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2002 Miraflores LP (LINC - DC&TC) - Replacement Deed of Trust & Security AgrmtRECORDING REQUESTED BY: STEWART TITLE OF CALIFORNIA STEWART TITLE -Riverside AND WHEN RECORDED MAIL TO: LA QUINTA REDEVELOPMENT AGENCY 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 ATTENTION: EXECUTIVE DIRECTOR ORDER NO: 501191093 APN : 649-030-045-5 TRA : 020-011 DTT:$ Doc " 2002-171478 04/03/2002 08:00A Fee:NC Pe Recorded InOfftctal Records County of RIverstde Gary L. Orso Assessor, County Clerk d Recorder 1111111111111111111111111111, 111111, 111, m S U PAGE SIZE DA PCOR NOCOR SMF MISC. V A I R L 11 COPY I LONG I REFUND NCHG THIS IS A FOURTH DEED OF TRUST SUBJECT TO AND SUBDORINATE TO THE FIRST SECOND AND THIRD DEEDS OF TRUST RECORDING CONCURRENTLY HEREWITH REPLACEMENT DEED OF TRUST AND SECURITY AGREEMENT, WITH ASSIGNMENT OF RENTS AND AGREEMENTS TITLE OF DOCUMENT THIS PAGE ADDED TO PROVIDE ADEQUATE SPACE FOR RECORDING INFORMATION ($3.00 ADDITIONAL RECORDING FEE APPLIES) STEWART TITLE —Riverside Recording Requested By And When Recorded Mail To: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Executive Director Space Above For Recorder Exempt from Recording Fee Per Gov. Code § 6103 REPLACEMENT DEED OF TRUST AND SECURITY AGREEMENT, WITH ASSIGNMENT OF RENTS AND AGREEMENTS NOTICE: THIS DEED OF TRUST AND SECURITY AGREEMENT, WITH ASSIGNMENT OF RENTS AND AGREEMENTS CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE LAND BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT This Replacement Deed of Trust, Security Agreement, and Fixture Filing with Assignment of Rents and Agreements (the "Deed of Trust") is made as of April 1, 2002, by MIRAFLORES, L.P., a California limited partnership (the "Trustor"), to STEWART TITLE COMPANY (the "Trustee"), for the benefit of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Beneficiary"). This Replacement Deed of Trust replaces that certain Deed of Trust recorded as Instrument No. 2001-035562 and reconveyed on the date of recordation hereof. WITNESSETH: Trustor does irrevocably grant, transfer, and assign to Trustee, in trust, with power of sale, all Trustor's right, title, and interest now owned or later acquired in the fee interest in the real property (the "Land") located in the City of La Quinta, County of Riverside, California, and more particularly described in attached Exhibit A, attached hereto and incorporated herein by reference (Trustor agrees that any greater title to the Land later acquired during the term of this Deed of Trust will be subject to this Deed of Trust),together with the rents, issues, and profits, subject however, to the right, power, and authority granted and conferred on Trustor in this Deed of Trust to collect and apply the rents, issues, and profits; and Trustor also irrevocably grants, transfers, and assigns to Trustee, in trust, with power of sale, all of Trustor's right, title, and interest now owned or later acquired to the following property (including the rights or interests pertaining to the property) located on the Land: (1) all appurtenances, easements, water and water rights, and pumps and pumping plants, and all shares of stock evidencing these; all of these items, whether now or later acquired, being declared to be for all purposes of this Deed of Trust a part of the Land, the specific enumerations in this Deed of Trust not excluding the general; 394/015610-002770365.04 a0326 28/02 I IIIIII IIIIII IIII IIIIIII 1111111111111111111111111111111 04?0 2 o 1 35a00F1 (2) the rents, issues, profits, and proceeds thereof; and (3) the Land to the extent any fee interest is not included in clauses (1) and (2) above. For the purpose of securing, in the order of priority that Beneficiary determines (a) repayment of moneys advanced by the Beneficiary to the Trustor (the "Loan") as evidenced by a Promissory Note of Trustor of the same date as this Deed of Trust in the principal amount of NINE MILLION FIVE HUNDRED THOUSAND DOLLARS ($9,500,000.00) (hereinafter the "Replacement SA Note," the Note" or "Note"), payable to Beneficiary or to order, and all extensions, modifications, or renewals of the Note; (b) payment of all sums, if any, due on the Loan according to the terms of the Note; (c) payment of all other sums (with interest as provided in this Deed of Trust) becoming due and payable to Beneficiary or Trustee pursuant to the terms of this Deed of Trust; and performance of every obligation contained in this Deed of Trust, the Note, and that certain Affordable Housing Agreement dated December 20, 2000, as amended and assigned by that certain Assignment and Assumption Agreement of Affordable Housing Agreement (Senior Apartments Development), dated June 11, 2001, as amended by that certain First Amendment to Affordable Housing Agreement (Senior Apartments Development), dated April 1, 2002 (collectively, the "AHA"); and (d) the AHA and any agreements, supplemental agreements, or other instruments of security executed by Trustor as of the same date of this Deed of Trust for the purpose of further securing any obligation secured by this Deed of Trust, or any part of it, or for the purpose of supplementing or amending this Deed of Trust or any instrument secured by this Deed of Trust. 1.0 DEFINITIONS Certain Defined Terms. Capitalized terms used herein shall have the following meanings unless the context in which they are used clearly requires otherwise. Collateral: The Collateral as defined in Section 9 of this Deed of Trust. Default Rate: The maximum rate of interest authorized under the laws of the State of California. Event of Default: Any of the events of default listed under Section 8 herein. Loan: The principal and all other amounts, payments, and premiums due, if not waived, under the Note and any extensions or renewals (including, without limitation, extensions or renewals at a different rate of interest, regardless of whether evidenced by a new or additional promissory note or notes as agreed to in writing by Trustor), and all other indebtedness or obligations of Trustor to Beneficiary under or secured by this Deed of Trust. I IIIIII IIIIII IIII IIIIIII IIIIIIIII IIIIIIIIIIIIII ?/ 5026 9) 270365.04 a03/28/02 IIII II3af5 &GA Hazardous Materials: The meaning set forth in Section 212 of the Affordable Housing Agreement. Hazardous Materials Claim: Any enforcement, cleanup, removal, remedial, or other governmental, regulatory, or private actions, agreements, or orders threatened, instituted, or completed pursuant to any Hazardous Materials Law, together with all claims made by any third party against Trustor or the Land relating to damage, contribution, cost -recovery compensation, loss, or injury resulting from the presence, release, or discharge of any Hazardous Materials. Hazardous Materials Law: Those federal, state, or local laws set forth in Section 212.5 of the Affordable Housing Agreement. Impositions: All real estate and personal property taxes and other taxes and assessments, water and sewer rates and charges, and all other governmental charges and any interest or costs or penalties with respect to those charges, assessments, or taxes, ground rent and charges for any easement or agreement maintained for the benefit of the Land, general and special, that at any time may be assessed, levied, imposed, or become a lien on the Land or the rent or income received from the Land, or any use or occupancy of the Land; and any charges, expenses, payments, or assessments of any nature, if any, that are or may become a lien on the Land or the rent or income received from the Land. Improvements: All buildings, improvements, and appurtenances on the Land, and all improvements, additions, and replacements of those improvements and other buildings and improvements, at any time later constructed or placed on the Land. Land: The real property as located in the City of La Quinta, Riverside County, California and more particularly described in attached Exhibit A and any fee interest now owned or later acquired in such property, together with all rights, privileges, hereditaments, tenements, rights of way, easements and appurtenances of the land. Material Adverse Change: Any material and adverse change in: a. the business or properties or condition (financial or otherwise) of Trustor; or b. the condition or maintenance of the Land. Obligations: All of the covenants, promises, and other obligations (other than the Loan) made or owing by Trustor to or due to Beneficiary under or as set forth in the Deed of Trust. Person: Any natural person, corporation, firm, association, government, governmental agency, or any other entity, whether acting in an individual, fiduciary, or other capacity. Personalty: Trustor's interest, if any, in all accounts, contract rights, and general intangibles (specifically including any insurance proceeds and condemnation awards) arising out of the ownership and maintenance of the Land. IIIYI�IIII�N�I�I�NIIIW�I�uNI�Y • 290� �'�R�• 394/015610-0026 270365.04 a03/28/02 -3- Project: The land and the SENIOR CITIZEN RENTAL APARTMENT project described in the Affordable Housing Agreement. Receiver: Any trustee, receiver, custodian, fiscal agent, liquidator, or similar officer. Release: Any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment, including continuing migration, of Hazardous Substances that goes into the soil, surface water, or groundwater of the Land, whether or not caused by, contributed to, permitted by, acquiesced to, or known to Trustor. Security Documents: This Deed of Trust and all other documents now or later securing any part of the payment of the Loan or the observance or performance of the Obligations. Title Policy: The title insurance policy issued by Stewart Title Insurance Company to Beneficiary. Trustor: Collectively, Trustor or any obligor under the Note and the Affordable Housing Agreement, together with their respective affiliates and their respective employees, representatives, and agents. 2.0 WARRANTY OF TITLE Trustor warrants that: Trustor is the owner of the Land; 2. Trustor shall maintain and preserve the lien of this Deed of Trust until the Loan has been paid in full or has been waived by the Beneficiary under the provisions of the Note; 3. Trustor has good, right, and lawful authority to grant the Land as provided in this Deed of Trust; and 4. Trustor will forever warrant and defend the grant made in this Deed of Trust against all claims and demands, except as are specifically set forth in this Deed of Trust. 3.0 REPRESENTATIONS AND WARRANTIES Trustor represents and warrants to Beneficiary that as of the date of this Deed of Trust: A. Organization of the Trustor. 1. Trustor is a duly organized limited liability company, validly existing, and in good standing under the laws of the State of California and is qualified to do business in California. iu�uwu�u�N��um��Mu ,.