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RGC Courthomes/Affordable Housing Agreement 00AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN LA QUINTA REDEVELOPMENT AGENCY RGC COURTHOMES, INC. 394/015610-0002 96055.03 a07/28/00 TABLE OF CONTENTS Page I. [100] SUBJECT OF AGREEMENT...............................................................................I A. [ 101 ] Purpose of Agreement................................................................................ I B. [ 102] The Redevelopment Plan...........................................................................2 C. [103] The Project Area.........................................................................................2 D. [ 104] The SFR Site............................................................................................... 2 E. [105] Parties to the Agreement............................................................................ 3 1. [ 106] The Agency.................................................................................... 3 2. [107] The Developer.................................................................................3 3. [108] Prohibition Against Change in Ownership, Management and Control of Developer and Prohibition Against Transfer of theSFR Site..............................................................................................3 F. [109] Representations by the Developer..............................................................4 G. [110] Representations by the Agency................................................................... 5 II. [200] AGENCY ASSISTANCE......................................................................................6 A. [201 ] Components of Agency Assistance............................................................ 6 B. [202] Agency HOA Assistance............................................................................6 C. [203] Buyer Second Trust Deed Assistance........................................................7 D. [204] Conditions Precedent to the Transfer of the SFR Site ............................... 7 E. [205] Acquisition of the SFR Site; Purchase Price..............................................8 F. [206] Escrow........................................................................................................ 8 G. [207] Conveyance of Restricted Units to Moderate Income Households............ 9 H. [208] Conveyance of Title and Delivery of Possession.....................................10 I. [209] Condition of Title.....................................................................................10 J. [210] Payment of the Purchase Price and Recordation of Deed........................10 K. [211 ] Title Insurance.......................................................................................... I I L. [212] Taxes and Assessments............................................................................ I I M. [213] Conveyance Free of Possession............................................................... 11 N. [214] Inspections; Condition of SFR Site.......................................................... I I O. [215] Preliminary Work by the Developer........................................................14 P. [216] Disbursement of Additional Assistance...................................................14 III. [300] DEVELOPMENT OF THE SITE........................................................................14 A. [301 ] Development of the SFR Site...................................................................14 1. [302] Scope of Development.................................................................14 2. [303] Plans, Drawings, and Related Documents....................................15 3. [304] Review and Approval of Plans, Drawings, and Related Documents..............................................................................................15 4. [305] Cost of Development....................................................................16 5. [306] Construction Schedule..................................................................16 6. [307] Indemnity, Bodily Injury and Property Damage Insurance .........16 7. [308] City and Other Governmental Agency Permits ............................17 8. [309] Rights of Access...........................................................................17 394/015610-0002 96055.03 a07/24/00 —1_ Page 9. [310] Local, State and Federal Laws.....................................................17 10. [311 ] Anti-Discrimination.....................................................................17 11. [312] Taxes and Assessments................................................................18 B. [313] Prohibition Against Transfer of the SFR Site, the Buildings or Structures Thereon and Assignment of Agreement............................................18 C. [314] Right of the Agency to Satisfy Other Liens on the SFR Site After TitlePasses..........................................................................................................18 D. [315] Certificate of Completion.........................................................................18 E. [316] No Encumbrances Except Mortgages, Deeds of Trust, Sales and Leases -Back or Other Financing for Development............................................19 F. [317] Holder Not Obligated to Construct Improvements .................................. 20 G. [318] Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure........................................................................... 20 H. [319] Failure of Holder to Complete Improvements.........................................21 I. [320] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default.....................................................................................21 IV. [400] USE OF THE SITE.............................................................................................. 21 A. [401] Affordable Housing..................................................................................21 1. Number of Units.....................................................................................21 2. Cost of Restricted Units.......................................................................... 22 3. Definitions...............................................................................................22 5. Restrictions on Transfer by Sale of the Restricted Property or AnyRestricted Unit................................................................................24 B. [402] Uses In Accordance with Redevelopment Plan; Nondiscrimination............................................................................................... 28 C. [403] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction................................................... 30 D. [404] Maintenance of the SFR Site....................................................................30 V. [500] DEFAULTS AND REMEDIES...........................................................................30 A. [501 ] Defaults -- General................................................................................... 30 B. [502] Legal Actions...........................................................................................31 1. [503] Institution of Legal Actions..........................................................31 2. [504] Applicable Law............................................................................31 3. [505] Acceptance of Service of Process................................................31 C. [506] Rights and Remedies Are Cumulative..................................................... 31 D. [507] Inaction Not a Waiver of Default.............................................................31 E. [508] Remedies and Rights of Termination....................................................... 31 1. [509] Defaults........................................................................................31 2. [510] Specific Performance................................................................... 32 3. [511 ] Termination by the Developer...................................................... 32 4. [512] Termination by the Agency..........................................................32 F. [513] Option to Purchase, Reenter and Repossess.............................................33 G. [514] Right of Reverter......................................................................................34 394/015610-0002 96055.03 a07/24/00 —11— Page VI. [600] GENERAL PROVISIONS...................................................................................35 A. [601 ] Notices, Demands and Communications Between Parties ....................... 35 B. [602] Conflicts of Interest..................................................................................35 C. [603] Enforced Delay; Extension of Times of Performance .............................36 D. [604] Non -Liability of Officials and Employees of the Agency and the Developer............................................................................................................ 36 E. [605] Interpretation; Entire Agreement, Waivers; Counterparts; Attachments........................................................................................................ 36 F. [605] No Brokers...............................................................................................37 G. [606] Amendments to this Agreement...............................................................37 ATTACHMENTS 1 Site Map 2 Legal Description 3 Scope of Development 4 Schedule of Performance 5 Grant Deed 6 SFR Promissory Note 7 SFR Deed of Trust 8 Declaration of Covenants, Conditions, and Restrictions For Property 9 Certificate of Completion 10 Maximum Sales Price Illustration 11 Form of Certificate of Proposed Transferee 12 Form of Notice to Intent to Transfer 13 Form of Request for Approval of Proposed Transferee 14 Form of Assumption Agreement 15 Additional Assistance And Developer's Additional On -Site and Off -Site Improvement Obligations 16 Agency Buyer Standard Forms 394/015610-0002 96055.03 a07/24/00 -111- AFFORDABLE HOUSING AGREEMENT This Affordable Housing Agreement ("Agreement") is entered into as of the day of , 2000 ("Effective Date") by and between LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency") and RGC COURTHOMES, INC., a California corporation (the "Developer"). The Agency and the Developer (collectively referred to as the "Parties") hereby agree as follows: I. [1001 SUBJECT OF AGREEMENT A. [ 101 1 Purpose of Agreement The purpose of this Agreement is to effectuate the Redevelopment Plan (as hereinafter defined) for the La Quinta Redevelopment Project (the 'Project") by providing for the improvement of certain property situated within the Project Area of the Project (the 'Project Area"), by assisting in the financing of the acquisition of the "SFR Site" (as hereinafter defined) and the development thereon of fifty-nine (59) single-family detached homes and related improvements, including the long-term maintenance of certain of the units at an affordable housing cost for persons and households of whose household income does not exceed "moderate income" as defined by applicable law, as more fully described in this Agreement. The SFR Site and SFR Development (as defined herein) are part of, and shall complete, the Miraflores Affordable Housing Project ("Miraflores"). Miraflores was conceived as a three- phase project. Phase I has been developed by Catellus Residential Group, Inc. ("Catellus"), which has or will sell up to twenty-seven (27) detached single family homes. Phase I also includes three (3) model homes which Catellus will not be selling but which will be conveyed by the Agency to Developer subject to the terms and conditions of this Agreement. The Parties acknowledge and agree that the SFR Site (as defined herein) and the SFR Development (as defined herein) that is the subject of this Agreement, refers to, collectively, (a) fifty-nine single family lots which includes (i) the three lots which are improved with model homes that were developed as part of Phase I, and (ii) fifty-six (56) new single family homes to be developed by Developer in accordance with this Agreement on the remaining fifty-six (56) lots in Phases II and III, and (c) certain on -site and off -site improvements pertaining to Phases I, II, and III as described herein. As used herein, the term "Unit" refers to each of the 59 single family dwelling units and the particular lot on which the unit is constructed, and the term "Units" refers to all of the 59 single family dwelling units and the lots on which they are constructed. The term "Unrestricted Units" refers to those of the Units that Developer may sell at a market rate (and which upon such sale shall be released from the Declaration of Covenants, Conditions, and Restrictions for Property (Attachment No. 8). The term 'Restricted Units" refers to those of the Units that are subject to the Declaration of Covenants, Conditions, and Restrictions and which Developer is required to sell at an Affordable Housing Cost to Moderate Income Households (as those terms are defined in this Agreement) and which upon such sale not be released from, but shall be continued to be subject to, the Declaration of Covenants, Conditions, and Restrictions for Property (Attachment No. 8). 394/015610-0002 1 96055.03 a07/24/00 The Agency financial assistance in this Agreement shall be utilized to effectuate a portion of the Agency's overall affordable housing program pursuant to the requirements of California Health and Safety Code Section 33334.2 to expend twenty percent (20%) of its increment funds to improve, increase and preserve the community's supply of low- and moderate housing. The acquisition and development of the Site and the occupancy of the single-family housing as developed for households of limited incomes all as provided in this Agreement are in the vital and best interests of the City of La Quinta (the "City") and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the Project has been undertaken. B. r1021 The Redevelopment Plan This Agreement is subject to the provisions of the Redevelopment Plan for Project Area No. 2 (the "Redevelopment Plan") which was approved and adopted by Ordinance No. 43 of the City Council of the City of La Quinta on the 29th day of November, 1983. Said ordinance and Redevelopment Plan are fully incorporated herein by reference. Any amendment hereafter to the Redevelopment Plan (as so approved and adopted) which changes the uses or development permitted on the Site as proposed in this Agreement, or otherwise changes the restrictions or controls that apply to the Site, or otherwise affects the Developer's obligations or rights with respect to the Site, shall not apply to the Site without the written consent of the Developer. Amendments to the Redevelopment Plan applying to other property in Project Area No. 2 shall not require the consent of the Developer. C. f 1031 The Project Area The La Quinta Redevelopment Project Area No. 2 ("Project Area") is located in the City and is generally bounded by Washington Street, the northern corporate boundary, Jefferson Street and Avenue 50. The exact boundaries are as set out in the Redevelopment Plan. D. f 1041 The SFR Site The "SFR Site" is currently owned by the Agency and consists of certain of real property at the corner of 48th Avenue and Jefferson Street located within the Project Area in the City of La Quinta, County of Riverside. The SFR Site is depicted in the Site Map on Attachment No. 1 attached hereto and incorporated herein by this reference. The legal description of the SFR Site is provided on Attachment No. 2 attached hereto and incorporated hereby by this reference. In accordance with the approved Specific Plan that covers the SFR Site, fifty-nine (59) single family homes may be constructed on the SFR Site. This Agreement is consistent with and in compliance with that Specific Plan. Any material change, as reasonably determined by the Agency, in the Scope of Development (Attachment No. 3) or in the approved Specific Plan which affects the size, quality, or type of development proposed for the SFR Site shall require the written approval of the Agency, which approval may be contingent upon the review and renegotiation of all the economic and financial terms of this Agreement and such other matters as the Agency shall deem appropriate. 394/015610-0002 96055.03 a07/24/00 -2- E. [1051 Parties to the Agreement 1. [ 106] The Agency The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California (Health & Safety Code § 33000 et seq.). The principal office of the Agency is located at 78-495 Calle Tampico, La Quinta, California 92253, or such other address as Agency shall hereafter designate in writing to Developer. "Agency", as used in this Agreement, includes the La Quinta Redevelopment Agency and any and all assignees of or successors to its rights, powers and responsibilities. 2. [107] The Developer The Developer is RGC CourtHomes, Inc., a California corporation. The principal office and mailing addresses of the Developer for purposes of this Agreement is 101 Shipyard Way, Suite G, Newport Beach, Ca 92663. By executing this Agreement, each person signing on behalf of the Developer warrants and represents to the Agency that the Developer has the full power and authority to enter into this Agreement, that all authorizations required to make this Agreement binding upon the Developer have been obtained, and that the person or persons executing this Agreement on behalf of the Developer are fully authorized to do so. Whenever the term "Developer" is used in this Agreement, such term shall include any and all nominees, assignees, or successors in interests as herein provided. 3. [108] Prohibition Against Change in Ownership, Management and Control of Developer and Prohibition Against Transfer of the SFR Site The qualifications and identity of the Developer are of particular interest to the Agency. It is because of these qualifications and identity that the Agency has entered into this Agreement with the Developer. Consequently, no person, whether a voluntary or involuntary successor of Developer shall acquire any rights or powers under this Agreement nor shall the Developer assign all or any part of this Agreement or the SFR Site without the prior written approval of the Agency. A voluntary or involuntary sale or transfer of any interest in the Developer of the SFR Site prior to the issuance of a Certificate of Completion for the Developer Improvements (as defined in this Agreement, including but not limited to the Scope of Development) with respect to the SFR Site shall be deemed to constitute an assignment or transfer for the purposes of this Section 108, and the written approval of the Agency shall be required prior to effecting such an assignment or transfer. Any purported transfer, voluntarily or by operation of law, except with the prior written consent of the Agency, shall render this Agreement absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. Prior to the issuance of a Certificate of Completion for the SFR Improvements on the SFR Site, the Developer shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any rights or duties herein, nor make any total or 394/015610-0002 96055.03 a07/24/00 -3- partial sale, transfer, conveyance, or assignment of the whole or any part of the SFR Site or the Developer Improvements thereon, without the prior written approval of the Agency. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment of this Agreement or transfer of the SFR Site, or any interest therein shall not be required in connection with: (a) the conveyance or dedication of any portion of the Site to the City of La Quinta, or other appropriate governmental agency, including public utilities, where the granting of such easements permits or facilitates the development of the Site; or (b) any assignment of this Agreement or transfer of the SFR Site, or the SFR Improvements located thereon to a limited liability company in which Developer is a member, or has a greater than fifty percent (50%) ownership and management interest; and (c) any assignment of this Agreement, or transfer of the SFR Site and Developer Improvements located thereon to a limited partnership in which Developer is a general partner with a greater than fifty percent (50%) ownership and management interest. Notwithstanding anything in this Section 108 to the contrary, no transfer or assignment by Developer or any successor shall be effective unless and until the transferor and transferee execute and deliver to Agency an assignment and assumption agreement in a form and with content reasonably acceptable to Agency's legal counsel. This Section 108 shall not be applicable to the sales of Units to home buyers in accordance with this Agreement and no assignment and assumption agreement shall be required for the conveyance of a home to a buyer. This Section 108 shall become inapplicable for each lot in the SFR Site as to which the Agency has issued a Certificate of Completion pursuant to Section 315 of this Agreement. F. (1091 Representations by the Developer The Developer represents and warrants to the Agency as follows: 1. The Developer is duly established and in good standing under the laws of the State of California and has duly authorized, executed and delivered this Agreement and any and all other agreements and documents required to be executed and delivered by the Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement. This Agreement is enforceable against the Developer in accordance with its terms. 2. The Developer does not have any contingent obligations or contractual agreements which will materially adversely affect the ability of the Developer to carry out its obligations hereunder. 3. There are no pending or, so far as is known to the Developer, threatened, legal proceedings to which the Developer is or may be made a party to or to which it or any of its property is or may become subject, which have not been fully disclosed in the material submitted to the Agency, which will materially adversely affect the ability of the Developer to carry out its obligations hereunder. 4. There is no action or proceeding pending or, to the Developer's best knowledge, threatened, looking toward the dissolution or liquidation of the Developer and there 394/015610-0002 96055.03 a07/24/00 -4- is no action or proceeding pending or, to the Developer's best knowledge, threatened by or against the Developer which could affect the validity and enforceability of the terms of this Agreement, or adversely affect the ability of the Developer to carry out its obligations hereunder. 5. The Developer has, and will as required by its obligations hereunder, dedicate, allocate and otherwise make available, sufficient financial and other resources to perform its obligations under this Agreement. Each of the foregoing items 1 to 5, inclusive, shall be deemed to be an ongoing representation and warranty and shall survive the close of escrow for the SFR Site and shall continue until the sale of the last Restricted Unit (as defined in Section 101) in the SFR Development. The Developer shall advise the Agency in writing if there is any change material pertaining to any matters set forth or referenced in the foregoing items 1 to 5, inclusive. G. [I 101 Representations by the Agency The Agency represents and warrants to Developer as follows: 1. Agency is a public body, corporate and politic, existing pursuant to the California Community Redevelopment Law (California Health and Safety Code Section 33000), which has been authorized to transact business pursuant to action of the City of La Quinta. Agency has full right, power and lawful authority to transfer the SFR Site as provided herein and the execution, performance, and delivery of this Agreement by Agency has been fully authorized by all requisite actions on the part of Agency. The parties who have executed this Agreement on behalf of Agency are authorized to bind Agency by their signatures hereto. 2. Agency does not have any contingent obligations or contractual agreements which will materially adversely affect the ability of Agency to carry out its obligations hereunder. 3. There are no pending or, so far as is known to Agency, threatened, legal proceedings to which Agency is or may be made a party or to which it or any of its property is or may become subject, which will materially adversely affect the ability of Agency to carry out its obligations hereunder. 4. There is no action or proceeding pending or, to Agency's best knowledge, threatened, looking toward the dissolution or liquidation of Agency and there is no action or proceeding pending or, to Agency's best knowledge, threatened by or against Agency which could affect the validity and enforceability of the terms of this Agreement, or adversely affect the ability of Agency to carry out its obligations hereunder. 5. To the best of Agency's knowledge, the SFR Site is not currently in violation of any law, ordinance, rule, regulation or requirement applicable to its use and operation. 6. Agency is not the subject of a bankruptcy proceeding. 394/015610-0002 96055.03 a07/24/00 75- II. [2001 AGENCY ASSISTANCE The Agency agrees to provide to Developer pursuant to the Agreement certain financial assistance and incentives in an amount not to exceed FOUR MILLION EIGHT HUNDRED FORTY-FIVE THOUSAND ONE HUNDRED FORTY-SEVEN DOLLARS ($4,845,147), which shall be composed of the Acquisition Assistance, the Additional Assistance, and the HOA Assistance, as defined below, which shall include a write down of the purchase price for the Site, funding for certain offsite public infrastructure for the SFR Development, and provision of affordability assistance towards the cost of homeowner's association dues through an Agency 2nd trust deed grant program to purchasers of the single family residences in the SFR Development, all as more particularly set forth in Sections 201 and 203 below (collectively, "Agency Assistance"). The Agency Assistance has been funded from the Agency's Low and Moderate Income Housing Fund. Accordingly, Developer acknowledges and agrees that the use of the SFR Site shall be subject to all of the income and affordability restrictions set forth in this Agreement, and the Declaration of Covenants, Conditions and Restrictions (Attachment No. 8). As a condition to provision of the Agency Assistance, Developer shall execute the SFR Note in the form of Attachment No. 6 in the amount of the total Agency Assistance of Four Million Eight Hundred Forty -Five Thousand One Hundred Forty -Seven Dollars ($4,845,147), and a deed if trust in the form of Attachment No. 7 ("SFR Deed of Trust") which shall secure repayment of the SFR Note. The SFR Note shall bear no interest and shall be due and payable in accordance with the terms of the SFR Note. The SFR Note shall automatically be reduced by one -fifty-ninth (1 /59) of the original principal of the SFR Note amount for each Unit (as that term is defined in Section 101) sold on the date of close of each Developer Conveyance Escrow and the Agency shall partially reconvey the SFR Deed of Trust upon the Close of each Developer Conveyance Escrow for each Unit in the SFR Development. A. [2011 Components of Agency Assistance 1. Acquisition Assistance: Agency shall provide a portion of the Agency Assistance in a maximum amount not to exceed Four Million Three Hundred Seventy Thousand One Hundred Forty -Nine Dollars ($4,370,149) in financial assistance for the SFR Development as a land write -down ("Acquisition Assistance"). 2. Additional Assistance. Agency shall disburse, as a grant, the Additional Assistance, as set forth in Attachment No. 15. 3. HOA Assistance. Agency shall disburse, as a loan to buyers of the Restricted Units, the HOA Assistance as set forth in Section 202 B. [2021 Agency HOA Assistance Agency shall provide as part of the Agency Assistance a maximum amount not to exceed $8719 for each of the twenty-five (25) Restricted Units Developer is required to sell, to be placed in a trust account in the name of the homeowners association ("Association") for assistance on payment of a portion of the homeowner's association dues to assist in assuring affordability during the covenanted period for the SFR Development ("HOA Assistance"). The HOA Assistance shall be deposited into the Association trust account concurrently with the 394/015610-0002 96055.03 a07/28/00 -6- Close of the Developer Conveyance Escrow for the first Restricted Unit. The HOA Assistance shall be used for the costs of maintenance of streets, landscaping and other facilities and a "subsidy fund" will be maintained on the books and records of the Association to document the use of the HOA Assistance. Nothing herein shall prohibit or prevent Developer from providing, from Developer's own funds, additional contributions to the HOA Assistance. C. [203] Buyer Second Trust Deed Assistance . Each buyer of a Restricted Unit shall be required to execute a promissory note ("Buyer Promissory Note") which shall be secured by a second deed of trust ("Buyer Second Trust Deed") to assure the affordability of the Restricted Unit to Moderate Income Households as defined in Section 401 hereof. The form of the Buyer Promissory Note and the Buyer Second Trust Deed shall be that form currently approved for use by the Agency for its affordable housing program at the time of the sale of the residences to the buyer(s). Each initial Buyer Promissory Note shall be in the amount of $8719 [Agency's HOA Assistance for that Restricted Unit], or such higher amount if Developer provides, from Developer's own funds, an additional contribution for an increased amount of HOA Assistance. The forms of the Buyer Promissory Note and Buyer Deed of Trust shall be subject to change to conform with this Agreement and all applicable Fannie Mae, HUD or other government or lender requirements. The basic terms of the Buyer Promissory Note shall include: (i) principal in the amount of the HOA Assistance; (ii) zero percent interest; (iii) 30- year term; (iv) no payments shall be due unless a sale to a nonqualified buyer triggers payment under the equity share provisions; (v) assumability to a qualified buyer, and (vi) full credit of all payments at end of term if all conditions, covenants and restrictions have been satisfied. A current sample forms of Buyer Promissory Note, Buyer Second Deed of Trust and Resale Restriction and Maintenance Agreement are attached hereto as Attachment No. 16. D. [2041 Conditions Precedent to the Transfer of the SFR Site Prior to and as conditions to conveyance of the SFR Site by Agency to Developer, and to funding any portion of the Agency Assistance, the Developer shall complete each of the following by the respective times established therefor in the Schedules of Performance (Attachment No. 4): 1. the Developer shall not be in default of this Agreement; 2. the Developer provides to the Executive Director insurance certificates conforming to Section 307 of this Agreement; 3. the Developer shall provide improvement security to the City to assure completion of the required subdivision improvement work referred to in Attachment No. 15; 4. the Developer shall have executed and deposited with escrow for delivery to the Agency the SFR Promissory Note (Attachment No. 6) and the SFR Deed of Trust (Attachment No. 7); 394/015610-0002 96055.03 a07/24/00 -7- 5. the Developer shall have executed and deposited with escrow for recordation and delivery to the Agency the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8); 6. the Developer shall have provided a conditional loan approval or other evidence of financing reasonably satisfactory to the Agency Executive Director sufficient to perform Developer's responsibilities for construction of the SFR Development pursuant to this Agreement; and 7. the Developer has approved the environmental condition of the SFR Site and agrees to acquire the SFR Site in its present condition. The foregoing items numbered 1 to 7, inclusive, together constitute the "Conditions Precedent" to the Agency's close of escrow on the conveyance of the SFR Site to the Developer and the funding of the acquisition portion of the Agency Assistance. E. [2051 Acquisition of the SFR Site; Purchase Price The Developer shall acquire a fee simple marketable title to the SFR Site pursuant to a Grant Deed in the form of Attachment No. 5 attached hereto and incorporated hereby by this reference. Developer's purchase price for the Site is Four Million Three Hundred Seventy Thousand One Hundred Fifty Dollars ($4,370,150), which consists of One Dollar ($1.00) to be paid at closing in cash plus the Acquisition Assistance. F. r206] Escrow Agency and Developer agree to open an escrow (the "Acquisition Escrow") with First American Title Insurance Company, or with another mutually agreeable escrow company (the "Escrow Agent"), by the time established therefor in the Schedule of Performance (Attachment No. 4). This Agreement constitutes Agency's and Developer's escrow instructions for the Agency's sale and Developer's purchase of the SFR Site and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the Acquisition Escrow. The Escrow Agent is hereby empowered to act under this Agreement, and the Escrow Agent, upon indicating within five (5) days after the opening of the Acquisition Escrow its acceptance of the provisions of this Section 206, in writing, delivered to the Agency and the Developer, shall carry out its duties as Escrow Agent hereunder. Agency and Developer shall pay into the Acquisition Escrow the following fees, charges and costs promptly after the Escrow Agent has notified the Agency of the total amount of such fees, charges and costs, but not earlier than five (5) days prior to the scheduled date for closing the Acquisition Escrow: Agency and Developer shall each pay one-half of the Escrow fee; 2. Agency shall pay the costs, if any, of drawing the grant deed; 3. Agency shall pay recording fees, if any; 394/015610-0002 96055.03 a07/24/00 �g— 4. Agency and Developer shall pay their respective Notary fees; 5. Agency pay the premium for the title insurance policy up to the amount set forth in Section 211 and Developer shall pay for its portion, if any, as set forth in Section 211. 