HomeMy WebLinkAboutCherry Tree Walk LLC; 1998-06-25;LOAN AGREEMENT
BY AND BETWEEN
THE CITY OF CARLSBAD
and
CHERRY TREE WALK, LLC
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ARTICLE 1 . DEFINITIONS AND EXHIBITS ............................................................................ 2
Section 1.1 Defirntlons 2
Section 1.2 Exhibits 4
ARTICLE 2 . LOAN PROVISIONS .............................................................................................. 5
Section 2.1 Loan ............................................................................................................. 5
Section 2.2 Interest .......................................................................................................... 5
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Section 2.3 Use of Loan Funds ....................................................................................... 5
Section 2.4 Security ........................................................................................................ 5
Section 2.5 Disbursement of Loan Proceeds .................................................................. 5
Section 2.6 Intercreditor Agreement ............................................................................... 7
Section 2.7 Subordination ............................................................................................... 7
Section 2.8 Term and Repayment Schedule ................................................................... 7
Section 2.9 Assumption .................................................................................................. 8
Section 2.10 Approval of Additional Financing ............................................................... 8
ARTICLE 3 . CONSTRUCTION OF THE DEVELOPMENT ..................................................... 8
Section 3.1 Schedule of Performance ............................................................................. 8
Section 3.2 Construction Pursuant to Plans and Laws .................................................... 9
Section 3.3 Equal Opportunity ........................................................................................ 9
Section 3.4 Mechanics Liens, Stop Notices, and Notices of Completion ....................... 9
ARTICLE 4 . REQUIREMENTS DURING AND AFTER CONSTRUCTION ......................... 10
Section 4.1 Information ................................................................................................ 10
Section 4.2 Records ...................................................................................................... 10
Section 4.3 Inspections ................................................................................................. 10
Section 4.4 Insurance .................................................................................................... 11
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Section 4.5
Section 4.6
Section 4.7
Section 4.8
Section 4.9
Section 4.10
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Hazardous Materials .................................................................................. 12
Fees and Taxes ........................................................................................... 13
Nondlscnmlnatlon ...................................................................................... 14
Notice of Lltlgation .................................................................................... 14
Transfers .................................................................................................... 14
Sale ofunits ............................................................................................... 15
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............................................................................................................. ARTICLE 5 . DEFAULT 15
Section 5.1 Events of Default ....................................................................................... 15
Section 5.2 Remedies .................................................................................................... 17
Section 5.3 Remedies Cumulative ................................................................................ 18
Section 5.4 Waiver of Terms and Conditions ............................................................... 18
ARTICLE 6 . REPRESENTATIONS AND WARRANTIES OF DEVELOPER ....................... 18
Section 6.1 Representations and Warranties ................................................................. 18
ARTICLE 7 . GENERAL PROVISIONS .................................................................................... 20
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7.10
Relationship of Parties ............................................................................... 20
No Claims .................................................................................................. 20
Amendments 20 ..............................................................................................
Indemnification .......................................................................................... 20
Non-Liability of City Officials, Employees and Agents ........................... 21
No Third Party Beneficiaries ..................................................................... 21
Discretion Retained By City ...................................................................... 21
Notices, Demands and Communications ................................................... 21
Applicable Law .......................................................................................... 22
Parties Bound; Covenants Running with the Land .................................... 22
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v (continued)
Section 7.1 1 Attorneys' Fees. .......................................................................................... 22
Section 7.12 Severablhty. 22
Section 7.13 Force Majeure. ........................................................................................... 22
Section 7.14 Approvals ................................................................................................... 22
Section 7.15 Title of Parts and Sections. ............................................... : ........................ 23
Section 7.16 Entire Understanding of the Parties. .......................................................... 23
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Section 7.17 Multiple Originals; Counterpart ................................................................. 23
Section 7.18 Time ofthe Essence ................................................................................... 23
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LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as of 3 uc 23 , 1998,
by and between the City of Carlsbad, a municipal corporation (the "City"), and Cherry Tree
Walk, LLC, a limited liability company (the "Developer"), with reference to the following facts:
A. The Developer is the owner of certain real property in the City of Carlsbad, in the
County of San Diego, California described in Exhibit A attached hereto and incorporated herein
(the "Affordable Development Property"). An affiliate of Developer purchased the Affordable
Development Property from SAMBI Seaside Heights, L.L.C. (the "Master Developer"), and then
conveyed the Affordable Development Property to the Developer.
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B. The Master Developer received approval fiom the City to construct 277
residential housing units in the City, in a development known as SAMBI Seaside Heights (the
"Master Development"). In satisfaction of certain conditions of approval in connection with the
City's approvals of the Master Development, the City and the Master Developer executed an
Affordable Housing Agreement Imposing Restrictions on Real Property dated as of November
11, 1996 (the "Original Affordable Housing Agreement").
C. Pursuant to the Original Affordable Housing Agreement, the Master Developer
agreed to sell 42 of the housing units in the Master Development at affordable housing cost to
lower income households (the "Affordable Units"). The Master Developer further agreed to
carry back second mortgage financing on the Affordable Units in an amount equal to the
difference between the market rate purchase price of the Affordable Unit and the affordable price
of such unit, and to assign such second mortgage financing to the City. The Master Developer
intended to construct the Affordable Units in a discrete townhome development on the
Affordable Development Property.
D. Pursuant to the Original Affordable Housing Agreement, the City agreed to
provide financial assistance to the Master Developer for the Affordable Units in the form of a
$453,600 construction loan (the "City Loan"), which represents a direct City subsidy amount of
$10,800 per Affordable Unit. As more fully set forth herein, upon sale of each Affordable Unit
to an eligible lower income household in compliance with the Affordable Housing Agreement,
and execution of second mortgage loan documents by the homebuyer to the City in compliance
with the Affordable Housing Agreement, the City will credit the Master Developer with
repayment of $10,800 of the City Loan.
E. The Master Developer conveyed the Affordable Development Property to Plum
Tree Walk, LLC, which subsequently conveyed the Property to the Developer. Concurrently
with these conveyances, the Master Developer assigned the Affordable Housing Agreement to
Plum Tree Walk, LLC, which assigned the Affordable Housing Agreement to the Developer.
The City consented to these assignments and agreed to certain amendments to the Affordable
Housing Agreement pursuant to an Estoppel Certificate and Amendment to Affordable Housing
Agreement between the City and The Olson Company dated December 30, 1997.
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F. The City intends to fund the City Loan with moneys from the City's Housing
Trust Fund created pursuant to City Ordinance No. NS-232.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1. DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following capitalized terms shall have the following meanings in this Agreement:
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(a) "Affordable Development" shall mean the Affordable Development
Property, the Affordable Units, and all landscaping, roads, parking spaces, and common area
appurtenant to such units.
(b) "Affordable Development Property" shall mean the property described in
Exhibit A on which the Affordable Development will be constructed.
(c) "Affordable Housing Agreement" shall mean the Affordable Housing
Agreement Imposing Restrictions on Real Property by and between the City and the Developer
dated November 11, 1996 and recorded against the Property as Document No. 1997-0045 12 in
the Official Records of San Diego County, as modified by the Estoppel Certificate and
Amendment to Affordable Housing Agreement between the City and The Olson Company dated
December 30, 1997.
(d) "Affordable Unit" shall mean a Unit sold to an Eligible Purchaser in
compliance with the Affordable Housing Agreement.
(e) "Agreement" shall mean this Loan Agreement.
(f) "Bank" shall mean the maker of the Bank Loan.
(8) "Bank Loan" shall mean the construction loan obtained by the Developer
from a private institutional lender, to pay for costs of construction of the Affordable Units not
paid from the City Loan.
(h) "Borrower Disclosure Statement" shall mean the borrower disclosure
statement to be signed by Eligible Buyers purchasing Units.
(i) "City" shall mean the City of Carlsbad, a municipal corporation.
(i) "City Loan" shall mean the loan for the amount of Four Hundred Fifty-
Three Thousand Six Hundred Dollars ($453,600) by the City to the Developer pursuant to this
Agreement.
(k) "CitylHomebuyer Second Mortgage Loan" shall mean the carryback
financing provided by the Developer to Eligible purchasers and assigned by the Developer to the
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City. Each CityEIomebuyer Second Mortgage Loan shall be evidenced by an Eligible Buyer
Note and secured by an Eligible Buyer Deed of Trust.
(1) "Default" shall have the meaning set forth in Section 5.1 below.
(m) "Developer Deed of Trust" shall mean the deed of trust to be placed on the
Affordable Development Property, in substantially the form shown in the attached Exhibit C,
securing the Developer Note and naming the City as beneficiary.
(n) "Developer Note" shall mean the promissory note, in substantially the
form shown in the attached Exhibit B, in the principal amount of Four Hundred Fifty-Three
Thousand Six Hundred Dollars ($453,600), evidencing the City Loan.
(0) "Direct City Subsidy Amount'' shall mean the $10,800 increment of the
City Loan attributable to each Affordable Unit.
(p) "Eligible Buyer" shall mean a Lower Income Household purchasing an
Affordable Unit.
(s) "Eligible Buyer Deed of Trust" shall mean the deed of trust held by the
City to secure payment of an Eligible Buyer Note executed and delivered to the City by the
Eligible Buyer of an Affordable Unit, in the form attached hereto as Exhibit E.
(r) "Eligible Buyer Note" shall mean the promissory note, in the form attached hereto as Exhibit D, executed and delivered to the City by an Eligible Buyer of a
Affordable Unit.
6) "Hazardous Materials" shall have the meaning set forth in Section 4.5
(9 "Hazardous Materials Claim" shall have the meaning set forth in Section
below.
4.5 below.
(u) "Hazardous Materials Law" shall have the meaning set forth in Section 4.5
below.
(v) "Intercreditor Agreement" shall mean the Intercreditor Agreement to be
entered into by and among the City, the Bank, and the Developer pursuant to Section 2.6 of this
Agreement.