=w2 5 & of�35 v&&. 394/015610-0026 270365.04 a03/28/02 —4 2. Trustor has the requisite power and authority to own and maintain its properties, to carry on its business as now being conducted, and to own, maintain and lease the Land. B. Validity of Security Documents. 1. The execution, delivery, and performance by the Trustor of the Security Documents and the borrowings evidenced by the Note: a. are within the power of the Trustor; b. have been duly authorized by all requisite corporate or partnership actions, as appropriate; C. have received all necessary governmental approval; and d. will not violate any provision of law, any order of any court or agency of government, the charter documents of the Trustor, or any indenture, agreement, or any other instrument to which the Trustor is a party or by which the Trustor or any of its property is bound, nor will they conflict with, result in a breach of, or constitute (with due notice and lapse of time) a default under any indenture, agreement, or other instrument, or result in the creation or imposition of any lien, charge, or encumbrance of any nature on any of the property or assets of the Trustor, except as contemplated by the provisions of the Security Documents. 2. Each of the Security Documents, when executed and delivered to Beneficiary, will constitute a valid obligation, enforceable in accordance with its terms. 3. All information and financial statements with respect to the Trustor furnished to Beneficiary disclose all liabilities of the Trustor, fixed and contingent, as of their respective dates. C. Use of Proceeds of Loan. Trustor will use the funds or the Land advanced pursuant to the Note for the purposes set forth in the Affordable Housing Agreement. D. Other Arrangements. Trustor is not a party to any agreement or instrument materially and adversely affecting Trustor's present or proposed business, properties, assets, operation, or condition, financial or otherwise; and Trustor is not in default in the performance, observance, or fulfillment of any of the material obligations, covenants, or conditions in any agreement or instrument to which Trustor is a party that materially and adversely affect Trustor's present or proposed business, properties, assets, operation, or condition, financial or otherwise. IIIIIIIIIIIIIIIIIIIIIII IIIII III IIIII IIII IIII 64 2� 60of? 060E 35 IIIIIIIIII 394/015610-0026 _ 270365.04 a03/28/02 _5 E. Litigation. There is not now pending against Trustor, nor to the knowledge of the Trustor is there threatened, any action, suit, or proceeding at law or in equity or before any administrative agency that, if adversely determined, would materially impair or affect: 1. the financial condition or the ability of the Trustor necessary to operate and maintain and sell the Land and Units and other improvements in accordance with the Affordable Housing Agreement; or 2. the condition of the Land. F. Other Warranties. 1. The Land is used principally or primarily for purposes designated in the Affordable Housing Agreement; 2. Trustor is engaged in the development, operation and leasing of the Improvements; and 3. the principal purpose of the Loan is to induce, cause and assist the development, construction and sale of 118 units of rental housing on the Land for senior citizens, at affordable costs for very low, lower, and moderate income households. G. Compliance with Laws. Except as otherwise provided in this Deed of Trust, the Land and the proposed and actual use of the Land comply in all material respects with all laws, ordinances, rules, and regulations of all local, regional, county, state, and federal governmental authorities having jurisdiction (including, but not limited to, the Americans With Disabilities Act), and there is no action or proceeding pending or, to the actual knowledge of Trustor without due inquiry, threatened before any court, quasi-judicial body, or administrative agency at the time of any disbursement by Beneficiary relating to the validity of the Loan or the proposed or actual use of the Land. 4.0 AFFIRMATIVE COVENANTS Until the entire Loan has been paid in full or waived, Trustor covenants to and agrees with Beneficiary as follows: A. Obligations of Trustor. Subject to the provisions set forth in the Note, Trustor will pay the Loan and Trustor will continue to be liable for the payment of the Loan until it has been paid in full or until repayment has been waived or forgiven by the Beneficiary under the terms of the Note. Trustor: 111111111111uii .�,��;;aO&A 394/015610-0026 270365.04 a03/28/02 -6- 1. will timely perform all the covenants, agreements, terms, and conditions to be performed by Trustor: a. under this Deed of Trust, Regulatory Agreement and Declaration of Covenants, Conditions, and Restrictions, and the Affordable Housing Agreement; and b. as required of Trustor under each document and agreement constituting one of the Security Documents.; and 2. will not cancel, surrender, modify, amend, or permit the cancellation, surrender, modification, or amendment of any of the previously mentioned agreements or any of the covenants, agreements, terms, or conditions contained in any of them, except in the ordinary course of Trustor's business, without the prior written consent, in each case, of Beneficiary which consent shall not be unreasonably withheld. B. Insurance. 1. Trustor, at its sole cost and expense, will obtain and maintain or shall cause to be obtained and maintained commercial general liability insurance covering the Land and the ownership, use, occupancy, and maintenance of the Land and the Project in accordance with the Regulatory Agreement and Declaration of Covenants, Conditions, and Restrictions and with the Affordable Housing Agreement. 2. Trustor, at its sole cost and expense, but for the mutual benefit of Trustor and Beneficiary, will maintain during the term of this Deed of Trust other insurance, and in any amounts, as may from time to time be reasonably required by Beneficiary against other insurable risks. 3. All policies of insurance required pursuant to this Deed of Trust will be satisfactory in form and substance to Beneficiary and will be approved by Beneficiary as to amounts, form, risk coverage, deductibles, insurer, loss payable, and cancellation provisions. 4. Effective on the occurrence of any Event of Default, all of Trustor's right, title, and interest in all policies of property insurance and any unearned premiums paid are assigned to Beneficiary, who may assign them to any purchaser of the Land at any foreclosure sale. C. Maintenance, Waste, and Repair. Trustor will maintain the Land now or later existing in good and tenantable repair, and will not structurally alter any Improvements located thereon without the prior written consent of Beneficiary, or remove or demolish them in whole or in part, nor will Trustor suffer any waste of the Land or make any change in the use of the Land that will in any way impair the security of this Deed of Trust. Trustor will not abandon the Land or leave the Land unprotected, vacant, or deserted. U 111111111111III111111111111104?0�$ off 35$IIIIIII 08 I II�III IIIIII IIII 394/015610-0026 270365.04 a03/28/02 -7- D. Impositions. Trustor will pay prior to delinquency all Impositions that are or that may become a lien on the Land or are assessed against the Land or its rents, royalties, profits, and income. E. Compliance with Law. Trustor will preserve and keep in full force its existence, rights, and powers. Trustor will promptly and faithfully comply with all present and future laws, ordinances, rules, regulations, and requirements of every governmental authority or agency and of every board of fire underwriters (or similar body exercising similar functions) having jurisdiction that may be applicable to it or to the Land or to the use or manner of occupancy, possession, operation, maintenance, alteration, or repair of the Land or any part of it. F. Books and Records. Trustor will maintain complete books of account and other records reflecting the results of Trustor's operations and maintenance of the Land, in a form reasonably satisfactory to Beneficiary, and furnish to Beneficiary any information about the financial condition of Trustor, and the operations and maintenance of the Land as Beneficiary reasonably requests, including, but not limited to, copies of any reports by independent public accountants submitted to Trustor concerning the Land. Beneficiary will have the right, at all reasonable times and on reasonable notice, but not more frequently than once per calendar year unless a greater frequency is necessary for Beneficiary to comply with an applicable law or regulation, to audit, at Beneficiary's sole cost and expense, Trustor's books of account and records relating to the Land, all of which will be made available to Beneficiary and Beneficiary's representatives for that purpose, from time to time, on Beneficiary's request. G. Further Assurances. Trustor, at Trustor's expense and at any time on the reasonable request of Beneficiary, will execute, acknowledge, and deliver any additional papers and instruments and any further assurances of title and will do or cause to be done all further acts and things that may be proper or reasonably necessary to carry out the purpose of this Deed of Trust and to subject to the liens any property intended by the terms to be covered and any renewals, additions, substitutions, replacements, or betterments. H. Statement by Trustor. Trustor, on ten (10) days' written request, will furnish a statement of the amount due or outstanding on the Note and a statement of any offsets, counterclaims, or defenses to the payment. I. Indemnity. 1. If any action or proceeding (whether judicial, regulatory, or administrative) is threatened or commenced, except an action to foreclose this Deed of Trust or to collect the Loan: 270365.0400026 28/02 I IIIIII IIIIII IIII (IIIIII III IIIIII IIIIII 1111111111111111 04 0 9©f 35�0RR a. that affects the Land or any portion of it; b. for which Beneficiary is a party; or C. in which it becomes necessary to defend or uphold the lien of this Deed of Trust; then all reasonable costs, fees, and expenses incurred by Beneficiary with respect to the action or proceeding (including, without limitation, reasonable attorney fees and expenses) will, within thirty (30) days after the submission of bills for the costs to Trustor, be paid directly to the billing party by Trustor. 