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1985-071-Approving The 1983 Issue Boilerplate Developer Agreement With The County Of Santa Clara And Participating Below Market Price Unit DevelopersRESOLUTION NO. 1985 -71 A RESOLUTION APPROVING THE 1983 ISSUE BOILERPLATE DEVELOPER AGREEMENT WITH THE COUNTY OF SANTA CLARA AND PARTICIPATING BELOW MARKET PRICE UNIT DEVELOPERS BE IT RESOLVED, and it is hereby resolved by the Town Council of the Town of Los Gatos, County of Santa Clara, State of California, that the Town of Los Gatos approves the Boilerplate Developer Agreement between the County of Santa Clara, the Town of Los Gatos, and participating Below Market Price Unit Developers, copy of which is attached hereto; and BE IT FURTHER RESOLVED that the Mayor is authorized and is hereby directed to execute said agreement in the name and in behalf of the Town of Los Gatos. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 20th day of May , 1985, by the following vote: AYES: COUNCILMEMBERS Ferrite, Brent Benjamin NOES: COUNCILMEMBERS ABSENT: COUNCILMEMBERS ABSTAIN: COUNCILMEMBERS Terrence J. Daily, Thomas J. N. Ventura, and Mayor Joanne None Eric D. Carlson None SIGNED: TOWN OF LOS GATO� ATTEST: CLERK OF THE TOWN OF LO ATO - JJM:pw 1/24/83 JJM:ar 2/04/83 JJM:ac 2/12/83 JJM:pw 2/24/83 JAMES LAMPS, GENERAL CONTRACTOR and TOWN OF LOS GATOS , CALIFORNIA and COUNTY OF SANTA CLARA, CALIFORNIA DEVELOPER AGREEMENT Dated as of March 1, 1983 COUNTY OF SANTA CLARA, CALIFORNIA SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS ISSUE I OF 1983 TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and is.not a part of the Developer Agreement). ARTICLE I Page Definitions .............. ............................... 2 ARTICLE II REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants of Issuer .............................. 7 Section 2.02. Representations, Warranties and Covenants of Developer ........................... 8 Section 2.03. Representations, Warranties and Covenants ofTown . ............................... 4 ARTICLE III ISSUANCE OF BONDS, APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of Bond Proceeds .......................... 10 Section 3.02. Limited Liability ........................ 10 ARTICLE IV i RESERVATION OF FUNDS FOR LOANS FOR DEVELOPER RESERVED SINGLE - FAMILY RESIDENCES Section 4.01. Reservation of Funds ..................... 11 Section 4.02. Developer's Best Efforts to Construct; Termination of Reservation of Funds ..... 11 Section 4.03. The Loans . ............................... 13 Section 4.04. Developer Fee ............................ 13 Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Section 4.06. Residences .............................. Developer to Submit Affidavit ........... 13 15 Section 4.07. Non - Origination of Reservation .......... 15 i ARTICLE V DEVELOPER Section 5.01. Liability of Developer .................. 16 Section 5.02'. Merger or Consolidation of Developer.... 16 ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined........... 16 Section 6.02. Remedies . ............................... 18 Section 6.03. No Remedy of Issuer, Trustee or 20 Section 7.04. Administrator Exclusive ............... 18 Section 6.04. Agreement to Pay Attorney's Fees and 20 Section 7.06. Expenses .............................. 19 ARTICLE VII MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences ii Permit Approvals ...................... 19 Section 7.02. Changes in Applicable Laws .............. 20 Section 7.03. Limitation on Rights of Bondholders..... 20 Section 7.04. Governing Law ........................... 20 Section 7.05. Counterparts ............................ 20 Section 7.06. Notices .. ............................... 20 Section 7.07. Severability ............................ 20 Section 7.08. Further Assurances and Corrective Instruments ........................... 20 Section 7.09. Term of Agreement ....................... 21 Testimonium ............ ............................... 21 Signatures and Seals ... ............................... 21 EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences ii DEVELOPER AGREEMENT THIS DEVELOPER AGREEMENT (the "Developer Agreement "), dated as of March 1, 1983, is by and among the developer whose name is set £orth'on the cover hereof and in Section 1 of Exhibit B hereto (the "Developer "), the city whose name is set forth on the cover and signature page hereof (the "Town "), and the County of Santa Clara, California (the "Issuer "). W I T N E S S E T H WHEREAS, the Issuer has adopted a home mortgage finance program (the "Program ") pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California (the WHEREAS, the issuer has promulgated rules and regulations with respect to purchasing mortgage loans originated and made by qualified mortgage lenders to certain mortgagors to purchase residences within the unincorporated areas of the Issuer and within certain cities (the "Participating Cities ") which have entered into cooperative agreements with the Issuer (the "Cooperative Agreements "); VIHEREAS, the Town and the Issuer have entered into a Cooperative Agreement pursuant to which the Town has authorized the Issuer to exercise the powers conferred upon it by the Act within the boundaries of the Town, all in furtherance of the Program; WHEREAS, the Issuer proposes to issue, sell and deliver its Single Family Residential Mortgage Revenue Bonds, Issue I of 1983 (the "Bonds "), pursuant to a purchase contract (the "Purchase Contract ") between the Issuer and a group of underwriters for whom A.G. Becker Incorporated is the senior manager (the "Underwriters "), for the purpose of providing funds to purchase mortgage loans pursuant to the Program; WHEREAS, the Issuer intends to enter into an indenture between itself and Security Pacific National Bank (the "Trustee ") for the issuance of the Bonds (the "Indenture "), pursuant to which the Trustee will be empowered to purchase mortgage loans on certain residences subject, among other things, to certain terms and conditions hereinafter set forth; WHEREAS, the Issuer, the Town and the Developer are desirous of setting forth the terms and conditions upon which the Developer will designate residences and the Issuer will reserve funds from the,purchase of the Bonds for the purchase of mortgage loans to finance the purchase of such residences; and WHEREAS, the Issuer has found and declared that such purchase of mortgage loans will both further the purposes of the Act and be in the public interest, providing for and promoting the public health, safety, morals and welfare, by (i) increasing the supply of money available for mortgage loans and (ii) assisting low and moderate income persons and families in acquiring decent, safe and sanitary housing; NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, and for and in consideration of the mutual promises, representations and agreements herein contained, hereby agree as follows: ARTICLE I DEFINITIONS Unless the context clearly otherwise requires, each capitalized word or phrase appearing herein which is defined in the Indenture shall have the same meaning in this Developer Agreement as is given it in the Indenture. In addition thereto, unless the context clearly requires otherwise, the following terms shall have the following respective meanings: _ "Acquisition Cost" means the cost of acquiring a Residence from the seller as a completed residential unit, including: (i) all amounts paid, either in cash or in kind, by the purchaser (or a related party or for the benefit of the purchaser) to the seller (or a related person or for the benefit of the seller) as consideration for the Residence; (ii) if the Residence is incomplete, the reasonable cost of completing it (so that occupancy thereof is legally permitted); and, (iii) if the Residence is purchased subject to a ground rent, the capitalized value of the ground rent calculated using a discount rate equal to the Yield on the Bonds; but exclusive of: (i) usual and reasonable settlement or financing costs (but only to the extent that such amounts do not exceed the usual and reasonable costs which would be paid by the purchaser where financing is not provided through bonds the interest on which is excludable from the gross income of the recipient for federal income tax purposes), (ii) the value of services performed by the mortgagor or members of his or her family in completing the Residence, and (iii) the cost of land which has been owned by the mortgagor for at least two years before the date on which construction of the Residence begins. "Administrator" means such person or firm as may be designated by the Issuer as the Administrator under the Agreement, and any successor thereto. 04 -02 -85 4374p/2236/01 -2- "Agreement" means any of the Mortgage Sale and Service Agreements among the Issuer, the Trustee, the Administrator and a Lending Institution, and all amendments or supplements thereto. "Average-Area Purchase Price" means the most current average purchase price safe harbor limitations from time to time published by the Department of the Treasury for the San Jose Standard Metropolitan Statistical Area stated separately with respect to residences which have not been previously occupied ( "Average Area Purchase Price - New ") and residences which have been previously occupied ( "Average Area Purchase Price - Existing "); provided, however, that in the absence of such safe harbor limitations, the average area purchase price shall be determined by the issuer in accordance with the Code. "Code" means the Internal Revenue Code of 1954, as amended, and all regulations and rulings promulgated thereunder. "Deed of Trust" means the instrument securing a Loan. "Developer Agreement" means any of the agreements between the Issuer and a developer. "Developer Fee" means the fee paid or to be paid to the _ Issuer by the Developer for the Issuer's reservation of funds for the Developer, which, prior to the issuance of the Bonds, shall be in an amount equal to the percentage of the Developer's Reservation which is specified in Section 2 of Exhibit B (the "Initial Developer Fee ") and which may, upon issuance of the Bonds, be reduced (but not increased) to such amount as may be specified in a Notice of Fee, Rate and Allocation (said amount being the "Final Developer Fee "). The Developer Fee does not include the Non - Origination Fee. "Developer Reserved Single Family Residences" means Residences which are anticipated to be sold by the Developer and financed with Loans pursuant to the Program (as more particularly described as to location, size, and the draw -down schedule for funds attributable to such Residences in Sections 3, 4 and 5, respectively, Exhibit B ). "Developments" means all the Residences described in Exhibit B to each of the Developer Agreements. "Existing Residence" means a Residence which has been previously occupied and includes a unit in a condominium conversion. "FHLMC" means the Federal Home Loan Mortgage Corporation or its successor. 04 -02 -85 4374p/2236/01 -3- "First Time Homebuyer" means a person who has not had a present ownership interest, within the meaning of the Code, in his or her principal residence at any time during the three -year period ending on the date he or she executes a Note. "Force Majeure" means any cause or event, not within the Developer's agency or control, which prevents the Developer from fulfilling its obligations hereunder, including, without limitation, the following: acts of God; strikes, lock -outs or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or political subdivision thereof or any of their departments, agencies or officials, or any civil or military authority; insurrections; riots; landslides; adverse weather conditions; earthquakes; fires; storms; droughts; floods; explosions; and breakage or accident to transmission wires, machinery, transmission pipes or canals. "Household Income" means the current adjusted gross income of a potential mortgagor, determined in substantially the same manner in which such determination is made in connection with other loans originated pursuant to FHLMC guidelines, together with the current adjusted gross income of all persons who reside or intend to reside with such mortgagor in the Residence, but exclusive of the income of any co- signer of a - Note who does not reside or intend to reside therein, as evidenced by documentation satisfactory to the Lending Institution making the related Loan. "Lending Institution" means any financial institution identified as such in, and which is a party to, an Agreement and its successors and assigns thereunder. "Loan" means a loan evidenced by a Note secured by a Deed of Trust which meets the requirements of the Agreement and which the Trustee, on behalf of the Issuer, has purchased or intends to purchase pursuant to the Agreement. "Loan -to -Value Ratio" means the ratio of the original principal amount of a Loan to the lesser of the initial appraised value or the purchase price of the Residence subject to the related Deed of Trust. "Maximum Acquisition Cost" means an amount which does not exceed the lesser of (i) the Average Area Purchase Price - New in the case of a New Residence or the Average Area Purchase Price - Existing in the case of an Existing Residence or (ii) the amount if any specified in Section 13 of Exhibit B; provided, however, that the Issuer and the Town at its option may increase the Maximum Acquisition Cost to up to 110 percent or, in the case of a Targeted Area Residence, 120 percent of 04 -02 -85 4374p/2236/01 -4- the applicable Average Area Purchase Price by giving written notice thereof to the Developer, the Trustee, the Administrator, and the Lending Institution. The Maximum Acquisition Cost shall be determined as of the earlier of the date the Lending Institution makes a commitment to provide financing or the date the Residence is purchased. "Median Household Income" means the highest of (i) statewide median household income for the State as determined by the Issuer, (ii) countywide median household income as determined by the Issuer, or (iii) median family income for the San Jose Standard Metropolitan Statistical Area for a family of four, as published by the United States Department of Housing and Urban Development, as may be adjusted from time to time by the Issuer, or as may be otherwise reasonably determined by the Issuer in accordance with the Act. "Mortgage Loan Interest Rate" means the interest rate of the Loans when held by the Trustee on behalf of the Issuer which rate shall be the rate specified in the Notice of Fee, Rate, and Allocation and which shall not exceed the rate set forth in Section 6 of Exhibit B (the "Maximum Mortgage Loan Interest Rate "), exclusive of any fee or charge for mortgage insurance or guaranty. "New Residence" means a Residence which has not been previously occupied. "Non- Origination Fee" means the fee required to be paid by the Developer to the Trustee for the benefit of the Issuer in the event that less than all of that portion of the Reservation which is specified in Section 8(a) of Exhibit B is used for the purchase of Loans within the Origination Period. The amount of the Non - Origination Fee will be equal to the product of said portion of the Reservation which is not so used multiplied by the percentage to be specified in the Notice of Fee, Rate, and Allocation, which percentage shall not exceed that specified in Section 12 of Exhibit B. "Non- Origination Fee Letter of Credit" means an uncondi- tional and irrevocable letter of credit in an amount equal to the maximum potential Non - Origination Fee in a form, and issued by a bank, acceptable to the Issuer to the credit of the Trustee in order to secure the payment of the Non - Origination Fee. "Note" means the promissory note executed by a mortgagor to evidence such mortgagor's obligation to repay a Loan. 04 -02 -85 4374p/2236/01 -5- "Notice Address" means: (a) As to the Issuer: County of Santa Clara County Executive's Office 70 West Hedding Street San Jose, California 95110 Attention: Housing Bond Coordinator (b) As to the Administrator: Investors Mortgage Financial Services, Inc. 500 Newport Center Drive, Suite 754 P. O. Box 2910 Newport Beach, California 92660 Attention: Mr. Richard Latto (c) As to the Trustee: Security Pacific National Bank Trust Department Corporate Trust Administration Division P.O. Box 30376, Terminal Annex Los Angeles, California 90030 Attention: H 42 -9 (d) As to the Town: The address specified in Section 7(a) of Exhibit B. (e) As to Developer: The address specified in Section 7(b) of Exhibit B. "Notice of Fee, Rate, and Allocation" means a notice from the Issuer to the Trustee, the Administrator, the Lending Institutions and the Developer specifying the Final Developer Fee, the Mortgage Loan Interest Rate, any reduction in the Developer's Reservation, the Targeted Areas, the maximum amount of the Developer's Reservation which may be designated for use in connection with the purchase of Loans on Targeted Area Residences, Non - Origination Fee percentage, and the Yield on the Bonds, which notice shall be provided within thirty days after the issuance of the Bonds. "Origination Period" means the period ending on the date set forth in Section 10(a) of Exhibit B with respect to that portion of the Reservation for which the Developer has agreed 04 -02 -85 4374p/2236/01 -6- to pay the Non - Origination Fee and the period ending on the date set forth in Section 10(b) of Exhibit B with respect to the remainder of the Reservation. "Program Fund" means the fund by that name created pursuant to the Indenture and into which certain Bond proceeds and Developer Fees will be deposited and used to purchase Loans. "Reservation" means the amount of money which the Developer has requested be reserved in the Program Fund to purchase Loans, as specified in Section 8 of Exhibit B, provided that the Issuer may specify in the Notice of Fee, Rate and Allocation a reduction in said amount of not more than 20 percent if the issuer deems such a reduction to be desirable in connection with the sale of the Bonds. "Residence" means real property and improvements thereon consisting of a single family detached or attached (condominium, rowhouse, townhouse) residential unit (but not including a mobile home, that is a residence transportable in one or more sections built on a permanent chassis) which can reasonably be expected to become the principal residence of the mortgagor within a reasonable period of time (which shall not exceed 60 days) after the Loan is made to the mortgagor and which is located within the unincorporated area of the Issuer or within the boundaries of any of the Participating Cities. "State" means the State of California. "Targeted Area" means a qualified census tract within the meaning of Section 103A of the Code, as determined by the Issuer and specified in the Notice of Fee, Rate and Allocation. "Targeted Area Residence" means a Residence located within a Targeted Area. "Yield on the Bonds" means the yield on the Bonds as determined by the Issuer in accordance with the Code and as specified by the Issuer in the Notice of Fee, Rate, and Allocation. ARTICLE II REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants of Issuer. The Issuer represents and warrants to, and covenants with, the Town and the Developer that: (a) The Issuer is a legal subdivision and body corporate and politic of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the 04 -02 -85 4374p/2236/01 -7- Act, the Issuer has authorized or intends to authorize the execution and delivery of the Agreement, the Indenture, the Cooperative Agreements and this Developer Agreement. (b) The Issuer has complied or intends to