TRUST
INDENTURE
FRONT RANGE ASSISTED LIVING, L.L.C.
Name of Issuer
Trust Number
COLONIAL TRUST COMPANY
As Trustee
TABLE OF CONTENTS
PAGE
I. Capacities of Colonial ............................. 1
II. Amount of Bond Issue; Lien on the Property;
Spendthrift Trust for Bondholders ................... 1
III. Description of Bonds and Liens ...................... 2
A. Registration of Bonds and Liens ............... 2
B. Bondholders' Pro Rata Lien .................... 2
C. Trustee's Reimbursement Lien .................. 2
IV. Disbursement of Bond Proceeds ....................... 3
A. Bond Proceeds Account ......................... 3
B. Preference of Payments Out of Bond
Proceeds Account .............................. 3
C. Construction Draws ............................ 4
D. Surplus Bond Proceeds ......................... 6
E. Overpayments .................................. 6
F. Abandonment of Project ........................ 7
V. Payment of Bonds .................................... 7
A. Priorities of Issuer's Payments ............... 7
B. Priority of Charges against Sinking Fund ...... 7
C. Method of Payments into Sinking Fund .......... 7
D. Expenses of Default ........................... 8
E. Issuer's Payment Secured by its Revenues ...... 8
F. When Sinking Fund Balance May Be Paid
to Issuer ..................................... 9
G. Three Year Bond Reserve Account ............... 9
VI. Bondholders' Failure to Surrender Matured Bonds ..... 10
A. No Interest After Maturity .................... 11
B. Escheat After Three Years ..................... 11
VII. Issuer's Covenants .................................. 11
A. Issuer Shall Maintain and Insure the
Property ...................................... 11
B. Trustee May Cure .............................. 12
C. Issuer May Not Merge .......................... 13
D. Issuer's ...................................... 13
VIII. Defaults and Remedies ............................... 13
A. Events of Default Defined ..................... 13
B. Waiver of Notice by Issuer; Trustee's
Remedies ...................................... 14
C. Legal Ownership of Rights to Prosecution
and Enforcement in Trustee Alone .............. 17
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D. Trustee's Discretion to Advise Bond-
holders of Default ............................ 18
E. Bondholders' Rights in Event of
Trustee's Failure to Act ...................... 18
F. Trustee's Right to Stop Payment on
Outstanding Checks ............................ 18
G. Penalty Interest .............................. 19
H. Trustee Has No Duty to Cure; Trustee's
Rights in Event of Overdraft or Overpayment ... 19
I. Application of Sinking Fund Balances
Upon Default .................................. 19
IX. Issuer's Prepayment Privileges ...................... 21
A. Entire Series in Full or Partial at
Random ........................................ 21
B. No Pre-Payment Penalty; Additional
Trustee's Fee ................................. 22
C. Pre-Payment Funds to be on Deposit in
Advance ....................................... 22
D. Prior Notice to Trustee and to Bond-
holders Required .............................. 22
E. Disposition of Unpresented Bonds .............. 22
F. Over- and Under-Deposit of Funds .............. 23
G. Trustee's Release of Lien ..................... 23
X. Replacement of Bonds ................................ 23
A. Exchange of Mutilated or Defaced Bonds ........ 23
B. Lost, Stolen or Destroyed Bonds ............... 23
C. Remedies are Exclusive ........................ 23
XI. Additional Parity Bonds ............................. 24
A. Conditions .................................... 24
B. Right of First Refusal ........................ 23
XII. Sale of Property .................................... 25
A. For Fair Value Only ........................... 25
B. Application of Sale Proceeds .................. 25
C. Value of Pledged Property to be
Sufficient to Secure Bonds Then
Outstanding ................................... 26
XIII. Substitution of Collateral .......................... 26
A. For Fair Value Only ........................... 26
B. Must Become Part of the Lien .................. 26
XIV. Condemnation of Property ............................ 27
XV. Duties of Trustee, Paying Agent and Registrar ....... 28
A. Trustee's Administrative Duties ............... 28
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B. Paying Agent's Duties ......................... 29
C. Registrar's Duties ........................... 30
XVI. Limitation of Trustee's Liability .................. 30
XVII. Ancillary/Co-Trustee; Resignation and Removal;
Successor Trustee .................................. 33
A. Trustee May Appoint Ancillary and
Co-Trustees .................................. 33
B. Voluntary Resignation and Involuntary
Removal of Trustee ........................... 33
XVIII. Illegal Interest ................................... 35
XIX. Release of the Lien ................................ 36
XX. Investment of Funds; Trustee's Fees ................ 37
A. Permitted Investments ........................ 37
B. Base Fees of Trustee, Paying Agent and
Registrar .................................... 37
C. Additional Fees to be Charged for
Extraordinary Services ....................... 37
XXI. Supplemental Indentures ............................ 38
A. Not Requiring Bondholder Consent ............. 38
B. Requiring Bondholder Consent ................. 38
C. Requisites of Notice to Bondholders .......... 39
D. Only Substantial Consent Required ............ 39
XXII. Bondholder Lists and Reports; Evidence
of Rights of Bondholders ........................... 39
A. Form of Bondholder Action .................... 39
B. Issuer Owned or Controlled Bonds to be
Disregarded .................................. 40
C. Third-Party Communiques to Bondholders ....... 41
D. Bondholder Identities Not to be
Disclosed .................................... 41
XXIII. Miscellaneous Provisions ............................ 42
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TABLE OF CONTENTS
PAGE
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TRUST INDENTURE
STATE OF ARIZONA
COUNTY OF MARICOPA
THIS TRUST INDENTURE made and entered into between
Front Range Assisted Living, L.L.C., St. George, Utah, acting through its duly
authorized agents and representatives, hereinafter called "Issuer," and COLONIAL
TRUST COMPANY, a trust company organized under the laws of the state of Arizona,
having its principal office and post office address respectively at 5336 North
19th Avenue, Phoenix, Maricopa County, Arizona 85015 and P.O. Box 33487,
Phoenix, Maricopa County, Arizona 85067-3487, hereinafter called "Colonial,"
WITNESSETH:
I.
CAPACITIES OF COLONIAL
Colonial will serve in the multiple capacities of Trustee for the benefit of
the Bondholders (hereinafter called "Trustee"), Registrar with respect to the
transfer of the Bonds and maintenance of the Bond Register (hereinafter called
"Registrar"), and Paying Agent with respect to distribution of interest and
principal payments to or for the Bondholders (hereinafter called "Paying
Agent"). The duties and responsibilities of Colonial for its service in each of
such capacities, as well as the compensation to be paid to Colonial therefor,
are hereinafter set forth; provided that, unless the context otherwise requires,
all such terms are used interchangeably and collectively, the term for one
capacity including as well the other two terms and capacities.
II.
ISSUE OF BONDS AND SECURITY
Issuer has agreed and does hereby agree to issue Bonds of serial maturities
in the total amount of $2,500,000.00 hereinafter called the "Bonds," secured, in
accordance with the terms and provisions of this Trust Indenture by a deed of
trust or mortgage
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and security agreement, hereinafter called the "Lien," recorded in the proper
State and County or other recording office, on and covering property of Issuer
described on Exhibit "B" attached hereto in a mortgage(s) or deed of trust to be
executed by Issuer and filed of record to secure the Bond Issue governed by this
Trust Indenture (hereinafter called the "Property"), and incorporated herein by
reference. All moneys received and maintained by the Trustee hereunder shall be
trust funds held for the benefit of the Bondholders and shall not be subject to
lien or attachment of any creditor of Issuer or Trustee.
III.
DESCRIPTION OF BONDS AND LIENS
(A) All of the Bonds shall be issued on the "Authentication Date"
defined in the prospectus or offering circular in the names of the holders
thereof as registered on the books and records of the Registrar. No principal
or interest payable upon the Bonds shall be paid to any persons other than the
registered holders. Payments of principal and/or interest upon the Bonds shall
be made by check drawn upon the Operating Account to be maintained by Trustee,
which check shall be mailed, postage prepaid, to the registered holders of the
Bonds at their registered addresses.
(B) All of the Bonds will be secured by the Lien upon the Property of
Issuer, and shall have equal rights, liens and privileges under this Trust
Indenture and the Lien so that each and every Bond shall be equally and
proportionately secured without preference, priority or distinction as to the
lien securing any one Bond over the lien securing any other Bond or Bonds.
(C) Hereinafter the phrase "Reimbursement Lien" will be used to identify
a lien against the Property in favor of Trustee securing Trustee's right to
reimbursement for its own or borrowed funds advanced or expended, said
Reimbursement Lien being likewise secured by the Property but being superior to
the Lien securing the Bondholders until such funds advanced or expended are
repaid in full. All such advances and expenditures secured by the Reimbursement
Lien shall, subject to Article XVIII, bear interest at the rate equal to two
(2%) percent per annum in excess of the "Prime Rate" quoted daily in the money
rate column of the Wall Street Journal as said note may from day to day in
Trustee's sole
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discretion be adjusted upward and downward. All such principal and interest
accrued and/or collected by Trustee in reimbursement from Issuer shall be
Trustee's sole property.
IV.
DISBURSEMENT OF BOND PROCEEDS
(A) As the Bonds are sold (or if the Bond proceeds are placed in an
escrow account to be released to Trustee only after the conditions of the escrow
agreement have been met) , the proceeds from the sale of the Bonds shall be
delivered to Trustee to be deposited into a Bond Proceeds Account in the name
and under the exclusive control of Trustee in a depository selected by Trustee,
including its own commercial banking division. Trustee shall disburse the Bond
proceeds in accordance with the provisions of paragraph (B) below.
(B) Out of the proceeds from the sale of the Bonds, Trustee shall first
pay the following items in the order and preference listed:
(1) The Dealer's fee due the broker/dealer assisting Issuer in the
sale of the Bonds (hereinafter called "Broker") under the terms of a written
agreement between Issuer and Broker.
(2) The reimbursement to Trustee of any expenses incurred by
Trustee in the examination by its legal counsel of all documents required to
issue the Bonds.
(3) The principal and interest payable by Issuer upon promissory
notes or other obligations of Issuer or others secured by existing liens upon
the Property. Upon payment of such obligations, Trustee shall be subrogated to
the rights of the prior owners thereof.
