FIRST SUPPLEMENTAL MASTER TRUST INDENTURE. between. FH, LLC, As Sole Member of the Obligated Group. and

FIRST SUPPLEMENTAL MASTER TRUST INDENTURE between FH, LLC, As Sole Member of the Obligated Group and U.S. BANK NATIONAL ASSOCIATION, as Master Trustee...
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FIRST SUPPLEMENTAL MASTER TRUST INDENTURE between FH, LLC, As Sole Member of the Obligated Group and U.S. BANK NATIONAL ASSOCIATION, as Master Trustee

Dated as of March 1, 2012

Authorizing the Issuance of $8,000,000 Direct Note Obligation, Series 2012 and Amending the Original Master Trust Indenture as set forth herein

FIRST SUPPLEMENTAL MASTER TRUST INDENTURE This is a FIRST SUPPLEMENTAL MASTER TRUST INDENTURE (this “First Supplement”) dated as of March 1, 2012 between FH, LLC, a Washington limited liability company (the “Borrower”), as the initial and sole member of the Obligated Group, and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Master Trustee”). RECITALS: The Borrower and the Master Trustee have heretofore executed and delivered a Master Trust Indenture dated as of January 1, 2007 (the “Original Master Indenture”). On February 28, 2007, Washington State Housing Finance Commission (the “Issuer”) issued its $106,700,000 Nonprofit Revenue Bonds (Skyline at First Hill Project), Series 2007A (the “Series 2007A Bonds”), $8,000,000 Nonprofit Revenue Bonds (Skyline at First Hill Project), Series 2007B (the “Series 2007B Bonds”), $88,900,000 Variable Rate Demand Nonprofit Revenue Bonds (Skyline at First Hill Project), Series 2007C (the “Series 2007C Bonds”), and $11,100,000 Taxable Variable Rate Demand Nonprofit Revenue Bonds (Skyline at First Hill Project), Series 2007D (the “Series 2007D Bonds” and collectively with the Series 2007A Bonds, the Series 2007B Bonds, and the Series 2007C Bonds, the “Series 2007 Bonds”). The proceeds of the Series 2007 Bonds were loaned by the Issuer to the Borrower pursuant to a Mortgage Loan Origination and Financing Agreement (the “Loan Agreement”) dated as of January 1, 2007, among the Borrower, Bank of America, N.A. (the “Series 2007C/D Credit Facility Issuer”), as mortgage lender, U.S. Bank National Association, as bond trustee, and the Issuer, for the purpose of providing funds to the Borrower to pay, inter alia, a portion of the costs of the Series 2007 Project (as defined in the Original Master Indenture). As collateral security for the Series 2007 Bonds, the Borrower caused to be issued under the Master Indenture the Borrower’s $106,700,000 Direct Note Obligation, Series 2007A (the “Series 2007A Obligation”), $8,000,000 Direct Note Obligation, Series 2007B (the “Series 2007B Obligation”), $88,900,000 Direct Note Obligation, Series 2007C-1 (the “Series 2007C-1 Obligation”), and $11,100,000 Direct Note Obligation, Series 2007D-1 (the “Series 2007D-1 Obligation”).

Pursuant to the Letter of Credit Agreement dated as of January 1, 2007, as subsequently amended by the First Amendment to Letter of Credit Agreement and Waiver dated February 17, 2010, the Second Amendment to Letter of Credit Agreement and Waiver dated as of March 2, 2011, and the Third Amendment to Letter of Credit Agreement dated as of February 13, 2012 (the “Third Amendment”), among the Borrower, the Bank, and Sovereign Bank (the “Administrative Agent”), as the administrative agent (as so amended, the “Original Letter of Credit Agreement”), the Series 2007C/ D Credit Facility Issuer issued to U.S Bank National Association, as bond trustee for the Series 2007C Bonds and the Series 2007D Bonds (the “Series 2007C/ D Bond Trustee”), a Letter of Credit with an initial stated termination date of February 28, 2012, which initial stated termination date was extended pursuant to the Third Amendment to May 31, 2012 (the “Series 2007C Letter of Credit”), in the stated amount of $89,776,822 to provide funds for the payment of principal of, and interest on, and the purchase price upon the optional or mandatory tender of the Series 2007C Bonds, and a Letter of Credit with an initial stated termination date of February 28, 2012 (the “Series 2007D Letter of Credit”, and together with the Series 2007C Letter of Credit, the “Series 2007C/D Letters of Credit”) in the stated amount of $11,236,859 to provide funds for the payment of principal of, interest on, and the purchase price upon the optional or mandatory tender of the Series 2007D Bonds. To evidence the Borrower’s payment obligations under the Original Letter of Credit Agreement pursuant to, and concurrently with the execution and delivery of, the Original Master Indenture, the Borrower issued to the Series 2007C/ D Credit Facility Issuer 89,776,822 Direct Note Obligation, Series 2007C-2 (the “Series 2007C-2 Obligation”) and $11,236,859 Direct Note Obligation, Series 2007D-2 (the “Series 2007D-2 Obligation”). The Series 2007D Bonds were optionally redeemed by the Borrower in accordance with the Master Indenture on March 18, 2010, and upon such redemption the Series 2007D Letter of Credit was terminated and Series 2007 D-2 Obligation was cancelled. In connection with certain defaults of the Borrower under the Original Letter of Credit Agreement and the Master Indenture and in order to restructure the credit obligations of the Borrower in connection with the Series 2007 Project, the Borrower has requested that the Issuer issue a new series of bonds to refund the Series 2007B Bonds and to issue a new Obligation as security therefor on a parity with the Series 2007A Obligation, the Series 2007C-1 Obligation and the Series 2007C-2 Obligation, and that the Series 2007C/ D Credit Facility Issuer extend the Series 2007C Letter of Credit to October 31, 2013. The Master Indenture provides for the issuance by the Obligated Group of Obligations thereunder upon the Borrower and the Master Trustee entering into a

