate
determined by the Liquidity Agent for purposes of Section 2.06(a).
(b) If, with respect to any Eurodollar Rate Advances, (i) the
Liquidity Agent shall have determined in good faith (which determination shall
be conclusive and binding upon the Liquidity Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Liquidity Interest
Period, or (ii) the Majority Liquidity Banks notify the Liquidity Agent that
matching deposits are not available to them in the London interbank market to
fund their respective Advances for any Liquidity Interest Period or that the
Eurodollar Rate for any Liquidity Interest Period for such Advances will not
adequately reflect the cost to such Majority Liquidity Banks of making, funding,
or maintaining their respective Eurodollar Rate Advances for such Liquidity
Interest Period, the Liquidity Agent shall forthwith so notify the Liquidity
Borrower and the Liquidity Banks, whereupon:
(i) each Eurodollar Rate Advance, to the extent not then
repaid, will automatically, on the last day of the then existing Liquidity
Interest Period therefor, Convert into a Base Rate Advance for a Liquidity
Interest Period of one day or such other
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maturity as the Liquidity Borrower may select by notice to the Liquidity Agent
as contemplated by Section 2.08(b)),
(ii) the obligation of the Liquidity Banks to make or to
Continue, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Liquidity Agent shall notify the Liquidity Borrower and the
Liquidity Banks that the circumstances causing such suspension no longer exist;
and
(iii) any Notice of Borrowing or Notice of
Conversion/Continuation with respect to a Eurodollar Rate Advance shall be
automatically withdrawn and deemed to be a request for a Base Rate Advance.
(c) If the Liquidity Borrower shall fail to select the
maturity of any Liquidity Interest Period for any Eurodollar Rate Advances in
accordance with the provisions contained in the definition of "Liquidity
Interest Period," or otherwise fails to deliver a Notice of
Conversion/Continuation with respect to an Advance by the last day of the
Liquidity Interest Period for such Advance, the Liquidity Agent will forthwith
so notify the Liquidity Borrower and the Liquidity Banks and:
(i) with respect to Funding Advances which constitute
Eurodollar Rate Advances, such Advances, to the extent not then repaid, will
automatically, on the last day of the then existing Liquidity Interest Period
therefor, Convert into Base Rate Advances for a Liquidity Interest Period of one
day; and
(ii) with respect to Funding Advances which
constitute Base Rate Advances, such Advances, to the extent not then repaid,
will automatically, on the last day of the then existing Liquidity Interest
Period therefor, Continue as Base Rate Advances for a Liquidity Interest Period
of one day.
(d) On the date on which the aggregate unpaid principal amount
of Advances constituting any Liquidity Borrowing shall be reduced by payment or
prepayment or otherwise, to less than $1,000,000 such Advances shall, if they
are Advances of a Type other than Base Rate Advances, automatically Convert into
Base Rate Advances for a Liquidity Interest Period of one day or such other
maturity as the Liquidity Borrower may elect by notice to the Liquidity Agent as
contemplated by Section 2.08(b), and on and after such date the right of the
Liquidity Borrower to Convert such Advances into Advances of a Type other than
Base Rate Advances shall terminate unless such Advances are combined with the
Advances constituting another Liquidity Borrowing, as contemplated by Section
2.08(a), with the result that the aggregate unpaid principal balance of all the
Advances so combined equals or exceeds $1,000,000.
SECTION II.8 Voluntary Conversion and Continuation of Advances.
(a) Subject to Section 3.02, the Liquidity Borrower shall have
the option, until one month prior to the Scheduled Liquidity Maturity Date,
exercisable on the last
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day of each Liquidity Interest Period for any Advance (A) to Convert all or any
portion of any outstanding Base Rate Advances to Eurodollar Rate Advances upon
the expiration date of the Liquidity Interest Period applicable to such Base
Rate Advances, (B) to Convert all or any portion of any outstanding Eurodollar
Rate Advances to Base Rate Advances upon the expiration date of the Liquidity
Interest Period applicable to such Eurodollar Rate Advances or (C) upon the
expiration of the Liquidity Interest Periods applicable to any outstanding
Eurodollar Rate Advances or Base Rate Advances, to Continue all or any portion
of such Eurodollar Rate Advances as Eurodollar Rate Advances or such Base Rate
Advances as Base Rate Advances; provided, however, the Liquidity Borrower shall
in no event Convert or Continue all or any portion of any Advance unless each
other Advance comprised by the Liquidity Borrowing that includes that Advance
(if any) is correspondingly Converted or Continued, as applicable. The Liquidity
Borrower's right to Convert or Continue Advances pursuant to this Section 2.08
shall be understood to include the right (i) to divide any Liquidity Borrowing
on the last day of the applicable Liquidity Interest Period into two or more
Liquidity Borrowings having aggregate principal equal to the aggregate principal
of such Liquidity Borrowing or (ii) to combine any two or more Liquidity
Borrowings originating on the last day of such Liquidity Interest Period or
having a Liquidity Interest Period ending on such date into a single Liquidity
Borrowing having aggregate principal equal to the aggregate principal of such
Liquidity Borrowings. The succeeding Liquidity Interest Periods of Converted or
Continued Advances shall commence on the last day of the Liquidity Interest
Periods for the Advances so Converted or Continued. If, after giving effect to
any combination or division of Liquidity Borrowings as contemplated by this
Section 2.08(a), the aggregate unpaid principal amount of the Advances
constituting a Liquidity Borrowing is less than $1,000,000, those Advances may
not be Converted into or Continued as Eurodollar Rate Advances.
(b) To Convert or Continue any Advance under Section 2.08(a),
the Liquidity Borrower shall deliver telephonic notice (a "Notice of
Conversion/Continuation") to the Liquidity Agent not later than 10:00 A.M. (New
York City time) on (i) the third Business Day prior to the date of the proposed
Conversion/Continuation if the Advance is to be Converted into or Continued as a
Eurodollar Rate Advance and (ii) the date of the proposed
Conversion/Continuation if the Advance is to be Converted into or Continued as a
Base Rate Advance. The Liquidity Agent shall then give each Liquidity Bank
prompt notice thereof (in any event not later than 11:00 A.M. (New York City
time) on such day) by telephone or facsimile. As soon as practicable after 10:00
A.M. (New York City time) on the same day, the Liquidity Borrower shall deliver
a Notice of Conversion/Continuation in the form of that attached hereto as
Exhibit E to the Liquidity Agent by facsimile, specifying (i) the date of such
proposed Conversion/Continuation (which shall be a Business Day), (ii) the
Advances to be Converted and/or Continued, (iii) the principal amount of the
Advances to be Converted and/or Continued, (iv) whether such Advance is to be
Converted or Continued, and (v) the requested Liquidity Interest Period for such
Converted and/or Continued Advance. Any Notice of Conversion/Continuation (or
telephonic notice thereof) shall be irrevocable, and the Liquidity Borrower
shall be bound to Convert or to Continue the Advances in accordance therewith.
If the Liquidity Borrower fails to deliver a Notice of Conversion/Continuation
with respect to an Advance by the last day of the Liquidity Interest Period for
such Advance, such Advance shall be Converted or Continued as a Base Rate
Advance on the last day of the related Liquidity Interest
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Period for a Liquidity Interest Period of one day.
(c) Prior to 12:30 P.M. (New York City time) on the date of
any Conversion of Downgraded Bank Advances into Funding Advances pursuant to
this Section 2.08, the Liquidity Agent shall debit each Downgraded Bank Account
by transfer of immediately available funds in an amount equal to the applicable
Liquidity Bank's Pro Rata Share (or other applicable portion) of the amount of
Advances so Converted. After the Liquidity Agent's receipt of such funds (or, at
the Liquidity Agent's option, such earlier time as permitted pursuant to Section
2.12(c)), and upon fulfillment of the applicable conditions set forth in Article
III and subject to the terms and conditions of this Section 2.08, the Liquidity
Agent will make such funds available no later than 1:00 P.M. (New York City
time) to the Tender Agent for payment of such Low Floater Certificates as
designated by the Tender Agent to the Liquidity Agent.
(d) After the occurrence and during the continuation of a
Liquidity Event of Default, all Funding Advances shall, at the end of their then
current Liquidity Interest Periods, be converted to Base Rate Advances having
Liquidity Interest Periods specified from time to time by the Liquidity Agent.
SECTION II.9 Prepayments. The Liquidity Borrower may on any Business
Day, upon telephonic notice (confirmed promptly by facsimile) to the Liquidity
Agent not later than 12:00 noon (New York City time) on (i) the third Business
Day prior to the date of the proposed prepayment if the Advances to be prepaid
are Eurodollar Rate Advances and (ii) the date of the proposed prepayment if the
Advances to be prepaid are Base Rate Advances, prepay the outstanding principal
amounts of the Advances constituting the same Liquidity Borrowing in whole or
ratably in part, together with accrued interest to the date of such prepayment
and reimbursement for any costs or expenses of the type described in Section
8.04(b) incurred by each relevant Liquidity Bank as a result of such prepayment.
SECTION II.10 Fees
(a) The Owner Trust agrees to pay to the Liquidity Agent, for
the account of each Liquidity Bank, a one-time closing fee equal to 0.03% of
such Liquidity Bank's Liquidity Commitment on the Effective Date hereof.
(b) The Owner Trust agrees to pay to the Liquidity Agent, for
the account of each Liquidity Bank the Liquidity Commitment Fee, payable monthly
in arrears on the last Business Day of each month (or within ten Business Days
thereof), during the term of such Liquidity Bank's Liquidity Commitment.
(c) The Owner Trust agrees to pay to the Liquidity Agent for
its own account a Liquidity Agent Fee on such terms and in such amounts as set
forth in the separate letter agreement dated as of May 21, 1998.
SECTION II.11 Increased Costs; Increased Capital.
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<PAGE>
(a) If, after the date hereof due to either (i) the
introduction of or any change in or to the interpretation of any law or
regulation by the governmental authority that promulgated or administers
compliance with such law or regulation (other than laws or regulations with
respect to income taxes or any change by way of imposition or increase of
reserve requirements included in the Eurodollar Reserve Percentage) or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority or similar agency (whether or not having the force of
law), any reserve or deposit or similar requirement shall be imposed, modified
or deemed applicable or, any basis of taxation shall be changed or any other
condition shall be imposed, and there shall be any increase in the cost to any
Liquidity Bank of making, funding, or maintaining Advances or in the cost to any
Liquidity Bank of agreeing to make, fund, or maintain Advances (including the
reduction of any sum received or receivable hereunder), then the Liquidity
Borrower shall from time to time, subject to the provisions of Section 8.08
hereof, upon demand by such Liquidity Bank by the submission of the certificate
described below (with a copy of such certificate to the Liquidity Agent), pay to
the Liquidity Agent for the account of such Liquidity Bank additional amounts
sufficient to compensate such Liquidity Bank for such increased cost; provided,
however, that before making any such demand, each Liquidity Bank agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
additional cost and would not, in the judgment of such Liquidity Bank, be
otherwise disadvantageous to such Liquidity Bank or result in any unreimbursed
costs or expenses which it deems to be material. A certificate setting forth in
reasonable detail the amount of such increased cost submitted to the Liquidity
Borrower and the Liquidity Agent by such Liquidity Bank shall be conclusive and
binding for all purposes, absent manifest error. Notwithstanding the foregoing,
the Liquidity Borrower shall not be obligated to pay any amounts under this
Section 2.11(a) to the extent such amounts resulted from an increased cost
incurred or amount not received which, in each case, occurred more than 90 days
prior to the date of the certificate in which such amounts were set forth.
(b) If any Liquidity Bank determines that compliance with any
law or regulation or any guideline or request or any written interpretation from
any central bank or other governmental authority or similar agency (whether or
not having the force of law) which is introduced, implemented or received by
such Liquidity Bank after the date hereof, affects or would affect capital
adequacy or the amount of capital required or expected to be maintained by such
Liquidity Bank or any corporation controlling such Liquidity Bank and that the
amount of such capital is increased by or based upon the Advances or the
existence of such Liquidity Bank's commitment to lend hereunder and other
commitments of this type, or has or would have the effect of reducing the rate
of return on capital, then, upon demand by such Liquidity Bank by the submission
of the certificate described below (with a copy of such certificate to the
Liquidity Agent), the Liquidity Borrower shall, subject to the provisions of
Section 8.08 hereof, pay to the Liquidity Agent for the account of such
Liquidity Bank, from time to time as specified by such Liquidity Bank,
additional amounts sufficient to compensate such Liquidity Bank or such
corporation in the light of such circumstances, to the extent that such
Liquidity Bank reasonably determines such increase in capital to be allocable to
the Advances or the existence of such Liquidity Bank's commitment to lend
hereunder. A certificate setting forth in reasonable detail
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such amounts submitted to the Liquidity Borrower and the Liquidity Agent by such
Liquidity Bank shall be conclusive and binding for all purposes, absent manifest
error. Notwithstanding the foregoing, the Liquidity Borrower shall not be
obligated to pay any amounts under this Section 2.11(b), to the extent such
amounts resulted from a reduction to such Liquidity Bank's rate of return on
capital which reduction occurred more than 90 days prior to the date of the
certificate in which such amounts were set forth.
(c) Each Liquidity Bank shall use reasonable efforts to notify
the Liquidity Borrower and the Liquidity Agent in the event such Liquidity Bank
determines that it is likely that such Liquidity Bank will be making a demand
for compensation under this Section 2.11, provided, that the failure of a
Liquidity Bank to provide such notice shall not relieve the Liquidity Borrower
of any of its obligations hereunder.
SECTION II.12 Payments and Computations.
(a) The Liquidity Borrower shall make each payment hereunder,
subject to the provisions of Section 8.08 hereof, not later than 3:00 P.M. (New
York City time) on the day when due in Dollars to the Liquidity Agent by wire to
its account at The Chase Manhattan Bank, New York, Fed ABA #021000021, Account
of: Bayerische Landesbank, New York Branch, Account #544-7-07960, Reference:
Charter MAC, or as otherwise specified from time to time by the Liquidity Agent
by written notice to the Liquidity Borrower. Upon receipt of such payment, the
Liquidity Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or fees hereunder ratably (or
as otherwise prescribed herein) to the Liquidity Banks for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other amount payable hereunder to any Liquidity Bank to such Liquidity Bank
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.06(d), from and after the "Transfer Date"
specified in such Assignment and Acceptance, the Liquidity Agent shall make all
payments hereunder in respect of the interest assigned thereby to the Liquidity
Bank's assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.
(b) All computations of interest using the Base Rate hereunder
shall be calculated on the basis of a year of 365 (or 366, as the case may be)
days for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest hereunder is payable
and all other computations of interest and fees hereunder shall be made by the
Liquidity Agent on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees hereunder is payable. Each determination by the
Liquidity Agent of an interest rate hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(c) Unless the Liquidity Agent shall have received notice from
a Liquidity Bank on the Business Day prior to the date of any Liquidity
Borrowing that such
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Liquidity Bank will not make available to the Liquidity Agent the amount
required to be made available by such Liquidity Bank as part of such Liquidity
Borrowing, the Liquidity Agent may assume that such Liquidity Bank has made such
amount available to the Liquidity Agent on the date of such Liquidity Borrowing
in accordance with Section 2.03, and the Liquidity Agent may (but it shall not
be required to), in reliance upon such assumption, make available to the
Liquidity Borrower on such date a corresponding amount. If and to the extent
that such Liquidity Bank shall not have so made such amount available to the
Liquidity Agent, such Liquidity Bank and the Liquidity Borrower severally agree
to repay to the Liquidity Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Liquidity Borrower until the date such amount is repaid to the
Liquidity Agent, at (i) in the case of the Liquidity Borrower, the interest rate
or rates applicable to such amount and (ii) in the case of such Liquidity Bank,
the Federal Funds Rate. If such Liquidity Bank shall repay to the Liquidity
Agent such corresponding amount, such repaid amount shall constitute such
Liquidity Bank's Advance as part of such Liquidity Borrowing for purposes of
this Agreement.
(d) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or any fee payable hereunder,
as the case may be, provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following month, such payment shall be made on the next preceding
Business Day.
SECTION II.13 Illegality. Notwithstanding any other provision
of this Agreement, if any Liquidity Bank shall notify the Liquidity Agent that
the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Liquidity Bank or its Applicable
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to fund or maintain Eurodollar Rate Advances hereunder, (i) the
obligation of the Liquidity Banks to make or to Continue, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Liquidity Agent
shall notify the Liquidity Borrower and the Liquidity Banks that the
circumstances causing such suspension no longer exist and (ii) the Liquidity
Borrower shall, within five Business Days of notice from the Liquidity Agent,
Convert all Eurodollar Rate Advances of all Liquidity Banks then outstanding
into Base Rate Advances in accordance with Section 2.08, but without the
requirement that such Conversion take place on the last day of the respective
Liquidity Interest Periods for such Eurodollar Rate Advances.
SECTION II.14 Taxes.
(a) Any and all payments by the Liquidity Borrower hereunder
shall be made, in accordance with Section 2.12, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, and all liabilities with respect
thereto, that are now or hereafter imposed, levied, collected, withheld or
assessed by any governmental authority having taxing authority, excluding, in
the case of each
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Liquidity Bank and the Liquidity Agent, net income and franchise taxes that are
imposed on such Liquidity Bank or the Liquidity Agent by the United States, any
state or foreign jurisdiction under the laws of which such Liquidity Bank or the
Liquidity Agent (as the case may be) is organized or any political subdivision
thereof and, in the case of each Liquidity Bank, franchise taxes and net income
taxes that are imposed on such Liquidity Bank by the state or foreign
jurisdiction of such Liquidity Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). If the Liquidity Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any Liquidity Bank or the
Liquidity Agent, (i) the sum payable shall be increased as may be necessary so
that, after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.14), such Liquidity Bank or the
Liquidity Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Liquidity
Borrower shall make such deductions, and (iii) the Liquidity Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) In addition, the Liquidity Borrower agrees to pay any
present or future stamp, sales or documentary taxes or excise or property taxes,
charges, or similar levies that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other agreement, instrument, or document delivered hereunder,
and agrees to indemnify such Liquidity Bank and the Liquidity Agent for any fees
with respect to or resulting from any delay in paying or the omission to pay
such taxes, charges or levies (hereinafter, "Other Taxes").
(c) The Liquidity Borrower will indemnify each Liquidity Bank
and the Liquidity Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.14) paid by such Liquidity Bank or the
Liquidity Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto; provided that
a Liquidity Bank or the Liquidity Agent, as appropriate, making a demand for
indemnity payment shall provide the Liquidity Borrower, at its address referred
to in Section 8.02, with a certificate from the relevant taxing authority or
from a responsible officer of such Liquidity Bank or the Liquidity Agent stating
or otherwise evidencing that a Liquidity Bank or the Liquidity Agent has made
payment of such Taxes or Other Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes or Other Taxes. This indemnification shall be
made within 30 days, to the extent there are Available Funds therefor pursuant
to the provisions of Section 8.08 hereof, from the date such Liquidity Bank or
the Liquidity Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Liquidity Borrower will furnish to the Liquidity Agent, at its
address referred to in Section 8.02, appropriate evidence of payment thereof.
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(e) The Liquidity Agent and each Liquidity Bank that is not
created or organized under the laws of the United States or a political
subdivision thereof shall, to the extent that it may then do so under applicable
laws and regulations, deliver to the Liquidity Borrower (with, in the case of
each Liquidity Bank, a copy to the Liquidity Agent) (i) on or prior to the date
hereof, or, if later, the date on which such Liquidity Bank becomes a Liquidity
Bank pursuant to Section 8.06 hereof or pursuant to a Joinder Agreement, two (or
such other number as may from time to time be prescribed by applicable laws or
regulations) duly completed copies of IRS Form 4224 or Form 1001 (or any
successor forms or other certificates or statements which may be required from
time to time by the relevant United States taxing authorities or applicable laws
or regulations), as appropriate, to permit the Liquidity Borrower to make
payments hereunder for the account of such Liquidity Bank or the Liquidity
Agent, as the case may be, without deduction or withholding of United States
federal income or similar taxes and (ii) upon the obsolescence of or after the
occurrence of any event requiring a change in, any form or certificate
previously delivered pursuant to this Section 2.14(e), copies (in such numbers
as may be from time to time be prescribed by applicable laws or regulations) of
such additional, amended, or successor forms, certificates or statements as may
be required under applicable laws or regulations to permit the Liquidity
Borrower and the Liquidity Agent to make payments hereunder for the account of
such Liquidity Bank or the Liquidity Agent, as the case may be, without
deduction or withholding of United States federal income or similar taxes.
(f) Within 30 days of the written request of the Liquidity
Borrower therefor, at the Liquidity Borrower's expense, the Liquidity Agent and
each Liquidity Bank, as appropriate, shall execute and deliver to the Liquidity
Borrower such certificates, forms, or other documents which can be furnished
consistent with the facts and which are reasonably necessary to assist the
Liquidity Borrower in applying for refunds of taxes remitted hereunder.
(g) Without prejudice to the survival of any other agreement
of the Liquidity Borrower hereunder, the agreements and obligations of the
Liquidity Borrower contained in this Section 2.14 shall survive the termination
of this Agreement.
SECTION II.15 Sharing of Payments. Etc. If any Liquidity Bank shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it (other
than pursuant to Sections 8.04(b), 2.11 or 2.14) in excess of its ratable share
of payments (taking into account Advances made pursuant to Section 2.03(c)) on
account of the Advances obtained by all the Liquidity Banks, such Liquidity Bank
shall forthwith (i) notify each of the other Liquidity Banks of such receipt and
(ii) purchase from the other Liquidity Banks such participation in the Advances
made by them as shall be necessary to cause such purchasing Liquidity Bank to
share the excess payment ratably with each of them; provided, however, that, if
all or any portion of such excess payment is thereafter recovered from such
purchasing Liquidity Bank, such purchase from each Liquidity Bank shall be
rescinded and such Liquidity Bank shall repay to the purchasing Liquidity Bank
the purchase price to the extent of such recovery together with an amount equal
to such Liquidity Bank's ratable share (according to the proportion of (i) the
amount of such Liquidity Bank's required repayment to (ii) the total amount so
recovered from the purchasing Liquidity Bank) of any interest or other amount
paid or payable by the purchasing Liquidity Bank in respect of the
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total amount so recovered. The Liquidity Borrower agrees that any Liquidity Bank
so purchasing a participation from another Liquidity Bank pursuant to this
Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of setoff) with respect to such
participation as fully as if such Liquidity Bank were the direct creditor of the
Liquidity Borrower in the amount of such participation.
SECTION II.16 Evidence of Debt. The Advances to the Liquidity Borrower
shall be evidenced by one or more promissory notes of the Liquidity Borrower in
the form of Exhibit F hereto (individually, a "Liquidity Note" and collectively,
the "Liquidity Notes", in each case as the same may be amended, modified or
supplemented, and together with any replacements or substitutions therefor)
payable to the order of each Liquidity Bank in a principal amount equal to such
Liquidity Bank's Liquidity Commitment and dated the date of the issuance
thereof. Each Liquidity Bank shall record and, prior to any transfer of its
Liquidity Note, shall endorse on the schedules forming a part thereof an
appropriate notation to evidence the date and amount of each Advance made by the
Liquidity Bank and each payment of principal and interest made by the Liquidity
Borrower with respect thereto, but the failure to make any such notation as to
the making of an Advance shall not affect the liability of the Liquidity
Borrower in respect of such Advance or the obligation of the Liquidity Bank to
make future Advances. Each Liquidity Bank is hereby irrevocably authorized by
the Liquidity Borrower to endorse its Liquidity Note and to attach to and make a
part of any Liquidity Note a continuation of any such schedule as and when
required.
SECTION II.17 Downgraded Bank Advances; Downgraded Bank Accounts.
(a) If a Downgrade Event occurs and the related Liquidity Bank is not replaced
pursuant to Section 8.06(g) hereof within thirty days of such Downgrade Event,
then the Liquidity Borrower shall, by delivery of a Notice of Borrowing to the
Liquidity Agent, require such Liquidity Bank to make a Downgraded Bank Advance
in an amount equal to the excess of such Liquidity Bank's Liquidity Commitment
over the then outstanding aggregate principal balance of such Liquidity Bank's
Funding Advances. Upon receipt of the proceeds of such Downgraded Bank Advance,
the Liquidity Agent shall deposit such funds into a segregated trust account
(each, a "Downgraded Bank Account"), in the name of the Tender Agent and
referencing the name of such Liquidity Bank, maintained at an Eligible
Depository Institution chosen by the Tender Agent. The Tender Agent will
withdraw funds from each Downgraded Bank Account at the time of, and in
connection with, the making of a Funding Advance pursuant to clause (b) below.
The Tender Agent hereby grants to the Liquidity Agent full power and authority,
on behalf of the Tender Agent, to deposit funds into each Downgraded Bank
Account, all in accordance with the terms of and for the purposes set forth in
this Agreement.
(b) From and after the establishment of a Downgraded Bank
Account with respect to any Liquidity Bank, and until the earliest of (i) the
assignment by such Liquidity Bank of all of its rights pursuant to Section 8.06
hereof, (ii) such Liquidity Bank receiving a short-term unsecured indebtedness
rating of at least A-1 by S&P and P-1 by Moody's, and (iii) the Liquidity
Commitment Termination Date, all Funding Advances to be made by such Liquidity
Bank shall be made by withdrawing funds from such Downgraded Bank Account, and
all payments of principal with respect to Funding Advances made by such
Liquidity Bank
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(whether or not originally funded from such Liquidity Bank's Downgraded Bank
Account) shall be made by depositing the related funds into such Downgraded Bank
Account. Upon the earliest of (i) the assignment by such Liquidity Bank of all
of its rights pursuant to Section 8.06 hereof, (ii) such Liquidity Bank
receiving a short-term unsecured indebtedness rating of at least A-1 by S&P and
P-1 by Moody's, and (iii) the Liquidity Commitment Termination Date, all funds
then held in such Downgraded Bank Account (after giving effect to any Funding
Advances to be made on such date) shall be paid by the Liquidity Agent to such
Liquidity Bank, and thereafter all payments of principal with respect to
Advances made by such Liquidity Bank shall be paid directly to such Liquidity
Bank in accordance with the terms of this Agreement.
(c) From and after the establishment of a Downgraded Bank
Account with respect to any Liquidity Bank, and until the earliest of (i) the
assignment by such Liquidity Bank of all of its rights pursuant to Section 8.06
hereof, (ii) such Liquidity Bank receiving a short-term unsecured indebtedness
rating of at least A-1 by S&P and P-1 by Moody's, and (iii) the Liquidity
Commitment Termination Date, the Tender Agent shall from time to time, at the
direction of the Controlling Person, invest and reinvest the funds on deposit in
the Downgraded Bank Account from time to time held by it in Permitted
Investments (having a maturity of not more than one Business Day from the date
of acquisition). The Tender Agent shall remit, for the account of each relevant
Liquidity Bank, all realized Investment Proceeds earned or received in
connection with the investment of such funds on deposit in the Downgraded Bank
Account of such Liquidity Bank on the first day of each calendar quarter
commencing hereafter (or more frequently as may be acceptable to the Liquidity
Banks and the Tender Agent). Notwithstanding anything contained herein to the
contrary, neither the Liquidity Agent nor the Liquidity Borrower shall have any
liability for any loss arising from any investment or reinvestment made by the
Tender Agent in accordance with, and pursuant to, the provisions hereof.
(d) If a Downgrade Event occurs, the Liquidity Agent will,
upon obtaining actual knowledge thereof, promptly give notice of such to the
Certificate Trust Agent.
ARTICLE III
CONDITIONS PRECEDENT
SECTION III.1 Conditions Precedent to the Effectiveness of this
Agreement. The effectiveness of this Agreement and the Liquidity Commitments of
the Liquidity Banks hereunder are subject to the following conditions precedent:
(a) The Liquidity Agent shall have received in form and
substance satisfactory to the Liquidity Agent originals or copies of each of the
items listed in Schedule II, and shall have received them in sufficient number
of copies for distribution to each Liquidity Bank;
(b) No Liquidity Event of Default described in Section 6.01
(or event which with the lapse of time would constitute such a Liquidity Event
of Default under such Section 6.01) has occurred and is continuing;
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(c) Either the Liquidity Borrower or an Affiliate of the
Liquidity Borrower shall have paid to the Liquidity Agent the closing fee as set
forth in Section 2.10 hereof;
(d) The Surety Bonds shall have been executed by the Surety
Provider, the Liquidity Surety Bond shall have been delivered to the Liquidity
Agent and each such Surety Bond shall be in full force and effect; and
(e) Any representations and warranties of the Liquidity
Borrower contained in the Transaction Documents shall be true and correct and
the Liquidity Agent shall have received such certificates to such effect as are
required to be delivered under the Transaction Documents as a condition to the
effectiveness thereof.
SECTION III.2 Conditions Precedent to Liquidity Borrowings,
Conversions, and Continuations. The obligation of each Liquidity Bank to make an
Advance on the occasion of each Liquidity Borrowing (including the initial
Liquidity Borrowing) or to Convert or Continue any Advance as a Eurodollar Rate
Advance shall be subject only to the conditions precedent that on the date of
such Liquidity Borrowing, Conversion, or Continuation (a) no Liquidity Event of
Default described in Section 6.01 has occurred and is continuing and (b) the
Liquidity Commitment Termination Date has not occurred. The parties hereto
hereby agree that any Advance made pursuant to Section 2.01 hereof shall
constitute a representation and warranty by the Liquidity Borrower that such
Advance is not in excess of the Available Liquidity Amount, as defined in such
Section 2.01 and that the proceeds of such Advance shall only be used as
provided in Section 2.02 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION IV.1 Representations and Warranties of the Liquidity Borrower.
The Liquidity Borrower represents and warrants as follows on the date of this
Agreement, the Effective Date, and each date on which an Advance is made, in
each case, with reference to the facts and circumstances then existing:
(a) The representations and warranties made by the Liquidity
Borrower or any Charter Entity (as defined in the Insurance Agreement) in any of
the other Transaction Documents to which it is a party were true and correct
when made and are hereby incorporated by reference for the benefit of the
Liquidity Banks as if fully set forth herein.
(b) ERISA. Neither the Liquidity Borrower nor any ERISA
Affiliate has established or contributed to any Plan.
(c) Investment Company Act; Securities Act. The Liquidity
Borrower
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is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The issuance and sale of the Low Floater Certificates will be exempt
from the registration requirements of the Securities Act of 1933, as amended.