2. In addition, Trustor agrees to pay all costs, including, without limitation, reasonable attorney fees and expenses, incurred by Beneficiary in enforcing the terms of this Deed of Trust, Regulatory Agreement and Declaration of Covenants, Conditions, and Restrictions, or the Affordable Housing Agreement. Trustor agrees to indemnify and hold Beneficiary harmless from all liability, loss, damage, or expense (including, without limitation, reasonable attorney fees) that it may incur under this Deed of Trust, or in connection with the Loan secured by this Deed of Trust, the enforcement of any of Beneficiary's rights or remedies, any action taken by Beneficiary under this Deed of Trust, or by reason or in defense of any claims and demands that may be asserted against Beneficiary arising out of the Collateral, unless caused by the negligence or willful misconduct of Beneficiary. J. Reimbursement. Beneficiary will have the right to declare immediately due any amount paid by it for any real property tax, stamp tax or assessment that affects the land and that was due and not paid by Trustor prior to delinquency. K. Litigation. Trustor will promptly give written notice to Beneficiary of any litigation commenced that materially affects the Land other than unlawful detainer proceedings brought by Trustor. L. Tax Receipts. Subject to the provisions of Section 4.4 of this Deed of Trust, Trustor will present to Beneficiary, within seven (7) days after written demand, bills (that will be receipted from and after the date receipted bills are obtainable) showing the payment to the extent then due of all taxes, assessments or any other Imposition that may have become a lien on the Land prior to the lien of this Deed of Trust. M. Additional Information. Trustor will furnish to Beneficiary, within seven (7) days after written request, all information that Beneficiary may request concerning the performance by Trustor of the covenants of the Affordable Housing Agreement, and Trustor will permit Beneficiary or its IIIN IIIIIIIIIIII IIII �4 �0@ zee2 035394/015610-0026 1111 10 of 35 270365.04 a03/28/02 representatives at all reasonable times to make investigation or examination concerning that performance. N. Right of Entry. Trustor grants to Beneficiary and its agents, employees, consultants, and contractors the right to enter on the Land, subject to the rights of any tenants of the Project, for the purpose of making any inspections, reports, tests (including, without limitation, soils borings, groundwater testing, wells, or soils analysis), inquiries, and reviews that Beneficiary, in its sole and absolute discretion, deems necessary to assess the then current condition of the Land and compliance with the Affordable Housing Agreement. Beneficiary will provide Trustor with one (1) Business Day's notice of the entry. However, Trustor's consent will not be required for entry or for the performance of tests. All costs, fees, and expenses (including, without limitation, those of Beneficiary's outside counsel and consultants) incurred by Beneficiary with respect to the inspections, reports, tests, inquiries, and reviews, together with all related preparation, consultation, analyses, and review, necessary for compliance with the Security Documents, will be paid by Trustor to Beneficiary on demand, will accrue interest at the Default Rate until paid, and will be secured by this Deed of Trust, prior to any right' title, or interest in or claim on the Land attaching or accruing subsequent to the lien of this Deed of Trust or to which this Deed of Trust is not subordinated. Beneficiary, if and when it uses the foregoing Right of Entry to enter upon the Land as set forth in this Section N, shall indemnify, defend, and hold Trustor harmless, from and against any and all claims, demands, losses, damages, causes of action, and costs, including attorney's fees incurred as a result of any claims or litigation, that arise out of the negligence or willful misconduct of Trustor or any of its officers, officials, employees, representatives, or agents in their activity upon the Land pursuant to this Right of Entry. 5.0 NEGATIVE COVENANTS Until the entire Loan has been paid in accordance with the terms of the Note, Trustor covenants to and agrees with Beneficiary as follows: A. Restrictive Uses. Trustor covenants not to initiate, join in, or consent to any change in any zoning ordinance, private restrictive covenant, assessment proceedings, or other public or private restriction inconsistent with the Affordable Housing Agreement. B. Subordination to Other Financing. This Deed of Trust and all covenants, restrictions or regulatory agreements executed by Trustor in favor of Beneficiary in connection with the Land are expressly and shall be automatically subordinated to a deed of trust securing the repayment of construction financing for the development and construction of the Improvements. Trustor will not create or permit to continue in existence any mortgage, pledge, encumbrance, lien or charge of any kind on any of the Land except for: liens for taxes not yet delinquent; and 270365504 a030/28/02 I IIIIII IIIIII IIII (IIIIII III IIIIII IIIIII III IIIIII 1111111 04 �0 21 of0 35 2. any other liens or charges that are specifically approved in writing by Beneficiary, including any deed of trust executed or to be executed by Trustor or Trustor's successor in interest and recorded in Riverside County, California, to secure a loan obtained for the purpose of the construction of any improvement on the Land contemplated by the Affordable Housing Agreement. Beneficiary agrees to reasonably accommodate Trustor's construction and permanent lenders as may be commercially reasonably necessary to effect the Trustor's construction and permanent loans, including such subordination agreements as may be reasonably necessary. The Beneficiary's Executive Director shall have the authority to enter into one or more such subordination agreements on behalf of the Beneficiary provided and such subordination agreements are consistent with the requirements of Health and Safety Code Section 33334.14. C. Transferability. One of the inducements to Beneficiary for making the Loan is the identity of Trustor. The existence of any interest in the Land other than the interests of Trustor and Beneficiary and any encumbrance permitted in this Deed of Trust, even though subordinate to the security interest of Beneficiary, and the existence of any interest in Trustor other than those of the present owners, would impair the Land and the security interest of Beneficiary, and, therefore, Trustor will not sell, convey, assign, transfer, alienate, or otherwise dispose of its interest in the Land, either voluntarily or by operation of law, or agree to do so, except in accordance with the terms of the Affordable Housing Agreement. 6.0 ENVIRONMENTAL PROVISIONS A. Warranties and Covenants. Except as disclosed in writing to, and acknowledged in writing by, the Beneficiary, Trustor represents and warrants that, to the best of Trustor's actual knowledge based on a Phase I environmental study, except in the ordinary course of business, during the period of Trustor's ownership of the Land: (1) there has been no use, generation, manufacture, storage, treatment, disposal, discharge, Release, or threatened Release of any Hazardous Materials by any person on or around the Land; and (2) there have been no Hazardous Materials transported over or through the Land. Trustor agrees, except in the ordinary course of business and in strict compliance with all applicable Hazardous Materials Laws, as follows: 1. not to cause or permit the Land to be used as a site for the use, generation, manufacture, storage, treatment, Release, discharge, disposal, transportation, or presence of any Hazardous Materials; 2. not to cause, contribute to, permit, or acquiesce in any Release or threatened Release; IIIIII I IIIIII IIII Iillill III IIIIII IIIIII III IIIIII III IIII ©4?0 120 £@ S00fi 394/015610-0026 270365.04 a03/28/02 -11- 3. not to change or modify the use of the Land without the prior written consent of Beneficiary; 4. to comply with and to cause the Land and every User of the Land to comply with all Hazardous Materials Laws; 5. to immediately notify Beneficiary in writing and to provide Beneficiary with a reasonably detailed description of: a. any Hazardous Materials Claim; b. any Release or threatened Release; and C. the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Land that would cause the Land or any part of it to be designated as hazardous waste property or border zone property under the provisions of Health and Safety Code §§ 25220, et seq. and any regulation adopted in accordance with that section; 6. in the event that Trustor discovers a Release or the presence of any Hazardous Materials on or about the Land in violation of any Hazardous Materials Law, to: a. cause the Land to be in compliance with all Hazardous Materials Laws; b. notify Beneficiary of that discovery together with a reasonably detailed description; 7. promptly after a request by Beneficiary, engage a qualified environmental engineer reasonably satisfactory to Beneficiary to investigate these matters and prepare and submit to Beneficiary a written report containing the findings and conclusions resulting from that investigation, all at the sole expense of Trustor; and 8. take, at Trustor's sole expense, all necessary actions to remedy, repair, clean up, or detoxify any Release or Hazardous Materials, including, but not limited to, any remedial action required by any Hazardous Materials Laws or any judgment, consent, decree, settlement, or compromise in respect of any Hazardous Materials Claims, these actions to be performed: (1) in accordance with Hazardous Materials Laws; (2) in a good and proper manner, (3) under the supervision of a qualified environmental engineer; (4) in accordance with plans and specifications for these actions; and (5) using licensed and insured qualified contractors; 394/015610-0026 2�d�-t�1�� 270365.04 a03/28/02 1111111111111111111111111111111111111111111111111111111 94/03/13 o 3 of 5 9. immediately furnish to Beneficiary copies of all written communications received by Trustor from any governmental authority or other person or given by Trustor to any person and any other information Beneficiary may reasonably request concerning any Release, threatened Release, Hazardous Materials Claim, or the discovery of any Hazardous Materials on or about the Land in violation of any Hazardous Materials Law; and 10. keep Beneficiary generally informed regarding any Release, threatened Release, Hazardous Materials Claim, or the discovery of any Hazardous Materials on or about the Land in violation of any Hazardous Materials Law. B. Inspection and Receivership Rights. Upon Beneficiary's reasonable belief that Trustor has failed to comply with any environmental provision of this Deed of Trust and upon reasonable prior notice (except in the case of an emergency) to Trustor, Beneficiary or its representatives, employees, and agents, may from time