(4) After the payment of the foregoing fees, expenses, and
pre-existing liens, if any, Trustee shall, subject to statutory retainage,
disburse the funds remaining in Issuer's Bond Proceeds Account (hereinafter
called the "Net Bond Proceeds") for the purposes of the Bond offering as set
forth and described in the prospectus or offering circular used in connection
with the Bond offering, however, in the following priority:
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(a) The expense associated with the offering up to $187,500,
including expenses of the Broker, Trustee's fees, and other similar fees
incurred in connection with the offering;
(b) To fund the initial operating fund payments up to $125,000;
(c) The establishment of a "Ten Year Bond Reserve Account" in the
amount of $130,000;
(d) To fund development, marketing and pre-opening costs
associated with the project up to $57,500 and concurrently to;
(e) The payoff the construction loan due Emprise Bank in the
amount of $2,000,000; and
(f) The balance, if any, of the proceeds shall be used for the
repayment of unsecured notes due Robert A. Brooks and Brooks Development Company
L.L.C.
(C) The disbursement by Trustee of the Net Bond Proceeds from Issuer's
Bond Proceeds Account shall be subject to and in accordance with the following
provisions:
(1) Issuer shall furnish to Trustee at Issuer's expense and Trustee's
election an attorney's title opinion or a mortgagee's title policy in favor of
Trustee reflecting that Trustee holds the Lien on the Property as trustee for
the benefit of the Bondholders, subject to no prior liens or encumbrances other
than those agreed upon in writing between Issuer and Trustee.
(2) If Issuer is remodeling and/or constructing new improvements with
all or any portion of the Net Bond Proceeds, Issuer shall file with Trustee a
written estimate of the cost of such construction, and Issuer shall provide
builder's risk insurance during the period of construction with loss payable
clause in favor of Trustee.
(a) If Issuer enters into a contract for such construction which
provides for (or if Issuer later determines such construction will actually
result in) a total cost greater than the
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Net Bond Proceeds, issuer will promptly notify Trustee of such of fact.
(b) Should Trustee be so advised or determine in its sole
discretion that the Net Bond Proceeds will be insufficient to complete the
contemplated use thereof, Trustee shall not be required to disburse any funds
from Issuer's Bond Proceeds Account until such time as Issuer demonstrates to
Trustee's satisfaction that the amount necessary for completion of the project
as originally contemplated is equal to or less than the Net Bond Proceeds.
(c) Provided that, notwithstanding the foregoing, Trustee may
make such construction and/or purchase disbursements from the Net Bond Proceeds
as it deems in its sole discretion to be in the best collective interest of the
Bondholders.
(3) Together with such supporting photographs and contractor's and
architect's affidavits and other information and material as Trustee may from
time to time require, Trustee shall be furnished an affidavit which shall be
signed and approved by an authorized representative of Issuer, showing the
estimate of the improvements completed in accordance with the plans and
specifications up to the date of such affidavit.
(a) Such affidavit shall be accompanied by Issuer's duly
executed written request for Trustee to make a construction payment, whereupon
Trustee is authorized to pay out of Issuer's Bond Proceeds Account the amount of
the estimate shown to be due for such labor performed or materials furnished or
such other percentage of such estimate, less any applicable retainage.
(b) When the representative of Issuer certifies that all
improvements have been completed in accordance with the plans and specifications
therefor and have been accepted by Issuer, Trustee is authorized to pay out of
Issuer's Bond Proceeds Account the final balance shown by the affidavit to be
due and owing.
(c) Disbursements may be made to the contractor and/or
Issuer, as Trustee may determine to be in the best interest of the Bondholders.
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(4) Trustee shall be subrogated to the rights of all laborers',
materialmen's and contractors, liens which it may reduce or discharge by such
payments, and the acceptance of any such payments shall be binding and
conclusive upon the recipients and Issuer as to such rights of Trustee.
(5) If Issuer is purchasing real property with all or any portion
of the proceeds from the sale of such Bonds, Trustee shall, upon like
certification, disburse such funds as are necessary to close such purchase,
provided that such purchased real property shall be subjected to and become a
part of the Lien and any mortgage or deed of trust upon the Property, as
evidenced at Trustee's election and at Issuer's sole expense by an attorney's
title opinion or a mortgagee's title policy in favor of Trustee reflecting no
liens or encumbrances prior to the Lien other than as agreed upon in writing
between Issuer and Trustee.
(D) Any funds remaining in Issuer's Bond Proceeds Account after all the
aforesaid payments, if not usable in further improvement of the Property, shall
in the sole discretion of Trustee be distributed to Issuer, or may be retained
by Trustee in the Bond Proceeds Account until so usable or until such remaining
funds, together with any additional funds delivered to Trustee under the
provisions of Article IX hereof, are used to redeem Bonds.
(E) If for any reason other than the gross negligence or willful
misconduct of Trustee, more funds are disbursed from the Bond Proceeds Account
for the items listed in this Article IV than are deposited into said Account:
(1) Trustee shall promptly upon discovery thereof notify Issuer of
such fact by furnishing a statement showing how said overexpenditure occurred;
(2) Within thirty (30) days of the receipt of such notice, Issuer
shall remit to Trustee funds sufficient to cover the overexpenditure; and
(3) Until such time, Trustee shall have its Reimbursement Lien
therefor.
(F) If after receipt by Trustee of the proceeds from the sale of all or
any portion of Issuer's Bonds, Issuer abandons or
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for any reason is legally restrained or prohibited from undertaking or
proceeding with the purposes for which such Bonds were issued:
(1) Before any disbursements are made by Trustee therefrom,
Issuer shall be obligated to pay and agrees promptly to pay the charges listed
in subparagraphs IV(B) (1) and (2) above, and Trustee shall return the gross
bond proceeds to the holders of such Bonds in full payment and redemption
thereof.
(2) After any disbursements have been made therefrom in good
faith by Trustee, the provisions of subparagraphs IV (B), (C), (D), (E) and this
subparagraph (F) shall then be applicable to the disbursement and return of the
excess funds remaining, if any.
In neither event shall the Bondholders be entitled, in addition to the principal
so returned after payment of such costs and expenses, to interest on such
principal. Return of such principal to the Bondholders, net of any applicable
expenses, shall operate as a complete discharge of the Trustee; and Issuer
hereby indemnities and agrees to hold Trustee from any and all claims therefor,
including all costs of maintaining a legal defense.
V.
PAYMENT OF BONDS
(A) Issuer shall pay directly and in the order and preference listed:
(1) All expenses incurred by Broker and any escrow agent in
connection with the escrowing of the Bond proceeds;
(2) The charges of any depository bank selected by Trustee;
(3) The service charges and fees of Trustee described in Article
XX; and
(4) The Operating Account maintained by Trustee for payment of
the principal and interest on the Bonds as such indebtedness matures on
successive Bondholder payment dates.
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(B) Issuer shall remit to Trustee amounts (hereinafter collectively
referred to as "Operating Fund Payments") as set forth in the Schedule of
Payments set forth in the Offering Circular pursuant to which the bonds were
sold and a copy of which said schedule is also attached hereto as EXHIBIT "C",
which said amounts, if timely paid, will accumulate to be sufficient on each
Bondholder payment date to pay the following in the order and preference
listed:
(1) Any unpaid charges of the depository bank;
(2) Any unpaid Trustee, Registrar and Paying Agent fees and
charges and any other compensation, repayment or reimbursement payable to
Trustee hereunder; and
(3) The installments of principal and interest on all Bonds then
due for payment.
(C) Issuer shall deliver to Trustee its required Operating Fund
Payments to be deposited into a Operating Fund Account in the name of and under
the exclusive control of Trustee in a depository or depositories selected by
Trustee, including its own commercial banking division. Trustee shall cause
disbursement of the operating funds for the purpose of paying the items
described above and such other items as are expressly provided to be paid from
the Operating Account by other provisions of this Trust Indenture. Issuer
shall remit the Operating Payments to Trustee by one of the following exclusive
methods:
(1) Weekly installments to be transmitted electronically through
the Automated Clearing House "("ACH") network;
(2) Weekly installments to be paid by check or bank draft; or
(3) If agreed between Issuer and Trustee in a separate writing,
monthly installments payable by check or bank draft one (1) month in advance.
(D) In the event Issuer defaults in the payment of the principal
and/or interest upon any outstanding Bond(s) issued hereunder or any of the
other requirements of this Trust Indenture,
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and Trustee consequently resorts to its remedies, Issuer hereby agrees to pay
the reasonable costs of cure, collection and/or foreclosure upon the Property,
including without limitation court costs, the fees of attorneys, legal
stenographers, expert witnesses, appraisers, surveyors and realtors, the travel
expenses of such persons and Trustee's own personnel and the costs of
preserving, maintaining, insuring and paying taxes on the Property; and Trustee
shall have its Reimbursement Lien therefor.
(E) Issuer agrees to pay the required installments into the Operating
Account as required herein before it disburses funds for any other purposes
whatsoever.
(1) To further secure the timely payment of the
operating fund installments and Issuer's other obligations hereunder, Issuer
hereby unconditionally assigns, sets over, and pledges its first revenues from
any and all sources.
(2) So long as the operating fund installments and other
expenditures required of Issuer are promptly and properly made, the first
revenues received by Issuer shall be handled by Issuer without any interference
by Trustee; but should Issuer fail to make the required operating fund
installments, then Trustee may elect to demand payment to it of Issuer' s first
revenues; and after receipt of such written demand Issuer shall, promptly and
without contest, deliver all of its receipts directly to Trustee until the
Operating Fund Account delinquency is remedied, after which Issuer may again
deal with its receipts as before such default.
(F) Any balance remaining in the Operating Fund Account shall be paid
to Issuer whenever (i) all matured principal and interest (including any
unforgiven penalty interest) on the Bonds has been paid in full or provision for
such payment satisfactory to Trustee has been made, (ii) all obligations,
expenses, fees, costs and charges of Trustee, Paying Agent, Registrar and all
depositories incurred hereunder have been paid, and (iii) Issuer is current in
its installments required to be paid into the Operating Fund Account.
(G) Issuer agrees to maintain with the Trustee a reserve account
(above referred to as a "Three Year Bond Reserve Account") which shall be for
the purpose of providing for, in part, the debt service requirements to pay the
principal and interest due on any
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semiannual payment date of the bonds herein authorized. Such account shall be
held, administered and distributed as follows:
(1) The Issuer shall fund from the proceeds of the sale of the
bonds and the Trustee will accept and maintain a the Three Year Bond Reserve
Account (hereinafter referred to as the "Reserve Account") in the amount of
$115,000 as set forth in the Prospectus pursuant to the terms and conditions
hereof.
(2) During the three year period of the reserve the Reserve
Account shall be applied only to the payment of principal and interest on the
bonds in the event that as of a semiannual payment date the Issuer has failed to
deposit with the Trustee in the Sinking Fund Account sufficient sums to enable
the Trustee to pay the principal and interest due as of such payment date. In
the event that as of a certain semiannual payment date the Issuer has not
deposited sufficient sums with the Trustee to pay the principal and interest
then due, as defined in the Trust Indenture, but the total bonds owing have not
been accelerated, then Trustee shall apply, to the extent available, funds from
the Reserve Account to the payment of the principal and interest then owing on
the bonds as of such payment date.