(d) Taxes. As of the date hereof, all Federal and state tax
returns required to be filed by the Liquidity Borrower have been properly
prepared, executed, and filed. As of the date hereof, all taxes, assessments,
fees, and other governmental charges upon the Liquidity Borrower or upon any of
its properties, income, sales, or franchises which are due and payable have been
paid and there are no liens outstanding or asserted with respect to any such
taxes or charges. The Liquidity Borrower's chief executive office is the same as
its notice address set forth herein.
(e) Compliance with Laws. The Liquidity Borrower is in
compliance in all material respects with all applicable laws, rules and
regulations.
(f) Transaction Documents. Each of the Transaction Documents
to which the Liquidity Borrower is a party are enforceable against the Liquidity
Borrower.
(g) Accuracy of Information. All written information furnished
by the Liquidity Borrower to the Liquidity Banks with respect to the Liquidity
Borrower is true and correct in all material respects and does not omit any
facts necessary under the circumstances to make the information contained
therein not misleading.
(h) No Liquidity Event of Default. No Liquidity Event of
Default (or event which, with the passage of time or giving of notice or both
would constitute a Liquidity Event of Default) has occurred and is continuing.
ARTICLE V
COVENANTS OF THE LIQUIDITY BORROWER
SECTION V.1 Affirmative Covenants. So long as any amount shall remain
owing hereunder or any Liquidity Bank shall have any Liquidity Commitment
hereunder, the Liquidity Borrower will, or with respect to any statement,
certificate or report required to be furnished pursuant to Section 5.01(a)(iv)
hereof, cause the Servicer to:
(a) Reporting Requirements. Furnish to the Liquidity Agent for
distribution to each Liquidity Bank:
(i) Financial Statements. As soon as available and in
any case (i) within 60 days after the end of each of the first three quarters in
each fiscal year, a statement of financial condition of the Liquidity Borrower
as of the end of such quarter, prepared in accordance with GAAP and certified,
subject to changes resulting from subsequent audit
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adjustments, by the respective Authorized Representative with responsibility for
financial reporting matters; and (2) within 120 days after the end of each
fiscal year, a statement of financial condition of the Liquidity Borrower as at
the end of such year, and a statement of revenues and expenses of the Liquidity
Borrower for such year, such financial statements to be audited by, and
accompanied by an opinion of, independent certified public accountants of
nationally recognized standing selected by the Liquidity Borrower, which opinion
shall state that such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied (except as
otherwise stated in such opinion) and that the audit by such accountants in
connection with such financial statement has been made in accordance with
generally accepted auditing standards;
(ii) Litigation. As soon as possible and in any
event not later than five Business Days after notice to the Liquidity Borrower
of the commencement thereof, notice of any action, suit or proceeding against
the Liquidity Borrower which could, if adversely determined, have a material
adverse effect on the business, financial condition or results of operations of
the Liquidity Borrower or on the ability of the Liquidity Borrower to repay any
Advance or perform any of its other obligations under this Agreement or the
other Transaction Documents;
(iii) Liquidity Event of Default. Immediately after the
Liquidity Borrower knows of the occurrence of any Liquidity Event of Default or
any event or condition which with the giving of notice or lapse of time, or
both, would constitute a Liquidity Event of Default, a certificate of the
Liquidity Borrower specifying the nature of such event or condition and the
action which the Liquidity Borrower has taken and/or proposes to take with
respect thereto;
(iv) Servicer's Report. Promptly after receipt thereof,
a copy of any Settlement Report, Servicer's Certificate, Servicer's Report,
Accountant's Report, notice of Servicer Default or Unmatured Servicer Default,
notice of an Event of Default, Unmatured Event of Default, information on any
event or occurrence that has, or could reasonably be expected to have, a
Material Adverse Effect on the Owner Trust, and notice of any litigation with
respect to the Bonds;
(v) Additional Information. Such other information
respecting the condition or operations, financial or otherwise, of the Liquidity
Borrower as any Liquidity Bank through the Liquidity Agent may from time to time
reasonably request.
(b) Preservation of Existence. Do or cause to be done all
things necessary on its part to preserve and keep in full force and effect its
existence.
(c) Payment of Taxes. Pay and discharge promptly or cause to
be paid and discharged promptly all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or upon any of its
assets, provided that the payment of any such tax, assessment, charge, or levy
shall not be required so long as (i) such non-payment does not result in the
creation of a Lien against any property of the Liquidity Borrower, (ii) the
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amount, applicability, or validity thereof shall be contested in good faith by
appropriate proceedings and (iii) the Liquidity Borrower shall have set aside on
its books adequate reserves in respect thereof (segregated to the extent
required by GAAP).
(d) Exercise of Rights Under Certificate Issuer Trust
Agreement. Exercise its rights under and take such other action in connection
with the Certificate Issuer Trust Agreement and each other Transaction Document
as may be reasonably appropriate or desirable, taking into account the
associated costs, to maximize the collection of amounts payable to the Liquidity
Borrower thereunder; provided, however that the Liquidity Borrower shall have no
obligation to take any action that is unreasonable in the circumstances or
otherwise inconsistent with its credit administration, enforcement, or recovery
procedures and policies.
(e) Books and Records. (i) Maintain at all times true and
complete books, records, and accounts in which true and correct entries shall be
made of its transactions in accordance with GAAP consistently applied and
consistent with those applied in the preparation of the financial statements
referred to in clause (i) of Section 5.01(a) hereof; and (ii) by means of
appropriate annual entries reflected in its accounts and in all financial
statements furnished pursuant to Section 5.01(a) hereof, establish and maintain
proper liabilities and reserves for all taxes and proper reserves for
depreciation, renewal, and replacement, obsolescence and amortization of its
properties and bad debts, all in accordance with GAAP consistently applied as
above.
(f) Compliance with Laws. Comply in all material respects with
all Applicable Laws.
SECTION V.2 Negative Covenants. So long as any amount shall remain
owing hereunder or any Liquidity Bank shall have any Liquidity Commitment
hereunder, the Liquidity Borrower will not:
(a) Issuance of Low Floater Certificates. Issue Low Floater
Certificates at any time in an Outstanding Face Amount such that when added to
the Outstanding Face Amount of Low Floater Certificates previously issued and
outstanding would equal a sum greater than the Stated Portion of the Insured
Amount (as defined in the Certificate Surety Bond) less any payments made to the
beneficiary of the Certificate Surety Bond pursuant to a "Face Amount Notice for
Payment" or to the beneficiary of the Liquidity Surety Bond pursuant to a
"Principal Notice for Payment."
(b) Negative Pledge. Except as otherwise permitted under the
Liquidity Pledge and Security Agreement, (i) sell, assign (by operation of law
or otherwise), or otherwise dispose of any of the Liquidity Collateral, or (ii)
create or suffer to exist any Lien upon or with respect to any of the Liquidity
Collateral (other than pursuant to the Liquidity Pledge and Security Agreement)
to secure indebtedness of any Person.
(c) Merger; Sale of Assets. Be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of,
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or any partnership or joint venture interest in, any other Person, or sell,
transfer, convey, or lease (in one transaction or a series of transactions) all
or substantially all of its assets.
(d) Certificate Issuer Trust Agreement. Amend the Certificate
Issuer Trust Agreement other than pursuant to Section 5.03 hereof.
(e) Change in Business. Engage in any activities other than
those permitted in the Certificate Issuer Trust Agreement.
(f) Indebtedness. Create, incur, guarantee, become surety for,
endorse, assume, or suffer to exist any Debt except for (i) payments with
respect to Low Floater Certificates; (ii) indebtedness hereunder, and (iii)
indebtedness in respect of taxes, assessments or governmental charges to the
extent that the nonpayment thereof shall not result in the creation of a Lien.
SECTION V.3 Amendment of Transaction Documents
(a) The Liquidity Borrower may agree to any amendment,
modification, or waiver of any Transaction Document (other than those set forth
in paragraph (b) below) or any instrument or document delivered pursuant
thereto, provided, that such amendment, modification or waiver shall only be
effective upon the Liquidity Borrower's certification to each Liquidity Bank
that no material adverse effect to such Liquidity Bank's rights, obligations or
interests hereunder would result therefrom (taking into consideration the
existence of the Surety Bonds); provided further, however, that upon and
following the occurrence of a Liquidity Event of Default, no such amendment,
modification or waiver shall be effective unless the prior consent of the
Majority Liquidity Banks shall have been obtained; provided further, however,
that no amendment, modification or waiver of the provisions of the Certificate
Issuer Trust Agreement shall be effective unless the prior written consent of
the Liquidity Agent shall have been obtained.
(b) The Liquidity Borrower will not, without the prior written
consent of each of the Liquidity Banks, (i) amend, modify, waive, supplement,
terminate, or otherwise change any provision of the Liquidity Surety Bond or the
Liquidity Pledge and Security Agreement which could result in a Material Adverse
Change to the Liquidity Banks, or (ii) consent to any assignment of the
obligations of the Surety Provider under either Surety Bond.
ARTICLE VI
EVENTS OF DEFAULT
SECTION VI.1 Events of Default. Each of the following events shall
constitute a "Liquidity Event of Default" hereunder.
(a) The Surety Provider fails to pay when, as and in the
amounts
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required, any amount payable under any Surety Bond and such failure continues
unremedied at the end of the applicable cure period;
(b) If any Liquidity Bank notifies the Liquidity Borrower, the
Tender Agent and the Remarketing Agent that it is aware the Surety Provider is
in default (at the end of the applicable cure period) in the payment when due of
any amount due under any other surety bond or financial guarantee insurance
policy issued by the Surety Provider in support of any obligation rated by S&P
or Moody's then, after the passage of fourteen calendar days from the date of
such notice, such default shall constitute a Liquidity Event of Default;
provided that, for purposes of this paragraph (b), default shall not include any
failure to make payment under a surety bond or other financial guarantee
insurance policy on the basis that all conditions to and defenses against
payment have not been duly satisfied or waived and with respect to which the
obligation to make payment is being contested in good faith by appropriate
proceedings which shall not be limited to legal proceedings;
(c) (i) the Superintendent of Insurance of the State of New
York (or any Person succeeding to the duties of such Superintendent) (for the
purpose of this paragraph (c), the "Superintendent") shall apply for an order
(A) pursuant to Section 7402 of the New York Insurance Law (or any successor
provisions thereto), directing him to rehabilitate the Surety Provider, (B)
pursuant to Section 7404 of the New York Insurance Law (or any successor
provision thereto), directing him to liquidate the business of the Surety
Provider or (C) pursuant to Section 7416 of the New York Insurance Law (or any
successor provision thereto), dissolving the corporate existence of the Surety
Provider and such application shall not be dismissed or withdrawn during a
period of 60 consecutive days or a court of competent jurisdiction enters an
order granting the relief sought; (ii) the Superintendent shall determine that
the Surety Provider is insolvent within the meaning of Section 1309 of the New
York Insurance Law; (iii) the Surety Provider shall commence a voluntary case or
other proceeding seeking rehabilitation, liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors; or (iv) an involuntary case or other proceeding shall
be commenced against the Surety Provider seeking rehabilitation, liquidation,
reorganization or other relief with respect to it or its debts under a
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property for purposes of
distributing its assets or winding up its affairs and such case or proceeding is
not dismissed or otherwise terminated within a period of 60 consecutive days or
a court of competent jurisdiction enters an order granting the relief sought in
such case or proceeding; or
(d) a court of competent jurisdiction shall have determined in
a final, nonappealable order that the Liquidity Surety Bond is no longer in full
force and effect.
SECTION VI.2 Remedies.
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(a) Voluntary Termination. Upon the occurrence of a Liquidity
Event of Default or at any time thereafter during the continuation of such
Liquidity Event of Default, the Liquidity Agent may, with the consent of the
Majority Liquidity Banks, and shall, upon the request of the Majority Liquidity
Banks, declare the Liquidity Commitments to be terminated forthwith, whereupon
the Liquidity Commitments shall immediately terminate. Any such termination of
the Liquidity Commitments shall be set forth in a written notice to the
Liquidity Borrower and the Certificate Trust Agent, with copies thereof to
Moody's and S&P.
(b) Additional Remedies. Upon the occurrence and during the
continuation of an Event of Default, the Liquidity Banks shall have, in addition
to all other rights and remedies under this Agreement and the other Transaction
Documents, all the other rights and remedies provided under the UCC of each
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION VI.3 Notice of Certain Events. The Surety Provider will give
notice to the Liquidity Borrower, Liquidity Banks, Liquidity Agent, the
Certificate Trust Agent and the Remarketing Agent of the commencement of any
action that, if decided adversely, could result in the occurrence of an Event of
Default described in Section 6.01(b) or 6.01(d). The Liquidity Agent will give
notice to the Administrative Agent of the occurrence of any Liquidity Event of
Default.
ARTICLE VII
THE LIQUIDITY AGENT
SECTION VII.1 Authorization and Action.
(a) Each Liquidity Bank hereby appoints and authorizes the
Liquidity Agent and the Liquidity Collateral Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement, the Liquidity
Pledge and Security Agreement, the Insurance Agreement and the other Transaction
Documents, as are delegated to the Liquidity Agent and the Liquidity Collateral
Agent, respectively, by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. As to any matters not expressly provided
for by this Agreement or any other Transaction Document (including, without
limitation, enforcement or collection of the indebtedness resulting from the
Advances), neither the Liquidity Agent nor the Liquidity Collateral Agent shall
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Liquidity Banks
or, in the case of the Liquidity Collateral Agent, of the Liquidity Agent, and
such instructions shall be binding upon all the Liquidity Banks (and the
Liquidity Agent, as the case may be); provided, however, that neither the
Liquidity Agent nor the Liquidity Collateral Agent shall be required to take any
action which exposes it to personal liability or which is contrary to this
Agreement, any
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other Transaction Document, or applicable law or which it believes to be
commercially unreasonable. The Liquidity Agent agrees to give to each Liquidity
Bank prompt notice of each notice given to it by the Liquidity Borrower pursuant
to the terms of this Agreement. Neither the Liquidity Agent nor the Liquidity
Collateral Agent shall have any duties or responsibilities, except those
expressly set forth herein or in the Liquidity Pledge and Security Agreement, or
any fiduciary relationship with any of the Liquidity Banks and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Facility Document or otherwise exist
against either the Liquidity Agent or the Liquidity Collateral Agent.
(b) Without limitation to any other provision of this Article
VII, each of the Liquidity Banks hereby (x) authorizes the Liquidity Agent to
execute and deliver the Insurance Agreement on its behalf, and to take such
action as agent on its behalf and to exercise such powers under the Insurance
Agreement as are delegated to the Liquidity Agent by the terms thereof, together
with such powers as are reasonably incidental thereto, (y) agrees that the
execution and action by the Liquidity Agent under this Section 7.01(b) shall be
binding upon such Liquidity Bank and its successors and assigns, and (z) agrees
that each of the provisions of this Article VII in favor of the Liquidity Agent
acting in its capacity as agent for the Liquidity Banks under this Agreement and
the Insurance Agreement shall inure to the benefit of the Liquidity Agent acting
in its capacity as agent for the Liquidity Banks under the Insurance Agreement.
(c) Without limitation to any other provision of this Article
VII, each of the Liquidity Banks and the Liquidity Agent hereby (x) authorizes
the Liquidity Collateral Agent to execute and deliver the Liquidity Pledge and
Security Agreement on its behalf, and to take such action as agent on its behalf
and to exercise such powers under the Liquidity Pledge and Security Agreement as
are delegated to the Liquidity Collateral Agent by the terms thereof, together
with such powers as are reasonably incidental thereto, (y) agrees that the
execution and action by the Liquidity Collateral Agent under this Section
7.01(c) shall be binding upon such Liquidity Bank, the Liquidity Agent and each
of their respective successors and assigns, and (z) agrees that each of the
provisions of this Article VII in favor of the Liquidity Agent acting in its
capacity as agent for the Liquidity Banks and the Liquidity Agent under the
Agreement shall inure to the benefit of the Liquidity Collateral Agent acting in
its capacity as agent for the Liquidity Banks and the Liquidity Agent under the
Liquidity Pledge and Security Agreement.
SECTION VII.2 Liquidity Agent's Reliance Etc. Neither the Liquidity
Agent, the Liquidity Collateral Agent nor any of their respective shareholders,
directors, officers, agents, or employees nor any other Person assisting them in
their duties nor any agent or employee thereof shall be liable for any waiver,
consent or appraisal given or any action taken or omitted to be taken in good
faith by it or them under or in connection with this Agreement or any other
Transaction Document, or be responsible for the consequences of any oversight or
error of judgment whatsoever, except for the Liquidity Agent's or the Liquidity
Collateral Agent's (as the case may be) own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Liquidity
Agent and the Liquidity Collateral Agent: (i) may treat the Liquidity Bank that
made any Advance as the holder of the indebtedness resulting therefrom until the
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Liquidity Agent receives and accepts an Assignment and Acceptance entered into
by such Liquidity Bank, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 8.06; (ii) may consult with legal counsel (including counsel
for the Liquidity Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any
Liquidity Bank and shall not be responsible to any Liquidity Bank for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement or any other Transaction Document; (iv) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants, or conditions of this Agreement or any other
Transaction Document on the part of the Liquidity Borrower or to inspect the
property (including the books and records) of the Liquidity Borrower; (v) shall
not be responsible to any Liquidity Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement,
the other Transaction Documents, or any other instrument or document furnished
pursuant hereto or thereto; and (vi) shall incur no liability under or in
respect of this Agreement or any other Transaction Document by acting upon any
notice, consent, certificate, or other instrument or writing (which may be by
facsimile or telegram) reasonably believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION VII.3 Tender Agent; Liquidity Agent and Affiliates.
(a) Each Liquidity Bank acknowledges that any obligation of
the Liquidity Borrower hereunder may be performed by the Tender Agent on the
Liquidity Borrower's behalf.
(b) The Liquidity Agent, or any successor Liquidity Agent and
its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, the Liquidity Borrower and Charter, and each of the Liquidity
Agent, or any successor Liquidity Agent, as the case may be, and the Surety
Provider may generally engage in any kind of business with the Liquidity
Borrower and Charter, any of their subsidiaries, and any Person who may do
business with or own securities of the Liquidity Borrower or Charter or any such
subsidiary, all as if the Liquidity Agent or any successor Liquidity Agent, as
the case may be, was not the Liquidity Agent and the Liquidity Collateral Agent
and without any duty to account therefor to the Liquidity Banks.
SECTION VII.4 Liquidity Bank Credit and Lending Decision.
(a) Each Liquidity Bank acknowledges that (i) it has,
independently and without reliance upon the Surety Provider, the Liquidity
Borrower, the Liquidity Agent, the Liquidity Collateral Agent, the Tender Agent
or any other Liquidity Bank, and based on such financial statements and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other
Transaction Documents to which it is a party, and that (ii) the commitment being
entered into herein has been approved through its regular approval process and
is duly authorized as a result of same. Each Liquidity Bank also acknowledges
that it will, independently and without reliance upon the
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Surety Provider, the Liquidity Borrower, the Liquidity Agent, the Liquidity
Collateral Agent, the Tender Agent or any other Liquidity Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and such other Transaction Documents.
(b) Each Liquidity Bank acknowledges that its execution,
delivery and performance of this Agreement complies with the legal lending
limits of the institution.
(c) Each Liquidity Bank acknowledges that to the best of its
officers' knowledge, information and belief, there is not regulatory or legal
impediment to its execution, delivery and performance of this Agreement.
SECTION VII.5 Indemnification. The Liquidity Banks agree to indemnify
the Liquidity Agent and the Liquidity Collateral Agent (to the extent not
reimbursed by the Liquidity Borrower), ratably according to the respective
aggregate principal amount of the Advances then owing to each of them (or if no
such Advances are at the time outstanding, ratably according to the respective
amounts of their Liquidity Commitments or, if the Liquidity Commitments have
theretofore terminated, the amounts of such Liquidity Commitments immediately
prior to their termination), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Liquidity Agent or the Liquidity
Collateral Agent, as the case may be, in any way relating to or arising out of
this Agreement, any of the other Transaction Documents or the transactions
contemplated hereby or thereby, or any action taken or omitted by the Liquidity
Agent or the Liquidity Collateral Agent, as the case may be, in such capacity
under this Agreement or any of the other Transaction Documents, provided, that
no Liquidity Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Liquidity Agent's or the Liquidity
Collateral Agent's, as applicable, gross negligence or willful misconduct.
Without limitation to the foregoing, each Liquidity Bank agrees to reimburse the
Liquidity Agent or the Liquidity Collateral Agent, as the case may be, promptly
upon the Liquidity Agent's or the Liquidity Collateral Agent's demand for such
Liquidity Bank's ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Liquidity Agent or the Liquidity
Collateral Agent, as the case may be, in connection with the preparation,
execution, delivery, administration, modification, amendment, waiver, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Transaction Documents, to the extent that the Liquidity
Agent or the Liquidity Collateral Agent, as the case may be, is not reimbursed
for such expenses by the Liquidity Borrower.
SECTION VII.6 Successor Liquidity Agent. The Liquidity Agent may resign
at any time by giving written notice thereof to the Liquidity Banks and the
Liquidity Borrower and the Administrative Agent and may be removed at any time
with or without cause by the Majority Liquidity Banks upon written notice
thereof to the Liquidity Agent and the Liquidity Borrower. Such resignation or
removal shall become effective as set forth below. The
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Majority Liquidity Banks shall have the right to appoint a successor Liquidity
Agent, provided that each of the Surety Provider and the Liquidity Borrower
shall have the right to approve the successor Liquidity Agent, which approval
shall not be unreasonably withheld or delayed. If no successor Liquidity Agent
shall have been so appointed by the Majority Liquidity Banks and approved by the
Liquidity Borrower, and shall have accepted such appointment, within 30 days
after the retiring Liquidity Agent's giving of notice of resignation or the
Majority Liquidity Banks' removal of the retiring Liquidity Agent, then the
retiring Liquidity Agent may, on behalf of the Liquidity Banks, appoint a
successor Liquidity Agent, which successor Liquidity Agent shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000
or an Affiliate of such an institution, which shall in either case have a
short-term unsecured indebtedness rating of at least A-1 by S&P and P-1 by
Moody's. Upon the acceptance of any appointment as Liquidity Agent hereunder by
a successor Liquidity Agent, such successor Liquidity Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges, and duties
of the retiring Liquidity Agent, and the retiring Liquidity Agent shall be
discharged from its duties and obligations under this Agreement and the other
Transaction Documents. After any retiring Liquidity Agent's resignation or
removal hereunder as Liquidity Agent, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Liquidity Agent under this Agreement and the other Transaction Documents.
ARTICLE VIII
MISCELLANEOUS
SECTION VIII.1 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Liquidity Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Borrower, the Surety Provider and the Majority
Liquidity Banks, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall, unless in writing and
signed by all the Liquidity Banks, do any of the following: (a) amend or waive
or consent to any departure from any of the conditions specified in Section
3.02, (b) except as provided in Section 2.04(b), increase the Liquidity
Commitments of the Liquidity Banks or subject the Liquidity Banks to any
additional obligations, (c) reduce the principal of, or interest on, the
Advances or any fees hereunder or other amounts payable hereunder, (d) postpone
any date fixed for any payment of principal of, or interest on, the Advances or
any fees hereunder or other amounts payable hereunder, (e) change the percentage
of the Liquidity Commitments or of the aggregate unpaid principal amount of the
Advances which shall be required for the Liquidity Banks or any of them to take
any action hereunder, (f) amend, waive or consent to any departure from this
Section 8.01, (g) amend, terminate or waive any Surety Bond, (h) amend the
definition of Majority Liquidity Banks or (i) except as provided in Section
5.02(b), consent to the sale, assignment or other disposition of any Liquidity
Collateral; provided, further, that no amendment, waiver, or consent shall,
unless in writing and signed by the Liquidity Agent in addition to the Liquidity
Banks required above to take such action, affect the rights or duties of the
Liquidity Agent under
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this Agreement. No material amendment to this Agreement will be effective until
the Rating Agency has confirmed in writing that the rating then assigned to the
Low Floater Certificates will not be reduced or withdrawn as a result of such
amendment. The Liquidity Agent will provide notice of amendments hereto to the
Administrative Agent at least sixteen (16) days prior to the effective date of
any such amendment.
SECTION VIII.2 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including communication by facsimile copy) and mailed, transmitted, or
delivered, as to each party hereto, at its address and/or number set forth under
its name on Schedule III hereto or specified in such party's Assignment and
Acceptance or Joinder Agreement or at such other address or number as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, upon receipt, or in the case
of (i) notice by mail, five days after being deposited in the United States
mails, first class postage prepaid, or (ii) notice by facsimile copy, when
verbal communication of receipt is obtained, except that notices and
communications to the Liquidity Agent pursuant to Article II or VII shall not be
effective until received by the Liquidity Agent. The Liquidity Borrower shall
provide copies of all material notices delivered hereunder, including, without
limitation, any amendments hereto and any assignments under Section 8.06 hereof
or any Joinder Agreement, to Moody's and S&P, and shall notify S&P and Moody's
of the date on which the final Low Floater Certificate matures.
SECTION VIII.3 No Waiver; Remedies. No failure on the part of any
Liquidity Bank or the Liquidity Agent to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION VIII.4 Costs, Expenses, and Indemnification.
(a) All costs and expenses of the Liquidity Agent and each
Liquidity Bank in connection with the preparation, execution, delivery,
modification, and amendment of this Agreement, the other Transaction Documents
and the other documents to be delivered hereunder and thereunder (whether
incurred prior to the date hereof or after the date hereof in connection with
any amendment, waiver, consent or re-commitment), including, without limitation,
the fees and out-of-pocket expenses of counsel shall be for the Liquidity
Agent's or such Liquidity Bank's own account and shall not be payable by the
Liquidity Borrower. The Liquidity Borrower agrees to pay on demand all costs and
expenses, subject to the provisions of Section 8.08 hereof, if any (including,
without limitation, reasonable counsel fees and expenses), of the Liquidity
Agent and each Liquidity Bank in connection with the enforcement of this
Agreement, the other Transaction Documents and the other documents to be
delivered hereunder and thereunder, including, without limitation, reasonable
counsel fees and expenses in connection with the enforcement of rights under
this Section 8.04(a). The Liquidity Borrower further agrees to indemnify the
Liquidity Agent, each Liquidity Bank and each of their respective affiliates,
control persons, officers, directors, shareholders, employees, and agents (each
an "Indemnified Party"), from and against any and all claims, damages, losses,
liabilities, and
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expenses, (including, without limitation, reasonable fees and disbursements of
counsel) for which any of them may become liable or which may be incurred by or
asserted against any of them in connection with the investigation of,
preparation for, or defense of any pending or threatened claim or any action or
proceeding arising out of, related to or in connection with the transactions
described herein whether or not any Indemnified Party or the Liquidity Borrower
is a party thereto, including, without limitation, any transaction in which any
proceeds of any Liquidity Borrowing are or are proposed to be applied; provided,
however, that the Liquidity Borrower shall not be liable for any portion of such
claims, damages, losses, liabilities, or expenses resulting from such
Indemnified Party's gross negligence or willful misconduct. Without prejudice to
the survival of any other agreement of the Liquidity Borrower hereunder, the
agreements and obligations of the Liquidity Borrower contained in this Section
8.04(a) shall survive the termination of this Agreement.
(b) Notwithstanding anything to the contrary contained herein,
if any Liquidity Borrowing comprising Eurodollar Rate Advances requested
pursuant to Section 2.03 or any Conversion into or Continuation of Eurodollar
Rate Advances requested pursuant to Section 2.08 is not for any reason
whatsoever (including, without limitation, the occurrence of a Liquidity Event
of Default described in Section 6.01(d)) made on the date specified in the
relevant Notice of Liquidity Borrowing or Notice of Conversion/Continuation, as
the case may be, or if any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made on a day other than the last day of the
Liquidity Interest Period with respect to such Eurodollar Rate Advance
(including, without limitation, pursuant to a mandatory conversion under Section
2.13), the Liquidity Borrower shall, upon demand by any Liquidity Bank (with a
copy of such demand to the Liquidity Agent), pay to the Liquidity Agent for the
account of such Liquidity Bank any amounts required to compensate such Liquidity
Bank for any additional losses, costs, or expenses which it may reasonably incur
as a result of such failure, payment, or Continuation or Conversion, including,
without limitation, any loss (including those of anticipated profits, net of
anticipated profits in respect of the reemployment of such funds in the manner
determined by such Liquidity Bank), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Liquidity
Bank to fund or maintain such Advance.
SECTION VIII.5 Binding Effect; Termination. This Agreement shall become
effective upon the Effective Date and shall thereafter be binding upon and inure
to the benefit of each of the Liquidity Borrower, the Low Floater Holders, the
Liquidity Agent, and the Liquidity Banks and each of their respective successors
and permitted assigns, except that the Liquidity Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Liquidity Banks. In addition, the provisions of this
Agreement which, by their terms, are intended for the benefit of the Surety
Provider and the Liquidity Collateral Agent, respectively, shall inure to the
benefit of the Surety Provider and the Liquidity Collateral Agent, respectively,
and their successors and assigns. This Agreement shall terminate on the date
following the Liquidity Commitment Termination Date on which the Liquidity
Obligations shall have been paid in full. The Liquidity Borrower shall notify
S&P and Moody's of such termination.
SECTION VIII.6 Assignments and Participation.