6. Agency shall pay for any transfer tax and any state, county or city documentary stamps. The Developer shall deposit with the Escrow Agent the executed SFR Note (Attachment No. 6) and the SFR Deed of Trust (Attachment No. 7). The Escrow Officer shall notify the Agency when all outstanding documents including the Grant Deed (Attachment No. 5) to the Developer, the SFR Deed of Trust (Attachment No. 7) and the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8) have been executed and submitted to Escrow by the applicable party. The Escrow Agent shall record the following documents in the following order of recordation: (1) Grant Deed, (2) SFR Deed of Trust (Attachment No. 7) and (3) Declaration of Conditions, Covenants and Restrictions (Attachment No. 8). All funds received in the Acquisition Escrow shall be deposited by the Escrow Agent, with other escrow funds of the Escrow Agent in an interest -earning general escrow account or accounts with any state or national bank doing business in the State of California. Such funds may be transferred to any other general escrow account or accounts. All disbursements shall be made by check of the Escrow Agent. Any amendment to these escrow instructions shall be in writing and signed by the Agency. At the time of any amendment, the Escrow Agent shall agree to carry out its duties as Escrow Agent under such amendment. The liability of the Escrow Agent in the capacity of escrow holder with respect to the Agency is limited to performance of the obligations imposed under it under Sections 206, 210, 211, and 212, of this Agreement. G. r207] Conveyance of Restricted Units to Moderate Income Households At such time as the Developer conveys each Restricted Unit in the SFR Development to a Moderate Income Household, Agency agrees to subordinate the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8) to the first priority lien of any purchase money deed of trust. Concurrently therewith, the Buyer Second Deed of Trust shall be recorded as a second priority deed of trust, behind the deed of trust securing the buyer's purchase money financing the Resale Restriction and Maintenance Agreement and the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8). Each Restricted Unit in the SFR Development shall be conveyed to the buyer pursuant to a grant deed which sets forth the affordability and nondiscrimination provisions in the Agency's most current form. 394/015610-0002 96055.03 a07/24/00 -9- H. [2081 Conveyance of Title and Delivery of Possession Provided that the Developer is not in default under this Agreement and all conditions precedent to such conveyance have occurred, and subject to any mutually agreed upon extensions of time, conveyance to the Developer of title to the SFR Site shall be completed on or prior to the date specified in the Schedule of Performance (Attachment No. 4). The Agency and the Developer agree to perform all acts necessary to conveyance of title in sufficient time for title to be conveyed in accordance with the foregoing provisions. Possession shall be delivered to the Developer concurrently with the conveyance of title, except that limited access may be permitted before conveyance of title as permitted in Section 213 of this Agreement. The Developer shall accept title and possession on the said date. I. f 209] Condition of Title The Agency shall convey to the Developer fee simple title to the SFR Site free and clear of all recorded liens, encumbrances, encroachments, assessments, leases and taxes except as approved by Developer pursuant to this Section 209. Within five (5) days of execution of this Agreement, Agency shall cause First American Title Insurance Company, or another title company reasonably acceptable to Agency and Developer (the "Title Company"), to deliver to Developer a standard preliminary title report (the "Title Report") with respect to the SFR Site, together with legible copies of the documents underlying the exceptions ("Exceptions") set forth in the Title Report. Developer shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Developer hereby approves the Redevelopment Plan and the lien of current non -delinquent real property taxes and assessments, if any, as Exceptions. Developer shall have ten (10) days from the date of receipt of the Title Report and the Exceptions pursuant to this Section 209 to give written notice to Agency of its approval or disapproval of any of such Exceptions. Developer's failure to give written approval of the Title Report within such time limit shall be deemed approval of the Title Report by Developer. If Developer notifies Agency of its disapproval of any Exceptions in the Title Report, Agency shall have the right, but not the obligation, to remove any disapproved Exceptions within ten (10) days after receiving written notice of Developer's disapproval or provide assurances satisfactory to Developer that such Exception(s) will be removed on or before conveyance of the SFR Site. If Agency cannot or in its sole discretion does not elect to remove any of the disapproved Exceptions within that period, Developer shall have ten (10) business days after the expiration of such ten (10) days to either give Agency written notice that it elects to proceed with the conveyance of the SFR Site subject to the disapproved Exceptions or to give Agency written notice that it elects to terminate this Agreement. Developer shall have the right to approve or disapprove any Exceptions reported by the Title Company after Developer has approved the condition of title for the SFR Site (which are not created by Developer). Agency shall not voluntarily create any new exceptions to title following the date of this Agreement. J. r2101 Payment of the Purchase Price and Recordation of Deed The Developer shall deposit the SFR Purchase Price including the executed SFR Note and the SFR Deed of Trust for the SFR Site and other sums required hereunder, if any, with 394/015610-0002 96055.03 a07/24/00 -10- the Escrow Agent prior to the date for conveyance of the SFR Site, provided that the Escrow Agent shall have notified the Developer in writing the Grant Deed, properly executed and acknowledged by the Agency, has been delivered to the Escrow Agent and that title is in condition to be conveyed in conformity with the provisions of Section 206 of this Agreement. Upon the close of escrow, the Escrow Agent shall record the Grant Deed for recordation among the land records in the Office of the County Recorder of Riverside County and shall deliver the purchase price and any other required sums to the Agency. Immediately following the recordation of the Grant Deed, the Escrow Agent shall record the SFR Deed of Trust (Attachment No. 7) and the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8), as provided in Section 206. K. [2111 Title Insurance Concurrently with recordation of the grant deed, Escrow Agent shall instruct First American Title Insurance Company or some other title insurance company satisfactory to the Agency and the Developer having equal or greater financial responsibility ("Title Company"), to provide and deliver to the Developer an ALTA standard form policy of title insurance that does not require a survey issued by the Title Company insuring that the title is vested in the Developer, or its assignee, as applicable, in the condition required by Section 209 of this Agreement. The Title Company shall provide the Agency with a copy of the title insurance policy and the title insurance policy shall be in the amount of Four Million Three Hundred Seventy Thousand One Hundred Fifty Dollars ($4,370,150). The Agency shall pay the title insurance premium attributable to the ALTA standard form policy of title insurance. The Title Company shall, if requested by the Developer, increase the amount of the title insurance policy or provide the Developer with an extended policy, coverages, or endorsements. The Developer shall pay the portion of the premium associated with such extended or additional coverages or endorsements. L. [2121 Taxes and Assessments Ad valorem taxes and assessments, if any, on the SFR Site, and taxes upon this Agreement or any rights hereunder, levied, assessed or imposed for any period commencing prior to conveyance of title shall be borne by the Agency. All ad valorem taxes and assessments levied or imposed for any period commencing after closing of escrow for the SFR Site shall be paid by the Developer. M. r2131 Conveyance Free of Possession The SFR Site shall be conveyed free of any possession or right of possession by any person except that of the Developer and the easements and other encumbrances of record (subject to Developer's right to review the condition of title pursuant to Section 209). N. [2141 Inspections; Condition of SFR Site 1. Inspections. The Developer shall conduct the Developer's own investigation of the SFR Site, including but not limited to the existing improvements, if any, its physical condition, the soils and toxic conditions of the SFR Site and all other matters which in 394/015610-0002 96055.03 a07/24/00 -1 1- the Developer's judgment affect or influence the Developer's proposed use of the SFR Site and the Developer's willingness to develop the SFR Site pursuant to this Agreement. The Developer's investigation may include, without limitation, the preparation by a duly licensed soils engineer of a soils report for the SFR Site. Prior to the acquisition of the SFR Site, the Developer shall provide written notice to the Agency of the Developer's determinations concerning the suitability of the physical condition of the SFR Site. If, in the Developer's reasonable judgment, the physical condition of the SFR Site is unsuitable for the use or uses to which the SFR Site will be put to the extent that it is not economically feasible for the Developer to develop the SFR Site pursuant to this Agreement, then the Developer shall have the option either to (a) take any action necessary to place the applicable Site in a condition suitable for development, at no cost to the Agency; or (b) terminate this Agreement pursuant to the provisions of Section 511 hereof. If the Developer has not notified the Agency of its determinations concerning the suitability of the physical condition of the SFR Site by close of escrow, the Developer shall be deemed to have waived its right to terminate this Agreement pursuant to this Section. 2. "As Is". The Agency has provided the Developer with all information of which it has actual knowledge concerning the physical condition of the SFR Site, including, without limitation, information about any Hazardous Materials, as defined below. The Developer acknowledges and agrees that any portion of the SFR Site, including but not limited to the existing improvements that it acquires from the Agency pursuant to this Agreement shall be purchased "AS IS" "WHERE IS" "WITH ALL FAULTS," in its current physical condition, with no warranties of any kind or nature, express or implied, as to the physical condition thereof, the presence or absence of any latent or patent condition thereon or therein, including, without limitation, any Hazardous Materials thereon or therein, and any other matters affecting the SFR Site. 3. Indemnity. The Developer agrees, from and after the date of recording of the deed conveying title to the SFR Site from the Agency to the Developer or its assignee under this Agreement, to defend, indemnify, protect and hold harmless the Agency and its officers, beneficiaries, employees, agents, attorneys, representatives, legal successors and assigns ("Indemnities") from, regarding and against any and all liabilities, obligations, orders, decrees, judgments, liens, demands, actions, Environmental Response Actions (as defined in subsection 5 below), claims, losses, damages, fines, penalties, expenses, Environmental Response Costs (as defined in subsection 5 below) or costs of any kind or nature whatsoever, together with fees (including, without limitation, reasonable attorneys' fees and experts' and consultants' fees), occurring during and caused by Developer's use and occupancy of the SFR Site, and resulting from or in connection with the actual or claimed generation, storage, handling, transportation, use, presence, placement, migration and/or release of Hazardous Materials (as defined in subsection 5 below), at, on, in, beneath or from the SFR Site, unless caused by the negligence or willful misconduct of Indemnities. The Developer's defense, indemnification, protection and hold harmless obligations herein shall include, without limitation, the duty to respond to any governmental inquiry, investigation, claim or demand regarding the Hazardous Materials, at the Developer's sole cost. 4. Release and Waiver. Subject to the exceptions set forth in Section 214.3 above, the Developer hereby releases and waives all rights, causes of action and claims the 394/015610-0002 96055.03 a07/24/00 -12- Developer has or may have in the future against the Indemnities arising out of or in connection with any Hazardous Materials (as defined in subsection 5 below), at, on, in, beneath or from the SFR Site. In furtherance of the intentions set forth herein, the Developer acknowledges that it is familiar with Section 1542 of the Civil Code of the State of California which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected this settlement with the debtor." The Developer hereby waives and relinquishes any right or benefit which it has or may have under Section 1542 of the Civil Code of the State of California or any similar provision of the statutory or nonstatutory law of any other applicable jurisdiction to the full extent that it may lawfully waive all such rights and benefits pertaining to the subject matter of this Section 214. 5. Definitions. a. As used in this Agreement, the term "Environmental Response Actions" means any and all activities, data compilations, preparation of studies or reports, interaction with environmental regulatory agencies, obligations and undertakings associated with environmental investigations, removal activities, remediation activities or responses to inquiries and notice letters, as may be sought, initiated or required in connection with any local, state or federal governmental or private party claims, including any claims by the Developer. b. As used in this Agreement, the term "Environmental Response Costs" means any and all costs associated with Environmental Response Actions including, without limitation, any and all fines, penalties and damages. C. As used in this Agreement, the term "Hazardous Materials" means any substance, material or waste which is (1) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of California law; (2) petroleum; (3) asbestos; (4) polychlorinated biphenyls; (5) radioactive materials; (6) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321)or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317); (7) defined as a "hazardous substance" pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903) or its implementing regulations; (8) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); or (9) determined by California, federal or local governmental authority to be capable of posing a risk of injury to health, safety or property. 6. Materiality. The Developer acknowledges and agrees that the defense, indemnification, protection and hold harmless obligations of the Developer for the benefit of the Agency set forth in this Agreement are a material element of the consideration to the Agency for the performance of its obligations under this Agreement, and that the Agency would not have entered this Agreement unless the Developer's obligations were as provided for herein. 394/015610-0002 96055.03 a07/24/00 -13- 7. Right to Contest. Developer may contest in good faith any claim, demand, levy or assessment under Hazardous Materials Laws if. (a) the contest is based on a material question of law or fact raised by Developer in good faith, (b) Developer promptly commences and thereafter diligently pursues the contest, (c) the contest will not materially impair the taking of any remedial action with respect to such claim, demand, levy or assessment, and (d) if requested by Agency, Developer deposits with Agency any funds or other forms of assurance Agency in good faith from time to time determines appropriate to protect Agency in good faith from the consequences of the contest being unsuccessful and any remedial action then reasonably necessary. No default shall be deemed to exist with respect to any claim, demand, levy or attachment being contested by Developer under the conditions of this section. O. r2151 Preliminary Work by the Developer Prior to the conveyance of title from the Agency, representatives of the Developer shall have the right of access to the SFR Site at all reasonable times for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement. The Developer shall indemnify, defend, and hold harmless the Agency and its officers, officials, employees, agents, and representatives, for any injury or damages arising out of any activity pursuant to this section. The Developer shall have access to all data and information on the SFR Site available to the Agency, but without warranty or representation by the Agency as to the completeness, correctness or validity of such data and information. Any preliminary work undertaken on the SFR Site by the Developer prior to conveyance of title thereto shall be done only after written consent of the Agency and at the sole expense of the Developer. The Developer shall save and protect the Agency against any claims resulting from such preliminary work, access or use of the SFR Site by Developer, its agents or contractors. Copies of data, surveys and tests obtained or made by the Developer on the SFR Site shall be filed with the Agency. Any preliminary work by the Developer shall be undertaken only after securing any necessary permits from the appropriate governmental agencies. P. [2161 Disbursement of Additional Assistance Agency shall disburse the Additional Assistance in accordance with Attachment No. 15. III. [300] DEVELOPMENT OF THE SITE A. r301 1 Development of the SFR Site 1. [302] Scope of Development Each of the fifty-nine (59) lots comprising the SFR Site shall be developed with a single family detached housing unit. Of the 59 housing units, twenty-five (25) units shall be "Restricted Units," i.e., sold to a Restricted Unit Transferee as defined in Section 401. The development of the SFR Site shall include all of the onsite private improvements necessary for the development in accordance with approved plans and permits, and the additional private improvements and the public improvements identified on Attachment 394/015610-0002 96055.03 a07/24/00 -14- No. 15. The improvements to be constructed on the SFR Site pursuant to this Agreement, whether private improvements or public improvements, are referred to as the "SFR Improvements". Upon close of the Escrow, the Developer shall commence and complete construction of the SFR Improvements for the SFR Site by the respective times established therefor in the Schedule of Performance (Attachment No. 4). 2. [303] Plans, Drawings, and Related Documents By the time set forth therefor in the applicable Schedule of Performance (Attachment No. 4), the Developer shall prepare and submit to the City for its approval all plans, drawings, and documents for the SFR Development in conformance with the approved Specific Plan for Village on the Green and all other requirements of the City and which contain the overall plan for development of the SFR Site in sufficient, detail to enable the City to evaluate the proposal for conformity to the requirements of the La Quinta Municipal Code and this Agreement. The SFR Site shall be developed as established in this Agreement and such documents, except as changes may be mutually agreed upon between the Developer and the Agency; provided that any changes shall be consistent with the material terms of this Agreement. The landscaping and finish grading plans, if any finish grading plans are required by the City, shall be prepared by a professional landscape architect or registered civil engineer who may be the same firm as the Developer's architect or civil engineer. During the preparation of all drawings and plans, staff of the City and the Agency and the Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of drawings, plans and related documents by the City. The staff of City and the Agency and the Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the Agency can receive prompt consideration. 3. [304] Review and Approval of Plans, Drawings, and Related Documents The Agency and the City shall have the right to review and approve all plans and drawings which may be required by the City with respect to any permits and entitlements which are required to be obtained to develop the SFR Improvements, including any changes therein. During each stage of the processing of plans for the SFR Improvements, the Agency and the City shall have the right to require additional information and shall advise the Developer if any submittal of plans or drawings is not complete or not in accordance with City/Agency procedures. If the Agency or the City determines that such a submittal is not complete or not in accordance with procedures, such tender shall not be deemed to constitute a submittal for purposes of satisfying the Schedule of Performance (Attachment No. 4); provided, however, Agency or City, as applicable, shall provide Developer with a detailed written report of any such deficiency or noncompliance with procedures and Developer shall revise and resubmit such plans in accordance with the Schedule of Performance and such written report. 394/015610-0002 96055.03 a07/24/00 -15- If the Developer desires to make any substantial changes in the construction plans for the SFR Improvements after their approval by the Agency and the City, the Developer shall submit the proposed changes to the Agency and the City for their approval. If the construction plans, as modified by the proposed change, conform to the requirements of this Section 304 and the Scope of Development (Attachment No. 3), the Agency and the City will approve the proposed change and notify the Developer in writing within thirty (30) days after submission to the Agency and the City. 4. [305] Cost of Development With the exception of the Agency Assistance, all costs for planning, designing, and constructing the SFR Improvements shall be borne exclusively by the Developer. The Developer shall also bear all costs related to discharging the duties of the Developer set forth in this Agreement. The Developer assumes the responsibility to construct, and shall let contracts for or cause to be constructed, all public improvements required to be constructed by Developer pursuant to this Agreement. The Developer shall be responsible for all fees associated with the development of the SFR Site. 5. [306] Construction Schedule The Developer shall commence and complete the SFR Improvements by the respective times established therefor in the Schedule of Performance (Attachment No. 4). 6. [307] Indemnity, Bodily Injury and Property Damage Insurance The Developer shall indemnify, defend, hold harmless the Agency and the City, and their respective officers, officials, employees, agents, and representatives, from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including expert witness fees, attorneys fees, and costs), which may be caused by any of the Developer's activities under this Agreement. The Developer shall maintain during the life of this Agreement a comprehensive liability policy in the amount of Three Million Dollars ($3,000,000) combined single limit policy, including contractual liability, as shall protect the Developer, the City, and the Agency from claims for such damages; provided, however, this obligation shall cease upon the sale of the last Restricted Unit. The policies or appropriate endorsements shall name the Agency and City and their respective officer, officials, employees, agents, and representatives as additional insureds. Coverage shall be "date of occurrence" insurance rather than "claims -made" insurance, and shall be primary and not contributing with any policy or coverage maintained by or obtained by the Agency, and appropriate endorsements shall so state. The policy shall contain a waiver of subrogation. Insurance coverage furnished by the Developer pursuant to this Section 307 shall conform to this Section 307 and shall pertain to all activities on the Site and adjacent public rights -of -way surrounding the SFR Site and all work on off -site public improvements. Developer shall furnish or cause to be furnished to the Agency a certificate of insurance from the insurer evidencing compliance with this Section 307 and providing that the 394/015610-0002 96055.03 a07/24/00 -16- insurer shall not change or modify the policy without thirty (30) days' prior written notice to Agency. In the alternative, Developer may show proof of a certificate of consent to self -insure issued by the Director of Industrial Relations according to California Labor Code Section 3800. Developer additionally agrees to and shall indemnify, defend, and hold harmless the Agency and the City and their respective officers, officials, employees, agents, and representatives, harmless from and assume all responsibility for any and all liability or responsibility for damage, costs, losses, or suit arising in any manner from the approval of this Agreement or the development and activities conducted by Developer or its agents pursuant to this Agreement. This obligation and indemnification shall constitute a covenant running with the land throughout the life of the Redevelopment Plan. 7. [308] City and Other Governmental Agency Permits Before commencement of construction or development of any buildings, structures or other works of improvement upon the Site or in connection with any off -site improvement, the Developer shall, at its own expense, secure or cause to be secured any and all permits which may be required by the City or any other governmental agent affected by such construction, development or work. It is understood that the Developer's obligation is to pay all necessary fees and to timely submit to the City final drawings with final corrections to obtain building permit; the Agency will, without obligation to incur liability or expense therefor, use its best efforts to expedite issuance of building permits and certificates of occupancy for construction that meet the requirements of the City Code. 8. [309] Rights of Access For purpose of assuring compliance with this Agreement, representatives of the Agency and the City shall have the right of access to the SFR Site without charges or fees, at normal business hours during the period of this Agreement for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Improvements, so long as they comply with all safety rules. Such representatives of the Agency or of the City shall be those who are so identified in writing by the Executive Director of the Agency. The Agency shall hold the Developer harmless from any bodily injury or related damages arising out of the activities of the Agency and the City as referred to in this Section 309. 9. [310] Local, State and Federal Laws The Developer shall perform under this Agreement and carry out its performance under this Agreement, including without limitation the construction of the Improvements, in conformity with all applicable federal and state laws and local ordinances, including all applicable federal and state labor standards, as to the SFR Site, provided, however, Developer and its contractors, successors, assigns, transferees, and lessees are not waiving their rights to contest any such laws, rules or standards. 10. [311 ] Anti -Discrimination Pursuant to Section 33435 and 33050 of the California Community Redevelopment Law, the Developer for itself and its successors and assigns, agrees, that in the 394/015610-0002 96055.03 a07/24/00 -17- construction of SFR Improvements on the SFR Site or other performance under this Agreement, the Developer shall not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, ancestry, or national origin. 11. [312] Taxes and Assessments After the conveyance of title by Agency to Developers or its assignee, the Developer shall pay prior to delinquency all real estate taxes and assessments on the SFR Site for any period subsequent to the conveyance of title and possession, so long as the Developer retains any ownership interest therein. The Developer shall remove or have removed any levy or attachment made on the SFR Site or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to any sale or transfer of all or any portions thereof. Notwithstanding the above, the Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to the Developer in respect thereto, and nothing herein shall limit the remedies available to the Developer in respect thereto. B. [3131 Prohibition Against Transfer of the SFR Site, the Buildings or Structures Thereon and Assignment of Agreement Except as to the sale of any single family home to an owner -occupant in accordance with this Agreement and for financing to construct the SFR Improvements that meets the requirements of this Agreement, the Developer shall not, except as may be expressly permitted by this Agreement, without prior approval of the Agency, make any total or partial sale, transfer, conveyance of, or enter into any assignment or ground lease of or refinance the whole or any part of the SFR Site or of the buildings or structures on the SFR Site. This prohibition shall not be deemed to prevent the granting of temporary or permanent easements or permits to facilitate the development of the SFR Site or to prohibit or restrict the sale of "Restricted Units" to "Moderate Income Households" (as defined in Section 401) in conformity with Section 401 of this Agreement. C. f 3141 Right of the Agency to Satisfy Other Liens on the SFR Site After Title PaCCP.0 After the conveyance of title by Agency and prior to the completion of construction, and after the Developer has had written notice and has failed after a reasonable time, but in any event not less than forty-five (45) days, to challenge, cure, adequately bond against, or satisfy any liens or encumbrances on the SFR Site which are not otherwise permitted under this Agreement, the Agency shall have the right but no obligation to satisfy any such liens or encumbrances. Notwithstanding the above, the Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to the Developer in respect thereto. D. [3151 Certificate of Completion Promptly after the completion of the SFR Improvements in conformity with this Agreement (as determined by the Executive Director of the Agency), upon the written request of the Developer, the Agency shall furnish the Developer with the Certificate of Completion (in the form attached hereto as Attachment No. 9) which evidences and determines the satisfactory 394/015610-0002 96055.03 a07/24/00 -1 g- completion of the construction and development pursuant to the provisions and covenants specified in this Agreement, the Redevelopment Plan and the California Community Redevelopment Law. The issuance and recordation of a Certificate of Completion (Attachment No. 9) with respect to the SFR Improvements shall not supersede, cancel, amend or limit the continued effectiveness of any obligations relating to the maintenance, or uses, or payment of monies, or any other obligations, except for the obligation to complete construction of the SFR Improvements as of the time of the issuance of such applicable certificate in accordance with the requirements of this Agreement. The Agency shall not unreasonably withhold the Certificate of Completion. If the Agency refuses or fails to furnish a Certificate of Completion after written request from the Developer, the Agency shall, within ten (10) days of the written request, provide the Developer with a written statement of the reasons the Agency refused or failed to furnish such Certificate of Completion. The statement shall also contain the Agency's opinion of the action the Developer must take to obtain the Certificate of Completion. Upon issuance of a Certificate of Completion (Attachment No. 9) for the SFR Improvements, construction of such SFR Improvements shall be deemed to have been completed in conformity with this Agreement. The issuance of a Certificate of Completion shall not affect the continued effectiveness of the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8) recorded pursuant to this Agreement. The Certificate of Completion (Attachment No. 9) is not a notice of completion as referred to in Section 3093 of the California Civil Code. The Certificate of Completion, at Agency's discretion, may be re -titled and recorded as a "Release of Construction Covenants." E. [3161 No Encumbrances Except Mortgages, Deeds of Trust, Sales and Leases - Back or Other Financing for Development Notwithstanding any prohibition in this Agreement, mortgages, deeds of trust, sales and leases -back or any other form of conveyance required for any reasonable method of financing are permitted before issuance of a Certificate of Completion but only for the purpose of securing loans of funds to be used for financing the acquisition of the SFR Site, the construction of improvements of the SFR Site and any other expenditures necessary and appropriate to develop the SFR Site under this Agreement. The Developer shall notify the Agency in advance of any mortgage, deed of trust, sale and lease -back or other form of conveyance for financing if the Developer proposes to enter into the same before issuance of a Certificate of Completion. The Developer shall not enter into any such conveyance for financing without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance is given to a responsible financial or lending institution or other acceptable person or entity. Such lender shall be deemed approved unless rejected in writing by the Agency within ten (10) days after notice thereof to the Agency by the Developer. In any event, the 394/015610-0002 96055.03 a07/24/00 -19- Developer shall promptly notify the Agency of any mortgage, deed of trust, sale and lease -back or other financing conveyance, encumbrance or lien that has been created or attached thereto prior to completion of the construction of the improvements on the SFR Site whether by voluntary act of the Developer or otherwise. The words "mortgage" and "deed of trust," as used herein, include all other appropriate modes of financing real estate acquisition, construction and land development. The Agency agrees to subordinate this Agreement, the SFR Deed of Trust and the Declaration of Conditions, Covenants and Restrictions to the lien of such mortgage or deed of trust pursuant to a subordination agreement in form and substance reasonably acceptable to the holder of the mortgage or deed of trust and the Agency. F. [3171 Holder Not Obligated to Construct Improvements The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the Improvements or to guarantee such construction or completion, nor shall any covenant or any other provision in the grant deed for the SFR Site be construed so to obligate such holder. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the SFR Site to any uses or to construct any improvements thereon other than those uses or improvements provided for or authorized by this Agreement. G. [3181 Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure Whenever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in completion of construction of the SFR Improvements, the Agency shall at the same time deliver a copy of such notice or demand to each holder or record of any mortgage, deed of trust or other security interest authorized by this Agreement who has previously made a written request to the Agency therefor. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the security interest debt and the lien on its security interest. In the event there is more than one such holder, the right to cure or remedy a breach or default of the Developer under this Section 318 shall be exercised by the holder first in priority or as the holders may otherwise agree among themselves, but there shall be only one exercise of such right to cure and remedy a breach or default of the Developer under this Section 318. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the SFR Improvements (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the Developer's obligations to the Agency by written agreement satisfactory to the Agency. The holder in that event must agree to complete, in the manner provided in this Agreement, the SFR Improvements to which the lien or title of such holder relates and submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder properly completing the SFR Improvements shall be entitled, upon written request made to the Agency, to a Certificate of Completion from the Agency. 394/015610-0002 96055.03 a07/24/00 -20 H. [3191 Failure of Holder to Complete Improvements In any case where, three (3) months after default by the Developer in completion of construction of the SFR Improvements under this Agreement, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the SFR Site has not exercised the option to construct, or if it has exercised the option and has not proceeded diligently with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, plus any accrued and unpaid interest. If the ownership of the SFR Site has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance of the SFR Site from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: 1. The unpaid mortgage, deed of trust or other security interest debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); 2. All expenses with respect to foreclosure; 3. The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the SFR Site; 4. The costs of any authorized improvements made by such holder; and 5. An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. I. [3201 Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the SFR Site prior to the completion of the SFR Improvements, and the holder has not exercised its option to complete the SFR Improvements, the Agency may cure the default prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be entitled to a lien upon the SFR Site to the extent of such costs and disbursements. Any such lien shall be subject to mortgages, deeds of trust or other security interests executed for the sole purpose of obtaining funds to purchase and develop the SFR Site as authorized herein. IV. [4001 USE OF THE SITE A. [401 1 Affordable Housing 1. Number of Units. Developer shall develop the SFR Development consisting of fifty-nine (59) detached, single-family homes. Of these fifty-nine (59) homes, three (3) are the Phase I model 394/015610-0002 96055.03 a07/24/00 -21- homes and 56 remain to be constructed. Of the fifty-nine (59) homes, twenty-five (25) shall be Restricted Units as described in, and subject to the terms of this Agreement, including but not limited to Section 302. Developer shall also develop all on -site improvements in connection with the construction of the homes and shall be responsible for the development of the other onsite-site improvements and the off -site public improvements identified in the Scope of Development (Attachment No. 3) and in the Additional Assistance list set forth in Attachment No. 15. Developer shall restrict the sale of the Restricted Units pursuant to the applicable income and affordability provisions contained in this Agreement. The Developer further covenants and agrees that the above -referenced occupancy, ownership and affordability requirements pertaining to the Restricted Units shall bind and be enforceable against those Restricted Unit lots for the period of thirty (30) years commencing with the acquisition of the SFR Site by the Developer with the simultaneous recording of the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8). Developer's sale of Unrestricted Units shall be in accordance with Section VII of the Scope of the Development (Attachment No. 3). 2. Cost of Restricted Units. The maximum sales prices of the Restricted Units in the SFR Development shall not exceed the affordability requirements for Moderate Income Households as set forth on the schedule of Maximum Sales Price Example (Attachment No. 10). 3. Definitions. a. "Affordability Period" shall be thirty (30) years from the date of transfer to an Eligible Person or Family. b. "Eligible Person or Family" shall mean any person or family who meets the income qualifications for Moderate Income Households. C. "SFR Affordable Housing Cost" shall be that purchase price which would result in maximum monthly housing payments including the cost for a thirty (30) year mortgage for that portion of the purchase price which is to be paid in the form of loan proceeds under currently prevailing mortgage loan rates or the interest rate of any below -market mortgage program for which such purchaser has obtained a first trust deed loan, for the moderate income group calculated pursuant to Health and Safety Code Section 50052.5, which sets forth the following formula: "Moderate Income Households" shall be households where not less than twenty-eight percent (28%) of the gross income of the household, nor more than thirty-five percent (35%) of one hundred ten percent (110%) of area median income adjusted for family size appropriate for the Restricted Unit, or if the gross income of the household for households exceeds one hundred ten percent (110%), not more than one hundred twenty percent (120%) of the area median income adjusted for family size. The SFR Affordable Housing Cost for the Restricted Units is set forth on the schedule of Maximum Sales Price Example (Attachment No. 10). d. "Owner" shall mean Developer and any successor in interest of Developer to any lot in the SFR Site except where a provision of this Agreement expressly excludes Developer from the definition of owner. 394/015610-0002 96055.03 a07/24/00 -22- e. "Proposed Transferee" shall mean a person or family determined to be an Eligible Person or Family, of Moderate Income Household, to whom the Developer or any successor Owner desires and proposes to Transfer a Restricted Unit. f. "Purchase Housing Cost" for an Eligible Person or Family purchasing a Restricted Unit shall include all of the following associated with that Restricted Unit, estimated or known as of the date of their proposed sale of the Restricted Unit: (1) Principal and interest on a fixed rate mortgage loan including any rehabilitation loans, and any loan insurance fees associated therewith. property improvements. (2) Property taxes and assessments. (3) Fire and casualty insurance covering replacement value of (4) Any homeowner association fees. (5) Estimate of utilities cost. Monthly housing cost of a purchaser shall be an average of estimated costs for the next twelve (12) months. The sum of (i) through (v), inclusive, shall not exceed the SFR Affordable Housing Cost. g. "Restricted Unit" shall have the meaning previously set forth in this Agreement, which Restricted Unit shall be subject to the restrictions of this Agreement (including, without limitation, the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8). h. "Sales Price" shall mean all sums paid by a purchaser to a seller for, or in conjunction with, the acquisition of a Restricted Unit, including the purchase price designated in any purchase agreement, consideration for personal property and all other costs and fees paid by the purchaser to or for the benefit of the seller. i. "Transfer" shall mean any sale, assignment, conveyance, lease or transfer, voluntary or involuntary, of any interest in a Restricted Unit. Without limiting the generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy to a party who does not meet the definition of Eligible Person or Family; (ii) a life estate; (iii) creation of a joint tenancy interest; (iv) a gift of all or any portion of a Restricted Unit; or (v) any voluntary conveyance of a Restricted Unit. Transfer shall not include transfer to a spouse in a dissolution proceeding; however any subsequent Transfer shall be subject to this restriction. j. "Transferee" shall mean any natural person or entity who obtains ownership or possessory rights in a Restricted Unit pursuant to a Transfer. 4. Sales of Restricted Units. Developer agrees that Developer shall sell each Restricted Unit to a Moderate Income Household at an SFR Affordable Housing Cost (the "Developer Conveyance") and that during the Affordability Period each subsequent resale of a 394/015610-0002 96055.03 a07/24/00 -23- Restricted Unit by the then -Owner thereof shall be to Moderate Income Households at an Affordable Housing Cost. Developer agrees that the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8) giving effect to the foregoing restriction shall be recorded against each lot of the Site concurrently with the Acquisition Escrow. Developer agrees to commence to market each Restricted Unit not later than the completion of construction of each Restricted Unit. Escrow for a Transfer of a Restricted Unit by Developer to a Transferee shall not close until after issuance of a certificate of occupancy to be issued by the City building department for such Restricted Unit. For purposes of satisfying the requirement that all of the Restricted Units shall be occupied by Moderate Income Households: (a) an individual or family who qualifies as a Moderate Income Household at the time he or she first takes title to a Restricted Unit will be deemed a Moderate Income Household as long as he or she continues to hold title to such Restricted Unit even though the Moderate Income Household subsequently ceases to meet the income or other requirements of a Moderate Income Household, and (b) when an Owner (other than Developer) releases title to a Restricted Unit, such unit will be considered as occupied by a Moderate Income Household if it is held vacant and available for such occupancy until title is transferred to another Moderate Income Household, at which time the status of the new Owner as a Moderate Income Household is to be determined. 5. Restrictions on Transfer by Sale of the Restricted Property or Any Restricted Unit. a. For the duration of the Affordability Period, Developer, for itself and any subsequent Owner, hereby subjects the SFR Site to certain restrictions and limits the price at which Developer or any other Owner may sell and/or resell a Restricted Unit and the persons to whom Developer or any other Owner may sell a Restricted Unit. b. DEVELOPER AND ANY OTHER OWNER UNDERSTANDS THAT THE DETERMINATION OF THE SALES PRICE CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, PROPERTY TAXES AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED AND THAT THE SALE PRICE PERMITTED HEREUNDER MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. DEVELOPER AND ANY OTHER OWNER FURTHER ACKNOWLEDGE THAT, AT ALL TIMES IN SETTING THE SALES PRICE, THE PRIMARY OBJECTIVE OF THE AGENCY AND THIS AGREEMENT IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. THE SALES PRICE MAY BE LESS THAN OTHER SIMILAR PROPERTIES WHICH HAVE NO RESTRICTIONS. Developer's Initials C. Transfer of a Restricted Unit. Developer and any successor Owner may transfer a Restricted Unit only in strict accordance with the provisions of this Agreement. Specifically, during the Affordability Period, Owner may transfer a Restricted Unit (i) only to a Moderate Income Household and (ii) only if the Purchase Housing Cost does not exceed the SFR 394/015610-0002 96055.03 a07/24/00 -24- Affordable Housing Cost for the Moderate Income Households; and (ill) only if the Transfer [as defined in Section 401.3(i)] has previously been approved in writing by the Agency. In order to comply with this Subsection 5(c), Developer and any successor Owner must calculate the SFR Affordable Housing Cost for the Proposed Transferee of the Restricted Unit in accordance with the definition set forth in Subsection 3(c) of this Section 401. The owner should contact the Agency housing staff to obtain assistance in determining this calculation. After calculating the SFR Affordable Housing Cost for the Proposed Transferee, the Owner must ensure that the sum of the Sales Price and all costs listed in the definition of Purchase Housing Cost set forth in Subsection 3(f) of Section 401 does not exceed that SFR Affordable Housing Cost. The Calculation of the Sales Price under this Subsection 5(c) is illustrated by example in Attachment No. 10 attached hereto. d. Notwithstanding anything to the contrary in this Section 401, at close of the Developer Conveyance transferring the Restricted Unit from the Developer to the Proposed Transferee (the "Initial Owner"), the Initial Owner shall execute a Buyer's Promissory Note as approved by the Executive Director and Agency Counsel which Buyer Promissory Note shall be secured by a Buyer Second Deed of Trust. The Buyer's Promissory Note shall be non - interest bearing. The principal amount shall be equal to the amount of the assistance provided by the Agency (and by the Developer, if any) to assist the initial owner in the payment of homeowner's association dues. This principal balance shall not be less than Eight Thousand Seven Hundred Nineteen Dollars ($8719) per Restricted Unit, the amount of HOA Assistance referred to in Section 202 of this Agreement and is designed to ensure the affordability requirements are met as approved by the Executive Director in accordance with the Agency's affordable housing program policies. The Buyer Promissory Note shall be due and payable according to its terms including any applicable equity sharing provision. However, should the Initial Owner transfer the Restricted Unit to a Moderate Income Household at the SFR Affordable Housing Cost, the Transferee shall assume the existing Buyer Promissory Note and Buyer Deed of Trust, to run for the balance of the 30-year term, by execution of an assignment and assumption agreement in the form set forth as Attachment No. 14 of this Agreement, together with other written documentation satisfactory to the Agency, and the due date of the Agency Equity pursuant to the Buyer Promissory Note shall be as set forth in the Buyer Promissory Note so assigned and assumed. e. The foregoing provisions will apply to every successive Transfer during the Affordability Period. 6. Process to Complete Transfer by Sale of Restricted Units. Upon the Transfer by sale of a Restricted Unit, the following procedures shall apply: a. Notice to City: Owner shall send to the Agency in care of the La Quinta Housing Department (or its successor), at P.O. Box 1504, La Quinta, California 92253, the form attached hereto as Attachment No. 12 (Notice of Intent to Transfer") and Attachment No. 13 ("Request for Approval of Proposed Transferee") fully completed and executed by the Owner and the Proposed Transferee. 394/015610-0002 96055.03 a07/24/00 -25- b. Qualification of Proposed Transferee. No Transfer shall occur unless and until determination is made based on the Certificate of Proposed Transferee in the form of Attachment No. 11 attached hereto ("Certificate of Proposed Transferee") and attachments thereto, that the Proposed Transferee (i) intends to occupy the Restricted Unit as the Proposed Transferee's principal residence and (ii) is a Moderate Income Household. Each Proposed Transferee shall submit the Certificate of Proposed Transferee to the Developer certifying its intent with regard to the occupancy of the Restricted Unit and as to the truth and accuracy of all information supplied as to the Gross Income (calculated as set forth in 25 Cal. Code of Regs., Section 6914) of the Proposed Transferee. Developer or subsequent owner shall certify pursuant to Attachment No. 11 hereof the information provided on the Certificate of Proposed Transferee pursuant to direction on that Certificate. Developer or subsequent owner shall be entitled to rely on the information on the Certificate of Proposed Transferee and attachments thereto in making the determination required by this subsection 6(b) unless the Developer or subsequent owner has knowledge of, or a reasonable basis for belief as to the inaccuracy or falsehood of the Certificate of Proposed Transferee. C. Restricted Unit Sales Price. The Sales Price for the Restricted Unit shall not exceed the maximum price at which the Purchase Housing Cost to be paid by the Proposed Transferee would not exceed the SFR Affordable Housing Cost. The calculation of the Sales Price under this subsection is illustrated by example in Attachment No. 10 attached hereto. However, in determining the SFR Affordable Housing Cost, the family size of the Proposed Transferee shall be deemed to be 2 persons in the case of a 1 bedroom, 3 persons for a 2 bedroom, 4 persons for a 3 bedroom, or 5 persons for a 4 bedroom Restricted Unit. If the actual family size of the Proposed Transferee is larger, then the actual family size shall be used. d. Certificates from Owner and Proposed Transferee. With respect to each sale of a Restricted Unit, Developer or subsequent owner shall submit to the Agency, not later than four (4) weeks prior to close of escrow on the sale of a Restricted Unit, a certificate that (i) the Developer or subsequent owner has made the affirmative determinations required by Section 6(b) above and (ii) the Sales Price conforms with Section 6(c) above. The Developer or subsequent owner shall concurrently submit to the Agency the Certificate of Proposed Transferee and all attachments thereto and all other documents or material with regard to information required by Sections 6(a) and/or (b) above, whether or not relied on by the Developer. Further, the Developer or subsequent owner and Proposed Transferee each shall certify in writing, in a form acceptable to the Agency, that the Transfer shall be closed in accordance with, and only with, the terms of the sales contract and other documents submitted to and approved by the Agency and that all consideration delivered by the Proposed Transferee to Developer or subsequent owner has been fully disclosed to the Agency. The written certificate shall also include a provision that, in the event a Transfer is made in violation of the terms of this Agreement or false or misleading statements are made in any documents or certificate submitted to the Agency for its approval of the Transfer, the Agency shall have the right to file an action at law or in equity to seek termination and/or rescission of the sales contract and/or declare the sale void, notwithstanding the fact that the Transfer may have closed and become final as between Developer or subsequent owner and its Transferee. In the event Developer for the initial transfer or subsequent owner for each following transfer fails to comply with Sections 6(a) or 6(b) above, any costs, liabilities or obligations incurred by the Developer or subsequent owner and its Transferee for the return of any monies paid or received or for any costs and legal expenses, shall 394/015610-0002 96055.03 a07/24/00 -26- be borne jointly and severally by the Developer and its transferee and such parties shall hold the City and Agency harmless and reimburse their expenses, legal fees and costs for any action and City and/or Agency take in enforcing the terms of this Section 401. e. Execution of Buyer Promissory Note and Buyer Second Deed of Trust. Notwithstanding anything to the contrary in this Agreement, at close of escrow of the sale of the Restricted Unit from the Developer to the Buyer, the Buyer shall execute a Buyer Promissory Note which shall be secured by a Buyer Second Deed of Trust. Said Buyer Second Deed of Trust shall be subordinate to any mortgage(s) obtained by the Owner for the purpose of securing funds to be applied to the Sales Price of the Restricted Unit. The Buyer Promissory Note shall be non -interest bearing. The principal amount of the Buyer Promissory Note shall be an amount equal to the amount actually given as cash plus the Agency Equity (as defined in the Buyer Promissory Note) which becomes applicable only in the event that the Buyer fails to sell the Restricted Unit to find a Moderate Income Household at the then-SFR Affordable Housing Cost. Agency may, in its sole and absolute discretion,+ approve the sale to a nonqualified buyer and release the covenants by receiving in addition to the cash amount originally provided the additional Agency Equity as provided under the terms of the Buyer Promissory Note. So long as the Transferee is a Moderate Income Household and the Sale of the Restricted Unit is made at a price which results in Purchase Housing Cost not in excess of the SFR Affordable Housing Cost, the Transferee shall assume the obligations of the Owner to repay the Agency Equity by execution of an assumption agreement in the form set forth as Attachment No. 14 of this Agreement ("Assumption Agreement"), together with other written documentation satisfactory to the Agency. In the event Agency permits assumption of the note and deed of trust, and so long as each Transferee from the Owner and each subsequent Owner: (1) is a Moderate Income Household, (2) acquires the Restricted Unit at an SFR Affordable Housing Cost, and (3) assumes the obligations of the predecessor Owner as aforesaid; then the Agency agrees to extend the due date of the Agency Equity pursuant to the Buyer Promissory Note and the transferring Owner shall not be required to pay the Agency Equity of the Buyer Promissory Note upon transfer of the Restricted Unit. The Agency Equity payment requirement is intended as a penalty against the Owner, to capture a portion of the equity in the Restricted Unit for the benefit of the Agency/Holder, in the event that the Owner makes a sale of the Restricted Unit to a Buyer that is not a Moderate Income Household. This equity recapture requirement is intended to be a cumulative remedy, together with all other remedies available to the Agency/Holder to compensate for the removal of the affordable housing covenants of the Grant Deed and/or Declaration of Covenants, Conditions, and Restrictions, and this Agreement on the Restricted Unit, to compensate the Agency for the administrative costs of operating the housing program of the Agency and to provide funds to the Agency to further assist low and moderate income persons in the provision of housing. In the event the equity recapture provisions of the Buyer Promissory Note are found by a court or administrative agency of competent jurisdiction to be in contravention of law or administrative regulation, the Applicable Percentage shall be reduced to the maximum percentage allowable by applicable law or administrative regulation, or may be otherwise modified by judicial decree or order so as to comply with applicable law. 394/015610-0002 96055.03 a07/24/00 -27- f. Written Consent of Agency Required Before Transfer. Except as provided herein, during the Affordability Period the Restricted Unit, and any interest therein, shall not be conveyed by any Transfer except with the express written consent of the Agency, which consent shall be given only if the Transfer is consistent with the Agency's goal of creating, preserving, maintaining and protecting housing in the City of La Quinta for Moderate Income Households and shall be in accordance with the provisions of this Subsection 6. This provision shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit. g. Delivery of Documents. Upon the close of the proposed Transfer, the Owner and Transferee, as applicable, shall provide the Agency with a certified copy of the recorded documents, a copy of the final sales contract, settlement statement, escrow instructions, all certificates required by this Subsection 6 and any other documents which the Agency may request. 7. Covenants of Owner. The Owner of each Restricted Unit by acceptance of a grant deed to the Restricted Unit covenants and agrees that, at all times during the Affordability Period, its Restricted Unit will be continuously occupied by Owner as its principal residence, and shall not be rented, subleased (except for periods on no more than two (2) months), or subject to any other business arrangement, whereby consideration shall be paid by any occupant of a Restricted Unit to the Owner of the Restricted Unit; provided, if the Restricted Unit is occupied by an Eligible Person or Family, the family members whose income was considered in determining the eligibility of that family may make monetary contributions toward the Purchase Housing Costs of the Restricted Unit. Owner agrees that it shall not record or cause the recordation of any deed of trust (a "Further Encumbrance") securing a note having an original principal sum which, when added to the sum of the principal amount(s) of any notes secured by any deeds of trust against the Restricted Unit real property and improvements thereon as of the date of recordation of the Further Encumbrance, exceeds ninety-five percent (95%) of the fair market value of the Restricted Unit real property and improvements thereon, subject to the Agency's underwriting criteria. B. [4021 Uses In Accordance with Redevelopment Plan; Nondiscrimination The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the SFR Site or any part thereof that the Developer and such successors and assignees, shall devote the SFR Site to the uses specified in the Redevelopment Plan, the Grant Deed (Attachment No. 5), the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8) and this Agreement for the periods of time specified therein. The foregoing covenants shall run with the land. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Developer itself or any person claiming under or though it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy 394/015610-0002 96055.03 a07/24/00 -28- of tenants, lessees, subtenants, sublessees or vendees of the SFR Site. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, creed, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through his or her 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, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation or any person or group of persons o account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." 3. In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." The covenants established in this Agreement and the deeds of conveyance for the SFR Site shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, the City and any successor in interest to the SFR Site, together with any property acquired by the Developer pursuant to this Agreement, or any part thereof. The covenants against racial discrimination shall remain in effect in perpetuity. 394/015610-0002 96055.03 a07/24/00 -29- C. [4031 Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the SFR Site or in the Project Area. The Agency shall have the right, if this Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other property proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. D. [4041 Maintenance of the SFR Site The Developer shall maintain the SFR Improvements on the SFR Site in conformity with the La Quinta Municipal Code and the requirements of the Declaration of Conditions, Covenants and Restrictions (Attachment No. 8), and shall keep the SFR Site free from any graffiti and from any accumulation of debris or waste materials. The Developer shall also maintain the landscaping required to be planted under the Scope of Development (Attachment No. 3) in a healthy and attractive condition. If, at any time, Developer fails to maintain the SFR Site or any portion thereof, and said condition is not corrected as soon as reasonably possible after written notice from the Agency, either the Agency or the City may enter the SFR Site or applicable portion thereof to perform the necessary maintenance thereon and Developer shall pay such costs as are reasonably incurred for such maintenance plus a 15% administrative fee. Upon the close of each Developer Conveyance, the Developer's obligations under this Section 404 with respect to such Restricted Unit or the SFR Site shall be assumed by the Transferee of such Restricted Unit or SFR Site. This covenant shall run with the land and shall remain in effect for the term of the Redevelopment Plan. V. [5001 DEFAULTS AND REMEDIES A. f 5011 Defaults --General Subject to the extensions of time set forth in Section 603, failure or delay by either party to perform any term or provision of this Agreement constitutes a default under this Agreement. A party claiming a default shall give written notice of default to the other party, specifying the default complained of and the actions required to correct such default. Except as otherwise expressly provided in Sections 508 and 509 of this Agreement, the claimant shall not institute proceedings against the other party if the other party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy as soon as reasonably practicable after receipt of such notice. 394/015610-0002 96055.03 a07/24/00 -30- B. [5021 Legal Actions [503] Institution of Legal Actions In addition to any other rights or remedies and subject to the restrictions in Section 501, either party may institute legal action to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any default, to recover damages for any default, or to obtain any other legal or equitable remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate municipal court in that county, or in the Federal District Court in the Central District of California. 2. [5041 Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 3. [5051 Acceptance of Service of Process In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service upon any officer or director of the Developer and shall be valid whether made within or without the State of California or in such other manner as may be provided by law. C. [5061 Rights and Remedies Are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. D. [5071 Inaction Not a Waiver of Default Any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. E. [5081 Remedies and Rights of Termination 1. [5091 Defaults If either party defaults with regard to any of the provisions of this Agreement, the non -defaulting party shall serve written notice of such default upon the defaulting party. If the 394/015610-0002 -31- 96055.03 a07/24/00 default is not cured or commenced to be cured by the defaulting party within thirty (30) days after service of the notice of default (or within such other period as is set forth herein), the defaulting party shall be entitled to pursue whatever remedies to which such party is entitled under this Agreement. 2. [5101 Specific Performance The non -defaulting party, upon expiration of applicable notice and cure periods, shall be permitted to, but not obligated to, commence an action for specific performance of the terms of this Agreement. In this regard, Developer specifically acknowledges that Agency is entering into this Agreement for the purpose of assisting in the redevelopment of the SFR Site and the provision of affordable housing and not for the purpose of enabling Developer to speculate in land. Agency shall also have the right to pursue damages for Developer's defaults but in no event shall Developer be entitled to damages of any kind from Agency, including damages for economic loss, lost profits, or any other economic or consequential damages of any kind. 3. [511 1 Termination by the Developer Prior to Agency's conveyance of the SFR Site to Developer, in the event that Agency is in material default of this Agreement, and any such failure is not be cured within thirty (30) days, or commenced to be cured within thirty (30) days and thereafter diligently prosecuted to completion, after written demand by the Developer then, at the option of the Developer, upon written notice thereof to the Agency, all provisions of this Agreement shall terminate and be of no further force and effect; thereafter, neither the Agency nor the Developer shall have any further rights against or liability to the other with respect to this Agreement. 