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Supplemental Master Indenture to the Master Indenture authorizing the creation of such Obligations. For the purpose of refunding the Series 2007B Bonds, the Issuer is, concurrently with the execution and delivery hereof, issuing $8,000,000 principal amount of its Nonprofit Refunding Revenue Bonds (Skyline at First Hill Project), Series 2012 (the “Series 2012 Bonds”), under and pursuant to the terms and provisions of a Bond Trust Indenture dated as of March 1, 2012 (the “Series 2012 Bond Indenture”), between the Issuer and U.S. Bank National Association, as bond trustee (the “Series 2012 Bond Trustee”). Pursuant to a Mortgage Loan Origination and Financing Agreement dated as of even date herewith (the “Series 2012 Loan Agreement”) by and among the Issuer, U.S. Bank National Association, as Mortgage Lender, the Borrower and the Series 2012 Bond Trustee, the proceeds of the Series 2012 Bonds will be used by the Issuer to acquire the Mortgage Loan made to the Borrower thereunder, and pursuant to which the Borrower will agree to repay such loan in amounts and at times sufficient, among other things, to pay the principal and redemption price of, and interest on, the Series 2012 Bonds. The Borrower desires to issue and deliver the $8,000,000 Direct Note Obligation, Series 2012 described herein (the “Series 2012 Obligation”) for the purpose of evidencing and securing the payment of all of the Borrower’s obligations under the Series 2012 Loan Agreement, including the principal or redemption price of, and interest on, the Series 2012 Bonds. In order to effect and carry out the extension of the Series 2007C Letter of Credit, the Borrower, the Series 2007C/ D Credit Facility Issuer and the Administrative Agent are entering into an Amended and Restated Letter of Credit Agreement dated as of March 1, 2012, amending and restating the Original Letter of Credit Agreement in its entirety, and the Borrower and the Master Trustee are amending Section 427 of the Original Master Indenture in connection therewith. The Master Indenture provides for the amendment of the terms and provisions of the Master Indenture upon the satisfaction of certain conditions set forth therein and upon the Borrower and the Master Trustee entering into a Supplemental Master Indenture authorizing such amendment. All acts and things necessary to constitute this First Supplement a valid indenture and agreement according to its terms, including the consent of the holders of not less than a majority in aggregate principal amount of each series of the Obligations which are outstanding under the Master Indenture, and the consent of Sovereign Bank, the Administrative Agent under the Series 2007C/ D Reimbursement Agreement, have been done and performed, and the Borrower has duly authorized the execution and

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delivery hereof, the execution, issuance and delivery of the Series 2012 Obligation authorized to be issued hereunder and the amendment of the Master Indenture as set forth herein. In consideration of the premises, of the acceptance by the Master Trustee of the trusts hereby created and of the giving of consideration for and acceptance of the Series 2012 Obligation authorized and created hereunder by the holder thereof, and intending to be legally bound, the Borrower hereby covenants and agrees with the Master Trustee, for the benefit of the holders from time to time of the Obligations authorized to be issued under the Master Indenture, including the Series 2012 Obligation, as follows: SECTION 1. DEFINED TERMS. Any terms which are used herein but are not defined herein and which are defined in the Master Indenture shall have the same meaning herein as therein. In addition, the definitions set forth in Article I of the Master Indenture shall be revised as follows:

(a)

The definition of “Cash and Investments” shall be amended to delete the references to the Operating Reserve Fund, the Working Capital Fund and the Entrance Fees Fund.

(b)

The definition of “Cash to Indebtedness Ratio” shall be deleted.

(c)

The definition of “DCOH Certificate” shall be added to read as follows: “DCOH Certificate” shall have the meaning set forth in Section 427(c) of the Master Indenture.