to time and at all reasonable times (or at any time in the case of an emergency) enter and inspect the Land and every part of it (including all samples of building materials, soil, and groundwater, and all books, records, and files of Trustor relating to the Land) and perform those acts and things that Beneficiary deems necessary to inspect, investigate, assess, and protect security of this Deed of Trust, for the purpose of determining: the existence, location, nature, and magnitude of any Release or threatened Release; 2. the presence of any Hazardous Materials on or about the Land in violation of any Hazardous Materials Law; and 3. the compliance by Trustor of every environmental provision of this Deed of Trust. In furtherance of the purposes above, without limitation of any of its other rights, Beneficiary may: a. obtain a court order to enforce Beneficiary's right to enter and inspect the Land under California Civil Code § 2929.5, to which the decision of Beneficiary as to whether there exists a Release, a threatened Release, any Hazardous Materials on or about the Land in violation of any Hazardous Materials Law, or a breach by Trustor of any environmental provision of this Deed of Trust, will be deemed reasonable and conclusive as between the parties; and b. have a receiver appointed under California Code of Civil Procedure § 564 to enforce Beneficiary's right to enter and inspect the Land for the purpose set forth above. All costs and expenses reasonably incurred by Beneficiary with respect to the audits, tests, inspections, and examinations that Beneficiary or its agents, representatives, or employees may conduct, including the fees of the engineers, laboratories, contractors, consultants, and 27036 .04 a0026 II IIIIIII III IIIIII IIIIII III IIIIII III IN 270365.04 a03/28/02 IIIIIII IIIIII II 04l03I2002 0$ � 00R 14 of 35 attorneys, will be paid by Trustor. All costs or expenses incurred by Trustee and Beneficiary pursuant to this subsection (including without limitation court costs, consultant's fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest at the Default Rate from the date they are incurred until those sums have been paid in full. Except as provided by law, any inspections or tests made by Beneficiary or its representatives, employees, and agents will be for Beneficiary's purposes only and will not be construed to create any responsibility or liability on the part of Beneficiary to Trustor or to any other person. Beneficiary will have the right, but not the obligation, to communicate with any governmental authority regarding any fact or reasonable belief of Beneficiary that constitutes or could constitute a breach of any of Trustor's obligations under any environmental provision contained in this Deed of Trust. C. Release and Indemnity. Trustor: 1. releases and waives any future claims against Beneficiary for indemnity or contribution in the event Trustor becomes liable for cleanup or other costs under any Hazardous Materials Laws or under any Hazardous Materials Claim, except as otherwise provided in Sections 110(7), 212(3) and 212(4) of the Affordable Housing Agreement;' provided, however, that the foregoing release and waiver does not apply to cleanup or related costs resulting from acts or omissions of Beneficiary during the period of Beneficiary's ownership of the Land prior to the Beneficiary's conveyance to Trustor or occurring after the date Beneficiary takes possession by foreclosure under this Deed of Trust or by deed -in -lieu of a foreclosure under this Deed of Trust; 2. agrees to reimburse Beneficiary, on demand, for all costs and expenses reasonably incurred by Beneficiary in connection with any review, approval, consent, or inspection relating to the environmental provisions in this Deed of Trust together with interest, after demand, in accordance with Section 212.3 of the Affordable Housing Agreement; and 3. agrees to indemnify, defend, and hold Beneficiary and Trustee harmless from all losses, costs, claims, damages, penalties, liabilities, causes of action, judgments, court costs, attorney fees and other legal expenses, costs of evidence of title, cost of evidence of value, and other expenses as set forth in Section 212.3 of the Affordable Housing Agreement. D. Request for Information. Trustor and Beneficiary agree that: 1. this Section D.1 is intended as Beneficiary's written request for information and Trustor's written response concerning the environmental condition of the Land as provided by California Code of Civil Procedure § 726.5; and 2. each representation, warranty, covenant, or indemnity made by Trustor in this Article or in any other provision of this Deed of Trust that relates to the environmental condition of the Land is intended by Trustor and Beneficiary to be an environmental provision for purposes of California Code of Civil Procedure § 736 and will survive the payment of the 27036 .04 a03 2 8 IIIIII IN IIIIIII III IIIIII IIIIII 1111111111111111 e4 2@0? 5 2f©a 5 270365.04 a03/28/02 Loan and the termination or expiration of this Deed of Trust will not be affected by Beneficiary's acquisition of any interest in the Land, whether by full credit bid at foreclosure, deed in lieu of that, or otherwise. If there is any transfer of any portion of Trustor's interest in the Land, any successor -in -interest to Trustor agrees by its succession to that interest that the written request made pursuant to this Article will be deemed remade to the successor -in -interest without any further or additional action on the part of Beneficiary and that by assuming the debt secured by this Deed of Trust or by accepting the interest of Trustor subject to the lien of this Deed of Trust, the successor remakes each of the representations and warranties in this Deed of Trust and agrees to be bound by each covenant in this Deed of Trust, including, but not limited to, any indemnity provision. 7.0 CASUALTIES AND CONDEMNATION A. Casualties. 1. Trustor will promptly notify Beneficiary in writing after any loss or damage caused by defect in Trustor's title to the Land and Trustor will furnish to Beneficiary within ninety (90) days after the loss or damage the following: a. evidence satisfactory to Beneficiary that such defect is cured; and b. evidence satisfactory to Beneficiary that sufficient funds are available or committed for the benefit of Beneficiary, including insurance proceeds, to secure the repayment of the full amount of the Loan if such repayment is not waived. Subject to the rights of Trustor's construction and permanent lender(s), all insurance proceeds shall be applied and used to restore, repair and rebuild the Improvements in accordance with the provisions of the Affordable Housing Agreement. Any proceeds not used for the repair, restoration, modification or improvement of the Land or the repayment of the construction or permanent loan(s) shall be applied, in the sole and absolute discretion of the Beneficiary, against the Loan. B. Condemnation. Trustor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Land or any portion of it, will notify Trustee and Beneficiary of the pendency of the proceedings. Trustee and Beneficiary may participate in any proceedings and Trustor from time to time will deliver to Beneficiary all instruments requested by Beneficiary to permit participation. Beneficiary will be under no obligation to question the amount of any award or compensation. In any condemnation proceedings, Beneficiary may be represented by counsel selected by Beneficiary. The proceeds of any award or compensation received will be applied pursuant to the provisions of the construction or permanent loan documents and provisions of Section 8.B.2 of this Deed of Trust. III IIIIII IIII (IIIIII III IIIIII IIIIII IIIIIIIIIIIIIIII e420Q 16 of 35 IIII 394/015610-0026 270365.04 a03/28/02 -15- 8.0 EVENTS OF DEFAULT AND REMEDIES A. Events of Default. The following events are each an Event of Default: 1. Default in the payment of any sum of principal when due and not waived under the Note which is not cured within the applicable cure period set forth therein; 2. A default under the Regulatory Agreement and Declaration of Covenants, Conditions, and Restrictions or the Affordable Housing Agreement which is not cured within the applicable cure period set forth therein; 3. The failure (without cure during the applicable cure period after provision of notice as required herein or under applicable law) of the Trustor to observe, perform, or discharge any obligation, term, covenant, or condition of this Deed of Trust; 4. The sale, hypothecation, conveyance, or other disposition of the Land except in accordance with Sections 5.0 of this Deed of Trust or in accordance with the Affordable Housing Agreement; and 5. Any representation or warranty made by Trustor or any other Person under this Deed of Trust is false or misleading in any material respect as of the date on which the representation or warranty was made. If one or more Events of Default occurs and are continuing, then Beneficiary may declare all the Loan to be due and the Loan will become due without any further presentment, demand, protest, or notice of any kind, and Beneficiary may: a. in person, by agent, or by a receiver, and without regard to the adequacy of security, the solvency of Trustor, or the existence of waste, enter on and take possession of the Land or any part of it in its own name or in the name of Trustee, sue for or otherwise collect the rents, issues, and profits, and apply them, less costs and expenses of operation and collection, including reasonable attorney fees, upon the Loan, all in any order that Beneficiary may determine. The entering on and taking possession of the Land, the collection of rents, issues, and profits, and the application of them will not cure or waive any default or notice of default or invalidate any act done pursuant to the notice; b. commence an action to foreclose this Deed of Trust in the manner provided by law for the foreclosure of mortgages of real property; C. deliver to Trustee a written Agreement of default and demand for sale, and a written notice of default and election to cause the Land to be sold, which notice Trustee or Beneficiary will cause to be filed for record; d. with respect to any Personalty, proceed as to both the real and personal property in accordance with Beneficiary's rights and remedies in respect of the Land, or 394/015610-0026 1 2@02-17147$ 270365.04 a03/28/02 I IIIIII 111111 Jill 11111111111111111111111111111111111111 94103/7 o 3 ©f�R £ 5 proceed to sell the Personalty separately and without regard to the Land in accordance with Beneficiary's rights and remedies; or e. exercise any of these remedies in combination or any other remedy at law or in equity. B. Power of Sale. 1. If Beneficiary