comply with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and has or intends to have full power and authority to consummate, all transactions contemplated by this Developer Agreement, the Agreement, and the Indenture and any and all other agreements relating thereto. (c) To accomplish the foregoing, the Issuer proposes to issue the Bonds concurrently with or following the execution of this Developer Agreement on the terms and bases set forth in the Indenture and the Purchase Contract and to use the proceeds thereof as specified herein and as further specified in the Agreement and the Indenture. (d) No officer or official of the Issuer has any prohibited interest as defined by the applicable laws of the State in the Developer or in the transactions contemplated by this Developer Agreement. (e) The Issuer will make any and all findings and determinations required to be made by it pursuant to this - Developer Agreement in good faith and with due diligence. Section 2.02. Rep resentations, Warranties and Covenants of Developer. The Developer represents and warrants to, and covenants with, the issuer, the Town, and, in order to induce the Underwriters to enter into the Purchase Contract with respect to the Bonds, the Underwriters, that: (a) It is a duly organized and existing corporation, sole proprietorship, partnership or joint venture, as may be specified in Section 9 of Exhibit B, authorized to do business in the State. (b) It will, during 36 months after the date of issuance of the Bonds, remain a real estate developer engaged in the business of constructing single- family residences, will remain in good standing and qualified to do business under the laws of the State and those of its then state of incorporation (if applicable), will not cease doing business, dissolve, or otherwise dispose of all or substantially all of its assets and will not voluntarily consolidate with or merge into any other entity or permit one or more other entities to consolidate with or merge into it; provided, that it may, without violating the agreement contained in this subsection, consolidate with or merge into another entity or permit one or more entities to consolidate with or merge into it, or sell or otherwise transfer to another such entity all or substantially all of its 04 -02 -85 4374p/2236/01 -8- assets as an entirety and thereafter cease doing business or dissolve, provided the surviving, resulting or transferee entity, as the case may be, shall be in good standing and qualified to do business under the laws of the state of its then incorporation (if applicable) and of the State and shall, after giving-effect to such transaction, have a net worth substantially equal to or greater than that of the Developer immediately prior to such transaction, and shall assume in writing all of the obligations of the Developer under this Developer Agreement (in the case of such a transaction the Trustee, on behalf of the Issuer, shall release the Developer in writing from all liability hereunder concurrently with and contingent upon such assumption). (c) It has the power to execute, deliver and perform, and to enter into the transactions contemplated by, this Developer Agreement, and has duly authorized the execution, delivery and performance of this Developer Agreement. (d) The execution and delivery of this Developer Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Developer Agreement do not and will not conflict with or result in a breach of any of the terms, conditions or provisions of any legal restrictions or any _ agreement or instrument to which the Developer is now a party or by which it is bound, or constitute a default under any of the foregoing. (e) It will not knowingly take any action or permit any action which is within its control to be taken which would to its knowledge impair the exemption from federal income taxation of interest on the Bonds. (f) It will furnish to the Issuer and the Underwriters on or before the date on which the Bonds are issued a certificate in the form of Exhibit A. Section 2.03. Representations, Warranties and Covenants of City. The Town represents and warrants to, and covenants with, the Issuer and the Developer that: (a) The Town is a municipal corporation and political subdivision of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the Act, the Town has authorized the execution and delivery of the Cooperative Agreement with the Issuer and this Developer Agreement. (b) The Town has found and determined that the purchase of the Loans under the terms of the Agreement and this Developer Agreement (the "Program ") will both further the purposes of the Act and be in the public interest by increasing 04 -02 -85 4374p/2236/01 -9- the supply of money available for mortgage loans, by (i) providing for and promoting the public health, safety, morals and welfare; an (ii) assisting persons in acquiring and owning decent, safe and sanitary housing which they can afford. (c; The Town has complied with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and had full power and authority to consummate, all transactions involving the Town contemplated by the Cooperative Agreement with the Issuer and by this Developer Agreement and any and all agreements relating thereto. (d) No officer or official of the Town has any Prohibited interest as defined by the applicable laws of the State in the Developer or in the transactions contemplated by this Developer Agreement. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of Bond Proceeds. The Issuer agrees to utilize its best efforts to issue, sell and deliver the Bonds to the initial purchaser or purchasers thereof on the terms and bases set forth in the Indenture and the Purchase Contract. The proceeds of the Bonds will be deposited with Trustee and will be disbursed as provided in the Indenture, the Agreements and this Developer Agreement. In the event that the Bonds have not been sold by the Issuer within 60 days after the execution hereof, the Developer shall have as its sole remedy the return of its Initial Developer Fee, less the Developer's initial application fee (0.53 percent of its Reservation), which shall be returned, with interest if any, earned thereon, to the Developer within 30 days thereafter. Section 3.02. Limited Liability. All obligations of the Issuer incurred hereunder shall be limited obligations of the Issuer, payable solely out of Bond proceeds, certain fees, revenues and certain other amounts derived by the Issuer from the Loans (including earnings thereon and certain insurance proceeds with respect thereto) and certain reserve funds established in connection therewith (but not including a certain portion of the earnings on such funds, which portion is not subject to the lien of the Indenture), all as provided in the Indenture; and nothing contained herein shall create any indebtedness or be construed to create any moral obligation on the part of the Issuer or of the Town or permit any person to compel the exercise•of� the taxing power of the Issuer or of the Town to repay the Bonds. All obligations of the Issuer incurred hereunder shall be subordinated to the obligations of 04 -02 -85 4374p/2236/01 -10- the Issuer to the holders of the Bonds, and shall be payable only after all obligations of the Issuer to the holders of the Bonds shall have been satisfied. ARTICLE IV RESERVATION OF FUNDS FOR LOANS FOR DEVELOPER Section 4.01. Reservation of Funds. The Issuer hereby agrees to reserve funds in the Program Fund for the purchase of Loans on Developer Reserved Single Family Residences in an aggregate principal amount equal, as nearly as practicable, to the amount of the Developer's Reservation. Notwithstanding the foregoing, the Issuer may designate a portion of such reserved funds for the purchase of Loans made with respect to Targeted Area Residences, rather than Developer Reserved Single Family Residences, during the first year following the date on which financing of Loans from Bond proceeds first becomes available provided that the amount so designated, if any, shall not exceed that percentage of the total amount which the Code requires the Issuer to reserve for Targeted Area Residences which is equal to the quotient _ obtained by dividing the Reservation by the initial amount deposited in the Program Fund for the purchase of Loans, and provided further that the amount so designated, if any, shall be set forth in the Notice of Fee, Rate and Allocation. In the evert any money in the Program Fund is used to purchase a Loan on a Targeted Area Residence, the Developer's Reservation shall be reduced ratably along with the reservations of the other developers who have signed Developer Agreements; and the Developer Fee paid by the Developer with respect to the amount of such reduction shall be returned to the Developer. Section 4.02. Developer's Best Efforts to Construct; Termination of Reservation of Funds. The Developer, subject to and in accordance with the provisions of this Developer Agreement, agrees to use its best efforts to construct and make available sufficient Developer Reserved Single Family Residences to enable the Lending Institutions to originate and sell, before the dates specified in Section 10(a) and 10(b) of Exhibit B, Loans in aggregate principal amounts approximately equal to the portions Developer's Reservation set forth in Sections 8(a) and 8(b) of Exhibit B (subject to the possibility of a reduction therein pursuant to Section 4.01). Notwithstand- ing the foregoing, the Developer may direct the Lending Institution to use up to 20 percent of the Developer's Reservation to originate Loans for Residences which are not Developer Reserved Single Family Residences, which Loans otherwise comply with all the requirements of the Program; and 04 -02 -85 4374p/2236/01 -11- the Town agrees that such Loans may be originated for residences located within its boundaries which are not Developer Reserved Single Family Residences. The mixture of Developer Reserved Single Family Residences to be constructed and financed pursuant to this Developer Agreement, including the breakdown thereof by number of bedrooms, location, and the draw -down schedule for Loan funds attributable to such Residences, is set forth in Sections 3, 4 and 5 of Exhibit B. Approximately one year after the date of issuance of the Bonds, and at any time thereafter, the Administrator, on behalf of the Issuer, may review the Developer's progress in constructing and making available Developer Reserved Single Family Residences. If the Issuer determines, in its sole but reasonably exercised discretion, based upon the advice of the Administrator, that the Developer is not likely to construct and make available Developer Reserved Single Family Residences at such times and in such quantity and at such prices as will be sufficient to enable the Lending Institutions to accomplish the foregoing, the Issuer may reduce the Developer's Reservation by the amount of such estimated insufficiency. If the Developer fails to construct and make available sufficient Developer Reserved Single Family Residences to enable the _ Lending institutions to originate the specified aggregate principal amount of Loans within the period specified in this paragraph, (i) the unused portion of the Developer's Reservation which was required to be used within such period will become generally available for use under the Program of the Issuer; and (ii) the Trustee, on behalf of the Issuer, will be entitled to and shall retain the portion of the Developer Fee attributable to said unused portion of the Developer's Reservation. No portion of the Developer Fee shall be refunded to the Developer except to the extent that the Issuer later secures a developer fee from another developer for the unused portion of the Developer's Reservation, in which case the amount so secured shall be refunded to the Developer. The Developer may, with the written consent of the Issuer, transfer all or a portion of its Reservation to another developer which has previously entered into a Developer Agreement with the Issuer; and the portion of the Reservation so transferred may be used pursuant to said Developer Agreement. Upon a determination by the Trustee that the same will not adversely affect the rating of the Bonds, the Developer may, with the written consent of the Issuer, transfer all or a portion of its Reservation to any other developer, who shall then enter into a Developer Agreement with the Issuer. The Developer's request for the Issuer's consent to such transfer shall set forth the terms and conditions of the transfer, a description of the proposed Developer Reserved 04 -02 -65 4374p/2236/01 -12- Single Family Residences, the proposed transferee and the purpose for the transfer, all of which must conform to all requirements of the program and otherwise be acceptable to the Issuer. Except in the case of the sale of a Development and an assignment of the Developer's rights hereunder to the purchaser thereof, no-Reservation or portion thereof may be transferred to a developer who has not entered into a Developer Agreement with the Issuer except upon terms and conditions which have been first presented to and rejected by each of the developers who has entered into such a Developer Agreement; and the Developer requesting approval of any transfer shall pay any and all costs incurred by the Issuer, the Trustee and the Administrator in connection with the processing of such request. Section 4.03. The Loans. The terms, conditions and requirements regarding the purchase of Loans by the Issuer and the origination, sale and servicing of such Loans by the Lending Institutions shall be governed by the terms of the Agreement. The Issuer reserves the right to purchase Loans as the terms of the Agreement and the Indenture, or sound financial practices, dictate; and in no case shall the Issuer or the Trustee be required to purchase Loans in amounts which would exceed those set forth in the draw -down schedule included in Section 5 of Exhibit B. Section 4.04. Developer Fee. In consideration of the Issuer's agreement to reserve from the proceeds from the sale of the Bonds the amount referred to in Section 4.01 hereof, the Developer hereby agrees to pay and deliver the Developer Fee to the Issuer prior to or at the execution of this Developer Agreement by the Issuer, to be held by the Issuer in trust and to be deposited by the Issuer with the Trustee concurrently with the delivery of the Bonds to the initial purchaser or purchasers thereof. If 60 days after its execution of this Developer Agreement, the Issuer has not issued the Bonds at such prices and rates of interest as will enable it to purchase Loans bearing an annual rate of interest which is equal to or less than the Maximum Mortgage Loan Interest Rate, all rights and obligations of the parties hereunder shall terminate, except that the Developer Fee shall be returned to the Developer, with interest, if any, earned thereon, within 30 days thereafter. Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Residences. The Developer hereby represents and warrants to, and covenants with, the Issuer and the Town that with respect to each Developer Reserved Single Family Residence which it constructs and sells, the following conditions will apply at the time of the sale of the Residence: 04 -02 -85 4374p/2236/01 -13- (i) To the best knowledge of the Developer, such Residence is to be occupied by a mortgagor who is a First Time Homebuyer (except that the mortgagor need not be a First Time Homebuyer in the case of a Targeted Area Residence or in the case of Loans the aggregate principal amount of which does not exceed 10 percent of the principal amount of all Loans purchased with respect to the Developer's Reservation) as such mortgagor's principal place of residence (and not primarily for use in a trade or business or as a recreational home) within 60 days after the making of the Loan to such mortgagor, and the related Loan is made for the purpose of purchasing the Residence and not for the purpose of acquiring or replacing any existing loan on any such Residence (other than a construction loan or similar temporary financing); (ii) To the best knowledge of the Developer: (a) the Household Income of the mortgagor will not cause the limits specified in Section 11 of Exhibit B top be exceeded; (b) except as otherwise expressly indicated by the Developer in its affidavit, each Developer Reserved Single Family Residence was constructed by the Developer, has not been previously sold; (c) the Acquisition Cost of the Residence does not exceed the Maximum Acquisition Cost; and (d) the Loan -to -Value Ratio does not exceed 95 percent (iii) The purchase contract for such Developer Reserved Single Family Residence was executed on or after the date hereof; (iv) The physical property financed by such Loan will be free of material damage, constructed in a good and workmanlike manner and will be in general good repair on the closing date of such Mortgage Loan and at the time the property is offered for sale it will be free of any and all mechanics' liens; (v) The deed by which the property is to be transferred will contain a deed restriction in the form attached hereto as Exhibit C, if any; (vi) All information, including sales literature, regarding the resale provisions applicable to the Developer Reserved Single Family Residences which is provided or made available to purchasers will be in such form and substance as the Issuer may from time to time require, and will be provided at the Developer's expense; (vii) The Developer Reserved Single Family Residence was offered for•s4le to qualifying buyers on either a first - come - first- served basis or a lottery basis (except to the extent that some other basis was required by law, as in 04 -02 -85 4374p/2236/01 -14- the case of a condominium conversion) without regard to race, color, religion, age, sex, marital status or national origin; and (viii) The Developer has no knowledge of any fact, circumstance or condition with respect to the mortgagor or the Loan which would lead the Developer to believe that the certifications made by the mortgagor to the Issuer are not true. Section 4.06. Developer to Submit Affidavit. In connection with, and as a condition precedent to, the proposed purchase of a Loan, for each Developer Reserved Single Family Residence, the Developer will execute and submit to the applicable Lending Institution an affidavit in the form specified in the Agreement. Section 4.07. Non - Origination of Reservation. In the event that less than the entire amount set forth in Section 8(a) of Exhibit B has been used to purchase Loans by the date specified in Section 10(a) of Exhibit B, the Developer shall immediately pay the Non - Origination Fee to the Trustee. In order to secure the payment of the Non - Origination Fee, the Developer shall deliver the Non - Origination Letter of - Credit to Issuer prior to or concurrently with the execution of this Developer Agreement by the Issuer, to be held by the Issuer in trust and to be deposited by the Issuer with the Trustee concurrently with the issuance of the Bonds. The Trustee shall hold the Non - Origination Letter of Credit for the benefit of the Issuer and shall draw upon it to the extent of the Non - Origination Fee if the Developer does not pay the same as soon as it becomes due. The Developer may from time to time substitute for the original Non - Origination Letter of Credit a new such instrument meeting all the terms and conditions of this Developer Agreement but in a lesser amount, provided such amount is at least equal to the maximum Non- Origination Fee then potentially payable by the Developer, as determined by the Trustee, giving recognition to the Developer's utilization of the Reservation. The Developer shall substitute a new Non - Origination Letter of Credit for any such instrument which expires prior to the expiration of the period specified in Section 10(a) of Exhibit B; and if such substitution is not effected at least thirty days prior to such expiration date, the Trustee is hereby authorized to draw upon the Non - Origination Letter of Credit and to retain for deposit in the Revenue Fund established by the Indenture the full amount of the maximum Non - Origination Fee then potentially payable. 