(d)

The definition of “DCOH Shortfall” shall be added to read as follows: “DCOH Shortfall” shall have the meaning set forth in Section 427(c) of the Master Indenture.

(e)

The definition of “DCOH Surplus” shall be added to read as follows: “DCOH Shortfall” shall have the meaning set forth in Section 427(c) of the Master Indenture.

(f)

The definition of “Debt Service Requirements” shall be amended to (i) change the comma at the end of clause (e) to a semicolon, (ii) delete the word “and” before clause (f), and (iii) add the following clause (g) immediately prior to the period at the end of the definition: “; and (g) principal payments with respect to the Series 2012 Obligation, whether pursuant to mandatory or optional redemption or at maturity, shall be excluded from the determination of the Debt Service Requirements”.

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(g)

The definition of “Development Agreement” shall be amended and restated in its entirety so that it reads as follows: “Development Agreement” means the Development Services Agreement dated April 27, 2005, as amended on June 13, 2005, between Skyline and the Developer, as amended and supplemented by that Amendment to the Development Services Agreement dated as of March 1, 2012.

(h)

The definition of “Greystone Management Agreement” shall be added to read as follows: “Greystone Management Agreement: means the Management and Marketing Services Agreement dated as of December 14, 2007, as amended by that First Amendment to the Management and Marketing Services Agreement dated as of June 11, 2011, and that Second Amendment to Management and Marketing Services Agreement dated as of March 1, 2012, between PRCN and the Greystone Manager.

(i)

The definition of “Greystone Manager” shall be added to read as follows: “Greystone Manager” means Greystone Management Services Company, LLC.

(j)

The definition of “Guaranty” shall be amended and restated in its entirety so that it reads as follows: “Guaranty” means any obligation of any Member guaranteeing in any manner, directly or indirectly, any obligation of any other Person that, if such obligation were the obligation of a Member, would constitute Indebtedness hereunder.

(k)

The definition of “Initial Testing Date” shall be amended and restated in its entirety so that it reads as follows: “Initial Testing Date” means the last day of the first full Fiscal Year after Stable Occupancy for the Series 2007 Project has been achieved.

(1)

The definition of “Second Amendment to Greystone Management Agreement” is added to read as follows: “Second Amendment to Greystone Management Agreement” means the Second Amendment to the Management and Marketing Services Agreement dated as of March 1, 2012, between PRCN and the Greystone Manager.

(m)

The definition of “Series 2012 Obligation” shall be added to read as follows: “Series 2012 Obligation” means the Borrower’s $8,000,000 Direct Note Obligation, Series 2012, issued under this Master Indenture in substantially the form attached to this First Supplement as Exhibit A, as security for the Series 2012 Bonds.”

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(n)

The definition of “Stable Occupancy” shall be amended to delete all references to the Series 2007B Bonds. Redemption of the Series 2012 Bonds shall not be required for “Stable Occupancy” to occur.

SECTION 2. FORM OF SERIES 2012 OBLIGATION. The Series 2012 Obligation shall be in substantially the form attached hereto as Exhibit A. SECTION 3. PRINCIPAL AMOUNT, MATURITY AND INTEREST RATE. There is hereby authorized for issuance as a Direct Note Obligation under the Master Indenture the Series 2012 Obligation, which shall be designated “FH LLC Direct Note Obligation, Series 2012”. The Series 2012 Obligation is hereby expressly limited to the principal amount of $8,000,000. The Series 2012 Obligation shall be in the form of a fully registered Direct Note Obligation without coupons, shall be number R-1 and shall be dated March 23, 2012. The Series 2012 Obligation shall bear interest from its date at a rate or rates equal to the interest accruing on and payable with respect to the Series 2012 Bonds. The Members of the Obligated Group shall have the right to prepay all or a portion of the Series 2012 Obligation as shall be necessary to effect the payment, prepayment, redemption, refunding or advance refunding of the Series 2012 Bonds secured by the Series 2012 Obligation or any portion thereof in the manner provided in the Series 2012 Bond Indenture. If called for prepayment or redemption in such events, the Series 2012 Obligation shall be subject to prepayment or redemption in such amount, and at such times, in the manner and with the premium necessary to effect the refunding, advance refunding or redemption of all or a portion of the Series 2012 Bonds to be refunded, advance refunded or redeemed. The Borrower hereby elects to make payments on the Series 2012 Obligation by check or draft hand delivered to the Series 2012 Bond Trustee or by wire transfer to the Series 2012 Bond Trustee, as the Series 2012 Bond Trustee shall direct, in either case delivered on the date each such payment is due. The Borrower also hereby elects to have the Series 2012 Obligation be issuable as a separate series of Direct Note Obligations only in fully registered form exchangeable solely for another fully registered Direct Note Obligation of such series. The Series 2012 Obligation shall not be issued until all conditions precedent to the issuance of the Series 2012 Bonds set forth in the Series 2012 Bond Indenture, the Series 2012 Loan Agreement and the Amended and Restated Letter of Credit Agreement shall have been satisfied as evidenced by the opinions of counsel to the Borrower and Independent Counsel or waived by the proper party or parties. The conditions precedent to the delivery of the Series 2012 Obligation shall include, among

