HomeMy WebLinkAboutRDA 3 DDA 03-02 06-16-03AGENDA REPORT
RDA 3
Agenda Item
Reviewed:
City Manager '
Finance Director
MEETING DATE: JUNE 16, 2003
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, EXECUTIVE DIRECTOR
REDEVELOPMENT AGENCY STAFF
KENYON DRIVE MULTIFAMILY RESIDENTIAL ACQUISITION AND
SUBSTANTIAL REHABILITATION PROJECT DISPOSITION AND
DEVELOPMENT AGREEMENT (DDA 03-02).
SUMMARY
Approval is requested of the Kenyon Drive Multifamily Residential Acquisition and
Substantial Rehabilitation Disposition and Development Agreement (DDA 03-02) and
related documents between the Agency and Kenyon Drive EEC. "Developer").
RECOMMENDATION
That the Agency:
Subject to non-substantial modifications, as may be determined necessary by the
City Attorney, Special Counsel or Executive Director prior to execution, approve
and authorize the Executive Director or assignee, to execute the DDA 03-02
Agreement between the Tustin Community Redevelopment Agency and Kenyon
Drive EEC., and to carry out all actions necessary to implement the DDA
including execution of all related documents.
FISCAL IMPACT
This action will require the supplemental appropriation of $3,464,200 from the Agency's
Low and Moderate Income Housing Set-Aside Fund. Under the California
Redevelopment Law ("CRL") not less than twenty percent (20%) of the Agency's annual
tax increment must be deposited in the Housing Set-Aside Fund for the purpose of
expanding and preserving the community's supply of very Iow, lower and moderate
income housing.
William A. Huston
Kenyon Drive Disposition and Development Agreement
June 16,2003
Page 2
BACKGROUND AND DISCUSSION
In August, 2002 the Agency authorized the Executive Director to enter exclusive
negotiations with Kenyon Drive LL.C. ("Developer") for the redevelopment of the
Kenyon Drive Neighborhood pursuant to the Rules Governing Participation for Property
Owners and Businesses in the South Central Redevelopment Plan. During the course
of the negotiations, the Developer has continued to acquire properties in the area and
prepared preliminary design drawings for substantially rehabilitating existing apartment
units and constructing additional site improvements at the Kenyon Drive Neighborhood.
The Developer currently owns 71 units of the total 125 units (including 24 units that are
necessary for the roadway widening under the Newport Avenue Extension Project (CIP
No. 7131)) at the Site.
Under the DDA, the Developer will acquire the remaining properties they do not
currently own in the Kenyon Drive Neighborhood, substantially rehabilitate the interiors
and exteriors of 104 apartment units, demolish 21 units in connection with the Newport
Avenue widening, and construct 8 new apartment units on the site to provide a total of
112 apartment units under a single project to be owned and managed by the Developer
("Project"). The Developer will provide 67 affordable housing units to be made available
to and occupied by very Iow, lower and moderate income families for a period of fifty-
five (55) years under the terms of a Regulatory Agreement and Declaration of
Restrictive Covenants to be recorded with a Memorandum of the DDA and the Deeds of
Trust securing the Agency's loans assisting the Project. In addition, the Developer will
construct site improvements including the common area landscaping, community
recreation facilities, play grounds and tot lots, additional parking, and a gated entrance
to Kenyon Drive which is to become a private street.
The proposed Project will be implemented over an approximately 18-month period due
to the necessity to acquire properties not currently owned by the Developer or Agency,
and for which some Agency assistance may be required to assemble the total project
site. Nevertheless, substantial rehabilitation work will commence on the interiors and
exteriors of the 71 developer-owned parcels after execution of the proposed DDA, while
the balance of the properties are assembled. The Agency's financial assistance has
been structured to reflect this implementation sequencing by first providing funding of a
Bridge Loan for predevelopment and property acquisition costs followed closely by an
initial disbursement of a construction assistance loan ("Agency Loan").
William A. Huston
Kenyon Drive Disposition and Development Agreement
June 16, 2003
Page 3
The total project cost is estimated to be $15,200,000. The Developer is required to
contribute not less than $2,000,000 in cash equity to the proposed Project and to
ensure that all project costs are funded either through a bank financing or additional
Developer cash contributions. A Bridge Loan will be provided in an amount of $900,000
and is a pass-through financing by the Agency using the California Housing Financing
Authority (CHFA) HELP Fund loan proceeds awarded to the Agency in 2001 and is due
and payable to the Agency within three years after it is disbursed to the Developer. The
Agency's assistance for construction of improvements and long-term affordability
restrictions is proposed in the form of an Agency Loan in the amount of $2,664,200 to
be disbursed to the Developer as the rehabilitation and construction work progresses. If
the Developer has fulfilled all of its obligations under the DDA and related documents,
the Agency Loan may be forgiven at the end of the seventh years after it is disbursed to
the Developer.
Prior the entering the Exclusive Agreement to Negotiate with the Developer identified
above, Agency staff had initiated and owner participation process as required under the
CRL to provide property owners and businesses in the project area the opportunity to
participate in redevelopment in accordance with the Redevelopment Plan. In July 2000,
staff mailed inquiries to the property owners in the Kenyon Drive Neighborhood
regarding their interest in revitalizing the area. Following to the initial unsuccessful
contacts, on June 1, 2001 staff sent a second mailing to request that the property
owners contact Agency Staff to discuss their views of appropriate actions, if any, that
the property owners might take in cooperation with the Agency towards revitalizing the
area. While the Agency received a relatively poor response by property owners to the
Agency's inquiries, staff was contacted by Kenyon Drive L.L.C. who was acquiring
properties in the area and was interested in pursuing the assembly of more properties in
the area pursuant to the owner participation process to undertake a large-scale
rehabilitation project in the Kenyon Drive Neighborhood. Per the Agency's
authorization, a formal Request for Proposals and statements of interest in participating in
revitalizing the neighborhood was sent via certified mail on December 19, 2001 to property
owners in the Kenyon Drive Neighborhood. On February 11, 2002, Agency staff received
only two responses from property owners indicating their interest in participating with the
Agency in revitalizing the Kenyon Drive Neighborhood and only one of which, Kenyon
Drive, EEC., submitted a proposal in response to the Agency's Request of Proposals.
Subsequently, Agency staff with its financial consultant, Keyser Marston Associates,
evaluated the financial capacity and comparable development experience of the
Developer to determine the Developer's overall qualifications under the owner participation
process.
William A. Huston
Kenyon Drive Disposition and Development Agreement
June 16, 2003
Page 4
The proposed Project is located in the South Central Project Area. On March 6, 2000 the
Tustin Community Redevelopment Agency adopted a five-year Implementation Plan for
the Town Center and South Central Redevelopment Project areas for fiscal years 2000-
2001 through 2004-2005. The Implementation Plan was composed of two parts, a five-
year plan for Redevelopment activities and a five-year plan for housing activities.
Anticipated accomplishments and expenditures for the five-year period included the
acquisition and substantial rehabilitation of multifamily rental properties in the Project Area
to improve building conditions, increase functionality and desirability, and to integrate
design characteristics through unified management and ownership with the aim of
enhancing the residential living conditions and neighborhood quality in the South Central
Project Area.
The proposed Project is consistent with the Implementation Plan for the South Central
Project Area. It will remove blighting influences in the Project Area, including residential
overcrowding, lack of parking and inadequate open space by substantially rehabilitating or
clearing existing improvements that are characterized by substantial deferred maintenance
and developing a viable residential apartment project under unified management. It is
anticipated that the proposed project would bring a higher standard of living in the area,
while providing for long-term affordability in the Project Area.
The proposed Disposition and Development Agreement is Categorically Exempt from
the provisions of the California Environmental Quality Act pursuant to Section 15302,
Class 2, and Section 15326, Class 26, of Title 14, Chapter 3 of the California Code of
Regulations (Guidelines for the California Environmental Quality Act), which provide for
the replacement and reconstruction of existing structures and the actions by a
redevelopment agency to provide housing assistance. In addition, a project that
converts or constructs not more than 100 affordable housing units in an urbanized area
is not subject to the provisions of the California Environmental Quality Act pursuant to
Section 21800.14 of the Public Resources Code.
Assistant City Manager
Attachments
J~l~es Draughon / ) v
Redevelopment Prq~;l~m Manager
KENYON DRIVE MULTIFAMILY RESIDENTIAL
ACQUISITION AND SUBSTANTIAL REHABILITATION PROJECT
DISPOSITION AND DEVELOPMENT AGREEMENT
by and between
TUSTIN CO1VEMUNITY REDEVELOPMENT AGENCY,
as Agency,
and
KENYON DR. LLC,
a California Limited Liability Company
as Developer
[AEI::djwA) 1680_4/061203/4182,007]
KENYON DRIVE RESIDENTIAL PROJECT
DISPOSITION AND DEVELOPMENT AGREEMENT
This Kenyon Drive Residential Project Disposition And Development Agreement
(this "Agreement" or "DDA') is made as of June __, 2003 (the "Effective Date") by and
between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community
redevelopment agency (as defined in Section 1.4.1, the "Agency"), and KENYON DR., LLC, a
Califbrnia limited liability company (as defined in Section 1.4.2, the "Developer"). The Agency
and Developer are sometimes referred to herein individually as a "Party" and collectively as the
"Parties". The Parties agree as follows:
Subject and Purpose of Agremnent3 Affected Pr.._~_opert¥; P_arties.
1.1 Purpose of A~reement.
1.1.1 The general purpose of this Agreement is to promote the implementation
and realization of the objectives of the Redevelopment Plan for the South Central
Redevelopment Project Area (the "Project Area") by providing for the acquisition by the
Agency and the Developer of certain property in the City of Tustin (the "City"), in the County of
Orange, California and the development thereon and on certain Developer-Owned Property
(defined below) of a 112-unit rental apartment project, including, without limitation, the
substantial rehabilitation of certain Existing Improvements (defined below) on the Site, the
demolition of certain Existing Improvements on the Site mad the construction of certain new
buildings, residential units and common areas on the Site (the "Project"), ail as more fully
described below and in the Scope of Development attached to this Agreement as Attaclunent
No. 3 (the "Scope of Development").
1.1.2 The process for potential acquisition and disposition of the Agency
Property (defined below), the making of the leans described herein to the Developer, the
development and operation of the Site for such uses as are allowed pursuant to this Agreement
and that certain Regulatory Agreement to be entered into by the Agency and the Developer as
further described in this Agreement and the fulfilhnent of this Agreement and the Regulatory
Agreement are in the vital and best interest of the City mad the Agency and the health, safety,
[AEF:djw/91680_4/061203/4182 007]
morals and welfare of the City's residents, and in accord with the public purposes and provisions
of applicable federal, State and local laws and requirements. Completion of the Project will
increase, preserve and maintain the supply of very low, low, and moderate income rental housing
in the Project Area, provide additional jobs for the community m~d substantially improve the
economic and physical conditions of the community in accordance with the purposes and goals
of the Redevelopment Plan (defined below).
1.2 The Redevelopment Plan.
1.2~ 1 This Agreement is subject to the provisions of the South Central
Redevelopment Plan (the "Redevelopment Plan"), which was approved amd adopted by the
City Council o£the City (the "City Council") by Ordinance No. 890 as amended by Ordinunce
Nos. 939, 1142, and 1223. Said ordinances and the Redevelopment Plan, as amended, are
incorporated herein by reference and made a part of this Agreement.
1.2.2 The implementation of the Project identiSed under this Agreement is
undertaken pursuant to the "Rules Governing Participation by Owners and Tenants,"
Section 402 of the Redevelopment Plan, and the Agency's request for proposals dated December
19, 2001, which provided opportunities for participation to property owners within the area
comprising the Site.
1.3 Descrij/~on of Pr~erty Affecting this Aereement.
1.3.1 Develo_Laer-Owned Parcels. The term "Developer-Owned Parcels"
means approximately 3.5 acres of land located in the Project Area, which property is comprised
of seven parcels, each of which is depicted on the Site Map attached as Attachment No. 1 to this
Agreement (the "Site Map") and legally described on Attachment No. lA to this Agreement.
The Developer-Owned Parcels currently contain 71 residential apartment units and, as of the
Effective Date, are owned by the Developer in fee.
1.3.2 Ad.iacent Parcels. Adjacent to the Deveioper-Oxmed Parcels axe eight
parcels of land totaling approximately 1.8 acres which currently contain 54 residential apartment
units and a portion of Kenyon Drive (collectively, the "Adjacent Parcels"). The Adjacent
Parcels are those portions on the Site not under the control of the Developer or the Agency as of
the Effective Date. The Adjacent Parcels are comprised of three components:
[AEF: djw/t) 1680_4/061203/4182007] Page 2
A. The "Developer Acquisition Parcels" which consist of 3 parcels
containing 30 residential apartment units, which parcels are each depicted on the Site Map and
legally described on Attachment No. lB to this Agreement and which are oxvned as of the
Effective Date by third parties;
B. The "Right-of-Way Parcels" which consist of four parcels
contahfing 24 residential units, which parcels are each depicted on the Site Map and iegally
described on Attachment No. lC to this Agreement and which are oxvned as oftl~e Effective Date
by third parties; and
C. The "Kenyon Drive Property" which consists of the portion of
the Kenyon Drive right of way within the Site boundaries, which property is depicted on the Site
Map and legally described on Attachment No. 1D to this Agreement and which property is
owned as of the Effective Date by the City in fee, and which is proposed to be considered
vacation in accordance with this Agreement and pursuant to California Streets and Highways
Code Section 8300 et seq. and a street vacation application to be filed by the Developer with the
City.
The Adjacent Parcels shall be subject to dedications to the City of portions of the
City Dedication Parcels as further described below~ Following such dedications, the terms
"Developer Acquisition Parcels", "Right-of-Way Parcels", "Kenyon Drive Property" and
"Adjacent Parcels" shall each exclude such portions of the City Dedication Parcels.
1 ~3.3 ~i~e~. The term "Site" means the Developer-Owned Parcels and the
Adjacent Parcels, collectively, but shall, from and after the date of transfer of fee or easement
interests therein required by the City to be transferred to the City and/or utility purveyors, as the
case may be, exclude the City Dedication Parcels.
1.3.4 C_.ity Dedication Parcels. The term "City Dedication Parcels" means
(a) those portions of the Site required by the City to be dedicated pursuant to subdivision or street
vacation or other action to the City in fee or (b) those easements in fac'or of the City and/or utility
purveyors) for the provision of public infrastructure or access to existing infrastructure and shall
include, without limitation: (i) those portions of the Right-of-Way Parcels designated on the
City's [ ] as required for Newport Avenue roadway and sidewalk widening (the
[AEF:djw/91680_4/061203/4182.007] Page
"Newport Avenue Widening Property"), which land shall be dedicated to the City in fee and
(ii) portions of the Developer-Owned Property and the Adjacent Parcels as required in
connection with utility infrastructure and access to public infrastructure on the Site, which land
shall be dedicated in fee or by grant of easement, as determined by the City in its sole discretion,
as a condition to approval of the Lot Merger Tract Map m~d/or the Kenyon Drive street vacation.
1.3.5 _Applicability of Agree__ment to Subsequently Ac utJ_u.~ed Parcels. In
order to carry out this Agreement, it is the intent of the Parties that: (a) the Developer acquire the
Developer Acquisition Parcels, (b) the Agency acquire the Right-of-Way Parcels and convey the
Newport Avenue Widening Property to the City' in fee and the remainder of the Right-of-Way
Parcels excluding any City Dedication Parcels located thereon to the Developer in fee for the
consideration described in this Agreement and (c) the Developer submit an application to the
City for vacation of Kenyon Drive and that, if approved by the City, the Agency cause the City to
convey certain of the property subject to the street vacation action to the Developer on the terms
set forth in this Agreement. As of the Effective Date, none of the foregoing parcels have been
acquired by the Parties. Upon acquisition by the Developer of all or any portion of the Adjacent
Parcels, this Agreement, and, to the extent then executed, the Regulatory Agreement, the Deeds
of Trust and the Notes, shall automatically, and without further action of the Parties, apply to and
govern the use and development of such property by Developer and its successors and assigns
owning ali or any portion thereof, and all covenants, conditions, restrictions and obligations set
forth in this Agreement, the Regulatory Agreement, the Deeds of Trust and the Notes as
applicable to the S~te shall become applicable to such property. To effectuate the foregoing,
upon acquisition by Developer of each additional parcel constituting the Adjacent Parcels, the
Developer, concurrently with its acquisition of such property: (a) shall cause the Memorandum
of DDA, the Regulatory Agreement, and the Deeds of Trust to be recorded against each such
additional parcel in conformity with the requirements of this Agreement in order to evidence
applicability of each of the foregoing agreements thereto and the liens represented thereby and
(b) shall t~e such steps as may be reasonably required by the Agency to ensure the priority of
such agreements as required by this Agreement, including without limitation, obtaining written
subordination agreements in recordable form from all Mortgagee(s) to establish the required
priority of such Agreements with respect to the DDA, the Regulatory Agreement and the Deeds
[AEF:djw/91680_4/061203/4182.007] Page 4
of Trust; provided, however, that nothing herein shall require any Permitted Mortgage which is a
Senior Obligation to be subordinate to the Deeds of Trust.
i .4 Parties to th_q_!.h~_~A reement.
1.4.1 ~. Agency is a public body, corporate and politic, exercising
governmental functions and powers and organized and existing under Chapter 2 of the
Community Redevelopment Law of the State of California. The principal office of Agency is
located at 300 Centennial Way, Tustin, CA 92780, and the mailing address of Agency shall be as
set forth in Section 15~2. "Agency", as used in this Agreement, includes the Tustin Community
Redevelopment Agency, and any assignee of or successor to its rights, powers arid
responsibilities. The Agency shall have the right, in its sole and absolute discretion to assign its
rights and obligations in whole or in part to the City or to any agency or instrumentality of the
City.
1.4.2 Developer. Developer, Kenyon Dr., LLC, is a Ca/ifornia limited liability
company comprised of two co-managing members, Statewide Acquisition Corp, a California
corporation and Centurion Partners LLC, a California limited liability company (each a
"Managing Member" and collectively, "Managing Members"). The mailing address of
Developer shall be as set forth in Section 15.2. Whenever the term "DeYeloper" is used herein,
such term shall be limited to Kenyon Dr., LLC, or, following an Ownership Transfer pursuant to
a Permitted Transfer approved by the Agency, to any assignee of or successor to the Developer's
rights, powers and responsibilities permitted by this Agreement.
1.4.3 Relationship of A~ency and City to Develope~r. It is hereby
acknowledged that the relationship of the Agency and the City to the Developer is neither that of
a partnership nor of a joint venture and that neither the Agency nor the City shall be deemed or
construed for any purpose to be the agent of the Developer, nor shall the Developer be deemed or
construed to be the agent of the Agency or the City. Notwithstanding any provision of this
Agreement, the Developer shall not have the power to bind the Agency to any contractual or
other obligation. The Developer shall not at any time hold itself out to the Agency or any other
third party as an agent of the Agency or the City, and shall not by any act or omission, mislead
any third party into believing, or allow any third party to continue in the mistaken belie1'~, that tI~e
[AEF:djw;91680_4/061203/4182.007] Page 5
2.1.1
the cormnunity;
Developer is an agent of the Agency or the City or has the power or authority to bind the Agency
or the City to any contractual or other obligation.
1.5 Attachments~
Capitalized terms used herein, including in the Attachments hereto, unless
otherwise defined herein, shall have the respective meanings specified in the Glossary of Defined
Terms attached to this Agreement as Attacl~nent No. 2. Unless otherwise indicated, references
in this Agreement to sections, paragraphs, clauses, exhibits, attachments, and schedules are to the
same contained in or attached to this Agreement and ail attachments and schedules referenced
herein are incorporated herein by this reference as through fully set forth, in this Section 1.5.
2. Prohibition Against Change in Ownership~ Management and Control of Develol!~.r.
2.1 Lmportance of Devel__.oper Qualifications.
Developer recognizes that the professional qualifications and reputation of
Developer and its Managing Members and principals are of particular concern to the community
and Agency in light of the following:
The importance of the redevelopment of the Site to the general welfare of
2.1.2 The public assistance that has been made available by law and by the
State, the Agency and the City for the purpose of making such redevelopment possible;
2.1.3 The fact that a chm~ge in ownership or control of Developer or of its
Managing Members, or any other act or transaction involving or resulting in a significanI change
in ownership or control of Developer or the degree of control thereof is, for practical pm¢oses, a
transfer or disposition of the portions of the Site then owned by Developer; and
2. t .4 That it is because of the Developer's oxvnersh[p interest in the DeYeloper-
Oxvned Property and the professional qualifications and reputation of Developer that Agency is
entering into this Agreement with Developer.
[AEF: djw/91680 4/06 [203/4182.007] Page 6
2.2 Transfer or Assignment.
2.2.1 Restrictions on Rights and Powers under Affreement. For the reasons
set forth in Section 2.1, and in exchange for the other benefits to Developer provided in this
Agreement, the Developer acknowledges and agrees that no voluntary or involuntaxy successor in
interest of the Developer shall acquire any rights or powers under this Agreement except as set
forth in this Section 2.2. In the event of(a) a faille by Developer to comply with the
requirements of this Section 2 with respect to any Ownership Transfer or Transfer of Control of
the Developer or (b) a failure of any Ownership Transferee to execute the Assumption
Agreement required by Section 2.2_, the Agency shall have ail remedies available to it at law and
in equity, including, without limitation, as specifically set forth in Section 13.4.2. For the
reasons set forth in Section 2.1, the Developer represents and agrees for itself, its members and
Managing Members and all voluntary and involuntary successorMn4nterest of Developer and
each member of Developer, that (a) the Developer shall not effect any total or partial Ownership
Transfer of the Site owned by it or of the Developer's interest in this Agreement, or any interest
therein, whether voluntary or involuntary, including any collateral assigmnent for financing
pm*poses, nor shall there be a Transfer of Control of the Developer (as described in Section 2.3)
unless such Ownership Transfer or Transfer of Control is a Permitted Transfer and (b) the
Developer shall not, under any circumstances, (i) effect an Ownership Transfer of less than the
whole of the Site, or the whole of such portions of the Site as are ow-ned by the Developer from
time to time, (ii) effect a2~ Ownership Transfer of the DDA or the Notes independent of an
Ownership Transfer of the Site and the Project Improvements or (iii) effect ~m Ownership
Transfer of the Project Improvements independent of the m~derlying fee, except pursuant to
apartment leases executed with tenants in conformity with the Regulatory' Agreement. In
connection w/th the foregoing, the Developer acknowledges and agrees that it is the intent of the
Developer and the Agency to create a gated multi-family residential community with common
area amenities under unified ownership and management. Developer shall take all steps
reasonably necessary to develop and manage the Project in accordance with this intent.
2.2.2 General Conditions Precedent to an Ownershil/Transfer that is a
Permitted Transfer. In order for an Ownership Transfer to be a Permitted Transfer, the
folIowing conditions shall be met by Developer:
[AEF:djw/91680_4/061203/4182.007] Page 7
A. Until the later of (a) issuance by the Agency of a Certificate of
Compliance for the Project or (b) repayment or other satisfaction in full of the Bridge Loan Note
and the Agency Loan Note, the Developer shall obtain the prior written consent of the Agency to
any proposed Ownership Transfer, which shall be granted or denied in Agency's reasonable
discretion in accordance with this Section 2.2; provided, however, that foreclosure of any
Permitted Mortgage, or any sale theretmder, whether by judicial proceedings or by virtue of any
power contained in the Permitted Mortgage, or any conveyance of ali or any portion of the Site to
any Permitted Mortgagee or its wholly-owned designee through, or in lieu of, foreclosure or other
appropriate proceedings in the nature thereof, shall not require the consent of the Agency;
B. Any proposed Ovmership Transferee shall have the qualifications
and financial responsibility determined by the Agency in its reasonable discretion, to be
necessary or appropriate to perform Developer's obligations under this Agreement, including,
without limitation, (i) a professional reputation for quality resident/al design and construction (if
prior to issuance by the Agency of a Certificate of Compliance for the Project) or quality
residential management (if after such recordation); (ii) a reputation for fair and honest business
dealings with persons amd entities generally; (iii) sufficient net worth to undertake the obligations
to be performed by Developer under this Agreement; and (iv) agreement to assume the
obligations of Developer under this Agreement.
C. The Developer shall have provided to the Agency at least twenty
(20) Business Days prior to the date of any proposed Ownership Transfer: (i)the name of the
proposed Ownership Transferee, (ii) all of the material proposed reruns of the transfer,
(iii) financial iaformation and other information sufficient to reasonably saIisfy Agency that the
proposed Ownership Tran~sferee is able to perform the obligations of Developer under this
Agreement, (iv) the names of all Persons who own, directly or indirectly, a five percent (5%) or
more interest in the proposed Ownership Transferee, (v) a copy of the proposed recordable
written transfer and assumption instrument pursuant to which the Ownership Trm~sferee
expressly assumes all of the obligations of Developer under this Agreement m~d agrees to be
subject to all conditions and restrictions to which Developer is subject hereunder, in fon-n and
substance satisfactory to the Agency ("Assumption Agreement").
[AEF: 4iw/91680_4/061203/4182.007] Page 8
D. Ownership Transferee shall have executed a written Assumption
Agreement and shall have caused it to be recorded in the official records of Orange County
California (the "Official Records").
2.2.3 Written Assumption Agreement Required. If any Ownership
Transferee fails to enter into an approved Assumption Agreement in accordance with the
requirements of Section 2.2, such Ownership Transfer shall, at the option of the Agency in its
sole and absolute discretion, be null and void.
2.2.4. Condition to Release of Developer from Obligations Under this
_Agreement. No Ovmership Transfer shall constitute a release of the Developer from any of its
obligations under this Agreement unless as part of an Agency-approved Oxvnership Transfer~
Agency expressly releases the Developer in writing. Notwithstanding the foregoing, in no event
shall the Developer be released from any obligation of Developer under this Agreement,
including pursuant to any indemnity or release, s~rising or accruing during the period in ~vhich
Developer was a Party to this Agreement.
2.2.5 As_21g_nment of Rights to Permitted Mortgagee.
A. Developer may conditionally assign its rights and obligations under
this Agreement only (a) pursuant to a Permitted Mortgage made in favor of an Institutional
Lender or other Mortgagee approved by the Agency in writing in its sole discretion ('?ermitted
Mortgagee"), and (b) as required to obtain financing for acquisition or development of the
Project on the Site, including to secure loans of funds to be used for financing the expenditures
necessa~¢~ and appropriate to acquire the Adjacent Parcels and to construct and rehabilitate the
Project Improvements as required by this Agreement.
B. Notwithstanding the ~bregoing, following issuance by the Agency
of a Certificate of Compliance for the Project, the Developer shall be permitted to refinance the
Permitted Mortgages described in clauses A above, provided that (a) tine Developer is not then in
Default under the terms of the DDA or the Other Agreements, (b) the Bridge Loan Obligation is
paid in full, (c) the sum of the remaining balance of the Agency Loan, including all accrued and
unpaid principal and interest thereon, and ail other Liens afl'ecting the Site do not exceed the fair
market value of the Project as determined by the Agency in its reasonable discretion, (d) the total
[AEF:djw/91680_4/061203/4182.007] Page 9
of all Liens affecting the Site, taking into account the proposed refinancing, does not exceed the
Loam to Value Ratio, (e) the maturity date of such financing is not earlier than the maturity date
of the Agency Loan and (f) the applicable interest rate does not exceed %. All costs and
expenses of the Agency with respect to determination and documentation of the foregoing,
including without limitation attorneys' fees and the cost of t2ne appraisal required by Agency to
determine the fair market value of the Project Improvements and the Site, shall be borne by
Developer at its sole cost mad expense.
C. All Mortgages shall be subject to and shall comply with the
provisions of Section 2.2, including, without limitation, Sections 2.2.2 and 2.2.6.
2.2.6 Subordination of Mortgages; Cross-Default and Cross-
Collateralization Prohibited.
A. All Mortgages shall be subordinated to the lien of this Agreement,
the Memormadum of DDA evidencing this Agreement and to the lien of the Regulatory
Agreement.
B. Prior to issuance of the Certificate of Compliance, the Agency
hereby agrees to subordinate the lien of the Bridge Loan Deed of Trust and the lien of the Agency
Loan Deed of Trust to the lien(s) of present and future Permitted Mortgages that are (a) approved
by the Agency in accordance with this Section 2.2 m~d (b) entered into by the Developer solely
for the purpose of acquiring the Site (or any portion thereof) and constructing and rehabilitating
the Project ]Improvements (such complying Permitted Mortgages, the "Senior Obligations").
The foregoing shall not obligate the Agency to subordinate the liens of the Deeds of Trust (amd
the liens of the Deeds o~' Trust shall at all times be superior) to Mortgages obtained in order for
the Developer to acquire funds not utilized or intended to be utilized for acquisition and
redevelopment of the Site pursuant to this Agreement. In addition, and until termination of the
Regulatory Agreement, all Mortgages shall be subordinated to the lien of the Regulatory
Agreement.
C. Following issua~nce by the Agency of the Certificate of Compliance
until both the Bridge Note Obligation and Agency Note Obligation are no longer outstanding, the
Agency hereby agrees to continue to subordinate the lien of the Bridge Loan Deed of Trust and
[AEF:c[iw~91680_4/061203/'1182.007] Page 10
the lien of the Agency Loan Deed of Trust to (a) Permitted Mortgages to which it became
subordinate in accordance with Section 2.2~6.A and (b) to any subsequent Permitted Mortgage
comply with the requirements of Section 2.2.5.B(such complying Permitted Mortgages, also
"Senior Obligations")~
D. The subordination of each Mortgage to the lien of this Agreement,
the Memorandum of DDA and the lien of the Regulatory Agreement shall be evidenced by
written subordination agreemem or agreement(s) (each a "Mortgagee Lien Subordination
Agreement") by and between the Agency- and the Mortgagees under each Mortgage affecting the
Site or any portion thereof. A Mortgagee Lien Subordination Agreement shall be execnted at the
time of(i) execution of the DDA, (ii) execution and recordation of the Memorandum of DDA
and the Regulatory Agreement and (iii) as a condition precedent to recordation of each Mortgage
against all or any portion of the Site entered into subsequent to the execution and recordation of
the Regulatory Agreement The subordination of the lien of the Bridge Loan Deed of Trust and
the lien of the Agency Loan Deed of Trust to the liens of present and future Senior Obligations
approved by the Agency in accordance with this Section 2.2 shall be evidenced by written
subordination agreement by-and between the Agency and the Permitted Mortgagees nnder such
Senior Obligations (the "Agency Lien Subordination Agreement"). The Agency and each
Mortgagee which is a party to a subordination agreement described in this Section 2.2.6 shall
consider in good faith ail reasonable lender protection provisions as may be requested by the
Agency and/or Mortgagees which are parties to such agreements, to protect, preserve, or maintain
the security of each with respect to its lien against the Site.
In no event shall any Mortgage on the Site be cross-defaulted or
cross-collateralized with any loan or deed of trust for property or improvements not comprising
part of the Site or the Project or junior to the Deeds of Trust. The provisions of this Section 2.2.6
shall survive the termination of this Agreement until the date ofreconveyance of the Deeds of
Trust by the "trustee" thereunder to the Developer and the release of the liens represented
thereby.
[AEF:djw~91680_4/061203/4182.007] Page 11
2.3 ~e in Mana[ement or Control.
2.3.1 Notwithstanding any other provision of this Agreement, unless otherwise
approved by the Agency in its sole discretion, which approval may be withheld for any reason
whatsoever, until the later of (a) issuance by the Agency of a Certificate of Compliance for the
Project, or (b) repayment or olher satisfaction in full of the Bridge Loan Note and the Agency
Loan Note, there shall be no Transfer of Control of the Developer; following such date~ there
shall be no further restriction on Transfer of Control of the Developer. A "Transfer of Control"
shall include any of the following, whether made directly or through an intermediary, and
whether made in one transaction or effected in more than one transaction, which result, on a
cumulative basis, in (a) if Developer is a limited liability company, a change in forty-nine percent
(49%) or more of the Managing Members or the interests of the members thereof in Developer;
(b) if the Developer is a corporation, a change in forty-nine percent (49%) or more of the
directors of the Developer or of control of the voting shares of the Developer; (c) if the
Developer is a partnership, a change in forty-nine percent (49%) or more of the general partners
of the Developer or of a change in control of the general partnership interests of the Developer;
or (d) if the Developer is other than a limited liability company, a corporation or a partnership,
any direct or indirect change in actual cm~trol or ownership of the beneficial interests of the
Developer.
2.3.2 The Developer shall make prompt and full disclosure to the Agency of any
changes to the Developer's Managing Members, members and key employees, any changes to
Developer's organizafionai jurisdiction or structure, and ali other material information
concerning the Developer and its associates related to the Project.
2.4 Assi~_tl~tment by.__Q.pO eration of Law~
Neither tiffs Agreement nor any interest therein shall be assignable by Developer
by operation of law, including without limitation, if Developer is an individual, the trm~sfer of
this Agreement by testacy or intestacy.
3. R_~.presentations and Warranties of Developer.
As an inducement to the Agency to enter into this Agreement mad to perform its
obligations hereunder, Developer hereby represents and warrants to the Agency as follows:
[AEF:djw/91680_4/061203/4182 007~ Page 12
Developer has the necessary expertise, experience, qualifications and legal status
necessary to perform as Developer pursuant to this Agreement and to complete the Project.
Developer's acquisition of the Site and its other undertaSrings pursuant to this Agreement and the
Other Agreements are for the purpose of redevelopment of the Site and not for speculation or
land holding.
3.2 Organization.
Developer is a limited liability company, duly organized, qualified and validly
existing and in good standing under the laws of the State of California.
3.3 Performance.
Developer has all requisite power, right and authority to enter into this
Agreement, the Other Agreements and the instr~aments referenced herein, to consummate the
transactions contemplated hereby and to perform its obligations hereunder.
3.4 AuthoriW_.
Developer has duly authorized, executed and delivered this Agreement, the Other
Agreements and any and all other agreements and documents required to be executed and
delivered by Developer in order to carry out, give effect to and consummate the transactions
co~templated by this Agreement.
3.5 _~_quisite L_L_9_g:al Action; Consent.
All requisite legal action has been talCen by Developer and its Managing Members
in connection with entering into this Agreement, the Other Agreements, the instruments
referenced herein and therein, and the consummation of the transactions contemplated hereby
and no consent of any additional Managing Member, member, partner, individual, corporation,
shareholder, creditor, investor, judicial or achninistrative body, authority or other entity or person
is required.
[AEF:c[iw/91680_4/061203/4 t 82 007] Page 13
Authority to Bind Develop.
The Managing Members executing this Agreement, the Other Agreements and the
instruments referenced herein and therei~ on behalf of Developer and the individuals executing
this Agreement on behalf of the Managing Members have the legal power, right and actual
authority to bind Developer to the terms and conditions hereof and thereo£
3.7 Valid Obli[ations.
This Agreement and all documents required hereby to be executed by Developer
are mad shall be valid, legally binding obligations of Developer and enforceable against
Developer in accordance with their terms.
3.8 Breach of Other Contracts.
Neither the execution and delivery of this Agreement, the Other Agreements mad
the documents referenced herein and therein, nor the incurring of the obligations set forth herein
and therein, nor the consummation of the transactions herein contemplated, nor compliance w/th
the terms of this Agreement, the Other Agreements and the docmnents referenced herein and
therein conflict with or result in the material breach of any te~ms, conditions, or provisions of, or
constitute a default under any bond, note, or other evidence of indebtedness or may contract,
indenture, mortgage, deed of trust, loan, operating agreement, partnership agreement, lease or
other agreements or instruments to which Developer or any of its Managing Members is a party,
or which affect the Site, the Existing Improvements or may portion thereof.
3.9 Insolvency.
No attachments, execution proceedings, assignments of benefit of creditors,
bankruptcy, reorganization or other proceedings are pending or threatened against Developer or
its Managing Members.
3.10 Hazardous Substances.
To the Best of Developer's Knowledge, except as otherwise previously disclosed
by Developer to Agency in writing[, including, without limitation, that certain environmental
report prepared by ., dated l[Agency needs to see before
[AEF:djw/91680_4/06 i203/4182.007] Page 14
inclusion of reference], which writings are incorporated herein by reference and copies of which
are on file w/th the Agency:
3.10.1 Developer has not aud shall not use, handle, treat, store or dispose of, and
has not permitted any other entity' or person to use, handle, treat, store or dispose of Hazardous
Substances at, on or beneath the Site in violation of any federal, State or local law-, regulation or
ordinmxce;
3.10.2 No Hazardous Substances are present, and no Hazardous Substances have
been used, handled, treated, stored, released or disposed of, at, on or beneath the Site or within
the Existing hnprovements, which have created or might create any liability of owners or
occupants of the Site under any federal, State or local law or regulation or which would require
reporting to a goverrmnental agency;
3.10.3 There are no underground storage tm*Xs located in, on or under the Site;
and
3.10.4 All reports, documents, instruments, information and forms of evidence
delivered by Developer to Agency concerning or required by this Agreement are accurate,
correct, and sufficiently complete to give Agency true and accurate knowledge of their subject
matter, and do not contain any misrepresentation or omission. Without limiting the generality of
the foregoing, Developer acknowledges that Agency has not made and will not make any
representations or warranties concerning compliance of this Agreement with environmental laws
or the existence or nonexistence of Hazardous Substances in relation to the Site or otherwise.
3.11 Financial Capability.
Developer has, and shall maintain throughout the term of this Agreelnent,
sufficient equity, capital and firm amd binding commitments to (a) pay through Completion of the
Project ail costs of development, property rehabilitation, construction, marketing and leasing of
all of the Prqject Improvements as described in the Scope of Development and the Method of
Financing; and (b) enable Developer to perform and satis~ all of the covenants of Developer
contained in this Agreement m~d the Regulatory Agreement. Developer shall not undertake such
additional projects as could reasonably be expected to jeopardize the sufficiency of such equity,
capital and firm and binding commitments for the purposes expressed in the preceding sentence.
[AEF:djw/91680_W061203/4182,0071 Page 15
3.12 Other Ol~ligations.
Except as set forth on Attachment No. 14, Developer does not have any
contingent obligations or any other contracts which affect the Site or could materially and
adversely affect the ability of Developer to carry out its obligations hereunder or which would
affect the liens granted by the Deeds of Trust.
3.13 L_.~egal Proceedings.
There are no material legal proceedings either pending (and served) or, To the
Best of Developer's Knowledge, otherwise pending or threatened, to which (a) Developer or any
of its Managing Members are or may be made a party, or (b) any of Developer's or such
Managing Members~ property, including the Site, is or may become subject, which has not been
fully disclosed in the documents submitted to Agency and which could adversely affect the
ability of Developer to carry out its obligatious hereunder.
3.14 Ongoing Representations and Warranties.
Each of the foregoing Sections 3.1 through 3.13, inclusive, is deemed to be an
ongoing representation and warranty for the term of this Agreement. Developer shall promptly
advise Agency in writing if t£here is any change pertaining to an_y matters set forth or referenced
in the foregoing items, Sections 3.1 through 3.13 inclusive.
4. Development of the Site,
4.1 ~ of Development.
4.1.1 .Requirement to Develop the Site. The Developer shall, at its sole cost
and expense, improve the Site with the Project hnprovements in the mariner described in this
Agreement m~¢t in the Scope of Development within the time periods set forth in the Schedule of
Performance attached to this Agreement as Attaclnnent No. 4 (the "Schedule of Performance")
and pursuant to (a) Project plans and specifications approved by the Agency and~ if appticable,
the City in accordance with the provisions of this Agreement ("Approved Project Plans") and
(b) all applicable federal, State and local laxvs and regulations, as further described herein.
4.1.2 Description of Proieet Development. The Scope of Development sets
forth the overall development plan for the Project, which generally consists of the following:
[AEF:djw/91680_4/061203/4182.007J Page 16
(a) the substantial rehabilitation of 71 residential apartment units on the Developer-Owned
Parcels, (b) the demolition of 21 residential apartment units on the Right-of-Way Parcels and the
construction of eight new residential apartment units on the Site, and the rehabilitation of all
other existing units on the Acquisition Pa2cels, (c) the development of the Con~qon Area
Improvements for the use and enjoyment of all of the tenants of the Project, to include, without
limitation, (i) construction of a club house, pool, and "tot lot"; (ii) roadway, sidewalk, parking,
landscape and utility improvements on the Site; (iii) decrease in width and redevelopment of the
roadbed on the Kenyon Drive Property and (iv) gating of the entrance to ~he Project
(d) certain off-Site improvements as may be required by the City' pursuant to the entitlement
process. The improvements to be constructed and/or rehabilitated as part of the Project, as
described in the preceding sentence and in the Scope of Development are referred to in this
Agreement as the "Project Improvements". The Project Improvements shall include the
Common Area Improvements, but shall exclude the widening of NeYvport Avenue pursuant to the
City's [. 1. Newport Avenue roadway widening is a capital project of the City and
shall be carried out by the City utilizing capital improvements funds of the City.
4.1.3 Initial Closing. In order to carry out the construction and rehabilitation of
the Project Improvements, Developer shall obtain certain Permitted Mortgages~ shall comribnte
Developer's Equity in accordance with the schedule attached to this Agreement as Attaclmaent
No. 16 and shall obtain, subject to satisfaction of the conditions precedent thereto set forth in
Sections 6 and 7 of this Agreement and in the Notes and Deeds of Trust, the Agency Assistance.
The Notes, the Deeds of Trust and the Regulatory Agreement shall be executed and the
Memorandum of DDA, the Deeds of Trust and the Regulatory Agreement shall be recorded at
the time of the Initial Closing as further described in Article 6.
4.1.4 Description of Land Ownership and Accj.uisition. Developer currently
owns the Developer-Owned Parcels in fee. It is the intent of the parties that the Developer shall
acquire all of the Adjacent Parcels from the Agency and/or third paxties in accordance with the
provisions of Section 4.2 and Article 5 within the time period set forth therefor in the Schedule
of Performance, subject to the terms of this Agreement and Force Majeure Delay.
[AEF:djw/91680 4/061203/4182.007] Page 17
4.1.5 Timinl[ of Construction. Subject to the provisions of Article 8, it is the
intent of the Parties that Developer, in accordance with the Approved Project Plans,
(a) commence rehabilitation of the Existing Improvements on the Developer-Owned Parcels
within sixty (60) calendar days following the Initial Closing, (b) cormnence demolition and/or
rehabilitation of certain of the Existing Improvements and construction of certain new Project
Improvements on the Adjacent Parcels as indicated on the Schedule of Performance and (c) that
Developer complete construction and rehabilitation of the Project hnprovements on or before
[__ ., 20041, subject in each case only to Force Majeure Delay.
4,2 A_c.~uisition~acent Parcels.
4.2.1 Ke_!~on Drive. Developer shall file a Kenyon Drive street vacation
application with the City within the time set forth therefor in the Schedule of Performance. The
Developer and the Agency shall use good faith efforts to cause the City to approve the requested
street vacation. Developer shall comply with all conditions imposed by the City with respect to
the street vacation application. Following approval by the City, if at all, of the street vacation
application, the Agency shall use good faith efibrts to cause the City to convey the Kenyon Drive
Property to the Developer. The Kenyon Drive Property transfer to Developer shall be carried out
in accordance with Article 5. Following approval by the City of the street vacation ordinance and
the conveyance of the Kenyon Drive Property to Developer, Developer shall cause the Project
entrance to be gated and the Kenyon Drive Property to be improved with roadway, infrastructure
mad Common Area Improvements in accordance with the Approved Project Plans.
4.2.2 A_.g_quisition of Develo~uisition Parcels. Subject to the terms and
conditions of this Agreement, Developer agrees to use best efforts to acquire oxvnership of each
of the three parcels constituting the Developer Acquisition Parcels, at a reasonable estimate of
lair market value for the land and improvements and on such other terms and conditions as are
acceptable to Developer, in its reasonable discretion. Developer shall acquire such parcels within
the time period set forth in the Schedule of Performance or shall demonstrate to Agency that it
has exercised its best efforts to acquire such parcels for which it has not been successful at a
price determined by the Agency in its reasonable discretion to be a reasonable estimate of fair
market value for the land and improvements,
[AEF:djw/91680_4/061203/4182.007] Page 18
4.2.3 _Ac__quisition of Right-of-Way Parcels. The Agency shall use good faith
efforts to acquire the Right-of-Way Parcels through negotiation with current land owners. If such
negotiation efforts fail, the Agency shall consider exercise of its power of eminent domain,
subject to the provisions of Sections 4.24 4.2.5 and 4.2.6.
4.2.4 Procedures for Exercise of Powers of Eminent Domain. The Agency
hereby agrees that (a) if Developer, despite the exercise of best efforts as more fully set forth in
Section 4.2.2, has been unable to acquire a fee interest in the Developer Acquisition Parcels or
any one or more paxcels thereof or (b) the Agency is unable to acquire one or more of the Right-
of-Way Parcels through negotiated acquisition on or prior to the date set forth as the deadline for
such acquisition in the Schedule of Performm~ce, then, within the time period set fo~Xh therefor in
the Schedule of Performance, the Agency shall moS:e a formal determination as to whether or not
to approve a resolution of necessity with regard to the exercise of its powers of eminent domain
with respect to such unacquired parcels. Notwithstanding the foregoing, the Agency shall not
make any offer to purchase nor shall it exercise its powers of condemnation unless (a) Developer
is not in Default or Potential Default of its obligations under this Agreement, (b) Developer is
proceeding with construction and rehabilitation of the Project Improvements in accordance with
the Schedule of Performance and is otherwise in compliance with the requirements of the
Schedule of Performance, (c) Developer has provided Evidence of Financing Commitments mad
evidence of its ability and willingness, including financial ability, to complete the Project and
fund the acquisition of the Developer Acquisilion Parcels, each in form and substance acceptable
to Agency in its sole discretion, and (d) Developer has posted security for the cost of such
acquisition in accordance with Section 4.2.4. [For purposes of the foregoing clause (c) t~he
Agency acknowledges that the loan documents of Imperial Bank provided ~ Developer as
of the date hereof constitute satisfactory Evidence of Financin~ Commitments. A~
needs to see before inclusion of_~l~rovlsion1
4.2.5 Resolution of Necessity. Nothing contained herein shall be construed to
mean that the Agency is agreeing or has agreed to exercise the right of eminent domain, which
right shall be exercised only in the sole discretion of the Agency mad only after the Agency has
determined pursuant to the law that there is substantial evidence of the following:
[AEF:djw/91680_4/061203/4182.007] Page 19
A. Public interest mad necessity requires the acquisition;
B. The Project is being carried ou't in a mamner compatible with
greatest public good and least private i~iuries;
C. The acquisition of the particular parcels is necessary for the
Project;
Section 7267.2.
The subject property interest is necessary for the Project; and
Offers were made in compliance with Government Code
With respect to consideration of the adoption of a resolution of necessity
for the applicable Developer Acquisition Parcels by the Agency pursuant to Article 21
(commencing with Section 1245.210) of Chapter 4 of Title 7 of the California Code of Civil
Procedure, it is expressly m~derstood that Agency has reserved its discretion to approve or
disapprove any such resolution of necessity and that Developer's exclusive remedy for the failure
of Agency to adopt a resolution of necessity shall be the termination of Developer's obligation to
acquire such parcel. Developer expressly acknowledges that this Agreement in no way binds the
Agency to acqnire any of the Developer Acqnisition Parcels pursuant to its exercise of the power
of eminent domain. If the Agency approves a resolution of necessity for the acquisition of one or
more of the Developer Acquisition Parcels then, upon satisfaction by the Developer of its
obligations under Section 4~2.7, and provided that Developer is not in Default or Potential
Defanlt of its obligations under this Agreement, the Agency shall, as soon as is reasonably
practicable thereafter, file a condemnation action, and shall exercise good faith efforts to obtain
an Order of Prejudgment Possession ~kom the court having condemnation jurisdiction over the
applicable Developer Acquisition Parcel(s) within the time period set forth therefor in the
Schedule of Performance.
4.2.6 Procedures U__t)on Adoption of Resolution of Necessity.
A. In the event Agency adopts a resolution of necessity for any pmtion
of the Developer Acquisition Parcels, m~d subsequently files a complaint in eminent domain, the
Agency shall provide the Developer w4th a written schedule of proposed activities with respect to
[AEF:cljw/91680_4/061203/4182.007] Page 20
condermration of such parcel and shall use good faith efforts to carry out the acquisition within
the time frames set forth in the Schedule of Performance.
B. Upon Agency's receipt of fbe interest, Agency shall sell, and
Developer shall purchase and accept from Agency, fee interest in the acquired properties after
dedication by the Agency 1o the City of the City Dedication Parcels contained therein, if any, in
accordance with the provisions of Article 5.
4.2.7 Developer to Pay All Costs. As a condition precedent to the Agency's
obligation to commence any negotiation and/or condemnation proceedings with respect to any
Developer Acquisition Parcel, Developer shall agree in writing to pay to the Agency an amotmt
equal to the purchase price paid for the land and all other acquisition and appraisal fees but
excluding court costs, attorneys' and expert witness fees of the Agency arid of the then-current
property owner, and Developer shall secure such obligation with a cash bond or a letmr of credit
acceptable as to form and amomat to Agency, in its sole discretion. In addition, Developer, when
requested by the Agency, shall advance all sums requested by the Agency which are payable by
Developer pursuant to this Section.
4.2.8 Temporary. and Permanent Displacement of Tenants. Developer shall
use every reasonable means to provide existing tenants temporary and permanent relocation
within the Site, both during construction and after Completion of the Project Improvements, in a
manner which minimizes or eliminates the displacement of tenants from the Site as a result of the
Project. Tenants occupying the Existing Improvements as of the Effective Date shall have
priority for relocating within the Project upon completion of the Project Improvements. Agency
shall be solely responsible for the temporary and perrnm~ent relocation costs of existing tenants
currently located on the Right-of-Way ParceI. Developer shall be solely responsible for the
temporary and permanent relocation costs of existing tenants currently located on all portions of
the Site other than the Right-of-Way Parcel. Developer hereby agrees to indemnify, defend and
hold harmless the City and the Agency against any and all temporary or permanent relocation
expenses relating to all portions of the Site other than the Right-of-Way Parcel and agrees to
reimburse the Agency for any and all costs of relocation assistance by the Agency to tenants
temporarily or permanently displaced at the Site other than from the Right-of-Way Pm-cci who
[AEF:djw/91680_ad061203/4182.007] Page 21
are eligible for relocation assistance under applicable law and in accordance with the approved
Relocation Plan for the Project.
4.3 Schedule of Performance.
Developer shall begin and complete the plam~ing~ design, construction,
entitlement, financing and development of the Project Improvements including, without
limitation, rehabilitation of the Existing Improvements which are to remain at the Site, within the
times specified in the Schedule of Performance. The Agency may, at its sole discretion and upon
written request from Developer, extend the times specified in the Schedule of Performance. Any
such extensions shall be evidenced by written notice from Agency's Executive Director or
designee.
4.4 A eric A royal of Plans and Specifications.
4.4.1 Preliminary Plans, Developer has previously submitted to the Agency its
preliminary design plans for the Project Improvements. The Agency shall review and comment
upon such plans within the time period set forth in the Schedule o£Performance. Upon approval
thereof by the Agency in accordance with the provisions of this Section 4.4~ such plans shall
constitute the "Preliminary Plans".
4.4.2 Final Construction Documents. Following approval of the Preliminary
Plans, the Developer shall prepare, complete and submit to the Agency for its approval, within
the times for performance set forth in the Schedule of Performance, Final Construction
Documents for the Project, which shall be consistent with the requirements set forth in the Scope
of Development, the approved Site Plan attached hereto as Attachment No. 11 ("Site Plan") and
the Preliminary Plans. Upon approval of the Final Construction Documents (a) by the Agency in
accordax~ce with the provisions of this Section 4.4 and (b) if applicable, by the City, pursuant to
may required entitlement proceeding of the City, such plans shall constitute the "Approved
Project Plans", The Site shall be developed in accordance with the Approved Project Plans.
Changes to the Approved Project Plans shall be made only in writing signed by both Developer
and Agency. Any such written changes shall be within the limitations of the Scope of
Development.