04 -02 -85 4374p/2236/01 -15- The Trustee shall return the Non - Origination Letter of Credit to the Developer as soon as the entire amount of the Reservation specified in Section 8(a) of Exhibit B has been used for the purchase of Loans. ARTICLE V DEVELOPER Section 5.01. Liability of Developer. If after the Trustee has purchased a Loan with respect to a Developer Reserved Single Family Residence it is determined by the Issuer that the Acquisition Cost of such Residence exceeded the Maximum Acquisition Cost, upon demand from the Trustee the Developer shall immediately purchase the Loan from the Trustee at a price equal to the principal amount thereof plus any unpaid interest thereon to the date of sale. Section 5.02. Merger or Consolidation of Developer. Any entity into which the Developer may be merged or consolidated, or any entity resulting from any merger, conversion or consolidation to which the Developer shall be a party, or any entity succeeding to the business of the Developer, shall be the successor of the Developer hereunder without the execution - or filing of any document or instrument, except as provided in Section 2.02(b) of this Developer Agreement, or any further act on the part of any of the parties hereto. ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined. Upon the happening of any one or more of the following events, the Administrator for and on behalf of the Issuer and the Trustee may terminate this Developer Agreement with respect to the Developer, as provided in Section 6.02 hereof and shall have the other remedies specified therein: (a) Failure by the Developer duly to observe or perform in any material respect any covenant, condition or agreement required by this Developer Agreement to be observed or performed by it (other than its agreement to have Loans originated against its Reservation by certain dates) for a period of thirty days after written notice thereof, specifying such failure and requesting that it be remedied, is given to the Developer by the Issuer, the Administrator or the Trustee, unless the Issuer, the Administrator or the Trustee (whichever has given notice) agrees in writing to an extension of such time period prior 04 -02 -85 4374p/2236/01 -16- to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer, the Administrator and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Developer within the applicable period and diligently pursued until the default is corrected. Neither this provision nor any other provision hereof shall require the purchase by the Trustee of any Loan after the expiration of the Origination Period. (b) A decree or an order of a court, agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding -up or liquidation of the Developer's affairs, shall have been entered against the Developer and such decree or order shall have remained in force undischarged or unstayed for a period of 30 days. (c) The Developer shall consent to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities of similar proceedings of or relating to the Developer or of or relating to all or substantially all of its property; (d) The Developer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable bankrutpcy, insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. (e) Any litigation, at law or in equity, or any proceeding before any federal, state or municipal board or other governmental agency or instrumentality is instituted or threatened against the Developer, or any development occurs in any such litigation, which in either event, may, in the reasonable judgment of the Issuer, the Administrator or the Trustee, materially adversely affect the financial condition or operations of the Developer or impair the ability of the Developer to perform its obligations under this Developer Agreement. The provisions of paragraph (a) above (but not the circumstances described in paragraphs (b) through (e) hereof) are subject to the following limitation: if by reason of Force Majeure the Developer is unable in whole or in part to carry out any agreement on its part herein contained, such event shall not be deemed•a.cause for termination during the continuance of such inability; provided, however, that neither Force Majeure nor any other event or cause shall require the 04 -02 -85 4374p/2236/01 -17- purchase by the Trustee of any Loan after the expiration of the Origination Period. The Developer agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out such agreement; provided that the settlement of strikes, lockouts and other disturbances shall be entirely within the discretion of the Developer; and the Developer shall not be required to make settlement of strikes, lockouts and other disburbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Developer unfavorable to it. Termination of the Developer's rights and obligations hereunder shall not preclude a mortgagor thereafter purchasing a Developer Reserved Single Family Residence from receving a Loan with respect to such property if such funds are otherwise available under the Program of the Issuer. Section 6.02. Remedies. Whenever any event referred to in Section 6.01 hereof shall have happened and be continuing, the Administrator, for and on behalf of the Issuer and the Trustee, may take any one or more of the following remedial steps: (a) By notice in writing to the Developer the Administrator may, subject to applicable state and federal law, terminate all of the Developer's rights and obligations including, without limitation, the Developer's reservation of Loan funds. Ten days after the giving of such notice, the Administrator is hereby authorized and empowered, without limitation, to execute and deliver on behalf of the Developer any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such termination. The Developer agrees to cooperate with the Administrator in effecting the termination of its rights and obligations hereunder. (b) Subject to the limitations Developer Agreement, the Administrat, other action at law or in equity may desirable to enforce performance and obligation, agreement or covenant of this Developer Agreement. contained in this Dr may take whatever appear necessary or observance of any the Developer under Any amounts collected pursuant to action taken under this Section shall be applied in accordance with the provisions of the Indenture.. Section 6.03. No Remedy of Issuer, Trustee or Administra- tor Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved to the Issuer, the Trustee or the Administrator is intended to be exclusive of any 04 -02 -85 4374p/2236/01 -18- other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under this Developer Agreement or existing at law or in equity. No delay or omission to exercise any right or power accruing upon the happening of any event set forth in Section 6.01 hereof shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee or the Administrator to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be required in this Article. Section 6.04. Agreement to Pay Attorneys' Fees and Expenses. In the event the Developer should fail to perform its obligations under any of the provisions of this Agreement and the Trustee or the Administrator should employ attorneys or incur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it will pay or reimburse the Trustee or the Administrator on demand the reasonable fee of such attorneys and such other incurred expenses. ARTICLE VII _ MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; Permit Approvals. Subsequent to the issuance of the Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Developer Agreement may not be effectively amended, changed, modified, altered or terminated without the written approval of the Trustee and the consent of the Issuer. The Issuer will not unreasonably delay or unreasonably withhold necessary approvals through the approval or permit processes, and will not unreasonably withhold its consent to amendments to Exhibit B hereto (other than to the draw -down schedule set forth in Section 5 thereof, with respect to which the Issuer shall have no obligation whatsoever to approve an amendment); provided, however, that it is expressly understood that it shall not be deemed unreasonable for the Issuer to withhold its consent in order to promote the public purposes of the Program or the inclusionary housing program of the Issuer; and provided further that the Developer must agree to advance all costs and expenses which the Issuer estimates will be incurred by it in connection with any such amendment. Furthermore, no amendment hereto shall be permitted which may adversely affect the Bondholders or the rating of the Bonds. 04 -02 -85 4374p/2236/01 -19- Section 7.02. Changes in Anolicable Laws. In the event the Act or the Code is amended so as, in the opinion of counsel recognized to be expert in such matters,to reduce or eliminate any restriction therein applicable to the use of the proceeds of the Bonds, the Issuer may, at its option, similarly reduce or eliminate the comparable restriction contained herein so as to conform to such amendment by giving notice thereof to the Developer. Section 7.03. Limitation on Rights o£ Bondholders. No Bondholder (as defined in the Indenture) shall have any right to institute a suit with respect to this Developer Agreement except as provided in Article VIII of the Indenture and only if £or the equal benefit of all Bondholders. Section 7.04. Governing Law. This Developer Agreement shall be construed in accordance with the laws of the State, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Section 7.05. Counterparts. This Developer Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed to the appropriate Notice Address. Duplicate copies of each notice, certificate or other communication given hereunder to the Issuer, the Town, the Developer, the Administrator or the Trustee shall also be given to the others. The Issuer, the Town, the Developer, the Administrator and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 7.07. Severability. In the event any provision of this Developer Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.08. Further Assurances and Corrective Instru- ments. To the extent permitted by law, the Issuer, the Town, and the Developer severally and not jointly agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Developer Agreement. 04 -02 -85 4374p/2236/01 -20- Section 7.09. Term of Agreement. This Developer Agreement shall be in full force and effect from the date of the execution hereof and shall continue in effect for the periods set forth in this Developer Agreement, and as such periods may be extended pursuant to the terms hereof. IN WITNESS WHEREOF, the Developer, the Town, and the Issuer have caused their names to be signed hereto by their respective officers thereunto duly authorized and their respective seals, duly attested, to be hereunto affixed, all as of the day and year first above written. ✓' /U-2 G1 ill ; Q TOWN AT JiEY M ATTEST i l T /j (SEAL)' Clerk of the Board of Supervisors County of Santa Clara, California 04 -02 -85 4374p/2236/01 -21- DEVELOPER 0 TOWN OF S �-t7 K / v By Mayor COUNTY OF SANTA CLARA, CALIFORNIA By Chairperson, Board of Supervisors EXHIBIT B I. Name of Developer: James Lampe, General Contractor 2. The Initial Developer Fee is four and a half percent (4,5 %} of the Developer's Reservation. 3. Description of Residences (approximate size, number of bed- rooms, etc.: Four - two bedroom units (856 square feet) 4. Location of Residences: _110,112,120 and 122 Henning Ct Los Gatos CA. 95030 5. Reservation Draw -Down Schedule. January F ebruary 1983 1984 !,'.arch $ April $ May $ June $ Julv $ August $_ September $ October $ November $ December S; 1985 $ S _ S $x,680 S 6. The Maximum Mortgage Loan Interest Rate is percent (9•rJS %) per year, exclusive.of any fee or charge for mortgage insurance or guaranty. 7. (a) Town's Notice Address: Town of I n< Gatns _ ox Los Gatos, CA. 95031 ATTN: Community Services Director 7. (b) Developer's Notice Address: James Lampe, General Contractor tacia os �a 04 -02 -85 4374p/2236/01 t 6. Developer's Reservation: $412,680 (G Portion for which Developer agrees to pay t Origination Fee and thereby recur e extended Origi `'on Period set forth in ion 10(a) hereof: (b) Portion t .ich the rho Origination Period set for n Section 10(b) hereo 11 be applicable: $ 9. Type of business organizaton of Developer (corporation, partnership, sole proprietorship or joint venture): Partnership 10. Last date on which Loans may be sold to the Trustee: (a) For portion. of Reservation specified in Section 9(a) hereof - December 31, 1985. he Leze.,be_ s- X04. _ 11. Income Limits: New Residences - the mortgagor's Household Income n exceed 150 percent of Median Household Income respe `o $ principal amount of Lo and 120 percent of ian Household Income with r ect to $ prince amount of Loans. Existing Residences_- mortgagor's Household income may not exceed 120 per of n Household Income with respect to $ _ principal amo of Loans, 110 percent they with respect to $ ncipal amount o£ Loan 00 percent thereof with respect to pr pal amount of Loans, and 80 percent thereof wi espect to $ principal amount of Loans. 12. Maximum Non - Origination Fee Percentage 13. Maximum Acquisition Cost: $ 151,800 04 -02 -85 4374p/2236/01 JJM:pw 1/24/83 JJM:ar 2/04/83 JJM:ac 2/12/83 JJM:pw 2/24/83 DONALD B. BACCI, INC. and TOWN OF _LOS GATOS CALIFORNIA and COUNTY OF SANTA CLARA, CALIFORNIA DEVELOPER AGREEMENT Dated as of March 1, 1983 COUNTY OF SANTA CLARA, CALIFORNIA SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS ISSUE I OF 1983 TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and is not a part of the Developer Agreement). ARTICLE I Page Definitions.............. ............................... 2 ARTICLE II REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants of Issuer .............................. 7 Section 2.02. Representations, Warranties and Covenants of Developer ........................... 8 Section 2.03. Representations, Warranties and Covenants of Town . ............................... 9 ARTICLE III ISSUANCE OF BONDS, APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of Bond Proceeds .......................... 10 Section 3.02. Limited Liability ........................ 10 ARTICLE IV Fib LOPER Section 4.01. Reservation of Funds ..................... 11 Section 4.02. Developer's Best Efforts to Construct; Termination of Reservation of Funds ..... 11 Section 4.03. The Loans . ............................... 13 Section 4.04. Developer Fee ............................ 13 Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Residences .............................. 13 Section 4.06. Developer to Submit Affidavit ........... 15 Section 4.07. Non - Origination of Reservation .......... 15 i ARTICLE V DEVELOPER Section 5.01. Liability of Developer .................. 16 Section 5.02. Merger or Consolidation of Developer.... 16 ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined........... 16 Section 6.02. Remedies . ............................... 18 Section 6.03. No Remedy of Issuer, Trustee or 20 Section 7.04. Administrator Exclusive ............... 18 Section 6.04. Agreement to Pay Attorney's Fees and 20 Section 7.06. Expenses .............................. 19 ARTICLE VII MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; Testimonium ............ ............................... 21 Signatures and Seals ... ............................... 21 EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences ii Permit Approvals ...................... 19 Section 7.02. Changes in Applicable Laws .............. 20 Section 7.03. Limitation on Rights of Bondholders..... 20 Section 7.04. Governing Law ........................... 20 Section 7.05. Counterparts ............................ 20 Section 7.06. Notices .. ............................... 20 Section 7.07. Severability ............................ 20 Section 7.08. Further Assurances and Corrective Instruments. .......................... 20 Section 7.09. Term of Agreement ....................... 21 Testimonium ............ ............................... 21 Signatures and Seals ... ............................... 21 EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences ii DEVELOPER AGREEMENT THIS DEVELOPER AGREEMENT (the "Developer Agreement "), dated as of March 1, 1983, is by and among the developer whose name is set forth on the cover hereof and in Section 1 of Exhibit B hereto (the "Developer "), the city whose name is set forth on the cover and signature page hereof (the "Town "), and the County of Santa Clara, California (the "Issuer "). W I T N E S S E T H WHEREAS, the Issuer has adopted a home mortgage finance program (the "Program ") pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act "); WHEREAS, the Issuer has promulgated rules and regulations with respect to purchasing mortgage loans originated and made by qualified mortgage lenders to certain mortgagors to purchase residences within the unincorporated areas of the Issuer and within certain cities (the "Participating Cities ") which have entered into cooperative agreements with the Issuer (the "Cooperative Agreements "); WHEREAS, the Town and the Issuer have entered into a Cooperative Agreement pursuant to which the Town has authorized the Issuer to exercise the powers conferred upon it by the Act within the boundaries of the Town, all in furtherance of the Program; WHEREAS, the Issuer proposes to issue, sell and deliver its Single Family Residential Mortgage Revenue Bonds, Issue I of 1983 (the "Bonds "), pursuant to a purchase contract (the "Purchase Contract ") between the Issuer and a group of underwriters for whom A.G. Becker Incorporated is the senior manager (the "Underwriters "), for the purpose of providing funds to purchase mortgage loans pursuant to the Program; WHEREAS, the Issuer intends to enter into an indenture between itself and Security Pacific National Bank (the "Trustee ") for the issuance of the Bonds (the "Indenture "), pursuant to which the Trustee will be empowered to purchase mortgage loans on certain residences subject, among other things, to certain terms and conditions hereinafter set forth; WHEREAS, the Issuer, the Town and the Developer are desirous of setting forth the terms and conditions upon which the Developer will designate residences and the Issuer will reserve funds from the purchase of the Bonds for the purchase of mortgage loans to finance the purchase of such residences; and WHEREAS, the Issuer has found and declared that such purchase of mortgage loans will both further the purposes of the Act and be in the public interest, providing for and promoting the public health, safety, morals and welfare, by (i) increasing the supply of money available for mortgage loans and (ii) assisting low and moderate income persons and families in acquiring decent, safe and sanitary housing; NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, and for and in consideration of the mutual promises, representations and agreements herein contained, hereby agree as follows: ARTICLE I DEFINITIONS Unless the context clearly otherwise requires, each capitalized word or phrase appearing herein which is defined in the Indenture shall have the same meaning in this Developer Agreement as is given it in the Indenture. In addition thereto, unless the context clearly requires otherwise, the following terms shall have the following respective meanings: "Acquisition Cost" means the cost of acquiring a Residence from the seller as a completed residential unit, including: (i) all amounts paid, either in cash or in kind, by the purchaser (or a related party or for the benefit of the purchaser) to the seller (or a related person or for the benefit of the seller) as consideration for the Residence; (ii) if the Residence is incomplete, the reasonable cost of completing it (so that occupancy thereof is legally permitted); and, (iii) if the Residence is purchased subject to a ground rent, the capitalized value of the ground rent calculated using a discount rate equal to the Yield on the Bonds; but exclusive of: (i) usual and reasonable settlement or financing costs (but only to the extent that such amounts do not exceed the usual and reasonable costs which would be paid by the purchaser where financing is not provided through bonds the interest on which is excludable from the gross income of the recipient for federal income tax purposes), (ii) the value of services performed by the mortgagor or members of his or her family in completing the Residence, and (iii) the cost of land which has been owned by the mortgagor for at least two years before the date on which construction of the Residence begins. "Administrator" means such person or firm as may be designated by the Issuer as the Administrator under the Agreement, and any successor thereto. 