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other things, delivery to the Master Trustee of an opinion of Independent Counsel not objected to by the Master Trustee to the effect that registration of the Series 2012 Obligation under the Securities Act of 1933, as amended, is not required. The Borrower shall receive certain credits against its required payments of principal of and interest on the Series 2012 Obligation to the extent set forth in the Series 2012 Loan Agreement. The Series 2012 Obligation shall be an Accelerable Instrument. SECTION 4. AMENDMENTS OF MASTER INDENTURE. Indenture is hereby amended as follows:

(a) as follows:

The Master

Section 424 of the Master Indenture shall be revised in its entirety to read

The Obligated Group covenants that it Liquidity Covenant. “Section 424. will calculate the Days Cash on Hand of the Obligated Group as of March 31 and September 30 of each Fiscal Year (each such date being a “Testing Date”), commencing with the Testing Date following the first full Fiscal Year after the Series 2012 Obligation has been paid in full. The Obligated Group shall deliver an Officer’s Certificate setting forth such calculation as of March 31 to the Master Trustee not less than 45 days after such March 31, and include such calculation as of September 30 in the Officer’s Certificate delivered pursuant to Section 414 hereof, Each Obligated Group Member is required to conduct its business so that on each Testing Date set forth below the Obligated Group shall have no less than the number of Days Cash on Hand set forth opposite such Testing Date (the “Liquidity Requirement”): Minimum Days Cash on Hand 125 150 175 200 225 225

Testing Date Initial Testing Date Second Testing Date Third Testing Date Fourth Testing Date Fifth Testing Date All Subsequent Testing Dates

If the amount of Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Agent shall, within 45 days after delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate approved by a resolution of the Governing Body of the Obligated Group Agent to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and

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adopting a specific plan setting forth steps to be taken designed to raise the level of Days Cash on Hand to the Liquidity Requirement for future periods. If the Obligated Group has not raised the level of the Days Cash on Hand to the Liquidity Requirement by the Testing Date immediately subsequent to the delivery of the Officer’s Certificate required in the preceding paragraph, the Obligated Group Agent shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, retain a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase the Days Cash on Hand to the Liquidity Requirement for future periods. A copy of the Consultant’s report and recommendations, if any, shall be filed with each Member and the Master Trustee (who shall deliver such report to each Required Information Recipient) within 60 days after the date such Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. Notwithstanding any other provision of this Master Indenture, failure of the Obligated Group to achieve the Liquidity Requirement for any Testing Date shall not constitute an event of default under this Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan or retaining a Consultant and follows each recommendation contained in such plan or Consultant’s report to the extent feasible (as determined by the Governing Body of the Obligated Group Agent) and permitted by law.” (b) deleted.

Section 425 (Marketing Covenant) of the Master Indenture is hereby

(c) deleted.

Section 426 (Occupancy Covenant) of the Master Indenture is hereby

(d) as follows:

Section 427 of the Master Indenture is hereby revised in its entirety to read

The Master Trustee has established and Entrance Fees Fund. “Section 427. shall continue to maintain a separate account to be known as the “Entrance Fees Fund FH, LLC” (the “Entrance Fees Fund”). All moneys received by the Master Trustee and held in the Entrance Fees Fund pursuant to this Section 427 shall be trust funds under the terms of this Master Indenture for the benefit of all of the Obligations outstanding hereunder (except as otherwise provided). Such moneys shall be held in trust and applied in accordance with the provisions of this Master Indenture. -