[AEF:djw/91680_4/061203/4182.007] ' Page 22
4.4.3 .~ular Meetingd. During Developer's preparation of all drawings and
plans, Agency staff and Developer shall hold regular progress meetings to coordinate the
preparation and submission of construction plans and related documents by Developer and
review by Agency. Such meeSngs shall serve as a forum for the exchange of information
concerning the design of the Project. The Agency and Developer shall communicate mad consult
informally as frequently as is necessary to ~x~sm'e that the formal submittal of any documents to
the Agency can receive prompt and speedy consideration. The Developer shall prepare amd
distribute minutes of the meetings to the Agency, the architect and all others in attendance, if
requested by the Agency.
4.4.4 _~genc__v Review; Revisions. In order to comply with this Section 4.4,
Developer shall submit two sets of design documents for the Agency at each design document
review phase. The Agency shall have the right of reasonable review (including, but not 1/mited
to, architectural review) and approval of all plans~ drawings'and related documents (including the
right to review mad approve sanaples of all construction materials, finishes, fixtures, hardware,
roofing materials and similar items called out in the specifications) for the substantial
rehabilitation and development of the Site~ including any proposed chmages therein. Upon
receipt of a requested correction or disapproval, Developer shall revise such portions of the
plans, drawings or related documents in a manner that corrects the problem or satisfies the
reasons for disapproval, and shall resubmit such revised portions to the Age~cy as soon as
possible after receipt of the notice of correction or disapproval.
4.4.5 Other Revisions. if any revisions or correction shall be required by any
goven~nent official, agency, depaXment or bureau having jurisdiction, or any lending institution
involved in financing the Project Improvements, in plans approved by the Agency, the Developer
and the Agency shall cooperate in effort to develop a mutually acceptable revision or correction.
4.4.6 Exculpation. Neither the Agency nor the City shall be liable in damages
to the Developer or to any owner, lessee, any licensee or other Persor~ on account of (a) any
approvals by the Agency and/or the City or the staff thereof or any disapproval of any design
document submittal, whether or not defective or whether or not in compliance with applicable
laws or ordinances; (b) any construction, performance or nonperformance by the Developer or
[AEF:djw?91680_4/061203/4182.007] Page 23
any owner, lessee, licensee or other Person of any work on the Site, whether or not pursuant to
approved design document submittals or whether or not in compliance with applicable laws or
ordinances; (c) any mistake in judgment, negligance, action or omission in exercising its rights,
powers and responsibilities under this Section 4; and/or (d) the enforcement or failure to enforce
any of the covenants, conditions and restrictions set forth in this Agreement and the Other
Agreements. Every Person who makes design document submittals for approval agrees by
reason of such submittal, and the Developer and every subsequent owner of the Site or any
portion thereof agrees by acquiring title thereto or an interest therein, not to bring any suit or
action against the Agency or the City seeking to recover any such dmxqages and expressly waives
any such claim or cause of action which it would otherwise be entitled to assert. The review of
any design document submitlal shall not constitute the assumption of any responsibility by, or
impose any liability upon, the Agency or the City as to the accuracy, efficacy, sufficiency or
legality thereof nor decrease or diminish any liability, duties, responsibilities, or obligations of
the Developer under this Agreement.
4.5 Permits and Government Apl~rovals.
The Developer, without cost to Agency or City, shall process, secm'e or cause to
be secured any and all permits, certificales and approvals which may be required by the Agency,
the City or any other govermnental agency with jurisdiction over the Site and/or over the
construction of the Project, including, but not limited to, (a) upon completion of the acquisition
of the Developer Acquisition Parcels, a parcel or tract map to effect a lot merger for the Site
(the "Lot Merger Tract Map"); (b) the Kenyon Drive street vacation; (c) grading, fomadation
and building permits; and (d) all approvals required under the California Environmental Quality
Act, Public Resources Code 21000 et seq., as amended or re-codified from time to time. Without
limiting the foregoing, in developing and constructing the Project, Developer shall ensure that the
Project complies with all applicable development standards in the City Municipal Code and with
all building code, landscaping, signage and parking requirements, except as may be permitted
through approved variances and modifications.
4.6 Federals_State and Local Laws.
[A/~F:djw/91680_4?061203/4182 007] Page 24
The Developer shall carry out all of its land development obligations, all property
rehabilitation, all construction of the Proiect Improvements, and all other responsibilities of
Developer under this Agreement in conformity with all applicable federal, State and local laws
and governmental requirements, including ali applicable federal and State labor laws and
requirements; and shall investigate the applicability of and, if to the extent applicable, pay
prevailing wages meeting the requirements of State law. The Developer hereby agrees that it
shall be fully responsible for determining whether the State prevailing wage requirements are
applicable and agrees to indenmify, defend and hold the City arid Agency and its elected
officials, employees, agents, attorneys, representatives free and harmless from and against any
and all claims from or related to compliance by the Developer m~d its officers, directors,
employees, agents, representatives, conlractors and subcontractors in construction of the Project
with the prevailing wage requirements imposed by State law.
4.7 _~g.h t of Access.
Representatives of the Agency m~d City shall have the reasonable right of access
to the Site or any portion thereof during the period of this Agreement without charges or fees for
the purpose of determining compliance with plans approved under this Agreement or lhe
provisions of the Redevelopment Plan, including but not limited to the inspection of work being
perfbrmed in constructing and rehabilitating the Project Improvements.
4.8 Taxes~~nents Encumbrances and Liens.
Developer shall pay when due all real estate taxes and assessments, and other
encumbrances or liens, assessed or levied on or against the Site and each portion thereol(
Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or
amomtts of any tax assessment, encumbrance or lien, or to limit the remedies available to the
Developer in respect thereto.
4.9 .Required Notifications.
The Developer shall, promptly after obtaining knowledge thereof, notiSj Agency
in writing of the following:
[AEF:djw/r) 1680_4/06 i203/4182,007] Page 25
4.9.1 Any litigation affecting Developer, its Managing Members, the Site or the
Project, or any portion thereof.
4.9.2 Any communication, whether written or oral, that Developer receives from
any governmental authority claiming or asserting that any aspect of work on the Site or related to
the Project Improvements fails in any respect to comply with any goverm~ental requirements, or
threatening to suspend or revoke any governmental approval.
4.9.3 Any material adverse change in the physical condition of the Site or the
Project Improvements, or the financial condition or operations of the Developer or its Managing
Members.
4.9.4 Any material default by the Developer's contractor, architect, engineer or
by any subcontractor, vendor or supplier, having a contract in excess of $100,000, or any material
adverse change in the financial condition or operations of any of them, or the filing ora petition
by or against any of them under any debtor relief law.
4.9.5 Any cessation in the work in excess often (10) Business Days.
4.9.6 Any damage to or destruction of any portion of the Project where the cost
to repair and restore will exceed $25,000.
4.9.7 Any defect in design or construction where the cost to correct will require
a chmxge, or the delay that will be caused will exceed ten (10) Business Days.
4.9.8 Any Lien, charge or encmnbrance affecting the Project that is not
expressly permitted hereby.
4.9.9 Any change in (i) Developer's jurisdiction of organization or form of
organization; (ii) the legal or trade business names used by Developer; or (iii) the natm'e of
Developer's business.
4.9.10 The existence of any material default or failure to perfonn an obligation by
Developer or any third party under any contract relating to the Ske, the Project, the Project
Improvements, this Agreement or under any of the Other Agreements.
[AEF:djw/91680_4/061203/4182,0071 Page 26
4.9.11 The existence of any Default trader this Agreement by Developer, or any
Potential Defanlt, the nature thereof, and the corrective steps Developer is taking with respect
thereto.
For purposes of clarification, the occurrence of any action or event listed in the
foregoing Sections 4.9.1 tln'ough 4.9.11 is not itself an Potential Default unless the same triggers
any provision under than this Section 4.9, but Developer's failure to provide a timely notice
thereof as set forth in the preamble of this Section 4.9 shall be an Potential Default.
5. Terms and Conditions Related to A~enc¥ Conveyance of A~_.~encv Proper~E,
5.1 O__bh_~ations of Parties with Respect to Conveyance.
5.1.1 The Parties hereby agree that the Agency shall seek to acquire, if at all, in
accordance with this Agreement, the following land together with all Existing Improvements
located thereon: (a) the Right-of-Way Parcels, and (b) to the extent Developer is unable to
acquire and the Agency agrees in accordance with Section 4.2 to acquire such property, all or
certain portions of the Developer Acquisition Parcels (the property in clauses (a) and/or (b), if
acquired by the Agency, but excluding the City Dedication Parcels contained therein, is
hereinafter referred to as the "Agency Property").
5.1.2 Developer hereby agrees that: (a) it shall use best efforts to expedite
satisfaction of all conditions precedent for the benefit of the Agency set forth in this Article 5 in
order to minimize the time period of Agency ownership of the Agency Property, it being the
in~enZ of the Parties that the Agency convey the Agency Property to the Developer inm~ediately
upon the Agency's acquisition thereof, in order to expedite the Completion of the Project axed
limit the potential liability of the Agency with respect thereto; (b) the conveyance of the Agency
Property to Developer shall be on an "AS4S, WHERE-IS AND WITH ALL FAULTS" basis,
as further set forth in this Article 5; and (c) Developer shall release and indemnify the Agency
and the City, as further set forth in this Article 5.
5.1.3 If with respect to m~y portion of the Agency Property, the Agency has been
granted an order of possession but has not yet received fee title, the Agency and Developer shall
use good faith efforts to negotiate a management agreement with respect to Existing
Improvements located thereon which shall include the following: (a) management of such
[AEF:djw/91680_4~061203/4182.007] Page 27
Existing Improvements by Developer for a corrnnercially reasonable management fbe comparable
to that charged by management companies with respect to comparable units in Orm~ge County,
California, (b) Agency to retain ail rents and fees earned in conjunction with such unit leases;
(c) a prohibition on demolition of Existing Improvements; (d) incorporation of maintenance,
rent, and nondiscrimination provisions on terms set forth in or required by this Agreement and
the Regulatory' Agreement; and (e) such other terms and conditions as are custommT for such
agreements.
5.2 Consideration for A~ency Conveyance.
5.2.1 ~t!ht-of~Way Parcels and Kenyon Drive Pro~. As consideration
for the conveyance of the Right-of-Way Parcels and the Kenyon Drive Property by the Agency to
the Developer, the Developer shall at its sole cost and expense (a) demolish all Existing
Improvements upon the Agency Property, with the exception of tb2~ee (3) apaxtment units located
at 14801 Newport Avenue, which shall be rehabilitated, and (b) construct on the Transfer
Property and/or rehabilitate in accordance with the Approved Project Plmxs, the Project
Improvements.
5.2.2 Devel~quisition Parcels. As consideration for the conveya~nce of
each Developer Acquisition Parcel acquired by the Agency to Developer (a) to the extent not
previously paid in full by the Developer, Developer shall pay to the Agency all sums required to
comply with Developer's payment obligations pursuant to Section 4.2.7 (the "Acquisition
Parcel Cash Consideration") and (b) the Developer shall, at its sole cost and expense, demolish
all Existing Improvements thereon required to be demolished in accordance with the Approved
Project Plans [confirm if there is demolition on these parcels] and construct on the Transfer
Property and/or rehabilitate in accordance with the Approved Project Plans, the Project
Improvements.
5.3 Transfer Pro er Closin Date,
It is currently anticipated that the close of escrow with respect to the Agency
Property shall occur in one or more closings; each such closing is referred to herein as a
"Traasfer Property Closing". The portion of the Agency Property transferred at any Transfer
Property Closing is referred to herein as the "Transfer Property". Each Transfer Property
[AE~:djw/91680_W061203/4 t 82.007] Page 28
Closing shall take place on a Transfer Property Closing Date at City Hall, 300 Centennial Way,
Tustin~ California, or at such other place that the Agency selects. The term "Transfer Property
Closing Date" shall mean, with respect to each Transfer Property, the date upon which the
Agency obtains fee title to such Parcel. Each Transfer Property Closing Date may be extended
upon mutual written agreement of the Parties.
5.4 AS-IS; WHERE-IS: No Representations or Warranties.
The Developer recognizes that the Agency would not transfer the Agency Property
or any portion thereof to Developer except on an "AS, IS~ WHERE IS, WITH ALL FAULTS"
basis, amd the Developer aclq~owledges that (a) it has examined the Agency Property and is
receiving the Agency Property in an "AS IS, WHERE IS, WITH ALL FA1ULTS~' condition, in
its presen~ state and condition and with all faults, if any; and (b) the Agency has not made amd
does not make and specifically negates and disclaims any representations, warranties, promises,
agreements or guaranties of any kind or character, ~vhether express or implied, oral or written,
past, present or £uture, whether by the Agency or any of its agents, elected or appointed officials~
representatives or employees, of concerning or with respect to the Agency Property or any
portion thereof, including, without limitation, with respect to:
(i) The value of the Agency Property or the income to be derived from the
Agency Property;
(ii) The existence or nonexistence of any Liens, easemems, covenants,
conditions, restrictions, claims or encumbrances affecting the Agency Property or any Transfer
Property;
(iii) The suitability of the Agency Property or mV Transfer Property for any
and all fhture development, uses and activities which the Developer may conduct thereon,
including the development of the l?roj ect described herein and/or the habitability, merchantability
or fitness for a particulax purpose of the Agency Property;
(iv) The manner, quality, state of repair or lack of repair of the Agency
Property or any Transfer Property or of the Existing Improvements, including, without limitation,
the nature, quality or condition of the Agency Property or any Transfer Property including water,
soil and geology, the sufficiency of any undershoring or drainage, m~d the presence or absence of
[AEF:djw/9/680 4/061203/4182007] Page 29
Hazardous Substmxces, including, without limitation, asbestos or lead paint, at, on, under, or
adjacent to the Agency Property or the Existing hnprovements, provided that notwithstanding the
foregoing and Section S J, Agency shall promptly deliver to Developer any written reports or
information it receives concerning the matters described in this clause (iv);
(v) The compliance of or by the Agency Property~ any Trm~sfer Property or the
Existing Improvements or any use or operation thereof with any past, current or future statutes,
laws, codes, ordina2~ces, regulations or governmental requirements relating to zoning,
subdivision, plmming, building, fire, safety, health or enviro~unental matters or otherwise
including, without limitation, CEQA and the Americans with Disabilities Act of 1990, and/or
with any past, current or future covenants, conditions, restrictions or deed restrictions; or
(vi) The fact tha:t all or a portion of the Agency Property, any Transfer Property
may be located on or near an earthquake fault Tine or falls within an earthquake fault zone
established under the Alquist-Priolo Earthquake Zone Act, California Public Resources Code
Sections 262 1-2630 or within a seismic hazard zone established under the Seismic Hazards
Mapping Act, California Public Resources Code, Sections 2690-2699.6 and Sections 3720-3725.
5.5 Release.
The Developer, its Managing Members and any Person claiming by, through or
under the Developer, including all voluntary and involuntary successors of the Developer owning
all or any portion of the Site ("Releasing Party"), hereby waives, as of the date of execution of
this Agreement and as of each Transfer Property Closing Date, its right to recover from, and fully
and irrevocably releases, the Agency and the City and the elected and appointed officials,
employees, agents, attorneys, affiliates, representatives, contractors, successors and assigns of
each (individually, a "Released Party's; collectively, the "Released Parties") from any and ail
Claims and/or Losses that the Developer may now have or hereafter suffer or acquire: (a) arising
from any information or docnrnentation supplied by any of the Released Pa~ties ("Due Diligence
Information"); (b) arising from any condition of each Transfer Property, whether known or
unlmown by any Releasing Party or any Released Party; (c)arising from any construction defects,
errors, omissions or other conditions, latent or otherwise~ including envirom2ental matters~ as
well as economic and legal conditions on or affecting each Transfer Property; (d) arising from the
[AEF:c[iw)) 1680_4/f~61203/4182.007J Page 30
existence, release, threatened release, presence, storage, treatment, transportation or disposal of
any' Hazardous Substances at any time on, in, under, from, about or adjacent to each Transfer
Property; (e) by any Goverrm~ental Authority or any other third party arising from or related to
auy actual, threatened~ or suspected release of a Hazardous Substances on, in, under, from, about,
or adjacent to each Transfer Property, including any investigation or remediation at or about each
Trm~sfer Property; provided, howevers that the foregoing release by the Releasing Parties shall
not (i) apply to the Agency or City, as the case may be, the extent that any Claim with respect to a
Transfer Property is the result of the willful misconduct or fraud of such entity or the elected and
appointed officials, employees, representatives, agents or consultants of such entity arising after
the Transfer Property Closing with respect to such Transfer Parcel, (ii) abrogate Agency's
disclosure obligation m~der Section 5.4(iv)~ or (iii) waive Developer's (or such other Person~s)
rights with respect to a Default by Agency under this Agreement, This release includes Claims
of which the Developer is presently unaware or which the Developer does not presently suspect
to exist which, if known by the Developer, would materially affect the Developer's release to the
Released Parties. In co~mection with this release, the Developer specifically waives the provision
of Calilbmia Civil Code Section 1542, which provides as follows:
"A GENEi~SL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
BY INITIALING BELOW, DEVELOPER ACKNOWLEDGES THAT (a)IT
HAS READ AND FULLY UNDERSTANDS THE PROVISIONS OF THIS
SECTION, (b) 1T HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS
COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (c)IT HAS
ACCEPTED AND AGREED TO THE TERMS SET FORTH IN THIS
SECTION.
AGENCY~ S INITIALS DEVELOPER'S INITIALS
5.6 Environmental Indemnity and Covenants.
5.6.1 IndemnitE. As a material part of the consideration for this Agreement,
and effective as to each Transfer Property, upon the Developer's acquisition of fee tkle to all or
[AEF:djw/91680_d/061203/4182,007] Page 31
any portion thereof, the Developer hereby agrees, to the maximum extent permitted by laxv,
indemnify~ protect, defend~ assume all responsibility for and hold harmless the Agency a2~d the
City and the elected and appointed officials, employees, agents, attorneys, affiliates,
representatives, contractors, successor and assigns of each (the "Indemnified Parties") from and
against any and all Claims and/or Losses resulting or arising from or in any way connected with
the existence, release, threatened release, presence, use, handling, storage, treatment,
transportation and/or disposal of any Hazardous Substances at any time on, in, under, from~ about
or adjacent to any portion or portions of said property and the improvements thereon, regardless
whether any sueh condition is known or unkno~vn as of the Effective Date or upon any Transfer
Property Closing and regardless of whether any such condition pre-exists acquisition or is
subsequently caused, created or occurring, provided, however, that the Developer shall not be
responsible for (and such indemnity shall not apply to) to the extent of any gross negligence or
willful misconduct of the Agency or the City, as the case may be. This environmental indenmity
shall be included in the Memorandum of DDA, shall be recorded against the Site and shall be
binding upon successors and assigns of the Developer owning all or any part thereof.
5.6.2 Obligate to Remediate Hazardous Substances. Developer hereby
covenants and agrees that Developer shall (a) immediately report to Agency the uncovering or
discovery of Hazardous Substances during the progress of the Work or the release of any
Hazardous Substances~ and (b) remove and remediate at its sole cost and expense all Hazardous
Substances contained within the Existing hnprovements and such other Hazardous Substances
located in, on or under the Site to the extent required to be remediated pursuant to any
Enviro~wnental Law.
5.6.3 Duration of Provisions. The provisions of this Section 5.6 shall survive
each Transfer Property Closing and the termination of this Agreement and shall not merge into
any deed or deed(s) conveying the Agency Property or the Deeds of Trust.
5.7 Title Policl:~ Endorsements.
5.7.1 Permitted Excel. The Developer acknowledges and agrees that
(a) it has received and reviewed the litigation guaranties dated ~, 2003, with
respect to the Right-of-Way Parcels; (b) within ten (10) business days of the execution of this
[AEF:djw~) 1680_~d061203/4182.007] Page 32
Agreement, it will order preliminary title reports from the Title Company for the Kenyon Drive
Property and the Developer Acquisition Parcels (such preliminary title reports and the litigation
guaranties described in clause (a) each a "Preliminary Title Report"); and (c) it shall take title
to the Agency Property and each portion thereof subject to the following (collectively referred to
herein as the "Permitted Exceptions"): (i) all covenants, restrictions and Liens, set forth in or
permitted or contemplated by this Agreement; (ii) all exceptions indicated in the Preliminary
Title Report(s) other than monetary Liens, which shall be removed from title to any Transfer
Propeo. y prior to the Transfer Property Closing with respect to such property at Developer's sole
cost and expense, and (iii) unless removed from title in accordance with Section 5.7.2, any and
all further title exceptions as may be found in any subsequent update oftitle.
5.7.2 Supplemental Title Reports. No later than three (3) calendar days
following [with respect to the Kenyon Drive Property, .~ with respect to the
Developer Acquisition Parcels to be acquired directly by the Developer .,
and with respect to any Transfer Property that is part of the Right-of-Way Parcels or a
Developer Acquisition Parcel~ approval by the Agency of a resolution of neeessity~]
Developer shall request a supplemental preliminary report from the Title Company with respect
to such Transfer Property ("Supplemental Report"). Developer, within five (5) Business Days
fbllowing its receipt of each Supplemental Report, shall provide the Agency with written notice
specifying the Developer's disapproval of any item or exception shown on such Supplemental
Report not previously included in the Preliminary Title Report for such parcel ("Disapproved
Exception"), together with the Developer's suggested cure thereof; provided, however that the
Developer shall only have the right to disapprove any such item or exception: (a) to which it has
not specifically consented pursuant to this Agreement, including all matters appearing on the
Preliminary Title Report, (b) which arose following the Effective Date, even if inadvertently or
negligently excluded by the Title Company from the Preliminary Title Report or (c) which
constitutes a monetary Lien upon the Transfer Property. Failure of the Developer to disapprove
any item or exception shown on any such Supplement Report on or before the expiration of such
five (5) Business Day period shall be deemed to be an approval of the matters set forth in such
Supplemental Report. If the Developer designates a Disapproved Exceplion, the Developer shall
specify in writing its reason for such disapproval amd the Agency shall use good faith efforts to
[AEF:djw/91680_4/061203/4 ~ 82.0071 Page 33
remove or cure the Disapproved Exception to the reasonable satisfaction of the Developer at
Developer's sole cost and expense. If the Agency is m~able to cause removal of the Disapproved
Exception despite use of good faith efforts (including through exercise of eminent domain only
to the extent the Transfer Property is then subject to eminent domain proceedings), then
Developer shall be deemed to have waived such Disapproved Exception without cause of action
hereunder against the Agency. All matters and exclusions or exceptions from title insurar~ce
coverage shown in the Supplemental Report (other than those which the Agency has agreed to
cure as provided in this Section 5.7.2) together with all Permitted Exceptions described in
Section 5.7.1 and all additional exceptions arising after the date of the Supplemental Report,
unless arising due to the act of or negligeat omission to act of the Agency, shall be deemed
"?ermitted Exceptions".
5.7.3 Developer's Title PolicZ. It shall be a condition precedent to the
Developer's obligations with respect to each Transfer Property Closing that the Title Company
has committed to issue a CLTA Policy ("CLTA Policy") shoxving fee title to such parcel vested
in Developer, in a policy amount not to exceed the purchase price of the Transfer Parcel by the
Agency (or, with respect to the Kenyon Drive Property, the fair market value thereof) and
showing as exceptions the Permitted Exceptions; the Agency Property being trans£en~ed by the
Agency "AS IS, WHERE4S.' The Developer shall have the right, at its sole expense~ to
request and obtain an ALTA extended coverage owneFs policy of insurance (the "ALTA
Policy") and any additional title endorsements ("Developer's Title Endorsements") as the
Developer deems necessary; provided that the issuance of the ALTA Policy and the Developer's
:l'itle Endorsements shall not delay the Transfer Property Closing and shall not be a condition
precedent to the Transfer Property Closing. The CLTA Policy or ALTA Policy to be obtained by
the Developer is also referred to herein as "Developer's Title Policy." Developer's failure or
inability to obtain the ALTA Policy or Developer's Title Endorsements by the Transfer Property
Closing Date shall not be a condition precedent to or result in any delay in the Transfer Property
Closing.
5~7.4 ALTA Lenders Pol~¢~. It shall be a condition precedent to the Agency's
obligation to close each Transfer Property Escrow that the Title Company issue an ALTA
lender's policy in favor of the Agency including all endorsements thereto requested by the
[AEF:~iw/916804~061203/4182~007] Page 34
Agency or, in the alternative, endorsements to the Initial Agency Title Policy (such policy or
endorsements, the "Agency Transfer Title Policy") insuring that the Transfer Property is subject
only to permitted exceptions approved by the Agency, evidencing the recordation and superior
priority of this Agreement, the Memorandum of DDA and the Regulatory Agreement to all Liens,
and the recordation and superior priority of the Bridge Loan Deed of Trust and the Agency Deed
of Trust to all Liens other than Senior Obligations in a policy amount not less than the Bridge
Note Obligations and the Agency Note Obligations, and with any additional title endorsements as
the Agency deems necessary, including without limitation date-downs of title policies provided
at each prior or contemporaneous disbursement of the Agency Loan m~d at each transfer of a
Transfer Parcel evidencing continued superior priority.
5.8 No Financin~ or Entitlement or Other Con.___~~tin~encies.
The Developer acknowledges that it has exmnined (a) its ability to purchase the
Adjacent Parcels and to develop the Project, including the Developer's ability to obtain financing
therefor, (b) the zoning and land use entitlements applicable to the Adjacent Parcels and (c) the
environmental and physical condition of the Adjacent Parcels, including the status of title thereto.
The Developer acknowledges and agrees that the Developer's purchase of the Adjacent Parcels is
subject to no financing, title, entitlement or other contingency whatsoever, except as specifically
set forth in Section 5.5 m~d Section 5.7.
5.9 Conditions Precedent to Each Transfer Prope~.
5.9.1 Conditions Precedent to Each Transfer Projnerty Closing for the
Benefit of Develop_~. The Developer's obligation to close with respect to each Transfer
Property Escrow is subject to and conditioned upon satisfaction of, or Developer's written waiver
in its sole discretion as to, each of the followhag conditions on or before the Transfer Property
Closing Date:
~cument Deliveries. Agency shall have the executed
and delivered to Escrow Holder no later than one (1) day prior to the Transfer Property Closing
Date:
[AEF:djw/91680 4~061203/4182.007] Page 35
(i) A deed executed by the Agency, acknowledged and in
recordable Ibrm, conveying fee title in the Transfer Property to the Developer, but excluding
therefrom any City Dedication Parcels located thereon, if any (each, a "Deed");
(ii) If ~ad to the extent required by the City~ a deed and/or
easement deed ("City Dedication Deed") conveying the City Dedication Parcels located within
the Transfer Property to the City or to utility purveyors;
(ii/) A federal "FIRPTA" A£fidavit executed by the Agency
in form reasonably acceptable to the Developer, certifying that the Agency is not a "foreign
person" under the Foreign Investment in Real Agency Property Tax Act;
certificate form 593-W;
(iv)
(v)
California's real estate witl~holding exemption
Such proof of the Agency's authority and authorization
to transfer the Transfer Property, and such proof of the power and authority of the individual(s)
execnting and/or delivering any instrm~nents, documents or certificates on behalf of the Agency to
act for amd/or bind the Agency as may be reasonably required by Title Company;
(vi) Such leases, subleases, licenses, franchises or
concessions or other agreements affecting the Transfer Property or the improvements thereon or
their use or occupancy, together with all security deposits~ letters of credit held as security, and/or
prepaid rents (but only up to a maximum of one month's prepayment for each such agreement) in
Agency's possession or control; and
(vii) Such other documents or instruments as Escrow Holder
may' reasonably request to consummate the transaction contemplated herein.
B. Developer Title Polic~. ]'he Title Company shall be in a position
to issue and shall issue to the Developer's Title Policy, provided that there are no conditions to
its issuance that shall delay the Transfer Property Closing.
5.9.2 Conditions Precedent to Transfer Prop~r_~ Closing for the Benefit of
~. The Agency's obligation to close with respect to each Transfer Property Escrow is
subject to and conditioned upon the satisfaction of, or the Agency's written waiver in/ts sole
[AEF:djw~91680_4/061203/4182.007] Page 36
discretion as to, each of the following conditions on or before the Transfer Property Closing
Date:
A. Developer's Document Deliveries. The Developer sl~aI1 have
executed and delivered to Escrow Holder no later than one (1) day prior to the Transfer Property
Closing Date:
(i) Such additional instruments executed and in recordable
form as may be required by the Agency in its sole discretion to evidence (a) the applicability and
ef~'ectiveness of this Agreement, the Memorandum of DDA, the Deeds of Trust and the
Regulatory Agreement to the Transfer Property, including, if required, a restatement of the terms
thereof and (b) the subordination of all Mo~xgages to the lien of this Agreement, the
Memorandum of DDA and the Regulatory Agreement and, unless such Mortgages constitute
Senior Obligations~ the Deeds of Trust;
(ii) A reaffirmation of the Developer's representations and
warranties set forth in Sections 3.1 through 3.13 and of the release and indemnity set forth in
Section 5.5 and 5.6, respectively, in form and substance acceptable to the Agency;
(iii) Such proof of the Developer's authority and
authorization to acquire the Transfer Parcel and such proof of the power and authority of fl~e
individual(s) executing and/or delivering any instrmnents, documents or certificates on behalf of
the Developer or any Mortgagee to act for and/or bind the Developer or such Mortgagee as may
be reasonably required by Title Company;
(iv) Such other documents or instruments as Escrow Holder
may reasonably request to consummate the transaction contemplated herein; and
(v) A Developer's Certificate in the form attached as
Attachment No. 15_, dated as of the Transfer Property Closing Date~ and such other documents as
the Agency, in its sole discretion, requires to determine that Developer is able to acquire the
Adjacent Parcels, construct the Pro~ect Improvements and perform in a timely manner ali of its
other obligations and commitments set forth in this Agreement.
[AEF:djw~91680_4/061203/4182 007] Page 37
B. .~kq. uisition of Develo-~er Ac uisition Parcels. The Developer
shall have purchased or entered into a binding agreement to purchase the Developer Acquisition
Parcels, subject only to industry standard closing contingencies on the part o£ the Developer or
seller thereto, or shall have provided to the Agency such other evidence of best efforts, intent and
ability to acquire the Developer Acquisition Parcels as shall be acceptable to the Agency in its
sole discretion.
C. Pa_!y_~_gnt of Accj.uisition Costs_. With respect to Transfer
Properties that are Developer Acquisition Parcels, Developer shall have placed in Transfer
Property Escrow the Acquisition Parcel Cash Consideration attributable to the transferred
Transfer Property.
D. _Appro~ Plans. The Agency shall have approved the
Approved Project Plans for the Project.
E. No Default. The Developer shall not be in Default under this
Agreement or any of the Other Agreements.
F. A e_~g_~2E._Transfer Title Policy. The Title Company shall be in a
position to issue and shall issue to the Agency the Agency Transfer Title Policy.
5.10 ProeeduresforConveyanceofA eric Pr~omA erie toDevelo er.
5.10.1 Costs and E_~enses. All costs and expenses related to each Transfer
Property Closing and the transfer of each Transfer Property to the Developer shall be paid by the
Developer, including without limitation the following: (a) with respect to the Developer
Acquisition Parcels only, the Acquisition Parcel Consideration; (b) the premium for the
Developer's Title Policy, including the cost of Developer's Title Endorsements, if any; (c) the
premium for the Agency Transfer Title Policy, including the cost of Agency requested
endorsements~ (d) any title policies required by any Mortgagee; (e) docmrrent recording charges
for the Deed, the Memorandum of DDA, the Regulatory Agreement and other documems
recorded at each Transfer Property Closing; (f) all Transfer Property Escrow fees arid costs; and
(g) all documentary and other transfer taxes.
[kEF:t~jw/91680_4/061203/4182007] Page 38
5.10.2 Possession. The Agency shall deliver possession of the Transfer Property
at the Transfer Property Closing.
5.10.3 Prorations.
A. General. Rentals, revenues and other income, if any, from each
Transfer Property shail be prorated on a cash basis as of 11:59 P.M. Pacific Time on the day
preceding the Transfer Property Closing. Tax payments shall be prorated in accordance with
Section 5.10.3.B.
B. Taxes. The Developer shall be responsible for all taxes, fees and
charges imposed by any governmental authority. If, after the Transfer Property Closing, any real
estate taxes are assessed against the Transfer Property conveyed thereby and pertaining to the
period of ownership of such Transfbr Property by the City or the Agency, the Agency agrees to
contact the applicable taxing authority and seek recognition and enforcement of the City and/or
the Agency tax exemption. The provisions ofthis Section 5.10.3.B shall survive the termination
of this Agreement m~d each Transfer Property Closing m~d shall not merge into the Deeds of
Trust or any deeds or deeds granted with respect to the Transfer Parcels.
5,10.4 Disbursements and Other Actions by Escrow Holder. At each Transfer
Property Closing and subject to the satisfaction or waiver by the benefited Party offae closing
conditions described in Section 5.9, Escrow Holder shall promptly undertake ail of the following
in the manner indicated below:
A. Funds. Debit or credit all matters addressed in Section 5.10.1 and
prorate ail matters addressed in Section 5.10.3 and disbnrse to the Agency all amounts then due
from Developer to the Agency and pay all other costs associated with each Transfer Property
Closing, at the sole cost and expense of the Developer.
B. Recordln~. Cause the Deed, the Memorandnm of DDA, the
Regulatory Agreement, the Deeds of Trust, m~y related subordination agreements and any other
documents which the Developer and the Agency may mutually direct, or which may be required
to be recorded by the terms of this Agreement to be recorded in the Official Records, ob'~ain
conformed copies thereof and distribute sane to the Developer and the Agency.
[AEF:,4iw~91680_4~061203/4182 0071 Page 39
C. Title Polie[. Direct the Title Company to issue the Agency
Transfer Title Policy and, if such issuance is approved by the Title Company, issuance of the
Developer's Title Policy to Developer together with the Developer's Title Endorsements.
D. Other Actions. Take such other actions as the Developer and the
Agency direct pursuant to mutually executed supplemental Escrow instructions.
Notice. Ali communications from the Escrow Holder shall be
directed to the addresses and in the manner established in Section 15.2 of this Agreement for
notices, demands and communications between the Parties.
6. Financial Terms and Conditions.
6.1 Pr_.E~ect Costs.
6.1.1 Project Costs. Except for the Agency agreement to provide the Bridge
Loan and the Agency Loan, to convey the Kenyon Drive Property and the Right, of-Way Parcels,
and to pay relocation costs associated with the Right-of-Way Parcels, all as described in this
Agreement, or as otherwise expressly provided in this Agreement or the Regulatory Agreement,
and regardless of the final total Project Cost or the amount of the Project Budget as estimated by
the Parties from time to time, Developer shall bear all costs of acquisition and maintenance o£the
Site, including xvithout limitation the Adjacent Parcels, and all costs of plm~fing, designing,
preparing the Site, demolishing portions of the Existing Improvements and constructing and
rehabilitating to Completion all Project Improvements on the Site, including, without limitation,
all hard costs, soft costs, the cost of services, fees~ exactions, dedications, cost overruns, profit,
overhead, attorneys' and consultm~ts' fees, wages required to be paid to any person employed by
the Developer or any contractor or subcontractor of Developer, and the costs related to temporary
or permanent displacement of tenants residing at the Site (except with respect to tenants residing
in Existing hnprovements on the Right-of-Way Parcels) as of the Effective Date (collectively, the
"Project Costs"), all without cost or liability to the Agency or the City unless otherwise
expressly provided in this Agreement or the Regulatory Agreement.
6.1.2 ~. The Parties' estimate as of the Effective Date of the cost
to f~nd the acquisition of the Site and to Complete the Project hnprovements in accordance with
the requirements of this Agreement is Fifteen Million. One Hundred Thirty-Six Thousand and
[AEF:~[jw/91680_~061203/4182.007] Page 40
Seven Hundred Dollars ($15,136,700), as further set forth in the Project Budget attached as
Attachment No. 6 to this Agreement. The Paxties acknowledge that the Project Budget is only an
esthnate and that the amount of the total Project Costs may be higher or lower than is shown on
the current Project Budget. Throughout the term of this Agreement until Completion of the
Project, the Developer shall from time to time as directed by the Agency cause the Project
Budget to be revised based upon then most current information and best available estimates. All
such revisions shall incorporate the comments and input of the Agency and shall be subject to
approval by the Agency. Upon approval by the Developer and the Agency of each successive
Project Budget, such Project Budget shall supercede the Project Budget attached to this
Agreement.
6.1.3 Developer Obligation. Without limiting the generality of the foregoing,
Developer's obligations to pay Project Costs shall include all costs and expenses associated with
the Project required to Complete the Project in accordance with the terms of this Agreement and
the Approved Project Plans and within the time period set forth in the Schedule of Performance.
The Developer acknowledges and agrees that the Project Costs may exceed the amounts set forth
in the Project Budget, that the amount of the Agency Assistance shall not be increased and that
notwithstanding any overruns with respect to estimated Project Costs, Developer shall be
responsible for all Project Costs including overruns.
6.1.4 ~nd Loans. Developer may obtain financing for a
po~ion of the Project Costs; provided, however, that Developer shall be obligated to contribute
Developer's Equity in an amount not less than Two Millio~ Dollars ($2,000,000) in accordance
with the schedule attached as Attachment No.16 prior and as a condition to disbursement of any
portion of the Agency Loan. Developer's Equity shall not be secured by any Mortgage or other
Lien upon the Site or any portion thereof. Ail Mortgages obtained by the Developer to fund the
Project Costs shall be entered into only in accordance with the provisions of Section 2.2 of this
Agreement and shall be subject to the subordination provisions set forth herein.
6.2 Agency Assistance to Developer.
So long as the Developer is not in Default of its obligations under this Agreement
and the Other Agreements, the Agency hereby agrees that it shall provide two loans to the
[AEF:djw/91680_4d06] 203/4182.007] Page 41
Developer in an amount not to exceed in total Three Million Five Hundred Sixty-Four Thousand
Two Hundred Dollars ($3,564,200) in order to assist the Developer with certain site assembly
and predevelopment costs and certain Project Improvement costs and long-term affordability
covenants (the two loans are collectively referred to as tire "Agency Assistance"). The
obligation of the Agency to fund the Agency Ass/stance shall be expressly subject to the
satisfaction of all conditions precedent thereto set ford~ in this Agreement and shall be subject to
disbursement in accordance with the terms and conditions of this Agreement. The Agency
Assistance consists of the following:
(a) The "Bridge Loan" in the total amount of Nine Hundred Thousand
Dollars ($900,000) to be utilized by the Developer for purchase of the Adjacent Parcels
and for payment or reimbursement of predevelopment costs associated with the Project
whether arising before or after the Effective Date, and
(b) The "Agency Loan" in the total amount of Two Million Six Hundred
Sixty Four Thousand Two Hundred Dollars ($2,664,200) to assist the Developer in
funding the construction of the Project Improvements and to provide Project financial
assistance to the Developer in exchange for Developer's agreement to restrict the Project
and the Site with long-term rental aflbrdability covenants pursuant to California Health
and Safety Code Section 33334.2(e)(8).
6,3 Subm~roval of Evidence of Financin~Commitments.
6.3.1 As an express condition precedent to Agency's obligalion to make
available any Agency Assistance to Developer, Developer shall submit to Agency, within the
times established therefor in the Schedule of Performance: (a) the final loan docmxqents for the
Developer's financing of the development, construction and rehabilitation of the Project
Improvements for the Developer-Owned Parcels, including but not limited to those loma
documents that pertain to indebtedness in co~mection with the acquisition and construction of the
Developer-Owned Pm'cels; and (b) such other documents, as Agency, in its good faith discretion,
determines will assist in the evaluation of whether Developer is able to construct and rehabilitate
the entire Project Improvements and perform its obligations under this Agreement.
[AEF: djw/r) 1680_4/061203/4182.007] Page 42
6.3.2 As an express condition precedent to the Agency's obligation to advance
to Developer any Agency Assistance subsequent to the Initial Closing, Developer shall submit to
Agency, within the times established therefor in the Schedule of Performance and at least ten
(10) Business Days prior to the date the Agency is to fund such advance: (a) if a condition
precedent to such advance is the acquisition by Developer of any of the Developer Acquisition
Paxcels, the final loan documents for the Developer's financing of the acquisition of such
Developer Acquisition Parcels, the demolition of any Existing Improvements located thereon,
and the construction of the Project Improvements to be constructed thereon, including but not
limited to those loan documents that pertain to indebtedness in connection with the acquisition,
demolition and construction; and (b) such other docaments, as Agency, in its good faith
discretion, determines will assist in the evaluation of whether Developer is able to construct and
rehabilitate the entire Project Improvements and perform its obligations under this Agreement.
6.3.3 The documents to be submitted as provided above in this Section 6.3 are
referred to as the "Evidence of Financing Commitments". The Agency shall approve or
reasonably disapprove such Evidence of Financing Commitments within the periods established
in the Schedule of Performa2ce.
6.4 Terms of the Bridge Loan.
6.4.1 The Bridge Loan shall be evidenced by a promissory note in the form
attached hereto as Atlachment No. 7 (the ~Bridge Note") which shaI1 be executed by the
Developer and delivered to the Agency at the time of and as a condition precedent to the Initial
Closing.
6.4.2 The Bridge Note shall be secured by the Bridge Loan Deed of Trust, which
Developer shall execute at the time of and as a condition to the Initial Closing and which shall be
recorded by Escrow Holder at the Initial Closing against each parcel comprising the Developer-
Owned Parcels and each Adjacent Parcel then owned in fee by the Developer. The Bridge Loan
Deed of Trust shall be recorded against each parcel comprising the Adjacent Parcels concurrently
with the acquisition of each such parcel by the Developer. Such Deed of Trust shall be
subordinate solely to the Permitted Mortgage(s) which are approved by the Agency as Senior
Obligations. The form of the Bridge Loan Deed of Trust is attached as Atlaclm~ent No. 8.
[AEF:c~iw/91680_W061203/4182 007] Page 43
6.4.3 The total amount of the Bridge Loan shall accrue interest at the rate of four
percent (4%) per armum simple interest, from the Initial Closing Date, with payment deferred
until the third (3rd) am~iversary of the Initial Closing. The principal amount of the Bridge Note
and all deferred accrued interest shall be due and payable on the third (3rd) anniversary of the
Initial Closing.
6.5 Terms of the A~enc¥ Loan,
6.5. I The Agency Loan, which consists of the total amount described in
Section 6.2(b) above, shall be evidenced by a promissory note in the form attached hereto as
Attachment No. 9 (the "Agency Note")~ which shall be executed by the Developer at the time of,
and as a condition to, the Initial Closing.
6.5.2 The Agency Note shall be secured by the Agency Loan Deed of Trust,
which Developer shall execute at the time of and as a condition to the Initial Closing auld which
shall be recorded by Escrow Holder at the Initial Closing against each parcel comprising the
Developer-Owned Parcels and each Adjacent Parcel then owned in fee by the Developer. The
Agency Loan Deed of Trust shall be recorded against each parcel comprising the Adjacent
Parcels concurrently with the acquisition of each such parcel by the Developer. Such Deed of
Trust shall be snbordinate solely to the Permitied Mortgage(s) which ~e approved by the Agency
as Senior Obligations. The form of the Agency Loan Deed of Trust is attached as
Attachment No. 10.
6.5.3 The disbursed and unpaid principal balance of the Agency Loan shall
accrue interest at the rate of six percent (6%) per mmum, simple interest, from the date on which
Agency Loan proceeds are disbursed to Developer, with payment of principal and interest to be
deferred and accrue until January 1,2011 ("Maturity Date"); provided, however, no interest
shall begin to accrue thereunder until such time as Agency has disbursed the first dollar of the
Agency Loan. The Agency's obligation to fund tory amounts under the Agency Note shall be
subject to the satisfaction of the express conditions precedent set forth in Section 7.
Notwithstanding any other provision of the Agency Note or this Agreement, the entire
outstanding principal balance of the Agency Loan together with deferred and accrued interest and
any other sums payable under the Agency Note shall be due and payable in full on the Maturity
[AEF:djw/91680_4/061203/41820071 Page 44
Date. If the Developer has performed the obligations under this Agreement and the Other
Agreements, then on the Maturity Date the total amount of the Agency Loan plus ali interest then
accrued shall be deemed paid.
6.6 Maintenance of Records.
Developer agrees to maintain complete and accurate accounts, invoices, and
records of ail monies expended or paid pursuant to contracts for the construction and
rehabilitation of the Project Improvements.
6.7 Survival of Provisions.
The provisions of Sections 6.2, 6.3, 6.4 and 6.5 shall survive the temnination of
this Agreement and shall not be merged into the Deeds of Trust or any deed granted with respect
to the Site.
7. Conditions Precedent to Disbursement of the A eg~..~E Assistance.
7.1 Conditions Precedent to the Funding of the Bridge Loan.
The Agency's obligation to disburse the proceeds of the Bridge Loan is expressly
subject to and conditioned upon the satisfaction, or the Agency's written waiver in its sole
discretion, of each of the following conditions to the Initial Closing on or before the Initial
Closing Date:
A. The execution and delivery by the Developer to Escrow Holder of
the following documenls not later than one (1) day prior to the Initial Closing:
(i)
(ii)
The DDA executed by Developer;
The Memorandum of DDA executed by Developer,
aclmowledged and in recordable form, with subordination thereto by all Lien holders amd
Mortgagees;
(iii) The Regulatory Agreement executed by Developer mud
Developer's Members, acknowledged and in recordable form, with subordination thereto by all
Lien holders and Mortgagees;
(iv) The Bridge Note, executed by Developer;
[AEF:djw/91680_4/001203/4182.007] Page 45
(v) The Agency Note~ executed by Developer;
(vi) The Bridge Loan Deed of Trust, executed and
acknowledged and in recordable form., with subordination thereto by all Lien holders and
Mortgagees not approved by the Agency as Permitted Mortgagees that are Senior Obligations;
(vii) The Agency Loan Deed of Trust, executed and
acknowledged and in recordable form, with subordination thereto by all Lien holders and
Mortgagees not approved by the Agency as Permitted Mortgagees that are Senior Obligalions;
(viii) Such additional instruments executed by Developer,
aclmowledged and in recordable form as may be required by the Agency in its sole discretion to
evidence the applicability and effectiveness of the Memorandum of DDA, the Regulatory
Agreement and the Deeds of Trust;
(ix) A reaffirmation of the Developer's representations and
warranties set forth in Sections 3.1 tl2'ough 3.13;
(x) Such proof of the Developer's authority and
authorization to enter into the Memorandum of DDA and the Other Agreements and such proof
of the power and authority of the individual(s) executing and/or delivering any instruments,
docmnents or certificates on behalf of the Developer or any Mortgagee to act fbr and/or bind the
Developer or such Mortgagee as may be reasonably required by the Agency or the Title
Company; and
(xi) Such other documents or instruments as Escrow Holder
may reasonably request to consummate the Initial Closing.
B. Agency shall have approved Developer's Evidence of Financing
Commitments required for the Initial Closing;
C. Agency shall have received from the California Housing Finance
Authority ("CHFA') a disbursement of HELP Loan funds in the ~xnount of $900,000.00
pursuant to the Loan Agreement between CHFA and the Agency dated February 27~ 2001
(CHFA Loan No. HELP-081800-2);
D. Developer shall not be in Default under this Agreement.
[AEF:djw/91680_4/061203/4182.007] Page 46
E. Agency shall have received Escrow Holder's commitment to abide
by Agency's escrow instructions pertaining to recordation of the Memorandum of DDA, the
Regulatory Agreement and the Deeds of Trust; which escrow instructions shall specify, inter
alia, thai ali such agreements shall be recorded at the Initial Closing without cost to Agency; and
F. Such Escrow Holder is prepared to issue to Agency, on close of
Escrow, an ALTA Lender's Title Policy showing: (1) fee simple title to each legal parcel
comprising the Developer-Oxvned Parcels as vested in Developer, (2) Agency as an insm'ed
lender, and (3) no monetary liens or encumbrances, other than Permitted Mortgages approved by
the Agency, which shall be subordinate to this Agreement, the Memorandum of DDA and the
Regulatory Agreement and, unless the same are Senior Obligations approved by the Agency, the
Deeds of Trust (the "Initial Agency Title Policy") and Evidence of Financing Commitments as
described in Section 6.3.3 hereinabove. Developer shall pay all costs relating to such Initial
Agency Title Policy and Escrow.
7.1.2 Developer agrees to deposit with Escrow Holder all the documents
referred to in Section 7.1.1 .A and to deliver to the Agency the documents referred to in
Section 7.1.1 .B on or before one (1) day prior to the Initial Closing. Developer's obligation to
deposit and deliver such documents is expressly subject to and conditioned upon the satisfaction,
or the Developer's written waiver in its sole discretion, of each of the following conditions to the
Initial Closing on or before the Initial Closing Date:
A. The deposit with Escro~v Holder of the full amonnt of the Bridge
Loan on or before one (1) day prior to the Initial Closing.
B. The execution and delivery by the Agency to Escrow Holder of the
fbltowing documents not later than one (1) day prior to the Initial Closing:
(ii)
The DDA executed by 1he Agency;
The Memorandum of DDA executed by the Agency,
acknowledged and in recordable form, with subordination thereto by all Lien holders and
Mortgagees;
[AEF:djw/91680 4z061203/4182 007] Page 47
(iii) The Regulatory Agreement executed by the Agency,
acknowledged and in recordable form;
(iv) Such proof of the Agency' s authoriIy and authorization
to enter into the Memorandum of DDA and the Other Agreements and such proof of the power
and authority of the individual(s) executing and/or delivering any instruments, documents or
certificates on behalf of the Agency to act for and/or bind the Agency as may be reasonably
required by the Developer or the Title Company; and
(v) Such other documents or instruments as Escrow Holder
may reasonably request to consmrnnate the Initial Closing.
7.1.3 Upon satisfaction of the conditions precedents set forth above, Escrow
Holder shall cause tI~e recording of the Memorandum of DDA, the Regulatory Agreement, the
Agency Loan Deed of Trust and the Bridge Loan Deed of Trust (the '~nitial Closing"). The date
of the Initial Closing (the "Initial Closing Date") is anticipated to occur within 45 days
following the Effective Date, subject to extension executed in writing by each of the Parties~
7.2 Conditions Precedent to Disbursement of the Agency Loan.
7.2.1 The Agency Loan shall be disbursed by the Agency to the Developer in
multiple advances. Each advance shall be disbursed in accordance with the provisions of this
Section 7.2 upon the Developer meeting or satisfying all the conditions precedent to such
disbursement, including, without limitation, each Milestone as set forth in the Method of
Financing attached hereto as Attachment No. 5.
7.2.2 Developer shall submit to the Agency- a request for disbursement of an
advance under of the Agency Loan (a "Payment Request") no later than thirty (30) days
following meeting or satisfying any Milestone entitling it to disbursement of Agency Loan
proceeds. Each Payment Request shall include:
A. Identification of the Milestone(s) completed and the dollar amounts
associated with completion of such Milestone;
B. Evidence of Financing Commitments reasonably satisfactory to the
Agency;
[AEF:djw/91680_4/061203/4182 007] P age 4 8
Attachment No. 15;
C. A Developer's Certificate in the form attached as
D. A commitment by the Title Company to issue a date-down
endorsement to the Initial Agency Title Policy indicating: (1) fee simple title to each legal parcel
comprising the Developer-Owned Parcels as vested in Developer, (2) Agency as an insured
lender, and (3) no monetary liens or encumbrances, other than a Permitted Mortgages approved
by the Agency as Senior Obligations, the Bridge Loan Deed of Trust, the Agency Deed of Trust,
and a lien for taxes not yet due and payable;
E. Proof of insurance coverage as provided in Section 12;
F. Written conditional (as to payment only) waivers and releases of
all claims against Agency by Developer and all contractors carrying oLlt the Work in the form
provided by California Civil Code ,~ 3262;
G. A reaffirmation of the Developer's representations and warranties
set forth in Sections 3. t through 3.13;
H. Contractor invoice(s), al~d other supporting documentation
reasonably requested to evidence costs and expenses incurred by or on behalf of the Developer in
connection with the Project; and
I. Such other documents, as Agency, in its good faith discretion,
determines will assist in the evaluation of whether Developer is able to construct and rehabilitate
the entire Project Improvements and perform its obligations under this Agreement.