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(a) Each Liquidity Bank may upon advance notice of at least
thirty days (or such lesser notice as may be agreed to by the Liquidity Agent
and the Surety Provider, but in no event shall such notice be less than fourteen
calendar days), in a form substantially similar to Exhibit G, to the Liquidity
Agent, the Tender Agent, the Liquidity Borrower, the Surety Provider, the
Remarketing Agent, S&P, and Moody's, and after consultation with the Liquidity
Agent, assign to one or more banks or other entities all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Liquidity Commitment and the Advances owing to it);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all of the assigning Liquidity Bank's rights and
obligations under this Agreement, (ii) the amount of the Liquidity Commitment of
the assigning Liquidity Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than the lesser of (A) $5,000,000 or an
integral multiple of $5,000,000 in excess of that amount and (B) the full amount
of the assigning Liquidity Bank's Liquidity Commitment, (iii) each such
assignment shall be to an Eligible Assignee, (iv) the parties to each such
assignment shall execute and deliver to the Liquidity Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $2,500 or such lesser amount as shall be
approved by the Liquidity Agent (which fee shall include the cost of the
issuance of new notes), (v) solely to the extent required by the Liquidity
Borrower, the Liquidity Agent, S&P or Moody's, counsel to the assignee shall
deliver an opinion in the form of Exhibit H to the Liquidity Borrower, the
Liquidity Agent, S&P and Moody's, (vi) in the case of any partial assignment,
the amount of the Liquidity Commitment being retained by the assigning Liquidity
Bank shall in no event be less than $5,000,000 and (vii) no such assignment
shall be effective until S&P and Moody's confirm that such assignment would not
cause the ratings assigned to the Low Floater Certificates prior to such
assignment to be reduced or withdrawn. Upon receipt of such notice of
assignment, the Liquidity Agent shall notify the Surety Provider, the Liquidity
Borrower and the assigning Liquidity Bank of the number of Liquidity Banks that
would be parties to this Agreement after giving effect to such Liquidity Bank's
intended assignment. Upon such execution, delivery, acceptance, and recording by
the Liquidity Agent, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof (unless otherwise agreed by the Liquidity
Agent, the Liquidity Borrower and the Surety Provider), (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Liquidity Bank hereunder and
(ii) the Liquidity Bank assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Liquidity Bank's rights and obligations
under this Agreement, such Liquidity Bank shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Liquidity Bank assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and
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Acceptance, such assigning Liquidity Bank makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties, or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency, or value of this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such assigning Liquidity Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Liquidity Borrower
or the performance or observance by the Liquidity Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of such financial statements and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Surety Provider, the
Liquidity Borrower, the Tender Agent, the Liquidity Agent, such assigning
Liquidity Bank or any other Liquidity Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assigning Liquidity Bank and such assignee confirm that such assignee is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Liquidity
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and under the Liquidity Pledge and Security Agreement, the
Insurance Agreement and each other Transaction Document as are delegated to the
Liquidity Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Liquidity Bank and (viii) such
assignee agrees that it will comply with the provisions contained in Section
8.07 and Section 8.13 of this Agreement.
(c) The Liquidity Agent shall maintain at its address referred
to in Section 8.02 a copy of each Assignment and Acceptance and each Joinder
Agreement delivered to and accepted by it and a register for the recordation of
the names and addresses of the Liquidity Banks and the Liquidity Commitment of,
and principal amount of the Advances owing to, each Liquidity Bank from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Liquidity Borrower, the
Liquidity Agent and the Liquidity Banks may treat each Person whose name is
recorded in the Register as a Liquidity Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Liquidity
Borrower or any Liquidity Bank at any reasonable time and from time to time upon
reasonable prior notice.
(d) Subject to the provisions of Section 8.06(a), upon its
receipt of an Assignment and Acceptance executed by an assigning Liquidity Bank
and an Eligible Assignee, the Liquidity Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Liquidity Borrower.
(e) Each Liquidity Bank may sell participations to one or more
banks or other entities ("Participants") in or to all or a portion of its rights
and obligations under this
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Agreement (including, without limitation, all or a portion of its Liquidity
Commitment and the Advances owing to it); provided, however, that (i) such
Liquidity Bank's obligations under this Agreement (including, without
limitation, its Liquidity Commitment to the Liquidity Borrower hereunder) shall
remain unchanged, (ii) such Liquidity Bank shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) the
Surety Provider, the Liquidity Borrower, the Liquidity Agent, and the other
Liquidity Banks shall continue to deal solely and directly with such Liquidity
Bank in connection with such Liquidity Bank's rights and obligations under this
Agreement and (iv) any Participant shall have been approved by the Liquidity
Borrower and the Surety Provider prior to the sale of a participation by such
Liquidity Bank, which approval shall not be unreasonably withheld by either the
Liquidity Borrower or the Surety Provider. Notwithstanding anything herein to
the contrary, each Participant shall have the rights of a Liquidity Bank
(including any right to receive payment) under Sections 2.11 and 2.14 and
8.04(b); provided, however, that the right of each Participant to receive
payment under such Sections shall not exceed the amounts that would have been
payable under such Sections by the Liquidity Borrower to the Liquidity Bank
granting its participation had such participation not been granted. No Liquidity
Bank granting a participation shall be entitled to receive payment under such
Sections in an amount which exceeds the sum of (i) the amount to which such
Liquidity Bank is entitled under such Sections with respect to the Liquidity
Obligations of the Liquidity Borrower owed to it which are not subject to any
participation, plus (ii) the aggregate amount to which its Participants are
entitled under such Sections with respect to the amounts of their respective
participations. Each Participant shall agree to comply with the provisions
contained in Section 8.07 and Section 8.13 of this Agreement.
(f) Each Liquidity Bank may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 8.06, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Liquidity Borrower or any other
Person furnished to such Liquidity Bank in connection with this Agreement by or
on behalf of the Liquidity Borrower; provided that, unless an Event of Default
or Liquidity Event of Default shall have occurred and be continuing, and so long
as the Liquidity Agent's review is prompt and its consent is not unreasonably
withheld, any such disclosure shall have been reviewed and approved by the
Liquidity Agent prior to such disclosure.
(g) In the event that (i) any Liquidity Bank ceases to have a
short-term unsecured indebtedness rating of at least A-1 by S&P and P-1 by
Moody's, (ii) any Liquidity Bank shall fail to meet its obligations under its
Liquidity Commitment, (iii) any Liquidity Bank has requested payment of costs
under Section 2.11 or 2.14, or (iv) any Liquidity Bank shall elect not to renew
its Liquidity Commitment under Section 8.10, such Liquidity Bank shall, promptly
following identification by the Surety Provider of an Eligible Assignee willing
to accept such assignment, assign its outstanding Advances and its Liquidity
Commitment hereunder to such Eligible Assignee in exchange for payment of all
principal of, and interest on, such Liquidity Bank's Advances, together with the
accrued and unpaid Commitment Fees owing to such Liquidity Bank; provided that
such payment shall not prejudice any other Liquidity Obligations owing to such
Liquidity Bank. The Surety Provider agrees to use commercially reasonable
efforts to find such a replacement Eligible Assignee within 30 days of the
occurrence of any of the events described in clauses (i), (ii) or (iii) above
and within 15 days of the occurrence of an
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event described in clause (iv) above. The rights granted under this Section
8.06(g) are in addition to any rights of the Liquidity Borrower under Section
2.17 hereof.
(h) Prior to any financial institution becoming a Liquidity
Bank hereunder (other than an original signatory to this Agreement or a
participant thereof), S&P and Moody's shall have confirmed that such financial
institution's becoming a Liquidity Bank shall not cause the ratings assigned to
the Low Floater Certificates prior thereto to be reduced or withdrawn.
SECTION VIII.7 No Proceedings. The Liquidity Banks and the Liquidity
Agent each hereby agrees (which agreement shall, pursuant to the terms of this
Agreement, be binding upon its successors, assigns and Participants) that it
shall not institute against, or join any other Person in instituting against,
the Liquidity Borrower any bankruptcy, reorganization, arrangement, insolvency,
or liquidation proceeding, or other proceeding under any federal or state
bankruptcy or similar law, for one year and a day after the latest maturing Low
Floater Certificates or other rated indebtedness issued by the Liquidity
Borrower is paid in full and in cash. The provisions of this Section 8.07 shall
survive the termination of this Agreement.
SECTION VIII.8 No Recourse. Anything contained in this Agreement or any
other Transaction Document to the contrary notwithstanding, all payments to be
made by the Liquidity Borrower under this Agreement shall be made by the
Liquidity Borrower solely from available cash, which shall be limited to (a) the
proceeds of collections and other amounts payable by or on behalf of the Owner
Trust or the Administrative Agent to the Liquidity Borrower pursuant to the
terms of the Senior Certificates or any of the other Transaction Documents, and
(b) amounts paid to the Liquidity Collateral Agent pursuant to the terms of the
Liquidity Pledge and Security Agreement, (c) the proceeds of the remarketing of
Low Floater Certificates held by the Liquidity Provider, and (d) proceeds of the
Surety Bonds (collectively, "Available Funds"). No recourse shall be had against
the Liquidity Borrower personally or against any incorporator, officer, trustee,
director or employee of the Liquidity Borrower, or against any Low Floater
Holder, or any shareholder, trustee, director, officer, employee or agent,
whether past, present or future, of a Low Floater Holder, with respect to any of
the covenants, agreements, representations or warranties of the Liquidity
Borrower contained in this Agreement, or any other Transaction Document, it
being understood that such covenants, representations or warranties are
enforceable only to the extent of Available Funds. The provisions of this
Section 8.08 shall survive the termination of this Agreement. The Liquidity
Agent and each Liquidity Bank hereby acknowledge that, pursuant to the terms and
conditions of this Agreement and the other Transaction Documents, the Liquidity
Borrower and the Owner Trust are or may be required, from time to time, to make
certain payments to the Liquidity Agent or the Liquidity Banks, either as
compensation for services rendered, reimbursement for out of pocket expenses,
indemnification, or otherwise, as set forth herein and therein. The Liquidity
Agent and each Liquidity Bank hereby agree that, notwithstanding any provision
of any Transaction Document, (i) the Liquidity Borrower shall not make any such
payment to the Liquidity Agent or any Liquidity Bank, (ii) the Liquidity
Borrower shall have no duty, liability or obligation to make any such payment to
the Liquidity Agent or any Liquidity Bank, (iii) no such payment shall be due
from the Liquidity Borrower and (iv) neither the Liquidity Agent nor any
Liquidity Bank shall
-46-
<PAGE>
have any right to enforce any claim against the Liquidity Borrower in respect of
any such payment, in each case at any time that any Low Floater Certificate is
outstanding and no Bankruptcy Event (as defined below) has occurred and is
continuing; provided, however, that, notwithstanding the foregoing, such payment
shall be made if and to the extent that (x) the making of such payment by the
Liquidity Borrower would not render the Liquidity Borrower insolvent and (y) the
Liquidity Borrower has received funds with respect to such obligations which may
be used to make such payment and which funds are not required to pay Low Floater
Certificates of the Liquidity Borrower when due; provided, further, that the
foregoing shall not be construed to prohibit a drawing on the Liquidity Surety
Bond by the Liquidity Agent. As used in this Section the term "Bankruptcy Event"
shall mean the entry against the Liquidity Borrower of a decree or order by a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of its affairs, or the
institution of any proceeding against the Liquidity Borrower seeking any of the
foregoing, and the continuance of any such decree or order, or any such
proceeding, in each case unstayed and in effect for a period of 60 consecutive
days, or the consent by the Liquidity Borrower to the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Liquidity Borrower, or the filing by the Liquidity Borrower of a petition
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization or relief of debtors or seeking the entry of any
order for relief or the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding up or liquidation of its
affairs.
SECTION VIII.9 Execution and Performance of Liquidity Pledge and
Security Agreement and Insurance Agreement. Without limitation to any provision
of Article VII, each Liquidity Bank hereby (a) authorizes the Liquidity Agent to
execute and deliver the Insurance Agreement on its behalf and agrees that such
execution by the Liquidity Agent shall be binding upon such Liquidity Bank and
its successors and assigns, (b) authorizes and directs the Liquidity Agent to
comply with the terms and provisions thereof on behalf of the Liquidity Banks
and (c) authorizes the Liquidity Agent, as the Liquidity Collateral Agent, to
execute and deliver the Liquidity Pledge and Security Agreement on its behalf
and agrees that such execution by the Liquidity Collateral Agent shall be
binding upon such Liquidity Bank and its successors and assigns.
SECTION VIII.10 Termination and Recommitment. At least 60 days but not
more than 120 days prior to the Scheduled Liquidity Commitment Termination Date,
the Surety Provider shall deliver written notice to the Liquidity Agent, which
shall request that each Liquidity Bank send a notice within 30 days in the form
of Exhibit I hereto (each, a "Notice of Recommitment") to the Surety Provider,
the Liquidity Borrower and the Tender Agent as to whether or not such Liquidity
Bank elects, in the exercise of its sole discretion, and based upon its
individual credit analysis at such time, to extend its Liquidity Commitment for
an additional 364 days following the then effective Scheduled Liquidity
Commitment Termination Date. If a Liquidity Bank does not desire to so recommit
and extend its Liquidity Commitment, or fails to
-47-
<PAGE>
give a Notice of Recommitment within the 30-day period (such a Liquidity Bank, a
"Non-recommitting Liquidity Bank"), the Liquidity Commitment of such Liquidity
Bank shall expire as of the close of business on the then effective Scheduled
Liquidity Commitment Termination Date; otherwise, the Scheduled Liquidity
Commitment Termination Date of such Liquidity Bank shall expire as of the close
of business on the date of the new Scheduled Liquidity Commitment Termination
Date specified by such Liquidity Bank in its Notice of Recommitment.
SECTION VIII.11 Confidentiality. Unless otherwise required by
applicable law, order of any court or administrative agency, or otherwise by any
governmental authority, each of the Liquidity Banks and the Liquidity Agent
agrees to maintain the confidentiality, in its communications with third parties
and otherwise, of any information regarding the Liquidity Borrower, the
Transaction Documents or the transactions contemplated thereby which is obtained
in connection with this Agreement and which has been identified by the Liquidity
Borrower as confidential in nature (which identification, if relating to
information solely with respect to the Liquidity Borrower, and not otherwise
with respect to the Transaction Documents or the transactions contemplated
thereby, shall be in writing) (the "Confidential Material"); provided, however,
that the Confidential Material may be disclosed to third parties to the extent
such disclosure is (i) required in connection with the exercise of any remedy
hereunder or under any related documents, instruments and agreements, (ii) to
any actual or proposed participant or assignee of all or part of its rights
hereunder, or an actual or proposed liquidity or enhancement provider, in each
case which has agreed in writing to be bound by the provisions of this Section,
(iii) to any other Liquidity Bank or (iv) to any governmental authority
regulating a Liquidity Bank, made in compliance with any guideline or request
from such governmental authority (whether or not having the force of law);
provided further, however, that (x) the Agreement may be disclosed to the
Liquidity Banks' and the Liquidity Agent's respective legal counsel and
independent auditors to the extent they have agreed to be bound by the terms of
this Section 8.11, and (y) neither the Liquidity Banks nor the Liquidity Agent
shall have any obligation of confidentiality in respect of any information which
may be generally available to the public or becomes available to the public
through no fault of such Person.
SECTION VIII.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION VIII.13 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT
IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR
-48-
<PAGE>
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
LIQUIDITY AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY
COUNTERCLAIM THEREIN.
SECTION VIII.14 Counterparts. This Agreement may be executed in any
number of separate counterparts by the parties hereto and each counterpart when
so executed shall be deemed to be an original and all such counterparts when
taken together shall constitute one and the same agreement.
SECTION VIII.15 Captions. The various captions (including, without
limitation, the table of contents) in this Agreement are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
SECITON VIII.16 Severability. If any provision of this Agreement shall
be prohibited or invalid under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Agreement.
SECITON VIII.17 Notice of Limitation of Liability. Pursuant to Section
10.6 of the Origination Trust Agreement, all Persons with whom the Origination
Trust does business are on notice that the Shareholders, the Trustees, and the
Manager (each as defined in the Origination Trust Agreement) are not liable for
the Origination Trust's obligations, and all persons shall look solely to the
assets of the Origination Trust for payment. The Origination Trust is a business
trust created under the Trust Act; but the Board of Trustees or Manager shall
not be liable for failure to give notice to such Persons, and any failure to
give such notice shall not imply that the Shareholders, the Managing Trustees,
the Manager, and the Registered Trustee are liable for the Trust's obligations.
[Signature pages to follow]
-49-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
OWNER TRUST: CHARTER MAC OWNER TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Stuart J. Boesky
----------------------------------
Name: Stuart J. Boesky
Title:President & COO
LIQUIDITY BORROWER: CHARTER
TRUST I
By: FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
as Certificate Trust Agent, pursuant to the
Certificate Issuer Trust Agreement, of the
CHARTER MAC FLOATER CERTIFICATE TRUST I
By: /s/ Dennis Gillespie
----------------------------------
Name: Dennis Gillespie
Title:
TENDER AGENT: FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By: /s/ Dennis Gillespie
----------------------------------
Name: Dennis Gillespie
Title:
LIQUIDITY AGENT: BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By: /s/ Scott M. Allison
----------------------------------
Name: Scott M. Allison
Title: Vice President
<PAGE>
By:
----------------------------------
Name:
Title:
LIQUIDITY BANK: BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
LIQUIDITY BANK: COMMERZBANK AG, NEW YORK BRANCH
By: /s/ Thomas Ausfahl
----------------------------------
Name: Thomas Ausfahl
Title: Vice President
By:
----------------------------------
Name:
Title:
LIQUIDITY BANK: CREDIT COMMUNAL DE BELGIQUE S.A.,
NEW YORK BRANCH
By: /s/ Caroline Van Bogaert
----------------------------------
Name: Caroline Van Bogaert
Title: Vice President
<PAGE>
By:
----------------------------------
Name:
Title:
LIQUIDITY BANK: LANDESBANK HESSEN-THURINGEN GIROZENTRALE,
NEW YORK BRANCH
By: /s/ Michael Novak
----------------------------------
Name: Michael Novak
Title: Assistant Vice President
By:
----------------------------------
Name:
Title:
SURETY PROVIDER: MBIA INSURANCE CORPORATION
By: /s/ Steven S. Cooke
----------------------------------
Name: Steven S. Cooke
Title: Director
<PAGE>
SCHEDULE I
Commitments and Applicable Lending Offices
<TABLE>
<CAPTION>
Name of Liquidity Bank Commitment
- ---------------------- ----------
<S> <C>
BAYERISCHE LANDESBANK $50,575,343
GIROZENTRALE, NEW YORK BRANCH
COMMERZBANK AG, NEW YORK BRANCH $50,575,343
CREDIT COMMUNAL DE BELGIQUE S.A., $27,816,439
NEW YORK BRANCH
LANDESBANK HESSEN-THURINGEN $22,758,905
GIROZENTRALE, NEW YORK BRANCH
Base Rate
Lending Office
- --------------
Same as notice address
Eurodollar Rate
Lending Office
- --------------
Same as notice address
------------
Total Commitment $151,726,030
============
</TABLE>
<PAGE>
SCHEDULE II
CONDITIONS PRECEDENT DOCUMENTS
1. Certificate of the Registered Trustee of the Liquidity
Borrower, with attached organizational documents, by-laws and
resolutions.
2. Opinion of Liquidity Borrower's Counsel.
3. A copy of each of the Transaction Documents contemplated to be
delivered on or prior to the Effective Date, duly executed and
delivered by the parties thereto, including, without
limitation, the Liquidity Pledge and Security Agreement and
the Surety Bonds.
4. UCC-1 financing statements pursuant to the Liquidity Pledge
and Security Agreement by the Liquidity Collateral Agent
against the Liquidity Borrower.
5. Officer's Certificate of duly elected officer of the Servicer
to the effect that all representations and warranties of
Liquidity Borrower set forth in the Certificate Issuer Trust
Agreement are true as of the Effective Date.
6. Opinion of Counsel to the Surety Provider.
7. Certificates of legal existence and good standing for the
Liquidity Borrower.
<PAGE>
SCHEDULE III
NOTICE ADDRESSES
OWNER TRUST: CHARTER MAC OWNER TRUST I
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
and: Attention: Bruce Brown,
Senior Vice President
LIQUIDITY BORROWER: CHARTER MAC FLOATER CERTIFICATE TRUST I
c/o Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
and: Attention: Bruce Brown,
Senior Vice President
TENDER AGENT: FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
First Tennessee Bank National Association
4385 Poplar Avenue
Memphis, Tennessee 38117
Attention: Dennis Gillespie
Tel: 901-681-2462
Fax: 901-681-2450
LIQUIDITY AGENT BAYERISCHE LANDESBANK GIROZENTRALE,
and LIQUIDITY BANK: NEW YORK BRANCH
560 Lexington Avenue, 17th Floor
New York, New York 10022
<PAGE>
Attention: Scott M. Allison
(for Credit matters)
First Vice President
Manager of Public Finance
Telephone: (212) 310-9868
Facsimile: (212) 310-9869
and to:
Loan Administration
Ms. Patricia Sanchez (Operations contact)
Telephone: (212) 310-3810
Facsimile: (212) 310-9930
LIQUIDITY BANK: COMMERZBANK AG, NEW YORK
2 World Financial Center Branch
New York, New York 10281-1050
Operations/Administration
(including draws)
Attention: Christine Scaffidi
Telephone: (212) 266-7396
Facsimile: (212) 266-7593
CREDIT (amendments/extensions)
Attention: Thomas Ausfahl
Telephone: (212) 266-7368
Facsimile: (212) 266-7661
and to:
LIQUIDITY BANK: CREDIT COMMUNAL DE BELGIQUE S.A.,
NEW YORK BRANCH
Chrysler Building, 54th floor
New York , New York 10174
Attention: Caroline Van Bogaert
Telephone: (212) 697-6060
Facsimile: (212) 972-6522
LIQUIDITY BANK: LANDESBANK HESSEN-THURINGEN
GIROZENTRALE, NEW YORK BRANCH
420 Fifth Avenue
New York, New York 10018-2729
-2-
<PAGE>
Attention: Mike Novack
Telephone: (212) 703-5249
Facsimile: (212) 703-5356
SURETY PROVIDER: MBIA INSURANCE CORPORATION
113 King Street
Armonk, New York 10504
Attention: Vice President and Manager,
IPM Structured Finance
Telephone: (914) 273-4545
Facsimile: (914) 765-3161
-3-
<PAGE>
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Liquidity Agreement dated as of May 21, 1998
(the "Agreement") among CHARTER MAC OWNER TRUST I, a Delaware business trust
(the "Owner Trust"), CHARTER MAC FLOATER CERTIFICATE TRUST I, a Delaware
business trust (the "Liquidity Borrower"), FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, (the "Tender Agent"), the Liquidity Banks (as defined in the
Agreement), BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as the
Liquidity Agent for the Liquidity Banks (the "Liquidity Agent") and MBIA
INSURANCE CORPORATION, (the "Surety Provider"). Terms defined in the Agreement
are used herein with the same meaning.
_______________ (the "Assignor") and _________________ (the "Assignee")
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
all of the Assignor's rights and obligations under the Agreement as of the
Transfer Date (as defined in Section 4 hereof) which represents the percentage
interest specified in Section 1 of Schedule I hereto of all outstanding rights
and obligations under the Agreement, including, without limitation, such
interest in the Assignor's Liquidity Commitment and the Advances owing to the
Assignor. After giving effect to such sale and assignment, the Assignee's
Liquidity Commitment and the amount of the Advances owing to the Assignee will
be as set forth in Section 2 of Schedule I hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement, any
other Transaction Document or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of the Agreement or any other instrument or
document furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Liquidity Borrower or the performance or observance by the Liquidity
Borrower of any of its obligations under the Agreement, any other Transaction
Document or any other instrument or document furnished pursuant thereto.
<PAGE>
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of such financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Liquidity Agent, the
Assignor or any other Liquidity Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Agreement; (iii) confirms
that it is an Eligible Assignee; (iv) appoints and authorizes the Liquidity
Agent and the Liquidity Collateral Agent to take such action as agent on its
behalf and to exercise such powers under the Agreement and the other Transaction
Documents as are delegated to the Liquidity Agent and the Liquidity Collateral
Agent, respectively, by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Agreement are
required to be performed by it as a Liquidity Bank; (vi) specifies as its
Applicable Lending Offices and address for notices the offices set forth beneath
its name on Schedule I and Schedule III hereof [and] (vii) attaches the forms,
certificates or statements required by Section 2.14(e) of the Agreement [and
(viii) confirms that it is authorized to enter into this Assignment and
Acceptance].(1)
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Liquidity Agent for
acceptance and recording by the Liquidity Agent. The effective date of this
Assignment and Acceptance (the "Transfer Date") shall be the date of acceptance
thereof by the Liquidity Agent unless a later date is specified in Section 3 of
Schedule I.
5. Upon such acceptance and recording by the Liquidity Agent, as of the
Transfer Date, (i) the Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Liquidity Bank thereunder including its obligation to comply
with the provisions contained in Section 8.07 and Section 8.13 of the Agreement
and (ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Agreement.
6. Upon such acceptance and recording by the Liquidity Agent, from and
after the Transfer Date, the Liquidity Agent shall make all payments under the
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest, and fees hereunder with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Agreement for periods prior to the Transfer
Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in
- -------------
(1) To be included if the Assignee is not created or organized under the
laws of the United States or a political subdivision thereof.
-2-
<PAGE>
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.
-3-
<PAGE>
SCHEDULE I
TO
ASSIGNMENT AND ACCEPTANCE
DATED ______ __, ____
Section 1.
Percentage Interest: %
--------
Section 2.
Assignee's Liquidity Commitment: $
--------
Aggregate Outstanding Principal Amount of
Advances Owing to the Assignee: $
---------
Section 3.
Transfer Date: , 19
---------------- --
[Scheduled Liquidity Commitment
Termination Date
-------------------, ----](2)
[NAME OF ASSIGNOR]
By:
--------------------------
Title:
[NAME OF ASSIGNEE]
By:
--------------------------
Title:
Applicable Lending Officers
Eurodollar Rate Advances:
[Address]
Base Rate Advances:
[Address]
- -----------------
(2) Insert if assignment relates to a non-renewing Liquidity Bank.
<PAGE>
Address for notices
[Address]
ACCEPTED THIS DAY OF ,
BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH,
AS LIQUIDITY AGENT
By:_____________________
Title:
ACCEPTED THIS DAY OF ,
MBIA INSURANCE CORPORATION
By:_____________________
Title:
<PAGE>
EXHIBIT B
FORM OF
JOINDER AGREEMENT
Reference is made to the Agreement dated as of May 21, 1998 (the
"Agreement") among CHARTER MAC OWNER TRUST I, a Delaware business trust (the
"Owner Trust"), CHARTER MAC FLOATER CERTIFICATE TRUST I, a Delaware business
trust (the "Liquidity Borrower"), FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
(the "Tender Agent"), the Liquidity Banks (as defined in the Agreement),
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, the Liquidity Agent for the
Liquidity Banks (the "Liquidity Agent") and MBIA INSURANCE CORPORATION, (the
"Surety Provider"). Terms defined in the Agreement are used herein with the same
meaning.
_______________ (the "New Liquidity Bank") and the Liquidity Borrower
agree as follows:
1. Pursuant to Section 2.04(c) of the Agreement, the Liquidity Borrower
has requested that the New Liquidity Bank agree to become a "Liquidity Bank"
under the Agreement.
2. The effective date of this Joinder Agreement is (the "Effective
Date"), which is at least one Business Day after the execution hereof.
3. By executing and delivering this Joinder Agreement, the New
Liquidity Bank confirms to and agrees with each other party to the Agreements
that (i) it has received a copy of the Agreement, together with copies of such
financial statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Joinder Agreement; (ii) agrees that it will, independently and without reliance
upon the Liquidity Agent or any other Liquidity Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement; (iii)
confirms that it is an Eligible Assignee; (iv) appoints and authorizes the
Liquidity Agent and the Liquidity Collateral Agent to take such action as agent
on its behalf and to exercise such powers under the Agreement and the other
Transaction Documents as are delegated to the Liquidity Agent and the Liquidity
Collateral Agent, respectively, by the terms thereof, together with such powers
as are reasonably incidental thereto; (v) agrees that it will perform in
accordance with its terms all of the obligations which by the terms of the
Agreement are required to be performed by it as a Liquidity Bank; (vi) specifies
as its Applicable Lending Offices and address for notices the offices set forth
beneath its name on the signature page hereof, (vii) attaches the forms,
certificates or statements required by Section 2.14(e) of the Agreement and
(viii) confirms that it is duly authorized to enter into this Joinder Agreement.
<PAGE>
4. On the Effective Date of this Joinder Agreement, the New Liquidity
Bank shall join in and be a party to each Agreement and, to the extent provided
in this Joinder Agreement, have the rights and obligations of a Liquidity Bank
under each such Agreement including its obligation to comply with the provisions
contained in Section 8.07 and Section 8.13 of the Agreement.
5. This Joinder Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Joinder
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written, such execution being made on Schedule I
hereto.
-2-
<PAGE>
SCHEDULE I
TO
JOINDER AGREEMENT
DATED ______ __, ____
Section 1.
Percentage Interest: %
-----
Section 2.
New Liquidity Bank's Liquidity Commitment: $
------
NEW LIQUIDITY BANK: [NAME OF NEW LIQUIDITY BANK]
By: _________________________
Title:
Applicable Lending Officers
Eurodollar Rate Advances:
[Address]
Base Rate Advances:
[Address]
Address for notices
[Address]
APPROVED THIS DAY OF ___________, ____
CHARTER MAC FLOATER CERTIFICATE TRUST I
By: FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
as Certificate Trust Agent, pursuant to the Certificate Issuer
Trust Agreement, of the CHARTER MAC FLOATER
CERTIFICATE TRUST I
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
<PAGE>
APPROVED THIS DAY OF __________, ____
MBIA INSURANCE CORPORATION
By:________________________________
Name:
Title:
-2-
<PAGE>
EXHIBIT C
FORM OF NOTICE OF LIQUIDITY BORROWING
[Date]
To: BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
as the Liquidity Agent for the
Liquidity Banks party to the
Agreement referred to
below
Attention:
---------
Ladies and Gentlemen:
The undersigned, [Tender Agent], as Tender Agent for the CHARTER MAC
FLOATER CERTIFICATE TRUST I (the "Liquidity Borrower"), refers to the Agreement,
dated as of May 21, 1998 (the "Agreement," the terms defined therein being used
herein as therein defined), among CHARTER MAC OWNER TRUST I (the "Owner Trust"),
the Liquidity Borrower, the Tender Agent, certain Liquidity Banks party thereto,
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as the Liquidity Agent for
said Liquidity Banks and MBIA INSURANCE CORPORATION (the "Surety Provider"),
hereby gives you notice, irrevocably, pursuant to Section 2.03 of the Agreement
that the undersigned hereby requests a Liquidity Borrowing in the form of a
[Funding Advance] [Downgraded Bank Advance] under the Agreement, and in that
connection sets forth below the information relating to such Liquidity Borrowing
(the "Proposed Funding Advance") [(the "Proposed Downgraded Bank Advance")] as
required by Section 2.03 of the Agreement:
(a) The Business Day of the [Proposed Funding Advance]
[Proposed Downgraded Bank Advance] is _______________, ____.
(b) The aggregate amount of the [Proposed Funding Advance]
[Proposed Downgraded Bank Advance] is $_________________.
(c) Liquidity Interest Period for [each Advance made as part
of the Proposed Funding Advance] [the Proposed Downgraded Bank Advance]
is [__ days] [__ month[s]].
(d) The Advances under such Proposed Funding Advance shall
constitute Base Rate Advances.
<PAGE>
(e) The Advances shall constitute [Downgraded Bank Advances
from [identify Liquidity Bank(s) subject to a Downgrade Event]].