4. [5121 Termination by the Agency In the event that prior to the close of the Acquisition Escrow: a. The Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the SFR Site in violation of this Agreement; or b. There is a charge in the ownership of the Developer contrary to the provisions of Section 108 hereof, or C. The Developer does not submit certificates of insurance, construction plans, drawings and related documents as required by this Agreement, in the manner and by the dates respectively provided in this Agreement therefor, and such default or failure is not be cured within thirty (30 days, or commenced to be cured within thirty (30) days thereafter diligently prosecuted to completion, after the date of written demand therefor by the Agency; or d. The Developer fails to satisfy the Conditions Precedent to the Conveyance by the time established therefor in the Schedule of Performance (Attachment No. 4); or 394/015610-0002 96055.03 a07/24/00 -32- e. The Developer is otherwise in material default under this Agreement and such failure is not cured or commenced to be cured within thirty (30) days of demand therefor by the Agency; then, at the option of the Agency, upon such written notice thereof to the Developer as may be set forth above, this Agreement shall be terminated, and thereafter neither party shall have any further rights or liability against the other under this Agreement. F. [5131 Option to Purchase, Reenter and Repossess The Agency shall have the additional right at its option to purchase, reenter and take possession of the SFR Site with all improvements thereon, if after conveyance of title to the individual lots comprising the SFR Site and prior to the issuance of the Certificate of Completion for the applicable lot, Developer shall: 1. Fail to proceed with the construction of the Improvements as required by this Agreement (subject to any force majeure delays) for a period of one (1) month after written notice thereof from the Agency; or 2. Abandon or substantially suspend construction of the improvements for a period of one (1) month (subject to any force maj eure delays under Section 603) after written notice of such abandonment or suspension from the Agency; or 3. Transfer or suffer any involuntary transfer of the SFR Site or any part thereof in violation of this Agreement. Such right to repurchase, reenter and repossess, to the extent provided in this Agreement, shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit: a. Any mortgage, deed of trust or other security instrument permitted by this Agreement; or b. Any rights or interests provided in this Agreement for the protection of the holder of such mortgages, deeds of trust or other security instruments. To exercise its right to repurchase, reenter and take possession with respect to a particular lot, Agency shall pay to the Developer in cash an amount equal to: (i) The costs and expenses incurred by the Developer for development of the SFR Site (which have not already been reimbursed), for the construction of the SFR Improvements existing on the Site at the time of the repurchase, reentry and repossession; less (ii) Any payment for work that has not been completed by the Developer on the SFR Site or the SFR Improvements thereon. 394/015610-0002 96055.03 a07/24/00 -33- G. [5141 Right of Reverter The Agency shall have the additional right, at its option, to reenter and take possession of the SFR Site with all improvements thereon and revest in the Agency the estate theretofore conveyed to the Developer, if after conveyance of title to the SFR Site and prior to issuance of the Certificate of Completion for the lot or lots in question, the Developer shall: 1. Fail to proceed with the construction of the improvements as required by this Agreement (subject to any force majeure delays) for a period of one (1) month after written notice of such abandonment or suspension from the Agency subject to any force majeure delays under Section 603; or 2. Abandon or substantially suspend construction of the improvements for a period of one (1) month (subject to any force majeure delays) after written notice of such abandonment or suspension from the Agency; or 3. Transfer or suffer any involuntary transfer of the SFR Site or any part thereof in violation of this Agreement. Such right to reenter, repossess and revest to the extent provided in this Agreement shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit: a. Any mortgage, deed of trust or other security instrument permitted by this Agreement; or b. Any rights or interest provided in this Agreement for the protection of the holder of such mortgages, deeds of trust or other security instruments. The grant deed shall contain appropriate reference and provision to give effect to the Agency's right, as set forth in this Section 516 under specified circumstances prior to the issuance of the Certificate of Completion, to reenter and take possession of the SFR Site or individual lots thereof with all improvements thereon and to terminate and revest in the Agency the estate conveyed to the Developer. Upon the revesting in the Agency of title to the Site or any part thereof as provided in this Section 514, the Agency shall, pursuant to its responsibilities under state law, use its best efforts to resell the SFR Site or part thereof as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligation of making or completing the improvements, or such other improvements in their stead, as shall be satisfactory to the Agency and in accordance with the uses specified for the SFR Site or part thereof in the Redevelopment Plan. Upon such resale of the SFR Site, the proceeds thereof shall be applied: (i) First, to reimburse the Agency on its own behalf or on behalf of the City for all costs and expenses incurred by the Agency, including, but not limited to, salaries to personnel in connection with the recapture, management and resale of the SFR Site or part 394/015610-0002 96055.03 a07/24/00 -34- thereof (but less any income derived by the Agency from the SFR Site or part thereof in connection with such management); all taxes, assessments and water and sewer charges with respect to the SFR Site or part thereof (or, in the event the SFR Site is exempt from taxation or assessment or such charges during the period of ownership, then such taxes, assessments or charges as determined by the County assessing official as would have been payable if the SFR Site were not so exempt); any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the SFR Site or part thereof; and any amounts otherwise owing the Agency by the Developer; and (ii) Second, to reimburse the Developer up to the amount equal to the sum of: (a) the Purchase Price paid to the Agency by the Developer for the Site (or allocable to the part thereof); plus (b) the costs and expenses incurred by the Developer for the development of the SFR Site and for construction of the SFR Improvements existing on the SFR Site at the time of the reentry and repossession; less (c) any payments for work that has not been completed by the Developer on the SFR Site or the SFR Improvements. Any balance remaining after such reimbursements shall be retained by the Agency as its property. To the extent that the rights established in this Section 516 involve a forfeiture, it must be strictly interpreted against the Agency, the party for whose benefit it is created. The rights established in this Section 516 are to be interpreted in light of the fact that the Agency will convey the SFR Site to the Developer for development and not for speculation. VI. [6001 GENERAL PROVISIONS A. [601 1 Notices, Demands and Communications Between Parties Written notices, demands and communications between the Agency and the Developer shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same - day or overnight messenger service that provides a receipt showing date and time of delivery, or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and the Developer at the addresses specified in Section 105 and 106, respectively. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 601. Any written notice, demand, or communication shall be deemed received immediately if delivered by hand or delivered by messenger in accordance with the preceding paragraph, and shall be deemed received on the fifth (5th) day from the date it is postmarked if delivered by registered or certified mail in accordance with the preceding paragraph. B. r6021 Conflicts of Interest No member, officer, official, or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official or employee 394/015610-0002 96055.03 a07/24/00 -35- participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. C. f 6031 Enforced Delay. Extension of Times of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other date specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor; subcontractor or supplier; acts or omissions of the other party; acts or failures to act of the City of La Quinta as the Agency or any other public or governmental agency or entity (other than the acts or failures to act of the Agency which shall not excuse performance by the Agency); or any other causes beyond the control or without the default of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, 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 notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer. Notwithstanding the foregoing portion of this Section 603, the Developer is not entitled pursuant to this Section 603 to an extension of time to perform because of past, present, or future difficulty in obtaining suitable construction financing for the development of the SFR Site, because of economic or market conditions, or because of the physical condition or suitability of the Site for the purposes of this Agreement. D. [6041 Non -Liability of Officials and Employees of the Agency and the Developer No member, official or employee of the Agency or the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Agency or the City or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement. E. [6051 Interpretation; Entire Agreement, Waivers; Counterparts; Attachments The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction that might otherwise apply. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of the Agency and the Developer, and all amendments hereto must be in 394/015610-0002 96055.03 a07/24/00 -36- writing by the appropriate authorities of the Agency and the Developer. In any circumstance where under this Agreement either party is required to approve or disapprove any matter, approval shall not be unreasonably withheld. This Agreement may be executed in counterparts, each of which, when this Agreement has been signed by all the Parties hereto, shall be deemed an original, and such counterparts shall constitute one and the same instrument. The exhibits and attachments to this Agreement are incorporated herein and made a part hereof. F. r6051 No Brokers Agency and Developer each represent and warrant to the other that it has not retained any real estate broker, agent, or finder in connection with this Agreement or the disposition or conveyance of the SFR Site as set forth herein, and each shall indemnify, defend, and hold harmless the other from and against any claim or lawsuit (including attorneys fees) for the payment of any real estate commission or finder's or broker's fees arising out of this Agreement to the extent caused by the acts or omissions of the Agency or Developer as the case may be. G. [6061 Amendments to this Agreement The Developer and the Agency agree to mutually consider reasonable requests for amendments to this Agreement which may be made by any of the parties hereto, lending institutions, or bond counsel or financial consultants to the Agency, provided such requests are consistent with this Agreement and would not substantially alter the basic business terms included herein. The Agency's Executive Director shall have the authority to approve, on behalf of the Agency, amendments to this Agreement that would not substantially alter the basic business terms. All other amendments shall require the action of the Agency Board. All amendments, including those authorized to be approved by the Agency's Executive Director, shall be in writing and shall be signed by authorized representatives of Agency and Developer. [end — signature page and attachments follow] 394/015610-0002 96055.03 a07/24/00 -37- IN WITNESS WHEREOF, the Agency and the Developer have signed this Agreement on the respective dates set forth below. Dated: Q 9 , 2000 APPROVED AS TO FORM: RUTAN & TU DER, LL P i-�7' Attorneys for the La. ( 'rrta Redevelopment Agency Dated: ip10-_ , 2000 Dated /d �®,'� , 2000 LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic By: Its: CfiairmaD RGC COURTHOMES, INC., , a California corporation Its: By: Its: 394/015610-0002 96055.03 a07/24/00 —38— ATTACHMENT NO. 1 SITE MAP [SEE NEXT PAGE] 394/015610-0002 96055.03 a07/24/00 f I 14 SS. SA OD Z�S, w 4=' ` w a a �IJ W �0!' I�-Q' r N_f�•1-BIZ 1 y�R ' ROSpm STREET y ]CIS R 0111V TE STrAlm L"'v. a O C2 GD D z m el a ' _ sy ' $ $ 0° O^ PDw111NV1'I A STREET to M I « tIYATE ManLOT'W lo GI '0 r1 to n s o2app Z ZQQ 4Y'r 1 Z1�P .xep 'r�`t 2 zQ q 2ap 'SYY�Let Z 2 s•u�ut5%uu�o� 2 �Zj Z 2 2 I� �'Y: CON A tq $ `i � �: 5 Vm: PI rn CON c c K i t t7 i • c VI K K i P1 1'1 8;r�1t88i�88 qk' 8^8�a8u� _ ��0iRf �"'Y�� 2 NNQ 2N �S RiS`! S[LYERDERRY STREET fMt1VP7t STREET) i � ��cu� m ��F � N „ 3T w 2+ yj �LddNu AR 9 VZ T �* WW ETI M !PRIVATE SIRCLTI 0� — d _ — — A'A : Iri pC� t■+� I � O INOr07'PO' Y 177.44 Qc N 00•43'lr C PP4 ev N fYr Or to Y 336lr —�� SCM,O 1•'• 10fY ' "Q N fY7'fPY PO'Y tl7. 1 LfTf •D' tLNiWCME ►LNPOTCf) ' g LOT r g M fY)'OY PO•Y 37I 1! _T <N 00•[Cali.S'Y IWP. IS RCC) M SO'OY20'Y IOSL PP �w IY N i CITY LIMITS 7 CITY OP INDIOu JEFFERSPN STREET ATTACHMENT NO. 2 LEGAL DESCRIPTION LOTS 1 THROUGH 12, 19 41 THROUGH 86 AND LETTERED LOTS A B D E AND H THROUGH R, BOOK 278, Pj CALIFORNIA. INCLUSIVE, OF TRACT NO. 28601-1, AS SHOWN BY MAP ON FILE IN .GES 86 THROUGH 90 OF MAPS, RECORDS OF RIVERSIDE COUNTY, 394/015610-0002 96055.03 a07/24/00 ATTACHMENT NO. 3 SCOPE OF DEVELOPMENT SINGLE FAMILY HOMES GENERAL SUMMARY This document outlines general requirements for improvements to the SFR Site, except for certain additional improvements set forth in Attachment No. 15. Detailed requirements shall be addressed in the development review process and approval of specific construction plans and related documents. II. DEVELOPMENT CONCEPT The Miraflores project consists of three (3) phases known as Phase I, Phase II, and Phase III. Phase I has been developed by Catellus and includes three (3) model homes. The development required by this Agreement is on the SFR Site (see legal description in Attachment No. 2) which consists of 59 lots comprised of lots in Phases II and III on which Developer shall construed the single family homes, and the three (3) model homes constructed as part of Phase I. Of the 59 lots, 56 (59 less the 3 model homes) shall be constructed by Developer. Twenty five (25) of the single family homes (which may include the 3 model homes) shall be sold as affordable units in conformance with this Agreement. The SFR Site shall developed and improved by the Developer in accordance with the provision of this Agreement, subject to all applicable codes, ordinances, and statutes including requirements and procedures set forth in the La Quinta Municipal Code, and the Redevelopment Plan regulations adopted in conjunction with or subsequent to execution of this Agreement. III. ON -SITE DEVELOPMENT AND IMPROVEMENTS Developer shall prepare such plans, reports, and studies, and obtain such permits and approvals as required, including as applicable grading plans, for construction of the project. Plans shall be prepared by a licensed civil engineer in good standing and subject to the approval of the Director of Public Works. Developer shall grant and permit all necessary and appropriate utility easements and rights for the development of the Site, including but not limited to sanitary sewers, storm drains, water, electrical power, telecommunications, natural gas, cable television, etc. IV. LANDSCAPING Developer shall be responsible for upgrading the Phase I landscaping and to fully landscape Phases II and III in accordance with a landscape plan approved by the City. 394/015610-0002 96055.03 a07/24/00 V. PUBLIC IMPROVEMENTS Developer shall be responsible for the construction of those public improvements identified in Attachment No. 15. With respect thereto, Developer shall be responsible for obtaining and delivering to the City such bonds or other improvement security as City may require in accordance with applicable law, including but not limited to payment and performance bonds. VI. DEVELOPMENT STANDARDS All development on the SFR Site shall conform with the development standards adopted as part of the Village on the Green Specific Plan. A. General Project Design All structures on the Site shall be designed and constructed to be consistent with the conceptual drawings prepared as part of the development proposal submitted by the Developer. B. Dwelling Unit Design The dwelling units shall range in size from a minimum of 1750 square feet to a maximum of 2100 square feet and include at least three distinct floor plans. There shall be a mix of three and four bedroom homes. Each of the units shall have an enclosed 2-car garage with direct access between the garage and the unit in addition to the primary entrance to the unit. Developer shall be permitted to adjust floor plans and square footages of individual units in accordance with applicable City codes, regulations, and procedures. C. Development Process The developer and its representatives, including its architect and engineer, shall work with the Agency and City Staff to develop and execute the architectural concept, architectural drawings, Site plan, tentative tract map, precise plan, grading plan, off -Site improvement plans, landscaping plans and related plans consistent with the conditions of approval adopted by the City and Agency and the applicable regulations contained in the La Quinta Municipal Code. VII. PHASING OF SALE OF UNITS For every two escrows that close on Unrestricted Units, Developer shall be obligated to close escrow on at least one Restricted Unit (selling the Restricted Unit in accordance with the requirements of this Agreement until all of the Restricted Units are sold). For example, Developer shall be permitted to close escrow on two Unrestricted Units before closing escrow on a Restricted Unit, but may not close escrow on a third Unrestricted Unit until escrow has closed on a Restricted Unit. The Parties acknowledge and agree that this covenant and restriction is designed to insure that Restricted Units are sold in a comparable time frame with the Unrestricted Units and that Developer does not concentrate marketing efforts solely on the Unrestricted Units. 394/015610-0002 96055.03 a07/24/00 -2- ATTACHMENT NO. 4 SCHEDULE OF PERFORMANCE ACTIVITY TIME FRAME 1. City and Agency approve this Agreement August 1, 2000. 2. Agency and Developer execute Agreement Within five (5) business days of approval of and open Escrow. Agreement by Agency. 3. Developer submits securities to City Public Within 15 business days of approval of Works Department to assume infrastructure Agreement by Agency. obligations under City Subdivision Improvement Agreement Tract 28601-1 dated January 19, 1999 4. Developer provides evidence of insurance Within ten (10) days after approval of to Agency. Agreement by Agency. 5. Developer to submit complete set of plans Within fifteen (15) business days after to City as necessary for the project. approval of Agreement by Agency. 6. Agency and Developer close Escrow on Within 10 business days after Developer's Agency's transfer of title to SFR Site to performance of Item No. 4, but in no event Developer later than September 15, 2000, and provided that Developer has satisfied all of the Conditions Precedent to Agency's obligation to close Escrow. 7. Developer commences pre -sales of Within three (3) business days after close of Miraflores Phase II phase homes. Escrow. 8. Developer records construction loan for Not later than one (1) months after close of Miraflores Phase II construction financing Escrow. 9. Developer commences construction on Within sixty (60) days after close of Escrow. Miraflores Phase II. 10. Developer completes construction of By May 31, 2001. common area recreation building and pool 11. Developer commences construction of On or before July 1, 2001 Miraflores Phase III homes. 12. Developer receives certificate of occupancy On or before December 31, 2002 upon final house 394/015610-0002 96055.03 a07/24/00 13. Developer completes improvements required under Subdivision Improvement Agreement. Not later than sixty (60) days after Developer receives certificate of occupancy upon final house 14. Upon completion of construction of all Within ten (10) days after Agency receipt of Subdivision Improvement Agreement work written request from Developer for Certificate and final housing unit, Agency shall issue a of Completion pursuant to Section 315 of the Certificate of Completion for the Agreement improvements or shall provide Developer with a written explanation of reasons why such a Certificate shall not be issued. 15. Developer receives complete bond Within 60 days of Certificate of Completion. exoneration from City and installs all final monuments It is understood that the foregoing Schedule is subject to all of the terms and conditions of the text of the Agreement. The summary of items of performance in the Schedule is not intended to supercede or modify any more complete description in the text; in the event of any conflict or inconsistency between this Schedule and text of the Agreement, the text of the Agreement shall govern. 394/015610-0002 96055.03 a07/24/00 -2- ATTACHMENT NO. 5 GRANT DEED [SEE FOLLOWING PAGE] 394/015610-0002 96055.03 a07/24/00 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: RGC CourtHomes, Inc. 101 Shipyard, Suite G Newport Beach, California 92663 Attn: Harold Lynch MAIL TAX STATEMENTS TO: Same as above GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the undersigned, LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic ("Grantor"), hereby grants to a California ("Grantee"), that certain real property in the City of La Quinta, County of Riverside, State of California described in Exhibit A attached hereto and incorporated herein, together with any and all buildings and improvements located thereon (the "Property"), subject to easements and encumbrances, and reservations of record. Dated: , 2000 LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic By: Name: Title: 394/015610-0002 1 96055.03 a07/24/00 STATE OF CALIFORNIA ) ) ss. COUNTY OF RIVERSIDE ) On , 2000 before me, a notary public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) 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. STATE OF CALIFORNIA ) ) ss. COUNTY OF RIVERSIDE ) On , 2000 before me, a notary public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) 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. U51A 394/015610-0002 96055.03 a07/24/00 -2- ATTACHMENT 6 SINGLE FAMILY DEVELOPMENT PROMISSORY NOTE FORM OF DEVELOPER PROMISSORY NOTE SECURED BY DEED OF TRUST [SEE FOLLOWING PAGES] 394/015610-0002 96055.03 a07/24/00 PROMISSORY NOTE Note Amount: $ 4,845,147.00 DATE: La Quinta, California On August , 2010 (the "Maturity Date"), for money advanced and value received, the undersigned (the "Promisor"), promises to pay to the La Quinta Redevelopment Agency (the "Holder"), or to order at 78-495 Calle Tampico, La Quinta, California 92253, or any other place designated in a writing submitted by Holder to Promisor, the principal sum of Four Million Eight Hundred Forty -Five Thousand One Hundred Forty -Seven Dollars And No Cents ($4,845,147.00), with no interest on the principal amount; provided, however, that the payment of the principal sum shall be waived and the obligation deemed for all purposes fully satisfied upon performance by Promisor of considerations and covenants provided in the Affordable Housing Agreement executed by and between the Promisor and the Holder, dated the same date as this Developer Promissory Note and executed concurrently herewith (the "Affordable Housing Agreement"), or upon termination of the Affordable Housing Agreement under its terms. In addition, pursuant to Section 201(3) of the Affordable Housing Agreement, the principal amount of this Developer Promissory Note shall be automatically reduced by one -fifty-ninth (1/59) of the face amount of this Developer Promissory Note upon the close of each escrow for a Unit (as defined in the Affordable Housing Agreement). Principal and interest payable under this Developer Promissory Note, if any, shall be paid in lawful money of the United States of America. There shall be no prepayment of this Developer Promissory Note permitted. This Developer Promissory Note is secured by, among other things, the Deed of Trust and Security Agreement with Assignment of Rents and Agreements dated the same date as this Developer Promissory Note, executed by Promisor, as trustor, in favor of Holder, as beneficiary (the "Deed of Trust"), and encumbering the fee interest in the real property described in the Deed of Trust (the "Land"). The Holder will be entitled to the benefits of the security provided by the Deed of Trust and will have the right to enforce the covenants and agreements of Promisor contained in the Deed of Trust and the Affordable Housing Agreement. If (a) Promisor fails to pay when due any sums payable under this Developer Promissory Note; (a) an Event of Default (as defined in the Deed of Trust) occurs; or (a) a default under the Affordable Housing Agreement occurs which is not cured within the applicable cure period set forth therein; then Holder, at its sole option, shall have the right to declare all sums owing under this Developer Promissory Note immediately due and payable. However, if any document related to this Developer Promissory Note (including, but not limited to, the Affordable Housing Agreement) provides for the automatic acceleration of payment of sums owing under this 394/015610-0002 96055.03 a07/24/00 Developer Promissory Note, all sums owing shall be automatically due in accordance with the terms of that document. Promisor shall pay to Holder all sums owing under this Developer Promissory Note, if not waived, without deduction, offset, or counterclaim of any kind. The advance of money evidenced by this Developer Promissory Note and secured by the Deed of Trust shall in no manner make Holder the partner or joint venturer of Promisor. If any attorney is engaged by Holder to enforce or construe any provision of this Developer Promissory Note, the Deed of Trust, the Affordable Housing Agreement or any other Security Documents (as defined in the Deed of Trust) or as a consequence of any Event of Default, with or without the filing of any legal action or proceeding, then Promisor shall immediately pay to Holder on demand all reasonable attorney fees and other costs incurred by Holder, together with interest. No previous waiver or failure or delay by Holder in acting with respect to the terms of this Developer Promissory Note, the Deed of Trust or the Affordable Housing Agreement shall constitute a waiver of any breach, default, or failure of condition under this Developer Promissory Note, the Deed of Trust or the Affordable Housing Agreement. A waiver of any term of this Developer Promissory Note, the Deed of Trust or the Affordable Housing Agreement must be made in writing and shall be limited to the express written terms of the waiver. If there are any inconsistencies between the terms of this Developer Promissory Note and the terms of the Deed of Trust or the Affordable Housing Agreement, the terms of this Developer Promissory Note shall prevail. All notice required or permitted in connection with this Developer Promissory Note shall be in writing and shall be given at the place and in the manner provided in the Deed of Trust for the giving of notices. If this Developer Promissory Note is executed by more than one person or entity as Promisor, the obligations of each person or entity shall be joint and several. No person or entity shall be a mere accommodation maker, but each shall be primarily and directly liable. Promisor waives presentment; demand; notice of dishonor; notice of default or delinquency; notice of acceleration; notice of protest and nonpayment; notice of costs, expenses, or losses and interest; notice of interest on interest and late charges; and diligence in taking any action to collect any sums owing under this Developer Promissory Note or in proceeding against any of the rights or interests to properties securing payment of this Developer Promissory Note. Time is of the essence with respect to every provision of this Developer Promissory Note. This Developer Promissory Note shall be construed and enforced in accordance with the laws of the State of California, except to the extent that Federal law preempts state law, and all persons and entities in any manner obligated under this Developer Promissory Note consent to the jurisdiction of any Federal or State Court within California having proper venue and also consent to service of process by any means authorized by California or Federal law. Promisor shall not be personally liable for the payment of the indebtedness or any obligations evidenced by this Developer Promissory Note or the Affordable Housing Agreement, and any judgment or decree in any action brought to enforce the obligation of Promisor to pay 394/015610-0002 96055.03 a07/24/00 -2- the indebtedness shall be enforceable against Promisor and the partners of the Promisor, if any, only to the extent of Promisor's interest in the Land and any other collateral pledged, encumbered, or otherwise covered by the Deed of Trust. Any judgment or decree shall not be subject to execution, or be a lien, on the assets of Promisor and the partners of the Promisor, if any, other than Promisor's interest in the Land and any other collateral pledged, encumbered, or otherwise covered by the Deed of Trust. Nothing in the preceding paragraph shall affect or limit the rights of Holder to enforce any of Holder's rights or remedies with respect to any portion of the Land or any other collateral pledged, encumbered, or otherwise covered by the Deed of Trust. ., a California corporation By: Its: By: Its: 394/015610-0002 _ 96055.03 a07/24/00 _3 ATTACHMENT NO. 7 FORM OF DEED OF TRUST [See following pages] 394/015610-0002 96055.03 a07/24/00 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 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 DEED OF TRUST AND SECURITY AGREEMENT, WITH ASSIGNMENT OF RENTS AND AGREEMENTS This Deed of Trust, Security Agreement, and Fixture Filing with Assignment of Rents and Agreements (the "Deed of Trust") is made as of , 2000 by ., a California (the "Trustor"), to First American Title Insurance Company (the "Trustee"), for the benefit of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Beneficiary"). 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, 394/015610-0002 96055.03 a07/24/00 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; (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 (1) repayment of moneys advanced by the Beneficiary to the Trustor (the "Loan") as evidenced by a Developer Promissory Note of Trustor of the same date as this Deed of Trust in the principal amount of FOUR MILLION EIGHT HUNDRED FORTY-FIVE THOUSAND ONE HUNDRED FORTY-SEVEN DOLLARS AND NO CENTS ($4,845,147.00) (the "Developer Note"), payable to Beneficiary or to order, and all extensions, modifications, or renewals of that Developer Note; (2) payment of all sums, if any, due on the Loan according to the terms of the Developer Note; (3) 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 (4) performance of every obligation contained in this Deed of Trust, the Developer Note, the Affordable Housing Agreement of the same date as this Deed of Trust entered into by and between the Trustor and the Beneficiary (the "Affordable Housing Agreement"), 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. DEFINITIONS A. 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 9.1 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 8.1 herein. Loan: The principal and all other amounts, payments, and premiums due, if not waived, under the Developer Note and any extensions or renewals (including, without limitation, 394/015610-0002 96055.03 a07/24/00 -2- 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. Hazardous Materials: The meaning set forth in Section 214.5 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 214.5 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: Trustor; or a. the business or properties or condition (financial or otherwise) of 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. 394/015610-0002 96055.03 a07/24/00 -3- 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. Project: The land and the single family residential 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 First American Title Insurance Company to Beneficiary. Trustor: Collectively, Trustor or any obligor under the Developer Note and the Affordable Housing Agreement, together with their respective affiliates and their respective employees, representatives, and agents. VIII. WARRANTY OF TITLE Trustor warrants that: Trustor is the lawful 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 Developer 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. IX. REPRESENTATIONS AND WARRANTIES Trustor represents and warrants to Beneficiary that as of the date of this Deed of Trust: 394/015610-0002 A 96055.03 a07/24/00 —`►— A. Organization of the Trustor. 1. Trustor is a duly organized , validly existing, and in good standing under the laws of the State of California and is qualified to do business in California. 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 Developer 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 Developer 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 394/015610-0002 96055.03 a07/24/00 -5- Trustor is a party that materially and adversely affect Trustor's present or proposed business, properties, assets, operation, or condition, financial or otherwise. 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 Restricted Units 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 sale of the Improvements; and 3. the principal purpose of the Loan is to induce, cause and assist the development, construction and sale of housing on the Land at affordable costs for moderate income households in a number of units and for a duration beyond that required by State of California and federal law. 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 knowledge of Trustor after 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. X. 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 Developer 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 394/015610-0002 _6_ 96055.03 a07/24/00 repayment has been waived or forgiven by the Beneficiary under the terms of the Developer Note. Trustor: l . will timely perform all the covenants, agreements, terms, and conditions to be performed by Trustor: a. under this Deed of Trust and the Affordable Housing Agreement; b. as seller under each contract of sale of, for which a contract of sale has been approved in writing by Beneficiary; C. as required of Trustor under each document and agreement constituting one of the Security Documents; and d. under all other agreements between Trustor and Beneficiary in accordance with the respective terms of the agreement; 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 public liability insurance covering the Land and the ownership, use, occupancy, and maintenance of the Land and the Project in accordance 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. 394/015610-0002 _ 7_ 96055.03 a07/24/00 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. 