7.2.3
Loan in the event:
Agreements;
The Agency shall have no obligation to disburse any portion of the Agency
A. Developer is in Default of this Agreement or any of the Other
B. The Title Company fails to issue to the Agency the endorsement(s)
described in Section 7.2.2(D_);
C. Developer's Work on the Project is not consistent with the
Approved Project Plans and the then-approved Project Budget;
[AEF:djw/91680_4/061203/4182.007] Page 49
D. Developer bas exceeded the Project Budget;
E. Developer has failed to contribute Developer's Equity when and as
required by the Method or Finance and the schedule for Developer's Equity Contribution
attached as Al:tachment No. 17~
F. Developer has failed to deliver to the Agency in a timely manner
the latest Project Budget.
7.2.4 Each Payment Request shall constitute a representation by Developer to
Agency that to the best of Developer's knowledge~ information and belief: (a) the Milestone for
which payment is requested as covered by the Payment Request has been fully satisfied or met;
(b) all Work and the quality of all Work done prior to the Payment Request is in con~'ormity with
the Approved Project Plan s and with generally accepted industry standaxds, practices and
principles applicable to the Work; (c) all costs reflected in the latest Project Budget were incurred
in accordance with applicable requirements of the Approved Project Plans and this Agreement,
(d) the Work, materials and equipment done prior to the Payment Request are free and clear of
Liens mad Stop Notices not satisfied or bonded, (e) no Stop Notice has been served on Developer
with respect to the Work, and (f) that Developer is entitled to payment from Agency of the
amount requested.
7.2.5 After confirming satisfaction of all conditions precedent set forth in
Section 7.2.3, the Agency shall review each Payment Request to determine whether the items for
which payment is requested are consistent with the Agreement and may request additional
supporting documentation, including receipts, invoices or purchase orders, if reasonably
necessary to substantiate the Payment Request. The Agency shall provide to the Developer the
Agency's approval or disapproval of such Payment Request within twenty (20) Business Days
following the submission thereof by the Developer and the demonstrated satisfaction of all
conditions precedent. If the Agency disapproves of all or any portion of the Payment Request,
the Agency shall provide the Developer with a written notice of disapproval specifying those
items disapproved by the Agency. If the Agency disapproves all or m~y portionof the Payment
Request, the parties shall, within two (2) Business Days following Developer's receipt of such
written disapproval, meet and confer in good faith in order to resolve any disputed items. Within
[AEF:djwZ91680_4/061203/4 [ 82~007] Page 50
20 calendar days fbllowing approval or deemed approval of the Payment Request by tl~e Agency,
the Agency shall disburse to Developer funds in the amount of the Payment Request, less the
amount of the Retained Agency Loan Proceeds, and less such portion of the Payment Request
disapproved by the Agency as provided herein above.
8. Covenants~ Conditions and Restrictions.
8.1 Rental Housing and Affordable Housing Use Restrictions.
As a condition to Initial Closing, Developer and Agency shall execute a
Regulatory Agreement in the form and substance of the agreement attached hereto as
Attachment No. 12. The Regulatory Agreement shall require that the Developer devote the
Project for use as a 112-unit rental apartment project with not less than sixty-seven (67)
Affordable Housing Units which shall be comprised of twenty tl~'ee (23) milts for Very Low
Income Tenmats, seventeen (17) un/ts for Lower Income Tenants, and twenty seven (27) units for
Moderate Income Tenants, in accordance with the terms and conditions, including, without
limitation~ the occupancy restrictions contained in the Regulatory Agreement for the period set
forth therein.
8.2 Development~ Use and Maintenance Covenants.
Developer covenants and agrees for itself, its successors, its assigns, and every
successor in interest to the Site, or any part thereof, that during the term of this Agreement,
Developer and its successors and assigns shall develop the Site in conformity w2h this
Agreement, the Scope of Development, the Approved Project Plans and the Regulatory
Agreement and shall cause the Site to be maintained and to be used for residential purposes in
accordance with the restrictions, covenants and conditions including, without limitation, the
affordable housing use restrictions set forth in the Regulatory- Agreement.
8.3 Obligation to Refrain from Discrimination,
The DeYeloper covenants and agrees for itself, its successors, its assigns and every
successor in interest to the Site or any part thereof, that there shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, religion, sex,
sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the Site or any portion thereof, nor shall the Developer
[AEF:diw/91680_ad06 t 203/4182.007] Page 51
itself or any person claiming under or through it establish or permit any such practice or practices
of discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants~ sublessees or vendees of the Site or any portion
tlaereof.
8.4
Clauses.
Redeveloj~ment Lawl Form of Nondiscrimination and Nonsegregatlon
The Developer shall refi'ain from restricting the sale of the property on the basis of
the race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry
of any person. All deeds, leases or contracts shall contain or be subject to substantially the
following non-discrimination or non-segregation clauses:
8.4.1 In deeds: '~The grantee herein covenants by and for itsel.f, its successors
and assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, sex, sexual orientation, marital status, national origin or ancestry h~ the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the
grantee itself or any person claiming under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, munber, use
or occnpancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed.
The foregoing covenm~ts shall run with the land."
8.4.2 In leases: '~The lessee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, and this lease is made and accepted
upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color~ creed,
religion, sex, sexual orientation, marital status, national origin or
ancestry in the leasing, subleasing, renting, transferring, use,
occupancy~ tenure or enjoyment of the land herein leased, nor shall
lessee itself, or any person claiming under or through it, establish
or permit such practice or practices of discrimination or
[AEF :djwfl) 1680_4/06120374182.007] Page 52
segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, sublessees, subtenants or vendees
in the land herein leased."
8.4.3 In contracts: "There shall be no discrimination against or segregation of
any person or group of persons on account of race, color~ creed, religion, sex, sexual orientation,
marital status, national or/gin or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation with
re£erence to the selection, location, number, use or occupancy of tenants, lessees, snbtenants,
sublessees or vendees of the land.'~
8.5 Beed Restrictions/Covenants Running with the Land.
8.5.1 Runs with Land. The obligations of the Developer set forth in this
Agreement shall be covenants rurming with the land, shall be set forth in the Memorandum of
DDA and in the Regulatory Agreement and shall be binding upon the Developer and all
successors and assigns of Developer owning ail or any portion of the Site, for the benefit of the
Agency and its successors and assigns and for the benefit o£the benefited property described in
the Regulatory Agreement, and the City and the successors and assigns of the City owning alt or
any portion of the benefited property to the fullest extent permitted by law and equity.
8.5.2 Agency Enforcement. In amplification and not in restriction of the
provisions set forth hereinabove, it is intended and agreed that the Agency and its successors and
assigns be deemed a beneficiary of the terms and provisions of this Agreement and the
Regulatory Agreement and of the conditions, covenants and restrictions contained herein and
therein and running with the land, for and in its own right and for the purposes of protecting the
interests of the commmfity and other parties, public or private, in whose favor and for whose
benefit this Agreement, the Regulatory Agreement amd the covenants running with the land have
been provided. Accordingly, all conditions, covenants and restrictions without regard to
technical classification or designation set forth in this Agreement and the Regulatory Agreement
shall run and be binding for the benefit of the Agency and such covenants shall run in favor of
Agency for the entire period during xvhich such conditions, covenants and restrictions shall be in
[AEF:djw~)I680_4/0612¢3/4182.007] Page 53
force and effect, without regard to whether the Agency is or remains an owner of any land or
interest therein to which such conditions, covenants and restrictions relate. The Agency shall
have the right, in the event of any' breach of any such conditions, covenant and restrictions to
exercise all the rights and remedies, and to maintain any action at law or suit in equity or other
proper proceedings to enforce the curing of such breach of agreement or covenant to which it or
any other beneficiaries of this Agreement and covenants ma:y be entitled.
8.5.3 Recordation ofMemoran~lum ofDDA~ Regulator~A~reement. In
order to provide notice of the covenants, conditions and restrictions contained in this Agreement~
Developer and Agency hereby agree that: (a) concurrently xvith and as a condition of the close of
Escrow, the Developer and the Agency shall execute and cause the recordation of the
Memorandum of DDA and the Regulatory Agreement, each of which shall make specific
reference to the non-discrimination provisions set forth in this Article 8 and such other
restrictions or covenants running with the land set forth herein as the Agency may deem
necessary or appropriate to carry out this Agreement and (b) concurrently with acquisition by the
Developer of each parcel constituting a portion of the Adjacent Parcels, the Developer shall
cause the Memorandum of DDA, the Regulatory Agreement and the Deeds of Trust to be
recorded against each such parcel to evidence the effectiveness of such covenants, conditions and
restrictions against such af~er-acquired property. Developer and each Mortgagee of Developer
shall, if requested by the Agency, execute such additional instruments as the Agency may request
to evidence the applicability of such agreements to the after-acquired property.
8.5.4 Termination Rights. The Agency and its successors and assigns, and
Developer and the permitted successors and assigns of Developer in and to all or any part of the
fee title to the Project, shall jointly have the right upon written agreement signed by both Parties
to consent and agree to changes in, or to eliminate in whole or in part, any of the conditions,
covenants, or restrictions contained in this Agreement and the Regulatory Agreement without the
consent of any tenant, lessee, easement holder, licensee or Mortgagee, or any other person or
entity having any interest less than a fee in the Site.
[AEF:djw/t) 1680_4/061203/4182 007] Page 54
9. Mortg_~ee Provisions.
9.1 Priority of A~reements.
This Agreement (as evidenced by the Memorandum of DDA) and the Regulatory
Agreement shall be a lien of first priority with respect to the Developer-Owned Parcels and the
Adjacent Parcels and shall be superior in priority to all Mortgages. To the extent required to
achieve the priority set forth in the preceding sentence, Developer shall cause each Mortgagee
having a Mortgage in the portions of the Site owned by Developer to execute in recordable form
and to record in the Official Records, a subordination agreement subordinating the priority of its
Mortgage to the priority of this Agreement and the Regulatory Agreement.
9.2 Mortgagee Protection.
No breach of any of the provisions of this Agreement shall impair, defeat or
render invalid the lien of any Permitted Mortgage or like encumbrance made in good fhith and
for value encumbering the Site or any portion thereof that is by the terms of this DDA superior to
the Deeds of Trust.
10. Construction Obligations.
10.1 Conditions to Commencement of Construction.
In order to preserve the priority of this Agreement and the Other Agreements,
Developer shall not commence grading, demolition, construction or rehabilitation on the
Developer-Owned Parcels or any portion thereof until the Initial Closing has occm'red and the
Memorandum of DDA, the Deeds of Trust and the Regulatory Agreement have been recorded
against the Developer-Owned Parcels. In addition, Developer shall not commence grading,
demolition, construction or rehabilitation on any parcel constituting a portion of the Adjacent
Parcels or any portion thereof until such property has been acquired in fee by the Developer and
until the Memorandum of DDA, the Deeds of Trust and the Regulatory Agreement have been
recorded against each such parcel. In addition, the Final Lot Merger Tract Map shall not be
recorded until all conditions to issuance of the Certificate of Compliance have been satisfied.
10.2 Time Limit for Construction.
[AEF:djw~ 1680_4/061203/4182.007] Page
Ail Project Improvements identified in the Scope of Development shall be
completed to the satisfaction of the Agency and in compliance with the City code, and applicable
City ordinances, and public works specifications, as applicable, within the time frames outlined
in the Schedule of Performance. Any extension of time must be approved in writing by Agency.
10.3 R~e~uired Licenses and Permits.
Before commencement of grading, demolition, rehabilitation and/or construction,
Developer shall, at its own expense, secure or cause to be secm'ed, any and all licenses and
permits which may be required by the City or any other governmental agency as a condition to
such work. Developer shall cause ali submittals required by the City in connection with permits
and approvals to be submitted within the times specified therefor in the Schedule of
Performance.
10.4 Licensed and_Qualified Contractor.
h~ connection with construction of the Project, Developer shall retain contractors
licensed in the State of California who shall maintain such licenses in good standing throughout
the course of construction.
10.5 One
Developer's contractor shall provide a one-year warranty of all work and
materials~ which shall be secured by a performance bond for the benefit of Developer and
Agency.
10.6 Construction Covenants.
With respect to construction of the Project, the Developer hereby covenants and
agrees as follows:
A. The Developer shall maintain throughout the term of this
Agreement, sufficient equity, capital and firm binding commitments for financing necessary to
(i) pay through issuance of the Certificate of Compliance, all costs of Site acquisition,
development, construction and rehabilitation of Project Improvements; and (ii) enable the
Developer to perform and satisfy all the covenants of the Developer contained in this Agreement
and the Other Agreements. The Developer shall not undertake such additional projects as could
[AEF:djw/91680_4/061203/4182 007] Page 56
reasonably be expected to jeopardize the sufficiency of such equity, capital and firm and binding
commitments for the purposed expressed in the preceding sentence.
B. The development of the Project shall be done in a professional and
competent manner. The Developer shall perform all work required to complete the Project and
related work in accordance with all laws and regulations applicable to the Project.
C. The Developer shall be responsible for the timeliness and quality
of all work per£mraed and materials and equipment furnished in connection with the Project,
whetlaer the work, materials and equipment are performed and furnished by the Developer or
through a general contractor, contractors, subcontractors (of all tiers) and suppliers.
D. The Developer shall promptly cause to be removed (by way of
release bonds, i£necessary) any and all mechanic's liens, stop notices and/or bonded stop notices
that are recorded and/or served by general contractors or contractors subcontractors (of all tiers)
and suppliers in com~ection with the Project.
E. The Developer shall commence the development of the Project
promptly and shall assure the development and Completion o£the Project in accordance with the
projections set forth in the Schedule of Performance, subject only to Force Majeure Delay.
F. All work shall be of good quality and all workers shall be skilled in
their trades. Unless otherwise agreed to by the Agency, all materials shall be new and shall be of
good quality.
i0.7 Clean-u/~ of Site and Adjacent Areas,
Developer, its agents, servants, employees or contractors shall keep the Site mad
adjacent streets and sidewalks free from accmnulation of waste material and rubbish; and at the
completion of the work, Developer shall remove from the Site ali waste material and rubbish,
implements, surplus materials and surplus equipment.
10.8 Liens and Stop Notices.
Developer shall keep the Site free from any and all Liens relating to provision of
labor and services. Developer shall promptly discharge all Liens or indemnify Agency by
provision of a bond equal to one hundred twenty-five percent (125%) of the Lien mnount, or by
[AEF:djwt91680_4/061203/4182 007] Page 57
other means satisfactory to Agency in its reasonable discretion. Ifa stop notice is served upon
Agency, Agency may, until discharge thereof, withhold from the moneys under its control so
much of said moneys due or to become due to Developer under this Agreement, the Bridge Note
or the Agency Note, in an amount equal to one hundred twenty-five percent (125%) of the
amount stated in such stop notice; provided that if Agency shall, in its sole discretion, permit
Developer to file with Agency pursuant to [Section 3196 of the Civil Code of the State], said
moneys shall not thereafter be witlkheld on account of such Stop Notice.
10.9 Recording of Notice of Completion.
Developer shall cause a notice of completiun for the Project in recordable fomx
and meeting all statutory requirements to be recorded in the Official Records, within ten calendar
days after the Project has been completed in accordance with California Civil Code Section 3093
and shall concurrently with such recordation, delivered a copy to the Agency.
11. Certificate of Compliance.
11.1 Issuance of Certificate of Compliance.
After Completion of all Project Improvements to be completed by the Developer
upon the Site in compliunce with the terms of this Agreement and upon satisfaction of the
conditions set forth hereinafter to the satisfaction of the Agency in its sole discretion, the Agency
shall furnish to the Developer, upon written request therefore by the Developer, a Certificate of
Compliance in the form and substance of the Certificate of Compliance attached as
Attackanent No. 13 to this Agreement. Such Certificate of Compliance shall be, und shall so
state, conclusive determination of compliance by the Developer with the terms of this Agreement
with respect to construction and rehabilitation of such Project Improvements. The Certificate of
Compliance shall be in such form as to permit it to be recorded in the Official Records.
I1.2 No Waiver.
Issuance of the Certificate of Compliance shall not waive any rights or claims that
the Agency may have against (a) Developer with respect to the terms of the Other Agreements or
(b) any party for latent or patent defects in design, construction or similar matters under may
applicable law, nor shall it be evidence of satisfaction of any of Developer's obligations to
others, not a Party to this Agreement.
[AEF:djw/91680_4/061203/4182.007] Page 58
11.3 Conditions to Issuance of Certificate of Compliance.
The Agency shall not be obligated to issue a Certificate of Compliance for the
Project unless and until each of the following has occurred:
A. Completion of the Project;
B. Final inspection of the Site by or on behalf of the Agency a~nd
determination by the Agency that the Project Improvements have been completed in conformance
with this Agreement, the Approved Project Plans and all government requirements;
C. Issuance of a certificate of substantial completion for the Project
Improvements by the architect (or if more than one, the execmive architect) retained by
Developer in connection with the Project;
D. Issuance of the Final Inspection and Building Occup~rcy approval
("Certificate of Occupancy") by the City for the Project;
E. Releases or waivers of all Liens or rights to record Liens shall have
been obtained from all mechanics, contractors, subcontractors and materialmen which have
served valid Preliminary 20-day Notices or which otherwise could perfect a Lien upon all or any
portion of the Site or the statutory period for filing liens shall have expired without any Liens
having been filed against all or any portion of the Site or the Project Improvements;
F. The Final Lot Merger Tract Map is prepared to be recorded (bnt
has not yet been recorded) in the Official Records;
G. Title Company shall issue an ALTA lender's policy in favor of the
Agency including all endorsements thereto requested by the Agency (or, in the alternative,
endorsements to the Initial Agency Title Policy and/or Agency Transfer Title Policy or Policies)
insuring that the Site is subject only to permitted exceptions approved by the Agency, evidencing
the recordation and superior priority of this Agreement, the Memorandum of DDA and the
Regulatory Agreement to all Liens, and the recordation and superior priority of the Bridge Loa~r
Deed of Trust and the Agency Deed of Trust to all Liens other than Senior Obligations in a
policy amount not less th~n the Bridge Note Obligations and the Agency Note Obligations, and
with any additional title endorsements as the Agency deems necessary, including withom
[AEF:djw/91680_4/06 t 203/4182.007] Page
limitation date-downs of title policies provided at each prior or contemporaneous disbursement
of the Agency Loan and at each transfer ora Transfer Parcel evidencing continued superior
priority; and
H. No Developer Default or Potential Default has occun'ed and is then
continuing.
11.4
O__b.btigations.
If the conditions set forth in Section 11.3 have been fully satisfied, the Agency
shall not unreasonably with,hold or delay issuance of the Certificate of Compliance: If the
Agency refuses or fails to issue a Cet:tificate of Compliance after written request from Developers
the Agency shall within ten (10) Business Days of the written request, provide a written
statement which details the reasons the Agency refused or failed to issue the Certificate of
Compliance. The statement shall also contain a statement of the actions, if any, that Developer
must take to obtain a Certificate of Compliance.
11.5 Survival of Provisions of this A~reement.
After the issuance and recordation of the Certificate of Compliance, any party then
owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Site or the
Project Improvements or any portion thereof shall not (because of such ownership, purchase,
lease or acquisition) incur any obligation or liability under this Agreement with respect to the
construction and rehabilitation of such Project Improvements, except that such Party shall
continue be bom~d, for the period set forth therein, by those provisions of this Agreement
described in the attached Certificate of Compliance as surviving the termination of this
Agreement, including, without limitation, the indemnities contained in Section 5.6 and t2.3 of
this Agreement, the release contained in Section 5.5, and the restrictions on Ownership Transfer
and Transfer of Control contained in Sections 2.2 and 2.3 of this Agreement, set forth in the
Certificate of Compliance. Nothing herein or in such Certificate of Compliance shall be deemed
a release or termination of (a) the Regulatory Agreement which shall continue in full force and
effect for the period set forth therein, (b) the Bridge Loan Note and Bridge Loan Deed of Trust,
which shall continue in full force and effect until payment in full by Developer of the Bridge
Loan Obligations and satisfaction in full by Developer of all other Bridge Loan Obligations,
[AEF:djw/91680_4/061203/4182.007] Page 60
and/or (c) the Agency Loan Note and Agency Loan Deed of Trust, which shall continue in full
force and effect until payment in full by Developer or forgiveness by the Agency of the Agency
Loan Obligations in accordance with the provisions of the Agency Loan Note and satisfaction in
full by Developer of all other Agency Loan Obligations.
11.6 Not Evidence of Rep_a3~ment or Notice of Comloletion.
Issuance by the Agency of a Certificate of Compliance shall not constitute
evidence of compliance with or satisfaction of any obligation of the Developer to any holder ora
mortgage or any insurer ora mortgage securing money loaned to finance the Project
Improvements or any part thereof, nor evidence of payment of the Bridge Loan or Agency Loan.
Such Certificate of Compliance is not a notice of completion as referred to in California Civil
Code Section 3093.
12. Insurance and Indemni ,ry.
12.1 Required Insurance.
Without limiting the Agency's and the City's right to indemnification, the
Developer shall procure and maintain, at its oxvn cost and expense, and furnish or cause to be
furnished to the City, evidence of the following policies of insurance naming the Developer as
insured and, except for automobile insurance and Worker's Compensation Insurance, the Agency
and the City as additional insureds. Unless a longer term is specified below, all such insurance
shall be kept in force with respect to the Project until issuance of the Certificate of Compliance.
12. I. 1 ~ Insurance. Commencing upon the Effective Date, the
Developer shall maintain or cause to be maintained commercial general liability insurance in a
general aggregate anaount of not less than [Two Million Dollars (($2,000,000)/Five Million
Dollars ($5,000,000)] per occurrence and in the aggregate to protect against loss from liability
imposed by law for damages (a) on account of personal injury, including death therefrom,
suffered or alleged to be suffered by any person or persons whomsoever on or about the Site and
the Project and the business of the Developer on the Site, or in connection with the construction
and operation thereof, resulting directly or indirectly from any acts or activities of the Developer
or anyone directly or indirectly employed or contracted with or acting for the Developer, or under
its respective control or direction, and (b) to any property of any person occurring on or about ~he
[AEF:djw/~ 1680_4/06 I203/4182 007] Page 61
Site, or in connection with the operation thereof~ caused directly or indirectly by or from acts or
activities of the Developer or any person acting for the Developer, or under its control or
direction, including, without limitation, all contractors and subcontractors at each tier,
responsible for constructing or rehabilitating the Project Improvements resulting from any acts or
omissions of the Developer, the Developer's employees, agents, contractors, suppliers,
consultants or other related parties. Such insurance shall also provide for amd protect the Agency
and the City against incurring any legal cost in defending claims fbr alleged loss. Such insurance
shall be mainta/ned in full 1%rce and effect until issuance of the Certificate of Compliance for the
Project and for so long thereafter as necessary to cover any claims of damages suffered by
persons or property prior to issuance of the Certificate of Compliance for the Project.
12.1.2 W__~orkers~ Compensation Insurance. Commencing upon the Efi'ective
Date, the Developer shall maintain or cause to be maintained workers' compensation insurance
issued by a responsible carrier authorized under the laws of the State to :insure employers against
liability for compensation under the workers' compensation laws now in force in the State, or any
laws hereafter enacted as am amendment or supplement thereto or in lieu thereof. Such workers*
compansation insurance shall cover all persons employed by the Developer in connection with
the Site and/or the Project and shall cover liability within statutory limits for compensation under
any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any
person incurring or suffering injury or death in connection with the Site or the Project or the
construction and/or operation thereof by the Developer and shall contain mi endorsement stating:
~'A waiver of subrogation is hereby given to the Tustin Community Redevelopment Agency and
the City of Tustin as pertains to the terns of workers compensation insurance". The Developer
shall also furnished (or cause to be furnished) to the Agency evidence satisfactory to the Agency
that any contractor with whom it has contracted for performance of work on the Site or otherwise
pursuant to this Agreement carries workers' compensation insurance required by law which shall
i~clude the waiver of subrogation endorsement set forth above.
12.1.3 Pr__rp__p!rty. Insurance. Commencing upon the Effective Date, the
Developer shall maintain or cause to be maintaii~ed, for all portions of the Site owned by it fi'om
time to time~ a policy or policies of insurance against loss or damage to the Site auld the
Improvements thereon and all property of an insurable nature located upon the Site, resulting
[AEF:djw/91680 4~061203/4182,0071 Page 62
from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other
perils ordinarily included in special clauses of property loss coverage form policies for the full
replacement value of the improvements~ including builder's risk coverage meeting the foregoing
requirements during the pendency of any construction on the Site. Such insurance shall be
maintained in an amount not less than one hundred percent (100%) of the fuI1 insurable value of
the Improvements on the Site. The term "full replacement value" shall mean the cost
determined by mutual agreement of the Agency and the Developer of providing similar
improvements of equal size and providing the same habitability as the improvements
immediately before such casualty or other loss, but using readily-available contemporazy
components, including the cost of construction, architectural and engineering fees, and inspection
and supervision.
12.2 General Insurance Requirements.
12.2.1 All policies or certificates of insurance shall provide that such policies
shall not be canceled, reduced in coverage or limited in any manner without at least thirty (30)
days prior written notice to the Agency and the City. .
12.2.2 Any liability insurance policy (other than automobile or workers'
compensation policies) shall name the Agency and the City and the elected and appointed
officials, agents, representatives and employees and successors and assigns of each as additional
insureds under the policy. As evidence of such insurance, the Developer shall deliver to the
Agency and the City an amendment to the h~surance policy and a certificate of insurance
countersigned by an authorized agent of the insurance can'ier on the form provided by the
Agency evidencing such insurance coverage within ten (10) Business Days following the
Effective Date.
12.2.3 Coverage provided under this Agreement by the Developer shall be
primary to, and not contribute with any insurance or self-insurance maintained by the Agency
and/or the City, and the liability policy shall contain such an endorsement.
12.2.4 Coverage provided under this Agreement by the Developer shall be
primary to, and not contribute with any insurance or self-insurance maintained by the Agency
m~d/or the City, and the liability policy shall contain such an endorsement.
[AEF:djw/91680 4t061203/4182.007] Page 63
12.2.5 All insurance herein provided for under th/s Section 11 shall be provided
by insurers licensed to do business in the State and with a Besfs rating of A-VII or better, except
that worker's compensation insurance provided by the State Compensation Fund shall be
accepted.
12.2.6 If the Developer fails or refuses to procure and maintain insurance as
required by this Agreement, the Agency shall have the right~ at the Agency's election, and upon
ten (10) days prior notice to the Developer~ to procure and maintain such insurance. The
premiums paid by the Agency shall be treated as a loan, due from the Developer, to be paid on
the first day of the month following the date on which the premiums were paid. The Agency
shall give prompt notice of the payment of such premiums, stating the amounts paid and the
name of the insured(s).
12.3 Developer's Indem~fification.
Developer hereby agrees to indemnify, defend (with counsel reasonably
acceptable to the Agency and the City) and hold harmless the Agency and City, their officers and
representatives, employees and agents from and against any Claims and/or Losses arising from or
related in any rammer to: (i) the activities of Developer under this Agreement~ (ii) the incurring
of costs and expenses by Developer, (iii) the acquisition of the Site by Developer, (iv) the
disposition of the Site pursuant to any future sales, leases and/or rental agreements, and (v) the
construction and demolition activity undertaken by Developer for the redevelopment of the Site~
This indemnity shall not apply' to Claims or Losses based on Agency's or City's gross negligence
or willful misconduct or any Agency Default with respect to the temqs of this Agreement.
13. Potential Defaults; Defaults; Remedies.
13.1 Potential Default.
Each of the following shall constitute an Potential Default under this Agreement:
13.1.1 Failure or delay by a Party to perform any term or provision of this
Agreement or in any Other Agreement within the time provided herein or therein or in the
Schedule of Performance, as such times may be extended by Force Mai em'e Delay (except for
monetary obligations, which are not subject thereto) or by written agreement of the non~
defaulting Party.
[AEF:d~ w)) 1680_4~061203/4182.007] Page 64
13.1.2 Failure of Developer to develop the Site substantially in accordance with
the Scope of Development amd the Approved Project Plans.
13.1.3 Breach of any covenant, warranty, or agreement contained or incorporated
in this Agreement or any Other Agreement.
13.1.4 Any of the following threatened or actual involmatary transfers:
A. The Developer is or becomes bankrupt or insolvent or any
involuntary proceeding is brought against the Developer (unless, in the case of a petition filed
against the Developer, the same is dismissed within sixty (60) days)~ or the Developer makes an
assigar~ent for the benefit of creditors, or institutes a proceeding under or otherwise seeks the
protection of federal or State bankruptcy or insolvency laws, including the filing of a petition for
voltmtary banl~ruptcy or instituting a proceeding for reorganization or arrangement;
B. A writ of attachment or execution is levied on this Agreement or
on the Site or any portion thereof owned or under control of the Developer, where such writ is
not discharged within sixty (60) days.
13.1.5 If, in any proceeding or action in which the Developer is a party, a receiver
is appointed with authority to take possession of the Site or any portion thereof.
13.2 Default Notice.
Ifa Party determines that the other Party is in Potential Default under this
Agreement~ such Party shall provide written notice (a "Default Notice") of the Potential Default
to the other Party, speciS?ing the nature of the Potential Default. Failure or delay in giving such
notice shall not constitute a waiver of any Potential Default or Default, nor shall it change the
time of the Potential Default or Default, nor shall it operate as a waiver of any rights or remedies
of the injured Party; but the injured Party shall have no right to exercise any remedy hereunder
without delivering the Default Notice as provided herein. Delays by either Party in asserting any
of its rights and remedies shall not deprive either Party of its right to institute ~md maintain any
actions or proceedings which ~t may deem necessary to protect, assert or enforce any such rights
or remedies~
13.3 Cure Period.
[AEF:djw/~)1680_4/061203/4182.007] Page 65
The Party- which fails to perform or delays performance of any term or provision
of this Agreement must immediately commence to cure, con'ect or remedy such failure and shall
complete such cure, correction or remedy with all due diligence, regardless of whether it has
received a Default Notice from the other Party. With respect to Potential Defaults or events for
which a specific cure period is provided elsewhere in this Agreement, the specific cure period in
that Section shall be applicable in lieu of cure periods provided in this Section. In no event shall
the cure period set forth in this Section be added to any other cure per/od set forth in this
Agreement.
A Potemial Default will become a Default if, (a) for a Potential Default that can
be cured by the payment of money, remains uncured for a period of five (5) calendar days
following the date of delivery of the Default Notice or (b) for a Potential Default which cm~not be
cured by the payment of money, continues uncured for a period of thirty (30) calendar days after
the date of delivery of the Default Notice, or, where the Potential Default is of a nature which
carmot be cured with/n such thirty (30) day period, the defaulting Party fails to commence such
cure within such thirty (30) day period or fails to proceed diligently to complete the same, within
a period of time not to exceed an additional thirty (30) days (for a total of sixty (60) days).
13.4 Remedies.
13.4.1 Remedies General115 If the Potential Default is not cured within the time
periods specified above, the non-defaulting Party shall have available to it all remedies at law or
equity, including, without limitation and at/ts option, an action for specific performance of the
terms of this Agreement. The Party providing the Default Notice shall have no right to exercise a
right or remedy hereunder unless and until the Potential Default becomes a Default.
13.4.2 Remedies for Im rp_r..9.per Transfer. Any pm20orted Ownership Transfer
that is not a Permitted Transfer shall, at the election of the Agency, be null and void. If there is
any Ownership Transfer that is not a Permitted Transfer such Ownership Transfer shall be a
Default under this Agreement as of the date of the transfer, which date shall not be extended by
Force Majeure Delay.
13.4.3 Right of Agency to Cure Mortgage Default.
[AEF:ctjw/91680_4/061203/4182007] Page 66
In the event of a default or breach by Developer of any Mortgage
with respect to the Site (or amy portion thereof) prior to the issuance and recordation of a
Certificate of Compliance for the Project, Agency, in accordance with the terms and conditions
of the applicable Mortgage may cure the default prior to completion of any foreclosure. In such
event, Agency shall be entitled to reimbursement from Developer of all costs and expenses
incurred by Agency in curing the default. Agency shall also be entitled to a lien upon the Site (or
any portion thereof) to the extent of such costs and disbursements. Any such lien shall be
subordinate and subject to mortgages, deeds of trust, or other security instrmnents executed for
the sole purpose of obtaining funds to acquire and develop the Site as authorized herein.
B. Upon the occurrence of an event of Default and the expiration of
the applicable cure period provided herein or by law, the injured Party shall have all rights and
remedies against the defaulting Party as may be available at law or in equity, to cure, correct or
remedy any Default, to obtain specific perforrnance, to recover dmnages for any Default, or to
obtain any other remedy consistent with the purpose of this Agreement. Such rights and
remedies are cumulative, and except with respect to rights and remedies expressly declared to be
exclusive in this Agreement, the exercise of one or more of such rights and remedies shall not
preclude the exercise, at the san~e or different times, of any other rights or remedies for the same
Default or m~y other Default by the defaulting Party.
I4. Termination.
14.1 Limitation of Termination R_~llhts in favor of Developer.
In addition to other remedies set forth in this Agreement, and subject to the terms
and conditions herein, Developer shall have the right to terminate this Agreement if all
conditions precedent to the Initial Closing for the benefit of the Agency have been satisfied or
waived by the Agency and the Agency is in Default of its obligation to proceed to Initial Closing
and following delivery by Developer of a Default Notice, all pertinent time periods for cure set
forth in this Agreement have expired without cure of the Default by the Agency.
14.2 TerminationS.
In addition to other remedies set forth in this Agreement, Agency shall have the
right to terminate this Agreement if:
[AEF:djw/91680_~061203/4182.0071 Page 67
14.2.1 Agency delivers a Default Notice and all pertinent time periods for cure set
forth in this Agreement have expired without cure of the Default by the Developer;
14.2.2 Developer (or any successor and assign of Developer) assigns or attempts
to assign this Agreement or any right therein or the Site (or any portion thereof) in contravention
of the provisions of this Agreement;
14.2.3 Developer fails to submit plans, drawings and related documents for the
Site~ as required by this Agreement by the dates or time fi'ames respectively provided for in the
Schedule of Performance or otherwise fails to comply with the Schedule of Perfm~uance;
14.2.4 Developer fails, in violation of this Agreement, to perform any of its
obligations hereunder; or
14.2.5 All conditions precedent to the Initial Closing for the benefit of the
Developer have been satisfied or waived by Developer and Developer is in Default of its
obligation to proceed to Initial Closing.
14.3 ~_~g.hts and Remedies Are Cumulative.
Except as otherwise expressly stated in this Agreement, the rights and remedies of
the Parties are cumulative, and the exercise by any Party of one or more of such rights or
remedies shall not preclude the exercise by it, at the stone or different times, of any other rights
or remedies for the same Default or any other Default by any other Party.
15. General Provisions.
15.1 Disputes to be Determined by Agency.
Any disagreement arising out of this Agreement or from breach thereof shall be
submitted to Agency for determination. Agency shall make its determination within thirty (30)
days after the matter is submitted to Agency for determination. It is mutually agreed that the
determination shall be a condition precedent to any right of legal action that either Party may
have against the other.
15.2 Notices~ Demands and Communications Between the Parties.
[AEF:djw/91680_4~061203/4182.007] Page 68
Written notices, demands and communications between Agency and Developer
shall be sufficiently given if (i) delivered by hmxd (and a receipt therefore is obtained or is
refused to be given), (ii) dispatched by registered or certified mail, postage prepaid, return receipt
requested, or (iii) delivered by private delivery service (and a receipt therefore is obtained or is
refused to be given), to the principal offices of Agency and/or Developer, as applicable. Such
written notices, demands and co~rununications may be sent in the same roamer to such other
addresses as either Pmly may from time to time designate by mail as provided in this
Section 15.2.
Any written notice, demand or communication shall be deemed received
immediately if delivered by hand, shall be deemed received on the third day from the date it is
postmarked if delivered by registered mail, shall be deemed received on date of delivery as
shown on the return receipt if delivered by certified mail, and shall be deemed received as of the
date of delivery shown in the records of the private delivery service if delivered by such private
delivery service.
Such notices shall
Agency:
and
Developer:
with a copy to:
be addressed and delivered to:
William A. Huston, Executive Director
Tustin Community Redevelopment Agency'
300 Centennial Way
Tustin, CA 92780
Christine A. Shingleton, Assistant Executive Director
Tustin Community Redevelopment Agency
300 Centennial Way'
Tustin, CA 92780
Kenyon Dr., LLC
c/o Kent Hawkins, President
Statewide Acquisition Corporation
2190 North Canal
Orange, CA 92865
Ceuturion Partners, LLC
3636 Birch St., Suite 260
Newport Beach, CA 92660
Atteution: Michael Smith, Mmrager
[AEF:djw/91680_4~061203/4182 007] Page 69
and
Permitted Mortgagees who have provided (or for whom
Developer has provided) in writing m~ address for
notices
15.3 Conflicts of Interest.
No member, official or employee of Agency shall have any personal interest,
direct or indirect~ in this Agreement or the Site, nor shall any member, official or employee
participate in any decision relating to the Agreement or the Site which affects his personal
interests or the interests of any corporation, partnership or association in which he is directly or
indirectly interested.
Developer warrants that it has not paid or given, and will not pay or give, any
third party any money or other considerafion for obtaining this Agreement.
15.4 Force Maieur~ Extension of Times of Performance.
In addition to specific provisions of this Agreement~ performance by either Party
hereunder shall not be deemed to be in Potential Default or Default, and all performance and
other dates specified in this Agreement and the Attachments hereto shall be extended, where
despite the claiming Party's exercise of reasonable diligence delays or defaults occur as a result
of any of the following ("Force Majeure Delay"): war; insurrection; acts of terrorism; strikes;
riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics;
quarantine restrictions; freight embargoes; governmental restrictions; litigation or claims by third
paxties challenging the validity of this Agreement, or Developer's rights m~d obligations under
this Agreement; unusually severe weather; inability to secure, or delay in securing necessary
labor, materials or tools for any of the foregoing reasons; delays of any contractor, subcontractor
or supplier for any of the foregoing reasons; or any other causes beyond the control or without
the fault of the Party claiming an extension of time to perform. Notwithstsmding anything to the
contrary in this Agreement, an extension of time due to any such cause shall be for the period of
the enforced delay~ if notice by the Party claiming such extension is sent to the other Party within
(a) thirty (30) calendar days of the commencement of the cause, when it is then reasonably
~breseeable that a delay may result (e.g., on learning of a labor strike), or (b) thirty (30) Business
Days following commencement of the delay, when it was not reasonably foreseeable that a delay
[AEF:d]w/91680_4/06 i203/4182.007] Page 70
would result (e.g., sudden flooding). Times of performance under this Agreement may also be
extended in writing by the mutual agreement of Agency and Developer.
15.5 Nonliabilitl: of Officials and Emp__~ees of A eng.t2fff ami CitE.
No agent, official or employee of Agency and City shall be personally liable to
Developer, or any successor in interest, in the event of any default or breach by Agency or for
any amount which may become due to Developer or its successors, or on any obligations under
the terms of this Agreement.
15.6 Inspection of Books and Records.
Agency have and shall have the right at all reasonable times, upon no less than ten
(10) days written notice, to inspect the books and records of Developer pertaining to the Site as
pertinent to the purposes of this Agreement. Developer also has the right at all reasonable times,
upon no less than two (2) days written notice to inspect the books and records of Agency
pertaining to the Site as pertinent to the purposes of this Agreement.
15.7 Successors In Interest.
All of the terms, covenants, conditions and restrictions of this Agreement and the
Other Agreements shall extend to and shall be binding upon and inure to the benefit of the heirs,
executors, administrators, and the permitted successors and assigns of the Parties.
15.8 Entire A r~ment~Amendments and Waivers.
15.8.1 This A~'eement shall be executed in two (2) duplicate originals, each of
which is deemed to be an original. This Agreement includes 74 pages and 15 Attachments,
wlnich constitutes the entire understanding and agreement of the Pm'ties.
15.8.2 This Agreement, together with the Other Agreements of even date
herewith, integrates all of the terms and conditions rnentioned herein or incidental hereto, a2d
supersedes all negotiations or previous agreements between the Parties or their predecessors in
interest with respect to all or any part of the subject matter hereof.
15.8.3 Waivers of any of the provisions of this Agreement by either Party and all
amendments hereto must be made in writing and executed Agency and Developer.
[AEF:djw/91680_4/061203/4182,007] Page 71
15.9 ~Actions.
15.9.1 Venue. Al1 legal actions must be instituted in the Superior Com't of the
County of Orange, State of California, or in any other appropriate cour'r of that county, or in the
Federal District Court in the Central District of California, Santa Aha branch.
15.9.2 Service of Process. Service of process on Agency shall be made by
personal service upon the Executive Director of Agency, or in such manner as may be provided
by law. Service of process on Developer shall be made by personal service upon an officer of
Developer or in such manner as may be provided by law, whether made within or without the
State of California.
15.10 Estoppel Certificate.
Each Party hereto shall upon the written request of the other Party hereto (which
may be made by the requesting Party not be made more frequently than two (2) times during any
calendar year), shall issue to a prospective mortgagee or successor of such requesting Owner,
within fifteen (15) calendar days after receipt of any such request, an estoppel certificate stating:
(a) whether the Party to whom the request has been directed knows of any
default by the requesting Par~y under this Regulatory Agreement; m~d if there are known
defaults, specifying the nature thereof;
(b) whether this Regulatory Agreement, or if then in effect, the DDA, has
been assigned, modified or amended in any way (and if it has, then stating the nature
thereof); and
(c) whether, to the responding Party's knowledge, this Regulatory Agreement,
as of the date of such estoppel certificate, is in lhll force and effect.
Such estoppel certificate shall act as a waiver of any claim by the Party furnishing it to the extent
such claim is based upon facts contrary to those asserted in the estoppel certificate and to the
extent such claim is asserted against a bona fide encumbrancer or purchaser for value withant
knowledge of facts contrary to those contained in the estoppel certificate and who has acted in
reasonable reliance upon the estoppel certificate. However, such estoppel certificate shall in no
[AEF:djw~91680_4/061203/4182.007] Page 72
event subject the Pa~rty furnishing it to any liability whatsoever, notMthstanding any negligent or
other inadvertent failure of such Party to disclose correct and/or relevant information.
15.1i A.A.A.A.A.A.A.A.A.~ I i c a b 1 e L aw.
The laws of the State of California shall govern the interpretation and enforcement
of this Agreement.
[remainder of page intemionally blank]
[AEF:djw/91680_4~061203/41 g2 007] Page 73
IN WITNESS WHEREOF~ Agency and Developer have caused their duly authorized
representatives to execute this Agreement as of the Effective Date.
"AGENCY":
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
APPROVED AS TO FORM
Lois Jeffrey
CITY ATTORNEY
TUSTIN, CALIFORNIA
By:
By:
William A. Huston
Executive Director
Attest:
Recording Secretary
Dated:
"DEVELOPER"
KENYON DR.,LLC,
aCali~rnialimitedli~iliW company
By:
STATEWIDE ACQUISITION CORP.,
a California corporation
Its Co-Mmraging Member
By:
By:
Kent Hawkins, President
CENTURION PARTNERS, LLC,
a California limited liability company,
Its Co-Managing Member
By:
Michael Smith, Manager
[AEF:djw/91680_4/061203/4182 007] Page 74
ATTACHMENT NO. 1
SITE MAP
[AEF:djw/91680_.4/061203/4182.007] Attachment No. 1 -Page 1
ATTACHMENT NO. 1
PROJECT SITE MAP
NO SCALE
LEGEND
~ DEVELOPER-OWNED PARCELS
ADJACENT PARCELS
DEVELOPER ACQUISITION PARCELS
ROW PARCELS
~ KENYON DR,YE PRO~'~R~
AVENUE
WIDENING PROJECT
ROW
7.'>777
NEWPORT AVENUE
WIDENING PROJEGT
ATTACHMENT NO. lA
DEVELOPER-OWNED PARCELS
LEGAL DESCRIPTION
[AEF:djw/91680_~/061203/4182.007] Attachment No. lA- Page 1
To be Inserted prior to Execution
ATTACHMENT NO. lB
ACQUISITION PARCELS
LEGAL DESCRIPTION
[AEF:djw/91680_aJ061203/4182.007] Attachment No. lB - Page 1
To be Inserted prior to Execution
ATTACHMENT NO. lC
RIGHT-OF-WAY PARCELS
LEGAL DESCRIPTION
[AEF:4iw/91680_4/061203/4182.007] Attachment No, lC Page 1
A'n'ACH~4ENT NO, lC
RIGfJTOF WAY PARCELS
LEGAL DESCRIPTTON
APN: 402~142~05~ described as follows:
Parcel 3, as shown on a map filed in Book 116, pages 41 and 42 of Parcel Haps, in the
office of the County Recorder of Orange County, California
APN: 402-142-19, described as follows:
Parcel 1: Parcel 1, as shown on a map recorded in Book 116, pages 41 and 42 of
Parcel Haps, records of said Orange County.
Parcel 2: A non-exclusive easement for ingress and egress over that portion of Lot I of
Tract No. 5465, as said tract is shown on a map recorded in Book 198, pages 30 and 31
in the office of the County Recorder of said County, described as follows:
Beginning at the most Northerly corner of Lot 1 of said tract, (said corner being on a
curve concave Northeasterly and having a radius of 180.00 feet, a radial bearing
through said corner bears South 48 deg. 22' 25" West); thence Southerly along said
curve 12.01 feet through a central angle of 3 deg. 49' 22"; thence parallel to the
Northwesterly line of said lot, South 39 deg. 53' 38" West 98.66 feet; thence at right
angles South 50 deg. 05' 22" East 51.08 feet; thence at right angles South 39 deg. 53'
38" West 25,00 feet; thence at right angles North 50 deg. 06' 22" West 41.90 feet;
thence North 89 deg. 24' 28" West 52,00 feet; thence North 0 deg. 35' 32" East 25.00
feet; thence South 89 deg, 24' 28" East 45.19 feet; thence North 39 deg, 53' 38" East
110.00 feet to the point of beginning.
Excepting therefrom any portion lying within Parcel 1.
APN: 402-142-22L described as follows:
Parcel 2, as per map recorded in Book 119, pages 28 and 29 of Miscellaneous Maps, in
the office of the County Recorder of said County.
APN: 402-142-21, described as follows:
Parcel 1, as per map recorded in Book 119, pages 28 and 29 of Parcel Haps, in the
office of the County Recorder of said County.
ATTACHMENT NO. 1D
KENYON DRIVE PROPERTY
LEGAL DESCRIPTION
[AEF:r[iw/91680_zF061203/4182.007] Attachment No. iD- Page 1
To be Inserted prior to Execution
ATTACHMENT NO. 2
GLOSSARY OF DEFINED TERMS
For purposes of this Agreement, the following capitalized terms shall mean the following:
"Acquisition Parcel Consideration" is defined in Section 5.2.2.
"Act" means Chapter 8 (commencing with Section 33750) of Part t of Division 24 of the
Health and Safety Code of the State of California, as amended.
"Adjacent Parcels" is defined in Section 1.3.2.
"Agency" is defined in Section 1.4.1.
"Agency Assistance" is defined in Section 6.2.
"Agency Lien Subordination Agreement" is defined in Section 2.2.6.
"Agency Loan" is defined in Section 6.2,
"Agency Loan Deed of Trust" means a Deed of Trust, Fixture Filing and Security
Agreement (Agency Loan With Future Advances), from Developer as "Trustor" therem~der~ to
as "Trustee" thereunder, in favor of Agency as "Beneficiary" thereunder, in the
form attached as Attachment No. I 0.
"Agency Loan Disbursement Conditions" means the conditions set forth in Section 7.2.
"Agency Note" is defined in Section 6.5.1 and has the form attached as
Attachment No. 9.
"Agency Property" is defined in Section 5.1.1 and includes, collectively, all Transfer
Property.
"Agency Transfer Title Policy" is defined in Section 5.7.3.
"Agreement" means the Kenyon Drive Multifamily Residential Acquisition and
Substantial Rehabilitation Project Disposition and Development Agreement and
Attachments Nos. 1 - ~1 attached thereto.
"ALTA Policy'~ is defined in Section 5.7.3.
"Approved Project Plans" is defined in Section 4.1.1.
"Assmnption Agreement" is defined in Section 2.2.2.C.
"Attachments" mean the Attachments to the Agreement.
[AEF:djw~91680_4/061203/4182.007] Attachment No. 2 - Page 1
"Bridge Loan" is defined in Section 6.2.
"Bridge Loan Deed of Trust" means a Deed of Trust, Fixture Filing and Security
Agreement (Bridge Loan.), from Developer as "Trustor' thereunder, to as
"Trustee" thereunder, in favor of Agency as "Beneficiary" therem~der, in the form attached as
Attaciunent No. 8.
"Bridge Note" is defined in Section 6.4.1 amd has the form attached as Attachment No. 7.
"Business Day(s)" means any day on which City Hall is open for business and shall
specifically exclude Fridays when City Hall is officially closed, Saturday, Sunday or a legal
holiday.
"Certificate of Compliance" means a certificate to be issued by the Agency upon
Completion of all of the Project Improvements and satisfaction of ail additional conditions
precedent to such issuance as described in Section 11.3 of this Agreement, and has the form
at~;ached as Attachment No. 13.
"Certificate of Occupancy" is defined in Section 11.3.6.
"CHFA" is de£med in Section 7.1.
"CHFA Loan" is defined in Section 7. I.
"City" is defined in Section 1.1.
"City Council" is defined in Section 1.2.
"City Dedication Parcels" is defined in Section 1.3.4.
"Claim(s)" means any and all claims, actions, causes of action, demands, orders, or other
means of seeking or recovering damages, liabilities, costs, expenses (including attorneys',
experts', and consultants' fees and other litigation costs), fines, penalties, debts, liens, taxes, or
any type of compensation whatsoever, direct or indirect, known or m~mown, foreseen or
unforeseen.
"CLTA Policy" is defined in Section 5.7.3.
"Common Area Improvements" means all improvements, structures, infras;ruc~tre and
buildings, but specifically excluding all residential apartment buildings, to be constructed mrd/or
rehabilitated on the Site by the Developer in accordance with the Approved Project Plans, which
shall be owned by the Developer and shall be made available at no charge for the common use of
the tenants of the Project. Common Area Improvements shall include, without limitation, all
private street and sidewalk improvements, utility and lighting improvements, parking, gated entry
at Newport Avenue/Kenyon Drive, community center, swimming pool, and "tot lot" play ~ceas,
all as generally depicted on the Site Plan attached to this Agreement as Attactnnent No. 1 t.
[AEF:djw/91680_4/061203/4182 007] Attachment No. 2- Page 2
"Complete'~ "Completed" or "Completion" means that (i) construction of the Project is
complete in conformity with this Agreement and the Approved Project Plans, with alt building
systems (including mechanical, electrical, structural, comnmnication and other systems) in
operating condition and ready for use such that the Project Improvements may occupy and
utilized for their intended purpose, (ii) ail Work required by this Agreement and the Approved
Project Plans, including minor or immaterial corrective Work and minor deficient or incomplete
Work (punch list), is complete; and (iii) a Certificate of Occupancy has been issued by the City
for the Project.
"Deeds of Tn~st' means the Bridge Loan Deed of Trust and the Agency Loan Deed of
Trust, except when the context explicitly indicates either of the foregoing standing alone.
"Default" is defined in Section 13.1.
"Default Notice" is defined in Section 13.2.
"Developer" is defined in Section 1.4.2.
"Developer Acquisition Parcels" is defined in Section 1.3.2.
"Developer Equity" means an amount of not Iess than Two Million Dollars ($2,000,000)
which shall be made available by the Developer to fund Project Costs, but shall exclude proceeds
~om Mortgages and the Agency Assistance.
"Developer-Owned Parcels" is defined in Section 1.3.1.
"Developer's Certificate" means a certificate executed by Developer in the ~brm
attached as Attachment No. 15.
"Developer's Title Endorsements" is defined in Section 5.7.3.
"Developer's Title Policy" is defined in Section 5.73.
"Effective Date" is defined in the preamble to this Agreement.
"Environmental Law(s)" means any federal, state, or local laws, ordinances, rules,
regulations, requirements, orders, directives, guidelines, or permit conditions, in existence as of
the Effective Date or as later enacted, promulgated, issued, modified or adopted, regulating or
relating to Hazardous Substances, and all applicable judicial, administrative and regulatory
decrees, judgments and orders and common law, including those relating to industrial hygiene,
public safety, human health, or protection of the environment, or the reporting, licensing,
permitting, use, presence, transfer, treatment, analysis, generation, manufacture, storage,
discharge, Release, disposal, transportation, Investigation or Remediation of Hazardous
Substances. Envirortmental Government Regulations shall include the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.