(f) Funds from the [proposed liquidity borrowing] [proposed
Advances] should be deposited in Acct. No. [ ], ABA No. [ ] at [ ].
Very truly yours,
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
as Tender Agent for
CHARTER MAC FLOATER CERTIFICATE TRUST I
By:_______________________
Name:
Title:
-2-
<PAGE>
EXHIBIT D
FORM OF
LIQUIDITY COMMITMENT INCREASE
[date]
To the Liquidity Agent
under the Agreement
referred to below
Reference is made to the Agreement dated as of May 21, 1998 (the
"Agreement") among CHARTER MAC OWNER TRUST I (the "Owner Trust"), CHARTER MAC
FLOATER CERTIFICATE TRUST I, a Delaware business trust (the "Liquidity
Borrower"), FIRST TENNESSEE BANK NATIONAL ASSOCIATION (the "Tender Agent"), the
Liquidity Banks (as defined in the Agreement), BAYERISCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH, as the Liquidity Agent for the Liquidity Banks
(the "Liquidity Agent"), and MBIA INSURANCE CORPORATION (the "Surety Provider").
Terms defined in the Agreement are used herein with the same meaning.
The undersigned Liquidity Borrower and [name of Liquidity Bank] (the
"Liquidity Bank") agree as follows:
1. The Liquidity Bank's Liquidity Commitment will be increased from
$__________ to $ ___________.
2. The effective date of such increase is ________, _______(the
"Effective Date"), which Effective Date is at least one Business day after the
date of this Liquidity Commitment Increase.
3. The Liquidity Bank shall endorse the increased amount of its
Liquidity Commitment on its Liquidity Note.
LIQUIDITY BANK: [NAME OF LIQUIDITY BANK]
By:_________________________
Name:
Title:
<PAGE>
LIQUIDITY BORROWER: CHARTER MAC FLOATER CERTIFICATE
TRUST I
By: FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Certificate
Trust Agent, pursuant to the
Certificate Issuer Trust
Agreement, of the CHARTER MAC
FLOATER CERTIFICATE TRUST I
By:_________________________
Name:
Title:
ACCEPTED THIS DAY OF ,
BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH,
AS LIQUIDITY AGENT
By:__________________________
Title:
APPROVED THIS DAY OF ,
MBIA INSURANCE CORPORATION
By:__________________________
Title:
-2-
<PAGE>
EXHIBIT E
FORM OF NOTICE OF CONVERSION/CONTINUATION
[Date]
To: BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
as the Liquidity Agent for the
Liquidity Banks party to the
Agreement referred to
below
Attention:
---------
Ladies and Gentlemen:
The undersigned, CHARTER MAC FLOATER CERTIFICATE TRUST I (the
"Liquidity Borrower"), refers to the Agreement, dated as of May 21, 1998 (the
"Agreement," the terms defined therein being used herein as therein defined),
among CHARTER MAC OWNER TRUST I (the "Owner Trust"), the Liquidity Borrower, the
Tender Agent, certain Liquidity Banks party thereto, BAYERISCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH, as the Liquidity Agent for said Liquidity Banks,
and MBIA INSURANCE CORPORATION (the "Surety Provider") hereby gives you notice,
irrevocably, pursuant to Section 2.08(b) of the Agreement that the undersigned,
on behalf of the Liquidity Borrower, hereby elects to insert one or more of the
following:
(1) convert $________ in aggregate principal amount of Base
Rate Advances with a current Liquidity Interest Period ending
__________ ___, 19__, to Eurodollar Rate Advances on __________________
___, 19__. The initial Liquidity Interest Period for such Eurodollar
Rate Advances is requested to be ___ month[s].
(2) continue as Eurodollar Rate Advances $__________ in
aggregate principal amount of Eurodollar Rate Advances ________________
with a current Liquidity Interest Period ending _________________,
19__. The succeeding Interest Period is requested to be _______
month[s].
- --------------
(1) Use if converting Base Rate Advances to Eurodollar Rate Advances.
(2) Use if continuing Eurodollar Rate Advances as Eurodollar Rate Advances.
<PAGE>
(3) continue as Base Rate Advances $____________ in aggregate
principal amount of Base Rate Advances with a current Liquidity
Interest Period ending _____, 19__. The succeeding Liquidity Interest
Period is requested to be _____ month[s].
Very truly yours,
CHARTER MAC FLOATER CERTIFICATE
TRUST I
By: FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Certificate
Trust Agent, pursuant to the
Certificate Issuer Trust
Agreement, of the CHARTER MAC
FLOATER CERTIFICATE TRUST I
By:_________________________
Name:
Title:
- ---------------------
(3) Use if continuing base rate Advances as Base Rate Advances.
-2-
<PAGE>
EXHIBIT F
FORM OF
LIQUIDITY NOTE
[Amount of Liquidity Commitment] [ ], 1998
----------
FOR VALUE RECEIVED, the undersigned, CHARTER MAC FLOATER CERTIFICATE
TRUST I, a Delaware business trust (the "Liquidity Borrower"), HEREBY
UNCONDITIONALLY PROMISES TO PAY to the order of [NAME OF LIQUIDITY BANK] (the
"Liquidity Bank"), the principal sum of [_________] DOLLARS ($[_________]), or,
if less, the aggregate unpaid principal amount of all of the Advances made by
the Liquidity Bank pursuant to the "Agreement" (as hereinafter defined).
Capitalized terms used herein and not otherwise defined herein are used as
defined in the Agreement.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Agreement and, if not
sooner paid in full, on the Scheduled Liquidity Maturity Date. The Liquidity
Borrower further promises to pay interest on the unpaid principal amount of each
Advance from the date of such Loan until the principal amount thereof is paid in
full, at such interest rates, and payable at such times, as are specified in the
Agreement.
All payments of principal and interest in respect of this Liquidity
Note shall be made payable to the Liquidity Agent in lawful money of the United
States of America in same day funds for the Liquidity Bank's account at such
place as shall be designated in writing by the Liquidity Agent for such purpose
in accordance with the terms of the Agreement.
The Liquidity Bank may record the date, Type and amount of each Advance
made by it, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Rate Advances, the length of
each Liquidity Interest Period with respect thereto, on the schedule that is
attached hereto and made a part hereof; provided, that the failure of the
Liquidity Bank to make any such recordation or endorsement or any error in any
such recordation or endorsement shall not affect the obligations of the
Liquidity Borrower hereunder or under the Agreement.
This Liquidity Note is one of the Liquidity Notes referred to in, and
is entitled to the benefits of, that certain Agreement dated as of May 21, 1998
(as amended, restated, supplemented or otherwise modified from time to time, the
"Agreement") among CHARTER MAC OWNER TRUST I (the "Owner Trust"), the Liquidity
Borrower, FIRST TENNESSEE BANK NATIONAL ASSOCIATION (the "Tender Agent"), the
Liquidity Agent, the Liquidity Banks and MBIA INSURANCE CORPORATION (the "Surety
Provider"). The Agreement, among other things, (i) provides for the making of
Advances by the Liquidity Banks to Liquidity
<PAGE>
Borrower from time to time and (ii) contains provisions for the mandatory
prepayment of principal from time to time upon the happening of certain stated
events.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Liquidity Borrower.
Whenever in this Liquidity Note reference is made to the Liquidity
Agent, the Liquidity Banks or the Liquidity Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective successors and
assigns. The provisions of this Liquidity Note shall be binding upon and shall
inure to the benefit of said successors and assigns. The Liquidity Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for the Liquidity Borrower.
-2-
<PAGE>
THIS LIQUIDITY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Liquidity Borrower has caused this Note to be
executed as of the date first above-written.
LIQUIDITY BORROWER: CHARTER MAC FLOATER CERTIFICATE
TRUST I
By: FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Certificate
Trust Agent, pursuant to the
Certificate Issuer Trust
Agreement, of the CHARTER MAC
FLOATER CERTIFICATE TRUST I
By:_________________________
Name:
Title:
-3-
<PAGE>
Charter MAC Floater Certificate Trust I Liquidity Note Schedule
<TABLE>
<CAPTION>
Amount of Type of Notation - Interest Amount of Unpaid Principal
Date Advance Advance Made By Period Principal Repaid Balance
---- ------- --------------- ------ ---------------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
-4-
<PAGE>
EXHIBIT G
FORM OF NOTICE OF ASSIGNMENT PURSUANT
TO SECTION 8.06 OF Agreement
[Letterhead of Assigning Liquidity Bank]
[Date]
To:
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
[The Surety Provider]
[Moody's]
[S&P]
Pursuant to Section 8.06 of the Agreement, we hereby notify you that we
intend to make the following assignment:
Assignee: [name]
Amount Assigned: [$ amount]
Retained Amount: [$ amount]
Effective Date:
Very truly yours,
-5-
<PAGE>
EXHIBIT H
FORM OF OPINION OF COUNSEL
FOR EACH LIQUIDITY BANK
DOMESTIC COUNSEL TO EACH LIQUIDITY BANK
[Letterhead of Counsel]
[DATE]
Charter MAC Floater Certificate Trust I
[ ]
[ ]
[ ]
[[Address of Liquidity Agent]]
Re: Agreement with Charter MAC Floater Certificate Trust I
Ladies and Gentlemen:
We have acted as counsel for the [Name of Subject Bank] (the "Subject
Bank") in connection with that certain Agreement dated as of May 1, 1998 (the
"Agreement") among Charter MAC Owner Trust I, Charter MAC Floater Certificate
Trust I (the "Liquidity Borrower"), First Tennessee Bank National Association as
Tender Agent, the Subject Bank and certain other banks from time to time parties
thereto (each, a "Liquidity Bank" and collectively, the "Liquidity Banks"),
[______________________] as Liquidity Agent for the Liquidity Banks and MBIA
Insurance Corporation. Terms defined therein and not otherwise defined in this
letter shall have the respective meanings ascribed therein.
Subject to the qualifications and limitations stated herein, we hereby
advise you that, in our opinion:
1. The Subject Bank is duly licensed and qualified to operate as a
[describe nature of institution--e.g., national banking association], and is in
good standing under the laws of the State of [_____________].
2. The Agreement has been duly authorized by all necessary corporate
action, has been duly executed and delivered by the Subject Bank and, assuming
due authorization, execution and delivery by each of the other parties thereto,
constitutes a legal, valid and binding
<PAGE>
obligation of the Subject Bank, enforceable against the Subject Bank in
accordance with its terms.
3. No consent, authorization or approval of, and no notice or filing
with, any governmental administrative or other authority is required in
connection with the execution, delivery or performance of the Agreement by the
Subject Bank.
4. The Subject Bank has the corporate power and authority to execute,
deliver and perform the Agreement and the execution, delivery and performance of
the Agreement by the Subject Bank does not conflict with any law, rule or
regulation applicable to the Subject Bank.
Our opinion set forth in paragraph 2 above is subject to the
qualifications that the enforceability of the Subject Bank's obligations under
the Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Without in
any way limiting the foregoing, we express no opinion with respect to the
enforceability of the Subject Bank's commitment to make Advances to the
Liquidity Borrower under the Agreement after the commencement of any involuntary
bankruptcy case or other insolvency proceeding against the Liquidity Borrower.
[I am/We are admitted to practice in the State of ______ and do not
express any opinion herein concerning any other law other than the State of
_________ and the federal laws of the United States of America. I/We have
assumed, for purposes of this opinion, with your permission that the law of the
State of New York is in all relevant respects the same as the law of the State
of __________.]
The opinions expressed herein are solely for your benefit in connection
with the transactions contemplated by the Agreement and may not be relied on in
any manner or for any purpose by any other individual, partnership, corporation
or other entity ("Person"), nor any copies thereof published, communicated or
otherwise made available in whole or in part to any other Person without our
specific prior written consent; provided, however, that Standard & Poor's
Ratings Services (a division of The McGraw-Hill Companies, Inc.) and Moody's
Investors Service, Inc. may be given copies of this letter and shall be entitled
to rely on the opinions expressed herein to the same extent as if this letter
were addressed to them.
Respectfully submitted,
-2-
<PAGE>
FOREIGN COUNSEL TO EACH FOREIGN LIQUIDITY BANK
[Letterhead of Counsel]
[DATE]
Charter MAC Floater Certificate Trust I
[ ]
[ ]
[ ]
[[Address of Liquidity Agent]]
Re: Agreement with Charter MAC Floater Certificate Trust I
Ladies and Gentlemen:
We have acted as counsel for the [Name of Subject Bank] (the "Subject
Bank") in connection with that certain Agreement dated as of May 1, 1998 (the
"Agreement") among Charter MAC Owner Trust I, Charter MAC Floater Certificate
Trust I (the "Liquidity Borrower"), First Tennessee Bank National Association as
Tender Agent, the Subject Bank and certain other banks from time to time parties
thereto (each, a "Liquidity Bank" and collectively, the "Liquidity Banks"),
[______________________] as Liquidity Agent for the Liquidity Banks and MBIA
Insurance Corporation. Terms defined therein and not otherwise defined in this
letter shall have the respective meanings ascribed therein.
Subject to the qualifications and limitations stated herein, we hereby
advise you that, in our opinion:
1. The Subject Bank is duly organized, validly existing, and in good
standing under the laws of [Name of home jurisdiction].
2. The Agreement has been duly authorized by all necessary corporate
action, has been duly executed and delivered by the Subject Bank and, assuming
due authorization, execution and delivery by each of the other parties thereto,
constitutes a legal, valid and binding obligation of the Subject Bank,
enforceable against the Subject Bank in accordance with its terms.
3. No consent, authorization or approval of, or filing with, any
governmental, administrative or other authority is required in connection with
the execution, delivery or performance of the Agreement by the Subject Bank.
<PAGE>
4. The Subject Bank has the corporate power and authority to execute,
deliver and perform the Agreement and the execution, delivery and performance of
the Agreement by the Subject Bank does not conflict with any law, rule or
regulation applicable to the Subject Bank.
5. The obligations of the Subject Bank under the Agreement rank at
least pari passu in priority of payment with other general unsecured claims of
the Subject Bank.
Our opinion set forth in paragraph 2 above is subject to the
qualifications that the enforceability of the Subject Bank's obligations under
the Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Without in
any way limiting the foregoing, we express no opinion with respect to the
enforceability of the Subject Bank's commitment to make Advances to the
Liquidity Borrower under the Agreement after the commencement of any involuntary
bankruptcy case or other insolvency proceeding against the Liquidity Borrower.
The opinions expressed herein are solely for your benefit in connection
with the transactions contemplated by the Agreement and may not be relied on in
any manner or for any purpose by any other individual, partnership, corporation
or other entity ("Person"), nor any copies thereof published, communicated or
otherwise made available in whole or in part to any other Person without our
specific prior written consent; provided, however, that Standard & Poor's
Ratings Services (a division of The McGraw-Hill Companies, Inc.), Moody's
Investors Service, Inc. and [name of domestic counsel to Subject Bank] may be
given copies of this letter and shall be entitled to rely on the opinions
expressed herein to the same extent as if this letter were addressed to them.
Respectfully submitted,
-2-
<PAGE>
EXHIBIT I
FORM OF NOTICE OF RECOMMITMENT
[Date]
To: Charter MAC Floater Certificate Trust I
[ ], as [ ]
[ ]
[ ]
Attention: [ ]
Reference is made to (i) the Agreement dated as of May 1, 1998 (the
"Agreement") among CHARTER MAC OWNER TRUST I, CHARTER MAC FLOATER CERTIFICATE
TRUST I, a Delaware business trust (the "Liquidity Borrower"), FIRST TENNESSEE
BANK NATIONAL ASSOCIATION as Tender Agent, the Liquidity Banks named therein,
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as the Liquidity Agent (the
"Liquidity Agent"), and MBIA INSURANCE CORPORATION. Terms defined in the
Agreements are used herein with the same meaning as defined therein.
[The undersigned Liquidity Bank hereby notifies you that the
undersigned has elected to recommit its Liquidity Commitment of $_________ (with
a previously effective Scheduled Liquidity Commitment Termination Date of
_______, ____), for a period until _______, ____, which date shall be the new
Scheduled Liquidity Commitment Termination Date for such Liquidity Commitment.]
[The undersigned Liquidity Bank hereby notifies you that the
undersigned has elected NOT TO RECOMMIT its Liquidity Commitment of $_________
with a Scheduled Liquidity Commitment Termination Date of _______, _____.]
LIQUIDITY BANK: [NAME OF LIQUIDITY BANK]
By:______________________________
Name:
Title:
- --------------------------------------------------------------------------------
LIQUIDITY PLEDGE AND SECURITY AGREEMENT
Dated as of May 21, 1998
by and among
CHARTER MAC ORIGINATION TRUST I
and
CHARTER MAC OWNER TRUST I
and
CHARTER MAC FLOATER CERTIFICATE TRUST I
and
MBIA INSURANCE CORPORATION
and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
as Administrative Agent
and
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
as the Liquidity Agent for the Liquidity Banks and
as the Liquidity Collateral Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE IDEFINITIONS
SECTION 1.1 Definitions .................................................... 2
ARTICLE II THE SECURITY INTEREST
SECTION 2.1 Grant of Security Interest ..................................... 2
SECTION 2.2 Delivery of Liquidity Provider Certificates .................... 3
SECTION 2.3 Custody of the Bonds and the Residual Certificate
for Benefit of Secured Party ................................. 3
SECTION 2.4 Release of Security Interest Upon the Sale of Acquired Assets .. 4
SECTION 2.5 Compliance With Certificate Issuer Trust Agreement ............. 4
SECTION 2.6 Continuing Liability of the Liquidity Borrower ................. 4
ARTICLE III REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties ................................. 5
ARTICLE IV COVENANTS
SECTION 4.1 Further Assurances ............................................. 6
SECTION 4.2 Change of Office Location ...................................... 6
SECTION 4.3 Defined Title; No Disposition .................................. 6
SECTION 4.4 Collections .................................................... 7
ARTICLE V REMEDIES
SECTION 5.1 Remedies ....................................................... 7
SECTION 5.2 Remedies Not Exclusive ......................................... 9
SECTION 5.3 Waiver of Certain Rights ....................................... 10
SECTION 5.4 Limitation by Law .............................................. 10
ARTICLE VI LIQUIDITY COLLATERAL ACCOUNTS; APPLICATION OF MONIES
SECTION 6.1 The Liquidity Collateral Accounts .............................. 10
SECTION 6.2 Investment of Funds Deposited in Liquidity Collateral Accounts . 11
SECTION 6.3 Application of Funds Deposited in Liquidity Collateral Account . 11
ARTICLE VII MISCELLANEOUS
SECTION 7.1 Amendments, Supplements and Waivers ............................ 11
SECTION 7.2 Exculpation .................................................... 11
SECTION 7.3 Filing Fees, Excise Taxes, etc ................................. 12
-i-
<PAGE>
SECTION 7.4 Conditions to Release .......................................... 13
SECTION 7.5 Notices ........................................................ 13
SECTION 7.6 Right of the Surety Provider to Direct Actions of
the Liquidity Collateral Agent; Replacement of the
Liquidity Collateral Agent; Resignation of the
Liquidity Collateral Agent ................................... 14
SECTION 7.7 Severability ................................................... 16
SECTION 7.8 Binding Effect ................................................. 16
SECTION 7.9 GOVERNING LAW .................................................. 16
SECTION 7.10 No Recourse .................................................... 16
SECTION 7.11 Counterparts ................................................... 17
SECTION 7.12 Captions ....................................................... 18
SECTION 7.13 Notice of Limitation of Liability .............................. 18
SCHEDULE 1
-ii-
<PAGE>
LIQUIDITY PLEDGE AND SECURITY AGREEMENT
LIQUIDITY PLEDGE AND SECURITY AGREEMENT (the "Agreement"), dated as
of May 21, 1998, by and among CHARTER MAC ORIGINATION TRUST I, a Delaware
business trust (the "Origination Trust"), CHARTER MAC OWNER TRUST I, a Delaware
business trust (the "Owner Trust"), CHARTER MAC FLOATER CERTIFICATE TRUST I, a
Delaware business trust (the "Certificate Issuer"), MBIA INSURANCE CORPORATION,
a New York domiciled stock insurance company (the "Surety Provider"), FIRST
TENNESSEE BANK NATIONAL ASSOCIATION, as Administrative and Custody Agent for the
Owner Trust (the "Administrative Agent"), and BAYERISCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH, as agent for the Liquidity Banks (the "Liquidity
Agent") and as agent for itself, for the Liquidity Banks (as hereinafter
defined) and for the Surety Provider (together with its successors and any
replacement, the "Liquidity Collateral Agent").
W I T N E S S E T H:
--------------------
WHEREAS, the Liquidity Borrower, the Liquidity Agent and the
financial institutions parties thereto from time to time as lenders (the
"Liquidity Banks") have entered into a Liquidity Agreement, dated as of May 21,
1998 (as the same may hereafter be supplemented, amended or otherwise modified
from time to time, the "Liquidity Agreement");
WHEREAS, the Liquidity Agreement provides for the Liquidity Banks to
make Advances from time to time, the proceeds of which shall be applied by the
Certificate Issuer to purchase Low Floater Certificates issued by the
Certificate Issuer that have not been remarketed or for which the remarketing
proceeds were insufficient to pay the Purchase Price thereof when tendered by
Low Floater Holders to the Tender Agent pursuant to the Certificate Issuer Trust
Agreement or which have been called for mandatory purchase pursuant to certain
subsections of Section 6.13 of the Certificate Issuer Trust Agreement (such Low
Floater Certificates purchased by the Certificate Issuer with Liquidity Bank
Advances are referred to herein as "Liquidity Provider Certificates");
WHEREAS, pursuant to an Insurance Agreement, dated as of May 21,
1998, among the Certificate Issuer, the Owner Trust, the Origination Trust,
Charter, the Surety Provider, Administrative Agent and the Liquidity Agent (as
the same may be supplemented, amended or otherwise modified from time to time,
the "Insurance Agreement"), the Surety Provider has issued a surety bond to the
Owner Trust, for the benefit of the Certificate Issuer as holder of the Senior
Certificate, issued by the Owner Trust (as the same may be supplemented, amended
or otherwise modified from time to time, the "Certificate Surety Bond") and a
surety bond to the Liquidity Agent for the benefit of the Liquidity Banks (as
the same may be supplemented, amended or otherwise modified from time to time,
the "Liquidity Surety Bond," together with the Certificate Surety Bond, the
"Surety Bonds"); and
WHEREAS, the Liquidity Borrower (as hereinafter defined) has agreed
that its obligations under the Insurance Agreement and under the Liquidity
Agreement shall be secured as provided in this Agreement;
<PAGE>
NOW, THEREFORE, in order to secure the payment of the Secured
Obligations (as hereinafter defined) now or hereafter existing and in
consideration of the premises and the agreements herein contained and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
SECTION I.1 Definitions. As used in this Agreement (but only as used
in this Agreement and in no other Transaction Document), the term "Liquidity
Borrower" shall mean the Origination Trust, the Owner Trust, and the Certificate
Issuer, to the extent that each has an ownership interest in any of the
Liquidity Collateral.
All other capitalized terms used herein shall have the respective
meanings set forth in the Liquidity Agreement, or as set forth in Appendix A
which is incorporated by reference herein.
ARTICLE II
THE SECURITY INTEREST
SECTION II.1 Grant of Security Interest. To secure the due and
punctual payment of all obligations, indebtedness and liabilities, whether now
existing or hereafter arising, absolute or contingent, or due or to become due,
of the Liquidity Borrower (a) to the Liquidity Agent and the Liquidity Banks
under or in connection with the Liquidity Agreement and (b) to the Surety
Provider under or in connection with the Insurance Agreement, including without
limitation, repayment of the Reimbursement Amount (as defined therein), and to
secure the due and punctual performance of all the obligations of the Liquidity
Borrower to the Liquidity Agent, the Liquidity Collateral Agent, the Liquidity
Banks and the Surety Provider contained in this Agreement, the Liquidity
Agreement, the Insurance Agreement and the other Transaction Documents to which
any are a party (all such obligations, together with the obligations,
indebtedness and liabilities referred to above, are collectively called the
"Secured Obligations"), the Liquidity Borrower hereby (i) pledges, assigns,
transfers and delivers to the Liquidity Collateral Agent, for the benefit of the
Liquidity Banks, the Liquidity Agent, individually and as agent for the
Liquidity Banks, and the Surety Provider (collectively the "Secured Parties"),
and (ii) hereby grants to the Liquidity Collateral Agent for the benefit of the
Secured Parties, a first lien on, and security interest in, all of the Liquidity
Borrower's respective right, title, and interest in and to the following,
whether now owned or hereafter acquired (collectively, the "Liquidity
Collateral"):
2
<PAGE>
(a) any and all Liquidity Provider Certificates and all
principal or interest payments thereof;
(b) the Bonds and all principal or interest collections
thereon;
(c) The Residual Certificate issued pursuant to Section 6.3
of the Owner Trust Agreement;
(d) the Transaction Documents (including all rights to
reserves, consents, recourse, subordination, and other credit enhancement
provided by the other parties thereto), and all rights to payment of fees,
expenses, and indemnities;
(e) the Liquidity Collateral Accounts (as defined in Section
6.1) and all monies held therein and all other monies, securities, reserves, and
other property now or at any time in the possession of the Liquidity Collateral
Agent or its bailee, agent, or custodian and relating to any of the foregoing,
and all funds deposited in each of such accounts;
(f) the Certificate Issuer Collection Account and any
agreements executed in connection with the Certificate Issuer Collection Account
in connection with the Certificate Issuer Trust Agreement;
(g) all products, proceeds, rents, and profits of any of the
foregoing including, without limitation, proceeds of insurance policies or
surety bonds insuring any of the foregoing or any indemnity or warranty payable
by reason of loss or damage to or otherwise in respect of any of the foregoing.
SECTION II.2 Delivery of Liquidity Provider Certificates. The
Liquidity Borrower agrees to deliver or cause to be delivered to the Liquidity
Collateral Agent all Liquidity Provider Certificates promptly upon the purchase
thereof by the Liquidity Borrower. Such Liquidity Provider Certificates shall be
registered in the certificate register of the Liquidity Borrower in the name of
the Liquidity Collateral Agent for the benefit of the Secured Parties. During
any period when the Liquidity Provider Certificates are immobilized at The
Depository Trust Company ("DTC") and DTC or its nominee is the registered owner
of the Liquidity Provider Certificates, the Liquidity Collateral Agent, for the
benefit of the Secured Parties, will be shown as the beneficial owner of the
Liquidity Provider Certificates on the books and records of DTC.
SECTION II.3 Custody of the Bonds and the Residual Certificate for
Benefit of Secured Party. The Administrative Agent hereby agrees that it will
hold the Bonds and the Residual Certificate in its custody for the benefit of
the Secured Parties.
SECTION II.4 Release of Security Interest Upon the Sale of Acquired
Assets.
(a) If (i) a payment is made under the Liquidity Surety
Bond, and the Liquidity Agent has assigned to the Surety Provider all its right,
title and interest in the Acquired
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Assets (including Purchased Certificates) in accordance with Section 6.12 of the
Insurance Agreement, or (ii) in lieu of making a payment under the Liquidity
Surety Bond, the Surety Provider has exercised the Liquidity Purchase Option and
purchased the Liquidity Bank's right, title and interest in Low Floater
Certificates, then the security interest in such Purchased Certificates or
Acquired Assets will be released as provided in this Section.
(b) Upon any assignment or sale of Liquidity Provider
Certificates as permitted by paragraph (a) above, the security interest granted
hereunder in the Liquidity Provider Certificates so sold or assigned, and all
related property with respect to such Liquidity Provider Certificates shall,
immediately upon the assignment or sale of (and payment for) such Liquidity
Provider Certificates and without any further action on the part of the
Liquidity Collateral Agent or the Secured Parties, be released except to the
extent of the interest of the Liquidity Collateral Agent, for the benefit of the
Secured Parties, in the proceeds of such assignment or sale and the interest, if
any, in such Liquidity Provider Certificates which are then retained or
thereafter acquired by the Liquidity Borrower (or the Certificate Trust Agent on
behalf of the Liquidity Borrower).
(c) Upon the sale of any Liquidity Provider Certificates as
provided in paragraph (a) above, the Liquidity Collateral Agent shall, upon the
request of the Liquidity Borrower (or the Administrative Agent on behalf of the
Liquidity Borrower), deliver to the Surety Provider a certificate stating that
the Liquidity Collateral Agent no longer has a security interest in such
Liquidity Provider Certificates except to the extent of the interest therein, if
any, which is retained by the Liquidity Borrower as provided in paragraph (b)
above. The Surety Provider shall be entitled to rely conclusively on such
certificate of the Liquidity Collateral Agent for any and all purposes.
SECTION II.5 Compliance With Certificate Issuer Trust Agreement. No
provision of this Agreement shall prevent the Liquidity Borrower from complying
with the Certificate Issuer Trust Agreement. In addition, each provision of this
Agreement shall in all respects be subject to the limitations and restrictions
applicable to the Liquidity Borrower and the exercise of its rights as set forth
in the Certificate Issuer Trust Agreement.
SECTION II.6 Continuing Liability of the Liquidity Borrower.
Anything herein to the contrary notwithstanding, the Liquidity Borrower shall
remain liable under each contract, agreement, interest, and obligation included
in the Liquidity Collateral (to the extent that the Liquidity Borrower has any
liability thereunder), to observe and perform all the conditions and obligations
to be observed and performed by each thereunder, all in accordance with and
pursuant to the terms and provisions thereof. The Liquidity Borrower shall do
nothing to impair the security interest in any Liquidity Collateral. None of the
Liquidity Collateral Agent, the Surety Provider, the Liquidity Agent, or any
Liquidity Bank shall have any obligation or liability under any such contract,
agreement, interest or obligation by reason of or arising out of this Agreement
or the receipt by the Liquidity Collateral Agent, the Surety Provider, the
Liquidity Agent or any Liquidity Bank of any payment relating to any such
contract, agreement, interest or obligation pursuant hereto (other than the
existing obligations of the Surety Provider under the Surety Bonds, which
obligations are not impaired by this Agreement), nor shall the Liquidity
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Collateral Agent, the Surety Provider, the Liquidity Agent, or any Liquidity
Bank be required or obligated in any manner to perform or fulfill any of the
obligations of the Liquidity Borrower thereunder or pursuant thereto, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any such contract, agreement, interest, or obligation, or to present or file any
claim, or to take any action to collect or enforce any performance of the
payment of any amount thereunder to which it may be entitled at any time except,
in the case of the Liquidity Collateral Agent, as expressly provided in this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1 Representations and Warranties. The Liquidity Borrower
represents and warrants to each of the other parties hereto as follows on the
Effective Date, on the date that any Advance is made or Continued or Converted,
and on each date any amounts are payable by the Surety Provider pursuant to any
Surety Bond:
(a) The chief place of business and chief executive office
of the Liquidity Borrower and the locations where the Liquidity Borrower keeps
all its records concerning the Liquidity Collateral are located at the addresses
set forth on Schedule 1 hereto (or at such other locations, notified to the
Liquidity Collateral Agent in accordance with Section 4.2, in jurisdictions
where all action required by Section 4.1 has been taken with respect to the
Liquidity Collateral);
(b) The Liquidity Borrower owns the Liquidity Collateral
free and clear of any lien, security interest, charge, or encumbrance created by
or through the Liquidity Borrower, except for the security interest created by
this Agreement;
(c) This Agreement creates a valid first priority security
interest in all Liquidity Collateral securing the payment and performance of the
Secured Obligations, and all assignments and other action necessary or desirable
to perfect such security interests in the Liquidity Collateral have been duly
made or taken;
(d) The representations and warranties of the Liquidity
Borrower contained in each of the other Transaction Documents to which it is a
party were true and correct when made and are hereby incorporated by reference
for the benefit of the other parties hereto as if fully set forth herein.