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 maintenance and lease of the Land, in a form satisfactory to Beneficiary, and furnish to Beneficiary any information about the financial condition of Trustor, and the sales 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, to audit, at Trustor'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. 394/015610-0002 96055.03 a07/24/00 -8- H. Statement by Trustor. Trustor, on ten (10) days' written request, will furnish a statement of the amount due or outstanding on the Developer 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: 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 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. K. Litigation. Trustor will promptly give written notice to Beneficiary of any litigation commenced or threatened affecting Trustor or the Land other than unlawful detainer proceedings brought by Trustor. 394/015610-0002 96055.03 a07/24/00 -9- 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 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. XI. NEGATIVE COVENANTS Until the entire Loan has been paid in accordance with the terms of the Developer 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. 394/015610-0002 96055.03 a07/24/00 -1 0- 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: 1. liens for taxes not yet delinquent; and 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. 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. XII. 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 knowledge, 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: 394/015610-0002 96055.03 a07/24/00 -11- (a) 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; 3. not to cause, contribute to, permit, or acquiesce in any Release or threatened Release; 4. not to change or modify the use of the Land without the prior written consent of Beneficiary; 5. to comply with and to cause the Land and every User of the Land to comply with all Hazardous Materials Laws; 6. to immediately notify Beneficiary in writing and to provide Beneficiary with a reasonably detailed description of - Laws; a. any noncompliance of the Land with any Hazardous Materials b. any Hazardous Materials Claim; C. any Release or threatened Release; and d. 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; 7. 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. notify Beneficiary of that discovery together with a reasonably detailed description; b. 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 C. 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, 394/015610-0002 96055.03 a07/24/00 -12- (3) under the supervision of a qualified environmental engineer approved in writing by Beneficiary; (4) in accordance with plans and specifications for these actions approved in writing by Beneficiary; and (5) using licensed and insured qualified contractors approved in writing by Beneficiary; 8. 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 9. 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 or desirable to inspect, investigate, assess, and protect security of this Deed of Trust, for the purpose of determining: 1. 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 394/015610-0002 96055.03 a07/24/00 -13- 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 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 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 214(3) and 214(4) of the Affordable Housing Agreement; 2. agrees to reimburse Beneficiary, on demand, for all costs and expenses 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 214.3 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 214.3 of the Affordable Housing Agreement. D. Request for Information. Trustor and Beneficiary agree that: 1. this Section 6.4 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 394/015610-0002 96055.03 a07/24/00 -14- for purposes of California Code of Civil Procedure § 736 and will survive the payment of the 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. XIII. 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 7.1 of this Deed of Trust. 394/015610-0002 96055.03 a07/24/00 -15 - XIV. 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 Developer Note which is not cured within the applicable cure period set forth therein; 2. A default under the Affordable Housing Agreement which is not cured within the applicable cure period set forth therein; 3. The failure (without cure during the applicable period) 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 5.2 or 5.3 of this Deed of Trust or 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 declaration 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 proceed to sell the Personalty separately and without regard to the Land in accordance with Beneficiary's rights and remedies; or 394/015610-0002 96055.03 a07/24/00 -16- 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 Developer 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 declaration of default and demand for sale and of any acceleration of maturity of the Loan affected by any prior declaration 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 declarations of default and demand for sale, or notices of default and of election to cause the Land to be sold, nor otherwise affect the Developer 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 Developer 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 Developer 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 394/015610-0002 96055.03 a07/24/00 -17- 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: 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 394/015610-0002 96055.03 a07/24/00 -18- 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 Developer Note, Trustor is required to perform, then Beneficiary, after seven (7) Business Days' notice to Trustor (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 (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. 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 394/015610-0002 96055.03 a07/24/00 -19- 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. 394/015610-0002 96055.03 a07/24/00 -20- k%TJ 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 declarations; 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 394/015610-0002 96055.03 a07/24/00 -21- 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. "T 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 394/015610-0002 96055.03 a07/24/00 -22- 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. Section 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 394/015610-0002 96055.03 a07/24/00 -23- 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. XVII. 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 394/015610-0002 96055.03 a07/24/00 -24- 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, addressed to: c/o RGC CourtHomes, Inc. 101 Shipyard, Suite G Newport Beach, C 92663 Attention: Harold Lynch If to Beneficiary, addressed La Quinta Redevelopment Agency to: 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, 394/015610-0002 96055.03 a07/24/00 -25- 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. 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 declaration 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, declarations 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. 394/015610-0002 96055.03 a07/24/00 -27- N. Junior Liens. Trustor agrees: 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 declaration 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 394/015610-0002 96055.03 a07/24/00 -28- 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 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 Developer Note, unless waived by the Beneficiary under the terms of the Developer 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 whose or in part by Beneficiary pursuant to this Deed of Trust, or by the proceeds of the Loan secured by this Deed of Trust. 394/015610-0002 96055.03 a07/24/00 -29- 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. 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 Developer 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. AA. Partial Reconveyances . Upon thirty (30) days' prior written request by Trustor to Beneficiary requesting that a Unit (as defined in the Affordable Housing Agreement) or any portion of the Land be reconveyed in connection with the sale of a Unit (as provided in the Affordable Housing Agreement), Beneficiary shall cause such Unit to be released from the lien of this Deed of Trust by depositing a request for the partial reconveyance into an escrow opened by or for Trustor in connection with the sale of each Unit, and the principal amount of the Developer Note shall be reduced as provided therein. [end — signature page follows] 394/015610-0002 96055.03 a07/24/00 -30- In Witness Whereof, Trustor has executed this Deed of Trust as of the day and year first above written. TRUSTOR: California By: Its: By: Its: a 394/015610-0002 3 I 96055.03 a07/24/00 Exhibit "A" LEGAL DESCRIPTION LOTS 1 THROUGH 12, 19, 41 THROUGH 86, AND LETTERED LOTS A, B, D, E, AND H THROUGH R, INCLUSIVE, OF TRACT NO. 28601-1, AS SHOWN BY MAP ON FILE IN BOOK 278, PAGES 86 THROUGH 90 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. 394/015610-0002 32 96055.03 a07/24/00 STATE OF CALIFORNIA ss. COUNTY OF On 2000 before me, a notary public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) 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. Name: [SEAL] 394/015610-0002 96055.03 a07/24/00 -33- STATE OF CALIFORNIA ss. COUNTY OF On 2000 before me, a notary public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) 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. Name: [SEAL] 394/015610-0002 96055.03 a07/24/00 34 ATTACHMENT 8 DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR PROPERTY [SEE FOLLOWING PAGES] 394/015610-0002 96055.03 a07/24/00 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's Use) (Exempt from Recordation Fee per Gov. Code § 6103) DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR PROPERTY THIS DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR PROPERTY (the "Declaration") is made by and between (the "Covenantor") and the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency" or "Covenantee") as of the day of , 2000. RECITALS A. Covenantor is fee owner of record of that certain real property (the "Property") located in the City of La Quinta, County of Riverside, State of California legally described in the attached Exhibit "A", which Property Covenantor acquired from Agency pursuant to a Grant Deed recorded concurrently herewith. The Property is part of the Miraflores housing project in the City. B. This Declaration and the Grant Deed described in Recital A are part of a redevelopment project described in that certain Affordable Housing Agreement, dated , 2000, by and between Covenantor and Covenantee. As described in the Affordable Housing Agreement, the Property includes fifty-nine (59) single family lots, three of which are already improved with "model homes." Covenantor shall construct single family homes on other fifty-six (56) lots that are within the Property. Of the fifty-nine (59) homes developed on the lots, not fewer than twenty-five (25) of the homes developed by Covenantor are to be sold to buyers that have an income not in excess of 120% of area wide medium income. C. The Property is within the La Quinta Project Area (the "Project") in the City of La Quinta and is subject to the provisions of the "Redevelopment Plan" for the Project. D. The Community Redevelopment Law (California Health and Safety Code 33000 et seq.) provides that a redevelopment agency shall establish covenants running with the land in furtherance of redevelopment plans. 394/015610-0002 96055.03 a07/24/00 1 NOW, THEREFORE, THE AGENCY AND THE BUYER AGREE AS FOLLOWS: Affordable Housing. Twenty-five (25) of the homes developed on the numbered lots described in Exhibit "A" are to be sold to moderate income households paying not more than "Affordable Housing Cost" for the Property as set forth below ("Restricted Units"). The Property has been made available, in part, with financial assistance provided by the Agency. In consideration of its financial assistance, the Agency requires that the Restricted Units on the Property be maintained as an affordable housing resource until thirty (30) years following the date that such Restricted Unit is first sold to a qualified affordable homebuyer in accordance with the Affordable Housing Agreement and this Declaration. 2. Affordability Covenants. Covenantor agrees for itself, and its successors and assigns, and every successor to Covenantor's interest in the Property, or any part thereof that, as to each numbered lot set forth in Exhibit "A", the terms of this Declaration shall apply until the date that is thirty (30) years from the date that such lot is first sold to an Eligible Person or Family (as defined below) (the 'Expiration Date"): As used herein the following terms shall have the following meanings: a. "Affordability Period" shall be thirty (30) years from the date of transfer to an Eligible Person or Family. b. "Eligible Person or Family" shall mean any person or family who meets the income qualifications for Moderate Income Households. C. "Affordable Housing Cost" shall be that purchase price which would result in maximum monthly housing payments, including for a thirty (30) year mortgage for that portion of the purchase price which is to be paid in the form of loan proceeds under currently prevailing mortgage loan rates or the interest rate of any below -market mortgage program for which such purchaser has obtained a first trust deed loan, for the moderate income group calculated pursuant to Health and Safety Code Section 50052.5, which sets forth the following formula: "Moderate Income Households" shall be households where not less than twenty-eight percent (28%) of the gross income of the household, nor more than thirty-five percent (35%) of one hundred ten percent (110%) of area median income adjusted for family size appropriate for the Restricted Unit, or if the gross income of the household for households exceeds one hundred ten percent (110%), not more than one hundred twenty percent (120%) of the area median income adjusted for family size. The Affordable Housing Cost for the Restricted Units is set forth on the schedule of Maximum Sales Price Example attached hereto as F,xhihit "B"_ d. "Owner" shall mean Covenantor and any successor in interest of Covenantor to any numbered lot in Exhibit "A" except where a provision of this Agreement expressly excludes Developer from the definition of Owner. 394/015610-0002 96055.03 a07/24/00 -2- e. "Proposed Transferee" shall mean a person or family determined to be an Eligible Person or Family, of Moderate Income Household, to whom the Developer or any successor Owner desires and proposes to Transfer a Restricted Unit. f. "Purchase Housing Cost" for an Eligible Person or Family purchasing a Restricted Unit shall include all of the following associated with that Restricted Unit, estimated or known as of the date of their proposed sale of the Restricted Unit: (1) Principal and interest on a fixed rate mortgage loan including any rehabilitation loans, and any loan insurance fees associated therewith. property improvements. (2) Property taxes and assessments. (3) Fire and casualty insurance covering replacement value of (4) Any homeowner association fees. (5) Estimate of utilities cost. Monthly housing cost of a purchaser shall be an average of estimated costs for the next twelve (12) months. The sum of (i) through (v), inclusive, shall not exceed the Affordable Housing Cost. g. "Restricted Unit" shall have the meaning previously set forth in this Declaration. h. "Sales Price" shall mean all sums paid by a purchaser to a seller for, or in conjunction with, the acquisition of a Restricted Unit, including the purchase price designated in any purchase agreement, consideration for personal property and all other costs and fees paid by the purchaser to or for the benefit of the seller. i. "Transfer" shall mean any sale, assignment, conveyance, lease or transfer, voluntary or involuntary, of any interest in a Restricted Unit. Without limiting the generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy to a party who does not meet the definition of Eligible Person or Family; (ii) a life estate; (iii) creation of a joint tenancy interest; (iv) a gift of all or any portion of a Restricted Unit; or (v) any voluntary conveyance of a Restricted Unit. Transfer shall not include transfer to a spouse in a dissolution proceeding; however any subsequent Transfer shall be subject to this restriction. j. "Transferee" shall mean any natural person or entity who obtains ownership or possessory rights in a Restricted Unit pursuant to a Transfer. Notwithstanding the foregoing, this Declaration shall be subordinate to the lien of a first deed of trust against the Property, and shall not impair the rights of any institution or lender which is the maker of a loan secured by such first deed of trust, or such lender's assignee or successor in interest, to exercise its remedies under the deed of trust in the event of default under the first deed of trust by the Covenantor. Such remedies under the first deed of trust 394/015610-0002 96055.03 a07/24/00 -3- include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, the affordability covenants and the transfer restrictions set forth in Sections 1, 2, 3 and 7 of this Declaration. as to each lettered lot covered by this Declaration that is the subject to the foreclosure, shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such deed of trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure, said Sections 1, 2 3 and 7 of this Declaration shall automatically terminate upon such acquisition of title, provided that (i) the Agency has been given written notice of a default under such first deed of trust; and (ii) the Agency shall not have cured the default under such first deed of trust within the thirty (30) day period provided in such notice sent to the Agency. Notwithstanding any other provision hereof, the nondiscrimination covenants and the maintenance requirements set forth in this Declaration shall remain in full force and effect as to the Property and any transferee. 3. Transfer of Property No transfer of the Property shall occur until the Agency determines (a) Developer is in compliance with the terms of the Affordable Housing Agreement; (b) that the proposed purchaser of a Restricted Unit intends to occupy the Restricted Unit as the proposed purchaser's principal residence; (b) that the proposed purchaser of a Restricted Unit is an Eligible Person or Family; and (c) that the proposed transfer of a Restricted Unit occurs at an "Affordable Housing Cost" as determined pursuant to the Affordability Restrictions. The Agency shall not be obligated to approve a transfer of a Restricted Unit until and unless the proposed purchaser has submitted to the Agency such information and completed such forms as the Agency shall request to certify the proposed purchaser's intent with respect to its residency of the Restricted Unit and its gross income, and the proposed purchaser has submitted an affidavit disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Property, each approved purchaser of a Restricted Unit shall submit to the Agency an executed disclosure statement which certifies that the purchaser is aware that the purchaser buying may only sell the unit at an Affordable Housing Cost to an Eligible Person or Family, that the maximum permitted sales price may be less than fair market value, and that the units must be owner -occupied at all times and cannot be rented or leased. Covenantee shall cooperate with the Covenantor in providing such forms to proposed purchasers and in assisting proposed purchaser to prepare such forms and to provide any required information to the Covenantee in connection with the Covenantor's sale of such Restricted Unit; provided that the Covenantor shall not be obligated to incur any out-of- pocket costs in connection therewith, other than employee time dedicated to providing such assistance. COVENANTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. COVENANTOR 394/015610-0002 96055.03 a07/24/00 -4- FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE THE PRIMARY OBJECTIVE OF THE AGENCY AND THIS DECLARATION IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. The covenant contained in this Section 3 shall run with the land and shall automatically terminate and be of no further force or effect upon the Expiration Date. 4. Nondiscrimination Covenants Covenantor by and for itself, its successors and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall Covenantor itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. Covenantor and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Covenantee) or sale of the Property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases, or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her 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, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." 394/015610-0002 96055.03 a07/24/00 -5- (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself of herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees or vendees of the premises." Nothing in this Section 4 shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted. The covenants in this paragraph 4 shall run with the land in perpetuity. 5. Maintenance of Property Covenantor shall properly maintain the buildings, landscaping and yard areas on the Property as follows: (a) No improperly maintained landscaping shall be visible from public rights - of -way, including: (1) no lawns with grasses in excess of six (6) inches in height; (2) no untrimmed hedges; (3) no trees, shrubbery, lawns, and other plant life dying from lack of water or other necessary maintenance; and (4) no trees and shrubbery grown uncontrolled without proper pruning; (5) no vegetation so overgrown as to be likely to harbor rats or vermin; (6) no dead, decayed, or diseased trees, weeds, and other vegetation. (b) No yard areas shall be left unmaintained, including: (1) no broken or discarded furniture, appliances, and other household equipment stored in yard areas for periods exceeding one (1) week; (2) no packing boxes, lumber, trash, dirt, and other debris stored in yards for periods exceeding one (1) week in areas visible from public property or neighboring properties; (3) no unscreened trash cans, bins, or containers stored for unreasonable periods in areas visible from public property or neighboring properties; and (4) no vehicles parked or stored in areas other than approved parking areas. 394/015610-0002 96055.03 a07/24/00 -6- (c) No buildings may be left in an unmaintained condition, including: (1) no violations of state law, Uniform Codes, or City ordinances; (2) no condition that constitutes an unsightly appearance that detracts from the aesthetics or property value of the subject property or constitutes a private or public nuisance; (3) no broken windows or chipped, cracked, or peeling paint; and (4) no conditions constituting hazards and/or inviting trespassers or malicious mischief, and (5) no graffiti. 6. Option to Repurchase and Right of Reverter Incorporated Herein The Agency's option to repurchase the Property or individual lots thereof, and the Agency's right of reverter, as set forth in Sections 513 and 514 of the Affordable Housing Agreement is incorporated herein and made a part hereof. 7. Covenants Do Not Impair Liens No violation or breach of covenants, conditions, restrictions, provisions, or limitations contained in this Declaration shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security instrument. 8. Conflict with Other Laws; Severabili In the event that any provision of this Declaration is found to be contrary to applicable law or the Affordability Restrictions, then the contrary provisions of this Declaration shall be deemed to mean those provisions which are enforceable and consistent with such laws and policies. The remaining portions of this Declaration shall be deemed modified in a manner which is consistent with the goals and intent of this Declaration to provide housing at an affordable housing cost to very low, low, and moderate income households. Every provision of this Declaration is intended to be severable. In the event any term or provision of this Declaration is declared by a court of competent jurisdiction to be unlawful, invalid or unenforceable for any reason, such determination shall not affect the balance of the terms and provisions of this Declaration, which terms and provisions shall remain binding and enforceable. 9. Covenants for Benefit of City and Agency. All covenants without regard to technical classification or designation shall be binding for the benefit of the Covenantee and the City of La Quinta (the "City") and such covenants shall run in favor of the Covenantee and the City for the entire period during which such covenants shall be in force and effect, without regard to whether the Covenantee or the City is or remains 394/015610-0002 96055.03 a07/24/00 -7- an owner of any land or interest therein to which such covenants relate. The Covenantee and the City, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper legal proceedings to enforce and to cure such breach to which it or any other beneficiaries of these covenants may be entitled during the term specified for such covenants, except the covenants against discrimination which may be enforced at law or in equity at any time in perpetuity. 10. Notices, Demands and Communications Written notices, demands and communications between the Covenantor and the Covenantee shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same - day or overnight courier service that provides a receipt showing date and time delivery, or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, as follows: Covenantor: c/o RGC CourtHomes, Inc. 101 Shipyard, Suite G Newport Beach, California 92663 Attn: Harold Lynch Covenantee: La Quinta Redevelopment Agency Attention: Executive Director 78-495 Calle Tampico La Quinta, California 92253 Such addresses for notice may be changed from time to time upon notice to the other party. Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the fifth (5th) calendar day from the date it is postmarked if delivered by registered or certified mail. 11. Expiration Date. This Declaration shall automatically terminate and be of no further force or effect as of thirty (30) years from the date this Declaration is recorded. 12. Counterparts This Declaration may be executed in counterparts each of which, when both Covenantor and Covenantee have signed this Declaration, shall be deemed an original and shall constitute one and same instrument. [end — signature page follows] 394/015610-0002 96055.03 a07/24/00 -8- IN WITNESS WHEREOF, the Covenantee and Covenantor have caused this instrument to be executed on their behalf of their respective officers hereunto duly authorized as of the date set forth above. "COVENANTEE" THE LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic WE Its: Executive Director Attest: Agency Secretary (Agency's and Owner's Signature must be acknowledged by a Notary Public) "COVENANTOR" California By: Its: By: Its: a 394/015610-0002 (1 96055.03 a07/24/00 -9- EXHIBIT "B" MAXIMUM SALES PRICE EXAMPLE Affordable Housing Example, City of La Quinta [SEE FOLLOWING —PAGE] 394/015610-0002 96055.03 a07/24/00 Affordable Housing Example, City of La Quinta Based upon Riverside County Income levels provided by the State of California, March 2000, Department of Housing and Community Development derived from HUD Actual Calculations to be based upon county income levels and mortgage rates in place at the time of the proposed transaction, income and housing costs are annual Unit size 3 bedroom 3 bedroom 4 bedroom Actual Household size, number of persons 3 4 5 Household size for qualifying purposes* 4 4 5 County Median Income 47,400 47,400 51,200 Maximum Household income, 120% of Median** 56,880 56,880 61,440 Maximum Affordable Housing Cost Allowance: 35% of 110% of Median 18,249 18,249 19,712 Annual property tax @ 1.25% of value 1,838 1,838 1,963 Annual utilities @$75/month 900 900 900 Annual insurance @lump sum 700 700 800 Annual Homeowner's Association @ $95/month 1,140 1,140 1,140 balance of housing cost for mortgage 13,671 13,671 14,909 Maximum annual mortgage payments 13,671 13,671 14,909 Monthly mortgage payment 1,139.25 1,139.25 1,242.42 1 st Mortgage term in years 30 30 30 Market interest rate, annual 9.00% 9.00% 9.00% 1 st Mortgage amount 141,588 141,588 154,410 10% down payment Loan to value 90% 90% 90% Maximum sales price 157,320 157,320 171,567 5% down payment Loan to value 95% 95% 95% Maximum sales price 149,040 149,040 162,537 3% down payment Loan to value 97% 97% 97% Maximum sales price 145,967 145,967 159,185 For qualifying purposes, the family/household size is the number of bedrooms plus 1, unless the actual family/household size is larger in which case the actual family size shall be used. * * For households with gross incomes over 110% of median, Affordable Housing Costs shall not exceed 35% of 120% of the median income. Affordable Housing Costs shall not be less than 28% of the gross income of the household. The foregoing is an example only and shall not necessarily be the prices or terms for the sale of a Restricted Unit. The foregoing is based upon 2000 figures and shall be updated SFRAgrAtttO.xls 7/28/2000 ATTACHMENT NO. 9 CERTIFICATE OF COMPLETION [SEE ATTACHED PAGES] 394/015610-0002 96055.03 a07/24/00 Recording Requested By And When Recorded Mail To: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attn: Executive Director (Space above for Recorder's use) (Exempt from Recording Fee Per Gov. Code § 6103) CERTIFICATE OF COMPLETION OF CONSTRUCTION AND DEVELOPMENT WHEREAS, by an Affordable Housing Agreement dated , 2000 ("Agreement"), by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (hereinafter referred to as the "Agency") and ("Developer"), the Developer has constructed improvements upon the real property (the "Site"), legally described on the attached Exhibit "A", by constructing or causing to be constructed the improvements thereon according to the terms and conditions of the Agreement; and WHEREAS, pursuant to Section 315 of the Agreement, promptly after completion of the Improvements the Agency shall furnish the Developer with a Certificate of Completion upon written request therefor by the Developer; and WHEREAS, the issuance by the Agency of the Certificate of Completion shall be conclusive evidence that the construction of the Improvements conforms to the Agreement; and WHEREAS, the Developer has requested that the Agency furnish the Developer with the Certificate of Completion; and WHEREAS, the Agency has conclusively determined that the construction of the Improvements conforms to the Agreement; NOW, THEREFORE: 1. As provided in the Agreement, the Agency does hereby certify that the construction of the Improvements required to be constructed on the real property described in Exhibit "A" hereto has been satisfactorily performed and completed and that such development and construction work complies with the Agreement. 2. This Certificate of Completion does not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage or any insurer of a mortgage security money loaned to finance the work of construction if improvements and development of the real property described in Exhibit "A", or any part hereof. 3. This Certificate of Completion does not denote completion of any work required to be completed, other than on the real property described in Exhibit "A". 394/015610-0002 96055.03 a07/24/00 4. The Deed of Trust recorded as Instrument No. in the official records of the County of Riverside, and the Declaration of Covenants Conditions, and Restrictions recorded as Instrument No. in the official records of the County of Riverside, shall remain in full force and effect. 5. This Certificate of Completion is not a notice of completion as referred to in Section 3093 of the California Civil Code. IN WITNESS WHEREOF, the Agency has executed this Certificate as of this day of ATTEST: Agency Secretary LA QUINTA REDEVELOPMENT AGENCY By Executive Director CONSENT TO RECORDATION , owner of fee title to the real property described in Exhibit "A" hereto, hereby consents to the recordation of this Certificate in the official records of Riverside County. U-In Its: 394/015610-0002 96055.03 a07/24/00 -2- STATE OF CALIFORNIA ) ss. COUNTY OF ) On , before me, a notary public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) 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. LM [SEAL] NAME: 394/015610-0002 96055.03 a07/24/00 STATE OF CALIFORNIA ) ss. COUNTY OF ) On , before me, a notary public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) 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. NAME: [SEAL] 394/015610-0002 4 96055.03 a07/24/00 ATTACHMENT NO. 10 MAXIMUM SALES PRICE ILLUSTRATION Affordable Housing Example, City of La Quinta [SEE FOLLOWING PAGE] 394/015610-0002 96055.03 a07/24/00 Affordable Housing Example, City of La Quinta Based upon Riverside County Income levels provided by the State of California, March 2000, Department of Housing and Community Development derived from HUD Actual Calculations to be based upon county income levels and mortgage rates in place at the time of the proposed transaction, income and housing costs are annual Unit size 3 bedroom 3 bedroom 4 bedroom Actual Household size, number of persons 3 4 5 Household size for qualifying purposes* 4 4 5 County Median Income 47,400 47,400 51,200 Maximum Household income, 120% of Median** 56,880 56,880 61,440 Maximum Affordable Housing Cost Allowance: 35% of 110% of Median 18,249 18,249 19,712 Annual property tax @ 1.25% of value 1,838 1,838 1,963 Annual utilities @$75/month 900 900 900 Annual insurance @lump sum 700 700 800 Annual Homeowner's Association @ $95/month 1,140 1,140 1,140 balance of housing cost for mortgage 13,671 13,671 14,909 Maximum annual mortgage payments 13,671 13,671 14,909 Monthly mortgage payment 1,139.25 1,139.25 1,242.42 1 st Mortgage term in years 30 30 30 Market interest rate, annual 9.00% 9.00% 9.00% 1st Mortgage amount 141,588 141,588 154,410 10% down payment Loan to value 90% 90% 90% Maximum sales price 157,320 157,320 171,567 5% down payment Loan to value 95% 95% 95% Maximum sales price 149,040 149,040 162,537 3% down payment Loan to value 97% 97% 97% Maximum sales price 145,967 145,967 159,185 For qualifying purposes, the family/household size is the number of bedrooms plus 1, unless the actual family/household size is larger in which case the actual family size shall be used. * * For households with gross incomes over 110% of median, Affordable Housing Costs shall not exceed 35% of 120% of the median income. Affordable Housing Costs shall not be less than 28% of the gross income of the household. The foregoing is an example only and shall not necessarily be the prices or terms for the sale of a Restricted Unit. The foregoing is based upon 2000 figures and shall be updated SFRAgrAtt1 O.xls 7/28/2000 ATTACHMENT NO. 11 FORM OF CERTIFICATE OF PROPOSED TRANSFEREE [SEE FOLLOWING PAGES] 394/015610-0002 96055.03 a07/24/00 CERTIFICATE OF PROPOSED TRANSFEREE THIS FORM MUST BE DELIVERED TO THE OWNER BEFORE PROCEEDING WITH ANY TRANSFER OF THE PROPERTY. La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Project Officer Re: Request for Approval of Proposed Transferee To Whom It May Concern: The undersigned is the owner of real property in La Quinta, located at (the "Property"), which was developed with assistance from the Agency. The Owner now desires to transfer the Property and by this letter is requesting the Agency to approve the proposed transferee. l . The Proposed Transferee is Names: Current Address: Telephone Number: 2. The terms of the proposed transfer are (a) Sales price of $ . This sales price is based on the lesser of (i) Fair market value; or (ii) The maximum price at which the Purchase Housing Cost of the Proposed Transferee would not exceed Affordable Housing Cost. The calculation of the Sales Price under this subsection (ii) is illustrated in Attachment No. _ to the Agreement. 