Section 9601, et seq.) ("CERCLA'); the Resource Conservation and Recovery Act, as amended,
(42 U.S.C. Section 6901 et seq.) ("RCRA'); the federal Water Pollution Control Act, as
[AEF:djw/91680_4/061203/4182007] Attachment No 2 - Page 3
amended, (33 U.S.C. Section 1251 et seq.); the Toxic Substances Control Act, as amended, (15
U.S.C~ Section 2601 et seq.); the Hazardous Substances Account Act (Chapter 6.8 of the
California Health and Safety Code Section 25300 et seq.); Chapter 6.5 commencing w/th
Section 25200 (Hazardous Waste Control) and Chapter 6.7 commencing with Section 25280
(Underground Storage of Hazardous Substa~qces) of the California Health and Safety Code; and
the California Water Code, Sections 13300 et seq.
"Escrow Holder" means the escrow company and escrow officer selected by Developer
and approved by Agency for the Initial Closing and each Transfer Property Closing. Developer
and Agency may mutually agree at any time to choose a new Escrow Holder, so long as Agency
does not incur any additional costs thereby.
"Evidence of Financing Commitments" is defined in Section 6.3.3.
"Existing Improvements" means the improvements located on the Site as of the
Effective Date.
"Final Construction Documents" means plans and specifications for the Project
Improvements prepared to a level associated in the construction industry with contract documents
and shall provide all the information necessary' to obtain a building permit for the Project,
including the building and roadway specifications, Common Area Improvements specifications,
landscape and irrigation plans, signage and, if requested by Agency, materials samples.
"Final Lot Merger Tract Map" is defined in Section 4.5.
"Force Majeure Delay" is defined in Section 15.4.
"General Plan/Transportation Master Plan" is defined in Section 1.3.4.
"Government Requirements" means all laws, statutes, codes, ordinances, rules,
regulations, standards, guidelines and other requirements issued by any govermnental entity at
any tier having jurisdiction over the Parties, the Project, the Site, ~he Developer-Owned Parcels,
the Adjacent Parcels, the City Dedication Parcels or any component thereof, including without
limitation the City Code.
"Hazardous Substances" means substances defined as "hazardous substances",
"hazardous materials", or "toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. 690I et seq.; and those substances defined as '~hazardous
waste" in Section 25117 of the California Health and Safety Code or as "hazardous substances"
in Section 25316 of the California Health and Safety Code; and substances defined in the
regulations adopted in publications promulgated pursuant to such laws.
"Improvements" means the Existing Improvements and Project Improvements.
'¢Initial Agency Title Policy" is defined in Section 7.1.1.
[AEF:djw/91680_4:061203/4182.007] ALtachment No. 2 - Page 4
"Initial Closing" is defined in Section. 6.
"Institutional Lender" means a nationally recognized bank, savings and loan
association, investment bank, or other institutional lender which has a net worth of One Billion
Dollars ($1,000,000~000) or more. The participation or securitization ora loan by an
Institutional Lender shall not give rise to any requirement that each lender participating in such
participation or securitization itself be an Institutional Lender, so long as (a) at the inception of
the loan, the originating and agent lender is an Institutional Lender, and (b) at the time of any
subsequent assignment of the loan, the assignee and agent lender is an Institutional Leader.
"Kenyon Drive Property" is defined in Section 1.3.2.
"Lien" or "Liens" means any Mortgage, lien (including~ without limkation, of
mechanics, materialmen and vendors) pledge, encumbrm~ce, security interest, claim, charge,
defect in title, easement, right of way, lease or other restriction arising out o£the demolition,
construction and/or rehabilitation of the Project Improvements or encumbering the Site or any
portion thereof, bu~ shall exclude Stop Notices.
"Loan to Value Ratio" means seventy-five percent (75%), being calculated~ from time to
time, as the ratio of (a) all indebtedness and obligations (including, without lirnitation, contingem
obligations, accounts m~d letters of credit) secured by an interest in the Site or any portion thereof
(but not including any Bridge Note Obligation or Agency Note Obligation then outstanding) to
(b) the fair market value of the Site.
"Losses" means all costs and expenses arising out of all Claims, demands, losses,
dan~ages, liens, liabilities, injuries, deaths, penalties, relocation or disruption of use, fines,
lawsuits and other proceedings, judgments mad awards rendered thereim including reasonable
attorneys' fees and court costs, and all other costs and expenses.
"Lot Merger Tract Map" is defined in Section 4.5.
"Managing Member(s)" is defined in Section 1.4.2.
"Maturity Date" is defined in Section 6.5.3.
"Member(s)" is defined in Section 1.4.2.
"Memorandum af DDA" means a Memorandum of this Agreement substantially in the
form and substance of the memorandum attached to the Agreement as Attachment No. 17_, and to
be recorded as and when set forth in the Agreement.
"Method of Financing" is defined in Section 2.2.5.
"Mortgage" means any indenture of mortgage or deed of trust, bond, grant of taxable or
tax exempt funds from a governmental agency or other security interest and the documents
governing a sale-leaseback transaction, together w/th all loan documents related thereto.
"Mortgage" includes each of the foregoing whether such Mortgage is a "Permitted Mortgage'~
[AEFxtjw/91680_4/06t203/4182~007] Attactunent No. 2 Page 5
under the Agreement or is entered into in violation of this Agreement, but does not include the
Deeds of Trust.
"Mortgagee" means any' mortgagee or beneficiary under any Mortgage, any trustee of
bonds, any governmental agency ~vhich is a grantor of fm~ds, and, with respect to any parcel
which is the subject of a sale-leaseback transaction, the Person acquiring fee title.
"Mortgagee Subordination Agreement" is defined in Section 2.2.6.
"Newport Avenue Widening Property" is defined in Section 1.3.4.
"Notes" means the Bridge Note and the Agency Note.
"Official Records" means the records of the office of the County Recorder for Orange
County, California.
"Other Agreements" means [the Memorandum of DDA,] the Regulatory Agreement,
the Bridge Note, the Bridge Loan Deed of Trust, the Agency Note, the Agency Loan Deed of
Trust and ali agreements and instrmnents other than this Agreement [and the Memorandum of
DDA] now or hereafter executed by Developer or the Agency with respect to the transaction that
is the subject matter of this Agreement.
"Ownership Transfer" means the transfer, sale, assignment, ground lease, gift,
hypothecation, mortgage, pledge or encm~brance, or other similar conveyance of the Developer's
interests in this Agreement, the Site or the Improvements thereon, or any portion thereof or
interest therein, whether voluntary, involuntary, by operation of law or otherwise, or any
agreement to do so; the granting of any Mortgage and/or the execution of any installment land
sale contract or similar instrument affecting all or a portion of the Site or the h~provements
thereon; mrd shall also include a Transfer of Control of the Developer, or any conversion of the
Developer to an entity form other than that of the Developer at the time of execution of this
Agreement.
"Ownership Transferee" rneans any person or entity which is the transferee, pm'chaser
or assignee pursuant to an Ownership Transfer.
"Party" or "Parties" is defined in the preamble to this Agreement.
"Payment Request" means a request for Agency to disburse a portion of the Agency
Loan, as more fully set forth in Section 7.
"Permitted Mortgage" means a Mortgage which is approved by Agency in writing or
which is otherwise expressly permitted by this Agreement, and includes all Senior Obligations.
"Permitted Mortgagee" means a Mortgagee under a Permitted Mortgage.
"Permitted Transfer" means an Ownership Transfer that satisfies the conditions set
forth in Section 2.
IA EF:djw/91680_4/061203/4182 0071 Attachme~t No. 2 - Page 6
"Person(s)" means
"Potential Default" means any condition or event which with the giving of notice or
passage of time, or both, as applicable, would constitute a Default.
"Preliminary Plans" is defined in Section 4.3.2.
"Preliminary Title Reports" is defined in Section 5.7.1.
"Project" is defined in Section 1,1.1.
"Project Area" is defined in Section 1.1.1.
"Project Budget" is defined in Section
"Project Costs" shall mean all reasonable and necessary cost and expenses incurred by
Developer prior to the issuance of a Certificate of Compliance and in connection with the
acquisition, planning, design, construction, rehabilitation, improvement, development and
equipping of the Project and for no other purpose unless approved by the Agency pursuant to this
Agreement.
"Project ]Improvements" is defined in Section 4.1.2.
"Redevelopment Plan" is defined in Section 1.2.
"Regulatory Agreement" means a Regulatory Agreement amd Declaration of Restrictive
Covenants by and between Agency and Developer, in the form attached as Attachment No. 12.
"Relocation Assistance" has the meaning given for relocation assistance to tenants in
projects subject to eminent domain as set forth in federal guidelines issued by the U.S.
Department of Housing and Urban Development.
"Relocation Plan" means a plan consistent with federal and state guidelines and the
Redevelopment Plan provide Relocation Assistance to residents living on the Right-of-Way
Parcels as of the date of this Agreement.
"Right-of-Way Parcels" is defined in Section 1.3.2.
"Schedule of Performance" means the document attached as Atlachment No. 4 to this
Agreement, setting forth the dates and time periods for submissions, approvals and actions,
including the construction of the Project Improvements.
"Scope of Development" means the description of the Project attached as
Attachment No. 3 to this Agreement.
"Senior Obligations" is defined in Section 2.2.6.
"Site" is defined in Section 1,3.3.
[AEF: djw/91680_4/061203/4182 007] Attachment No. 2 - Page 7
"Site Map" is defined in Section 1.3.1.
"State~' means the State of California.
"Stop Notice" means a stop notice as defined in California Civil Code Section 3103.
"Title Company" means
"To the Best of Developer's Knowledge" means the actual, present l~owledge of each
of Kent Hawkins and Michael Smith.
"Transfer of Control" is defined in Section 2.3.1.
"Transfer Property" is defined in Section 5.3.
"Transfer Property Closing" is defined in Section 5.3.
"Transfer Property Closing Date" is defined in Section 5.3.
"Transfer Property Escrow" means each escrow held for purposes of transferring
parcels of Agency Property to Developer, as more fully set forth in Article 5.
"Work" means the total planning, design, engineering and construction services and
construction work necessary or appropriate to produce the Project.
[AEF:djw/91680_4~061203/4182.007] Attachment No. 2- Page 8
ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
Note: References herein to the "Agreement" and the '~DDA" mean the Disposition and
Development Agreement of which this Attachment No. 3 is a part; references to "Attachments"
mean the Attacl-anents to the DDA unless otherwise specified. Except as othe~wvise noted, all
capitalized terms defined within the DDA and the Attachments shall retain the meanings as
defined in the DDA.
The Site is described and delineated on the Project Site Map in Attacl~nent No. 1 and
described in Attachments Nos. lA, lB, lC and iD, as they may be mnended fi'om time to time.
2.1 Generally_. The Developer shall assemble the Site and construct or rehabilitate or
cause to be constructed or rehabilitated, as appropriate, on the Site all of the Project
Improvements set forth in this Scope of Development, tlre Site Plan (Attachment No. 11), the
Approved Project Plans and the Detailed Rehabilitation Work Program attached hereto aJ~d
incorporated herein as Exhibit A to this Scope of Development.
2.2
~ements.
The Project Improvements shall generally consist of the following:
(a) Improvement of the Site with a 1 i2-m~it rental apartment project in
accordance with the Site Plan [the Approved Project Plans] and pursuant to Agency approvals
and City approvals through the City Planning Commission and City Council. Approvals in
writing shall be obtained within the times established in the Schedule of Performance.
(b) Substantial interior and exterior rehabilitation of 104 existing apartment
units in accordance with the Detailed Rehabilitation Work Program and the Approved Project
Plans and construction of 8 new infill units as identified on the Site Plan.
3. Schedule of Performance. The Developer shall commence and complete the Project
Improvements within the times established therefor in the Schedule of Performance. The Agency
and Developer will cooperate and direct their consultants, architects and/or engineers, and
contractors to cooperate so as to ensure the continuity and coordination necessary for the proper
and timely completion of the Project.
4. Development Standards.
4.1 The Project Improvements shall be designed and developed as a cohesive project
in which the residential units, buildings and site amenities, including open space and recreation
facilities will have an architectural quality and character consistent with high quality class B
[AEF:~iw/91680_4/061203/4182.007] Attachment No. 3 - Page I
apartment projects, both individually and in the context of the surrounding residential
community. All public spaces mhd project open spaces shall be designed, landscaped and
developed with the same degree of quality that reflects a high quality of life environment for the
tenants. Particular attention shall be paid to enhancing pedestrian activities, providing
meaningful community open spaces, minimizing mass, scale and bulk, and to the selection of
color and materials.
4.2 All of the Project Improvements shall conform to all applicable federal, state, and
city codes mad regulations, including but not limited to federal and state labor codes and
regulations, and the requirements of the City Municipal Code and all conditions of approval
stipulated by any and all an applicable governmental agencies having jurisdiction, including, but
not limited to, the design review and approvals by the City Planning Commission and the City
approvals identified above.
4.3 The Developer acknowledges the responsibility to obtain any approvals required
by any governmental agency, utility, or other agency, including the City, which has jurisdiction
over all or any portion of the Site or the Project Improvements. All "Conditions of Approval'
stipulated by an applicable jurisdiction shall be incorporated into the final design and noted in the
construction documents by the architects, engineer and other consultants. The Developer shall
make necessary applications by such time(s) as will be consistent with the timely commencement
and completion of various portions of the off-site and on-site improvements by respective times
established therefore by the Schedule of Performance.
5. Rental Requirements.
5.1 The Developer is aware that Agency's participation in the Agreement is to provide
financial assistance to Developer in order to provide for (a) the development of not less than
sixty-seven (67) units of Affordable Housing Units (as defined in the Regulatory Agreement and
Declaration of Restrictive Covenants attached as Attacl~nent No. 12), to be dispersed throughout
the Project, and (b) the recordation of covenants providing for the long-term restriction of
affordability of the units for Very Low~ Low and Moderate Income Tenants (defined in the
Regulatory Agreement) for a period not less than the Qualified Project Period (defined in the
Regulatory Agreement).
5.2 To accomplish such purposes, the Developer covenants and promises to conduct
marketing and provide recital restrictions in a manner consistent with and in full conformance at
all times with the provisions of the Agreement and the Regulatory Agreement.
[AEF:djw/91680_~061203/4182.007] Attacl~ment No. 3 - Page 2
Exhibit "A"
Detailed Rehabilitation Work Program
[AEF:djw/91680_4/061203/4182.007] Attachment No. 3 -- Page 3
To be Inserted prior to Execution
ATTACHMENT NO. 4
SCHEDULE OF PERFORMANCE
KENYON DRIVE MULTIFAMILY RESIDENTIAL
ACQUISITION AND SUBSTANTIAL REHABILITATION PROJECT DDA
NOTE: References herein to the "Agreement" and the "DDA" mean the Disposition and
Development Agreement of which this Attachment No. 4 is a part; references to "Attachments"
mean the Attachments to the DDA unless otherwise specified. Except as otherwise noted,
capitalized terms defined within the DDA and the Attachments shall retain the mem~ings as
defined in the DDA.
ACTION TIMING
Execution of Agreement,
1.1. Developer delivers executed DDA to
Agency.
Within 5 calendar days following action by Agency
approving the DDA.
1.2. Agency executes DDA.
1.3. Developer and Agency execute and cause
recordation, as appropriate, of the Other
Agreements.
A..~g~_cy Design Review Approvals.
2.1. Developer submits draft Prelhninary Plans
to Agency for review.
2,2. Agency approves or disapproves all
necessary draft Preliminary Pkms.
2.3.
Developer submits draft Final Construction
Documents to Agency for review.
Agency approves or disapproves all
necessary draft Final Construction
Documents.
With in 10 calendar days following Developer's
submission of executed DDA.
Upon Initial Closing,
Within 5 calendar days followh~g the DDA Effective
Date.
Within 10 Business Days following Developer's
submission of complete Preliminary Plans to the
Agency~
Within l 0 Bus,ess Days following the DDA Effective
Date.
Within 30 calendar days following Developer's
submission of complete Final Construction Documents
to the Agency.
[AEF:djw/91680_4/06 I203/4182.007] Attachment No. 4 - Page 1
ACTION TIMING_
3, C_City Entitlement Approvals.
Developer submits complete appI]cations
with related drawings and documents to the
City' for all necessary permits and
approvals for the substantial rehabilitation
of Project Improvements on the Developer-
Owned Parcels.
3.2.
City approves or disapproves all necessary
permits and approvals for the Project
Improvements on the Developer-Owned
Property,
Developer submits complete applications
with related drawings and documents to
City for ali necessary permits and
approvals for the construction and
substantial rehabilkation of Project
hnprovements on the Adjacent Parcels.
City approves or disapproves all necessary
approvals for the Project Improvements on
the Adjacent Parcels.
3.5. Developer submits Kenyon Drive street
vacation application.
3.6. City reviews street vacation application.
Developer submits complete applications
with related drawings and documents to the
City for all necessary approvals for the Lot
Merger Tract Map,
City approves or disapproves all necessary
approvals for the tentative Lot Merger
Tract Map.
3.9. [Other Entitlements?]
3.[0, Building Permits and Performance Bonds.
3.11. Infrastructm*e and Off-Site permits.
Within 15 calendar days following Agency approval of
FLnal Construction Documents.
Within 30 Calendar days following Developer's
submission of complete applications with related
drawings and documents to the City for Project
Improvements on the Developer-Owned Parcels,
Within 30 calendar days following acquisition of[each
of] the Adjacent Parcels by the Developer.
Within 30 calendar days following the later of
(a) Developer's submission of complete applications
with related drawings and documents to the City for the
Project Improvements on the Adjacent Parcels and
(b) acquisition of [each of] the Adjacent Parcels by the
Developer.
Within 30 calendar days following acquisition of all of
the Adjacent Parcels by the Developer.
Within 30 calendar days following (a)Developer's
submittal of a complete Street Vacation Application and
(b) acquisition by Developer of all of the Developer
Acquisition Parcels.
Within 30 calendar days following acquisition of all of
the Adjacent Parcels by the Developer.
Wkhin 30 calendar days following (a)Developer's
submission of complete applications to the City for the
tentative Lot Merger Tract Map and (b) acquisition by
Developer of all of the Developer Acquisition Parcels.
[AEF:djw/91680_4/061203/4182 007] Attachment No. 4- Page 2
ACTION TIMING
3.I2. FinalLot Merger Tract Map approval by
City,
3.i3. Recordation by Developer of Final Lot
Merger Tract Map.
4, A~cy Assistance; Finance.
Submittal by Developer to Agency of
Developer's Evidence of Financing
Commitments,
4.2. Agency review and approval or disapproval
and Developer's Evidence of Financing
Commitments.
4.3. Opening of Escrow with Escrow Holder.
4.4.
4.7.
Satisfaction of conditions precedent to
Initial Closing.
Initial Closing and Recordation of Bridge
Loan Deed of Trnst, Agency Loan Deed of
Trust, Memorandum of DDA and
Regulatory Agreement against Developer-
Owned ParceIs.
Developer submits evidence of satisfaction
of conditions precedent for initial funding
of Agency Loan for Project Improvements
on the Developer-Owned Parcels.
Agency approves or disapproves
commencement of disbursement of Agency
Loan proceeds for Project Improvements
on the Developer-Owned Parcels,
4.8.
Developer submits evidence of satisfaction
of conditions precedent for funding and
disbursement of Agency Loan proceeds for
Project Improvements on the Adjacent
Parcels.
Within 5 Business Days following DDA Effective Date.
Within 10 Business Days of submittal 0f Evidence of
Financing Commitments by Developer,
Upon earlier of 30 calendar days following DDA
Effective Date or upon Agency's approval of
Developer's Evidence of Financing Commitments and
receipt of the CHFA Loan but not less than 15 Business
Days prior to requested disbursement date of Bridge
Loan funds.
Within 45 calendar days of DDA Effective Date.
Within 2 Business Days following Developer's
satisfaction of conditions precedent for Initial Closing
and Agency's deposit into Escrow of the HELP Loan
funds from the CHFA.
Within 15 calendar days followi~g the issuance by City
of building permits for the rehabilitation of
Improvements on the Developer-Owned Parcels.
Within I0 Business Days fullowing Agency's inspectinn
of the Developer's evidence of satisfaction of conditions
precedent to disbursing the Agency Loal proceeds for
the portion of tile Project Improvements on the
Developer-Owned Parcels.
Within 15 calendar days following the issuance by City
of building permits for the new construction and
substantial rehabilitation of Project Improvements on
the Adjacent Parcels.
[AEF:djw/91680_4/061203/4182.007] Attachment No. 4- Page 3
4.9.
ACTION
Agency approves or disapproves
commencement of disbursement of Agency
Loan proceeds for the Project
Improvements on the Adjacent Parcels.
4.10.
4.11.
Developer submits evidence of satisfactinn
of conditions precedent for funding and
disbursement of Retained Agency Loan
Proceeds.
Agency approves or disapproves
disbursement of Retained Agency Loan
Proceeds.
Land Acquisition.
5.1. Developer Acquisition Parcels.
5.i,1.
Developer seeks to and acquires
Developer Acquisition Parcels or
provides written notice to Agency
of inability to acquire despite use of
good faith efforts.
5.1.2,
Agency considers Resolution of
Necessity if Developer unsuccessful
in acquiring one or more of
Developer Acquisition Parcels.
5.1.3.
Agency steps if Resolution of
Necessity approved for one or more
Developer Acquisition Parcels~
(a) File Complaint.
(b) Order of Immediate
Possession.
(c) Agency conveys Acquisition
Parcels to Developer (with
Section 33433 report, if
needed).
5.l.4. If Resolution of Necessity for one
or more Developer Acquisition
Parcels not approved, Agency and
Developer negotiate Site Plan
revision.
TIMING
Within 10 Business Days following Agency's inspection
of the Developer's evidence of satisfaction of conditions
precedent to disbursing the Agency Loan proceeds fbr
the portion of the Project Improvements on the Adjacent
Parcels.
Within 10 calendar days following the issuance by City
of Tustin of a Certificate of Occupatlcy for the new
construction and substantial rehabilitation of the Project
Improvements on the Site.
Within 15 Business Days following Agency's thspection
of the Developer's evidence of satisfaction of condition
precedent for disbursement of Retained Agency Loan
Proceeds.
Within [90] calendar days following the DDA Effective
Date, but in no event later than [. .], 2003.
Within [30] Business Days following receipt of writlen
notice from Developer indicating good faith efforts and
inability to purchase
Within 2 calendar days following acquisition of any
Acquisition Parcel by the Developer.
[AEF:djw/91680_4/061203/4182.007] Attachment No. 4 - Page 4
ACTION TIMING
5.2. Right-of-Way Parcels.
5.2.1. Agency acquisitionofRight-of-
Way Parcels.
(a) Agency seeks negotiated
acquisition
(c) If unsuccessful, Agency seeks
Resolution of Necessity.
(d) If approved, File Complaint.
(e) Order of Immediate
Possession.
5.2.2.
Agency conveys Right-of-Way
Parcels to Developer (with Section
33433 report, if needed)..
5.3. Kenyon Drive Property.
5.3.1. Agency causes City to convey
Kenyon Drive property to
Developer.
Within 2 calendar days following acquisition of any
Acquisition Parcel by the Developer.
Within ] ] calendar day's following approval by City
of street vacation ordinance and Lot Merger Tract Map.
5.4. Encumbrance of Adjacent Parcels with
Memorandum of DDA and Other
Agreements.
6. Construction of the Pr___oiect Improvements.
Developer commences construction of the
Project Improvements on the Developer-
Owned Parcels.
6.2.
Developer completes construction of the
Project Improvements on the Developer-
Owned Parcels.
Developer commences construction of the
Project Improvements on the Adjacent
Parcels.
6.4.
Developer completes construction of the
Project Improvements, including new
construction on the Adjacent Parcels.
Developer commences construction of the
private street, parking, open space and
Common Area Improvements on the Site.
Concurrently with conveyance to Developer of each of
Adjacent Parcels.
Within 30 calendar days following the DDA Effective
Date.
Within three (3) months following commencement of
construction, but in no event later than
2003.
Within 60 calendar days following acquisition of the
Adjacent Parcels.
Within 6 months following commencement of
construction of the Project Improvements on the
Adjacent Parcels, but in no event later than [.__
2004.
Within 30 calendar days following acquisition by
Developer of the Adjacent Parcels.
[AEF:djw/91680_~/061203/4182 007] Attachment No. 4-- Page 5
ACTION
6.6. Developer completes construction of the
private street, parking, open space and
Common Area Improvements on the Site.
6.7, Developer records Notice of Completion.
7. Certificate of Compliance.
7.1. Developer satisfies conditinns precedent
and submits request for issuance ora
Certificate of Compliance by the Agency.
7,2. Agency approves or disapproves
Developer's request for Certificate of
Compliance,
7.3. Agency issuance of Certificate of
Compliance.
7.4. Recordation of Certificate of Compliance
by Developer.
8. Fiuancin~ Matters Followin~ Issuance of
Certificate-of Com_oliance.
8.I. Bridge Loan Maturity Date.
8.2. Agency cancels Bridge Note following
Developer payment of obligations in full,
8.3. Recordation of Deed of Reconveyance to
remove Bridge Loan Trust Deed from
title.
8.4. Agency Loan Maturity Date.
8.5. Agency cancels Agency Note.
8.6, Recordation of Reconveyance to remove
Bridge Loan Trust Deed from title.
TIMING
Within 6 months following commencement of
construction of the private street, parking, open space
and Common Area hnpmvements, but in no event later
than [ L 2004.
Within __ calendar days following satisfaction of
statutory notice requirements.
Within 30 calendar days following issuance by the City
ora Certificate of Occupancy for the Project
Improvements defined in the Agreement,
Within __ calendar days following satisfaction by
Developer of all conditions precedent,
Within 5 Business Days following issuance of
Certificate of Compliance by Agency.
Third anniversary of Bridge Loan Date.
Within 20 Business Days following repayment of
Bridge Loan principal amount and all interest then
accrued,
Within 20 Business Days following repayment of
Bridge Loan principal amount and all interest then
accrued.
On or before January 1,2011.
Within 20 Business Days following repayment of
Agency Loan principal amount and all interest then
accrued or forgiveness of Agency Loan obligations by
Agency.
Within 20 Business Days following repayment of
Agency Loan principal amount and all interest then
accrued or forgiveness of Agency Loan obligations by
Agency.
[AEF:djw/91680 4/061203/4182.007] Attachment No. 4- Page 6
ATTACI-~,dENT NO. 5
METHOD OF FINANCING
Note: References herein to the "Agreement" and the "DDA" mean the Disposition and
Development Agreement of which this Attachment No. 5 is a part; references to "Attachments"
mean the Attachments to the DDA unless otherwise specified. Except as otherwise noted, all
capitalized terms defined within the DDA and this Attachment shall retain the meanings as
defined in the DDA.
1. P~r~ject Costs and Fundin~ Sources.
1.1 In General. The acquisition of the Site and construction of the Project
Improvements is intended to be financed as provided in this Method of Financing and the DDA.
The "Project Budget," attached to the DDA as Attacl~_rnent No. 6, identifies the sources of fronds,
schedule for funding disbursements, and estimates the total Project Costs to be Fifteen Million
One Hundred Thirty Six Thousand Seven Hundred Dollars ($15,136,700).
1.2
as follows:
Funding Sources. Funding sources for the total Project Costs will be generally
1.2.1 Permitted Mortgage(s) in the aggregate amount of approximately Nine
Million Five Hundred Seventy Two Thousand Five Hundred Dollars ($9,572,500). Developer
shall obtain acquisition and construction loan(s) issued by Institutional Lenders or other lending
institutions approved by the Agency and secured by a first deed of trust(s) in an aggregate
amount necessary to assemble the Developer-Owned Parcels and the Adjacent Parcels and to
construct the Project Improvements.
1.2.2 Developer Equity in the aggregate amount of not less than Txvo Million
Dollars ($2,000,000). Developer Equity shall be funded in accordance with the Schedule of
Developer Equity Funding (Attactnnent No. I'~).
1.2.3 Agency Assistance in the aggregate amount not to exceed Three Million
Five Hundred Sixty Four Thousand Two Hundred Dollars ($3,564,200). Agency Assistance
shall be in the form of two loans, each of which evidenced by a Note and secured by a Deed of
Trust attached to the DDA, as follows: the Bridge Note (Attachment No. _7), the Bridge Loan
Deed of Trust (Attachment No. 85, the Agency Note (Attachment No. 9) and the Agency Loan
Deed of Trust (Attachrnent No. 10).
1.2.4 It shall be the responsibility of Developer to obtain funds necessary to
develop the Site in accordance with the DDA, including funding of any Project Costs in excess
of estimated total Proj eot Cost of $15,136,700.00.
t [JRA:jred92220 2cs filml Melhod offnanci[!g9g-37~41~:2/061303/4182~O07] Attachment No. 5 - Page 1
2. _~lle Loan. In accordance with the terms and conditions of the DDA and subject to
the satisfaction of all conditions precedent thereto set forth in the DDA, the Agency shall
disburse the Bridge Loan in the amount of Nine Hundred Thousand Dollaxs ($900,000) as short-
term financing to assist Developer in funding acquisition and predevelopment costs and fees in
connection with the Project.
3. _Agency Loan.
3.1 Conditions to Funding of Agent. The Agency shall have no obligation
to fund any portion of the Agency Loan unless all conditions precedent thereto set f'orth in the
DDA have occurred or been satisfied, including without limitation, funding in full by the
Developer of the Developer Equity arid the occurrence or satisfaction of all the conditions
precedent set forth in Sections 7.1 and 7.2 of the DDA. In addition, disbuxsements of Agency
Loan proceeds by the Agency are to reimbm'se Developer for amounts expended in developing
the Project in excess of the amount of the Developer Equity, and the Agency shall have no
obligation to disburse any portion of the Agency Loan in the event such disbursement ~vould
reduce the ont-of-pocket amount the Developer has expended on the Project to less than
$2,000,000~
3.2 Funding of Agency Loan. The Agency shall disburse the Agency Loan, not to
exceed ($2,664,200), as long-term financing to the Developer to assist in land ~vrite-down and
the long-term rental affordability restrictions in connection with the Project. The Agency Loan
shall be disbursed as follows:
3.2.1 Upon the issuance of a certificate of occupancy for each building, the
Agency shall disbnrse (a) with respect to the Developer-Owned Parcels and the Developer
Acquisition Parcels, $14,680 per unit in such building for a total not to exceed disbursement of
$1,042,280 and (b) with respect to the Developer Acquisition Parcels or Right Of Way Parcels,
$14,680 per unit in such building for which rehabilitation is carried out, for a total not to exceed
disbursement of $484,440 and (c) with respect to completion of the newly constructed building
to be both on the Developer Owned Parcels and the Developer Acquisition Parcels, a not to
exceed disbursement of $373,812 after Lot Merger. Each issuance of a certificate of occupancy
for a building shall be a "Milestone"
3.2.2 The remaining amount of the Agency Loan, $ $763,668shall be disbursed
based upon the percentage of completion of the Common Area Improvements as follows:
$305,467 when the Common Areas are 50% completed (a "Milestone") and $458,201 whmr the
Agency issues a Certificate of Compliance (a "Milestone").
I [JRAjraJ;)2220 2csfinalMethodoffinancing92~20 2/061303/4182007] Ai~achmentNo. 5-Page2
ATTACHMENT NO. 6
PROJECT BUDGET
[AEF:djw/91680 4/061203/4182,007] Attachment No. 6 Page 1
To be Inserted prior to Execution
ATTACHMENT NO. 7
BRIDGE LOAN PROMISSORY NOTE
[AEF:djw/91680_4]061203/4182.007] Attaclunent No. 7- Page 1
PROMISSORY NOTE SECURED BY DEED OF TRUST
(Bridge Loan)
$900,000,00
Tustin, Califomia
__,2003
FOR VALUE RECEIVED, the undersigned KENYON DR., LLC, a California limited
liability compm~y ("Developer") promises to pay to the TUSTIN COMMUNITY
REDEVELOPMENT AGENCY, a Califon~ia community redevelopment agency ("Agency"), or
order, in immediately available funds, the principal sum of NINE HUNDRED THOUSAND
AND 00/100 DOLLARS ($900,000.00), or, if less, the aggregate unpaid and outstanding
principal amount of the Bridge Loan (as defined below), plus interest accruing thereon and all
other monetary Bridge Note Obligations (as defined below) and interest accruing thereon, in
each case at the time and upon the te~ms specified below.
Recitals
A. Agency and Developer are parties to that certain Kenyon Drive Multi-Family
Residential Acquisition and Substantial Rehabilitation Project Disposition and Development
Agreement, dated as of __, 2003, by and between Agency and Developer (the
"DDA"). Capitalized terms used and not defined in this Bridge Note shall have the meanings set
forth in the DDA.
B. Agency and Developer have also executed, delivered and recorded that certain
Regulatory Agreement and Declaration of Restrictive Covenants, of even date herewith (the
"ReguLatory Agreement").
C. On the terms and subject to the conditions set forth in the DDA and the Other
Agreements (as defined below), Agency is to provide, among other things, a loan to Developer in
a principal amount of Nine Hundred Thousand and 00/100 Dollars ($900,000.00) for purchase of
the Adjacent Parcels and for payment or reimbursement of predevelopment costs associated with
the Project (the "Bridge Loan"). "Other Agreements" means each of the DDA; the Regulatory
Agreement; that certain Promissory Note Secured by Deed of Trust (Agency Loan With Future
Advances), from Developer to Agency, of even date herewith; and that certain Deed of Trust,
Fixture Filing and Security Agreement (Agency Loan With Future Advances), from Developer
to , as "Trustee", for the benefit of Agency as "Beneficiary" thereunder, of even date
herewith, as each of the foregoing agreements may then be in force and effect.
D. Agency has on the date hereof (the "Bridge Note Date") provided the proceeds of
the Bridge Loan to Developer.
E. In exchange for Agency's provision of the Bridge Loan, among other things,
Developer has granted to Agency a security interest in certain real and personal property under
that certain Deed of Trust, Fixture Filing and Security Agreement (Bridge Loan), by Developer
[JYVW:jww/ID 0 CS 2_91497_31/061103/4182.007] 1
Bridge Note
to ., as "Trustee", in favor of Agency as "Beneficiary" thereunder, and dated as of
the date hereof (the "Deed of Trust"), as more fully set forth therein, and Developer has agreed
to pay and/or perform the Bridge Note Obligations.
Agreement
1. A~areement to Repay and Perform Bridge Note Obligations. In consideration of
the foregoing facts, the receipt of the Bridge Loan proceeds and for other good and valuable
consideration the adequacy of which is hereby acknowledged, Developer hereby agrees to repay
the principal and accrued interest due under this Promissory Note Secured By Deed of Trust
(Bridge Loan) (this '%ridge Note"), together with all other fees and costs as stated herein or in
the Deed of Trust, and to perform each other obligation of Developer under this Bridge Note and
the Deed of Trust and the Other Agreements (collectively, the "Bridge Note Obligations").
2. Interest; Accounting.
(a) Except as provided in Section 7 below, the unpaid principal balance of the
Bridge Loan shall accrue interest, commencing on the Bridge Loan Date, at the rate of four
percent (4%) per annum, simple interest to be computed on the basis of actual days elapsed and a
360-day year (the "Deferred Interest Rate").
(b) All monetary Bridge Note Obligations other than those addressed by
Section 2(a~ shall accrue interest at the Deferred Interest Rate from the date incurred until paid in
full in immediately available funds as set forth in Section 3 below.
(c) Agency shall record the principal amount of the Bridge Loan, the
aggregate amount of accrued interest, and the aggregate amount of all other unpaid monetary
Bridge Note Obligations outstanding with respect to this Bridge Note from time to time on a
ledger (which may be electronic) under control of Agency or its designee. Failure by Agency to
record a given entry shall not affect the obligations of Developer with respect to the Bridge Loan
or the Bridge Note Obligations. Developer agrees that the ledger and Agency' s books and
records showing the monetary Br/dge Note Obligations and the transactions pursuant to this
Bridge Note shall be admissible in any action or proceeding arising therefrom, and shall
constitute rebuttably presumptive proof thereof, irrespective of whether any Bridge Note
Obligation is also evidenced by a promissory note or other instrument.
3. Repayment; Terms_of Payment. All amounts due and payable under this Bridge
Note shall be tendered to Agency, or such other person(s) as Agency may designate, and at the
office of Agency at the address provided in the DDA, or at such other place or places as Agency
may designate to Developer in writing from time to time. Any payment under this Bridge Note
shall be paid in lawful cun'ency of the United States of America and in immediately available
funds.
(a) The total unpaid principal amount and all unpaid accrued interest shall be
due and payable as a balloon payment upon the third (3rd) anniversa-y of the Bridge Loan Date,
unless the same becomes due and payabie at an earlier time whether by acceleration or
otherwise.
[JWW:jww/1Docs2_9i 497_31/061103/4182007] 2
Bridge Note
(b) If any repayment date or other payment date for any monetary Bridge
Note Obligation is a Saturday, Sunday or holiday on which banks in the State of California are
customarily closed (each a "Nonbanklng Day"), such repayment shall be made on the next day
thereafter that is not a Nonbanking Day. Any payment received from Developer after 3:00 p.m.
Pacific Time shall be deemed made (and credited) as of the next day that is not a Nonbanking
Day.
(c) Any and alt payments made by Developer shall be made free and clear of,
and without deduction or withholding for, any taxes;
(d) Agency shall apply any payment of any monetary Bridge Note Obligation
(including but not limited to any prepayment under Section 4, but not including any payment
specifically earmaxked by Developer as a payment for principal or interest or any specific fee) in
the following order:
(i)
(2)
(3)
(4)
(5)
to pay any fees, indemnities, expense reimbursements or other
sums then due to Agency pursuant to this Bridge Note, the Deed of
Trust or any of the Other Agreements;
to pay interest due in respect of the Bridge Loan;
to pay or prepay principal of the Bridge Loan;
to the payment of any other monetary Bridge Note Obligation; and
the excess, if any, to Developer, but only if ail Bridge Note
Obligations and Agency Note Obligations (as defined in the
Agency Note) have been paid and/or performed in full.
4. Prepayments. Developer may prepay ail or part of the principal balance and
interest then accrued under this Bridge Note without penalty, subject to the performance in full
of the Developer's obligations under the DDA, the Regulatory Agreement and each other
applicable Other Agreement.
5. Waivers.
(a) Developer agrees that (i) any extension of a required payment of this
Bridge Note or any other payment due hereunder, or the release of any security under the Deed
of Trust, shall only be made with the Agency's prior written consent, which Agency may provide
or withhold in its sole and absolute discretion, (ii) the Agency may require additional security
and/or consideration in conjunction with any such extension or release of security at Agency's
sole and absolute discretion, and (iii) any withholding of consent by the Agency in connection
with the foregoing shall in no way affect, and Agency shall in no way be liable for, the Bridge
Note Obligations.
(b) No extension of time for payment of this Bridge Note made by written
agreement by the Agency with any person now or hereafter liable for payment of this Bridge
[JWW:jww/IDOCS291497_31/061103/4182,007J 3
Bridge Note
Note shall operate to release, discharge, modify, change, or affect the original liability of
Developer under this Bridge Note or the Deed of Trust, either in whole or in part.
all rights:
(c) The Bridge Note Obligations are absolute and Developer waives any and
(i) to offset, deduct, or withhold any payments or charges due under
this Bridge Note or the Deed of Trust for any reasons whatsoever;
(ii) of presentment, demand, protest and notices of dishonor and
protest; and
(iii) of Agency diligence in taking any action to collect any sums owing
under this Bridge Note or the Deed of Trust or in proceeding against any of the
rights and interests in and to properties securing payment of this Bridge Note.
(d) Developer agrees that Agency is entitled to rely on any notice or
communication which Agency believes in good faith to have been given Developer or by an
officer or other person duly authorized by Developer on Developer's behalf, and Agency shall
not incur any liability as a result of acting on any such notice or communication.
6. Inde~rmification: Exoneration; Costs.
(a) In addition to any amounts payable elsewhere in this Bridge Note,
Developer agrees to defend, with counsel reasonably acceptable to Agency ~md the City,
indemnify, pay and hold hm'mless Agency and City from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including without limitation
reasonable attorneys', consultants' and expert witnesses' fees) which Agency or City may incur
or be subject to as a consequence, direct or indirect, of the issuance of the Bridge Loan to
Developer or the use of the proceeds therefrom.
(b) If after receipt of any payment which is applied to the payment of all or
any part of the monetary Bridge Note Obligations, Agency is compelled for any mason to
sm'render such payment or proceeds to any person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any other reasons, then the
monetary Bridge Note Obligations or part thereof intended to be satisfied shall be revived and
continued and this Bridge Note and the Deed of Trust shall continue in full force as if such
payment or proceeds had not bee received by Agency, and Developer shall be liable to pay
Agency, and hereby does agree to defend, with counsel reasonably acceptable to Agency and the
City, indemnify, pay and hold harmless Agency for the amount of such payment or proceeds
surrendered together with all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including without limitation reasonable attorneys', consultants' and expert witnesses'
fees) associated therewith. The provisions of this Section 6(b) shall be and remain effective
notwithstanding any contrary action which may have been taken by Agency in reliance on such
payment or proceeds, and any such contrary action shall be without prejudice to Agency's rights
[JWW:jww/IDOCS29 1497_31/061103/4182.007] 4
Bridge Note
under this Bridge Note and the Deed of Trust and shall be deemed to have been conditioned
upon such payment or proceeds having become final and irrevocable.
(c) As between Developer and Agency, Developer assumes all risks of the
acts and omissions of, or misuse of any proceeds of the Bridge Loan by, Developer or its
members, employees, officers, contractors and subcontractors and their employees and officers.
No action or omission whatsoever by Agency or City shall relieve Developer of the payment
and/or pe~'formance of any of the Bridge Note Obligations hereunder.
(d) Developer agrees that if any amounts due under this Bridge Note are not
paid when due, Developer will pay in addition to such amounts 'all costs and expenses of
collection and ali attorney fees and other fees and costs paid or incurred by the Agency in
connection with the collection or enforcement of this Bridge Note, whether or not suit is filed,
each of which such costs will become part of the monetary Bridge Note Obligations.
(e) The provisions of this Section 6_ shall survive the termination of this
Bridge Note and the Deed of T~2st.
7. Events of Default; Deed of Trust Acceleration.
(a) The Deed of Trust provides for acceleration of the payments due under
this Bridge Note upon the occurrence and during the continuance of an Event of Default (as
defined in the Deed of Trust). This Bridge Note does not provide, and Developer does not
hereby receive, any additional notice and cure provisions beyond those which may be set forth in
the Deed of Trust.
(b) in furtherance of the foregoing (and not in lieu thereof), upon the
occurrence and during the continuance of any Event of Default, the unpaid balance of the then-
outstanding principal amount of this Bridge Note, together with all accrued interest thereon and
cha~rges owing, and all other outstanding monetary Bridge Note Obligations, shall, at the option
of the Agency, become immediately due and payable, and thereafter until paid shall bear interest
at the rate of ten percent (10%) per annum (the "Default Rate"), compounded monthly (or, if
lower, the maximum rate permitted by law).
(c) Upon the occurrence and during the continuance of any Event of Default,
in addition to the foregoing and without prejudice to any other rights it may otherwise have
under the laws of the State of California or under the terms of the Deed of Trust or any Other
Agreement, Agency may exercise any of the remedies set forth in or allowed by the Deed of
Trust. Each of Agency's rights under this Bridge Note and the Deed of Trust will be cumulative
and not exclusive of any other right or remedy which Agency may have.
8. Covenants.
(a) Legal Existence and Good Standing. Developer shall, and shall cause its
members to, maintain its legal existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such existence and qualification or good standing
could reasonably be expected to have a material adverse effect on Developer,/ts members, the
[JWW:jww/IDOCS2 91497__31/061103/4182007] 5
Bridge Note
Bridge Note Obligations or the performance of Developer's obligations under this Bridge Note,
the Deed of Trust or any Other Agreement.
(b) Prohibition Against Transfer of Interest.
(1) Developer shall not sell, assign, convey, or transfer in any other
form this Bridge Note or the Bridge Note Obligations. Any action in violation of this
restriction shall result in all Bridge Note Obligations being immediately due and payable,
and thereafter all monetary Bridge Note Obligations shall accrue interest at the Default
Rate until paid in full.
(2) Developer shall not grant any further pledge, encumbrance, or
mortgaging of the Property (as defined in the Deed of Trust) or any portion thereof or of
any of its interest herein or therein except as approved by the Agency as provided in the
DDA.
(3) The Agency may assign the Bridge Note and Agency's fights to
performance of the Bridge Note Obligations, upon notice to Developer, to any
governmental or quasi-governmental agency or body.
(c) Compliance with Law. Developer shall comply in all material respects
with all requirements of law of any governmental authority having jurisdiction over it or its
business, and all material agreements to which it is a party or by which it or its assets are bound.
Id) Covenants in the DDA. Each covenant of Developer set forth in
Article [__] and Attachment 5 of the DDA is incorporated herein as if fully se~ forth herein and,
if the DDA terminates prior to the payment and performance in full of ali Bridge Note
Obligations and the termination of this Bridge Note and the Deed of Trust, shall survive as
incorporated in this Bridge Note.
(e) Use of Funds. The proceeds of the Bridge Loan shall be use by Developer
solely for the development of the Project as described in the DDA.
9. _Representations and Wammties. Each representation and warranty of Developer
set forth in Article 3 of the DDA is incorporated herein as if fuI]y set forth herein and, if the
DDA te~ninates prior to the payment and performance in full of all Bridge Note Obligations and
the termination of this Bridge Note and the Deed of Trust, shall survive as incorporated in this
Bridge Note.
10. Governing Law; Choice of Forum; Service of Process.
(a) This Bridge Note shall be construed in accordance with and be governed
by the laws of the State of California, provided that perfection issues with respect to Division 9
of the Uniform Commercial Code of the State of California may give effect to applicable choice
or conflict of law rules set forth therein.
(b) Any legal action or proceeding with respect to this Bridge Note, the Deed
of Trust, or the Bridge Note Obligations must be instituted in the Super/or Court of the County of
[JWW:j ww/iDOCS2_91497_3 ~/061103/4182,0071 6
Bridge Note
Orange, State of California, or in any other appropriate court of that county, or in the Federal
District Court in the Central District of California, Santa Aha branch. Developer hereby waives
any fight to object to the foregoing courts based on venue or inconvenient forum.
(c) Service of process on Agency shall be made by personal service upon the
Executive Director of Agency, or in such manner as may be provided by law. Service of process
on Developer shall be made by personal service upon an officer of Developer or in such manner
as may be provided by law, whether made within or without the State of California.
11. Severability. If any provision of this Bridge Note shall be invalid, illegal, or
unenforceable, then so long as the material bargain of the parties may be preserved, the validity,
legality, and enforceability of the remaining provisions hereof shall not in any way be affected or
impaired thereby.
12. Time. As a material inducement and consideration to the Agency in providing the
Bridge Loan, and but for this provision the Agency would not provide the Bridge Loan nor enter
into the Other Agreements, Developer agrees that ime is of the essence in this Bridge Note.
13. No Waiver by the Agency. No waiver of any breach, default, or failure of
condition under the terms of this Bridge Note, the Deed of Trust or any Other Agreement or the
obligations secured thereby shall be implied from any failure of the Agency to take, or any delay
by the Agency in taking, action with respect to such breach, default or failure, or any form of
previous wai~er of any similar or unrelated breach, default or failure; and waiver of any term of
this Bridge Note, the Deed of Trust or any Other Agreement or any of the obligations secured
thereby must be made in writing and shall be limited to the express written terms of such waiver.
No waiver by Agency on any occasion shall affect or diminish Agency's fights thereafter to
require strict performance by Developer of any provision of this Bridge Note, the Deed of Trust,
or any Other Agreement.
14. Amendments and Modifications. This Bridge Note may not be changed orally,
but only by an amendment in writing signed by Developer and the Agency.
15. _Legal Fees. If the Agency institutes any action, suit, counterclaim, appeal,
arbitration or mediation for any relief against another party, declaratory or otherwise
(collectively an "Action"), to enforce the terms hereof or to declare fights hereunder or with
respect to any inaccuracies or material omissions in connection with any of the covenants,
representations or warranties of Developer, then the prevailing party in such Action, whether by
arbitration or final judgment, shall be entitled to have and recover of and from the other party all
costs and expenses of the Action, including reasonable attorneys' fees and costs (at the
prevailing party's attorneys' then-prevailing rates as increased from time to time by the giving of
advanced written notice by such counsel to such party) incurred in bringing and prosecuting such
Action and/or enforcing any judgment, order, ruling or award (collectively, a "Decision")
granted therein, all of which shall be deemed to have accrued on the commencement of such
Action and shall be paid whether or not such Action is prosecuted to a Decision. Any Decision
entered in such Action shall contain a specific provision providing for the recovery of attorneys'
fees and costs incun*ed in enforcing such Decision. A com't or arbitrator shall fix the amount of
reasonable attorneys' fees and costs upon the request of either party. Any judgment or order
[JWW:jww/IDOCS2_91497_31/061103/4182,007]
B~idge Note
entered in any final judgment shall contain a specific provision providing for the recovery of all
costs and expenses of suit, including reasonable attomeys' fees and expert fees and costs
(collectively "Costs") incun'ed in enforcing, perfecting and executing such judgment. For the
purposes of this paragraph, Costs shall include, without limitation, in addition to Costs incurred
in prosecution or defense of the underlying action, reasonable attorneys' fees, costs, expenses
and expert fees and costs incurred in the following: (a) postjudgment motions and collection
actions; (b) contempt proceedings; (c) garnishment, levy, debtor and third party examinations;
(d) discovery; (e) bankruptcy litigation; and (f) appeals of any order or judgment. "Prevailing
party" within the meaning of this section includes, without limitation, a party who a~ees to
dismiss an Action in consideration for the other party's payment of the amounts allegedly due or
performance of the covenants allegedly breached, or obtains substantially the relief sought by
such party.
fN WITNESS WHEREOF, Developer acting through its duly authorized representatives
has executed this Bridge Note on the date first set above.
"DEVELOPER"
KENYON DR., LLC,
a California limited liability company
By: STATEWIDE ACQUISITION CORP.,
a California corporation,
its Co-Managing Member
By:
Kent Hawkins, President
Dated:
By: CENTURION PARTNERS, L.L.C.,
a California limited liability company,
its Co-Managing Member
By:
Michael Smith, Manager
[JWW:jww/IDOCS2 91497 31/061103/4182.0071 8
Bridge Note
JOINDER
In consideration of the Agency making the foregoing Bridge Loan, STATEW1DE
ACQUISITION CORP., a California corporation, and CENTURION PARTNERS, L.L.C., a
California limited liability company, the Co-Managing Members of Developer, jointly and
severally, agree to cause Developer to comply fully with the provisions of Sections 6 and 8 of the
Bridge Note and join with Developer in the representations and wan'anties set forth in Section 9
of the Bridge Note.
Dated: June __, 2003
STATEWIDE ACQUISITION CORP.,
a California corporation,
its Co-Managing Member
By:
Kent Hawkins, President
Dated: June __., 2003
CENTURION PARTNERS, L.L.C.,
a California limited liability company,
its Co-Managing Member
By:
Michael Smith, Manager
[JWW:jww/ff)OCS2_91497_31/061103/4182 007]
Bridge Note Joinder to Bridge Note
ATTACHMENT NO. 8
BRIDGE LOAN DEED OF TRUST
[AEF:djw591680_4/061203/4182 007] AtXachment No, 8 - Page I
TUSTIN REDEVELOPMENT AGENCY OFFICIAL BUSINESS
REQUEST DOCUq'dENT TO BE RECORDED
AND TO BE EXEMPT FROM RECORDING
FEES PER GOVERNMENT CODE 6103 AND 27383
RECORDING REQU-ESTED BY
AND WHEN RECORDED MAIL TO:
City Clerk
The City of Tustin
300 Centennial Way
Tustin, California 92780
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST. FIXTURE FILING AND SECURITY AGREEMENT
(BRIDGE LOAN)
by
KENYON DR., LLC
a California limited liability company,
Trustor
to
Trustee
for the benefit of the
TUSTIN COMMUNITY REDEVELOPMENT AGENCY,
a California community redevelopment agency
Beneficiary
THIS DOCUqMENT IS ALSO A FIXTURE FILING IN ACCORDANCE WITH
SECTION 9502(c) OF THE UCC
ORGANIZATIONAL NUMBER OF TRUSTOR IS:
DEED OF TRUST~ FIXTURE FILING AND SECURITY AGREEMENT
(BRIDGE LOAN_).