04 -02 -85 4374p/2236/01 -2- "Agreement" means any of the Mortgage Sale and Service Agreements among the Issuer, the Trustee, the Administrator and a Lending Institution, and all amendments or supplements thereto. "Average Area Purchase Price" means the most current average purchase price safe harbor limitations from time to time published by the Department of the Treasury for the San Jose Standard Metropolitan Statistical Area stated separately with respect to residences which have not been previously occupied ( "Average Area Purchase Price - New ") and residences which have been previously occupied ( "Average Area Purchase Price - Existing "); provided, however, that in the absence of such safe harbor limitations, the average area purchase price shall be determined by the Issuer in accordance with the Code. "Code" means the Internal Revenue Code of 1954, as amended, and all regulations and rulings promulgated thereunder. "Deed of Trust" means the instrument securing a Loan. "Developer Agreement" means any of the agreements between the Issuer and a developer. "Developer Fee" means the fee paid or to be paid to the Issuer by the Developer for the Issuer`s reservation of funds for the Developer, which, prior to the issuance of the Bonds, shall be in an amount equal to the percentage of the Developer's Reservation which is specified in Section 2 of Exhibit B (the "Initial Developer Fee ") and which may, upon issuance of the Bonds, be reduced (but not increased) to such amount as may be specified in a Notice of Fee, Rate and Allocation (said amount being the "Final Developer Fee "). The Developer Fee does not include the Non - Origination Fee. "Developer Reserved Single Family Residences" means Residences which are anticipated to be sold by the Developer and financed with Loans pursuant to the Program (as more particularly described as to location, size, and the draw -down schedule for funds attributable to such Residences in Sections 3, 4 and 5, respectively, Exhibit B ). "Developments" means all the Residences described in Exhibit B to each of the Developer Agreements. "Existing Residence" means a Residence which has been previously occupied and includes a unit in a condominium conversion. "FHLMC" means the Federal Home Loan Mortgage Corporation or its successor. 04 -02 -85 4374p/2236/01 -3- "First Time Homebuyer" means a person who has not had a present ownership interest, within the meaning of the Code, in his or her principal residence at any time during the three -year period ending on the date he or she executes a Note. "Force Majeure" means any cause or event, not within the Developer's agency or control, which prevents the Developer from fulfilling its obligations hereunder, including, without limitation, the following: acts of God; strikes, lock -outs or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or political subdivision thereof or any of their departments, agencies or officials, or any civil or military authority; insurrections; riots; landslides; adverse weather conditions; earthquakes; fires; storms; droughts; floods; explosions; and breakage or accident to transmission wires, machinery, transmission pipes or canals. "Household Income" means the current adjusted gross income of a potential mortgagor, determined in substantially the same manner in which such determination is made in connection with other loans originated pursuant to FHLMC guidelines, together with the current adjusted gross income of all persons who reside or intend to reside with such mortgagor in the Residence, but exclusive of the income of any co- signer of a Note who does not reside or intend to reside therein, as evidenced by documentation satisfactory to the Lending Institution making the related Loan. "Lending Institution" means any financial institution identified as such in, and which is a party to, an Agreement and its successors and assigns thereunder. "Loan" means a loan evidenced by a Note secured by a Deed of Trust which meets the requirements of the Agreement and which the Trustee, on behalf of the Issuer, has purchased or intends to purchase pursuant to the Agreement. "Loan -to -Value Ratio" means the ratio of the original principal amount of a Loan to the lesser of the initial appraised value or the purchase price of the Residence subject to the related Deed of Trust. "Maximum Acquisition Cost" means an amount which does not exceed the lesser of (i) the Average Area Purchase Price - New in the case of a New Residence or the Average Area Purchase Price - Existing in the case of an Existing Residence or (ii) the amount if any specified in Section 13 of Exhibit B; provided, however, that the Issuer and the Town at its option may increase the Maximum Acquisition Cost to up to 110 percent or, in the case of a Targeted Area Residence, 120 percent of 04 -02 -85 4374p/2236/02,_. -4- the applicable Average Area Purchase Price by giving written notice thereof to the Developer, the Trustee, the Administrator, and the Lending Institution. The Maximum Acquisition Cost shall be determined as of the earlier of the date the Lending Institution makes a commitment to provide financing or the date the Residence is purchased. "Median Household Income" means the highest of (i) statewide median household income for the State as determined by the Issuer, (ii) countywide median household income as determined by the Issuer, or (iii) median family income for the San Jose Standard Metropolitan Statistical Area for a family of four, as published by the United States Department of Housing and Urban Development, as may be adjusted from time to time by the Issuer, or as may be otherwise reasonably determined by the Issuer in accordance with the Act. "Mortgage Loan Interest Rate" means the interest rate of the Loans when held by the Trustee on behalf of the Issuer which rate shall be the rate specified in the Notice of Fee, Rate, and Allocation and which shall not exceed the rate set forth in Section 6 of Exhibit B (the "Maximum Mortgage Loan Interest Rate "), exclusive of any fee or charge for mortgage insurance or guaranty. "New Residence" means a Residence which has not been previously occupied. "Non - Origination Fee" means the fee required to be paid by the Developer to the Trustee for the benefit of the Issuer in the event that less than all of that portion of the Reservation which is specified in Section 8(a) of Exhibit B is used for the purchase of Loans within the Origination Period. The amount of the Non - Origination Fee will be equal to the product of said portion of the Reservation which is not so used multiplied by the percentage to be specified in the Notice of Fee, Rate, and Allocation, which percentage shall not exceed that specified in Section 12 of Exhibit B. "Non- Origination Fee Letter of Credit" means an uncondi- tional and irrevocable letter of credit in an amount equal to the maximum potential Non - Origination Fee in a form, and issued by a bank, acceptable to the Issuer to the credit of the Trustee in order to secure the payment of the Non - Origination Fee. "Note" means the promissory note executed by a mortgagor to evidence such mortgagor's obligation to repay a Loan. 04 -02 -85 4374p/2236/01 -5- "Notice Address" means: (a) As to the Issuer: County of Santa Clara County Executive's Office 70 West Hedding Street San Jose, California 95110 Attention: Housing Bond Coordinator (b) As to the Administrator: Investors Mortgage Financial Services, Inc. 500 Newport Center Drive, Suite 754 P. 0. Box 2910 Newport Beach, California 92660 Attention: Mr. Richard Latto (c) As to the Trustee: Security Pacific National Bank Trust Department Corporate Trust Administration Division P.O. Box 30376, Terminal Annex Los Angeles, California 90030 Attention: H 42 -9 (d) As to the Town: The address specified in Section 7(a) of Exhibit B. (e) As to Developer: The address specified in Section 7(b) of Exhibit B. "Notice of Fee, Rate, and Allocation" means a notice from the Issuer to the Trustee, the Administrator, the Lending Institutions and the Developer specifying the Final Developer Fee, the Mortgage Loan Interest Rate, any reduction in the Developer's Reservation, the Targeted Areas, the maximum amount of the Developer's Reservation which may be designated for use in connection with the purchase of Loans on Targeted Area Residences, Non- Origination Fee percentage, and the Yield on the Bonds, which notice shall be provided within thirty days after the issuance of the Bonds. "Origination Period" means the period ending on the date set forth in Section 10(a) of Exhibit B with respect to that portion of the Reservation for which the Developer has agreed 04 -02 -85 4374p/2236/01 -6- to pay the Non - Origination Fee and the period ending on the date set forth in Section 10(b) of Exhibit B with respect to the remainder of the Reservation. "Program Fund" means the fund by that name created pursuant to the Indenture and into which certain Bond proceeds and Developer Fees will be deposited and used to purchase Loans. "Reservation" means the amount of money which the Developer has requested be reserved in the Program Fund to purchase Loans, as specified in Section 8 of Exhibit B, provided that the Issuer may specify in the Notice of Fee, Rate and Allocation a reduction in said amount of not more than 20 percent if the Issuer deems such a reduction to be desirable in connection with the sale of the Bonds. "Residence" means real property and improvements thereon consisting of a single family detached or attached (condominium, rowhouse, townhouse) residential unit (but not including a mobile home, that is a residence transportable in one or more sections built on a permanent chassis) which can reasonably be expected to become the principal residence of the mortgagor within a reasonable period of time (which shall not exceed 60 days) after the Loan is made to the mortgagor and which is located within the unincorporated area of the Issuer or within the boundaries of any of the Participating Cities. "State" means the State of California. "Targeted Area" means a qualified census tract within the meaning of Section 103A of the Code, as determined by the Issuer and specified in the Notice of Fee, Rate and Allocation. "Targeted Area Residence" means a Residence located within a Targeted Area. "Yield on the determined by the specified by the Allocation. Bonds" means the yield on the Bonds as Issuer in accordance with the Code and as Issuer in the Notice of Fee, Rate, and ARTICLE II REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants of Issuer. The Issuer represents and warrants to, and covenants with, the Town and the Developer that: (a) The Issuer is a legal subdivision and body corporate and politic of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the 04 -02 -85 4374p/2236/01 -7- Act, the Issuer has authorized or intends to authorize the execution and delivery of the Agreement, the Indenture, the Cooperative Agreements and this Developer Agreement. (b) The Issuer has complied or intends to comply with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and has or intends to have full power and authority to consummate, all transactions contemplated by this Developer Agreement, the Agreement, and the Indenture and any and all other agreements relating thereto. (c) To accomplish the foregoing, the Issuer proposes to issue the Bonds concurrently with or following the execution of this Developer Agreement on the terms and bases set forth in the Indenture and the Purchase Contract and to use the proceeds thereof as specified herein and as further specified in the Agreement and the Indenture. (d) No officer or official of the Issuer has any prohibited interest as defined by the applicable laws of the State in the Developer or in the transactions contemplated by this Developer Agreement. (e) The Issuer will make any and all findings and determinations required to be made by it pursuant to this Developer Agreement in good faith and with due diligence. Section 2.02. Representations Warranties and Covenants of Developer. The Developer represents and warrants to, and covenants with, the Issuer, the Town, and, in order to. induce the Underwriters to enter into the Purchase Contract with respect to the Bonds, the Underwriters, that: (a) It is a duly organized and existing corporation, sole proprietorship, partnership or joint venture, as may be specified in Section 9 of Exhibit B, authorized to do business in the State. (b) It will, during 36 months after the date of issuance of the Bonds, remain a real estate developer engaged in the business of constructing single - family residences, will remain in good standing and qualified to do business under the laws of the State and those of its then state of incorporation (if applicable), will not cease doing business, dissolve, or otherwise dispose of all or substantially all of its assets and will not voluntarily consolidate with or merge into any other entity or permit one or more other entities to consolidate with or merge into it; provided, that it may, without violating the agreement contained in this subsection, consolidate with or merge into another entity or permit one or more entities to consolidate with or merge into it, or sell or otherwise transfer to another such entity all or substantially all of its 04 -02 -85 4374p/2236/01 -8' assets as an entirety and thereafter cease doing business or dissolve, provided the surviving, resulting or transferee entity, as the case may be, shall be in good standing and qualified to do business under the laws of the state of its then incorporation (if applicable) and of the State and shall, after giving effect to such transaction, have a net worth substantially equal to or greater than that of the Developer immediately prior to such transaction, and shall assume in writing all of the obligations of the Developer under this Developer Agreement (in the case of such a transaction the Trustee, on behalf of the "Issuer, shall release the Developer in writing from all liability hereunder concurrently with and contingent upon such assumption). (c) It has the power to execute, deliver and perform, and to enter into the transactions contemplated by, this Developer Agreement, and has duly authorized the execution, delivery and performance of this Developer Agreement. (d) The execution and delivery of this Developer Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Developer Agreement do not and will not conflict with or result in a breach of any of the terms, conditions or provisions of any legal restrictions or any agreement or instrument to which the Developer is now a party or by which it is bound, or constitute a default under any of the foregoing. (e) It will not knowingly take any action or permit any action which is within its control to be taken which would to its knowledge impair the exemption from federal income taxation of interest on the Bonds. (f) It will furnish to the Issuer and the Underwriters on or before the date on which the Bonds are issued a certificate in the form of Exhibit A. Section 2.03. Representations, Warranties and Covenants of City. The Town represents and warrants to, and covenants with, the Issuer and the Developer that: (a) The Town is a municipal corporation and political subdivision of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the Act, the Town has authorized the execution and delivery of the Cooperative Agreement with the Issuer and this Developer Agreement. (b) The Town has found and determined that the purchase of the Loans under the terms of the Agreement and this Developer Agreement (the "Program ") will both further the purposes of the Act and be in the public interest by increasing 04 -02 -85 4374p/2236/01 -9- the supply of money available for mortgage loans, by (i) providing for and promoting the public health, safety, morals and welfare; an (ii) assisting persons in acquiring and owning decent, safe and sanitary housing which they can afford. (c) The Town has complied with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and had full power and authority to consummate, all transactions involving the Town contemplated by the Cooperative Agreement with the Issuer and by this Developer Agreement and any and all agreements relating thereto. (d) No officer or official of the Town has any prohibited interest as defined by the applicable laws of the State in the Developer or in the transactions contemplated by this Developer Agreement. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of Bond Proceeds. The Issuer agrees to utilize its best efforts to issue, sell and deliver the Bonds to the initial purchaser or purchasers thereof on the terms and bases set forth in the Indenture and the Purchase Contract. The proceeds of the Bonds will be deposited with Trustee and will be disbursed as provided in the Indenture, the Agreements and this Developer Agreement. In the event that the Bonds have not been sold by the Issuer within 60 days after the execution hereof, the Developer shall have as its sole remedy the return of its Initial Developer Fee, less the Developer's initial application fee (0.53 percent of its Reservation), which shall be returned, with interest if any, earned thereon, to the Developer within 30 days thereafter. Section 3.02. Limited Liability. All obligations of the Issuer incurred hereunder shall be limited obligations of the Issuer, payable solely out of Bond proceeds, certain fees, revenues and certain other amounts derived by the Issuer from the Loans (including earnings thereon and certain insurance proceeds with respect thereto) and certain reserve funds established in connection therewith (but not including a certain portion of the earnings on such funds, which portion is not subject to the lien of the Indenture), all as provided in the Indenture; and nothing contained herein shall create any indebtedness or be construed to create any moral obligation on the part of the Issuer or of the Town or permit any person to compel the exercise of the taxing power of the Issuer or of the Town to repay the Bonds. All obligations of the Issuer incurred hereunder shall be subordinated to the obligations of 04 -02 -85 4374p/2236/01 -10- the Issuer to the holders of the Bonds, and shall be payable only after all obligations of the Issuer to the holders of the Bonds shall have been satisfied. ARTICLE IV OF FUNDS FOR LOANS FOR DEVELOPER Section 4.01. Reservation of Funds. The Issuer hereby agrees to reserve funds in the Program Fund for the purchase of Loans on Developer Reserved Single Family Residences in an aggregate principal amount equal, as nearly as practicable, to the amount of the Developer's Reservation. Notwithstanding the foregoing, the issuer may designate a portion of such reserved funds for the purchase of Loans made with respect to Targeted Area Residences, rather than Developer Reserved Single Family Residences, during the first year following the date on which financing of Loans from Bond proceeds first becomes available provided that the amount so designated, if any, shall not exceed that percentage of the total amount which the Code requires the Issuer to reserve for Targeted Area Residences which is equal to the quotient obtained by dividing the Reservation by the initial amount deposited in the Program Fund for the purchase of Loans, and provided further that the amount so designated, if any, shall be set forth in the Notice of Fee, Rate and Allocation. In the event any money in the Program Fund is used to purchase a Loan on a Targeted Area Residence, the Developer's Reservation shall be reduced ratably along with the reservations of the other developers who have signed Developer Agreements; and the Developer Fee paid by the Developer with respect to the amount of such reduction shall be returned to the Developer. Section 4.02. Developer's Best Efforts to Construct; Termination of Reservation of Funds. The Developer, subject to and in accordance with the provisions of this Developer Agreement, agrees to use its best efforts to construct and make available sufficient Developer Reserved Single Family Residences to enable the Lending Institutions to originate and sell, before the dates specified in Section 10(a) and 10(b) of Exhibit B, Loans in aggregate principal amounts approximately equal to the portions Developer's Reservation set forth in Sections 8(a) and 8(b) of Exhibit B (subject to the possibility of a reduction therein pursuant to Section 4.01). Notwithstand- ing the foregoing, the Developer may direct the Lending Institution to use up to 20 percent of the Developer's Reservation to originate Loans for Residences which are not Developer Reserved Single Family Residences, which Loans otherwise comply with all the requirements of the Program; and 04 -02 -85 4374p/2236/01 -11� the Town agrees that such Loans may be originated for residences located within its boundaries which are not Developer Reserved Single Family Residences. The mixture of Developer Reserved Single Family Residences to be constructed and financed pursuant to this Developer Agreement, including the breakdown thereof by number of bedrooms, location, and the draw -down schedule for Loan funds attributable to such Residences, is set forth in Sections 3, 4 and 5 of Exhibit B. Approximately one year after the date of issuance of the Bonds, and at any time thereafter, the Administrator, on behalf of the Issuer, may review the Developer's progress in constructing and making available Developer Reserved Single Family Residences. If the Issuer determines, in its sole but reasonably exercised discretion, based upon the advice of the Administrator, that the Developer is not likely to construct and make available Developer Reserved Single Family Residences at such times and in such quantity and at such prices as will be sufficient to enable the Lending Institutions to accomplish the foregoing, the Issuer may reduce the Developer's Reservation by the amount of such estimated insufficiency. If the Developer fails to construct and make available sufficient Developer Reserved Single Family Residences to enable the Lending Institutions to originate the specified aggregate principal amount of Loans within the period specified in this paragraph, (i) the unused portion of the Developer's Reservation which was required to be used within such period will become generally available for use under the Program of the Issuer; and (ii) the Trustee, on behalf of the Issuer, will be entitled to and shall retain the portion of the Developer Fee attributable to said unused portion of the Developer's Reservation. No portion of the Developer Fee shall be refunded to the Developer except to the extent that the Issuer later secures a developer fee from another developer for the unused portion of the Developer's Reservation, in which case the amount so secured shall be refunded to the Developer. The Developer may, with the written consent of the Issuer, transfer all or a portion of its Reservation to another developer which has previously entered into a Developer Agreement with the Issuer; and the portion of the Reservation so transferred may be used pursuant to said Developer Agreement. Upon a determination by the Trustee that the same will not adversely affect the rating of the Bonds, the Developer may, with the written consent of the Issuer, transfer all or a portion of its Reservation to any other developer, who shall then enter into a Developer Agreement with the Issuer. The Developer's request for the Issuer's consent to such transfer shall set forth the terms and conditions of the transfer, a description of the proposed Developer Reserved 04 -02 -85 4374p/2236/01 -12- Single Family Residences, the proposed transferee and the purpose for the transfer, all of which must conform to all requirements of the Program and otherwise be acceptable to the Issuer. Except in the case of the sale of a Development and an assignment of the Developer's rights hereunder to the purchaser thereof, no Reservation or portion thereof may be transferred to a developer who has not entered into a Developer Agreement with the Issuer except upon terms and conditions which have been first presented to and rejected by each of the developers who has entered into such a Developer Agreement; and the Developer requesting approval of any transfer shall pay any and all costs incurred by the Issuer, the Trustee and the Administrator in connection with the processing of such request. Section 4.03. The Loans. The terms, conditions and requirements regarding the purchase of Loans by the Issuer and the origination, sale and servicing of such Loans by the Lending Institutions shall be governed by the terms of the Agreement. The Issuer reserves the right to purchase Loans as the terms of the Agreement and the Indenture, or sound financial practices, dictate; and in no case shall the Issuer or the Trustee be required to purchase Loans in amounts which would exceed those set forth in the draw -down schedule included in Section 5 of Exhibit B. Section 4.04, Developer Fee. In consideration of the Issuer's agreement to reserve from the proceeds from the sale of the Bonds the amount referred to in Section 4.01 hereof, the Developer hereby agrees to pay and deliver the Developer Fee to the Issuer prior to or at the execution of this Developer Agreement by the Issuer, to be held by the Issuer in trust and to be deposited by the Issuer with the Trustee concurrently with the delivery of the Bonds to the initial purchaser or purchasers thereof. If 60 days after its execution of this Developer Agreement, the Issuer has not issued the Bonds at such prices and rates of interest as will enable it to purchase Loans bearing an annual rate of interest which is equal to or less than the Maximum Mortgage Loan Interest Rate, all rights and obligations of the parties hereunder shall terminate, except that the Developer Fee shall be returned to the Developer, with interest, if any, earned thereon, within 30 days thereafter. Section 4.05. Representati of Developer Concerning Sales of Resid hereby represents and warrants to, and Issuer and the Town that with respect Reserved Single Family Residence which the following conditions will apply at the Residence: 04 -02 -85 4374p/2236/01 -13- rranties and Covenants ences. The Developer covenants with, the to each Developer it constructs and sells, the time of the sale of (i) To the best knowledge of the Developer, such Residence is to be occupied by a mortgagor who is a First Time Homebuyer (except that the mortgagor need not be a First Time Homebuyer in the case of a Targeted Area Residence or in the case of Loans the aggregate principal amount of which does not exceed 10 percent of the principal amount of all Loans purchased with respect to the Developer's Reservation) as such mortgagor's principal place of residence (and not primarily for use in a trade or business or as a recreational home) within 60 days after the making of the Loan to such mortgagor, and the related Loan is made for the purpose of purchasing the Residence and not for the purpose of acquiring or replacing any existing loan on any such Residence (other than a construction loan or similar temporary financing); (ii) To the best knowledge of the Developer: (a) the Household Income of the mortgagor will not cause the limits specified in Section 11 of Exhibit B top be exceeded; (b) except as otherwise expressly indicated by the Developer in its affidavit, each Developer Reserved Single Family Residence was constructed by the Developer, has not been previously sold; (c) the Acquisition Cost of the Residence does not exceed the Maximum Acquisition Cost; and (d) the Loan -to -Value Ratio does not exceed 95 percent (iii) The purchase contract for such Developer Reserved Single Family Residence was executed on or after the date hereof; (iv) The physical property financed by such Loan will be free of material damage, constructed in a good and workmanlike manner and will be in general good repair on the closing date of such Mortgage Loan and at the time the property is offered for sale it will be free of any and all mechanics' liens; (v) The deed by which the property is to be transferred will contain a deed restriction in the form attached hereto as Exhibit C, if any; (vi) All information, including sales literature, regarding the resale provisions applicable to the Developer Reserved Single Family Residences which is provided or made available to purchasers will be in such form and substance as the Issuer may from time to time require, and will be provided at the Developer's expense; (vii) The Developer Reserved Single Family Residence was offered for sale to qualifying buyers on either a first - come - first - served basis or a lottery basis (except to the extent that some other basis was required by law, as in 04 -02 -85 4374p/2236/01 -14- the case of a condominium conversion) without regard to race, color, religion, age, sex, marital status or national origin; and (viii) The Developer has no knowledge of any fact, circumstance or condition with respect to the mortgagor or the Loan which would lead the Developer to believe that the certifications made by the mortgagor to the Issuer are not true. Section 4.06. Developer to Submit Affidavit. In connection with, and as a condition precedent to, the proposed purchase of a Loan for each Developer Reserved Single Family Residence, the Developer will execute and submit to the applicable Lending Institution an affidavit in the form specified in the Agreement. Section 4.07. Non - Origination of Reservation. In the event that less than the entire amount set forth in Section 8(a) of Exhibit B has been used to purchase Loans by the date specified in Section 10(a) of Exhibit B, the Developer shall immediately pay the Non - Origination Fee to the Trustee. In order to secure the payment of the Non - Origination Fee, the Developer shall deliver the Non - Origination Letter of Credit to Issuer prior to or concurrently with the execution of this Developer Agreement by the Issuer, to be held by the Issuer in trust and to be deposited by the Issuer with the Trustee concurrently with the issuance of the Bonds. The Trustee shall hold the Non - Origination Letter of Credit for the benefit of the Issuer and shall draw upon it to the extent of the Non - Origination Fee if the Developer does not pay the same as soon as it becomes due. The Developer may from time to time substitute for the original Non - Origination Letter of Credit a new such instrument meeting all the terms and conditions of this Developer Agreement but in a lesser amount, provided such amount is at least equal to the maximum Non - Origination Fee then potentially payable by the Developer, as determined by the Trustee, giving recognition to the Developer's utilization of the Reservation. The Developer shall substitute a new Non - Origination Letter of Credit for any such instrument which expires prior to the expiration of the period specified in Section 10(a) of Exhibit B; and if such substitution is not effected at least thirty days prior to such expiration date, the Trustee is hereby authorized to draw upon the Non - Origination Letter of Credit and to retain for deposit in the Revenue Fund established by the Indenture the full amount of the maximum Non - Origination Fee then potentially payable. 04 -02 -85 4374p/2236/01 -15- The Trustee shall return the Non - Origination Letter of Credit to the Developer as soon as the entire amount of the Reservation specified in Section 8(a) of Exhibit B has been used for the purchase of Loans. ARTICLE V DEVELOPER Section 5.01. Liability of Developer. If after the Trustee has purchased a Loan with respect to a Developer Reserved Single Family Residence it is determined by the Issuer that the Acquisition Cost of such Residence exceeded the Maximum Acquisition Cost, upon demand from the Trustee the Developer shall immediately purchase the Loan from the Trustee at a price equal to the principal amount thereof plus any unpaid interest thereon to the date of sale. Section 5.02. Merger or Consolidation of Developer. Any entity into which the Developer may be merged or consolidated, or any entity resulting from any merger, conversion or consolidation to which the Developer shall be a party, or any entity succeeding to the business of the Developer, shall be the successor of the Developer hereunder without the execution or filing of any document or instrument, except as provided in Section 2.02(b) of this Developer Agreement, or any further act on the part of any of the parties hereto. ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined. Upon the happening of any one or more of the following events, the Administrator for and on behalf of the Issuer and the Trustee may terminate this Developer Agreement with respect to the Developer, as provided in Section 6.02 hereof and shall have the other remedies specified therein: (a) Failure by the Developer duly to observe or perform in any material respect any covenant, condition or agreement required by this Developer Agreement to be observed or performed by it (other than its agreement to have Loans originated against its Reservation by certain dates) for a period of thirty days after written notice thereof, specifying such failure and requesting that it be remedied, is given to the Developer by the Issuer, the Administrator or the Trustee, unless the Issuer, the Administrator or the Trustee (whichever has given notice) agrees in writing to an extension of such time period prior 04 -02 -85 4374p/2236/01 -16- to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer, the Administrator and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Developer within the applicable period and diligently pursued until the default is corrected. Neither this provision nor any other provision hereof shall require the purchase by the Trustee of any Loan after the expiration of the Origination Period. (b) A decree or an order of a court, agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding -up or liquidation of the Developer's affairs, shall have been entered against the Developer and such decree or order shall have remained in force undischarged or unstayed for a period of 30 days. (c) The Developer shall consent to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities of similar proceedings of or relating to the Developer or of or relating to all or substantially all of its property; (d) The Developer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable bankrutpcy, insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. (e) Any litigation, at law or in equity, or any proceeding before any federal, state or municipal board or other governmental agency or instrumentality is instituted or threatened against the Developer, or any development occurs in any such litigation, which in either event, may, in the reasonable judgment of the Issuer, the Administrator or the Trustee, materially adversely affect the financial condition or operations of the Developer or impair the ability of the Developer to perform its obligations under this Developer Agreement. The provisions of paragraph (a) above (but not the circumstances described in paragraphs (b) through (e) hereof) are subject to the following limitation: if by reason of Force Majeure the Developer is unable in whole or in part to carry out any agreement on its part herein contained, such event shall not be deemed a cause for termination during the continuance of such inability; provided, however, that neither Force Majeure nor any other event or cause shall require the 04 -02 -85 4374p/2236/01 -17- purchase by the Trustee of any Loan after the expiration of the Origination Period, The Developer agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out such agreement; provided that the settlement of strikes, lockouts and other disturbances shall be entirely within the discretion of the Developer; and the Developer shall not be required to make settlement of strikes, lockouts and other disburbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Developer unfavorable to it. Termination of the Developer's rights and obligations hereunder shall not preclude a mortgagor thereafter purchasing a Developer Reserved Single Family Residence from receving a Loan with respect to such property if such funds are otherwise available under the Program of the Issuer. Section 6.02. Remedies. Whenever any event referred to in Section 6.01 hereof shall have happened and be continuing, the Administrator, for and on behalf of the Issuer and the Trustee, may take any one or more of the following remedial steps: (a) By notice in writing to the Developer the Administrator may, subject to applicable state and federal law, terminate all of the Developer's rights and obligations including, without limitation, the Developer's reservation of Loan funds. Ten days after the giving of such notice, the Administrator is hereby authorized and empowered, without limitation, to execute and deliver on behalf of the Developer any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such termination. The Developer agrees to cooperate with the Administrator in effecting the termination of its rights and obligations hereunder. (b) Subject to the limitations Developer Agreement, the Administrat, other action at law or in equity may desirable to enforce performance and obligation, agreement or covenant of this Developer Agreement. contained in this Dr may take whatever appear necessary or observance of any the Developer under Any amounts collected pursuant to action taken under this Section shall be applied in accordance with the provisions of the Indenture. Section 6.03. No Remedy of Issuer Trustee or Administra- tor Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved to the Issuer, the Trustee or the Administrator is intended to be exclusive of any 04 -02 -85 4374p/2236/01 -18- other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under this Developer Agreement or existing at law or in equity. No delay or omission to exercise any right or power accruing upon the happening of any event set forth in Section 6.01 hereof shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee or the Administrator to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be required in this Article. Section 6.04. Agreement to Pay Attorneys' Fees and Expenses. In the event the Developer should fail to perform its obligations under any of the provisions of this Agreement and the Trustee or the Administrator should employ attorneys or incur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it will pay or reimburse the Trustee or the Administrator on demand the reasonable fee of such attorneys and such other incurred expenses. ARTICLE VII MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; Permit Approvals. Subsequent to the issuance of the Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Developer Agreement may not be effectively amended, changed, modified, altered or terminated without the written approval of the Trustee and the consent of the Issuer. The Issuer will not unreasonably delay or unreasonably withhold necessary approvals through the approval or permit processes, and will not unreasonably withhold its consent to amendments to Exhibit B hereto (other than to the draw -down schedule set forth in Section 5 thereof, with respect to which the Issuer shall have no obligation whatsoever to approve an amendment); provided, however, that it is expressly understood that it shall not be deemed unreasonable for the Issuer to withhold its consent in order to promote the public purposes of the Program or the inclusionary housing program of the Issuer; and provided further that the Developer must agree to advance all costs and expenses which the Issuer estimates will be incurred by it in connection with any such amendment. Furthermore, no amendment hereto shall be permitted which may adversely affect the Bondholders or the rating of the Bonds. 