394/015610-0002 1 96055.03 a07/24/00 IN ORDER TO ANSWER QUESTION 2(b) YOU MUST CALCULATE THE PROPOSED SALES PRICE BASED ON AFFORDABLE HOUSING COST, TAKING INTO CONSIDERATION ALL ITEMS LISTED IN THE DEFINITION OF PURCHASE HOUSING COST. (b) Price of any personal property being sold by the Owner to the proposed transferee: $ (If none, so state) (c) The price of $ to be paid by the proposed transferee for any services of Owner. (If none, so state). (d) All other amounts of money or other consideration, if any, concerning the Property or any other matter to be paid by the proposed transferee to the Owner: $ (if none, so state). (e) Sources of payment of sales price: Sales price $ Cash down payment $ 1 st loan $ 2nd loan $ Other (describe) $ Total $ (f) The financing obtained by the proposed transferee to purchase the Property is as follows: 1 st Loan: Loan amount $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: 394/015610-0002 96055.03 a07/24/00 -2 Lender: Lender's address: 2nd Loan: Loan amount: $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: Lender: Lender's address: Other Loans: (describe, if none, so state) (g) The monthly Purchase Housing Cost to be paid by the proposed transferee: 1 st loan monthly payment: $ 2nd loan monthly payment: $ Other loans monthly payment: $ Taxes and assessments (1/12 of $ yearly taxes and assessments): Insurance (1/12 of yearly $ premium): Homeowner's dues: $ Total: $ 3. The proposed transferee represents, warrants and covenants the following: 394/015610-0002 96055.03 a07/24/00 -3- (a) The Property will be the principal residence of the proposed transferee. (b) The combined maximum annual income for all household members of the proposed transferee is $ . (This figure must include al sources of income). (c) The proposed transferee will deliver to the Agency a signed financial statement on a form acceptable to the Agency. 4. The proposed transferee's household consists of the following persons who will reside in the Property: Adults (18 or over) - [name of each]: Minors (under 18) [name of each]: 5. The proposed transferee must submit to the Owner, on a form available from the Owner, an income certification so the Owner may determine if the proposed transferee is an Eligible Person or Family. 6. A true and correct copy of the proposed transferee's most recent tax return to the U.S. Internal Revenue Service is attached hereto. 7. A true and correct copy of the purchase and sale or other agreement between the owner and the proposed transferee is attached hereto. 394/015610-0002 _ 96055.03 a07/24/00 -4 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. OWNER: Date signature print name street address signature print name telephone City state zip code PROPOSED TRANSFEREE: Date signature signature print name print name street address telephone City state zip code Developer's Certification Based on the Proposed Transferee's Certificate above, and all documents attached hereto, Developer hereby certifies that: (1) Proposed Transferee is an Eligible Person or Family; and 394/015610-0002 96055.03 a07/24/00 -5- (2) The monthly Purchase Housing Cost to be paid by the Proposed Transferee shall not exceed the monthly Affordable Housing Cost. [Capitalized terms used above are defined in the Agreement to which this certificate is attached.] OWNER: [Name] Date: 394/015610-0002 L _ 96055.03 a07/24/00 -v ATTACHMENT NO. 12 FORM OF NOTICE OF INTENT TO TRANSFER [SEE FOLLOWING PAGES] 394/015610-0002 96055.03 a07/24/00 NOTICE OF INTENT TO TRANSFER NOTICE OF INTENT TO TRANSFER MUST BE DELIVERED TO THE LA QUINTA REDEVELOPMENT AGENCY PRIOR TO PROCEEDING WITH ANY TRANSFER OF THE PROPERTY. From: To: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Project Officer Re: (street address) La Quinta, CA (the "Property") ("Owner") Owner desires to [sell, convey, transfer by inheritance or devise, lease, gift, otherwise transfer] (circle appropriate words) the Property. If the Agency has a program to help locate an Eligible Family, does the Owner want the Agency to help look for an Eligible Person or Family to buy the Property? Yes Ore Date: Signature of Owner (U Day time telephone of Owner Date: Signature of Owner Day time telephone of Owner 394/015610-0002 1 96055.03 a07/24/00 ATTACHMENT NO. 13 FORM OF REQUEST FOR APPROVAL OF PROPOSED TRANSFEREE [SEE FOLLOWING PAGES] 394/015610-0002 96055.03 a07/24/00 UEST FOR APPROVAL OF PROPOSED TRANSFEREE THIS FORM MUST BE DELIVERED TO THE LA QUINTA REDEVELOPMENT AGENCY BEFORE PROCEEDING WITH ANY TRANSFER OF THE PROPERTY THIS FORM MUST BE DELIVERED TO THE OWNER BEFORE PROCEEDING WITH ANY TRANSFER OF THE PROPERTY. La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Project Officer Re: Request for Approval of Proposed Transferee To Whom It May Concern: The undersigned is the owner of real property in La Quinta, located at (the "Property"), which was developed with assistance of the Agency. The Owner now desires to transfer the Property and by this letter is requesting the Agency to approve the proposed transferee. 1. The Proposed Transferee is Names: Current Address: Telephone Number: 2. The terms of the proposed transfer are (a) Sales price of $ . This sales price is based on the lesser of (i) Fair market value; or (ii) The maximum price at which the Purchase Housing Cost of the Proposed Transferee would not exceed Affordable Housing 394/015610-0002 1 96055.03 a07/24/00 Proposed Transferee would not exceed Affordable Housing Cost. The calculation of the Sales Price under this subsection (ii) is illustrated in Attachment No. to the Agreement. IN ORDER TO ANSWER QUESTION 2(b) YOU MUST CALCULATE THE PROPOSED SALES PRICE BASED ON AFFORDABLE HOUSING COST, TAKING INTO CONSIDERATION ALL ITEMS LISTED IN THE DEFINITION OF PURCHASE HOUSING COST. (b) Price of any personal property being sold by the Owner to the proposed transferee: $ (If none, so state) (c) The price of $ to be paid by the proposed transferee for any services of Owner. (If none, so state). (d) All other amounts of money or other consideration, if any, concerning the Property or any other matter to be paid by the proposed transferee to the Owner: $ (if none, so state). (e) Sources of payment of sales price: Sales price $ Cash down payment $ 1 st loan $ 2nd loan $ Other (describe) $ Total $ (f) The financing obtained by the proposed transferee to purchase the Property is as follows: 1 st Loan: Loan amount $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: 394/015610-0002 96055.03 a07/24/00 -2- Balloon payment amount: Points and fees: Lender: Lender's address: 2nd Loan: Loan amount: $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: Lender: Lender's address: Other Loans: (describe, if none, so state) (g) The monthly Purchase Housing Cost to be paid by the proposed transferee: 1 st loan monthly payment: $ 2nd loan monthly payment: $ Other loans monthly payment: $ Taxes and assessments (1/12 of $ yearly taxes and assessments): Insurance (1 / 12 of yearly $ premium): Homeowner's dues: $ 394/015610-0002 96055.03 a07/24/00 -3- Total: $ 3. The proposed transferee represents, warrants and covenants the following: (a) The Property will be the principal residence of the proposed transferee. (b) The combined maximum annual income for all household members of the proposed transferee is $ . (This figure must include al sources of income). (c) The proposed transferee will deliver to the Agency a signed financial statement on a form acceptable to the Agency. 4. The proposed transferee's household consists of the following persons who will reside in the Property: Adults (18 or over) - [name of each]: Minors (under 18) [name of each]: 5. The proposed transferee must submit to the Owner, on a form available from the Owner, an income certification so the Owner may determine if the proposed transferee is an Eligible Person or Family. 6. A true and correct copy of the proposed transferee's most recent tax return to the U.S. Internal Revenue Service is attached hereto. 7. A true and correct copy of the purchase and sale or other agreement between the owner and the proposed transferee is attached hereto. 394/015610-0002 96055.03 a07/24/00 -4- I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. OWNER: Date signature signature print name print name street address telephone City state zip code PROPOSED TRANSFEREE: Date signature print name street address City signature print name telephone state zip code 394/015610-0002 96055.03 a07/24/00 -5- ATTACHMENT NO. 14 FORM OF ASSUMPTION AGREEMENT [SEE FOLLOWING PAGE] 394/015610-0002 96055.03 a07/24/00 Recording Requested By A When Recorded Return To: La Quinta Redevelopment Agency Attn: Executive Director 78-495 Calle Tampico La Quinta, California 92253 SPACE ABUVE PUx KRC:URDP;R'S USE EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103 ASSUMPTION AND ASSIGNMENT AGREEMENT This Assumption and Assignment Agreement ("Agreement"), is made as of by and among the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), ("Seller" or "Assignor") and , ('Buyer" or "Assignee"). WITNESSETH: A. The Agency is the holder of that certain Promissory Note Secured by Deed of Trust (the "Promissory Note") dated , with a Note Amount of Dollars ($ ), made by Seller and payable to the order of Agency. The Promissory Note is secured by that certain Deed of Trust dated , from Seller as trustor to , as trustee, in favor of Agency as beneficiary, and recorded on as Instrument Number in the Official Records of Riverside County, California. (The Promissory Note and the Deed of Trust are sometimes hereinafter referred to collectively as the "Loan Documents".) The Deed of Trust encumbers the real property (the "property") located in Riverside County, California described in Exhibit A attached hereto and made a part hereof. B. Buyer is acquiring the Property from Seller and has met all of the requirements of the Program to qualify therefor. Seller and Buyer desire that in connection with the sale of the Property from Seller to Buyer that Agency, as beneficiary under the Loan Documents, consent to the transfer of the obligation of the Loan Documents from Seller to Buyer. C. Agency will consent to such acquisition provided that (i) Buyer assumes the obligations of Seller under the Loan Documents, as set forth in this Agreement, and that (ii) Seller shall not be released from any liability or obligations under the Loan Documents as further provided herein. NOW THEREFORE, Agency, Seller and Buyer agree as follows: Effective Date. As used in this Agreement, the "Effective Date" shall be 2. Consent by Agency. As of the Effective Date, Agency consents to the transfer of the Property by Assignor/Seller to Assignee/Buyer. Such consent by Agency shall not constitute a consent to any further or subsequent sale, conveyance or transfer by Assignee/Buyer of the Property, or any part thereof, or any interest therein. 394/015610-0002 96055.03 a07/24/00 3. Assumption by Assignee/Buyer. As of the Effective Date, Assignee/Buyer assumes and agrees to be bound by the Loan Documents. Assignee/Buyer shall fully and faithfully pay, perform and discharge, as and when payment, performance and discharge are due, all of the obligations of Assignor/Seller under the Loan Documents, and each of them. 4. No Release of Assignor/Seller. There shall be no release of Assignor/Seller from any liability or obligations arising under the Loan Documents. In the event of any default under the Loan Documents, whether prior to or after the Effective Date, Agency shall have the option, in its sole discretion, to pursue its remedies against Assignor/Seller, Assignee/Buyer or both. 5. Legal Effect. Except as modified by this Agreement, the Loan Documents are unchanged and, as so modified, the Loan Documents shall remain in full force and effect. The Deed of Trust (as modified by this Agreement) shall secure the Promissory Note, all extensions, renewals and modifications thereof, all substitutions therefor, and all other indebtedness and obligations recited in the Deed of Trust. 6. Entire Agreement. This Agreement contains the entire agreement among Agency, Assignor/Seller and Assignee/Buyer with respect to the subject matter hereof and supersedes all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto. This Agreement shall bind and inure to the benefit of Agency, Assignor/Seller and Assignee/Buyer and their respective personal representatives, heirs, successors and assigns. This Agreement shall be governed and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, Agency, Assignee/Seller and Assignee/Buyer have executed this Agreement as of the date first hereinabove written. LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic By: Executive Director ASSIGNOR/SELLER ASSIGNEE/BUYER 394/015610-0002 96055.03 a07/24/00 -2- EXHIBIT A LEGAL DESCRIPTION [TO BE INSERTED AT TIME FORM COMPLETED] 394/015610-0002 96055.03 a07/24/00 -3- ATTACHMENT NO. 15 ADDITIONAL ASSISTANCE AND DEVELOPER'S ADDITIONAL ON -SITE AND OFF - SITE IMPROVEMENT OBLIGATIONS A. ADDITIONAL DEVELOPER OBLIGATIONS AND AGENCY ADDITIONAL ASSISTANCE 1. Phase I Landscaping Upgrade. Developer, within the time set forth in the Schedule of Performance, and pursuant to a landscape plan approved by City, shall upgrade the landscaping existing on Phase I of the Miraflores project. Agency shall reimburse Developer for Developer's costs incurred for this upgrade in an amount not to exceed Twenty -Five Thousand Dollars ($25,000) ("Phase I Landscape Upgrade Assistance"). The disbursement shall be made in accordance with the disbursement procedure outlined below. In the event that Agency or City perform the upgrade work or cause the upgrade work to be performed, Developer shall be relieved from the obligation to perform the work and the Agency shall be relieved from providing the Phase I Landscape Upgrade Assistance or any portion thereof, and the Agency Assistance amount set forth in the text of the Agreement shall be reduced by Twenty -Five Thousand Dollars ($25,000).. 2. Coachella Valley Water District ("CVWD")Wellsite. Agency and Developer agree that Agency shall undertake or cause the completion of the CVWD wellsite that CVWD is requiring for the Miraflores project, at Agency's cost and Developer shall have no obligation therefor. In exchange for Agency assuming this responsibility, the Additional Assistance to Developer that is defined in the Agreement shall be reduced Seventy -Seven Thousand And Twenty -Five Dollars ($77,025), which is the amount Agency would have provided to Developer to assist in the cost of the wellsite completion ("Wellsite Assistance"). The Agency Assistance amount set forth in the text of the Agreement, therefore, shall be reduced by Seventy -Seven Thousand And Twenty -Five Dollars ($77,025). 3. Jefferson Street and 481h Street Median, Monument & Landscaping Improvements. Developer, within the time set forth in the Schedule of Performance, shall undertake and complete Jefferson Street and 481h Street median, monument, and landscaping improvements adjacent to the Miraflores project in accordance with plans and specifications approved by the City. Agency shall reimburse Developer for the Developer s cost incurred for this work in an amount not to exceed Thirty -Nine Thousand Seven Hundred And Fifty Dollars ($39,750) ("Street Assistance"). The disbursement shall be made in accordance with the disbursement procedure outlined below. In the event that Agency or City perform the work or cause the work to be performed, Developer shall be relieved from the obligation to perform the work and the Agency shall be relieved from providing the Street Assistance, and the Agency Assistance amount set forth in the text of the Agreement, therefore, shall be reduced by Thirty -Nine Thousand Seven Hundred Fifty Dollars ($39,750). 394/015610-0002 1 96055.03 a07/24/00 4. Additional Cost Reimbursement. Agency shall reimburse Developer for additional Developer improvement costs incurred for the development of the Restricted Units in an amount not to exceed One Hundred Fifteen Thousand Two Hundred Forty -Eight Dollars ($115,248) ("Additional Cost Reimbursement"). Agency shall disbursement the Additional Cost Reimbursement in accordance with the disbursement procedure outlined below; provided, however, that notwithstanding anything in this Agreement to the contrary, the Additional Cost Reimbursement shall not be made by Agency unless and until Developer has completed the Miraflores project recreation building and swimming pool as part of Phase II of the development and in accordance with plans and specifications approved by the City and Agency. 5. Completion of Site Work on Tract 28601-1. Developer, within in the time set forth in the Schedule of Performance, shall fulfill all of the remaining obligations of the "developer" under City of La Quinta Subdivision Improvement Agreement Tract 28601-1, dated January 19, 1999, including City Engineer Steven D. Speer's Preliminary Punch List Letter dated May 23, 2000. 6. Developer Provision of Improvement Security. Developer shall provide bonds or other improvement security acceptable to the City Public Works Department and in accordance with applicable law for completion of all improvements for which the City or Agency regularly requires such security. 7. Developer Fulfillment of DRE Agreement Obligations. Developer, within the time set forth in the Schedule of Performance, fulfill all of the remaining obligations of "developer" under the California Department of Real Estate Subsidy Agreement. B. DISBURSEMENT PROCEDURES 1. Conditions for Each Disbursement. Prior to each and every disbursement, the following conditions shall be satisfied: a. Application. Developer shall have delivered the Application attached hereto as Exhibit "A" to the Agency Executive Director at least fifteen (15) business days prior to the requested disbursement. The Application shall be completed and certified to be accurate by Developer. The Application shall specifically identify the nature of each expense, by reference to items in the Budget, and shall identify the status of completion of such construction. b. Approval of Application. The Executive Director shall review and approve the Application and accompanying documents, and the Executive Director shall determine that the work is within the scope of the applicable section of the Budget within ten (10) business days. The Executive Director shall advise Developer of any issues within the ten (10) day period and shall pay all uncontested amounts requested by the Application within twenty (20) days of the receipt of the Application. C. Lien Waivers. Agency shall have received appropriate waivers of mechanics' and materialmen's lien rights and stop notice rights executed by all contractors and other 394/015610-0002 _ 96055.03 a07/24/00 -2 persons rendering services or delivering materials covered by the requests made in the Application. d. Frequency. Agency shall not be obligated to make disbursements more frequently than once per month. e. Use of Disbursements. Developer shall use or apply all of the assistance set forth in this Attachment No. 15 solely for reimbursement or payment of the items described in the Application pursuant to which the disbursement was made. 394/015610-0002 _ 96055.03 a07/24/00 _3 EXHIBIT "A" TO ATTACHMENT NO. 15 FORM OF APPLICATION FOR DISBURSEMENT [SEE FOLLOWING PAGES] 394/015610-0002 96055.03 a07/24/00 TO: La Quinta Redevelopment Agency ("Agency") REQUEST NO. "DEVELOPER": PR OIF.C'T MIRAFLORES DATE: Pursuant to Affordable Housing Agreement dated as of (the "Agreement") between Developer and Agency, Developer hereby requests that Agency disburse $ of the financial assistance identified in Attachment No. 15 to the Agreement. . This advance is requested to pay for the expenses set forth below as described in Attachment No. 15. Developer hereby certifies that the amounts shown on the attached schedule and the accompanying invoices represent costs incurred for improvements identified which are eligible for reimbursement at this time in accordance with the provisions of Attachment No. 15 and the Agreement. SUBMITTED BY: REVIEWED AND APPROVED BY: Date: Agency Inspector Date: DISBURSEMENT SCHEDULE Maximum Reimbursement Amount Previously Item of Cost Amount Disbursed Amount Requested this Disbursement 394/015610-0002 5 96055.03 a07/24/00 ATTACHMENT NO. 16 AGENCY BUYER STANDARD FORMS AGENCY DEED OF TRUST SUBORDINATED DEED OF TRUST SINGLE FAMILY RESIDENCE 2. BUYER/AGENCY NOTE 3. RESALE RESTRICTION AND MAINTENANCE AGREEMENT 4. BUYER DISCLOSURE (Copies attached on following pages) 394/015610-0002 96055.03 a07/24/00 BUYER/AGENCY NOTE Moderate Income Buyer NOTICE: This Note requires payment of Shared Appreciation if certain events occur. $8,719 2000 , California La Ouinta California 92253 Property Address City State Zip Code FOR VALUE RECEIVED, the undersigned, hereinafter called "Borrower," hereby jointly and severally promise to pay to the La Quinta Redevelopment Agency, a public body, corporate and politic, hereinafter called "Lender," or to Lender's order, at 78-495 Calle Tampico, La Quinta, California, 92253 or such other place the Lender may hereafter designate from time to time, in lawful money of the United States of America as hereafter set forth and is made pursuant to the Resale and Restriction and Maintenance Agreement of even date herewith (the "Restriction Agreement"), and Second Deed of Trust of even date herewith (the "Agency Deed of Trust"). DEFINITIONS. The following definitions shall apply throughout this Promissory Note: (A) Appraiser. An appraiser who is an MAI member of the American Institute of Real Estate Appraisers or an SREA member of the Society of Real Estate Appraisers (or in case such professional designations are modified or discontinued, the most nearly equivalent successor designations). (B) Original Sales Price. $ (C) Note Amount. $8,719 (D) Pro e . The real property described in Exhibit A attached to this Promissory Note and made a part hereof. (E) Sale or Transfer. Any sale or transfer of any part of the Property or any interest in it, except a sale or transfer which under federal law, would not, by itself, permit Lender to exercise a due on sale or due on encumbrance clause. (F) Sales Price. The price of the Property on which the transfer tax is paid, plus the amount of any existing financing that the purchaser of the Property assumes or takes subject to. (G) This Date. , 2000 (H) Note Term. Thirty (30) years from the date of execution of this Promissory Note. 2. INTEREST RATE. The Note Amount shall bear no interest but a "Shared Appreciation" may accrue in a manner and in an amount provided for in Section 4 and subject to the exception set forth in Section 5 herein. FARSG\LAQUINTA\Catellus\Loan Documents\note.doc 1 07/19/2000 3. SALE TO ELIGIBLE PERSON OR FAMILY AT AFFORDABLE HOUSING COST. Notwithstanding the provisions of Section 4, if the Property is sold during the Affordability Period by the Borrower to a Buyer who is verified by the Lender as a person or family of moderate income as defined by Section 50093 of the California Health and Safety Code, ("Eligible Person or Family") as provided hereinbelow prior to such sale and the Sales Price does not exceed an "Affordable Housing Cost", as defined by Section 50052.5 of the California Health and Safety Code, to such Buyer, then so long as the Borrower is not in default, any prequalified Eligible Person or Family who purchases the Property at an Affordable Housing Cost may assume this Promissory Note, subject to the terms and conditions of the Agency Deed of Trust and the Restriction Agreement upon execution of an assumption agreement in a form provided by the Lender and, thereafter, the payment of the Note Amount is deferred until subsequent sale, transfer or refinancing of the Property as set forth in Section 4 of this Promissory Note. In order to verify the Buyer's status as an Eligible Person or Family, Borrower shall submit to the Lender the identity of the proposed Buyer and adequate information evidencing the income of the proposed Buyer. Said income information shall be submitted together with the notice of proposed sale pursuant to Section 3 of the Restriction Agreement not less than thirty (30) days prior to the proposed sale and shall include original or true copies of pay stubs, income tax records, or other financial documents in order that the Lender may determine and verify the household income of the proposed Buyer to determine Eligible Person or Family status and whether the Property is available to such Buyer at affordable housing cost. If the Lender is unable to verify the Buyer's income as provided herein prior to the proposed sale, then the Buyer's income shall be deemed to exceed the maximum allowable income limit for Eligible Persons and Families and the Shared Appreciation Amount shall be due and payable concurrent with the repayment of the Note Amount. The foregoing provisions will apply to every successive sale during the Affordability Period, the Lender shall, in consideration for the availability of moderate income housing during the Affordability Period, declare the Promissory Note paid in full. 4. TIME OF PAYMENT. The Note Amount and the Shared Appreciation Amount shall become due and be immediately payable to the Lender by the Borrower upon the occurrence of any one of the following events: a. Borrower sells or transfers the Property, including, without limitation, lease, exchange, or other disposition of the Property or any interest therein, whether voluntary or involuntary, except a sale or transfer which under federal law would not, by itself, permit the Lender to exercise a due on sale or due on encumbrance clause; but excluding any permitted transfer made pursuant to Section 3 of this Promissory Note; b. Borrower refinances the lien of the Agency Deed of Trust or any lien or encumbrance to which the Agency Deed of Trust is subordinate for a loan amount in excess of the then current loan balance secured by such lien or encumbrance; C. Borrower fails to occupy the Property as Borrower's principal personal residence pursuant to Section 7(a) of the Restriction Agreement; d. Notwithstanding the above, the following transfers shall not require payment of the Note Amount or the Appreciation Amount. The following Transfers are not considered Prohibited Transfers: (i) transfer by gift, devise, or inheritance to the Owner's spouse or natural or adopted children; (ii) transfer of title by an Owner's death to a surviving joint tenant, tenant by entireties, or a surviving spouse of community property; (iii) transfer of title to a spouse as part of divorce or dissolution proceedings; or (iv) transfer of title or an interest in the Residence to the spouse in conjunction with marriage; providing, however: (a) that these covenants shall continue to run with the title to the Residence following said Transfers; and (b) that an instrument be executed, acknowledged, and recorded by the transferee containing the following covenant: "This Residence is subject to the Resale Restriction Agreement (the "Agreement") and transferee, on behalf of transferee, and FARSG\LAQU[NTA\Cate]1us\Loan Documents\note.doc 2 07/19/2000 transferee's successors and assigns, covenants, and agrees to be bound by and perform pursuant to the Agreement, and to include in any further transfer of the Residence the covenant required by Section 8(b) of the Agreement." 5. NOTE PAYMENT AND SHARED APPRECIATION. If an event under Paragraph 4 above triggers the need to pay the Note Amount and the Appreciation Amount during the first twenty (20) years of this Promissory Note, the Borrower shall pay the full Note Amount and a "Shared Appreciation Amount" to Lender equal to twenty-five percent (25%) of the "Appreciation Amount". Thereafter, the Note Amount shall be reduced annually by ten percent (10%) until the Note Amount is reduced to Zero Dollars ($0.00) in the thirtieth (30th) year of this Promissory Note; and the percentage of the Shared Appreciation Amount shall be reduced annually on the anniversary of this Promissory Note by ten percent (10616) of the Shared Appreciation percentage until the percentage of the Shared Appreciation is reduced to zero percent (0%) in the thirtieth (30th) year of this Promissory Note. For the purposes of this Section 5, "Appreciation Amount" shall mean the difference between the Original Sales Price of the Property paid by the Borrower and one of the following amounts, as applicable: (i) in the event of a sale of the Property, the amount received by the Borrower as the sales price of the Property excluding amounts received but paid out for any closing costs and commissions paid by Borrower and excluding the "Value of Capital Improvements"; (ii) in the event of a transfer of the Property other than a sale, or in the event of a default of the Resale Restriction Agreement or this Promissory Note, or upon prepayment of this Promissory Note prior to the due date, the "Fair Market Value" of the Property, less the Value of Capital Improvements; or (iii) in the event a creditor acquires title to the Property through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the amount paid for the Property at the creditor's sale of the Property. "Fair Market Value" shall be determined by an appraisal of the Property as provided herein, provided that nothing herein shall preclude the Borrower and the Lender from establishing the Fair Market Value of the Property by mutual agreement in lieu of an appraisal. If it is necessary to determine the Fair Market Value of the Property, it shall be determined by a real estate appraiser mutually agreed upon by the Lender and the beneficiary of the first deed of trust which encumbers the Property (the "First Lender"). The appraisal shall have been previously approved by the Federal National Mortgage Association ("FNMA") or the Federal Housing Administration and place on their list of approved single family housing appraisers. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three (3) month period. The cost of the appraisal shall be borne by the Lender. In the event the Lender and the First Lender cannot agree on an appraiser, the Fair ' Market Value of the Property will be determined by taking the average of two (2) appraisals, one prepared by an appraiser chosen by the First Lender, and one prepared by an appraiser chosen by the Lender, both of whom shall have been previously approved by FNMA. In the event that the Borrower has made capital improvements to the Property which have improved the value of the Property, or if damage or deferred maintenance has occurred while the Borrower owned the Property which decreased the value of the Property, the appraisal shall specifically ascribe a value to these adjustment factors and state what the fair market value of the Property would be without such adjustments. FARS&LAQUINTA\Catellus\Loan Documents\note.doc 3 07/19/2000 "Value of Capital Improvements" shall mean the value of substantial structural or permanent fixed improvements which cannot be removed without substantial damage to the Property or substantial or total loss of value of said improvements. No such valuation shall be made except for improvements: (i) made or installed by or under the direction of the Borrower; and (ii) with an initial cost of Two Thousand Dollars ($2,000.00) or more. The value of such improvements shall be calculated as the cost of the improvements as originally incurred by the Borrower and as evidenced by receipts or other documentation provided to the Lender. 6. SECURITY FOR NOTE. This Promissory Note shall be secured by the Agency Deed of Trust encumbering the Property executed by Borrower as Trustor in favor of Lender as Trustee. 7. PREPAYMENT. Borrower shall have the right at any time to repay this Promissory Note, in full or in part. In the event of prepayment in full, the amount payable in full by Borrower shall be the Note Amount with the Shared Appreciation Amount. 8. JOINT AND SEVERAL. The undersigned, if more than one, shall be jointly and severally liable hereunder. 9. ATTORNEYS FEES. if any default is made hereunder, Borrower further promises to pay reasonable attorney fees, costs, and expenses incurred by the Lender in connection with any such default or any other action or other proceeding brought to enforce any of the provisions of this Promissory Note. The Lender's right to such fees shall not be limited to or by its representation by staff counsel, and such representation shall be valued at customary and reasonable rates for private sector legal services. 10. TIME. Time is of the essence herein. 11. AMENDMENTS. This Promissory Note may not be modified or amended except by an instrument in writing expressing such intention executed by the parties sought to be bound thereby, which writing must be firmly attached to this Promissory Note so as to become a permanent part thereof. 12. SEVERABILITY. The covenants of this Promissory Note are severable. Invalidation of any covenant or any part thereof by law, judgment, or court order shall not affect any other covenant. 