This DEED OF TRUST, FIXTURE FILING AND SECURITY AGREEMENT
(BRIDGE LOAN) (this "Deed of Trust") is made as of ., 2003, by KENYON DR.,
LLC, a California limited liability company ("Trustor"), to ., a
("Trustee"), for the benefit of the TUSTIN COMMUNITY
REDEVELOPMENT AGENCY, a California community redevelopment agency
("Beneficiary").
RECITALS
A. Beneficiary and Trustor am parties to that certain Kenyon Drive Multi-Family
Residential Acquisition and Substantial Rehabilitation Prqject Disposition and Development
Agreement, dated as of ,2003, by and between Beneficiary and Trustor (the
"DDA"). Capitalized terms used and not defined in this Deed of 'Trust have the meaning set
forth in the Bridge Note (as defined below) or, if not therein, in the DDA (as defined below).
B. Beneficiary and Trustor have also executed, delivered and recorded that certain
Regulatory Agreement and Declaration of Restrictive Covenants, of even date herewith (the
"Regulatory Agreement").
C. On the terms and subject to the conditions set forth in the DDA and the Other
Agreements (as defined in the Bridge Note), and in reliance upon the security interests granted
under this Deed of Trust, Beneficiary is to provide, among other things, a loan to Tmstor in a
principal amount of Nine Hundred Thousand and 00/100 Dollars ($900,000.00) to be used by
Trustor in connection with its purchase of the Adjacent Parcels and for payment or
reimbursement of predevelopment costs associated with the Project (the "Bridge Loan").
D. Beneficiary has on the dare hereof (the "Bridge Note Date") provided the
proceeds of the Bridge Loan to Trustor.
NOW, THEREFORE, in consideration of the foregoing facts, the receipt of the Bridge
Loan proceeds and for other good and valuable consideration the adequacy of which is hereby
acknowledged, Trustor hereby executes and delivers this Deed of Trust to Trustee for the benefit
of Beneficiary.
ARTICLE I.
GRANTS AND OBLIGATIONS SECURED
1.1 Real Propen~y... Trustor irrevocably grants, transfers and assigns to Trustee, in
trust, with power of sale and right of entry and possession, all of its fight, title and interest in and
to the following property (collectively, the "Real Property"), which Trustor now owns or may
acquire later:
(a) the real property more particularly described on Exhibit "A-i" (being the
"Developer-Owned Parcels" as defined in the DDA) and Exhibit "A-2" (being the "Adjacent
Parcels", as defined in the DDA) (collectively, the "Land"), and with respect to the Adjacent
[JWW:jww/IDOCS2_91687_2/060103/4182.0()7]
Parcels, Trustor agrees that it will execute and permit recordation of such documents as
Beneficiary may reasonably request to memorialize the lien of this Deed of Trust against the
Adjacent Parcels upon Trustor's acquisition thereof or any portion thereof; all buildings and
other improvements located on or appurtenant to the Land and ali machinery, equipments
appliances, tooling, furniture, fixtures, goods and other articles of real and personal property,
affixed to or placed upon the Land or such buildings or other improvements (the
"Improvements");
(b) all licenses, privileges, tenements, hereditaments and appurtenances of or
to the Land or the Improvements, including, without limitation, all rights-of-way, easements, any
land lying within the right-of-way of any street, open or proposed, adjoining the Land, and all
sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Land;
(c) to the degree not specifically excluded by the description in Exhibit "A",
all water rights, ali dil and gas and other mineral rights in connection with the Land;
(d) all claims and demands, including claims or demands with respect to the
proceeds of insurance, in effect with respect to the Land or the Improvements, and all awards
made for the taking by eminent domain, or by any proceeding of purchase in lieu of any such
taking, of ail or any part of the Property (as defined below); and
(e) all rents, issues, profits, royalties, income, rights to payment and other
benefits (collectively, the "Rents") derived from any lease, sublease, license, franchise or
concession or other agreement (collectively, the "Leases") affecting the Land or the
Improvements or their use or occupancy, all of Trustor's interest in the Leases; all guaranties of
any obligation of any lessee or other party to any Lease (each a "Lessee") and the right of
Trustor to alter, amend, modify or terminate the Leases or any of their terms.
1.2 Personal Property. Trustor grants a security interest to Beneficiary in, and assigns
to Beneficiary, all of the Trustor's right, title and interest in and to the following, which Trustor
now owns or may acquire later, and whether located on the Real Property or wherever located if
used or usable in connection with the use, operation or occupancy of the Real Property or the
performance of Trustor's obligations under the DDA and the Other Agreements with respect to
the Real Property (collectively, the "Personal Property" and, with the Real Property, the
"Property"):
(a) all personal prope~Iy, including without limitation accounts, as-extracted
collateral, chattel paper (including tangible and electronic chattel paper), commercial tort claims,
documents, deposit accounts, equipment, fixtures, general intangibles, goods, instruments,
inventory, investment property (including both certificated and uncertificated securities, security
entitlements, securities accounts, corrnnodJty contracts and commodity accounts), letters of
credit, letter-of-credit fights, manufactured homes, payment intangibles, promissory notes,
software, supporting obligations, and proceeds (including cash and noncash proceeds) including
any proceeds of any of the foregoing, whether cash, instruments, promissory notes, contract
rights or otherwise, of the sale or other disposition of all or any part of the estate of Trustor upon
the Property;
[JWW:jww/IDOCS2_91687_2/060103/4182.007]2
(b) all proceeds and claims arising on account of any damage to or taking of
the Property, including, without limitation, cla/ms under insurance policies, and all causes of
action and recoveries for any loss or diminution in the value of the Property;
(c) all po:ticies of insurance relating to the Property, irrespective of whether
Beneficiary requires Trustor to obta/n or maintain such policies, all riders, amendments,
renewals, supplements or extensions of such policies; the fight to assert, prosecute and settle
claims under such policies; the right to receive payments of proceeds of such policies; and all
judgments, claims, compensation, awards, settlements and proceeds of or with respect to any of
the foregoing; and
(d) all deposit accounts or related rights to recei ve payment from depositories
or institutions into which Trustor deposits (i) the Rents, (ii) any other income derived from the
Property, (iii) any security deposits or other monies paid to Trustor or Trustor's property
manager whether pursuant to the terms of a Lease or otherwise, (iv) any other amounts described
in Sections 1.1 or 1.2 and any proceeds of any such amounts, or (v) amounts required by
Beneficiary to be deposited or which Trustor agrees to deposit in connection with the obligations
secured by this Deed of Trust.
1.3 UCC Security Agreement.
(a) This Deed of Trust shall constitute a security agreement pursuant to the
California Uniform Commercial Code (the "UCC") for any portion of the Property which, under
applicable law, may be subject to a security interest pursuant to the UCC (such portion of the
Property is hereinafter called the "Personalty") and Trustor hereby grants to Beneficiary a
security interest in the Personalty.
(b) Tmstor agrees to execute and deliver to Beneficiary any financing
statements, as well as extensions, renewals and amendments thereof, and reproductions of this
Deed of Trust in such form as Beneficiary may require to perfect and maintain a security interest
with respect to the Personalty. Trustor hereby authorizes and empowers Beneficiary and
irrevocably appoints Beneficiary its agent and attorney-in-fact to execute and file, on Trustor's
behalf, all financing statements and refilings and continuations thereof as Beneficiary deems
necessary or advisable to create, preserve and protect such lien. Trustor shall pay all costs of
filing such financing statements and any extensions, renewals, amendments and releases thereof,
and shall pay all reasonable costs and expenses of any record searches for financing statements
as Beneficiary may reasonably require.
(c) Trustor shall not, without the prior written consent of Beneficiary, sell,
assign, transfer, encumber, remove or permit to be removed from the Real Property any of the
Personalty except (i) in the ordinary course of business and (ii) in accordance with the DDA or
the Other Agreements. Any replacement or substituted Personalty shall be subject to the security
interest granted herein.
(d) Upon the occurrence of an Event of Default, Beneficiary, pursuant to the
appropriate provisions of the UCC and in addition to the rights set forth in Article 4 below, shall
have an option to proceed with respect to both the Real Property and the Personalty in
[JWW:jww/IDOCS2_91687_2/060103/4182,007] 3
accordance with its rights, powers and remedies with respect to such Real Property, in which
event the default provisions of the UCC shall not apply. Such option shall be revocable by
Beneficiary as to all or any portion of the Personalty at any time prior to the sale of the
remainder of the Real Property. In such event Beneficiary shall designate Trustee to conduct the
sale of the Personalty in combination with the sale of the remainder of the Property. Should
Beneficiary elect to sell the Personalty or any part thereof which is real property or which
Beneficiary has elected to treat as real property or which may be sold together with the real
property as provided above, Beneficiary or Trustee shall give such notice of default and election
to sell as may then be required by law. If Beneficiary shall elect to proceed with respect to any
portion of the Personalty separately from such real property, Tmstor hereby agrees that five (5)
days notice of the sale of the Personalty shall be reasonable notice. The reasonable expenses of
retaking, holding, preparing for sale, selling and the like incurred by Trustor shall include, but
not be limited to, reasonable attorneys' fees, costs and expenses, and other expenses incun'ed by
Trustee and/or Beneficiary.
1.4 Fixture Filing. The personal property in which Beneficiary has a security interest
includes goods which are or shall become fixtures on the Land or Improvements. This Deed of
Trust is intended to serve as a fixture filing pursuant to the terms of Sections 9334 and 9502 of
the UCC. This filing shall remain in effect as a fixture filing until this Deed of Trust is released
or satisfied of record or its effectiveness otherwise terminates as to the Property. In that regard,
the following information is provided:
Name of Debtor:
Organizational Number of Debtor:
Address of Debtor:
Name of Secured Party:
Address of Secured Party:
Kenyon Dr., LLC
See Section __ of the DDA
Tustin Community Redevelopment Agency
See Section __ of the DDA
1.5 Obligations Secured. The grants, transfers, assignments and security interests
made and granted in Sections_ 1.1, 1.2, 1.3, and 1.4 are for the purpose of securing, in such order
of priority as Beneficiary may determine:
(a) the payment of all amounts owing under the Bridge Note of even date
herewith, including but not limited to the payment and/or performance of the Bridge Note
Obligations, together with interest thereon at the Defen'ed Interest Rate or the Default Rate (as
each is defined in the Bridge Note);
(b) performance of and compliance with all of the terms and conditions of
each agreement of Trustor contained in this Deed of Trust and any modifications or substitutions
of this Deed of Trust or any Other Agreement; and
(c) the payment of such additional sums and the performance of ail other
obligations now or later owing from Trustor to Beneficiary, whether otherwise secured or not,
payable to or otherwise acquired by Beneficiary, when the instrument evidencing such obligation
recites that it is intended to be secured by this Deed of Trust.
[JWW:jww/IDOCS2_91687 2/060103/4182.007] 4
ARTICLE II.
TRUSTOR'S COVENANTS
2.1 Condition of Property. Trustor shall maintain and preserve the Property in
accordance with tine DDA and the Other Agreements, and shall not commit or permit any waste
to or deterioration of the Property. Tmstor shall undertake all acts reasonably necessary to
protect and preserve Beneficiary's security under this Deed of Trust.
2.2 Alteration of Improvements. Trustor shall not remove, demolish or structurally
alter any Improvement or permit or suffer the same to be done, except such alterations as may be
required by laws, ordinances, rules, regulations or orders of governmental authorities or by the
terms of any of the Other Agreements. Trustor shall complete promptly and in a good and
workmanlike manner any Improvement which may be constructed on the Property and promptly
restore in like manner any Improvement which may be damaged or destroyed by any cause
whatsoever.
2.3 Compliance With Laws. Trustor shall comply in ail material respects with all
requirements of law of any governmental authority having jurisdiction over it or its business, and
all materia/agreements to which it is a party or by which it or its assets are bound.
2.4 Liens. Except as provided below, Tmstor shall not suffer any Liens to attach to
the Property, and shall promptly pay and promptly discharge, at Trustor's sole cost and expense,
all Liens affecting the Property, except (a) those items shown on Schedule B of the policy of title
insurance of this date issued to Beneficiary insuring the enforceability and priority of this Deed
of Trust and taxes and assessments not delinquent (as such policy may be modified by date-down
or other endorsements requested by Agency from time to time in accordance with Article 7 of the
DDA) and (b) Permitted Mortgages constituting Senior Obligations. The existence of any
mechanic's, laborer's, materialman's, supplier's, vendor's or statutory Lien or right to any such
Lien shall not constitute a violation of this Section 2.4 if payment is not yet due under the
contract, obligation, or statute which is the foundation of such lien or if Trustor is contesting in
good faith the validity of any such Lien pursuant to Section 5.3.
2~5 Indemnity and Reimbursement. Trustor hereby agrees to defend, with counsel
reasonably acceptable to Beneficiary and the City, indemnify and hold harmless Beneficiary and
City from all claims, demands, liabilities, damages, losses, costs, charges mad expenses
(including without limitation reasonable attorneys', consultants' and expert witnesses' fees)
arising out of Beneficiary's interest under this Deed of Trust or in connection with the Property
and shall appear in and defend any action or proceeding which purports to affect Beneficiary's
interests relative to the Bridge Loan or the rights, powers and duties of Trustee. In addition,
Trustor shall pay upon demand, after expenditure, all sums expended for expenses paid or
incurred by Trustee or Beneficiary pursuant to any of the terms of this Deed of Trust or in any
action or proceeding in which Beneficiary or Trustee may appear or be made a party, whether or
not pursued to final judgment, and in any exercise of any of the rights or remedies granted to
Beneficiary by this Deed of Trust, or any of the Other Agreements, whether or not any such right
or remedy is exercised to completion. In addition, Trustor shall pay upon demand the ordinary
and reasonable fees of Trustee in connection with any such action or proceeding.
[JW~V:jww/IDOCS2_91687_2/060103/4182,007] 5
2.6 Taxes and Impositions.
(a) Trustor shall pay, prior to delinquency, ali real and personal property taxes
and assessments and all other taxes and assessments of any kind, including, without limitation,
nongovernmental levies or assessments such as maintenance charges, owner association dues or
charges and levies or charges resulting from covenants, conditions and restrictions affecting the
Property, which are assessed or imposed upon the Property, or become due and payable, and
which create or may create a Lien upon any part of the Property (all such taxes, assessments and
other charges are referred to in this Deed of Trust as "Impositions").
(b) If at any time after the date of this Deed of Trust there shall be a license
fee, tax or assessment imposed on Beneficim-y and measured by or based in whole or in part
upon the amount of the outstanding obligations secured by this Deed of Trust, then all such
taxes, assessments or fees shall be deemed to be included within the term "Impositions" as
defined in subsection 2.6(a) above, and Trustor shall pay and discharge such amounts upon
Beneficiary's demand accompanied by a statement showing the calculation of the tax,
assessment or fee. Anything to the contrary in this Deed of Trust notwithstanding, Trustor shall
have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax
levied on Beneficiary.
(c) Upon Beneficiary's request, Trustor shall furnish Beneficiary with official
receipts of the appropriate taxing authority, or other proof satisfactory to Beneficiary, evidencing
payment of the Impositions.
(d) Upon the occurrence of an Event of Default or any event which with the
giving of notice, the lapse of time, or both, would become an Event of Default, Beneficiary may
require that Trustor deposit with Beneficiary an initial cash reserve in an amount equal to one-
half of all Impositions for the ensuing tax year and shall thereafter continue to deposit with
Beneficiary, in monthly installments, an amount equal to one-twelfth of the estimated aggregate
annual Impositions. In such event, Trustor shall cause all bills, statements or other documents
relating to hnpositions to be sent or mailed directly to Beneficiary. Upon receipt of such bills or
statements, and providing Trustor has deposited sufficient funds with Beneficiary pursuant to
this Section 2.6, Beneficiary shall pay such amounts as may be due under such bills or statements
out of the funds so deposited with Beneficiary. If at any time and for any reason the funds
deposited with Beneficiary are or will be insufficient to pay such amounts as may then or
subsequently be due, Beneficiary shall notify Trustor and Trustor shall promptly deposit an
amount equal to such deficiency with Beneficiary. Notwithstanding the foregoing, nothing in
this Deed of Trust shall cause Beneficiary to be deemed a trustee of such funds or to be obligated
to pay any amounts in excess of the amount of funds deposited with Beneficiary pursuant to tlnis
Section. Beneficiary may cormningle such reserve with its own funds and Trustor shall not be
entitled to interest on any amounts so held. Upon the occurrence of an Event of Default,
Beneficiary may apply any gmounts held to any obligation secured'by this Deed of Trust in any
order that Beneficiary may dete~Tnine or may hold any such amounts as security for any such
obligation and shall have no obligation to apply such amounts to any particular obligation,
including, without limitation, to the payment of Impositions.
[JWW:,i ww/IDOCS 2__91687 2/060103/4,182.007] 6
2.7 Insurance. The insurance provisions of Article __ of the DDA are incorporated
herein as if fully set forth herein, and, if the DDA terminates prior to the payment and
performance in full of all Bridge Note Obligations and the termination of this Deed of Trust,
shall survive as incorporated in this Deed of Trust.
Upon the occurrence of an Event of Default or any event which with the giving of
notice, the lapse of time, or both, would become an Event of Default, Beneficiary may require
that Trustor deposit with Beneficiary an initial cash reserve in an amount equal to the estimated
aggregate annual insurance premiums on all policies required by this Deed of Trust and
thereafter continue to deposit with Beneficiary, in monthly installments, an amount equal to one-
twelfth of the estimated aggregate annual insurance premiums on ali policies of insurance
required by this Deed of Trust. In such event, Trustor shall cause all bills, statements or other
documents relating to such insurance premiarns to be sent or mailed directly to Beneficiary.
Upon receipt of such bills or statements, and providing Trustor has deposited sufficient funds
with Beneficiary pursuant to this Section 2.7, Beneficiary shall pay such amounts as may be due
under such bills or statements out of the funds so deposited with Beneficiary. If at any time and
for any reason the funds deposited with Beneficiary are or will be insufficient to pay such
amounts as may then or subsequently be due, Beneficiary shall notify Trustor and Trustor shall
promptly deposit an amount equal to such deficiency with Beneficiary. Notwithstanding the
foregoing, nothing contained in this Deed of Trust shall cause Beneficiary to be deemed a trustee
of such funds or to be obligated to pay any amounts in excess of the amount of funds deposited
with Beneficiary pursuant to this Section 2.7. Beneficiary may commingle such reserve with its
own funds and Trustor shall not be entitled to interest on any amounts so held.
2.8 Casualties; Insurance Proceeds. Trustor shall give prompt written notice to
Beneficiary of any casualty to the Property resulting in damage in an amount greater than
$25,000, whether or not such casualty is covered by insurance. In the event of such casualty, all
proceeds of insurance shall be payable to Beneficiary and Trustor authorizes and empowers
Beneficiary, at Beneficiary's option and in Beneficiary's reasonable discretion as attorney-in-fact
for Trustor, to make proof of loss, to adjust and compromise any claim under insurance policies,
to appear in and prosecute any action arising from such insurance policies, to collect and receive
insurance proceeds, and to deduct from such proceeds Beneficiary's expenses incun'ed in their
collection. In the event of any damage to or destruction of the Improvements, so long as no
Event of Default has occurred and is continuing or no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both, would become an Event of
Default, Beneficiary shall hold the balance of such proceeds to be used to reimburse Trustor for
the costs of reconstruction of the Improvements if all of the following conditions are satisfied
within sixty (60) days from the date of the damage or destruction:
(a) In Beneficiary's reasonable judgment, such insurance proceeds are
sufficient to pay ail costs of reconstruction of the Improvements, including make the payments
required under the Bridge Note and the Other Agreements; or if such proceeds are not sufficient,
Trustor deposits additional funds with Beneficiary sufficient to pay such additional costs of
reconstructing the Improvements;
(b) Beneficiary reasonably determines that the damage or destruction can be
repaired or restored and the Property as repaired or restored will comply with all applicable laws;
[JWW:jww/DOCS2_91687_2/060103/4182.007] 7
(c) Beneficiary has received and approved (i) a budget of all costs of repair or
restoration and (ii) a construction schedule for such repair or restoration; and
(d) Beneficiary has determined that the work of reconstruction will be in
accordance with the DDA and the Regulatory Agreement.
TRUSTOR HEREBY ACKNOWLEDGES AND AGREES THAT IT IS
AWARE OF AND UNDERSTANDS SCHOOLCRAFT V. ROSS (81 CAL. APP. 3D 75
(1981)) AND ITS PROGENY AS WELL AS CALIFORNLA CIVIL CODE SECTION 2924.7
AND FINANCIAL CODE SECTIONS 1227.3 AND 7462, WHICH PERMIT BENEFICIARY
TO REQUIRE INSURANCE BUT OBLIGATE BENEFICIARY TO ALLOW TRUSTOR TO
USE CASUALTY INSURANCE PROCEEDS FOR THE PURPOSE OF REPAIRING OR
RESTORING THE REAL PROPERTY PLEDGED AS SECURITY FOR THE TRUSTOR'S
OBLIGATIONS TO BENEFICIARY U~NLESS BENEFICIARY'S SECURITY HAS BEEN
IMPAIRED. TRUSTOR HEREBY ACKNOWLEDGES AND AGREES THAT, IN THE
EVENT OF A CASUALTY TO THE PROPERTY, IF TRUSTOR FAILS TO REPAIR OR
RESTORE THE PROPERTY IN A MANNER CONSISTENT WITH SECTIONS 2.8(a)-(d),
SUCH FAILURE IS AND SHALL BE DEEMED A SUBSTANTIAL IMPAIRMENT OF THE
PROPERTY ENTITLING BENEFICIARY TO APPLY THE NET INSURANCE PROCEEDS
TO THE INDEBTEDNESS IN SUCH ORDER AND MANNER AS BENEFICIARY MAY
ELECT, WHETHER OR NOT DUE AND PAYABLE, WITH ANY EXCESS PAID TO
TRUSTOR. BY INITIALING THIS PROVISION, TRUSTOR HEREBY ACKNOWLEDGES
AND AGREES THAT THE TERMS OF THIS PROVISION HAVE BEEN SPECIFICALLY
BARGAINED FOR AND ARE A MATERIAL INDUCEMENT FOR BENEFICIARY TO
MAKE THE LOAN AND ENTER INTO THE DDA AND THE OTHER AGREEMENTS.
TRUSTOR'S INITIALS
T~x~stor shall promptly and diligently restore the Improvements to the equivalent of their
condition immediately prior to the casualty or to such other improved condition as is necessary
to comply with the requirements of this Deed of Trust or any applicable governmental entity.
Disbursements of such insurance proceeds shall be in accordance with the disbursement
conditions of the DDA. Any proceeds held by Beneficiary upon Trustor's failure to satisfy the
conditions to disbursement within the time allowed above or those proceeds not required to
reconstruct the Improvements, shall be applied to the monetary Bridge Note Obligations in
accordance with the Bridge Note.
2.9 Condemnation and Other Awards. Trustor shall give prompt notice to
Beneficiary of the institution or threatened institution of any condemnation proceeding affecting
the Property. Trustor shall undertake such acts as shall be reasonably necessary to protect its
rights in any such proceeding and shall cause any awards or settlements to be paid over to
Beneficiary. Trustor may be the nominal party in such proceeding but Beneficiary shall be
entitled to participate in and to control such proceeding and to be represented by counsel of its
choice, and Trustor shall deliver, or cause to be delivered, to Beneficiary such instruments as
may be requested by it from time to time to permit such participation. If any parr of the Property
is taken or diminished in value, or if a consent settlement is entered, by or under threat of such
proceeding, Trustor assigns to Beneficiary any award or settlement payable to Trustor by virtue
[JWW:jww/IDOCS2_91687_2/060103/4~ 82,007] 8
of its interest in the Property to be held by Beneficiary, in trust, subject to the lien and security
interest of this Deed of Trust.
2.10 Lien Subrogation. As further security, Beneficiary shall be subrogated to all
Liens superior to this Deed of Trust, whether or not re]eased of record, to the extent paid out of
the proceeds of the loan secured by this Deed of Trust.
ARTICLE III.
LEASES AND RENTS
3.1 Covenants Reaarding Leases. Trustor shall timely perform all of its obligations
under the Leases and give prompt notice to Beneficiary of any material failure on its part to do so
al~d of any claim made by any Lessee of any such failure by Trustor.
(a) Trustor shall enforce, or secure in the name of Beneficiary the
performance of, each obligation of a Lessee or guarantor under any Lease, and Trustor shall
appear in and defend any action or proceeding arising out of the Leases. Upon request by
Beneficiary after the occulTence and during the continuance of an Event of Default, Trustor will
do so in the name and on behalf of Beneficiary but at the expense of Trustor.
(b) Trustor shall neither receive nor collect any Rents from any Lessee for a
period of more than one month in advance (whether in cash or by evidence of indebtedness), nor
pledge or otherwise encumber or assign future payments of Rents, nor waive, discount, setoff,
compromise or in any manner release or discharge any Lessee of or from any obligations under
such Lessee's Lease.
(c) Trustor shall use commercially reasonable efforts to keep the Property
fully leased. All material Leases shall be on terms and conditions acceptable to Beneficiary and,
unless otherwise approved by Beneficiary in writing, shall be on the standard lease form
approved by Beneficiary.
(d) Trustor acknowledges and agrees that, other than as approved in writing
by Beneficiary, ali Leases shall be subordinate to this Deed of Trust, as this Deed of Trust may
be amended from time to time, unless Beneficiary shall specify otherwise at any time during the
term of this Deed of Trust.
3.2 Survival. The rights and powers of Beneficiary under the assignment of rents
provided for above shall continue until expiration of the redemption period fi'om any foreclosure
sale under this Deed of Trust, whether or not any deficiency remains after a foreclosure sale.
3.3 Exculpation of Beneficiary. The acceptance by Beneficiary of the assignment of
the Rents provided for above with all of Beneficiary's rights under this Article 3 shall not, prior
to entry upon and taking possession of the Property by Beneficiary, be deemed or construed to
constitute Beneficiary a "mortgagee in possession" nor at any time obligate Beneficiary to
appear in or defend any action or proceeding relating to the Leases, the Rents or the Proper~ry, or
to take any action permitted under this Deed of Trust or to expend any money or incur any
expenses or perfo~xn or discharge any obligation under any Lease or to assume any obligation or
responsibility for any security deposits or other deposits delivered to Trustor by any Lessee and
[JWW:'iww/IDOCS 2-91687-2/060103/4182'007] 9
not assigned and delivered to Beneficiary, nor shall Beneficiary be liable for any injury or
damage to person or property sustained by any person in connection with the Property.
3.4 Waiver. Neither the collection of the Rents or their application by Beneficiary
nor the entry upon and taking possession of the Property by Beneficiary shall be deemed to cure
or waive any default or waive, modify or affect any notice of default under any of the Other
Agreements or invalidate any act done pursuant to any such notice. The enforcement of any
such right or remedy by Beneficiary, once exercised, shall continue for so long as Beneficiary
shall elect, notwithstanding that the collection and application of the Rents may have cured the
original default. If Beneficiary shall after such enforcement elect to discontinue the exercise of
any such fight or remedy, the same or any other fight or remedy under this Deed of Trust may be
reasserted at any time and from time to time following any subsequent default.
3.5 Further Assignments. Trustor agrees to give Beneficiary at any time upon
demand any further or additional form of assignment or transfer of the Rents or of the Leases, as
may be requested by Beneficiary, and to deliver to Beneficiary Tmstor's executed copies of all
Leases.
ARTICLE IV.
EVENTS OF DEFAULT; REMEDIES
4.1 Default.. Any of the following events shall constitute an "Event of Default":
(a) Trustor's failure to pay when due any installment of principal or interest
under the Bridge Note or any other Bridge Note Obligation when such failure remains uncured
within five (5) business days following the date on which such payment was due;
(b) Trustor's failure to maintain the insurance required to be maintained under
Section 2.7 above or the occurrence of any Transfer in violation of Section 9(b) of the Br/dge
Note when such failure remains uncured within ten (10) Business Days following notice from
Beneficiary of same;
(c) the failure of Trustor, within thirty (30) days following notice from
Beneficiary, to observe or perform any other nonmonetary covenant or other agreement
contained in this Deed of Trust other than those covenants and agreements set forth in
Sections 4.1(a) arid (b) or Section 5.12; provided, however, that the notice and thirty (30) day
grace period set forth above shall be applicable only to a failure to observe or perform any
covenant or other agreement which is reasonably susceptible of being cured; provided, further,
that should Trustor be unable to cure its failure within such thirty (30) day period despite
beginning to cure such failure promptly after receipt of notice and prosecuting such attempt
diligently during such thirty (30) day period, the cure period shall be extended an additional
thirty (30) days so long as (i) Trustor continues diligently to prosecute the cm'e during such
additional pefiod and (ii) such failure does not materially and adversely affect Beneficiary or its
rights under this Deed of Trust or the Other Agreements;
(d) any written representation, warranty or financial statement given by
Trustor, any affiliate of Trustor or any surety of any of Trustor's obligations shall have been
untrue in any material respect when given;
[JWW:jww/IDOCS2_91687_2/0(;0I(13/4182.007I 10
(e) an Event of Default occurs under Section 5.12;
(f) the occurrence of a default under any of the Other Agreements (except
those set forth in subsections 4.1(a), ~) and the failure of any such default to be cured
during the permitted time, if any~ for such cure set forth in the relevant Other Agreement;
(g) any of Trustor, any surety of any of Trustor's obligations or any general
partner or member of Trustor, shall be unable or shall admit in writing its inability to pay its
debts when due, or shall make a general assignment for the benefit of creditors; or any of them
shall apply for or consent to the appointment of any receiver, trustee or similar officer for such
person or for all or any substantial part of such person's property; or any of them shall institute
(by petition, application, answer, consent or otherwise) any bankruptcy, insolvency~
reorganization, arrangement, readjustment of debts, dissolution, liquidation, or similar
proceedings relating to such person under the laws of any jurisdiction;
(h) if a receiver, trustee or similar officer shall be appointed for any of
Trustor, any surety of any of Trustor's obligations or any general partner or member of Trustor,
or for all or any substantial part of any such person's property without the application or consent
of such person, and such appointment shall continue undischarged for a period of sixty (60) days
(whether or not consecutive); or any bankruptcy~ insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceedings shall be instituted (by
petition, application or other~vise) against any such person and shall remain undismissed for a
period of sixty (60) days (whether or not consecutive);
(i) the Property or all or any substantial part of the assets of Trustor, any
surety of any of Trustor's obligations or any general partner or member of Trustor, shall become
subject to attachment, execution or judicial seizure (whether by enforcement of money judgment
by writ or warrant of attachment, or by any other process), and any such attachment, execution or
other seizure remains undismissed or undischarged for a period of sixty (60) days after levy, or~
in any event, later than ten (10) days prior to the date of any proposed sale;
O) Trustor or any other person obligated shall be in default in the payment of
any indebtedness or the performance of any other obligation secured by a Lien on the Property,
and such default is declared and is not cured within the time, if any, specified for such a cure
any applicable agreement; or
(k) any of the Other Agreements, any guaranty of or surety obligation with
respect thereto~ any agreement or instrument securing any such guaranty or other suretyship
obligation shall cease to be a valid, binding and enforceable obligation of the person purported to
be bound; or the lien of this Deed of Trust, any Other Agreement or any security instrument
securing any guaranty of Trustor's obligations shall cease to be a valid and enforceable lien on
the property it purports to encumber or shall fail to have the priority represented or wan:anted by
Trustor or otherwise stated in any title insurance policy issued to Beneficiary which insures the
validity and priority of such lien; or Trustor shall assert such cessation or failure in writing.
Ali notices and cure periods described herein shall not be applicable to any event which
with the giving of notice, the passage of time or both would constitute an Event of Default, if
I JV4W'~ww/IDOCS2_91687_2/060103/4182.007] 1 1
such event has occurred as of the date on which Beneficiary commences a nonjudicial
foreclosure proceeding with respect to another Event or Events of Default. Such event shall
constitute an independent Event of Default hereunder.
4.2 Actions by Trustee or Beneficiary to Preserve Security. Upon the occurrence and
during the continuance of an Event of Default, and irrespective of whether Beneficiary elects to
accelerate the indebtedness evidenced by the Bridge Note as permitted in Section 4.3,
Beneficiary and Trustee, each in its own discretion, without obligation to do so and without
further notice to or demand upon Trustor and without releasing Trustor from any obligation, may
undertake such acts with respect to the Property as either may deem reasonably necessary to
protect Beneficiary's security under this Deed of Trust, including, without limitation, any acts
required by this Deed of Trust to be undertaken by Trustor. Without limiting their general
powers, Beneficiary and Trustee shall have the right, but not the obligation, (a) to enter upon and
take possession of the Property; (b) to make additions, alterations, repairs and improvements to
the Property which they or either of them may consider necessary or proper to keep the Property
in good condit/on and repair and/or to comply with the provisions of the DDA and the
Regulatory Agreement; (c) to appear and participate in any action or proceeding affecting or
which may affect the security of this Deed of Trust or the rights or powers of Beneficiary or
Trustee; (d) to pay, purchase, contest or compromise any Lien, claim, charge or debt which in the
judgment of either may affect or appear to affect the security of this Deed of Trust or be or
appear to be superior to the lien of this Deed of Trust; (e) pay any expenses incurred or which, in
Beneficiary's judgment, should be incurred in connection with the ownership, use and operation
of the Property, including, without limitation, Impositions, insurance premimns and charges for
utilities and maintenance; and (f) in exemising such powers, to pay necessm:y expenses and
employ necessary or desirable attorneys, experts and consultants.
4.3 Remedies. Upon the occurrence of any Event of Default, Beneficiary may do any
of the following:
(a) terminate its obligation to disburse any amounts of the Bridge Loan which
remain undisbursed;
(b) declare all monetary Bridge Note Obligations immediately due and
payable without any further presentment, demand, protest or notice of any kind;
(c) collect the Rents and either in person or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon and take possession of the Property, in its own name or in
the name of Trustee, and
(d) do any acts which it deems necessary or desirable to preserve the value,
marketability or rentability of the Property, make, modify, enfome, cancel or accept the
surrender of any Lease, increase the income from any Lease or protect the security of this Deed
of Trust and, with o1: without taking possession of the Property, sue for or otherwise collect the
Rents, including those past due and unpaid, and apply them, less costs and expenses of operation
and collection, including altorueys' and property managers' fees, to the Bridge Note Obligations
in the order set forth in the Bridge Note. The entering upon and taking possession of the
[JWW:jww/IDOCS291687 2/060103/4182,007] 12
Property, the collection of the Rents and the application of them as provided for above shall not
cum or waive any Event of Default or notice of default or invalidate any act done in response to
an Event of Default or pursuant to such notice of default and, notwithstanding the continuance in
possession of the Property or the collection, receipt and application of Rents, Trustee or
Beneficiary shall be entitled to exercise every right provided for in any of the Other Agreements
or by law upon occun'ence of any Event of Default, including the right to exercise the power of
sale provided below;
(e) commence an action to foreclose this Deed of Trust or specifically enforce
any of the covenants contained in this Deed of Trust and the Bridge Note;
(f) exercise any of the remedies available to a secured party under the UCC in
such order and in such manner as Beneficiary, in its sole discretion, may determine; provided,
however, that the expenses of retaking, holding, preparing for sale or the like as provided in the
UCC shall include reasonable attorneys' fees and other expenses of Beneficiary and Trustee and
shall be additionally secured by this Deed of Trust;
(g) deliver to Trustee a written declaration of default and demand for sale, and
a written notice of default and election to cause Trustor's interest in the Property to be sold;
(h) exerci se ail other rights and remedies provided in thi s Deed of Trust, in
any Other Agreement, or provided by law; or
(i) impose the Default Rate on all monetary Bridge Note Obligations.
Upon request of Beneficiary, Trustor shall assemble and make available to Beneficiary at the
Land any of the Prope~xy which is not located there.
4.4 Foreclosure By Power of Sale. Should Beneficiary elect to foreclose by exercise
of the power of sale provided for in this Deed of Trust, Beneficiary shall notify Trustee (the
"Foreclosure Notice") and shall deposit with Trustee this Deed of Trust and the Bridge Note
and such receipts and evidence of expenditures made and secured by this Deed of Trust as
Trustee may require.
(a) Upon receipt of the Foreclosure Notice from Beneficiary, Trustee shall
cause to be recorded, published and delivered to Trustor such notice of default and election to
sell as may then be required by law. Trustee shall, without demand on Trustor, after lapse of
such time as may then be required by law and after recordation of such notice of default and
election to sell having been given as required by law, sell the Property at the time and place of
sale fixed by it in said notice of default, either as a whole, or in separate lots or parcels or items
as Trustee shall deem expedient, and in such order as it may determine, at public auction to the
highest bidder for cash in lawful money of the United States payable at the time of sale. Trustee
shaI1 deliver to the pumhaser or purchasers its good and sufficient deed or deeds conveying the
property so sold, but without any covenant or warranty, express or implied. The recitals in such
deed of any matters or facts shall be conclusive proof of the truthfulness of such matters. Any
person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale
and Trustor covenants to warrant and defend the title of such purchaser or purchasers.
[JWW:jww/IDOCS2_91687_2/060103/~.182 007] 13
(b) After deducting all costs, fees and expenses of Trustee and of this Deed of
Trust and the Bridge Note, including without limitation costs of evidence of title and attorneys'
fees of Trustee or Beneficiary in connection with the sale, Trustee shall apply the proceeds of
sale in the order set forth in the Bridge Note until satisfaction of all amounts owing under this
Deed of Trust and the Other Agreements, with the remainder, if any, to be paid to the person or
persons legally entitled to any such amounts.
(c) Trustee may postpone the sale of ali or any portion of the Property by
public announcement at the time and place of such sale, and from time to time thereafter may
postpone such sale by public announcement at the time fixed by the preceding postponement or
subsequently noticed sale, and without further notice make such sale at the time fixed by the last
postponement, or may, in its discretion, give a new notice of sale.
(d) Trustor waives any fight which it may have to direct the order in which
any of the Property shall be sold in any sale made pursuant to the terms of this Deed of Trust.
4.5 Rescission of Notice of Default. Beneficiary, from time to time before any
Trustee' s sale as provided above, may rescind any notice of default and election to sell or notice
of sale by executing and delivering to Trustee a written notice of such rescission, which such
notice, when recorded, shall also constitute a cancellation of any prior declaration of default and
demand for sale. The exercise by Beneficiary of such fight of rescission shall not constitute a
waiver of any breach or default then existing or subsequently occurring, or impair the right of
Beneficiary to execute and deliver to Trustee, as provided above, other declarations or notices of
default and demand for sale of the Property to satisfy the monetary Bfidge Note Obligations, nor
otherwise affect any provision, covenant or condition of any Other Agreement or any of the
rights, obligations or remedies of Trustee or Beneficiary under this Deed of Trust or any such
Other Agreement.
4.6 Appointment of Receiver. If an Event of Default shall have occun'ed and be
continuing, Beneficiary, as a matter of fight and without notice to Trustor or to anyone claiming
under Trustor, and without regard to the then-value of the Property or Trustor's interest in it,
shall have the fight to apply to any court having jurisdiction to appoint a receiver of the Property,
and Trustor irrevocably consents to such appointment and waives notice of any application for
any such receiver. In addition, Beneficiary shall have the fight to appoint a receiver when
permitted under California Code of Civil Procedure Section 564, including, without limitation, in
order to enforce Beneficiary's rights under California Civil Code Section 2929.5. Any such
receiver shall have all the usual powers and duties of a receiver in like or similar cases and all the
powers and duties of Beneficiary in case of entry as provided in Section 4.2 above, and shall
continue as such and exercise all such powers until the date of confirmation of the sale of the
Property, unless such receivership is sooner terminated. Without limiting the foregoing, the
receiver shall have the right to apply Rents to cleanup, remediation or other response action
concerning the release or threatened release of Hazardous Substances, whether or not such
actions are pursuant to an order of any federal, state or local governmental agency.
4.7 Waiver of Lien.. In accordance with California Code of Civil Procedure
Section 726.5, Beneficiary may waive its lien against the Property, to the extent any pa~1 of it is
found to be environmentally impaired, and may exercise all rights and remedies of an unsecured
[JWW:jww/IDOCS2_91687 2~'060103/4182 007] 14
creditor against Trustor and all of Trustor's assets and property for the recovery of any
deficiency, including, without limitation, seeking an attachment order under California Code of
Civil Procedure Section 483.010. No such waiver shall be final or binding on Beneficiary until a
final money judgment is obtained against Trustor. As between Beneficiary and Trustor, for
purposes of Section 726.5, Trustor shall have the burden of proving that the release or threatened
release was not knowingly or negligently caused or contributed to, or knowingly or willfully
permitted or acquiesced to by Trustor or any related party (or any affiliate or agent of Trustor or
any related party) and that Trustor made written disclosure of any contamination to Beneficiary
or that Beneficiary otherwise obtained actual knowledge of such contamination prior to the
making of the Loan. Notwithstanding anything to the contrary contained in this Deed of Trust or
the Other Agreements, Trustor shall be fully and personally liable for ali judgments and awards
entered against Trustor pursuant to Section 726.5 and shall not be limited to the original principal
amount of the obligations secured by this Deed of Trust. For purposes of Section 726.5, the acts,
knowledge and notice of each "726.5 Party" shall be attributed to and be deemed to have been
performed by the party or parties then obligated on and liable for payment of the Bridge Note.
As used herein, "726.5 Party" shall mean Trustor, any successor owner to Trustor of all or any
portion of the Property, any related party of Trustor or any such successor and any affiliate or
agent of Trustor, any such successor or any such related party.
4.8 Action on Environmental Provisions. Without limiting any of the remedies
provided in the Bridge Note or the Other Agreements, Trustor agrees that any covenants agreed
by Trustor and any representations given by Trustor, or any such covenants or representations
with respect to any affiliate of Trustor or any surety of any obligations of Trustor, concerning the
presence of Hazardous Substances on the Property or the Property's, Trustor's or such affiliate's
or surety's compliance with or liability under any Environmental Law in the Other Agreements
are "environmental provisions" (as defined in California Code of Civil Procedure
Section 736(f)(2)) made by Trustor relating to the Real Property, and that Tmstor's failure to
comply with, or breach of warranty under, any such environmental provision is a breach of
contract such that Beneficiary shall have the remedies provided under Section 736 for the
recovery of damages and for the enforcement of such environmental provisions. Tmstor's
obligation to pay costs, damages or liabilities incurred by Beneficiary but not permitted to be
recovered pursuant to Section 736 shall not be secured by this Deed of Trust, irrespective of
whether such amounts are included at any time for purposes of calculating the amount
outstanding under the Bridge Note. Nothing provided in this Deed of Trust shall prevent
Beneficiary from enforcing the environmental indemnity set forth in Section [5.31 of the DDA to
recover costs, damages or liabilities not pennitted to be recovered under Section 736.
Notwithstanding any other provision of the Other Agreements, Beneficiary shall not be obligated
to apply any amounts received at any time, whether from Trustor, any surety of Tmstor' s
obligations, any purchaser of the Property at a foreclosure sale or tiny other source, to repay
costs, damages or liabilities incurred by Beneficiary which arise out of the breach of any
environmental provision and Beneficiary shall be free to apply any such amounts received so as
to maximize the amount available to be recovered under any action being maintained or to be
maintained pursuant to Section 736. Trustor waives any rights it may have, including the fights
granted under California Civil Code Section 1479, to direct the application of payments made
under the Bridge Note or this Deed of Trust.
[JW~z:J ww/IDOCS2-91687-2/060 103/4182'007] 15
4.9 Remedies Not Exclusive; Waiver. Trustee and Beneficiary shall be entitled to
enforce the payment and performance of any indebtedness or obligations secured by this Deed of
Trust and to exercise all fights and powers under this Deed of Trust or under any of the Other
Agreements or other agreement or any laws now or later in force, notwithstanding the fact that
some or all of the indebtedness and obligations secured by this Deed of Trust may now or later
be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assigmnent or otherwise.
Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or
pursuant to the power of sale or other powers, shall prejudice or in any manner affect Trustee's
or Beneficiary's right to realize upon or enforce any other secufity held by Trustee or
Beneficiary. Trustee and Beneficiary shall be entitled to enforce this Deed of Trust and any
other security held by Beneficiary or Trustee in such order and manner as they may in their
absolute discretion determine. No remedy conferred in this Deed of Trust upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other permitted remedy, but each shall
be cumulative and shall be in addition to every other remedy permitted by law, contract or
otherwise. Every power or remedy given by any of the Other Agreements to Trustee or
Beneficiary or to which either of them may be otherwise entitled, may be exercised, concurrently
or independently, from time to time and as often as may be deemed expedient by Trustee or
Beneficiary, and either of them may pursue inconsistent remedies. By exercising or by failing to
exercise any right, option or election under this Deed of Trust, Beneficiary shall not be deemed
to have waived any provision of this Deed of Trust or to have released Trustor from any of the
obligations secured by this Deed of Trust unless such waiver or release is in writing and signed
by Beneficiary. The waiver by Beneficiary of Trustor's failure to perform or observe any term,
covenant, or condition referred to or contained in this Deed of Trust to be performed or observed
by Trustor shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent failure of Trustor to perform or observe the same or any other such term, cove~ant or
condition referred to or contained in this Deed of Trust, and no custom or practice which may
develop between Trustor and Beneficiary shall be deemed a waiver of or any way affect the right
of Beneficiary to insist upon the performance by Trustor of the obligations secured by this Deed
of Trust in strict accordance with the terms of such obligations or of any of the Other
Agreements.
ARTICLE V,
MISCELLANEOUS
5.1 Successors. This Deed of Trust applies to, encumbers, and binds Trustor and its
successors and assigns.
5.2 Governing Law; Choice of Forum; Service of Process.
(a) This Deed of Trust shall be construed in accordm~ce with and be governed
by the laws of the State of California, provided that perfection issues with respect to Division 9
of the UCC may give effect to applicable choice or conflict of law rules set forth therein.
(b) Any legal action or proceeding with respect to this Deed of Trust, the
Bridge Note, or the Bridge Note Obligations must be instituted in the Superior Court of the
County of Orange, State of California, or in any other appropriate court of that county, or in the
[JWW:jww/IDOCS2 91687_2/060103/4182007] 16
Federal District Court in the Central District of California, Santa Ana branch. Trustor hereby
waives any right to object to the foregoing courts based on venue or inconvenient forum.
(c) Service of process on Beneficiary shall be made by personal service upon
the Executive Director of Beneficiary, or in such manner as may be provided by law. Service of
process on Trustor shall be made by personal service upon an officer of Trustor or in such
manner as may be provided by law, whether made within or without the State.
5.3 Permitted Contests. Trustor may contest or object in good faith to the amount or
validity of any tax, assessment, claim, demand, levy, Lien or notice of noncompliance asserted
by a third party (collectively, the "Claim"), the nonpayment or nonperformance of which would
be a default under this Deed of Trust, but only in accordance with the following conditions:
(a) Trustor shall first give written notice to Beneficiary and deposit with
Beneficiary a bond or cash satisfactory to Beneficiary in such amounts as Beneficiary shall
reasonably require, up to one hundred fifty percent (150%) of the amount of any Claim or other
sum in controversy, and, if the context of such Claim so requires, Trustor shall have provided
such additional undertaking as may be required or permitted by law to accomplish a stay of any
legal proceedings then pending in connection with any such Claim or controversy;
(b) Trustor shall promptly and diligently proceed to cause such Claim to be
settled and discharged in a manner not prejudicial to Beneficiary or its rights or security under
this Deed of Trust;
(c) if Trustor shall fail to discharge diligently any such Claim, then, in
addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be obligated
to, discharge the same, either by paying the amount claimed to be due, or by procuring the
discharge of such Claim by promptly depositing in court a bond or the amount claimed or
otherwise giving security for such Claim, or in such manner as is or may be prescribed by law;
(d) Beneficiary may employ attorneys to protect its rights, and in the event of
such employment, Trustor shall pay Beneficiary the reasonable attorneys' fees and expenses
incurred by Beneficiary, whether or not an action is actually commenced against Trustor by
reason of any default by Trustor under this Deed of Trust; and
(e) Trustor has demonstrated to Beneficiary's reasonable satisfactio~ that no
portion of the Property will be sold to satisfy any such Claim prior to final resolution of such
Claim or permitted contest.
5.4 Severabilit¥. If any provision of this Deed of Trust shall be invalid, illegal, or
unenforceable, then so long as the material bargain of the parties may be preserved, the validity,
legality, and enforceability of the remaining provisions hereof shall not in any way be affected or
impaired thereby. If the lien of this Deed of Trust is invalid or unenforceable as to any part of
the indebtedness secured by the this Deed of Trust, or if the lien is invalid or unenforceable as to
any part of the Property, the unsecured or partially secured portion of such indebtedness shall be
completely paid prior to the payment of the remaining and secured or partially secured portion of
such indebtedness, and all payments made on such indebtedness, whether voluntary or under
foreclosure or other enforcement action or procedure, shall be considered to have been first paid
[ JWW :'iww/IDOCS2-91687-2/060103/4182'O07] 17
on and applied to the full payment of that portion of such indebtedness which is not secured or
fully secured by the lien of this Deed of Trust.
5.5 Notices. Any notice, demand or request required under this Deed of Trust shall
be given in writing at the addresses set forth in the DDA, in the manner set forth in the DDA, and
if the DDA terminates prior to the payment and performance in full of all Bridge Note
Obligations and the te~Tnination of this Deed of Trust and the Bridge Note, such notice
provisions shall survive as incorporated in this Deed of Trust.
5.6 Indemnification Procedures.If Beneficiary notifies Trustor of any claim or notice
of the commencement of any action, administrative or legal proceeding or investigation as to
which Trustor's obligation to indemnify under this Deed of Trust or the Bridge Note applies,
Trustor shall assume on behalf of Beneficiary or other person to be indemnified (each, an
"Indemnitee"), and conduct with due diligence and in good faith, the investigation and defense
of, and the response to, such claim, action, proceeding or investigation, with counsel reasonably
satisfactory to the Indemnitee; provided, however, that such Indemnitee shall have the right to be
represented by advisory counsel of its own selection and at its own expense; and provided,
further, that if any such claim, action, proceeding, or investigation involves both Trustor and an
Indemnitee, and such Indemnitee shall have reasonably concluded that there may be legal
defenses available to it which are different from, additional to, or inconsistent with those
available to Trustor, then the Indemnitee shall have the right to select separate counsel to
participate in the investigation and defense of and response to such claim, action, proceeding or
investigation on its own behalf at Trustor's expense.
(b) If any claim, action, proceeding, or investigation arises as to which
Trustor's duty to indemnify under this Deed of Trust applies, and Trustor fails to assume
promptly (and in any event within ten (10) days after being notified of the claim, action,
proceeding, or investigation) the defense of an Indemnitee, then such Indemnitee may contest
and settle the claim, action, proceeding, or investigation at Trustor's expense using counsel
selected by such Indemnitee; provided, however, that after any such failure by Trustor no such
contest need be made by such Indemnitee and settlement or full payment of any claim may be
made by such indemnitee without Tmstor's consent and without releasing Trustor from any
obligations to such Indemnitee under this Deed of T~n2st.
5.7 Waiver of Remedies. No waiver of any breach, default, or failure of condition
under the terms of this Deed of Trust, the Bridge Note, or any Other Agreement or the
obligations secured thereby shall be implied from any failure of the Beneficiary to take, or any
delay by the Beneficiary in taking, action with respect to such broach, default or failure, or any
form of previous waiver of any similar or unrelated breach, default or failure; and waiver of any
term of this Deed of Trust, the Bridge Note, or any Other Agreement or any of the obligations
secured thereby must be made in writing and shall be limited to the express written terms of such
waiver. No waiver by Beneficiary on any occasion shall affect or diminish Beneficiary's fights
thereafter to require strict performance by Trustor of any provision of this Deed of Trust, the
Bridge Note and the Other Agreements.