(w) "Loan Documents" shall mean the following documents: (i) the
Developer Note; (ii) the Developer Deed of Trust; (iii) the Affordable Housing Agreement and
(iv) this Agreement.
(x) "Lower Income Household" shall mean a household with an annual
income, adjusted for actual household size, that is no greater than eighty percent (80%) of
Median Income.
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(y) "Median Income" shall mean the median gross yearly income for
households in San Diego County, California, as adjusted for household size, as published
periodically by the United States Department of Housing and Urban Development ("HLJD"). In
the event such income determinations are no longer published by HUD, or are not updated for a
period of at least eighteen (18) months, the City shall provide the Developer with other income
determinations which are reasonably similar with respect to method of calculation to those
previously published by HIJD.
(z) "Parties" shall mean the City and the Developer.
(aa) "Primary Affordability Subsidy" shall have the meaning set forth in
Section 2.4.2 of the Affordable Housing Agreement.
(bb) "Property" shall mean the property on which the Developer shall construct
the Improvements, as more particularly described in the attached Exhibit A.
(cc) "Schedule of Performance" shall mean the schedule of performance set
forth in Section 2.2 of the Affordable Housing Agreement.
(dd) "Term" shall mean the thirty-six (36) month term of the Loan,
commencing on the date of recordation of the Deed of Trust and continuing for thirty-six (36)
months thereafter.
(ee) "Transfer" shall have the meaning set forth in Section 4.9 below.
(ff) "Unit" shall mean a housing unit located within the Affordable
Development.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
EXHIBIT A: Legal Description of the Affordable Development Property
EXHIBIT B: Form of the Developer Note
EXHIBIT C: Form of the Developer Deed of Trust
EXHIBIT D: Form of Eligible Buyer Note
EXHIBIT E: Form of Eligible Buyer Deed of Trust
EXHIBIT F: Form of Borrower Disclosure Statement
EXHIBIT G: Development Budget
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ARTICLE 2. LOAN PROVISIONS
Section 2.1 m.
The City shall loan to the Developer the Loan in the principal amount of Four Hundred
Fifty Three Thousand Six Hundred Dollars ($453,600) for the purposes set forth in Section 2.3
of this Agreement. The obligation of the Developer to repay the Loan shall be evidenced by the
Developer Note in substantially the form attached to this Agreement as Exhibit B.
Section 2.2 Iu&E.&.
The Loan shall not bear interest; provided, however, if a Default is declared by the City,
the Loan shall bear interest, commencing on the date of declaration of the Default (subject to
applicable cure periods), at the default rate equal to the lesser of ten percent (lo%), compounded
annually or the maximum rate permitted by law.
Section 2.3 Use of Loan F&.
The Developer shall use the City Loan to pay for a portion of costs associated with
development of the Affordable Units, identified as City-funded costs in the budget attached
hereto as w. The Developer shall not use the City Loan funds for any other purpose
without the prior written consent of the City.
Section 2.4 Security.
The Developer shall secure its obligation to repay the City Loan, as evidenced by the
Developer Note, by signing and delivering to the City the Developer Deed of Trust in
substantially the form attached to this Agreement as Exhibit C.
Section 2.5 P.
(a) The City shall have no obligation to disburse any portion of the City Loan
unless the following conditions have been satisfied and continue to be satisfied
(i) The Developer has signed and delivered to the City the Developer
Note in substantially the form attached to this Agreement as Exhibit B and the Developer Deed
of Trust in substantially the form attached to this Agreement as Exhibit C.
(ii) The Developer Deed of Trust has been recorded against the
Affordable Development Property in the Office of the Recorder of the County of San Diego.
(iii) A title insurer reasonably acceptable to the City is unconditionally
and irrevocably committed to issuing a CLTA Lender's Policy of insurance insuring the priority
of the City Deed of Trust in the amount of the City Loan, subject only to such exceptions and
exclusions as may be reasonably acceptable to the City and containing such endorsements as the
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City may reasonably require. The City agrees to accept the deed of trust securing the Bank Loan
as a prior exception to title.
(iv) The Developer has furnished the City with evidence of the
insurance coverage required pursuant to Section 4.4 below.
(v) The City has received a good standing certificate issued by the
California Secretary of State's office indicating that the Developer exists in good standing at the
time of the proposed disbursement, as well as a copy of a resolution of the Developer indicating
that Developer has duly authorized entry into and performance under this Agreement.
(vi) The Developer has certified in writing to the City that the City
Loan, together with the Bank Loan and any other financing obtained by the Developer, is
projected to be suEcient to pay all development costs of the Affordable Units.
(vii) The Developer (A) has received all general plan and zoning
approvals necessary to construct the Affordable Units, (B) has submitted to the City a proposed
final tract map for the Affordable Development which satisfies all tentative tract map conditions
and is reasonably acceptable to the City Engineer, together with all fees required therefor, and
(C) has submitted to the City all grading and improvement plans required for the Affordable
Development, in a form which is reasonably acceptable to the City Engineer, together with all
fees required therefore, and (D) has received from the City temporary or interim approval to
commence grading of the Affordable Development Property, and (E) has received approval of
building plans for the Affordable Development by the City Building and Safety Department,
pending pad certification for permit issuance.
(viii) The closing of the Bank Loan shall be completed and the City, the
Bank, and the Developer shall have executed an Intercreditor Agreement as provided in Section
2.6 below. Prior to such closing, the City and the Developer shall cooperate in good faith with
the Bank and shall make changes to the terms and conditions of this Agreement (including the
exhibits hereto) as the Bank may require, and which the Developer and the City Housing and
Community Development Director determine are reasonable.
(b) Upon satisfaction of the conditions set forth in Section 2.5(a) above the
City shall promptly, but in no event later than five (5) business days after receiving Developer's
written request and any required documentation, disburse the City Loan proceeds to Developer
from time to time, but in no event more often than monthly. Disbursement requests shall include
a certified statement from Developer: (i) reaffirming the accuracy as of the date of the
disbursement request of Developer's representations and warranties set forth in Article 6 below;
(ii) certifymg that Borrower is not in default under the City Loan Documents or loan documents
for the Bank Loan; and (iii) setting forth the proposed uses of funds consistent with Section 2.3
and Exhibit G, the amount of funds needed, and, where applicable, a copy of the bill or invoice
covering a cost incurred or to be incurred. When a disbursement is requested to pay any
contractor in connection with the Affordable Development, the written request must be
accompanied by certification by Developer that the work for which disbursement is requested
has been completed (although the City reserves the right to inspect the Affordable Development
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and make an independent evaluation), and lien releases andor mechanics lien title insurance
endorsements reasonably acceptable to the City. City Loan proceeds utilized for hard
construction costs of on-site improvements shall be subject to a retention of ten percent (loyo),
with retained proceeds to be released upon completion of the on-site improvements.
Section 2.6
As set forth in Section 2.5(a)(viii) above, the City, the Bank, and the Developer shall
enter into an Intercreditor Agreement as a condition of closing the City Loan. The Intercreditor
Agreement shall set forth any agreements between the parties regarding the following issues:
(a) the procedure and timing for disbursement of the City Loan proceeds by
the City and Bank Loan proceeds by the Bank.
(b) the provision to the City of notice of any default by Developer under the
Bank Loan documents, and the nature and extent of the City's cure rights, including the right of
the City to foreclose on the City Deed of Trust, succeed to Developer under the Bank Loan (or
assign its right to do so to another developer), and complete the Affordable Units.
Section 2.7 SL3hdUbQ n.
The City shall execute such documents as may be necessary to subordinate the priority of
the City Deed of Trust to the lien of the deed of trust securing the Bank Loan. The subordination
documents shall'provide the City with reasonably adequate notice and cure rights to enable the
City to avoid foreclosure of a senior deed of trust.
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Section 2.8 -and&.
The Loan shall be repaid as follows:
(a) Upon sale of an Affordable Unit to an Eligible Buyer, the Developer shall
carry back second mortgage financing to the Eligible Buyer in an amount equal to the Primary
Affordability Subsidy for the Affordable Unit, as established pursuant to the Affordable Housing
Agreement. The Developer shall assign its interest in such second mortgage financing to the
City, and shall require that the Eligible Buyer sign, at close of escrow on the purchase of the
Affordable Unit, the Borrower Disclosure Statement and the Eligible Buyer Note and the
Eligible Buyer Deed of Trust for the benefit of the City. Upon the execution of the Borrower
Disclosure Statement, the Eligible Buyer Note and the Eligible Buyer Deed of Trust, and the
recordation of the Eligible Buyer Deed of Trust against the Affordable Unit, the City shall credit
the Developer with repayment of Ten Thousand Eight Hundred Dollars ($10,800) of the City
Loan. The City and the Developer acknowledge that the principal amount of the Eligible Buyer
Note to the City shall be equal to the Primary Affordability Subsidy, which includes the value to
the Eligible Purchaser of the City's inclusionary housing restrictions pursuant to the Affordable
Housing Agreement and will therefore be greater in principal amount than the Direct City
Subsidy Amount of Ten Thousand Eight Hundred Dollars ($lO,SOO), but nevertheless agree that
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only the Direct City Subsidy Amount of Ten Thousand Eight Hundred Dollars ($10,800) shall be
credited toward repayment.of the City Loan.
@) Upon the sooner of the date of expiration of the Term, the date of an
unauthorized Transfer of the Development, or Developer's Transfer of the last Affordable Unit
still owned by the Developer, all principal remaining unpaid or uncredited shall be due and
payable.
(c) At the time of sale of an Affordable Unit to an Eligible Buyer, the City
shall execute a partial reconveyance of the Developer Deed of Trust to release the Affordable
Unit being sold from the lien of the Developer Deed of Trust. Upon the sale of all Affordable
Units in compliance with the Affordable Housing Agreement, the City shall entirely reconvey
the Developer Deed of Trust.