(3) In the event that the total amount owing on the bonds has
been accelerated, then the funds held in the Sinking Fund Reserve shall be held,
administered and distributed for the benefit of all bondholders as part of the
proceeds from the collateral. No portion of the Reserve Account shall inure to
or benefit any interim note holder who is in a co-first mortgage position with
the Trustee, unless and except that the Issuer and the Trustee may agree to use
funds available in the Reserve Account to pay off any such interim lender.
(4) Any interest earned on the Reserve Account shall be retained
in the Reserve Account.
(5) Provided that the Issuer is current in the payment of its
sinking fund obligation, all funds on hand in the Reserve Account after the term
provided for in the Prospectus for the maintaining of the Reserve Account ("the
term of the Reserve") shall be transferred by the Trustee into the Sinking Fund
Account to be used to pay off existing bonds. In the event that the Issuer is
not current in its sinking fund payments as of the date of the termination of
the term of the Reserve Account, then the Trustee
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shall continue to hold the funds in the Reserve Account pursuant to the terms
and conditions hereof until the Issuer is current in its sinking fund payments
and maintains a current status for six (6) consecutive months.
(6) In the event that the Trustee uses funds from the Reserve
Account to pay the principal and interest on the bonds due at a particular
paydate, then the Issuer shall pay to the Trustee, within one hundred eighty
(180) days from the date of such paydate, an amount necessary to replenish the
Reserve Account. Failure to replenish the Reserve Account within such one
hundred eighty (180) day period shall be an event of default hereunder and shall
entitle the Trustee to continue to hold such Reserve Account, in addition to its
other remedies.
(7) In addition to the payment of the principal and interest due
the bondholders, Trustee may pay from the Reserve Account before transferring
the Reserve Account to the Sinking Fund Account any and all late charges,
trustees fees, collection charges, attorney's fees and other out-of-pocket
expenses due and owing to the Trustee or incurred by the Trustee in regard to
this issue.
VI.
FAILURE TO SURRENDER MATURED BONDS FOR PAYMENT
As to checks representing payments of principal and/or interest mailed
by Paying Agent to the registered holders of the Bonds which are not thereafter
presented for payment, Trustee shall set aside and retain in a separate account
a sum equal to such maturing installment of principal or interest.
(A) No interest shall accrue or be payable from or after such payment
date either upon such matured installment or such funds in said separate
account.
(B) After three (3) years from such separation of funds,
any separated funds remaining unclaimed shall be escheated and delivered by
Trustee to the appropriate state which delivery shall operate as a complete
discharge of Trustee; and Issuer hereby indemnities and agrees to hold Trustee
harmless from any and all subsequent claims therefor or resulting therefrom
asserted by any
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Bondholder(s) and/or governmental agency or agencies, including all costs of
maintaining a legal defense.
VII.
ISSUER IS COVENANTS REGARDING
MAINTENANCE OF PROPERTY
AND STATUS
(A) At its own cost and expense, Issuer shall:
(1) Maintain the Property in good repair and condition;
(2) Pay or discharge all taxes and assessments and any mechanics,
and materialmen's lien indebtedness that are or may become payable with respect
to the Property as same become due and payable under any law, ordinance or
regulation; and
(3) Secure from a reputable insurance company or companies
acceptable to Trustee, and maintain in full force and effect at all times while
any of said Bonds are outstanding, fire and extended coverage insuring the
Property against such losses in an amount at least equal to the balance
outstanding on the outstanding Bonds hereunder, including accrued interest, and
in no event less than eighty (80%) percent of the fair market value of the
improvements located thereon, which policy or policies shall contain a loss
payable clause in favor of Trustee and shall be delivered to Trustee to be kept
by it until the Bonds are paid in full.
(a) In the event of any losses, the proceeds of insurance
paid to Trustee shall be applied: (i) for the replacement and/or repair of the
improvement(s) damaged; (ii) toward the purchase of additional property,
subjected to and become a part of the Lien and any mortgage or deed of trust
upon the Property, as evidenced at Trustee's election and at Issuer's sole
expense by an attorney's title opinion or a mortgagee's title policy in favor of
Trustee reflecting no liens or encumbrances prior to the Lien other than as
agreed upon in writing between Issuer and Trustee; (iii) for the construction of
additional improvements on the Property; and/or (iv) to call and repay
outstanding Bonds in the same manner as partial prepayments are to
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be applied under the provisions of Article IX without prepayment penalty.
(b) Subject to the approval of Trustee, Issuer has the right
to select which of these alternatives it desires to exercise and shall notify
Trustee in writing in advance as to the alternative(s) selected.
(B) In the event that Issuer defaults in its performance
of any of the undertakings set out in paragraph VII(A) above:
(1) Trustee is hereby authorized to withdraw funds
from Issuer's Operating Fund Account and to apply same in curing
such default for the account of Issuer. In the event there are no funds in
Issuer's Operating Fund Account or same are insufficient for such purpose,
Trustee may in its sole discretion borrow for and/or advance into the Operating
Fund Account such amounts as are required for compliance, secure such loan with
or be secured for such advance by the Reimbursement Lien, and repay such
withdrawal, loan or advance, together with interest accruing thereon at the
Reimbursement Lien rate, from future payments made into Issuer's Sinking Fund
Account; provided, that Trustee shall never, under any circumstances whatsoever,
be obligated to borrow for or advance funds to or for Issuer's account.
(2) Issuer shall be obligated to immediately restore the proper
balance of its Operating Fund Account by prompt payment of the amount so
withdrawn and expended.
(3) The time, amount and nature of such withdrawal and
expenditure by Trustee shall be fully established by a written notice from
Trustee to Issuer of such actions by Trustee. The exercise of this right of
withdrawal and expenditure by Trustee, however, shall not be considered
or constitute a waiver of Trustee's cumulative right hereinafter set out to
declare the entire indebtedness represented by such Bonds to be and become due
and payable at once by reason of such default on the part of Issuer.
(C) Issuer covenants that it will not merge or consolidate with or
into any other organization or corporation unless Issuer is the surviving
corporation or the surviving corporation assumes all obligations of Issuer under
this Indenture. So long as any Bonds are outstanding, Issuer shall not merge or
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consolidate with any other organization without the prior written consent of
Trustee. Issuer further covenants that it will not sell, lease or otherwise
dispose of all or substantially all of its properties as an entirety.
(D) Issuer covenants that so long as any Bonds are
outstanding and unpaid to the extent of its financial dealings or
transactions in relation to its business and the revenues derived
therefrom, Issuer will keep or cause to be kept proper books of record and
account. Such books shall at all times be open to the inspection of such
accountants or other agencies as Trustee may from time to time designate. In
addition, Issuer shall provide Trustee upon request with financial statements
within ninety (90) days of the close of Issuer's fiscal year.
VIII.
DEFAULT AND REMEDIES
(A) For purposes hereof, any one or more of the following by Issuer shall
constitute an event of default:
(1) Failure or refusal to pay when due the principal and/or
interest on any of the Bonds;
(2) Failure or refusal to timely pay into the Operating Fund
Account any installment(s) required;
(3) Failure or refusal to pay when due any taxes, assessments,
insurance, claims, liens or encumbrances upon the Property, or to maintain the
Property in good repair; or to cure the breach of any other covenant set forth
in Article VII;
(4) Failure or refusal to pay when due any loan or advance by or
the fees and expenses of Trustee or of any depository or escrow agent;
(5) Failure or refusal, upon any written request of Trustee, (i)
to furnish Trustee with such insurance policies, financial reports and
information concerning Issuer as may be reasonably required by Trustee, or (ii)
to grant unto Trustee, its agents, accountants and attorneys access during
normal business hours to Issuer's offices for the purpose of examining and,
within reasonable limits, photocopying such records.
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(6) Making an assignment for the benefit of creditors; or should
a receiver, liquidator, or trustee be appointed to assist in the payment of
Issuer's debt; or should any petition for the bankruptcy, reorganization, or
arrangement of Issuer be filed; or should Issuer be liquidated or dissolved, or
its charter expire or be revoked;
(B) Should an event of default occur, Issuer expressly hereby waives:
demand and presentment for payment, notice of default and of intent to
accelerate and of acceleration, and protest, notice of protest, presentment and
notice of dishonor. Trustee shall be entitled to exercise the following
remedies which shall be cumulative and not exclusive; and the waiver or
forbearance by Trustee, whether mandatory or discretionary, as to any one or
more events of default shall not under any circumstances be deemed or construed
as: (i) a waiver or estoppel as to any subsequent event of default, (ii)
impairing any rights or remedies consequent thereon, or (iii) establishing a
course of dealing with Issuer:
(1) Should the default continue for a period of thirty (30) days,
Trustee may, or Trustee shall upon the receipt of (i) written request from the
registered holders of twenty-five (25%) percent in principal amount of the Bonds
then outstanding and unpaid and (ii) satisfactory proof of indemnity, declare to
be immediately due and payable the principal balance of all unpaid Bonds
together with all accrued interest thereon and all such loans, advances, taxes,
assessments and insurance monies unpaid. This rovision, however, is subject to
the condition that if at any time after the principal of said Bonds shall have
been so declared due and payable, and before any sale of the Property shall have
been made, all defaults under this Trust Indenture have been cured and all
expenses incurred by Trustee in any attempted correction of such default and
acceleration of such indebtedness have been fully paid or reimbursed by Issuer,
then Trustee shall waive such default and its consequences.
(2) Should the default continue for a period of thirty (30) days,
upon demand of Trustee, Issuer shall forthwith peaceably surrender the Property
to Trustee, and it shall be lawful for Trustee by such officers, agents,
servants and employees as it may appoint, (i) to take possession of the Property
(with the relevant books, papers and accounts of Issuer), to lock-out Issuer's
employees and agents and/or to hold, operate and manage
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the Property, any or all without having thereby committed trespass or violated
any statute otherwise applicable (which claim(s) Issuer expressly hereby
waives), (ii) to pay taxes, insurance and assessments thereon, (iii) to make
such repairs, alterations, additions, and improvements thereto as Trustee in its
sole discretion deems necessary; and (iv) to receive the rents, income, issues
and profits therefrom and out of them to pay all proper costs and expenses of so
taking, holding and managing such Property, including without limitation
reasonable compensation to and expenses of Trustee, its agents, employees and
counsel, for which Trustee shall have its Reimbursement Lien. the remainder of
the monies so received by Trustee, if any, shall be utilized to pay interest and
principal on the Bonds. Provided, however, that it shall not be obligatory upon
Trustee to take such possession in the event of default.