04 -02 -85 4374p/2236/01 -19- Section 7.02. Changes in Applicable Laws. In the event the Act or the Code is amended so as, in the opinion of counsel recognized to be expert in such matters,to reduce or eliminate any restriction therein applicable to the use of the proceeds of the Bonds, the Issuer may, at its option, similarly reduce or eliminate the comparable restriction contained herein so as to conform to such amendment by giving notice thereof to the Developer. Section 7.03. Limitation on Rights of Bondholders. No Bondholder (as defined in the Indenture) shall have any right to institute a suit with respect to this Developer Agreement except as provided in Article VIII of the Indenture and only if for the equal benefit of all Bondholders. Section 7.04. Governing Law. This Developer Agreement shall be construed in accordance with the laws of the State, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Section 7.05. Counterparts. This Developer Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed to the appropriate Notice Address. Duplicate copies of each notice, certificate or other communication given hereunder to the Issuer, the Town, the Developer, the Administrator or the Trustee shall also be given to the others. The Issuer, the Town, the Developer, the Administrator and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 7.07. Severability. In the event any provision of this Developer Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.08. Further Assurances and Corrective Instru- ments. To the extent permitted by law, the Issuer, the Town, and the Developer severally and not jointly agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Developer Agreement. 04 -02 -85 4374p/2236/01 -20- Section 7.09. Term of Agreement. This Developer Agreement shall be in full force and effect from the date of the execution hereof and shall continue in effect for the periods set forth in this Developer Agreement, and as such periods may be extended pursuant to the terms hereof. IN WITNESS WHEREOF, the Developer, the Town, and the Issuer have caused their names to be signed hereto by their respective officers thereunto duly authorized and their respective seals, duly attested, to be hereunto affixed, all as of the day and year first above written. hiJrJ TOWN ATT,,MN1Y- ;r' (SEAL) OR Clerk of the Board of Supervisors County of Santa Clara, California 04 -02 -85 4374p/2236/01 -21- DEVELOPER By IL/C�F Its7�LZTJZ% -Z TOWN OF . !;" By jL i}F fC,Yf2C r�� Mayor b COUNTY OF SANTA CLARA, CALIFORNIA By Chairperson, Board of Supervisors 1. Name of Developer: EXHIBIT B Donald B. Bacci. Inc 2. The Initial Developer Fee is four and a half percent (4.5 %) of the Developer's Reservation. 3. Description of Residences (approximate size, number of bed- rooms, etc.: One - two bedroom unit (1 .106 gquarP feat) 4. Location of Residences: 982 Pollard Rd. Los Gatos . CA. 5. Reservation Draw -Down Schedule. 11MW January February March $ April $ May $ June Y Julv $ August $ September $ October $ November $ December 1984 S_ $ S $ S S S $ S $ $ 99,750 S S S S $ S $ $ 1985 6. The Maximum Mortgage Loan Interest Rate is percent (q.7s %) per year, exclusive of any fee or charge for mortgage insurance or guaranty. 7. (a) Town's Notice Address: Box Los Gatos CA. 95031 ATTN: Community Services Director 7. (b) Developer's Notice Address: Donald B. Bacci, Inc. P.O. Box 942 Los Gatos CA. 95031 04 -02 -85 4374p/2236/01 B. Developer's Reservation: $ 99.750 ( Portion for which Developer agrees to pay t Origination Fee and thereby recur e extended Origi on Period set forth in ion 10(a) hereof: (b) Portion t Ich the sho Origination Period set for b) hereo 11 be applicable: 9 9. Type of business organizaton of Developer (corporation, partnership, sole proprietorship or joint venture): Partnership 10. Last date on which. Loans may be sold to the Trustee: (a) For portion of Reservation specified in Section 9(a) hereof - December 31, 1985. 11. Income Limits: New Residences - the mortgagor's Household Incom�120 n exceed 150 percent of Median Household Income respe o $ principal amount of Lo and percent of ian Household Income with r ect to $ prince amount of Loans. Existing Residences - mortgagor's Household Income may not exceed 120 per of n Household Income with respect to $ principal amo—UTitof Loans, 110 percent they with respect to $ ncipal amount of Loan 00 percent thereof with respect to pr' pal amount of Loans, and 80 percent thereof wi expect to $ principal amount of Loans. 12. Maximum Non - Origination Fee Percentage - 13. Maximum Acquisition Cost: $ 151,80Q 04 -02 -85 4374p/2236/01 ALI MOZAFFARI, PRESIDENT TEKTON CONSTRUCTION, INC. TOWN, OF and LOS GATOS and JJM:pw 1/24/83 JJM:ar 2/04/83 JJM:ac 2/12/83 JJM:pw 2/24/83 CALIFORNIA COUNTY OF SANTA CLARA, CALIFORNIA DEVELOPER AGREEMENT Dated as of March 1, 1983 COUNTY OF SANTA CLARA, CALIFORNIA SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS ISSUE I OF 1983 TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and is -not a part of the Developer Agreement). ARTICLE I Page Definitions .............. ............................... 2 ARTICLE !I REPRESENTATIONS Section 2.01. Representations, of issuer.... Section 2.02. Representations, of Developer.. Section 2.03. Representations, of Town....... Warranties Warranties Warranties ARTICLE III and Covenants and Covenants 8 and Covenants ISSUANCE OF BONDS, APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of BondProceeds .......................... 10 Section 3.02. Limited Liability ........................ 10 ARTICLE IV Section 4.01. Reservation of Funds ..................... 11 Section 4.02. Developer's Best Efforts to Construct; Termination of Reservation of Funds ..... 11 Section 4.03. The Loans . ............................... 13 Section 4.04. Developer Fee .............'............... 13 Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Residences .............................. 13 Section 4.06. Developer to Submit Affidavit ........... 15 Section 4.07. Non - Origination of Reservation .......... 15 ARTICLE V DEVELOPER Section 5.01. Liability of Developer .................. 16 Section 5.02: Merger or Consolidation of Developer.... 16 ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined........... 16 Section 6.02. Remedies . ............................... 18 Section 6.03. No Remedy of issuer, Trustee or 20 Section 7.04. Administrator Exclusive ............... 18 Section 6.04. Agreement to Pay Attorney's Fees and 20 Section 7.06. Expenses .............................. 19 ARTICLE ViI MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; Testimonium ............ ............................... 21 Signaturesand Seals ... ............................... 21 EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences ii Permit Approvals ...................... 19 Sectior. 7.02. Changes in Applicable Laws .............. 20 Section 7.03. Limitation on Rights of Bondholders..... 20 Section 7.04. Governing Law ...... :.................... 20 Section 7.05. Counterparts ............................ 20 Section 7.06. Notices .. ............................... 20 Section 7.07. Severability ............................ 20 Section 7.08. Further Assurances and Corrective instruments ........................... 20 Section 7.09. Term of Agreement ....................... 21 Testimonium ............ ............................... 21 Signaturesand Seals ... ............................... 21 EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences ii DEVELOPER AGREEMENT THIS DEVELOPER AGREEMENT (the "Developer Agreement "), dated as of March 1, 1983, is by and among the developer whose name is set forth on the cover hereof and it Section _ of Exhibit B hereto (the "Developer "), the city whose name is set forth on the cover and signature page hereof (the "Town "), and the County of Santa Clara, California (the "Issuer "). W I T N E S S E T H W_ERE�.S, the Issuer has adopted a home mortgage finance program (the "Program ") pursuant to Part 5 of D--vision 31 of the Health and Safety Code of ..he State of California (the 11 " ) Ac Wr'EREAS, the Issuer has promulgated rules and regulations with respect to purchasing mor-gaae loans originated and made by grualified mortgage lenders to certain mortgacors to purchase residences within the unincorporated areas of the Issuer and within certain cities (the "Participating Cities ") which have C_- _.tc cooperative agreements with the Issuer (the "Cocpera *:ive Agreements "); WFHERZAS, the Town and the Issuer have entered into a Cooperative Agreement pursuant to which the Town. has authorized the Issuer to exercise the powers conferred upon it by the Act within the boundaries of the Town, all in furtherance of the Program; WHEREAS, the Issuer proposes to issue, sell and deliver its Single Family Residential Mortgage Revenue Bonds, Issue I of 1983 (the "Bonds "), pursuant to a purchase contract (the "Purchase Contract ") between the Issuer and a group of underwriters for whom A.G. Becker Incorporated is the senior manager (the "Underwriters "), for the purpose of providing funds to purchase mortgage loans pursuant to the Program; WHEREAS, the Issuer intends to enter into an indenture between itself and Security Pacific National Bank (the "Trustee ") for the issuance of the Bonds (the "Indenture "), pursuant to which the Trustee will be empowered to purchase mortgage loans on certain residences subject, among other things, to certain terms and conditions hereinafter set forth; WF=,EAS, the Issuer, the Town and the Developer are desirous of setting forth the terms and conditions upon which the Developer will designate residences and the Issuer will reserve funds from the,purchase of the Bonds for the purchase of mortgage loans to finance the purchase of such residences; and WHEREAS, the Issuer has found and declared that such purchase of mortgage loans will both further the purposes of the Act and be in the public interest, providing for and promoting the public 'realth, safety, morals and welfare, by (i) increasing the supply of money available for mortgage loans and (ii) assisting low and moderate income persons and families in acquiring decent, safe and sanitary housing; NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, and for and in consideration of the mutual promises, representations and agreements herein contained, hereby agree as follows: ARTICLE I DEFINITIONS Unless the context clearly otherwise requires, each capitalized word or phrase appearing herein which is defined in the Indenture shall have the same meaning in this Developer Agreement as is given it in the Indenture. In addition thereto, unless the context clearly requires otherwise, the following terms shall have the following respective meanings: "Acquisition Cost" means the cost of acquiring a Residence from the seller as a completed residential unit, including: (i) all amounts paid, either in cash or in kind, by the purchaser (or a related party or for the benefit of the purchaser) to the seller (or a related person or for the benefit of the seller) as consideration for the Residence; (ii) if the Residence is incomplete, the reasonable cost of completing it (so that occupancy thereof is legally permitted); and, (iii) if the Residence is purchased subject to a ground rent, the capitalized value of the ground rent calculated using a discount rate equal to the Yield on the Bonds; but exclusive of: (i) usual and reasonable settlement or financing costs (but only to the extent that such amounts do not exceed the usual and reasonable costs which would be paid by the purchaser where financing is not provided through bonds the interest on which is excludable from the gross income of the recipient for federal income tax purposes), (ii) the value of services performed by the mortgagor or members of his or her family in completing the Residence, and (iii) the cost of land which has been owned by the mortgagor for at least two years before the date on which construction of the Residence begins. "Administrator" means such person or firm as may be designated by the Issuer as the Administrator under the Agreement, and any successor thereto. 04 -02 -85 4374p/2236/01 -2- "Agreement" means any of the Mortgage Sale and Service Agreements among the Issuer, the Trustee, the Administrator and a Lending Institution, and all amendments or supplements `hereto. "Average Area Purchase Price" means the most current average purchase price safe harbor limitations from time to ..-me publis.ed by the Department of the Treasury for the San Jose Standard Metropolitan Statistical Area stated separately with respect to residences which have not been previously occupied ( "Average Area Purchase Price - New ") and residences which have been previously occupied ( "Average Area Purchase Price - Existing "); provided, however, that in the absence of such safe harbor limitations, the average area purchase _price sra'_1 be determined by the issuer in accordance with the Code. "Code" means the Internal Revenue Code of 1954, as amended, and all regulations and rulings promulgated thereunder. "Deed of Trust" means the instrument securing a Loan. "Developer Agreement" means any of the agreements between the Issuer and a developer. "Developer Fee" means the fee paid or to be paid to the - Issuer by the Developer for the Issuer's reservation of funds for the Developer, which, prior to the issuance of the Bonds, shall be in an amount equal to the percentage of the Developer's Reservation which is specified in Section 2 of Exhibit B (the "Initial Developer Fee ") and which may, upon issuance of the Bonds, be reduced (but not increased) to such amount as may be specified in a Notice of Fee, Rate and Allocation (said amount being the "Final Developer Fee "). The Developer Fee does not include the Non - Origination Fee. "Developer Reserved Single Family Residences" means Residences which are anticipated to be sold by the Developer and financed with Loans pursuant to the Program (as more particularly described as to location, size, and the draw -down schedule for funds attributable to such Residences in Sections 3, 4 and 5, respectively, Exhibit B ). "Developments" means all the Residences described in Exhibit B to each of the Developer Agreements. "Existing Residence" means a Residence which has been previously occupied and includes a unit in a condominium conversion. "FHLMC" means the Federal Home Loan Mortgage Corporation or its successor. 04 -02 -85 4374p/2236/01 -3- "First Time nomebuyer" means a person who has not had a present ownership interest, within the meaning of the Code, in his or her principal residence at any time during the three -year period ending on the date he or she executes a Note. "Force Majeure" means anv cause or event, not within the Developer's agency or control, which prevents the Developer from fulfilling its obligations hereunder, including, without limitation, the following: acts of God; strikes, lock -outs or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or political subdivision thereof or any of their departments, agencies or officials, or any civil or military authority; insurrections; riots; landslides; adverse weather conditions; earthquakes; fires; storms; droughts; floods; explosions; and breakage or accident to transmission wires, machinery, transmission pipes or canals. "Iousehcld Income" means the current adjusted gross income of a potential mortgagor, determined in substantially the same manner in which such determination is made in connection with other loans originated pursuant to FLMC guidelines, together with the current adjusted gross income of all persons who reside or intend to reside with such mortgagor in the Residence, but exclusive of the income of any cc- signer of a - Note who does not reside or intend to reside therein, as evidenced by documentation satisfactory to the Lending Institution making the related Loan. "Lending Institution" means any financial institution identified as such in, and which is a party to, an Agreement and its successors and assigns `hereunder. "Loan" means a loan evidenced by a Note secured by a Deed of Trust which meets the requirements of the Agreement and which the Trustee, on behalf of the Issuer, has purchased or intends to purchase pursuant to the Agreement. "Loan -to -Value Ratio" means the ratio of the original principal amount of a Loan to the lesser of the initial appraised value or the purchase price of the Residence subject to the related Deed of Trust. "Maximum Acquisition Cost" means art amount which does not exceed the lesser of (i) the Average Area Purchase Price - New in the case of a New Residence or the Average Area Purchase Price - Existing in the case of an Existing Residence or (ii) the amount if any specified in Section 13 of Exhibit B; provided, however, that the Issuer and the Town at its option may increase the Maximum Acquisition Cost to up to 110 percent or, in the case of a Targeted Area Residence, 120 percent of 04 -02 -85 4374p/2236/O1-,,. -4- the applicable Average Area Purchase Price by giving written notice thereof to the Developer, the Trustee, the Administrator, and the Lending Institution. The Maximum Acquisition Cost shall be determined as of the earlier of the date the Lending Institution makes a commitment to provide financing or the date the Residence is purchased. "Median Household Income" means the highest of (i) statewide median household income for the State as determined by the Issuer, (ii) countywide median household income as determined by the Issuer, or (iii) median family income for the San Jose Standard Metropolitan. Statistical Area for a family of four, as published by the United States Department of Housing and Urban Development, as may be adjusted from time to time by the issuer, or as may be otherwise reasonably determined by the Issuer in accordance with the Act. "Mortgage Loan Interest Rate" means the interest rate of the Loans when held by the Trustee on behalf of the Issuer which rate shall be the rate specified In the Notice of Fee, Rate, and Allocation and which shall not exceed the rate set forth in Section 6 of Exhibit B (the "Maximum Mortgage Loan Interest Rate "), exclusive of any fee or charge for mortgage insurance or guaranty. "New Residence" means a Residence which has not been previously occupied. "Non - Origination Fee" means the fee required to be paid by the Developer to the Trustee for the benefit of the Issuer in the event that less than all of that portion of the Reservation which is specified in Section 8(a) of Exhibit B is used for the purchase of Loans within the Origination Period. The amount of the Non - Origination Fee will be equal to the product of said portion of the Reservation which is not so used multiplied by the percentage to be specified in the Notice of Fee, Rate, and Allocation, which percentage shall not exceed that specified in Section 12 of Exhibit B. "Non- Origination Fee Letter of Credit" means an uncondi- tional and irrevocable letter of credit in an amount equal to Mae maximum potential Non- Origination Fee in a form, and issued by a bank, acceptable to the Issuer to the credit of the Trustee in order to secure the payment of the Non - Origination Fee. "Note" means the promissory note executed by a mortgagor to evidence such mortgagor's obligation to repay a Loan. 04 -02 -85 4374p/2236/01 -5- "Notice Address" means: (a) As to the Issuer: County of Santa Clara County Executive's Office 70 West Hedding Street San Jose, California 95110 Attention: Housing Bond Coordinator (b) As to the Administrator: Investors Mortgage Financial Services, Inc. 500 Newport Center Drive, Suite 754 P. 0. Box 2910 Newport Beach, California 92660 Attention: Mr. Richard Latto (c) As to the Trustee: Security Pacific National Bank Trust Department Corporate Trust Administration Division P.O. Box 30376, Terminal Annex Los Angeles, California 90030 Attention: H 42 -9 (d) As to the Town: The address specified in Section 7(a) of Exhibit B. (e) As to Developer: The address specified in Section 7(b) of Exhibit B. "Notice of Fee, Rate, and Allocation" means a notice from the Issuer to the Trustee, the Administrator, the Lending Institutions and the Developer specifying the Final Developer Fee, the Mortgage Loan Interest Rate, any reduction in the Developer's Reservation, the Targeted Areas, the maximum amount of the Developer's Reservation which may be designated for use in connection with the purchase of Loans on Targeted Area Residences, Non - Origination Fee percentage, and the Yield on the Bonds, which notice shall be provided within thirty days after the issuance of the Bonds. "Origination Period" means the period ending on the date set forth in Section 10(a) of Exhibit B with respect to that portion of the Reservation for which the Developer has agreed 04 -02 -85 4374p/2236/01 -6- to pay the Non - Origination Fee and the period ending on the date set forth in Section 10(b) of Exhibit B with respect to the remainder of the Reservation. "Program-Fund" means the fund by that name created pursuant to the Indenture and into which certain Bond proceeds and Developer Fees will be deposited and used to purchase Loans. "Reservation" means the amount of money which the Developer has requested be reserved in the Program Fund to purchase Loans, as specified in Section 8 of Exhibit B, provided that the issuer may specify in the Notice of Fee, Rate and Allocation a reduction in said amount of not more than 20 percent if the Issuer deems such a reduction to be desirable in connection with the sale of the Bonds. "Residence" means real property and improvements thereon consisting of a single family detached or attached (condominium, rowhouse, townhouse) residential unit (but not including a mobile home, that is a residence transportable in one or more sections built on a permanent chassis) which can reasonably be expected to become the principal residence of the mortgagor within a reasonable period of time (which shall not exceed 60 days) after the Loan is made to the mortgagor and which is located within the unincorporated area of the Issuer or within the boundaries of any of the Participating Cities. "State" means the State of California. "Targeted Area" means a qualified census tract within the meaning of Section 103A of the Code, as determined by the Issuer and specified in the Notice of Fee, Rate and Allocation. "Targeted Area Residence" means a Residence located within a Targeted Area. "Yield on the Bonds" means the yield on the Bonds as determined by the Issuer in accordance with the Code and as specified by the Issuer in the Notice of Fee, Rate, and Allocation. ARTICLE II REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants of issuer. The Issuer represents and warrants to, and covenants with, the Town and the Developer that: (a) The Issuer is a legal subdivision and body corporate and politic of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the 04 -02 -85 4374p/2236/01 -.7- Act, the Issuer has authorized or intends to authorize the execution and delivery of the Agreement, the Indenture, the Cooperative Agreements and this Developer Agreement. (b) The Issuer has complied or intends to comply with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and has or intends to have full power and authority to consummate, all transactions contemplated by this Developer Agreement, the Agreement, and the Indenture and any and all other agreements relating thereto. (c) To accomplish the foregoing, the Issuer proposes to issue the Bonds concurrently with or following the execution of this Developer Agreement on the terms and bases set forth in the indenture and the Purchase Contract and to use the - roceeds thereof as specified herein and as further specified in Agreement and the Indenture. (d) No officer or official cf the Issuer has any Drohibited _merest as defined by the applicable laws of the State -he Developer or In the transactions contemplated by this Developer Agreement. (e) The Issuer will make any and all- findings and determinations required to be made by it pursuant to this Developer Agreement in good faith and with due diligence. Section 2.02. Representations, Warranties and Covenants of Developer. The Developer represents and warrants to, and covenants with, the Issuer, the Town, and, in order to. induce the Underwriters to enter into the Purchase Contract with respect to the Bonds, the Underwriters, that: (a) It is a duly organized and existing corporation, sole proprietorship, partnership or joint venture, as may be specified in Section 9 of Exhibit B, authorized to do business in the State. (b) It will, during 36 months after the date of issuance of the Bonds, remain a real estate developer engaged in the business of constructing single - family residences, will remain in good standing and qualified to do business under the laws of the State and those of its then state of incorporation (if applicable), will not cease doing business, dissolve, or otherwise dispose of all or substantially all of its assets and will not voluntarily consolidate with or merge into any other entity or permit one or more other entities to consolidate with or merge into it; provided, that it may, without violating the agreement contained in this subsection, consolidate with or merge into another entity or permit one or more entities to consolidate with or merge into it, or sell or otherwise transfer to another such entity all or substantially all of its 04 -02 -85 4374p/2236/01 -8- assets as an entirety and thereafter cease doing business or dissolve, provided the surviving, resulting or transferee entity, as the case may be, shall be in good standing and qualified to do business under the laws of the state of its then incorporation (if applicable) and of the State and shall, after giving-effect to such transaction, have a net worth substantially equal to or greater than that of the Developer immediately prior to such transaction, and shall assume in writing all of the obligations of the Developer under this Developer Agreement (in the case of such a transaction the Trustee, on behalf of the "Issuer, shall release the Developer in writing from all liability hereunder concurrently with and contingent upon such assumption). (c) It has the power to execute, deliver and perform, and to enter into the transactions contemplated by, this Developer Agreement, and has duly authorized the execution, delivery and performance of this Developer Agreement. (d) The execution and delivery of this Developer Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or Compliance with the terms and conditions of this Developer Agreement do not and will not conflict with or result in a breach of any of the terms, conditions or provisions of any legal restrictions or any - agreement or instrument to which the Developer is now a party or by which it is bound, or constitute a default under any of the foregoing. (e) It will not knowingly take any action or permit anv action which is within its control to be taken which would to its knowledge impair the exemption from federal income taxation of interest on the Bonds. (f) It will furnish to the Issuer and the Underwriters on or before the date on which the Bonds are issued a certificate in the form of Exhibit A. Section 2.03. Representations, Warranties and Covenants of City. The Town_ represents and warrants to, and covenants with, the Issuer and the Developer that: (a) The Town is a municipal corporation and political subdivision of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the Act, the Town has authorized the execution and delivery of the Cooperative Agreement with the Issuer and this Developer Agreement. (b) The Town has found and determined that the purchase of the Loans under the terms of the Agreement and this Developer Agreement (the "Program ") will both further the purposes of the Act and be in the public interest by increasing 04 -02 -85 4374p/2236/01 -9- the supply of money available for mortgage loans, by (i) providing for and promoting the public health, safety, morals and welfare; an (ii) assisting persons in acquiring and owning decent, safe and sanitary housing which they can afford. (c)' The Town has complied with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and had full power and authority to consummate, all transactions involving the Town contemplated by the Cooperative Agreement with the Issuer and by this Developer Agreement and any and all agreements relating thereto. (d) No officer or official of the Town has any prohibited interest as defined by the applicable laws of the State in the Developer or in the transactions contemplated by this Developer Agreement. ARTICLE III ISSUFNCE OF BONDS; APP''ICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; ADOlication of Bond Proceeds. The issuer agrees to utilize its best efforts to issue, sell and deliver the Bonds to the initial purchaser - or purchasers thereof on the terms and bases set forth in the Indenture and the Purchase Contract. The proceeds of the Bonds will be deposited with Trustee and-will be disbursed as orovided in the Indenture, the Agreements and this Developer Agreement. In the event that the Bonds have not been sold by the Issuer within 60 days after the execution hereof, the Developer shall have as its sole remedy the return of its Initial Developer Fee, less the Developer's initial application fee (0.53 percent of its Reservation), which shall be returned, with interest if any, earned thereon, to the Developer within 30 days thereafter. Section 3.02. Limited Liability. All obligations of the Issuer incurred hereunder shall be limited obligations of the Issuer, payable solely out of Bond proceeds, certain fees, revenues and certain 'other amounts derived by the Issuer from the Loans (including earnings thereon and certain insurance proceeds with respect thereto) and certain reserve funds established in connection therewith (but not including a certain portion of the earnings on such funds, which portion is not subject to the lien 'of the Indenture), all as provided in the Indenture; and nothing contained herein shall create any indebtedness or be construed to create any moral obligation on the part of the Issuer or of the Town or permit any person to compel the exercise of the taxing power of the Issuer or of the Town to repay the Bonds. All obligations of the Issuer incurred hereunder shall be subordinated to the obligations of 04 -02 -85 4374p/2236/01 -10- the Issuer to the holders of the only after all obligations of the Bonds shall have been satisfied. Bonds, and shall be payable Issuer to the holders of the ARTICLE IV RESERVATION OF FUNDS FOR LOANS FOR DEVELOPER RESERVED SINGLE - FAMILY RESIDENCES Section 4.01. Reservation of Funds. The Issuer hereby agrees to reserve funds in the Program Fund for the purchase of Loans on Developer Reserved Single Family Residences in an aggregate principal amount equal, as nearly as practicable, to the amount of the Developer's Reservation. Notwithstanding the foregoing, the Issuer may designate a portion of such reserved -funds for the purchase of Loans made with respect to Targeted Area Residences, rather than Developer Reserved Single Familv Residences, during the -first year a'low,ng the date on which financing of Loans from Bond proceeds first becomes available provided that the amount so designated, if any, shall not exceed that percentage of the total amount which the Code requires the Issuer to reserve for Targeted Area Residences which is equal to the quotient - obtained by dividing the Reservation by the initial amount deposited in the Program Fund for the purchase of Loans, and provided further that the amount so designated, if any, shall be set forth in the Notice of Fee, -Rate and Allocation. In `,..he event any money in the Program Fund is used to purchase a Loan on a Targeted Area Residence, the Developer's Reservation shall be reduced ratably along with the reservations of the other developers who have signed Developer Agreements; and the Developer Fee paid by the Developer with respect to the amount of such reduction shall be returned to the Developer. Section 4.02. Devel Termination of Reservation of Funds. The Developer, subject to and in accordance with the provisions of this Developer Agreement, agrees to use its best efforts to construct and make available sufficient Developer Reserved Single Family Residences to enable the Lending Institutions to originate and sell, before the dates specified in Section 10(a) and 10(1) of Exhibit B, Loans in aggregate principal amounts approximately equal to the portions Developer's Reservation set forth in Sections 8(a) and 8(b) of Exhibit B (subject to the possibility of a reduction therein pursuant to Section 4.01). Notwithstand- ing the foregoing, the Developer may direct the Lending Institution to use up to 20 percent of the Developer's Reservation to originate Loans for Residences which are not Developer Reserved Single Family Residences, which Loans otherwise comply with all the requirements of the Program; and 04 -02 -85 4374p/2236/01 -11- the Town agrees that such Loans may be originated for residences located within its boundaries which are not Developer Reserved Single Family Residences. The mixture of Developer Reserved Single Family Residences to be constructed and financed pursuant to this Developer Agreement, including the breakdown thereof by number of bedrooms, location, and the draw -down schedule for Loan funds attributable to such Residences, is set forth in Sections 3, 4 and 5 of Exhibit B. Approximately one year after the date of issuance of the Bonds, and at any time thereafter, the Administrator, on behalf of the issuer, may review the Developer's progress in constructing and making available Developer Reserved Single Family Residences. if the Issuer determines, in its sole but reasonably exercised discretion, based upon the advice of the Administrator, that the Developer is not likely to construct and make available Developer Reserved Single Family Residences at such times and in such quantity and at such prices as will be sufficient to enable the Lending institutions to accomplish the foregoing, the issuer may reduce the Developer's Reservation by the amount of such estimated insufficiency_ if the Developer fails to construct and make available sufficient Developer Reserved Single Family Residences to enable the _ Lending institutions to originate the specified aggregate principal amount of Loans within the period specified in this paragraph, (i) the unused portion of the Developer's Reservation which was required to be used within such period will become generally available for use under the Program of the Issuer; and (ii) the Trustee, on behalf of the Issuer, will be entitled to and shall retain the portion of the Developer Fee attributable to said unused portion of the Developer's Reservation. No portion of the Developer Fee shall be refunded to the Developer except to the extent that the Issuer later secures a developer fee from another developer for the unused portion of the Developer's Reservation, in which case the amount so secured shall be refunded to the Developer. The Developer may, with the written consent of the Issuer, transfer all or a portion of its Reservation to another developer which has previously entered into a Developer Agreement with the Issuer; and the portion of the Reservation so transferred may be used pursuant to said Developer Agreement. Upon a determination by the Trustee that the same will not adversely affect the rating of the Bonds, the Developer may, with the written consent of the issuer, transfer all or a portion of its Reservation to any other developer, who shall then enter into a Developer Agreement with the Issuer. The Developer's request for the Issuer's consent to such transfer shall set forth the terms and conditions of the transfer, a description of the proposed Developer Reserved 04 -02 -85 4374p/2236/01 -12- Single Family Residences, the proposed transferee and the purpose for the transfer, all of which must conform, to all requirements of the Program and otherwise be acceptable to the Issuer. Except in the case of the sale of a Development and an assignment of the Developer's rights hereunder to the purchaser thereof, no-Reservation or portion thereof may be transferred to a developer who has not entered into a Developer Agreement with the issuer except upon term=_ and conditions which have been first presented to and rejected by each of the developers who has entered into such a Developer Agreement; and the Developer requesting approval of any transfer shall pay any and all costs incurred by the Issuer, the Trustee and t_he Administrator in connection with the processing Of such request. Section 4.03. The Loans. The terms, conditions and requirements regarding the purchase of Loans by the Issuer and the origination, sale and servicing of suc- Loans by the Lending institutions shall be governed by the terms of the Agreement. The issuer reserves the :right to purchase Loans as the terms of the Agreement and the indenture, or sound i_n.ancial practices, dictate; and in no case shall the issuer or the Trustee be required to purchase Loans in amounts which would exceed those set forth in the draw -down schedule included in Section 5 of Exhibit B. Section. 