(d) The Developer may pay the principal and any interest due the City under
the Developer Note prior to or in advance of the time for payment thereof as provided in the
Developer Note, without penalty. However, the provisions of this Agreement and the Affordable
Housing Agreement will be applicable to the Affordable Development even though Developer
may have prepaid the Developer Note, including the requirement that a minimum of forty-two
(42) of the Units shall be sold to Eligible Buyers who execute City Second Mortgage Loan
documents.
Section 2.9
Subject to Section 4.9 below, the Developer Note shall not be assumable by successors
and assigns of Developer without the prior written consent of the City, which consent shall not
be withheld unreasonably.
Section 2.10 Aporoval of Ad-.
The Developer shall not place any additional encumbrances on the Affordable
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Development Property without the prior written consent of the City, which consent shall not be
withheld unreasonably. The City consents to encumbrances in connection with the Bank Loan.
ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT
Section 3.1 -.
The Developer shall develop the Affordable Development in compliance with the
Schedule of Performance.
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Section 3.2 ctlon Pmt to PI-.
(a) The Developer shall construct the Affordable Development in
conformance with the construction drawings approved by the City in connection with approval
of the building permits for the Affordable Development.
@) The Developer shall cause all work performed in connection with the
Affordable Development to be performed in compliance with (i) all applicable laws, ordinances,
rules and regulations of federal, state, county or municipal governments or agencies now in force
or that may be enacted hereafter, and (ii) all directions, rules and regulations of any fire marshal,
health officer, building inspector, or other officer of every governmental agency now having or
hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit,
license, or other authorization that may be required by any governmental agency having
jurisdiction, and the Developer shall be responsible to the City for the procurement and
maintenance thereof, as may be required of the Developer and all entities engaged in work on the
Affordable Development.
(c) All construction work and professional services shall be performed by
persons or entities licensed or otherwise authorized to perform the applicable construction work
or service in the State of California.
(d) The Developer shall be solely responsible for all aspects of the
Developer's conduct in connection with the Affordable Development, including (but not limited
to) the quality and suitability of the construction drawings, the supervision of construction work,
and the qualifications, financial condition, and performance of all architects, engineers,
contractors, subcontractors, suppliers, consultants, and property managers. Any review or
inspection undertaken by the City with reference to the Affordable Development is solely for the
purpose of determining whether the Developer is properly discharging its obligations to the City,
and should not be relied upon by the Developer or by any third parties as a warranty or
representation by the City as to the quality of the design or construction of the Affordable
Development.
Section 3.3 1 opportulily.
During the construction of the Affordable Development there shall be no discrimination
on the basis of race, color, creed, religion, age, disability, sex, sexual orientation, marital status,
national origin, or ancestry, in the hiring, firing, promoting, or demoting of any person engaged
in the construction work.
Section 3.4 Mechanics Liens. Stop Notices. and Notices of Completion.
(a) If any claim of lien is filed against the Affordable Development Property
or the Affordable Development or a stop notice affecting the City Loan is served on the City or
any other lender or other third party in connection with the Affordable Development, then the
Developer shall, within twenty (20) days after such filing or service, either pay and fully
discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the
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City a surety bond in sufficient form and amount, or provide the City with other assurance
satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
(b) If the Developer fails to discharge any lien, encumbrance, charge, or claim
in the manner required in Section 3.4(a), then in addition to any other right or remedy, the City
may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at
the Developer's expense. Alternately, the City may require the Developer to immediately deposit
with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined
against the Developer.
(c) . The Developer shall file a valid notice of cessation or notice of completion
upon cessation of construction on the Affordable Development for a continuous period of thirty
(30) days or more, and take all other reasonable steps to forestall the assertion of claims or lien
against the Affordable Development. The City may (but has no obligation to) record any notices
of completion or cessation of labor, or any other notice that the City deems necessary or
desirable to protect its interest in the Affordable Development.
ARTICLE 4. REQUIREMENTS DURING AND AFTER CONSTRUCTION
Section 4.1 Information.
The Developer shall promptly provide any information reasonably requested by the City
in connection with the Affordable Development.
Section 4.2 Records.
The Developer shall maintain complete, accurate, and current records pertaining to the
Affordable Development for a period of five (5) years after the creation of such records, and
shall permit any duly authorized representative of the City to inspect and copy records, including
records pertaining to income and household size of purchasers of the Affordable Units. Such
records shall include records regarding the occupancy and sales price of the Affordable Units, as
well as records that accurately and fully show the date, amount, purpose, and payee of all
expenditures drawn from Loan funds. Such records shall also include all invoices, receipts, and
other documents related to expenditures from the Loan funds. Records shall be maintained
accurately and shall be kept current.
Section 4.3 Inspections.
The Developer shall permit and facilitate, and shall require its contractors to permit and
facilitate, observation and inspection at the Affordable Development by the City and by public
authorities during reasonable business hours and upon reasonable advance notice for the
purposes of determining compliance with this Agreement.
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Section 4.4 Insurance.
Throughout the period of Developer's ownership of any portion of the Affordable
Development, Developer shall maintain the following insurance policies:
(a) Worker's Compensation insurance, including Employer's Liability
coverage, with limits not less than One Million Dollars ($1,000,000) each accident, if required
by law or if the Developer has employees.
(b) Comprehensive General Liability insurance with limits not less than Five
Million Dollars ($5,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform
Property Damage, Products and Completed Operations.
(c) Comprehensive Automobile Liability insurance with limits not less than
One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable.
However, if the Developer does not own or lease vehicles for purposes of this Agreement, then
no automobile insurance shall be required.
(d) Property insurance covering all Affordable Development real and personal
(non-expendable) property, in form appropriate for the nature of such property, covering all risks
of loss, including flood (if the Affordable Development Property is located within a flood zone),
for 100% of the replacement value, with deductible, if any, acceptable to the City, naming the
City as a Loss Payee, as its interests may appear.
(e) The Developer shall cause any general contractor or agent working on the
Affordable Development under direct contract with the Developer to maintain insurance of the
types and in at least the minimum amounts described in Sections 4.4(a), (b) and (c), and shall
require that such insurance meet all of the general requirements of Sections 4.4(f), (g), and (h).
Liability and Comprehensive Automobile Liability insurance to be maintained by such general
contractor and agents pursuant to this subsection shall name as additional insureds the City, its
officers, agents, employees, and members of the City Council. The Developer shall cause the
conditions in this Section 4.4(e) to continue to be satisfied at all times after the disbursement of
any City Loan funds and before sale of all Affordable Units in compliance with the Affordable
Housing Agreement.
(f) The required insurance shall be provided under an occurrence form, and
Developer shall maintain such coverage continuously until all Affordable Units are sold.
(g) Comprehensive General Liability, Comprehensive Automobile Liability
and Property insurance policies shall be endorsed to name as additional insured the City and its
officers, agents, and employees, as well members of the City Council.
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(h) All policies and bonds shall be endorsed to provide thirty (30) days prior
written notice of cancellation, reduction in coverage, or intent not to renew to the address
established for notices to the City.
Section 4.5 ous M&n&.
(a) The Developer shall keep and maintain the Affordable Development in
compliance with, and shall not cause or permit the Affordable Development to be in violation of,
any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the
environmental conditions on, under or about the Affordable Development including, but not
limited to, soil and ground water conditions. The Developer shall not use, generate,
manufacture, store or dispose of on, under, or about the Affordable Development or transport to
or from the Affordable Development any flammable explosives, radioactive materials, hazardous
wastes, toxic substances or related materials, including without limitation, any substances
defined as or included in the definition of "hazardous substances, "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or state laws or
regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the
foregoing as may be customarily kept and used in and about single family residential property.
(b) The Developer shall immediately advise the City in writing if at any time
it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental
or regulatory actions instituted, completed or threatened against the Developer or the Affordable
Development pursuant to any applicable federal, state or local laws, ordinances, or regulations
relating to any Hazardous Materials ("Hazardous Materials Law"); (ii) all claims made or
threatened by any third party against the Developer or the Affordable Development relating to
damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous
Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as
"Hazardous Materials Claims"); and (iii) the Developer's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Affordable Development that
could cause the Affordable Development or any part thereof to be classified as "border-zone
property" under California Health and Safety Code Sections 25220 et seq. or any regulation
adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Affordable Development Property under any Hazardous
Materials Law.
(c) The City shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated in connection with any Hazardous Materials
Claims and to have its reasonable attorneys' fees in connection therewith paid by the Developer.
The Developer shall indemnify, defend (with counsel reasonably chosen by the City, at the City's
option), and hold harmless the City and its officers, councilmembers, employees, and agents
from and against any loss, damage, cost, expense, or liability directly or indirectly arising out of
or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or
presence of Hazardous Materials on, under, or about the Affordable Development, including
(without limitation): (i) all foreseeable consequential damages; (ii) the costs of any required or
necessary repair, cleanup, or detoxification of the Affordable Development and the preparation
and implementation of any closure, remedial, or other required plans; and (iii) all reasonable
1010\03\111527.3 12
costs and expenses incurred by the City in connection with clauses (i) and (ii), including (but not
limited to) reasonable attorneys' fees. This paragraph shall survive termination of this
Agreement.
(d) Without the City's prior written consent, which shall not be unreasonably
withheld, the Developer shall not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Affordable Development, nor enter into any
settlement agreement, consent decree, or other compromise in respect to any Hazardous Material
Claims, which remedial action, settlement, consent decree or compromise might, in the City's
reasonable judgement, impair the value of the City's security hereunder. However, the City's
prior consent shall not be necessary if the presence of Hazardous Materials on, under, or about
the Affordable Development either poses an immediate threat to the health, safety or welfare of
any individual, or is of such a nature that an immediate remedial response is necessary and it is
not reasonably possible to obtain the City's consent before taking such action, provided that in
such event the Developer shall notify the City as soon as practicable of any action so taken. The
City shall not withhold its consent, where consent is required hereunder, if either (i) a particular
remedial action is ordered by a court of competent jurisdiction, (ii) the Developer will or may be
subjected to civil or criminal sanctions or penalties if it fails to take a required action; or (iii) the
Developer establishes to the reasonable satisfaction of the City that there is no reasonable
alternative to such remedial action which would result in less impairment of the City's security
hereunder.
