82-25 AUTHORIZING, APPROVING, RATIFYING AND CONFIRMING CERTAIN ADDITIONS AND CHANGES TO ECONOMIC DEVELOPMENT REVENUE BONDS (BRETTWOOD VILLAGE ASSOCIATES PROJECT)

Home Browse Search

, THE LETTER OF CREDIT General The Letter of Credit is an irrevocable obligation of the Bank to pay the Trustee, upon request, for the benefit of the holders of the Bonds an amount up to $3,795,000 in order to enable the Trustee to pay the principal of the Bonds, accrued interest thereon for a period of up to approximately ten months, and a redemption premium (if applicable) up to 5X of the par value of the Bonds. The Partnership will enter into the Credit Agreement with the Bank, pursu- ant to which the reimbursement obligations of the Partnership will be limited to recourse pursuant to a Junior Mortgage and Security Agreement dated as of February 1, 1982 from the Land Trustee to the Bank (the "Bank Mortgage") . The Bank Mortgage will be subject and subordinate to the prior lien and security interest of the Mortgage to the Trustee securing the Note and the obligations of the Partnership under the Loan Agreement. The Bank will also have a securi- ty interest in certain additional collateral which will either be subordinated to the lien of the Mortgage or will be held by the Bank for the prorata benefit and security of the Bank and the Trustee as provided in the Credit Agreement. The Letter of Credit is being issued for $3,795,000 and for an initial term expiring on July 1, 1986 and will be automatically extended for a renewal term ending July 1, 1987 and a second renewal term ending July 1, 1988 and a third renewal term ending July 1, 1989, unless the Bank in its sole discretion deter- mines not to extend the then applicable expiration date of the Letter of Credit by notifying the Trustee at least 121 days prior to the then applicable expira- tion date of its intention not to extend the Letter of Credit. The Letter of Credit provides that it shall expire on the earlier of (i) July 1, 1986 or such date to which the term of the Letter of Credit shall have been extended pursuant to the preceding sentence or (ii) 60 days after the Trustee shall receive notice from the Bank of a default under the Credit Agreement; provided, however, that if any payment of interest on or principal of, or premium, if any, on the Bonds shall have been made on or within the 61 day period preceding the date of such notice in whole or in part from moneys other than the proceeds of the Letter of Credit, then such expiration date shall be extended to the date occurring 121 days after the most recent of such payments or (iii) 121 days after the date on which all Bonds are paid in full or deemed to be paid in full in accordance with the Indenture. Upon notice to the Trustee that the Letter of Credit will not be extended, will expire or will be terminated prior to July 1, 1989, the Bonds shall be called for redemption on the earliest practicable date thereafter selected by the Trustee for which a notice of redemption can be given and the Trustee is required to draw on the Letter of Credit for an amount which together with Eligible Moneys held by the Trustee and available for such payment shall be sufficient to redeem the Bonds on such redemption date. The Letter of Credit does not provide for multiple advances and any draw upon the Letter of Credit will result in the redemption of all of the outstanding Bonds. The Trustee is also entitled to draw on the Letter of Credit to recover potential preference payments by the Partnership. See "LETTER OF CREDIT - Preferences" herein. The form of the Letter of Credit is set forth in Appendix B hereto. 14