5.8 Trustee's Powers. At any time, without liability for doing so and without notice,
upon written request of Beneficiary and presentation of the original or certified copies of this
[JW~V:jww/IDOCS2_91687 2/060~03/4182~007] 18
Deed of Trust and the Bridge Note for endorsement, and without affecting the personal liability
of any person for payment of the indebtedness secured by this Deed of Trust or the effect of this
Deed of Trust upon the remainder of the Property, Trustee may (a) reconvey any part of the
Property, (b) consent in writing to the making of any map or plat of the Property, (c) join in
granting any easement on the Property, or (d)join in any extension agreement or any agreement
subordinating the lien of this Deed of Trust.
5.9 Substitution of Trustee. Beneficiary may, from time to time, by a written
instrument executed and acknowledged by Beneficiary and recorded in the Office of the
Recorder in the County of Orange, and by otherwise complying with the provisions of California
Civil Code Section 2934a, or any successor section, substitute a successor or successors for the
Trustee.
5.10 Trust Irrevocable; No Offset. The trust created by this Deed of Trust is
irrevocable by Trustor. No offset or claim that Trustor now or may in the future have against
Beneficiary shall relieve Trustor from paying the monetary Bridge Note Obligations or any other
amounts due under this Deed of Trust any of the Other Agreements.
5.1 1 Corrections and Further Assurances. Trustor shall, upon request of Trustee and at
Trustor's sole cost, promptly correct any defect, error or omission which may be discovered in
the contents of this Deed of Trust or in/ts execution or acknowledgment, and will execute,
acknowledge and deliver such further instruments and do such further acts as may be necessary
or as may be reasonably requested by Trustee to carry out effectively the purposes of this Deed
of Trust, to subject to the lien and security interest of this Deed of Trust any of Trustor's
properties, rights or interest covered or intended to be covered by this Deed of Trust, including
without limitation the Future Acquisitions, and to pe~Tect and maintain such lien and security
interest.
5.12 Future Acquisitions. Notwithstanding anything to the contrary in this Deed of
Trust, the Bridge Note or any Other Agreement, Trustor acknowledges that certain portions of
the Property covered hereby (including the Real Property described in Exhibit "A-2") (such
Property, including such Real Property, the "Future Acquisitions") is not currently owned by
Trustor, and Trustor does not currently have a recordable interest in such Future Acquisitions.
Trustor hereby agrees that it will cause this Deed of Trust to be recorded against such Future
Acquisitions (or any portion thereof) immediately upon Trustor's acquisition thereof, and in no
event (a) more than one business day after such acquisition and (b) in any matter or timing that
results in the security interests granted hereby to be junior to any other security interests on such
Future Acquisitions, _except that any deed(s) of trust securing any loan(s) used to acquire such
Futm'e Acquisitions may be senior to this Deed of Trust, but only to the degree pe~xnitted by the
DDA. In no event shall this Deed of Trust be junior to any financing of any Future Acquisition
(or any post-purchase advances of acquisition financing thereof) except as set forth in the DDA.
A breach of any of the foregoing covenants will be an immediate Event of Default hereunder,
without any further notice or cure rights with respect thereto.
5.13 Full Reconveyance. Upon written request of Beneficiary stating that all monetary
Bridge Note Obligations have been paid and upon surrender to Trustee of this Deed of Trust and
the Bridge Note for cancellation and retention and upon payment of its fees, Trustee shall fully
[JWW:jww/iDOCS2_91687_2/060103/4182.007] 19
reconvey, without wa~anty, the entire remaining Property then s~bject to this Deed of Trust.
The recitals in such reconveyance of any matters of facts shall be conclusive proof of their
truthfulness. The grantee in such reconveyance may be described as "the person or persons
legally entitled thereto." Upon written request of Beneficiary stating that any portion of the Land
has been dedicated to the City as provided in the DDA (being the "City Dedication Pm:eels" as
defined in the DDA), Trustee shall fully reconvey, without warranty, such dedicated portion of
the Land concurrently with the acceptance of title thereto by the City~ The grantee in such
reconYeyance may be described as "the person or persons legally entitled thereto."
5.14 Performance Under Other Documents. Subject to Beneficiary's rights under
Section 2.3 above, Trustor shall faithfully perform each covenant to be performed by Trustor
under any Lien, ]ease, sublease, instrument, declaration, covenant, condition, restriction, license,
order or other agreement which affects the Property, including, without limitation, each covenant
to be performed by Trustor under any Mortgages and any and all other instruments pertaining to
such Mortgages, including the respective obligations secured thereby. A breach of or a default
under any such l~Jen or other instrument which Beneficiary reasonably believes may be prior and
superior to the lien or charge of this Deed of Trust shall, at Beneficiary's option, constitute an
Event of Default under this Deed of Trust.
5.15 Amendments. This Deed of Trust may not be changed orally, but only by an
amendment in writing signed by Trustor and the Beneficiary.
5.16 Time. As a material inducement and consideration to the Beneficiary in
providing the Bridge Loan, and but for this provision the Beneficiary would not provide the
Bridge Loan nor enter into the Other Agreements, Trustor agrees that time is of the essence in
this Bridge Note.
5.17 Brokers. Trustor represents and warrants to Beneficim'y that Trustor has not dealt
with any person who is or may be entitled to any finder's fee, brokerage commission, loan
commission, or other sum in connection with the consummation of the transactions contemplated
by this Deed of Trust and the Other Agreements, and Trustor agrees to protect, indemnify, pay
and hold harmless Beneficiary and City from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including without limitation reasonable attorneys',
consultants' and expert witnesses' fees) that Beneficiary or City may suffer or sustain if such
warranty or representation proves inaccurate in whole or in part.
5.18 Beneficiary's Advances and Costs. Subject to Section 4.8, at Beneficiary's
election, Trustor shall pay all reasonable Costs incurred by Beneficiary in connection with the
documentation, modification, workout, collection or enforcement of this Deed of Trust, the
Bridge Note or any Other Agreement (as applicable), including probate, appellate and
bankruptcy proceedings, any post-judgment proceedings to collect or enforce any judgment or
order relating to this Deed of Trust, the Bridge Note or any Other Agreement (as applicable), and
all such Costs shall be included as additional indebtedness secured hereunder bearing interest at
the Default Rate set forth in the Bridge Note until paid. In any action to foreclose the lien hereof
or othe~wvise enforce Beneficiary's rights and remedies hereunder, there shall be allowed and
included as additional indebtedness secured hereunder all Costs which may be paid or incurred
by or on behalf of Beneficiary. For the purposes hereof "Costs" means all expenditures and
[JWW:jww/IDOCS2_91687_2/060103/4182.007] 20
expenses which may be paid or incurred by or on behalf of Beneficiary including repair costs,
payments to remove or protect against Liens, attorneys' fees, receivers' fees, appraisers' fees,
engineers' fees, accountants' fees, independent consultants' fees (including environmental
consultants), all costs and expenses incurred in connection with any of the foregoing,
Beneficiary's out-of~pocket costs and expenses related to any audit or inspection of the Property,
outlays for documentary and expert evidence, stenographers' charges, stamp taxes, publication
costs, and costs (which may be estimates as to items to be expended after entry of an order or
judgment) for procuring all such abstracts of title, title searches and examination, title insurance
policies, and similar data and assurances with respect to title as Beneficiary may deem
reasonably necessary either to prosecute any action or to evidence to bidders at any sale of the
partnership interests in Trustor the true condition of the title to, or the value of, the Property.
Further, all "Costs" shall include such other costs, expenses and fees as may be incurred by
Beneficiary in the protection of the Property and the maintenance of the lien of this Deed of
Trust, including, attorneys' fees, expenses and costs in any litigation or proceeding affecting tl-fis
Deed of Trust, the Bridge Note, the Other Agreements, the Property or the Personalty, including
probate, appellate, and bankruptcy proceedings, and any post-judgment proceedings to collect or
enforce any judgment or order relating to this Deed of Trust or the Other Agreements, to obtain
any court order or the appointment of a receiver to enforce Beneficiary's rights pursuant to
Califomia Code of Civil Procedure Section 564 and/or California Civil Code Section 2929.5 or
in preparation for the commencement or defense of any action or proceeding, shall be
immediately due and payable to Beneficiary, with interest thereon at the Default Rate, and shall
be secured by this Deed of Trust. This provision is separate and several, and shall survive the
merger of this provision into any judgment.
5.19 Acceptance by Trustee.. Trustee accepts the trust created by this Deed of Trust
when it is made a public record as provided by law.
[signature page follows]
[JWW:jww/IDOCS2_91687_2/060103/4182.007] 21
1N WITNESS WHEREOF, the parties hereto have executed this Deed of Trust on the
date first set forth above.
"TRUSTOR"
KENYON DR., LLC,
a California limited liability company
By:
STATEWIDE ACQUISITION CORP.,
a California corporation
Its: Co-Managing Member
By:
Kent Hawkins
President
By:
CENTURION PARTNERS, LLC,
a California limited liability company
Its: Co-Managing Member
By:
Michael Smith
Manager
[JWW:jww/IDOCS2_91687_2/060103/4182.007]
Signature Page to Deed of Trust
EXHIBIT
Legal Description
(to be attached)
[JWW:jww/IDOCS2 91687 2/060103/4182.007]
EXHIBIT "A-2"
Legal Description
(to be attached)
[JWSV:jww/iDOCS2_91687_2/060103/4182.007]
STATE OF CAL1FORNIA
COUNTY OF LOS ANGELES
SS.
On before me .... , a Notary
Public in and for said County and State, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
be/she/they executed the same in his/her/their authorized capacity(les), and that by his/hefftheir
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
Signature of Notary
[SEAL]
[JWW:j ww/IDOCS 2_91687 2/060103/41 S2,007]
ATTACHMENT NO. 9
AGENCY LOAN PROMISSORY NOTE
AEF:d.iw/~)1680_4/06t203/4182.0071 Attachment No. 9 Page 1
PROMISSORY NOTE SECURED BY DEED OF TRUST
(Agency Loan With Future Advances)
$2,664,200~00
Tustin, California
_, 2003
FOR VALUE RECEIVED, the undersigned KENYON DR., LLC, a California limited
liability company ("Developer") promises to pay to the TUSTIN COMMUNITY
REDEVELOPiV[ENT AGENCY, a California community redevelopment agency ("Agency"), or
order, in immediately available funds, the principal sum of TWO MILLION SIX HUNDRED
SIXTY-FOUR THOUSAND TWO HUNDRED AND 00/100 DOLLARS ($2,664,200.00), or, if
less, the aggregate unpaid and outstanding principal amount of the Agency Loan (as defined
below), plus interest accruing thereon and all other monetary Agency Note Obligations (as
defined below) and interest accruing thereon, in each case at the time and upon the terms
specified below.
Recitals
A. Agency and Developer are parties to that certain Kenyon Drive Multi-Family
Residential Acquisition and Substantial Rehabilitation Project Disposition and Development
Agreement, dated as of ,2003, by and between Agency and Developer (the
"DDA")~ Capitalized terms used and not defined in this Agency Note shall have the meanings
set forth in the DDA.
B. Agency and Developer have also executed, delivered and recorded that certain
Regulatory Agreement and Declaration of Restrictive Covenants, dated as of _, 2003
(the "Regulatory Agreement").
C. On the tenns and subject to the conditions set forth in the DDA and the Other
Agreements (as defined below), Agency is to provide, among other things, a loan to Developer in
a principal amount of Two Million Six Hundred Sixty-Four Thousand Two Hundred and 00/100
Dollars ($2,664,200.00) to assist the Developer in funding the construction of the Project
Improvements and to provide Project financial assistance to the Developer (the "Agency Loan").
"Other Agreements" means each of the DDA; the Regulatory Agreement; that certain
Promissory Note Secured by Deed of Trust (Bridge Note), from Developer to Agency of even
date herewith; and that certain Deed of Trust, FJxtm'e Filing and Security Agreement (Bridge
Loan), from Developer to , as "Trustee", for the benefit of Agency, as "Beneficiary"
thereunder, of even date herewith, as each of the foregoing agreements may then be in force and
effect.
D. Agency has on the date hereof (the "Agency Note Date") provided the proceeds
of the Agency Loan to Developer.
[AEF:jww/IDOCS2 91714_21/053003/4182.007] 1
Age~cy Note
E. In exchange for Agency's provision of the Agency Loan, among other things,
Developer has granted to Agency a security interest in certain real and personal property under
that certain Deed of Trust, Fixture Filing and Security Agreement (Agency Loan With Futm'e
Advances) by Developer to , as "Trustee", in favor of Agency as "Beneficiary"
thereunder, and dated as of the date hereof (the "Deed of Trust"), as more fully set forth therein,
and Developer has agreed to pay and/or perform the Agency Note Obligations.
Agreement
1. Agreement to Repay and Perform Agency Note Obligations. In consideration of
the foregoing facts, the receipt of the Agency Loan proceeds and for other good and valuable
consideration the adequacy of which is hereby acknowledged, Developer hereby agrees to repay
the principal and accrued interest due under this Promissory Note Secured By Deed of Trust
(Agency Loan With Future Advances) (this "Agency Note"), together with all other fees and
costs as stated herein or in the Deed of Trust, and to perform each other obligation of Developer
under this Agency Note and the Deed of Trust and the Other Agreements (collectively, the
"Agency Note Obligations").
2. Interest; Accounting.
(a) Except as provided in Section 7 below, the unpaid principal balance of the
Agency ~an shall accrue interest, comrnencing on the Agency Loan Date, at the rate of six
percent 6% per annum, simple interest to be computed on the basis of actual days elapsed and a
360-day year (the '~Deferred Interest Rate").
(b) All monetary Agency Note Obligations other than those addressed by
Section 2(a) shall accrue interest at the Deferred Interest Rate from the date incurred until paid in
full in immediately available funds as set forth in Section 3 below.
(c) The proceeds of the Agency Loan are to be provided to Developer in
multiple future advances, as more fully set forth in and in accordance with Section 7 of the DDA
and Section 5.12 of the Deed of Trust. Nothing in this Agency Note shall serve to modify or
waive any of the conditions precedent to the disbursement of each such future advance as set
forth in Section 7 of the DDA. Each such future advance will be, upon disbursement to the
Developer, secured by the Deed of Trust and become part of the Agency Note Obligations
secured thereby.
(d) Agency shall record the principal amount of the Agency Loan, the
aggregate amount of accrued interest, and the aggregate amount of all other unpaid monetary
Agency Note Obligations outstanding with respect to this Agency Note fi'om time to time on a
ledger (which may be electronic) under control of Agency or its designee. Failure by Agency to
record a given entry shall not affect the obligations of Developer with respect to the Agency
Loan or the Agency Note Obligations. Developer agrees that the ledger and Agency's books and
records showing the monetary Agency Note Obligations and the transactions pursuant to this
Agency Note shall be admissible in any action or proceeding arising therefrom, and shall
constitute rebuttably presumptive proof thereof, irrespective of whether any Agency Note
Obligation is also evidenced by a promissory note or other instrument.
[AEF:jww/1DOCS2_91714_21/053003/4182.0071 2
Agency Note
3. Repayment; Terms of Payment. All amounts due and payable under this Agency
Note shall be tendered to Agency, or such other person(s) as Agency may designate, and at the
office of Agency at the address provided in the DDA, or at such other place or places as Agency
may designate to Developer in writing fi:om time to time. Any payment under this Agency Note
shall be paid in lawful currency of the United States of America and in immediately available
funds.
(a) The total unpaid principal amount and all unpai d accrued interest shall be
due and payable as a balloon payment on January 1,2011 (the "Maturity Date"), unless the
same becomes due and payable at an earlier time whether by acceleration or otherwise.
Notwithstanding the foregoing, so long as no Event of Default has occurred and is then
continuing, on the Maturity Date the principal hereunder and all interest accrued thereon shall be
deemed paid and no longer owed hereunder, and un]ess other Agency Note Obligations remain
unpaid and/or unperformed, then this Agency Note m~d the Agency Note Deed of Trust shall
terminate, as more fully set forth in the DDA and the Agency Note Deed of Trust.
(b) If any repayment date or other payment date for any monetary Agency
Note Obligation is a Saturday, Sunday or holiday on which banks in the State of California are
customarily closed (each a "Nonbanking Day"), such repayment shall be made on the next day
thereafter that is not a Nonbanking Day. Any payment received from Developer after [3:00p.m.
Pacific Time] shall be deemed made (and credited) as of the next day that is not a Nonbanking
Day.
(c) Any and all payments made by Developer shall be made free and clear of,
and without deduction or withholding for, any taxes.
(d) Agency shall apply any payment of any monetary Agency Note Obligation
(including but not limited to any prepayment under Section 4, but not including any payruent
specifically earmarked by Developer as a payment for principal or interest or any specific fee) in
the following order:
(2)
to pay any fees, indemnities, expense reimbursements or other
sums then due to Agency pursuant to this Agency Note, the Deed
of Trust or any of the Other Agreements;
(2) to pay interest due in respect of the Agency Loan;
(3) to pay or prepay principal of the Agency Loan;
(4)
to the payment of any other monetary Agency Note Obligation;
and
(5)
the excess, if any, to Developer, but only if all Agency Note
Obligations and Bridge Note Obligations (as defined in the Bridge
Note) have been paid and/or performed in full.
4. Prepayments. Developer may prepay all or part of the principal balance and
interest then accrued under this Agency Note without penalty, subject to the performance in full
[ AEF,j ww/iDOCS2_91714_2 I /O$ 3003/4182,007 } 3
Agency Note
of the Developer's obligations under the DDA, the Regulatory Agreement and each other
applicable Other Agreement.
5. Waivers.
(a) Developer agrees that (i) any extension of a required payment of this
Agency Note or any other payment due hereunder, or the release of any security under the Deed
of Trust~ shall only be made with the Agency's prior written consent, which Agency may provide
or withhold in its sole and absolute discretion, (ii) the Agency may require additional security
and/or consideration in conjunction with any such extension or release or security at Agency's
sole and absolute discretion, and (iii) any withholding of consent by the Agency in connection
with the foregoing shall in no way affect, and Agency shall in no way be liable for, the Agency
Note Obligations.
(b) No extension of time for payment of this Agency Note made by written
agreement by the Agency with any person now or hereafter liable for payment of this Agency
Note shall operate to release, discharge, modify, change, or affect the original liability of
Developer under this Agency Note or the Deed of Trust, either in whole or in pm*t.
(c) The Agency Note Obligations are absolute and Developer waives any and
all rights:
(i) to offset, deduct, or withhold any payments or charges due under
this Agency Note or the Deed of Trust for any reasons whatsoever;
(ii) of presentment, demand, protest and notices of dishonor and
protest; and
(iii) of Agency diligence in taking any action to collect any sums owing
under this Agency Note or the Deed of Trust or in proceeding against any of the
rights and interests in and to properties securing payment of this Agency Note.
(d) Developer agrees that Agency is entitled to rely on any notice or
communication which Agency believes in good faith to have been given Developer or by an
officer or other person duly authorized by Developer on Developer's behalf, and Agency shall
not incur any liability as a result of acting on any such notice or communication.
6. Indemnification; Exoneration; Costs.
(a) In addition to any amounts payable elsewhere in this Agency Note,
Developer agrees to defend, with counsel reasonably acceptable to Agency and the City,
indemnify, pay and hold harmless Agency and City from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including without limitation
reasonable attorneys', consultants' and expert witnesses' fees) which Agency or City may incur
or be subject to as a consequence, direct or indirect, of the issuance of the Agency Loan to
Developer or the use of the proceeds therefrom.
[AEF:jww/IDOCS2_91714_21/053003/4182,007] 4
Agency Note
(b) If after receipt of any payment which is applied to the payment of all or
any part of the monetary Agency Note Obligations, Agency is compelled for any reason to
sm'render such payment or proceeds to any person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, detmrnined to be void or voidable as a
preference, impenrdssible setoff, or a diversion of trust funds, or for any other reasons, then the
monetary Agency Note Obligations or part thereof intended to be satisfied shall be revived and
continued and this Agency Note and the Deed of Trust shall continue in full force as if such
payment or proceeds l~ad not bee received by Agency, and Developer shall be liable to pay
Agency, and hereby does agree to defend, with counsel reasonably acceptable to Agency and the
City, indemnify, pay and hold hatTnless Agency for the amount of such payment or proceeds
surrendered together with ail claims, demands, liabilities, damages, losses, costs, cha~:ges and
expenses (including without limitation reasonable attorneys', consultants' and expert witnesses'
fees) associated therewith. The provisions of this Section 6(b) shall be and remain effective
notwithstanding any contrary action which may have been taken by Agency in reliance on such
payment or proceeds, and any such contrary action shall be without prejudice to Agency's rights
under this Agency Note and the Deed of Trust and shall be deemed to have been conditioned
upon such payment or proceeds having become final and irrevocable.
(c) As between Developer and Agency, Developer assumes ali risks of the
acts and omissions of, or misuse of any proceeds of the Agency Loan by, Developer or its
members, employees, officers, contractors and subcontractors and their employees and officers.
No action or omission whatsoever by Agency or City shall relieve Developer of the payment
and/or performance of any of the Agency Note Obligations hereunder.
(d) Developer agrees that if any amounts due under this Agency Note are not
paid when due, Developer will pay in addition to such amounts all costs and expenses of
collection and all attorney fees and other fees and costs paid or incurred by the Agency in
connection with the collection or enforcement of this Agency Note, whether or not suit is filed,
each of which such costs will become pm-t of the monetary Agency Note Obligations.
(e) The provisions of this Section 6 shall survive the termination of this
Agency Note and the Deed of Trust.
7. Events of Default~ Deed of Trust Acceleration.
(a) The Deed of Trust provides for acceleration of the payments due under
this Agency Note upon the occurrence and during the continuance of an Event of Default (as
defined in the Deed of Trust). This Agency Note does not provide, and Developer does not
hereby receive, any additional notice and cure provisions beyond those which may be set forth in
the Deed of Trust.
(b) In furtherance of the foregoing (and not in lieu thereof), upon the
occurrence and during the continuance of any Event of Default, the unpaid balance of the then-
outstanding principal amount of this Agency Note, together with ail accrued interest thereon and
charges owing, and all other outstanding monetary Agency Note Obligations, shall, at the option
of the Agency, become immediately due and payable, and thereafter until paid shall bear interest
[ AEF:,iwwlIDOCS2_91714_21/05 3003/ 4182.007] 5
Agency Note
at the rate of ten percent (10%) per annum (the "Default Rate"), compounded monthly (or, if
lower, the maximum rate permitted by law).
(c) Upon the occurrence and during the continuance of any Event of Default,
in addition to the foregoing and without prejudice to any other rights it may otherwise have
under the laws of the State of California or under the terms of the Deed of Trust or any Other
Agreement, Agency may exercise any of the remedies set forth in or allowed by the Deed of
Trust. Each of Agency!s rights under this Agency Note and the Deed of Trust wilt be cumulative
and not exclusive of any other right or remedy which Agency may have.
8. Covenants.
(a) Legal Existence and Good Standing. Developer shall, and shall cause its
members to, maintain its legal existence and its qualification and good standing in all
jufi sdictions in which the failure to maintain such existence and qualification or good standing
could reasonably be expected to have a material adverse effect on Developer, its members, the
Agency Note Obligations or the performance of Developer's obligations under this Agency
Note, the Deed of Trust or any Other Agreement.
(b) Prohibition Against Transfer of Interest.
(1) Developer shall not sell, assign, convey, or transfer in any other
form this Agency Note or the Agency Note Obligations prior to the issuance and
recordation of the Certificate of Compliance. Upon such issuance and recordation,
Developer shall have all rights to alienate and transfer the Property set forth in the DDA,
and in conjunction therewith to sell, assign, convey or transfer this Agency Note and the
Agency Note Obligations. In addition, regardless of the recordation or non-recordation
of the Certificate of Compliance, Developer may assign its rights in this Agency Note as
part of an Ownership Transfer pursuant to a Permitted Transfer approved by the Agency
as provided in the DDA.
(2) Developer shall not grant any further pledge, encumbrance, or
mortgaging of the Property (as defined in the Deed of Trust) or any portion thereof or of
any of its interest herein or therein, except as approved by the Agency as provided in the
DDA.
(3) Agency may assign the Agency Note and Agency's rights to
performance of the Agency Note Obligations, upon notice to Developer, to any
governmental or quasi-governmental agency or body.
(c) Compliance with Law. Developer shall comply in all material respects
with all requirements of law of any governmental authority having jurisdiction over it or its
business, and all material agreements to which it is a party or by which it or its assets are bound.
(d) Covenants in the DDA. Each covenant of Developer set forth in
Article [__] and Attachment 5 of the DDA is incorporated herein as if fully set forth herein and,
if the DDA terminates prior to the payment and performance in full of all Agency Note
[AEF:jww/IDOCS2_91714_21/053003/4182.0071 6
Agency Note
Obligations and the termination of this Agency Note and the Deed of Trust, shall survive as
incorporated in this Agency Note.
9. Representations and Warranties. Each representation and warranty of Developer
set forth in Article 3 of the DDA is incorporated herein as if fully set forth herein and, if the
DDA terminates prior to the payment and performance in full of all Agency Note Obligations
and the termination of this Agency Note and the Deed of Trust, shall survive as incorporated in
this Agency Note. Each such representation and warranty will be deemed to have been re-made
as of the date of each disbursement of Agency Loan proceeds under Section 2(c) and Section 7
of the DDA.
10. Governing Law; Choice of Forum; Service of Process.
(a) This Agency Note shall be construed in accordance with and be governed
by the laws of the State of California, provided that perfection issues with respect to Division 9
of the Uniform Commercial Code of the State of California may give effect to applicable choice
or conflict of law rules set forth therein.
(b) Any legal action or proceeding with respect to this Agency Note, the Deed
of Trust, or the Agency Note Obligations must be instituted in the Superior Court of the County
of Orange, State of California, or in any other approp~5 ate court of that county, or in the Federal
District Court in the Central District of California, Santa Aha branch. Developer hereby waives
any right to object to the foregoing courts based on venue or inconvenient forum.
(c) Service of process on Agency shall be made by personal service upon the
Executive Director of Agency, or in such manner as may be provided by law. Service of process
on Developer shall be made by personal service upon an officer of Developer or in such manner
as may be provided by law, whether made within or without the State of California.
11. Severabilitx. If any provision of this Agency Note shall be invalid, illegal, or
unenforceable, then so long as the material bargain of the pa;ties may be preserved, the validity,
legality, and enforceability of the remaining provisions hereof shall not in any way be affected or
impaired thereby.
12. Time. As a material inducement and consideration to the Agency in providing the
Agency Loan, and but for this provision the Agency would not provide the Agency Loan nor
enter into the Other Agreements, Developer agrees that ime is of the essence in this Agency
Note:
13. No Waiver by the A~ency. No waiver of any breach, default, or failure of
condition under the terms of this Agency Note, the Deed of Trust or any Other Agreement or the
obligations secured thereby shall be implied from any failure of the Agency to take, or any delay
by the Agency in taking, action with respect to such breach, default or failure, or any form of
previous waiver of any similar or unrelated breach, default or failure; and waiver of any term of
this Agency Note, the Deed of Trust or any Other Agreement or any of the obligations secured
thereby must be made in writing and shall be limited to the express written terms of such waiver.
No waiver by Agency on any occasion shall affect or din'finish Agency's rights thereafter to
[AEF:jww/fDOCS2_91714_21/053003/4182,007] 7
Agency Note
require strict performance by Developer of any provision of this Agency Note, the Deed of Trust,
or any Other Agreement.
14. Amendments and Modifications. This Agency Note may not be changed orally,
but only by an amendment in writing signed by Developer and the Agency.
15. Legal Fees. ff the Agency institutes any action, suit, counterclaim, appeal, arbitration
or mediation for any relief against another party, declaratory or otherwise (collectively an
'~Actlon"), to enforce the terms hereof or to declare rights hereunder or with respect to any
inaccuracies or material omissions in connection with any of the covenants, representations or
warranties of Developer, then the prevailing party in such Action, whether by arbitration or final
judgment, shall be entitled to have and recover of and from the other party all costs and expenses
of the Action, including reasonable attorneys' fees and costs (at the prevailing party's attorneys'
then-prevailing rates as increased from time to time by the giving of advanced written notice by
such counsel to such party) incurred in bringing and prosecuting such Action and/or enforcing
any judgment, order, ruling or award (collectively, a "Decision") granted therein, all of which
shall be deemed to have accrued on the commencement of such Action and shall be pai d whether
or not such Action is prosecuted to a Decision. Any Decision entered in such Action shall
contain a specific provisio~ providing for the recovery of altorneys' fees and costs incurred in
enforcing such Decision. A court or arbitrator shall fix the amount of reasonable attorneys' fees
and costs upon the request of either party. Any judgment or order entered in any final judgment
shall contain a specific provision providing for the recovery of all costs and expenses of suit,
including reasonable attorneys' fees and expert fees and costs (collectively "Costs") incmTed in
enforcing, perfecting and executing such judgment. For the purposes of this paragraph, Costs
shall include, without limitation, in addition to Costs incurred in prosecution or defense of the
underlying action, reasonable attorneys' fees, costs, expenses and expert fees and costs incurred
in the following: (a) postjudgment motions and collection actions; (b) contempt proceedings;
(c) garnishment, levy, debtor and third party examinations; (d) discovery; (e) bankruptcy
litigation; and (f) appeals of any order or judgment. "Prevailing party" within the meaning of
this section includes, without limitation, a party who agrees to dismiss an Action in consideration
for the other party's payment of the amounts allegedly due or performance of the covenants
allegedly breached, or obtains substantially the relief sought by such party.
16. Nonrecourse. Notwithstanding anything to the contrary contained in this Agency
Note or with respect to the Agency Note Obligations, neither Developer, nor any principal,
director, officer, employee, beneficiary, shareholder, partner, member, managing member,
trustee~ agent or affiliate of Developer or any person owning, directly or indirectly, any legal or
beneficial interest in Developer, or any successors or assigns of any of the foregoing
(collectively, the "Nonrecourse Parties") shall be personally liable in any manner or to any
extent under this Agency Note or the Deed of Trust, and Agency shall not have any recourse to
any assets of a Nonrecourse Party other than the interest in the "Property" (as defined in the
Deed of Trust) and any other collateral securing this Agency Note to satisfy any liability,
judgment or claim that may be obtained or made against such Nonrecourse Party under this
Agency Note or the Deed of Trust.
[AEF:jww/iDOCS2_91714_21/053003~'4182 007J 8
Agency Note
IN WITNESS WHEREOF, Developer acting through its duly authorized representatives
has executed this Agency Note on the date first set above.
"DEVELOPER"
KENYON DR., LLC,
a California limited liability company
By: STATEWIDE ACQUISITION CORP.,
a California corporation,
its Co-Managing Member
By:
Kent Hawkins, President
Dated:
By: CENTURION PARTNERS, L.L.C.,
a California limited liability company,
its Co-Managing Member
By:
Michael Smith, Manager
[ AEF:jww /[DOCS 2_91714_21/05 3003/4182~O07] 9
Agency Note
JOINDER
~n consideration of the Agency malting the foregoing Agency Loan, STATEWIDE
ACQUISITION CORP., a California corporation, and CENTURION PARTNERS, L.L.C., a
California limited liability company~ the Co-Managing Members of Developer, jointly and
severally, agree to cause Developer to comply fully with the provisions of Sections 6 and 8 of the
Agency Note and join with Developer in the representations and warranties set forth in Section 9
of the Agency Note.
Dated: June ...... 2003
STATEWIDE ACQUISITION CORP.,
a California corporation,
its Co-Managing Member
By:
Kent Hawkins, President
Dated: June __, 2003
CENTURION PARTNERS, L.L.C.,
a California limited liability company,
its Co-Managing Member
By:
Michael Smith, Manager
[AEF:jww/IDOCS2_9171 421/053003/4182.007 J
Agency Note Joh~der to Agency
ATTACHMENT NO. 10
AGENCY LOAN DEED OF TRUST
[AEF:ct.~w/91680_4/061203/4182007] Attachment No. i0- Page 1
TUSTIN REDEVELOPMENT AGENCY OFFICIAL BUSINESS
REQUEST DOCUMENT TO BE RECORDED
AND TO BE EXEMPT FROM RECORDING
FEES PER GOVERNMENT CODE 6103 AND 27383
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City Clerk
The City of Tustin
300 Centennial Way
Tustin, California 92780
SPACE ABOVE THiS LINE FOR RECORDER'S USE
DEED OF TRUST~ FIXTURE FILING AND SECURITY AGREEMENT
(AGENCY LOAN WITH FUTURE ADVANCES)
by
I<~NYON DR. LLC,
a California limited liability company,
Trustor
to
Trustee
for the benefit of the
TUSTIN COMMUNITY REDEVELOPMENT AGENCY,
a California community redevelopment agency
Beneficiary
THIS DOCUMENT IS ALSO A FIXTURE FiLk.NG tN ACCORDANCE WITH
SECTION 9502(c) OF THE UCC
ORGANIZATIONAL NUMBER OF TRUSTOR IS:
DEED OF TRUST FIXTURE FILING AND SECURITY AGREEMENT
![AGENCY LOAN WITH FUTURE ADVANCES)
This DEED OF TRUST, FL,XTURE FILING AND SECURITY AGREEMENT
(AGENCY LOAN WITH FUTURE ADVANCES) (this "Deed of Trust") is made as of
__ __, 2003, by KENYON DR., LLC, a California limited liability company ("Trustor'), to
, a ("Trustee"), for the benefit of the
TUSTEN COMMUNITY REDEVELOP~NT AGENCY, a California community
redevelopment agency ("Beneficiary").
RECITALS
A. Beneficiary and Trustor are parties to that certain Kenyon Dhve Multi-Family
Residential Acquisition and Substantial Rehabilitation Project Disposition and Development
Agreement, dated as of ,2003, by and between Beneficiary and Trustor (the
"DDA"). Capitalized terms used and not defined in this Deed of Trust have the meaning set
forth in the Agency Note (as defined below) or, if not therein, in the DDA (as defined below).
B. Beneficiary and Tmstor have also executed, delivered and recorded that certain
Regulatory Agreement and Declaration of Restrictive Covenants, of even date herewith (the
"Regulatory Agreement"),
C. On the terms and subject to the conditions set forth in the DDA and the Other
Agreements (as defined in the Agency Note), and in reliance upon the security interests granted
under this Deed of Trust, Beneficiary is to provide, among other things, a loan to Trustor in a
total principal amount not to exceed Two Million Six Hundred Sixty-Four Thousand Two
Hundred and 00/t00 Dollars ($2,664,200.00) to be used by Trustor in funding the construction of
the Project Improvements and to provide Project financial assistance to the Trustor (the "Agency
Loan").
D. Beneficiary has on the date hereof (the "Agency Note Date") provided the
proceeds of the Agency Loan to Trustor.
NOW, THEREFORE, in consideration of the foregoing facts, the receipt of the Agency
Loan proceeds and for other good and valuable consideration the adequacy of which is hereby
acknowledged, Trustor hereby executes and delivers this Deed of Trust to Trustee for the benefit
of Beneficiary.
ARTICLE I.
GRANTS AND OBLIGATIONS SECURED
i. 1 Real Property. Trustor irrevocably grants, transfers and assigns to Trustee, in
trust, with power of sale and right of entry and possession, all of its fight, title and interest in and
to the following property (collectively, the "Real Property"), which Trustor now owns or may
acquire later:
(a) the real property more particularly described on Exhibit "A-i' (being the
"Developer-Owned Parcels" as defined in the DDA) and Exhibit "A-2" (being the "Adjacent
[JWSV:j ww/IDOCS 2_9 I740_2/060203/4182.007]
Parcels", as defined in the DDA) (collectively, the "Land"), and with respect to the Adjacent
Parcels, Trustor agrees that it will execute and permit recordation of such documents as
Beneficiary may reasonably request to memorialize the lien of this Deed of Trust against the
Adjacent Parcels upon Trustor's acquisition thereof or any portion thereof; all buildings and
other improvements located on or appurtenant to the Land and all machinery, equipment,
appliances, tooling, furniture, fixtures, goods and other articles of real and personal property,
affixed to or placed upon the Land or such buildings or other improvements (the
"Improvements");
(b) all licenses, privileges, tenements, hereditaments and appurtenances of or
to the Land or the Improvements, including, without limitation, all fights-of-way, easements, any
land lying within the right-of-way of any street, open or proposed, adjoining the Land, and all
sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Land;
(c) to the degree not specifically excluded by the description in Exhibit "A",
ail water rights, all oil and gas and other mineral rights in connection with the Land;
(d) ali claims and demands, including claims or demands with respect to the
proceeds of insurance, in effect with respect to the Land or the Improvements, and all awards
made for the taking by eminent domain, or by any proceeding of purchase in lieu of any such
taking, of all or any part of the Property (as defined below); and
(e) ail rents, issues, profits, royalties, income, rights to payment and other
benefits (collectively, the "Rents") derived from any lease, sublease, license, franchise or
concession or other agreement (collectively, the "Leases") affecting the Land or the
Improvements or their use or occupancy, all of Trustor's interest in the Leases, all guaranties of
any obligation of any lessee or other party to any Lease (each a "Lessee") and the right of
Trustor to alter, amend, modify or terminate the Leases or any of their terms.
1~2 Personal Property__. Tmstor grants a security interest to Beneficiary in, and assigns
to Beneficiary, all of the Trustor's right, title and interest in and to the following, which Trustor
now owns or may acquire later, and whether located on the Real Property or wherever located if
used or usable in connection with the use, operation or occupancy of the Real Property or the
performance of Trustor's obligations under the DDA and the Other Agreements with respect to
the Real Property (collectively, the "Personal Property" and, with the Real Property, the
"Property"):
(a) all personal property, including without limitation accounts, as-extracted
collateral, chattel paper (including tangible and electronic chattel paper), commercial tort claims,
documents, deposit accounts, equipment, fixtures, general intangibles, goods, instruments,
inventory, investment property (including both certificated and uncertificated securities, security
entitlements, secufities accounts, commodity contracts and commodity accounts), letters of
credit, letter-of-credit rights, manufactm'ed homes, payment intangibles, promissory notes,
software, supporting obligations, and proceeds (including cash and noncash proceeds) including
any proceeds of any of the foregoing, whether cash, instruments, promissory notes, contract
fights or otherwise, of the sale or other disposition of all or any part of the estate of Trustor upon
the Property;
[ JWW:jww/iDOCS 2_9 1740_2/060203/4182.007 ] 2
(b) all proceeds and claims arising on account of any damage to or taking of
the Property, including, without limitation, claims under insurance policies, and ail causes of
action and recoveries for any loss or diminution in the value of the Properiy;
(c) ail policies of insurance relating to the Property, irrespective of whether
Beneficiary requires Trustor to obtain or maintain such policies, all riders, amench,nents,
renewals, supplements or extensions of such policies; the right to assert, prosecute and settle
claims under such policies; the right to receive payments of proceeds of such policies; and all
judgments, claims, compensation, awards, settlements and proceeds of or with respect to any of
the foregoing; and
(d) all deposit accounts or related rights to receive payment from depositories
or institutions into which Trustor deposits (i) the Rents, (ii) any other income derived from the
Property, (iii) any security deposits or other monies paid to Tmstor or Trustor's property
manager whether pursuant to the terms of a Lease or otherwise, (iv) any other amounts described
in Sections 1.1 or 1.2 and any proceeds of any such amounts, or (v) amounts required by
Beneficiary to be deposited or which Trustor agrees to deposit in connection with the obligations
secured by this Deed of Trust.
1.3 UCC Security Agreement.
(a) This Deed of Trust shall constitute a security agreement pursuant to the
California Uniform Commercial Code (the "UCC") for any portion of the Property which, under
applicable law, may be subject to a security interest pursuant to the UCC (such portion of the
Property is hereinafter called the "Personalty") and Tmstor hereby grants to Beneficiary a
security interest in the Personalty.
(b) Trustor agrees to execute and deliver to Beneficiary any financing
statements, as well as extensions, renewals and amendments thereof, and reproductions of this
Deed of Trust in such form as Beneficiary may requh'e to perfect and maintain a security interest
with respect to the Personalty. Trustor hereby authorizes and empowers Beneficiary and
irrevocably appoints Beneficiary its agent and attorney-in-fact to execute and file, on Trustor's
behalf, all financing statements and refilings and continuations thereof as Beneficiary deems
necessary or advisable to create, preserve and protect such lien. Trustor shall pay all costs of
filing such financing statements and any extensions, renewals, amendments and releases thereof,
and shall pay all reasonable costs and expenses of any record searches for financing statements
as Beneficiary may reasonably require.
(c) Trustor shall not, without the prior written consent of Beneficiary, sell,
assign, transfer, encumber, remove or permit to be removed from the Real Property any of the
Personalty except (i) in the ordinary course of business and (ii) in accordance with the DDA or
the Other Agreements. Any replacement or substituted Personalty shall be subject to the security
interest granted herein.
(d) Upon the occurrence of an Event of Default, Beneficiary, pursuant to the
appropriate provisions of the UCC and in addition to the rights set forth in Article 4_. below, shall
have an option to proceed with respect to both the Real Property and the Personalty in
[ J WW:j ww/IDOCS 2_91740_2/060203/4182.0071 3
accordance with its rights, powers and remedies with respect to such Real Property, in which
event the default provisions of the UCC shall not apply. Such option shall be revocable by
Beneficiary as to ail or any portion of the Personalty at any time prior to the sale of the
remainder of the Real Property~ In such event Beneficiary shall designate Trustee to conduct the
sale of the Personalty in combination with the sale of the remainder of the Property. Should
Beneficiary elect to sell the Personalty or any part thereof which is real property or which
Beneficiary has elected to treat as real property or which may be sold together with the real
property as provided above, Beneficiary or Trustee shall give such notice of default and election
to sell as may then be required by law. If Beneficiary shall elect to proceed with respect to any
portion of the Personalty separately from such real property, Trustor hereby agrees that five (5)
days notice of the sale of the Personalty shall be reasonable notice. The reasonable expenses of
retaking, holding, preparing for sale, selling and the like incurred by Trustor shall include, but
not be limited to, reasonable attorneys' fees, costs and expenses, and other expenses incurred by
Trustee and/or Beneficiary.
1.4 Fixtnre Filing. The personal property in which Beneficiary has a security interest
includes goods which are or shall become fixtures on the Land or Improvements. This Deed of
Trust is intended to serve as a fixture filing pursuant to the terms of Sections 9334 and 9502 of
the UCC. This filing shall remain in effect as a fixture filing until this Deed of Trust is released
or satisfied of record or its effectiveness otherwise terminates as to the Property. In that regard,
the following information is provided:
Name of Debtor:
Organizational Number of Debtor:
Address of Debtor:
Name of Secured Party:
Address of Secured Party:
Kenyon Dr., LLC
See Section __ of the DDA
Tustin Community Redevelopment Agency
See Section __ of the DDA
1.5 Obligations Secured. The grants, transfers, assignments and security interests
made and granted in Sections 1.i, 1.2, 1.3, and 1.4 are for the purpose of securing, in such order
of priority as Beneficiary may determine:
(a) the payment of all amounts owing under the Agency Note of even date
herewith, including but not limited to the payment and/or performance of the Agency Note
Obligations, together with interest thereon at the Deferred Interest Rate or the Default Rate (as
each is defined in the Agency Note);
(b) performance of and compliance with ail of the terms and conditions of
each agreement of Trustor contained in this Deed of Trust and any modifications or substitutions
of this Deed of Trust or any Other Agreement; and
(c) the payment of such additional sums and the performance of all other
obligations now or later owing fi'om Trustor to Beneficiary, whether otherwise secured or not,
payable to or otherwise acquired by Beneficiary, when the instrument evidencing such obligation
recites that it is intended to be secured by this Deed of Trust.
[JW~V:j ww/IDOCS 2_91740 2/060203/4182.007] 4
ARTICLE II.
TRUSTOR'S COVENANTS
2.1 Condition of Property. Tmstor shall maintain mud preserve the Property in
accordance with the DDA and the Other Agreements, and shall not commit or pem~it any waste
to or deterioration of the Property. Tmstor shall undertake all acts reasonably necessary to
protect and preserve Beneficiary's security under this Deed of Trust.
2.2 Alteration of Improvements. Trustor shall not remove, demolish or structurally
alter any Improvement or permit or suffer the same to be done, except such alterations as may be
required by laws, ordinances, rules, regulations or orders of governmental authorities or by the
terms of any of the Other Agreements. Trnstor shall complete promptly and in a good and
workmanlike manner any Improvement which may be constructed on the Propelly and promptly
restore in like manner any Improvement which may be damaged or destroyed by any cause
whatsoever.
2.3 Compliance With Laws. Tmstor shall comply in all material respects with all
requirements of law of any governmental authority having jurisdiction over it or its business, and
all material agreements to which it is a party or by which it or its assets are bound.
2.4 Liens. Except as provided below, Trustor shall not suffer any Liens to attach to
the Property, and shall promptly pay and promptly discharge, at Trustor's sole cost and expense,
all Liens affecting the Property, except (a) those items shown on Schedule B of the policy of title
insurance of this date issued to Beneficiary insuring the enforceability and priority of this Deed
of Trust and taxes and assessments not delinquent (as such policy may be modified by date-down
or other endorsements requested by Agency from time to time in accordance with Article 7 of the
DDA) and (b) Permitted Mortgages constituting Senior Obligations. The existence of any
mechanic's, laborer's, matefialman's, supplier's, vendor's or statutory Lien or right to any such
Lien shall not constitute a violation of this Section 2.4 if payment is not yet due under the
contract, obligation, or statute which is the foundation of such lien or if Tmstor is contesting in
good faith the validity of any such Lien pursuant to Section 5.3.
2.5 Indemnity and Reimbursement. Trustor hereby agrees to defend, with counsel
reasonably acceptable to Beneficiary and the City, indemnify and hold harmless Beneficim:y and
City from all claims, demands, liabilities, damages, losses, costs, cha~:ges and expenses
(including without limitation reasonable attorneys', consultants' and expert witnesses' fees)
arising out of Beneficiary's interest under this Deed of Trust or in connection with the Property
and shall appear in and defend any action or proceeding which purports to affect Beneficiary's
interests relative to the Agency Loan or the fights, powers and duties of Trustee. In addition,
Trustor shall pay upon demand, after expenditure, ali sums expended for expenses paid or
incurred by Trustee or Beneficiary pursuant to any of the tenrts of this Deed of Trust or in any
action or proceeding in which Beneficiary or Trustee may appear or be made a party, whether or
not pursued to final judgment, and in any exercise of any of the rights or remedies granted to
Beneficiary by this Deed of Trust, or any of the Other Agreements, whether or not any such right
or remedy is exercised to completion. In addition, Trustor shall pay upon demand the ordinary
and reasonable fees of Trustee in connection with any such action or proceeding,
[JWW:jww/IDOCS2_91740_2/060203/4182.0071 5
2.6 Taxes and Impositions.
(a) Trustor shall pay, prior to delinquency, all real and personal property taxes
and assessments and ali other taxes and assessments of any kind, including, without limitation,
nongovernmental levies or assessments such as maintenance charges, owner association dues or
charges and levies or charges msulting from covenants, conditions and restrictions affecting the
Property, which are assessed or imposed upon the Property, or become due and payable, and
which create or may create a Lien upon any part of the Property (all such taxes, assessments and
other charges are referred to in this Deed of Trust as "Impositions").
(b) If at any time after the date of this Deed of Trust there shall be a licm~se
fee, tax or assessment imposed on Beneficiary and measured by or based in whole or in part
upon the amount of the outstanding obligations secured by this Deed of Trust, then all such
taxes, assessments or fees shall be deemed to be included within the term "Impositions" as
defined in subsection 2.6(a) above, and Trustor shall pay and discharge such amounts upon
Beneficiary's demand accompanied by a statement showing the calculation of the tax,
assessment or fee. Anything to the contrary in this Deed of Trust notwithstanding, Trustor shall
have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax
levied on Beneficiary.
(c) Upon Beneficiary's request, Trustor shall furnish Beneficiary with official
receipts of the appropriate taxing authority, or other proof satisfactory to Beneficiary, evidencing
payment of the Impositions.
(d) Upon the occurrence of an Event of Default or any event which with the
giving of notice, the lapse of time, or botln, would become an Event of Default, Beneficiary may
require that Trustor deposit with Beneficiary an initial cash reserve in an amount equal to one-
half of all Impositions for the ensuing tax year and shall thereafter continue to deposit with
Beneficiary, in monthly installments, an amount equal to one-twelfth of the estimated aggregate
annual Impositions. In such event, Trustor shall cause all bills, statements or other documents
relating to Impositions to be sent or mailed directly to Beneficiary. Upon receipt of such bills or
statements, and providing Trustor has deposited sufficient funds with Beneficiary pursuant to
this Section 2._6, Beneficiary shall pay such amounts as may be due under such bills or statements
out of the funds so deposited with Beneficiary. If at any time and for any reason the funds
deposited with Beneficiary are or will be insufficient to pay such amounts as may then or
subsequently be due, Beneficiary shall notify Trustor and Trustor shall promptly deposit an
amount equal to such deficiency with Beneficiary. Notwithstanding the foregoing, nothing in
this Deed of Trust shall cause Beneficiary to be deemed a trustee of such funds or to be obligated
to pay any amounts in excess of the amount of funds deposited with Beneficiary pursuant to this
Section. Beneficiary may commingle such reserve with its own funds and Trustor shall not be
entitled to interest on any amounts so held. Upon the occurrence of an Event of Default,
Beneficiary may apply any amounts held to any obligation secured by this Deed of Trust in any
order that Beneficiary may determine or may hold any such amounts as security for any such
obligation and shall have no obligation to apply such amounts to any particular obligation,
including, without limitation, to the payment of Impositions.
[JWW:j ww/DOCS 2_91740_2/060203/4182,007] 6
2.7 Insurance~ The insurance provisions of Article __ of the DDA are incorporated
herein as if fully set forth herein, and, if the DDA terminates prior to the payment and
performance in full of all Agency Note Obligations and the termination of this Deed of Trust,
shall survive as incorporated in this Deed of Trust.
Upon the occurrence of an Event of Default or any event which with the giving of
notice, the lapse of time, or both, would become an Event of Default, Beneficiary may require
that Trustor deposit with Beneficiary an initial cash reserve in an amount equal to the estimated
aggregate annual insurance premiums on all policies required by this Deed of Trust and
thereafter continue to deposit with Beneficiary, in monthly installments, an amount equal to one-
twelfth of the estimated aggregate annual insurance premiums on all policies of insurance
required by this Deed of Trust. In such event, Trustor shall cause all bills, statements or other
documents relating to such insurance premiums to be sent or mailed directly to Beneficiary.
Upon receipt of such bills or statements, and providing Trustor has deposited sufficient funds
with Beneficiary pursuant to this Section 2.7, Beneficiary shall pay such amounts as may be due
under such bills or statements out of the funds so deposited with Beneficiary. If at any time and
for any reason the funds deposited with Beneficiary are or will be insufficient to pay such
amounts as may then or subsequently be due, Beneficiary shall notify Trustor and Trustor shall
promptly deposit an amount equal to such deficiency with Beneficiary. Notwithstanding the
foregoing, nothing contained in this Deed of Trust shall cause Beneficiary to be deemed a trustee
of such funds or to be obligated to pay any amounts in excess of the amount of funds deposited
with Beneficiary pursuant to this Section 2~7. Beneficiary may commingle such reserve with its
own funds and Trustor shall not be entitled to interest on any amounts so held.