(e) The Developer acknowledges and agrees that (i) this Section 4.5 is
intended as the City's written request for information (and the Developer's response) concerning
the environmental condition of the Affordable Development as required by California Code of
Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement
(together with any indemnity obligation applicable to a breach of or such representation and
warranty) with respect to the environmental condition of the Affordable Development is intended
by the Parties to be an "environmental provision" for purposes of California Code of Civil
Procedure Section 736.
Section 4.6 and TUB.
During the period of ownership of the Affordable Development by the Developer, the
Developer shall be solely responsible for payment of all fees, assessments, taxes, charges, and
levies imposed by any public authority or utility company with respect to the Affordable
Development or portion thereof owned by the Developer, and shall pay such charges prior to
delinquency. However, the Developer shall not be required to pay and discharge any such
charge so long as (a) the legality thereof is being contested diligently and in good faith and by
appropriate proceedings, and (b) if requested by the City, the Developer deposits with the City
any funds or other forms of assurance that the City in good faith from time to time determines
appropriate to protect the City from the consequences of the contest being unsuccessful.
1010\03\111527.3 13
Section 4.7 m.
The Developer covenants by and for itself and its successors and assigns that there shall
. .. .
be no discrimination against or segregation of a person or of a group of persons on account of
race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or
national origin in the sale, transfer, use, occupancy, or enjoyment of any Affordable Unit, nor
shall the Developer or any person claiming under or through the Developer establish or permit
any such practice or practices of discrimination or segregation. The foregoing covenant shall run
with the land.
Section 4.8 Notice of lAwJ.un
During the period of ownership of the Affordable Development by the Developer, the
.. .
Developer shall promptly notify the City in writing of any litigation affecting the Developer or
the Development and of any claims or disputes that involve a material risk of litigation.
Section 4.9 Transfers.
(a) The qualifications and identity of the Developer are of particular concern
to the City. It is because of those qualifications and identity that the City has entered into this
Agreement with the Developer. The City shall have no obligation to perform hereunder if any
voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers
under this Agreement except as expressly set forth herein. The City may terminate this
Agreement upon the occurrence of a Transfer prohibited by subsection (b). The City shall
approve a proposed Transfer if the Developer is transfening the entire Affordable Development
Property to the transferee and the City reasonably determines that the proposed transferee
possesses the qualifications, development experience and financial capability necessary and
adequate to fulfill the obligations undertaken in this Agreement and the Affordable Housing
Agreement by the Developer.
(b) No Transfer shall be permitted prior to repayment of the City Loan in full
or prior to sale of all Affordable Units in compliance with the Affordable Housing Agreement
without the prior written consent of the City, which the City shall grant or withhold in
accordance with the standard set forth in subsection (a) above. Pursuant to Section 2.8(b) above,
the City Loan shall automatically accelerate and be due in full upon any Transfer for which prior
written City approval has not been obtained.
(c) For purposes of this Agreement, "Transfer" shall mean, except as excluded
by the provisions of subsection (d), any sale, assignment, or transfer, whether voluntary or
involuntary, of (i) any rights and/or duties under this Agreement, andor (ii) any interest in the
Development, including (but not limited to) a fee simple interest, a joint tenancy interest, a life
estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a
land contract by which possession of the Affordable Development is transferred and the
Developer retains title.
1010\03\111527.3 14
(d) The term "Transfer" shall exclude the following transfers that would
otherwise be Transfers under subsection (a):
(i) the assignment of this Agreement (and the transfer of the
Affordable Development) to a corporation controlled by the Developer, or to a partnership or
joint venture in which the Developer, or an entity controlled by the Developer, is a general
partner and is in control thereof;
(ii) the admission of additional new general or limited partners, or the
substitution or deletion of partners to any partnership or joint venture set forth in (i) above so
long as the Developer, or an entity controlled by the Developer, continues in control;
(iii) the granting of easements, licenses or permits to facilitate the
development of the Affordable Development;
(iv) the granting of any security interest in the Affordable Development
or other financing arrangement for the purposes of securing the Bank Loan or other financing or
the transfer of such security interests to another entity;
(v) the transfer or conveyance of all or any portion of the Affordable
Development by foreclosure of a mortgage or deed of trust or by transfer in-lieu-of foreclosure
thereof, and a subsequent transfer or conveyance of all or any portion of the Development to a
third party transferee.
(vi) the sale or transfer of individual Units in the Affordable
Development to homebuyers in compliance with the Affordable Housing Agreement.
(e) In the absence of specific written agreement by the City, or except to a
transferee othenvise authorized in this Agreement (whereupon the transferor-assignor shall be
relieved of its obligations hereunder), no Transfer (whether authorized or unauthorized) shall be
deemed to relieve the Developer or any other party of any obligations under this Agreement.
Section 4.10 Sale of Units.
All Units in the Affordable Development shall be sold to Eligible Buyers in compliance
with the Affordable Housing Agreement. The Developer shall grant preference in the sale of
Units to persons who have lived for sixty (60) days in the City of Carlsbad or who are employed
in the City of Carlsbad.
ARTICLE 5. DEFAULT
Section 5.1 Events of Default.
Each of the following shall constitute a "Default" by Developer under this Agreement:
1010\03\111527.3 15
(a) -. Failure to make prompt payments of the principal on the Developer Note when due;
(b) mh of Coven-. Failure by the Developer to duly perform, comply
with, or observe any of the conditions, terms, or covenants of any of the Loan Documents (other
than a monetary default as described in paragraph (a) above). If such a non-monetary event of
default occurs under the terms of the Loan Documents, unless automatic acceleration is provided
for hereunder, prior to exercising any remedies thereunder, the City shall give the Developer
written notice of such default and the Developer shall have thirty (30) days (unless an alternative
time period is specified hereunder, in which event such alternate cure period shall apply) to
effect a cure prior to exercise of remedies by the City.
(c) Insolvency. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging the Developer to be bankrupt or insolvent, (ii) approving as
properly filed a petition seeking reorganization of the Developer or seeking any arrangement for
the Developer under the bankruptcy law or any other applicable debtor's relief law or statute of
the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator,
or assignee of the Developer in bankruptcy or insolvency or for any of their properties, or (iv)
directing the winding up or liquidation of the Developer, or the Developer shall have admitted in
writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed
a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The
occurrence of any of the events described in clauses (i) to (iv) with regard to Developer's
managing member shall also be a Default hereunder. The occurrence of any of the events of
Default in this Section 5.l(c) shall act to accelerate automatically, without the need for any
notice or action by the City, the indebtedness evidenced by the Developer Note.
(4 Assignment: w. The Developer, by reason of a default under its obligations to creditors, has assigned its assets for the benefit of its creditors or suffered a
sequestration or attachment of or execution on any substantial part of its property; provided that
Developer shall have sixty (60) days to cure any sequestration, attachment, or execution not
consented to by Developer. The occurrence of any of the events of Default in this Section 5.l(d)
shall act to accelerate automatically, without the need for any notice or action by the City, the
indebtedness evidenced by the Developer Note.
(e) Suspension:. The Developer shall have voluntarily suspended its business or, if Developer is a partnership, the partnership shall have been dissolved
or terminated.
(0 -. There shall be filed any claim of lien (other than the deed(s) of trust and other security instruments in connection with the Bank Loan lien
approved in writing by the City) against the Affordable Development or any part thereof, or any
interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of
the City Loan, and such claim of lien or notices to withhold is maintained for a period of forty-
five (45) days without discharge or satisfaction thereof or provision therefor satisfactory to the
City.
1010\03\111527.3 16
(g) -. The condemnation, seizure, or appropriation of all or, in the opinion of the City, a substantial part of the Affordable Development.
(h) Defaults yDder Other m. Any default declared by the lender under
any loan document related to the Bank Loan or other loan secured by the Affordable
Development Property, which default is not cured by the Developer following the expiration of
applicable notice and cure periods under the Bank Loan Documents or other loan document,
shall act to accelerate automatically, without the need for any notice or action by the City, the
indebtedness evidenced by the Developer Note.
(i) Breach ofReDresentatlon. Any representation or warranty of Developer to
the City was materially incorrect when made.
Section 5.2 Remedies.
The occurrence of any Default will either at the option of the City, or automatically
where so specified, relieve the City of any obligation to make or continue the City Loan and shall
give the City the right to proceed with any and all remedies set forth in this Agreement and the
Loan Documents, including but not limited to the following:
(a) Acceleration of Develnper No&. The City shall have the right to cause all indebtedness of the Developer to the City under this Agreement and the Developer Note to
become immediately due and payable, with interest accruing on the principal amount from the
date of acceleration to the date of repayment at an interest rate equal to the lesser of ten percent
(10%) or the maximum rate permitted by law. The Developer waives all right to presentment,
demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of
the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured
party under the law including the Uniform Commercial Code, including foreclosure under the
City Deed of Trust. The Developer shall be liable to pay the City on demand all expenses, costs
and fees (including, without limitation, attorney's fees and expenses) paid or incurred by the City
in connection with the collection of the City Loan and the preservation, maintenance, protection,
sale, or other disposition of the security given for the Loan.
(b) SDeclfic. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the Developer to perform its obligations
and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or
in violation of the provisions of the Loan Documents.
(c) &&t to Cure at the Developer's Exuem. The City shall have the right to
cure any monetary default by the Developer under a loan other than the City Loan. The
Developer shall reimburse the City for any funds advanced by the City to cure a monetary
default by Developer upon demand therefor, together with interest thereon at the rate of interest
equal to the rate of interest on the Bank Loan from the date of expenditure until the date of
reimbursement.