elects to foreclose by exercise of the power of sale in this Deed of Trust, Beneficiary will also deposit with Trustee this Deed of Trust, the Note, and any receipts and evidence of expenditures made and secured as Trustee may require. If notice of default has been given as then required by law, and after lapse of the time that may then be required by law, after recordation of the notice of default, Trustee, without demand on Trustor, will, after notice of sale having been given as required by law, sell the Land at the time and place of sale fixed by it in the notice of sale, either as a whole or in separate parcels as Trustee determines, and in any order that it may determine, at public auction to the highest bidder. Trustee may postpone sale of all or any portion of the Land by public announcement at the time and place of sale, and from time to time after that may postpone the sale by public announcement at the time fixed by the preceding postponement, and without further notice make the sale at the time fixed by the last postponement; or Trustee may, in its discretion, give a new notice of sale. Beneficiary may rescind any notice of default at any time before Trustee's sale by executing a notice of rescission and recording it. The recordation of the notice will constitute a cancellation of any prior Agreement of default and demand for sale and of any acceleration of maturity of the Loan affected by any prior Agreement or notice of default. The exercise by Beneficiary of the right of rescission will not constitute a waiver of any default then existing or subsequently occurring, or impair the right of Beneficiary to execute other Agreements of default and demand for sale, or notices of default and of election to cause the Land to be sold, nor otherwise affect the Note or this Deed of Trust, or any of the rights, obligations, or remedies of Beneficiary or Trustee. After sale, Trustee will deliver to the purchaser its deed conveying the property sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts will be conclusive proof of their truthfulness. Any Person, including Trustor, Trustee, or Beneficiary, may purchase at that sale. If allowed by law, Beneficiary, if it is the purchaser, may turn in the Note at the amount owing on it toward payment of the purchase price (or for endorsement of the purchase price as a payment on the Note if the amount owing exceeds the purchase price). Trustor expressly waives any right of redemption after sale that Trustor may have at the time of sale or that may apply to the sale. 2. Trustee, upon the sale, will make (without any covenant or warranty, express or implied), execute and, after due payment made, deliver to a purchaser and its heirs or assigns a deed or other record of interest, as the case may be, to the Land sold, which will convey to the purchaser all the title and interest of Trustor in the Land and will apply the proceeds of the sale in payment: a. first, of the expenses of the sale together with the expenses of the trust, including, without limitation, attorney fees, that will become due on any default made by Trustor, and also any sums that Trustee or Beneficiary have paid for procuring a search of the title to the Land subsequent to the execution of this Deed of Trust; and 27036 .04 a0026 I IIIIII IIIIII IIII illlill III IIIIII IIIIII III HIM 1111111 04 20 � 18 of 3$©E1R 270365.04 a03/28/02 b. second, in payment of the Loan then remaining unpaid, and the amount of all other monies with interest in this Deed of Trust agreed or provided to be paid by Trustor. Trustee will pay the balance or surplus of the proceeds of sale to Trustor and its successors or assigns as its interests may appear. C. Proof of Default. If there is a sale of the Land, or any part of it, and the execution of a deed for it, the recital of default and of recording notice of breach and election of sale, and of the elapsing of the required time between the recording and the following notice, and of the giving of notice of sale, and of a demand by Beneficiary that the sale should be made, will be conclusive proof of the default, recording, election, elapsing of time, and the due giving of notice, and that the sale was regularly and validly made on proper demand by Beneficiary. Any deed with these recitals will be effectual and conclusive against Trustor, its successors, and assigns, and all other Persons. The receipt for the purchase money recited or in any deed executed to the purchaser will be sufficient discharge to the purchaser from all obligations to see to the proper application of the purchase money. D. Protection of Security. If an Event of Default occurs and is continuing, Beneficiary or Trustee, without limitation to do so, without notice to or demand upon Trustor, and without releasing Trustor from any obligations or defaults may in the exercise of their reasonable discretion: 1. enter on the Land in any manner and to any extent that either deems necessary to protect the security of this Deed of Trust; 2. appear in and defend any action or proceeding purporting to affect, in any manner, the Obligations or the Loan, the security of this Deed of Trust, or the rights or powers of Beneficiary or Trustee; 3. pay, purchase, or compromise any encumbrance, charge, or lien that in the judgment of Beneficiary or Trustee is prior or superior to this Deed of Trust; and 4. pay necessary expenses, employ counsel, and pay reasonable attorney fees. Trustor agrees to repay on demand all sums expended by Trustee or Beneficiary pursuant to this section with interest at the Default Rate, and those sums, with interest, will be secured by this Deed of Trust. E. Receiver. If an Event of Default occurs and is continuing, Beneficiary, as a matter of strict right and without notice to Trustor or anyone claiming under Trustor and without regard to the then value of the Land, will have the right to apply ex parte to any court having jurisdiction to appoint a 270 65.04 a003/28/02 I IIIIII IIIIII IIII IIIIIII 1111111111111111111111111111111 04. eke 291 2f est3DR Receiver of the Land, and Trustor waives notice of any application for that, provided a hearing to confirm the appointment with notice to Trustor is set within fourteen (14) days after the appointment. Any Receiver will have all the powers and duties of receivers in similar cases and all the powers and duties of Beneficiary in case of entry as provided in this Deed of Trust, and will continue as such and exercise all those powers until the date of confirmation of sale, unless the receivership is terminated sooner. F. Curing the Defaults. If Trustor at any time fails to perform or comply with any of the terms, covenants, and conditions required on Trustor's part to be performed and complied with under this Deed of Trust or the Note, Trustor is required to perform, then Beneficiary, after ten (10) days' notice to Trustor or such longer period as may be provided in this Deed of Trust or the AHA for the particular default or as may otherwise be approved by Beneficiary in writing prior to expiration of the applicable cure period (or without notice if Beneficiary determines that an emergency exists), and without waiving or releasing Trustor from any of the Obligations, may, subject to the provisions of any of the Security Documents: 1. make from its own funds any payments payable by Trustor and take out, pay for, and maintain any of the insurance policies provided for; and 2. perform any other acts on the part of Trustor to be performed and enter on the Land for that purpose. The making by Beneficiary of payments out of Beneficiary's own funds will not, however, be deemed to cure the default by Trustor, and they will not be cured unless and until Trustor reimburses Beneficiary for the payments. All sums paid and all reasonable costs and expenses incurred by Beneficiary in connection with the performance of any act, together with interest on unpaid balances at the Default Rate from the respective dates of Beneficiary's making of each payment, will be added to the principal of the Loan, will be secured by the Security Documents and by the lien of this Deed of Trust, prior to any right, title, or interest in or claim on the Land attaching or accruing subsequent to the lien of this Deed of Trust, and will be payable by Trustor to Beneficiary on demand. G. Inspection Rights. On reasonable notice during normal business hours (except in the case of an emergency), and without releasing Trustor from any obligation to cure any default of Trustor, Beneficiary or its agents, representatives, and employees acting by themselves or through a court -appointed receiver, may, from time to time and at all reasonable times (or at any time in the case of an emergency) enter and inspect the Land and every part of it and perform any acts and things as Beneficiary deems necessary or desirable to inspect, investigate, assess, and protect the security of this Deed of Trust, for the purpose of determining compliance with covenants and restrictions contained this Deed of Trust. 394/015610-0026 270365.04 a03/28/02 —17(1 - H. Judgment on Environmental Provision. Beneficiary or its agents, representatives, and employees may seek a judgment that Trustor has breached its covenants, representations, or warranties in Article 6 of this Deed of Trustor any other covenants, representations, or warranties that are deemed to be environmental provisions pursuant to California Code of Civil Procedure § 736 (each an Environmental Provision), by commencing and maintaining an action or actions in any court of competent jurisdiction pursuant to California Code of Civil Procedure § 736, whether commenced prior to or after foreclosure of the lien of this Deed of Trust. Beneficiary or its agents, representatives, and employees may also seek an injunction to cause Trustor to abate any action in violation of any Environmental Provision and may seek the recovery of all costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses actually incurred by Beneficiary (collectively, "Environmental Costs") incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action required by any Hazardous Materials Law, or any Hazardous Materials Claim, or which Beneficiary believes necessary to protect the Land. It will be conclusively presumed between Beneficiary and Trustor that all Environmental Costs incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action of or to the Land were made by Beneficiary in good faith. All Environmental Costs incurred by Beneficiary under this subsection (including, without limitation, court costs, consultant fees, and reasonable attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest at the legal rate from the date of expenditure until those sums have been paid in full. Beneficiary will be entitled to bid, at any trustee's