ARTICLE IV
COVENANTS
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SECTION IV.1 Further Assurances.
(a) The Liquidity Borrower agrees that from time to time, at
the expense of the Liquidity Borrower, the Liquidity Borrower will promptly
execute and deliver all further instruments, assignments and other documents,
and take all further action that may be necessary or desirable as reasonably
requested by the Liquidity Collateral Agent or the Secured Parties, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Liquidity Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Liquidity Collateral,
including without limitation, the execution of financing or continuation
statements, or amendments thereto.
(b) The Liquidity Borrower hereby authorizes the Liquidity
Collateral Agent to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Liquidity Collateral
without the signature of the Liquidity Borrower where permitted by law. A carbon
copy, photographic copy, or other reproduction of this Agreement or any
financing statement covering the Liquidity Collateral or any part thereof shall
be sufficient as a financing statement where permitted by law.
SECTION IV.2 Change of Office Location. The Liquidity Borrower shall
keep its chief place of business and chief executive office and the locations
where it keeps its records concerning the Liquidity Collateral at the respective
locations therefor set forth on Schedule 1 hereto or, upon 30 days' prior
written notice to the Liquidity Collateral Agent, at such other locations in a
jurisdiction where all action required by Section 4.1 shall have been taken with
respect to the Liquidity Collateral. The Liquidity Borrower will hold and
preserve such records and will permit representatives of the Liquidity
Collateral Agent or the Secured Parties at any time during normal business hours
to inspect and make abstracts from such records.
SECTION IV.3 Defined Title; No Disposition.
(a) The Liquidity Borrower covenants and agrees that it will
defend the Secured Parties' right, title and security interest in and to the
Liquidity Collateral against claims and demands of all persons whomsoever; and
covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter Liquidity Provider to the Secured Parties
as Liquidity Collateral hereunder and will likewise defend the Secured Parties'
right thereto and security interest therein.
(b) Without the prior written consent of the Liquidity
Collateral Agent, the Liquidity Borrower agrees that it will not sell, assign,
transfer, or otherwise dispose of, or grant any option with respect to, the
Liquidity Collateral nor will it create, incur or permit to exist any pledge,
lien, mortgage, security interest, charge, option or any other encumbrance with
respect to any of the Liquidity Collateral, or any interest therein, or any
proceeds thereof, except for the lien and security interest provided for by this
Agreement, provided that nothing in this Section 4.3 or elsewhere in this
Agreement shall be deemed to permit any sale, assignment or other disposition of
the Liquidity Collateral (or any portion thereof) which is otherwise prohibited
by the terms of the Insurance Agreement or the Liquidity Agreement.
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SECTION IV.4 Collections. Except as otherwise provided in this
Section 4.4 or in Section 5.1, the Liquidity Borrower or its duly appointed
agent shall continue to collect all amounts due or to become due to the
Liquidity Borrower under or in connection with the Liquidity Collateral. To the
extent, and only to the extent, that the Liquidity Borrower or its agent is
permitted to do so under the terms of the Certificate Issuer Trust Agreement and
all other Transaction Documents in connection with such collections, the
Liquidity Borrower may take (and, at the Liquidity Collateral Agent's direction,
shall take) such action as the Liquidity Borrower, the Liquidity Collateral
Agent or the Surety Provider, as appropriate, may deem necessary or advisable to
enforce collection of the Liquidity Collateral.
ARTICLE V
REMEDIES
SECTION V.1 Remedies.
(a) The Liquidity Collateral Agent shall have the right,
upon the occurrence and during the continuation of a Liquidity Event of Default
(such date being referred to hereinafter as the "Liquidity Trigger Date"), upon
written notice to the Liquidity Borrower and the Administrative Agent of its
intention to do so, to, and the Liquidity Borrower hereby irrevocably
constitutes and appoints the Liquidity Collateral Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact, with full power and authority in the name of the Liquidity
Borrower or in its own name, from time to time in the Liquidity Collateral
Agent's discretion, on and after the occurrence of the Liquidity Trigger Date,
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes
hereof and, without limiting the generality of the foregoing, hereby gives the
Liquidity Collateral Agent the power and right on behalf of the Liquidity
Borrower, without notice to or assent by the Liquidity Borrower, to the extent,
and only to the extent, that the Liquidity Borrower is permitted under
applicable law and under the Transaction Documents, to do the following:
(i) take any and all steps in the name of the
Liquidity Borrower and on behalf of the Liquidity Borrower, to
collect all amounts due under any of the Liquidity Collateral
including, without limitation, the right to ask for, demand,
sue for, collect, receive, and give acquittance for any and
all monies due or to become due with respect to the Liquidity
Collateral;
(ii) to receive, take, endorse, assign, and deliver any
and all checks, notes, drafts, acceptances, documents, and
other negotiable and non-negotiable instruments, documents and
chattel paper taken or received by the Liquidity Collateral
Agent in connection herewith and therewith;
(iii) to commence, file, prosecute, defend, settle,
compromise, or adjust any claim, suit, action, or proceeding
with respect to the Liquidity Collateral or to
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foreclose upon or repossess any security for the Liquidity
Collateral, or to direct the Liquidity Collateral Agent to do
so;
(iv) to sell, transfer, assign, or otherwise deal in or
with the Liquidity Collateral or any part thereof pursuant to
the terms and conditions hereunder and thereunder;
(v) to do, at its option and at the expense and for
the account of the Liquidity Borrower, at any time or from
time to time, all acts and things which the Liquidity
Collateral Agent deems necessary to protect or preserve the
Liquidity Collateral or the security interest granted
hereunder and to realize upon the Liquidity Collateral; and
(vi) in addition to all other rights and remedies
herein, to enforce all other rights and effect such remedies
provided to a secured party under the circumstances of a
default under the Uniform Commercial Code of the applicable
jurisdiction and all other applicable laws.
The Liquidity Collateral Agent shall have the right and power to institute
and maintain such suits and proceedings as it may deem appropriate to protect
and enforce the rights vested in it by this Agreement and the other Transaction
Documents, and the Liquidity Collateral Agent may, either after entry or without
entry, proceed by suit or suits at law or in equity to enforce such rights and
to foreclose upon the Liquidity Collateral and to sell all or, from time to
time, any of the Liquidity Collateral under the judgment or decree of a court of
competent jurisdiction.
(b) After receipt by the Liquidity Borrower and Administrative
Agent of the notice from the Liquidity Collateral Agent referred to in paragraph
(a) above, (i) all amounts and proceeds (including instruments) received by the
Liquidity Borrower in respect of the Liquidity Collateral shall be received in
trust for the benefit of the Liquidity Collateral Agent and the Secured Parties
hereunder, shall be segregated from other funds of the Liquidity Borrower, and
shall be forthwith paid over to the Liquidity Collateral Agent in the same form
as so received (with any necessary endorsement) to be held as cash collateral
and (ii) the Liquidity Borrower shall not (either directly or through the
Administrative Agent) adjust, settle, or compromise the amount or payment of any
Liquidity Collateral, or release wholly or partly any obligor thereof or obligor
with respect thereto, or allow any credit or discount thereon. The Liquidity
Collateral Agent agrees that if it exercises any of its rights under Section
5.1(a), 5.1(b), or otherwise under this Agreement or applicable law, and as a
result thereof, the Liquidity Collateral Agent receives collections or other
proceeds of property that do not constitute part of the Liquidity Collateral
(all such non-collateral property or proceeds thereof being the "Non-Liquidity
Collateral Property"), then the Liquidity Collateral Agent shall use reasonable
means to identify such Non-Liquidity Collateral Property and transfer, deliver,
or remit such Non-Liquidity Collateral Property to the Liquidity Borrower as
promptly as may be reasonably practical.
(c) The Liquidity Borrower hereby waives presentment, demand,
protest, or any notice (to the extent permitted by applicable law) of any kind
in connection with this
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Agreement, the exercise by the Liquidity Collateral Agent or the Secured Parties
of any rights or remedies hereunder or in respect of any Liquidity Collateral.
(d) The Liquidity Collateral Agent shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Liquidity Collateral Agent pursuant to Section 5.1(a); provided that such
direction shall not be in conflict with any rule of law or with this Agreement.
(e) If the Liquidity Collateral Agent has been requested or
directed to take any action (or to refrain from taking any action) pursuant to
the terms of this Agreement, the Liquidity Collateral Agent shall not be under
any obligation to exercise any of the rights or powers vested in the Liquidity
Collateral Agent by this Agreement or any other Transaction Document or expend
or advance any funds with respect to such exercise of rights or powers unless
the Liquidity Collateral Agent shall have been provided adequate security and
indemnity against the costs, expenses and liabilities which may be incurred by
it in compliance with such request or direction, including such reasonable
advances as may be requested by the Liquidity Collateral Agent.
SECTION V.2 Remedies Not Exclusive. No remedy conferred upon or
reserved to the Liquidity Collateral Agent or the Secured Parties herein is
intended to be exclusive of any other remedy or remedies, but every such remedy
shall be cumulative and shall be in addition to every other remedy conferred
herein or in any other Transaction Document or now or hereafter existing at law,
in equity, or by statute. No delay or omission of the Liquidity Collateral Agent
or the Secured Parties to exercise any right, remedy, or power accruing upon the
occurrence of the Liquidity Trigger Date shall impair any such right, remedy, or
power or shall be construed to be a waiver thereof or an acquiescence therein;
and every right, power, and remedy given by this Agreement or in any other
Transaction Document to the Liquidity Collateral Agent or the Secured Parties
may be exercised from time to time and as often as may be deemed expedient by
the Liquidity Collateral Agent or the Secured Parties. All rights of action and
rights to assert claims upon or under this Agreement may be enforced by the
Liquidity Collateral Agent or the Secured Parties without the possession of any
promissory note executed pursuant to the Liquidity Agreement or the production
thereof in any trial or other proceeding relative thereto, and any recovery of
judgment shall be held as part of the Liquidity Collateral.
SECTION V.3 Waiver of Certain Rights. The Liquidity Borrower, to the
extent it may lawfully do so, on behalf of itself and all who may claim through
or under it, including, without limitation, any and all subsequent creditors,
vendees, assignees, and lienors, expressly waives and releases any, every, and
all rights to demand or to have any marshalling of the Liquidity Collateral upon
any sale, whether made under any power of sale granted hereunder, or pursuant to
judicial proceedings or upon any foreclosure or any enforcement of this
Agreement and consents and agrees that all the Liquidity Collateral may at any
such sale be offered and sold as an entirety.
SECTION V.4 Limitation by Law. All the provisions of this Article V
are intended to be subject to all applicable mandatory provisions of law and to
be limited to the
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extent necessary so that they will not render this Agreement invalid,
unenforceable in whole or in part, or not entitled to be recorded, registered,
or filed under the provisions of any applicable law.
ARTICLE VI
LIQUIDITY COLLATERAL ACCOUNTS; APPLICATION OF MONIES
SECTION VI.1 The Liquidity Collateral Accounts. On and after the
occurrence of a Liquidity Trigger Date or an Event of Default under the
Insurance Agreement, or if the Liquidity Banks have failed to make a payment in
full under the Liquidity Agreement when required, the Liquidity Collateral Agent
shall have, pursuant to the terms hereof, the Certificate Issuer Trust
Agreement, the other Transaction Documents and applicable law, the right to
direct that payments on or other proceeds of the Liquidity Collateral (but not
the proceeds of any asset not within the definition of Liquidity Collateral
contained in Section 2.1) be remitted to it. For such purpose, the Liquidity
Collateral Agent may establish an account entitled the "Certificate Issuer
Liquidity Collateral Account", use an existing account or retain the Collection
Account under the Certificate Issuer Trust Agreement (such accounts,
collectively, the "Liquidity Collateral Accounts"). Pursuant to Section 1.1, all
right, title, and interest of the Liquidity Borrower in and to the Liquidity
Collateral Accounts, all funds, investment property and other property credited
thereto and all proceeds thereof shall be subject to the security interest of
the Liquidity Collateral Agent hereunder. All right, title, and interest in and
all other property credited thereto and to the Liquidity Collateral Accounts
shall vest in the Liquidity Collateral Agent for the benefit of the Secured
Parties, and funds on deposit in the Liquidity Collateral Accounts shall
constitute part of the Liquidity Collateral. The Liquidity Collateral Accounts
shall be subject to the exclusive dominion and control of the Liquidity
Collateral Agent for the benefit of the Secured Parties, subject to the
provisions hereof.
SECTION VI.2 Investment of Funds Deposited in Liquidity Collateral
Accounts. The Liquidity Collateral Agent shall invest and reinvest funds on
deposit in the Liquidity Collateral Accounts at any time in short term
investments rated A-l by S&P and P-l by Moody's. All such investments and the
interest and income received thereon and therefrom and the net proceeds realized
on the sale thereof shall be held in the Liquidity Collateral Accounts as part
of the Liquidity Collateral. Notwithstanding anything to the contrary contained
herein or in any of the other Transaction Documents, the Liquidity Collateral
Agent shall not be liable for any losses on or with respect to any investments
or reinvestments made by it in accordance with the provisions of this Section
6.2.
SECTION VI.3 Application of Funds Deposited in Liquidity Collateral
Account. Funds in the Liquidity Collateral Account shall be applied first to
repay all Secured Obligations owing to the Liquidity Collateral Agent hereunder,
next to repay all Secured Obligations that are outstanding under the Liquidity
Agreement (in such order as may be directed by the Liquidity Agent) and,
following the Liquidity Commitment Termination Date and the indefeasible payment
in full of all such Secured Obligations arising under the Liquidity Agreement,
to repay any Secured Obligations outstanding under the Insurance Agreement (in
such order as may be directed by the Surety Provider).
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ARTICLE VII
MISCELLANEOUS
SECTION VII.1 Amendments, Supplements and Waivers. None of the terms
or provisions of this Agreement may be waived, amended, supplemented, or
otherwise modified except by written instrument executed by the Liquidity
Borrower, the Liquidity Collateral Agent, the Surety Provider and, in the event
that the Liquidity Agreement is then in effect or any Liquidity Obligations are
outstanding or the Liquidity Commitment Termination Date has not occurred, the
Liquidity Agent. No amendment to this Agreement which releases all or
substantially all of the Liquidity Collateral shall in any event be effective
until S&P and Moody's confirm that such amendment would not cause the ratings
assigned to the Low Floater Certificates prior to such amendment to be reduced
or withdrawn.
SECTION VII.2 Exculpation
(a) The Liquidity Collateral Agent shall not be liable for any
acts, omissions, errors of judgment, or mistakes of fact or law made, taken, or
omitted to be made or taken by it pursuant to this Agreement or any related
document, except for those arising out of or in connection with the Liquidity
Collateral Agent's gross negligence or willful misconduct. The Liquidity
Collateral Agent may consult with counsel, accountants, or other experts in
connection with its rights and obligations hereunder, and shall not be liable
for any action taken or omitted to be taken by it in accordance with the advice
of such counsel, accountants, or other experts. The Liquidity Collateral Agent
shall have the right at any time to seek instructions concerning the
administration of the Liquidity Collateral from any court of competent
jurisdiction. The Liquidity Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the secured parties and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Transaction Document or otherwise exist against
the Liquidity Collateral Agent.
(b) The Liquidity Borrower agrees to pay, indemnify, and hold the
Liquidity Collateral Agent, the Liquidity Agent, the Surety Provider, and their
respective directors, officers, employees and agents harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement and performance
of this Agreement and the other Transaction Documents, unless arising from the
gross negligence or willful misconduct of the party to be indemnified under this
Section 7.2(b). The obligations of the Liquidity Borrower under this Section
7.2(b) shall survive the termination of the other provisions of this Agreement.
(c) The Liquidity Borrower agrees to indemnify and hold harmless
the Liquidity Collateral Agent, the Surety Provider, the Liquidity Agent, and
each Liquidity Bank from any present or future claim for liability for any stamp
or other similar tax and any penalties
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or interest with respect thereto, which may be assessed, levied, or collected by
any jurisdiction in connection with this Agreement, the Liquidity Collateral, or
the attachment or perfection of the security interest granted to the Liquidity
Collateral Agent in any Liquidity Collateral. The obligations of the Liquidity
Borrower under this Section 7.2(c) shall survive the termination of the other
provisions of this Agreement.
(d) To the extent not promptly paid by the Liquidity Borrower or
recovered from the proceeds of the Liquidity Collateral, the Liquidity
Collateral Agent shall have the right to recover reasonable costs and expenses
incurred in exercising its obligations hereunder, which shall be shared by the
secured parties hereunder.
SECTION VII.3 Filing Fees, Excise Taxes, etc. The Liquidity Borrower
agrees:
(a) to reimburse the Liquidity Collateral Agent for any and all
amounts in respect of all search, filing, recording, and registration fees,
taxes, excise taxes, and other similar imposts which may be payable or
determined to be payable in respect of the enforcement of this Agreement and the
other Transaction Documents, and
(b) to save the Liquidity Collateral Agent, the Surety Provider,
the Liquidity Agent and the Liquidity Banks harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees. The obligations of the Liquidity Borrower
under this Section 7.3 shall survive the termination of the other provisions of
this Agreement.
SECTION VII.4 Conditions to Release. The Liquidity Collateral shall
be automatically released on the date on which all of the Secured Obligations
have been paid and satisfied in full and no further Secured Obligations may be
incurred.
SECTION VII.5 Notices. Except to the extent otherwise expressly
provided herein, all notices, requests, and demands provided for or permitted
hereunder to be effective shall be in writing (including facsimile
communications) and shall be personally delivered (including delivery by express
mail or courier), sent by mail (certified or registered, return receipt
requested), or facsimile transmission and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or three business days after being deposited in the mail, postage prepaid, or,
in the case of facsimile transmission, when sent (except that all notices,
requests, demands or other communications to the Liquidity Collateral Agent
shall not be effective until received),
(a) if to the Origination Trust, the Owner Trust
or the Liquidity Borrower, to:
c/o Related Charter L.P.
625 Madison Avenue
New York, New York 10022
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Attention: President
and Attention: Bruce Brown,
Senior Vice President
Telephone: (212) 421-5333
Facsimile: (212) 593-5794
or such other address as may be designated by such party in a written notice to
the notifying party;
(b) if to the Administrative Agent, to:
First Tennessee Bank National Association
4385 Poplar Avenue
Memphis, Tennessee 38117
Attention: Dennis Gillespie
Tel: 901-681-2462
Fax: 901-681-2450
(c) if to the Liquidity Agent, to:
Bayerische Landesbank Girozentrale, New York Branch
560 Lexington Avenue, 17th Floor
New York, New York 10022
Credit Matters:
Attention: Scott M. Allison, First Vice President
Manager of Public Finance
Telephone: (212) 310-9869
Facsimile: (212) 310-9868
Operations Contact:
Attention: Patricia Sanchez
Telephone: (212) 310-3810
Facsimile: (212) 310-9930
or such other address as may be designated by the Liquidity Agent in a written
notice to the notifying party;
(d) if to the Surety Provider, to:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
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Attn: Vice President and Manager,
IPM Structured Finance
Telephone: (914) 273-4545
Facsimile: (914) 765-3161
or such other address as may be designated by the Surety Provider in a written
notice to the notifying party;
(e) if to any Liquidity Bank (other than the Liquidity Agent), to
its then current address for notices pursuant to the Liquidity Agreement.
SECTION VII.6 Right of the Surety Provider to Direct Actions of the
Liquidity Collateral Agent; Replacement of the Liquidity Collateral Agent;
Resignation of the Liquidity Collateral Agent.
(a) The Liquidity Collateral Agent agrees that following the
Surety Provider's written request it will take or refrain from taking any
action, and exercise or refrain from exercising any of its rights under this
Agreement and all agreements, documents and instruments relating hereto in the
manner described in the Surety Provider's written request; provided, however,
that the obligation of the Liquidity Collateral Agent to take or refrain from
taking, or to exercise or refrain from exercising any such action or rights
shall be limited to those actions and rights that can be exercised or taken (or
not exercised or taken, as the case may be) in full compliance with the
provisions of this Agreement, the other Transaction Documents and applicable
law; provided, further, that (i) if any of the events set forth in paragraphs(a)
through (d) of Section 6.01 of the Liquidity Agreement has occurred and if any
Liquidity Obligations are then outstanding (or the Liquidity Commitment
Termination Date has not yet occurred) or (ii) if the Surety Bonds shall cease
to be in full force and effect or the validity thereof shall be contested by the
Surety Provider and any Liquidity Obligations are then outstanding (or the
Liquidity Commitment Termination Date has not yet occurred), the Liquidity
Collateral Agent shall have no obligation to act at the written direction of the
Surety Provider, and the Liquidity Collateral Agent agrees in circumstances
described in this proviso that following the written request of the Liquidity
Agent it will take or refrain from taking any action, and exercise or refrain
from exercising any of its rights under this Agreement and all agreements,
documents or instruments relating hereto in the manner described in such request
of the Liquidity Agent; provided, further, that the obligation of the Liquidity
Collateral Agent to take or refrain from taking, or to exercise or refrain from
exercising any actions or rights described in the preceding proviso of this
Section 7.6(a) shall be limited to those actions and rights that can be
exercised or taken (or not exercised or taken, as the case may be) in full
compliance with the provisions of this Agreement, the other Transaction
Documents and the applicable law; provided, further, that absent any written
request from the Surety Provider or the Liquidity Agent to the Liquidity
Collateral Agent to take or refrain from taking any action or to exercise or
refrain from exercising any of its rights, the Liquidity Collateral Agent shall
have no duty to take or refrain from taking any action or to exercise or refrain
from exercising any of its rights other than as expressly required in this
Agreement.
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(b) The Majority Liquidity Banks, with the consent of the Surety
Provider, may replace the Liquidity Collateral Agent at any time during which
the Liquidity Agreement is then in effect; provided, however, that if any of the
events set forth in paragraphs (a) through (d) of Section 6.01 of the Liquidity
Agreement has occurred or if the Surety Bonds shall cease to be in full force
and effect or the validity thereof shall be contested by the Surety Provider and
any Liquidity Obligations are then outstanding (or the Liquidity Commitment
Termination Date has not yet occurred), the Majority Liquidity Banks may replace
the Liquidity Collateral Agent without the consent of the Surety Provider. The
Surety Provider, in its sole discretion, may replace the Liquidity Collateral
Agent (or any replacement appointed by the Majority the Liquidity Banks) in the
event that the Liquidity Agreement is not then in effect and all Liquidity
Obligations shall have been paid in full. Any replacement described above in
this paragraph (b) shall be effective when a notice, signed by the Liquidity
Agent (if the Liquidity Agreement is then in effect) and the Surety Provider
(except where the Surety Provider's consent is not required as stated above),
stating that the conditions for such replacement have been satisfied and
identifying the replacement Liquidity Collateral Agent, is received by the
Liquidity Borrower.
(c) The Liquidity Collateral Agent may, at any time, by giving 30
days written notice to the Liquidity Borrower, the Surety Provider and, in the
event that the Liquidity Agreement is then in effect or any Liquidity
Obligations are then outstanding, the Liquidity Agent, resign and be discharged
of the responsibilities created by this Agreement, such resignation to become
effective upon the appointment of a successor the Liquidity Collateral Agent
acceptable to the Surety Provider, the Liquidity Borrower, and, in the event
that the Liquidity Agreement is then in effect and any Liquidity Obligations
remain unpaid, the Majority Liquidity Banks. If no successor Liquidity
Collateral Agent shall be appointed and approved within thirty (30) days from
the date of the giving of the aforesaid notice of resignation, the Liquidity
Collateral Agent or any of the Surety Provider, the Liquidity Borrower, and in
the event the Liquidity Agreement is then in effect or any Liquidity Obligations
are then outstanding, the Liquidity Agent may apply to any court of competent
jurisdiction to appoint a successor the Liquidity Collateral Agent to act until
such time, if any, as a successor the Liquidity Collateral Agent shall have been
appointed as above provided. Any successor the Liquidity Collateral Agent so
appointed by such court shall immediately and without further act be superseded
by any successor the Liquidity Collateral Agent appointed by the Surety
Provider, the Liquidity Borrower, and in the event the Liquidity Agreement is
then in effect or any Liquidity Obligations are then outstanding, the Majority
Liquidity Banks.
SECTION VII.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION VII.8 Binding Effect. This Agreement shall be binding upon
the Liquidity Borrower, the Surety Provider, the Liquidity Agent, the Liquidity
Collateral Agent and the Liquidity Banks, and their respective successors and
permitted assigns (which successors and assigns shall include a trustee in
bankruptcy), and shall inure to the benefit of each such Person and each of
their respective successors and permitted assigns, and nothing herein is
intended or
15
<PAGE>
shall be construed to give any other person any right, remedy, or claim under,
to or in respect of this Agreement or the Liquidity Collateral.
SECTION VII.9 GOVERNING LAW. THIS LIQUIDITY SECURITY AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION VII.10 No Recourse. Anything contained in this Agreement or
any other Transaction Document to the contrary notwithstanding, all payments to
be made by the Liquidity Borrower under this Agreement shall be made by the
Liquidity Borrower solely from Available Funds (as defined in the Liquidity
Agreement). No recourse shall be had against the Liquidity Borrower personally
or against any incorporator, shareholder, trustee, officer, director or employee
of the Liquidity Borrower or against any Low Floater Holder, or any shareholder,
trustee, director, officer, employee or agent, whether past, present or future,
of a Low Floater Holder with respect to any of the covenants, agreements,
representations or warranties of the Liquidity Borrower contained in this
Agreement, or any other Transaction Document, it being understood that such
covenants, representations or warranties are enforceable only against Available
Funds. The provisions of this Section 7.10 shall survive the termination of this
Agreement.
The Surety Provider, the Liquidity Agent and the Liquidity
Collateral Agent each hereby acknowledges that, pursuant to the terms and
conditions of this Agreement and the other Transaction Documents, the Liquidity
Borrower is or may be required, from time to time, to make certain payments to
the Surety Provider, the Liquidity Agent and the Liquidity Collateral Agent,
either as compensation for services rendered, reimbursement for out of pocket
expenses, indemnification, or otherwise, as set forth herein and therein. The
Surety Provider, the Liquidity Agent and the Liquidity Collateral Agent hereby
agree that, notwithstanding any provision of any Transaction Document, (i) the
Liquidity Borrower shall not make any such payment to the Surety Provider, the
Liquidity Collateral Agent or the Liquidity Agent, (ii) the Liquidity Borrower
shall have no duty, liability or obligation to make any such payment to the
Surety Provider, the Liquidity Collateral Agent or the Liquidity Agent, (iii) no
such payment shall be due from the Liquidity Borrower and (iv) the Surety
Provider and the Liquidity Collateral Agent shall have no right to enforce any
claim against the Liquidity Borrower in respect of any such payment, in each
case at any time that any Low Floater Certificate is outstanding and no
Bankruptcy Event (as defined below) has occurred and is continuing; provided,
however, that, notwithstanding the foregoing, such payment shall be made if and
to the extent that (x) the making of such payment by the Liquidity Borrower
would not render the Liquidity Borrower insolvent and (y) the Liquidity Borrower
has received funds with respect to such obligations which may be used to make
such payment and which funds are not required to pay Low Floater Certificates of
the Liquidity Borrower when due; provided, however, that the foregoing shall not
be construed to prohibit a drawing on the Liquidity Surety Bond by the Liquidity
Agent. As used in this Section the term "Bankruptcy Event" shall mean the entry
against the Liquidity Borrower of a decree or order by a court or agency or
supervisory authority having jurisdiction for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the winding
up or liquidation of its affairs, and
16
<PAGE>
the continuance of any such decree or order unstayed and, in the case of any
such proceeding instituted against the Liquidity Borrower, either such
proceeding shall remain undismissed or unstayed for a period of 60 consecutive
days or an order for relief as described below has been entered, or the consent
by the Liquidity Borrower to or the entry of an order for the appointment of a
trustee, conservator, receiver or liquidator in any insolvency, readjustment of
debt, order of relief marshalling of assets and liabilities of or relating to
the Liquidity Borrower or the filing by the Liquidity Borrower of a petition to
take advantage of any applicable insolvency or reorganization statute.
SECTION VII.11 Counterparts. This Agreement may be executed in any
number of separate counterparts by the parties hereto and each counterpart when
so executed shall be deemed to be an original and all such counterparts when
taken together shall constitute one and the same agreement.
SECTION VII.12 Captions. The various captions (including without
limitation, the table of contents) in this Agreement are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
SECTION VII.13 Notice of Limitation of Liability. Pursuant to
Section 10.6 of the Origination Trust Agreement and Section 12.7 of the Owner
Trust Agreement, all suppliers and Persons with whom the Origination Trust and
the Owner Trust do business are on notice that the Shareholders, the Trustees,
and the Manager (each as defined in the Origination Trust Agreement) and the
Senior Holder, Residual Holder, Trustees and Manager (each as defined in the
Owner Trust Agreement) are not liable for the obligations of the Origination
Trust or the Owner Trust, and all suppliers and persons shall look solely to the
assets of the Origination Trust or the Owner Trust, as the case may be, for
payment. The Origination Trust and the Owner Trust are both business trusts
created under the Trust Act; but the Board of Trustees or Manager of neither the
Origination Trust nor the Owner Trust shall be liable for failure to give notice
to such Persons, and any failure to give such notice shall not imply that the
Shareholders, the Managing Trustees, the Manager, and the Registered Trustee are
liable for the Origination Trust's obligations, nor shall such failure imply
that the Senior Holder, Residual Holder, Managing Trustees, the Manager and the
Registered Trustee are liable for the Owner Trust's obligations.