1010\03\111527.3 17
Section 5.3
No right, power, or remedy given to the City by the terms of this Agreement or the Loan
Documents is intended to be exclusive of any other right, power, or remedy; and each and every
such right, power, or remedy shall be cumulative and in addition to every other right, power, or
remedy given to the City by the terms of any such instrument, or by any statute or othenvise
against the Developer and any other person. Neither the failure nor any delay on the part of the
City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any
single or partial exercise by the City of any such right or remedy preclude any other or further
exercise of such right or remedy, or any other right or remedy.
Section 5.4
The City's Housing and Redevelopment Director may at his or her discretion waive in
writing any of the obligations of the Developer under this Agreement, without the Developer
completing an amendment to this Agreement. No waiver of any default or breach by Developer
hereunder shall be implied fkom any omission by the City to take action on account of such
default if such default persists or is repeated, and no express waiver shall affect any default other
than the default specified in the waiver, and such waiver shall be operative only for the time and
to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall
not be construed as a waiver of any subsequent breach of the same covenant, term, or condition.
The consent or approval by the City to or of any act by the Developer requiring further consent
or approval shall not be deemed to waive or render unnecessary the consent or approval to or of
any subsequent similar act. The exercise of any right, power, or remedy shall in no event
constitute a cure or a waiver of any default under this Agreement or the Loan Documents, nor
shall it invalidate any act done pursuant to notice of default, or prejudice the City in the exercise
of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of
any such right, power, or remedy all obligations of the Developer to City are paid and discharged
in full.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF DEVELOPER
Section 6.1 Representations and Warranties.
Developer hereby represents and warrants to the City as follows:
(4 Organizatioq. Developer is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted.
(b) Authority of Devw. Developer has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated
hereunder, to execute and deliver the City Loan Documents and all other documents or
instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement,
and to perform and observe the terms and provisions of all of the above.
1010\03\111527.3 18
(c) Fxectlting Documents. This Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be
executed and delivered, pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Developer, and all
actions required under Developer's organizational documents and applicable governing law for
the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement, have been duly taken.
(4 . .. -. This Agreement and the Loan Documents and
all other documents or instruments which have been executed and delivered pursuant to or in
connection with this Agreement constitute or, if not yet executed or delivered, will when so
executed and delivered constitute, legal, valid and binding obligations of Developer enforceable
against it in accordance with their respective terms.
(e) No Breach of Law or u. Neither the execution nor delivery of
this Agreement and the Loan Documents or of any other documents or instruments executed and
delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any
provision, condition, covenant or other term hereof or thereof, will conflict with or result in a
breach of any statute, rule or regulation, or any judgment, decree or order of any court, board,
commission or agency whatsoever binding on Developer, or any provision of the organizational
documents of Developer, or will conflict with or constitute a breach of or a default under any
agreement to which Developer is a party, or will result in the creation or imposition of any lien
upon any assets or property of Developer, other than liens established pursuant hereto.
(9 &nding Proceedings. Developer is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or, to the knowledge of Developer,
threatened against or affecting Developer or the Affordable Development, at law or in equity,
before or by any court, board, commission or agency whatsoever which might, if determined
adversely to Developer, materially affect Developer's ability to repay the City Loan or impair the
security to be given to the City pursuant hereto.
(g) 1 Statem. The financial statements of Developer and other financial data and information furnished by Developer to the City fairly present the information
contained therein. As of the date of this Agreement, there has not been any adverse, material
change in the financial condition of Developer from that shown by such financial statements and
other data and information.
(h) Mficient Funds. Developer holds sufficient funds andor binding commitments for sufficient funds to complete the construction of Affordable Development in
accordance with the plans and specifications approved by the City.
1010\03\111527.3 19
ARTICLE 7. GENERAL PROVISIONS
Section 7.1
Nothing contained in this Agreement shall be interpreted or understood by any of the
Parties, or by any third persons, as creating the relationship of employer and employee, principal
and agent, limited or general partnership, or joint venture between the City and the Developer or
its agents, employees or contractors, and the Developer shall at all times be deemed an
independent contractor and shall be wholly responsible for the manner in which it or its agents,
or both, perform the services required of it by the terms of this Agreement. The Developer has
and retains the right to exercise full control of employment, direction, compensation, and
discharge of all persons assisting in the performance of services under the Agreement. In regards
to the construction of the Improvements and sale of the Units, the Developer shall be solely
responsible for all matters relating to payment of its employees, including compliance with
Social Security, withholding, and all other laws and regulations governing such matters, and
shall include requirements in each contract that contractors shall be solely responsible for similar
matters relating to their employees. The Developer shall be solely responsible for its own acts
and those of its agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the City by
any person that the Developer may have employed or with whom the Developer may have
contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the
performance of any work or services with respect to the construction or sale of the Affordable
Units, and the Developer shall include similar requirements in any contracts entered into for the
construction or sale of the Affordable Units.
Section 7.3 Amendments.
No alteration or variation of the terms of this Agreement shall be valid unless made in
writing by the Parties.
Section 7.4 Indemnification.
Developer shall indemnify, defend, and hold harmless (without limit as to amount) City
and its elected officials, officers, employees and agents in their official capacity (hereinafter
collectively referred to as "Indemnitees"), and any of them, from and against all loss, all risk of
loss and all damage (including expense and attorneys fees) sustained or incurred because of or by
reason of any and all claims, demands, suits, actions, judgments and executions for damages of
any and every kind and by whomever and whenever made of obtained, allegedly caused by,
arising out of or relating in any manner to Developer's actions or defaults pursuant to this
Agreement, or construction of the Development and sale of any Units, and shall protect and
defend Indemnitees, and any of them with respect thereto. The provisions of this Section 7.4
shall survive the expiration of the Term or the termination of this Agreement.
1010\03\111527.3 20
Section 7.5 of Cltv 0-.
No member, official, employee or agent of the City shall be personally liable to the
Developer in the event of any default or breach by the City or for any amount which may
become due to the Developer or its successor or on any obligation under the terms of this
Agreement.
Section 7.6 No Third Partv Beneficlanes.
There shall be no third party beneficiaries to this Agreement.
Section 7.7 Discretion Retain4 By City.
The City’s execution of this Agreement in no way limits the discretion of the City in the
..
permit and approval process in connection with the Development.
Section 7.8 mtices. Demands and C-.
Formal notices, demands, and communications between the Parties shall be sufficiently
..
given if and shall not be deemed given unless dispatched by registered or certified mail, postage
prepaid, return receipt requested, or delivered by express delivery service, return receipt
requested, or delivered personally, to the principal office of the Parties as follows:
City:
City of Carlsbad
Housing and Community Development Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Attention: Housing and Redevelopment Director
Developer:
Cherry Tree Walk, LLC
c/o The Olson Company
3020 Old Ranch Parkway, Suite 250
Seal Beach, CA 90740-2750
Attention: Mark Buckland
Such written notices, demands and communications may be sent in the same manner to
such other addresses as the affected Party may from time to time designate by mail as provided
in this Section 7.8. Receipt shall be deemed to have occurred on the date shown on a written
receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).
1010\03\111527.3 21
Section 7.9
This Agreement shall be governed by California law.
Section 7.10 Edes Bound: COVGW.& Runni-.
Except as otherwise limited herein, the provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal
representatives, successors, and assigns. This Agreement is intended to run with the land and
shall bind the Developer and its successors and assigns in the Land and the Development for the
entire Term, and the benefit hereof shall inure to the benefit of the City and its successors and
assigns.
Section 7.1 1 A&meys' Fees.
If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing
Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other
party.
Section 7.12 Severabd 1ty.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions shall continue in full force and effect
unless the rights and obligations of the Parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
..
Section 7.13 Force Majeure.
In addition to specific provisions of this Agreement, performance by either Party shall not
be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock-
outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embargoes; lack of
transportation; third party lawsuit; or court order; or any other similar causes beyond the control
or without the fault of the Party claiming an extension of time to perfom (but not including any
inability by Developer to secure financing). An extension of time for any such cause shall be for
the period of the enforced delay and shall commence to run from the time of the commencement
of the cause. If, however, notice by the party claiming such extension is sent to the other party
more than thirty (30) days after the commencement of the cause, the period shall commence to
run only thirty (30) days prior to the giving of such notice.
Section 7.14 Bpprovals,
Whenever this Agreement calls for City approval, consent, or waiver, the written
approval, consent, or waiver of the City's Housing and Redevelopment Director shall constitute
the approval, consent, or waiver of the City, without further authorization required from the City
Council. The City hereby authorizes the City's Housing and Redevelopment Director to deliver
1010\03\111527.3 22
such approvals or consents as are required by this Agreement, or to waive requirements under
this Agreement, on behalf of the City.
Section 7.15 Title of Parts and Sectipns.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and shall be disregarded in interpreting any part of the Agreement's provisions.
Section 7.16 Entire Unda&&gd'the Parties.
This Agreement constitutes the entire understanding and agreement of the Parties with
respect to the Loan.
Section 7.17 -Onemals.r.
This Agreement may be executed in multiple originals, each of which is deemed to be an
..
original, and may be signed in counterparts.
Section 7.18 Time of the ESE~XX.
Time is of the essence in this Agreement.
1010\03\111527.3 23
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
Developer:
CHERRY TREE WALK, LLC,
a California limited liability company
By The Olson Company, a California corporation,
L
City:
City of Carlsbad, cipal corporation
By:
1010\03\111527.3 24
STATE OF CALIFORNIA )
ks
On June a< , 1998, before me, the undersigned, a Notary Public, personally appeared
the entity upon behalf of which the person@ acted, executed the instrument.
WITNESS my hand and official seal.
STATE OF CALIFORNIA )
COUNTY OF ) )ss
On , 199-, before me, the undersigned, a Notary Public, personally appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within
instrument, and acknowledged to me that he/she/they executed the same in hishedtheir
authorized capacity(ies), and that by hishedtheir 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.