4.04. Developer Fee. In consideration of the Issuer's agreement to reserve from the proceeds from the sale of the Bonds the amount referred to in Section 4.01 hereof, the Developer hereby agrees to may and-deliver the Developer Fee to the Issuer prior to or at the execution of this Developer Agreement by the Issuer, to be held by the issuer in trust and to be deposited by the Issuer with the Trustee concurrently with the delivery of the Bonds to the initial purchaser or purchasers thereof. If 60 days after its execution of this Developer Agreement, the Issuer has not issued the Bonds at such prices and rates of interest as will enable it to purchase Loans bearing an annual rate of interest which is equal to or less than the Maximum Mortgage Loan Interest Rate, all rights and obligations of the parties hereunder shall terminate, except that the Developer Fee shall be returned to the Developer, with interest, if any, earned thereon, within 30 days thereafter. Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Residences. The Developer hereby represents and warrants to, and covenants with, the Issuer and the Town that with respect to each Developer Reserved Single Family Residence which it constructs and sells, the following conditions will apply at the time of the sale of the Residence: 04 -02 -85 4374p/2236/01 -13- (i) To the best knowledge of the Developer, such Residence is to be occupied by a mortgagor who is a First Time Homebuyer (except that the mortgagor reed not be a First Time Homebuyer in the case of a Targeted Area Residence or in the case of Loans the aggregate principal amount of which does not exceed 10 percent of the principal amount of all Loans purchased with respect to the Developer's Reservation) as such mortgagor's principal place of residence (and not primarily for use in a trade or business or as a recreational home) within 60 days .after the making of the Loan to such mortgagor, and the related Loan is made for the purpose of purchasing the Residence and not for the purpose of acquiring or replacing any existing loan on any such Residence (other than a construction loan or similar temporary financing); (ii) To the best knowledge of the Developer: (a) the Household Income of the mortgagor will not cause the limits specified in Section 1'_ of Exhibit B top be exceeded; (b) except as otherwise expressly indicated by the Developer in its affidavit, each Developer Reserved Single Family Residence was constructed by the Developer, has not been previously sold; (c) the Ac(Tsisition Cost of the Residence does not exceed the Maximum Acquisition Cost; and (d) the Loan -to -Value Ratio does not exceed 95 percent (iii) The purchase contract for such Developer Reserved Single Family Residence was executed on or after the date hereof; (iv) The physical property financed by such Loan will be free of material damage, constructed in a good and workmanlike manner and will be in general good repair on the closing date of such Mortgage Loan and at the time the property is offered for sale it will be free of any and all mechanics' liens; (v) The deed by which the property is to be transferred will contain a deed restriction in the form attached hereto as Exhibit C, if any; (vi) All information, including sales literature, regarding the resale provisions applicable to the Developer Reserved Single Family Residences which is provided or made available to purchasers will be in such form and substance as the Issuer may from time to time require, and will be provided at the Developer's expense; (vii) The Developer Reserved Single Family Residence was offered for sale to qualifying buyers on either a first- come - first - served basis or a lottery basis (except to the extent that some other basis was required by law, as in 04 -02 -85 4374p/2236/01 -14- the case of a condominium conversion) without regard to race, cclor, religion, age, sex, marital status or national origin; and (viii) The Developer has no knowledge of any fact, circumstance or condition, with respect to the mortgagor or the Loan which would lead the Developer to believe that the certifications made by the mortgagor to the Issuer are not true. Section 4.06. Developer to Submit Affidavit. In connection with, and as a condition precedent to, the proposed Purchase of a Loan for each Developer Reserved Single Family Residence, the Developer will execute and submit to the applicable Lending Institution an affidavit in the form specified in the Agreement. Section 4.07. Non - Origination of Reservation. In the event that less than the entire amount set fort ^. In Section S(a) of Exhibit B has been used to purchase Loans by the date specified in Section 10(a) of Exhibit B, the Developer shall immediately pay the Non - Origination Fee to the Trustee. in order to secure the payment of the Non - Origination Fee, the Developer shall deliver the Non - Origination Letter of Credit to Issuer prior to or concurrently with the execution of this Developer Agreement by the Issuer, to be held by the Issuer in trust and to be depo -sited by the Issuer with the Trustee concurrently with the issuance of the Bonds. The Trustee shall hold the Non - Origination Letter of Credit for the benefit of the Issuer and shall draw upon it to the extent of the Nor.- Origination Fee if the Developer does not pay the same as soon as it becomes due. The Developer may from time to time substitute for the original Non - Origination Letter of Credit a new such instrument meeting all the terms and conditions of this Developer Agreement but in a lesser amount, provided such amount is at least equal to the maximum Non- Origination Fee then potentially payable by the Developer, as determined by the Trustee, giving recognition to the Developer's utilization of the Reservation. The Developer shall substitute a new Non - Origination Letter of Credit for any such instrument which expires prior to the expiration of the period specified in Section 10(a) of Exhibit B; and if such substitution is not effected at least thirty days prior to such expiration date, the Trustee is hereby authorized to draw upon the Non - Origination Letter of Credit and to retain for deposit in the Revenue Fund established by the Indenture the full amount of the maximum Nor.- Origination Fee then potentially payable. 04 -02 -85 4374p/2236/01 -15- The Trustee sha rl return the Non - Origination Letter of Credit to the Developer as soon as the entire amount of the Reservation specified in Section 8(a) of Exhibit 3 has been used for the purchase of Loans. ARTICLE V Section 5.01. Liability of Developer.' If after the _ Trustee has purchased a Loan with respect to a Developer Reserved Single Family Residence it is determined by the Issuer ,.hat the Acquisition Cost of such Residence exceeded the Maximum Acquisition Cost, upon demand from the Trustee the Developer s'r.a11 immediately purchase the Loan -from the Trustee az a price equal to the principal amount thereof plus any unpaid - _nterest thereon to the date of sale. Section_ 5.32. Merger or Consolidation of Developer. Any entity into which the Developer may be merged or consolidated, or any entity resulting from any mercer, conversion or consolidation to which the Developer shall be a party, or any entity succeeding to the business of the Developer, shall be the successor of the Developer hereunder without the execution - or filing of any document or instrument, except as provided in Section 2.02(b) of this Developer Agreement, or any further act on the part of any of the parties hereto. ARTICLE VI CAUSES PER- ?41=INO TERMINATION Section 6.01. Causes of Termination Defined. Upon the happening of any one or more of the following events, the Administrator for and on behalf of the Issuer and the Trustee may terminate this Developer Agreement with respect to the Developer, as provided in Section 6.02 hereof and shall have the other remedies specified therein: (a) Failure by the Developer duly to observe or perform in any material respect any covenant, condition or agreement required by this Developer Agreement to be observed or performed by it (other than its agreement to have Loans originated against its Reservation by certain dates) for a period of thirty days after written notice thereof, specifying such failure and requesting that it be remedied, is given to the Developer by the Issuer, the Administrator or,the Trustee, unless the Issuer, the Administrator or the Trustee (whichever has given notice) agrees in writing to an extension of such time period prior 04 -02 -85 4374p/2236/01 -16- to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer, the Administrator and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Developer within the applicable period and diligently pursued until the default is corrected. Neither this provision nor any other provision hereof shall require the purchase by the Trustee of any Loan after the expiration of the Origination Period. (b) A decree or an order of a court, agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readJustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding -up or liquidation of the Developer's affairs, snail have been entered against the Developer and such decree or order shall have remained in force undischarged or unstayed for a period of 30 days. (c) The Developer shall consent to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities of similar proceedings of or relating to the Developer or of or relating to all or substantially all of its property; (d) The Developer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable bankrutpcy, insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. (e) Any litigation, at law or in equity, or any proceeding before any federal, state or municipal board or other governmental agency or instrumentality is instituted or threatened against the Developer, or any development occurs in any such litigation, which in either event, may, in the reasonable judgment of the Issuer, the Administrator or the Trustee, materially adversely affect the financial condition or operations of the Developer or impair the ability of the Developer to perform its obligations under this Developer Agreement. The provisions of paragraph (a) above (but not the circumstances described in paragraphs (b) through (e) hereof) are subject to the following limitation: if by reason of Force Majeure the Developer is unable in whole or in part to carry out any agreement on its part herein contained, such event shall not be deemed a cause for termination during the continuance of such inability; provided, however, that neither Force Majeure nor any other event or cause shall require the 04 -02 -85 4374p/2236/01 -17- purchase by the Trustee of any Loan after the expiration of the Origination Period. The Developer agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out such agreement; provided that the settlement of strikes, lockouts and other disturbances shall be entirely within the discretion of the Developer; and the Developer shall not be recuired to make settlement of strikes, lockouts and other disburbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Developer unfavorable to it. Termination of the Developer's rights and obligations hereunder shall not preclude a mortgagor thereafter purchasing a Developer Reserved Single Family Residence from receving a Loan with respect to such property if such funds are otherwise available under the Program of the issuer. Section 6.02. Remedies. Whenever any event referred to in Section 6.01 hereof shall have happened and be continuing, the Administrator, for and on behalf of the Issuer and the Trustee, may take any one or more of the following remedial steps: (a) By notice in writing to the Developer the Administrator may, subject to applicable state and federal law, terminate all of the Developer's rights and obligations including, without limitation, the Developer's reservation of Loan funds. Ten days after the giving of such notice, the Administrator_ is hereby authorized and empowered, without limitation., to execute and deliver on behalf of the Developer any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such termination. The Developer agrees to cooperate with the Administrator in effecting the termination of its rights and obligations hereunder. (b) Subject to the limitations Developer Agreement, the Administrat, other action at law or in equity may desirable to enforce performance and obligation, agreement or covenant of this Developer Agreement. contained in this Dr may take whatever appear necessary or observance of any the Developer under Any amounts collected pursuant to action taken under this Section shall be applied in accordance with the provisions of the Indenture. Section 6.03. No Remedy of Issuer, Trustee or Administra- tor Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved to the Issuer, the Trustee or the Administrator is intended to be exclusive of any 04 -02 -85 4374p/2236/01 -18- other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under this Developer Agreement or existing at law or in equity. No delay or omission to exercise any right or power accruing upon the happening of any event set forth in Section 6.01 hereof shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee or the Administrator to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be required in this Article. Section 6.04. Agreement to Pay Attorneys' Fees and Expenses. In the event the Developer should fail to perform _;.s obligations under any of the provisions of this Agreement and the Trustee or the Administrator should employ attorneys or __cur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it will- pay or reimburse the Trustee or the Administrator on demand the reasonable fee of such attorneys and such other incurred expenses. ARTICLE VII _ MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; Permit Approvals. Subseauent to the issuance of the Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Developer Agreement may not be effectively amended, changed, modified, altered or terminated without the written approval of the Trustee and the consent of the Issuer. The Issuer will not unreasonably delay or unreasonably withhold necessary approvals through the approval or permit processes, and will not unreasonably withhold its consent to amendments to Exhibit B hereto (other than to the draw -down schedule set forth in Section 5 thereof, with respect to which the Issuer shall have no obligation whatsoever to approve an amendment); provided, however, that it is expressly understood that it shall not be deemed unreasonable for the Issuer to withhold its consent in order to promote the public purposes of the Program or the inclusionary housing program of the Issuer; and provided further that the Developer must agree to advance all costs and expenses which the issuer estimates will be incurred by it in connection with any such amendment. Furthermore, no amendment hereto shall be permitted which may adversely affect the Bondholders or the rating of the Bonds. 04 -02 -85 4374p/2236/01 -19- Section 7.02. Ctinges in Aool =cable Laws. In the event the Act or the Code is amended so as, in the opinion of counsel recognized to be expert in such matters,to reduce or eliminate any restriction therein applicable to the use of the proceeds of the Bonds, the Issuer mav, at its option, similarly reduce or eliminate the comparable restriction contained herein so as to conform to such amendment by giving notice thereof to the Developer. Section 7.03. Limitation on Rights of Bondholders. No Bondholder (as defined in the Indenture) shall have any right to institute a suit with respect to this Developer Agreement except as provided in Article VIII of the Indenture and only if for the equal benefit of a1'. Bondholders. Section. 7.04. Governing Law. This Developer Agreement shall be construed in accordance with the laws of the State, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Section 7.05. Counterparts. This Developer Agreement mav be executed _- several counterparts, each which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed to the appropriate Notice Address. Duplicate copies,of each notice, certificate or other communication given hereunder to the Issuer, the Town, the Developer, the Administrator or the Trustee shall also be given to the others. The Issuer, the Town, the Developer, the Administrator and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 7.07. Severability. In the event any provision of this Developer Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.08. Further Assurances and Corrective Instru- ments. To the extent permitted by law, the Issuer, the Town, and the Developer severally and not jointly agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Developer Agreement. 04 -02 -85 4374p/2236/01 -20- Section 7.09. Term of Agreement. This Developer Agreement shall be in full force and effect from the date of the execution hereof and shall continue in effect for the periods set forth in this Developer Agreement, and as such periods may be extended pursuant to the terms hereof. IN WITNESS WHEREOF, the Developer, the Town, and the Issuer have caused their names to be signed hereto by their respective officers thereunto duly authorized and their respective seals, duly attested, to be hereunto affixed, all as of the day and year first above written. TO 'Wt- A T -D P� 1 C (1 (SEAL) Clerlt of the Board of Supervisors County of Santa Clara, California 04 -02 -85 4374p/2236/01 -21- DEVELOPER AMF- 1(1*(An) EpcPl °% li0 { i�Kraa Carurf 2�c.. By Its r,O TOWN OF 95� By Mayor COUNTY OF SANTA CLARA, CALIFORNIA By Chairperson, Board of Supervisors EXHIBIT B 1. Name of Developer: Ali Mozaffari, President lekton onstruction, nc. 2. The Initial Developer Fee is four and a half percent (4.5 ) of the Developer's Reservation. I ° 3. Description of Residences (approximate size, number of bed- rooms, etc.: 1- two bedroom unit (920 square feet) 4. Location of Residences: 576 West Parr Aye. IQs Gatos, CA 95030 5, Reservation Draw -Down Schedule. January February March April May June July August September October November December 1963 1984 $ 1985 $ 89.275 6. The Maximum Mortgage Loan Interest Rate is percent (9.175' %) per year, exclusive,of any fee or charge for mortgage insurance or guaranty. 7. (a) Town's Notice Address: Town of Los Gatns Los Gatos, CA. 95031 ATTN: Community Services Director 7. (b) Developer's Notice Address: M. e • . • i a 1 04 -02 -65 4374p/2236/01 S. Developer's Reservation: $ 89,275 (G Portion for which Developer agrees to pay t - Origination Fee and thereby secure __ e extended Origi. ion Period set forth in Dior. 1O(a) hereof: (b) Portion _t ich the sho Origination Period set for in Section 1O(b) hereo X11 be applicable: °. Type of business organizaton of Developer (corporation, partnership, sole proprietorship or joint venture): Limited Partnership 10. Last date on which Loans may be sold to the Trustee: (a) For portion of Reservation specified in Section 9(a) hereof - December 31, 1985. 4. 11. Income Limits: New Residences - the mortgagor's Household Income n exceed 150 percent of Median Household Income respe �,;;�Ian principal amount of Lo and 120 percent ousehold Inco me with rP ect to $ amount of Loans. Existing Residences - mortgagor's Household Income may not exceed 120 per, n of i n Household Income with respect to $ _ principal am o of Loans, 110 percent ther with respect to $ ncipal amount of Loan 00 percent thereof with respect to pr pal amount of Loans, and 80 percent thereof wi respect to $ principal amount of Loans. 12. Maximum Non - Origination Fee Percentage - R;�A 13. Maximum Acquisition Cost: $ 151,800 04 -02 -85 4374p/2236/01