[signature pages follow]
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
CHARTER MAC ORIGINATION TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
--------------------------------------------
By /s/ Stuart J. Boesky
-----------------------------------------
Name: Stuart J. Boesky
---------------------------------------
Title: President & COO
--------------------------------------
CHARTER MAC OWNER TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By /s/ Stuart J. Boesky
-----------------------------------------
Name: Stuart J. Boesky
---------------------------------------
Title: President & COO
--------------------------------------
CHARTER MAC FLOATER CERTIFICATE TRUST I
By: FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
as Certificate Trust Agent, pursuant to the
Certificate Issuer Trust Agreement, of
CHARTER MAC FLOATER CERTIFICATE
TRUST I
By /s/ Dennis Gillespie
-----------------------------------------
Name: Dennis Gillespie
---------------------------------------
Title:
--------------------------------------
<PAGE>
MBIA INSURANCE CORPORATION
By /s/ Steven S. Cooke
-----------------------------------------
Name: Steven S. Cooke
---------------------------------------
Title: Director
--------------------------------------
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Administrative Agent
By /s/ Dennis Gillespie
-----------------------------------------
Name: Dennis Gillespie
---------------------------------------
Title:
--------------------------------------
BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH, as the Liquidity
Agent for the Liquidity Banks and as
the Liquidity Collateral Agent
By /s/ Scott M. Allison
-----------------------------------------
Name: Scott M. Allison
---------------------------------------
Title: Vice President
--------------------------------------
By
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
<PAGE>
SCHEDULE 1
CHIEF EXECUTIVE OFFICE AND
LIQUIDITY COLLATERAL RECORDS LOCATION
c/o [ ]
[ ]
[ ]
[ ]
FEE AGREEMENT
This Agreement is made the 21st day of May, 1998, by and among
Wilmington Trust Company, a Delaware banking corporation ("Wilmington Trust"),
Charter MAC Floater Certificate Trust I, a Delaware business trust (the
"Certificate Trust"), and Charter Municipal Mortgage Acceptance Company, a
Delaware business trust (the "Company").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated
as of May 21, 1998 (the "Certificate Trust Agreement"), among First Tennessee
Bank National Association, Wilmington Trust, and Charter MAC Owner Trust I, a
Delaware business trust, Wilmington Trust will act as Certificate Trustee of the
Certificate Trust;
WHEREAS, pursuant to the Certificate Trust Agreement, Wilmington
Trust is entitled to compensation for its services as Certificate Trustee of the
Certificate Trust;
WHEREAS, Wilmington Trust, the Certificate Trust and the Company
desire to set forth the specific agreement as to the compensation owing to
Wilmington Trust for its services as Certificate Trustee under the Certificate
Trust Agreement;
NOW, THEREFORE, for good and valuable consideration, the parties
hereto hereby agree as follows.
1. The compensation due and owing to Wilmington Trust by Charter
and the Trust on a joint and several basis in connection with the Certificate
Trust Agreement shall be as follows:
a. Initial Fee: $2,500.00
b. Annual Administration Fee: $2,500.00
c. Closing Attendance Fee: $1,000.00
(This fee includes travel expenses for one officer's attendance at closing in
New York City for up to two days; to the extent that more than two days'
attendance is necessary, there will be an additional fee of $500.00 per day.
Should it be required to send two officers, there will be a $500.00 fee for the
second officer's attendance. The Closing Attendance Fee for one officer's
attendance at closing in other cities is $750.00 per day plus travel expenses;
to the extent that more than two days attendance is necessary there will be an
additional fee of $500.00 per day.)
<PAGE>
d. Transaction Fees: (ONLY IF INCURRED)
Purchase, sale, withdrawal,
maturities, calls and puts of
domestic securities: $15.00
Physical delivery of
domestic securities: $50.00
Purchase of Eurodollar
certificate of deposit: $65.00
Principal amortizing securities
(per pool/per month): $10.00
Wire charge (per transfer):
Outgoing $12.00
Incoming $7.00
(Transfers made by associate banks may result in additional wire charges.)
e. Termination Fee: To be determined
(Wilmington Trust reserves the right to charge a fee relating to the termination
of the Certificate Trust and the final distribution of the property held by the
Certificate Trust, such fee to be determined at the time of termination.)
2. In the event of a substantive change in the nature of the
Certificate Trustee's duties, and in any event after the expiration of three
years from the closing date, Wilmington Trust reserves the right to adjust its
fees.
3. Wilmington Trust requests that, whenever possible, the Initial
Fee, the first year's Annual Administration Fee and the Closing Attendance Fee
be paid on the closing date by wire transfer per the following wire transfer
instructions:
Wilmington Trust Company
Wilmington, Delaware
ABA No. 031100092
For credit to the account of
Corporate Trust Administration - Income Account
Account No. 9974-0 (Income)
Attn: Irene Lennon
Reference: Trustee Fees and Expenses
Transaction Name: Charter MAC Floater Certificate Trust I
Thereafter, the Annual Administration Fee is due and payable annually in advance
on each anniversary of the closing date. Transaction Fees are due and payable
annually in arrears.
-2-
<PAGE>
Outside counsel's fees and expenses are due and payable within 30 days after the
closing. All fees are nonrefundable and will not be pro rated in the event of an
early termination of the Certificate Trust. In the event that the transaction
does not close, Wilmington Trust reserves the right to be paid its initial fee.
4. Out of pocket expenses (including outside counsel's fees and
expenses in connection with the closing and in connection with any post-closing
matters) are additional and are billed separately.
5. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of such counterparts shall together constitute but one and the
same Agreement.
6. Invoices should be sent to Charter MAC Floater Certificate
Trust I at its address set forth below, or at such other address as such party
shall hereafter furnish in writing:
Charter MAC Floater Certificate Trust I
c/o Related Charter, LP
625 Madison Avenue
New York, NY 10022
Phone: (212) 421-5333
Facsimile: (212) 593-5794
Attention: Vice President for Portfolio Management
7. No waiver, modification or amendment of this Agreement shall
be valid unless executed in writing by the parties hereto.
8. To the fullest extent permitted by law, Charter (on a joint
and several basis with the Trust) hereby agrees to indemnify and to make all
other payments to the Certificate Trustee, and its affiliates, and their
respective officers, directors, employees, agents and representatives, to the
extent set forth in and subject to the terms and conditions of Section 3.3 of
the Certificate Trust Agreement; provided, however, that the limitation on
indemnification set forth in the first sentence of Section 3.3 of the
Certificate Trust Agreement relating to availability of funds shall not apply to
Charter's obligations hereunder.
9. Other than as expressly set forth herein, no recourse shall be
had against any trustee, manager, shareholder, officer, director or employee of
the Trust or Charter with respect to any of the agreements contained in this
Agreement
10. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflicts
of laws principles.
[SIGNATURE PAGE FOLLOWS]
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers effective as of the day first
above written.
WILMINGTON TRUST COMPANY
By: /s/ Emmett Harmon
---------------------------------
Name: Emmett Harmon
Title:
CHARTER MAC FLOATER
CERTIFICATE TRUST I
By: First Tennessee Bank National
Association, as Certificate Trust Agent
By: /s/ Dennis Gillespie
---------------------------------
Name: Dennis Gillespie
Title:
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY, a Delaware
business trust
By: Related Charter, LP, a Delaware limited
partnership, its manager
By: Related Charter, LLC, a Delaware
limited liability company
By: /s/ Stuart J. Boesky
----------------------------------
Name: Stuart J. Boesky
Title: President & COO
PLACEMENT AGREEMENT
-------------------
This PLACEMENT AGREEMENT, dated May 21, 1998 (this "Agreement"), by and
among Charter Municipal Mortgage Acceptance Company ("Charter"), Charter MAC
Floater Certificate Trust I (the "Certificate Trust"), Charter MAC Owner Trust I
(the "Owner Trust") and Goldman, Sachs & Co., as placement agent (the "Placement
Agent").
WITNESSETH:
-----------
WHEREAS, the Certificate Trust, a Delaware Business Trust created and
formed under the laws of the State of Delaware pursuant to that certain Trust
Agreement, (the "Certificate Trust Agreement") dated May 21, 1998, among the
Owner Trust, First Tennessee Bank National Association, as Tender Agent and
Certificate Trust Agent, and Wilmington Trust Company as the Certificate
Trustee, expects to issue, pursuant to the Certificate Trust Agreement, from
time to time Charter MAC Low Floater Certificate Trust I Variable Rate Demand
Certificates of Beneficial Ownership (the "Certificates") in an initial
aggregate principal amount of $58,000,000 and a total aggregate principal amount
of not to exceed $150,000,000;
WHEREAS, pursuant to the terms and conditions hereof, the Certificate
Trust desires to appoint the Placement Agent to act as the exclusive agent in
connection with the placement of the Certificates;
WHEREAS, pursuant to the terms and conditions hereof, the Placement Agent
desires to accept such appointment on the terms and conditions set forth herein;
NOW THEREFORE, for and in consideration of the premises herein made and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and subject to the conditions herein set forth, the parties
hereto, intending to be legally bound, agree as follows:
Section 1. Definitions.
Capitalized terms used and not defined in this Agreement shall have the
meanings assigned to them in the Certificate Trust Agreement.
Section 2. Appointment and Obligations of Placement Agent.
(a) On the basis of the representations, warranties and covenants herein
contained, but subject to the terms and conditions herein contained, the
Placement Agent is hereby appointed by the Certificate Trust, and the Placement
Agent hereby accepts such appointment, to act as exclusive agent in connection
with the placement of the Certificates for the purpose of finding Qualified (as
defined in Section 2(b)) subscribers for the Certificates through the placement
herein contemplated. Subject to the performance by the Certificate Trust of its
obligations to be performed hereunder, and the completeness and accuracy of all
of the representations and warranties of the Certificate Trust contained herein,
the Placement Agent
<PAGE>
hereby accepts such agency and agrees on the terms and conditions herein set
forth to use its best efforts to find Qualified subscribers for Certificates
having a total aggregate principal amount of not to exceed $150,000,000.
(b) The Placement Agent agrees to directly solicit offers to purchase
Certificates, in connection with the placement thereof, exclusively from persons
who have identified themselves to the Placement Agent as, and who agree to
execute the Master Investment Representation Letter substantially in the form
attached as Exhibit B to the Private Placement Memorandum representing that such
persons are "qualified institutional buyers" as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") and are "qualified
purchasers" as such term is defined in Section 2(a)(51) of the Investment
Company Act of 1940, as amended (the "Investment Company Act") (such persons are
referred to herein as "Qualified"). The initial placement of Certificates shall
be made only if Certificates having an initial aggregate principal amount of
$58,000,000 are sold and only if each Certificate is sold against payment in
same-day funds.
(c) The Placement Agent will act as agent for the Certificate Trust by
directly contacting only Qualified persons or entities. The Placement Agent will
follow the procedures set forth in this Agreement in soliciting offers in
connection with the placement, and such solicitation of offers by it in
connection with the placement will not cause the offer and sale of the
Certificates to fail to be exempt as hereinabove described in paragraph (b) from
the registration and prospectus delivery requirements of the Securities Act
solely by reason of such solicitation, without limiting the generality of the
foregoing:
(1) prior to the purchase of the Certificates, each purchaser of
Certificates will be required to execute and deliver a Master
Investment Representation Letter, substantially in the form
attached as Exhibit B to the Memorandum (as defined herein);
and,
(2) the Placement Agent will not (i) utilize any form of general
solicitation or general advertising in connection with the
initial placement of the Certificates, including any
advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or
broadcast over television or radio, or (ii) conduct any
seminar or meeting with respect to the Certificates whose
attendees have been invited by general solicitation or
advertising.
(d) The Placement Agent shall not, in fulfilling its obligations
hereunder, be required to act as an underwriter for the Certificates, and is in
no way obligated, directly or indirectly, to advance its own funds to purchase
any Certificates.
Section 3. Private Placement Memorandum.
(a) The Certificate Trust, the Owner Trust and Charter authorize the use
of the Private Placement Memorandum dated May 21, 1998, relating to the
Certificates (the "Memorandum"), in connection with the offering and sale of the
Certificates. The Certificate
-2-
<PAGE>
Trust, the Owner Trust and Charter shall furnish or cause to be furnished to the
Placement Agent copies of the Memorandum in such quantities as shall be
requested by the Placement Agent.
(b) The Certificate Trust, the Owner Trust and Charter shall promptly
advise the Placement Agent of the institution of any action, suit, proceeding,
inquiry or investigation known to it seeking to prohibit, restrain or otherwise
affect the use of the Memorandum in connection with the offering or sale of the
Certificates.
Section 4. Dealing in Certificates.
The Placement Agent, in its individual capacity, may in good faith buy,
sell, own, hold and deal in any of the Certificates, and may join in any action
which any Holder may be entitled to take with like effect as if it was not
Placement Agent. The Placement Agent shall have all the rights of a Holder at
any time that it is the owner of any Certificates.
Section 5. Fees and Expenses.
(a) Charter will pay the fee of $232,000 to Goldman, Sachs & Co. for
acting as Placement Agent on the Closing Date.
(b) Charter will pay all costs and expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, issuance
and delivery of the Certificates and the preparation and delivery of the
Certificate Trust Agreement, the Owner Trust Agreement and the Transaction
Documents (as hereinafter defined), (ii) the fees and disbursements of the
Certificate Trust's, the Owner Trust's and Charter's counsel and accountants, if
any, (iii) the fees and disbursements of Nixon, Hargrave, Devans & Doyle LLP, as
Placement Agent counsel, (iv) the fees and disbursements of Federated's counsel
in excess of $35,000; (v) the printing and delivery to the Placement Agent in
such quantities as it shall reasonably request of copies of the Memorandum and
of each amendment and supplement thereto, and (vi) the fees (including legal
fees) of the Certificate Trust, the Owner Trust and Charter.
Section 6. Representations and Warranties.
The Certificate Trust, the Owner Trust and Charter each represents and
warrants to the Placement Agent as follows:
(i) The Certificate Trust, the Owner Trust, and Charter are each
Delaware Business Trusts formed, existing and in good standing under the laws of
the State of Delaware, each with the requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Certificate Trust
Agreement, and the Owner Trust Agreement as applicable, and any other agreements
or instruments entered into or delivered in connection with the issuance and
sale of the Certificates (collectively, the "Transaction Documents").
-3-
<PAGE>
(ii) This Agreement has been duly authorized, executed and delivered by
each and constitutes a legal, valid and binding obligation of each, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, does
not contravene, or constitute a default under, any provision of applicable law
or regulation and does not contravene or constitute a default under the
Certificate Trust Agreement, the Owner Trust Agreement, the Transaction
Documents or any agreement, organizational document, judgment, injunction,
order, decree or other instrument binding upon the Certificate Trust, the Owner
Trust or Charter or result in the creation or imposition of any lien on assets
of the Certificate Trust, the Owner Trust or Charter.
(iii) Neither the Certificate Trust, the Owner Trust nor Charter or any
affiliate of any of the foregoing is required to register as an investment
company under the Investment Company Act nor is either the Certificate Trust,
the Owner Trust or Charter controlled by an investment company within the
meaning of the Investment Company Act.
(iv) The Memorandum, other than the information contained under the
headings entitled "THE LIQUIDITY BANKS" and "THE SURETY PROVIDER," does not, and
on the Closing Date will not, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of circumstances under which they are made, not
misleading.
(v) No consent, approval, authorization, or order of or filing with, any
court or regulatory, supervisory or governmental agency or body is required
under any law in connection with the execution, delivery and performance by the
Certificate Trust, the Owner Trust or Charter of the Transaction Documents.
Section 7. Sale and Delivery to Purchasers; Closing.
Payment of the purchase price for and delivery of the initial installment
of Certificates, shall be made 12:00 Noon, New York City time, on the Closing
Date in same-day funds.
Section 8. Conditions Precedent to the Obligations of the Placement Agent.
(a) The obligations of the Placement Agent under this Agreement are
subject to the following conditions precedent:
(i) The representations and warranties of the Certificate Trust, the
Owner Trust and Charter contained in this Agreement (as hereinafter defined)
shall be true, correct and complete in all material respects on the date hereof
and on the Closing Date, as if made again at such Closing Date, and the
Memorandum (as the same may be supplemented or amended with the written approval
of the Placement Agent), other than the information contained under the headings
entitled "THE LIQUIDITY BANKS" and "THE SURETY PROVIDER," shall be true, correct
and complete in all material respects and shall not contain any untrue statement
of material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading.
-4-
<PAGE>
(ii) the opinions and certificates described in Exhibit A attached hereto
shall have been executed and delivered.
(iii) The Placement Agent shall have received such additional opinions,
certificates, instruments and other documents as the Placement Agent may
reasonably request to evidence the due execution and delivery of, and the due
performance or satisfaction at or prior to the Closing Date of, all agreements
and covenants then to be performed and all conditions then to be satisfied as
contemplated by the Certificate Trust Agreement, the Owner Trust Agreement and
the other Transaction Documents, and the truth, correctness and completeness as
of the Closing Date of the information contained in the Memorandum and of the
representations and warranties contained in this Agreement, the Certificate
Trust Agreement, the Owner Trust and the Transaction Documents.
Section 9. Termination of this Agreement.
In the event the offering is commenced but no Certificates shall have been
purchased, this Agreement shall terminate without obligation on the part of any
party to this Agreement; provided, however, that in the event the Certificate
Trust, the Owner Trust or Charter do not perform any obligation under this
Agreement or any representation and warranty hereunder is incomplete or
inaccurate, this Agreement and all of the Placement Agent's obligations
hereunder may be immediately cancelled by the Placement Agent by notice thereof
to the Certificate Trust, the Owner Trust or Charter. Any such cancellation
shall be without liability of any party to any other party except that the
provisions of Sections 5, 10 and 11 shall survive any such cancellation.
Section 10. Indemnification.
(a) Each of the Certificate Trust, the Owner Trust and Charter agrees to
indemnify and hold harmless the Placement Agent, its respective officers,
directors, employees and agents and each person who controls the Placement Agent
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (collectively, the "Securities Acts"), against any losses, claims,
liabilities and expenses which it may incur in connection with the performance
by the Placement Agent of its duties and obligations as Placement Agent under
this Agreement, the Certificate Trust Agreement, the Owner Trust Agreement and
the Memorandum (except to the extent that any such loss, claim, damage,
liability or expense results from the Placement Agent's negligence, bad faith or
willful misconduct) or arising from or based upon the transactions contemplated
in this Agreement, the Certificate Trust Agreement, the Owner Trust Agreement
and the Memorandum including, but not limited to, any such loss, claim, damage,
liability or expenses relating specifically to any of the following:
(i) the imposition of any tax on the Certificate Trust or the Owner
Trust by the Internal Revenue Service or the failure of the Internal Revenue
Service to permit the Holders of the Certificates to exclude from gross income
the Low Floater Certificate Distribution Payments made by the Certificate Trust;
-5-
<PAGE>
(ii) the imposition of any tax on the Placement Agent relating to the
transactions contemplated by this Agreement, the Certificate Trust Agreement,
the Owner Trust Agreement and the Memorandum or the performance of the Placement
Agent's duties thereunder, other than taxes based upon income and franchise
taxes payable to the Placement Agent with respect to the amounts paid to it in
connection with the transactions contemplated in this Agreement, the Certificate
Trust Agreement and the Owner Trust Agreement as compensation for services
rendered pursuant to this Agreement, the Certificate Trust Agreement and the
Owner Trust Agreement;
(iii) the accuracy or completeness of information required to be furnished
to Holders pursuant to the Certificate Trust Agreement and the Owner Trust
Agreement or the discharge by the Certificate Trust or the Owner Trust of its
obligations thereunder to provide such information;
(iv) any untrue statement or alleged untrue statement of a material fact
contained in the Memorandum, other than the information contained under the
headings entitled "THE LIQUIDITY BANKS" and "THE SURETY PROVIDER," or in any
written information furnished to the Placement Agent by the Certificate Trust or
the Owner Trust, or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such settlement
is effected with the written consent of the Certificate Trust or the Owner
Trust; and
(vi) any and all expense whatsoever, as incurred (including, subject to
Section 10(b) hereof, the reasonable fees and disbursements of counsel),
reasonably incurred in enforcing this Section 10(a) or in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, to the extent
that any such expense is not paid under (v) or (vi) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished by the Placement Agent
expressly for use in the Memorandum.
(b) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying party be liable for fees and expenses
of more than one counsel separate from its own counsel for all parties
indemnified hereunder in
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connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
If it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving such
notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action, which approval
shall not be unreasonably withheld, provided that, if such indemnified party or
parties reasonably determine that there may be legal defenses available to them
which are different from or in addition to those available to such indemnifying
party or parties, then such indemnifying party or parties shall not be entitled
to assume such defense. If the indemnifying party or parties are not entitled to
assume the defense of such action as a result of the proviso to the preceding
sentence, counsel for the indemnified party or parties shall be entitled to
conduct the defense of such indemnified party or parties and counsel for the
indemnifying party or parties shall be entitled to conduct the defense of such
indemnifying party or parties, it being understood that both such counsel will
cooperate with each other to conduct the defense of such action as efficiently
as possible. If an indemnifying party assumes the defense of such action, the
indemnifying party shall not be liable for any fees and expenses of counsel for
the indemnified parties incurred thereafter in connection with such action.
(c) If the indemnification provided for in this Section 10 shall for any
reason be unavailable or insufficient to hold harmless an indemnified party
hereunder in respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Certificate Trust,
the Owner Trust and Charter, on the one hand, and the Placement Agent, on the
other, from the offering of the Certificates or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Certificate Trust, the Owner Trust and
Charter, on the one hand, and the Placement Agent, on the other, with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Certificate Trust, the
Owner Trust and Charter, on the one hand, and the Placement Agent, on the other,
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Certificates purchased under
this Agreement (before deducting expenses) received by the Certificate Trust and
the Owner Trust, on the one hand, and the total fees received by the Placement
Agent with respect to the Certificates purchased under this Agreement, on the
other hand, bear to the total gross proceeds from the offering of the
Certificates under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Certificate Trust, the Owner Trust and
Charter, on the one hand, or the Placement Agent, on the other hand, and the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Certificate
Trust, the Owner Trust, Charter and the Placement Agent agree that it would not
be just and equitable if contributions pursuant to this Section 10(c) were to be
determined by pro rata allocation or by any other method of allocation which
does
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<PAGE>
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10(c) shall be deemed to include, for purposes of this Section 10(c),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(c), the Placement Agent shall
not be required to contribute any amount in excess of the amount by which the
total fees received by it, exceeds the amount of any damages which the Placement
Agent has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
Section 11. Placement Agent's Performance; Duty of Care.
The duties and obligations of the Placement Agent shall be determined
solely by the express provisions of this Agreement. No implied covenants or
obligations of or against the Placement Agent shall be read into this Agreement.
In the absence of negligence, bad faith or willful misconduct on the part of the
Placement Agent, the Placement Agent may conclusively rely upon any document
furnished to it which purports to conform to the requirements of this Agreement,
the Certificate Trust Agreement or the Owner Trust Agreement as to the truth of
the statements expressed therein. The Placement Agent shall be protected in
acting upon any document or communication reasonably believed by it to have been
signed, presented or made by the proper party or parties. Except as provided in
Section 10 hereof, the Placement Agent shall not incur any liability to the
Certificate Trust, the Owner Trust or Charter or any Holder in its individual
capacities or as Placement Agent for any action or failure to act in connection
with a remarketing or otherwise, except as a result of its negligence, bad faith
or willful misconduct.
Section 12. Terms of Agreement.
Unless otherwise terminated in accordance with the provisions hereof, this
Agreement shall remain in full force and effect from the date hereof until the
first day thereafter on which all Certificates shall have been sold as
contemplated by Section 2(b) hereof, provided however, that Sections 5, 10, 11
and 13 of this Agreement shall survive for one year after any termination or
expiration of this Agreement.
Section 13. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and agreements contained in this Agreement
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent or any controlling
person, or by or on behalf of the Certificate Trust, the Owner Trust or Charter
or any controlling person, director or officer of the Certificate Trust, the
Owner Trust or Charter and shall survive for one year after delivery of the
Certificates to the purchasers thereof.
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<PAGE>
Section 14. Amendments.
This Agreement may be amended by any instrument signed by all of the
parties hereto so long as this Agreement as amended is not inconsistent with the
Certificate Trust Agreement or the Owner Trust Agreement in effect as of the
date of any such amendment.
Section 15. Notices.
Notices hereunder shall be given, except as otherwise provided herein or
in the Certificate Trust Agreement, in writing, and shall be delivered by hand,
mailed by certified mail, postage prepaid, delivered by overnight courier,
charges prepaid, or telecopied, addressed as set forth below:
If to the Placement Agent:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy: (212) 902-0654
Telephone: (212) 902-3219
Attention: Kevin Willens
If to the Certificate Trust or the Owner Trust:
Wilmington Trust Company, as Trustee
Rodney Square North - 9th Floor
Wilmington, Delaware 19890
Attention: Corporate Trust Department
Regarding Charter MAC Floater
Certificate Trust I or Regarding
Charter MAC Owner Trust I, or as
applicable
Telecopy: (302) 651-1576
Telephone: (302) 651-1284
If to Charter:
Charter Municipal Mortgage Acceptance Company
c/o Related Capital LP
625 Madison Avenue, 9th Floor
New York, New York 10022
Attention: Stuart J. Boesky
Telecopy: (212) 593-5794
Telephone: (212) 421-5333
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<PAGE>
Each party hereto may change the address for service of notice upon it by
a notice in writing to the other parties hereto.
Section 16. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Placement Agent, the Certificate Trust, the Owner Trust and Charter and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than parties hereto and their respective successors and the controlling persons
and officers, directors, employees and agents referred to in Section 10 and
their respective heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and their
respective successors, and said controlling persons and officers, directors,
employees and agents and their respective heirs and legal representatives, and
for the benefit of no other person, firm or corporation.
Section 17. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, excluding conflict of law rules.
Section 18. Counterparts.
This Agreement may be signed in various counterparts which together shall
constitute one agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the Certificate Trust, the Owner Trust,
Charter and the Placement Agent has caused this Agreement to be executed in its
name and on its behalf by one of its duly authorized officers on the date first
above written.