1010\03\111527.3 25
EXHIBIT A
LEGAL DESCRIPTION OF THE AFFORDABLE DEVELOPMENT PROPERTY
1010\03\111527.3 A- 1
1010\03\111527.3
EXHIBIT B
FORM OF THE DEVELOPER NOTE
B-1
PROMISSORY NOTE
$453,600 Carlsbad, California
Juneg, 1998
FOR VALUE RECEIVED, the undersigned Cherry Tree Walk, LLC, a California limited
liability company (the "Developer"), hereby promises to pay to the order of the City of Carlsbad,
a municipal corporation (the "Holder"), a principal amount equal to Four Hundred Fifty-Three
Thousand Six Hundred Dollars ($453,600), or so much thereof as is advanced by the Holder to
the Developer pursuant to the Loan Agreement between the Developer and the Holder dated as
in this Note shall have the meanings set forth in the Agreement.
of .&e 23 , 1998 (the "Agreement"). All capitalized terms not otherwise defined
1. Mest: Repayment Tams. The indebtedness evidenced by this Note
shall not bear interest; provided, however, if a default occurs hereunder, the principal amount of
this Note shall bear interest commencing on the date of default at the default rate equal to the
lesser of ten percent (lo%), compounded annually, or the maximum amount permitted by law.
The Note shall be due and payable at the times and in the manner set forth in Section 2.8 of the
Agreement.
2. No Ass- Except as provided in Section 4.9 of the Agreement, this
Note shall not be assumable by the successors and assigns of Developer without the prior written
consent of the City.
3. of Pavment.
a. All payments due under this Note shall be paid in currency of the
United States of America, which at the time of payment is lawful for the payment of public and
private debts.
b. All payments on this Note shall be paid to Holder at the Housing
and Community Development Department, City of Carlsbad, 2965 Roosevelt Street, Suite B,
Carlsbad, CA 92008, Attn: Housing and Redevelopment Director, or to such other place as the
Holder of this Note may from time to time designate.
c. All payments on this Note shall be without expense to the Holder,
and the Developer agrees to pay all costs and expenses, including re-conveyance fees and
reasonable attorney's fees of the Holder, incurred in connection with the payment of this Note
and the release of any security hereof.
4. Acceleration. Upon the occurrence of a Default (as defined in the Loan
Agreement), the City shall have the right to accelerate the debt evidenced by this Note and
1010\03\111655.3 1
declare all of the unpaid principal and interest, if any, immediately due and payable. Upon the
occurrence of a Default, the outstanding portion of the principal shall bear interest at the rate of
the lesser of ten percent (lo%), compounded annually, and the highest rate permitted by law.
Any failure by the City to pursue its legal and equitable remedies upon Default shall not
constitute a waiver of the City's right to declare a Default and exercise all of its rights under this
Note, the Deed of Trust, and the Loan Agreement. Nor shall acceptance by the City of any
payment provided for herein constitute a waiver of the City's right to require prompt payment of
any remaining payment owed.
5. No Offset. The Developer hereby waives any rights of offset it now has or
may hereafter have against the City, its successors and assigns, and agrees to make the payments
called for herein in accordance with the terms of this Note and the Loan Agreement.
6. Waiver: -Q. Developer, for itself, its heirs, legal
representatives, successors and assigns, respectively, waives diligence, presentment, protest, and
demand, and notice of protest, dishonor and non-payment of this Note, and expressly waives any
change, alteration or release of any security given for the payments hereof, and expressly waives
the right to plead any and all statutes of limitations as a defense to any demand on this Note or
agreement to pay the same, and agrees to pay all costs of collection when incurred, including
reasonable attorneys' fees. If an action is instituted on this Note, the undersigned promises to
pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys' fees in such action.
. rights to be released by reason of any extension of time or change in terms of payment, or
7. Security. This Note is secured by a Deed of Trust and Security Agreement
(the "Developer Deed of Trust"), of even date herewith, wherein the Developer is the Trustor and
the Holder is the Beneficiary, constituting a second priority lien against the Affordable
Development.
8. Miscellaneous Provisions.
a. All notices to the Holder or the Developer shall be given in the
manner and at the addresses set froth in the Agreement, or to such addresses as the Holder and
the Developer may hereinafter designate.
b. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
c. This Note shall be governed by and construed in accordance with
the laws of the State of California.
d. The times for the performance of any obligations hereunder shall
be strictly construed, time being of the essence.
1010\03\111655.3 2
e. This document, together with the other Loan Documents, contains
the entire agreement between the parties as to the City Loan. It may not be modified except
upon written consent of the parties.
Developer:
Cherry Tree Walk, LLC, a California limited
liability company
By: The Olson Company, a California corporation,
its Manager
1010\03\111655.3 3
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk’s Office
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Clerk
No fee for recording pursuant to
Government Code Section 27383
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (“Deed of Trust“) is made as
of this __ day of June, 1998, by and among Cherry Tree Walk, LLC, a California limited
liability company (“Trustor“), ,a
(“Beneficiary”)).
(“Trustee”), and the City of Carlsbad, a municipal corporation
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor‘s fee interest in the property located in the City of Carlsbad, County
of San Diego, State of California, that is described in the attached Exhibit A, incorporated herein
by this reference (the ”Property”).
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH all easements, rights-of-way and rights used in connection therewith
or as a means of access thereto, including (without limiting the generality of the foregoing) all
tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH any and all buildings and improvements of every kind and
description now or hereafter erected thereon, and all property of the Trustor now or hereafter
affixed to or placed upon the Property;
TOGETHER WITH all building materials and equipment now or hereafter delivered to
said property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open or proposed,
101 0\03\111661.2 1
adjoining the Property, and any and all sidewalks, alleys and ships and areas of land adjacent to
or used in connection with the Property;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including, but
not limited to, all deposits made with or other security given by Trustor to utility companies, the
proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may
hereafter acquire, any and all awards made for the taking by eminent domain or by any
proceeding or purchase in lieu thereof of the whole or any part of such property, including
without limitation, any awards resulting from a change of grade of streets and awards for
severance damages to the extent Beneficiary has an interest in such awards for taking as
provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property which are necessary to the complete and comfortable use
and occupancy of such building or buildings for the purposes for which they were or are to be
erected, including all other goods and chattels and personal property as are ever used or
furnished in operating a building, or the activities conducted therein, similar to the one herein
described and referred to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner.
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment,
work in process and other personal property to be incorporated into the Property; all goods,
materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other
personal property now or hereafter appropriated for use on the Property, whether stored on the
Property or elsewhere, 'and used or to be used in connection with the Property; all rents, issues
and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance
and condemnation awards and proceeds, trade names, trademarks and service marks arising from
or related to the Property and any business conducted thereon by Trustor; all replacements,
additions, accessions and proceeds; and all books, records and files relating to any of the
foregoing.
All of the foregoing, together with the Property, is herein referred to as the "Security."
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING:
(a) Payment ofjust indebtedness of Trustor to Beneficiary as set forth in the Note
(defined in Article 1 below) until paid or cancelled. Said principal and other payments shall be
due and payable as provided in the Note. Said Note and all its terms are incorporated herein by
1010\03\111661.2 2
reference, and this conveyance shall secure any and all extensions thereof, however evidenced;
and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
(c) Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents (defined in Section 1.2 below).
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall
have the following meanings in this Deed of Trust:
Section 1.1 The term "Affordable Housing Agreement" means that certain Affordable
Housing Agreement Imposing Restrictions on Real Property between SAMBI Seaside Heights
and Beneficiary dated November 11, 1996 and recorded as Document No. 1997-004512 in the
Official Records of San Diego County, as modified by the Estoppel Certificate and Amendment
to Affordable Housing Agreement between the City and The Olson Company dated December
30, 1997.
Section 1.2 The term "Loan Agreement" means thakertain Loan Agreement between
Trustor and Beneficiary, dated , 1998 providing for the Beneficiary to loan to the
Trustor Four Hundred Fifty Three Thousand Six Hundred Dollars ($453,600) for the
construction of improvements on the Property.
Section 1.3 The term "Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, and the Affordable Housing Agreement and any other debt, loan or security
instruments between Trustor and the Beneficiary relating to the Property.
Section 1.4 The term "Note" means the promissory note in the principal amount of
Four Hundred Fifty Three Thousand Six Hundred Dollars ($453,600) of even date herewith
executed by the Trustor in favor of the Beneficiary, the payment of which is secured by this
Deed of Trust. (A copy of the Note is on file with the Beneficiary and terms and provisions of
the Note is incorporated herein by reference.)
Section 1.5 The term "Principal" means all amounts (including interest) required to be
paid under the Note.
1010\03\111661.2 3
ARTICLE 2
MAINTENANCE AND MODIFICATION OF THE PROPERTY
AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note,
the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause
the Security to be maintained and preserved in good condition. The Trustor will from time to
time make or cause to be made all repairs, replacements and renewals deemed proper and
necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the
making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge (or cause to be paid hlly and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty (30) days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary
as its agent (said agency being coupled with an interest) with the authority, but without any
obligation, to file for record any notices of completion or cessation of labor or any other notice
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the
Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor
only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those
actions as hereinbefore provided.
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or
claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons
who have furnished or claim to have furnished labor, services or materials in connection with the
Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or
services which Trustor in good faith disputes and is diligently contesting provided that Trustor
shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the
Recorder of San Diego County, a surety bond in an amount 1 and 1/2 times the amount of such
claim item to protect against a claim of lien.
Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in
the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to
these exceptions, Beneficiary will grant andor direct the Trustee to grant such easements.