2.8 Casualties; Insurance Proceeds. Trustor shall give prompt written notice to
Beneficiary of any casualty to the Property resulting in damage in an amount greater than
$25,000, whether or not such casualty is covered by insurance. In the event of such casualty, all
proceeds of insurance shall be payable to Beneficiary and Trustor authorizes and empowers
Beneficiary, at Beneficiary's option and in Beneficiary's reasonable discretion as attorney-in-fact
for Trustor, to make proof of loss, to adjust and compromise any claim under insurance policies,
to appear in and prosecute any action arising from such insurance policies, to collect and receive
insurance proceeds, and to deduct from such proceeds Beneficiary's expenses incrusted in their
collection. In the event of any damage to or destruction of the Improvements, so long as no
Event of Default has occurred and is continuing or no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both, would become an Event of
Default, Beneficiary shall hold the balance of such proceeds to be used to reimburse Trustor for
the costs of reconstruction of the Improvements if ail of the following conditions are satisfied
within sixty (60) days from the date of the damage or destruction:
(a) In Beneficiary's reasonable judgment, such insurance proceeds are
sufficient to pay all costs of reconstruction of the Improvements, including make the payments
required under the Agency Note and the Other Agreements; or if such proceeds are not
sufficient, Trustor deposits additional funds with Beneficiary sufficient to pay such additional
costs of reconstructing the Improvements;
(b) Beneficiary reasonably determines that the damage or destruction can be
repaired or restored and the Property as repaired or restored will comply with all applicable laws;
[JWW:jww/IDOCS2_91740 2/060203/4182.007] 7
(c) Beneficiary has received and approved (i) a budget of all costs of repair or
restoration and (ii) a construction schedule for such repair or restoration; and
(d) Beneficiary has determined that the work of reconstruction will be in
accordance with the DDA and the Regulatory Agreement.
TRUSTOR HEREBY ACKNOWLEDGES AND AGREES THAT IT IS
AWARE OF AND UNDERSTANDS SCHOOLCRAFT V. ROSS (81 CAL. APP. 3D 75
(1981)) AND ITS PROGENY AS WELL AS CALIFORNIA CIVIL CODE SECTION 2924.7
AND FINANCIAL CODE SECTIONS 122T3 AND 7462, WHICH PERMIT BENEFICIARY
TO REQUIRE INSURANCE BUT OBLIGATE BENEFICIARY TO ALLOW TRUSTOR TO
USE CASUALTY INSURANCE PROCEEDS FOR THE PURPOSE OF REPAIRING OR
RESTORING THE REAL PROPERTY PLEDGED AS SECURITY FOR THE TRUSTOR'S
OBLIGATIONS TO BENEFICIARY UNLESS BENEFICIARY'S SECURFI'Y HAS BEEN
IMPAIRED. TRUSTOR HEREBY ACKNOWLEDGES AND AGREES THAT, IN THE
EVENT OF A CASUALTY TO THE PROPERTY, IF TRUSTOR FAILS TO REPAIR OR
RESTORE THE PROPERTY IN A MANNER CONSISTENT WITH SECTIONS 2.8(a)-(d),
SUCH FAILURE IS AND SHALL BE DEEMED A SUBSTANTIAL IMPAIRMENT OF THE
PROPERTY ENTiTLING BENEFICIARY TO APPLY THE NET INSURANCE PROCEEDS
TO THE INDEBTEDNESS IN SUCH ORDER AND MANNER AS BENEFICIARY MAY
ELECT, WHETHER OR NOT DUE AND PAYABLE, WITH ANY EXCESS PAD TO
TRUSTOR. BY INITIALING THIS PROVISION, TRUSTOR HEREBY ACKNOWLEDGES
AND AGREES THAT THE TERMS OF THIS PROVISION HAVE BEEN SPECIFICALLY
BARGAINED FOR AND ARE A MATERIAL INDUCEMENT FOR BENEFICIARY TO
MAKE THE LOAN AND ENTER INTO THE DDA AND THE OTHER AGREEMENTS.
TRUSTOR' S INITIALS
Trustor shall promptly and diligently restore the Improvements to the equivalent of their
condition immediately prior to the casualty or to such other improved condition as is necessary
to comply with the requirements of this Deed of Trust or any applicable governmental entity.
Disbursements of such insurance proceeds shall be in accordance with the disbursement
conditions of the DDA. Any proceeds held by Beneficiary upon Trustor's failure to satisfy the
conditions to disbursement within the time allowed above or those proceeds not required to
reconstruct the Improvements, shall be applied to the monetary Agency Note Obligations in
accordance with the Agency Note.
2.9 Condemnation and Other Awards. 'Trustor shall give prompt notice to
Beneficiary of the institution or threatened institution of m~y condemnation proceeding affecting
the Property. Trustor shall undertake such acts as shall be reasonably necessary to protect its
rights in any such proceeding and shall cause any awards or settlements to be paid over to
Beneficiary. Trustor may be the nominal party in such proceeding but Beneficiary shall be
entitled to participate in and to control such proceeding and to be represented by counsel of its
choice, and Trustor shall deliver, or cause to be delivered, to Beneficiary such instruments as
may be requested by it from time to time to permit such participation. If any part of the Property
is taken or diminished in value, or if a consent settlement is entered, by or under threat of such
proceeding, Trustor assigns to Beneficiary any award or settlement payable to Trustor by virtue
[JWW:j ww/LDOCS2_91740_2/060203/4182.007] 8
of its interest in the Property to be held by Beneficiary, in trust, subject to the lien and security
interest of this Deed of Trust.
2.10 Lien Subroaation. As further security, Beneficiary shall be subrogated to all
Liens superior to this Deed of Trust, whether or not released of record, to the extent paid out of
the proceeds of the loan secured by this Deed of Trust.
ARTICLE III.
LEASES AND RENTS
3.1 Covenants Re~arding Leases. Trustor shall timely perform all of its obligations
under the Leases and give prompt notice to Beneficiary of any material failure on its part to do so
and of any claim made by any Lessee of any such failure by Tmstor.
(a) Trustor shall enforce, or secure in the name of Beneficiary the
performance of, each obligation of a Lessee or guarantor under any Lease, and Tmstor shall
appear in and defend any action or proceeding arising out of the Leases. Upon request by
Beneficiary after the occurrence and during the continuance of an Event of Default, Trustor will
do so in the name and on behalf of Beneficiary but at the expense of Trustor.
(b) Trustor shall neither receive nor collect any Rents from any Lessee for a
period of more than one month in advance (whether in cash or by evidence of indebtedness), nor
pledge or otherwise encumber or assign future payments of Rents, nor waive, discount, setoff,
compromise or in any manner release or discharge any Lessee of or from any obligations under
such Lessee's Lease.
(c) Trustor shall use commercially reasonable efforts to keep the Property
fully leased. All material Leases shall be on terms and conditions acceptable to Beneficiary and,
unless otherwise approved by Beneficiary in writing, shall be on the standard lease form
approved by Beneficiary.
(d) Trustor acknowledges and agrees that, other than as approved in wr/ting
by Beneficiary, all Leases shall be subordinate to this Deed of Trust, as this Deed of Trust may
be amended from time to time, unless Beneficim'y shall specify otherwise at any time during the
term of this Deed of Trust.
3.2 Survival. The rights and powers of Beneficiary under the assignment of rents
provided for above shall continue until expiration of the redemption period from any foreclosure
sale under this Deed of Trust, whether or not any deficiency remains after a foreclosure sale.
3.3 Exculpation of Beneficiary. The acceptance by Beneficiary of the assignment of
the Rents provided for above with all of Beneficiary's rights under this Article 3 shall not, prior
to entry upon and taking possession of the Property by Beneficiary, be deemed or construed to
constitute Beneficiary a "mortgagee in possession" nor at any time obligate Beneficiary to
appear in or defend any action or proceeding relating to the Leases, the Rents or the Property, or
to take any action permitted under this Deed of Trust or to expend any money or incur any
expenses or perform or discharge any obligation under any Lease or to assume any obligation or
responsibility for any security deposits or other deposits delivered to Trustor by any Lessee and
[ JWW:j ww/l])OC s 2_91740_2/060203/4182.007] 9
not assigned and delivered to Beneficiary, nor shall Beneficiary be liable for any injury or
damage to person or property sustained by any person in connection with the Property.
3.4 Waiver. Neither the collection of the Rents or their application by Benefici ary
nor the entry upon and taking possession of the Property by Beneficiary shall be deemed to cure
or waive any default or waive, modify or affect any notice of default under any of the Other
Agreements or invalidate any act done pursuant to any such notice. The enforcement of any
such right or remedy by Beneficiary, once exercised, shall continue for so long as Beneficiary
shall elect, notwithstanding that the collection and application of the Rents may have cured the
original default. If Beneficiary shall after such enforcement elect to discontinue the exercise of
any such right or remedy, the same or any other right or remedy under this Deed of Trust may be
reasserted at any time and from time to time following any subsequent default.
3.5 Further Assignments. Trustor agrees to give Beneficiary at any time upon
demand any further or additional form of assignment or transfer of the Rents or of the Leases, as
may be requested by Beneficiary, and to deliver to Beneficiary Trustor's executed copies of all
Leases.
4.1
ARTICLE IV.
EVENTS OF DEFAULT; REMEDIES
Default. Any of the following events shall constitute an "Event of Default":
(a) Trustor's failure to pay when due any installment of principal or interest
under the Agency Note or any other Agency Note Obligation when such failure remains uncured
within five (5) business days following the date on which such payment was due;
(b) Trustor's failure to maintain the insurance required to be maintained under
Section 2.7 above or the occurrence of any Transfer in violation of Section 9(b) of the Agency
Note when such failure remains uncured within ten (10) Business Days following notice from
Beneficiary of same;
(c) the failure of Trustor, within thirty (30) days following notice from
Beneficiary, to observe or perform any other nonmonetary covenant or other agreement
contained in this Deed of Trust other than those covenants and agreements set forth in
Sections 4.1(a) and (b) or Section 5.12; provided, however, that the notice and thirty (30) day
grace period set forth above shall be applicable only to a failure to observe or perform any
covenant or other agreement which is reasonably susceptible of being cured; provided, further,
that should Trustor be unable to cure its failure within such thirty (30) day period despite
beginning to cure such failure promptly after receipt of notice and prosecuting such attempt
diligently during such thirty (30) day period, the cure period shall be extended an additional
thirty (30) days so long as (i) Trustor continues diligently to prosecute the cure during such
additional period and (ii) such failure does not materially and adversely affect Beneficiary or its
fights under this Deed of Trust or the Other Agreements;
(d) any written representation, wan'anty or financial statement given by
Trustor, any affiliate of Trustor or any surety of any of Trustor's obligations shall have been
untrue in any material respect when given;
[JYVW:j ww/tDOCS2_91740_2/060203/4182.007] 10
(e) an Event of Default occurs under Section 5.12,;
(f) the occurrence of a default under any of the Other Agreements (except
those set forth in subsections 4.1(a), (b), (c) or (d)) and the failure of any such default to be cured
during the permitted time, if any, for such cure set forth in the relevant Other Agreement;
(g) any of Trustor, any surety of any of Trustor's obligations or any general
partner or member of Trustor, shall be unable or shall admit in writing its inability to pay its
debts when due, or shall make a general assignment for the benefit of creditors; or any of them
shall apply for or consent to the appointment of any receiver, trustee or similar officer for such
person or for all or any substantial part of such person's property; or any of them shall institute
(by petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, m'rangement, readjustment of debts, dissolution, liquidation, or similar
proceedings relating to such person under the laws of anyjurisdiction;
(h) if a receiver, trustee or similar officer shall be appointed for any of
Trustor, any surety of any of Trustor's obligations or any general partner or member of Trustor,
or for all or any substantial part of any such person's property without the application or consent
of such person, al~d such appointment shall continue undischarged for a period of sixty (60) days
(whether or not consecutive); or any bankruptcy, insolvency, reorganization, an'angement,
readjustment of debt, dissolution, liquidation or similar proceedings shall be instituted (by
petition, application or otherwise) against any such person and shall remain undismissed for a
period of sixty (60) days (whether or not consecutive);
(i) the Property or all or any substantial part of the assets of Trustor, any
surety of any of Trustor's obligations or any general partner or member of Trustor, shall become
subject to attachment, execution or judicial seizure (whether by enfomement of money judgment,
by writ or warrant of attachment, or by any other process), and any such attachment, execution or
other seizure remains undismissed or undischarged for a period of sixty (60) days after levy, or,
in any event, later than ten (10) days prior to the date of any proposed sale;
(j) Trustor or any other person obligated shall be in default in the payment of
any indebtedness or the performance of any other obligation secured by a Lien on the Property,
and such default is declared and is not cured within the time, if any, specified for such a cure in
any applicable agreement; or
(k) any of the Other Agreements, any guaranty of or surety obligation with
respect thereto, any agreement or instrument securing any such guaranty or other suretyship
obligation shall cease to be a valid, binding and enforceable obligation of the person purported to
be bound; or the lien of this Deed of Trust, any Other Agreement or any security instrument
securing any guaranty of Trustor's obligations shall cease to be a valid and enforceable lien on
the property it purports to encumber or shall fail to have the priority represented or warranted by
Trustor or otherwise stated in any title insurance policy issued to Beneficiary which insures the
validity and priority of such lien; or Trustor shall assert such cessation or failure in writing.
All notices and cure periods described herein shall not be applicable to any event which
with the giving of notice, the passage of time or both would constitute an Event of Default, if
[JWW :j ww/IDOCS 2_91740_2/060203/4182,007]
such event has occurred as of the date on which Beneficiary commences a nonjudicial
foreclosure proceeding with respect to another Event or Events of Default. Such event shall
constitute an independent Event of Default hereunder.
4.2 .Actions bl/Trustee or Beneficiary to Preserve Security. Upon the occurrence and
during the continuance of an Event of Default, and irrespective of whether Beneficiary elects to
accelerate the indebtedness evidenced by the Agency Note as permitted in Section 4.3,
Beneficiary and Trustee, each in its own discretion, without obligation to do so and without
further notice to or demand upon Trustor and without releasing Trustor from any obligation, may
undertake such acts with respect to the Property as either may deem reasonably necessary to
protect Beneficiary's security under this Deed of Trust, including, without limitation, any acts
required by this Deed of Trust to be undertaken by Trustor. Without limiting their general
powers, Beneficiary and Trustee shall have the right, but not the obligation, (a) to enter upon and
take possession of the Property; (b) to make additions, alterations, repairs and improvements to
the Property which they or either of them may consider necessary or proper to keep the Property
in good condition and repair and/or to comply with the provisions of the DDA and the
Regulatory Agreement; (c) to appear and participate in any action or proceeding affecting or
which may affect the security of this Deed of Trust or the rights or powers of Beneficiary or
Trustee; (d) to pay, purchase, contest or compromise any Lien, claim, charge or debt which in the
judgment of either may affect or appear to affect the security of this Deed of Trust or be or
appear to be superior to the lien of this Deed of Trust; (e) pay any expenses incurred or which, in
Beneficiary' s judgment, should be incurred in connection with the ownership, use and operation
of the Property, including, without limitation, Impositions, insurance premiums and charges for
utilities and maintenance; and (f) in exercising such powers, to pay necessary expenses and
employ necessary or desirable attorneys, experts and consultants.
4.3 Remedies. Upon the occun'ence of any Event of Default, Beneficiary may do any
of the following:
(a) terminate its obligation to disburse any amounts of the Agency Loan
which remain undisbursed;
(b) declare all monetary Agency Note Obligations immediately due and
payable without any further presentment, demand, protest or notice of any kind;
(c) collect the Rents and either in person or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon and take possession of the Property, in/ts own name or in
the name of Trustee, and
(d) do any acts which it deems necessary or desirable to preserve the value,
marketability or rentability of the Property, make, modify, enforce, cancel or accept the
smx'ender of any Lease, increase the income from any Lease or protect the security of this Deed
of Trust and, with or without taking possession of the Property, sue for or otherwise collect the
Rents, including those past due and unpaid, and apply them, less costs and expenses of operation
and collection, including attorneys' and property managers' fees, to the Agency Note Obligations
in the order set forth in the Agency Note. The entering upon and taking possession of the
[JWW:jwwlIDOCS2_91740_?./060203/4182.007] 12
Property, the collection of the Rents and the application of them as provided for above shall not
cure or waive any Event of Default or notice of default or invalidate any act done in response to
an Event of Default or pursuant to such notice of default and, notwithstanding the continuance in
possession of the Property or the collection, receipt and application of Rents, Trustee or
Beneficiary shall be entitled to exercise every right provided for in any of the Other Agreements
or by law upon occurrence of any Event of Default, including the right to exercise the power of
sale provided below;
(e) commence an action to foreclose this Deed of Trust or specifically enforce
any of the covenants contained in this Deed of Trust and the Agency Note;
(f) exercise any of the remedies available to a secured party under the UCC in
such order and in such manner as Beneficiary, in its sole discretion, may determine; provided,
however, that the expenses of retaking, holding, preparing for sale or the like as provided in the
UCC shall include reasonable attorneys' fees and other expenses of Beneficiary and Trustee and
shall be additionally secured by this Deed of Trust;
(g) deliver to Trustee a written declaration of default and demand for sale, and
a written notice of default and election to cause Trustor's interest in the Property to be sold;
(h) exercise all other rights and remedies provided in this Deed of Trust, in
any Other Agreement, or provided by law; or
(i) impose the Default Rate on all monetary Agency Note Obligations.
'Upon request of Beneficiary, Trustor shall assemble and make available to Beneficiary at the
Land any of the Property which is not located there.
4.4 Foreclosure By Power of Sale. Should Beneficiary elect to foreclose by exercise
of the power of sale provided for in this Deed of Trust, Beneficiary shall notify Trustee (the
"Foreclosure Notice") and shall deposit with Trustee this Deed of Trust and the Agency Note
and such receipts and evidence of expenditures made and secured by this Deed of Trust as
Trustee may require.
(a) Upon receipt of the Foreclosure Notice from Beneficiary, Trustee shall
cause to be recorded, published and delivered to Trustor such notice of default and election to
sell as may then be required by law. Trustee shall, without demand on Trustor, after lapse of
such time as may then be required by law and after recordation of such notice of default and
election to sell having been given as required by law, sell the Property at the time and place of
sale fixed by it in said notice of default, either as a whole, or in separate lots or parcels or items
as Trustee shall deem expedient, and in such order as it may determine, at public auction to the
highest bidder for cash in lawful money of the United States payable at the time of sale. Trustee
shall deliver to the purchaser or purchasers its good and sufficient deed or deeds conveying the
property so sold, but without any covenant or warranty, express or implied. The recitals in such
deed of any matters or facts shall be conclusive proof of the truthfulness of such matters. Any
person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale
and Trustor covenants to warrant and defend the title of such purchaser or purchasers.
[JWW:jww/IDOCS2_91740_2/060203/4182,007] 13
(b) After deducting ali costs, fees and expenses of Trustee and of this Deed of
Trust and the Agency Note, including without limitation costs of evidence of title and attorneys'
fees of Trustee or Beneficiary in connection with the sale, Trustee shall apply the proceeds of
sale in the order set forth in the Agency Note until satisfaction of all amounts owing under this
Deed of Trust and the Other Agreements, with the remainder, if any, to be paid to the person or
persons legally entitled to any such amounts.
(c) Trustee may postpone the sale of all or any portion of the Property by
public announcement at the time and place of such sale, and from time to time thereafter may
postpone such sale by public announcement at the time fixed by the preceding postponement or
subsequently noticed sale, and without further notice make such sale at the time fixed by the last
postponement, or may, in its discretion, give a new notice of sale.
(d) Trustor waives any right which it may have to direct the order in which
any of the Property shall be sold in any sale made pursuant to the terms of this Deed of Trust.
4.5 Rescission of Notice of Default. Beneficiary, from time to time before any
Trustee's sale as provided above, may rescind any notice of default and election to sell or notice
of sale by executing and delivering to Trustee a written notice of such rescission, which such
notice, when recorded, shall also constitute a cancellation of any prior declaration of default and
demand for sale. The exercise by Beneficiary of such right of rescission shall not constitute a
waiver of any breach or default then existing or subsequently occurring, or impair the fight of
Beneficiary to execute and deliver to Trustee, as provided above, other declarations or notices of
default and demand for sale of the Property to satisfy the monetary Agency Note Obligations,
nor otherwise affect any provision, covenant or condition of any Other Agreement or any of the
rights, obligations or remedies of Trustee or Beneficiary under this Deed of Trust or any such
Other Agreement.
4.6 Appointment of Receiver. If an Event of Default shall have occurred and be
continuing, Beneficiary, as a matter of fight and without notice to Trustor or to anyone claiming
under Trustor, and without regard to the then-value of the Property or Trustor's interest in it,
shall have the right to apply to any court having jurisdiction to appoint a receiver of the Property,
and Trustor irrevocably consents to such appointment and waives notice of any application for
any such receiver. In addition, Beneficiary shall have the right to appoint a receiver when
permitted under California Code of Civil Procedure Section 564, including, without limitation, in
order to enforce Beneficiary's rights under California Civil Code Section 2929.5. Any such
receiver shall have all the usual powers and duties of a receiver in like or similar cases and all the
powers and duties of Beneficiary in case of entry as provided in Section 4.2 above, and shall
continue as such and exercise all such powers until the date of confirmation of the sale of the
Property, unless such receivership is sooner terminated. Without limiting the foregoing, the
receiver shall have the right to apply Rents to cleanup, remediation or other response action
concerning the release or threatened release of Hazardous Substances, whether or not such
actions are pursuant to an order of any federal, state or local governmental agency.
4.7 Waiver of Lien. In accordance with California Code of Civil Procedure
Section 726.5, Beneficiary may waive its lien against the Property, to the extent any part of it is
found to be environmentally impaired, and may exercise all rights and remedies of an unsecured
[JWW:jww/IDOCS2_91740_2/060203/4182.007} 14
creditor against Trustor and all of Tmstor's assets and property for the recovery of any
deficiency, including, without limitation, seeking an attachment order under California Code of
Civil Procedure Section 483.010. No such waiver shall be final or binding on Beneficiary until a
final money judgment is obtained against Trustor. As between Beneficiary and Trustor, for
purposes of Section 726.5, Trustor shall have the burden of proving that the release or threatened
release was not knowingly or negligently caused or contributed to, or knowingly or willfully
permitted or acquiesced to by Trustor or any related party (or any affiliate or agent of Trustor or
any related party) and that Tmstor made written disclosure of any contamination to Beneficiary
or that Beneficiary otherwise obtained actual knowledge of such contamination prior to the
making of the Loan. Notwithstanding anything to the contrary contained in this Deed of Trust or
the Other Agreements, Tmstor shall be fully and personally liable for all judgments and awards
entered against Trustor pursuant to Section 726.5 and shall not be limited to the original principal
amount of the obligations secured by this Deed of Trust. For purposes of Section 726.5, the acts,
knowledge and notice of each "726.5 Party" shall be attributed to and be deemed to have been
performed by the party or parties then obligated on and liable for payment of the Agency Note.
As used herein, "726.5 Party" shall mean Trustor, any successor owner to Tmstor of ail or any
portion of the Property, any related party of Tmstor or any such successor and any affiliate or
agent of Trustor, any such successor or any such related party.
4.8 Action on Environmental Provisions. Without limiting any of the remedies
provided in the Agency Note or the Other Agreements, Trustor agrees that any covenants agreed
by Trustor and any representations given by Trustor, or any such covenants or representations
with respect to any affiliate of Trustor or any surety of any obligations of Trustor, concerning the
presence of Hazardous Substances on the Property or the Property's, Tmstor's or such affiliate's
or surety's compliance with or liability under m~y Environmental Law in the Other Agreements
are "environmental provisions" (as defined in California Code of Civil Procedure
Section 736(f)(2)) made by Trustor relating to the Real Property, and that Trustor's failure to
comply with, or breach of warranty under, any such environmental provision is a breach of
contract such that Beneficiary shall have the remedies provided under Section 736 for the
recovery of damages and for the enforcement of such environmental provisions. Trustor's
obligation to pay costs, damages or liabilities incun'ed by Beneficiary but not permitted to be
recovered pursuant to Section 736 shall not be secured by this Deed of Trust, i~Tespective of
whether such amounts are included at any time for purposes of calculating the amount
outstanding under the Agency Note. Nothing provided in this Deed of Trust shall prevent
Beneficiary from enforcing the environmental indemnity set forth in Section [5.3] of the DDA to
recover costs, damages or liabilities not permitted to be recovered under Section 736.
Notwithstanding any other provision of the Other Agreements, Beneficiary shall not be obligated
to apply any amounts received at any time, whether from Trustor, any surety of Trustor's
obligations, any purchaser of the Property at a foreclosure sale or any other source, to repay
costs, damages or liabilities incurred by Beneficiary which arise out of the breach of any
environmental provision and Beneficiary shall be free to apply any such amounts received so as
to maximize the amount available to be recovered under any action being maintained or to be
maintained pursuant to Section 736. Tmstor waives any rights it may have, including the fights
granted under California Civil Code Section 1479, to direct the application of payments made
under the Agency Note or this Deed of Trust.
[JV,/W:j ww/IDOCS2_91740_2/060203/4182.007] 1 5
4.9 Remedies Not Exclusive; Waiver. Trustee and Beneficiary shall be entitled to
enforce the payment and performance of any indebtedness or obligations secured by this Deed of
Trust and to exercise all fights and powers under this Deed of Trust or under any of the Other
Agreements or other agreement or any laws now or later in force, notwithstanding the fact that
some or all of the indebtedness and obligations secured by this Deed of Trust may now or later
be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise.
Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or
pursuant to the power of sale or other powers~ shall prejudice or in any manner affect Trustee's
or Beneficiary's fight to realize upon or enforce any other security held by Trustee or
Beneficia~-y. Trustee and Beneficiary shall be entitled to enforce this Deed of Trust and any
other security held by Beneficiary or Trustee in such order and manner as they may in their
absolute discretion determine. No remedy conferred in this Deed of Trust upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other permitted remedy, but each shall
be cumulative and shall be in addition to every other remedy permitted by law, contract or
otherwise. Every power or remedy given by any of the Other Agreements to Trustee or
Beneficiary or to which either of them may be otherwise entitled, may be exercised, concurrently
or independently, from time to time and as often as may be deemed expedient by Trustee or
Beneficiary, and either of them may pursue inconsistent remedies. By exercising or by failing to
exemise any right, option or election under this Deed of Trust, Beneficiary shall not be deemed
to have waived any provision of this Deed of Trust or to have released Trustor from any of the
obligations secured by this Deed of Trust unless such waiver or release is in writing and signed
by Beneficiary. The waiver by Beneficiary of Trustor's failure to perform or observe any term,
covenant, or condition referred to or contained in this Deed of Trust to be performed or observed
by Trustor shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent failure of Trustor to perform or observe the same or any other such terra, covenant or
condition referred to or contained in this Deed of Trust, and no custom or practice which may
develop between Tmstor and Beneficiary shall be deemed a waiver of or any way affect the right
of Beneficiary to insist upon the performance by Trustor of the obligations secm:ed by this Deed
of Trust in strict accordance with the terms of such obligations or of any of the Other
Agreements.
ARTICLE V.
MISCELLANEOUS
5.1 Successors. This Deed of Trust applies to, encumbers, and binds Trustor and its
successors and assigns.
5.2 Governing Law; Choice of Forum; Service of Process.
(a) This Deed of Trust shall be construed in accordance with and be governed
by the laws of the State of California, provided that perfection issues with respect to Division 9
of the UCC may give effect to applicable choice or conflict of law rules set forth therein.
(b) Any legal action or proceeding with respect to this Deed of Trust, the
Agency Note, or the Agency Note Obligations must be instituted in the Superior Court of the
County of Orange, State of California, or in any other appropriate court of that county, or in the
[JWW:jww/IDOCS 2_91740_2/060203/4182,007] 16
Federal District Court in the Central District of California, Santa Aha branch. Trustor hereby
waives any right to object to the foregoing courts based on venue or inconvenient forum.
(c) Service of process on Beneficiary shall be made by personal service upon
the Executive Director of Beneficiary, or in such manner as may be provided by law. Service of
process on Tmstor shall be made by personal service upon an officer of Trustor or in such
manner as may be provided by law, whether made within or without the State.
5.3 Permitted Contests. Trustor may contest or object in good faith to the amount or
validity of any tax, assessment, claim, demand, levy, Lien or notice of noncompliance asserted
by a third party (collectively, the "Claim"), the nonpayment or nonperformance of which would
be a default under this Deed of Trust, but only in accordance with the following conditions:
(a) Trustor shall first give written notice to Beneficiary and deposit with
Beneficiary a bond or cash satisfactory to Beneficiary in such amounts as Beneficiary shall
reasonably require, up to one hundred fifty percent (150%) of the amount of any Claim or other
sum in controversy, and, if the context of such Claim so requires, Trustor shall have provided
such additional undertaking as may be required or permitted by law to accomplish a stay of any
legal proceedings then pending in connection with any such Claim or controversy;
(b) Trustor shall promptly and diligently proceed to cause such Claim to be
settled and discharged in a manner not prejudicial to Beneficiary or its rights or security under
this Deed of Trust;
(c) if Trustor shall fail to discharge diligently any such Claim, then, in
addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be obligated
to, discharge the same, eitlner by paying the amount claimed to be due, or by procm:ing the
discharge of such Claim by promptly depositing in court a bond or the amount claimed or
otherwise giving security for such Claim, or in such manner as is or may be prescribed by law;
(d) Beneficia~:y may employ attorneys to protect its rights, and in the event of
such employment, Trustor shall pay Beneficiary the reasonable attorneys' fees and expenses
incurred by Beneficiary, whether or not an action is actually commenced against Trustor by
reason of any default by Trustor under this Deed of Trust; and
(e) Trustor has demonstrated to Beneficiary's reasonable satisfaction that no
portion of the Property will be sold to satisfy any such Claim prior to final resolution of such
Claim or permitted contest.
5.4 Severabilit¥. If any provision of this Deed of Trust shall be invalid, illegal, or
unenforceable, then so long as the material bargain of the parties may be preserved, the validity,
legality, and enforceability of the remaining provisions hereof shall not in any way be affected or
impaired thereby. If the lien of this Deed of Trust is invalid or unenforceable as to any part of
the indebtedness secured by the this Deed of Trust, or if the lien is invalid or unenforceable as to
any part of the Property, the unsecured or partially secured portion of such indebtedness shall be
completely paid prior to the payment of the remaining and secured or partially secured portion of
such indebtedness, and all payments made on such indebtedness, whether voluntary or under
foreclosure or other enforcement action or procedure, shall be considered to have been first paid
[JWW:j ww/IDOCS2_917402/060203/4182,007] 17
on and applied to the full payment of that portion of such indebtedness which is not secured or
fully secured by the lien of this Deed of Trust.
5.5 Notices~. Any notice, demand or request required under this Deed of Tmst shall
be given in writing at the addresses set forth in the DDA, in the manner set forth in the DDA, and
if the DDA terminates prior to the payment and performance in full of all Agency Note
Obligations and the termination of this Deed of Trust and the Agency Note, such notice
provisions shall survive as incorporated in this Deed of Trust.
5.6 Indemnification Procedures.If Beneficiary notifies Trustor of any claim or notice
of the commencement of any action, administrative or legal proceeding or investigation as to
which Trustor's obligation to indemnify under this Deed of Trust or the Agency Note applies,
Trustor shall assume on behalf of Beneficiary or other person to be indemnified (each, an
"lndemnitee"), and conduct with due diligence and in good faith, the investigation and defense
of, and the response to, such claim, action, proceeding or investigation, with counsel reasonably
satisfactory to the Indemnitee; provided, however, that such Indemnitee shall have the right to be
represented by advisory counsel of its own selection and at its own expense; and provided,
further, that if any such claim, action, proceeding, or investigation involves both Trustor and an
Indemnitee, and such Indemnitee shall have reasonably concluded that there may be legal
defenses available to it which are different from, additional to, or inconsistent with those
available to Trustor, then the Indemnitee shall have the fight to select separate counsel to
participate in the investigation and defense of and response to such claim, action, proceeding or
investigation on its own behalf at Trustor's expense.
(b) It' any claim, action, proceeding, or investigation arises as to which
Trustor's duty to indemnify under this Deed of Trust applies, and Trustor fails to assume
promptly (and in any event within ten (10) days after being notified of the claim, action,
proceeding, or investigation) the defense of an Indemnitee, then such Indemnitee may contest
and settle the claim, action, proceeding, or investigation at Trustor's expense using counsel
selected by such Indemnitee; provided, however, that after any such failure by Trustor no such
contest need be made by such Indemnitee and settlement or full payment of any claim may be
made by such Indemnitee without Trustor's consent and without releasing Trustor from any
obligations to such Indemnitee under this Deed of Trust.
5.7 Waiver of Remedies. No waiver of any breach, default, or failure of condition
under the te~rns of this Deed of Trust, the Agency Note, or any Other Agreement or the
obligations secured thereby shall be implied from any failure of the Beneficiary to take, or any
delay by the Beneficiary in taking, action with respect to such breach, default or failure, or any
form of previous waiver of any similar or unrelated breach, default or failure; and waiver of any
term of this Deed of Trust, the Agency Note, or any Other Agreement or any of the obligations
secured thereby must be made in writing and shall be limited to the express written terms of such
waiver. No waiver by Beneficiary on any occasion shall affect or diminish Beneficiary's fights
thereafter to require strict performance by Trustor of any provision of this Deed of Trust, the
Agency Note and the Other Agreements.
5.8 Trustee's Powers. At any time, without liability for doing so and without notice,
upon written request of Beneficiary and presentation of the original or certified copies of this
[JWW:j ww/IDOCS2_91740_2/060203/4182.007] 18
Deed of Trust and the Agency Note for endorsernent, and without affecting the personal liability
of any person for payment of the indebtedness secured by this Deed of Trust or the effect of this
Deed of Trust upon the remainder of the Property, Trustee may (a) reconvey any part of the
Property, (b) consent in writing to the making of any map or plat of the Property, (c) join in
granting any easement on the Property, or (d) join in any extension agreement or any agreement
subordinating the lien of this Deed of Trust.
5.9 Substitution of Trustee. Beneficiary may, from time to time, by a written
instrument executed and acknowledged by Beneficiary and recorded in the Office of the
Recorder in the County of Orange, and by otherwise complying with the provisions of California
Civil Code Section 2934a, or any successor section, substitute a successor or successors for the
Trustee.
5.10 Trust Irrevocable; No Offset. The trust created by this Deed of Trust is
irrevocable by Trustor. No offset or claim that Trustor now or may in the future have against
Beneficiary shall relieve Trustor from paying the monetary Agency Note Obligations or any
other amounts due under this Deed of Trust any of the Other Agreements.
5.11 Corrections and Further Assurances. Trustor shall, upon request of Trustee and at
Trustor's sole cost, promptly correct any defect, error or omission which may be discovered in
the contents of this Deed of Trust or in its execution or acknowledgment, and will execute,
acknowledge and deliver such further instruments and do such further acts as may be necessary
or as may be reasonably requested by Trustee to carry out effectively the purposes of this Deed
of Trust, to subject to the lien and security interest of this Deed of Trust any of Trustor's
properties, fights or interest covered or intended to be covered by this Deed of Trust, including
without limitation the Future Acquisitions, and to perfect and maintain such lien and security
interest.
5.12 Future Acquisitions; Future Advances.
(a) Notwithstanding anything to the contrary in this Deed of Trust, the
Agency Note or any Other Agreement, Trustor acknowledges that certain portions of the
Property covered hereby (including the Real Property described in Exhibit "A-2'_') (such
Property, including such Real Property, the "Future Acquisitions") is not currently owned by
Trustor, and Trustor does not currently have a recordable interest in such Future Acquisitions.
Trustor hereby agrees that it will cause this Deed of Trust to be recorded against such Future
Acquisitions (or any portion thereof) immediately upon Trustor's acquisition thereof, and in no
event (a) more than one business day after such acquisition and (b) in any matter or timing that
results in the security interests granted hereby to be junior to any other security interests on such
Future Acquisitions, except that any deed(s) of trust securing any loan(s) used to acquire such
Future Acquisitions may be senior to this Deed of Trust, but only to the degree permitted by the
DDA. In no event shall this Deed of Trust be junior to any financing of any Future Acquisition
(or any post-purchase advances of acquisition financing thereof) except as set forth in the DDA.
A breach of any of the foregoing covenants will be an immediate Event of Default hereunder,
without any further notice or cure rights with respect thereto.
[J w w:j ww/IDOCS 2_91.740_2/06o203/4182.007] 19
(b) On request by Trustor, as mom fully set forth in the DDA and subject to
the conditions set forth in Article __ thereof, Beneficiary, at Beneficiary's option, may make
future advances of the Agency Loan to Tmstor. Ail such future advances, with interest in
accordance with the Agency Note, shall be added to and become a part of the Agency Note
Obligations secured hereby, and when disbursed to Trustor will be evidenced by the Agency
Note reciting that such future advances are secured by this Deed of Trust.
5.13 Reconveyance. Upon written request of Beneficiary stating that all monetary
Agency Note Obligations have been paid and upon surrender to Trustee of this Deed of Trust and
the Agency Note for cancellation and retention and upon payment of its fees, Trustee shall fully
reconvey, without warranty, the entire remaining Property then subject to this Deed of Trust.
The grantee in such reconveyance may be described as "the person or persons legally entitled
thereto." Upon written request of Beneficiary stating that any portion of the Land has been
dedicated to the City as provided in the DDA (being the "City Dedication Parcels" as defined in
the DDA), Trustee shall fully reconvey, without warranty, such dedicated portion of the Land
concurrently with the acceptance of title thereto by the City. The recitals in such reconveyance
of any matters of facts shall be conclusive proof of their truthfulness.
5.14 Performance Under Other Documents. Subject to Beneficiary's rights under
Section 2.3 above, Trustor shall faithfully perform each covenant to be performed by Trustor
under any Lien, lease, sublease, instrument, declaration, covenant, condition, restriction, license,
order or other agreement which affects the Property, including, without limitation, each covenant
to be performed by Trustor under any Mortgages and any and all other instruments pertaining to
such Mortgages, including the respective obligations secm:ed thereby. A breach of or a default
under any such Lien or other instrument which Beneficiary reasonably believes may be prior and
superior to the lien or charge of this Deed of Trust shall, at Beneficiary's option, constitute an
Event of Default under this Deed of Trust.
5.I5 Amendments. This Deed of Trust may not be changed orally, but only by an
amendment in writing signed by Trustor and the Beneficiary.
5.16 Time.. As a material inducement and consideration to the Beneficiary in
providing the Agency Loan, and but for this provision the Beneficiary would not provide the
Agency Loan nor enter into the Other Agreements, Tmstor agrees that time is of the essence in
this Agency Note.
5.17 Brokers. Trustor represents and warrants to Beneficiary that Trustor has not dealt
with any person who is or may be entitled to any finder's fee, brokerage commission, loan
commission, or other sum in connection with the consummation of the transactions contemplated
by this Deed of Trust and the Other Agreements, and Trustor agrees to protect, indemnify, pay
and hold harmless Beneficiary and City from and against any and alt claims, demands, liabilities,
damages, losses, costs, charges and expenses (including without limitation reasonable attorneys',
consultants' and expert witnesses' fees) that Beneficiary or City may suffer or sustain if such
warranty or representation proves inaccurate in whole or in part.
5.18 Beneficiar¥'s Advances and Costs. Subject to Section 4.8, at Beneficiary's
election, Trustor shall pay all reasonable Costs incurred by Beneficiary in connection with the
[JWW:jww/IDOCS2 91740_2/060203/4182.007] 20
documentstion, modification, workout, collection or enforcement of this Deed of Trust, the
Agency Note or any Other Agreement (as applicable), including probate, appellate and
bankruptcy proceedings, any post-judgment proceedings to collect or enforce any judgment or
order relating to this Deed of Trust, the Agency Note or any Other Agreement (as applicable),
and all such Costs shall be included as addidonai indebtedness secured hereunder bearing
interest at the Default Rate set forth in the Agency Note until paid. In any action to foreclose the
lien hereof or otherwise enforce Beneficiary's rights and remedies hereunder, there shall be
allowed and included as additional indebtedness secured hereunder all Costs which may be paid
or incurred by or on behalf of Beneficiary. For the purposes hereof "Costs" means all
expenditures and expenses which may be paid or incurred by or on behalf of Beneficiary
including repair costs, payments to remove or protect against Liens, attorneys' fees, receivers'
fees, appraisers' fees, engineers' fees, accountants' fees, independent consultants' fees (including
environmental consultants), all costs and expenses incurred in connection with any of the
foregoing, Beneficiary's out-of-pocket costs and expenses related to any audit or inspection of
the Property, outlays for documentary and expert evidence, stenographers' charges, stamp taxes,
publication costs, and costs (which may be estimates as to items to be expended after entry of an
order or judgment) for procuring all such abstracts of title, title searches and examination, title
insurance policies, and similsx data and assurances with respect to title as Beneficiary may deem
reasonably necessary either to prosecute any action or to evidence to bidders at any sale of the
partnership interests in Trustor the tree condition of the title to, or the value of, the Property.
Further~ all "Costs" shall include such other costs, expenses and fees as may be incurred by
Beneficiary in the protection of the Property and the maintenance of the lien of this Deed of
Trust, including, attorneys' fees, expenses and costs in any litigation or proceeding affecting this
Deed of Trust, the Agency Note, the Other Agreements, the Property or the Personalty, including
probate, appellate, and bankd-uptcy proceedings, and any post-judgment proceedings to collect or
enforce any judgment or order relating to this Deed of Trust or the Other Agreements, to obtain
any court order or the appointment of a receiver to enforce Beneficiary's rights pursuant to
California Code of Civil Procedure Section 564 and/or California Civil Code Section 2929.5 or
in prepm'ation for the commencement or defense of any action or proceeding, shall be
immediately due and payable to Beneficiary, with interest thereon at the Default Rate, and shall
be secured by this Deed of Trust. This provision is separate and several, and shall survive the
merger of this provision into any judgment.
5.19 Acceptance by Trustee. Trustee accepts the trust created by this Deed of Trust
when it is made a public record as provided by law.
5.20 Nonrecourse.. Section 16 of the Agency Note is incorporated herein as if fully set
forth herein.
[signature page follows]
[JWW:jww/IDOCS2_91740 2/060203/4182,007] 21
1N WITNESS WHEREOF, the parties hereto have executed this Deed of Trust on the
date first set forth above.
"TRUSTOR"
KENYON DR., LLC,
a California limited liability company
By:
STATEWDE ACQUISITION CORP.,
a California corporation
Its: Co-Managing Member
By:
Kent Hawkins
President
By:
CENTURION PARTNERS, LLC,
a California limited liability company
Its: Co-Managing Member
By:
Michael Smith
Manager
[JWW:.iww/IDOCS 2_917¢0_2/060203/4182,0071
Signaturc Page to Deed of Trust
EXHIBIT
Legal Description
(to be attached)
[JWW:jww/IDOCS2_917 40_2/060203/4182.0¢7]
EXHIBIT "A-2"
~___gal Description
to be attached)
[JWW:.j ww/IDOCS 2_91740_2/060203/A-182.007]
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
S8.
On before me, , a Notaxy
Public in and for said County and State, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(les), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Wimess my hand and official seal.
Signature of Notary
[SEAL]
[JWW:jww/IDOCS2_91740_2/060203/4i 82.007]
ATTACHMENT NO. 11
SITE PLAN
[AEF:djw/91680_4/061203/4182.007] Attachment No. I 1 - Page
ATTACHMENT NO. 12
REGULATORY AGREEMENT
[AEF:dfia,/91680_4/061203/4182.007] Attachment No. 12 - Page 1
TUSTIN REDEVELOPMENT AGENCY
OFFICIAL BUSINESS
REQUEST DOCUMENT TO BE RECORDED
AND TO BE EXEMPT FROM RECORDING
FEES PER GOVERNMENT CODE 6103 AND 27383
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City Clerk
Thc City of Tastin
300 Cente~mial Way
Tustin, California 92780
[SPACE ABOVE LfNE FOR RECORDER'S USE ONLY]
Exempt From Recording Fee Pursum~t to Government Code Section 27383
REGULATORY AGREEMENT
AND DECLARATION OF RESTRICTIVE COVENANTS
THiS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS (this "Regulatory Agreement" ) is made and entered into as of [June 301, 2003,
by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California
redevelopment agency (together with any successor, the "Agency") mrd KENYON DR., LLC., a
California limited liability company (the "Developer").
RECITALS
A. The Developer has two Members: Statewide Acquisition Corporation, a
California corporation and Centurion Partners, LLC, a California limited liability company (each
a "Co-Managing Member").
B. At the time of the execution of this Regulatory Agreement, Developer owns that
certain real property legally described on Exhibit "A" attached hereto and inco~Tporated herein by
this reference (the "Developer-Owned Parcels") and intends to acquire certain additional real
property legally described on Exhibit "B" attached hereto and incorporated herein by this
reference (the '~Aequisition Parcels"; the Developer-Owned Pm'cels and the Acquisition Parcels
collectively, the "Site"), and to substantially rehabilitate and construct improvements for a rental
housing project on the Site (the "Project").
C. The Agency and Developer have entered into that certain Kenyon Drive
Multifamily Residential Acquisition And Substantial Rehabilitation Project Disposition And
Development Regulatory Agreement (the "DDA'), dated as of June 30, 2003 (the "DDA
Effective Date") with respect to the Project.
[AEF:djw/91495_7/061303/4182.007J -1- DRAFT 6/1372003
D. Pursuant to the DDA, the Agency has agreed to provide certain financing for the
Project (the "Loans"). One of the conditions of the Loans is that the Developer enter into this
Regulatory Agreement to enforce certain affordable housing restrictions.
E. The City of Tustin, a municipal corporation (the "City") owns in fee that certain
parcel of land adjacent to the Site consisting of the land underlying Newport Avenue (the ~Ci~
Parcel").
F. The covenants and agreements of Developer set fbrth in this Regulatory
Agreement are intended to encumber the entire Site for benefit of the City Parcel, the Agency and
the City, and the obligations and rights contained herein are intended to run with the land as
anthorized by applicable law, including, without limitation, California Health & Safety Code
§§ 33438 and 33439.
G. Developer intends to acquire the portions of the Site that it does not currently own
in various parcels f¥om time to time. The covenants and agreements of Developer set forth in
this Regulatory Agreement shall encmnber the Developer-Owned Parcels upon execution of this
Regulatory Agreement, and shall automatically, without the need to file any amendment to this
Regulatory Agreement, encumber the remainder of the Site on a parcel by parcel basis as and
when it is acquired by Developer.
H. In consideration of the Agency's agreement to assist the Project pursuant to the
DDA and the Agency's commitments to provide the loans described therein~ and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknoxvledged, the
Agency and the Developer now desire to enter into this Regulatory Agreement to set forth their
agreement regarding the affordable housing restrictions for the Project and to cause said
affordable housing restrictions to run with the land for the benefit of both the Agency and the
Cit~.
AGREEMENT
NOW, THEREFORE, the Agency and the Developer hereby agree as follows:
1. Definitions. Capitalized temps used in this Regnlatory Agreement, unless otherwise
defined herein (including Exhibit "C" attached hereto), shall have the meanings specified in the
DDA and the use of the defined terms set forth therein shall survive the termination of the DDA.
2. Development of the Site.
2.1 Permits and Governmental. As part of the proposed construction of
the Project, prior to any construction requiring a building permit for the Project, the Developer
shall obtain all required City approvals, building permits and Design Review application
approvals in accordance with the City of Tustin Municipal Code (the "City Code") and the
DDA.
2.2 Local, State and Federal Law.. The Developer shall carry out the construction of
the Project in conformity with the DDA and all applicable Govermnental Requirements,
including the City Code (mxd applicable public works specifications) and all federal, state and
[AEF:djw/91495_7/061303/4182.007] -2- DRAFT 6/13/2003
local laxvs, rules and regulations. Specifically, and without limiting the foregoing, the Developer
shall at all times comply with all applicable federal and State labor rules, includ/ng but not
limited to, any applicable prevailing wage requirements under California Labor Code
Section 1720 et seq.
2.3 In__~pections.
2.3.1 During the construction of the Project, the Agency shall have the right to
inspect all improvements on the Site, including but not limited to, dwelling unit interiors and the
grounds of the Site for City and/or the State of California (the "State") building, housing and fire
code and safety violations. Developer shall correct any such violations within a reasonable
period of time after receiving written notice ora violation of any building, housing, fire or safety
code applicable to the Project; provided~ however, that Agency acknowledges and agrees that as
part of the construction and rehabilitation included in the Project, certain actual or alleged
violations will be remedied during tlxe construction and rehabilitation process.
2.3.2 Upon completion of the construction work, the Agency shall have the right
to conduct annual inspections 0fthe Project, including the dwelling unit interiors and the grounds
of the Site for City and/or State building, housing mxd fire code and safety and occupancy
violations. All rental agreements and contracts executed with the tenants in the Project shall
include the right of the Agency to inspect the interior of the dwelling units upon forty-eight (48)
hours notice. The Agency agrees to use its best efforts to coordinate annual inspections in
conjunction with annual inspections by other agencies.
2.4 Time Limit for Construction. All improvements on the Site shall be renovated
and/or constructed to Completion to the satisfaction of the Agency in accordance with the DDA,
including the Schedule of Performance which is attached as Attachment No. 4 to the DDA.
3. Covenants Related to Affordable Housing. The Developer and each Co-Managing
Member, jointly and severally, hereby represent, warrant and covenant as follows:
3.1 Use of Ve Low Lower and Moderate Income Units. Developer shall
construct on the Site a 112-unit residential rental housing project. The Project shall include not
less than sixty-seven (67) Very Low, Lower and Moderate Income Units (each an "Affordable
Housing Unit") to be rented to, occupied by, or held available only fbr rental to Very Low,
Lower and Moderate Income Tenants at an Affordable Rent subject to the occupancy restrictions
contained in this Section 3 and in the DDA.
3.2 Identification of Affordable Housing Units. During the Qualified Project
Period, occupancy for the sixty-seven (67) Very Low, Lower and Moderate income Units shall be
dispersed throughout the Project in a manner approved by the Agency in order to avoid
concentration of Very Low, Low and/or Moderate Income Units. The Very Low, Lower and
Moderate Income Units shall be allocated an~ong the Affordable Housing Units as follows:
[AEF:djw/91495_7/061303/4182,007] -3- DRAFT 6/13/2003
Affordable Housing Very Low Income Lower Income Moderate Income
Unit Types Units Units Units
2 Bedroom Units 19 14 22
3 Bedroom Units 4 3 5
Totals 23 17 27
3.3 Renting.Limited to Very Low, Lower and Moderate Income Tenants. The
Affordable Housing Units shall be rented to eligible and qualified Very Low, Lower and
Moderate Income Tenants in accordance with the following terms:
3.3.1 Developer shall use its best eff'orts to fill vacancies of Very Low, Lower
and Moderate Income Units as soon as possible following the date the Affordable Housing Unit
becomes available for renting, by renting the units to Very Low, Lower and Moderate Income
Tenants as applicable to such units. Should multiple tenants be equally eligible and qualified for
a Very Lo,v, Louver or Moderate Income Unit, Developer shall lease available units to such
eligible tenants on a first-comeT first-served~ and non-discriminatory basis. Developer shall
notify the appropriate housing authorities of any Affordable Housing Unit that either (a) fails to
be leased within thirty (30) day after the issuance of a certificate of occupancy for the unit to a
Very Low, Lower or Moderate Income Tenant, as may be applicable (the "Initial Leasing
Period"), or (b) becomes available as a result of tenant vacation of the premises.
3.3.2 Developer shall create and maintain an "interest list" which includes all
those potential tenants ~vho have expressed an interest in leasing a unit within the Project. The
interest list shall designate whether a potential tenant is a Very Low-, Lower or Moderate Income
Tenant. The interest list shall clearly designate whether such potential tenant will be receiving
rental assistance under the U.S. Department of Housing and Urban Development (HUD)
Section 8 program (or such other federal progrmn that may replace the Section 8 progrmn).
3.3.3 An Affordable Housing Unit that either (a) fails to be leased within the
Initial Leasing Period to a Very Low, Lower or Moderate Income Tenant, as may be applicable,
or (b) becomes available as a result of tenant vacation of the premises, shall be rented to a new
eligible and qualified tenant in accordance with the following procedure:
3.3.3.1 Developer shall make a reasonable effo~ to contact eligible and
qualified prospective tenants listed on the "interest list" created in Section 3.3.2, Developer shall
lease available units to such eligible tenants on a first-come, first-served, basis;
3.3.3.2 Each such eligible and qualified prospective Very Low, Lower
or Moderate Income Tenant(s) shall have five (5) business days after being contacted by
Developer to notify Developer of the tenant's intent to accept the unit, and must thereafter
execute a lease for the unit within three (3) days of such acceptance;
3.3.3.3 Failure of the eligible m~d qualified prospective Very Low,
Lower or Moderate Income Tenant(s) to timely notify Developer of accepting the unit or to
thereafter timely execute a lease for the unit, shall be deemed a rej ecfion of the unit~ and
Developer may seek other eligible tenants as set forth in Sections 3.3~3 m~d 3.3.4 and following.