or foreclosure sale of the Land, the amount of the costs, expenses, and interest in addition to the amount of the Loan. I. Waive Lien. Beneficiary or its agents, representatives, and employees may waive its lien against the Land or any portion of it, including the Improvements and the Land, to the extent that the Land is found to be environmentally impaired in accordance with California Code of Civil Procedure § 726.5, and to exercise all rights and remedies of an unsecured creditor against Trustor and all of Trustor's assets and property for the recovery of any deficiency and Environmental Costs, including, but not limited to, seeking an attachment order under California Code of Civil Procedure § 483.010. As between Beneficiary and Trustor, for purposes of California Code of Civil Procedure § 726.5, Trustor will have the burden of proving that Trustor or any related party (or any affiliate or agent of Trustor or any related party) was not in any way negligent in permitting the Release or threatened Release of the Hazardous Materials. J. Remedies Cumulative. All remedies of Beneficiary provided for in this Deed of Trust are cumulative and will be in addition to all other rights and remedies provided in any other Security Documents or the Affordable Housing Agreement or provided by law, including any banker's lien and right of offset. The exercise of any right or remedy by Beneficiary will not in any way constitute a cure or waiver of default, will not invalidate any act done pursuant to any notice of default, nor will it prejudice Beneficiary in the exercise of any of its rights unless, in the exercise of those rights, Beneficiary collects the total amount of the Loan. II IN 04 �� 0 -171478 21 of 35 394/015610-0026 III 270365.04 a03/28/02 9.0 SECURITY AGREEMENT A. Security Interest. The security interest includes all policies of insurance arising out of the ownership of the Land, and all accounts, contract rights, chattel paper, instruments, general intangibles, and other obligations of any kind now or later existing, arising out of, or in connection with the ownership and maintenance of the Land (the "Collateral"). The security interest also includes all rights now or later existing in all security agreements, leases, and other contracts securing or otherwise relating to any accounts, contract rights, chattel paper, instruments, general intangibles, or obligations; all causes of action and recoveries now or later existing for any loss or diminution in value of the Land; all proceeds of any of the Land; and, to the extent not otherwise included, all payments under insurance (whether Beneficiary is the loss payee), or any indemnity, warranty, or guaranty payable by reason of loss or damage to or otherwise with respect to any of the Collateral. B. Remedies. Trustor agrees to execute and deliver on demand, and irrevocably constitutes and appoints Beneficiary the attorney -in -fact of Trustor to execute, deliver, and file, any security agreements, financing statements, continuation statements, or other instruments that Beneficiary may request to impose, perfect, or continue the perfection of the lien or security interest created by this Deed of Trust. Beneficiary has all rights and remedies, whether at law, in equity, or by statute that are available to secured creditors. Any disposition may be conducted by an employee or agent of Beneficiary or Trustee. Any Person, including both Trustor and Beneficiary, will be eligible to purchase any part or all of the Collateral at any disposition. C. Expenses. Expenses of retaking, holding, and preparing for sale, selling, or the like will be borne by Trustor and will include Beneficiary's and Trustee's attorney fees and legal expenses. Trustor, on demand of Beneficiary, will assemble the Collateral and make it available to Beneficiary at the Land, a place deemed to be reasonably convenient to Beneficiary and Trustor. Beneficiary will give Trustor at least ten (10) days' prior written notice of the time and place of any public sale or other disposition of the Collateral or of the time of or after which any private sale or any other intended disposition is to be made. If the notice is sent to Trustor in the manner provided for the mailing of notices in this Deed of Trust, it is deemed reasonable notice to Trustor. D. Assignment of Agreements. 1. As security for the Loan, Trustor sells, assigns, transfers, sets over, and delivers to Beneficiary (subject to the prior rights of any construction or permanent lender(s)) all of Trustor's right, title, and interest in all agreements, permits, and contracts pertaining to the ownership and maintenance of the Land, including, but not limited to, environmental impact reports; negative Agreements; map approvals; grading permits; conditional use permits; applications for all permits; management agreements; all development rights in the Land that Trustor may now or later acquire (including, without limitation, development rights arising in 29740655.0641 700 5.04 a0328/02 IIIIIII IIIIII IIII IIIIIII III IIIIII IIIIII III IIIIIII II IN 042 0 0 22 o f0 35 connection with any action by a governmental entity, including, by way of illustration, but not of limitation, inducement resolutions of county, municipal, or other governmental entities); agreements with contractors, suppliers, and construction managers; and agreements pertaining to the transfer of development rights or permitted floor area under applicable laws or ordinances (collectively, "Agreements"), as they may be amended or otherwise modified from time to time, including, without limitation, the right of Trustor to terminate any of the Agreements, to perform under them, and to compel performance and otherwise exercise all remedies under them, together with the immediate and continuing right to collect and receive all sums that may become due to Trustor, or which Trustor may now or later become entitled to demand or claim, arising or issuing out of the Agreements, including, without limitation, claims of Trustor for damages arising out of breach of or default under any of the Agreements and all rights of Trustor to receive proceeds of any insurance, indemnity, warranty, or guaranty with respect to any of the Agreements. However, so long as no Event of Default has occurred and is continuing, Trustor will have the right under a license granted to collect and retain all sums that may become payable to Trustor under the Agreements. 2. Trustor covenants and agrees to punctually observe, perform, and discharge the obligations, terms, covenants, conditions, and warranties to be observed, performed, and discharged by it under the Agreements. Beneficiary, upon an Event of Default, at its option and upon written notice to Trustor, will have the right to declare the assignment in this Section 9.4 to be absolute, and, in addition, Beneficiary will have the complete right then or later to exercise and enforce all of the rights and remedies provided by law. 3. The acceptance by Beneficiary of the assignment in this Article 9.5, with all the rights, powers, privileges, and authority granted will not, prior to the exercise of Beneficiary's right to declare the assignment in this Article 9.4 to be absolute, obligate Beneficiary to assume any obligations under the Agreements or to take any action under them, or to expend any money or incur any expense or perform or discharge any obligation, duty, or liability under the Agreements, or to assume any obligation or responsibility for the nonperformance of the provisions by Trustor. 10.0 ASSIGNMENT OF LEASES AND RENTS A. Assignment. Trustor irrevocably assigns to Beneficiary: 1. all of Trustor's right, title, and interest in all leases; licenses; agreements relating to the management, leasing, or operation of the Land; and other agreements of any kind relating to the use or occupancy of the Land, whether now existing or entered into after the date of this Deed of Trust; and 2. the rents, issues, and profits of the Land, including, without limitation, all amounts payable and all rights and benefits accruing to Trustor under any leases (the "Payments"), for the purposes and on the terms and conditions below. This is a present and 27036 .04 a0026 IIIIIII IIIIII IIII IIIIIII III IIIIII IIIIII III IIIIIII II IN 04 @9�20 £08 5 270365.04 a03/28/02 absolute assignment, not an assignment for security purposes only, and Beneficiary's right to the leases and payments is not contingent on, and may be exercised without, possession of the Land. B. License. Beneficiary confers on Trustor a license (the "License") to collect and retain the Payments as they become due until the occurrence of an Event of Default. Upon an Event of Default, the License will be automatically revoked and Beneficiary may collect and retain the Payments without notice and without taking possession of the Land. The lessees will have no right or duty to inquire as to whether any Default has actually occurred or is then existing. Trustor relieves the lessees from any liability to Trustor by reason of relying on and complying with any notice or demand by Beneficiary. C. Effect of Assignment. The assignment will not impose on Beneficiary any duty to produce rents, issues, or profits from the Land, or cause Beneficiary to be: 1. a mortgagee -in -possession for any purpose; 2. responsible for performing any of the obligations of the lessor under any leases; or 3. responsible for any waste committed by lessees or any other parties, any dangerous or defective condition of the Land, or any negligence in the management, upkeep, repair, or control of the Land. Beneficiary will not be liable to Trustor or any other party as a consequence of the exercise of the rights granted to Beneficiary under this assignment. D. Leasing Covenants. Trustor covenants and agrees as follows: 1. At Trustor's sole cost to: a. perform all obligations of the lessor under the any leases and enforce performance by the lessees of their obligations under such leases; b. subject to the provisions of Section 10.4(b) below, enforce all remedies available to Trustor in case of default by the lessees under the leases and prosecute and defend any action, arbitration, or other controversy relating to the leases or to Trustor's interest in the leases; C. exercise diligent, good -faith efforts to keep all portions of the Land, if applicable, leased at all times and at rental rates set forth in the Affordable Housing Agreement; and III 270365.04 a03/28/02 I IIIIII IIII IIIIIII III IIIIII IIIIII IIIIIII II IIII 04 � 240of R30E,R IIIIII d. promptly upon execution, deliver to Beneficiary fully executed counterpart originals of the leases; and 2. except in compliance with the terms of the Affordable Housing Agreement, not to enter into, assign, terminate, modify, or amend the terms