(3) Should the default continue for a period of thirty (30) days,
Trustee may, or Trustee shall upon receipt of (i) written request from the
registered holders of twenty-five (25%) percent in principal amount of the Bonds
outstanding and unpaid and (ii) satisfactory proof of indemnity, proceed to sell
the Property, in one or more parcels, as provided by law for foreclosure under
the terms and provisions of the Lien. Anyone may bid and/or purchase at such
sale, including Trustee or any Bondholder.
(4) Should the default continue for a period of thirty (30) days,
Trustee may, with or without entry upon the Property as hereinbefore provided,
proceed by suit or suits at law or in equity or by any other appropriate remedy:
(a) To recover all payments of principal, interest and other
sums which are due but have not been paid;
(b) To recover the entire principal sum of all Bonds then
outstanding together with all accrued interest thereon (irrespective of whether
the principal and/or interest of the Bonds shall then be due and payable as
therein expressed and irrespective of whether Trustee shall have made any demand
on Issuer for the payment of overdue principal and/or interest;
(c) To enforce payment of the Bonds; and/or
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(d) To foreclose the Lien and to sell the Property under the
judgment or decree of a court or courts of competent jurisdiction.
It shall be obligatory upon Trustee to take action either by such proceedings or
by the exercise of its powers with respect to entry or sale as it in its sole
discretion may determine, upon being requested so to do in writing by the
holders of twenty-five (25%) percent in principal amount of the Bonds then
outstanding and unpaid and upon receipt of satisfactory indemnity.
(5) Trustee may in good faith, if it deems such to be in the best
collective interest of the Bondholders, agree with Issuer upon a temporarily
reduced level of performance and/or payments into the Operating Fund Account,
during which time Trustee will forbear from resorting to other remedies even
though Issuer continues in formal default; provided that such forbearance
agreement shall immediately be terminated upon Trustee's receipt of written
request from the registered holders of twenty-five percent (25%) in principal
amount of the Bonds then outstanding and unpaid directing Trustee to resort to
any other remedy.
(6) Upon a filing of a bill in equity or other commencement of
judicial proceedings to enforce the rights of Trustee on behalf of the
Bondholders, Trustee, as a matter of right and without regard to the sufficiency
of the security, shall be entitled at its sole election to the appointment
(immediately and without notice to Issuer, which is hereby waived) of a receiver
of the Property and of the income, rents, issues and profits thereof pending
such proceedings, with such powers as may be required to protect the interest of
the Bondholders as the court making such appointment shall confer.
(7) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to Issuer, or of any other obligor upon the
Bonds or the Property or of such other obligor or their creditors, Trustee
(irrespective of whether the principal and/or interest of the Bonds shall then
be due and payable as therein expressed or by declaration or otherwise, and
irrespective of whether Trustee shall have made any demand on Issuer for the
payment of overdue principal and/or interest) shall be entitled and empowered,
by intervention in such proceeding or otherwise: (i) to represent the interests
of the
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Bondholders as a class in any such judicial proceedings; (ii) to file and prove
a claim for the whole amount of principal and interest owing and unpaid in
respect of the Bonds and to file such other papers or documents as may be
necessary or advisable in order to have the claims of Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
Trustee, its agents, employees and counsel) and of the Bondholders allowed in
such judicial proceedings; and (iii) to collect and receive monies or other
property payable or deliverable on any such claims and to distribute the same.
Any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each
Bondholder to make such payments to Trustee, and in the event that Trustee shall
consent to the making of such payments directly to the Bondholders, to pay to
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances due Trustee, its agents, employees and counsel, and
any other amount due Trustee hereunder. Nothing herein contained shall be
deemed to authorize Trustee to authorize or consent to or accept or adopt on
behalf of any Bondholder any plan of reorganization, arrangement, adjustment or
compensation affecting the Bonds or the rights of any Bondholder thereof, or to
authorize Trustee to vote in respect of the claim of any Bondholder in any such
proceeding.
(8) In the event Trustee determines in good faith that Issuer and
any other actual or potential obligor(s) upon the Bonds (e.g., obligor's
personnel and members of its governing body in the event of defalcation, fraud
or other malfeasance) have no other material assets worth more than the costs
and expenses of obtaining and executing upon any judgment which might result
from a foreclosure sale of the Property and/or a suit for damages, each
Bondholder hereby expressly authorizes Trustee to bid on the Property at any
foreclosure sale the total amount of indebtedness then secured by the Lien,
in full and complete discharge of the liability of Issuer and any such
obligor(s) upon the Bonds; and Trustee shall thereby be relieved of any duty
whatsoever to pursue a deficiency against Issuer or any person. This clause
shall under no circumstances be construed as limiting the liability of Issuer
and/or its principals or sureties to the collateral or otherwise waiving
personal recourse against such persons should Trustee elect to pursue same.
(C) It is the intention of Issuer, the Bondholders and Trustee to create
hereby an express trust as defined by the Arizona
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Trust Statutes and to which said Arizona Trust Statutes are applicable as they
now exists or may hereafter be amended; and to that end legal ownership of the
collective rights and choses in action created hereunder is vested in Trustee
for the equitable benefit of the Bondholders, including the rights to repayment
and to proceed against any and all collateral securing same and any and all
persons liable therefor, of which the bonds are only an indicia of each
individual Bondholder's equitable ownership. All rights of action and claims
under this Trust Indenture or the Bonds may be prosecuted and enforced by
Trustee as legal owner thereof without the possession of any of the Bonds or the
production thereof in any proceeding relating thereto; and any such proceeding
instituted by Trustee shall be brought in its own name as Trustee of this
express trust.
(D) After the occurrence of any event of default hereunder of which
Trustee has knowledge or is required to notice, Trustee may, but shall not be
obligated to, transmit by mail to all Bondholders, as their names and addresses
appear in the Bond register, notice of such default and Trustee's intentions
with respect thereto. Trustee shall be protected in withholding such notice so
long as Trustee in good faith determines that the withholding of such notice is
in the best collective interest of the Bondholders.
(E) No bondholder individually or as part of group may institute any
proceeding (judicial or otherwise) with respect to the Bonds and/or the
Indenture or seek any remedy thereunder, unless: (i) such Bondholder(s) has
notified Trustee of an event of default continuing thirty (30) days or more,
(ii) the Bondholders of at least twenty-five (25%) percent in principal amount
of the Bonds then outstanding and unpaid have given written notice to Trustee
to institute proceedings in respect of such event of default, (iii) such
Bondholder in subparagraph (i) and/or Bondholders in subparagraph (ii) have
offered in writing and demonstrated to Trustee's satisfaction the ability to
indemnify Trustee against the costs Trustee may incur in complying with such
request, and (iv) during the sixty (60) day period following Trustee's receipt
of the notice in subparagraphs (i) - (iii) , Trustee fails to institute a
proceeding or take action as permitted hereunder in respect to such event of
default.
(F) If, at any Bondholder payment date, Issuer has failed to make the
operating fund installments required to pay all
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of the principal and/or interest maturing on said date, Trustee shall have the
right, among other remedies, to authorize and direct the depository bank to stop
payment on any and all checks therefor which may have been issued by Trustee to
the Bondholders and which are outstanding at such time even though the funds
which are on deposit are sufficient to pay some of those checks. When Issuer
has deposited with Trustee sums sufficient to permit payment in full of all such
Bondholders, Trustee's compensation and any reimbursement then due, and any
charges of the depository bank, Trustee may revoke its stop payment instructions
and authorize said bank to proceed to honor any checks drawn upon such Operating
Account.
(G) Notwithstanding any provision(s) of the Bonds to the contrary,
should Issuer fail for any reason to timely pay the principal and/or interest
upon the Bonds at the time such payment becomes due, and should Trustee elect
not to loan or advance the requisite funds and secure same with its
Reimbursement Lien, Issuer shall pay as a penalty for the benefit of the
Bondholders additional interest upon the past due principal and/or interest of
said Bonds at the rate, subject to Article XVIII, equal to two (2%) percent per
annum in excess of the highest rate of interest payable by said Issuer upon the
Bonds from and after the date that said indebtedness becomes due and payable
until such time as said indebtedness is paid in full; provided that Trustee may
waive such penalty interest for additional consideration or if Trustee otherwise
determines in its sole discretion that to do so is in the best collective
interest of the Bondholders.
(H) Trustee shall have no duty, obligation or liability under any
circumstances whatsoever to pay any principal and/or interest upon the Bonds
issued hereunder nor to correct or cure any default. Should Trustee, however,
for any reason pay any principal and/or interest upon said Bonds, whether
intentionally or inadvertently (excluding only overpayment), or in its sole
discretion incur any expenses, including without limitation attorney fees and
other legal costs, in attempting to correct or cure such default or collect any
delinquent payment or foreclose upon the Lien, Trustee shall have its
Reimbursement Lien to secure the repayment of such sum advanced or expended to
be repayable by Issuer and otherwise from Issuer's Operating Account and, to the
extent then necessary, from Issuer's Bond Proceeds Account, anything to the
contrary herein notwithstanding. In the event of an overpayment to a
Bondholder(s), Trustee shall look to the
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Bondholder(s) and not Issuer for repayment, but shall have the right of offset
against other funds at any time held for distribution to such individual
overpaid Bondholder(s).
(I) All moneys received by Trustee pursuant to any right given or action
taken under the provisions of this Article in respect of an event of default
shall, after payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the fees, expenses, liabilities and
advances incurred or made by Trustee or at its discretion, be deposited into the
Sinking Fund Account; and all moneys in the Operating Account (other than moneys
for the payment of Bonds which have matured or otherwise become payable prior to
such event of default, which moneys shall be applied to such payment) shall
during the continuance of an event of default be applied as follows:
(1) Unless the principal of all the bonds shall have become or
shall have been declared due and payable, all such moneys shall be applied:
FIRST -- To the payment in full of all series of
interest payments then due on the Bonds, in order of
maturity, and if the amount available shall not be
sufficient to pay in full the eligible series having the
most recent maturity, then to the ratable payment of
such series, without other discrimination or privilege;
and
SECOND -- To the payment in full of all series of
principal payments then due on the Bonds, in order of
maturity, and if the amount available shall not be
sufficient to pay in full the latest series having the
most recent maturity, then to the ratable payment of
such series, without other discrimination or privilege.
(2) If the principal of all the Bonds shall have become due or
shall have been declared due and payable, all such moneys shall be applied to
the payment of the principal and interest then accrued and unpaid upon all
unpaid Bonds, without preference or priority of principal over interest or of
interest over principal, or of any series or maturity over any other series
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or maturity, or of any bond over any other bond, whether simple or compound,
ratably, according to the combined amount respectively due thereon for both
principal and interest, to the persons entitled thereto without any
discrimination or privilege.
