Loading...
HomeMy WebLinkAboutRES 83-084 r , + M Y F3 RESOLUTION APPROVING THE ISSUANCE OF BEAUMONT HOUSING FINANCE CORPORATION $1, 600 ,000 MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) WHEREAS , by a duly adopted resolution of the City Council (the "Governing Body") of the City of Beaumont Texas (the "City") , the Governing Body authorized and approved the creation of the Beaumont Housing Finance Corporation (the "Corporation") pursuant to the Texas Housing Finance Corporations Act , Article 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the' "Act") ; and WHEREAS , the Corporation has been duly and properly created and organized as a housing finance corporation under the Act; and WHEREAS , the Act authorizes the Corporation to (i) lend money for corporate purposes , (ii) issue revenue bonds for the purpose of providing financing for, and to defray in whole or part, the development costs of residential developments located within the City and intended to be occupied substantially (at least 90 percent) by persons of low and moderate income, as determined in Rules and Regulations adopted by the Board of Directors of the Corporation, and (iii) rent, lease, sell or otherwise dispose of such residential developments , or loan the proceeds of such revenue bonds to any person to defray, in whole or in part, the development costs of any residential development; and WHEREAS, the definition of "residential development" in the Act includes the acquisition, construction, reconstruc- tion, rehabilitation, repair, alteration, improvement, or extension of any land, interest in land, building, structure, facility, system, fixture, improvement , addition, appurte- nance, machinery, or equipment or any combination thereof, all real and personal property deemed necessary in connection therewith, and all real and personal property or improvements functionally related and subordinate thereto , substantially (at least 90 percent) for use by or intended to be occupied substantially (at least 90 percent) by persons of low and moderate income, as determined in Rules and Regulations adopted by the Board of Directors of the Corporation; and WHEREAS , the definition of "development costs" in the Act includes the sum total of all reasonable or necessary , costs incidental to the providing, acquisition, construction, reconstruction, rehabilitation, repair, alteration, improvement, and extension of a residential development , including, without limitation, the following: the cost of studies and surveys; plans and specifications ; architectural and engineering services; financial advisory, mortgage banking and administrative services; underwriting fees ; legal, accounting, marketing, and other special services relating to residential development or incurred in connection with the issuance and sale of bonds ; necessary application and other fees to federal , state , and local government agencies for any requisite approvals for construction, for assisted financing or otherwise; financing, acquisition, demolition, constrution, equipment, and site development of new and rehabilitated buildings ; the relocation of utilities , public ways , and parks ; the construction of recreational, cultural , and commercial facilities ; rehabilitation, reconstruction, repair, or remodeling of existing buildings and all other necessary and incidental expenses , including trustee and rating agency fees and. an initial bond and interest reserve together with interest on bonds issued to finance a residential development to a date 12 months subsequent to the estimated date of completion; any premiums for mortgage insurance or insurance with respect to bonds ; and such other expenses as the Corporation may. deem appropriate to effectuate the purposes of the Act; and WHEREAS , Section 103(b) (4) (A) of the Internal Revenue Code of 1954 , as amended (the "Code") , provides that the interest on industrial development bonds (in the form of fully registered obligations) issued by or on behalf of a state or a political subdivision thereof as part of an issue substantially all (at least 90 percent) of the proceeds of which are to be used to provide projects for residential rental property shall be exempt from federal income taxation if at least 20 percent of the units in each project are to be occupied by individuals of low or moderate income , within the meaning of Section 103(b) (12) (C) of the Code , at all times during the qualified project period set forth in Section 103(b) (12) (B) of the Code; and WHEREAS, the Act provides that the proceeds of revenue bonds issued pursuant to the Act may be used to defray, in whole or in part, the development costs of residential developments intended to be occupied substantially (at least 90 percent) by persons of low and moderate income whose adjusted gross income, together with the adjusted gross income of all persons who intend to reside with such persons in one dwelling unit, did not, for the immediately preceding -2- taxable year, exceed the maximum amount established as constituting moderate income in Rules and Regulations adopted by the Board of Directors of the Corporation; and WHEREAS, on February 3 , 1983 , the Corporation duly adopted a RESOLUTION DECLARING INTENT TO ISSUE BONDS TO PROVIDE FINANCING FOR A RESIDENTIAL DEVELOPMENT FOR PERSONS OF LOW AND MODERATE INCOME (VIRGINIA VILLAGE DEVELOPMENT) ; PRESCRIBING CERTAIN TERMS AND CONDITIONS OF SUCH BONDS; AND CONTAINING OTHER PROVISIONS RELATING TO THE SUBJECT, a copy of which is attached hereto as Exhibit "A" , wherein it is proposed that the Corporation issue its revenue bonds for the purpose of providing tax exempt financing for a multi-family rental residential development (the "Development") consisting of approximately 138 dwelling units to be located within the City on the land described in Exhibit "B" , and to be owned by Virginia Village Venture , a joint venture, or its permitted assigns (the ' Owner") ; and wherein the Corporation has indicated its intent to issue its Multi-Family Housing Revenue Bonds, Series 1983 (Virginia Village Development) (the "Bonds") , in the approximate aggregate principal amount of . $1 , 600 ,000 to defray, in whole or in part , certain development costs incurred or paid with respect to the Development, subject to the consummation of certain contractual agreements between the Corporation and the Owner and the satisfaction of other conditions set forth in said Resolution; and WHEREAS , the Owner has indicated its willingness to enter into contractual agreements with the Corporation providing assurance satisfactory to the Corporation that at least 90 percent of the dwelling units comprising the Development will be occupied at all times by persons of low and moderate income , as determined in accordance with the Rules and Regulations adopted by the Board of Directors of the Corporation, that the Development will serve or be available for general public use in accordance with Treas . Reg. 1. 103-8(a) (2) and shall . -be used otherwise than on a transient basis (within the meaning of the Code and the Regulations promulgated thereunder) , and that substantially all (at least 92 percent) of the proceeds of the issuance of the Bonds will be used to provide projects for residential rental property, at least 20 percent of which project units will be occupied (or held vacant and available for occupancy) by individuals of low or moderate income within the meaning of Section 103(b) (12) (c) of the Code at all times during the qualified project period set forth in Section 103(b) (12) (B) of the Code; and -3- A WHEREAS, the Corporation proposes to adopt substantially in the form attached as Exhibit C a RESOLUTION AUTHORIZING THE ISSUANCE OF BEAUMONT HOUSING FINANCE CORPORATION $1 ,600 ,000 MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) , THE EXECUTION OF A TRUST INDENTURE AND OTHER RELATED DOCUMENTS , AND ADOPTION OF CER- TAIN RULES AND REGULATIONS , wherein the Corporation proposes to approve the Development and authorize and direct the issuance of the Bonds to finance and defray, in whole or in part , the development costs of the Development , in accordance with the terms , conditions and provisions of such Resolution; and WHEREAS , the Governing Body has determined that the issuance of the Bonds and the approval of the Development will further the public purposes of the Act, and desires to -approve and authorize the proposed Development and the issuance of the Bonds by the Corporation to finance and defray, in whole or in part, certain development costs of the Development; and WHEREAS, as a prerequisite to the exemption from federal income tax of interest on obligations issued pursuant to Sectin 103(b) (4) (A) of the Code , Section 103 (k) of the Code provides that such issue must be approved by the applicable elected representative of the governmental unit on whose behalf such obligations are issued and each governmental jurisdiction over the area in which any facility to be financed from the proceeds of such issue is located (except that if more than one governmental unit has jurisdiction over the entire area in which such facility is located, only one governmental unit need approve the issue) , only after a public hearing has been held; and WHEREAS, the City is a "governmental unit" within the meaning of the Code; and WHEREAS, as the elected legislative body of the governmental unit within which the entire Development is located, the Governing Body is an "applicable elected representative" of the governmental unit with specific authority within the meaning of Section 103(k) of the Code; and WHEREAS, the facilities comprising the Development are looated entirely within the geographic jurisdiction of the City, thus necessitating only one public hearing and approval pursuant to Section 103(k) of the Code; and -4- d' WHEREAS, in compliance with Section 103(k) of the Code, and the Open Meetings Law, as amended, Article 6252-17 , Vernon' s Annotated Texas Civil Statutes , notice in writing of a public hearing to approve issuance of the Bonds has been published in a newspaper of general circulation in the City on February 11, February 18 , and February 25 , 1983 , and written notice has also been posted continuously at City Hall since February 11 , 1983 , and pursuant to such notice, the Governing Body has this day held a public hearing for the purpose of considering the authorization and approval of the proposed Development and the issuance of the Bonds; and WHEREAS , this public hearing has been conducted in order to provide an opportunity for persons with differing views on both the authorization and issuance of the Bonds and the location and nature of the Development to be heard, and in order to comply with Section 103(k) of the Code and the Act; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF BEAUMONT, TEXAS: Section 1 . The Governing Body hereby finds , determines , recites and declares that the issuance of the Bonds to provide tax exempt financing for the proposed Development, and the approval of the proposed Development , is in furtherance of and will promote the public purposes of the Act, including, without limitation, assisting persons of low and moderate income to obtain decent, safe and sanitary housing at rentals they can afford. Section 2 . The Governing Body, as the elected legislative moody of the City, and for the purposes of complying with the terms and provisions of Section 103(b) (4) (A) and 103 (k) of the Code and the Act , does hereby approve, ratify, adopt and confirm the Resolutions of the Corporation, in substantially the forms attached hereto as Exhibits "A" and "C" ; and does hereby approve and authorize the Development contemplated in such Resolutions and the issuance of the Bonds by the Corporation in the amount and for the purposes therein expressed, including, without limitation, the financing of development costs in connection with the proposed Development. Section 3 . The Governing Body has considered evidence oft'he publication and posting of notice of this meeting and public hearing and officially finds , determines , recites , and declares that a sufficient written and reasonable public notice of the date , hour and place of this meeting and public hearing and of the subject matter of this -5- ��-�7 Resolution, was published in a newspaper of general circulation in the City not less than fourteen (14) days prior to this meeting and public hearing, and thereafter weekly, and was. also posted on a bulletin board at a place convenient to the public in the City Hall of the Governmental Unit (within the meaning of Section 103 of the Code) not less than fourteen (14) days preceding the convening of this meeting and public hearing; that such place of posting was readily accessible to the general public at all times from the time of posting until the convening of such meeting and public hearing; that such meeting and public hearing was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered, and formally acted upon; that the giving of notice in the manner provided above was reasonably designed to apprise residents of the City of the proposed authorization and issuance of the Bonds and approval of the Development; that the meeting and public hearing was conducted in a manner that provided a reasonable opportunity for persons with differing views on the issuance of the Bonds and the nature and location of the Development facilities to be heard; and that this meeting and public hearing was held at a time and place convenient for persons affected by the financing of the Development and issuance of the Bonds ; and that the foregoing notice and hearing complied with the Open Meetings Law, as amended, Article 6252-17 , Vernon' s Annotated Texas Civil Statutes, and Section 103(k) of the Code. PASSED, ADOPTED AND APPROVED THIS 1st DAY OF MARCH, 1983 . ayor -6- RESOLUTION AUTHORIZING THE ISSUANCE OF BEAUMONT HOUSING FINANCE CORPORATION $1,600 , 000 MULTI-FAMILY HOUSING REVENUE BONDS, SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) , THE EXECUTION OF A TRUST INDENTURE AND OTHER RELATED DOCUMENTS , AND ADOPTION OF CERTAIN RULES AND REGULATIONS TABLE OF CONTENTS (The Table of Contents is not a part of the Resolution but is for convenience of reference only) PAGE Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 1 . APPROVAL OF TRANSACTION. . . . . . . . . . . . . 4 (a) Approval of the Bonds . . . . . . . . . . 4 (b) Approval of the Agreement. . . . . . 4 (c) Requirement as to the Deed of Trust and Collateral Assignment. . . . . . . . . . . . . . . . . . . . . 5 (d) Requirement as to Guarantee Agreement. . . . . . . . . . . . 5 (e) Conditions Precedent to Closing of the Transaction. . . . . . 5 (f) Approval of Sale of the�Bonds . . 6 (g) Issuance Furthers the Purposes of the Act. . . . . . . . . . . . . . . . . 6 (h) Incorporation by Reference. . . . . 7 (i) Additional Authorizations to Officers of the Corporation. . . . 7 (j ) Effective Date of the Bond Resolution. . . . . . . . . . . . . . . . . . . . . 7 (k) Defined Terms . . . . . . . . . . . . . . . . . . 7 SECTION 2 . DATE, DENOMINATION, NUMBERS , AND MATURITIES OF THE BONDS. . . . . . . . . . . . . 7 SECTION 3. INTEREST ON THE BONDS. . . . . . . . . . . . . . . 8 SECTION 4 . GENERAL CHARACTERISTICS OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (a) In General. . . . . . . . . . . . . . . . . 8 (b) Registration Books . . • . . . . 9 (c) Payment to Registered Holder. . . 9 (d) Notation of Prepayment. . . . . . . . . 9 SECTION 5 . FORM OF BOND. . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 6 . PLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 7 . DEBT SERVICE FUND. . . . . . . . . . . . . . . . . . . 22 (a) Establishment of Debt Service Fund. . 22 (b) Accrued� Interest . . . . . . . . . . . . . . . 22 (c) Installment Loan Payments . . . . . . 22 (d) Redemption. . . . . . . . . . . . . . . . 24 (e) , Payments from Debt Service Fund. . . . . . . . . . . . . . . . . . . . . 24 (f) Immediately Available Funds . . . . 24 (g) Investment of Funds . . . . . . . . . . . . 24 SECTION 8 . SECURITY FOR FUNDS. . . . . . . . . . . . . . . . . . 25 SECTION 9. THE OWNER' S PAYMENTS . . . . . . . . . . . . . . . . 25 (a) Limitations On Owner' s Obligation. . . . . . . . . . . . . . . . . . . . . 25 (b) Prepayments . . . . . . . . . . . . . . . . . . . . 26 SECTION 10 . ADDITIONAL PARITY BONDS . . . . . . . . . . . . . 26 (a) Additional Bonds . . . . . . . . . . . . . 26 (b) Amendments to Trust Indenture Unnecessary. . . . . . . . . . . . . . . . . . . . 28 SECTION 11. SPECIAL COVENANTS. . . . . . . . . . . . . . . . . . . 28 (a) Installment Loan Payments Pledged to Bonds Only. . . . . . . . . . 28 (b) Non-Encumbrance. . . . . . . . . . . . . . . . 28 (c) Performance by Corporation. . . . . 28 (d) Certain Modifications Prohibited. . . . . . . . . . . . . . . . . . . . 28 SECTION 12 . THE BONDS ARE SPECIAL OBLIGATIONS. . . 29 SECTION 13 . AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 29 (a) Amendment with Consent of Holders of 75% of the Bonds . . . . 29 (b) Notice of Amendment. . . . . . . . . . . . 30 (c) Consent to Amendment. . . . . . . . . . . 31 (d) Effect of Amendment. . . . . . . . . . . . 31 (e) Consent of Bondholders . . . . . . . . . 31 (f) Ownership of the Bonds . . . . . . . . . 32 (g) Amendments Without Consent. . . . . 32 (h) Special Exception. . . . . . . . . . . . . . 32 SECTION 14 . ESTABLISHMENT OF CONSTRUCTION FUND. . 32 (a) Deposit of Bond Proceeds into Construction Fund. . . . . . . . . . . . . . 32 (b) Investment of Money in Construction Fund. . . . . . . . . . . . . . 33 (c) Deposit of Accrued Interest, Income , and Profits . . . . . . . . . . . . 33 SECTION 15 . PAYMENTS FROM CONSTRUCTION FUND. . . . . 34 (a) Corporation' s Administrative Overhead Expenses and Other Costs . . . . . . . . . . . . . . . 34 (b) Reimbursement for and Pay- ment of Cost of the Development. . . . . . . . . . . . . . . . . . . . 34 (c) Reliance by Trustee. . . . . . . . . . . . 35 SECTION 16 . SURPLUS CONSTRUCTION FUNDS . . . . . . . . . . 35 (a) Disposition of Surplus Funds . . . . . . . . . . . . . . . . . . . . 35 (b) Disposition of* Construction Fund upon Acceleration and Redemption. . . . . . . . . . . . . . . . . . . . . 36 SECTION 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS . . . . . . . . . . . . . . . . . . 36 (a) Replacement Bonds . . . . . . . . . . . . . . 36 (b) Application for Substitute Bonds . . . . . . . . . . . . . . . . . . . . 36 (c) No Default Occurred. . . . . . . . . . 37 (d) Charge for Issuing Substitute Bonds . . . . . . . . . . . . . . . . . . . 37 (e) Authority for� Issuing Substitute Bonds . . . . . . . . . . . . . . . 37 SECTION 18 . NO ARBITRAGE. . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 19 . ADOPTION OF RULES AND REGULATIONS AS TO LOW AND MODERATE INCOME LEVELS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 1 EXHIBITS A Trust Indenture B Loan Agreement C Deed of Trust, Assignment of Rents and Security Agreement D Collateral Assignment and Security Agreement E Guarantee Agreement F Letter of Representation G Investment Letter RESOLUTION AUTHORIZING THE ISSUANCE OF BEAUMONT HOUSING FINANCE CORPORATION MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) , THE EXECUTION OF A TRUST INDENTURE AND OTHER RELATED DOCUMENTS , AND ADOPTION OF CERTAIN RULES AND REGULATIONS WHEREAS, Beaumont Housing Finance Corporation (the "Corporation") has been duly created and organized pursuant to and in accordance with the provisions of the Texas Housing Finance Corporations Act , Article 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the "Act") ; and WHEREAS , the Act authorizes the Corporation to issue revenue bonds for the purposes of providing financing for . and to loan sufficient funds to any person to defray in whole or in part the development costs of residential developments located within the City of Beaumont , Texas (the "City") , and intended to be occupied substantially (at least 907) by persons of low and moderate income as determined in Rules and Regulations adopted by the Board of Directors of the Corporation (the "Board") ; and WHEREAS , Section 103 (b) (4) (A) of the Internal Revenue Code of 1954 , as amended (the "Code") , provides that the interest on fully registered obligations issued by or on behalf of a state or a political subdivision thereof, substantially all of the proceeds of which obligations are to be used to provide projects for residential rental property, shall be exempt from federal income taxation if at least 20 percent of the dwelling units in each project are to be occupied by individuals of low or moderate income , within the meaning of Section 103(b) (12) (C) of the Code at all times during the qualified project period set forth in Section 103 (b) (12) (B) of the Code; and WHEREAS, the Board adopted a resolution on February 3 , 1983 (the "Inducement Resolution") , whereby in accordance with the provisions of the Act , the Corporation has agreed to issue its revenue bonds for the purpose of providing financing for a multi-family residential development (the "Development") consisting of approximately 138 dwelling units to be rehabilitated by Virginia Village Venture (the "Owner") and to be located within the City on the real estate which was initially described in Exhibit A to the Inducement Resolution and which is more fully described in the hereinafter described Loan Agreement; and WHEREAS , for purposes of financing the Development, the Corporation now desires to (i) authorize the issuance of its Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) (the "Bonds") , in the maximum aggregate principal amount of $1 , 600 , 000 , pursuant to the terms and provisions of a trust indenture, (ii) provide for the sale of the Bonds to the purchasers described herein, (iii) provide for the payment of the principal of and premium, if any, and liquidated damages , if any, and interest on the Bonds with revenues derived from the loan of proceeds of the sale of the Bonds (except for any amount representing accrued interest on the Bonds) to the Owner pursuant to the terms and provisions of a loan agreement and (iv) take and authorize certain other actions in connection with the foregoing; and WHEREAS , on March 1 , 1983 , after a public hearing as required by and in compliance with Section 103 (k) of the Code , the City adopted a written resolution specifically approving the Development , the Inducement Resolution, this Resolution, and the issuance of the Bonds ; and WHEREAS , pursuant 'to the terms of the hereinafter described Loan Agreement, the Owner has agreed and covenanted with the Corporation that (i) in accordance with the Act , at least 90 percent of the dwelling units in the Development will be occupied at all times by persons of low and moderate income , as determined in Rules and Regulations adopted by the Board on behalf of the Corporation, and (ii) in accordance with the Code , at least 20 percent of the dwelling units in the Development will be occupied (or held vacant and available for occupancy) by individuals of low or moderate income within the meaning of Section 103 (b) (12) (C) of the Code at all times during the qualified project period set forth in Section 103 (b) (12) (B) of the Code; and WHEREAS , by the terms of this resolution the Board has found and determined under the Act and adopted as a part of* the Rules and Regulations of the Corporation effective as of January 1 , 1983 , that for purposes of occupancy of dwelling units in the Development, a person of low or moderate income shall be a person whose adjusted gross income, together with the adjusted gross incomes of all persons who intend to reside with such person in one dwelling unit , did not exceed $40 , 000 . 00 for the calendar year 1982; and -2- WHEREAS, pursuant to Section 8 of the United States Housing Act of 1937 , as amended (the "Housing Act") , the United States of America, acting through the Department of Housing and Urban Development ("HUD") , has entered into an Annual Contributions Contract dated as of September 28 , 1981 , as amended (the "Annual Contributions Contract") with the Housing Authority of the City of Beaumont, Texas (the "Authority") , providing for the payment of annual contributions by HUD to the Authority to be used to pay a portion of the rent of tenants who are eligible for such assistance under HUD regulations ; and WHEREAS , pursuant to the Annual Contributions Contract the Authority has executed with respect to the Development an Agreement to Enter into a Housing Assistance Payments Contract dated as of September 15 , 1982 (the "Section 8 Agreement") , providing for the execution of a Housing Assistance Payments Contract (the "Section 8 Contract") upon completion of the Development and its acceptance by HUD; and WHEREAS, the Board has examined proposed forms of a trust indenture, a note , a loan agreement , a collateral assignment and security agreement , a letter of representation and an investment letter, all comprising a part of this resolution, and the Board finds the form and substance of such documents to be satisfactory and that the recitals and findings contained therein are true, correct and complete and hereby adopts and incorporates by reference such recitals and findings as if set forth in full in this resolution, and finds that it is in the best interest of the public and the Corporation and will assist in carrying out the public purpose of the Corporation and the Act to authorize the execution and delivery of such documents ; and WHEREAS , the Board has examined the proposed form of a guarantee agreement pursuant to which C. L. Sherman, Jr. , James J. Conway, Jr. , Wayne D. Sherman, Robert G. Quinn, J. D. Martin III, A. S . Crawford and F. L. Stanley (the "Guarantors") agree on a proportionate basis to guarantee payment of the principal of and premium, if any, and liquidated damages , if any, and interest on the Bonds , and the Board finds the form and substance of such document to be satisfactory and that the agreement of the Guarantors as contained therein constitutes a material inducement to the Corporation to issue and sell the Bonds and in reliance thereon, the Board is willing to adopt this resolution and authorize the actions to be taken hereunder; and -3- WHEREAS, the Board has examined the proposed form of a deed of trust, assignment of rents and security agreement from the Owner to Donald W. Cioban, as mortgage trustee , for the benefit of the Corporation, and the Board finds the form and substance of such document to be satisfactory; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF BEAUMONT HOUSING FINANCE CORPORATION, THAT: Section 1. APPROVAL OF TRANSACTION. (a) Approval of the Bonds . The Corporation hereby authorizes and dire cts t e issuance of the Bonds in the maximum aggregate principal amount of $1, 600 ,000 , in accordance with a trust indenture substantially in the form of the Trust Indenture, dated as of March 1 , 1983 (the "Trust Indenture") , by and between the Corporation and InterFirst Bank-Beaumont, as trustee (the "Trustee") , attached to this resolution as Exhibit A, the form, terms and provisions of the Trust Indenture and the Bonds being hereby authorized and approved, and the President and any Vice President of the Corporation are hereby severally authorized and directed to execute and deliver such Indenture and the Bonds on behalf of the Corporation, and the Secretary or any Assistant Secretary of the Corporation is hereby authorized to attest and affix the Corporation' s seal thereto , with such changes therein as the officers executing the same may approve, such approval to be conclu- sively evidenced by such execution thereof. (b) Approval of the Agreement. The loan of the proceeds of the sale o t e Bonds (except for any amount representing accrued interest on the Bonds) by the Corpora- tion to the Owner in order to provide financing for the costs of the Development shall be effected pursuant to the terms and provisions of a loan agreement substantially in the form of the Loan Agreement dated as of March 1 , 1983 (the "Agreement") , by and between the Corporation and the Owner, attached to this resolution as Exhibit B , the form, terms and provisions of the Agreement being hereby authorized and approved, and the President and any Vice President of the Corporation are hereby severally authorized and directed to execute and deliver the Agreement on behalf of the Corporation, and the Secretary or any Assistant Secretary of the Corporation is hereby authorized to attest and affix the Corporation' s seal thereto , with such changes therein as the officers executing the same may approve, such approval to be conclusively evidenced by such execution thereof. -4- (c) Requirement as to Deed of Trust and Collateral Assignment. As a con ition t i. to e actions aut orze in this Section, the Owner shall have executed a deed of trust , assignment of rents and security agreement substantially in the form of the Deed of Trust , Assignment of Rents and Security Agreement dated as of March 1 , 1983 (the "Deed of Trust") , from the Owner to Donald W. Cioban, as mortgage trustee , for the benefit of the_ Corporation, attached to this resolution as Exhibit C, the form, terms and provisions thereof being hereby authorized and approved. The assignment of the Corporation' s rights under the Deed of Trust and the Note (as defined therein) to the Trustee for the benefit of the holders of the Bonds , shall be effected pursuant to the terms and provisions of a collateral assignment and security agreement substantially in the form of the Collateral Assignment and Security Agreement dated as of March 1 , 1983 (the "Collateral Assignment") , from the Corporation to the Trustee , and attached to this Resolution as Exhibit D, the form, terms and provisions of the Collateral Assignment being hereby authorized and approved, and the President and any Vice President of the Corporation are hereby severally authorized and directed to execute and deliver the Collateral Assignment on behalf of the Corporation, and the Secretary or any Assistant Secretary is hereby authorized to attest and affix the Corporation' s seal thereto , with such changes therein as the officers executing the same may approve, such approval to be conclusively evidenced by such execution thereof. (d) Requirement as to Guarantee Agreement. As a condition to the actions authorized in this Section, the Guarantors shall have executed a guarantee agreement substantially in the form of the Guarantee Agreement dated as of March 1 , 1983 (the "Guarantee") , from the Guarantors to the Trustee , attached hereto as Exhibit E, the form, terms and provisions of the Guarantee being hereby authorized and approved. (e) Conditions Precedent to Closing of the Transaction. The actions and obligations authorized in this Section shall be subject to and conditioned upon the receipt by the Corporation at the Closing Date (as hereinafter defined) of (i) a letter of representation from the Owner and the Guarantors , duly authorized and executed by the Owner and the Guarantors , substantially in the form of the Letter of Representation, dated the Closing Date (the "Letter of Representation") and attached to this resolution as Exhibit -5- F, the form, terms and provisions of the Letter of Representation being hereby authorized and approved and the President and any Vice President of the Corporation are hereby severally authorized to signify the Corporation' s acceptance and confirmation of such Letter of Representation by executing the same on behalf of the Corporation in multiple counterparts ; (ii) an investment letter, duly authorized and executed by the Purchasers (as hereinafter defined) , substantially in the form of the Investment Letter, dated the Closing Date (the "Investment Letter") and attached to this resolution as Exhibit G, the form, terms and provisions of such Investment Letter being hereby authorized and approved; (iii) the purchase price for the Bonds ; and (iv) such opinions , evidences , certificates , instruments or other documents as shall be requested by the. Corporation' s Counsel or by Bond Counsel, to evidence due performance or satisfaction by the Owner at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by it. (f) Approval of Sale of the Bonds . The sale and delivery of the Bonds by the Corporation to the following named purchasers (collectively the "Purchasers") is hereby approved and authorized at the par value thereof plus accrued interest from the date of the Bonds until the date of delivery and payment for the Bonds (the "Closing Date") : PURCHASER PRINCIPAL AMOUNT InterFirst Bank-Beaumont $ 500 , 000 Allied Bank Beaumont 500 , 000 First City National Bank of Beaumont 175 , 000 Texas Commerce Bank-Beaumont , N.A. 175 , 000 Parkdale Bank 150 , 000 Texas Bank of Beaumont , Texas 100 , 000 (g) Issuance Furthers the Purposes of the Act. The Board of Directors of the Corporation hereby Inds , determines , recites and declares that the issuance of the Bonds on the terms and conditions set out in this resolution so as to provide financing for the Development is in -6- furtherance of and will promote the public purposes set forth in Section 3 of the Act, including without limitation assisting persons of low and moderate income to obtain decent , safe and sanitary housing at rentals they can afford. (h) Incorporation by Reference. All of the terms and provisions of trie ocuments attached as Exhibits A through G to this resolution shall be and the same are hereby made a part of this resolution. (i) Additional Authorizations to Officers of the Cor o- ration. The officers , employees and agents ot the Corporation, and each of them, shall be and each is expressly authorized, empowered and directed from time to time and at any time to do and perform all acts and things and to execute , acknowledge and deliver in the name and under the corporate seal and on behalf of the Corporation all certificates , financing statements , instruments and other papers , whether or not herein mentioned, as they may determine to be necessary or desirable in order to carry out the terms and provisions of this resolution and of the Bonds to be issued hereunder, as well as the terms and provisions of the Agreement, the Trust Indenture, the Note, the Deed of Trust , the Letter of Representation, the Collateral Assignment and the Guarantee hereby authorized and approved, such determination to be conclusively evidenced by the performance of such acts and things and the execution of any such certificate , financing statement , instrument or other paper. (j ) Effective Date of the Bond Resolution. This resolution shall take effect and be in full force and effect upon and after its passage. (k) Defined Terms . Unless otherwise indicated, all capitalized terms used herein shall have the meanings set forth in (i) this resolution and (ii) the documents which are incorporated herein pursuant to (h) above . This resolution is sometimes herein referred to as the "Bond Resolution" . Section 2 . DATE, DENOMINATION, NUMBERS , AND MATURITIES OF THE BONDS. The Bonds initial y authorized hereby shall be dated March 1 , 1983 , shall be issued and delivered in the form of fully registered bonds , without coupons , payable in installments to the registered holders thereof, or registered assigns , all in the manner hereinafter provided, with the Bonds to be initially payable to the Purchasers in -7- monthly installments on the dates and in the amounts as set forth in Section 5 hereof and to be numbered and issued as follows : NUMBER OWNER DENOMINATION R-001 InterFirst Bank-Beaumont $ 500 , 000 R=002 Allied Bank Beaumont 500 , 000 R-003 First City National Bank of Beaumont 1752000 R-004 Texas Commerce Bank-Beaumont, N.A. 175 , 000 R-005 Parkdale Bank 150 , 000 R-006 Texas Bank of Beaumont , Texas 100 , 000 Section 3 . INTEREST ON THE BONDS. The Bonds initially authorized hereby shall bear interest on the unpaid balance of the principal amount thereof from March 1 , 1983 , to the scheduled due date or to the date - of prepayment or redemption of the principal installments of the Bonds prior to the scheduled due date , at a per annum rate equal to the Bond Interest Rate (as defined in Section 5 hereof) . The interest shall be payable on the dates and in the manner provided in Section 5 . Section 4 . GENERAL CHARACTERISTICS OF THE BONDS. (a) In General. The Bonds initially authorized hereby shall be issued, s all be payable , may or shall be prepaid or redeemed prior to the scheduled principal installment payment dates , may be transferred and assigned, shall have the characteristics , and shall be signed, executed and sealed, all as provided and in the manner indicated in Section 5 . After the Bonds have been authorized to be issued by the Board but prior to the delivery of the Bonds , the Trustee shall authenticate the Bonds by executing the Trustee ' s Certificate of Authentication appearing on the Bonds as provided in Section 5 . In addition, on the date of delivery of the Bonds to the initial purchasers thereof, the Trustee shall fill in the date of delivery of the Bonds in the Delivery Certificate appearing on the Bonds as provided in Section 5 . -8- (b) Re istration Books . The Corporation shall keep or cause to be kept at t e principal corporate trust office of the Trustee books for the registration and transfer of Bonds (the "Bond Registration Books") and the Corporation hereby appoints the Trustee as its registrar and transfer agent (the "Registrar") to keep such books and make such registrations and transfers under reasonable regulations as the Corporation or the Registrar may prescribe; and the Registrar will register or transfer- as herein provided any Bonds upon presentation thereof at such office . The Corporation, the Owner and each Bondholder shall have the right to inspect the Bond Registration Books during the normal business hours of the Trustee. Registration of the Bonds and ownership thereof may be transferred only on the Bond Registration Books upon surrender of the Bond by the registered holder in person or by his duly authorized attorney, by proper written instrument of transfer, in the form and with guaranty of signatures satisfactory to the Registrar, duly executed by such holder or attorney. Upon such surrender for transfer of registration, the Registrar shall make notation DE such transfer on the Bonds in the Assignment section appearing thereon and in the Bond Registration Books . Such transfers of registration shall be made without charge to the holder of such Bonds , but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Bondholder requesting such transfer of registration, as a condition precedent to the exercise of such privilege. (c) Payment to Registered Holder. The person in whose name any Bond shall be registered on the Bond Registration Books may be deemed and treated as the absolute holder thereof for all purposes of this Bond Resolution and the Trust Indenture whether or not such Bond shall be overdue, and the Corporation, the Trustee , and the Owner shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, agreed liquidated damages , if any, and interest on any such Bond shall be made only to such registered holder thereof; but such registration may be changed as provided herein. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (d) Notation of Prepayment. The Corporation hereby appoints the Trustee as the Paying Agent for the Bonds . Upon the prepayment or partial redemption of any Bond, the Trustee , as Registrar and Paying Agent , shall note in the J -9- Prepayment Record appearing on such Bond the amount of such prepayment or redemption, the date said payment was made and the remaining unpaid principal balance of said Bond and shall then have said entry signed by an authorized official of the Trustee. The Trustee shall also record such information in the Bond Registration Books , and the Trustee shall also record in the Bond Registration Books all payments of principal installments on the Bonds when made on their respective due dates . Section 5 . FORM OF BOND. The form of Bond, together with the forms of the various certificates and forms to appear on the Bonds , shall be substantially as follows , with necessary and appropriate variations , omissions , and insertions as permitted or required by this Bond Resolution: f -10- FORM OF BOND NO. $ UNITED STATES OF AMERICA STATE OF TEXAS BEAUMONT HOUSING FINANCE CORPORATION MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) BEAUMONT HOUSING FINANCE CORPORATION (the "Corporation") , being duly created and organized as a housing finance corporation under the Texas Housing Finance Corporations Act , Article 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the "Act") , and acting on behalf of the City of Beaumont , Texas , hereby promises to pay to , or its registered assigns , the aggregate principal amount of DOLLARS. THIS BOND AND THE SERIES OF BONDS OF WHICH IT IS A PART HAVE BEEN ISSUED UNDER AND PURSUANT TO THE ACT, AND DO NOT CONSTITUTE AN INDEBTEDNESS OR OBLIGATION (LEGAL, GENERAL, SPECIAL, MORAL OR OTHERWISE) OF THE CITY OF BEAUMONT (OR ANY OTHER CITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS) OR OF THE STATE OF TEXAS , OR A LOAN OF CREDIT OF ANY OF THEM, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISIONS. THIS BOND SHALL BE PAYABLE (i) in principal install- ments on the first day of each month in the 180-month period (the "Principal Payment Period") in the amounts shown below commencing on April 1 , 1983 and (ii) with interest thereon, from March 1 , 1983 , on the balance of said principal amount from time to time remaining unpaid, at a per annum rate equal to the Bond Interest Rate (as hereinafter defined) , and at the maximum lawful per annum rate on overdue princi- pal and, to the extent legally permissible, on overdue interest, with interest being payable on said unpaid princi- pal balance during the period from March 1 , 1983 , until this Bond is fully paid, on the first day of each month commenc- ing April 1 , 1983 , in the amounts shown below (or in such other amounts as may be payable after any adjustment to the Bond Interest Rate as hereinafter provided) : t -11- THE TERM "BOND INTEREST RATE" shall mean the rate of 11% per annum, computed on a 365-366 day basis , as adjusted pursuant to the provisions of the next following sentence. Notwithstanding the foregoing, if at any time the Bond Interest Rate exceeds the maximum net interest cost which will produce a net effective interest rate in excess of 15% per annum or such other maximum per annum rate as set out in Article 717k-2 , Vernon' s Annotated Texas Civil Statutes , as amended, then the Bond Interest Rate shall not exceed 15% per annum or such other maximum set out in such Article. THE PRINCIPAL of and interest on this Bond shall be payable in lawful money of the United States of America, without exchange or collection charges . Payment of principal and interest , shall be made to the registered owner by check or draft mailed by InterFirst Bank-Beaumont (the "Trustee" , "Paying Agent" , and "Registrar" for this Bond) or its successor appointed under the Trust Indenture (hereinafter defined) , to the registered holder at its address as it appears on the Bond Registration Books kept by the Trustee; provided that in the alternative such payment may be made by any other method requested in writing by the registered holder, subject to the approval of the Trustee. The final payment of principal on this Bond shall be paid only upon surrender of this Bond to the Trustee for cancellation. Any prepayment or redemption of any principal installments of this Bond shall be made only upon presentation of this Bond to the Trustee , who shall make notation of such prepayment or redemption in the Prepayment Record endorsed hereon. THIS BOND is one of a series of Bonds dated as of March 1 , 1983 , authorized and issued in the aggregate principal amount of $1 , 600 , 000 pursuant to a resolution adopted by the Board of Directors of the Corporation (the "Bond Resolution") on behalf of the City of Beaumont , Texas , all issued or to be issued under a trust indenture , dated as of March 1 , 1983 (the "Trust Indenture") , between the Corporation and the Trustee , pursuant to and in full conformity with the Constitution and the laws of the State of Texas . The Bonds are issued in order to provide funds for the Corporation to lend to Virginia Village Venture, a Texas Joint Venture (the "Owner") , in order to finance the development costs of Virginia Village Development (together with the Owner' s interest in the site thereof, the "Development") . Payment of the principal of, and premium, if any, and liquidated damages , if any, and interest on this Bond has been unconditionally guaranteed on a proportionate basis by C. L. Sherman, Jr. , James J. Conway, Jr. , Wayne D. -12- Sherman, Robert G. Quinn, J. D. Martin III, A. S . Crawford, and F. L. Stanley (the "Guarantors") , pursuant to a guarantee agreement dated as of March 1, 1983 , between the Trustee and the Guarantors (the "Guarantee") . The proceeds of the sale \of the Bonds will be loaned to the Owner on a limited recourse basis pursuant to a loan agreement, dated as of March 1 , 1983 (the "Agreement") , between the Corporation and the Owner, and the Owner' s obligations under the Agreement will be further evidenced by the Owner' s execution and issuance of a limited recourse note (the "Note") which will be in an amount equal to the aggregate principal amount of the Bonds and which will constitute a renewal, extension and settlement of the Owner' s liability under two promissory note acquired by the Corporation incident to issuance of the Bonds . Contemporaneously with the execution of the Agreement , the Owner executed a deed of trust , assignment of rents , and security agreement dated as of March 1 , 1983 (the "Deed of Trust") , pursuant to which the Owner bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee , for the use and benefit of the Corporation, and further granted to the Corporation a security interest in, the Development and certain other properties , in order to secure the payment of the Installment Loan Payments (as defined in the Agreement) and the Note, according to their tenor and effect, and certain other indebtedness of the Owner , and the performance and observance by the Owner of all of the covenants expressed or implied in the Deed of Trust , the Agreement, and the Note; and the Corporation executed a collateral assignment and security agreement dated as of March 1 , 1983 (the "Collateral Assignment") , pursuant to which the Corporation conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , liens , privileges , claims , demands and equities existing and to exist in connection with or as security for payment of the Note , including its rights , titles and interests arising under the Deed of Trust , in order to secure payment of the Bonds according to their tenor and effect and the performance by the Corporation of all the covenants expressed or implied herein and in the Trust Indenture and the Collateral Assignment. ON ANY DATE, the unpaid principal installments of this Bond are subject to optional prepayment or redemption and may be prepaid or redeemed prior to their scheduled due dates , by the Trustee, at the option of the Corporation, upon written notice of the exercise of the option to prepay or redeem delivered to the Trustee by the Corporation not -13- later than the 45th day prior to the date of prepayment or redemption. Such unpaid principal installments may be so prepaid or redeemed as a whole on any date, or in part on any interest payment date (and, if in part, such installment shall be prepaid or redeemed in inverse chronological order of their scheduled due dates , and in amounts not less than all of an unpaid principal installment) , for the principal amount thereof and accrued interest thereon to the date of prepayment or redemption but without any premium. PROMPTLY AFTER ANY DATE ON WHICH the unpaid principal installments of this Bond are subject to mandatory prepayment or redemption as a whole as a result of occurrence of a Taxable Event and a Final Determination of Taxability, all such installments shall be prepaid or redeemed prior to their scheduled due dates by the Trustee, with funds which shall be furnished by the Corporation, on the earliest practicable date , and in all events within sixty days , following the latter of such occurrences as provided for in the Agreement. The prepayment or redemption price in such event shall be equal to the unpaid principal amount of this Bond so prepaid or redeemed, plus accrued interest to the date of prepayment or redemption, plus an additional amount (the "Redemption Premium") calculated by multiplying an amount equal to 1% the unpaid principal amount of this Bond by the number of complete 3-month periods elapsed between the date of the Taxable Event and the actual prepayment or redemption date , with such additional amount being payable on the prepayment or redemption date and with such additional amount being the agreed liquidated damages (for loss of a bargain and not as a penalty) which the holder of this Bond will be due as a result of the loss of the tax exempt status of the interest on this Bond. Such prepayment or redemption price shall constitute the entire amount due with respect to this Bond as a result of the occurrence of a Taxable Event and a Final Determination of Taxability. In the event this Bond has been paid prior to a Final Determination of Taxability, or in the event that notice of prepayment or redemption is given prior to a Final Determination of Taxability, the registered holder of this Bond at the time it is paid shall additionally be entitled to receive the Redemption Premium calculated using the date this Bond is paid in lieu of the actual prepayment or redemption date. ON ANY DATE but only with and to the extent of any surplus funds remaining in the Construction Fund after the r -14- completion of the Development as provided and required by Section 16 of the Bond Resolution, the unpaid principal installments of this Bond shall be prepaid or redeemed prior to the scheduled due dates by the Trustee, in inverse chronological order of their scheduled due dates (in the denominations of $1, 000 or any integral multiple thereof or in amounts not less than all of an unpaid principal installment) , at a prepayment or redemption price equal to the principal amount thereof to be prepaid or redeemed plus accrued interest thereon to the date of prepayment or redemption, and without premium. THE AGREEMENT recites and it is hereby provided that any provision for any payment of this Bond contained herein or in the Agreement shall be held to be subject to reduction to the amount allowed under the usury laws and the public securities laws of the State of Texas as now or hereafter construed by the courts having jurisdiction, and it is agreed by the Corporation and the holder of this Bond that in no event shall usury or any amount in excess of the maximum allowed under such public securities laws be paid or collected with respect to this Bond (whether as or in the form of liquidated damages or otherwise) . AT LEAST 7 DAYS PRIOR to the date fixed for any prepayment or redemption of the unpaid principal installments of this Bond, the Trustee shall cause a written notice of such redemption to be mailed to the registered holder of this Bond addressed to such holder at the address appearing on the Bond Registration Books . By the date fixed for any such prepayment or redemption, due provision shall be made by the Corporation with the Trustee and the Paying Agent for the payment of the principal amount of this Bond which is to be prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption, plus any required prepayment or redemption premium, and any other amounts due to the holder of this Bond. If such written notice of prepayment or redemption is given and if due provision for payment of the redemption price is made , all as provided above, the unpaid principal installments of this Bond which are to be prepaid or redeemed, thereby automatically shall be deemed to have been prepaid or redeemed prior to their scheduled due dates , and they shall not bear interest after the date fixed for prepayment or redemption, and they shall not be regarded as being outstanding except for the right of the holder hereof to receive the redemption price from the Paying Agent out of the funds provided for such payment. Upon presentation of this Bond to the Paying Agent , such unpaid principal r -15- installments which are to be prepaid or redeemed shall be paid at the redemption price. Except as .set forth above, this Bond is not subject to prepayment or redemption prior to maturity. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent is located are authorized by law or executive order to close , then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date of payment. IT IS HEREBY CERTIFIED AND COVENANTED that this Bond has been duly and validly authorized, issued, and delivered; that all acts , conditions , and things required or proper to be performed, exist , and be done precedent to or in the authorization, issuance , and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a special revenue obligation of the Corporation, and that the principal of and interest on this Bond are payable from and secured by a first lien on and pledge of the payments designated as "Installment Loan Payments" to be made or paid, or caused to be made or paid, to the Trustee , pursuant to the Bond Resolution, the Trust Indenture and the Agreement. The Owner, which is a joint venture organized and existing under the laws of the State of Texas , is obligated on a limited recourse basis as provided in the Agreement , to make or pay or cause to be made or paid, without set-off, recoupment, or counterclaim, to the Trustee each such "Installment Loan Payment" for deposit into the Debt Service Fund created for the benefit of the Bonds by the Bond Resolution, in aggregate amounts sufficient to pay and redeem, and provide for the payment and redemption of, the principal of and interest on this Bond, and to pay all other amounts required by the Agreement, the Bond Resolution, and the Trust Indenture when due, subject to and as required by the provisions of the Agreement , the Bond Resolution, and the Trust Indenture. THIS BOND is secured by the Trust Indenture whereunder the Installment Loan Payments are pledged as collateral and the Trustee is custodian of the Debt Service Fund and the Construction Fund, and is obligated to enforce the rights of the holder of this Bond and to perform other duties in the manner and under the conditions stated in the Trust t -16- Indenture. In case an "Event of Default" , as defined in the Trust Indenture , shall occur , the unpaid principal installments of this Bond may be declared to be due and payable immediately upon the conditions and in the manner provided in the Trust Indenture. This Bond is additionally secured by the Collateral Assignment of the Corporation' s rights with respect to the Note and the Deed of Trust. Reference is hereby made to the Bond Resolution, the Trust Indenture, the Deed of Trust, the Agreement and the Collateral Assignment for additional provisions with respect to the nature and extent of the security, the rights , duties , and obligations of the Owner, the Corporation, the Trustee , and the holder of this Bond, the terms upon which this Bond is issued and secured, and the modification of any of the foregoing. THE CORPORATION has reserved the right , subject to the restrictions stated in the Bond Resolution and with the consent of the holders of at least 75% in aggregate principal amount of the Bonds and any Additional Bonds then outstanding (as hereinafter defined) , to issue additional parity revenue bonds ("Additional Bonds") which, when issued and delivered, shall be payable from the Debt Service Fund, and shall be payable from and secured by a first lien on the pledge of "Installment Loan Payments" pursuant to the Agreement and entitled to the benefits of and secured by the Trust Indenture, the Collateral Assignment and the Deed of Trust in the same manner and to the same extent as , and shall be on a parity with, this Bond and all then outstanding Additional Bonds . THE CORPORATION also has reserved the right to amend the Bond Resolution and the Trust Indenture, as provided therein; and under some (but not all) circumstances amendments thereto must be approved by the holders of 75% in aggregate principal amount of the Bonds then outstanding and any Additional Bonds then outstanding. THE BONDS AND any coupons appertaining thereto have been issued under and pursuant to the Act , and are limited obligations of the Corporation and shall be payable solely out of the revenues derived from or in connection with the Agreement , including all sums deposited from time to time pursuant to the Agreement , the Trust Indenture and the Note in the Debt Service Fund established under the Trust Indenture , and in certain events out of amounts attributable to Bond proceeds or amounts secured through exercise of the remedies provided in the Trust Indenture, or in the Deed of Trust, or in the Collateral Assignment upon occurrence of an -17- event of default thereunder, and do not constitute an indebtedness or obligation (legal, general , special , moral or otherwise) of the City of Beaumont (or any other city, county or other municipal or political corporation or subdivision of the State of Texas) or of the State of Texas , or a loan of credit of any of them, within the meaning of any constitutional or statutory provisions . Neither the State of Texas nor the City of Beaumont nor any political corporation, subdivision or agency of the State of Texas shall be obligated to pay the principal of or premium, if any, or liquidated damages , if any, or interest on the Bonds and neither the faith and credit nor the taxing power of the State of Texas , the City of Beaumont , or any other political corporation, subdivision or agency of the State of Texas is pledged to the payment of the principal of or interest on the Bonds . No recourse under this Bond shall be had against any past , present or future officer, director, agent , or representative of the Corporation or of the City of Beaumont. The Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or out of any other revenues of the Corporation, the City of Beaumont , or the State of Texas except those revenues pledged by the Trust Indenture. THIS BOND may be assigned and shall be transferred only on the Bond Registration Books of the Corporation kept by the Trustee , as Registrar, upon the terms and conditions set forth in the Bond Resolution, the Trust Indenture and the Assignment provisions endorsed hereon. Such transfers shall be without expense to the holder hereof, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the holder requesting such transfer as a condition precedent to the exercise of such privilege. The registered holder of this Bond may be deemed and treated by the Corporation, the Trustee, and the Owner, as the absolute owner and holder thereof for all purposes , including payment and discharge of liability upon such Bond to the extent of such payment , and the Corporation, the Trustee , and the Owner shall not be affected by any notice to the contrary. THIS BOND shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Trust Indenture until the Trustee ' s Certificate of Authentication hereon shall have been signed by the Trustee and the Delivery Certificate hereon shall have been completed. -18- IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signatures of the President or any Vice President and the Secretary of the Corporation, and the official seal of the Corporation affixed on this Bond. BEAUMONT HOUSING FINANCE ATTEST: CORPORATION By: Secretary Vice President (CORPORATE SEAL) -19- FORM OF TRUSTEE' S CERTIFICATE OF AUTHENTICATION TRUSTEE' S CERTIFICATE OF AUTHENTICATION This Bond is the Bond initially issued under the pro- visions of the within mentioned Agreement, Bond Resolution, and Trust Indenture. INTERFIRST BANK-BEAUMONT By: Its : Authorized Officer TRUSTEE FORM OF ASSIGNMENT ASSIGNMENT- FOR VALUE RECEIVED, the registered owner and holder of this Bond last listed below sells , assigns , and transfers the within Bond to the Assignee last listed below, and hereby authorizes the transfer of this Bond on the Bond Registration Books of the Trustee. Such assignment shall not be effective until such Assignee presents this Bond to the Trustee for verification of such assignment and gives the Trustee its address to which payments shall be made and the Trustee makes notation of such Assignment below. DATE OF REGISTERED SIGNATURE ASSIGNMENT OWNER/HOLDER ASSIGNEE OF REGISTRAR -20- FORM OF DELIVERY CERTIFICATE DELIVERY CERTIFICATE THIS BOND was delivered to and paid for by the purchaser hereon on FORM OF PREPAYMENT RECORD PREPAYMENT RECORD Principal Name & Title Signature Date Prepayment Remaining of Authorized of of or Principal Officer Authorized Pmt. Redemption Balance Making Entry Officer -21- Section 6. PLEDGE. The Bonds and the interest thereon are and shall be payaETe from and secured by a first lien on and pledge of the payments designated as Installment Loan Payments to be made or paid, or caused to be made or paid, to the Trustee by the Owner, pursuant and subject to the terms and provisions of this Bond Resolution, the Trust Indenture, and the Agreement; and such Installment Loan Pay- ments are further pledged irrevocably to the establishment and maintenance of the Debt Service Fund -hereinafter created. The Bonds are additionally secured as provided in the Collateral Assignment. Section 7 . DEBT SERVICE FUND. (a) Establishment of Debt Service Fund. A separate and special trust fund to be designated and known as the "Debt Service Fund" shall be established by the Corporation with the Trustee for the benefit of the holders of the Bonds pursuant to the Agreement and the Trust Indenture , and maintained as provided in this Bond Resolution and the Trust Indenture, as long as any of the Bonds , or interest thereon, is outstanding and unpaid. (b) Accrued Interest. Immediately after the delivery of the Bon s to the initial purchasers thereof, all accrued interest , if any, received from the proceeds from the sale and delivery of the Bonds , shall be transferred by the Trustee into the Debt Service Fund. (c) Installment Loan Payments . Pursuant to the Agreement and the Trust Indenture, the Owner shall make or pay, or cause to be made or paid, to the Trustee, which shall deposit into the Debt Service Fund, Installment Loan Payments as follows : (1) On or before each interest payment date as provided in Section 5 hereof, an amount which, together with any other amounts then on deposit therein and available for such purposes , will be sufficient to pay the interest coming due on the Bonds on each interest payment date; and (2) On or before each principal payment date as provided in Section 5 hereof, an amount which, together with any other amounts then on deposit therein and available for such purpose, will be sufficient to pay the principal of the Bonds scheduled to be paid on each principal payment date; and -22- (3) On or before any optional or mandatory prepayment or redemption date as permitted or required in Section 5 hereof, an amount which, together with any other amounts then on deposit and available for such purpose, will be sufficient to pay the prepayment or redemption price (including any agreed liquidated damages) specified therein; and (4) Promptly after the occurrence of a Taxable Event and a Final Determination of Taxability, the additional amount required to pay the agreed liquidated damages to the holders of the Bonds for any installments of principal which were unpaid on the date of any Taxable Event, but which were paid or redeemed prior to the prepayment or redemption of all unpaid principal installments after a Final Determination of Taxability, all as provided in Section 5 hereof; and (5) On any date on which the Bonds are declared to be immediately due and payable pursuant to the Trust Indenture, an amount which, together with any other amounts then on deposit and available for such purpose , will be sufficient to pay the principal of all Bonds then outstanding and the interest accrued thereon to such date and Redemption Premium, liquidated damages , if applicable , and the reasonable fees and expenses (including attorneys ' fees) of the Trustee in enforcing the Agreement; and (6) Promptly ' after receipt of each statement and request for payment , an amount equal to the charges of the Trustee for performing the duties of Trustee and Registrar , and the charges of the Paying Agent for the Bonds , as designated in Section 5 hereof, for paying or redeeming principal installments of the Bonds , and paying the interest thereon. In the event the Owner should fail to make , or cause to be made, any of the required Installment Loan Payments set forth in this Section, each such required payment shall continue as an obligation of the Owner until fully paid, and the Owner agrees to pay the same to the Trustee, for the benefit of the holders of the Bonds , with interest thereon, to the extent legally permissible, at the rate of 157 per annum, from the date any such payment was due until payment thereof. -23- (d) Redemption. The Bonds initially authorized hereby shall be subject to redemption, and may or shall be redeemed, as specified in Section 5 hereof. (e) Payments from Debt Service Fund. Except as otherwise specifically provided in this Bond Resolution or the Trust Indenture, the Debt Service Fund shall be used by the Trustee only to pay the principal of, prepayment or redemption premium, if any, agreed liquidated damages , if any, and interest on the Bonds , when due, and the charges of the Trustee , Registrar, and Paying Agent; and the Trustee shall make available to the Paying Agent , out of the Debt Service Fund, the amounts required to pay or redeem the principal of and interest on the Bonds when due, and the Trustee shall make all other payments as required by this Initial Bond Resolution and the Trust Indenture. (f) Immediately Available Funds . The Owner shall make all Insta went Loan Payments in funds that will be immediately available and allow the Paying Agent to pay, in lawful money of the United States of America, the principal , interest , and other amounts with respect to the Bonds , when due. (g) Investment of Funds . Any money held as part of the Debt Service Fund shall e invested or reinvested by the Trustee , upon the written direction of the Approving Officer in any obligations of the United States Government or its agencies or in certificates of deposit of banks approved by the Trustee , including certificates of deposit of the Trustee . The Trustee shall make no investments except as specifically directed by the Approving Officer. The investments of the Debt Service Fund shall be deemed to be a part of such Fund, and, for the purpose of determining the amount of money in such Fund, such investments shall be valued at their cost or market value, whichever is lower. The income and profits , including realized discount on obligations purchased, received from such investments shall be deposited in or credited to the Debt Service Fund, and any losses on investments thereon shall be charged against the Debt Service Fund. If at any time it shall become necessary that some or all of the investments made with the moneys from the Debt Service Fund be redeemed or sold to raise moneys necessary to comply with the provisions of this Bond Resolution or the Trust Indenture, the Trustee shall, without further authorization, effect such redemption or sale, employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any loss resulting from any 1 -24- such investment or resulting from the redemption or sale of any such investment as herein authorized, except that the Trustee shall be liable for (1) any loss resulting from its willful or negligent failure, within a reasonable time after receiving the written direction from the Approving Officer, to make, redeem, or sell any investment in the manner provided for herein, and (2) except for any redemption or sale made pursuant to the next preceding sentence of this paragraph, for any loss resulting from the making, redeeming, or selling of any investment which was not authorized by written direction of the Approving Officer. If the Trustee is unable, after reasonable effort and within a reasonable time, to make, redeem, or sell any such investment , it shall so notify in writing the Approving Officer and thereafter the Trustee shall be relieved of all responsibility with respect thereto. In the event of any such loss , the Owner shall make additional deposits to restore same if and to the extent required to enable the Trustee to make all payments required to be made from the Debt Service Fund, and such additional deposits shall constitute additional amounts of "Installment Loan Payments" . Section S . SECURITY FOR FUNDS . All uninvested money in all Funds established pursuant to this Bond Resolution (including the Debt Service Fund and the Construction Fund) shall be secured by the Trustee in such manner and to the extent as may be directed by the Approving Officer and approved by the Trustee. Section 9 . THE OWNER' S PAYMENTS. (a) Limitations on Owner' s Obligation. The Owner has covenanted in the Agreement and the Trust Indenture, and, by the approval of this Bond Resolution, the Owner further has obligated itself and agreed on a limited recourse basis , regardless of and notwithstanding any provisions of the Agreement (other than Sections 6 . 01 and 6 . 02 thereof relating to merger, consolidation, transfer of assets , and assignment) and regardless of the provisions of any other agreement or contract to the contrary, to make or pay or cause to be made or paid, without set-off, recoupment, or counterclaim but on a limited recourse basis only, the Installment Loan Payments to the Trustee in the amounts required by Section 7 (c) of this Bond Resolution to be made into the Debt Service Fund, and to make such payments on or before the dates specified in this Bond Resolution and the Trust Indenture; and said payments by the Owner shall be and constitute the Installment Loan Payments as contemplated and -25- required by the Agreement. Each Bondholder is and shall be entitled to rely unconditionally on the agreements , covenants , and representations set forth in this Bond Resolution and the Trust Indenture. (b) Prepayments . It is further understood that the Owner may prepay all or any part of each Installment Loan Payment , and any such prepayment , and any earnings thereon, shall be applied by the Trustee to the payment of each Installment Loan Payment; provided that the prepayment or redemption at any time of any unpaid principal installments of the Bonds prior to their due dates , with funds from any source (whether from Installment Loan Payments or otherwise) , shall not relieve the Owner of its obligation to make or pay, or cause to be made or paid, each Installment Loan Payment as specified in Section 9(a) above, when due with respect to any remaining unpaid principal installments of the Bonds . Section 10 . ADDITIONAL PARITY BONDS. (a) Additional Bonds . The Corporation -reserves the right, upon the request of the Owner but only with the consent of the holders of at least 75% in aggregate principal amount of the Bonds and any Additional Bonds (as hereinafter defined) then outstanding, to issue additional parity revenue bonds ("Additional Bonds") in any amounts , for any. lawful purpose or purposes , including the refunding of any outstanding Bonds . Such Additional Bonds., along with the Bonds authorized by this Bond Resolution, shall be considered, constitute , and be "Bonds" as defined in, and for all purposes of, the Agreement and the Trust Indenture. When issued and delivered, such Additional Bonds , the redemption premium, if any, agreed liquidated damages , if any, and the interest thereon shall be payable from the Debt Service Fund, and shall be payable from and secured by a first lien on and pledge of Installment Loan Payments pursuant to the Agreement , and secured by the Trust Indenture and the Collateral Assignment in the same manner and to the same extent as , and be on a parity with, all then outstanding Bonds and Additional Bonds . Such Additional Bonds may be issued in one or more series or issues , in various principal amounts , maturing at different times , bearing interest at different rates , be payable in installments or otherwise be redeemable prior to maturity, with or without redemption premium, on whatever terms or prices , and may contain such other provisions as may be provided in any Bond Resolution authorizing the issuance of -26- such Additional Bonds . It is provided, however, that no series or issue of Additional Bonds shall be issued unless : (i) In the opinion of Bond Counsel (A) the issu- ance of such Additional Bonds will not adversely affect the exemption from federal income taxation of the interest on the then outstanding Bonds and Additional Bonds , or affect the validity of the then outstanding Bonds or Additional Bonds and (B) such Additional Bonds are secured in the same manner and to the same extent as and are on a parity with all then outstanding Bonds and Additional Bonds ; (ii) A certificate is executed by the President or any Vice President and the Secretary of the Corporation to the effect that no default exists in connection with the Bonds or the Trust Indenture (or any amendment or supplement thereto) or with any of the covenants or requirements of this Bond Resolution or the Bond Resolutions (or any amendments or supplements thereto) authorizing the issuance of all then outstanding Bonds and Additional Bonds , and that the Debt Service Fund contain-s the amount then required to be on deposit therein; (iii) The Bond Resolution authorizing the issuance of such series or issue of Additional Bonds provides for additional Installment Loan Payments to be deposited into the Debt Service Fund in amounts sufficient to pay all principal of, redemption premium, if any, agreed liquidated damages , if any, and interest on such Additional Bonds , together with all Trustee, Registrar, and Paying Agent fees and expenses attributable to such Additional Bonds ; (iv) The Approving Officer and the Trustee , but only with the consent of the holders of at least seventy five percent (75%) of the then outstanding principal amount of the Bonds and Additional Bonds , if any, approve in writing the Bond Resolution authorizing the issuance of such series or issue of Additional Bonds , as required by the Agreement; and (v) The Trustee, Paying Agent, and principal and interest payment dates during any year in which principal and interest on such Additional Bonds are scheduled to be paid, are the same for the Additional Bonds and the Bonds . -27- (b) Amendments to Trust Indenture Unnecessary. It shall not a necessary or required that the—Trust Indenture be amended or supplemented to cause any series or issue of Additional Bonds to be secured by the Trust Indenture. All that shall be necessary or required to cause any such Addi- tional Bonds to be secured by the Trust Indenture is for the Corporation to deliver to the Trustee a certified copy of the Bond Resolution authorizing their issuance prior to the delivery of such Additional Bonds . Section 11. SPECIAL COVENANTS . The Corporation fur- ther covenants as follows : (a) Installment Loan Pa ents Pledged to Bonds Only. Other than f or t e payment of the Bonds and except as provided in this Bond Resolution, the Trust Indenture and the Collateral Assignment , the Installment Loan Payments , the Deed of Trust and the Note have not in any manner been pledged to the payment of any debt or obligation of the Corporation. (b) Non-Encumbrance. While any of the Bonds are outstanding , the Corporation will not (except with respect to the Bonds and any Additional Bonds and except as provided in the Agreement , any Bond Resolution, or the Trust Indenture) in any manner whatsoever create, assume , or suffer to exist, directly or indirectly, any mortgage, lien, encumbrance, pledge, or charge against the Debt Service Fund, the Installment Loan Payments , the Construction Fund, the Deed of Trust, the Note, or any property or moneys deposited with the Trustee. (c) Performance by Corporation. The Corporation will carry out all of its covenants and obligations under this Bond Resolution; and the Corporation may be required to carry out such covenants and obligations by all legal and equitable means , including, but without limitation, actions for specific performance and the use and filing of mandamus proceedings in any court of competent jurisdiction against the Corporation. (d) Certain Modifications Prohibited. The Corporation covenants and agrees that it will not execute or permit the execution of any contract or agreement, or terminate or amend the Agreement , in any manner that would relieve or abrogate the obligations of the Owner to make or pay, or cause to be made or paid, when due, all Installment Loan Payments , in the manner and to the extent required by the Agreement, this Bond Resolution, and the Trust Indenture , or -28- which would change or affect Sections 4 . 04 , 4 . 05 , 4 . 06 , 6 . 01 and 6 . 02 of the Agreement without the written consent of all of the Bondholders and the Trustee. Section 12 . THE BONDS ARE SPECIAL OBLIGATIONS. The Bonds and any coupons appertaining thereto are limited obligations of the Corporation and shall be payable solely out of the revenues derived from or in connection with the Agreement, including all , sums deposited from time to time pursuant to the Agreement , the Trust Indenture and the Note in the Debt Service Fund established under the Trust Indenture, and in certain events out of amounts attributable to Bond proceeds or amounts secured through exercise of the remedies provided in the Trust Indenture, or in the Deed of Trust , or in the Collateral Assignment upon occurrence of an event of default thereunder, and do not constitute an indebtedness or an obligation (legal, general , special , moral or otherwise) of the City of Beaumont (or any other city, county or other municipal or political corporation or subdivision of the State of Texas) or of the State of Texas , or a loan of credit of any of them within the meaning of any constitutional or statutory provisions . Neither the State of Texas nor the City of Beaumont nor any political corporation, subdivision or agency of the State of Texas shall be obligated to pay the principal of or premium, if any, or liquidated damages , if any, or interest on the Bonds and neither the faith and credit nor the taxing power of the State of Texas , the City of Beaumont, or any other political corporation, subdivision or agency of the State of Texas is pledged to the payment of the principal of or interest on the Bonds . No recourse under this Bond shall be had against any past , present or future officer, director, agent , employee or representative of the Corporation or of the City of Beaumont. The Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or out of any other revenues of the Corporation, the City of Beaumont , or the State of Texas except those revenues pledged by the Trust Indenture. Section 13 . AMENDMENTS. (a) Amendment with Consent of Holders of 75% of the Bonds . Su j ect to approval in writing by the Corporation (witTi the consent of the Approving Officer of the Owner) , the holders of 757 in aggregate principal amount of the then outstanding Bonds shall have the right from time to time to approve any amendment to any Bond Resolution or to the Trust Indenture (provided that the Trustee must approve any amendment to the Trust Indenture) which may be deemed f -29- necessary or desirable by the Corporation; provided, however, that nothing herein contained shall permit or be construed to permit the amendment , without the consent of the holder of each of the then outstanding Bonds affected thereby, of the terms and conditions of any Bond Resolution, the -Bonds , or the Trust Indenture , so as to: (1) change the Debt Service Fund requirements , interest payment dates , mandatory redemption provisions , or the due date or dates , or the maturity or maturities of the outstanding Bonds ; (2) reduce the rate of interest borne by any of the outstanding Bonds ; (3) reduce the terms of the principal of, redemption premium, if any, liquidated damages , if any, or interest on the outstanding Bonds , or impose any conditions with respect to such payments ; (4) modify the terms of payment of principal of, redemption premium, if any, liquidated damages , if any, or interest on the outstanding Bonds , or impose any conditions with respect to such payments ; (5) affect the rights of the holders of less than all of the Bonds then outstanding; (6) decrease the minimum percentage of the principal amount of Bonds necessary for consent to any such amendment; or (7) alter the obligations of the Owner to pay Install- ment Loan Payments in the manner and to the extent provided in the Agreement, this Bond Resolution, and the Trust Indenture. (b) Notice of Amendment. If at any time the Corporation shall desire to amend any Bond Resolution or the Trust Indenture under this Section, the Corporation shall file a copy of the proposed amendment at the principal office of the Trustee and shall cause notice of the proposed amendment to be published at least once in a financial newspaper, journal or publication of general circulation in The City of New York, New York, or in the State of Texas , during each calendar week for at least two successive calendar weeks . If, because of temporary or permanent suspension of the publication or general circulation of all -30- such financial newspapers , journals and publications , it is impossible or impractical to publish such notice in the manner provided herein, then such publication in lieu thereof as shall be made by the Trustee shall constitute a sufficient publication of notice. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Trustee for inspection by all owners of Bonds . Such publication is not required, however, if notice in writing is given to each holder of Bonds . (c) Consent to Amendment. Whenever at any time (but not less than 30 days nor more than one year from the date of the first publication of said notice or other service of written notice) the Corporation shall receive an instrument or instruments executed by the holders of at least 75% in aggregate principal amounts of all Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and shall specifically consent to and approve such amendment , the Corporation may adopt the amendatory resolution in substantially the same form. (d) Effect of Amendment. Upon the adoption of any amendatory reso ution pursuant to the provisions of this Section, any such Bond Resolution or the Trust Indenture, shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights , duties , and obligations of all the Bondholders under such amendatory resolution or the Trust Indenture shall thereafter be deter- mined and exercised subject in all respects to such amendments . (e) Consent of Bondholders . Any consent given by a Bondholder pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication or other giving of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Bond during such period. Such consent may be revoked at any time after six months from the date of the first publication or other giving of such notice by the Bondholder who gave such consent, or by a successor in title , by filing notice thereof with the Trustee and the Corporation, but such revocation shall not be effective if the holders of 75% in aggregate principal amount of the then outstanding Bonds have, prior to the attempted revocation, consented to and approved the amendment. -31- (f) Ownership of the Bonds . For the purpose of this Section, the fact of being a Bondholder , the amount and numbers of such Bonds , and the date of being a Bondholder may be conclusively presumed, or may be proved by an affidavit satisfactory to the Corporation and the Trustee of the person claiming to be such Bondholder, or by a certificate executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date therein mentioned such person has on deposit with such trust company, bank, banker, or other depository, the Bonds described in such certificate, or in any other manner, whether or not the Bonds are so deposited, as the Trustee may approve. The Corporation may conclusively presume that the status of any Bondholders will continue until written notice to the contrary is served upon the Corporation. (g) Amendments Without Consent. Notwithstanding the provisions of (a) through (f) of t is Section, and without publication of the proposed amendment and without the consent of the Bondholders , but subject to approval of the Approving Officer and, in the case of any amendment to the Trust Indenture, with the approval of the Trustee , the Corporation may, at any time , amend any Bond Resolution or the Trust Indenture , to cure any ambiguity or cure, correct, or supplement any defective or inconsistent provision contained therein, or make any other change that does not in any respect materially and adversely affect the interest of the Bondholders , provided that no such amendment shall be made contrary to the proviso to Section 13 (a) above , and a duly certified or executed copy of each such amendment shall be filed with the Trustee. (h) Special Exception. The provisions of this Section 13 shall have no application to the right of the Corporation to amend its Rules and Regulations pertaining to levels of low and moderate income as set forth in Section 19 hereof, and the Corporation shall be permitted to make any such amendments as provided therein. Section 14 . ESTABLISHMENT OF CONSTRUCTION FUND. (a) Deposit of Bond Proceeds into Construction Fund. Prior to or immediately a ter the sale and delivery of t e Bonds authorized hereby, the Corporation shall establish the Construction Fund with the Trustee, as defined in and required by the Agreement. The Corporation shall deposit all of the proceeds from the sale and delivery of the Bonds authorized hereby into the Construction Fund. The Trustee shall draw on and use the Construction Fund as hereinafter -32- provided. The amount so deposited into the Construction Fund shall constitute the Loan made to the Owner by the Corporation as contemplated and provided in the Agreement. (b) . Investment of Money in Construction Fund. Any money held as part of the Construction Fund, other than the amounts described in Section 15 (a) , shall be invested or reinvested by the Trustee upon the written direction of the Approving Officer in obligations of the United States government or its agencies or in certificates of deposit of banks approved by the Trustee, including certificates of deposit of the Trustee. The Trustee shall make no investments except as specifically directed in writing by the Approving Officer. The investments of the Construction Fund shall be deemed to be a part of the Construction Fund, and for the purpose of determining the amount of money in the Construction Fund, such investments shall be valued at their cost or market value , whichever is lower. The income and profits (including realized discount on obligations) received from such investments shall be deposited in or credited to the Construction Fund, and any losses on investments shall be charged against the Construction Fund. Upon the written direction of the Approving Officer , the Trustee shall redeem or sell all or any designated part of such investments employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any loss resulting from the redemption or sale of any such investment as herein authorized; except that , notwithstanding any provisions of the Agreement , the Trustee shall be liable for (1) any loss resulting from its willful or negligent failure , within a reasonable time after receiving the written direction from the Approving Officer, to make, redeem, or sell any investment in the manner provided for herein, and (2) any loss resulting from the making, redeeming, or selling of any investment which was not authorized by written direction of the Approving Officer. If the Trustee is unable , after reasonable effort and within a reasonable time after receipt of the required written direction, to make, redeem, or sell any such investment , it shall so notify in writing the Approving Officer, and thereupon the Trustee shall be relieved of all liability or responsibility with respect thereto . (c) Deposit of Accrued Interest , Income, and Profits . Any accrued interest received from _t 7e sale of- the Bonds , and all income and profits received from the investment of the Construction Fund shall, as soon as practicable after any receipt thereof has been deposited in or credited to the -33- Construction Fund, be transferred by the Trustee and deposited into the Debt Service Fund to be used to pay interest on the Bonds during the period of construction of the Development. Section 15 . PAYMENTS FROM CONSTRUCTION FUND. (a) Corporation ' s Administrative Overhead Ex enses and Other Costs . Immediately after the de ivery of the Bonds authorized hereby, the Trustee shall pay directly to the Corporation the amount which is agreed upon by the Corporation and the Owner and which will reimburse the Corporation for its application fee and its administrative and overhead expenses directly attributable and chargeable to the costs of issuance of the Bonds authorized hereby. Also , immediately after the delivery of the Bonds authorized hereby, the Trustee shall pay directly out of the Construction Fund, promptly after receiving the bills or statements therefor, all of the actual expenses and costs of issuance of such Bonds , including , without limitation, financing charges , commitment fees , printing and engraving expenses , the fees and expenses of accountants , financial advisors , and attorneys , and the initial fees and expenses of the Trustee. (b) Reimbursement for and Payment of Cost of the Development. Su ject and subordinate to making the payments required by the preceding paragraph, the Trustee shall make such payments from the Construction Fund to enable the Owner to pay, or to reimburse the Owner for paying, any Cost of the Development , from time to time upon receipt by the Trustee of a request of the Owner signed by the Approving Officer. Such request shall be accompanied by a certificate (in the form attached to the Agreement) stating with respect to each payment as follows : (i) the expenditures , in summary form, as to which payment is to be made or for which reimbursement is