[AEF:djw/914:)5 7/061303/4182.007] -4- DRAFT 6/13/2003
3.3.4 In the event the "interest list" mah~tained by Developer as provided in
Section 3.3 ~2 does not include a prospective tenant that is eligible and qualified as a tenant of a
vacant Affordable Housing Unit, or in the event Developer is unable to lease a vacant Affordable
Housing Unit after fully complying with the procedures set forth in Section 3.3.3, then Developer
may lease the restricted unit to any eligible and qualified Very Low, Lower or Moderate Income
Tenant for the appropriate restricted unit.
3.3.5 Very Low, Lower and Moderate Income Tenants who occupy Affordable
Housing Units at the expiration of the Qualified Project Period and who qualify as Very Low,
Lower and Moderate Income Tenants on such date shall be permitted to continue to occupy those
Affbrdable Housing Units for a period of one (1) year, beginning on the first day after the
expiration of the Qualified Project Period; provided, however, that mmual rent increases during
such one (1) year period shall not exceed an amount equal to the existing rent for such unit plus
m~ amount equal to the greater of five percent (5%) or (ii) the increase that would have been
permitted had the Qualified Project Period not expired. Except as provided in the preceding
sentence, upon the expiration of the Qualified Project Period, the Affordable Housing Units shall
no longer be subject to the provisions of this Section 3.
3.3.6 The Developer agrees to provide to Very Low, Lower m~d Moderate
Income Tenants within the Project to notice of ali rent increases pursuant to all applicable
Govermnental Requirements, including rules and regulations of the State.
3.4 Rental Rates. Rental rates for all Affordable Housing Units to which this
Regulatory Agreement is applicable shall not exceed the higher of the following:
3.4.1 The Affbrdable Housing Rent as defined in the California Health and
Safety Code Section 50053 for Very Low Income Tenants (Section 50043(b)(1)), for Lower
Income Tenants (Section 50053(b)(2)), and for Moderate Income Tenants (Section 50053(b)(3)),
less the monthly allowance :for utilities and services (excluding telephone) to be paid by the
tenant; or
3.4.2 If a Very Low or Lower Income Tenant receives federal or State rental
subsidy, and the Very Low or Lower Income Tenant pays as a conlribution toward rent no more
thma 30% of the household's adjusted income, then the maximmn rent (i.e., tenant contribution
plus any rental subsidy) shall bethe fair market rent allowable under the federal or State rental
subsidy certificate or voucher program. Alternatively, the maximum monthly rent that may be
charged to a qualified Tenant who is subject to this limitation, may be the monthly adjusted
income of the qualified Tenant multiplied by 30 percent, from which product, if applicable, a
monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant
shall be subtracted.
3.5 Voucher Holders. No Very Low or Lower Income Unit shall be refused for
leasing to a holder of a certificate or voucher under 24 CFR Part 982 Section 8 Rental Certificate
Program or Section 8 Rental Voucher Program or to the holder of a comparable document
evidencing participation in a tenant-based assistance progrmn because of the status of the
prospective Very Low or Lower Income Tenant as a holder of such certificate of family
paxticipation, rental voucher, or comparable tenant-based assistance document.
[AEF:djw/91495_7/061303/4182.007] -5~ DRA.]FT 6/13/2003
3.6 Rent Schedule and Utilitli Allowances. The Agency shall aimually review, at
Developer's sole cost, and approve rents proposed by the Developer for the Very Low, Lower
and Moderate Income Units to determine that the Developer has properly applied the restrictions
contained in this Section 3 and shall provide the Developer with a schedule establishing the
monthly allowances for utilities and services to be paid by the Very Low~ Lower and Moderate
Income Tenants of the Affordable Housing Units. The Agency agrees to consider a schedule of
estimated monthly allowances for utilities and services which may be provided by the Developer.
The Developer shall reexamine the income of each tenant household living in the Affordable
Housing Units at least ammally, which examination shall be completed by Developer as to all
Very Low, Lower and Moderate Income Tenants of the Aflbrdable Housing Units on or be~bre
June 1st of each year in which this Agreement is in effect. The maximum monthly rent shall be
recalculated by the Developer and reviewed and approved by the Agency annually, and may
change as changes in the applicable gross rent amounts, the income adjustments, or the monthly
allowance for utilities and services warrant. The Developer shall not impose on a tenant an
increase in rent approved by the Agency if that increase is not permitted to be imposed under the
lease between Developer and the tenant. Developer shall provide not less than sixty (60) days
prior written nofice to affected tenants before imple~nenting any increase in rents.
3,7 Increases in Tenant lncom,_.__.~e.
3.7.1 If, as a result of the mmual reexamination of incomes required pm'suant to
Section 3.10.2, the Developer determines that a household that qualified as a Very Low Income
Tenant for purposes of Section 3.3 above, no longer is a Very Low Income Tenant but instead
qualifies as a Lower Income Tenant, then the Developer may require that household to pay the
Affordable Rent for Lower Income Units, and the Developer shall lease the next available Lower
Income or Moderate Income Unit to a Very Low Income Tenant at the rent permitted under
Section 3.3.
3.7.2 If, as a result of the annual reexamination of incomes required pursuant to
Section 3.10.2, the Developer determines that a household that qualified as a Very Low Income
Tenant for purposes of Section 3.3 above, no longer is a Very Low Income Tenant but instead
qualifies as a Moderate Income Tenant, then the Developer may require that household to pay the
Affordable Rent for Moderate Income Units, and the Developer shall lease the next available
Moderate Income Unit to a Very Lo~v Income Tenant at the rent permitted under Section 3.3.
3.7.3 If, as a result of the annual reexamination of incomes required pursuant to
Section 3.10.2, the Developer determines that a household that qualified as a Lower Income
Tenant for purposes of Section 3.3. above, no longer is a Lower Income Tenant but instead
qualifies as a Moderate Income Tenant~ then the Developer may require that household to pay the
Affordable Rent for Moderate Income Units, and the Developer shall lease the next available
Moderate Income Unit to a Lower Income Tenant at the rent permitted under Section 3.3.
3.7.4 If, as a result of the annual reexamination of incomes required pursuant to
Section 3.10,2, the Developer determines that a household that qualified as a Very Low, Lower
or Moderate Income Tenant for pm'poses of Section 3.3 above, no longer is a Very Low, Lower
or Moderate Income Tenant, then the Developer may require that household to pay the fair
market rent, and the Developer shall lease the next available apartment unit in the Project to a
[AF~F:djw/91495_7/061303/4182 007] -6- DRAFT 6/13/20~13
Very Low, Lower or Moderate Income Tenant (whichever class of tenant the original Affordable
Housing U~it was to be rented to) at the Affordable Rent for such Very Low, Lower or Moderate
]Income Unit. Such next available apartment unit shall then be deemed to be a Very' Low, Lower
or Moderate Income Unit, as the case may be, subject to the provisions of this Section 3, and the
previous unit shall no longer be subject to the provisions of this Section 3.
3.7.5 Notwithstanding the foregoing provisions, it is the intent of this
Regulatory Agreement that the number of Very Low, Lower and Moderate Income Units be
allocated as among the Affordable Housing Units as provided in Section 3.2. In the event the
fbregoing provisions result in m~ allocation of Affordable Housing Units different from that
provided in Section 3.2, Developer shall lease the next available Affordable Housing Unit to
Very Low, Lower or Moderate Income Tenant, as the case may be, in order to correct the
allocation.
3.8 Minimum Rents. Notwithstanding the other provisions of this Section 3,
Developer shall not be required to charge a rent for a Very Low, Lower or Moderate Income Unit
that would be lower than the maximmn rent Developer would have been permitted to charge for
the Very Low, Lower or Moderate Income Unit had the determination of maximtm~ rent been
made on the date the Agency and Developer entered into this Regulatory Agreement.
3.9 Tenant Protections.
3.9:1 Rental Agreement. The rental agreement between Developer and a Very
Low, Lower or Moderate Income Tenant must be for not less than one year, unless the Agency
provides prior writ"ten approval, and may not contain m~y of the following provisions:
3.9. I. 1 Any agreement by the tenant to be sued, to admit guilt, or to a
judgment in favor of the Developer in a lawsuit brought in connection with the lease.
3.9.1.2 Any agreement by the tenant that the Developer may take, hold,
or sell personal property ofhousehold members without notice to the tenant and a court decision
on the rights of the parties. This prohibition, however, does not apply to an agreement by the
tenant concerning disposition of personal property remaining in the unit after the tenant has
moved out of the unit. The Developer may dispose of such personal property in accordance with
applicable State law'.
3.9.1.3 Any agreement by the tenant not to hold the Developer or its
agents legally responsible for any action or f;ailure to act, whether intentional or negligent.
3.9.1.4 Any agreement of the tenant that the Developer may evict the
tenant or household members without notice to the tenmat.
3.9.1.5 Any agreement by the tenant that the Developer may evict the
tenant or household members without instituting a civil com't proceeding in which the tenant has
the opportunity to present a defense, or before a court decision on the rights of the pmties.
jury.
3.9.1.6
Any agreement by the tenant to waive any right to a trial by
[AEF:djw/9149S_7/061303/4182.007] -7- D R>%FT 6/13/2003
3.9.1.7 Any agreement by the tenant to waive the tenant's right to
appeal, or to otherwise challenge in court, a court decision in connection with the lease.
3.9.1.8 Any agreement by the tenant to pay attorney's fees or other
legal costs even if the tenant wins in a court proceeding by the Developer against the tenant. The
tenant, however, may be obligated to pay costs if the tenant loses.
3.9.2 Termination of Tenantz. Developer may not terminate the tenancy or
refuse to renew the lease ora Very Low, Lower or Moderate Income Tenant except for violation
of the terms and conditions of the lease; for violation of applicable federal, State, or local law; or
for other good cause. Any termination or refusal to renew must be preceded by not less than
sixty (60) days by the Developer's service upon the tenant of a written notice specifying the
grounds for the action.
3,10 Ve..__~ Low~ Lower and Moderate Income Tenants; Records and Reports. The
Developer hereby represents, warrants and covenants as follows:
3.10.1 Within thirty (30) day's after the date on which at least fifty percent (50%)
of the substantially rehabilitated dwelling units in the Project are first occnpied, the Developer
shall execute and deliver to the Agency a copy of a certificate identifying said date and the
beginning date and earliest ending date of the Qualified Project Period, which certificate shall be
in the form provided by Agency or otherwise approved by Agmcy. The Developer shall record a
copy of such certificate in the Official Records.
3.10.2 The Developer shall obtain, complete and maintain on file Verifications of
Income qualification, in the form provided by Agency, from each Very Low, Lower and
Moderate Income Tena~nt, including (a) a Verification of Income dated immediately prior to the
initial occupancy of such Very Low, Lower or Moderate Income Tena~nt and (b)thereafter,
armnal Verifications of Income which must be dated as of June 1 st of each year, or such other
date as may be mutually agreed upon by the Agency and the Developer, and in no event less than
once in every twelve-month period following each Very Low, Lower and Moderate Income
Tenants' occupancy of a unit in the Project. The Developer shall obtain such additional
information as may be required in the future by the State or by the Agency, due to changes in
federal or State law.
3.10.3 A copy of the most recent Verification of Income for Very Low, Lower
and Moderate Income Tenants commencing occupation or continuing occupation of a renovated
Very Low, Lower or Moderate Income Unit (and not previously filed) shall be attached to the
Certificate of Continuing Program Conrpliance, in the form provided by Agency, which is to be
filed with the Agency no later than the fifteenth day of each month following the receipt by the
Agency of the Completion Certificate to and including the month in which such report indicates
that fifty percent (50%) of the units in the Project are occupied by Very Low, Lower and
Moderate Income Tenants mhd, thereafter, no later than the first day of the sixth month of each
calendar year until the end of the Qualified Project Period.
3.10.4 The Developer shall make a diligent and good-faith effort to verify that the
information provided by an applicant in the Verification of Income is accurate by taking the
following steps, as a part of the verification process: (a) obtaining pay stubs for the most recent
[AEF:dj;v/91495_7/061303/4182,007] -8- DIIAFT 6/13/2003
one-month period, and (b) obtaining income W-2 Wage and Earning Statements and tax returns
fbr the most recent tax year; alternatively, if determined appropriate for the tenant's situation the
following may be obtained: (i) an income verification from the Social Security A&ninistration
and/or the California Department of Social Services if the applicant receives assistance from
either of such agencies; or (ii) if the applicant is unemployed, does not have income tax returns
or is otherwise unable to provide other forms of verification as required above, such other form
of independent verification as is satisfactory to the Agency.
3.10.5 The Developer shall maintain complete and accurate records pertaining to
the Very Low, Lower and Moderate Income Units and shall permit any duly authorized
representative of the Agency to inspect the books and records of the Developer pertaining to the
Project, including those records pertaining to the occupancy of the Affordable Housing Units.
3.10.6 The Developer shall prepare and submit to the Agency later than the first
day of the sixth month of each calendar year until the end of the Qualified Project Period, a
Certificate of Continuing Program Compliance executed by the Developer with the following
information:
3.10.6.1 The number of the dwelling units of the Prqiect which were
occupied, pursuant to Section 3.1 above, by Very Low, Lower and Moderate Income Tenants
during such period and such other tenant information as may be reasonably required as stated on
the form of the Certificate of Contin.uing Program Compliance acceptable to the Agency; and
3.10.6.2 A statement either (a) that no unremedied defanlt has occurred
under this Regulatory Agreement or (b)that a default has occurred, in which event the Certificate
shall describe the nature of the default in detail and shall set forth the measm'es being taken by
the Developer to remedy such default.
3.10.7 Each lease or rental agreement for an Affordable Housing Unit shall
contain a provision to the effect that the Developer has relied upon the Verification of Income
and supporting information supplied by the Very Low, Lower or Moderate Income Tenant in
determining qualification for occupancy of the Very Lo,v, Lower a~nd Moderate Income Units and
that any material misstatement in such verification (whether or not intentional) wilt be cause for
immediate termination of such lease or rental agreement. Each such lease or rental agreement
shall also provide (and shall so disclose to the tenant) that the tenant's income is subject to annual
verification in accordance with the terms of this Regulatory Agreement, and that, if upon review
of any such verification, the tenant's income exceeds the then applicable income limit for a Very
Low, Lower or Moderate Income Tenant, such tenant shall cease to qualify as a Low or Very
Low Income Tenant, and, as a consequence, said Tenant's lease shall be subject to termination on
such prior notice as the Agency deems reasonable.
3.11 Termination of Affordable Housing. Covenants. The provisions of this
Section 3 shall terminate in their entirety at the end of one year following the expiration of the
Qualified Project Period.
[AEF:4iw/91495_7/061303/4182 007] -9- DIt2kFT 6/12;/2003
4. Non-Discrimination Covenants. The Developer for itself, its successors, its assigns and
every successor in interest to the Site or any part thereof, and each Co-Mmmging Member, jointly
and severally, hereby represent, warrant and covenant as follows:
4.1 Obligation to Refrain from Discrimination.. There shall be no discrimination
against or segregation of any person or group of persons, on account of race, color, creed,
religion, sex, sexual orientation, marital status, national origin or azacestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the Site or any portion thereof; nor
shall the Developer itself or any person claiming under or through it (including any tenant)
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Site or any portion thereof.
4.2 Redevelopment Law; Form of Nondiscrimination and Nonsegregation
Clauses. The Developer itself and any person claiming under or through it shall refrain from
restricting the sale of the property on the basis of the race, color, creed, religion, sex, sexual
orientation, marital status, national origin or ancestry of any person. All deeds, leases or
contracts shall contain or be subject to substantially the following non-discrimination or non-
segregation clauses:
4.2.1 In deeds: "The grantee herein covenants by and for itself, its successors
and assigns, mad all persons claiming m~der or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, sex, sexual orientation, marital status, national origin or al~cestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the
grantee itself or any person claiming under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed.
The foregoing covenants shall run with the iand."
4.2.2 In leases: "The lessee herein covenants by and for itself, its successors
mhd assigns, and all persons claiming under or through them, and this lease is made and accepted
upon amd subject to the following conditions:
"That there shall be no discrimination against or segregation of any person or group of persons,
on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or
ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of
the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish
or permit such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy oftenants, lessees, sublessees, subtenants or
vendees in the land herein leased."
4.2.3 In contracts: "There shall be no discrimination against or segregation of
any person or group of persons on account of race, color, creed, religion, sex, sexual orientation,
marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation with
[AEF:djw/91495_7/061303/4182.007] - 1 0- DRAFT 6/13/2003
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees or vendees of the la2~d.'
5. Maintenance of the Pro~eet. Commencing upon the DDA Effective Date, the Developer
and its successors and assigns shall maintain at their cost the Developer-Owned Parcels, and
commencing upon the acquisition by the Developer or its successors or assigns of each remaining
portion of the Site, Developer and its successors and assigns shall maintain at their cost such
remaining portion of the Site as follows:
5.1 Prior to Renovation or Construction.
5.1.1 Prior to renovation or construction of any units on the Site, the Site shall at
all times be maintained (a) in a clean and weed-free condition, reasonably free fi'om any debris
and waste materials m~d (b) excluding any improvements thereon that are to be demolished as
approved by the Agency, in at least in the stone aesthetic and sound condition as the condition of
the prope~Xy as of the DDA Effective Date. All hard-surfaced areas, including asphalt, brick,
metal, concrete, glass, wood and other structural members, shall regularly be washed and
cleaned. Alt landscaped areas, including lawn areas and planters around and adjacent to exterior
walls of buildings, shall be maintained, including repairing automatic sprinklers, weeding,
pruning, fertilizing and making replacement of sl~rubs and other landscaping as may be required.
5.1.2 Any portion of the Site that has improvements that are to be demolished as
approved by the Agency, shall be secure and shall be maintained in the san~e manner as provided
in Section 5.1.1 until the commencement of the demolition.
5.2 During Renovation and/or Construction. From the date of commencement of
demolition or construction of any improvements on the Site until issuance of a Certificate of
Compliance, the Developer and its successors and assigns shall maintain all improvements on the
portions of the Site being demolished or under construction consistent with sound construction
industry practice.
5.3 Following Renovation or Construction.
5.3.1 Upon Completion of the Project improvements as provided in the DDA,
the Developer, its successors mad assigns shall maintain the Project Improvements in the same
aesthetic and same condition or better as the condition of such Project Improvements at the time
the Agency issues a Certificate of Compliance, reasonable wear and tear excepted. The standard
for the quality of maintenance of the Project Improvements required by th/s Section 5.3.1 shall be
met whether or not a specific item of main;enance is listed below. However, representative items
of maintenance shall include: (a) maintenance, repair (if needed) and replacement on a regular
schedule, consistent with like developments in Orange County, of private streets, roads, drives,
bike paths, alleyways, sidewalks, utilities (except to the extent o~vned or controlled by a utility
franchisee) common areas, landscaping, hardscaping and fore, talus; (b) frequent and regular
inspection for graftiti or danaage or deterioration or failure, and immediate repainting or repair or
replacement of alt snrfaces, fencing, xvalls, equipment, etc., as necessary; (c) emptying of trash
receptacles and removal of litter; (d) regular sweeping of roadways and sidewalks throughout the
Site; (e) fertilizing and replacing vegetation as necessary; (f) cleaning windows on a regular
basis; (g) painting the buildings on a regular program and prior to the deterioration of the painted
[AEF:djw/91495_7/061303/4182.007] -1 1- DIL~FT 6/13/2(103
surfaces; (h) conducting roof inspections on a regular basis and maintaining roofs in a leak-free
and weather-tight condition.
5.3.2 Upon Completion of the renovation or construction of Project
Improvements as provided in the DDA, Developer shall maintain, repair and replace ali or any
portion of the Project Improvements as may be required to maintain the Project Improvements in
a high quality condition, reasonable xvear and tear excepted. Ail Project Improvements repaired
or replaced under this Section 5.3.2 shall be repaired or replaced with materials, apparatus and
facilities of quality at least equal to the quality of the materials, apparatus and facilities identified
for the Project hnprovements under this Regulatory Agreement.
5.3.3 Developer's obligations to maintain the Project Improvements as provided
in this Section 5.3 shall include, but not be limited to, the following:
5.3.3.1 Maintaining all paved surfaces, including streets, drives, parking
areas and curbs of the common areas in a smooth and evenly covered condition, which
maintenance work shall include without limitation, cleauing, sweeping, re-striping, repairing and
resurfacing of the paved surfaces using surface material of an appearm~ce and quality equal or
superior to the materials installed under this Regulatory Agreement, all of which shall be carried
out in accordance with industry standards;
5.3.3.2 Removal of all papers, debris, filth and refuse, and washing and
sweeping the common area to the extent necessary to keep the Site in a first-class, clean and
orderly condition, and washing down and/or cleaning all hard surfaces including brick, metal,
concrete, glass, wood and other structural members as required to conform to industry standards;
5.3.3.3 Operating, keeping in repair, cleaning and replacing and/or re-
ballasting all common area lighting fixtures, equipment and facilities as may be reasonably
required, including all lighting necessary or appropriate for the Site mad Project Improvements,
secm-ity and exterior lights intended to illuminate the Site and Project Improvements;
5.3.3.4 Cleaning and maintaining all landscaped areas, including
landscape planting areas, laxvn areas and planters around and adjacent to exterior walls of
buildings, repairing automatic sprinklers, weeding, prm~ing, fertilizing and making replacement
of sl~rubs and other landscaping as required; and
5.3.3.5 Maintaining, repairing and replacing as necessary any
freestanding, monument or pylon signs on the Site.
Sale or Transfer of the Proiect.
Prior to issuance of the Certificate of Compliance, the terms of the DDA shail govern all
sales, transfers, assig~m~ents and dispositions of the Project and/or the Site or any portion thereof.
Developer hereby covenants and agrees that following issuance of the Certificate of Compliance,
it shall not voluntarily sell, transfer or otherxvise dispose of the Project, or any portion thereof
(other than for individual tenant use as contemplated hereunder), without obtaining the prior
written consent of the Agency in its reasonable discretion. It is hereby expressly stipulated and
agreed that (a) Developer shall not sell, transfer or dispose of the Project and the Site except
[AEF:djw/91495_7/061303/4182.007] -12- DRAFT 6/13/2003
tl~rough a sale, transfer or disposition of the entirety of the Project a~nd the Site and (b) any sale,
transfer or other disposition of the Project in violation of this Section 6 shall be null, void, and
shall be ineffective to relieve the Developer of its obligations under this Regulatory Agreement.
Any transfer of the Project to any entity, whether or not affiliated with the Developer, shall be
subject to the provisions of this Section 6. The provisions of this Section 6 shall terminate in
their entirety at the end of one year following the expiration of the Qualified Project Period.
7. Term.
This Regulatory Agreement and all and each of the provisions hereof shall become
effective upon its execution and delivery, shall remain in full force and effect thereafter except as
expressly pro¼ded herein. It is expressly agreed and understood that the provisions of this
Regulatory Agreement are intended to smwive the discharge of the Bridge Loan and Agency
Loan, and the termination of the Bridge Loan Deed of Trust and Agency Loan Deed of Trust and
of the DDA.
8. Covenants and Restrictions to Run with the Land.
8.1 Developer states that: all covenants and restrictions contained in this Regulatory
Agreement are intended to be covenants rmming with the land, and shall, in any event, and
without regard to tectnfical classification or designation, legal or other~vise, be, to the fullest
extent permitted by law and equity, binding for the benefit and in favor or, and enforceable by the
Agency and the City, and their respective successors and assigns, against Developer, its
successors and assigns, to or of the Site or any portion thereof or any interest therein, and any
party in possession or occupancy of said Project or portion thereof.
8.2 The parties acknowledge and agree that all covenants and restrictions contained in
this Regulatory Agreement are intended to be covenants rmming with the land of the entire Site,
and not just the lm~d of the Developer-O~vned Parcels, and that this Regulatory Agreement m~d
the covenants and restrictions contained herein shall be binding upon the remainder of the Site at
such time as such additional land is acquired by the Developer without the need for any
amendment to this Regulatory Agreement. Without in any way limiting the foregoing, each of
the parties hereto shall execute and deliver at their own cost and expense, any and all additional
papers, documents, or instruments, rand shall do any and all acts and things reasonably necessary
or appropriate in connection with the performance of their respective obligations hereunder in
order to carry out the intent and purposes of this Regulatory Agreement, including, without
limitation, the preparation, exec.ution and recordation of an amendment to this Regulatory
Agreement stating that any portion of the Site acquired by the Developer after the Effective Date
of this Regulatory Agreement shall be bound by this Regulatory Agreement and byall covenants
and restrictions contained in this Regulatory Agreement.
8.3 In amplification and not in restriction of the provisions set forth hereinabove,
Developer specifically states that it is intended and agreed that the Agency and the City shall
each be deemed a beneficiary of the agreements, covenants and restrictions herein both for mad in
their own right and also for the purposes of protecting the interests of the community. Ail
covenants and restrictions without regard to technical classification or designation shall be
binding for the benefit of the Agency and the City, and such covenants and restrictions shall mn
[AEF:d.iw/91495_7/061303/4182,007] -] 3- DRAFT
in favor of Agency and City for the entire period during which such covenants amd restrictions
shall be in fbrce and effect, without regard to whether the Agency or the City is or remains an
owner of any land or interest therein to which such covenants and restrictions relate. The Agency
and the City shall each have the independent right, in the event of any breach of this Regulatory
Agreement or covenant or restriction herein, to exercise all the rights mhd remedies, and to
maintain any action at law' or suit in equity or other proper proceedings to enlbrce the curing of
such breach of this Regulatory Agreement or the covenants, conditions and/or restrictions
contained herein.
8.4 Subject to Section 8.5~, the Agency and its successors and assigns, and Developer
and the permitted successors and assigns of Developer in and to all or any part of the fee title to
the Project, shall have the right upon written agreement signed by both parties to consent and
agree to changes in, or to eliminate in whole or in part, any of the covenants or restrictions
contained in this Regulatory Agreement without the consent of any tenant~ lessee, easement
holder, licensee, mortgagee, trustee, beneficiary under a deed of trust, or amy other person or
entity having any interest less than a fee in the Project. Except as specifically set forth herein~ tl~e
covenants, conditions and restrictions contained in this Regulatory Agreement, without regard to
technical classification, shall not benefit or be enforceable by any owner of any other real
property within or outside the Project, or any person or entity having any interest in any other
such realty.
8.5 No breach of any of the provisions of this Regulatory Agreement shall impair,
defeat or render invalid the lien of any Mortgage made in good faith and for value encumbering
the Project or any portion thereof. No amendment or modification to this Regulatory Agreement
made without the consent of any Permitted Mortgagee shall be binding upon such Permitted
Mortgagee or its successors in interest. Developer shall not terminate this Agreement as to any
portion of the Site which is subject to any Permitted Mortgage without first obtaining the prior
written consent of all Pe~itted Mortgagees whose Permitted Mortgages encumber that portion
of the Site.
9. Burden and Benefit.
The Agency and the Developer hereby declare their understanding and intent that the
burden of the covenants and restrictions set forth herein touch and concern the Project in that the
Developer's legal interest in the Project is rendered less valuable thereby. The Developer hereby
further declares its understanding and intent that the benefit of such covenants and restrictions
touching and concerning the land is the furthering of public purposes for which the Agency Loath
and the Bridge Loan were made to Developer.
10. Uniformity; Common Plan.
The covenants, reservations and restrictions hereof shall apply uniformly to the entire
Project in order to establish and carry out a common plan for the use, development and
improvement of the Site.
[AEF:djw~ 1495_7/061303/4182.007] -14- DRAFT 6/13/'2003
11. Default; Enforcement.
11.1 Default.. Developer shall be in "Default" under this Regulatory Agreement if any
of the following occur:
11.1.1 A Default occurs under the DDA or, if the DDA has terminated, either the
Bridge Loan Deed of Trust or the Agency Loan Deed of Trust; or
11.1.2 The Developer or its successor in interest fails to perform fully any of its
obligations set forth in this Regulatory Agreement within thirty (30) days following receipt of
written notice regarding such other default; provided, that if such failure is capable of being
remedied but not capable of being remedied within thirty (30) days, then the defaulting party
shall have an additional period of time within which to remedy such falltnce, provided, however,
that the total period for cure provided pursuant to this Section shall not exceed sixty (60) days.
The failure of the Agency or the City to notify Developer or its successor in interest of any such
default shall not be deemed a waiver of the default.
11.2 Remedies.
11.2.1 Following a Default described in Section 11.1, either the Agency or the
City may pursue all of its rights and remedies available at law, in equity or by statute including
without limitation, all of its rights and remedies set forth in the Bridge Loan Promissory Note,
the Agency Loan Promissory Note, the Bridge Loan Deed of Trust or the Agency Loan Deed of
Trust (the "Loan Documents"). The parties agree that this Regulatory Agreement may be
specifically enforced.
11.2.2 In the event of a Default by the Developer, the Agency shall have the right,
but not the obligation, to perform the unperformed obligations at the expense of the Developer,
and all expenditures of the Agency to cure such default shall accrue interest from the date such
sums are actually spent by the Agency at a default rate equal to the then "prime rate" specified by
Wells Fargo Bank or its successor plus three percent (3%), but not in excess of such rate as may
be permitted under applicable law. Payment shall be made by the Developer to the Agency
within thirty (30) day's after written request therefor. If payment is not made by the Developer
within ten (10) days after such demand is made then the Agency shall have the right to deduct the
aforesaid amount, without liability or forfeiture, from any sums then due or thereafter becoming
due from it to the Developer under this Regulatory Agreement, the Loan Documents or the [)DA.
In addition, the amount due to the Agency shall constitute a lien and charge upon the fee interest
of Developer in the Site and the Agency shall have the right to record a notice (the "Delinquency
Notice") against the Site, which states the an2ount due from the Developer. The aforesaid lien
shall attach immediately upon recordation of the Delinquency Notice. A copy of the
Delinquency Notice shall be detivemd to the Developer pursuant to Section 13.5. The lien may
be foreclosed by appropriate action in court or in the manner prescribed by law. Upon such
event, the Developer shall be required to pay ail attorneys' fees and costs and expenses of the
Agency in com~ection with the preparation, recordation and foreclosure of such lien. Any such
lien shall be prior to ail encmnbrances, liens or charges on the Site except (a) taxes which are by
taw prior thereto; (b) the rights of occupants pursuant to bona fide leases; and (c) any Permitted
Mortgage (as defined in the DDA) and advances thereunder made in good faith and for value and
[AEF:djw/91495_7/061303/4182.007] -15~ DRAFT 6/13/2003
recorded prior to the Delinquency Notice. The transfer of the Site or any portion thereof shall not
affect the aforesaid lien.
11.2.3 The rights and remedies of Agency shall be cumulative and no one of such
rights auld remedies shall be exclusive of any of the others, or of reV other right or remedy at law
or in equity which the Agency might otherwise have by virtue ora default under this Agreement,
and the exercise of one such right or remedy by the Agency shall not impair the Agency's
standing to exercise any other right or remedy.
11.3 Non-Complying Affordable Housing Units. In addition to and without
limitation of any other rights and remedies set forth in this Regulatory Agreement or otherwise
available to any pa~ty legally entitled to enforce this Regulatory Agreement, if a Default with
respect to Section 3 occurs, then Agency shall have the right to lease, and Developer shall lease
to Agency on demand, for a rental of $1.00 per unit per year any and all of the Non-Complying
Affordable Housing Units at such time as the Non-Complying Affordable Housing Unit(s) is
vacated. Notwithstanding any term or condition of the lease under which the Agency leases a
Non-Complying Affordable Housing Unit pursuant to this Section 11.3, Developer hereby
consents to and grants Agency the right to assign such lease or snblet such unit(s) to a Very Low,
Lower or Moderate Income Tenant at the Affordable Rent for Very Low, Lower or Moderate
Income Unit(s), or to any non-profit housing provider qualified as a 501 (c)(3) entity under the
Internal Revenue Code (a "Provider") in the community for $1.00 per year. The assigm~aent or
sublet to a Provider shall be on the condition that such Provider subleases such Affordable
Housing Unit(s), or assigns such lease(s) to a Very Low, Lower or Moderate Income Tenant at
the applicable Affordable Rent for such Tenant. If the Agency assigns or sublets to any Provider,
notwithstanding any term or condition of the lease between the Developer mad the Agency, the
Developer hereby consents to and grants such Provider the right to assign such lease or sublet
such Affordable Housing Unit to any Very Low, Lower or Moderate Income Tenant at the
applicable Affordable Rent for such Tenant. If the Agency leases any Affbrdable Housing
Unit(s) or a Provider subleases any Affordable Housing Unit(s) or is the assignee of any lease(s)
from the Agency, the Agency or Provider, as the case may be, to the extent necessary to ensure
compliance with Section 3 hereof, shall sublease such Affordable Housing Unit(s) or assign such
lease(s) to any Very Low, Lower or Moderate Income Tenant at the applicable Affordable Rent.
Any rent paid under such a sublease or assignment shall be paid to the Developer after the
Agency or Provider, as the case may be, has been reimbursed for any reasonable expenses
incurred by it in connection with exercising the rights and remedies set forth in this Section t 1.3;
provided hoxvever, if the Developer is in default under any Permitted Mortgage to which the
Loan Documents are subordinate, such rent shall be paid to the party legally entitled thereto
under the terms of the applicable loan.
12. Recording and Filing.
The Developer shall cause this Regulatory Agreement, and all anaendments and
supplements hereto and thereto, to be recorded and filed in the Official Records and in such other
places as the Agency may reasonably request. The Developer shall pay all fees and charges
incurred in cmmection with any such recording. Written evidence of the recorded Regulatory
Agreement shall be provided to the Agency.
[AEF:djw/91495_7/061303/4182.007] -16- DRAFT 6/13/2003
13. Miscellaneous.
13.1 Governing Law. This Regulatory Agreement shall be governed by, interpreted
under, construed and enforced in accordance with the laws of the State, irrespective of State
choice-of-law principles.
13.2 Modifications or Amendments. No amendment, change, modification or
supplement to this Regulatory Agreement shall be valid and binding on any of the parties unless
it is represented in writing and signed by each of the parties hereto and dnly recorded in the
Official Records.
13.3 Waiver. No waiver of any provision or consent to any action under this
Regulatory Agreement shall constilute a waiver of any other provision or consent to any other
action, whether or not similar. No waiver or consent shall constitute a continuing waiver or
consent or commit a party to provide a waiver in the future except to 'the extent specifically set
forth in writing. Any waiver given by a paxty shall be null and void if the party requesting such
waiver has not provided a full and complete disclosure of all material facts relevant to the waiver
requested.
13.4 Counterparts. This Regulatory Agreenrent may be executed in txvo or more
separate counterparts, each complete and fully executed set of which, vvhen so executed, shall be
deemed to be an original. Such counterparts shall, together, constitute and shall be one and the
same instrument. This Regulatory Agreement shall not be effective until the execution and
delivery by the parties of at least one set of counterparts. The parties hereunder authorize each
other to detach and combine original signature pages and consolidate them into a single identical
original. Any one of such completely executed counterparts shall be sufficient proof of this
Regulatory Agreement.
13.5 Notices. All notices, demands, consents, requests and other cormnunications
required or permitted to be given under this Regulatory Agreement shall be in writing and shall
be deemed conclusively to have been duly given (a) when hand delivered to the other party;
(b) three (3) business days after such notice has been sent by United States mail via certified
maii, return receipt requested, postage prepaid, and addressed to the other party as set forth
below; or (c) the next business day after such notice has been deposited with a national overnight
delivery service reasonably approved by the parties (Federal Express and Airborne Express ~xe
deemed approved by the parties), postage prepaid, addressed to the party to whom notice is being
sent as set forth below with next-business-day delivery guaranteed, provided that the sending
party receives a confirmation of delivery from the delivery service provider. Unless otherwise
provided in writing, all notices hereunder shall be addressed as follows.
[AEF:djw/914~)5 7/061303/4182,007] -17- DRAFT 6/13/2003
Developer:
Agency
Kenyon Dr., LLC
c/o Statewide Acquisition Corporation
2190 North C a~nal
Orange, CA 92865
Attn: Kent Hawkins, President
with a copy to:
Centurion Partners, LLC
3636 Birch St. Suite 260
Ne,vport Beach, CA 92660
Attn: Michael Smith, Manager
with a copy to:
Permitted Mortgagees who have provided an
address fbr notices to Agency in ~vriting
Tustin Community Redevelopment Agency
300 Centennial Way
Tustin, CA 92780
Attn: William A. Huston, Executive Director
13.6 Severabili~. Any provision of this Regulatory Agreement that is deemed to be
illegal, invalid or m~entbrceable by an arbitrator or court of competent jurisdiction shall be
ineffective to the extent of the invalidity or unenforceability of such provision and shall be
deemed stricken from this Regulatory Agreement. Any stricken provision shall not affect the
legality, enforceability or validity of the remainder of this Regulatory Agreement. If any
provision or part thereof of this Regulato~7 Agreement is stricken in accordance with the
provisions of this Section, then the stricken provision shall be replaced, to the extent possible,
with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken
provision as is legally possible. Any such invalidity or unenforceability of any provision in any
jurisdiction shall not invalidate or render unenforceable such provision in m~y other jurisdiction.
13.7 Legal Fees and Costs. If any party to this Regulatory Agreement institutes any
action, suit, counterclaim, appeal, azbitration or mediation for any relief against another party,
declaratory or otherwise (collectively an "Action"), to enforce the terms hereof or to declare
rights herem~der or vvith respect to any inaccm'acies or material omissions in com~ection with emy
of the covenants, representations or warranties on the pact of the other party to this Regulatory
Agreement, then the prevailing party in such Action, whether by arbitration or final judgment,
shall be entitled to have and recover of and from the other party all costs and expenses of the
Action, including reasonable attorneys' fees and costs (at the prevailing party's attorneys' the;n-
prevailing rates as increased from time to time by the giving of advanced written notice by such
counsel to such party) incurred in bringing and prosecuting such Action and/or enforcing any
judgment, order, ruling or award (collectively, a "Decision") granted therein, ali of which shall be
deemed to have accrued on the commencement of such Action and shall be paid whether or not
such Action is prosecuted to a Decision. Any Decision entered in such Action shall contain a
specific provision providing for the recovery of attorneys' fees and costs incurred in enforcing
[AEF:dj~v/91495_7/06t303/4182.007] -1 8- DRAFT 6/13/2003
such Decision. A court or arbitrator shall fix the amount of reasonable attorneys' fees and costs
upon the request of either party. Any judgment or order entered in any final judgment shall
contain a specific provision providing for the recovery of all costs and expenses of suit, including
reasonable attorneys~ fees and expert fees and costs (collectively "Costs") incurred in errforcing,
perfecting and executing such judgment. For the purposes of this Section, Costs shall include,
without limitation, in addition to Costs incurred in prosecution or defense of the m~derlying
action, reasonable attorneys' fees, costs, expenses and expert fees and costs incurred in the
following: (a) post-judgment motions and collection actions; (b) contempt proceedings;
(c) garnishment, levy, debtor and third party examinations; (d) discovery-; (e) bankruptcy
litigation; and (f) appeals of any order or judgment. "Prevailing party" within the meaning of
this section includes, without limitation., a party who agrees to dismiss am Action in consideration
for the other party's payment of the mnounts allegedly due or performance of the covenants
allegedly breached, or obtains substantially the relief sought by such party'.
13.8 Authority4 of Signatories to Regulatory. A~reement. Each person executing this
Regulatory Agreement represents and warrants that he or she is duly authorized and has legal
capacity to execute and deliver this Regulatory Agreement on behalf of the parties for xvhich
execution is made. Each party represents and warrants to the other that the execution of this
Regulatory Agreement and the performance of such party's obligations hereunder have been duly
authorized and that the agreement is a valid and legal agreement binding on such party and
enforceable in accordance with its terms.
13.9 Consent to Jurisdiction. The parties hereto agree that ail actions or proceedings
arising in com~ection with this Regulatory Agreement shall be tried and litigated exclusively in
the state and federal courts located in the County of Orange, State of California. This choice of
venue is intended by the parties to be mandatory amd not permissive in nature, thereby precluding
the possibility of litigation between or among the parties with respect to or arising out of this
Regulatory Agreement in any jurisdiction other than that specified in this section. Each party
hereto waives any right that it may have to assert the doctrine forum non converziens or similar
doctrine or to object to venue with respect to any proceeding brought in accordance with this
section, and stipulates that the state and federal corn:ts located in the County of Orange, State of
California, shall have inlversonamjurisdiction and venue over each of them for the purpose of
litigating any dispute, controversy or proceeding arising out of this Regulatory Agreement Each
party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any
action against it as contemplated by this section by means of registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices as set forth in this
Regulatory Agreement, or in the mmmer set forth in the section of this Regulatory Agreement
pertaining to notice. Any final judgment rendered against the party in amy action or proceeding
shall be conclusive as to the subject of such final judgment and may be enforced in other
jurisdictions in any manner provided by law.
13.10 Recitals. ']?he recitals set forth at the begi~ming of this Regulatory Agreement of
any matters or facts shall be conclusive proof of the truthfulness thereof and the terms and
conditions set forth in the recitals, if any, shall be deemed a part of this Regulatory Agreement.
13.11 _~..~ptions. Ali captions, titles or headings of the articles, sections, paragraphs or
subparagraphs of this Regulatory Agreement are inserted solely as a matter of convenience of the
[AEF:djw/91495_7/06 [ 303/4182.0071 -19-. DllA. FT 6/13/2003
parties hereto, and for reference, shall not be deemed to be a part of this Regulatory Agreement,
and shall not define, limit, extend or describe the scope of this Regulatory Agreement nor be
used or construed in the interpretation or determination of the validity of this Regulatory
Agreement or may provision hereof.
13.12 Estoppel Certificate. Each party hereto shall upon the written request of the
other party hereto (which may be made by the requesting party not be made more frequently than
two (2) times during any calendar year), shall issue to a prospective mortgagee or successor of
such requesting Oxvner, within fifteen (15) calendar days after receipt of any such request, an
estoppel certificate stating:
(a) whether the party to whom the request has been directed knows of any default by
the requesting party under this Regulatory Agreement~ and if there are known defaults, specifying
the nature thereof;
(b) whether this Regulatory Agreement, or il:then in effect, the DDA, has been
assigned, modified or amended in any way (and if it has, then stating the nature thereof); and
(c) whether, to the responding party's knowledge, this Regulatory Agreement, as of
the date of such estoppel certificate, is in full force and effect.
Such estoppel certificate shall act as a waiver of any claim by the party fm'nishing it to the extent
such claim is based upon facts contrary to those asserted in the estoppel certificate and to the
extent such claim is asserted against a bona fide encumbrancer or purchaser for value without
knowledge of facts contrary to those contained in the estoppel certificate and who has acted in
reasonable reliance upon the estoppel certificate. However, such estoppel certificate shall in no
event subject the party furnisl~ing it to any liability whatsoever, notwithstanding a2~y negligent or
other inadvertent failure of such party to disclose correct and/or relevant information.
[AEF:djw/91495_7/06 t 303/4182.007] -20- DRAFT 6/13/2003
IN WITNESS WHEREOF, the Tustin Community Redevelopment Agency and the
Developer haYe executed this Regulatory Agreement and Declaration of Restrictive Covenmats
by duly authorized representatives, all as of the date first w~:itten above.
TUSTIN COMMUNITY REDEVELOPMENT
AGENCY
By:
William A. Huston
Executive Director
APPROVED AS TO FORM
Special Counsel fbr the Agency
GILCHRIST & RUTTER
PROFESSIONAL CORPORATION
By:
DEVELOPER:
KENYON DR., LLC,
a California limited liability company
By: CO-MANAGING MEMBER:
Statewide Acquisition Corporation,
a California limited liability company
By:
By:
Kent Hawkins, President
CO-MANAGING MEMBER:
Centurion Partners, LLC,
a California limited liability company
By:
Michael Smith, Manager
[AEF:djw/914957/061303/4182.007] -21- DRAFT 6/13/2003
EXHIBIT "A"
LEGAL DESCRIPTION
DEVELOPER-OWNED PARCELS
[AE?:djw/91495_7/061303/4] 82 007] A-1 DI~kFT 6/13/2003
To be Inserted prior to Execution
EXHIBIT "B~'
LEGAL DESCRIPTION
ACQUISITION PARCELS
[AEF:djw/91495 7/061303/4182.007] B-1 DRAFT 6/13/2003
To be Inserted prior to Execution
EXHIBIT "C"
GLOSSARY OF DEFINED TERMS
KENYON DRIVE MULTIFAMILY RESIDENTIAL
ACQUISITION AND SUBSTANTIAL REHABILITATION PROJECT DDA
For purposes of this Regulatory Agreement, the following initially capitalized terms shall
mean the following:
"Act" means Chapter 8 (commencing with Section 33750) of Part 1 of Division 24 of the
Health and Safety Code of the State of California, as amended.
"Affordable Housing Units" means 'the sixty seven (67) units on the Site to be rented to,
occupied by or held available for Very Low, Lower or Moderate Income Tenants at an applicable
Aftbrdable Rent.
"Affordable Rent for Lower Income Units" means the rent per unit for Lower Income
Tenants as more particularly defined ia Health and Safety Code Section 50053 (b)(2) and as
generally described herein, the product of 30 percent times 60% of the Area Medimn Income
adjusted for fhmily size appropriate for the m~its, including a reasonable utility allowance; and,
for those Lower Income Tenm~ts with gross incomes that exceed 60% of the area median income,
the product of 30% times 80% of the Area Median Income adjusted for family size appropriate
for the units, including a reasonable utility allowance.
"Affordable Rent for Moderate Income Units" means the rent per unit for Moderate
Income Tenants as more particularly defined in Health and Safety Code Section 50053 (b)(3),
and as generally described herein, the product of 30 percent times 110% of the Area Median
Income adjusted for fmnily size appropriate for the units, including a reasonable mility
allowance; mad, for those Moderate Income Tenanls with gross incomes that exceed 60% of the
area median income, the product of 30% times 120% of the Area Median Income adjusted for
family size appropriate for the units, including a reasonable utility allowance.
"Affordable Rent for Very Low Income Units" means the rent per unit for Very Low
Income Tenants as more particularly defined in Health and Safety Code Section 50053 (b)(1) and
as generally described herein, the product of 30 percent times 50% of the Area Median Income
adjusted for family size appropriate for the units, including a reasonable utility allowance.
"Agency Loan" means the long-term loan made by the Agency to the Developer pursuant
to the Agency Loan Promissory Note for the purpose of financing the Site Improvement costs
and long-term rental affordability restrictions of the Project.
"Acquisition Parcels" is defined in Recital B to this Regulatory Agreement.
"Area Median Income and AMI" means the median family income for the Orange
County Primary Metropolitan Statistical Area as most recently determined by the Secretary of the
Treasury pursuant to ]Section 142(d)(2)(B) of the Internal Revenue Code].
[AEF:djw/9 1495_7/061303/4182.007] C-1 DRAFT 6/i3/2003
~Bridge Loan" means the short-term loan made by the Agency to the Developer pursuant
to the Bridge Loam Promissory Note for the purpose of financing the Site assembly and
predevelopment costs of the Project.
"Certificate of Continuing Program Compliance" means the annual report of
occupancy for the Affordable Housing Units including the verification of income provided by
Developer to Agency as described in Section 3.10.6 hereof or such other form as may' be
prescribed by the Agency.
"Completion Certificate" means the notice of completion of construction of the Project
filed by Developer, a copy of which shall also be concurrently delivered to the City and Agency
by the Developer.
"DDA" is defined in Recital C to this Regulatory Agreement.
"Default" is defined in Section 11.1 of this Regulatory Agreement.
"Developer" means Kenyon Dr., LLC and its permitted successors and assigns.
"Developer-Owned Parcels" is defined in Recital B to this Regulatory Agreement.
"Lower Inco~ne Tenant" means households whose incomes do not exceed eighty
percent (80%) of the Area Median Income with adjustments for smaller and larger fan~ilies. The
determination ofa tenm~t's stalus as a Lower Income Tenant shall be made by the Developer
upon initial occupancy of a unit in the Project by such tenant and annually thereafter on the basis
of a Verification of Income executed by the tenant.
"Lower Income Units" means the seventeen (17) traits in the Project required to be
rented to, occupied by, and held available for Lower Income Tenants in accordance with the
terms of this Regulatory Agreement.
"Moderate Income Tenant" means households whose incomes do not exceed one
hundred and twenty percent (120%) of the Area Median Income with adjustments lbr smaller and
larger families. The determination of a tenant's status as a Lower Income Tenant shall be made
by the Developer upon initial occupancy ora unit in the Project by such tenant and annually
thereafter, on the basis of a Verification of Income executed by the tenant.
"Moderate Income Units" means the twenty seven (27) units in the Project required to
be rented to, occupied by, or held available for Moderate Income Tenants in accordance with the
terms of this Regulatory Agreement.
"Non-Complying Affordable Housing Units" shall mean an Affordable Housing Unit
which is occupied and/or leased in violation of Section 3 of this Regulatory Agreement
(excluding units leased by any eligible tenant who loses eligibility between certification dates.)
Determination of such a violation may be based on information provided in the Annual Report or
determined by Agency in its reasonable discretion based on information otherwise available to it.
[AEF:djw/9 I495_7/061303/4182.007] C-2 DRAI~I? 6/13/2003
"Permitted Mortgage (Permitted Mortgagee)" means Developer's interim and
permanent financing loan(s) for acquisition, development, and construction, as may be approved
by the Agency for the entire Site.
Project" means Site and the Project Improvements.
"Project Improvements" means all structures and related buildings and other
improvements on the Site to be substantially rehabilitated or to be constructed on the Site and all
fixtures and other property owned by the Developer and located on, or used in connection with,
such buildings, structures and improvements.
"Qualified Project Period" means the period beginning on the first day on which at
least 50% of the residential units in the Project are rehabilitated and first occupied and ending on
the date which is fifty-five (55) years after the date on which at least 50% of the residential units
in the Project are rehabilitated and first occupied.
"Site" means the Developer-Owned Parcels and the Acquisition Parcels, collectively.
"State" means the State of California.
"Verification of Income" means the documentation obtained by the Developer from the
Very Low, Lower and Moderate Income Tenants of the Verification of Income described in
Section 4.2 hereof or such other form as may from time to time be provided by the Agency to the
Developer.
"Very Low Income Tenant" means vex3: low income households whose incomes do not
exceed fifty percent (50%) of the Area Median Income with adjustments for smaller and larger
families. The determination of a tenant's status as a Very Low Income Tenant shall be made by
the Developer upon initial occupancy of a unit in the Project by such tenant and armually
thereafter, on the basis of a Verification of Income executed by the tenant.
"Very Low Income Units" means the twenty three (23) units in the Project required to be
rented to, occupied by, or held available for Very Low Income Tenants in accordance with the
Regulatory Agreement.
[AEF:dj w/91495_7/061303/4182.007] C-3 DRAFT 6/13/2003
ATTACHMENT NO, 13
CERTIFICATE OF COMPLIANCE
[AEF:djw/91680_~061203/4182.007J Attacln~ent No. 13 - Page I
To be Inserted prior to Execution
ATTACHMENT NO. 14
EXISTING MORTGAGES AND CONTRACTS AFFECTING THE SITE
AND/OR THE PROJECT
[Developer to complete by detailing the Imperial Bank loan documentation and other contracts
and mortgages, if any]
[AEF:djw#91680_4/061203/4182,007] Attachment No. 14 - Page 1
To be Inserted prior to Execution
ATTACHMENT NO. 15
DEVELOPER'S CERTIFICATE
[AEF:djw/91680_4/061203/4182.007] Attac[nnent No. 15 - Page
To be Inserted prior to Execution
ATTACHMENT NO. 16
SCHEDULE FOR DEVELOPER'S EQUITY CONTRIBUTION
[AEF:djw/9 t680_4/061203/4182.0071 A~achment No. 16 - Page 1
To be Inserted prior to Execution
ATTACHMENT NO. 17
MEMORANDUM OF DDA
[AEF:djw/91680_4/061203/4182.007] Attachment No. 16- Page
To be Inserted prior to Execution
[AEF:djw/9t680_4/061203/4182 007] Attachment No. 17- Page 1