Whenever moneys are to be applied pursuant to the provisions of this
paragraph (I), such moneys may be applied at such times and from time to time,
as Trustee may determine in its sole discretion, having due regard to the amount
of such moneys available for such application and the likelihood of additional
moneys becoming available for such application in the future. Whenever Trustee
so applies funds, it shall fix the date (which shall be a principal and/or
interest payment date unless Trustee in its sole discretion deems another date
more suitable) upon which such application is to be made, and upon such date
interest on the amounts of principal and interest to be paid on such dates shall
cease to accrue. Trustee may give such notice as it deems appropriate of the
deposit with it of any such moneys and of the fixing of any such date, and
Trustee shall not be required to make payment to the holder of any unpaid Bond
until such Bond shall be presented to Trustee for appropriate endorsement or
cancellation.
Notwithstanding anything herein to the contrary, in the event that
a Bondholder paydate distribution shall not have been made because of
insufficient funds in Issuer's Operating Account, should funds thereafter
accumulate in the Operating Account sufficient to meet such prior Bondholder
payment in whole or in part, Trustee may nonetheless continue to hold such funds
until it is able to make a good faith determination, based in its sole
discretion upon its negotiations with Issuer and its perception of Issuer's
ability to meet Issuer's future obligations hereunder: (i) to disburse
such funds pursuant to subparagraph (I) (1) , or (ii) to accelerate the entire
indebtedness effective as of either the date of the event of default or the
Bondholder payment date, as Trustee elects, and later disburse such funds along
with other proceeds pursuant to subparagraph (I)(2).
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IX.
PREPAYMENT PRIVILEGES
(A) If Issuer is not in default:
(1) If there is only one series of Bonds outstanding hereunder,
Issuer shall have the privilege of prepaying all of the Bonds of said series in
full before maturity; provided that said prepayment shall be made only on a
principal and/or interest payment date. If there are two or more series of
Bonds outstanding hereunder, Issuer shall have the privilege of prepaying in
full before maturity, on a principal and/or interest payment date only, all of
the Bonds of one or more of such series, which series Issuer may in its sole
discretion select.
(2) Issuer shall also have the privilege of peremptory partial
prepayment, i.e., prepayment in full before maturity of one or more randomly
selected Bonds from any one outstanding series, but not all the Bonds thereof,
to be made only on a principal and/or interest payment date. Issuer shall
notify Trustee of both the amount to be prepaid and the series designated, and
Trustee shall randomly by lot, in such manner as it may determine, select from
such series individual Bonds in the requisite amount for prepayment.
(B) Except as may be otherwise provided in the prospectus, offering
circular and/or Bonds themselves, there shall be no penalty for prepayment of
all or any portion of the Bonds, but Issuer may be charged a reasonable fee
therefor in addition to and notwithstanding those fees set forth in Article XX.
(C) Issuer will pay to Trustee not less than two (2) full working days
before the date fixed by Issuer for such prepayment as provided in paragraph
(D) next following, a sum sufficient to pay the principal of the Bonds being
called for prepayment together with all interest accrued thereon as of the
prepayment date, together with Trustee's fee. Upon the prepayment date,
or as soon thereafter as shall be practicable, Trustee shall pay to the
holders of the Bonds being called for prepayment the principal and accrued
interest upon said Bonds as of the prepayment date. Payment of the
principal and accrued interest upon said Bonds shall be by check drawn
upon the Operating Account mailed,
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postage prepaid, to the registered Bondholder at his registered address.
(D) Issuer shall give Trustee written notice of its election to call and
prepay such Bonds at least thirty (30) days prior to the date fixed by Issuer
for such call and prepayment. Trustee shall, at the expense of Issuer, then
give written notice of the proposed prepayment to each of the registered
Bondholders of the Bonds selected at least fifteen (15) days prior to the date
fixed by Issuer for such prepayment.
(E) As to any Bonds called for prepayment which are not presented to
Trustee for payment, Trustee shall set aside and retain in a separate account a
sum equal to the unpaid principal and accrued interest thereof.
(1) No interest shall accrue or be payable from or after such
payment date either upon such called Bonds or such funds in said separate
account.
(2) After three (3) years from such separation of funds, any
separated funds remaining unclaimed shall be escheated and delivered by Trustee
to the State of Arizona; such delivery shall operate as a complete discharge of
Trustee as between the Bondholders and Issuer; and Issuer hereby indemnities and
agrees to hold Trustee harmless from any and all subsequent claims therefor or
resulting therefrom asserted by any Bondholder(s) or governmental agency or
agencies, including all costs of maintaining a legal defense.
(F) Should Issuer deposit funds for the prepayment of ,outstanding bonds
in an amount which Trustee ultimately determines to be in excess of the funds
actually required to effect said prepayment, then Trustee, immediately upon
discovering this fact, shall remit such excess payment to Issuer or to such
other persons or firms to whom Issuer is obligated with respect thereto. Should
Issuer deposit funds for such prepayment which are insufficient to accomplish
same, Issuer shall immediately remit to Trustee such additional funds as may be
required to complete the prepayment, even if such underpayment was the result of
the reliance by Issuer on prepayment calculations furnished it by Trustee. In
the event that Issuer does not promptly remit such additional funds, then
Trustee may, at its option, stop payment on the checks given by it to pay the
principal and interest upon said Bonds which have not
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been paid, or it may borrow and/or advance such additional funds as will permit
said Bonds to be prepaid. In the latter event Issuer agrees to promptly
reimburse Trustee, and Trustee shall have its Reimbursement Lien therefor.
(G) Trustee is authorized to execute a release of the Lien in the event
of complete prepayment of all Bonds issued pursuant to this Trust Indenture.
Such release will be prepared by or on behalf of Issuer at its expense and
submitted to Trustee for execution.
X.
REPLACEMENT OF BONDS
(A) In the event any Bond shall become mutilated or defaced, Registrar
in its discretion may, upon presentment and cancellation thereof, issue a new
Bond of like kind, maturity and date in exchange and in substitution therefor.
(B) In the event any Bond is destroyed, lost or stolen, Registrar in its
discretion may issue, in lieu of and in substitution therefor, a new Bond of
like kind, maturity and date upon the registered holder of such Bond (i) filing
with Registrar evidence satisfactory to it that he is the true owner of same and
that such Bond has in fact been destroyed, lost or stolen; and (ii) indemnifying
through a reputable surety and holding harmless both Issuer and Registrar and
Paying Agent against any loss resulting, directly or indirectly, from issuance
of the substitute Bond.
(C) All Bonds issued under this Trust Indenture shall be held and owned
upon the express condition that the provisions of this Article are exclusive in
respect to the replacement and payment of mutilated, defaced, destroyed, lost or
stolen Bonds, and shall preclude any and all other rights and remedies,
notwithstanding any law or statute now existing or hereafter enacted to the
contrary respecting such replacement or payment of bonds, notes,
negotiable instruments or other securities without their surrender.
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XI.
ADDITIONAL PARITY BONDS
Subject to the following, Issuer reserves the right to issue
additional parity bonds or to incur additional debt obligations (hereinafter
collectively called "Additional Bonds" even though such debt obligations are not
in bond form) for any lawful purpose, including without limitation refunding or
prepaying any outstanding Bonds, construction of improvements and/or the
acquisition of additional real property. Such Additional Bonds, along with the
original Bonds issued under this Indenture, shall be deemed "Bonds" for all
purposes as defined in this Indenture unless the context otherwise requires.
Once issued and delivered, such Additional Bonds and the interest thereon shall
be payable from the sources described in this Indenture and secured by the
Indenture and the Lien to the same extent and priority as, and on a parity with,
all then Outstanding Bonds, regardless of the date and order of recording of the
deed(s) of trust or mortgage(s), as if such Additional Bonds had been part of
the original offering. Such Additional Bonds may be made or issued in one or
more obligations, series or issues, in various principal amounts, bearing
interest, maturing, and having such redemption features and other provisions as
may be provided in any supplemental indenture or other instrument authorizing
their making or issuance. As to such Additional Bonds, whether a debt
obligation such as a note or a series or a separate issue of bonds, and whether
governed by a note or supplement to the Indenture or a separate indenture, a
default as to any one note, series or issue shall constitute a default as to any
and all other notes, series and/or issues totally or partially secured by such a
parity lien on the same collateral.
(A) Provided, no such note or series or issue of Additional Bonds shall
be made or issued unless:
(1) Any default or event which would result in default by Issuer
under the Indenture has been first cured;
(2) Any real property acquired from the proceeds of Additional
Bonds shall be subjected to and become a part of the Lien and any mortgage or
deed of trust upon the Property, as evidenced at Trustee's election and at
Issuer's sole expense by an attorney's title opinion or a mortgagee's title
policy in favor of
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Trustee reflecting no liens or encumbrances prior to the Lien other
than as agreed upon in writing between Issuer and Trustee;
(3) The ratio of the total Outstanding Bonds plus the Additional
Bonds shall not exceed one-hundred percent (100%) of the current appraised fair
market value of the Property then to secure the payment of the Bonds; and
(B) Further provided that for a period of three years from the effective
date of the offering, MMR Investment Bankers, Inc. shall have a first right of
refusal to provide investment banking services for any additional borrowings of
Issuer relative to the subject property or any refinancing of this
indebtedness.
XII.
SALE OF PROPERTY
Should Issuer desire to convey all or any portion of the Property,
Trustee is authorized in its sole discretion to execute a release or partial
release thereof, provided that:
(A) The consideration for such conveyance is equal to or greater than
the fair market value of the property conveyed at the time of sale and either
becomes subject to and a part of the Lien, as evidenced at Trustee's election
and at Issuer's sole expense by an attorney's title opinion or a mortgagee's
title policy in favor of Trustee reflecting no liens or encumbrances prior to
the Lien other than as agreed upon in writing between Issuer and Trustee, or is
applied as in (B);
(B) Any cash proceeds derived from such conveyance shall be delivered to
Trustee to be applied either:
(1) To call and prepay outstanding Bonds in the same manner as
partial prepayments are to be applied under the provisions of Article IX; or
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(2) Paid into a trust or escrow account in a depository
designated by Trustee, to be applied:
(a) To purchase additional property subjected to and
becoming a part of the Lien and any mortgage or deed of trust upon the Property,
as evidenced at Trustee's election and at Issuer's sole expense by an
attorney's title opinion or a mortgagee's title policy in favor of Trustee
reflecting no liens or encumbrances prior to the Lien other than as
agreed upon in writing between Issuer and Trustee;
(b) To construct additional improvements on the property
remaining under the Lien; and/or
(c) To reduce any other lien indebtedness existing against the
Property.