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The Members of the Obligated Group hereby agree that all Initial Entrance Fees currently held by the Members of the Obligated Group shall be immediately transferred, and, so long as the Series 2007C Bonds are outstanding or any amounts are due and owing under the Series 2007C/D Reimbursement Agreement, all Initial Entrance Fees received by the Members of the Obligated Group on or after the date of issuance of the Series 2012 Obligation to and including May 31, 2013 shall be transferred within five Business Days of the receipt thereof, to the Master Trustee for deposit into the Entrance Fees Fund. The Members of the Obligated Group further hereby agree that, commencing June 1, 2013, all Initial Entrance Fees received by the Members of the Obligated Group shall be transferred to the Series 2007C/ D Bond Trustee within five Business Days of the receipt thereof for deposit into the Redemption Fund established under the Series 2007C/D Bond Indenture for redemption of Series 2007C Bonds pursuant to Section 501 of the Series 2007C/ D Bond Indenture and prepayment of the Series 2007C-1 Obligation, and then payment of all amounts due to the Series 2007C/ D Credit Facility Issuer under the Series 2007C/ D Reimbursement Agreement and the Series 2007C-2 Bank Obligation. No later than the Business Day preceding the last Business Day of each calendar month, commencing on April 27, 2012, for so long as the Entrance Fees Fund shall remain open, the Borrower shall deliver to the Master Trustee and the Administrative Agent under the Series 2007C/ D Reimbursement Agreement a written certificate of an Authorized Officer of the Borrower substantially in the form attached here to as Exhibit B (the “DCOH Certificate”) certifying the current aggregate amount of the Borrower’s Cash and Investments, as adjusted for any then outstanding checks and deposits and any payroll due prior to month end. If the DCOH Certificate shows the Borrower to have less than an amount equal to 75 Days Cash on Hand, any shortfall (the “Shortfall”) shall be disbursed to the Borrower by the Master Trustee pursuant to the following paragraph. If the DCOH Certificate shows the Borrower to have more than an amount equal to 75 Days Cash on Hand, any surplus (the “Surplus”) shall be transferred by the Borrower on the last Business Day of such calendar month to the Series 2007C/D Bond Trustee for deposit into the Redemption Fund established under the Series 2007C/D Bond Indenture for redemption of Series 2007C Bonds pursuant to Section 501 of the Series 2007C/D Bond Indenture and prepayment of the Series 2007C-1 Obligation, and then payment of all amounts due to the Series 2007C/ D Credit Facility Issuer under the Series 2007C/ D Reimbursement Agreement and the Series 2007C-2 Bank Obligation. Moneys in the Entrance Fees Fund shall be disbursed by the Master Trustee on the last Business Day of each calendar month, as follows: FIRST: pro rata based upon the principal amount of Bonds Outstanding, (i) to the Series 2007A/ B Bond Trustee for deposit into the Debt Service Fund established under the Series 2007A/ B Bond Indenture the amount set forth in the DCOH Certificate as principal and interest payments due on the Series 2007A Bonds in the immediately

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succeeding calendar month, and (ii) to the Series 2012 Bond Trustee for deposit into the Revenue Fund established under the Series 2012 Bond Indenture the amount set forth in the DCOH Certificate as the interest payment due on the Series 2012 Bonds in the immediately succeeding calendar month. SECOND: to the Borrower, the amount, if any, set forth in such Certificate as the Shortfall. THIRD: to the Developer, the amount, if any, due pursuant to Section 4.1 of the Development Agreement, as certified by the Borrower in the DCOH Certificate; and to PRCN, for payment to the Greystone Manager under Section 2(d) of the Second Amendment to the Greystone Management Agreement, as certified by the Borrower in the DCOH Certificate; provided that in each case payment instructions shall be attached to the DCOH Certificate provided to the Master Trustee. FOURTH: (i) if the amount in the Entrance Fees Fund (together with any Surplus to be transferred by the Borrower) is equal to $100,000 or more, to the Series 2007C/D Bond Trustee for deposit into the Redemption Fund established under the Series 2007C/ D Bond Indenture for redemption of Series 2007C Bonds pursuant to Section 501 of the Series 2007C/ D Bond Indenture and prepayment of the Series 2007C-1 Obligation, and then payment of all amounts due to the Series 2007C/ D Credit Facility Issuer under the Series 2007C/ D Reimbursement Agreement and the Series 2007C-2 Bank Obligation; or (ii) if the amount remaining in the Entrance Fees Fund (together with any Surplus to be transferred by the Borrower) is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fees Fund until the next calendar month. Funds shall be transferred as described in clause FOURTH above only to the extent that the amount to be so transferred (together with any Surplus to be transferred by the Borrower) is not less than $100,000 and is sufficient to redeem Series 2007C Bonds in Authorized Denominations of such Series 2007C Bonds. When the Obligated Group Agent delivers an Officer’s Certificate to the Master Trustee (a) stating that either (i) the last Initial Entrance Fee has been received and transferred to the Master Trustee for deposit into the Entrance Fees Fund or (ii) the Series 2007C Bonds and all amounts due under the Series 2007 C/ D Reimbursement Agreement, the Series 2007C-1 Obligation and the Series 2007C-2 Obligation have been paid in full and (b) requesting that any funds on deposit in the Entrance Fees Fund be transferred to the Borrower, any amounts on deposit in the Entrance Fees Fund shall be remitted promptly to the Borrower by the Master Trustee, and the Entrance Fees Fund shall be closed.”