requested; (ii) that the amounts requested are to be or have been paid by the Owner for interest during construc- tion, acquisition and development of property, or to contractors , subcontractors , materialmen, engineers , architects , or other persons who will perform or have performed necessary or appropriate services or will supply or have supplied necessary or appropriate materials for the provision, acquisition, construction, renovation, reconstruction, rehabilitation, repair, -34- alteration, improvement or extension of the Develop- ment , as the case may be , and that , to the best of the knowledge of the person delivering the certificate , the fair value of such interest, property, services , or materials is not exceeded by the amounts requested to be paid; (iii) that no part of the several amounts requested to be paid to the Owner as stated in such certificate has been or is the basis for the payment of any money in any previous or then pending request from the Construction Fund or any other source; (iv) that the payment of the amounts requested will not result in a breach of any of the covenants of the Owner contained in the Agreement; and (v) that the expenditure of such amounts to be paid, when added to all previous disbursements from the Construction Fund, will result in at least 92% of the total of such disbursements , other than disbursements for issuance expenses , being used to provide , acquire , construct , rehabilitate , renovate , improve , alter, equip , and furnish a project for residential rental property that constitutes an exempt facility (within the meaning of Section 103 (b) (4) (A) of the Code) . (c) Reliance by Trustee. The Trustee shall rely fully on any request and certificate delivered pursuant to this Section and shall not be required to make any investigation in connection therewith. The Trustee may request from time to time, and the Owner shall furnish, supporting documentation for any amounts requested under Section 15 (b) (ii) above. If amounts paid by the Trustee with respect to any portion of the Development should exceed the cost thereof, the Owner shall promptly repay such overpayment into the Construction Fund. Section 16 . SURPLUS CONSTRUCTION FUNDS. (a) Disposition of Surplus Funds . The completion of the Development shall e conclusively evidenced, and the date of completion shall be established by a written certificate of completion to be signed and delivered as provided in the Agreement. If, upon the completion of the Development , there shall be any surplus funds remaining in the Construction Fund not required to provide for the payment of the Cost of the Development, or if any funds are -35- on hand in the Construction Fund at the time of the release of the Trust Indenture under the terms thereof, then any such funds shall be used immediately to prepay or redeem principal installments of the Bonds , in inverse chronological order, in the manner set forth in Section 5 hereof for the prepayment or redemption of principal - installments of the Bonds with surplus Construction Fund moneys , to the extent of any such available funds ; provided that prior to such use , the Corporation and the Trustee shall have been furnished with an unqualified opinion of Bond Counsel to the effect that the use of moneys from the Construction Fund for such purpose will be lawful and will not impair the exemption of interest on the Bonds from federal income taxation; and provided further that the Owner shall deposit into the Construction Fund prior to such prepayment or redemption an amount sufficient to cause the total amount in the Construction Fund to be equal to (i) an integral multiple of $1, 000 , or (ii) not less than all of the unpaid principal installment or installments to be prepaid or redeemed. (b) Disposition of Construction Fund upon Acceleration and Redemption. It the Trustee shall—declare the principal of the Bonds and the interest accrued thereon immediately due and payable as the result of an Event of Default specified in the Trust Indenture , or if the Bonds are optionally or mandatorily prepaid or redeemed prior to maturity as a whole in accordance with their terms , any amounts remaining in the Construction Fund shall be used immediately by the Trustee for the purpose of paying principal of, redemption premium, if any, agreed liquidated damages , if any, and interest on the Bonds when due. Section 17 . DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds . In the event any of the outstanding Bonds authorized hereby are damaged, mutilated, lost, stolen, or destroyed, the .Corporation shall execute, and the Trustee shall authenticate, a new Bond of the same principal amount and maturity of the damaged, mutilated, lost, stolen, or destroyed Bond in exchange and substitution for such Bond or in lieu of and substitution for such Bond. (b) Application for Substitute Bonds . Application for exchange and substitution of damaged, mutilated, lost , stolen, or destroyed Bonds shall be made to the Corporation. In every case, the applicant for a substitute Bond shall furnish to the Corporation and to the Trustee such security -36- or indemnity as may be required by them to save each of them and the Paying Agent harmless . In every case of loss , theft , or destruction of a Bond, the applicant shall also furnish to the Corporation and to the Trustee evidence to their satisfaction of the loss , theft , or destruction, and of the ownership of the lost Bond. In every case of damage or mutilation of a Bond, the applicant shall surrender the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, agreed liquidated damages , if any, or interest on the Bond, the Corporation may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a substitute Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Substitute Bonds . Prior to the issuance of any substitute Bond, the Corporation and the Trustee may charge the applicant for such Bond with all legal , printing, and other expenses in connection therewith. Every substitute Bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Corporation whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone , and shall be entitled to all the benefits of the Trust Indenture and this Bond Resolution equally and proportionately with any and all other Bonds duly issued under this Bond Resolution. (e) Authorit . for Issuing Substitute Bonds . This Bond Resolution shall constitute sufficient authority for the issuance of any such substitute bonds without necessity of further action by the Board of Directors of the Corporation or any other body or person, and the issuance of such substituted Bonds is hereby authorized, notwithstanding any other provisions of this Bond Resolution, except to the extent otherwise required by law. Section 18 . NO ARBITRAGE. The Corporation and the Owner have covenanted to and with the purchasers of the Bonds that they will make no use of the direct or indirect proceeds thereof at any time throughout the term thereof which would cause the Bonds to be arbitrage bonds within the meaning of Section 103 (c) of the Code or any Regulations or t -37- rulings pertaining thereto; and by this covenant the Corporation and the Owner are obligated to comply with the requirements of the aforesaid Section 103(c) and all applicable and pertinent Regulations and rulings relating to arbitrage bonds . Section 19 . ADOPTION OF RULES AND REGULATIONS AS TO LOW AND MODERATE INCOME LEVELS. Pursuant to and as required by the Act , t e Board of Directors of the Corporation hereby finds and determines and hereby adopts as a part of the Rules and Regulations of the. Corporation effective as of January 1 , 1983 , that for purposes of occupancy of dwelling units in the Development, a person of low and moderate income shall be a person whose adjusted gross income , together with the adjusted gross incomes of all persons who intend to reside with such person in one dwelling unit within the Development , did not exceed $40 , 000 . 00 for the calendar year 1982 . It is expressly stipulated that (i) the Corporation shall retain the right to modify the levels of low and moderate income for purposes of the Act and this resolution at any time and from time to time while any of the Bonds may be outstanding without the consent of any other person or entity (including without limitation the Trustee, the Owner or any Bondholder) , and (ii) the income levels now or hereafter established by the Corporation as provided in this Section have been or will be determined solely for purposes of compliance with -the Act , and nothing contained herein shall affect the Owner' s obligation to rent dwelling units in the Development to individuals of low or moderate income as defined in the Code and the Regulations and rulings thereunder in order to qualify (and maintain qualification of) the Bonds as tax-exempt bonds under Section 103 (b) (4) (A) of the Code. THIS RESOLUTION PASSED and APPROVED this 2nd day of March, 1983 . f -38- TRUST INDENTURE BETWEEN BEAUMONT HOUSING FINANCE CORPORATION AND INTERFIRST BANK-BEAUMONT TRUSTEE RELATING TO BEAUMONT HOUSING FINANCE CORPORATION $1, 600 , 000 MULTI-FAMILY HOUSING REVENUE BONDS SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) Dated as of March 1 , 1983 f ���5v TABLE OF CONTENTS PAGE PREAMBLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 GRANTING CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1 . 01 Definitions . . . . . . . . . . . . . . . . . . . 4 Section 1 . 02 Additional Definitions and Interpretations . . . . . . . . . . . . . . . . . 7 ARTICLE II ACCEPTANCE OF TRUST Acceptance of Trust. . . . . . . . . . . . . . . . . 8 ARTICLE III DEBT SERVICE FUND AND CONSTRUCTION FUND Debt Service Fund and Construction Fund. . . . . . . . . . . . . . . . . . . 8 ARTICLE IV NOTICE TO OWNER Notice to Owner. . . . . . . . . . . . . . . . . . . . . 8 ARTICLE V ACCOUNTS AND RECORDS Section 5 . 01 Separate Records to be Kept. . . . . . . . . 9 Section 5 . 02 Annual Report. . . . . . . . . . . . . . . . . . . . . . . 9 Section 5 . 03 Right to Inspect. . . . . . . . . . . . . . . . . . . . 9 ARTICLE VI ENFORCEMENT OF RIGHTS IN CASE OF DEFAULT Section 6. 01 Appointment of Trustee and Rights of Holder. . . . . . . . . . . . . . . . . . . . 10 Section 6 . 02 Control by Trustee. .. . . . . . . . . . . . . . . . 10 Section 6 . 03 Events of Default. . . . . . . . . . . . . . . 11 Section 6 . 04 Declaration of Principal ands Interest Due. . . . . . . . . . . . . . . . . . . . . . . . 12 Section 6 . 05 Enforcement by Trustee. . . . . . . . . . . . . . 13 Section 6 . 06 Non-Exclusive Remedies . . . . . . . . . . . . . . 13 Section 6 . 07 Waiver of Defaults . . . . . . . . . . . . . . . . . . 14 Section 6 . 08 Discretion of Trustee. . . . . . . . . . . . . . . 14 Section 6 . 09 Application of Moneys . . . . . . . . . . . . . . . 14 Section 6 . 10 Judicial Proceedings . . . . . . . . . . . . . . 16 Section 6 . 11 Enforcement' of Remedies Without Possession of Bonds . . . . . . . . . . . . . . . . . 16 Section 6 . 12 Direction of 75% in Principal Amount of Bondholders . . . . . . . . . . . . . . . 16 Section 6 . 13 Notice of Default. . . . . . . . . . . . . . . 16 Section 6 . 14 Concurrence of Bondholders . . . . . . . . . . 17 Section 6 . 15 Notice to Owner of Past Due Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VII CONCERNING THE TRUSTEE Section 7 . 01 Not Accountable For Bond Proceeds . . . 17 Section 7 . 02 Reliance by Trustee. . . . . . . . . . . . . . . . . 18 Section 7 . 03 Compensation. . . . . . . . . . . . . . . . . . . . 18 Section 7 . 04 Limited Responsibilities. . . . . . . . . . . . 19 Section 7 . 05 Advice. . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 7 . 06 Trustee May Own Bonds . . . . . . . . . . . . . . . 20 Section 7 . 07 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 7 . 08 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ARTICLE VIII SUCCESSOR TRUSTEE Section 8. 01 Resignation of Trustee. . . . . . . . . . . . . . 20 Section 8 . 02 Removal of Trustee. . . . . . . . . . . . . . . . 21 Section 8 . 03 Appointment of Successor Trustee. . . . 21 Section 8 . 04 Transfer to Successor Trustee. . . . . . . 22 Section 8. 05 Merger or Consolidation of Trustee. . 22 1 s ARTICLE IX RELEASE OF INDENTURE Section 9. 01 Satisfaction of Indebtedness and Release of Indenture. . . . . . . . . . . . . . 22 ARTICLE X AMENDMENTS Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE XI MISCELLANEOUS PROVISIONS Section 11 . 01 Acknowledgments and Ownership of Bonds . . . . � . . . . . . . . . . . . . . . . 23 Section 11 . 02 Trustee May RequireProof of Ownership. . . . . . . . . . . . . . . . . . . . . 24 Section 11 . 03 Consent of Bondholders . . . . . . . . . . . . . . 24 Section 11 . 04 Survival of Valid Bonds . . . . . . . . . . . . . 24 Section 11 . 05 Unclaimed Funds . . . . . . . . . . . . . . . . . . . . . 25 Section 11 . 06 Rights of Parties. . . . . . . . . . . . . . . . . . . 25 Section 11 . 07 Severability. . . . . . . . . . . . . . . . . . . . . 25 Section 11 . 08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE XII RECORDING Section 12. 01 Corporation and Trustee toRecord. . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 12 . 02 Non-Encumbrance. . . . . . . . . . . . . . . . . . . . . 26 TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ACKNOWLEDGMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 EXHIBITS Exhibit A Schedule of Trustee Fees THE STATE OF TEXAS § TRUST INDENTURE COUNTY OF JEFFERSON § This Trust Indenture, dated as of March 1 , 1983 , executed by and between Beaumont Housing Finance Corporation, duly organized and created as a housing finance corporation under the Texas Housing Finance Corporations Act , Art. 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the "Act") , and InterFirst Bank-Beaumont , a state banking corporation duly organized and existing under the laws of the State of Texas and having its principal office in the City of Beaumont, Texas , as Trustee (the "Trustee") : W I T N E S S E T H: WHEREAS , the Act authorizes and empowers the Corporation to issue revenue bonds on behalf of the City of Beaumont , Texas (the "City") , for the purpose of providing financing for residential developments within the City and intended to be occupied substantially (at least 90%) by persons of low and moderate income, as determined in Rules and Regulations adopted by the Board of Directors of the Corporation; and WHEREAS , in order to finance the cost of such developments , the Corporation is authorized by the Act to issue revenue bonds payable from the revenues derived from repayment of loans made to owners of such developments; and WHEREAS , the Owner (as hereinafter defined) has heretofore acquired certain real property interests in the Site (as hereinafter defined) and the Facilities (as hereinafter defined) located thereon; and WHEREAS , the Corporation has entered into the Agreement (as hereinafter defined) with the Owner, providing for (i) a loan from the Corporation to the Owner to provide financing for a portion of the Cost of the Development (as hereinafter defined) , and (ii) the repayment of such loan by the Owner; and WHEREAS, contemporaneously with the execution of the Agreement , the Owner has executed that certain Deed of Trust , Assignment of Rents and Security Agreement, dated as of the date hereof (as hereinafter defined) , pursuant to which the Owner bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee , for the use and benefit of the Corporation, and further granted unto the Corporation a security interest in, the Development and certain other properties of the Owner, in order to secure the payment of the Installment Loan Payments (as hereinafter defined) on the Note (as hereinafter defined) , according to their tenor and effect, and certain other indebtedness of the Owner and the performance and observance by the Owner of all the covenants expressed or implied in the Deed of Trust , the Bond Resolution, the Agreement and . the Note; and WHEREAS, in order to provide funds for the Corporation to loan to the Owner, the Corporation now proposes to issue its Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , in the aggregate principal amount of $1,600 , 000 pursuant to this Trust Indenture and in accordance with the Bond Resolution (as hereinafter defined) ; and WHEREAS, contemporaneously with the execution of this Trust Indenture and the Agreement , the Corporation has executed that certain Collateral Assignment and Security Agreement (as hereinafter defined) , dated as of the date hereof, pursuant to which the Corporation has conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , estates , real and personal property, liens , privileges , claims and demands and equities existing and to exist in connection with or as security for payment of the Note, including its rights , titles and interests arising under the Deed of Trust in order to secure payment of the Bonds (as hereinafter defined) according to their tenor and effect and the performance by the Corporation of all the covenants expressed or implied herein, therein and in the Bonds ; and WHEREAS, the Corporation also desires to provide for the issuance from time to time in the future of Additional Bonds (as hereinafter defined) for the purpose of defraying the costs of completing, enlarging, rehabilitating, improving or expanding the Development, or refunding any Original Bonds (as hereinafter defined) or series of Additional Bonds theretofore issued and outstanding under this Trust Indenture; and WHEREAS, all things necessary to make the Original Bonds , when- issued, executed and delivered by the Corporation and authenticated by the Trustee pursuant to -2- this Trust Indenture, the valid, legal and binding limited obligations of the Corporation, and to constitute this Trust Indenture as a valid pledge of certain income and revenues derived from repayment of the loan for the payment of the principal of, premium, if any, agreed liquidated damages , if any, and interest on the Bonds authenticated and delivered under this Trust Indenture, have been performed and the creation, execution and delivery of this Trust Indenture, and the creation, execution and issuance of the Original Bonds , subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH: The Corporation, in consideration of the premises and acceptance by the Trustee of the trusts hereby created, and of the purchase and acceptance of the Bonds by the owners thereof, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and for the purpose of securing and providing for the payment of the principal of, redemption premium, if any, agreed liqui- dated damages , if any, and interest on the Bonds according to their tenor and effect and the performance and observance by the Corporation of all the covenants expressed or implied herein and in the Bonds , has granted, assigned, transferred, pledged, set over, and confirmed, and by these presents does grant , assign, pledge , set over, and confirm unto the Trustee , and to its successors and substitutes in trust , all of the following described property (the "Trust Estate") : (i) all of the right, title, and interest of the Corporation in and to the Installment Loan Payments as required and provided in the Agreement, the Note and the Bond Resolution; and (ii) the Debt Service Fund and the Construction Fund created by the Bond Resolution, upon, and subject to the terms , conditions , stipulations , covenants , agreements , trusts , uses , and purposes hereinafter expressed. TO HAVE AND TO HOLD all and singular the Trust Estate , whether now owned or held or hereafter acquired, unto the Trustee , its successors and assigns , forever. IN TRUST NEVERTHELESS , upon the terms and trusts herein set forth for the equal and proportionate benefit and security of all present and future holders of the Bonds and interest coupons , if any, appertaining thereto without -3- preference of any Bond or coupon over any other, and for enforcement of the payment of the Bonds and interest coupons appertaining thereto in accordance with their terms , and all other sums payable hereunder or on the Bonds (including agreed liquidated damages) and for the performance of and compliance with the obligations , covenants and conditions of this Trust Indenture , as if all the Bonds at any time outstanding had been authenticated, executed and delivered simultaneously with the execution and delivery of this Trust Indenture, all as herein set forth. PROVIDED, HOWEVER, that the grant, conveyance , pledge and assignment made in this Trust Indenture, which are intended for the aforesaid security purposes only, shall in no way affect, impair or diminish the Corporation' s obligations under the Agreement and the Bond Resolution, nor shall any such obligations be imposed upon the Trustee, and, except as otherwise provided in the remaining provisions of this Trust Indenture, nothing herein shall prohibit the Corporation from bringing any actions or proceedings for the enforcement of the obligations of the Owner under the Agreement or the Bond Resolution, except the obligations of the Owner with respect to the amounts and moneys required to be paid into the Debt Service Fund and except that nothing in this proviso shall prejudice the rights of the Trustee under Articles V, VI , and VII hereof. IT IS HEREBY COVENANTED, DECLARED and AGREED that this Trust Indenture creates a continuing lien on the Trust Estate equally and ratably to secure the payment in full of the principal of, premium, if any, agreed liquidated damages , if any, and interest on all Bonds which may, from time to time, be outstanding hereunder,and that the Bonds are to be issued, authenticated and delivered, and that the Trust Estate is to be held, dealt with and disposed of by the Trustee , upon and subject to the terms , covenants , conditions , uses , agreements and trusts set forth in this Trust Indenture, as follows : ARTICLE I DEFINITIONS AND INTEPRETATIONS Section 1 . 01. Definitions . In addition to all other words and terms defined herein, and unless a different meaning or intent clearly appears from the context, the following words and terms shall have the following meanings , respectively, whenever they are used herein: -4- Additional Bonds - Subject to satisfaction of all requirements set out in the. Bond Resolution, any bonds issued by the Corporation pursuant to this Trust Indenture and the Bond Resolution, which bonds shall rank equally and on a parity with the Bonds and shall be equally and ratably secured under the Bond Resolution, this Trust Indenture and the Agreement. Agreement - The Loan Agreement dated as of March 1 , 1983 , by and between the Corporation and the Owner. Article - Any subdivision of this Trust Indenture designated with a roman numeral . Board or Board of Directors - The lawfully qualified Board of Directors of the Corporation. Bond Resolution - The Bond Resolution adopted by the Board of Directors of the Corporation authorizing the issuance and delivery of Beaumont Housing Finance Corporation, Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , in the aggregate principal amount of $1 , 600 , 000 and each other resolution of the Board of Directors of the Corporation authorizing Additional Bonds for the Development , with the Bond Resolution being expressly incorporated herein by reference for all purposes . Bondholder - The owner of any Bond registered as to principal . Bonds - Any and all revenue bonds of the Corporation issued and delivered to finance and pay for a portion of the Cost of the Development pursuant to the Act and the Agreement, including initial and subsequent series of issues of revenue bonds and revenue bonds issued to finance and pay for all or any part of the Cost of completing the Development , and any revenue Bonds issued for the purpose of refunding or' replacing any Bonds issued for such purpose. Collateral Assignment - The Collateral Assignment and Security Agreement dated as of March 1 , 1983 , pursuant to which the Corporation conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , liens , privileges , claims and demands and equities existing or to exist in connection with or as security for payment of the Note, including its rights , titles and interests arising under the Deed of Trust in order to secure payment of the Bonds according to their tenor and effect and the 1 -5- performance by the Corporation of all the covenants expressed or implied therein and in the Trust Indenture and the Collateral Assignment. Construction Fund - The segregated account or accounts into which certain proceeds from the sale and delivery of each series of Bonds will be deposited as provided in each _ Bond Resolution (excepting any Bond Resolution authorizing revenue bonds to refund any Bonds) . Corporation - Beaumont Housing Finance Corporation. Debt Service Fund - The segregated account or accounts in which Installment Loan Payments will be deposited as provided in each Bond Resolution. Deed of Trust - The Deed of Trust , Assignment of Rents and Security Agreement dated as of March 1 , 1983 , pursuant to which the Owner has bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee, for the use and benefit of the Corporation, and further granted to the Corporation a security interest in, the Development and certain other property in order to secure the payment of the Installment Loan Payments and the Note, according to their tenor and effect, and certain other indebtedness of the Owner and the performance and observance by the Owner of all the covenants expressed or implied in the Deed of Trust, the Agreement , and the Note. Development - The interest of the Owner in the Site, the Facilities and the Premises which comprise the Development as described in Exhibit A to the Agreement. Facilities - The interest of the Owner in the facilities which are now or may hereafter be located on the Site described in Exhibit A to the Deed of Trust , including any modifications to , substitutions for or additions thereto. Installment Loan Payments - Payments required to be made by the Owner to amortize each series or issue of Bonds , as provided for in the applicable Bond Resolution, including the principal of, redemption premium, if any, and interest on such Bonds when due (whether at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated maturity) , any agreed liquidated damages owed to the Bondholders , and all agreed fees and expenses of the Trustee , Registrar, and any Paying Agent for such Bonds , -6- together with any other payments required by such Bond Resolution or this Trust Indenture. Note - The limited recourse promissory note from the Owner dated March 1 , 1983 , in the principal sum of $1,600 , 000 and payable to the Corporation. Original Bonds - Any or all of the Corporation' s $1,600 , 000 Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , dated as of March 1 , 1983 , which are issued, sold and delivered pursuant to the Bond Resolution. Owner - Virginia Village Venture, a joint venture formed under the laws of the State of Texas , and its permitted successors and assigns . Paying Agent - The Trustee and any other paying agent for an issue or series of Bonds named in the Bond Resolution authorizing such Bonds . Premises - The property described in Exhibit A to the Deed of Trust. Registrar - The registrar for the Bonds named in the Bond Resolution. Section - Any subdivision of this Trust Indenture designated by arabic numerals . Site - The real estate which is described in Exhibit A to the Deed of Trust , and any other additional land which may be acquired for or as a part of the Development. Trust Indenture - This Trust Indenture, together with the Exhibits attached hereto , and all amendments and supplements hereto. Trustee - InterFirst Bank-Beaumont , its successors or assigns , and any successor trustee at any time serving as successor trustee hereunder. Section 1 . 02. Additional Definitions and Interpreta- tions . (a) Capitalized terms used but not expressly defined herein shall have the same meanings as set forth in the Agreement or the Bond Resolution unless the context indicates otherwise. 1 -7- (b) The table of contents , article and section headings are for reference purposes only and shall not affect its interpretation in any respect. (c) Unless the context requires otherwise , words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. ARTICLE II ACCEPTANCE OF TRUST The Trustee hereby accepts the trusts , duties , obligations , and requirements imposed on it by the Bond Resolution and this Trust Indenture, and agrees to carry out and perform, punctually and effectively, such duties , obligations , and requirements for the benefit of the Corporation, the Owner and the holders of the Bonds . It is further specifically agreed that (i) the Trustee will act as a Paying Agent for the Bonds at all times while it is the Trustee, (ii) the Trustee will act as Registrar for the Bonds at all times while it is the Trustee , and (iii) the Trustee will authenticate each of the Bonds by executing the Trustee ' s Certificate of Authentication appearing on each of the Bonds , as provided in the Bond Resolution, at such time . and in such manner as directed by the Corporation. ARTICLE III DEBT SERVICE FUND AND CONSTRUCTION FUND The Debt Service Fund and the Construction Fund created by the Bond Resolution are hereby confirmed and established, respectively, in trust , with the Trustee , and the Trustee agrees to hold, administer, deposit , secure, invest , and use said funds in all respects as provided and required by the Agreement , the Bond Resolution, and this Trust Indenture. ARTICLE IV NOTICE TO OWNER On or before the 5th day prior to each date upon or before which each Installment Loan Payment is required by the Bond Resolution and the Agreement to be deposited into the Debt Service Fund, but only if the Owner shall expressly J -8- so request in writing following an applicable adjustment of the Bond Interest Rate, the Owner shall be given written notice via hand delivery or first class mail , postage prepaid, at such address as the Owner shall from time to time designate and file in writing with the Trustee, of the amount , if any, of each Installment Loan Payment required by the Bond Resolution and the Agreement to be made by the Owner to the Trustee and deposited by the Trustee into the Debt Service Fund on or before such date. Such notice shall give a brief statement of the manner in which the amount due was calculated, including a showing of all credits on account of available moneys in the Debt Service Fund. The failure of the notice to be given, or of the Owner to receive any such notice, shall not relieve the Owner of its obligation to make all deposits or payments of Installment Loan Payments to the Trustee as required by the Agreement and the Bond Resolution. ARTICLE V ACCOUNTS AND RECORDS Section 5 . 01 Separate Records to be Kept. The Trus- tee shall keep proper books of records and accounts , separate from all other records and accounts , in which complete and correct entries shall be made of all transactions relating to the Installment Loan Payments , the Debt Service Fund, and the Construction Fund. Section 5 . 02 Annual Report. Within 120 days after each anniversary date of this Trust Indenture, the Trustee will furnish to the Corporation, the Owner, and any holder of any outstanding Bonds who may so request, a copy of a report by the Trustee covering the year preceding such anniversary date , showing the following information: . (1) a detailed statement concerning the receipt and disposition of all Installment Loan Payments and the disposition of the amounts in the Construction Fund (until the Construction Fund shall have been fully depleted) . (2) an asset statement or balance sheet of the Debt Service Fund and of the Construction Fund (until the Construction Fund shall have been fully depleted) . . Section 5 . 03 Right to Inspect. The Corporation, the Owner, and the holders of any Bonds shall have the right , at J -9- all reasonable times and upon reasonable notice , to inspect all records , accounts , and data of the Trustee relating to the Installment Loan Payments , the Debt Service Fund and the Construction Fund. ARTICLE VI ENFORCEMENT OF RIGHTS IN CASE OF DEFAULT Section 6 . 01 Appointment of Trustee and Rights of Holder. The Trustee is hereby irrevocably appointed the special agent and representative of the holders of the Bonds and vested with full power in their behalf to effect and enforce the Agreement , this Trust Indenture , and the Bond Resolution for their benefit as provided herein and in the Bond Resolution; provided, however, the holders of a majority of the aggregate principal amount of the Bonds then outstanding shall have the right from time to time to direct and control the Trustee in connection with the enforcement of any of the provisions of the Agreement , the Trust Indenture , and the Bond Resolution, and any other proceedings taken by virtue of any provisions of the aforesaid instruments , in case of any subsisting Event of Default (as hereinafter defined) or of any other event entitling the Trustee to proceed hereunder, including the right to have withdrawn and discontinued at any stage thereof any proceedings taken hereunder by the Trustee, provided that the Event of Default upon which such proceedings were based and all other Events of Default hereunder shall have been remedied and made good. Anything contained in this Trust Indenture to the contrary notwithstanding, each holder of any Bond shall have a right of action to enforce the payment of all amounts due with respect to any Bond owned by him when or after the same shall have become due , at the place, from the sources , and in the manner expressed; and provided that no right of action shall exist subsequent to the time of waiver of an Event of Default in the payment of any such amount so due and such Event of Default having been remedied and made good as set forth in Section 6 . 07. Section 6 . 02 Control by Trustee. Except as other- wise provided in this-Article , the rights of action with respect to this Trust Indenture shall be exercised by the Trustee and no holder of any Bond shall have any right to institute any suit, action or proceeding at law or equity for the appointment of a receiver or for any other remedy hereunder or by reason hereof unless and until in addition to the fulfillment of all other conditions precedent f -10- specified in this Trust Indenture , the Trustee shall have received the written request of the holders of not less than 25% of the aggregate principal amount of the Bonds then outstanding and shall have been offered reasonable indemnity and shall have refused, or for 30 days thereafter neglected, to institute such suit , action, or proceeding; and it is hereby declared that the making of such request and the furnishing of such indemnity are in each case conditions precedent to the execution and enforcement by any holder of any Bond of the powers and remedies given to the Trustee hereunder and to the institution and maintenance by any holder of any Bond of any action or cause of action for the appointment of a receiver or for any other remedy hereunder; but the Trustee may, in its discretion, or when duly requested in writing by the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding and upon being furnished indemnity satisfactory to the Trustee against expenses , charges , and liability, shall forthwith take such appropriate action by judicial proceedings or otherwise to enforce the covenants of the Owner and the Corporation as the Trustee may deem expedient in the interest of the holders of the Bonds . Section 6 . 03 Events of Default. Any one or more of the following events shall constitute an "Event of Default" under this Trust Indenture: (1) the failure of the Owner to make or pay, or cause to be made or paid, any Installment Loan Payment upon the terms and conditions required by the Agreement or the Bond Resolution; (2) the dissolution or liquidation of the Owner in any manner not specifically authorized by the Agreement , or the filing by the Owner of a voluntary petition in bankruptcy or failure by the Owner promptly to lift or suspend any execution, garnishment, or attachment of such consequence as will materially impair its ability to carry out its obligations under the Agreement or the Bond Resolution, the breach of any other contract , agreement or instrument and the failure to remedy or cure such breach with the consequences that the ability of the Owner to carry out its obligations under the Agreement or the Bond Resolution are materially impaired, or the commission by the Owner of any act of bankruptcy, or failure of the Owner generally to pay its debts as they become due, or entry of an order for relief of the Owner in a bankruptcy case of the Owner, or the assignment or transfer by the r -11- Owner of a substantial portion of its assets for the benefit of its creditors , or the entry by the Owner into an agreement of composition with its creditors , or the entry of an order or decree applicable to the Owner in any proceeding for its reorganization or arrangement in any proceedings instituted under the provisions of any applicable federal or state bankruptcy statutes , including the federal Bankruptcy Code, as they now exist or are hereafter amended or enacted; (3) the Owner defaults in the observance or performance of any other of its covenants , conditions , or obligations in the Bonds , the Agreement , the Bond Resolution, the Note , the Deed of Trust, the Collateral Assignment , or this Trust Indenture , and the Owner fails to not remedy such default within 30 days or such other reasonable period of time, not to exceed 90 days , as the Owner may require to remedy such default if because of reasons of force maj eure such cure cannot reasonably be accomplished within 30 days , after written notice to do so has been received by the Owner from the Trustee or the holders of the Bonds ; and the Trustee may serve such notice , in its discretion, or shall serve such notice at the written request of the holders of not less than 25% of the aggregate principal amount of the Bonds then outstanding; (4) the occurrence of an "Event of Default" under the Agreement , the Note, the Bond Resolution, the Deed of Trust or the Collateral Assignment; (5) Subject to Section 2 . 02(a) of the Agreement, the Owner shall not be receiving, on and after June 1 , 1984 , public rental assistance payments under the Section 8 Contract (or any successor contract which is executed within 90-days after termination or expiration of the Section 8 Contract or any predecessor contract and which provides for public rental assistance pay- ments) with respect to at least 66-2/3% of the dwelling units in the Development; or (6) the Owner shall make any untrue or materially misleading warranty, representation, or other statement in the Agreement, Bonds or in any other instrument, document, or letter now or hereafter furnished by the Owner to the Trustee or any holder of the Bonds . Section 6 . 04 Declaration of Principal and Interest Due. Upon the happening of an Event of De ault, the -12- Trustee may, in its discretion, or upon the written request of the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee , shall , declare the principal of all Bonds then outstanding, and the interest accrued thereon immediately due and payable , and such principal and interest , together with any applicable agreed liquidated damages , and any applicable redemption premium, and any other amounts then due, shall thereupon become and be immediately due and payable , anything in the Bonds , the Agreement, the Bond Resolution, or this Trust Indenture to the contrary notwithstanding. Section 6 . 05 Enforcement by Trustee. Upon the happening of an Event ot De au tl , the Trustee may, in its discretion, or upon the written request of the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee , shall , take such appropriate action by judicial proceedings or otherwise to (i) cure the Event of Default and/or (ii) require the Owner or the Corporation to carry out its or their covenants and obligations under and with respect to the Bonds , the Agreement , the Bond Resolution, the Collateral Assignment, the Note , the Deed of Trust , or this Trust Indenture, including without limitation, the use and filing of actions for specific performance , the appointment of a receiver (in equity with power to charge and collect the Installment Loan Payments) and mandamus proceedings , in any court of competent jurisdiction, against the Corporation or the Owner, their respective officers , directors , employees , and/or agents , and to obtain judgments for any Installment Loan Payments due but unpaid into the Debt Service Fund, or for any other amounts due hereunder, under the Bond Resolution, or under the Agreement , including all amounts due with respect to the Bonds then outstanding if declared due and payable as provided herein, and/or (iii) exercise any of the rights , remedies and powers accorded under the Agreement , the Bond Resolution, the Collateral Assignment , the Note or the Deed of Trust. Section 6 . 06 Non-Exclusive Remedies . No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other available remedy or remedies , but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Agreement, the Deed of Trust, the Bonds , the Bond Resolution, the Note or the Collateral Assignment, or now and hereafter existing at law or in equity or by statute. -13- No delay or omission to exercise any right or power accruing upon the happening of an Event of Default continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein, and every such right and power may be exercised from time to time and so often as may be deemed expedient. Section 6 . 07 Waiver of Defaults . The Trustee may, and upon the written request of the olders of 75% of the aggregate principal amount of the Bonds then outstanding shall , waive any Event of Default hereunder and its consequences , except that an Event of Default in the payment of Installment Loan Payments , or in the payment of any amounts with respect to the Bonds when and as the same shall become due and payable, may be waived only if the Event of Default therein shall have been remedied and made good. In case of any such waiver, the Corporation, the Owner, the Trustee , and the holders of the Bonds shall be respectively restored to their former position and rights hereunder and such waiver shall not extend to any subsequent or other Event of Default or impair any right consequent thereto. Section 6 . 08 Discretion of Trustee. In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of holders of Bonds , each representing less than 75% of the aggregate principal amount of Bonds then outstanding, the Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Trust Indenture. Section 6 . 09_ Application of Moneys. All moneys collected by the Trustee pursuant to the exercise of the remedies and powers provided in this Article, together with all other sums which then may be held by the Trustee under any provision of this Trust Indenture as security for the Bonds , shall be applied as follows ; First, to the payment of the costs and expenses of the proceedings whereunder such money was collected, including a reasonable compensation to the Trustee , its agents , attorneys , and all other necessary or proper expenses , liabilities , and advances incurred or made by the Trustee under this Trust Indenture, and to the payment of all taxes , assessments , and liens superior to the lien of this Trust Indenture; 1 -14- Second, to the payment of matured interest on the Bonds , including, to the extent legally permissible , interest thereon at the maximum non-usurious per annum rate permitted by law from due date to date of payment; Third, to the payment of principal of, redemption premium, if any, and agreed liquidated damages , if any, on the Bonds which have been called for redemption as permitted or required by the Bond Resolution or have matured as provided thereby, and interest thereon, to the extent legally permissible , at the maximum non-usurious per annum rate permitted by law from the date of redemption or maturity to date of payment; Fourth, to the payment of principal of the Bonds which have become due by virtue of declaration of the Trustee pursuant to Section 6. 04 hereof and interest thereon, to the extent legally permissible , at the maximum non-usurious per annum rate permitted by law from the date declared due to date of payment; Fifth, to the payment of any other sums owing to the Trustee from the Owner; and Sixth; to the payment of the surplus , if any, to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. If in making distribution pursuant to the order above stated, the amount available for distribution in a particular classification be insufficient to pay in full all of the items in such classification, the amount available for distribution to items in such classification shall be prorated among such items in the proportion that the amount each item bears to the total of all such items . Notwith- standing anything contained in this Trust Indenture to the contrary, if the Trustee shall declare the principal of all Bonds then outstanding and the interest accrued thereon immediately due and payable as the result of an Event of Default, or if the Bonds are to be redeemed as a whole pursuant to mandatory redemption provisions provided in the Bond Resolution, or if the Owner shall exercise any option to redeem the Bonds as a whole in accordance with their terms , any amounts remaining in the Construction Fund shall -15- be deposited in the Debt Service Fund and applied by the Trustee as provided in this Section 6 . 