of, any leases, or to assign the Payments, or to subordinate the leases to any other deed of trust or encumbrances. Any attempted action in violation of the provisions of this Section 10.4(b) will be voidable at Beneficiary's election. E. Application of Rents. Beneficiary, in its sole discretion, may apply, or require the application of, all amounts received pursuant to the assignment to the payment of any one or more of the obligations in any order that Beneficiary may elect. F. Remedies. In addition to any other remedies in this Deed of Trust, Beneficiary will have the following rights and remedies upon the occurrence of an Event of Default: 1. To receive the Payments and any other amounts arising or accruing under the leases or from the Land; 2. To collect, sue for, settle, compromise, and give releases for the Payments and pursue any remedies for the enforcement of the leases or Trustor's rights under the leases; and 3. To take possession of the Land, and hold, manage, lease, and operate it on any terms and for any period of time that Beneficiary may deem proper and, either with or without taking possession of the Land, in its own name, make from time to time all alterations, renovations, repairs, or replacements that Beneficiary may deem proper. G. Definitions. The terms lessor and lessors as used in this Deed of Trust will include all owners, landlords, licensors, and other parties in a similar position with respect to the leases. The terms lessee and lessees will include any tenants and licensees and any other parties in a similar position and will also include any guarantor or other obligors under the leases. 11.0 MISCELLANEOUS A. Successor Trustee. Beneficiary may remove Trustee or any successor trustee at any time and appoint a successor trustee by recording a written substitution in the county where the Land is located, or 270365.04 a0/28/02 I IIIIII IIIIII IIII IIIIIII III IIIIII IIIIII III 1111111111111 04103�2-171478 250 £R 0335 in any other manner permitted by law. Upon that appointment, all of the powers, rights, and authority of Trustee will immediately become vested in the successor. B. No Waiver. No waiver by Beneficiary of any default or breach by Trustor will be implied from any omission by Beneficiary to take action on account of that default if the default persists or is repeated. Also, no express waiver will affect any default other than the default in the waiver and the waiver will be operative only for the time and to the extent stated. Waivers of any covenant, term, or condition in this Deed of Trust will not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by Beneficiary for any act by Trustor requiring further consent or approval will not be deemed to waive or render unnecessary the consent or approval for any subsequent similar act. C. Abandonment. Subject to any chattel mortgages, security agreements, or other liens on title that may exist with the consent of Beneficiary, or any provided for in this Deed of Trust, all Personalty that upon foreclosure of the Land is owned by Trustor and is used in connection with the maintenance of the Land will be deemed at Beneficiary's option to have become on that date a part of the Land and abandoned to Beneficiary in its then condition. D. Notices . All notices, advices, demands, requests, consents, statements, satisfactions, waivers, designations, refusals, confirmations, or denials that may be required or contemplated under this Deed of Trust for any party to serve on or give to any other will be in writing, and, if not in writing, will not be deemed to have been given. Also, they must be either personally served or sent with return receipt requested by registered or certified mail with postage (including registration or certification charges) prepaid in a securely enclosed and sealed envelope as follows: If to Trustor: Miraflores, L.P. C/o LINC Housing Corporation 110 Pine Ave., Suite 525 Long Beach, California 92802 If to Beneficiary: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Executive Director E. Survival. The covenants and agreements in this Deed of Trust will bind and inure to the benefit of Beneficiary and Trustor and their successors and assigns. It is agreed that Beneficiary may assign to or grant a participation in any one or more lenders, free from any right of counterclaim, recoupment, or setoff, by Trustor, Beneficiary's rights and obligations in whole or in part under ��35 2-171478 394/015610-0026 94020©29 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIII 270365.04 a03/28/02 IN 11111111 IN 26 of 35 the Security Documents. Nothing in this Section 11.5 is intended to limit other provisions in any other Security Documents or in the Affordable Housing Agreement or any recorded document that by their terms survive the repayment of the Loan or the termination of any Security Document. F. Severability. If any term, provision, covenant, or condition of this Deed of Trust or any application of it is held by a court of competent jurisdiction to be invalid, void, or unenforceable, in whole or in part, all terms, provisions, covenants, and conditions of this Deed of Trust and all applications of it not held invalid, void, or unenforceable will continue in full force and will not be affected, impaired, or invalidated. G. References to Foreclosure. References in this Deed of Trust to foreclosure and related phrases are references to the appropriate procedure in connection with Trustee's private power of sale, any judicial foreclosure proceeding, and any deed given in lieu of foreclosure. H. Joinder of Foreclosure. If Beneficiary holds any other or additional security for the payment of any Loan or performance of any Obligation, its sale or foreclosure, on any default in the payment or performance, in Beneficiary's sole discretion, may be prior to, subsequent to, or joined or otherwise contemporaneous with any sale or foreclosure. In addition to the rights in this Deed of Trust specifically conferred, Beneficiary, at any time and from time to time, may exercise any right or remedy now or later given by law to beneficiaries under deeds of trust generally, or to the holders of any obligations of the kind secured. I. Rights of Beneficiary and Trustee. At any time and from time to time, without liability and without notice, and without releasing or otherwise affecting the liability of any person for payment of any of the Loan: 1. Beneficiary, at its sole discretion and only in writing, may extend the time for or release any Person now or later liable for payment of any of the Loan, or accept or release additional security, or subordinate the lien or charge of this Deed of Trust; or 2. Trustee, on written request of Beneficiary and presentation of the Note, any additional notes secured by this Deed of Trust, and this Deed of Trust for endorsement, may reconvey any part of the Land, consent to the making of any map or plat of it, join in granting any easement on it, or join in any agreement of extension or subordination. On Beneficiary's written request and surrender of the Note, any additional notes secured by this Deed of Trust, and this Deed of Trust to Trustee for cancellation, and on payment to Trustee of its fees and expenses, Trustee will reconvey without warranty the then trust property. The recitals in any reconveyance will be conclusive proof of the truthfulness of them, and the grantee in any reconveyance may be described as the person legally entitled. 270365.04 a03/28/02 I IIIIII IIIIII IN IIIIIII III IIIIII IIIIII III 111111111 IN e4 ze 0 27 f 35 J. Copies. Trustor will promptly give to Beneficiary copies of- 1 . all notices of violation that Trustor receives from any governmental agency or authority; and 2. all notices of default that Trustor receives under the Bond Documents. K. Subordination to Contracts of Sale and Leases. At the option of Beneficiary, this Deed of Trust will become subject and subordinate, in whole or in part (but not with respect to priority of entitlement to any insurance proceeds, damages, awards, or compensation resulting from damage to the Land or condemnation or exercise of power of eminent domain), to any contracts of sale or any leases of the Land on the execution by Beneficiary and recording of a unilateral Agreement to that effect in the official records of the county and state where the Land is located. Beneficiary may require the issuance of any title insurance endorsements to the Title Policy in connection with any subordination that Beneficiary, in its judgment, determines are appropriate, and Trustor will be obligated to pay any cost or expense incurred in connection with the issuance. L. No Merger. So long as any of the Loan remains unpaid or Beneficiary has any further obligation under the Security Documents, unless Beneficiary otherwise consents in writing, the fee estate of Trustor in the Land or any part of it will not merge, by operation of law or otherwise, with any leasehold or other estate in the Land or any part of it, but will always be kept separate and distinct, regardless of the union of the fee estate and the leasehold or other estate in Trustor or any other Person. M Performance by Trustor. Trustor will faithfully perform every covenant to be performed by Trustor under any lien or encumbrance, including, without limiting the generality of this Deed of Trust, mortgages, deeds of trust, leases, Agreements or covenants, conditions and restrictions, and other agreements that affect the Land, in law or in equity, that Beneficiary reasonably believes may be prior and superior to or on a parity with the lien or charge of this Deed of Trust. A breach of or a default under any lien or encumbrance that exists after any applicable grace period in the pertinent instrument has expired without that breach or default having been cured, will constitute an Event of Default under this Deed of Trust. If Trustor fails to do so, Beneficiary, without demand or notice and in its sole judgment, may do any things required by Trustor by any of the provisions in this Deed of Trust and incur and pay expenses in connection with such provisions. Nothing in this section affects Trustor's obligations pursuant to Sections 5.2 and 5.3 of this Deed of Trust or limits Beneficiary's rights. N. Junior Liens. Trustor agrees: 27036478 .04 a03 26 11111111111111111111111111111111111111111111111111111110� �0 e 28 fe35 270365.04 a03/28/02 1. that as of the date of this Deed of Trust there are no encumbrances to secure debts junior to this Deed of Trust; and record. 2. that there are to be none as of the date when this Deed of Trust becomes of O. Waiver of Statute of Limitations. The pleading of any statute of limitations as a defense to any obligations secured by this Deed of Trust is waived, to the fullest extent permissible by law. P. Charges for Statements. Trustor agrees to pay Beneficiary's reasonable charge, to the maximum amount permitted by law, for any statement regarding the obligations secured by this Deed of Trust requested by Trustor or on its behalf. Q. Waiver of Marshaling Rights. 