Issuer, subject to the approval of Trustee, has the right to select from the
foregoing alternatives, and shall notify Trustee in writing and in advance which
alternative(s) it has selected and the respective amounts.
(C) The value of the remaining property covered by the Lien is
sufficient, in the opinion of Trustee, to secure the outstanding Bonds after
application of the sale proceeds as in (B) above.
Trustee shall not be liable for mistakes of judgment made in good faith in
reliance upon any appraisals or other information furnished which forms a
reasonable basis for Trustee's decision.
XIII.
SUBSTITUTION OF COLLATERAL
Should Issuer desire to substitute the Property, in whole or in part,
Trustee is authorized in its sole discretion to execute such releases, partial
releases and other legal documents as may be necessary to do so, provided that:
(A) The net fair market value of the substituted property after
subtracting therefrom its potential exposure to any superior lien shall be equal
to or greater than the fair market
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value of the Property released from the Lien at the time of substitution; and
(B) The Property substituted shall be subjected to and
become a part of the Lien and any mortgage or deed of trust upon
the Property, as evidenced at Trustee's election and at Issuer's sole expense by
an attorney's title opinion or a mortgagee's title policy in favor of Trustee
reflecting no liens or encumbrances prior to the Lien other than as agreed upon
in writing between Issuer and Trustee.
Trustee shall not be liable for mistakes of judgment made in good faith in
reliance upon any appraisals or other information furnished which forms a
reasonable basis for Trustee's decision.
XIV.
CONDEMNATION OF PROPERTY
(A) Should any governmental agency undertake to acquire by eminent domain
all of the Property, Trustee is authorized to join with Issuer in negotiating
with such governmental agency, and to execute any and all instruments necessary
or required to convey said Property to such governmental agency, without
requiring formal condemnation; provided, that the sums received for such
condemnation shall be at least sufficient to pay the principal balance of the
Bonds and accrued interest to date of pay-off. Trustee is not authorized to
agree to any non-judicial total condemnation which will not provide funds
sufficient to pay all of the Bonds then outstanding, with accrued interest
thereon.
(B) Should any governmental agency undertake to acquire by eminent domain
a portion of the Property, Trustee is authorized to join with Issuer in
negotiating with such governmental agency and to execute such documents as may
be necessary or required to transfer title of such portion to such governmental
agency without requiring formal condemnation; provided, that any cash proceeds
derived from such acquisition shall be delivered to Trustee to be applied
either:
(1) To call and prepay outstanding Bonds in the same manner as
partial prepayments are to be applied under the provisions of paragraph IX(B);
or
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(2) To be paid into a trust account maintained by Trustee to be
applied:
(a) For the purchase of additional property which shall be
subjected to and become a part of the Lien and any mortgage or deed of trust
upon the Property, as evidenced at Trustee's election and at Issuer's sole
expense by an attorney's title opinion or a mortgagee's title policy in favor
of Trustee reflecting no liens or encumbrances prior to the Lien other than as
agreed upon in writing between Issuer and Trustee;
(b) To construct additional improvements on the property
remaining under the Lien; and/or
(c) To reduce any other lien indebtedness existing against
the Property.
Issuer, subject to the approval of Trustee, has the right to select which of the
foregoing alternatives it desires to exercise, and shall notify Trustee in
writing and in advance which alternative is selected by Issuer.
XV
DUTIES OF TRUSTEE, PAYING AGENT AND REGISTRAR
The following services will be provided for the benefit of Issuer and
the Bondholders:
(A) Trustee shall:
(1) Maintain the legal file containing Issuer's application for
financing, resolution for financing, appraisal, articles of incorporation,
bylaws, trust indenture, escrow instructions and agreement (if applicable) ,
commitment for title insurance, policy of title insurance or attorney's title
opinion, opinion of counsel (if applicable) , current fire and extended coverage
insurance policy, builder's risk insurance policy (if applicable), and any other
written agreements that may be entered into between Issuer and Trustee
simultaneously with or after execution hereof.
(2) Hold for the benefit of the Bondholders their legal rights to
repayment and in and under the Lien; and in the
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event of default by Issuer, Trustee may (or shall when required) pursue in its
name on their collective behalf all lawful remedies.
(3) Provide Issuer an amortization schedule for the payment of the
Bonds. If electronic banking is available, Trustee will provide Issuer
instructions for its use. If electronic banking is not available, Trustee will
provide Issuer a operating fund installment book.
(4) Monitor all operating fund installments and if Issuer is in
arrears, give written and/or oral notification of the delinquency.
(5) Disburse all Bond proceeds to Issuer at such time as all the
legal requirements have been met.
(6) Endorse insurance settlement checks, if any, for damages to the
insured Property when satisfied that the proceeds will be used as required
herein.
(7) Execute a release of the Lien when all Bonds have been paid or
canceled under the terms and provisions hereof.
(B) Paying Agent shall:
(1) Record all proceeds received from the sale of Bonds.
(2) Provide Issuer after the final project disbursement from the Bond
Proceeds Account with an accounting showing the deposits to and charges against
the Bond Proceeds Account.
(3) Receive and record weekly or monthly operating fund installments
from Issuer.
(4) Provide Issuer semi-annual statements showing the deposits to and
charges against the Operating Account.
(5) Prepare and mail as required interest checks to the registered
owners of simple-interest Bonds.
(6) Prepare and mail principal checks to the registered owners of
simple-interest Bonds at maturity.
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(7) Prepare and mail principal and interest checks to the registered
owners of compound-interest Bonds at maturity.
(8) Provide Issuer with information and forms for notification of the
Bond owners in the event of a prepayment of all or a portion of the outstanding
Bonds.
(9) Prepare and mail principal and interest checks to the registered
Bond owners of Bonds that are called for prepayment prior to maturity
(10) Prepare and mail Internal Revenue Service Form 1099's to inform
each registered owner of the Bonds of the respective amount of interest earned
and required to be reported by Trustee to the Internal Revenue Service for that
taxable year (which may be different figures from those applicable to and
reportable for income tax purposes by individual Bondholders).
(11) Prepare and forward to applicable taxing authorities all
required information pertaining to the interest income of Bondholders.
(C) Registrar shall:
(1) Upon receipt by the Trustee of all documentation which is
prerequisite, print, issue, authenticate and mail all Bonds to the registered
owners.
(2) Record and reissue Bonds subsequently transferred to a new owner.
(3) Maintain a permanent Bond register which reflects the serial or
other identification number, maturity date, face value, interest rate, name and
address of owner, date bought, and price reported paid (if any) for each Bond
issued.
(4) Reissue mutilated, defaced, destroyed, lost and stolen Bonds
if prior to maturity, and if matured, direct the payment of the principal and
accrued interest to the registered Bond owners, subject to all terms and
conditions hereof.
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XVI.
LIMITATION OF LIABILITY
Trustee, Paying Agent and Registrar (for purposes of this Article
jointly and severally called "Trustee") accept their respective duties and
responsibilities as set forth under the terms of this Trust Indenture upon the
express conditions (to which Issuer and the Bondholders by the acceptance of the
Bonds agree) that Trustee shall not be responsible for any act or omission
hereunder unless due to its own gross negligence or willful default; and no
implied covenants, obligations or warranties whatsoever shall be read into this
debenture against Trustee. Without limiting the generality of the foregoing:
(A) Trustee shall not be responsible or liable for any recitals,
statements or representations whatsoever in any prospectus or offering circular
used in connection with the sale of the Bonds. Trustee makes no presentation or
warranty whatsoever, express or implied, (i) that the terms, conditions or
provisions of this Trust Indenture are, will remain or will become in compliance
with any state or federal statute or regulations applicable or relating to this
Indenture or the transactions contemplated herein or related hereto, or (ii)
regarding any individual Bondholder's reportable amount of income from the
Bonds, his tax liability thereon or the tax consequences of any transaction
relating to the Bonds, their repayment and/or the collection thereof pursuant
to Issuer's default whether through a forbearance agreement, a court-ordered or
bondholder-approved restructure of the debt, or foreclosure and sale of the
Property.
(B) Trustee shall have no liability for any losses resulting from its
reliance upon any instrument, writing or communication believed by it in good
faith to be genuine and properly authorized, nor for forgery of any bond or
unauthorized delivery by Issuer of any Bond. Trustee shall be under no duty to
investigate or inquire into any statements contained or matters referred to in
any such item.
(C) Trustee shall not be liable upon the Bonds for the payment of the
principal and/or interest due thereon.
(D) Notwithstanding any applicable statutes or regulations relating to
registered Bonds, Trustee shall have no
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duty to recognize any person as a Bondholder unless such person is shown as the
registered Bondholder on the books and records of Trustee.
(E) Trustee may accept as correct any written statement made to it by the
person or persons who sign this Trust Indenture for and on behalf of Issuer or
by such other representatives of Issuer as may be from time to time designated
by Issuer to act for it, and Trustee will be fully protected in acting upon and
in conformity with such opinion.
(F) Trustee may request and act upon the opinion or advice of its
counsel. If Trustee acts on an opinion of counsel concerning matters relating
hereto and its duties hereunder, it shall be relieved of all liability in
connection with the matters referenced herein and its duties hereunder when
acting in conformity therewith.
(G) If an event of default has occurred and is continuing, Trustee shall,
in exercising its rights and powers hereunder, use the same degree of care and
skill as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(H) Trustee shall not be bound to ascertain or inquire into the
performance or observances of any covenants, conditions, or agreements of Issuer
hereunder. However, Trustee may require of Issuer full information and advice
about such performance or observance.
(I) Trustee need not consider the ability to respond in damages when
selecting or approving any person or entity to render opinions, advice and/or
services pertaining hereto.
(J) Trustee shall not be responsible for recording or re-recording or
filing or re-filing this Indenture, for the validity of the execution by Issuer
of this Indenture, for the sufficiency or maintenance of the security for the
Bonds, or for the validity or enforceability of this Indenture, the Lien or any
security rights or remedies granted to Trustee or the Bondholders hereunder or
in any other Bond document. Trustee shall have no obligation to perform any of
the duties of Issuer under the Indenture.
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(K) Moneys and securities held by Trustee in trust need not be segregated
from other assets except to the extent required by law or this Indenture.
Trustee shall not be liable for interest on any moneys received by it hereunder.
Trustee shall not be accountable for the use or application of funds from
Issuer's Bonds Proceeds Account after same have been disbursed in accordance
herewith.
(L) Notwithstanding anything to the contrary, if in the sole judgment of
Trustee any action it desires or is requested or demanded to take hereunder may
tend to involve liability, loss or expense, Trustee shall not be obligated to so
act unless and until it is furnished with indemnity satisfactory to it.