09. Section 6 . 10 Judicial Proceedings . In any judicial proceeding in which the Corporation is a party and which, in the opinion of the Trustee or its counsel , has a substantial bearing on the interests of the holders of the Bonds , the Trustee, if permitted by the court having jurisdiction over such proceeding, may, in its discretion, or upon the written request of the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee, shall , intervene on behalf of the holders of the Bonds to assert the rights of such holders . Section 6 . 11 Enforcement of Remedies Without Possession of Bonds . All -rights o action or other rights under this Trust Indenture or otherwise may be brought by the Trustee in its own name as Trustee of an express trust and may be enforced by the Trustee without the possession of any of the Bonds or any interest coupons appertaining thereto , or the production thereof on the trial or other proceedings relative thereto. Section 6. 12 Direction by 75% in Principal Amount of Bondholders . It is expressly provided that the holders of 50 of t e aggregate principal amount of the Bonds then outstanding, or a committee appointed pursuant to a written appointment filed with the Trustee (the "Committee") , representing the holders of 75% of the aggregate principal amount of the Bonds then outstanding, shall have the right , at any time, by an instrument or instruments in writing executed and delivered to the Trustee , to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the Trustee ' s rights and remedies under the Agreement , the Bond Resolution, the Deed of Trust, the Note, the Collateral Assignment or this Trust Indenture or the rights of the holders of the Bonds and may exercise any right or perform any action hereunder with the same effect as the Trustee under this Trust Indenture; provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Trust Indenture and provided further that the Trustee shall be indemnified to its satisfaction. Section 6 . 13 Notice of Default. The Trustee shall not be required to take notice nor a deemed to have notice of any default specified in this Trust Indenture, except for -16- those Events- of Default specified in Section 6 . 03 (1) , unless specifically notified in writing of such default by the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding. Section 6 . 14 Concurrence of Bondholders . In deter-' mining whether the holders of a requisite aggregate principal amount of Bonds outstanding have concurred in any request , demand, authorization, direction, notice, consent , or waiver under this Trust Indenture or the Bond Resolution, any Bonds owned by or for the account of the Owner, or any person controlled by, controlling, or under common control with the Owner, shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent , or waiver, only the Bonds of which the Trustee has actual knowledge of such ownership shall be so disregarded. Section 6 . 15 Notice to Owner of Past Due Payments . Pursuant to the Agreement , Insta ment Loan Payments are to be paid by the Owner- directly to the Trustee. In the event that any such payments are not timely made, the Trustee shall immediately notify the Owner by wire at the address provided in the Agreement or by telephonic notice with confirmation of such notice by wire, that payment has not been made. Such notice shall be deemed given at the time the wire is received or telephonic notice is given, whichever is earlier. Failure of the Trustee to give , or of the Owner to receive , such notice shall not relieve the Owner of any covenant or obligation under the Agreement, the Bond Resolution, the Deed of Trust , the Note, the Collateral Assignment , or this Trust Indenture and shall not constitute a waiver of any Event of Default under this Trust Indenture. ARTICLE VII CONCERNING THE TRUSTEE The Trustee accepts the trust imposed upon it by this Trust Indenture , but only upon and subject to the following express terms and conditions : Section 7 . 01 Not Accountable for Bond Proceeds. In no event shall the Trustee be liable- except for its gross negligence or willful misconduct in relation to its duties under this Trust Indenture and the Bond Resolution. The Trustee shall not be responsible for any recitals herein, in -17- the Bonds , the interest coupons , if any, appertaining thereto , the Bond Resolution, the Agreement, the Deed of Trust , the Collateral Assignment or the Note , or for the sufficiency of the security for the Bonds or interest coupons , if any, appertaining thereto . The Trustee shall have no responsibility hereunder except to the extent of the duties placed upon the Trustee to hold, administer, deposit , secure, invest, and use the Debt Service Fund and the Construction Fund as expressly required by the Bond Resolution, to the extent funds for such purposes are received by the Trustee, and to perform the other express covenants and agreements made by the Trustee under the provisions of this Trust Indenture and the Bond Resolution. Section 7 . 02 Reliance by Trustee. The Trustee may rely and shall be protected in acting or refraining from acting in accordance with the provisions of this Trust Indenture and the Bond Resolution upon any notice, requisition, request, consent, certificate, order, affidavit , letter, telegram, or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons , and the Trustee shall not be bound to recognize any person as holder of Bonds or to take any action at his request , unless the Bond or Bonds owned by such holder shall be deposited with the Trustee , be registered in the name of such holder on the Bond Registration Books kept by the Trustee, or submitted to it for inspection. Any action taken by the Trustee pursuant to this Trust Indenture upon the request or authority or consent of any person who , at the time of making such request or giving such authority or consent, is the holder of any Bond secured hereby, shall be conclusive and binding upon all future holders of the same Bond and of Bonds issued in exchange therefor or in place thereof. Section 7 . 03 Compensation. In addition to the fees described in Section 7 . 07 , there shall be paid from the Debt Service Fund the Trustee ' s reasonable expenses , advances , and fees of its counsel , engineers , accountants or other experts , and its liabilities incurred in and about the execution of the trusts hereby created and the exercise and performance of the powers and duties of the Trustee hereunder (except liabilities incurred as a result of the gross negligence or willful misconduct of the Trustee , or as provided in Section 15 (a) of the Bond Resolution) , and the reasonable cost and expenses , including counsel fees , of defending against liabilities . The Owner shall have the same contest rights with respect to payments under this -18- Section as the Owner has pursuant to Section 7. 07 of this Trust Indenture. Section 7 . 04 Limited Responsibilities . The respon- sibilities of the Trustee elsewhere set forth herein shall be further limited as follows : (a) The Trustee shall . not be liable with respect to any action taken or omitted to be taken by it in good faith (i) in accordance with a direction of the holders of Bonds pursuant to any provision of this Trust Indenture relating to the time , method, and place of conducting any proceeding for any remedy available to the Trustee , or exercising any trust or power conferred upon the Trustee , under this Trust Indenture, or (ii) exercising any trust or power whether or not in accordance with such a direction. (b) No provision of this Trust Indenture shall require the Trustee (i) to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers , if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it , nor (ii) to take any action, whether or not directed to take such action by the holers of Bonds , pursuant to this Trust Indenture, which in the judgment of the Trustee would conflict with any rule of law, or with the terms of this Trust Indenture, or would be unjustly prejudicial to the holders of Bonds not taking part in such direction. When acting pursuant to the direction of any holders of Bonds pursuant to this Trust Indenture, the Trustee may take other action deemed proper by the Trustee which is not inconsistent with such direction; provided that the terms of this subparagraph (b) shall not impose any additional duties or re- sponsibilities upon the Trustee and shall not be construed to limit the effect of subparagraph (a) of this Section 7. 04 . Section 7 . 05 Advice. The Trustee may act upon the professional opinion or advice of counsel, reasonably believed by the Trustee to be qualified in relation to the r -19- subject matter, whether retained by the Trustee , the Owner, or the Corporation or otherwise , and the Trustee shall not be responsible for anything suffered or done or not done by it in good faith in accordance with any such opinion or advice. Section 7 . 06 Trustee May Own Bonds . Except as prohibited by law, the Trustee may ecome the owner or holder of any of the Bonds secured by this Trust Indenture with the same rights which it would have if it were not the Trustee; and nothing herein contained shall be construed to prohibit the Trustee, either as principal or agent , from engaging in or being interested in any financial or other transaction with the Corporation or the Owner or from acting as depository, trustee , or agent for any Committee or body of holders of the Bonds or of other obligations of the Corporation as freely as if it were not the Trustee. Section 7 . 07 Fees . The Corporation has agreed with the Owner in the Agreement and the Bond Resolution provides that as part of the Installment Loan Payments , the Owner shall pay to the Trustee , its customary charges for performing the duties of the Trustee, Registrar, and Paying Agent for the Bonds as set forth in the Schedule attached hereto as Exhibit A. It is agreed by the Trustee that the Owner may, without causing or creating a default or Event of Default hereunder, contest in good faith (and withhold payment of the contested amount) the reasonableness of any extraordinary service charges , until such contest is resolved; provided that in the event the reasonableness of the charges is contested in a court proceeding, the reasonable attorney' s fees of the prevailing party may be adjudged against the other party. All payments due the Trustee for such charges , fees , or expenses shall be paid by the Owner and no such charges , fees , or expenses shall be charged against or be payable by the Corporation, except the initial fees and expenses of the Trustee which are paid as part of the costs of issuance of the Bonds . Section 7 . 08 Insurance. The Trustee shall have no obligation or duty with respect to the insurance to be maintained by the Owner on the Development. ARTICLE VIII SUCCESSOR TRUSTEE Section 8 . 01 Resignation of Trustee. The Trustee hereunder may at any time resign and--be discharged from all I _20_ trusts created by this Trust Indenture by giving not less than 60 days written notice to the Corporation, the Owner, and to any holders of Bonds as shown on the Bond Registra- tion Books kept by the Trustee , and such resignation shall take effect upon the appointment of a temporary Trustee or a successor Trustee by the holders of Bonds or by the Corpor- ation as hereinafter provided. Section 8 . 02 Removal of Trustee. The Trustee may be discharged and removed at any time by an instrument or con- current instruments in writing, delivered to the Trustee and to the Corporation, and signed by the holders of 51% of the aggregate principal amount of the then outstanding Bonds . Section 8 . 03 Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Trustee shall be taken under the control of any public officer or officers , or of a receiver appointed by a court , a successor may be appointed by the holders of a majority of the aggregate principal amount of the then outstanding Bonds by an instrument or concurrent instruments in writing, signed by such holders of Bonds , or by their attorneys-in-fact duly authorized in writing, and delivered to the Corporation; provided that in any such event the Corporation by an instrument executed by authority of a resolution of its Board of Directors and signed by the President or any Vice President and Secretary, may appoint a temporary Trustee to fill such vacancy until a successor Trustee shall be appointed by the holders of Bonds in the manner above provided, and any such temporary Trustee so appointed by the Corporation shall immediately and without further act be superseded by the Trustee which is thereafter so appointed by such holders of Bonds . Every such successor of temporary Trustee so appointed by the Corporation shall immediately and without further act be superseded by the Trustee so appointed by such holders of Bonds . Every such successor temporary Trustee shall be a trust company or bank in good standing located in the State of Texas , and having a capital and surplus of not less than Ten Million Dollars ($10 , 000 , 000) , if there be such a trust company or bank willing, qualified, and able to accept the trust upon reasonable and customary terms . In the event that no appointment of a temporary or successor Trustee shall be made pursuant to the foregoing provisions of this Article within 60 days after the Trustee gives written notice of resignation or the Trustee is removed, any holder of Bonds or any retiring Trustee may apply to any court of competent -21- jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it shall deem proper, prescribe or appoint a successor Trustee. Section 8 . 04 Transfer to Successor Trustee. Every successor Trustee appointed ereunder s a execute, acknowledge , and deliver to its predecessor, the Corporation and the Owner, an instrument in writing accepting such appointment hereunder, and such successor Trustee, without any further act, deed, or conveyance, shall become fully vested with all the estates , rights , powers , trusts , duties , and obligations hereunder of its predecessor; but such predecessor shall nevertheless , on the written request of the Corporation, execute and deliver an instrument transferring to such successor Trustee all of the estates , rights , powers , and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and money held by it to its successor; provided that before any such delivery is required or made , all reasonable, customary, and legally accrued fees , advances , and expenses of such predecessor Trustee shall be paid in full . Should a deed, assignment , or instrument in writing from the Corporation be required by any successor Trustee for more fully and certainly vesting in such Trustee the estates , rights , powers , and duties hereby vested or intended to be vested in the predecessor Trustee , any and all such deeds , assignments , and instruments in writing shall, on request, be executed, acknowledged, and delivered by the Corporation. Section 8 . 05 Merger or Consolidation of Trustee. Any corporation or association into w is the Trustee, or any successor to it in the trusts created by this Trust Indenture, may be merged or converted or with which it is or any successor to it may be consolidated, or any corporation or association resulting from any merger, conversion, or consolidation to which the Trustee or any successor to it shall be a party, shall be the successor Trustee under this Trust Indenture without the necessity of the execution or filing of any paper or any other act on the part of any of the parties hereto anything herein to the contrary notwithstanding. ARTICLE IX RELEASE OF INDENTURE Section 9. 01 Satisfaction of Indebtedness and Release of Indenture. I w en the Bonds sR—aIl have become due and paya e in accordance with their terms or as -22- otherwise provided in this Trust Indenture , or shall have been duly called for redemption, and the whole amount of the principal , redemption premium, if any, and the interest so due and payable upon all of the Bonds , and the agreed liquidated damages , if any, with respect to the Bonds then due, shall be paid, or sufficient money shall be held by the Trustee for such purpose , and provision shall also be made for paying all other sums payable hereunder and/or under the Agreement and the Bond Resolution by _the Owner, then and in that case all right , title , and interest of the Trustee in the presents and the estate and rights hereby granted shall thereupon cease , determine, and become void, and the Trustee in such case shall release this Trust Indenture and shall execute such documents to evidence such release as may be reasonably required by the Corporation and the Owner, and shall turn over any surplus funds held by it to whomsoever may then be entitled pursuant to the Bond Resolution, the Agreement , or by law to receive the same; and thereupon this Trust Indenture shall terminate and be of no effect; pro- vided that until the Bonds are finally paid, the Trustee shall continue to act as Paying Agent and Registrar for the Bonds . ARTICLE X AMENDMENTS This Trust Indenture may be amended only as provided in the Bond Resolution; provided that Additional Bonds may be issued pursuant to the Bond Resolution as provided therein, and may be secured by this Trust Indenture without the necessity of amending or supplementing this Trust Indenture. ARTICLE XI MISCELLANEOUS PROVISIONS Section 11 . 01 Acknowledgments and Ownership of Bonds . Any request, direction, consent , or other instrument required by this Trust Indenture to be signed or executed by holders of Bonds may be in any number of concurrent writings of similar tenor and may be signed or executed by such holders of Bonds in person or by an agent appointed in writing. Proof of the execution of any instrument , or of the writing appointing such agent , and of the holding and owning of the Bonds , if made in the following manner, shall be sufficient for any purpose of this Trust Indenture and shall be conclusive in favor of the Trustee with regard to any action taken by it under such instrument: -23- (i) the fact, date , and due authorization of the execution by any person or of any such instrument may be proved by the certificate of any officer, in any jurisdiction, who , by the laws thereof, has power to take acknowledgments within such jurisdiction to the effect that the person signing such instrument acknowl- edged before him the execution thereof, or by an affidavit of a witness to such execution. (ii) the fact of the holding and owning of the Bonds by any holder thereof, the amount and numbers of such Bonds , and the date of his holding and owning same may be proved by the appropriate entries in the Bond Registration Books maintained by the Trustee as Registrar, and the Trustee may conclusively assume that such ownership continued until written notice to the contrary is served upon the Trustee. Section 11 . 02 Trustee May Require Proof of Ownership. Nothing contained in- Article shall be construed as limiting the Trustee to the proof hereinabove specified, it being intended that the Trustee may accept any other evidence of the matters herein stated which it may deem sufficient. Section 11 . 03 Consent of Bondholders . Unless other- wise provided in the Bond Reso ution, any request or consent of any holder of Bonds shall bind every future holder of the same Bond in respect of anything done by the Trustee in pursuance of such request or consent. In the event of the dissolution of the Corporation, all of the covenants , stipulations , promises , and agreements in this Trust Indenture contained by, on behalf of, or for the benefit of the Corporation, shall bind or inure to the benefit of the successor or successors of the Corporation from time to time and any officer, board, or commission to whom or to which any power or duty affecting such covenants , stipulations , promises , and agreements shall be transferred by or in accordance with law. Section 11 . 04 Survival of Valid Bonds . If any Bond shall not be presented or payment when the principal thereof becomes due, either at maturity or at the date fixed for redemption thereof or otherwise , or in the event any coupons shall not be presented for payment at the due date thereof, all liability of the Corporation and the Owner to the holders thereof and to the Trustee for the payment of such Bond or coupons , as the case may be , shall forthwith cease, determine, and be completely discharged whenever -24- funds sufficient to pay such Bond or coupons shall be paid to the Trustee by the Corporation and/or the Owner and such funds shall be segregated by the Trustee and held in trust for the benefit of the holders of such Bond or coupons , as the case may be, who shall thereafter be restricted exclusively to such funds for the satisfaction of any claim of whatever nature on their part relating to such Bond or coupons . Section 11 . 05 Unclaimed Funds . Any money deposited with the Trustee in trust for the payment of the principal of, redemption premium, if any, agreed liquidated damages , if any, or interest on any Bond and remaining unclaimed for six years after such principal of, redemption premium, if any, agreed liquidated damages , if any, or interest on such Bond has become due and payable shall be paid to the Corporation and/or the Owner as provided in the Bond Resolution; provided that before the Trustee shall be required to make any such repayment, the Trustee may at the expense of the Owner cause to be published at least once , in a financial newspaper , journal , or publication of general circulation in the City of New York, New York, or in the State of Texas , a notice that such money remains unclaimed and that , after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Corporation and/or the Owner. After the payment of such unclaimed moneys to the Corporation and/or the Owner, the holder of such Bond or the holder of the relevant coupon shall thereafter look only to the Owner for the payment thereof, and all liability of the Trustee with respect to such money shall thereupon cease. Section 11 . 06 Rights of Parties . Except as otherwise expressly provided herein, not ing in this Trust Indenture expressed or implied is intended or shall be construed to confer upon any person, firm, or corporation other than the Owner, the Corporation, the Trustee , and the holders of Bonds , any right , remedy, or claim, legal or equitable , under or by reason of this Trust Indenture or any covenant, condition, or stipulation contained herein. Section 11 . 07 Severabilit . In case any one or more of the provisions of this Trust Indenture or of the Bonds or any interest coupons appertaining thereto shall be held to be invalid or ineffective as to any person or circumstance, the remainder thereof and the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. -25- Section 11 . 08 Governing Law. The validity, interpre- tation, and performance of this Trust Indenture shall be governed by the laws of the State of Texas . ARTICLE XII RECORDING Section 12. 01 Corporation and Trustee to Record. The Corporation shall cause the Agreement and this Trust Inden- ture (or financing or other statements with respect thereto) to be filed with the Secretary of State of Texas in order to secure the lien of this Trust Indenture. The Trustee shall cause any additional security instruments delivered to the Trustee as additional security for the Bonds , memorandum, financing statements , or continuation statements with respect to such instruments , amendments , or supplements to be filed, registered, and recorded and to be refiled, reregistered, and rerecorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien of the rights and security of the holders of the Bonds and the rights of the Trustee under the Agreement , the Bond Resolution, the Note, the Collateral Assignment , and this Trust Indenture and perform or cause to be performed from time to time any other act as required by law, and execute and file or cause to be executed and filed any and all instruments of further assurance, that may be necessary for such publication and protection. Provided, however, the Trustee may act upon the opinion or advice of any legal counsel as to action required hereunder. The Corporation shall, when so requested by the Trustee , execute all such instruments , memoranda, or statements necessary to maintain, protect , or preserve the interests assigned to the Trustee under this Trust Indenture or under such other instruments . Section 12. 02 Non-Encumbrance. This Trust Indenture is and always shall remain a direct lien and security interest upon the Installment Loan Payments , the Debt Service Fund, and the Construction Fund, and except as provided in the Bond Resolution, the Corporation will not create or suffer to be created any lien prior to or on a parity with the lien of this Trust Indenture or any part thereof. IN WITNESS WHEREOF, the Corporation acting through its Board of Directors , has caused this Trust Indenture to be executed in multiple counterparts , each of which shall be considered an original for all purposes , in its name , and -26- for and on its behalf, by its President or a Vice President and attested by its Secretary, and its corporate seal to be hereto affixed; and the Trustee , to evidence its acceptance of the trusts hereby created and vested in it , has caused this Trust Indenture to be executed in multiple counterparts , each of which shall be considered an original for all purposes , in its behalf by one of its Vice Presidents , attested by one of its Trust Officers or its Secretary, and its corporate seal to be hereunto affixed, all as of the date first written. BEAUMONT HOUSING FINANCE ATTEST: CORPORATION By: Its . (SEAL) CORPORATION ATTEST: INTERFIRST BANK-BEAUMONT By: Its . (SEAL) TRUSTEE -27- THE STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned authority, on this day personally appeared , of Beaumont Housing Finance Corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument , and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said Corporation. GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the day of 1983 . Notary Public, State of Texas Typed or Printed Name My Commission Expires : -28- THE STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned authority, on this day per- sonally appeared of InterFirst Bank-Beaumont , a state an ing corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument , and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said Bank. GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the day of 1983 . Notary Public , State of Texas Typed or Printed Name My Commission expires : -29- EXHIBIT A TRUST INDENTURE Schedule of Trustee Fees ACCEPTANCE CHARGE The acceptance charge will be $1, 600 . 00. ADMINISTRATION CHARGE The administration charge will be $1, 600 . 00 per year payable on the first day of each March 1 during the life of the Bonds commencing March 1 , 1984 . PAYMENT OF PRINCIPAL This charge is included in the annual administration charge. PAYMENT OF INTEREST This charge is included in the annual administration charge. CUSTODY OF COLLATERAL This charge is included in the annual administration charge. RECONVEYANCE, CANCELLATION OR CLOSING CHARGE This charge is included in the annual administration charge. OUT-OF-POCKET-EXPENSES The Trustee is entitled to reimbursement for reasonable amounts spent for postage , insurance for shipment of securities , registered mail fee and federal surcharges , stationery and envelopes , special checks binders , transfer reports , necessary travel expenses and other miscellaneous out-of-pocket expenses . I EXTRAORDINARY SERVICE OR SERVICES For extraordinary services not specifically mentioned above , including but not limited to the preparation and distribution of financial statements for external use and the furnishing of information or performance of services not required of the Trustee unless requested by the Owner, the Bondholders or other third parties , the charges will be based on an appraisal of the services performed. -2- LOAN AGREEMENT BETWEEN BEAUMONT HOUSING FINANCE CORPORATION AND VIRGINIA VILLAGE VENTURE RELATING TO BEAUMONT HOUSING FINANCE CORPORATION $1 ,600 , 000 MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) Dated as of March 1 , 1983 TABLE OF CONTENTS LOAN AGREEMENT Page ARTICLE I DEFINITIONS; GENERAL RECITALS, FINDINGS, AND REPRESENTATIONS Section 1. 01 Definitions . . . . . . . . . . . . . . . . 1 Section 1. 02 General Recitals , Findings andRepresentations . . . . . . . . . . . . . . . . . 6 ARTICLE II THE DEVELOPMENT Section 2 . 01 Approvals and Permits . . . . . . . . . . . . . . . 7 Section 2 . 02 Acquisition and Reconstruction. . . . . . . . 8 ARTICLE III FINANCING THE DEVELOPMENT; TITLE AND OPERATION Section 3 . 01 The Loan and the Note. . . . . . . . . . . . . 9 Section 3 . 02 Security for the Loan and the Note. . . . . . . . . . . . . . . . . 9 Section 3. 03 Repayment of the Loan andthe Note. . . . . . . . . . . . . . . . . . . 10 Section 3. 04 Title. 12 Section 3 . 05 Operation. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 3 . 06 Indemnities . . . . 12 Section 3 . 07 The Corporation' s Limited Liability. . . . . . . . . . . . . . 14 ARTICLE IV THE BONDS Section 4 . 01 Issuance of the Bonds . . . . . . . . . . . . . . . 14 Section 4 . 02 Refunding of the Bonds . . . 16 Section 4 . 03 Redemption of the Bonds . . . . . . . . . . . . . 16 Section 4 . 04 Installment Loan Payments . . . . . . . . . . . 16 Section 4. 05 No Arbitrage. . . . . . . . . . . . . . . . . . . . . . . . 17 Section 4 . 06 Tax-Exempt Status of Interest on the Bonds and Mandatory Redemption. . . . . . . . . . . 17 Section 4 . 07 Covenants under the Act. . . . . . . . . . . . . 22 Section 4 . 08 Payments to the Corporation. . . . . . . . . 23 ARTICLE V COVENANTS AND REMEDIES Section 5 . 01 Covenants . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 5 . 02 Trustee ' s Remedies . . . . . . . . . . . . . . . . . . 24 Section 5 . 03 General Provisions . 24 Section 5 . 04 Amendment of Agreement. . . . . . . . . . . . . . 25 ARTICLE VI SPECIAL COVENANTS Section 6 . 01 Existence of Joint Venture. . . . . . . . . . 26 Section 6 . 02 Assignment. . . . . . . . . . . . . . . . . . . . . 26 Section 6 . 03 Financial Reports . . . . . . . . . . . . . . . . . . . 27 Section 6 . 04 Term of Agreement. . . . . . . . . . . . . . . . 27 Section 6. 05 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 6. 06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 6 . 07 Severability. . . . . . . . . . . . . . . . . . . . . . . . 28 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 28 EXHIBITS Exhibit A Description of the Development Exhibit B Construction Fund Requisition Exhibit C Note THE STATE OF TEXAS § LOAN AGREEMENT COUNTY OF JEFFERSON § This Loan Agreement dated as of March 1 , 1983 , by and between Beaumont Housing Finance Corporation, duly organized and created as a housing finance corporation under the Texas Housing Finance Corporations Act , Art. 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended, and Virginia Village Venture , a joint venture created under the laws of the State of Texas . W I T N E S S E T H: ARTICLE I DEFINITIONS; GENERAL RECITALS, FINDINGS , AND REPRESENTATIONS Section 1. 01. DEFINITIONS. In addition to all other words and terms defined herein, and unless a different meaning or intent clearly appears from the context , the following words and terms shall have the following meanings , respectively, whenever they are used herein: Act - The Texas Housing Finance Corporations Act, Art. 12691-7 , Vernon' s Annotated Texas Civil- Statutes , as amended. Agreement - This Loan Agreement, together with the Exhibits attached hereto , and all amendments and supplements to this Loan Agreement. Annual Contributions Contract - The Annual Contribu- tions Contract dated as of September 28 , 1981 , by and between HUD and the Authority, and all amendments and supplements to the Contract. Approving Officer - The person or persons designated by the Owner in a form satisfactory to the Trustee and the Corporation. Article - Any subdivision of this Agreement designated with a roman numeral. Authority - The Housing Authority of the City of Beaumont , Texas , its successors and assigns . r Board or Board of Directors - The lawfully qualified Board of Directors of the Corporation. Bondholder - The owner of any Bond registered as to principal. Bond Counsel - An attorney or firm of attorneys experi- enced in matters relating to municipal bond law and the tax exemption of interest on bonds of states and their political subdivisions , selected by the Corporation and satisfactory to the Trustee and the Owner. Bond Resolution - The Bond Resolution adopted by the Board of Directors authorizing the issuance and delivery of Beaumont Housing Finance Corporation Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , in the aggregate principal amount of $1 , 600 , 000 , and each other resolution of the Board of Directors authorizing additional Bonds for the Development , with the Bond Resolu- tion being expressly incorporated herein by this reference for all purposes . Bonds - Any and all revenue bonds of the Corporation issued and delivered to finance and pay for all or any part of the Cost of the Development pursuant to the Act and this Agreement , including initial and subsequent series of issues of revenue bonds and revenue bonds issued to finance and pay for all or any part of the Cost of completing the Develop- ment, and any revenue bonds issued for the purpose of refunding or replacing any Bonds issued for such purpose. City - The City of Beaumont , Texas. Code - The Internal Revenue Code of 1954 , as amended. Collateral Assignment - The Collateral Assignment and Security Agreement dated as of March 1 , 1983 , pursuant to which the Corporation conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , liens , privileges , claims and demands and equities existing or to exist in connection with or as security for payment of the Note , including its rights , titles and interests arising under the Deed of Trust, in order to secure payment of the Bonds according to their tenor and effect and the performance by the Corporation of all the covenants expressed or implied therein and in the Trust Indenture and the Collateral Assignment. -2- Construction Fund - The segregated account or accounts into which certain proceeds from the sale and delivery of each series of Bonds will be deposited as provided in each Bond Resolution (excepting any Bond Resolution authorizing revenue bonds to refund any Bonds) . Corporation - Beaumont Housing Finance Corporation, its successors and assigns . Cost - With respect to the Development, the sum total of all reasonable or necessary costs incidental to the pro- viding, acquisition, construction, reconstruction, rehabili- tation, repair, alteration, improvement and extension of a residential development as defined in the Act, including without limitation the following: the cost of studies and surveys ; plans and specifications ; architectural and engineering services , financial advisory, mortgage banking and administrative services ; underwriting fees ; legal, accounting , marketing and other special services related to residential development or incurred in connection with the issuance and sale of bonds ; necessary application and other fees to federal, state and local government agencies for any requisite approval for construction, assisted financing or otherwise; financing, acquisition, demolition, construction, equipment and site development of new and rehabilitated buildings ; the relocation of utilities , public ways , and parks ; the construction of recreational , cultural and commercial facilities ; rehabilitation, reconstruction, repair or remodeling of existing buildings and all other necessary and incidental expenses , including trustee and related agency fees and an initial bond and interest reserve together with interest on bonds issued to finance a residential development to a date 12 months subsequent to the estimated date of completion; any premiums for mortgage insurance or insurance with respect to bonds ; and such other expenses as the Corporation may deem appropriate to effectuate the purposes of the Act. Debt Service Fund - The segregated account or accounts in which Installment Loan Payments will be deposited as provided in each Bond Resolution. Deed of Trust - The Deed of Trust, Assignment of Rents and Security Agreement dated as of March 1 , 1983 , pursuant to which the Owner has bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee, for the use and benefit of the Corporation, and has assigned all of its right , title and interest in any rents arising with respect to , and has -3- further granted to the Corporation a -security interest in, the Development in order to secure the payment of the Installment Loan Payments and the Note, according to their tenor and effect , and certain other indebtedness of the Owner and the performance and observance by the Owner of all the covenants expressed or implied in the Deed of Trust, the Agreement , and the Note. Development - Virginia Village Development , comprised of the real estate described in Exhibit A to the Deed of Trust , together with the buildings , improvements , equipment and related facilities to be reconstructed, rehabilitated and installed thereon and consisting of 138 dwelling units for persons of low and moderate income to be located in the City, which buildings, improvements , equipment and related facilities are more fully described in Exhibit A attached hereto. Guarantee - The Guarantee Agreement dated as of March 1 , 1983 , pursuant to which the Guarantors agree on a proportionate basis to guarantee payment of the principal of and premium, if any, and liquidated damages , if any, and interest on the Bonds in the event of a default in the payment of the Bonds or -upon occurrence of a Taxable Event (which thereafter results in a Final Determination of Tax- ability) . Housing Act - The United States Housing Act of 1937 , as amended. HUD - The Department of Housing and Urban Development of the United States of America. Guarantors - C. L. Sherman, Jr. , James J. Conway, Jr. , Wayne D. Sherman, Robert G. Quinn, J. D. Martin III, A. S. Crawford and F. L. Stanley. Installment Loan Payments - Payments required to be made by the Owner on a limited recourse basis to amortize each series or issue of Bonds , as provided for in the applicable Bond Resolution, including the principal of, redemption premium, if any, and interest on such Bonds when due (whether at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated maturity) , any agreed liquidated damages owed to the Bondholders , and all agreed fees and expenses of the Trustee , Registrar, and any Paying Agent for such Bonds , together with any other payments required by such Bond Resolution or the Trust Indenture. -4- Loan - The loan of the proceeds of the sale of the Bonds as described in Section 3 . 01 . Note - The limited recourse promissory note representing the Loan as described in Section 3 . 01. Owner - Virginia Village Venture, a joint venture formed under the laws of the State of Texas , and its per- mitted successors and assigns . Paying Agent - The Trustee and any other paying agent for an issue or series of Bonds named in the Bond Resolution authorizing such Bonds . Registrar - The registrar for the Bonds named in the Bond Resolution. Regulations - The regulations promulgated by the United States Treasury Department pursuant to the Code. Section - Any subdivision of this Agreement designated by arabic numerals . Section 8 Agreement - The Agreement to Enter into a Housing Assistance Payments Contract dated as of Septem- ber 15 , 1982 , by and between HUD, the Authority and the Moebius Family Partnership with respect to the Development , and any and all amendments and supplements thereto , which Agreement has been heretofore assigned to the Owner with the written consent of the Authority. Section 8 Contract - The Housing Assistance Payments Contract with respect to the Development to be entered into by and between HUD, the Authority and the Owner pursuant to the Section 8 Agreement , and any and all amendments and supplements thereto. Trust Indenture - The trust indenture, including all supplements and amendments thereto , prescribed in and executed and delivered pursuant to the Bond Resolution. Trustee - The corporate trustee named under the Trust Indenture, and its successors or assigns . References in the singular number in this Agreement shall, be considered to include the plural , if and when appropriate. Capitalized terms used but not expressly defined herein shall have the same meaning as set forth in -5- the Bond Resolution or the Deed of Trust unless the context indicates otherwise. Section 1 . 02 . GENERAL RECITALS , FINDINGS , AND REPRE- SENTATIONS . (a) The Corporation is duly created and organized and Validly existing as a housing finance corporation under the Act. (b) The Corporation is a public instrumentality of the City, a political subdivision of the State of Texas , within the meaning of the Regulations and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to Section 103 of the Code, and the Corporation is functioning and acting on behalf of the City. (c) The Owner is a joint venture duly organized and validly existing under the laws of the State of Texas , is fully qualified to transact business in the State of Texas , and is fully authorized by law to execute this Agreement. (d) This Agreement is authorized and executed pursuant to applicable laws , including the Act . (e) The Owner has requested the Corporation to finance the Cost of the Development. (f) The Corporation has determined, in the public interest , that it will finance the Cost of the Development and will loan money to the Owner for such purpose in the manner provided in the Act and this Agreement. (g) Based on representations made by the Owner to the Board of Directors , the Corporation has officially found and determined and hereby officially finds and determines that (i) issuance of the Bonds on the terms and conditions set out in the Bond Resolution so as to provide financing for the Cost of the Development will promote the public purposes set forth in Section 3 of the Act, including without limita- tion assisting persons of low and moderate income to obtain decent, safe and sanitary housing at rentals they can afford, and (ii) the Owner has agreed and covenanted that in accordance with the Act and the Code, respectively, at least 90% of the dwelling units in the Development will be occupied at all times by persons of low and moderate income (as determined in the Rules and Regulations adopted by the Board of Directors on behalf of the Corporation) and at least 20% of the dwelling units in the Development will be -6- occupied (or held vacant and available for occupancy) by individuals of low or moderate income within the meaning of Section 103 (b) (12) (C) of the Code at all times during the qualified project period set forth in Section 103 (b) (12) (B) of the Code. (h) As required by the Code , the governing body of the City has held a public hearing after publication and posting of reasonable written notice and has approved by written resolution the Development , the Inducement Resolution, the Bond Resolution and issuance of the Bonds . (i) The Corporation and the Owner have taken all action and have complied with all provisions of law with respect to the execution, delivery and performance of this Agreement and the due authorization of the consummation of the transactions contemplated hereby, and this Agreement has been duly executed and delivered by, and constitutes a valid and legally binding agreement of, the Corporation and the Owner, enforceable against the respective parties in accordance with its terms . (j ) The execution of this Agreement and the perfor- mance of the transactions contemplated hereby will not violate any law or regulation, or any Joint Venture Agree- ment , or any Articles of Incorporation, Charter or Bylaws , or any judicial order, judgment, decree , or injunction, or contravene the provisions of or constitute a default under any agreement , deed of trust, indenture, bond resolution, or other instrument to which the Corporation or the Owner is a party. NOW THEREFORE, in consideration of the covenants and agreements herein made , and subject to the conditions herein set forth, the Corporation and the Owner contract and agree as hereinafter provided. ARTICLE II THE DEVELOPMENT Section 2. 01 . APPROVALS AND PERMITS. The Corporation and the Owner agree to use their est e forts to obtain all other permits necessary with respect to the provision, acquisition, construction, renovating, reconstruction, rehabilitation, repair, alteration, improvement and extension of the Development. -7- Section 2. 