1. Trustor, for itself and for all parties claiming through or under Trustor, and for all parties who may acquire a lien on or interest in the Land, waives all rights to have the Land or any other property that is now or later may be security for any Obligation ("Other Land") marshaled on any foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the Obligations. Beneficiary will have the right to sell, and any court in which foreclosure proceedings may be brought will have the right to order a sale of, the Land and any of the Other Land as a whole or in separate parcels, in any order that Beneficiary may designate. R. Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts this trust when this Deed of Trust is recorded. From time to time on written request of Beneficiary and presentation of this Deed of Trust for endorsement, and without affecting the personal liability of any person for payment of any indebtedness or the performance of any obligations, Trustee may, without liability and without notice: 1. reconvey all or any part of the Land; 2. consent to the making of any map or plat; and 3. join in any grant of easement, any Agreement of covenants, conditions, and restrictions, any extension agreement, or any agreement subordinating the lien or charge of this Deed of Trust. Except as may be required by applicable law, Trustee or Beneficiary may from time to time apply to any court of competent jurisdiction for aid and direction in the execution of the trust and the enforcement of the rights and remedies available, and may obtain orders or decrees directing, confirming, or approving acts in the execution of the trust and the enforcement of the remedies. Trustee has no obligation to notify any party of any pending sale or any action or proceeding, including, without limitation, actions in which Trustor, Beneficiary, or Trustee will IIIIIIIIIIIIIIIIIIII11II104�� 29o£©38394/015610-0026 0©R I IIIIII IIIIII III III 270365.04 a03/2S/02 be a party, unless held or commenced and maintained by Trustee under this Deed of Trust. Trustee will not be obligated to perform any act required of it under this Deed of Trust unless the performance of the act is requested in writing and Trustee is reasonably indemnified and held harmless against any loss, cost, liability, or expense. S. Releases, Extensions, Modifications, and Additional Security. Without notice to or the consent, approval, or agreement of any persons or entities having any interest at any time in the Land or in any manner obligated under the Obligations (the "Interested Parties"), Beneficiary may, from time to time, release any person or entity from liability for the payment or performance of any Obligation; take any action or make any agreement extending the maturity or otherwise altering the terms or increasing the amount of any Obligation; or accept additional security or release the Land or other security for any Obligation. None of these actions will release or reduce the personal liability of any of the Interested Parties, or release or impair the lien of this Deed of Trust, or the priority of it on the Land. However, no action taken or agreement made by Beneficiary to extend the maturity or otherwise alter the terms or increase the amount of any Obligation will be binding on Trustor without Trustor's consent. T. Reconveyance. Upon the payment of the Loan and performance of all Obligations, including, without limitation, Beneficiary's receipt of all sums owing and outstanding under the Note, unless waived by the Beneficiary under the terms of the Note, Beneficiary will deliver to Trustee a written request for reconveyance, and will surrender to Trustee for cancellation this Deed of Trust and any note or instrument evidencing the Loan and the Obligations. However, Beneficiary will have no obligation to deliver the written request and documents until Beneficiary has been paid by Trustor, in immediately available funds, all escrow, closing, and recording costs, the costs of preparing and issuing the reconveyance, and any trustee's or reconveyance fees. On Trustee's receipt of the written request by Beneficiary and the documents, Trustee will reconvey, without warranty, the Land or that portion then held. To the extent permitted by law, the reconveyance may describe the grantee as the person or persons legally entitled and the recitals of any matters or facts in any reconveyance will be conclusive proof of the truthfulness of them. Neither Beneficiary nor Trustee will have any duty to determine the rights of persons claiming to be rightful grantees of any reconveyance. When the Land has been fully reconveyed, the last reconveyance will operate as a reassignment of all future rents, issues, and profits of the Land to the person legally entitled. U. Subrogation. Beneficiary's rights will be subrogated to the lien of all encumbrances, whether released of record, paid in whole or in part by Beneficiary pursuant to this Deed of Trust, or by the proceeds of the Loan secured by this Deed of Trust. V. Obligations of Trustor Joint and Several. If more than one person has executed this Deed of Trust as Trustor, the obligations of all those persons will be joint and several. 270365.04a0o28/02 111111111111111111111111111111111111111111IIIIIIIIIIIII 04 0003 0of 35 W. Rules of Construction. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural. X. Successors in Interest. The terms, covenants, and conditions in this Deed of Trust will be binding on and inure to the benefit of the heirs, successors, and assigns of the parties. Y. No Offset. Trustor will pay to Beneficiary all amounts owing, if not waived, under the Note, this Deed of Trust, or any of the other Obligations without deduction, offset, or counterclaim of any kind. Z. Governing Law. The parties expressly agree that this Deed of Trust (including, without limitation, all questions regarding permissive rates of interest) will be governed by or construed in accordance with the laws of the State of California. 12.0 NON -RECOURSE. Notwithstanding anything to the contrary herein contained, (i) the liability of Trustor and its general and limited partners shall be limited to its/their interest in the Land, Improvements, and Project and any rents, issues, and profits arising therefrom, and, in addition, with respect to any obligation to hold and apply insurance proceeds, proceeds of condemnation or other monies hereunder, any such monies received by it to the extent not so applied in accordance with the terms hereof; (ii) no other assets of Maker or it general or limited partners, other than as secured by this Deed of Trust shall be affected by or subject to being applied to the satisfaction of any liability which Maker may have to Holder or to another person; and (iii) any judgment, order, decree or other award in favor of Holder shall be collectible only out of, or enforceable in accordance with, the terms hereof. Notwithstanding the foregoing, it is expressly understood and agreed that the aforesaid limitation on liability shall in no way restrict or abridge Maker's continued personal liability for: (A) fraud or willful or grossly negligent misrepresentation made by Maker in connection with this Deed of Trust; (B) misapplication of (a) proceeds of insurance and condemnation or (b) rent received by Maker under rental agreements entered into for any portion of the Land, Improvements, or Project; (C) the retention by Maker of all advance rentals and security deposits of tenants not refunded to or forfeited by such tenants; (D) the indemnification undertakings of Maker hereunder; and (E) material waste by Maker with respect to the Land, Improvements, or Project. w290=�e1,e:,6,M 394/015610-0026 270365.04 a03/28/02 —30— In Witness Whereof, Trustor has executed this Deed of Trust as of the day and year first above written. TRUSTOR MIRAFLORES, L.P., a California limited partnership By: LINC HOUSING CORPORATION, a California nonprofit public benefit corporation, its Managing General Partner AByunter L. Johnson, its esident BENEFICIARY LA QUINTA REDEVELOPMENT AGENCY Y� � �- Thomas P. Genovese Executive Director ATTEST: A y Secretary APPROVED AS TO FORM: RUTA jN &>TUCKER, LLP Agency Counsel III�IINYII�I�IIIVINIIINYINIUI�VIN-�'v�.'D`� 394/015610-0026 31 270365.03 a03/26/02 Exhibit "A" LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Riverside, City of La Quinta, described as follows: REMAINDER PARCEL, OF TRACT 28601-1, AS SHOWN BY MAP IN FILE IN BOOK 278, PAGES 86 THROUGH 90, INCLUSIVE, OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. 111111111111111111111111111111111111111111111111111111 ..� &nm.;��.w 394/015610-0026 32 270365.04 a03/28/02 STATE OF CALIFORNIA ) ) ss. COUNTY OF ) On before me, a notary public, personally appeared MAdlAk personallkkno� tie (or proved to me on the basis of satisfactory evidenc to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. [SEAL] V,7Gi 1A ?. PARKER 1111 IN64 /0 Q $ g40of 8008 IIIIII III IIIIII IN III III IIIIIIIIIIIIIIIIII 394/015610-0026 -33- 270365.03 a03/26/02 1111 IN64 /0 Q $ g40of 8008 IIIIII III IIIIII IN III III IIIIIIIIIIIIIIIIII 394/015610-0026 -33- 270365.03 a03/26/02 CERTIFICATE PURSUANT TO SECTION 149 (e) (2) (F) OF THE INTERNAL REVENUE CODE OF 1986 AS AMENDED The undersigned hereby certifies as follows: 1. This certification is made in order to comply with Section 149 (e) (2) (F) of the Internal Revenue Code of 1986, as amended (the "Code") and Section 1.25-4T(d) of Part I, of Title 26 of the Code of Federal Regulations. I am an official of the State of California duly designated under State law to make this certification. 2. This certification is based upon information filed with the California Debt Limit Allocation Committee (the "Committee") and information compiled by the Committee. 3. The private activity bond issue(s) identified in Exhibit A of this certificate met the requirements of Section 146 of the Code. Date: May 18, 2002 LAURIE W R, Executive Director CalifornWDebt Limit Allocation Committee Exhibit A Bond Issue Amount and Name: $5,000,000 (2001 carryforward allocation) La Quinta Redevelopment Agency, Variable Rate Demand Multifamily Housing Revenue Bonds (Miraflores Apartments) Series A $3,000,000 (2001 carryforward allocation) La Quinta Redevelopment Agency, Multifamily Housing Revenue Bonds (Miraflores Apartments) Series B Issue Date: April 4, 2002 CUSIP #: 50419V AB7 (Series A); 50419V AA9 (Series B) EIN #: 95-3740431 Address of Issuer: Redevelopment Agency of the City of La Quinta 78-495 Calle Tampico La Quinta, CA 92253