(M) The permissive right of Trustee to do certain things, whether express
or implied, shall not be construed as a duty or obligation to take such action.
(N) Trustee shall not be required to give any bond or security in respect
hereof.
(0) Upon delivery of an executed release of the Lien to Issuer pursuant
to Article IX(G) or upon restructure of the debt or foreclosure and final
distribution of the net proceeds therefrom to the Bondholders, Trustee shall
have thereby discharged in full all its liabilities and obligations hereunder,
and this trust shall terminate along with any further duties, obligations or
liabilities of Trustee hereunder.
(P) Should liability for any of the foregoing nonetheless be
unsuccessfully judicially asserted against Trustee, it shall be reimbursed and
have the Reimbursement Lien for costs and expenses incurred in defending itself,
including without limitation attorney, stenographer and witness fees and travel
expense and court costs.
(Q) By purchasing and accepting delivery of the Bonds, each Bondholder
shall hold same subject to all terms of this Trust Indenture.
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XVII.
ANCILLARY/CO-TRUSTEE; RESIGNATION AND REMOVAL;
SUCCESSOR TRUSTEES
(A) Trustee may in its sole discretion appoint an additional individual
or institution as a Co-Trustee or a separate ancillary Trustee hereunder.
Trustee will so notify Issuer of such appointment, as well as any applicable
regulatory authority. Each power or right vested in Trustee hereunder shall be
exercisable by and vest in such Co-Trustee or separate ancillary Trustee to the
extent necessary or desirable to enable it to exercise the powers and rights
necessary to carry out the purposes of this Indenture. Provided, such
Co-Trustee or ancillary Trustee may not be Issuer, Broker nor an affiliate of
either.
(B) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of such appointment in writing by such successor Trustee as
hereinafter provided.
(1) Subject to the foregoing, the Trustee may, at its election,
resign at any time by either:
(a) Giving to Issuer written notice thereof; or
(b) Petitioning a court of competent jurisdiction for both
(i) the permission to resign and (ii) the appointment of a qualified successor
trustee.
Provided: (i) if the Trustee shall elect to resign while Issuer is
in default hereunder, the Trustee must so petition a court as set forth in (b)
above, as Issuer may not in such event select the successor Trustee; and
provided further, no successor Trustee shall in any event be the Broker or
Issuer, or a subsidiary, affiliate or under the control of either; and (ii)
every successor Trustee appointed or succeeding pursuant to any of the foregoing
provisions shall be either a trust company or a national or state bank with
trust powers, in good standing and having combined capital, surplus and
undivided profits of at least $500,000, or a corporation, individual(s) or
mixture approved by a court of competent jurisdiction.
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(2) If at any time (i) the Trustee shall be adjudged a bankrupt,
(ii) a receiver shall be appointed therefor by a court of competent
jurisdiction, or (iii) an authorized regulatory agency shall take charge or
control thereof, Issuer may, if not in default hereunder, appoint a qualified
successor Trustee.
(3) If at any time the Trustee shall become incapable of acting or
ineligible to act under any state or federal law or this Indenture, it shall
tender its resignation as in subparagraph (2) above, failing which Issuer may,
if not in default, petition a court of competent jurisdiction for both (i) the
removal of the Trustee and (ii) the appointment of a qualified successor
Trustee.
(4) In the event Issuer shall be disqualified by its default from
exercising its rights under subparagraphs (B)(2) or (3) above, or shall fail to
exercise such rights within thirty (30) days from occurrence of the event giving
rise to such rights, such rights shall devolve upon:
(a) Under subparagraph (B) (2), such bankruptcy Trustee,
receiver or government agency; and
(b) Under subparagraph (B) (3), any Bondholder as set forth
in subparagraph (5) below.
(5) If, in a proper case, a successor Trustee has not been
appointed pursuant to the foregoing provisions within six months after the
resignation or removal of Trustee, any Bondholder may apply to any District
Court in and for Maricopa County, Arizona or to any succeeding court of
competent jurisdiction to appoint a successor Trustee. Such Court may
thereupon, after such notice, if any, as it may be deem proper, appoint a
successor Trustee.
(6) Any Trustee may be removed at any time by an instrument
appointing a successor Trustee executed by the holders of not less than a
majority in aggregate principal amount of all Bonds then outstanding.
(7) All provisions of this Article which refer to the "Trustee"
shall likewise always include the positions of Paying Agent and Bond Registrar,
except that the Trustee, acting voluntarily pursuant to subparagraph (2) above,
may resign as
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Trustee while retaining its appointment(s) and continuing as Paying Agent and/or
Bond Registrar; or vice versa.
(8) Issuer shall give notice or cause notice to be given of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee, Paying Agent and/or Registrar by mailing written notice of such event
by first-class mail, postage prepaid, to the Registered Holders of Bonds as
their names and addresses appear in the Bond Register. Each notice shall
include the name of the successor Trustee, Paying Agent and/or Registrar, as the
case may be, and its principal address.
(9) Should Trustee change its name, or voluntarily merge or
consolidate with or its business be taken over by another corporation chartered
to exercise trust powers and legally competent to perform such duties, then such
other corporation shall succeed to all of the powers and duties of Trustee as
herein set out, without any further act.
(10) Any successor Trustee appointed hereunder shall execute and
deliver to Issuer or the Court, whichever is applicable, an instrument accepting
such appointment. Thereupon such successor Trustee, without any further act,
shall become duly vested with all of the trust estate and the rights, powers,
trusts, duties and obligations of its predecessor.
(11) The name of any duly appointed and qualified successor trustee
shall be substituted wherever "Trustee" is used throughout this Indenture.
XVIII.
ILLEGAL INTEREST
It is the intention of the parties hereto to comply With applicable
usury laws; notwithstanding any provisions herein to the contrary or in any of
the documents securing payment or otherwise relating to the Bonds, in no event
shall this Trust Indenture, including provisions relating to penalty interest in
the event of default or to the Reimbursement Lien rate, the Bonds or such
documents require the payment or permit the collection of interest in excess of
the maximum amount permitted by such laws.
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(A) If any such excess of interest is contracted for, charged or received
under the Bonds or under any of the instruments securing payment thereof or
otherwise relating thereto, including this Trust Indenture or in the event the
maturity of the indebtedness evidenced by the Bonds is accelerated in whole or
in part, or in the event that all or part of the principal or interest of the
Bonds shall be prepaid, so that under any of such circumstances the amount of
interest contracted for, charged or received therefrom or under any of the
instruments securing payment thereof or otherwise relating thereto, on the
amount of principal actually outstanding from time to time under the Bonds,
shall exceed the maximum amount of interest permitted by applicable usury laws,
then in any such event: (i) the provisions of this Article shall govern and
control; (ii) neither Issuer nor any other person or entity now or hereafter
liable for the payment of the Bonds shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount of
interest permitted by applicable usury laws; (iii) any such excess which may
have been charged and/or collected shall be either applied as of the date
charged or collected as a credit against the then unpaid principal amount of the
Bonds or refunded to Issuer, at Issuer's option, and (iv) the effective rate of
interest shall be automatically, immediately and retroactively reduced to the
maximum lawful contract rate allowed under applicable usury laws as now or
hereafter construed by the courts having Jurisdiction thereof.
(B) Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged upon or received from the Bonds or under such
other documents, which calculations are made for the purpose of determining
whether such rate exceeds the maximum lawful contract rate, shall be made, to
the extent permitted by applicable laws, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of the
respective indebtedness, all interest at any time contracted for, charged or
received by Trustee from Issuer or otherwise.
XIX.
RELEASE OF THE LIEN
When Issuer has duly made all of the payments required to
be made under the provisions of this Trust Indenture, Trustee is
authorized to execute a release of the Lien even if there are
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checks issued for the payment of the principal and/or interest upon the Bonds
which are still uncashed; provided, that Trustee shall first satisfy itself that
the funds remaining on deposit in the Operating Account are sufficient to pay
such outstanding checks upon presentment.
XX.
INVESTMENT OF BOND PROCEEDS AND OPERATING ACCOUNT FUNDS;
FEES OF TRUSTEE, ET. AL.
(A) Upon the receipt by Trustee of the proceeds from the sale of Bonds,
and upon receipt of the operating fund installments required of Issuer, it is
expressly agreed by Issuer that Trustee may invest all or part of such funds in
United States government and government agency obligations, federally insured
time and/or demand deposits of banks and savings and loan associations mutual
and/or money market funds which invests only in the foregoing instruments; and
an investment in any such instruments and/or fund(s) shall be deemed prudent.
All moneys required to be deposited with or paid to Trustee under any provision
of the Indenture, until disbursed or directed as permitted by the Indenture,
shall be held by Trustee in trust and may be commingled with other trust funds
held by the Trustee.
(B) The fees of Trustee, Paying Agent and Registrar, the payment of which
is secured by the Reimbursement Lien and to which Issuer has agreed, are set
forth on EXHIBIT "A" attached hereto.
(C) Notwithstanding the amount of fees to be paid to Trustee as set forth
on EXHIBIT "A", should Trustee, Paying Agent or Registrar be required to perform
extraordinary services, it shall have the right to assess reasonable charges
against Issuer for said extraordinary services in addition to the service
charges otherwise described on EXHIBIT "A". Such services occasioned
by Issuer's prepayment under Article IX or default shall by definition be
extraordinary. Without limiting the foregoing, Trustee shall have the right to
be reimbursed by Issuer for any fees or expenses incurred for any unusual
services required of Trustee, either in the event of prepayment, default or
otherwise, and shall specifically have the right of reimbursement and the
Reimbursement Lien for any fees, compensation or documented travel expenses paid
by Trustee to or for licensed attorneys, accountants, appraisers,
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realtors, surveyors, court stenographers, Trustee's own personnel or any other
persons whose services are necessary or required in order to perform such
extraordinary services. The hourly compensation of Trustee's personnel shall be
computed as base annual salary divided by two thousand (2,000) hours.
XXI.
SUPPLEMENTAL INDENTURES
(A) Issuer and Trustee, without the consent of the Bondholders, from time
to time may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) To add to the covenants of Issuer for the benefit of the
Bondholders, or to surrender any right or power herein conferred upon Issuer;
(2) To cure any vagueness or ambiguity or to correct or supplement
any inconsistent or defective provision contained herein or in any supplemental
indenture; provided, such action shall not adversely affect the interest of the
Bondholders; or
(3) To make any change which, in the judgment of Trustee in
reliance upon opinion of counsel, does not adversely affect the rights of any
Bondholder.