02. AC UISITION AND RECONSTRUCTION. (a) The Development shall be acquired, constructed, renovated, reconstructed, rehabilitated, repaired, altered, improved, extended and completed with all reasonable dispatch, and the Owner will use its best efforts to cause such acquisition, construction, renovation, reconstruction, rehabilitation, repair , alteration, improvement and extension to be completed as soon as practicable , delays incident to strikes , riots , acts of God, or the public enemy, or other causes beyond the reasonable control of the Owner only excepted; and in the event of such delay, there shall be no resulting liability on the part of the Corporation. (b) The Corporation shall have no responsibility or liability whatsoever with respect to the Development and the acquisition, construction, reconstruction, rehabilitation, repair , alteration, improvement , extension and completion thereof. It is agreed and understood that the Owner has entered into and executed and will enter into and execute all agreements and contracts necessary to assure and accomplish the actual acquisition, construction, recon- struction, renovation, rehabilitation, repair, alteration, improvement , extension and completion of the Development , that the Corporation shall not execute any such agreements or contracts , and that the Owner will carry out , pay, supervise, and enforce all such agreements and contracts and will provide such insurance on and in connection with the acquisition, construction, renovation, reconstruction, rehabilitation, repair, alteration, improvement , extension and completion of the Development as it deems necessary or advisable or as required by law and this Agreement . The Owner shall pay from proceeds from the sale and delivery of .the Bonds loaned to it pursuant to this Agreement, from any available income or earnings derived therefrom, and from other funds of the Owner to the extent necessary, but in all events subject to Section 3 . 03 (b) of this Agreement , the entire Cost of the Development. The Owner shall promptly pay all taxes , including specifically all sales taxes and ad valorem taxes , in connection with the Development and the acquisition, construction, renovation, reconstruction, rehabilitation, repair, alteration, improvement , or extension thereof. The Corporation shall loan certain proceeds from the sale of the Bonds to the Owner to be used by the Owner to pay the Cost of the Development in accordance with procedures to be established in the Bond Resolution, including provisions for reimbursing the Owner for paying the Cost of the Development under the aforesaid -8- agreements and contracts for the acquisition, construction, renovation, reconstruction, rehabilitation, repair, alteration, improvement , or extension thereof. It is speci- fically provided, however, that none of the proceeds from the sale of the Bonds will be used to reimburse the Owner for, or to pay (and the Owner hereby covenants and agrees not to request reimbursement of or payment for) any part of the Cost of the Development if such use or payment would result in a Taxable Event as defined in Section 4 . 06 , and the Owner hereby agrees to pay from its own funds or other sources all such Development Costs which cannot be paid or reimbursed from the proceeds of the Bonds for such reason. The Bond Resolution shall contain appropriate provisions with respect to the Construction Fund which shall be drawn on and administered as provided therein. Subject to satisfaction of all conditions to drawdowns set out in the Bond Resolution, any drawdowns on the Construction Fund shall be made by the Owner through execution and delivery of Construction Fund Requisitions in the form attached as Exhibit B. (c) Construction of the Development shall be deemed to be completed upon the issuance of a certification by the Owner (the "Development Completion Certificate") that the Development has been completed in accordance with the Owner ' s plans and specifications . ARTICLE III FINANCING THE DEVELOPMENT; TITLE AND OPERATION Section 3 . 01 . THE LOAN AND THE NOTE. The Corporation shall make the Loan to the Owner by depositing into the Con- struction Fund (or such other fund as specifically provided in the Bond Resolution) the proceeds from the sale of Bonds in such amount as is provided in the Bond Resolution. The amounts so deposited shall be advanced in the manner pro- vided in the Bond Resolution, and the obligation of the Owner to repay the Loan shall be represented by the Note in the form attached as Exhibit C, and the Owner shall repay the Loan and the Note by making the Installment Loan Payments as provided in this Agreement and the Bond Resolution. Section 3 . 02. SECURITY FOR THE LOAN AND THE NOTE. The obligations of the Owner under this Agreement and t e Note shall be direct obligations of the Owner subject to Sec- tion 3. 03 (b) of this Agreement , and shall be secured by the J -9- Deed of Trust. Prior to or simultaneously with the issuance of the Bonds , the Corporation will assign to the Trustee , in accordance with the Trust Indenture and the Collateral Assignment , all of the Corporation' s right , title' interest in and to the Installment Loan Payments , the Note , and the Deed of Trust. Section 3 . 03 . REPAYMENT OF THE LOAN AND THE NOTE. (a) Subject to Subsection (b) below, the Owner agrees that pursuant to the assignment by the Corporation, the Owner shall make Installment Loan Payments to the Trustee in lawful money of the United States of America, and in such amounts and at such times as shall be necessary to enable the Trustee to make full and prompt payment of the principal of, redemption premium, if any, and interest on all Bonds when due (whether at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated matur- ity) , any agreed liquidated damages owed to the Bondholders , and all agreed fees and expenses of the Trustee, the Regis- trar, and any Paying Agent for such Bonds , and of all other amounts required to be paid by this Agreement , the Bond Resolution and the Trust Indenture. Upon the issuance and delivery of Bonds to the initial purchasers thereof, and the deposit of the proceeds derived therefrom into the accounts established by the Bond Resolution, the Owner shall have re- ceived, and the Corporation shall have given, full and com- plete consideration for the Owner' s obligation hereunder to make Installment Loan Payments . Subject to Subsection (b) below and except as provided in Sections 6 . 01 and 6. 02 , the obligations of the Owner to make the payments required by this Agreement shall be absolute and unconditional and shall not be subject to diminution by set-off, recoupment , counterclaim, abatement , or otherwise. Until such time as all Installment Loan Payments shall have been made or provision therefor shall have been made in accordance with the Bond Resolution and the Trust Indenture, it is expressly stipulated that subject to Subsection (b) below, the Owner (i) will not suspend or discontinue, or permit the suspension or discontinuance of, any payments provided for in this Agreement, (ii) will perform and observe all of its other agreements contained in this Agreement , and (iii) will not terminate this Agreement for any cause, including, with- out limiting the generality of the foregoing, failure of the Development to comply with the plans and specifications therefor, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Development , frustration of commercial purpose, any change in the tax or other laws or administrative rulings of or -10- administrative actions by the United States of America, the State of Texas , or any political subdivision of either, or any failure of the Corporation to perform and observe any agreement , whether expressed or implied, or any duty, lia- bility, or obligation arising out of or -in connection with this Agreement. Nothing contained in this Section shall be construed to release- the Corporation from the performance of any of the agreements on its part contained herein; and in the event the Corporation shall fail to perform any such agreement on its part, the Owner may institute such action against the Corporation as the Owner may deem necessary to compel performance , provided that no such action shall violate the agreements on the part of the Owner contained in this Section or postpone or diminish the amounts required to be paid by the Owner pursuant to this Agreement. (b) Other than the interest of the Owner in the Development and the future rents , issues and profits , insurance proceeds and condemnation awards to be derived therefrom and any other collateral expressly pledged by the Owner with respect to the Development , neither the Owner nor any venturer or participant therein shall have liability for failure to pay or perform any of the obligations of the Owner hereunder and under the Note and the Deed of Trust (other than the obligations under Section 3 . 06 and Section 4 . 06 hereof for which the Owner and its venturers or participants shall be personally liable) . In the event of any breach or threatened breach by the Owner of any of the covenants , agreements , terms or conditions contained herein or in the Note or the Deed of Trust , the Corporation, its successors and assigns , shall make no claim, or enforce nor seek to enforce any claim, either at law or in equity, by attachment , execution or other legal or equitable means , against any of the assets of either the Owner or any venturer or participant therein, other than the interest of the Owner in the Development and the future rents , issues and profits , insurance proceeds and condemnation awards to be derived therefrom and other collateral expressly pledged by the Owner with respect to the Development (except that the assets of the Owner and its venturers and participants shall be subject to payment of claims under Section 3 . 06 and Section 4 . 06 hereof) . Nothing contained in this Subsection (b) shall relieve, modify, diminish, or waive the personal liability of the Guarantors under the Guarantee Agreement , attached to the Bond Resolution as Exhibit E. (c) Notwithstanding the other provisions of this Agreement, it is the intention of the parties hereto to conform strictly to the usury laws and the public securities • -11- laws (both state and federal , to the extent applicable) now in force in the State of Texas , and any provision for any payment contained herein and in the Note and the Bonds and the interest coupons appertaining thereto, if any, shall be held to be subject to reduction to the amount allowed under said usury or securities laws as now or hereafter construed by the courts having jurisdiction. This provision shall be held to operate to deny the owners of the Bonds and the interest coupons appertaining thereto , if any, the right, in any event , to collect usury or amounts in excess of those allowed under such securities laws . Section 3 . 04 . TITLE. The Corporation shall have no right, title , or interest in and to the Development other than a lien on, a pledge against and a security interest in the Development as provided in the Deed of Trust. Except for making the Loan to the Owner from the source and in the manner provided in this Agreement , the Corporation shall not be responsible or liable in any manner for any claims , losses , damages , penalties , costs , taxes , or fines with respect to the acquisition, construction, renovation, reconstruction, rehabilitation, repair, alteration, improvement , extension, equipping , furnishing, installation, operation, maintenance, or ownership of the Development. Section 3 . 05 . OPERATION. The Owner represents and covenants that it will operate and maintain the Development, or cause the Development to be operated and maintained, and subject to Section 3 . 03(b) of this Agreement, will pay, or cause to be paid, all costs and expenses of operation and maintenance of the Development , including all applicable taxes and utilities . The Development will be considered as an asset of the Owner at all times for the purpose of application of its insurance practices , and any insurance claims by reason of damage to or destruction of the Development or any portion thereof shall be handled by the Owner as provided in the Deed of Trust. The Owner agrees that it will obtain and continuously maintain in effect , insurance on the Development as required under the Deed of Trust . It is understood and agreed that the Corporation shall have no duties or responsibilities whatsoever with respect to the operation or maintenance of the Development , or the suitability of the Development for its designed purposes , or insuring of the Development. Section 3 . 06. INDEMNITIES. The Owner releases the Corporation and the Trustee , their respective officers , directors , employees , agents , representatives , and attorneys , and the City, its officers , representatives , and -12- employees and the members of its governing body (collectively the "Indemnified Parties".) from, and the Indemnified Parties shall not be liable for, and the Owner agrees and shall protect , indemnify, defend, and hold the Indemnified Parties harmless from any and all liability, cost , expense, damage or loss of whatever nature (including, but not limited to, attorneys ' fees , litigation and court Costs , amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from, arising out of, in connection with, or related to (i) the issuance, offering, sale, or delivery of the Bonds , the Bond Resolution, the Trust Indenture, this Agreement, the Note, the Deed of Trust and the Collateral Assignment , and the obligations imposed on the Corporation hereby and thereby, or the design, construction, renovation, reconstruction, rehabilitation, repair, alteration, improvement, extension, operation, use, occupancy, maintenance, or ownership of the Development; (ii) any written statements or representations made or given by the Owner or any of its employees , to the Indemnified Parties , or any underwriters or purchasers of any of the Bonds , with respect to the Corporation, the Owner, the Development , or the Bonds , including, but not limited to , statements or representations of facts , financial information, or corporate affairs ; (iii) damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Development; and (iv) any loss or damage incurred by the Indemnified Parties as a result of violation by the Owner of the provisions of Sections 4 . 05 , 4 . 06 or 4 . 07 hereof. The provisions of the preceding sentence shall remain and be in full force and effect even if any such liability, cost, expense, damage or loss or claim therefor by any person directly or indirectly results from, arises out of, or relates to or is asserted to have resulted from, arisen out of, or related to, in whole or in part , one or more negli- gent acts or omissions of the Corporation or the City, or the officers , directors , employees , agents , servants , or any other party acting for or on behalf of the Corporation or the City in connection with the matters set forth in clauses (i) through (iv) of such sentence. Notwithstanding the foregoing, the Owner shall not be required to indemnify the Trustee or its officers , directors , employees , agents , representatives , or attorneys , for liabilities , costs , expenses , damages or losses caused or resulting from their acts of gross negligence or willful misconduct. The provisions of this Section 3 . 06 shall inure solely to the benefit of the Corporation, the Trustee , the City, and their respective officers , directors , employees , agents , representatives , attorneys and members , and no other person -13- or entity (including without limitation any Bondholder or the Trustee acting in such capacity on their behalf) shall have or acquire any rights hereunder. Section 3 . 07 . THE CORPORATION' S LIMITED LIABILITY. It is recognized that the Corporation s on 'y source of unds with which to carry out its commitments with respect to the Development and this Agreement will be from the proceeds from the sale of the Bonds and that the Bonds represent limited obligations of the Corporation as set out in Section 12 of the Bond Resolution. It and it is expressly agreed that the Corporation shall have no liability, obligation, or responsibility with respect to this Agreement or the Development except to the extent of funds available from such Bond proceeds . If, for any reason, the proceeds from the sale of the Bonds and any other amounts contemplated to be advanced as provided in the Description of the Development attached as Exhibit A are not sufficient to pay all the Cost of the Development, the Owner shall not be entitled to reimbursement therefor unless additional Bonds are issued for such purpose , or to any diminution in or postponement of any payments required to be made by the Owner hereunder. ARTICLE IV THE BONDS Section 4 . 01 . ISSUANCE OF THE BONDS. (a) In consideration of the covenants and agreements set forth in this Agreement , and to enable the Corporation to issue the Bonds in order to carry out the intents and purposes hereof, this Agreement is executed to assure the issuance of such Bonds , and to provide for the due and punctual payment by the Owner to the Trustee of the Installment Loan Payments . The Owner shall make the Installment Loan Payments , for the benefit of each series or issue of Bonds , to the Trustee for deposit into the Debt Service Fund as provided in each Bond Resolution. (b) Simultaneously with its authorization of this Agreement , the Board has adopted the Bond Resolution (which Bond Resolution is expressly incorporated in this Agreement by reference for all purposes) . Upon the request of the Owner, and only upon its request, the Corporation may, at its option and when it becomes necessary or advisable, authorize and use its best efforts to sell and deliver additional Bonds , in one or more series or issues , in -14- aggregate principal amounts sufficient to pay any additional Cost of the Development, provided that no additional Bonds shall be issued without satisfaction of the conditions set out in Section 10 of the Bond Resolution. Each Bond Resolution (including the Trust Indenture authorized by the Bond Resolution) shall be subject to the written approval of the Approving Officer and the provisions of any Bond Resolution and the Trust Indenture shall not be binding or effective upon the Owner unless and until such approval is given. Through execution hereof by the Approving Officer, the Owner hereby approves the terms of the Trust Indenture and the Bond Resolution delivered by the Corporation in connection with its Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) . It is hereby agreed that such approval , if and when given, shall constitute the acknowledgement and agreement of the Owner that such Bonds , when issued, sold, and delivered as provided in the Bond Resolution, will be issued in accordance with and in compliance with this Agreement , notwithstanding any other provisions of this Agreement or any other contract or agreement to the contrary. Any Bondholder is entitled to rely fully and unconditionally on any such approval . Notwithstanding any provisions of this Agreement or any other contract or agreement to the contrary, if and when the Approving Officer gives written approval of any Bond Resolution (including the Trust Indenture authorized by the Bond Resolution) , all covenants and provisions in such Bond Resolution and the Trust Indenture affecting the Owner shall , upon the delivery of such Bonds and the Trust Indenture, become valid and binding covenants and obligations of the Owner enforceable to the extent herein and therein provided so long as such Bonds and the interest thereon are outstanding and unpaid. Without limiting the generality of the foregoing, the obligation of the Owner to make , promptly when due, all Installment Loan Payments specified in each Bond Resolution and the Trust Indenture shall be absolute and unconditional , and such obligation may be enforced as provided in each Bond Resolution and the applicable Loan Agreement and Trust Indenture, regardless of any other provisions of any other contract or agreement to the contrary. It is further the intention of the parties to this Agreement that if any such written approval of any Bond Resolution and the Trust Indenture is given by the Approving Officer, such approval shall constitute and be the equivalent of the approval of such Bond Resolution and the Trust Indenture by the Owner, and the provisions of such Bond Resolution and the Trust Indenture affecting the Owner shall constitute enforceable -15- obligations of and be binding upon the Owner with the effect described above. Section 4 . 02. REFUNDING OF THE BONDS. After the issuance o any Bonds , the Corporation shall not refund any of the Bonds or change or modify the Bonds in any way, except as provided for in the Bond Resolution, without the prior written approval of the Approving Officer; nor shall the Corporation redeem any Bonds prior to their scheduled maturities , or change or modify any Bond Resolution, without the prior written approval of the Approving Officer, unless such redemption is required by a Bond Resolution. Section 4 . 03 . REDEMPTION OF THE BONDS. Provision shall be made in each Bond Resolution for the redemption of Bonds prior to maturity, under such terms and conditions as shall be set forth therein. The redemption of any outstand- ing Bonds prior to maturity at any time shall not relieve the Owner of its obligation to pay each remaining Installment Loan Payment as specified herein and in any Bond Resolution or the Trust Indenture. The Owner shall also comply with and be bound by all provisions of this Agreement and of each Bond Resolution and the Trust Indenture with respect to the mandatory and optional redemption of Bonds . Section 4 . 04 . INSTALLMENT LOAN PAYMENTS. (a) Payment of all Installment Loan Payments shall be made and deposited as required by each Bond Resolution and the Trust Indenture , including all such payments which may come due because of the acceleration of the maturity or maturities of any Bonds upon default , or otherwise, under the provisions of the Trust Indenture. If any available funds in excess of current requirements are held on deposit in the Debt Service Fund at the time payment of any Install- ment Loan Payment is due, such payment may be reduced by the amount of the funds so held on deposit. The Owner shall have the right to prepay all or a portion of any Installment Loan Payment at any time. Any such prepayment by the Owner shall not relieve it of liability for each remaining Installment Loan Payment as provided in this Agreement and each Bond Resolution and the Trust Indenture. (b) It is expressly stipulated that subject to Section 3 . 03 (b) of this Agreement , the Owner shall be obligated to make and pay, or cause to be made and paid, each Installment Loan Payment regardless of whether or not the Owner actually acquires or completes the Development, or whether or not the Owner actually approves , purchases , i -16- receives , accepts , or uses the Development; ' and such payments shall not be subject to any abatement, set-off, recoupment , or counter-claim; and the Bondholders shall be entitled to rely on this agreement and representation, notwithstanding any provisions of any other contract or agreement to the contrary, and regardless of the validity or the performance of the remainder of this Agreement or any other contract or agreement. Section 4 . 05 . NO ARBITRAGE. The Corporation and the Owner ereby covenant with each other for the benefit of the Bondholders that they will make no use of the direct or indirect proceeds of the Bonds at any time throughout the term of this Agreement and the Bonds which will cause the Bonds to be arbitrage bonds within the meaning of Section 103(c) of the Code and the Regulations and rulings pertaining thereto; and by this covenant the Corporation and the Owner are obligated to comply with the requirements of Section 103(c) of the Code and the pertinent Regulations and rulings . Section 4 : 06 . TAX-EXEMPT STATUS OF INTEREST ON THE BONDS AND MANDATORY REDEMPTION. (a) All references in this Section to the "Code" shall mean the Internal Revenue Code of 1954 , as now or hereafter amended, and shall also refer to and incorporate by reference the applicable Treasury Regulations , Revenue Rulings and Revenue Procedures now or hereafter promulgated under the Code. The capitalized terms employed in this Section shall have the respective meaning assigned to them in the Code. In the event of any inconsistency or conflict between any definition or capitalized term in this Section and the Code , the Code shall control . (b) The Corporation covenants that it shall , prior to expiration of the reporting period set out in Section 103 (1) (2) of the Code , file the information report with Internal Revenue Service in the form thereby required. The Owner covenants that it shall furnish to the Corporation whatever information is necessary for the Corporation to make such filing on a timely basis . (c) The Owner hereby covenants , warrants , represents , certifies and agrees that substantially all (within the meaning of Section 103 (b) (4) of the Code) and in any event not less than 92% of the proceeds from the issuance of the Bonds and investment earnings thereon shall be used to provide, acquire , construct , reconstruct , repair, alter, -17- improve , renovate and rehabilitate multi-family Residential Rental Property and Functionally Related and Subordinate Facilities containing one or more similarly constructed Units and Proximate Buildings or Structures that have similarly constructed Units , all of which property shall be located wholly within the City of Beaumont , Texas , and shall constitute a Residential Rental Project and an Exempt Facility within the meaning of the Code , and substantially all (within the meaning of the Code) of the Development shall contain such Units and Functionally Related and Subordinate Facilities . (d) The Owner hereby covenants , warrants , represents , certifies and agrees that at all times during the Qualified Project Period (i) the Development and all Facilities con- stituting or comprising a Part of or Functionally Related and Subordinate to the Development , and all land, struc- tures , buildings , improvements , fixtures , additions , appurtenances , equipment, and other assets or property financed in whole or in part with the proceeds of the issu- ance of the Bonds shall comprise a multi-family rental hous- ing development that is Residential Real Property and a Residential Rental Project and an Exempt Facility, (ii) at least twenty percent (20%) of the Units comprising a Part of or Functionally Related and Subordinate to the Development shall be occupied or held vacant and available for occupancy (within the meaning of the Code) by Individuals of Low or Moderate Income , (iii) subject to the provisions of clause (ii) above with respect to occupancy by Individuals of Low or Moderate Income and clause (iv) below concerning use restrictions , all of the Units , Proximate Buildings and Structures , and Facilities comprising a Part of or Function- ally Related and Subordinate to the Development shall serve or be available for General Public Use , or be Part of a Facility so used, and (iv) no part of the Units , Proximate Buildings and Structures , land and Facilities comprising a Part of or Functionally Related and Subordinate to the Development shall be or hereafter become Owner-Occupied Residences , or shall otherwise be utilized, rented, or held out for rental as a hotel, motel, dormitory, fraternity or sorority house , rooming house, hospital , nursing home, sanitarium, rent house, trailer parks or courts , or for any other use on a transient basis , or for usage by any partner, venturer, or participant in the Owner. (e) The Owner hereby covenants , warrants , represents , certifies and agrees that (i) once available for occupancy, each Unit in the Development shall be rented or held open as available for rental on a continuous basis during the longer -18- of the remaining term of the Bond or Bonds with the longest maturity or the Qualified Project Period, (ii) no part of the Development or any of the Units , Proximate Buildings and Structures , land or Facilities comprising a Part of or func- tionally Related and Subordinate to the Development shall be sold, transferred, conveyed, sublet , assigned, encumbered or otherwise disposed of in any transaction which would cause the interest on the Bonds to be includable in the gross income of the holders thereof for federal -income tax pur- poses , (iii) the Development and all buildings , structures , fixtures , additions , appurtenances , equipment , improvements , facilities , and other real or personal property functionally or integrally related or subordinate thereto are and shall be located wholly within the jurisdiction of the City as the Governmental Unit , (iv) the Original Use of the Development has or will commence prior to the date of issuance of the Bonds , and no Non-Exempt Person or a Related Person who was a Substantial User of the Development at any time during the five-year period preceding the date of issuance of the Bonds and who receives , directly or indirectly, proceeds of the issuance of the Bonds equal to five percent (57) or more of the face amount of the Bonds in payment for his interest in the Development , will be a Substantial User of the Develop- ment at any time during the five-year period following the date of issuance of the Bonds , and (v) all or a major portion (within the meaning of Section 103 of the Code) and in no event less than 757 of the proceeds of the issuance of the Bonds will be used, at all times during the life of the Bonds , directly or indirectly in the trade or business of the Owner (within the meaning of Section 103 of the Code) , and not by an Exempt Person. (f) The Corporation hereby covenants and agrees that in the event of any non-compliance by the Owner with the covenants , warranties , representations , certifications , and agreements set out in paragraphs (c) , (d) and (e) above , the Corporation shall , if so requested by the Trustee and if provided with an indemnity against costs or other liability, attempt to cure the non-compliance or to have such non- compliance cured within a reasonable period of time. If requested by the Corporation at any time and from time to time, the Owner agrees to furnish certificates and any other necessary evidence or information to demonstrate its compliance with the provisions of this Section 4 . 06 . The Corporation shall have the right (either directly or by representative) to audit , inspect and copy the books and records of the Owner at all reasonable times in order to monitor such compliance. r -19- (g) The Owner further covenants and represents that it has not made , paid, or incurred, and will not make, pay, or incur any expenditures which would cause the interest on the Bonds to become subject to federal income taxes pursuant to the provisions of Section 103 (b) of the Code. The Owner further covenants that it has not taken any action or per- mitted any action to be taken, and that it will not take any action or permit any action to be taken, which would result in a Taxable Event (as hereinafter defined) and that the Owner has not failed to take and will not fail to take any action required to prevent the occurrence of a Taxable Event. (h) As used herein, a "Taxable Event" shall mean: (i) the application of the proceeds of the Bonds in such a manner that the Bonds become "arbitrage bonds" within the . meaning of Section 103 (c) of the Code , with the result that interest on the Bonds is or becomes includable in the gross income of any Bondholder for federal income tax purposes ; or (ii) the application of the proceeds of the Bonds in such a manner, or the occurrence or non-occurrence of any event within the control of the Owner, with the result that under the Code the interest on the Bonds is or becomes includable in the gross income of any Bondholder for federal income tax purposes (other than a Bondholder who is a Substantial User or a Related Person within the meaning of the Code) ; or (iii) the violation by the Owner of a covenant, warranty, representation, certification or agree- ment contained in this Agreement with the result that under the Code the interest on the Bonds is or becomes includable in the gross income of any Bond- holder for federal income tax purposes (other than a Bondholder who is a Substantial User or a Related Person within the meaning of the Code) . (i) A "Determination" shall be deemed to have occurred on the first to occur of the following: (i) on that date when the Owner shall be advised by the Commissioner or any District Director of Internal Revenue that, based upon filings of the Owner or the Corporation or upon any -20- TABLE OF CONTENTS (The Table of Contents is not a part of the Resolution but is for convenience of reference only) PAGE Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 1 . APPROVAL OF TRANSACTION. . . . . . . . . . . . . 4 (a) Approval of the Bonds . . . . . . . . . . 4 (b) Approval of the Agreement. . . . . . 4 (c) Requirement as to the Deed of Trust and Collateral Assignment. . . . . . . . . . . . . . . . . . . . . 5 (d) Requirement as to Guarantee Agreement. . . . . . . . . . . . 5 (e) Conditions Precedent to Closing of the Transaction. . . . . . 5 (f) Approval of Sale of the�Bonds . . 6 (g) Issuance Furthers the Purposes of the Act. . . . . . . . . . . . . . . . . 6 (h) Incorporation by Reference. . . . . 7 (i) Additional Authorizations to Officers of the Corporation. . . . 7 (j ) Effective Date of the Bond Resolution. . . . . . . . . . . . . . . . . . . . . 7 (k) Defined Terms . . . . . . . . . . . . . . . . . . 7 SECTION 2 . DATE, DENOMINATION, NUMBERS , AND MATURITIES OF THE BONDS. . . . . . . . . . . . . 7 SECTION 3. INTEREST ON THE BONDS. . . . . . . . . . . . . . . 8 SECTION 4 . GENERAL CHARACTERISTICS OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (a) In General. . . . . . . . . . . . . . . . . 8 (b) Registration Books . . • . . . . 9 (c) Payment to Registered Holder. . . 9 (d) Notation of Prepayment. . . . . . . . . 9 SECTION 5 . FORM OF BOND. . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 6 . PLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 7 . DEBT SERVICE FUND. . . . . . . . . . . . . . . . . . . 22 (a) Establishment of Debt Service Fund. . 22 (b) Accrued� Interest . . . . . . . . . . . . . . . 22 (c) Installment Loan Payments . . . . . . 22 (d) Redemption. . . . . . . . . . . . . . . . 24 (e) , Payments from Debt Service Fund. . . . . . . . . . . . . . . . . . . . . 24 (f) Immediately Available Funds . . . . 24 (g) Investment of Funds . . . . . . . . . . . . 24 SECTION 8 . SECURITY FOR FUNDS. . . . . . . . . . . . . . . . . . 25 SECTION 9. THE OWNER' S PAYMENTS . . . . . . . . . . . . . . . . 25 (a) Limitations On Owner' s Obligation. . . . . . . . . . . . . . . . . . . . . 25 (b) Prepayments . . . . . . . . . . . . . . . . . . . . 26 SECTION 10 . ADDITIONAL PARITY BONDS . . . . . . . . . . . . . 26 (a) Additional Bonds . . . . . . . . . . . . . 26 (b) Amendments to Trust Indenture Unnecessary. . . . . . . . . . . . . . . . . . . . 28 SECTION 11. SPECIAL COVENANTS. . . . . . . . . . . . . . . . . . . 28 (a) Installment Loan Payments Pledged to Bonds Only. . . . . . . . . . 28 (b) Non-Encumbrance. . . . . . . . . . . . . . . . 28 (c) Performance by Corporation. . . . . 28 (d) Certain Modifications Prohibited. . . . . . . . . . . . . . . . . . . . 28 SECTION 12 . THE BONDS ARE SPECIAL OBLIGATIONS. . . 29 SECTION 13 . AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 29 (a) Amendment with Consent of Holders of 75% of the Bonds . . . . 29 (b) Notice of Amendment. . . . . . . . . . . . 30 (c) Consent to Amendment. . . . . . . . . . . 31 (d) Effect of Amendment. . . . . . . . . . . . 31 (e) Consent of Bondholders . . . . . . . . . 31 (f) Ownership of the Bonds . . . . . . . . . 32 (g) Amendments Without Consent. . . . . 32 (h) Special Exception. . . . . . . . . . . . . . 32 SECTION 14 . ESTABLISHMENT OF CONSTRUCTION FUND. . 32 (a) Deposit of Bond Proceeds into Construction Fund. . . . . . . . . . . . . . 32 (b) Investment of Money in Construction Fund. . . . . . . . . . . . . . 33 (c) Deposit of Accrued Interest, Income , and Profits . . . . . . . . . . . . 33 SECTION 15 . PAYMENTS FROM CONSTRUCTION FUND. . . . . 34 (a) Corporation' s Administrative Overhead Expenses and Other Costs . . . . . . . . . . . . . . . 34 (b) Reimbursement for and Pay- ment of Cost of the Development. . . . . . . . . . . . . . . . . . . . 34 (c) Reliance by Trustee. . . . . . . . . . . . 35 SECTION 16 . SURPLUS CONSTRUCTION FUNDS . . . . . . . . . . 35 (a) Disposition of Surplus Funds . . . . . . . . . . . . . . . . . . . . 35 (b) Disposition of* Construction Fund upon Acceleration and Redemption. . . . . . . . . . . . . . . . . . . . . 36 SECTION 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS . . . . . . . . . . . . . . . . . . 36 (a) Replacement Bonds . . . . . . . . . . . . . . 36 (b) Application for Substitute Bonds . . . . . . . . . . . . . . . . . . . . 36 (c) No Default Occurred. . . . . . . . . . 37 (d) Charge for Issuing Substitute Bonds . . . . . . . . . . . . . . . . . . . 37 (e) Authority for� Issuing Substitute Bonds . . . . . . . . . . . . . . . 37 SECTION 18 . NO ARBITRAGE. . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 19 . ADOPTION OF RULES AND REGULATIONS AS TO LOW AND MODERATE INCOME LEVELS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 1 EXHIBITS A Trust Indenture B Loan Agreement C Deed of Trust, Assignment of Rents and Security Agreement D Collateral Assignment and Security Agreement E Guarantee Agreement F Letter of Representation G Investment Letter RESOLUTION AUTHORIZING THE ISSUANCE OF BEAUMONT HOUSING FINANCE CORPORATION MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) , THE EXECUTION OF A TRUST INDENTURE AND OTHER RELATED DOCUMENTS , AND ADOPTION OF CERTAIN RULES AND REGULATIONS WHEREAS, Beaumont Housing Finance Corporation (the "Corporation") has been duly created and organized pursuant to and in accordance with the provisions of the Texas Housing Finance Corporations Act , Article 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the "Act") ; and WHEREAS , the Act authorizes the Corporation to issue revenue bonds for the purposes of providing financing for . and to loan sufficient funds to any person to defray in whole or in part the development costs of residential developments located within the City of Beaumont , Texas (the "City") , and intended to be occupied substantially (at least 907) by persons of low and moderate income as determined in Rules and Regulations adopted by the Board of Directors of the Corporation (the "Board") ; and WHEREAS , Section 103 (b) (4) (A) of the Internal Revenue Code of 1954 , as amended (the "Code") , provides that the interest on fully registered obligations issued by or on behalf of a state or a political subdivision thereof, substantially all of the proceeds of which obligations are to be used to provide projects for residential rental property, shall be exempt from federal income taxation if at least 20 percent of the dwelling units in each project are to be occupied by individuals of low or moderate income , within the meaning of Section 103(b) (12) (C) of the Code at all times during the qualified project period set forth in Section 103 (b) (12) (B) of the Code; and WHEREAS, the Board adopted a resolution on February 3 , 1983 (the "Inducement Resolution") , whereby in accordance with the provisions of the Act , the Corporation has agreed to issue its revenue bonds for the purpose of providing financing for a multi-family residential development (the "Development") consisting of approximately 138 dwelling units to be rehabilitated by Virginia Village Venture (the "Owner") and to be located within the City on the real estate which was initially described in Exhibit A to the Inducement Resolution and which is more fully described in the hereinafter described Loan Agreement; and WHEREAS , for purposes of financing the Development, the Corporation now desires to (i) authorize the issuance of its Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) (the "Bonds") , in the maximum aggregate principal amount of $1 , 600 , 000 , pursuant to the terms and provisions of a trust indenture, (ii) provide for the sale of the Bonds to the purchasers described herein, (iii) provide for the payment of the principal of and premium, if any, and liquidated damages , if any, and interest on the Bonds with revenues derived from the loan of proceeds of the sale of the Bonds (except for any amount representing accrued interest on the Bonds) to the Owner pursuant to the terms and provisions of a loan agreement and (iv) take and authorize certain other actions in connection with the foregoing; and WHEREAS , on March 1 , 1983 , after a public hearing as required by and in compliance with Section 103 (k) of the Code , the City adopted a written resolution specifically approving the Development , the Inducement Resolution, this Resolution, and the issuance of the Bonds ; and WHEREAS , pursuant 'to the terms of the hereinafter described Loan Agreement, the Owner has agreed and covenanted with the Corporation that (i) in accordance with the Act , at least 90 percent of the dwelling units in the Development will be occupied at all times by persons of low and moderate income , as determined in Rules and Regulations adopted by the Board on behalf of the Corporation, and (ii) in accordance with the Code , at least 20 percent of the dwelling units in the Development will be occupied (or held vacant and available for occupancy) by individuals of low or moderate income within the meaning of Section 103 (b) (12) (C) of the Code at all times during the qualified project period set forth in Section 103 (b) (12) (B) of the Code; and WHEREAS , by the terms of this resolution the Board has found and determined under the Act and adopted as a part of* the Rules and Regulations of the Corporation effective as of January 1 , 1983 , that for purposes of occupancy of dwelling units in the Development, a person of low or moderate income shall be a person whose adjusted gross income, together with the adjusted gross incomes of all persons who intend to reside with such person in one dwelling unit , did not exceed $40 , 000 . 