13. PLACE OF PAYMENT. Borrower will make payment of all amounts due to Lender under this Promissory Note to Lender at 78-495 Calle Tampico, La Quinta, California 92253 or such other address as Lender may hereafter from time to time designate in writing to Borrower. 14. BORROWER'S WAIVERS. Borrower waives any rights to require the Lender to do certain things. Those things are: (A) to demand payment of amounts due (known as "presentment"); (B) to give notice that amounts due have not been paid (known as "notice of dishonor"); (C) to obtain an official certification of nonpayment (known as a "protest"). 15. GIVING OF NOTICES. Any notice that must be given to Borrower under this Promissory Note will be given by delivering it or by mailing it by certified mail addressed to Borrower at the Property Address above. A notice will be delivered or mailed to Borrower at a different address if Borrower gives the Lender written notice of Borrower's different address. Any notice that must be given to the Lender under this Promissory Note will be given by mailing it certified mail to the Lender at the address stated in Section 13 above. A notice will be mailed to the Lender at a different address if Borrower is given written notice of that different address. FARSG\LAQUINTA\Cate11w\Loan Documents\note.doc 4 07/19/2000 16. SUCCESSORS. The covenants and agreements contained in this Promissory Note shall bind, and the rights hereunder shall inure to, the respective successors and assigns of Borrower to Lender. DATED: DATED: "BORROWER" PRINTED NAME: ME PRINTED NAME: FASG\LAQUINTA\Cate11us\Loan Documents\note.doc 5 07/19/2000 EXHIBIT A REAL PROPERTY DESCRIPTION F.\RSG\LAQUINTA\Catellus\Loan Documents\note.doc 6 07/19/2000 AGENCY DEED OF TRUST SUBORDINATED DEED OF TRUST SINGLE-FAMILY RESIDENCE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Executive Director C This document is exempt from payment of a recording fee pursuant to Government Code Section 6103. LA QUINTA REDEVELOPMENT AGENCY By: Executive Director Dated: _ , 2000 SUBORDINATED DEED OF TRUST AND ASSIGNMENT OF RENTS THIS SUBORDINATED DEED OF TRUST AND ASSIGNMENT OF RENTS ("Subordinated Deed of Trust") is made as of the day of , 2000 by and between (the "Trustor"), whose address is La Quinta, California 92253, First American Title Insurance Company (the "Trustee"), whose address is 3625 14th Street, Riverside, California 92501, and the La Quinta Redevelopment Agency, a public body corporate and politic (the "Beneficiary"), whose address is 78-495 Calle Tampico, La Quinta, California 92253. 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, the property located in the County of Riverside, State of California, that is described in Attachment 1, attached hereto and by this reference incorporated herein (the "Property'). TOGETHER WITH all rents, issues, profits, royalties, income, and other benefits derived from the Property (collectively, the "rents"), provided that so long as Trustor is not in default hereunder, it shall be permitted to collect rents and operate the Property, as hereinafter defined; TOGETHER WITH all interests, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents; F.\RSG\LAQUINTA\Cate11us\L.oan Documents\deed of trust.doc 1 07/19/2000 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 now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property, including, without limitations, all fixtures, attachments, appliances, furnishings, equipment and machinery (whether fixed or movable), and other articles (including, in each instance, improvements, restorations, replacements, repairs, additions, accessions, or substitutions thereto or therefor); TOGETHER WITH all leasehold estate, right, title, and interest of Trustor in and to all leases or subleases covering the Property or any portion thereof now or hereafter existing or entered into, and all right, title, and interest of Trustor thereunder, including, without limitations, all cash or security deposits, advance rentals, and deposits or payments of similar nature; TOGETHER WITH all right, title, and interest of Trustor in and to all options to purchase or lease the Property or any portion thereof or interest therein, and any greater estate in the Property owned or hereafter acquired; 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, opened or proposed, adjoining the Property, and any and all sidewalks, alleys, and strips and gores of land adjacent to or used in connection with the Property; TOGETHER WITH all the 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 for 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; All of the foregoing, together with the Property, is herein referred to as the "Security". FOR THE PURPOSE OF SECURING: (a) Payment of any amount owed by Trustor to Beneficiary pursuant to the Buyer/Agency Note (the "Note"); (b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Subordinated Deed of Trust following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period and upon five (5) business days notice to the Trustor, with interest thereon as provided herein; (c) Payment of such additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assignees, by Beneficiary, when evidenced by a promissory note or notes or other documents reciting that they are secured by this Subordinated Deed of Trust; and (d) Performance of every obligation, covenant, or agreement of Trustor referenced in the Resale Restriction and Maintenance Agreement, and any amendments or modifications made thereto. F:\RSG\LAQUINTA\Cate]1us\Loan Documents\deed of uust.doc 2 07/19/2000 ARTICLE 1 DEFINITIONS 1. "Note" means that Buyer/Agency Note entered into by the Trustor and the Beneficiary hereof, dated , 2000 and extensions and renewals thereof in the principal sum of U.S. $8,719 advanced in accordance and herewith to protect the security of this Subordinated Deed of Trust. 2. The term "Expiration Date" means the date upon which obligations, the performance of which are secured by this Subordinated Deed of Trust, have been satisfied, but in no event later than the termination date of the Redevelopment Plan. 3. "Mortgage" means any permanent or long-term loan (other than a loan by an entity related to or controlled by the Trustor), or any other financing device (including without limitations deeds of trust) the proceeds of which are used to purchase the Property, which loan is secured by a security financing interest in the Trustor's interest in the Property or the Improvements. 4. "Property" means the real property described in Attachment 1, together with all additions, improvements (including the Improvements), restorations, and replacements thereof. "Security" is defined in the granting clauses hereof. 6. "Standards" means those standards of construction and operation characteristics of a residence of size, character, and quality similar to the Property. 7. "Trustor" means , and its transferees and successors in interest. Where an obligation is created herein binding upon Trustor, the obligation shall also apply to and bind any transferees or successors in interest. Where the terms of the Subordinated 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. ARTICLE II MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY; CERTIFICATE OF COMPLETION UPON PAYMENT Section 2.1 Maintenance and Modification of the Property by Trustor. The Trustor agrees that at all times prior to the Expiration Date, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Property or cause the Property to be maintained, preserved, kept in a condition, and used in a manner consistent with substantially similar single family homes in size, character and quality to the Property and consisting only of those uses allowed by the Resale and Restriction Agreement. 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 Property. Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for materials and services furnished in connection with the Security; diligently file or procure the filing of a valid notice of completion upon completion of construction of any part of the Security; diligently file or procure the filing of a 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 or any part thereof. FARSG\LAQUINTA\Cate11us\Loan Documents\deed of trust.doc 3 07/19/2000 Section 2.2 Granting of Easements. Trustor may grant easements, licenses, rights -of -way, or other similar rights or privileges in the nature of easements with respect to any property or rights included in the Security with the prior written approval of the Beneficiary. ARTICLE III TAXES AND INSURANCE; ADVANCES Section 3.1 Taxes, Other Governmental Charges, and Utility Charges. Trustor shall pay, or cause to be paid, prior to 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 in accordance with generally accepted accounting principles. With respect to special assessments or other similar governmental charges, Trustor shall pay such amount in whole or in installments over a period of years. 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 Trustor of such failure to pay and the Trustor fails to fully pay any such item within seven (7) business days of the earlier of the receipt or mailing 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 under Section 1(2) of Article XV of the California Constitution, shall become an additional obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor hereby agrees to pay all such amounts. Section 3.2 Provisions Respecting Insurance. (a) Trustor agrees to provide insurance covering one hundred percent (100%) of the replacement cost of all insurable items within the Property during the course of construction and following completion in the event of fire, lightning, debris removal, windstorm, flood, vandalism, malicious mischief, theft, mysterious disappearance and hazards, casualties and contingencies as are normally and usually covered by all-risk policies in effect in the locality where the Property is situated. (b) Trustor agrees to carry or cause to be carried: (i) comprehensive general liability insurance with respect to the Property with limits of not less than One Hundred Thousand Dollars ($100,000) each occurrence combined single -limit bodily injury and property damage and mortgage insurance, if any. Coverage's thereunder shall include contractual liability, personal injury, owners' and contractors' protection, garage liability, and mortgage payment insurance. (c) All such insurance policies and coverage's (i) shall be maintained at Trustor's sole cost and expense, (ii) shall be with insurers of recognized responsibility, and in form and substance satisfactory to the Beneficiary, (iii) shall name Beneficiary as additional insured, and (iv) shall contain a provision to the effect that the insured shall not cancel the policy or modify it materially and adversely to the interests of Beneficiary without first giving at least thirty (30) days' prior written notice thereof. 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 Expiration Date. F:\RSG\LAQUWTA\Cate11us\L.oan Documents\deed of trust.doc 4 07/19/2000 Section 3.3 Advances. In the event the Trustor shall fail to maintain the full insurance coverage required by this Subordinated Deed of Trust, or shall fail to keep the Property in good repair and operating condition, the Beneficiary may (but shall be under no obligation to) take out the required policies of insurance and pay the premium on the same and, provided that the Beneficiary provides five (5) business days' notice to the Trustor 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 thereby, which amounts the Trustor agrees to pay on demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the maximum rate permitted by Section 1(2) of Article XV of the California Constitution. ARTICLE IV DAMAGE, DESTRUCTION OR CONDEMNATION Section 4.1 Damage and Destruction. If, prior to the Expiration Date, the Property or any portion thereof is destroyed (in whole or in part), or is damaged by fire or other casualty, the Trustor shall (a) cause any insurance proceeds arising from insurance referred to in Section 3.2 hereof and any other coverage acquired by the Trustor to be used to promptly rebuild and replace the Property; and (b) repair and replace the Property as necessary to bring the Property into conformity with the Standards, provided that such covenants shall be subordinated to the provisions of all senior obligations to which this Subordinated Deed of Trust is subordinate. There shall be no abatement in, and Trustor shall be obligated to continue to pay, the amounts payable under this Subordinated Deed of Trust. Section 4.2 Condemnation. Subject to the provisions of senior obligations to which this Subordinated Deed of Trust is subordinate, if title to or any interest in or the temporary use of the Property or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any persons, firm or corporation acting under governmental authority, including any proceeding or purchase in lieu thereof, the proceeds as a result of such taking shall be paid as provided by the law of the State of California to all persons or entities as their interests appear of record. ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE TRUSTOR Section 5.1 Defense of Title. The Trustor covenants that it is lawfully seized and possessed of title in fee simple interest to the Property, that it has good right to sell, convey, or otherwise transfer or encumber the same, and that the Trustor, for itself and its successors and assigns, warrants and will forever defend the right and title to the foregoing described and conveyed property unto the Beneficiary, its successors and assigns, against the claims of all persons whomsoever, excepting only encumbrances approved by the Beneficiary. Section 5.2 Inspection of Property. The Trustor covenants and agrees that at any and all reasonable times and upon reasonable 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 Property. FARSG\LAQUINTA\Cate11us\Loan Docummts\deed of trust.doc 5 07/19/2000 ARTICLE VI AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES; PAYMENT OF THE AGENCY ASSISTANCE AMOUNT; PAYMENT OF THE PURCHASE PRICE Section 6.1 Other Agreements Affecting Property. The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding on it under any agreement of any nature whatsoever now or hereafter involving or affecting the Property or any part thereof. Section 6.2 Further Assurances; After Acquired Property. At any time, and from time to time, upon request by the Beneficiary, the Trustor shall make, execute and deliver, or cause to be made, executed and delivered, to the Beneficiary and, where appropriate, cause to be recorded and/or filed, and from time to time thereafter to be recorded and/or filed, and from time to time deemed desirable by the Beneficiary, any and all such other and further deeds of trust, security agreements, financing statements respecting personal property, instruments of further assurance, certificates, and other documents as may, in the opinion of the Beneficiary, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve, (a) the obligations of the Trustor under this Subordinated Deed of Trust; and (b) the lien of this Subordinated Deed of Trust as a lien prior to all liens except those obligations which shall be senior obligations pursuant to the provisions of this Subordinated Deed of Trust. Upon any failure any and all such deeds of trust, security agreements, instruments, certificates, and documents for and in the name of the Trustor, and the Trustor hereby irrevocably appoints the Beneficiary, the agent, and attorney -in -fact of the Trustor to do so. The lien hereof shall automatically attach, without further act, to all after -acquired property deemed to be part of the Security as defined herein. Section 6.3 Agreement to Pay Attorney's Fees and Expenses. In the event of an Event of Default 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 Subordinated 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 Subordinated Deed of Trust, and shall bear interest from the date such expenses are incurred at the maximum rate permitted by Section 1(2) of Article XV of the California Constitution. Section 6.4 Payment of Amounts Due Beneficiary. The Trustor shall pay to the Beneficiary any amounts due the Beneficiary in the amount(s) and by the time(s) set out in the Note. The failure to pay such amounts constitutes an Event of Default authorizing and permitting the Beneficiary to exercise the remedies set forth in Article VII hereof. Section 6.5 Subrogation; Payment of Claims. Provided that the Beneficiary gives notice of at least five (5) business days to the Trustor, the Beneficiary shall be subrogated to the claims and liens of all parties whose claims or liens are discharged or paid by the Beneficiary pursuant to the provisions hereof. If permitted in the Mortgage, the Beneficiary shall have the right to pay and discharge the obligations secured by the Mortgage. Section 6.6 Use and Operation of the Property. The Trustor agrees and covenants to use and operate the Property (and, in case of a transfer of a portion of the Property, the transferee shall operate such portion of the Property) in full compliance with the Note until the Expiration Date. F:\RSG\LAQUINTATate11us\Loan Documents\deed of trust.doc 6 07/19/2000 Section 6.7 Transfer. No sale, transfer, lease, pledge, encumbrance, creation of a security interest in or other hypothecation of the Security shall relieve or release the Trustor from primary liability under this Subordinated Deed of Trust or the Note. Section 6.8 Subordination. The provisions of the Note and this Subordinated Deed of Trust shall be subordinate to any first lien on the Property ("First Lien") held by an institutional lender or investor (the "Lender") and shall not impair the rights of Lender, or Lender's assignee or successor in interest, to exercise its remedies under the First Lien in the event of default under the First Lien by Trustor. Such remedies under the First Lien include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, the Note and this Subordinated Deed of Trust shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of the First Lien acquires title to the Property pursuant to a deed or assignment in lieu of foreclosure, the Note and this Subordinated Deed of Trust shall automatically terminate upon such acquisition of title, provided that (i) the Beneficiary has been given written notice of a default under the First Lien, and (ii) the Beneficiary shall not have cured the default under such First Lien within the 30-day period provided in such notice sent to the Beneficiary. Trustor agrees it shall instruct the escrow holder for the acquisition of the Property by the Trustor that the order of recording in the escrow for the purchase of the Property by the Trustor shall occur as follows: (1) the First Lien; (2) this Subordinated Deed of Trust; and (3) the Declaration. The Restrictions will automatically terminate if title to the mortgaged property is transferred by foreclosure or deed in lieu of foreclosure, or if the mortgage is assigned to the Secretary of Housing and Urban Development ("HUD"). ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default Defined. The occurrence of any failure of the Trustor to perform under this Subordinated Deed of Trust, and the continuation of said failure for a period of thirty (30) business days as to monetary obligations and ninety (90) business days as to non -monetary obligations, after written notice specifying such failure and requesting that it be remedied (such notice being referred to herein a "notice of default") shall have been given to Trustor from the Beneficiary, shall be an Event of Default under this Subordinated Deed of Trust. Section 7.2 Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then the entire indebtedness secured hereby shall, at the option of the Beneficiary, immediately become due and payable without notice or demand which are hereby expressly waived, 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 Property and take possession thereof (or any part thereof) any of the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to increase the income therefrom or protect the Security hereof and, with or without taking possession of the Property, sue for or otherwise collect the rents, issues and profits thereof, including those past due and unpaid, and apply the same, less costs and expenses of operation and F.\RSG\LAQUINTA\Cate11us\Loan Documents\deed of trust.doc / 07/19/2000 collection, including attorneys' fees, upon any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Property, the collection of such rents, issues and profits, and the application thereof, as aforesaid, shall not cure or waive any Event of Default or notice of Event of Default hereunder or invalidate any act done in response to such Event of Default or pursuant to such notice of Event of Default and, notwithstanding the continuance in possession of the Property or the collection, receipt, and application of rents, issues or profits, Beneficiary shall be entitled to exercise every right provided for in this Subordinated Deed of Trust or by law upon occurrence of any Event of Default, including the right to exercise the power of sale. Trustor requests that a copy of any notice of default and a copy of any Notice of Sale hereunder be mailed to him at his address herein given; (b) Commence an action to foreclose this Subordinated 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 Property to be sold, which notice Trustee or Beneficiary shall cause to be duly filed for record in the official records of the county in which the Property is located; or (d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to the Property, including 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 notify Trustee and shall deposit with Trustee this Subordinated Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the Agency Assisted Amount and/or the Purchase Price 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 Subordinated 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 after notice of sale having been given as required by law, sell the Property, at the time and place of sale fixed by it in said notice of sale, either as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine, at public auction to the highest bidder; for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to 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 of any matters or 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. (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 of. (i) all other sums then secured hereby; and (ii) the remainder, if any, to the person or persons legally entitled thereto. (c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from 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. F:\RSG\LAQUINTA\CateII s\Loan DocumentsWeed of trust.doc 8 07/19/2000 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 of Trustor or anyone claiming under Security, and without regard to the then value of the Property 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 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 Property, 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 Subordinated Deed of Trust is intended to be exclusive of another 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 Default shall exhaust or impair any such right, power or remedy, or shall be construed to be a waiver of any such Default or acquiescence therein; and every right, power and remedy given by this Subordinated 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 of 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, powers or remedies consequent on any breach or Event of Default by the Trustor. (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 herein; (iv) releases any part of the Security from the lien of this Subordinated Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements of this Subordinated Deed of Trust; (v) consents to the filing of any map, plat or replat affecting the Security; (vi) consents to the granting of any easement or other right affecting the Security; or (vii) 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 Subordinated 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 upon the occurrence of the 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 Subordinated Deed of Trust be altered thereby. In the event of the sale or transfer by operation of law or otherwise of all or any part of the Property, the Beneficiary, without notice, is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Security (or a part thereof) or the indebtedness secured hereby, or with reference to any of the terms, covenants, conditions or agreement hereof, as fully and to the same extent as it might deal with the Trustor and without in any way releasing or discharging any liabilities, obligations or undertakings of the Trustor. Section 7.8 Suits to Protect the Security. The Beneficiary shall have power (upon ninety (90) days notice to the Trustor) to (a) institute and maintain such suits and proceedings as it may deem expedient to present any impairment of the Security (and the rights of the Beneficiary as secured by this Subordinated Deed of Trust ) by any acts which may be unlawful or any violation of this Subordinated Deed of Trust; (b) preserve F.\RSG\LAQUINTA1CatellusU.oan DocumentsWeed of trust.doc 9 07/19/2000 or protect its interest (as described in this Subordinated Deed of Trust) in the Security and in the rents, issues, profits and revenues arising therefor; 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 interests 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 for the entire amount due and payable by the Trustor under this Subordinated Deed of Trust at the date of the institution of such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date. ARTICLE VIII MISCELLANEOUS Section 8.1 Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought. Section 8.2 Reconveyance by Trustee. Notwithstanding the obligations surviving the payment of amounts owed the Beneficiary, if any, Trustor, upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Subordinated Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey to Trustor, or to the person or persons legally entitled thereto, without warranty, any portion of the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in any reconveyance may be described as "the person or persons legally entitled thereto." Section 8.3 Notices. Whenever Beneficiary, Trustor or Trustee shall desire to give or serve any notice, demand, request or other communication with respect to this Subordinated Deed of Trust, each such notice, demand, request, or other communication shall be in writing and shall be effective only if the same is delivered by personal service or mailed by registered or certified mail, postage prepaid, return receipts requested, or by telecopier or facsimile transmission, addressed to the address set forth in the first paragraph of this Subordinated Deed of Trust. Any party may at any time change its address for such notices by delivering or mailing to the other parties hereto, as aforesaid, a notice of such change. Section 8.4 Acceptance by Trustee. Trustee accepts this Trust when this Subordinated Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Section 8.5 Captions. The captions or heading at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Subordinated Deed of Trust. Section 8.6 Invalidityof Certain Provisions. Every provision of this Subordinated Deed of Trust is intended to be severable. In the event any term of provision hereof is declared to be illegal or invalid for any reason whatsoever by a court 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 Subordinated 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, F \RSG\L.AQUINTA\Cate11us\Loan DocumentsWeed of nust.doc 10 07/19/2000 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 on and applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Subordinated Deed of Trust. Section 8.7 No Merger. If title to the Property shall become vested in the Beneficiary, this Subordinated Deed of Trust and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger and, in such event, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary under this Subordinated Deed of Trust. In addition, upon foreclosure under this Subordinated Deed of Trust pursuant to the provisions hereof, any leases or subleases then existing and affecting all or any portion of the Security shall not be destroyed or terminated by application of the law of merger or as a matter of law or as a result of such foreclosure unless Beneficiary or any purchaser at any such foreclosure shall so elect. No act by or on behalf of Beneficiary or any such purchaser shall constitute a termination of any lease or sublease unless Beneficiary or such purchaser shall give written notice of termination to such tenant or subtenant. Section 8.8 Governing Law. This Subordinated Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. Section 8.9 Gender and Number. In this Subordinated 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. IN WITNESS WHEREOF, Trustor has executed this Subordinated Deed of Trust Agreement as of the date first written above. Dated: TRUSTOR LON F:\RSG\LAQUINTA\Cate11us\Loan DocumentsWeed of twst.doc 11 07/19/2000 ATTACHMENT I LEGAL DESCRIPTION OF PROPERTY F:\RSG\LAQUINTA\Catellus\Loan Documents\deed of trust.doc 12 07/19/2000 State of California) County of ) On , before me, personally appeared , ❑ personally known to me or ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Signature: Print Name Commission Expires State of California) County of On , before me, personally appeared , ❑ personally known to me or ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Signature: Print Name Commission Expires CAPACITY CLAIMED BY SIGNER ❑ INDIVIDUALS ❑ CORPORATE OFFICER(S) ❑ PARTNERS ❑ ATTORNEY -IN -FACT ❑ TRUSTEE(S) ❑ SUBSCRIBING WITNESS ❑ GUARDIAN/CONSERVATOR ❑ OTHER: SIGNER IS REPRESENTING: (Name Of Persons) Or Entities) CAPACITY CLAIMED BY SIGNER ❑ INDIVIDUALS ❑ CORPORATE OFFICER(S) ❑ PARTNERS ❑ ATTORNEY -IN -FACT ❑ TRUSTEE(S) ❑ SUBSCRIBING WITNESS ❑ GUARDIAN/CONSERVATOR ❑ OTHER: SIGNER IS REPRESENTING: (Name Of Person(s) Or Entities) F.\RSG\LAQUINTA\Cate11us\Loan Documents\deed of trust doc 13 07/19/2000 RESALE RESTRICTION AND MAINTENANCE AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Executive Director This document is exempt from payment of a recording fee pursuant to Government Code Section 6103. RESALE RESTRICTION AND MAINTENANCE AGREEMENT Section 1. Parties. This Resale Restriction Agreement (the "Agreement") is entered into as of this day of , 2000, by and between the La Quinta Redevelopment Agency, a public body, corporate and politic (the "Agency") and "Owner"). _ (the Section 2. Definitions. The following defined terms have the meaning indicated in Section 2. Exhibits to this Agreement are hereby incorporated by reference. All recordings required by this Agreement shall be in the official records where deeds are recorded in the county where the land described on Exhibit A is located. (a) "Affordability Period" means the period commencing with the initial sale of the Residence (as defined below) and ending thirty (30) years from the date of recordation of this Resale Restriction Agreement. (b) "Aaenc " means the La Quinta Redevelopment Agency, a public body, corporate and politic. (c) "Agreement" means this Resale Restriction Agreement. (d) "Appraiser" means an appraiser who is an MAI member of the American Institute of Real Estate Appraisers or an SREA member of the Society of Real Estate Appraisers (or in case such professional designations are modified or discontinued, the most nearly equivalent successor designations). (e) "Business Day" means a day other than a Saturday or Sunday on which banks located in the county in which the Residence is located are not required or authorized to remain closed. (f) "BMR Unit" means the Residence which has been designated as a below -market rate unit by Section 4 of this Agreement. (g) The term "including" or variants thereof shall mean "including without limitation." (h) "Owner" means (i) "Prohibited Transfer" has the meaning stated in Section 8. FARSG\LAQUINTA\Catellus\Loan Documents\resale restrictions.doc 1 07/19/2000 0) "Residence" means the real property described on Exhibit A, including all improvements and appurtenances. (k) "Transfer" has the meaning stated in Section 6. (1) "Transferee" means any owner of the Residence other than the Owner. Section 3. Recitals. The following recitals of facts are a material part of this Agreement. (a) WHEREAS, the Agency has developed a program to provide housing opportunities to moderate income purchasers of homes to be offered for sale at prices which are below those otherwise prevailing in the market; and (b) WHEREAS, the intent of the Agency is to preserve the affordability of the homes for persons of moderate income as more particularly provided herein. (c) NOW THEREFORE, in consideration of the benefits received by the Owner, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be bound, the Owner and the Agency agree as follows: Section 4. The Residence. The Residence which is the subject of this Agreement has a street address of , La Quinta, California 92253, and its legal description is set forth on "Exhibit "A" attached to this Agreement and incorporated herein. The Residence is hereby designated as a below -market rate unit (the "BMR Unit") and shall be subject to the terms and conditions herein set forth. Section 5. Owner Representations and Warranties. The Owner represents and warrants to the Agency that the financial and other information previously provided to the Agency by the Owner for the purpose of qualifying to purchase the Residence was true and correct at the time it was given and remains true and correct as of the date of this Agreement. Section 6. Affordable Housins. The Property is to be used for housing of a household paying not more than "Affordable Housing Cost" for the Property, and having an income not greater than one hundred twenty percent (120%) of area -wide median income. The Property has been made available, in part, with financial assistance provided by the Agency. In consideration of its participation, the Agency requires that the dwelling units on the Property be maintained as an affordable housing resource until thirty (30) years from the date this Agreement is recorded. This Agreement shall be construed as consistent and not in conflict to the greatest extent feasible. In the event of conflict involving the Agency and the Buyer, the Agreement shall control. Section 7. Affordability Covenants. Owner agrees for itself, and its successors and assigns, and every successor to Owner's interest in the Property, or any part thereof that until thirty (30) years from the date this Agreement is recorded (the "Expiration Date"): (a) The Property shall only be owned and occupied by Owners or by households which, as of the time of purchase of the Property, have an income which does not exceed one hundred twenty percent (120%) of the Riverside County monthly median income, (as determined by the United States Department of Housing and Urban Development (the "Median Income") which households shall, for purposes of this Agreement, constitute "Qualifying Income Households". F:\RSG\LAQUINTA\Catellus\Loan Documents\resale restrictionsAm L 07/19/2000 (b) The Property may be sold at an Affordable Housing Cost (as defined below) to Qualifying Income Households. Affordable Housing Cost shall mean, as to each Qualifying Income Household, that purchase price which would result in monthly housing payments which do not exceed an amount under any currently prevailing conventional home mortgage lending rates applied by any reputable institutional home mortgage lender, or the lending rates of any government -subsidized or special mortgage program for which such person or family qualifies and has obtained a first trust deed loan, where not less than twenty-eight percent (28%) of the gross income of the household, nor more than thirty-five percent (35%) of one hundred ten percent (110%) of area median income adjusted for family size appropriate for the Restricted Unit, or if the gross income of the household for households exceeds one hundred ten percent (110%), not more than one hundred twenty percent (120%) of the area median income adjusted for family size, as more particularly set forth in Section 50052 of the California Health and Safety Code. (c) The covenant contained in this Section 7 shall run with the land and shall automatically terminate and be of no further force or effect upon the Expiration Date. (d) This Agreement shall be subordinate to the lien of a first deed of trust against the Property, and shall not impair the rights of any institution or lender which is the maker of a loan secured by such first deed of trust, or such lender's assignee or successor in interest, to exercise its remedies under the deed of trust in the event of default under the first deed of trust by the Owner. Such remedies under the first deed of trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, the affordability covenants and the transfer restrictions set forth in this Agreement shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such deed of trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure, This Agreement shall automatically terminate upon such acquisition of title, provided that (i) the Agency has been given written notice of a default under such first deed of trust; and (ii) the Agency shall not have cured the default under such first deed of trust within the thirty (30) day period provided in such notice sent to the Agency. Notwithstanding any other provision hereof, the nondiscrimination covenants and the maintenance requirements set forth in this Agreement shall remain in full force and effect as to the Property and any transferee. Section 8. Transfer by Owner. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Residence in violation of this Agreement shall be subject to the terms of this Section 8 of this Agreement. (a) "Transfer" means any voluntary or involuntary sale, assignment or transfer of ownership of or any interest in the Residence, including a fee simple interest, tenancy in common, joint tenancy, community property tenancy by the entireties, life estate, or other limited estate, leasehold interest or any rental of the Residence, or any interest evidenced by a land contract. Any Transfer without satisfaction of the conditions of this Agreement shall be deemed a "Prohibited Transfer." (b) The following Transfers are not considered Prohibited Transfer: (i) transfer by gift, devise, or inheritance to the Owner's spouse or natural or adopted children; (ii) transfer of title by an Owner's death to a surviving joint tenant, tenant by entireties, or a surviving spouse of community property; (iii) transfer of title to a spouse as part of divorce or dissolution proceedings; or (iv) transfer of title or an interest in the Residence to the spouse in conjunction with marriage; providing, however: (a) that these covenants shall continue to run with the title to the Residence following said Transfers; and (b) that an instrument be executed, acknowledged and recorded by the transferee containing the following covenant: "This Residence is subject to the Resale Restriction Agreement (the "Agreement") and transferee, on behalf of transferee, and transferee's successors and assigns, covenants and agrees to be bound by and perform the Agreement, and to include in any further Transfer of the Residence the covenant required by Section 8(b) of the Agreement." A transferee who satisfies the conditions of this Section 8(b) shall then be the Owner. F:URSG\LAQUINTA\Catellus\Loan Documents\resale restrictions.doc J 07/19/2000 (c) No transfer of the Property shall occur until the Agency determines (a) that the proposed purchaser intends to occupy the Property as the proposed purchaser's principal residence; (b) that the proposed purchaser is a Qualifying Income Household; and (c) that the proposed transfer occurs at an "Affordable Housing Cost" as determined pursuant to the Affordability Restrictions. The Agency shall not be obligated to approve a transfer until and unless the proposed purchaser has submitted to the Agency such information and completed such forms as the Agency shall request to certify the proposed purchaser's intent with respect to its residency of the Property and its gross income, and the proposed purchaser has submitted an affidavit disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Property, each approved purchaser shall submit to the Agency an executed disclosure statement which certifies that the purchaser is aware that the purchaser buying may only sell the unit at an Affordable Housing Cost to a moderate income person or family, that the maximum permitted sales price may be less than fair market value, and that the units must be owner -occupied at all times and cannot be rented or leased. Owner shall cooperate with the Agency in providing such forms to proposed purchasers and in assisting proposed purchaser to prepare such forms and to provide any required information to the Agency in connection with the Owner's original sale of the Property, provided that the Owner shall not be obligated to incur any out-of-pocket costs in connection therewith, other than employee time dedicated to providing such assistance. OWNER UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS AGREEMENT. OWNER FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE THE PRIMARY OBJECTIVE OF THE AGENCY AND THIS AGREEMENT IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. The covenant contained in this Section 8 shall run with the land and shall automatically terminate and be of no further force or effect upon the Expiration Date. Section 9. Sale to Eligible Person or Family at Affordable Housing Cost. Notwithstanding the provisions of Section 4 of the Promissory Note, if the Residence is sold during the Affordability Period by the Owner to a Buyer who is verified by the Agency as a person or family of moderate income, as defined by Section 50093 of the California Health and Safety Code, ("Eligible Person or Family") as provided hereinbelow prior to such sale and the Sales Price does not exceed an "Affordable Housing Costs," as defined by Section 50052.5 of the California Health and Safety Code, to such Buyer, then so long as the Owner is not in default of the Agreement, any prequalified Eligible Person or Family who purchases the Residence at an Affordable Housing Cost may assume the "Promissory Note" which is secured by the Residence, subject to the terms and conditions of this Agreement, and the Agency Deed of Trust upon execution of an assumption agreement in a form provided by the Agency, and, thereafter, the payment of the Note Amount, as defined therein, is deferred until subsequent sale, transfer or refinancing of the Residence as set forth in Section 4 of the Promissory Note. In order to verify the Buyer's status as an Eligible Person or Family, Owner shall submit to the Agency the proposed identity of the proposed Buyer and adequate information evidencing the income of the proposed Buyer. Said income information shall be submitted together with the notice of proposed sale not less than thirty (30) days prior to the proposed sale and shall include original or true copies of pay stubs, income tax records or other financial documents in order that the Agency may determine and verify the household income of the proposed Buyer to determine Eligible Person or Family status and whether the Residence is available to such Buyer at an Affordable Housing Cost. If the Agency is unable to verify the Buyer's income as provided FARSG\LAQUINTA\Catellus\Loan Documents\resale restrictions.doc 4 07/19/2000 herein prior to the proposed sale, then the Buyer's income shall be deemed to exceed the maximum allowable income limit for Eligible Persons and Families and the Shared Appreciation Amount shall be due and payable concurrent with the repayment of the Note Amount. The foregoing provisions will apply to every successive sale during the Affordability Period, the Agency shall, in consideration for the availability of moderate income housing during the Affordability Period, declare the Promissory Note paid in full. Section 10. Shared Appreciation. In the event a Prohibited Transfer, as set forth in Section 9 above occurs and the Note Amount becomes due and payable during the first twenty (20) years of the Promissory Note, the Owner, in addition to paying the Note Amount, shall also pay a Shared Appreciation Amount to the Agency equal to twenty-five percent (25%) of the "Appreciation Amount." Thereafter, the Note Amount due and payable shall be reduced annually by ten percent (10%) until the Note Amount is reduced to Zero Dollars ($0) in the thirtieth (30th) year of the Promissory Note; and the percentage of the Shared Appreciation amount due and payable shall be reduced annually on the anniversary of the Promissory Note by ten percent (10%) of the Shared Appreciation percentage until the percentage of the Shared Appreciation is reduced to zero percent (0%) in the thirtieth (30th) year of the Promissory Note. For the purposes of this Section 10, "Appreciation Amount" shall mean the difference between the Original Sales Price of the Residence paid by the Owner and one of the following amounts, as applicable. (i) in the event of a sale of the Residence, the amount received by the Owner as the sales price of the Residence excluding amounts received but paid out for any closing costs and commissions paid by Owner and excluding the "Value of Capital Improvements"; (ii) in the event of a transfer of the Residence other than a sale, or in the event of a default of the Promissory Note, or upon prepayment of the Promissory Note prior to the due date, the "Fair Market Value" of the Residence, less the Value of Capital Improvements; or (iii) in the event a creditor acquires title to the Residence through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the amount paid for the Residence at the creditor's sale of the Residence. "Fair Market Value" shall be determined by an appraisal of the Residence as provided herein, provided that nothing herein shall preclude the Owner and the Agency from establishing the Fair Market Value of the Residence by mutual agreement in lieu of an appraisal. If it is necessary to determine the Fair Market Value of the Residence, it shall be determined by a real estate appraiser mutually agreed upon by the Agency and the beneficiary of the first deed of trust which encumbers the Residence (the "First Lender"). The appraisal shall have been previously approved by the Federal National Mortgage Association ("FNMA") or the Federal Housing Administration and placed on their list of approved single family housing appraisers. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three (3) month period. The cost of the appraisal shall be borne by the Agency. In the event the Agency and the First Lender cannot agree on an appraiser, the Fair Market Value of the Residence will be determined by taking the average of two appraisals, one prepared by an appraiser chosen by the First Lender, and one prepared by an appraiser chosen by the Agency, both of whom shall have been previously approved by FNMA. In the event that the Owner has made capital improvements to the Residence which have improved the value of the Residence, or if damage or deferred maintenance has occurred while the Owner owned the Residence which has decreased the value of the Residence, the appraisal shall specifically ascribe a value to these adjustment factors and state what the fair market value of the Residence would be without such adjustments. FARSG\LAQUINTA\Catellus\Loan Documents\resale restrictions.doc 5 07119/2000 "Value of Capital Improvements" shall mean the value of substantial structural or permanent fixed improvements which cannot be removed without substantial damage to the Residence or substantial or total loss of value of said improvements. No such valuation shall be made except for improvements: (i) made or installed by or under the direction of the Owner; and (ii) with an initial cost of Two Thousand Dollars ($2,000) or more. The value of such improvements shall be calculated as the cost of improvements as originally incurred by the Owner and as evidenced by receipts or other documentation provided to the Agency. Section 11. Nondiscrimination Covenants. Owner by and for itself, its successors and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall Owner itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. Owner and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Agency) or sale of the Property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases, or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her 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, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself of herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees or vendees of the premises." Nothing in this Section 1 l shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted. The covenants in this paragraph (c) shall run with the land in perpetuity. F:\RSG\LAQUINTA\Catellus\Loan Docummts\resale restrictions.doc 6 07/19/2000 Section 12. Default and Foreclosure. A request for notice of default and any notice of sale under any deed of trust or mortgage with power of sale encumbering the Residence shall be recorded by the Agency. Any notice of default given pursuant to Civil Code Section 2924b, as amended, shall constitute an Owner's notice of intent to sell under Section 9 of this Agreement, and the Agency may exercise any of its remedies pursuant to the provisions of this Agreement; provided, however, that, notwithstanding any language contained in this Agreement to the contrary with regard to the rights of the lien holder, the Agency must complete any such actions no later than the end of the period established by California Civil Code Section 2924c for reinstatement of a monetary default under the deed of trust or mortgage. In the event of default and foreclosure, the Agency shall have the same right as the Owner to cure defaults and redeem the Residence prior to foreclosure sale. Such redemption shall be subject to the same fees, charges, and penalties which would otherwise be assessed against the Owner. Nothing herein shall be construed as creating any obligation on the part of the Agency to cure any such default, nor shall this right to cure and redeem operate to extend any time limitations in the default provisions of the underlying deed of trust or mortgage. In the event a foreclosure sale is consummated, any surplus proceeds to which the Owner may be entitled following foreclosure under California state law shall be paid as follows: After any required payment of encumbrances, that portion of surplus, if any, up to but not exceeding the net amount that the Owner would have received after any required payment of encumbrances under the formula set forth in Section 12 shall be paid to the Owner on the date of the foreclosure sale; the balance of the surplus, if any, shall be paid to the Agency. Section 13. Distribution of Insurance and Condemnation Proceeds. In the event that the Residence is condemned or destroyed (or in the event that the Residence consists of a unit in a condominium project and the condominium project is destroyed and insurance proceeds are distributed to the Owner, instead of being used to rebuild, or in the event of condemnation, if proceeds thereof are distributed to the Owner, or in the event of termination of the condominium, liquidation of the association and distribution of the assets of the association to the members thereof, including the Owner), any surplus proceeds from insurance or condemnation so distributed remaining after payment of encumbrances on the Residence shall be distributed as follows: That portion of the surplus up to but not to exceed the net amount that Owner would have received under the formula set forth in Section 9, the destruction, condemnation valuation date, or liquidation, shall be distributed to the Owner, and the balance of such surplus, if any, shall be distributed to the Agency. Section 14. Maintenance of Residence. Owner shall properly maintain the buildings, landscaping and yard areas on the Residence, as follows: (a) No improperly maintained landscaping shall be visible from public rights -of -way, including: no lawns with grasses in excess of six (6) inches in height; no untrimmed hedges; no trees, shrubbery, lawns, and other plant life dying from lack of water or other necessary maintenance; 4. no trees and shrubbery grown uncontrolled without proper pruning; F.\RSG\LAQUINTA\Catellus\Loan DDcuments\resale restrictions.doc 7 07/19/2000 5. no vegetation so overgrown as to be likely to harbor rats or vermin; 6. no dead, decayed, or diseased trees, weeds, and other vegetation. (b) No yard areas shall be left unmaintained, including: no broken or discarded furniture, appliances, and other household equipment stored in yard areas for periods exceeding one (1) week; 2. no packing boxes, lumber, trash, dirt, and other debris stored in yards for periods exceeding one (1) week in areas visible from public property or neighboring properties; 3. no unscreened trash cans, bins, or containers stored for unreasonable periods in areas visible from public property or neighboring properties; and 4. no vehicles parked or stored in areas other than approved parking areas. (c) No buildings may be left in an unmaintained condition, including: 1. no violation of state law, Uniform Codes, or City ordinances; 2. no condition that constitutes an unsightly appearance that detracts from the aesthetics or property value of the subject property or constitutes a private or public nuisance; 3. no broken windows or chipped, cracked or peeling paint; and 4. no conditions constituting hazards and/or inviting trespassers or malicious mischief. If such buildings, landscaping or yard areas are not so maintained, and such conditions are not corrected as soon as possible after notice thereof from Agency or the City of La Quinta (the "City"), then either Agency or the City may perform the necessary maintenance and Owner shall pay such costs as are reasonably incurred for such maintenance. Section 15. Attorney Fees and Costs. If any action is brought to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs. Section 16. Controlling Agreement. The Owner covenants that the Owner has not executed, and will not execute any other agreement with provisions contradictory to or in opposition to the provisions hereof, and that in any event, the Owner understands and agrees that this Agreement shall control the rights and obligations between and among the parties. Section 17. Subordination. This Agreement shall be subordinate to the lien of a first deed of trust against the Residence, and shall not impair the rights of any institutional lender which is the maker of a loan secured by such first deed of trust, or such lenders' assignee or successor in interest, to exercise its remedies under the deed of trust in the event of default under the first deed of trust by the Owner. Such remedies under the first deed of trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, this Agreement shall be forever terminated and shall have no further effect as to the Residence or any transferee thereafter; provided, F \RSG\LAQUINTA\Catellus\Loan Documentstresale restrictions.doc 8 07/19/2000 however, if the holder of such deed of trust acquired title to the Residence pursuant to a deed or assignment in lieu of foreclosure, this Agreement shall automatically terminate upon such acquisition of title, provided that (i) the Agency has been given written notice of a default under such first deed of trust, and (ii) the Agency shall not have cured the default under such first deed of trust within the 30-day period provided such notice sent to the Agency. Section 18. Severability. If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision(s) had never been contained herein. Section 19. Time. Time is of the essence of this entire Agreement. Whenever under the terms of this Agreement the time for performance falls on a day which is not a business day, such time for performance shall be on the next day that is a business day. Section 20. Notices. All notices required herein shall be in writing and shall be considered as given when personally delivered or one (1) business day following the day on which notice is delivered to Federal Express or similar overnight delivery service with all delivery charges paid, addressed to the parties as follows: If to Agency: La Quinta Redevelopment Agency Attention: Executive Director 78-495 Calle Tampico La Quinta, California 92253 If to Owner: La Quinta, California 92253 The address of a party for notices may be changed by that parry's written designation to all other parties of the new address and the recording of the designation, including the recording reference of this Agreement and its legal description, Exhibit A. Section 21. Covenants as to Use of and Title to the Residence. The Owner covenants and agrees with the Agency that the Owner will use and maintain the Residence as a single family residence and will perform all obligations of any consensual lien encumbering the Residence, until a permitted Transfer or Termination of this Agreement. Section 22. Captions and Pronouns. The captions and headings of the various Sections of this Agreement are for convenience only, and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof. Whenever the context requires or permits, the singular shall include the plural, the plural shall include the singular, and masculine, feminine, and neuter shall be freely interchangeable. Section 23. Running of Benefits and Burdens. All provisions of this Agreement, including the benefits and burdens, run with the land described in Exhibit A and are binding upon the heirs, successors, assigns, and personal representatives of the parties hereto and inure to the benefit of the heirs, personal representatives, and permitted successors and assigns of the parties hereto. FARSG\LAQUINTA\Catellus\Loan Documents\resale restrictions.doc 9 07/19/2000 Section 24. Construction. The rule of strict construction does not apply to this Agreement. This Agreement shall be given a reasonable construction so that the intention of the parties, to prevent any Prohibited Transfer or any use of the Residence in violation of this Agreement is carried out. Section 25. Termination. This Agreement shall terminate on the acquisition of title through a foreclosure of any consensual lien to which this Agreement has been subordinated ("Termination"). Upon Termination of this Agreement, on request of the then record Owner of the fee title to the Residence, the Agency shall execute, acknowledge, and record a termination of this Agreement. To the extent permitted by law, any unfulfilled obligations of any Owner shall survive the Termination of this Agreement, but this Agreement shall no longer affect title to the Residence. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Attest: Agency Secretary (Agency's and Owner's Signature must be acknowledged by a Notary Public) THE LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director BORROWER BORROWER "AGENCY" "OWNER" FARSG\LAQUIN7A\Cate11us\Loan Documentstresale restrictions,doc 10 07/19/2000 EXHIBIT A LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Riverside, City of La Quinta, and is described as follows: FARSG\LAQUINTA\Catellus\Loan Documents\resale restrictions.doc 11 07/19/2000 State of California) County of On , before me, personally appeared , O personally known to me or O proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. CAPACITY CLAIMED BY SIGNER O INDIVIDUALS O CORPORATE OFFICER(S) O PARTNERS O ATTORNEY -IN -FACT O TRUSTEE(S) O SUBSCRIBING WITNESS O GUARDIAN/CONSERVATOR O OTHER: WITNESS my hand and official seal. (SEAL) SIGNER IS REPRESENTING: (Name Of Person(s) Or Entities) Signature: Print Name Commission Expires State of California) County of ) On , before me, personally appeared , O personally known to me or O proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Signature: Print Name Commission Expires CAPACITY CLAIMED BY SIGNER O INDIVIDUALS O CORPORATE OFFICER(S) O PARTNERS O ATTORNEY -IN -FACT O TRUSTEE(S) O SUBSCRIBING WITNESS O GUARDIAN/CONSERVATOR O OTHER: SIGNER IS REPRESENTING: (Name Of Person(s) Or Entities) F:\RSG\LAQUINTA\Catellus\Loan Documents\male restrictions.doc 12 07/19/2000 BUYER DISCLOSURE CREDITOR: LA QUINTA REDEVELOPMENT AGENCY 78-495 Calle Tampico La Quinta, California 92253 BORROWER: La Quinta, California 92253 ITEMIZATION OF AMOUNT FINANCED: [ ] I want an itemization. Principal Amount: $8,719 You have the right to receive at this time an itemization of the Amount Financed [ ] I do not want an itemization. Your Payment Schedule will be applicable only in the event of certain circumstances as specified in Sections 4 and 5 of your Buyer/Agency Note. During the first twenty (20) years if payment is due, it will be the full Note Amount plus twenty-five percent (25%) Shared Appreciation Amount. During the final ten (10) years both the Note Amount and the Appreciation Amount declines by ten percent (10%) a year to a zero balance at the end of the thirty (30) year Note term. For more specific terms, please refer to the terms in the Buyer/Agency Note: Number of Payments Amount of Payments When Payments Are Due One (1) of Note $8,719 Upon Acceleration If you comply with the terms of the Resale Restriction Agreement, the Agency Deed of Trust, and the Promissory Note, no Principal or Shared Appreciation will be due at maturity. Property: You must obtain property insurance in an amount equal to the full replacement value of the structures on the Property and name the La Quinta Redevelopment Agency as a loss payee. Security: You are giving a security interest in the home you are purchasing which is located at , La Quinta, California 92253. Filing Fees: $ Non -Filing Insurance: $ Prepayment: If you pay off early you [ X ] may [ ] may not have to pay principal and Shared Appreciation. Interest Rate: The Agency Loan has a base interest rate that is zero percent (0%) but may require payment of a Shared Appreciation upon the occurrence of certain events. F.\RSG\L.AQUINTA\Catellus\Loan Documents\disclosure.doc 1 07/19/2000 Shared Appreciation: If the Agency Loan is accelerated prior to maturity, the La Quinta Redevelopment Agency is entitled to a percentage of the appreciation ("Shared Appreciation") of the secured real property as defined pursuant to Section 10 of the Resale Restriction Agreement. The complete terms of the Agency Loan are fully set forth in the Resale Restriction Agreement, Promissory Note, and other loan documents. READ ALL OF THESE DOCUMENTS CAREFULLY. ALL OF THESE DOCUMENTS AFFECT YOUR LEGAL RIGHTS. Assumption: Demand Feature: Examples: Someone buying your house [ X ] may, subject to conditions, be allowed to assume the remainder of the mortgage on the original terms. [ ] cannot assume the remainder of the mortgage on the original terms. This obligation [ ] is not payable on demand. [ X ] is not payable on demand, but does contain an acceleration clause. Example No. 1 shows what your payment would be if you borrowed $7,000 from the Agency, bought a house for $100,000, and sold this house to a non -income eligible family or at a non -affordable housing cost one year later for $110,000 without making any Qualified Capital Improvements to the Property with payment of a six percent (6%) commission and $500 closing costs. This does not necessarily indicate how your house will appreciate in the future. Example No. 1 is based on the following assumptions: Amount of Agency Loan $7,000 Purchase Price of House $100,000 Sales Price of House One Year Later $110,000 Commissions and Closing Costs $6,600 Under the above assumptions, you would owe the following amounts to the Agency: Shared Appreciation 25% ($10,000 - 6,600) $850 Principal $7,000 Total Amount Owed by You $7,850 * Shared Appreciation = Agency Loan Purchase Price x (Sales Price - Purchase Price - Commissions and Closing Costs) F:\RSG\LAQUINTA\Catellus\Loan Documents\disclosure.doc 2 07/19/2000 Example No. 2 shows what your payment would be if you borrowed the same $7,000 from the Agency as in Example No. I and purchased the same house for $100,000 and sold that house five (5) years later for $110,000 to a non -income eligible family or at a non -affordable housing cost. You added a patio and patio cover which increased the appraised fair market value of the property $2,000 (from $ l 08,000 to $110,000) and you were able to provide substantiation of the cost of those improvements. This does not necessarily indicate how your house will appreciate in the future. Example No. 2 is based on the following assumptions: Amount of Agency Loan $7,000 Purchase Price of House $100,000 Value of Qualified Capital Improvements $2,000 Sales Price of House $110,000 Under the above assumptions, you would owe the following amounts to the Agency: Shared Appreciation 25% ($10,000 - 6,600) $350 Principal $7,000 Total Amount Owed by You $7,350 * Shared Appreciation = Sales Price - (Purchase Price + Qualified Capital Improvements + Commissions and Closing Costs) $110,000 - ($100,000 + $2,000 + $6,600) $100,000 Example No. 3 shows what your payment would be if you borrowed $7,000 from the Agency, bought a house for $100,000, and sold this house to a non -income eligible family or at a non -affordable housing cost twenty- five (25) years later for $150,000 without making any Qualified Capital Improvements to the Property with commission costs of six percent (6%) and closing costs of $500. This does not necessarily indicate how your house will appreciate in the future. Example No. 3 is based on the following assumptions: Amount of Agency Loan $7,000 Purchase Price of House $100,000 Sales Price of House Twenty -Five (25) Years Later $150,000 Commissions and Closing Costs $9,500 FARSG\LAQUINTA\Catellus\Loan DocumentsWisclosureAm .5 07/19/2000 Under the above assumptions, you would owe the following amounts to the Agency: Shared Appreciation $1,750 Principal iLL02** Total Amount Owed by You $5,250 * Shared Appreciation = (Sales Price - Purchase Price - Commissions and Costs) .25 (150,000 - 100,000 - 9,500) = 10,125 (amount of percentage of Shared Appreciation declines by ten percent (10%) per year after year twenty (20) of the Note) ** Principal declines by ten percent (10%) of original Note Amount annually after year twenty (20) of the Note. This example is for year twenty-five (25), five (5) years times ten percent (10%) means that only fifty percent (50%) of the principal is due and owing. See your loan documents for any additional information about the terms for the provision of the Applicable Ownership Assistance by the Agency, nonpayment, default and penalties and any required repayment in full before the scheduled date. ITEMIZATION OF THE AMOUNT FINANCED $8,719 Amount given to you directly $0 Amount paid on your account $8,719 Amount paid to others on your behalf: To [credit bureau] [appraiser] [title insurance company] [escrow] $0 to (name of other creditor) $0 to (other) $0 prepaid finance charge $0 I have carefully reviewed the Buyer Disclosure, consisting of four (4) pages. DATED: DATED: BUYER INITIALS BUYER INITIALS FARSG\LAQUINTA\Cate11us\Loan Documents\disdosure.doc 4 07/19/2000 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Executive Director This document is exempt from payment of a recording fee pursuant to Government Code Section 6103. Request For Notice Under Section 2924b Civil Code In accordance with Section 2925b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. on , 19 , in Book , Page , Official Records of Riverside County, California, and describing land herein as Executed by (insert legal description) , as Trustee, be mailed to: La Quinta Redevelopment Agency Community Development Department 78-495 Calle Tampico La Quinta, California 92253 Attention: Community Development Director as Trustor, in which is named as Beneficiary, and NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY TO THE ADDRESS CONTAINED IN THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A NEW REQUEST MUST BE RECORDED. FARSG\LAQUINTA\Cate11us\L.oan DocumentsVepot.doc 07/19/2000 State of California) County of ) On , before me, personally appeared , ❑ personally known to me or ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Signature: Print Name Commission State of California) County of On , before me, personally appeared ❑ personally known to me or ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Signature: Print Name Commission Expires CAPACITY CLAIMED BY SIGNER ❑ INDIVIDUALS ❑ CORPORATE OFFICER(S) ❑ PARTNERS ❑ ATTORNEY -IN -FACT ❑ TRUSTEE(S) ❑ SUBSCRIBING WITNESS ❑ GUARDIAN/CONSERVATOR ❑ OTHER: SIGNER IS REPRESENTING: (Name Of Person(s) Or Entities) CAPACITY CLAIMED BY SIGNER ❑ INDIVIDUALS ❑ CORPORATE OFFICER(S) ❑ PARTNERS ❑ ATTORNEY -IN -FACT ❑ TRUSTEE(S) ❑ SUBSCRIBING WITNESS ❑ GUARDIAN/CONSERVATOR ❑ OTHER: SIGNER IS REPRESENTING: (Name Of Persons) Or Entities) F:\RSG\LAQUINTA\Cate11us\Loan Documents4epotdoc 07/19/2000