1010\03\111661.2 4
ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, at least fifteen (15) days prior to the date of
delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility
company which are or may become a lien affecting the Security or any part thereof; provided,
however, that Trustor shall not be required to pay and discharge any such tax, assessment, charge
or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith
and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities
contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar
governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien
therefor on any part of the Security; provided, however, if such taxes, assessments or charges
may be paid in installments, Trustor may pay in such installments. Except as provided in clause
(b) of the first sentence of this paragraph, the provisions of this Section 3.1 shall not be construed
to require that Trustor maintain a reserve account, escrow account, impound account or other
similar account for the payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this
Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the
same, after the Beneficiary has notified the Tmstor of such failure to pay and the Trustor fails to
fully pay such items within seven (7) business days after receipt of such notice. Any amount so
advanced therefor by Beneficiary, together with interest thereon from the date of such advance at
the maximum rate permitted by law, shall become an additional obligation of Trustor to the
Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid and all other obligations secured
hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time
prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of
Trust.
1010\03\111661.2 5
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, the
Beneficiary, after at least seven (7) days prior notice to Beneficiary, may (but shall be under no
obligation to) take out the required policies of insurance and pay the premiums on the same or
may make such repairs or replacements as are necessary and provide for payment thereof; and all
amounts so advanced therefor by the Beneficiary shall become an additional obligation of the
Trustor to the Beneficiary (together with interest as set forth below) and shall be secured hereby,
which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid,
shall bear interest from the date of the advance at the lesser of ten percent (10%) per annum or
the maximum rate permitted by law.
ARTICLE 4
DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of (1) taking of all or any part of or any interest in the Property by or under
assertion of the power of eminent domain, (2) any damage to or destruction of the Property or in
any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the
Property ("Funds") are hereby assigned to and shall be paid to the Beneficiary by a check made
payable to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to
collect and receive any funds and is authorized to apply them in whole or in part upon any
indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall
determine at its sole option. The Beneficiary shall be entitled to settle and adjust all claims under
insurance policies provided under this Deed of Trust and may deduct and retain from the
proceeds of such insurance the amount of all expenses incurred by it in connection with any such
settlement or adjustment. All or any part of the amounts so collected and recovered by the
Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for
its disposition. Application of all or any part of the Funds collected and received by the
Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust.
The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior
mortgage lender.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
1010\03\111661.2 6
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such
expenses are incurred at the lesser of ten percent (10%) per annum or the maximum rate
permitted by law.
Section 5.3 Payment of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and by the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of
Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixtures filing under the California Commercial Code. As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are required to
convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees
to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary
to maintain such valid perfected security interest in the Security in order to secure the payment of
the Note in accordance with their terms. The Beneficiary is authorized to file a copy of any such
financing statement in any jurisdiction(s) as it shall deem appropriate kom time to time in order
to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the
Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in
full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
1010\03\111661.2 7
At any and all reasonable times upon seventy-two (72) hours' notice, the Beneficiary and
its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall
have the right, without payment of charges or fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, 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, age, sex, sexual orientation, marital status, national origin or ancestry in the sale,
transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor 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 transferees or vendees in the Security. The foregoing covenants shall run with the land.
ARTICLE 6
HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or
permit the Property to be in violation of any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions on, under or about the Property
including, but not limited to, soil and ground water conditions. Trustor shall not use, generate,
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or
related materials, including without limitation, any substances defined as or included in the
definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations (collectively referred to
hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept
and used in and about multifamily residential property.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written
notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against Trustor or the Property pursuant to any
applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party
against Trustor or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above hereinafter referred to a "Hazardous Materials Claims"); and (iii) Trustor's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of the Property that
could cause the Property or any part thereof to be classified as "border-zone property" under the
provision of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted
in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any Hazardous Materials Law.
Beneficiary shall have the right to join and participate in, as a party if it so elects, any
legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to
1010\03\111661.2 8
have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall
indemnify and hold harmless Beneficiary and its councilmembers, supervisors, directors,
officers, employees, agents, successors and assigns from and against any loss, damage, cost,
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (a) all foreseeable consequential
damages; @) the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
plans; and (c) all reasonable costs and expenses incurred by Beneficiary in connection with
clauses (a) and (b), including but not limited to reasonable attorneys' fees.
Without Beneficiary's prior written consent, which shall not be unreasonably withheld,
Trustor shall not take any remedial action in response to the presence of any Hazardous
Materials on, under or about the Property, nor enter into any settlement agreement, consent
decree, or other compromise in respect to any Hazardous Material Claims, which remedial
action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgement,
impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Property either poses an immediate threat to the health, safety or welfare of
any individual or is of such a nature that an immediate remedial response is necessary and it is
not reasonably possible to obtain Beneficiary's consent before taking such action, provided that
in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken.
Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if
either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Trustor
will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required
action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no
reasonable alternative to such remedial action which would result in less impairment of
Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary.
The Trustor hereby acknowledges and agrees that (i) this Article is intended as the
Beneficiary's written request for information (and the Trustor's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other
Loan Documents (together with any indemnity applicable to a breach of any such representation
and warranty) with respect to the environmental condition of the property is intended by the
Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code
of Civil Procedure Section 736.
In the event that any portion of the Property is determined to be "environmentally
impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or
to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section
726S(e)(l)), then, without otherwise limiting or in any way affecting the Beneficiary's or the
Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its
rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such
environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Trustor to
1010\03\111661.2 9
judgment, and (b) any other rights and remedies permitted by law. For purposes of determining
the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a), the Trustor shall be deemed to have willhlly permitted or
acquiesced in a release or threatened release of hazardous materials, within the meaning of
California Code of Civil Procedure Section 726.5(d)(l), if the release or threatened release of
hazardous materials was knowingly or negligently caused or contributed to by any lessee,
occupant, or user of any portion of the Property and the Trustor knew or should have known of
the activity by such lessee, occupant, or user which caused or contributed to the release or
threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred
by the Beneficiary in connection with any action commenced under this paragraph, including any
action required by California Code of Civil Procedure Section 726.5@) to determine the degree
to which the Property is environmentally impaired, plus interest thereon at the rate specified in
the Note until paid, shall be added to the indebtedness secured by this Deed of Trust and shall be
due and payable to the Beneficiary upon its demand made at any time following the conclusion
of such action.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following shall constitute Events of Default following the expiration of any
applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under
the Loan Documents; (2) failure to observe or perform any of Trustor's other covenants,
agreements or obligations under the Loan Documents, including, without limitation, the
provisions concerning discrimination; or (3) failure to make any payment or perform any of
Trustor's other covenants, agreements, or obligations under any other debt instruments or
regulatory agreement secured by the Property, which default shall not be cured within the times
and in the manner provided therein.
Section 7.2 Acceleration of Maturity.
If an Event of Default shall have occurred and be continuing, then at the option of the
Beneficiary, the amount of any payment related to the Event of Default and the unpaid Principal
of the Note shall immediately become due and payable, upon written notice by the Beneficiary to
the Trustor (or automatically where so specified in the Loan Documents), and no omission on the
part of the Beneficiary to exercise such option when entitled to do so shall be construed as a
waiver of such right.
Section 7.3 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) 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 the
Security and take possession thereof (or any part thereof) and of any of the Security, in its own
1010\03\111661.2 10
name or in the name of Trustee, and do any acts which it deems necessary or desirable to
preserve the value or marketability of the Property, or part thereof or interest therein, increase the
income therefrom or protect the security thereof. The entering upon and taking possession of the
Security shall not cure or waive any Event of Default or Notice of Default (as defined below)
hereunder or invalidate any act done in response to such Default or pursuant to such Notice of
Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be
entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of
any Event of Default, including the right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof;
(c) 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 Security to be sold ("Notice of
Default and Election to Sell"), which notice Trustee or Beneficiary shall cause to be duly filed
for record in the Official Records of San Diego County; or
(d) Exercise all other rights and remedies provided herein, in the instruments by which
the Trustor acquires title to any Security, or in any other document or agreement now or
hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or
provided by law.
Section 7.4 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained, the Beneficiary shall give notice to the Trustee (the "Notice of Sale") and shall deposit
with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be
deemed to constitute evidence that the unpaid principal amount of the Note is immediately due
and payable), and such receipts and evidence of any expenditures made that are additionally
secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be
recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
required by law and by this Deed of Trust. 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 and after Notice of Sale having been given as required by law, sell the Security,
at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate
lots or parcels or items as Trustee shall deem expedient and in such order as it may determine
unless specified otherwise by the Trustor according to California Civil Code Section 2924g@), 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 such purchaser or purchasers thereof 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 or any matters of facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary,
may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such
purchaser or purchasers.
1010\03\111661.2 11
(b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of
evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to
payment oE (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to
Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the
remainder, if any, to Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and kom time to time thereafter, 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.
Section 7.5 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of
right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part
thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice
of any application therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of
entry as provided herein, and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 7.6 Remedies Cumulative.
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 7.7 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy
accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or
shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every
right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from
time to time and as often as may be deemed expeditious by the Beneficiary. No consent or
waiver, expressed or implied, by the Beneficiary to or any breach by the Trustor in the
performance of the obligations hereunder shall be deemed or construed to be a consent to or
waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to
complain of any act or failure to act or to declare an Event of Default, irrespective of how long
such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or
impair any rights, power or remedies consequent on any Event of Default by the Trustor.
1010\03\111661.2 12
(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of
any sums secured hereby, (ii) takes other or additional security or the payment of any sums
secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv)
releases any part of the Security f?om the lien of this Deed of Trust, or otherwise changes any of
the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
granting of any easement or other right affecting the Security, or (iv) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the original liability under this Deed of Trust, or any other obligation of
the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or
omission preclude the Beneficiary from exercising any right, power or privilege herein granted
or intended to be granted in any Event of Default then made or of any subsequent Event of
Default, nor, except as otherwise expressly provided in an instrument or instruments executed by
the Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 7.8 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its
interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 7.9 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of the Beneficiary
allowed in such proceedings and for any additional amount which may become due and payable
by the Trustor hereunder after such date.