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(e) Section 429 (Operating Reserve Fund) of the Master Indenture shall be revised to provide that (i) as of the date of issuance of the Series 2012 Obligation, any funds remaining in the Operating Reserve Fund shall be transferred promptly to the Borrower, (ii) the Operating Reserve Fund shall be closed, and (iii) any references elsewhere in the Master Indenture to the Operating Reserve Fund shall refer to the Borrower. (f) Section 431 (Cumulative Cash Operating Loss Covenant) of the Master Indenture is hereby deleted. SECTION 5. STATUS OF MASTER INDENTURE. Except as modified herein, all the provisions, definitions, terms and conditions of the Master Indenture are hereby ratified, approved and confirmed. All references to “this Master Indenture” in the Master Indenture shall be to the Master Indenture as supplemented by this First Supplement. SECTION 6. SEVERABILITY. If any portion of this First Supplement shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or sections in this First Supplement shall not affect the remaining portions of this First Supplement, or any part thereof. SECTION 7. EXECUTION AND COUNTERPARTS. This First Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. [Signatures on Following Page]

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________

IN WITNESS WHEREOF, FF1, LLC and the vi aster Trustee have caused this First Supplement to be executed all as of the day and year first above written. FH, LLC

By:

Presbyterian Retirement Communities Northwest, its sole member /2/1.

By:

( /f// I L’//1

C/3_

Title:______________________________________

U.S. BANK NATIONAL ASSOCIATION, as Master Trustee

By Authorized’ent

EXHIBIT A [This Series 2012 Obligation has not been registered under the Securities Act of 1933, as amended] FH, LLC DIRECT NOTE OBLIGATION, SERIES 2012 $8,000,000.00

No. R-1

FH, LLC, a Washington limited liability company (the “Borrower”), for value received, hereby promises to pay to U.S. Bank National Association, as Mortgage Lender, or registered assigns, the principal sum of Eight Million and 00/100 Dollars ($8,000,000). This Series 2012 Obligation (as hereinafter defined) shall bear interest from time to time in an amount equal to the interest accruing on and payable with respect to the Nonprofit Refunding Revenue Bonds (Skyline at First Hill Project), Series 2012 (the “Series 2012 Bonds”) of the Washington State Housing Finance Commission (the “Commission”) in the original aggregate principal amount of $8,000,000 issued under and pursuant to the Bond Trust Indenture dated as of March 1, 2012 between the Commission and U.S. Bank National Association, as Bond Trustee (the “Series 2012 Bond Indenture”), to which reference is hereby made for the definition of certain terms used herein. Monthly installments of interest are payable on or before the 25th day of each month commencing April 25, 2012 (or on the next succeeding Business Day if the 25th day of any such month is not a Business Day), in an amount which, together with an equal amount to be deposited on the 25th day of each month preceding the next regularly scheduled Interest Payment Date, will be not less than the amount of interest to become due on the Series 2012 Bonds on the next succeeding Interest Payment Date; provided, however, that the Borrower may be entitled to certain credits on such payments as permitted under the Mortgage Loan Origination and Financing Agreement dated as of March 1, 2012 (the “Loan Agreement”) by and among the Commission, U.S. Bank National Association, as Mortgage Lender, the Borrower and the Series 2012 Bond Trustee. Principal of this Series 2012 Obligation is payable in monthly installments commencing on January 1, 2018, in the amount due on the Series 2012 Bonds; provided, however, that principal may be payable prior to January 1, 2018 from Excess Cash (as defined in the Series 2012 Bond Indenture); provided further, however, that the Borrower may be entitled to certain credits on such payment as permitted under the Loan Agreement.

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The Borrower shall receive certain credits against its required payments of principal of and interest on this Series 2012 Obligation to the extent provided in Section 5.4 of the Loan Agreement, pursuant to the provisions of which the proceeds of the sale of the Series 2012 Bonds were used by the Commission to acquire the mortgage loan made to the Borrower thereunder. Notwithstanding anything to the contrary herein or in the Loan Agreement, the Borrower agrees to pay all amounts due and owing on the Series 2012 Bonds as they become due. In addition, the Borrower hereby promises to remit to the Series 2012 Bond Trustee all other amounts due and owing under the Loan Agreement, including any amount required to be deposited by the Borrower into the Debt Service Reserve Fund established under the Series 2012 Bond Indenture pursuant to Section 5.3 of the Loan Agreement. The principal of and interest on this Series 2012 Obligation and the premium, if any, payable upon redemption are payable at the designated corporate trust office of the Series 2012 Bond Trustee for the Series 2012 Bonds by check or draft hand delivered to the Series 2012 Bond Trustee or by wire transfer, in either case delivered on the date such payment is due. This Series 2012 Obligation is issued in the principal amount of $8,000,000 and is designated as the “FH, LLC Direct Note Obligation, Series 2012” (the “Series 2012 Obligation” and, together with all other Obligations issued under the Master Indenture (defined below), the “Obligations”) and is issued under and secured by and entitled to the security of the Master Trust Indenture dated as of January 1, 2007 between the Borrower, as the initial member of an Obligated Group (the “Obligated Group”), and U.S. Bank National Association, as Master Trustee (the “Master Trustee”), as amended and supplemented from time to time, including without limitation as amended and supplemented by the First Supplemental Master Trust Indenture dated as of March 1, 2012 (collectively, the “Master Indenture”). Pursuant to the Master Indenture each Member of the Obligated Group (as defined in the Master Indenture) and each future Member of the Obligated Group are jointly and severally liable on all Obligations (including this Series 2012 Obligation) issued under the Master Indenture. It is provided in the Master Indenture that the Borrower and any future Members of the Obligated Group may hereafter issue Additional Obligations (as defined in the Master Indenture) from time to time, and if issued, such Additional Obligations will rank pan passu with this Series 2012 Obligation and all other Obligations theretofore or thereafter issued under the Master Indenture, except as otherwise provided in the Master Reference is made to the Master Indenture and to all indentures Indenture. supplemental thereto for the provisions, among others, with respect to the nature and