CHARTER MAC FLOATER CERTIFICATE
TRUST I
By: Charter Mac Owner Trust I,
Depositor
By: Related Charter, LP,
a Delaware limited partnership,
its Manager
By: Related Charter, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Stuart J. Boesky
--------------------------------
Name: Stuart J. Boesky
Title: President & COO
CHARTER MAC OWNER TRUST I
By: Related Charter, LP,
a Delaware limited partnership,
its Manager
By: Related Charter, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Stuart J. Boesky
--------------------------------
Name: Stuart J. Boesky
Title: President & COO
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<PAGE>
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
By: Related Charter, LP,
a Delaware limited partnership,
its Manager
By: Related Charter, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Stuart J. Boesky
--------------------------------
Name: Stuart J. Boesky
Title: President & COO
GOLDMAN, SACHS & CO.,
as Placement Agent
By: /s/ Kevin Willens
--------------------------------
Name: Kevin Willens
Title: Vice President
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<PAGE>
EXHIBIT A
At or prior to the Closing, the Placement Agent shall receive the following
documents:
(i) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to Charter, dated the date of Closing, to the effect that
(a) Charter is duly organized and validly existing as a Delaware Business Trust
under the laws of the State of Delaware and duly qualified as a foreign business
trust in the State of New York; (b) the Transaction Documents to which Charter
is a party have each been duly authorized, executed and delivered by Charter and
each constitutes a valid, binding and enforceable agreement of Charter in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by bankruptcy, reorganization, moratorium, insolvency or other
laws affecting creditors' rights and remedies generally, or by general
principles of equity (regardless of whether considered in a proceeding at law or
in equity); (c) all authorizations, consents, approvals and reviews of
governmental bodies or regulatory authorities required for Charter's execution,
delivery, acceptance and performance of the Transaction Documents to which
Charter is a party have been obtained or effected; and (d) the execution and
delivery of the Transaction Documents to which Charter is a party, and
compliance with the provisions of each of them, under the circumstances
contemplated hereby and thereby, do not, as of the date of Closing, in any
material respect conflict with or constitute on the part of Charter a breach of
or default under any agreement or other instrument known to such Counsel to
which Charter is a party or any existing law, administrative regulation, court
order or consent decree known to such Counsel to which Charter is subject; and
(e) to the best of such Counsel's knowledge, there is no action, suit,
proceeding or investigation before or by any court, public board or body,
pending or threatened against or affecting Charter wherein an unfavorable
decision, ruling or finding would have a material adverse effect upon the
transactions contemplated by the Transaction Documents to which Charter is a
party. In addition, such Counsel shall state in its letter containing the
foregoing opinion, or in a separate letter dated the date of Closing and
addressed to the Placement Agent that, based upon the participation of such
counsel in the preparation of the Private Placement Memorandum as Counsel for
Charter and without having undertaken to determine independently the accuracy or
completeness of the statements contained in the section entitled "INTRODUCTION,"
"LOW FLOATER CERTIFICATES" (other than the subsection entitled "Book-Entry Only
System"), "TENDERS AND REDEMPTIONS," "THE MUNICIPAL BONDS," "CHARTER," "THE
MANAGER AND SERVICER," "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS," "TAX-EXEMPT
STATUS OF INTEREST ON THE MUNICIPAL BONDS," "PASS-THROUGH STATUS OF THE OWNER
TRUST AND CERTIFICATE TRUST," TAX OWNERSHIP OF THE LOW FLOATER CERTIFICATES,"
"ADDITIONAL TAX CONSIDERATIONS," "RIGHTS AND POWERS OF HOLDERS," "LIABILITY OF
HOLDERS," PARTNERSHIP STATUS," the subsections entitled "THE OWNER TRUST" and
"THE CERTIFICATE TRUST AGREEMENT" contained in Exhibit E and Schedule 1 in the
Private Placement Memorandum, such counsel has no reason to believe that, as of
the date of Closing, the Private Placement Memorandum (except for financial and
statistical data contained therein, as to which no view need be expressed)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
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(ii) the opinion of Counsel to Charter, dated the date of Closing,
regarding the ownership of the Municipal Bonds in the event of the bankruptcy of
Charter;
(iii) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Origination Trust, dated the date of Closing, to
the effect that (a) the Origination Trust is duly organized and validly existing
as a Delaware Business Trust under the laws of the State of Delaware and duly
qualified as a foreign business trust in the State of New York; (b) the
Transaction Documents to which the Origination Trust is a party have each been
duly authorized, executed and delivered by the Origination Trust and each
constitutes a valid, binding and enforceable agreement of the Origination Trust
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by bankruptcy, reorganization, moratorium, insolvency or
other laws affecting creditors' rights and remedies generally, or by general
principles of equity (regardless of whether considered in a proceeding at law or
in equity); (c) all authorizations, consents, approvals and reviews of
governmental bodies or regulatory authorities required for the Origination
Trust's execution, delivery, acceptance and performance of the Transaction
Documents to which the Origination Trust is a party have been obtained or
effected; (d) the execution and delivery of the Transaction Documents to which
Origination Trust is a party and compliance with the provisions of each of them,
under the circumstances contemplated hereby and thereby, do not, as of the date
of Closing, in any material respect conflict with or constitute on the part of
the Origination Trust a breach of or default under any agreement or other
instrument known to such Counsel to which the Origination Trust is a party or
any existing law, administrative regulation, court order or consent decree known
to such Counsel to which the Origination Trust is subject; and (e) to the best
of such Counsel's knowledge, there is no action, suit, proceeding or
investigation before or by any court, public board or body, pending or
threatened against or affecting the Origination Trust wherein an unfavorable
decision, ruling or finding would have a material adverse effect upon the
transactions contemplated by the Transaction Documents to which Origination
Trust is a party;
(iv) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Origination Trust, dated the date of Closing, to
the effect that in the event of a bankruptcy of Charter or any affiliate of
Charter, it would not be a proper exercise by a bankruptcy court to order
substantive consolidation, under bankruptcy law principles, of the assets and
liabilities of the Origination Trust with those of the bankruptcy estate of
Charter or of any affiliate of Charter;
(v) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Origination Trust, dated the date of Closing,
regarding the perfection of the security interest created by the pledge of the
Residual Certificate to the Origination Trust;
(vi) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Owner Trust, dated the date of Closing, to the
effect that (a) the Owner Trust is duly organized and validly existing as a
Delaware Business Trust under the laws of the State of Delaware and duly
qualified as a foreign business trust in the State of New York; (b) the
Transaction Documents to which the Owner Trust is a party have each been duly
authorized, executed and delivered by the Owner Trust and each constitutes a
valid, binding and enforceable agreement of the Owner Trust in accordance with
its terms, except to the extent that the
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enforceability thereof may be limited by bankruptcy, reorganization, moratorium,
insolvency or other laws affecting creditors' rights and remedies generally, or
by general principles of equity (regardless of whether considered in a
proceeding at law or in equity); (c) all authorizations, consents, approvals and
reviews of governmental bodies or regulatory authorities required for the Owner
Trust's execution, delivery, acceptance and performance of the Transaction
Documents to which the Owner Trust is a party have been obtained or effected;
and (d) the execution and delivery of the Transaction Documents to which the
Owner Trust is a party and compliance with the provisions of each of them, under
the circumstances contemplated hereby and thereby, do not, as of the date of
Closing, in any material respect conflict with or constitute on the part of the
Owner Trust a breach of or default under any agreement or other instrument known
to such Counsel to which the Owner Trust is a party or any existing law,
administrative regulation, court order or consent decree known to such Counsel
to which the Owner Trust is subject; and (e) to the best of such Counsel's
knowledge, there is no action, suit, proceeding or investigation before or by
any court, public board or body, pending or threatened against or affecting the
Owner Trust wherein an unfavorable decision, ruling or finding would have a
material adverse effect upon the transactions contemplated by the Transaction
Documents to which the Owner Trust is a party;
(vii) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Owner Trust, dated the date of Closing, to the
effect that in the event of a bankruptcy of Charter or any affiliate of Charter,
it would not be a proper exercise by a bankruptcy court to order substantive
consolidation, under bankruptcy law principles, of the assets and liabilities of
the Owner Trust with those of the bankruptcy estate of Charter or of any
affiliate of Charter;
(viii) an opinion, dated the date of Closing, to the effect that (a)
the Manager has been duly organized and is validly existing under the laws of
the State of Delaware, and is duly qualified to do business under the laws of
the State of New York; (b) the Transaction Documents to which the Manager is a
party has been duly authorized, executed and delivered by the Manager and each
constitutes a valid, binding and enforceable agreement of the Manager in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by bankruptcy, reorganization, moratorium, insolvency or other
laws affecting creditors' rights and remedies generally, or by general
principles of equity (regardless of whether considered in a proceeding at law or
in equity); (c) all authorizations, consents, approvals and reviews of
governmental bodies or regulatory authorities required for the Manager's
execution, delivery, acceptance and performance of the Transaction Documents to
which the Manager is a party has have been obtained or effected; (d) the
execution and delivery of the Transaction Documents to which the Manager is a
party, and compliance with its provisions, under the circumstances contemplated
hereby and thereby, do not, as of the date of Closing, in any material respect
conflict with or constitute on the part of the Manager a breach of or default
under any agreement or other instrument known to such Counsel to which the
Manager is a party or any existing law, administrative regulation, court order
or consent decree known to such Counsel to which the Manager is subject; and (e)
to the best of such Counsel's knowledge, there is no action, suit, proceeding or
investigation before or by any court, public board or body, pending or
threatened against or affecting the Manager wherein an unfavorable decision,
ruling or finding would have a material adverse effect upon the transactions
contemplated by the Transaction Documents to which the Manager is a party;
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(ix) the opinions of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Special Tax Counsel, dated the date of Closing, regarding the
exclusion from gross income under the Internal Revenue Code of 1986, as amended
(the "Code"), of the Low Floater Certificate Distribution Payments made by the
Certificate Trust;
(x) the opinion of Battle Fowler LLP, Counsel to the Surety
Provider, dated the date of Closing, to the effect that (a) the Surety Provider
has been duly organized and is validly existing under the laws of the State of
New York, and is duly qualified to do business under the laws of the State of
New York; (b) the Transaction Documents to which the Surety Provider is a party
have each been duly authorized, executed and delivered by the Surety Provider
and each constitutes a valid, binding and enforceable agreement of the Surety
Provider in accordance with its terms, except to the extent that the
enforceability thereof may be limited by bankruptcy, reorganization, moratorium,
insolvency or other laws affecting creditors' rights and remedies generally, or
by general principles of equity (regardless of whether considered in a
proceeding at law or in equity); (c) all authorizations, consents, approvals and
reviews of governmental bodies or regulatory authorities required for the Surety
Provider's execution, delivery, acceptance and performance of the Transaction
Documents to which the Surety Provider is a party have been obtained or
effected; and (d) the execution and delivery of the Transaction Documents to
which the Surety Provider is a party, and compliance with the provisions of all
of them, under the circumstances contemplated hereby and thereby, do not, as of
the date of Closing, in any material respect conflict with or constitute on the
part of the Surety Provider a breach of or default under any agreement or other
instrument known to such Counsel to which the Surety Provider is a party or any
existing law, administrative regulation, court order or consent decree known to
such Counsel to which the Surety Provider is subject; and (e) to the best of
such Counsel's knowledge, there is no action, suit, proceeding or investigation
before or by any court, public board or body, pending or threatened against or
affecting the Surety Provider wherein an unfavorable decision, ruling or finding
would have a material adverse effect upon the transactions contemplated by the
Transaction Documents to which the Surety Provider is a party. In addition, such
Counsel shall state in its letter containing the foregoing opinion, or in a
separate letter dated the date of Closing and addressed to the Placement Agent
that the information in the Private Placement Memorandum, as of the date of
Closing, under the headings "Liquidity Agreement," "Liquidity Pledge and
Security Agreement," "The Surety Provider," "Certificate Surety Bond," "The
Insurance Agreement" and "Summary of Certain Agreements--The Insurance
Agreement" is true and correct in all material respects;
(xi) the opinion of Battle Fowler LLP, Counsel to the Surety
Provider, dated the date of Closing, to the effect that the Certificate Surety
Bond and the Insurance Agreement are not subject to the registration
requirements of the Securities Act of 1933, as amended;
(xii) the opinion of McGlinchey Stafford, Counsel to the
Administrative Agent, dated the date of Closing, to the effect that (a) the
Administrative Agent has been duly organized and is validly existing under the
laws of the United States of America; (b) the Transaction Documents to which the
Administrative Agent is a party have each been duly authorized, executed and
delivered by the Originator and each constitutes a valid, binding and
enforceable agreement of the Administrative Agent in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
bankruptcy, reorganization, moratorium, insolvency or other laws affecting
creditors' rights and remedies generally, or by general
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principles of equity (regardless of whether considered in a proceeding at law or
in equity); (c) all authorizations, consents, approvals and reviews of
governmental bodies or regulatory authorities required for the Administration
Agent's execution, delivery, acceptance and performance of the Transaction
Documents to which the Administrative Agent is a party have been obtained or
effected; and (d) the execution and delivery of the Administration and Custody
Agreement and the Paying Agent Agreement, and compliance with the provisions of
all of them, under the circumstances contemplated hereby and thereby, do not, as
of the date of Closing, in any material respect conflict with or constitute on
the part of the Administrative Agent a breach of or default under any agreement
or other instrument known to such Counsel to which the Administrative Agent is a
party or any existing law, administrative regulation, court order or consent
decree known to such Counsel to which the Administrative Agent is subject; and
(e) to the best of such Counsel's knowledge, there is no action, suit,
proceeding or investigation before or by any court, public board or body,
pending or threatened against or affecting the Collateral Trustee wherein an
unfavorable decision, ruling or finding would have a material adverse effect
upon the transactions contemplated by the Transaction Documents to which the
Administrative Agent is a party;
(xiii) an opinion, dated the date of Closing, to the effect that (a)
the Servicer has been duly organized and is validly existing under the laws of
the State of Delaware, and is duly qualified to do business under the laws of
the State of New York; (b) the Transaction Documents to which the Servicer is a
party has been duly authorized, executed and delivered by the Servicer and each
constitutes a valid, binding and enforceable agreement of the Servicer in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by bankruptcy, reorganization, moratorium, insolvency or other
laws affecting creditors' rights and remedies generally, or by general
principles of equity (regardless of whether considered in a proceeding at law or
in equity); (c) all authorizations, consents, approvals and reviews of
governmental bodies or regulatory authorities required for the Servicer's
execution, delivery, acceptance and performance of the Transaction Documents to
which the Servicer is a party has been obtained or effected; and (d) the
execution and delivery of the Transaction Documents to which the Servicer is a
party, and compliance with its provisions, under the circumstances contemplated
hereby and thereby, do not, as of the date of Closing, in any material respect
conflict with or constitute on the part of the Servicer a breach of or default
under any agreement or other instrument known to such Counsel to which the
Servicer is a party or any existing law, administrative regulation, court order
or consent decree known to such Counsel to which the Servicer is subject; and
(e) to the best of such Counsel's knowledge, there is no action, suit,
proceeding or investigation before or by any court, public board or body,
pending or threatened against or affecting the Servicer wherein an unfavorable
decision, ruling or finding would have a material adverse effect upon the
transactions contemplated by the Transaction Documents to which the Servicer is
a party;
(xiv) the opinion of Richards, Laytons & Finger, P.A., Counsel to
the Registered Trustee, dated the date of Closing, to the effect that (a) the
Registered Trustee has been duly organized and is validly existing under the
laws of the State of Delaware, and is duly qualified to do business under the
laws of the State of New York; (b) the Transaction Documents to which the
Registered Trustee is a party have been duly authorized, executed and delivered
by the Registered Trustee and each constitutes a valid, binding and enforceable
agreement of the Registered Trustee in accordance with its terms, except to the
extent that the
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enforceability thereof may be limited by bankruptcy, reorganization, moratorium,
insolvency or other laws affecting creditors' rights and remedies generally, or
by general principles of equity (regardless of whether considered in a
proceeding at law or in equity); (c) all authorizations, consents, approvals and
reviews of governmental bodies or regulatory authorities required for the Owner
Trust Trustee's execution, delivery, acceptance and performance of the
Transaction Documents to which the Registered Trustee is a party has been
obtained or effected; and (d) the execution and delivery of the Transaction
Documents to which the Registered Trustee is a party, and compliance with its
provisions, under the circumstances contemplated hereby and thereby, do not, as
of the date of Closing, in any material respect conflict with or constitute on
the part of the Registered Trustee a breach of or default under any agreement or
other instrument known to such Counsel to which the Registered Trustee is a
party or any existing law, administrative regulation, court order or consent
decree known to such Counsel to which the Registered Trustee is subject; and (e)
to the best of such Counsel's knowledge, there is no action, suit, proceeding or
investigation before or by any court, public board or body, pending or
threatened against or affecting the Registered Trustee wherein an unfavorable
decision, ruling or finding would have a material adverse effect upon the
transactions contemplated by the Transaction Documents to which the Registered
Trustee is a party;
(xv) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, Counsel to the Certificate Trust, dated the date of Closing, to the
effect that (a) the Certificate Trust is duly organized and validly existing as
a Delaware Business Trust under the laws of the State of Delaware and duly
qualified as a foreign business trust in the State of New York; (b) the
Transaction Documents to which the Certificate Trust is a party have each been
duly authorized, executed and delivered by the Certificate Trust and each
constitutes a valid, binding and enforceable agreement of the Certificate Trust
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by bankruptcy, reorganization, moratorium, insolvency or
other laws affecting creditors' rights and remedies generally, or by general
principles of equity (regardless of whether considered in a proceeding at law or
in equity); (c) all authorizations, consents, approvals and reviews of
governmental bodies or regulatory authorities required for the Certificate
Trust's execution, delivery, acceptance and performance of the Transaction
Documents to which the Certificate Trust is a party have been obtained or
effected; and (d) the execution and delivery of the Transaction Documents to
which the Certificate Trust is a party, and compliance with the provisions of
all of them, under the circumstances contemplated hereby and thereby, do not, as
of the date of Closing, in any material respect conflict with or constitute on
the part of the Certificate Trust a breach of or default under any agreement or
other instrument known to such Counsel to which the Certificate Trust is a party
or any existing law, administrative regulation, court order or consent decree
known to such Counsel to which the Certificate Trust is subject; and (e) to the
best of such Counsel's knowledge, there is no action, suit, proceeding or
investigation before or by any court, public board or body, pending or
threatened against or affecting the Certificate Trust wherein an unfavorable
decision, ruling or finding would have a material adverse effect upon the
transactions contemplated by the Transaction Documents to which the Certificate
Trust is a party;
(xvi) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Certificate Trust, dated the date of Closing, to
the effect that in the event of a bankruptcy of Charter or any affiliate of
Charter, it would not be a proper exercise by a
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<PAGE>
bankruptcy court to order substantive consolidation, under bankruptcy law
principles, of the assets and liabilities of the Certificate Trust with those of
the bankruptcy estate of Charter or of any affiliate of Charter;
(xvii) the opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Counsel to the Certificate Trust, dated the date of Closing,
regarding the perfection of the security interest created by the pledge of the
Senior Certificate to the Certificate Trust;
(xviii) the opinion of Richards, Layton & Finger, P.A., Counsel to the
Certificate Trustee, dated the date of Closing, to the effect that (a) the
Certificate Trustee has been duly organized and is validly existing under the
laws of the State of Delaware, and is duly qualified to do business under the
laws of the State of New York; (b) the Transaction Documents to which the
Certificate Trustee is a party have been duly authorized, executed and delivered
by the Certificate Trustee and each constitutes a valid, binding and enforceable
agreement of the Certificate Trustee in accordance with its terms, except to the
extent that the enforceability thereof may be limited by bankruptcy,
reorganization, moratorium, insolvency or other laws affecting creditors' rights
and remedies generally, or by general principles of equity (regardless of
whether considered in a proceeding at law or in equity); (c) all authorizations,
consents, approvals and reviews of governmental bodies or regulatory authorities
required for the Certificate Trustee's execution, delivery, acceptance and
performance of the Transaction Documents to which the Certificate Trustee is a
party have been obtained or effected; and (d) the execution and delivery of the
Transaction Documents to which the Certificate Trustee is a party, and
compliance with its provisions, under the circumstances contemplated hereby and
thereby, do not, as of the date of Closing, in any material respect conflict
with or constitute on the part of the Certificate Trustee a breach of or default
under any agreement or other instrument known to such Counsel to which the
Certificate Trustee is a party or any existing law, administrative regulation,
court order or consent decree known to such Counsel to which the Certificate
Trustee is subject; and (e) to the best of such Counsel's knowledge, there is no
action, suit, proceeding or investigation before or by any court, public board
or body, pending or threatened against or affecting the Certificate Trustee
wherein an unfavorable decision, ruling or finding would have a material adverse
effect upon the transactions contemplated by the Transaction Documents to which
the Certificate Trustee is a party;
(xix) the opinion of Chapman and Cutler, Counsel to the Liquidity
Banks, dated the date of Closing, to the effect that (a) each of the Liquidity
Banks has been duly organized and is validly existing under the laws of the
foreign jurisdiction pursuant to which each respective Liquidity Banks is
created, and is duly qualified to do business under the laws of the State of New
York; (b) each of the Liquidity Banks has the power and authority to issue the
Liquidity Commitment and to execute the Transaction Documents to which the
Liquidity Banks are a party have been duly authorized, executed and delivered by
the Liquidity Banks and each constitutes a valid, binding and enforceable
agreement of the Liquidity Banks in accordance with its terms, except to the
extent that the enforceability thereof may be limited by bankruptcy,
reorganization, moratorium, insolvency or other laws affecting creditors' rights
and remedies generally, or by general principles of equity (regardless of
whether considered in a proceeding at law or in equity); (d) all authorizations,
consents, approvals and reviews of governmental bodies or regulatory authorities
required for the Liquidity Banks's execution, delivery, acceptance and
performance of the Transaction Documents to which the Liquidity Banks are a
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<PAGE>
party have been obtained or effected; and (e) the execution and delivery of the
Transaction Documents to which the Liquidity Banks are a party, and compliance
with the provisions of all of them, under the circumstances contemplated hereby
and thereby, do not, as of the date of Closing, in any material respect conflict
with or constitute on the part of the Liquidity Banks a breach of or default
under any agreement or other instrument known to such Counsel to which the
Liquidity Banks is a party or any existing law, administrative regulation, court
order or consent decree known to such Counsel to which the Liquidity Provider is
subject; and (f) to the best of such Counsel's knowledge, there is no action,
suit, proceeding or investigation before or by any court, public board or body,
pending or threatened against or affecting the Liquidity Banks wherein an
unfavorable decision, ruling or finding would have a material adverse effect
upon the transactions contemplated by the Transaction Documents to which the
Liquidity Banks are a party. In addition, such Counsel shall state in its letter
containing the foregoing opinion, or in a separate letter dated the date of
Closing and addressed to the Placement Agent that the information in the Private
Placement Memorandum, as of the date of Closing, under the heading "Liquidity
Banks" is true and correct in all material respects;
(xx) the opinion of Chapman and Cutler, Counsel to the Liquidity
Banks, dated the date of Closing, to the effect that the Liquidity Agreement is
not subject to the registration requirements of the Securities Act of 1933, as
amended;
(xxi) the opinion of Nixon, Hargrave, Devans & Doyle LLP, New York,
New York, Counsel to the Placement Agent, dated the date of Closing and
addressed to the Placement Agent, to the effect that in connection with the
public offering and sale of the Certificates, the Certificates are not subject
to the registration requirements of the Securities Act of 1933, as amended, and
the Trust Agreement are exempt from qualification as indentures pursuant to the
Trust Indenture Act of 1939, as amended. In addition, such Counsel shall state
in their letter containing the foregoing opinion or in a separate letter, dated
the date of the Closing and addressed to the Placement Agent, that based upon
their participation in the preparation of the Private Placement Memorandum as
Counsel for the Placement Agent and without having undertaken to determine
independently the accuracy, completeness or fairness of the statements contained
in the Private Placement Memorandum, no information has come to their attention
which would lead them to believe that, as of the date of Closing, the Private
Placement Memorandum (except for the financial and statistical data included
therein, the information under the sections entitled "Low Floater Certificates
- -- Book-Entry Only System, "Liquidity Banks", "Surety Provider", "Charter", "The
Manager and Servicer" "Certain Federal Income Tax Considerations" and in
Schedule I, as to which no view need be expressed) contains an untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(xxii) certificates, dated the date of Closing, each signed by an
authorized officer of Certificate Trust, Owner Trust and Charter, to the effect
that to the best of his or her knowledge, (a) the representations of each are
true and correct in all material respects as of the date of the Closing; (b)
except as disclosed in the Private Placement Memorandum, no litigation is
pending or threatened against it (i) to restrain or enjoin the issuance or
delivery of any of the Certificates, (ii) in any way contesting or affecting the
authority for the issuance of the Certificates or the validity of the
Certificates, the Certificate Trust Agreement, the Owner Trust or the Placement
Agreement, (iii) in any way contesting the corporate existence or powers of
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<PAGE>
the Certificate Trust, the Owner Trust or Charter; (iv) which would, if
successful, result in a material and adverse change in its financial position or
operations; (c) all consents, approvals and authorizations of governmental
bodies required for the due authorization, execution, issuance and delivery of
the Certificates have been obtained; (d) no event has occurred since the date of
the Private Placement Memorandum which is necessary to disclose therein in order
to make the statements and information therein not misleading in any material
respect; and (e) neither the Certificate Trust, the Owner Trust or Charter have,
since formation, incurred any material liabilities other than in the ordinary
course of business or as set forth in or contemplated by the Private Placement
Memorandum;
(xxiii) a certificate dated the date of Closing, and satisfactory to
the Placement Agent, from each of Charter, the Origination in Trust, the Owner
Trust, the Certificate Trust and the General Partner with respect to the Trust
Agreements or Articles or Incorporation, as applicable, and each entity's
respective; by-laws, good standing or formation, as applicable,in the State of
Delaware, qualification to do business in the State of New York, incumbency of
authorized officers, and authorizing resolution, together with exhibits
pertaining to such matters attached thereto;
(xxiv) a certificate dated the date of Closing, and satisfactory to
the Placement Agent, from the Manager and the Servicer with respect to the
Manager's and Servicer's, as the case may be, existence as a limited
partnership, good standing in the State of Delaware, qualification to do
business in the State of New York and partner consents, together with exhibits
pertaining to such matters attached thereto;
(xxv) a certificate dated the date of Closing, and satisfactory to
the Placement Agent, from each of the Liquidity Banks, the Surety Provider, the
Tender Agent and Certificate Trust Agent with respect to the Certificate Trust
Agreement or Articles or Incorporation, as applicable, and each entity's
respective; by-laws, good standing or formation, as applicable,in the State of
Delaware, qualification to do business in the State of New York, if applicable,
incumbency of authorized officers, and authorizing resolution, together with
exhibits pertaining to such matters attached thereto;
(xxvi) the certificate of the Liquidity Banks dated the date of
Closing and in form and substance satisfactory to the Placement Agent and
Charter, signed by a duly authorized officer of the Liquidity Banks, to the
effect that (A) the information describing each of the Liquidity Banks in the
Private Placement Memorandum, as of the date of Closing, is true and correct in
all material respects and (B) the Liquidity Facility has been duly authorized,
executed and delivered by the Liquidity Banks;
(xxvii) the certificate of Charter, signed by a duly authorized
officer of Charter MAC, to the effect that the information relating to Charter,
the Manager, the Servicer and The Related Companies, L.P. in the Private
Placement Memorandum, as of the date hereof is, and as of the date of Closing
will be, true and correct in all material respects;
(xxviii) evidence of compliance and executed copies of certificates and
other documents and opinions required to be delivered as conditions precedent to
the delivery of the
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<PAGE>
Surety Bonds pursuant to the Insurance Agreement and as conditions precedent tot
he delivery of the Liquidity Facility pursuant to the Liquidity Agreement;
(xxix) each of the executed Liquidity Facility, Liquidity Surety Bond
and Certificate Surety Bond;
1. two copies of resolutions of Charter directing and authorizing the
execution and delivery of the Certificates, the Private Placement Memorandum and
this Placement Agreement and approving the Draft Private Placement Memorandum;
2. satisfactory evidence that Moody's Investors Service, Inc. has rated
the Certificates "P-1", and Standard & Poor's Ratings Services has rated the
Certificates "A-1+" which ratings shall not have been lowered or withdrawn prior
to the date of Closing;
(xxx) such additional legal opinions, certificates, proceedings,
instruments and other documents as the Placement Agent or its Counsel may
reasonably request to evidence the due execution and issuance of the
Certificates.
A-10
REMARKETING AGREEMENT
THIS REMARKETING AGREEMENT, dated May 21, 1998, as amended and
supplemented from time to time (this "Agreement"), is among Charter MAC Owner
Trust I (the "Owner Trust"), Charter MAC Floater Certificate Trust I (the
"Certificate Trust"), Charter Municipal Mortgage Acceptance Company ("Charter"),
each a Delaware Business Trust, First Tennessee Bank National Association,
together with its successors and assigns, as Tender Agent (the "Tender Agent")
and Certificate Trust Agent (the "Certificate Trust Agent") under the
Certificate Trust and Goldman, Sachs & Co. as Remarketing Agent (the
"Remarketing Agent").
BACKGROUND
Pursuant to the authority of the Delaware Business Trust Act, 12 Del.C.
Sections 3801 et. seq., and the trust agreement (the "Certificate Trust
Agreement"), dated May 21, 1998, among Charter MAC Owner Trust I, First
Tennessee Bank National Association, as the Tender Agent and the Certificate
Trust Agent, and Wilmington Trust Company, as the Certificate Trustee, the
Certificate Trust is authorized to issue, sell and deliver not to exceed
$150,000,000 of aggregate principal amount of Charter MAC Floater Certificate
Trust I Floating Rate Certificates of Beneficial Ownership (the "Certificates"
or the "Low Floater Certificates"). The Certificate Trust contemplates the
potential remarketing of Certificates, from time to time, to one or more
purchasers found by the Remarketing Agent in the event of the exercise by a
Holder of the Certificates of its right to tender, or in the event such Holder
of the Certificates is required to tender, its Certificates pursuant to the
Certificate Trust Agreement. The trust agreement (the "Owner Trust Agreement"),
dated May 21, 1998, among J. Michael Fried, Stuart J. Boesky, Alan P. Hirmes,
George A. Massih, III and William H. Freeborn, as Managing Trustees, Charter MAC
Origination Trust I, and Wilmington Trust Company, as Registered Trustee,
provides for the issuance of a Senior Certificate by the Owner Trust to the
Certificate Trust. The Senior Certificate represents the right to receive on a
priority basis on each Senior Certificate Distribution Payment Date a portion of
the interest received by the Owner Trust on the Municipal Bonds owned by the
Owner Trust in an amount equal to the Senior Certificate Distribution Payment.
The Certificate Trust and the Owner Trust wish to engage the Remarketing Agent
to remarket the Certificates and to set the Senior Certificate Distribution
Rate. The Remarketing Agent, subject to certain terms and conditions, is willing
to enter into such engagements. Thus, in consideration of the foregoing, the
mutual promises contained herein and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree
(capitalized terms used but not defined in this Agreement shall have meanings
ascribed to such terms in the Certificate Trust Agreement or the Owner Trust
Agreement) as follows:
1. Appointment of Agent.
Pursuant to Section 6.18 of the Certificate Trust Agreement and
Section 6.7 of the Owner Trust Agreement, respectively, Owner Trust has
appointed the Remarketing Agent
<PAGE>
to act as exclusive agent of the Certificate Trust in connection with the
remarketing of the Certificates and as exclusive agent of the Owner Trust in
connection with the determination of the Senior Certificate Distribution Rate,
subject to the terms and conditions and upon the representations and warranties
contained herein, in the Certificate Trust Agreement and in the Owner Trust
Agreement. The Remarketing Agent hereby accepts such appointment.
2. Responsibilities of Agent.
It is understood and agreed that the Remarketing Agent's
responsibilities under this Agreement include (i) determination and announcement
of the Senior Certificate Distribution Rate in accordance with the standards and
procedures set forth in Section 6.7 of the Owner Trust Agreement; (ii) using its
best efforts to attempt to remarket certain Certificates tendered or deemed
tendered to the Tender Agent pursuant to Sections 6.12 and 6.13 of the
Certificate Trust Agreement; and (iii) performing such other related functions
as are set forth in this Agreement and as may be reasonably requested by the
Certificate Trust Agent or the Owner Trust and agreed to by the Remarketing
Agent. In connection with the performance of the foregoing responsibilities, the
Remarketing Agent agrees to act in accordance with all applicable securities
laws relating thereto and regulations promulgated thereunder.
3. The Certificates.
The Certificates will be issuable upon the terms and conditions, and
will have the form, tenor, terms and specifications set forth in the Certificate
Trust.
4. Authorized Officers.
From time to time, the Certificate Trust, the Owner Trust, the
Remarketing Agent and the Tender Agent will furnish to each other a certificate
setting forth the names and specimen signatures of each officer and employee
then authorized to give instructions or notices, or to approve transactions
hereunder. The Remarketing Agent and the Tender Agent shall act hereunder only
upon the instructions of authorized officers or employees of the Certificate
Trust, the Owner Trust, the Remarketing Agent and the Tender Agent, as the case
may be, unless this Agreement authorizes a party hereto to act without such
instructions. The Remarketing Agent and the Tender Agent shall be entitled to
rely for all purposes of this Agreement on instructions given by any such
officer or employee named in the most recent certificate delivered to the
Remarketing Agent and the Tender Agent, as the case may be, pursuant to this
Section.
5. Marketing and Purchase of the Certificates.
(a) Upon receipt by the Tender Agent of a Holder's properly
completed Notice of Tender in accordance with the provisions of Section 6.12(a)
of the Certificate Trust Agreement, the Tender Agent shall give telephonic
notice of (i) the aggregate Outstanding Face Amount of Low Floater Certificates
to be purchased, (ii) the date on which such Low Floater Certificates are to be
purchased, which date shall be a Business Day that occurs no earlier than seven
(7) days following the date of receipt of such notice and no later than thirty
(30) days after the date of receipt of such notice, and (iii) payment
instructions with respect to the payment of the Purchase Price, promptly
confirmed in writing (which may be by legible facsimile
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<PAGE>
transmission, registered or certified mail or overnight delivery), to the
Remarketing Agent. If the Holder's Notice of Tender is received by the Tender
Agent on or prior to 12:00 noon, New York City time, such Holder's Notice of
Tender will be deemed tendered on such day. If received later than 12:00 noon,
New York City time, such Holder's Notice of Tender will be deemed tendered the
following Business Day. The Tender Agent hereby agrees to provide notice of
receipt of such Notices of Tender, on the day of receipt thereof, in accordance
with Section 6.12(c) of the Certificate Trust.