Section 7.10 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of
protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in
taking any action to collect any sums owing under the Note or in proceedings against the
Security, in connection with the delivery, acceptance, performance, default, endorsement or
guaranty of this Deed of Trust.
1010\03\111661.2 13
ARTICLE 8
MISCELLANEOUS
Section 8.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by
an instrument in writing signed by Beneficiary and Trustor.
Section 8.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid
or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,
and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to
Trustor, or to the person or persons legally entitled thereto.
Section 8.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon the
other party, such notice, demand or communication shall be in writing and shall be served
personally or by depositing the same in the registered United States mail, return receipt
requested, postage prepaid and (1) if intended for Beneficiary shall be addressed to:
City of Carlsbad
Housing and Community Development Department
2965 Roosevelt Street
Carlsbad, CA 92008-2389
Attn: Housing and Redevelopment Director
and (2) if intended for Trustor shall be addressed to:
Cherry Tree Walk, LLC
c/o The Olson Company
3010 Old Ranch Parkway, Suite 400
Seal Beach, CA 90740-2750
Attn: Mark Buckland
Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either
party may change its address at any time by giving written notice of such change to Beneficiary
or Trustor as the case may be, in the manner provided herein, at least ten (1 0) days prior to the
date such change is desired to be effective.
1010\03\111661.2 14
Section 8.4 Successors and Joint Trustors.
Where an obligation is created herein binding upon Trustor, the obligation shall also
apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust
have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be
deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is
more than one entity or person, all obligations of Trustor shall be deemed to be a joint and
several obligation of each and every entity and person comprising Trustor.
Section 8.5 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
Section 8.6 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or
partially secured by the lien of this Deed of Trust.
Section 8.7 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California.
Section 8.8 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
Section 8.9 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 8.10 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
Security.
1010\03\111661.2 15
Section 8.1 1 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its place of record, which, when duly recorded in the proper office of the
county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 8.12 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 8.13 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and
year first above written.
TRUSTOR:
Cherry Tree Walk, LLC, a California limited
liability company
By The Olson Company, a California corporation,
its Manager
1010\03\111661.2 16
STATE OF CALIFORNIA )
COUNTY OF 1 ss 1
authorized capacity(ies), and that by weir 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.
1010\03\111661.2 17
EXHIBIT A
(Legal Description)
The land is situated in the State of California, City of Carlsbad, County of San Diego, and
is described as fallows:
1010\03\111661.2 18
July 6, 1998
Fidelity National Title Insurance Company
2763 Camino del Rio South
San Diego, CA 92108
Attention: Douglas Jones
Re: Cherry Tree Walk - Carlsbad, California
Escrow No. 98003362-A
Dear Mr. Jones:
This letter constitutes the escrow instructions of the City of Carlsbad, a municipal
corporation (the "City") in connection with financing to be provided by the City to Cherry Tree
Walk, LLC, a limited liability company (the "Borrower"). Through this escrow, the City will
provide a loan to the Borrower to finance the construction by the Borrower of forty-two (42)
townhomes on certain Property located in the City of Carlsbad and described in Exhibit A
attached hereto (the "Property"). These instructions are to be read in conjunction with separate
escrow instructions from the Borrower and from Wells Fargo Bank.
I. Loans Through This Escrow.
A. The City will make a Four Hundred Fifty-Three Thousand Six Hundred
Dollar ($453,600) loan to the Borrower (the "City Loan"), which will be evidenced by a
promissory note secured by a second deed of trust on the Property.
B. Wells Fargo Bank will make a Four Million Three Hundred and Fourteen
Thousand Dollars ($4,3 13,000) loan to the Borrower (the "Bank Loan"), which will be evidenced
by a promissory note secured by a first deed of trust on the Property.
1010\03\112853.3
2965 Roosevelt St., Ste. B - Carlsbad, CA 92008-2389 - (619) 434-2810/2811 FAX (619) 720-2037
. ,. a Fidelity National Title Ir. ance Company -
. * ' June-, 1998
Page 2
11. Deuosit of Documents into Escrow.
A. The City and the Bank will deposit the following documents into this Escrow (the
"Escrow Documents"):
1. The deed of trust executed by the Borrower as trustor to Fidelity National
Title Insurance Company as trustee for the benefit of the City, to secure a
note from the Borrower to the City in the principal amount of Four
Hundred Fifty-Three Thousand Six Hundred Dollars ($453,600) (the "City
Deed of Trust");
2. The deed of trust executed by the Borrower as trustor in favor of the Bank
as Beneficiary, to secure promissory note executed by the Borrower in
favor of the Bank in the principal amount of Four Million Three Hundred
and Fourteen Thousand Dollars (%4,3 14,000) (the "Bank Deed of Trust");
3. A Subordination and Intercreditor Agreement between City, the Bank, and
the Borrower, subordinating the City Deed of Trust to the Bank Deed of
Trust (the "subordination and Intercreditor Agreement"); and
111.
4. A Collateral Assignment and Subordination Agreement, executed by the
City, the Bank, and the Borrower, subordinating an Affordable Housing
Agreement Imposing Restrictions on Real Property dated November 18,
1996 between the City and the Borrower's predecessor in interest to the
Property, and amendments thereto, to the Bank Deed of Trust (the
"Collateral Assignment and Subordination Agreement").
Conditions of Closing.
You may close this Escrow only upon fulfillment of all of the following conditions:
A. You have confirmed that the Borrower holds fee title to the Property.
B. You hold the documents referred to in Section I1 above, duly executed and
acknowledged where required, with all appropriate exhibits attached;
C. You have met all of the requirements of the Borrower and the Bank pursuant to
their escrow instructions;
1010\03\112853.3
,.- . .. Fidelity National Title 11. .ance Company
. , .I ' June -, 1998
Page 3
D. You are prepared and unconditionally committed to deliver to the City a 1992
ALTA LP-10 Lender's Policy on the Property naming the City as insured in the amount of Four
Hundred Fifty-Three Thousand Six Hundred Dollars ($453,600) subject only to the lien of the
Bank Deed of Trust and exceptions numbers 1-3 and 5-21 on the preliminq title report issued
by your company and dated as of May 14, 1998 (the "Title Report"), with the creditors rights
exclusion set forth in the Exclusions From Coverage deleted, and with the following CLTA
endorsements: modified 100, 116 and 102.5 (to be issued at a later date). 103.7 showing access
from Aviara Parkway, and a 1 16.1 endorsement confirming that the property shown in the survey
is the same as the Property (the "City Policy"). The Citv Policv shall not be subiect to
mechanics liens rights arisine from any work that may have commenced on the Prouertv
prior to recordation of the Citv Deed of Trust.
E. You have had verbal contact with the City's representative Craig Ruiz at (760)
434-2817, confirming that all conditions of closing required by the City have been satisfied.
IV. Recording Requirements.
A. Please insert all dates where there are blanks in the Escrow Documents and
attached correct legal descriptions where appropriate.
B. The City Deed of Trust is to be recorded at no charge pursuant to California
Government Code Section 27383. If a recording fee is charged by the Recorder of the County of
San Diego, you are to pay the recording fee and be reimbursed through this Escrow.
C. Upon meeting the conditions of closing in Section I11 above, you are instructed to
immediately record in the Official Records of the County of San Diego the following documents
(collectively, the "Record Documents"), in the order set forth below:
1. Bank Deed of Trust;
2. City Deed of Trust;
3. Subordination and Intercreditor Agreement;
4. Collateral Assignment and Subordination Agreement;
Immediately upon recordation of the Record Documents, you are instructed to notify, by
telephone, Craig Ruiz at (760) 434-2817 and Polly Marshall at (415) 788-6336.
1010\03\112853.3
. . * " , Fidelity National Title 11. .ance Company
-
.. . .. June -, 1998
Page 4
V. Delivery of the Recorded Documents and Policies.
You are instructed to deliver the following documents, which, where applicable, are to
include recording information certified as correct by Fidelity National Title Insurance Company,
within seventy-two (72) hours of the close of escrow:
A. Copies of all Escrow Documents, the two originals and one copy of the City
Policy to:
Craig Ruiz
Housing and Redevelopment Department
City of Carlsbad
2965 Roosevelt Street, Suite B
Carlsbad, California 920008
B. Copies of all documents sent to the City, including a copy of the City Policy, to:
Polly V. Marshall
Goldfarb and Lipman
One Montgomery Street, Telesis Tower, 23rd Floor
San Francisco, CA 94104
VI. Costs. Fees. and Premiums.
All costs, fees, and premiums associated with this Escrow will be paid by the Borrower.
VII. Internal Revenue Code Reauirements.
You shall be responsible for complying with the requirements of Section 6045(e) of the
Internal Revenue Code of 1986, as amended, and Section 18802.10 of the California Revenue
and Taxation Code.
VIII. Amendment, Modification or Revocation.
These instructions may be revoked, amended or modified in writing by the City at any
time prior to the close of escrow. The City authorizes the Community Development Director of
the City to sign any revocation, supplement, amendment or modification to these instructions on
its behalf.
1010\03\112853.3
-.
I , ’ Fidelity National Title 11. ance Company . .1 ’ June -, 1998
Page 5
*****
Please acknowledge your agreement to and acceptance of these instructions by signing
the enclosed copies of this letter and returning one copy to Craig Ruiz at the City
Thank you for your assistance.
Sincerely,
tion
Community Development Director
The undersigned acknowledges receipt of the above instructions and agrees to proceed in strict
accordance therewith.
FIDELITY NATIONAL TITLE INSURANCE COMPANY
1010\03\112853.3
EXHIBIT A
The Propem referred to is situated in the State of California, County of Sari Diego, city of
Carlsbad, and described as follows:
Lot 138 of CARLSBAD TRACT NO. 92-02, in the City of Carlsbad, County of San Diego, State
of California, according to Map thereof No. 13378, filed in the Office of the County Recorder of
San Diego County, December 9, 1996.
Assessor Parcel No.: 214-544-01
1010\03\112853.3