00 for the calendar year 1982; and -2- WHEREAS, pursuant to Section 8 of the United States Housing Act of 1937 , as amended (the "Housing Act") , the United States of America, acting through the Department of Housing and Urban Development ("HUD") , has entered into an Annual Contributions Contract dated as of September 28 , 1981 , as amended (the "Annual Contributions Contract") with the Housing Authority of the City of Beaumont, Texas (the "Authority") , providing for the payment of annual contributions by HUD to the Authority to be used to pay a portion of the rent of tenants who are eligible for such assistance under HUD regulations ; and WHEREAS , pursuant to the Annual Contributions Contract the Authority has executed with respect to the Development an Agreement to Enter into a Housing Assistance Payments Contract dated as of September 15 , 1982 (the "Section 8 Agreement") , providing for the execution of a Housing Assistance Payments Contract (the "Section 8 Contract") upon completion of the Development and its acceptance by HUD; and WHEREAS, the Board has examined proposed forms of a trust indenture, a note , a loan agreement , a collateral assignment and security agreement , a letter of representation and an investment letter, all comprising a part of this resolution, and the Board finds the form and substance of such documents to be satisfactory and that the recitals and findings contained therein are true, correct and complete and hereby adopts and incorporates by reference such recitals and findings as if set forth in full in this resolution, and finds that it is in the best interest of the public and the Corporation and will assist in carrying out the public purpose of the Corporation and the Act to authorize the execution and delivery of such documents ; and WHEREAS , the Board has examined the proposed form of a guarantee agreement pursuant to which C. L. Sherman, Jr. , James J. Conway, Jr. , Wayne D. Sherman, Robert G. Quinn, J. D. Martin III, A. S . Crawford and F. L. Stanley (the "Guarantors") agree on a proportionate basis to guarantee payment of the principal of and premium, if any, and liquidated damages , if any, and interest on the Bonds , and the Board finds the form and substance of such document to be satisfactory and that the agreement of the Guarantors as contained therein constitutes a material inducement to the Corporation to issue and sell the Bonds and in reliance thereon, the Board is willing to adopt this resolution and authorize the actions to be taken hereunder; and -3- WHEREAS, the Board has examined the proposed form of a deed of trust, assignment of rents and security agreement from the Owner to Donald W. Cioban, as mortgage trustee , for the benefit of the Corporation, and the Board finds the form and substance of such document to be satisfactory; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF BEAUMONT HOUSING FINANCE CORPORATION, THAT: Section 1. APPROVAL OF TRANSACTION. (a) Approval of the Bonds . The Corporation hereby authorizes and dire cts t e issuance of the Bonds in the maximum aggregate principal amount of $1, 600 ,000 , in accordance with a trust indenture substantially in the form of the Trust Indenture, dated as of March 1 , 1983 (the "Trust Indenture") , by and between the Corporation and InterFirst Bank-Beaumont, as trustee (the "Trustee") , attached to this resolution as Exhibit A, the form, terms and provisions of the Trust Indenture and the Bonds being hereby authorized and approved, and the President and any Vice President of the Corporation are hereby severally authorized and directed to execute and deliver such Indenture and the Bonds on behalf of the Corporation, and the Secretary or any Assistant Secretary of the Corporation is hereby authorized to attest and affix the Corporation' s seal thereto , with such changes therein as the officers executing the same may approve, such approval to be conclu- sively evidenced by such execution thereof. (b) Approval of the Agreement. The loan of the proceeds of the sale o t e Bonds (except for any amount representing accrued interest on the Bonds) by the Corpora- tion to the Owner in order to provide financing for the costs of the Development shall be effected pursuant to the terms and provisions of a loan agreement substantially in the form of the Loan Agreement dated as of March 1 , 1983 (the "Agreement") , by and between the Corporation and the Owner, attached to this resolution as Exhibit B , the form, terms and provisions of the Agreement being hereby authorized and approved, and the President and any Vice President of the Corporation are hereby severally authorized and directed to execute and deliver the Agreement on behalf of the Corporation, and the Secretary or any Assistant Secretary of the Corporation is hereby authorized to attest and affix the Corporation' s seal thereto , with such changes therein as the officers executing the same may approve, such approval to be conclusively evidenced by such execution thereof. -4- (c) Requirement as to Deed of Trust and Collateral Assignment. As a con ition t i. to e actions aut orze in this Section, the Owner shall have executed a deed of trust , assignment of rents and security agreement substantially in the form of the Deed of Trust , Assignment of Rents and Security Agreement dated as of March 1 , 1983 (the "Deed of Trust") , from the Owner to Donald W. Cioban, as mortgage trustee , for the benefit of the_ Corporation, attached to this resolution as Exhibit C, the form, terms and provisions thereof being hereby authorized and approved. The assignment of the Corporation' s rights under the Deed of Trust and the Note (as defined therein) to the Trustee for the benefit of the holders of the Bonds , shall be effected pursuant to the terms and provisions of a collateral assignment and security agreement substantially in the form of the Collateral Assignment and Security Agreement dated as of March 1 , 1983 (the "Collateral Assignment") , from the Corporation to the Trustee , and attached to this Resolution as Exhibit D, the form, terms and provisions of the Collateral Assignment being hereby authorized and approved, and the President and any Vice President of the Corporation are hereby severally authorized and directed to execute and deliver the Collateral Assignment on behalf of the Corporation, and the Secretary or any Assistant Secretary is hereby authorized to attest and affix the Corporation' s seal thereto , with such changes therein as the officers executing the same may approve, such approval to be conclusively evidenced by such execution thereof. (d) Requirement as to Guarantee Agreement. As a condition to the actions authorized in this Section, the Guarantors shall have executed a guarantee agreement substantially in the form of the Guarantee Agreement dated as of March 1 , 1983 (the "Guarantee") , from the Guarantors to the Trustee , attached hereto as Exhibit E, the form, terms and provisions of the Guarantee being hereby authorized and approved. (e) Conditions Precedent to Closing of the Transaction. The actions and obligations authorized in this Section shall be subject to and conditioned upon the receipt by the Corporation at the Closing Date (as hereinafter defined) of (i) a letter of representation from the Owner and the Guarantors , duly authorized and executed by the Owner and the Guarantors , substantially in the form of the Letter of Representation, dated the Closing Date (the "Letter of Representation") and attached to this resolution as Exhibit -5- F, the form, terms and provisions of the Letter of Representation being hereby authorized and approved and the President and any Vice President of the Corporation are hereby severally authorized to signify the Corporation' s acceptance and confirmation of such Letter of Representation by executing the same on behalf of the Corporation in multiple counterparts ; (ii) an investment letter, duly authorized and executed by the Purchasers (as hereinafter defined) , substantially in the form of the Investment Letter, dated the Closing Date (the "Investment Letter") and attached to this resolution as Exhibit G, the form, terms and provisions of such Investment Letter being hereby authorized and approved; (iii) the purchase price for the Bonds ; and (iv) such opinions , evidences , certificates , instruments or other documents as shall be requested by the. Corporation' s Counsel or by Bond Counsel, to evidence due performance or satisfaction by the Owner at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by it. (f) Approval of Sale of the Bonds . The sale and delivery of the Bonds by the Corporation to the following named purchasers (collectively the "Purchasers") is hereby approved and authorized at the par value thereof plus accrued interest from the date of the Bonds until the date of delivery and payment for the Bonds (the "Closing Date") : PURCHASER PRINCIPAL AMOUNT InterFirst Bank-Beaumont $ 500 , 000 Allied Bank Beaumont 500 , 000 First City National Bank of Beaumont 175 , 000 Texas Commerce Bank-Beaumont , N.A. 175 , 000 Parkdale Bank 150 , 000 Texas Bank of Beaumont , Texas 100 , 000 (g) Issuance Furthers the Purposes of the Act. The Board of Directors of the Corporation hereby Inds , determines , recites and declares that the issuance of the Bonds on the terms and conditions set out in this resolution so as to provide financing for the Development is in -6- furtherance of and will promote the public purposes set forth in Section 3 of the Act, including without limitation assisting persons of low and moderate income to obtain decent , safe and sanitary housing at rentals they can afford. (h) Incorporation by Reference. All of the terms and provisions of trie ocuments attached as Exhibits A through G to this resolution shall be and the same are hereby made a part of this resolution. (i) Additional Authorizations to Officers of the Cor o- ration. The officers , employees and agents ot the Corporation, and each of them, shall be and each is expressly authorized, empowered and directed from time to time and at any time to do and perform all acts and things and to execute , acknowledge and deliver in the name and under the corporate seal and on behalf of the Corporation all certificates , financing statements , instruments and other papers , whether or not herein mentioned, as they may determine to be necessary or desirable in order to carry out the terms and provisions of this resolution and of the Bonds to be issued hereunder, as well as the terms and provisions of the Agreement, the Trust Indenture, the Note, the Deed of Trust , the Letter of Representation, the Collateral Assignment and the Guarantee hereby authorized and approved, such determination to be conclusively evidenced by the performance of such acts and things and the execution of any such certificate , financing statement , instrument or other paper. (j ) Effective Date of the Bond Resolution. This resolution shall take effect and be in full force and effect upon and after its passage. (k) Defined Terms . Unless otherwise indicated, all capitalized terms used herein shall have the meanings set forth in (i) this resolution and (ii) the documents which are incorporated herein pursuant to (h) above . This resolution is sometimes herein referred to as the "Bond Resolution" . Section 2 . DATE, DENOMINATION, NUMBERS , AND MATURITIES OF THE BONDS. The Bonds initial y authorized hereby shall be dated March 1 , 1983 , shall be issued and delivered in the form of fully registered bonds , without coupons , payable in installments to the registered holders thereof, or registered assigns , all in the manner hereinafter provided, with the Bonds to be initially payable to the Purchasers in -7- monthly installments on the dates and in the amounts as set forth in Section 5 hereof and to be numbered and issued as follows : NUMBER OWNER DENOMINATION R-001 InterFirst Bank-Beaumont $ 500 , 000 R=002 Allied Bank Beaumont 500 , 000 R-003 First City National Bank of Beaumont 1752000 R-004 Texas Commerce Bank-Beaumont, N.A. 175 , 000 R-005 Parkdale Bank 150 , 000 R-006 Texas Bank of Beaumont , Texas 100 , 000 Section 3 . INTEREST ON THE BONDS. The Bonds initially authorized hereby shall bear interest on the unpaid balance of the principal amount thereof from March 1 , 1983 , to the scheduled due date or to the date - of prepayment or redemption of the principal installments of the Bonds prior to the scheduled due date , at a per annum rate equal to the Bond Interest Rate (as defined in Section 5 hereof) . The interest shall be payable on the dates and in the manner provided in Section 5 . Section 4 . GENERAL CHARACTERISTICS OF THE BONDS. (a) In General. The Bonds initially authorized hereby shall be issued, s all be payable , may or shall be prepaid or redeemed prior to the scheduled principal installment payment dates , may be transferred and assigned, shall have the characteristics , and shall be signed, executed and sealed, all as provided and in the manner indicated in Section 5 . After the Bonds have been authorized to be issued by the Board but prior to the delivery of the Bonds , the Trustee shall authenticate the Bonds by executing the Trustee ' s Certificate of Authentication appearing on the Bonds as provided in Section 5 . In addition, on the date of delivery of the Bonds to the initial purchasers thereof, the Trustee shall fill in the date of delivery of the Bonds in the Delivery Certificate appearing on the Bonds as provided in Section 5 . -8- (b) Re istration Books . The Corporation shall keep or cause to be kept at t e principal corporate trust office of the Trustee books for the registration and transfer of Bonds (the "Bond Registration Books") and the Corporation hereby appoints the Trustee as its registrar and transfer agent (the "Registrar") to keep such books and make such registrations and transfers under reasonable regulations as the Corporation or the Registrar may prescribe; and the Registrar will register or transfer- as herein provided any Bonds upon presentation thereof at such office . The Corporation, the Owner and each Bondholder shall have the right to inspect the Bond Registration Books during the normal business hours of the Trustee. Registration of the Bonds and ownership thereof may be transferred only on the Bond Registration Books upon surrender of the Bond by the registered holder in person or by his duly authorized attorney, by proper written instrument of transfer, in the form and with guaranty of signatures satisfactory to the Registrar, duly executed by such holder or attorney. Upon such surrender for transfer of registration, the Registrar shall make notation DE such transfer on the Bonds in the Assignment section appearing thereon and in the Bond Registration Books . Such transfers of registration shall be made without charge to the holder of such Bonds , but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Bondholder requesting such transfer of registration, as a condition precedent to the exercise of such privilege. (c) Payment to Registered Holder. The person in whose name any Bond shall be registered on the Bond Registration Books may be deemed and treated as the absolute holder thereof for all purposes of this Bond Resolution and the Trust Indenture whether or not such Bond shall be overdue, and the Corporation, the Trustee , and the Owner shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, agreed liquidated damages , if any, and interest on any such Bond shall be made only to such registered holder thereof; but such registration may be changed as provided herein. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (d) Notation of Prepayment. The Corporation hereby appoints the Trustee as the Paying Agent for the Bonds . Upon the prepayment or partial redemption of any Bond, the Trustee , as Registrar and Paying Agent , shall note in the J -9- Prepayment Record appearing on such Bond the amount of such prepayment or redemption, the date said payment was made and the remaining unpaid principal balance of said Bond and shall then have said entry signed by an authorized official of the Trustee. The Trustee shall also record such information in the Bond Registration Books , and the Trustee shall also record in the Bond Registration Books all payments of principal installments on the Bonds when made on their respective due dates . Section 5 . FORM OF BOND. The form of Bond, together with the forms of the various certificates and forms to appear on the Bonds , shall be substantially as follows , with necessary and appropriate variations , omissions , and insertions as permitted or required by this Bond Resolution: f -10- FORM OF BOND NO. $ UNITED STATES OF AMERICA STATE OF TEXAS BEAUMONT HOUSING FINANCE CORPORATION MULTI-FAMILY HOUSING REVENUE BONDS , SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) BEAUMONT HOUSING FINANCE CORPORATION (the "Corporation") , being duly created and organized as a housing finance corporation under the Texas Housing Finance Corporations Act , Article 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the "Act") , and acting on behalf of the City of Beaumont , Texas , hereby promises to pay to , or its registered assigns , the aggregate principal amount of DOLLARS. THIS BOND AND THE SERIES OF BONDS OF WHICH IT IS A PART HAVE BEEN ISSUED UNDER AND PURSUANT TO THE ACT, AND DO NOT CONSTITUTE AN INDEBTEDNESS OR OBLIGATION (LEGAL, GENERAL, SPECIAL, MORAL OR OTHERWISE) OF THE CITY OF BEAUMONT (OR ANY OTHER CITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS) OR OF THE STATE OF TEXAS , OR A LOAN OF CREDIT OF ANY OF THEM, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISIONS. THIS BOND SHALL BE PAYABLE (i) in principal install- ments on the first day of each month in the 180-month period (the "Principal Payment Period") in the amounts shown below commencing on April 1 , 1983 and (ii) with interest thereon, from March 1 , 1983 , on the balance of said principal amount from time to time remaining unpaid, at a per annum rate equal to the Bond Interest Rate (as hereinafter defined) , and at the maximum lawful per annum rate on overdue princi- pal and, to the extent legally permissible, on overdue interest, with interest being payable on said unpaid princi- pal balance during the period from March 1 , 1983 , until this Bond is fully paid, on the first day of each month commenc- ing April 1 , 1983 , in the amounts shown below (or in such other amounts as may be payable after any adjustment to the Bond Interest Rate as hereinafter provided) : t -11- THE TERM "BOND INTEREST RATE" shall mean the rate of 11% per annum, computed on a 365-366 day basis , as adjusted pursuant to the provisions of the next following sentence. Notwithstanding the foregoing, if at any time the Bond Interest Rate exceeds the maximum net interest cost which will produce a net effective interest rate in excess of 15% per annum or such other maximum per annum rate as set out in Article 717k-2 , Vernon' s Annotated Texas Civil Statutes , as amended, then the Bond Interest Rate shall not exceed 15% per annum or such other maximum set out in such Article. THE PRINCIPAL of and interest on this Bond shall be payable in lawful money of the United States of America, without exchange or collection charges . Payment of principal and interest , shall be made to the registered owner by check or draft mailed by InterFirst Bank-Beaumont (the "Trustee" , "Paying Agent" , and "Registrar" for this Bond) or its successor appointed under the Trust Indenture (hereinafter defined) , to the registered holder at its address as it appears on the Bond Registration Books kept by the Trustee; provided that in the alternative such payment may be made by any other method requested in writing by the registered holder, subject to the approval of the Trustee. The final payment of principal on this Bond shall be paid only upon surrender of this Bond to the Trustee for cancellation. Any prepayment or redemption of any principal installments of this Bond shall be made only upon presentation of this Bond to the Trustee , who shall make notation of such prepayment or redemption in the Prepayment Record endorsed hereon. THIS BOND is one of a series of Bonds dated as of March 1 , 1983 , authorized and issued in the aggregate principal amount of $1 , 600 , 000 pursuant to a resolution adopted by the Board of Directors of the Corporation (the "Bond Resolution") on behalf of the City of Beaumont , Texas , all issued or to be issued under a trust indenture , dated as of March 1 , 1983 (the "Trust Indenture") , between the Corporation and the Trustee , pursuant to and in full conformity with the Constitution and the laws of the State of Texas . The Bonds are issued in order to provide funds for the Corporation to lend to Virginia Village Venture, a Texas Joint Venture (the "Owner") , in order to finance the development costs of Virginia Village Development (together with the Owner' s interest in the site thereof, the "Development") . Payment of the principal of, and premium, if any, and liquidated damages , if any, and interest on this Bond has been unconditionally guaranteed on a proportionate basis by C. L. Sherman, Jr. , James J. Conway, Jr. , Wayne D. -12- Sherman, Robert G. Quinn, J. D. Martin III, A. S . Crawford, and F. L. Stanley (the "Guarantors") , pursuant to a guarantee agreement dated as of March 1, 1983 , between the Trustee and the Guarantors (the "Guarantee") . The proceeds of the sale \of the Bonds will be loaned to the Owner on a limited recourse basis pursuant to a loan agreement, dated as of March 1 , 1983 (the "Agreement") , between the Corporation and the Owner, and the Owner' s obligations under the Agreement will be further evidenced by the Owner' s execution and issuance of a limited recourse note (the "Note") which will be in an amount equal to the aggregate principal amount of the Bonds and which will constitute a renewal, extension and settlement of the Owner' s liability under two promissory note acquired by the Corporation incident to issuance of the Bonds . Contemporaneously with the execution of the Agreement , the Owner executed a deed of trust , assignment of rents , and security agreement dated as of March 1 , 1983 (the "Deed of Trust") , pursuant to which the Owner bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee , for the use and benefit of the Corporation, and further granted to the Corporation a security interest in, the Development and certain other properties , in order to secure the payment of the Installment Loan Payments (as defined in the Agreement) and the Note, according to their tenor and effect, and certain other indebtedness of the Owner , and the performance and observance by the Owner of all of the covenants expressed or implied in the Deed of Trust , the Agreement, and the Note; and the Corporation executed a collateral assignment and security agreement dated as of March 1 , 1983 (the "Collateral Assignment") , pursuant to which the Corporation conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , liens , privileges , claims , demands and equities existing and to exist in connection with or as security for payment of the Note , including its rights , titles and interests arising under the Deed of Trust , in order to secure payment of the Bonds according to their tenor and effect and the performance by the Corporation of all the covenants expressed or implied herein and in the Trust Indenture and the Collateral Assignment. ON ANY DATE, the unpaid principal installments of this Bond are subject to optional prepayment or redemption and may be prepaid or redeemed prior to their scheduled due dates , by the Trustee, at the option of the Corporation, upon written notice of the exercise of the option to prepay or redeem delivered to the Trustee by the Corporation not -13- later than the 45th day prior to the date of prepayment or redemption. Such unpaid principal installments may be so prepaid or redeemed as a whole on any date, or in part on any interest payment date (and, if in part, such installment shall be prepaid or redeemed in inverse chronological order of their scheduled due dates , and in amounts not less than all of an unpaid principal installment) , for the principal amount thereof and accrued interest thereon to the date of prepayment or redemption but without any premium. PROMPTLY AFTER ANY DATE ON WHICH the unpaid principal installments of this Bond are subject to mandatory prepayment or redemption as a whole as a result of occurrence of a Taxable Event and a Final Determination of Taxability, all such installments shall be prepaid or redeemed prior to their scheduled due dates by the Trustee, with funds which shall be furnished by the Corporation, on the earliest practicable date , and in all events within sixty days , following the latter of such occurrences as provided for in the Agreement. The prepayment or redemption price in such event shall be equal to the unpaid principal amount of this Bond so prepaid or redeemed, plus accrued interest to the date of prepayment or redemption, plus an additional amount (the "Redemption Premium") calculated by multiplying an amount equal to 1% the unpaid principal amount of this Bond by the number of complete 3-month periods elapsed between the date of the Taxable Event and the actual prepayment or redemption date , with such additional amount being payable on the prepayment or redemption date and with such additional amount being the agreed liquidated damages (for loss of a bargain and not as a penalty) which the holder of this Bond will be due as a result of the loss of the tax exempt status of the interest on this Bond. Such prepayment or redemption price shall constitute the entire amount due with respect to this Bond as a result of the occurrence of a Taxable Event and a Final Determination of Taxability. In the event this Bond has been paid prior to a Final Determination of Taxability, or in the event that notice of prepayment or redemption is given prior to a Final Determination of Taxability, the registered holder of this Bond at the time it is paid shall additionally be entitled to receive the Redemption Premium calculated using the date this Bond is paid in lieu of the actual prepayment or redemption date. ON ANY DATE but only with and to the extent of any surplus funds remaining in the Construction Fund after the r -14- completion of the Development as provided and required by Section 16 of the Bond Resolution, the unpaid principal installments of this Bond shall be prepaid or redeemed prior to the scheduled due dates by the Trustee, in inverse chronological order of their scheduled due dates (in the denominations of $1, 000 or any integral multiple thereof or in amounts not less than all of an unpaid principal installment) , at a prepayment or redemption price equal to the principal amount thereof to be prepaid or redeemed plus accrued interest thereon to the date of prepayment or redemption, and without premium. THE AGREEMENT recites and it is hereby provided that any provision for any payment of this Bond contained herein or in the Agreement shall be held to be subject to reduction to the amount allowed under the usury laws and the public securities laws of the State of Texas as now or hereafter construed by the courts having jurisdiction, and it is agreed by the Corporation and the holder of this Bond that in no event shall usury or any amount in excess of the maximum allowed under such public securities laws be paid or collected with respect to this Bond (whether as or in the form of liquidated damages or otherwise) . AT LEAST 7 DAYS PRIOR to the date fixed for any prepayment or redemption of the unpaid principal installments of this Bond, the Trustee shall cause a written notice of such redemption to be mailed to the registered holder of this Bond addressed to such holder at the address appearing on the Bond Registration Books . By the date fixed for any such prepayment or redemption, due provision shall be made by the Corporation with the Trustee and the Paying Agent for the payment of the principal amount of this Bond which is to be prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption, plus any required prepayment or redemption premium, and any other amounts due to the holder of this Bond. If such written notice of prepayment or redemption is given and if due provision for payment of the redemption price is made , all as provided above, the unpaid principal installments of this Bond which are to be prepaid or redeemed, thereby automatically shall be deemed to have been prepaid or redeemed prior to their scheduled due dates , and they shall not bear interest after the date fixed for prepayment or redemption, and they shall not be regarded as being outstanding except for the right of the holder hereof to receive the redemption price from the Paying Agent out of the funds provided for such payment. Upon presentation of this Bond to the Paying Agent , such unpaid principal r -15- installments which are to be prepaid or redeemed shall be paid at the redemption price. Except as .set forth above, this Bond is not subject to prepayment or redemption prior to maturity. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent is located are authorized by law or executive order to close , then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date of payment. IT IS HEREBY CERTIFIED AND COVENANTED that this Bond has been duly and validly authorized, issued, and delivered; that all acts , conditions , and things required or proper to be performed, exist , and be done precedent to or in the authorization, issuance , and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a special revenue obligation of the Corporation, and that the principal of and interest on this Bond are payable from and secured by a first lien on and pledge of the payments designated as "Installment Loan Payments" to be made or paid, or caused to be made or paid, to the Trustee , pursuant to the Bond Resolution, the Trust Indenture and the Agreement. The Owner, which is a joint venture organized and existing under the laws of the State of Texas , is obligated on a limited recourse basis as provided in the Agreement , to make or pay or cause to be made or paid, without set-off, recoupment, or counterclaim, to the Trustee each such "Installment Loan Payment" for deposit into the Debt Service Fund created for the benefit of the Bonds by the Bond Resolution, in aggregate amounts sufficient to pay and redeem, and provide for the payment and redemption of, the principal of and interest on this Bond, and to pay all other amounts required by the Agreement, the Bond Resolution, and the Trust Indenture when due, subject to and as required by the provisions of the Agreement , the Bond Resolution, and the Trust Indenture. THIS BOND is secured by the Trust Indenture whereunder the Installment Loan Payments are pledged as collateral and the Trustee is custodian of the Debt Service Fund and the Construction Fund, and is obligated to enforce the rights of the holder of this Bond and to perform other duties in the manner and under the conditions stated in the Trust t -16- Indenture. In case an "Event of Default" , as defined in the Trust Indenture , shall occur , the unpaid principal installments of this Bond may be declared to be due and payable immediately upon the conditions and in the manner provided in the Trust Indenture. This Bond is additionally secured by the Collateral Assignment of the Corporation' s rights with respect to the Note and the Deed of Trust. Reference is hereby made to the Bond Resolution, the Trust Indenture, the Deed of Trust, the Agreement and the Collateral Assignment for additional provisions with respect to the nature and extent of the security, the rights , duties , and obligations of the Owner, the Corporation, the Trustee , and the holder of this Bond, the terms upon which this Bond is issued and secured, and the modification of any of the foregoing. THE CORPORATION has reserved the right , subject to the restrictions stated in the Bond Resolution and with the consent of the holders of at least 75% in aggregate principal amount of the Bonds and any Additional Bonds then outstanding (as hereinafter defined) , to issue additional parity revenue bonds ("Additional Bonds") which, when issued and delivered, shall be payable from the Debt Service Fund, and shall be payable from and secured by a first lien on the pledge of "Installment Loan Payments" pursuant to the Agreement and entitled to the benefits of and secured by the Trust Indenture, the Collateral Assignment and the Deed of Trust in the same manner and to the same extent as , and shall be on a parity with, this Bond and all then outstanding Additional Bonds . THE CORPORATION also has reserved the right to amend the Bond Resolution and the Trust Indenture, as provided therein; and under some (but not all) circumstances amendments thereto must be approved by the holders of 75% in aggregate principal amount of the Bonds then outstanding and any Additional Bonds then outstanding. THE BONDS AND any coupons appertaining thereto have been issued under and pursuant to the Act , and are limited obligations of the Corporation and shall be payable solely out of the revenues derived from or in connection with the Agreement , including all sums deposited from time to time pursuant to the Agreement , the Trust Indenture and the Note in the Debt Service Fund established under the Trust Indenture , and in certain events out of amounts attributable to Bond proceeds or amounts secured through exercise of the remedies provided in the Trust Indenture, or in the Deed of Trust, or in the Collateral Assignment upon occurrence of an -17- event of default thereunder, and do not constitute an indebtedness or obligation (legal, general , special , moral or otherwise) of the City of Beaumont (or any other city, county or other municipal or political corporation or subdivision of the State of Texas) or of the State of Texas , or a loan of credit of any of them, within the meaning of any constitutional or statutory provisions . Neither the State of Texas nor the City of Beaumont nor any political corporation, subdivision or agency of the State of Texas shall be obligated to pay the principal of or premium, if any, or liquidated damages , if any, or interest on the Bonds and neither the faith and credit nor the taxing power of the State of Texas , the City of Beaumont , or any other political corporation, subdivision or agency of the State of Texas is pledged to the payment of the principal of or interest on the Bonds . No recourse under this Bond shall be had against any past , present or future officer, director, agent , or representative of the Corporation or of the City of Beaumont. The Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or out of any other revenues of the Corporation, the City of Beaumont , or the State of Texas except those revenues pledged by the Trust Indenture. THIS BOND may be assigned and shall be transferred only on the Bond Registration Books of the Corporation kept by the Trustee , as Registrar, upon the terms and conditions set forth in the Bond Resolution, the Trust Indenture and the Assignment provisions endorsed hereon. Such transfers shall be without expense to the holder hereof, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the holder requesting such transfer as a condition precedent to the exercise of such privilege. The registered holder of this Bond may be deemed and treated by the Corporation, the Trustee, and the Owner, as the absolute owner and holder thereof for all purposes , including payment and discharge of liability upon such Bond to the extent of such payment , and the Corporation, the Trustee , and the Owner shall not be affected by any notice to the contrary. THIS BOND shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Trust Indenture until the Trustee ' s Certificate of Authentication hereon shall have been signed by the Trustee and the Delivery Certificate hereon shall have been completed. -18- IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signatures of the President or any Vice President and the Secretary of the Corporation, and the official seal of the Corporation affixed on this Bond. BEAUMONT HOUSING FINANCE ATTEST: CORPORATION By: Secretary Vice President (CORPORATE SEAL) -19- FORM OF TRUSTEE' S CERTIFICATE OF AUTHENTICATION TRUSTEE' S CERTIFICATE OF AUTHENTICATION This Bond is the Bond initially issued under the pro- visions of the within mentioned Agreement, Bond Resolution, and Trust Indenture. INTERFIRST BANK-BEAUMONT By: Its : Authorized Officer TRUSTEE FORM OF ASSIGNMENT ASSIGNMENT- FOR VALUE RECEIVED, the registered owner and holder of this Bond last listed below sells , assigns , and transfers the within Bond to the Assignee last listed below, and hereby authorizes the transfer of this Bond on the Bond Registration Books of the Trustee. Such assignment shall not be effective until such Assignee presents this Bond to the Trustee for verification of such assignment and gives the Trustee its address to which payments shall be made and the Trustee makes notation of such Assignment below. DATE OF REGISTERED SIGNATURE ASSIGNMENT OWNER/HOLDER ASSIGNEE OF REGISTRAR -20- FORM OF DELIVERY CERTIFICATE DELIVERY CERTIFICATE THIS BOND was delivered to and paid for by the purchaser hereon on FORM OF PREPAYMENT RECORD PREPAYMENT RECORD Principal Name & Title Signature Date Prepayment Remaining of Authorized of of or Principal Officer Authorized Pmt. Redemption Balance Making Entry Officer -21- Section 6. PLEDGE. The Bonds and the interest thereon are and shall be payaETe from and secured by a first lien on and pledge of the payments designated as Installment Loan Payments to be made or paid, or caused to be made or paid, to the Trustee by the Owner, pursuant and subject to the terms and provisions of this Bond Resolution, the Trust Indenture, and the Agreement; and such Installment Loan Pay- ments are further pledged irrevocably to the establishment and maintenance of the Debt Service Fund -hereinafter created. The Bonds are additionally secured as provided in the Collateral Assignment. Section 7 . DEBT SERVICE FUND. (a) Establishment of Debt Service Fund. A separate and special trust fund to be designated and known as the "Debt Service Fund" shall be established by the Corporation with the Trustee for the benefit of the holders of the Bonds pursuant to the Agreement and the Trust Indenture , and maintained as provided in this Bond Resolution and the Trust Indenture, as long as any of the Bonds , or interest thereon, is outstanding and unpaid. (b) Accrued Interest. Immediately after the delivery of the Bon s to the initial purchasers thereof, all accrued interest , if any, received from the proceeds from the sale and delivery of the Bonds , shall be transferred by the Trustee into the Debt Service Fund. (c) Installment Loan Payments . Pursuant to the Agreement and the Trust Indenture, the Owner shall make or pay, or cause to be made or paid, to the Trustee, which shall deposit into the Debt Service Fund, Installment Loan Payments as follows : (1) On or before each interest payment date as provided in Section 5 hereof, an amount which, together with any other amounts then on deposit therein and available for such purposes , will be sufficient to pay the interest coming due on the Bonds on each interest payment date; and (2) On or before each principal payment date as provided in Section 5 hereof, an amount which, together with any other amounts then on deposit therein and available for such purpose, will be sufficient to pay the principal of the Bonds scheduled to be paid on each principal payment date; and -22- (3) On or before any optional or mandatory prepayment or redemption date as permitted or required in Section 5 hereof, an amount which, together with any other amounts then on deposit and available for such purpose, will be sufficient to pay the prepayment or redemption price (including any agreed liquidated damages) specified therein; and (4) Promptly after the occurrence of a Taxable Event and a Final Determination of Taxability, the additional amount required to pay the agreed liquidated damages to the holders of the Bonds for any installments of principal which were unpaid on the date of any Taxable Event, but which were paid or redeemed prior to the prepayment or redemption of all unpaid principal installments after a Final Determination of Taxability, all as provided in Section 5 hereof; and (5) On any date on which the Bonds are declared to be immediately due and payable pursuant to the Trust Indenture, an amount which, together with any other amounts then on deposit and available for such purpose , will be sufficient to pay the principal of all Bonds then outstanding and the interest accrued thereon to such date and Redemption Premium, liquidated damages , if applicable , and the reasonable fees and expenses (including attorneys ' fees) of the Trustee in enforcing the Agreement; and (6) Promptly ' after receipt of each statement and request for payment , an amount equal to the charges of the Trustee for performing the duties of Trustee and Registrar , and the charges of the Paying Agent for the Bonds , as designated in Section 5 hereof, for paying or redeeming principal installments of the Bonds , and paying the interest thereon. In the event the Owner should fail to make , or cause to be made, any of the required Installment Loan Payments set forth in this Section, each such required payment shall continue as an obligation of the Owner until fully paid, and the Owner agrees to pay the same to the Trustee, for the benefit of the holders of the Bonds , with interest thereon, to the extent legally permissible, at the rate of 157 per annum, from the date any such payment was due until payment thereof. -23- (d) Redemption. The Bonds initially authorized hereby shall be subject to redemption, and may or shall be redeemed, as specified in Section 5 hereof. (e) Payments from Debt Service Fund. Except as otherwise specifically provided in this Bond Resolution or the Trust Indenture, the Debt Service Fund shall be used by the Trustee only to pay the principal of, prepayment or redemption premium, if any, agreed liquidated damages , if any, and interest on the Bonds , when due, and the charges of the Trustee , Registrar, and Paying Agent; and the Trustee shall make available to the Paying Agent , out of the Debt Service Fund, the amounts required to pay or redeem the principal of and interest on the Bonds when due, and the Trustee shall make all other payments as required by this Initial Bond Resolution and the Trust Indenture. (f) Immediately Available Funds . The Owner shall make all Insta went Loan Payments in funds that will be immediately available and allow the Paying Agent to pay, in lawful money of the United States of America, the principal , interest , and other amounts with respect to the Bonds , when due. (g) Investment of Funds . Any money held as part of the Debt Service Fund shall e invested or reinvested by the Trustee , upon the written direction of the Approving Officer in any obligations of the United States Government or its agencies or in certificates of deposit of banks approved by the Trustee , including certificates of deposit of the Trustee . The Trustee shall make no investments except as specifically directed by the Approving Officer. The investments of the Debt Service Fund shall be deemed to be a part of such Fund, and, for the purpose of determining the amount of money in such Fund, such investments shall be valued at their cost or market value, whichever is lower. The income and profits , including realized discount on obligations purchased, received from such investments shall be deposited in or credited to the Debt Service Fund, and any losses on investments thereon shall be charged against the Debt Service Fund. If at any time it shall become necessary that some or all of the investments made with the moneys from the Debt Service Fund be redeemed or sold to raise moneys necessary to comply with the provisions of this Bond Resolution or the Trust Indenture, the Trustee shall, without further authorization, effect such redemption or sale, employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any loss resulting from any 1 -24- such investment or resulting from the redemption or sale of any such investment as herein authorized, except that the Trustee shall be liable for (1) any loss resulting from its willful or negligent failure, within a reasonable time after receiving the written direction from the Approving Officer, to make, redeem, or sell any investment in the manner provided for herein, and (2) except for any redemption or sale made pursuant to the next preceding sentence of this paragraph, for any loss resulting from the making, redeeming, or selling of any investment which was not authorized by written direction of the Approving Officer. If the Trustee is unable, after reasonable effort and within a reasonable time, to make, redeem, or sell any such investment , it shall so notify in writing the Approving Officer and thereafter the Trustee shall be relieved of all responsibility with respect thereto. In the event of any such loss , the Owner shall make additional deposits to restore same if and to the extent required to enable the Trustee to make all payments required to be made from the Debt Service Fund, and such additional deposits shall constitute additional amounts of "Installment Loan Payments" . Section S . SECURITY FOR FUNDS . All uninvested money in all Funds established pursuant to this Bond Resolution (including the Debt Service Fund and the Construction Fund) shall be secured by the Trustee in such manner and to the extent as may be directed by the Approving Officer and approved by the Trustee. Section 9 . THE OWNER' S PAYMENTS. (a) Limitations on Owner' s Obligation. The Owner has covenanted in the Agreement and the Trust Indenture, and, by the approval of this Bond Resolution, the Owner further has obligated itself and agreed on a limited recourse basis , regardless of and notwithstanding any provisions of the Agreement (other than Sections 6 . 01 and 6 . 