                                 CODE OF VIRGINIA

NOTES AND BONDS (§ 36-55.40)

A. 1. HDA shall have power and is hereby authorized to issue from time to time
its negotiable notes and bonds in conformity with applicable provisions of the
Uniform Commercial Code in such principal amount as HDA shall determine to be
necessary to provide sufficient funds for achieving any of its corporate
purposes, including the payment of interest on notes and bonds of HDA,
establishment of reserves to secure such notes and bonds, and all other
expenditures of HDA incident to and necessary or convenient to carry out its
corporate purposes and powers. In accordance with § 2.2-5002, such power to
issue notes and bonds shall not be restricted or limited solely because the
interest on the notes and bonds is subject, in whole or in part, directly or
indirectly, to federal income taxes.

   2. HDA shall have the power, from time to time, to issue (i) notes to renew
   notes and (ii) bonds, to pay notes, including the interest thereon and,
   whenever it deems refunding expedient, to refund any bonds by the issuance of
   new bonds, whether the bonds to be refunded have or have not matured, and to
   issue bonds partly to refund bonds then outstanding and partly for any of its
   corporate purposes. The refunding bonds may be (i) exchanged for the bonds to
   be refunded or (ii) sold and the proceeds applied to the purchase, redemption
   or payment of such bonds.

   3. Except as may otherwise be expressly provided by HDA, every issue of its
   notes and bonds shall be general obligations of HDA payable out of any
   revenues or moneys of HDA, subject only to any agreements with the holders of
   particular notes or bonds pledging any particular revenues.

B. The notes and bonds shall be authorized by resolution or resolutions of HDA,
shall bear such date or dates and shall mature at such time or times as such
resolution or resolutions may provide, except that no bond shall mature more
than fifty years from the date of its issue. The bonds may be issued as serial
bonds payable in annual installments or as term bonds or as a combination
thereof. The notes and bonds shall bear interest at such rate or rates, be in
such denominations, be in such form, either coupon or registered, carry such
registration privileges, be executed in such manner, be payable in such medium
of payment, at such place or places, and be subject to such terms of redemption
as such resolution or resolutions may provide. The notes and bonds of HDA may be
sold by HDA, at public or private sale, at such price or prices as HDA shall
determine.

C. Any resolution or resolutions authorizing any notes or bonds or any issue
thereof may contain provisions, which shall be a part of the contract or
contracts with the holders thereof, as to:

   1. Pledging all or any part of the revenues to secure the payment of the notes
   or bonds or of any issue thereof, subject to such agreements with noteholders
   or bondholders as may then exist;

   2. Pledging all or any part of the assets of HDA, including mortgages and
   obligations securing the same, to secure the payment of the notes or bonds or
   of any issue of notes or bonds, subject to such agreements with noteholders or
   bondholders as may then exist;

   3. The use and disposition of the gross income from mortgages owned by HDA and
   payment of principal of mortgages owned by HDA;

   4. The setting aside of reserves or sinking funds and the regulation and
   disposition thereof;

   5. Limitations on the purpose to which the proceeds of sale of notes or bonds
   may be applied and pledging such proceeds to secure the payment of the notes
   or bonds or of any issue thereof;

   6. Limitations on the issuance of additional notes or bonds; the terms upon
   which additional notes or bonds may be issued and secured; and the refunding
   of outstanding or other notes or bonds;

   7. The procedure, if any, by which the terms of any contract with noteholders
   or bondholders may be amended or abrogated, the amount of notes or bonds the
   holders of which must consent thereto; and the manner in which such consent
   may be given;

   8. Limitations on the amount of moneys to be expended by HDA for operating
   expenses of HDA;

   9. Vesting in a trustee or trustees such property, rights, powers and duties
   in trust as HDA may determine, which may include any or all of the rights,
   powers and duties of the trustee appointed by the bondholders pursuant to this
   chapter and limiting or abrogating the right of the bondholders to appoint a
   trustee under this chapter or limiting the rights, powers and duties of such
   trustee;

   10. Defining the acts or omissions to act which shall constitute a default in
   the obligations and duties of HDA to the holders of the notes or bonds and
   providing for the rights and remedies of the holders of the notes or bonds in
   the event of such default, including as a matter of right the appointment of a
   receiver; provided, however, that such rights and remedies shall not be
   inconsistent with the general laws of the Commonwealth and the other
   provisions of this chapter;

   11. Any other matters, of like or different character, which in any way affect
   the security or protection of the holders of the notes or bonds.