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extent of the for the Obligations, the rights, duties and obligations of the Borrower, the other Members of the Obligated Group and the Master Trustee and the rights of the holders of the Obligations, and to all the provisions of which the holder hereof by the acceptance of this Series 2012 Obligation assents. security

This Series 2012 Obligation is issued to evidence the mortgage loan made by the Mortgage Lender to the Borrower and acquired by the Commission pursuant to the Loan Agreement. Reference is made to the Loan Agreement for its provisions, including the provisions for the payment of principal and interest on this Series 2012 Obligation, to which the holder hereof, by acceptance of this Series 2012 Obligation, assents. This Series 2012 Obligation is transferable by the registered holder hereof in person or by duly authorized attorney at the designated corporate trust office of the Master Trustee, currently in St. Paul, Minnesota, but only in the manner, subject to the limitations and upon payment of the charges provided in the Master Indenture, and upon surrender and cancellation of this Series 2012 Obligation. Upon such transfer, a new Series 2012 Obligation or Series 2012 Obligations without coupons of the same series and maturity and of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. The Master Trustee may deem and treat the registered holder hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and premium, if any, hereon and interest due hereon and for all other purposes, and the Master Trustee shall not be affected by any notice to the contrary. This Series 2012 Obligation is issuable as a single fully registered Obligation without coupons. This Series 2012 Obligation may not be exchanged for a coupon Obligation. This Series 2012 Obligation is prepayable at any time to the extent of proceeds received from insurance and condemnation or sale consummated under threat of condemnation under certain conditions, in whole or in part, without premium, as provided in the Master Indenture. In addition, from and after the date on which the Series 2007C Bonds are paid in full, this Series 2012 Obligation is subject to mandatory prepayment from Excess Cash as set forth in the Series 2012 Bond Indenture with respect to the mandatory redemption of the Series 2012 Bonds. This Series 2012 Obligation may also be prepaid in whole or in part by paying the amount necessary to provide for the payment, prepayment, redemption, refunding or advance refunding of the Commission’s $8,000,000 Nonprofit Refunding Revenue

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Bonds (Skyline at First Hill Project), Series 2012 (the “Series 2012 Bonds”) or any portion of such Series 2012 Bonds in the manner provided in the Series 2012 Bond Indenture. In the event this Series 2012 Obligation is prepaid as aforesaid, notice thereof identifying the portion of this Series 2012 Obligation to be prepaid will be given by mailing a copy of the redemption notice by first class mail, postage prepaid, to the registered owner or owners hereof, at their addresses shown on the registration books, not less than 20 days prior to the date fixed for prepayment. This Series 2012 Obligation or the portion hereof so called for prepayment will cease to bear interest on the specified prepayment date, provided funds for its prepayment are on deposit at the place of payment at that time, and this Series 2012 Obligation or such portion shall no longer be protect by the Master Indenture and shall not be deemed to be outstanding under the provisions of the Master Indenture. The Members may pay or provide for the payment of the entire indebtedness on this Series 2012 Obligation or any portion of this Series 2012 Obligation by depositing Escrow Obligations (as defined in the Master Indenture) in an amount, together with the income or increment to accrue thereon, but without consideration of any reinvestment thereof, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on this Series 2012 Obligation or a portion of this Series 2012 Obligation at or before its maturity date. Upon such deposit, this Series 2012 Obligation or portion of this Series 2012 Obligation shall cease to be entitled to any lien, benefit or security under the Master Indenture. The Members shall remain the obligors on this Series 2012 Obligation but the holders thereof shall be entitled to payment (to the exclusion of all other Obligation holders) solely out of funds received from such Escrow Obligations. Other Obligations are also subject to advance defeasance, and the Members may pay or provide for the payment of all or a part of the indebtedness on all Obligations of a particular series as described in the Master Indenture. The foregoing notwithstanding, this Series 2012 Obligation shall not be deemed paid and shall continue to be entitled to the lien, benefit and security of the Master Indenture unless and until the Series 2012 Bonds cease to be entitled to any lien, benefit or security under the Series 2012 Bond Indenture pursuant to the provisions thereof. The holder of this Series 2012 Obligation shall have no right to enforce the provisions of the Master Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Master Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Master Indenture. This Series 2012 Obligation is an Accelerable Instrument (as defined in the Master Indenture) and, subject to the terms of the Master Indenture, the holder hereof has the right under the Master Indenture to request an acceleration of this Series 2012