(B) With the foregoing limited exceptions which permit modification of
the Trust Indenture by Issuer and Trustee alone, the Trust Indenture, the rights
and obligations of Issuer, and the rights and obligations of the Bondholders may
be modified by Issuer with the consent of the respective holders of not less
than sixty-six and two-thirds percent (66 2/3%) in principal of the Bonds then
outstanding; provided that no such modification may be made without the consent
of the holders of each Bond affected if such modification would:
(1) Change the stated maturity date of the principal or of any
installment of interest on any Bond; or
(2) Reduce the principal amount or rate of interest on any Bond;
or
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(3) Impair the right as herein set out to institute suit for the
enforcement of payment on or with respect to the Bonds; or
(4) Reduce the percentage and principal amount of the Bonds of
which the holders, collective consent is required for any such supplemental
indenture;
(5) Except as permitted under this Indenture, permit the creation
of any lien ranking prior to or on a parity with the Lien; or
(6) Modify any of the provisions of this Article.
(C) Whenever the consent of Bondholders is required for any proposed
change, modification, addition, elimination or subordination of the Trust
Indenture or otherwise, Trustee may cause a notice specifying the action
proposed to be mailed, first-class, postage prepaid, to the owner of each
outstanding Bond at the address shown on the Bond Register maintained by the
Registrar. Trustee shall be entitled to treat the failure of any Bondholder
to respond within thirty (30) days after completion of the mailing of such
notice as either a consent or a rejection, as indicated in the notice, of the
proposed action specified in the notice.
(1) Except as hereinafter provided in Article XXII(B), Trustee
shall be the sole judge of the validity and regularity of all consents filed
under this paragraph, and may require evidence satisfactory to it that the
signer of such consent is lawfully entitled to execute the same.
(2) Any required action or consent of Bondholders may also be
obtained by a vote of Bondholders representing the requisite percentage of
principal then outstanding who are present or represented by proxy at a meeting
called by Trustee for such purpose to be held at Trustee's principal offices at
a time and date specified in a notice mailed to the Bondholders as above not
less than thirty (30) days prior to such meeting.
(D) It shall not be necessary for any consent of Bondholders to approve
the particular form of any proposed supplemental indenture; rather, it shall be
sufficient if such consent approves the substance thereof.
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XXII.
BONDHOLDER LISTS AND REPORTS
EVIDENCE OF RIGHTS OF BONDHOLDERS
(A) Any request, consent or other instrument which the Indenture may
require or permit to be signed and executed by the Bondholders may be in any
number of concurrent instruments of similar tenor, and may be signed or executed
by such Bondholders in person or by an attorney appointed in writing or by a
committee constituted by an agreement to which any portion of the Bonds shall
have been made subject by deposit or otherwise. Proof of the execution of any
such request or other instrument or of a writing appointing any such agent or
the holder of the Bonds shall be sufficient for any purpose of the Indenture,
if made in the following manner:
(1) The fact and date of the execution by any person of such
request in writing may be provided by any of the following documents in form
satisfactory to Trustee:
(a) The certificate under his official seal of any notary
public or other officer in any jurisdiction who by the laws thereof has power to
take acknowledgements of documents to be recorded within such jurisdiction, that
the person signing such request or other instrument acknowledged to him the
execution thereof;
(b) An affidavit of a witness of such execution; or
(c) The certification or guarantee of the authenticity of such
signature by an officer of any duly chartered trust company or commercial bank.
(2) The ownership of registered Bonds shall be proved by the Bond
Register as hereinbefore provided.
(3) Trustee may, nevertheless, in its discretion,(i)accept other
proof in cases where it deems such other proof sufficient or (ii) require
further proof in cases where it deems further proof desirable.
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The foregoing provisions of this paragraph shall not be construed to
abrogate, modify or affect any of the exemptions or rights of Trustee set out
in Article XVI of this Indenture.
(B) For the purposes of this Indenture, in determining whether the
holders of the required percentage of the principal amount of Bonds have
concurred in any directive, amendment, modification, consent, waiver or other
action, Bonds deemed by Trustee to be owned by Issuer, or under direct or
indirect common control of Issuer or by an officer, director, trustee, eider or
member thereof, shall be disregarded, except that for the purpose of determining
whether Trustee shall be protected in relying upon any such directive,
amendment, modification, consent, waiver or other action, only Bonds as to which
Trustee has actual knowledge of such ownership or control must be so
disregarded.
(C) If either (i) Issuer or (ii) three or more Bondholders (herein after
referred to as "Applicant(s)" apply in writing to Trustee, and, exclusive of
Issuer, furnish to Trustee reasonable proof that each such Applicant has owned a
Bond for a period of at least six (6) months preceding the date of such
application, and such application further states that the Applicant(s) desire to
communicate with all Bondholders with respect to their rights under this
Indenture or under the Bonds and is accompanied by a copy of the form of proxy
or other communication which such Applicant(s) propose to transmit, then Trustee
shall, within ten (10) business days after the receipt of such application, at
its election, either:
(1) Afford such Applicant(s) access to such information;
(2) Inform such Applicant(s) as to the approximate number of
registered Bondholders and as to the approximate cost of mailing to such
Bondholders the form of proxy or other communication, if any, specified in such
application, in which latter event Trustee shall further elect either:
(a) Within ten (10) days after tender to Trustee of the
material to be mailed and of payment of the reasonable expenses of mailing, to
mail to such Applicants, together with a return of the material to have been
mailed to the Bondholders, a written statement to the effect that, in the
opinion of Trustee, such mailing would be contrary to the best collective
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interest of the Bondholders or would be in violation of applicable law, such
written statement specifying the basis of such opinion; or
(b) Mail, with reasonable promptness, to each registered
Bondholder a copy of the form of proxy or other communication which is
specified in such request.
(D) Issuer, Broker, and each and every holder of the Bonds by receiving
and holding the same, agrees with Trustee and Registrar that:
(1) Each Bondholder's identity is privileged information not
subject to disclosure and such Bondholder may receive communications from
Issuer, other Bondholders or any third party only in accordance with this
Article; and
(2) Neither Trustee nor Registrar shall be held accountable by
reason of mailing any material pursuant to a request made pursuant to this
Article which Trustee in its sole discretion determines to grant.
XXIII.
MISCELLANEOUS PROVISIONS
(A) When the context requires, the singular includes the plural, the
masculine includes the female and neuter, and vice versa. Except within a
series, the conjunctive includes the disjunctive and vice versa.
(B) The headings contained in the Table of Contents and body hereof are
for convenience only and shall in no manner be construed as a part of this
Indenture.
(C) All notices required hereby as between Issuer and Trustee, Paying
Agent and/or Registrar shall be sufficient if such notices are in writing and
mailed by either registered or certified mail, return receipt requested, postage
prepaid, or by delivering in person or causing the delivery thereof by
commercial courier to such party at the address shown on the last page or at
such other address as either party may hereafter furnish in writing to the
other.
Trust Indenture
Page 45 of 48
DRAFT
(D) This Indenture constitutes the entire agreement between the parties
and supersedes any and all other prior agreements or understandings, if any,
whether oral or in writing, relating to the rights and liabilities arising out
of the subject matter hereof.
(E) This agreement may be amended or modified only in accordance with the
terms of this Indenture by a written instrument of even or subsequent date
hereto signed by both parties.
(F) Neither the waiver of any provision or breach hereof nor the
forbearance, failure or delay, whether intentional or inadvertent, in exercising
any right or remedy hereunder, nor the partial exercise thereof, by either party
shall be deemed a waiver of any other provision or breach or of the subsequent
or further exercise of such right or remedy or as establishing a course of
dealing.
(G) If any provision of this Trust Indenture is held to be illegal or
unenforceable, the remaining provisions shall nevertheless remain in full force
and effect. In addition, the illegal or unenforceable provisions shall be
modified so as to conform, to the greatest extent legally permissible, to the
original intent of such provision.
(H) This agreement will be binding upon and will inure to the benefit
of each party's respective successors and assigns.
(I) Each person signing below represents and warrants that he is
authorized to act in the capacity stated.
(J) ISSUER AND TRUSTEE EACH ACKNOWLEDGES AND AGREES THAT ITS
REPRESENTATIVES AND ATTORNEYS HAVE HAD THE OPPORTUNITY TO PARTICIPATE IN THE
DRAFTING AND CONSTRUCTION OF THIS INDENTURE AND THAT THE PROVISIONS HEREOF SHALL
NOT BE CONSTRUED AGAINST OR IN FAVOR OF EITHER PARTY.
(K) This Indenture shall be construed in accordance with and governed by
the laws of Arizona, with the exception of the terms and conditions pertaining
to the foreclosure of the Property set forth in Article VIII which shall be
construed in accordance with and governed by the laws of the State in which the
Property is located.
Trust Indenture
Page 46 of 48
DRAFT
(L) As used throughout, the words or phrases "legal costs,"
"collection costs," "collection expenses, "costs of maintaining a legal
defense," "Reimbursement Lien" and words and phrases of like import shall be
liberally construed to include all costs and expenses reasonably incurred by
Trustee, directly or indirectly, as compensation or reimbursement to its own
personnel, licensed legal counsel, accountants, surveyors, appraisers, court
reporters and other experts, including their fees or other compensation and
travel expenses, in carrying out the purposes of this Indenture and holding
Trustee harmless from such costs and expenses.
IN TESTIMONY WHEREOF, Issuer and Trustee have caused this
instrument to be signed in duplicate originals by their duly authorized agents
and representatives this day of , 19
ISSUER: (Legal Name of Issuer)
Front Range Assisted Living, L.L.C.
By:
-------------------------------
(President or Chairman of
Governing Body)
By:
-------------------------------
(Secretary of Governing
Body)
Address:
---------------------------
St. George, Utah
Colonial:
COLONIAL TRUST COMPANY, TRUSTEE
By:
------------------------------
Title: Vice President
Address: 5336 North 19th Avenue Phoenix, Arizona 85015
Trust Indenture
Page 47 of 48
DRAFT
STATE OF ARIZONA
COUNTY OF MARICOPA
This instrument was acknowledged before me on the day of
, 1997, by Susan D. Carlisle, Vice President of COLONIAL TRUST COMPANY, an
Arizona corporation with trust powers.
Notary Public, State of
Notary's Name, Printed or Typed
STATE OF
COUNTY OF
This instrument was acknowledged before me on the day of
1997, by of
a of Front Range Assisted Living, L.L.C.
Notary Public, State of
Notary's Name, Printed or Typed
Trust Indenture
Page 48 of 48
DRAFT
EXHIBIT "A"
TRUSTEE, PAYING AGENT & BOND REGISTRAR/TRANSFER AGENT
SCHEDULE OF FEES
DRAFT
EXHIBIT "C"
OPERATING FUND PAYMENTS