D. Any pledge made by HDA shall be valid and binding from the time when the
pledge is made; HDA&#8217;s interest, then existing or thereafter obtained, in
the revenues, moneys, mortgage loans, receivables, contract rights or other
property or proceeds so pledged shall immediately be subject to the lien of such
pledge without any physical delivery or further act, and the lien of such pledge
shall be valid and binding as against all parties having claims of any kind in
tort, contract or otherwise against HDA, irrespective of whether such parties
have notice thereof. Neither the resolution nor any other instrument by which a
pledge is created need be recorded, nor shall any filing be required with
respect thereto.

E. Neither the commissioners of HDA nor any other person executing such notes or
bonds shall be subject to any personal liability or accountability by reason of
the issuance thereof.

F. HDA, subject to such agreements with noteholders or bondholders as may then
exist, shall have power out of any funds available therefor to purchase notes or
bonds of HDA, which shall thereupon be cancelled unless HDA shall provide
written notification to the trustee pursuant to subsection J, at a price not
exceeding:

   1. If the notes or bonds are then redeemable, the redemption price then
   applicable plus accrued interest to the next interest payment thereon, or

   2. If the notes or bonds are not then redeemable, the redemption price
   applicable on the first date after such purchase upon which the notes or bonds
   become subject to redemption plus accrued interest to such date.

G. In the discretion of HDA, the bonds may be secured by a trust indenture by
and between HDA and a corporate trustee, which may be any trust company or bank
having the power of a trust company within or without the Commonwealth. Such
trust indenture may contain such provisions for protecting and enforcing the
rights and remedies of the bondholders as may be reasonable and proper and not
in violation of law, including covenants setting forth the duties of HDA in
relation to the exercise of its corporate powers and the custody, safeguarding
and application of all moneys. HDA may provide by such trust indenture for the
payment of the proceeds of the bonds and the revenues to the trustee under such
trust indenture or other depository, and for the method of disbursement thereof,
with such safeguards and restrictions as it may determine. All expenses incurred
in carrying out such trust indenture may be treated as a part of the operating
expenses of HDA. If the bonds shall be secured by a trust indenture, the
bondholders shall have no authority to appoint a separate trustee to represent
them.

H. Whether or not the notes and bonds are of such form and character as to be
negotiable instruments under the terms of the Uniform Commercial Code, the notes
and bonds are hereby made negotiable instruments within the meaning of and for
all the purposes of the Uniform Commercial Code, subject only to the provisions
of the notes and bonds for registration.

I. In case any of the commissioners or officers of HDA whose signatures appear
on any notes or bonds or coupons shall cease to be such commissioners or
officers before the delivery of such notes or bonds, such signatures shall,
nevertheless, be valid and sufficient for all purposes, the same as if such
commissioners or officers had remained in office until such delivery.

J. Notwithstanding any statute or case law to the contrary, the purchase or
actual or constructive ownership by HDA of any of its notes or bonds with the
intent that such notes or bonds remain outstanding, as evidenced by written
notification from HDA to the trustee under the resolution or trust indenture,
shall not cause such notes or bonds or the indebtedness evidenced thereby to be
canceled or extinguished, subject to such terms and conditions as may be set
forth in the written notification and except as may be otherwise provided in the
resolution or trust indenture.

HISTORY: 1972, c. 830; 1978, c. 189; 1996, c. 298; 1998, c. 442.