02 thereof relating to merger, consolidation, transfer of assets , and assignment) and regardless of the provisions of any other agreement or contract to the contrary, to make or pay or cause to be made or paid, without set-off, recoupment, or counterclaim but on a limited recourse basis only, the Installment Loan Payments to the Trustee in the amounts required by Section 7 (c) of this Bond Resolution to be made into the Debt Service Fund, and to make such payments on or before the dates specified in this Bond Resolution and the Trust Indenture; and said payments by the Owner shall be and constitute the Installment Loan Payments as contemplated and -25- required by the Agreement. Each Bondholder is and shall be entitled to rely unconditionally on the agreements , covenants , and representations set forth in this Bond Resolution and the Trust Indenture. (b) Prepayments . It is further understood that the Owner may prepay all or any part of each Installment Loan Payment , and any such prepayment , and any earnings thereon, shall be applied by the Trustee to the payment of each Installment Loan Payment; provided that the prepayment or redemption at any time of any unpaid principal installments of the Bonds prior to their due dates , with funds from any source (whether from Installment Loan Payments or otherwise) , shall not relieve the Owner of its obligation to make or pay, or cause to be made or paid, each Installment Loan Payment as specified in Section 9(a) above, when due with respect to any remaining unpaid principal installments of the Bonds . Section 10 . ADDITIONAL PARITY BONDS. (a) Additional Bonds . The Corporation -reserves the right, upon the request of the Owner but only with the consent of the holders of at least 75% in aggregate principal amount of the Bonds and any Additional Bonds (as hereinafter defined) then outstanding, to issue additional parity revenue bonds ("Additional Bonds") in any amounts , for any. lawful purpose or purposes , including the refunding of any outstanding Bonds . Such Additional Bonds., along with the Bonds authorized by this Bond Resolution, shall be considered, constitute , and be "Bonds" as defined in, and for all purposes of, the Agreement and the Trust Indenture. When issued and delivered, such Additional Bonds , the redemption premium, if any, agreed liquidated damages , if any, and the interest thereon shall be payable from the Debt Service Fund, and shall be payable from and secured by a first lien on and pledge of Installment Loan Payments pursuant to the Agreement , and secured by the Trust Indenture and the Collateral Assignment in the same manner and to the same extent as , and be on a parity with, all then outstanding Bonds and Additional Bonds . Such Additional Bonds may be issued in one or more series or issues , in various principal amounts , maturing at different times , bearing interest at different rates , be payable in installments or otherwise be redeemable prior to maturity, with or without redemption premium, on whatever terms or prices , and may contain such other provisions as may be provided in any Bond Resolution authorizing the issuance of -26- such Additional Bonds . It is provided, however, that no series or issue of Additional Bonds shall be issued unless : (i) In the opinion of Bond Counsel (A) the issu- ance of such Additional Bonds will not adversely affect the exemption from federal income taxation of the interest on the then outstanding Bonds and Additional Bonds , or affect the validity of the then outstanding Bonds or Additional Bonds and (B) such Additional Bonds are secured in the same manner and to the same extent as and are on a parity with all then outstanding Bonds and Additional Bonds ; (ii) A certificate is executed by the President or any Vice President and the Secretary of the Corporation to the effect that no default exists in connection with the Bonds or the Trust Indenture (or any amendment or supplement thereto) or with any of the covenants or requirements of this Bond Resolution or the Bond Resolutions (or any amendments or supplements thereto) authorizing the issuance of all then outstanding Bonds and Additional Bonds , and that the Debt Service Fund contain-s the amount then required to be on deposit therein; (iii) The Bond Resolution authorizing the issuance of such series or issue of Additional Bonds provides for additional Installment Loan Payments to be deposited into the Debt Service Fund in amounts sufficient to pay all principal of, redemption premium, if any, agreed liquidated damages , if any, and interest on such Additional Bonds , together with all Trustee, Registrar, and Paying Agent fees and expenses attributable to such Additional Bonds ; (iv) The Approving Officer and the Trustee , but only with the consent of the holders of at least seventy five percent (75%) of the then outstanding principal amount of the Bonds and Additional Bonds , if any, approve in writing the Bond Resolution authorizing the issuance of such series or issue of Additional Bonds , as required by the Agreement; and (v) The Trustee, Paying Agent, and principal and interest payment dates during any year in which principal and interest on such Additional Bonds are scheduled to be paid, are the same for the Additional Bonds and the Bonds . -27- (b) Amendments to Trust Indenture Unnecessary. It shall not a necessary or required that the—Trust Indenture be amended or supplemented to cause any series or issue of Additional Bonds to be secured by the Trust Indenture. All that shall be necessary or required to cause any such Addi- tional Bonds to be secured by the Trust Indenture is for the Corporation to deliver to the Trustee a certified copy of the Bond Resolution authorizing their issuance prior to the delivery of such Additional Bonds . Section 11. SPECIAL COVENANTS . The Corporation fur- ther covenants as follows : (a) Installment Loan Pa ents Pledged to Bonds Only. Other than f or t e payment of the Bonds and except as provided in this Bond Resolution, the Trust Indenture and the Collateral Assignment , the Installment Loan Payments , the Deed of Trust and the Note have not in any manner been pledged to the payment of any debt or obligation of the Corporation. (b) Non-Encumbrance. While any of the Bonds are outstanding , the Corporation will not (except with respect to the Bonds and any Additional Bonds and except as provided in the Agreement , any Bond Resolution, or the Trust Indenture) in any manner whatsoever create, assume , or suffer to exist, directly or indirectly, any mortgage, lien, encumbrance, pledge, or charge against the Debt Service Fund, the Installment Loan Payments , the Construction Fund, the Deed of Trust, the Note, or any property or moneys deposited with the Trustee. (c) Performance by Corporation. The Corporation will carry out all of its covenants and obligations under this Bond Resolution; and the Corporation may be required to carry out such covenants and obligations by all legal and equitable means , including, but without limitation, actions for specific performance and the use and filing of mandamus proceedings in any court of competent jurisdiction against the Corporation. (d) Certain Modifications Prohibited. The Corporation covenants and agrees that it will not execute or permit the execution of any contract or agreement, or terminate or amend the Agreement , in any manner that would relieve or abrogate the obligations of the Owner to make or pay, or cause to be made or paid, when due, all Installment Loan Payments , in the manner and to the extent required by the Agreement, this Bond Resolution, and the Trust Indenture , or -28- which would change or affect Sections 4 . 04 , 4 . 05 , 4 . 06 , 6 . 01 and 6 . 02 of the Agreement without the written consent of all of the Bondholders and the Trustee. Section 12 . THE BONDS ARE SPECIAL OBLIGATIONS. The Bonds and any coupons appertaining thereto are limited obligations of the Corporation and shall be payable solely out of the revenues derived from or in connection with the Agreement, including all , sums deposited from time to time pursuant to the Agreement , the Trust Indenture and the Note in the Debt Service Fund established under the Trust Indenture, and in certain events out of amounts attributable to Bond proceeds or amounts secured through exercise of the remedies provided in the Trust Indenture, or in the Deed of Trust , or in the Collateral Assignment upon occurrence of an event of default thereunder, and do not constitute an indebtedness or an obligation (legal, general , special , moral or otherwise) of the City of Beaumont (or any other city, county or other municipal or political corporation or subdivision of the State of Texas) or of the State of Texas , or a loan of credit of any of them within the meaning of any constitutional or statutory provisions . Neither the State of Texas nor the City of Beaumont nor any political corporation, subdivision or agency of the State of Texas shall be obligated to pay the principal of or premium, if any, or liquidated damages , if any, or interest on the Bonds and neither the faith and credit nor the taxing power of the State of Texas , the City of Beaumont, or any other political corporation, subdivision or agency of the State of Texas is pledged to the payment of the principal of or interest on the Bonds . No recourse under this Bond shall be had against any past , present or future officer, director, agent , employee or representative of the Corporation or of the City of Beaumont. The Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or out of any other revenues of the Corporation, the City of Beaumont , or the State of Texas except those revenues pledged by the Trust Indenture. Section 13 . AMENDMENTS. (a) Amendment with Consent of Holders of 75% of the Bonds . Su j ect to approval in writing by the Corporation (witTi the consent of the Approving Officer of the Owner) , the holders of 757 in aggregate principal amount of the then outstanding Bonds shall have the right from time to time to approve any amendment to any Bond Resolution or to the Trust Indenture (provided that the Trustee must approve any amendment to the Trust Indenture) which may be deemed f -29- necessary or desirable by the Corporation; provided, however, that nothing herein contained shall permit or be construed to permit the amendment , without the consent of the holder of each of the then outstanding Bonds affected thereby, of the terms and conditions of any Bond Resolution, the -Bonds , or the Trust Indenture , so as to: (1) change the Debt Service Fund requirements , interest payment dates , mandatory redemption provisions , or the due date or dates , or the maturity or maturities of the outstanding Bonds ; (2) reduce the rate of interest borne by any of the outstanding Bonds ; (3) reduce the terms of the principal of, redemption premium, if any, liquidated damages , if any, or interest on the outstanding Bonds , or impose any conditions with respect to such payments ; (4) modify the terms of payment of principal of, redemption premium, if any, liquidated damages , if any, or interest on the outstanding Bonds , or impose any conditions with respect to such payments ; (5) affect the rights of the holders of less than all of the Bonds then outstanding; (6) decrease the minimum percentage of the principal amount of Bonds necessary for consent to any such amendment; or (7) alter the obligations of the Owner to pay Install- ment Loan Payments in the manner and to the extent provided in the Agreement, this Bond Resolution, and the Trust Indenture. (b) Notice of Amendment. If at any time the Corporation shall desire to amend any Bond Resolution or the Trust Indenture under this Section, the Corporation shall file a copy of the proposed amendment at the principal office of the Trustee and shall cause notice of the proposed amendment to be published at least once in a financial newspaper, journal or publication of general circulation in The City of New York, New York, or in the State of Texas , during each calendar week for at least two successive calendar weeks . If, because of temporary or permanent suspension of the publication or general circulation of all -30- such financial newspapers , journals and publications , it is impossible or impractical to publish such notice in the manner provided herein, then such publication in lieu thereof as shall be made by the Trustee shall constitute a sufficient publication of notice. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Trustee for inspection by all owners of Bonds . Such publication is not required, however, if notice in writing is given to each holder of Bonds . (c) Consent to Amendment. Whenever at any time (but not less than 30 days nor more than one year from the date of the first publication of said notice or other service of written notice) the Corporation shall receive an instrument or instruments executed by the holders of at least 75% in aggregate principal amounts of all Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and shall specifically consent to and approve such amendment , the Corporation may adopt the amendatory resolution in substantially the same form. (d) Effect of Amendment. Upon the adoption of any amendatory reso ution pursuant to the provisions of this Section, any such Bond Resolution or the Trust Indenture, shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights , duties , and obligations of all the Bondholders under such amendatory resolution or the Trust Indenture shall thereafter be deter- mined and exercised subject in all respects to such amendments . (e) Consent of Bondholders . Any consent given by a Bondholder pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication or other giving of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Bond during such period. Such consent may be revoked at any time after six months from the date of the first publication or other giving of such notice by the Bondholder who gave such consent, or by a successor in title , by filing notice thereof with the Trustee and the Corporation, but such revocation shall not be effective if the holders of 75% in aggregate principal amount of the then outstanding Bonds have, prior to the attempted revocation, consented to and approved the amendment. -31- (f) Ownership of the Bonds . For the purpose of this Section, the fact of being a Bondholder , the amount and numbers of such Bonds , and the date of being a Bondholder may be conclusively presumed, or may be proved by an affidavit satisfactory to the Corporation and the Trustee of the person claiming to be such Bondholder, or by a certificate executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date therein mentioned such person has on deposit with such trust company, bank, banker, or other depository, the Bonds described in such certificate, or in any other manner, whether or not the Bonds are so deposited, as the Trustee may approve. The Corporation may conclusively presume that the status of any Bondholders will continue until written notice to the contrary is served upon the Corporation. (g) Amendments Without Consent. Notwithstanding the provisions of (a) through (f) of t is Section, and without publication of the proposed amendment and without the consent of the Bondholders , but subject to approval of the Approving Officer and, in the case of any amendment to the Trust Indenture, with the approval of the Trustee , the Corporation may, at any time , amend any Bond Resolution or the Trust Indenture , to cure any ambiguity or cure, correct, or supplement any defective or inconsistent provision contained therein, or make any other change that does not in any respect materially and adversely affect the interest of the Bondholders , provided that no such amendment shall be made contrary to the proviso to Section 13 (a) above , and a duly certified or executed copy of each such amendment shall be filed with the Trustee. (h) Special Exception. The provisions of this Section 13 shall have no application to the right of the Corporation to amend its Rules and Regulations pertaining to levels of low and moderate income as set forth in Section 19 hereof, and the Corporation shall be permitted to make any such amendments as provided therein. Section 14 . ESTABLISHMENT OF CONSTRUCTION FUND. (a) Deposit of Bond Proceeds into Construction Fund. Prior to or immediately a ter the sale and delivery of t e Bonds authorized hereby, the Corporation shall establish the Construction Fund with the Trustee, as defined in and required by the Agreement. The Corporation shall deposit all of the proceeds from the sale and delivery of the Bonds authorized hereby into the Construction Fund. The Trustee shall draw on and use the Construction Fund as hereinafter -32- provided. The amount so deposited into the Construction Fund shall constitute the Loan made to the Owner by the Corporation as contemplated and provided in the Agreement. (b) . Investment of Money in Construction Fund. Any money held as part of the Construction Fund, other than the amounts described in Section 15 (a) , shall be invested or reinvested by the Trustee upon the written direction of the Approving Officer in obligations of the United States government or its agencies or in certificates of deposit of banks approved by the Trustee, including certificates of deposit of the Trustee. The Trustee shall make no investments except as specifically directed in writing by the Approving Officer. The investments of the Construction Fund shall be deemed to be a part of the Construction Fund, and for the purpose of determining the amount of money in the Construction Fund, such investments shall be valued at their cost or market value , whichever is lower. The income and profits (including realized discount on obligations) received from such investments shall be deposited in or credited to the Construction Fund, and any losses on investments shall be charged against the Construction Fund. Upon the written direction of the Approving Officer , the Trustee shall redeem or sell all or any designated part of such investments employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any loss resulting from the redemption or sale of any such investment as herein authorized; except that , notwithstanding any provisions of the Agreement , the Trustee shall be liable for (1) any loss resulting from its willful or negligent failure , within a reasonable time after receiving the written direction from the Approving Officer, to make, redeem, or sell any investment in the manner provided for herein, and (2) any loss resulting from the making, redeeming, or selling of any investment which was not authorized by written direction of the Approving Officer. If the Trustee is unable , after reasonable effort and within a reasonable time after receipt of the required written direction, to make, redeem, or sell any such investment , it shall so notify in writing the Approving Officer, and thereupon the Trustee shall be relieved of all liability or responsibility with respect thereto . (c) Deposit of Accrued Interest , Income, and Profits . Any accrued interest received from _t 7e sale of- the Bonds , and all income and profits received from the investment of the Construction Fund shall, as soon as practicable after any receipt thereof has been deposited in or credited to the -33- Construction Fund, be transferred by the Trustee and deposited into the Debt Service Fund to be used to pay interest on the Bonds during the period of construction of the Development. Section 15 . PAYMENTS FROM CONSTRUCTION FUND. (a) Corporation ' s Administrative Overhead Ex enses and Other Costs . Immediately after the de ivery of the Bonds authorized hereby, the Trustee shall pay directly to the Corporation the amount which is agreed upon by the Corporation and the Owner and which will reimburse the Corporation for its application fee and its administrative and overhead expenses directly attributable and chargeable to the costs of issuance of the Bonds authorized hereby. Also , immediately after the delivery of the Bonds authorized hereby, the Trustee shall pay directly out of the Construction Fund, promptly after receiving the bills or statements therefor, all of the actual expenses and costs of issuance of such Bonds , including , without limitation, financing charges , commitment fees , printing and engraving expenses , the fees and expenses of accountants , financial advisors , and attorneys , and the initial fees and expenses of the Trustee. (b) Reimbursement for and Payment of Cost of the Development. Su ject and subordinate to making the payments required by the preceding paragraph, the Trustee shall make such payments from the Construction Fund to enable the Owner to pay, or to reimburse the Owner for paying, any Cost of the Development , from time to time upon receipt by the Trustee of a request of the Owner signed by the Approving Officer. Such request shall be accompanied by a certificate (in the form attached to the Agreement) stating with respect to each payment as follows : (i) the expenditures , in summary form, as to which payment is to be made or for which reimbursement is requested; (ii) that the amounts requested are to be or have been paid by the Owner for interest during construc- tion, acquisition and development of property, or to contractors , subcontractors , materialmen, engineers , architects , or other persons who will perform or have performed necessary or appropriate services or will supply or have supplied necessary or appropriate materials for the provision, acquisition, construction, renovation, reconstruction, rehabilitation, repair, -34- alteration, improvement or extension of the Develop- ment , as the case may be , and that , to the best of the knowledge of the person delivering the certificate , the fair value of such interest, property, services , or materials is not exceeded by the amounts requested to be paid; (iii) that no part of the several amounts requested to be paid to the Owner as stated in such certificate has been or is the basis for the payment of any money in any previous or then pending request from the Construction Fund or any other source; (iv) that the payment of the amounts requested will not result in a breach of any of the covenants of the Owner contained in the Agreement; and (v) that the expenditure of such amounts to be paid, when added to all previous disbursements from the Construction Fund, will result in at least 92% of the total of such disbursements , other than disbursements for issuance expenses , being used to provide , acquire , construct , rehabilitate , renovate , improve , alter, equip , and furnish a project for residential rental property that constitutes an exempt facility (within the meaning of Section 103 (b) (4) (A) of the Code) . (c) Reliance by Trustee. The Trustee shall rely fully on any request and certificate delivered pursuant to this Section and shall not be required to make any investigation in connection therewith. The Trustee may request from time to time, and the Owner shall furnish, supporting documentation for any amounts requested under Section 15 (b) (ii) above. If amounts paid by the Trustee with respect to any portion of the Development should exceed the cost thereof, the Owner shall promptly repay such overpayment into the Construction Fund. Section 16 . SURPLUS CONSTRUCTION FUNDS. (a) Disposition of Surplus Funds . The completion of the Development shall e conclusively evidenced, and the date of completion shall be established by a written certificate of completion to be signed and delivered as provided in the Agreement. If, upon the completion of the Development , there shall be any surplus funds remaining in the Construction Fund not required to provide for the payment of the Cost of the Development, or if any funds are -35- on hand in the Construction Fund at the time of the release of the Trust Indenture under the terms thereof, then any such funds shall be used immediately to prepay or redeem principal installments of the Bonds , in inverse chronological order, in the manner set forth in Section 5 hereof for the prepayment or redemption of principal - installments of the Bonds with surplus Construction Fund moneys , to the extent of any such available funds ; provided that prior to such use , the Corporation and the Trustee shall have been furnished with an unqualified opinion of Bond Counsel to the effect that the use of moneys from the Construction Fund for such purpose will be lawful and will not impair the exemption of interest on the Bonds from federal income taxation; and provided further that the Owner shall deposit into the Construction Fund prior to such prepayment or redemption an amount sufficient to cause the total amount in the Construction Fund to be equal to (i) an integral multiple of $1, 000 , or (ii) not less than all of the unpaid principal installment or installments to be prepaid or redeemed. (b) Disposition of Construction Fund upon Acceleration and Redemption. It the Trustee shall—declare the principal of the Bonds and the interest accrued thereon immediately due and payable as the result of an Event of Default specified in the Trust Indenture , or if the Bonds are optionally or mandatorily prepaid or redeemed prior to maturity as a whole in accordance with their terms , any amounts remaining in the Construction Fund shall be used immediately by the Trustee for the purpose of paying principal of, redemption premium, if any, agreed liquidated damages , if any, and interest on the Bonds when due. Section 17 . DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds . In the event any of the outstanding Bonds authorized hereby are damaged, mutilated, lost, stolen, or destroyed, the .Corporation shall execute, and the Trustee shall authenticate, a new Bond of the same principal amount and maturity of the damaged, mutilated, lost, stolen, or destroyed Bond in exchange and substitution for such Bond or in lieu of and substitution for such Bond. (b) Application for Substitute Bonds . Application for exchange and substitution of damaged, mutilated, lost , stolen, or destroyed Bonds shall be made to the Corporation. In every case, the applicant for a substitute Bond shall furnish to the Corporation and to the Trustee such security -36- or indemnity as may be required by them to save each of them and the Paying Agent harmless . In every case of loss , theft , or destruction of a Bond, the applicant shall also furnish to the Corporation and to the Trustee evidence to their satisfaction of the loss , theft , or destruction, and of the ownership of the lost Bond. In every case of damage or mutilation of a Bond, the applicant shall surrender the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, agreed liquidated damages , if any, or interest on the Bond, the Corporation may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a substitute Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Substitute Bonds . Prior to the issuance of any substitute Bond, the Corporation and the Trustee may charge the applicant for such Bond with all legal , printing, and other expenses in connection therewith. Every substitute Bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Corporation whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone , and shall be entitled to all the benefits of the Trust Indenture and this Bond Resolution equally and proportionately with any and all other Bonds duly issued under this Bond Resolution. (e) Authorit . for Issuing Substitute Bonds . This Bond Resolution shall constitute sufficient authority for the issuance of any such substitute bonds without necessity of further action by the Board of Directors of the Corporation or any other body or person, and the issuance of such substituted Bonds is hereby authorized, notwithstanding any other provisions of this Bond Resolution, except to the extent otherwise required by law. Section 18 . NO ARBITRAGE. The Corporation and the Owner have covenanted to and with the purchasers of the Bonds that they will make no use of the direct or indirect proceeds thereof at any time throughout the term thereof which would cause the Bonds to be arbitrage bonds within the meaning of Section 103 (c) of the Code or any Regulations or t -37- rulings pertaining thereto; and by this covenant the Corporation and the Owner are obligated to comply with the requirements of the aforesaid Section 103(c) and all applicable and pertinent Regulations and rulings relating to arbitrage bonds . Section 19 . ADOPTION OF RULES AND REGULATIONS AS TO LOW AND MODERATE INCOME LEVELS. Pursuant to and as required by the Act , t e Board of Directors of the Corporation hereby finds and determines and hereby adopts as a part of the Rules and Regulations of the. Corporation effective as of January 1 , 1983 , that for purposes of occupancy of dwelling units in the Development, a person of low and moderate income shall be a person whose adjusted gross income , together with the adjusted gross incomes of all persons who intend to reside with such person in one dwelling unit within the Development , did not exceed $40 , 000 . 00 for the calendar year 1982 . It is expressly stipulated that (i) the Corporation shall retain the right to modify the levels of low and moderate income for purposes of the Act and this resolution at any time and from time to time while any of the Bonds may be outstanding without the consent of any other person or entity (including without limitation the Trustee, the Owner or any Bondholder) , and (ii) the income levels now or hereafter established by the Corporation as provided in this Section have been or will be determined solely for purposes of compliance with -the Act , and nothing contained herein shall affect the Owner' s obligation to rent dwelling units in the Development to individuals of low or moderate income as defined in the Code and the Regulations and rulings thereunder in order to qualify (and maintain qualification of) the Bonds as tax-exempt bonds under Section 103 (b) (4) (A) of the Code. THIS RESOLUTION PASSED and APPROVED this 2nd day of March, 1983 . f -38- TRUST INDENTURE BETWEEN BEAUMONT HOUSING FINANCE CORPORATION AND INTERFIRST BANK-BEAUMONT TRUSTEE RELATING TO BEAUMONT HOUSING FINANCE CORPORATION $1, 600 , 000 MULTI-FAMILY HOUSING REVENUE BONDS SERIES 1983 (VIRGINIA VILLAGE DEVELOPMENT) Dated as of March 1 , 1983 f ���5v TABLE OF CONTENTS PAGE PREAMBLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 GRANTING CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1 . 01 Definitions . . . . . . . . . . . . . . . . . . . 4 Section 1 . 02 Additional Definitions and Interpretations . . . . . . . . . . . . . . . . . 7 ARTICLE II ACCEPTANCE OF TRUST Acceptance of Trust. . . . . . . . . . . . . . . . . 8 ARTICLE III DEBT SERVICE FUND AND CONSTRUCTION FUND Debt Service Fund and Construction Fund. . . . . . . . . . . . . . . . . . . 8 ARTICLE IV NOTICE TO OWNER Notice to Owner. . . . . . . . . . . . . . . . . . . . . 8 ARTICLE V ACCOUNTS AND RECORDS Section 5 . 01 Separate Records to be Kept. . . . . . . . . 9 Section 5 . 02 Annual Report. . . . . . . . . . . . . . . . . . . . . . . 9 Section 5 . 03 Right to Inspect. . . . . . . . . . . . . . . . . . . . 9 ARTICLE VI ENFORCEMENT OF RIGHTS IN CASE OF DEFAULT Section 6. 01 Appointment of Trustee and Rights of Holder. . . . . . . . . . . . . . . . . . . . 10 Section 6 . 02 Control by Trustee. .. . . . . . . . . . . . . . . . 10 Section 6 . 03 Events of Default. . . . . . . . . . . . . . . 11 Section 6 . 04 Declaration of Principal ands Interest Due. . . . . . . . . . . . . . . . . . . . . . . . 12 Section 6 . 05 Enforcement by Trustee. . . . . . . . . . . . . . 13 Section 6 . 06 Non-Exclusive Remedies . . . . . . . . . . . . . . 13 Section 6 . 07 Waiver of Defaults . . . . . . . . . . . . . . . . . . 14 Section 6 . 08 Discretion of Trustee. . . . . . . . . . . . . . . 14 Section 6 . 09 Application of Moneys . . . . . . . . . . . . . . . 14 Section 6 . 10 Judicial Proceedings . . . . . . . . . . . . . . 16 Section 6 . 11 Enforcement' of Remedies Without Possession of Bonds . . . . . . . . . . . . . . . . . 16 Section 6 . 12 Direction of 75% in Principal Amount of Bondholders . . . . . . . . . . . . . . . 16 Section 6 . 13 Notice of Default. . . . . . . . . . . . . . . 16 Section 6 . 14 Concurrence of Bondholders . . . . . . . . . . 17 Section 6 . 15 Notice to Owner of Past Due Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VII CONCERNING THE TRUSTEE Section 7 . 01 Not Accountable For Bond Proceeds . . . 17 Section 7 . 02 Reliance by Trustee. . . . . . . . . . . . . . . . . 18 Section 7 . 03 Compensation. . . . . . . . . . . . . . . . . . . . 18 Section 7 . 04 Limited Responsibilities. . . . . . . . . . . . 19 Section 7 . 05 Advice. . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 7 . 06 Trustee May Own Bonds . . . . . . . . . . . . . . . 20 Section 7 . 07 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 7 . 08 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ARTICLE VIII SUCCESSOR TRUSTEE Section 8. 01 Resignation of Trustee. . . . . . . . . . . . . . 20 Section 8 . 02 Removal of Trustee. . . . . . . . . . . . . . . . 21 Section 8 . 03 Appointment of Successor Trustee. . . . 21 Section 8 . 04 Transfer to Successor Trustee. . . . . . . 22 Section 8. 05 Merger or Consolidation of Trustee. . 22 1 s ARTICLE IX RELEASE OF INDENTURE Section 9. 01 Satisfaction of Indebtedness and Release of Indenture. . . . . . . . . . . . . . 22 ARTICLE X AMENDMENTS Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE XI MISCELLANEOUS PROVISIONS Section 11 . 01 Acknowledgments and Ownership of Bonds . . . . � . . . . . . . . . . . . . . . . 23 Section 11 . 02 Trustee May RequireProof of Ownership. . . . . . . . . . . . . . . . . . . . . 24 Section 11 . 03 Consent of Bondholders . . . . . . . . . . . . . . 24 Section 11 . 04 Survival of Valid Bonds . . . . . . . . . . . . . 24 Section 11 . 05 Unclaimed Funds . . . . . . . . . . . . . . . . . . . . . 25 Section 11 . 06 Rights of Parties. . . . . . . . . . . . . . . . . . . 25 Section 11 . 07 Severability. . . . . . . . . . . . . . . . . . . . . 25 Section 11 . 08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE XII RECORDING Section 12. 01 Corporation and Trustee toRecord. . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 12 . 02 Non-Encumbrance. . . . . . . . . . . . . . . . . . . . . 26 TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ACKNOWLEDGMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 EXHIBITS Exhibit A Schedule of Trustee Fees THE STATE OF TEXAS § TRUST INDENTURE COUNTY OF JEFFERSON § This Trust Indenture, dated as of March 1 , 1983 , executed by and between Beaumont Housing Finance Corporation, duly organized and created as a housing finance corporation under the Texas Housing Finance Corporations Act , Art. 12691-7 , Vernon' s Annotated Texas Civil Statutes , as amended (the "Act") , and InterFirst Bank-Beaumont , a state banking corporation duly organized and existing under the laws of the State of Texas and having its principal office in the City of Beaumont, Texas , as Trustee (the "Trustee") : W I T N E S S E T H: WHEREAS , the Act authorizes and empowers the Corporation to issue revenue bonds on behalf of the City of Beaumont , Texas (the "City") , for the purpose of providing financing for residential developments within the City and intended to be occupied substantially (at least 90%) by persons of low and moderate income, as determined in Rules and Regulations adopted by the Board of Directors of the Corporation; and WHEREAS , in order to finance the cost of such developments , the Corporation is authorized by the Act to issue revenue bonds payable from the revenues derived from repayment of loans made to owners of such developments; and WHEREAS , the Owner (as hereinafter defined) has heretofore acquired certain real property interests in the Site (as hereinafter defined) and the Facilities (as hereinafter defined) located thereon; and WHEREAS , the Corporation has entered into the Agreement (as hereinafter defined) with the Owner, providing for (i) a loan from the Corporation to the Owner to provide financing for a portion of the Cost of the Development (as hereinafter defined) , and (ii) the repayment of such loan by the Owner; and WHEREAS, contemporaneously with the execution of the Agreement , the Owner has executed that certain Deed of Trust , Assignment of Rents and Security Agreement, dated as of the date hereof (as hereinafter defined) , pursuant to which the Owner bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee , for the use and benefit of the Corporation, and further granted unto the Corporation a security interest in, the Development and certain other properties of the Owner, in order to secure the payment of the Installment Loan Payments (as hereinafter defined) on the Note (as hereinafter defined) , according to their tenor and effect, and certain other indebtedness of the Owner and the performance and observance by the Owner of all the covenants expressed or implied in the Deed of Trust , the Bond Resolution, the Agreement and . the Note; and WHEREAS, in order to provide funds for the Corporation to loan to the Owner, the Corporation now proposes to issue its Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , in the aggregate principal amount of $1,600 , 000 pursuant to this Trust Indenture and in accordance with the Bond Resolution (as hereinafter defined) ; and WHEREAS, contemporaneously with the execution of this Trust Indenture and the Agreement , the Corporation has executed that certain Collateral Assignment and Security Agreement (as hereinafter defined) , dated as of the date hereof, pursuant to which the Corporation has conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , estates , real and personal property, liens , privileges , claims and demands and equities existing and to exist in connection with or as security for payment of the Note, including its rights , titles and interests arising under the Deed of Trust in order to secure payment of the Bonds (as hereinafter defined) according to their tenor and effect and the performance by the Corporation of all the covenants expressed or implied herein, therein and in the Bonds ; and WHEREAS, the Corporation also desires to provide for the issuance from time to time in the future of Additional Bonds (as hereinafter defined) for the purpose of defraying the costs of completing, enlarging, rehabilitating, improving or expanding the Development, or refunding any Original Bonds (as hereinafter defined) or series of Additional Bonds theretofore issued and outstanding under this Trust Indenture; and WHEREAS, all things necessary to make the Original Bonds , when- issued, executed and delivered by the Corporation and authenticated by the Trustee pursuant to -2- this Trust Indenture, the valid, legal and binding limited obligations of the Corporation, and to constitute this Trust Indenture as a valid pledge of certain income and revenues derived from repayment of the loan for the payment of the principal of, premium, if any, agreed liquidated damages , if any, and interest on the Bonds authenticated and delivered under this Trust Indenture, have been performed and the creation, execution and delivery of this Trust Indenture, and the creation, execution and issuance of the Original Bonds , subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH: The Corporation, in consideration of the premises and acceptance by the Trustee of the trusts hereby created, and of the purchase and acceptance of the Bonds by the owners thereof, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and for the purpose of securing and providing for the payment of the principal of, redemption premium, if any, agreed liqui- dated damages , if any, and interest on the Bonds according to their tenor and effect and the performance and observance by the Corporation of all the covenants expressed or implied herein and in the Bonds , has granted, assigned, transferred, pledged, set over, and confirmed, and by these presents does grant , assign, pledge , set over, and confirm unto the Trustee , and to its successors and substitutes in trust , all of the following described property (the "Trust Estate") : (i) all of the right, title, and interest of the Corporation in and to the Installment Loan Payments as required and provided in the Agreement, the Note and the Bond Resolution; and (ii) the Debt Service Fund and the Construction Fund created by the Bond Resolution, upon, and subject to the terms , conditions , stipulations , covenants , agreements , trusts , uses , and purposes hereinafter expressed. TO HAVE AND TO HOLD all and singular the Trust Estate , whether now owned or held or hereafter acquired, unto the Trustee , its successors and assigns , forever. IN TRUST NEVERTHELESS , upon the terms and trusts herein set forth for the equal and proportionate benefit and security of all present and future holders of the Bonds and interest coupons , if any, appertaining thereto without -3- preference of any Bond or coupon over any other, and for enforcement of the payment of the Bonds and interest coupons appertaining thereto in accordance with their terms , and all other sums payable hereunder or on the Bonds (including agreed liquidated damages) and for the performance of and compliance with the obligations , covenants and conditions of this Trust Indenture , as if all the Bonds at any time outstanding had been authenticated, executed and delivered simultaneously with the execution and delivery of this Trust Indenture, all as herein set forth. PROVIDED, HOWEVER, that the grant, conveyance , pledge and assignment made in this Trust Indenture, which are intended for the aforesaid security purposes only, shall in no way affect, impair or diminish the Corporation' s obligations under the Agreement and the Bond Resolution, nor shall any such obligations be imposed upon the Trustee, and, except as otherwise provided in the remaining provisions of this Trust Indenture, nothing herein shall prohibit the Corporation from bringing any actions or proceedings for the enforcement of the obligations of the Owner under the Agreement or the Bond Resolution, except the obligations of the Owner with respect to the amounts and moneys required to be paid into the Debt Service Fund and except that nothing in this proviso shall prejudice the rights of the Trustee under Articles V, VI , and VII hereof. IT IS HEREBY COVENANTED, DECLARED and AGREED that this Trust Indenture creates a continuing lien on the Trust Estate equally and ratably to secure the payment in full of the principal of, premium, if any, agreed liquidated damages , if any, and interest on all Bonds which may, from time to time, be outstanding hereunder,and that the Bonds are to be issued, authenticated and delivered, and that the Trust Estate is to be held, dealt with and disposed of by the Trustee , upon and subject to the terms , covenants , conditions , uses , agreements and trusts set forth in this Trust Indenture, as follows : ARTICLE I DEFINITIONS AND INTEPRETATIONS Section 1 . 01. Definitions . In addition to all other words and terms defined herein, and unless a different meaning or intent clearly appears from the context, the following words and terms shall have the following meanings , respectively, whenever they are used herein: -4- Additional Bonds - Subject to satisfaction of all requirements set out in the. Bond Resolution, any bonds issued by the Corporation pursuant to this Trust Indenture and the Bond Resolution, which bonds shall rank equally and on a parity with the Bonds and shall be equally and ratably secured under the Bond Resolution, this Trust Indenture and the Agreement. Agreement - The Loan Agreement dated as of March 1 , 1983 , by and between the Corporation and the Owner. Article - Any subdivision of this Trust Indenture designated with a roman numeral . Board or Board of Directors - The lawfully qualified Board of Directors of the Corporation. Bond Resolution - The Bond Resolution adopted by the Board of Directors of the Corporation authorizing the issuance and delivery of Beaumont Housing Finance Corporation, Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , in the aggregate principal amount of $1 , 600 , 000 and each other resolution of the Board of Directors of the Corporation authorizing Additional Bonds for the Development , with the Bond Resolution being expressly incorporated herein by reference for all purposes . Bondholder - The owner of any Bond registered as to principal . Bonds - Any and all revenue bonds of the Corporation issued and delivered to finance and pay for a portion of the Cost of the Development pursuant to the Act and the Agreement, including initial and subsequent series of issues of revenue bonds and revenue bonds issued to finance and pay for all or any part of the Cost of completing the Development , and any revenue Bonds issued for the purpose of refunding or' replacing any Bonds issued for such purpose. Collateral Assignment - The Collateral Assignment and Security Agreement dated as of March 1 , 1983 , pursuant to which the Corporation conveyed, assigned, transferred and delivered and granted a security interest to the Trustee in the Note and all rights , titles , interests , liens , privileges , claims and demands and equities existing or to exist in connection with or as security for payment of the Note, including its rights , titles and interests arising under the Deed of Trust in order to secure payment of the Bonds according to their tenor and effect and the 1 -5- performance by the Corporation of all the covenants expressed or implied therein and in the Trust Indenture and the Collateral Assignment. Construction Fund - The segregated account or accounts into which certain proceeds from the sale and delivery of each series of Bonds will be deposited as provided in each _ Bond Resolution (excepting any Bond Resolution authorizing revenue bonds to refund any Bonds) . Corporation - Beaumont Housing Finance Corporation. Debt Service Fund - The segregated account or accounts in which Installment Loan Payments will be deposited as provided in each Bond Resolution. Deed of Trust - The Deed of Trust , Assignment of Rents and Security Agreement dated as of March 1 , 1983 , pursuant to which the Owner has bargained, sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Donald W. Cioban, as mortgage trustee, for the use and benefit of the Corporation, and further granted to the Corporation a security interest in, the Development and certain other property in order to secure the payment of the Installment Loan Payments and the Note, according to their tenor and effect, and certain other indebtedness of the Owner and the performance and observance by the Owner of all the covenants expressed or implied in the Deed of Trust, the Agreement , and the Note. Development - The interest of the Owner in the Site, the Facilities and the Premises which comprise the Development as described in Exhibit A to the Agreement. Facilities - The interest of the Owner in the facilities which are now or may hereafter be located on the Site described in Exhibit A to the Deed of Trust , including any modifications to , substitutions for or additions thereto. Installment Loan Payments - Payments required to be made by the Owner to amortize each series or issue of Bonds , as provided for in the applicable Bond Resolution, including the principal of, redemption premium, if any, and interest on such Bonds when due (whether at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated maturity) , any agreed liquidated damages owed to the Bondholders , and all agreed fees and expenses of the Trustee , Registrar, and any Paying Agent for such Bonds , -6- together with any other payments required by such Bond Resolution or this Trust Indenture. Note - The limited recourse promissory note from the Owner dated March 1 , 1983 , in the principal sum of $1,600 , 000 and payable to the Corporation. Original Bonds - Any or all of the Corporation' s $1,600 , 000 Multi-Family Housing Revenue Bonds , Series 1983 (Virginia Village Development) , dated as of March 1 , 1983 , which are issued, sold and delivered pursuant to the Bond Resolution. Owner - Virginia Village Venture, a joint venture formed under the laws of the State of Texas , and its permitted successors and assigns . Paying Agent - The Trustee and any other paying agent for an issue or series of Bonds named in the Bond Resolution authorizing such Bonds . Premises - The property described in Exhibit A to the Deed of Trust. Registrar - The registrar for the Bonds named in the Bond Resolution. Section - Any subdivision of this Trust Indenture designated by arabic numerals . Site - The real estate which is described in Exhibit A to the Deed of Trust , and any other additional land which may be acquired for or as a part of the Development. Trust Indenture - This Trust Indenture, together with the Exhibits attached hereto , and all amendments and supplements hereto. Trustee - InterFirst Bank-Beaumont , its successors or assigns , and any successor trustee at any time serving as successor trustee hereunder. Section 1 . 