In the event of a mandatory purchase of Certificates in accordance
with the provisions of Section 6.13 of the Certificate Trust Agreement, the
Tender Agent shall cause notice of such mandatory purchase to be given not less
than fourteen (14) days, (or, in the case of Low Floater Certificates subject to
mandatory tender pursuant to Section 6.13 (d) of the Certificate Trust
Agreement, as many days as may be possible up to a maximum of fourteen (14)
days, prior to the Purchase Date to the Remarketing Agent by telecopier,
promptly confirmed by hard copy delivered by first class mail, postage prepaid.
In the event of a redemption of Certificates, the Certificate Trust
Agent shall cause notice of such redemption to be given not less than fourteen
(14) days prior to the redemption to the Remarketing Agent, by mailing copies of
such notice of redemption by first class mail, postage prepaid.
(b) The Remarketing Agent shall thereupon use its best efforts in
accordance with the provisions of Section 6.15 of the Certificate Trust
Agreement to remarket (i) Certificates with respect to which the Remarketing
Agent has received from the Tender Agent a Notice of Tender pursuant to Section
6.12 thereof, subject to the provisions of Section 6.12(f) thereof, (ii)
Certificates which are subject to mandatory tender to purchase pursuant to
Section 6.13 thereof and with respect to which the Tender Agent has not received
a Notice of Election to Retain, and (iii) subject to the provisions Section 6.17
of the Certificate Trust Agreement (if applicable), Liquidity Provider
Certificates (as hereinafter defined); provided however, that the Remarketing
Agent shall not remarket (A) Certificates tendered pursuant to Section 6.13(a)
thereof unless an Alternate Liquidity Facility shall have been subsequently
delivered; (B) Certificates tendered pursuant to Section 6.13(b) thereof unless
the Liquidity Provider shall have consented to such remarketing or an Alternate
Liquidity Facility shall have been delivered; (C) Certificates tendered pursuant
to Section 6.13(c) thereof unless the Owner Trust shall have directed such
remarketing; or (D) Certificates tendered pursuant to Section 6.13(h) thereof
unless the remaining Liquidity Commitment (after giving effect to the
termination or expiration which caused such mandatory tender) shall be
sufficient to comply with the requirements of Section 9.2 thereof with respect
to the Liquidity Facility coverage.
The Remarketing Agent shall use its best efforts to remarket
Certificates as described above, at a price equal to 100% of the Outstanding
Face Amount thereof plus Low Floater Certificate Distribution Payments accrued
with respect thereto to, but not including, the Purchase Date (the "Purchase
Price") for delivery on the Purchase Date.
Not later than 10:00 a.m., New York City time, on the Purchase Date,
the Remarketing Agent shall transfer to the Tender Agent, in immediately
available funds, the proceeds derived from the Remarketing Agent's remarketing
of the Certificates subject to tender
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<PAGE>
for purchase on such Purchase Date; provided, however, that the provisions of
Section 6.17 of the Certificate Trust Agreement shall govern remarketing of
Liquidity Provider Certificates.
Not later than 4:00 p.m., New York City time, on the day before the
Purchase Date, the Remarketing Agent shall notify the Tender Agent and the
Liquidity Provider, by facsimile transmission, of the amount of Certificates for
which the Remarketing Agent expects to receive remarketing proceeds and shall
provide the Tender Agent with registration information and redelivery
instructions for all Certificates which are to be remarketed on the Purchase
Date.
The Remarketing Agent shall not remarket Certificates to any Person
known to the Remarketing Agent to be a Charter Entity or an entity "affiliated"
with any Charter Entity within the meaning of Rule 405 under the Securities Act.
If Certificates which have been selected for redemption or mandatory
purchase are tendered for optional purchase on a Purchase Date prior to the
mandatory purchase or redemption date, such Low Floater Certificates may only be
remarketed by the Remarketing Agent if notice of such selection for redemption
or mandatory purchase is given by the Tender Agent to the purchaser thereof.
The Tender Agent agrees to give prompt notice to the Remarketing
Agent if any Certificates are to be redeemed together with sufficient
information to permit the Remarketing Agent to identify such Certificates and to
notify such prospective purchasers. In addition, the Remarketing Agent shall not
remarket Certificates in an aggregate principal amount greater than the
principal amount specified by the Tender Agent to the Remarketing Agent nor
shall the Tender Agent instruct the Remarketing Agent to remarket Certificates
in an aggregate principal amount greater than the amount specified in the
Holder's Tender Notice. The Remarketing Agent agrees to comply at all times with
applicable State and Federal securities laws in remarketing such Certificates.
The Tender Agent shall promptly deposit such amounts received from
the Remarketing Agent to the credit of the Remarketing Proceeds Subaccount of
the Purchase Account and transfer the proceeds of such sale to the former owners
of such Certificates upon presentation and surrender thereof.
(c) In accordance with Section 6.17 of the Certificate Trust
Agreement, the Remarketing Agent shall use its best efforts to remarket
Certificates registered in the name of the Liquidity Provider ("Liquidity
Provider Certificates") or its nominee in substantially the same manner as
contemplated by Section 5(b) above.
At or prior to 4:00 p.m., New York City time, on the Business Day
preceding each day on which any Liquidity Provider Certificates that are
successfully remarketed by the Remarketing Agent are to be purchased, the
Remarketing Agent shall give telephonic notice, promptly confirmed in writing,
to the Certificate Trust Agent, the Tender Agent and the Liquidity Provider
specifying the Business Day on which such purchase will take place and the
principal amount of Liquidity Provider Certificates successfully remarketed by
the Remarketing Agent.
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<PAGE>
Contemporaneously with the delivery of the proceeds of the
remarketing of Liquidity Provider Certificates, the Liquidity Provider shall
deliver to the Tender Agent and the Remarketing Agent written confirmation that
the Liquidity Facility has been reinstated in an amount equal to the amount
required under the Certificate Trust Agreement; provided, however, that if the
Liquidity Facility reinstates automatically upon the delivery of the proceeds of
remarketing the Liquidity Provider Certificates, then no written confirmation of
such reinstatement is required.
Contemporaneously with reinstatement of the Liquidity Facility and
the sale of Liquidity Provider Certificates arranged by the Remarketing Agent
(i) such Low Floater Certificates shall be made available (at the principal
office of the Tender Agent) to the Remarketing Agent or the purchasers thereof
in accordance with the instructions of the Remarketing Agent and (ii) the
proceeds of such sale shall be delivered by the Tender Agent to the Liquidity
Provider.
(d) The Remarketing Agent may at any time resign and be discharged
of the duties and obligations created by this Agreement and the Certificate
Trust Agreement by giving at least thirty (30) days' written notice to the
Liquidity Provider, the Tender Agent, the Certificate Trust Agent and the
Certificate Trustee. In no event shall the resignation of the Remarketing Agent
become effective prior to the earlier of (i) the effective date of the
appointment of a successor remarketing agent or (ii) one hundred and twenty
(120) days after the effective date specified in the original notice of
resignation.
(e) The Remarketing Agent shall have the right to suspend its
efforts to remarket the Certificates in the event of (i) a suspension or
material limitation in trading in securities generally on any national
securities exchange which, in the Remarketing Agent's reasonable judgment, makes
the Certificates unremarketable; (ii) a general moratorium on commercial banking
activities in New York are declared by either federal or New York State
authorities which, in the Remarketing Agent's reasonable judgment, makes the
Certificates unremarketable; (iii) the engagement by the United States in
hostilities which have resulted in the declaration of a national emergency or
war which, in the Remarketing Agent's reasonable judgment, makes the
Certificates unremarketable; or (iv) the imposition by any governmental
authority or by any nationally recognized securities exchange of additional
material restrictions upon trading in securities, including the Certificates,
not in force as of the date hereof which, in the Remarketing Agent's reasonable
judgment, materially adversely affects the remarketability of the Certificates.
In the event that the Remarketing Agent exercises its right to
cancel its obligations hereunder as provided above, the Owner Trust shall be
entitled to immediately terminate this Agreement.
(f) The Remarketing Agent agrees that it will only place the
Certificates with certain "qualified institutional buyers" (as such term is
defined within the meaning of Rule 144A promulgated under the Securities Act of
1933, as amended (the "Securities Act")) who are also "qualified purchasers"
within the meaning of Section 2(a)(51) of the Investment Company Act of 1940 and
in compliance with applicable securities laws and that it will not knowingly
place Certificates with any Owner Trust entity or any entity "affiliated" with
any Owner Trust entity
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<PAGE>
within the meaning of Rule 405 under the Securities Act, except with respect to
Certificates registered in the name of the Liquidity Provider.
(g) The Remarketing Agent agrees that it will only place
Certificates with a person or entity which has executed and delivered to the
Remarketing Agent a Master Investment Representation Letter substantially in the
form attached as Exhibit B to the Private Placement Memorandum and that at no
time will it place Certificates with a person or entity if such placement would
result in the Remarketing Agent having in its possession more than ninety-eight
(98) such Master Investment Representation Letters respecting the Certificates.
(h) Charter, the Owner Trust, and the Certificate Trust agree to
notify the Tender Agent and the Remarketing Agent promptly upon learning of the
occurrence of any Event of Default, under and as defined in the Insurance
Agreement and the Liquidity Facility, or any event which, with notice or lapse
of time or both, would become such an Event of Default.
6. Representations, Warranties and Covenants.
(a) Charter, the Owner Trust and the Certificate Trust each
represent and warrant, as the basis of the undertakings on the part of the
Remarketing Agent herein contained, that (i) the representations, warranties and
certifications contained in the Placement Agreement, dated May 21, 1998, among
Goldman, Sachs & Co., as Placement Agent, the Certificate Trust, the Owner Trust
and Charter (the "Placement Agreement") are true and correct, (ii) each is
validly created and existing as a Delaware Business Trust under the laws of the
State of Delaware; (iii) each has all requisite power to execute and deliver,
and has by proper action duly authorized the execution and delivery of this
Agreement, the Placement Agreement, as applicable, and the Liquidity Facility;
(iv) this Agreement, the Placement Agreement and the Liquidity Facility
constitute legal, valid and binding obligations of each enforceable in
accordance with their respective terms; and (v) no "insider" of either or any
general partner of either within the meaning of 11 U.S.C.ss.101, as amended,
shall purchase remarketed Certificates.
(b) The Owner Trust, the Certificate Trust and Charter agree that
the Private Placement Memorandum, dated May 21, 1998, other than the information
contained under the headings entitled "THE LIQUIDITY BANKS" and "THE SURETY
PROVIDER," when furnished to the Remarketing Agent, will not contain any untrue
statement of a material fact, or omit to state a material fact necessary to make
any statement included therein, in the light of the circumstances under which it
was made, not misleading.
(c) The Owner Trust agrees that it will not consent to any
proposed amendment of the Certificate Trust, the Owner Trust, the Liquidity
Facility or the Insurance Agreement, and the Origination Trust agrees that it
will not consent to any proposed amendment to the Owner Trust, without notifying
the Remarketing Agent at least 20 days prior to the effective date of such
amendment, or such shorter period as may be mutually agreed upon, if such
amendment would affect the tax-exempt status of the Low Floater Certificate
Distribution Payments.
-6-
<PAGE>
(d) The Owner Trust, the Certificate Trust and Charter shall
immediately, upon obtaining notice or knowledge thereof, notify the Remarketing
Agent by telecopy, confirmed in writing of: (1) the occurrence or existence of
any event or condition which becomes known to the Owner Trust, the Certificate
Trust or Charter and which would make any of its representations contained
herein or incorporated herein by reference incorrect or untrue in any material
respect if made on and as of any date during the term of this Agreement; or (2)
any Liquidity Trigger Date, or Event of Default under the Insurance Agreement or
the Liquidity Facility or any event which with the passage of time, the giving
of notice, or both, would constitute such an Event of Default.
(e) The Owner Trust, the Certificate Trust and Charter will
cooperate with the Remarketing Agent in the preparation of, and shall furnish to
the Remarketing Agent at Charter's expense, any supplement to the Private
Placement Memorandum or other disclosure materials that the Remarketing Agent
and the Owner Trust and the Certificate Trust determine are required by the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including,
without limitation, Rule 10b-5 under the Exchange Act and Rule 144A promulgated
under the Securities Act or by subsequent changes of law or rules pertaining to
registration of the Certificates or the registration of the Owner Trust or the
Certificate Trust as an "investment company" pursuant to the Investment Company
Act of 1940, as amended (collectively, the "Securities Laws"), disclosure with
respect to the Certificates, or delivery of disclosure materials to purchasers
of the Certificates or which the Remarketing Agent, with the concurrence of the
Owner Trust, the Certificate Trust and Charter, determines should be provided to
the owners of the Certificates; provided, however, that nothing contained in
this Agreement is intended to authorize any party to amend, modify or supplement
the Private Placement Memorandum in any respect without the prior written
approval of the Owner Trust. To this end, if any Securities Laws are amended or
new Securities Laws are promulgated in a manner such that compliance with the
provisions of this Agreement will not be sufficient to enable the Remarketing
Agent, the Certificate Trust or the Owner Trust to comply with Securities Laws,
each of Charter, the Remarketing Agent, the Owner Trust and the Certificate
Trust (each at the written request of the Remarketing Agent or the Certificate
Trust and at the Certificate Trust's, the Owner Trust's and Charter's sole cost
and expense) agrees (but each only as to itself and not as to the other) to take
such further actions as are reasonably within its control to enable the
Remarketing Agent, the Owner Trust and the Certificate Trust to comply with
Securities Laws; provided, however, that the Owner Trust and the Certificate
Trust shall not be required to execute a general or special consent to service
of process or qualify to do business in connection with any qualification of the
Certificates for offer and sale under state Blue Sky or other securities laws or
with any determination of eligibility of the Certificates for investment.
(f) The Tender Agent and the Certificate Trust Agent represents
and warrants, as the basis for the undertakings on the part of the Tender Agent
and the Certificate Trust Agent herein contained and throughout the term of this
Agreement, that (i) the Tender Agent and the Certificate Trust Agent is a
national banking association; (ii) the Tender Agent and the Certificate Trust
Agent has all requisite power to execute and deliver, and has by proper action
duly authorized the execution and delivery of this Agreement; and (iii) this
Agreement constitutes the legal, valid and binding obligation of the Tender
Agent and the Certificate Trust Agent enforceable in accordance with its terms.
-7-
<PAGE>
(g) The Remarketing Agent represents and warrants as the basis for
the undertakings on the part of the Remarketing Agent herein contained and
throughout the term of this Agreement, that (i) the Remarketing Agent is a
registered broker/dealer corporation and is a member of the National Association
of Securities Dealers, Inc.; (ii) the Remarketing Agent has all requisite power
to execute, deliver and perform, and has by proper action duly authorized the
execution, delivery and performance of this Agreement; and (iii) this Agreement
constitutes the legal, valid and binding obligation of the Remarketing Agent
enforceable in accordance with its terms.
7. Purchase Account.
There has been created, pursuant to Section 6.16(a) of the
Certificate Trust Agreement, a trust fund (the "Purchase Account") which shall
be held by the Tender Agent subject to the terms and conditions and subject to
the standard of care set forth in the Certificate Trust Agreement. Money in the
Purchase Account shall be held solely for the account of the Holders who shall
have tendered or been deemed to have tendered Certificates and if applicable,
the Gainshare Amount described in Section 6.13(i) of the Certificate Trust
Agreement. Only proceeds from the remarketing of Certificates, monies received
pursuant to a drawing on the Liquidity Facility and monies deposited in
accordance with the computation of the Gainshare Amount shall be deposited in
the Purchase Account. All such transactions, if any, recorded in the Purchase
Account shall be deemed to be simultaneous purchase and sale transactions
between the former owner and the new owner of the Certificate remarketed.
8. Furnishing of Private Placement Memorandum and Other
Information.
(a) The Owner Trust agrees to furnish the Remarketing Agent with
as many copies as the Remarketing Agent may reasonably request of the Private
Placement Memorandum relating to the Certificates dated May 21, 1998, any
supplement to the Private Placement Memorandum or other document or material
furnished by the Certificate Trust, the Owner Trust or Charter for use in
connection with the remarketing of the Certificates ("Additional Material").
Such Private Placement Memorandum (including in each case the cover page and all
summary statements, exhibits and other material included or incorporated therein
by reference or attached thereto or for distribution therewith), as amended or
supplemented from time to time, is referred to herein as the "Private Placement
Memorandum".
(b) If, during or prior to such time as the Private Placement
Memorandum or any Additional Material is used in connection with the offering
and sale or remarketing of the Certificates, any event shall occur or condition
shall exist relating to or affecting the Certificate Trust, the Owner Trust or
Charter or any other entity or the ability of the Certificate Trust Agent to pay
the Low Floater Certificate Distribution Payment or the ability of the Owner
Trust to pay the Senior Certificate Distribution Payment, which might materially
adversely affect the interests of the owners of the Certificates, or which might
affect the correctness of any statement of a material fact contained in the
Private Placement Memorandum or any Additional Material, the Owner Trust, the
Certificate Trust or Charter, will promptly after obtaining notice or knowledge
thereof, notify the Remarketing Agent of the circumstances and details of such
event or condition. If, as a result of such event or condition, or any other
event or condition, it is necessary or advisable, in the opinion of the
Remarketing Agent, to amend or supplement such
-8-
<PAGE>
Private Placement Memorandum or Additional Material in light of such event or
condition or such other event or condition, the Owner Trust, the Certificate
Trust or Charter will cause to have prepared forthwith, at the expense of the
Owner Trust, the Certificate Trust or Charter, a supplement to such Private
Placement Memorandum or Additional Material, which supplement shall be in form
and substance satisfactory to the Remarketing Agent.
(c) The Certificate Trust and the Owner Trust understands that the
Remarketing Agent will furnish copies of the Private Placement Memorandum or
Additional Material to offerees of the Certificates and expects to do so in the
manner and at the times required of it under the Securities Laws.
(d) The Certificate Trust and the Owner Trust will furnish the
Remarketing Agent with copies of all quarterly and annual financial statements
and reports relating to the financial affairs and condition of the Certificate
Trust and the Owner Trust which are required to be furnished to the Surety
Provider or the Liquidity Provider not later than the date they are required to
be furnished to the Surety Provider or the Liquidity Provider, and will also
promptly furnish the Remarketing Agent with such additional information
concerning the operations and financial condition of the Certificate Trust and
the Owner Trust as required by Rule 144A promulgated under the Securities Act,
or as the Remarketing Agent may from time to time reasonably request.
9. Records.
The Remarketing Agent shall keep records of its remarketing
transactions in respect of the Certificates. Such records shall be kept in a
manner consistent with prudent industry practice. The Owner Trust, the
Certificate Trust, and the Tender Agent may examine such records at times
reasonably established by the Remarketing Agent.
10. Indemnification of the Remarketing Agent and the Tender Agent.
(a) Charter, the Owner Trust and the Certificate Trust, jointly
and severally agree to indemnify and hold the Remarketing Agent and the Tender
Agent harmless from any and all liability, loss, damage, costs and expenses of
any nature (including interest and counsel fees) arising out of or in connection
with their duties, or those of their employees or agents arising from their
performance under this Agreement, except for liabilities, losses, damages,
costs, expenses and fees (including liabilities as a result of any untrue
statement of a material fact in connection with the remarketing of the
Certificates, or omission to state a material fact necessary to make the
statements made in connection therewith, in the light of the circumstances in
which they were made, not misleading) arising out of the negligence or willful
misconduct of the Remarketing Agent or the Tender Agent or their employees or
agents. Charter, the Certificate Trust and the Owner Trust agree that neither
the Remarketing Agent nor the Tender Agent nor any of their employees and agents
shall be liable for any action or omission to act, taken or made pursuant to
this Agreement, except for negligence or willful misconduct. This indemnity
includes any action taken or omitted within the scope of this Agreement or any
such action taken or omitted upon telecopied or written instructions (authorized
herein) received or reasonably believed to have been received from Charter, the
Owner Trust or the Certificate Trust, by the Tender Agent or the Remarketing
Agent.
-9-
<PAGE>
Promptly after receipt by the Remarketing Agent of notice of the
commencement of any action relating solely to matters referred to in this
Agreement, the Remarketing Agent shall, if a claim in respect thereof under the
preceding paragraph is to be made, notify Charter, the Certificate Trust and the
Owner Trust of such action; but the omission so to notify Charter, the
Certificate Trust and the Owner Trust shall not relieve Charter, the Certificate
Trust and the Owner Trust of any liability that the Owner Trust may have to such
Agent otherwise than under such paragraph. In the event of such notification,
Charter, the Certificate Trust and the Owner Trust shall be entitled to assume
the defense of such action with counsel reasonably satisfactory to the
Remarketing Agent and, thereafter, Charter, the Certificate Trust and the Owner
Trust shall not be liable to the Remarketing Agent for any legal expenses
subsequently incurred by the Remarketing Agent in connection with the defense of
such action, other than the reasonable costs of investigation.
(b) The duties of the Remarketing Agent and the Tender Agent shall
be solely as provided herein and in the Certificate Trust Agreement and the
Owner Trust Agreement and no implied covenants or obligations shall be read into
this Agreement against the Remarketing Agent or the Tender Agent. The
Remarketing Agent and the Tender Agent may consult with counsel of their choice,
including in-house counsel, and shall not be liable for any action taken in good
faith in reliance upon advice of such counsel. Except as otherwise provided
herein, the Remarketing Agent or the Tender Agent, as the case may be, may act
or refrain from acting in reliance upon any resolution or other document
transmitted to it on behalf of Charter, the Certificate Trust, the Owner Trust,
the Remarketing Agent or the Tender Agent, if executed on behalf of such entity
by any duly authorized representative thereof.
(c) Charter or the Owner Trust shall pay for the services of the
Remarketing Agent hereunder a fee per annum of 1/10 of 1% of the Outstanding
Face Amount of the Certificates, payable quarterly in arrears on the first day
of each February, May, August and November of each year, it being understood
that upon any termination (or cancellation under Section 5(e) of this Agreement)
during a quarter, fees will be paid only for that number of days during such
period which this Agreement is in effect and will be payable on the Business
Day, following such termination (or cancellation). Fees shall be paid upon
receipt of an invoice and shall be based on actual number of days elapsed in a
year of 365/366 days. Charter or the Owner Trust will reimburse the Remarketing
Agent for its reasonable costs and expenses, including counsel fees. The Tender
Agent shall not be liable for costs, expenses, fees or liabilities of the
Remarketing Agent.
11. Termination of Agreement; Removal of Agent.
This Agreement will terminate on the earlier of (i) the dissolution
of the Trust pursuant to Section 14.2 of the Certificate Trust Agreement or the
Owner Trust pursuant to Section 14.2 of the Owner Trust Agreement, or (ii) the
date on which Certificates are no longer outstanding and unretired; provided,
however, that this Agreement shall also terminate in accordance with Section
6.18 of the Certificate Trust Agreement and pursuant to Section 5(d) hereof. The
parties to this Agreement further acknowledge the right of the Owner Trust, in
accordance with Section 6.18(c) and (e) of the Certificate Trust Agreement, to
remove the Remarketing Agent and to select any successor to the Remarketing
Agent, subject, in each case, to the approval of the Controlling Person.
-10-
<PAGE>
12. Miscellaneous.
(a) Except as otherwise specifically provided in this Agreement,
all notices, certificates, requests or other communications among the parties
hereto permitted or required to be given hereunder shall be effective when
received and shall be given by first-class mail (postage prepaid) or by
teletransmission device capable of transmitting or creating a written record, or
by hand, delivered to the addresses specified below.
- If to the Charter, to:
Charter Municipal Mortgage
Acceptance Company
c/o The Related Companies, L.P.
625 Madison Avenue
New York, New York 10022
Attention: Mr. Stuart Boesky
Fax: (212) 593-5794
- If to the Tender Agent and Certificate Trust Agent, to:
First Tennessee Bank
National Association
4385 Poplar Owner
Memphis, Tennessee 38117
Attention: Dennis Gillespie
Fax: (901) 681-2450
- If to the Remarketing Agent, to:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Kevin Willens
Fax: (212) 902-0654
- If to the Liquidity Provider, to:
Bayerische Landesbank Girozentrale,
New York Branch,
as Liquidity Agent
560 Lexington Avenue
New York, New York 10022
Attention: Mr. Scott Allison
Fax: (212) 310-9868
-11-
<PAGE>
The parties hereto, the Liquidity Provider and the Certificate
Trustee, by notice given hereunder, may designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
(b) Any amendment to this Agreement shall not be effective unless
the amendment is in writing and signed by all parties to this Agreement.
(c) This Agreement, and any amendments to this Agreement, may be
executed in any number of counterparts, each of which when so executed and
delivered shall constitute an original, but such counterparts together shall
constitute but one and the same Agreement.
(d) All funds required to be transferred pursuant to the terms of
this Agreement shall be funds immediately available for use by the transferee on
the day of transfer.
(e) Prior to obtaining an Alternate Liquidity Facility or
Alternate Credit Facility, the Certificate Trust and the Owner Trust shall
notify the Remarketing Agent.
(f) The Remarketing Agent's duties and obligations shall be
governed solely by the terms of this Agreement, the Certificate Trust Agreement
and the Owner Trust Agreement. Any conflict between the terms of this Agreement
and the Certificate Trust Agreement or the Owner Trust Agreement will be
resolved in favor of the Certificate Trust Agreement and/or the Owner Trust
Agreement.
(g) Section headings in this Agreement have been inserted for
convenience and shall not define or limit this Agreement.
(h) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
-12-
<PAGE>
IN WITNESS WHEREOF, Charter, the Certificate Trust, the Owner Trust,
the Tender Agent, and the Remarketing Agent have executed this Agreement by
their duly authorized officers as of the date first above written.
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
By: Related Charter, LP,
a Delaware limited partnership,
its Manager
By: Related Charter, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Stuart J. Boesky
------------------------------
Name: Stuart J. Boesky
Title: President & COO
CHARTER MAC FLOATER
CERTIFICATE TRUST I
By: Charter Mac Owner Trust I,
Depositor
By: Related Charter, LP,
a Delaware limited partnership,
its Manager
By: Related Charter, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Stuart J. Boesky
------------------------------
Name: Stuart J. Boesky
Title: President & COO
-13-
<PAGE>
CHARTER MAC OWNER TRUST I
By: Related Charter, LP,
a Delaware limited partnership,
its Manager
By: Related Charter, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Stuart J. Boesky
------------------------------
Name: Stuart J. Boesky
Title: President & COO
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION,
as Tender Agent
By: /s/ Dennis Gillespie
------------------------------
Name: Dennis Gillespie
Title:
GOLDMAN, SACHS & CO., as Remarketing Agent
By: /s/ Kevin Willens
------------------------------
Name: Kevin Willens
Title: Vice President
-14-
<PAGE>
ATTACHMENT A
TO THE REMARKETING AGREEMENT
May 21, 1998
Bayerische Landesbank
Girozentrale, New York Branch,
as Liquidity Agent
560 Lexington Avenue
New York, New York 10022
Re: Charter MAC Floater Certificate Trust I
Floating Rate Certificates of Beneficial Ownership
Ladies and Gentlemen:
Reference is made to the Liquidity Agreement (the "Liquidity
Facility"), dated May 21, 1998, by and among the Certificate Trust, Bayerische
Landesbank Girozentrale, New York Branch, as Liquidity Agent (the "Liquidity
Agent"), Commerzbank Aktiengesellschaft, New York Branch, Credit Communal and
Landesbank Hessen-Thuringen (such banks, together with the Liquidity Agent,
collectively, the "Liquidity Provider") and MBIA Insurance Corporation, as
Liquidity Renewal Agent, pursuant to which the Liquidity Provider has agreed to
issue the Liquidity Facility to provide for the timely payment of the purchase
price of the above captioned certificates (the "Certificates") issued by Charter
MAC Floater Certificate Trust I (the "Certificate Trust") under the Trust
Agreement, dated May 21, 1998, among Charter MAC Owner Trust I (the "Owner
Trust"), First Tennessee Bank National Association, as Tender Agent and
Certificate Trust Agent, and Wilmington Trust Company, as Certificate Trustee.
Goldman, Sachs & Co. has been appointed remarketing agent (the
"Remarketing Agent") for the Certificates under and pursuant to a Remarketing
Agreement, dated May 21, 1998, by and among Charter Municipal Mortgage
Acceptance Company, the Owner Trust, the Certificate Trust, the Remarketing
Agent and First Tennessee Bank National Association, as Tender Agent and as
Certificate Trust Agent (the "Remarketing Agreement").
In order to facilitate the Remarketing Agent's performance of its
duties and obligations under the Remarketing Agreement and to preclude the
remarketing of Certificates registered in the name of the Liquidity Provider (as
such term is defined in the Liquidity Facility) upon an Event of Default under
the Liquidity Facility, the Liquidity Provider shall, in writing (i) notify the
Remarketing Agent of such Event of Default and (ii) direct the Remarketing Agent
not to remarket Certificates purchased using funds provided by the Liquidity
Provider under the Liquidity Facility.
A-1
<PAGE>
The Remarketing Agent agrees that upon receipt of such notice and
direction from the Liquidity Provider it shall not remarket Certificates
purchased using funds provided by the Liquidity Provider under the Liquidity
Facility
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York. This letter agreement may be
signed in counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
This letter agreement shall be binding upon and insure solely to the
benefit of the Remarketing Agent and the Liquidity Provider and no other person
shall have any right, benefit or interest under or because of the existence of
this letter agreement.
If the terms of this letter accurately set forth our agreement with
respect to the matters described herein, please indicate your agreement by
acknowledging this letter in the space provided below.
Very truly yours,
GOLDMAN, SACHS & CO.
--------------------------------
Accepted and agreed to
as of the date first above written:
BAYERISCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH,
as Liquidity Agent
By:
--------------------------------
Name:
Title:
A-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Charter Municipal Mortgage Acceptance Company and is qualified in
its entirety by reference to such financial statements
</LEGEND>
<CIK> 0001043325
<NAME> Charter Municipal Mortgage Acceptance Company
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,396,518
<SECURITIES> 384,870,228
<RECEIVABLES> 8,984,801
<ALLOWANCES> 452,119
<INVENTORY> 0
<CURRENT-ASSETS> 75,316
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 399,260,880
<CURRENT-LIABILITIES> 6,561,394
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 331,633,925
<TOTAL-LIABILITY-AND-EQUITY> 399,260,880
<SALES> 0
<TOTAL-REVENUES> 12,846,896
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,397,206
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 673,645
<INCOME-PRETAX> 10,776,045
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,776,045
<EPS-PRIMARY> .49
<EPS-DILUTED> 0
</TABLE>