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Obligation upon the occurrence of an event of default described in Section 502 of the Master Indenture. In certain events (including without limitation the occurrence of an “event of default” as defined in the Master Indenture), on the conditions, in the manner and with the effect set forth in the Master Indenture, the outstanding principal of this Series 2012 Obligation may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. Modifications or alterations of the Master Indenture, or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Master Indenture. It is hereby certified that all conditions, acts and things required to exist, happen and be performed under the Master Indenture precedent to and in the issuance of this Series 2012 Obligation exist, have happened and have been performed, and that the issuance, authentication and delivery of this Series 2012 Obligation have been duly authorized by resolution of the Borrower duly adopted. No recourse shall be had for the payment of the principal of or premium or interest on this Series 2012 Obligation or for any claim based thereon or upon any obligation, covenant or agreement in the Master Indenture contained against any past, present or future officer, director, employee, member or agent of any Member, or of any successor corporation, as such, either directly or through any Member or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such officers, directors, employees, members or agents, as such, is hereby expressly waived and released as a condition of and consideration for the execution of the Master Indenture and the issuance of this Series 2012 Obligation. The Borrower, on behalf of itself and the other Members, hereby waives presentment for payment, demand, protest, notice of protest, notice of dishonor and all defenses on the grounds of extension of time of payment for the payment hereof which may be given (other than in writing) by the Master Trustee to the Members. This Series 2012 Obligation shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Master Indenture until the certificate of authentication hereon shall have been duly executed by the Master Trustee.

[Signatures on Following Page]

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IN WITNESS WHEREOF, FH, LLC has caused this Series 2012 Obligation to be executed in its name and on its behalf by the manual signature of an authorized officer of its sole member on March 2012. ,

FH, LLC By:

Presbyterian Retirement Communities Northwest, its sole member

By: Title:________________________________

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CERTIFICATE OF AUTHENTICATION This Series 2012 Obligation is one of the Obligations described in the within mentioned Master Indenture. U.S. BANK NATIONAL ASSOCIATION, as Master Trustee

Date: March

,

2012

By: Authorized Signatory

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ASSIGNMENT The undersigned, on behalf of U.S. Bank National Association, hereby assigns all right, title and interest of U.S. Bank National Association, as Mortgage Lender, in this Series 2012 Obligation to U.S. Bank National Association, as Bond Trustee under the within-mentioned Series 2012 Bond Indenture. U.S. Bank National Association, as Mortgage Lender Date: March

,

2012

By: Authorized Officer

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EXHIBIT B OFFICER’S CERTIFICATE The undersigned, being an Authorized Officer of Presbyterian Retirement Communities Northwest, a Washington not for profit corporation and the sole member of FH, LLC (the “Borrower”), hereby certifies pursuant to Section 427 of the Master Trust Indenture dated as of January 1, 2007 between the Borrower and U.S. Bank National Association, as amended by the First Supplemental Master Trust Indenture (collectively, the “Master Indenture”), as follows: The current aggregate amount of the Borrower’s Cash 1. and Investments: Adjustments for any then outstanding checks and 2. deposits and any payroll due prior to month end: Available cash through current calendar month 3. end (sum of lines 1 and 2 above): 4.

Amount of cash equal to 75 Days Cash on Hand:

If the amount on line 3 is less than the amount on line 4, 5. the difference (“Shortfall”) to be transferred from the Entrance Fee Fund to the Borrower: If the amount on line 3 is greater than the amount on 6. line 4, the difference (“Surplus”) to be transferred by the Borrower to the Redemption Fund: The amount of principal and interest due on the Series 7. 2007A Bonds during the next calendar month: The amount of interest due on the Series 2012 Bonds 8. during the next calendar month: 9.

The amount, if any, payable to the Developer under

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$___________

(

)

_

Section 4.1 of the Development Agreement (payment instructions attached): 10. The amount, if any, payable to the Greystone Manager under Section 2(d) of the Second Amendment to Management Agreement (payment instructions attached): All terms used in this Certificate and defined in the Master Indenture shall have the meanings assigned to such terms in the Master Indenture. Date:

FH, LLC By:

Presbyterian Retirement Communities Northwest, its sole member

By: Title:

198 7800v9

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