02. Additional Definitions and Interpreta- tions . (a) Capitalized terms used but not expressly defined herein shall have the same meanings as set forth in the Agreement or the Bond Resolution unless the context indicates otherwise. 1 -7- (b) The table of contents , article and section headings are for reference purposes only and shall not affect its interpretation in any respect. (c) Unless the context requires otherwise , words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. ARTICLE II ACCEPTANCE OF TRUST The Trustee hereby accepts the trusts , duties , obligations , and requirements imposed on it by the Bond Resolution and this Trust Indenture, and agrees to carry out and perform, punctually and effectively, such duties , obligations , and requirements for the benefit of the Corporation, the Owner and the holders of the Bonds . It is further specifically agreed that (i) the Trustee will act as a Paying Agent for the Bonds at all times while it is the Trustee, (ii) the Trustee will act as Registrar for the Bonds at all times while it is the Trustee , and (iii) the Trustee will authenticate each of the Bonds by executing the Trustee ' s Certificate of Authentication appearing on each of the Bonds , as provided in the Bond Resolution, at such time . and in such manner as directed by the Corporation. ARTICLE III DEBT SERVICE FUND AND CONSTRUCTION FUND The Debt Service Fund and the Construction Fund created by the Bond Resolution are hereby confirmed and established, respectively, in trust , with the Trustee , and the Trustee agrees to hold, administer, deposit , secure, invest , and use said funds in all respects as provided and required by the Agreement , the Bond Resolution, and this Trust Indenture. ARTICLE IV NOTICE TO OWNER On or before the 5th day prior to each date upon or before which each Installment Loan Payment is required by the Bond Resolution and the Agreement to be deposited into the Debt Service Fund, but only if the Owner shall expressly J -8- so request in writing following an applicable adjustment of the Bond Interest Rate, the Owner shall be given written notice via hand delivery or first class mail , postage prepaid, at such address as the Owner shall from time to time designate and file in writing with the Trustee, of the amount , if any, of each Installment Loan Payment required by the Bond Resolution and the Agreement to be made by the Owner to the Trustee and deposited by the Trustee into the Debt Service Fund on or before such date. Such notice shall give a brief statement of the manner in which the amount due was calculated, including a showing of all credits on account of available moneys in the Debt Service Fund. The failure of the notice to be given, or of the Owner to receive any such notice, shall not relieve the Owner of its obligation to make all deposits or payments of Installment Loan Payments to the Trustee as required by the Agreement and the Bond Resolution. ARTICLE V ACCOUNTS AND RECORDS Section 5 . 01 Separate Records to be Kept. The Trus- tee shall keep proper books of records and accounts , separate from all other records and accounts , in which complete and correct entries shall be made of all transactions relating to the Installment Loan Payments , the Debt Service Fund, and the Construction Fund. Section 5 . 02 Annual Report. Within 120 days after each anniversary date of this Trust Indenture, the Trustee will furnish to the Corporation, the Owner, and any holder of any outstanding Bonds who may so request, a copy of a report by the Trustee covering the year preceding such anniversary date , showing the following information: . (1) a detailed statement concerning the receipt and disposition of all Installment Loan Payments and the disposition of the amounts in the Construction Fund (until the Construction Fund shall have been fully depleted) . (2) an asset statement or balance sheet of the Debt Service Fund and of the Construction Fund (until the Construction Fund shall have been fully depleted) . . Section 5 . 03 Right to Inspect. The Corporation, the Owner, and the holders of any Bonds shall have the right , at J -9- all reasonable times and upon reasonable notice , to inspect all records , accounts , and data of the Trustee relating to the Installment Loan Payments , the Debt Service Fund and the Construction Fund. ARTICLE VI ENFORCEMENT OF RIGHTS IN CASE OF DEFAULT Section 6 . 01 Appointment of Trustee and Rights of Holder. The Trustee is hereby irrevocably appointed the special agent and representative of the holders of the Bonds and vested with full power in their behalf to effect and enforce the Agreement , this Trust Indenture , and the Bond Resolution for their benefit as provided herein and in the Bond Resolution; provided, however, the holders of a majority of the aggregate principal amount of the Bonds then outstanding shall have the right from time to time to direct and control the Trustee in connection with the enforcement of any of the provisions of the Agreement , the Trust Indenture , and the Bond Resolution, and any other proceedings taken by virtue of any provisions of the aforesaid instruments , in case of any subsisting Event of Default (as hereinafter defined) or of any other event entitling the Trustee to proceed hereunder, including the right to have withdrawn and discontinued at any stage thereof any proceedings taken hereunder by the Trustee, provided that the Event of Default upon which such proceedings were based and all other Events of Default hereunder shall have been remedied and made good. Anything contained in this Trust Indenture to the contrary notwithstanding, each holder of any Bond shall have a right of action to enforce the payment of all amounts due with respect to any Bond owned by him when or after the same shall have become due , at the place, from the sources , and in the manner expressed; and provided that no right of action shall exist subsequent to the time of waiver of an Event of Default in the payment of any such amount so due and such Event of Default having been remedied and made good as set forth in Section 6 . 07. Section 6 . 02 Control by Trustee. Except as other- wise provided in this-Article , the rights of action with respect to this Trust Indenture shall be exercised by the Trustee and no holder of any Bond shall have any right to institute any suit, action or proceeding at law or equity for the appointment of a receiver or for any other remedy hereunder or by reason hereof unless and until in addition to the fulfillment of all other conditions precedent f -10- specified in this Trust Indenture , the Trustee shall have received the written request of the holders of not less than 25% of the aggregate principal amount of the Bonds then outstanding and shall have been offered reasonable indemnity and shall have refused, or for 30 days thereafter neglected, to institute such suit , action, or proceeding; and it is hereby declared that the making of such request and the furnishing of such indemnity are in each case conditions precedent to the execution and enforcement by any holder of any Bond of the powers and remedies given to the Trustee hereunder and to the institution and maintenance by any holder of any Bond of any action or cause of action for the appointment of a receiver or for any other remedy hereunder; but the Trustee may, in its discretion, or when duly requested in writing by the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding and upon being furnished indemnity satisfactory to the Trustee against expenses , charges , and liability, shall forthwith take such appropriate action by judicial proceedings or otherwise to enforce the covenants of the Owner and the Corporation as the Trustee may deem expedient in the interest of the holders of the Bonds . Section 6 . 03 Events of Default. Any one or more of the following events shall constitute an "Event of Default" under this Trust Indenture: (1) the failure of the Owner to make or pay, or cause to be made or paid, any Installment Loan Payment upon the terms and conditions required by the Agreement or the Bond Resolution; (2) the dissolution or liquidation of the Owner in any manner not specifically authorized by the Agreement , or the filing by the Owner of a voluntary petition in bankruptcy or failure by the Owner promptly to lift or suspend any execution, garnishment, or attachment of such consequence as will materially impair its ability to carry out its obligations under the Agreement or the Bond Resolution, the breach of any other contract , agreement or instrument and the failure to remedy or cure such breach with the consequences that the ability of the Owner to carry out its obligations under the Agreement or the Bond Resolution are materially impaired, or the commission by the Owner of any act of bankruptcy, or failure of the Owner generally to pay its debts as they become due, or entry of an order for relief of the Owner in a bankruptcy case of the Owner, or the assignment or transfer by the r -11- Owner of a substantial portion of its assets for the benefit of its creditors , or the entry by the Owner into an agreement of composition with its creditors , or the entry of an order or decree applicable to the Owner in any proceeding for its reorganization or arrangement in any proceedings instituted under the provisions of any applicable federal or state bankruptcy statutes , including the federal Bankruptcy Code, as they now exist or are hereafter amended or enacted; (3) the Owner defaults in the observance or performance of any other of its covenants , conditions , or obligations in the Bonds , the Agreement , the Bond Resolution, the Note , the Deed of Trust, the Collateral Assignment , or this Trust Indenture , and the Owner fails to not remedy such default within 30 days or such other reasonable period of time, not to exceed 90 days , as the Owner may require to remedy such default if because of reasons of force maj eure such cure cannot reasonably be accomplished within 30 days , after written notice to do so has been received by the Owner from the Trustee or the holders of the Bonds ; and the Trustee may serve such notice , in its discretion, or shall serve such notice at the written request of the holders of not less than 25% of the aggregate principal amount of the Bonds then outstanding; (4) the occurrence of an "Event of Default" under the Agreement , the Note, the Bond Resolution, the Deed of Trust or the Collateral Assignment; (5) Subject to Section 2 . 02(a) of the Agreement, the Owner shall not be receiving, on and after June 1 , 1984 , public rental assistance payments under the Section 8 Contract (or any successor contract which is executed within 90-days after termination or expiration of the Section 8 Contract or any predecessor contract and which provides for public rental assistance pay- ments) with respect to at least 66-2/3% of the dwelling units in the Development; or (6) the Owner shall make any untrue or materially misleading warranty, representation, or other statement in the Agreement, Bonds or in any other instrument, document, or letter now or hereafter furnished by the Owner to the Trustee or any holder of the Bonds . Section 6 . 04 Declaration of Principal and Interest Due. Upon the happening of an Event of De ault, the -12- Trustee may, in its discretion, or upon the written request of the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee , shall , declare the principal of all Bonds then outstanding, and the interest accrued thereon immediately due and payable , and such principal and interest , together with any applicable agreed liquidated damages , and any applicable redemption premium, and any other amounts then due, shall thereupon become and be immediately due and payable , anything in the Bonds , the Agreement, the Bond Resolution, or this Trust Indenture to the contrary notwithstanding. Section 6 . 05 Enforcement by Trustee. Upon the happening of an Event ot De au tl , the Trustee may, in its discretion, or upon the written request of the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee , shall , take such appropriate action by judicial proceedings or otherwise to (i) cure the Event of Default and/or (ii) require the Owner or the Corporation to carry out its or their covenants and obligations under and with respect to the Bonds , the Agreement , the Bond Resolution, the Collateral Assignment, the Note , the Deed of Trust , or this Trust Indenture, including without limitation, the use and filing of actions for specific performance , the appointment of a receiver (in equity with power to charge and collect the Installment Loan Payments) and mandamus proceedings , in any court of competent jurisdiction, against the Corporation or the Owner, their respective officers , directors , employees , and/or agents , and to obtain judgments for any Installment Loan Payments due but unpaid into the Debt Service Fund, or for any other amounts due hereunder, under the Bond Resolution, or under the Agreement , including all amounts due with respect to the Bonds then outstanding if declared due and payable as provided herein, and/or (iii) exercise any of the rights , remedies and powers accorded under the Agreement , the Bond Resolution, the Collateral Assignment , the Note or the Deed of Trust. Section 6 . 06 Non-Exclusive Remedies . No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other available remedy or remedies , but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Agreement, the Deed of Trust, the Bonds , the Bond Resolution, the Note or the Collateral Assignment, or now and hereafter existing at law or in equity or by statute. -13- No delay or omission to exercise any right or power accruing upon the happening of an Event of Default continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein, and every such right and power may be exercised from time to time and so often as may be deemed expedient. Section 6 . 07 Waiver of Defaults . The Trustee may, and upon the written request of the olders of 75% of the aggregate principal amount of the Bonds then outstanding shall , waive any Event of Default hereunder and its consequences , except that an Event of Default in the payment of Installment Loan Payments , or in the payment of any amounts with respect to the Bonds when and as the same shall become due and payable, may be waived only if the Event of Default therein shall have been remedied and made good. In case of any such waiver, the Corporation, the Owner, the Trustee , and the holders of the Bonds shall be respectively restored to their former position and rights hereunder and such waiver shall not extend to any subsequent or other Event of Default or impair any right consequent thereto. Section 6 . 08 Discretion of Trustee. In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of holders of Bonds , each representing less than 75% of the aggregate principal amount of Bonds then outstanding, the Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Trust Indenture. Section 6 . 09_ Application of Moneys. All moneys collected by the Trustee pursuant to the exercise of the remedies and powers provided in this Article, together with all other sums which then may be held by the Trustee under any provision of this Trust Indenture as security for the Bonds , shall be applied as follows ; First, to the payment of the costs and expenses of the proceedings whereunder such money was collected, including a reasonable compensation to the Trustee , its agents , attorneys , and all other necessary or proper expenses , liabilities , and advances incurred or made by the Trustee under this Trust Indenture, and to the payment of all taxes , assessments , and liens superior to the lien of this Trust Indenture; 1 -14- Second, to the payment of matured interest on the Bonds , including, to the extent legally permissible , interest thereon at the maximum non-usurious per annum rate permitted by law from due date to date of payment; Third, to the payment of principal of, redemption premium, if any, and agreed liquidated damages , if any, on the Bonds which have been called for redemption as permitted or required by the Bond Resolution or have matured as provided thereby, and interest thereon, to the extent legally permissible , at the maximum non-usurious per annum rate permitted by law from the date of redemption or maturity to date of payment; Fourth, to the payment of principal of the Bonds which have become due by virtue of declaration of the Trustee pursuant to Section 6. 04 hereof and interest thereon, to the extent legally permissible , at the maximum non-usurious per annum rate permitted by law from the date declared due to date of payment; Fifth, to the payment of any other sums owing to the Trustee from the Owner; and Sixth; to the payment of the surplus , if any, to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. If in making distribution pursuant to the order above stated, the amount available for distribution in a particular classification be insufficient to pay in full all of the items in such classification, the amount available for distribution to items in such classification shall be prorated among such items in the proportion that the amount each item bears to the total of all such items . Notwith- standing anything contained in this Trust Indenture to the contrary, if the Trustee shall declare the principal of all Bonds then outstanding and the interest accrued thereon immediately due and payable as the result of an Event of Default, or if the Bonds are to be redeemed as a whole pursuant to mandatory redemption provisions provided in the Bond Resolution, or if the Owner shall exercise any option to redeem the Bonds as a whole in accordance with their terms , any amounts remaining in the Construction Fund shall -15- be deposited in the Debt Service Fund and applied by the Trustee as provided in this Section 6 . 09. Section 6 . 10 Judicial Proceedings . In any judicial proceeding in which the Corporation is a party and which, in the opinion of the Trustee or its counsel , has a substantial bearing on the interests of the holders of the Bonds , the Trustee, if permitted by the court having jurisdiction over such proceeding, may, in its discretion, or upon the written request of the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee, shall , intervene on behalf of the holders of the Bonds to assert the rights of such holders . Section 6 . 11 Enforcement of Remedies Without Possession of Bonds . All -rights o action or other rights under this Trust Indenture or otherwise may be brought by the Trustee in its own name as Trustee of an express trust and may be enforced by the Trustee without the possession of any of the Bonds or any interest coupons appertaining thereto , or the production thereof on the trial or other proceedings relative thereto. Section 6. 12 Direction by 75% in Principal Amount of Bondholders . It is expressly provided that the holders of 50 of t e aggregate principal amount of the Bonds then outstanding, or a committee appointed pursuant to a written appointment filed with the Trustee (the "Committee") , representing the holders of 75% of the aggregate principal amount of the Bonds then outstanding, shall have the right , at any time, by an instrument or instruments in writing executed and delivered to the Trustee , to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the Trustee ' s rights and remedies under the Agreement , the Bond Resolution, the Deed of Trust, the Note, the Collateral Assignment or this Trust Indenture or the rights of the holders of the Bonds and may exercise any right or perform any action hereunder with the same effect as the Trustee under this Trust Indenture; provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Trust Indenture and provided further that the Trustee shall be indemnified to its satisfaction. Section 6 . 13 Notice of Default. The Trustee shall not be required to take notice nor a deemed to have notice of any default specified in this Trust Indenture, except for -16- those Events- of Default specified in Section 6 . 03 (1) , unless specifically notified in writing of such default by the holders of at least 25% of the aggregate principal amount of the Bonds then outstanding. Section 6 . 14 Concurrence of Bondholders . In deter-' mining whether the holders of a requisite aggregate principal amount of Bonds outstanding have concurred in any request , demand, authorization, direction, notice, consent , or waiver under this Trust Indenture or the Bond Resolution, any Bonds owned by or for the account of the Owner, or any person controlled by, controlling, or under common control with the Owner, shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent , or waiver, only the Bonds of which the Trustee has actual knowledge of such ownership shall be so disregarded. Section 6 . 15 Notice to Owner of Past Due Payments . Pursuant to the Agreement , Insta ment Loan Payments are to be paid by the Owner- directly to the Trustee. In the event that any such payments are not timely made, the Trustee shall immediately notify the Owner by wire at the address provided in the Agreement or by telephonic notice with confirmation of such notice by wire, that payment has not been made. Such notice shall be deemed given at the time the wire is received or telephonic notice is given, whichever is earlier. Failure of the Trustee to give , or of the Owner to receive , such notice shall not relieve the Owner of any covenant or obligation under the Agreement, the Bond Resolution, the Deed of Trust , the Note, the Collateral Assignment , or this Trust Indenture and shall not constitute a waiver of any Event of Default under this Trust Indenture. ARTICLE VII CONCERNING THE TRUSTEE The Trustee accepts the trust imposed upon it by this Trust Indenture , but only upon and subject to the following express terms and conditions : Section 7 . 01 Not Accountable for Bond Proceeds. In no event shall the Trustee be liable- except for its gross negligence or willful misconduct in relation to its duties under this Trust Indenture and the Bond Resolution. The Trustee shall not be responsible for any recitals herein, in -17- the Bonds , the interest coupons , if any, appertaining thereto , the Bond Resolution, the Agreement, the Deed of Trust , the Collateral Assignment or the Note , or for the sufficiency of the security for the Bonds or interest coupons , if any, appertaining thereto . The Trustee shall have no responsibility hereunder except to the extent of the duties placed upon the Trustee to hold, administer, deposit , secure, invest, and use the Debt Service Fund and the Construction Fund as expressly required by the Bond Resolution, to the extent funds for such purposes are received by the Trustee, and to perform the other express covenants and agreements made by the Trustee under the provisions of this Trust Indenture and the Bond Resolution. Section 7 . 02 Reliance by Trustee. The Trustee may rely and shall be protected in acting or refraining from acting in accordance with the provisions of this Trust Indenture and the Bond Resolution upon any notice, requisition, request, consent, certificate, order, affidavit , letter, telegram, or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons , and the Trustee shall not be bound to recognize any person as holder of Bonds or to take any action at his request , unless the Bond or Bonds owned by such holder shall be deposited with the Trustee , be registered in the name of such holder on the Bond Registration Books kept by the Trustee, or submitted to it for inspection. Any action taken by the Trustee pursuant to this Trust Indenture upon the request or authority or consent of any person who , at the time of making such request or giving such authority or consent, is the holder of any Bond secured hereby, shall be conclusive and binding upon all future holders of the same Bond and of Bonds issued in exchange therefor or in place thereof. Section 7 . 03 Compensation. In addition to the fees described in Section 7 . 07 , there shall be paid from the Debt Service Fund the Trustee ' s reasonable expenses , advances , and fees of its counsel , engineers , accountants or other experts , and its liabilities incurred in and about the execution of the trusts hereby created and the exercise and performance of the powers and duties of the Trustee hereunder (except liabilities incurred as a result of the gross negligence or willful misconduct of the Trustee , or as provided in Section 15 (a) of the Bond Resolution) , and the reasonable cost and expenses , including counsel fees , of defending against liabilities . The Owner shall have the same contest rights with respect to payments under this -18- Section as the Owner has pursuant to Section 7. 07 of this Trust Indenture. Section 7 . 04 Limited Responsibilities . The respon- sibilities of the Trustee elsewhere set forth herein shall be further limited as follows : (a) The Trustee shall . not be liable with respect to any action taken or omitted to be taken by it in good faith (i) in accordance with a direction of the holders of Bonds pursuant to any provision of this Trust Indenture relating to the time , method, and place of conducting any proceeding for any remedy available to the Trustee , or exercising any trust or power conferred upon the Trustee , under this Trust Indenture, or (ii) exercising any trust or power whether or not in accordance with such a direction. (b) No provision of this Trust Indenture shall require the Trustee (i) to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers , if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it , nor (ii) to take any action, whether or not directed to take such action by the holers of Bonds , pursuant to this Trust Indenture, which in the judgment of the Trustee would conflict with any rule of law, or with the terms of this Trust Indenture, or would be unjustly prejudicial to the holders of Bonds not taking part in such direction. When acting pursuant to the direction of any holders of Bonds pursuant to this Trust Indenture, the Trustee may take other action deemed proper by the Trustee which is not inconsistent with such direction; provided that the terms of this subparagraph (b) shall not impose any additional duties or re- sponsibilities upon the Trustee and shall not be construed to limit the effect of subparagraph (a) of this Section 7. 04 . Section 7 . 05 Advice. The Trustee may act upon the professional opinion or advice of counsel, reasonably believed by the Trustee to be qualified in relation to the r -19- subject matter, whether retained by the Trustee , the Owner, or the Corporation or otherwise , and the Trustee shall not be responsible for anything suffered or done or not done by it in good faith in accordance with any such opinion or advice. Section 7 . 06 Trustee May Own Bonds . Except as prohibited by law, the Trustee may ecome the owner or holder of any of the Bonds secured by this Trust Indenture with the same rights which it would have if it were not the Trustee; and nothing herein contained shall be construed to prohibit the Trustee, either as principal or agent , from engaging in or being interested in any financial or other transaction with the Corporation or the Owner or from acting as depository, trustee , or agent for any Committee or body of holders of the Bonds or of other obligations of the Corporation as freely as if it were not the Trustee. Section 7 . 07 Fees . The Corporation has agreed with the Owner in the Agreement and the Bond Resolution provides that as part of the Installment Loan Payments , the Owner shall pay to the Trustee , its customary charges for performing the duties of the Trustee, Registrar, and Paying Agent for the Bonds as set forth in the Schedule attached hereto as Exhibit A. It is agreed by the Trustee that the Owner may, without causing or creating a default or Event of Default hereunder, contest in good faith (and withhold payment of the contested amount) the reasonableness of any extraordinary service charges , until such contest is resolved; provided that in the event the reasonableness of the charges is contested in a court proceeding, the reasonable attorney' s fees of the prevailing party may be adjudged against the other party. All payments due the Trustee for such charges , fees , or expenses shall be paid by the Owner and no such charges , fees , or expenses shall be charged against or be payable by the Corporation, except the initial fees and expenses of the Trustee which are paid as part of the costs of issuance of the Bonds . Section 7 . 08 Insurance. The Trustee shall have no obligation or duty with respect to the insurance to be maintained by the Owner on the Development. ARTICLE VIII SUCCESSOR TRUSTEE Section 8 . 01 Resignation of Trustee. The Trustee hereunder may at any time resign and--be discharged from all I _20_ trusts created by this Trust Indenture by giving not less than 60 days written notice to the Corporation, the Owner, and to any holders of Bonds as shown on the Bond Registra- tion Books kept by the Trustee , and such resignation shall take effect upon the appointment of a temporary Trustee or a successor Trustee by the holders of Bonds or by the Corpor- ation as hereinafter provided. Section 8 . 02 Removal of Trustee. The Trustee may be discharged and removed at any time by an instrument or con- current instruments in writing, delivered to the Trustee and to the Corporation, and signed by the holders of 51% of the aggregate principal amount of the then outstanding Bonds . Section 8 . 03 Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Trustee shall be taken under the control of any public officer or officers , or of a receiver appointed by a court , a successor may be appointed by the holders of a majority of the aggregate principal amount of the then outstanding Bonds by an instrument or concurrent instruments in writing, signed by such holders of Bonds , or by their attorneys-in-fact duly authorized in writing, and delivered to the Corporation; provided that in any such event the Corporation by an instrument executed by authority of a resolution of its Board of Directors and signed by the President or any Vice President and Secretary, may appoint a temporary Trustee to fill such vacancy until a successor Trustee shall be appointed by the holders of Bonds in the manner above provided, and any such temporary Trustee so appointed by the Corporation shall immediately and without further act be superseded by the Trustee which is thereafter so appointed by such holders of Bonds . Every such successor of temporary Trustee so appointed by the Corporation shall immediately and without further act be superseded by the Trustee so appointed by such holders of Bonds . Every such successor temporary Trustee shall be a trust company or bank in good standing located in the State of Texas , and having a capital and surplus of not less than Ten Million Dollars ($10 , 000 , 000) , if there be such a trust company or bank willing, qualified, and able to accept the trust upon reasonable and customary terms . In the event that no appointment of a temporary or successor Trustee shall be made pursuant to the foregoing provisions of this Article within 60 days after the Trustee gives written notice of resignation or the Trustee is removed, any holder of Bonds or any retiring Trustee may apply to any court of competent -21- jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it shall deem proper, prescribe or appoint a successor Trustee. Section 8 . 04 Transfer to Successor Trustee. Every successor Trustee appointed ereunder s a execute, acknowledge , and deliver to its predecessor, the Corporation and the Owner, an instrument in writing accepting such appointment hereunder, and such successor Trustee, without any further act, deed, or conveyance, shall become fully vested with all the estates , rights , powers , trusts , duties , and obligations hereunder of its predecessor; but such predecessor shall nevertheless , on the written request of the Corporation, execute and deliver an instrument transferring to such successor Trustee all of the estates , rights , powers , and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and money held by it to its successor; provided that before any such delivery is required or made , all reasonable, customary, and legally accrued fees , advances , and expenses of such predecessor Trustee shall be paid in full . Should a deed, assignment , or instrument in writing from the Corporation be required by any successor Trustee for more fully and certainly vesting in such Trustee the estates , rights , powers , and duties hereby vested or intended to be vested in the predecessor Trustee , any and all such deeds , assignments , and instruments in writing shall, on request, be executed, acknowledged, and delivered by the Corporation. Section 8 . 05 Merger or Consolidation of Trustee. Any corporation or association into w is the Trustee, or any successor to it in the trusts created by this Trust Indenture, may be merged or converted or with which it is or any successor to it may be consolidated, or any corporation or association resulting from any merger, conversion, or consolidation to which the Trustee or any successor to it shall be a party, shall be the successor Trustee under this Trust Indenture without the necessity of the execution or filing of any paper or any other act on the part of any of the parties hereto anything herein to the contrary notwithstanding. ARTICLE IX RELEASE OF INDENTURE Section 9. 01 Satisfaction of Indebtedness and Release of Indenture. I w en the Bonds sR—aIl have become due and paya e in accordance with their terms or as -22- otherwise provided in this Trust Indenture , or shall have been duly called for redemption, and the whole amount of the principal , redemption premium, if any, and the interest so due and payable upon all of the Bonds , and the agreed liquidated damages , if any, with respect to the Bonds then due, shall be paid, or sufficient money shall be held by the Trustee for such purpose , and provision shall also be made for paying all other sums payable hereunder and/or under the Agreement and the Bond Resolution by _the Owner, then and in that case all right , title , and interest of the Trustee in the presents and the estate and rights hereby granted shall thereupon cease , determine, and become void, and the Trustee in such case shall release this Trust Indenture and shall execute such documents to evidence such release as may be reasonably required by the Corporation and the Owner, and shall turn over any surplus funds held by it to whomsoever may then be entitled pursuant to the Bond Resolution, the Agreement , or by law to receive the same; and thereupon this Trust Indenture shall terminate and be of no effect; pro- vided that until the Bonds are finally paid, the Trustee shall continue to act as Paying Agent and Registrar for the Bonds . ARTICLE X AMENDMENTS This Trust Indenture may be amended only as provided in the Bond Resolution; provided that Additional Bonds may be issued pursuant to the Bond Resolution as provided therein, and may be secured by this Trust Indenture without the necessity of amending or supplementing this Trust Indenture. ARTICLE XI MISCELLANEOUS PROVISIONS Section 11 . 01 Acknowledgments and Ownership of Bonds . Any request, direction, consent , or other instrument required by this Trust Indenture to be signed or executed by holders of Bonds may be in any number of concurrent writings of similar tenor and may be signed or executed by such holders of Bonds in person or by an agent appointed in writing. Proof of the execution of any instrument , or of the writing appointing such agent , and of the holding and owning of the Bonds , if made in the following manner, shall be sufficient for any purpose of this Trust Indenture and shall be conclusive in favor of the Trustee with regard to any action taken by it under such instrument: -23- (i) the fact, date , and due authorization of the execution by any person or of any such instrument may be proved by the certificate of any officer, in any jurisdiction, who , by the laws thereof, has power to take acknowledgments within such jurisdiction to the effect that the person signing such instrument acknowl- edged before him the execution thereof, or by an affidavit of a witness to such execution. (ii) the fact of the holding and owning of the Bonds by any holder thereof, the amount and numbers of such Bonds , and the date of his holding and owning same may be proved by the appropriate entries in the Bond Registration Books maintained by the Trustee as Registrar, and the Trustee may conclusively assume that such ownership continued until written notice to the contrary is served upon the Trustee. Section 11 . 02 Trustee May Require Proof of Ownership. Nothing contained in- Article shall be construed as limiting the Trustee to the proof hereinabove specified, it being intended that the Trustee may accept any other evidence of the matters herein stated which it may deem sufficient. Section 11 . 03 Consent of Bondholders . Unless other- wise provided in the Bond Reso ution, any request or consent of any holder of Bonds shall bind every future holder of the same Bond in respect of anything done by the Trustee in pursuance of such request or consent. In the event of the dissolution of the Corporation, all of the covenants , stipulations , promises , and agreements in this Trust Indenture contained by, on behalf of, or for the benefit of the Corporation, shall bind or inure to the benefit of the successor or successors of the Corporation from time to time and any officer, board, or commission to whom or to which any power or duty affecting such covenants , stipulations , promises , and agreements shall be transferred by or in accordance with law. Section 11 . 04 Survival of Valid Bonds . If any Bond shall not be presented or payment when the principal thereof becomes due, either at maturity or at the date fixed for redemption thereof or otherwise , or in the event any coupons shall not be presented for payment at the due date thereof, all liability of the Corporation and the Owner to the holders thereof and to the Trustee for the payment of such Bond or coupons , as the case may be , shall forthwith cease, determine, and be completely discharged whenever -24- funds sufficient to pay such Bond or coupons shall be paid to the Trustee by the Corporation and/or the Owner and such funds shall be segregated by the Trustee and held in trust for the benefit of the holders of such Bond or coupons , as the case may be, who shall thereafter be restricted exclusively to such funds for the satisfaction of any claim of whatever nature on their part relating to such Bond or coupons . Section 11 . 05 Unclaimed Funds . Any money deposited with the Trustee in trust for the payment of the principal of, redemption premium, if any, agreed liquidated damages , if any, or interest on any Bond and remaining unclaimed for six years after such principal of, redemption premium, if any, agreed liquidated damages , if any, or interest on such Bond has become due and payable shall be paid to the Corporation and/or the Owner as provided in the Bond Resolution; provided that before the Trustee shall be required to make any such repayment, the Trustee may at the expense of the Owner cause to be published at least once , in a financial newspaper , journal , or publication of general circulation in the City of New York, New York, or in the State of Texas , a notice that such money remains unclaimed and that , after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Corporation and/or the Owner. After the payment of such unclaimed moneys to the Corporation and/or the Owner, the holder of such Bond or the holder of the relevant coupon shall thereafter look only to the Owner for the payment thereof, and all liability of the Trustee with respect to such money shall thereupon cease. Section 11 . 06 Rights of Parties . Except as otherwise expressly provided herein, not ing in this Trust Indenture expressed or implied is intended or shall be construed to confer upon any person, firm, or corporation other than the Owner, the Corporation, the Trustee , and the holders of Bonds , any right , remedy, or claim, legal or equitable , under or by reason of this Trust Indenture or any covenant, condition, or stipulation contained herein. Section 11 . 07 Severabilit . In case any one or more of the provisions of this Trust Indenture or of the Bonds or any interest coupons appertaining thereto shall be held to be invalid or ineffective as to any person or circumstance, the remainder thereof and the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. -25- Section 11 . 08 Governing Law. The validity, interpre- tation, and performance of this Trust Indenture shall be governed by the laws of the State of Texas . ARTICLE XII RECORDING Section 12. 01 Corporation and Trustee to Record. The Corporation shall cause the Agreement and this Trust Inden- ture (or financing or other statements with respect thereto) to be filed with the Secretary of State of Texas in order to secure the lien of this Trust Indenture. The Trustee shall cause any additional security instruments delivered to the Trustee as additional security for the Bonds , memorandum, financing statements , or continuation statements with respect to such instruments , amendments , or supplements to be filed, registered, and recorded and to be refiled, reregistered, and rerecorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien of the rights and security of the holders of the Bonds and the rights of the Trustee under the Agreement , the Bond Resolution, the Note, the Collateral Assignment , and this Trust Indenture and perform or cause to be performed from time to time any other act as required by law, and execute and file or cause to be executed and filed any and all instruments of further assurance, that may be necessary for such publication and protection. Provided, however, the Trustee may act upon the opinion or advice of any legal counsel as to action required hereunder. The Corporation shall, when so requested by the Trustee , execute all such instruments , memoranda, or statements necessary to maintain, protect , or preserve the interests assigned to the Trustee under this Trust Indenture or under such other instruments . Section 12. 02 Non-Encumbrance. This Trust Indenture is and always shall remain a direct lien and security interest upon the Installment Loan Payments , the Debt Service Fund, and the Construction Fund, and except as provided in the Bond Resolution, the Corporation will not create or suffer to be created any lien prior to or on a parity with the lien of this Trust Indenture or any part thereof. IN WITNESS WHEREOF, the Corporation acting through its Board of Directors , has caused this Trust Indenture to be executed in multiple counterparts , each of which shall be considered an original for all purposes , in its name , and -26- for and on its behalf, by its President or a Vice President and attested by its Secretary, and its corporate seal to be hereto affixed; and the Trustee , to evidence its acceptance of the trusts hereby created and vested in it , has caused this Trust Indenture to be executed in multiple counterparts , each of which shall be considered an original for all purposes , in its behalf by one of its Vice Presidents , attested by one of its Trust Officers or its Secretary, and its corporate seal to be hereunto affixed, all as of the date first written. BEAUMONT HOUSING FINANCE ATTEST: CORPORATION By: Its . (SEAL) CORPORATION ATTEST: INTERFIRST BANK-BEAUMONT By: Its . (SEAL) TRUSTEE -27- THE STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned authority, on this day personally appeared , of Beaumont Housing Finance Corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument , and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said Corporation. GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the day of 1983 . Notary Public, State of Texas Typed or Printed Name My Commission Expires : -28- THE STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned authority, on this day per- sonally appeared of InterFirst Bank-Beaumont , a state an ing corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument , and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said Bank. GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the day of 1983 . Notary Public , State of Texas Typed or Printed Name My Commission expires : -29-